-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DMwT8jnzdj5yOGn0Nn7HXKVCn8Q1wG+tbdqYde1CTmZh90P+u6bAVdIKcCTuwy2M WM5O4aTsrr5TM86gXPNoLQ== 0000897101-99-001169.txt : 19991216 0000897101-99-001169.hdr.sgml : 19991216 ACCESSION NUMBER: 0000897101-99-001169 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991031 FILED AS OF DATE: 19991215 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RAVEN INDUSTRIES INC CENTRAL INDEX KEY: 0000082166 STANDARD INDUSTRIAL CLASSIFICATION: APPAREL & OTHER FINISHED PRODS OF FABRICS & SIMILAR MATERIAL [2300] IRS NUMBER: 460246171 STATE OF INCORPORATION: SD FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-07982 FILM NUMBER: 99774672 BUSINESS ADDRESS: STREET 1: 205 E 6TH ST STREET 2: PO BOX 5107 CITY: SIOUX FALLS STATE: SD ZIP: 57117 BUSINESS PHONE: 6053362750 MAIL ADDRESS: STREET 1: P O BOX 5107 CITY: SIOUX FALLS STATE: SD ZIP: 57117-5107 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 (Mark One) (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED: OCTOBER 31, 1999 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ______________________ Commission file number: 0-3136 RAVEN INDUSTRIES, INC. ----------------------------------------------------------------- (Exact name of registrant as specified in its charter) SOUTH DAKOTA 46-0246171 - ------------------------------------ ------------------------------------ (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 205 EAST 6TH STREET P.O. BOX 5107 SIOUX FALLS, SD 57117-5107 ----------------------------------------------------------------- (Address of principal executive offices) (Zip code) 605-336-2750 -------------------------------------------- Registrant's telephone number, including area code Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes __X__ No _____ APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. CLASS OUTSTANDING AS OF 11/30/99 - ---------------------------- ------------------------------------------- Common Stock 4,051,082 shares RAVEN INDUSTRIES, INC. AND SUBSIDIARIES INDEX PAGE NO. -------- PART I-FINANCIAL INFORMATION Consolidated Balance Sheets as of October 31, 1999, January 31, 1999 and October 31, 1998 3 Consolidated Statements of Income for the three and nine month periods ended October 31, 1999 and 1998 4 Consolidated Statements of Cash Flows for the nine month periods ended October 31, 1999 and 1998 5 Notes to Consolidated Financial Statements 6-7 Management's Discussion and Analysis of Financial Condition and Results of Operations 8-10 PART II-OTHER INFORMATION 11 PART I - FINANCIAL INFORMATION RAVEN INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except per share data)
10/31/99 01/31/99 10/31/98 ----------- ----------- ----------- (unaudited) (unaudited) ASSETS - ------ Cash and cash equivalents .......................................... $ 4,557 $ 5,335 $ 2,932 Accounts and notes receivable, less allowance for doubtful accounts of $502, $400 and $400 as of 10/31/99, 01/31/99 and 10/31/98, respectively .............................. 31,339 27,399 26,841 Inventories: Materials ........................................................ 19,270 18,261 18,528 In process ....................................................... 4,702 3,662 5,380 Finished goods ................................................... 3,366 4,055 5,716 ----------- ----------- ----------- Total inventories ............................................ 27,338 25,978 29,624 Deferred income taxes .............................................. 2,161 1,732 1,682 Prepaid expenses and other current assets .......................... 309 417 391 ----------- ----------- ----------- Total current assets ......................................... 65,704 60,861 61,470 ----------- ----------- ----------- Property, plant and equipment ...................................... 49,691 57,276 56,573 Less: accumulated depreciation ................................... 34,848 37,713 37,311 ----------- ----------- ----------- Net property, plant and equipment ............................ 14,843 19,563 19,262 Note receivable, less current portion .............................. 1,418 Other assets, net .................................................. 3,017 3,250 3,338 ----------- ----------- ----------- TOTAL ASSETS ....................................................... $ 83,564 $ 83,674 $ 85,488 =========== =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY - ------------------------------------ Current portion of long-term debt .................................. $ 1,555 $ 1,060 $ 1,645 Accounts payable ................................................... 7,029 5,993 6,260 Accrued liabilities and customer advances .......................... 12,278 9,739 11,129 ----------- ----------- ----------- Total current liabilities .................................... 20,862 16,792 19,034 Long-term debt, less current portion ............................... 3,024 4,572 4,512 Deferred income taxes .............................................. 17 524 Stockholders' equity Common stock, $1 par value, authorized shares: 100,000,000; issued: 5,215,489; 5,215,489 and 5,214,989 shares as of 10/31/99, 01/31/99 and 10/31/98, respectively ................... 5,215 5,215 5,215 Paid in capital .................................................. 2,961 2,940 2,917 Retained earnings ................................................ 63,665 60,369 59,517 ----------- ----------- ----------- 71,841 68,524 67,649 Less treasury stock, at cost: 909,848; 521,403 and 521,403 shares as of 10/31/99, 01/31/99 and 10/31/98, respectively .......................... 12,163 6,231 6,231 ----------- ----------- ----------- Total stockholders' equity ................................... 59,678 62,293 61,418 ----------- ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ......................... $ 83,564 $ 83,674 $ 85,488 =========== =========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL STATEMENTS. Page 3 PART I - FINANCIAL INFORMATION RAVEN INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (Dollars in thousands, except per share data)
FOR THE THREE FOR THE NINE MONTHS ENDED MONTHS ENDED ----------------------- ----------------------- 10/31/99 10/31/98 10/31/99 10/31/98 --------- --------- --------- --------- Net sales ................................ $ 44,971 $ 44,787 $ 116,431 $ 113,157 Cost of goods sold ....................... 38,486 37,746 97,347 94,664 --------- --------- --------- --------- Gross profit ........................... 6,485 7,041 19,084 18,493 Operating expenses Selling ................................ 2,051 2,219 6,043 6,330 Administrative ......................... 1,811 1,625 5,357 4,977 Gain on sale of assets ................. (966) (966) --------- --------- --------- --------- Operating income .................... 3,589 3,197 8,650 7,186 Interest expense ......................... (141) (127) (333) (355) Other income, net ........................ 79 132 304 312 --------- --------- --------- --------- Income before income taxes ............. 3,527 3,202 8,621 7,143 Income taxes ............................. 1,273 1,149 3,112 2,564 --------- --------- --------- --------- Net income ............................. $ 2,254 $ 2,053 $ 5,509 $ 4,579 ========= ========= ========= ========= Net income per common share: Basic ............................ $ 0.52 $ 0.44 $ 1.22 $ 0.96 Diluted .......................... $ 0.52 $ 0.44 $ 1.22 $ 0.96 Cash dividends paid per share ............ $ 0.17 $ 0.16 $ 0.49 $ 0.48
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL STATEMENTS. Page 4 PART I - FINANCIAL INFORMATION RAVEN INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (Dollars in thousands)
FOR THE NINE MONTHS ENDED ------------------------- 10/31/99 10/31/98 ---------- ---------- Cash flows from operating activities: Net income ....................................................... $ 5,509 $ 4,579 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization ................................ 4,074 4,045 Provision for losses on accounts receivable .................. 232 111 Gain on sale of assets ....................................... (966) Deferred income taxes ........................................ (492) 4 Interest earned on note receivable ........................... (79) (159) Change in accounts receivable ................................ (5,661) 21 Change in inventories ........................................ (3,112) (3,808) Change in prepaid expenses and other current assets .......... 85 115 Change in operating liabilities .............................. 3,196 (221) Other ........................................................ (21) 3 ---------- ---------- Net cash provided by operating activities ........................ 2,765 4,690 ---------- ---------- Cash flows from investing activities: Capital expenditures ............................................. (2,619) (3,225) Sale of assets, net of cash sold $135 thousand ................... 8,228 Other ............................................................ 45 76 ---------- ---------- Net cash provided by (used in) investing activities .............. 5,654 (3,149) ---------- ---------- Cash flows from financing activities: Issuance of short-term debt ...................................... 6,000 4,000 Payment of short-term debt ....................................... (6,000) (4,000) Issuance of long-term debt ....................................... 5,000 Long-term debt principal payments ................................ (1,053) (1,736) Net proceeds from exercise of stock options ...................... 77 Dividends paid ................................................... (2,212) (2,192) Purchase of treasury stock ....................................... (5,932) (2,608) ---------- ---------- Net cash provided by (used in) financing activities .............. (9,197) (1,459) ---------- ---------- Net increase (decrease) in cash and equivalents .................. (778) 82 Cash and cash equivalents at beginning of period ................... 5,335 2,850 ---------- ---------- Cash and cash equivalents at end of period ......................... $ 4,557 $ 2,932 ========== ========== Cash paid during the period for: Interest ....................................................... $ 318 $ 330 Income taxes, net of refund .................................... $ 3,431 $ 2,803
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL STATEMENTS. Page 5 PART I - FINANCIAL INFORMATION RAVEN INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 1. The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission (SEC). Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the three and nine-month periods ended October 31, 1999 are not necessarily indicative of the results that may be be expected for the year ending January 31, 2000. For further information, refer to the consolidated financial statements and notes thereto included in the company's Annual Report on Form 10-K for the year ended January 31, 1999. 2. Certain outstanding options for the three and nine month periods ended 10/31/99 and 10/31/98, were excluded from the diluted earnings per share calculations because their exercise prices were greater than the average market price of the company's common stock during those periods. Details of the earnings per share computation are presented below (in thousands, except per share data):
FOR THE THREE FOR THE NINE MONTHS ENDED MONTHS ENDED ------------------------ ------------------------ 10/31/99 10/31/98 10/31/99 10/31/98 ---------- ---------- ---------- ---------- Net income ....................................... $ 2,254 $ 2,053 $ 5,509 $ 4,579 ========== ========== ========== ========== Weighted average common shares outstanding ....... 4,332,108 4,705,531 4,498,194 4,770,460 Dilutive impact of stock options ................. 739 0 0 8,111 ---------- ---------- ---------- ---------- Weighted average common and common equivalent shares outstanding .................. 4,332,847 4,705,531 4,498,194 4,778,571 ========== ========== ========== ========== Net income per share: Basic ....................................... $ 0.52 $ 0.44 $ 1.22 $ 0.96 ========== ========== ========== ========== Diluted ..................................... $ 0.52 $ 0.44 $ 1.22 $ 0.96 ========== ========== ========== ==========
Page 6 PART I - FINANCIAL INFORMATION RAVEN INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 3. The company's three segments (Electronics, Plastics and Sewn Products) are based upon their common technologies, raw materials and production processes. These segments are consistent with the company's management reporting structure. The company's customers (distributors or original equipment manufacturers) provide opportunities for each segment to serve various markets. Distribution methods are similar across and within segments. These segments, whose results are shown below, are Electronics, whose principal products include industrial controls, computerized flow control hardware and software and printed circuit boards and assemblies; Plastics, providing plastic films, large-volume plastic and fiberglass tanks and fiberglass pick-up truck toppers; and Sewn Products, providing superior-performance outerwear and sewn inflatables including hot-air balloons.
FOR THE THREE FOR THE NINE MONTHS ENDED MONTHS ENDED ---------------------- ---------------------- 10/31/99 10/31/98 10/31/99 10/31/98 --------- --------- --------- --------- NET SALES --------- Electronics .................... $ 12,181 $ 11,503 $ 37,015 $ 34,748 Plastics ....................... 19,991 19,178 57,969 52,516 Sewn Products .................. 12,799 14,106 21,447 25,893 --------- --------- --------- --------- TOTAL COMPANY ..................... $ 44,971 $ 44,787 $ 116,431 $ 113,157 ========= ========= ========= ========= OPERATING INCOME ---------------- Electronics .................... $ 679 $ 872 $ 2,261 $ 3,110 Plastics ....................... 2,599 1,564 5,874 3,194 Sewn Products .................. 311 761 515 882 --------- --------- --------- --------- TOTAL COMPANY ..................... $ 3,589 $ 3,197 $ 8,650 $ 7,186 ========= ========= ========= =========
4. On October 29, 1999, the company sold the assets of its Glasstite subsidiary to Penda Corporation resulting in a pretax gain of $966,000. The gain on the sale reflects an estimate for the cost of remedial actions on certain environmental concerns. At the closing, the company received $8.4 million in cash and delivered all tangible and intangible assets of the subsidiary, including $135,000 of cash, netting to $8.2 million of cash received. In addition, the company has receivable for certain working capital adjustments yet to be finalized, and the buyer assumed certain liabilities. Page 7 PART I - FINANCIAL INFORMATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FINANCIAL CONDITION On October 29, 1999, the company sold the assets of its Glasstite subsidiary for $8.4 million cash. In addition, the company has a receivable for certain working capital adjustments yet to be finalized, and the buyer assumed certain liabilities. From a portion of the proceeds of this sale, the company repaid $5.0 million in short term debt. During the nine months ended October 31,1999, the company repurchased 388,445 shares of its common stock. The average purchase price was $15.27 per share for a total cost of $5.9 million. Subsequent to the third quarter the company repurchased an additional 270,000 shares for a total of 658,445 shares for the year. The company's cash was $4.6 million at October 31, 1999, compared with $2.9 million one year earlier. Inventory levels decreased $2.3 million from the October 31, 1998, level due primarily to the sale of Galsstite's assets. The Company retains its minimum $5.0 million line of credit. The company's capital resources continue to be sufficient to fund all its activities. RESULTS OF OPERATIONS Sales were $45.0 million for the quarter ended October 31, 1999, an increase of $184,000 over the third quarter of the prior year. For the nine months ended October 31, 1999, sales increased 3 percent to $116.4 million compared to last year's $113.2 million. Net income climbed 20 percent to $5.5 million or a record $1.22 per diluted share, compared to $4.6 million or 96 cents per diluted share in the first nine months of the previous year. Results included a $966,000 pretax gain on the Glasstite sale, and a $800,000 pretax inventory charge related to third-quarter actions by the new managers of Raven operating units who are repositioning certain elements of the company's business. The Plastic segment and Electronics segment generated sales increases over last year for both the third quarter and the year-to-date figures. Operating income for the third quater increased 12 percent to $3.6 million from $3.2 million a year earlier. Third-quarter earnings per share on a diluted basis rose 18 percent to 52 cents a diluted share, compared to 44 cents a share in the third quarter of last year, with 372,684 fewer average common equivalent shares outstanding. For the nine months, operating income rose 20 percent to $8.6 from $7.2 million for the same period last year. Electronics segment third-quarter sales were $12.2 million, which was an increase of 6 percent or $678,000 over the same period last year. Operating income, however, declined 22 percent to $679,000 from $872,000 the prior year. The increase in sales was due primarily to stronger deliveries from the contract manufacturing operations. Their sales increased to $5.8 million in the third quarter from $5.0 million last year. The decline in operating income was due to the impact of $300,000 in inventory valuation adjustments described above and continuing inefficiencies in new business in the contract manufacturing operations. Sales of flow control devices in the third quarter at $3.4 million were even with last year's third quarter due to the continuing weakness in the agricultural markets. However, through cost cutting and production efficiencies they were able to improve their gross margin rates. Third-quarter sales of feedmill automation systems fell $192,000 to $3.0 million due to a decrease in demand for new systems. Sales for the nine months totaled $37.0 million compared to $34.7 million for the same period in fiscal 1999. Operating income for the nine months was $2.3 million, down 27 percent from the prior year's $3.1 million. Plastics segment sales of $20.0 million for the third quarter were 4 percent more than the same period last year. Sales of $58.0 million for the first nine months were 10 percent greater than the $52.5 million generated in the first nine months of fiscal 1999. Third quarter operating income for the segment was $2.6 million, up sharply Page 8 PART I - FINANCIAL INFORMATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) due in substantial part to the $966,000 gain on the sale of Glasstite. Adjusted for the gain, operating income was up slightly, but partially offset by $250,000 in inventory-valuation adjustments. The research balloons, engineered films, and pickup truck topper product lines showed increased sales in both the second quarter and the year-to-date figures. Year-to-date operating income was $5.9 million compared to $3.2 million the first nine months of last fiscal year. The increase in operating margins in the Plastics segment was due primarily to the sale of Glasstite. However, there were also positive effects from slightly better prices on purchased material, small increases in selling prices, and better equipment and labor utilization. Sewn Products segment sales of $12.8 million for the third quarter were short of the $14.1 million figure logged for the same period last year. Year-to-date sales of $21.4 million were 17 percent below the nine-month results of fiscal 1999. Management is projecting lower sales totals in the segment's contract sewing product line due to offshore competition. Third quarter operating income of $311,000 compares to $761,000 generated in the third quarter of fiscal 1999. This result reflects $250,000 of inventory valuation adjustments described above in the contract sewing product line. New management in contract sewing line is repositioning the focus of the product offering. Year-to-date operating income was $515,000, $367,000 less than last year's nine-month total. Consolidated gross profits of $6.5 million in the third quarter were $556,000 less than the third quarter last year. The current year figure reflects $800,000 in inventory charges. The nine months generated an increase of $591,000 in gross profits, rising from $18.5 million to $19.1 million over the same period the prior year. These increases were due primarily to the strong performance of the Plastics segment. Selling expenses were down by 8 percent for the quarter and 5 percent for the nine months due to decreased selling staff. Administrative expenses were up 12 percent for the quarter and 8 percent on a year-to-date basis reflecting increases in bad debt expenses, consulting and compensation. Third quarter pretax income of $3.5 million was 10 percent higher than last year's $3.2 million. The pretax income for the nine months was $8.6 million compared to $7.1 million last year. These results generated a 27 percent increase year-to-date in per share diluted earnings, rising from 96 cents in fiscal 1999 to $1.22 in fiscal 2000. YEAR 2000 STATEMENT All of the company's business software has been changed to be 2000-compliant and is currently in daily production. The platform on which this software runs is 2000-compliant. Production equipment is being checked, and any problems identified are being addressed. Building equipment has been checked, and only one problem was found, which was corrected in March 1999. Since the company does not run its primary business software on personal computers, management does not expect any material problems from non-compliant personal computers. Vendors and service providers have been surveyed to ensure that they are 2000-compliant. Any problems identified are being addressed. Page 9 PART I - FINANCIAL INFORMATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) SAFE HARBOR STATEMENT THIS REPORT CONTAINS DISCUSSIONS OF ITEMS WHICH MAY CONSTITUTE FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF FEDERAL SECURITIES LAWS. ALTHOUGH RAVEN INDUSTRIES BELIEVES THAT EXPECTATIONS REFLECTED IN SUCH FORWARD-LOOKING STATEMENTS ARE BASED ON REASONABLE ASSUMPTIONS, IT CAN GIVE NO ASSURANCES THAT ITS EXPECTATIONS WILL BE ACHIEVED. FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER FROM EXPECTATIONS INCLUDE GENERAL ECONOMIC CONDITIONS, WEATHER CONDITIONS WHICH COULD AFFECT CERTAIN OF THE COMPANY'S PRIMARY MARKETS SUCH AS THE AGRICULTURAL MARKET OR ITS MARKET FOR OUTERWEAR, OR CHANGES IN COMPETITION WHICH COULD IMPACT ANY OF THE COMPANY'S PRODUCT LINES. Page 10 PART II-OTHER INFORMATION Item 1. Legal Proceedings: None Item 2. Changes in Securities: None Item 3. Defaults upon Senior Securities: None Item 4. Submission of Matters to a Vote of Security Holders: None Item 5. Other Information: None Item 6. (a) Exhibits Filed: Exh. 27-Financial Data schedule (for SEC only). (b) Reports on Form 8-K: An 8-K was filed November 9, 1999, concerning the October 29, 1999 sale of the assets of the Company's Glasstite Subsidiary. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. RAVEN INDUSTRIES, INC. /s/ Thomas Iacarella -------------------------------------- Thomas Iacarella Vice President, Finance, Secretary and Treasurer (Principal Financial and Accounting Officer) DATE: DECEMBER 15, 1999 Page 11 EX-27 2 ARTICLE 5 - FINANCIAL DATA SCHEDULE
5 1,000 9-MOS JAN-31-1999 OCT-31-1999 4,557 0 31,841 502 27,338 65,704 49,691 34,848 83,564 20,862 3,024 0 0 5,215 54,463 83,564 116,431 116,431 97,347 97,347 0 0 333 8,621 3,112 5,509 0 0 0 5,509 1.22 1.22
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