##### 



EXHIBIT 13
 
 Founded 50 years ago, in 1956, Raven today is an industrial manufacturer that believes in
old values and new ideas. The company has four operating units and focuses on cash return on
invested capital and shareholder value.
Operating Unit
Products
Markets
Competitive Strengths > Computerized control hardware and software for precision farming
Leading developer of GPS-based control system
· Precision application of pesticides.fertilizers and other chemicals Domestic and International agricultural OEMs andsprayer manufacturers Agricultural equipment aftermarket Marine navigation
Market leader for ag sprayer controls
Strong brand recognition and distribution network
Wide range of precision agricultural products SALES
(dollars in millions) 2004 2005 2006  Electronics Manufacturing Services (EMS) Primarily industrial OEMs in North America
Fortune 500 companies that contract their low-volume, high-mix production · Advanced manufacturing technology
Full-service provider, from engineering and manufacturing to customer service
· ISO 9001
SALES
(dollars in millions)
156.2 2004 2005 2006  High-altitude aerostats
· Custom-shaped Inflatable  Protective wear
· Military parachutes
· US and foreign governments
· NASA and scientific agencies
· Promotional and advertising markets, including Disney and Macys
· Reputation for innovation and quality
· Sole source in US for scientific balloons
 Best technology for sewing and sealing
SALES
(dollars in millions) 2004 2005 2006  Rugged reinforced plastic
· Manufactured housing and RVs  Vertically integrated            SALES
manufacturing capabilities (dollar in millions)
· Temporary grain coven for agriculture
· Temporary building construction enclosures
· Pond lining and containment for oil exploration
> Broad product line
> Superior target marketing
· High productivity and low-cost structure 2004 2005 2006 RAVEN 2006 Annual Report




---



##### 



For the years ended January 31Dollars in thousands, except per-share data
    
    2006
    
    2005
    
    2004OPERATIONS FOR THE YEARNet salesOngoing operations
    
    $
    204,528
    
    
    $
    168,086
    
    
    $
    142,727Sold businesses(a)
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    204,528
    
    
    
    168,086
    
    
    
    142,727Gross profit
    
    
    53,231
    
    
    
    43,200
    
    
    
    33,759Operating incomeOngoing operations
    
    
    37,363
    
    
    
    27,862
    
    
    
    21,981Sold businesses(a)
    
    
    (79
    )
    
    
    
    
    
    
    (355
    )Total
    
    
    37,284
    
    
    
    27,862
    
    
    
    21,626Income before income taxes
    
    
    37,494
    
    
    
    27,955
    
    
    
    21,716Net income
    
    $
    24,262
    
    
    $
    17,891
    
    
    $
    13,836Net income % of sales
    
    
    11.9
    %
    
    
    10.6
    %
    
    
    9.7
    %Net income % of beginning equity
    
    
    36.7
    %
    
    
    26.9
    %
    
    
    23.8
    %Cash dividends
    
    $
    5,056
    
    
    $
    15,298
    (b)
    
    $
    3,075FINANCIAL POSITIONCurrent assets
    
    $
    71,345
    
    
    $
    61,592
    
    
    $
    55,710Current liabilities
    
    
    20,050
    
    
    
    20,950
    
    
    
    11,895Working capital
    
    $
    51,295
    
    
    $
    40,642
    
    
    $
    43,815Current ratio
    
    
    3.56
    
    
    
    2.94
    
    
    
    4.68Property, plant and equipment
    
    $
    25,602
    
    
    $
    19,964
    
    
    $
    15,950Total assets
    
    
    106,157
    
    
    
    88,509
    
    
    
    79,508Long-term debt, less current portion
    
    
    9
    
    
    
    
    
    
    
    57Shareholders equity
    
    $
    84,389
    
    
    $
    66,082
    
    
    $
    66,471Long-term debt / total capitalization
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.1
    %Inventory turnover (CGS / year-end inventory)
    
    
    5.4
    
    
    
    5.4
    
    
    
    6.5CASH FLOWS PROVIDED BY (USED IN)Operating activities
    
    $
    21,189
    
    
    $
    18,871
    
    
    $
    19,732Investing activities
    
    
    (11,435
    )
    
    
    (7,631
    )
    
    
    (4,352
    )Financing activities
    
    
    (6,946
    )
    
    
    (19,063
    )
    
    
    (6,155
    )Increase (decrease) in cash and cash equivalents
    
    
    2,790
    
    
    
    (7,823
    )
    
    
    9,225COMMON STOCK DATANet income per share  basic
    
    $
    1.34
    
    
    $
    0.99
    
    
    $
    0.77Net income per share  diluted
    
    
    1.32
    
    
    
    0.97
    
    
    
    0.75Cash dividends per share
    
    
    0.28
    
    
    
    0.85
    (b)
    
    
    0.17Book value per share
    
    
    4.67
    
    
    
    3.67
    
    
    
    3.68Stock price range during yearHigh
    
    $
    33.15
    
    
    $
    26.94
    
    
    $
    15.23Low
    
    
    16.54
    
    
    
    13.08
    
    
    
    7.56Close
    
    $
    31.60
    
    
    $
    18.38
    
    
    $
    14.11Shares outstanding, year-end (in thousands)
    
    
    18,072
    
    
    
    17,999
    
    
    
    18,041Number of shareholders, year-end
    
    
    9,263
    
    
    
    6,269
    
    
    
    3,560OTHER DATAPrice / earnings ratio
    
    
    23.9
    
    
    
    18.9
    
    
    
    18.8Average number of employees
    
    
    819
    
    
    
    807
    
    
    
    770Sales per employee
    
    $
    250
    
    
    $
    208
    
    
    $
    185Backlog
    
    $
    43,619
    
    
    $
    43,646
    
    
    $
    47,120
 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 outstanding.
 (a)
    
    In fiscal 2003, 2001, 2000 and 1996, the company sold its Beta Raven
Industrial Controls, Plastic Tank, Glasstite and Astoria businesses,
respectively.(b)
    
    Includes a special dividend of $.625 per share that was paid
during the second quarter of fiscal 2005.
 RAVEN 2006 Annual Report




---



##### 



2003
    
    2002
    
    2001
    
    2000
    
    1999
    
    1998
    
    1997
    
    1996$
    119,589
    
    
    $
    112,018
    
    
    $
    113,360
    
    
    $
    107,862
    
    
    $
    108,408
    
    
    $
    104,489
    
    
    $
    101,869
    
    
    $
    84,3791,314
    
    
    
    6,497
    
    
    
    19,498
    
    
    
    42,523
    
    
    
    46,798
    
    
    
    47,679
    
    
    
    39,576
    
    
    
    38,010120,903
    
    
    
    118,515
    
    
    
    132,858
    
    
    
    150,385
    
    
    
    155,206
    
    
    
    152,168
    
    
    
    141,445
    
    
    
    122,38927,515
    
    
    
    23,851
    
    
    
    21,123
    
    
    
    24,217
    
    
    
    24,441
    
    
    
    24,929
    
    
    
    25,287
    
    
    
    22,66016,861
    
    
    
    13,788
    
    
    
    7,417
    (c)
    
    
    7,971
    
    
    
    8,220
    
    
    
    9,555
    
    
    
    9,321
    
    
    
    7,692204
    
    
    
    (613
    )
    
    
    3,331
    (d)
    
    
    2,606
    (e)
    
    
    1,453
    
    
    
    1,007
    
    
    
    2,650
    
    
    
    1,86917,065
    
    
    
    13,175
    
    
    
    10,748
    
    
    
    10,577
    
    
    
    9,673
    
    
    
    10,562
    
    
    
    11,971
    
    
    
    9,56117,254
    
    
    
    13,565
    
    
    
    10,924
    
    
    
    10,503
    
    
    
    9,649
    
    
    
    12,540
    (f)
    
    
    11,915
    
    
    
    9,566$
    11,185
    
    
    $
    8,847
    
    
    $
    6,411
    (c)(d)
    
    $
    6,762
    (e)
    
    $
    6,182
    
    
    $
    8,062
    
    
    $
    7,688
    
    
    $
    6,1979.3
    %
    
    
    7.5
    %
    
    
    4.8
    %
    
    
    4.5
    %
    
    
    4.0
    %
    
    
    5.3
    %
    
    
    5.4
    %
    
    
    5.1
    %21.5
    %
    
    
    18.4
    %
    
    
    11.8
    %
    
    
    10.9
    %
    
    
    10.0
    %
    
    
    14.2
    %
    
    
    15.6
    %
    
    
    13.6
    %$
    2,563
    
    
    $
    2,371
    
    
    $
    2,399
    
    
    $
    2,895
    
    
    $
    2,944
    
    
    $
    2,709
    
    
    $
    2,367
    
    
    $
    2,130$
    49,351
    
    
    $
    45,308
    
    
    $
    51,817
    
    
    $
    55,371
    
    
    $
    60,279
    
    
    $
    57,285
    
    
    $
    56,696
    
    
    $
    45,69513,167
    
    
    
    13,810
    
    
    
    13,935
    
    
    
    14,702
    
    
    
    15,128
    
    
    
    17,816
    
    
    
    20,016
    
    
    
    14,771$
    36,184
    
    
    $
    31,498
    
    
    $
    37,882
    
    
    $
    40,669
    
    
    $
    45,151
    
    
    $
    39,469
    
    
    $
    36,680
    
    
    $
    30,9243.75
    
    
    
    3.28
    
    
    
    3.72
    
    
    
    3.77
    
    
    
    3.98
    
    
    
    3.22
    
    
    
    2.83
    
    
    
    3.09$
    16,455
    
    
    $
    14,059
    
    
    $
    11,647
    
    
    $
    15,068
    
    
    $
    19,563
    
    
    $
    19,817
    
    
    $
    18,142
    
    
    $
    18,06972,816
    
    
    
    67,836
    
    
    
    65,656
    
    
    
    74,047
    
    
    
    83,657
    
    
    
    82,066
    
    
    
    80,662
    
    
    
    67,553151
    
    
    
    280
    
    
    
    2,013
    
    
    
    3,024
    
    
    
    4,572
    
    
    
    1,128
    
    
    
    3,181
    
    
    
    2,816$
    58,236
    
    
    $
    52,032
    
    
    $
    47,989
    
    
    $
    54,519
    
    
    $
    62,293
    
    
    $
    61,563
    
    
    $
    56,729
    
    
    $
    49,1510.3
    %
    
    
    0.5
    %
    
    
    4.0
    %
    
    
    5.3
    %
    
    
    6.8
    %
    
    
    1.8
    %
    
    
    5.3
    %
    
    
    5.4
    %4.4
    
    
    
    5.0
    
    
    
    5.9
    
    
    
    5.2
    
    
    
    4.9
    
    
    
    4.8
    
    
    
    4.5
    
    
    
    4.1$
    12,735
    
    
    $
    18,496
    
    
    $
    9,441
    
    
    $
    10,375
    
    
    $
    8,326
    
    
    $
    9,274
    
    
    $
    7,088
    
    
    $
    9,687(9,166
    )
    
    
    (13,152
    )
    
    
    9,752
    
    
    
    6,323
    
    
    
    (3,127
    )
    
    
    (4,979
    )
    
    
    (5,090
    )
    
    
    (4,158
    )(5,830
    )
    
    
    (8,539
    )
    
    
    (14,227
    )
    
    
    (16,326
    )
    
    
    (2,714
    )
    
    
    (4,884
    )
    
    
    (2,363
    )
    
    
    (4,029
    )(2,261
    )
    
    
    (3,195
    )
    
    
    4,966
    
    
    
    372
    
    
    
    2,485
    
    
    
    (589
    )
    
    
    (365
    )
    
    
    1,500$
    0.61
    
    
    $
    0.48
    
    
    $
    0.31
    
    
    $
    0.26
    
    
    $
    0.22
    
    
    $
    0.28
    
    
    $
    0.27
    
    
    $
    0.220.60
    
    
    
    0.47
    
    
    
    0.31
    
    
    
    0.26
    
    
    
    0.22
    
    
    
    0.28
    
    
    
    0.27
    
    
    
    0.220.14
    
    
    
    0.13
    
    
    
    0.12
    
    
    
    0.11
    
    
    
    0.10
    
    
    
    0.09
    
    
    
    0.08
    
    
    
    0.083.21
    
    
    
    2.82
    
    
    
    2.53
    
    
    
    2.32
    
    
    
    2.21
    
    
    
    2.13
    
    
    
    1.96
    
    
    
    1.74$
    9.20
    
    
    $
    5.88
    
    
    $
    3.48
    
    
    $
    3.04
    
    
    $
    3.79
    
    
    $
    4.29
    
    
    $
    3.92
    
    
    $
    3.464.38
    
    
    
    3.02
    
    
    
    1.88
    
    
    
    2.25
    
    
    
    2.54
    
    
    
    3.27
    
    
    
    2.67
    
    
    
    2.58$
    7.91
    
    
    $
    5.64
    
    
    $
    3.04
    
    
    $
    2.40
    
    
    $
    2.67
    
    
    $
    3.77
    
    
    $
    3.75
    
    
    $
    3.2118,133
    
    
    
    18,424
    
    
    
    18,956
    
    
    
    23,496
    
    
    
    28,164
    
    
    
    28,944
    
    
    
    29,016
    
    
    
    28,2962,781
    
    
    
    2,387
    
    
    
    2,460
    
    
    
    2,749
    
    
    
    3,014
    
    
    
    3,221
    
    
    
    3,011
    
    
    
    3,19013.2
    
    
    
    12.1
    
    
    
    9.8
    
    
    
    9.2
    
    
    
    12.4
    
    
    
    13.7
    
    
    
    13.9
    
    
    
    14.9758
    
    
    
    838
    
    
    
    1,043
    
    
    
    1,320
    
    
    
    1,445
    
    
    
    1,511
    
    
    
    1,387
    
    
    
    1,368$
    160
    
    
    $
    141
    
    
    $
    127
    
    
    $
    114
    
    
    $
    107
    
    
    $
    101
    
    
    $
    102
    
    
    $
    89$
    42,826
    
    
    $
    33,834
    
    
    $
    38,239
    
    
    $
    44,935
    
    
    $
    47,431
    
    
    $
    47,154
    
    
    $
    38,102
    
    
    $
    32,539
 (c)
    
    Includes $2.6 million of business repositioning charges, net of
gains on plant sales, primarily in Electronic Systems Division 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 2006 Annual Report




---



##### 



For the years ended January 31Dollars in thousands
    
    2006
    
    2005
    
    2004
    
    2003
    
    2002
    
    2001FLOW CONTROLS DIVISIONSales
    
    $
    47,506
    
    
    $
    40,726
    
    
    $
    35,059
    
    
    $
    28,496
    
    
    $
    23,178
    
    
    $
    16,758Operating income
    
    
    13,586
    
    
    
    10,516
    (b)
    
    
    8,254
    
    
    
    6,897
    
    
    
    5,509
    (d)
    
    
    3,985Assets
    
    
    30,047
    
    
    
    23,701
    
    
    
    19,304
    
    
    
    21,483
    
    
    
    20,313
    
    
    
    9,578Capital expenditures
    
    
    938
    
    
    
    1,372
    
    
    
    341
    
    
    
    729
    
    
    
    677
    
    
    
    327Depreciation & amortization
    
    
    1,085
    
    
    
    876
    
    
    
    1,004
    
    
    
    948
    
    
    
    443
    
    
    
    353ENGINEERED FILMS DIVISIONSales
    
    $
    82,794
    
    
    $
    58,657
    
    
    $
    42,636
    
    
    $
    35,096
    
    
    $
    35,796
    
    
    $
    35,403Operating income
    
    
    19,907
    
    
    
    15,739
    
    
    
    10,563
    
    
    
    10,030
    
    
    
    8,257
    
    
    
    7,397Assets
    
    
    33,512
    
    
    
    25,181
    
    
    
    15,941
    
    
    
    17,244
    
    
    
    13,691
    
    
    
    11,520Capital expenditures
    
    
    7,359
    
    
    
    3,960
    
    
    
    712
    
    
    
    4,080
    
    
    
    3,178
    
    
    
    633Depreciation & amortization
    
    
    2,436
    
    
    
    1,403
    
    
    
    1,611
    
    
    
    1,475
    
    
    
    1,001
    
    
    
    946ELECTRONIC SYSTEMS DIVISIONSales
    
    $
    56,219
    
    
    $
    47,049
    
    
    $
    44,307
    
    
    $
    38,589
    
    
    $
    32,289
    
    
    $
    32,039Operating income (loss)
    
    
    8,916
    
    
    
    4,492
    
    
    
    5,797
    
    
    
    4,022
    
    
    
    2,264
    
    
    
    (542
    )(f)Assets
    
    
    20,191
    
    
    
    17,382
    
    
    
    14,975
    
    
    
    14,528
    
    
    
    13,910
    
    
    
    15,359Capital expenditures
    
    
    1,612
    
    
    
    1,201
    
    
    
    841
    
    
    
    395
    
    
    
    774
    
    
    
    1,492Depreciation & amortization
    
    
    871
    
    
    
    880
    
    
    
    850
    
    
    
    978
    
    
    
    1,101
    
    
    
    1,089AEROSTARSales
    
    $
    18,009
    
    
    $
    21,654
    
    
    $
    20,725
    
    
    $
    17,408
    
    
    $
    20,755
    
    
    $
    29,160Operating income
    
    
    2,133
    
    
    
    3,609
    
    
    
    3,092
    (c)
    
    
    1,012
    
    
    
    2,907
    (e)
    
    
    2,996Assets
    
    
    6,837
    
    
    
    7,492
    
    
    
    7,756
    
    
    
    7,032
    
    
    
    7,150
    
    
    
    8,872Capital expenditures
    
    
    179
    
    
    
    542
    
    
    
    1,130
    
    
    
    570
    
    
    
    256
    
    
    
    163Depreciation & amortization
    
    
    359
    
    
    
    389
    
    
    
    436
    
    
    
    374
    
    
    
    347
    
    
    
    367REPORTABLE SEGMENTS TOTALSales
    
    $
    204,528
    
    
    $
    168,086
    
    
    $
    142,727
    
    
    $
    119,589
    
    
    $
    112,018
    
    
    $
    113,360Operating income
    
    
    44,542
    
    
    
    34,356
    (b)
    
    
    27,706
    (c)
    
    
    21,961
    
    
    
    18,937
    (d,e)
    
    
    13,836
    (f)Assets
    
    
    90,587
    
    
    
    73,756
    
    
    
    57,976
    
    
    
    60,287
    
    
    
    55,064
    
    
    
    45,329Capital expenditures
    
    
    10,088
    
    
    
    7,075
    
    
    
    3,024
    
    
    
    5,774
    
    
    
    4,885
    
    
    
    2,615Depreciation & amortization
    
    
    4,751
    
    
    
    3,548
    
    
    
    3,901
    
    
    
    3,775
    
    
    
    2,892
    
    
    
    2,755CORPORATE
& OTHER(a)Sales from sold businesses
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    1,314
    
    
    $
    6,497
    
    
    $
    19,498Operating income (loss) from sold businesses
    
    
    (79
    )
    
    
    
    
    
    
    (355
    )
    
    
    204
    
    
    
    (613
    )
    
    
    3,331
    (g)Operating (loss) from administrative expenses
    
    
    (7,179
    )
    
    
    (6,494
    )
    
    
    (5,725
    )
    
    
    (5,100
    )
    
    
    (5,149
    )
    
    
    (6,419
    )Assets
    
    
    15,570
    
    
    
    14,753
    
    
    
    21,532
    
    
    
    12,529
    
    
    
    12,772
    
    
    
    20,327Capital expenditures
    
    
    270
    
    
    
    466
    
    
    
    306
    
    
    
    259
    
    
    
    209
    
    
    
    475Depreciation & amortization
    
    
    400
    
    
    
    293
    
    
    
    244
    
    
    
    191
    
    
    
    253
    
    
    
    912TOTAL COMPANYSales
    
    $
    204,528
    
    
    $
    168,086
    
    
    $
    142,727
    
    
    $
    120,903
    
    
    $
    118,515
    
    
    $
    132,858Operating income
    
    
    37,284
    
    
    
    27,862
    (b)
    
    
    21,626
    (c)
    
    
    17,065
    
    
    
    13,175
    (d,e)
    
    
    10,748
    (f,g)Assets
    
    
    106,157
    
    
    
    88,509
    
    
    
    79,508
    
    
    
    72,816
    
    
    
    67,836
    
    
    
    65,656Capital expenditures
    
    
    10,358
    
    
    
    7,541
    
    
    
    3,330
    
    
    
    6,033
    
    
    
    5,094
    
    
    
    3,090Depreciation & amortization
    
    
    5,151
    
    
    
    3,841
    
    
    
    4,145
    
    
    
    3,966
    
    
    
    3,145
    
    
    
    3,667
 (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 gains on
plant sales.(f)
    
    Includes $1.8 million of business repositioning charges in the
Electronic Systems Division and $2.6 million for the total company.(g)
    
    Includes a $3.1 million pretax gain on the sale of the companys
Plastic Tank Division.
 RAVEN 2006 Annual Report




---



##### 



RESULTS OF OPERATIONS
  For the years ended January 312006
    
    
    2005
    
    
    2004%
    
    
    %
    
    
    
    
    
    
    %
    
    
    %
    
    
    
    
    
    
    %
    
    
    %Dollars in thousands, except per-share data
    
    
    
    
    
    Sales
    
    
    Change
    
    
    
    
    
    
    Sales
    
    
    Change
    
    
    
    
    
    
    Sales
    
    
    ChangeNet sales
    
    $
    204,528
    
    
    
    100.0
    
    
    
    + 21.7
    
    
    $
    168,086
    
    
    
    100.0
    
    
    
    + 17.8
    
    
    $
    142,727
    
    
    
    100.0
    
    
    
    + 18.1Gross profit
    
    
    53,231
    
    
    
    26.0
    
    
    
    + 23.2
    
    
    
    43,200
    
    
    
    25.7
    
    
    
    + 28.0
    
    
    
    33,759
    
    
    
    23.7
    
    
    
    + 22.7Operating expenses
    
    
    15,868
    
    
    
    7.8
    
    
    
    + 12.9
    
    
    
    14,056
    
    
    
    8.4
    
    
    
    + 17.5
    
    
    
    11,960
    
    
    
    8.4
    
    
    
    + 12.5Loss on disposition of businesses & assets
    
    
    79
    
    
    
    
    
    
    
    
    
    
    
    1,282
    
    
    
    
    
    
    
    
    
    
    
    173Operating income
    
    
    37,284
    
    
    
    18.2
    
    
    
    + 33.8
    
    
    
    27,862
    
    
    
    16.6
    
    
    
    + 28.8
    
    
    
    21,626
    
    
    
    15.2
    
    
    
    + 26.7Income before income taxes
    
    
    37,494
    
    
    
    18.3
    
    
    
    + 34.1
    
    
    
    27,955
    
    
    
    16.6
    
    
    
    + 28.7
    
    
    
    21,716
    
    
    
    15.2
    
    
    
    + 25.9Income taxes
    
    
    13,232
    
    
    
    6.5
    
    
    
    + 31.5
    
    
    
    10,064
    
    
    
    6.0
    
    
    
    + 27.7
    
    
    
    7,880
    
    
    
    5.5
    
    
    
    + 29.8Net income
    
    $
    24,262
    
    
    
    11.9
    
    
    
    + 35.6
    
    
    $
    17,891
    
    
    
    10.6
    
    
    
    + 29.3
    
    
    $
    13,836
    
    
    
    9.7
    
    
    
    + 23.7Net income per share  diluted
    
    $
    1.32
    
    
    
    
    
    
    
    + 36.1
    
    
    $
    0.97
    
    
    
    
    
    
    
    + 29.3
    
    
    $
    0.75
    
    
    
    
    
    
    
    + 25.0Effective income tax rate
    
    
    35.3
    %
    
    
    
    
    
    
    - 1.9
    
    
    
    36.0
    %
    
    
    
    
    
    
    - 0.8
    
    
    
    36.3
    %
    
    
    
    
    
    
    + 3.1
 EXECUTIVE SUMMARY
  Consolidated Operating Results
     RAVEN 2006 Annual Report




---



##### 



Fiscal 2006 versus fiscal 2005
   Fiscal 2005 versus fiscal 2004
   FISCAL 2006 PERFORMANCE MEASURES
  2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001Net income as % ofNet sales
    
    
    11.9
    %
    
    
    10.6
    %
    
    
    9.7
    %
    
    
    9.3
    %
    
    
    7.5
    %
    
    
    4.8
    %Average assets
    
    
    24.9
    %
    
    
    21.3
    %
    
    
    18.2
    %
    
    
    15.9
    %
    
    
    13.3
    %
    
    
    9.2
    %Beginning equity
    
    
    36.7
    %
    
    
    26.9
    %
    
    
    23.8
    %
    
    
    21.5
    %
    
    
    18.4
    %
    
    
    11.8
    %
 RAVEN 2006 Annual Report




---



##### 



SEGMENT ANALYSIS
 SALES AND OPERATING INCOME BY SEGMENT
 2006
    
    
    2005
    
    
    2004%
    
    
    
    
    
    
    %
    
    
    
    
    
    
    %Dollars in thousands
    
    amount
    
    
    change
    
    
    amount
    
    
    change
    
    
    amount
    
    
    changeSALESFlow Controls
    
    $
    47,506
    
    
    
    +16.6
    
    
    $
    40,726
    
    
    
    +16.2
    
    
    $
    35,059
    
    
    
    +23.0Engineered Films
    
    
    82,794
    
    
    
    + 41.1
    
    
    
    58,657
    
    
    
    + 37.6
    
    
    
    42,636
    
    
    
    +21.5Electronic Systems
    
    
    56,219
    
    
    
    + 19.5
    
    
    
    47,049
    
    
    
    + 6.2
    
    
    
    44,307
    
    
    
    +14.8Aerostar
    
    
    18,009
    
    
    
    16.8
    
    
    
    21,654
    
    
    
    + 4.5
    
    
    
    20,725
    
    
    
    +19.1Total
    
    $
    204,528
    
    
    
    +21.7
    
    
    $
    168,086
    
    
    
    +17.8
    
    
    $
    142,727
    
    
    
    +18.1
 2006
    
    
    2005
    
    
    2004%
    
    
    
    
    
    
    %
    
    
    
    
    
    
    %Dollars in thousands
    
    amount
    
    
    sales
    
    
    amount
    
    
    sales
    
    
    amount
    
    
    salesOPERATING INCOME (LOSS)Flow Controls
    
    $
    13,586
    
    
    
    28.6
    
    
    $
    10,516
    
    
    
    25.8
    
    
    $
    8,254
    
    
    
    23.5Engineered Films
    
    
    19,907
    
    
    
    24.0
    
    
    
    15,739
    
    
    
    26.8
    
    
    
    10,563
    
    
    
    24.8Electronic Systems
    
    
    8,916
    
    
    
    15.9
    
    
    
    4,492
    
    
    
    9.5
    
    
    
    5,797
    
    
    
    13.1Aerostar
    
    
    2,133
    
    
    
    11.8
    
    
    
    3,609
    
    
    
    16.7
    
    
    
    3,092
    
    
    
    14.9Sold businesses
    
    
    (79
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (355
    )Corporate expenses
    
    
    (7,179
    )
    
    
    
    
    
    
    (6,494
    )
    
    
    
    
    
    
    (5,725
    )Total
    
    $
    37,284
    
    
    
    18.2
    
    
    $
    27,862
    
    
    
    16.6
    
    
    $
    21,626
    
    
    
    15.2
 FLOW CONTROLS
  Fiscal 2006 versus fiscal 2005
  
 Fiscal 2005 versus fiscal 2004
  RAVEN 2006 Annual Report




---



##### 



Prospects
  ENGINEERED FILMS
  Fiscal 2006 versus fiscal 2005
  
 Fiscal 2005 versus fiscal 2004
  Prospects
  RAVEN 2006 Annual Report




---



##### 



ELECTRONIC SYSTEMS
  Fiscal 2006 versus fiscal 2005
  
 Fiscal 2005 versus fiscal 2004
  Prospects
  AEROSTAR
  Fiscal 2006 versus fiscal 2005
  
 RAVEN 2006 Annual Report




---



##### 



Fiscal 2005 versus fiscal 2004
  Prospects
  DIVESTITURES AND OTHER REPOSITIONING ACTIVITIES
  EXPENSES, INCOME TAXES AND OTHER
   
 RAVEN 2006 Annual Report




---



##### 



LIQUIDITY AND CAPITAL RESOURCES
  Dollars in thousands
    
    2006
    
    2005
    
    2004Operating activities
    
    $
    21,189
    
    
    $
    18,871
    
    
    $
    19,732Investing activities
    
    
    (11,435
    )
    
    
    (7,631
    )
    
    
    (4,352
    )Financing activities
    
    
    (6,946
    )
    
    
    (19,063
    )
    
    
    (6,155
    )
 OPERATING ACTIVITIES AND CASH POSITION
   INVESTING ACTIVITIES
  
 RAVEN 2006 Annual Report




---



##### 



FINANCING ACTIVITIES
    FY 2008-
    
    FY 2010-Dollars in thousands
    
    Total
    
    FY 2007
    
    FY 2009
    
    FY 2011Contractual Obligations:Line of credit(a)
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Capital leases
    
    
    16
    
    
    
    7
    
    
    
    9
    
    
    
    Operating leases
    
    
    557
    
    
    
    272
    
    
    
    279
    
    
    
    6Unconditional purchase
obligations(b)
    
    
    29,293
    
    
    
    29,293
    
    
    
    
    
    
    
    Real estate purchase agreement
    
    
    1,756
    
    
    
    1,756
    
    
    
    
    
    
    
    31,622
    
    
    
    31,328
    
    
    
    288
    
    
    
    6Other Commercial Commitments:Letters of credit
    
    
    2,032
    
    
    
    2,032
    
    
    
    
    
    
    
    $
    33,654
    
    
    $
    33,360
    
    
    $
    288
    
    
    $
    6
 
 (a)
    
    $8.0 million line bears interest at 7.25% as of January 31, 2006, and expires June 2006. The
line of credit is reduced by outstanding letters of credit.(b)
    
    Unconditional purchase obligations
include $5.2 million for Engineered Films capital equipment investments. CAPITAL REQUIREMENTS
  RAVEN 2006 Annual Report




---



##### 



CRITICAL
ACCOUNTING POLICIES AND NEW ACCOUNTING STANDARDS
 CRITICAL ACCOUNTING POLICIES
  Inventories
  Warranty
  Allowance for Doubtful Accounts
  
 Revenue Recognition
  RAVEN 2006 Annual Report




---



##### 



Self-insurance Reserves
  Goodwill and Long-lived Asset Impairment
  
 NEW ACCOUNTING STANDARDS
 Share-Based Payment, Accounting for Stock Issued to Employees, Statement of Cash Flows.
 RAVEN 2006 Annual Report




---



##### 



Accounting Changes and Error Corrections. Accounting
Changes, Reporting Accounting Changes in Interim Financial Statements.
 Determining Amortization Period for Leasehold Improvements.
 RAVEN 2006 Annual Report




---



##### 



QUARTERLY
INFORMATION
(Unaudited)
 Net Income
    
    
    Common Stock
    
    
    CashDollars in thousands,
    
    Net
    
    
    Gross
    
    
    Operating
    
    
    Pretax
    
    
    Net
    
    
    Per Share (a)(b)
    
    
    Market Price(b)
    
    
    Dividendsexcept per-share data
    
    Sales
    
    
    Profit
    
    
    Income
    
    
    Income
    
    
    Income
    
    
    Basic
    
    
    Diluted
    
    
    High
    
    
    Low
    
    
    Per Share(b)FISCAL 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
    (c)Third Quarter
    
    
    48,597
    
    
    
    12,962
    
    
    
    8,099
    (d)
    
    
    8,115
    (d)
    
    
    5,194
    (d)
    
    
    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
    
    
    $
    0.845FISCAL 2004First Quarter
    
    $
    36,942
    
    
    $
    9,437
    
    
    $
    6,544
    
    
    $
    6,556
    
    
    $
    4,183
    
    
    $
    0.23
    
    
    $
    0.23
    
    
    $
    9.50
    
    
    $
    7.56
    
    
    $
    0.040Second Quarter
    
    
    36,110
    
    
    
    7,811
    
    
    
    4,937
    
    
    
    4,976
    
    
    
    3,163
    
    
    
    0.17
    
    
    
    0.17
    
    
    
    11.00
    
    
    
    7.90
    
    
    
    0.040Third Quarter
    
    
    36,081
    
    
    
    9,219
    
    
    
    6,121
    
    
    
    6,126
    
    
    
    3,902
    
    
    
    0.22
    
    
    
    0.21
    
    
    
    13.73
    
    
    
    10.62
    
    
    
    0.045Fourth Quarter
    
    
    33,594
    
    
    
    7,292
    
    
    
    4,024
    
    
    
    4,058
    
    
    
    2,588
    
    
    
    0.14
    
    
    
    0.14
    
    
    
    15.23
    
    
    
    11.89
    
    
    
    0.045Total Year
    
    $
    142,727
    
    
    $
    33,759
    
    
    $
    21,626
    
    
    $
    21,716
    
    
    $
    13,836
    
    
    $
    0.77
    
    
    $
    0.75
    
    
    $
    15.23
    
    
    $
    7.56
    
    
    $
    0.170
 
 (a)
    
    Net income per share is computed discretely by quarter and
may not add to the full year.(b)
    
    All per-share and market price
data reflect the October 2004 two-for-one stock split.(c)
    
    A special
dividend of $.625 per share was paid during the second quarter of
fiscal 2005.(d)
    
    Includes a pretax $1.3 million ($845,000 net of tax) writeoff of assets related to the Fluent
Systems product line (See Note 5). RAVEN 2006 Annual Report




---



##### 



MANAGEMENTS REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
   Internal Control  Integrated Framework,
  -s- Ronald M. Moquist
    
    -s- Thomas lacarellaRonald M. Moquist
    
    Thomas lacarellaPresident & Chief Executive Officer
    
    Vice President & Chief Financial OfficerMarch 23, 2006
 RAVEN 2006 Annual Report




---



##### 



CONSOLIDATED
BALANCE SHEETS
 As of January 31Dollars in thousands, except per-share data
    
    2006
    
    
    2005
    
    
    2004ASSETSCurrent assetsCash and cash equivalents
    
    $
    9,409
    
    
    $
    6,619
    
    
    $
    14,442Short-term investments
    
    
    2,000
    
    
    
    3,000
    
    
    
    4,000Accounts receivable, net
    
    
    29,290
    
    
    
    25,370
    
    
    
    18,454Inventories, net
    
    
    27,819
    
    
    
    23,315
    
    
    
    16,763Deferred income taxes
    
    
    1,746
    
    
    
    1,465
    
    
    
    1,313Prepaid expenses and other current assets
    
    
    1,081
    
    
    
    1,823
    
    
    
    738Total current assets
    
    
    71,345
    
    
    
    61,592
    
    
    
    55,710Property, plant and equipment, net
    
    
    25,602
    
    
    
    19,964
    
    
    
    15,950Goodwill
    
    
    6,401
    
    
    
    5,933
    
    
    
    6,776Other assets, net
    
    
    2,809
    
    
    
    1,020
    
    
    
    1,072Total assets
    
    $
    106,157
    
    
    $
    88,509
    
    
    $
    79,508LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilitiesCurrent portion of long-term debt
    
    $
    7
    
    
    $
    57
    
    
    $
    72Accounts payable
    
    
    8,179
    
    
    
    10,322
    
    
    
    3,666Accrued liabilities
    
    
    11,147
    
    
    
    9,716
    
    
    
    7,784Customer advances
    
    
    717
    
    
    
    855
    
    
    
    373Total current liabilities
    
    
    20,050
    
    
    
    20,950
    
    
    
    11,895Long-term debt, less current portion
    
    
    9
    
    
    
    
    
    
    
    57Other liabilities, primarily compensation and benefits
    
    
    1,709
    
    
    
    1,477
    
    
    
    1,085Commitments and contingenciesShareholders equity
    
    
    84,389
    
    
    
    66,082
    
    
    
    66,471Common shares, par value $1.00 per shareAuthorized
 100,000,000Outstanding
 2006: 18,072,369; 2005: 17,999,468
2004: 18,041,088 (9,020,544 pre-split)Total liabilities and shareholders equity
    
    $
    106,157
    
    
    $
    88,509
    
    
    $
    79,508
 The accompanying notes are an integral part of the consolidated financial statements.
 RAVEN 2006 Annual Report




---



##### 



CONSOLIDATED STATEMENTS OF INCOME
 For the years ended January 31Dollars in thousands, except per-share data
    
    2006
    
    
    2005
    
    
    2004Net sales
    
    $
    204,528
    
    
    $
    168,086
    
    
    $
    142,727Cost of goods sold
    
    
    151,297
    
    
    
    124,886
    
    
    
    108,968Gross profit
    
    
    53,231
    
    
    
    43,200
    
    
    
    33,759Selling, general and administrative expenses
    
    
    15,868
    
    
    
    14,056
    
    
    
    11,960Loss on disposition of businesses and assets, net
    
    
    79
    
    
    
    1,282
    
    
    
    173Operating income
    
    
    37,284
    
    
    
    27,862
    
    
    
    21,626Interest expense
    
    
    35
    
    
    
    35
    
    
    
    70Other income, net
    
    
    (245
    )
    
    
    (128
    )
    
    
    (160
    )Income before income taxes
    
    
    37,494
    
    
    
    27,955
    
    
    
    21,716Income taxes
    
    
    13,232
    
    
    
    10,064
    
    
    
    7,880Net income
    
    $
    24,262
    
    
    $
    17,891
    
    
    $
    13,836Net income per common share basic
    
    $
    1.34
    
    
    $
    0.99
    
    
    $
    0.77 diluted
    
    $
    1.32
    
    
    $
    0.97
    
    
    $
    0.75
 The accompanying notes are an integral part of the consolidated financial statements.
 RAVEN 2006 Annual Report




---



##### 



CONSOLIDATED
STATEMENTS OF
 SHAREHOLDERS
EQUITY AND COMPREHENSIVE INCOME
 Accumulated$1 Par
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    OtherCommon
    
    
    Paid-in
    
    
    Treasury stock
    
    
    Retained
    
    
    ComprehensiveDollars in thousands, except per-share data
    
    Stock
    
    
    Capital
    
    
    Shares
    
    
    Cost
    
    
    Earnings
    
    
    Income
    
    
    TotalBalance January 31, 2003
    
    $
    15,856
    
    
    $
    340
    
    
    
    (6,789,268
    )
    
    $
    (35,113
    )
    
    $
    77,153
    
    
    $
    
    
    
    $
    58,236Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,836
    
    
    
    
    
    
    
    13,836Cash dividends ($.170 per share)(a)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,075
    )
    
    
    
    
    
    
    (3,075
    )Purchase of stock
    
    
    
    
    
    
    
    
    
    
    (144,175
    )
    
    
    (3,068
    )
    
    
    
    
    
    
    
    
    
    
    (3,068
    )Purchase and retirement of stock
    
    
    (39
    )
    
    
    (804
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (843
    )Employees stock options exercised
    
    
    137
    
    
    
    435
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    572Stock compensation expense
    
    
    
    
    
    
    282
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    282Tax benefit from exercise of stock options
    
    
    
    
    
    
    531
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    531Balance January 31, 2004
    
    
    15,954
    
    
    
    784
    
    
    
    (6,933,443
    )
    
    
    (38,181
    )
    
    
    87,914
    
    
    
    
    
    
    
    66,471Net 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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    512Stock compensation expense
    
    
    
    
    
    
    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
    
    
    
    
    
    
    
    24,262Change in cumulative foreign
currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13
    
    
    
    13Cash 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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    578Stock compensation expense
    
    
    
    
    
    
    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
    
    
    $
    84,389
 
 (a)
    
    Reflects the October 2004 two-for-one stock split. The accompanying notes are an integral part of the consolidated financial statements.
 RAVEN 2006 Annual Report




---



##### 



CONSOLIDATED STATEMENTS OF CASH FLOWS
 For the years ended January 31Dollars in thousands
    
    2006
    
    
    2005
    
    
    2004Cash flows from operating activitiesNet income
    
    $
    24,262
    
    
    $
    17,891
    
    
    $
    13,836Adjustments to reconcile net income to net cash provided by operating activities:Depreciation
    
    
    4,684
    
    
    
    3,410
    
    
    
    3,674Amortization of intangible assets
    
    
    467
    
    
    
    431
    
    
    
    471Provision for losses on accounts receivable, net of recoveries
    
    
    78
    
    
    
    34
    
    
    
    67Loss on disposition of businesses and assets
    
    
    79
    
    
    
    1,282
    
    
    
    173Deferred income taxes
    
    
    (809
    )
    
    
    (31
    )
    
    
    254Stock compensation expense
    
    
    485
    
    
    
    309
    
    
    
    282Change in operating assets and liabilities, net of effects from acquisition and
disposition of businesses and assets
    
    
    (8,086
    )
    
    
    (4,669
    )
    
    
    850Other operating activities, net
    
    
    29
    
    
    
    214
    
    
    
    125Net cash provided by operating activities
    
    
    21,189
    
    
    
    18,871
    
    
    
    19,732Cash flows from investing activitiesCapital expenditures
    
    
    (10,358
    )
    
    
    (7,541
    )
    
    
    (3,330
    )Purchase of short-term investments
    
    
    (4,500
    )
    
    
    (3,000
    )
    
    
    (4,000
    )Sale of short-term investments
    
    
    5,500
    
    
    
    4,000
    
    
    
    4,000Acquisition of businesses
    
    
    (2,828
    )
    
    
    (414
    )
    
    
    (1,038
    )Sales of businesses and assets, net of cash sold
    
    
    
    
    
    
    
    
    
    
    257Sale of (investment in) unconsolidated affiliate
    
    
    650
    
    
    
    (650
    )
    
    
    Other investing activities, net
    
    
    101
    
    
    
    (26
    )
    
    
    (241
    )Net cash used in investing activities
    
    
    (11,435
    )
    
    
    (7,631
    )
    
    
    (4,352
    )Cash flows from financing activitiesProceeds from borrowing under line of credit
    
    
    4,500
    
    
    
    
    
    
    
    Repayment on borrowing under line of credit
    
    
    (4,500
    )
    
    
    
    
    
    
    Long-term debt principal payments
    
    
    (63
    )
    
    
    (72
    )
    
    
    (141
    )Dividends paid
    
    
    (5,056
    )
    
    
    (15,298
    )
    
    
    (3,075
    )Purchase of treasury stock
    
    
    (1,689
    )
    
    
    (3,519
    )
    
    
    (3,068
    )Other financing activities, net
    
    
    (138
    )
    
    
    (174
    )
    
    
    129Net cash used in financing activities
    
    
    (6,946
    )
    
    
    (19,063
    )
    
    
    (6,155
    )Effect of exchange rate changes on cash
    
    
    (18
    )
    
    
    
    
    
    
    Net increase (decrease) in cash and cash equivalents
    
    
    2,790
    
    
    
    (7,823
    )
    
    
    9,225Cash and cash equivalents at beginning of year
    
    
    6,619
    
    
    
    14,442
    
    
    
    5,217Cash and cash equivalents at end of year
    
    $
    9,409
    
    
    $
    6,619
    
    
    $
    14,442
 The accompanying notes are an integral part of the consolidated financial statements.
 RAVEN 2006 Annual Report




---



##### 



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
  Buildings and improvements
    
    7 to 39 yearsMachinery and equipment
    
    3 to 7 years
  INTANGIBLE ASSETS
  GOODWILL
  RAVEN 2006 Annual Report




---



##### 



LONG-LIVED ASSETS
  INSURANCE OBLIGATIONS
  CONTINGENCIES
  REVENUE RECOGNITION
  WARRANTIES
  RESEARCH AND DEVELOPMENT
  STOCK-BASED COMPENSATION
 Accounting for Stock-Based
Compensation Accounting for Stock-Based Compensation-Transition and
Disclosure.
 INCOME TAXES
 Application of FASB Statement
No. 109, Accounting for Income Taxes, to the Tax Deduction on
Qualified Production Activities Provided by the American Jobs
Creation Act of 2004,
 STOCK SPLITS
  RAVEN 2006 Annual Report




---



##### 



NOTES TO FINANCIAL STATEMENTS (continued)
 NEW ACCOUNTING STANDARDS
 Share-Based Payment, Accounting for Stock Issued to Employees, Statement of Cash Flows.
 Accounting Changes and Error Corrections. Accounting Changes, Reporting Accounting Changes in Interim Financial Statements.
 Determining the Amortization Period for Leasehold Improvements.
 Note 2. Selected Balance Sheet Information
  As of January 31Dollars in thousands
    
    2006
    
    2005
    
    2004Accounts receivable, net:Trade accounts
    
    $
    29,547
    
    
    $
    25,635
    
    
    $
    18,719Allowance for doubtful accounts
    
    
    (257
    )
    
    
    (265
    )
    
    
    (265
    )$
    29,290
    
    
    $
    25,370
    
    
    $
    18,454Inventories, net:Finished goods
    
    $
    3,504
    
    
    $
    3,538
    
    
    $
    2,500In process
    
    
    3,652
    
    
    
    2,820
    
    
    
    2,120Materials
    
    
    20,663
    
    
    
    16,957
    
    
    
    12,143$
    27,819
    
    
    $
    23,315
    
    
    $
    16,763Property, plant and equipment, net:Land
    
    $
    1,084
    
    
    $
    1,084
    
    
    $
    1,110Building and improvements
    
    
    16,662
    
    
    
    15,184
    
    
    
    13,049Machinery and equipment
    
    
    43,256
    
    
    
    36,486
    
    
    
    32,479Accumulated depreciation
    
    
    (35,400
    )
    
    
    (32,790
    )
    
    
    (30,688
    )$
    25,602
    
    
    $
    19,964
    
    
    $
    15,950Other assets, net:Amortizable assets:Purchased technology
    
    $
    3,380
    
    
    $
    1,080
    
    
    $
    1,250Other intangibles
    
    
    1,265
    
    
    
    946
    
    
    
    1,136Accumulated amortization
    
    
    (2,300
    )
    
    
    (1,831
    )
    
    
    (1,494
    )2,345
    
    
    
    195
    
    
    
    892Investment in unconsolidated affiliate
    
    
    
    
    
    
    650
    
    
    
    Deferred income taxes
    
    
    318
    
    
    
    
    
    
    
    Other, net
    
    
    146
    
    
    
    175
    
    
    
    180$
    2,809
    
    
    $
    1,020
    
    
    $
    1,072Accrued liabilities:Salaries and benefits
    
    $
    2,167
    
    
    $
    1,992
    
    
    $
    1,875Vacation
    
    
    2,119
    
    
    
    1,852
    
    
    
    1,638401(k) contributions
    
    
    1,049
    
    
    
    980
    
    
    
    906Insurance obligations
    
    
    1,632
    
    
    
    1,541
    
    
    
    524Income taxes
    
    
    808
    
    
    
    567
    
    
    
    267Profit sharing
    
    
    1,168
    
    
    
    900
    
    
    
    544Warranty
    
    
    569
    
    
    
    452
    
    
    
    263Other
    
    
    1,635
    
    
    
    1,432
    
    
    
    1,767$
    11,147
    
    
    $
    9,716
    
    
    $
    7,784
 RAVEN 2006 Annual Report




---



##### 



Note 3. Supplemental Cash Flow Information
 For the years ended January 31Dollars in thousands
    
    2006
    
    2005
    
    2004Changes in operating assets and liabilities, net of
effects from the acquisition and sale of businesses:Accounts receivable
    
    $
    (3,821
    )
    
    $
    (6,950
    )
    
    $
    (2,072
    )Inventories
    
    
    (4,356
    )
    
    
    (6,704
    )
    
    
    4,603Prepaid expenses and other assets
    
    
    (103
    )
    
    
    150
    
    
    
    (16
    )Accounts payable
    
    
    (2,688
    )
    
    
    6,576
    
    
    
    (1,625
    )Accrued and other liabilities
    
    
    3,021
    
    
    
    1,777
    
    
    
    187Customer advances
    
    
    (139
    )
    
    
    482
    
    
    
    (227
    )$
    (8,086
    )
    
    $
    (4,669
    )
    
    $
    850Cash paid during the year for:Interest
    
    $
    35
    
    
    $
    77
    
    
    $
    50Income taxes
    
    $
    12,806
    
    
    $
    9,596
    
    
    $
    7,014
 Note 4. Montgomery Industries Acquisition
    Note 5. Fluent Systems
   Note 6. Divestitures and Other
Repositioning Activities
  Note 7. Goodwill and Other Intangibles
 Goodwill
  Flow
    
    Engineered
    
    ElectronicDollars in thousands
    
    Controls
    
    Films
    
    Systems
    
    Aerostar
    
    TotalBalance at January 31, 2003
    
    $
    4,940
    
    
    $
    96
    
    
    $
    433
    
    
    $
    464
    
    
    $
    5,933Goodwill acquired during year
    
    
    843
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    843Balance 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 year
    
    
    285
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    285Acquisition earn-outs
    
    
    183
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    183Balance at January 31, 2006
    
    $
    5,408
    
    
    $
    96
    
    
    $
    433
    
    
    $
    464
    
    
    $
    6,401
 Intangible Assets
  RAVEN 2006 Annual Report




---



##### 



NOTES TO FINANCIAL STATEMENTS (continued)
 Note 8. Employee Retirement Benefits
  Accounting for Postretirement Benefits Other Than Pensions.
 For the years ended January 31Dollars in thousands
    
    2006
    
    2005
    
    2004Benefit obligation at beginning of year
    
    $
    2,722
    
    
    $
    2,607
    
    
    $
    2,235Service cost
    
    
    80
    
    
    
    58
    
    
    
    36Interest cost
    
    
    259
    
    
    
    186
    
    
    
    162Actuarial loss
    
    
    2,014
    
    
    
    27
    
    
    
    380Retiree benefits paid
    
    
    (147
    )
    
    
    (156
    )
    
    
    (206
    )Benefit obligation at end of year
    
    
    4,928
    
    
    
    2,722
    
    
    
    2,607Less: unrecognized actuarial losses
    
    
    (3,045
    )
    
    
    (1,275
    )
    
    
    (1,395
    )Ending liability balance
    
    $
    1,883
    
    
    $
    1,447
    
    
    $
    1,212
  For the years ended January 31Dollars in thousands
    
    2006
    
    2005
    
    2004Beginning liability balance
    
    $
    1,447
    
    
    $
    1,212
    
    
    $
    1,102Employer expense
    
    
    583
    
    
    
    391
    
    
    
    316Retiree benefits paid
    
    
    (147
    )
    
    
    (156
    )
    
    
    (206
    )Ending liability balance
    
    
    1,883
    
    
    
    1,447
    
    
    
    1,212Current portion
    
    
    (174
    )
    
    
    (180
    )
    
    
    (200
    )Long-term portion
    
    $
    1,709
    
    
    $
    1,267
    
    
    $
    1,012Assumptions used:Discount rate
    
    
    5.75
    %
    
    
    7.00
    %
    
    
    7.00
    %Wage inflation rate
    
    
    4.00
    %
    
    
    4.00
    %
    
    
    4.00
    %
   Note 9. Warranties
  As of January 31Dollars in thousands
    
    2006
    
    2005
    
    2004Beginning balance
    
    $
    452
    
    
    $
    263
    
    
    $
    156Accrual for warranties
    
    
    958
    
    
    
    932
    
    
    
    863Settlements made (in cash or in kind)
    
    
    (841
    )
    
    
    (743
    )
    
    
    (756
    )Ending balance
    
    $
    569
    
    
    $
    452
    
    
    $
    263
 Note 10. Income Taxes
  For the years ended January 312006
    
    2005
    
    2004Tax 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
    
    
    
    0.9
    
    
    
    0.9Tax deduction on qualified production activities
    
    
    (1.0
    )
    
    
    
    
    
    
    Other, net
    
    
    0.2
    
    
    
    0.1
    
    
    
    0.435.3
    %
    
    
    36.0
    %
    
    
    36.3
    %
  For the years ended January 31Dollars in thousands
    
    2006
    
    2005
    
    2004Income taxes:Currently payable
    
    $
    14,041
    
    
    $
    10,095
    
    
    $
    7,626Deferred
    
    
    (809
    )
    
    
    (31
    )
    
    
    254$
    13,232
    
    
    $
    10,064
    
    
    $
    7,880
  As of January 31Dollars in thousands
    
    2006
    
    2005
    
    2004Current deferred tax assets:Accounts receivable
    
    $
    88
    
    
    $
    93
    
    
    $
    93Inventories
    
    
    220
    
    
    
    237
    
    
    
    182Accrued vacation
    
    
    680
    
    
    
    591
    
    
    
    532Insurance obligations
    
    
    282
    
    
    
    161
    
    
    
    183Other accrued liabilities
    
    
    476
    
    
    
    383
    
    
    
    3231,746
    
    
    
    1,465
    
    
    
    1,313Non-current deferred tax assets (liabilities):Accrued compensation and benefits
    
    
    598
    
    
    
    443
    
    
    
    354Depreciation and amortization
    
    
    (439
    )
    
    
    (771
    )
    
    
    (502
    )Other
    
    
    159
    
    
    
    118
    
    
    
    75318
    
    
    
    (210
    )
    
    
    (73
    )Net deferred tax asset
    
    $
    2,064
    
    
    $
    1,255
    
    
    $
    1,240
  RAVEN 2006 Annual Report




---



##### 



Note 11. Financing Arrangements
    Note 12. Stock Options
   For the years ended January 312006
    
    2005
    
    2004Risk-free interest rate
    
    
    4.36
    %
    
    
    3.51
    %
    
    
    3.02
    %Expected dividend yield
    
    
    0.90
    %
    
    
    1.07
    %
    
    
    1.33
    %Expected volatility factor
    
    
    39.25
    %
    
    
    34.92
    %
    
    
    35.89
    %Expected option term (in years)
    
    
    4.25
    
    
    
    4.50
    
    
    
    4.50Weighted average grant date fair value
    
    $
    10.90
    
    
    $
    5.91
    
    
    $
    4.11Stock compensation expense
    
    $
    485,000
    
    
    $
    309,000
    
    
    $
    282,000
  For the years ended January 312006
    
    
    2005
    
    
    2004weighted
    
    
    
    
    
    
    weighted
    
    
    
    
    
    
    weightedaverage
    
    
    
    
    
    
    average
    
    
    
    
    
    
    averageexercise
    
    
    
    
    
    
    exercise
    
    
    
    
    
    
    exerciseoptions
    
    
    price
    
    
    options
    
    
    price
    
    
    options
    
    
    priceOutstanding at beginning
of year
    
    
    612,176
    
    
    $
    9.02
    
    
    
    723,676
    
    
    $
    5.89
    
    
    
    872,112
    
    
    $
    3.72Granted
    
    
    76,500
    
    
    
    31.05
    
    
    
    86,600
    
    
    
    22.00
    
    
    
    129,000
    
    
    
    13.50Exercised
    
    
    (167,962
    )
    
    
    3.44
    
    
    
    (184,600
    )
    
    
    2.77
    
    
    
    (274,436
    )
    
    
    2.61Forfeited
    
    
    (1,300
    )
    
    
    17.93
    
    
    
    (13,500
    )
    
    
    9.79
    
    
    
    (3,000
    )
    
    
    2.65Outstanding at
end of year
    
    
    519,414
    
    
    $
    14.05
    
    
    
    612,176
    
    
    $
    9.02
    
    
    
    723,676
    
    
    $
    5.89Options exercisable
at end of year
    
    
    282,383
    
    
    $
    8.66
    
    
    
    323,076
    
    
    $
    5.27
    
    
    
    326,608
    
    
    $
    3.57
  RemainingExercise
    
    Contractual
    
    Number
    
    NumberPrice
    
    Life (Years)
    
    Outstanding
    
    Exercisable$  4.38
    
    
    0.75
    
    
    
    91,489
    
    
    
    91,4897.00
    
    
    1.75
    
    
    
    146,075
    
    
    
    109,55613.50
    
    
    2.75
    
    
    
    120,000
    
    
    
    60,00022.00
    
    
    3.75
    
    
    
    85,350
    
    
    
    21,33831.05
    
    
    4.75
    
    
    
    76,500
    
    
    
    519,414
    
    
    
    282,383
 RAVEN 2006 Annual report




---



##### 



NOTES
TO FINANCIAL STATEMENTS (continued)
 Note 13. Net Income Per Share
  For the years ended January 31Dollars in thousands, except per-share amounts
    
    2006
    
    2005
    
    2004Net income
    
    $
    24,262
    
    
    $
    17,891
    
    
    $
    13,836Weighted-average common
shares outstanding
    
    
    18,055,439
    
    
    
    18,066,223
    
    
    
    18,081,712Dilutive impact of stock options
    
    
    259,104
    
    
    
    344,104
    
    
    
    407,868Weighted-average common and
common-equivalent shares
outstanding
    
    
    18,314,543
    
    
    
    18,410,327
    
    
    
    18,489,580Net income per common share: basic
    
    $
    1.34
    
    
    $
    0.99
    
    
    $
    0.77 diluted
    
    $
    1.32
    
    
    $
    0.97
    
    
    $
    0.75
 Note 14. Comprehensive Income
 Reporting Comprehensive Income,
 As of January 31Dollars in thousands
    
    2006
    
    2005
    
    2004Net Income
    
    $
    24,262
    
    
    $
    17,891
    
    
    $
    13,836Foreign currency translation adjustments
    
    
    13
    
    
    
    
    
    
    
    Total comprehensive income
    
    $
    24,275
    
    
    $
    17,891
    
    
    $
    13,836
 Note 15. Business Segments and Major Customer Information
  Disclosures about Segments of an Enterprise and Related Information.
    Note 16. Subsequent Event
  Note 17. Quarterly Information (Unaudited)
  RAVEN 2006 Annual Report




---



##### 



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 To the Board of Directors and Shareholders of Raven Industries, Inc:
  Consolidated financial statements
  Internal control over financial reporting
 Internal Control  Integrated Framework Internal Control  Integrated Framework
   
 RAVEN 2006 Annual Report




---



##### 



Independent Registered Public
Accounting Firm
 Stock Transfer Agent & Registrar
Wells Fargo Bank, N.A.
 Form 10-K
 Direct inquires to:
Raven Industries, Inc.
 Raven Website
 Stock Quotations
 Annual Meeting
  Dividend Reinvestment Plan
 SIC Codes:  3672
 
  FORWARD-LOOKING STATEMENTS