##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the quarterly period ended April 30, 2009
 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 1-8777
 VIRCO MFG. CORPORATION
  Delaware
    
    95-1613718(State or Other Jurisdiction of
    
    (I.R.S. EmployerIncorporation or Organization)
    
    Identification No.)
 2027 Harpers Way, Torrance, CA
    
    90501(Address of Principal Executive Offices)
    
    (Zip Code)
 (310) 533-0474
   þ o
 o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




---



##### 



VIRCO MFG. CORPORATION
 INDEX
 Part I. Financial InformationItem 1. Financial Statements

3Condensed consolidated balance sheets  April 30, 2009, January 31, 2009 and April 30, 2008

3Unaudited condensed consolidated statements of operations  Three months ended April 30, 2009 and 2008

5Unaudited condensed consolidated statements of cash flows  Three months ended April 30, 2009 and 2008

6Notes to unaudited condensed consolidated financial statements  April 30, 2009

7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations

12Item 3. Quantitative and Qualitative Disclosures about Market Risk

13Item 4. Controls and Procedures

13Part II. Other InformationItem 1. Legal Proceedings

15Item 6. Exhibits

15Exhibit 10.1 - Amendment No. 2 to Second Amended and Restated Credit Agreement, dated as of March 27,
2009, by Virco Mfg. Corporation and Wells Fargo Bank, National Association (incorporate by reference to
Exhibit 10.25 to the Companys Annual Report on Form 10-K filed with the Commission on April 16, 2009).Exhibit 31.1 - Certification of Robert A. Virtue, President, pursuant to Rules 13a-14 and 15d-14 of the
Securities Exchange Act, as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002.Exhibit 31.2 - Certification of Robert E. Dose, Vice President, Finance, pursuant to Rules 13a-14 and
15d-14 of the Securities Exchange Act, as adopted pursuant to section 302 of the Sarbanes-Oxley Act of
2002.Exhibit 32.1 - Certifications of Principal Executive Officer and Principal Financial Officer pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.EX-31.1EX-31.2EX-32.1
  2




---



##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 VIRCO MFG. CORPORATION
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 4/30/2009
    
    
    1/31/2009
    
    
    4/30/2008(In thousands, except share data)Unaudited (Note 1)
    
    
    
    
    
    
    Unaudited (Note 1)AssetsCurrent assets:Cash
    
    $
    1,121
    
    
    $
    4,387
    
    
    $
    1,487Trade accounts receivable
    
    
    11,579
    
    
    
    14,393
    
    
    
    13,115Less allowance for doubtful accounts
    
    
    206
    
    
    
    200
    
    
    
    224Net trade accounts receivable
    
    
    11,373
    
    
    
    14,193
    
    
    
    12,891Other receivables
    
    
    638
    
    
    
    768
    
    
    
    86InventoriesFinished goods, net
    
    
    23,209
    
    
    
    10,720
    
    
    
    25,026Work in process, net
    
    
    17,785
    
    
    
    14,848
    
    
    
    27,631Raw materials and supplies, net
    
    
    7,964
    
    
    
    7,417
    
    
    
    10,412Total inventories
    
    
    48,958
    
    
    
    32,985
    
    
    
    63,069Deferred tax assets, net
    
    
    5,751
    
    
    
    3,808
    
    
    
    5,880Prepaid expenses and other current assets
    
    
    2,192
    
    
    
    1,658
    
    
    
    1,755Total current assets
    
    
    70,033
    
    
    
    57,799
    
    
    
    85,168Property, plant and equipment:Land and land improvements
    
    
    3,387
    
    
    
    3,379
    
    
    
    3,626Buildings and building improvements
    
    
    47,888
    
    
    
    47,888
    
    
    
    49,558Machinery and equipment
    
    
    115,780
    
    
    
    116,559
    
    
    
    115,074Leasehold improvements
    
    
    1,911
    
    
    
    1,911
    
    
    
    1,477168,966
    
    
    
    169,737
    
    
    
    169,735Less accumulated depreciation and amortization
    
    
    124,614
    
    
    
    125,122
    
    
    
    123,986Net property, plant and equipment
    
    
    44,352
    
    
    
    44,615
    
    
    
    45,749Goodwill and other intangible assets
    
    
    
    
    
    
    
    
    
    
    2,350Less accumulated amortization
    
    
    
    
    
    
    
    
    
    
    56Net goodwill and other intangible assets
    
    
    
    
    
    
    
    
    
    
    2,294Deferred tax assets, net
    
    
    9,390
    
    
    
    9,372
    
    
    
    5,652Other assets
    
    
    6,289
    
    
    
    6,289
    
    
    
    6,238Total assets
    
    $
    130,064
    
    
    $
    118,075
    
    
    $
    145,101
 3




---



##### Table of Contents



VIRCO MFG. CORPORATION
 CONDENSED CONSOLIDATED BALANCE SHEETS
 4/30/2009
    
    
    1/31/2009
    
    
    4/30/2008(In thousands, except share data)Unaudited (Note 1)
    
    
    
    
    
    
    Unaudited (Note 1)LiabilitiesCurrent liabilities:Checks released but not yet cleared bank
    
    $
    3,455
    
    
    $
    4,996
    
    
    $
    1,943Accounts payable
    
    
    11,511
    
    
    
    10,728
    
    
    
    13,424Accrued compensation and employee benefits
    
    
    4,246
    
    
    
    5,136
    
    
    
    5,524Current portion of long-term debt
    
    
    6,148
    
    
    
    69
    
    
    
    9,152Other accrued liabilities
    
    
    7,215
    
    
    
    6,735
    
    
    
    8,949Total current liabilities
    
    
    32,575
    
    
    
    27,664
    
    
    
    38,992Non-current liabilities:Accrued self-insurance retention and other
    
    
    5,068
    
    
    
    4,424
    
    
    
    4,745Accrued pension expenses
    
    
    20,063
    
    
    
    19,777
    
    
    
    13,956Long-term debt, less current portion
    
    
    10,000
    
    
    
    47
    
    
    
    20,097Total non-current liabilities
    
    
    35,131
    
    
    
    24,248
    
    
    
    38,798Commitments and contingenciesStockholders equity:Preferred stockAuthorized 3,000,000 shares, $.01 par value; none
issued or outstandingCommon stockAuthorized 25,000,000 shares, $.01 par value;
issued 14,142,422 shares at 4/30/2009 and 14,238,994 at
1/31/2009, and 14,428,662 shares at 4/30/2008
    
    
    141
    
    
    
    142
    
    
    
    144Additional paid-in capital
    
    
    113,962
    
    
    
    114,067
    
    
    
    114,517Accumulated deficit
    
    
    (42,363
    )
    
    
    (38,664
    )
    
    
    (42,260
    )Accumulated comprehensive loss
    
    
    (9,382
    )
    
    
    (9,382
    )
    
    
    (5,090
    )Total stockholders equity
    
    
    62,358
    
    
    
    66,163
    
    
    
    67,311Total liabilities and stockholders equity
    
    $
    130,064
    
    
    $
    118,075
    
    
    $
    145,101
  4




---



##### Table of Contents



VIRCO
MFG. CORPORATION
 
 UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
 Three months ended4/30/2009
    
    
    4/30/2008(In thousands, except share data)Net sales
    
    $
    27,049
    
    
    $
    29,194Costs of goods sold
    
    
    18,749
    
    
    
    19,641Gross profit
    
    
    8,300
    
    
    
    9,553Selling, general, administrative & other expenses
    
    
    13,012
    
    
    
    13,791Interest expense
    
    
    175
    
    
    
    309Loss before income taxes
    
    
    (4,887
    )
    
    
    (4,547
    )Income tax benefits
    
    
    (1,900
    )
    
    
    (1,691
    )Net loss
    
    $
    (2,987
    )
    
    $
    (2,856
    )Net loss per common shareBasic and diluted
    
    $
    (0.21
    )
    
    $
    (0.20
    )Weighted average shares outstandingBasic and diluted
    
    
    14,231
    
    
    
    14,429Dividend declared per common shareCash
    
    $
    0.05
    
    
    $
    0.05
   5




---



##### Table of Contents



VIRCO MFG. VIRCO MFG. CORPORATION
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
  Three months ended4/30/2009
    
    
    4/30/2008(In thousands)Operating activitiesNet loss
    
    $
    (2,987
    )
    
    $
    (2,856
    )Adjustments to reconcile net loss to net cash used in
operating activitiesDepreciation and amortization
    
    
    1,332
    
    
    
    1,458Provision for doubtful accounts
    
    
    40
    
    
    
    20Deferred income taxes
    
    
    (1,942
    )
    
    
    (1,691
    )Stock based compensation
    
    
    221
    
    
    
    200Changes in operating assets and liabilitiesTrade accounts receivable
    
    
    2,780
    
    
    
    2,563Other receivables
    
    
    37
    
    
    
    198Inventories
    
    
    (15,973
    )
    
    
    (20,061
    )Income taxes
    
    
    76
    
    
    
    42Prepaid expenses and other current assets
    
    
    (534
    )
    
    
    (262
    )Accounts payable and accrued liabilities
    
    
    (636
    )
    
    
    (4,374
    )Net cash used in operating activities
    
    
    (17,586
    )
    
    
    (24,763
    )Investing activitiesCapital expenditures
    
    
    (1,070
    )
    
    
    (860
    )Net cash used in investing activities
    
    
    (1,070
    )
    
    
    (860
    )Financing activitiesIssuance of debt
    
    
    16,090
    
    
    
    25,422Repayment of debt
    
    
    (18
    )
    
    
    (18
    )Cash dividends paid
    
    
    (356
    )
    
    
    (360
    )Repurchase of common stock
    
    
    (326
    )
    
    
    Net cash provided by financing activities
    
    
    15,390
    
    
    
    25,044Net decrease in cash
    
    
    (3,266
    )
    
    
    (579
    )Cash at beginning of year
    
    
    4,387
    
    
    
    2,066Cash at end of year
    
    $
    1,121
    
    
    $
    1,487Non cash disclosures:Increase to long term liabilities as a result of the
adoption of EITF 06-4
    
    $
    
    
    
    $
    1,820Cash dividends declared but not paid
    
    
    356
    
    
    
    
  6




---



##### Table of Contents



VIRCO MFG. CORPORATION
 
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 April 30, 2009
 Note 1. Basis of Presentation
  Note 2. Seasonality
    Note 3. New Accounting Standards
     7




---



##### Table of Contents



Note 4. Inventories
  Note 5. Debt
      Note 6. Income Taxes
   8




---



##### Table of Contents



Note 7. Net Loss per Share
 Three Months Ended4/30/2009
    
    
    4/30/2008(In thousands, except per share data)Numerators:Numerator for both basic and diluted net loss per share
    
    $
    (2,987
    )
    
    $
    (2,856
    )Denominators:Denominator for basic net loss per share weighted-average
common shares outstanding
    
    
    14,231
    
    
    
    14,429Potentially dilutive shares from stock option plans
    
    
    
    
    
    
    Denominator for diluted net loss per share
    
    
    14,231
    
    
    
    14,429Net loss per share  basic and diluted
    
    $
    (0.21
    )
    
    $
    (0.20
    )
  Note 8. Stock Based Compensation
 Stock Incentive Plans
      9




---



##### Table of Contents



Restricted Stock and Stock Unit Awards
 Accounting for the Plans
  UnrecognizedCompensationExpense for 3 months ended
    
    
    Cost at4/30/2009
    
    
    04/30/2008
    
    
    4/30/20092007 Stock Incentive Plan262,500 Restricted Stock Units issued 6/19/2007, vesting over 5 years
    
    $
    89,000
    
    
    $
    89,000
    
    
    $
    1,096,00035,644 Grants of Restricted Stock issued 6/17/2008, vesting over 1 year
    
    
    44,000
    
    
    
    
    
    
    
    15,00012,887 Grants of Restricted Stock issued 6/19/2007, vesting over 1 year
    
    
    
    
    
    
    22,000
    
    
    
    1997 Employee Incentive Stock Plan270,000 Restricted Stock Units issued 6/30/2004, vesting over 5 years
    
    
    88,000
    
    
    
    89,000
    
    
    
    59,000Totals for the period
    
    $
    221,000
    
    
    $
    200,000
    
    
    $
    1,170,000
 Stockholders Rights
  Note 9. Comprehensive Income (Loss)
  Note 10. Retirement Plans
    10




---



##### Table of Contents



Three Months Ended April 30,Non-Employee DirectorsEmployees Retirement Plan
    
    
    VIP Retirement Plan
    
    
    Retirement Plan2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Service cost
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Interest cost
    
    
    367
    
    
    
    357
    
    
    
    85
    
    
    
    83
    
    
    
    7
    
    
    
    7Expected return on plan assets
    
    
    (179
    )
    
    
    (300
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization of prior service cost
    
    
    128
    
    
    
    128
    
    
    
    (79
    )
    
    
    (79
    )
    
    
    
    
    
    
    Recognized net actuarial (gain) or loss
    
    
    231
    
    
    
    47
    
    
    
    24
    
    
    
    36
    
    
    
    (46
    )
    
    
    (8
    )Net periodic pension cost
    
    $
    547
    
    
    $
    232
    
    
    $
    30
    
    
    $
    40
    
    
    $
    (39
    )
    
    $
    (1
    )
 Note 11. Warranty
   April 30,2009
    
    
    2008Beginning balance
    
    $
    1,950
    
    
    $
    1,750Provision
    
    
    301
    
    
    
    543Costs incurred
    
    
    (301
    )
    
    
    (343
    )Ending balance
    
    $
    1,950
    
    
    $
    1,950
 11




---



##### Table of Contents



VIRCO MFG. CORPORATION
 
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Results of Operations
    ,
 Liquidity and Capital Resources
   .
   Off Balance Sheet Arrangements
  12




---



##### Table of Contents



Critical Accounting Policies and Estimates
  Forward-Looking Statements
   
 Item 3. Quantitative and Qualitative Disclosures about Market Risk
      
 Item 4. Controls and Procedures
 Disclosure Controls and Procedures
  ,
 13




---



##### Table of Contents



Internal Control over Financial Reporting
  14




---



##### Table of Contents



PART II  OTHER INFORMATION
 VIRCO MFG. CORPORATION
 
 Item 1. Legal Proceedings
  Item 1A. Risk Factors
  
 Item 6. Exhibits
     VIRCO MFG. CORPORATION
 
 SIGNATURES
  VIRCO MFG. CORPORATIONDate: June 8, 2009
    
    By:
    
    /s/ Robert E. Dose

Robert E. DoseVice President  Finance
 15