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UNITED STATES
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SECURITIES AND EXCHANGE COMMISSION
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Washington, D.C. 20549
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FORM 10-K
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þ
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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For the fiscal year ended January 31, 2017
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o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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For the transition period from to
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Commission File Number: 001-07982
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RAVEN INDUSTRIES, INC.
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(Exact name of registrant as specified in its charter)
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Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
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o
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Yes
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þ
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No
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Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
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o
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Yes
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þ
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No
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
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þ
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Yes
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o
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No
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Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
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þ
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Yes
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o
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No
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter)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.
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þ
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
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o
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Yes
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þ
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No
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The aggregate market value of the registrant's common stock held by non-affiliates at July 31, 2016 was approximately $742,719,932. The aggregate market value was computed by reference to the closing price as reported on the NASDAQ Global Select Market, $20.76, on July 29, 2016, which was as of the last business day of the registrant's most recently completed second fiscal quarter. The number of shares outstanding on March 22, 2017 was 36,076,259.
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DOCUMENTS INCORPORATED BY REFERENCE
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The definitive proxy statement relating to the registrant's Annual Meeting of Shareholders, to be held May 25, 2017, is incorporated by reference into Part III to the extent described therein.
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ITEM 1A.
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RISK FACTORS
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ITEM 1B.
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UNRESOLVED STAFF COMMENTS
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ITEM 2.
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PROPERTIES
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ITEM 3.
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LEGAL PROCEEDINGS
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ITEM 4.
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MINE SAFETY DISCLOSURES
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PART II
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ITEM 5.
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MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
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Years Ended January 31,
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5-Year
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|||||||||||||||||||||||
Company / Index
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2012
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2013
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2014
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2015
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2016
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2017
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CAGR
(a)
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Raven Industries, Inc.
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$
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100.00
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$
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84.21
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$
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118.83
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$
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69.30
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$
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49.92
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$
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85.51
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(3.1
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)%
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S&P 1500 Industrial Machinery Index
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100.00
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120.45
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151.75
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157.33
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143.50
|
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205.32
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15.5
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%
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||||||
Russell 2000 Index
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100.00
|
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115.47
|
|
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146.69
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153.15
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|
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137.96
|
|
|
184.21
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13.0
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%
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||||||
(a)
compound annual growth rate (CAGR)
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ITEM 6.
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SELECTED FINANCIAL DATA
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ITEM 7.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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•
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Executive Summary
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•
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Results of Operations - Segment Analysis
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•
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Liquidity and Capital Resources
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•
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Off-Balance Sheet Arrangements and Contractual Obligations
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•
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Critical Accounting Policies and Estimates
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•
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Accounting Pronouncements
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•
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Consolidated net sales, gross margin, operating income, operating margin, net income, and diluted earnings per share
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•
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Cash flow from operations and shareholder returns
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•
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Return on sales, average assets, and average equity
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•
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Segment net sales, gross profit, gross margin, operating margin, and operating income. At the segment level, operating income does not include an allocation of general and administrative expenses.
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•
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Consolidated net sales excluding contract manufacturing sales (adjusted sales)
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•
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Segment net sales excluding contract manufacturing sales (adjusted sales)
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•
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Segment operating income excluding Vista charges (adjusted operating income)
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•
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Consolidated operating income excluding Vista charges (consolidated adjusted operating income)
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•
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Net income excluding Vista charges (adjusted net income)
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•
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Intentionally serve a set of diversified market segments with attractive near- and long-term growth prospects;
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•
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Consistently manage a pipeline of growth initiatives within our market segments;
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•
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Aggressively compete on quality, service, innovation, and peak performance;
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•
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Hold ourselves accountable for continuous improvement;
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•
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Value our balance sheet as a source of strength and stability with which to pursue strategic acquisitions; and
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•
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Make corporate responsibility a top priority.
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For the years ended January 31,
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|||||||||
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%
change
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(dollars in thousands)
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2016
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2015
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||||||
Applied Technology
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Reported net sales
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$
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92,599
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(34.9
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)%
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$
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142,154
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Less: Contract manufacturing sales
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546
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(90.6
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)%
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5,832
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Applied Technology net sales, excluding
contract manufacturing sales
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$
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92,053
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(32.5
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)%
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$
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136,322
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Aerostar
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Reported net sales
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$
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36,368
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(55.0
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)%
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$
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80,772
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Less: Contract manufacturing sales
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4,701
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(85.2
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)%
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31,669
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Aerostar net sales, excluding contract
manufacturing sales
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$
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31,667
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(35.5
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)%
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$
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49,103
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Consolidated Raven
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Reported net sales
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$
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258,229
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(31.7
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)%
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$
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378,153
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Less: Contract manufacturing sales
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5,247
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(86.0
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)%
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37,501
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Plus: Aerostar sales to Applied Technology
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—
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(100.0
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)%
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10,553
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Consolidated net sales, excluding contract
manufacturing sales
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$
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252,982
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(28.0
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)%
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$
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351,205
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For the years ended January 31,
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||||||||||||||||
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%
change
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|
%
change
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||||||||
(dollars in thousands)
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2017
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2016
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2015
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||||||||||
Consolidated Raven
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||||||||
Reported net income attributable to Raven Industries, Inc.
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$
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20,191
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322.8
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%
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$
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4,776
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(84.9
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)%
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$
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31,733
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Plus:
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|
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||||||||
Goodwill impairment loss
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—
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11,497
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—
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|||||
Long-lived asset impairment loss
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—
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3,813
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—
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|||||
Pre-contract costs written off
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—
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2,933
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|
—
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|||||
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|
|
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||||||||
Less:
|
|
|
|
|
|
|
|
|
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||||||||
Acquisition-related contingent liability benefit
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—
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2,273
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|
—
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|||||
Net tax benefit on adjustments
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—
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5,693
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—
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|||||
Adjusted net income attributable to Raven
Industries, Inc.
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$
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20,191
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34.1
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%
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$
|
15,053
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|
|
(52.6
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)%
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|
$
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31,733
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|
|
|
|
|
|
|
|
|
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||||||||
Adjusted net income per common share:
|
|
|
|
|
|
|
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||||||||
─ Basic
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$
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0.56
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|
|
40.0
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%
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|
$
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0.40
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|
|
(53.5
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)%
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|
$
|
0.86
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─ Diluted
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$
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0.56
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|
|
40.0
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%
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|
$
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0.40
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|
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(53.5
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)%
|
|
$
|
0.86
|
|
Financial highlights for the fiscal years ended January 31,
|
||||||||||||||||||
(dollars in thousands)
|
|
2017
|
|
% change
|
|
2016
|
|
% change
|
|
2015
|
||||||||
Net sales
|
|
$
|
105,217
|
|
|
13.6
|
%
|
|
$
|
92,599
|
|
|
(34.9
|
)%
|
|
$
|
142,154
|
|
Gross profit
|
|
43,476
|
|
|
28.0
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%
|
|
33,969
|
|
|
(41.8
|
)%
|
|
58,325
|
|
|||
Gross margin
|
|
41.3
|
%
|
|
|
|
36.7
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%
|
|
|
|
41.0
|
%
|
|||||
Operating expense
|
|
$
|
16,833
|
|
|
7.6
|
%
|
|
$
|
15,650
|
|
|
(34.2
|
)%
|
|
$
|
23,768
|
|
Operating expense as % of sales
|
|
16.0
|
%
|
|
|
|
16.9
|
%
|
|
|
|
16.7
|
%
|
|||||
Operating income
(a)
|
|
$
|
26,643
|
|
|
45.4
|
%
|
|
$
|
18,319
|
|
|
(47.0
|
)%
|
|
$
|
34,557
|
|
Operating margin
|
|
25.3
|
%
|
|
|
|
19.8
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%
|
|
|
|
24.3
|
%
|
|||||
Applied Technology net sales,
excluding contract manufacturing
sales
(b)
|
|
NMF
|
|
NMF
|
|
$
|
92,053
|
|
|
(32.5
|
)%
|
|
$
|
136,322
|
|
|||
(a)
At the segment level, operating income does not include an allocation of general and administrative expenses.
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||||||||||||||||||
(b)
Reduction of contract manufacturing was largely completed in fiscal 2016; measure is not meaningful (NMF) for comparisons in subsequent fiscal periods.
|
•
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Market conditions.
Conditions in the agriculture market remain subdued; however, Applied Technology's marketplace strategy has capitalized on new product introductions in fiscal 2017. While OEM and aftermarket sales channel demand remains challenging, Applied Technology achieved fourth quarter and year-to-date sales growth compared to the prior year primarily due to market share gains driven by new product introductions and expanded relationships with OEM partners. These were the primary growth drivers both domestically and internationally.
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•
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Sales volume.
Fiscal 2017 sales increased 13.6% to $105.2 million as compared to $92.6 million in the prior fiscal year. Sales in the OEM and aftermarket channels were up 25.1% and 6.1%, respectively, in fiscal 2017. Fiscal 2017 domestic sales were up 9.9% while international sales were up 24.8%.
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•
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International sales.
Net sales outside the U.S. accounted for 27.6% of segment sales in fiscal 2017 compared to 25.1% in fiscal 2016. International sales increased $5.8 million, or 24.8%, to $29.0 million in fiscal 2017 compared to fiscal 2016. Higher sales in Canada and Europe were the primary drivers of the increase. European revenue growth included strong growth at SBG in fiscal 2017. For the fourth quarter, international sales totaled $5.9 million, an increase of 29.8% from the prior year comparative quarter.
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•
|
Gross margin.
Gross margin increased from 36.7% in fiscal 2016 to 41.3% in fiscal 2017. Higher sales volume and lower manufacturing costs including increased leverage of fixed manufacturing costs contributed to the higher margin. Due to the existing available capacity of the facilities, the increase in sales volume did not require a commensurate increase in costs in fiscal 2017.
|
•
|
Restructuring expenses.
Fiscal 2016 results included severance and other related exit activity totaling $0.6 million. These costs were offset by completion of the St. Louis contract manufacturing exit activities which resulted in gains of $0.6 million recorded in the fiscal 2016 results. There were no impairments recorded as a result of the exit of this business. No restructuring or exit costs were incurred in the three-month period ended January 31, 2016. No restructuring or exit costs were incurred in the three-month or year-to-date period ended January 31, 2017.
|
•
|
Operating expenses.
Fiscal 2017 operating expenses were 16.0% of net sales compared to 16.9% for the prior year. Operating expenses increased less than revenues due primarily to continued cost control measures and resulted in a lower percentage of sales year-over-year.
|
•
|
Market conditions.
Deteriorating
conditions in the agriculture market put pressure on Applied Technology during fiscal 2016. End-market demand had deteriorated from the beginning of the year. Corn prices had stabilized since the beginning of the year but were still at multi-year lows. Farm incomes and farmer sentiment were weak, resulting in productivity investments in precision agriculture equipment being delayed.
|
•
|
Sales volume.
Fiscal 2016 sales declined 34.9% to $92.6 million as compared to $142.2 million in the prior fiscal year. These sales declines were driven by continued lower demand, OEM shutdowns, and customers managing down inventory levels. Sales in the OEM and aftermarket channels were down 42.1% and 23.8%, respectively, for fiscal 2016. Fiscal 2016 domestic sales were down 37.6% while international sales were down 25.2%.
|
•
|
Strategic sales
. Applied Technology’s net sales, excluding contract manufacturing sales, for fiscal 2016 were $92.1 million, a decrease of 32.5%, compared to $136.3 million in fiscal 2015.
|
•
|
International sales.
Net sales outside the U.S. accounted for 25.1% of segment sales in fiscal 2016 compared to 21.9% in fiscal 2015. International sales decreased $7.9 million, or 25.2%, to $23.3 million in fiscal 2016 compared to fiscal 2015. Lower sales in Latin America, Canada, and South Africa were the primary drivers of the decline. These declines were partially offset by higher European revenues. European revenues were favorably impacted by the acquisition of SBG in fiscal 2015 second quarter. For the fourth quarter, international sales totaled $4.6 million, an increase of 45.6% from the prior year comparative quarter. The fiscal fourth quarter 2015 sales were reduced by credits issued related to
|
•
|
Gross margin.
Gross margin declined from 41.0% in fiscal 2015 to 36.7% in fiscal 2016. Lower sales volume and a reduced leverage of fixed manufacturing costs contributed to the lower margin.
|
•
|
Restructuring expenses.
Fiscal 2016 results included severance and other related exit activity totaling $0.6 million. These costs were offset by completion of the St. Louis contract manufacturing exit activities which resulted in gains of $0.6 million recorded in the fiscal 2016 results. There were no impairments recorded as a result of the exit of this business. No restructuring or exit costs were incurred in the three-month period ended January 31, 2016. Restructuring costs of $0.3 million were incurred for the three-month period ended January 31, 2015.
|
•
|
Operating expenses.
Fiscal 2016 operating expenses were 16.9% of net sales compared to 16.7% for the prior year. Restructuring efforts and cost containment actions reduced both selling expense and R&D expense as planned, but were not enough to offset the impact to division profit from lower sales volume.
|
Financial highlights for the fiscal years ended January 31,
|
||||||||||||||||||
(dollars in thousands)
|
|
2017
|
|
% change
|
|
2016
|
|
% change
|
|
2015
|
||||||||
Net sales
|
|
$
|
138,855
|
|
|
7.3
|
%
|
|
$
|
129,465
|
|
|
(22.3
|
)%
|
|
$
|
166,634
|
|
Gross profit
|
|
29,407
|
|
|
17.3
|
%
|
|
25,076
|
|
|
(10.8
|
)%
|
|
28,104
|
|
|||
Gross margin
|
|
21.2
|
%
|
|
|
|
19.4
|
%
|
|
|
|
16.9
|
%
|
|||||
Operating expenses
|
|
$
|
6,441
|
|
|
(10.3
|
)%
|
|
$
|
7,184
|
|
|
14.0
|
%
|
|
$
|
6,302
|
|
Operating expenses as % of sales
|
|
4.6
|
%
|
|
|
|
5.5
|
%
|
|
|
|
3.8
|
%
|
|||||
Operating income
(a)
|
|
$
|
22,966
|
|
|
28.4
|
%
|
|
$
|
17,892
|
|
|
(17.9
|
)%
|
|
$
|
21,802
|
|
Operating margin
|
|
16.5
|
%
|
|
|
|
13.8
|
%
|
|
|
|
13.1
|
%
|
|||||
(a)
At the segment level, operating income does not include an allocation of general and administrative expenses.
|
•
|
Market conditions.
End-market conditions have improved in the geomembrane (which includes energy) market in the second half of fiscal 2017 for Engineered Films. U.S. land-based rig counts have increased approximately 17% from January 2016 to January 2017. For fiscal 2017, sales into the geomembrane market increased 16.9% year-over-year.
|
•
|
Sales volume and selling prices
. Fiscal 2017 net sales were up 7.3% to $138.9 million compared to fiscal 2016 net sales of $129.5 million. Sales volume, measured in pounds, for fiscal 2017 was up 11.4%. Primary drivers of the increase in sales volume included the improved market conditions within the geomembrane market and new sales into the industrial and geomembrane markets as a result of successfully selling capacity of the division's new production line that was commissioned in the fiscal 2017 first quarter. Average selling prices for the same period were down approximately 3.7% compared to the prior fiscal year primarily due to product mix and the competitive landscape in the geomembrane market. Fourth quarter fiscal 2017 sales volume was up 34.0% compared to fourth quarter fiscal 2016. Fourth quarter average selling prices increased 1.3% year-over-year.
|
•
|
Gross margin.
Fiscal 2017 gross margin was 21.2%, 1.8 percentage points higher than the prior fiscal year. During fiscal 2017 fourth quarter, the gross margin was 20.5% compared to 15.0% in the prior year fourth quarter. The increase for both periods was primarily the result of higher sales volume. Due to the existing available capacity of the facilities, the increase in sales volume did not require a commensurate increase in costs in fiscal 2017. In addition, benefits from value engineering, reformulation efforts, pricing discipline, and favorable raw material cost developments also benefited gross margin.
|
•
|
Operating expenses.
Fiscal 2017 operating expenses, as a percentage of net sales, decreased to 4.6%, from 5.5% in the prior year. Sales volume increased while selling expense decreased compared to fiscal year 2016 as a result of cost control measures and lower bad debt expense.
|
•
|
Market conditions.
Challenging end-market conditions persisted in the geomembrane (which includes energy) market for Engineered Films. The decline in oil prices resulted in land-based rig counts decreasing more than 60% year-over-year along with declining well-completion rates. While the decline in oil prices reduced demand for sales of film into the geomembrane market, it also led to favorable raw material cost comparisons versus the prior year. While the geomembrane market experienced challenging end-market conditions, demand continued to strengthen for both Engineered Films' agricultural barrier films used in high-value crop production and grain and silage covers used to protect grain and feed.
|
•
|
Sales volume and selling prices
. Fiscal 2016 net sales were down 22.3% to $129.5 million compared to fiscal 2015 net sales of $166.6 million. The decline in sales was driven primarily by a 66% decline in geomembrane market sales. These declines were partially offset by the acquisition of Integra. Sales volume for fiscal 2016 was down 27.5%. Average selling prices for the same period were up approximately 7% compared to the prior fiscal year primarily due to product mix. Fourth quarter fiscal 2016 sales volume was down approximately 38% compared to fourth quarter fiscal 2015. Fourth quarter average selling prices remained flat year-over-year.
|
•
|
Gross margin.
Fiscal 2016 gross margin was 19.4%, 2.5 percentage points higher than the prior fiscal year. This increase was the result of gross margin expansion from value engineering, reformulation efforts, pricing discipline, and favorable raw material cost comparisons. During fiscal 2016 fourth quarter, the gross margin was 15.0% compared to 16.2% in the prior year fourth quarter. The decline was due to significantly lower volume and the resulting decline in fixed cost absorption.
|
•
|
Operating expenses.
Fiscal 2016 operating expenses, as a percentage of net sales, increased to 5.5%, from 3.8% in the prior year. Higher selling expenses resulting from the Integra acquisition, additional R&D costs for new product development activities and higher bad debt expense over lower sales volume increased operating expense as a percentage of sales.
|
•
|
Market conditions
. Aerostar is experiencing delays and uncertainties regarding certain opportunities important to the division's growth strategy, and some of Aerostar's markets are subject to significant variability due to government spending and the timing of contract awards. Aerostar is pioneering new markets with leading-edge applications of its high-altitude balloons and remains in active collaboration with Google on Project Loon. Project Loon is a program to provide high-speed wireless Internet accessibility and telecommunications to rural, remote, and under-served areas of the world.
|
•
|
Sales volume.
Fiscal 2017 net sales decreased $2.3 million from the prior year, a year-over-year decrease of 6.2%. The decline was principally driven by lower aerostat sales due to the timing of deliveries. This was partially offset by higher sales of stratospheric balloons for Project Loon and other customers newly established in fiscal 2017.
|
•
|
Gross margin.
For fiscal 2017, gross margin decreased 6.0 percentage points compared to the prior fiscal year. Fiscal 2017 gross margin decline was primarily driven by lower sales volume and $2.3 million of inventory write-downs related to certain radar systems discussed in more detail in Note 6
Goodwill, Long-lived Assets, and Other Charges
of the Notes to the Consolidated Financial Statements
,
offset somewhat by a $1.3 million reduction in depreciation and amortization expense due to the long-lived asset impairment charges recorded in fiscal 2016.
|
•
|
Goodwill and long-lived asset impairment loss.
In fiscal 2016, Aerostar recorded a goodwill impairment loss of $11.5 million and a long-lived asset impairment loss of $3.8 million. These impairment charges were recorded in the Vista reporting unit and are described more fully in Note 6
Goodwill, Long-lived Assets, and Other Charges
of the Notes to the Consolidated Financial Statements. As also described in Note 6
Goodwill, Long-lived Assets, and Other Charges,
a $0.1 million long-lived asset impairment loss was recorded in fiscal 2017 on the Radar asset group. Expense control measures executed throughout fiscal year 2017 reduced operating expenses year-over-year.
|
•
|
Operating expenses.
Operating expenses as a percentage of net sales was essentially flat year-over- year. Fiscal 2017 operating expenses of $6.8 million were 19.9% of net sales compared to operating expenses of $7.3 million, equivalent to 20.1% of net sales in fiscal 2016.
|
•
|
Aerostar adjusted operating income.
Aerostar reported an operating loss of $1.6 million in fiscal 2017 compared to an operating loss of $14.8 million in fiscal 2016. The fiscal 2016 results were impacted by the Vista goodwill and long-lived asset impairments and associated financial impacts. Excluding these Vista related items, adjusted operating income in fiscal 2016 was $1.2 million, compared to an operating loss of $1.6 million for fiscal 2017, a decline of $2.8 million on an adjusted basis. This decline in operating income was primarily driven by lower sales volume and $2.3 million of inventory write-downs related to certain radar systems, offset somewhat by a $1.3 million reduction in depreciation and amortization expense due to the long-lived asset impairment charges recorded in fiscal 2016.
|
•
|
Market conditions
. Aerostar’s growth strategy emphasizes proprietary products and its focus was on proprietary technology including stratospheric balloons, advanced radar systems, and sales of aerostats in international markets. Certain of Aerostar's markets are subject to significant variability due to government spending. Uncertain demand in these markets continued in fiscal 2016 as defense spending was down. Aerostar continued to pursue substantial targeted international opportunities but the conflicts plaguing the Middle East North Africa region made these opportunities and their timing less certain.
|
•
|
Sales volume.
Fiscal 2016 net sales decreased $44.4 million from the prior year, a year-over-year decrease of 55.0%. The decline was the result of both lower sales of proprietary products, particularly Vista radar sales, and the planned reduction in contract manufacturing sales.
|
•
|
Proprietary net sales.
For fiscal 2016, net sales for proprietary products were $31.7 million, down $17.4 million, or 35.5%, from the prior fiscal year. Sales of proprietary products were down primarily due to Vista’s lack of success in winning certain international contracts and declines in domestic government defense spending that reduced revenues for Vista.
|
•
|
Gross margin.
For fiscal 2016, gross margin increased 1.0 percentage point compared to the prior fiscal year. Fiscal 2016 gross margin reflected net charges of $0.6 million which are discussed further below. Vista had been pursuing international opportunities and throughout the first half of fiscal 2016 was in the process of negotiating a large international contract for which it also had a pre-authorization letter from the prime contractor. When the contract did not materialize in the fiscal 2016 third quarter as expected, expectations were lowered as the timing and likelihood of completing certain international pursuits became less certain. Corresponding to these lower expectations, the pre-contract costs associated with these pursuits were written off during the fiscal 2016 third quarter. Vista recorded a charge of $2.9 million for the write-off of these pre-contract costs. Partially offsetting this impairment charge, Vista recorded a benefit of $2.3 million to reflect a reduction in acquisition-related contingent liabilities due to lower expected payouts.
|
•
|
Goodwill and long-lived asset impairment loss.
Aerostar recorded a goodwill impairment loss of $11.5 million and a long-lived asset impairment loss of $3.8 million for fiscal 2016. The goodwill and long-lived impairment charges were recorded on the Vista reporting unit. These impairment losses are described more fully in Note 6
Goodwill, Long-lived Assets, and Other Charges
of the Notes to the Consolidated Financial Statements. No impairment losses were recorded in fiscal 2015.
|
•
|
Operating expenses.
Fiscal 2016 operating expenses of $7.3 million were 20.1% of net sales compared to $7.7 million, or 9.5% of net sales in fiscal 2015. The increase in operating expenses, as a percentage of net sales, was due to continued strategic R&D spending on radar and stratospheric technologies over lower sales.
|
•
|
Aerostar adjusted operating income.
Excluding the Vista goodwill and long-lived asset impairment losses and associated financial impacts, the fiscal 2016 operating income was $1.2 million, down from $9.0 million in the prior year. These operating income declines were driven primarily by the significant declines in sales volume for the year for both contract manufacturing and proprietary products, in particular Vista.
|
|
|
For the years ended January 31,
|
||||||||||
dollars in thousands
|
|
2017
|
|
2016
|
|
2015
|
||||||
Administrative expenses
|
|
$
|
19,624
|
|
|
$
|
17,110
|
|
|
$
|
21,704
|
|
Administrative expenses as a % of sales
|
|
7.1
|
%
|
|
6.6
|
%
|
|
5.7
|
%
|
|||
Other (expense), net
|
|
$
|
(560
|
)
|
|
$
|
(310
|
)
|
|
$
|
(300
|
)
|
Effective tax rate
|
|
27.5
|
%
|
|
(18.8
|
)%
|
|
26.9
|
%
|
(dollars in thousands)
|
|
January 31,
2017 |
|
January 31,
2016 |
|
January 31,
2015 |
||||||
Cash and cash equivalents
|
|
$
|
50,648
|
|
|
$
|
33,782
|
|
|
$
|
51,949
|
|
Short-term investments
|
|
—
|
|
|
—
|
|
|
250
|
|
|
|
For the years ended January 31,
|
||||||||||
(dollars in thousands)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Cash provided by operating activities
|
|
$
|
48,636
|
|
|
$
|
44,008
|
|
|
$
|
60,083
|
|
Cash used in investing activities
|
|
(4,642
|
)
|
|
(11,074
|
)
|
|
(29,986
|
)
|
|||
Cash used in financing activities
|
|
(27,151
|
)
|
|
(50,684
|
)
|
|
(30,665
|
)
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
|
23
|
|
|
(417
|
)
|
|
(470
|
)
|
|||
Net increase (decrease) in cash and cash equivalents
|
|
$
|
16,866
|
|
|
$
|
(18,167
|
)
|
|
$
|
(1,038
|
)
|
(dollars in thousands)
|
|
Total
|
|
Less than
1 year
|
|
1-3
years
|
|
3-5
years
|
|
More than
5 years
|
|||||||||||
Operating leases
|
|
$
|
5,319
|
|
|
$
|
1,647
|
|
|
$
|
2,484
|
|
|
$
|
1,188
|
|
|
$
|
—
|
|
|
Unconditional purchase obligations
|
|
31,976
|
|
|
31,976
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Postretirement benefits
(a)
|
|
18,698
|
|
|
362
|
|
|
737
|
|
|
757
|
|
|
16,842
|
|
||||||
Acquisition-related contingent payments
(b)
|
|
2,657
|
|
|
457
|
|
|
1,596
|
|
|
590
|
|
|
14
|
|
||||||
Uncertain tax positions
(c)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Credit facility
(d)
|
|
699
|
|
|
212
|
|
|
424
|
|
|
63
|
|
|
—
|
|
||||||
|
|
$
|
59,349
|
|
|
$
|
34,654
|
|
|
$
|
5,241
|
|
|
$
|
2,598
|
|
|
$
|
16,856
|
|
|
(a)
|
Postretirement benefit amounts represent expected payments on the accumulated postretirement benefit obligation before it is discounted.
|
||||||||||||||||||||
(b)
|
Amounts reflect the expected future earn-out payments with respect to business acquisitions. Actual payments on these obligations may vary from the expected amounts since the total payment amount due depends upon certain future conditions. See below for further detail on the specific obligations.
|
||||||||||||||||||||
(c)
|
See below for further details on specific obligations.
|
||||||||||||||||||||
(d)
|
Amounts reflect administrative and unborrowed capacity fees under the credit facility described below.
|
ITEM 7A.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
|
|
|
|
|
|
Index to Financial Statements
|
|
||
|
|
|
|
|
|
|
Page
|
Management's Report on Internal Control Over Financial Reporting
|
|
||
Report of Independent Registered Public Accounting Firm
|
|
||
Consolidated Financial Statements
|
|
|
|
|
Consolidated Balance Sheets
|
|
|
|
Consolidated Statements of Income and Comprehensive Income
|
|
|
|
Consolidated Statements of Shareholders' Equity
|
|
|
|
Consolidated Statements of Cash Flows
|
|
|
|
Notes to Consolidated Financial Statements
|
|
|
Quarterly Information (Unaudited) - included in Item 5
|
|
||
|
|
|
|
•
|
The Company’s controls relating to the response to the risks of material misstatement were not effectively designed and constituted a material weakness that contributed to the following additional material weaknesses.
|
•
|
The Company’s controls over the accounting for goodwill and long-lived assets, including finite-lived intangible assets, were not effectively designed and maintained, specifically, the controls related to the identification of the proper unit of account as well as the development and review of assumptions used in interim and annual impairment tests. This control deficiency resulted in the restatement of the Company’s financial statements for the three- and nine-month periods ended October 31, 2015, the fiscal year ended January 31, 2016, and the three-month period ended April 30, 2016.
|
•
|
The Company’s controls related to the accounting for income taxes were not effectively designed and maintained, specifically the controls to assess that the income tax provision and related tax assets and liabilities are complete and accurate. This control deficiency resulted in adjustments to the income tax provision and related tax asset and liability accounts and related disclosures for the three- and nine-month periods ended October 31, 2015, the fiscal year ended January 31, 2016, and the three-month period ended April 30, 2016.
|
•
|
The Company’s controls over the existence of inventories were not effectively designed and maintained. Specifically, the controls to monitor that inventory subject to the cycle count program was counted at the frequency levels and accuracy rates required under the Company’s policy, and the controls to verify the existence of inventory held at third-party locations were not effectively designed and maintained. These control deficiencies resulted in adjustments to inventory and cost of sales accounts and disclosures for the three and nine months ended October 31, 2015, the fiscal year ended January 31, 2016, and the three months ended April 30, 2016.
|
•
|
The Company’s controls over the completeness and accuracy of spreadsheets and system-generated reports used in internal control over financial reporting were not effectively designed and maintained.
|
/s/ DANIEL A. RYKHUS
|
|
/s/ STEVEN E. BRAZONES
|
Daniel A. Rykhus
|
|
Steven E. Brazones
|
President and Chief Executive Officer
|
|
Vice President and Chief Financial Officer
|
RAVEN INDUSTRIES, INC.
|
CONSOLIDATED BALANCE SHEETS
|
(Dollars and shares in thousands, except per-share amounts)
|
|
As of January 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
ASSETS
|
|
|
|
|
|
||||||
Current assets
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
$
|
50,648
|
|
|
$
|
33,782
|
|
|
$
|
51,949
|
|
Short-term investments
|
—
|
|
|
—
|
|
|
250
|
|
|||
Accounts receivable, net
|
43,143
|
|
|
38,069
|
|
|
56,576
|
|
|||
Inventories
|
42,336
|
|
|
45,839
|
|
|
55,152
|
|
|||
Deferred income taxes
|
—
|
|
|
3,110
|
|
|
3,958
|
|
|||
Other current assets
|
2,689
|
|
|
4,429
|
|
|
3,094
|
|
|||
Total current assets
|
138,816
|
|
|
125,229
|
|
|
170,979
|
|
|||
|
|
|
|
|
|
||||||
Property, plant and equipment, net
|
106,324
|
|
|
115,704
|
|
|
117,513
|
|
|||
Goodwill
|
40,649
|
|
|
40,672
|
|
|
52,148
|
|
|||
Amortizable intangible assets, net
|
12,048
|
|
|
12,956
|
|
|
18,490
|
|
|||
Other assets
|
3,672
|
|
|
4,127
|
|
|
3,743
|
|
|||
TOTAL ASSETS
|
$
|
301,509
|
|
|
$
|
298,688
|
|
|
$
|
362,873
|
|
|
|
|
|
|
|
||||||
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
||||||
Current liabilities
|
|
|
|
|
|
||||||
Accounts payable
|
$
|
8,467
|
|
|
$
|
6,038
|
|
|
$
|
11,545
|
|
Accrued liabilities
|
18,055
|
|
|
12,042
|
|
|
19,187
|
|
|||
Customer advances
|
1,860
|
|
|
739
|
|
|
1,111
|
|
|||
Total current liabilities
|
28,382
|
|
|
18,819
|
|
|
31,843
|
|
|||
|
|
|
|
|
|
||||||
Other liabilities
|
13,696
|
|
|
15,640
|
|
|
25,793
|
|
|||
|
|
|
|
|
|
||||||
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
||||||
Shareholders' equity
|
|
|
|
|
|
||||||
Common stock, $1 par value, authorized shares 100,000; issued 67,060; 67,006; and 66,947, respectively
|
67,060
|
|
|
67,006
|
|
|
66,947
|
|
|||
Paid-in capital
|
55,795
|
|
|
53,907
|
|
|
53,237
|
|
|||
Retained earnings
|
230,649
|
|
|
229,443
|
|
|
244,180
|
|
|||
Accumulated other comprehensive loss
|
(3,676
|
)
|
|
(3,501
|
)
|
|
(5,849
|
)
|
|||
Less treasury stock at cost, 30,984; 30,500; and 28,897 shares, respectively
|
(90,402
|
)
|
|
(82,700
|
)
|
|
(53,362
|
)
|
|||
Total Raven Industries, Inc. shareholders' equity
|
259,426
|
|
|
264,155
|
|
|
305,153
|
|
|||
Noncontrolling interest
|
5
|
|
|
74
|
|
|
84
|
|
|||
Total shareholders' equity
|
259,431
|
|
|
264,229
|
|
|
305,237
|
|
|||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
|
$
|
301,509
|
|
|
$
|
298,688
|
|
|
$
|
362,873
|
|
|
|
|
|
|
|
||||||
The accompanying notes are an integral part of the consolidated financial statements.
|
|
|
|
|
|
RAVEN INDUSTRIES, INC.
|
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
|
(Dollars in thousands, except per-share amounts)
|
|
For the years ended January 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Net sales
|
$
|
277,395
|
|
|
$
|
258,229
|
|
|
$
|
378,153
|
|
Cost of sales
|
199,205
|
|
|
191,255
|
|
|
274,907
|
|
|||
Gross profit
|
78,190
|
|
|
66,974
|
|
|
103,246
|
|
|||
|
|
|
|
|
|
||||||
Research and development expenses
|
16,312
|
|
|
14,686
|
|
|
17,440
|
|
|||
Selling, general and administrative expenses
|
33,378
|
|
|
32,574
|
|
|
42,005
|
|
|||
Goodwill impairment loss
|
—
|
|
|
11,497
|
|
|
—
|
|
|||
Long-lived asset impairment loss
|
87
|
|
|
3,826
|
|
|
—
|
|
|||
Operating income
|
28,413
|
|
|
4,391
|
|
|
43,801
|
|
|||
|
|
|
|
|
|
||||||
Other (expense), net
|
(560
|
)
|
|
(310
|
)
|
|
(300
|
)
|
|||
Income before income taxes
|
27,853
|
|
|
4,081
|
|
|
43,501
|
|
|||
|
|
|
|
|
|
||||||
Income tax expense (benefit)
|
7,661
|
|
|
(767
|
)
|
|
11,705
|
|
|||
Net income
|
20,192
|
|
|
4,848
|
|
|
31,796
|
|
|||
|
|
|
|
|
|
||||||
Net income attributable to the noncontrolling interest
|
1
|
|
|
72
|
|
|
63
|
|
|||
|
|
|
|
|
|
||||||
Net income attributable to Raven Industries, Inc.
|
$
|
20,191
|
|
|
$
|
4,776
|
|
|
$
|
31,733
|
|
|
|
|
|
|
|
||||||
Net income per common share:
|
|
|
|
|
|
||||||
─ Basic
|
$
|
0.56
|
|
|
$
|
0.13
|
|
|
$
|
0.86
|
|
─ Diluted
|
$
|
0.56
|
|
|
$
|
0.13
|
|
|
$
|
0.86
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
Comprehensive income:
|
|
|
|
|
|
||||||
Net income
|
$
|
20,192
|
|
|
$
|
4,848
|
|
|
$
|
31,796
|
|
|
|
|
|
|
|
||||||
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
||||||
Foreign currency translation
|
50
|
|
|
(729
|
)
|
|
(1,466
|
)
|
|||
Postretirement benefits, net of income tax benefit (expense) of $129, ($1,620), and $1,187, respectively
|
(225
|
)
|
|
3,077
|
|
|
(2,204
|
)
|
|||
Other comprehensive (loss) income, net of tax
|
(175
|
)
|
|
2,348
|
|
|
(3,670
|
)
|
|||
|
|
|
|
|
|
||||||
Comprehensive income
|
20,017
|
|
|
7,196
|
|
|
28,126
|
|
|||
|
|
|
|
|
|
||||||
Comprehensive income attributable to noncontrolling interest
|
1
|
|
|
72
|
|
|
63
|
|
|||
|
|
|
|
|
|
||||||
Comprehensive income attributable to Raven Industries, Inc.
|
$
|
20,016
|
|
|
$
|
7,124
|
|
|
$
|
28,063
|
|
The accompanying notes are an integral part of the consolidated financial statements.
|
|
|
RAVEN INDUSTRIES, INC.
|
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
|
(Dollars and shares in thousands, except per-share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
$1 Par Common Stock
|
Paid-in Capital
|
Treasury Stock
|
Retained Earnings
|
Accumulated Other Comprehen-sive Income (Loss)
|
Raven Industries, Inc. Equity
|
Non-controlling Interest
|
Total Equity
|
|||||||||||||||||||
|
Shares
|
|
Cost
|
||||||||||||||||||||||||
Balance January 31, 2014
|
$
|
65,318
|
|
$
|
10,556
|
|
28,897
|
|
|
$
|
(53,362
|
)
|
$
|
231,029
|
|
$
|
(2,179
|
)
|
$
|
251,362
|
|
$
|
100
|
|
251,462
|
|
|
Net income
|
—
|
|
—
|
|
—
|
|
|
—
|
|
31,733
|
|
—
|
|
31,733
|
|
63
|
|
31,796
|
|
||||||||
Other comprehensive income (loss), net of income tax
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
(3,670
|
)
|
(3,670
|
)
|
—
|
|
(3,670
|
)
|
||||||||
Cash dividends ($0.50 per share)
|
—
|
|
142
|
|
—
|
|
|
—
|
|
(18,582
|
)
|
—
|
|
(18,440
|
)
|
—
|
|
(18,440
|
)
|
||||||||
Dividends of less than wholly-owned subsidiary paid to noncontrolling interest
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(79
|
)
|
(79
|
)
|
||||||||
Shares issued in connection with business combination (net of issuance costs of $38)
|
1,542
|
|
37,672
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
39,214
|
|
—
|
|
39,214
|
|
||||||||
Director shares issued
|
18
|
|
(18
|
)
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||||
Shares issued on stock options exercised, net of shares withheld for employee taxes
|
69
|
|
572
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
641
|
|
—
|
|
641
|
|
||||||||
Share-based compensation
|
—
|
|
4,213
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
4,213
|
|
—
|
|
4,213
|
|
||||||||
Tax benefit from exercise of stock options
|
—
|
|
100
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
100
|
|
—
|
|
100
|
|
||||||||
Balance January 31, 2015
|
66,947
|
|
53,237
|
|
28,897
|
|
|
(53,362
|
)
|
244,180
|
|
(5,849
|
)
|
305,153
|
|
84
|
|
305,237
|
|
||||||||
Net income
|
—
|
|
—
|
|
—
|
|
|
—
|
|
4,776
|
|
—
|
|
4,776
|
|
72
|
|
4,848
|
|
||||||||
Other comprehensive income (loss), net of income tax
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
2,348
|
|
2,348
|
|
—
|
|
2,348
|
|
||||||||
Cash dividends ($0.52 per share)
|
—
|
|
169
|
|
—
|
|
|
—
|
|
(19,513
|
)
|
—
|
|
(19,344
|
)
|
—
|
|
(19,344
|
)
|
||||||||
Dividends of less than wholly-owned subsidiary paid to noncontrolling interest
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(82
|
)
|
(82
|
)
|
||||||||
Share issuance costs related to fiscal 2015 business combination
|
—
|
|
(15
|
)
|
—
|
|
|
—
|
|
—
|
|
—
|
|
(15
|
)
|
—
|
|
(15
|
)
|
||||||||
Shares issued on stock options exercised, net of shares withheld for employee taxes
|
7
|
|
(54
|
)
|
—
|
|
|
—
|
|
—
|
|
—
|
|
(47
|
)
|
—
|
|
(47
|
)
|
||||||||
Shares issued on vesting of stock units, net of shares withheld for employee taxes
|
52
|
|
(510
|
)
|
—
|
|
|
—
|
|
—
|
|
—
|
|
(458
|
)
|
—
|
|
(458
|
)
|
||||||||
Shares repurchased
|
—
|
|
—
|
|
1,603
|
|
|
(29,338
|
)
|
—
|
|
—
|
|
(29,338
|
)
|
—
|
|
(29,338
|
)
|
||||||||
Share-based compensation
|
—
|
|
2,311
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
2,311
|
|
—
|
|
2,311
|
|
||||||||
Income tax impact related to share-based compensation
|
—
|
|
(1,231
|
)
|
—
|
|
|
—
|
|
—
|
|
—
|
|
(1,231
|
)
|
—
|
|
(1,231
|
)
|
||||||||
Balance January 31, 2016
|
67,006
|
|
53,907
|
|
30,500
|
|
|
(82,700
|
)
|
229,443
|
|
(3,501
|
)
|
264,155
|
|
74
|
|
264,229
|
|
||||||||
Net income
|
—
|
|
—
|
|
—
|
|
|
—
|
|
20,191
|
|
—
|
|
20,191
|
|
1
|
|
20,192
|
|
||||||||
Other comprehensive income, net of income tax
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
(175
|
)
|
(175
|
)
|
—
|
|
(175
|
)
|
||||||||
Cash dividends ($0.52 per share)
|
—
|
|
216
|
|
—
|
|
|
—
|
|
(18,985
|
)
|
—
|
|
(18,769
|
)
|
—
|
|
(18,769
|
)
|
||||||||
Dividends of less than wholly-owned subsidiary paid to noncontrolling interest
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(70
|
)
|
(70
|
)
|
||||||||
Director shares issued
|
19
|
|
(19
|
)
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||||
Shares issued on vesting of stock units, net of shares withheld for employee taxes
|
35
|
|
(291
|
)
|
—
|
|
|
—
|
|
—
|
|
—
|
|
(256
|
)
|
—
|
|
(256
|
)
|
||||||||
Shares repurchased
|
—
|
|
—
|
|
484
|
|
|
(7,702
|
)
|
—
|
|
—
|
|
(7,702
|
)
|
—
|
|
(7,702
|
)
|
||||||||
Share-based compensation
|
—
|
|
3,071
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
3,071
|
|
—
|
|
3,071
|
|
||||||||
Income tax impact related to share-based compensation
|
—
|
|
(1,089
|
)
|
—
|
|
|
—
|
|
—
|
|
—
|
|
(1,089
|
)
|
—
|
|
(1,089
|
)
|
||||||||
Balance January 31, 2017
|
$
|
67,060
|
|
$
|
55,795
|
|
30,984
|
|
|
$
|
(90,402
|
)
|
$
|
230,649
|
|
$
|
(3,676
|
)
|
$
|
259,426
|
|
$
|
5
|
|
$
|
259,431
|
|
The accompanying notes are an integral part of the consolidated financial statements.
|
|
|
|
|
RAVEN INDUSTRIES, INC.
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(Dollars in thousands)
|
|
For the years ended January 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
OPERATING ACTIVITIES:
|
|
|
|
|
|
||||||
Net income
|
$
|
20,192
|
|
|
$
|
4,848
|
|
|
$
|
31,796
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation
|
13,169
|
|
|
13,856
|
|
|
14,761
|
|
|||
Amortization of intangible assets
|
2,267
|
|
|
3,280
|
|
|
2,608
|
|
|||
Goodwill impairment loss
|
—
|
|
|
11,497
|
|
|
—
|
|
|||
Long-lived asset impairment loss
|
87
|
|
|
3,826
|
|
|
—
|
|
|||
Change in fair value of acquisition-related contingent consideration
|
36
|
|
|
(1,488
|
)
|
|
714
|
|
|||
Loss (income) from equity investments
|
72
|
|
|
(83
|
)
|
|
(28
|
)
|
|||
Deferred income taxes
|
307
|
|
|
(6,039
|
)
|
|
(958
|
)
|
|||
Share-based compensation expense
|
3,071
|
|
|
2,311
|
|
|
4,213
|
|
|||
Other operating activities, net
|
2,390
|
|
|
2,112
|
|
|
(996
|
)
|
|||
Change in operating assets and liabilities
|
7,045
|
|
|
9,888
|
|
|
7,973
|
|
|||
Net cash provided by operating activities
|
48,636
|
|
|
44,008
|
|
|
60,083
|
|
|||
|
|
|
|
|
|
||||||
INVESTING ACTIVITIES:
|
|
|
|
|
|
||||||
Capital expenditures
|
(4,796
|
)
|
|
(13,046
|
)
|
|
(17,041
|
)
|
|||
Proceeds (payments) related to business acquisitions
|
—
|
|
|
351
|
|
|
(12,472
|
)
|
|||
Maturities of investments
|
250
|
|
|
250
|
|
|
500
|
|
|||
Purchases of investments
|
(750
|
)
|
|
(250
|
)
|
|
(750
|
)
|
|||
Proceeds from sale of assets
|
1,188
|
|
|
2,124
|
|
|
—
|
|
|||
Other investing activities, net
|
(534
|
)
|
|
(503
|
)
|
|
(223
|
)
|
|||
Net cash used in investing activities
|
(4,642
|
)
|
|
(11,074
|
)
|
|
(29,986
|
)
|
|||
|
|
|
|
|
|
||||||
FINANCING ACTIVITIES:
|
|
|
|
|
|
||||||
Dividends paid
|
(18,839
|
)
|
|
(19,426
|
)
|
|
(18,519
|
)
|
|||
Payments for common shares repurchased
|
(7,702
|
)
|
|
(29,338
|
)
|
|
—
|
|
|||
Proceeds from revolving line of credit
|
—
|
|
|
—
|
|
|
2,127
|
|
|||
Payment of revolving line of credit and acquisition-related debt
|
—
|
|
|
—
|
|
|
(14,116
|
)
|
|||
Payment of acquisition-related contingent liabilities
|
(354
|
)
|
|
(814
|
)
|
|
(533
|
)
|
|||
Debt issuance costs paid
|
—
|
|
|
(548
|
)
|
|
—
|
|
|||
Restricted stock units vested and issued
|
(256
|
)
|
|
(458
|
)
|
|
—
|
|
|||
Employee stock option exercises net of tax benefit
|
—
|
|
|
(85
|
)
|
|
702
|
|
|||
Other financing activities, net
|
—
|
|
|
(15
|
)
|
|
(326
|
)
|
|||
Net cash used in financing activities
|
(27,151
|
)
|
|
(50,684
|
)
|
|
(30,665
|
)
|
|||
Effect of exchange rate changes on cash
|
23
|
|
|
(417
|
)
|
|
(470
|
)
|
|||
Net increase (decrease) in cash and cash equivalents
|
16,866
|
|
|
(18,167
|
)
|
|
(1,038
|
)
|
|||
Cash and cash equivalents at beginning of year
|
33,782
|
|
|
51,949
|
|
|
52,987
|
|
|||
Cash and cash equivalents at end of year
|
$
|
50,648
|
|
|
$
|
33,782
|
|
|
$
|
51,949
|
|
|
|
|
|
|
|
||||||
The accompanying notes are an integral part of the consolidated financial statements.
|
|
|
|
|
|
NOTE 1
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
Building and improvements
|
15 - 39 years
|
Manufacturing equipment by segment
|
|
Applied Technology
|
3 - 5 years
|
Engineered Films
|
5 - 12 years
|
Aerostar
|
3 - 5 years
|
Furniture, fixtures, office equipment, and other
|
3 - 7 years
|
Cost of sales
|
|
Research and development (R&D) expenses
|
|
Selling, general, and administrative (SG&A)expenses
|
Direct material costs
Material acquisition and handling costs
Direct labor
Factory overhead including depreciation and amortization
Inventory obsolescence
Product warranties
Shipping and handling cost
|
|
Personnel costs
Professional service fees
Material and supplies
Facility allocation
|
|
Personnel costs
Professional service fees
Advertising
Promotions
Information technology equipment depreciation
Office supplies
Facility allocation
Bad debt expense
|
NOTE 2
|
SELECTED BALANCE SHEET INFORMATION
|
|
|
As of January 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Accounts receivable, net:
|
|
|
|
|
|
|
||||||
Trade accounts
|
|
$
|
43,834
|
|
|
$
|
39,103
|
|
|
$
|
56,895
|
|
Allowance for doubtful accounts
|
|
(691
|
)
|
|
(1,034
|
)
|
|
(319
|
)
|
|||
|
|
$
|
43,143
|
|
|
$
|
38,069
|
|
|
$
|
56,576
|
|
Inventories:
|
|
|
|
|
|
|
||||||
Finished goods
|
|
$
|
5,438
|
|
|
$
|
4,896
|
|
|
$
|
8,127
|
|
In process
|
|
2,288
|
|
|
1,845
|
|
|
1,317
|
|
|||
Materials
|
|
34,610
|
|
|
39,098
|
|
|
45,708
|
|
|||
|
|
$
|
42,336
|
|
|
$
|
45,839
|
|
|
$
|
55,152
|
|
Other current assets:
|
|
|
|
|
|
|
||||||
Insurance policy benefit
|
|
$
|
802
|
|
|
$
|
716
|
|
|
$
|
733
|
|
Federal income tax receivable
|
|
604
|
|
|
1,721
|
|
|
713
|
|
|||
Prepaid expenses and other
|
|
1,283
|
|
|
1,992
|
|
|
1,648
|
|
|||
|
|
$
|
2,689
|
|
|
$
|
4,429
|
|
|
$
|
3,094
|
|
Property, plant and equipment, net:
|
|
|
|
|
|
|
||||||
Held for use:
|
|
|
|
|
|
|
||||||
Land
|
|
$
|
3,054
|
|
|
$
|
3,054
|
|
|
$
|
3,246
|
|
Buildings and improvements
|
|
77,817
|
|
|
77,797
|
|
|
78,140
|
|
|||
Machinery and equipment
|
|
142,471
|
|
|
140,472
|
|
|
131,766
|
|
|||
Accumulated depreciation
|
|
(117,018
|
)
|
|
(106,419
|
)
|
|
(96,545
|
)
|
|||
|
|
$
|
106,324
|
|
|
$
|
114,904
|
|
|
$
|
116,607
|
|
|
|
|
|
|
|
|
||||||
Held for sale:
|
|
|
|
|
|
|
||||||
Land
|
|
$
|
—
|
|
|
$
|
244
|
|
|
$
|
11
|
|
Buildings and improvements
|
|
—
|
|
|
1,595
|
|
|
1,522
|
|
|||
Machinery and equipment
|
|
—
|
|
|
329
|
|
|
—
|
|
|||
Accumulated depreciation
|
|
—
|
|
|
(1,368
|
)
|
|
(627
|
)
|
|||
|
|
—
|
|
|
800
|
|
|
906
|
|
|||
|
|
$
|
106,324
|
|
|
$
|
115,704
|
|
|
$
|
117,513
|
|
Other assets:
|
|
|
|
|
|
|
||||||
Equity investments
|
|
$
|
2,371
|
|
|
$
|
2,805
|
|
|
$
|
3,217
|
|
Deferred income taxes
|
|
18
|
|
|
—
|
|
|
—
|
|
|||
Other
|
|
1,283
|
|
|
1,322
|
|
|
526
|
|
|||
|
|
$
|
3,672
|
|
|
$
|
4,127
|
|
|
$
|
3,743
|
|
Accrued liabilities:
|
|
|
|
|
|
|
||||||
Salaries and related
|
|
$
|
6,286
|
|
|
$
|
1,883
|
|
|
$
|
4,063
|
|
Benefits
|
|
3,960
|
|
|
3,864
|
|
|
5,001
|
|
|||
Insurance obligations
|
|
2,400
|
|
|
1,730
|
|
|
1,590
|
|
|||
Warranties
|
|
1,547
|
|
|
1,835
|
|
|
3,120
|
|
|||
Income taxes
|
|
498
|
|
|
475
|
|
|
536
|
|
|||
Other taxes
|
|
1,540
|
|
|
1,117
|
|
|
1,240
|
|
|||
Acquisition-related contingent consideration
|
|
445
|
|
|
407
|
|
|
1,375
|
|
|||
Other
|
|
1,379
|
|
|
731
|
|
|
2,262
|
|
|||
|
|
$
|
18,055
|
|
|
$
|
12,042
|
|
|
$
|
19,187
|
|
Other liabilities:
|
|
|
|
|
|
|
||||||
Postretirement benefits
|
|
$
|
8,054
|
|
|
$
|
7,662
|
|
|
$
|
11,812
|
|
Acquisition-related contingent consideration
|
|
1,397
|
|
|
1,732
|
|
|
3,631
|
|
|||
Deferred income taxes
|
|
1,421
|
|
|
3,247
|
|
|
7,091
|
|
|||
Uncertain tax positions
|
|
2,610
|
|
|
2,999
|
|
|
3,259
|
|
|||
Other
|
|
214
|
|
|
—
|
|
|
—
|
|
|||
|
|
$
|
13,696
|
|
|
$
|
15,640
|
|
|
$
|
25,793
|
|
NOTE 3
|
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
|
|
|
Cumulative foreign currency translation adjustment
|
|
Postretirement benefits
|
|
Total
|
||||||
Balance at January 31, 2014
|
|
$
|
(282
|
)
|
|
$
|
(1,897
|
)
|
|
$
|
(2,179
|
)
|
Other comprehensive (loss) before reclassifications
|
|
(1,466
|
)
|
|
—
|
|
|
(1,466
|
)
|
|||
Amounts reclassified from accumulated other comprehensive (loss) after tax benefit of $1,187
|
|
—
|
|
|
(2,204
|
)
|
|
(2,204
|
)
|
|||
Balance at January 31, 2015
|
|
(1,748
|
)
|
|
(4,101
|
)
|
|
(5,849
|
)
|
|||
Other comprehensive (loss) before reclassifications
|
|
(729
|
)
|
|
—
|
|
|
(729
|
)
|
|||
Amounts reclassified from accumulated other comprehensive (loss) after tax expense of ($1,620)
|
|
—
|
|
|
3,077
|
|
|
3,077
|
|
|||
Balance at January 31, 2016
|
|
(2,477
|
)
|
|
(1,024
|
)
|
|
(3,501
|
)
|
|||
Other comprehensive income before reclassifications
|
|
50
|
|
|
—
|
|
|
50
|
|
|||
Amounts reclassified from accumulated other comprehensive (loss) after tax benefit of $129
|
|
—
|
|
|
(225
|
)
|
|
(225
|
)
|
|||
Balance at January 31, 2017
|
|
$
|
(2,427
|
)
|
|
$
|
(1,249
|
)
|
|
$
|
(3,676
|
)
|
NOTE 4
|
SUPPLEMENTAL CASH FLOW INFORMATION
|
|
|
For the years ended January 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
||||||
Accounts receivable
|
|
$
|
(5,361
|
)
|
|
$
|
16,847
|
|
|
$
|
4,699
|
|
Inventories
|
|
1,215
|
|
|
7,564
|
|
|
6,753
|
|
|||
Prepaid expenses and other assets
|
|
228
|
|
|
(111
|
)
|
|
195
|
|
|||
Accounts payable
|
|
2,558
|
|
|
(5,059
|
)
|
|
(3,578
|
)
|
|||
Accrued and other liabilities
|
|
7,279
|
|
|
(8,985
|
)
|
|
48
|
|
|||
Customer advances
|
|
1,126
|
|
|
(368
|
)
|
|
(144
|
)
|
|||
|
|
$
|
7,045
|
|
|
$
|
9,888
|
|
|
$
|
7,973
|
|
|
|
|
|
|
|
|
||||||
Supplemental disclosures of cash flow information:
|
|
|
|
|
|
|
||||||
Cash paid during the year for income taxes
|
|
$
|
6,618
|
|
|
$
|
6,558
|
|
|
$
|
14,011
|
|
Interest paid
|
|
$
|
190
|
|
|
$
|
129
|
|
|
$
|
160
|
|
|
|
|
|
|
|
|
||||||
Significant non-cash transactions:
|
|
|
|
|
|
|
||||||
Issuance of common stock for business acquisition
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
39,252
|
|
Capital expenditures included in accounts payable
|
|
$
|
84
|
|
|
$
|
161
|
|
|
$
|
564
|
|
Capital expenditures converted from inventory
|
|
$
|
—
|
|
|
$
|
1,036
|
|
|
$
|
491
|
|
NOTE 5
|
ACQUISITIONS OF AND INVESTMENTS IN BUSINESSES AND TECHNOLOGIES
|
Cash
|
|
$
|
1,600
|
|
Accounts receivable
|
|
4,808
|
|
|
Inventory
|
|
7,575
|
|
|
Deferred income taxes
|
|
543
|
|
|
Other current assets
|
|
24
|
|
|
Property, plant and equipment, net
|
|
17,088
|
|
|
Goodwill
|
|
27,422
|
|
|
Customer relationships and other definite-lived intangibles
|
|
10,200
|
|
|
Short-term and long-term debt
|
|
(11,341
|
)
|
|
Current liabilities
|
|
(4,084
|
)
|
|
Other liabilities
|
|
(5,573
|
)
|
|
Total purchase price
|
|
$
|
48,262
|
|
|
|
As of January 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Balance at beginning of year
|
|
$
|
2,805
|
|
|
$
|
3,217
|
|
|
$
|
3,684
|
|
Purchase price of equity investment
|
|
135
|
|
|
—
|
|
|
—
|
|
|||
(Loss) income from equity investment
|
|
(72
|
)
|
|
83
|
|
|
28
|
|
|||
Amortization of intangible assets
|
|
(497
|
)
|
|
(495
|
)
|
|
(495
|
)
|
|||
Balance at end of year
|
|
$
|
2,371
|
|
|
$
|
2,805
|
|
|
$
|
3,217
|
|
NOTE 6
|
GOODWILL, LONG-LIVED ASSETS, AND OTHER CHARGES
|
|
|
Applied
Technology
|
|
Engineered
Films
|
|
Aerostar
(
b
)
|
|
Vista
|
|
Total
|
||||||||||
Balance at January 31, 2014
|
|
$
|
9,892
|
|
|
$
|
96
|
|
|
$
|
789
|
|
|
$
|
11,497
|
|
|
$
|
22,274
|
|
Acquired goodwill
|
|
3,250
|
|
|
27,216
|
|
|
—
|
|
|
—
|
|
|
30,466
|
|
|||||
Foreign currency translation adjustment
|
|
(592
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(592
|
)
|
|||||
Balance at January 31, 2015
|
|
12,550
|
|
|
27,312
|
|
|
789
|
|
|
11,497
|
|
|
52,148
|
|
|||||
Purchase price adjustment to acquired goodwill
(a)
|
|
—
|
|
|
206
|
|
|
—
|
|
|
—
|
|
|
206
|
|
|||||
Goodwill disposed from sale of business
|
|
(69
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(69
|
)
|
|||||
Goodwill impairment loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11,497
|
)
|
|
(11,497
|
)
|
|||||
Foreign currency translation adjustment
|
|
(116
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(116
|
)
|
|||||
Balance at January 31, 2016
|
|
12,365
|
|
|
27,518
|
|
|
789
|
|
|
—
|
|
|
40,672
|
|
|||||
Foreign currency translation adjustment
|
|
(23
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(23
|
)
|
|||||
Reporting unit transfer balance
(b)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Balance at January 31, 2017
|
|
$
|
12,342
|
|
|
$
|
27,518
|
|
|
$
|
789
|
|
|
$
|
—
|
|
|
$
|
40,649
|
|
|
|
For the years ended January 31,
|
||||||||||||||||||||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||||||||||||||||||||
|
|
|
Accumulated
|
|
|
|
Accumulated
|
|
|
|
Accumulated
|
|
||||||||||||||||||
|
|
Amount
|
amortization
|
Net
|
|
Amount
|
amortization
|
Net
|
|
Amount
|
amortization
|
Net
|
||||||||||||||||||
Existing technology
|
|
$
|
7,136
|
|
$
|
(6,553
|
)
|
$
|
583
|
|
|
$
|
7,144
|
|
$
|
(6,265
|
)
|
$
|
879
|
|
|
$
|
8,870
|
|
$
|
(5,239
|
)
|
$
|
3,631
|
|
Customer relationships
|
|
12,987
|
|
(3,680
|
)
|
9,307
|
|
|
12,628
|
|
(2,641
|
)
|
9,987
|
|
|
14,128
|
|
(1,271
|
)
|
12,857
|
|
|||||||||
Patents and other intangibles
|
|
4,378
|
|
(2,220
|
)
|
2,158
|
|
|
3,967
|
|
(1,877
|
)
|
2,090
|
|
|
3,657
|
|
(1,655
|
)
|
2,002
|
|
|||||||||
Total
|
|
$
|
24,501
|
|
$
|
(12,453
|
)
|
$
|
12,048
|
|
|
$
|
23,739
|
|
$
|
(10,783
|
)
|
$
|
12,956
|
|
|
$
|
26,655
|
|
$
|
(8,165
|
)
|
$
|
18,490
|
|
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
||||||||||
Estimated amortization expense
|
|
$
|
1,936
|
|
|
$
|
1,822
|
|
|
$
|
1,576
|
|
|
$
|
1,096
|
|
|
$
|
1,067
|
|
NOTE 7
|
EMPLOYEE POSTRETIREMENT BENEFITS
|
|
|
For the years ended January 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Benefit obligation at beginning of year
|
|
$
|
7,991
|
|
|
$
|
12,125
|
|
|
$
|
8,254
|
|
Service cost
|
|
80
|
|
|
285
|
|
|
195
|
|
|||
Interest cost
|
|
333
|
|
|
386
|
|
|
366
|
|
|||
Amendments
|
|
—
|
|
|
(958
|
)
|
|
—
|
|
|||
Actuarial loss (gain) and assumption changes
|
|
341
|
|
|
(3,544
|
)
|
|
3,543
|
|
|||
Retiree benefits paid
|
|
(329
|
)
|
|
(303
|
)
|
|
(233
|
)
|
|||
Benefit obligation at end of year
|
|
$
|
8,416
|
|
|
$
|
7,991
|
|
|
$
|
12,125
|
|
|
|
|
|
|
|
|
|
|
For the years ended January 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Amounts not yet recognized in net periodic benefit cost:
|
|
|
|
|
|
|
||||||
Net actuarial loss
|
|
$
|
2,699
|
|
|
$
|
2,504
|
|
|
$
|
6,309
|
|
Prior service cost
|
|
(732
|
)
|
|
(892
|
)
|
|
—
|
|
|||
Total pre-tax accumulated other comprehensive loss
|
|
$
|
1,967
|
|
|
$
|
1,612
|
|
|
$
|
6,309
|
|
|
|
|
|
|
|
|
||||||
Pre-tax accumulated other comprehensive loss - beginning of year related to benefit obligation
|
|
$
|
1,612
|
|
|
$
|
6,309
|
|
|
$
|
2,918
|
|
Reclassification adjustments recognized in benefit cost:
|
|
|
|
|
|
|
||||||
Recognized net (loss)
|
|
(146
|
)
|
|
(261
|
)
|
|
(152
|
)
|
|||
Amortization of prior service cost
|
|
160
|
|
|
66
|
|
|
—
|
|
|||
Amounts recognized in AOCI during the year:
|
|
|
|
|
|
|
||||||
Prior service cost from amendments
|
|
—
|
|
|
(958
|
)
|
|
—
|
|
|||
Net actuarial loss (gain)
|
|
341
|
|
|
(3,544
|
)
|
|
3,543
|
|
|||
Pre-tax accumulated other comprehensive loss - end of year related to benefit obligation
|
|
$
|
1,967
|
|
|
$
|
1,612
|
|
|
$
|
6,309
|
|
|
|
For the years ended January 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Beginning liability balance
|
|
$
|
7,991
|
|
|
$
|
12,125
|
|
|
$
|
8,254
|
|
Net periodic benefit cost
|
|
399
|
|
|
866
|
|
|
713
|
|
|||
Other comprehensive loss (income)
|
|
355
|
|
|
(4,697
|
)
|
|
3,391
|
|
|||
Total recognized in net periodic benefit cost and other comprehensive income
|
|
754
|
|
|
(3,831
|
)
|
|
4,104
|
|
|||
Retiree benefits paid
|
|
(329
|
)
|
|
(303
|
)
|
|
(233
|
)
|
|||
Ending liability balance
|
|
$
|
8,416
|
|
|
$
|
7,991
|
|
|
$
|
12,125
|
|
|
|
|
|
|
|
|
||||||
Current portion in accrued liabilities
|
|
$
|
362
|
|
|
$
|
329
|
|
|
$
|
313
|
|
Long-term portion in other liabilities
|
|
$
|
8,054
|
|
|
$
|
7,662
|
|
|
$
|
11,812
|
|
|
|
|
|
|
|
|
||||||
Assumptions used to calculate benefit obligation:
|
|
|
|
|
|
|
||||||
Discount rate
|
|
4.00
|
%
|
|
4.25
|
%
|
|
3.50
|
%
|
|||
Rate of compensation increase
|
|
4.00
|
%
|
|
4.00
|
%
|
|
4.00
|
%
|
|||
Health care cost trend rates:
|
|
|
|
|
|
|
||||||
Health care cost trend rate assumed for next year
|
|
6.67
|
%
|
|
6.83%
(a)
|
7.00%
(b)
|
|
|
7.20
|
%
|
|||
Ultimate health care cost trend rate
|
|
4.50
|
%
|
|
4.50%
(a)
|
5
.00%
(b)
|
|
|
5.00
|
%
|
|||
Year that the rate reaches the ultimate trend rate
|
|
2030
|
|
|
2030
(a)
|
2025
(b)
|
|
2025
|
|
||||
Assumptions used to calculated the net periodic benefit cost:
|
|
|
|
|
|
|
||||||
Discount rate
|
|
4.25
|
%
|
|
4.25%
(a)
| 3.50%
(b)
|
|
|
4.50
|
%
|
|||
Rate of compensation increase
|
|
4.00
|
%
|
|
4.00
|
%
|
|
4.00
|
%
|
|
|
January 31, 2017
|
||||||
|
|
One-percentage-point increase
|
|
One-percentage-point decrease
|
||||
Effect on total of service and interest cost components
|
|
$
|
91
|
|
|
$
|
(69
|
)
|
Effect on accumulated postretirement benefit obligation
|
|
$
|
1,486
|
|
|
$
|
(1,159
|
)
|
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
2022 - 2027
|
||||||||||
Expected postretirement medical and other benefit payments
|
|
$
|
362
|
|
|
$
|
371
|
|
|
$
|
366
|
|
|
$
|
379
|
|
|
$
|
2,372
|
|
NOTE 8
|
WARRANTIES
|
|
|
For the years ended January 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Beginning balance
|
|
$
|
1,835
|
|
|
$
|
3,120
|
|
|
$
|
2,525
|
|
Acquired
|
|
—
|
|
|
—
|
|
|
50
|
|
|||
Accrual for warranties
|
|
1,597
|
|
|
1,945
|
|
|
3,467
|
|
|||
Settlements made
|
|
(1,885
|
)
|
|
(3,230
|
)
|
|
(2,922
|
)
|
|||
Ending balance
|
|
$
|
1,547
|
|
|
$
|
1,835
|
|
|
$
|
3,120
|
|
NOTE 9
|
INCOME TAXES
|
|
|
For the years ended January 31,
|
|||||||
|
|
2017
|
|
2016
|
|
2015
|
|||
Tax at U.S. federal statutory rate
|
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
State and local income taxes, net of U.S. federal tax benefit
|
|
0.7
|
|
|
(2.8
|
)
|
|
(0.3
|
)
|
Tax credit for research activities
|
|
(3.7
|
)
|
|
(24.2
|
)
|
|
(3.9
|
)
|
Tax benefit on qualified production activities
|
|
(2.8
|
)
|
|
(13.7
|
)
|
|
(3.6
|
)
|
Tax benefit on insurance premiums
|
|
(1.5
|
)
|
|
(10.3
|
)
|
|
(1.0
|
)
|
Change in uncertain tax positions
|
|
(0.3
|
)
|
|
1.8
|
|
|
—
|
|
Foreign tax rate difference
|
|
(0.3
|
)
|
|
(2.9
|
)
|
|
0.4
|
|
Other, net
|
|
0.4
|
|
|
(1.7
|
)
|
|
0.3
|
|
|
|
27.5
|
%
|
|
(18.8
|
)%
|
|
26.9
|
%
|
|
|
For the years ended January 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Income taxes:
|
|
|
|
|
|
|
||||||
Currently payable
|
|
$
|
7,354
|
|
|
$
|
5,272
|
|
|
$
|
12,663
|
|
Deferred expense (benefit)
|
|
307
|
|
|
(6,039
|
)
|
|
(958
|
)
|
|||
|
|
$
|
7,661
|
|
|
$
|
(767
|
)
|
|
$
|
11,705
|
|
|
|
As of January 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Deferred tax assets:
|
|
|
|
|
|
|
||||||
Accounts receivable
(a)
|
|
$
|
212
|
|
|
$
|
355
|
|
|
$
|
194
|
|
Inventories
(a)
|
|
978
|
|
|
602
|
|
|
873
|
|
|||
Accrued vacation
(a)
|
|
887
|
|
|
836
|
|
|
940
|
|
|||
Insurance obligations
(a)
|
|
383
|
|
|
350
|
|
|
271
|
|
|||
Accrued benefit liabilities
(a)
|
|
41
|
|
|
99
|
|
|
261
|
|
|||
Warranty obligations
(a)
|
|
565
|
|
|
670
|
|
|
1,225
|
|
|||
Postretirement benefits
|
|
3,072
|
|
|
2,797
|
|
|
4,243
|
|
|||
Uncertain tax positions
|
|
803
|
|
|
896
|
|
|
1,002
|
|
|||
Share-based compensation
|
|
3,201
|
|
|
3,613
|
|
|
4,410
|
|
|||
Other accrued liabilities
(a)
|
|
68
|
|
|
198
|
|
|
194
|
|
|||
|
|
10,210
|
|
|
10,416
|
|
|
13,613
|
|
|||
|
|
|
|
|
|
|
||||||
Deferred tax (liabilities):
|
|
|
|
|
|
|
||||||
Depreciation and amortization
|
|
(10,565
|
)
|
|
(9,886
|
)
|
|
(16,099
|
)
|
|||
Other
|
|
(1,048
|
)
|
|
(667
|
)
|
|
(647
|
)
|
|||
|
|
(11,613
|
)
|
|
(10,553
|
)
|
|
(16,746
|
)
|
|||
Net deferred tax (liability)
|
|
$
|
(1,403
|
)
|
|
$
|
(137
|
)
|
|
$
|
(3,133
|
)
|
|
|
For the years ended January 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Gross unrecognized tax benefits at beginning of year
|
|
$
|
2,327
|
|
|
$
|
2,307
|
|
|
$
|
4,660
|
|
Increases in tax positions related to the current year
|
|
279
|
|
|
395
|
|
|
909
|
|
|||
Decreases in tax positions related to prior years
|
|
(193
|
)
|
|
—
|
|
|
—
|
|
|||
Decreases as a result of lapses in applicable statutes of limitation
|
|
(303
|
)
|
|
(375
|
)
|
|
(393
|
)
|
|||
Tax settlement with tax authorities
|
|
—
|
|
|
—
|
|
|
(2,869
|
)
|
|||
Gross unrecognized tax benefits at end of year
|
|
$
|
2,110
|
|
|
$
|
2,327
|
|
|
$
|
2,307
|
|
NOTE 10
|
FINANCING ARRANGEMENTS
|
|
|
Line of credit
|
|
Long-term notes
|
|
Notes with former owners and others
|
|
Debt Outstanding
|
||||||||
Balance at January 31, 2014
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Acquired in business combination
|
|
1,465
|
|
|
9,876
|
|
|
648
|
|
|
11,989
|
|
||||
Additional borrowings
|
|
2,127
|
|
|
—
|
|
|
—
|
|
|
2,127
|
|
||||
Debt repayment
|
|
(3,592
|
)
|
|
(9,876
|
)
|
|
(648
|
)
|
|
(14,116
|
)
|
||||
Balance at January 31, 2015
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Balance at January 31, 2016
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Balance at January 31, 2017
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
Thereafter
|
||||||||||||
Minimum lease payments
|
|
$
|
1,647
|
|
|
$
|
1,276
|
|
|
$
|
1,208
|
|
|
$
|
1,188
|
|
|
$
|
—
|
|
|
$
|
—
|
|
NOTE 11
|
COMMITMENTS AND CONTINGENCIES
|
|
|
Total
|
|
2018
|
|
2019 - 2020
|
|
2021 - 2022
|
|
2023 and After
|
||||||||||
Unconditional purchase obligations
|
|
$
|
31,976
|
|
|
$
|
31,976
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Postretirement benefits
(a)
|
|
18,698
|
|
|
362
|
|
|
737
|
|
|
757
|
|
|
16,842
|
|
|||||
Credit facility
(b)
|
|
699
|
|
|
212
|
|
|
424
|
|
|
63
|
|
|
—
|
|
|||||
|
|
$
|
51,373
|
|
|
$
|
32,550
|
|
|
$
|
1,161
|
|
|
$
|
820
|
|
|
$
|
16,842
|
|
NOTE 12
|
RESTRUCTURING COSTS
|
NOTE 13
|
SHARE-BASED COMPENSATION
|
|
|
For the years ended January 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Share-based compensation cost
|
|
$
|
3,071
|
|
|
$
|
2,311
|
|
|
$
|
4,213
|
|
Tax benefit
|
|
1,103
|
|
|
819
|
|
|
1,504
|
|
|
|
For the years ended January 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Risk-free interest rate
|
|
1.05
|
%
|
|
1.33
|
%
|
|
1.32
|
%
|
|||
Expected dividend yield
|
|
3.33
|
%
|
|
2.59
|
%
|
|
1.53
|
%
|
|||
Expected volatility factor
|
|
32.61
|
%
|
|
36.81
|
%
|
|
38.65
|
%
|
|||
Expected option term (in years)
|
|
4.00
|
|
|
3.75
|
|
|
4.00
|
|
|||
|
|
|
|
|
|
|
||||||
Weighted average grant date fair value
|
|
$
|
3.05
|
|
|
$
|
4.77
|
|
|
$
|
9.18
|
|
|
|
Number
of options |
|
Weighted average exercise price
|
|
Aggregate intrinsic value
|
|
Weighted
average remaining contractual term (years) |
|||||
Outstanding, January 31, 2016
|
|
925,950
|
|
|
$
|
28.44
|
|
|
|
|
|
||
Granted
|
|
274,200
|
|
|
15.61
|
|
|
|
|
|
|||
Exercised
|
|
—
|
|
|
—
|
|
|
|
|
|
|||
Forfeited
|
|
(4,125
|
)
|
|
25.41
|
|
|
|
|
|
|||
Expired
|
|
(205,125
|
)
|
|
30.03
|
|
|
|
|
|
|||
Outstanding, January 31, 2017
|
|
990,900
|
|
|
$
|
24.58
|
|
|
$
|
3,867
|
|
|
2.55
|
|
|
|
|
|
|
|
|
|
|||||
Outstanding exercisable, January 31, 2017
|
|
422,158
|
|
|
$
|
30.24
|
|
|
$
|
361
|
|
|
1.41
|
|
|
|
|
|
|
|
|
|
|||||
Options vested, or expected to vest, January 31, 2017
|
|
990,900
|
|
|
$
|
24.58
|
|
|
$
|
3,867
|
|
|
2.55
|
|
|
Number
of restricted stock units |
|
Weighted
average grant date fair value |
|||
Outstanding, January 31, 2016
|
|
81,926
|
|
|
$
|
25.53
|
|
Granted
|
|
70,947
|
|
|
15.94
|
|
|
Vested
|
|
(19,208
|
)
|
|
32.85
|
|
|
Forfeited
|
|
(6,936
|
)
|
|
23.14
|
|
|
Outstanding, January 31, 2017
|
|
126,729
|
|
|
$
|
19.19
|
|
|
|
|
|
|
|||
Cumulative dividends, January 31, 2017
|
|
5,003
|
|
|
|
|
|
Number
of restricted stock units expected to vest |
|
Weighted
average grant date fair value |
|||
Outstanding, January 31, 2016
|
|
66,068
|
|
|
$
|
25.65
|
|
Granted
|
|
72,950
|
|
|
15.61
|
|
|
Vested
|
|
(29,162
|
)
|
|
32.85
|
|
|
Forfeited
|
|
(1,178
|
)
|
|
17.66
|
|
|
Performance-based adjustment
|
|
37,841
|
|
|
15.94
|
|
|
Outstanding, January 31, 2017
|
|
146,519
|
|
|
$
|
16.78
|
|
|
|
|
|
|
|||
Cumulative dividends, January 31, 2017
|
|
5,103
|
|
|
|
|
|
For the years ended January 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Weighted average grant date fair value: time-based RSUs
|
|
$
|
15.94
|
|
|
$
|
19.25
|
|
|
$
|
29.69
|
|
Weighted average grant date fair value: performance-based RSUs
|
|
$
|
15.61
|
|
|
$
|
20.09
|
|
|
$
|
32.75
|
|
|
|
Number
of stock units |
|
Weighted
average price |
|||
Outstanding, January 31, 2016
|
|
93,734
|
|
|
$
|
20.82
|
|
Granted
|
|
18,750
|
|
|
19.20
|
|
|
Deferred retainers
|
|
3,125
|
|
|
19.20
|
|
|
Dividends
|
|
2,681
|
|
|
19.68
|
|
|
Converted into common shares
|
|
(19,641
|
)
|
|
18.88
|
|
|
Outstanding, January 31, 2017
|
|
98,649
|
|
|
$
|
20.82
|
|
NOTE 14
|
NET INCOME PER SHARE
|
|
|
For the years ended January 31,
|
|||||||
|
|
2017
|
|
2016
|
|
2015
|
|||
Anti-dilutive options and restricted stock units
|
|
884,099
|
|
|
1,107,733
|
|
|
781,988
|
|
|
|
For the years ended January 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Numerator:
|
|
|
|
|
|
|
||||||
Net income attributable to Raven Industries, Inc.
|
|
$
|
20,191
|
|
|
$
|
4,776
|
|
|
$
|
31,733
|
|
|
|
|
|
|
|
|
||||||
Denominator:
|
|
|
|
|
|
|
||||||
Weighted average common shares outstanding
|
|
36,142,416
|
|
|
37,237,717
|
|
|
36,859,026
|
|
|||
Weighted average stock units outstanding
|
|
100,019
|
|
|
86,745
|
|
|
69,484
|
|
|||
Denominator for basic calculation
|
|
36,242,435
|
|
|
37,324,462
|
|
|
36,928,510
|
|
|||
|
|
|
|
|
|
|
||||||
Weighted average common shares outstanding
|
|
36,142,416
|
|
|
37,237,717
|
|
|
36,859,026
|
|
|||
Weighted average stock units outstanding
|
|
100,019
|
|
|
86,745
|
|
|
69,484
|
|
|||
Dilutive impact of stock options and RSUs
|
|
129,480
|
|
|
75,481
|
|
|
174,784
|
|
|||
Denominator for diluted calculation
|
|
36,371,915
|
|
|
37,399,943
|
|
|
37,103,294
|
|
|||
|
|
|
|
|
|
|
||||||
Net income per share - basic
|
|
$
|
0.56
|
|
|
$
|
0.13
|
|
|
$
|
0.86
|
|
Net income per share - diluted
|
|
$
|
0.56
|
|
|
$
|
0.13
|
|
|
$
|
0.86
|
|
NOTE 15
|
BUSINESS SEGMENTS AND MAJOR CUSTOMER INFORMATION
|
|
|
For the years ended January 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Canada
|
|
$
|
13,969
|
|
|
$
|
11,789
|
|
|
$
|
14,432
|
|
Europe
|
|
13,924
|
|
|
10,526
|
|
|
8,243
|
|
|||
Latin America
|
|
3,402
|
|
|
2,676
|
|
|
9,921
|
|
|||
Other foreign sales
|
|
4,233
|
|
|
2,858
|
|
|
4,239
|
|
|||
Total foreign sales
|
|
35,528
|
|
|
27,849
|
|
|
36,835
|
|
|||
United States
|
|
241,867
|
|
|
230,380
|
|
|
341,318
|
|
|||
|
|
$
|
277,395
|
|
|
$
|
258,229
|
|
|
$
|
378,153
|
|
NOTE 16
|
SUBSEQUENT EVENTS
|
ITEM 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
ITEM 9A.
|
CONTROLS AND PROCEDURES
|
•
|
Controls relating to the risk assessment in response to the risks of material misstatement
|
◦
|
During the fourth quarter of fiscal 2017, we engaged a third-party independent registered public accounting firm to help remediate the identified material weaknesses and complete an assessment of our internal controls framework.
|
◦
|
We are adding or redesigning specific controls and procedures to proactively address opportunities to augment and enhance controls identified through this assessment.
|
◦
|
We are establishing an independent internal audit function and hiring additional accounting and internal audit staff to improve the management of risks to the enterprise.
|
•
|
Controls over accounting for goodwill and long-lived assets, including finite-lived intangible assets
|
◦
|
We are redesigning our specific procedures and controls associated with the identification of the proper unit of account.
|
◦
|
We are developing an enhanced risk assessment evaluation for the reporting unit for which a goodwill impairment analysis is being conducted.
|
◦
|
We are redesigning our controls associated with the development of a more precise revenue forecast for use in interim and annual impairment tests. For Aerostar, this specifically includes more precise contract-based revenue assumptions.
|
◦
|
We are redesigning our controls associated with all significant assumptions, model and data used in management's estimates relevant to assessing the valuation of goodwill and long-lived assets, including finite-lived intangible assets.
|
◦
|
We have engaged third-party valuation experts to evaluate and enhance the processes and procedures we are establishing or enhancing.
|
•
|
Completeness and accuracy of accounting for income taxes
|
◦
|
We are redesigning specific processes and controls to augment the review of significant or unusual transactions by finance leadership to ensure that the relevant tax accounting implications are identified and considered.
|
◦
|
We have engaged third-party tax accounting resources to assist in review and analysis of tax matters associated with significant or unusual transactions.
|
◦
|
Our new Director of Taxation has begun re-evaluating our tax models and designing and implementing multiple reconciliations to ensure the Company’s tax provision is properly reconciled and rolled-forward.
|
•
|
Controls over the existence of inventories, specifically controls to monitor that inventory subject to the cycle count program was counted at the frequency levels and accuracy rates required under the Company’s policy, and the controls to verify existence of inventory held at third-party locations
|
◦
|
We have begun redesigning and enhancing our cycle count procedure to monitor the completeness and accuracy of cycle count results and establish specific accountability for investigation and analysis of variances.
|
◦
|
We have begun redesigning and enhancing controls, including those over the completeness and accuracy of underlying information, to monitor count dates for each item by location. This will be reviewed annually to ensure that each item was counted the appropriate number of times in accordance with the cycle count policy.
|
◦
|
We are redesigning and implementing enhanced controls including those over the completeness and accuracy of underlying information to calculate and monitor the historical 12-month rolling accuracy of cycle counts.
|
◦
|
During the fourth quarter of fiscal 2017, we completed a full physical inventory count for locations subject to the cycle count program and will continue to do so annually until the completeness and accuracy of the cycle count program has been validated. Also during the fourth quarter of fiscal 2017, we completed a full physical inventory count of third-party locations and will conduct a full physical count at such locations each quarter until we have completed the transfer of the vast majority of inventory held at third-party locations to Company-owned facilities.
|
•
|
Controls over the completeness and accuracy of spreadsheets and system-generated reports used in internal control over financial reporting
|
◦
|
We have begun designing new controls for the identification and assessment of the completeness and accuracy of spreadsheets and system-generated reports used within the Company’s internal control over financial reporting.
|
◦
|
We have begun adding or redesigning controls to require both an evaluation and evidence of that evaluation of the completeness and accuracy of all spreadsheets and system-generated reports used in internal control over financial reporting and the preparation of the financial statements and related footnote disclosures.
|
◦
|
We will maintain evidence of a baseline evaluation of completeness and accuracy for every system-generated report determined to be a key report for which it is possible to maintain a baseline test.
|
◦
|
We will periodically re-baseline system-generated reports whether they are changed or not in accordance with our redesigned procedures and controls over financial reporting.
|
◦
|
We will establish a process for evaluating and documenting the completeness and accuracy of all other spreadsheets and system-generated reports that cannot be baselined, including spreadsheets prepared or reviewed by management.
|
ITEM 9B.
|
OTHER INFORMATION
|
ITEM 16.
|
FORM 10-K SUMMARY
|
Exhibit
Number
|
|
Description
|
|
|
|
|
|
2(a)
|
|
|
Agreement and Plan of Merger and Reorganization, dated as of November 3, 2014, by and among Raven Industries, Inc., Infinity Acquisition, Inc., Integra Plastics, Inc. and Nikole Mulder, as the Shareholder Representative (incorporated herein by reference to Exhibit 2.1 of the Company's Form 8-K filed November 7, 2014).
|
|
|
|
|
3(a)
|
|
|
Articles of Incorporation of Raven Industries, Inc. and all amendments thereto (incorporated herein by reference to the corresponding exhibit of the Company's 10-K for the year ended January 31, 1989).
|
|
|
|
|
3(b)
|
|
|
Amended and Restated Bylaws of Raven Industries (incorporated herein by reference to Exhibit B of the Company's definitive Proxy Statement filed April 12, 2012).
|
|
|
|
|
4(a)
|
|
|
Raven Industries, Inc. Amended and Restated 2010 Stock Incentive Plan filed on June 8, 2015 as Exhibit 4.1 of Raven Industries, Inc. Registration Statement on Form S-8, and incorporated herein by reference.
|
|
|
|
|
10.1
|
|
|
Amended and Restated Employment Agreement between Raven Industries, Inc. and Daniel A. Rykhus dated as of March 29, 2017 and filed herewith as Exhibit 10.1. †
|
|
|
|
|
10.2
|
|
|
Amended and Restated Employment Agreement between Raven Industries, Inc. and Steven E. Brazones dated as of March 29, 2017 and filed herewith as Exhibit 10.2. †
|
|
|
|
|
10.3
|
|
|
Form of Schedule A to Employment Agreement, revised effective January 1, 2016, between Raven Industries, Inc. and the following executive officers: Stephanie Herseth Sandlin, Janet L. Matthiesen, Brian E. Meyer, and Anthony D. Schmidt filed herewith as Exhibit 10.3. †
|
10(a)
|
|
|
Amended and Restated Change in Control Agreements between Raven Industries, Inc. and the following senior executive officers: Stephanie Herseth Sandlin, Anthony D. Schmidt, Brian E. Meyer, and Janet L. Matthiesen dated as of March 28, 2016 (incorporated herein by reference to Exhibit 10.1 of the Company's 10-K filed March 29, 2016). †
|
|
|
|
|
10(b)
|
|
|
Amended and Restated Change in Control Agreements between Raven Industries, Inc. and the following senior executives: Lon E. Stroschein and Scott W. Wickersham dated as of March 28, 2016 (incorporated herein by reference to Exhibit 10.2 of the Company's 10-K filed March 29, 2016). †
|
|
|
|
|
10(c)
|
|
|
Employment Agreement between Raven Industries, Inc. and Anthony D. Schmidt dated as of February 1, 2012 (incorporated herein by reference to Exhibit 10.1 of the Company's 8-K filed February 1, 2012). †
|
|
|
|
|
10(d)
|
|
|
Raven Industries, Inc. 2000 Stock Option and Compensation Plan adopted May 24, 2000 (incorporated herein by reference to Exhibit A of the Company's definitive Proxy Statement filed April 19, 2000). †
|
|
|
|
|
10(e)
|
|
|
Raven Industries, Inc. Deferred Compensation Plan for Directors adopted May 23, 2007 (incorporated herein by reference to Exhibit 10.1 of the Company's 8-K filed May 24, 2007). †
|
|
|
|
|
10(f)
|
|
|
Change in Control Agreement between Raven Industries, Inc. and Anthony D. Schmidt dated February 1, 2012 (incorporated herein by reference to Exhibit 10.3 of the Company's 8-K filed February 1, 2012). †
|
|
|
|
|
10(g)
|
|
|
Change in Control Agreement between Raven Industries, Inc. and Janet L. Matthiesen (incorporated herein by reference to Exhibit 10.3 of the Company's 8-K filed April 20, 2012). †
|
|
|
|
|
10(h)
|
|
|
Credit Agreement dated April 15, 2015, by and between Raven Industries, Inc. and JPMorgan Chase Bank, N.A., Toronto Branch, as Canadian Administrative Agent, JPMorgan Chase Bank National Association, as Administrative Agent, and JP Morgan Securities LLC and Wells Fargo Securities, LLC as Joint Bookrunners and Joint Lead Arrangers (incorporated herein by reference to Exhibit 10.1 of the Company's Form 8-K filed April 16, 2015).
|
|
|
|
|
10(i)
|
|
|
Guaranty dated April 15, 2015, made by each of the Guarantors (Raven Industries, Inc., Aerostar International, Inc., Vista Research, Inc., and Integra Plastics, Inc.) in favor of JPMorgan Chase Bank, N.A. as Administrative Agent on behalf of the guaranteed parties (incorporated herein by reference to Exhibit 10.2 of the Company's Form 8-K filed April 16, 2015).
|
|
|
|
|
10(j)
|
|
|
Amended Employment Agreements between Raven Industries, Inc. and the following senior executive officers: Brian E. Meyer, Janet L. Matthiesen, and Stephanie Herseth Sandlin dated August 25, 2015 (incorporated herein by reference to Exhibit 10.1 of the Company's 8-K filed August 31, 2015). †
|
|
|
|
|
10(k)
|
|
|
Form of Non-Qualified Stock Option Agreement (incorporated herein by reference to Exhibit 10(r) of the Company's Form 10-Q filed June 4, 2012). †
|
|
|
|
|
10(l)
|
|
|
Form of Restricted Stock Unit Agreement (incorporated herein by reference to Exhibit 10(s) of the Company's Form 10-Q filed June 4, 2012). †
|
|
|
|
|
21
|
|
|
Subsidiaries of the Registrant.
|
|
|
|
|
23
|
|
|
Consent of Independent Registered Public Accounting Firm.
|
|
|
|
|
31.1
|
|
|
Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
31.2
|
|
|
Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
32.1
|
|
|
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
32.2
|
|
|
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
101.INS
|
|
|
XBRL Instance Document
|
|
|
|
|
101.SCH
|
|
|
XBRL Taxonomy Extension Schema
|
|
|
|
|
101.CAL
|
|
|
XBRL Taxonomy Extension Calculation Linkbase
|
|
|
|
|
101.DEF
|
|
|
XBRL Taxonomy Extension Definition Linkbase
|
|
|
|
|
101.LAB
|
|
|
XBRL Taxonomy Extension Label Linkbase
|
|
|
|
|
101.PRE
|
|
|
XBRL Taxonomy Extension Presentation Linkbase
|
|
|
|
|
†
|
|
|
Management contract or compensatory plan or arrangement.
|
SIGNATURES
|
|||
|
|
|
|
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)
|
|
|
|
|
|
|
|
By: /s/ DANIEL A. RYKHUS
|
|
|
|
Daniel A. Rykhus
|
|
|
|
President and Chief Executive Officer
|
|
|
|
|
|
|
|
Date: March 31, 2017
|
|
|
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.
|
||
|
|
|
/s/ DANIEL A. RYKHUS
|
|
|
Daniel A. Rykhus
|
|
|
President and Chief Executive Officer
|
|
|
(principal executive officer) and Director
|
|
|
|
|
|
|
|
|
/s/ STEVEN E. BRAZONES
|
|
/s/ KEVIN T. KIRBY
|
Steven E. Brazones
|
|
Kevin T. Kirby
|
Vice President and Chief Financial Officer
|
|
Director
|
(principal financial and accounting officer)
|
|
|
|
|
|
|
|
|
/s/ THOMAS S. EVERIST
|
|
/s/ MARC E. LEBARON
|
Thomas S. Everist
|
|
Marc E. LeBaron
|
Chairman of the Board
|
|
Director
|
|
|
|
|
|
|
/s/ JASON M. ANDRINGA
|
|
/s/ HEATHER A. WILSON
|
Jason M. Andringa
|
|
Heather A. Wilson
|
Director
|
|
Director
|
|
|
|
|
|
|
/s/ MARK E. GRIFFIN
|
|
|
Mark E. Griffin
|
|
|
Director
|
|
|
|
|
|
|
|
|
|
|
Date: March 31, 2017
|
Column A
|
Column B
|
Column C
|
Column D
|
Column E
|
|||||||||||
|
|
Additions
|
|
|
|||||||||||
Description
|
Balance at
Beginning
of Year
|
Charged to
Costs and
Expenses
|
Charged to
Other
Accounts
|
Deductions
From
Reserves (1)
|
Balance at
End of Year
|
||||||||||
Deducted in the balance sheet from the asset to which it applies:
|
|
|
|
|
|
||||||||||
Allowance for doubtful accounts:
|
|
|
|
|
|
||||||||||
Year ended January 31, 2017
|
$
|
1,034
|
|
$
|
380
|
|
$
|
—
|
|
$
|
723
|
|
$
|
691
|
|
Year ended January 31, 2016
|
319
|
|
1,066
|
|
—
|
|
351
|
|
1,034
|
|
|||||
Year ended January 31, 2015
|
319
|
|
211
|
|
19
|
|
230
|
|
319
|
|
(1)
|
Represents uncollectable accounts receivable written off during the year, net of recoveries.
|
RAVEN INDUSTRIES, INC.
|
By:
/s/ STEPHANIE HERSETH SANDLIN
|
Stephanie Herseth Sandlin,
General Counsel and Vice President of Corporate Development
|
|
EXECUTIVE:
|
By:
/s/ DANIEL A. RYKHUS
|
Daniel A. Rykhus
|
POLICIES AND PROCEDURES
DATE: 1 DECEMBER 2010 (revised 1 January 2016)
SUBJECT: SENIOR EXECUTIVE OFFICER BENEFITS
|
|
NO. RS-01A
|
1.
|
|
Supplemental health insurance benefits for the officer and his dependents up to 6.5% of the total current base salary.
|
2.
|
|
The Chief Executive Officer will receive a social membership to the Minnehaha Country Club.
|
3.
|
|
Health club membership or equivalent in home exercise equipment.
|
4.
|
|
Inclusion in the Group Life Insurance and A.D. & D. policy at 2.0 times annualized base salary on February 1st each year. The group life insurance policy is updated annually on March 1st of each year, and the benefit will be limited to the maximum benefit offered by the current life insurance carrier.
|
5.
|
|
Individual term policies may be required to reach the coverage levels in Number 5 above.
|
|
|
Those policies are funded by the company for the period of time employed by the company. The officer will have the option to convert or continue at officer’s expense upon termination or retirement.
|
6.
|
|
This section applies only to Senior Executive Officers elected before February 1, 2004. A second-to-die life policy will be provided to the Chief Financial Officer in the amount of $300,000. Premiums on this policy will be paid by the company until the policy is fully funded (the point where dividends of the policy are sufficient to pay the entire premium) provided that the officer is employed until “normal retirement” age or qualifies for “early retirement” in accordance with Raven policies and procedures.
|
|
|
Upon the officer’s retirement at the normal retirement age or if qualifying for early retirement in accordance with Raven Policies and Procedures the second-to-die life policy will be paid up by Raven at the time of the officer’s retirement. The premium benefit for the paid up policy will be grossed up at the end of the calendar year.
|
|
|
If the officer terminates employment before qualifying for either normal or early retirement the officer will have the option to continue the policy by paying the premiums or may exercise one of the conversion features available in the policy.
|
7.
|
|
For Senior Executive Officers elected before February 1, 2004, long-term care insurance will be provided to the officer and officer’s spouse.
|
8.
|
|
Full pay for sick leave up to a point where disability insurance coverage begins. Disability insurance is 60% of base salary non-integrated with Social Security. Provisions of the actual policy will govern the exact amount of payments.
|
9.
|
|
Two additional weeks of paid vacation in addition to the regular established vacation policy.
|
10.
|
|
Physical examinations provided by the company will be given on a biennial basis to age 60 on individuals who are asymptomatic, annually if symptomatic. Above age 60 examinations will be annually.
|
11.
|
|
Officer’s annual base salary will be grossed up at the end of the calendar year to compensate for any additional payroll and income tax burden created by the treatment of the officer’s benefits under numbers 1, 4, 5, 6, 7, and 10, above, as additional income.
|
12.
|
|
Senior Executive Officer Retirement & Benefits
|
|
|
This section applies only to Senior Executive Officers retiring after February 1, 2010. Benefits to officers retiring before that date will be governed by the policy in effect at retirement.
|
|
|
Full retirement benefits will be available to any senior executive officer who retires between the ages of 65 and 70, or who chooses early retirement. Early retirement is defined as the first day of any month after the officer’s years of service, plus attained age equals or exceeds the sum of 80, or any date between then and age 65.
|
|
|
Those benefits are:
|
Title
|
Date
|
Identifying Number
or Brief Description
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date___________________
|
__________________________________________________
|
|
[EMPLOYEE NAME]
|
|
|
Date___________________
|
RAVEN INDUSTRIES, INC.
|
|
|
|
By _______________________________________
|
|
|
|
Its _______________________________________
|
|
|
1.
|
Definitions
.
|
|
RAVEN INDUSTRIES, INC.
|
|
By:
/s/ DANIEL A. RYKHUS
|
|
Daniel A. Rykhus,
President and Chief Executive Officer
|
|
EXECUTIVE:
|
|
|
|
By:
/s/ STEVEN E. BRAZONES
Steven E. Brazones
|
|
|
|
|
|
|
POLICIES AND PROCEDURES
DATE: 25 AUGUST 2015 (Revised 1 January 2016)
SUBJECT: SENIOR MANAGEMENT BENEFITS
|
PAGE 1 OF 1
|
NO. RS-01
|
SCHEDULE A
|
|
|
1.
|
|
Supplemental health insurance benefits for the Senior Managers and dependents up to 4% of the total of the current base salary.
|
2.
|
|
Health club membership or equivalent in home exercise equipment.
|
3.
|
|
Group Life Insurance and A.D. & D. at 2.0 times annualized base salary as of January 1st each year. The Group Life Insurance / AD&D policy is updated annually on February 1st each year, and the benefit will be limited to the maximum benefit offered by the current life insurance carrier.
|
4.
|
|
Full pay for sick leave up to a point where disability insurance coverage begins. Disability insurance is 60% of base salary, non-integrated with Social Security. Provisions of the actual policy will govern the exact amount of payments.
|
5.
|
|
Two additional weeks of paid vacation in addition to the regular established vacation policy.
|
6.
|
|
Physical examination provided by the Company will be given on a biennial basis to age 60 on individuals who are asymptomatic, annually if symptomatic. Above age 60 examinations will be annually.
|
7.
|
|
Senior Manager’s annual base salary will be grossed up at the end of the calendar year to compensate for the additional payroll and income tax burden created by the treatment of benefits under Numbers 1, 3, and 6, above, as additional income.
|
Title
|
Date
|
Identifying Number
or Brief Description
|
|
|
|
|
|
|
|
|
|
|
Date___________________
|
__________________________________________________
|
|
[EMPLOYEE NAME]
|
|
|
|
|
Date___________________
|
RAVEN INDUSTRIES, INC.
|
|
|
|
By _______________________________________
|
|
|
|
Its _______________________________________
|
|
|
|
|
|
|
|
|
POLICIES AND PROCEDURES
DATE: 25 AUGUST 2015 (Revised 1 January 2016)
SUBJECT: SENIOR MANAGEMENT BENEFITS
|
PAGE 1 OF 1
|
NO. RS-01
|
SCHEDULE A
|
|
|
1.
|
|
Supplemental health insurance benefits for the Senior Managers and dependents up to 4% of the total of the current base salary.
|
2.
|
|
Health club membership or equivalent in home exercise equipment.
|
3.
|
|
Group Life Insurance and A.D. & D. at 2.0 times annualized base salary as of January 1st each year. The Group Life Insurance / AD&D policy is updated annually on February 1st each year, and the benefit will be limited to the maximum benefit offered by the current life insurance carrier.
|
4.
|
|
Full pay for sick leave up to a point where disability insurance coverage begins. Disability insurance is 60% of base salary, non-integrated with Social Security. Provisions of the actual policy will govern the exact amount of payments.
|
5.
|
|
Two additional weeks of paid vacation in addition to the regular established vacation policy.
|
6.
|
|
Physical examination provided by the Company will be given on a biennial basis to age 60 on individuals who are asymptomatic, annually if symptomatic. Above age 60 examinations will be annually.
|
7.
|
|
Senior Manager’s annual base salary will be grossed up at the end of the calendar year to compensate for the additional payroll and income tax burden created by the treatment of benefits under Numbers 1, 3, and 6, above, as additional income.
|
RAVEN INDUSTRIES, INC.
|
||
SUBSIDIARIES OF THE REGISTRANT
|
||
|
|
|
NAME OF SUBSIDIARY
|
|
JURISDICTION
|
|
|
|
Aerostar International, Inc.
|
|
South Dakota, USA
|
|
|
|
Aerostar Integrated Systems, LLC
(a)
|
|
Delaware, USA
|
|
|
|
Raven Industries Canada, Inc.
|
|
Nova Scotia, Canada
|
|
|
|
Raven International Holding Company B.V.
|
|
Amsterdam, Netherlands
|
|
|
|
SBG Innovatie BV
|
|
Middenmeer, Netherlands
|
|
|
|
Vista Research, Inc.
|
|
California, USA
|
|
|
|
|
|
|
(a) 75% owned
|
|
|
1.
|
I have reviewed this Annual Report on Form 10-K of Raven Industries, Inc. (the Registrant);
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; and
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
|
4.
|
The Registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b.
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c.
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Evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d.
|
Disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and
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5.
|
The Registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of Registrant's board of directors (or others performing the equivalent function):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and report information; and
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b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal controls over financial reporting.
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Dated: March 31, 2017
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/s/ DANIEL A. RYKHUS
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|
Daniel A. Rykhus
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|
President and Chief Executive Officer
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1.
|
I have reviewed this Annual Report on Form 10-K of Raven Industries, Inc. (the Registrant);
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2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; and
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3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
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4.
|
The Registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and
|
5.
|
The Registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of Registrant's board of directors (or others performing the equivalent function):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and report information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal controls over financial reporting.
|
Dated: March 31, 2017
|
/s/ STEVEN E. BRAZONES
|
|
Steven E. Brazones
|
|
Vice President and Chief Financial Officer
|
•
|
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
•
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Raven Industries, Inc.
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Dated: March 31, 2017
|
/s/ DANIEL A. RYKHUS
|
|
Daniel A. Rykhus
|
|
President and Chief Executive Officer
|
•
|
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
•
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Raven Industries, Inc.
|
Dated: March 31, 2017
|
/s/ STEVEN E. BRAZONES
|
|
Steven E. Brazones
|
|
Vice President and Chief Financial Officer
|
|
|