ELEVEN-YEAR FINANCIAL SUMMARY For the years ended January 31
Dollars in thousands except per-share data20092008 2007 OPERATIONS FOR THE YEAR Net sales
Ongoing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $279,913$233,957 $217,529 Sold businesses(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 279,913233,957 217,529 Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67,88159,148 54,882 Operating income
Ongoing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46,39441,145 38,302 Sold businesses(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46,39441,145 38,302 Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46,90142,224 38,835 Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 30,770$ 27,802 $ 25,441 Net income as % of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.0%11.9% 11.7%
Net income as % of beginning equity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26.0%28.3% 30.1%
Cash dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $31,884(b) $ 7,966 $ 6,507 FINANCIAL POSITION Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 98,073$100,869 $ 73,219 Current liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,32222,108 16,464 Working capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 74,751$ 78,761 $ 56,755 Current ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.214.56 4.45 Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 35,880$ 35,743 $ 36,264 Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144,415147,861 119,764 Long-term debt, less current portion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    Shareholders equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $113,556$118,275 $ 98,268 Long-term debt / total capitalization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0%0.0% 0.0%
Inventory turnover (CGS / year-end inventory) . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.94.8 5.8 CASH FLOWS PROVIDED BY (USED IN) Operating activities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 39,037$ 27,151 $ 26,313 Investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7,000)(4,433) (18,664) Financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (36,969)(8,270) (10,277) Increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . (5,005)14,489 (2,626) COMMON STOCK DATA Net income per sharebasic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.71$ 1.54 $ 1.41 Net income per sharediluted. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.701.53 1.39 Cash dividends per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.77(b) 0.44 0.36 Book value per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.306.52 5.45 Stock price range during year
High . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 47.82$ 45.85 $ 42.70 Low. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.6026.20 25.46 Close. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 21.81$ 30.02 $ 28.43 Shares and stock units outstanding, year-end (in thousands) . . . . . . . . . . . . . . . . 18,02718,130 18,044 Number of shareholders, year-end . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,2688,700 8,992 OTHER DATA Price / earnings ratio. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.8319.6 20.5 Average number of employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,070930 884 Sales per employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 262$ 252 $ 246 Backlog . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 80,361$ 66,628 $ 44,237 All per-share, shares outstanding and market price data reflect the October 2004 two-for-one stock
split, the January 2003 two-for-one stock split and the July 2001 three-for-two stock split. All
other figures are as reported. Price / earnings ratio is determined as closing stock price divided by net income per
sharediluted. Book value per share is computed by dividing total shareholders equity by the number of
common shares and stock units outstanding. (a) In fiscal 2003, 2001, and 2000, the company
sold its Beta Raven Industrial Controls, Plastic Tank, and Glasstite businesses,
respectively. 16 RAVEN 2009ANNUAL REPORT




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2006 2005 2004 2003 2002 2001 2000 1999 $204,528 $168,086 $142,727 $119,589 $112,018 $113,360 $107,862 $108,408         1,314 6,497 19,498 42,523 46,798 204,528 168,086 142,727 120,903 118,515 132,858 150,385 155,206 53,231 43,200 33,759 27,515 23,851 21,123 24,217 24,441 37,284 27,862 21,981 16,861 13,788 7,417(d) 7,971 8,220      (355) 204 (613) 3,331(e) 2,606(f) 1,453 37,284 27,862 21,626 17,065 13,175 10,748 10,577 9,673 37,494 27,955 21,716 17,254 13,565 10,924 10,503 9,649 $24,262 $ 17,891 $ 13,836 $ 11,185 $ 8,847 $6,411(d)(e) $6,762(f) $ 6,182 11.9% 10.6% 9.7% 9.3% 7.5% 4.8% 4.5% 4.0%
36.7% 26.9% 23.8% 21.5% 18.4% 11.8% 10.9% 10.0%
$5,056 $15,298(c) $ 3,075 $ 2,563 $ 2,371 $ 2,399 $ 2,895 $ 2,944 $71,345 $ 61,592 $ 55,710 $ 49,351 $ 45,308 $ 51,817 $ 55,371 $ 60,279 20,050 20,950 11,895 13,167 13,810 13,935 14,702 15,128 $51,295 $ 40,642 $ 43,815 $ 36,184 $ 31,498 $ 37,882 $ 40,669 $ 45,151 3.56 2.94 4.68 3.75 3.28 3.72 3.77 3.98 $25,602 $ 19,964 $ 15,950 $ 16,455 $ 14,059 $ 11,647 $ 15,068 $ 19,563 106,157 88,509 79,508 72,816 67,836 65,656 74,047 83,657 9    57 151 280 2,013 3,024 4,572 $84,389 $ 66,082 $ 66,471 $ 58,236 $ 52,032 $ 47,989 $ 54,519 $ 62,293 0.0% 0.0% 0.1% 0.3% 0.5% 4.0% 5.3% 6.8%
5.4 5.4 6.5 4.4 5.0 5.9 5.2 4.9 $21,189 $ 18,871 $ 19,732 $ 12,735 $ 18,496 $ 9,441 $ 10,375 $ 8,326 (11,435) (7,631) (4,352) (9,166) (13,152) 9,752 6,323 (3,127) (6,946) (19,063) (6,155) (5,830) (8,539) (14,227) (16,326) (2,714) 2,790 (7,823) 9,225 (2,261) (3,195) 4,966 372 2,485 $1.34 $ 0.99 $ 0.77 $ 0.61 $ 0.48 $ 0.31 $ 0.26 $ 0.22 1.32 0.97 0.75 0.60 0.47 0.31 0.26 0.22 0.28 0.85(c) 0.17 0.14 0.13 0.12 0.11 0.10 4.67 3.67 3.68 3.21 2.82 2.53 2.32 2.21 $33.15 $ 26.94 $ 15.23 $ 9.20 $ 5.88 $ 3.48 $ 3.04 $ 3.79 16.54 13.08 7.56 4.38 3.02 1.88 2.25 2.54 $31.60 $ 18.38 $ 14.11 $ 7.91 $ 5.64 $ 3.04 $ 2.40 $ 2.67 18,072 17,999 18,041 18,133 18,424 18,956 23,496 28,164 9,263 6,269 3,560 2,781 2,387 2,460 2,749 3,014 23.9 18.9 18.8 13.2 12.1 9.8 9.2 12.4 845 835 787 784 858 1,082 1,369 1,507 $242 $ 201 $ 181 $ 154 $ 138 $ 123 $ 110 $ 103 $43,619 $ 43,646 $ 47,120 $ 42,826 $ 33,834 $ 38,239 $ 44,935 $ 47,431 (b) Includes a special dividend of $1.25 per share that was paid
in fiscal 2009. (c) Includes a special dividend of $.625 per share
that was paid in fiscal 2005. (d) Includes $2.6 million of business repositioning charges, net of gains on plant
sales, primarily in Electronic Systems and Aerostar. (e) Includes the $3.1 million
pretax gain ($1.4 million net of tax) on the sale of the companys Plastic Tank
Division. (f) Includes the $1.2 million pretax gain ($764,000 net of tax) on the sale of assets of the
companys Glasstite subsidiary. RAVEN 2009ANNUAL REPORT 17




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FINANCIAL REVIEW AND ANALYSIS
Managements Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is
designed to enhance overall financial disclosure by providing managements analysis of the key
drivers of year-over-year changes in key financial statement elements, business segment results,
and the impact of accounting principles on the companys financial statements. This discussion should be read in conjunction with the companys January 31, 2009 financial
statements and the accompanying notes. The MD&A is organized as follows:
3 Executive Summary
3 Results of OperationsSegment Analysis
3 Outlook
3 Liquidity and Capital Resources
3 Off-balance Sheet Arrangements and Contractual Obligations
3 Critical Accounting Estimates
3 New Accounting Standards EXECUTIVE SUMMARY Raven Industries, Inc. is an industrial manufacturer providing a variety of products to customers
within the industrial, agricultural, construction and military/aerospace markets, primarily in
North America. The company operates in four business segments: Applied Technology (formerly Flow
Controls), Engineered Films, Electronic Systems and Aerostar. Management uses a number of metrics to assess the companys performance:
- Segment net sales, gross margin, and operating income
- Consolidated net sales, gross margin, operating income, net income, and earnings per share
- Capital expenditures
- Return on sales, assets, and equity The following discussion highlights the consolidated operating results. Segment operating results
are more fully explained in the Results of OperationsSegment Analysis section. Financial highlights for fiscal years ended January 31, % %
Dollars in thousands except per-share data2009change 2008 change 2007 Results of Operations Net sales . . . . . . . . . . . . . . . .
        . . . . . . . . . . . . . . . . . . . . .
        . . . . . . . . . . . . . . . $279,91320% $233,957 8% $217,529 Gross margins. . . . . . . . . . . . . . .
        . . . . . . . . . . . . . . . . . . . . .
        . . . . . . . . . . . . 24.3%25.3% 25.2%
Operating income . . . . . . . . . . . . .
        . . . . . . . . . . . . . . . . . . . . .
        . . . . . . . . . . . $ 46,39413% $ 41,145 7% $ 38,302 Net income . . . . . . . . . . . . . . . .
        . . . . . . . . . . . . . . . . . . . . .
        . . . . . . . . . . . . . $ 30,77011% $ 27,802 9% $ 25,441 Diluted earnings per share . . . . . . . .
        . . . . . . . . . . . . . . . . . . . . .
        . . . . . . . . . $ 1.7011% $ 1.53 10% $ 1.39 Free Cash Flow and Payments to Shareholders Cash flow from operations . . . . . . . .
        . . . . . . . . . . . . . . . . . . . . .
        . . . . . . . . . $ 39,037$ 27,151 $ 26,313 Capital expenditures . . . . . . . . . . .
        . . . . . . . . . . . . . . . . . . . . .
        . . . . . . . . . . . (8,001)(6,635) (16,522) Free cash flow. . . . . . . . . . . . . .
        . . . . . . . . . . . . . . . . . . . . .
        . . . . . . . . . . . . . $ 31,036$ 20,516 $ 9,791 Cash dividends . . . . . . . . . . . . . .
        . . . . . . . . . . . . . . . . . . . . .
        . . . . . . . . . . . . $ 31,884$ 7,966 $ 6,507 Common stock repurchases . . . . . . . . .
        . . . . . . . . . . . . . . . . . . . . .
        . . . . . . . 5,180592 4,201 Cash returned to shareholders . . . . . .
        . . . . . . . . . . . . . . . . . . . . .
        . . . . . . . . $ 37,064$ 8,558 $ 10,708 Performance Measures Return on net sales (net income / net
sales) . . . . . . . . . . . . . . . . . .
        . . . . . . . 11.0%11.9% 11.7%
Return on average assets (net income /
average assets). . . . . . . . . . . . . .
        . . 21.1%20.8% 22.5%
Return on beginning equity (net income /
beginning equity) . . . . . . . . . . . . 26.0%28.3% 30.1% RAVEN 2009ANNUAL REPORT 19




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FINANCIAL REVIEW AND ANALYSIS(continued) Results of Operations The company posted record sales, operating income, net income, diluted earnings per share, and
operating cash flow for fiscal 2009. The results were fueled by a strong agricultural market and
new product introductions in the Applied Technology segment and, to a lesser extent, shipments
under government contracts at Aerostar. The 20% increase in net sales is the result of
year-over-year sales growth in Applied Technology (60%), Aerostar (57%), and Engineered Films (5%).
The 13% rise in operating income is primarily the result of sales growth and positive operating
leverage generated by Applied Technology. The increase in operating income fell short of the growth
in sales as a result of negative operating leverage at Electronic Systems as sales volume slipped
in the latest year due to the loss of a customer and the weak economy. In addition, Engineered
Films margins contracted as competitive pricing pressures created by the slowdown in construction
activity prevented the pass-through of increased plastic resin costs. After three very strong quarters in fiscal 2009, the fourth quarter was significantly affected by
the weakening economy and related declines in commodity prices. Fourth quarter sales of $59.9
million were up 3%, and net income was 22% lower than the fourth quarter of fiscal 2008. The
collapse of construction and oil and gas drilling markets at Engineered Films pushed that segment
into an operating loss. Weaker agricultural commodity prices reduced the growth rate in Applied
Technology. Fiscal 2008 consolidated net sales increased 8% to $234.0 million from $217.5 million in fiscal
2007. The agricultural market was improving during the year, and the resulting 41% increase in
Applied Technology sales boosted profitability. Shipments of U.S. Army parachutes helped Aerostars
turnaround from a relatively weak fiscal 2007 performance. A very strong fiscal 2007 at Engineered
Films resulted from disaster film shipments that did not repeat in fiscal 2008. The company
reported year-over-year improvements in operating income, net income, diluted earnings per share,
and operating cash flow. Free Cash Flow and Payments to Shareholders The company continues to generate strong free cash flow as a result of solid earnings, excellent
cash flow from operations, and modest capital expenditures. During fiscal 2009, $37.1 million was
returned to shareholders through stock repurchases, quarterly dividends and a special dividend of
$22.5 million paid in November 2008. Performance Measures The company continues to generate solid returns on net sales, average assets and beginning equity,
which are important gauges of Ravens ability to efficiently produce profits. The return on sales
dropped from 11.9% in fiscal 2008 to 11.0% in fiscal 2009, primarily as a result of pricing
pressures at Engineered Films. RESULTS OF OPERATIONSSEGMENT ANALYSIS Applied Technology Applied Technology provides electronic and Global Positioning System (GPS) products designed to
reduce operating costs and improve yields for the agriculture market. Financial highlights for fiscal years ended January 31,
% %
Dollars in thousands2009change 2008 change 2007 Applied Technology Net sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $103,09860% $64,291 41% $45,515 Gross margins. . . . . . . . . . . . . . . . . . . . . . . . . . . . 40.2%37.9% 32.1%
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . $ 33,88477% $19,102 89% $10,111 Fiscal 2009 net sales of $103.1 million increased $38.8 million (60%) and operating income
of $33.9 million increased $14.8 million (77%) over fiscal 2008. Fiscal 2009 fourth quarter net sales of $19.6 million increased $3.0 million (18%) and
operating income of $5.3 million increased $752,000 (17%) over fourth quarter fiscal 2008
levels. 20 RAVEN 2009ANNUAL REPORT




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Several factors contributed to the strong fourth quarter and fiscal 2009 results: - Healthy global farm fundamentals.Commodity prices were strong through the first nine
months of the year but fell from their highs; however, agricultural market fundamentals
remained strong and continued to influence growers capital investment decisions, increasing
demand for Applied Technology precision agriculture equipment. - Investments in select global markets.International sales increased to 17% of segment
sales in fiscal 2009 compared with 16% in fiscal 2008during a period of 60% overall sales
growth. - Increased acceptance of precision agriculture.Double-digit year-over-year sales growth
was achieved for all product categories (standard, precision, steering, and Autoboom)
reflecting strong customer demand for flagship sprayer products as well as newer products
such as the Cruizer, a simple and affordable guidance system targeted at new entrants to
the precision agriculture market. - Positive operating leverage.Gross margins of 40.2% in fiscal 2009 compared favorably to
fiscal 2008 gross margins of 37.9%. Fiscal 2009 selling expense was $7.5 million, or 7.3% of
net sales, compared with fiscal 2008 selling expense of $5.3 million, or 8.2% of net sales.
These improvements reflect positive operating leverage generated through increased sales
volume. Fiscal 2008 net sales of $64.3 million increased $18.8 million (41%) and operating income of $19.1
million rose $9.0 million (89%) over fiscal 2007. Fiscal 2008 results were primarily attributable to the following:
- Healthy global farm fundamentals.Worldwide agricultural conditions were strong as a result of record prices for corn, soybeans and other feed grains. - Investments in select global markets.Fiscal 2008 international sales increased 43% from
fiscal 2007 as a result of sales and marketing expenditures in select global markets. - Increased acceptance of precision agriculture.Standard sprayer control system deliveries
were solid throughout the period, led by strong demand for anhydrous ammonia control
systems. - Positive operating leverage.Gross margins of 37.9% in fiscal 2008 compared favorably to
fiscal 2007 gross margins of 32.1%. Fiscal 2008 selling expenses were $5.3 million or 8.2%
of net sales compared with fiscal 2007 selling expenses of $4.5 million or 9.9% of net
sales. These improvements reflect positive operating leverage generated through increased
sales volume. Engineered Films Engineered Films produces rugged reinforced plastic sheeting for industrial, construction,
geomembrane and agricultural applications. Financial highlights for fiscal years ended January 31, % %
Dollars in thousands2009change 2008 change 2007 Engineered Films Net sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $89,8585% $85,316 (6%) $91,082 Gross margins. . . . . . . . . . . . . . . . . . . . . . . . . . . 16.1%24.8% 29.4%
Operating income . . . . . . . . . . . . . . . . . . . . . . . . $10,919(38%) $17,739 (24%) $23,440 Fiscal 2009 net sales of $89.9 million increased $4.5 million (5%) while operating income
of $10.9 million decreased $6.8 million (38%) versus fiscal 2008. RAVEN 2009ANNUAL REPORT 21




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FINANCIAL REVIEW AND ANALYSIS(continued) Fiscal 2009 results were primarily due to the following: 3 Sales volume.Sales increased as a result of higher volume coupled with a modest increase
in selling prices. Strong sales of pit and pond lining films to the oil and gas market and
higher agriculture sales were partially offset by a decline in sales to the manufactured
housing market. 3 Margin contraction.Depressed margins reflected volatile material costs, increased price
competition, and poor economic conditions. Competitive pricing pressures, especially in the
construction market, hindered the ability to pass on higher resin costs. This meant
production costs outpaced increases in selling prices. Gross margins decreased from 24.8% in
fiscal 2008 to 16.1% in fiscal 2009. 3 Selling expenses.Fiscal 2009 selling expenses of $3.5 million were relatively flat
year-over-year. Fiscal 2009 fourth quarter net sales of $14.5 million decreased $5.7 million (28%) from the fourth
quarter of fiscal 2008. In addition, the segment posted a fourth quarter fiscal 2009 operating loss
of $178,000 compared with operating income of $3.4 million in the fourth quarter of fiscal 2008. Fiscal 2009 fourth quarter results were affected by the following; - Global recession.Dysfunctional credit markets and plunging asset values resulted in weak
economic activity in the fourth quarter of fiscal 2009. As a result of the reduction in
economic activity, energy prices plunged, 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. Consequently, the two largest markets for
Engineered Films were both depressed in the quarter. - Sales volume.Fourth quarter 2009 sales to the energy and construction markets fell
nearly 30% below fourth quarter fiscal 2008 levels due to the factors mentioned above. - Margin contraction.Lower sales volume resulted in negative operating leverage, and
margins were depressed by high-cost raw materials purchased prior to the precipitous drop in
commodity prices. Fiscal 2008 net sales of $85.3 million decreased $5.8 million (6%) and operating income of $17.7
million was down $5.7 million (24%) from fiscal 2007. Fiscal 2008 results were driven by the following: - Sales volume.Strong sales of pit and pond lining films to the oil and gas market were
led by increased drilling activity, reflecting high oil and gas prices. Increased shipments
of vapor retarders resulted from higher market share and industry growth. These increases
were offset by a $9.9 million decrease in disaster film shipments due to a benign hurricane
season. Sales declined to the manufactured housing market due to the economic challenges
faced by that industry. - Margin contraction.Selling prices decreased approximately 3% from fiscal 2007 despite
higher raw material costs. Competitive pricing pressures prevented the pass-through of
increased resin costs in the form of higher selling prices. - Overhead.Increased depreciation and start-up costs associated with new extruders that
were placed into service during the first and second quarters of fiscal 2008 negatively
affected fiscal 2008 gross margins compared with one year earlier. - Selling expenses.Fiscal 2008 selling expenses of $3.4 million were unchanged from fiscal
2007, reflecting lower personnel costs offset by increased product development expense. 22 RAVEN 2009ANNUAL REPORT




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Electronic Systems Electronic Systems is a total-solutions provider of electronics manufacturing services,
primarily to North American original equipment manufacturers. Financial highlights for fiscal years ended January 31, % %
Dollars in thousands2009change 2008 change 2007 Electronic Systems Net sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $61,983(9%) $67,987 3% $66,278 Gross margins. . . . . . . . . . . . . . . . . . . . . . . . . . . 11.3%16.9% 18.0%
Operating income . . . . . . . . . . . . . . . . . . . . . . . . $ 5,926(43%) $10,365 (4%) $10,850 Fiscal 2009 net sales of $62.0 million decreased $6.0 million (9%) and operating income
of $5.9 million declined $4.4 million (43%) from fiscal 2008. Fiscal 2009 fourth quarter net sales of $16.1 million were off $450,000 (3%) and operating
income of $2.2 million increased $299,000 (15%) from fourth quarter fiscal 2008. The fiscal 2009 fourth quarter and full-year comparative results reflected the following: - Slower consumer spending.Hand-held bed control shipments have been negatively affected
by lower consumer spending on non-essential home-related products, indicating the influence
of financial uncertainty on consumer sentiment and a soft construction market. - Loss of a customer.Prior year results included $7 million of sales to a former customer (which was acquired) and a profitable non-repeat close-out order.
- Increased sales of aviation electronics.Strong sales of avionics partially offset the negative impact of the factors mentioned earlier. - Negative operating leverage.Gross margins suffered as a result of negative operating
leverage on lower sales and a less favorable product mix. Third and fourth quarter operating
expenses were reduced by consolidating manufacturing space, which led to improved gross
margins in the second half of the year. - Selling expenses.Selling expenses of $1.1 million (1.7% of sales) were consistent with
the prior year. Fiscal 2008 net sales of $68.0 million increased $1.7 million (3%) and operating income of $10.4
million decreased $485,000 (4%) versus fiscal 2007. Fiscal 2008 comparative results were primarily due to the following:
- Slower consumer spending.Hand-held bed control shipments decreased as a result of lower consumer spending on non-essential home-related products.
- Increased sales of aviation electronics.Strong sales of avionics partially offset the negative impact of slower consumer spending.
- Product mix.Gross profit margins were negatively affected by a less favorable product mix.
- Selling expense.Selling expenses of $1.2 million (1.7% of sales) were consistent with the prior year. RAVEN 2009ANNUAL REPORT 23




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FINANCIAL REVIEW AND ANALYSIS(continued) Aerostar Aerostar manufactures military parachutes, protective wear, custom-shaped inflatable products, and
high-altitude aerostats for government and commercial research. Financial highlights for fiscal years ended January 31,
% %
Dollars in thousands2009change 2008 change 2007 Aerostar Net sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $27,18657% $17,290 18% $14,654 Gross margins. . . . . . . . . . . . . . . . . . . . . . . . . . . 18.7%12.8% 10.4%
Operating income . . . . . . . . . . . . . . . . . . . . . . . . $ 4,219180% $ 1,506 113% $ 707 Fiscal 2009 net sales of $27.2 million increased $9.9 million (57%) and operating income
of $4.2 million rose $2.7 million (180%) over fiscal 2008. Fourth quarter fiscal 2009 net sales of $10.2 million and operating income of $1.8 million
compared favorably with fourth quarter fiscal 2008 net sales of $5.6 million and operating
income of $689,000. Fiscal 2009 fourth quarter and full-year comparative results were primarily attributable
to the following: - Government contracts.Shipments of protective wear and MC-6 parachutes increased
year-over-year. Deliveries under the $20.7 million MC-6 Army parachute and $6.5 million
protective wear contract began in the fourth quarter of fiscal 2008. Fourth quarter 2009
parachute sales included nearly $3 million of deliveries that were delayed from the prior
quarter. - Positive operating leverage.Gross margins of 18.7% in fiscal 2009 compared favorably
with gross margins of 12.8% in fiscal 2008, bolstered by increased MC-6 Army parachute and
protective wear shipments. - Selling expenses.Fiscal 2009 selling expenses of $860,000 were 3.2% of net sales
compared with 4.1% of net sales in fiscal 2008, reflecting the benefits of a higher sales
volume. Fiscal 2008 net sales of $17.3 million increased $2.6 million (18%) and fiscal 2008 operating
income grew $799,000 (113%) over fiscal 2007. Fiscal 2008 comparative results were primarily attributable to the following:
- Government contracts.Regular shipments of protective wear and MC-6 parachutes began in the fourth quarter of fiscal 2008. - Positive operating leverage.Gross margins of 12.8% in fiscal 2008 compared favorably
with gross margins of 10.4% in fiscal 2007. This reflected increased MC- 6 Army parachute and protective wear shipments and higher research balloon profits. - Selling expenses.Fiscal 2008 selling expenses were 4.1% of net sales compared with
5.6% of net sales in fiscal 2007, showing the benefits of increased sales volume. Corporate Expenses (administrative expenses, income taxes, and interest income and other, net) Dollars in thousands20092008 2007 Administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $8,502$7,467 $6,806 Administrative expenses as a % of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0%3.2% 3.1%
Interest income and other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 507$1,079 $ 533 Effective tax rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34.4%34.2% 34.5% Administrative expenses increased 14% in fiscal 2009 compared with fiscal 2008, as a result
of higher compensation and professional service expense. Administrative expenses rose 10% in
fiscal 2008 compared with fiscal 2007, and were primarily driven by higher compensation
expense. 24 RAVEN 2009ANNUAL REPORT




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Fiscal 2009 interest income and other, net declined 53% from fiscal 2008, primarily as a result
of lower interest income due to a decrease in interest rates. Fiscal 2008 interest income and
other, net increased over 2007 as a result of higher average cash, cash equivalent, and short-term
investment balances. The effective tax rate for fiscal 2009 was 34.4%, versus 34.2% for fiscal 2008 and 34.5% for fiscal
2007. The fiscal 2009 and 2008 tax rates were favorably affected by an increase in the U.S. federal
tax deduction from income attributable to manufacturing activities, partially offset by higher
state and local taxes. OUTLOOK Management anticipates a challenging and uncertain year in fiscal 2010. Sales and earnings are
expected to fall short of the record levels achieved in fiscal 2009. The companys outlook includes a continued downturn for the economy in fiscal 2010, and it factors
in a long and slow recovery. Management intends to focus on optimizing performance regardless of
the economic situation, and being ready to take advantage of opportunities as they present
themselves. For the near term, this means growing the business at previous target rates is no
longer the imperative. To preserve the resources that could be depleted by a recession, management plans to implement a
new three-part strategy. First: protect the core. This means getting rid of everything that is
non-core (from assets to product lines), defending core assets (such as businesses that have
performed well in the past but will struggle in a recession), protecting core values and beliefs,
and continuing to pay dividends to shareholders. Second: generate and preserve cash. This includes
controlling the balance sheet and improving working capital turnover through tactics such as
increasing inventory turns and cutting expenses. Third: continue to invest in quality initiatives
when it comes to customers, suppliers, products and R&D. Applied Technology Applied Technology will seek to capitalize on previous investments in product development and
domestic and international expansion. It plans to accomplish this by leveraging its position as a
total precision solutions provider (GPS steering devices, planting and spraying controls and data
collection) and by capitalizing on increased acceptance of precision agriculture as an essential
means of softening the impact of volatile input costs. Engineered Films Engineered Films was severely affected by the freefall in fiscal 2009 fourth quarter business
activity, reflecting the global recession, plunging oil prices and a drop in construction activity.
This business depends on increased penetration of existing markets and the introduction of
innovative products. The segment continues to market new products such as FeedFresh sileage covers
and VaporBlock Plus radon barriers. Ultimately, Engineered Films is dependent on the reversal of
the severe economic contraction, particularly in the oil and gas drilling and construction markets. Electronic Systems Sales of printed circuit board assemblies for the aviation industry and secure communication
devices for government agencies are expected to be more recession-resistant than consumer bed
control sales. Aerostar Continued shipments under the MC-6 Army parachute contract, and sales of high-altitude airships and
aerostats are expected to be relatively secure from the current
recession. RAVEN 2009ANNUAL REPORT 25




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FINANCIAL REVIEW AND ANALYSIS(continued) LIQUIDITY AND CAPITAL RESOURCES Cash Position Cash, cash equivalents, and short-term investments totaled $16.3 million at January 31, 2009, a
$6.5 million decrease from $22.8 million on the same date in 2008. Management expects that current
cash, combined with continued positive operating cash flows and the companys short-term line of
credit, will be sufficient to fund day-to-day operations. Ravens uncollateralized credit agreement
provides an $8.0 million line of credit. The credit line is expected to be renewed during fiscal
2010, as the maturity date on the current line of credit is July 1, 2009. Management anticipates
that its capital spending in fiscal 2010 will not exceed $6 million. The companys cash needs are
seasonal, with working capital demands strongest in the first quarter. Operating Activities Fiscal 2009 cash provided by operating activities was $39.0 million, an increase of $11.9 million
from $27.2 million in fiscal 2008. The improvement in fiscal 2009 operating cash flows versus one
year earlier was due primarily to company earnings, improved inventory levels and a higher accounts
payable balance. Inventory declined to $36.0 million in fiscal 2009 from $36.5 million in fiscal
2008. Lower Engineered Films inventories were partially offset by higher levels at Applied
Technology. Accounts payable at January 31, 2009, of $9.4 million was up 13% from one year ago,
reflecting more favorable payment terms. Partially offsetting these cash flow improvements was cash
consumed to finance higher accounts receivable. Accounts receivable rose from $36.5 million in
fiscal 2008 to $40.3 million at January 31, 2009, with Applied Technology sales growth and seasonal
payment terms offered to the agricultural market accounting for the majority of the increase.
Fiscal 2009 bad debt expense of $629,000 was up $538,000 from the prior year. This reflected
specific customer receivable writeoffs, as well as additional reserves for increased international
exposure. Fiscal 2008 cash provided by operating activities was $27.2 million, an $838,000 increase compared
with operating cash inflows in fiscal 2007. The fiscal 2008 improvement was due primarily to
company earnings and increases in the accounts payable and accrued liabilities balances at
year-end, partially offset by higher inventory and accounts receivable levels. As of January 31,
2008, accounts receivable and inventory balances increased by $5.2 million and $8.5 million,
respectively, in support of Applied Technology growth. Investing Activities Cash used in investing activities was $7.0 million in fiscal 2009, $4.4 million in fiscal
2008, and $18.7 million in 2007. The change between fiscal 2009 and 2008 was primarily due to
higher capital expenditures to support the increased manufacturing requirements of Applied
Technology. The change between fiscal 2008 and 2007 was mostly due to a fluctuation in
capital investment. Fiscal 2008 capital expenditures of $6.6 million decreased from the prior
years $16.5 million, when $13.3 million was invested in Engineered Films manufacturing
capacity and facilities. As part of the companys strategy to preserve cash, capital
expenditures are expected to be less than $6 million in fiscal 2010, and that will be closely
monitored. 26 RAVEN 2009ANNUAL REPORT




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Financing Activities Cash consumed by financing activities was $37.0 million in fiscal 2009, $8.3 million in fiscal
2008, and $10.3 million in fiscal 2007. The change between fiscal 2009 and 2008 was the result of
an increase in dividends and stock repurchases. The fiscal 2009 quarterly dividend of 13 cents per
share increased from 11 cents per share one year earlier. In addition to the quarterly dividend, a
special dividend of $1.25 per share was paid during the fourth quarter of fiscal 2009. The special
dividend was in response to the companys strong cash position and commitment to return excess cash
to shareholders. The change between fiscal 2008 and fiscal 2007 was due to a reduction in
repurchases of the companys stock, partially offset by an increase in the quarterly dividend.
Repurchases of the companys common stock totaled $5.2 million (161,100 shares) in fiscal 2009,
$592,000 (20,150 shares) in fiscal 2008, and $4.2 million (146,247 shares) in fiscal 2007. The
company has suspended repurchases of common stock, which, along with lower expected capital
investments, is expected to help protect quarterly dividend payments throughout fiscal 2010. OFF-BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS As of January 31, 2009, the company is obligated to make cash payments in connection with its
non-cancelable operating leases for facilities and equipment, and unconditional purchase
obligationsprimarily for raw materialsin the amounts listed below. The company has no
off-balance sheet debt or other unrecorded obligations other than the items noted in the following
table. In addition to the commitments noted there, standby letters of credit totaling $1.3 million
have been issued, primarily to support self-insured workers compensation bonding requirements. In
the event the bank chooses not to renew the companys line of credit, the letters of credit would
cease and alternative methods of support for the insurance obligations would be necessary, would be
more expensive, and would require additional cash outlays. Management believes the chances of this
are remote. A summary of the obligations and commitments at January 31, 2009, and for the next five
years is shown below. More
Less than 1-3 3-5 than
Dollars in thousandsTotal 1 year            years            years 5 years
Contractual Obligations: Line of credit(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $  $  $  $  $ Operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 462 264 198     Postretirement benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,840 203 479 546 3,612 Unconditional purchase obligations . . . . . . . . . . . . . . . . . . . . . . . . . . 39,034 39,034        Uncertain tax positions(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              $44,336 $39,501 $677 $546 $3,612 (a) $8.0 million line bears interest at 2.25% as of January 31, 2009, and expires July 2009.
The line of credit is reduced by outstanding letters of credit totaling $1.3 million. (b) The total liability for uncertain tax positions under FIN 48 at January 31, 2009, was
$2.9 million. The company is not able to reasonably estimate the timing of future payments
relating to non-current tax benefits. RAVEN 2009ANNUAL REPORT 27




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FINANCIAL REVIEW AND ANALYSIS(continued) CRITICAL ACCOUNTING ESTIMATES Critical accounting policies are those that require the application of judgment when valuing assets
and liabilities on the companys balance sheet. These policies are discussed below, because a
fluctuation in actual results versus expected results could materially affect operating results,
and because the policies require significant judgments and estimates to be made. Accounting related
to these policies is initially based on best estimates at the time of original entry in the
accounting records. Adjustments are periodically recorded when the companys actual experience
differs from the expected experience underlying the estimates. These adjustments could be material
if experience were to change significantly in a short period of time. The company does not enter
into derivatives or other financial instruments for trading or speculative purposes. However, Raven
has used derivative financial instruments to manage the economic impact of fluctuations in currency
exchange rates on transactions that are denominated in currency other than its functional currency,
which is the U.S. dollar. The use of these financial instruments had no material effect on the
companys financial condition, results of operations or cash flows. Inventories Ravens most significant accounting judgment is determining inventory value at the lower of cost or
market. The company estimates inventory valuation each quarter. Typically, when a product reaches
the end of its lifecycle, inventory value declines slowly or the product has alternative uses.
Management uses its manufacturing resources planning data to help determine if inventory is
slow-moving or has become obsolete due to an engineering change. The company closely reviews items
that have balances in excess of the prior years requirements or that have been dropped from
production requirements. Despite these reviews, technological or strategic decisions made by
management or the companys customers may result in unexpected excess material. In Electronic
Systems, the company typically has recourse to customers for obsolete or excess material. When
Electronic Systems customers authorize inventory purchases, especially with long lead-time items,
they are required to take delivery of unused material or compensate the company accordingly. In
every Raven operating unit, management must manage obsolete inventory risk. The accounting judgment
ultimately made is an evaluation of the success that management will have in controlling inventory
risk and mitigating the impact of obsolescence when it does occur. Warranty Estimated warranty liability costs are based on historical warranty costs and average time
elapsed between purchases and returns for each business segment. Warranty issues that are
unusual in nature are accrued for individually. Allowance for Doubtful Accounts Determining the level of the allowance for doubtful accounts requires managements best
estimate of the amount of probable credit losses based on historical writeoff experience
by segment, and an estimate of the collectibility of any known problem accounts. Factors
that are considered beyond historical experience include the length of time the
receivables are outstanding, the current business climate, and the customers current
financial condition. Revenue Recognition The company recognizes and records revenue when products are shipped because there is
persuasive evidence of an arrangement, the sales price is determinable, collectibility is
reasonably assured, and delivery has occurred. Estimated returns, sales allowances or
warranty charges are recognized upon shipment of a product. The company sells directly to
customers or distributors that incur the expense and commitment for any post-sale
obligations beyond stated warranty terms. Self-insurance Reserves Raven purchases insurance with deductibles for product liability; general insurance, including
aviation product liability; and workers compensation. Third-party insurance is carried for what is
believed to be the major portion of potential exposure. The company has established accruals for
potential uninsured claims, including estimated costs and legal fees. Management considers these
accruals adequate, although a substantial change in the number and/or severity of claims would
result in materially different amounts. 28 RAVEN 2009ANNUAL REPORT




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Goodwill and Long-lived Assets Management periodically assesses goodwill and other long-lived assets for impairmentor more
frequently if events or changes in circumstances indicate that an asset might be impairedusing
fair value measurement techniques. For goodwill, Raven performs impairment reviews annually by
reporting units, which are the companys reportable segments. The one exception is Aerostars
high-altitude research balloon operation, which is evaluated independently from Aerostars other
operations. Estimates of fair value are primarily determined using discounted cash flows, market
comparisons and recent transactions. These valuation methodologies use significant estimates and
assumptions, which include projected future cash flows, including timing and the risks inherent in
future cash flows, perpetual growth rates, and determination of appropriate market comparables. Uncertain Tax Positions Accounting for tax positions requires judgments, including estimating reserves for uncertainties
associated with the interpretation of income tax laws and regulations, and the resolution of tax
positions with tax authorities after discussions and negotiations. The ultimate outcome of these
matters could result in material favorable or unfavorable adjustments to the consolidated financial
statements. NEW ACCOUNTING STANDARDS At the beginning of fiscal 2009, the company adopted SFAS No. 157, Fair Value Measurement.The
standard provides guidance for using fair value to measure assets and liabilities. SFAS No. 157
clarifies the principle that fair value should be based on the assumptions market participants
would use when pricing an asset or liability, and establishes a fair value hierarchy that
prioritizes the information used to develop those assumptions. Under the standard, fair value
measurements are separately disclosed by level within the fair value hierarchy. The adoption of
SFAS No. 157 did not have a material impact on the companys consolidated results of operations,
financial condition or cash flows. At the beginning of fiscal 2009, the company adopted SFAS No. 159, The Fair Value Option for
Financial Assets and Financial Liabilities.SFAS No. 159 permits companies to choose to measure
many financial instruments and certain other items at fair value. The adoption of SFAS No. 159 did
not have a material impact on the companys consolidated results of operations, financial condition
or cash flows. At the beginning of fiscal 2009, the company adopted SFAS No. 141(R), Business Combinations,which
changes the accounting for business acquisitions. SFAS No. 141(R) requires an entity to recognize
the assets acquired, liabilities assumed, contractual contingencies, and contingent consideration
at their fair value on the acquisition date. It also requires acquisition-related costs to be
expensed as incurred, restructuring costs to generally be expensed in periods subsequent to the
acquisition date, and changes in accounting for deferred tax asset valuation allowances and
acquired income tax uncertainties after the measurement period to affect income tax expense. SFAS
No. 141(R) had no immediate impact upon adoption by the company, but will affect business
combinations closing after February 1, 2009. In March 2008, the Financial Accounting Standards Board (FASB) issued SFAS No. 161, Disclosures
about Derivative Instruments and Hedging Activitiesan amendment of FASB Statement No. 133.SFAS
No. 161 requires enhanced disclosures about (a) how and why derivative instruments are used, (b)
how derivative instruments and related hedged items are accounted for and (c) how derivative
instruments and related hedged items affect an entitys financial position, financial performance
and cash flows. SFAS No. 161 is effective for financial statements issued for fiscal years and
interim periods beginning after November 15, 2008. The company does not anticipate that the
adoption of SFAS No. 161 will have a material effect on its consolidated results of operations,
financial condition or cash flows. In April 2008, the FASB issued FSP No. FAS 142-3, Determination of the Useful Life of Intangible
Assets,which amends the list of factors an entity should consider in developing renewal or
extension assumptions used in determining the useful life of recognized intangible assets under
SFAS No. 142, Goodwill and Other Intangible Assets.The new guidance applies to (1) intangible assets that are acquired individually or with a
group of other assets, and (2) intangible assets acquired in both business combinations and asset
acquisitions. Under FSP No. FAS 142-3, entities estimating the useful life of a recognized
intangible asset must consider their historical experience in renewing or extending similar
arrangements or, in the absence of historical experience, must consider assumptions that market
participants would use about renewal or extension. FSP No. FAS 142-3 is effective as of the
beginning of the companys 2010 fiscal year. The company does not anticipate that the adoption of
FSP No. 142-3 will have a material effect on its consolidated results of operations or financial
condition. RAVEN 2009ANNUAL REPORT 29




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MONTHLY CLOSING STOCK PRICE AND VOLUME QUARTERLY INFORMATION (UNAUDITED) Net Income            Common Stock            Cash
Gross            Operating            Pretax            Net            Per Share(a) Market Price            Dividends
Dollars in thousands
except per-share dataNet Sales            Profit            Income            Income            Income            Basic            Diluted &nb
sp;          High            Low            Per Share
FISCAL 2009
First Quarter . . . . . $ 75,166 $22,015 $16,641 $16,759 $10,882 $0.60 $0.60 $32.80 $25.94 $0.13
Second Quarter . . . 69,278 15,786 10,312 10,488 6,815 0.38 0.38 39.50 29.46 0.13
Third Quarter . . . . . 75,538 18,001 12,371 12,548 8,385 0.47 0.46 47.82 25.79 0.13
Fourth Quarter. . . . 59,931 12,079 7,070 7,106 4,688 0.26 0.26 33.24 20.60 1.38(b)
Total Year . . . . . . . . $279,913 $67,881 $46,394 $46,901 $30,770 $1.71 $1.70 $47.82 $20.60 $1.77 FISCAL 2008
First Quarter. . . . . . . $ 58,103 $17,374 $12,838 $13,025 $ 8,540 $0.47 $0.47 $30.84 $26.20 $0.11 Second Quarter . . . . 55,653 13,407 8,543 8,857 5,843 0.32 0.32 39.36 28.39 0.11 Third Quarter . . . . . . 61,842 15,299 10,940 11,254 7,398 0.41 0.41 45.85 33.42 0.11 Fourth Quarter . . . . . 58,359 13,068 8,824 9,088 6,021 0.33 0.33 42.75 27.57 0.11 Total Year . . . . . . . . . $233,957 $59,148 $41,145 $42,224 $27,802 $1.54 $1.53 $45.85 $26.20 $0.44 FISCAL 2007
First Quarter. . . . . . . $ 58,465 $15,891 $11,477 $11,615 $ 7,502 $0.41 $0.41 $42.16 $31.22 $0.09 Second Quarter . . . . 50,381 12,183 7,872 7,937 5,127 0.28 0.28 42.70 25.89 0.09 Third Quarter . . . . . . 57,435 14,480 10,540 10,713 6,968 0.39 0.38 32.64 25.89 0.09 Fourth Quarter . . . . . 51,248 12,328 8,413 8,570 5,844 0.32 0.32 35.35 25.46 0.09 Total Year . . . . . . . . . $217,529 $54,882 $38,302 $38,835 $25,441 $1.41 $1.39 $42.70 $25.46 $0.36 (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 fourth quarter of fiscal 2009. 30 RAVEN 2009ANNUAL REPORT




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MANAGEMENTS REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING Our management is responsible for establishing and maintaining effective internal control over
financial reporting as defined in Rule 13a-15(f) of the Securities Exchange Act of 1934. Our
internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles. Our internal control
over financial reporting includes those policies and procedures that (i) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with generally accepted
accounting principles, and that our receipts and expenditures are being made only in accordance
with authorizations of our management and directors; and (iii) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our
assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or
detect misstatements. Also, projections of any evaluation of effectiveness to future periods are
subject to the risk that controls may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate. Management has assessed our internal control over financial reporting in relation to criteria
described in Internal Control  Integrated Framework,issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Based on this assessment using those criteria, we
concluded that, as of January 31, 2009, our internal control over financial reporting was
effective. The effectiveness of our internal control over financial reporting as of January 31, 2009, has been
audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated
in their report, which appears on page 43 of this Annual Report. Ronald M. Moquist            Thomas Iacarella President & Chief Executive Officer            Vice President & Chief Financial Officer March 24, 2009 RAVEN 2009ANNUAL REPORT 31




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CONSOLIDATED BALANCE SHEETS As of January 31
Dollars in thousands, except per-share data20092008 2007 ASSETS Current assets
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 16,267$ 21,272 $ 6,783 Short-term investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,500 4,000 Accounts receivable, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,27836,538 31,336 Inventories, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,97736,529 28,071 Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,5422,075 1,761 Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,0092,955 1,268 Total current assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98,073100,869 73,219 Property, plant and equipment, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,88035,743 36,264 Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,4506,902 6,604 Other assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,0124,347 3,677 Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $144,415$147,861 $119,764 LIABILITIES AND SHAREHOLDERS EQUITY Current liabilities
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,433$ 8,374 $ 6,093 Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,28112,804 9,579 Customer advances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 608930 792 Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,32222,108 16,464 Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,5377,478 5,032 Commitments and contingencies
Shareholders equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113,556118,275 98,268 Common shares, par value $1.00 per share
Authorized100,000,000
Outstanding2009: 18,012,251; 2008: 18,120,513
2007: 18,039,223
Total liabilities and shareholders equity. . . . . . . . . . . . . . . . . . . . . $144,415$147,861 $119,764 The accompanying notes are an integral part of the consolidated financial statements. 32 RAVEN 2009ANNUAL REPORT




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CONSOLIDATED STATEMENTS OF INCOME For the years ended January 31
Dollars in thousands, except per-share data20092008 2007 Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $279,913$233,957 $217,529 Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 212,032174,809 162,647 Gross profit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67,88159,148 54,882 Selling, general and administrative expenses . . . . . . . . . . . . . . . . . . . . 21,48718,003 16,580 Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46,39441,145 38,302 Interest income and other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (507)(1,079) (533) Income before income taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46,90142,224 38,835 Income taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,13114,422 13,394 Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 30,770$27,802 $ 25,441 Net income per common share:  Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.71$1.54 $ 1.41  Diluted. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.70$1.53 $ 1.39 The accompanying notes are an integral part of the consolidated financial statements. RAVEN 2009ANNUAL REPORT 33




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CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY AND COMPREHENSIVE INCOME Accumulated
other
$1 Par            comprehensive
common            Paid-in            Treasury            stock            Retained            income
Dollars in thousands, except per-share datastock            capital            Shares            Cost            earnings (loss) Total
Balance January 31, 2006 . . . . . . . . . . . $32,194 $ 1,401 (14,121,186) $(43,389) $94,170 $ 13 $ 84,389 Net income . . . . . . . . . . . . . . . . . . . .             25,441    25,441 Foreign currency translation . . . . . . .                (21) (21) Total comprehensive income. . . . . . . 25,420 Adoption of SFAS No.158,
net of $1,015 income tax . . . . . . .                (1,885) (1,885) Dividends ($.36 per share) . . . . . . . .    1       (6,508)    (6,507) Purchase of stock . . . . . . . . . . . . . . .       (146,247) (4,201)       (4,201) Stock surrendered upon exercise
of stock options . . . . . . . . . . . . . . (28) (854)             (882) Employees stock options exercised . 141 718             859 Share-based compensation. . . . . . . .    605             605 Tax benefit from exercise
of stock options . . . . . . . . . . . . . .    470             470 Balance January 31, 2007 . . . . . . . . . . . 32,307 2,341 (14,267,433) (47,590) 113,103 (1,893) 98,268 Net income . . . . . . . . . . . . . . . . . . . .             27,802    27,802 Postretirement benefits,
net of $84 income tax. . . . . . . . . .                156 156 Foreign currency translation . . . . . . .                131 131 Total comprehensive income. . . . . . . 28,089 Adoption of FIN 48 . . . . . . . . . . . . . .             (716)    (716) Dividends ($.44 per share) . . . . . . . .    4       (7,970)    (7,966) Purchase of stock . . . . . . . . . . . . . . .       (20,150) (592)       (592) Stock surrendered upon exercise
of stock options . . . . . . . . . . . . . . (47) (1,462)             (1,509) Employees stock options exercised . 148 1,170             1,318 Share-based compensation. . . . . . . .    904             904 Tax benefit from exercise
of stock options . . . . . . . . . . . . . .    479             479 Balance January 31, 2008 . . . . . . . . . . . 32,408 3,436 (14,287,583) (48,182) 132,219 (1,606) 118,275 Net income . . . . . . . . . . . . . . . . . . . .             30,770    30,770 Postretirement benefits,
net of $375 income tax. . . . . . . . .                698 698 Foreign currency translation . . . . . . .                (246) (246) Total comprehensive income. . . . . . . 31,222 Dividends ($.52 per share) . . . . . . . .    7       (9,381)    (9,374) Dividends (special$1.25 per share) .    18       (22,528)    (22,510) Purchase of stock . . . . . . . . . . . . . . .       (161,100) (5,180)       (5,180) Stock surrendered upon exercise
of stock options . . . . . . . . . . . . . . (34) (1,258)             (1,292) Employees stock options exercised . 83 1,176             1,259 Share-based compensation. . . . . . . . 4 1,024             1,028 Tax benefit from exercise
of stock options . . . . . . . . . . . . . .    128             128 Balance January 31, 2009. . . . . . . . . $32,461 $ 4,531 (14,448,683) $(53,362) $131,080 $(1,154) $ 113,556 The accompanying notes are an integral part of the consolidated financial statements.
34 RAVEN 2009ANNUAL REPORT




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CONSOLIDATED STATEMENTS OF CASH FLOWS For the years ended January 31
Dollars in thousands20092008 2007 Cash flows from operating activities: Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 30,770$27,802 $ 25,441 Adjustments to reconcile net income to net cash provided
by operating activities: Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,3456,944 5,445 Amortization of intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 413400 440 Provision for losses on accounts receivable, net of recoveries . . . . . . . . . . 62991 40 Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 216(779) (293) Share-based compensation expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,028904 605 Change in operating assets and liabilities . . . . . . . . . . . . . . . . . . . . . . . . . (1,346)(8,187) (5,380) Other operating activities, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (18)(24) 15 Net cash provided by operating activities. . . . . . . . . . . . . . . . . . . . . . . . . . . . 39,03727,151 26,313 Cash flows from investing activities: Capital expenditures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8,001)(6,635) (16,522) Purchases of short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,100)(3,100) (6,000) Sales of short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,6005,600 4,000 Other investing activities, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (499)(298) (142) Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7,000)(4,433) (18,664) Cash flows from financing activities: Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (31,884)(7,966) (6,507) Purchases of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,180)(592) (4,201) Excess tax benefit on stock option exercises . . . . . . . . . . . . . . . . . . . . . . . . . 128479 470 Other financing activities, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (33)(191) (39) Net cash used in financing activities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (36,969)(8,270) (10,277) Effect of exchange rate changes on cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . (73)41 2 Net (decrease) increase in cash and cash equivalents. . . . . . . . . . . . . . . . . . . . . (5,005)14,489 (2,626) Cash and cash equivalents at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . 21,2726,783 9,409 Cash and cash equivalents at end of year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 16,267$21,272 $ 6,783 The accompanying notes are an integral part of the consolidated financial statements. RAVEN 2009ANNUAL REPORT 35




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NOTES TO FINANCIAL STATEMENTS Note 1. Summary of Significant Accounting Policies BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Raven
Industries, Inc. and its wholly owned subsidiaries (the company or
Raven). The company is an industrial manufacturer providing a variety of
products to customers within the industrial, agricultural, construction
and military/ aerospace markets primarily in North America. Raven
operates three divisions (Applied Technology [formerly known as Flow
Controls], Engineered Films and Electronic Systems) in addition to three
wholly owned subsidiaries: Aerostar International, Inc. (Aerostar);
Raven Industries Canada, Inc. (Raven Canada); and Raven Industries GmbH
(Raven GmbH). All significant intercompany balances and transactions
have been eliminated in consolidation. USE OF ESTIMATES
Preparing the companys financial statements in conformity with
accounting principles generally accepted in the United States of
America requires management to make certain estimates and assumptions.
These affect the reported amounts of assets and liabilities as of the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting periods. Actual results could differ
from these estimates. FOREIGN CURRENCY
The companys subsidiaries that operate outside the United States use
the local currency as their functional currency. The functional currency
is translated into U.S. dollars for balance sheet accounts using the
period-end exchange rates, and average exchange rates for the statement
of income. Adjustments resulting from financial statement translations
are included as foreign currency translation adjustments in accumulated
other comprehensive income (loss) within shareholders equity. Foreign
currency transaction gains or losses are recognized in the period
incurred and are included in interest income and other, net in the
Consolidated Statements of Income. CASH AND CASH EQUIVALENTS
The company considers all highly liquid debt instruments with original
maturities of three or fewer months to be cash equivalents. Cash and
cash equivalent balances are principally concentrated in checking, money
market and sweep accounts with Wells Fargo Bank, Wells Fargo Brokerage
Services, LLC., and Merrill Lynch & Co. (Bank of America). ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS
Trade accounts receivable are recorded at the invoiced amount and do not
bear interest. The allowance for doubtful accounts is the companys best
estimate of the amount of probable credit losses. This is based on
historical writeoff experience by segment and an estimate of the
collectibility of any known problem accounts. INVENTORY VALUATION Inventories are stated at the lower of cost or market, with cost
determined on the first-in, first-out basis. Market value encompasses
consideration of all business factors including price, contract terms
and usefulness. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost and are depreciated
over the estimated useful lives of the assets using accelerated
methods. The estimated useful lives used for computing depreciation are
as follows: Building and improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15  39 years
Manufacturing equipment by segment Applied Technology ... . . . . . . 3  5 years
Engineered Films. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5  12
years
Electronic Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3  5
years
Aerostar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 -
5 years
Furniture, fixtures, office equipment and other . . . . . . . . . . . . . . . . 3  7 years Maintenance and repairs are charged to expense in the year incurred and
renewals and betterments are capitalized. The cost and related
accumulated depreciation of assets sold or disposed of are removed from
the accounts, and the resulting gain or loss is reflected in
operations. INTANGIBLE ASSETS
Intangible assets, primarily comprised of technologies acquired through
acquisition, are recorded at cost and are presented net of accumulated
amortization. Amortization is computed on a straight-line basis over
estimated useful lives ranging from 3 to 20 years. The straight-line
method of amortization reflects an appropriate allocation of the cost
of the intangible assets to earnings in each reporting period. GOODWILL
Raven recognizes goodwill as the excess cost of an acquired entity over
the net amount assigned to assets acquired and liabilities assumed.
Goodwill is tested for impairment on an annual basis during the fourth
quarter, and between annual tests whenever there is an impairment
indicated. Impairment tests of goodwill are performed at the reporting
unit level. Fair values are estimated based on discounted cash flows and
are compared with the corresponding carrying value of the reporting
unit. If the fair value of the reporting unit is less than the carrying
amount, the amount of the impairment loss must be measured and then
recognized to the extent the carrying value exceeds the implied fair
value. LONG-LIVED ASSETS
The company periodically assesses the recoverability of long-lived and
intangible assets. An impairment loss is recognized when the carrying
amount of an asset exceeds the estimated undiscounted cash flows used in
determining the fair value of the assets. The amount of the impairment
loss to be recorded is calculated by the excess of the assets carrying
value over its fair value. 36 RAVEN 2009ANNUAL REPORT




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INSURANCE OBLIGATIONS
Raven employs insurance policies to cover workers compensation and
general liability costs. Liabilities are accrued related to claims filed
and estimates for claims incurred but not reported. To the extent these
obligations will be reimbursed by insurance, the expected insurance
policy benefit is included as a component of other current assets. CONTINGENCIES
The company is involved as a defendant in lawsuits, claims or disputes
arising in the normal course of business. An estimate of the loss on
these matters is charged to operations when it is probable that an asset
has been impaired or a liability has been incurred, and the amount of
the loss can be reasonably estimated. While the settlement of any claims
cannot be determined at this time, management believes that any
liability resulting from these claims will be substantially covered by
insurance. Accordingly, management does not believe that the ultimate
outcome of these matters will have a significant impact on its results
of operations, financial position or cash flows. REVENUE RECOGNITION
Raven recognizes revenue when products are shipped because there is
persuasive evidence of an arrangement, the sales price is determinable,
collectability is reasonably assured, and delivery has occurred. The
company sells directly to customers or distributors who incur the
expense and commitment for any post-sale obligations beyond stated
warranty terms. Estimated returns, sales allowances or warranty charges
are recognized upon shipment of a product. Shipping and handling costs
are classified as a component of cost of goods sold. WARRANTIES
Accruals necessary for product warranties are estimated based on
historical warranty costs and average time elapsed between purchases and
returns for each division. Additional accruals are made for any
significant, discrete warranty issues. RESEARCH AND DEVELOPMENT
Research and development expense (principally, labor and material costs)
was $5.8 million, $4.4 million and $2.6 million for fiscal 2009, 2008,
and 2007, respectively. SHARE-BASED COMPENSATION
The company records compensation expense related to its share-based
compensation plans using the fair value method. INCOME TAXES
Deferred income taxes reflect temporary differences between assets and
liabilities reported on the companys balance sheet and their tax
bases. These differences are measured using enacted tax laws and
statutory tax rates applicable to the periods when the temporary
differences will affect taxable income. Deferred tax assets are reduced
by a valuation allowance to reflect realizable value, when necessary.
Accruals are maintained for uncertain tax positions. NEW ACCOUNTING STANDARDS
At the beginning of fiscal 2009, the company adopted SFAS No. 157, Fair
Value Measurement.The standard provides guidance for using fair value
to measure assets and liabilities. SFAS No. 157 clarifies the principle
that fair value should be
based on the assumptions market participants would use when pricing an
asset or liability, and establishes a fair value hierarchy that
prioritizes the information used to develop those assumptions. Under the
standard, fair value measurements are separately disclosed by level
within the fair value hierarchy. The adoption of SFAS No. 157 did not
have a material impact on the companys consolidated results of
operations, financial condition or cash flows. At the beginning of fiscal 2009, the company adopted SFAS No. 159, The
Fair Value Option for Financial Assets and Financial Liabilities.SFAS
No. 159 permits companies to choose to measure many financial
instruments and certain other items at fair value. The adoption of SFAS
No. 159 did not have a material impact on the companys consolidated
results of operations, financial condition or cash flows. At the beginning of fiscal 2009, the company adopted SFAS No. 141(R),
Business Combinations,which changes the accounting for business
acquisitions. SFAS No. 141(R) requires an entity to recognize the assets
acquired, liabilities assumed, contractual contingencies, and contingent
consideration at their fair value on the acquisition date. It also
requires acquisition-related costs to be expensed as incurred,
restructuring costs to generally be expensed in periods subsequent to
the acquisition date, and changes in accounting for deferred tax asset
valuation allowances and acquired income tax uncertainties after the
measurement period to affect income tax expense. SFAS No. 141(R) had no
immediate impact upon adoption by the company, but will affect business
combinations closing after February 1, 2009. In March 2008, the Financial Accounting Standards Board (FASB) issued
SFAS No. 161, Disclosures about Derivative Instruments and Hedging
Activitiesan amendment of FASB Statement No. 133.SFAS No. 161
requires enhanced disclosures about (a) how and why derivative
instruments are used, (b) how derivative instruments and related hedged
items are accounted for and (c) how derivative instruments and related
hedged items affect an entitys financial position, financial
performance and cash flows. SFAS No. 161 is effective for financial
statements issued for fiscal years and interim periods beginning after
November 15, 2008. The company does not anticipate that the adoption of
SFAS No. 161 will have a material effect on its consolidated results of
operations, financial condition or cash flows. In April 2008, the FASB issued FSP No. FAS 142-3,Determination of the Useful Life of Intangible Assets,which amends the
list of factors an entity should consider in developing renewal or
extension assumptions used in determining the useful life of recognized
intangible assets under SFAS No. 142, Goodwill and Other Intangible
Assets.The new guidance RAVEN 2009ANNUAL REPORT 37




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NOTES TO FINANCIAL STATEMENTS(continued) applies to (1) intangible assets that are acquired individually or with a group of other assets and
(2) intangible assets acquired in both business combinations and asset acquisitions. Under FSP No.
FAS 142-3, entities estimating the useful life of a recognized intangible asset must consider their
historical experience in renewing or extending similar arrangements or, in the absence of
historical experience, must consider assumptions that market participants would use about renewal
or extension. FSP No. FAS 142-3 is effective as of the beginning of the companys 2010 fiscal year.
The company does not anticipate that the adoption of FSP No. 142-3 will have a material effect on
its consolidated results of operations or financial condition. Note 2. Selected Balance Sheet Information
Following are the components of selected balance sheet items: As of January 31
Dollars in thousands20092008 2007 Accounts receivable, net: Trade accounts . . . . . . . . . . . . . . . . . . . . . . . $ 40,891$ 36,831 $ 31,594 Allowance for doubtful accounts . . . . . . . . . (613)(293) (258) $ 40,278$ 36,538 $ 31,336 Inventories, net: Finished goods . . . . . . . . . . . . . . . . . . . . . . . $ 6,062$ 4,975 $ 3,750 In process . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,2583,631 2,612 Materials. . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,65727,923 21,709 $ 35,977$ 36,529 $ 28,071 Other current assets: Insurance policy benefit . . . . . . . . . . . . . . . . $ 2,119$ 2,549 $ 651 Prepaid expenses and other . . . . . . . . . . . . . 890406 617 $ 3,009$ 2,955 $ 1,268 Property, plant and equipment, net: Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,227$ 1,227 $ 1,227 Buildings and improvements. . . . . . . . . . . . . 22,59321,523 21,494 Machinery and equipment . . . . . . . . . . . . . . 62,50457,563 52,552 Accumulated depreciation . . . . . . . . . . . . . . (50,444)(44,570) (39,009) $ 35,880$ 35,743 $ 36,264 Other assets, net: Amortizable assets: Purchased technology. . . . . . . . . . . . . . . . $ 2,300$ 2,300 $ 3,380 Other intangibles . . . . . . . . . . . . . . . . . . . 1,3141,172 1,305 Accumulated amortization . . . . . . . . . . . . (2,143)(1,740) (2,729) 1,4711,732 1,956 Deferred income taxes . . . . . . . . . . . . . . . . . 1,4822,540 1,607 Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . 5975 114 $ 3,012$ 4,347 $ 3,677 Accrued liabilities: Salaries and benefits . . . . . . . . . . . . . . . . . . $ 1,891$ 2,109 $ 1,722 Vacation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,5812,415 2,212 401(k) contributions . . . . . . . . . . . . . . . . . . . 1,3331,184 1,109 Insurance obligations . . . . . . . . . . . . . . . . . . 3,6154,010 1,743 Profit sharing . . . . . . . . . . . . . . . . . . . . . . . . 436490 553 Warranty . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,004684 397 Taxesaccrued and withheld . . . . . . . . . . . . 1,2661,061 1,227 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,155851 616 $ 13,281$ 12,804 $ 9,579 Other liabilities: Postretirement benefits . . . . . . . . . . . . . . . . $ 4,637$ 5,246 $ 5,032 Uncertain tax positions . . . . . . . . . . . . . . . . 2,9002,232  $ 7,537$ 7,478 $ 5,032 Note 3. Supplemental Cash Flow Information For the years ended January 31
Dollars in thousands20092008 2007 Changes in operating            assets and liabilities: Accounts receivable . . . . . . . . . . . . . . . . . . . $(4,603)$(5,216) $(2,097) Inventories . . . . . . . . . . . . . . . . . . . . . . . . 447(8,403) (262) . .
Prepaid expenses and            other assets . . . . . . . . (35)218 (284) Accounts payable . . . . . . . . . . . . . . . . . . . 9632,437 (1,770) . .
Accrued and other            liabilities . . . . . . . . . . . . . 2,1942,648 (1,045) Customer advances . . . . . . . . . . . . . . . . . . . (312)129 78 $(1,346)$(8,187) $(5,380) Cash paid during the            year for Income taxes. . . . . . . . . . . . . . . . . . . . . $15,072$14,068 $13,759 . . Note 4. Goodwill and Other Intangibles Goodwill
The changes in the carrying amount of goodwill by reporting segment are
shown below: Applied            Engineered            Electronic
Dollars in thousandsTechnology            Films            Systems            Aerostar            Total
Balance at January 31, 2006 . . . . $5,408 $96 $433 $464 $6,401 Acquisition earn-outs . . . . . . . . . 203          203 Balance at January 31, 2007 . . . . 5,611 96 433 464 6,604 Acquisition earn-outs . . . . . . . . . 298          298 Balance at January 31, 2008 . . . . 5,909 96 433 464 6,902 Acquisition earn-outs . . . . . . . . . 548          548 Balance at January 31, 2009. . $6,457 $96 $433 $464 $7,450 Intangible Assets
Estimated future amortization expense based on the current carrying
value of amortizable intangible assets for fiscal periods 2010 through
2014 is $441,000, $414,000, $383,000, $30,000, and $24,000,
respectively. Note 5. Employee Retirement Benefits
The company has a 401(k) plan covering substantially all employees and
contributed 3% of qualified payroll. Ravens contribution expense was
$1,158,000, $1,020,000, and $935,000 for fiscal 2009, 2008 and 2007,
respectively. In addition, the company provides postretirement medical and other
benefits to senior executive officers and senior managers. There are no
assets held for the plans and any obligations are covered through
operating cash and investments. Raven accounts for these benefits in
accordance with SFAS No. 106, Accounting for Postretirement Benefits
Other Than Pensions.At January 31, 2007, the company adopted SFAS No.
158, Employers Accounting for Defined Pension and Other Postretirement
Plans.This statement requires the company to fully recognize the
liability for its postretirement benefits through changes in accumulated
other comprehensive income (loss). 38 RAVEN 2009ANNUAL REPORT




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The incremental effect of applying SFAS No. 158 on the following
balance sheet items as of January 31, 2007, was as follows: Impact of SFAS No. 158
Dollars in thousandsBefore            Adjustment            After
Non-current deferred tax assets . . . . . . . . . $ 592 $ 1,015 $ 1,607 Total assets . . . . . . . . . . . . . . . . . . . . . . . . . 118,749 1,015 119,764 Other liabilities . . . . . . . . . . . . . . . . . . . . . . 2,132 2,900 5,032 Accumulated other comprehensive
income (loss). . . . . . . . . . . . . . . . . . . . . . (8) (1,885) (1,893) Total shareholders equity . . . . . . . . . . . . . . 100,153 (1,885) 98,268 The accumulated benefit obligation for these benefits is shown below: For the years ended January 31
Dollars in thousands20092008 2007 Benefit obligation at beginning of year . . . . . . . . $5,447$5,213 $4,928 Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6790 84 Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 361307 278 Actuarial (gain) loss . . . . . . . . . . . . . . . . . . . . . . . (847)(2) 89 Total recognized in net and other
comprehensive income . . . . . . . . . . . . . . . . . . (419)395 Retiree benefits paid . . . . . . . . . . . . . . . . . . . . . . (188)(161) (166) Benefit obligation at end of year . . . . . . . . . . . . . $4,840$5,447 $5,213 The liability and expense reflected in the balance sheet and income statement were as follows: For the years ended January 31
Dollars in thousands20092008 2007 Beginning liability balance. . . . . . . . . . . . . . . . . . $ 5,447$5,213 $1,883 Employer expense . . . . . . . . . . . . . . . . . . . . . . . . 654635 596 Other comprehensive income. . . . . . . . . . . . . . . . (1,073)(240)  Total recognized in net and other
comprehensive income . . . . . . . . . . . . . . . . . . (419)395 Initial effect of adopting SFAS No. 158. . . . . . . . .   2,900 Retiree benefits paid . . . . . . . . . . . . . . . . . . . . . . (188)(161) (166) Ending liability balance . . . . . . . . . . . . . . . . . . . . 4,8405,447 5,213 Current portion . . . . . . . . . . . . . . . . . . . . . . . . . . (203)(201) (181) Long-term portion . . . . . . . . . . . . . . . . . . . . . . . . $ 4,637$5,246 $5,032 Assumptions used: Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.00%6.75% 6.00%
Wage inflation rate . . . . . . . . . . . . . . . . . . . . . . . 3.00%4.00% 4.00% The discount rate is based on matching rates of return on high-quality
fixed-income investments with the timing and amount of expected benefit
payments. No material fluctuations in retiree benefit payments are
expected in future years. The assumed health care cost trend rate for
fiscal 2009 was 8.97% compared with 10.38% and 9.64% for fiscal 2008 and
2007. The impact of a one-percentage-point change in assumed health care
rates would not be significant to the companys income statement and
would affect the ending liability balance by approximately $700,000. The
rate to which the fiscal 2009 health care cost trend rate is assumed to
decline is 5.50%, which is the ultimate trend rate. The fiscal year that
the rate reaches the ultimate trend rate is expected to be fiscal 2029. Note 6. Warranties
Changes in the warranty accrual were as follows: As of January 31
Dollars in thousands20092008 2007 Beginning balance . . . . . . . . . . . . . . . . . . . . . . . $684$ 397 $569 Accrual for warranties. . . . . . . . . . . . . . . . . . . . . 2,7601,390 1,317 Settlements made (in cash or in kind). . . . . . . . . (2,440)(1,103) (1,489) Ending balance . . . . . . . . . . . . . . . . . . . . . . . . . . $1,004$ 684 $397 Note 7. Income Taxes The reconciliation of income tax computed at the federal statutory rate
to the companys effective income tax rate was as follows: For the years ended January 31
20092008 2007 Tax at U.S. federal statutory rate . . . . . . . . . . . . . . . 35.0%35.0% 35.0%
State and local income taxes,
net of U.S. federal benefit . . . . . . . . . . . . . . . . . . 1.51.5 1.1 Tax benefit on qualified production activities. . . . . . (2.0)(2.1) (1.0) Tax credit for research activities. . . . . . . . . . . . . . . . (0.7)(0.7) (0.5) Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.70.5 (0.1) 34.4%34.2% 34.5% Significant components of the companys income tax provision were
as follows: For the years ended January 31
Dollars in thousands20092008 2007 Income taxes: Currently payable . . . . . . . . . . . . . . . . . . . . . $15,915$15,201 $13,687 Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . 216(779) (293) $16,131$14,422 $13,394 Deferred Tax Assets
Deferred income taxes reflect the net effects of temporary differences
between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes.
Significant components of the companys deferred tax assets and
liabilities were as follows: As ofJanuary 31
Dollars in thousands20092008 2007 Current deferred tax assets: Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . $ 211$ 105 $ 91 Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 408271 240 Accrued vacation . . . . . . . . . . . . . . . . . . . . . . . . . 840781 711 Insurance obligations . . . . . . . . . . . . . . . . . . . . . . 489456 357 Warranty obligations. . . . . . . . . . . . . . . . . . . . . . . 352225 139 Other accrued liabilities . . . . . . . . . . . . . . . . . . . . 242237 223 2,5422,075 1,761 Non-current deferred tax assets (liabilities): Postretirement benefits. . . . . . . . . . . . . . . . . . . . . 1,6231,836 1,758 Depreciation and amortization . . . . . . . . . . . . . . . (1,556)(478) (405) Uncertain tax positions . . . . . . . . . . . . . . . . . . . . . 969741  Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 446441 254 1,4822,540 1,607 Net deferred tax asset. . . . . . . . . . . . . . . . . . . . . . $ 4,024$4,615 $3,368 RAVEN 2009ANNUAL REPORT 39




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NOTES TO FINANCIAL STATEMENTS(continued) Uncertain Tax Positions
Effective February 1, 2007, Raven adopted the provisions of FASB
Interpretation No. 48, Accounting for Uncertainty in Income Taxes(FIN
48). Upon its adoption, the company reported a net $716,000 increase
in the liability for unrecognized tax benefits, which was recorded as
a reduction to the February 1, 2007 beginning retained earnings
balance. At the adoption date, the company had gross unrecognized tax
benefits of $1.3 million ($1.6 million including interest and
penalties). The following table summarizes the activity related to the
gross unrecognized tax benefits (excluding interest and penalties): For the years
ended January 31
Dollars in thousands20092008 Gross unrecognized tax benefits at beginning of year . . . . $1,793$1,328 Increases in tax positions related to the current year . . . . . 539465 Decreases as a result of a lapse in applicable
statute of limitations. . . . . . . . . . . . . . . . . . . . . . . . . . . . (63) Gross unrecognized tax benefits at end of year . . . . . . . . . $2,269$1,793 During the fiscal year ended January 31, 2009, the only change to
uncertain tax positions related to prior years resulted from the lapse
of a statute of limitations. The company does not expect any significant
change in the amount of unrecognized tax benefits in the next fiscal
year. The total unrecognized tax benefits that, if recognized, would affect
the companys effective tax rate were $1.5 million and $1.2 million as
of January 31, 2009 and January 31, 2008, respectively. Raven recognizes interest and penalties accrued related to unrecognized
tax benefits in income tax expense. At January 31, 2009 and January 31,
2008, accrued interest and penalties were $631,000 and $439,000,
respectively. The company files tax returns, including returns for its subsidiaries,
with various federal, state, and local jurisdictions. Uncertain tax
positions are related to tax years that remain subject to examination.
As of January 31, 2009, federal tax returns filed in the U.S., Canada
and Switzerland for fiscal years ended January 31, 2006  2008 remain
subject to examination by federal tax authorities. In state and local
jurisdictions, tax returns for fiscal years ended January 31, 2003 -
2008 remain subject to examination by state and local tax authorities. Note 8. Financing Arrangements Raven has an uncollateralized credit agreement providing a line of
credit of $8.0 million with a maturity date of July 1, 2009, bearing
interest at 1.00% under the prime rate. Letters of credit totaling $1.3
million have been issued under the line, primarily to support
self-insured workers compensation bonding requirements. No borrowings
were outstanding as of January 31, 2009, 2008 or 2007, and $6.7 million
was available at January 31, 2009. There have been no borrowings under
the credit line in the last three fiscal years. Wells Fargo Bank, N.A. provides Ravens line of credit and holds the
majority of its cash and cash equivalents. One member of the companys
board of directors is also on the board of directors of Wells Fargo &
Co., the parent company of Wells Fargo Bank, N.A. The company leases certain vehicles, equipment and facilities under
operating leases. Total rent and lease expense was $353,000, $268,000,
and $351,000 in fiscal 2009, 2008 and 2007, respectively. Future minimum
lease payments under non-cancelable operating leases for fiscal periods
2010 to 2012 are $264,000, $176,000, and $22,000, respectively, with all
leases scheduled to expire during fiscal 2012. Note 9. Share-based Compensation
At January 31, 2009, Raven had two share-based compensation plans,
which are described below. The compensation cost for these plans was
$1,028,000, $904,000, and $605,000 in fiscal 2009, 2008, and 2007,
respectively. The related income tax benefit recorded in the income
statement was $153,000, $154,000, and $110,000 for fiscal 2009, 2008,
and 2007, respectively. Compensation cost capitalized as part of
inventory at January 31, 2009, 2008, and 2007 was $60,000, $54,000 and
$40,000, respectively. 2000 Stock Option and Compensation Plan
The 2000 Stock Option and Compensation Plan, approved by the
shareholders, is administered by the Personnel and Compensation
Committee of the board of directors and allows for stock awards and
incentive or non-qualified options with terms not to exceed 10 years.
Included in the fiscal 2009 compensation cost was $135,000 of expense
recognized as a result of a stock award of 5,500 shares. There are
339,225 shares of the companys common stock reserved for future stock
awards and stock option grants under the plan at January 31, 2009.
Options are granted with exercise prices not less than market value at
the date of grant. The stock options vest over a four-year period and
expire after five years. Options contain retirement and change in
control provisions that may accelerate the vesting period. The fair
value of each option grant is estimated on the date of grant using the
Black-Scholes option pricing model. The company uses historical data to
estimate option exercise and employee termination within the valuation
model. 40 RAVEN 2009ANNUAL REPORT




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The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option pricing model, with the following
weighted average assumptions by grant year: For the years ended January 31
20092008 2007 Risk-free interest rate. . . . . . . . . . . . . . . . . . . 1.64%3.07% 4.45%
Expected dividend yield . . . . . . . . . . . . . . . . . 2.12%1.28% 1.29%
Expected volatility factor . . . . . . . . . . . . . . . . 46.32%40.62% 38.97%
Expected option term (in years) . . . . . . . . . . . 4.254.25 4.25 Weighted average grant date fair value. . . . . $8.08$11.45 $9.51 Option activity for the year ended January 31, 2009, was as follows: Weighted
average
Weighted            Aggregate            remaining
average            intrinsic            contractual
Number            exercise            value            term
of options            price (in 000s) (years)
Outstanding at
beginning of year . . . . . . . 373,031 $25.96
Granted. . . . . . . . . . . . . . . . . 95,800 24.51
Exercised. . . . . . . . . . . . . . . . (83,456) 15.09
Forfeited . . . . . . . . . . . . . . . . (2,400) 31.26
Outstanding at
end of year . . . . . . . . . . . . 382,975 $27.93$    2.93 Options exercisable at
end of year . . . . . . . . . . . . 174,388 $27.39$    1.82 The intrinsic value of a stock award is the amount by which the fair
value of the underlying stock exceeds the exercise price of the award.
The total intrinsic value of options exercised was $1.9 million, $3.5
million and $3.7 million during the years ended January 31, 2009, 2008
and 2007, respectively. As of January 31, 2009, the total compensation
cost for non-vested awards not yet recognized in the companys
statements of income was $1.4 million, net of the effect of estimated
forfeitures. This amount is expected to be recognized over a weighted
average period of 2.57 years. Deferred Stock Compensation Plan for Directors
On May 23, 2006, the companys stockholders approved the Deferred Stock
Compensation Plan for Directors of Raven Industries, Inc. Under the
plan, a stock unit is the right to receive one share of the companys
common stock as deferred compensation, to be distributed from an account
established by the company in the name of the non-employee director.
Stock units have the same value as a share of common stock but cannot be
sold. Stock units are a component of the companys equity. The plan
reserves 50,000 common shares for the conversion of stock units into
common stock after directors retire from the board. The plan is
administered by the Governance Committee of the board of directors. Stock units granted under this plan vest immediately and are expensed at
the date of grant. Stock units are also accumulated if a director elects
to defer the annual retainer paid for board service. When dividends are
paid on the companys common shares, stock units are added to the
directors balances and a corresponding amount is removed from retained
earnings. The intrinsic value of a stock unit is the fair value of the
underlying shares. Outstanding stock units for the year ended January 31, 2009, were as
follows: Weighted
Number            average
of units            price
Outstanding at beginning of year . . . . . . . . . . . . . . . . . . . 9,878 $30.02 Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,820 36.65 Deferred retainers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 546 36.65 Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 864 28.92 Converted into common shares . . . . . . . . . . . . . . . . . . . . .     Outstanding at end of year . . . . . . . . . . . . . . . . . . . . . . . . 15,107 $21.81 Note 10. Net Income Per Share
Basic net income per share is computed by dividing net income by the
weighted-average common shares and stock units outstanding. Diluted net
income per share is computed by dividing net income by the
weighted-average common and common equivalent shares outstanding (which
includes the shares issuable upon exercise of employee stock options net
of shares assumed purchased with the option proceeds) and stock units
outstanding. Certain outstanding options were excluded from the diluted
net income per-share calculations because their effect would have been
anti-dilutive, as their exercise prices were greater than the average
market price of the companys common stock during those periods. For
fiscal 2009, 2008, and 2007, 167,942, 90,338, and 96,075 options,
respectively, were excluded from the diluted net income per-share
calculation. Details of the computation are presented below: For the yearsended January 31
20092008 2007 Numerator: Net income (in thousands). . . . . . . . . $ 30,770$ 27,802 $ 25,441 Denominator: Weighted average common
            shares outstanding . . . . . . . . . . . 18,031,02018,099,600 18,082,606 Weighted average stock
units outstanding. . . . . . . . . . . . . 13,4518,580 3,602 Denominator for
basic calculation . . . . . . . . . . . . . 18,044,47118,108,180 18,086,208 Weighted average common
            shares outstanding . . . . . . . . . . . 18,031,02018,099,600 18,082,606 Weighted average stock
units outstanding. . . . . . . . . . . . . 13,4518,580 3,602 Dilutive impact of stock options. . . . 35,77195,883 186,705 Denominator for
diluted calculation . . . . . . . . . . . . 18,080,24218,204,063 18,272,913 Net income per sharebasic. . . . . . . $ 1.71$ 1.54 $ 1.41 Net income per sharediluted . . . . . $ 1.70$ 1.53 $ 1.39 RAVEN 2009ANNUAL REPORT 41




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NOTES TO FINANCIAL STATEMENTS(continued) Note 11. Business Segments and Major Customer
Information
The companys reportable segments are defined by their common
technologies, production processes and inventories. These segments
reflect Ravens organization into three Raven divisions and the
Aerostar subsidiary. Raven Canada and Raven GmbH are included in the
Applied Technology Division. Applied Technology provides electronic and Global Positioning System
(GPS) products designed to reduce operating costs and improve yields for
the agriculture market. Engineered Films produces rugged reinforced
plastic sheeting for industrial, construction, geomembrane and
agriculture applications. Electronic Systems provides electronics
manufacturing services to avionics, secure communication and other
markets. Aerostar manufactures military parachutes, protective wear,
custom-shaped inflatable products and high-altitude aerostats for
government and commercial research. The company measures the performance of its segments based on their
operating income excluding administrative and general expenses. The
accounting policies of the operating segments are the same as those
described in Note 1, Summary of Significant Accounting Policies. Other
income, interest expense and income taxes are not allocated to
individual operating segments, and assets not identifiable to an
individual segment are included as corporate assets. Segment information
is reported consistent with the companys management reporting structure
as required by SFAS No. 131, Disclosures about Segments of an Enterprise
and Related Information. At the beginning of fiscal 2009, Raven revised the disclosure of each
segments sales and operating income to reflect increased intersegment
activity. Transactions between operating segments are now eliminated in
a separate caption entitled intersegment eliminations to arrive at
consolidated sales, operating income, and assets. Business segment information is as follows: For the years ended January 31
Dollars in thousands20092008 2007 APPLIED TECHNOLOGY DIVISION Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . $103,098$64,291 $45,515 Operating income . . . . . . . . . . . . . . . . . . 33,88419,102 10,111 Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 48,88136,938 27,629 Capital expenditures . . . . . . . . . . . . . . . . 2,6741,008 577 Depreciation & amortization . . . . . . . . . . 1,3831,125 1,142 ENGINEERED FILMS DIVISION Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 89,858$85,316 $91,082 Operating income . . . . . . . . . . . . . . . . . . 10,91917,739 23,440 Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,86243,688 41,988 Capital expenditures . . . . . . . . . . . . . . . . 3,1204,012 13,266 Depreciation & amortization . . . . . . . . . . 4,3034,046 2,887 ELECTRONIC SYSTEMS DIVISION Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 61,983$ 67,987 $ 66,278 Operating income . . . . . . . . . . . . . . . . . . 5,92610,365 10,850 Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,84725,865 25,175 Capital expenditures . . . . . . . . . . . . . . . . 1,3991,077 1,357 Depreciation & amortization . . . . . . . . . . 1,1591,237 1,086 AEROSTAR Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 27,186$ 17,290 $ 14,654 Operating income . . . . . . . . . . . . . . . . . . 4,2191,506 707 Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,7449,941 8,161 Capital expenditures . . . . . . . . . . . . . . . . 383156 812 Depreciation & amortization . . . . . . . . . . 444499 375 INTERSEGMENT ELIMINATIONS Sales
Engineered Films Division . . . . . . . . . . $ (210)$ (533) $  Electronic Systems Division . . . . . . . . . (1,977)(378)  Aerostar . . . . . . . . . . . . . . . . . . . . . . . . (25)(16)  Operating income . . . . . . . . . . . . . . . . . . (52)(100)  Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . (152)(100)  REPORTABLE SEGMENTS TOTAL Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . $279,913$233,957 $217,529 Operating income . . . . . . . . . . . . . . . . . . 54,89648,612 45,108 Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 120,182116,332 102,953 Capital expenditures . . . . . . . . . . . . . . . . 7,5766,253 16,012 Depreciation & amortization . . . . . . . . . . 7,2896,907 5,490 CORPORATE & OTHER(a) Operating (loss) from
administrative expenses . . . . . . . . . . . $ (8,502)$ (7,467) $ (6,806) Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,23331,529 16,811 Capital expenditures . . . . . . . . . . . . . . . . 425382 510 Depreciation & amortization . . . . . . . . . . 469437 395 TOTAL COMPANY Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . $279,913$233,957 $217,529 Operating income . . . . . . . . . . . . . . . . . . 46,39441,145 38,302 Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 144,415147,861 119,764 Capital expenditures . . . . . . . . . . . . . . . . 8,0016,635 16,522 Depreciation & amortization . . . . . . . . . . 7,7587,344 5,885 (a) Assets are principally cash, investments, deferred taxes and other receivables. Sales to a customer of the Electronic Systems segment accounted for
13%, 11%, and 10% of consolidated sales in fiscal 2009, 2008, and 2007,
respectively, and 18%, 14% and 14%, of consolidated accounts receivable
at the end of fiscal 2009, 2008, and 2007, respectively. Sales to countries outside the United States, primarily to Canada,
were as follows: For the years ended January 31
Dollars in thousands20092008 2007 Applied Technology . . . . . . . . . . . . . . . . . . . . . $17,705$10,104 $ 7,081 Engineered Films . . . . . . . . . . . . . . . . . . . . . . . 1,9491,803 2,060 Electronic Systems . . . . . . . . . . . . . . . . . . . . . . 5576,852 8,718 Aerostar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9661,310 868 Total foreign sales . . . . . . . . . . . . . . . . . . . . $21,177$20,069 $18,727 Note 12. Quarterly Information (Unaudited)
The companys quarterly information is presented on page 30. 42 RAVEN 2009ANNUAL REPORT




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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Shareholders of Raven Industries, Inc.: In our opinion, the accompanying consolidated balance sheets and the related consolidated
statements of income, shareholders equity and comprehensive income and cash flows present fairly,
in all material respects, the financial position of Raven Industries, Inc. and its subsidiaries at
January 31, 2009, 2008 and 2007, and the results of their operations and their cash flows for each
of the three years in the period ended January 31, 2009 in conformity with accounting principles
generally accepted in the United States of America. Also in our opinion, the Company maintained, in
all material respects, effective internal control over financial reporting as of January 31, 2009
based on criteria established in Internal ControlIntegrated Frameworkissued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). The Companys management is responsible
for these financial statements, for maintaining effective internal control over financial reporting
and for its assessment of the effectiveness of internal control over financial reporting, appearing
on page 31 of the 2009 Annual Report to Shareholders in Managements Report on Internal Control
over Financial Reporting. Our responsibility is to express opinions on these financial statements
and on the Companys internal control over financial reporting based on our integrated audits. We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material misstatement and
whether effective internal control over financial reporting was maintained in all material
respects. Our audits of the financial statements included examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and evaluating the overall financial
statement presentation. Our audit of internal control over financial reporting included obtaining
an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, and testing and evaluating the design and operating effectiveness of internal
control based on the assessed risk. Our audits also included performing such other procedures as we
considered necessary in the circumstances. We believe that our audits provide a reasonable basis
for our opinions. As described in Note 5 to the consolidated financial statements, effective January 31, 2007, the
Company adopted the provisions of Financial Accounting Standards Board (FASB) Statement No. 158,
Employers Accounting for Defined Benefit Pension and Other Postretirement Plans.As described in
Note 7 to the consolidated financial statements, effective February 1, 2007, the Company adopted
the provisions of FASB Interpretation No. 48 (FIN 48), Accounting for Uncertainty in Income Taxes. A companys internal control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles. A
companys internal control over financial reporting includes those policies and procedures that (i)
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and
directors of the company; and (iii) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the companys assets that could have
a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or
detect misstatements. Also, projections of any evaluation of effectiveness to future periods are
subject to the risk that controls may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate. PricewaterhouseCoopers LLP Minneapolis, Minnesota March 24, 2009 RAVEN 2009ANNUAL REPORT 43




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INVESTOR INFORMATION Annual Meeting
May 21, 2009, 9:00 a.m.
Ramkota Hotel and Conference Center 3200 W. Maple
Avenue Sioux Falls, SD Dividend Reinvestment Plan
Raven Industries, Inc. sponsors a Dividend Reinvestment Plan so
shareholders can purchase additional Raven common stock without paying
any brokerage commission or fees. For more information on how you can
take advantage of this plan, contact your broker, our stock transfer
agent or write to our Investor Relations Department. Dividend Policy
Our policy is to return a substantial portion of earnings to
shareholders through regular dividends. Each year our board of
directors reviews Ravens dividend and will increase it when the new
level is sustainable. Fiscal 2009 represented the 22nd-consecutive
year we raised our annual dividend. Raven Web Site www.ravenind.com Stock Quotations
Listed on the Nasdaq NGS Stock MarketRAVN Independent Registered Public Accounting Firm
PricewaterhouseCoopers LLP Minneapolis, MN Stock Transfer Agent & Registrar
Wells Fargo Bank, N.A. 161 N. Concord Exchange P.O.
Box 64854 South St. Paul, MN 55164-0854 Phone:
1-800-468-9716 Form 10-K
Upon written request, Raven Industries, Inc.s Form 10-K for the
fiscal year ended January 31, 2009, which has been filed with the
Securities and Exchange Commission, is available free of charge. Affirmative Action Plan
Raven Industries, Inc. and Aerostar International, Inc. are Equal
Employment Opportunity Employers with approved affirmative action
plans. Inquires
Raven Industries, Inc. Attention: Investor
Relations P.O. Box 5107 Sioux Falls, SD 57117-5107
Phone: 605-336-2750 Providing a Positive Return If an investor purchased $100 of Raven stock on
January 31, 2004, held it for the next five years
and reinvested the dividends, its value would have
increased to $178.47. This 12% cumulative growth
rate represents a gain compared with the S&P 1500
Industrial Indexs $96.77 and the Russell 2000s
$81.48. FORWARD-LOOKING STATEMENTS
This annual report contains forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, including statements regarding the expectations, beliefs, intentions or strategies
regarding the future. Without limiting the foregoing, the words anticipates, believes,
expects, intends, may, plans and similar expressions are intended to identify
forward-looking statements. The company intends that all forward-looking statements be subject to
the safe harbor provisions of the Private Securities Litigation Reform Act. Although management
believes that the expectations reflected in forward-looking statements are based on reasonable
assumptions, there is no assurance these assumptions are correct or that these expectations will be
achieved. Assumptions involve important risks and uncertainties that could significantly affect
results in the future. These risks and uncertainties include, but are not limited to, those
relating to weather conditions and commodity prices, which could affect sales and profitability in
some of the companys primary markets, such as agriculture, construction, and oil and gas well
drilling; or changes in competition, raw material availability, technology or relationships with
the companys largest customersany of which could adversely affect any of the companys product
lines, as well as other risks described in Ravens 10-K under Item 1A. This list is not exhaustive,
and the company does not have an obligation to revise any forward-looking statements to reflect
events or circumstances after the date these statements are made. Design: Creative Design Board, Chicago, IL