##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
 (Mark One)
 þ
    
    Annual Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934
 For the fiscal year ended January 31, 2008.
 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 1-8777
 VIRCO MFG. CORPORATION
  DELAWARE
    
    95-1613718(State or other jurisdiction of incorporation or organization)
    
    (IRS Employer Identification No.)2027 Harpers Way, Torrance, California
    
    90501(Address of principal executive offices)
    
    (Zip Code)
 
 Title of each class
    
    Name of each exchange on which registered:Common Stock, $0.01 Par Value
    
    NASDAQ
  o þ
 o þ
 þ o
 þ
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ
   DOCUMENTS INCORPORATED BY REFERENCE




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##### 



TABLE OF CONTENTS
 PART IItem 1. Business
    
    
    2Item 1A. Risk Factors
    
    
    9Item 1B. Unresolved Staff Comments
    
    
    12Item 2. Properties
    
    
    13Item 3. Legal Proceedings
    
    
    13Item 4. Submission of Matters to a Vote of Security Holders
    
    
    13PART IIItem 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    14Item 6. Selected Financial Data
    
    
    15Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    17Item 7a. Quantitative and Qualitative Disclosures about Market Risk
    
    
    28Item 8. Financial Statements and Supplementary Data
    
    
    30Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures
    
    
    57Item 9A. Controls and Procedures
    
    
    57Item 9B. Other Information
    
    
    58PART IIIItem 10. Directors and Executive Officers of the Registrant
    
    
    59Item 11. Executive Compensation
    
    
    59Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    59Item 13. Certain Relationships and Related Transactions
    
    
    59Item 14. Principal Accounting Fees and Services
    
    
    59PART IVItem 15. Exhibits, Financial Statement Schedules
    
    
    60SIGNATURES
    
    
    62POWER OF ATTORNEY
    
    
    63Exhibit 21.1. List of SubsidiariesExhibit 23.1. Consent of Independent Registered Public Accounting FirmExhibit 31.1. CertificationsExhibit 31.2. CertificationsExhibit 32.1. Certification pursuant to 18 U.S.C. Section 1350EXHIBIT 21.1EXHIBIT 23.1EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1
  1




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PART I
 This report on Form 10-K contains a number of forward-looking statements that reflect the
Companys current views with respect to future events and financial performance, including, but not
limited to, statements regarding plans and objectives of management for future operations,
including plans and objectives relating to products, pricing, marketing, expansion, manufacturing
processes and potential or contemplated acquisitions; new business strategies; the Companys
ability to continue to control costs and inventory levels; availability and cost of raw materials,
especially steel and petroleum-based products; the availability and cost of labor: the potential
impact of the Companys Assemble-To-Ship program on earnings; market demand; the Companys
ability to position itself in the market; references to current and future investments in and
utilization of infrastructure; statements relating to managements beliefs that cash flow from
current operations, existing cash reserves, and available lines of credit will be sufficient to
support the Companys working capital requirements to fund existing operations; references to
expectations of future revenues; pricing; and seasonality.
 Such statements involve known and unknown risks, uncertainties, assumptions and other factors, many
of which are out of the Companys control and difficult to forecast, that may cause actual results
to differ materially from those which are anticipated. Such factors include, but are not limited
to, changes in, or the Companys ability to predict, general economic conditions, the markets for
school and office furniture generally and specifically in areas and with customers with which the
Company conducts its principal business activities, the rate of approval of school bonds for the
construction of new schools, the extent to which existing schools order replacement furniture,
customer confidence, and competition.
 In this report, words such as anticipates, believes, expects, will continue, future,
intends, plans, estimates, projects, potential, budgets, may, could and similar
expressions identify forward-looking statements. Readers are cautioned not to place undue reliance
on forward-looking statements, which speak only as of the date hereof.
 Throughout this report, our fiscal years ended January 31, 2004, January 31, 2005, January 31,
2006, January 31, 2007 and January 31, 2008 are referred to as years 2003, 2004, 2005, 2006 and
2007, respectively.
 
 Item 1. Business
 Introduction
 ® ® ® ® ®
   2




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Principal Products
   ® ® ® ® ®
 ® ® ®
 ®
  3




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®
   ® ®
   ® ® ® ® ® ® ® ® ® ®
  Raw Materials
    Marketing and Distribution
  4




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®
     Seasonality
  Working Capital Requirements During the Peak Summer Season
    5




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Other Matters
 Competition
   Backlog
  Patents and Trademarks
 ® ® ®
    6




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Employees
  Environmental Compliance
 ® ®
 Financial Information About Geographic Areas
  Executive Officers of the Registrant
  Age atJanuary
    
    Has Held31,
    
    OfficeName
    
    Office
    
    2008
    
    SinceR. A. Virtue (1)
    
    President, Chairman of the Board and Chief Executive Officer
    
    
    75
    
    
    
    1990D. A. Virtue (2)
    
    Executive Vice President
    
    
    49
    
    
    
    1992S. Bell (3)
    
    Vice President   General Manager, Conway Division
    
    
    51
    
    
    
    2004R. E. Dose (4)
    
    Vice President   Finance, Secretary and Treasurer
    
    
    51
    
    
    
    1995A. Gamble (5)
    
    Vice President   Human Resources
    
    
    39
    
    
    
    2004P. Quinones (6)
    
    Vice President   Logistics and Marketing Services
    
    
    44
    
    
    
    2004D. R. Smith (7)
    
    Vice President   Marketing
    
    
    59
    
    
    
    1995L. L. Swafford (8)
    
    Vice President   Legal Affairs
    
    
    43
    
    
    
    1998N. Wilson (9)
    
    Vice President   General Manager, Torrance Division
    
    
    60
    
    
    
    2004L. O. Wonder (10)
    
    Vice President   Sales
    
    
    56
    
    
    
    1995B. Yau (11)
    
    Corporate Controller, Assistant Secretary and Treasurer
    
    
    49
    
    
    
    2004
 
 (1)
    
    Appointed Chairman in 1990; has been employed by the Company for 51 years and has served as the President since 1982.(2)
    
    Appointed in 1992; has been employed by the Company for 22 years and has served in Production Control, as Contract Administrator, as Manager of Marketing Services, as
General Manager of the Torrance Division, and currently as Corporate Executive Vice President.(3)
    
    Appointed in 2004; has been employed by the Company for 19 years and has served in a variety of
manufacturing, safety, and environmental positions.(4)
    
    Appointed in 1995; has been employed by the Company for 17 years and has served as the Corporate Controller, and currently as Vice President-Finance, Secretary and
Treasurer.(5)
    
    Appointed in 2004; has been employed by the Company for 9 years and has served as Manager of Human Resources, as Director of Human Resources, currently as Vice President
of Human Resources.(6)
    
    Appointed in 2004; has been employed by the Company for 16 years in a variety customer and marketing service positions, currently as Vice President of Logistics and
Marketing Services.(7)
    
    Appointed in 1995; has been employed by the Company for 23 years in a variety of sales and marketing positions, currently as Vice President of Marketing. 7




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(8)
    
    Appointed in 1998; has been employed by the Company for 12 years and has served as Associate Corporate Counsel, currently as Vice President of Legal Affairs.(9)
    
    Appointed in 2004; has been employed by the Company for 41 years in a variety of manufacturing, warehousing, and transportation positions, currently as Vice President 
General Manager, Torrance Division.(10)
    
    Appointed in 1995; has been employed by the Company for 30 years in a variety of sales and marketing positions, currently as Vice President of Sales.(11)
    
    Appointed in 2004; has been employed by the Company for 11 years and has served as Corporate Controller, currently as Corporate Controller, Assistant Secretary and
Treasurer.  Available Information
    8




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Item 1A. Risk Factors
  Our product sales are significantly affected by education funding, which is outside of our control.
Our sales and/or growth in our sales would be adversely affected by a recessionary economy
characterized by decreased state and local revenues which in turn cause decreased funding for
education.
   We may have difficulty increasing or maintaining our prices as a result of price competition, which
could lower our profit margins. Our competitors may develop new services or product designs that
give them an advantage over us in making future sales.
  Our efforts to introduce new products that meet customer requirements may not be successful, which
could limit our sales growth or cause our sales to decline.
  We may not be able to manage our business effectively if we are unable to retain our experienced
management team or recruit other key personnel.
  The majority of our sales are generated under annual contracts, which limit our ability to raise
prices during a given year in response to increases in costs.
  We are dependent on the pricing and availability of raw materials and components, and price
increases and unavailability of raw materials and components could lower sales, increase our cost
of goods sold and reduce our profits and margins.
  9




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We are affected by the cost of energy, and increases in energy prices could reduce our margins and
profits.
  Approximately 40% of our sales are priced through one contract, under which we are the exclusive
supplier of classroom furniture.
  We operate in a seasonal business, and require significant amounts of working capital through our
existing credit facility to fund acquisitions of inventory, fund expenses for freight and
installation, and finance receivables during the summer delivery season. Restrictions imposed by
the terms of our existing credit facility may limit our operating and financial flexibility.
    We may require additional capital in the future, which may not be available or may be available
only on unfavorable terms.
  An inability to protect our intellectual property could have a significant impact on our business.
  10




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If third parties claim that we infringe upon their intellectual property rights, we may incur
liability and costs and may have to redesign or discontinue an infringing product.
  We could be required to incur substantial costs to comply with environmental requirements.
Violations of, and liabilities under, environmental laws and regulations may increase our costs or
require us to change our business practices.
  We are subject to potential labor disruptions, which could have a significant impact on our
business.
  Our insurance coverage may not adequately insulate us from expenses for product defects.
  Holders of approximately 45% of the shares of our stock have entered into an agreement restricting
the sale of the stock.
  Our corporate documents and Delaware law contain provisions that could discourage, delay or prevent
a change in control of our company.
  Our stock price has historically been volatile, and investors in our common stock could suffer a
decline in value.
 11




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
    
    actual or anticipated fluctuations in our operating results or future prospects;
    
    our announcements or our competitors announcements of new products;
    
    the publics reaction to our press releases, our other public announcements and our filings with the SEC;
    
    strategic actions by us or our competitors, such as acquisitions or restructurings;
    
    new laws or regulations or new interpretations of existing laws or regulations applicable to our business;
    
    changes in accounting standards, policies, guidance, interpretations or principles;
    
    changes in our growth rates or our competitors growth rates;
    
    our inability to raise additional capital;
    
    conditions of the school furniture industry as a result of changes in funding or general economic
conditions, including those resulting from war, incidents of terrorism and responses to such events; and
    
    changes in stock market analyst recommendations or earnings estimates regarding our common stock, other
comparable companies or the education furniture industry generally.
 
 Item 1B. Unresolved Staff Comments
  12




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Item 2. Properties
 Torrance, California
  Conway, Arkansas
   
 Item 3. Legal Proceedings
  
 Item 4. Submission of Matters to a Vote of Security Holders
  13




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PART II
 
 Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
  Dividend Policy
  Quarterly Dividend and Stock Market Information
 Common Stock RangeCash Dividends Declared
    
    2007
    
    20062007
    
    2006
    
    High
    
    Low
    
    High
    
    Low1st Quarter
    
    $
    
    
    
    $
    
    
    
    $
    9.60
    
    
    $
    6.34
    
    
    $
    6.63
    
    
    $
    4.402nd Quarter
    
    
    
    
    
    
    
    
    
    
    7.40
    
    
    
    5.59
    
    
    
    5.11
    
    
    
    4.503rd Quarter
    
    
    
    
    
    
    
    
    
    
    11.66
    
    
    
    4.85
    
    
    
    6.00
    
    
    
    4.364th Quarter
    
    
    .025
    
    
    
    
    
    
    
    13.79
    
    
    
    5.05
    
    
    
    9.50
    
    
    
    5.62
 Stock Performance Graph
  
 2003
    
    
    2004
    
    
    2005
    
    
    2006
    
    
    2007
    
    
    2008Virco Mfg. Corporation
    
    
    
    100.00
    
    
    
    
    83.00
    
    
    
    
    88.65
    
    
    
    
    74.98
    
    
    
    
    101.52
    
    
    
    
    72.49Hemscott Group Index
    
    
    
    100.00
    
    
    
    
    149.10
    
    
    
    
    160.76
    
    
    
    
    167.44
    
    
    
    
    196.12
    
    
    
    
    155.05NASDAQ Market Index
    
    
    
    100.00
    
    
    
    
    156.95
    
    
    
    
    156.32
    
    
    
    
    175.75
    
    
    
    
    188.54
    
    
    
    
    183.03AMEX Market Index
    
    
    
    100.00
    
    
    
    
    140.36
    
    
    
    
    150.39
    
    
    
    
    182.42
    
    
    
    
    196.71
    
    
    
    
    201.09
  14




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Securities Authorized for Issuance Under Equity Compensation Plans
 Equity Compensation Plan InformationNumber of securitiesremaining availableforfuture issuance underNumber of securities to
    
    Weighted-average
    
    equity compensationbe issued upon exercise
    
    exercise price of
    
    plans - excludingof outstanding options,
    
    outstanding options
    
    securities reflected inwarrants and rights
    
    warrants and rights
    
    column (a)Plan category
    
    (a)
    
    (b)
    
    (c)Equity compensation plans approved by security holders
    
    
    161,000
    
    
    $
    11.46
    
    
    
    Equity compensation plans not approved by security holders
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    161,000
    
    
    $
    11.46
    
    
    
    
  
 Item 6. Selected Financial Data
  Five Year Summary of Selected Financial Data
 In thousands, except per share data
    
    2007
    
    2006
    
    2005
    
    2004
    
    2003Summary of OperationsNet sales
    
    $
    229,565
    
    
    $
    223,107
    
    
    $
    214,450
    
    
    $
    199,854
    
    
    $
    191,852Net income (loss) (a)
    
    $
    22,219
    
    
    $
    7,545
    
    
    $
    (9,574
    )
    
    $
    (13,995
    )
    
    $
    (23,607
    )Income (Loss) per share dataNet income (loss) (b)Basic
    
    $
    1.54
    
    
    $
    0.56
    
    
    $
    (0.73
    )
    
    $
    (1.07
    )
    
    $
    (1.80
    )Assuming dilution
    
    $
    1.53
    
    
    $
    0.55
    
    
    $
    (0.73
    )
    
    $
    (1.07
    )
    
    $
    (1.80
    )Cash dividends declared per share
    
    $
    0.025
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    0.040
 
 (a)
    
    For fiscal 2003, an adjustment of $1.6 million of income tax expense was made to reflect tax
effect of minimum pension liability.(b)
    
    Net loss per share was calculated based on basic shares outstanding due to the anti-dilutive
effect on the inclusion of common stock equivalent shares.  In thousands, except per share data
    
    2007
    
    2006
    
    2005
    
    2004
    
    2003Total assets
    
    $
    127,035
    
    
    $
    116,277
    
    
    $
    114,720
    
    
    $
    114,041
    
    
    $
    126,268Working capital
    
    $
    31,996
    
    
    $
    22,994
    
    
    $
    15,488
    
    
    $
    15,334
    
    
    $
    25,404Current ratio
    
    
    1.9/1
    
    
    
    1.6/1
    
    
    
    1.4/1
    
    
    
    1.5/1
    
    
    
    2.0/1Total long-term obligations
    
    $
    20,369
    
    
    $
    30,101
    
    
    $
    38,862
    
    
    $
    34,090
    
    
    $
    37,934
 15




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In thousands, except per share data
    
    2007
    
    2006
    
    2005
    
    2004
    
    2003Stockholders equity
    
    $
    72,148
    
    
    $
    48,878
    
    
    $
    39,100
    
    
    $
    49,265
    
    
    $
    62,352Shares outstanding at year-end (2)
    
    
    14,429
    
    
    
    14,380
    
    
    
    13,137
    
    
    
    13,098
    
    
    
    13,096Stockholders equity per share (1)
    
    $
    5.00
    
    
    $
    3.40
    
    
    $
    2.98
    
    
    $
    3.76
    
    
    $
    4.76
 
 (1)
    
    Based on number of shares outstanding at year-end after giving effect for stock dividends and stock split.(2)
    
    Adjusted for stock dividends and stock split. Financial Highlights
 In thousands, except per share data
    
    2007
    
    2006
    
    2005
    
    2004
    
    2003Summary of OperationsNet sales (3) (4)
    
    $
    229,565
    
    
    $
    223,107
    
    
    $
    214,450
    
    
    $
    199,854
    
    
    $
    191,852Net income (loss) (5)Net income (loss) before change in
accounting methods
    
    $
    22,219
    
    
    $
    7,545
    
    
    $
    (9,574
    )
    
    $
    (13,995
    )
    
    $
    (23,607
    )Change in accounting methods
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    22,219
    
    
    $
    7,545
    
    
    $
    (9,574
    )
    
    $
    (13,995
    )
    
    $
    (23,607
    )Net income (loss) per share (1)
    
    $
    1.53
    
    
    $
    0.55
    
    
    $
    (0.73
    )
    
    $
    (1.07
    )
    
    $
    (1.80
    )Stockholders equity
    
    
    72,148
    
    
    
    48,878
    
    
    
    39,100
    
    
    
    49,265
    
    
    
    62,352Stockholders equity per share (2)
    
    
    5.00
    
    
    
    3.40
    
    
    
    2.98
    
    
    
    3.76
    
    
    
    4.76
 In thousands, except per share data
    
    2002
    
    2001
    
    2000
    
    1999
    
    1998Summary of OperationsNet sales (3) (4)
    
    $
    244,355
    
    
    $
    257,462
    
    
    $
    287,342
    
    
    $
    268,079
    
    
    $
    275,096Stockholders equity per share (2)Net income (loss) before change in
accounting methods
    
    $
    282
    
    
    $
    246
    
    
    $
    4,313
    
    
    $
    10,166
    
    
    $
    17,630Change in accounting methods
    
    
    
    
    
    
    
    
    
    
    (297
    )
    
    
    
    
    
    
    $
    282
    
    
    $
    246
    
    
    $
    4,016
    
    
    $
    10,166
    
    
    $
    17,630Net income (loss) per share (1)
    
    $
    0.02
    
    
    $
    0.02
    
    
    $
    0.29
    
    
    $
    0.72
    
    
    $
    1.20Stockholders equity
    
    
    82,774
    
    
    
    90,223
    
    
    
    94,141
    
    
    
    93,834
    
    
    
    88,923Stockholders equity per share (2)
    
    
    6.31
    
    
    
    6.71
    
    
    
    6.90
    
    
    
    6.82
    
    
    
    6.30
 
 (1)
    
    Based on average number of shares outstanding each year after giving retroactive effect for stock dividends and stock split.(2)
    
    Based on number of shares outstanding at year-end giving effect for stock dividends and stock split.(3)
    
    The prior period statements of operations contain certain reclassifications to conform to the presentation required by EITF
No. 00-10, Accounting for Shipping and Handling Fees and Costs, which the Company adopted during the fourth quarter of the year
ended January 31, 2001.(4)
    
    During the fourth quarter of 2000, the Company changed its method of accounting for revenue recognition in accordance with Staff
Accounting Bulletin No. 101, Revenue Recognition in Financial Statements. Pursuant to Financial Accounting Standards Board
Statement No. 3, Reporting Accounting Changes in Interim Financial Statements, effective February 1, 2000, the Company recorded
the cumulative effect of the accounting change.(5)
    
    For fiscal 2003, an adjustment of $1.6 million of income tax expense was made to reflect tax effect of minimum pension liability. 16




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Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    Executive Overview
    17




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Metric
    
    Fiscal 2000
    
    Fiscal 2007Revenue
    
    $
    287,342,000
    
    
    $
    229,565,000Interest and Depreciation
    
    $
    18,374,000
    
    
    $
    8,919,000Gross Margin
    
    
    32.40
    %
    
    
    36.40
    %Headcount
    
    
    2,300
    
    
    
    1,200Sales per Employee
    
    $
    125,000
    
    
    $
    191,000Pre-Tax Operating Margin
    
    
    2.40
    %
    
    
    5.30
    %Capital Expenditures
    
    $
    22,711,000
    
    
    $
    4,832,000
 ®
     Critical Accounting Policies and Estimates
    18




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19




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Industry Overview
    Virco Response to the Industry Environment
    20




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®
  ®
  Results of Operations (2007 vs. 2006)
 Financial Results and Cash Flow
  Sales
 ®
  Cost of Sales
    21




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Selling, General and Administrative and Others
    Results of Operations (2006 vs. 2005)
 Financial Results and Cash Flow
  Sales
 ®
 Cost of Sales
  Selling, General and Administrative and Others
   Provision for Income Taxes
  22




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Liquidity and Capital Resources
 Working Capital Requirements
       23




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Long-Term Capital Requirements
   Asset Impairment
 ®
   Contractual Obligations
  24




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##### Table of Contents



Less than 1
    
    
    
    
    
    
    
    
    
    More than 5(In thousands)
    
    Total
    
    year
    
    1-3 years
    
    3-5 years
    
    yearsLong-Term debt obligations
    
    $
    3,727
    
    
    $
    12
    
    
    $
    3,680
    
    
    $
    24
    
    
    $
    11Interest on long-term debt
obligations
    
    
    447
    
    
    
    1
    
    
    
    442
    
    
    
    3
    
    
    
    1Capital lease obligations
    
    
    119
    
    
    
    62
    
    
    
    57
    
    
    
    
    
    
    
    Operating lease obligations
    
    
    15,622
    
    
    
    6,791
    
    
    
    6,748
    
    
    
    1,666
    
    
    
    417Purchase obligations
    
    
    15,910
    
    
    
    15,910
    
    
    
    
    
    
    
    
    
    
    
    $
    35,825
    
    
    $
    22,776
    
    
    $
    10,927
    
    
    $
    1,693
    
    
    $
    429
    January 31,2008
    
    2007Beginning balance
    
    $
    1,750
    
    
    $
    1,500Provision
    
    
    938
    
    
    
    1,154Costs incurred
    
    
    (938
    )
    
    
    (904
    )Ending balance
    
    $
    1,750
    
    
    $
    1,750
 Retirement Obligations
    25




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##### Table of Contents



Stockholders Equity
    26




---



##### Table of Contents



Environmental and Contingent Liabilities
    Off-Balance Sheet Arrangements
  New Accounting Pronouncements
     27




---



##### Table of Contents



Item 7a. Quantitative and Qualitative Disclosures about Market Risk
 Inflation and Future Change in Prices
    28




---



##### Table of Contents



29




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##### Table of Contents



Item 8. Financial Statements and Supplementary Data
 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 PageManagements Report on Internal Control Over Financial Reporting
    
    
    32Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting
    
    
    33Report of Independent Registered Public Accounting Firm
    
    
    34Consolidated Balance Sheets as of January 31, 2008 and 2007
    
    
    35Consolidated Statements of Operations for the years ended January 31, 2008, 2007 and 2006
    
    
    36Consolidated Statements of Stockholders Equity for the years ended January 31, 2008, 2007 and 2006
    
    
    37Consolidated Statements of Cash Flows for the years ended January 31, 2008, 2007 and 2006
    
    
    38Notes to Consolidated Financial Statements
    
    
    39
 30




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##### Table of Contents



MANAGEMENTS REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
        31




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON INTERNAL CONTROL OVER FINANCIAL
REPORTING
 The Board of Directors and Stockholders of Virco Mfg. Corporation
     .
   
 32




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
            33




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##### Table of Contents



Virco Mfg. Corporation
 
 Consolidated Balance Sheets
 January 312008
    
    2007(In thousands)AssetsCurrent assetsCash
    
    $
    2,066
    
    
    $
    1,892Trade accounts receivables (net of allowance for
doubtful accounts of $200 in 2007 and 2006)
    
    
    15,474
    
    
    
    18,596Other receivables
    
    
    284
    
    
    
    228InventoriesFinished goods, net
    
    
    14,564
    
    
    
    11,651Work in process, net
    
    
    20,653
    
    
    
    19,690Raw materials and supplies, net
    
    
    7,791
    
    
    
    6,49643,008
    
    
    
    37,837Deferred tax assets, net
    
    
    4,189
    
    
    
    Prepaid expenses and other current assets
    
    
    1,493
    
    
    
    1,479Total current assets
    
    
    66,514
    
    
    
    60,032Property, plant and equipmentLand and land improvements
    
    
    3,612
    
    
    
    3,596Buildings and building improvements
    
    
    49,558
    
    
    
    49,555Machinery and equipment
    
    
    114,286
    
    
    
    109,730Leasehold improvements
    
    
    1,475
    
    
    
    1,323168,931
    
    
    
    164,204Less accumulated depreciation and amortization
    
    
    122,598
    
    
    
    116,116Net property, plant and equipment
    
    
    46,333
    
    
    
    48,088Goodwill and other intangible assets
    
    
    2,350
    
    
    
    2,350Less accumulated amortization
    
    
    52
    
    
    
    39Net goodwill and other intangible assets
    
    
    2,298
    
    
    
    2,311Deferred tax assets, net
    
    
    5,652
    
    
    
    Other assets
    
    
    6,238
    
    
    
    5,846Total assets
    
    $
    127,035
    
    
    $
    116,277
 See accompanying notes.
 34




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##### Table of Contents



Virco Mfg. Corporation
 Consolidated Balance Sheets
 January 312008
    
    2007(In thousands, except per share data)LiabilitiesCurrent liabilitiesChecks released but not yet cleared bank
    
    $
    4,163
    
    
    $
    2,563Accounts payable
    
    
    14,313
    
    
    
    14,463Accrued compensation and employee benefits
    
    
    7,762
    
    
    
    8,094Income tax payable
    
    
    610
    
    
    
    989Current portion of long-term debt
    
    
    74
    
    
    
    5,074Other accrued liabilities
    
    
    7,596
    
    
    
    5,855Total current liabilities
    
    
    34,518
    
    
    
    37,038Non-current liabilitiesAccrued self-insurance retention and other
    
    
    3,848
    
    
    
    3,962Accrued pension expenses
    
    
    12,749
    
    
    
    15,949Long-term debt, less current portion
    
    
    3,772
    
    
    
    10,190Total non-current liabilities
    
    
    20,369
    
    
    
    30,101Deferred tax liabilities
    
    
    
    
    
    
    260Commitments and contingenciesStockholders equityPreferred stock:Authorized 3,000,000 shares, $.01 par value; none issued or
outstanding
    
    
    
    
    
    
    Common stock:Authorized 25,000,000 shares, $.01 par value; issued
14,428,662 shares in 2007 and 14,379,506 shares in 2006
    
    
    144
    
    
    
    143Additional paid-in capital
    
    
    114,318
    
    
    
    113,737Accumulated deficit
    
    
    (37,224
    )
    
    
    (59,082
    )Accumulated comprehensive loss
    
    
    (5,090
    )
    
    
    (5,920
    )Total stockholders equity
    
    
    72,148
    
    
    
    48,878Total liabilities and stockholders equity
    
    $
    127,035
    
    
    $
    116,277
 See accompanying notes.
 35




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##### Table of Contents



Virco Mfg. Corporation
 
 Consolidated Statements of Operations
 Year ended January 312008
    
    2007
    
    2006(In thousands, except per share data)Net sales
    
    $
    229,565
    
    
    $
    223,107
    
    
    $
    214,450Costs of goods sold
    
    
    145,901
    
    
    
    144,495
    
    
    
    149,785Gross profit
    
    
    83,664
    
    
    
    78,612
    
    
    
    64,665Selling, general and administrative expenses
    
    
    69,213
    
    
    
    66,828
    
    
    
    70,271Separation costs
    
    
    
    
    
    
    
    
    
    
    742Interest expense, net
    
    
    2,276
    
    
    
    3,792
    
    
    
    3,258(Gain) loss on sale of assets, net
    
    
    (17
    )
    
    
    1
    
    
    
    77Income (loss) before income taxes
    
    
    12,192
    
    
    
    7,991
    
    
    
    (9,683
    )Income tax (benefit) expense
    
    
    (10,027
    )
    
    
    446
    
    
    
    (109
    )Net income (loss)
    
    $
    22,219
    
    
    $
    7,545
    
    
    $
    (9,574
    )Net income (loss) per common share (a)Basic
    
    $
    1.54
    
    
    $
    0.56
    
    
    $
    (0.73
    )Diluted
    
    $
    1.53
    
    
    $
    0.55
    
    
    $
    (0.73
    )Weighted average shares outstandingBasic
    
    
    14,401
    
    
    
    13,590
    
    
    
    13,114Diluted
    
    
    14,539
    
    
    
    13,611
    
    
    
    13,114
 
 (a)
    
    Net loss per share was calculated based on basic shares outstanding due to the anti-dilutive
effect on the inclusion of common stock equivalent shares. See accompanying notes.
 36




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##### Table of Contents



Virco Mfg. Corporation
 
 Consolidated Statements of Stockholders Equity
 Additional
    
    
    
    
    
    
    
    
    
    
    AccumulatedPaid-in
    
    
    Accumulated
    
    
    Comprehensive
    
    
    ComprehensiveIn thousands, except share data
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Deficit
    
    
    Income (Loss)
    
    
    Loss
    
    
    TotalBalance at January 31, 2005;
as previously reported
    
    
    13,098,364
    
    
    $
    131
    
    
    $
    107,883
    
    
    $
    (55,407
    )
    
    
    
    
    
    $
    (3,342
    )
    
    $
    49,265Adjustment to beginning
balances to reflect tax effect
of minimum pension liability
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,646
    )
    
    
    
    
    
    
    1,646
    
    
    
    Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,574
    )
    
    $
    (9,574
    )
    
    
    
    
    
    
    (9,574
    )Minimum pension liability
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (851
    )
    
    
    (851
    )
    
    
    (851
    )Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,425
    )
    
    
    
    
    
    
    Stock issued under option plans
    
    
    38,924
    
    
    
    
    
    
    
    260
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    260Balance at January 31, 2006
    
    
    13,137,288
    
    
    
    131
    
    
    
    108,143
    
    
    
    (66,627
    )
    
    
    
    
    
    
    (2,547
    )
    
    
    39,100Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,545
    
    
    
    7,545
    
    
    
    
    
    
    
    7,545Minimum pension liability
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,462
    )
    
    
    (1,462
    )
    
    
    (1,462
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,083
    
    
    
    
    
    
    
    Stock based payments under
stock compensation plans
    
    
    112,722
    
    
    
    
    
    
    
    754
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    754Stock issued under private
placement
    
    
    1,129,496
    
    
    
    12
    
    
    
    4,840
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,852Adoption of
SFAS No. 158
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,911
    )
    
    
    (1,911
    )Balance at January 31, 2007
    
    
    14,379,506
    
    
    
    143
    
    
    
    113,737
    
    
    
    (59,082
    )
    
    
    
    
    
    
    (5,920
    )
    
    
    48,878Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22,219
    
    
    
    22,219
    
    
    
    
    
    
    
    22,219Minimum pension liability, net
of tax effect of $553
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    830
    
    
    
    830
    
    
    
    830Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23,049
    
    
    
    
    
    
    
    Stock based payments under
stock compensation plans
    
    
    49,156
    
    
    
    1
    
    
    
    581
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    582Cash dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (361
    )
    
    
    
    
    
    
    
    
    
    
    (361
    )Balance at January 31, 2008
    
    
    14,428,662
    
    
    $
    144
    
    
    $
    114,318
    
    
    $
    (37,224
    )
    
    
    
    
    
    $
    (5,090
    )
    
    $
    72,148
 See accompanying notes.
 37




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##### Table of Contents



Virco Mfg. Corporation
 
 Consolidated Statements of Cash Flows
 Year Ended January 312008
    
    2007
    
    2006(In thousand, except share data)Operating activitiesNet income (loss)
    
    $
    22,219
    
    
    $
    7,545
    
    
    $
    (9,574
    )Adjustments to reconcile net income (loss) to net
cash provided by operating activities
Depreciation and amortization
    
    
    6,643
    
    
    
    7,199
    
    
    
    8,844Provision for doubtful accounts
    
    
    53
    
    
    
    72
    
    
    
    (2
    )(Gain) loss on sale of property, plant and equipment
    
    
    (17
    )
    
    
    1
    
    
    
    77Deferred income taxes
    
    
    (10,654
    )
    
    
    260
    
    
    
    Stock based compensation
    
    
    678
    
    
    
    754
    
    
    
    408Changes in operating assets and liabilities
trade accounts receivable
    
    
    3,070
    
    
    
    (1,399
    )
    
    
    (1,271
    )Other receivables
    
    
    (56
    )
    
    
    149
    
    
    
    (212
    )Inventories
    
    
    (5,171
    )
    
    
    (6,220
    )
    
    
    (5,570
    )Income taxes
    
    
    (379
    )
    
    
    142
    
    
    
    2,126Prepaid expenses and other current assets
    
    
    (290
    )
    
    
    14
    
    
    
    (153
    )Accounts payable and accrued liabilities
    
    
    788
    
    
    
    2,398
    
    
    
    5,576Other
    
    
    
    
    
    
    
    
    
    
    55Net cash provided by operating activities
    
    
    16,884
    
    
    
    10,915
    
    
    
    304Investing activitiesCapital expenditures
    
    
    (4,832
    )
    
    
    (3,622
    )
    
    
    (3,470
    )Proceeds from sale of property, plant and equipment
    
    
    17
    
    
    
    
    
    
    
    15Net investment in life insurance
    
    
    (116
    )
    
    
    (167
    )
    
    
    109Net cash used in investing activities
    
    
    (4,931
    )
    
    
    (3,789
    )
    
    
    (3,346
    )Financing activitiesProceeds from long-term debt
    
    
    3,582
    
    
    
    
    
    
    
    3,330Repayment of long-term debt
    
    
    (15,000
    )
    
    
    (11,475
    )
    
    
    Proceeds from issuance of common stock
    
    
    
    
    
    
    4,752
    
    
    
    9Cash dividend paid
    
    
    (361
    )
    
    
    
    
    
    
    Net cash (used in) provided by financing activities
    
    
    (11,779
    )
    
    
    (6,723
    )
    
    
    3,339Net increase in cash
    
    
    174
    
    
    
    403
    
    
    
    297Cash at beginning of year
    
    
    1,892
    
    
    
    1,489
    
    
    
    1,192Cash at end of year
    
    $
    2,066
    
    
    $
    1,892
    
    
    $
    1,489Supplemental disclosures of cash flow informationCash paid (received) during the year for:Interest, net of amounts capitalized
    
    $
    2,276
    
    
    $
    3,792
    
    
    $
    3,258Income tax, net
    
    
    1,006
    
    
    
    44
    
    
    
    (2,235
    )Non-cash activitiesAccrued asset retirement obligations
    
    $
    669
    
    
    $
    626
    
    
    $
    583Assets acquired under capital leases
    
    
    
    
    
    
    186
    
    
    
    
 See accompanying notes
 38




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##### Table of Contents



VIRCO MFG. CORPORATION
 
 Notes to Financial Statements
 January 31, 2008
 1. Summary of Business and Significant Accounting Policies
 Business
   Principles of Consolidation
  Management Use of Estimates
  Fiscal Year End
  Concentration of Credit Risk
   Fair
Values of Financial Instruments
  Derivatives
  39




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##### Table of Contents



Inventories
  Property, Plant and Equipment
  Land improvements
    
    5 to 25 yearsBuildings and building improvements
    
    5 to 40 yearsMachinery and equipment
    
    3 to 10 yearsLeasehold improvements
    
    shorter of lease or useful life
      AccumulatedAsset
    
    Depreciation
    
    LiabilityBeginning balance at January 31, 2007
    
    $
    540,000
    
    
    $
    (216,000
    )
    
    $
    (626,000
    )Additional obligation
    
    
    
    
    
    
    
    
    
    
    Depreciation expense
    
    
    
    
    
    
    (109,000
    )
    
    
    Accretion expense
    
    
    
    
    
    
    
    
    
    
    (43,000
    )Ending balance at January 31, 2008
    
    $
    540,000
    
    
    $
    (325,000
    )
    
    $
    (669,000
    )
 Impairment of Long-Lived Assets
  Net Income (Loss) Per Share
  40




---



##### Table of Contents



In thousands, except per share data
    
    2007
    
    2006
    
    2005NumeratorNet income (loss)
    
    $
    22,219
    
    
    $
    7,545
    
    
    $
    (9,574
    )DenominatorWeighted-average shares  basic
    
    
    14,401
    
    
    
    13,590
    
    
    
    13,114Common equivalent shares from common stock options and warrants
    
    
    138
    
    
    
    21
    
    
    
    Weighted-average shares  diluted
    
    
    14,539
    
    
    
    13,611
    
    
    
    13,114Net income (loss) per common share (a)Basic
    
    $
    1.54
    
    
    $
    0.56
    
    
    $
    (0.73
    )Diluted
    
    
    1.53
    
    
    
    0.55
    
    
    
    (0.73
    )
 
 (a)
    
    For the period ended January 31, 2006, approximately 253,000 shares of unvested stock awards
and incentive stock options were excluded in the computation of diluted net income per share,
as the effect would have been anti-dilutive. Goodwill and Other Intangible Assets
   2007
    
    
    
    
    
    
    
    
    
    2006Accumulated
    
    
    
    
    
    
    
    
    
    AccumulatedIn thousands
    
    Gross Amount
    
    Amortization
    
    Net Amount
    
    Gross Amount
    
    Amortization
    
    Net AmountGoodwill (not amortized)
    
    $
    2,200
    
    
    $
    
    
    
    $
    2,200
    
    
    $
    2,200
    
    
    $
    
    
    
    $
    2,200Intangible assets
    
    
    150
    
    
    
    52
    
    
    
    98
    
    
    
    150
    
    
    
    39
    
    
    
    111$
    2,350
    
    
    $
    52
    
    
    $
    2,298
    
    
    $
    2,350
    
    
    $
    39
    
    
    $
    2,311
  Environmental Costs
    Advertising Costs
  Product Warranty Expense
  41




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##### Table of Contents



Self-Insurance
  Stock-Based Compensation Plans
  Reclassifications
  Revenue Recognition
  Shipping and Installation Fees
  Accounting for Income Taxes
  Accounting for Pensions and Other Postretirement Plans
   42




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##### Table of Contents



New Accounting Pronouncements
        2. Inventories
  43




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##### Table of Contents



January 31, 2008Material
    
    
    
    
    
    Labor,Content at
    
    LIFO
    
    OverheadFIFO
    
    Reserve
    
    and Other
    
    TotalFinished goods
    
    $
    10,176
    
    
    $
    (1,849
    )
    
    $
    6,237
    
    
    $
    14,564Work in process
    
    
    14,402
    
    
    
    (2,912
    )
    
    
    9,163
    
    
    
    20,653Raw materials and supplies
    
    
    10,210
    
    
    
    (2,432
    )
    
    
    13
    
    
    
    7,791Total
    
    $
    34,788
    
    
    $
    (7,193
    )
    
    $
    15,413
    
    
    $
    43,008
 January 31, 2007Material
    
    
    
    
    
    Labor,Content at
    
    LIFO
    
    OverheadFIFO
    
    Reserve
    
    and Other
    
    TotalFinished goods
    
    $
    8,559
    
    
    $
    (1,616
    )
    
    $
    4,708
    
    
    $
    11,651Work in process
    
    
    13,974
    
    
    
    (3,306
    )
    
    
    9,022
    
    
    
    19,690Raw materials and supplies
    
    
    8,931
    
    
    
    (2,435
    )
    
    
    
    
    
    
    6,496Total
    
    $
    31,464
    
    
    $
    (7,357
    )
    
    $
    13,730
    
    
    $
    37,837
 3. Debt
  January 31,In thousands, except per share data
    
    2008
    
    2007Revolving credit line with Wells Fargo Bank
    
    $
    3,656
    
    
    $
    Term note with Wells Fargo Bank
    
    
    
    
    
    
    15,000Other
    
    
    190
    
    
    
    2643,846
    
    
    
    15,264Less current portion
    
    
    74
    
    
    
    5,074$
    3,772
    
    
    $
    10,190Outstanding stand-by letters of credit
    
    $
    329
    
    
    $
    329
      44




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##### Table of Contents



Year ending January 31,2009
    
    $
    742010
    
    
    3,7252011
    
    
    122012
    
    
    122013
    
    
    12Thereafter
    
    
    11
  4. Retirement Plans
           45




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##### Table of Contents



Qualified
    
    
    
    
    
    DirectorsPlan Year
    
    Plan
    
    VIP Plan
    
    Plan
    
    Total(In thousands)2008
    
    $
    837
    
    
    $
    526
    
    
    $
    0
    
    
    $
    1,3632009
    
    
    856
    
    
    
    517
    
    
    
    51
    
    
    
    1,4242010
    
    
    877
    
    
    
    495
    
    
    
    48
    
    
    
    1,4202011
    
    
    993
    
    
    
    478
    
    
    
    62
    
    
    
    1,5332012
    
    
    991
    
    
    
    457
    
    
    
    58
    
    
    
    1,5062013 - 2017
    
    
    6,355
    
    
    
    2,027
    
    
    
    234
    
    
    
    8,616
 Qualified Pension Plan
   Pension Benefits12/31/2007
    
    12/31/2006Change in Benefit ObligationBenefit obligation at beginning of year
    
    $
    24,079
    
    
    $
    22,284Service cost
    
    
    
    
    
    
    165Interest cost
    
    
    1,293
    
    
    
    1,382Plan participants contributions
    
    
    
    
    
    
    Amendments
    
    
    
    
    
    
    424Actuarial (gains) losses
    
    
    (344
    )
    
    
    3,013Benefits paid
    
    
    (834
    )
    
    
    (3,189
    )Benefit obligation at end of year
    
    $
    24,194
    
    
    $
    24,079Change in Plan AssetsFair value at beginning of year
    
    $
    13,911
    
    
    $
    14,812Actual return on plan assets
    
    
    1,457
    
    
    
    2,288Company contributions
    
    
    2,800
    
    
    
    Benefits paid
    
    
    (834
    )
    
    
    (3,189
    )Fair value at end of year
    
    $
    17,334
    
    
    $
    13,911Funded StatusUnfunded status of plan
    
    $
    (6,860
    )
    
    $
    (10,167
    )Accrued benefit cost
    
    $
    (6,860
    )
    
    
    (10,167
    )Amounts Recognized in Statements of Financial PositionAccrued benefit liability
    
    
    (6,860
    )
    
    
    (10,167
    )Accumulated other comprehensive loss
    
    
    6,650
    
    
    
    8,459Net amount recognized
    
    $
    (210
    )
    
    $
    (1,708
    )Items not yet Recognized as a Component of Net Periodic Pension Expense:Unrecognized net actuarial losses
    
    $
    4,357
    
    
    $
    5,670Unamortized prior service costs
    
    
    2,293
    
    
    
    2,804Net initial asset recognition
    
    
    
    
    
    
    (15
    )$
    6,650
    
    
    $
    8,459Supplementary DataProjected benefit obligation
    
    $
    24,194
    
    
    $
    24,079Accumulated benefit obligation
    
    
    24,194
    
    
    
    24,079Fair value of plan assets
    
    
    17,334
    
    
    
    13,911
 46




---



##### Table of Contents



12/31/2007
    
    12/31/2006Components of Net CostService cost
    
    $
    
    
    
    $
    165Interest cost
    
    
    1,293
    
    
    
    1,382Expected return on plan assets
    
    
    (801
    )
    
    
    (896
    )Amortization of transition amount
    
    
    (15
    )
    
    
    (37
    )Amortization of prior service cost
    
    
    510
    
    
    
    469Recognized net actuarial loss
    
    
    313
    
    
    
    196Benefit cost
    
    $
    1,300
    
    
    $
    1,279Estimated Future Benefit PaymentsFYE 01-31-2009
    
    
    837FYE 01-31-2010
    
    
    856FYE 01-31-2011
    
    
    877FYE 01-31-2012
    
    
    993FYE 01-31-2013
    
    
    991FYE 01-31-2014 to 2018
    
    
    6,355Total
    
    $
    10,909
 12/31/2007
    
    12/31/2006Weighted Average AssumptionsDiscount rate
    
    
    6.00
    %
    
    
    5.75
    %Expected return on plan assets
    
    
    6.50
    %
    
    
    6.50
    %Rate of compensation increase
    
    
    N/A
    
    
    
    N/A
 VIP Retirement Plan
    Non-Qualified Pension12/31/2007
    
    12/31/2006Change in Benefit ObligationBenefit obligation at beginning of year
    
    $
    5,764
    
    
    $
    5,675Service cost
    
    
    
    
    
    
    202Interest cost
    
    
    324
    
    
    
    360Plan participants contributions
    
    
    
    
    
    
    Amendments
    
    
    
    
    
    
    (424
    )Actuarial losses
    
    
    102
    
    
    
    207Benefits paid
    
    
    (370
    )
    
    
    (256
    )Benefit obligation at end of year
    
    $
    5,820
    
    
    $
    5,764Change in Plan AssetsCompany contributions
    
    
    370
    
    
    
    256Benefits paid
    
    
    (370
    )
    
    
    (256
    )Fair value at end of year
    
    $
    
    
    
    $
    Funded StatusUnfunded status of plan
    
    $
    (5,820
    )
    
    $
    (5,764
    )Accrued benefit cost
    
    $
    (5,820
    )
    
    $
    (5,764
    )
 47




---



##### Table of Contents



Non-Qualified Pension12/31/2007
    
    12/31/2006Amounts Recognized in Statements of Financial PositionAccrued benefit liability
    
    
    (5,820
    )
    
    
    (5,764
    )Accumulated other comprehensive loss
    
    
    (238
    )
    
    
    Net amount recognized
    
    $
    (6,058
    )
    
    $
    (5,764
    )Items not yet Recognized as a Component of Net Periodic Pension Expense:Unrecognized net actuarial losses
    
    $
    1,992
    
    
    $
    2,034Unamortized prior service costs
    
    
    (2,230
    )
    
    
    (2,729
    )$
    (238
    )
    
    $
    (695
    )Supplementary DataProjected benefit obligation
    
    $
    5,820
    
    
    $
    5,764Accumulated benefit obligation
    
    
    5,820
    
    
    
    5,764Fair value of plan assets
    
    
    
    
    
    
    Components of Net CostService cost
    
    $
    
    
    
    $
    202Interest cost
    
    
    324
    
    
    
    360Amortization of prior service cost
    
    
    (499
    )
    
    
    (535
    )Recognized net actuarial loss
    
    
    144
    
    
    
    119Benefit cost
    
    $
    (31
    )
    
    $
    146Estimated Future Benefit PaymentsFYE 01-31-2009
    
    
    526FYE 01-31-2010
    
    
    517FYE 01-31-2011
    
    
    495FYE 01-31-2012
    
    
    478FYE 01-31-2013
    
    
    457FYE 01-31-2014 to 2018
    
    
    2,027Total
    
    $
    4,500Weighted Average AssumptionsDiscount rate
    
    
    6.00
    %
    
    
    5.75
    %Expected return on plan assets
    
    
    N/A
    
    
    
    N/ARate of compensation increase
    
    
    N/A
    
    
    
    N/A
 Non-Employee Directors Retirement Plan
   Non-Qualified OutsideDirectors12/31/2007
    
    12/31/2006Change in Benefit ObligationBenefit obligation at beginning of year
    
    $
    471
    
    
    $
    419Service cost
    
    
    28
    
    
    
    26Interest cost
    
    
    27
    
    
    
    27Actuarial (gains)
    
    
    (56
    )
    
    
    (1
    )Benefits paid
    
    
    
    
    
    
    Benefit obligation at end of year
    
    $
    470
    
    
    $
    471
 48




---



##### Table of Contents



Non-Qualified OutsideDirectors12/31/2007
    
    12/31/2006Funded StatusUnfunded status of plan
    
    $
    (470
    )
    
    $
    (471
    )Accrued benefit cost
    
    $
    (470
    )
    
    $
    (471
    )Amounts Recognized in Statements of Financial PositionAccrued benefit liability
    
    $
    (470
    )
    
    $
    (471
    )Accumulate other comprehensive loss
    
    
    
    
    
    
    Net amount recognized
    
    $
    (470
    )
    
    $
    (471
    )Items not
yet Recognized as a Component of Net Periodic Pension Expense:Unrecognized net actuarial gain
    
    $
    (230
    )
    
    $
    (198
    )Unamortized prior service costs
    
    
    Net initial asset recognition
    
    
    $
    (230
    )
    
    
    (198
    )Supplementary DataProjected benefit obligation
    
    $
    470
    
    
    $
    471Accumulated benefit obligation
    
    
    470
    
    
    
    471Fair value of plan assets
    
    
    
    
    
    
    Components of
Net CostService cost
    
    $
    28
    
    
    $
    26Interest cost
    
    
    27
    
    
    
    27Amortization of prior service cost
    
    
    
    
    
    
    23Recognized net actuarial loss
    
    
    (25
    )
    
    
    (28
    )Benefit cost
    
    $
    30
    
    
    $
    48Estimated Future Benefit PaymentsFYE 01-31-2009
    
    
    FYE 01-31-2010
    
    
    51FYE 01-31-2011
    
    
    48FYE 01-31-2012
    
    
    62FYE 01-31-2013
    
    
    58FYE 01-31-2014 to 2017
    
    
    234Total
    
    $
    453Weighted Average AssumptionsDiscount rate
    
    
    6.00
    %
    
    
    5.75
    %Expected return on plan assets
    
    
    N/A
    
    
    
    N/ARate of compensation increase
    
    
    N/A
    
    
    
    N/A
 Implementation of SFAS No. 158
  49




---



##### Table of Contents



Qualified
    
    VIP
    
    DirectorsIn thousands
    
    Plan
    
    Plan
    
    PlanActuarial (gain)/loss recognition
    
    $
    190
    
    
    $
    143
    
    
    $
    (32
    )Prior service cost recognition
    
    
    510
    
    
    
    (318
    )
    
    
    Net initial obligation/(asset) recognition
    
    
    
    
    
    
    
    
    
    
    
  Before
    
    Effect of
    
    AfterSFAS No.
    
    SFAS No.
    
    SFAS No.In thousands
    
    158
    
    158
    
    158Assets:Other non-current assets
    
    $
    2,804
    
    
    $
    (2,804
    )
    
    $
    Liabilities:Accrued pension expenses
    
    $
    16,842
    
    
    $
    893
    
    
    $
    15,949Shareholders equity:Accumulated comprehensive loss
    
    $
    50,789
    
    
    $
    (1,911
    )
    
    $
    48,878
 401(k) Retirement Plan
  Life Insurance
   5. Stock Based Compensation and Stockholders Rights
 Stock Incentive Plans
    50




---



##### Table of Contents



Accounting for the Plans
   Year ended January 31,in thousands except per share data
    
    2006Net loss, as reported
    
    $
    (9,574
    )Deduct: Total stock-based employee compensation expense
determined under the fair value based method for all awards,
net of tax effects
    
    
    (51
    )Net loss, pro forma
    
    $
    (9,625
    )Basic earnings per share:Net income loss, as reported
    
    $
    (0.73
    )Net income loss, pro forma
    
    
    (0.73
    )Diluted earnings per share:Net income loss, as reported
    
    $
    (0.73
    )Net income loss, pro forma
    
    
    (0.73
    )
  Expected life
    
    5 yearsRisk-free interest rate
    
    
    4.5
    %Expected volatility
    
    
    0.26Expected dividend yield
    
    
    0
    %
   2008
    
    
    2007
    
    
    2006Weighted-
    
    
    
    
    
    
    Weighted-
    
    
    
    
    
    
    Weighted-Average
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    AverageOptions
    
    
    Exercise Price
    
    
    Options
    
    
    Exercise Price
    
    
    Options
    
    
    Exercise PriceOutstanding at beginning of year
    
    
    234,594
    
    
    $
    12.53
    
    
    
    292,571
    
    
    $
    11.56
    
    
    
    367,888
    
    
    $
    11.39Granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,000
    
    
    
    7.20Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,922
    )
    
    
    2.91Forfeited
    
    
    (73,161
    )
    
    
    14.89
    
    
    
    (57,977
    )
    
    
    7.66
    
    
    
    (86,395
    )
    
    
    9.28Outstanding at end of year
    
    
    161,433
    
    
    
    11.46
    
    
    
    234,594
    
    
    
    12.53
    
    
    
    292,571
    
    
    
    11.56Exercisable at end of year
    
    
    161,433
    
    
    
    11.46
    
    
    
    234,594
    
    
    
    12.53
    
    
    
    292,571
    
    
    
    11.56Weighted-average fair value of
options granted during the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2.78
 51




---



##### Table of Contents



Options Outstanding
    
    Options ExercisableRemainingContractualPrice
    
    Number of Shares
    
    Life
    
    Number of Shares
    
    Price$8.82
    
    
    12,100
    
    
    
    3.55
    
    
    
    12,100
    
    
    $
    8.82$11.06
    
    
    90,769
    
    
    
    1.47
    
    
    
    90,769
    
    
    $
    11.06$12.64
    
    
    58,564
    
    
    
    0.70
    
    
    
    58,564
    
    
    $
    12.64$11.46
    
    
    161,433
    
    
    
    1.35
    
    
    
    161,433
    
    
    $
    11.46
  Restricted Stock Unit Awards
      52




---



##### Table of Contents



2008
    
    2007
    
    2006Weighted-
    
    
    
    
    
    Weighted-
    
    
    
    
    
    Weighted-average fair
    
    
    
    
    
    average fair
    
    
    
    
    
    average fairvalue of
    
    
    
    
    
    value of
    
    
    
    
    
    value ofRestricted
    
    restricted
    
    Restricted
    
    restricted
    
    Restricted
    
    restrictedstock units
    
    stock units
    
    stock units
    
    stock units
    
    stock units
    
    stock unitsOutstanding at beginning
of year
    
    
    153,000
    
    
    $
    6.91
    
    
    
    277,881
    
    
    $
    6.91
    
    
    
    270,000
    
    
    $
    6.92Granted
    
    
    275,387
    
    
    
    6.79
    
    
    
    17,640
    
    
    
    4.96
    
    
    
    73,881
    
    
    
    5.21Vested
    
    
    (63,887
    )
    
    
    6.64
    
    
    
    (142,521
    )
    
    
    4.99
    
    
    
    (54,000
    )
    
    
    6.80Forfeited
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,000
    )
    
    
    6.92Outstanding at end of year
    
    
    364,500
    
    
    
    6.82
    
    
    
    153,000
    
    
    
    6.91
    
    
    
    277,881
    
    
    
    6.91Weighted-average fair
value of restricted stock
units granted during the
year
    
    
    
    
    
    $
    6.79
    
    
    
    
    
    
    $
    4.96
    
    
    
    
    
    
    $
    5.21
 Stockholders Rights
  6. Income Taxes
  Year ended January 31,2008
    
    
    2007
    
    
    2006Statutory
    
    $
    4,145
    
    
    $
    2,717
    
    
    $
    (3,292
    )State taxes (net of federal tax)
    
    
    458
    
    
    
    272
    
    
    
    (329
    )Change in valuation allowance
    
    
    (14,750
    )
    
    
    (2,432
    )
    
    
    3,721Other
    
    
    120
    
    
    
    (111
    )
    
    
    (209
    )$
    (10,027
    )
    
    $
    446
    
    
    $
    (109
    )
  January 31,2008
    
    
    2007
    
    
    2006CurrentFederal
    
    $
    284
    
    
    $
    220
    
    
    $
    State
    
    
    343
    
    
    
    (34
    )
    
    
    (109
    )627
    
    
    
    186
    
    
    
    (109
    )DeferredFederal
    
    
    3,927
    
    
    
    2,205
    
    
    
    (3,502
    )State
    
    
    169
    
    
    
    487
    
    
    
    (219
    )4,096
    
    
    
    2,692
    
    
    
    (3,721
    )Valuation allowance
    
    
    (14,750
    )
    
    
    (2,432
    )
    
    
    3,721(10,654
    )
    
    
    260
    
    
    
    $
    (10,027
    )
    
    $
    446
    
    
    $
    (109
    )
 53




---



##### Table of Contents



January 31,2008
    
    
    2007Deferred tax assetsAccrued vacation and sick leave
    
    $
    1,232
    
    
    $
    979Retirement plans
    
    
    5,213
    
    
    
    6,517Insurance reserves
    
    
    1,256
    
    
    
    1,060Inventory
    
    
    989
    
    
    
    858Warranty
    
    
    665
    
    
    
    655Net operating loss carry forwards
    
    
    2,517
    
    
    
    6,87211,872
    
    
    
    16,941Deferred tax liabilitiesTax in excess of book depreciation
    
    
    (985
    )
    
    
    (1,407
    )Other
    
    
    (205
    )
    
    
    (204
    )(1,190
    )
    
    
    (1,611
    )Valuation allowance
    
    
    (841
    )
    
    
    (15,591
    )Net deferred tax asset (liability)
    
    $
    9,841
    
    
    $
    (260
    )
  Balance as of February 1, 2007
    
    $
    525,000Increases related to prior year tax positions
    
    
    90,000Decreases related to prior year tax positions
    
    
    (150,000
    )Increases related to current year tax positions
    
    
    60,000Decreases related to settlements with taxing authorities
    
    
    Decreases related to lapsing of statue of limitations
    
    
    Balance as of January 31, 2008
    
    $
    525,000
    54




---



##### Table of Contents



7. Commitments
   Year ending January 31,2009
    
    $
    6,7912010
    
    
    5,6072011
    
    
    1,1412012
    
    
    9342013
    
    
    732Thereafter
    
    
    417
  Year ended January 31,2008
    
    $
    7,4912007
    
    
    8,0192006
    
    
    9,457
  8. Contingencies
    55




---



##### Table of Contents



Year ending January 31,2009
    
    $
    7502010
    
    
    7502011
    
    
    7502012
    
    
    7502013
    
    
    750Total
    
    
    3,750Discount to net present value
    
    
    (300
    )Thereafter
    
    $
    3,450
  9. Warranty
   January 31,2008
    
    2007Beginning balance
    
    $
    1,750
    
    
    $
    1,500Provision
    
    
    938
    
    
    
    1,154Costs incurred
    
    
    (938
    )
    
    
    (904
    )Ending balance
    
    $
    1,750
    
    
    $
    1,750
 10. Other Financing Activities
   56




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##### Table of Contents



11. Quarterly Results (Unaudited)
  April 30
    
    July 30
    
    October 31
    
    January 31Year ended January 31, 2008Net sales
    
    $
    31,122
    
    
    $
    88,931
    
    
    $
    76,977
    
    
    $
    32,535Gross profit
    
    
    11,550
    
    
    
    33,716
    
    
    
    27,939
    
    
    
    10,459Net (loss) income
    
    
    (2,980
    )
    
    
    11,611
    
    
    
    16,738
    
    
    
    (3,150
    )Per common shareNet (loss) income (1)Basic
    
    $
    (0.21
    )
    
    $
    0.81
    
    
    $
    1.16
    
    
    $
    (0.22
    )Assuming dilution
    
    
    (0.21
    )
    
    
    0.80
    
    
    
    1.15
    
    
    
    (0.22
    )Year ended January 31, 2007Net sales
    
    $
    34,515
    
    
    $
    78,595
    
    
    $
    73,678
    
    
    $
    36,319Gross profit
    
    
    11,494
    
    
    
    28,383
    
    
    
    27,092
    
    
    
    11,643Net (loss) income
    
    
    (3,267
    )
    
    
    7,832
    
    
    
    5,833
    
    
    
    (2,853
    )Per common share (1)Net (loss) incomeBasic
    
    $
    (0.25
    )
    
    $
    0.58
    
    
    $
    0.41
    
    
    $
    (0.20
    )Assuming dilution
    
    
    (0.25
    )
    
    
    0.58
    
    
    
    0.41
    
    
    
    (0.20
    )
 
 (1)
    
    Per common share amounts for the quarters and full years have each been calculated
separately. Accordingly, quarterly amounts may not add to the annual amounts because of
differences in the average common shares outstanding during each period and with regard to
diluted per common share amounts only, because of the effect of potentially dilutive
securities only in the periods in which the effect would have been dilutive. 
 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures
  
 Item 9A. Controls and Procedures
 Disclosure Controls and Procedures
   57




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##### Table of Contents



Internal Control Over Financial Reporting
  
 Item 9B. Other Information
  58




---



##### Table of Contents



PART III
 
 Item 10. Directors and Executive Officers of the Registrant
  www.virco.com
 
 Item 11. Executive Compensation
  
 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
  
 Item 13. Certain Relationships and Related Transactions
  
 Item 14. Principal Accounting Fees and Services
  59




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##### Table of Contents



PART IV
 
 Item 15. Exhibits, Financial Statement Schedules
 1.
    
    The following consolidated financial statements of Virco Mfg. Corporation are set forth in Item 8 of this report.Report of Independent Registered Public Accounting Firm.Consolidated balance sheets  January 31, 2008 and 2007.Consolidated statements of operations  Years ended January 31, 2008, 2007, and 2006.Consolidated statements of stockholders equity  Years ended January 31, 2008, 2007, and 2006.Consolidated statements of cash flows  Years ended January 31, 2008, 2007, and 2006.Notes to consolidated financial statements  January 31, 2008.2.
    
    The following consolidated financial statement schedule of Virco Mfg. Corporation is included in Item 15:
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VIRCO MFG. CORPORATION AND SUBSIDIARIES
SCHEDULE II  VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEARS ENDED JANUARY 31, 2008, 2007 AND 2006
  Col. A
    
    Col. B
    
    Col. C
    
    Col. E
    
    Col. FCharged to
    
    Deductions fromBeginning Balance
    
    Expenses
    
    Reserves
    
    Ending BalanceAllowance for doubtful accounts for the period ended:January 31, 2008
    
    $
    200
    
    
    $
    53
    
    
    $
    53
    
    
    $
    200January 31, 2007
    
    $
    200
    
    
    $
    72
    
    
    $
    72
    
    
    $
    200January 31, 2006
    
    $
    225
    
    
    $
    
    
    
    $
    25
    
    
    $
    200Inventory valuation reserve for the period ended:January 31, 2008
    
    $
    1,400
    
    
    $
    250
    
    
    $
    
    
    
    $
    1,650January 31, 2007
    
    $
    1,400
    
    
    $
    
    
    
    $
    
    
    
    $
    1,400January 31, 2006
    
    $
    1,400
    
    
    $
    
    
    
    $
    
    
    
    $
    1,400Warranty reserve for the period ended:January 31, 2008
    
    $
    1,750
    
    
    $
    938
    
    
    $
    938
    
    
    $
    1,750January 31, 2007
    
    $
    1,500
    
    
    $
    1,154
    
    
    $
    904
    
    
    $
    1,750January 31, 2006
    
    $
    1,500
    
    
    $
    900
    
    
    $
    900
    
    
    $
    1,500Product, workers compensation and automobile liability
reserves 
for the period ended:January 31, 2008
    
    $
    2,835
    
    
    $
    470
    
    
    $
    
    
    
    $
    3,305January 31, 2007
    
    $
    1,620
    
    
    $
    1,215
    
    
    $
    
    
    
    $
    2,835January 31, 2006
    
    $
    2,400
    
    
    $
    
    
    
    $
    780
    
    
    $
    1,620Deferred tax valuation allowance for the period ended:January 31, 2008
    
    $
    15,591
    
    
    $
    
    
    
    $
    14,750
    
    
    $
    841January 31, 2007
    
    $
    16,640
    
    
    $
    
    
    
    $
    1,049
    
    
    $
    15,591January 31, 2006
    
    $
    12,919
    
    
    $
    3,721
    
    
    $
    
    
    
    $
    16,640
  3.
    
    Exhibits
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##### Table of Contents



SIGNATURES
  VIRCO MFG. CORPORATIONDate: April 15, 2008
    By:
    /s/ Robert A. VirtueRobert A. VirtueChairman of the Board and
Chief Executive Officer 62




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##### Table of Contents



POWER OF ATTORNEY
   SIGNATURE
    
    TITLE
    
    DATE/s/ Robert A. Virtue
    
    Chairman of the Board, Chief ExecutiveRobert A. Virtue
    
    Officer, President and Director (Principal Executive Officer)
    
    April 15, 2008/s/ Douglas A. Virtue
    
    Director
    
    April 15, 2008Douglas A. Virtue/s/ Robert E. Dose
    
    Vice President  Finance, Secretary andRobert E. Dose
    
    Treasurer (Principal Financial Officer)
    
    April 15, 2008/s/ Bassey Yau
    
    Corporate ControllerBassey Yau
    
    (Principal Accounting Officer)
    
    April 15, 2008/s/ Donald S. Friesz
    
    Director
    
    April 15, 2008Donald S. Friesz/s/ Thomas J. Schulte
    
    Director
    
    April 15, 2008Thomas J. Schulte/s/ Robert K. Montgomery
    
    Director
    
    April 15, 2008Robert K. Montgomery/s/ Albert J. Moyer
    
    Director
    
    April 15, 2008Albert J. Moyer/s/ Glen D. Parish
    
    Director
    
    April 15, 2008Glen D. Parish/s/ Donald A. Patrick
    
    Director
    
    April 15, 2008Donald A. Patrick/s/ James R. Wilburn
    
    Director
    
    April 15, 2008James R. Wilburn
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##### Table of Contents



VIRCO MFG. CORPORATION
 
 EXHIBITS TO FORM 10-K ANNUAL REPORT
 For the Year Ended January 31, 2008
 ExhibitNumber
    
    Description3.1
    
    Certificate of Incorporation of the Company dated April 23, 1984, as amended (incorporated by reference to
Exhibit 4.4 to the Companys Form S-8 Registration Statement (Commission File No. 33-65098), filed with the
Commission on June 25, 1993).3.2
    
    Amended and Restated Bylaws of the Company dated September 10, 2001 (incorporated by reference to
Exhibit 3.2 to the Companys Quarterly Report on Form 10-Q (Commission File No. 001-08777), filed with the
Commission on September 14, 2001).4.1
    
    Rights Agreement dated as of October 18, 1996, by and between the Company and Mellon Investor Services (as
assignee of The Chase Manhattan Bank), as Rights Agent incorporated by reference to Exhibit 1 to the
Companys Form S-8 Registration Statement (Commission File No. 001-08777), filed with the Commission on
October 25, 1996.4.2
    
    Amendment dated as of April 30, 2007 by and between the Company and Mellow Investor Services LLC to the
Rights Agreement by and between the Company and The Chase Manhattan Bank dated as of October 18, 1996, as
incorporated by reference to Exhibit 4.1 to the Companys Quarterly Report on Form 10-Q filed with the
Commission on June 8, 2007.10.1
    
    Form of Virco Mfg. Corporation Employee Stock Ownership Plan (the ESOP) (incorporated by reference to
Exhibit 4.1 to the Companys Form S-8 Registration Statement (Commission File No. 33-65098), filed with the
Commission on June 25, 1993).10.2
    
    Trust Agreement for the ESOP (incorporated by reference to Exhibit 4.2 to the Companys Form S-8
Registration Statement (Commission File No. 33-65098), filed with the Commission on June 25, 1993).10.3
    
    Form of Registration Rights Agreement for the ESOP (incorporated by reference to Exhibit 4.3 to the
Companys Form S-8 Registration Statement (Commission File No. 33-65098), filed with the Commission on
June 25, 1993).10.5
    
    1993 Stock Incentive Plan of the Company (incorporated by reference to Exhibit 4.1 to the Companys
Form S-8 Registration Statement (Commission File No. 33-65098), filed with the Commission on June 1993).10.6
    
    Lease dated February 1, 2006, between FHL Group, a California Corporation, as landlord and Virco Mfg.
Corporation, a Delaware Corporation, as tenant (incorporated by reference to Exhibit 99.1 to the Companys
Current Report on Form 8-K filed with the Commission on February 3, 2006).10.7
    
    Amended and Restated Credit Agreement dated as of January 27, 2004, between the Company and Wells Fargo
Bank, National Association (incorporated by reference to Exhibit 99.2 to the Companys Current Report on
Form 8-K filed with the Commission on January 30, 2004).10.8
    
    Amendment No. 2 to Amended and Restated Credit Agreement dated as of January 21, 2006, between the Company
and Wells Fargo Bank, National Association (incorporated by reference to Exhibit 99.2 to the Companys
Current Report on Form 8-K filed with the Commission on January 27, 2006).10.9
    
    Subsidiary Guaranty dated as of January 27, 2004, by Virco Mgmt. Corporation in favor of Wells Fargo Bank,
National Association (incorporated by reference to Exhibit 99.3 to the Companys Current Report on Form 8-K
filed with the Commission on January 30, 2004).10.10
    
    Subsidiary Guaranty dated as of January 27, 2004, by Virco, Inc. in favor of Wells Fargo Bank, National
Association (incorporated by reference to Exhibit 99.4 to the Companys Current Report on Form 8-K filed
with the Commission on January 30, 2004).10.11
    
    Amended and Restated Security Agreement dated as of January 27, 2004, among the Company, Virco Mgmt.
Corporation, Virco, Inc. and Wells Fargo Bank, National Association (incorporated by reference to
Exhibit 99.7 to the Companys Current Report on Form 8-K filed with the Commission on January 30, 2004).10.12
    
    Revolving Line of Credit Note dated March 26, 2007, between the Company and Wells Fargo Bank, National
Association. (incorporated by reference to Exhibit 10.12 to the Companys Form 10-K filed
with the Commission on April 16, 2007).10.13
    
    Term Note dated March 26, 2007 between the Company and Wells Fargo Bank, National Association.
(incorporated by reference to Exhibit 10.13 to the Companys Form 10-K filed with the
Commission on April 16, 2007).
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##### Table of Contents



ExhibitNumber
    
    Description10.14
    
    Amendment No. 4 to Amended and Restated Credit
Agreement dated as of March 26, 2007, between the Company
and Wells Fargo Bank, National Association. (incorporated by
reference to Exhibit 10.4 to the Companys
Form 10-K filed with the Commission on April 16, 2007).10.15
    
    Stock Purchase Agreement dated
June 6, 2006, between the Company and Wedbush, Inc. and Wedbush Morgan
Securities, Inc. (incorporated by reference to Exhibit 10.1 to the Companys Current Report on Form 8-K
filed with the Commission on June 8, 2006).10.16
    
    Warrant Agreement dated June 6, 2006, between the Company and Wedbush, Inc. (incorporated by reference to
Exhibit 10.2 to the Companys Current Report on Form 8-K filed with the Commission on June 8, 2006).10.17
    
    Warrant Agreement dated June 6, 2006, between the Company and Wedbush Morgan Securities, Inc. (incorporated
by reference to Exhibit 10.2 to the Companys Current Report on Form 8-K filed with the Commission on
June 8, 2007).10.18
    
    Amended Stock Purchase Agreement dated August 29, 2006, between the Company and Steve Presley, Ed Gyenes,
Nick Wilson, Scotty Bell, Patty Quinones, Eric Nordstrom, Larry Maddox, James Simms, Bassey Yau, Robert
Virtue, Doug Virtue and Evan Gruber (incorporated by reference to Exhibit 10.1 to the Companys Quarterly
Report on Form 10-Q filed with the Commission on
December 11, 2006).10.19
    
    Design Agreement dated January 21, 2008, between the Company and Peter Glass Design, LLC, and Hedgehog
Design, LLC. (incorporated by reference to Exhibit 10.1 and 10.2 to the Companys Current Report on
Form 8-K filed with the Commission on January 25, 2008).10.20
    
    Second Amended and Restated Credit Agreement, dated as of March 12, 2008 between Virco Mfg. Corporation and
Wells Fargo Bank, National Association (incorporated by reference to Exhibit 10.1 to the Companys Current
Report on Form 8-K filed with the Commission on March 24, 2008).10.21
    
    Revolving Line of Credit Note, dated as of March 12, 2008, by Virco Mfg. Corporation in favor of Wells
Fargo Bank, National Association (incorporated by reference to Exhibit 10.2 to the Companys Current Report
on Form 8-K filed with the Commission on March 24, 2008).10.22
    
    Master Reaffirmation Agreement, dated as of March 12, 2008, among Virco Mfg. Corporation, Virco Mgmt.
Corporation, Virco Inc. and Wells Fargo Bank, National Association (incorporated by reference to
Exhibit 10.3 to the Companys Current Report on Form 8-K filed with the Commission on March 24, 2008).10.23
    
    Amended and Restated Mortgage, dated as of March 12, 2008, by Virco Mfg. Corporation in favor of Wells
Fargo Bank, National Association (incorporated by reference to Exhibit 10.4 to the Companys Current Report
on Form 8-K filed with the Commission on March 24, 2008).21.1
    
    List of All Subsidiaries of Virco Mfg. Corporation.23.1
    
    Consent of Independent Registered Public Accounting Firm.31.1
    
    Certification of the Chief Executive Officer Pursuant to Rule 13a-14(a) under the Securities and Exchange
Act of 1934, as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of the Chief Financial Officer Pursuant to Rule 13a-14(a) under the Securities and Exchange
Act of 1934, as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350.
 65