##### 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, 2007.
 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
    
    American Stock Exchange
  o þ
 o þ
 þ o
 þ
  o þ o
 o þ
   DOCUMENTS INCORPORATED BY REFERENCE




---



##### 



TABLE OF CONTENTS
 PART IItem 1. Business
    1Item 1A. Risk Factors
    7Item 1B. Unresolved Staff Comments
    11Item 2. Properties
    12Item 3. Legal Proceedings
    12Item 4. Submission of Matters to a Vote of Security Holders
    12PART IIItem 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    13Item 6. Selected Financial Data
    14Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    16Item 7a. Quantitative and Qualitative Disclosures about Market Risk
    26Item 8. Financial Statements and Supplementary Data
    28Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures
    54Item 9A. Controls and Procedures
    54Item 9B. Other Information
    55PART IIIItem 10. Directors and Executive Officers of the Registrant
    56Item 11. Executive Compensation
    56Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    56Item 13. Certain Relationships and Related Transactions
    56Item 14. Principal Accounting Fees and Services
    56PART IVItem 15. Exhibits, Financial Statement Schedules
    57SIGNATURES
    59POWER OF ATTORNEY
    60Exhibit 10.12. Revolving Line of credit NoteExhibit 10.13. Term NoteExhibit 10.14. Amendment No. 4Exhibit 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 Sectopm 1350EXHIBIT 10.12EXHIBIT 10.13EXHIBIT 10.14EXHIBIT 21.1EXHIBIT 23.1EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1




---



##### Table of Contents



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, 2003, January 31, 2004, January 31,
2005, January 31, 2006 and January 31, 2007 are referred to as years 2002, 2003, 2004, 2005 and
2006, respectively.
 
 Item 1. Business
 Introduction
     1




---



##### Table of Contents



Principal Products
     2




---



##### Table of Contents



Raw Materials
    3




---



##### Table of Contents



Marketing and Distribution
        Seasonality
  Working Capital Requirements During the Peak Summer Season
  4




---



##### Table of Contents



Other Matters
 Competition
   Backlog
  Patents and Trademarks
    5




---



##### Table of Contents



Employees
  Environmental Compliance
  Financial Information About Geographic Areas
  Executive Officers of the Registrant
  Age atJanuary
    
    Has Held31,
    
    OfficeName
    
    Office
    
    2007
    
    SinceR. A. Virtue (1)
    
    President, Chairman of the Board and Chief Executive Officer
    
    
    74
    
    
    
    1990D. A. Virtue (2)
    
    Executive Vice President
    
    
    48
    
    
    
    1992S. Bell (3)
    
    Vice President  General Manager, Conway Division
    
    
    50
    
    
    
    2004R. E. Dose (4)
    
    Vice President  Finance, Secretary and Treasurer
    
    
    50
    
    
    
    1995A. Gamble (5)
    
    Vice President  Human Resources
    
    
    38
    
    
    
    2004P. Quinones (6)
    
    Vice President  Logistics and Marketing Services
    
    
    43
    
    
    
    2004D. R. Smith (7)
    
    Vice President  Marketing
    
    
    58
    
    
    
    1995L. L. Swafford (8)
    
    Vice President  Legal Affairs
    
    
    42
    
    
    
    1998N. Wilson (9)
    
    Vice President  General Manager, Torrance Division
    
    
    59
    
    
    
    2004L. O. Wonder (10)
    
    Vice President  Sales
    
    
    55
    
    
    
    1995B. Yau (11)
    
    Corporate Controller, Assistant Secretary and Treasurer
    
    
    48
    
    
    
    2004
 
 (1)
    
    Appointed Chairman in 1990; has been employed by the Company for
50 years and has served as the President since 1982.(2)
    
    Appointed in 1992; has been employed by the Company for 21 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 18 years
and has served in a variety of 6




---



##### Table of Contents



manufacturing, safety, and
environmental positions.(4)
    
    Appointed in 1995; has been employed by the Company for 16 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 8 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 15 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 22 years
in a variety of sales and marketing positions, currently as Vice
President of Marketing.(8)
    
    Appointed in 1998; has been employed by the Company for 11 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 40 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 29 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 10 years
and has served as Corporate Controller, currently as Corporate
Controller, Assistant Secretary and Treasurer.  Available Information
    
 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.
   7




---



##### Table of Contents



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.
   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 under one contract, under which we are the exclusive
supplier of classroom furniture.
  8




---



##### Table of Contents



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.
  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.
  9




---



##### Table of Contents



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.
  Risks Related to Our Common Stock
 Holders of approximately 45% of the shares of Virco 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 may be volatile, and your investment in our common stock could suffer a decline in
value.
  
    
    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;
 10




---



##### Table of Contents




    
    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
  11




---



##### Table of Contents



Item 2. Properties
 Torrance, California
  Conway, Arkansas
   
 Item 3. Legal Proceeding s
  
 Item 4. Submission of Matters to a Vote of Security Holders
  12




---



##### Table of Contents



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
    
    2006
    
    20052006
    
    2005
    
    High
    
    Low
    
    High
    
    Low1st Quarter
    
    $
    
    
    
    $
    
    
    
    $
    6.63
    
    
    $
    4.40
    
    
    $
    7.94
    
    
    $
    7.422nd Quarter
    
    
    
    
    
    
    
    
    
    
    5.11
    
    
    
    4.50
    
    
    
    7.47
    
    
    
    6.603rd Quarter
    
    
    
    
    
    
    
    
    
    
    6.00
    
    
    
    4.36
    
    
    
    7.94
    
    
    
    6.644th Quarter
    
    
    
    
    
    
    
    
    
    
    9.50
    
    
    
    5.62
    
    
    
    7.15
    
    
    
    5.13
 Stock Performance Graph
  
 2002
    
    
    2003
    
    
    2004
    
    
    2005
    
    
    2006
    
    
    2007VIRCO MFG. CORPORATION
    
    
    
    100.00
    
    
    
    
    106.45
    
    
    
    
    88.36
    
    
    
    
    94.37
    
    
    
    
    79.82
    
    
    
    
    108.07PEER GROUP INDEX
    
    
    
    100.00
    
    
    
    
    79.75
    
    
    
    
    118.91
    
    
    
    
    128.21
    
    
    
    
    133.54
    
    
    
    
    156.41AMEX MARKET INDEX
    
    
    
    100.00
    
    
    
    
    98.53
    
    
    
    
    138.29
    
    
    
    
    148.17
    
    
    
    
    179.73
    
    
    
    
    193.81
 13




---



##### Table of Contents



Securities Authorized for Issuance Under Equity Compensation Plans
 Equity Compensation Plan InformationNumber of securitiesremaining available forfuture 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
    
    
    235,000
    
    
    $
    12.53
    
    
    
    109,000Equity compensation
plans not approved
by security holders
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    235,000
    
    
    $
    12.53
    
    
    
    109,000
  
 Item 6. Selected Financial Data
  Five Year Summary of Selected Financial Data
  In thousands except per share data
    
    2006
    
    2005
    
    2004
    
    2003
    
    2002Summary of OperationsNet sales
    
    $
    223,107
    
    
    $
    214,450
    
    
    $
    199,854
    
    
    $
    191,852
    
    
    $
    244,355Net income (loss)
    
    $
    7,545
    
    
    $
    (9,574
    )
    
    $
    (13,995
    )
    
    $
    (21,961
    )
    
    $
    282Income (Loss) per share dataNet income (loss) (1)Basic
    
    $
    0.56
    
    
    $
    (0.73
    )
    
    $
    (1.07
    )
    
    $
    (1.68
    )
    
    $
    0.02Assuming dilution
    
    $
    0.55
    
    
    $
    (0.73
    )
    
    $
    (1.07
    )
    
    $
    (1.68
    )
    
    $
    0.02Dividends declared per share,
adjusted for 10% stock dividend
Cash dividends (3)
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    0.04
    
    
    $
    0.08Other Financial Data
 14




---



##### Table of Contents



In thousands except per share data
    
    2006
    
    2005
    
    2004
    
    2003
    
    2002Total assets
    
    $
    116,277
    
    
    $
    114,720
    
    
    $
    114,041
    
    
    $
    126,268
    
    
    $
    154,796Working capital
    
    $
    22,994
    
    
    $
    15,488
    
    
    $
    15,334
    
    
    $
    25,404
    
    
    $
    38,748Current ratio
    
    
    1.6/1
    
    
    
    1.4/1
    
    
    
    1.5/1
    
    
    
    2.0/1
    
    
    
    2.4/1Total long-term obligations
    
    $
    30,101
    
    
    $
    38,862
    
    
    $
    34,090
    
    
    $
    37,934
    
    
    $
    44,702Stockholders equity
    
    $
    48,878
    
    
    $
    39,100
    
    
    $
    49,265
    
    
    $
    62,352
    
    
    $
    82,774Shares outstanding at year-end
(3)
    
    
    14,380
    
    
    
    13,137
    
    
    
    13,098
    
    
    
    13,096
    
    
    
    13,111Stockholders equity per share
(2)
    
    $
    3.40
    
    
    $
    2.98
    
    
    $
    3.76
    
    
    $
    4.76
    
    
    $
    6.31
 
 (1)
    
    Based on average number of shares outstanding each year after giving retroactive effect for stock
dividends.(2)
    
    Based on number of shares outstanding at year-end after giving effect for stock dividends and stock split.(3)
    
    Adjusted for stock dividends and stock split. Financial Highlights
  In thousands, except per share data
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002Summary of OperationsNet sales
    
    $
    223,107
    
    
    $
    214,450
    
    
    $
    199,854
    
    
    $
    191,852
    
    
    $
    244,355Net income (loss)Net income (loss) before change in
accounting methods
    
    $
    7,545
    
    
    $
    (9,574
    )
    
    $
    (13,995
    )
    
    $
    (21,961
    )
    
    $
    282Change in accounting methods
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    7,545
    
    
    $
    (9,574
    )
    
    $
    (13,995
    )
    
    $
    (21,961
    )
    
    $
    282Net income (loss) per share (1)
    
    $
    0.55
    
    
    $
    (0.73
    )
    
    $
    (1.07
    )
    
    $
    (1.68
    )
    
    $
    0.02Stockholders equity
    
    
    48,878
    
    
    
    39,100
    
    
    
    49,265
    
    
    
    62,352
    
    
    
    82,774Stockholders equity per share (2)
    
    
    3.40
    
    
    
    2.98
    
    
    
    3.76
    
    
    
    4.76
    
    
    
    6.31
 In thousands, except per share data
    
    2001
    
    
    2000
    
    
    1999
    
    
    1998
    
    
    1997Summary of OperationsNet sales
    
    $
    257,462
    
    
    $
    287,342
    
    
    $
    268,079
    
    
    $
    275,096
    
    
    $
    259,586Stockholders equity per share (2)Net income (loss) before change in
accounting methods
    
    $
    246
    
    
    $
    4,313
    
    
    $
    10,166
    
    
    $
    17,630
    
    
    $
    13,852Change in accounting methods
    
    
    
    
    
    
    (297
    )
    
    
    
    
    
    
    
    
    
    
    $
    246
    
    
    $
    4,016
    
    
    $
    10,166
    
    
    $
    17,630
    
    
    $
    13,852Net income (loss) per share (1)
    
    $
    0.02
    
    
    $
    0.29
    
    
    $
    0.72
    
    
    $
    1.20
    
    
    $
    0.94Stockholders equity
    
    
    90,223
    
    
    
    94,141
    
    
    
    93,834
    
    
    
    88,923
    
    
    
    77,077Stockholders equity per share (2)
    
    
    6.71
    
    
    
    6.90
    
    
    
    6.82
    
    
    
    6.30
    
    
    
    5.39
 
 (1)
    
    Based on average number of shares outstanding each year after giving retroactive effect for stock
dividends and stock split. 15




---



##### Table of Contents



(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. 
 Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    Executive Overview
    16




---



##### Table of Contents



Critical Accounting Policies and Estimates
     17




---



##### Table of Contents



Industry Overview
   18




---



##### Table of Contents



Virco Response to the Industry Environment
       19




---



##### Table of Contents



Results of Operations (2006 vs. 2005)
 Financial Results and Cash Flow
  Sales
   Cost of Sales
     Selling, General and Administrative and Others
 20




---



##### Table of Contents



Results of Operations (2005 vs. 2004)
 Financial Results and Cash Flow
  Sales
   Cost of Sales
  Selling, General and Administrative and Others
   Provision for Income Taxes
  21




---



##### Table of Contents



Liquidity and Capital Resources
 Working Capital Requirements
        22




---



##### Table of Contents



Long-Term Capital Requirements
    Asset Impairment
    Contractual Obligations
  
 (In thousands)
    
    Total
    
    Less than 1 year
    
    1-3 years
    
    3-5 years
    
    More than
 5 yearsLong-Term debt obligations
    
    $
    15,083
    
    
    $
    5,012
    
    
    $
    10,024
    
    
    $
    24
    
    
    $
    23Interest on long-term debt
obligations
    
    
    2,201
    
    
    
    439
    
    
    
    1,754
    
    
    
    4
    
    
    
    4Capital lease obligations
    
    
    181
    
    
    
    62
    
    
    
    119
    
    
    
    
    
    
    
    Operating lease obligations
    
    
    16,653
    
    
    
    6,244
    
    
    
    9,008
    
    
    
    1,401
    
    
    
    Purchase obligations
    
    
    18,094
    
    
    
    18,094
    
    
    
    
    
    
    
    
    
    
    
    Other long-term obligations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    52,212
    
    
    $
    29,850
    
    
    $
    20,906
    
    
    $
    1,429
    
    
    $
    27
 23




---



##### Table of Contents



January 31,2007
    
    2006Beginning balance
    
    $
    1,500
    
    
    $
    1,500Provision
    
    
    1,154
    
    
    
    900Costs incurred
    
    
    (904
    )
    
    
    (900
    )Ending balance
    
    $
    1,750
    
    
    $
    1,500
 Retirement Obligations
        24




---



##### Table of Contents



Stockholders Equity
     Environmental and Contingent Liabilities
    Off-Balance Sheet Arrangements
  New Accounting Pronouncements
 25




---



##### Table of Contents



Item 7a. Quantitative and Qualitative Disclosures about Market Risk
 Inflation and Future Change in Prices
    26




---



##### Table of Contents



27




---



##### Table of Contents



Item 8. Financial Statements and Supplementary Data
 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 PageManagements Report on Internal Control Over Financial Reporting
    
    
    29Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting
    
    
    30Report of Independent Registered Public Accounting Firm
    
    
    31Consolidated Balance Sheets as of January 31, 2007 and 2006
    
    
    32Consolidated Statements of Operations for the years ended January 31, 2007, 2006 and 2005
    
    
    34Consolidated Statements of Stockholders Equity for the years ended January 31, 2007, 2006 and 2005
    
    
    35Consolidated Statements of Cash Flows for the years ended January 31, 2007, 2006 and 2005
    
    
    36Notes to Consolidated Financial Statements
    
    
    37
 28




---



##### Table of Contents



MANAGEMENTS REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
       29




---



##### 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
     .
  /s/ Ernst & Young LLP
   30




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
         /s/ Ernst & Young LLP
   31




---



##### Table of Contents



Virco Mfg. Corporation
 
 Consolidated Balance Sheets
 January 312007
    
    2006(In thousands, except share data)AssetsCurrent assetsCash
    
    $
    1,892
    
    
    $
    1,489Trade accounts receivable (net of allowance for doubtful
accounts of $200 in 2006 and 2005)
    
    
    18,596
    
    
    
    17,270Other receivables
    
    
    228
    
    
    
    377InventoriesFinished goods, net
    
    
    11,651
    
    
    
    11,070Work in process, net
    
    
    19,690
    
    
    
    13,796Raw materials and supplies, net
    
    
    6,496
    
    
    
    6,75137,837
    
    
    
    31,617Prepaid expenses and other current assets
    
    
    1,479
    
    
    
    1,493Total current assets
    
    
    60,032
    
    
    
    52,246Property, plant and equipment:Land and land improvements
    
    
    3,596
    
    
    
    3,591Buildings and building improvements
    
    
    49,555
    
    
    
    49,581Machinery and equipment
    
    
    109,730
    
    
    
    106,475Leasehold improvements
    
    
    1,323
    
    
    
    1,289164,204
    
    
    
    160,936Less accumulated depreciation and amortization
    
    
    116,116
    
    
    
    109,513Net property, plant and equipment
    
    
    48,088
    
    
    
    51,423Goodwill and other intangible assets
    
    
    2,350
    
    
    
    2,350Less accumulated amortization
    
    
    39
    
    
    
    26Net goodwill and other intangible assets
    
    
    2,311
    
    
    
    2,324Other assets
    
    
    5,846
    
    
    
    8,727Total assets
    
    $
    116,277
    
    
    $
    114,720
 See accompanying notes.
 32




---



##### Table of Contents



Virco Mfg. Corporation
 Consolidated Balance Sheets
 January 312007
    
    2006(In thousands, except share data)LiabilitiesCurrent liabilitiesChecks released but not yet cleared bank
    
    $
    2,563
    
    
    $
    2,030Accounts payable
    
    
    14,463
    
    
    
    17,504Accrued compensation and employee benefits
    
    
    8,094
    
    
    
    6,047Income tax payable
    
    
    989
    
    
    
    847Current portion of long-term debt
    
    
    5,074
    
    
    
    5,012Other accrued liabilities
    
    
    5,855
    
    
    
    5,318Total current liabilities
    
    
    37,038
    
    
    
    36,758Non-current liabilitiesAccrued self-insurance retention and other
    
    
    3,962
    
    
    
    2,703Accrued pension expenses
    
    
    15,949
    
    
    
    14,618Long-term debt, less current portion
    
    
    10,190
    
    
    
    21,541Total non-current liabilities
    
    
    30,101
    
    
    
    38,862Deferred tax liabilities
    
    
    260
    
    
    
    Commitments 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
14,379,506 shares in 2006 and 13,137,288 shares in 2005
    
    
    143
    
    
    
    131Additional paid-in capital
    
    
    113,737
    
    
    
    108,143Accumulated deficit
    
    
    (57,436
    )
    
    
    (64,981
    )Accumulated comprehensive loss
    
    
    (7,566
    )
    
    
    (4,193
    )Total stockholders equity
    
    
    48,878
    
    
    
    39,100Total liabilities and stockholders equity
    
    $
    116,277
    
    
    $
    114,720
 See accompanying notes.
 33




---



##### Table of Contents



Virco Mfg. Corporation
 
 Consolidated Statements of Operations
 Year ended January 312007
    
    2006
    
    2005(In thousands, except per share data)Net sales
    
    $
    223,107
    
    
    $
    214,450
    
    
    $
    199,854Costs of goods sold
    
    
    144,495
    
    
    
    149,785
    
    
    
    143,415Gross profit
    
    
    78,612
    
    
    
    64,665
    
    
    
    56,439Selling, general and administrative expenses
    
    
    66,828
    
    
    
    70,271
    
    
    
    68,229Separation costs
    
    
    
    
    
    
    742
    
    
    
    Interest expense, net
    
    
    3,792
    
    
    
    3,258
    
    
    
    2,090Loss on sale of assets, net
    
    
    1
    
    
    
    77
    
    
    
    Income (loss) before income taxes
    
    
    7,991
    
    
    
    (9,683
    )
    
    
    (13,880
    )Income expense (tax benefit)
    
    
    446
    
    
    
    (109
    )
    
    
    115Net income (loss)
    
    $
    7,545
    
    
    $
    (9,574
    )
    
    $
    (13,995
    )Net income (loss) per common share(a)Basic
    
    $
    0.56
    
    
    $
    (0.73
    )
    
    $
    (1.07
    )Diluted
    
    $
    0.55
    
    
    $
    (0.73
    )
    
    $
    (1.07
    )Weighted average shares outstandingBasic
    
    
    13,590
    
    
    
    13,114
    
    
    
    13,112Diluted
    
    
    13,611
    
    
    
    13,114
    
    
    
    13,112
 
 
 See accompanying notes.
 34




---



##### Table of Contents



Virco Mfg. Corporation
 
 Consolidated Statements of Stockholders Equity
 Additional
    
    Retained
    
    
    
    
    
    
    
    
    
    AccumulatedPaid-in
    
    Earnings
    
    Comprehensive
    
    Treasury
    
    ComprehensiveIn thousands, except share data
    
    Shares
    
    Amount
    
    Capital
    
    (Deficit)
    
    Income (Loss)
    
    Stock
    
    Loss
    
    TotalBalance at January 31, 2004
    
    
    13,095,801
    
    
    $
    146
    
    
    $
    127,133
    
    
    $
    (41,412
    )
    
    
    
    
    
    $
    (19,271
    )
    
    $
    (4,244
    )
    
    $
    62,352Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13,995
    )
    
    $
    (13,995
    )
    
    
    
    
    
    
    
    
    
    
    (13,995
    )Minimum pension liability
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    902
    
    
    
    
    
    
    
    902
    
    
    
    902Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (13,093
    )
    
    
    
    
    
    
    
    
    
    
    Stock issued under option
plans
    
    
    2,563
    
    
    
    
    
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6Retirement of treasury stock
    
    
    
    
    
    
    (15
    )
    
    
    (19,256
    )
    
    
    
    
    
    
    
    
    
    
    19,271
    
    
    
    
    
    
    
    Balance at January 31, 2005
    
    
    13,098,364
    
    
    
    131
    
    
    
    107,883
    
    
    
    (55,407
    )
    
    
    
    
    
    
    
    
    
    
    (3,342
    )
    
    
    49,265Net 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
    
    
    
    (64,981
    )
    
    
    
    
    
    
    
    
    
    
    (4,193
    )
    
    
    39,100Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,545
    
    
    $
    7,545
    
    
    
    
    
    
    
    
    
    
    
    7,545Minimum pension liability
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,373
    )
    
    
    
    
    
    
    (3,373
    )
    
    
    (3,373
    )Comprehensive
income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    4,172
    
    
    
    
    
    
    
    
    
    
    
    Stock based payments under
stock compensation plans
    
    
    112,722
    
    
    
    
    
    
    
    754
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    754Stock issued under private
placement
    
    
    1,129,496
    
    
    
    12
    
    
    
    4,740
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,752Balance at January 31, 2007
    
    
    14,379,506
    
    
    $
    143
    
    
    $
    113,737
    
    
    $
    (57,436
    )
    
    
    
    
    
    
    
    
    
    $
    (7,566
    )
    
    $
    48,878
 See accompanying notes.
 35




---



##### Table of Contents



Virco Mfg. Corporation
 
 Consolidated Statements of Cash Flows
 Year ended January 312007
    
    2006
    
    2005(In thousands, except share data)Operating activitiesNet income (loss)
    
    $
    7,545
    
    
    $
    (9,574
    )
    
    $
    (13,995
    )Adjustments to reconcile net income / (loss) to net cash
provided by operating activitiesDepreciation and amortization
    
    
    7,199
    
    
    
    8,844
    
    
    
    9,799Provision for doubtful accounts
    
    
    72
    
    
    
    (2
    )
    
    
    17Loss on sale of property, plant and equipment
    
    
    1
    
    
    
    77
    
    
    
    Deferred income taxes
    
    
    260
    
    
    
    
    
    
    
    Stock based compensation
    
    
    754
    
    
    
    408
    
    
    
    230Changes in operating assets and liabilitiesTrade accounts receivable
    
    
    (1,399
    )
    
    
    (1,271
    )
    
    
    1,319Other receivables
    
    
    149
    
    
    
    (212
    )
    
    
    (27
    )Inventories
    
    
    (6,220
    )
    
    
    (5,570
    )
    
    
    2,424Income taxes
    
    
    142
    
    
    
    2,126
    
    
    
    144Prepaid expenses and other current assets
    
    
    14
    
    
    
    (153
    )
    
    
    622Accounts payable and accrued liabilities
    
    
    2,398
    
    
    
    5,576
    
    
    
    3,134Other
    
    
    
    
    
    
    55
    
    
    
    11Net cash provided by operating activities
    
    
    10,915
    
    
    
    304
    
    
    
    3,678Investing activitiesCapital expenditures
    
    
    (3,622
    )
    
    
    (3,470
    )
    
    
    (2,799
    )Proceeds from sale of property, plant and equipment
    
    
    
    
    
    
    15
    
    
    
    9Net investment in life insurance
    
    
    (167
    )
    
    
    109
    
    
    
    442Net cash used in investing activities
    
    
    (3,789
    )
    
    
    (3,346
    )
    
    
    (2,348
    )Financing activitiesProceeds from long-term debt
    
    
    
    
    
    
    3,330
    
    
    
    1,862Repayment of long-term debt
    
    
    (11,475
    )
    
    
    
    
    
    
    (4,065
    )Proceeds from issuance of common stock
    
    
    4,752
    
    
    
    9
    
    
    
    6Net cash (used in) provided by financing activities
    
    
    (6,723
    )
    
    
    3,339
    
    
    
    (2,197
    )Net increase (decrease) in cash
    
    
    403
    
    
    
    297
    
    
    
    (867
    )Cash at beginning of year
    
    
    1,489
    
    
    
    1,192
    
    
    
    2,059Cash at end of year
    
    $
    1,892
    
    
    $
    1,489
    
    
    $
    1,192Supplemental disclosures of cash flow informationCash paid (received) during the year for:Interest, net of amounts capitalized
    
    $
    3,792
    
    
    $
    3,258
    
    
    $
    2,090Income tax, net
    
    
    44
    
    
    
    (2,235
    )
    
    
    (320
    )Non-cash activitiesAccrued asset retirement obligations
    
    $
    626
    
    
    $
    583
    
    
    $
    540Assets
acquired under capital leases
    
    $
    186
    
    
    $
    
    
    
    $
    
 See accompanying notes
 36




---



##### Table of Contents



VIRCO MFG. CORPORATION
 
 Notes to Financial Statements
 January 31, 2007
 1. Summary of Business and Significant Accounting Policies
 Business
   Principles of Consolidation
  Management Use of Estimates
  Fiscal Year End
  Cash and Cash Equivalents
  Concentration of Credit Risk
   Derivatives
  Inventories
  37




---



##### Table of Contents



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, 2006
    
    $
    540,000
    
    
    $
    (108,000
    )
    
    $
    (583,000
    )Additional obligation
    
    
    
    
    
    
    
    
    
    
    Depreciation expense
    
    
    
    
    
    
    (108,000
    )
    
    
    Accretion expense
    
    
    
    
    
    
    
    
    
    
    (43,000
    )Ending balance at January 31, 2007
    
    $
    540,000
    
    
    $
    (216,000
    )
    
    $
    (626,000
    )
 Impairment of Long-Lived Assets
  Net Income (Loss) Per Share
  In thousands, except per share data
    
    2006
    
    2005
    
    2004NumeratorNet income (loss)
    
    $
    7,545
    
    
    $
    (9,574
    )
    
    $
    (13,995
    )DenominatorWeighted-average shares  basic
    
    
    13,590
    
    
    
    13,114
    
    
    
    13,112Common equivalent shares from common stock options and warrants
    
    
    21
    
    
    
    
    
    
    
    Weighted-average shares  diluted
    
    
    13,611
    
    
    
    13,114
    
    
    
    13,112Net income (loss) per common share(a)Basic
    
    $
    0.56
    
    
    $
    (0.73
    )
    
    $
    (1.07
    )Diluted
    
    
    0.55
    
    
    
    (0.73
    )
    
    
    (1.07
    )
 38




---



##### Table of Contents



Goodwill and Other Intangible Assets
   2006
    
    2005Accumulated
    
    
    
    
    
    
    
    
    
    AccumulatedGross Amount
    
    Amortization
    
    Net Amount
    
    Gross Amount
    
    Amortization
    
    Net AmountGoodwill (not
amortized)
    
    $
    2,200
    
    
    $
    
    
    
    $
    2,200
    
    
    $
    2,200
    
    
    $
    
    
    
    $
    2,200Intangible assets
    
    
    150
    
    
    
    39
    
    
    
    111
    
    
    
    150
    
    
    
    26
    
    
    
    124$
    2,350
    
    
    $
    39
    
    
    $
    2,311
    
    
    $
    2,350
    
    
    $
    26
    
    
    $
    2,324
  Environmental Costs
    Advertising Costs
  Product Warranty Expense
  39




---



##### Table of Contents



Self-Insurance
  Stock-Based Compensation Plans
  Use of Estimates and Assumptions
  Reclassifications
  Revenue Recognition
  Shipping and Installation Fees
  Accounting for Income Taxes
  New Accounting Pronouncements
    40




---



##### Table of Contents



2. Inventories
   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
 January 31, 2006Material
    
    
    
    
    
    Labor,Content at
    
    LIFO
    
    OverheadFIFO
    
    Reserve
    
    and Other
    
    TotalFinished goods
    
    $
    8,581
    
    
    $
    (1,630
    )
    
    $
    4,119
    
    
    $
    11,070Work in process
    
    
    9,883
    
    
    
    (2,594
    )
    
    
    6,507
    
    
    
    13,796Raw materials and supplies
    
    
    8,949
    
    
    
    (2,198
    )
    
    
    
    
    
    
    6,751Total
    
    $
    27,413
    
    
    $
    (6,422
    )
    
    $
    10,626
    
    
    $
    31,617
 3. Debt
  January 31,In thousands, except per share data
    
    2007
    
    2006Revolving credit line with Wells Fargo Bank (a)
    
    $
    
    
    
    $
    6,448Term note with Wells Fargo Bank (a)
    
    
    15,000
    
    
    
    20,000Other
    
    
    264
    
    
    
    10515,264
    
    
    
    26,553Less current portion
    
    
    5,074
    
    
    
    5,012$
    10,190
    
    
    $
    21,541Outstanding stand-by letters of credit
    
    $
    329
    
    
    $
    329
 41




---



##### Table of Contents



Year ending January 31,2008
    
    $
    5,0742009
    
    
    10,0742010
    
    
    692011
    
    
    122012
    
    
    12Thereafter
    
    
    23
  4. Retirement Plans
      42




---



##### Table of Contents



Qualified
    
    
    
    
    
    DirectorsPlan
Year
    
    Plan
    
    VIP Plan
    
    Plan
    
    Total(In thousands)2007
    
    $
    557
    
    
    $
    263
    
    
    $
    0
    
    
    $
    8202008
    
    
    596
    
    
    
    247
    
    
    
    48
    
    
    
    8912009
    
    
    664
    
    
    
    232
    
    
    
    46
    
    
    
    9422010
    
    
    745
    
    
    
    216
    
    
    
    43
    
    
    
    1,0042011
    
    
    855
    
    
    
    200
    
    
    
    40
    
    
    
    1,095Thereafter
    
    
    5,796
    
    
    
    852
    
    
    
    226
    
    
    
    6,874
 Qualified Pension Plan
   Pension Benefits12/31/2006
    
    12/31/2005Change in Benefit ObligationBenefit obligation at beginning of year
    
    $
    22,284
    
    
    $
    21,675Service cost
    
    
    165
    
    
    
    173Interest cost
    
    
    1,382
    
    
    
    1,408Plan participants contributions
    
    
    
    
    
    
    Amendments
    
    
    424
    
    
    
    416FASB 88 events
    
    
    
    
    
    
    Actuarial (gains) losses
    
    
    3,013
    
    
    
    509Benefits paid
    
    
    (3,189
    )
    
    
    (1,897
    )Benefit obligation at end of year
    
    $
    24,079
    
    
    $
    22,284
 43




---



##### Table of Contents



Pension Benefits12/31/2006
    
    12/31/2005Change in Plan AssetsFair value at beginning of year
    
    $
    14,812
    
    
    $
    16,192Actual return on plan assets
    
    
    2,288
    
    
    
    517Acquisition
    
    
    
    
    
    
    Company contributions
    
    
    
    
    
    
    Plan participants contributions
    
    
    
    
    
    
    Benefits paid
    
    
    (3,189
    )
    
    
    (1,897
    )Fair value at end of year
    
    $
    13,911
    
    
    $
    14,812Funded StatusFunded status of plan
    
    $
    (10,167
    )
    
    $
    (7,472
    )Unrecognized net transition amount
    
    
    
    
    
    
    (52
    )Unrecognized net actuarial loss
    
    
    
    
    
    
    4,246Unrecognized prior service cost
    
    
    
    
    
    
    2,849Accrual of minimum liability
    
    
    
    
    
    
    Accrued benefit cost
    
    
    (10,167
    )
    
    
    (429
    )Statements of Financial PositionPrepaid benefit cost
    
    
    
    
    
    
    Accrued benefit liability
    
    
    (10,167
    )
    
    
    (7,472
    )Intangible Asset
    
    
    
    
    
    
    2,849Accumulate other comprehensive loss
    
    
    8,459
    
    
    
    4,194Net amount recognized
    
    $
    (1,708
    )
    
    $
    (429
    )Items not yet recognized as a component of net periodic pension expense:Unrecognized net actuarial losses
    
    
    5,670
    
    
    
    N/AUnamortized prior service costs
    
    
    2,804
    
    
    
    N/ANet initial asset recognition
    
    
    (15
    )
    
    
    N/A8,459
    
    
    
    N/ASupplementary DataProjected benefit obligation
    
    $
    24,079
    
    
    $
    22,284Accumulated benefit obligation
    
    
    24,079
    
    
    
    22,284Fair value of plan assets
    
    
    13,911
    
    
    
    14,812
 12/31/2006
    
    
    12/31/2005Components of net costService cost
    
    $
    165
    
    
    $
    173Interest cost
    
    
    1,382
    
    
    
    1,408Expected return on plan assets
    
    
    (896
    )
    
    
    (986
    )Amortization of transition amount
    
    
    (37
    )
    
    
    (37
    )Amortization of prior service cost
    
    
    469
    
    
    
    469Recognized net actuarial loss
    
    
    196
    
    
    
    163FASB 88
    
    
    
    
    
    
    Benefit cost
    
    $
    1,279
    
    
    $
    1,190Additional InformationIncrease in minimum liability included
in other comprehensive income
    
    $
    4,266
    
    
    $
    851Estimated Future Benefit PaymentsFYE 01-31-2007
    
    $
    
    
    
    $
    493FYE 01-31-2008
    
    
    557
    
    
    
    521FYE 01-31-2009
    
    
    596
    
    
    
    580FYE 01-31-2010
    
    
    664
    
    
    
    653FYE 01-31-2011
    
    
    745
    
    
    
    739FYE 01-31-2012
    
    
    855
    
    
    
    FYE 01-31-2013 to 2016
    
    
    5,796
    
    
    
    5,211Total
    
    $
    9,213
    
    
    $
    8,197
 44




---



##### Table of Contents



12/31/2006
    
    
    12/31/2005Weighted Average AssumptionsDiscount rate
    
    
    5.75
    %
    
    
    6.50
    %Expected return on plan assets
    
    
    6.50
    %
    
    
    6.50
    %Rate of compensation increase
    
    
    5
    %
    
    
    5
    %5.00
    %
    
    
    5.00
    %
 VIP Retirement Plan
    Non-Qualified Pension12/31/2006
    
    12/31/2005Change in Benefit ObligationBenefit
obligation at beginning of year
    
    $
    5,675
    
    
    $
    5,592Service cost
    
    
    202
    
    
    
    211Interest cost
    
    
    360
    
    
    
    341Plan participants contributions
    
    
    
    
    
    
    Amendments
    
    
    (424
    )
    
    
    (416
    )FASB 88 events
    
    
    0
    
    
    
    0Actuarial (gains) losses
    
    
    207
    
    
    
    203Benefits paid
    
    
    (256
    )
    
    
    (256
    )Benefit obligation at end of year
    
    $
    5,764
    
    
    $
    5,675Change in Plan AssetsFair value at beginning of year
    
    $
    
    
    
    $
    Actual return on plan assets
    
    
    
    
    
    
    Acquisition
    
    
    
    
    
    
    Company contributions
    
    
    256
    
    
    
    256Plan participants contributions
    
    
    
    
    
    
    Benefits paid
    
    
    (256
    )
    
    
    (256
    )Fair value at end of year
    
    $
    
    
    
    $
    Funded StatusFunded status of plan
    
    $
    (5,764
    )
    
    $
    (5,675
    )Unrecognized net transition amount
    
    
    
    
    
    
    Unrecognized net actuarial loss
    
    
    
    
    
    
    1,946Unrecognized prior service cost
    
    
    
    
    
    
    (2,840
    )Accrual of minimum liability
    
    
    
    
    
    
    Accrued benefit cost
    
    $
    (5,764
    )
    
    $
    (6,569
    )Statements of Financial PositionPrepaid benefit cost
    
    $
    
    
    
    $
    Accrued benefit liability
    
    
    (5,764
    )
    
    
    (6,569
    )Intangible Asset
    
    
    
    
    
    
    Accumulate other comprehensive loss
    
    
    
    
    
    
    Net amount recognized
    
    $
    (5,764
    )
    
    $
    (6,569
    )Items not yet recognized as a component of net periodic pension expense:Unrecognized net actuarial losses
    
    
    2,034
    
    
    
    N/AUnamortized prior service costs
    
    
    (2,729
    )
    
    
    N/ANet initial asset recognition
    
    
    
    
    
    
    N/A(695
    )
    
    
    N/A
 45




---



##### Table of Contents



Non-Qualified Pension12/31/2006
    
    12/31/2005Supplementary DataProjected benefit obligation
    
    $
    5,764
    
    
    $
    5,675Accumulated benefit obligation
    
    
    5,764
    
    
    
    5,675Fair value of plan assets
    
    
    
    
    
    
    
 12/31/2006
    
    12/31/2005Components of net costService cost
    
    $
    202
    
    
    $
    211Interest cost
    
    
    360
    
    
    
    341Expected return on plan assets
    
    
    
    
    
    
    Amortization of transition amount
    
    
    
    
    
    
    Amortization of prior service cost
    
    
    (535
    )
    
    
    (535
    )Recognized net actuarial loss
    
    
    119
    
    
    
    134FASB 88
    
    
    
    
    
    
    Benefit cost
    
    $
    146
    
    
    $
    151Additional InformationIncrease in minimum liability
included
in other comprehensive income
    
    $
    (695
    )
    
    $
    Estimated Future Benefit PaymentsFYE 01-31-2007
    
    $
    
    
    
    $
    248FYE 01-31-2008
    
    
    263
    
    
    
    243FYE 01-31-2009
    
    
    247
    
    
    
    226FYE 01-31-2010
    
    
    232
    
    
    
    211FYE 01-31-2011
    
    
    216
    
    
    
    194FYE 01-31-2012
    
    
    200
    
    
    
    FYE 01-31-2013 to 2016
    
    
    852
    
    
    
    781Total
    
    $
    2,010
    
    
    $
    1,903Weighted Average AssumptionsDiscount rate
    
    
    5.75
    %
    
    
    6.50
    %Expected return on plan assets
    
    
    6.50
    %
    
    
    6.50
    %Rate of compensation increase
    
    
    5.00
    %
    
    
    5.00
    %
 Non-Employee Directors Retirement Plan
   Non-Qualified OutsideDirectors12/31/2006
    
    12/31/2005Change in Benefit ObligationBenefit
obligation at beginning of year
    
    $
    419
    
    
    $
    391Service cost
    
    
    26
    
    
    
    23Interest cost
    
    
    27
    
    
    
    25Plan participants contributions
    
    
    
    
    
    
    Amendments
    
    
    
    
    
    
    FASB 88 events
    
    
    
    
    
    
    Actuarial (gains) losses
    
    
    (1
    )
    
    
    (20
    )Benefits paid
    
    
    
    
    
    
    Benefit obligation at end of year
    
    $
    471
    
    
    $
    419
 46




---



##### Table of Contents



Non-Qualified OutsideDirectors12/31/2006
    
    12/31/2005Change in Plan AssetsFair value at beginning of year
    
    $
    
    
    
    $
    Actual return on plan assets
    
    
    
    
    
    
    Acquisition
    
    
    
    
    
    
    Company contributions
    
    
    
    
    
    
    Plan participants contributions
    
    
    
    
    
    
    Benefits paid
    
    
    
    
    
    
    Fair value at end of year
    
    $
    
    
    
    $
    Funded
StatusFunded status of plan
    
    $
    (471
    )
    
    $
    (419
    )Unrecognized net transition amount
    
    
    
    
    
    
    Unrecognized net actuarial loss
    
    
    
    
    
    
    (225
    )Unrecognized prior service cost
    
    
    
    
    
    
    23Accrual of minimum liability
    
    
    
    
    
    
    Accrued benefit cost
    
    
    (471
    )
    
    
    (621
    )Statements
of Financial PositionPrepaid benefit cost
    
    
    
    
    
    
    Accrued benefit liability
    
    $
    (471
    )
    
    $
    (621
    )Intangible Asset
    
    
    
    
    
    
    Accumulate other comprehensive loss
    
    
    
    
    
    
    Net amount recognized
    
    $
    (471
    )
    
    $
    (621
    )Items not
yet recognized as a component of net periodic pension expense:Unrecognized net actuarial gain
    
    
    (198
    )
    
    
    N/AUnamortized prior service costs
    
    
    
    
    
    
    N/ANet initial asset recognition
    
    
    
    
    
    
    N/A(198)
    
    
    
    N/ASupplementary
DataProjected
benefit obligation
    
    
    471
    
    
    
    419Accumulated
benefit obligation
    
    
    471
    
    
    
    419Fair value
of plan assets
    
    
    
    
    
    
    
 12/31/2006
    
    12/31/2005Components of net costService cost
    
    $
    26
    
    
    $
    23Interest cost
    
    
    27
    
    
    
    26Expected return on plan assets
    
    
    
    
    
    
    Amortization of transition amount
    
    
    
    
    
    
    Amortization of prior service cost
    
    
    23
    
    
    
    88Recognized net actuarial loss
    
    
    (28
    )
    
    
    (27
    )FASB 88
    
    
    
    
    
    
    Benefit cost
    
    $
    48
    
    
    $
    110Additional InformationIncrease in minimum liability
included
in other comprehensive income
    
    $
    (198
    )
    
    $
    Estimated Future Benefit PaymentsFYE 01-31-2007
    
    $
    
    
    
    $
    FYE 01-31-2008
    
    
    
    
    
    
    48FYE 01-31-2009
    
    
    48
    
    
    
    45FYE 01-31-2010
    
    
    46
    
    
    
    42FYE 01-31-2011
    
    
    43
    
    
    
    39FYE 01-31-2012
    
    
    40
    
    
    
    FYE 01-31-2013 to 2016
    
    
    225
    
    
    
    218Total
    
    $
    402
    
    
    $
    392
 47




---



##### Table of Contents



12/31/2006
    
    12/31/2005Weighted Average AssumptionsDiscount rate
    
    
    5.75
    %
    
    
    6.50
    %Expected return on plan assets
    
    
    6.50
    %
    
    
    6.50
    %Rate of compensation increase
    
    
    5.00
    %
    
    
    5.00
    %
 Implementation of SFAS No. 158
   Qualified
    
    VIP
    
    DirectorsIn thousands
    
    Plan
    
    Plan
    
    PlanActuarial (Gain)/loss recognition
    
    $
    313
    
    
    $
    145
    
    
    $
    (25
    )Prior service cost recognition
    
    
    505
    
    
    
    (499
    )
    
    
    0Net initial obligation/(asset) recognition
    
    
    (15
    )
    
    
    0
    
    
    
    0
  Before
    
    Effect of
    
    AfterSFAS No. 158
    
    SFAS No. 158
    
    SFAS No. 158in thousandsAssets: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 Option Plans
   Accounting for the Plans
  48




---



##### Table of Contents



Year ended January 31,in thousands except per share data
    
    2006
    
    2005Net loss, as reported
    
    $
    (9,574
    )
    
    $
    (13,995
    )Deduct: Total stock-based employee compensation
expense determined under the fair value based
method for all awards, net of tax effects
    
    
    (51
    )
    
    
    (54
    )Net loss, pro forma
    
    $
    (9,625
    )
    
    $
    (14,049
    )Basic earnings per share:Net income loss, as reported
    
    $
    (0.73
    )
    
    $
    (1.07
    )Net income loss, pro forma
    
    
    (0.73
    )
    
    
    (1.07
    )Diluted earnings per share:Net income loss, as reported
    
    $
    (0.73
    )
    
    $
    (1.07
    )Net income loss, pro forma
    
    
    (0.73
    )
    
    
    (1.07
    )
  Expected life
    
    5 yearsRisk-free interest rate
    
    3.6% to 6.26%Expected volatility
    
    
    0.26 to 0.42Expected dividend yield
    
    0.00% to 0.98%
   2007
    
    2006
    
    2005Weighted-
    
    
    
    
    
    Weighted-
    
    
    
    
    
    Weighted-Average
    
    
    
    
    
    Average
    
    
    
    
    
    AverageOptions
    
    Exercise Price
    
    Options
    
    Exercise Price
    
    Options
    
    Exercise PriceOutstanding at
beginning of year
    
    
    292,571
    
    
    $
    11.56
    
    
    
    367,888
    
    
    $
    11.39
    
    
    
    372,381
    
    
    $
    11.30Granted
    
    
    
    
    
    
    
    
    
    
    14,000
    
    
    
    7.20
    
    
    
    12,000
    
    
    
    6.89Exercised
    
    
    
    
    
    
    
    
    
    
    (2,922
    )
    
    
    2.91
    
    
    
    (2,563
    )
    
    
    2.41Forfeited
    
    
    (57,977
    )
    
    
    7.66
    
    
    
    (86,395
    )
    
    
    9.28
    
    
    
    (13,930
    )
    
    
    8.54Outstanding at end
of year
    
    
    234,594
    
    
    
    12.53
    
    
    
    292,571
    
    
    
    11.56
    
    
    
    367,888
    
    
    
    11.17Exercisable at
end of year
    
    
    234,594
    
    
    
    12.53
    
    
    
    292,571
    
    
    
    11.56
    
    
    
    336,352
    
    
    
    11.39Weighted-average
fair value of
options granted
during the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2.78
    
    
    
    
    
    
    
    2.86
 49




---



##### Table of Contents



Options Outstanding
    
    Options ExercisableRemainingContractualPrice
    
    Number of Shares
    
    Life
    
    Number of Shares
    
    Price$
    8.82
    
    
    
    12,100
    
    
    
    4.55
    
    
    
    12,100
    
    
    $
    8.82$
    11.06
    
    
    
    92,965
    
    
    
    2.47
    
    
    
    92,965
    
    
    $
    11.06$
    11.65
    
    
    
    1,098
    
    
    
    2.70
    
    
    
    1,098
    
    
    $
    11.65$
    12.53
    
    
    
    58,564
    
    
    
    1.70
    
    
    
    58,564
    
    
    $
    12.53$
    12.64
    
    
    
    69,867
    
    
    
    0.67
    
    
    
    69,867
    
    
    $
    12.64$
    12.53
    
    
    
    234,594
    
    
    
    1.85
    
    
    
    234,594
    
    
    $
    12.53
  Restricted Stock Unit Awards
      50




---



##### Table of Contents



2006
    
    2005
    
    2004Weighted-average
    
    
    
    
    
    Weighted-average
    
    
    
    
    
    Weighted-averagefair value of
    
    
    
    
    
    fair value of
    
    
    
    
    
    fair value ofRestricted
    
    restricted stock
    
    Restricted
    
    restricted stock
    
    Restricted
    
    restricted stockstock units
    
    units
    
    stock units
    
    units
    
    stock units
    
    unitsOutstanding at
beginning of year
    
    
    277,881
    
    
    $
    6.91
    
    
    
    270,000
    
    
    $
    6.92
    
    
    
    
    
    
    $
    Granted
    
    
    17,640
    
    
    
    4.96
    
    
    
    73,881
    
    
    
    5.21
    
    
    
    285,000
    
    
    
    6.92Vested
    
    
    (142,521
    )
    
    
    4.99
    
    
    
    (54,000
    )
    
    
    6.80
    
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    
    
    
    
    (12,000
    )
    
    
    6.92
    
    
    
    (15,000
    )
    
    
    6.92Outstanding at end of year
    
    
    153,000
    
    
    
    6.91
    
    
    
    277,881
    
    
    
    6.91
    
    
    
    270,000
    
    
    
    6.92Weighted-average fair
value of restricted stock
units granted during the
year
    
    
    
    
    
    $
    4.96
    
    
    
    
    
    
    $
    5.21
    
    
    
    
    
    
    $
    6.92
 Stockholders Rights
  6. Income Taxes
  Year ended January 31,2007
    
    2006
    
    2005Statutory
    
    $
    2,717
    
    
    $
    (3,292
    )
    
    $
    (4,719
    )State taxes (net of federal tax)
    
    
    272
    
    
    
    (329
    )
    
    
    (472
    )Change in valuation allowance
    
    
    (2,432
    )
    
    
    3,721
    
    
    
    5,219Other
    
    
    (111
    )
    
    
    (209
    )
    
    
    87$
    446
    
    
    $
    (109
    )
    
    $
    115
  January 31,2007
    
    2006
    
    2005CurrentFederal
    
    $
    220
    
    
    $
    
    
    
    $
    State
    
    
    (34
    )
    
    
    (109
    )
    
    
    115186
    
    
    
    (109
    )
    
    
    115DeferredFederal
    
    
    2,205
    
    
    
    (3,502
    )
    
    
    (4,466
    )State
    
    
    487
    
    
    
    (219
    )
    
    
    (753
    )2,692
    
    
    
    (3,721
    )
    
    
    (5,219
    )Valuation allowance
    
    
    (2,432
    )
    
    
    3,721
    
    
    
    5,219260
    
    
    
    
    
    
    
    $
    446
    
    
    $
    (109
    )
    
    $
    115
 51




---



##### Table of Contents



January 31,2007
    
    2006Deferred tax assetsAccrued vacation and sick leave
    
    $
    979
    
    
    $
    926Retirement plans
    
    
    6,517
    
    
    
    4,953Insurance reserves
    
    
    1,060
    
    
    
    606Inventory
    
    
    858
    
    
    
    804Warranty
    
    
    655
    
    
    
    561Net operating loss carry forwards
    
    
    6,872
    
    
    
    11,05816,941
    
    
    
    18,908Deferred tax liabilitiesTax in excess of book depreciation
    
    
    (1,407
    )
    
    
    (2,062
    )Capitalized software development costs
    
    
    
    
    
    
    (53
    )Other
    
    
    (204
    )
    
    
    (153
    )(1,611
    )
    
    
    (2,268
    )Valuation allowance
    
    
    (15,591
    )
    
    
    (16,640
    )Net deferred tax liability
    
    $
    (260
    )
    
    $
    
    7. Commitments
   Year ending January 31,2008
    
    $
    6,2442009
    
    
    4,8252010
    
    
    4,1842011
    
    
    7922012
    
    
    608Thereafter
    
    
    0
  Year ended January 31,2007
    
    $
    8,0192006
    
    
    9,4572005
    
    
    9,050
  52




---



##### Table of Contents



8. Contingencies
     Year ending January 31,2008
    
    $
    6202009
    
    
    6202010
    
    
    6202011
    
    
    6202012
    
    
    610Total
    
    
    3,090Discount to net present value
    
    
    (255
    )Thereafter
    
    $
    2,835
  9. Warranty
   January 31,2007
    
    2006Beginning balance
    
    $
    1,500
    
    
    $
    1,500Provision
    
    
    1,154
    
    
    
    900Costs incurred
    
    
    (904
    )
    
    
    (900
    )Ending balance
    
    $
    1,750
    
    
    $
    1,500
 10. Other Financing Activities
  53




---



##### Table of Contents



11. Quarterly Results (Unaudited)
  April 30
    
    July 30
    
    October 31
    
    January 31Year 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 shareNet IncomeBasic
    
    
    (0.25
    )
    
    
    0.58
    
    
    
    0.41
    
    
    
    (0.20
    )Assuming dilution
    
    
    (0.25
    )
    
    
    0.58
    
    
    
    0.41
    
    
    
    (0.20
    )Year ended January 31, 2006Net sales
    
    $
    33,254
    
    
    $
    75,906
    
    
    $
    70,484
    
    
    $
    34,806Gross profit
    
    
    9,407
    
    
    
    26,504
    
    
    
    20,084
    
    
    
    8,670Net (loss) income
    
    
    (5,683
    )
    
    
    6,085
    
    
    
    (2,194
    )
    
    
    (7,782
    )Per common shareNet IncomeBasic
    
    
    (0.43
    )
    
    
    0.46
    
    
    
    (0.17
    )
    
    
    (0.59
    )Assuming dilution
    
    
    (0.43
    )
    
    
    0.46
    
    
    
    (0.17
    )
    
    
    (0.59
    )
 
 (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
  54




---



##### Table of Contents



Internal Control Over Financial Reporting
  
 Item 9B. Other Information
  55




---



##### 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
  56




---



##### 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, 2007 and 2006.Consolidated statements of operations  Years ended January 31, 2007, 2006, and 2005.Consolidated statements of stockholders equity  Years ended January 31, 2007, 2006, and 2005.Consolidated statements of cash flows  Years ended January 31, 2007, 2006, and 2005.Notes to consolidated financial statements  January 31, 2007.2.
    
    The following consolidated financial statement schedule of Virco Mfg. Corporation is included in Item 15:
 57




---



##### Table of Contents



VIRCO MFG. CORPORATION AND SUBSIDIARIES
 SCHEDULE II  VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
 FOR THE YEARS ENDED JANUARY 31, 2007, 2006 AND 2005
  Col. C
    
    Col. ECol. B
    
    Charged to
    
    Deductions from
    
    Col. FCol. A
    
    Beginning Balance
    
    Expenses
    
    Reserves
    
    Ending BalanceAllowance for
doubtful accounts
for the
period ended:January 31, 2007
    
    $
    200
    
    
    $
    72
    
    
    $
    72
    
    
    $
    200January 31, 2006
    
    $
    225
    
    
    $
    
    
    
    $
    25
    
    
    $
    200January 31, 2005
    
    $
    225
    
    
    $
    17
    
    
    $
    17
    
    
    $
    225Inventory valuation
reserve for the
period ended:January 31, 2007
    
    $
    1,400
    
    
    $
    
    
    
    $
    
    
    
    $
    1,400January 31, 2006
    
    $
    1,400
    
    
    $
    
    
    
    $
    
    
    
    $
    1,400January 31, 2005
    
    $
    1,150
    
    
    $
    250
    
    
    $
    
    
    
    $
    1,400Warranty reserve for
the period ended:January 31, 2007
    
    $
    1,500
    
    
    $
    1,154
    
    
    $
    904
    
    
    $
    1,750January 31, 2006
    
    $
    1,500
    
    
    $
    900
    
    
    $
    900
    
    
    $
    1,500January 31, 2005
    
    $
    1,751
    
    
    $
    1,304
    
    
    $
    1,555
    
    
    $
    1,500Product, workers
compensation and
automobile liability
reserves
for the period ended:January 31, 2007
    
    $
    1,620
    
    
    $
    1,215
    
    
    $
    
    
    
    $
    2,835January 31, 2006
    
    $
    2,400
    
    
    $
    
    
    
    $
    780
    
    
    $
    1,620January 31, 2005
    
    $
    4,297
    
    
    $
    
    
    
    $
    1,897
    
    
    $
    2,400Deferred tax
valuation allowance
for the
period ended:January 31, 2007
    
    $
    16,640
    
    
    $
    
    
    
    $
    1,049
    
    
    $
    15,591January 31, 2006
    
    $
    12,919
    
    
    $
    3,721
    
    
    $
    
    
    
    $
    16,640January 31, 2005
    
    $
    7,700
    
    
    $
    5,219
    
    
    $
    
    
    
    $
    12,919
  3.
    
    Exhibits
  58




---



##### Table of Contents



SIGNATURES
  VIRCO MFG. CORPORATIONDate: April 13, 2007
    By:
    /s/ Robert A. VirtueRobert A. VirtueChairman of the Board and
Chief Executive Officer 59




---



##### 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 13, 2007/s/ Robert E. Dose
    
    Vice President  Finance, Secretary andRobert E. Dose
    
    Treasurer
(Principal Financial Officer)
    
    April 13, 2007/s/ Bassey Yau
    
    Corporate ControllerBassey Yau
    
    (Principal
Accounting Officer)
    
    April 13, 2007/s/ Douglas A. Virtue
    
    Director
    
    April 13, 2007Douglas A. Virtue/s/ Donald S. Friesz
    
    Director
    
    April 13, 2007Donald S. Friesz/s/ Evan M. Gruber
    
    Director
    
    April 13, 2007Evan M. Gruber/s/ Robert K. Montgomery
    
    Director
    
    April 13, 2007Robert K. Montgomery/s/ Albert J. Moyer
    
    Director
    
    April 13, 2007Albert J. Moyer/s/ Glen D. Parish
    
    Director
    
    April 13, 2007Glen D. Parish/s/ Donald A. Patrick
    
    Director
    
    April 13, 2007Donald A. Patrick/s/ James R. Wilburn
    
    Director
    
    April 13, 2007James R. Wilburn
 60




---



##### Table of Contents



VIRCO MFG. CORPORATION
 EXHIBITS TO FORM 10-K ANNUAL REPORT
 For the Year Ended January 31, 2007
 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).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).10.4
    
    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, 1996.10.5
    
    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, 2005, 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, 2005).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, 2005, 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, 2005).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.10.13
    
    Term Note dated March 26, 2007 between the Company and Wells Fargo Bank, National Association.10.14
    
    Amendment No. 4 to Amended and Restated Credit Agreement dated as of March 26, 2007, between the Company and Wells
Fargo Bank, National Association.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, 2006).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.
 61




---



##### Table of Contents



ExhibitNumber
    
    Description21.1
    
    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.
 62