##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended January 31, 2011
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission file number: 001-07982
 
 RAVEN INDUSTRIES, INC.
  South Dakota
(State of incorporation)205 E. 6th Street, P.O. Box 5107, Sioux Falls, SD
(Address of principal executive offices)
    
    46-0246171
(IRS Employer Identification No.)57117- 5107
(zip code)
  Securities registered pursuant to Section 12(b) of the Act:
 Title of Each Class:
    
    Name of Each Exchange on which RegisteredCommon Stock, $1 par value
    
    The NASDAQ Stock Market
 Securities registered pursuant to Section 12(g) of the Act: None
 
 o þ
 o þ
 þ o
 o o
 þ
  Large accelerated filer o
Accelerated filer þ
Non-accelerated filer o(Do not check if a smaller reporting company)Smaller reporting company o o þ
 
  DOCUMENTS INCORPORATED BY REFERENCE




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##### 



PART IItem 1.
    
    BUSINESS
    
    
    3Item 1A.
    
    RISK FACTORS
    
    
    6Item 1B.
    
    UNRESOLVED STAFF COMMENTS
    
    
    9Item 2.
    
    PROPERTIES
    
    
    9Item 3.
    
    LEGAL PROCEEDINGS
    
    
    9Item 4.
    
    REMOVED AND RESERVED
    
    
    9PART IIItem 5.
    
    MARKET FOR THE REGISTRANTS COMMON EQUITY, RELATED SHAREHOLDER MATTERS,
AND ISSUER PURCHASES OF EQUITY SECURITIES
    
    
    10Quarterly Information (Unaudited)
    
    
    10Stock Performance
    
    
    11Item 6.
    
    SELECTED FINANCIAL DATA
    
    
    12Six-year Financial Summary
    
    
    12Business Segments
    
    
    13Item 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
    
    
    14Executive Summary
    
    
    14Results of Operations  Segment Analysis
    
    
    17Outlook
    
    
    21Liquidity and Capital Resources
    
    
    22Off-Balance Sheet Arrangements and Contractual Obligations
    
    
    23Critical Accounting Estimates
    
    
    23New Accounting Standards
    
    
    25Item 7A.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    25Item 8.
    
    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
    
    
    26Managements Report on Internal Control Over Financial Reporting
    
    
    27Report of Independent Registered Public Accounting Firm
    
    
    28Consolidated Balance Sheets
    
    
    29Consolidated Statements of Income
    
    
    30Consolidated Statements of Shareholders Equity and Comprehensive Income
    
    
    31Consolidated Statements of Cash Flows
    
    
    32Notes to Consolidated Financial Statements
    
    
    33Item 9.
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND 
FINANCIAL DISCLOSURE
    
    
    46Item 9A.
    
    CONTROLS AND PROCEDURES
    
    
    46Item 9B.
    
    OTHER INFORMATION
    
    
    46PART IIIItem 10.
    
    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
    
    
    47Item 11.
    
    EXECUTIVE COMPENSATION
    
    
    47Item 12.
    
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND 
RELATED SHAREHOLDER MATTERS
    
    
    47Item 13.
    
    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
    
    
    47Item 14
    
    PRINCIPAL ACCOUNTING FEES AND SERVICES
    
    
    47PART IVItem 15.
    
    EXHIBITS, FINANCIAL STATEMENT SCHEDULE
    
    
    48INDEX TO EXHIBITS
    
    
    49SIGNATURES
    
    
    50REPORT OF INDEPENDENT REGISTERED ACCOUNTING FIRM ON FINANCIAL STATEMENT SCHEDULE
    
    
    51SCHEDULE II
    
    
    52EX-10.GEX-10.PEX-21EX-23EX-31.1EX-31.2EX-32.1EX-32.2
  
 2




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PART I
 
 ITEM 1.
    
    BUSINESS
 http://www.ravenind.com
 http://www.sec.gov
   13
    
    

Business
Segments17
    
    

Results
of Operations  Segment Analysis43
    
    

Note
13. Business Segments and Major Customer Information
 BUSINESS SEGMENTS
 Applied Technology
   Engineered Films
  3




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Aerostar
   Electronic Systems
   MAJOR CUSTOMER INFORMATION
  SEASONAL WORKING CAPITAL REQUIREMENTS
  FINANCIAL INSTRUMENTS
   RAW MATERIALS
  4




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PATENTS
  RESEARCH AND DEVELOPMENT
  ENVIRONMENTAL MATTERS
    BACKLOG
  EMPLOYEES
  5




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EXECUTIVE OFFICERS
 NAME, AGE AND POSITION
    
    BIOGRAPHICAL DATADaniel
A. Rykhus, 46President and Chief Executive Officer
    
    Mr. Rykhus became the
companys President and
Chief Executive Officer in
2010. He joined Raven in
1990 as Director of World
Class Manufacturing, was
General Manager of the
Applied Technology Division
from 1998 through 2009, and
served as Executive Vice
President from 2004 through
2010.Thomas
Iacarella, 57Vice President and Chief Financial Officer
    
    Mr. Iacarella joined Raven
in 1991 as Corporate
Controller and has been the
companys Chief Financial
Officer, Secretary and
Treasurer since 1998. Prior
to joining the company, he
held positions with Tonka
Corporation and the
accounting firm now known as
Ernst & Young.David
R. Bair, 54Division Vice President and General Manager 
Electronic Systems Division
    
    Mr. Bair joined Raven in
1999 as Division Vice
President and General
Manager of the Electronic
Systems Division.James
D. Groninger, 52Division Vice President and General Manager 
Engineered Films Division
    
    Mr. Groninger joined Raven
in 1986 and in 1995 became
Manager of Glasstite, Inc.
He has been Division Vice
President and General
Manager of the Engineered
Films Division since 2004.Barbara
K. Ohme, 63Vice President  Administration
    
    Ms. Ohme joined Raven in
1987 as Employment Manager
and has been the companys
Vice President of
Administration since 2004.Matthew
T. Burkhart, 35Division Vice President and General Manager 
Applied Technology Division
    
    Mr. Burkhart was named
Division Vice President and
General Manager of the
Applied Technology Division
on February 1, 2010. He
joined Raven in 2008 as
Director of Sales and became
General Manager  Applied
Technology Division on
February 1, 2009. Prior to
joining the company, he was
a Branch Manager for Johnson
Controls.Lon
E. Stroschein, 36Division Vice President and General Manager 
Aerostar Division
    
    Mr. Stroschein was named
Vice President and General
Manager of the Aerostar
Division in October 2010. He
joined Raven in 2008 as
International Sales Manager
for Applied Technology.
Prior to joining Raven, he
was a bank Vice President
and was a member of the
executive staff for a U.S.
Senator.
 
  FORWARD-LOOKING STATEMENTS
  6




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RISKS RELATING TO THE COMPANY
  Weather conditions could affect certain of the companys markets such as agriculture and
construction.
   Price fluctuations in and shortages of raw materials could have a significant impact on the
companys ability to sustain and grow earnings.
    Fluctuations in commodity prices can increase our costs and decrease our sales.
   Failure to develop and market new technologies and products could impact the companys competitive
position and have an adverse effect on the companys financial results.
  7




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The companys Electronic Systems Division is dependent on a small number of customers and faces
competitive risks.
   The companys Aerostar segment depends on the U.S. government for a significant portion of its
sales, creating uncertainty in the timing of and funding for projected contracts.
   The company derives a portion of its revenues from foreign markets, which subjects the company to
risk of changes in government policies and laws or worldwide economic conditions.
  Adverse economic conditions in the major industries the company serves may materially affect
segment performance and consolidated results of operations.
  8




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SquareLocation
    
    
    Feet
    
    
    Function
    
    Business segmentsSioux Falls, SD
    
    
    
    
    150,000
    
    
    Corporate
office; electronics manufacturing
    
    All131,000
    
    
    Plastic sheeting manufacturing
    
    Engineered Films73,000
    
    
    Warehouse
    
    Engineered Films59,000
    
    
    Plastic sheeting manufacturing and sewing
    
    Engineered Films; Aerostar35,000
    
    
    Warehouse and offices
    
    Engineered Films; Aerostar27,000
    
    
    Training facility and manufacturing
    
    Applied Technology25,000
    
    
    Tethered
aerostat and inflatable manufacturing
    
    Aerostar24,000
    
    
    Electronics manufacturing
    
    Electronic Systems*14,000
    
    
    Tethered aerostat inflation and testing
    
    Aerostar23,000
    
    
    Training and product development facility
    
    Applied Technology10,000
    
    
    Machine shop
    
    Applied TechnologySulphur Springs, TX
    
    
    64,000
    
    
    Research balloon manufacturing
    
    AerostarHuron, SD
    
    
    24,000
    
    
    Sewing plant
    
    AerostarSt. Louis, MO
    
    
    24,000
    
    
    Electronics manufacturing
    
    Electronic SystemsMadison, SD
    
    
    20,000
    
    
    Sewing plant
    
    AerostarAustin, TX
    
    
    *7,000
    
    
    Product development facility
    
    Applied Technology; AerostarStockholm, SK
    
    
    *7,000
    
    
    Warehouse
    
    Applied Technology
 
 *
    
    Leased  
   
  9




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PART
II
 
   
 QUARTERLY INFORMATION (UNAUDITED)
  Net Income
    
    
    Common Stock
    
    
    CashNet
    
    
    Gross
    
    
    Operating
    
    
    Pretax
    
    
    Net
    
    
    Per Share(a)
    
    
    Market Price
    
    
    DividendsSales
    
    
    Profit
    
    
    Income
    
    
    Income
    
    
    Income
    
    
    Basic
    
    
    Diluted
    
    
    High
    
    
    Low
    
    
    Per ShareFISCAL 2011First Quarter
    
    $
    85,030
    
    
    $
    27,171
    
    
    $
    19,505
    
    
    $
    19,557
    
    
    $
    12,945
    
    
    $
    0.72
    
    
    $
    0.72
    
    
    $
    31.79
    
    
    $
    26.54
    
    
    $
    0.16Second Quarter
    
    
    73,174
    
    
    
    20,389
    
    
    
    12,623
    
    
    
    12,529
    
    
    
    8,353
    
    
    
    0.46
    
    
    
    0.46
    
    
    
    38.18
    
    
    
    28.66
    
    
    
    0.16Third Quarter
    
    
    85,823
    
    
    
    24,887
    
    
    
    17,866
    
    
    
    17,883
    
    
    
    11,833
    
    
    
    0.65
    
    
    
    0.65
    
    
    
    42.11
    
    
    
    30.00
    
    
    
    1.41
    (b)Fourth Quarter
    
    
    70,681
    
    
    
    18,982
    
    
    
    10,209
    
    
    
    10,313
    
    
    
    7,406
    
    
    
    0.41
    
    
    
    0.41
    
    
    
    49.59
    
    
    
    40.01
    
    
    
    0.16Total Year
    
    $
    314,708
    
    
    $
    91,429
    
    
    $
    60,203
    
    
    $
    60,282
    
    
    $
    40,537
    
    
    $
    2.24
    
    
    $
    2.24
    
    
    $
    49.59
    
    
    $
    26.54
    
    
    $
    1.89FISCAL 2010First Quarter
    
    $
    65,222
    
    
    $
    20,428
    
    
    $
    14,113
    
    
    $
    14,114
    
    
    $
    9,231
    
    
    $
    0.51
    
    
    $
    0.51
    
    
    $
    24.65
    
    
    $
    15.37
    
    
    $
    0.13Second Quarter
    
    
    56,586
    
    
    
    15,112
    
    
    
    9,306
    
    
    
    9,411
    
    
    
    6,204
    
    
    
    0.34
    
    
    
    0.34
    
    
    
    31.00
    
    
    
    23.99
    
    
    
    0.14Third Quarter
    
    
    60,158
    
    
    
    16,918
    
    
    
    11,119
    
    
    
    11,116
    
    
    
    7,293
    
    
    
    0.40
    
    
    
    0.40
    
    
    
    32.43
    
    
    
    24.47
    
    
    
    0.14Fourth Quarter
    
    
    55,816
    
    
    
    15,394
    
    
    
    8,682
    
    
    
    8,681
    
    
    
    5,846
    
    
    
    0.32
    
    
    
    0.32
    
    
    
    33.18
    
    
    
    24.04
    
    
    
    0.14Total Year
    
    $
    237,782
    
    
    $
    67,852
    
    
    $
    43,220
    
    
    $
    43,322
    
    
    $
    28,574
    
    
    $
    1.58
    
    
    $
    1.58
    
    
    $
    33.18
    
    
    $
    15.37
    
    
    $
    0.55FISCAL 2009First Quarter
    
    $
    75,166
    
    
    $
    23,288
    
    
    $
    16,641
    
    
    $
    16,759
    
    
    $
    10,882
    
    
    $
    0.60
    
    
    $
    0.60
    
    
    $
    32.80
    
    
    $
    25.94
    
    
    $
    0.13Second Quarter
    
    
    69,278
    
    
    
    17,197
    
    
    
    10,312
    
    
    
    10,488
    
    
    
    6,815
    
    
    
    0.38
    
    
    
    0.38
    
    
    
    39.50
    
    
    
    29.46
    
    
    
    0.13Third Quarter
    
    
    75,538
    
    
    
    19,564
    
    
    
    12,371
    
    
    
    12,548
    
    
    
    8,385
    
    
    
    0.47
    
    
    
    0.46
    
    
    
    47.82
    
    
    
    25.79
    
    
    
    0.13Fourth Quarter
    
    
    59,931
    
    
    
    13,399
    
    
    
    7,070
    
    
    
    7,106
    
    
    
    4,688
    
    
    
    0.26
    
    
    
    0.26
    
    
    
    33.24
    
    
    
    20.60
    
    
    
    1.38
    (c)Total Year
    
    $
    279,913
    
    
    $
    73,448
    
    
    $
    46,394
    
    
    $
    46,901
    
    
    $
    30,770
    
    
    $
    1.71
    
    
    $
    1.70
    
    
    $
    47.82
    
    
    $
    20.60
    
    
    $
    1.77
 
 (a)
    
    Net income per share is computed discretely by quarter and may not add to the full
year.(b)
    
    A special dividend of $1.25 per share was paid during the third quarter of fiscal 2011.(c)
    
    A special dividend of $1.25 per share was paid during the fourth quarter of fiscal
2009.




10




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COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN AMONG RAVEN INDUSTRIES, S&P 1500
INDUSTRIAL MACHINERY INDEX AND RUSSELL 2000 INDEX
 
  Year Ended January 31
    5-YearCompany / Index
    
    2006
    
    2007
    
    2008
    
    2009
    
    2010
    
    2011
    
    CAGR(a)Raven Industries, Inc.
    
    $
    100.00
    
    
    $
    91.05
    
    
    $
    97.37
    
    
    $
    74.90
    
    
    $
    100.24
    
    
    $
    174.50
    
    
    
    12
    %S&P 1500 Industrial Machinery
    
    
    100.00
    
    
    
    114.82
    
    
    
    121.05
    
    
    
    67.90
    
    
    
    92.53
    
    
    
    124.67
    
    
    
    5
    %Russell 2000
    
    
    100.00
    
    
    
    110.51
    
    
    
    99.70
    
    
    
    62.97
    
    
    
    86.78
    
    
    
    114.00
    
    
    
    3
    %
 
 (a)
    
    compound annual growth rate 11




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SIX-YEAR FINANCIAL SUMMARY
  For the years ended January 312011
    
    
    2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006OPERATIONSNet sales
    
    $
    314,708
    
    
    $
    237,782
    
    
    $
    279,913
    
    
    $
    233,957
    
    
    $
    217,529
    
    
    $
    204,528Gross profit
    
    
    91,429
    
    
    
    67,852
    
    
    
    73,448
    
    
    
    63,676
    
    
    
    57,540
    
    
    
    55,714Operating income
    
    
    60,203
    
    
    
    43,220
    
    
    
    46,394
    
    
    
    41,145
    
    
    
    38,302
    
    
    
    37,284Income before income taxes
    
    
    60,282
    
    
    
    43,322
    
    
    
    46,901
    
    
    
    42,224
    
    
    
    38,835
    
    
    
    37,494Net income
    
    $
    40,537
    
    
    $
    28,574
    
    
    $
    30,770
    
    
    $
    27,802
    
    
    $
    25,441
    
    
    $
    24,262Net income % of sales
    
    
    12.9
    %
    
    
    12.0
    %
    
    
    11.0
    %
    
    
    11.9
    %
    
    
    11.7
    %
    
    
    11.9
    %Net income % of beginning equity
    
    
    30.4
    %
    
    
    25.2
    %
    
    
    26.0
    %
    
    
    28.3
    %
    
    
    30.1
    %
    
    
    36.7
    %Cash dividends(a)
    
    $
    34,095
    
    
    $
    9,911
    
    
    $
    31,884
    
    
    $
    7,966
    
    
    $
    6,507
    
    
    $
    5,056FINANCIAL POSITIONCurrent assets
    
    $
    128,181
    
    
    $
    117,747
    
    
    $
    98,073
    
    
    $
    100,869
    
    
    $
    73,219
    
    
    $
    71,345Current liabilities
    
    
    34,335
    
    
    
    25,960
    
    
    
    23,322
    
    
    
    22,108
    
    
    
    16,464
    
    
    
    20,050Working capital
    
    $
    93,846
    
    
    $
    91,787
    
    
    $
    74,751
    
    
    $
    78,761
    
    
    $
    56,755
    
    
    $
    51,295Current ratio
    
    
    3.73
    
    
    
    4.54
    
    
    
    4.21
    
    
    
    4.56
    
    
    
    4.45
    
    
    
    3.56Property, plant and equipment
    
    $
    41,522
    
    
    $
    33,029
    
    
    $
    35,880
    
    
    $
    35,743
    
    
    $
    36,264
    
    
    $
    25,602Total assets
    
    
    187,760
    
    
    
    170,309
    
    
    
    144,415
    
    
    
    147,861
    
    
    
    119,764
    
    
    
    106,157Shareholders equity
    
    $
    141,214
    
    
    $
    133,251
    
    
    $
    113,556
    
    
    $
    118,275
    
    
    $
    98,268
    
    
    $
    84,389Long-term debt / total capitalization
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %Inventory turnover (COS / average inventory)
    
    
    5.6
    
    
    
    5.3
    
    
    
    5.2
    
    
    
    5.3
    
    
    
    5.4
    
    
    
    5.9CASH FLOWS PROVIDED BY (USED IN)Operating activities
    
    $
    42,085
    
    
    $
    47,643
    
    
    $
    39,037
    
    
    $
    27,151
    
    
    $
    26,313
    
    
    $
    21,189Investing activities
    
    
    (11,418
    )
    
    
    (13,396
    )
    
    
    (7,000
    )
    
    
    (4,433
    )
    
    
    (18,664
    )
    
    
    (11,435
    )Financing activities
    
    
    (33,834
    )
    
    
    (9,867
    )
    
    
    (36,969
    )
    
    
    (8,270
    )
    
    
    (10,277
    )
    
    
    (6,946
    )Change in cash
    
    
    (3,121
    )
    
    
    24,417
    
    
    
    (5,005
    )
    
    
    14,489
    
    
    
    (2,626
    )
    
    
    2,790COMMON
STOCK DATAEPS  basic
    
    $
    2.24
    
    
    $
    1.58
    
    
    $
    1.71
    
    
    $
    1.54
    
    
    $
    1.41
    
    
    $
    1.34EPS  diluted
    
    
    2.24
    
    
    
    1.58
    
    
    
    1.70
    
    
    
    1.53
    
    
    
    1.39
    
    
    
    1.32Cash dividends per share(a)
    
    
    1.89
    
    
    
    0.55
    
    
    
    1.77
    
    
    
    0.44
    
    
    
    0.36
    
    
    
    0.28Book value per share (b)
    
    
    7.81
    
    
    
    7.38
    
    
    
    6.30
    
    
    
    6.52
    
    
    
    5.45
    
    
    
    4.67Stock price range during the yearHigh
    
    $
    49.59
    
    
    $
    33.18
    
    
    $
    47.82
    
    
    $
    45.85
    
    
    $
    42.70
    
    
    $
    33.15Low
    
    
    26.54
    
    
    
    15.37
    
    
    
    20.60
    
    
    
    26.20
    
    
    
    25.46
    
    
    
    16.54Close
    
    $
    47.24
    
    
    $
    28.58
    
    
    $
    21.81
    
    
    $
    30.02
    
    
    $
    28.43
    
    
    $
    31.60Shares and stock units outstanding, year-end
    
    
    18,089
    
    
    
    18,051
    
    
    
    18,027
    
    
    
    18,130
    
    
    
    18,044
    
    
    
    18,072Number of shareholders, year-end
    
    
    7,456
    
    
    
    7,767
    
    
    
    8,268
    
    
    
    8,700
    
    
    
    8,992
    
    
    
    9,263OTHER DATAPrice / earnings ratio (c)
    
    
    21.1
    
    
    
    18.1
    
    
    
    12.8
    
    
    
    19.6
    
    
    
    20.5
    
    
    
    23.9Average number of employees
    
    
    1,036
    
    
    
    930
    
    
    
    1,070
    
    
    
    930
    
    
    
    884
    
    
    
    845Sales per employee
    
    $
    304
    
    
    $
    256
    
    
    $
    262
    
    
    $
    252
    
    
    $
    246
    
    
    $
    242Backlog
    
    $
    75,972
    
    
    $
    74,718
    
    
    $
    80,361
    
    
    $
    66,628
    
    
    $
    44,237
    
    
    $
    43,619
 
 (a)
    
    Includes special dividends of $1.25 per share in fiscal 2011 and 2009.(b)
    
    Shareholders equity divided by common shares and stock units outstanding.(c)
    
    Closing stock price divided by EPS  diluted. 12




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##### Table of Contents



BUSINESS SEGMENTS
  For the years ended January 312011
    
    2010
    
    2009
    
    2008
    
    2007
    
    2006APPLIED TECHNOLOGY DIVISIONSales
    
    $
    100,090
    
    
    $
    86,217
    
    
    $
    103,098
    
    
    $
    64,291
    
    
    $
    45,515
    
    
    $
    47,506Operating income
    
    
    31,135
    
    
    
    25,722
    
    
    
    33,884
    
    
    
    19,102
    
    
    
    10,111
    
    
    
    13,586Assets
    
    
    52,669
    
    
    
    51,029
    
    
    
    48,881
    
    
    
    36,938
    
    
    
    27,629
    
    
    
    30,047Capital expenditures
    
    
    1,769
    
    
    
    941
    
    
    
    2,674
    
    
    
    1,008
    
    
    
    577
    
    
    
    938Depreciation and amortization
    
    
    2,238
    
    
    
    1,677
    
    
    
    1,383
    
    
    
    1,125
    
    
    
    1,142
    
    
    
    1,085ENGINEERED FILMS DIVISIONSales
    
    $
    105,838
    
    
    $
    63,783
    
    
    $
    89,858
    
    
    $
    85,316
    
    
    $
    91,082
    
    
    $
    82,794Operating income
    
    
    19,622

(b)
    
    
    10,232
    
    
    
    10,919
    
    
    
    17,739
    
    
    
    23,440
    
    
    
    19,907Assets
    
    
    46,519
    
    
    
    35,999
    
    
    
    35,862
    
    
    
    43,688
    
    
    
    41,988
    
    
    
    33,512Capital expenditures
    
    
    8,450
    
    
    
    1,460
    
    
    
    3,120
    
    
    
    4,012
    
    
    
    13,266
    
    
    
    7,359Depreciation and amortization
    
    
    3,452
    
    
    
    3,707
    
    
    
    4,303
    
    
    
    4,046
    
    
    
    2,887
    
    
    
    2,436AEROSTAR DIVISIONSales
    
    $
    48,787
    
    
    $
    27,244
    
    
    $
    27,186
    
    
    $
    17,290
    
    
    $
    14,654
    
    
    $
    18,009Operating income
    
    
    9,407
    
    
    
    5,634
    
    
    
    4,219
    
    
    
    1,506
    
    
    
    707
    
    
    
    2,133Assets
    
    
    18,140
    
    
    
    10,462
    
    
    
    8,744
    
    
    
    9,941
    
    
    
    8,161
    
    
    
    6,837Capital expenditures
    
    
    2,190
    
    
    
    332
    
    
    
    383
    
    
    
    156
    
    
    
    812
    
    
    
    179Depreciation and amortization
    
    
    757
    
    
    
    398
    
    
    
    444
    
    
    
    499
    
    
    
    375
    
    
    
    359ELECTRONIC SYSTEMS DIVISIONSales
    
    $
    65,852
    
    
    $
    63,525
    
    
    $
    61,983
    
    
    $
    67,987
    
    
    $
    66,278
    
    
    $
    56,219Operating income
    
    
    9,917
    
    
    
    8,979
    
    
    
    5,926
    
    
    
    10,365
    
    
    
    10,850
    
    
    
    8,916Assets
    
    
    23,385
    
    
    
    21,216
    
    
    
    26,847
    
    
    
    25,865
    
    
    
    25,175
    
    
    
    20,191Capital expenditures
    
    
    609
    
    
    
    290
    
    
    
    1,399
    
    
    
    1,077
    
    
    
    1,357
    
    
    
    1,612Depreciation and amortization
    
    
    823
    
    
    
    939
    
    
    
    1,159
    
    
    
    1,237
    
    
    
    1,086
    
    
    
    871INTERSEGMENT ELIMINATIONSSalesEngineered Films Division
    
    $
    (307
    )
    
    $
    (210
    )
    
    $
    (210
    )
    
    $
    (533
    )
    
    $
    
    
    
    $
    Aerostar
    
    
    (32
    )
    
    
    (1
    )
    
    
    (25
    )
    
    
    (16
    )
    
    
    
    
    
    
    Electronic Systems Division
    
    
    (5,520
    )
    
    
    (2,776
    )
    
    
    (1,977
    )
    
    
    (378
    )
    
    
    
    
    
    
    Operating income
    
    
    (94
    )
    
    
    60
    
    
    
    (52
    )
    
    
    (100
    )
    
    
    
    
    
    
    Assets
    
    
    (186
    )
    
    
    (92
    )
    
    
    (152
    )
    
    
    (100
    )
    
    
    
    
    
    
    REPORTABLE SEGMENTS TOTALSales
    
    $
    314,708
    
    
    $
    237,782
    
    
    $
    279,913
    
    
    $
    233,957
    
    
    $
    217,529
    
    
    $
    204,528Operating income
    
    
    69,987

(b)
    
    
    50,627
    
    
    
    54,896
    
    
    
    48,612
    
    
    
    45,108
    
    
    
    44,542Assets
    
    
    140,527
    
    
    
    118,614
    
    
    
    120,182
    
    
    
    116,332
    
    
    
    102,953
    
    
    
    90,587Capital expenditures
    
    
    13,018
    
    
    
    3,023
    
    
    
    7,576
    
    
    
    6,253
    
    
    
    16,012
    
    
    
    10,088Depreciation and amortization
    
    
    7,270
    
    
    
    6,721
    
    
    
    7,289
    
    
    
    6,907
    
    
    
    5,490
    
    
    
    4,751CORPORATE & OTHER(a)Operating loss (from admin expenses)
    
    $
    (9,784
    )
    
    $
    (7,407
    )
    
    $
    (8,502
    )
    
    $
    (7,467
    )
    
    $
    (6,806
    )
    
    $
    (7,258
    )Assets
    
    
    47,233
    
    
    
    51,695
    
    
    
    24,233
    
    
    
    31,529
    
    
    
    16,811
    
    
    
    15,570Capital expenditures
    
    
    954
    
    
    
    279
    
    
    
    425
    
    
    
    382
    
    
    
    510
    
    
    
    270Depreciation and amortization
    
    
    361
    
    
    
    387
    
    
    
    469
    
    
    
    437
    
    
    
    395
    
    
    
    400TOTAL COMPANYSales
    
    $
    314,708
    
    
    $
    237,782
    
    
    $
    279,913
    
    
    $
    233,957
    
    
    $
    217,529
    
    
    $
    204,528Operating income
    
    
    60,203

(b)
    
    
    43,220
    
    
    
    46,394
    
    
    
    41,145
    
    
    
    38,302
    
    
    
    37,284Assets
    
    
    187,760
    
    
    
    170,309
    
    
    
    144,415
    
    
    
    147,861
    
    
    
    119,764
    
    
    
    106,157Capital expenditures
    
    
    13,972
    
    
    
    3,302
    
    
    
    8,001
    
    
    
    6,635
    
    
    
    16,522
    
    
    
    10,358Depreciation and amortization
    
    
    7,631
    
    
    
    7,108
    
    
    
    7,758
    
    
    
    7,344
    
    
    
    5,885
    
    
    
    5,151
 
 (a)
    
    Assets are principally cash, investments and deferred taxes.(b)
    
    Includes a $451 pre-tax gain on disposition of assets. 13




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##### Table of Contents




    
    Executive Summary
    
    Results of Operations  Segment Analysis
    
    Outlook
    
    Liquidity and Capital Resources
    
    Off-balance Sheet Arrangements and Contractual Obligations
    
    Critical Accounting Estimates
    
    New Accounting Standards
 
 EXECUTIVE SUMMARY
   
    
    Consolidated net sales, gross margins, operating income, operating margins, net income
and earnings per share
    
    Cash flow from operations and shareholder returns
    
    Return on sales, assets and equity
    
    Segment net sales, gross profit, gross margins, operating income and operating margins
  14




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##### Table of Contents



For the years ended January 31%
    
    
    
    
    
    
    %dollars in thousands, except per-share data
    
    2011
    
    
    change
    
    
    2010
    
    
    change
    
    
    2009Results of OperationsNet sales
    
    $
    314,708
    
    
    
    32
    %
    
    $
    237,782
    
    
    
    (15
    )%
    
    $
    279,913Gross margins (a)
    
    
    29.1
    %
    
    
    
    
    
    
    28.5
    %
    
    
    
    
    
    
    26.2
    %Operating income
    
    $
    60,203
    
    
    
    39
    %
    
    $
    43,220
    
    
    
    (7
    )%
    
    $
    46,394Operating margins (a)
    
    
    19.1
    %
    
    
    
    
    
    
    18.2
    %
    
    
    
    
    
    
    16.6
    %Net income
    
    $
    40,537
    
    
    
    42
    %
    
    $
    28,574
    
    
    
    (7
    )%
    
    $
    30,770Diluted income per share
    
    $
    2.24
    
    
    
    42
    %
    
    $
    1.58
    
    
    
    (7
    )%
    
    $
    1.70Cash Flow and Payments to ShareholdersCash flow from operating activities
    
    $
    42,085
    
    
    
    
    
    
    $
    47,643
    
    
    
    
    
    
    $
    39,037Cash dividends
    
    $
    34,095
    
    
    
    
    
    
    $
    9,911
    
    
    
    
    
    
    $
    31,884Common stock repurchases
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,180Cash returned to shareholders
    
    $
    34,095
    
    
    
    
    
    
    $
    9,911
    
    
    
    
    
    
    $
    37,064Performance MeasuresReturn on net sales(b)
    
    
    12.9
    %
    
    
    
    
    
    
    12.0
    %
    
    
    
    
    
    
    11.0
    %Return on average assets(c)
    
    
    22.6
    %
    
    
    
    
    
    
    18.2
    %
    
    
    
    
    
    
    21.1
    %Return on beginning equity(d)
    
    
    30.4
    %
    
    
    
    
    
    
    25.2
    %
    
    
    
    
    
    
    26.0
    %
 
 (a)
    
    The companys gross and operating margins may not be comparable to industry peers
due to variability in the classification of expenses across industries in which the company
operates.(b)
    
    Net income divided by sales(c)
    
    Net income divided by average assets(d)
    
    Net income divided by beginning equity Results of Operations  Fiscal 2011 versus Fiscal 2010
   Applied Technology
  Engineered Films
  15
    Table of Contents    Aerostar
  Electronic Systems
  Results of Operations  Fiscal 2010 versus Fiscal 2009
   Cash Flow and Payments to Shareholders
   Performance Measures
  16




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##### Table of Contents



RESULTS OF OPERATIONS  SEGMENT ANALYSIS
 Applied Technology
   dollars in thousands
    
    2011
    
    % change
    
    2010
    
    % change
    
    2009Net sales
    
    $
    100,090
    
    
    
    16
    %
    
    $
    86,217
    
    
    
    (16
    )%
    
    $
    103,098Gross profit
    
    
    45,106
    
    
    
    19
    %
    
    
    37,889
    
    
    
    (19
    )%
    
    
    46,591Gross margins
    
    
    45.1
    %
    
    
    
    
    
    
    43.9
    %
    
    
    
    
    
    
    45.2
    %Operating income
    
    $
    31,135
    
    
    
    21
    %
    
    $
    25,722
    
    
    
    (24
    )%
    
    $
    33,884Operating margins
    
    
    31.1
    %
    
    
    
    
    
    
    29.8
    %
    
    
    
    
    
    
    32.9
    %
    
    
    Market conditions.U.S. farm fundamentals were strong as commodity pricescorn,
soybeans and other feed grains remained above historical levels. In addition, global
market conditions were healthy as population and income growth in emerging economies
continued to spur increased demand for food.
    
    Sales volume and selling prices.Fiscal 2011 sales growth was driven by higher volume
and modest selling price increases.
The growth in volume reflects solid year-over-year demand for Slingshot, application controls and guidance and steering products.
    
    New product sales.Year-to-date new product sales reflected the success of Slingshotan information
 platform which improves data collection, transmission, storage and analysis and provides RTK correction of GPS signals for high accuracy steering solutions.
    
    International sales.Net sales outside the U.S. accounted for 21% of segment sales in
fiscal 2011 versus 20% in fiscal 2010. International sales of $21.3 million rose $4.2
million (25%) year-over-year led by strong Slingshot demand in Canada. Economic growth and
strong farm fundamentals in Argentina and Brazil drove strong overall demand in South
America. This growth was partially offset by a decrease in Australian sales due to weak
market conditions.
    
    Gross Margins.Gross margins of 45.1% in fiscal 2011 rose from 43.9% in fiscal 2010 due
to the positive effect of higher sales and strong operating leverage on profitability.
    
    Operating expenses.Full-year operating expenses decreased from 14.1% of sales in
fiscal 2010 to 14.0% in fiscal 2011. Strong sales and growth opportunities drove a $1.1
million (16%) increase in selling expenses and research and development expenses increased
$0.7 million (14%) to support product development and strategic initiatives.
   
    
    Economic uncertainty.The governments calendar 2009 farm income forecast was
significantly lower than 2008 actual levels. Farm production costs declined from prior-year
levels; however, they were outpaced by the decline in crop prices. Expectations of lower
farm income and economic uncertainty led growers and custom spray applicators to defer
purchases. These factors had a negative impact on substantially all of the segments
product categories.
    
    New product sales.Fiscal 2010 new product sales decreased from one year earlier due to
the highly successful fiscal 2009 launch of innovative field computers.
    
    International sales.International sales of $17.1 million fell $1.7 million (9%)
year-over-year. Net sales outside the U.S. accounted for 20% of segment sales in fiscal
2010 versus 18% in fiscal 2009. Declines in some markets were partially offset by expansion
into regions not previously served.
    
    Negative operating leverage.Gross margins of 43.9% in fiscal 2010 fell from 45.2% in
fiscal 2009 reflecting the negative
 17




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##### Table of Contents



impact of falling sales and operating leverage on profitability.
    
    Operating expenses.Full-year operating expenses increased to 14.1% of sales in fiscal
2010 from 12.3% in fiscal 2009. Selling expenses decreased $0.5 million (7%) and lagged the
drop in sales. Research and development expenses were flat year-over-year.
 Engineered Films
   dollars in thousands
    
    2011
    
    % change
    
    2010
    
    % change
    
    2009Net sales
    
    $
    105,838
    
    
    
    66
    %
    
    $
    63,783
    
    
    
    (29
    )%
    
    $
    89,858Gross profit
    
    
    22,708
    
    
    
    75
    %
    
    
    13,013
    
    
    
    (10
    )%
    
    
    14,502Gross margins
    
    
    21.5
    %
    
    
    
    
    
    
    20.4
    %
    
    
    
    
    
    
    16.1
    %Operating income
    
    $
    19,622
    (a)
    
    
    92
    %
    
    $
    10,232
    
    
    
    (6
    )%
    
    $
    10,919Operating margins
    
    
    18.5
    %
    
    
    
    
    
    
    16.0
    %
    
    
    
    
    
    
    12.2
    %
 
 (a)
    
    Includes a $451 pre-tax gain on the disposition of assets.    
    
    Improved market conditions.Business activity and confidence rose as credit markets
improved and asset values stabilized. Crude oil prices rose to levels adequate to support
increased drilling activity and strengthened energy market demand for pit liners.
Similarly, as credit began flowing and economic uncertainty diminished, the construction
and agriculture markets rose from recessionary levels.
    
    Sales volume and selling prices.Input cost increases drove a 13% increase in selling
prices. Sales volume, as measured by pounds shipped, increased over 50%, as Engineered
Films largest marketsenergy and constructionrebounded from prior year depressed
levels. Recovery of crude oil prices from their lows in early calendar 2009 drove
additional oil and gas drilling activity and increased demand for pit liners as sales to
the energy market more than doubled. Sales of industrial and construction films rose double
digits. Deliveries of agriculture films rose more than 60%. Sales of FeedFresh silage
covers gained traction due to healthy farm conditions and broadened appreciation of the
value-added benefits of this highly engineered film. Grain cover sales improved
year-over-year due to strong yields and a short harvest cycle.
    
    Capacity Utilization.Full-year operating margins expanded from 16.0% to 18.5% as a
result of improved capacity utilization. Fourth quarter profit margins fell from 14.4% to
12.5% as a result of less favorable leverage and increased purchases of outside materials
due to capacity constraints caused by planned maintenance.
    
    Operating expenses.Full-year operating expenses were 3.3% of sales in fiscal 2011
versus 4.4% in fiscal 2010. The increase in selling expenses of $0.7 million (30%) lagged
the 66% increase in sales. Research and development expenses were flat year-over-year.
   
    
    Depressed markets.Dysfunctional credit markets and plunging asset values resulted in
weak economic activity. Energy prices plunged as a result of the reduction in economic
activity, leading to the decline in the oil and gas exploration market. Similarly, as the
flow of credit slowed and economic uncertainty rose, the commercial construction markets
suffered. Agricultural commodity prices also fell sharply, resulting in a softening of the
agricultural market. The impact of the recession was felt across all of the divisions
markets, with sales to the two largest marketsenergy and construction decreasing
approximately 40% and 25%, respectively.
    
    Sales volume and selling prices.Selling prices decreased approximately 16% and sales
volume as measured by pounds
 18




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##### Table of Contents



shipped fell 17% year-over-year. These negative trends reflected market disruptions,
competitive pricing pressures stemming from excess industry capacity and lower resin costs
due to relatively low natural gas prices.
    
    Cost containment.Management responded quickly and decisively to the freefall in
business activity experienced in the fourth quarter of fiscal 2009. The necessary steps
were taken to align the division with the weak business environment, by tightly managing
expenses and decreasing headcount.
    
    Margin preservation.Poor economic conditions, volatile material costs and competitive
pricing pressures continued to squeeze margins. However, the impact of these factors was
more than offset by opportune purchases of prime grade resin and cost containments.
Consequently, gross margins increased from 16.1% to 20.4%.
    
    Operating expenses.Full-year operating expenses increased to 4.4% of sales in fiscal
2010 from 4.0% in fiscal 2009. Research and development expenses were flat year-over-year.
Selling expenses of $2.4 million decreased 25% year-over-year through reductions in
personnel and promotional expenses. However, this lagged the 29% drop in sales.
 Aerostar
   dollars in thousands
    
    2011
    
    % change
    
    2010
    
    % change
    
    2009Net sales
    
    $
    48,787
    
    
    
    79
    %
    
    $
    27,244
    
    
    
    0
    %
    
    $
    27,186Gross profit
    
    
    12,475
    
    
    
    88
    %
    
    
    6,632
    
    
    
    28
    %
    
    
    5,189Gross margins
    
    
    25.6
    %
    
    
    
    
    
    
    24.3
    %
    
    
    
    
    
    
    19.1
    %Operating income
    
    $
    9,407
    
    
    
    67
    %
    
    $
    5,634
    
    
    
    34
    %
    
    $
    4,219Operating margins
    
    
    19.3
    %
    
    
    
    
    
    
    20.7
    %
    
    
    
    
    
    
    15.5
    %
    
    
    Tethered aerostats.Aerostar capitalized on strong demand from the U.S. military for
persistent ground surveillance systems to be deployed in Afghanistan. This segment provides
the helium filled blimp, along with the fiber optics and deployment system. The blimp is
then equipped with surveillance equipment and flown on a tether at over 1,500 feet above
ground level to enable persistent surveillance of a wide area.
    
    Volatility in aerostat deliveries.Sequentially, fiscal 2011 quarterly sales of
aerostats varied materially ($8.2 million in the first quarter; $3.2 million in the second
quarter; $7.4 million in the third quarter and $3.6 million in the fourth quarter) as
design changes and funding shifts have impacted the timing of deliveries.
    
    Military parachutes.Fiscal 2011 full-year and fourth quarter parachute revenue
increased over 20% as the T-11 parachutes ramped to full production and deliveries under
the T-11 spares contract began.
    
    Gross Margins.Full-year gross margins improved year-over-year. The negative effect of
T-11 parachute start-up costs in the first half of the year and increased overhead was
partially offset by a more favorable product mix as the relative contribution of tethered
aerostats to total sales grew.
    
    Operating expenses.Operating expenses of $3.1 million or 6.3% of sales increased $2.1
million from $1.0 million or 3.7% of sales as a result of higher selling expenses and
significant investments in research and development primarily to support aerostat
development.
   
    
    Sales volumes.Flat year-over-year sales reflected increased deliveries of MC-6 Army
parachutes, aerostats and research balloons, offset by decreased deliveries of protective
wear due to the completion of a large contract in January 2009.
    
    Margin expansion.The improvement in gross and operating margins came from increased
parachute manufacturing efficiencies. Final production runs and deliveries were made at the
end of fiscal 2010 on the MC-6 parachute contract. Fiscal 2010 was the most profitable year
for the program, primarily due to the higher efficiency level attained.
 19




---



##### Table of Contents




    
    Operating expenses.Operating expenses were relatively flat year-over-year.
 Electronic Systems
  dollars in thousands
    
    2011
    
    % change
    
    2010
    

% change
    
    2009Net sales
    
    $
    65,852
    
    
    
    4
    %
    
    $
    63,525
    
    
    
    2
    %
    
    $
    61,983Gross profit
    
    
    11,234
    
    
    
    10
    %
    
    
    10,258
    
    
    
    42
    %
    
    
    7,218Gross margins
    
    
    17.1
    %
    
    
    
    
    
    
    16.1
    %
    
    
    
    
    
    
    11.6
    %Operating income
    
    $
    9,917
    
    
    
    10
    %
    
    $
    8,979
    
    
    
    52
    %
    
    $
    5,926Operating margins
    
    
    15.1
    %
    
    
    
    
    
    
    14.1
    %
    
    
    
    
    
    
    9.6
    %
    
    
    Sales volume.Fiscal 2011 revenue was positively impacted by avionics growth and
increased sourcing of assemblies to Applied Technology partially offset by weaker
deliveries of circuit boards for secure communication devices.
    
    Profit margins.Product mix had a favorable impact on full-year operating margins.
Fourth quarter operating margins of 12.2% were down from 14.2% in the fourth quarter of
fiscal 2010 due to a less favorable mix and increased overhead costs to compensate for
supply chain weakness on flat sales volume.
    
    Operating expenses.Fiscal 2011 operating expenses were relatively unchanged from
fiscal 2010 levels.
   
    
    Growth from existing customers.The rise in sales was attributable to higher deliveries
of avionics and secure communication electronics to meet increased demand from government
agencies and the aerospace market, partially offset by a smaller customer base.
    
    Margin expansion.Gross margins expanded as a result of positive operating leverage
produced through increased sales to existing customers, favorable product mix and cost
controlssuch as headcount reduction and facility consolidation.
    
    Operating expenses.Operating expenses were relatively flat year over year.
 Corporate Expenses (administrative expenses, income taxes and interest income and other, net)
 For the years ended January 31dollars in thousands
    
    2011
    
    2010
    
    2009Administrative expenses
    
    $
    9,784
    
    
    $
    7,407
    
    
    $
    8,502Administrative expenses as a % of sales
    
    
    3.1
    %
    
    
    3.1
    %
    
    
    3.0
    %Interest income and other, net
    
    $
    79
    
    
    $
    102
    
    
    $
    507Effective tax rate
    
    
    32.8
    %
    
    
    34.0
    %
    
    
    34.4
    %
   20




---



##### Table of Contents



OUTLOOK
   Applied Technology
  Engineered Films
   Aerostar
  Electronic Systems
  21




---



##### Table of Contents



LIQUIDITY AND CAPITAL RESOURCES
     Operating Activities
     Investing Activities
   22




---



##### Table of Contents



Financing
Activities
      
 OFF-BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS
   Less than
    
    
    1-3
    
    
    3-5
    
    
    More thandollars in thousands
    
    Total
    
    
    1 year
    
    
    years
    
    
    years
    
    
    5 yearsContractual Obligations:Line of credit(a)
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Operating leases
    
    
    355
    
    
    
    237
    
    
    
    118
    
    
    
    
    
    
    
    Postretirement benefits
    
    
    5,969
    
    
    
    212
    
    
    
    460
    
    
    
    504
    
    
    
    4,793Unconditional purchase obligations
    
    
    56,812
    
    
    
    56,812
    
    
    
    
    
    
    
    
    
    
    
    Uncertain tax positions(b)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    63,136
    
    
    $
    57,261
    
    
    $
    578
    
    
    $
    504
    
    
    $
    4,793
 
 (a)
    
    $8.0 million line bears interest at 4.0% as of January 31, 2011 and expires July
2011. The line of credit is reduced by outstanding letters of credit totaling $1.3
million.(b)
    
    The total liability for uncertain tax positions at January 31, 2011, was $4.2
million. The company is not able to reasonably estimate the timing of future payments
relating to non-current tax benefits. 
 CRITICAL ACCOUNTING ESTIMATES
  23




---



##### Table of Contents



Inventories
  Warranties
  Allowance
for Doubtful Accounts
  Revenue
Recognition
  Goodwill
and Long-lived Assets
     Uncertain
Tax Positions
  24




---



##### Table of Contents



NEW ACCOUNTING STANDARDS
  
 ITEM 7A.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   25




---



##### 



ITEM 8.
    
    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
  
 Index to Financial Statements
 Page(s)Managements Report on Internal Control Over Financial Reporting
    
    
    27Report of Independent Registered Public Accounting Firm
    
    
    28Consolidated Financial StatementsConsolidated Balance Sheets
    
    
    29Consolidated Statements of Income
    
    
    30Consolidated Statements of Shareholders Equity and Comprehensive Income
    
    
    31Consolidated Statements of Cash Flows
    
    
    32Notes to Consolidated Financial Statements
    
    
    33Quarterly Information (Unaudited)  included in Item 5 on page 10
    
    
    10
  26




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##### Table of Contents



MANAGEMENTS REPORT ON INTERNAL CONTROL
OVER FINANCIAL REPORTING
   Internal Control  Integrated Framework
  /s/ Daniel A. Rykhus
    

/s/
Thomas IacarellaDaniel A. Rykhus
President & Chief Executive Officer
    
    Thomas Iacarella
Vice President & Chief Financial Officer
  27




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
 To the Board of Directors and Shareholders of Raven Industries, Inc.:
 Internal Control  Integrated
Framework
    
 28




---



##### Table of Contents



CONSOLIDATED BALANCE SHEETS
  As of January 312011
    
    
    2010
    
    
    2009ASSETSCurrent assetsCash and cash equivalents
    
    $
    37,563
    
    
    $
    40,684
    
    
    $
    16,267Short-term investments
    
    
    1,000
    
    
    
    3,000
    
    
    
    Accounts receivable, net
    
    
    39,967
    
    
    
    34,327
    
    
    
    40,278Inventories
    
    
    43,679
    
    
    
    34,475
    
    
    
    35,977Deferred income taxes
    
    
    2,733
    
    
    
    2,471
    
    
    
    2,542Other current assets
    
    
    3,239
    
    
    
    2,790
    
    
    
    3,009Total current assets
    
    
    128,181
    
    
    
    117,747
    
    
    
    98,073Property, plant and equipment, net
    
    
    41,522
    
    
    
    33,029
    
    
    
    35,880Goodwill
    
    
    10,777
    
    
    
    10,699
    
    
    
    7,450Other assets, net
    
    
    7,280
    
    
    
    8,834
    
    
    
    3,012Total assets
    
    $
    187,760
    
    
    $
    170,309
    
    
    $
    144,415LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilitiesAccounts payable
    
    $
    16,715
    
    
    $
    12,398
    
    
    $
    9,433Accrued liabilities
    
    
    16,096
    
    
    
    12,256
    
    
    
    13,281Customer advances
    
    
    1,524
    
    
    
    1,306
    
    
    
    608Total current liabilities
    
    
    34,335
    
    
    
    25,960
    
    
    
    23,322Other liabilities
    
    
    12,211
    
    
    
    11,098
    
    
    
    7,537Commitments and contingenciesShareholders equity
    
    
    141,214
    
    
    
    133,251
    
    
    
    113,556Common shares, par value $1.00 per shareAuthorized  100,000Outstanding  2011: 18,062; 2010: 18,030;
2009: 18,012Total liabilities and shareholders equity
    
    $
    187,760
    
    
    $
    170,309
    
    
    $
    144,415
  29




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##### Table of Contents



CONSOLIDATED STATEMENTS OF INCOME
  For the years ended January 312011
    
    
    2010
    
    
    2009Net sales
    
    $
    314,708
    
    
    $
    237,782
    
    
    $
    279,913Cost of sales
    
    
    223,279
    
    
    
    169,930
    
    
    
    206,465Gross profit
    
    
    91,429
    
    
    
    67,852
    
    
    
    73,448Research and development expenses
    
    
    7,604
    
    
    
    5,843
    
    
    
    5,848Selling, general and administrative expenses
    
    
    24,073
    
    
    
    18,789
    
    
    
    21,206Gain on disposition of assets
    
    
    (451
    )
    
    
    
    
    
    
    Operating income
    
    
    60,203
    
    
    
    43,220
    
    
    
    46,394Interest income and other, net
    
    
    (79
    )
    
    
    (102
    )
    
    
    (507
    )Income before income taxes
    
    
    60,282
    
    
    
    43,322
    
    
    
    46,901Income taxes
    
    
    19,745
    
    
    
    14,748
    
    
    
    16,131Net income
    
    $
    40,537
    
    
    $
    28,574
    
    
    $
    30,770Net income per common share:- Basic
    
    $
    2.24
    
    
    $
    1.58
    
    
    $
    1.71- Diluted
    
    $
    2.24
    
    
    $
    1.58
    
    
    $
    1.70
  30




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##### Table of Contents



CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY AND COMPREHENSIVE INCOME
  Accumulated$1 Par
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    othercommon
    
    
    Paid-in
    
    
    Treasury stock
    
    
    Retained
    
    
    comprehensivestock
    
    
    capital
    
    
    Shares
    
    
    Cost
    
    
    earnings
    
    
    income (loss)
    
    
    TotalBalance January 31, 2008
    
    $
    32,408
    
    
    $
    3,436
    
    
    
    (14,288
    )
    
    $
    (48,182
    )
    
    $
    132,219
    
    
    $
    (1,606
    )
    
    $
    118,275Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30,770
    
    
    
    
    
    
    
    30,770Postretirement benefits, net of $375 income tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    698
    
    
    
    698Foreign currency translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (246
    )
    
    
    (246
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    31,222Dividends ($.52 per share)
    
    
    
    
    
    
    7
    
    
    
    
    
    
    
    
    
    
    
    (9,381
    )
    
    
    
    
    
    
    (9,374
    )Dividends (special$1.25 per share)
    
    
    
    
    
    
    18
    
    
    
    
    
    
    
    
    
    
    
    (22,528
    )
    
    
    
    
    
    
    (22,510
    )Purchase of stock
    
    
    
    
    
    
    
    
    
    
    (161
    )
    
    
    (5,180
    )
    
    
    
    
    
    
    
    
    
    
    (5,180
    )Stock surrendered upon exercise of stock options
    
    
    (34
    )
    
    
    (1,258
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,292
    )Employees stock options exercised
    
    
    83
    
    
    
    1,176
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,259Share-based compensation
    
    
    4
    
    
    
    1,024
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,028Tax benefit from exercise of stock options
    
    
    
    
    
    
    128
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    128Balance January 31, 2009
    
    
    32,461
    
    
    
    4,531
    
    
    
    (14,449
    )
    
    
    (53,362
    )
    
    
    131,080
    
    
    
    (1,154
    )
    
    
    113,556Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28,574
    
    
    
    
    
    
    
    28,574Postretirement benefits, net of ($122) income tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (226
    )
    
    
    (226
    )Foreign currency translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    179
    
    
    
    179Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28,527Dividends ($.55 per share)
    
    
    
    
    
    
    11
    
    
    
    
    
    
    
    
    
    
    
    (9,922
    )
    
    
    
    
    
    
    (9,911
    )Stock surrendered upon exercise of stock options
    
    
    (51
    )
    
    
    (1,319
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,370
    )Employees stock options exercised
    
    
    65
    
    
    
    1,374
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,439Share-based compensation
    
    
    3
    
    
    
    1,031
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,034Tax cost from exercise of stock options
    
    
    
    
    
    
    (24
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (24
    )Balance January 31, 2010
    
    
    32,478
    
    
    
    5,604
    
    
    
    (14,449
    )
    
    
    (53,362
    )
    
    
    149,732
    
    
    
    (1,201
    )
    
    
    133,251Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    40,537
    
    
    
    
    
    
    
    40,537Postretirement benefits, net of ($25) income tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (46
    )
    
    
    (46
    )Foreign currency translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    127
    
    
    
    127Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    40,618Dividends ($.64 per share)
    
    
    
    
    
    
    17
    
    
    
    
    
    
    
    
    
    
    
    (11,563
    )
    
    
    
    
    
    
    (11,546
    )Dividends (special$1.25 per share)
    
    
    
    
    
    
    32
    
    
    
    
    
    
    
    
    
    
    
    (22,581
    )
    
    
    
    
    
    
    (22,549
    )Stock surrendered upon exercise of stock options
    
    
    (79
    )
    
    
    (3,038
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,117
    )Employees stock options exercised
    
    
    112
    
    
    
    3,257
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,369Share-based compensation
    
    
    
    
    
    
    1,179
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,179Tax benefit from exercise of stock options
    
    
    
    
    
    
    9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9Balance January 31, 2011
    
    $
    32,511
    
    
    $
    7,060
    
    
    
    (14,449
    )
    
    $
    (53,362
    )
    
    $
    156,125
    
    
    $
    (1,120
    )
    
    $
    141,214
  31




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##### Table of Contents



CONSOLIDATED STATEMENTS OF CASH FLOWS
  For the years ended January 312011
    
    
    2010
    
    
    2009Cash flows from operating activities:Net income
    
    $
    40,537
    
    
    $
    28,574
    
    
    $
    30,770Adjustments to reconcile net income to net cash provided by
operating activities:Depreciation
    
    
    6,512
    
    
    
    6,611
    
    
    
    7,345Amortization of intangible assets
    
    
    1,119
    
    
    
    497
    
    
    
    413Gain on disposition of assets
    
    
    (451
    )
    
    
    
    
    
    
    Change in fair value of acquisition-related contingent
consideration
    
    
    274
    
    
    
    94
    
    
    
    Earnings of equity investee
    
    
    (195
    )
    
    
    (10
    )
    
    
    Provision for losses on accounts receivable, net of recoveries
    
    
    
    
    
    
    (183
    )
    
    
    629Deferred income taxes
    
    
    423
    
    
    
    95
    
    
    
    216Share-based compensation expense
    
    
    1,179
    
    
    
    1,034
    
    
    
    1,028Change in operating assets and liabilities
    
    
    (7,273
    )
    
    
    10,935
    
    
    
    (1,346
    )Other operating activities, net
    
    
    (40
    )
    
    
    (4
    )
    
    
    (18
    )Net cash provided by operating activities
    
    
    42,085
    
    
    
    47,643
    
    
    
    39,037Cash flows from investing activities:Capital expenditures
    
    
    (13,972
    )
    
    
    (3,302
    )
    
    
    (8,001
    )Purchases of short-term investments
    
    
    (1,700
    )
    
    
    (3,500
    )
    
    
    (2,100
    )Sales of short-term investments
    
    
    3,700
    
    
    
    500
    
    
    
    3,600Purchase of equity investment
    
    
    
    
    
    
    (5,000
    )
    
    
    Payments related to business acquisitions
    
    
    (399
    )
    
    
    (2,000
    )
    
    
    (488
    )Proceeds from disposition of assets
    
    
    888
    
    
    
    
    
    
    
    Other investing activities, net
    
    
    65
    
    
    
    (94
    )
    
    
    (11
    )Net cash used in investing activities
    
    
    (11,418
    )
    
    
    (13,396
    )
    
    
    (7,000
    )Cash flows from financing activities:Dividends paid
    
    
    (34,095
    )
    
    
    (9,911
    )
    
    
    (31,884
    )Purchases of treasury stock
    
    
    
    
    
    
    
    
    
    
    (5,180
    )Excess tax benefit on stock option exercises
    
    
    9
    
    
    
    
    
    
    
    128Other financing activities, net
    
    
    252
    
    
    
    44
    
    
    
    (33
    )Net cash used in financing activities
    
    
    (33,834
    )
    
    
    (9,867
    )
    
    
    (36,969
    )Effect of exchange rate changes on cash
    
    
    46
    
    
    
    37
    
    
    
    (73
    )Net increase (decrease) in cash and cash equivalents
    
    
    (3,121
    )
    
    
    24,417
    
    
    
    (5,005
    )Cash and cash equivalents at beginning of year
    
    
    40,684
    
    
    
    16,267
    
    
    
    21,272Cash and cash equivalents at end of year
    
    $
    37,563
    
    
    $
    40,684
    
    
    $
    16,267
  32




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Basis of Presentation and Principles of Consolidation
  Investments in Affiliate
  Use of Estimates
  Foreign Currency
  Cash and Cash Equivalents
  Accounts Receivable and Allowance for Doubtful Accounts
  Inventory Valuation
  Property, Plant and Equipment
  33




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##### Table of Contents



Building and improvements
    
    15-39 yearsManufacturing equipment by segmentApplied Technology
    
    3-5 yearsEngineered Films
    
    5-12 yearsAerostar
    
    3-5 yearsElectronic Systems
    
    3-5 yearsFurniture, fixtures, office equipment and other
    
    3-7 years
   Intangible Assets
  Goodwill
  Long-Lived Assets
  Insurance Obligations
  Contingencies
  Revenue Recognition
  34




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##### Table of Contents



Operating Expenses
  Research and developmentCost of sales
    
    expenses
    
    Selling, general and administrative expensesDirect material costs
    
    Personnel costs
    
    Personnel costsMaterial acquisition and handling costs
    
    Professional service fees
    
    Professional service feesDirect labor
    
    Material and supplies
    
    AdvertisingFactory overhead including depreciation
    
    Facility allocation
    
    PromotionsInventory obsolescence
    
    
    
    Information technology equipment depreciationProduct warranties
    
    
    
    Office supplies
  Warranties
  Share-Based Compensation
  Income Taxes
  New Accounting Standards
  35




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##### Table of Contents



SELECTED BALANCE SHEET INFORMATION
  As of January 312011
    
    
    2010
    
    
    2009Accounts receivable, net:Trade accounts
    
    $
    40,267
    
    
    $
    34,624
    
    
    $
    40,891Allowance for doubtful accounts
    
    
    (300
    )
    
    
    (297
    )
    
    
    (613
    )$
    39,967
    
    
    $
    34,327
    
    
    $
    40,278Inventories:Finished goods
    
    $
    7,994
    
    
    $
    6,283
    
    
    $
    6,062In process
    
    
    5,424
    
    
    
    4,172
    
    
    
    3,258Materials
    
    
    30,261
    
    
    
    24,020
    
    
    
    26,657$
    43,679
    
    
    $
    34,475
    
    
    $
    35,977Other current assets:Insurance policy benefit
    
    $
    1,909
    
    
    $
    2,300
    
    
    $
    2,119Prepaid expenses and other
    
    
    1,330
    
    
    
    490
    
    
    
    890$
    3,239
    
    
    $
    2,790
    
    
    $
    3,009Property, plant and equipment, net:Land
    
    $
    1,798
    
    
    $
    1,227
    
    
    $
    1,227Buildings and improvements
    
    
    24,972
    
    
    
    22,973
    
    
    
    22,593Machinery and equipment
    
    
    75,310
    
    
    
    64,119
    
    
    
    62,504Accumulated depreciation
    
    
    (60,558
    )
    
    
    (55,290
    )
    
    
    (50,444
    )$
    41,522
    
    
    $
    33,029
    
    
    $
    35,880Other assets, net:Amortizable assets:Purchased technology
    
    $
    3,200
    
    
    $
    3,200
    
    
    $
    2,300Other intangibles
    
    
    1,660
    
    
    
    1,633
    
    
    
    1,314Accumulated amortization
    
    
    (3,275
    )
    
    
    (2,648
    )
    
    
    (2,143
    )1,585
    
    
    
    2,185
    
    
    
    1,471Investment in affiliate
    
    
    4,728
    
    
    
    5,010
    
    
    
    Deferred income taxes
    
    
    924
    
    
    
    1,580
    
    
    
    1,482Other, net
    
    
    43
    
    
    
    59
    
    
    
    59$
    7,280
    
    
    $
    8,834
    
    
    $
    3,012Accrued liabilities:Salaries and benefits
    
    $
    3,264
    
    
    $
    1,148
    
    
    $
    1,891Vacation
    
    
    3,186
    
    
    
    2,693
    
    
    
    2,581401(k) contributions
    
    
    253
    
    
    
    180
    
    
    
    1,333Insurance obligations
    
    
    3,356
    
    
    
    3,959
    
    
    
    3,615Profit sharing
    
    
    1,627
    
    
    
    217
    
    
    
    436Warranties
    
    
    1,437
    
    
    
    1,259
    
    
    
    1,004Taxes  accrued and withheld
    
    
    1,453
    
    
    
    1,574
    
    
    
    1,266Other
    
    
    1,520
    
    
    
    1,226
    
    
    
    1,155$
    16,096
    
    
    $
    12,256
    
    
    $
    13,281Other liabilities:Postretirement benefits
    
    $
    5,757
    
    
    $
    5,283
    
    
    $
    4,637Acquisition-related contingent consideration
    
    
    2,230
    
    
    
    2,301
    
    
    
    Uncertain tax positions
    
    
    4,224
    
    
    
    3,514
    
    
    
    2,900$
    12,211
    
    
    $
    11,098
    
    
    $
    7,537
 36




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##### Table of Contents



NOTE 3
    
    ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
  As of January 312011
    
    
    2010
    
    
    2009Foreign currency translation
    
    $
    183
    
    
    $
    56
    
    
    $
    (123
    )Postretirement benefits, net of tax
    
    
    (1,303
    )
    
    
    (1,257
    )
    
    
    (1,031
    )Total accumulated other comprehensive loss
    
    $
    (1,120
    )
    
    $
    (1,201
    )
    
    $
    (1,154
    )
 SUPPLEMENTAL CASH FLOW INFORMATION
 For the years ended January 312011
    
    
    2010
    
    
    2009Changes in operating assets and liabilities:Accounts receivable
    
    $
    (5,536
    )
    
    $
    6,325
    
    
    $
    (4,603
    )Inventories
    
    
    (9,189
    )
    
    
    1,552
    
    
    
    447Prepaid expenses and other assets
    
    
    96
    
    
    
    (49
    )
    
    
    (35
    )Accounts payable
    
    
    2,713
    
    
    
    2,934
    
    
    
    963Accrued and other liabilities
    
    
    4,428
    
    
    
    (520
    )
    
    
    2,194Customer advances
    
    
    215
    
    
    
    693
    
    
    
    (312
    )$
    (7,273
    )
    
    $
    10,935
    
    
    $
    (1,346
    )Cash paid during the year for income taxes
    
    $
    19,700
    
    
    $
    13,816
    
    
    $
    15,072
 ACQUISITIONS OF AND INVESTMENTS IN BUSINESSES AND TECHNOLOGIES
   Balance at January 31, 2010
    
    $
    5,010Ravens share of SST earnings
    
    
    195Amortization of intangible assets
    
    
    (477
    )Balance at January 31, 2011
    
    $
    4,728
  37




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##### Table of Contents



Goodwill
    
    $
    2,734Existing technology
    
    
    900Other intangibles
    
    
    175Total
    
    $
    3,809
   GOODWILL AND OTHER INTANGIBLES
 Goodwill
  Applied
    
    
    Engineered
    
    
    ElectronicTechnology
    
    
    Films
    
    
    Systems
    
    
    Aerostar
    
    
    TotalBalance at January 31, 2008
    
    $
    5,909
    
    
    $
    96
    
    
    $
    433
    
    
    $
    464
    
    
    $
    6,902Acquisition earn-outs
    
    
    548
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    548Balance at January 31, 2009
    
    
    6,457
    
    
    
    96
    
    
    
    433
    
    
    
    464
    
    
    
    7,450Acquired goodwill
    
    
    2,734
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,734Acquisition earn-outs
    
    
    515
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    515Balance at January 31, 2010
    
    
    9,706
    
    
    
    96
    
    
    
    433
    
    
    
    464
    
    
    
    10,699Acquisition earn-outs
    
    
    78
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    78Balance at January 31, 2011
    
    $
    9,784
    
    
    $
    96
    
    
    $
    433
    
    
    $
    464
    
    
    $
    10,777
 Intangible Assets
  EMPLOYEE RETIREMENT BENEFITS
   For the years ended January 312011
    
    
    2010
    
    
    2009Benefit obligation at beginning of year
    
    $
    5,512
    
    
    $
    4,840
    
    
    $
    5,447Service cost
    
    
    62
    
    
    
    55
    
    
    
    67Interest cost
    
    
    324
    
    
    
    332
    
    
    
    361Actuarial (gain) loss and assumption changes
    
    
    237
    
    
    
    476
    
    
    
    (847
    )Total recognized in net and other comprehensive income
    
    
    623
    
    
    
    863
    
    
    
    (419
    )Retiree benefits paid
    
    
    (166
    )
    
    
    (191
    )
    
    
    (188
    )Benefit obligation at end of year
    
    $
    5,969
    
    
    $
    5,512
    
    
    $
    4,840
 38




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##### Table of Contents



For the years ended January 312011
    
    
    2010
    
    
    2009Beginning liability balance
    
    $
    5,512
    
    
    $
    4,840
    
    
    $
    5,447Employer expense
    
    
    552
    
    
    
    515
    
    
    
    654Other comprehensive (income) loss
    
    
    71
    
    
    
    348
    
    
    
    (1,073
    )Total recognized in net and other comprehensive income
    
    
    623
    
    
    
    863
    
    
    
    (419
    )Retiree benefits paid
    
    
    (166
    )
    
    
    (191
    )
    
    
    (188
    )Ending liability balance
    
    $
    5,969
    
    
    $
    5,512
    
    
    $
    4,840Current portion in accrued liabilities
    
    $
    212
    
    
    $
    229
    
    
    $
    203Long-term portion in other liabilities
    
    $
    5,757
    
    
    $
    5,283
    
    
    $
    4,637Assumptions used:Discount rate
    
    
    5.75
    %
    
    
    6.00
    %
    
    
    7.00
    %Wage inflation rate
    
    
    4.00
    %
    
    
    3.00
    %
    
    
    3.00
    %
   WARRANTIES
  As of January 312011
    
    
    2010
    
    
    2009Beginning balance
    
    $
    1,259
    
    
    $
    1,004
    
    
    $
    684Accrual for warranties
    
    
    2,461
    
    
    
    2,426
    
    
    
    2,760Settlements made (in cash or in kind)
    
    
    (2,283
    )
    
    
    (2,171
    )
    
    
    (2,440
    )Ending balance
    
    $
    1,437
    
    
    $
    1,259
    
    
    $
    1,004
 INCOME TAXES
  For the years ended January     312011
    
    2010
    
    2009Tax at U.S. federal statutory rate
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %State and local income taxes, net of U.S. federal benefit
    
    
    1.3
    
    
    
    1.3
    
    
    
    1.5Tax benefit on qualified production activities
    
    
    (3.0
    )
    
    
    (2.1
    )
    
    
    (2.0
    )Tax credit for research activities
    
    
    (0.7
    )
    
    
    (0.7
    )
    
    
    (0.7
    )Other, net
    
    
    0.2
    
    
    
    0.5
    
    
    
    0.632.8
    %
    
    
    34.0
    %
    
    
    34.4
    %
 39




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##### Table of Contents



For the years ended January 312011
    
    
    2010
    
    
    2009Income taxes:Currently payable
    
    $
    19,322
    
    
    $
    14,653
    
    
    $
    15,915Deferred
    
    
    423
    
    
    
    95
    
    
    
    216$
    19,745
    
    
    $
    14,748
    
    
    $
    16,131
 Deferred Tax Assets
  As of January 312011
    
    
    2010
    
    
    2009Current deferred tax assets:Accounts receivable
    
    $
    103
    
    
    $
    103
    
    
    $
    211Inventories
    
    
    463
    
    
    
    344
    
    
    
    408Accrued vacation
    
    
    1,008
    
    
    
    857
    
    
    
    840Insurance obligations
    
    
    485
    
    
    
    553
    
    
    
    489Warranty obligations
    
    
    503
    
    
    
    441
    
    
    
    352Other accrued liabilities
    
    
    171
    
    
    
    173
    
    
    
    2422,733
    
    
    
    2,471
    
    
    
    2,542Non-current deferred tax assets (liabilities):Postretirement benefits
    
    
    2,014
    
    
    
    1,849
    
    
    
    1,623Depreciation and amortization
    
    
    (3,050
    )
    
    
    (1,970
    )
    
    
    (1,556
    )Uncertain tax positions
    
    
    1,426
    
    
    
    1,180
    
    
    
    969Other
    
    
    534
    
    
    
    521
    
    
    
    446924
    
    
    
    1,580
    
    
    
    1,482Net deferred tax asset
    
    $
    3,657
    
    
    $
    4,051
    
    
    $
    4,024
  Uncertain Tax Positions
  For the years ended January 312011
    
    
    2010
    
    
    2009Gross unrecognized tax benefits at beginning of year
    
    $
    2,656
    
    
    $
    2,269
    
    
    $
    1,793Increases in tax positions related to the current year
    
    
    601
    
    
    
    463
    
    
    
    539Decreases as a result of a lapse in applicable statute of limitations
    
    
    (145
    )
    
    
    (76
    )
    
    
    (63
    )Gross unrecognized tax benefits at end of year
    
    $
    3,112
    
    
    $
    2,656
    
    
    $
    2,269
    40




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##### Table of Contents



FINANCING ARRANGEMENTS
    SHARE-BASED COMPENSATION
  For the years ended January 312011
    
    2010
    
    2009Stock compensation cost
    
    $
    1,179
    
    
    $
    1,034
    
    
    $
    1,028Tax benefit
    
    
    272
    
    
    
    184
    
    
    
    200
  Stock Option and Compensation Plans
    For the years ended January 312011
    
    2010
    
    2009Risk-free interest rate
    
    
    1.46
    %
    
    
    2.03
    %
    
    
    1.64
    %Expected dividend yield
    
    
    1.49
    %
    
    
    1.73
    %
    
    
    2.12
    %Expected volatility factor
    
    
    49.33
    %
    
    
    49.69
    %
    
    
    46.32
    %Expected option term (in years)
    
    
    4.50
    
    
    
    4.50
    
    
    
    4.25Weighted average grant date fair value
    
    $
    15.70
    
    
    $
    11.28
    
    
    $
    8.08
 41




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##### Table of Contents



WeightedaverageWeighted
    
    
    
    
    
    
    remainingaverage
    
    
    Aggregate
    
    
    contractualNumber
    
    
    exercise
    
    
    intrinsic
    
    
    termof options
    
    
    price
    
    
    value
    
    
    (years)Oustanding, January 31, 2010
    
    
    397
    
    
    $
    29.33Granted
    
    
    160
    
    
    
    42.31Exercised
    
    
    (112
    )
    
    
    30.03Forfeited
    
    
    
    
    
    
    24.51Outstanding, January 31, 2011
    
    
    445
    
    
    $
    33.86
    
    
    $
    5,953
    
    
    
    3.30Exercisable, January 31, 2011
    
    
    160
    
    
    $
    29.41
    
    
    $
    2,850
    
    
    
    2.04
  Deferred Stock Compensation Plan for Directors
    WeightedNumber
    
    averageof units
    
    priceOustanding, January 31, 2010
    
    
    21
    
    
    $
    28.58Granted
    
    
    4
    
    
    
    34.96Deferred retainers
    
    
    1
    
    
    
    34.96Dividends
    
    
    1
    
    
    
    37.81Converted into common shares
    
    
    
    
    
    
    Outstanding, January 31, 2011
    
    
    27
    
    
    $
    47.24
 NET INCOME PER SHARE
  42




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##### Table of Contents



For the years ended January 312011
    
    
    2010
    
    
    2009Numerator:Net income
    
    $
    40,537
    
    
    $
    28,574
    
    
    $
    30,770Denominator:Weighted average common shares outstanding
    
    
    18,042
    
    
    
    18,021
    
    
    
    18,031Weighted average stock units outstanding
    
    
    25
    
    
    
    19
    
    
    
    13Denominator for basic calculation
    
    
    18,067
    
    
    
    18,040
    
    
    
    18,044Weighted average common shares outstanding
    
    
    18,042
    
    
    
    18,021
    
    
    
    18,031Weighted average stock units outstanding
    
    
    25
    
    
    
    19
    
    
    
    13Dilutive impact of stock options
    
    
    43
    
    
    
    3
    
    
    
    36Denominator for diluted calculation
    
    
    18,110
    
    
    
    18,043
    
    
    
    18,080Net income per share  basic
    
    $
    2.24
    
    
    $
    1.58
    
    
    $
    1.71Net income per share  diluted
    
    $
    2.24
    
    
    $
    1.58
    
    
    $
    1.70
  BUSINESS SEGMENTS AND MAJOR CUSTOMER INFORMATION
    43




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##### Table of Contents



For the years ended January 312011
    
    2010
    
    2009APPLIED TECHNOLOGY DIVISIONSales
    
    $
    100,090
    
    
    $
    86,217
    
    
    $
    103,098Operating income
    
    
    31,135
    
    
    
    25,722
    
    
    
    33,884Assets
    
    
    52,669
    
    
    
    51,029
    
    
    
    48,881Capital expenditures
    
    
    1,769
    
    
    
    941
    
    
    
    2,674Depreciation and amortization
    
    
    2,238
    
    
    
    1,677
    
    
    
    1,383ENGINEERED FILMS DIVISIONSales
    
    $
    105,838
    
    
    $
    63,783
    
    
    $
    89,858Operating income
    
    
    19,622
    (b)
    
    
    10,232
    
    
    
    10,919Assets
    
    
    46,519
    
    
    
    35,999
    
    
    
    35,862Capital expenditures
    
    
    8,450
    
    
    
    1,460
    
    
    
    3,120Depreciation and amortization
    
    
    3,452
    
    
    
    3,707
    
    
    
    4,303AEROSTAR DIVISIONSales
    
    $
    48,787
    
    
    $
    27,244
    
    
    $
    27,186Operating income
    
    
    9,407
    
    
    
    5,634
    
    
    
    4,219Assets
    
    
    18,140
    
    
    
    10,462
    
    
    
    8,744Capital expenditures
    
    
    2,190
    
    
    
    332
    
    
    
    383Depreciation and amortization
    
    
    757
    
    
    
    398
    
    
    
    444ELECTRONIC SYSTEMS DIVISIONSales
    
    $
    65,852
    
    
    $
    63,525
    
    
    $
    61,983Operating income
    
    
    9,917
    
    
    
    8,979
    
    
    
    5,926Assets
    
    
    23,385
    
    
    
    21,216
    
    
    
    26,847Capital expenditures
    
    
    609
    
    
    
    290
    
    
    
    1,399Depreciation and amortization
    
    
    823
    
    
    
    939
    
    
    
    1,159INTERSEGMENT ELIMINATIONSSalesEngineered Films Division
    
    $
    (307
    )
    
    $
    (210
    )
    
    $
    (210
    )Aerostar
    
    
    (32
    )
    
    
    (1
    )
    
    
    (25
    )Electronic Systems Division
    
    
    (5,520
    )
    
    
    (2,776
    )
    
    
    (1,977
    )Operating income
    
    
    (94
    )
    
    
    60
    
    
    
    (52
    )Assets
    
    
    (186
    )
    
    
    (92
    )
    
    
    (152
    )REPORTABLE SEGMENTS TOTALSales
    
    $
    314,708
    
    
    $
    237,782
    
    
    $
    279,913Operating income
    
    
    69,987
    (b)
    
    
    50,627
    
    
    
    54,896Assets
    
    
    140,527
    
    
    
    118,614
    
    
    
    120,182Capital expenditures
    
    
    13,018
    
    
    
    3,023
    
    
    
    7,576Depreciation and amortization
    
    
    7,270
    
    
    
    6,721
    
    
    
    7,289CORPORATE & OTHER(a)Operating (loss) from administrative expenses
    
    $
    (9,784
    )
    
    $
    (7,407
    )
    
    $
    (8,502
    )Assets
    
    
    47,233
    
    
    
    51,695
    
    
    
    24,233Capital expenditures
    
    
    954
    
    
    
    279
    
    
    
    425Depreciation and amortization
    
    
    361
    
    
    
    387
    
    
    
    469TOTAL COMPANYSales
    
    $
    314,708
    
    
    $
    237,782
    
    
    $
    279,913Operating income
    
    
    60,203
    (b)
    
    
    43,220
    
    
    
    46,394Assets
    
    
    187,760
    
    
    
    170,309
    
    
    
    144,415Capital expenditures
    
    
    13,972
    
    
    
    3,302
    
    
    
    8,001Depreciation and amortization
    
    
    7,631
    
    
    
    7,108
    
    
    
    7,758
 
 (a)
    
    Assets are principally cash, investments, deferred taxes and other receivables.(b)
    
    Includes a $451 pre-tax gain on disposition of assets. 44




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##### Table of Contents



For the years ended January 312011
    
    
    2010
    
    
    2009Pit lining and geomembrane films
    
    $
    55,048
    
    
    $
    26,834
    
    
    $
    40,205Other plastic films
    
    
    50,483
    
    
    
    36,739
    
    
    
    49,443Agricultural precision control devices and accessories
    
    
    98,402
    
    
    
    83,236
    
    
    
    99,428Electronics manufacturing services
    
    
    60,333
    
    
    
    60,749
    
    
    
    60,006Tethered aerostats
    
    
    22,423
    
    
    
    3,048
    
    
    
    265Parachute-related products
    
    
    12,816
    
    
    
    10,298
    
    
    
    8,660Uniforms and protective wear
    
    
    4,559
    
    
    
    5,434
    
    
    
    9,976Other
    
    
    10,644
    
    
    
    11,444
    
    
    
    11,930Total sales
    
    $
    314,708
    
    
    $
    237,782
    
    
    $
    279,913
  For the years ended January 312011
    
    
    2010
    
    
    2009Applied Technology
    
    $
    21,349
    
    
    $
    17,140
    
    
    $
    18,847Engineered Films
    
    
    2,200
    
    
    
    1,383
    
    
    
    2,034Aerostar
    
    
    427
    
    
    
    1,219
    
    
    
    1,004Electronic Systems
    
    
    693
    
    
    
    495
    
    
    
    568Total foreign sales
    
    $
    24,669
    
    
    $
    20,237
    
    
    $
    22,453
 45




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##### Table of Contents



Disclosure Controls and Procedures
  Managements Report on Internal Control Over Financial Reporting
  Changes in Internal Control Over Financial Reporting
  
   
 46




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##### Table of Contents



PART III
 
  Election of Directors, Board of
Directors and Committees Corporate Governance, Other Matters
 Executive Officers
 
  Executive Compensation Non-management Director Compensation
 
  Ownership of Common Stock
 Securities Authorized for Issuance
under Equity Compensation Plans Equity
Compensation Plan Information
 
  Board of Directors and Committees Corporate Governance
 
  Independent Registered Public Accounting
Firm Fees,
 47




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##### Table of Contents



PART IV
 
  LIST OF DOCUMENTS FILED AS PART OF THIS REPORT
 Financial Statements
  Financial Statement Schedule
   Exhibits
  48




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##### Table of Contents



ExhibitNumber
    
    Description3(a)
    
    Articles of Incorporation of Raven Industries, Inc. and all amendments thereto.*3(b)
    
    Bylaws of Raven Industries, Inc.*3(c)
    
    Extract of Shareholders Resolution adopted on April 7, 1962 with respect to the bylaws of Raven Industries, Inc. *10(a)
    
    Employment Agreement between Raven Industries, Inc. and Daniel Rykhus dated as of February 1, 2009 (incorporated
by reference to Exhibit 10.1 of the companys Form 8-K filed February 1, 2009). 10(b)
    
    Employment Agreement between Raven Industries, Inc. and David R. Bair dated as of February 1, 2004.  ***10(c)
    
    Employment Agreement between Raven Industries, Inc. and James D. Groninger dated as of February 1, 2004.  ***10(d)
    
    Employment Agreement between Raven Industries, Inc. and Lon E. Stroschein dated as of October 1, 2010
(Incorporated by reference to Exhibit 10.1 to the companys 8-K filed October 1, 2010) 10(e)
    
    Employment Agreement between Raven Industries, Inc. and Ronald M. Moquist dated as of February 1, 2004.  **10(f)
    
    Employment Agreement between Raven Industries, Inc. and Thomas Iacarella dated as of February 1, 2004.  **10(g)
    
    Schedule A to Employment Agreements between Raven Industries, Inc. and each of the following Senior Executive
Officers: Ronald M. Moquist, Thomas Iacarella, and Daniel A. Rykhus. 10(h)
    
    Employment Agreement between Raven Industries, Inc. and Barbara Ohme dated as of February 1, 2004.  **10(i)
    
    Change in Control Agreement between Raven Industries, Inc. and each of the following officers and key employees:Ronald M. Moquist, Thomas Iacarella, Daniel A. Rykhus, David R. Bair, James D. Groninger and Barbara K. Ohme
dated as of January 31, 2008 (incorporated by reference to Exhibit 10.1 of the companys 8-K filed December 17,
2007). 10(j)
    
    Trust Agreement between Raven Industries, Inc. and Norwest Bank South Dakota, N.A. dated April 26, 1989. *10(k)
    
    Raven Industries, Inc. 2000 Stock Option and Compensation Plan adopted May 24, 2000 (incorporated by reference to
Exhibit A to the companys definitive Proxy Statement filed April 19, 2000).10(l)
    
    Raven Industries, Inc. 2010 Stock Incentive Plan adopted May 25, 2010 (incorporated by reference to Exhibit A of
the companys definitive Proxy Statement filed April 14, 2010).10(m)
    
    Raven Industries, Inc. Deferred Compensation Plan for Directors adopted May 23, 2007 (incorporated by reference
to Exhibit 10.1 to the companys 8-K filed May 24, 2007). 10(n)
    
    Change in Control Agreement between Raven Industries, Inc. and Matthew T. Burkhart dated February 1, 2010
(incorporated by reference to Exhibit 10.3 to the companys 8-K filed February 2, 2010). 10(o)
    
    Employment Agreement between Raven Industries, Inc. and Matthew T. Burkhart dated February 1, 2010 (incorporated
by reference to Exhibit 10.1 to the companys 8-K filed February 2, 2010). 10(p)
    
    Schedule A to Employment Agreements between Raven Industries, Inc. and each of the following Senior Managers:David R. Bair, Matthew T. Burkhart, James D. Groninger, Lon E. Stroschein and Barbara K. Ohme. 10(q)
    
    Change in Control Agreement between Raven Industries, Inc. and Lon E. Stroschein dated October 1, 2010
(incorporated by reference to Exhibit 10.3 to the companys 8-K filed October 1, 2010).21
    
    Subsidiaries of the Registrant.23
    
    Consent of Independent Registered Public Accounting Firm.31.1
    
    Certification of CEO Pursuant to Section 302 of Sarbanes-Oxley Act.31.2
    
    Certification of CFO Pursuant to Section 302 of Sarbanes-Oxley Act.32.1
    
    Certification pursuant to Section 906 of Sarbanes-Oxley Act.32.2
    
    Certification pursuant to Section 906 of Sarbanes-Oxley Act.
 
 
    
    Management contract or compensatory plan or arrangement.*
    
    Incorporated by reference to corresponding Exhibit Number of the companys Form
10-K for the year ended January 31, 1989.**
    
    Incorporated by reference to corresponding Exhibit Number of the companys Form
10-K for the year ended January 31, 2004.***
    
    Incorporated by reference to corresponding Exhibit Number of the companys Form
10-K for the year ended January 31, 2007. 
 49




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##### Table of Contents



SIGNATURES
  RAVEN INDUSTRIES, INC.
(Registrant)By:

/s/  DANIEL A. RYKHUSDaniel A. RykhusPresident and Chief Executive Officer   /s/ DANIEL A. RYKHUS
    
    /s/ MARK E. GRIFFINDaniel A. RykhusPresident and Chief Executive Officer
(principal executive officer) and Director
    
    Mark E. GriffinDirector/s/ THOMAS IACARELLA
    
    /s/ CONRAD J. HOIGAARDThomas IacarellaVice President and Chief Financial Officer
(principal financial and accounting officer)
    
    Conrad J. HoigaardDirector/s/ THOMAS S. EVERIST
    
    /s/ KEVIN T. KIRBYThomas S. EveristChairman of the Board
    
    Kevin T. KirbyDirector/s/ ANTHONY W. BOUR
    
    /s/ CYNTHIA H. MILLIGANAnthony W. BourDirector
    
    Cynthia H. MilliganDirector/s/ DAVID A. CHRISTENSEN

David A. ChristensenDirector
    
    Date:
March 31, 2011
 
 50




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
ON FINANCIAL STATEMENT SCHEDULE
 To the Board of Directors and Shareholders of Raven Industries, Inc.:
  
 
 51




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##### Table of Contents



SCHEDULE II  VALUATION AND QUALIFYING ACCOUNTS
 for the years ended January 31, 2011, 2010 and 2009
 Column A
    
    Column B
    
    Column C
    
    Column D
    
    Column EAdditionsBalance at
    
    Charged to
    
    Charged to
    
    DeductionsBeginning
    
    Costs and
    
    Other
    
    From
    
    Balance atDescription
    
    of Year
    
    Expenses
    
    Accounts
    
    Reserves (1)
    
    End of YearDeducted in the balance sheet from the asset to which it
applies:Allowance for doubtful accounts:Year ended January 31, 2011
    
    $
    297
    
    
    $
    (1
    )
    
    None
    
    $
    (4
    )
    
    $
    300Year ended January 31, 2010
    
    $
    613
    
    
    $
    (183
    )
    
    None
    
    $
    133
    
    
    $
    297Year ended January 31, 2009
    
    $
    293
    
    
    $
    629
    
    
    None
    
    $
    309
    
    
    $
    613
 Note:
 
 (1)
    
    Represents uncollectible accounts receivable written off during the year, net of recoveries. 52