Document
false--01-31Q220192018-07-3110-Q000008216635902427Large Accelerated FilerRAVEN INDUSTRIES INC0002017-09-012014-05-012012-01-060.2600.2601110000000010000000067124000672290002018-02-0500.3500000000500000000004300000000300070002000400070004000000005000000000003133200031332000 0000082166 2018-02-01 2018-07-31 0000082166 2018-08-17 0000082166 2018-01-31 0000082166 2018-07-31 0000082166 2018-05-01 2018-07-31 0000082166 2017-05-01 2017-07-31 0000082166 2017-02-01 2017-07-31 0000082166 us-gaap:ParentMember 2017-02-01 2017-07-31 0000082166 us-gaap:AdditionalPaidInCapitalMember 2017-07-31 0000082166 us-gaap:NoncontrollingInterestMember 2018-07-31 0000082166 us-gaap:AdditionalPaidInCapitalMember 2017-02-01 2017-07-31 0000082166 us-gaap:TreasuryStockMember 2017-07-31 0000082166 us-gaap:ParentMember 2018-02-01 2018-07-31 0000082166 us-gaap:AdditionalPaidInCapitalMember 2018-01-31 0000082166 us-gaap:AdditionalPaidInCapitalMember 2018-02-01 2018-07-31 0000082166 us-gaap:RetainedEarningsMember 2017-01-31 0000082166 us-gaap:CommonStockMember 2018-07-31 0000082166 us-gaap:ParentMember 2017-07-31 0000082166 us-gaap:NoncontrollingInterestMember 2017-02-01 2017-07-31 0000082166 us-gaap:TreasuryStockMember 2018-07-31 0000082166 us-gaap:TreasuryStockMember 2017-01-31 0000082166 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-01-31 0000082166 us-gaap:CommonStockMember 2017-02-01 2017-07-31 0000082166 us-gaap:CommonStockMember 2018-01-31 0000082166 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2017-07-31 0000082166 us-gaap:RetainedEarningsMember 2018-02-01 2018-07-31 0000082166 us-gaap:NoncontrollingInterestMember 2018-01-31 0000082166 us-gaap:ParentMember 2018-01-31 0000082166 us-gaap:AdditionalPaidInCapitalMember 2018-07-31 0000082166 us-gaap:AdditionalPaidInCapitalMember 2017-01-31 0000082166 us-gaap:RetainedEarningsMember 2018-07-31 0000082166 us-gaap:TreasuryStockMember 2018-01-31 0000082166 us-gaap:CommonStockMember 2017-07-31 0000082166 us-gaap:CommonStockMember 2018-02-01 2018-07-31 0000082166 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2017-02-01 2017-07-31 0000082166 2017-01-31 0000082166 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-02-01 2018-07-31 0000082166 us-gaap:RetainedEarningsMember 2017-02-01 2017-07-31 0000082166 us-gaap:NoncontrollingInterestMember 2017-07-31 0000082166 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2017-01-31 0000082166 us-gaap:NoncontrollingInterestMember 2017-01-31 0000082166 us-gaap:ParentMember 2017-01-31 0000082166 us-gaap:ParentMember 2018-07-31 0000082166 us-gaap:RetainedEarningsMember 2018-01-31 0000082166 us-gaap:NoncontrollingInterestMember 2018-02-01 2018-07-31 0000082166 us-gaap:RetainedEarningsMember 2017-07-31 0000082166 2017-07-31 0000082166 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-07-31 0000082166 us-gaap:CommonStockMember 2017-01-31 0000082166 ravn:AerostarIntegratedSystemsMember 2018-07-31 0000082166 us-gaap:OperatingIncomeLossMember us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2018-05-01 2018-07-31 0000082166 us-gaap:OtherNonoperatingIncomeExpenseMember us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2018-02-01 2018-07-31 0000082166 us-gaap:OperatingIncomeLossMember us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2018-02-01 2018-07-31 0000082166 us-gaap:OtherNonoperatingIncomeExpenseMember us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2018-05-01 2018-07-31 0000082166 us-gaap:AssetsHeldUnderCapitalLeasesMember 2018-07-31 0000082166 ravn:PropertyplantandequipmentOwnedMember 2018-07-31 0000082166 ravn:PropertyplantandequipmentOwnedMember 2018-01-31 0000082166 us-gaap:BuildingAndBuildingImprovementsMember 2018-07-31 0000082166 us-gaap:BuildingAndBuildingImprovementsMember 2018-01-31 0000082166 ravn:AssetsownedorheldundercapitalleaseMember 2018-01-31 0000082166 ravn:AssetsownedorheldundercapitalleaseMember 2018-07-31 0000082166 us-gaap:MachineryAndEquipmentMember 2018-01-31 0000082166 us-gaap:AssetsHeldUnderCapitalLeasesMember 2018-01-31 0000082166 us-gaap:LandMember 2018-01-31 0000082166 us-gaap:LandMember 2018-07-31 0000082166 us-gaap:MachineryAndEquipmentMember 2018-07-31 0000082166 ravn:PlasticFilmsandSheetingMember us-gaap:IntersegmentEliminationMember 2018-02-01 2018-07-31 0000082166 ravn:AerostarOtherMember 2017-05-01 2017-07-31 0000082166 ravn:AerostarOtherMember 2018-02-01 2018-07-31 0000082166 ravn:AerostarMember 2017-02-01 2017-07-31 0000082166 ravn:AppliedTechnologyPrecisionAgricultureEquipmentMember 2018-05-01 2018-07-31 0000082166 ravn:EngineeredFilmsPlasticFilmsSheetingMember 2018-05-01 2018-07-31 0000082166 ravn:AppliedTechnologyPrecisionAgricultureEquipmentMember 2017-05-01 2017-07-31 0000082166 us-gaap:IntersegmentEliminationMember 2017-05-01 2017-07-31 0000082166 ravn:EngineeredFilmsPlasticFilmsSheetingMember 2017-02-01 2017-07-31 0000082166 ravn:AppliedTechnologyPrecisionAgricultureEquipmentMember 2017-02-01 2017-07-31 0000082166 ravn:AllSegmentsMember 2018-05-01 2018-07-31 0000082166 ravn:AerostarLighterthanairMember 2018-05-01 2018-07-31 0000082166 ravn:EngineeredFilmsPlasticFilmsSheetingMember 2018-02-01 2018-07-31 0000082166 ravn:AerostarMember 2017-05-01 2017-07-31 0000082166 us-gaap:IntersegmentEliminationMember 2017-02-01 2017-07-31 0000082166 ravn:AerostarLighterthanairMember 2017-05-01 2017-07-31 0000082166 us-gaap:IntersegmentEliminationMember 2018-05-01 2018-07-31 0000082166 ravn:PrecisionAgricultureMember 2017-02-01 2017-07-31 0000082166 ravn:AllSegmentsMember 2018-02-01 2018-07-31 0000082166 ravn:AerostarMember 2018-02-01 2018-07-31 0000082166 ravn:PrecisionAgricultureMember 2017-05-01 2017-07-31 0000082166 ravn:AerostarMember 2018-05-01 2018-07-31 0000082166 ravn:PlasticFilmsandSheetingMember 2018-05-01 2018-07-31 0000082166 ravn:LighterthanairMember 2017-02-01 2017-07-31 0000082166 ravn:EngineeredFilmsPlasticFilmsSheetingMember 2017-05-01 2017-07-31 0000082166 ravn:AppliedTechnologyPrecisionAgricultureEquipmentMember 2018-02-01 2018-07-31 0000082166 ravn:PlasticFilmsandSheetingMember us-gaap:IntersegmentEliminationMember 2018-05-01 2018-07-31 0000082166 us-gaap:ProductMember 2018-02-01 2018-07-31 0000082166 ravn:LighterthanairMember 2018-02-01 2018-07-31 0000082166 ravn:AerostarOtherMember 2017-02-01 2017-07-31 0000082166 ravn:PlasticFilmsandSheetingMember 2017-05-01 2017-07-31 0000082166 us-gaap:ProductMember 2018-05-01 2018-07-31 0000082166 ravn:AerostarLighterthanairMember 2018-02-01 2018-07-31 0000082166 ravn:PlasticFilmsandSheetingMember us-gaap:IntersegmentEliminationMember 2017-02-01 2017-07-31 0000082166 us-gaap:ProductMember 2017-05-01 2017-07-31 0000082166 ravn:LighterthanairMember 2018-05-01 2018-07-31 0000082166 ravn:AerostarLighterthanairMember 2017-02-01 2017-07-31 0000082166 us-gaap:ProductMember 2017-02-01 2017-07-31 0000082166 ravn:PlasticFilmsandSheetingMember 2018-02-01 2018-07-31 0000082166 ravn:AerostarOtherMember 2018-05-01 2018-07-31 0000082166 ravn:PlasticFilmsandSheetingMember us-gaap:IntersegmentEliminationMember 2017-05-01 2017-07-31 0000082166 ravn:PlasticFilmsandSheetingMember 2017-02-01 2017-07-31 0000082166 ravn:AllSegmentsMember 2017-05-01 2017-07-31 0000082166 ravn:PrecisionAgricultureMember 2018-05-01 2018-07-31 0000082166 ravn:LighterthanairMember 2017-05-01 2017-07-31 0000082166 ravn:AllSegmentsMember 2017-02-01 2017-07-31 0000082166 ravn:PrecisionAgricultureMember 2018-02-01 2018-07-31 0000082166 us-gaap:IntersegmentEliminationMember 2018-02-01 2018-07-31 0000082166 us-gaap:ShortTermContractWithCustomerMember 2018-07-31 0000082166 us-gaap:ShortTermContractWithCustomerMember 2018-01-31 0000082166 us-gaap:ShortTermContractWithCustomerMember 2018-02-01 2018-07-31 0000082166 2017-04-30 0000082166 2018-04-30 0000082166 ravn:SBGInnovatiieandaffiliateMember ravn:AppliedTechnologyMember 2018-07-31 0000082166 ravn:CLIMember ravn:EngineeredFilmsMember 2018-02-01 2018-07-31 0000082166 ravn:VistaResearchMember ravn:AerostarMember 2018-02-01 2018-07-31 0000082166 ravn:SstMember ravn:AppliedTechnologyMember 2018-01-31 0000082166 ravn:SstMember us-gaap:OtherNonoperatingIncomeExpenseMember ravn:AppliedTechnologyMember 2018-02-01 2018-07-31 0000082166 ravn:SstMember us-gaap:OtherNonoperatingIncomeExpenseMember ravn:AppliedTechnologyMember 2018-05-01 2018-07-31 0000082166 ravn:SBGInnovatiieandaffiliateMember ravn:AppliedTechnologyMember 2018-02-01 2018-07-31 0000082166 ravn:CLIMember ravn:EngineeredFilmsMember 2017-09-01 2017-09-01 0000082166 ravn:SstMember ravn:AppliedTechnologyMember 2018-02-05 2018-02-05 0000082166 ravn:CLIMember ravn:EngineeredFilmsMember 2017-09-01 0000082166 ravn:VistaResearchMember ravn:AerostarMember 2018-07-31 0000082166 ravn:CLIMember ravn:EngineeredFilmsMember 2018-07-31 0000082166 ravn:AgEagleAerialSystemsMember us-gaap:CustomerRelatedIntangibleAssetsMember us-gaap:OperatingIncomeLossMember ravn:AppliedTechnologyMember 2017-02-01 2017-07-31 0000082166 ravn:AgEagleAerialSystemsMember us-gaap:OtherNonoperatingIncomeExpenseMember ravn:AppliedTechnologyMember 2017-02-01 2017-07-31 0000082166 ravn:AgEagleAerialSystemsMember us-gaap:OtherNonoperatingIncomeExpenseMember ravn:AppliedTechnologyMember 2017-05-01 2017-07-31 0000082166 ravn:EngineeredFilmsMember 2018-02-01 2018-07-31 0000082166 ravn:AppliedTechnologyMember 2018-01-31 0000082166 ravn:EngineeredFilmsMember 2018-07-31 0000082166 ravn:AppliedTechnologyMember 2018-02-01 2018-07-31 0000082166 ravn:EngineeredFilmsMember 2018-01-31 0000082166 ravn:AerostarMember 2018-07-31 0000082166 ravn:AerostarMember 2018-01-31 0000082166 ravn:AppliedTechnologyMember 2018-07-31 0000082166 us-gaap:TechnologyBasedIntangibleAssetsMember 2018-07-31 0000082166 us-gaap:CustomerRelatedIntangibleAssetsMember 2018-01-31 0000082166 us-gaap:TechnologyBasedIntangibleAssetsMember 2018-01-31 0000082166 us-gaap:PatentsMember 2018-01-31 0000082166 us-gaap:CustomerRelatedIntangibleAssetsMember 2018-07-31 0000082166 us-gaap:PatentsMember 2018-07-31 0000082166 ravn:AgEagleAerialSystemsMember us-gaap:CustomerRelatedIntangibleAssetsMember us-gaap:OperatingIncomeLossMember ravn:AppliedTechnologyMember 2017-05-01 2017-07-31 0000082166 ravn:AgEagleAerialSystemsMember us-gaap:CustomerRelatedIntangibleAssetsMember us-gaap:OperatingIncomeLossMember ravn:AppliedTechnologyMember 2018-05-01 2018-07-31 0000082166 ravn:AgEagleAerialSystemsMember us-gaap:OtherNonoperatingIncomeExpenseMember ravn:AppliedTechnologyMember 2018-02-01 2018-07-31 0000082166 ravn:AgEagleAerialSystemsMember us-gaap:CustomerRelatedIntangibleAssetsMember us-gaap:OperatingIncomeLossMember ravn:AppliedTechnologyMember 2018-02-01 2018-07-31 0000082166 ravn:AgEagleAerialSystemsMember us-gaap:OtherNonoperatingIncomeExpenseMember ravn:AppliedTechnologyMember 2018-05-01 2018-07-31 0000082166 us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2018-02-01 2018-07-31 0000082166 us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2018-05-01 2018-07-31 0000082166 us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2017-05-01 2017-07-31 0000082166 us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2017-02-01 2017-07-31 0000082166 ravn:WellsFargoBankN.A.Member 2018-07-31 0000082166 ravn:JPMorganChaseBankMember 2018-02-01 2018-07-31 0000082166 ravn:JPMorganChaseBankMember 2018-07-31 0000082166 ravn:JPMorganChaseBankMember 2015-04-15 0000082166 ravn:JPMorganChaseBankMember 2017-07-31 0000082166 ravn:WellsFargoBankN.A.Member 2017-07-31 0000082166 us-gaap:OtherNonoperatingIncomeExpenseMember ravn:CharitableGiftMember 2018-05-01 2018-07-31 0000082166 us-gaap:SellingGeneralAndAdministrativeExpensesMember ravn:CharitableGiftMember 2018-02-01 2018-07-31 0000082166 us-gaap:OtherNoncurrentLiabilitiesMember ravn:CharitableGiftMember 2018-07-31 0000082166 ravn:CharitableGiftMember 2018-07-31 0000082166 us-gaap:AccruedLiabilitiesMember ravn:CharitableGiftMember 2018-07-31 0000082166 ravn:CharitableGiftMember 2018-02-01 2018-07-31 0000082166 us-gaap:SellingGeneralAndAdministrativeExpensesMember ravn:CharitableGiftMember 2017-02-01 2017-07-31 0000082166 us-gaap:OtherNonoperatingIncomeExpenseMember ravn:CharitableGiftMember 2017-02-01 2017-07-31 0000082166 us-gaap:OtherNoncurrentLiabilitiesMember ravn:CharitableGiftMember 2018-01-31 0000082166 us-gaap:AccruedLiabilitiesMember ravn:CharitableGiftMember 2018-01-31 0000082166 us-gaap:SellingGeneralAndAdministrativeExpensesMember ravn:CharitableGiftMember 2017-05-01 2017-07-31 0000082166 ravn:CharitableGiftMember 2018-01-31 0000082166 us-gaap:SellingGeneralAndAdministrativeExpensesMember ravn:CharitableGiftMember 2018-05-01 2018-07-31 0000082166 us-gaap:OtherNonoperatingIncomeExpenseMember ravn:CharitableGiftMember 2017-05-01 2017-07-31 0000082166 us-gaap:OtherNonoperatingIncomeExpenseMember ravn:CharitableGiftMember 2018-02-01 2018-07-31 0000082166 2015-01-31 0000082166 us-gaap:SellingGeneralAndAdministrativeExpensesMember 2017-02-01 2017-07-31 0000082166 us-gaap:ResearchAndDevelopmentExpenseMember 2018-02-01 2018-07-31 0000082166 us-gaap:ResearchAndDevelopmentExpenseMember 2017-02-01 2017-07-31 0000082166 us-gaap:ResearchAndDevelopmentExpenseMember 2018-05-01 2018-07-31 0000082166 us-gaap:OperatingIncomeLossMember 2018-05-01 2018-07-31 0000082166 us-gaap:OperatingIncomeLossMember 2017-02-01 2017-07-31 0000082166 us-gaap:CostOfSalesMember 2018-05-01 2018-07-31 0000082166 us-gaap:OperatingIncomeLossMember 2018-02-01 2018-07-31 0000082166 us-gaap:SellingGeneralAndAdministrativeExpensesMember 2017-05-01 2017-07-31 0000082166 us-gaap:CostOfSalesMember 2017-02-01 2017-07-31 0000082166 us-gaap:SellingGeneralAndAdministrativeExpensesMember 2018-05-01 2018-07-31 0000082166 us-gaap:ResearchAndDevelopmentExpenseMember 2017-05-01 2017-07-31 0000082166 us-gaap:CostOfSalesMember 2017-05-01 2017-07-31 0000082166 us-gaap:CostOfSalesMember 2018-02-01 2018-07-31 0000082166 us-gaap:SellingGeneralAndAdministrativeExpensesMember 2018-02-01 2018-07-31 0000082166 us-gaap:OperatingIncomeLossMember 2017-05-01 2017-07-31 0000082166 ravn:EngineeredFilmsMember 2017-02-01 2017-07-31 0000082166 ravn:EngineeredFilmsMember 2017-05-01 2017-07-31 0000082166 us-gaap:ReportableSubsegmentsMember 2018-05-01 2018-07-31 0000082166 ravn:AppliedTechnologyMember 2018-05-01 2018-07-31 0000082166 ravn:AppliedTechnologyMember 2017-05-01 2017-07-31 0000082166 ravn:EngineeredFilmsMember 2018-05-01 2018-07-31 0000082166 ravn:AppliedTechnologyMember 2017-02-01 2017-07-31 0000082166 us-gaap:ReportableSubsegmentsMember 2017-02-01 2017-07-31 0000082166 us-gaap:ReportableSubsegmentsMember 2017-05-01 2017-07-31 0000082166 us-gaap:ReportableSubsegmentsMember 2018-02-01 2018-07-31 0000082166 ravn:HurricaneRecoveryFilmMember ravn:EngineeredFilmsMember 2018-05-01 2018-07-31 0000082166 ravn:HurricaneRecoveryFilmMember ravn:EngineeredFilmsMember 2018-02-01 2018-07-31 0000082166 ravn:CLIMember ravn:EngineeredFilmsMember 2017-05-01 2017-07-31 0000082166 ravn:CLIMember ravn:EngineeredFilmsMember 2018-05-01 2018-07-31 0000082166 ravn:HurricaneRecoveryFilmMember ravn:EngineeredFilmsMember 2017-05-01 2017-07-31 0000082166 ravn:CLIMember ravn:EngineeredFilmsMember 2017-02-01 2017-07-31 0000082166 ravn:HurricaneRecoveryFilmMember ravn:EngineeredFilmsMember 2017-02-01 2017-07-31 ravn:Divisions xbrli:shares iso4217:USD ravn:segment xbrli:pure iso4217:USD xbrli:shares

 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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, 2018
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 Number: 001-07982
RAVEN INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
South Dakota
(State or other jurisdiction of incorporation or organization)
 
46-0246171
(I.R.S. Employer Identification No.)
205 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 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).         þ Yes o No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer þ
 
Accelerated filer o
Non-accelerated filer o (Do not check if a smaller reporting company)
 
Smaller reporting company o
Emerging growth company o
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 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 17, 2018 there were 35,902,427 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
 
 
 
 
 
 
 
 
 
 
 
Item 4. Mine Safety Disclosures




PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

RAVEN INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)
(dollars and shares in thousands, except per-share data)
July 31,
2018
 
January 31,
2018
ASSETS
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
65,439

 
$
40,535

Accounts receivable, net
61,348

 
58,532

Inventories
55,993

 
55,351

Other current assets
5,372

 
5,861

Total current assets
188,152

 
160,279

 
 
 
 
Property, plant and equipment, net
106,716

 
106,280

Goodwill
46,438

 
46,710

Amortizable intangible assets, net
11,772

 
10,584

Other assets
2,837

 
2,950

TOTAL ASSETS
$
355,915

 
$
326,803

 
 
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 
Current liabilities
 
 
 
Accounts payable
$
14,882

 
$
13,106

Accrued liabilities
21,875

 
21,946

Other current liabilities
733

 
1,890

Total current liabilities
37,490

 
36,942

 
 
 
 
Other liabilities
16,315

 
13,795

 
 
 
 
Commitments and contingencies (see Note 11)

 

 
 
 
 
Shareholders' equity
 
 
 
Common stock, $1 par value, authorized shares 100,000; issued 67,229 and 67,124, respectively
67,229

 
67,124

Paid-in capital
59,489

 
59,143

Retained earnings
279,438

 
252,772

Accumulated other comprehensive income (loss)
(3,702
)
 
(2,573
)
Treasury stock at cost, 31,332 and 31,332 shares, respectively
(100,402
)
 
(100,402
)
Total Raven Industries, Inc. shareholders' equity
302,052

 
276,064

Noncontrolling interest
58

 
2

Total equity
302,110

 
276,066

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$
355,915

 
$
326,803


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

#3

                           

RAVEN INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(unaudited)
 
Three Months Ended
 
Six Months Ended
(dollars in thousands, except per-share data)
July 31,
2018
 
July 31,
2017
 
July 31,
2018
 
July 31,
2017
Net sales
$
102,684

 
$
86,610

 
$
213,813

 
$
180,145

Cost of sales
68,076

 
60,097

 
139,207

 
121,676

Gross profit
34,608

 
26,513

 
74,606

 
58,469

 
 
 
 
 
 
 
 
Research and development expenses
6,151

 
4,256

 
11,436

 
8,236

Selling, general, and administrative expenses
11,828

 
10,557

 
25,010

 
20,055

Long-lived asset impairment loss

 

 

 
259

Operating income
16,629

 
11,700

 
38,160

 
29,919

 
 
 
 
 
 
 
 
Other (expense) income, net
(139
)
 
(63
)
 
5,540

 
(293
)
Income before income taxes
16,490

 
11,637

 
43,700

 
29,626

 
 
 
 
 
 
 
 
Income tax expense
2,769

 
3,403

 
7,832

 
9,044

Net income
13,721

 
8,234

 
35,868

 
20,582

 
 
 
 
 
 
 
 
Net income (loss) attributable to the noncontrolling interest
44

 
(1
)
 
56

 
(1
)
 
 
 
 
 
 
 
 
Net income attributable to Raven Industries, Inc.
$
13,677

 
$
8,235

 
$
35,812

 
$
20,583

 
 
 
 
 
 
 
 
Net income per common share:
 
 
 
 
 
 
 
      ─ Basic
$
0.38

 
$
0.23

 
$
1.00

 
$
0.57

      ─ Diluted
$
0.38

 
$
0.23

 
$
0.98

 
$
0.56

 
 
 
 
 
 
 
 
Cash dividends paid per common share
$
0.13

 
$
0.13

 
$
0.26

 
$
0.26

 
 
 
 
 
 
 
 
Comprehensive income (loss):
 
 
 
 
 
 
 
Net income
$
13,721

 
$
8,234

 
$
35,868

 
$
20,582

 
 
 
 
 
 
 
 
Other comprehensive income (loss):
 
 
 
 
 
 
 
Foreign currency translation
(357
)
 
810

 
(837
)
 
822

Postretirement benefits, net of income tax benefit of $2, $3, $4 and $7 respectively
(6
)
 
(7
)
 
(12
)
 
(13
)
Other comprehensive income (loss), net of tax
(363
)
 
803

 
(849
)
 
809

 
 
 
 
 
 
 
 
Comprehensive income
13,358

 
9,037

 
35,019

 
21,391

 
 
 
 
 
 
 
 
Comprehensive income (loss) attributable to noncontrolling interest
44

 
(1
)
 
56

 
(1
)
 
 
 
 
 
 
 
 
Comprehensive income attributable to Raven Industries, Inc.
$
13,314

 
$
9,038

 
$
34,963

 
$
21,392


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

#4

                           

RAVEN INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(unaudited)
 
$1 Par Common Stock
Paid-in Capital
Treasury Stock
Retained Earnings
Accumulated Other Comprehensive Income (Loss)
Raven Industries, Inc. Equity
Non- controlling Interest
Total Equity
(dollars in thousands, except per-share amounts)
Shares
Cost
Balance January 31, 2017
$
67,060

$
55,795

30,984

$
(90,402
)
$
230,649

$
(3,676
)
$
259,426

$
5

$
259,431

Net income




20,583


20,583

(1
)
20,582

Other comprehensive income (loss):
 
 
 
 
 
 
 
 
 
Cumulative foreign currency translation adjustment





822

822


822

Postretirement benefits reclassified from accumulated other comprehensive income (loss) after tax benefit of $7





(13
)
(13
)

(13
)
Cash dividends ($0.26 per share) 

109



(9,493
)

(9,384
)

(9,384
)
Shares issued on stock options exercised, net of shares withheld for employee taxes
12

(160
)




(148
)

(148
)
Shares issued on vesting of stock units, net of shares withheld for employee taxes
11

(162
)




(151
)

(151
)
Director shares issued
4

(4
)







Share-based compensation

1,932





1,932


1,932

Balance July 31, 2017
$
67,087

$
57,510

30,984

$
(90,402
)
$
241,739

$
(2,867
)
$
273,067

$
4

$
273,071

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance January 31, 2018
$
67,124

$
59,143

31,332

$
(100,402
)
$
252,772

$
(2,573
)
$
276,064

$
2

$
276,066

Net income




35,812


35,812

56

35,868

Other comprehensive income (loss):
 
 
 
 
 
 
 
 
 
Cumulative foreign currency translation adjustment





(837
)
(837
)

(837
)
Postretirement benefits reclassified from accumulated other comprehensive income (loss) after tax benefit of $4





(12
)
(12
)

(12
)
Reclassification due to ASU 2018-02 adoption




280

(280
)



Cash dividends ($0.26 per share)

100



(9,426
)

(9,326
)

(9,326
)
Shares issued on stock options exercised, net of shares withheld for employee taxes
42

(721
)




(679
)

(679
)
Shares issued on vesting of stock units, net of shares withheld for employee taxes
63

(1,314
)




(1,251
)

(1,251
)
Share-based compensation

2,281





2,281


2,281

Balance July 31, 2018
$
67,229

$
59,489

31,332

$
(100,402
)
$
279,438

$
(3,702
)
$
302,052

$
58

$
302,110


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


#5

                           

RAVEN INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
 
Six Months Ended
(dollars in thousands)
July 31,
2018
 
July 31,
2017
OPERATING ACTIVITIES:
 
 
 
Net income
$
35,868

 
$
20,582

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
7,401

 
7,184

Change in fair value of acquisition-related contingent consideration
403

 
145

Long-lived asset impairment loss

 
259

Loss from equity investment

 
154

Gain from sale of equity method investment
(5,785
)
 

Deferred income taxes
(439
)
 
(942
)
Share-based compensation expense
2,281

 
1,932

Other operating activities, net
(1,987
)
 
174

Change in operating assets and liabilities:
 
 
 
Accounts receivable
(2,982
)
 
(3,279
)
Inventories
(792
)
 
(8,466
)
Other assets
74

 
(1,257
)
Operating liabilities
4,610

 
3,375

Net cash provided by operating activities
38,652

 
19,861

 
 
 
 
INVESTING ACTIVITIES:
 
 
 
Capital expenditures
(6,853
)
 
(5,223
)
Proceeds from sale or maturity of investments
6,668

 
250

Purchases of investments
(164
)
 
(255
)
Proceeds (disbursements) from sale of assets, settlement of liabilities
832

 
(344
)
Other investing activities
(1,971
)
 
(17
)
Net cash used in investing activities
(1,488
)
 
(5,589
)
 
 
 
 
FINANCING ACTIVITIES:
 
 
 
Dividends paid
(9,326
)
 
(9,384
)
Payments of acquisition-related contingent liability
(499
)
 
(320
)
Restricted stock units vested and issued
(679
)
 
(151
)
Employee stock option exercises
(1,251
)
 
(148
)
Other financing activities
(102
)
 

Net cash used in financing activities
(11,857
)
 
(10,003
)
 
 
 
 
Effect of exchange rate changes on cash
(403
)
 
280

 
 
 
 
Net increase in cash and cash equivalents
24,904

 
4,549

Cash and cash equivalents at beginning of year
40,535

 
50,648

Cash and cash equivalents at end of period
$
65,439

 
$
55,197


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

#6

(dollars in thousands, except per-share amounts)


RAVEN INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(dollars in thousands, except per-share amounts)

(1) BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION
Raven Industries, Inc. (the Company or Raven) is a diversified technology company providing a variety of products to customers within the agricultural, aerospace/defense, construction, geomembrane, industrial, and stratospheric balloon markets. The Company is comprised of three unique operating units, or divisions, classified into reportable segments: Applied Technology, Engineered Films, and Aerostar.

The accompanying interim unaudited consolidated financial statements, which includes the accounts of Raven and its wholly-owned or controlled subsidiaries, net of intercompany balances and transactions, has been prepared by the Company in accordance with generally accepted accounting principles in the United States (GAAP) 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, these financial statements do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary to fairly present this financial information have been included. These financial statements should be read in conjunction with the audited consolidated financial statements and the accompanying notes included in the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2018.

Financial results for the interim three- and six-month periods ended July 31, 2018 are not necessarily indicative of the results that may be expected for the year ending January 31, 2019. The January 31, 2018 consolidated balance sheet was derived from audited financial statements, but does not include all disclosures required in an annual report on Form 10-K. Preparing financial statements in conformity with GAAP requires management to make certain estimates and assumptions. These affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
 
Noncontrolling interests represent capital contributions, income and loss attributable to the owners of less than wholly-owned consolidated entities. The Company owns a 75% interest in an entity consolidated under the Aerostar business segment. Given the Company's controlling financial interest, the accounts of the business venture have been consolidated with the accounts of the Company, and a noncontrolling interest has been recorded for the noncontrolling investor interest in the net assets and operations of the business venture.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

There have been no material changes to the Company's significant accounting policies as described in the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2018 other than described in the Accounting Standards Adopted section below.
Accounting Pronouncements
Accounting Standards Adopted
In the fiscal 2019 first quarter, the Company early adopted Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) No. 2018-02, "Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income" (ASU 2018-02) issued in February 2018. The amendments in this guidance allow for a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act (TCJA). Consequently, the amendments eliminate the stranded tax effects resulting from the TCJA and are intended to improve the usefulness of information reported. The Company elected to apply the amendments in the period of adoption. The Company recorded a $280 reclassification entry for the stranded tax effects in Accumulated Other Comprehensive Income related to Raven's post-retirement plan further disclosed in the Company's Annual Report in the Form 10-K filed March 23, 2018. The impact of the reclassification is reported as "Reclassification due to ASU 2018-02 adoption" in the Consolidated Statements of Shareholders' Equity.

In the fiscal 2019 first quarter when it became effective, the Company adopted FASB ASU No. 2017-09, "Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting" (ASU 2017-09) on a prospective basis. The guidance amends the scope of modification accounting for share-based payment arrangements. The ASU provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting under Topic 718. Specifically, an entity would not apply modification accounting if the fair value, vesting conditions, and classification of the awards as equity instruments or liability instruments are the same immediately before and after the modification

#7

(dollars in thousands, except per-share amounts)


to the award. The Company did not modify any of its outstanding awards during the six-month period ended July 31, 2018; therefore, the adoption of this guidance had no impact on its consolidated financial statements, results of operations, or disclosures.

In the fiscal 2019 first quarter when it became effective, the Company adopted, the FASB ASU No. 2017-07, "Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Postretirement Benefit Cost" (ASU 2017-07). The guidance clarifies where the cost components of the net benefit cost should be reported in the income statement and it allows only the service cost to be capitalized. The adoption of this guidance resulted in $7 and $14 of the net periodic benefit cost being reported as a charge to operating income and $71 and $142 reported as a charge to non-operating income (expense) for the three- and six-months ended July 31, 2018, respectively. The classification of this charge on the Consolidated Statements of Income and Comprehensive Income is described in Note 8 Employee Retirement Benefits in the Notes to the Consolidated Financial Statements. The net periodic benefit cost for the prior fiscal year was not material.

In the fiscal 2019 first quarter when it became effective, the Company adopted FASB ASU 2016-16, "Income Taxes (Topic 740) Intra-Entity Transfers of Assets Other Than Inventory" (ASU 2016-16). Previous GAAP prohibits the recognition of current and deferred income taxes for an intra-entity asset transfer until the asset has been sold to an outside party. This prohibition on recognition is an exception to the principle of comprehensive recognition of current and deferred income taxes in GAAP. This new guidance eliminates the exception for an intra-entity transfer of an asset other than inventory. The Company did not have any intra-entity transfers of assets impacted by this guidance, as such the adoption of this guidance had no impact on its consolidated financial statements, results of operations, or disclosures.

In the fiscal 2019 first quarter when it became effective, the Company adopted FASB ASU 2016-15, "Statement of Cash Flows (Topic 230) Classification of Certain Cash Receipts and Cash Payments" (ASU 2016-15). The specific classification issues clarified in the guidance either were not applicable to the Company or are consistent with how the Company previously classified them, therefore the adoption of this guidance had no impact on its consolidated financial statements, results of operations, or disclosures.

In the fiscal 2019 first quarter when it became effective, the Company adopted FASB ASU No. 2016-01, "Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities" (ASU 2016-01). The updated accounting guidance requires equity securities to be measured at fair value with changes in the fair value recognized through net income. An entity’s equity investments that are accounted for under the equity method of accounting or result in consolidation of an investee are not included within the scope of this update. The impacted financial instruments held at the time of adoption were not material, as such, the adoption of this guidance and the subsequent changes to Subtopic 825-10 in ASU 2018-03 "Technical Corrections and Improvements to Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities," did not have a material impact on the Company's consolidated financial statements, results of operations, or disclosures.

In the fiscal 2019 first quarter, the Company adopted ASU No. 2014-09, "Revenue from Contracts with Customers (Topic 606)" (ASU 2014-09). ASU 2014-09 provides a comprehensive new recognition model that requires recognition of revenue when a company transfers promised goods or services to customers in an amount that reflects the consideration which a company expects to receive in exchange for those goods or services. This guidance supersedes the revenue recognition requirements in FASB ASC Topic 605, "Revenue Recognition," and most industry-specific guidance. ASU 2014-09 defines a five-step process to achieve this core principle. It also requires additional disclosure about the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts. The Company adopted ASU 2014-09 on a modified retrospective basis. The comparative historical information has not been adjusted and continues to be reported under ASC Topic 605 as previously presented. The adoption of ASU 2014-09 did not have a material impact on the Company’s consolidated financial statements or results of operations as of the adoption date and for the three- or six months ended July 31, 2018 as a significant majority of our sales revenue is recognized when products are shipped from our manufacturing facilities. As part of our adoption of ASU 2014-09 we have elected the following practical expedients: modified retrospective basis was applied for all contracts that were not completed as of February 1, 2018; shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are considered fulfillment costs included within cost of sales; and taxes that are collected by the Company from a customer, which are assessed by governmental authorities that are both imposed upon and concurrent with a specific revenue-producing transaction, are excluded from revenues. Additional disclosures related to the revenues arising from contracts with customers as required by Topic 606 are included in Note 5 Revenue.
New Accounting Standards Not Yet Adopted
In February 2016 the FASB issued ASU No. 2016-02, "Leases (Topic 842)" (ASU 2016-02). The primary difference between previous GAAP and ASU 2016-02 is the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous GAAP. The guidance requires a lessee to recognize a lease liability (to make lease payments) and a right-of-use asset (representing its right to use the underlying asset for the lease term) on the balance sheet with terms greater than 12 months. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018. In July 2018 the FASB amended Topic 842 to provide entities additional guidance on transition to adopt using either a modified retrospective approach for leases

#8

(dollars in thousands, except per-share amounts)


that exist upon adoption and in the comparative periods presented, or an optional approach to initially apply the new lease guidance upon the adoption date without adjusting the comparative periods presented. The Company is currently evaluating the method and impact the adoption will have on its consolidated financial statements, results of operations, and disclosures.

(3) SELECTED BALANCE SHEET INFORMATION

Following are the components of selected items from the Consolidated Balance Sheets:
 
 
July 31, 2018
 
January 31, 2018
Accounts receivable, net:
 
 
 
 
     Trade accounts
 
$
59,138

 
$
57,063

     Unbilled receivables
 
3,167

 
2,447

     Allowance for doubtful accounts
 
(957
)
 
(978
)
 
 
$
61,348

 
$
58,532

Inventories:
 
 
 
 
Finished goods
 
$
6,709

 
$
8,054

In process
 
1,406

 
961

Materials
 
47,878

 
46,336

 

$
55,993


$
55,351

Other current assets:
 
 
 
 
Insurance policy benefit
 
$
714

 
$
759

     Income tax receivable
 
16

 
1,397

Receivable from sale of investment
 
1,055

 

     Prepaid expenses and other
 
3,587

 
3,705

 
 
$
5,372

 
$
5,861

Property, plant and equipment, net:
 
 
 
 
Land
 
$
3,234

 
$
3,234

Buildings and improvements
 
81,092

 
80,299

Machinery and equipment
 
155,515

 
149,847

     Accumulated depreciation
 
(133,482
)
 
(127,523
)
 
 
106,359

 
105,857

Property, plant and equipment subject to capital leases:
 
 
 
 
Machinery and equipment
 
510

 
488

Accumulated amortization for capitalized leases
 
(153
)
 
(65
)
 
 
$
106,716

 
$
106,280

Other assets:
 
 
 
 
Equity investments
 
$
175

 
$
1,955

Deferred income taxes
 
20

 
19

Other
 
2,642

 
976

 
 
$
2,837

 
$
2,950

Accrued liabilities:
 
 
 
 
Salaries and related
 
$
5,759

 
$
9,409

Benefits
 
4,045

 
4,225

Insurance obligations
 
2,488

 
1,992

Warranties
 
1,137

 
1,163

Income taxes
 
1,667

 
226

Other taxes
 
1,357

 
1,880

Acquisition-related contingent consideration
 
1,709

 
1,036

Other
 
3,713

 
2,015

 
 
$
21,875

 
$
21,946

Other liabilities:
 
 
 
 
Postretirement benefits
 
$
8,260

 
$
8,264

Acquisition-related contingent consideration
 
1,241

 
2,010

Deferred income taxes
 
168

 
615

Uncertain tax positions
 
2,636

 
2,634

Other
 
4,010

 
272

 
 
$
16,315

 
$
13,795




#9

(dollars in thousands, except per-share amounts)


(4) NET INCOME PER SHARE

Basic net income per share is computed by dividing net income by the weighted average common shares and fully vested 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), stock units, and restricted stock units outstanding. Performance share awards are included in the diluted calculation based upon what would be issued if the end of the most recent reporting period was the end of the term of the award.
Certain outstanding options and restricted stock units were excluded from the diluted net income per-share calculations because their effect would have been anti-dilutive under the treasury stock method. The options and restricted stock units excluded from the diluted net income per-share share calculation were as follows:
 
Three Months Ended
 
Six Months Ended
 
July 31,
2018
 
July 31,
2017
 
July 31,
2018
 
July 31,
2017
Anti-dilutive options and restricted stock units
55,810
 
209,400
 
36,384
 
409,136


The computation of earnings per share is presented below:
 
Three Months Ended
 
Six Months Ended
 
July 31,
2018
 
July 31,
2017
 
July 31,
2018
 
July 31,
2017
Numerator:
 
 
 
 
 
 
 
Net income attributable to Raven Industries, Inc.
$
13,677

 
$
8,235

 
$
35,812

 
$
20,583

 
 
 
 
 
 
 
 
Denominator:
 
 
 
 
 
 
 
Weighted average common shares outstanding
35,893,132

 
36,096,048

 
35,859,614

 
36,088,095

Weighted average fully vested stock units outstanding
102,339

 
109,146

 
95,027

 
103,966

Denominator for basic calculation
35,995,471

 
36,205,194

 
35,954,641

 
36,192,061

 
 
 
 
 
 
 
 
Weighted average common shares outstanding
35,893,132

 
36,096,048

 
35,859,614

 
36,088,095

Weighted average fully vested stock units outstanding
102,339

 
109,146

 
95,027

 
103,966

Dilutive impact of stock options and restricted stock units
429,409

 
348,795

 
455,595

 
322,661

Denominator for diluted calculation
36,424,880

 
36,553,989

 
36,410,236

 
36,514,722

 
 
 
 
 
 
 
 
Net income per share ─ basic
$
0.38

 
$
0.23

 
$
1.00

 
$
0.57

Net income per share ─ diluted
$
0.38

 
$
0.23

 
$
0.98

 
$
0.56



(5) REVENUE
Nature of goods and services
The Company is comprised of three unique operating divisions, classified into reportable segments: Applied Technology (ATD), Engineered Films (EFD), and Aerostar (AERO). The following is a description of principal activities, separated by reportable segment, from which the Company generates revenue. Note that service revenues are not material and are not separately disclosed.
Applied Technology
Applied Technology designs, manufactures, sells, and services innovative precision agriculture products and information management tools, which are collectively referred to as precision agriculture equipment, that help growers reduce costs, more precisely control inputs, and improve crop yields for the global agriculture market. Customers can purchase precision agriculture equipment individually or in large quantities. For purchases made in large quantities, the Company accounts for each piece of equipment separately, as each is a distinct performance obligation from which the customer derives benefit. The stand-alone selling prices are determined based on the prices at which the Company charges other customers for similar products in similar circumstances. Kits or bundles, which can consist of various pieces of equipment, are shipped together and therefore allocation of transaction price does not impact timing of revenue recognition. In the normal course of business the customer agrees to a stated price that does not vary upon purchase and revenue is recognized when control has transferred to the customer.

#10

(dollars in thousands, except per-share amounts)


Engineered Films
Engineered Films manufactures high performance plastic films and sheeting for geomembrane, agricultural, construction, and industrial applications. Engineered Films' ability to develop value-added innovative products is expanded by its fabrication, conversion, and installation capabilities. Plastic film and sheeting can be purchased separately or together with installation services. The majority of transactions within Engineered Films are considered non-customized product-only sales. The Company accounts for each product separately, as each is a distinct performance obligation from which the customer derives benefit. The stand-alone selling prices are determined based on the prices at which the Company charges other customers for similar products in similar circumstances. In the normal course of business the customer agrees to a stated price that does not vary upon purchase and revenue is recognized when control has transferred to the customer.
The remaining transactions within Engineered Films are related to installation and/or customized product sales. Installation revenues are recognized over time using the cost incurred input method (i.e., costs incurred to date relative to total estimated costs at completion) because of continuous transfer of control to our customers. For customized product-only sales, the Company recognizes revenue over time by applying an output method, such as units delivered, to measure progress.
Aerostar
Aerostar serves the aerospace/defense and stratospheric balloon markets. Aerostar designs and manufactures proprietary products including high-altitude (stratospheric) balloon systems, and tethered aerostats, which are collectively referred to as lighter-than-air products, and offers radar processing systems and related services. These products can be integrated with additional third-party sensors to provide research, communications, and situational awareness capabilities to governmental and commercial customers. Aerostar pursues product and support services contracts with agencies and instrumentalities of the U.S. government. Product sales to customers for which we do not continuously transfer control are recognized based on a point-in-time. Contracts with customers which include elements of service, and are considered to be single performance obligations, are recognized over time. The stand-alone selling prices are determined based on the prices at which the Company charges other customers for similar products or services in similar circumstances. In the normal course of business the customer agrees to a stated price that does not vary upon purchase. For revenues recognized at a point-in-time, the Company recognizes revenue when control has transferred to the customer. Certain lighter-than-air contracts are recognized over time using the cost incurred input method. The remaining transactions are recognized over time applying an output method, such as units delivered, to measure progress.
Disaggregation of Revenues
In the following table, revenue is disaggregated by major product category and geography as we believe these categories best depict how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors. The table also includes a reconciliation of the disaggregated revenue with reportable segments.

#11

(dollars in thousands, except per-share amounts)


 
Revenue by Product Category
 
Three Months Ended July 31, 2018
 
Three Months Ended July 31, 2017
 
ATD
EFD
AERO
ELIM(a)
Total
 
ATD
EFD
AERO
ELIM(a)
Total
Lighter-than-Air
 
 
 
 
 
 
 
 
 
 
 
    Domestic
$

$

$
11,199

$

$
11,199

 
$

$

$
5,460

$

$
5,460

    International


82


82

 


28


28

Plastic Films & Sheeting
 
 
 
 


 
 
 
 
 


    Domestic

54,921


(70
)
54,851

 

45,243


(211
)
45,032

    International

3,954



3,954

 

3,785



3,785

Precision Agriculture Equipment
 
 
 
 


 
 
 
 
 


    Domestic
23,592




23,592

 
20,742




20,742

    International
6,770




6,770

 
7,682




7,682

Other
 
 
 
 


 
 
 
 
 


    Domestic


2,221


2,221

 


3,881


3,881

    International


15


15

 





Totals
$
30,362

$
58,875

$
13,517

$
(70
)
$
102,684

 
$
28,424

$
49,028

$
9,369

$
(211
)
$
86,610

 
 
 
 
 
 
 
 
 
 
 
 
 
Six Months Ended July 31, 2018
 
Six Months Ended July 31, 2017
 
ATD
EFD
AERO
ELIM(a)
Total
 
ATD
EFD
AERO
ELIM(a)
Total
Lighter-than-Air
 
 
 
 
 
 
 
 
 
 
 
    Domestic
$

$

$
17,747

$

$
17,747

 
$

$

$
11,666

$

$
11,666

    International


536


536

 


54


54

Plastic Films & Sheeting
 
 
 
 
 
 
 
 
 
 
 
    Domestic

110,218


(264
)
109,954

 

86,354


(327
)
86,027

    International

8,649



8,649

 

6,229



6,229

Precision Agriculture Equipment
 
 
 
 
 
 
 
 
 
 
 
    Domestic
53,117




53,117

 
51,000




51,000

    International
17,675




17,675

 
17,914




17,914

Other
 
 
 
 
 
 
 
 
 
 
 
    Domestic


6,120


6,120

 


7,213


7,213

    International


15


15

 


42


42

Totals
$
70,792

$
118,867

$
24,418

$
(264
)
$
213,813

 
$
68,914

$
92,583

$
18,975

$
(327
)
$
180,145

(a)
Intersegment sales for both fiscal 2019 and 2018 were primarily sales from Engineered Films to Aerostar.
Contract Balances
Contract assets consist of unbilled receivables and retainage. Contract assets primarily relate to the Company’s rights to consideration for work completed but not billed at the reporting date, or retainage provisions on billings that have been issued. Contract assets are converted to receivables when the right to collect becomes unconditional.
Contract liabilities consist of customer advances and deferred revenue. Contract liabilities primarily relate to consideration received from customers prior to transferring goods or services to the customer.

#12

(dollars in thousands, except per-share amounts)


The changes in our contract assets and liabilities were as follows:
 
July 31,
2018
 
January 31,
2018
 
$ Change
% Change
Contract assets(a)
$
3,167

 
$
3,119

 
$
48

1.5
 %
 
 
 
 
 
 
 
Contract liabilities(b)
$
733

 
$
1,890

 
$
(1,157
)
(61.2
)%
(a) Contract assets are reported in "Accounts receivable, net" in the Consolidated Balance Sheet.
(b) Contract liabilities are reported in "Other current liabilities" in the Consolidated Balance Sheet.

During the six months ended July 31, 2018, the Company’s contract assets increased by $48 and contract liabilities decreased by $1,157, primarily as a result of the contract terms which include timing of customer payments, timing of invoicing, and progress made on open contracts. Due to the short-term nature of the Company’s contracts, substantially all of the contract assets that existed as of January 31, 2018 were converted to receivables and contract liabilities that existed as of January 31, 2018 were recognized as revenue during the first quarter of fiscal 2019.
Remaining performance obligations
As of July 31, 2018, the Company did not have any remaining performance obligations related to customer contracts that had an original expected duration of one year or more.

(6) ACQUISITIONS AND DIVESTITURES OF AND INVESTMENTS IN BUSINESSES AND TECHNOLOGIES

Colorado Lining International, Inc.
On September 1, 2017, the Company completed the acquisition of substantially all of the assets (the acquisition) of Colorado Lining International, Inc., a Colorado corporation, headquartered in Parker, CO (CLI). The acquisition was immediately aligned under the Company’s Engineered Films Division. The acquisition enhanced the Company’s geomembrane market position through extended service and product offerings with the addition of new design-build and installation service components, and advanced Engineered Films’ business model into a vertically-integrated, full-service solutions provider for the geomembrane market. The acquisition constituted a business and as such was accounted for as a business combination.

The purchase price of $14,938 included a potential earn-out with an estimated fair value of $1,256. The earn-out payments are contingent upon achieving certain revenue targets and operational synergies. The fair value of the business acquired was allocated to the assets acquired and liabilities assumed based on their estimated fair values. The excess of the purchase price over the fair value of the identifiable assets acquired and liabilities assumed was recorded as goodwill. Goodwill recorded as part of the purchase price allocation was $5,714, all of which is tax deductible. Intangible assets acquired in the acquisition related to customer relationships, order backlog and non-compete agreements were valued at $610.

Aerostar's Client Private Business
In fiscal 2018 Aerostar actively marketed the sale of its client private business and classified it as held for sale. During the first quarter of fiscal 2019, the client private business was sold for $832 which resulted in an immaterial gain in the six-months ended July 31, 2018. No gain was recognized during the three-months ended July 31, 2018.

Site-Specific Technology Development Group, Inc. (SST)
In February 2018 the Company sold its ownership interest of approximately 22% in SST with a carrying value of $1,937. This investment was being accounted for as an equity method investment. Raven received $6,556 in cash at closing which was reported as "Proceeds from sale or maturity of investments" in the Consolidated Statements of Cash Flows. The Company recognized a gain on the sale of $5,785 for the six-months ended July 31, 2018. No gain was recognized during the three-months ended July 31, 2018. The gain was reported in "Other (expense) income, net" in the Consolidated Statements of Income and Comprehensive Income. This amount includes a fifteen percent hold-back provision held in an escrow account which is expected to be settled in fiscal 2020.

Acquisition-related Contingent Consideration
The Company has contingent liabilities related to the acquisition of CLI in September 2017, as well as the prior acquisitions of SBG Innovatie BV and its affiliate, Navtronics BVBA (collectively, SBG) in May 2014 and Vista Research, Inc. (Vista) in January 2012. The fair value of such contingent consideration is estimated as of the acquisition date, and subsequently at the end of each reporting period, using forecasted cash flows. Projecting future cash flows requires the Company to make significant estimates and assumptions regarding future events, conditions, or revenues being achieved under the subject contingent agreement as well as the appropriate discount rate. Such valuation techniques include one or more significant inputs that are not observable (Level 3 fair value measures).

#13

(dollars in thousands, except per-share amounts)


Changes in the fair value of the liability for acquisition-related contingent consideration are as follows:
 
Three Months Ended
 
Six Months Ended
 
July 31,
2018
 
July 31,
2017
 
July 31,
2018
 
July 31,
2017
Beginning balance
$
2,903

 
$
1,672

 
$
3,046

 
$
1,742

Change in fair value of the liability
251

 
54

 
403

 
145

Contingent consideration earn-out paid
(204
)
 
(159
)
 
(499
)
 
(320
)
Ending balance
$
2,950

 
$
1,567

 
$
2,950

 
$
1,567

 
 
 
 
 
 
 
 
Classification of liability in the Consolidated balance sheet
 
 
 
 
 
 
 
Accrued liabilities
$
1,709

 
$
385

 
$
1,709

 
$
385

Other liabilities, long-term
1,241

 
1,182

 
1,241

 
1,182

Balance at July 31
$
2,950

 
$
1,567

 
$
2,950

 
$
1,567



In the CLI acquisition, the Company entered into a contingent earn-out agreement, not to exceed $2,000. The earn-out is paid annually for three years after the purchase date, contingent upon achieving certain revenues and operational synergies. To date, the Company has made no payments on this potential earn-out liability.

In connection with the acquisition of SBG, Raven is committed to making additional earn-out payments, not to exceed $2,500 calculated and paid quarterly for ten years after the purchase date contingent upon achieving certain revenues. To date, the Company has paid a total of $1,178 of this potential earn-out liability.

Related to the acquisition of Vista in 2012, the Company is committed to making annual payments based upon earn-out percentages on specific revenue streams for