##### 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 August 31, 2007.
 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 
incorporation or organization)
    
    (I.R.S. Employer
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 StatementsConsolidated Balance Sheets 
August 31, 2007 (unaudited) and February 28, 2007
    
    
    3Consolidated Statements of Operations -
Three months and six months ended August 31, 2007 and 2006 (unaudited)
    
    
    5Consolidated Statement of Shareholders Equity -
For the six months ended August 31, 2007 (unaudited)
    
    
    6Consolidated Statements of Cash Flows 
Six months ended August 31, 2007 and 2006 (unaudited)
    
    
    7Notes to Consolidated Financial Statements -
August 31, 2007 (unaudited)
    
    
    9Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    18Item 3. Quantitative and Qualitative Disclosure About Market Risk
    
    
    26Item 4. Controls and Procedures
    
    
    26PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    27Item 1A. Risk Factors
    
    
    27Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    27Item 3. Defaults upon Senior Securities
    
    
    27Item 4. Submission of Matters to a Vote of Security Holders
    
    
    27Item 5. Other Information
    
    
    27Item 6. Exhibits
    
    
    28SIGNATURES
    
    
    29EX-31.1 SECTION 302 CERTIFICATION OF THE CEOEX-31.2 SECTION 302 CERTIFICATION OF THE CFOEX-32.1 SECTION 906 CERTIFICATION OF THE CEO AND CFO
  2




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##### Table of Contents



ITEM 1. FINANCIAL STATEMENTS
 Video Display Corporation and Subsidiaries
 
 Consolidated Balance Sheets
 (in thousands)
 August 31,
    
    
    February 28,2007
    
    
    2007(unaudited)AssetsCurrent AssetsCash
    
    $
    2,177
    
    
    $
    1,226Accounts receivable, less allowance for
doubtful accounts of $546 and $458
    
    
    12,000
    
    
    
    10,497Inventories, net
    
    
    33,198
    
    
    
    33,344Cost and estimated earnings in excess of
billings on uncompleted contracts
    
    
    3,495
    
    
    
    2,963Deferred income taxes
    
    
    3,200
    
    
    
    3,042Income Taxes Refundable
    
    
    72
    
    
    
    Prepaid expenses and other
    
    
    523
    
    
    
    737Total current assets
    
    
    54,665
    
    
    
    51,809Property, plant and equipment:Land
    
    
    585
    
    
    
    585Buildings
    
    
    8,251
    
    
    
    8,223Machinery and equipment
    
    
    20,600
    
    
    
    20,19629,436
    
    
    
    29,004Accumulated depreciation and amortization
    
    
    (21,781
    )
    
    
    (21,084
    )Net property, plant, and equipment
    
    
    7,655
    
    
    
    7,920Goodwill
    
    
    1,343
    
    
    
    1,343Intangible assets, net
    
    
    3,424
    
    
    
    3,894Deferred income taxes
    
    
    61
    
    
    
    Other assets
    
    
    119
    
    
    
    121Total assets
    
    $
    67,267
    
    
    $
    65,087
  3




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Video Display Corporation and Subsidiaries
Consolidated Balance Sheets (continued)
(in thousands)
 August 31,
    
    
    February 28,2007
    
    
    2007(unaudited)Liabilities and Shareholders EquityCurrent liabilitiesAccounts payable
    
    $
    6,185
    
    
    $
    6,325Accrued liabilities
    
    
    4,430
    
    
    
    4,054Billings in excess of cost and estimated
earnings on uncompleted contracts
    
    
    4
    
    
    
    34Current maturities of notes payable to officers
and directors
    
    
    416
    
    
    
    446Convertible notes payable, net of
discount of $25 and $75
    
    
    975
    
    
    
    1,175Income taxes payable
    
    
    
    
    
    
    61Current maturities of long-term debt
and financing lease obligations
    
    
    720
    
    
    
    726Total current liabilities
    
    
    12,730
    
    
    
    12,821Lines of credit
    
    
    16,149
    
    
    
    13,593Long-term debt, less current maturities
    
    
    2,239
    
    
    
    2,550Financing lease obligations, less current maturities
    
    
    226
    
    
    
    269Notes payable to officers and directors,
less current maturities
    
    
    4,128
    
    
    
    5,619Other long term liabilities
    
    
    623
    
    
    
    623Deferred income taxes
    
    
    
    
    
    
    71Total liabilities
    
    
    36,095
    
    
    
    35,546Shareholders EquityPreferred stock, no par value  10,000 shares
authorized; none issued and outstanding
    
    
    
    
    
    
    Common stock, no par value  50,000 shares authorized;
9,859 and 9,766 issued and outstanding at August
31, 2007 and 9,707 and 9,600 issued and
outstanding at February 28, 2007
    
    
    7,293
    
    
    
    7,284Additional paid-in capital
    
    
    104
    
    
    
    171Retained earnings
    
    
    25,466
    
    
    
    23,376Accumulated other comprehensive income
    
    
    165
    
    
    
    95Treasury stock, 228 and 166 shares at cost
    
    
    (1,856
    )
    
    
    (1,385
    )Total shareholders equity
    
    
    31,172
    
    
    
    29,541Total liabilities and shareholders equity
    
    $
    67,267
    
    
    $
    65,087
  4




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Video Display Corporation and Subsidiaries
 
 Consolidated Statements of Operations (unaudited)
 (in thousands, except per share data)
 Three Months Ended
    
    
    Six Months EndedAugust 31,
    
    
    August 31,2007
    
    
    2006
    
    
    2007
    
    
    2006Net sales
    
    $
    22,864
    
    
    $
    19,832
    
    
    $
    44,329
    
    
    $
    38,430Cost of goods sold
    
    
    15,208
    
    
    
    13,022
    
    
    
    29,133
    
    
    
    26,056Gross profit
    
    
    7,656
    
    
    
    6,810
    
    
    
    15,196
    
    
    
    12,374Operating expensesSelling and delivery
    
    
    1,967
    
    
    
    1,905
    
    
    
    3,889
    
    
    
    3,820General and
administrative
    
    
    3,850
    
    
    
    3,629
    
    
    
    7,735
    
    
    
    7,1805,817
    
    
    
    5,534
    
    
    
    11,624
    
    
    
    11,000Operating profit
    
    
    1,839
    
    
    
    1,276
    
    
    
    3,572
    
    
    
    1,374Other income (expense)Interest expense
    
    
    (470
    )
    
    
    (622
    )
    
    
    (941
    )
    
    
    (1,123
    )Other, net
    
    
    140
    
    
    
    6
    
    
    
    205
    
    
    
    49(330
    )
    
    
    (616
    )
    
    
    (736
    )
    
    
    (1,074
    )Income before
income taxes
    
    
    1,509
    
    
    
    660
    
    
    
    2,836
    
    
    
    300Income tax expense
    
    
    272
    
    
    
    275
    
    
    
    746
    
    
    
    150Net income
    
    $
    1,237
    
    
    $
    385
    
    
    $
    2,090
    
    
    $
    150Basic earnings per share
of common stock
    
    $
    .13
    
    
    $
    .04
    
    
    $
    .22
    
    
    $
    .02Diluted earnings per share
of common stock
    
    $
    .13
    
    
    $
    .04
    
    
    $
    .22
    
    
    $
    .02Basic weighted average
shares outstanding
    
    
    9,637
    
    
    
    9,673
    
    
    
    9,642
    
    
    
    9,657Diluted weighted average
shares outstanding
    
    
    9,687
    
    
    
    9,907
    
    
    
    9,698
    
    
    
    9,894
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Video Display Corporation and Subsidiaries
 
 Consolidated Statements of Shareholders Equity
 Six Months Ended August 31, 2007 (unaudited)
 (in thousands)
 AccumulatedCommon
    
    
    Common
    
    
    Additional
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    Compre-Stock
    
    
    Stock
    
    
    Paid-in
    
    
    Retained
    
    
    Comprehensive
    
    
    Treasury
    
    
    hensiveShares
    
    
    Amount
    
    
    Capital
    
    
    Earnings
    
    
    Income
    
    
    Stock
    
    
    IncomeBalance, February 28, 2007
    
    
    9,600
    
    
    $
    7,284
    
    
    $
    171
    
    
    $
    23,376
    
    
    $
    95
    
    
    $
    (1,385
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,090
    
    
    
    
    
    
    
    
    
    
    $
    2,090Foreign currency
translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    70
    
    
    
    
    
    
    
    70Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    2,160Issuance of common stock
under stock option plan
    
    
    68
    
    
    
    9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Repurchase of Treasury
Stock
    
    
    (62
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (471
    )Share based compensation
    
    
    
    
    
    
    
    
    
    
    (67
    )
    
    
    
    
    
    
    
    
    
    
    Balance, August 31, 2007
    
    
    9,606
    
    
    $
    7,293
    
    
    $
    104
    
    
    $
    25,466
    
    
    $
    165
    
    
    $
    (1,856
    )
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Video Display Corporation and Subsidiaries
 
 Consolidated Statements of Cash Flows (unaudited)
 (in thousands)
 Six Months EndedAugust 31,2007
    
    
    2006Operating ActivitiesNet income
    
    $
    2,090
    
    
    $
    150Adjustments to reconcile net income to net cash
provided by (used in) operating activities:Depreciation and amortization
    
    
    1,167
    
    
    
    1,042Provision for doubtful accounts
    
    
    88
    
    
    
    116Provision for inventory reserve
    
    
    76
    
    
    
    711Non-cash charge for share based compensation
    
    
    (67
    )
    
    
    26Deferred income taxes
    
    
    (290
    )
    
    
    (209
    )Interest on convertible note
    
    
    50
    
    
    
    13Changes in working capital, net of effects
from acquisitions:Accounts receivable
    
    
    (1,591
    )
    
    
    (483
    )Inventories
    
    
    70
    
    
    
    855Prepaid expenses and other current assets
    
    
    83
    
    
    
    (215
    )Accounts payable and accrued liabilities
    
    
    235
    
    
    
    (2,538
    )Cost,
estimated earnings and billings on uncompleted
contracts
    
    
    (561
    )
    
    
    Net cash provided by (used in) operating activities
    
    
    1,350
    
    
    
    (532
    )Investing ActivitiesCapital expenditures
    
    
    (432
    )
    
    
    (113
    )Cash paid for acquisition
    
    
    
    
    
    
    (550
    )Proceeds from the sale of property, plant and
equipment
    
    
    
    
    
    
    151Net cash used in investing activities
    
    
    (432
    )
    
    
    (512
    )
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Video Display Corporation and Subsidiaries


Consolidated Statements of Cash Flows (unaudited)


(in thousands)


Financing ActivitiesProceeds from long-term debt, lines of credit
and financing lease obligations
    
    
    11,549
    
    
    
    38,376Payments on long-term debt, lines of credit
and financing lease obligations
    
    
    (9,602
    )
    
    
    (37,330
    )Proceeds from loans from officers and directors
    
    
    702
    
    
    
    3,220Repayments of loans from officers and directors
    
    
    (2,224
    )
    
    
    (3,865
    )Purchases and retirements of common stock and purchase
of treasury stock
    
    
    (471
    )
    
    
    Proceeds from exercise of stock options
    
    
    9
    
    
    
    54Net cash (used in) provided by financing activities
    
    
    (37
    )
    
    
    455Effect of exchange rate changes on cash
    
    
    70
    
    
    
    247Net increase (decrease) in cash
    
    
    951
    
    
    
    (342
    )Cash, beginning of period
    
    
    1,226
    
    
    
    1,577Cash, end of period
    
    $
    2,177
    
    
    $
    1,235
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Video Display Corporation and Subsidiaries
 
 Notes to Consolidated Financial Statements (unaudited)
 August 31, 2007
       Accounting for Uncertainty in Income
Taxes
 How Taxes Collected from Customers and Remitted to Governmental
Authorities Should Be Presented in the Income Statement (That is, Gross versus Net Presentation).
 9




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Video Display Corporation and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
August 31, 2007
 Fair Values Measurements
 The Fair Value Option for Financial
Assets and Financial Liabilities.
     10




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Video Display Corporation and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
August 31, 2007
     August 31,
    
    
    February 28,2007
    
    
    2007Raw materials
    
    $
    19,503
    
    
    $
    19,540Work-in-process
    
    
    5,017
    
    
    
    4,210Finished goods
    
    
    14,140
    
    
    
    14,98038,660
    
    
    
    38,730Reserves for obsolescence
    
    
    (5,462
    )
    
    
    (5,386
    )$
    33,198
    
    
    $
    33,344
   August 31,
    
    
    February 28,2007
    
    
    2007Costs incurred to date on uncompleted contracts
    
    $
    5,768
    
    
    $
    9,733Estimated earnings recognized to date on these contracts
    
    
    2,035
    
    
    
    6,7697,803
    
    
    
    16,502Billings to date
    
    
    (4,312
    )
    
    
    (13,573
    )Costs and estimated earnings in excess of billings, net
    
    $
    3,491
    
    
    $
    2,929Costs and estimated earnings in excess of billings
    
    $
    3,495
    
    
    $
    2,963Billings in excess of costs and estimated earnings
    
    
    (4
    )
    
    
    (34
    )$
    3,491
    
    
    $
    2,929
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Video Display Corporation and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
August 31, 2007
       August 31, 2007
    
    
    February 28, 2007Accumulated
    
    
    
    
    
    
    AccumulatedCost
    
    
    Amortization
    
    
    Cost
    
    
    AmortizationCustomer lists
    
    $
    3,611
    
    
    $
    1,362
    
    
    $
    3,611
    
    
    $
    1,089Non-compete
agreements
    
    
    1,245
    
    
    
    678
    
    
    
    1,245
    
    
    
    552Patents
    
    
    765
    
    
    
    214
    
    
    
    765
    
    
    
    154Other intangibles
    
    
    149
    
    
    
    92
    
    
    
    149
    
    
    
    81$
    5,770
    
    
    $
    2,346
    
    
    $
    5,770
    
    
    $
    1,876
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Video Display Corporation and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
August 31, 2007
   August 31,
    
    
    February 28,2007
    
    
    2007Note payable to bank syndicate (RBC Centura
and Regions Bank); interest rate at LIBOR
plus applicable margin as defined per the
loan agreement, (7.67% combined rate as of
August 31, 2007); monthly principal payments
of $50 plus accrued interest, payable through
July 2011; collateralized by all assets of
the Company.
    
    $
    2,350
    
    
    $
    2,650Mortgage payable to bank; interest rate at
Federal Home Loan Bank Board Index rate plus
1.95% (7.35% as of August 31, 2007); monthly
principal and interest payments of $5 payable
through October 2021; collateralized by land
and building of Teltron Technologies, Inc
    
    
    510
    
    
    
    521Other
    
    
    
    
    
    
    162,860
    
    
    
    3,187Financing lease obligations
    
    
    325
    
    
    
    3583,185
    
    
    
    3,545Less current maturities
    
    
    (720
    )
    
    
    (726
    )$
    2,465
    
    
    $
    2,819
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Video Display Corporation and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
August 31, 2007
   Three Months
    
    
    Six MonthsEnded August 31,
    
    
    Ended August 31,2007
    
    
    2006
    
    
    2007
    
    
    2006Net SalesDisplay Segment
    
    $
    14,054
    
    
    $
    13,838
    
    
    $
    28,713
    
    
    $
    27,819Wholesale Distribution Segment
    
    
    8,810
    
    
    
    5,994
    
    
    
    15,616
    
    
    
    10,611$
    22,864
    
    
    $
    19,832
    
    
    $
    44,329
    
    
    $
    38,430Operating profitDisplay Segment
    
    $
    1,356
    
    
    $
    993
    
    
    $
    3,074
    
    
    $
    1,316Wholesale Distribution Segment
    
    
    483
    
    
    
    283
    
    
    
    498
    
    
    
    58Income from Operations
    
    
    1,839
    
    
    
    1,276
    
    
    
    3,572
    
    
    
    1,374Interest expense
    
    
    (470
    )
    
    
    (622
    )
    
    
    (941
    )
    
    
    (1,123
    )Other income, net
    
    
    140
    
    
    
    6
    
    
    
    205
    
    
    
    49Income before income taxes
    
    $
    1,509
    
    
    $
    660
    
    
    $
    2,836
    
    
    $
    300
   Six MonthsEnded August 31,2007
    
    
    2006Cash Paid for:Interest
    
    $
    902
    
    
    $
    1,033Income taxes, net of refunds
    
    $
    1,169
    
    
    $
    58Non-cash Transactions:Assets acquired in exchange for assumption of
debt
    
    $
    
    
    
    $
    678Assets acquired in exchange for common stock
    
    $
    
    
    
    $
    250
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Video Display Corporation and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
August 31, 2007
  Earnings Per Share
   WeightedAverageCommon Shares
    
    
    Earnings PerNet Income
    
    
    Outstanding
    
    
    ShareThree months ended August 31, 2007Basic
    
    $
    1,237
    
    
    
    9,637
    
    
    $
    0.13Effect of dilution:Options
    
    
    
    
    
    
    50Diluted
    
    $
    1,237
    
    
    
    9,687
    
    
    $
    0.13Three months ended August 31, 2006Basic
    
    $
    385
    
    
    
    9,673
    
    
    $
    0.04Effect of dilution:Options
    
    
    
    
    
    
    234Diluted
    
    $
    385
    
    
    
    9,907
    
    
    $
    0.04Six months ended August 31, 2007Basic
    
    $
    2,090
    
    
    
    9,642
    
    
    $
    0.22Effect of dilution:Options
    
    
    
    
    
    
    56Diluted
    
    $
    2,090
    
    
    
    9,698
    
    
    $
    0.22Six months ended August 31, 2006Basic
    
    $
    150
    
    
    
    9,657
    
    
    $
    0.02Effect of dilution:Options
    
    
    
    
    
    
    237Diluted
    
    $
    150
    
    
    
    9,894
    
    
    $
    0.02
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Video Display Corporation and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
August 31, 2007
 Stock-Based Compensation Plans
    Stock Repurchase Program
   Reporting Comprehensive Income
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Video Display Corporation and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
August 31, 2007
         17




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Video Display Corporation and Subsidiaries
August 31, 2007
 
 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 CRTSoffers a complete
range of CRTs for use in data display screen, including computer terminal monitors and medical
monitoring equipment.
    
    Entertainment CRTS offers a wide range of CRTs and projection tubes for
television and home theater equipment.
    
    Component Parts provides replacement electron guns and
other components for CRTs primarily for servicing the Companys internal needs.
  Inventory management
  18




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Video Display Corporation and Subsidiaries
August 31, 2007
  Interest rate exposure
 Results of Operations
  Three Months
    
    Six MonthsEnded August 31,
    
    Ended August 31,2007
    
    2006
    
    2007
    
    2006SalesDisplay SegmentMonitors
    
    
    49.3
    %
    
    
    56.2
    %
    
    
    47.7
    %
    
    
    56.4
    %Data Display CRTs
    
    
    9.3
    
    
    
    10.5
    
    
    
    13.8
    
    
    
    12.0Entertainment CRTs
    
    
    2.6
    
    
    
    2.8
    
    
    
    2.8
    
    
    
    3.4Components Parts
    
    
    0.3
    
    
    
    0.3
    
    
    
    0.5
    
    
    
    0.6Total Display Segment
    
    
    61.5
    %
    
    
    69.8
    %
    
    
    64.8
    %
    
    
    72.4
    %Wholesale Distribution Segment
    
    
    38.5
    
    
    
    30.2
    
    
    
    35.2
    
    
    
    27.6100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Costs and expensesCost of goods sold
    
    
    66.5
    %
    
    
    65.7
    %
    
    
    65.7
    %
    
    
    67.8
    %Selling and delivery
    
    
    8.6
    
    
    
    9.6
    
    
    
    8.8
    
    
    
    9.9General and administrative
    
    
    16.9
    
    
    
    18.3
    
    
    
    17.5
    
    
    
    18.792.0
    %
    
    
    93.6
    %
    
    
    92.0
    %
    
    
    96.4
    %Income from Operations
    
    
    8.0
    %
    
    
    6.4
    %
    
    
    8.0
    %
    
    
    3.6
    %Interest expense
    
    
    (2.0
    )%
    
    
    (3.1
    )%
    
    
    (2.1
    )%
    
    
    (2.9
    )%Other income, net
    
    
    0.6
    
    
    
    
    
    
    
    .5
    
    
    
    0.1Income before income taxes
    
    
    6.6
    %
    
    
    3.3
    %
    
    
    6.4
    %
    
    
    0.8
    %Provision for income taxes
    
    
    1.2
    
    
    
    1.4
    
    
    
    1.7
    
    
    
    0.4Net Income
    
    
    5.4
    %
    
    
    1.9
    %
    
    
    4.7
    %
    
    
    0.4
    %
 19




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##### Table of Contents



Video Display Corporation and Subsidiaries
August 31, 2007
 Net sales
   Gross margins
    20




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##### Table of Contents



Video Display Corporation and Subsidiaries
August 31, 2007
 Operating expenses
    Interest expense
  Income taxes
  Accounting for Uncertainty in Income Taxes
 Foreign currency translation
  Liquidity and Capital Resources
  21




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##### Table of Contents



Video Display Corporation and Subsidiaries
August 31, 2007
        Critical Accounting Policies
  22




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##### Table of Contents



Video Display Corporation and Subsidiaries
August 31, 2007
 Reserves on inventories
  Revenue Recognition
     23




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##### Table of Contents



Video Display Corporation and Subsidiaries
August 31, 2007
 Allowance for doubtful accounts
  Warranty reserves
  Other Accounting Policies
  Recent Accounting Pronouncements
 Accounting for Uncertainty in Income
Taxes
 How Taxes Collected from Customers and Remitted to Governmental
Authorities Should Be Presented in the Income Statement (That is, Gross versus Net Presentation).
 24




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##### Table of Contents



Video Display Corporation and Subsidiaries
August 31, 2007
  The Fair Value Option for Financial Assets
and Financial Liabilities
 Forward-Looking Information and Risk Factors
  25




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##### Table of Contents



Video Display Corporation and Subsidiaries
August 31, 2007
 
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
   
 ITEM 4. CONTROLS AND PROCEDURES
   Changes in Internal Controls
  26




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##### Table of Contents



Video Display Corporation and Subsidiaries
August 31, 2007
 
 PART II
 
 Legal Proceedings
 No new material legal proceedings or material changes in existing litigation occurred
during the quarter ended August 31, 2007.
 
 Risk Factors
 Information regarding risk factors appears under the caption Forward-Looking
Statements and Risk Factors in Part I, Item 2 of this Form 10-Q and in Part I, Item
1A of our Annual Report on Form 10-K for the fiscal year ended February 28, 2007.
There have been no material changes from the risk factors previously disclosed in our
Annual Report on Form 10-K.
 
 Unregistered Sales of Equity Securities and Use of Proceeds
 None.
 
 Defaults upon Senior Securities
 None
 
 Submission of Matters to a Vote of Security Holders
 None.
 
 Other information
 None.
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##### Table of Contents



Video Display Corporation and Subsidiaries
August 31, 2007
 
 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).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.
 28




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##### Table of Contents



SIGNATURES
  VIDEO DISPLAY CORPORATIONOctober 15, 2007
    
    By:
    
    /s/ Ronald D. OrdwayRonald D. OrdwayChief Executive OfficerOctober 15, 2007
    
    By:
    
    /s/ Gregory L. OsbornGregory L. OsbornChief Financial Officer
 29