Good afternoon, ladies and gentlemen, thank you for standing by. Welcome to the Raven Industries Incorporated second quarter 2010 earnings conference. Today’s call is being recorded. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. Instructions will be provided at the time for you to queue up for questions. I would now like to turn the conference over to Ms. Leslie Loyet of the Financial Relations Board. Please go ahead ma’am.

Thank you. I’d like to thank everyone for joining us today. Earlier in the day, we sent out a press release, outlining the results for second quarter of fiscal 2010. If anyone has not received the release, please visit Raven’s website at www.ravenind.com to retrieve a copy. Management will provide an overview of the quarter and then we’ll open the call up to your questions. Before we begin, we’d like to remind participants that the information contained in this call is current only as of the day of the call, August 19, 2009 and the company assumes no obligation to update any statements, including forward-looking statements made during this call. Statements made by the company that are not historical facts, are forward-looking statements that are subject to the Safe Harbor Disclaimer in today’s press release. Joining us today from management of Raven Industries, we have Ron Moquist, President and Chief Executive Officer, Tom Iacarella, Vice President, Chief Financial Officer, and Dan Rykhus, Executive Vice President. At this point, I’d like to turn the call over to Ron for his opening comments. Please go ahead.

Thanks Leslie and thank you all for joining us today as we highlight our second quarter results and then hopefully provide some inside as to how we’re looking at the second half of the year. As Leslie mentioned we released our second quarter results this morning and you all should have received a copy. Three months ago I thought the second quarter would be our toughest especially in light of the agricultural situation. We were thinking that earnings could be down as much as 30%, 35% from last year’s strong second quarter. It didn’t turn out that way it was still a tough quarter, but the results were better than expected and all operations beat our revised internal projections and when I say revised internal projection, those were once that were made after we had the results of our first quarter. I never thought I’d be saying when he a good performance when sales are down 18% for the quarter and net income is down 9% but these are different times and any manufacturer serving basic industries as we do that is down say 20% or less for the full year has done a pretty good job in my book. Some good companies are not going to achieve those results regardless how well they manage their business. The fact that we earned a 12.7% net return on sales for the first half of the year versus 12.3% in the same period last year in spite of a 16% drop in sales, speaks to the strength of our business model and how we executed. In Engineered Films, sales are way down from last year, but about where we thought they’d come in, but operating income was a lot better than we projected and our gross margins for the first half of…

(Operator Instructions) Your first question comes from Michael Cox - Piper Jaffray.

My first question is in relation to the out performance that you produced in the quarter and it sounds like you’re approaching the current quarter with a certainty agree of caution not unlike what you did in the second quarter. So I’d just be curious perhaps what perhaps you might have changed here recent that would give you that reason for caution.

As I mentioned Engineered Films will be down in the third quarter; electronics in comparison with last year I don’t think Tom, those comparisons are good.

They started to show some progress beginning in the second half of last year and so the comparisons do get tougher for Electronic Systems as we get into the second half.

Well, the third quarter will be already for electronics and the fourth quarter they deteriorate. I think, Michael, you’re talking specifically of third quarter though, right?

I am just because of the big out performance in Q2, I guess it seems that you’re carrying good momentum into the third quarter, but it’s a general comments seem more cautious.

Yes, I’d say, again Engineer Films is one reason for that Applied Technology. Those comparisons again aren’t too bad. Aerostars’ aren’t too bad. I don’t think it’s necessarily that we look at the third quarter as something that’s showing weakness going forward as much as it is in a lot of cases just comparisons versus the previous years third quarter. Just like the fourth quarter is an easy comparison, because we didn’t do very well on the fourth quarter, so I think it’s more in terms of comparisons and, Tom or Dan if you want to add anything to that go ahead and jump in.

I think the other thing that might cause us to be a little bit more cautious as we look at the third quarter compared to the second is. We continue to see pricing pressure in films and our ability to hold our pricing and we’re also seeing cost increases in resins. So after seeing some of the results that we had, say, in the fourth quarter, where the margins got squeeze pretty rapidly we’re concerned of that we’ll continue to see that type of pressure. So we think there’s a possibility that the margins May compress us squeezed.

Just to show you the difference in pretax income Michael between the second quarter of last year versus third quarter of last year we earned about $10.5 million pretax in last year’s second quarter and we’ve earned $12.5 million pretax in last year’s third quarter.

On the film side if I’m looking at the math correctly it sounds like volumes would be down in the low 30% range in the quarter. Do you see that continuing I guess through the back half of the year or should we see that moderate against some of the easier comparisons you referenced?

I think again what’s going to happen is that the sales in third quarter for Applied or Engineered Films, did you say Engineered Films?

That’s correct.

For Engineered Films, the sales are going to be comparable to second quarter. Margins just aren’t going to be the same. We are not going to get the same benefits from raw materials and there’s going to be more pressure on pricing. That could change, of course, if we get some extraordinary order like you could from FEMA, or hurricanes or something like that, but that’s the way we’re looking at it. Then in the fourth quarter although sales will be probably the lowest of the year last year’s fourth quarter was actually a loss and so we can easily beat that by quite a large amount. So fourth quarter will be our smallest quarter of the year for Engineered Films both in terms of sales and operating income, but the comparisons are going to be quite easy in the fourth quarter versus last year, especially not so much on the sales side, but certainly on the operating income side.

On the Electronic Systems side could you provide maybe a little more color around the new account, what end market that would be associated with?

That’s going to be in secure communications. That’s going to be similar to what we’re doing now. It’s going to be a slightly different product, but it’s in that same field.

My last question is on within the Applied Technology. I was just wondering if you could provide any more detail around the Deere agreement, perhaps if you could quantify what you think the sales potential could be from that, that venture and perhaps any channel disruption that you might perceive with introducing this product to a competing dealer.

Good question, I’m going to let Dan handle that one.

Yes, the Deere agreement is moving along just exactly where we thought it would be at this point. All the work has been done to get our systems integrated from a supply chain standpoint and the forecast that Deere is giving us are what we expected and we will start to make deliveries this week and continue on through the third quarter. As far as the size, we’re working off forecasts right now and like Ron said, it’s not going to be a game changer for us this year, but it is going to add to our revenues in the third and fourth quarter and the real impact as far as our profit growth and sales growth we think will come next year. As far as channel disruption, we think and I’ve talked to some of our resale customers and they’re going to watch us, they’re going to look at our service levels to them and I think that’s how we’ll be judged is, how well does Raven provide ongoing service to them as a resale customer and as an OEM customer. So we’re committing resources to providing better service than we have ever before and I believe our service has been pretty good. So that’s how we’re going to be judged, we believe and we’re hitting that head on. As far as numerics, we haven’t seen any decline in new orders and we’re in the middle of some of our dating programs and we’re seeing increases in dating program participation on a year-over-year basis. So the tangible proof is in the orders and so far that’s been strong.

I think that’s important, Michael, that the order book is not going down, it’s actually strengthening and we’re seeing some momentum year-over-year on the order side and that’s always a good thing to look at and I probably look at new orders closer than I look at billings, because it’s just a lead lag situation. You got to have those new orders coming in and we’re very encouraged by new orders we’re seeing in Applied Technology.

Your next question comes from John Rankin - Boranco Management LLC.

You mentioned productivity was up 24%. So I have a few questions. My first question is you alluded to the fact that, you thought you’d begin to come out of this with second half of 2010. To ramp up, will you need to bring back some of the people that were furloughed and if so, what is the strategy to gear up without losing sales? The literature talks about a lot of companies might have cut a little too deep and I would like to have some color on that.

Any particular division, that you’re specifically interested? Because they’re all a little bit different in terms of how and what condition we bring people back and what our capacity constraints are. Engineered Films we’re operating at 50% capacity. For example, now when you take Electronic Systems division just because of what we’ve done in terms of consolidating facilities and equipment and really tightening up that operation, we’re probably operating at 80% to 90% capacity. So anything we do there we’ll do slowly and we’ll do methodically and we’re going to control growth in Electronic Systems. Engineered Films, if something were to break lose, that’s machine based manufacturing as opposed to labor based and so with a few additions of people you can increase volumes quite handily. Now there’s handling costs, but as far as running the machinery it doesn’t take a lot of people. Moving the product around efforts it’s been built and loading it and unloading raw materials and the like does, but it’s a good question because for a couple of reasons. One is as you bring back people and there are no problem bringing back people because there’s a lot of people unemployed and even in South Dakota which has one of the lowest rates in the country at a little over 5%. We are still going to be able finds plenty of workers and good workers and which you are always going to have inefficiencies on the front ends. That’s part of the situation and on the backside it’s just the opposite when you do some cut backs unfortunately as it turn out you gain efficiencies because you are keeping your more senior people around and there you’re more experienced and sometimes more talented people. So you gain productivity sometimes when you make cut backs. I’m not sure if I’m answering the question directly, but...

You’re answered perfectly. My main focus was on Engineered Films and you covered that, so my second question, this would be on accounts receivable. I notice accounts receivable year-over-year was a little down further than sales and it’s always a juggling act in markets like this, how far you extend credit because when the time get good and you put people on COD early, but I was just curious, have there been an accounts receivable, have they been a problem? Have you had to tighten up credit at all or is it just been business as usual?

Well, it’s never business as usual in this environment, but you’re right that we’ve done a good job in accounts receivable. We’ve had very little bad debt write-off, our days of accounts receivable is very similar to what it was last year. We haven’t tightened the screws too much but on the other hand we’re not buying business. We’re not buying it with price and we’re not buying it with terms and we’re just not going to do that. We’re not going to loosen up to get an order because it’s no fun to make the sale if you don’t get paid and for us, but business as usual for us is pretty cautious when it comes to handing out terms.

Your next question comes from Jeff Evanson - Dougherty & Company. Jeff Evanson - Dougherty & Company: Eventually we’ll see Engineered Films get back into a growth mode. Ron, what are some of the things you’re looking for to see those first signs of growth in Engineered Films? Specifically I’m wondering about what initiatives you have with respect to geomembranes or if you are watching oil prices or what?

Well, there’s two aspects to that, obviously you can sit around and weight for the economy to come back and I already I’m an old man, but I could become a very old man waiting for the economy to come back strong and waiting for construction to be anywhere near where it was in 2005 or 2006. So construction obviously, if it were to come back strong and housing starts now are at an annualized basis of little over 200,000 to 500,000 units. A few years ago, it was well over 2 million, so we’ve got a long ways to go before we get back to those days. Would that be helpful, absolutely if oil and gas they start opening up those wells and start pumping again, that’s a big bonus for us, but our attitude is not to wait around for the economy. Our attitude is to continue to introduce new products, go aggressively after new markets, takeaway business from the competition, out market, out hustle, our work the competition and take business that way. If we can do that, we’ll outperform the market and we’ll grow and it’s my absolute intent to grow the business regardless of what the economy does. So anything the economy gives us is a bonus. Love to have it, but not counting on it. Jeff Evanson - Dougherty & Company: So, should we expect that you’ll have some new products selling in Q4, then? It’s what you said when you thought things would start to show a little bed.

Engineered Films, you’re talking about? Jeff Evanson - Dougherty & Company: Correct.

Yes, the, again, the geomembrane is still a new product and that’s catching on and that’s going to be bigger and we’ve had this discussion before in previous conversations, quarterly conversations about the need for membranes especially in states where water needs to be preserved and they’re losing so much of it by singing into the ground or evaporating so we continue to hit that real hard in states like California and Arizona, we’ll continue to do that. A product like vapor barrier plus, which is a construction product could be a lot better than it is, but it’s still doing well because it’s taking market share because when people find out that they can block not only moisture, but radon with our product, it becomes an easy sell. People want it because, especially in our part of the country in the Midwest here there is a lot of radon that’s permeating into houses and people are becoming more aware of that and there’s a number of other products we’ve got coming out. : So we have the new products. We are working on them. We are doing it aggressively and we think we’re going to have some success with that starting in the fourth quarter, but I’d be happy to talk about it after I have the success and we can brag about what we did. I think the philosophy is the thing, Jeff, and that’s most important to me and it should be to our shareholders and that is that we’re going to grow this business in spite of the economy and we believe we can. Jeff Evanson - Dougherty & Company: Then within Applied technologies, I think it was maybe a quarter or two ago you talked about some new initiatives around remote sensing for the Ag market and the Data solutions or data had a business. Can you give us an update on where you’re at with that?

I’m not sure the comments you’re referencing on remote sensing specifically, but we’ve been pursuing an element of our strategy that is centered around better collection of data from the field and aggregation of data and development of products, software products that will allow for more efficient movement of data from our Viper Pro and Envizio Pro in the field back to a means of data warehouse that has useful for a grow our order custom applicator or Ag retail customer. So, what that means in terms of actual products and work that we’re doing. You’ve maybe recently heard about our strategic alliance with SST. SST is a software company that has had great success with Ag retail market space and the custom applicators and that just happens the overlap very nicely with where our strength is in precision Ag. So these alliances allows us to operator or integrate their data protocol, information protocol into our Viper Pro and E Pro and allows for a much more efficient use for the end user of SST Software and moment of data back and forth. So, but that mean to us, how do we monetize that and have that mean anything to us is ultimately in the sale of Viper Pro’s and E Pro’s now and as we move forward and build out this information strategy further, we believe there will be opportunities for us to cell services and establish other alliances with other companies in the Ag business sector that will allow us revenue opportunities through them, but in the short term it means we believe that we’ll be able to continue to push us our Viper Pro and Envizio Pro sale.

Your final question comes from [David Delio] - Canaccord Adams.

So last quarter you had been benefit from some beneficial resin purchases and this quarter you said, you had some of those, but not to the extent and any of the other segments. Did you have any kind of beneficial purchases, inventory sales that helped gross margin? Aero wasn’t strictly confined to Engineered Films in the quarter?

Well, it wasn’t so much anything special from a material standpoint, but the cost cutting that I talked about in Engineered Films has been something that’s more or less been done across the company, a little bit less so in Applied Technology, only because R&D and the sales and marketing effort we felt were so important that we didn’t want to make any drastic cuts there, but all operations have been trimmed up and reduced and so there’s been some cost savings there. Tom, I don’t know if you can think of anything else that would be a major factor in terms of…

I don’t think there are any significant one time items that really affected our results in the second quarter that would take out of my own projections going forward.

Then within Applied Technology, can you just kind of talk direction speaking, since the end of the quarter, end of July, how that business has kind of gone, flat, up, down, any kind of color there?

We talk a little bit about new orders and we’re very excited about the trends in new orders, but again I’ll let Dan take that one, because he’s much more familiar with the details in Applied Technology.

The specific question was about orders or business after the end of the second quarter?

Yes, so since July, just kind of trying to get a feel for how the business has performed even direction speaking is fine.

New orders continued strong in August, on a year-over-year basis and that’s a continuation of our June and July order volume increases and that doesn’t include any of the Deere business. So we’re seeing decent order increases in the double digit on a percentage basis without Deere factored into those numbers at all. So that’s positive news for us and as far as the 19 days that have happened after the end of the quarter we’re just continuing that trend and like Ron said in his opening comments, we expect that we will still be down in the third quarter on a year-over-year basis in ATD, but we think that rate of decline will start to moderate and in the fourth quarter we hope to bring that to a flat performance or possibly slightly up.

Then just lastly, Electronic Systems good color there going forward, talking about a strong Q3 and then kind of a little bit of a falloff in Q4. In Q3 with another strong quarter expected, how do you think about margins there? I mean the margin expansion here has been tremendous. I’m just trying to get a sense for how you guys think of that continue to grow with another strong quarter, have we kind of peaked?

Are you talking strictly about margin expansion?

Yes, just within Electronic Systems, Op margin expansion.

There won’t be margin expansion in the third quarter and in the fourth quarter that will be actually relatively weak, because not that necessarily Airbus and Boeing are cutting back on avionics equipment, but some of our major accounts that are between us and Airbus and Boeing simply have got enough inventory to hold them over for now so they’re trimming their sails a little bit, but the only way there’s not going to be margin expansion is the simple answer. We’re going to have to start growing the business. We can always get 1% or 2%, because no matter how good you get, you can always improve things 1% or 2%, but where we’re operating right now is at a fairly high level and we are happy with that. What we’d like to do then is just overlay some growth on that and maintain those good margins.

It appears there are no further questions. I’ll turn the call back over to you Mr. Moquist for closing remarks.

Thank you again for joining us today. It was a tough six months, but we came through it in good shape. As I already told you, I don’t see any snapback in the economy in the near term. Our planning has always been for a slow turnaround in the second half of 2010, but as I mentioned before, that doesn’t mean we can’t grow. New products, new markets, taking market share, we can execute these strategies and outperform the market. We’re not just sitting around waiting for a better economy and we know you can’t see your way to success, you have to grow. You have to beat the competition and we’re doing that. So we’ll talk to you again in November and good luck everybody. Thanks.