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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the quarterly period ended April 30, 2008
 OR
 o
    
    Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the transition period from  to
 Commission File number 1-8777
 VIRCO MFG. CORPORATION
  Delaware
    
    95-1613718(State or Other Jurisdiction of 
Incorporation or Organization)
    
    (I.R.S. Employer
Identification No.)2027 Harpers Way, Torrance, CA
    
    90501(Address of Principal Executive Offices)
    
    (Zip Code)
 (310) 533-0474
   þ o
  Large accelerated filer
o
    
    Accelerated filer
þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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VIRCO MFG. CORPORATION
 INDEX
  
 Part I. Financial InformationItem 1. Financial StatementsCondensed consolidated balance sheets  April 30, 2008, January 31, 2008 and April 30, 2007Unaudited condensed consolidated statements of operations  Three months ended April 30, 2008 and 2007Unaudited condensed consolidated statements of cash flows   Three months ended April 30, 2008 and 2007Notes to unaudited condensed consolidated financial statements  April 30, 2008Item 2. Managements Discussion and Analysis of Financial Condition and Results of OperationsItem 3. Quantitative and Qualitative Disclosures about Market RiskItem 4. Controls and ProceduresPart II. Other InformationItem 1. Legal ProceedingsItem 6. ExhibitsEXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1
     2




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PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 VIRCO MFG. CORPORATION
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 4/30/2008
    
    1/31/2008
    
    4/30/2007(In thousands, except share data)Unaudited (Note 1)
    
    
    
    
    
    Unaudited (Note 1)AssetsCurrent assets:Cash
    
    $
    1,487
    
    
    $
    2,066
    
    
    $
    1,523Trade accounts receivable
    
    
    13,115
    
    
    
    15,674
    
    
    
    14,133Less allowance for doubtful accounts
    
    
    224
    
    
    
    200
    
    
    
    20812,891
    
    
    
    15,474
    
    
    
    13,925Net trade accounts receivableOther receivables
    
    
    86
    
    
    
    284
    
    
    
    85InventoriesFinished goods, net
    
    
    25,026
    
    
    
    14,564
    
    
    
    20,443Work in process, net
    
    
    27,631
    
    
    
    20,653
    
    
    
    25,376Raw materials and supplies, net
    
    
    10,412
    
    
    
    7,791
    
    
    
    7,03163,069
    
    
    
    43,008
    
    
    
    52,850Deferred tax assets, net
    
    
    5,880
    
    
    
    4,189
    
    
    
    Prepaid expenses and other current assets
    
    
    1,755
    
    
    
    1,493
    
    
    
    1,767Total current assets
    
    
    85,168
    
    
    
    66,514
    
    
    
    70,150Property, plant and equipment:Land and land improvements
    
    
    3,626
    
    
    
    3,612
    
    
    
    3,596Buildings and building improvements
    
    
    49,558
    
    
    
    49,558
    
    
    
    49,555Machinery and equipment
    
    
    115,074
    
    
    
    114,286
    
    
    
    110,607Leasehold improvements
    
    
    1,477
    
    
    
    1,475
    
    
    
    1,338169,735
    
    
    
    168,931
    
    
    
    165,096Less accumulated depreciation and amortization
    
    
    123,986
    
    
    
    122,598
    
    
    
    117,728Net property, plant and equipment
    
    
    45,749
    
    
    
    46,333
    
    
    
    47,368Goodwill and other intangible assets
    
    
    2,350
    
    
    
    2,350
    
    
    
    2,350Less accumulated amortization
    
    
    56
    
    
    
    52
    
    
    
    42Net goodwill and other intangible assets
    
    
    2,294
    
    
    
    2,298
    
    
    
    2,308Deferred tax assets, net
    
    
    5,652
    
    
    
    5,652
    
    
    
    Other assets
    
    
    6,238
    
    
    
    6,238
    
    
    
    5,846Total assets
    
    $
    145,101
    
    
    $
    127,035
    
    
    $
    125,672
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VIRCO MFG. CORPORATION
 CONDENSED CONSOLIDATED BALANCE SHEETS
 4/30/2008
    
    1/31/2008
    
    4/30/2007(In thousands, except share data)Unaudited (Note 1)
    
    
    
    
    
    Unaudited (Note 1)LiabilitiesCurrent liabilities:Checks released but not yet cleared bank
    
    $
    1,943
    
    
    $
    4,163
    
    
    $
    1,664Accounts payable
    
    
    13,424
    
    
    
    14,313
    
    
    
    13,414Accrued compensation and employee benefits
    
    
    5,524
    
    
    
    7,762
    
    
    
    5,860Current portion of long-term debt
    
    
    9,152
    
    
    
    74
    
    
    
    5,074Other accrued liabilities
    
    
    8,949
    
    
    
    8,206
    
    
    
    6,367Total current liabilities
    
    
    38,992
    
    
    
    34,518
    
    
    
    32,379Non-current liabilities:Accrued self-insurance retention and other
    
    
    4,745
    
    
    
    3,848
    
    
    
    4,911Accrued pension expenses
    
    
    13,956
    
    
    
    12,749
    
    
    
    16,248Long-term debt, less current portion
    
    
    20,097
    
    
    
    3,772
    
    
    
    25,866Total non-current liabilities
    
    
    38,798
    
    
    
    20,369
    
    
    
    47,025Deferred income taxes, net
    
    
    
    
    
    
    
    
    
    
    260Commitments and contingenciesStockholders equity:Preferred stockAuthorized 3,000,000 shares, $.01 par value; none
issued or outstandingCommon stockAuthorized 25,000,000 shares, $.01 par value;
issued 14,428,662 shares at 4/30/2008 and
1/31/2008, and 14,379,506 shares at 4/30/2007
    
    
    144
    
    
    
    144
    
    
    
    143Additional paid-in capital
    
    
    114,517
    
    
    
    114,318
    
    
    
    113,847Accumulated deficit
    
    
    (42,260
    )
    
    
    (37,224
    )
    
    
    (60,416
    )Accumulated comprehensive loss
    
    
    (5,090
    )
    
    
    (5,090
    )
    
    
    (7,566
    )Total stockholders equity
    
    
    67,311
    
    
    
    72,148
    
    
    
    46,008Total liabilities and stockholders equity
    
    $
    145,101
    
    
    $
    127,035
    
    
    $
    125,672
  4




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VIRCO MFG. CORPORATION
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
  Three months ended4/30/2008
    
    4/30/2007(In thousands, except share data)Net sales
    
    $
    29,194
    
    
    $
    31,122Costs of goods sold
    
    
    19,641
    
    
    
    19,572Gross profit
    
    
    9,553
    
    
    
    11,550Selling, general, administrative & other expenses
    
    
    13,791
    
    
    
    13,986Interest expense
    
    
    309
    
    
    
    544Loss before income taxes
    
    
    (4,547
    )
    
    
    (2,980
    )Provision for income taxes
    
    
    (1,691
    )
    
    
    Net loss
    
    $
    (2,856
    )
    
    $
    (2,980
    )Net loss per common shareBasic and diluted
    
    $
    (0.20
    )
    
    $
    (0.21
    )Weighted average shares outstandingBasic and diluted
    
    
    14,429
    
    
    
    14,380Dividend per common shareCash
    
    $
    0.025
    
    
    $
    
   5




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VIRCO MFG. VIRCO MFG. CORPORATION
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
  Three months ended4/30/2008
    
    4/30/2007(In thousands)Operating activitiesNet loss
    
    $
    (2,856
    )
    
    $
    (2,980
    )Adjustments to reconcile net loss to net cash used in
operating activitiesDepreciation and amortization
    
    
    1,458
    
    
    
    1,730Provision for doubtful accounts
    
    
    20
    
    
    
    8Gain on sale of property, plant and equipment
    
    
    
    
    
    
    (17
    )Deferred income taxes
    
    
    (1,691
    )
    
    
    Stock based compensation
    
    
    200
    
    
    
    110Changes in operating assets and liabilitiesTrade accounts receivable
    
    
    2,563
    
    
    
    4,663Other receivables
    
    
    198
    
    
    
    143Inventories
    
    
    (20,061
    )
    
    
    (15,013
    )Income taxes
    
    
    42
    
    
    
    2Prepaid expenses and other current assets
    
    
    (262
    )
    
    
    (288
    )Accounts payable and accrued liabilities
    
    
    (4,374
    )
    
    
    (3,423
    )Net cash used in operating activities
    
    
    (24,763
    )
    
    
    (15,065
    )Investing activitiesCapital expenditures
    
    
    (860
    )
    
    
    (997
    )Proceeds from sale of property, plant and equipment
    
    
    
    
    
    
    17Net cash used in investing activities
    
    
    (860
    )
    
    
    (980
    )Financing activitiesIssuance of long-term debt
    
    
    25,422
    
    
    
    15,694Repayment of long-term debt
    
    
    (18
    )
    
    
    (18
    )Cash dividends paid
    
    
    (360
    )
    
    
    Net cash provided by financing activities
    
    
    25,044
    
    
    
    15,676Net decrease in cash
    
    
    (579
    )
    
    
    (369
    )Cash at beginning of year
    
    
    2,066
    
    
    
    1,892Cash at end of year
    
    $
    1,487
    
    
    $
    1,523Non cash disclosures:Increase to long term liabilities as a result of
the adoption of EITF 06-4
    
    $
    1,820
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VIRCO MFG. CORPORATION
 
 NOTES TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 April 30, 2008
 Note 1. Basis of Presentation
  Note 2. Seasonality
    Note 3. New Accounting Standards
   Effective Date of FASB Statement No.
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The Fair Value Option for Financial Assets and Financial
LiabilitiesIncluding an Amendment of FASB Statement No. 115.
   Note 4. Inventories
  Note 5. Debt
    8




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Note 6. Income Taxes
     Note 7. Net Loss per Share
 Three Months Ended4/30/2008
    
    4/30/2007(In thousands, except per share data)Numerators:Numerator for both basic and diluted net loss per share
    
    $
    (2,856
    )
    
    $
    (2,980
    )Denominators:
    
    
    14,429
    
    
    
    14,380Denominator for basic net loss per share weighted-average common shares outstandingPotentially dilutive shares from stock option plans
    
    
    
    
    
    
    Denominator for diluted net loss per share
    
    
    14,429
    
    
    
    14,380Net loss per
share  basic and diluted
    
    $
    (0.20
    )
    
    $
    (0.21
    )
  Note 8. Stock Based Compensation
  9




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Accounting for the Plans
  Restricted Stock and Stock Unit Awards
      UnrecognizedCompensationExpense for 3 months ended
    
    Cost at04/30/2008
    
    04/30/2007
    
    04/30/20082007 Stock Incentive Plan262,500 Restricted Stock Units
issued 6/19/2007, vesting over
5 years
    
    $
    89,000
    
    
    
    
    
    
    $
    1,453,00012,887 Grants of Restricted Stock
issued 6/19/2007, vesting over
1 year
    
    
    22,000
    
    
    
    
    
    
    
    7,0001997 Employee Incentive Stock Plan270,000 Restricted Stock Units
issued 6/30/2004, vesting over
5 years
    
    
    89,000
    
    
    
    88,000
    
    
    
    412,00017,640 Grants of Restricted Stock
issued 6/20/2006, vesting over
1 year
    
    
    
    
    
    
    22,000
    
    
    
    Totals for the period
    
    $
    200,000
    
    
    $
    110,000
    
    
    $
    1,872,000
 Stockholders Rights
  10




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Note 9. Comprehensive Income (Loss)
  Note 10. Retirement Plans
     Three Months Ended April 30,Employees Retirement
    
    
    
    
    
    
    
    
    
    Non-Employee DirectorsPlan

    
    VIP Retirement Plan
    
    Retirement Plan2008
    
    2007
    
    2008
    
    2007
    
    2008
    
    2007Service cost
    
    $
    
    
    
    $
    41
    
    
    $
    
    
    
    $
    50
    
    
    $
    5
    
    
    $
    6Interest cost
    
    
    388
    
    
    
    345
    
    
    
    90
    
    
    
    90
    
    
    
    8
    
    
    
    7Expected return on plan assets
    
    
    (300
    )
    
    
    (224
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization of transition amount
    
    
    
    
    
    
    (9
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization of prior service cost
    
    
    138
    
    
    
    117
    
    
    
    (80
    )
    
    
    (134
    )
    
    
    
    
    
    
    6Recognized net actuarial (gain) or loss
    
    
    50
    
    
    
    49
    
    
    
    40
    
    
    
    30
    
    
    
    (8
    )
    
    
    (7
    )Settlement and curtailment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net periodic pension cost
    
    $
    276
    
    
    $
    319
    
    
    $
    50
    
    
    $
    36
    
    
    $
    5
    
    
    $
    12
 Note 11. Warranty
   April 30,2008
    
    2007Beginning balance
    
    $
    1,750
    
    
    $
    1,750Provision
    
    
    543
    
    
    
    345Costs incurred
    
    
    (343
    )
    
    
    (245
    )Ending balance
    
    $
    1,950
    
    
    $
    1,850
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VIRCO MFG. CORPORATION
 
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Results of Operations
   ,
 ,
    .
   Off Balance Sheet Arrangements
  12




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




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PART II  OTHER INFORMATION
 VIRCO MFG. CORPORATION
 
 Item 1. Legal Proceedings
  Item 1A. Risk Factors
  
 Item 6. Exhibits
    14




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VIRCO MFG. CORPORATION
 
 SIGNATURES
  VIRCO MFG. CORPORATIONDate: June 6, 2008
    
    By:
    
    /s/ Robert E. Dose

Robert E. Dose
Vice President  Finance
 15