##### 



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, 2005
    
    Commission File Number 1-8777
 VIRCO MFG. CORPORATION  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 þ No o Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule
12b-2 of the Exchange Act). Yes þ No o The number of shares outstanding of each of the issuers classes of common stock, as of June
3, 2005. Common Stock 13,099,825 Shares




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##### 



VIRCO MFG. CORPORATION INDEX Part I. Financial InformationItem 1.
    
    Financial Statements (unaudited)Condensed consolidated balance sheets - April 30, 2005, January 31, 2005 and April 30, 2004Condensed consolidated statements of operations - Three months ended April 30, 2005 and 2004Condensed consolidated statements of cash flows - Three months ended April 30, 2005 and 2004Notes to condensed consolidated financial statements - April 30, 2005Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of OperationsItem 3.
    
    Quantitative and Qualitative Disclosures about Market RiskItem 4.
    
    Controls and ProceduresPart II. Other InformationItem 1.
    
    Legal ProceedingsItem 2.
    
    Changes in Securities and Use of ProceedsItem 3.
    
    Defaults Upon Senior SecuritiesItem 4.
    
    Submission of Matters to a Vote of Security HoldersItem 5.
    
    Other InformationItem 6.
    
    ExhibitsExhibit 31.1 - Certification of
Robert A. Virtue, President, pursuant to Rules 13a-14
and 15d-14 of the Securities Exchange Act, as adopted pursuant to
section 302 of the
Sarbanes-Oxley Act of 2002Exhibit 31.2 - Certification of
Robert E. Dose, Vice President, Finance, pursuant to
Rules 13a-14 and 15d-14 of the Securities Exchange Act, as adopted
pursuant to section
302 of the Sarbanes-Oxley Act of 2002Exhibit 32.1 - Certification of
Chief Executive Officer and Chief Financial Officer
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the
Sarbanes-Oxley Act of 2002.




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##### 



PART I 
 Item 1. Financial Statements VIRCO MFG. CORPORATION 
 CONDENSED CONSOLIDATED BALANCE SHEETS 4/30/2005
    
    
    1/31/2005
    
    
    4/30/2004(In thousands, except share data)Unaudited (Note 1)
    
    
    
    
    
    
    Unaudited (Note 1)AssetsCurrent assetsCash
    
    $
    495
    
    
    $
    1,192
    
    
    $
    830Trade accounts receivable
    
    
    16,112
    
    
    
    16,222
    
    
    
    13,286Less allowance for doubtful accounts
    
    
    262
    
    
    
    225
    
    
    
    297Net trade accounts receivable
    
    
    15,850
    
    
    
    15,997
    
    
    
    12,989Income taxes receivable
    
    
    
    
    
    
    1,279
    
    
    
    1,117Other receivables
    
    
    179
    
    
    
    165
    
    
    
    332InventoriesFinished goods, net
    
    
    12,611
    
    
    
    9,676
    
    
    
    21,670Work in process, net
    
    
    24,546
    
    
    
    10,373
    
    
    
    19,414Raw materials and supplies, net
    
    
    8,438
    
    
    
    5,998
    
    
    
    6,30545,595
    
    
    
    26,047
    
    
    
    47,389Prepaid expenses and other current assets
    
    
    1,153
    
    
    
    1,340
    
    
    
    956Total current assets
    
    
    63,272
    
    
    
    46,020
    
    
    
    63,613Property, plant and equipment:Land and land improvements
    
    
    3,253
    
    
    
    3,287
    
    
    
    3,288Buildings and building improvements
    
    
    49,542
    
    
    
    49,542
    
    
    
    49,547Machinery and equipment
    
    
    104,319
    
    
    
    104,762
    
    
    
    103,831Leasehold improvements
    
    
    1,289
    
    
    
    1,307
    
    
    
    1,251158,403
    
    
    
    158,898
    
    
    
    157,917Less accumulated depreciation and amortization
    
    
    103,535
    
    
    
    102,009
    
    
    
    96,356Net property, plant and equipment
    
    
    54,868
    
    
    
    56,889
    
    
    
    61,561Goodwill and other intangible assets, net
    
    
    2,334
    
    
    
    2,337
    
    
    
    2,348Other assets
    
    
    8,889
    
    
    
    8,795
    
    
    
    9,174Total assets
    
    $
    129,363
    
    
    $
    114,041
    
    
    $
    136,696
 See Notes to Condensed Consolidated Financial Statements.




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##### 



VIRCO MFG. CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS 4/30/2005
    
    
    1/31/2005
    
    
    4/30/2004(In thousands, except share data)Unaudited (Note 1)
    
    
    
    
    
    
    Unaudited (Note 1)LiabilitiesCurrent liabilitiesChecks released but not yet cleared bank
    
    $
    2,909
    
    
    $
    1,759
    
    
    $
    2,379Accounts payable
    
    
    19,350
    
    
    
    13,948
    
    
    
    13,104Accrued compensation and employee benefits
    
    
    5,094
    
    
    
    5,722
    
    
    
    5,057Current portion of long-term debt
    
    
    5,012
    
    
    
    5,012
    
    
    
    11,764Other accrued liabilities
    
    
    5,073
    
    
    
    4,245
    
    
    
    4,780Total current liabilities
    
    
    37,438
    
    
    
    30,686
    
    
    
    37,084Non-current liabilities:Accrued self-insurance retention and other
    
    
    3,723
    
    
    
    3,221
    
    
    
    4,149Accrued pension expenses
    
    
    13,288
    
    
    
    12,751
    
    
    
    12,295Long-term debt, less current portion
    
    
    31,327
    
    
    
    18,118
    
    
    
    25,417Total non-current liabilities
    
    
    48,338
    
    
    
    34,090
    
    
    
    41,861Commitments and contingenciesStockholders equityPreferred stockAuthorized 3,000,000 shares, $.01 par
value; none issued or
outstanding
    
    
    
    
    
    
    
    
    
    
    Common stockAuthorized 25,000,000 shares, $.01 par
value; issued 13,099,825 shares at
4/30/2005, 13,098,364 shares at 1/31/2005
and 14,583,331 shares at 4/30/2004
    
    
    131
    
    
    
    131
    
    
    
    146Additional paid-in capital
    
    
    107,888
    
    
    
    107,883
    
    
    
    127,133Retained deficit
    
    
    (61,090
    )
    
    
    (55,407
    )
    
    
    (46,013
    )Less treasury stock at cost (0 shares at
04/30/2005 and 01/31/2005; 1,487,530
shares at 04/30/2004)
    
    
    
    
    
    
    
    
    
    
    (19,271
    )Accumulated comprehensive loss
    
    
    (3,342
    )
    
    
    (3,342
    )
    
    
    (4,244
    )Total stockholders equity
    
    
    43,587
    
    
    
    49,265
    
    
    
    57,751Total liabilities and stockholders equity
    
    $
    129,363
    
    
    $
    114,041
    
    
    $
    136,696
 See Notes to Condensed Consolidated Financial Statements.




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VIRCO MFG. CORPORATION 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  Three months ended4/30/2005
    
    
    4/30/2004(In thousands, except share data)Net sales
    
    $
    33,254
    
    
    $
    30,321Costs of goods sold
    
    
    23,847
    
    
    
    20,004Gross profit
    
    
    9,407
    
    
    
    10,317Selling, general and administrative expenses
    
    
    14,557
    
    
    
    14,541Interest expense
    
    
    533
    
    
    
    377Loss before income taxes
    
    
    (5,683
    )
    
    
    (4,601
    )Provision for income taxes
    
    
    
    
    
    
    Net loss
    
    $
    (5,683
    )
    
    $
    (4,601
    )Net loss per common shareBasic
    
    $
    (0.43
    )
    
    $
    (0.35
    )Weighted average shares outstandingBasic
    
    
    13,100
    
    
    
    13,096
 (a) Net loss per share was calculated based on basic shares outstanding at April 30, 2005 and 2004
due to the anti-dilutive effect on the inclusion of common stock equivalent shares. See Notes to Condensed Consolidated Financial Statements.




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VIRCO MFG. CORPORATION 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  Three months ended4/30/2005
    
    
    4/30/2004(In thousands)Operating activitiesNet loss
    
    $
    (5,683
    )
    
    $
    (4,601
    )Adjustments to reconcile net loss to net cash
used in operating activities:Depreciation and amortization
    
    
    2,406
    
    
    
    2,467Provision for doubtful accounts
    
    
    37
    
    
    
    36Loss on sale of property, plant and equipment
    
    
    20
    
    
    
    2Changes in assets and liabilitiesTrade accounts receivable
    
    
    110
    
    
    
    4,308Other receivables
    
    
    (14
    )
    
    
    (194
    )Inventories
    
    
    (19,548
    )
    
    
    (18,918
    )Income taxes
    
    
    2,244
    
    
    
    306Prepaid expenses and other current assets
    
    
    187
    
    
    
    1,006Accounts payable and accrued liabilities
    
    
    6,826
    
    
    
    3,181Other
    
    
    (91
    )
    
    
    2Net cash used in operating activities
    
    
    (13,506
    )
    
    
    (12,405
    )Investing activitiesCapital expenditures
    
    
    (437
    )
    
    
    (678
    )Proceeds from sale of property, plant and equipment

    
    
    32
    
    
    
    6Net cash used in investing activities
    
    
    (405
    )
    
    
    (672
    )Financing activitiesIssuance of long-term debt
    
    
    13,209
    
    
    
    11,848Proceeds from issuance of common stock
    
    
    5
    
    
    
    Net cash provided by financing activities
    
    
    13,214
    
    
    
    11,848Net decrease in cash
    
    
    (697
    )
    
    
    (1,229
    )Cash at beginning of year
    
    
    1,192
    
    
    
    2,059Cash at end of year
    
    $
    495
    
    
    $
    830Supplemental disclosures of cash flow informationCash paid (received) during the year for
Interest, net of amounts capitalized
    
    $
    533
    
    
    $
    377Income tax, net
    
    
    (2,254
    )
    
    
    (398
    )Non cash activitiesAccrued asset retirement obligations
    
    $
    11
    
    
    $
    11
 See Notes to Condensed Consolidated Financial Statements.




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VIRCO MFG. CORPORATION 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS April 30, 2005 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 months ended
April 30, 2005, are not necessarily indicative of the results that
may be expected for the year ending January 31, 2006. The balance
sheet at January 31, 2005, 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, 2005.Note 2.
    
    InventoriesYear end financial statements at January 31, 2005 reflect
inventories verified by physical counts with the material content
valued by the LIFO method. At April 30, 2005 and 2004, 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 adjustments have
been made for the periods ended April 30, 2005 and 2004. LIFO
reserves at April 30, 2005 and January 31, 2005 were $6,201,000.
LIFO reserves at April 30, 2004 were $4,042,000. Management
continually monitors production costs, material costs and
inventory levels to determine that interim inventories are fairly
stated.Note 3.
    
    DebtThe Company has entered into a revolving credit facility with Wells Fargo Bank, amended and
restated January 21, 2005, which provides a Term Loan of $20,000,000 and a secured
revolving line of credit that varies as a percentage of inventory and receivables, up to a
maximum of $40,000,000. The term note is a two-year loan amortizing at $5,000,000 per year
with interest payable monthly at a fluctuating rate equal to the Banks prime rate (5.75%
at April 30, 2005) plus a fluctuating margin of (i) 1.50% if the aggregate principal amount
of the Term Loan outstanding is greater than $15,000,000; (ii) 1.25% if the aggregate
principal amount of the Term Loan outstanding is greater than $10,000,000 but less than
$15,000,000; (iii) 1.00% if the aggregate principal amount of the Term Loan outstanding is
greater than $5,000,000 but less than $10,000,000; (iv) 0.75% if the aggregate principal
amount of the Term Loan outstanding is less than $5,000,000.The revolving line has a 24-month maturity with interest payable monthly at a fluctuating
rate equal to the Banks prime rate plus a fluctuating margin similar to the term note. The
revolving line typically provides for advances of 80% on eligible accounts receivable and
20%  60% on eligible inventory. The advance rates fluctuate depending on the time of the
year and the types of assets. The agreement has an unused commitment fee of 0.375%.
Approximately $19,314,000 was available for borrowing as of April 30, 2005.The revolving credit facility with Wells Fargo Bank is subject to minimum EBITDA requirements. The agreement also places certain restrictions
on capital expenditures, new operating leases, dividends and the repurchase of the
Companys common stock. The revolving credit facility is secured by the Companys accounts
receivable, inventories, equipment and property. The Company is in compliance with its
covenants at April 30, 2005.Note 4.
    
    Income TaxesThe Company recognizes deferred income taxes under the asset and liability method of
accounting for income taxes in accordance with the provisions of Statement of Financial
Accounting Standards (SFAS) No. 109, Accounting for Income Taxes. Deferred income taxes
are recognized for differences between the financial statement and tax basis of assets and
liabilities at enacted statutory tax rates in effect for the years in which the differences
are expected to reverse. The effect on deferred taxes of a change in tax rates is
recognized in income




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##### 



in the period that includes the enactment date. In assessing the realizability of deferred
tax assets, we consider whether it is more likely than not that some portion or all of the
deferred tax assets will not be realized. The ultimate realization of deferred tax assets
is dependent upon the generation of future taxable income or reversal of deferred tax
liabilities during the periods in which those temporary differences become deductible. We
consider the scheduled reversal of deferred tax liabilities, projected future taxable
income, and tax planning strategies in making this assessment. Based on this consideration,
we believe it is more likely than not that the net deferred tax assets will not be
realized, and a valuation allowance has been recorded against the net deferred tax assets
at April 30, 2005, January 31, 2005 and April 30, 2004.Note 5.
    
    Net Loss per ShareFor the three month periods ended April 30, 2005 and 2004, net loss per share was
calculated based on basic shares outstanding due to the anti-dilutive effect of the
inclusion of common stock equivalent shares. The following table sets forth the computation
of loss per share:
 Three Months Ended4/30/2005
    
    
    4/30/2004(In thousands, except per share data)Net loss
    
    $
    (5,683
    )
    
    $
    (4,601
    )Average shares outstanding
    
    
    13,100
    
    
    
    13,096Net effect of dilutive
stock options based on
the treasury stock method
using average market
price
    
    
    281
    
    
    
    35Totals
    
    
    13,381
    
    
    
    13,381Net loss per
share - basic
    
    $
    (0.42
    )
    
    $
    (0.34
    )
 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 information for the three months ended
April 30, 2005 and 2004 are as follows: Three Months Ended4/30/2005
    
    
    4/30/2004(In thousands)Net loss, as reported
    
    $
    (5,683
    )
    
    $
    (4,601
    )Total stock-based employee
compensation expense determined under
the fair value based method for all
awards, net of related tax effects
    
    
    13
    
    
    
    13Pro forma net loss
    
    $
    (5,670
    )
    
    $
    (4,588
    )Net loss per
share - basic, as reported
    
    $
    (0.43
    )
    
    $
    (0.35
    )Pro forma
net loss per share - basic
    
    
    13,100
    
    
    
    13,096
 Note 6.
    
    Comprehensive LossComprehensive loss for the three months ended April 30, 2005 and 2004 was the same as net
loss reported on the statement operations. Accumulated comprehensive loss at April 30,
2005 and 2004 is composed of minimum pension liability adjustments.Note 7.
    
    Retirement Plans




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##### 



The Company and its subsidiaries cover all employees under a
noncontributory defined benefit retirement plan, the Virco
Employees Retirement Plan (the Plan). Benefits under the Plan are
based on years of service and career average earnings. As more
fully described in the Form 10K dated January 31, 2005, benefit
accruals under this plan were frozen effective December 31, 2003.
The Company also provides a supplementary retirement plan for
certain key employees, the VIP Retirement Plan (VIP Plan). The VIP
Plan provides a benefit of up to 50% of average compensation for
the last five years in the VIP Plan, offset by benefits earned
under the Plan. As more fully described in the Form 10K dated
January 31, 2005, benefit accruals under this plan were frozen
effective December 31, 2003.The Company also provides a non-qualified plan for non-employee
directors of the Company (the Non-Employee Directors Retirement
Plan). The Non-Employee Directors Retirement Plan provides a
lifetime annual retirement benefit equal to the directors annual
retainer fee for the fiscal year in which the director terminates
his or her position with the Board, subject to the director
providing 10 years of service to the Company. As more fully
described in the Form 10K dated January 31, 2005, benefit accruals
under this plan were frozen effective December 31, 2003.The net periodic pension costs for the Plan, the VIP Plan, and the
Non-Employee Directors Retirement Plan for the three months ended
April 30, 2005 and 2004 were as follows (in thousands):
 Non-EmployeeDirectors RetirementPension Plan
    
    
    VIP Retirement Plan
    
    
    Plan2005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Service cost
    
    $
    55
    
    
    $
    57
    
    
    $
    58
    
    
    $
    65
    
    
    $
    6
    
    
    $
    5Interest cost
    
    
    337
    
    
    
    321
    
    
    
    89
    
    
    
    83
    
    
    
    6
    
    
    
    6Expected return on plan assets
    
    
    (248
    )
    
    
    (250
    )
    
    
    
    
    
    
    
    
    
    
    0
    
    
    
    0Amortization of transition amount
    
    
    (9
    )
    
    
    (9
    )
    
    
    
    
    
    
    
    
    
    
    0
    
    
    
    0Amortization of prior service cost
    
    
    107
    
    
    
    95
    
    
    
    (125
    )
    
    
    (115
    )
    
    
    22
    
    
    
    22Recognized net actuarial (Gain)
or loss
    
    
    33
    
    
    
    52
    
    
    
    27
    
    
    
    22
    
    
    
    (7
    )
    
    
    (6
    )Settlement and curtailment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net periodic pension cost
    
    $
    275
    
    
    $
    266
    
    
    $
    49
    
    
    $
    55
    
    
    $
    27
    
    
    $
    27
 Note 8.
    
    WarrantyThe Company provides a product warranty on most products. It
generally warrants that customers can return a defective product
during the specified warranty period following purchase in
exchange for a replacement product or that the Company can repair
the product at no charge to the customer. The Company determines
whether replacement or repair is appropriate in each circumstance.
The Company uses historic data to estimate appropriate levels of
warranty reserves. Because product mix, production methods, and
raw material sources change over time, historic data may not
always provide precise estimates for future warranty expense. The
following is a summary of the Companys warranty claim activity
for the three months ended April 30, 2005 and 2004 were as follows
(in thousands):
 Three Months Ended4/30/2005
    
    
    4/30/2004Beginning Accrued Warranty Balance
    
    $
    1,500
    
    
    $
    1,751Provision
    
    
    219
    
    
    
    275Costs Incurred
    
    
    (219
    )
    
    
    (475
    )Ending Accrued Warranty Balance
    
    $
    1,500
    
    
    $
    1,551




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##### 



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 2005, the Company incurred a net loss of $5,683,000 on sales of
$33,254,000 compared to a net loss of $4,601,000 on sales of $30,321,000 in the same period last
year. Sales for the first quarter ended April 30, 2005 increased by $2,933,000, a 9% increase, compared
to the same period last year. Incoming orders for the same period increased by approximately 8%.
Backlog at April 30, 2005 increased by approximately 6% compared to the prior year. As more fully
disclosed in the Companys Annual Report for the fiscal year ended January 31, 2005, in the prior
year the Company incurred a severe increase in the cost of certain raw materials, especially steel.
Steel prices started to increase in the first quarter and reached a peak during the fourth
quarter. As a result, margins deteriorated as the year progressed, with the fourth quarter gross
margins declining to under 13%. In response to the increased cost of materials, the Company began
raising selling prices as annual bids and contracts come up for renewal during the fourth quarter.
During the first quarter ended April 31, 2005, the Company benefited from higher selling prices
under certain contracts, but also delivered orders received at lower margins in the fourth quarter
of 2004 as well as delivered orders received under contracts that have not yet been renegotiated.
Raw material costs have been relatively stable during the first quarter of 2005 at approximately
the same costs experienced during the fourth quarter of 2004. The increase in sales for the first
quarter is attributable to increases in selling prices. Unit volume decreased slightly. Gross profit for the first quarter, as a percentage of sales, decreased compared to the same period
last year. As more fully disclosed in the Companys Annual Report for the fiscal year ended
January 31, 2005, in the prior year the Company incurred a severe increase in the cost of certain
raw materials. During the first quarter of 2004, the Company had not incurred the full impact of
these material costs. During the first quarter of 2005, the Company incurred the full impact of
raw material cost increases. Selling, general and administrative expense for the quarter ended April 30, 2005 were flat compared
to the same period last year, and decreased as a percentage of sales by more than 4%. The decrease
as a percentage of sales was primarily attributable to the price increase. Increases in traffic
and warehousing expenses were offset by reductions in other selling and administrative expenses. Interest expense increased by approximately $156,000 compared to the same period last year. The
increase is primarily due to higher interest rates. Financial Condition As a result of seasonally lower deliveries in the first quarter and fourth quarter last year,
accounts and notes receivable were flat compared to January 31, 2005. 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 $19,548,000
compared to January 31, 2005. This increase in inventory was comparable to the in increase in the
first quarter in the prior year. The composition of inventory at the end of the first quarter of
2005 changed compared to the first quarter of 2004 for two reasons. First, the Company was not
able to obtain adequate deliveries of raw material, especially steel in the first quarter of 2004.
The Company did not incur similar shortages in 2005. Second, the Company has a larger proportion
of more flexible ATS component inventory and less finished goods inventory, as the Company has
deferred the final assemble process slightly in the current year. The increase in inventory was
financed through the credit facility with Wells Fargo Bank. The Company has established a goal of limiting capital spending to approximately $5,000,000 for
2005, which is approximately one-half of anticipated depreciation expense. Capital spending for
the quarter ended April 30, 2005, was $437,000 compared to $678,000 for the same period last year.
Capital expenditures are being financed through the Companys credit facility established with
Wells Fargo Bank and operating cash flow. Net cash used in operating activities for the first quarter ended April 30, 2005 was $13,506,000
compared to $12,405,000 for the same period last year. The Company believes that cash flows from operations, together with the Companys unused borrowing
capacity with




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Wells Fargo Bank will be sufficient to fund the Companys debt service requirements, capital
expenditures and working capital needs. Approximately $19,314,000 was available for borrowing as
of April 30, 2005. Critical Accounting Policies and Estimates The Companys critical accounting policies are outlined in its Form 10-K for fiscal year ended
January 31, 2005. Recent Developments Section 402 of the Sarbanes Oxley Act of 2002 (the Act) generally prohibits issuers from directly
or indirectly extending or maintaining credit, arranging for the extension of credit or renewing an
extension of credit in the form of a personal loan to or for any director or executive officer of
that issuer. In light of Section 402 of the Act, and after considering the recommendation of the
Companys Corporate Governance/Nominating Committee, on June 7, 2005 the Companys Board of
Directors approved certain amendments to the Companys 1993 Stock Incentive Plan and 1997 Stock
Incentive Plan (each, a Plan) to, among other things, expressly provide that executive officer
and director participants may not pay the exercise price or tax withholding amount relating to a
Plan award in the form of a promissory note or other type of loan. The Company plans to file the
amendments to the Plans as exhibits to its Form 10-Q for the second quarter of the 2005 fiscal
year. 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 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, 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, 2005. 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 The Company has entered into a revolving credit facility with Wells Fargo Bank, amended and
restated January 21, 2005, which provides a Term Loan of $20,000,000 and a secured revolving line
of credit that varies as a percentage of inventory and receivables, up to a maximum of $40,000,000.
The term note is a two-year loan amortizing at $5,000,000 per year with interest payable monthly at
a fluctuating rate equal to the Banks prime rate (5.75% at April 30, 2005) plus a fluctuating
margin of (i) 1.50% if the aggregate principal amount of the Term Loan outstanding is greater than
$15,000,000; (ii) 1.25% if the aggregate principal amount of the Term Loan outstanding is greater
than $10,000,000 but less than $15,000,000; (iii) 1.00% if the aggregate principal amount of the
Term Loan outstanding is greater than $5,000,000 but less than $10,000,000; (iv) 0.75% if the
aggregate principal amount of the Term Loan outstanding is less than $5,000,000. Accordingly, a
100 basis point upward fluctuation in the lenders base rate would cause the Company to incur
additional interest charges of approximately $68,000 for the fiscal quarter ended April 30, 2005.
The Company would benefit from a similar interest savings if the base rate were to fluctuate
downward by a like amount. As of April 30, 2005, the Company has borrowed $36,215,000 under its
Wells Fargo term loan and asset-based credit facility. The revolving line has a 24-month maturity with interest payable monthly at a fluctuating rate
equal to the Banks prime rate plus a fluctuating margin similar to the term note. The revolving
line typically provides for advances of 80% on eligible accounts receivable and 20%  60% on
eligible inventory. The advance rates fluctuate depending on the time of the year and the types of
assets. The agreement has an unused commitment fee of 0.375%. Approximately $19,314,000 was
available for borrowing as of April 30, 2005.




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The revolving credit facility with Wells Fargo Bank is subject to minimum EBITDA requirements. The agreement also places certain restrictions on capital expenditures, new operating
leases, dividends and the repurchase of the Companys common stock. The revolving credit facility
is secured by the Companys accounts receivable, inventories, equipment and property. The Company
is in compliance with its covenants at April 30, 2005. 
 Item 4. Controls and Procedures (a) Evaluation of Disclosure Controls and Procedures The 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 the 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. 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 as of the end of the period covered by this Quarterly
Report (the Evaluation Date) pursuant to Exchange Act Rule 13a-15. Based upon the foregoing, the
Companys President and Chief Executive Officer, along with the Companys Chief Financial Officer
and other members of management, concluded that the Companys disclosure controls and procedures
are effective in ensuring that (i) information required to be disclosed by the Company in the
reports that it files or submits under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the SECs rules and forms and (ii) information
required to be disclosed by the Company in the reports that it files or submits under the Exchange
Act is accumulated and communicated to the Companys management, including its principal executive
and principal financial officers, or persons performing similar functions, as appropriate to allow
timely decisions regarding required disclosure. (b) Changes In Internal Control Over Financial Reporting No changes in the Companys internal control over financial reporting identified in connection with
the evaluation required by Exchange Act Rule 13a-15 have come to managements attention during the
last fiscal quarter that have materially affected, or are reasonably likely to materially affect,
its internal control over financial reporting.




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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 Exhibit 31.1  Certification of Robert A. Virtue, President, pursuant to Rules 13a-14 and 15d-14 of
the Securities Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Exhibit 31.2  Certification of Robert E. Dose, Vice President, Finance, pursuant to Rules 13a-14
and 15d-14 of the Securities Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002. Exhibit 32.1  Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.




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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. CORPORATIONDate: June 8, 2005
    
    
    
    By:
    
    /s/ Robert E. DoseRobert E. DoseVice President - FinanceDate: June 8, 2005
    
    
    
    By:
    
    /s/ Bassey YauBassey YauCorporate Controller