##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


Quarterly Report under Section 13 or 15(d)
of the Securities Exchange Act of 1934

FORM 10-Q

|                  |  |                |  |                        |  |       
|----------------- |  | -------------- |  | ---------------------- |  | ------
|For Quarter Ended |  | April 30, 2003 |  | Commission File Number |  | 1-8777
|                  |  |                |  |                        |  |       

VIRCO MFG. CORPORATION

(Exact Name of Registrant as Specified in its Charter)


|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 95-1613718                          
|                                                               |  |                                     
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer
Identification No.)

|                                         |  |           
|---------------------------------------- |  | ----------
|2027 Harpers Way, Torrance, CA           |  | 90501     
|                                         |  |           
|(Address of principal executive offices) |  | (Zip Code)

|                                                    |  |               
|--------------------------------------------------- |  | --------------
|Registrants telephone number, including area code: |  | (310) 533-0474
|                                                    |  |               

|                                                                                          
|------------------------------------------------------------------------------------------
|No change
Former name, former address and former fiscal year, if changed since last report

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13
or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that
the registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past
90 days. Yes x No o

Indicate
by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes x No o

The number of shares outstanding of each of the issuers classes of common
stock, as of June 07, 2003.

|             |  |                  
|------------ |  | -----------------
|Common Stock |  | 13,106,119 Shares





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TABLE OF CONTENTS



|             |                                                                                                |  |  |  |  |  |  | 
|------------ | ---------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART 1      
|             | Item 1. Financial Statements                                                                  
|             | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
|             | Item 3. Quantitative and Qualitative Disclosures about Market Risk.                           
|             | Item 4. Controls and Procedures                                                               
|PART II     
|             | Item 1. Legal Proceedings                                                                     
|             | Item 2. Changes in Securities and Use of Proceeds                                             
|             | Item 3. Defaults upon senior securities                                                       
|             | Item 4. Submission of matters to a vote of Security Holders                                   
|             | Item 5. Other Information                                                                     
|             | Item 6. Exhibits and Reports on Form 8-K                                                      
|SIGNATURES  
|EXHIBIT 99.1
|EXHIBIT 99.2



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##### Table of Contents



VIRCO MFG. CORPORATION

INDEX

|                              |  |            |  |                                                                                             
|----------------------------- |  | ---------- |  | --------------------------------------------------------------------------------------------
|Part I. Financial Information
|                              |  | Item 1.    |  | Financial Statements (unaudited)                                                            
|                              |  |            |  | Condensed consolidated balance sheets  April 30, 2003, and January
31, 2003                
|                              |  |            |  | Condensed consolidated statements of operations  Three months ended
April 30, 2003 and 2002
|                              |  |            |  | Condensed consolidated statements of cash flows  Three months ended
April 30, 2003 and 2002
|                              |  |            |  | Notes to condensed consolidated financial statements  April 30, 2003                       
|                              |  | Item 2.    |  | Managements Discussion and Analysis of Financial Condition
and Results of Operations       
|                              |  | Item 3.    |  | Quantitative and Qualitative Disclosures about Market Risk.                                 
|                              |  | Item 4.    |  | Controls and Procedures                                                                     
|Part II. Other Information   
|                              |  | Item 1.    |  | Legal Proceedings                                                                           
|                              |  | Item 2.    |  | Changes in Securities and Use of Proceeds                                                   
|                              |  | Item 3.    |  | Defaults upon senior securities                                                             
|                              |  | Item 4.    |  | Submission of matters to a vote of Security Holders                                         
|                              |  | Item 5.    |  | Other Information                                                                           
|                              |  | Item 6.    |  | Exhibits and Reports on Form 8-K                                                            
|                              |  |            |  | Exhibit 99.1                                                                                
|                              |  |            |  | Exhibit 99.2                                                                                
|                              |  | Signatures |  |                                                                                             

2



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##### Table of Contents






PART 1




Item 1. Financial Statements

VIRCO MFG. CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollar amounts in thousands, except per share data)

|                            |                                          |                                      |         |           |         |   |         |        |         | 
|--------------------------- | ---------------------------------------- | ------------------------------------ | ------- | --------- | ------- | - | ------- | ------ | ------- | 
|ASSETS                      |                                          | 4/30/2003                            |         | 1/31/2003
|                            |                                          |                                      |         |          
|                            |                                          | Unaudited (Note 1)                   |         |          
|Current assets              |                                          |                                      |         |           |         |   |         |       
|                            | Cash                                     |                                      | $       | 1,058     |         |   | $       | 1,639  |        
|                            | Accounts and notes receivable            |                                      |         | 13,277    |         |   |         | 17,601 |        
|                            |                                          | Less allowance for doubtful accounts |         |           | 312     |   |         |        | 200     | 
|                            |                                          |                                      |         |           |         |   |         |       
|                            |                                          | Net accounts and notes receivable    |         |           | 12,965  |   |         |        | 17,401  | 
|                            | Income tax receivable                    |                                      |         | 666       |         |   |         |       |        
|                            | Inventories (Note 2)                     |                                      |         |           |         |   |         |        |        
|                            |                                          | Finished goods                       |         |           | 24,549  |   |         |        | 16,510  | 
|                            |                                          | Work in process                      |         |           | 27,600  |   |         |        | 18,233  | 
|                            |                                          | Raw materials and supplies           |         |           | 9,211   |   |         |        | 8,296   | 
|                            |                                          |                                      |         |           |         |   |         |       
|                            |                                          | Total inventories                    |         |           | 61,360  |   |         |        | 43,039  | 
|                            | Deferred income taxes                    |                                      |         | 2,416     |         |   |         | 2,494  |        
|                            | Prepaid expenses and deferred income tax |                                      |         | 513       |         |   |         | 1,495  |        
|                            |                                          |                                      |         |           |         |   |         |       
|Total current assets        |                                          |                                      | 78,978  |           |         |   | 66,068  |       
|Property, plant & equipment |                                          |                                      |         |           |         |   |         |       
|                            |                                          | Cost                                 |         |           | 156,809 |   |         |        | 156,863 | 
|                            |                                          | Less accumulated depreciation        |         |           | 86,379  |   |         |        | 83,827  | 
|                            |                                          |                                      |         |           |         |   |         |       
|                            |                                          | Net property, plant & equipment      |         |           | 70,430  |   |         |        | 73,036  | 
|Other assets                |                                          |                                      | 15,692  |           |         |   | 15,692  |       
|                            |                                          |                                      |         |           |         |   |         |       
|Total assets                |                                          | $                                    | 165,100 |           |         | $ | 154,796 |       
|                            |                                          |                                      |         |           |         |   |         |       

See notes to condensed consolidated financial statements.

3



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VIRCO MFG. CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollar amounts in thousands, except per share data)

|                                           |                                                                                               |                                                                                                           |         |           |     |   |         |         |     | 
|------------------------------------------ | --------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------- | ------- | --------- | --- | - | ------- | ------- | --- | 
|LIABILITIES AND STOCKHOLDERS' EQUITY       |                                                                                               | 4/30/2003                                                                                                 |         | 1/31/2003
|                                           |                                                                                               |                                                                                                           |         |          
|                                           |                                                                                               | Unaudited (Note 1)                                                                                        |         |          
|Current liabilities                        |                                                                                               |                                                                                                           |         |           |     |   |         |        
|                                           | Checks released but not yet cleared bank                                                      |                                                                                                           | $       | 2,311     |     |   | $       | 2,506   |    
|                                           | Accounts payable                                                                              |                                                                                                           |         | 11,761    |     |   |         | 8,395   |    
|                                           | Income tax payable                                                                            |                                                                                                           |         |          |     |   |         | 3,538   |    
|                                           | Accrued compensation and employee benefits                                                    |                                                                                                           |         | 7,291     |     |   |         | 7,109   |    
|                                           | Current maturities on long-term debt                                                          |                                                                                                           |         | 1,087     |     |   |         | 1,087   |    
|                                           | Other current liabilities                                                                     |                                                                                                           |         | 4,743     |     |   |         | 4,685   |    
|                                           |                                                                                               |                                                                                                           |         |           |     |   |         |        
|Total current liabilities                  |                                                                                               |                                                                                                           | 27,193  |           |     |   | 27,320  |        
|Non-current liabilities                    |                                                                                               |                                                                                                           |         |           |     |   |         |        
|                                           | Long term debt (less current portion)                                                         |                                                                                                           |         | 40,808    |     |   |         | 27,905  |    
|                                           | Other non-current liabilities                                                                 |                                                                                                           |         | 18,635    |     |   |         | 16,699  |    
|                                           |                                                                                               |                                                                                                           |         |           |     |   |         |        
|Total non-current liabilities              |                                                                                               |                                                                                                           | 59,443  |           |     |   | 44,604  |        
|Deferred income taxes                      |                                                                                               |                                                                                                           | 98      |           |     |   | 98      |        
|Stockholders equity                       |                                                                                               |                                                                                                           |         |           |     |   |         |        
|                                           | Preferred stock:                                                                              |                                                                                                           |         |           |     |   |         |         |    
|                                           |                                                                                               | Authorized 3,000,000 shares, $.01 par
value; none issued or outstanding                                   |         |           |    |   |         |         |    | 
|                                           | Common stock:                                                                                 |                                                                                                           |         |           |     |   |         |         |    
|                                           |                                                                                               | Authorized 25,000,000 shares, $.01 par
value; 14,574,588 and 14,527,074 issued
at 4/30/2003 and 1/31/2003 |         |           | 146 |   |         |         | 145 | 
|                                           | Additional paid-in capital                                                                    |                                                                                                           |         | 126,672   |     |   |         | 126,284 |    
|                                           | Retained deficit                                                                              |                                                                                                           |         | (23,202   | )   |   |         | (18,927 | )  
|                                           | Less treasury stock at cost (1,468,469
shares at 4/30/2003 and 1,416,472 shares
at 1/31/2003) |                                                                                                           |         | (19,274   | )   |   |         | (18,634 | )  
|                                           | Less accumulated comprehensive loss                                                           |                                                                                                           |         | (5,976    | )   |   |         | (6,094  | )  
|                                           |                                                                                               |                                                                                                           |         |           |     |   |         |        
|Total stockholders equity                 |                                                                                               |                                                                                                           | 78,366  |           |     |   | 82,774  |        
|                                           |                                                                                               |                                                                                                           |         |           |     |   |         |        
|Total liabilities and stockholders equity |                                                                                               | $                                                                                                         | 165,100 |           |     | $ | 154,796 |        
|                                           |                                                                                               |                                                                                                           |         |           |     |   |         |        

See Notes to Condensed Consolidated Financial Statements.

4



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VIRCO MFG. CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Unaudited (Note 1)

(Dollar amounts in thousands, except per share data)

|                                            |  |                |        |           |  |   |        |  
|------------------------------------------- |  | -------------- | ------ | --------- |  | - | ------ | -
|                                            |  | 3 Months Ended
|                                            |  |               
|                                            |  | 4/30/2003      |        | 4/30/2002
|                                            |  |                |        |          
|Net sales                                   |  | $              | 31,180 |           |  | $ | 41,168 |  
|Cost of goods sold                          |  |                | 20,769 |           |  |   | 26,869 |  
|                                            |  |                |        |           |  |   |        |  
|Gross profit                                |  |                | 10,411 |           |  |   | 14,299 |  
|Operating expense                           |  |                |        |           |  |   |        |  
|Selling, general and administrative expense |  |                | 16,596 |           |  |   | 17,078 |  
|Interest expense                            |  |                | 394    |           |  |   | 725    |  
|                                            |  |                |        |           |  |   |        |  
|                                            |  |                | 16,990 |           |  |   | 17,803 |  
|Loss before income taxes                    |  |                | (6,579 | )         |  |   | (3,504 | )
|Income tax benefit                          |  |                | (2,566 | )         |  |   | (1,367 | )
|                                            |  |                |        |           |  |   |        |  
|Net loss                                    |  | $              | (4,013 | )         |  | $ | (2,137 | )
|                                            |  |                |        |           |  |   |        |  
|Amounts per common share  basic(a)         |  |                |        |           |  |   |        |  
|Net loss                                    |  | $              | (0.31  | )         |  | $ | (0.16  | )
|                                            |  |                |        |           |  |   |        |  
|Dividend per common share(a)                |  |                |        |           |  |   |        |  
|Cash                                        |  | $              | 0.02   |           |  | $ | 0.02   |  



---

|(a) |  | Adjusted for 10% stock dividend declared August 20, 2002
|--- |  | --------------------------------------------------------

See Notes to Condensed Consolidated Financial Statements.

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VIRCO MFG. CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Unaudited (Note 1)

(Dollar amounts in thousands)

|                                          |                                                                             |                                           |         |                |         |           |         |        |         |  
|----------------------------------------- | --------------------------------------------------------------------------- | ----------------------------------------- | ------- | -------------- | ------- | --------- | ------- | ------ | ------- | -
|                                          |                                                                             |                                           |         | 3 Months Ended
|                                          |                                                                             |                                           |         |               
|                                          |                                                                             |                                           |         | 4/30/2003      |         | 4/30/2002
|                                          |                                                                             |                                           |         |                |         |          
|Operating activities                      |                                                                             |                                           |         |                |         |           |         |       
|                                          | Net loss                                                                    |                                           | $       | (4,013         | )       |           | $       | (2,137 | )      
|                                          | Adjustments to reconcile net loss to net
cash used in operating activities: |                                           |         |                |         |           |         |        |        
|                                          | Depreciation                                                                |                                           |         | 3,048          |         |           |         | 3,455  |        
|                                          | Provision for doubtful accounts                                             |                                           |         | 61             |         |           |         | 129    |        
|                                          | Loss/(gain) on sale of fixed assets                                         |                                           |         | 16             |         |           |         | (2     | )      
|                                          | Changes in assets and liabilities:                                          |                                           |         |                |         |           |         |        |        
|                                          |                                                                             | Accounts and notes receivable             |         |                | 4,375   |           |         |        | 111     |  
|                                          |                                                                             | Inventories                               |         |                | (18,321 | )         |         |        | (16,265 | )
|                                          |                                                                             | Prepaid expenses and other current assets |         |                | 982     |           |         |        | 853     |  
|                                          |                                                                             | Income taxes receivable/payable           |         |                | (4,204  | )         |         |        | (1,373  | )
|                                          |                                                                             | Accounts payable and accrued expenses     |         |                | 4,647   |           |         |        | 4,198   |  
|                                          |                                                                             |                                           |         |                |         |           |         |       
|Net cash used in operating activities     |                                                                             |                                           | (13,409 | )              |         |           | (11,031 | )     
|Investing activities                      |                                                                             |                                           |         |                |         |           |         |       
|                                          | Capital expenditures                                                        |                                           |         | (484           | )       |           |         | (855   | )      
|                                          | Proceeds from sale of fixed assets                                          |                                           |         | 26             |         |           |         | 2      |        
|                                          |                                                                             |                                           |         |                |         |           |         |       
|Net cash used in investing activities     |                                                                             |                                           | (458    | )              |         |           | (853    | )     
|Financing activities                      |                                                                             |                                           |         |                |         |           |         |       
|                                          | Issuance of long-term debt                                                  |                                           |         | 14,154         |         |           |         | 12,550 |        
|                                          | Repayment of long-term debt                                                 |                                           |         | (355           | )       |           |         | (202   | )      
|                                          | Purchase of treasury stock                                                  |                                           |         | (308           | )       |           |         | (914   | )      
|                                          | Payment of cash dividend                                                    |                                           |         | (262           | )       |           |         | (244   | )      
|                                          | Issuance of common stock                                                    |                                           |         | 57             |         |           |         | 27     |        
|                                          |                                                                             |                                           |         |                |         |           |         |       
|Net cash provided by financing activities |                                                                             |                                           | 13,286  |                |         |           | 11,217  |       
|Net change in cash                        |                                                                             |                                           | (581    | )              |         |           | (667    | )     
|Cash at beginning of quarter              |                                                                             |                                           | 1,639   |                |         |           | 1,704   |       
|                                          |                                                                             |                                           |         |                |         |           |         |       
|Cash at end of quarter                    |                                                                             | $                                         | 1,058   |                |         | $         | 1,037   |       
|                                          |                                                                             |                                           |         |                |         |           |         |       

See Notes to Condensed Consolidated Financial Statements.

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VIRCO MFG. CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

April 30, 2003

|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Note 1: |  | The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with accounting
principles generally accepted in the United States for
interim financial information and with the instructions to
Form 10-Q and Article 10 of Regulation S-X. Accordingly,
they do not include all of the information and footnotes
required by generally accepted accounting principles for
complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have
been included. Operating results for the three-month ended
April 30, 2003, are not necessarily indicative of the
results that may be expected for the year ending January 31,
2004. The balance sheet at January 31, 2003, has been
derived from the audited financial statements at that date,
but does not include all of the information and footnotes
required by accounting principles generally accepted in the
United States for complete financial statements. For
further information, refer to the consolidated financial
statements and footnotes thereto included in the Companys
annual report on Form 10-K for the year ended January 31,
2003.
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|Note 2. |  | Inventories                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|        |  | Year end financial statements reflect inventories verified
by physical counts with the material content valued by the
LIFO method. At this interim date, there has been no
physical verification of inventory quantities. Cost of
sales is recorded at current cost. The effect of
penetrating LIFO layers is not recorded at interim dates
unless the reduction in inventory is expected to be
permanent. No such adjustment has been made for the period
ended April 30, 2003. Management continually monitors
production costs, material costs and inventory levels to
determine that interim inventories are fairly stated.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|Note 3. |  | Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|        |  | Income taxes for the three month period ended April 30, 2003, were
computed using the effective tax rate estimated to be applicable for
the full fiscal year, which is subject to ongoing review and evaluation
by management.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|Note 4. |  | Reclassifications                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|        |  | Certain prior year amounts have been reclassified to conform to the current year presentation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|Note 5. |  | Net Loss Per Share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|        |  | For the quarter ended April 30, 2003 and 2002, net loss per share was
calculated based on basic shares outstanding at April 30, 2003 and
2002, due to the anti-dilutive effect on the inclusion of common stock
equivalent shares. For the three months ended April 30, 2002, weighted
average                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

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| |  |                                                                                                                                                                                                                                         
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | shares outstanding was adjusted for 10% stock dividend declared
August 20, 2002, and payable on
September 27, 2002, to stockholders of record September 6, 2002. The
following table sets forth the computation of basic loss per share:

|                                                                                                     |  |                    |            |      |  |   |            |  
|---------------------------------------------------------------------------------------------------- |  | ------------------ | ---------- | ---- |  | - | ---------- | -
|                                                                                                     |  | Three Months Ended
|                                                                                                     |  |                   
|                                                                                                     |  | April 30          
|                                                                                                     |  |                   
|                                                                                                     |  | 2003               |            | 2002
|                                                                                                     |  |                    |            |     
|Net loss                                                                                             |  | $                  | (4,013,000 | )    |  | $ | (2,137,000 | )
|                                                                                                     |  |                    |            |      |  |   |            |  
|Average shares outstanding                                                                           |  |                    | 13,110,000 |      |  |   | 13,392,000 |  
|Net effect of dilutive stock
options  based on the
treasury stock method using
average market price |  |                    | 27,000     |      |  |   | 126,000    |  
|                                                                                                     |  |                    |            |      |  |   |            |  
|Totals                                                                                               |  |                    | 13,137,000 |      |  |   | 13,518,000 |  
|                                                                                                     |  |                    |            |      |  |   |            |  
|Net loss per share  basic                                                                           |  | $                  | (0.31      | )    |  | $ | (0.16      | )
|                                                                                                     |  |                    |            |      |  |   |            |  

| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | SFAS No. 123, as amended by SFAS No. 148, requires pro forma
information regarding net income and net income per share to be
disclosed for new options granted after fiscal year 1996. The fair
value of these options was determined at the date of grant using the
Black-Scholes option-pricing model. The estimated fair value of the
options is amortized to expense over the options vesting period for
pro forma disclosures. The per share pro forma for the effects of
SFAS No. 123, as amended by SFAS 148, is not indicative of the effects
on reported net income/loss for future years. The Companys reported
and pro forma information for the three-month periods ended April 30,
2002 and April 30, 2003 are as follows:

|                                                                                                                                                |  |                    |            |      |  |   |            |  
|----------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | ---------- | ---- |  | - | ---------- | -
|                                                                                                                                                |  | Three Months Ended
|                                                                                                                                                |  |                   
|                                                                                                                                                |  | April 30          
|                                                                                                                                                |  |                   
|                                                                                                                                                |  | 2003               |            | 2002
|                                                                                                                                                |  |                    |            |     
|Net loss, as reported                                                                                                                           |  | $                  | (4,013,000 | )    |  | $ | (2,137,000 | )
|Deduct: Total stock-based
employee compensation
expense determined under the
fair value based method for
all awards, net of related
tax effects |  |                    | 10,000     |      |  |   | 9,000      |  
|                                                                                                                                                |  |                    |            |      |  |   |            |  
|Pro forma net loss                                                                                                                              |  | $                  | (4,023,000 | )    |  | $ | (2,146,000 | )
|                                                                                                                                                |  |                    |            |      |  |   |            |  
|Basic and diluted earnings
per share, as reported:                                                                                              |  | $                  | (0.31      | )    |  | $ | (0.16      | )
|                                                                                                                                                |  |                    |            |      |  |   |            |  
|Basic and diluted earnings
per share, pro forma:                                                                                                |  | $                  | (0.31      | )    |  | $ | (0.16      | )
|                                                                                                                                                |  |                    |            |      |  |   |            |  

8



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##### Table of Contents



|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Note 6. |  | Comprehensive Loss                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|        |  | Comprehensive loss for the quarter ended April 30, 2003 was $3,895,000
compared to comprehensive loss of $2,017,000 for the quarter ended
April 30, 2002. The difference between losses reported on the income
statement and comprehensive loss is primarily attributable to
adjustments to account for a derivative financial investment.                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|        |  | Accumulated comprehensive loss at the quarter ended April 30, 2003 is
primarily composed of minimum pension liability adjustments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Note 7. |  | New Accounting Standards                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|        |  | In June 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 143, Accounting
for Asset Retirement Obligations, which addresses financial accounting
and reporting for obligations associated with the retirement of
tangible long-lived assets and the associated asset retirement costs,
and requires such obligations and costs to be recognized at fair value
in the period in which they are incurred. The Company adopted SFAS No.
143 as of February 1, 2003, and the adoption did not have an impact on
the Companys financial statements.                                                                                                                                                                                 
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|        |  | In April 2002, the FASB issued SFAS No. 145, Rescission of FASB
Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and
Technical Corrections. SFAS No. 145 requires most gains and losses on
extinguishment of debt to be classified as income or loss from
continuing operations rather than as extraordinary items as previously
required. SFAS No. 145 also amends SFAS No. 13 to require certain lease
modifications to be treated as sales-leaseback transactions. Certain
provisions of SFAS No. 145 are effective for transactions occurring
after May 15, 2002, while other provisions are effective for fiscal
years beginning after May 15, 2002. The adoption of SFAS No. 145 did
not have a material effect on the Companys results of operations or
financial condition.
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|        |  | In June 2002, the FASB issued SFAS No. 146, Accounting for Costs
Associated with Exit or Disposal Activities, which requires the
recognition of costs associated with exit or disposal activities when
they are incurred rather than at the date of a commitment to an exit or
disposal plan. SFAS No. 146 is effective for exit or disposal
activities initiated after December 31, 2002. The adoption did not have
an impact on the Companys financial statements.                                                                                                                                                                                                                                                                                                                               

9



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##### Table of Contents



VIRCO MFG. CORPORATION




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

Results of Operations:

For the first quarter of 2003, the Company incurred a net loss of $4,013,000 on
sales of $31,180,000 compared to a net loss of $2,137,000 on sales of
$41,168,000 in the same period last year.

Sales for the first quarter decreased $9,988,000 compared to the same period
last year. Backlog at quarter end decreased by 13% compared to the prior year.
The decrease in shipments is attributable to several events. The primary
reason for the decline in shipments and orders is attributable to a severe
decline in the market for publicly funded agencies, particularly schools. The
funding difficulties faced at the state level is contributing to reduced
orders, and we believe deferred orders as schools are holding orders until
budget and spending levels are established. In addition, the market for
commercial furniture, which has suffered severe decline in 2001 and 2002,
continues to be very weak. Severe weather in February 2003, combined with
economic uncertainty surrounding the war in Iraq contributed to the decline in
orders and shipments. Through May, shipments and incoming orders are lagging
by 23% and 17%, respectively.

Gross profit for the first quarter, as a percentage of sales, decreased 2%
compared to the same period last year. The reduction in gross margin is
primarily attributed to increased cost of raw materials. The Company has been
unable to pass these increased material costs to the customer in the current
economic climate. In addition to increased material costs, manufacturing
variances, as a percent of sales increased modestly as the Company has reduced
manufacturing activity in its factories.

Selling, general and administrative expense for the quarter ended April 30,
2003, declined modestly compared to the same period last year. The decreased
expense is due to reductions in staffing, reduced sales incentives and overall
spending.

Interest expense decreased by approximately $331,000 compared to the same
period last year. The reduction is primarily due to lower interest rates.

In response to reduced order levels, the Company has reduced manufacturing
levels, and plans to further reduce manufacturing levels during the second and
third quarter. The Company is evaluating a variety of reductions in operating
spending in response to reduced manufacturing and shipping activity.

Financial Condition:

As a result of lower deliveries in the first quarter compared to the fourth
quarter last year, accounts and notes receivable were $4,400,000 less than
January 31, 2003. The Company traditionally builds large quantities of
inventory during the first quarter in anticipation of seasonally high summer
shipments. For the current quarter, the Company increased inventory by nearly
$18,321,000 compared to year-end. In the prior year first quarter, the Company
increased inventory by approximately $16,265,000. This increase in inventory
was financed through the credit facility with Wells Fargo Bank.

10



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##### Table of Contents



The Company has established a goal of limiting capital spending to
approximately $5,000,000 to $7,000,000 for 2003, which is approximately
one-half of anticipated depreciation expense. Capital spending for the quarter
ended April 30, 2003, was $484,000 compared to $855,000 for the same period
last year. Capital expenditures are being financed through credit facilities
established with Wells Fargo Bank and operating cash flow.

Net cash used in operating activities for the first quarter ended April 30,
2003, was $13,409,000 compared to $11,031,000 for the same period last year.
The increase in cash used in operating activities was partially due to an
increase in inventory and larger operating loss, offset by a reduction in
receivables.

In April 1998, the Board of Directors approved a stock buyback program. In
December 2001, the Board of Directors increased the authorized amount to
$20,000,000. As of April 30, 2003, the Company has repurchased approximately
1,435,000 shares at a cost of approximately $18,656,000 since the inception of
this program in April 1998. The Company intends to continue buying back shares
of common stock as long as the Company believes the shares are undervalued and
operating cashflows and borrowing capacity under the Wells Fargo line allow.
As of April 30, 2003, the Company violated one of the covenants under the line
of credit with Wells Fargo bank. Wells Fargo provided a waiver of the
covenant, but has required the Company to limit stock buyback activity to
$250,000 for the period between June 4, 2003 and December 1, 2003.

On February 11, 2003, the Companys Board of Directors authorized a $0.02 per
share cash dividend, payable on April 30, 2003, to stockholders on record as of
March 31, 2002. For the quarter ended April 30, 2003, the Company paid
$262,000 in cash dividends.

In April 2002, the Company entered into an agreement with Dew-El Corporation to
purchase certain assets of Furniture FocusTM, Inc., an Ohio reseller that
offers complete package solutions for the furniture, fixtures and equipment
segments of bond-funded public school construction projects, primarily in the
upper Midwest. In May 2002, the Company paid $2,400,000 in cash for certain
assets of the corporation and recorded goodwill of $2,200,000. The goodwill is
not expected to be deductible for income tax. In addition, the Company
purchased approximately $2,150,000 of accounts receivable. The financial
statements for the fiscal 2002 included nine months of Furniture Focus
operations. The additional revenue and operating results as a result of this
acquisition did not have a significant effect on the Companys financial
position, operations or cash flows.

The Company believes that cashflows from operations, together with the
Companys unused borrowing capacity with Wells Fargo Bank will be sufficient to
fund the Companys debt service requirements, capital expenditures and working
capital needs.

Critical Accounting Policies and Estimates:

The Companys critical accounting policies are outlined in its Form 10-K for
fiscal year ended January 31, 2003.

Forward-Looking Statements:

From time to time, the Company or its representatives have made and may make
forward-looking statements, orally or in writing, including those contained
herein. Such forward-looking statements may be included in, without
limitation, reports to stockholders, press releases, oral statements made with
the approval of an authorized executive officer of the Company and filings with
the Securities and Exchange Commission. The words or phrases anticipates,
expects, will continue, believes, estimates, projects, or similar

11



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##### Table of Contents



expressions are intended to identify forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. The results
contemplated by the Companys forward-looking statements are subject to certain
risks and uncertainties that could cause actual results to vary materially from
anticipated
results, including without limitation, material availability and cost of
materials, especially steel; availability and cost of labor, demand for the
Companys products, and competitive conditions affecting selling prices and
margins, capital costs and general economic conditions. Such risks and
uncertainties are discussed in more detail in the Companys Annual Report on
Form 10-K for the fiscal year ended January 31, 2003.

The Companys forward-looking statements represent its judgment only on the
dates such statements were made. By making any forward-looking statements, the
Company assumes no duty to update them to reflect new, changed or unanticipated
events or circumstances.




Item 3. Quantitative and Qualitative Disclosures about Market Risk.

On February 22, 2000, the Company entered into an interest rate swap agreement
with Wells Fargo Bank. The initial notional swap amount is $30,000,000 for the
period February 22, 2000 through February 28, 2001. The notional swap amount
then decreases to $20,000,000 until the end of the swap agreement, March 3,
2003. The swap agreement is in consideration for a fixed rate at 7.23% plus a
fluctuating margin of 1.50% to 2.50%. The swap agreement was not renewed at
expiration.

As of April 30, 2003, the Company has borrowed $40,808,000 under its Wells
Fargo credit facility. The revolving credit facility with Wells Fargo Bank is
a two-year non-amortizing line with interest payable monthly at a fluctuating
rate equal to the Banks prime rate, plus a fluctuating margin of 0.25%  0.50.
The line also allows the Company the option to borrow under 30- 60- and 90-day
fixed term rates at LIBOR plus a fluctuating margin of 1.50% to 2.50%.
Accordingly, a 100 basis point upward fluctuation in the lenders base rate
would cause the Company to incur additional interest charges of approximately
$79,000 for the fiscal quarter ended April 30, 2003. The Company would benefit
from a similar interest savings if the base rate were to fluctuate downward by
a like amount.




Item 4. Controls and Procedures

Our company maintains disclosure controls and procedures that are designed to
ensure that information required to be disclosed in our reports filed with the
Securities and Exchange Commission (the SEC) pursuant to the Securities
Exchange Act of 1934 (the Exchange Act) is recorded, processed, summarized
and reported within the time periods specified in the SECs rules and forms,
and that such information is accumulated and communicated to our companys
management, including its President and Chief Executive Officer and Chief
Financial Officer, as appropriate, to allow timely decisions regarding required
disclosure. Assessing the costs and benefits of such controls and procedures
necessarily involves the exercise of judgment by management, and such controls
and procedures, by their nature, can provide only reasonable assurance that
managements objectives in establishing them will be achieved.

Within 90 days prior to the date of this report, we carried out an evaluation,
under the supervision and with the participation of our companys management,
including the companys President and Chief Executive Officer along with the
companys Chief Financial Officer, of the effectiveness of the design and
operation of the companys disclosure controls and procedures pursuant to
Exchange Act Rule 13a-14. Based upon the foregoing, the companys President and
Chief Executive Officer along with the companys Chief Financial Officer
concluded that our companys disclosure controls and procedures are effective
in alerting them in a

12



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##### Table of Contents



timely fashion to material information relating to the
company (including its consolidated subsidiaries) required to be included in
the companys Exchange Act reports. There have been no significant changes in
our companys internal controls or in other factors which could significantly
affect internal controls subsequent to the date that our company carried out
its evaluation.

13



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##### Table of Contents






PART II

VIRCO MFG. CORPORATION

OTHER INFORMATION




Item 1. Legal Proceedings



| |  | None
| |  | ----




Item 2. Changes in Securities and Use of Proceeds



| |  | None
| |  | ----




Item 3. Defaults upon senior securities



| |  | None
| |  | ----




Item 4. Submission of matters to a vote of Security Holders



| |  | None
| |  | ----




Item 5. Other Information



| |  | None
| |  | ----




Item 6. Exhibits and Reports on Form 8-K



| |  | Exhibit 99.1- Statement re: Certification pursuant to 18 U.S.C.
section 1350, as adopted pursuant to section 906 of the
Sarbanes-Oxley Act of 2002 
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Exhibit 99.2  Statement re: Certification pursuant to 18 U.S.C.
section 1350, as adopted pursuant to section 906 of the
Sarbanes-Oxley Act of 2002

Signatures

14



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##### Table of Contents



VIRCO MFG. CORPORATION




SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

|      |  |               |  |                        |  |                                        
|----- |  | ------------- |  | ---------------------- |  | ---------------------------------------
|      |  |               |  | VIRCO MFG. CORPORATION
|      |  |               |  |                        |  |                                        
|Date: |  | June 13, 2003 |  | By:                    |  | /s/ Robert E. Dose                     
|      |  |               |  |                        |  |                                        
|      |  |               |  |                        |  | Robert E. Dose
Vice President  Finance
|      |  |               |  |                        |  |                                        
|Date: |  | June 13, 2003 |  | By:                    |  | /s/ Bassey Yau                         
|      |  |               |  |                        |  |                                        
|      |  |               |  |                        |  | Bassey Yau
Corporate Controller        

Each of the undersigned, in their capacity as the Chief Executive Officer and
Chief Financial Officer of Virco Mfg. Corporation, as the case may be, provides
the following certifications required by 18 U.S.C. Section 1350, as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, and 17 C.F.R.
§240.13a-14.

Certification of Chief Executive Officer

I, Robert A. Virtue, certify that:



| | 1. |  | I have reviewed this quarterly report on Form 10-Q of
Virco Mfg. Corporation;                                                                                                                                                                                                                                                                                                            
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 2. |  | Based on my knowledge, this quarterly report does not
contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements made, in light
of the circumstances under which such statements were made, not
misleading with respect to the period covered by this quarterly
report; and                                                       
|
| | 3. |  | Based on my knowledge, the financial statements, and
other financial information included in this quarterly report,
fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of,
and for, the periods presented in this quarterly report.                                                                              
|
| | 4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:                                                                                                                                                                
|
|
| | a) |  | designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;                                                                                          
|
| | b) |  | evaluated the effectiveness of the registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and                                                                                                                                                                                            
|
| | c) |  | presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;                                                                                                                                                                                                                  
|
| | 5. |  | The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors:                                                                                                                                                                                           
|
| | a) |  | all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrants ability to record, process,
summarize and report financial data and have identified for the registrants
auditors any material weaknesses in internal controls; and                                                                                           
|
| | b) |  | any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal controls;
and                                                                                                                                                                                                                                   
|
| | 6. |  | The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

|      |  |               |  |     |  |                            
|----- |  | ------------- |  | --- |  | ---------------------------
|Date: |  | June 13, 2003 |  | By: |  | /s/ Robert A. Virtue       
|      |  |               |  |     |  |                            
|      |  |               |  |     |  | Robert A. Virtue
 President
|      |  |               |  |     |  |                            

15



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##### Table of Contents



Certification of Chief Financial Officer

I, Robert E. Dose, certify that:



| | 1. |  | I have reviewed this quarterly report on Form 10-Q of
Virco Mfg. Corporation;                                                                                                                                                                                                                                                                                                            
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 2. |  | Based on my knowledge, this quarterly report does not
contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements made, in light
of the circumstances under which such statements were made, not
misleading with respect to the period covered by this quarterly
report; and                                                       
|
| | 3. |  | Based on my knowledge, the financial statements, and
other financial information included in this quarterly report,
fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of,
and for, the periods presented in this quarterly report.                                                                              
|
| | 4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:                                                                                                                                                                
|
|
| | a) |  | designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;                                                                                          
|
| | b) |  | evaluated the effectiveness of the registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and                                                                                                                                                                                            
|
| | c) |  | presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;                                                                                                                                                                                                                  
|
| | 5. |  | The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors:                                                                                                                                                                                           
|
| | a) |  | all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrants ability to record, process,
summarize and report financial data and have identified for the registrants
auditors any material weaknesses in internal controls; and                                                                                           
|
| | b) |  | any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal controls;
and                                                                                                                                                                                                                                   
|
| | 6. |  | The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

|      |  |               |  |                                        
|----- |  | ------------- |  | ---------------------------------------
|Date: |  | June 13, 2003 |  | /s/ Robert E. Dose                     
|      |  |               |  |                                        
|      |  |               |  | Robert E. Dose
Vice President  Finance

16