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Raven Industries Reports Fourth Quarter And Fiscal 2010 Results

Breakthrough Year at Aerostar

Aerostar's sales in fiscal 2010 of $27.2 million were relatively flat. Its annual operating income, at $5.6 million, grew 34 percent compared with $4.2 million.  

In the fourth quarter, revenues fell 12 percent to $8.9 million versus $10.2 million. Sales in the previous year were aided by $3 million of parachute revenues that were delayed from earlier in that year. Operating income, at $2.1 million, increased 17 percent from $1.8 million as a result of improved production efficiencies and product mix.

Higher profitability in military parachutes and growing demand for aerostats fueled Aerostar's sales and income growth for the year.  The Company completed the final year of a four-year contract for MC-6 parachutes. This was the most profitable year for the program because of higher efficiency levels. Moquist added, "In the current year, we begin shipments of the T-11 parachute for Army Airborne. We expect this to be a four- to five-year contract at an annual run rate of $12 million.  Initial margins will be lower as we work up the learning curve.  Tethered aerostat backlog now exceeds $10 million. These will be paired with surveillance equipment and deployed in Afghanistan."

Healthy Balance Sheet and Cash Flows

At January 31, 2010, cash and investment balances were $43.7 million, up from $16.3 million a year ago. This reflects healthy operating cash flows and the decision to reduce capital spending by $4.7 million from the prior year, to $3.3 million. Capital spending is expected to increase to $8 million in the coming year, with investments in new film capabilities and our Slingshot™ precision ag platform.

Operating cash flows continued to be strong, at $47.6 million versus $39.0 million at the end of fiscal 2009. Working capital levels reflected both lower business levels and improved performance. Accounts receivable decreased to $34.3 million compared with $40.3 million at January 31, 2009. Inventory was down $1.5 million to $34.5 million.  

In November 2009, investments in SST and Ranchview used $6.5 million of cash. In November 2008, a special cash dividend of $22.5 million, or $1.25 per share, was paid to shareholders. For the year just ended, Raven paid regular cash dividends of $9.9 million, or 55 cents per share, an increase of 3 cents, or 5.8 percent, over the prior year.

Finding Opportunity in a Bad Economy

"We don't see the economy improving much in the coming year," said Moquist. "Business spending remains soft as consumers continue to exercise caution.

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