##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 FORM 10-K
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended February 28, 2011
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from _____________to______________
 Commission file number 0-13394
 
 VIDEO DISPLAY CORPORATION
  Georgia
    
    58-1217564(State of Incorporation)
    
    (IRS Employer Identification No.)1868 Tucker Industrial Road, Tucker Georgia
    
    30084(Address of principal executive offices)
    
    (Zip code)
 (770) 938-2080
  Title of each class
    
    Name of each exchange on which registeredCommon Stock, no par value
    
    NASDAQ/NMS
  o þ
 o þ
 þ o
 þ
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 o þ
   DOCUMENTS INCORPORATED BY REFERENCE




---



##### 



VIDEO DISPLAY CORPORATION
TABLE OF CONTENTS
  
 ITEM

    
    PAGENUMBER

    

NUMBERPART IItem 1.
    
Business

    
    2Item 1A.

    Risk Factors
    
    7Item 1B.

    Unresolved Staff Comments
    
    10Item 2.

    Properties
    
    10Item 3.

    Legal Proceedings
    
    11Item 4.

    Submission of Matters to a Vote of Security Holders
    
    11PART IIItem 5.

    Market for Registrants Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities
    
    12Item 6.

    Selected Financial Data
    
    13Item 7.

    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    13Item 7A.

    Quantitative and Qualitative Disclosures About Market Risk
    
    21Item 8.

    Financial Statements and Supplementary Data
    
    22Item 9.

    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    46Item 9A(T).

    Controls and Procedures
    
    46Item 9B.

    Other Information
    
    48PART IIIItem 10.

    Directors, Executive Officers and Corporate Governance
    
    49Item 11.

    Executive Compensation
    
    49Item 12.

    Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
    
    49Item 13.

    Certain Relationships and Related Transactions, and Director Independence
    
    49Item 14.

    Principal Accounting Fees and Services
    
    49PART IVItem 15.

    Exhibits, Financial Statement Schedules
    
    50Signatures

    
    51EX-10.DEX-10.EEX-21EX-23.1EX-31.1EX-31.2EX-32.1




---



##### Table of Contents



PART I
 
 Item 1. Business.
 General
   Description of Principal Business
   
    Segment Information
  2




---



##### Table of Contents



Principal Products by Division
 Monitors
      Data Display CRTs and Entertainment CRTs
    3




---



##### Table of Contents



Component Parts
   Patents and Trademarks
  Seasonal Variations in Business
  Working Capital Practices
  4




---



##### Table of Contents



Concentration of Customers
  Backlog
  Government Contracts
  Environmental Matters
  5




---



##### Table of Contents



Research and Development
  Employees
  Competition
      6




---



##### Table of Contents



Discontinued Operations
  
 Item 1A. Risk Factors.
 Forward looking statements and risk factors
   Our industry is highly competitive and competitive conditions may adversely affect our business.
   Competitors or third parties may infringe on our intellectual property.
  Migration to flat panel and other technology may negatively affect our CRT business.
  7




---



##### Table of Contents



Future acquisitions may not provide benefits to the Company.
  Changes in government priorities may affect military spending, and our consolidated financial condition and
results of operations could suffer if their purchases decline.
  If we are unable to retain certain key personnel and hire new, highly-skilled personnel, we may not
be able to execute our business plan.
  Our business operations could be disrupted if our information technology systems fail to perform
adequately.
  Changes to accounting rules or regulations may adversely affect our results of operations.
  The Companys stock price may be negatively affected by a variety of factors.
  Changes to estimates related to long-term assets, or operating results that are lower than our
current estimates, may cause us to incur impairment charges.
 Intangible Assets, Property, Plant, and Equipment.
 8




---



##### Table of Contents



International factors could negatively affect our business.
  
    
    Economic downturns;
    
    Currency exchange rate and interest rate fluctuations;
    
    Changes in governmental policy, including, among others, those relating to taxation;
    
    International military, political, diplomatic and terrorist incidents;
    
    Government instability;
    
    Nationalization of foreign assets;
    
    Natural disasters, such as the recent Japan earthquake, could disturb our supply chains; and
    
    Tariffs and governmental trade policies.
  Our level of indebtedness could adversely affect the future operation of our business.
  
    
    making it more difficult for us to make payments on the debt, as our
business may not be able to generate sufficient cash flows from
operating activities to meet our debt service obligations;
    
    increasing our vulnerability to general economic and industry conditions;
    
    requiring a substantial portion of cash flow from operating activities
to be dedicated to the payment of our outstanding lines of credit and
long-term debt, and as a result reducing our ability to use our cash
flow to fund our operations and capital expenditures, capitalize on
future business opportunities and expand our business and execute our
strategy;
    
    exposing us to the risk of increased interest rates since much of our
borrowings are at variable rates of interest;
    
    causing us to make non-strategic divestitures;
    
    limiting our ability to obtain additional financing for working
capital, capital expenditures, debt service requirements and other
general corporate purposes; and
    
    limiting our ability to adjust to changing market conditions and to
react to competitive pressure and placing us at a competitive
disadvantage compared to our competitors who may have lower debt
leverage.
 Our debt agreements contain covenants that limit our flexibility in operating our business.
  9




---



##### Table of Contents




    
    incur additional indebtedness;
    
    make certain investments, loans or advances;
    
    transfer and sell certain assets;
    
    create or permit liens on assets;
    
    consolidate, merge, sell or otherwise dispose of all or substantially all of our assets;
    
    engage in any business activity substantially different from our current businesses;
    
    pay dividends;
    
    purchase treasury shares; and
    
    cause, permit, or suffer a change in capital ownership.
  
 Item 1B. Unresolved Staff Comments.
  
 Item 2. Properties.
  Location
    
    Square Feet
    
    Lease ExpiresCRT, Monitor and Electron Gun  Manufacturing and Warehouse FacilitiesTucker, Georgia
    
    
    59,000
    
    
    October 31, 2018Stone Mountain, Georgia
    
    
    45,000
    
    
    May 31, 2018White Mills, Pennsylvania
    
    
    110,000
    
    
    Company OwnedBossier City, Louisiana
    
    
    26,000
    
    
    Company OwnedBirdsboro, Pennsylvania
    
    
    40,000
    
    
    Company Owned (a)Phelps, New York
    
    
    32,000
    
    
    Company OwnedCape Canaveral, Florida
    
    
    30,000
    
    
    January 17, 2012Lexington, Kentucky
    
    
    80,000
    
    
    March 31, 2015Loves Park, Illinois
    
    
    120,000
    
    
    September 30, 2011 (b)
 
 (a)
    
    The Birdsboro, Pennsylvania property secures mortgage loans from a bank with a
principal balance of $0.4 million as of February 28, 2011. This mortgage loan bears an
interest rate of approximately 7.3%. Monthly principal and interest payments of
approximately $5,000 are payable through October 2021.(b)
    
    Approximately 100,000 square feet are on a month-to-month lease arrangement. The
other 20,000 square feet are being leased from Border Town Properties on a one-year
lease. 10




---



##### Table of Contents



Item 3. Legal Proceedings.
      
 Item 4. Submission of Matters to a Vote of Security Holders.
  11




---



##### Table of Contents



PART II
 
 Item 5. Market for Registrants Common Equity, Related Stockholder Matters, and Issuer Purchases of
Equity Securities.
   For Fiscal Years EndedFebruary 28, 2011
    
    February 28, 2010Quarter Ended
    
    High
    
    Low
    
    High
    
    LowMay
    
    $
    5.38
    
    
    $
    4.39
    
    
    $
    3.64
    
    
    $
    1.23August
    
    
    4.87
    
    
    
    3.87
    
    
    
    3.53
    
    
    
    2.90November
    
    
    4.50
    
    
    
    3.79
    
    
    
    5.19
    
    
    
    3.19February
    
    
    4.20
    
    
    
    3.70
    
    
    
    4.90
    
    
    
    3.84
   Securities Authorized for Issuance Under Equity Compensation Plans
  Number of securitiesNumber of
    
    
    
    
    
    
    remaining available forsecurities to be
    
    
    
    
    
    
    future issuance underissued upon exercise
    
    
    Weighted-average
    
    
    equity compensationof outstanding
    
    
    exercise price of
    
    
    plans (excludingoptions, warrants
    
    
    outstanding options,
    
    
    securities reflected inStock Option Plan
    
    and rights
    
    
    warrants and rights
    
    
    first column)Equity compensation plans
approved by security holders
    
    
    96,000
    
    
    $
    5.05
    
    
    
    738,000
 Issuer Purchases of Equity Securities
  12




---



##### Table of Contents



Item 6. Selected Financial Data
  
 Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations.
   Overview
 Segment
Reporting
 
    
    Monitors offers a wide range of CRT, flat panel and projection display systems for
use in training and simulation, military, medical, and industrial applications.
    
    Data Display CRTs offers a wide range of CRTs for use in data display screens,
including computer terminal monitors and medical monitoring equipment.
    
    Entertainment CRTs offers a wide range of CRTs and projection tubes for television
and home theater equipment.
    
    Component Parts provides replacement electron guns and other components for CRTs
primarily for servicing the Companys internal needs.
  Inventory management
  Interest rate exposure
 13




---



##### Table of Contents



Operations
   2011
    
    
    2010Amount
    
    
    %
    
    
    Amount
    
    
    %Net SalesMonitors
    
    $
    51,936
    
    
    
    88.0
    %
    
    $
    42,135
    
    
    
    84.1
    %Data Display CRTs
    
    
    6,498
    
    
    
    11.0
    
    
    
    7,181
    
    
    
    14.3Entertainment CRTs
    
    
    353
    
    
    
    0.6
    
    
    
    579
    
    
    
    1.2Component Parts
    
    
    252
    
    
    
    0.4
    
    
    
    181
    
    
    
    0.4Total Company
    
    
    59,039
    
    
    
    100.0
    
    
    
    50,076
    
    
    
    100.0Costs and expensesCost of goods sold
    
    $
    43,544
    
    
    
    73.8
    %
    
    $
    36,367
    
    
    
    72.6
    %Selling and delivery
    
    
    4,387
    
    
    
    7.4
    
    
    
    3,905
    
    
    
    7.8General and administrative
    
    
    6,689
    
    
    
    11.3
    
    
    
    7,411
    
    
    
    14.854,620
    
    
    
    92.5
    
    
    
    47,683
    
    
    
    95.2Income from operations
    
    
    4,419
    
    
    
    7.5
    
    
    
    2,393
    
    
    
    4.8Interest expense
    
    
    (946
    )
    
    
    (1.6
    )
    
    
    (912
    )
    
    
    (1.8
    )Other income, net
    
    
    245
    
    
    
    0.4
    
    
    
    297
    
    
    
    0.5Income before income taxes
    
    
    3,718
    
    
    
    6.3
    
    
    
    1,778
    
    
    
    3.5Provision for income taxes
    
    
    1,317
    
    
    
    2.2
    
    
    
    599
    
    
    
    1.2Income from continuing operations
    
    
    2,401
    
    
    
    4.1
    %
    
    
    1,179
    
    
    
    2.3
    %Loss from
discontinued operations, net of tax
    
    
    (1,314
    )
    
    
    (2.2
    %)
    
    
    (239
    )
    
    
    (0.4
    %)Net Income
    
    $
    1,087
    
    
    
    1.9
    %
    
    $
    940
    
    
    
    1.9
    %
 Fiscal 2011 Compared to Fiscal 2010
    14




---



##### Table of Contents



15




---



##### Table of Contents



Liquidity and Capital Resources
         16




---



##### Table of Contents



Transactions with Related Parties, Contractual Obligations, and Commitments
    17




---



##### Table of Contents



Contractual Obligations
  Payments due by periodLess than
    
    
    1-3
    
    
    3-5
    
    
    More thanTotal
    
    
    1 year
    
    
    years
    
    
    years
    
    
    5 yearsLong-term debt obligations
    
    $
    21,871
    
    
    $
    1,339
    
    
    $
    16,019
    
    
    $
    2,364
    
    
    $
    2,149Interest obligations on
long-term debt (a)
    
    
    3,074
    
    
    
    913
    
    
    
    1,484
    
    
    
    275
    
    
    
    402Operating lease obligations
    
    
    4,731
    
    
    
    1,044
    
    
    
    1,695
    
    
    
    1,204
    
    
    
    788Purchase obligations
    
    
    13,934
    
    
    
    13,934
    
    
    
    
    
    
    
    
    
    
    
    Warranty reserve obligations
    
    
    216
    
    
    
    216
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    43,826
    
    
    $
    17,446
    
    
    $
    19,198
    
    
    $
    3,843
    
    
    $
    3,339
 
 (a)
    
    This line item was calculated by utilizing the effective rate on outstanding debt as of
February 28, 2011. Off-Balance Sheet Arrangements
  Critical Accounting Estimates
  Reserves on inventories
   18




---



##### Table of Contents



Revenue and profit or loss recognition
  Revenue Recognition: Principal Agent
Considerations,
 Revenue Recognition Construction-Type and Production-Type Contracts
 Allowance for bad debts
  Warranty reserves
  Other loss contingencies
  Discontinued Operations
  19




---



##### Table of Contents



Recent Accounting Pronouncements
 Fair Value Measurements
and Disclosures  Overall Subtopic
 When to Perform Step 2
of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts"
 Disclosure of Supplementary Pro
Forma Information for Business Combinations.
 20




---



##### Table of Contents



Revenue Recognition.
 Leases.
 Impact of Inflation
  
 Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
  21




---



##### 



Item 8. Financial Statements and Supplementary Data.
    
 Report of Independent Registered Public Accounting Firm
    
    23Consolidated Balance Sheets as of February 28, 2011 and February 28, 2010
    
    24Consolidated Statements of Income for the years ended
February 28, 2011 and February 28, 2010
    
    26Consolidated Statements of Shareholders Equity and Comprehensive Income
for the years ended February 28, 2011 and February 28, 2010
    
    27Consolidated Statements of Cash Flows for the years ended
February 28, 2011 and February 28, 2010
    
    28Notes to Consolidated Financial Statements
    
    29
  22




---



##### Table of Contents



23




---



##### Table of Contents



February 28,
    
    
    February 28,2011
    
    
    2010AssetsCurrent AssetsCash
    
    $
    1,399
    
    
    $
    441Restricted cash
    
    
    1,388
    
    
    
    Accounts receivable, less allowance for
Bad debts of $134 and $117, respectively
    
    
    8,496
    
    
    
    9,313Inventories, net
    
    
    30,593
    
    
    
    33,718Cost and estimated earnings in excess of
billings on uncompleted contracts
    
    
    2,192
    
    
    
    4,089Deferred income taxes
    
    
    2,659
    
    
    
    2,770Income taxes refundable
    
    
    770
    
    
    
    162Outside Investments
    
    
    58
    
    
    
    78Prepaid expenses and other current assets
    
    
    767
    
    
    
    417Assets of discontinued operations
    
    
    5,710
    
    
    
    6,875Total current assets
    
    
    54,032
    
    
    
    57,863Property, plant and equipment:Land
    
    
    336
    
    
    
    335Buildings
    
    
    6,340
    
    
    
    6,370Machinery and equipment
    
    
    17,583
    
    
    
    16,75224,259
    
    
    
    23,457Accumulated depreciation
    
    
    (19,737
    )
    
    
    (18,930
    )Net property, plant and equipment
    
    
    4,522
    
    
    
    4,527Goodwill
    
    
    1,376
    
    
    
    1,376Intangible assets, net
    
    
    1,504
    
    
    
    1,843Deferred income taxes
    
    
    823
    
    
    
    760Other assets
    
    
    5
    
    
    
    3Assets of discontinued operations
    
    
    1,208
    
    
    
    1,231Total assets
    
    $
    63,470
    
    
    $
    67,603
  24




---



##### Table of Contents



February 28,
    
    
    February 28,2011
    
    
    2010Liabilities and Shareholders EquityCurrent liabilitiesAccounts payable
    
    $
    4,387
    
    
    $
    6,883Accrued liabilities
    
    
    3,690
    
    
    
    3,826Billings in excess of cost and estimated
earnings
on uncompleted contracts
    
    
    1,026
    
    
    
    880Current maturities of notes payable to
officers and directors
    
    
    396
    
    
    
    396Line of credit
    
    
    
    
    
    
    20,143Current maturities of long-term debt
    
    
    943
    
    
    
    625Liabilities of discontinued operations
    
    
    3,208
    
    
    
    3,313Total current liabilities
    
    
    13,650
    
    
    
    36,066Lines of credit
    
    
    13,336
    
    
    
    Long-term debt, less current maturities
    
    
    5,822
    
    
    
    957Notes payable to officers and directors,
less current maturities
    
    
    1,374
    
    
    
    2,447Other long-term liabilities
    
    
    296
    
    
    
    415Liabilities of discontinued operations
    
    
    188
    
    
    
    221Total liabilities
    
    
    34,666
    
    
    
    40,106Shareholders EquityPreferred stock, no par value  10,000 shares
authorized; none issued and outstanding
    
    
    
    
    
    
    Common stock, no par value  50,000 shares
authorized; 9,732 issued and 8,409 outstanding
at February 28, 2011, and 9,732 issued and 8,365
outstanding at February 28, 2010
    
    
    7,293
    
    
    
    7,293Additional paid-in capital
    
    
    175
    
    
    
    193Retained earnings
    
    
    28,488
    
    
    
    27,401Treasury stock, 1,323 shares at February 28, 2011
and 1,367 shares at February 28, 2010 at cost
    
    
    (7,152
    )
    
    
    (7,390
    )Total shareholders equity
    
    
    28,804
    
    
    
    27,497Total liabilities and shareholders equity
    
    $
    63,470
    
    
    $
    67,603
  25




---



##### Table of Contents



February 28,
    
    
    February 28,2011
    
    
    2010Net sales
    
    $
    59,039
    
    
    $
    50,076Cost of goods sold
    
    
    43,544
    
    
    
    36,367Gross profit
    
    
    15,495
    
    
    
    13,709Operating expensesSelling and delivery
    
    
    4,387
    
    
    
    3,905General and administrative
    
    
    6,689
    
    
    
    7,41111,076
    
    
    
    11,316Operating income
    
    
    4,419
    
    
    
    2,393Other income (expense)Interest expense
    
    
    (946
    )
    
    
    (912
    )Other, net
    
    
    245
    
    
    
    297(701
    )
    
    
    (615
    )Income from continuing operations before income taxes
    
    
    3,718
    
    
    
    1,778Provision for income taxes
    
    
    1,317
    
    
    
    599Net income from continuing operations
    
    $
    2,401
    
    
    $
    1,179Loss from
discontinued operations, net of income tax benefit of $665 and $111, respectively
    
    
    (1,314
    )
    
    
    (239
    )Net income
    
    $
    1,087
    
    
    $
    940Net income (loss)per share:From continuing operations basic
    
    $
    0.29
    
    
    $
    0.14From continuing operations  diluted
    
    $
    0.28
    
    
    $
    0.14From discontinued operations  basic
    
    $
    (0.16
    )
    
    $
    (0.03
    )From discontinued operations  diluted
    
    $
    (0.15
    )
    
    $
    (0.03
    )Average shares outstanding  basic
    
    
    8,370
    
    
    
    8,427Average shares outstanding  diluted
    
    
    8,700
    
    
    
    8,744
  26




---



##### Table of Contents



Accumulated
    
    
    
    
    
    
    CurrentAdditional
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    YearCommon
    
    
    Share
    
    
    Paid-in
    
    
    Retained
    
    
    Comprehensive
    
    
    Treasury
    
    
    Compre- hensiveShares*
    
    
    Amount
    
    
    Capital
    
    
    Earnings
    
    
    Income (Loss)
    
    
    Stock
    
    
    IncomeBalance, February 29, 2009
    
    
    8,601
    
    
    
    7,293
    
    
    
    147
    
    
    
    26,461
    
    
    
    (90
    )
    
    
    (7,046
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    940
    
    
    
    
    
    
    
    
    
    
    $
    940Foreign currency
translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    90
    
    
    
    
    
    
    
    90Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    1,030Adjustment to correct shares
    
    
    (7
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Repurchase of treasury stock
    
    
    (229
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (344
    )Share based compensation
    
    
    
    
    
    
    
    
    
    
    46
    
    
    
    
    
    
    
    
    
    
    
    Balance, February 28, 2010
    
    
    8,365
    
    
    
    7,293
    
    
    
    193
    
    
    
    27,401
    
    
    
    
    
    
    
    (7,390
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,087
    
    
    
    
    
    
    
    
    
    
    $
    1,087Foreign currency
translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    1,087Stock awards
    
    
    44
    
    
    
    
    
    
    
    (55
    )
    
    
    
    
    
    
    
    
    
    
    238Share based compensation
    
    
    
    
    
    
    
    
    
    
    37
    
    
    
    
    
    
    
    
    
    
    
    Balance, February 28, 2011
    
    
    8,409
    
    
    $
    7,293
    
    
    $
    175
    
    
    $
    28,488
    
    
    $
    
    
    
    $
    (7,152
    )
 
 *
    
    Common Shares are shown net of Treasury Shares  27




---



##### Table of Contents



February 28,
    
    
    February 28,2011
    
    
    2010Operating ActivitiesNet income
    
    $
    1,087
    
    
    $
    940Adjustments to reconcile net income to net
cash provided by operating activities:Loss from discontinued operations, net of tax
    
    
    1,314
    
    
    
    239Depreciation and amortization
    
    
    1,213
    
    
    
    1,813Provision for doubtful accounts
    
    
    233
    
    
    
    209Provision for inventory reserve
    
    
    1,774
    
    
    
    1,086Non-cash charge for share based compensation
    
    
    220
    
    
    
    46Deferred income taxes
    
    
    49
    
    
    
    (288
    )Net unrealized loss on equity securities
    
    
    20
    
    
    
    Gain on disposal of equipment
    
    
    (14
    )
    
    
    Changes in working capital items:Accounts receivable
    
    
    346
    
    
    
    (2,832
    )Inventories
    
    
    1,350
    
    
    
    (3,047
    )Cost, estimated earnings and billings, net
on uncompleted contracts
    
    
    2,042
    
    
    
    (1,896
    )Prepaid expenses and other assets
    
    
    (352
    )
    
    
    (65
    )Decrease (increase) in income taxes refundable
    
    
    (607
    )
    
    
    1,674Accounts payable and accrued liabilities
    
    
    (2,751
    )
    
    
    2,261Net cash provided by operating activities
    
    
    5,924
    
    
    
    140Investing ActivitiesCapital expenditures
    
    
    (957
    )
    
    
    (146
    )Net investments in equity securities
    
    
    
    
    
    
    257Proceeds on sale of equipment
    
    
    102
    
    
    
    License Agreement
    
    
    
    
    
    
    (500
    )Purchase of Letter of Credit/CD
    
    
    (1,388
    )
    
    
    Net cash used in investing activities
    
    
    (2,243
    )
    
    
    (389
    )Financing ActivitiesProceeds from long-term debt, lines of credit
and financing lease obligations
    
    
    29,546
    
    
    
    13,515Repayments of long-term debt, lines of credit
and financing lease obligations
    
    
    (31,195
    )
    
    
    (13,832
    )Proceeds from notes payable from officers and
directors
    
    
    350
    
    
    
    1,166Repayments of notes payable to officers and directors
    
    
    (1,423
    )
    
    
    (523
    )Purchases and re-issues of treasury stock
    
    
    
    
    
    
    (344
    )Net cash used in financing activities
    
    
    (2,722
    )
    
    
    (18
    )Discontinued OperationsOperating activities
    
    
    170
    
    
    
    266Investing activities
    
    
    (339
    )
    
    
    (272
    )Financing activities
    
    
    138
    
    
    
    (14
    )Net cash used in discontinued operations
    
    
    (31
    )
    
    
    (20
    )Effect of exchange rates on cash
    
    
    
    
    
    
    90Net change in cash
    
    
    928
    
    
    
    (197
    )Cash, beginning of year
    
    
    465
    
    
    
    662Cash, end of year
    
    
    1,393
    
    
    
    465Cash, discontinued operations
    
    
    6
    
    
    
    (24
    )Cash,
continuing operations
    
    $
    1,399
    
    
    $
    441
 
 28




---



##### Table of Contents



Notes to Consolidated Financial Statements
 Note 1. Summary of Significant Accounting Policies
 Fiscal Year
  Nature of Business
  Principles of Consolidation
  Basis of Accounting
 The FASB Accounting
Standards Codification
 Use of Estimates
  Banking and Liquidity
   29




---



##### Table of Contents



Revenue Recognition
 Guarantees:
Recognition,
 Revenue Recognition: Principal Agent
Considerations,
 Revenue Recognition: Construction-Type and Production-Type Contracts.
 Research and Development
  Financial Instruments
  Accounts Receivable and Allowance for Doubtful Accounts
  30




---



##### Table of Contents



Warranty Reserves
  Inventories
   Property, Plant and Equipment
   Goodwill and Other Intangibles
  31




---



##### Table of Contents



Stock-Based Compensation Plans
 Compensation  Stock Compensation: Initial Measurement.
  Comprehensive Income
 Comprehensive Income
 Stock Repurchase Program
  Taxes on Income
 Income Taxes
 Income Tax: Basic
Recognition Threshold,
 32




---



##### Table of Contents



Foreign Currency Translations
  Earnings per Share
   Net Income
    
    
    Average Shares
    
    
    Net Income Per(loss)
    
    
    Outstanding
    
    
    Share2011Basic  continuing operations
    
    $
    2,401
    
    
    
    8,370
    
    
    $
    0.29Basic  discontinued operations
    
    
    (1,314
    )
    
    
    8,370
    
    
    
    (0.16
    )Effect of dilution:Options
    
    
    
    
    
    
    330Diluted earnings per share
    
    $
    1,087
    
    
    
    8,700
    
    
    $
    0.132010Basic  continuing operations
    
    $
    1,179
    
    
    
    8,427
    
    
    $
    0.14Basic  discontinued operations
    
    $
    (239
    )
    
    
    8,427
    
    
    $
    (0.03
    )Effect of dilution:Options
    
    
    
    
    
    
    317Diluted earnings per share
    
    $
    940
    
    
    
    8,744
    
    
    $
    0.11
  Segment Reporting
 Segment Reporting
 33




---



##### Table of Contents



Discontinued Operations
  Recent Accounting Pronouncements
 Fair Value Measurements
and Disclosures  Overall Subtopic
 34




---



##### Table of Contents



When to Perform Step 2
of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts
 Disclosure of Supplementary Pro
Forma Information for Business Combinations.
 Revenue Recognition.
 Leases.
 Note 2. Costs and Estimated Earnings Related to Billings on Uncompleted Contracts
  February 28,
    
    
    February 28,2011
    
    
    2010Costs incurred to date on uncompleted contracts
    
    $
    5,598
    
    
    $
    5,476Estimated earnings recognized to date on these contracts
    
    
    2,941
    
    
    
    2,9348,539
    
    
    
    8,410Billings to date
    
    
    (7,373
    )
    
    
    (5,201
    )Costs and estimated earnings in excess of billings, net
    
    $
    1,166
    
    
    $
    3,209Costs and estimated earnings in excess of billings
    
    $
    2,192
    
    
    $
    4,089Billings in excess of costs and estimated earnings
    
    
    (1,026
    )
    
    
    (880
    )$
    1,166
    
    
    $
    3,209
 Revenue Recognition: Construction-Type and Production-Type Contracts.
 35




---



##### Table of Contents



Note 3. Intangible Assets
  February 28, 2011
    
    
    February 28, 2010Accumulated
    
    
    
    
    
    
    AccumulatedCost
    
    
    Amortization
    
    
    Cost
    
    
    AmortizationCustomer lists
    
    $
    3,611
    
    
    $
    2,583
    
    
    $
    3,611
    
    
    $
    2,466Non-compete agreements
    
    
    1,245
    
    
    
    1,245
    
    
    
    1,245
    
    
    
    1,234Patents/designs
    
    
    777
    
    
    
    627
    
    
    
    777
    
    
    
    516Other intangibles
    
    
    649
    
    
    
    323
    
    
    
    649
    
    
    
    223$
    6,282
    
    
    $
    4,778
    
    
    $
    6,282
    
    
    $
    4,439
  Year
    
    Amort. Exp.2012
    
    $
    2832013
    
    $
    2382014
    
    $
    2382015
    
    $
    1632016
    
    $
    130Thereafter
    
    $
    452
 Note 4. Business Acquisitions
  36




---



##### Table of Contents



Note 5. Inventories
  February 28,
    
    
    February 28,2011
    
    
    2010Raw materials
    
    $
    20,750
    
    
    $
    20,464Work-in-process
    
    
    6,997
    
    
    
    8,396Finished goods
    
    
    7,760
    
    
    
    9,28635,507
    
    
    
    38,146Reserves for obsolescence
    
    
    (4,914
    )
    
    
    (4,428
    )$
    30,593
    
    
    $
    33,718
  Note 6. Long-Term Debt
  February 28,
    
    
    February 28,2011
    
    
    2010Note payable to RBC Bank; interest rate at
LIBOR plus applicable margin as defined per
the loan agreement, minimum 4.00% (2.51%
combined rate as of February 28, 2011);
monthly principal payments of $50 plus
accrued interest, payable through December
2011; collateralized by all assets of the
Company. Refinanced as of December 23,
2010.
    
    $
    
    
    
    $
    1,128Note payable to RBC Bank and Community&
Southern Bank; interest rate at LIBOR plus
applicable margin as defined per the loan
agreement, minimum 4.00% (2.51% combined
rate as of February 28, 2011); monthly
principal payments of $58 plus accrued
interest, payable through December 2015;
collateralized by all assets of the
Company.
    
    
    3,383
    
    
    
    Note payable to RBC Bank and Community &
Southern Bank; interest rate at LIBOR plus
applicable margin as defined per the loan
agreement, minimum 4.00% (2.51% combined
rate as of February 28, 2011); monthly
principal payments of $17 plus accrued
interest, payable through December 2025;
collateralized by four properties of the
Company.
    
    
    2,967
    
    
    
    Mortgage payable to bank; interest rate at
Federal Home Loan Bank Board Index rate
plus 1.95% (7.25% as of February 28, 2010);
monthly principal and interest payments of
$5 payable through October 2021;
collateralized by land and building of
Teltron Technologies, Inc.
    
    
    415
    
    
    
    4546,765
    
    
    
    1,582Less current maturities
    
    
    (943
    )
    
    
    (625
    )$
    5,822
    
    
    $
    957
 37




---



##### Table of Contents



Year
    
    Amount2012
    
    $
    9432013
    
    
    9452014
    
    
    9472015
    
    
    9482016
    
    
    833Thereafter
    
    
    2,149$
    6,765
 Note 7. Lines of Credit
    Note 8. Notes Payable to Officers and Directors
  Note 9. Accrued Expenses and Warranty Obligations
  38




---



##### Table of Contents



2011
    
    
    2010Balance at beginning of year
    
    $
    451
    
    
    $
    585Provision for current year sales
    
    
    444
    
    
    
    761Warranty costs incurred
    
    
    (679
    )
    
    
    (895
    )Balance at end of year
    
    $
    216
    
    
    $
    451
  February 28,
    
    
    February 28,2011
    
    
    2010Accrued compensation and benefits
    
    $
    981
    
    
    $
    895Accrued liability to issue stock
    
    
    1,625
    
    
    
    1,625Accrued warranty
    
    
    216
    
    
    
    451Accrued customer advances
    
    
    207
    
    
    
    132Accrued other
    
    
    661
    
    
    
    723$
    3,690
    
    
    $
    3,826
 Note 10. Stock Options
    Number of Shares
    
    
    Average Exercise Price(in thousands)
    
    
    Per ShareOutstanding at February 28, 2009
    
    
    87
    
    
    $
    5.46Granted
    
    
    6
    
    
    
    3.27Forfeited or expired
    
    
    
    
    
    
    Outstanding at February 28, 2010
    
    
    93
    
    
    $
    5.21Granted
    
    
    9
    
    
    
    4.19Forfeited or expired
    
    
    (6
    )
    
    
    7.91Outstanding at February 28, 2011
    
    
    96
    
    
    $
    5.05Options exercisableFebruary 28, 2010
    
    
    52
    
    
    $
    3.94February 28, 2011
    
    
    32
    
    
    
    3.50
 39




---



##### Table of Contents



Options Outstanding
    
    
    Options ExercisableNumber
    
    
    Weighted Average
    
    
    
    
    
    
    NumberOutstanding at
    
    
    Remaining
    
    
    Weighted
    
    
    Exercisable at
    
    
    WeightedRange
    
    February 28, 2010
    
    
    Contractual Life
    
    
    Average
    
    
    February 28, 2010
    
    
    Averageof Exercise Prices
    
    (in thousands)
    
    
    (in years)
    
    
    Exercise Price
    
    
    (in thousands)
    
    
    Exercise Price$2.20 - 2.20
    
    
    20
    
    
    
    0.8
    
    
    $
    2.20
    
    
    
    20
    
    
    $
    2.203.25 - 3.40
    
    
    26
    
    
    
    1.1
    
    
    
    3.25
    
    
    
    6
    
    
    
    3.274.19 - 4.19
    
    
    9
    
    
    
    2.5
    
    
    
    4.19
    
    
    
    
    
    
    
    7.71 - 8.08
    
    
    41
    
    
    
    5.4
    
    
    
    7.76
    
    
    
    6
    
    
    
    8.0896
    
    
    
    2.9
    
    
    $
    5.05
    
    
    
    32
    
    
    $
    3.50
   Note 11. Taxes on Income
  Fiscal Year EndedFebruary 28,
    
    
    February 28,2011
    
    
    2010Current:Federal
    
    $
    1,021
    
    
    $
    304State
    
    
    135
    
    
    
    641,156
    
    
    
    368Deferred:Federal
    
    
    140
    
    
    
    201State
    
    
    21
    
    
    
    30161
    
    
    
    231Total
    
    $
    1,317
    
    
    $
    599
  Fiscal Year EndedFebruary 28,
    
    
    February 28,2011
    
    
    2010U.S. operations
    
    $
    3,718
    
    
    $
    1,913Foreign operations
    
    
    
    
    
    
    (135
    )$
    3,718
    
    
    $
    1,778
 40




---



##### Table of Contents



Fiscal Year EndedFebruary 28,
    
    
    February 28,2011
    
    
    2010Statutory U.S. federal income tax rate
    
    $
    1,264
    
    
    $
    650State income taxes, net of federal benefit
    
    
    147
    
    
    
    76Foreign operating income (loss)
    
    
    
    
    
    
    (46
    )Research and experimentation credits
    
    
    (141
    )
    
    
    (128
    )Deemed Dividend Credit
    
    
    
    
    
    
    10State NOL adj  Fed. benefit
    
    
    
    
    
    
    14Deferred tax rate change
    
    
    144
    
    
    
    Non-deductible expenses
    
    
    26
    
    
    
    28Domestic production activities deduction
    
    
    (102
    )
    
    
    (45
    )Other
    
    
    (21
    )
    
    
    40Taxes at effective income tax rate
    
    $
    1,317
    
    
    $
    599
    Fiscal Year EndedFebruary 28,
    
    
    February 28,2011
    
    
    2010Deferred tax assets:Uniform capitalization costs
    
    $
    427
    
    
    $
    487Inventory reserves
    
    
    1,889
    
    
    
    1,683Accrued liabilities
    
    
    503
    
    
    
    638Allowance for doubtful accounts
    
    
    71
    
    
    
    44Amortization of intangibles
    
    
    651
    
    
    
    6733,541
    
    
    
    3,525State NOL
    
    
    1
    
    
    
    79Foreign tax credit carryforward
    
    
    99
    
    
    
    108Deferred tax liabilities:Basis difference of property, plant and equipment
    
    
    (110
    )
    
    
    (141
    )Other
    
    
    (49
    )
    
    
    (41
    )Net deferred tax assets
    
    $
    3,482
    
    
    $
    3,530Current asset
    
    $
    2,659
    
    
    $
    2,770Non-current asset
    
    
    823
    
    
    
    760$
    3,482
    
    
    $
    3,530
  41




---



##### Table of Contents



Note 12. Segment Information
 Segment Reporting, Segment Reporting:
Disclosure.
  Note 13. Benefit Plan
  Note 14. Commitments and Contingencies
 Operating Leases
   Fiscal Year
    
    Amount2012
    
    $
    1,0442013
    
    
    8492014
    
    
    8462015
    
    
    8452016
    
    
    358Thereafter
    
    
    788$
    4,730
 Related Party Leases
   Fiscal Year
    
    Amount2012
    
    $
    3142013
    
    
    3142014
    
    
    3142015
    
    
    3142016
    
    
    314Thereafter
    
    
    788$
    2,358
 42




---



##### Table of Contents



Legal Proceedings
     Note 15. Concentrations of Risk and Major Customers
   43




---



##### Table of Contents



Note 16. Supplemental Cash Flow Information
 Fiscal Year Ended(in thousands)February 28,
    
    
    February 28,2011
    
    
    2010Cash paid for:Interest
    
    $
    949
    
    
    $
    920Income taxes, net of refunds
    
    $
    1,086
    
    
    $
    (847
    )
 Note 17. Selected Quarterly Financial Data (unaudited)
  2011First
    
    
    Second
    
    
    Third
    
    
    FourthQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter(in thousands, except per share amounts)Net Sales
    
    $
    14,281
    
    
    $
    17,126
    
    
    $
    13,121
    
    
    $
    14,511Gross profit
    
    
    4,018
    
    
    
    4,699
    
    
    
    3,240
    
    
    
    3,538Net income (loss)
    
    
    720
    
    
    
    1,241
    
    
    
    150
    
    
    
    290Basic net income
(loss) per share
    
    $
    0.09
    
    
    $
    0.15
    
    
    $
    0.02
    
    
    $
    0.03Diluted net
income (loss) per
share
    
    $
    0.08
    
    
    $
    0.14
    
    
    $
    0.02
    
    
    $
    0.03
 2010First
    
    
    Second
    
    
    Third
    
    
    FourthQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter(in thousands, except per share amounts)Net Sales
    
    $
    11,582
    
    
    $
    11,856
    
    
    $
    12,552
    
    
    $
    14,086Gross profit
    
    
    2,877
    
    
    
    3,621
    
    
    
    3,160
    
    
    
    4,051Net income (loss)
    
    
    (55
    )
    
    
    235
    
    
    
    279
    
    
    
    720Basic net income
(loss) per share
    
    $
    (0.01
    )
    
    $
    0.03
    
    
    $
    0.03
    
    
    $
    0.09Diluted net
income (loss) per
share
    
    $
    (0.01
    )
    
    $
    0.03
    
    
    $
    0.03
    
    
    $
    0.08
 44




---



##### Table of Contents



Note 18. Discontinued Operations
  February 28, 2011
    
    
    February 28, 2010Net sales
    
    $
    18,453
    
    
    $
    20,355Cost of goods sold
    
    
    9,519
    
    
    
    10,284Gross profit
    
    
    8,934
    
    
    
    10,071Operating expensesSelling and delivery
    
    
    3,801
    
    
    
    3,056General and administrative
    
    
    7,006
    
    
    
    7,23110,807
    
    
    
    10,287Operating loss
    
    
    (1,873
    )
    
    
    (216
    )Other income (expense)Interest expense
    
    
    (132
    )
    
    
    (174
    )Other, net
    
    
    26
    
    
    
    40(106
    )
    
    
    (134
    )Loss from discontinued operations
before income taxes
    
    
    (1,979
    )
    
    
    (350
    )Benefit from income taxes
    
    
    (665
    )
    
    
    (111
    )Loss from discontinued operations
    
    $
    (1,314
    )
    
    $
    (239
    )
  February 28,
    
    
    February 28,2011
    
    
    2010AssetsCurrent AssetsCash
    
    $
    (6
    )
    
    $
    24Accounts
receivable, less allowance for Bad debts of $21 and $43, respectively
    
    
    1,312
    
    
    
    2,360Inventories, net
    
    
    4,280
    
    
    
    4,279Deferred income taxes
    
    
    (2
    )
    
    
    109Prepaid expenses and other current assets
    
    
    126
    
    
    
    103Total current assets
    
    
    5,710
    
    
    
    6,875Property, plant and equipment:Land
    
    
    249
    
    
    
    250Buildings
    
    
    1,978
    
    
    
    1,922Machinery and equipment
    
    
    5,706
    
    
    
    5,4227,933
    
    
    
    7,594Accumulated depreciation
    
    
    (6,748
    )
    
    
    (6,392
    )Net property, plant and equipment
    
    
    1,185
    
    
    
    1,202Other assets
    
    
    23
    
    
    
    29Total assets
    
    $
    6,918
    
    
    $
    8,106
 45




---



##### Table of Contents



February 28,
    
    
    February 28,2011
    
    
    2010Liabilities and Shareholders EquityCurrent liabilitiesAccounts payable
    
    $
    2,167
    
    
    $
    2,349Accrued liabilities
    
    
    579
    
    
    
    649Current maturities of notes payable to officers
and directors
    
    
    263
    
    
    
    115Current maturities of long-term debt
And financing lease obligations
    
    
    199
    
    
    
    200Total current liabilities
    
    
    3,208
    
    
    
    3,313Financing lease obligations, less current maturities
    
    
    188
    
    
    
    221Total liabilities
    
    
    3,396
    
    
    
    3,534Shareholders EquityRetained earnings
    
    
    3,522
    
    
    
    4,572Total shareholders equity
    
    
    3,522
    
    
    
    4,572Total liabilities and shareholders equity
    
    $
    6,918
    
    
    $
    8,106
   Note 19. Subsequent Events
  
 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
  
 Item9A (T). Controls and Procedures.
 Evaluation of disclosure controls and procedures.
  46




---



##### Table of Contents



Changes in Internal Controls
  Managements Report on Internal Control Over Financial Reporting
   Internal Control- Integrated
Framework.
  Limitations on the effectiveness of controls.
  47




---



##### Table of Contents



Item 9B. Other Information.
  48




---



##### Table of Contents



PART III
 
 Item 10. Directors, Executive Officers and Corporate Governance.
  
 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, and Director Independence.
  
 Item 14. Principal Accounting Fees and Services.
  49




---



##### Table of Contents



PART IV
 
 Item 15. Exhibits, Financial Statement Schedules.
 (a)
    
    The following documents are filed as part of this Report:
 1.
    
    Financial Statements:
        2.
    
    Financial Statement Schedules
  (b)
    
    Exhibits
 Exhibit Number
    
    Exhibit Description3(a)
    
    
    Articles of Incorporation of the Company (incorporated by reference to
Exhibit 3A to the Companys Registration Statement on Form S-18 filed
January 15, 1985).3(b)
    
    
    By-Laws of the Company (incorporated by reference to Exhibit 3B to the
Companys Registration Statement on Form S-18 filed January 15, 1985).10(b)
    
    
    Lease dated June 1, 2008 by and between Registrant (Lessee) and Ronald
D. Ordway (Lessor) with respect to premises located at 4601 Lewis Road,
Stone Mountain, Georgia. (incorporated by reference to Exhibit 10(b) to the
Companys 2009 Annual Report on Form 10-K)10(c)
    
    
    Lease dated November 1, 2008 by and between Registrant (Lessee) and
Ronald D. Ordway (Lessor) with respect to premises located at 1868 Tucker
Industrial Road, Tucker, Georgia. (incorporated by reference to Exhibit
10(c) to the Companys 2009 Annual Report on Form 10-K)10(d)
    
    
    Purchase Agreement dated March 1, 2011 by and between the Company and
FI Acquisition with respect to the sale of the Companys Fox International
subsidiary.10(e)
    
    
    Amendment to Loan and Security Agreement dated May 26, 201110(h)
    
    
    Loan and Security Agreement and related documents, dated December 23,
2010, among Video Display Corporation and Subsidiaries and RBC Bank and
Community and Southern Bank as lenders and RBC Bank as administrative agent
(incorporated by reference to Exhibit 10(h) to the Companys Report on Form
8-K dated December 30, 2010).10(i)
    
    
    $6,000,000 Subordinated Note, dated June 29, 2006, between Video
Display Corporation and Ronald D. Ordway (holder) (incorporated by reference
to Exhibit 10(i) to the Companys Current Report on Form 8-K dated June 29,
2006).10(j)
    
    
    Video Display Corporation 2006 Stock Incentive Plan. (incorporated by
reference to Appendix A to the Companys 2006 Proxy Statement on Schedule
14A)21
    
    
    Subsidiary companies23.1
    
    
    Consent of Carr, Riggs & Ingram, LLC31.1
    
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.
    
    
    Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 50




---



##### Table of Contents



SIGNATURES
  Date:  May 27, 2011
    VIDEO DISPLAY CORPORATIONBy:
    /s/ Ronald D. OrdwayRonald D. OrdwayChairman of the Board and

Chief Executive Officer POWER OF ATTORNEY
   Signature -Name
    
    Capacity
    
    Date/s/ Ronald D. Ordway

Ronald D. Ordway
    
    Chief Executive Officer, Treasurer
and Director
(Principal Executive Officer)
    
    May 27, 2011/s/ Gregory L. Osborn

Gregory L. Osborn
    
    Chief Financial Officer (Principal
Financial Officer)
    
    May 27, 2011/s/ Murray Fox

Murray Fox
    
    Director
    
    May 27, 2011/s/ Carolyn Howard

Carolyn Howard
    
    Director
    
    May 27, 2011/s/ Peter Frend

Peter Frend
    
    Director
    
    May 27, 2011/s/ Carleton Sawyer

Carleton Sawyer
    
    Director
    
    May 27, 2011
 51




---



##### Table of Contents



Report of Independent Registered Public Accounting Firm




---



##### Table of Contents



Column A
    
    Column B
    
    
    Column C
    
    
    Column D
    
    
    Column EAdditionsBalance at
    
    
    Charged to
    
    
    
    
    
    
    Balance atBeginning
    
    
    Costs and
    
    
    
    
    
    
    End ofDescription
    
    of Period
    
    
    Expenses
    
    
    Deductions
    
    
    PeriodAllowance for
doubtful accounts:February 28, 2011
    
    $
    117
    
    
    $
    233
    
    
    $
    216
    
    
    $
    134February 28, 2010
    
    
    490
    
    
    
    209
    
    
    
    582
    
    
    
    117Reserves for inventory:February 28, 2011
    
    $
    4,428
    
    
    $
    1,774
    
    
    $
    1,288
    
    
    $
    4,914February 28, 2010
    
    
    3,666
    
    
    
    1,086
    
    
    
    324
    
    
    
    4,428