10-K

FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

(Mark One)

[X]	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the Fiscal Year Ended January 31, 2002
[   ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from ____________ to _____________

Commission file number 0-3136

RAVEN INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)

SOUTH DAKOTA
(State or other jurisdiction of
incorporation or organization) 46-0246171
(I.R.S. Employer
Identification No.)

205 E. 6th Street
Sioux Falls, South Dakota 57117

(Address of principal offices)   (Zip Code)

(605)336-2750

Registrant’s telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:

Common stock, $1 par value

(Title of each class)

Indicate by checkmark 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 twelve months, and (2) has been subject to such filing requirements for the past ninety days.

Yes [X]    No [   ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [   ]

The aggregate market value of voting stock held by nonaffiliates of the Registrant, based on the closing price of $22.80 per share as reported on the NASDAQ National Market System on April 11, 2002 was $89,440,775.

Shares of common stock outstanding at April 11, 2002: 4,593,397.

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TABLE OF CONTENTS

PART I
	ITEM 1. BUSINESS
	ITEM 2. PROPERTIES
	ITEM 3. PENDING LEGAL PROCEEDINGS
	ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
	ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
PART II
	ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
PART IV
	ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K
SIGNATURES
REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULE
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
2002 Annual Report to Shareholders
Consent of Independent Auditors

DOCUMENTS INCORPORATED BY REFERENCE

The following table shows, except as otherwise noted, the location of information, required in this Form 10-K, in the registrant’s Annual Report to Shareholders for the year ended January 31, 2002 and Proxy Statement for the registrant’s 2002 annual meeting, a definitive copy of which was filed on April 18, 2002. All such information set forth under the heading “Reference” below is included herein or incorporated herein by reference. A copy of the registrant’s Annual Report to Shareholders for the year ended January 31, 2002 is included as an exhibit to this report.

	ITEM IN FORM 10-K	REFERENCE
PART I.
Item 1.	Business	Business, pages 4-8, this Document; Business Segments, pages 5 and 12 of the Annual Report to Shareholders
Item 2.	Properties	Properties, pages 8-9, this document
Item 3.	Pending Legal Proceedings	Pending Legal Proceedings, page 9, this document
Item 4.	Submission of Matters to a Vote of Security Holders	Submission of Matters to a Vote of Security Holders, page 10, this document
Item 4A.	Executive Officers of the Registrant	Executive Officers of the Registrant, page 10, this document
PART II.
Item 5.	Market for the Registrant’s Common Equity and Related Stockholder Matters	Quarterly Information (unaudited), page 20, Eleven-Year Financial Summary, pages 10-11, and inside back cover, Annual Report to Shareholders
Item 6.	Selected Financial Data	Eleven-Year Financial Summary, pages 10-11, Annual Report to Shareholders
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	Financial Review and Analysis, pages 13-19, Annual Report to Shareholders

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	ITEM IN FORM 10-K	REFERENCE
Item 8.	Financial Statements and Supplementary Data	Pages 21-31, Annual Report to Shareholders
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure, page 10, this document
PART III.
Item 10.	Directors and Executive Officers of the Registrant	Election of Directors and Executive Compensation, Proxy Statement
		Executive Officers of Registrant, Item 4A, page 10, this document and Other Matters, Proxy Statement
Item 11.	Executive Compensation	Executive Compensation, Proxy Statement
Item 12.	Voting Securities and Principal Holders Thereof	Ownership of Common Stock, Proxy Statement
Item 13.	Certain Relationships and Related Transactions	Certain Relationships and Related Transactions, Proxy Statement
PART IV.
Item 14.	Exhibits, Financial Statement Schedule and Reports on Form 8-K	Exhibits, Financial Statement Schedule and Reports on Form 8-K, pages 11-13, this document.

FORWARD-LOOKING STATEMENTS

Certain sections of this report contain statements which may constitute forward-looking statements within the meaning of federal securities laws. Although Raven Industries, Inc. 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 agriculture or construction, or changes in competition or the company’s customer base which could impact any of the company’s product lines.

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RAVEN INDUSTRIES, INC.
FORM 10-K
year ended January 31, 2002

Item 1. Business

General

     Raven Industries, Inc. was incorporated in February 1956 under the laws of the State of South Dakota and began operations later that same year. The following terms — the company, Raven or the registrant — are intended to apply to Raven Industries, Inc. and its consolidated subsidiaries listed in Exhibit 21 to this report. Raven is headquartered in Sioux Falls, South Dakota, employing approximately 850 persons in four states.

     The company began operations as a manufacturer of high-altitude research balloons. It has diversified over the years to supply specialized products for a number of markets, including industrial, recreation, agriculture and military/aerospace. Many of these product lines are an extension of technology and production methods developed in the original balloon business. The company’s pickup-truck topper product line was sold in the third quarter of fiscal 2000. Substantially all of the company’s plastic tank product lines were sold in the third quarter of fiscal 2001.

     The company has four ongoing business segments consisting of the Electronic Systems Division, Flow Controls Division, Engineered Films Division and Aerostar. Product lines have been grouped in these segments based on common technologies, production methods and raw materials. However, more than one business segment may serve each of the product markets identified above. Page 12 of the company’s Annual Report to Shareholders, incorporated herein by reference, provides financial information concerning the business segments, including businesses sold and for sale.

     Following is a summary of company net sales by principal product categories (dollars in thousands):

			FY 2002		FY 2001		FY 2000
Electronics manufacturing services			$	32,289	$	32,039	$	30,176
Flow control devices and accessories				23,178		16,758		13,520
Reinforced plastic sheeting				35,796		35,403		30,868
Specialty apparel				11,001		19,102		23,286
Other				9,754		10,058		10,012
Total ongoing operation sales				112,018		113,360		107,862
Businesses sold and for sale:
		Pickup-truck toppers		—		—		17,657
		Plastic tanks		3,500		16,232		19,632
		Feedmill controls		2,997		3,266		5,234
	Total sales		$	118,515	$	132,858	$	150,385

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Business Segments

     Electronic Systems — Historically, the company’s Electronic Systems segment provided a variety of assemblies and controls to the United States Department of Defense and other military contractors. The company has expanded this segment’s capabilities in electronics manufacturing services (EMS) for commercial customers to offset a decline in military contracts. Assemblies manufactured by the Electronic Systems segment include communication, environmental control, computer and other products where high quality is critical. The Electronic Systems segment expanded its capacity in fiscal 2002 by purchasing System Integrators and moving it into its EMS facility in St. Louis, Missouri.

     EMS sales are made in response to competitive bid requests by commercial customers and military contractors. The level and nature of competition varies with the type of product, but the company frequently competes with a number of EMS manufacturers on any given bid request. The markets in which the company participates are highly competitive, with customers having many suppliers to choose from.

     Flow Controls — Flow control devices, used primarily for precision farming applications, are designed and produced within the company’s Flow Controls segment. These devices are also used for roadside and turf chemical spraying. The company has developed new products for field location control and chemical injection systems. The acquisition of Starlink in fiscal 2002 enhanced the company’s global positioning (GPS) capabilities. The combined technologies are expected to provide a competitive advantage in the support of precision agriculture in future years.

     Home office personnel sell flow control devices directly to original equipment manufacturers(OEMs) and independent third-party distributors. The company’s competitive advantage in this segment is product reliability, ease of use, product availability and service after the sale.

     Engineered Films — Products in the company’s Engineered Films segment include rugged reinforced plastic sheeting for industrial, construction and agricultural applications and high altitude balloons for public and commercial research.

     The company’s sales force sells plastic sheeting to independent third-party distributors in each of the various markets it serves. The company extrudes a significant portion of the film converted for its commercial products and believes it is one of the largest sheeting converters in the United States. A number of suppliers of sheeting compete with Raven on both price and product availability. To increase production of plastic sheeting, the company must make capital investments. An $8 million capital investment plan was begun in fiscal 2002 and is expected to be completed by January 31, 2003. This new equipment will provide capacity for up to $15 million in additional annual sales.

     This division also sells high-altitude research balloons directly to public agencies (usually funded by the National Aeronautics and Space Administration) or commercial users. Demand for these products is small but stable. Raven is the largest balloon supplier for high-altitude research in the United States.

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     Aerostar — The Aerostar segment of the company produces and sells custom-shaped advertising inflatables that have a number of uses including parade floats and advertising media. The company is the originator of modern hot-air ballooning and continues to be a leader in design and technical expertise. Aerostar also manufactures specialty apparel for a variety of activities, including hunting and fishing.

     Specialty apparel is a contract business sold by home office personnel to independent third-party distributors and catalog retailers. There are many outerwear manufacturers in the United States and abroad, and considerable competition exists. The market for domestically produced outerwear is declining because labor costs are significantly higher than those incurred by manufacturers outside the United States.

     The Aerostar segment sells balloons through an independent third-party dealer network. The company believes it has approximately one-third of the United States hot-air balloon market, although others are able to compete with lower-cost products. Inflatable displays are sold directly to corporate customers, advertising agencies and public relations firms and are subject to varying levels of competition. Generally, the more customized the product, the greater the company’s market share.

Businesses Sold and For Sale — The company has disposed of its pickup-truck topper and plastic tank businesses. The company’s Beta Raven Industrial Controls Division produces and sells computerized process-control systems to feedmills and to other markets.

Major Customer Information

     No customer accounted for more than 10 percent of consolidated sales in fiscal 2002 or for more than 10 percent of the company’s consolidated accounts receivable at January 31, 2002. In fiscal 2002, the top three customers in the Electronic Systems segment accounted for more than half of that segment’s sales. The loss of these accounts would adversely affect profitability, however, the company believes its relationships with these customers are strong. In addition, the breadth of the company’s product lines help protect it from the impact of losing any single customer.

Seasonal Working Capital Requirements

     Some seasonal demand exists in Flow Control’s agricultural market. The Flow Controls Division builds product in the fall for winter/spring delivery. Certain sales to agricultural customers offer spring dating terms for late fall and early winter shipments. The resulting fluctuations in inventory and accounts receivable balances may require, and have required, seasonal short-term financing.

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Financial Instruments and Market Risk

     The principal financial instruments the company maintains are in accounts receivable and long-term debt. The company believes that the interest rate, credit and market risk related to these accounts is not significant. The company manages the risk associated with these accounts through periodic reviews of the carrying value of assets and liabilities and establishment of appropriate allowances in connection with the company’s internal controls and policies. Except for operating leases, the company does not enter into hedging, derivative instruments or off balance sheet financing.

Raw Materials

     The company obtains a wide variety of materials from numerous vendors. Principal materials include numerous electronic components for the Electronic Systems and Flow Controls segments, various plastic resins for the Engineered Films segment and fabrics for the Aerostar segment. The company has not experienced any significant shortages or other problems in purchasing raw materials to date, and alternative sources of supply are generally available. However, predicting future material shortages and the related potential impact on Raven is not possible.

Patents

      The company owns a number of patents. However, Raven does not believe that its business, as a whole, is materially dependent on any one patent or related group of patents. It believes the successful manufacture and sale of its products generally depend more upon its technical expertise and manufacturing skills.

Research and Development

     The business segments conduct ongoing research and development efforts. Most of the company’s research and development expenditures are directed toward new products in the Flow Controls segment. Total company research and development costs are disclosed in Note 1 to the Consolidated Financial Statements located on page 26 of the Annual Report to Shareholders, incorporated herein by reference.

Environmental Matters

     Except as described below, the company believes that it is in compliance, in all material respects, with applicable federal, state and local environmental laws and regulations. Expenditures relating to compliance for operating facilities incurred in the past have not significantly affected the company’s capital expenditures, earnings or competitive position.

     In connection with the sale of substantially all of the assets of the company’s Glasstite, Inc. subsidiary, the company has agreed to assume responsibility for the investigation and remediation of any pre-October 29, 1999 environmental contamination at the company’s Glasstite pickup-truck topper facility in Dunnell, Minnesota as required by the Minnesota Pollution Control Agency (MPCA) or the United States Environmental Protection Agency (EPA).

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     Also, in connection with the sale of substantially all of the assets of the company’s Plastic Tank Division, the company has agreed to assume responsibility for the investigation and remediation of any pre-August 28, 2000 environmental contamination at the property located at 1813 E Avenue, Sioux Falls, S.D. in accordance with the South Dakota Department of Environment and Natural Resources (DENR).

     The company and the purchasers of the company’s Glasstite subsidiary and Plastic Tank division have conducted preliminary environmental assessments of the properties used in these businesses. Although these assessments are still being evaluated by the MPCA and DENR, on the basis of the preliminary data available, there is no reason to believe that any activities which might be required as a result of the findings of the assessments will have a material effect on the company’s results of operations, financial position or cash flow. As discussed in Note 5 to the company’s Consolidated Financial Statements, located on pages 27 and 28 of the Annual Report to Shareholders, incorporated herein by reference, the company had accrued approximately $200,000 at January 31, 2002, its best estimate of probable costs to be incurred related to these matters.

Backlog

     As of February 1, 2002, the company’s backlog of firm orders totaled $33.8 million. Backlog amounts as of February 1, 2001 and 2000 were $38.2 million and $44.9 million, respectively. Lower order levels for Aerostar specialty apparel, as described on page 6 of this document, account for most of the decline.

Employees

     As of January 31, 2002, the company had approximately 850 employees, 770 in an active status. Following is a summary of active employees by segment: Electronic Systems — 190; Flow Controls — 180; Engineered Films — 130; Aerostar — 190; Business for Sale — 30, Administration — 50. None of the employees are represented by a union and management believes its employee relations are satisfactory.

Item 2. Properties

The company maintains the following properties in connection with its operations, all of which the company owns, unless indicated otherwise:

Location	Square Feet	Use	Business Segments
Sioux Falls, SD	150,000	Corporate office and electronics manufacturing	All
	62,300	Plastic sheeting manufacturing	Engineered Films
	59,000	Plastic sheeting and hot-air balloon manufacturing	Engineered Films Aerostar

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Location	Square Feet	Use	Business Segments
	30,800	Warehouse	Engineered Films
	27,000	Offices and material handling facility	Aerostar
	25,300	Inflatable manufacturing	Aerostar
	24,000	Electronics manufacturing	Electronic Systems
	10,200	Machine shop	Flow Controls
	*9,000	Warehouse	Engineered Films
	6,200	Training/meeting Center	All
Sulphur Springs, TX	*63,900	Research balloon manufacturing	Engineered Films
Springfield, OH	30,000	Plastic sheeting manufacturing	Engineered Films
Huron, SD	24,100	Sewing plant	Aerostar
St. Louis, MO	21,000	Electronics manufacturing	Electronic Systems
St.Charles, MO	*20,000	Feedmill automation Equipment manufacturing	Businesses held for sale
Madison, SD	20,000	Sewing plant	Aerostar
Parkston, SD	14,000	Sewing plant	Aerostar
Austin, TX	*12,000	Product Development & Manufacturing	Flow Controls

* Leased, short-term

Most of the company’s manufacturing plants also serve as distribution centers and contain offices for sales, engineering and manufacturing support staff. The company believes that its properties are, in all material respects, in good condition and are adequate to meet existing production needs. The company owns 6.95 acres of undeveloped land adjacent to the other owned property in Sioux Falls which is available for expansion.

Item 3. Pending Legal Proceedings

The company is responsible for investigation and remediation of environmental contamination at two of its sold facilities as described under “Environmental Matters” on pages 7-8. In addition, the company is involved as a defendant in lawsuits, claims or disputes arising in the normal course of its business. The settlement of such claims cannot be determined at this time. Management believes that any liability resulting from these claims will be substantially mitigated by insurance coverage.

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Accordingly, management does not believe the ultimate outcome of these matters will be significant to its results of operations, financial position or cash flows.

Item 4. Submission of Matters to a Vote of Security Holders

There was no matter submitted during the fourth quarter to a vote of security holders of the company.

Item 4A. Executive Officers of the Registrant

Name	Age		Position
Ronald M. Moquist		56	President and Chief
			Executive Officer
Thomas Iacarella		48	Vice President and
			Chief Financial Officer

Each of the above named individuals serves at the pleasure of the Board of Directors on a year-to-year basis.

     Mr. Moquist was named President and Chief Executive Officer of the company effective August 1, 2000. He served as the Executive Vice President of Raven from 1985 through July 2000. As Vice President of the company from 1979 to 1985, his responsibilities encompassed both corporate and divisional management positions. He joined Raven in 1975 as Sales and Marketing Manager.

     Mr. Iacarella has been the company’s Chief Financial Officer, Secretary and Treasurer since 1998. He joined Raven, as Corporate Controller, in 1991. Prior to joining Raven, he held positions with Tonka Corporation and Ernst & Young, LLP.

Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure

None.

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Item 14. Exhibits, Financial Statement Schedule and Reports on Form 8-K

(a)		Consolidated Financial Statements and Schedule
	1.	Incorporated by reference from the attached exhibit containing the 2002 Annual Report to Shareholders:
		Consolidated Balance Sheet
		Consolidated Statement of Income
		Consolidated Statements of Stockholders’ Equity and Comprehensive Income
		Consolidated Statement of Cash Flows
		Notes to Financial Statements
		Report of Independent Accountants
	2.	Included in Part II:
		Report of Independent Accountants on Financial Statement Schedule
		Schedule II — Valuation and Qualifying Accounts
	The following schedules are omitted as they are not applicable or are not required: I, III and IV.
(b)	Reports on Form 8-K
	December 5, 2001 — Acquisitions of Starlink and System Integrators.
(c)	Exhibits filed
	The following exhibits are filed as part of this report.

Exhibit Number	Description
2	Asset Purchase Agreement dated December 5, 2001 by and among the company, Starlink, Incorporated and the shareholders of Starlink, Incorporated (incorporated by reference to Exhibit 2.1 to the company's current report on Form 8-K dated December 5, 2001).
3(a)	Articles of Incorporation of Raven Industries, Inc. and all amendments thereto.*
3(b)	By-Laws of Raven Industries, Inc.*
3(c)	Extract of Shareholders Resolution adopted on April 7, 1962 with respect to the by-laws of Raven Industries, Inc.*
10(a)	Raven Industries, Inc. 2000 Stock Option and Compensation Plan adopted May 24, 2000 (incorporated by reference to Exhibit A to the company's definitive Proxy Statement filed April 19, 2000).

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Item 14. Exhibits, Financial Statement Schedule and Reports on Form 8-K, continued:

Exhibit
Number	Description
10(b)	Raven Industries, Inc. 1990 Stock Plan adopted January 30, 1990 (incorporated by reference to Exhibit A to the company’s definitive Proxy Statement filed April 25, 1990).
10(c)	Change in Control Agreement between Raven Industries, Inc. and Ronald M. Moquist dated as of March 17, 1989.*
10(d)	Change in Control Agreement between Raven Industries, Inc. and Thomas Iacarella dated as of August 1, 1998 (incorporated by reference to Exhibit 10.1 of the company’s Form 10-Q for the quarter ended July 31, 1998).
10(e)	Employment Agreement between Raven Industries, Inc. and Ronald M. Moquist dated as of November 29, 1999. (incorporated by reference to Exhibit 10(j) of the company’s Form 10-K for the year ended January 31, 2001.)
10(f)	Schedule identifying material details of other Employment Agreements between Raven Industries, Inc. and other executive officers substantially identical to the Employment Agreement filed as Exhibit 10(e). (incorporated by reference to Exhibit 10(k) of the company’s Form 10-K for the year ended January 31, 2001.)
10(g)	Schedule A to Employment Agreement between Raven Industries, Inc. and Ronald M. Moquist dated as of November 14, 2000. (incorporated by reference to Exhibit 10(l) of the company’s Form 10-K for the year ended January 31, 2001.)
10(h)	Deferred Compensation Plan between Raven Industries, Inc. and David A. Christensen dated as of February 1, 1997 (incorporated by reference to Exhibit 10(h) of the company’s Form 10-K for the year ended January 31, 1999).
10(i)	Trust Agreement between Raven Industries, Inc. and Norwest Bank South Dakota, N.A. dated April 26, 1989.*
10(j)	Asset Purchase Agreement and Amendment dated August 28, 2000 between Raven Industries, Inc. and Norwesco, Inc. (incorporated by reference to Exhibits 10.1 and 10.2 of the company’s current report on Form 8-K dated September 12, 2000).
13	2002 Annual Report to Shareholders (only those portions specifically incorporated herein by reference shall be deemed filed with the Commission).

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Item 14. Exhibits, Financial Statement Schedule and Reports on Form 8-K, continued:

Exhibit
Number	Description
21	Subsidiaries of the Registrant (incorporated by reference to Exhibit 21 of the company’s Form 10-K for the year ended January 31, 2000).
23	Consent of Independent Accountants.

* Incorporated by reference to corresponding Exhibit Number of the company’s Form 10-K for the year ended January 31, 1989.

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SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) 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. (Registrant)
April 19, 2002         Date	By:	/S/ Ronald M. Moquist Ronald M. Moquist President (Principal Executive         Officer and Director)

     Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

April 19, 2002         Date	By:	/S/ Ronald M. Moquist Ronald M. Moquist President (Principal Executive Officer and Director)
April 19, 2002         Date		/S/ Thomas Iacarella Thomas Iacarella Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)
		Directors:
April 19, 2002         Date		/S/ Conrad J. Hoigaard Conrad J. Hoigaard
April 19, 2002         Date		/S/ Anthony W. Bour Anthony W. Bour
April 19, 2002         Date		/S/ David A. Christensen David A. Christensen
April 19, 2002         Date		/S/ Thomas S. Everist Thomas S. Everist
April 19, 2002         Date		/S/ Mark E. Griffin Mark E. Griffin
April 19, 2002         Date		/S/ Cynthia H. Milligan Cynthia H. Milligan

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REPORT OF INDEPENDENT ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULE

To the Board of Directors and Stockholders of Raven Industries, Inc.:

     Our audits of the consolidated financial statements referred to in our report dated March 12, 2002 appearing in the 2002 Annual Report to Stockholders of Raven Industries, Inc. (which report and consolidated financial statements are incorporated by reference in this Annual Report on Form 10-K) also included an audit of the financial statement schedule listed in Item 14(a)(2) of this Form 10-K. In our opinion, this financial statement schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.

PricewaterhouseCoopers LLP
Minneapolis, Minnesota
March 12, 2002

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SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS

for the years ended January 31, 2002, 2001 and 2000

(Dollars in thousands)

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, 2002	$	400	$	126	None	$	216	$	310
		Year ended January 31, 2001	$	400	$	552	None	$	552	$	400
		Year ended January 31, 2000	$	400	$	362	None	$	362	$	400

Note:

(1) Represents uncollectible accounts receivable written off during the year, net of recoveries.

16 EX-13 3 c68831ex13.txt 2002 ANNUAL REPORT TO SHAREHOLDERS BUSINESS PROFILE Founded in 1956, Raven today is an industrial manufacturer with four operating units. The company is divesting lower-performing assets, simplifying its product bases, and building profitability (cash return on invested capital) and shareholder value-a strategy of "Shrink, Fix, Grow."

- ------------------------------------------------------------------------------------------------------------------------------------ OPERATING UNIT PRODUCTS MARKETS COMPETITIVE STRENGTHS OUTLOOK - ------------------------------------------------------------------------------------------------------------------------------------ FLOW CONTROLS - Computerized control - Agriculture OEM's and - Market leader for - Technology-leading new Sales: hardware and software for sprayer manufacturers ag sprayer controls products will drive FY02 - $23 million precision farming growth in agriculture FY01 - $17 million - Turf management - Strong brand recognition FY00 - $14 million - Leading developer of equipment manufacturers and distribution network - Intergration of new GPS GPS-based control application will spur systems - Departments of - New Precision growth in new markets Transportation (DOTs) Solutions(TM) product - Precision application of line - Environmental concerns insecticides, fertilizer will dictate precision and road de-icers application of chemicals - ------------------------------------------------------------------------------------------------------------------------------------ ENGINEERED FILMS - Rugged reinforced plastic - Manufactured housing - Vertically integrated - Moderate growth as new Sales: sheeting and RVs manufacturing capacity comes online FY02 - $40 million capabilities FY01 - $40 million - Temporary grain covers - Price volatility for FY00 - $36 million for agriculture - Broad product line polyethylene resin - Temporary building - Superior target marketing construction enclosures - Pond lining and - High productivity and containers for oil low-cost structure exploration ----------------------------------------------------------------------------------------------------------- - High-altitude research - NASA - Sole source in US for - New commercial balloons scientific balloons applications could - Universities spur growth - Worldwide reputation for leadership - ------------------------------------------------------------------------------------------------------------------------------------ ELECTRONIC SYSTEMS - Electronics manufacturing - Primarily industrial - Advanced manufacturing, - Higher margins based on Sales: services (EMS) OEMs in North America technology better customer mix and FY02 - $32 million productivity FY01 - $32 million - Fortune 500 companies - Full-service provider, FY00 - $30 million that contract their from engineering and - Substantial topline small-volume, high-mix manufacturing to growth based on production customer service outsourcing trend - ISO 9001 - Customer emphasis on fewer suppliers with turnkey capabilities and financial strength - ------------------------------------------------------------------------------------------------------------------------------------ AEROSTAR - Custom-shaped advertising - Promotional and - Best technology in - Growth in advertising Sales: inflatables advertising markets in advertising inflatables and promotional markets FY02 - $16 million US including Disney for custom inflatables FY01 - $25 million - Hot-air sport balloons and Macy's - Reputation for innovation FY00 - $28 million and quality - Cost reductions to - Specialized sewing - Recreational ballooning enhance profitability applications - Market leader in sport - Service uniforms and balloons defense applications - ------------------------------------------------------------------------------------------------------------------------------------

Raven 2002 Annual Report PAGE 5 ELEVEN-YEAR FINANCIAL SUMMARY

For the years ended January 31 - ---------------------------------------------------------------------------------------------------------- Dollars in thousands, except per-share data 2002 2001 2000 - ---------------------------------------------------------------------------------------------------------- OPERATIONS FOR THE YEAR Net sales Ongoing operations ................................... $112,018 $113,360 $107,862 Sold operations(a) ................................... 6,497 19,498 42,523 Total .............................................. 118,515 132,858 150,385 Gross profit ........................................... 23,851 21,123 24,217 Operating income Ongoing operations ................................... 13,906 9,907 8,521 Nonrecurring charges, net ............................ (118)(b) (2,490)(c) (550) Sold operations(a) ................................... (613) 3,331(d) 2,606(e) Total .............................................. 13,175 10,748(d) 10,577(e) Income before income taxes ............................. 13,565 10,924(d) 10,503(e) Net income ............................................. $ 8,847 $ 6,411(d) $ 6,762(e) Net income % of sales .................................. 7.5% 4.8% 4.5% Net income % of beginning equity ....................... 18.4% 11.8% 10.9% Cash dividends ......................................... $ 2,371 $ 2,399 $ 2,895 FINANCIAL POSITION Current assets ......................................... $ 45,308 $ 51,817 $ 55,371 Current liabilities .................................... 13,810 13,935 14,702 Working capital ........................................ $ 31,498 $ 37,882 $ 40,669 Current ratio .......................................... 3.28 3.72 3.77 Property, plant and equipment .......................... $ 14,059 $ 11,647 $ 15,068 Total assets ........................................... 67,836 65,656 74,047 Long-term debt, less current portion ................... 280 2,013 3,024 Shareholders' equity, .................................. $ 52,032 $ 47,989 $ 54,519 Long-term debt/total capitalization .................... 0.5% 4.0% 5.3% Inventory turnover (CGS/year-end inventory) ............ 5.0 5.9 5.2 CASH FLOWS PROVIDED BY (USED IN) Operating activities ................................... $ 18,496 $ 9,441 $ 10,375 Investing activities ................................... (13,152) 9,752 6,323 Financing activities ................................... (8,539) (14,227) (16,326) Increase (decrease) in cash ............................ (3,195) 4,966 372 COMMON STOCK DATA Net income per share--basic ............................ $ 1.90 $ 1.24 $ 1.03 Net income per share--diluted .......................... 1.86 1.24 1.03 Cash dividends per share ............................... 0.51 0.47 0.44 Book value per share ................................... 11.30 10.13 9.28 Stock price range during year High ................................................. $ 23.50 $ 13.91 $ 12.17 Low .................................................. $ 12.08 $ 7.50 $ 9.00 Shares outstanding, year-end (in thousands)............. 4,606 4,739 5,874 Number of shareholders, year-end ....................... 2,387 2,460 2,749 OTHER DATA EBITDA ................................................. $ 16,870 $ 14,415 $ 15,461 EBITDA % of sales ...................................... 14.2% 10.8% 10.3% Average number of employees ............................ 838 1,043 1,320 Sales per employee ..................................... $ 141 $ 127 $ 114 Backlog ................................................ $ 33,834 $ 38,239 $ 44,935 - ----------------------------------------------------------------------------------------------------------

All per-share, shares outstanding and market price data reflect the July 2001 three-for-two stock split. All other figures are as reported. EBITDA is determined as operating income plus depreciation, amortization and the acquired in-process research and development charge. (a) During the third quarter of fiscal 2001, the company sold its Plastic Tank Division. In fiscal year 2000 and 1996, the company sold its Glasstite and Astoria businesses, respectively. The company's Beta Raven Industrial Controls Division is currently held for sale. Sales and operating income for all periods have been adjusted to reflect these business dispositions. (b) Represents a $550,000 acquired in-process research and development charge, partially offset by a net gain on business repositioning activities. (See Notes 4 and 5). PAGE 10

For the years ended January 31 - ---------------------------------------------------------------------------------------------------------------- 1999(h) 1998(h) 1997(h) 1996(h) 1995(h) 1994(h) 1993(h) 1992(h) - ---------------------------------------------------------------------------------------------------------------- $ 108,408 $ 104,489 $ 101,869 $ 84,379 $ 87,458 $ 88,608 $ 85,181 $ 76,943 46,798 47,679 39,576 38,010 35,889 34,279 27,367 24,853 155,206 152,168 141,445 122,389 123,347 122,887 112,548 101,796 24,441 24,929 25,287 22,660 23,968 23,574 21,048 19,109 8,220 9,555 9,321 7,692 10,470 8,054 7,758 7,691 1,453 1,007 2,650 1,869 466(g) 2,386 1,388 447 9,673 10,562 11,971 9,561 10,936 10,440 9,146 8,138 9,649 12,540(f) 11,915 9,566 9,372 10,638 9,182 8,067 $ 6,182 $ 8,062(f) $ 7,688 $ 6,197 $ 6,088 $ 6,954 $ 6,030 $ 5,306 4.0% 5.3% 5.4% 5.1% 4.9% 5.7% 5.4% 5.2% 10.0% 14.2% 15.6% 13.6% 14.8% 19.6% 19.7% 20.2% $ 2,944 $ 2,709 $ 2,367 $ 2,130 $ 1,843 $ 1,545 $ 1,316 $ 1,165 $ 60,279 $ 57,285 $ 56,696 $ 45,695 $ 43,795 $ 45,037 $ 42,476 $ 34,798 15,128 17,816 20,016 14,771 15,078 16,088 15,253 11,284 $ 45,151 $ 39,469 $ 36,680 $ 30,924 $ 28,717 $ 28,949 $ 27,223 $ 23,514 3.98 3.22 2.83 3.09 2.90 2.80 2.78 3.08 $ 19,563 $ 19,817 $ 18,142 $ 18,069 $ 18,570 $ 13,371 $ 10,457 $ 9,947 83,657 82,066 80,662 67,553 65,636 60,597 54,813 46,528 4,572 1,128 3,181 2,816 4,179 2,539 3,224 3,676 $ 62,293 $ 61,563 $ 56,729 $ 49,151 $ 45,526 $ 41,100 $ 35,530 $ 30,601 6.8% 1.8% 5.3% 5.4% 8.4% 5.8% 8.3% 10.7% 4.9 4.8 4.5 4.1 4.4 4.4 3.8 4.2 $ 8,326 $ 9,274 $ 7,088 $ 9,687 $ 7,452 $ 11,257 $ 3,475 $ 7,489 (3,127) (4,979) (5,090) (4,158) (10,000) (5,908) (3,107) (3,886) (2,714) (4,884) (2,363) (4,029) 406 (2,042) (1,659) (2,518) 2,485 (589) (365) 1,500 (2,142) 3,307 (1,291) 1,085 $ 0.87 $ 1.11 $ 1.08 $ 0.87 $ 0.86 $ 0.99 $ 0.87 $ 0.77 0.87 1.10 1.07 0.87 0.85 0.97 0.85 0.75 0.41 0.37 0.33 0.30 0.26 0.22 0.19 0.16 8.85 8.51 7.82 6.95 6.41 5.84 5.07 4.42 $ 15.17 $ 17.17 $ 15.67 $ 13.83 $ 16.33 $ 15.67 $ 14.33 $ 10.56 $ 10.17 $ 13.08 $ 10.67 $ 10.33 $ 12.00 $ 12.00 $ 9.22 $ 5.33 7,041 7,236 7,253 7,074 7,103 7,041 7,014 6,944 3,014 3,221 3,011 3,190 3,031 3,173 3,147 2,775 $ 14,806 $ 15,699 $ 16,537 $ 13,803 $ 12,718 $ 13,337 $ 11,809 $ 10,675 9.5% 10.3% 11.7% 11.3% 10.3% 10.9% 10.5% 10.5% 1,445 1,511 1,387 1,368 1,414 1,435 1,316 1,252 $ 107 $ 101 $ 102 $ 89 $ 87 $ 86 $ 86 $ 81 $ 47,431 $ 47,154 $ 38,102 $ 32,539 $ 29,661 $ 36,403 $ 49,033 $ 48,200 - ----------------------------------------------------------------------------------------------------------------

(c) Represents business repositioning charges, net of gains on plant sales, primarily in Electronic Systems Division and Aerostar (See Note 5). (d) Includes the $3.1 million pretax gain ($1.4 million net of tax) on the sale of the company's Plastic Tank Division (See Note 5). (e) Includes the $1.2 million pretax gain ($764,000 net of tax) on the sale of assets of the company's Glasstite subsidiary (See Note 5). (f) Includes the $1.8 million pretax gain ($1.2 million net of tax) on sale of an investment in an affiliate. (g) Includes $1.8 million of business repositioning charges at the company's Beta Raven Industrial Controls Division. (h) Amounts for these years are unaudited. Raven 2002 Annual Report PAGE 11 BUSINESS SEGMENTS

For the years ended January 31 -------------------------------------------------------------------------------- Dollars in thousands 2002 2001 2000 1999(g) 1998(g) 1997(g) -------------------------------------------------------------------------------- ELECTRONIC SYSTEMS DIVISION Sales ........................................... $ 32,289 $ 32,039 $ 30,176 $ 24,958 $ 23,968 $ 22,133 Operating income (loss) ......................... 2,264 (542)(b) 1,632 2,322 3,319 1,971 Assets .......................................... 13,910 15,359 18,846 15,591 12,994 11,055 Capital expenditures ............................ 774 1,492 1,168 1,399 1,614 660 Depreciation & amortization ..................... 1,101 1,089 1,032 959 834 815 FLOW CONTROLS DIVISION Sales ........................................... $ 23,178 $ 16,758 $ 13,520 $ 15,311 $ 16,852 $ 16,689 Operating income ................................ 5,509(a) 3,985 2,873 2,810 3,829 4,264 Assets .......................................... 20,313 9,578 7,096 8,553 10,679 10,370 Capital expenditures ............................ 677 327 202 501 210 316 Depreciation & amortization ..................... 443 353 351 329 322 284 ENGINEERED FILMS DIVISION Sales ........................................... $ 40,280 $ 40,004 $ 35,889 $ 32,514 $ 28,322 $ 26,625 Operating income ................................ 9,886 8,810 7,464 5,836 3,336 3,751 Assets .......................................... 14,847 13,031 13,472 13,177 13,504 13,107 Capital expenditures ............................ 3,182 674 792 566 1,511 1,576 Depreciation & amortization ..................... 1,085 1,033 1,075 1,136 1,140 877 AEROSTAR Sales ........................................... $ 16,271 $ 24,559 $ 28,277 $ 35,625 $ 35,347 $ 36,422 Operating income ................................ 1,278 1,583 2,092 2,724 4,300 4,543 Assets .......................................... 5,994 7,361 11,307 14,446 14,065 14,934 Capital expenditures ............................ 252 122 117 308 556 353 Depreciation & amortization ..................... 263 280 372 464 489 528 BUSINESSES SOLD AND FOR SALE Sales ........................................... $ 6,497 $ 19,498 $ 42,523 $ 46,798 $ 47,679 $ 39,576 Operating income (loss)(e) ...................... (613) 3,331(c) 2,606(d) 1,453 1,007 2,650 Assets .......................................... 1,102 4,805 13,475 22,048 22,693 22,451 Capital expenditures ............................ 52 246 1,172 1,585 2,217 997 Depreciation & amortization ..................... 76 718 1,831 2,004 2,136 1,833 CORPORATE & OTHER(f) Operating (loss) ................................ $ (5,149) $ (6,419) $ (6,090) $ (5,472) $ (5,229) $ (5,208) Assets .......................................... 11,670 15,522 9,851 9,842 8,131 8,745 Capital expenditures ............................ 157 229 188 247 433 107 Depreciation & amortization ..................... 177 194 223 241 216 229 TOTAL COMPANY Sales ........................................... $ 118,515 $ 132,858 $ 150,385 $ 155,206 $ 152,168 $ 141,445 Operating income ................................ 13,175(a) 10,748(b,c) 10,577(d) 9,673 10,562 11,971 Assets .......................................... 67,836 65,656 74,047 83,657 82,066 80,662 Capital expenditures ............................ 5,094 3,090 3,639 4,606 6,541 4,009 Depreciation & amortization ..................... 3,145 3,667 4,884 5,133 5,137 4,566 - ------------------------------------------------------------------------------------------------------------------------------------

(a) Includes a $550,000 in-process research and development charge, related to the Starlink acquisition. (b) Includes $1.8 million of business repositioning charges in the Electronic Systems Division and $2.5 million for the total company (See Note 5). (c) Includes a $3.1 million pretax gain on the sale of the company's Plastic Tank Division (See Note 5). (d) Includes a $1.2 million pretax gain on the sale of the company's Glasstite business (See Note 5). (e) Operating income for businesses sold and for sale includes administrative expenses directly attributable to the sold business. (f) Operating loss consists of administrative expenses-- assets are principally cash, investments, deferred taxes and notes receivable. (g) Amounts for 1999, 1998 and 1997 are unaudited. PAGE 12 FINANCIAL REVIEW AND ANALYSIS RESULTS OF OPERATIONS: MARGIN ANALYSIS The following table presents comparative financial performance for the past three years:

For the years ended January 31 -------------------------------------------------------------------------------------- 2002 2001 2000 -------------------------------------------------------------------------------------- % % % % % % In thousands, except per-share data As Reported Sales Change As Reported Sales Change As Reported Sales Change -------------------------------------------------------------------------------------- Net sales ................................. $118,515 100.0 -10.8 $132,858 100.0 -11.7 $150,385 100.0 - 3.1 Gross profit .............................. 23,851 20.1 +12.9 21,123 15.9 -12.8 24,217 16.1 - 0.9 Operating expenses ........................ 11,043 9.3 -20.5 13,883 10.4 - 6.4 14,826 9.9 + 0.4 Gain on sale of businesses and assets ..... (367) (3,508) (1,186) Operating income .......................... 13,175 11.1 +22.6 10,748 8.1 + 1.6 10,577 7.0 + 9.3 Income before income taxes ................ 13,565 11.4 +24.2 10,924 8.2 + 4.0 10,503 7.0 + 8.9 Income taxes .............................. 4,718 4.0 + 4.5 4,513 3.4 +20.6 3,741 2.5 + 7.9 Net income ................................ $ 8,847 7.5 +38.0 $ 6,411 4.8 - 5.2 $ 6,762 4.5 + 9.4 Net income per share - diluted ............ $ 1.86 +50.0 $ 1.24 +20.4 $ 1.03 +18.4 Effective income tax rate ................. 34.8% -15.8 41.3% +16.0 35.6% - 0.9 - ---------------------------------------------------------------------------------------------------------------------------------

The following table presents selected financial statement data, excluding the results of businesses sold and for sale and certain nonrecurring charges:

For the years ended January 31 --------------------------------------------------------------------------------------- 2002 ONGOING OPERATIONS 2001 Ongoing Operations --------------------------------------------------------------------------------------- Adjustments % % Adjustments % % In thousands to as reported Results Sales Change to as reported Results Sales Change --------------------------------------------------------------------------------------- Net sales ................................. $ 6,497 $112,018 100.0 - 1.2 $19,498 $113,360 100.0 + 5.1 Gross profit .............................. (276) 24,127 21.5 +14.5 50 21,073 18.6 + 6.6 Operating expenses ........................ 822 10,221 9.1 - 8.5 2,717 11,166 9.9 - 0.7 Gain on sale of businesses and assets ..... (367) -- (3,508) -- Operating income .......................... (731) 13,906 12.4 +40.4 841 9,907 8.7 +16.3 Income before income taxes ................ (731) 14,296 12.8 +41.8 844 10,080 8.9 +19.6 Income taxes .............................. (254) 4,972 4.4 +38.1 914 3,599 3.2 +20.0 Net income ................................ $ (477) $ 9,324 8.3 +43.9 $ (70) $ 6,481 5.7 +19.4 - ----------------------------------------------------------------------------------------------------------------------------------

For the years ended January 31 ---------------------------------- 2000 Ongoing Operations ---------------------------------- Adjustments % In thousands to as reported Result Sales ---------------------------------- Net sales ................................. $42,523 $107,862 100.0 Gross profit .............................. 4,452 19,765 18.3 Operating expenses ........................ 3,583 11,243 10.4 Gain on sale of businesses and assets ..... (1,186) -- Operating income .......................... 2,056 8,521 7.9 Income before income taxes ................ 2,075 8,428 7.8 Income taxes .............................. 741 3,000 2.8 Net income ................................ $ 1,334 $ 5,428 5.0 - -----------------------------------------------------------------------------

PERFORMANCE OF ONGOING OPERATIONS Results as reported include a number of items the company believes are not relevant to future cash flows or operating results. Ongoing operations exclude the operations of and gains on sale of the Glasstite subsidiary which was sold in October 1999, the Plastic Tank Division which was partially sold in August 2000 and closed in November 2001 and the results of the Industrial Controls Division of Beta Raven which is held for sale. Ongoing results also exclude the nonrecurring gains and losses related to repositioning the company's businesses and acquisition-related charges. The items excluded from ongoing results cause this presentation to not be in conformity with accounting principles generally accepted in the United States of America. Discussions of operating performance in this document generally relate to ongoing operations unless otherwise indicated. A strong performance from new products in the Flow Controls Division was key to the company's success in fiscal 2002. Profit improvement in the Electronic Systems and Engineered Films divisions also contributed to record fiscal 2002 profitability. Sales from ongoing operations were down 1.2%, at $112.0 million. A planned drop in Aerostar outerwear sales accounted for an $8.3 million reduction in revenues, while deliveries from the Flow Controls Division were up 38%. Lower operating expenses resulted from reduced spending at the corporate level for administrative costs. Ongoing operating income increased 40%, to $13.9 million. Net income was up $2.8 million in fiscal 2002, reaching $9.3 million. Fiscal 2001 sales from ongoing businesses were $113.4 million and were 5.1% higher than the $107.9 million sales figure in fiscal 2000. Sales in our important growth segments; Electronic Systems, Flow Controls and Engineered Films, exceeded fiscal 2000 levels. New product offerings generated growth in the Flow Controls Division. Engineered Films growth came from strong construction and oil exploration markets. New contracts in an expanding market created growth in the Electronic Systems Division. Aerostar segment sales fell below the prior year's level due to weakness in the markets it serves. Ongoing operating income was $9.9 million, 16.3% higher than the comparable figure in fiscal 2000. The favorable profit impact of higher sales and lower operating expenses raised operating income as a percent of sales. As a result, net income from ongoing operations increased from $5.4 million in fiscal 2000 to $6.5 million in fiscal 2001. Raven 2002 Annual Report PAGE 13 FINANCIAL REVIEW AND ANALYSIS (CONTINUED) DIVESTITURES AND OTHER REPOSITIONING ACTIVITIES The company has taken important steps to reposition its business over the last three years. The company's Beta Raven Industrial Controls Division is currently held for sale. Most of the company's plastic tank operation was sold in August 2000. The company's remaining tank facility in Tacoma, WA was closed in November 2001. In October 1999, the Glasstite pickup-truck topper business was sold. Sales of these businesses resulted in pretax gains of $3.1 million in fiscal 2001 and $1.2 million in fiscal 2000. In addition, the company's effective income tax rate in fiscal 2001 of 41.3% reflects the impact of a non-deductible goodwill disposition related to the sale of the plastic tank operation. In fiscal 2002, the only significant one-time charge to ongoing operations was to write off in-process research and development related to the acquisition of Starlink in the fourth quarter. The in-process research and development related to a project to develop the Invicta GPS receiver, which is scheduled for release in the second half of fiscal 2003. A $550,000 charge to cost of goods sold in the Flow Controls segment was required because the project had not reached technological feasibility. The Electronic Systems Division recorded a net $18,000 favorable adjustment to prior year repositioning accruals. The Beta Raven Industrial Controls Division incurred $249,000 of costs to reposition its operations, including the closing of its Alabama facility. These Beta Raven costs impacted the reported cost of goods sold in the Businesses Sold and For Sale segment. For fiscal 2001, inventory write-downs and severances totaled approximately $3.0 million (of which $84,000 relates to the held-for-sale Beta Raven Industrial Controls Division) and were offset by $393,000 of gains on the sale of sewing plants. These nonrecurring charges included $1.7 million in cost of sales and $130,000 in operating expenses for the Electronic Systems Division. The Flow Controls Division and Beta Raven incurred cost-of-sales charges of $238,000 and $84,000, respectively. Charges in fiscal 2001 were primarily excess and obsolete inventory from restructuring the customer base in the Electronic Systems Division and Beta Raven and discontinuing certain ultrasonic products in the Flow Controls Division. Additional nonrecurring charges incurred in fiscal 2001 included obsolete inventory due to discontinued apparel lines, severance and other costs from the combination of the former Raven Sportswear Division into Aerostar. These charges totaled $823,000 ($767,000 in the fourth quarter), of which $344,000 was charged to cost of sales and $479,000 was charged to corporate and other operating expenses. In fiscal 2000, nonrecurring charges were $800,000 (of which $250,000 related to the now sold Plastic Tank Division). These cost-of-sales charges were primarily for obsolete and excess inventory identified by new management in the Electronic Systems Division ($300,000) and Aerostar's specialty apparel operations ($250,000). Beta Raven Industrial Controls Division sales were $3.0 million, $3.3 million and $5.2 million in fiscal 2002, 2001, and 2000, respectively. Sales for the Plastic Tank Division were $3.5 million in fiscal 2002, $16.2 million in fiscal 2001 and $19.6 million in fiscal 2000. Glasstite pickup-truck topper sales in fiscal 2000 were $17.7 million. Fiscal 2002 results included an operating loss of $613,000 for businesses sold and for sale. In fiscal 2001, operating income for the businesses sold and for sale, was $3.3 million, including a $3.1 million gain on sale. Operating income for these businesses in fiscal 2000, including a $1.2 million asset sales gain, was $2.6 million. PERFORMANCE OF OPERATIONS - AS REPORTED Consolidated sales from all businesses in fiscal 2002 were $118.5 million, compared to $132.9 million and $150.4 million in fiscal 2001 and fiscal 2000, respectively. Sales from businesses sold and for sale were $6.5 million in fiscal 2002, $19.5 million in fiscal 2001 and $42.5 million in fiscal 2000. Nearly all the assets of the Plastic Tank Division were sold in August 2000 and the Glasstite pickup-truck topper business was sold in October 1999. Total net income, including the impact of sold and for sale operations, nonrecurring charges and gains on sales of businesses and assets, reached a record $8.8 million or $1.86 per diluted share in fiscal 2002. In fiscal 2001 net income was $6.4 million and in fiscal 2000 it was $6.8 million. Net income per diluted share was $1.24 per share in fiscal 2001 and $1.03 in fiscal 2000 as the number of diluted shares declined from 6.6 million in fiscal 2000 to 5.2 million in fiscal 2001 and 4.7 million in fiscal 2002. PAGE 14 By divesting itself of underperforming assets, the company's management has focused on improving profitability in its core businesses. In fiscal 2002, the company's return was 18.4% on beginning equity and 7.5% on sales. The company completed two strategic acquisitions, repurchased 173,309 shares of its common stock for a total of $2.8 million, paid record per-share dividends, prepaid its long-term debt and continued to invest in its ongoing businesses. The company also split its stock on a 3-for-2 basis during fiscal 2002.

2002 2001 2000 1999 1998 1997 - ---------------------------------------------------------------------- Net income as % of Sales ................ 7.5% 4.8% 4.5% 4.0% 5.3% 5.4% Average assets ....... 13.3% 9.2% 8.6% 7.4% 9.9% 10.4% Beginning equity ..... 18.4% 11.8% 10.9% 10.0% 14.2% 15.6% - ----------------------------------------------------------------------

SEGMENT ANALYSIS SALES AND OPERATING INCOME BY SEGMENT

2002 2001 2000 ---------------------------------------------------------- % % % Dollars in thousands amount change amount change amount change ---------------------------------------------------------- SALES Flow Controls ....... $ 23,178 +38.3 $ 16,758 +23.9 $ 13,520 -11.7 Engineered Films .... 40,280 + 0.7 40,004 +11.5 35,889 +10.4 Electronic Systems .. 32,289 + 0.8 32,039 + 6.2 30,176 +20.9 Aerostar ............ 16,271 -33.7 24,559 -13.1 28,277 -20.6 -------- -------- -------- ONGOING OPERATIONS TOTAL ............. 112,018 - 1.2 113,360 + 5.1 107,862 - 0.5 Businesses Sold and For Sale . 6,497 -66.7 19,498 -54.1 42,523 - 9.1 -------- -------- -------- Total (as reported) . $118,515 -10.8 $132,858 -11.7 $150,385 - 3.1 ======== ======== ========

2002 2001 2000 ---------------------------------------------------------- % % % Dollars in thousands amount sales amount sales amount sales ---------------------------------------------------------- OPERATING INCOME (LOSS) Flow Controls ........... $ 6,059 26.1 $ 4,223 25.2 $ 2,873 21.3 Engineered Films ........ 9,886 24.5 8,810 22.0 7,464 20.8 Electronic Systems ...... 2,246 7.0 1,280 4.0 1,932 6.4 Aerostar ................ 864 5.3 1,534 6.2 2,342 8.3 Corporate expenses ...... (5,149) (5,940) (6,090) ------- ------- ------- ONGOING OPERATIONS TOTAL ................. 13,906 12.4 9,907 8.7 8,521 7.9 Businesses Sold and For Sale .............. (613) 3,331 2,606 Nonrecurring charges(a) . (118) (2,490) (550) ------- ------- ------- Total (as reported) ..... $13,175 11.1 $10,748 8.1 $10,577 7.0 ======= ======= =======

(a) Nonrecurring charges are separately stated in the above table as the company does not believe them to be relevant to future cash flows or operating results. However, the reported segment data on page 12 reflect nonrecurring charges in the segment to which they apply. FLOW CONTROLS FISCAL 2002 VERSUS FISCAL 2001 The Flow Controls Division (FCD) provides electronic speed and Global Positioning System (GPS)-based, location-compensated application-control products for the agriculture, golf course and DOT (department of transportation) markets. Sales in fiscal 2002 were $23.2 million, up 38.3% over fiscal 2001 levels. The acceptance of new product introductions, including a special order for chemical injection systems, increased deliveries. In the fourth quarter of fiscal 2002, deliveries under that special order were $2.0 million, up $1.0 million from a similar order delivered in the fourth quarter of fiscal 2001. Gross profit rates on new product introductions were slightly lower than existing products, but the relatively strong sales growth pushed ongoing operating income to a record high. Gross profit rates, excluding nonrecurring charges, were 32.9% in fiscal 2002 and 34.3% in fiscal 2001. Fiscal 2002 ongoing operating income of $6.1 million was 43.5% higher than in fiscal 2001. FISCAL 2001 VERSUS FISCAL 2000 Fiscal 2001 sales reached $16.8 million, 23.9% over fiscal 2000. The sales increase is primarily the result of new product introductions and a comprehensive marketing campaign that increased FCD's market share in the industries it serves. Gross profits, excluding non-recurring charges, increased $1.7 million in fiscal 2001 to $5.7 million. The strong sales volume, increased manufacturing efficiencies through process improvements and material cost reductions were the main contributors to a gross profit margin increase from 29.9% to 34.3% in fiscal 2001. Operating income, excluding non-recurring charges, of $4.2 million was $1.3 million over the $2.9 million figure in fiscal 2000. Marketing expenses increased $363,000 from fiscal 2000, primarily due to advertising, trade show and literature expenses. Operating income, excluding nonrecurring charges, increased to 25.2% of sales, an increase of almost four percentage points from fiscal 2000. PROSPECTS The Flow Controls Division acquired Starlink in December 2001 for $7.9 million. Starlink is a developer of GPS technology for agricultural and other niche markets. Starlink was a key supplier of a number of the new products introduced over the past [FLOW CONTROLS BAR GRAPH]

FLOW CONTROLS NET SALES ONGOING OPERATING INCOME ($ IN MILLIONS) ($ IN MILLIONS) 2000 13.52 2.873 2001 16.758 4.223 2002 23.178 6.059

Raven 2002 Annual Report PAGE 15 FINANCIAL REVIEW AND ANALYSIS (continued) two years by FCD. The overall agricultural market remains weak and management anticipated relatively flat sales and profits absent the acquisition. Starlink is expected to add more than $5 million to the sales figures in fiscal 2003 and the division will capture additional gross profit on product formerly supplied to it by Starlink. ENGINEERED FILMS FISCAL 2002 VERSUS FISCAL 2001 The Engineered Films Division (EFD) provides reinforced plastic sheeting, primarily to the construction, oil exploration and manufactured housing industries, and manufactures scientific research balloons. Sales in fiscal 2002 of $40.3 million were slightly higher than the $40.0 million in fiscal 2001. Strength in pit lining for oil exploration was strong in the first half of fiscal 2002, but softened in the second half. Demand for construction film in the fourth quarter of fiscal 2002 was slowed by mild weather. Deliveries of scientific research balloons were $4.5 million, down 3% from fiscal 2001. Favorable trends in material pricing, along with improved throughput in key manufacturing areas improved profitability over fiscal 2001 levels. Gross profit rates increased from 26.3% in fiscal 2001 to 29.1% in fiscal 2002. Record operating income of $9.9 million in fiscal 2002 was 12% higher than in fiscal 2001. FISCAL 2001 VERSUS FISCAL 2000 Sales in fiscal 2001 were $40.0 million, a $4.1 million increase over fiscal 2000. The sales increases were primarily from increased and construction industries. Pit lining demand increased due to increased domestic oil production and construction enclosure demand increased due to an early winter across much of the country. Sales of scientific research balloons declined $420,000 from $5.0 million in fiscal 2000, but gross profits rose from $1.3 million in fiscal 2000 to $1.5 in fiscal 2001. Final delivery of NASA prototype balloon products occurred in the fourth quarter of fiscal 2001. EFD's gross profits in fiscal 2001 were $10.5 million, a $1.5 million increase from fiscal 2000. The gross profit rate increase of 1.3 points to 26.3% in fiscal 2001 was due primarily to increased manufacturing efficiencies and sales increases of relatively higher margin construction and oil exploration industry products. EFD's operating income in fiscal 2001 was $8.8 million and exceeded fiscal 2000 by $1.3 million. [ENGINEERED FILMS BAR GRAPH]

ENGINEERED FILMS NET SALES ONGOING OPERATING INCOME ($ IN MILLIONS) ($ IN MILLIONS) 2000 35.889 7.464 2001 40.004 8.81 2002 40.28 9.886

PROSPECTS After capital expenditures of $3.2 million in fiscal 2002, management will invest an additional $5 million in the Engineered Films Division in fiscal 2003. New extrusion equipment is expected to come online in the fall of 2002. These equipment additions are expected to broaden EFD's product offerings and expand sales. Sales growth in the 10% range is expected. The higher depreciation burden and costs of entering new markets is expected to substantially offset the profit impact of the higher sales in fiscal 2003. ELECTRONIC SYSTEMS FISCAL 2002 VERSUS FISCAL 2001 The Electronic Systems Division (ESD) provides electronics manufacturing services (EMS) primarily to North American original equipment manufacturers (OEM's). Results for ESD include the operations of its St. Louis facility, which until August 2001 was a division of the company's Beta Raven subsidiary. Prior years' results have been reclassified to maintain comparability. Revenues of $32.3 million in fiscal 2002 compared to $32.0 million in fiscal 2001. The repositioning of the division in fiscal 2001 reduced the division's customer base by 50%, mitigating the impact of growth with continuing accounts. Gross profit rates improved from 6.3% in fiscal 2001 to 8.8% in fiscal 2002. The better focus created by repositioning combined with streamlined workflow in our new Sioux Falls, SD facility improved manufacturing efficiencies. As a result, ongoing operating income increased by 75%, from $1.3 million in fiscal 2001 to $2.2 million in fiscal 2002. [ELECTRONIC SYSTEMS BAR GRAPH]

ELECTRONIC SYSTEMS NET SALES ONGOING OPERATING INCOME ($ IN MILLIONS) ($ IN MILLIONS) 2000 30.176 1.932 2001 32.039 1.28 2002 32.289 2.246

FISCAL 2001 VERSUS FISCAL 2000 Sales for ESD were up $1.9 million over fiscal 2000, reaching $32.0 million in fiscal 2001. ESD delivered $2.1 million of secure telecommunication products on its multi-year contract with General Dynamics in the fourth quarter. Gross profits, excluding nonrecurring charges of $2.0 million, trailed fiscal 2000 by $795,000. The division moved into a new production facility during fiscal 2001 and re-evaluated its customer base, reducing the number of customers by nearly 50%. Both of these efforts caused manufacturing inefficiencies, increased production costs and reduced gross profits in the PAGE 16 second and third quarters of fiscal 2001. The gross profit rate, excluding nonrecurring charges, was 6.3% compared to 9.3% in fiscal 2000. The repositioning efforts combined with special shipments benefited the division in the fourth quarter of fiscal 2001 and the division returned a gross profit of $1.3 million or 14.1% of sales in that quarter. ESD's operating income, excluding nonrecurring charges, for fiscal 2001 was $1.3 million compared to $1.9 million in fiscal 2000. PROSPECTS The division purchased System Integrators in December 2001 for approximately $1.4 million. This company was moved to ESD's existing facility in the St. Louis area. System Integrators customers are expected to add another $5 million to sales in fiscal 2003. In addition, the division's existing customers expect to grow in the 7-12% range over the coming year. Better utilization of capacity and improvements to manufacturing efficiency are also expected to continue, improving gross profit rates. AEROSTAR FISCAL 2002 VERSUS FISCAL 2001 The Aerostar segment manufactures inflatable display products and hot-air sport balloons and performs specialized sewing operations on a contract basis. With the closing of two sewing plants late in fiscal 2001, a decline in demand for outerwear sewing contracts was anticipated. As expected, Aerostar sales declined from $24.6 million in fiscal 2001 to $16.3 million in fiscal 2002. Efficiencies suffered as products were transferred between facilities. Fourth-quarter results in fiscal 2002 were also negatively impacted by approximately $228,000 of inventory writedowns related to continued loss of customers. Despite a slight overall improvement in gross margin rates, from 11.4% to 11.9%, ongoing operating income fell from $1.5 million in fiscal 2001 to $864,000 in fiscal 2002. [AEROSTAR BAR GRAPH]

AEROSTAR NET SALES ONGOING OPERATING INCOME ($ IN MILLIONS) ($ IN MILLIONS) 2000 28.277 2.342 2001 24.559 1.534 2002 16.271 0.864

FISCAL 2001 VERSUS FISCAL 2000 Aerostar sales in fiscal 2001 were $24.6 million compared to $28.3 million in fiscal 2000. Inflatable and hot-air sales reached $5.5 million and were up slightly from fiscal 2000. However, specialty apparel sales fell to $19.1 million in fiscal 2001 from $23.3 million in fiscal 2000. The sales decline was primarily due to the sale of Aerostar's proprietary skiwear line at the end of fiscal 2000 and a declining market share of hunting outerwear products due to foreign competition. In the fourth quarter of fiscal 2001, two of the segment's five sewing plants were closed to reduce manufacturing capacity because of the continuing sales decline. Gross profits, excluding nonrecurring charges, of $2.8 million were $1.1 million below fiscal 2000. Hot-air and inflatable margins increased due to aggressive product pricing and manufacturing efficiency improvements. Specialty apparel gross profit declines are primarily the result of the sale of the proprietary skiwear line that carried higher gross margins than the remaining contract lines but required higher working capital investments. Operating profits, excluding nonrecurring charges, of $1.5 million were $808,000 below the $2.3 million level in fiscal 2000. PROSPECTS Sales are expected to continue to decline at Aerostar, but by less than $2 million in fiscal 2003. Sales of inflatable and other advertising products are expected to increase. With a more stable sales base, efficiency and profitability are expected to improve. This improvement is expected to be substantially offset by higher aviation insurance premiums for hot-air balloon products. EXPENSES, INCOME TAXES, AND OTHER FISCAL 2002 VERSUS FISCAL 2001 Corporate expenses, primarily administrative expenses, were $5.1 million in fiscal 2002, down from $5.9 million in fiscal 2001. Reduced administrative staff accounted for the improvement. Interest expense of $129,000 in fiscal 2002 was down due to lower long-term debt levels. Interest income, included in other income, was $573,000 in fiscal 2002 as compared to $468,000 one year earlier. Higher average invested cash balances were partially offset by lower interest rates. The company's effective tax rate of 34.8% in fiscal 2002 was lower than the fiscal 2001 rate, excluding non-recurring charges, of 35.7%. The fiscal 2001 rate, as reported, of 41.3% included a nondeductible goodwill write-off and the fiscal 2002 rate reflected closing operations in, and losses in, states that have a corporate income tax. Raven 2002 Annual Report PAGE 17 FINANCIAL REVIEW AND ANALYSIS (continued) FISCAL 2001 VERSUS FISCAL 2000 Corporate expenses were $5.9 million in fiscal 2001, excluding non-recurring charges, as compared to $6.1 million in fiscal 2000. The decrease was a result of corporate staff reductions. Interest expense was $258,000, down from $418,000 the previous year due to lower short-term borrowing and long-term debt. Other income increased due to interest earned on the cash proceeds from the Plastic Tank Division asset sale. Interest income was $468,000 in fiscal 2001 compared with $276,000 in fiscal 2000. The effective tax rate increased from 35.6% to 41.3% in fiscal 2001 due to a $1.8 million write-off of nondeductible goodwill. The tax rate used for ongoing operations excludes the impact of the goodwill write-off and was 35.7%. PROSPECTS In fiscal 2003, management expects to keep corporate administrative expenses relatively flat. Interest income is forecasted to be lower due to the cash spent on acquisitions and capital projects. The company's effective tax rate should increase to the 35% range due to higher state taxes in fiscal 2003. ANALYSIS OF FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES The following table summarizes cash provided by (used in) the company's business activities for the past three fiscal years:

Dollars in thousands 2002 2001 2000 --------------------------- Operating activities ............... $18,496 $ 9,441 $10,375 Investing activities ............... (13,152) 9,752 6,323 Financing activities ............... (8,539) (14,227) (16,326) - -------------------------------------------------------------------

OPERATING ACTIVITIES The company's cash flow from operations totaled $38.3 million over the past three years compared to net income of $22.0 million over the same period. Inventories and accounts receivable, after adjusting for businesses acquired and sold, decreased $6.0 million in fiscal 2002. Management has instituted incentives to improve working capital utilization. Reducing the customer base in the Electronic Systems Division has also improved inventory turns. Working capital requirements are projected to decline due to increased inventory and accounts receivable turnover rates. INVESTING ACTIVITIES In fiscal 2002, the company paid approximately $8.7 million in cash for two acquisitions. In fiscal 2001, the company sold substantially all the assets of its Plastic Tank Division. In addition, the company sold two of its sewing plants and collected additional cash from the fiscal 2000 sale of Glasstite assets. Total cash proceeds from these sales in fiscal 2001 were $12.8 million. Capital expenditures were $5.1 million in fiscal 2002 and $3.1 million in fiscal 2001. The Engineered Films Division acquired additional extrusion capacity and warehouse space, accounting for $3.2 million of the spending. Capital expenditures in fiscal 2002 exceeded depreciation and amortization by $1.9 million. Capital spending is expected to approach $7 million in fiscal 2003. Fiscal 2003 expenditures are again planned primarily for expansion of the Engineered Films product line and are expected to be financed by cash flow from operations. FINANCING ACTIVITIES AND CREDIT LINES The company increased its dividend on a per share basis for the fifteenth consecutive year. Cash was also used to repurchase 173,309 shares of company stock at an average price of $16.43. In fiscal 2001, 1.1 million shares of company stock were purchased at an average price of $9.48. Shares were repurchased to return additional cash to the shareholders and increase the leverage of the company's balance sheet. The company may repurchase additional shares, depending upon its internal cash requirements, as authorized by the Board of Directors. The company used its short-term lines of credit to finance Aerostar's seasonal borrowing needs. Maximum borrowing under the company's line of credit was $1.3 million during fiscal 2002 and the average daily borrowing was $368,000. Short-term borrowing required for fiscal 2003 should again be minimal due to the company's opening cash balance. Management believes its existing credit facility and cash provided by operations will be sufficient to fund its requirements in the coming fiscal year. CAPITAL STRUCTURE AND LONG-TERM FINANCING The company prepaid substantially all of its long-term debt in fiscal 2002. The remaining term debt of approximately $400,000 matures over four years and relates primarily to capitalized leases assumed from acquisitions. The company's solid financial condition and capacity to assume additional financing, if needed, provide the company a strategic advantage over many of its competitors. Management has the capacity to, and will, leverage the company to acquire businesses that fit its strategic direction. In the opinion of management, the company is well positioned to take on new opportunities in its core businesses with emphasis on those that build on the company's strengths of customer service and manufacturing. PAGE 18 ACCOUNTING POLICIES AND PRONOUNCEMENTS KEY ACCOUNTING POLICIES Key accounting policies for the company are those policies that require the application of judgement when valuing assets and liabilities on the company's balance sheet. The company, other than utilizing operating leases outlined in Note 8 to the financial statements, does not enter into off balance sheet financing or derivatives. The company's most difficult accounting decision is determining inventory value at the lower of cost or market. Typically, when a product reaches the end of its life cycle, inventory value declines slowly or the product has alternative uses. Management uses its computerized manufacturing resources planning data to help determine if inventory is slow moving or has become obsolete due to an engineering change. The company has been unable to develop a mathematical model to predict obsolescence, but closely reviews items that have balances in excess of the prior year's requirements or that have been dropped from production requirements. Despite these reviews, technological or strategic decisions, made by management or the company's customers, may result in unexpected excess material. In the Electronic Systems Division, the company typically has recourse to customers for obsolete or excess material. In every operating unit of the company, management must manage obsolete inventory risk. The accounting judgement ultimately made is an evaluation of the success that division management will have in controlling inventory risk and mitigating the impact of obsolescence when it does occur. Similarly, determining the level of the allowance for doubtful accounts, warranty and self-insurance accruals represent management's best estimate of future events. Historical levels of activity or actuarial assistance may be used in certain circumstances, but knowledge of the current financial climate or the impact of a new product on these accruals always tempers evaluation of the historical data. In fiscal 2002, the significance of the intangible assets associated with the Starlink acquisition led management to obtain the assistance of an outside specialist to determine the values of the identifiable intangible assets acquired. This valuation required management to estimate future revenues and cash flows associated with various intangibles outlined by Statements of Financial Accounting Standards No. 141 (FAS 141), "Business Combinations." The specialist provided a comprehensive report to management, outlining the value of the intangible assets and their estimated useful lives. NEW ACCOUNTING PRONOUNCEMENTS The Financial Accounting Standard Board issued Statements of Financial Accounting Standards No. 141 (FAS 141), "Business Combinations," No. 142 (FAS 142), "Goodwill and Other Intangible Assets," No. 143 (FAS 143), "Accounting for Asset Retirement Obligations," and No. 144 (FAS 144), "Accounting for the Impairment or Disposal of Long-Lived Assets," during fiscal 2002. FAS 141 supercedes Accounting Principles Board Opinion No. 16, "Business Combinations." The most significant changes made by FAS 141 are: (1) requiring that the purchase method of accounting be used for all business combinations initiated after June 30, 2001, and (2) establishing specific criteria for the recognition of intangible assets separately from goodwill. FAS 142 supercedes APB 17, "Intangible Assets." FAS 142 primarily addresses the accounting for goodwill and intangible assets subsequent to their acquisition (i.e., the post-acquisition accounting). The provisions of FAS 142 will be effective for fiscal years beginning after December 15, 2001, with the amortization provisions to be applied to all business combinations after June 30, 2001. The most significant changes made by FAS 142 are (1) goodwill and indefinite lived intangible assets will no longer be amortized, (2) goodwill will be tested for impairment at least annually at the reporting level, (3) intangible assets deemed to have an indefinite life will be tested for impairment at least annually, and (4) the amortization period of intangible assets with finite lives will no longer be limited to forty years. FAS 143 establishes accounting standards for recognition and measurement of a liability for an asset retirement obligation and the associated asset retirement cost. FAS 144 establishes accounting and reporting standards for the impairment or disposal of long-lived assets to be disposed of by sale, whether previously held and used or newly acquired. The company, as required, has implemented FAS 141 and FAS 142 for its purchases of Starlink and System Integrators as explained in Note 4 to the consolidated financial statements. The company is in the process of analyzing any additional impacts of these new standards on its results of operations and financial condition and expects no material impact from the adoption of these new accounting pronouncements. Raven 2002 Annual Report PAGE 19 WEEKLY CLOSING STOCK PRICE, VOLUME & P/E Weekly from February 1, 2001 thru February 2, 2002

Closing Price Volume (in dollars) (in thousands) P/E Ratio 12.17 73650 9.4 12.33 8250 9.5 12.33 3150 9.5 12.38 3450 9.5 12.33 36000 9.5 12.33 6600 9.5 12.33 30600 9.5 12.33 6150 9.5 12.33 13200 9.5 12.67 23700 9.7 12.67 11550 9.7 12.47 8400 9.6 12.67 40050 9.7 12.77 30000 8.4 12.93 16800 8.5 13.97 50250 9.2 17 91800 11.2 16.67 112800 11 17.33 83400 11.4 18 50100 11.8 17.93 31350 11.8 17.93 19050 11.8 18 9150 11.8 17.87 20700 11.8 16.6 64500 10.9 17 69900 11.2 17.5 15300 10.5 17.68 38500 10.6 17.5 37200 10.5 15.45 46900 9.2 17.09 26300 10.2 18.1 49600 10.8 17.9 2000 10.7 14.45 30400 8.6 17.15 20800 10.2 17.7 14700 10.6 16.5 8700 9.9 17.4 12200 10.4 17.99 10700 10.8 18 13600 9.6 17.97 36000 9.6 17.45 12000 9.3 19.6 47200 10.4 21.75 51100 11.6 23.2 65100 12.3 22.5 66200 12 23 35200 12.2 23 9800 12.2 22.5 35000 12 23.05 43500 12.3 21.51 28800 11.4 22.6 26300 12 23.47 33700 12.5

QUARTERLY INFORMATION (Unaudited)

Net Income Common Stock Cash Dollars in thousands, Net Gross Operating Pretax Net Per Share(a)(b) Market Price(b) Dividends(b) except per-share data Sales Profit Income Income Income Basic Diluted High Low Per Share - ------------------------------------------------------------------------------------------------------------------------------------ FISCAL 2002 FIRST QUARTER ....... $ 30,972 $ 6,239 $ 3,294 $ 3,415 $ 2,209 $ 0.47 $0.47 $12.83 $12.08 $0.120 SECOND QUARTER ...... 28,157 5,299 3,020 3,157 2,043 0.44 0.43 18.17 12.67 0.130 THIRD QUARTER ....... 28,780 6,391 3,762 3,879 2,510 0.54 0.53 18.11 14.45 0.130 FOURTH QUARTER ...... 30,606 5,922(c) 3,099(c) 3,114(c) 2,085(c) 0.45 0.44 23.50 17.10 0.130 ---------------------------------------------------------------------------------------------------------- TOTAL YEAR .......... $118,515 $ 23,851 $ 13,175 $ 13,565 $ 8,847 $ 1.90 $1.86 $23.50 $12.08 $0.510 ========================================================================================================== FISCAL 2001 First Quarter ....... $ 32,168 $ 6,159 $ 2,599 $ 2,621 $ 1,677 $ 0.29 $0.29 $10.00 $ 7.50 $0.113 Second Quarter ...... 33,178 5,073 1,851 1,832 1,173 0.23 0.23 10.00 8.67 0.113 Third Quarter ....... 35,210 3,734 3,576(d) 3,592(d) 1,663(d) 0.34 0.34 13.91 9.67 0.120 Fourth Quarter ...... 32,302 6,157 2,722(d) 2,879(d) 1,898(d) 0.40 0.40 12.25 10.33 0.120 ---------------------------------------------------------------------------------------------------------- Total Year .......... $132,858 $ 21,123 $ 10,748 $ 10,924 $ 6,411 $ 1.24 $1.24 $13.91 $ 7.50 $0.467 ========================================================================================================== FISCAL 2000 First Quarter ....... $ 35,247 $ 5,956 $ 2,258 $ 2,252 $ 1,439 $ 0.21 $0.21 $11.00 $ 9.00 $0.107 Second Quarter ...... 37,515 6,500 2,803 2,842 1,816 0.27 0.27 12.17 9.25 0.107 Third Quarter ....... 45,580 6,415 3,589(e) 3,527(e) 2,254(e) 0.35 0.35 12.00 9.00 0.113 Fourth Quarter ...... 32,043 5,346 1,927(e) 1,882(e) 1,253(e) 0.21 0.21 10.67 9.08 0.113 ---------------------------------------------------------------------------------------------------------- Total Year .......... $150,385 $ 24,217 $ 10,577 $ 10,503 $ 6,762 $ 1.03 $1.03 $12.17 $ 9.00 $0.440 ==========================================================================================================

(a) Net income per share is computed discretely by quarter and may not add to the full year. (b) All per share and market price data reflect the July 2001 three-for-two stock split. (c) Includes a pretax $550,000 ($350,000 net of tax) acquired in-process research and development charge (See Note 4). (d) Includes a $3.1 million third-quarter pretax gain ($1.4 million net of tax) and a $393,000 fourth-quarter pretax gain ($253,000 net of tax) on the sale of the company's Plastic Tank Division and certain sewing plants. Also includes a $2.2 million third-quarter pretax charge ($1.4 million net of tax) and a $767,000 fourth-quarter pretax charge ($493,000 net of tax) for exiting certain business activities (See Note 5). (e) Includes a $966,000 third-quarter pretax gain ($619,000 net of tax) and a $220,000 fourth-quarter pretax gain ($142,000 net of tax) on the sale of the company's Glasstite business. (See Note 5). PAGE 20 CONSOLIDATED BALANCE SHEET

As of January 31 --------------------------- Dollars in thousands, except per-share data 2002 2001 2000 --------------------------- ASSETS Current assets Cash and cash equivalents .................................................. $ 7,478 $10,673 $ 5,707 Accounts receivable, net ................................................... 16,427 19,274 22,717 Inventories, net ........................................................... 19,082 18,983 24,462 Deferred income taxes ...................................................... 1,927 2,516 1,919 Prepaid expenses and other current assets .................................. 394 371 566 --------------------------- Total current assets .................................................... 45,308 51,817 55,371 Property, plant and equipment, net ........................................... 14,059 11,647 15,068 Other assets, net ............................................................ 8,469 2,192 3,608 --------------------------- Total assets ............................................................ $67,836 $65,656 $74,047 =========================== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Current portion of long-term debt .......................................... $ 127 $ 1,012 $ 1,044 Accounts payable ........................................................... 4,801 3,490 5,320 Accrued liabilities ........................................................ 8,179 8,727 7,721 Customer advances .......................................................... 703 706 617 --------------------------- Total current liabilities ............................................... 13,810 13,935 14,702 Long-term debt, less current portion ......................................... 280 2,013 3,024 Other liabilities, primarily compensation and benefits ....................... 1,714 1,719 1,802 Commitments and contingencies Stockholders' equity ......................................................... 52,032 47,989 54,519 Common shares, par value $1.00 Authorized--100,000,000 Outstanding--2002: 4,605,569; 2001: 3,159,432; 2000: 3,916,107 --------------------------- Total liabilities and stockholders' equity .............................. $67,836 $65,656 $74,047 ===========================

The accompanying notes are an integral part of the consolidated financial statements. Raven 2002 Annual Report PAGE 21 CONSOLIDATED STATEMENT OF INCOME

For the years ended January 31 ----------------------------------------- Dollars in thousands, except per-share data 2002 2001 2000 ----------------------------------------- Net sales ....................................................... $118,515 $132,858 $150,385 Cost of goods sold .............................................. 94,664 111,735 126,168 ----------------------------------------- Gross profit .................................................. 23,851 21,123 24,217 Selling, general and administrative expenses .................... 11,043 13,883 14,826 Gain on sale of businesses and assets ........................... (367) (3,508) (1,186) ----------------------------------------- Operating income .............................................. 13,175 10,748 10,577 Interest expense ................................................ (129) (258) (418) Other income, net ............................................... 519 434 344 ----------------------------------------- Income before income taxes .................................... 13,565 10,924 10,503 Income taxes .................................................... 4,718 4,513 3,741 ----------------------------------------- Net income .................................................... $ 8,847 $ 6,411 $ 6,762 ========================================= Net income per common share --basic ...................................................... $ 1.90 $ 1.24 $ 1.03 ========================================= --diluted .................................................... $ 1.86 $ 1.24 $ 1.03 =========================================

The accompanying notes are an integral part of the consolidated financial statements. PAGE 22 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME

Treasury stock Common Paid-in ---------------------- Retained Dollars in thousands, except per-share data Stock Capital Shares Cost Earnings Total ------------------------------------------------------------------- Balance January 31, 1999 ................................. $5,215 $ 2,940 (521,403) $ (6,231) $60,369 $62,293 Net and comprehensive income ............................. 6,762 6,762 Cash dividends ($.440 per share)(a) ...................... (2,895) (2,895) Purchase of stock ........................................ (780,604) (11,881) (11,881) Purchase and retirement of stock ......................... (5) (65) (70) Employees' stock options exercised ....................... 5 79 84 Employee stock grant ..................................... 3 35 38 Stock option cash bonus forfeitures, net of tax .......... 188 188 ------------------------------------------------------------------- Balance January 31, 2000 ................................. 5,218 3,177 (1,302,007) (18,112) 64,236 54,519 Net and comprehensive income ............................. 6,411 6,411 Cash dividends ($.467 per share)(a) ...................... (2,399) (2,399) Purchase of stock ........................................ (761,800) (10,829) (10,829) Employees' stock options exercised ....................... 2 42 44 Employee stock grant ..................................... 3 39 42 Stock option cash bonus forfeitures, net of tax .......... 201 201 ------------------------------------------------------------------- Balance January 31, 2001 ................................. 5,223 3,459 (2,063,807) (28,941) 68,248 47,989 Net and comprehensive income ............................. 8,847 8,847 Cash dividends ($.510 per share)(a) ...................... (2,371) (2,371) Three-for-two stock split ................................ 2,612 (2,614) (1,031,903) (2) Purchase of stock ........................................ (173,309) (2,848) (2,848) Purchase and retirement of stock ......................... (70) 1,134) (1,204) Employees' stock options exercised ....................... 110 1,378 1,488 Tax benefit from exercise of stock options ............... 133 133 ------------------------------------------------------------------- BALANCE JANUARY 31, 2002 ................................. $7,875 $ 1,222 (3,269,019) $(31,789) $74,724 $52,032 ===================================================================

(a) Restated to reflect the July 2001 three-for-two stock split. The accompanying notes are an integral part of the consolidated financial statements. Raven 2002 Annual Report PAGE 23 CONSOLIDATED STATEMENT OF CASH FLOWS

For the years ended January 31 -------------------------------- Dollars in thousands 2002 2001 2000 -------------------------------- Cash flows from operating activities Net income ........................................................................ $ 8,847 $ 6,411 $ 6,762 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization .................................................... 3,145 3,667 4,884 Acquired in-process research and development charge .............................. 550 Provision for losses on accounts receivable ...................................... 126 552 362 Gain on sale of businesses and assets ............................................ (367) (3,508) (1,186) Deferred income taxes ............................................................ 586 (684) (1,019) Change in operating assets and liabilities, net of effects from the acquisition and sale of businesses ............................................. 5,529 2,914 478 Other operating activities, net .................................................. 80 89 94 --------------------------------- Net cash provided by operating activities ......................................... 18,496 9,441 10,375 --------------------------------- Cash flows from investing activities Capital expenditures .............................................................. (5,094) (3,090) (3,639) Acquisition of businesses ......................................................... (8,735) Sale of businesses and assets, net of cash sold ................................... 677 12,805 8,682 Proceeds on sale of investment in affiliate ....................................... 1,250 Other investing activities, net ................................................... 37 30 -------------------------------- Net cash provided by (used in) investing activities ............................... (13,152) 9,752 6,323 -------------------------------- Cash flows from financing activities Proceeds from borrowing under line of credit ...................................... 1,470 3,500 6,000 Repayment on borrowing under line of credit ....................................... (1,470) (3,500) (6,000) Long-term debt principal payments ................................................. (3,012) (1,043) (1,564) Principal payments on debt from acquired businesses ............................... (590) Net proceeds from exercise of stock options ....................................... 284 44 14 Dividends paid .................................................................... (2,371) (2,399) (2,895) Purchase of treasury stock ........................................................ (2,848) (10,829) (11,881) Other ............................................................................. (2) -------------------------------- Net cash used in financing activities ............................................. (8,539) (14,227) (16,326) -------------------------------- Net increase (decrease) in cash and cash equivalents ................................ (3,195) 4,966 372 Cash and cash equivalents at beginning of year ...................................... 10,673 5,707 5,335 -------------------------------- Cash and cash equivalents at end of year ............................................ $ 7,478 $ 10,673 $ 5,707 ================================

The accompanying notes are an integral part of the consolidated financial statements. PAGE 24 NOTES TO FINANCIAL STATEMENTS NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of Raven Industries, Inc. and its wholly owned subsidiaries (the "company"). All significant intercompany balances and transactions have been eliminated in consolidation. USE OF ESTIMATES The preparation of the company's financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from these estimates. CASH AND CASH EQUIVALENTS The company considers all highly liquid debt instruments with original maturities of three months or less to be cash equivalents. Cash and cash equivalent balances are principally concentrated in a money market fund with Wells Fargo Bank Minnesota N.A. INVENTORY VALUATION Inventories are stated at the lower of cost or market, with cost determined on the first-in, first-out basis. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are stated at cost and are depreciated over the estimated useful lives of the assets using accelerated methods. The estimated useful lives used for computing depreciation are as follows: Buildings and improvements . . . . . . . . . . . . . 7 to 39 years Machinery and equipment . . . . . . . . . . . . . . . 3 to 7 years Maintenance and repairs are charged to expense in the year incurred and renewals and betterments are capitalized. The cost and related accumulated depreciation of assets sold or disposed of are removed from the accounts and the resulting gain or loss is reflected in operations. INTANGIBLE ASSETS Intangible assets, primarily comprised of technologies acquired through acquisition, are recorded at cost net of accumulated amortization. Amortization is computed on a straight-line basis over estimated useful lives ranging from 3 to 20 years. The company periodically assesses the recoverability of long-lived and intangible assets based upon anticipated future earnings and operating cash flows. Any impaired assets are written down to fair value. GOODWILL Goodwill related to acquisitions completed prior to fiscal 2002 is amortized over lives ranging from 15 to 20 years. As required by Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets," this amortization ceases on February 1, 2002. Goodwill related to the company's fiscal year 2002 acquisitions may not be amortized under the requirements of that Statement. Goodwill will instead be evaluated in terms of its fair value on an annual basis. INSURANCE OBLIGATIONS The company employs large deductible insurance policies covering workers compensation, employee healthcare and general liability costs. Costs are accrued related to the risk retained under these policies based on claims filed and estimates for claims incurred but not reported. CONTINGENCIES The company is involved as a defendant in lawsuits, claims or disputes arising in the normal course of business. An estimate of the loss on these matters is charged to operations when it is probable that an asset has been impaired or a liability has been incurred, and the amount of the loss can be reasonably estimated. The settlement of such claims cannot be determined at this time; however, management believes that any liability resulting from these claims will be substantially mitigated by insurance coverage. Accordingly, management does not believe that the ultimate outcome of these matters will be significant to its results of operations, financial position or cash flows. REVENUE RECOGNITION The company recognizes revenue and records any related returns, allowances and warranty charges only after shipment of a product. The company does not typically require collateral from its customers. Shipping and handling costs are classified as a component of cost of goods sold. PAGE 25 NOTES TO FINANCIAL STATEMENTS (continued) RESEARCH AND DEVELOPMENT Research and development expenditures of $1,435,000 in fiscal 2002, $617,000 in fiscal 2001, and $636,000 in fiscal 2000 were charged to cost of goods sold in the year incurred. Fiscal 2002 expenditures include the $550,000 acquired research and development charge related to the acquisition of Starlink (See Note 4). STOCK-BASED COMPENSATION The company records compensation expense related to its stock-based compensation plan using the intrinsic value method. INCOME TAXES Deferred income taxes reflect temporary differences between assets and liabilities reported on the company's balance sheet and their tax bases. These differences are measured using enacted tax laws and statutory tax rates applicable to the periods when the temporary differences will impact taxable income. Deferred tax assets are reduced by a valuation allowance to reflect realizable value, when necessary. Income tax expense is the tax payable for the period and the change during the period in deferred tax assets and liabilities, adjusted for any change in deferred taxes related to the expiration of certain stock options. RECLASSIFICATION Certain amounts in the 2001 and 2000 financial statements have been reclassified to conform to the 2002 presentation. These reclassifications had no effect on net income or stockholders' equity as previously presented. STOCK SPLIT The company completed a three-for-two stock split effected in the form of a 50% stock dividend on July 13, 2001. All per-share information reflects the stock split. NOTE 2. SELECTED BALANCE SHEET INFORMATION Following are the components of selected balance sheet items:

As of January 31 -------------------------------- Dollars in thousands 2002 2001 2000 -------------------------------- Accounts receivable, net: Trade accounts .................... $ 16,737 $ 19,674 $ 23,117 Allowance for doubtful accounts ... (310) (400) (400) -------------------------------- $ 16,427 $ 19,274 $ 22,717 ================================ Inventories, net: Finished goods .................... $ 4,509 $ 4,170 $ 3,815 In process ........................ 1,732 2,496 4,997 Materials ......................... 12,841 12,317 15,650 -------------------------------- $ 19,082 $ 18,983 $ 24,462 ================================ Property, plant and equipment, net: Land .............................. $ 1,091 $ 1,004 $ 1,150 Building and improvements ......... 10,614 9,357 12,526 Machinery and equipment ........... 29,219 27,517 35,273 Accumulated depreciation .......... (26,865) (26,231) (33,881) -------------------------------- $ 14,059 $ 11,647 $ 15,068 ================================ Other assets, net: Goodwill .......................... $ 6,637 $ 1,334 $ 3,654 Accumulated amortization .......... (774) (692) (1,075) -------------------------------- 5,863 642 2,579 -------------------------------- Other intangible assets ........... 2,196 680 689 Accumulated amortization .......... (705) (617) (519) -------------------------------- 1,491 63 170 -------------------------------- Deferred income taxes ............. 696 693 714 Other, net ........................ 419 794 145 -------------------------------- $ 8,469 $ 2,192 $ 3,608 ================================ Accrued liabilities: Salaries and benefits ............. $ 2,393 $ 2,163 $ 1,319 Vacation .......................... 1,731 1,711 1,944 401(k) contributions .............. 825 979 957 Self-insurance obligations ........ 1,627 2,386 2,250 Other ............................. 1,603 1,488 1,251 -------------------------------- $ 8,179 $ 8,727 $ 7,721 ================================

NOTE 3. SUPPLEMENTAL CASH FLOW INFORMATION

For the years ended January 31 -------------------------------- Dollars in thousands 2002 2001 2000 -------------------------------- Changes in operating assets and liabilities, net of effects from the purchase and sale of businesses: Accounts and interest receivable ................ $ 4,510 $ 128 $ 1,070 Inventories ..................................... 1,506 3,552 (236) Prepaid expenses and other assets ............... 386 195 (172) Accounts payable ................................ 681 (1,501) (375) Accrued and other liabilities ................... (1,223) 452 68 Customer advances ............................... (331) 88 123 -------------------------------- $ 5,529 $ 2,914 $ 478 ================================ Cash paid during the year for: Interest ........................................ $ 149 $ 265 $ 427 Income taxes .................................... 3,923 4,983 5,186

PAGE 26 NOTE 4. ACQUISITIONS On December 5, 2001, the company acquired the operating assets and certain liabilities of Starlink, Incorporated and System Integrators, Inc. The results of operations for these businesses have been included in the consolidated financial statements since that date. Starlink provides GPS-based guidance systems for the agriculture and marine markets. As a result of the acquisition, the company's ability to integrate new technology into its control systems for precision agriculture has been strengthened. This operation has been combined into the company's Flow Controls Division. The purchase price of Starlink was $7.9 million, including $7.5 million of cash and a payment deferred until December 2004, which was valued at $399,000. System Integrators is an electronics manufacturing services (EMS) provider and has been combined into the company's Electronic Systems Division. The purchase price of $1.4 million includes a deferred payment valued at $122,000. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition. The company has not yet finalized the purchase prices under the asset purchase agreements; thus, the allocation of the purchase price is subject to refinement.

System Dollars in thousands Starlink Integrators ----------------------- Current assets ............................... $1,720 $1,704 Property, plant, and equipment ............... 364 142 Intangible assets ............................ 1,710 350 Goodwill ..................................... 4,947 356 ----------------------- Total assets acquired ........................ 8,741 2,552 ----------------------- Notes payable ................................ 572 Other current liabilities .................... 618 434 Long-term debt ............................... 253 159 ----------------------- Total liabilities assumed .................... 871 1,165 ----------------------- Net assets acquired .......................... $7,870 $1,387 =======================

Of the $2.1 million of acquired intangible assets, $550,000 was assigned to Starlink research and development assets that were written off at the date of acquisition in accordance with FASB Interpretation No. 4, "Applicability of FASB Statement No. 2 to Business Combinations Accounted for by the Purchase Method." Those write-offs are included in cost of goods sold in the Flow Controls segment. The remaining $1.5 million of acquired intangible assets consist primarily of existing GPS technologies and have a weighted-average useful life of approximately 3 years. Goodwill recognized in these transactions amounted to approximately $5.3 million, and that amount is expected to be fully deductible for tax purposes. Goodwill related to Starlink and System Integrators was assigned to the Flow Controls and Electronic Systems segments, respectively. NOTE 5. DIVESTITURES AND OTHER REPOSITIONING ACTIVITIES In fiscal 2002, the company recorded a net gain of $367,000, before income taxes, related to the sale of its former Sportswear Division warehouse and the closure of its remaining Plastic Tank Division operations in Tacoma, Washington. The company also incurred $249,000 of nonrecurring pretax charges to reposition the Industrial Controls Division of Beta Raven, including the closing of its Alabama plant. This charge impacted the cost of goods sold in the Businesses Sold and For Sale segment. In fiscal 2001, the company sold substantially all of the assets of its Plastic Tank Division. The proceeds of the sale were $12.3 million including primarily cash and a note receivable and the buyers also assumed certain liabilities of the company. Assets sold included property, plant and equipment (approximately $2.6 million), accounts receivable (approximately $2.5 million) and inventories (approximately $1.3 million). The purchaser assumed liabilities totaling approximately $388,000, primarily accounts payable. In addition, the company recorded approximately $813,000 to accrue for severance, legal and other costs related to the Plastic Tank Division sale, reflecting the company's best estimate of costs that it will incur until these matters are resolved. At January 31, 2002, approximately $100,000 of these closing costs were still accrued. The sale did not include the company's operations in Tacoma, Washington, which were closed in November 2001. The Tacoma assets, primarily inventories and manufacturing equipment, were written down to their estimated net realizable value requiring a charge of approximately $585,000. The company also recorded a charge of approximately $1.8 million related to the write-off of goodwill related to the Plastic Tank Division. As a result of the above, the company recognized a pretax gain of approximately $3.1 million in fiscal 2001. Raven 2002 Annual Report PAGE 27 NOTES TO FINANCIAL STATEMENTS (continued) In the third quarter of fiscal 2001, the company reduced the number of customers in its Electronic Systems Division and its other electronics businesses resulting in write-downs of inventory and accounts receivable, severance and other nonrecurring pretax charges totaling $2.2 million. In the fourth quarter of fiscal 2001, the company reorganized its former Sewn Products segment, combining its former Sportswear Division with its wholly owned subsidiary, Aerostar International, Inc. The company incurred nonrecurring pretax charges of $767,000 related to the combination and sold three former Sportswear Division plants for a pretax gain of $393,000. During fiscal 2000, the company sold its Glasstite business, resulting in a pretax gain of $1.2 million. The company received approximately $8.7 million of cash in fiscal 2000 and approximately $200,000 in fiscal 2001 and incurred direct costs related to the sale, primarily legal costs, of approximately $230,000. Assets sold primarily related to property, plant and equipment (approximately $3.5 million), accounts receivable (approximately $2.5 million), inventories (approximately $1.7 million) and cash (approximately $135,000). The purchaser assumed certain liabilities, primarily related to employee wages and benefits (approximately $200,000) and accounts payable (approximately $300,000). At January 31, 2002, the company has approximately $200,000 accrued for certain environmental clean-up costs related to the Glasstite facility, reflecting the company's best estimate of costs that it will incur until the environmental matter is resolved. In fiscal 2000, the company collected the final installment payment under a $2.5 million note. The note represented partial proceeds from the sale of an affiliated equity investee in January 1998. NOTE 6. BUSINESS SEGMENTS AND MAJOR CUSTOMER INFORMATION The company's reportable segments are defined by their common technologies, production processes and inventories. These segments reflect the organization of the company into three Raven divisions, each with a Divisional Vice President, and two subsidiaries. In the second quarter of fiscal 2002, the electronics manufacturing services (EMS) operation of Beta Raven was combined with the Electronic Systems segment. This change combines the common EMS operations of the company and is designed to improve operating results through better integrating management, marketing and production techniques. The Industrial Controls Division of Beta Raven is included under the caption "Businesses Sold and For Sale." The company measures the performance of its segments based on their operating income exclusive of administrative and general expenses. Prior-year information has been restated to be consistent with the company's new management reporting structure as required by Statement of Financial Accounting Standards (SFAS) No.131 "Disclosures about Segments of an Enterprise and Related Information." No customer accounted for more than 10% of consolidated sales or receivables in any fiscal year presented. Market and segment information is presented on pages 5 and 12 of this annual report. NOTE 7. QUARTERLY INFORMATION (UNAUDITED) The company's quarterly information is presented on page 20. NOTE 8. FINANCING ARRANGEMENTS Long-term debt consisted of the following:

As of January 31 ----------------------------- Dollars in thousands 2002 2001 2000 ----------------------------- Total long-term debt ................... $ 407 $ 3,025 $ 4,068 Current portion ........................ (127) (1,012) (1,044) ----------------------------- $ 280 $ 2,013 $ 3,024 =============================

Wells Fargo Bank South Dakota N.A. provides the company's uncollateralized long-term notes payable and lines of credit. Two members of the company's board of directors are also on the board of directors of Wells Fargo & Co., the parent company of Wells Fargo Bank South Dakota N.A. In fiscal 2002, the company prepaid its long-term note. The company believes the fair market value of its long-term debt approximates its carrying value based on quoted market prices for similar debt. The company had a $5.0 million uncollateralized line of credit and its Aerostar subsidiary had a $2.0 million secured seasonal line of credit available as of January 31, 2002. No borrowings on either line were outstanding as of January 31, 2002. These lines of credit contain certain restrictive covenants that, among other things, require each company to maintain certain levels of net worth and working capital. Borrowings on the Raven line bear interest as of January 31, 2002, 2001 and 2000 at 4.25%, 8.50%, and 8.00%, respectively. Borrowings on the Aerostar line bear interest as of January 31, 2002 at 4.75%. The weighted average interest rates for PAGE 28 borrowing under the short-term credit lines in fiscal 2002, 2001, and 2000 were 6.3%, 9.0% and 7.7%, respectively. As described in Note 4, the company assumed $572,000 of short-term notes payable and $412,000 of capital lease obligations in connection with its acquisitions. In December 2001, the company paid the notes in full. The capital lease obligations expire through 2006, with annual payments averaging $100,000. Payments on capital lease obligations in fiscal 2002 totaled $18,000. The company leases certain transportation, equipment and facilities under operating leases. Total rent expense under these leases was $575,000, $636,000 and $977,000 in fiscal 2002, 2001 and 2000, respectively. NOTE 9. STOCK OPTIONS Officers and key employees of the company have been granted options to purchase stock under the company's 2000 Stock Option and Compensation Plan ("Plan"). The Plan, administered by the board of directors, allows for a fixed cash bonus when options are exercised and may grant either incentive or non-qualified options with terms not to exceed ten years. There are 249,387 shares of the Company's common stock reserved for issue under the plan at January 31, 2002. Options are granted with exercise prices not less than market value at the date of grant. These stock options vest over a four-year period and expire after five years. Compensation expense related to the Plan's cash bonus feature was $76,000, $252,000 and $383,000 in fiscal 2002, 2001 and 2000, respectively. Options granted after fiscal 1999 do not include a fixed cash bonus. During fiscal 2001 and 2000, certain options containing the cash bonus feature expired. Accordingly, the company reduced its accrued liabilities by $309,000 and $289,000 and associated deferred tax asset by approximately $108,000 and $101,000 and correspondingly increased additional paid-in-capital by approximately $201,000 and $188,000, respectively. As allowed under the Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation," the company has elected to continue to use the intrinsic value method to recognize compensation expense for stock-based compensation. If compensation expense had been recognized in accordance with the fair value method, the company's net income and net income per share would have been as follows:

For the years ended January 31 ------------------------------------------------------------ 2002 2001 2001 ------------------------------------------------------------ as pro as pro as pro reported forma reported forma reported forma ------------------------------------------------------------ Net income (in thousands) ...... $8,847 $8,790 $6,411 $6,466 $6,762 $6,744 Net income per share --basic ............. $ 1.90 $ 1.89 $ 1.24 $ 1.25 $ 1.03 $ 1.03 --diluted ........... $ 1.86 $ 1.85 $ 1.24 $ 1.25 $ 1.03 $ 1.03

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions: Dividend yield of 3.0-4.8%; expected volatility of 20-27%; risk-free interest rate of 4.1-6.2%; and expected lives of 4.5 years. The weighted average grant date fair value of each option granted was $3.75, $2.01 and $1.49 in fiscal 2002, 2001 and 2000, respectively. Information regarding option activity follows:

For the years ended January 31 ---------------------------------------------------------------------- 2002 2000 1999 ---------------------------------------------------------------------- weighted weighted weighted average average average exercise exercise exercise options price options price options price ---------------------------------------------------------------------- Outstanding at beginning of year ............ 350,625 $11.95 372,150 $12.19 414,300 $12.53 Granted .............. 44,200 17.50 77,925 10.67 49,350 9.50 Exercised ............ (109,836) 13.54 (3,750) 11.92 (7,500) 12.17 Forfeited ............ (9,337) 12.46 (95,700) 11.87 (84,000) 12.25 -------- -------- -------- Outstanding at end of year ............ 275,652 12.18 350,625 11.95 372,150 12.19 ======== ======== ======== Options exercisable at year-end ........... 141,161 $11.66 188,175 $12.97 206,588 $12.78

The following table contains information about stock options outstanding at January 31, 2002:

Remaining Exercise Contractual Number Number Price Life (Years) Outstanding Exercisable - ------------------------------------------------------------------ $13.33 0.75 62,401 62,401 10.58 1.75 53,138 39,854 9.50 2.75 39,713 19,857 10.67 3.75 76,200 19,050 17.50 4.75 44,200 -- ----------------------- 275,652 141,161 =======================

Raven 2002 Annual Report PAGE 29 NOTES TO FINANCIAL STATEMENTS (continued) NOTE 10. EMPLOYEE RETIREMENT BENEFITS The company has a 401(k) plan covering substantially all employees and contributes 3% of qualified payroll. The company's contribution expense was $727,000, $943,000 and $1,060,000 for fiscal 2002, 2001 and 2000, respectively. In addition, the company provides postretirement medical and other benefits to officers and certain employees. The company accounts for these benefits in accordance with SFAS No.106, "Accounting for Postretirement Benefits Other Than Pensions." The accumulated benefit obligation was approximately $2.3 million, $2.0 million and $1.6 million at January 31, 2002, 2001 and 2000, respectively. Annual expense related to these benefits was $482,000, $436,000 and $370,000 for fiscal 2002, 2001 and 2000, respectively. NOTE 11. INCOME TAXES The reconciliation of income tax computed at the federal statutory rate to the company's effective income tax rate is as follows:

For the years ended January 31 ------------------------------ 2002 2001 2000 ------------------------------ Tax at U.S. federal statutory rate .... 35.0% 35.0% 35.0% Nondeductible goodwill amortization and write-off ....................... 0.1 6.0 0.6 State and local income taxes, net of U.S. federal benefit ......... 0.2 0.7 0.9 Impact of graduated rates ............. (0.7) (0.9) (1.0) Other, net ............................ 0.2 0.5 0.1 ------------------------------ 34.8% 41.3% 35.6% ==============================

Significant components of the company's income tax provision are as follows:

For the years ended January 31 ------------------------------ Dollars in thousands 2002 2001 2000 ------------------------------ Income taxes: Currently payable ..................... $4,132 $5,197 $4,760 Deferred .............................. 586 (684) (1,019) ------------------------------ $4,718 $4,513 $3,741 ==============================

Significant components of the company's deferred tax assets and liabilities are as follows:

As of January 31 ------------------------------ Dollars in thousands 2002 2001 2000 ------------------------------ Current deferred tax assets (liabilities): Accounts receivable ................ $ 109 $ 98 $ 56 Inventory valuation ................ 271 530 347 Accrued vacation ................... 525 498 472 Insurance obligations .............. 549 782 783 Other accrued liabilities .......... 473 608 261 ------------------------------ 1,927 2,516 1,919 ============================== Non-current deferred tax assets (liabilities): Accrued compensation and benefits .. 417 602 631 Depreciation and amortization ...... 244 91 83 Other .............................. 35 ------------------------------ 696 693 714 ------------------------------ Net deferred tax asset ............... $2,623 $3,209 $2,633 ==============================

NOTE 12. NET INCOME PER SHARE Basic net income per share is computed by dividing net income by the weighted average common shares outstanding. Common shares outstanding represent common shares issued less shares purchased and held in treasury. Share and per share data in the income per share computation have been restated to reflect the July 13, 2001 three-for-two stock split. Diluted net income per share is computed by dividing net income by the weighted average common and common equivalent shares outstanding, which includes the shares issuable upon exercise of employee stock options, net of shares assumed purchased with the option proceeds. Certain outstanding options 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. For fiscal 2002, 2001 and 2000, 11,050, 320,094 and 318,750 options, respectively, were excluded from the diluted earnings-per-share calculation. Details of the computation are presented below.

For the years ended January 31 -------------------------------------- Dollars in thousands, except per-share data 2002 2001 2000 -------------------------------------- Net income .................................. $ 8,847 $ 6,411 $ 6,762 ====================================== Weighted average common shares outstanding .. 4,655,295 5,166,639 6,557,258 Dilutive impact of stock options ............ 90,502 2,205 813 -------------------------------------- Weighted average common and common-equivalent shares outstanding ...... 4,745,797 5,168,844 6,558,071 ====================================== Net income per common share --basic ................................... $ 1.90 $ 1.24 $ 1.03 ====================================== --diluted ................................. $ 1.86 $ 1.24 $ 1.03 ======================================

PAGE 30 REPORT OF INDEPENDENT ACCOUNTANTS TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF RAVEN INDUSTRIES, INC.: In our opinion, the accompanying consolidated balance sheet and the related consolidated statements of income, of stockholders' equity and comprehensive income and of cash flows present fairly in all material respects, the financial position of Raven Industries, Inc. as of January 31, 2002, 2001 and 2000, and the results of its operations and its cash flow for each of the three years in the period ended January 31, 2002, in conformity with accounting principles generally accepted in the United States of America. Those financial statements are the responsibility of Raven Industries, Inc.'s management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall presentation. We believe that our audits provide a reasonable basis for our opinion. /s/ PRICEWATERHOUSECOOPERS LLP Minneapolis, Minnesota March 12, 2002 RAVEN 2002 ANNUAL REPORT PAGE 31 Investor Information INDEPENDENT ACCOUNTANTS PRICEWATERHOUSECOOPERS LLP Minneapolis, MN STOCK TRANSFER AGENT & REGISTRAR WELLS FARGO BANK MINNESOTA N.A. 161 N. Concord Exchange P.O. Box 64854 S. St. Paul, MN 55164-0854 Phone: 1-800-468-9716 FORM 10-K Upon written request, Raven Industries, Inc.'s form 10-K for the fiscal year ended January 31, 2002, which has been filed with the Securities and Exchange Commission, is available free of charge. DIRECT INQUIRES TO: RAVEN INDUSTRIES, INC. Attention: Investor Relations P.O. Box 5107 Sioux Falls, SD 57117-5107 RAVEN WEBSITE www.ravenind.com STOCK QUOTATIONS Listed on the Nasdaq Stock Market--RAVN ANNUAL MEETING May 22, 2002, 9:00 a.m. Ramkota Inn Hwy 38 & I-29 Sioux Falls, SD Raven Industries, Inc. is an Equal Employment Opportunity Employer with an approved affirmative action plan. DIVIDEND REINVESTMENT PLAN Raven Industries sponsors a Dividend Reinvestment Plan whereby shareholders can purchase additional Raven common stock without the payment of any brokerage commission or fees. For more information on how you can take advantage of this plan, contact your broker, our stock transfer agent or write: Investor Relations; P.O. Box 5107, Sioux Falls, SD 57117-5107 SIC CODES: 3672, 3081, 3829 FORWARD-LOOKING STATEMENTS Certain sections of this report contain statements which may constitute forward-looking statements within the meaning of federal securities laws. Although Raven Industries, Inc. 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 agriculture or construction, or changes in competition or the company's customer base which could impact any of the company's product lines. Design: Creative Design Board, Chicago, IL EX-23 4 c68831ex23.txt CONSENT OF INDEPENDENT AUDITORS EXHIBIT 23 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Registration Nos. 33-38614 and 333-41352) of Raven Industries, Inc. of our report dated March 12, 2002 relating to the consolidated financial statements of Raven Industries, Inc. as of January 31, 2002, 2001 and 2000 and for the years then ended, which appears in the 2002 Annual Report to Stockholders, which is incorporated in this Annual Report on Form 10-K. We also consent to the incorporation by reference of our report dated March 12, 2002 relating to the financial statement schedule, which appears in this Form 10-K. PricewaterhouseCoopers LLP Minneapolis, Minnesota April 19, 2002 -----END PRIVACY-ENHANCED MESSAGE-----

EX-13

BUSINESS PROFILE

     Founded in 1956, Raven today is an industrial manufacturer with four
     operating units. The company is divesting lower-performing assets,
     simplifying its product bases, and building profitability (cash return on
     invested capital) and shareholder value-a strategy of "Shrink, Fix, Grow."


- ------------------------------------------------------------------------------------------------------------------------------------
OPERATING UNIT           PRODUCTS                     MARKETS                  COMPETITIVE STRENGTHS      OUTLOOK
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                              
FLOW CONTROLS            - Computerized control       - Agriculture OEM's and  - Market leader for        - Technology-leading new
Sales:                     hardware and software for    sprayer manufacturers    ag sprayer controls        products will drive
FY02 - $23 million         precision farming                                                                growth in agriculture
FY01 - $17 million                                    - Turf management        - Strong brand recognition
FY00 - $14 million       - Leading developer of         equipment manufacturers  and distribution network - Intergration of new GPS
                           GPS-based control                                                                application will spur
                           systems                    - Departments of         - New Precision              growth in new markets
                                                        Transportation (DOTs)    Solutions(TM) product
                         - Precision application of                              line                     - Environmental concerns
                           insecticides, fertilizer                                                         will dictate precision
                           and road de-icers                                                                application of chemicals
- ------------------------------------------------------------------------------------------------------------------------------------
ENGINEERED FILMS         - Rugged reinforced plastic  - Manufactured housing   - Vertically integrated    - Moderate growth as new
Sales:                     sheeting                     and RVs                  manufacturing              capacity comes online
FY02 - $40 million                                                               capabilities
FY01 - $40 million                                    - Temporary grain covers                            - Price volatility for
FY00 - $36 million                                      for agriculture        - Broad product line         polyethylene resin

                                                      - Temporary building     - Superior target marketing
                                                        construction enclosures

                                                      - Pond lining and        - High productivity and
                                                        containers for oil       low-cost structure
                                                        exploration
                         -----------------------------------------------------------------------------------------------------------
                         - High-altitude research     - NASA                   - Sole source in US for    - New commercial
                           balloons                                              scientific balloons        applications could
                                                      - Universities                                        spur growth
                                                                               - Worldwide reputation for
                                                                                 leadership
- ------------------------------------------------------------------------------------------------------------------------------------
ELECTRONIC SYSTEMS       - Electronics manufacturing  - Primarily industrial   - Advanced manufacturing,  - Higher margins based on
Sales:                     services (EMS)               OEMs in North America    technology                 better customer mix and
FY02 - $32 million                                                                                          productivity
FY01 - $32 million                                    - Fortune 500 companies  - Full-service provider,
FY00 - $30 million                                      that contract their      from engineering and     - Substantial topline
                                                        small-volume, high-mix   manufacturing to           growth based on
                                                        production               customer service           outsourcing trend

                                                                               - ISO 9001                 - Customer emphasis on
                                                                                                            fewer suppliers with
                                                                                                            turnkey capabilities and
                                                                                                            financial strength
- ------------------------------------------------------------------------------------------------------------------------------------
AEROSTAR                 - Custom-shaped advertising  - Promotional and        - Best technology in       - Growth in advertising
Sales:                     inflatables                  advertising markets in   advertising inflatables    and promotional markets
FY02 - $16 million                                      US including Disney                                 for custom inflatables
FY01 - $25 million       - Hot-air sport balloons       and Macy's             - Reputation for innovation
FY00 - $28 million                                                               and quality              - Cost reductions to
                         - Specialized sewing         - Recreational ballooning                             enhance profitability
                           applications                                        - Market leader in sport
                                                      - Service uniforms and     balloons
                                                        defense applications
- ------------------------------------------------------------------------------------------------------------------------------------



                                                        Raven 2002 Annual Report
                                                                          PAGE 5

ELEVEN-YEAR FINANCIAL SUMMARY


                                                                   For the years ended January 31
- ----------------------------------------------------------------------------------------------------------
Dollars in thousands, except per-share data                  2002            2001            2000
- ----------------------------------------------------------------------------------------------------------
                                                                                  
OPERATIONS FOR THE YEAR
Net sales
  Ongoing operations ...................................   $112,018        $113,360        $107,862
  Sold operations(a) ...................................      6,497          19,498          42,523
    Total ..............................................    118,515         132,858         150,385
Gross profit ...........................................     23,851          21,123          24,217
Operating income
  Ongoing operations ...................................     13,906            9,907          8,521
  Nonrecurring charges, net ............................       (118)(b)       (2,490)(c)       (550)
  Sold operations(a) ...................................       (613)           3,331(d)       2,606(e)
    Total ..............................................     13,175           10,748(d)      10,577(e)
Income before income taxes .............................     13,565           10,924(d)      10,503(e)
Net income .............................................   $  8,847        $   6,411(d)    $  6,762(e)
Net income % of sales ..................................        7.5%             4.8%           4.5%
Net income % of beginning equity .......................       18.4%            11.8%          10.9%
Cash dividends .........................................   $  2,371        $   2,399       $  2,895
FINANCIAL POSITION
Current assets .........................................   $ 45,308        $  51,817       $ 55,371
Current liabilities ....................................     13,810           13,935         14,702
Working capital ........................................   $ 31,498        $  37,882       $ 40,669
Current ratio ..........................................       3.28             3.72           3.77
Property, plant and equipment ..........................   $ 14,059        $  11,647       $ 15,068
Total assets ...........................................     67,836           65,656         74,047
Long-term debt, less current portion ...................        280            2,013          3,024
Shareholders' equity, ..................................   $ 52,032        $  47,989       $ 54,519
Long-term debt/total capitalization ....................        0.5%             4.0%           5.3%
Inventory turnover (CGS/year-end inventory) ............        5.0              5.9            5.2
CASH FLOWS PROVIDED BY (USED IN)
Operating activities ...................................   $ 18,496        $   9,441       $ 10,375
Investing activities ...................................    (13,152)           9,752          6,323
Financing activities ...................................     (8,539)         (14,227)       (16,326)
Increase (decrease) in cash ............................     (3,195)           4,966            372
COMMON STOCK DATA
Net income per share--basic ............................   $   1.90        $    1.24       $   1.03
Net income per share--diluted ..........................       1.86             1.24           1.03
Cash dividends per share ...............................       0.51             0.47           0.44
Book value per share ...................................      11.30            10.13           9.28
Stock price range during year
  High .................................................   $  23.50        $   13.91       $  12.17
  Low ..................................................   $  12.08        $    7.50       $   9.00
Shares outstanding, year-end (in thousands).............      4,606            4,739          5,874
Number of shareholders, year-end .......................      2,387            2,460          2,749
OTHER DATA
EBITDA .................................................   $ 16,870        $  14,415       $ 15,461
EBITDA % of sales ......................................       14.2%            10.8%          10.3%
Average number of employees ............................        838            1,043          1,320
Sales per employee .....................................   $    141        $     127       $    114
Backlog ................................................   $ 33,834        $  38,239       $ 44,935
- ----------------------------------------------------------------------------------------------------------

All per-share, shares outstanding and market price data reflect the July 2001
three-for-two stock split. All other figures are as reported.
EBITDA is determined as operating income plus depreciation, amortization and the
acquired in-process research and development charge.

(a)  During the third quarter of fiscal 2001, the company sold its Plastic Tank
     Division. In fiscal year 2000 and 1996, the company sold its Glasstite and
     Astoria businesses, respectively. The company's Beta Raven Industrial
     Controls Division is currently held for sale. Sales and operating income
     for all periods have been adjusted to reflect these business dispositions.
(b)  Represents a $550,000 acquired in-process research and development charge,
     partially offset by a net gain on business repositioning activities. (See
     Notes 4 and 5).


PAGE 10



                                     For the years ended January 31
- ----------------------------------------------------------------------------------------------------------------
 1999(h)       1998(h)         1997(h)       1996(h)       1995(h)         1994(h)       1993(h)       1992(h)
- ----------------------------------------------------------------------------------------------------------------
                                                                                 
$ 108,408     $ 104,489       $ 101,869     $  84,379     $  87,458       $  88,608     $  85,181     $  76,943
   46,798        47,679          39,576        38,010        35,889          34,279        27,367        24,853
  155,206       152,168         141,445       122,389       123,347         122,887       112,548       101,796
   24,441        24,929          25,287        22,660        23,968          23,574        21,048        19,109

    8,220         9,555           9,321         7,692        10,470           8,054         7,758         7,691

    1,453         1,007           2,650         1,869           466(g)        2,386         1,388           447
    9,673        10,562          11,971         9,561        10,936          10,440         9,146         8,138
    9,649        12,540(f)       11,915         9,566         9,372          10,638         9,182         8,067
$   6,182     $   8,062(f)    $   7,688     $   6,197     $   6,088       $   6,954     $   6,030     $   5,306
      4.0%          5.3%            5.4%          5.1%          4.9%            5.7%          5.4%          5.2%
     10.0%         14.2%           15.6%         13.6%         14.8%           19.6%         19.7%         20.2%
$   2,944     $   2,709       $   2,367     $   2,130     $   1,843       $   1,545     $   1,316     $   1,165

$  60,279     $  57,285       $  56,696     $  45,695     $  43,795       $  45,037     $  42,476     $  34,798
   15,128        17,816          20,016        14,771        15,078          16,088        15,253        11,284
$  45,151     $  39,469       $  36,680     $  30,924     $  28,717       $  28,949     $  27,223     $  23,514
     3.98          3.22            2.83          3.09          2.90            2.80          2.78          3.08
$  19,563     $  19,817       $  18,142     $  18,069     $  18,570       $  13,371     $  10,457     $   9,947
   83,657        82,066          80,662        67,553        65,636          60,597        54,813        46,528
    4,572         1,128           3,181         2,816         4,179           2,539         3,224         3,676
$  62,293     $  61,563       $  56,729     $  49,151     $  45,526       $  41,100     $  35,530     $  30,601
      6.8%          1.8%            5.3%          5.4%          8.4%            5.8%          8.3%         10.7%
      4.9           4.8             4.5           4.1           4.4             4.4           3.8           4.2

$   8,326     $   9,274       $   7,088     $   9,687     $   7,452       $  11,257     $   3,475     $   7,489
   (3,127)       (4,979)         (5,090)       (4,158)      (10,000)         (5,908)       (3,107)       (3,886)
   (2,714)       (4,884)         (2,363)       (4,029)          406          (2,042)       (1,659)       (2,518)
    2,485          (589)           (365)        1,500        (2,142)          3,307        (1,291)        1,085

$    0.87     $    1.11       $    1.08     $    0.87     $    0.86       $    0.99     $    0.87     $    0.77
     0.87          1.10            1.07          0.87          0.85            0.97          0.85          0.75
     0.41          0.37            0.33          0.30          0.26            0.22          0.19          0.16
     8.85          8.51            7.82          6.95          6.41            5.84          5.07          4.42

$   15.17     $   17.17       $   15.67     $   13.83     $   16.33       $   15.67     $   14.33     $   10.56
$   10.17     $   13.08       $   10.67     $   10.33     $   12.00       $   12.00     $    9.22     $    5.33
    7,041         7,236           7,253         7,074         7,103           7,041         7,014         6,944
    3,014         3,221           3,011         3,190         3,031           3,173         3,147         2,775

$  14,806     $  15,699       $  16,537     $  13,803     $  12,718       $  13,337     $  11,809     $  10,675
      9.5%         10.3%           11.7%         11.3%         10.3%           10.9%         10.5%         10.5%
    1,445         1,511           1,387         1,368         1,414           1,435         1,316         1,252
$     107     $     101       $     102     $      89     $      87       $      86     $      86     $      81
$  47,431     $  47,154       $  38,102     $  32,539     $  29,661       $  36,403     $  49,033     $  48,200
- ----------------------------------------------------------------------------------------------------------------

(c)  Represents business repositioning charges, net of gains on plant sales,
     primarily in Electronic Systems Division and Aerostar (See Note 5).
(d)  Includes the $3.1 million pretax gain ($1.4 million net of tax) on the sale
     of the company's Plastic Tank Division (See Note 5).
(e)  Includes the $1.2 million pretax gain ($764,000 net of tax) on the sale of
     assets of the company's Glasstite subsidiary (See Note 5).
(f)  Includes the $1.8 million pretax gain ($1.2 million net of tax) on sale of
     an investment in an affiliate.
(g)  Includes $1.8 million of business repositioning charges at the company's
     Beta Raven Industrial Controls Division.
(h)  Amounts for these years are unaudited.


                                                        Raven 2002 Annual Report
                                                                         PAGE 11

BUSINESS SEGMENTS


                                                                                For the years ended January 31
                                                    --------------------------------------------------------------------------------
Dollars in thousands                                   2002          2001              2000        1999(g)      1998(g)      1997(g)
                                                    --------------------------------------------------------------------------------
                                                                                                        
ELECTRONIC SYSTEMS DIVISION
Sales ...........................................   $  32,289     $  32,039         $  30,176     $  24,958    $  23,968  $  22,133
Operating income (loss) .........................       2,264          (542)(b)         1,632         2,322        3,319      1,971
Assets ..........................................      13,910        15,359            18,846        15,591       12,994     11,055
Capital expenditures ............................         774         1,492             1,168         1,399        1,614        660
Depreciation & amortization .....................       1,101         1,089             1,032           959          834        815

FLOW CONTROLS DIVISION
Sales ...........................................   $  23,178     $  16,758         $  13,520     $  15,311    $  16,852  $  16,689
Operating income ................................       5,509(a)      3,985             2,873         2,810        3,829      4,264
Assets ..........................................      20,313         9,578             7,096         8,553       10,679     10,370
Capital expenditures ............................         677           327               202           501          210        316
Depreciation & amortization .....................         443           353               351           329          322        284

ENGINEERED FILMS DIVISION
Sales ...........................................   $  40,280     $  40,004         $  35,889     $  32,514    $  28,322  $  26,625
Operating income ................................       9,886         8,810             7,464         5,836        3,336      3,751
Assets ..........................................      14,847        13,031            13,472        13,177       13,504     13,107
Capital expenditures ............................       3,182           674               792           566        1,511      1,576
Depreciation & amortization .....................       1,085         1,033             1,075         1,136        1,140        877

AEROSTAR
Sales ...........................................   $  16,271     $  24,559         $  28,277     $  35,625    $  35,347  $  36,422
Operating income ................................       1,278         1,583             2,092         2,724        4,300      4,543
Assets ..........................................       5,994         7,361            11,307        14,446       14,065     14,934
Capital expenditures ............................         252           122               117           308          556        353
Depreciation & amortization .....................         263           280               372           464          489        528

BUSINESSES SOLD AND FOR SALE
Sales ...........................................   $   6,497     $  19,498         $  42,523     $  46,798    $  47,679  $  39,576
Operating income (loss)(e) ......................        (613)        3,331(c)          2,606(d)      1,453        1,007      2,650
Assets ..........................................       1,102         4,805            13,475        22,048       22,693     22,451
Capital expenditures ............................          52           246             1,172         1,585        2,217        997
Depreciation & amortization .....................          76           718             1,831         2,004        2,136      1,833

CORPORATE & OTHER(f)
Operating (loss) ................................   $  (5,149)    $  (6,419)        $  (6,090)    $  (5,472)   $  (5,229) $  (5,208)
Assets ..........................................      11,670        15,522             9,851         9,842        8,131      8,745
Capital expenditures ............................         157           229               188           247          433        107
Depreciation & amortization .....................         177           194               223           241          216        229

TOTAL COMPANY
Sales ...........................................   $ 118,515     $ 132,858         $ 150,385     $ 155,206    $ 152,168  $ 141,445
Operating income ................................      13,175(a)     10,748(b,c)       10,577(d)      9,673       10,562     11,971
Assets ..........................................      67,836        65,656            74,047        83,657       82,066     80,662
Capital expenditures ............................       5,094         3,090             3,639         4,606        6,541      4,009
Depreciation & amortization .....................       3,145         3,667             4,884         5,133        5,137      4,566
- ------------------------------------------------------------------------------------------------------------------------------------

(a)  Includes a $550,000 in-process research and development charge, related to
     the Starlink acquisition.
(b)  Includes $1.8 million of business repositioning charges in the Electronic
     Systems Division and $2.5 million for the total company (See Note 5).
(c)  Includes a $3.1 million pretax gain on the sale of the company's Plastic
     Tank Division (See Note 5).
(d)  Includes a $1.2 million pretax gain on the sale of the company's Glasstite
     business (See Note 5).
(e)  Operating income for businesses sold and for sale includes administrative
     expenses directly attributable to the sold business.
(f)  Operating loss consists of administrative expenses-- assets are principally
     cash, investments, deferred taxes and notes receivable.
(g)  Amounts for 1999, 1998 and 1997 are unaudited.




PAGE 12

FINANCIAL REVIEW AND ANALYSIS

RESULTS OF OPERATIONS: MARGIN ANALYSIS

The following table presents comparative financial performance for the past
three years:



                                                                         For the years ended January 31
                                           --------------------------------------------------------------------------------------
                                                        2002                          2001                          2000
                                           --------------------------------------------------------------------------------------
                                                          %      %                      %      %                      %      %
In thousands, except per-share data        As Reported  Sales  Change    As Reported  Sales  Change    As Reported  Sales  Change
                                           --------------------------------------------------------------------------------------
                                                                                                
Net sales .................................  $118,515   100.0   -10.8      $132,858   100.0   -11.7      $150,385   100.0   - 3.1
Gross profit ..............................    23,851    20.1   +12.9        21,123    15.9   -12.8        24,217    16.1   - 0.9
Operating expenses ........................    11,043     9.3   -20.5        13,883    10.4   - 6.4        14,826     9.9   + 0.4
Gain on sale of businesses and assets .....      (367)                       (3,508)                       (1,186)
Operating income ..........................    13,175    11.1   +22.6        10,748     8.1   + 1.6        10,577     7.0   + 9.3
Income before income taxes ................    13,565    11.4   +24.2        10,924     8.2   + 4.0        10,503     7.0   + 8.9
Income taxes ..............................     4,718     4.0   + 4.5         4,513     3.4   +20.6         3,741     2.5   + 7.9
Net income ................................  $  8,847     7.5   +38.0      $  6,411     4.8   - 5.2      $  6,762     4.5   + 9.4
Net income per share - diluted ............  $   1.86           +50.0      $   1.24           +20.4      $   1.03           +18.4
Effective income tax rate .................      34.8%          -15.8          41.3%          +16.0          35.6%          - 0.9
- ---------------------------------------------------------------------------------------------------------------------------------


The following table presents selected financial statement data, excluding the
results of businesses sold and for sale and certain nonrecurring charges:


                                                                         For the years ended January 31
                                           ---------------------------------------------------------------------------------------
                                                      2002 ONGOING OPERATIONS                      2001 Ongoing Operations
                                           ---------------------------------------------------------------------------------------
                                             Adjustments                  %        %       Adjustments                %       %
In thousands                               to as reported   Results     Sales    Change  to as reported  Results    Sales   Change
                                           ---------------------------------------------------------------------------------------
                                                                                                    
Net sales .................................  $  6,497      $112,018     100.0     - 1.2     $19,498     $113,360    100.0    + 5.1
Gross profit ..............................      (276)       24,127      21.5     +14.5          50       21,073     18.6    + 6.6
Operating expenses ........................       822        10,221       9.1     - 8.5       2,717       11,166      9.9    - 0.7
Gain on sale of businesses and assets .....      (367)           --                          (3,508)          --
Operating income ..........................      (731)       13,906      12.4     +40.4         841        9,907      8.7    +16.3
Income before income taxes ................      (731)       14,296      12.8     +41.8         844       10,080      8.9    +19.6
Income taxes ..............................      (254)        4,972       4.4     +38.1         914        3,599      3.2    +20.0
Net income ................................  $   (477)     $  9,324       8.3     +43.9     $   (70)    $  6,481      5.7    +19.4
- ----------------------------------------------------------------------------------------------------------------------------------

                                             For the years ended January 31
                                           ----------------------------------
                                                  2000 Ongoing Operations
                                           ----------------------------------
                                            Adjustments                   %
In thousands                               to as reported   Result      Sales
                                           ----------------------------------
                                                               
Net sales .................................   $42,523      $107,862     100.0
Gross profit ..............................     4,452        19,765      18.3
Operating expenses ........................     3,583        11,243      10.4
Gain on sale of businesses and assets .....    (1,186)           --
Operating income ..........................     2,056         8,521       7.9
Income before income taxes ................     2,075         8,428       7.8
Income taxes ..............................       741         3,000       2.8
Net income ................................   $ 1,334      $  5,428       5.0
- -----------------------------------------------------------------------------

PERFORMANCE OF ONGOING OPERATIONS

Results as reported include a number of items the company believes are not
relevant to future cash flows or operating results. Ongoing operations exclude
the operations of and gains on sale of the Glasstite subsidiary which was sold
in October 1999, the Plastic Tank Division which was partially sold in August
2000 and closed in November 2001 and the results of the Industrial Controls
Division of Beta Raven which is held for sale. Ongoing results also exclude the
nonrecurring gains and losses related to repositioning the company's businesses
and acquisition-related charges. The items excluded from ongoing results cause
this presentation to not be in conformity with accounting principles generally
accepted in the United States of America. Discussions of operating performance
in this document generally relate to ongoing operations unless otherwise
indicated.

A strong performance from new products in the Flow Controls Division was key to
the company's success in fiscal 2002. Profit improvement in the Electronic
Systems and Engineered Films divisions also contributed to record fiscal 2002
profitability. Sales from ongoing operations were down 1.2%, at $112.0 million.
A planned drop in Aerostar outerwear sales accounted for an $8.3 million
reduction in revenues, while deliveries from the Flow Controls Division were up
38%. Lower operating expenses resulted from reduced spending at the corporate
level for administrative costs. Ongoing operating income increased 40%, to $13.9
million. Net income was up $2.8 million in fiscal 2002, reaching $9.3 million.

Fiscal 2001 sales from ongoing businesses were $113.4 million and were 5.1%
higher than the $107.9 million sales figure in fiscal 2000. Sales in our
important growth segments; Electronic Systems, Flow Controls and Engineered
Films, exceeded fiscal 2000 levels. New product offerings generated growth in
the Flow Controls Division. Engineered Films growth came from strong
construction and oil exploration markets. New contracts in an expanding market
created growth in the Electronic Systems Division. Aerostar segment sales fell
below the prior year's level due to weakness in the markets it serves. Ongoing
operating income was $9.9 million, 16.3% higher than the comparable figure in
fiscal 2000. The favorable profit impact of higher sales and lower operating
expenses raised operating income as a percent of sales. As a result, net income
from ongoing operations increased from $5.4 million in fiscal 2000 to $6.5
million in fiscal 2001.
                                                        Raven 2002 Annual Report
                                                                         PAGE 13

FINANCIAL REVIEW AND ANALYSIS (CONTINUED)

DIVESTITURES AND OTHER REPOSITIONING ACTIVITIES

The company has taken important steps to reposition its business over the last
three years. The company's Beta Raven Industrial Controls Division is currently
held for sale. Most of the company's plastic tank operation was sold in August
2000. The company's remaining tank facility in Tacoma, WA was closed in November
2001. In October 1999, the Glasstite pickup-truck topper business was sold.
Sales of these businesses resulted in pretax gains of $3.1 million in fiscal
2001 and $1.2 million in fiscal 2000. In addition, the company's effective
income tax rate in fiscal 2001 of 41.3% reflects the impact of a non-deductible
goodwill disposition related to the sale of the plastic tank operation.

In fiscal 2002, the only significant one-time charge to ongoing operations was
to write off in-process research and development related to the acquisition of
Starlink in the fourth quarter. The in-process research and development related
to a project to develop the Invicta GPS receiver, which is scheduled for release
in the second half of fiscal 2003. A $550,000 charge to cost of goods sold in
the Flow Controls segment was required because the project had not reached
technological feasibility. The Electronic Systems Division recorded a net
$18,000 favorable adjustment to prior year repositioning accruals. The Beta
Raven Industrial Controls Division incurred $249,000 of costs to reposition its
operations, including the closing of its Alabama facility. These Beta Raven
costs impacted the reported cost of goods sold in the Businesses Sold and For
Sale segment.

For fiscal 2001, inventory write-downs and severances totaled approximately $3.0
million (of which $84,000 relates to the held-for-sale Beta Raven Industrial
Controls Division) and were offset by $393,000 of gains on the sale of sewing
plants. These nonrecurring charges included $1.7 million in cost of sales and
$130,000 in operating expenses for the Electronic Systems Division. The Flow
Controls Division and Beta Raven incurred cost-of-sales charges of $238,000 and
$84,000, respectively. Charges in fiscal 2001 were primarily excess and obsolete
inventory from restructuring the customer base in the Electronic Systems
Division and Beta Raven and discontinuing certain ultrasonic products in the
Flow Controls Division. Additional nonrecurring charges incurred in fiscal 2001
included obsolete inventory due to discontinued apparel lines, severance and
other costs from the combination of the former Raven Sportswear Division into
Aerostar. These charges totaled $823,000 ($767,000 in the fourth quarter), of
which $344,000 was charged to cost of sales and $479,000 was charged to
corporate and other operating expenses.

In fiscal 2000, nonrecurring charges were $800,000 (of which $250,000 related to
the now sold Plastic Tank Division). These cost-of-sales charges were primarily
for obsolete and excess inventory identified by new management in the Electronic
Systems Division ($300,000) and Aerostar's specialty apparel operations
($250,000).

Beta Raven Industrial Controls Division sales were $3.0 million, $3.3 million
and $5.2 million in fiscal 2002, 2001, and 2000, respectively. Sales for the
Plastic Tank Division were $3.5 million in fiscal 2002, $16.2 million in fiscal
2001 and $19.6 million in fiscal 2000. Glasstite pickup-truck topper sales in
fiscal 2000 were $17.7 million. Fiscal 2002 results included an operating loss
of $613,000 for businesses sold and for sale. In fiscal 2001, operating income
for the businesses sold and for sale, was $3.3 million, including a $3.1 million
gain on sale. Operating income for these businesses in fiscal 2000, including a
$1.2 million asset sales gain, was $2.6 million.

PERFORMANCE OF OPERATIONS - AS REPORTED

Consolidated sales from all businesses in fiscal 2002 were $118.5 million,
compared to $132.9 million and $150.4 million in fiscal 2001 and fiscal 2000,
respectively. Sales from businesses sold and for sale were $6.5 million in
fiscal 2002, $19.5 million in fiscal 2001 and $42.5 million in fiscal 2000.
Nearly all the assets of the Plastic Tank Division were sold in August 2000 and
the Glasstite pickup-truck topper business was sold in October 1999. Total net
income, including the impact of sold and for sale operations, nonrecurring
charges and gains on sales of businesses and assets, reached a record $8.8
million or $1.86 per diluted share in fiscal 2002. In fiscal 2001 net income was
$6.4 million and in fiscal 2000 it was $6.8 million. Net income per diluted
share was $1.24 per share in fiscal 2001 and $1.03 in fiscal 2000 as the number
of diluted shares declined from 6.6 million in fiscal 2000 to 5.2 million in
fiscal 2001 and 4.7 million in fiscal 2002.




PAGE 14

By divesting itself of underperforming assets, the company's management has
focused on improving profitability in its core businesses. In fiscal 2002, the
company's return was 18.4% on beginning equity and 7.5% on sales. The company
completed two strategic acquisitions, repurchased 173,309 shares of its common
stock for a total of $2.8 million, paid record per-share dividends, prepaid its
long-term debt and continued to invest in its ongoing businesses. The company
also split its stock on a 3-for-2 basis during fiscal 2002.


                          2002    2001    2000   1999    1998    1997
- ----------------------------------------------------------------------
                                               
Net income as % of
  Sales ................   7.5%    4.8%    4.5%   4.0%    5.3%    5.4%
  Average assets .......  13.3%    9.2%    8.6%   7.4%    9.9%   10.4%
  Beginning equity .....  18.4%   11.8%   10.9%  10.0%   14.2%   15.6%
- ----------------------------------------------------------------------


SEGMENT ANALYSIS

SALES AND OPERATING INCOME BY SEGMENT


                               2002                2001                 2000
                        ----------------------------------------------------------
                                    %                    %                    %
Dollars in thousands     amount   change     amount    change     amount    change
                        ----------------------------------------------------------
                                                          
SALES
Flow Controls .......   $ 23,178   +38.3    $ 16,758    +23.9    $ 13,520    -11.7
Engineered Films ....     40,280   + 0.7      40,004    +11.5      35,889    +10.4
Electronic Systems ..     32,289   + 0.8      32,039    + 6.2      30,176    +20.9
Aerostar ............     16,271   -33.7      24,559    -13.1      28,277    -20.6
                        --------            --------             --------
ONGOING OPERATIONS
  TOTAL .............    112,018   - 1.2     113,360    + 5.1     107,862    - 0.5
Businesses
  Sold and For Sale .      6,497   -66.7      19,498    -54.1      42,523    - 9.1
                        --------            --------             --------
Total (as reported) .   $118,515   -10.8    $132,858    -11.7    $150,385    - 3.1
                        ========            ========             ========

                                   2002                2001                 2000
                            ----------------------------------------------------------
                                        %                    %                    %
Dollars in thousands         amount   sales      amount    sales      amount    sales
                            ----------------------------------------------------------
                                                              
OPERATING INCOME
  (LOSS)
Flow Controls ...........   $ 6,059     26.1    $ 4,223     25.2     $ 2,873     21.3
Engineered Films ........     9,886     24.5      8,810     22.0       7,464     20.8
Electronic Systems ......     2,246      7.0      1,280      4.0       1,932      6.4
Aerostar ................       864      5.3      1,534      6.2       2,342      8.3
Corporate expenses ......    (5,149)             (5,940)              (6,090)
                            -------             -------              -------
ONGOING OPERATIONS
  TOTAL .................    13,906     12.4      9,907      8.7       8,521      7.9
Businesses Sold and
  For Sale ..............      (613)              3,331                2,606
Nonrecurring charges(a) .      (118)             (2,490)                (550)
                            -------             -------              -------
Total (as reported) .....   $13,175     11.1    $10,748      8.1     $10,577      7.0
                            =======             =======              =======

(a)  Nonrecurring charges are separately stated in the above table as the
     company does not believe them to be relevant to future cash flows or
     operating results. However, the reported segment data on page 12 reflect
     nonrecurring charges in the segment to which they apply.

FLOW CONTROLS

FISCAL 2002 VERSUS FISCAL 2001

The Flow Controls Division (FCD) provides electronic speed and Global
Positioning System (GPS)-based, location-compensated application-control
products for the agriculture, golf course and DOT (department of transportation)
markets. Sales in fiscal 2002 were $23.2 million, up 38.3% over fiscal 2001
levels. The acceptance of new product introductions, including a special order
for chemical injection systems, increased deliveries. In the fourth quarter of
fiscal 2002, deliveries under that special order were $2.0 million, up $1.0
million from a similar order delivered in the fourth quarter of fiscal 2001.
Gross profit rates on new product introductions were slightly lower than
existing products, but the relatively strong sales growth pushed ongoing
operating income to a record high. Gross profit rates, excluding nonrecurring
charges, were 32.9% in fiscal 2002 and 34.3% in fiscal 2001. Fiscal 2002 ongoing
operating income of $6.1 million was 43.5% higher than in fiscal 2001.

FISCAL 2001 VERSUS FISCAL 2000

Fiscal 2001 sales reached $16.8 million, 23.9% over fiscal 2000. The sales
increase is primarily the result of new product introductions and a
comprehensive marketing campaign that increased FCD's market share in the
industries it serves. Gross profits, excluding non-recurring charges, increased
$1.7 million in fiscal 2001 to $5.7 million. The strong sales volume, increased
manufacturing efficiencies through process improvements and material cost
reductions were the main contributors to a gross profit margin increase from
29.9% to 34.3% in fiscal 2001. Operating income, excluding non-recurring
charges, of $4.2 million was $1.3 million over the $2.9 million figure in fiscal
2000. Marketing expenses increased $363,000 from fiscal 2000, primarily due to
advertising, trade show and literature expenses. Operating income, excluding
nonrecurring charges, increased to 25.2% of sales, an increase of almost four
percentage points from fiscal 2000.

PROSPECTS

The Flow Controls Division acquired Starlink in December 2001 for $7.9 million.
Starlink is a developer of GPS technology for agricultural and other niche
markets. Starlink was a key supplier of a number of the new products introduced
over the past

                            [FLOW CONTROLS BAR GRAPH]



FLOW CONTROLS

                           NET SALES                                     ONGOING OPERATING INCOME
                       ($ IN MILLIONS)                                        ($ IN MILLIONS)
                                                                   
2000                         13.52                                                 2.873
2001                        16.758                                                 4.223
2002                        23.178                                                 6.059



                                                        Raven 2002 Annual Report
                                                                         PAGE 15

FINANCIAL REVIEW AND ANALYSIS (continued)

two years by FCD. The overall agricultural market remains weak and management
anticipated relatively flat sales and profits absent the acquisition. Starlink
is expected to add more than $5 million to the sales figures in fiscal 2003 and
the division will capture additional gross profit on product formerly supplied
to it by Starlink.

ENGINEERED FILMS

FISCAL 2002 VERSUS FISCAL 2001

The Engineered Films Division (EFD) provides reinforced plastic sheeting,
primarily to the construction, oil exploration and manufactured housing
industries, and manufactures scientific research balloons. Sales in fiscal 2002
of $40.3 million were slightly higher than the $40.0 million in fiscal 2001.
Strength in pit lining for oil exploration was strong in the first half of
fiscal 2002, but softened in the second half. Demand for construction film in
the fourth quarter of fiscal 2002 was slowed by mild weather. Deliveries of
scientific research balloons were $4.5 million, down 3% from fiscal 2001.
Favorable trends in material pricing, along with improved throughput in key
manufacturing areas improved profitability over fiscal 2001 levels. Gross profit
rates increased from 26.3% in fiscal 2001 to 29.1% in fiscal 2002. Record
operating income of $9.9 million in fiscal 2002 was 12% higher than in fiscal
2001.

FISCAL 2001 VERSUS FISCAL 2000

Sales in fiscal 2001 were $40.0 million, a $4.1 million increase over fiscal
2000. The sales increases were primarily from increased and construction
industries. Pit lining demand increased due to increased domestic oil production
and construction enclosure demand increased due to an early winter across much
of the country. Sales of scientific research balloons declined $420,000 from
$5.0 million in fiscal 2000, but gross profits rose from $1.3 million in fiscal
2000 to $1.5 in fiscal 2001. Final delivery of NASA prototype balloon products
occurred in the fourth quarter of fiscal 2001. EFD's gross profits in fiscal
2001 were $10.5 million, a $1.5 million increase from fiscal 2000. The gross
profit rate increase of 1.3 points to 26.3% in fiscal 2001 was due primarily to
increased manufacturing efficiencies and sales increases of relatively higher
margin construction and oil exploration industry products. EFD's operating
income in fiscal 2001 was $8.8 million and exceeded fiscal 2000 by $1.3 million.

                          [ENGINEERED FILMS BAR GRAPH]



ENGINEERED FILMS

                           NET SALES                                     ONGOING OPERATING INCOME
                       ($ IN MILLIONS)                                        ($ IN MILLIONS)
                                                                   
2000                          35.889                                                7.464
2001                          40.004                                                8.81
2002                          40.28                                                 9.886


PROSPECTS

After capital expenditures of $3.2 million in fiscal 2002, management will
invest an additional $5 million in the Engineered Films Division in fiscal 2003.
New extrusion equipment is expected to come online in the fall of 2002. These
equipment additions are expected to broaden EFD's product offerings and expand
sales. Sales growth in the 10% range is expected. The higher depreciation burden
and costs of entering new markets is expected to substantially offset the profit
impact of the higher sales in fiscal 2003.

ELECTRONIC SYSTEMS

FISCAL 2002 VERSUS FISCAL 2001

The Electronic Systems Division (ESD) provides electronics manufacturing
services (EMS) primarily to North American original equipment manufacturers
(OEM's). Results for ESD include the operations of its St. Louis facility, which
until August 2001 was a division of the company's Beta Raven subsidiary. Prior
years' results have been reclassified to maintain comparability. Revenues of
$32.3 million in fiscal 2002 compared to $32.0 million in fiscal 2001. The
repositioning of the division in fiscal 2001 reduced the division's customer
base by 50%, mitigating the impact of growth with continuing accounts. Gross
profit rates improved from 6.3% in fiscal 2001 to 8.8% in fiscal 2002. The
better focus created by repositioning combined with streamlined workflow in our
new Sioux Falls, SD facility improved manufacturing efficiencies. As a result,
ongoing operating income increased by 75%, from $1.3 million in fiscal 2001 to
$2.2 million in fiscal 2002.

                         [ELECTRONIC SYSTEMS BAR GRAPH]



ELECTRONIC SYSTEMS

                           NET SALES                                     ONGOING OPERATING INCOME
                       ($ IN MILLIONS)                                        ($ IN MILLIONS)
                                                                   
2000                          30.176                                                1.932
2001                          32.039                                                1.28
2002                          32.289                                                2.246



FISCAL 2001 VERSUS FISCAL 2000

Sales for ESD were up $1.9 million over fiscal 2000, reaching $32.0 million in
fiscal 2001. ESD delivered $2.1 million of secure telecommunication products on
its multi-year contract with General Dynamics in the fourth quarter. Gross
profits, excluding nonrecurring charges of $2.0 million, trailed fiscal 2000 by
$795,000. The division moved into a new production facility during fiscal 2001
and re-evaluated its customer base, reducing the number of customers by nearly
50%. Both of these efforts caused manufacturing inefficiencies, increased
production costs and reduced gross profits in the




PAGE 16


second and third quarters of fiscal 2001. The gross profit rate, excluding
nonrecurring charges, was 6.3% compared to 9.3% in fiscal 2000. The
repositioning efforts combined with special shipments benefited the division in
the fourth quarter of fiscal 2001 and the division returned a gross profit of
$1.3 million or 14.1% of sales in that quarter. ESD's operating income,
excluding nonrecurring charges, for fiscal 2001 was $1.3 million compared to
$1.9 million in fiscal 2000.

PROSPECTS

The division purchased System Integrators in December 2001 for approximately
$1.4 million. This company was moved to ESD's existing facility in the St. Louis
area. System Integrators customers are expected to add another $5 million to
sales in fiscal 2003. In addition, the division's existing customers expect to
grow in the 7-12% range over the coming year. Better utilization of capacity and
improvements to manufacturing efficiency are also expected to continue,
improving gross profit rates.

AEROSTAR

FISCAL 2002 VERSUS FISCAL 2001

The Aerostar segment manufactures inflatable display products and hot-air sport
balloons and performs specialized sewing operations on a contract basis. With
the closing of two sewing plants late in fiscal 2001, a decline in demand for
outerwear sewing contracts was anticipated. As expected, Aerostar sales declined
from $24.6 million in fiscal 2001 to $16.3 million in fiscal 2002. Efficiencies
suffered as products were transferred between facilities. Fourth-quarter results
in fiscal 2002 were also negatively impacted by approximately $228,000 of
inventory writedowns related to continued loss of customers. Despite a slight
overall improvement in gross margin rates, from 11.4% to 11.9%, ongoing
operating income fell from $1.5 million in fiscal 2001 to $864,000 in fiscal
2002.
                              [AEROSTAR BAR GRAPH]



AEROSTAR

                           NET SALES                                     ONGOING OPERATING INCOME
                       ($ IN MILLIONS)                                        ($ IN MILLIONS)
                                                                   
2000                          28.277                                                  2.342
2001                          24.559                                                  1.534
2002                          16.271                                                  0.864


FISCAL 2001 VERSUS FISCAL 2000

Aerostar sales in fiscal 2001 were $24.6 million compared to $28.3 million in
fiscal 2000. Inflatable and hot-air sales reached $5.5 million and were up
slightly from fiscal 2000. However, specialty apparel sales fell to $19.1
million in fiscal 2001 from $23.3 million in fiscal 2000. The sales decline was
primarily due to the sale of Aerostar's proprietary skiwear line at the end of
fiscal 2000 and a declining market share of hunting outerwear products due to
foreign competition. In the fourth quarter of fiscal 2001, two of the segment's
five sewing plants were closed to reduce manufacturing capacity because of the
continuing sales decline. Gross profits, excluding nonrecurring charges, of $2.8
million were $1.1 million below fiscal 2000. Hot-air and inflatable margins
increased due to aggressive product pricing and manufacturing efficiency
improvements. Specialty apparel gross profit declines are primarily the result
of the sale of the proprietary skiwear line that carried higher gross margins
than the remaining contract lines but required higher working capital
investments. Operating profits, excluding nonrecurring charges, of $1.5 million
were $808,000 below the $2.3 million level in fiscal 2000.

PROSPECTS

Sales are expected to continue to decline at Aerostar, but by less than $2
million in fiscal 2003. Sales of inflatable and other advertising products are
expected to increase. With a more stable sales base, efficiency and
profitability are expected to improve. This improvement is expected to be
substantially offset by higher aviation insurance premiums for hot-air balloon
products.

EXPENSES, INCOME TAXES, AND OTHER

FISCAL 2002 VERSUS FISCAL 2001

Corporate expenses, primarily administrative expenses, were $5.1 million in
fiscal 2002, down from $5.9 million in fiscal 2001. Reduced administrative staff
accounted for the improvement. Interest expense of $129,000 in fiscal 2002 was
down due to lower long-term debt levels. Interest income, included in other
income, was $573,000 in fiscal 2002 as compared to $468,000 one year earlier.
Higher average invested cash balances were partially offset by lower interest
rates. The company's effective tax rate of 34.8% in fiscal 2002 was lower than
the fiscal 2001 rate, excluding non-recurring charges, of 35.7%. The fiscal 2001
rate, as reported, of 41.3% included a nondeductible goodwill write-off and the
fiscal 2002 rate reflected closing operations in, and losses in, states that
have a corporate income tax.


                                                        Raven 2002 Annual Report
                                                                         PAGE 17

FINANCIAL REVIEW AND ANALYSIS (continued)

FISCAL 2001 VERSUS FISCAL 2000

Corporate expenses were $5.9 million in fiscal 2001, excluding non-recurring
charges, as compared to $6.1 million in fiscal 2000. The decrease was a result
of corporate staff reductions. Interest expense was $258,000, down from $418,000
the previous year due to lower short-term borrowing and long-term debt. Other
income increased due to interest earned on the cash proceeds from the Plastic
Tank Division asset sale. Interest income was $468,000 in fiscal 2001 compared
with $276,000 in fiscal 2000. The effective tax rate increased from 35.6% to
41.3% in fiscal 2001 due to a $1.8 million write-off of nondeductible goodwill.
The tax rate used for ongoing operations excludes the impact of the goodwill
write-off and was 35.7%.

PROSPECTS

In fiscal 2003, management expects to keep corporate administrative expenses
relatively flat. Interest income is forecasted to be lower due to the cash spent
on acquisitions and capital projects. The company's effective tax rate should
increase to the 35% range due to higher state taxes in fiscal 2003.

ANALYSIS OF FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES

The following table summarizes cash provided by (used in) the company's business
activities for the past three fiscal years:


Dollars in thousands                      2002      2001      2000
                                        ---------------------------
                                                   
Operating activities ...............    $18,496   $ 9,441   $10,375
Investing activities ...............    (13,152)    9,752     6,323
Financing activities ...............     (8,539)  (14,227)  (16,326)
- -------------------------------------------------------------------

OPERATING ACTIVITIES

The company's cash flow from operations totaled $38.3 million over the past
three years compared to net income of $22.0 million over the same period.
Inventories and accounts receivable, after adjusting for businesses acquired and
sold, decreased $6.0 million in fiscal 2002. Management has instituted
incentives to improve working capital utilization. Reducing the customer base in
the Electronic Systems Division has also improved inventory turns. Working
capital requirements are projected to decline due to increased inventory and
accounts receivable turnover rates.

INVESTING ACTIVITIES

In fiscal 2002, the company paid approximately $8.7 million in cash for two
acquisitions. In fiscal 2001, the company sold substantially all the assets of
its Plastic Tank Division. In addition, the company sold two of its sewing
plants and collected additional cash from the fiscal 2000 sale of Glasstite
assets. Total cash proceeds from these sales in fiscal 2001 were $12.8 million.
Capital expenditures were $5.1 million in fiscal 2002 and $3.1 million in fiscal
2001. The Engineered Films Division acquired additional extrusion capacity and
warehouse space, accounting for $3.2 million of the spending. Capital
expenditures in fiscal 2002 exceeded depreciation and amortization by $1.9
million. Capital spending is expected to approach $7 million in fiscal 2003.
Fiscal 2003 expenditures are again planned primarily for expansion of the
Engineered Films product line and are expected to be financed by cash flow from
operations.

FINANCING ACTIVITIES AND CREDIT LINES

The company increased its dividend on a per share basis for the fifteenth
consecutive year. Cash was also used to repurchase 173,309 shares of company
stock at an average price of $16.43. In fiscal 2001, 1.1 million shares of
company stock were purchased at an average price of $9.48. Shares were
repurchased to return additional cash to the shareholders and increase the
leverage of the company's balance sheet. The company may repurchase additional
shares, depending upon its internal cash requirements, as authorized by the
Board of Directors.

The company used its short-term lines of credit to finance Aerostar's seasonal
borrowing needs. Maximum borrowing under the company's line of credit was $1.3
million during fiscal 2002 and the average daily borrowing was $368,000.
Short-term borrowing required for fiscal 2003 should again be minimal due to the
company's opening cash balance. Management believes its existing credit facility
and cash provided by operations will be sufficient to fund its requirements in
the coming fiscal year.

CAPITAL STRUCTURE AND LONG-TERM FINANCING

The company prepaid substantially all of its long-term debt in fiscal 2002. The
remaining term debt of approximately $400,000 matures over four years and
relates primarily to capitalized leases assumed from acquisitions.

The company's solid financial condition and capacity to assume additional
financing, if needed, provide the company a strategic advantage over many of its
competitors. Management has the capacity to, and will, leverage the company to
acquire businesses that fit its strategic direction. In the opinion of
management, the company is well positioned to take on new opportunities in its
core businesses with emphasis on those that build on the company's strengths of
customer service and manufacturing.

PAGE 18

ACCOUNTING POLICIES AND PRONOUNCEMENTS

KEY ACCOUNTING POLICIES

Key accounting policies for the company are those policies that require the
application of judgement when valuing assets and liabilities on the company's
balance sheet. The company, other than utilizing operating leases outlined in
Note 8 to the financial statements, does not enter into off balance sheet
financing or derivatives.

The company's most difficult accounting decision is determining inventory value
at the lower of cost or market. Typically, when a product reaches the end of its
life cycle, inventory value declines slowly or the product has alternative uses.
Management uses its computerized manufacturing resources planning data to help
determine if inventory is slow moving or has become obsolete due to an
engineering change. The company has been unable to develop a mathematical model
to predict obsolescence, but closely reviews items that have balances in excess
of the prior year's requirements or that have been dropped from production
requirements. Despite these reviews, technological or strategic decisions, made
by management or the company's customers, may result in unexpected excess
material. In the Electronic Systems Division, the company typically has recourse
to customers for obsolete or excess material. In every operating unit of the
company, management must manage obsolete inventory risk. The accounting
judgement ultimately made is an evaluation of the success that division
management will have in controlling inventory risk and mitigating the impact of
obsolescence when it does occur.

Similarly, determining the level of the allowance for doubtful accounts,
warranty and self-insurance accruals represent management's best estimate of
future events. Historical levels of activity or actuarial assistance may be used
in certain circumstances, but knowledge of the current financial climate or the
impact of a new product on these accruals always tempers evaluation of the
historical data.

In fiscal 2002, the significance of the intangible assets associated with the
Starlink acquisition led management to obtain the assistance of an outside
specialist to determine the values of the identifiable intangible assets
acquired. This valuation required management to estimate future revenues and
cash flows associated with various intangibles outlined by Statements of
Financial Accounting Standards No. 141 (FAS 141), "Business Combinations." The
specialist provided a comprehensive report to management, outlining the value of
the intangible assets and their estimated useful lives.

NEW ACCOUNTING PRONOUNCEMENTS

The Financial Accounting Standard Board issued Statements of Financial
Accounting Standards No. 141 (FAS 141), "Business Combinations," No. 142 (FAS
142), "Goodwill and Other Intangible Assets," No. 143 (FAS 143), "Accounting for
Asset Retirement Obligations," and No. 144 (FAS 144), "Accounting for the
Impairment or Disposal of Long-Lived Assets," during fiscal 2002. FAS 141
supercedes Accounting Principles Board Opinion No. 16, "Business Combinations."
The most significant changes made by FAS 141 are: (1) requiring that the
purchase method of accounting be used for all business combinations initiated
after June 30, 2001, and (2) establishing specific criteria for the recognition
of intangible assets separately from goodwill.

FAS 142 supercedes APB 17, "Intangible Assets." FAS 142 primarily addresses the
accounting for goodwill and intangible assets subsequent to their acquisition
(i.e., the post-acquisition accounting). The provisions of FAS 142 will be
effective for fiscal years beginning after December 15, 2001, with the
amortization provisions to be applied to all business combinations after June
30, 2001. The most significant changes made by FAS 142 are (1) goodwill and
indefinite lived intangible assets will no longer be amortized, (2) goodwill
will be tested for impairment at least annually at the reporting level, (3)
intangible assets deemed to have an indefinite life will be tested for
impairment at least annually, and (4) the amortization period of intangible
assets with finite lives will no longer be limited to forty years.

FAS 143 establishes accounting standards for recognition and measurement of a
liability for an asset retirement obligation and the associated asset retirement
cost.

FAS 144 establishes accounting and reporting standards for the impairment or
disposal of long-lived assets to be disposed of by sale, whether previously held
and used or newly acquired.

The company, as required, has implemented FAS 141 and FAS 142 for its purchases
of Starlink and System Integrators as explained in Note 4 to the consolidated
financial statements. The company is in the process of analyzing any additional
impacts of these new standards on its results of operations and financial
condition and expects no material impact from the adoption of these new
accounting pronouncements.



                                                        Raven 2002 Annual Report
                                                                         PAGE 19

WEEKLY CLOSING STOCK PRICE, VOLUME & P/E

Weekly from February 1, 2001 thru February 2, 2002




Closing Price               Volume
(in dollars)           (in thousands)               P/E Ratio
                                              
12.17                        73650                      9.4
12.33                         8250                      9.5
12.33                         3150                      9.5
12.38                         3450                      9.5
12.33                        36000                      9.5
12.33                         6600                      9.5
12.33                        30600                      9.5
12.33                         6150                      9.5
12.33                        13200                      9.5
12.67                        23700                      9.7
12.67                        11550                      9.7
12.47                         8400                      9.6
12.67                        40050                      9.7
12.77                        30000                      8.4
12.93                        16800                      8.5
13.97                        50250                      9.2
   17                        91800                     11.2
16.67                       112800                       11
17.33                        83400                     11.4
   18                        50100                     11.8
17.93                        31350                     11.8
17.93                        19050                     11.8
   18                         9150                     11.8
17.87                        20700                     11.8
 16.6                        64500                     10.9
   17                        69900                     11.2
 17.5                        15300                     10.5
17.68                        38500                     10.6
 17.5                        37200                     10.5
15.45                        46900                      9.2
17.09                        26300                     10.2
 18.1                        49600                     10.8
 17.9                         2000                     10.7
14.45                        30400                      8.6
17.15                        20800                     10.2
 17.7                        14700                     10.6
 16.5                         8700                      9.9
 17.4                        12200                     10.4
17.99                        10700                     10.8
   18                        13600                      9.6
17.97                        36000                      9.6
17.45                        12000                      9.3
 19.6                        47200                     10.4
21.75                        51100                     11.6
 23.2                        65100                     12.3
 22.5                        66200                       12
   23                        35200                     12.2
   23                         9800                     12.2
 22.5                        35000                       12
23.05                        43500                     12.3
21.51                        28800                     11.4
 22.6                        26300                       12
23.47                        33700                     12.5


QUARTERLY INFORMATION (Unaudited)


                                                                                         Net Income     Common Stock       Cash
Dollars in thousands,     Net      Gross       Operating     Pretax        Net         Per Share(a)(b)  Market Price(b) Dividends(b)
except per-share data    Sales     Profit       Income       Income       Income       Basic   Diluted   High     Low    Per Share
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                          
FISCAL 2002
FIRST QUARTER .......  $ 30,972  $  6,239     $  3,294     $  3,415     $  2,209     $  0.47   $0.47   $12.83   $12.08     $0.120
SECOND QUARTER ......    28,157     5,299        3,020        3,157        2,043        0.44    0.43    18.17    12.67      0.130
THIRD QUARTER .......    28,780     6,391        3,762        3,879        2,510        0.54    0.53    18.11    14.45      0.130
FOURTH QUARTER ......    30,606     5,922(c)     3,099(c)     3,114(c)     2,085(c)     0.45    0.44    23.50    17.10      0.130
                       ----------------------------------------------------------------------------------------------------------
TOTAL YEAR ..........  $118,515  $ 23,851     $ 13,175     $ 13,565     $  8,847     $  1.90   $1.86   $23.50   $12.08     $0.510
                       ==========================================================================================================
FISCAL 2001
First Quarter .......  $ 32,168  $  6,159     $  2,599     $  2,621     $  1,677     $  0.29   $0.29   $10.00   $ 7.50     $0.113
Second Quarter ......    33,178     5,073        1,851        1,832        1,173        0.23    0.23    10.00     8.67      0.113
Third Quarter .......    35,210     3,734        3,576(d)     3,592(d)     1,663(d)     0.34    0.34    13.91     9.67      0.120
Fourth Quarter ......    32,302     6,157        2,722(d)     2,879(d)     1,898(d)     0.40    0.40    12.25    10.33      0.120
                       ----------------------------------------------------------------------------------------------------------
Total Year ..........  $132,858  $ 21,123     $ 10,748     $ 10,924     $  6,411     $  1.24   $1.24   $13.91   $ 7.50     $0.467
                       ==========================================================================================================
FISCAL 2000
First Quarter .......  $ 35,247  $  5,956     $  2,258     $  2,252     $  1,439     $  0.21   $0.21   $11.00   $ 9.00     $0.107
Second Quarter ......    37,515     6,500        2,803        2,842        1,816        0.27    0.27    12.17     9.25      0.107
Third Quarter .......    45,580     6,415        3,589(e)     3,527(e)     2,254(e)     0.35    0.35    12.00     9.00      0.113
Fourth Quarter ......    32,043     5,346        1,927(e)     1,882(e)     1,253(e)     0.21    0.21    10.67     9.08      0.113
                       ----------------------------------------------------------------------------------------------------------
Total Year ..........  $150,385  $ 24,217     $ 10,577     $ 10,503     $  6,762     $  1.03   $1.03   $12.17   $ 9.00     $0.440
                       ==========================================================================================================

(a)  Net income per share is computed discretely by quarter and may not add to
     the full year.
(b)  All per share and market price data reflect the July 2001 three-for-two
     stock split.
(c)  Includes a pretax $550,000 ($350,000 net of tax) acquired in-process
     research and development charge (See Note 4).
(d)  Includes a $3.1 million third-quarter pretax gain ($1.4 million net of tax)
     and a $393,000 fourth-quarter pretax gain ($253,000 net of tax) on the sale
     of the company's Plastic Tank Division and certain sewing plants. Also
     includes a $2.2 million third-quarter pretax charge ($1.4 million net of
     tax) and a $767,000 fourth-quarter pretax charge ($493,000 net of tax) for
     exiting certain business activities (See Note 5).
(e)  Includes a $966,000 third-quarter pretax gain ($619,000 net of tax) and a
     $220,000 fourth-quarter pretax gain ($142,000 net of tax) on the sale of
     the company's Glasstite business.
     (See Note 5).


PAGE 20

CONSOLIDATED BALANCE SHEET


                                                                                      As of January 31
                                                                                 ---------------------------
Dollars in thousands, except per-share data                                        2002      2001      2000
                                                                                 ---------------------------
                                                                                            
ASSETS
Current assets
  Cash and cash equivalents ..................................................   $ 7,478   $10,673   $ 5,707
  Accounts receivable, net ...................................................    16,427    19,274    22,717
  Inventories, net ...........................................................    19,082    18,983    24,462
  Deferred income taxes ......................................................     1,927     2,516     1,919
  Prepaid expenses and other current assets ..................................       394       371       566
                                                                                 ---------------------------
     Total current assets ....................................................    45,308    51,817    55,371
Property, plant and equipment, net ...........................................    14,059    11,647    15,068
Other assets, net ............................................................     8,469     2,192     3,608
                                                                                 ---------------------------
     Total assets ............................................................   $67,836   $65,656   $74,047
                                                                                 ===========================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
  Current portion of long-term debt ..........................................   $   127   $ 1,012   $ 1,044
  Accounts payable ...........................................................     4,801     3,490     5,320
  Accrued liabilities ........................................................     8,179     8,727     7,721
  Customer advances ..........................................................       703       706       617
                                                                                 ---------------------------
     Total current liabilities ...............................................    13,810    13,935    14,702
Long-term debt, less current portion .........................................       280     2,013     3,024
Other liabilities, primarily compensation and benefits .......................     1,714     1,719     1,802
Commitments and contingencies
Stockholders' equity .........................................................    52,032    47,989    54,519
  Common shares, par value $1.00
   Authorized--100,000,000
   Outstanding--2002: 4,605,569; 2001: 3,159,432; 2000: 3,916,107
                                                                                 ---------------------------
     Total liabilities and stockholders' equity ..............................   $67,836   $65,656   $74,047
                                                                                 ===========================

The accompanying notes are an integral part of the consolidated financial
statements.


                                                        Raven 2002 Annual Report
                                                                         PAGE 21

CONSOLIDATED STATEMENT OF INCOME


                                                                           For the years ended January 31
                                                                      -----------------------------------------
Dollars in thousands, except per-share data                             2002            2001            2000
                                                                      -----------------------------------------
                                                                                             
Net sales .......................................................     $118,515        $132,858        $150,385
Cost of goods sold ..............................................       94,664         111,735         126,168
                                                                      -----------------------------------------
  Gross profit ..................................................       23,851          21,123          24,217
Selling, general and administrative expenses ....................       11,043          13,883          14,826
Gain on sale of businesses and assets ...........................         (367)         (3,508)         (1,186)
                                                                      -----------------------------------------
  Operating income ..............................................       13,175          10,748          10,577
Interest expense ................................................         (129)           (258)           (418)
Other income, net ...............................................          519             434             344
                                                                      -----------------------------------------
  Income before income taxes ....................................       13,565          10,924          10,503
Income taxes ....................................................        4,718           4,513           3,741
                                                                      -----------------------------------------
  Net income ....................................................     $  8,847        $  6,411        $  6,762
                                                                      =========================================
Net income per common share
   --basic ......................................................     $   1.90        $   1.24        $   1.03
                                                                      =========================================
   --diluted ....................................................     $   1.86        $   1.24        $   1.03
                                                                      =========================================



The accompanying notes are an integral part of the consolidated financial
statements.



PAGE 22


CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME


                                                                                     Treasury stock
                                                            Common     Paid-in   ----------------------    Retained
Dollars in thousands, except per-share data                 Stock      Capital     Shares       Cost       Earnings     Total
                                                           -------------------------------------------------------------------
                                                                                                    
Balance January 31, 1999 .................................  $5,215     $ 2,940    (521,403)   $ (6,231)     $60,369    $62,293
Net and comprehensive income .............................                                                    6,762      6,762
Cash dividends ($.440 per share)(a) ......................                                                   (2,895)    (2,895)
Purchase of stock ........................................                        (780,604)    (11,881)                (11,881)
Purchase and retirement of stock .........................      (5)        (65)                                            (70)
Employees' stock options exercised .......................       5          79                                              84
Employee stock grant .....................................       3          35                                              38
Stock option cash bonus forfeitures, net of tax ..........                 188                                             188
                                                           -------------------------------------------------------------------
Balance January 31, 2000 .................................   5,218       3,177  (1,302,007)    (18,112)      64,236     54,519
Net and comprehensive income .............................                                                    6,411      6,411
Cash dividends ($.467 per share)(a) ......................                                                   (2,399)    (2,399)
Purchase of stock ........................................                        (761,800)    (10,829)                (10,829)
Employees' stock options exercised .......................       2          42                                              44
Employee stock grant .....................................       3          39                                              42
Stock option cash bonus forfeitures, net of tax ..........                 201                                             201
                                                           -------------------------------------------------------------------
Balance January 31, 2001 .................................   5,223       3,459  (2,063,807)    (28,941)      68,248     47,989
Net and comprehensive income .............................                                                    8,847      8,847
Cash dividends ($.510 per share)(a) ......................                                                   (2,371)    (2,371)
Three-for-two stock split ................................   2,612      (2,614) (1,031,903)                                 (2)
Purchase of stock ........................................                        (173,309)     (2,848)                 (2,848)
Purchase and retirement of stock .........................     (70)      1,134)                                         (1,204)
Employees' stock options exercised .......................     110       1,378                                           1,488
Tax benefit from exercise of stock options ...............                 133                                             133
                                                           -------------------------------------------------------------------
BALANCE JANUARY 31, 2002 .................................  $7,875     $ 1,222  (3,269,019)   $(31,789)     $74,724    $52,032
                                                           ===================================================================

(a)  Restated to reflect the July 2001 three-for-two stock split.
The accompanying notes are an integral part of the consolidated financial
statements.


                                                        Raven 2002 Annual Report
                                                                         PAGE 23

CONSOLIDATED STATEMENT OF CASH FLOWS


                                                                                         For the years ended January 31
                                                                                        --------------------------------
Dollars in thousands                                                                      2002        2001        2000
                                                                                        --------------------------------
                                                                                                       
Cash flows from operating activities
  Net income ........................................................................   $  8,847    $  6,411    $  6,762
  Adjustments to reconcile net income to net cash provided by operating activities:
   Depreciation and amortization ....................................................      3,145       3,667       4,884
   Acquired in-process research and development charge ..............................        550
   Provision for losses on accounts receivable ......................................        126         552         362
   Gain on sale of businesses and assets ............................................       (367)     (3,508)     (1,186)
   Deferred income taxes ............................................................        586        (684)     (1,019)
   Change in operating assets and liabilities, net of effects from the
     acquisition and sale of businesses .............................................      5,529       2,914         478
   Other operating activities, net ..................................................         80          89          94
                                                                                       ---------------------------------
  Net cash provided by operating activities .........................................     18,496       9,441      10,375
                                                                                       ---------------------------------
Cash flows from investing activities
  Capital expenditures ..............................................................     (5,094)     (3,090)     (3,639)
  Acquisition of businesses .........................................................     (8,735)
  Sale of businesses and assets, net of cash sold ...................................        677      12,805       8,682
  Proceeds on sale of investment in affiliate .......................................                              1,250
  Other investing activities, net ...................................................                     37          30
                                                                                        --------------------------------
  Net cash provided by (used in) investing activities ...............................    (13,152)      9,752       6,323
                                                                                        --------------------------------

Cash flows from financing activities
  Proceeds from borrowing under line of credit ......................................      1,470       3,500       6,000
  Repayment on borrowing under line of credit .......................................     (1,470)     (3,500)     (6,000)
  Long-term debt principal payments .................................................     (3,012)     (1,043)     (1,564)
  Principal payments on debt from acquired businesses ...............................       (590)
  Net proceeds from exercise of stock options .......................................        284          44          14
  Dividends paid ....................................................................     (2,371)     (2,399)     (2,895)
  Purchase of treasury stock ........................................................     (2,848)    (10,829)    (11,881)
  Other .............................................................................         (2)
                                                                                        --------------------------------
  Net cash used in financing activities .............................................     (8,539)    (14,227)    (16,326)
                                                                                        --------------------------------

Net increase (decrease) in cash and cash equivalents ................................     (3,195)      4,966         372
Cash and cash equivalents at beginning of year ......................................     10,673       5,707       5,335
                                                                                        --------------------------------
Cash and cash equivalents at end of year ............................................   $  7,478    $ 10,673    $  5,707
                                                                                        ================================

The accompanying notes are an integral part of the consolidated financial
statements.


PAGE 24

NOTES TO FINANCIAL STATEMENTS

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of Raven
Industries, Inc. and its wholly owned subsidiaries (the "company"). All
significant intercompany balances and transactions have been eliminated in
consolidation.

USE OF ESTIMATES

The preparation of the company's financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make certain estimates and assumptions that affect the
reported amounts of assets and liabilities as of the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods. Actual results could differ from these estimates.

CASH AND CASH EQUIVALENTS

The company considers all highly liquid debt instruments with original
maturities of three months or less to be cash equivalents. Cash and cash
equivalent balances are principally concentrated in a money market fund with
Wells Fargo Bank Minnesota N.A.

INVENTORY VALUATION

Inventories are stated at the lower of cost or market, with cost determined
on the first-in, first-out basis.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are stated at cost and are depreciated over the
estimated useful lives of the assets using accelerated methods. The estimated
useful lives used for computing depreciation are as follows:

                                                   
Buildings and improvements . . . . . . . . . . . . .  7 to 39 years
Machinery and equipment . . . . . . . . . . . . . . . 3 to 7 years



Maintenance and repairs are charged to expense in the year incurred and
renewals and betterments are capitalized. The cost and related accumulated
depreciation of assets sold or disposed of are removed from the accounts and
the resulting gain or loss is reflected in operations.

INTANGIBLE ASSETS

Intangible assets, primarily comprised of technologies acquired through
acquisition, are recorded at cost net of accumulated amortization.
Amortization is computed on a straight-line basis over estimated useful lives
ranging from 3 to 20 years. The company  periodically assesses the
recoverability of long-lived and intangible assets based upon anticipated
future earnings and operating cash flows. Any impaired assets are written down
to fair value.

GOODWILL

Goodwill related to acquisitions completed prior to fiscal 2002 is amortized
over lives ranging from 15 to 20 years. As required by Statement of Financial
Accounting Standards No. 142, "Goodwill and Other Intangible Assets," this
amortization ceases on February 1, 2002. Goodwill related to the company's
fiscal year 2002 acquisitions may not be amortized under the requirements of
that Statement. Goodwill will instead be evaluated in terms of its fair value
on an annual basis.

INSURANCE OBLIGATIONS

The company employs large deductible insurance policies covering workers
compensation, employee healthcare and general liability costs. Costs are
accrued related to the risk retained under these policies based on claims
filed and estimates for claims incurred but not reported.

CONTINGENCIES

The company is involved as a defendant in lawsuits, claims or disputes
arising in the normal course of business. An estimate of the loss on these
matters is charged to operations when it is probable that an asset has been
impaired or a liability has been incurred, and the amount of the loss can be
reasonably estimated. The settlement of such claims cannot be determined at
this time; however, management believes that any liability resulting from
these claims will be substantially mitigated by insurance coverage.
Accordingly, management does not believe that the ultimate outcome of these
matters will be significant to its results of operations, financial position
or cash flows.

REVENUE RECOGNITION

The company recognizes revenue and records any related returns, allowances and
warranty charges only after shipment of a product. The company does not
typically require collateral from its customers. Shipping and handling costs
are classified as a component of cost of goods sold.

PAGE 25

NOTES TO FINANCIAL STATEMENTS (continued)

RESEARCH AND DEVELOPMENT

Research and development expenditures of $1,435,000 in fiscal 2002, $617,000 in
fiscal 2001, and $636,000 in fiscal 2000 were charged to cost of goods sold in
the year incurred. Fiscal 2002 expenditures include the $550,000 acquired
research and development charge related to the acquisition of Starlink (See Note
4).

STOCK-BASED COMPENSATION

The company records compensation expense related to its stock-based
compensation plan using the intrinsic value method.

INCOME TAXES

Deferred income taxes reflect temporary differences between assets and
liabilities reported on the company's balance sheet and their tax bases.
These differences are measured using enacted tax laws and statutory tax rates
applicable to the periods when the temporary differences will impact taxable
income. Deferred tax assets are reduced by a valuation allowance to reflect
realizable value, when necessary. Income tax expense is the tax payable for
the period and the change during the period in deferred tax assets and
liabilities, adjusted for any change in deferred taxes related to the
expiration of certain stock options.

RECLASSIFICATION

Certain amounts in the 2001 and 2000 financial statements have been
reclassified to conform to the 2002 presentation. These reclassifications had
no effect on net income or stockholders' equity as previously presented.

STOCK SPLIT

The company  completed a three-for-two  stock split effected in the form of
a 50% stock dividend on July 13, 2001. All per-share  information  reflects
the stock split.

NOTE 2. SELECTED BALANCE SHEET INFORMATION

Following are the components of selected balance sheet items:


                                                As of January 31
                                         --------------------------------
Dollars in thousands                       2002        2001       2000
                                         --------------------------------
                                                        
Accounts receivable, net:
  Trade accounts ....................    $ 16,737    $ 19,674    $ 23,117
  Allowance for doubtful accounts ...        (310)       (400)       (400)
                                         --------------------------------
                                         $ 16,427    $ 19,274    $ 22,717
                                         ================================

Inventories, net:
  Finished goods ....................    $  4,509    $  4,170    $  3,815
  In process ........................       1,732       2,496       4,997
  Materials .........................      12,841      12,317      15,650
                                         --------------------------------
                                         $ 19,082    $ 18,983    $ 24,462
                                         ================================

Property, plant and equipment, net:
  Land ..............................    $  1,091    $  1,004    $  1,150
  Building and improvements .........      10,614       9,357      12,526
  Machinery and equipment ...........      29,219      27,517      35,273
  Accumulated depreciation ..........     (26,865)    (26,231)    (33,881)
                                         --------------------------------
                                         $ 14,059    $ 11,647    $ 15,068
                                         ================================

Other assets, net:
  Goodwill ..........................    $  6,637    $  1,334    $  3,654
  Accumulated amortization ..........        (774)       (692)     (1,075)
                                         --------------------------------
                                            5,863         642       2,579
                                         --------------------------------

  Other intangible assets ...........       2,196         680         689
  Accumulated amortization ..........        (705)       (617)       (519)
                                         --------------------------------
                                            1,491          63         170
                                         --------------------------------

  Deferred income taxes .............         696         693         714
  Other, net ........................         419         794         145
                                         --------------------------------
                                         $  8,469    $  2,192    $  3,608
                                         ================================

Accrued liabilities:
  Salaries and benefits .............    $  2,393    $  2,163    $  1,319
  Vacation ..........................       1,731       1,711       1,944
  401(k) contributions ..............         825         979         957
  Self-insurance obligations ........       1,627       2,386       2,250
  Other .............................       1,603       1,488       1,251
                                         --------------------------------
                                         $  8,179    $  8,727    $  7,721
                                         ================================


NOTE 3. SUPPLEMENTAL CASH FLOW INFORMATION


                                                     For the years ended January 31
                                                    --------------------------------
Dollars in thousands                                    2002       2001      2000
                                                    --------------------------------
                                                                   
Changes in operating assets and liabilities, net of
  effects from the purchase and sale of businesses:
  Accounts and interest receivable ................   $ 4,510    $   128    $ 1,070
  Inventories .....................................     1,506      3,552       (236)
  Prepaid expenses and other assets ...............       386        195       (172)
  Accounts payable ................................       681     (1,501)      (375)
  Accrued and other liabilities ...................    (1,223)       452         68
  Customer advances ...............................      (331)        88        123
                                                    --------------------------------
                                                      $ 5,529    $ 2,914    $   478
                                                    ================================

Cash paid during the year for:
  Interest ........................................   $   149    $   265    $   427
  Income taxes ....................................     3,923      4,983      5,186



PAGE 26


NOTE 4. ACQUISITIONS

On December 5, 2001, the company acquired the operating assets and certain
liabilities of Starlink, Incorporated and System Integrators, Inc. The results
of operations for these businesses have been included in the consolidated
financial statements since that date.

Starlink provides GPS-based guidance systems for the agriculture and marine
markets. As a result of the acquisition, the company's ability to integrate new
technology into its control systems for precision agriculture has been
strengthened. This operation has been combined into the company's Flow Controls
Division. The purchase price of Starlink was $7.9 million, including $7.5
million of cash and a payment deferred until December 2004, which was valued at
$399,000.

System Integrators is an electronics manufacturing services (EMS) provider and
has been combined into the company's Electronic Systems Division. The purchase
price of $1.4 million includes a deferred payment valued at $122,000.

The following table summarizes the estimated fair values of the assets acquired
and liabilities assumed at the date of acquisition. The company has not yet
finalized the purchase prices under the asset purchase agreements; thus, the
allocation of the purchase price is subject to refinement.


                                                            System
Dollars in thousands                            Starlink  Integrators
                                               -----------------------
                                                    
Current assets ...............................   $1,720       $1,704
Property, plant, and equipment ...............      364          142
Intangible assets ............................    1,710          350
Goodwill .....................................    4,947          356
                                               -----------------------
Total assets acquired ........................    8,741        2,552
                                               -----------------------
Notes payable ................................                   572
Other current liabilities ....................      618          434
Long-term debt ...............................      253          159
                                               -----------------------
Total liabilities assumed ....................      871        1,165
                                               -----------------------
Net assets acquired ..........................   $7,870       $1,387
                                               =======================

Of the $2.1 million of acquired intangible assets, $550,000 was assigned to
Starlink research and development assets that were written off at the date of
acquisition in accordance with FASB Interpretation No. 4, "Applicability of
FASB Statement No. 2 to Business Combinations Accounted for by the Purchase
Method." Those write-offs are included in cost of goods sold in the Flow
Controls segment. The remaining $1.5 million of acquired intangible assets
consist primarily of existing GPS technologies and have a weighted-average
useful life of approximately 3 years.

Goodwill recognized in these transactions amounted to approximately $5.3
million, and that amount is expected to be fully deductible for tax purposes.
Goodwill related to Starlink and System Integrators was assigned to the Flow
Controls and Electronic Systems segments, respectively.

NOTE 5. DIVESTITURES AND OTHER REPOSITIONING ACTIVITIES

In fiscal 2002, the company recorded a net gain of $367,000, before income
taxes, related to the sale of its former Sportswear Division warehouse and the
closure of its remaining Plastic Tank Division operations in Tacoma, Washington.
The company also incurred $249,000 of nonrecurring pretax charges to reposition
the Industrial Controls Division of Beta Raven, including the closing of its
Alabama plant. This charge impacted the cost of goods sold in the Businesses
Sold and For Sale segment.

In fiscal 2001, the company sold substantially all of the assets of its Plastic
Tank Division. The proceeds of the sale were $12.3 million including primarily
cash and a note receivable and the buyers also assumed certain liabilities of
the company. Assets sold included property, plant and equipment (approximately
$2.6 million), accounts receivable (approximately $2.5 million) and inventories
(approximately $1.3 million). The purchaser assumed liabilities totaling
approximately $388,000, primarily accounts payable. In addition, the company
recorded approximately $813,000 to accrue for severance, legal and other costs
related to the Plastic Tank Division sale, reflecting the company's best
estimate of costs that it will incur until these matters are resolved. At
January 31, 2002, approximately $100,000 of these closing costs were still
accrued. The sale did not include the company's operations in Tacoma,
Washington, which were closed in November 2001. The Tacoma assets, primarily
inventories and manufacturing equipment, were written down to their estimated
net realizable value requiring a charge of approximately $585,000. The company
also recorded a charge of approximately $1.8 million related to the write-off of
goodwill related to the Plastic Tank Division. As a result of the above, the
company recognized a pretax gain of approximately $3.1 million in fiscal 2001.



                                                        Raven 2002 Annual Report
                                                                         PAGE 27

NOTES TO FINANCIAL STATEMENTS (continued)

In the third quarter of fiscal 2001, the company reduced the number of customers
in its Electronic Systems Division and its other electronics businesses
resulting in write-downs of inventory and accounts receivable, severance and
other nonrecurring pretax charges totaling $2.2 million. In the fourth quarter
of fiscal 2001, the company reorganized its former Sewn Products segment,
combining its former Sportswear Division with its wholly owned subsidiary,
Aerostar International, Inc. The company incurred nonrecurring pretax charges of
$767,000 related to the combination and sold three former Sportswear Division
plants for a pretax gain of $393,000.

During fiscal 2000, the company sold its Glasstite business, resulting in a
pretax gain of $1.2 million. The company received approximately $8.7 million of
cash in fiscal 2000 and approximately $200,000 in fiscal 2001 and incurred
direct costs related to the sale, primarily legal costs, of approximately
$230,000. Assets sold primarily related to property, plant and equipment
(approximately $3.5 million), accounts receivable (approximately $2.5 million),
inventories (approximately $1.7 million) and cash (approximately $135,000). The
purchaser assumed certain liabilities, primarily related to employee wages and
benefits (approximately $200,000) and accounts payable (approximately $300,000).
At January 31, 2002, the company has approximately $200,000 accrued for certain
environmental clean-up costs related to the Glasstite facility, reflecting the
company's best estimate of costs that it will incur until the environmental
matter is resolved.

In fiscal 2000, the company collected the final installment payment under a $2.5
million note. The note represented partial proceeds from the sale of an
affiliated equity investee in January 1998.

NOTE 6. BUSINESS SEGMENTS AND MAJOR CUSTOMER INFORMATION

The company's reportable segments are defined by their common technologies,
production processes and inventories. These segments reflect the organization of
the company into three Raven divisions, each with a Divisional Vice President,
and two subsidiaries. In the second quarter of fiscal 2002, the electronics
manufacturing services (EMS) operation of Beta Raven was combined with the
Electronic Systems segment. This change combines the common EMS operations of
the company and is designed to improve operating results through better
integrating management, marketing and production techniques. The Industrial
Controls Division of Beta Raven is included under the caption "Businesses Sold
and For Sale."

The company measures the performance of its segments based on their operating
income exclusive of administrative and general expenses. Prior-year information
has been restated to be consistent with the company's new management reporting
structure as required by Statement of Financial Accounting Standards (SFAS)
No.131 "Disclosures about Segments of an Enterprise and Related Information." No
customer accounted for more than 10% of consolidated sales or receivables in any
fiscal year presented. Market and segment information is presented on pages 5
and 12 of this annual report.

NOTE 7. QUARTERLY INFORMATION (UNAUDITED)

The company's quarterly information is presented on page 20.

NOTE 8. FINANCING ARRANGEMENTS

Long-term debt consisted of the following:


                                                 As of January 31
                                           -----------------------------
Dollars in thousands                         2002       2001      2000
                                           -----------------------------
                                                        
Total long-term debt ...................   $   407    $ 3,025    $ 4,068
Current portion ........................      (127)    (1,012)    (1,044)
                                           -----------------------------
                                           $   280    $ 2,013    $ 3,024
                                           =============================

Wells Fargo Bank South Dakota N.A. provides the company's uncollateralized
long-term notes payable and lines of credit. Two members of the company's board
of directors are also on the board of directors of Wells Fargo & Co., the parent
company of Wells Fargo Bank South Dakota N.A. In fiscal 2002, the company
prepaid its long-term note.

The company believes the fair market value of its long-term debt approximates
its carrying value based on quoted market prices for similar debt.

The company had a $5.0 million uncollateralized line of credit and its Aerostar
subsidiary had a $2.0 million secured seasonal line of credit available as of
January 31, 2002. No borrowings on either line were outstanding as of January
31, 2002. These lines of credit contain certain restrictive covenants that,
among other things, require each company to maintain certain levels of net worth
and working capital. Borrowings on the Raven line bear interest as of January
31, 2002, 2001 and 2000 at 4.25%, 8.50%, and 8.00%, respectively. Borrowings on
the Aerostar line bear interest as of January 31, 2002 at 4.75%. The weighted
average interest rates for



PAGE 28

borrowing under the short-term credit lines in fiscal 2002, 2001, and 2000 were
6.3%, 9.0% and 7.7%, respectively.

As described in Note 4, the company assumed $572,000 of short-term notes payable
and $412,000 of capital lease obligations in connection with its acquisitions.
In December 2001, the company paid the notes in full. The capital lease
obligations expire through 2006, with annual payments averaging $100,000.
Payments on capital lease obligations in fiscal 2002 totaled $18,000.

The company leases certain transportation, equipment and facilities under
operating leases. Total rent expense under these leases was $575,000, $636,000
and $977,000 in fiscal 2002, 2001 and 2000, respectively.

NOTE 9. STOCK OPTIONS

Officers and key employees of the company have been granted options to purchase
stock under the company's 2000 Stock Option and Compensation Plan ("Plan"). The
Plan, administered by the board of directors, allows for a fixed cash bonus when
options are exercised and may grant either incentive or non-qualified options
with terms not to exceed ten years. There are 249,387 shares of the Company's
common stock reserved for issue under the plan at January 31, 2002. Options are
granted with exercise prices not less than market value at the date of grant.
These stock options vest over a four-year period and expire after five years.
Compensation expense related to the Plan's cash bonus feature was $76,000,
$252,000 and $383,000 in fiscal 2002, 2001 and 2000, respectively. Options
granted after fiscal 1999 do not include a fixed cash bonus.

During fiscal 2001 and 2000, certain options containing the cash bonus feature
expired. Accordingly, the company reduced its accrued liabilities by $309,000
and $289,000 and associated deferred tax asset by approximately $108,000 and
$101,000 and correspondingly increased additional paid-in-capital by
approximately $201,000 and $188,000, respectively.

As allowed under the Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation," the company has elected to continue
to use the intrinsic value method to recognize compensation expense for
stock-based compensation. If compensation expense had been recognized in
accordance with the fair value method, the company's net income and net income
per share would have been as follows:


                                        For the years ended January 31
                          ------------------------------------------------------------
                                  2002                 2001                  2001
                          ------------------------------------------------------------
                             as        pro         as        pro        as        pro
                          reported    forma     reported    forma    reported    forma
                          ------------------------------------------------------------
                                                               
Net income
  (in thousands) ......    $8,847     $8,790     $6,411     $6,466    $6,762     $6,744
Net income per share
  --basic .............    $ 1.90     $ 1.89     $ 1.24     $ 1.25    $ 1.03     $ 1.03
  --diluted ...........    $ 1.86     $ 1.85     $ 1.24     $ 1.25    $ 1.03     $ 1.03


The fair value of each option grant is estimated on the date of grant using the
Black-Scholes option pricing model with the following assumptions: Dividend
yield of 3.0-4.8%; expected volatility of 20-27%; risk-free interest rate of
4.1-6.2%; and expected lives of 4.5 years. The weighted average grant date fair
value of each option granted was $3.75, $2.01 and $1.49 in fiscal 2002, 2001 and
2000, respectively.

Information regarding option activity follows:


                                           For the years ended January 31
                       ----------------------------------------------------------------------
                                2002                     2000                  1999
                       ----------------------------------------------------------------------
                                     weighted                weighted               weighted
                                     average                 average                average
                                     exercise                exercise               exercise
                        options       price       options      price     options      price
                       ----------------------------------------------------------------------
                                                                  
Outstanding
  at beginning
  of year ............  350,625       $11.95      372,150     $12.19     414,300     $12.53
Granted ..............   44,200        17.50       77,925      10.67      49,350       9.50
Exercised ............ (109,836)       13.54       (3,750)     11.92      (7,500)     12.17
Forfeited ............   (9,337)       12.46      (95,700)     11.87     (84,000)     12.25
                       --------                  --------               --------
Outstanding
  at end
  of year ............  275,652        12.18      350,625      11.95     372,150      12.19
                       ========                  ========               ========
Options
  exercisable at
  year-end ...........  141,161       $11.66      188,175     $12.97     206,588     $12.78

The following table contains information about stock options outstanding at
January 31, 2002:


                   Remaining
        Exercise  Contractual       Number          Number
         Price    Life (Years)    Outstanding     Exercisable
- ------------------------------------------------------------------
                                         
        $13.33        0.75           62,401         62,401
         10.58        1.75           53,138         39,854
          9.50        2.75           39,713         19,857
         10.67        3.75           76,200         19,050
         17.50        4.75           44,200             --
                                   -----------------------
                                    275,652        141,161
                                   =======================


                                                        Raven 2002 Annual Report
                                                                         PAGE 29

NOTES TO FINANCIAL STATEMENTS (continued)

NOTE 10. EMPLOYEE RETIREMENT BENEFITS

The company has a 401(k) plan covering substantially all employees and
contributes 3% of qualified payroll. The company's contribution expense was
$727,000, $943,000 and $1,060,000 for fiscal 2002, 2001 and 2000, respectively.

In addition, the company provides postretirement medical and other benefits to
officers and certain employees. The company accounts for these benefits in
accordance with SFAS No.106, "Accounting for Postretirement Benefits Other Than
Pensions." The accumulated benefit obligation was approximately $2.3 million,
$2.0 million and $1.6 million at January 31, 2002, 2001 and 2000, respectively.
Annual expense related to these benefits was $482,000, $436,000 and $370,000 for
fiscal 2002, 2001 and 2000, respectively.

NOTE 11. INCOME TAXES

The reconciliation of income tax computed at the federal statutory rate to the
company's effective income tax rate is as follows:


                                        For the years ended January 31
                                        ------------------------------
                                            2002      2001    2000
                                        ------------------------------
                                                    
Tax at U.S. federal statutory rate ....     35.0%     35.0%   35.0%
Nondeductible goodwill amortization
  and write-off .......................      0.1       6.0     0.6
State and local income taxes,
  net of U.S. federal benefit .........      0.2       0.7     0.9
Impact of graduated rates .............     (0.7)     (0.9)   (1.0)
Other, net ............................      0.2       0.5     0.1
                                        ------------------------------
                                            34.8%     41.3%   35.6%
                                        ==============================


Significant components of the company's income tax provision are as follows:


                                        For the years ended January 31
                                        ------------------------------
Dollars in thousands                        2002      2001    2000
                                        ------------------------------
                                                   
Income taxes:
Currently payable .....................   $4,132    $5,197  $4,760
Deferred ..............................      586      (684) (1,019)
                                        ------------------------------
                                          $4,718    $4,513  $3,741
                                        ==============================


Significant components of the company's deferred tax assets and liabilities are
as follows:


                                                As of January 31
                                          ------------------------------
Dollars in thousands                          2002      2001    2000
                                          ------------------------------
                                                      
Current deferred tax assets (liabilities):
  Accounts receivable ................      $  109    $   98   $  56
  Inventory valuation ................         271       530     347
  Accrued vacation ...................         525       498     472
  Insurance obligations ..............         549       782     783
  Other accrued liabilities ..........         473       608     261
                                          ------------------------------
                                             1,927     2,516   1,919
                                          ==============================

Non-current deferred tax assets
(liabilities):
  Accrued compensation and benefits ..         417       602     631
  Depreciation and amortization ......         244        91      83
  Other ..............................          35
                                          ------------------------------
                                               696       693     714
                                          ------------------------------
Net deferred tax asset ...............      $2,623    $3,209  $2,633
                                          ==============================


NOTE 12. NET INCOME PER SHARE

Basic net income per share is computed by dividing net income by the weighted
average common shares outstanding. Common shares outstanding represent common
shares issued less shares purchased and held in treasury. Share and per share
data in the income per share computation have been restated to reflect the
July 13, 2001 three-for-two stock split. Diluted net income per share is
computed by dividing net income by the weighted average common and common
equivalent shares outstanding, which includes the shares issuable upon
exercise of employee stock options, net of shares assumed purchased with the
option proceeds. Certain outstanding options 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. For fiscal 2002, 2001 and 2000, 11,050, 320,094 and 318,750 options,
respectively, were excluded from the diluted earnings-per-share calculation.
Details of the computation are presented below.


                                                   For the years ended January 31
                                               --------------------------------------
Dollars in thousands, except per-share data       2002          2001          2000
                                               --------------------------------------
                                                                  
Net income ..................................  $    8,847    $    6,411    $    6,762
                                               ======================================
Weighted average common shares outstanding ..   4,655,295     5,166,639     6,557,258
Dilutive impact of stock options ............      90,502         2,205           813
                                               --------------------------------------
Weighted average common and
  common-equivalent shares outstanding ......   4,745,797     5,168,844     6,558,071
                                               ======================================
Net income per common share
  --basic ...................................  $     1.90    $     1.24    $     1.03
                                               ======================================
  --diluted .................................  $     1.86    $     1.24    $     1.03
                                               ======================================




PAGE 30

REPORT OF INDEPENDENT ACCOUNTANTS

TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF RAVEN INDUSTRIES, INC.:

In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of income, of stockholders' equity and comprehensive
income and of cash flows present fairly in all material respects, the financial
position of Raven Industries, Inc. as of January 31, 2002, 2001 and 2000, and
the results of its operations and its cash flow for each of the three years in
the period ended January 31, 2002, in conformity with accounting principles
generally accepted in the United States of America. Those financial statements
are the responsibility of Raven Industries, Inc.'s management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States of America which
require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
presentation. We believe that our audits provide a reasonable basis for our
opinion.

/s/ PRICEWATERHOUSECOOPERS LLP
Minneapolis, Minnesota
March 12, 2002



RAVEN 2002 ANNUAL REPORT
PAGE 31

Investor Information



INDEPENDENT ACCOUNTANTS

PRICEWATERHOUSECOOPERS LLP
Minneapolis, MN

STOCK TRANSFER AGENT & REGISTRAR

WELLS FARGO BANK MINNESOTA N.A.
161 N. Concord Exchange
P.O. Box 64854
S. St. Paul, MN 55164-0854
Phone: 1-800-468-9716

FORM 10-K

Upon written request, Raven Industries, Inc.'s form 10-K for the fiscal year
ended January 31, 2002, which has been filed with the Securities and Exchange
Commission, is available free of charge.

DIRECT INQUIRES TO:
RAVEN INDUSTRIES, INC.
Attention: Investor Relations
P.O. Box 5107
Sioux Falls, SD 57117-5107

RAVEN WEBSITE

www.ravenind.com


STOCK QUOTATIONS

Listed on the Nasdaq Stock Market--RAVN

ANNUAL MEETING

May 22, 2002, 9:00 a.m.
Ramkota Inn
Hwy 38 & I-29
Sioux Falls, SD

Raven Industries, Inc. is an Equal Employment Opportunity Employer with an
approved affirmative action plan.

DIVIDEND REINVESTMENT PLAN

Raven Industries sponsors a Dividend Reinvestment Plan whereby shareholders can
purchase additional Raven common stock without the payment of any brokerage
commission or fees. For more information on how you can take advantage of this
plan, contact your broker, our stock transfer agent or write: Investor
Relations; P.O. Box 5107, Sioux Falls, SD 57117-5107

SIC CODES:
3672, 3081, 3829


FORWARD-LOOKING STATEMENTS

Certain sections of this report contain statements which may constitute
forward-looking statements within the meaning of federal securities laws.
Although Raven Industries, Inc. 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 agriculture or construction, or changes in competition or the company's
customer base which could impact any of the company's product lines.

Design: Creative Design Board, Chicago, IL

EX-23

                                                                      EXHIBIT 23

                       CONSENT OF INDEPENDENT ACCOUNTANTS








                  We hereby consent to the incorporation by reference in the
Registration Statements on Form S-8 (Registration Nos. 33-38614 and 333-41352)
of Raven Industries, Inc. of our report dated March 12, 2002 relating to the
consolidated financial statements of Raven Industries, Inc. as of January 31,
2002, 2001 and 2000 and for the years then ended, which appears in the 2002
Annual Report to Stockholders, which is incorporated in this Annual Report on
Form 10-K. We also consent to the incorporation by reference of our report dated
March 12, 2002 relating to the financial statement schedule, which appears in
this Form 10-K.




PricewaterhouseCoopers LLP
Minneapolis, Minnesota
April 19, 2002