##### 



ELEVEN-YEAR FINANCIAL SUMMARY
  For the years ended January 31Dollars in thousands except per-share data
    
    2007
    
    2006
    
    2005OPERATIONS FOR THE YEARNet salesOngoing operations
    
    $
    217,529
    
    
    $
    204,528
    
    
    $
    168,086Sold businesses(a)
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    217,529
    
    
    
    204,528
    
    
    
    168,086Gross profit
    
    
    54,882
    
    
    
    53,231
    
    
    
    43,200Operating incomeOngoing operations
    
    
    38,302
    
    
    
    37,363
    
    
    
    27,862Sold businesses(a)
    
    
    
    
    
    
    (79
    )
    
    
    Total
    
    
    38,302
    
    
    
    37,284
    
    
    
    27,862Income before income taxes
    
    
    38,835
    
    
    
    37,494
    
    
    
    27,955Net income
    
    $
    25,441
    
    
    $
    24,262
    
    
    $
    17,891Net income as % of sales
    
    
    11.7
    %
    
    
    11.9
    %
    
    
    10.6
    %Net income as % of beginning equity
    
    
    30.1
    %
    
    
    36.7
    %
    
    
    26.9
    %Cash dividends
    
    $
    6,507
    
    
    $
    5,056
    
    
    $
    15,298
    (b)FINANCIAL POSITIONCurrent assets
    
    $
    73,219
    
    
    $
    71,345
    
    
    $
    61,592Current liabilities
    
    
    16,464
    
    
    
    20,050
    
    
    
    20,950Working capital
    
    $
    56,755
    
    
    $
    51,295
    
    
    $
    40,642Current ratio
    
    
    4.45
    
    
    
    3.56
    
    
    
    2.94Property, plant and equipment
    
    $
    36,264
    
    
    $
    25,602
    
    
    $
    19,964Total assets
    
    
    119,764
    
    
    
    106,157
    
    
    
    88,509Long-term
debt, less current portion
    
    
    
    
    
    
    9
    
    
    
    Shareholders equity
    
    $
    98,268
    
    
    $
    84,389
    
    
    $
    66,082Long-term debt / total capitalization
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %Inventory turnover (CGS / year-end inventory)
    
    
    5.8
    
    
    
    5.4
    
    
    
    5.4CASH FLOWS PROVIDED BY (USED IN)Operating activities
    
    $
    26,313
    
    
    $
    21,189
    
    
    $
    18,871Investing activities
    
    
    (18,664
    )
    
    
    (11,435
    )
    
    
    (7,631
    )Financing activities
    
    
    (10,277
    )
    
    
    (6,946
    )
    
    
    (19,063
    )Increase (decrease) in cash and cash equivalents
    
    
    (2,626
    )
    
    
    2,790
    
    
    
    (7,823
    )COMMON STOCK DATANet income per share  basic
    
    $
    1.41
    
    
    $
    1.34
    
    
    $
    0.99Net income per share  diluted
    
    
    1.39
    
    
    
    1.32
    
    
    
    0.97Cash dividends per share
    
    
    0.36
    
    
    
    0.28
    
    
    
    0.85
    (b)Book value per share
    
    
    5.45
    
    
    
    4.67
    
    
    
    3.67Stock price range during yearHigh
    
    $
    42.70
    
    
    $
    33.15
    
    
    $
    26.94Low
    
    
    25.46
    
    
    
    16.54
    
    
    
    13.08Close
    
    $
    28.43
    
    
    $
    31.60
    
    
    $
    18.38Shares
outstanding, year-end (in thousands)
    
    
    18,039
    
    
    
    18,072
    
    
    
    17,999Number of
shareholders, year-end
    
    
    8,992
    
    
    
    9,263
    
    
    
    6,269OTHER DATAPrice / earnings ratio
    
    
    20.5
    
    
    
    23.9
    
    
    
    18.9Average number of employees
    
    
    884
    
    
    
    845
    
    
    
    835Sales per employee
    
    $
    246
    
    
    $
    242
    
    
    $
    201Backlog
    
    $
    44,237
    
    
    $
    43,619
    
    
    $
    43,646
 
 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




---



##### 



2004
    
    2003
    
    2002
    
    2001
    
    2000
    
    1999
    
    1998
    
    1997$
    142,727
    
    
    $
    119,589
    
    
    $
    112,018
    
    
    $
    113,360
    
    
    $
    107,862
    
    
    $
    108,408
    
    
    $
    104,489
    
    
    $
    101,869
    
    
    
    1,314
    
    
    
    6,497
    
    
    
    19,498
    
    
    
    42,523
    
    
    
    46,798
    
    
    
    47,679
    
    
    
    39,576142,727
    
    
    
    120,903
    
    
    
    118,515
    
    
    
    132,858
    
    
    
    150,385
    
    
    
    155,206
    
    
    
    152,168
    
    
    
    141,44533,759
    
    
    
    27,515
    
    
    
    23,851
    
    
    
    21,123
    
    
    
    24,217
    
    
    
    24,441
    
    
    
    24,929
    
    
    
    25,28721,981
    
    
    
    16,861
    
    
    
    13,788
    
    
    
    7,417
    (c)
    
    
    7,971
    
    
    
    8,220
    
    
    
    9,555
    
    
    
    9,321(355
    )
    
    
    204
    
    
    
    (613
    )
    
    
    3,331
    (d)
    
    
    2,606
    (e)
    
    
    1,453
    
    
    
    1,007
    
    
    
    2,65021,626
    
    
    
    17,065
    
    
    
    13,175
    
    
    
    10,748
    
    
    
    10,577
    
    
    
    9,673
    
    
    
    10,562
    
    
    
    11,97121,716
    
    
    
    17,254
    
    
    
    13,565
    
    
    
    10,924
    
    
    
    10,503
    
    
    
    9,649
    
    
    
    12,540
    (f)
    
    
    11,915$
    13,836
    
    
    $
    11,185
    
    
    $
    8,847
    
    
    $
    6,411
    (c)(d)
    
    $
    6,762
    (e)
    
    $
    6,182
    
    
    $
    8,062
    
    
    $
    7,6889.7
    %
    
    
    9.3
    %
    
    
    7.5
    %
    
    
    4.8
    %
    
    
    4.5
    %
    
    
    4.0
    %
    
    
    5.3
    %
    
    
    5.4
    %23.8
    %
    
    
    21.5
    %
    
    
    18.4
    %
    
    
    11.8
    %
    
    
    10.9
    %
    
    
    10.0
    %
    
    
    14.2
    %
    
    
    15.6
    %$
    3,075
    
    
    $
    2,563
    
    
    $
    2,371
    
    
    $
    2,399
    
    
    $
    2,895
    
    
    $
    2,944
    
    
    $
    2,709
    
    
    $
    2,367$
    55,710
    
    
    $
    49,351
    
    
    $
    45,308
    
    
    $
    51,817
    
    
    $
    55,371
    
    
    $
    60,279
    
    
    $
    57,285
    
    
    $
    56,69611,895
    
    
    
    13,167
    
    
    
    13,810
    
    
    
    13,935
    
    
    
    14,702
    
    
    
    15,128
    
    
    
    17,816
    
    
    
    20,016$
    43,815
    
    
    $
    36,184
    
    
    $
    31,498
    
    
    $
    37,882
    
    
    $
    40,669
    
    
    $
    45,151
    
    
    $
    39,469
    
    
    $
    36,6804.68
    
    
    
    3.75
    
    
    
    3.28
    
    
    
    3.72
    
    
    
    3.77
    
    
    
    3.98
    
    
    
    3.22
    
    
    
    2.83$
    15,950
    
    
    $
    16,455
    
    
    $
    14,059
    
    
    $
    11,647
    
    
    $
    15,068
    
    
    $
    19,563
    
    
    $
    19,817
    
    
    $
    18,14279,508
    
    
    
    72,816
    
    
    
    67,836
    
    
    
    65,656
    
    
    
    74,047
    
    
    
    83,657
    
    
    
    82,066
    
    
    
    80,66257
    
    
    
    151
    
    
    
    280
    
    
    
    2,013
    
    
    
    3,024
    
    
    
    4,572
    
    
    
    1,128
    
    
    
    3,181$
    66,471
    
    
    $
    58,236
    
    
    $
    52,032
    
    
    $
    47,989
    
    
    $
    54,519
    
    
    $
    62,293
    
    
    $
    61,563
    
    
    $
    56,7290.1
    %
    
    
    0.3
    %
    
    
    0.5
    %
    
    
    4.0
    %
    
    
    5.3
    %
    
    
    6.8
    %
    
    
    1.8
    %
    
    
    5.3
    %6.5
    
    
    
    4.4
    
    
    
    5.0
    
    
    
    5.9
    
    
    
    5.2
    
    
    
    4.9
    
    
    
    4.8
    
    
    
    4.5$
    19,732
    
    
    $
    12,735
    
    
    $
    18,496
    
    
    $
    9,441
    
    
    $
    10,375
    
    
    $
    8,326
    
    
    $
    9,274
    
    
    $
    7,088(4,352
    )
    
    
    (9,166
    )
    
    
    (13,152
    )
    
    
    9,752
    
    
    
    6,323
    
    
    
    (3,127
    )
    
    
    (4,979
    )
    
    
    (5,090
    )(6,155
    )
    
    
    (5,830
    )
    
    
    (8,539
    )
    
    
    (14,227
    )
    
    
    (16,326
    )
    
    
    (2,714
    )
    
    
    (4,884
    )
    
    
    (2,363
    )9,225
    
    
    
    (2,261
    )
    
    
    (3,195
    )
    
    
    4,966
    
    
    
    372
    
    
    
    2,485
    
    
    
    (589
    )
    
    
    (365
    )$
    0.77
    
    
    $
    0.61
    
    
    $
    0.48
    
    
    $
    0.31
    
    
    $
    0.26
    
    
    $
    0.22
    
    
    $
    0.28
    
    
    $
    0.270.75
    
    
    
    0.60
    
    
    
    0.47
    
    
    
    0.31
    
    
    
    0.26
    
    
    
    0.22
    
    
    
    0.28
    
    
    
    0.270.17
    
    
    
    0.14
    
    
    
    0.13
    
    
    
    0.12
    
    
    
    0.11
    
    
    
    0.10
    
    
    
    0.09
    
    
    
    0.083.68
    
    
    
    3.21
    
    
    
    2.82
    
    
    
    2.53
    
    
    
    2.32
    
    
    
    2.21
    
    
    
    2.13
    
    
    
    1.96$
    15.23
    
    
    $
    9.20
    
    
    $
    5.88
    
    
    $
    3.48
    
    
    $
    3.04
    
    
    $
    3.79
    
    
    $
    4.29
    
    
    $
    3.927.56
    
    
    
    4.38
    
    
    
    3.02
    
    
    
    1.88
    
    
    
    2.25
    
    
    
    2.54
    
    
    
    3.27
    
    
    
    2.67$
    14.11
    
    
    $
    7.91
    
    
    $
    5.64
    
    
    $
    3.04
    
    
    $
    2.40
    
    
    $
    2.67
    
    
    $
    3.77
    
    
    $
    3.7518,041
    
    
    
    18,133
    
    
    
    18,424
    
    
    
    18,956
    
    
    
    23,496
    
    
    
    28,164
    
    
    
    28,944
    
    
    
    29,0163,560
    
    
    
    2,781
    
    
    
    2,387
    
    
    
    2,460
    
    
    
    2,749
    
    
    
    3,014
    
    
    
    3,221
    
    
    
    3,01118.8
    
    
    
    13.2
    
    
    
    12.1
    
    
    
    9.8
    
    
    
    9.2
    
    
    
    12.4
    
    
    
    13.7
    
    
    
    13.9787
    
    
    
    784
    
    
    
    858
    
    
    
    1,082
    
    
    
    1,369
    
    
    
    1,507
    
    
    
    1,573
    
    
    
    1,454$
    181
    
    
    $
    154
    
    
    $
    138
    
    
    $
    123
    
    
    $
    110
    
    
    $
    103
    
    
    $
    97
    
    
    $
    97$
    47,120
    
    
    $
    42,826
    
    
    $
    33,834
    
    
    $
    38,239
    
    
    $
    44,935
    
    
    $
    47,431
    
    
    $
    47,154
    
    
    $
    38,102
 
 (b)

    Includes a special dividend of $.625 per share that was paid during the second quarter of
fiscal 2005.(c)

    Includes $2.6 million of business repositioning charges, net of gains on plant
sales, primarily in Electronic Systems and Aerostar.(d)

    Includes the $3.1 million pretax gain ($1.4 million net of tax) on the sale of the
companys Plastic Tank Division.(e)

    Includes the $1.2 million pretax gain ($764,000 net of tax) on the sale of
assets of the companys Glasstite subsidiary.(f)

    Includes the $1.8 million pretax gain ($1.2 million net of tax) on the
sale of an investment in an affiliate. RAVEN ANNUAL
 17




---



##### 



BUSINESS SEGMENTS
 For the years ended January 31Dollars in thousands
    
    2007
    
    2006
    
    2005
    
    2004
    
    2003
    
    2002ENGINEERED FILMS DIVISIONSales
    
    $
    91,082
    
    
    $
    82,794
    
    
    $
    58,657
    
    
    $
    42,636
    
    
    $
    35,096
    
    
    $
    35,796Operating income
    
    
    23,440
    
    
    
    19,907
    
    
    
    15,739
    
    
    
    10,563
    
    
    
    10,030
    
    
    
    8,257Assets
    
    
    41,988
    
    
    
    33,512
    
    
    
    25,181
    
    
    
    15,941
    
    
    
    17,244
    
    
    
    13,691Capital expenditures
    
    
    13,266
    
    
    
    7,359
    
    
    
    3,960
    
    
    
    712
    
    
    
    4,080
    
    
    
    3,178Depreciation & amortization
    
    
    2,887
    
    
    
    2,436
    
    
    
    1,403
    
    
    
    1,611
    
    
    
    1,475
    
    
    
    1,001FLOW CONTROLS DIVISIONSales
    
    $
    45,515
    
    
    $
    47,506
    
    
    $
    40,726
    
    
    $
    35,059
    
    
    $
    28,496
    
    
    $
    23,178Operating income
    
    
    10,111
    
    
    
    13,586
    
    
    
    10,516
    (b)
    
    
    8,254
    
    
    
    6,897
    
    
    
    5,509
    (d)Assets
    
    
    27,629
    
    
    
    30,047
    
    
    
    23,701
    
    
    
    19,304
    
    
    
    21,483
    
    
    
    20,313Capital expenditures
    
    
    577
    
    
    
    938
    
    
    
    1,372
    
    
    
    341
    
    
    
    729
    
    
    
    677Depreciation & amortization
    
    
    1,142
    
    
    
    1,085
    
    
    
    876
    
    
    
    1,004
    
    
    
    948
    
    
    
    443ELECTRONIC SYSTEMS DIVISIONSales
    
    $
    66,278
    
    
    $
    56,219
    
    
    $
    47,049
    
    
    $
    44,307
    
    
    $
    38,589
    
    
    $
    32,289Operating income
    
    
    10,850
    
    
    
    8,916
    
    
    
    4,492
    
    
    
    5,797
    
    
    
    4,022
    
    
    
    2,264Assets
    
    
    25,175
    
    
    
    20,191
    
    
    
    17,382
    
    
    
    14,975
    
    
    
    14,528
    
    
    
    13,910Capital expenditures
    
    
    1,357
    
    
    
    1,612
    
    
    
    1,201
    
    
    
    841
    
    
    
    395
    
    
    
    774Depreciation & amortization
    
    
    1,086
    
    
    
    871
    
    
    
    880
    
    
    
    850
    
    
    
    978
    
    
    
    1,101AEROSTARSales
    
    $
    14,654
    
    
    $
    18,009
    
    
    $
    21,654
    
    
    $
    20,725
    
    
    $
    17,408
    
    
    $
    20,755Operating income
    
    
    707
    
    
    
    2,133
    
    
    
    3,609
    
    
    
    3,092
    (c)
    
    
    1,012
    
    
    
    2,907
    (e)Assets
    
    
    8,161
    
    
    
    6,837
    
    
    
    7,492
    
    
    
    7,756
    
    
    
    7,032
    
    
    
    7,150Capital expenditures
    
    
    812
    
    
    
    179
    
    
    
    542
    
    
    
    1,130
    
    
    
    570
    
    
    
    256Depreciation & amortization
    
    
    375
    
    
    
    359
    
    
    
    389
    
    
    
    436
    
    
    
    374
    
    
    
    347REPORTABLE SEGMENTS TOTALSales
    
    $
    217,529
    
    
    $
    204,528
    
    
    $
    168,086
    
    
    $
    142,727
    
    
    $
    119,589
    
    
    $
    112,018Operating income
    
    
    45,108
    
    
    
    44,542
    
    
    
    34,356
    (b)
    
    
    27,706
    (c)
    
    
    21,961
    
    
    
    18,937
    (d,e)Assets
    
    
    102,953
    
    
    
    90,587
    
    
    
    73,756
    
    
    
    57,976
    
    
    
    60,287
    
    
    
    55,064Capital expenditures
    
    
    16,012
    
    
    
    10,088
    
    
    
    7,075
    
    
    
    3,024
    
    
    
    5,774
    
    
    
    4,885Depreciation & amortization
    
    
    5,490
    
    
    
    4,751
    
    
    
    3,548
    
    
    
    3,901
    
    
    
    3,775
    
    
    
    2,892CORPORATE & OTHER(a)Sales from sold businesses
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    1,314
    
    
    $
    6,497Operating income (loss) from sold businesses
    
    
    
    
    
    
    (79
    )
    
    
    
    
    
    
    (355
    )
    
    
    204
    
    
    
    (613
    )Operating (loss) from administrative expenses
    
    
    (6,806
    )
    
    
    (7,179
    )
    
    
    (6,494
    )
    
    
    (5,725
    )
    
    
    (5,100
    )
    
    
    (5,149
    )Assets
    
    
    16,811
    
    
    
    15,570
    
    
    
    14,753
    
    
    
    21,532
    
    
    
    12,529
    
    
    
    12,772Capital expenditures
    
    
    510
    
    
    
    270
    
    
    
    466
    
    
    
    306
    
    
    
    259
    
    
    
    209Depreciation & amortization
    
    
    395
    
    
    
    400
    
    
    
    293
    
    
    
    244
    
    
    
    191
    
    
    
    253TOTAL COMPANYSales
    
    $
    217,529
    
    
    $
    204,528
    
    
    $
    168,086
    
    
    $
    142,727
    
    
    $
    120,903
    
    
    $
    118,515Operating income
    
    
    38,302
    
    
    
    37,284
    
    
    
    27,862
    (b)
    
    
    21,626
    (c)
    
    
    17,065
    
    
    
    13,175
    (d,e)Assets
    
    
    119,764
    
    
    
    106,157
    
    
    
    88,509
    
    
    
    79,508
    
    
    
    72,816
    
    
    
    67,836Capital expenditures
    
    
    16,522
    
    
    
    10,358
    
    
    
    7,541
    
    
    
    3,330
    
    
    
    6,033
    
    
    
    5,094Depreciation & amortization
    
    
    5,885
    
    
    
    5,151
    
    
    
    3,841
    
    
    
    4,145
    
    
    
    3,966
    
    
    
    3,145
 
 
 (a)

    Operating income from sold businesses includes administrative expenses directly
attributable to the sold businesses. Assets are principally cash, investments, deferred taxes and
notes receivable.(b)

    Includes a $1.3 million pretax writeoff of assets related to the
Fluent Systems product line (see Note 5).(c)

    Includes $182,000 of pretax gain on plant sale.(d)

    Includes a $550,000 in-process research and development charge
related to the Starlink acquisition.(e)

    Includes $414,000 of pretax gain on plant sale. 18




---



##### 



FINANCIAL REVIEW AND ANALYSIS
 RESULTS OF OPERATIONS
  For the years ended January 312007
    
    2006
    
    2005Dollars in thousands,
    
    
    
    
    
    %
    
    %
    
    
    
    
    
    %
    
    %
    
    
    
    
    
    %
    
    %except per-share data
    
    
    
    
    
    Sales
    
    Change
    
    
    
    
    
    Sales
    
    Change
    
    
    
    
    
    Sales
    
    ChangeNet sales
    
    $
    217,529
    
    
    
    100.0
    
    
    
    +6.4
    
    
    $
    204,528
    
    
    
    100.0
    
    
    
    +21.7
    
    
    $
    168,086
    
    
    
    100.0
    
    
    
    +17.8Gross profit
    
    
    54,882
    
    
    
    25.2
    
    
    
    +3.1
    
    
    
    53,231
    
    
    
    26.0
    
    
    
    +23.2
    
    
    
    43,200
    
    
    
    25.7
    
    
    
    +28.0Operating expenses
    
    
    16,580
    
    
    
    7.6
    
    
    
    +4.5
    
    
    
    15,868
    
    
    
    7.8
    
    
    
    +12.9
    
    
    
    14,056
    
    
    
    8.4
    
    
    
    +17.5Loss on disposition of
businesses & assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    79
    
    
    
    
    
    
    
    
    
    
    
    1,282Operating income
    
    
    38,302
    
    
    
    17.6
    
    
    
    +2.7
    
    
    
    37,284
    
    
    
    18.2
    
    
    
    +33.8
    
    
    
    27,862
    
    
    
    16.6
    
    
    
    +28.8Income before income taxes
    
    
    38,835
    
    
    
    17.9
    
    
    
    +3.6
    
    
    
    37,494
    
    
    
    18.3
    
    
    
    +34.1
    
    
    
    27,955
    
    
    
    16.6
    
    
    
    +28.7Income taxes
    
    
    13,394
    
    
    
    6.2
    
    
    
    +1.2
    
    
    
    13,232
    
    
    
    6.5
    
    
    
    +31.5
    
    
    
    10,064
    
    
    
    6.0
    
    
    
    +27.7Net income
    
    $
    25,441
    
    
    
    11.7
    
    
    
    +4.9
    
    
    $
    24,262
    
    
    
    11.9
    
    
    
    +35.6
    
    
    $
    17,891
    
    
    
    10.6
    
    
    
    +29.3Net income per share  diluted
    
    $
    1.39
    
    
    
    
    
    
    
    +5.3
    
    
    $
    1.32
    
    
    
    
    
    
    
    +36.1
    
    
    $
    0.97
    
    
    
    
    
    
    
    +29.3Effective income tax rate
    
    
    34.5
    %
    
    
    
    
    
    
    2.3
    
    
    
    35.3
    %
    
    
    
    
    
    
     1.9
    
    
    
    36.0
    %
    
    
    
    
    
    
     0.8
 EXECUTIVE SUMMARY
  Consolidated Operating Results
     RAVEN ANNUAL
 19




---



##### 



FINANCIAL REVIEW AND ANALYSIS
 Fiscal 2007 versus fiscal 2006
   Fiscal 2006 versus fiscal 2005
   20




---



##### 



FISCAL 2007 PERFORMANCE MEASURES
  2007
    
    2006
    
    2005
    
    2004
    
    2003
    
    2002Net income as % ofNet sales
    
    
    11.7
    %
    
    
    11.9
    %
    
    
    10.6
    %
    
    
    9.7
    %
    
    
    9.3
    %
    
    
    7.5
    %Average assets
    
    
    22.5
    %
    
    
    24.9
    %
    
    
    21.3
    %
    
    
    18.2
    %
    
    
    15.9
    %
    
    
    13.3
    %Beginning equity
    
    
    30.1
    %
    
    
    36.7
    %
    
    
    26.9
    %
    
    
    23.8
    %
    
    
    21.5
    %
    
    
    18.4
    %
 SEGMENT ANALYSIS
 NET SALES AND OPERATING INCOME BY SEGMENT
 2007
    
    
    2006
    
    
    2005%
    
    
    
    
    
    
    %
    
    
    
    
    
    
    %Dollars in thousands
    
    amount
    
    
    change
    
    
    amount
    
    
    change
    
    
    amount
    
    
    changeNET SALESEngineered Films
    
    $
    91,082
    
    
    
    +10.0
    
    
    $
    82,794
    
    
    
    +41.1
    
    
    $
    58,657
    
    
    
    +37.6Flow Controls
    
    
    45,515
    
    
    
      4.2
    
    
    
    47,506
    
    
    
    +16.6
    
    
    
    40,726
    
    
    
    +16.2Electronic Systems
    
    
    66,278
    
    
    
    +17.9
    
    
    
    56,219
    
    
    
    +19.5
    
    
    
    47,049
    
    
    
    +  6.2Aerostar
    
    
    14,654
    
    
    
    18.6
    
    
    
    18,009
    
    
    
    16.8
    
    
    
    21,654
    
    
    
    +  4.5Total
    
    $
    217,529
    
    
    
    +  6.4
    
    
    $
    204,528
    
    
    
    +21.7
    
    
    $
    168,086
    
    
    
    +17.8
 2007
    
    
    2006
    
    
    2005%
    
    
    
    
    
    
    %
    
    
    
    
    
    
    %Dollars in thousands
    
    amount
    
    
    sales
    
    
    amount
    
    
    sales
    
    
    amount
    
    
    salesOPERATING INCOME (LOSS)Engineered Films
    
    $
    23,440
    
    
    
    25.7
    
    
    $
    19,907
    
    
    
    24.0
    
    
    $
    15,739
    
    
    
    26.8Flow Controls
    
    
    10,111
    
    
    
    22.2
    
    
    
    13,586
    
    
    
    28.6
    
    
    
    10,516
    
    
    
    25.8Electronic Systems
    
    
    10,850
    
    
    
    16.4
    
    
    
    8,916
    
    
    
    15.9
    
    
    
    4,492
    
    
    
    9.5Aerostar
    
    
    707
    
    
    
    4.8
    
    
    
    2,133
    
    
    
    11.8
    
    
    
    3,609
    
    
    
    16.7Sold businesses
    
    
    
    
    
    
    
    
    
    
    (79
    )
    
    
    
    
    
    
    Corporate expenses
    
    
    (6,806
    )
    
    
    
    
    
    
    (7,179
    )
    
    
    
    
    
    
    (6,494
    )Total
    
    $
    38,302
    
    
    
    17.6
    
    
    $
    37,284
    
    
    
    18.2
    
    
    $
    27,862
    
    
    
    16.6
 ENGINEERED FILMS
  
 Fiscal 2007 versus fiscal 2006
  RAVEN ANNUAL
 21




---



##### 



FINANCIAL REVIEW AND ANALYSIS
  Fiscal 2006 versus fiscal 2005
   Prospects
  FLOW CONTROLS
  Fiscal 2007 versus fiscal 2006
  22




---



##### 



Fiscal 2006 versus fiscal 2005
   Prospects
  RAVEN ANNUAL
 23




---



##### 



FINANCIAL REVIEW AND ANALYSIS
 ELECTRONIC SYSTEMS
  
 Fiscal 2007 versus fiscal 2006
   Fiscal 2006 versus fiscal 2005
  Prospects
  AEROSTAR
  Fiscal 2007 versus fiscal 2006
   24




---



##### 



Fiscal 2006 versus fiscal 2005
  Prospects
  EXPENSES, INCOME TAXES AND OTHER
  Accounting for Uncertain Tax Positions,
 
 RAVEN ANNUAL
 25




---



##### 



FINANCIAL REVIEW AND ANALYSIS
 LIQUIDITY AND CAPITAL RESOURCES
  Dollars in thousands
    
    2007
    
    2006
    
    2005Operating activities
    
    $
    26,313
    
    
    $
    21,189
    
    
    $
    18,871Investing activities
    
    
    (18,664
    )
    
    
    (11,435
    )
    
    
    (7,631
    )Financing activities
    
    
    (10,277
    )
    
    
    (6,946
    )
    
    
    (19,063
    )
 OPERATING ACTIVITIES AND CASH POSITION
   INVESTING ACTIVITIES
  
 26




---



##### 



FINANCING ACTIVITIES
    FY 2009-
    
    FY 2011-Dollars in thousands
    
    Total
    
    FY 2008
    
    FY 2010
    
    FY 2012Contractual Obligations:Line of Credit(a)
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Operating leases
    
    
    305
    
    
    
    235
    
    
    
    70
    
    
    
    Unconditional purchase obligations
    
    
    26,329
    
    
    
    26,329
    
    
    
    
    
    
    
    26,634
    
    
    
    26,564
    
    
    
    70
    
    
    
    Other Commercial Commitments:Letters of credit
    
    
    1,356
    
    
    
    1,356
    
    
    
    
    
    
    
    $
    27,990
    
    
    $
    27,920
    
    
    $
    70
    
    
    $
    
 
 (a)
    
    $8.0 million line bears interest at 8.00% as of January 31, 2007, and expires August 2007.The line of credit is reduced by outstanding letters of credit. CAPITAL REQUIREMENTS
  RAVEN ANNUAL
 27




---



##### 



FINANCIAL REVIEW AND ANALYSIS
 CRITICAL ACCOUNTING POLICIES AND NEW ACCOUNTING STANDARDS
CRITICAL ACCOUNTING POLICIES
  Inventories
  Warranty
  Allowance for Doubtful Accounts
  Revenue Recognition
  
 28




---



##### 



Self-insurance Reserves
  Goodwill and Long-lived Assets
   
 NEW ACCOUNTING STANDARDS
 Fair Value
Measurement.
 Accounting for Uncertainty in Income
Taxes Accounting for Income Taxes,
 RAVEN ANNUAL
 29




---



##### 



MONTHLY CLOSING STOCK PRICE AND VOLUME
 
 QUARTERLY INFORMATION ( Unaudited )
 Net Income
    
    
    Common Stock
    
    
    CashDollars in thousands
    
    Net
    
    
    Gross
    
    
    Operating
    
    
    Pretax
    
    
    Net
    
    
    Per Share(a)
    
    
    Market Price
    
    
    Dividendsexcept per-share data
    
    Sales
    
    
    Profit
    
    
    Income
    
    
    Income
    
    
    Income
    
    
    Basic
    
    
    Diluted
    
    
    High
    
    
    Low
    
    
    Per ShareFISCAL 2007First Quarter
    
    $
    58,465
    
    
    $
    15,891
    
    
    $
    11,477
    
    
    $
    11,615
    
    
    $
    7,502
    
    
    $
    0.41
    
    
    $
    0.41
    
    
    $
    42.16
    
    
    $
    31.22
    
    
    $
    0.090Second Quarter
    
    
    50,381
    
    
    
    12,183
    
    
    
    7,872
    
    
    
    7,937
    
    
    
    5,127
    
    
    
    0.28
    
    
    
    0.28
    
    
    
    42.70
    
    
    
    25.89
    
    
    
    0.090Third Quarter
    
    
    57,435
    
    
    
    14,480
    
    
    
    10,540
    
    
    
    10,713
    
    
    
    6,968
    
    
    
    0.39
    
    
    
    0.38
    
    
    
    32.64
    
    
    
    25.89
    
    
    
    0.090Fourth Quarter
    
    
    51,248
    
    
    
    12,328
    
    
    
    8,413
    
    
    
    8,570
    
    
    
    5,844
    
    
    
    0.32
    
    
    
    0.32
    
    
    
    35.35
    
    
    
    25.46
    
    
    
    0.090Total Year
    
    $
    217,529
    
    
    $
    54,882
    
    
    $
    38,302
    
    
    $
    38,835
    
    
    $
    25,441
    
    
    $
    1.41
    
    
    $
    1.39
    
    
    $
    42.70
    
    
    $
    25.46
    
    
    $
    0.360FISCAL 2006First Quarter
    
    $
    50,704
    
    
    $
    15,161
    
    
    $
    11,136
    
    
    $
    11,098
    
    
    $
    7,157
    
    
    $
    0.40
    
    
    $
    0.39
    
    
    $
    22.28
    
    
    $
    16.54
    
    
    $
    0.070Second Quarter
    
    
    45,304
    
    
    
    10,882
    
    
    
    7,299
    
    
    
    7,391
    
    
    
    4,774
    
    
    
    0.26
    
    
    
    0.26
    
    
    
    27.78
    
    
    
    18.68
    
    
    
    0.070Third Quarter
    
    
    54,135
    
    
    
    14,213
    
    
    
    10,568
    
    
    
    10,635
    
    
    
    6,869
    
    
    
    0.38
    
    
    
    0.37
    
    
    
    31.99
    
    
    
    21.75
    
    
    
    0.070Fourth Quarter
    
    
    54,385
    
    
    
    12,975
    
    
    
    8,281
    
    
    
    8,370
    
    
    
    5,462
    
    
    
    0.30
    
    
    
    0.30
    
    
    
    33.15
    
    
    
    26.75
    
    
    
    0.070Total Year
    
    $
    204,528
    
    
    $
    53,231
    
    
    $
    37,284
    
    
    $
    37,494
    
    
    $
    24,262
    
    
    $
    1.34
    
    
    $
    1.32
    
    
    $
    33.15
    
    
    $
    16.54
    
    
    $
    0.280FISCAL 2005First Quarter
    
    $
    38,408
    
    
    $
    11,678
    
    
    $
    8,451
    
    
    $
    8,475
    
    
    $
    5,415
    
    
    $
    0.30
    
    
    $
    0.29
    
    
    $
    17.17
    
    
    $
    13.65
    
    
    $
    0.055Second Quarter
    
    
    37,077
    
    
    
    8,759
    
    
    
    5,651
    
    
    
    5,677
    
    
    
    3,642
    
    
    
    0.20
    
    
    
    0.20
    
    
    
    19.43
    
    
    
    13.08
    
    
    
    0.680
    (b)Third Quarter
    
    
    48,597
    
    
    
    12,962
    
    
    
    8,099
    (c)
    
    
    8,115
    (c)
    
    
    5,194
    (c)
    
    
    0.29
    
    
    
    0.28
    
    
    
    23.89
    
    
    
    17.41
    
    
    
    0.055Fourth Quarter
    
    
    44,004
    
    
    
    9,801
    
    
    
    5,661
    
    
    
    5,688
    
    
    
    3,640
    
    
    
    0.20
    
    
    
    0.20
    
    
    
    26.94
    
    
    
    17.05
    
    
    
    0.055Total Year
    
    $
    168,086
    
    
    $
    43,200
    
    
    $
    27,862
    
    
    $
    27,955
    
    
    $
    17,891
    
    
    $
    0.99
    
    
    $
    0.97
    
    
    $
    26.94
    
    
    $
    13.08
    
    
    $
    0.845
 
 (a)
    
    Net income per share is computed discretely by quarter and
may not add to the full year.(b)
    
    A special dividend of $.625 per share was paid during the
second quarter of fiscal 2005.(c)
    
    Includes a pretax $1.3 million ($845,000 net of tax) writeoff of assets related to the Fluent
Systems product line (see Note 5). 30




---



##### 



MANAGEMENTS REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
   Internal Control  Integrated Framework,
  -s- Ronald M. Moquist
    
    -s- Thomas lacarellaRonald M. Moquist
    
    Thomas IacarellaPresident & Chief Executive Officer
    
    Vice President & Chief Financial OfficerMarch 22, 2007
 RAVEN ANNUAL
 31




---



##### 



CONSOLIDATED BALANCE SHEETS
 As of January 31Dollars in thousands, except share data
    
    2007
    
    2006
    
    2005ASSETSCurrent assetsCash and cash equivalents
    
    $
    6,783
    
    
    $
    9,409
    
    
    $
    6,619Short-term investments
    
    
    4,000
    
    
    
    2,000
    
    
    
    3,000Accounts receivable, net
    
    
    31,336
    
    
    
    29,290
    
    
    
    25,370Inventories, net
    
    
    28,071
    
    
    
    27,819
    
    
    
    23,315Deferred income taxes
    
    
    1,761
    
    
    
    1,746
    
    
    
    1,465Prepaid expenses and other current assets
    
    
    1,268
    
    
    
    1,081
    
    
    
    1,823Total current assets
    
    
    73,219
    
    
    
    71,345
    
    
    
    61,592Property, plant and equipment, net
    
    
    36,264
    
    
    
    25,602
    
    
    
    19,964Goodwill
    
    
    6,604
    
    
    
    6,401
    
    
    
    5,933Other assets, net
    
    
    3,677
    
    
    
    2,809
    
    
    
    1,020Total assets
    
    $
    119,764
    
    
    $
    106,157
    
    
    $
    88,509LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilitiesAccounts payable
    
    $
    6,093
    
    
    $
    8,179
    
    
    $
    10,322Accrued liabilities
    
    
    9,579
    
    
    
    11,154
    
    
    
    9,773Customer advances
    
    
    792
    
    
    
    717
    
    
    
    855Total current liabilities
    
    
    16,464
    
    
    
    20,050
    
    
    
    20,950Other liabilities, primarily compensation and benefits
    
    
    5,032
    
    
    
    1,718
    
    
    
    1,477Commitments and contingenciesShareholders equity
    
    
    98,268
    
    
    
    84,389
    
    
    
    66,082Common shares, par value $1.00 per share
Authorized  100,000,000
Outstanding  2007: 18,039,223; 2006: 18,072,369;
2005: 17,999,468Total liabilities and shareholders equity
    
    $
    119,764
    
    
    $
    106,157
    
    
    $
    88,509
 The accompanying notes are an integral part of the consolidated financial statements.
 32




---



##### 



CONSOLIDATED STATEMENTS OF INCOME
 For the years ended January 31Dollars in thousands, except per-share data
    
    2007
    
    2006
    
    2005Net sales
    
    $
    217,529
    
    
    $
    204,528
    
    
    $
    168,086Cost of goods sold
    
    
    162,647
    
    
    
    151,297
    
    
    
    124,886Gross profit
    
    
    54,882
    
    
    
    53,231
    
    
    
    43,200Selling, general and administrative expenses
    
    
    16,580
    
    
    
    15,868
    
    
    
    14,056Loss on disposition of businesses and assets, net
    
    
    
    
    
    
    79
    
    
    
    1,282Operating income
    
    
    38,302
    
    
    
    37,284
    
    
    
    27,862Interest expense
    
    
    2
    
    
    
    35
    
    
    
    35Interest income and other, net
    
    
    (535
    )
    
    
    (245
    )
    
    
    (128
    )Income before income taxes
    
    
    38,835
    
    
    
    37,494
    
    
    
    27,955Income taxes
    
    
    13,394
    
    
    
    13,232
    
    
    
    10,064Net income
    
    $
    25,441
    
    
    $
    24,262
    
    
    $
    17,891Net income per common share: Basic
    
    $
    1.41
    
    
    $
    1.34
    
    
    $
    0.99 Diluted
    
    $
    1.39
    
    
    $
    1.32
    
    
    $
    0.97
 The accompanying notes are an integral part of the consolidated financial statements.
 RAVEN ANNUAL
 33




---



##### 



CONSOLIDATED STATEMENTS OF
SHAREHOLDERS EQUITY AND COMPREHENSIVE INCOME
 AccumulatedOther$1 Par
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    ComprehensiveCommon
    
    Paid-in
    
    Treasury stock
    
    Retained
    
    IncomeDollars in thousands, except per-share data
    
    Stock
    
    Capital
    
    Shares
    
    Cost
    
    Earnings
    
    (Loss)
    
    TotalBalance
January 31, 2004
    
    $
    15,954
    
    
    $
    784
    
    
    
    (6,933,443
    )
    
    $
    (38,181
    )
    
    $
    87,914
    
    
    $
    
    
    
    $
    66,471Net and comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,891
    
    
    
    
    
    
    
    17,891Cash dividends ($.220 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,971
    )
    
    
    
    
    
    
    (3,971
    )Cash dividend  Special ($.625 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,327
    )
    
    
    
    
    
    
    (11,327
    )Two-for-one stock split
    
    
    15,954
    
    
    
    (411
    )
    
    
    (6,933,443
    )
    
    
    
    
    
    
    (15,543
    )
    
    
    
    
    
    
    Purchase of stock
    
    
    
    
    
    
    
    
    
    
    (186,500
    )
    
    
    (3,519
    )
    
    
    

    
    
    
    
    
    
    
    (3,519
    )Purchase and retirement of stock
    
    
    (40
    )
    
    
    (646
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (686
    )Employees stock options exercised
    
    
    185
    
    
    
    327
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    512Share-based compensation
    
    
    
    
    
    
    309
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    309Tax benefit from exercise of stock options
    
    
    
    
    
    
    402
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    402Balance
January 31, 2005
    
    
    32,053
    
    
    
    765
    
    
    
    (14,053,386
    )
    
    
    (41,700
    )
    
    
    74,964
    
    
    
    
    
    
    
    66,082Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24,262
    
    
    
    
    
    
    
    24,262Foreign currency translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13
    
    
    
    13Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24,275Cash dividends ($.280 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,056
    )
    
    
    
    
    
    
    (5,056
    )Purchase of stock
    
    
    
    
    
    
    
    
    
    
    (67,800
    )
    
    
    (1,689
    )
    
    
    
    
    
    
    
    
    
    
    (1,689
    )Purchase and retirement of stock
    
    
    (27
    )
    
    
    (689
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (716
    )Employees stock options exercised
    
    
    168
    
    
    
    410
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    578Share-based compensation
    
    
    
    
    
    
    485
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    485Tax benefit from exercise of stock options
    
    
    
    
    
    
    430
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    430Balance
January 31, 2006
    
    
    32,194
    
    
    
    1,401
    
    
    
    (14,121,186
    )
    
    
    (43,389
    )
    
    
    94,170
    
    
    
    13
    
    
    
    84,389Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,441
    
    
    
    
    
    
    
    25,441Foreign currency translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (21
    )
    
    
    (21
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,420Adoption of
SFAS No. 158, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,885
    )
    
    
    (1,885
    )Dividends ($.360 per share)
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    (6,508
    )
    
    
    
    
    
    
    (6,507
    )Purchase of stock
    
    
    
    
    
    
    
    
    
    
    (146,247
    )
    
    
    (4,201
    )
    
    
    
    
    
    
    
    
    
    
    (4,201
    )Purchase and retirement of stock
    
    
    (28
    )
    
    
    (854
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (882
    )Employees stock options exercised
    
    
    141
    
    
    
    718
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    859Share-based compensation
    
    
    
    
    
    
    605
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    605Tax benefit from exercise of stock options
    
    
    
    
    
    
    470
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    470Balance
January 31, 2007
    
    $
    32,307
    
    
    $
    2,341
    
    
    
    (14,267,433
    )
    
    $
    (47,590
    )
    
    $
    113,103
    
    
    $
    (1,893
    )
    
    $
    98,268
 The accompanying notes are an integral part of the consolidated financial statements.
 34




---



##### 



CONSOLIDATED STATEMENTS OF CASH FLOWS
 For the years ended January 31Dollars in thousands
    
    2007
    
    2006
    
    2005Cash flows from operating activities:Net income
    
    $
    25,441
    
    
    $
    24,262
    
    
    $
    17,891Adjustments to reconcile net income to net cash provided by
operating activities:Depreciation
    
    
    5,445
    
    
    
    4,684
    
    
    
    3,410Amortization of intangible assets
    
    
    440
    
    
    
    467
    
    
    
    431Provision for losses on accounts receivable, net of recoveries
    
    
    40
    
    
    
    78
    
    
    
    34Loss on disposition of businesses and assets
    
    
    
    
    
    
    79
    
    
    
    1,282Deferred income taxes
    
    
    (293
    )
    
    
    (809
    )
    
    
    (31
    )Share-based compensation expense
    
    
    605
    
    
    
    485
    
    
    
    309Change in operating assets and liabilities, net of effects from
acquisition and disposition of businesses and assets
    
    
    (5,380
    )
    
    
    (8,086
    )
    
    
    (4,669
    )Other operating activities, net
    
    
    15
    
    
    
    29
    
    
    
    214Net cash provided by operating activities
    
    
    26,313
    
    
    
    21,189
    
    
    
    18,871Cash flows from investing activities:Capital expenditures
    
    
    (16,522
    )
    
    
    (10,358
    )
    
    
    (7,541
    )Purchase of short-term investments
    
    
    (6,000
    )
    
    
    (4,500
    )
    
    
    (3,000
    )Sale of short-term investments
    
    
    4,000
    
    
    
    5,500
    
    
    
    4,000Acquisition of businesses
    
    
    (203
    )
    
    
    (2,828
    )
    
    
    (414
    )Sale of (investment in) unconsolidated affiliate
    
    
    
    
    
    
    650
    
    
    
    (650
    )Other investing activities, net
    
    
    61
    
    
    
    101
    
    
    
    (26
    )Net cash used in investing activities
    
    
    (18,664
    )
    
    
    (11,435
    )
    
    
    (7,631
    )Cash flows from financing activities:Proceeds from borrowing under line of credit
    
    
    
    
    
    
    4,500
    
    
    
    Repayment of borrowing under line of credit
    
    
    
    
    
    
    (4,500
    )
    
    
    Dividends paid
    
    
    (6,507
    )
    
    
    (5,056
    )
    
    
    (15,298
    )Purchases of treasury stock
    
    
    (4,201
    )
    
    
    (1,689
    )
    
    
    (3,519
    )Excess tax benefit on stock option exercises
    
    
    470
    
    
    
    
    
    
    
    Other financing activities, net
    
    
    (39
    )
    
    
    (201
    )
    
    
    (246
    )Net cash used in financing activities
    
    
    (10,277
    )
    
    
    (6,946
    )
    
    
    (19,063
    )Effect of exchange rate changes on cash
    
    
    2
    
    
    
    (18
    )
    
    
    Net (decrease) increase in cash and cash equivalents
    
    
    (2,626
    )
    
    
    2,790
    
    
    
    (7,823
    )Cash and cash equivalents at beginning of year
    
    
    9,409
    
    
    
    6,619
    
    
    
    14,442Cash and cash equivalents at end of year
    
    $
    6,783
    
    
    $
    9,409
    
    
    $
    6,619
 The accompanying notes are an integral part of the consolidated financial statements.
 RAVEN ANNUAL
 35




---



##### 



NOTES TO FINANCIAL STATEMENTS
 Note 1. Summary of Significant Accounting Policies
 BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION
  USE OF ESTIMATES
  FOREIGN CURRENCY
  CASH AND CASH EQUIVALENTS
  SHORT-TERM INVESTMENTS
  ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS
  INVENTORY VALUATION
  PROPERTY,
PLANT AND EQUIPMENT
  Building and improvements
    
    15 - 39 yearsManufacturing equipment by segmentFlow Controls
    
    3 -   5 yearsEngineered Films
    
    5 - 12 yearsElectronic Systems
    
    3 -          5 yearsAerostar
    
    3 -          5 yearsFurniture, fixtures, office equipment and other
    
    3 -          7 years
  INTANGIBLE ASSETS
  GOODWILL
  36




---



##### 



LONG-LIVED ASSETS
  INSURANCE OBLIGATIONS
  CONTINGENCIES
  REVENUE RECOGNITION
  WARRANTIES
  RESEARCH AND DEVELOPMENT
  SHARE-BASED COMPENSATION
 Accounting for
Stock-Based Compensation. Share-Based
Payment.
 INCOME TAXES
  NEW ACCOUNTING STANDARDS
 Fair Value
Measurement.
 Accounting for Uncertainty in Income Taxes Accounting for Income Taxes,
 RAVEN ANNUAL
 37




---



##### 



NOTES TO FINANCIAL STATEMENTS
 Note 2. Selected Balance Sheet Information
  As of January 31Dollars in thousands
    
    2007
    
    2006
    
    2005Accounts
receivable, net:Trade accounts
    
    $
    31,594
    
    
    $
    29,547
    
    
    $
    25,635Allowance for doubtful accounts
    
    
    (258
    )
    
    
    (257
    )
    
    
    (265
    )$
    31,336
    
    
    $
    29,290
    
    
    $
    25,370Inventories, net:Finished goods
    
    $
    3,750
    
    
    $
    3,504
    
    
    $
    3,538In process
    
    
    2,612
    
    
    
    3,652
    
    
    
    2,820Materials
    
    
    21,709
    
    
    
    20,663
    
    
    
    16,957$
    28,071
    
    
    $
    27,819
    
    
    $
    23,315Property, plant and equipment, net:Land
    
    $
    1,227
    
    
    $
    1,084
    
    
    $
    1,084Buildings and improvements
    
    
    21,494
    
    
    
    16,662
    
    
    
    15,184Machinery and equipment
    
    
    52,552
    
    
    
    43,256
    
    
    
    36,486Accumulated depreciation
    
    
    (39,009
    )
    
    
    (35,400
    )
    
    
    (32,790
    )$
    36,264
    
    
    $
    25,602
    
    
    $
    19,964Other
assets, net:Amortizable assets:Purchased technology
    
    $
    3,380
    
    
    $
    3,380
    
    
    $
    1,080Other intangibles
    
    
    1,305
    
    
    
    1,265
    
    
    
    946Accumulated amortization
    
    
    (2,729
    )
    
    
    (2,300
    )
    
    
    (1,831
    )1,956
    
    
    
    2,345
    
    
    
    195Investment in unconsolidated affiliate
    
    
    
    
    
    
    
    
    
    
    650Deferred income taxes
    
    
    1,607
    
    
    
    318
    
    
    
    Other, net
    
    
    114
    
    
    
    146
    
    
    
    175$
    3,677
    
    
    $
    2,809
    
    
    $
    1,020Accrued liabilities:Salaries and benefits
    
    $
    1,722
    
    
    $
    2,167
    
    
    $
    1,992Vacation
    
    
    2,212
    
    
    
    2,119
    
    
    
    1,852401(k) contributions
    
    
    1,109
    
    
    
    1,049
    
    
    
    980Insurance obligations
    
    
    1,743
    
    
    
    1,632
    
    
    
    1,541Income taxes
    
    
    265
    
    
    
    808
    
    
    
    567Profit sharing
    
    
    553
    
    
    
    1,168
    
    
    
    900Warranty
    
    
    397
    
    
    
    569
    
    
    
    452Other
    
    
    1,578
    
    
    
    1,642
    
    
    
    1,489$
    9,579
    
    
    $
    11,154
    
    
    $
    9,773
 Note 3. Supplemental Cash Flow Information
 For the years ended January 31Dollars in thousands
    
    2007
    
    2006
    
    2005Changes in operating assets and liabilities,
net of effects from acquisition and
disposition of businesses and assets:Accounts receivable
    
    $
    (2,097
    )
    
    $
    (3,821
    )
    
    $
    (6,950
    )Inventories
    
    
    (262
    )
    
    
    (4,356
    )
    
    
    (6,704
    )Prepaid expenses and other assets
    
    
    (284
    )
    
    
    (103
    )
    
    
    150Accounts payable
    
    
    (1,770
    )
    
    
    (2,688
    )
    
    
    6,576Accrued and other liabilities
    
    
    (1,045
    )
    
    
    3,021
    
    
    
    1,777Customer advances
    
    
    78
    
    
    
    (139
    )
    
    
    482$
    (5,380
    )
    
    $
    (8,086
    )
    
    $
    (4,669
    )Cash paid during the year for:Interest
    
    $
    2
    
    
    $
    35
    
    
    $
    77Income taxes
    
    $
    13,759
    
    
    $
    12,806
    
    
    $
    9,596
 Note 4. Montgomery Industries Acquisition
    Note 5. Divestitures and Other Repositioning Activities
   38




---



##### 



Note 6. Goodwill and Other Intangibles
 Goodwill
  Flow
    
    Engineered
    
    ElectronicDollars in thousands
    
    Controls
    
    Films
    
    Systems
    
    Aerostar
    
    TotalBalance at
January 31, 2004
    
    $
    5,783
    
    
    $
    96
    
    
    $
    433
    
    
    $
    464
    
    
    $
    6,776Adjustment
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5Writeoff of Fluent Systems
    
    
    (848
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (848
    )Balance at
January 31, 2005
    
    
    4,940
    
    
    
    96
    
    
    
    433
    
    
    
    464
    
    
    
    5,933Goodwill acquired during
the year
    
    
    285
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    285Acquisition earn-outs
    
    
    183
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    183Balance at
January 31, 2006
    
    
    5,408
    
    
    
    96
    
    
    
    433
    
    
    
    464
    
    
    
    6,401Acquisition earn-outs
    
    
    203
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    203Balance
at January 31, 2007
    
    $
    5,611
    
    
    $
    96
    
    
    $
    433
    
    
    $
    464
    
    
    $
    6,604
 Intangible Assets
  Note 7. Employee Retirement Benefits
  Accounting for Postretirement Benefits Other Than
Pensions. Employers Accounting for Defined
Pension and Other Postretirement Plans.
  Impact of SFAS No. 158Dollars in thousands
    
    Before
    
    Adjustment
    
    AfterNon-current deferred tax assets
    
    $
    592
    
    
    $
    1,015
    
    
    $
    1,607Total assets
    
    
    118,749
    
    
    
    1,015
    
    
    
    119,764Other liabilities
    
    
    2,132
    
    
    
    2,900
    
    
    
    5,032Accumulated other comprehensive
income (loss)
    
    
    (8
    )
    
    
    (1,885
    )
    
    
    (1,893
    )Total shareholders equity
    
    
    100,153
    
    
    
    (1,885
    )
    
    
    98,268
  For the years ended January 31Dollars in thousands
    
    2007
    
    2006
    
    2005Benefit obligation at beginning of year
    
    $
    4,928
    
    
    $
    2,722
    
    
    $
    2,607Service cost
    
    
    84
    
    
    
    80
    
    
    
    58Interest cost
    
    
    278
    
    
    
    259
    
    
    
    186Actuarial loss
    
    
    89
    
    
    
    2,014
    
    
    
    27Retiree benefits paid
    
    
    (166
    )
    
    
    (147
    )
    
    
    (156
    )Benefit obligation at end of year
    
    
    5,213
    
    
    
    4,928
    
    
    
    2,722Less: unrecognized actuarial losses
    
    
    
    
    
    
    (3,045
    )
    
    
    (1,275
    )Ending liability balance
    
    $
    5,213
    
    
    $
    1,883
    
    
    $
    1,447
  For the years ended January 31Dollars in thousands
    
    2007
    
    2006
    
    2005Beginning liability balance
    
    $
    1,883
    
    
    $
    1,447
    
    
    $
    1,212Employer expense
    
    
    596
    
    
    
    583
    
    
    
    391Initial effect of adopting SFAS No. 158
    
    
    2,900
    
    
    
    
    
    
    
    Retiree benefits paid
    
    
    (166
    )
    
    
    (147
    )
    
    
    (156
    )Ending liability balance
    
    
    5,213
    
    
    
    1,883
    
    
    
    1,447Current portion
    
    
    (181
    )
    
    
    (174
    )
    
    
    (180
    )Long-term portion
    
    $
    5,032
    
    
    $
    1,709
    
    
    $
    1,267Assumptions used:Discount rate
    
    
    6.00
    %
    
    
    5.75
    %
    
    
    7.00
    %Wage inflation rate
    
    
    4.00
    %
    
    
    4.00
    %
    
    
    4.00
    %
   RAVEN ANNUAL
 39




---



##### 



NOTES TO FINANCIAL STATEMENTS
 Note 8. Warranties
  As of January 31Dollars in thousands
    
    2007
    
    2006
    
    2005Beginning balance
    
    $
    569
    
    
    $
    452
    
    
    $
    263Accrual for warranties
    
    
    1,317
    
    
    
    958
    
    
    
    932Settlements made (in cash or in kind)
    
    
    (1,489
    )
    
    
    (841
    )
    
    
    (743
    )Ending balance
    
    $
    397
    
    
    $
    569
    
    
    $
    452
 Note 9. Income Taxes
  For the years ended January 31Dollars in thousands
    
    2007
    
    2006
    
    2005Tax at U.S. federal statutory rate
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %State and local income taxes,
net of U.S. federal benefit
    
    
    1.1
    
    
    
    1.1
    
    
    
    0.9Tax benefit on qualified production activities
    
    
    (1.0
    )
    
    
    (1.0
    )
    
    
    Tax credit for research activities
    
    
    (0.5
    )
    
    
    (0.1
    )
    
    
    Other, net
    
    
    (0.1
    )
    
    
    0.3
    
    
    
    0.134.5
    %
    
    
    35.3
    %
    
    
    36.0
    %
  For the years ended January 31Dollars in thousands
    
    2007
    
    2006
    
    2005Income taxes:Currently payable
    
    $
    13,687
    
    
    $
    14,041
    
    
    $
    10,095Deferred
    
    
    (293
    )
    
    
    (809
    )
    
    
    (31
    )$
    13,394
    
    
    $
    13,232
    
    
    $
    10,064
  As of January 31Dollars in thousands
    
    2007
    
    2006
    
    2005Current deferred tax assets:Accounts receivable
    
    $
    91
    
    
    $
    88
    
    
    $
    93Inventories
    
    
    212
    
    
    
    220
    
    
    
    237Accrued vacation
    
    
    711
    
    
    
    680
    
    
    
    591Insurance obligations
    
    
    357
    
    
    
    282
    
    
    
    161Other accrued liabilities
    
    
    390
    
    
    
    476
    
    
    
    3831,761
    
    
    
    1,746
    
    
    
    1,465Non-current deferred tax assets (liabilities):Postretirement and other employee benefits
    
    
    1,758
    
    
    
    598
    
    
    
    443Depreciation and amortization
    
    
    (405
    )
    
    
    (439
    )
    
    
    (771
    )Net
operating loss carryforward(a)
    
    
    82
    
    
    
    
    
    
    
    Other
    
    
    172
    
    
    
    159
    
    
    
    1181,607
    
    
    
    318
    
    
    
    (210
    )Net deferred tax asset
    
    $
    3,368
    
    
    $
    2,064
    
    
    $
    1,255
 
 (a)
    
    The companys Canadian operation incurred a $210,000 net operating loss that, if unused, will
expire in 2017. Note 10. Financing Arrangements
    Note 11. Share-based Compensation
  2000 Stock Option and Compensation Plan
  40




---



##### 



For the years ended January 312007
    
    2006
    
    2005Risk-free interest rate
    
    
    4.45
    %
    
    
    4.36
    %
    
    
    3.51
    %Expected dividend yield
    
    
    1.29
    %
    
    
    0.90
    %
    
    
    1.07
    %Expected volatility factor
    
    
    38.97
    %
    
    
    39.25
    %
    
    
    34.92
    %Expected option term (in years)
    
    
    4.25
    
    
    
    4.25
    
    
    
    4.50Weighted average grant date fair value
    
    $
    9.51
    
    
    $
    10.90
    
    
    $
    5.91
  WeightedaverageWeighted
    
    
    Aggregate
    
    
    remainingaverage
    
    
    intrinsic
    
    
    contractualNumber
    
    
    exercise
    
    
    value
    
    
    termof options
    
    
    price
    
    
    (in 000s)
    
    
    (years)Outstanding at
beginning of year
    
    
    519,414
    
    
    $
    14.05Granted
    
    
    83,700
    
    
    
    28.01Exercised
    
    
    (140,989
    )
    
    
    6.10Forfeited
    
    
    (15,075
    )
    
    
    22.37Outstanding at end of year
    
    
    447,050
    
    
    $
    18.89
    
    
    $
    4,455
    
    
    
    2.55Options exercisable
at end of year
    
    
    245,700
    
    
    $
    13.24
    
    
    $
    3,780
    
    
    
    1.61
  Deferred Stock Compensation Plan for Directors
    WeightedNumber
    
    
    averageof units
    
    
    priceOutstanding at beginning of year
    
    
    
    
    
    $
    Granted
    
    
    3,743
    
    
    
    32.06Deferred retainers
    
    
    1,040
    
    
    
    32.06Dividends
    
    
    45
    
    
    
    28.65Converted into common shares
    
    
    
    
    
    
    Outstanding at end of year
    
    
    4,828
    
    
    $
    28.43
 Note 12. Net Income Per Share
  For the years ended January 312007
    
    2006
    
    2005Numerator:Net income
(in thousands)
    
    $
    25,441
    
    
    $
    24,262
    
    
    $
    17,891Denominator:Weighted average
common shares outstanding
    
    
    18,082,606
    
    
    
    18,055,439
    
    
    
    18,066,223Weighted average stock
units outstanding
    
    
    3,602
    
    
    
    
    
    
    
    Denominator for
basic calculation
    
    
    18,086,208
    
    
    
    18,055,439
    
    
    
    18,066,223Weighted average
common shares outstanding
    
    
    18,082,606
    
    
    
    18,055,439
    
    
    
    18,066,223Weighted average
stock units outstanding
    
    
    3,602
    
    
    
    
    
    
    
    Dilutive impact of stock options
    
    
    186,705
    
    
    
    259,104
    
    
    
    344,104Denominator for
diluted calculation
    
    
    18,272,913
    
    
    
    18,314,543
    
    
    
    18,410,327Net income per share  basic
    
    $
    1.41
    
    
    $
    1.34
    
    
    $
    0.99Net income per share  diluted
    
    $
    1.39
    
    
    $
    1.32
    
    
    $
    0.97
 RAVEN ANNUAL
 41




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##### 



NOTES TO FINANCIAL STATEMENTS
 Note 13. Business Segments and Major Customer Information
   Disclosures about Segments of an Enterprise and Related Information.
  For the years ended January 31Dollars in thousands
    
    2007
    
    2006
    
    2005ENGINEERED FILMS DIVISIONSales
    
    $
    91,082
    
    
    $
    82,794
    
    
    $
    58,657Operating income
    
    
    23,440
    
    
    
    19,907
    
    
    
    15,739Assets
    
    
    41,988
    
    
    
    33,512
    
    
    
    25,181Capital expenditures
    
    
    13,266
    
    
    
    7,359
    
    
    
    3,960Depreciation & amortization
    
    
    2,887
    
    
    
    2,436
    
    
    
    1,403FLOW CONTROLS DIVISIONSales
    
    $
    45,515
    
    
    $
    47,506
    
    
    $
    40,726Operating income
    
    
    10,111
    
    
    
    13,586
    
    
    
    10,516
    (b)Assets
    
    
    27,629
    
    
    
    30,047
    
    
    
    23,701Capital expenditures
    
    
    577
    
    
    
    938
    
    
    
    1,372Depreciation & amortization
    
    
    1,142
    
    
    
    1,085
    
    
    
    876ELECTRONIC SYSTEMS DIVISIONSales
    
    $
    66,278
    
    
    $
    56,219
    
    
    $
    47,049Operating income
    
    
    10,850
    
    
    
    8,916
    
    
    
    4,492Assets
    
    
    25,175
    
    
    
    20,191
    
    
    
    17,382Capital expenditures
    
    
    1,357
    
    
    
    1,612
    
    
    
    1,201Depreciation & amortization
    
    
    1,086
    
    
    
    871
    
    
    
    880AEROSTARSales
    
    $
    14,654
    
    
    $
    18,009
    
    
    $
    21,654Operating income
    
    
    707
    
    
    
    2,133
    
    
    
    3,609Assets
    
    
    8,161
    
    
    
    6,837
    
    
    
    7,492Capital expenditures
    
    
    812
    
    
    
    179
    
    
    
    542Depreciation & amortization
    
    
    375
    
    
    
    359
    
    
    
    389REPORTABLE SEGMENTS TOTALSales
    
    $
    217,529
    
    
    $
    204,528
    
    
    $
    168,086Operating income
    
    
    45,108
    
    
    
    44,542
    
    
    
    34,356
    (b)Assets
    
    
    102,953
    
    
    
    90,587
    
    
    
    73,756Capital expenditures
    
    
    16,012
    
    
    
    10,088
    
    
    
    7,075Depreciation & amortization
    
    
    5,490
    
    
    
    4,751
    
    
    
    3,548CORPORATE & OTHER(a)Operating (loss) from sold business
    
    $
    
    
    
    $
    (79
    )
    
    $
    Operating (loss) from
administrative expenses
    
    
    (6,806
    )
    
    
    (7,179
    )
    
    
    (6,494
    )Assets
    
    
    16,811
    
    
    
    15,570
    
    
    
    14,753Capital expenditures
    
    
    510
    
    
    
    270
    
    
    
    466Depreciation & amortization
    
    
    395
    
    
    
    400
    
    
    
    293TOTAL COMPANYSales
    
    $
    217,529
    
    
    $
    204,528
    
    
    $
    168,086Operating income
    
    
    38,302
    
    
    
    37,284
    
    
    
    27,862
    (b)Assets
    
    
    119,764
    
    
    
    106,157
    
    
    
    88,509Capital expenditures
    
    
    16,522
    
    
    
    10,358
    
    
    
    7,541Depreciation & amortization
    
    
    5,885
    
    
    
    5,151
    
    
    
    3,841
 
 (a)
    
    Assets are principally cash, investments, deferred taxes and notes receivable.(b)
    
    Includes a $1.3 million pretax writeoff of assets related to the Fluent Systems product line (see Note 5).   For the years ended January 31Dollars in thousands
    
    2007
    
    2006
    
    2005Flow Controls
    
    $
    7,100
    
    
    $
    6,700
    
    
    $
    5,000Engineered Films
    
    
    2,000
    
    
    
    1,300
    
    
    
    600Electronic Systems
    
    
    8,700
    
    
    
    8,000
    
    
    
    4,900Aerostar
    
    
    900
    
    
    
    800
    
    
    
    500Total foreign sales
    
    $
    18,700
    
    
    $
    16,800
    
    
    $
    11,000
 Note 14. Quarterly Information (Unaudited)
  42




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##### 



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 To the Board of Directors and Shareholders of Raven Industries, Inc:
  Consolidated financial statements
  Employers Accounting for Defined Benefit Pension and Other Postretirement Plans.
 Internal control over financial reporting
 Internal Control  Integrated
Framework Internal Control  Integrated
Framework
   
 
 RAVEN ANNUAL
 43




---



##### 



INVESTOR INFORMATION
  Annual Meeting
 Dividend Reinvestment Plan
 Dividend Policy
 Raven Web Site
 Stock Quotations
 Independent Registered Public
Accounting Firm
 Stock Transfer Agent & Registrar
 Form 10-K
 Affirmative Action Plan
 Direct inquires to:
   (TOTAL RETURN INDEX CHART)
    
    This graph compares the returns investors would have earned from stock price increases and dividend
reinvestment if they purchased $100 of Raven stock or the same amount in one of these two indices
on January 31, 2002. Their investment in Raven would have reached $561.83, versus $187.23 for the
S&P 1500 Industrial Machinery Index and $176.56 in the Russell 2000 Index.
  FORWARD-LOOKING STATEMENTS