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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, 2010
 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)
  
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
(Do not check if a smaller reporting company)
    
    Smaller reporting company þ
 o þ




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##### 



VIRCO MFG. CORPORATION
  
 INDEX
 Part I. Financial InformationItem 1. Financial Statements
    
    
    3Condensed consolidated balance sheets  April 30, 2010, January 31, 2010 and April 30, 2009
    
    
    3Unaudited condensed consolidated statements of operations  Three months ended April 30, 2010 and 2009
    
    
    5Unaudited condensed consolidated statements of cash flows  Three months ended April 30, 2010 and 2009
    
    
    6Notes to unaudited condensed consolidated financial statements  April 30, 2010
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    12Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    13Item 4. Controls and Procedures
    
    
    13Part II. Other InformationItem 1. Legal Proceedings
    
    
    15Item 1A. Risk Factors
    
    
    15Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    15Item 6. Exhibits
    
    
    15Exhibit 10.1 Amendment No. 4 to Second Amended and Restated Credit Agreement, dated as of April
28, 2010, between Virco Mfg. Corporation and Wells Fargo Bank, National Association.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 - Certifications of Principal Executive Officer and Principal Financial Officer pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
  2




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PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 VIRCO MFG. CORPORATION
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 4/30/2010
    
    
    1/31/2010
    
    
    4/30/2009(In thousands, except share data)Unaudited (Note 1)
    
    
    
    
    
    
    Unaudited (Note 1)AssetsCurrent assetsCash
    
    $
    1,080
    
    
    $
    1,045
    
    
    $
    1,121Trade accounts receivables, net
    
    
    13,468
    
    
    
    14,127
    
    
    
    11,373Other receivables
    
    
    40
    
    
    
    141
    
    
    
    638Income tax receivable
    
    
    273
    
    
    
    259
    
    
    
    InventoriesFinished goods, net
    
    
    15,383
    
    
    
    10,683
    
    
    
    23,209Work in process, net
    
    
    24,325
    
    
    
    18,653
    
    
    
    17,785Raw materials and supplies, net
    
    
    11,125
    
    
    
    7,334
    
    
    
    7,96450,833
    
    
    
    36,670
    
    
    
    48,958Deferred tax assets, net
    
    
    4,534
    
    
    
    3,150
    
    
    
    5,751Prepaid expenses and other current assets
    
    
    1,942
    
    
    
    1,514
    
    
    
    2,192Total current assets
    
    
    72,170
    
    
    
    56,906
    
    
    
    70,033Property, plant and equipmentLand and land improvements
    
    
    3,329
    
    
    
    3,329
    
    
    
    3,387Buildings and building improvements
    
    
    47,796
    
    
    
    47,796
    
    
    
    47,888Machinery and equipment
    
    
    117,063
    
    
    
    116,425
    
    
    
    115,780Leasehold improvements
    
    
    2,688
    
    
    
    2,688
    
    
    
    1,911170,876
    
    
    
    170,238
    
    
    
    168,966Less accumulated depreciation and amortization
    
    
    127,132
    
    
    
    125,804
    
    
    
    124,614Net property, plant and equipment
    
    
    43,744
    
    
    
    44,434
    
    
    
    44,352Deferred tax assets, net
    
    
    10,546
    
    
    
    10,502
    
    
    
    9,390Other assets
    
    
    6,310
    
    
    
    6,258
    
    
    
    6,289Total assets
    
    $
    132,770
    
    
    $
    118,100
    
    
    $
    130,064
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VIRCO MFG. CORPORATION
 CONDENSED CONSOLIDATED BALANCE SHEETS
 4/30/2010
    
    
    1/31/2010
    
    
    4/30/2009(In thousands, except share data)Unaudited (Note 1)
    
    
    
    
    
    
    Unaudited (Note 1)LiabilitiesCurrent liabilitiesChecks released but not yet cleared bank
    
    $
    4,172
    
    
    $
    2,360
    
    
    $
    3,455Accounts payable
    
    
    12,966
    
    
    
    11,641
    
    
    
    11,511Accrued compensation and employee benefits
    
    
    4,179
    
    
    
    4,396
    
    
    
    4,246Current portion of long-term debt
    
    
    14,742
    
    
    
    12
    
    
    
    6,148Other accrued liabilities
    
    
    5,638
    
    
    
    4,517
    
    
    
    6,457Total current liabilities
    
    
    41,697
    
    
    
    22,926
    
    
    
    31,817Non-current liabilitiesAccrued self-insurance retention and other
    
    
    5,767
    
    
    
    4,918
    
    
    
    4,626Accrued pension expenses
    
    
    17,439
    
    
    
    17,286
    
    
    
    20,063Income tax payable
    
    
    1,134
    
    
    
    1,120
    
    
    
    1,161Long-term debt, less current portion
    
    
    7,532
    
    
    
    6,912
    
    
    
    10,039Total non-current liabilities
    
    
    31,872
    
    
    
    30,236
    
    
    
    35,889Commitments 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 14,121,004 at 04/30/2010,
14,163,044 shares at 01/31/2010 and
14,142,422 at 04/30/2009
    
    
    142
    
    
    
    142
    
    
    
    141Additional paid-in capital
    
    
    114,201
    
    
    
    114,152
    
    
    
    113,962Accumulated deficit
    
    
    (45,571
    )
    
    
    (39,785
    )
    
    
    (42,363
    )Accumulated other comprehensive loss
    
    
    (9,571
    )
    
    
    (9,571
    )
    
    
    (9,382
    )Total stockholders equity
    
    
    59,201
    
    
    
    64,938
    
    
    
    62,358Total liabilities and stockholders equity
    
    $
    132,770
    
    
    $
    118,100
    
    
    $
    130,064
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VIRCO MFG. CORPORATION
 
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
  Three months ended4/30/2010
    
    
    4/30/2009(In thousands, except share data)Net sales
    
    $
    24,860
    
    
    $
    27,049Costs of goods sold
    
    
    18,589
    
    
    
    18,749Gross profit
    
    
    6,271
    
    
    
    8,300Selling, general, administrative & other expenses
    
    
    12,532
    
    
    
    13,012Interest expense
    
    
    233
    
    
    
    175Loss before income taxes
    
    
    (6,494
    )
    
    
    (4,887
    )Income tax benefits
    
    
    (1,413
    )
    
    
    (1,900
    )Net loss
    
    $
    (5,081
    )
    
    $
    (2,987
    )Net loss per common shareBasic and diluted
    
    $
    (0.36
    )
    
    $
    (0.21
    )Weighted average shares outstandingBasic and diluted
    
    
    14,157
    
    
    
    14,231Dividend 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 ended4/30/2010
    
    
    4/30/2009(In thousands)Operating activitiesNet loss
    
    $
    (5,081
    )
    
    $
    (2,987
    )Adjustments to reconcile net loss to net cash used in
operating activitiesDepreciation and amortization
    
    
    1,371
    
    
    
    1,332Provision for doubtful accounts
    
    
    15
    
    
    
    40Deferred income taxes
    
    
    (1,413
    )
    
    
    (1,942
    )Stock based compensation
    
    
    200
    
    
    
    221Changes in operating assets and liabilitiesTrade accounts receivable
    
    
    644
    
    
    
    2,780Other receivables
    
    
    101
    
    
    
    37Inventories
    
    
    (14,163
    )
    
    
    (15,973
    )Income taxes
    
    
    (14
    )
    
    
    76Prepaid expenses and other assets
    
    
    (483
    )
    
    
    (534
    )Accounts payable and accrued liabilities
    
    
    4,691
    
    
    
    (636
    )Net cash used in operating activities
    
    
    (14,132
    )
    
    
    (17,586
    )Investing activitiesCapital expenditures
    
    
    (679
    )
    
    
    (1,070
    )Net cash used in investing activities
    
    
    (679
    )
    
    
    (1,070
    )Financing activitiesIssuance of debt
    
    
    15,353
    
    
    
    16,090Repayment of debt
    
    
    (3
    )
    
    
    (18
    )Cash dividends paid
    
    
    (354
    )
    
    
    (356
    )Repurchase of common stock
    
    
    (150
    )
    
    
    (326
    )Net cash provided by financing activities
    
    
    14,846
    
    
    
    15,390Net increase (decrease) in cash
    
    
    35
    
    
    
    (3,266
    )Cash at beginning of year
    
    
    1,045
    
    
    
    4,387Cash at end of year
    
    $
    1,080
    
    
    $
    1,121Non cash disclosures:Cash dividends declared but not paid
    
    $
    352
    
    
    $
    356
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VIRCO MFG. CORPORATION
 
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 April 30, 2010
 Note 1. Basis of Presentation
  Note 2. Seasonality
    Note 3. New Accounting Standards
  Note 4. Inventories
  Note 5. Debt
  7




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Note 6. Income Taxes
     Note 7. Net Loss per Share
 Three Months Ended4/30/2010
    
    
    4/30/2009(In thousands, except per share data)Numerators:Numerator for both basic and diluted net loss per share
    
    $
    (5,081
    )
    
    $
    (2,987
    )Denominators:Denominator for basic net loss per share
weighted-average
common shares outstanding
    
    
    14,157
    
    
    
    14,231Potentially dilutive shares from stock option plans
    
    
    
    
    
    
    Denominator for diluted net loss per share
    
    
    14,157
    
    
    
    14,231Net loss per share  basic and diluted
    
    $
    (0.36
    )
    
    $
    (0.21
    )
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Note 8. Stock Based Compensation
 Stock Incentive Plans
    Restricted Stock and Stock Unit Awards
 Accounting for the Plans
  UnrecognizedCompensationExpense for 3 months ended
    
    
    Cost at4/30/2010
    
    
    1/31/2010
    
    
    4/30/2009
    
    
    4/30/20102007 Plan382,500 Restricted Stock Units,
issued
6/16/2009, vesting over 5 years
    
    $
    67,000
    
    
    $
    178,000
    
    
    
    
    
    
    $
    1,093,00049,854 Restricted Stock Units, issued
6/16/2009, vesting over 1 year
    
    
    44,000
    
    
    
    116,000
    
    
    
    
    
    
    
    14,000262,500 Restricted Stock Units,
issued
6/19/2007, vesting over 5 years
    
    
    89,000
    
    
    
    357,000
    
    
    $
    89,000
    
    
    
    743,00035,644 Grants of Restricted Stock,
issued 6/17/2008, vesting over 1 year
    
    
    
    
    
    
    58,000
    
    
    
    44,000
    
    
    
    1997 Plan270,000 Restricted Stock Units,
issued
6/30/2004, vesting over 5 years
    
    
    
    
    
    
    147,000
    
    
    
    88,000
    
    
    
    Totals for the period
    
    $
    200,000
    
    
    $
    856,000
    
    
    $
    221,000
    
    
    $
    1,850,000
 Stockholders Rights
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Note 9. Comprehensive Loss and Stockholders Equity
   Note 10. Retirement Plans
     Three Months Ended April 30,Non-Employee DirectorsEmployees Retirement Plan
    
    VIP Retirement Plan
    
    Retirement Plan2010
    
    2009
    
    2010
    
    2009
    
    2010
    
    2009Service cost
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Interest cost
    
    
    352
    
    
    
    367
    
    
    
    87
    
    
    
    85
    
    
    
    6
    
    
    
    7Expected return on plan assets
    
    
    (262
    )
    
    
    (179
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization of prior service cost
    
    
    
    
    
    
    128
    
    
    
    
    
    
    
    (79
    )
    
    
    
    
    
    
    Recognized net actuarial (gain)
or loss
    
    
    243
    
    
    
    231
    
    
    
    
    
    
    
    24
    
    
    
    (7
    )
    
    
    (46
    )Net periodic pension cost
    
    $
    333
    
    
    $
    547
    
    
    $
    87
    
    
    $
    30
    
    
    $
    (1
    )
    
    $
    (39
    )
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Note 11. Warranty
   April 30,2010
    
    
    2009Beginning balance
    
    $
    1,675
    
    
    $
    1,950Provision
    
    
    192
    
    
    
    301Costs incurred
    
    
    (192
    )
    
    
    (301
    )Ending balance
    
    $
    1,675
    
    
    $
    1,950
 Note 12. Subsequent Events
  11




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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
  Critical Accounting Policies and Estimates
 12




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Forward-Looking Statements
   
 Item 3. Quantitative and Qualitative Disclosures about Market Risk
      
 Item 4. Controls and Procedures
 Disclosure Controls and Procedures
  ,
 13




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Internal Control over Financial Reporting
  14




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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
    
    Maximum Number of $Shares Purchased as
    
    that May Yet BeTotal Number of
    
    Average Price Paid
    
    Part of a Publicly
    
    Expended Under theShares Purchased
    
    Per Share
    
    Announced Program (1)
    
    Program (1)February 1, 2010
through February
28, 2010
    
    
    
    
    
    
    
    
    
    
    491,502
    
    
    
    1,398,000March 1, 2010
through March 31,
2010
    
    
    
    
    
    
    
    
    
    
    491,502
    
    
    
    1,398,000April 1, 2010
through April 30,
2010
    
    
    42,040
    
    
    
    3.59
    
    
    
    533,542
    
    
    
    1,247,000
 
 (1)
    
    On June 6, 2008, the Board of Directors approved a $3,000,000 share repurchase program. 
 Item 6. Exhibits
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VIRCO MFG. CORPORATION
 SIGNATURES
  VIRCO MFG. CORPORATIONDate: June 7, 2010
    By:
    /s/ Robert E. DoseRobert E. DoseVice President  Finance 16