##### 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      October 31, 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 [   ]

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

The number of shares outstanding of each of the issuers classes of common
stock, as of November 18, 2003.

Common Stock                13,095,801 Shares





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TABLE OF CONTENTS



|                          |                                                                                                |                                                      |  |  |  |  |  | 
|------------------------- | ---------------------------------------------------------------------------------------------- | ---------------------------------------------------- |  |  |  |  |  | 
|PART I                   
|                          | Item 1. Financial Statements                                                                  
|                          |                                                                                                | CONDENSED CONSOLIDATED BALANCE SHEETS               
|                          |                                                                                                | CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS     
|                          |                                                                                                | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS     
|                          |                                                                                                | NOTES TO CONDENSED CONSOLIDATED 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 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                                                      
|SIGNATURES               
|EXHIBIT 31.1             
|EXHIBIT 31.2             
|EXHIBIT 32.1             



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##### Table of Contents



VIRCO MFG. CORPORATION

INDEX

Part I. Financial Information

|                           |  |                                                                                               
|-------------------------- |  | ----------------------------------------------------------------------------------------------
|Item 1.                    |  | Financial Statements (unaudited)                                                              
|                          
|                           |  | Condensed consolidated balance sheets  October 31, 2003, and January
31, 2003                
|                          
|                           |  | Condensed consolidated statements of operations  Three months ended
October 31, 2003 and 2002
|                          
|                           |  | Condensed consolidated statements of operations  Nine months ended
October 31, 2003 and 2002 
|                          
|                           |  | Condensed consolidated statements of cash flows  Nine months ended
October 31, 2003 and 2002 
|                          
|                           |  | Notes to condensed consolidated financial statements  October 31,
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 31.1                                                                                  
|                          
|                           |  | Exhibit 31.2                                                                                  
|                          
|                           |  | Exhibit 32.1                                                                                  
|                          
|Signatures                

2



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##### Table of Contents






PART I




Item 1. Financial Statements




VIRCO MFG. CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollar amounts in thousands, except per share data)

|                            |                                           |                                      |         |                    |         |           |         |        |         | 
|--------------------------- | ----------------------------------------- | ------------------------------------ | ------- | ------------------ | ------- | --------- | ------- | ------ | ------- | 
|                            |                                           |                                      |         | 10/31/2003         |         | 1/31/2003
|                            |                                           |                                      |         |                    |         |          
|                            |                                           |                                      |         | Unaudited (Note 1) |         |           |         |       
|ASSETS                      |                                           |                                      |         |                    |         |           |         |       
|Current assets              |                                           |                                      |         |                    |         |           |         |       
|                            | Cash                                      |                                      | $       | 2,284              |         |           | $       | 1,639  |        
|                            | Accounts and notes receivable             |                                      |         | 25,003             |         |           |         | 17,601 |        
|                            |                                           | Less allowance for doubtful accounts |         |                    | 320     |           |         |        | 200     | 
|                            |                                           |                                      |         |                    |         |           |         |        |        
|                            |                                           | Net accounts and notes receivable    |         |                    | 24,683  |           |         |        | 17,401  | 
|                            | Income tax receivable                     |                                      |         | 853                |         |           |         |       |        
|                            | Inventories (Note 2)                      |                                      |         |                    |         |           |         |        |        
|                            |                                           | Finished goods                       |         |                    | 10,873  |           |         |        | 16,510  | 
|                            |                                           | Work in process                      |         |                    | 8,615   |           |         |        | 18,233  | 
|                            |                                           | Raw materials and supplies           |         |                    | 6,916   |           |         |        | 8,296   | 
|                            |                                           |                                      |         |                    |         |           |         |        |        
|                            |                                           | Total inventories                    |         |                    | 26,404  |           |         |        | 43,039  | 
|                            | Deferred income taxes                     |                                      |         | 2,416              |         |           |         | 2,494  |        
|                            | Prepaid expenses and other current assets |                                      |         | 589                |         |           |         | 1,495  |        
|                            |                                           |                                      |         |                    |         |           |         |        |        
|Total current assets        |                                           |                                      | 57,229  |                    |         |           | 66,068  |       
|Property, plant & equipment |                                           |                                      |         |                    |         |           |         |       
|                            |                                           | Cost                                 |         |                    | 156,978 |           |         |        | 156,863 | 
|                            |                                           | Less accumulated depreciation        |         |                    | 91,949  |           |         |        | 83,827  | 
|                            |                                           |                                      |         |                    |         |           |         |        |        
|                            |                                           | Net property, plant & equipment      |         |                    | 65,029  |           |         |        | 73,036  | 
|Other assets                |                                           |                                      | 15,692  |                    |         |           | 15,692  |       
|                            |                                           |                                      |         |                    |         |           |         |        |        
|Total assets                |                                           | $                                    | 137,950 |                    |         | $         | 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)

|                                           |                                                                                                |                                                                                                            |         |                    |     |           |         |         |     | 
|------------------------------------------ | ---------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------- | ------- | ------------------ | --- | --------- | ------- | ------- | --- | 
|                                           |                                                                                                |                                                                                                            |         | 10/31/2003         |     | 1/31/2003
|                                           |                                                                                                |                                                                                                            |         |                    |     |          
|                                           |                                                                                                |                                                                                                            |         | Unaudited (Note 1) |     |           |         |        
|LIABILITIES AND STOCKHOLDERS EQUITY       |                                                                                                |                                                                                                            |         |                    |     |           |         |        
|Current liabilities                        |                                                                                                |                                                                                                            |         |                    |     |           |         |        
|                                           | Checks released but not yet cleared bank                                                       |                                                                                                            | $       | 2,229              |     |           | $       | 2,506   |    
|                                           | Accounts payable                                                                               |                                                                                                            |         | 5,917              |     |           |         | 8,395   |    
|                                           | Income tax payable                                                                             |                                                                                                            |         |                   |     |           |         | 3,538   |    
|                                           | Accrued compensation and employee benefits                                                     |                                                                                                            |         | 6,617              |     |           |         | 7,109   |    
|                                           | Current maturities on long-term debt                                                           |                                                                                                            |         | 34,012             |     |           |         | 1,087   |    
|                                           | Other current liabilities                                                                      |                                                                                                            |         | 4,754              |     |           |         | 4,685   |    
|                                           |                                                                                                |                                                                                                            |         |                    |     |           |         |         |    
|Total current liabilities                  |                                                                                                |                                                                                                            | 53,529  |                    |     |           | 27,320  |        
|Non-current liabilities                    |                                                                                                |                                                                                                            |         |                    |     |           |         |        
|                                           | Long term debt (less current portion)                                                          |                                                                                                            |         |                   |     |           |         | 27,905  |    
|                                           | Other non-current liabilities                                                                  |                                                                                                            |         | 22,354             |     |           |         | 16,797  |    
|                                           |                                                                                                |                                                                                                            |         |                    |     |           |         |         |    
|Total non-current liabilities              |                                                                                                |                                                                                                            | 22,354  |                    |     |           | 44,702  |        
|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; 14,583,331 and 14,527,074 issued
at 10/31/2003 and 1/31/2003 |         |                    | 145 |           |         |         | 145 | 
|                                           | Additional paid-in capital                                                                     |                                                                                                            |         | 126,728            |     |           |         | 126,284 |    
|                                           | Retained deficit                                                                               |                                                                                                            |         | (39,424            | )   |           |         | (18,927 | )  
|                                           | Less treasury stock at cost (1,487,530
shares at 10/31/2003 and 1,416,472 shares
at 1/31/2003) |                                                                                                            |         | (19,406            | )   |           |         | (18,634 | )  
|                                           | Less accumulated comprehensive loss                                                            |                                                                                                            |         | (5,976             | )   |           |         | (6,094  | )  
|                                           |                                                                                                |                                                                                                            |         |                    |     |           |         |         |    
|Total stockholders equity                 |                                                                                                |                                                                                                            | 62,067  |                    |     |           | 82,774  |        
|                                           |                                                                                                |                                                                                                            |         |                    |     |           |         |         |    
|Total liabilities and stockholders equity |                                                                                                | $                                                                                                          | 137,950 |                    |     | $         | 154,796 |        
|                                           |                                                                                                |                                                                                                            |         |                    |     |           |         |         |    

See Notes to Condensed Consolidated Financial Statements.

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VIRCO MFG. CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited (Note 1)

(Dollar amounts in thousands, except per share data)

|                                            |  |                    |            |            |  |   |            | 
|------------------------------------------- |  | ------------------ | ---------- | ---------- |  | - | ---------- | 
|                                            |  | Three Months Ended
|                                            |  |                   
|                                            |  | 10/31/2003         |            | 10/31/2002
|                                            |  |                    |            |           
|Net sales                                   |  | $                  | 65,802     |            |  | $ | 85,022     | 
|Cost of goods sold                          |  |                    | 46,937     |            |  |   | 53,805     | 
|                                            |  |                    |            |            |  |   |            | 
|Gross profit                                |  |                    | 18,865     |            |  |   | 31,217     | 
|Operating expense                           |  |                    |            |            |  |   |            | 
|Selling, general and administrative expense |  |                    | 21,450     |            |  |   | 25,191     | 
|Separation charges                          |  |                    | 4,589      |            |  |   |           | 
|Interest expense                            |  |                    | 501        |            |  |   | 708        | 
|                                            |  |                    |            |            |  |   |            | 
|                                            |  |                    | 26,540     |            |  |   | 25,899     | 
|(Loss)/income before income taxes           |  |                    | (7,675     | )          |  |   | 5,318      | 
|Income tax expense                          |  |                    |           |            |  |   | 2,074      | 
|                                            |  |                    |            |            |  |   |            | 
|Net (loss)/income                           |  | $                  | (7,675     | )          |  | $ | 3,244      | 
|                                            |  |                    |            |            |  |   |            | 
|Amounts per common share (a)                |  |                    |            |            |  |   |            | 
|Net (loss)/income                           |  | $                  | (0.59      | )          |  | $ | 0.24       | 
|                                            |  |                    |            |            |  |   |            | 
|Weighted average shares outstanding (a)     |  |                    | 13,099,000 |            |  |   | 13,457,000 | 
|Dividend per common share (a)               |  |                    |            |            |  |   |            | 
|Cash                                        |  | $                  |           |            |  | $ | 0.02       | 



---

|(a) For fiscal year 2003, net loss per share was calculated based on basic shares
outstanding at October 31, 2003, 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 OPERATIONS
Unaudited (Note 1)

(Dollar amounts in thousands, except per share data)

|                                            |  |                   |            |            |  |   |            | 
|------------------------------------------- |  | ----------------- | ---------- | ---------- |  | - | ---------- | 
|                                            |  | Nine Months Ended
|                                            |  |                  
|                                            |  | 10/31/2003        |            | 10/31/2002
|                                            |  |                   |            |           
|Net sales                                   |  | $                 | 162,843    |            |  | $ | 209,354    | 
|Cost of goods sold                          |  |                   | 112,601    |            |  |   | 132,849    | 
|                                            |  |                   |            |            |  |   |            | 
|Gross profit                                |  |                   | 50,242     |            |  |   | 76,505     | 
|Operating expense                           |  |                   |            |            |  |   |            | 
|Selling, general and administrative expense |  |                   | 59,472     |            |  |   | 65,405     | 
|Separation charges                          |  |                   | 12,377     |            |  |   |           | 
|Interest expense                            |  |                   | 1,313      |            |  |   | 2,302      | 
|                                            |  |                   |            |            |  |   |            | 
|                                            |  |                   | 73,162     |            |  |   | 67,707     | 
|(Loss)/income before income taxes           |  |                   | (22,920    | )          |  |   | 8,798      | 
|Income tax (benefit)/expense                |  |                   | (2,946     | )          |  |   | 3,431      | 
|                                            |  |                   |            |            |  |   |            | 
|Net (loss)/income                           |  | $                 | (19,974    | )          |  | $ | 5,367      | 
|                                            |  |                   |            |            |  |   |            | 
|Amounts per common share (a)                |  |                   |            |            |  |   |            | 
|Net (loss)/income                           |  | $                 | (1.52      | )          |  | $ | 0.40       | 
|                                            |  |                   |            |            |  |   |            | 
|Weighted average shares outstanding (a)     |  |                   | 13,107,000 |            |  |   | 13,493,000 | 
|Dividend per common share (a)               |  |                   |            |            |  |   |            | 
|Cash                                        |  | $                 |           |            |  | $ | 0.02       | 



---

|(a) For fiscal year 2003, net loss per share was calculated based on basic shares
outstanding at October 31, 2003, 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
Unaudited (Note 1)

|                                                    |                                                                                                    |                                           |        |                   |        |   |        |        |        |  
|--------------------------------------------------- | -------------------------------------------------------------------------------------------------- | ----------------------------------------- | ------ | ----------------- | ------ | - | ------ | ------ | ------ | -
|                                                    |                                                                                                    |                                           |        | Nine Months Ended
|                                                    |                                                                                                    |                                           |        |                  
|(Dollar amounts in thousands)                       |                                                                                                    | 10/31/2003                                |        | 10/31/2002       
|                                                    |                                                                                                    |                                           |        |                  
|Operating activities                                |                                                                                                    |                                           |        |                   |        |   |        |       
|                                                    | Net (loss)/income                                                                                  |                                           | $      | (19,974           | )      |   | $      | 5,367  |       
|                                                    | Adjustments to reconcile net (loss)/income to
net cash (used in) provided by operating activities: |                                           |        |                   |        |   |        |        |       
|                                                    | Depreciation                                                                                       |                                           |        | 8,901             |        |   |        | 10,223 |       
|                                                    | Provision for doubtful accounts                                                                    |                                           |        | 102               |        |   |        | 319    |       
|                                                    | Loss on sale of fixed assets                                                                       |                                           |        | 49                |        |   |        |       |       
|                                                    | Changes in assets and liabilities:                                                                 |                                           |        |                   |        |   |        |        |       
|                                                    |                                                                                                    | Accounts and notes receivable             |        |                   | (7,384 | ) |        |        | (8,072 | )
|                                                    |                                                                                                    | Inventories                               |        |                   | 16,635 |   |        |        | 1,878  |  
|                                                    |                                                                                                    | Prepaid expenses and other current assets |        |                   | 906    |   |        |        | 361    |  
|                                                    |                                                                                                    | Income taxes receivable/payable           |        |                   | (4,391 | ) |        |        | 3,530  |  
|                                                    |                                                                                                    | Accounts payable and accrued expenses     |        |                   | 2,230  |   |        |        | (274   | )
|                                                    |                                                                                                    |                                           |        |                   |        |   |        |        |       
|Net cash (used in) provided by operating activities |                                                                                                    |                                           | (2,926 | )                 |        |   | 13,332 |       
|Investing activities                                |                                                                                                    |                                           |        |                   |        |   |        |       
|                                                    | Capital expenditures                                                                               |                                           |        | (943              | )      |   |        | (2,700 | )     
|                                                    | Acquisition                                                                                        |                                           |        |                  |        |   |        | (4,550 | )     
|                                                    | Proceeds from sale of assets                                                                       |                                           |        |                  |        |   |        | 2      |       
|                                                    |                                                                                                    |                                           |        |                   |        |   |        |        |       
|Net cash used in investing activities               |                                                                                                    |                                           | (943   | )                 |        |   | (7,248 | )     
|Financing activities                                |                                                                                                    |                                           |        |                   |        |   |        |       
|                                                    | Issuance of debt                                                                                   |                                           |        | 5,365             |        |   |        | 5,586  |       
|                                                    | Repayment of long-term debt                                                                        |                                           |        |                  |        |   |        | (2,705 | )     
|                                                    | Purchase of treasury stock                                                                         |                                           |        | (446              | )      |   |        | (754   | )     
|                                                    | Payment of cash dividend                                                                           |                                           |        | (525              | )      |   |        | (2,250 | )     
|                                                    | Issuance of common stock                                                                           |                                           |        | 120               |        |   |        | 178    |       
|                                                    |                                                                                                    |                                           |        |                   |        |   |        |        |       
|Net cash provided by financing activities           |                                                                                                    |                                           | 4,514  |                   |        |   | 55     |       
|Net change in cash                                  |                                                                                                    |                                           | 645    |                   |        |   | 6,139  |       
|Cash at beginning of period                         |                                                                                                    |                                           | 1,639  |                   |        |   | 1,704  |       
|                                                    |                                                                                                    |                                           |        |                   |        |   |        |        |       
|Cash at end of period                               |                                                                                                    | $                                         | 2,284  |                   |        | $ | 7,843  |       
|                                                    |                                                                                                    |                                           |        |                   |        |   |        |        |       

See Notes to Condensed Consolidated Financial Statements.

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VIRCO MFG. CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

October 31, 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 accounting principles
generally accepted in the United States 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
nine-months ended October 31, 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.
An estimated provision has been made for the period ended October 31,
2003. Management continually monitors production costs, material
costs and inventory levels to determine that interim inventories are
fairly stated.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|       
|Note 3. |  | Debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       
|        |  | Effective January 31, 2003, the Company entered into a credit
facility with Wells Fargo Bank that provides a secured revolving line
of credit that ranges from $40,000,000 to $70,000,000. At October
31, 2003, the Company was in violation of certain of its loan
covenants. In December 2003 Wells Fargo provided the Company with a
waiver of these covenants as of October 31, 2003. However, based on
managements forecasts for operating results for the remainder of the
year, it is considered to be more likely than not that the Company
will violate the loan covenants at the fourth quarter ending January
31, 2004. Accordingly, the debt has been classified as a current
liability on the October 31, 2003 balance sheet. The Company is
currently negotiating with Wells Fargo to restructure the credit
facility so that the Company will comply with the quarterly debt
covenants. No assurance can be given that such negotiations will be
successful. If they are not, the Company would be in default with
the bank, which could significantly affect its liquidity. If
additional sources of financing are not available, the Company plans
to continue to implement measures to conserve cash or reduce costs.                                           

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|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Note 4. |  | Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|       
|        |  | Income taxes for the nine-month period ended October 31, 2003, were
computed using the effective tax rate estimated to be applicable for
the full fiscal year and the determination of a valuation allowance for
deferred income tax assets. For the nine months ended October 31, 2003,
the Company established a $6 million deferred tax valuation allowance.
The allowance was recognized based on the weight of available evidence
that it is more likely than not that this portion of the Companys
deferred tax asset will not be realized within the next three years,
notwithstanding that some of those assets may have longer lives under
applicable tax laws. Deferred income taxes reflect the net tax effect
of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes. The Company believes,
based on its history of prior operating earnings, its actions to reduce
costs (see Note 8), and its expectations of future earnings, that
operating income of the Company will more likely than not be sufficient
to realize the future benefits of the amount classified as a net
deferred tax asset. Future adverse changes in market conditions, poor
operating results or a decline in our projections about future
profitability may affect the Companys assessment of the adequacy of the
reserve and, consequently, the net carrying value of net deferred tax
assets. In the event that the Company determines that it is more likely
than not that it would be unable to realize an additional portion of
the net deferred tax asset, an additional adjustment to the deferred
tax asset valuation allowance would be charged to income in the period
such determination was made.
|       
|Note 5. |  | Reclassifications                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|       
|        |  | Certain prior year amounts have been reclassified to conform to the current year presentation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|       
|Note 6. |  | Net (Loss)/Income Per Share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

For the quarter ended October 31, 2003, net loss per share was calculated based
on basic shares outstanding at October 31, 2003 due to the anti-dilutive effect
on the inclusion of common stock equivalent shares. The following table sets
forth the computation of basic loss per share:

|                                                                                                     |  |                    |            |                   |  |      |            |      |  |   |             |   |  |   |            | 
|---------------------------------------------------------------------------------------------------- |  | ------------------ | ---------- | ----------------- |  | ---- | ---------- | ---- |  | - | ----------- | - |  | - | ---------- | 
|                                                                                                     |  | Three Months Ended |            | Nine Months Ended
|                                                                                                     |  | October 31         |            | October 31       
|                                                                                                     |  |                    |            |                  
|                                                                                                     |  | 2003               |            | 2002              |  | 2003 |            | 2002
|                                                                                                     |  |                    |            |                   |  |      |            |     
|Net (loss)/income                                                                                    |  | $                  | (7,675,000 | )                 |  | $    | 3,244,000  |      |  | $ | (19,974,000 | ) |  | $ | 5,367,000  | 
|                                                                                                     |  |                    |            |                   |  |      |            |      |  |   |             |   |  |   |            | 
|Average shares outstanding                                                                           |  |                    | 13,099,000 |                   |  |      | 13,311,000 |      |  |   | 13,107,000  |   |  |   | 13,349,000 | 
|Net effect of dilutive
stock options  based on
the treasury stock method
using average market price |  |                    | 35,000     |                   |  |      | 146,000    |      |  |   | 23,000      |   |  |   | 144,000    | 
|                                                                                                     |  |                    |            |                   |  |      |            |      |  |   |             |   |  |   |            | 
|Totals                                                                                               |  |                    | 13,134,000 |                   |  |      | 13,457,000 |      |  |   | 13,130,000  |   |  |   | 13,493,000 | 
|                                                                                                     |  |                    |            |                   |  |      |            |      |  |   |             |   |  |   |            | 
|Net loss per share  basic                                                                           |  | $                  | (0.59      | )                 |  | $    | 0.24       |      |  | $ | (1.52       | ) |  | $ | 0.40       | 
|                                                                                                     |  |                    |            |                   |  |      |            |      |  |   |             |   |  |   |            | 
|Net loss per share  diluted                                                                         |  | $                  | (0.59      | )                 |  | $    | 0.24       |      |  | $ | (1.52       | ) |  | $ | 0.40       | 
|                                                                                                     |  |                    |            |                   |  |      |            |      |  |   |             |   |  |   |            | 

9



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##### Table of Contents



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 and nine-month periods ended October
31, 2003 and October 31, 2002 are as follows:

|                                                                                                                                                |  |                    |            |                   |  |      |           |      |  |   |             |   |  |   |           | 
|----------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | ---------- | ----------------- |  | ---- | --------- | ---- |  | - | ----------- | - |  | - | --------- | 
|                                                                                                                                                |  | Three Months Ended |            | Nine Months Ended
|                                                                                                                                                |  | October 31         |            | October 31       
|                                                                                                                                                |  |                    |            |                  
|                                                                                                                                                |  | 2003               |            | 2002              |  | 2003 |           | 2002
|                                                                                                                                                |  |                    |            |                   |  |      |           |     
|Net (loss)/income, as reported                                                                                                                  |  | $                  | (7,675,000 | )                 |  | $    | 3,244,000 |      |  | $ | (19,974,000 | ) |  | $ | 5,367,000 | 
|Deduct: Total stock-based
employee compensation expense
determined under the fair
value based method for all
awards, net of related tax
effects |  |                    | 16,000     |                   |  |      | 9,000     |      |  |   | 43,000      |   |  |   | 28,000    | 
|                                                                                                                                                |  |                    |            |                   |  |      |           |      |  |   |             |   |  |   |           | 
|Pro forma net (loss)/income                                                                                                                     |  | $                  | (7,691,000 | )                 |  | $    | 3,235,000 |      |  | $ | (20,017,000 | ) |  | $ | 5,339,000 | 
|                                                                                                                                                |  |                    |            |                   |  |      |           |      |  |   |             |   |  |   |           | 
|Basic and diluted earnings
per share, as reported:                                                                                              |  | $                  | (0.59      | )                 |  | $    | 0.24      |      |  | $ | (1.52       | ) |  | $ | 0.40      | 
|                                                                                                                                                |  |                    |            |                   |  |      |           |      |  |   |             |   |  |   |           | 
|Basic and diluted earnings
per share, pro forma:                                                                                                |  | $                  | (0.59      | )                 |  | $    | 0.24      |      |  | $ | (1.52       | ) |  | $ | 0.40      | 
|                                                                                                                                                |  |                    |            |                   |  |      |           |      |  |   |             |   |  |   |           | 

|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Note 7. |  | Comprehensive (Loss)/Income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|       
|        |  | Comprehensive loss for the quarter ended October 31, 2003 was
$7,675,000 compared to comprehensive income of $3,398,000 for the
quarter ended October 31, 2002. Comprehensive loss for the nine months
ended October 31, 2003 was $19,856,000 compared to comprehensive income
of $5,742,000 for the nine months ended October 31, 2002. The difference
between results reported on the income statement and comprehensive
(loss)/income is primarily attributable to adjustments in the prior
year to account for a derivative financial investment that expired in
March 2003.            
|       
|        |  | Accumulated comprehensive loss at the quarter ended October 31, 2003 is
primarily composed of minimum pension liability adjustments.                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|       
|Note 8. |  | Separation Charges                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|       
|        |  | During the second and third quarters, the Company determined that the
reduced level of orders received in the first quarter would likely
continue for the rest of the year and possibly through 2004 as well.
In the second quarter the Company announced a Voluntary Severance
Program in addition to other measures that include voluntary part-time
work and voluntary sabbaticals. Under the program, employees who
voluntarily terminated their employment with the Company were paid six
months of severance pay. During the second quarter, nearly 500
employees accepted this offer.

10



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##### Table of Contents



|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        |  | Approximately 25% of the workforce severed their employment in June and
July. Including employer taxes, the Company incurred approximately
$7.8 million in severance costs during the second quarter.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|       
|        |  | During the third quarter, the Company elected to further reduce
expenses and head count through a non-voluntary reduction in force. In
September, the Company laid off an additional 160 employees. These
employees were given six months of severance pay in addition to a
variety of outplacement service benefits to help them locate new
employment. The Company incurred approximately $2.6 million of
severance costs in the third quarter related to this reduction in
force. In addition to the severance costs, the Company incurred
additional pension settlement costs of approximately $2 million and is
anticipated to record another $1 million during the fourth quarter.
|       
|Note 9. |  | New Accounting Standards                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|       
|        |  | In April 2003, the FASB issued SFAS No. 149, Amendment of Statement 133
on Derivative Instruments and Hedging Activities, which amends and
clarifies financial accounting and reporting derivative instruments,
including certain derivative instruments embedded in other contracts
and for hedging activities under SFAS No. 133, Accounting for
Derivative Instruments and Hedging Activities. This statement is
effective for contracts entered into or modified and for hedging
relationships designated after June 30, 2003. The Company does not
expect the adoption of this statement to have a material impact on its
financial statements.                                    
|       
|        |  | In May 2003, the FASB issued SFAS No. 150, Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and
Equity, effective for financial instruments entered into or modified
after May 31, 2003, and otherwise is effective at the beginning of the
first interim period beginning after June 15, 2003. The impact upon
adoption of SFAS No. 150 is not expected to have a material impact on
the results of operations or the financial position of the Company.                                                                                                                                                                                          

11



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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 third quarter of 2003, the Company incurred a net loss of $7,675,000 on
sales of $65,802,000 compared to a net income of $3,244,000 on sales of
$85,022,000 in the same period last year. Net loss per share was $0.59
compared to net income per share of $0.24 in the same period last year. For
the nine months ended October 31, 2003, the Company incurred a net loss of
$19,974,000 on sales of $162,843,000 compared to net income of $5,367,000 on
sales of $209,354,000 in the same period last year. Net loss per share was
$1.51 compared to net income per share of $0.40 in the same period last year.

Sales for the third quarter decreased by $19,220,000, a 23% decrease compared
to the same period last year. For the first nine months of 2003 sales
decreased by $46,511,000, a 22% decrease compared to the prior year. Backlog
at quarter end increased by 4% compared to the prior year third quarter.

The decrease in sales is primarily attributable to budgetary pressures on state
and local governments. As more fully discussed in the Presidents Letter
included with our 2002 annual report (page 21), schools obtain funding for
educational furniture from two primary sources. The first source is from bonds
that fund development of new schools and significant refurbishment of older
schools. The availability of funds from bonds is relatively stable compared to
the prior year. The second source of funds is typically provided from a
states general funds. Many of the state governments are facing severe funding
shortages and school officials will curtail expenditures on maintenance,
furniture, and supplies in order to avoid laying off teachers and
administrators. With approximately 80-85% of school budgets spent on teachers
and administrators, the impact on funds available for furniture can be dramatic
when school funding is reduced. In addition to the weakness in the education
market, the market for commercial furniture, which suffered a severe decline in
2001 and 2002, continues to be very weak.

Gross profit for the third quarter, as a percentage of sales, decreased
approximately 8% compared to the same period last year. For the first nine
months, gross profit as a percentage of sales decreased by nearly 6% compared
to the prior year. The reduction in gross margin is attributable to increased
material costs and reduced production hours. In the prior year, the Company
benefited from favorable raw material costs, especially steel. During the
second half of 2002, the Company incurred higher steel costs, and has had
difficulty passing these costs on to our customers. Material costs, as a
percentage of sales were 2% higher in the third quarter and 3% higher for the
first nine months as compared to the same periods last year. In addition to
increased material costs, the Company substantially reduced factory production
in order to control inventory levels. This reduction in production caused the
Company to incur unfavorable manufacturing variances. These manufacturing
variances caused the balance of the reduced gross margin. In the third
quarter, production hours decreased by 51% compared to the prior year. This
was accomplished using four tactics. First, the Company implemented a hiring
freeze. Second, the Company has traditionally hired temporary labor in its
factories during the summer months, and did not hire these temporary workers in
the current year. Third, the Company has traditionally hired temporary workers
to perform installations at customer locations. In the current year, the
Company created installation teams from its factory and warehouse locations.
These installation teams performed a significant number of the installations,
allowing the Company to reduce production hours, reduce money spent on
temporary labor services, and improve customer service at installed jobs.
Finally, as more fully discussed below, the Company implemented a voluntary reduction in force at the end of the
second quarter, followed by a mandatory reduction in force during the third
quarter.

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Selling, general and administrative expense, excluding separation costs of
$4,589,000, decreased by $3,741,000 for the quarter ended October 31, 2003 as
compared to the same period last year, but increased by approximately 3% as a
percentage of sales. Approximately 1% of the increase was related to freight
expenses and the balance attributable to costs that were not impacted by the
reduction in volume. Selling, general and administrative expense, excluding
separation costs of $12,377,000, decreased by $5,933,000 for the nine months
ended October 31, 2003 as compared to the same period last year but increased
by approximately 5% as a percentage of sales. Approximately 1% of the increase
was related to freight expenses and the balance attributable to costs that were
not impacted by the reduction in volume.

Interest expense for the quarter ended October 31, 2003 decreased by
approximately $207,000 compared to the same period last year. Interest expense
for the nine months ended October 31, 2003 decreased by approximately $989,000
compared to the same period last year. Average borrowings for the year
increased due to increased inventories for the first 5 months of the year and
the loss from operations. The increased interest expense is offset by lower
interest rates resulted in an overall net reduction in interest expense.

Income taxes for the nine-month period ended October 31, 2003, were computed
using the effective tax rate estimated to be applicable for the full fiscal
year and the determination of a valuation allowance for deferred income tax
assets. For the nine months ended October 31, 2003, the Company established a
$6 million deferred tax valuation allowance. The allowance was recognized based
on the weight of available evidence that it is more likely than not that this
portion of the Companys deferred tax asset will not be realized within the
next three years, notwithstanding that some of those assets may have longer
lives under applicable tax laws. Deferred income taxes reflect the net tax
effect of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes. The Company believes, based on
its history of prior operating earnings, its actions to reduce costs (see Note
8), and its expectations of future earnings, that operating income of the
Company will more likely than not be sufficient to realize the future benefits
of the amount classified as a net deferred tax asset. Future adverse changes in
market conditions, poor operating results or a decline in our projections about
future profitability may affect the Company assessment of the adequacy of the
reserve and, consequently, the net carrying value of net deferred tax assets.
In the event that the Company determines that it is more likely than not that
it would be unable to realize an additional portion of the net deferred tax
asset, an additional adjustment to the deferred tax asset valuation allowance
would be charged to income in the period such determination was made.

During the second and third quarters, the Company determined that the reduced
level of orders received in the first quarter would likely continue for the
rest of the year and possibly through 2004 as well. In the second quarter the
Company announced a Voluntary Severance Program in addition to other measures
that include voluntary part-time work and voluntary sabbaticals. Under the
program, employees who voluntarily terminated their employment with the Company
were paid six months of severance pay. During the second quarter, nearly 500
employees accepted this offer. Approximately 25% of the workforce severed
their employment in June and July. Including employer taxes, the Company
incurred approximately $7.8 million in severance costs during the second
quarter.

During the third quarter, the Company elected to further reduce expenses and
head count through a non-voluntary reduction in force. In September, the
Company laid off an additional 160 employees. These employees were given six
months of severance pay in addition to a variety of outplacement service
benefits to help them locate new employment. The Company incurred
approximately $2.6 million of severance costs in the

13



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##### Table of Contents



third quarter related to this reduction in force. In addition to the severance
costs, the Company incurred additional pension settlement costs of
approximately $2 million and is anticipated to record another $1 million during
the fourth quarter.

As a result of the hiring freeze and the voluntary and involuntary severance
programs, the Company anticipates spending on salaries and wages in 2004 to
decrease by approximately $22 million compared to 2002, with 2003 being a
transition year. In addition to the reduction in salaries, the Company
anticipates it will save the related costs for retirement, health, and welfare
benefits.

Financial Condition:

Net cash (used in) provided by operating activities for the nine months ended
October 31, 2003 was ($2,926,000) compared to $13,332,000 for the same period
last year. The increase in cash used in operating activities was primarily due
to a large operating loss combined with an increase in accounts and income tax receivable,
offset by a reduction in inventory.

As a result of seasonally higher sales in the third quarter, accounts
receivable increased by $7,384,000 compared to the year-ended January 31, 2003.
In the prior year, accounts receivable increased by $8,072,000 in the same
period. In response to the reduction in orders, the Company substantially
reduced levels of production in the third quarter by 51% compared to the prior
year. Although the reduced production caused the Company to incur unfavorable
manufacturing variances, the inventory levels were reduced by nearly $17
million compared to January 31, 2003 and by more that $10 million compared to
October 31, 2002.

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
nine-month period ended October 31, 2003, was $943,000 compared to $2,700,000
for the same period last year. Capital expenditures were financed through the
credit facility established with Wells Fargo Bank and operating cash flow.

Subsequent to the end of the quarter, the Company sold its former manufacturing
facility in Gardena, California, which had been held as rental property.
Rental revenue for the 9 months ended October 31, 2003 was approximately
$425,000. The sale generated approximately $5.8 million of cash and a $5.5
million pre-tax gain.

To facilitate the Companys seasonal working capital requirements, beginning
June 1, 2003, the credit facility with Wells Fargo Bank increased from
$60,000,000 to $70,000,000. This line of credit decreases to $60,000,000 on
September 1, 2003 and to $40,000,000 effective November 1, 2003.

As of October 31, 2003, the Company violated certain debt covenants relating to
its revolving line of credit with Wells Fargo Bank. In December 2003 Wells
Fargo provided the Company with a waiver of these covenants. However, based on
managements forecast for operating results for the remainder of the year, it
is considered to be more likely than not that the Company will violate the loan
covenants in the fourth quarter ending January 31, 2004. Accordingly, the
debt has been classified as a current liability on the October 31, 2003 balance
sheet. The Company is currently negotiating with Wells Fargo to restructure
the credit facility so that the Company will comply with the quarterly debt
covenants and have adequate liquidity for the next twelve months. No assurance
can be given that such negotiations will be successful. If they are not, the
Company would be in default with the bank, which could significantly affect its
liquidity. If additional sources of financing are not available, the Company
plans to continue to implement measures to conserve cash or reduce costs.

14



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##### Table of Contents



In April 1998, the Board of Directors approved a stock buyback program. As of
October 31, 2003, the Company has repurchased approximately 1,454,000 shares at
a cost of approximately $18,788,000 since the inception of this program. 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. Under the current Wells
Fargo line, the Company must limit stock buyback activity to $250,000 for the
period between June 4, 2003 and December 1, 2003.

The Company believes that upon the successful completion of the refinancing or
restructuring of the Wells Fargo line of credit, funds available under the
restructured or refinanced line, together with cashflows from operations, 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
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, risks and uncertainties
relating to the Companys ability to refinance or restructure its credit line
with Wells Fargo Bank; material availability and cost of materials, especially
steel; the 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, 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 was $30,000,000 for the
period February 22, 2000 through February 28, 2001. The

15



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##### Table of Contents



notional swap amount then decreased to $20,000,000 until the end of the swap
agreement, March 3, 2003. The swap agreement was 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 October 31, 2003, the Company had borrowed $32,925,000 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
$117,000 and $383,000 for the fiscal quarter and nine months ended October 31,
2003, respectively. 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

(a)  Evaluation of Disclosure 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.

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
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 our Companys disclosure
controls and procedures are effective in alerting them in a timely fashion to
material information relating to the Company (including its consolidated
subsidiaries) required to be included in the Companys periodic filings with
the Securities Exchange Commission.

(b)  Changes In Internal Control Over Financial Reporting

No changes in our internal control over financial reporting have come to
managements attention during the last fiscal quarter that have materially
affected, or are reasonably likely to materially affect, our internal control
over financial reporting.

16



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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                                                                                                                                                                                 
|       
|        |  | (a) 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.                    
|       
|        |  | (b) Reports on Form 8-K                                                                                                                                                                                          
|       
|        |  | On December 15, 2003, we filed a Current Report on Form 8-K in which
we furnished, pursuant to Item 5, our interim report on the Companys
third quarter results.                                                

17



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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: December 15, 2003 | By:                    | /s/ Robert E. Dose                     
|                        |                       
|                        |                        | Robert E. Dose
Vice President  Finance

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