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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, 2011
 OR
 o
    
    Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the transition period from to
 Commission File number 1-8777
 VIRCO MFG. CORPORATION
  Delaware
    
    95-1613718(State or Other Jurisdiction of
    
    (I.R.S. EmployerIncorporation or Organization)
    
    Identification No.)
 2027 Harpers Way, Torrance, CA
    
    90501(Address of Principal Executive Offices)
    
    (Zip Code)
  
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 o þ




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VIRCO MFG. CORPORATION
 INDEX
 Part I. Financial InformationItem 1. Financial Statements
    
    
    3Condensed consolidated balance sheets  April 30, 2011, January 31, 2011 and April 30, 2010
    
    
    3Unaudited condensed consolidated statements of operations  Three months ended April 30, 2011 and 2010
    
    
    5Unaudited condensed consolidated statements of cash flows  Three months ended April 30, 2011 and 2010
    
    
    6Notes to unaudited condensed consolidated financial statements  April 30, 2011
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    11Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    12Item 4. Controls and Procedures
    
    
    12Part II. Other InformationItem 1. Legal Proceedings
    
    
    14Item 1A. Risk Factors
    
    
    14Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    14Item 6. Exhibits
    
    
    14EX-10.1EX-10.2EX-31.1EX-31.2EX-32.1
  
 
 
 
 
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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 VIRCO MFG. CORPORATION
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 4/30/2011
    
    
    1/31/2011
    
    
    4/30/2010(In thousands, except share data)Unaudited (Note 1)
    
    
    
    
    
    
    Unaudited (Note 1)AssetsCurrent assetsCash
    
    $
    768
    
    
    $
    1,529
    
    
    $
    1,080Trade accounts receivables, net
    
    
    10,038
    
    
    
    10,462
    
    
    
    13,468Other receivables
    
    
    51
    
    
    
    168
    
    
    
    40Income tax receivable
    
    
    345
    
    
    
    367
    
    
    
    273InventoriesFinished goods, net
    
    
    13,926
    
    
    
    9,617
    
    
    
    15,840Work in process, net
    
    
    24,796
    
    
    
    13,773
    
    
    
    27,900Raw materials and supplies, net
    
    
    12,778
    
    
    
    11,980
    
    
    
    14,01251,500
    
    
    
    35,370
    
    
    
    57,752Deferred tax assets, net
    
    
    
    
    
    
    
    
    
    
    1,947Prepaid expenses and other current assets
    
    
    2,020
    
    
    
    1,619
    
    
    
    1,942Total current assets
    
    
    64,722
    
    
    
    49,515
    
    
    
    76,502Property, plant and equipmentLand and land improvements
    
    
    3,108
    
    
    
    3,108
    
    
    
    3,329Buildings and building improvements
    
    
    47,797
    
    
    
    47,797
    
    
    
    47,796Machinery and equipment
    
    
    119,598
    
    
    
    118,799
    
    
    
    117,063Leasehold improvements
    
    
    2,699
    
    
    
    2,699
    
    
    
    2,688173,202
    
    
    
    172,403
    
    
    
    170,876Less accumulated depreciation and amortization
    
    
    131,637
    
    
    
    130,342
    
    
    
    127,132Net property, plant and equipment
    
    
    41,565
    
    
    
    42,061
    
    
    
    43,744Deferred tax assets, net
    
    
    2,596
    
    
    
    2,605
    
    
    
    10,546Other assets
    
    
    6,407
    
    
    
    6,407
    
    
    
    6,310Total assets
    
    $
    115,290
    
    
    $
    100,588
    
    
    $
    137,102
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VIRCO MFG. CORPORATION
 CONDENSED CONSOLIDATED BALANCE SHEETS
 4/30/2011
    
    
    1/31/2011
    
    
    4/30/2010(In thousands, except share data)Unaudited (Note 1)
    
    
    
    
    
    
    Unaudited (Note 1)LiabilitiesCurrent liabilitiesChecks released but not yet cleared bank
    
    $
    1,976
    
    
    $
    1,154
    
    
    $
    4,172Accounts payable
    
    
    13,573
    
    
    
    8,382
    
    
    
    12,966Accrued compensation and employee benefits
    
    
    4,256
    
    
    
    3,946
    
    
    
    4,179Current portion of long-term debt
    
    
    11,652
    
    
    
    12
    
    
    
    14,742Deferred Tax Liability
    
    
    1,398
    
    
    
    1,398
    
    
    
    Other accrued liabilities
    
    
    6,204
    
    
    
    5,125
    
    
    
    5,638Total current liabilities
    
    
    39,059
    
    
    
    20,017
    
    
    
    41,697Non-current liabilitiesAccrued self-insurance retention and other
    
    
    5,568
    
    
    
    4,924
    
    
    
    5,767Accrued pension expenses
    
    
    17,942
    
    
    
    18,027
    
    
    
    17,439Income tax payable
    
    
    731
    
    
    
    722
    
    
    
    1,134Long-term debt, less current portion
    
    
    7,500
    
    
    
    6,496
    
    
    
    7,532Total non-current liabilities
    
    
    31,741
    
    
    
    30,169
    
    
    
    31,872Commitments and contingenciesStockholders equityPreferred stock:Authorized 3,000,000 shares, $.01 par value;
none issued or outstanding Common stock:Authorized 25,000,000 shares, $.01 par
value; issued 14,204,998 at 04/30/2011,
14,204,998 shares at 01/31/2011 and
14,121,004 at 04/30/2010
    
    
    142
    
    
    
    142
    
    
    
    142Additional paid-in capital
    
    
    114,109
    
    
    
    114,467
    
    
    
    114,201Accumulated deficit
    
    
    (60,019
    )
    
    
    (54,465
    )
    
    
    (41,239
    )Accumulated other comprehensive loss
    
    
    (9,742
    )
    
    
    (9,742
    )
    
    
    (9,571
    )Total stockholders equity
    
    
    44,490
    
    
    
    50,402
    
    
    
    63,533Total liabilities and stockholders equity
    
    $
    115,290
    
    
    $
    100,588
    
    
    $
    137,102
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VIRCO MFG. CORPORATION
 
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
  Three months ended4/30/2011
    
    
    4/30/2010(In thousands, except share data)Net sales
    
    $
    24,256
    
    
    $
    24,860Costs of goods sold
    
    
    17,478
    
    
    
    18,589Gross profit
    
    
    6,778
    
    
    
    6,271Selling, general, administrative & other expenses
    
    
    11,936
    
    
    
    12,532Interest expense
    
    
    214
    
    
    
    233Loss before income taxes
    
    
    (5,372
    )
    
    
    (6,494
    )Income tax
expense (benefit)
    
    
    28
    
    
    
    (1,413
    )Net loss
    
    $
    (5,400
    )
    
    $
    (5,081
    )Net loss per common share
Basic and diluted
    
    $
    (0.38
    )
    
    $
    (0.36
    )Weighted average shares outstanding
Basic and diluted
    
    
    14,205
    
    
    
    14,157Dividend declared per common shareCash
    
    $
    0.05
    
    
    $
    0.05
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VIRCO MFG. VIRCO MFG. CORPORATION
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
  Three months ended4/30/2011
    
    
    4/30/2010(In thousands)Operating activitiesNet loss
    
    $
    (5,400
    )
    
    $
    (5,081
    )Adjustments to reconcile net loss to net cash used in operating activitiesDepreciation and amortization
    
    
    1,299
    
    
    
    1,371Provision for doubtful accounts
    
    
    15
    
    
    
    15Deferred income taxes
    
    
    18
    
    
    
    (1,413
    )Stock based compensation
    
    
    199
    
    
    
    200Changes in operating assets and liabilitiesTrade accounts receivable
    
    
    409
    
    
    
    644Other receivables
    
    
    117
    
    
    
    101Inventories
    
    
    (16,130
    )
    
    
    (14,163
    )Income taxes
    
    
    22
    
    
    
    (14
    )Prepaid expenses and other assets
    
    
    (401
    )
    
    
    (483
    )Accounts payable and accrued liabilities
    
    
    7,609
    
    
    
    4,691Net cash used in operating activities
    
    
    (12,243
    )
    
    
    (14,132
    )Investing activitiesCapital expenditures
    
    
    (803
    )
    
    
    (679
    )Net cash used in investing activities
    
    
    (803
    )
    
    
    (679
    )Financing activitiesIssuance of debt
    
    
    12,644
    
    
    
    15,353Repayment of debt
    
    
    (3
    )
    
    
    (3
    )Cash dividends paid
    
    
    (356
    )
    
    
    (354
    )Repurchase of common stock
    
    
    
    
    
    
    (150
    )Net cash provided by financing activities
    
    
    12,285
    
    
    
    14,846Net (decrease) increase in cash
    
    
    (761
    )
    
    
    35Cash at beginning of period
    
    
    1,529
    
    
    
    1,045Cash at end of period
    
    $
    768
    
    
    $
    1,080Non cash disclosures:Cash dividends declared but not paid
    
    $
    355
    
    
    $
    352
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VIRCO MFG. CORPORATION
 
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 April 30, 2011
 Note 1. Basis of Presentation
  Note 2. Seasonality
    Note 3. New Accounting Standards
  Note 4. Inventories
   Note 5. Debt
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Note 6. Income Taxes
    Note 7. Net Loss per Share
 Three Months Ended4/30/2011
    
    
    4/30/2010(In thousands, except per share data)Numerators:Numerator for both basic and diluted net loss per share
    
    $
    (5,400
    )
    
    $
    (5,081
    )Denominators:Denominator for basic net loss per share weighted-average common shares outstanding
    
    
    14,205
    
    
    
    14,157Potentially dilutive shares from stock option plans
    
    
    
    
    
    
    Denominator for diluted net loss per share
    
    
    14,205
    
    
    
    14,157Net loss per share  basic and diluted
    
    $
    (0.38
    )
    
    $
    (0.36
    )
  Note 8. Stock Based Compensation
 Stock Incentive Plans
   8




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Restricted Stock and Stock Unit Awards
 Accounting for the Plans
  UnrecognizedExpense for 3 months ended
    
    
    Compensation Cost at4/30/2011
    
    
    4/30/2010
    
    
    4/30/20112007 Plan56,455 Grants of
Restricted Stock,
issued 6/8/2010,
vesting over 1 year
    
    $
    43,000
    
    
    $
    
    
    
    $
    15,000382,500 Restricted
Stock Units, issued
6/16/2009, vesting
over 5 years
    
    
    67,000
    
    
    
    67,000
    
    
    
    826,00049,854 Restricted
Stock Units, issued
6/16/2009, vesting
over 1 year
    
    
    
    
    
    
    44,000
    
    
    
    262,500 Restricted
Stock Units, issued
6/19/2007, vesting
over 5 years
    
    
    89,000
    
    
    
    89,000
    
    
    
    386,000Totals for the period
    
    $
    199,000
    
    
    $
    200,000
    
    
    $
    1,227,000
 Stockholders Rights
  Note 9. Comprehensive Loss and Stockholders Equity
   Note 10. Retirement Plans
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Three Months Ended April 30,Non-Employee DirectorsEmployees Retirement Plan
    
    
    VIP Retirement Plan
    
    
    Retirement Plan2011
    
    
    2010
    
    
    2011
    
    
    2010
    
    
    2011
    
    
    2010Service cost
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Interest cost
    
    
    360
    
    
    
    352
    
    
    
    95
    
    
    
    87
    
    
    
    6
    
    
    
    6Expected return on plan assets
    
    
    (289
    )
    
    
    (262
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization of prior service cost
    
    
    
    
    
    
    
    
    
    
    13
    
    
    
    (
    )
    
    
    
    
    
    
    Recognized net actuarial (gain)
or loss
    
    
    262
    
    
    
    243
    
    
    
    
    
    
    
    
    
    
    
    (10
    )
    
    
    (7
    )Net periodic pension cost
    
    $
    333
    
    
    $
    333
    
    
    $
    108
    
    
    $
    87
    
    
    $
    (4
    )
    
    $
    (1
    )
 Note 11. Warranty
   April 30,2011
    
    
    2010Beginning balance
    
    $
    2,300
    
    
    $
    1,675Provision
    
    
    82
    
    
    
    192Costs incurred
    
    
    (232
    )
    
    
    (192
    )Ending balance
    
    $
    2,150
    
    
    $
    1,675
 Note 12. Subsequent Events
  10




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VIRCO MFG. CORPORATION
 
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Results of Operations
    ,
   Liquidity and Capital Resources
      Off Balance Sheet Arrangements
  11




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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
  ,
 12




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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 2. Unregistered Sales of Equity Securities and Use of Proceeds
  Total Number of SharesPurchased as Part of a
    
    
    Maximum Number of $ thatTotal Number of Shares
    
    
    Average Price Paid Per
    
    
    Publicly Announced
    
    
    May Yet Be Expended UnderPurchased
    
    
    Share
    
    
    Program (1)
    
    
    the Program (1)February 1, 2011 through February
28, 2011
    
    
    
    
    
    
    
    
    
    
    591,386
    
    
    
    1,053,000March 1, 2011 through March 31, 2011
    
    
    
    
    
    
    
    
    
    
    591,386
    
    
    
    1,053,000April 1, 2011 through April 30, 2011
    
    
    
    
    
    
    
    
    
    
    591,386
    
    
    
    1,053,000
 
 (1)
    
    On June 6, 2008, the Board of Directors approved a $3,000,000 share repurchase program. 
 Item 6. Exhibits
      14




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VIRCO MFG. CORPORATION
 SIGNATURES
  VIRCO MFG. CORPORATIONDate: June 9, 2011
    By:
    /s/ Robert E. DoseRobert E. DoseVice President  Finance 15