Applied Technology designs, manufactures, sells, and services innovative precision agriculture products and information management tools that help growers reduce costs, decreasemore precisely control inputs, and improve farm yields around the world.yields.  The Applied Technology product families include field computers, application controls, GPS-guidance and assisted-steeringsteering systems, automatic boom controls, injection systems, and planter controls, and harvestseeder controls. Applied Technology's services include high-speed in-field Internet connectivity and cloud-based data management. The Company's investment in Site-Specific Technology Development Group, Inc. (SST), a software company, and the continued build-out of the Slingshot™ platform have has also

positioned Applied Technology as an information platform that improves grower decision-making and achieves business efficiencies for ourits agriculture retail partners.

Applied Technology sells its precision agriculture control products to both original equipment manufacturers (OEMs) and through aftermarket distribution partners in the United States and in most major agricultural areas around the world. Applied Technology has personnel and third-party distribution representatives located in the U.S. and key geographic areas throughout the world. The Company's competitive advantage in this segment is designing and selling easy to use, reliable, and innovative value-added products that are supported by an industry-leading service and support team.

Engineered Films produces high-performance plastic films and sheeting for energy,geomembrane, agricultural, construction, and industrial applications. Engineered Films acquired the assets of Colorado Lining International, Inc. (CLI) in September 2017. This acquisition enhanced the division's geomembrane market position through extended service and product offerings with the addition of new design-build and installation service components. The acquisition of CLI advanced Engineered Films’ business model into a vertically-integrated, full-service solutions provider for the geomembrane market.

Engineered Films sells both direct to end-customers and through independent third-party distributors. The majority of product sold into the construction and agriculture markets is through distributors, while sales into the geomembrane and industrial applications.

Aerostar serves the defense/aerospaceaerospace/defense, radar and situational awarenesslighter-than-air markets. Aerostar's primary products include high-altitude (stratospheric or lighter-than-air) balloons, tethered aerostats, and radar processing systems. These products can be integrated with additional third-party sensors to provide research, communications, and situational awareness capabilities to governmental and commercial customers. Aerostar’s growth strategy emphasizes the design and manufacture of proprietary products in these markets. In previous years, Aerostar also provided contract manufacturing services. During this last year the Company largely exited this business. Net sales from contract manufacturing in fiscal 2016 were $4.7 million, compared to $31.7 million in fiscal 2015 and $51.3 million in fiscal 2014. The planned wind-down of contract manufacturing is now complete.

Aerostar sells to government agencies oras both a prime contractor and subcontractor, and to commercial users primarily as a sub-contractor. The projects Aerostar bids on can be large-scale, with opportunities in the $10-$50 million range. Further, Direct Commercial Salessales to foreign governmentsgovernment agencies often involve large contracts subject to frequent delays because of budget uncertainties, regional military conflicts, and protracted negotiation processes. The timing and size of contract wins results incan create volatility in Aerostar’s results.

No customers accounted for 10% or more of consolidated sales in fiscal 2016. Sales to Brawler Industrial Fabrics, a customer in the Engineered Films Division, accounted for 14%, and 13% of consolidated sales in fiscal years 2015 and 2014.2018, 2017, or 2016.

Some seasonal demand exists in both the Applied Technology'sTechnology and Engineered Films divisions, primarily due to their respective exposure to the agricultural market. Applied Technology builds product inHowever, given the fall for winter and spring delivery. Certain sales to agricultural customers offer spring payment terms for fall and early winter shipments. The resultingoverall diversification of the Company, the seasonal fluctuations in inventory andnet working capital (accounts receivable, net plus inventories less accounts receivable have required, and may require, seasonal short-term financing.payable) are not usually significant.

The principal financial instruments that the Company maintains are cash, cash equivalents, short-term investments, accounts receivable, accounts payable, accrued liabilities, and acquisition-related contingent payments. The Company manages the interest rate, credit, and market risks associated with these accounts through periodic reviews of the carrying value of assets and liabilities and establishment of appropriate allowances in accordance with Company policies. The Company does not use off-balance sheet financing, except to enter into operating leases.

The Company obtains a wide variety of materials from numerous vendors. Principal materials include electronic components for Aerostar and Applied Technology and Aerostar, various plasticpolymeric resins for Engineered Films, and fabrics and film for Aerostar. Engineered Films has experienced volatile resin prices over the past three years. Price increases could not always be passed on to customers due to weak demand andand/or a competitive pricing environment. Predicting future material volatility and the related potential impact on the Company is not possible.easily estimated and the Company is unable to do so to the degree required to build reliance on such forecasts.

The Company owns a number of patents. The Company does not believe that its business, as a whole, is materially dependent on any one patent or related group of patents. As theThe Company continuesfocuses significant research and development effort to develop more technology-based offerings,offerings. As such, the protection of the Company’s intellectual property has becomeis an increasingly important strategic objective. Along with a morean aggressive posture toward patenting new technology and protecting trade secrets, the Company has restrictions on the disclosure of our technology to industry and business partners to ensure that our intellectual property is maintained and protected.

The three business segments conduct ongoing research and development efforts.(R&D) efforts to improve their product offerings and develop new products. Most of the Company's research and developmentR&D expenditures are directed toward new product development,development. R&D investment is particularly instrong within the Applied Technology Division. Total Company researchDevelopment of new technology and product enhancements within Applied Technology is a competitive differentiator and central to its long-term strategy. Engineered Films also utilizes R&D spending to develop new products and to value engineer and reformulate its products. These R&D investments deliver high-value film solutions to the markets it serves and also result in lower raw material costs and improved quality for existing product lines. Aerostar's investment in the development of new technology has a particular emphasis on its core stratospheric balloon platform. The Company's total R&D costs are presented in the Consolidated Statements of Income and Comprehensive Income.

The Company believes that, in all material respects, it is in compliance with applicable federal, state and local environmental laws and regulations. Expenditures incurred in the past relating to compliance for operating facilities have not significantly affected the Company's capital expenditures, earnings, or competitive position.

As of February 1, 2016,2018, the Company's order backlog totaled approximately $18.6$40.3 million. Backlog amounts as of February 1, 20152017 and 20142016 were $26.7$25.7 million and $51.8$18.6 million, respectively. Because the length of time between order and shipment varies considerably by business segment and customers can change delivery schedules or potentially cancel orders, the Company does not believe that backlog, as of any particular date, is necessarily indicative of actual net sales for any future period.

As of January 31, 2016,2018, the Company had approximately 910 employees.1,157 employees (including temporary workers). Following is a summary of active employees by segment: Applied Technology - 363;394; Engineered Films - 298;471; Aerostar - 175;195; and Corporate Services - 75.97. Management believes its employee relations are satisfactory.relationship with its employees is good.

The Company's business is subject to many risks. Set forthrisks, which by their nature are unpredictable or unquantifiable and may be unknown. In an attempt to provide you with information on potential risks the Company may encounter, we have provided below, what we believe are the most importantsignificant risks we face. In evaluatingthe Company could potentially face, based on our businessknowledge, experience, information and your investmentassumptions. The risks provided below should be assessed contemporaneously with other information contained in us, you should also considerthis Form 10-K, including Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” the risks and uncertainties addressed under "Forward-Looking Statements" on page 35, the Notes to the Consolidated Financial Statements on page 45, and other information presented in or incorporated by reference into this Annual Report on Form 10-K. The risks contained herein, as well as other statements in this 10-K are forward-looking statements and, as such, are uncertain. Such statements are

The Company's Applied Technology Division is largely dependent on the ability of farmers, agricultural service providers, and custom operatorsapplicators to purchase agricultural equipment, that includesincluding its products. If such farmers, agricultural service providers, or custom applicators experience adverse weather conditions or natural disasters resulting in poor growing conditions, or experience unfavorable crop prices or expenses, potential buyers may be less likely to purchase agricultural equipment. Conversely, if farmers experience favorable weather and growing conditions, high yields could result in unfavorable crop prices and lower farm income making potential buyers less likely to purchase agricultural equipment. Accordingly, weather conditions may adversely affectincomes, sales in the Applied Technology Division.Division may be adversely affected.

Weather conditions and natural disasters can also adversely affect sales in the Company's Engineered Films Division. To the extent weather conditions or natural disasters curtail construction or agricultural activity, such as a late spring or drought, sales of the segment'sdivision's plastic sheeting would likely decrease.

Seasonal weather-related and market demandweather-related variation could also affect quarterly results. If expected sales are deferred in a fiscal quarter while inventory has been built and operating expenses incurred, financial results could be negatively impacted.

The Company's Engineered Films Division consumesutilizes significant amounts of plasticpolymeric resin, the cost of which depends upon market prices for natural gas and oil and other market forces. These prices are subject to worldwide supply and demand as well as other factors beyond the control of the Company.our control. Although the Engineered Films Division is sometimes able to pass on such price increases to its customers, significant variations in the cost of plasticpolymeric resins can affect the Company's operating results from period to period. Unusual supply disruptions, such as one caused by a natural disaster, could cause suppliers to invoke “force majeure” clauses in their supply agreements, causing shortages of material. Success in offsetting higher raw material costs with price increases is largely influenced by competitive and economic conditions and could vary significantly depending on the market served. Unusual supply disruptions, such as one caused by a natural disaster, could cause suppliers to invoke "force majeure" clauses in their supply agreements, causing shortages in supply of material. If the Company is not able to fully offset the effects of adverse materials availability and correspondinglyor higher costs, financial results could be adversely affected.affected, which in turn could adversely affect our results of operations, financial condition, liquidity, and cash flows.

Electronic components used by both the Applied Technology Division and Aerostar Division are sometimes in short supply, impactingwhich may impact our ability to meet customer demand.

Agricultural income levels are affected by agricultural commodity prices and input costs. As a result, changes in commodity prices or input costs that reduce agricultural income levels could have a negative effect on the ability of growers and their service providers to purchase the Company's precision agriculture products manufactured by its Applied Technology Division.

Exploration for oil and natural gas fluctuates with their price and recent energy market conditions suggest that while end-market conditions are not likelysubject to deteriorate further, they are not likely to improve in the near term. Plasticvolatility. Certain plastic sheeting manufactured and sold by our Engineered Films Division is sold as pit and pond liners to contain water used in the drilling process.processes for these energy commodities. Lower prices for oil and natural gas could reduce exploration activities and demand for our products.

Plastic sheetingFilm manufacturing uses plasticpolymeric resins, which can be subject to changes in price as the cost of oil or natural gas or oil changes. Accordingly, volatility in oil and natural gas prices may negatively affect our raw material costs and cost of goods sold and potentially cause us to increase prices, which could adversely affect our sales and/or profitability.

The Company's operating results in Applied Technology, Engineered Films, and Aerostar depend upon the ability to renew the pipeline of new technologies and products and to bring those productsthese to market. This ability could be adversely affected by difficulties or delays in product development, such as the inability to identify viable new products, successfully complete research and development projects, obtain relevant regulatory approvals, obtain intellectual property protection, or gain market acceptance of new products and services. Because of the lengthy development process, technological challenges, and intense competition, there can be no assurance that any of the products the Company is currently developing, or could begin to develop in the future, will achieve substantial commercial success. Technical advancements in products may also increase the risk of product failure, increasing product returns or warranty claims and settlements. In addition, sales of the Company's new products could replace sales of some of its current products, offsetting the benefit of even a successful new product introduction.

The Company’s growth strategy relies on the design and manufacture of proprietary products. Highly technical, specialized product inventories may be more susceptible to fluctuations in market demand. If demand is unexpectedly low, write-downs or impairments of such inventory may become necessary. Either of these outcomes could adversely affect our results of operations. Start-up costs and inefficiencies can adversely affect operating results and such costs may not be recoverable in a proprietary product environment because the Company may not receive reimbursement from its customers for such costs.

Competition in agriculture markets could come from our current customers if original equipment manufacturers develop and integrate precision agriculture technology products themselves rather than purchasing from third parties, thereby reducing demand for Applied Technology’s products.

Regulatory restrictions could be placed on hydraulic fracturing activities because of environmental and health concerns, reducing demand for Engineered Film’s products. For Engineered Films, the development of alternative technologies, such as closed loop drilling processes that would reduce the need for pit liners in energy exploration, could also reduce demand for the Company’s products.

Aerostar’s future growth relies on sales of high-altitude balloons, as well as advanced radar systems and aerostats to international markets. In somelimited cases, such sales willmay be Direct Commercial Salesdirect commercial sales to foreign governments rather than Foreign Military Salesforeign military sales through the U.S. government. Direct Commercial Salescommercial sales to foreign governments often involve large contracts subject to frequent delays because of budget uncertainties, regional military conflicts, political instability, and protracted negotiation processes. Such delays could adversely affect our results of operations. The nature of these markets for Vista'scertain of Aerostar's advanced radar systems and Aerostar's aerostats makes these products particularly susceptible to fluctuations in market demand. Demand fluctuations and the likelihood of delays in sales involving large contracts for such products also increase the risk of these products becoming obsolete, increasing the risk associated with expected sales of such products. The value of aerostatcertain advanced radar systems and radar systemsaerostat inventory at January 31, 2016 is approximately $12 million.2018 was $1.6 million and $3.4 million, respectively. This valuation is based on an estimate that the market demand for these products will be sufficient in future periods such that these inventories will be sold at a price greater than carrying value.value and related selling costs. Write-downs or impairment of the value of such products carried in inventory could adversely affect our results of operations. To the extent products become obsolete or anticipated sales are not realized, our expected future cash flows could be adversely impacted. AnThis could also lead to an impairment, which could adversely impact the Company's results of operations and financial condition.

  

Sales of certain of Aerostar’s products into international markets increase the compliance risk associated with regulations such as The International Traffic in Arms Regulations (ITAR),and Foreign Corrupt Practices Act, as well as others, exposing the Company to fines and its employees to fines, imprisonment, or civil penalties. Potential consequences of a material violation of such regulations include damage to our reputation, litigation, and increased costs.

A significant portion of Aerostar's sales are to the U.S. government or U.S. government agencies as a prime or sub-contractor. Government spending has historically been cyclical. A decrease in U.S. government defense or near-space research spending or changes in spending allocations could result in one or more of the Company's programs being reduced, delayed, or terminated. Reductions in the Company's existing programs, unless offset by other programs and opportunities, could adversely affect its ability to sustain and grow its future sales and earnings. The Company's U.S. government sales are funded by the federal budget, which operates on an October-to-September fiscal year. Changes in congressional schedules, negotiations for program funding levels, reduced program funding due to U.S government debt limitations, automatic budget cuts ("sequestration"), or unforeseen world events can interrupt the funding for a program or contract. Funds for multi-year contracts can be changed in subsequent years in the appropriations process.

In addition, many U.S. government contracts are subject to a competitive bidding and funding process even after the award of the basic contract, adding an additional element of uncertainty to future funding levels. Delays in the funding process or changes in funding are common and can impact the timing of available funds or can lead to changes in program content or termination at the government's convenience. The loss of anticipated funding or the termination of multiple or large programs could have an adverse effect on the Company's future sales and earnings.

The Company's consolidated net sales to locations outside of the U.S. were $27.8$41.6 million in fiscal 2016,2018, representing approximately 11% of consolidated net sales. The Company's financial results could be affected by changes in trade, monetary and fiscal policies, laws and regulations, or other activities of U.S. and non-U.S. governments, agencies and similar organizations, along with changes in worldwide economic conditions. These conditions include, but are not limited to, changes in a country's or region's economic or political condition; trade regulations affecting production, pricing, and marketing of products; local labor conditions and regulations; reduced protection of intellectual property rights in some countries; changes in the regulatory or legal environment; restrictions on currency exchange activities; the impact of fluctuations in foreign currency exchange rates, which may affect product demand and may adversely affect the profitability of our products in U.S. dollars in foreign markets where payments are made in the local currency; burdensome taxes and tariffs; and other trade barriers. International risks and uncertainties also include changing social and economic conditions, terrorism, political hostilities and war, difficulty in enforcing agreements or collecting receivables, and increased transportation or other shipping costs. Any of these such risks could lead to reduced sales and reduced profitability associated with such sales.

The Company's results of operations are impacted by the market fundamentals of the primary industries served. Significant declines of economic activity in the agricultural, oil and gas exploration, construction, industrial, aerospace/aviation, defense, and other major markets served may adversely affect segment performance and consolidated results of operations.

The Company's business strategy includes the potential forpursuing future acquisitions. Acquisitions involve a number of risks, including integration of the acquired company with the Company's operations and unanticipated liabilities or contingencies related to the acquired company. Further, business strategies supported by the acquisition may be in perceived, or actual, opposition to strategies of certain of our customers and our business could be materially adversely affected if those relationships are terminated and the expected strategic benefits are delayed or are not achieved. The Company cannot ensure that the expected benefits of any acquisition will be realized. Costs could be incurred on pursuits or proposed acquisitions that have not yet or may not close, which could significantly impact the operating results, financial condition, or cash flows. Additionally, after the acquisition, unforeseen issues could arise, which adversely affect the anticipated returns or which are otherwise not recoverable as an adjustment to the purchase price. Other acquisition risks include delays in realizing benefits from the acquired companies or products; difficulties due to lack of or limited prior experience in any new product or geographic markets we enter; unforeseen adjustments, charges or write-offs; unforeseen losses of customers of, or suppliers to, acquired businesses; difficulties in retaining key employees of the acquired businesses; or challenges arising from increased geographic diversity and complexity of our operations and our information technology systems.

Total goodwill and intangible assets accountaccounted for approximately $60.6$57.3 million, or 20%approximately 18%, of the Company's total assets as of January 31, 2016.2018. The Company evaluates goodwill and intangible assets for impairment annually, or when evidence of potential impairment exists. The annual impairment test is based on several factors requiring judgment. Principally, a significant decrease in expected cash flows or changes in market conditions may indicate potential impairment of recorded goodwill or intangible assets. Our expected future cash flows are dependent on several factors, including revenue growth in certain of our product lines and an expectation that the pricing in commodities markets will recover in future periods.lines. Our expected future cash flows could be adversely impacted if our anticipated revenue growth is not realized or if pricing in commodities markets does not recover in future periods. AnReductions in cash flows could result in an impairment of goodwill and/or intangible assets, which could adversely impact the Company's results of operations and financial condition.

We depend on the performance of our board of directors, senior management team and other key employees, including experienced and skilled technical personnel.  The loss of certain members of our board of directors, senior management, including our Chief Executive Officer, or other key employees, could negatively impact our operating results and ability to execute our business strategy.  Our future success will also depend, in part, upon our ability to attract, train, motivate, and retain qualified board members, senior management and other key personnel.

The Company has developed significant proprietary technology and other rights that are used in its businesses. The Company relies on trade secret, copyright, trademark, and patent laws and contractual provisions to protect the Company's intellectual property. While the Company takes enforcement of these rights seriously, other companies, such as competitors or persons in related markets, in which the Company does not participate may attempt to copy or use the Company's intellectual property for their own benefit.

In addition, intellectual property of others also has an impact on the Company's ability to offer some of its products and services for specific uses or at competitive prices. Competitors' patents or other intellectual property may limit the Company's ability to offer products and services to its customers. Any infringement or claimed infringement ofby the Company on the intellectual property rights of others could result in litigation and adversely affect the Company's ability to continue to provide, or could increase the cost of providing, products and services.

Although the Company believes the probability of a materially adverse outcome is remote, if one or more claims were resolved against the Company in a reporting period for amounts in excess of management’s expectations, the Company’s consolidated financial statements may be materially adversely affected. Further, such an outcome could result in significant compensatory, punitive or trebled monetary damages, disgorgement of revenue or profits, remedial corporate measures or injunctive relief against the Company that could have a material adverse affect on its businesses, and financial condition, results of operation, and results. In addition, there may be no effective legal recourse against infringement of the Company's intellectual property by third parties, whether due to limitations on enforcement of rights in foreign jurisdictions or as a result of other factors.cash flows.

The Company increasingly relies on information technology systems to process, transmit, and store electronic information. In addition, a significant portion of internal communications, as well as communication with customers and suppliers, depends on

None.

Raven's corporate office is located in Sioux Falls, South Dakota. Along with the corporate headquarters building, the Company also owns separate manufacturing facilities for each of our business segments as well as various warehouses, training, and product development facilities in the immediate Sioux Falls area.

In addition to its Sioux Falls facilities, Applied Technology owns a product development facility in Austin, Texas and an idle manufacturing facility in St. Louis, Missouri that is actively being marketed for sale.Texas. Applied Technology also leases manufacturing, warehouse, research, and office facilities in Middenmeer, Netherlands and Geel, Belgium as well as in Winnipeg, Manitoba and office/warehouse space in Stockholm, Saskatchewan Canada. In addition,in Canada and in Brazil. Furthermore, Applied Technology leases smaller research and office facilities in South Dakota.

 

Engineered Films also has additional owned production and conversion facilities located in Madison and Brandon, South Dakota and in Midland and Pleasanton, Texas. In addition, Engineered Films leases a production and conversion facility in Parker, Colorado and Colton, California.

Aerostar also owns manufacturing, sewing, and research facilities located in Madison, South Dakota and Sulphur Springs, Texas. Aerostar's subsidiary Vista also leases facilities in Arlington, Virginia and in Monterey Chatsworth, and Sunnyvale,Chatsworth, California.

Most of the Company's manufacturing plants also serve as distribution centers and contain offices for sales, engineering, and manufacturing support staff. The Company believes that its properties are suitable and adequate to meet existing production needs. Although there is idle capacity available in the Engineered Films Division, the productive capacity in the Company's facilities is substantially being used. The Company also owns approximately 29.670 acres of undeveloped land adjacent to the other owned property, which is available for expansion.

The Company is responsible for investigation and remediation of environmental contamination at one of its sold facilities (see Item 1, Business - Environmental Matters of this Form 10-K). In addition, the Company is involved as a party in lawsuits, claims, regulatory inquiries, or disputes arising in the normal course of its business. Thebusiness, the potential costs and liability of such claimswhich cannot be determined at this time. Management believes that any liability resulting from these claims will be substantially mitigated by insurance coverage. Accordingly, management does not believe the ultimate outcomeoutcomes of these matters willits legal proceedings are likely to be significantmaterial to its results of operations, financial position, or cash flows. The previously disclosed patent infringement lawsuit in which Capstan Ag Systems, Inc. made certain infringement claims against the Company has been settled on a confidential basis.

The Company's common stock is traded on the NASDAQ Global Select Market under the ticker symbol RAVN. The following table shows quarterly unaudited financial results, quarterly high and low trade prices per share of the Company's common stock, as reported by the NASDAQ Global Select Market, and dividends declared for the periods indicated:

On November 3, 2014, the Company announced that its Board of Directors (Board) had authorized a $40.0 million stock buyback program. Since that time, the Board has provided additional authorizations to increase the total amount authorized under the program to $75.0 million.

fiscal 2017, the Company made purchases of 484,252 common shares under this plan at an average price of $15.91 per share for a total cost of $7.7 million. None of these common shares were repurchased during the fourth quarter of fiscal 2017. During fiscal 2016, the Company made purchases of 1,602,545 common shares under this plan at an average price of $18.31 per share for a total cost of $29.3 million or $18.31 per share.million. None of these common shares were repurchased during the fourth quarter of fiscal 2016. There is approximately $10.7$28.0 million still available for share repurchases under this Board-authorized program which remains in place until such time as the authorized spending limit is reached or is otherwise revoked by the Board.