þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
South Dakota (State of incorporation) 205 E. 6th Street, P.O. Box 5107, Sioux Falls, SD (Address of principal executive offices) |
46-0246171 (IRS Employer Identification No.) 57117- 5107 (zip code) |
Title of Each Class: | Name of Each Exchange on which Registered | |
Common Stock, $1 par value | The NASDAQ Stock Market |
Large accelerated filer o | Accelerated filer þ | Non-accelerated filer o (Do not check if a smaller reporting company) | Smaller reporting company o |
PART I | ||||||||
Item 1. | 3 | |||||||
Item 1A. | 6 | |||||||
Item 1B. | 9 | |||||||
Item 2. | 9 | |||||||
Item 3. | 9 | |||||||
Item 4. | 9 | |||||||
PART II | ||||||||
Item 5. | 10 | |||||||
10 | ||||||||
11 | ||||||||
Item 6. | 12 | |||||||
12 | ||||||||
13 | ||||||||
Item 7. | 14 | |||||||
14 | ||||||||
17 | ||||||||
21 | ||||||||
22 | ||||||||
23 | ||||||||
23 | ||||||||
25 | ||||||||
Item 7A. | 25 | |||||||
Item 8. | 26 | |||||||
27 | ||||||||
28 | ||||||||
29 | ||||||||
30 | ||||||||
31 | ||||||||
32 | ||||||||
33 | ||||||||
Item 9. | 46 | |||||||
Item 9A. | 46 | |||||||
Item 9B. | 46 | |||||||
PART III | ||||||||
Item 10. | 47 | |||||||
Item 11. | 47 | |||||||
Item 12. | 47 | |||||||
Item 13. | 47 | |||||||
Item 14 | 47 | |||||||
PART IV | ||||||||
Item 15. | 48 | |||||||
INDEX TO EXHIBITS | 49 | |||||||
SIGNATURES | 50 | |||||||
REPORT OF INDEPENDENT REGISTERED ACCOUNTING FIRM ON FINANCIAL STATEMENT SCHEDULE | 51 | |||||||
SCHEDULE II | 52 | |||||||
EX-10.G | ||||||||
EX-10.P | ||||||||
EX-21 | ||||||||
EX-23 | ||||||||
EX-31.1 | ||||||||
EX-31.2 | ||||||||
EX-32.1 | ||||||||
EX-32.2 |
2
ITEM 1. | BUSINESS |
13 | ||||
17 | ||||
43 |
3
4
5
NAME, AGE AND POSITION | BIOGRAPHICAL DATA | |
Daniel
A. Rykhus, 46 President and Chief Executive Officer |
Mr. Rykhus became the companys President and Chief Executive Officer in 2010. He joined Raven in 1990 as Director of World Class Manufacturing, was General Manager of the Applied Technology Division from 1998 through 2009, and served as Executive Vice President from 2004 through 2010. | |
Thomas
Iacarella, 57 Vice President and Chief Financial Officer |
Mr. Iacarella joined Raven in 1991 as Corporate Controller and has been the companys Chief Financial Officer, Secretary and Treasurer since 1998. Prior to joining the company, he held positions with Tonka Corporation and the accounting firm now known as Ernst & Young. | |
David
R. Bair, 54 Division Vice President and General Manager Electronic Systems Division |
Mr. Bair joined Raven in 1999 as Division Vice President and General Manager of the Electronic Systems Division. | |
James
D. Groninger, 52 Division Vice President and General Manager Engineered Films Division |
Mr. Groninger joined Raven in 1986 and in 1995 became Manager of Glasstite, Inc. He has been Division Vice President and General Manager of the Engineered Films Division since 2004. | |
Barbara
K. Ohme, 63 Vice President Administration |
Ms. Ohme joined Raven in 1987 as Employment Manager and has been the companys Vice President of Administration since 2004. | |
Matthew
T. Burkhart, 35 Division Vice President and General Manager Applied Technology Division |
Mr. Burkhart was named Division Vice President and General Manager of the Applied Technology Division on February 1, 2010. He joined Raven in 2008 as Director of Sales and became General Manager Applied Technology Division on February 1, 2009. Prior to joining the company, he was a Branch Manager for Johnson Controls. | |
Lon
E. Stroschein, 36 Division Vice President and General Manager Aerostar Division |
Mr. Stroschein was named Vice President and General Manager of the Aerostar Division in October 2010. He joined Raven in 2008 as International Sales Manager for Applied Technology. Prior to joining Raven, he was a bank Vice President and was a member of the executive staff for a U.S. Senator. |
6
7
8
Square | ||||||||||||
Location | Feet | Function | Business segments | |||||||||
Sioux Falls, SD | 150,000 | Corporate
office; electronics manufacturing |
All | |||||||||
131,000 | Plastic sheeting manufacturing |
Engineered Films | ||||||||||
73,000 | Warehouse |
Engineered Films | ||||||||||
59,000 | Plastic sheeting manufacturing and sewing |
Engineered Films; Aerostar | ||||||||||
35,000 | Warehouse and offices |
Engineered Films; Aerostar | ||||||||||
27,000 | Training facility and manufacturing |
Applied Technology | ||||||||||
25,000 | Tethered
aerostat and inflatable manufacturing |
Aerostar | ||||||||||
24,000 | Electronics manufacturing |
Electronic Systems | ||||||||||
*14,000 | Tethered aerostat inflation and testing |
Aerostar | ||||||||||
23,000 | Training and product development facility |
Applied Technology | ||||||||||
10,000 | Machine shop |
Applied Technology | ||||||||||
Sulphur Springs, TX | 64,000 | Research balloon manufacturing |
Aerostar | |||||||||
Huron, SD | 24,000 | Sewing plant |
Aerostar | |||||||||
St. Louis, MO | 24,000 | Electronics manufacturing |
Electronic Systems | |||||||||
Madison, SD | 20,000 | Sewing plant |
Aerostar | |||||||||
Austin, TX | *7,000 | Product development facility |
Applied Technology; Aerostar | |||||||||
Stockholm, SK | *7,000 | Warehouse |
Applied Technology |
* | Leased |
9
Net Income | Common Stock | Cash | ||||||||||||||||||||||||||||||||||||||
Net | Gross | Operating | Pretax | Net | Per Share(a) | Market Price | Dividends | |||||||||||||||||||||||||||||||||
Sales | Profit | Income | Income | Income | Basic | Diluted | High | Low | Per Share | |||||||||||||||||||||||||||||||
FISCAL 2011 |
||||||||||||||||||||||||||||||||||||||||
First Quarter |
$ | 85,030 | $ | 27,171 | $ | 19,505 | $ | 19,557 | $ | 12,945 | $ | 0.72 | $ | 0.72 | $ | 31.79 | $ | 26.54 | $ | 0.16 | ||||||||||||||||||||
Second Quarter |
73,174 | 20,389 | 12,623 | 12,529 | 8,353 | 0.46 | 0.46 | 38.18 | 28.66 | 0.16 | ||||||||||||||||||||||||||||||
Third Quarter |
85,823 | 24,887 | 17,866 | 17,883 | 11,833 | 0.65 | 0.65 | 42.11 | 30.00 | 1.41 | (b) | |||||||||||||||||||||||||||||
Fourth Quarter |
70,681 | 18,982 | 10,209 | 10,313 | 7,406 | 0.41 | 0.41 | 49.59 | 40.01 | 0.16 | ||||||||||||||||||||||||||||||
Total Year |
$ | 314,708 | $ | 91,429 | $ | 60,203 | $ | 60,282 | $ | 40,537 | $ | 2.24 | $ | 2.24 | $ | 49.59 | $ | 26.54 | $ | 1.89 | ||||||||||||||||||||
FISCAL 2010 |
||||||||||||||||||||||||||||||||||||||||
First Quarter |
$ | 65,222 | $ | 20,428 | $ | 14,113 | $ | 14,114 | $ | 9,231 | $ | 0.51 | $ | 0.51 | $ | 24.65 | $ | 15.37 | $ | 0.13 | ||||||||||||||||||||
Second Quarter |
56,586 | 15,112 | 9,306 | 9,411 | 6,204 | 0.34 | 0.34 | 31.00 | 23.99 | 0.14 | ||||||||||||||||||||||||||||||
Third Quarter |
60,158 | 16,918 | 11,119 | 11,116 | 7,293 | 0.40 | 0.40 | 32.43 | 24.47 | 0.14 | ||||||||||||||||||||||||||||||
Fourth Quarter |
55,816 | 15,394 | 8,682 | 8,681 | 5,846 | 0.32 | 0.32 | 33.18 | 24.04 | 0.14 | ||||||||||||||||||||||||||||||
Total Year |
$ | 237,782 | $ | 67,852 | $ | 43,220 | $ | 43,322 | $ | 28,574 | $ | 1.58 | $ | 1.58 | $ | 33.18 | $ | 15.37 | $ | 0.55 | ||||||||||||||||||||
FISCAL 2009 |
||||||||||||||||||||||||||||||||||||||||
First Quarter |
$ | 75,166 | $ | 23,288 | $ | 16,641 | $ | 16,759 | $ | 10,882 | $ | 0.60 | $ | 0.60 | $ | 32.80 | $ | 25.94 | $ | 0.13 | ||||||||||||||||||||
Second Quarter |
69,278 | 17,197 | 10,312 | 10,488 | 6,815 | 0.38 | 0.38 | 39.50 | 29.46 | 0.13 | ||||||||||||||||||||||||||||||
Third Quarter |
75,538 | 19,564 | 12,371 | 12,548 | 8,385 | 0.47 | 0.46 | 47.82 | 25.79 | 0.13 | ||||||||||||||||||||||||||||||
Fourth Quarter |
59,931 | 13,399 | 7,070 | 7,106 | 4,688 | 0.26 | 0.26 | 33.24 | 20.60 | 1.38 | (c) | |||||||||||||||||||||||||||||
Total Year |
$ | 279,913 | $ | 73,448 | $ | 46,394 | $ | 46,901 | $ | 30,770 | $ | 1.71 | $ | 1.70 | $ | 47.82 | $ | 20.60 | $ | 1.77 | ||||||||||||||||||||
(a) | Net income per share is computed discretely by quarter and may not add to the full year. | |
(b) | A special dividend of $1.25 per share was paid during the third quarter of fiscal 2011. | |
(c) | A special dividend of $1.25 per share was paid during the fourth quarter of fiscal 2009. |
10
Year Ended January 31 | 5-Year | |||||||||||||||||||||||||||
Company / Index | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | CAGR(a) | |||||||||||||||||||||
Raven Industries, Inc. |
$ | 100.00 | $ | 91.05 | $ | 97.37 | $ | 74.90 | $ | 100.24 | $ | 174.50 | 12 | % | ||||||||||||||
S&P 1500 Industrial Machinery |
100.00 | 114.82 | 121.05 | 67.90 | 92.53 | 124.67 | 5 | % | ||||||||||||||||||||
Russell 2000 |
100.00 | 110.51 | 99.70 | 62.97 | 86.78 | 114.00 | 3 | % |
(a) | compound annual growth rate |
11
For the years ended January 31 | ||||||||||||||||||||||||
2011 | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
OPERATIONS |
||||||||||||||||||||||||
Net sales |
$ | 314,708 | $ | 237,782 | $ | 279,913 | $ | 233,957 | $ | 217,529 | $ | 204,528 | ||||||||||||
Gross profit |
91,429 | 67,852 | 73,448 | 63,676 | 57,540 | 55,714 | ||||||||||||||||||
Operating income |
60,203 | 43,220 | 46,394 | 41,145 | 38,302 | 37,284 | ||||||||||||||||||
Income before income taxes |
60,282 | 43,322 | 46,901 | 42,224 | 38,835 | 37,494 | ||||||||||||||||||
Net income |
$ | 40,537 | $ | 28,574 | $ | 30,770 | $ | 27,802 | $ | 25,441 | $ | 24,262 | ||||||||||||
Net income % of sales |
12.9 | % | 12.0 | % | 11.0 | % | 11.9 | % | 11.7 | % | 11.9 | % | ||||||||||||
Net income % of beginning equity |
30.4 | % | 25.2 | % | 26.0 | % | 28.3 | % | 30.1 | % | 36.7 | % | ||||||||||||
Cash dividends(a) |
$ | 34,095 | $ | 9,911 | $ | 31,884 | $ | 7,966 | $ | 6,507 | $ | 5,056 | ||||||||||||
FINANCIAL POSITION |
||||||||||||||||||||||||
Current assets |
$ | 128,181 | $ | 117,747 | $ | 98,073 | $ | 100,869 | $ | 73,219 | $ | 71,345 | ||||||||||||
Current liabilities |
34,335 | 25,960 | 23,322 | 22,108 | 16,464 | 20,050 | ||||||||||||||||||
Working capital |
$ | 93,846 | $ | 91,787 | $ | 74,751 | $ | 78,761 | $ | 56,755 | $ | 51,295 | ||||||||||||
Current ratio |
3.73 | 4.54 | 4.21 | 4.56 | 4.45 | 3.56 | ||||||||||||||||||
Property, plant and equipment |
$ | 41,522 | $ | 33,029 | $ | 35,880 | $ | 35,743 | $ | 36,264 | $ | 25,602 | ||||||||||||
Total assets |
187,760 | 170,309 | 144,415 | 147,861 | 119,764 | 106,157 | ||||||||||||||||||
Shareholders equity |
$ | 141,214 | $ | 133,251 | $ | 113,556 | $ | 118,275 | $ | 98,268 | $ | 84,389 | ||||||||||||
Long-term debt / total capitalization |
0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | ||||||||||||
Inventory turnover (COS / average inventory) |
5.6 | 5.3 | 5.2 | 5.3 | 5.4 | 5.9 | ||||||||||||||||||
CASH FLOWS PROVIDED BY (USED IN) |
||||||||||||||||||||||||
Operating activities |
$ | 42,085 | $ | 47,643 | $ | 39,037 | $ | 27,151 | $ | 26,313 | $ | 21,189 | ||||||||||||
Investing activities |
(11,418 | ) | (13,396 | ) | (7,000 | ) | (4,433 | ) | (18,664 | ) | (11,435 | ) | ||||||||||||
Financing activities |
(33,834 | ) | (9,867 | ) | (36,969 | ) | (8,270 | ) | (10,277 | ) | (6,946 | ) | ||||||||||||
Change in cash |
(3,121 | ) | 24,417 | (5,005 | ) | 14,489 | (2,626 | ) | 2,790 | |||||||||||||||
COMMON
STOCK DATA |
||||||||||||||||||||||||
EPS basic |
$ | 2.24 | $ | 1.58 | $ | 1.71 | $ | 1.54 | $ | 1.41 | $ | 1.34 | ||||||||||||
EPS diluted |
2.24 | 1.58 | 1.70 | 1.53 | 1.39 | 1.32 | ||||||||||||||||||
Cash dividends per share(a) |
1.89 | 0.55 | 1.77 | 0.44 | 0.36 | 0.28 | ||||||||||||||||||
Book value per share (b) |
7.81 | 7.38 | 6.30 | 6.52 | 5.45 | 4.67 | ||||||||||||||||||
Stock price range during the year |
||||||||||||||||||||||||
High |
$ | 49.59 | $ | 33.18 | $ | 47.82 | $ | 45.85 | $ | 42.70 | $ | 33.15 | ||||||||||||
Low |
26.54 | 15.37 | 20.60 | 26.20 | 25.46 | 16.54 | ||||||||||||||||||
Close |
$ | 47.24 | $ | 28.58 | $ | 21.81 | $ | 30.02 | $ | 28.43 | $ | 31.60 | ||||||||||||
Shares and stock units outstanding, year-end |
18,089 | 18,051 | 18,027 | 18,130 | 18,044 | 18,072 | ||||||||||||||||||
Number of shareholders, year-end |
7,456 | 7,767 | 8,268 | 8,700 | 8,992 | 9,263 | ||||||||||||||||||
OTHER DATA |
||||||||||||||||||||||||
Price / earnings ratio (c) |
21.1 | 18.1 | 12.8 | 19.6 | 20.5 | 23.9 | ||||||||||||||||||
Average number of employees |
1,036 | 930 | 1,070 | 930 | 884 | 845 | ||||||||||||||||||
Sales per employee |
$ | 304 | $ | 256 | $ | 262 | $ | 252 | $ | 246 | $ | 242 | ||||||||||||
Backlog |
$ | 75,972 | $ | 74,718 | $ | 80,361 | $ | 66,628 | $ | 44,237 | $ | 43,619 | ||||||||||||
(a) | Includes special dividends of $1.25 per share in fiscal 2011 and 2009. | |
(b) | Shareholders equity divided by common shares and stock units outstanding. | |
(c) | Closing stock price divided by EPS diluted. |
12
For the years ended January 31 | ||||||||||||||||||||||||
2011 | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
APPLIED TECHNOLOGY DIVISION |
||||||||||||||||||||||||
Sales |
$ | 100,090 | $ | 86,217 | $ | 103,098 | $ | 64,291 | $ | 45,515 | $ | 47,506 | ||||||||||||
Operating income |
31,135 | 25,722 | 33,884 | 19,102 | 10,111 | 13,586 | ||||||||||||||||||
Assets |
52,669 | 51,029 | 48,881 | 36,938 | 27,629 | 30,047 | ||||||||||||||||||
Capital expenditures |
1,769 | 941 | 2,674 | 1,008 | 577 | 938 | ||||||||||||||||||
Depreciation and amortization |
2,238 | 1,677 | 1,383 | 1,125 | 1,142 | 1,085 | ||||||||||||||||||
ENGINEERED FILMS DIVISION |
||||||||||||||||||||||||
Sales |
$ | 105,838 | $ | 63,783 | $ | 89,858 | $ | 85,316 | $ | 91,082 | $ | 82,794 | ||||||||||||
Operating income |
19,622 | (b) | 10,232 | 10,919 | 17,739 | 23,440 | 19,907 | |||||||||||||||||
Assets |
46,519 | 35,999 | 35,862 | 43,688 | 41,988 | 33,512 | ||||||||||||||||||
Capital expenditures |
8,450 | 1,460 | 3,120 | 4,012 | 13,266 | 7,359 | ||||||||||||||||||
Depreciation and amortization |
3,452 | 3,707 | 4,303 | 4,046 | 2,887 | 2,436 | ||||||||||||||||||
AEROSTAR DIVISION |
||||||||||||||||||||||||
Sales |
$ | 48,787 | $ | 27,244 | $ | 27,186 | $ | 17,290 | $ | 14,654 | $ | 18,009 | ||||||||||||
Operating income |
9,407 | 5,634 | 4,219 | 1,506 | 707 | 2,133 | ||||||||||||||||||
Assets |
18,140 | 10,462 | 8,744 | 9,941 | 8,161 | 6,837 | ||||||||||||||||||
Capital expenditures |
2,190 | 332 | 383 | 156 | 812 | 179 | ||||||||||||||||||
Depreciation and amortization |
757 | 398 | 444 | 499 | 375 | 359 | ||||||||||||||||||
ELECTRONIC SYSTEMS DIVISION |
||||||||||||||||||||||||
Sales |
$ | 65,852 | $ | 63,525 | $ | 61,983 | $ | 67,987 | $ | 66,278 | $ | 56,219 | ||||||||||||
Operating income |
9,917 | 8,979 | 5,926 | 10,365 | 10,850 | 8,916 | ||||||||||||||||||
Assets |
23,385 | 21,216 | 26,847 | 25,865 | 25,175 | 20,191 | ||||||||||||||||||
Capital expenditures |
609 | 290 | 1,399 | 1,077 | 1,357 | 1,612 | ||||||||||||||||||
Depreciation and amortization |
823 | 939 | 1,159 | 1,237 | 1,086 | 871 | ||||||||||||||||||
INTERSEGMENT ELIMINATIONS |
||||||||||||||||||||||||
Sales |
||||||||||||||||||||||||
Engineered Films Division |
$ | (307 | ) | $ | (210 | ) | $ | (210 | ) | $ | (533 | ) | $ | | $ | | ||||||||
Aerostar |
(32 | ) | (1 | ) | (25 | ) | (16 | ) | | | ||||||||||||||
Electronic Systems Division |
(5,520 | ) | (2,776 | ) | (1,977 | ) | (378 | ) | | | ||||||||||||||
Operating income |
(94 | ) | 60 | (52 | ) | (100 | ) | | | |||||||||||||||
Assets |
(186 | ) | (92 | ) | (152 | ) | (100 | ) | | | ||||||||||||||
REPORTABLE SEGMENTS TOTAL |
||||||||||||||||||||||||
Sales |
$ | 314,708 | $ | 237,782 | $ | 279,913 | $ | 233,957 | $ | 217,529 | $ | 204,528 | ||||||||||||
Operating income |
69,987 | (b) | 50,627 | 54,896 | 48,612 | 45,108 | 44,542 | |||||||||||||||||
Assets |
140,527 | 118,614 | 120,182 | 116,332 | 102,953 | 90,587 | ||||||||||||||||||
Capital expenditures |
13,018 | 3,023 | 7,576 | 6,253 | 16,012 | 10,088 | ||||||||||||||||||
Depreciation and amortization |
7,270 | 6,721 | 7,289 | 6,907 | 5,490 | 4,751 | ||||||||||||||||||
CORPORATE & OTHER(a) |
||||||||||||||||||||||||
Operating loss (from admin expenses) |
$ | (9,784 | ) | $ | (7,407 | ) | $ | (8,502 | ) | $ | (7,467 | ) | $ | (6,806 | ) | $ | (7,258 | ) | ||||||
Assets |
47,233 | 51,695 | 24,233 | 31,529 | 16,811 | 15,570 | ||||||||||||||||||
Capital expenditures |
954 | 279 | 425 | 382 | 510 | 270 | ||||||||||||||||||
Depreciation and amortization |
361 | 387 | 469 | 437 | 395 | 400 | ||||||||||||||||||
TOTAL COMPANY |
||||||||||||||||||||||||
Sales |
$ | 314,708 | $ | 237,782 | $ | 279,913 | $ | 233,957 | $ | 217,529 | $ | 204,528 | ||||||||||||
Operating income |
60,203 | (b) | 43,220 | 46,394 | 41,145 | 38,302 | 37,284 | |||||||||||||||||
Assets |
187,760 | 170,309 | 144,415 | 147,861 | 119,764 | 106,157 | ||||||||||||||||||
Capital expenditures |
13,972 | 3,302 | 8,001 | 6,635 | 16,522 | 10,358 | ||||||||||||||||||
Depreciation and amortization |
7,631 | 7,108 | 7,758 | 7,344 | 5,885 | 5,151 | ||||||||||||||||||
(a) | Assets are principally cash, investments and deferred taxes. | |
(b) | Includes a $451 pre-tax gain on disposition of assets. |
13
| Executive Summary | ||
| Results of Operations Segment Analysis | ||
| Outlook | ||
| Liquidity and Capital Resources | ||
| Off-balance Sheet Arrangements and Contractual Obligations | ||
| Critical Accounting Estimates | ||
| New Accounting Standards |
| Consolidated net sales, gross margins, operating income, operating margins, net income and earnings per share | ||
| Cash flow from operations and shareholder returns | ||
| Return on sales, assets and equity | ||
| Segment net sales, gross profit, gross margins, operating income and operating margins |
14
For the years ended January 31 | ||||||||||||||||||||
% | % | |||||||||||||||||||
dollars in thousands, except per-share data | 2011 | change | 2010 | change | 2009 | |||||||||||||||
Results of Operations |
||||||||||||||||||||
Net sales |
$ | 314,708 | 32 | % | $ | 237,782 | (15 | )% | $ | 279,913 | ||||||||||
Gross margins (a) |
29.1 | % | 28.5 | % | 26.2 | % | ||||||||||||||
Operating income |
$ | 60,203 | 39 | % | $ | 43,220 | (7 | )% | $ | 46,394 | ||||||||||
Operating margins (a) |
19.1 | % | 18.2 | % | 16.6 | % | ||||||||||||||
Net income |
$ | 40,537 | 42 | % | $ | 28,574 | (7 | )% | $ | 30,770 | ||||||||||
Diluted income per share |
$ | 2.24 | 42 | % | $ | 1.58 | (7 | )% | $ | 1.70 | ||||||||||
Cash Flow and Payments to Shareholders |
||||||||||||||||||||
Cash flow from operating activities |
$ | 42,085 | $ | 47,643 | $ | 39,037 | ||||||||||||||
Cash dividends |
$ | 34,095 | $ | 9,911 | $ | 31,884 | ||||||||||||||
Common stock repurchases |
| | 5,180 | |||||||||||||||||
Cash returned to shareholders |
$ | 34,095 | $ | 9,911 | $ | 37,064 | ||||||||||||||
Performance Measures |
||||||||||||||||||||
Return on net sales(b) |
12.9 | % | 12.0 | % | 11.0 | % | ||||||||||||||
Return on average assets(c) |
22.6 | % | 18.2 | % | 21.1 | % | ||||||||||||||
Return on beginning equity(d) |
30.4 | % | 25.2 | % | 26.0 | % |
(a) | The companys gross and operating margins may not be comparable to industry peers due to variability in the classification of expenses across industries in which the company operates. | |
(b) | Net income divided by sales | |
(c) | Net income divided by average assets | |
(d) | Net income divided by beginning equity |
15
16
dollars in thousands | 2011 | % change | 2010 | % change | 2009 | |||||||||||||||
Net sales |
$ | 100,090 | 16 | % | $ | 86,217 | (16 | )% | $ | 103,098 | ||||||||||
Gross profit |
45,106 | 19 | % | 37,889 | (19 | )% | 46,591 | |||||||||||||
Gross margins |
45.1 | % | 43.9 | % | 45.2 | % | ||||||||||||||
Operating income |
$ | 31,135 | 21 | % | $ | 25,722 | (24 | )% | $ | 33,884 | ||||||||||
Operating margins |
31.1 | % | 29.8 | % | 32.9 | % |
| Market conditions. U.S. farm fundamentals were strong as commodity pricescorn, soybeans and other feed grains remained above historical levels. In addition, global market conditions were healthy as population and income growth in emerging economies continued to spur increased demand for food. | ||
| Sales volume and selling prices. Fiscal 2011 sales growth was driven by higher volume and modest selling price increases. The growth in volume reflects solid year-over-year demand for Slingshot, application controls and guidance and steering products. | ||
| New product sales. Year-to-date new product sales reflected the success of Slingshotan information platform which improves data collection, transmission, storage and analysis and provides RTK correction of GPS signals for high accuracy steering solutions. | ||
| International sales. Net sales outside the U.S. accounted for 21% of segment sales in fiscal 2011 versus 20% in fiscal 2010. International sales of $21.3 million rose $4.2 million (25%) year-over-year led by strong Slingshot demand in Canada. Economic growth and strong farm fundamentals in Argentina and Brazil drove strong overall demand in South America. This growth was partially offset by a decrease in Australian sales due to weak market conditions. | ||
| Gross Margins. Gross margins of 45.1% in fiscal 2011 rose from 43.9% in fiscal 2010 due to the positive effect of higher sales and strong operating leverage on profitability. | ||
| Operating expenses. Full-year operating expenses decreased from 14.1% of sales in fiscal 2010 to 14.0% in fiscal 2011. Strong sales and growth opportunities drove a $1.1 million (16%) increase in selling expenses and research and development expenses increased $0.7 million (14%) to support product development and strategic initiatives. |
| Economic uncertainty. The governments calendar 2009 farm income forecast was significantly lower than 2008 actual levels. Farm production costs declined from prior-year levels; however, they were outpaced by the decline in crop prices. Expectations of lower farm income and economic uncertainty led growers and custom spray applicators to defer purchases. These factors had a negative impact on substantially all of the segments product categories. | ||
| New product sales. Fiscal 2010 new product sales decreased from one year earlier due to the highly successful fiscal 2009 launch of innovative field computers. | ||
| International sales. International sales of $17.1 million fell $1.7 million (9%) year-over-year. Net sales outside the U.S. accounted for 20% of segment sales in fiscal 2010 versus 18% in fiscal 2009. Declines in some markets were partially offset by expansion into regions not previously served. | ||
| Negative operating leverage. Gross margins of 43.9% in fiscal 2010 fell from 45.2% in fiscal 2009 reflecting the negative |
17
impact of falling sales and operating leverage on profitability. | |||
| Operating expenses. Full-year operating expenses increased to 14.1% of sales in fiscal 2010 from 12.3% in fiscal 2009. Selling expenses decreased $0.5 million (7%) and lagged the drop in sales. Research and development expenses were flat year-over-year. |
dollars in thousands | 2011 | % change | 2010 | % change | 2009 | |||||||||||||||
Net sales |
$ | 105,838 | 66 | % | $ | 63,783 | (29 | )% | $ | 89,858 | ||||||||||
Gross profit |
22,708 | 75 | % | 13,013 | (10 | )% | 14,502 | |||||||||||||
Gross margins |
21.5 | % | 20.4 | % | 16.1 | % | ||||||||||||||
Operating income |
$ | 19,622 | (a) | 92 | % | $ | 10,232 | (6 | )% | $ | 10,919 | |||||||||
Operating margins |
18.5 | % | 16.0 | % | 12.2 | % |
(a) | Includes a $451 pre-tax gain on the disposition of assets. |
| Improved market conditions. Business activity and confidence rose as credit markets improved and asset values stabilized. Crude oil prices rose to levels adequate to support increased drilling activity and strengthened energy market demand for pit liners. Similarly, as credit began flowing and economic uncertainty diminished, the construction and agriculture markets rose from recessionary levels. | ||
| Sales volume and selling prices. Input cost increases drove a 13% increase in selling prices. Sales volume, as measured by pounds shipped, increased over 50%, as Engineered Films largest marketsenergy and constructionrebounded from prior year depressed levels. Recovery of crude oil prices from their lows in early calendar 2009 drove additional oil and gas drilling activity and increased demand for pit liners as sales to the energy market more than doubled. Sales of industrial and construction films rose double digits. Deliveries of agriculture films rose more than 60%. Sales of FeedFresh silage covers gained traction due to healthy farm conditions and broadened appreciation of the value-added benefits of this highly engineered film. Grain cover sales improved year-over-year due to strong yields and a short harvest cycle. | ||
| Capacity Utilization. Full-year operating margins expanded from 16.0% to 18.5% as a result of improved capacity utilization. Fourth quarter profit margins fell from 14.4% to 12.5% as a result of less favorable leverage and increased purchases of outside materials due to capacity constraints caused by planned maintenance. | ||
| Operating expenses. Full-year operating expenses were 3.3% of sales in fiscal 2011 versus 4.4% in fiscal 2010. The increase in selling expenses of $0.7 million (30%) lagged the 66% increase in sales. Research and development expenses were flat year-over-year. |
| Depressed markets. Dysfunctional credit markets and plunging asset values resulted in weak economic activity. Energy prices plunged as a result of the reduction in economic activity, leading to the decline in the oil and gas exploration market. Similarly, as the flow of credit slowed and economic uncertainty rose, the commercial construction markets suffered. Agricultural commodity prices also fell sharply, resulting in a softening of the agricultural market. The impact of the recession was felt across all of the divisions markets, with sales to the two largest marketsenergy and construction decreasing approximately 40% and 25%, respectively. | ||
| Sales volume and selling prices. Selling prices decreased approximately 16% and sales volume as measured by pounds |
18
shipped fell 17% year-over-year. These negative trends reflected market disruptions, competitive pricing pressures stemming from excess industry capacity and lower resin costs due to relatively low natural gas prices. | |||
| Cost containment. Management responded quickly and decisively to the freefall in business activity experienced in the fourth quarter of fiscal 2009. The necessary steps were taken to align the division with the weak business environment, by tightly managing expenses and decreasing headcount. | ||
| Margin preservation. Poor economic conditions, volatile material costs and competitive pricing pressures continued to squeeze margins. However, the impact of these factors was more than offset by opportune purchases of prime grade resin and cost containments. Consequently, gross margins increased from 16.1% to 20.4%. | ||
| Operating expenses. Full-year operating expenses increased to 4.4% of sales in fiscal 2010 from 4.0% in fiscal 2009. Research and development expenses were flat year-over-year. Selling expenses of $2.4 million decreased 25% year-over-year through reductions in personnel and promotional expenses. However, this lagged the 29% drop in sales. |
dollars in thousands | 2011 | % change | 2010 | % change | 2009 | |||||||||||||||
Net sales |
$ | 48,787 | 79 | % | $ | 27,244 | 0 | % | $ | 27,186 | ||||||||||
Gross profit |
12,475 | 88 | % | 6,632 | 28 | % | 5,189 | |||||||||||||
Gross margins |
25.6 | % | 24.3 | % | 19.1 | % | ||||||||||||||
Operating income |
$ | 9,407 | 67 | % | $ | 5,634 | 34 | % | $ | 4,219 | ||||||||||
Operating margins |
19.3 | % | 20.7 | % | 15.5 | % |
| Tethered aerostats. Aerostar capitalized on strong demand from the U.S. military for persistent ground surveillance systems to be deployed in Afghanistan. This segment provides the helium filled blimp, along with the fiber optics and deployment system. The blimp is then equipped with surveillance equipment and flown on a tether at over 1,500 feet above ground level to enable persistent surveillance of a wide area. | ||
| Volatility in aerostat deliveries. Sequentially, fiscal 2011 quarterly sales of aerostats varied materially ($8.2 million in the first quarter; $3.2 million in the second quarter; $7.4 million in the third quarter and $3.6 million in the fourth quarter) as design changes and funding shifts have impacted the timing of deliveries. | ||
| Military parachutes. Fiscal 2011 full-year and fourth quarter parachute revenue increased over 20% as the T-11 parachutes ramped to full production and deliveries under the T-11 spares contract began. | ||
| Gross Margins. Full-year gross margins improved year-over-year. The negative effect of T-11 parachute start-up costs in the first half of the year and increased overhead was partially offset by a more favorable product mix as the relative contribution of tethered aerostats to total sales grew. | ||
| Operating expenses. Operating expenses of $3.1 million or 6.3% of sales increased $2.1 million from $1.0 million or 3.7% of sales as a result of higher selling expenses and significant investments in research and development primarily to support aerostat development. |
| Sales volumes. Flat year-over-year sales reflected increased deliveries of MC-6 Army parachutes, aerostats and research balloons, offset by decreased deliveries of protective wear due to the completion of a large contract in January 2009. | ||
| Margin expansion. The improvement in gross and operating margins came from increased parachute manufacturing efficiencies. Final production runs and deliveries were made at the end of fiscal 2010 on the MC-6 parachute contract. Fiscal 2010 was the most profitable year for the program, primarily due to the higher efficiency level attained. |
19
| Operating expenses. Operating expenses were relatively flat year-over-year. |
dollars in thousands | 2011 | % change | 2010 | % change | 2009 | |||||||||||||||
Net sales |
$ | 65,852 | 4 | % | $ | 63,525 | 2 | % | $ | 61,983 | ||||||||||
Gross profit |
11,234 | 10 | % | 10,258 | 42 | % | 7,218 | |||||||||||||
Gross margins |
17.1 | % | 16.1 | % | 11.6 | % | ||||||||||||||
Operating income |
$ | 9,917 | 10 | % | $ | 8,979 | 52 | % | $ | 5,926 | ||||||||||
Operating margins |
15.1 | % | 14.1 | % | 9.6 | % |
| Sales volume. Fiscal 2011 revenue was positively impacted by avionics growth and increased sourcing of assemblies to Applied Technology partially offset by weaker deliveries of circuit boards for secure communication devices. | ||
| Profit margins. Product mix had a favorable impact on full-year operating margins. Fourth quarter operating margins of 12.2% were down from 14.2% in the fourth quarter of fiscal 2010 due to a less favorable mix and increased overhead costs to compensate for supply chain weakness on flat sales volume. | ||
| Operating expenses. Fiscal 2011 operating expenses were relatively unchanged from fiscal 2010 levels. |
| Growth from existing customers. The rise in sales was attributable to higher deliveries of avionics and secure communication electronics to meet increased demand from government agencies and the aerospace market, partially offset by a smaller customer base. | ||
| Margin expansion. Gross margins expanded as a result of positive operating leverage produced through increased sales to existing customers, favorable product mix and cost controlssuch as headcount reduction and facility consolidation. | ||
| Operating expenses. Operating expenses were relatively flat year over year. |
For the years ended January 31 | ||||||||||||
dollars in thousands | 2011 | 2010 | 2009 | |||||||||
Administrative expenses |
$ | 9,784 | $ | 7,407 | $ | 8,502 | ||||||
Administrative expenses as a % of sales |
3.1 | % | 3.1 | % | 3.0 | % | ||||||
Interest income and other, net |
$ | 79 | $ | 102 | $ | 507 | ||||||
Effective tax rate |
32.8 | % | 34.0 | % | 34.4 | % |
20
21
22
Less than | 1-3 | 3-5 | More than | |||||||||||||||||
dollars in thousands | Total | 1 year | years | years | 5 years | |||||||||||||||
Contractual Obligations: |
||||||||||||||||||||
Line of credit(a) |
$ | | $ | | $ | | $ | | $ | | ||||||||||
Operating leases |
355 | 237 | 118 | | | |||||||||||||||
Postretirement benefits |
5,969 | 212 | 460 | 504 | 4,793 | |||||||||||||||
Unconditional purchase obligations |
56,812 | 56,812 | | | | |||||||||||||||
Uncertain tax positions(b) |
| | | | | |||||||||||||||
$ | 63,136 | $ | 57,261 | $ | 578 | $ | 504 | $ | 4,793 | |||||||||||
(a) | $8.0 million line bears interest at 4.0% as of January 31, 2011 and expires July 2011. The line of credit is reduced by outstanding letters of credit totaling $1.3 million. | |
(b) | The total liability for uncertain tax positions at January 31, 2011, was $4.2 million. The company is not able to reasonably estimate the timing of future payments relating to non-current tax benefits. |
23
24
ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
25
ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
Page(s) | ||||
27 | ||||
28 | ||||
29 | ||||
30 | ||||
31 | ||||
32 | ||||
33 | ||||
10 |
26
/s/ Daniel A. Rykhus
|
/s/
Thomas Iacarella |
||
Daniel A. Rykhus President & Chief Executive Officer |
Thomas Iacarella Vice President & Chief Financial Officer |
27
28
As of January 31 | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
ASSETS |
||||||||||||
Current assets |
||||||||||||
Cash and cash equivalents |
$ | 37,563 | $ | 40,684 | $ | 16,267 | ||||||
Short-term investments |
1,000 | 3,000 | | |||||||||
Accounts receivable, net |
39,967 | 34,327 | 40,278 | |||||||||
Inventories |
43,679 | 34,475 | 35,977 | |||||||||
Deferred income taxes |
2,733 | 2,471 | 2,542 | |||||||||
Other current assets |
3,239 | 2,790 | 3,009 | |||||||||
Total current assets |
128,181 | 117,747 | 98,073 | |||||||||
Property, plant and equipment, net |
41,522 | 33,029 | 35,880 | |||||||||
Goodwill |
10,777 | 10,699 | 7,450 | |||||||||
Other assets, net |
7,280 | 8,834 | 3,012 | |||||||||
Total assets |
$ | 187,760 | $ | 170,309 | $ | 144,415 | ||||||
LIABILITIES AND SHAREHOLDERS EQUITY |
||||||||||||
Current liabilities |
||||||||||||
Accounts payable |
$ | 16,715 | $ | 12,398 | $ | 9,433 | ||||||
Accrued liabilities |
16,096 | 12,256 | 13,281 | |||||||||
Customer advances |
1,524 | 1,306 | 608 | |||||||||
Total current liabilities |
34,335 | 25,960 | 23,322 | |||||||||
Other liabilities |
12,211 | 11,098 | 7,537 | |||||||||
Commitments and contingencies |
||||||||||||
Shareholders equity |
141,214 | 133,251 | 113,556 | |||||||||
Common shares, par value $1.00 per share |
||||||||||||
Authorized 100,000 |
||||||||||||
Outstanding 2011: 18,062; 2010: 18,030;
2009: 18,012 |
||||||||||||
Total liabilities and shareholders equity |
$ | 187,760 | $ | 170,309 | $ | 144,415 | ||||||
29
For the years ended January 31 | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Net sales |
$ | 314,708 | $ | 237,782 | $ | 279,913 | ||||||
Cost of sales |
223,279 | 169,930 | 206,465 | |||||||||
Gross profit |
91,429 | 67,852 | 73,448 | |||||||||
Research and development expenses |
7,604 | 5,843 | 5,848 | |||||||||
Selling, general and administrative expenses |
24,073 | 18,789 | 21,206 | |||||||||
Gain on disposition of assets |
(451 | ) | | | ||||||||
Operating income |
60,203 | 43,220 | 46,394 | |||||||||
Interest income and other, net |
(79 | ) | (102 | ) | (507 | ) | ||||||
Income before income taxes |
60,282 | 43,322 | 46,901 | |||||||||
Income taxes |
19,745 | 14,748 | 16,131 | |||||||||
Net income |
$ | 40,537 | $ | 28,574 | $ | 30,770 | ||||||
Net income per common share: |
||||||||||||
- Basic |
$ | 2.24 | $ | 1.58 | $ | 1.71 | ||||||
- Diluted |
$ | 2.24 | $ | 1.58 | $ | 1.70 | ||||||
30
Accumulated | ||||||||||||||||||||||||||||
$1 Par | other | |||||||||||||||||||||||||||
common | Paid-in | Treasury stock | Retained | comprehensive | ||||||||||||||||||||||||
stock | capital | Shares | Cost | earnings | income (loss) | Total | ||||||||||||||||||||||
Balance January 31, 2008 |
$ | 32,408 | $ | 3,436 | (14,288 | ) | $ | (48,182 | ) | $ | 132,219 | $ | (1,606 | ) | $ | 118,275 | ||||||||||||
Net income |
| | | | 30,770 | | 30,770 | |||||||||||||||||||||
Postretirement benefits, net of $375 income tax |
| | | | | 698 | 698 | |||||||||||||||||||||
Foreign currency translation |
| | | | | (246 | ) | (246 | ) | |||||||||||||||||||
Total comprehensive income |
31,222 | |||||||||||||||||||||||||||
Dividends ($.52 per share) |
| 7 | | | (9,381 | ) | | (9,374 | ) | |||||||||||||||||||
Dividends (special$1.25 per share) |
| 18 | | | (22,528 | ) | | (22,510 | ) | |||||||||||||||||||
Purchase of stock |
| | (161 | ) | (5,180 | ) | | | (5,180 | ) | ||||||||||||||||||
Stock surrendered upon exercise of stock options |
(34 | ) | (1,258 | ) | | | | | (1,292 | ) | ||||||||||||||||||
Employees stock options exercised |
83 | 1,176 | | | | | 1,259 | |||||||||||||||||||||
Share-based compensation |
4 | 1,024 | | | | | 1,028 | |||||||||||||||||||||
Tax benefit from exercise of stock options |
| 128 | | | | | 128 | |||||||||||||||||||||
Balance January 31, 2009 |
32,461 | 4,531 | (14,449 | ) | (53,362 | ) | 131,080 | (1,154 | ) | 113,556 | ||||||||||||||||||
Net income |
| | | | 28,574 | | 28,574 | |||||||||||||||||||||
Postretirement benefits, net of ($122) income tax |
| | | | | (226 | ) | (226 | ) | |||||||||||||||||||
Foreign currency translation |
| | | | | 179 | 179 | |||||||||||||||||||||
Total comprehensive income |
28,527 | |||||||||||||||||||||||||||
Dividends ($.55 per share) |
| 11 | | | (9,922 | ) | | (9,911 | ) | |||||||||||||||||||
Stock surrendered upon exercise of stock options |
(51 | ) | (1,319 | ) | | | | | (1,370 | ) | ||||||||||||||||||
Employees stock options exercised |
65 | 1,374 | | | | | 1,439 | |||||||||||||||||||||
Share-based compensation |
3 | 1,031 | | | | | 1,034 | |||||||||||||||||||||
Tax cost from exercise of stock options |
| (24 | ) | | | | | (24 | ) | |||||||||||||||||||
Balance January 31, 2010 |
32,478 | 5,604 | (14,449 | ) | (53,362 | ) | 149,732 | (1,201 | ) | 133,251 | ||||||||||||||||||
Net income |
| | | | 40,537 | | 40,537 | |||||||||||||||||||||
Postretirement benefits, net of ($25) income tax |
| | | | | (46 | ) | (46 | ) | |||||||||||||||||||
Foreign currency translation |
| | | | | 127 | 127 | |||||||||||||||||||||
Total comprehensive income |
40,618 | |||||||||||||||||||||||||||
Dividends ($.64 per share) |
| 17 | | | (11,563 | ) | | (11,546 | ) | |||||||||||||||||||
Dividends (special$1.25 per share) |
| 32 | | | (22,581 | ) | | (22,549 | ) | |||||||||||||||||||
Stock surrendered upon exercise of stock options |
(79 | ) | (3,038 | ) | | | | | (3,117 | ) | ||||||||||||||||||
Employees stock options exercised |
112 | 3,257 | | | | | 3,369 | |||||||||||||||||||||
Share-based compensation |
| 1,179 | | | | | 1,179 | |||||||||||||||||||||
Tax benefit from exercise of stock options |
| 9 | | | | | 9 | |||||||||||||||||||||
Balance January 31, 2011 |
$ | 32,511 | $ | 7,060 | (14,449 | ) | $ | (53,362 | ) | $ | 156,125 | $ | (1,120 | ) | $ | 141,214 | ||||||||||||
31
For the years ended January 31 | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Cash flows from operating activities: |
||||||||||||
Net income |
$ | 40,537 | $ | 28,574 | $ | 30,770 | ||||||
Adjustments to reconcile net income to net cash provided by
operating activities: |
||||||||||||
Depreciation |
6,512 | 6,611 | 7,345 | |||||||||
Amortization of intangible assets |
1,119 | 497 | 413 | |||||||||
Gain on disposition of assets |
(451 | ) | | | ||||||||
Change in fair value of acquisition-related contingent
consideration |
274 | 94 | | |||||||||
Earnings of equity investee |
(195 | ) | (10 | ) | | |||||||
Provision for losses on accounts receivable, net of recoveries |
| (183 | ) | 629 | ||||||||
Deferred income taxes |
423 | 95 | 216 | |||||||||
Share-based compensation expense |
1,179 | 1,034 | 1,028 | |||||||||
Change in operating assets and liabilities |
(7,273 | ) | 10,935 | (1,346 | ) | |||||||
Other operating activities, net |
(40 | ) | (4 | ) | (18 | ) | ||||||
Net cash provided by operating activities |
42,085 | 47,643 | 39,037 | |||||||||
Cash flows from investing activities: |
||||||||||||
Capital expenditures |
(13,972 | ) | (3,302 | ) | (8,001 | ) | ||||||
Purchases of short-term investments |
(1,700 | ) | (3,500 | ) | (2,100 | ) | ||||||
Sales of short-term investments |
3,700 | 500 | 3,600 | |||||||||
Purchase of equity investment |
| (5,000 | ) | | ||||||||
Payments related to business acquisitions |
(399 | ) | (2,000 | ) | (488 | ) | ||||||
Proceeds from disposition of assets |
888 | | | |||||||||
Other investing activities, net |
65 | (94 | ) | (11 | ) | |||||||
Net cash used in investing activities |
(11,418 | ) | (13,396 | ) | (7,000 | ) | ||||||
Cash flows from financing activities: |
||||||||||||
Dividends paid |
(34,095 | ) | (9,911 | ) | (31,884 | ) | ||||||
Purchases of treasury stock |
| | (5,180 | ) | ||||||||
Excess tax benefit on stock option exercises |
9 | | 128 | |||||||||
Other financing activities, net |
252 | 44 | (33 | ) | ||||||||
Net cash used in financing activities |
(33,834 | ) | (9,867 | ) | (36,969 | ) | ||||||
Effect of exchange rate changes on cash |
46 | 37 | (73 | ) | ||||||||
Net increase (decrease) in cash and cash equivalents |
(3,121 | ) | 24,417 | (5,005 | ) | |||||||
Cash and cash equivalents at beginning of year |
40,684 | 16,267 | 21,272 | |||||||||
Cash and cash equivalents at end of year |
$ | 37,563 | $ | 40,684 | $ | 16,267 | ||||||
32
33
Building and improvements |
15-39 years | |||
Manufacturing equipment by segment |
||||
Applied Technology |
3-5 years | |||
Engineered Films |
5-12 years | |||
Aerostar |
3-5 years | |||
Electronic Systems |
3-5 years | |||
Furniture, fixtures, office equipment and other |
3-7 years |
34
Research and development | ||||
Cost of sales | expenses | Selling, general and administrative expenses | ||
Direct material costs
|
Personnel costs | Personnel costs | ||
Material acquisition and handling costs
|
Professional service fees | Professional service fees | ||
Direct labor
|
Material and supplies | Advertising | ||
Factory overhead including depreciation
|
Facility allocation | Promotions | ||
Inventory obsolescence
|
Information technology equipment depreciation | |||
Product warranties
|
Office supplies |
35
As of January 31 | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Accounts receivable, net: |
||||||||||||
Trade accounts |
$ | 40,267 | $ | 34,624 | $ | 40,891 | ||||||
Allowance for doubtful accounts |
(300 | ) | (297 | ) | (613 | ) | ||||||
$ | 39,967 | $ | 34,327 | $ | 40,278 | |||||||
Inventories: |
||||||||||||
Finished goods |
$ | 7,994 | $ | 6,283 | $ | 6,062 | ||||||
In process |
5,424 | 4,172 | 3,258 | |||||||||
Materials |
30,261 | 24,020 | 26,657 | |||||||||
$ | 43,679 | $ | 34,475 | $ | 35,977 | |||||||
Other current assets: |
||||||||||||
Insurance policy benefit |
$ | 1,909 | $ | 2,300 | $ | 2,119 | ||||||
Prepaid expenses and other |
1,330 | 490 | 890 | |||||||||
$ | 3,239 | $ | 2,790 | $ | 3,009 | |||||||
Property, plant and equipment, net: |
||||||||||||
Land |
$ | 1,798 | $ | 1,227 | $ | 1,227 | ||||||
Buildings and improvements |
24,972 | 22,973 | 22,593 | |||||||||
Machinery and equipment |
75,310 | 64,119 | 62,504 | |||||||||
Accumulated depreciation |
(60,558 | ) | (55,290 | ) | (50,444 | ) | ||||||
$ | 41,522 | $ | 33,029 | $ | 35,880 | |||||||
Other assets, net: |
||||||||||||
Amortizable assets: |
||||||||||||
Purchased technology |
$ | 3,200 | $ | 3,200 | $ | 2,300 | ||||||
Other intangibles |
1,660 | 1,633 | 1,314 | |||||||||
Accumulated amortization |
(3,275 | ) | (2,648 | ) | (2,143 | ) | ||||||
1,585 | 2,185 | 1,471 | ||||||||||
Investment in affiliate |
4,728 | 5,010 | | |||||||||
Deferred income taxes |
924 | 1,580 | 1,482 | |||||||||
Other, net |
43 | 59 | 59 | |||||||||
$ | 7,280 | $ | 8,834 | $ | 3,012 | |||||||
Accrued liabilities: |
||||||||||||
Salaries and benefits |
$ | 3,264 | $ | 1,148 | $ | 1,891 | ||||||
Vacation |
3,186 | 2,693 | 2,581 | |||||||||
401(k) contributions |
253 | 180 | 1,333 | |||||||||
Insurance obligations |
3,356 | 3,959 | 3,615 | |||||||||
Profit sharing |
1,627 | 217 | 436 | |||||||||
Warranties |
1,437 | 1,259 | 1,004 | |||||||||
Taxes accrued and withheld |
1,453 | 1,574 | 1,266 | |||||||||
Other |
1,520 | 1,226 | 1,155 | |||||||||
$ | 16,096 | $ | 12,256 | $ | 13,281 | |||||||
Other liabilities: |
||||||||||||
Postretirement benefits |
$ | 5,757 | $ | 5,283 | $ | 4,637 | ||||||
Acquisition-related contingent consideration |
2,230 | 2,301 | | |||||||||
Uncertain tax positions |
4,224 | 3,514 | 2,900 | |||||||||
$ | 12,211 | $ | 11,098 | $ | 7,537 | |||||||
36
NOTE 3 | ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) |
As of January 31 | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Foreign currency translation |
$ | 183 | $ | 56 | $ | (123 | ) | |||||
Postretirement benefits, net of tax |
(1,303 | ) | (1,257 | ) | (1,031 | ) | ||||||
Total accumulated other comprehensive loss |
$ | (1,120 | ) | $ | (1,201 | ) | $ | (1,154 | ) | |||
For the years ended January 31 | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Changes in operating assets and liabilities: |
||||||||||||
Accounts receivable |
$ | (5,536 | ) | $ | 6,325 | $ | (4,603 | ) | ||||
Inventories |
(9,189 | ) | 1,552 | 447 | ||||||||
Prepaid expenses and other assets |
96 | (49 | ) | (35 | ) | |||||||
Accounts payable |
2,713 | 2,934 | 963 | |||||||||
Accrued and other liabilities |
4,428 | (520 | ) | 2,194 | ||||||||
Customer advances |
215 | 693 | (312 | ) | ||||||||
$ | (7,273 | ) | $ | 10,935 | $ | (1,346 | ) | |||||
Cash paid during the year for income taxes |
$ | 19,700 | $ | 13,816 | $ | 15,072 | ||||||
Balance at January 31, 2010 |
$ | 5,010 | ||
Ravens share of SST earnings |
195 | |||
Amortization of intangible assets |
(477 | ) | ||
Balance at January 31, 2011 |
$ | 4,728 | ||
37
Goodwill |
$ | 2,734 | ||
Existing technology |
900 | |||
Other intangibles |
175 | |||
Total |
$ | 3,809 | ||
Applied | Engineered | Electronic | ||||||||||||||||||
Technology | Films | Systems | Aerostar | Total | ||||||||||||||||
Balance at January 31, 2008 |
$ | 5,909 | $ | 96 | $ | 433 | $ | 464 | $ | 6,902 | ||||||||||
Acquisition earn-outs |
548 | | | | 548 | |||||||||||||||
Balance at January 31, 2009 |
6,457 | 96 | 433 | 464 | 7,450 | |||||||||||||||
Acquired goodwill |
2,734 | | | | 2,734 | |||||||||||||||
Acquisition earn-outs |
515 | | | | 515 | |||||||||||||||
Balance at January 31, 2010 |
9,706 | 96 | 433 | 464 | 10,699 | |||||||||||||||
Acquisition earn-outs |
78 | | | | 78 | |||||||||||||||
Balance at January 31, 2011 |
$ | 9,784 | $ | 96 | $ | 433 | $ | 464 | $ | 10,777 | ||||||||||
For the years ended January 31 | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Benefit obligation at beginning of year |
$ | 5,512 | $ | 4,840 | $ | 5,447 | ||||||
Service cost |
62 | 55 | 67 | |||||||||
Interest cost |
324 | 332 | 361 | |||||||||
Actuarial (gain) loss and assumption changes |
237 | 476 | (847 | ) | ||||||||
Total recognized in net and other comprehensive income |
623 | 863 | (419 | ) | ||||||||
Retiree benefits paid |
(166 | ) | (191 | ) | (188 | ) | ||||||
Benefit obligation at end of year |
$ | 5,969 | $ | 5,512 | $ | 4,840 | ||||||
38
For the years ended January 31 | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Beginning liability balance |
$ | 5,512 | $ | 4,840 | $ | 5,447 | ||||||
Employer expense |
552 | 515 | 654 | |||||||||
Other comprehensive (income) loss |
71 | 348 | (1,073 | ) | ||||||||
Total recognized in net and other comprehensive income |
623 | 863 | (419 | ) | ||||||||
Retiree benefits paid |
(166 | ) | (191 | ) | (188 | ) | ||||||
Ending liability balance |
$ | 5,969 | $ | 5,512 | $ | 4,840 | ||||||
Current portion in accrued liabilities |
$ | 212 | $ | 229 | $ | 203 | ||||||
Long-term portion in other liabilities |
$ | 5,757 | $ | 5,283 | $ | 4,637 | ||||||
Assumptions used: |
||||||||||||
Discount rate |
5.75 | % | 6.00 | % | 7.00 | % | ||||||
Wage inflation rate |
4.00 | % | 3.00 | % | 3.00 | % |
As of January 31 | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Beginning balance |
$ | 1,259 | $ | 1,004 | $ | 684 | ||||||
Accrual for warranties |
2,461 | 2,426 | 2,760 | |||||||||
Settlements made (in cash or in kind) |
(2,283 | ) | (2,171 | ) | (2,440 | ) | ||||||
Ending balance |
$ | 1,437 | $ | 1,259 | $ | 1,004 | ||||||
For the years ended January 31 | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Tax at U.S. federal statutory rate |
35.0 | % | 35.0 | % | 35.0 | % | ||||||
State and local income taxes, net of U.S. federal benefit |
1.3 | 1.3 | 1.5 | |||||||||
Tax benefit on qualified production activities |
(3.0 | ) | (2.1 | ) | (2.0 | ) | ||||||
Tax credit for research activities |
(0.7 | ) | (0.7 | ) | (0.7 | ) | ||||||
Other, net |
0.2 | 0.5 | 0.6 | |||||||||
32.8 | % | 34.0 | % | 34.4 | % | |||||||
39
For the years ended January 31 | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Income taxes: |
||||||||||||
Currently payable |
$ | 19,322 | $ | 14,653 | $ | 15,915 | ||||||
Deferred |
423 | 95 | 216 | |||||||||
$ | 19,745 | $ | 14,748 | $ | 16,131 | |||||||
As of January 31 | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Current deferred tax assets: |
||||||||||||
Accounts receivable |
$ | 103 | $ | 103 | $ | 211 | ||||||
Inventories |
463 | 344 | 408 | |||||||||
Accrued vacation |
1,008 | 857 | 840 | |||||||||
Insurance obligations |
485 | 553 | 489 | |||||||||
Warranty obligations |
503 | 441 | 352 | |||||||||
Other accrued liabilities |
171 | 173 | 242 | |||||||||
2,733 | 2,471 | 2,542 | ||||||||||
Non-current deferred tax assets (liabilities): |
||||||||||||
Postretirement benefits |
2,014 | 1,849 | 1,623 | |||||||||
Depreciation and amortization |
(3,050 | ) | (1,970 | ) | (1,556 | ) | ||||||
Uncertain tax positions |
1,426 | 1,180 | 969 | |||||||||
Other |
534 | 521 | 446 | |||||||||
924 | 1,580 | 1,482 | ||||||||||
Net deferred tax asset |
$ | 3,657 | $ | 4,051 | $ | 4,024 | ||||||
For the years ended January 31 | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Gross unrecognized tax benefits at beginning of year |
$ | 2,656 | $ | 2,269 | $ | 1,793 | ||||||
Increases in tax positions related to the current year |
601 | 463 | 539 | |||||||||
Decreases as a result of a lapse in applicable statute of limitations |
(145 | ) | (76 | ) | (63 | ) | ||||||
Gross unrecognized tax benefits at end of year |
$ | 3,112 | $ | 2,656 | $ | 2,269 | ||||||
40
For the years ended January 31 | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Stock compensation cost |
$ | 1,179 | $ | 1,034 | $ | 1,028 | ||||||
Tax benefit |
272 | 184 | 200 |
For the years ended January 31 | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Risk-free interest rate |
1.46 | % | 2.03 | % | 1.64 | % | ||||||
Expected dividend yield |
1.49 | % | 1.73 | % | 2.12 | % | ||||||
Expected volatility factor |
49.33 | % | 49.69 | % | 46.32 | % | ||||||
Expected option term (in years) |
4.50 | 4.50 | 4.25 | |||||||||
Weighted average grant date fair value |
$ | 15.70 | $ | 11.28 | $ | 8.08 |
41
Weighted | ||||||||||||||||
average | ||||||||||||||||
Weighted | remaining | |||||||||||||||
average | Aggregate | contractual | ||||||||||||||
Number | exercise | intrinsic | term | |||||||||||||
of options | price | value | (years) | |||||||||||||
Oustanding, January 31, 2010 |
397 | $ | 29.33 | |||||||||||||
Granted |
160 | 42.31 | ||||||||||||||
Exercised |
(112 | ) | 30.03 | |||||||||||||
Forfeited |
| 24.51 | ||||||||||||||
Outstanding, January 31, 2011 |
445 | $ | 33.86 | $ | 5,953 | 3.30 | ||||||||||
Exercisable, January 31, 2011 |
160 | $ | 29.41 | $ | 2,850 | 2.04 |
Weighted | ||||||||
Number | average | |||||||
of units | price | |||||||
Oustanding, January 31, 2010 |
21 | $ | 28.58 | |||||
Granted |
4 | 34.96 | ||||||
Deferred retainers |
1 | 34.96 | ||||||
Dividends |
1 | 37.81 | ||||||
Converted into common shares |
| | ||||||
Outstanding, January 31, 2011 |
27 | $ | 47.24 | |||||
42
For the years ended January 31 | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Numerator: |
||||||||||||
Net income |
$ | 40,537 | $ | 28,574 | $ | 30,770 | ||||||
Denominator: |
||||||||||||
Weighted average common shares outstanding |
18,042 | 18,021 | 18,031 | |||||||||
Weighted average stock units outstanding |
25 | 19 | 13 | |||||||||
Denominator for basic calculation |
18,067 | 18,040 | 18,044 | |||||||||
Weighted average common shares outstanding |
18,042 | 18,021 | 18,031 | |||||||||
Weighted average stock units outstanding |
25 | 19 | 13 | |||||||||
Dilutive impact of stock options |
43 | 3 | 36 | |||||||||
Denominator for diluted calculation |
18,110 | 18,043 | 18,080 | |||||||||
Net income per share basic |
$ | 2.24 | $ | 1.58 | $ | 1.71 | ||||||
Net income per share diluted |
$ | 2.24 | $ | 1.58 | $ | 1.70 |
43
For the years ended January 31 | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
APPLIED TECHNOLOGY DIVISION |
||||||||||||
Sales |
$ | 100,090 | $ | 86,217 | $ | 103,098 | ||||||
Operating income |
31,135 | 25,722 | 33,884 | |||||||||
Assets |
52,669 | 51,029 | 48,881 | |||||||||
Capital expenditures |
1,769 | 941 | 2,674 | |||||||||
Depreciation and amortization |
2,238 | 1,677 | 1,383 | |||||||||
ENGINEERED FILMS DIVISION |
||||||||||||
Sales |
$ | 105,838 | $ | 63,783 | $ | 89,858 | ||||||
Operating income |
19,622 | (b) | 10,232 | 10,919 | ||||||||
Assets |
46,519 | 35,999 | 35,862 | |||||||||
Capital expenditures |
8,450 | 1,460 | 3,120 | |||||||||
Depreciation and amortization |
3,452 | 3,707 | 4,303 | |||||||||
AEROSTAR DIVISION |
||||||||||||
Sales |
$ | 48,787 | $ | 27,244 | $ | 27,186 | ||||||
Operating income |
9,407 | 5,634 | 4,219 | |||||||||
Assets |
18,140 | 10,462 | 8,744 | |||||||||
Capital expenditures |
2,190 | 332 | 383 | |||||||||
Depreciation and amortization |
757 | 398 | 444 | |||||||||
ELECTRONIC SYSTEMS DIVISION |
||||||||||||
Sales |
$ | 65,852 | $ | 63,525 | $ | 61,983 | ||||||
Operating income |
9,917 | 8,979 | 5,926 | |||||||||
Assets |
23,385 | 21,216 | 26,847 | |||||||||
Capital expenditures |
609 | 290 | 1,399 | |||||||||
Depreciation and amortization |
823 | 939 | 1,159 | |||||||||
INTERSEGMENT ELIMINATIONS |
||||||||||||
Sales |
||||||||||||
Engineered Films Division |
$ | (307 | ) | $ | (210 | ) | $ | (210 | ) | |||
Aerostar |
(32 | ) | (1 | ) | (25 | ) | ||||||
Electronic Systems Division |
(5,520 | ) | (2,776 | ) | (1,977 | ) | ||||||
Operating income |
(94 | ) | 60 | (52 | ) | |||||||
Assets |
(186 | ) | (92 | ) | (152 | ) | ||||||
REPORTABLE SEGMENTS TOTAL |
||||||||||||
Sales |
$ | 314,708 | $ | 237,782 | $ | 279,913 | ||||||
Operating income |
69,987 | (b) | 50,627 | 54,896 | ||||||||
Assets |
140,527 | 118,614 | 120,182 | |||||||||
Capital expenditures |
13,018 | 3,023 | 7,576 | |||||||||
Depreciation and amortization |
7,270 | 6,721 | 7,289 | |||||||||
CORPORATE & OTHER(a) |
||||||||||||
Operating (loss) from administrative expenses |
$ | (9,784 | ) | $ | (7,407 | ) | $ | (8,502 | ) | |||
Assets |
47,233 | 51,695 | 24,233 | |||||||||
Capital expenditures |
954 | 279 | 425 | |||||||||
Depreciation and amortization |
361 | 387 | 469 | |||||||||
TOTAL COMPANY |
||||||||||||
Sales |
$ | 314,708 | $ | 237,782 | $ | 279,913 | ||||||
Operating income |
60,203 | (b) | 43,220 | 46,394 | ||||||||
Assets |
187,760 | 170,309 | 144,415 | |||||||||
Capital expenditures |
13,972 | 3,302 | 8,001 | |||||||||
Depreciation and amortization |
7,631 | 7,108 | 7,758 |
(a) | Assets are principally cash, investments, deferred taxes and other receivables. | |
(b) | Includes a $451 pre-tax gain on disposition of assets. |
44
For the years ended January 31 | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Pit lining and geomembrane films |
$ | 55,048 | $ | 26,834 | $ | 40,205 | ||||||
Other plastic films |
50,483 | 36,739 | 49,443 | |||||||||
Agricultural precision control devices and accessories |
98,402 | 83,236 | 99,428 | |||||||||
Electronics manufacturing services |
60,333 | 60,749 | 60,006 | |||||||||
Tethered aerostats |
22,423 | 3,048 | 265 | |||||||||
Parachute-related products |
12,816 | 10,298 | 8,660 | |||||||||
Uniforms and protective wear |
4,559 | 5,434 | 9,976 | |||||||||
Other |
10,644 | 11,444 | 11,930 | |||||||||
Total sales |
$ | 314,708 | $ | 237,782 | $ | 279,913 | ||||||
For the years ended January 31 | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Applied Technology |
$ | 21,349 | $ | 17,140 | $ | 18,847 | ||||||
Engineered Films |
2,200 | 1,383 | 2,034 | |||||||||
Aerostar |
427 | 1,219 | 1,004 | |||||||||
Electronic Systems |
693 | 495 | 568 | |||||||||
Total foreign sales |
$ | 24,669 | $ | 20,237 | $ | 22,453 | ||||||
45
46
47
48
Exhibit | ||
Number | Description | |
3(a)
|
Articles of Incorporation of Raven Industries, Inc. and all amendments thereto.* | |
3(b)
|
Bylaws of Raven Industries, Inc.* | |
3(c)
|
Extract of Shareholders Resolution adopted on April 7, 1962 with respect to the bylaws of Raven Industries, Inc. * | |
10(a)
|
Employment Agreement between Raven Industries, Inc. and Daniel Rykhus dated as of February 1, 2009 (incorporated by reference to Exhibit 10.1 of the companys Form 8-K filed February 1, 2009). | |
10(b)
|
Employment Agreement between Raven Industries, Inc. and David R. Bair dated as of February 1, 2004. *** | |
10(c)
|
Employment Agreement between Raven Industries, Inc. and James D. Groninger dated as of February 1, 2004. *** | |
10(d)
|
Employment Agreement between Raven Industries, Inc. and Lon E. Stroschein dated as of October 1, 2010 (Incorporated by reference to Exhibit 10.1 to the companys 8-K filed October 1, 2010) | |
10(e)
|
Employment Agreement between Raven Industries, Inc. and Ronald M. Moquist dated as of February 1, 2004. ** | |
10(f)
|
Employment Agreement between Raven Industries, Inc. and Thomas Iacarella dated as of February 1, 2004. ** | |
10(g)
|
Schedule A to Employment Agreements between Raven Industries, Inc. and each of the following Senior Executive Officers: Ronald M. Moquist, Thomas Iacarella, and Daniel A. Rykhus. | |
10(h)
|
Employment Agreement between Raven Industries, Inc. and Barbara Ohme dated as of February 1, 2004. ** | |
10(i)
|
Change in Control Agreement between Raven Industries, Inc. and each of the following officers and key employees: | |
Ronald M. Moquist, Thomas Iacarella, Daniel A. Rykhus, David R. Bair, James D. Groninger and Barbara K. Ohme dated as of January 31, 2008 (incorporated by reference to Exhibit 10.1 of the companys 8-K filed December 17, 2007). | ||
10(j)
|
Trust Agreement between Raven Industries, Inc. and Norwest Bank South Dakota, N.A. dated April 26, 1989. * | |
10(k)
|
Raven Industries, Inc. 2000 Stock Option and Compensation Plan adopted May 24, 2000 (incorporated by reference to Exhibit A to the companys definitive Proxy Statement filed April 19, 2000). | |
10(l)
|
Raven Industries, Inc. 2010 Stock Incentive Plan adopted May 25, 2010 (incorporated by reference to Exhibit A of the companys definitive Proxy Statement filed April 14, 2010). | |
10(m)
|
Raven Industries, Inc. Deferred Compensation Plan for Directors adopted May 23, 2007 (incorporated by reference to Exhibit 10.1 to the companys 8-K filed May 24, 2007). | |
10(n)
|
Change in Control Agreement between Raven Industries, Inc. and Matthew T. Burkhart dated February 1, 2010 (incorporated by reference to Exhibit 10.3 to the companys 8-K filed February 2, 2010). | |
10(o)
|
Employment Agreement between Raven Industries, Inc. and Matthew T. Burkhart dated February 1, 2010 (incorporated by reference to Exhibit 10.1 to the companys 8-K filed February 2, 2010). | |
10(p)
|
Schedule A to Employment Agreements between Raven Industries, Inc. and each of the following Senior Managers: | |
David R. Bair, Matthew T. Burkhart, James D. Groninger, Lon E. Stroschein and Barbara K. Ohme. | ||
10(q)
|
Change in Control Agreement between Raven Industries, Inc. and Lon E. Stroschein dated October 1, 2010 (incorporated by reference to Exhibit 10.3 to the companys 8-K filed October 1, 2010). | |
21
|
Subsidiaries of the Registrant. | |
23
|
Consent of Independent Registered Public Accounting Firm. | |
31.1
|
Certification of CEO Pursuant to Section 302 of Sarbanes-Oxley Act. | |
31.2
|
Certification of CFO Pursuant to Section 302 of Sarbanes-Oxley Act. | |
32.1
|
Certification pursuant to Section 906 of Sarbanes-Oxley Act. | |
32.2
|
Certification pursuant to Section 906 of Sarbanes-Oxley Act. |
| Management contract or compensatory plan or arrangement. | |
* | Incorporated by reference to corresponding Exhibit Number of the companys Form 10-K for the year ended January 31, 1989. | |
** | Incorporated by reference to corresponding Exhibit Number of the companys Form 10-K for the year ended January 31, 2004. | |
*** | Incorporated by reference to corresponding Exhibit Number of the companys Form 10-K for the year ended January 31, 2007. |
49
RAVEN INDUSTRIES, INC. (Registrant) |
||||
By: | /s/ DANIEL A. RYKHUS | |||
Daniel A. Rykhus | ||||
President and Chief Executive Officer | ||||
/s/ DANIEL A. RYKHUS
|
/s/ MARK E. GRIFFIN | |
Daniel A. Rykhus President and Chief Executive Officer (principal executive officer) and Director |
Mark E. Griffin Director |
|
/s/ THOMAS IACARELLA
|
/s/ CONRAD J. HOIGAARD | |
Thomas Iacarella Vice President and Chief Financial Officer (principal financial and accounting officer) |
Conrad J. Hoigaard Director |
|
/s/ THOMAS S. EVERIST
|
/s/ KEVIN T. KIRBY | |
Thomas S. Everist Chairman of the Board |
Kevin T. Kirby Director |
|
/s/ ANTHONY W. BOUR
|
/s/ CYNTHIA H. MILLIGAN | |
Anthony W. Bour Director |
Cynthia H. Milligan Director |
|
/s/ DAVID A. CHRISTENSEN
Director |
Date: March 31, 2011 |
50
51
Column A | Column B | Column C | Column D | Column E | ||||||||||||||||
Additions | ||||||||||||||||||||
Balance at | Charged to | Charged to | Deductions | |||||||||||||||||
Beginning | Costs and | Other | From | Balance at | ||||||||||||||||
Description | of Year | Expenses | Accounts | Reserves (1) | End of Year | |||||||||||||||
Deducted in the balance sheet from the asset to which it
applies: |
||||||||||||||||||||
Allowance for doubtful accounts: |
||||||||||||||||||||
Year ended January 31, 2011 |
$ | 297 | $ | (1 | ) | None | $ | (4 | ) | $ | 300 | |||||||||
Year ended January 31, 2010 |
$ | 613 | $ | (183 | ) | None | $ | 133 | $ | 297 | ||||||||||
Year ended January 31, 2009 |
$ | 293 | $ | 629 | None | $ | 309 | $ | 613 |
(1) | Represents uncollectible accounts receivable written off during the year, net of recoveries. |
52
POLICIES AND PROCEDURES DATE: 1 DECEMBER 2010 (revised) SUBJECT: SENIOR EXECUTIVE OFFICER BENEFITS |
NO. RS-01 |
1. | Insurance premiums will be one-half the amount paid by regular salaried employees, with equal seniority, for all individual and family health coverage. Life, disability and dental insurance coverage will be paid in full. |
2. | Supplemental health insurance benefits for the officer and his dependents up to 6.5% of the total current base salary. |
3. | The Chief Executive Officer will receive a social membership to the Minnehaha Country Club. |
4. | Health club membership or equivalent in home exercise equipment. |
5. | Inclusion in the Group Life Insurance and A.D. & D. policy at 2.0 times annualized base salary on February 1st each year. The group life insurance policy is updated annually on March 1st of each year, and the benefit will be limited to the maximum benefit offered by the current life insurance carrier. |
6. | Individual term policies may be required to reach the coverage levels in Number 5 above. |
Those policies are funded by the company for the period of time employed by the company. The officer will have the option to convert or continue at officers expense upon termination or retirement. |
7. | This section applies only to Senior Executive Officers elected before February 1, 2004. A second-to-die life policy will be provided to the Chief Financial Officer in the amount of $300,000. Premiums on this policy will be paid by the company until the policy is fully funded (the point where dividends of the policy are sufficient to pay the entire premium) provided that the officer is employed until normal retirement age or qualifies for early retirement in accordance with Raven policies and procedures. |
Upon the officers retirement at the normal retirement age or if qualifying for early retirement in accordance with Raven Policies and Procedures the second-to-die life policy will be paid up by Raven at the time of the officers retirement. The premium benefit for the paid up policy will be grossed up at the end of the calendar year. |
If the officer terminates employment before qualifying for either normal or early retirement the officer will have the option to continue the policy by paying the premiums or may exercise one of the conversion features available in the policy. |
8. | For Senior Executive Officers elected before February 1, 2004, long-term care insurance will be provided to the officer and officers spouse. |
9. | Full pay for sick leave up to a point where disability insurance coverage begins. Disability insurance is 60% of base salary non-integrated with Social Security. Provisions of the actual policy will govern the exact amount of payments. |
10. | Two additional weeks of paid vacation in addition to the regular established vacation policy. |
11. | Physical examinations provided by the company will be given on a biennial basis to age 60 on individuals who are asymptomatic, annually if symptomatic. Above age 60 examinations will be annually. |
12. | Officers annual base salary will be grossed up at the end of the calendar year to compensate for any additional payroll and income tax burden created by the treatment of the officers benefits under numbers 1, 2, 5, 6, 7, 8 and 11, above, as additional income. |
13. | Senior Executive Officer Retirement & Benefits |
This section applies only to Senior Executive Officers retiring after February 1, 2010. Benefits to officers retiring before that date will be governed by the policy in effect at retirement. |
Full retirement benefits will be available to any senior executive officer who retires between the ages of 65 and 70, or who |
chooses early retirement. Early retirement is defined as the first day of any month after the officers years of service, plus attained age equals or exceeds the sum of 80, or any date between then and age 65. |
Those benefits are: |
POLICIES AND PROCEDURES
|
NO. RS 06 | |
DATE: 1 December 2010 (revised) |
||
SUBJECT: SENIOR MANAGEMENT BENEFITS |
||
SCHEDULE A |
1. | Insurance premiums will be one-half the amount paid by regular salaried employees with equal seniority for all individual and family health coverage. Life, disability and dental insurance coverage will be paid in full. |
2. | Supplemental health insurance benefits for the Senior Managers and dependents up to 4% of the total of the current base salary. |
3. | Health Club membership or equivalent in home exercise equipment. |
4. | Group Life Insurance and A.D. & D. at 2.0 times annualized base salary as of February 1st each year. The Group Life Insurance / AD&D policy is updated annually on March 1st each year, and the benefit will be limited to the maximum benefit offered by the current life insurance carrier. |
5. | Full pay for sick leave up to a point where disability insurance coverage begins. Disability insurance is 60% of base salary, non-integrated with Social Security. Provisions of the actual policy will govern the exact amount of payments. |
6. | Two additional weeks of paid vacation in addition to the regular established vacation policy. |
7. | Physical examination provided by the Company will be given on a biennial basis to age 60 on individuals who are asymptomatic, annually if symptomatic. Above age 60 examinations will be annually. |
8. | Senior Managers annual base salary will be grossed up at the end of the calendar year to compensate for the additional payroll and income tax burden created by the treatment of benefits under Numbers 1, 2, 4 and 7, above, as additional income. |
9. | Retirement Benefits: |
This section applies only to Senior Managers retiring after February 1, 2010. Benefits to Senior Managers retiring before that date will be governed by the policy in effect at retirement. |
Upon retirement, the following benefits will be available to Raven Senior Managers who retire between the ages of 65 and 70, or who choose early retirement. Early retirement is defined as the first day of any month after the Senior Managers years of service, plus attained age, equals or exceeds the sum of 80, or any date between then and age 65. |
Those benefits are: |
(A) | Continued retiree group hospital, medical and dental coverage for the Senior Manager, spouse and eligible dependent child(ren), as defined by the insurance carriers policy, until the Senior Manager attains the eligibility age for Medicare (presently age 65) or is eligible for Medicare due to disability. Premiums will be at the same rate available to active Senior Managers. | ||
If said Senior Manager dies prior to Medicare eligibility, coverage will continue on the same basis for spouse and/or eligible dependent child(ren) as long as spouse does not remarry and dependent child(ren) meets insurance carriers eligibility requirements. | |||
When the Senior Manager becomes eligible for Medicare, the spouse is eligible for continued retiree group hospital, medical, or dental coverage until the spouse becomes eligible for Medicare. Coverage for the spouse will terminate in the event the Senior Manager and spouse divorce or the spouse remarries after the death of the Senior Manager. Upon divorce or remarriage of spouse, the spouse would then be offered COBRA in compliance with Federal COBRA guidelines administered on a consecutive basis. | |||
When the Senior Manager becomes eligible for Medicare, eligible dependent child(ren) are eligible for continued |
retiree group hospital, medical, and dental coverage until the dependent no longer meets the definition of an eligible dependent as defined by the insurance carriers policy. Upon loss of dependent eligibility, COBRA will be offered in compliance with Federal COBRA guidelines administered on a consecutive basis. | |||
(B) | Upon eligibility for Medicare by either the Senior Manager or spouse, the Senior Manager and spouse will be provided supplemental hospital, medical, and prescription drug coverage to Medicare which would result in the same coverage that is provided to the full-time active Senior Managers of the company. This coverage, as well as group dental coverage, will continue for the rest of the Senior Managers and spouses life or until the spouse divorces said Senior Manager or remarries after the death of the Senior Manager. In the event the spouse divorces or remarries after the death of the Senior Manager, supplemental coverage will cease being paid by Raven and will be the responsibility of the former spouse. | ||
In the event that eligible dependent child(ren) are eligible for Medicare, said dependent child(ren) will be provided supplemental hospital and medical coverage to Medicare which would result in the same coverage that is provided to the full-time active officers of the company. This coverage, as well as group dental coverage, will continue for the rest of the dependents life as long as the dependent meets disability requirements. | |||
(C) | In the event that a retired Senior Manager marries/remarries, retiree benefits are only offered to spouses enrolled in benefits at the time of the Senior Managers retirement. | ||
(D) | Upon retirement, supplemental health insurance benefits for the Senior Manager and dependents will be provided annually for the rest of the Senior Managers life at an amount of up to 3.5% of the highest total annual compensation (salary and bonus) during the last five years of employment with the company. |
NAME OF SUBSIDIARY | JURISDICTION | |
Aerostar International, Inc.
|
South Dakota, USA | |
GTH, Inc. (formerly known as Glasstite, Inc.)
|
Minnesota, USA | |
Raven Industries Australia Pty Ltd
|
Victoria, Australia | |
Raven Industries Canada, Inc.
|
Nova Scotia, Canada | |
Raven Industries GmbH
|
Solothurn, Switzerland |
1. | I have reviewed this annual report on Form 10-K of Raven Industries, Inc. (the Registrant); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; and |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report; |
4. | The Registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
c. | Evaluated the effectiveness of the Registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
d. | Disclosed in this report any change in the Registrants internal control over financial reporting that occurred during the Registrants most recent fiscal quarter (the Registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrants internal control over financial reporting; and |
5. | The Registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrants auditors and the audit committee of Registrants board of directors (or others performing the equivalent function): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrants ability to record, process, summarize and report information; and | ||
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrants internal controls over financial reporting. |
Date: March 31, 2011 | /s/ Daniel A. Rykhus | |||
Daniel A. Rykhus | ||||
President and Chief Executive Officer |
1. | I have reviewed this annual report on Form 10-K of Raven Industries, Inc. (the Registrant); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; and |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report; |
4. | The Registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
c. | Evaluated the effectiveness of the Registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
d. | Disclosed in this report any change in the Registrants internal control over financial reporting that occurred during the Registrants most recent fiscal quarter (the Registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrants internal control over financial reporting; and |
5. | The Registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrants auditors and the audit committee of Registrants board of directors (or others performing the equivalent function): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrants ability to record, process, summarize and report information; and | ||
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrants internal controls over financial reporting. |
Date: March 31, 2011 | /s/ Thomas Iacarella | |||
Thomas Iacarella | ||||
Vice President and Chief Financial Officer |
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Raven Industries, Inc. |
/s/ Daniel A. Rykhus | ||||
Daniel A. Rykhus | ||||
President and Chief Executive Officer |
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Raven Industries, Inc. |
/s/ Thomas Iacarella | ||||
Thomas Iacarella | ||||
Vice President and Chief Financial Officer |
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