e10vq
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
     
þ   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 31, 2009
OR
     
o   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                     to
Commission File: 001-07982
RAVEN INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
     
South Dakota
(State of incorporation)
  46-0246171
(IRS Employer Identification No.)
205 East 6th Street, P.O. Box 5107, Sioux Falls, SD 57117-5107
(Address of principal executive offices)
(605) 336-2750
(Registrant’s telephone number including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
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. þ Yes o No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). þ Yes o No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer oAccelerated filer þ  Non-accelerated filer o
(Do not check if a smaller reporting company)
Smaller reporting company o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes þ No
As of August 31, 2009 there were 18,020,915 shares of common stock, $1 par value, of Raven Industries, Inc. outstanding. There were no other classes of stock outstanding.
 
 

 


 

RAVEN INDUSTRIES, INC.
INDEX
             
        PAGE  
PART I — FINANCIAL INFORMATION        
 
Item 1.
  Financial Statements:        
 
      3  
 
      4  
 
      5  
 
      6-9  
  Management’s Discussion and Analysis of Financial Condition and Results of Operations     9-14  
  Quantitative and Qualitative Disclosures about Market Risks     14  
  Internal Controls and Procedures     15  
 
           
PART II — OTHER INFORMATION        
 
           
  Legal Proceedings     16  
  Risk Factors     16  
  Changes in Securities     16  
  Defaults upon Senior Securities     16  
  Submission of Matters to a Vote of Security Holders     16  
  Other Information     16  
  Exhibits Filed     16  
Signatures     17  
 EX-31.1
 EX-31.2
 EX-32.1
 EX-32.2

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PART I — FINANCIAL INFORMATION
RAVEN INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)
                         
    July 31,     January 31,     July 31,  
(in thousands except share data)   2009     2009     2008  
 
ASSETS
                       
Current Assets
                       
Cash and cash equivalents
  $ 41,032     $ 16,267     $ 30,136  
Short-term investments
    2,000             2,100  
Accounts receivable, net of allowances of $350, $613, and $375, respectively
    29,155       40,278       34,936  
Inventories:
                       
Materials
    21,352       26,657       33,115  
In process
    3,738       3,258       3,996  
Finished goods
    4,359       6,062       5,441  
 
                 
Total inventories
    29,449       35,977       42,552  
Deferred income taxes
    2,508       2,542       2,347  
Prepaid expenses and other current assets
    3,123       3,009       3,323  
 
                 
Total current assets
    107,267       98,073       115,394  
 
                 
 
                       
Property, plant and equipment
    88,370       86,324       83,194  
Accumulated depreciation
    (53,257 )     (50,444 )     (47,836 )
 
                 
Property, plant and equipment, net
    35,113       35,880       35,358  
Goodwill
    7,716       7,450       7,202  
Amortizable intangible assets, net
    1,376       1,471       1,580  
Other assets, net
    1,534       1,541       1,844  
 
                 
 
                       
TOTAL ASSETS
  $ 153,006     $ 144,415     $ 161,378  
 
                 
 
                       
LIABILITIES AND SHAREHOLDERS’ EQUITY
                       
Current Liabilities
                       
Accounts payable
  $ 8,485     $ 9,433     $ 12,915  
Accrued liabilities
    11,270       13,281       12,919  
Income taxes payable
                411  
Customer advances
    522       608       452  
 
                 
Total current liabilities
    20,277       23,322       26,697  
 
                       
Other liabilities
    7,898       7,537       7,916  
 
                 
Total liabilities
    28,175       30,859       34,613  
 
                 
 
                       
Commitments and contingencies
                       
 
                       
Shareholders’ equity:
                       
Common stock, $1 par value, authorized shares 100,000,000; issued 32,469,598; 32,460,934; 32,436,527, respectively
    32,470       32,461       32,437  
Paid in capital
    5,035       4,531       4,030  
Retained earnings
    141,646       131,080       145,221  
Accumulated other comprehensive income (loss)
    (958 )     (1,154 )     (1,561 )
 
                 
 
    178,193       166,918       180,127  
Less treasury stock, at cost, 14,448,683 shares
    53,362       53,362       53,362  
 
                 
Total shareholders’ equity
    124,831       113,556       126,765  
 
                 
 
                       
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
  $ 153,006     $ 144,415     $ 161,378  
 
                 
The accompanying notes are an integral part of the unaudited consolidated financial information.

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RAVEN INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF INCOME

(unaudited)
                                 
    Three Months Ended     Six Months Ended  
    July 31,     July 31,     July 31,     July 31,  
(in thousands except per share data)   2009     2008     2009     2008  
 
Net sales
  $ 56,586     $ 69,278     $ 121,808     $ 144,444  
Cost of goods sold
    42,765       53,492       89,017       106,643  
 
                       
 
                               
Gross profit
    13,821       15,786       32,791       37,801  
 
                               
Selling, general and administrative expenses
    4,515       5,474       9,372       10,848  
 
                       
 
                               
Operating income
    9,306       10,312       23,419       26,953  
 
                               
Interest income and other, net
    (105 )     (176 )     (106 )     (294 )
 
                       
Income before income taxes
    9,411       10,488       23,525       27,247  
 
                               
Income taxes
    3,207       3,673       8,090       9,550  
 
                       
 
                               
Net income
  $ 6,204     $ 6,815     $ 15,435     $ 17,697  
 
                       
 
                               
Net income per common share:
                               
Basic
  $ 0.34     $ 0.38     $ 0.86     $ 0.98  
Diluted
  $ 0.34     $ 0.38     $ 0.86     $ 0.98  
 
                               
Cash dividends paid per common share
  $ 0.14     $ 0.13     $ 0.27     $ 0.26  
The accompanying notes are an integral part of the unaudited consolidated financial information.

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RAVEN INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)
                 
    Three Months Ended  
    July 31,     July 31,  
(in thousands)   2009     2008  
 
OPERATING ACTIVITIES:
               
Net income
  $ 15,435     $ 17,697  
Adjustments to reconcile net income to net cash provided by operating activities:
               
Depreciation and amortization
    3,530       3,748  
Deferred income taxes
    25       437  
Share-based compensation expense
    544       544  
Change in operating assets and liabilities:
               
Accounts receivable
    11,407       910  
Inventories
    6,571       (6,030 )
Prepaid expenses and other current assets
    (724 )     (758 )
Operating liabilities
    (2,302 )     6,220  
Other operating activities, net
    (165 )     123  
 
           
Net cash provided by operating activities
    34,321       22,891  
 
           
 
               
INVESTING ACTIVITIES:
               
Capital expenditures
    (2,304 )     (3,489 )
Purchase of short-term investments
    (2,000 )     (2,100 )
Sale of short-term investments
          1,500  
Other investing activities, net
    (397 )     (135 )
 
           
Net cash used in investing activities
    (4,701 )     (4,224 )
 
           
 
               
FINANCING ACTIVITIES:
               
Dividends paid
    (4,864 )     (4,692 )
Purchases of treasury stock
          (5,180 )
Other financing activities, net
    (37 )     76  
 
           
Net cash used in financing activities
    (4,901 )     (9,796 )
 
           
 
               
Effect of exchange rate changes on cash
    46       (7 )
 
           
 
               
Net increase in cash and cash equivalents
    24,765       8,864  
 
               
Cash and cash equivalents:
               
Beginning of period
    16,267       21,272  
 
           
End of period
  $ 41,032     $ 30,136  
 
           
The accompanying notes are an integral part of the unaudited consolidated financial information.

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RAVEN INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)
(1) Basis of Presentation and Description of Business
The accompanying unaudited consolidated financial information has been prepared by Raven Industries, Inc. (the “company”) in accordance with accounting principles generally accepted in the United States of America for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission (SEC). Accordingly, it does not include all of the information and notes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair statement of this financial information have been included. Financial results for the interim three and six-month periods ended July 31, 2009 are not necessarily indicative of the results that may be expected for the year ending January 31, 2010. The January 31, 2009 consolidated balance sheet was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. This financial information should be read in conjunction with the consolidated financial statements and notes included in the company’s Annual Report on Form 10-K for the year ended January 31, 2009.
(2) Operating Expenses
The primary types of operating expenses are classified in the income statement as follows:
     
Cost of Goods Sold   Selling, General, and Administrative Expenses
Direct material costs
  Personnel costs
Material acquisition and handling costs
  Professional service fees
Direct labor
  Advertising
Factory overhead including depreciation
  Promotions
Inventory obsolescence
  Information technology equipment depreciation
Product warranties
  Office supplies
Research and development
   
The company’s gross margins may not be comparable to industry peers due to variability in the classification of these expenses across the industries in which the company operates.
The company’s research and development expense is comprised principally of labor and material costs related to product development efforts in the Applied Technology segment. During the three and six month periods ended July 31, 2009, $1.4 million and $2.9 million, respectively, were expended on research and development. During the three and six month periods ended July 31, 2008, $1.5 million and $2.8 million, respectively, were expended on research and development.
(3) Net Income Per Share
Basic net income per share is computed by dividing net income by the weighted-average common shares and stock units outstanding. Diluted net income per share is computed by dividing net income by the weighted-average common and common equivalent shares outstanding (which includes the shares issuable upon exercise of employee stock options net of shares assumed purchased with the option proceeds) and stock units outstanding. Certain outstanding options were excluded from the diluted net income per-share calculations because their effect would have been anti-dilutive, as their exercise prices were greater than the average market price of the company’s common stock during those periods. For the three and six month periods ended July 31, 2009, 318,600 and 318,663 shares were excluded, respectively. For the three and six months periods ended July 31, 2008, 74,200 and 144,883 shares were excluded, respectively. Details of the earnings per share computation are presented below:
                                 
    Three Months Ended     Six Months Ended  
    July 31,     July 31,     July 31,     July 31,  
    2009     2008     2009     2008  
 
Numerator:
                               
Net income (in thousands)
  $ 6,204     $ 6,815     $ 15,435     $ 17,697  
 
                       
 
                               
Denominator:
                               
Weighted average common shares outstanding
    18,020,535       18,018,432       18,016,393       18,055,509  
Weighted average stock units outstanding
    20,954       14,306       18,047       12,100  
 
                       
Denominator for basic calculation
    18,041,489       18,032,738       18,034,440       18,067,609  
 
                       
 
                               
Weighted average common shares outstanding
    18,020,535       18,018,432       18,016,393       18,055,509  
Weighted average stock units outstanding
    20,954       14,306       18,047       12,100  
Dilutive impact of stock options
    2,215       57,927       3,305       51,629  
 
                       
Denominator for diluted calculation
    18,043,704       18,090,665       18,037,745       18,119,238  
 
                       
 
                               
Net income per share — basic
  $ 0.34     $ 0.38     $ 0.86     $ 0.98  
Net income per share — diluted
  $ 0.34     $ 0.38     $ 0.86     $ 0.98  

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(4) Segment Reporting
The company’s reportable segments are defined by their common technologies, production processes and inventories. These segments are consistent with the company’s management reporting structure and reflect the organization of the company into the three Raven divisions and the Aerostar subsidiary. Raven Canada and Raven GmbH are included in the Applied Technology Division. The company measures the performance of its segments based on their operating income exclusive of administrative and general expenses. Other income, interest expense and income taxes are not allocated to individual operating segments. Intersegment transactions are eliminated in a separate caption entitled “intersegment eliminations” to arrive at consolidated sales and operating income. Second quarter and first half intersegment sales were primarily from Electronic Systems to Applied Technology. The results for these segments follow:
                                 
    Three Months Ended     Six Months Ended  
    July 31,     July 31,     July 31,     July 31,  
(in thousands)   2009     2008     2009     2008  
 
Net sales
                               
Applied Technology
  $ 18,572     $ 22,716     $ 48,006     $ 57,562  
Engineered Films
    15,017       26,504       28,375       48,509  
Electronic Systems
    17,913       14,739       34,066       28,018  
Aerostar
    5,838       5,547       12,403       11,566  
Intersegment eliminations
    (754 )     (228 )     (1,042 )     (1,211 )
 
                       
Consolidated net sales
  $ 56,586     $ 69,278     $ 121,808     $ 144,444  
 
                       
 
                               
Operating income (loss)
                               
Applied Technology
  $ 5,117     $ 7,060     $ 14,727     $ 20,606  
Engineered Films
    2,081       3,515       4,796       7,379  
Electronic Systems
    2,962       1,239       5,457       1,879  
Aerostar
    1,136       718       2,294       1,524  
Intersegment eliminations
    (26 )     26       2       (3 )
 
                       
Total reportable segment income
    11,270       12,558       27,276       31,385  
Administrative and general expenses
    (1,964 )     (2,246 )     (3,857 )     (4,432 )
 
                       
Consolidated operating income
  $ 9,306     $ 10,312     $ 23,419     $ 26,953  
 
                       
(5) Financing Arrangements
Raven has an uncollateralized credit agreement providing a line of credit of $8.0 million with a maturity date of September 29, 2009, bearing interest at 1.00% under the prime rate. Letters of credit totaling $1.3 million have been issued under the line, primarily to support self-insured workers compensation bonding requirements. No borrowings were outstanding as of July 31, 2009, January 31, 2009 or July 31, 2008, and $6.7 million was available at July 31, 2009.
(6) Dividends
The company announced on August 25, 2009, that its board of directors approved a quarterly cash dividend of 14 cents per share, payable October 15, 2009 to shareholders of record on September 25, 2009.
(7) Comprehensive Income
Comprehensive income consists of two components, net income and other comprehensive income. Other comprehensive income refers to revenue, expenses, gains, and losses that under U.S. generally accepted accounting principles are recorded as an element of shareholders’ equity but are excluded from net income. The components of total comprehensive income and accumulated other comprehensive income (loss) follow:

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Comprehensive income
                                 
    Three Months Ended     Six Months Ended  
    July 31,     July 31,     July 31,     July 31,  
(in thousands)   2009     2008     2009     2008  
 
Net income
  $ 6,204     $ 6,815     $ 15,435     $ 17,697  
Other comprehensive income:
                               
Foreign currency translation
    134       (17 )     154       (29 )
Amortization of postretirement benefit plan actuarial losses, net of income tax of $11, $20, $22 and $39, respectively
    21       36       42       74  
 
                       
Total other comprehensive income
    155       19       196       45  
 
                       
Total comprehensive income
  $ 6,359     $ 6,834     $ 15,631     $ 17,742  
 
                       
Accumulated other comprehensive income (loss)
                         
    July 31,     January 31,     July 31,  
(in thousands)   2009     2009     2008  
 
Foreign currency translation
  $ 31     $ (124 )   $ 94  
Post-retirement benefits
    (989 )     (1,030 )     (1,655 )
 
                 
Total accumulated other comprehensive loss
  $ (958 )   $ (1,154 )   $ (1,561 )
 
                 
(8) Employee Retirement Benefits
The components of net periodic benefit cost for postretirement benefits are as follows:
                                 
    Three Months Ended     Six Months Ended  
    July 31,     July 31,     July 31,     July 31,  
(in thousands)   2009     2008     2009     2008  
 
Service cost
  $ 13     $ 17     $ 27     $ 34  
Interest cost
    83       90       166       180  
Amortization of actuarial losses
    32       56       64       113  
 
                       
Net periodic benefit cost
  $ 128     $ 163     $ 257     $ 327  
 
                       
(9) Product Warranty Costs
Accruals necessary for product warranties are estimated based upon historical warranty costs and average time elapsed between purchases and returns for each division. Any warranty issues that are unusual in nature are accrued individually. Changes in the carrying amount of accrued product warranty costs follow:
                                 
    Three Months Ended     Six Months Ended  
    July 31,     July 31,     July 31,     July 31,  
(in thousands)   2009     2008     2009     2008  
 
Balance, beginning of period
  $ 1,099     $ 793     $ 1,004     $ 684  
Accrual for warranties
    755       852       1,240       1,311  
Settlements made (in cash or in kind)
    (748 )     (627 )     (1,138 )     (977 )
 
                       
Balance, end of period
  $ 1,106     $ 1,018     $ 1,106     $ 1,018  
 
                       
(10) Recent Accounting Pronouncements
At the beginning of fiscal 2010 the company adopted SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities—an amendment of FASB Statement No. 133. SFAS No. 161 requires enhanced disclosures about (a) how and why derivative instruments are used, (b) how derivative instruments and related hedged items are accounted for and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance and cash flows. The adoption of SFAS No. 161 had no impact on the company’s consolidated results of operations, financial condition or cash flows.
At the beginning of fiscal 2010 the company adopted FSP No. FAS 142-3, Determination of the Useful Life of Intangible Assets, which amends the list of factors an entity should consider in developing renewal or extension assumptions used in determining the useful life of recognized intangible assets under SFAS No. 142, Goodwill and Other Intangible Assets. The new guidance applies to (1) intangible assets that are acquired individually or with a group of other assets, and (2) intangible assets acquired in both business combinations and asset acquisitions. Under FSP No. FAS 142-3, entities estimating the useful life of a recognized intangible asset must consider their historical experience in renewing or extending similar arrangements or, in the absence of historical experience, must consider assumptions that market participants would use about renewal or extension. As this guidance applies only to assets acquired in the future, the company is not able to predict the impact, if any, on the company’s consolidated results of operations, financial condition or cash flows.

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As of July 31, 2009 the company adopted SFAS No. 165, Subsequent Events, which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. In particular, this Statement sets forth: (1) the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements; (2) the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements and (3) the disclosures that an entity should make about events or transactions that occurred after the balance sheet date. The adoption of SFAS No. 165 did not have a material impact on the company’s consolidated results of operations, financial condition or cash flows. In accordance with SFAS No. 165, the company has evaluated subsequent events through the date and time the financial statements were issued on September 2, 2009.
In June 2009, the FASB issued SFAS No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles, a replacement of FASB Statement No. 162. SFAS No. 168 establishes a two-level GAAP hierarchy for nongovernmental entities: authoritative guidance and non-authoritative guidance. The FASB will no longer issue new standards in the form of Statements, FASB Staff Positions, and EITF Abstracts; instead, the Board will issue new guidance as Accounting Standards Updates, which will include revisions to the codification, as well as background information and the Board’s basis for conclusions for new guidance. SFAS No. 168 is effective for interim and annual reporting periods ending after September 15, 2009. The adoption of SFAS No. 168 will not have an impact on the company’s consolidated results of operations, financial condition or cash flows.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This commentary should be read in conjunction with the company’s consolidated financial statements for the three and six months ended July 31, 2009 and July 31, 2008, as well as the company’s consolidated financial statements and related notes thereto and management’s discussion and analysis of financial condition and results of operations in the company’s Form 10-K for the year ended January 31, 2009.
EXECUTIVE SUMMARY
Raven Industries, Inc. is an industrial manufacturer providing a variety of products to customers within the industrial, agricultural, construction and military/aerospace markets, primarily in North America. The company operates in four business segments: Applied Technology (formerly Flow Controls), Engineered Films, Electronic Systems and Aerostar.
Seasonality
The Applied Technology segment is predominately focused on the agricultural market and quarterly financial results have typically been impacted by the inherent seasonality of this market. Historically, Applied Technology’s first quarter results are the strongest and the second quarter the weakest.
Snapshot
Consolidated financial highlights for the second quarter and first six months of fiscal 2010 include the following:
                                                 
    Three Months Ended   Six Months Ended
    July 31,   July 31,   %   July 31,   July 31,   %
(dollars in thousands except per share data)   2009   2008   Change   2009   2008   Change
     
 
                                               
Net sales
  $ 56,586     $ 69,278       (18 )%   $ 121,808     $ 144,444       (16 )%
Gross profit
    13,821       15,786       (12 )%     32,791       37,801       (13 )%
Gross margins
    24.4 %     22.8 %             26.9 %     26.2 %        
Operating income
    9,306       10,312       (10 )%     23,419       26,953       (13 )%
Net income
    6,204       6,815       (9 )%     15,435       17,697       (13 )%
Diluted earnings per share
    0.34       0.38       (11 )%     0.86       0.98       (12 )%
 
                                               
Operating cash flow
                            34,321       22,891       50 %
Cash dividends
                            4,864       4,692       4 %
Common stock repurchases
                                  5,180          

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The quarter-over-quarter and year-over-year declines in financial results were driven by softening global agricultural fundamentals and recessionary global economic conditions. The drop in net sales for the second quarter and first half of fiscal 2010 is the result of year-over-year sales declines in Applied Technology and Engineered Films partially offset by sales growth in Electronic Systems and Aerostar. In addition, the company reported lower quarter-over-quarter and year-over-year operating income, net income, and diluted earnings per share. The drop in second quarter and first half operating income is attributable to falling profits in Applied Technology and Engineered Films, partially offset by profit growth in Electronic Systems and Aerostar.
Applied Technology net sales of $18.6 million in the second quarter of fiscal 2010 were down $4.1 million (18%) and operating income of $5.1 million fell $1.9 million (28%) compared to the second quarter of fiscal 2009. For the first half ended July 31, 2009, Applied Technology net sales of $48.0 million dropped $9.6 million (17%) and operating income of $14.7 million decreased $5.9 million (29%) as compared to the first half ended July 31, 2008. Applied Technology’s results were negatively impacted by a less robust agricultural market as farm incomes have declined from prior year record levels due to falling commodity prices and uncertainty stemming from turbulent financial markets. Furthermore, quarter-over-quarter comparisons were unfavorable as the prior year’s second quarter included carryover demand as orders in the first quarter of fiscal 2009 exceeded production capacity.
Engineered Films net sales of $15.0 million in the second quarter of fiscal 2010 fell $11.5 million (43%) and operating income of $2.1 million declined $1.4 million (41%) as compared to the second quarter of fiscal 2009. In the first half of fiscal 2010, Engineered Films net sales of $28.4 million dropped $20.1 million (42%) and operating income of $4.8 million decreased $2.6 million (35%) as compared to the first half of fiscal 2009. Engineered Films second quarter and first half results were negatively impacted by the continuation of a weak construction market, resulting in reduced demand for construction films and depressed selling prices. Additionally, demand for pit liners declined, reflecting less oil and gas drilling activity caused by falling oil prices. Sequentially, gross margins fell from 25.8% in the first quarter of fiscal 2010 to 18.2% in the current quarter, reflecting approximately $1.3 million of first quarter profit from one-time opportune purchases of prime grade plastic resin.
Electronic Systems net sales of $17.9 million in the second quarter of fiscal 2010 grew $3.2 million (22%) and operating income of $3.0 million rose $1.7 million (139%) as compared to the second quarter of fiscal 2009. Electronic Systems net sales of $34.1 million in the first half of fiscal 2010 improved $6.0 million (22%) and operating income of $5.5 million in the first half of fiscal 2010 increased $3.6 million (190%) as compared to the first half of fiscal 2009. Electronic Systems second quarter and first half results were positively impacted by stronger shipments of printed circuit boards for the aviation industry and secure communication devices.
Aerostar’s fiscal 2010 second quarter sales of $5.8 million grew $291,000 (5%) and operating income of $1.1 million expanded $418,000 (58%) as compared to the second quarter of fiscal 2009. Aerostar’s fiscal 2010 first half sales of $12.4 million rose $837,000 (7%) and operating income of $2.3 million improved $770,000 (51%) as compared to the first half of fiscal 2009. Aerostar’s second quarter and first half results were positively impacted by shipments under the MC-6 Army parachute contract which was partially offset by a decline in protective wear shipments.
RESULTS OF OPERATIONS — SEGMENT ANALYSIS
Applied Technology
Applied Technology provides electronic and Global Positioning System (GPS) products designed to reduce operating costs and improve yields for the agriculture market.
                                                                 
    Three Months Ended   Six Months Ended
    July 31,   July 31,   $   %   July 31,   July 31,   $   %
(dollars in thousands)   2009   2008   Change   Change   2009   2008   Change   Change
     
Net sales
  $ 18,572     $ 22,716     $ (4,144 )     (18 )%   $ 48,006     $ 57,562     $ (9,556 )     (17 )%
Gross profit
    6,544       8,884       (2,340 )     (26 )%     17,888       24,063       (6,175 )     (26 )%
Gross margins
    35.2 %     39.1 %                     37.3 %     41.8 %                
Operating income
    5,117       7,060       (1,943 )     (28 )%     14,727       20,606       (5,879 )     (29 )%
Several factors contributed to the quarter-over-quarter and year-over-year declines in net sales and operating income:
    Net farm income has declined from 2008 levels due to a decline in crop prices partially offset by a reduction in farm production costs. Farm income remains high by historical standards; however, grower and custom spray applicator purchasing decisions were deferred as a result of uncertainty regarding global economic conditions causing a decline in sales across substantially all of the segment’s product categories.
 
    The decline in sales for the three and six month periods was comprised of a drop in volume offset by a modest increase in selling prices.

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    First half international sales of $9.9 million fell $1.7 million (15%) year-over-year. Net sales outside the U.S. comprised approximately 21% of segment sales in fiscal 2010 up slightly from 20% in fiscal 2009. Sharp declines experienced in some geographic markets were partially offset by expansion into regions not previously served.
 
    New product sales declined year-over-year because last year’s first six months included a high level of Cruizer™ shipments. This simple and affordable guidance system, which was introduced at the beginning of last year, targeted new entrants to the precision agricultural market and was well received in the marketplace.
 
    First half fiscal 2010 gross margins of 37.3% contracted from 41.8% for the first half of fiscal 2009 as result of negative operating leverage stemming from decreased sales volume that was partially offset by spending cuts and modest selling price increases.
 
    As a percentage of sales, first half selling expense increased to 6.9% versus 5.9% in the prior six-month period due to higher expense on lower sales volume. Selling expense of $3.3 million decreased 3% year-over-year, however, lagged the 17% drop in sales.
Engineered Films
Engineered Films produces rugged reinforced plastic sheeting for industrial, construction, geomembrane and agricultural applications.
                                                                 
    Three Months Ended   Six Months Ended
    July 31,   July 31,   $   %   July 31,   July 31,   $   %
(dollars in thousands)   2009   2008   Change   Change   2009   2008   Change   Change
     
Net sales
  $ 15,017     $ 26,504     $ (11,487 )     (43 )%   $ 28,375     $ 48,509     $ (20,134 )     (42 )%
Gross profit
    2,738       4,458       (1,720 )     (39 )%     6,186       9,356       (3,170 )     (34 )%
Gross margins
    18.2 %     16.8 %                     21.8 %     19.3 %                
Operating income
    2,081       3,515       (1,434 )     (41 )%     4,796       7,379       (2,583 )     (35 )%
The following factors contributed to the quarter-over-quarter and year-over-year change:
    This segment has been negatively impacted by weak global economic activity that began in the second half of fiscal 2009 and has continued through the first half of fiscal 2010.
 
    Approximately 25% of the year-over-year decline in sales is attributable to a reduction in selling prices. Selling prices have been driven downward by the market in response to lower resin costs and competitors slashing prices in order to reduce inventories and fill excess capacity.
 
    Roughly 75% of the year-over-year decline in sales is due to a decline in sales volume which was down approximately 32%. Construction orders fell as the market participants adapted to a weakening economic outlook and the scarcity of credit. Also, deliveries of pit liners to the energy exploration market declined from prior year levels. Drilling activity slowed due to lower oil prices and reductions in forecasted demand.
 
    The expansion of gross margins in the current quarter and year-over-year reflect reduced spending levels and a reduction in plastic resin costs that outpaced the decline in selling prices.
 
    First half selling expense as a percentage of sales increased to 4.9% versus 3.9% in the prior year. Selling expense of $1.4 million decreased 26% year-over-year through reductions in personnel and promotional expenses, however, sales dropped 42%.
Electronic Systems
Electronic Systems is a total-solutions provider of electronics manufacturing services, primarily to North American original equipment manufacturers.
                                                                 
    Three Months Ended   Six Months Ended
    July 31,   July 31,   $   %   July 31,   July 31,   $   %
(dollars in thousands)   2009   2008   Change   Change   2009   2008   Change   Change
     
Net sales
  $ 17,913     $ 14,739     $ 3,174       22 %   $ 34,066     $ 28,018     $ 6,048       22 %
Gross profit
    3,239       1,475       1,764       120 %     6,037       2,425       3,612       149 %
Gross margins
    18.1 %     10.0 %                     17.7 %     8.7 %                
Operating income
    2,962       1,239       1,723       139 %     5,457       1,879       3,578       190 %
The relative quarter-over-quarter and year-over-year change is primarily the result of the following:
    The increase in net sales is attributable to increased shipment volume of aviation electronics and secure communication equipment in response to increased customer demand.
 
    Shipments of hand-held bed controls have begun to stabilize from the depressed levels of one year ago.

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    Gross margins expanded from 8.7% in the first half of fiscal 2009 to 17.7% for the first half of fiscal 2010. The improvement was attributable to more favorable product mix, cost controls such as staff reduction and facility consolidation, and positive operating leverage generated through increased sales.
 
    First half selling expense as a percentage of sales decreased to 1.7% versus 1.9% in the prior year. Selling expense of $580,000 increased slightly from one year ago due mainly to higher personnel costs, however, lagged the 22% growth in net sales.
Aerostar
Aerostar manufactures military parachutes, protective wear, custom shaped inflatable products, and high-altitude aerostats for government and commercial research.
                                                                 
    Three Months Ended   Six Months Ended
    July 31,   July 31,   $   %   July 31,   July 31,   $   %
(dollars in thousands)   2009   2008   Change   Change   2009   2008   Change   Change
     
Net sales
  $ 5,838     $ 5,547     $ 291       5 %   $ 12,403     $ 11,566     $ 837       7 %
Gross profit
    1,326       943       383       41 %     2,678       1,960       718       37 %
Gross margins
    22.7 %     17.0 %                     21.6 %     16.9 %                
Operating income
    1,136       718       418       58 %     2,294       1,524       770       51 %
The quarter-over-quarter and year-over-year change is primarily due to the following:
    Increased sales volume of MC-6 Army parachutes was partially offset by reduced protective wear shipments. Protective wear sales have declined from last year at this time due to the completion of a relatively large contract in January 2009.
 
    Gross margins improved in the second quarter and first half of fiscal 2010 reflecting parachute manufacturing efficiencies.
 
    For the first six months, selling expense as a percentage of sales decreased to 3.1% from 3.8% due to relatively flat selling expense and increased sales.
Corporate Expenses (administrative expenses, interest income and other, net and income taxes)
                                 
    Three Months Ended Six Months Ended
    July 31,   July 31,   July 31,   July 31,
(dollars in thousands)   2009   2008   2009   2008
 
Administrative expenses
  $ 1,964     $ 2,246     $ 3,857     $ 4,432  
Administrative expenses as a % of sales
    3.5 %     3.2 %     3.2 %     3.1 %
Interest income and other, net
  $ 105     $ 176     $ 106     $ 294  
Effective tax rate
    34.1 %     35.0 %     34.4 %     35.0 %
Administrative expenses decreased 13% for the three and six month periods ended July 31, 2009 due primarily to lower compensation expense.
“Interest income and other, net” consists mainly of interest income, bank fees and foreign currency transaction gain or loss. Interest income declined year-over-year due to lower interest rates.
The decrease in the effective tax rate is attributable to reinstatement of the U.S. research and development tax credit in October 2008.
OUTLOOK
Financial results for the first half of fiscal 2010 have been impacted by the recessionary global economic environment. The weak business activity experienced in the fourth quarter of fiscal 2009 has continued throughout the first half of fiscal 2010. It is likely that current economic conditions will persist for the remainder of fiscal 2010. As with the first half of the year, third quarter results are expected to be down from one year ago and on a sequential quarter basis, be similar or slightly lower when comparing year-over-year on a percentage basis. Management expects full-year sales and earnings to fall short of last year’s record levels.
Management reacted promptly and decisively in the fourth quarter of fiscal 2009 to control costs in response to deteriorating economic conditions. In addition, the company’s strong product offerings and commitment to quality and service have resulted in preservation of market share and mitigated the impact of the harsh economic conditions.
Applied Technology
Third quarter sales are expected to miss last year’s record results. Management continues to see increased acceptance of precision agricultural equipment as an essential tool for maximizing yields in an environment of volatile input costs. However, the short-term

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outlook is less clear. Grower and custom spray applicator purchasing decisions are impacted by uncertainty regarding global economic conditions. This is expected to continue to negatively impact sales through the third quarter. Fourth quarter revenues could be greater than the previous year because last year’s fourth quarter was impacted by the recession. This segment entered into an agreement to distribute select products through John Deere dealers starting in the third quarter. The benefit from this agreement is expected to be material to fiscal 2011 results but its impact on the current year cannot be determined.
Engineered Films
The growth prospects for Engineered Films are expected to be driven by increased penetration of existing markets and the introduction of innovative products. Ultimately, Engineered Films is dependent on the reversal of the severe economic contraction, particularly in the oil and gas drilling and construction markets, to achieve growth.
In the near-term, management expects a difficult third quarter as current economic conditions create unfavorable year-over-year comparisons. Sequentially, gross margins are expected to decline in the third quarter due to higher resin costs. The construction market continues to be hampered by bleak industry conditions and the scarcity of credit. In addition, deliveries of pit liners to the energy exploration market are expected to decline from prior year levels. Drilling activity has slowed due to lower oil prices and reductions in forecasted demand. Recent increases in oil prices are encouraging but it is unlikely that drilling activity will return to prior year levels. Because gross profit rates have improved, management does not expect the previous year’s fourth quarter loss to be repeated.
Electronic Systems
Electronic Systems third quarter sales are expected to decline from last year’s third quarter, however, profits are forecasted to increase year-over-year as cost cutting and plant consolidation measures are expected to continue to result in efficiency gains and improved margins. Sequentially, margins are expected to be lower due to product mix, although will remain strong as compared year-over-year. With avionics sales accounting for more than 50 percent of this segment’s sales, an anticipated inventory reduction by the segment’s largest customer could further reduce sales in the fourth quarter.
Aerostar
Although Aerostar’s long-term potential will be driven by success in the high-altitude research balloon and tethered aerostats markets, third quarter sales and profits are expected to be up as compared with one year earlier due to higher MC-6 Army parachute deliveries. Sales in the previous year’s fourth quarter included $3 million of parachute sales that were delayed from the third quarter. As a result, fourth quarter year-over-year comparisons are expected to be unfavorable.
LIQUIDITY AND CAPITAL RESOURCES
The company’s liquidity and capital resources are strong despite the global economic recession. Management focuses on the current cash balance and operating cash flows in considering liquidity as operating cash flows have historically been the company’s primary source of liquidity. Management expects that current cash combined with the generation of positive operating cash flows will be sufficient to fund the company’s operating, investing, and financing activities.
The company’s cash needs are seasonal, with working capital demands strongest in the first quarter. Consequently, the discussion of trends in operating cash flows focuses on the primary drivers of year-over-year variability in working capital.
Cash, cash equivalents, and short-term investments totaled $43.0 million at July 31, 2009, a $26.8 million increase compared to cash, cash equivalents, and short-term investments at January 31, 2009 of $16.3 million. The comparable balances one year earlier totaled $32.2 million. In November 2008, the company paid a special cash dividend of $22.5 million.
Operating Activities
Cash provided by operating activities was $34.3 million in the first half of fiscal 2010 compared to $22.9 million in the first half of fiscal 2009. The company’s operating cash flows result primarily from cash received from customers offset by cash payments for inventories, services, and employee compensation. The increase in first half operating cash flows is the result of variability in working capital. For the six-month period, inventory and accounts receivable have combined to generate $18.0 million in cash as compared with cash consumed of $5.1 million during last year’s first six months. Inventory balances have declined significantly due to improved management, lower sales and a drop in plastic resin costs. Additionally, accounts receivable have declined which reflects the decrease in business activity. This was partially offset by year-over-year reductions in accounts payable.

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Investing Activities
Cash used in investing activities totaled $4.7 million in the first half of fiscal 2010, compared to $4.2 million in the first half of fiscal 2009. The variance reflects a $1.4 million increase in net purchases of short-term investments which was partially offset by a $1.2 million reduction in capital expenditures. Capital expenditures are expected to be in the $3 million range for the current fiscal year.
Financing Activities
Financing activities consumed cash of $4.9 million for the six months ended July 31, 2009 compared with $9.8 million used in last year’s comparable period. Cash used in financing activities is primarily for dividend payments and repurchases of common stock. The quarterly per-share cash dividend was increased by 8 percent, to 14 cents per share in the second quarter. Dividends of $4.9 million or 27 cents per share were paid in the current year compared to $4.7 million in the first half of fiscal 2009. Treasury stock purchases totaled $5.2 million for the first six months of last year, just prior to the suspension of the share repurchase program in July 2008.
OFF-BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS
There have been no material changes since the fiscal year ended January 31, 2009.
NEW ACCOUNTING STANDARDS
At the beginning of fiscal 2010 the company adopted SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities—an amendment of FASB Statement No. 133. SFAS No. 161 requires enhanced disclosures about (a) how and why derivative instruments are used, (b) how derivative instruments and related hedged items are accounted for and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance and cash flows. The adoption of SFAS No. 161 had no impact on the company’s consolidated results of operations, financial condition or cash flows.
At the beginning of fiscal 2010 the company adopted FSP No. FAS 142-3, Determination of the Useful Life of Intangible Assets, which amends the list of factors an entity should consider in developing renewal or extension assumptions used in determining the useful life of recognized intangible assets under SFAS No. 142, Goodwill and Other Intangible Assets. The new guidance applies to (1) intangible assets that are acquired individually or with a group of other assets, and (2) intangible assets acquired in both business combinations and asset acquisitions. Under FSP No. FAS 142-3, entities estimating the useful life of a recognized intangible asset must consider their historical experience in renewing or extending similar arrangements or, in the absence of historical experience, must consider assumptions that market participants would use about renewal or extension. As this guidance applies only to assets acquired in the future, the company is not able to predict the impact, if any, on the company’s consolidated results of operations, financial condition or cash flows.
As of July 31, 2009 the company adopted SFAS No. 165, Subsequent Events, which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. In particular, this Statement sets forth: (1) the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements; (2) the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements and (3) the disclosures that an entity should make about events or transactions that occurred after the balance sheet date. The adoption of SFAS No. 165 did not have a material impact on the company’s consolidated results of operations, financial condition or cash flows. In accordance with SFAS No. 165, the company has evaluated subsequent events through the date and time the financial statements were issued on September 2, 2009.
In June 2009, the FASB issued SFAS No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles, a replacement of FASB Statement No. 162. SFAS 168 establishes a two-level GAAP hierarchy for nongovernmental entities: authoritative guidance and non-authoritative guidance. The FASB will no longer issue new standards in the form of Statements, FASB Staff Positions, and EITF Abstracts; instead, the Board will issue new guidance as Accounting Standards Updates, which will include revisions to the codification, as well as background information and the Board’s basis for conclusions for new guidance. SFAS No. 168 is effective for interim and annual reporting periods ending after September 15, 2009. The adoption of SFAS No. 168 will not have an impact on the company’s consolidated results of operations, financial condition or cash flows.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
The exposure to market risks pertains mainly to changes in interest rates on cash and cash equivalents and short-term investments. The company has no debt. The company does not expect operating results or cash flows to be significantly affected by changes in interest rates. Additionally, the company does not enter into derivatives or other financial instruments for trading or speculative purposes.

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However, the company does utilize derivative financial instruments to manage the economic impact of fluctuation in foreign currency exchange rates on those transactions that are denominated in currency other than its functional currency, which is the U.S. dollar. The use of these financial instruments had no material effect on the company’s financial condition, results of operations or cash flows.
The company’s subsidiaries that operate outside the United States use their local currency as the functional currency. The functional currency is translated into U.S. dollars for balance sheet accounts using the period-end exchange rates, and average exchange rates for the statement of income. Adjustments resulting from financial statement translations are included as cumulative translation adjustments in accumulated other comprehensive income (loss) within shareholders’ equity. Foreign currency transaction gains or losses are recognized in the period incurred and are included in “interest income and other, net” in the Consolidated Statements of Income. Foreign currency fluctuations had no material effect on the company’s financial condition, results of operations or cash flows.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
As of July 31, 2009, the end of the period covered by this report, management, including the Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”) evaluated the effectiveness of disclosure controls and procedures (as defined in the Exchange Act Rules 13a-15(e) and 15d-15(e)) as of such date. Based on that evaluation, the CEO and CFO have concluded that the company’s disclosure controls and procedures were effective as of July 31, 2009.
Changes in Internal Control over Financial Reporting
There were no changes in the company’s internal control over financial reporting that occurred during the quarter ended July 31, 2009 that have materially affected, or are reasonably likely to materially affect, the company’s internal control over financial reporting.
FORWARD-LOOKING STATEMENTS
Certain statements contained in this quarterly report on Form 10-Q are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding the expectations, beliefs, intentions or strategies regarding the future. Without limiting the foregoing, the words “anticipates,” “believes,” “expects,” “intends,” “may,” “plans” and similar expressions are intended to identify forward-looking statements. The company intends that all forward-looking statements be subject to the safe harbor provisions of the Private Securities Litigation Reform Act. Although management believes that the expectations reflected in forward-looking statements are based on reasonable assumptions, there is no assurance that these assumptions are correct or that these expectations will be achieved. Assumptions involve important risks and uncertainties that could significantly affect results in the future. These risks and uncertainties include, but are not limited to, those relating to weather conditions and commodity prices, which could affect sales and profitability in some of the company’s primary markets, such as agriculture, construction, and oil and gas well drilling; or changes in competition, raw material availability, technology or relationships with the company’s largest customers-any of which could adversely affect any of the company’s product lines, as well as other risks described in the company’s 10-K under Item 1A. This list is not exhaustive, and the company does not have an obligation to revise any forward-looking statements to reflect events or circumstances after the date these statements are made.

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RAVEN INDUSTRIES, INC.
PART II — OTHER INFORMATION
Item 1.   Legal Proceedings:
The company is involved as a defendant in lawsuits, claims or disputes arising in the normal course of business. The settlement of such claims cannot be determined at this time. Management believes that any liability resulting from these claims will be substantially mitigated by insurance coverage. Accordingly, management does not believe the ultimate outcome of these matters will be significant to its results of operations, financial position or cash flows.
Item 1A.   Risk Factors: No material change.
Item 2.   Changes in Securities:
Under a resolution from the Board of Directors dated March 15, 2008, the company was authorized to repurchase up to $10 million of stock on the open market. No shares were repurchased during the first half of fiscal 2010. Approximately $5.1 million of the repurchase authorization remains open; however, the company temporarily suspended the share repurchase program in July 2008.
Item 3.   Defaults upon Senior Securities: None
Item 4.   Submission of Matters to a Vote of Security Holders:
The company’s annual meeting of stockholders was held May 21, 2009.
Election of Directors
The following members were elected to the company’s Board of Directors to hold office for the ensuing year.
                 
Nominee   In Favor     Withheld  
Anthony W. Bour
    16,541,384       105,249  
David A. Christensen
    11,174,734       5,471,899  
Thomas S. Everist
    16,549,507       97,126  
Mark E. Griffin
    16,545,536       101,097  
Conrad J. Hoigaard
    16,503,121       143,512  
Kevin T. Kirby
    16,573,542       73,091  
Cynthia H. Milligan
    16,568,168       78,465  
Ronald M. Moquist
    16,559,602       87,031  
Daniel A. Rykhus
    16,548,424       98,209  
Ratification of the Appointment of the Independent Registered Public Accounting Firm
The appointment of PricewaterhouseCoopers LLP as our independent auditors was ratified by the stockholders with 16,564,307 votes cast in favor of the proposal, 55,183 votes cast against the proposal, and 27,188 votes abstained.
Item 5.   Other Information: None
Item 6.   Exhibits Filed:
         
  31.1    
Certification of CEO Pursuant to Section 302 of Sarbanes-Oxley Act
       
 
  31.2    
Certification of CFO Pursuant to Section 302 of Sarbanes-Oxley Act
       
 
  32.1    
Certification of CEO Pursuant to Section 906 of Sarbanes-Oxley Act
       
 
  32.2    
Certification of CFO Pursuant to Section 906 of Sarbanes-Oxley Act

16


Table of Contents

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
         
  RAVEN INDUSTRIES, INC.
 
 
  /s/ Thomas Iacarella    
  Thomas Iacarella   
  Vice President and CFO, Secretary and Treasurer
(Principal Financial and Accounting Officer) 
 
 
Date: September 2, 2009

17

exv31w1
Exhibit 31.1
CERTIFICATION OF CEO PURSUANT TO
SECTION 302 OF SARBANES-OXLEY ACT OF 2002
I, Ronald M. Moquist, certify that:
1.   I have reviewed this quarterly report on Form 10-Q 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;
 
  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.
         
     
Date: September 2, 2009  /s/ Ronald M. Moquist    
  Ronald M. Moquist   
  President and Chief Executive Officer   

 

exv31w2
         
Exhibit 31.2
CERTIFICATION OF CFO PURSUANT TO
SECTION 302 OF SARBANES-OXLEY ACT OF 2002
I, Thomas Iacarella, certify that:
1.   I have reviewed this quarterly report on Form 10-Q 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;
 
  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.
         
     
Date: September 2, 2009  /s/ Thomas Iacarella    
  Thomas Iacarella   
  Vice President and Chief Financial Officer   

 

exv32w1
         
Exhibit 32.1
RAVEN INDUSTRIES, INC.
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
The undersigned, Ronald M. Moquist, the President and Chief Executive Officer of Raven Industries, Inc., has executed this Certification in connection with the filing with the Securities and Exchange Commission of Raven Industries, Inc.’s Quarterly Report on Form 10-Q for the fiscal quarter ended July 31, 2009 (the “Report”).
The undersigned hereby certifies, to his knowledge, that:
    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.
IN WITNESS WHEREOF, the undersigned has executed this Certification as of the 2nd day of September 2009.
         
     
  /s/ Ronald M. Moquist    
  Ronald M. Moquist   
  President and Chief Executive Officer   

 

exv32w2
         
Exhibit 32.2
RAVEN INDUSTRIES, INC.
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
The undersigned, Thomas Iacarella, the Vice President and Chief Financial Officer of Raven Industries, Inc., has executed this Certification in connection with the filing with the Securities and Exchange Commission of Raven Industries, Inc.’s Annual Report on Form 10-Q for the fiscal quarter ended July 31, 2009 (the “Report”).
The undersigned hereby certifies, to his knowledge, that:
    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.
IN WITNESS WHEREOF, the undersigned has executed this Certification as of the 2nd day of September 2009.
         
     
  /s/ Thomas Iacarella    
  Thomas Iacarella   
  Vice President and Chief Financial Officer