##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, DC 20549
 FORM 10-Q
 þ
    
    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the Quarterly Period Ended November 30, 2006.
 or
 o
    
    Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the Transition Period From  to
 Commission File Number 0-13394
 VIDEO DISPLAY CORPORATION
  GEORGIA
    
    58-1217564(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 1868 TUCKER INDUSTRIAL ROAD, TUCKER, GEORGIA 30084
 770-938-2080
 þ o
  o o þ
 o þ




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##### 



Video Display Corporation and Subsidiaries
Index
 PagePART I. FINANCIAL INFORMATIONItem 1.    Financial Statements.Consolidated Balance Sheets  November 30, 2006 (unaudited) and February 28, 2006
    
    
    3Consolidated Statements of Operations  Three and nine months ended November 30, 2006 and 2005 (unaudited)
    
    
    5Consolidated Statement of Shareholders Equity and Comprehensive Income  Nine months ended November 30, 2006 (unaudited)
    
    
    6Consolidated Statements of Cash Flows  Nine months ended November 30, 2006 and 2005 (unaudited)
    
    
    7Notes to Consolidated Financial Statements  November 30, 2006 (unaudited)
    
    
    8Item 2.    Managements Discussion and Analysis of Financial Condition and Results of Operations.
    
    
    21Item 3.    Quantitative and Qualitative Disclosure About Market Risk.
    
    
    30Item 4.    Controls and Procedures.
    
    
    31PART II. OTHER INFORMATIONItem 1.    Legal Proceedings.
    
    
    32Item 1A. Risk Factors.
    
    
    32Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds.
    
    
    32Item 3.    Defaults upon Senior Securities.
    
    
    32Item 4.    Submission of Matters to a Vote of Security Holders.
    
    
    32Item 5.    Other Information.
    
    
    32Item 6.    Exhibits.
    
    
    33SIGNATURES.
    
    
    34EX-31.1 CERTIFICATION PURSUANT TO SECTION 302EX-31.2 CERTIFICATION PURSUANT TO SECTION 302EX-32.1 CERTIFICATION PURSUANT TO SECTION 906
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##### Table of Contents



ITEM 1. FINANCIAL STATEMENTS
 Video Display Corporation and Subsidiaries
 
 Consolidated Balance Sheets
 (in thousands)
 November 30,
    
    
    February 28,2006
    
    
    2006(unaudited)AssetsCurrent AssetsCash
    
    $
    1,778
    
    
    $
    1,577Accounts receivable, less allowance for
possible losses of $560 and $381
    
    
    9,892
    
    
    
    9,483Inventories, net
    
    
    31,982
    
    
    
    34,645Cost and estimated earnings in excess of
billings on uncompleted contracts
    
    
    2,609
    
    
    
    968Deferred income taxes
    
    
    3,104
    
    
    
    3,279Prepaid expenses and other
    
    
    685
    
    
    
    1,720Total current assets
    
    
    50,050
    
    
    
    51,672Property, plant and equipment:Land
    
    
    585
    
    
    
    605Buildings
    
    
    8,218
    
    
    
    8,454Machinery and equipment
    
    
    20,163
    
    
    
    19,97028,966
    
    
    
    29,029Accumulated depreciation and amortization
    
    
    (21,003
    )
    
    
    (20,270
    )Net property, plant, and equipment
    
    
    7,963
    
    
    
    8,759Goodwill
    
    
    1,343
    
    
    
    1,318Intangible assets, net
    
    
    3,796
    
    
    
    3,591Other assets
    
    
    78
    
    
    
    98Total assets
    
    $
    63,230
    
    
    $
    65,438
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##### Table of Contents



Video Display Corporation and Subsidiaries
Consolidated Balance Sheets (continued)
(in thousands)
 November 30,
    
    
    February 28,2006
    
    
    2006(unaudited)Liabilities and Shareholders EquityCurrent liabilitiesAccounts payable
    
    $
    5,630
    
    
    $
    6,889Accrued liabilities
    
    
    3,491
    
    
    
    2,833Billings in excess of cost and estimated
earnings on uncompleted contracts
    
    
    149
    
    
    
    965Lines of credit
    
    
    
    
    
    
    17,567Notes payable to officers and directors
    
    
    382
    
    
    
    6,948Convertible notes payable, net of discount of $19
    
    
    231
    
    
    
    Current maturities of long-term debt
and financing lease obligations
    
    
    755
    
    
    
    140Total current liabilities
    
    
    10,638
    
    
    
    35,342Lines of credit
    
    
    13,655
    
    
    
    Long-term debt, less current maturities
    
    
    3,308
    
    
    
    808Financing lease obligations, less current maturities
    
    
    292
    
    
    
    363Notes payable to officers and directors, less
current maturities
    
    
    5,801
    
    
    
    Convertible notes payable, net of discount of $38
    
    
    
    
    
    
    212Deferred income taxes
    
    
    55
    
    
    
    560Total liabilities
    
    
    33,749
    
    
    
    37,285Minority Interests
    
    
    123
    
    
    
    123Commitments and Contingencies
    
    
    
    
    
    
    Shareholders EquityPreferred
stock, no par value  10,000 shares
authorized; none issued and outstanding
    
    
    
    
    
    
    Common
stock, no par value  50,000 shares
authorized; 9,637 and 9,628 issued and outstanding
    
    
    7,275
    
    
    
    7,198Additional paid-in capital
    
    
    143
    
    
    
    92Retained earnings
    
    
    22,919
    
    
    
    21,771Accumulated other comprehensive income (loss)
    
    
    95
    
    
    
    (172
    )Treasury stock, 125 and 86 shares at cost
    
    
    (1,074
    )
    
    
    (859
    )Total shareholders equity
    
    
    29,358
    
    
    
    28,030Total liabilities and shareholders equity
    
    $
    63,230
    
    
    $
    65,438
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Video Display Corporation and Subsidiaries
 
 Consolidated Statements of Operations (unaudited)
 (in thousands, except per share data)
 Three Months Ended
    
    
    Nine Months EndedNovember 30,
    
    
    November 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Net sales
    
    $
    22,298
    
    
    $
    19,676
    
    
    $
    60,728
    
    
    $
    63,450Cost of goods sold
    
    
    14,313
    
    
    
    13,231
    
    
    
    40,369
    
    
    
    42,865Gross profit
    
    
    7,985
    
    
    
    6,445
    
    
    
    20,359
    
    
    
    20,585Operating expensesSelling and delivery
    
    
    2,033
    
    
    
    1,929
    
    
    
    5,853
    
    
    
    5,526General and administrative
    
    
    3,744
    
    
    
    3,733
    
    
    
    10,924
    
    
    
    10,9055,777
    
    
    
    5,662
    
    
    
    16,777
    
    
    
    16,431Operating profit
    
    
    2,208
    
    
    
    782
    
    
    
    3,582
    
    
    
    4,154Other income (expense)Interest expense
    
    
    (527
    )
    
    
    (353
    )
    
    
    (1,650
    )
    
    
    (1,028
    )Other, net
    
    
    (35
    )
    
    
    6
    
    
    
    14
    
    
    
    86(562
    )
    
    
    (347
    )
    
    
    (1,636
    )
    
    
    (942
    )Income before income taxes
    
    
    1,646
    
    
    
    436
    
    
    
    1,946
    
    
    
    3,212Income tax expense
    
    
    630
    
    
    
    181
    
    
    
    780
    
    
    
    1,235Net income
    
    $
    1,016
    
    
    $
    255
    
    
    $
    1,166
    
    
    $
    1,977Basic earnings per share of common stock
    
    $
    .11
    
    
    $
    .03
    
    
    $
    .12
    
    
    $
    .20Diluted earnings per share of common stock
    
    $
    .10
    
    
    $
    .03
    
    
    $
    .12
    
    
    $
    .20Basic weighted average shares outstanding
    
    
    9,675
    
    
    
    9,687
    
    
    
    9,659
    
    
    
    9,699Diluted weighted average shares outstanding
    
    
    9,848
    
    
    
    9,923
    
    
    
    9,858
    
    
    
    9,977
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Video Display Corporation and Subsidiaries
 
 Consolidated Statements of Shareholders Equity and Comprehensive Income
 For the Nine Months Ended November 30, 2006 (unaudited)
 (in thousands)
 AccumulatedAdditional
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    Compre-Common
    
    
    Share
    
    
    Paid-in
    
    
    Retained
    
    
    Comprehensive
    
    
    Treasury
    
    
    hensiveShares
    
    
    Amount
    
    
    Capital
    
    
    Earnings
    
    
    Income (Loss)
    
    
    Stock
    
    
    IncomeBalance, February 28, 2006
    
    
    9,628
    
    
    $
    7,198
    
    
    $
    92
    
    
    $
    21,771
    
    
    $
    (172
    )
    
    $
    (859
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,166
    
    
    
    
    
    
    
    
    
    
    $
    1,166Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    267
    
    
    
    
    
    
    
    267Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    1,433Issuance of common stock under stock
option plan
    
    
    48
    
    
    
    77
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Issuance of common stock from treasury
    
    
    27
    
    
    
    
    
    
    
    
    
    
    
    (18
    )
    
    
    
    
    
    
    268Repurchase of treasury stock
    
    
    (66
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (483
    )Share based compensation
    
    
    
    
    
    
    
    
    
    
    51
    
    
    
    
    
    
    
    
    
    
    
    Balance, November 30, 2006
    
    
    9,637
    
    
    $
    7,275
    
    
    $
    143
    
    
    $
    22,919
    
    
    $
    95
    
    
    $
    (1,074
    )
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Video Display Corporation and Subsidiaries
 
 Consolidated Statements of Cash Flows (unaudited)
 (in thousands)
 Nine Months EndedNovember 30,2006
    
    
    2005Operating ActivitiesNet income
    
    $
    1,166
    
    
    $
    1,977Adjustments to reconcile net income to net cash
provided by operating activities:Depreciation and amortization
    
    
    1,647
    
    
    
    1,304Provision for bad debts
    
    
    200
    
    
    
    (16
    )Provision for inventory reserve
    
    
    1,165
    
    
    
    720Non-cash charge for share based compensation
    
    
    51
    
    
    
    Deferred income taxes
    
    
    (330
    )
    
    
    (260
    )Interest on convertible note
    
    
    19
    
    
    
    Changes in working capital, net of effects
from acquisitions:Accounts receivable
    
    
    (489
    )
    
    
    1,537Inventories
    
    
    1,939
    
    
    
    (3,769
    )Cost, estimated earnings and billings, net,
on uncompleted contracts
    
    
    (2,457
    )
    
    
    960Prepaid expenses and other assets
    
    
    934
    
    
    
    (714
    )Accounts payable and accrued liabilities
    
    
    (611
    )
    
    
    169Net cash provided by operating activities
    
    
    3,234
    
    
    
    1,908Investing ActivitiesCapital expenditures
    
    
    (193
    )
    
    
    (1,427
    )Cash paid for acquisition
    
    
    (550
    )
    
    
    (1,377
    )Proceeds from the sale of property, plant and equipment
    
    
    159
    
    
    
    Net cash used in investing activities
    
    
    (584
    )
    
    
    (2,804
    )Financing ActivitiesProceeds from long-term debt, lines of credit
and financing lease obligations
    
    
    44,664
    
    
    
    23,999Payments on long-term debt, lines of credit
and financing lease obligations
    
    
    (46,208
    )
    
    
    (22,447
    )Proceeds from loans from related parties
    
    
    3,220
    
    
    
    1,000Repayments of loans from related parties
    
    
    (3,985
    )
    
    
    (1,028
    )Purchase of common stock
    
    
    
    
    
    
    (317
    )Purchase of treasury stock
    
    
    (484
    )
    
    
    Proceeds from exercise of stock options
    
    
    77
    
    
    
    22Net cash provided by (used in) financing activities
    
    
    (2,716
    )
    
    
    1,229Effect of exchange rate changes on cash
    
    
    267
    
    
    
    15Net increase in cash
    
    
    201
    
    
    
    348Cash, beginning of period
    
    
    1,577
    
    
    
    1,471Cash, end of period
    
    $
    1,778
    
    
    $
    1,819
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Video Display Corporation and Subsidiaries
 
 Notes to Consolidated Financial Statements (unaudited)
 November 30, 2006
   Share-Based Payment
    Accounting for Uncertainty in Income Taxes
 8




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Video Display Corporation and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
November 30, 2006
 Fair Value Measurements
 Employers Accounting for Defined
Benefit Pension and Other Postretirement Plansan amendment of FASB Statements No. 87, 88, 106, and
132(R)
 Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in
Current Year Financial Statements
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Video Display Corporation and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
November 30, 2006
    Inventories
    
    $
    773Machinery & equipment
    
    
    74Product designs, customer lists and other assets
    
    
    530$
    1,377
   November 30,
    
    
    February 28,2006
    
    
    2006Raw materials
    
    $
    17,221
    
    
    $
    18,618Work-in-process
    
    
    4,164
    
    
    
    3,772Finished goods
    
    
    15,851
    
    
    
    16,68837,236
    
    
    
    39,078Reserves for obsolescence
    
    
    (5,254
    )
    
    
    (4,433
    )$
    31,982
    
    
    $
    34,645
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Video Display Corporation and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
November 30, 2006
   November 30,
    
    
    February 28,2006
    
    
    2006Costs incurred to date on uncompleted contracts
    
    $
    3,950
    
    
    $
    4,528Estimated earnings recognized to date on these contracts
    
    
    1,290
    
    
    
    2,5855,240
    
    
    
    7,113Billings to date
    
    
    (2,780
    )
    
    
    (7,110
    )Costs and estimated earnings in excess of billings, net
    
    $
    2,460
    
    
    $
    3Costs and estimated earnings in excess of billings
    
    $
    2,609
    
    
    $
    968Billings in excess of costs and estimated earnings
    
    
    (149
    )
    
    
    (965
    )$
    2,460
    
    
    $
    3
    11




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Video Display Corporation and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
November 30, 2006
    November 30, 2006
    
    
    February 28, 2006Accumulated
    
    
    
    
    
    
    AccumulatedCost
    
    
    Amortization
    
    
    Cost
    
    
    AmortizationCustomer lists
    
    $
    3,386
    
    
    $
    959
    
    
    $
    2,968
    
    
    $
    658Non-compete agreements
    
    
    1,245
    
    
    
    489
    
    
    
    1,230
    
    
    
    301Patents
    
    
    665
    
    
    
    125
    
    
    
    335
    
    
    
    78Other intangibles
    
    
    148
    
    
    
    75
    
    
    
    119
    
    
    
    24$
    5,444
    
    
    $
    1,648
    
    
    $
    4,652
    
    
    $
    1,061
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Video Display Corporation and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
November 30, 2006
   November 30,
    
    
    February 28,2006
    
    
    2006Note payable to bank syndicate (RBC Centura
and Regions Bank); interest rate at LIBOR
plus applicable margin as defined per the
loan agreement, (7.42% combined rate as of
November 30, 2006); monthly principal
payments of $50 plus accrued interest,
payable through July 2011; collateralized
by all assets of the Company.
    
    $
    2,800
    
    
    $
    Note payable to bank; interest at the Prime
Rate plus 0.50%, (8.75% as of November 30,
2006); monthly principal and interest
payments of $11, payable through February
2013 at current interest rates;
collateralized by all assets acquired from
EDL Displays, Inc.
    
    
    632
    
    
    
    Mortgage payable to bank; interest rate at
Federal Home Loan Bank Board Index rate
plus 1.95% (7.35% as of November 30, 2006);
monthly principal and interest payments of
$5 payable through October 2021;
collateralized by land and building of
Teltron Technologies, Inc.
    
    
    525
    
    
    
    540Mortgage payable to Pennsylvania Industrial
Development Authority; interest rate at
4.25%; monthly principal and interest
payments of $2.8 payable through October
2017; collateralized by a second priority
lien on land and building of Teltron
Technologies, Inc.
    
    
    
    
    
    
    308Other
    
    
    19
    
    
    
    143,976
    
    
    
    862Financing lease obligations
    
    
    379
    
    
    
    4494,355
    
    
    
    1,311Less current maturities
    
    
    (755
    )
    
    
    (140
    )$
    3,600
    
    
    $
    1,171
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Video Display Corporation and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
November 30, 2006
     14




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Video Display Corporation and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
November 30, 2006
   Three Months
    
    
    Nine MonthsEnded November 30,
    
    
    Ended November 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Net SalesDisplay Segment
    
    $
    15,801
    
    
    $
    15,010
    
    
    $
    43,620
    
    
    $
    49,110Wholesale Distribution Segment
    
    
    6,497
    
    
    
    4,666
    
    
    
    17,108
    
    
    
    14,340$
    22,298
    
    
    $
    19,676
    
    
    $
    60,728
    
    
    $
    63,450Operating profitDisplay Segment
    
    $
    2,167
    
    
    $
    586
    
    
    $
    3,483
    
    
    $
    3,448Wholesale Distribution Segment
    
    
    41
    
    
    
    196
    
    
    
    99
    
    
    
    706Income from Operations
    
    
    2,208
    
    
    
    782
    
    
    
    3,582
    
    
    
    4,154Interest expense
    
    
    (527
    )
    
    
    (353
    )
    
    
    (1,650
    )
    
    
    (1,028
    )Other income, net
    
    
    (35
    )
    
    
    6
    
    
    
    14
    
    
    
    86Income before income taxes
    
    $
    1,646
    
    
    $
    436
    
    
    $
    1,946
    
    
    $
    3,212
   Nine MonthsEnded November 30,2006
    
    
    2005Cash Paid for:Interest
    
    $
    1,589
    
    
    $
    978Income taxes, net of refunds
    
    $
    109
    
    
    $
    3,250Non-cash Transactions:Assets acquired in exchange for assumption of debt
    
    $
    678
    
    
    $
    Assets acquired in exchange for common stock
    
    $
    250
    
    
    $
    Leased capital equipment
    
    $
    
    
    
    $
    433Conversion of note payable to common stock
    
    $
    
    
    
    $
    125
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Video Display Corporation and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
November 30, 2006
  Earnings Per Share
   WeightedAverageCommon Shares
    
    
    Earnings PerNet Income
    
    
    Outstanding
    
    
    ShareThree months ended November 30, 2006Basic
    
    $
    1,016
    
    
    
    9,675
    
    
    $
    0.11Effect of dilution:Options
    
    
    
    
    
    
    173Diluted
    
    $
    1,016
    
    
    
    9,848
    
    
    $
    0.10Three months ended November 30, 2005Basic
    
    $
    255
    
    
    
    9,687
    
    
    $
    0.03Effect of dilution:Options
    
    
    
    
    
    
    236Diluted
    
    $
    255
    
    
    
    9,923
    
    
    $
    0.03Nine months ended November 30, 2006Basic
    
    $
    1,166
    
    
    
    9,659
    
    
    $
    0.12Effect of dilution:Options
    
    
    
    
    
    
    199Diluted
    
    $
    1,166
    
    
    
    9,858
    
    
    $
    0.12Nine months ended November 30, 2005Basic
    
    $
    1,977
    
    
    
    9,699
    
    
    $
    0.20Effect of dilution:Options
    
    
    
    
    
    
    278Diluted
    
    $
    1,977
    
    
    
    9,977
    
    
    $
    0.20
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Video Display Corporation and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
November 30, 2006
 Stock-Based Compensation Plans
 Share-Based Payment Accounting for Stock Issued to Employees, Accounting for Stock-Based Compensation,
     17




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Video Display Corporation and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
November 30, 2006
    Three Months Ended
    
    
    Nine Months EndedNovember 30, 2005
    
    
    November 30, 2005Net income, as reported
    
    $
    255
    
    
    $
    1,977Stock-based employee
compensation expense
determined under fair value
basis, net of tax
    
    
    (24
    )
    
    
    (39
    )Pro forma net income
    
    $
    231
    
    
    $
    1,938Net earnings per share:Basic  as reported
    
    $
    0.03
    
    
    $
    0.20Basic  pro forma
    
    $
    0.02
    
    
    $
    0.20Diluted  as reported
    
    $
    0.03
    
    
    $
    0.20Diluted  pro forma
    
    $
    0.02
    
    
    $
    0.19
 Stock Repurchase Program
  18




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Video Display Corporation and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
November 30, 2006
     1 4
    19




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Video Display Corporation and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
November 30, 2006
   20




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Video Display Corporation and Subsidiaries
November 30, 2006
 
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  Overview
  
    
    Monitors offers a complete range of CRT, flat panel and projection display systems
for use in training and simulation, military, medical and industrial applications.
    
    Data Display offers a complete range of CRTs for use in data display screen,
including computer terminal monitors and medical monitoring equipment.
    
    Home Entertainment offers a wide range of CRTs and projection tubes for television
and home theater equipment.
    
    Components provides replacement electron guns and other components for CRTs primarily
for servicing the Companys internal needs.
  Inventory
management
  Interest rate exposure
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##### Table of Contents



Video Display Corporation and Subsidiaries
November 30, 2006
  Results of Operations
  Three Months
    
    Nine MonthsEnded November 30,
    
    Ended November 30,2006
    
    2005
    
    2006
    
    2005SalesDisplay SegmentMonitors
    
    
    56.4
    %
    
    
    62.0
    %
    
    
    56.4
    %
    
    
    60.6
    %Data Display CRTs
    
    
    11.0
    
    
    
    8.9
    
    
    
    11.6
    
    
    
    11.3Entertainment CRTs
    
    
    3.1
    
    
    
    4.5
    
    
    
    3.3
    
    
    
    4.6Electron Guns and Components
    
    
    0.4
    
    
    
    0.9
    
    
    
    0.5
    
    
    
    0.9Total Display Segment
    
    
    70.9
    %
    
    
    76.3
    %
    
    
    71.8
    %
    
    
    77.4
    %Wholesale Distribution Segment
    
    
    29.1
    
    
    
    23.7
    
    
    
    28.2
    
    
    
    22.6100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Costs and expensesCost of goods sold
    
    
    64.2
    %
    
    
    67.2
    %
    
    
    66.5
    %
    
    
    67.6
    %Selling and delivery
    
    
    9.1
    
    
    
    9.8
    
    
    
    9.6
    
    
    
    8.7General and administrative
    
    
    16.8
    
    
    
    19.0
    
    
    
    18.0
    
    
    
    17.290.1
    %
    
    
    96.0
    %
    
    
    94.1
    %
    
    
    93.5
    %Income from Operations
    
    
    9.9
    %
    
    
    4.0
    %
    
    
    5.9
    %
    
    
    6.5
    %Interest expense
    
    
    (2.4)
    %
    
    
    (1.8
    )%
    
    
    (2.7)
    %
    
    
    (1.6
    )%Other income, net
    
    
    (0.1
    )
    
    
    0.0
    
    
    
    0.0
    
    
    
    0.1Income before income taxes
    
    
    7.4
    %
    
    
    2.2
    %
    
    
    3.2
    %
    
    
    5.0
    %Provision for income taxes
    
    
    2.8
    
    
    
    0.9
    
    
    
    1.3
    
    
    
    1.9Net Income
    
    
    4.6
    %
    
    
    1.3
    %
    
    
    1.9
    %
    
    
    3.1
    %
 Net sales
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Video Display Corporation and Subsidiaries
November 30, 2006
     Gross margins
   23




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Video Display Corporation and Subsidiaries
November 30, 2006
   Operating expenses
    Interest expense
  Income taxes
  Foreign currency translation
  24




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Video
Display Corporation and SubsidiariesNovember 30, 2006
 Liquidity and Capital Resources
       25




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Video Display Corporation and Subsidiaries
November 30, 2006
   Critical Accounting Policies
  Reserves on inventories
  Revenue Recognition
  26




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Video Display Corporation and Subsidiaries
November 30, 2006
    Allowance for bad debts
  Warranty reserves
  Other Accounting Policies
  New Accounting Pronouncements
 Accounting for Uncertainty in Income Taxes
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Video Display Corporation and Subsidiaries
November 30, 2006
  Fair Value Measurements
 Employers Accounting for Defined
Benefit Pension and Other Postretirement Plansan amendment of FASB Statements No. 87, 88, 106,
and 132(R)
 Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in
Current Year Financial Statements
 Forward-Looking Information and Risk Factors
  28




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Video Display Corporation and Subsidiaries
November 30, 2006
 Subsequent Event
  29




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Video Display Corporation and Subsidiaries
November 30, 2006
 
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
   30




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Video Display Corporation and Subsidiaries
November 30, 2006
 
 ITEM 4. CONTROLS AND PROCEDURES
   Changes in Internal Controls
   31




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Video Display Corporation and Subsidiaries
November 30, 2006
 
 PART II
 
 Item 1.
    
    Legal Proceedings
  
 Item 1A.
    
    Risk Factors
  
 Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3.
    
    Defaults upon Senior Securities
  
 Item 4.
    
    Submission of Matters to a Vote of Security Holders
  
 Item 5.
    
    Other information
  32




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##### Table of Contents



Video Display Corporation and Subsidiaries
November 30, 2006
 
 Item 6.
    
    Exhibits
 ExhibitNumber
    
    Exhibit Description3(a)
    
    Articles of Incorporation of the Company (incorporated by reference to
Exhibit 3A to the Companys Registration Statement on Form S-18 filed
January 15, 1985).3(b)
    
    By-Laws of the Company (incorporated by reference to Exhibit 3B to the
Companys Registration Statement on Form S-18 filed January 15, 1985).10(d)
    
    $27,500,000 promissory note dated November 10, 2004 between the Company
and Bank of America (holder) (incorporated by reference to Exhibit
10(d) to the Companys 2005 Annual Report on Form 10-K).10(e)
    
    $6,800,000 term note dated February 27, 2006 between the Company and
Ronald D. Ordway (holder) (incorporated by reference to Exhibit 10(e)
to the Companys 2006 Annual Report on Form 10-K).10(h)
    
    Loan and Security Agreement and related documents, dated June 14, 2006,
among Video Display Corporation and Subsidiaries and RBC Centura Bank
and Regions Bank as lenders and RBC Centura Bank as collateral agent
(incorporated by reference to Exhibit 10(h) to the Companys Current
Report on Form 8-K dated June 29, 2006).10(i)
    
    $6,000,000 Subordinated Note, dated June 29, 2006, between Video
Display Corporation and Ronald D. Ordway (holder) (incorporated by
reference to Exhibit 10(i) to the Companys Current Report on Form 8-K
dated June 29, 2006).10(j)
    
    Video Display Corporation 2006 Stock Incentive Plan (incorporated by
reference to Appendix A to the Companys 2006 Proxy Statement on
Schedule 14A).31.1
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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SIGNATURES
  VIDEO DISPLAY CORPORATIONJanuary 12, 2007
    By:
    /s/ Ronald D. OrdwayRonald D. OrdwayChief Executive Officer January 12, 2007
    By:
    /s/ Michael D. BoydMichael D. BoydChief Financial Officer 34