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SECURITIES AND EXCHANGE COMMISSION  Quarterly Report under Section 13 or 15(d)
of the Securities Exchange Act of 1934 FORM 10-Q For Quarter Ended
    
    April 30, 2004
    
    Commission File Number
    
    1-8777
 VIRCO MFG. CORPORATION   Delaware
    
    95-1613718(State or other jurisdiction of
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)2027 Harpers Way, Torrance, CA
    
    90501(Address of principal executive offices)
    
    (Zip Code)
 Registrants telephone number, including area code:
    
    (310) 533-0474
 No change   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 May 24, 2004. Common Stock
    
    
    
    13,095,801 Shares




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VIRCO MFG. CORPORATION  
 INDEX Part I. Financial InformationItem 1.
    
    Financial Statements (unaudited)Condensed consolidated balance sheets - April 30, 2004 and January 31, 2004Condensed consolidated statements of operations - Three months ended April 30,
2004 and 2003Condensed consolidated statements of cash flows - Three months ended
April 30, 2004 and 2003Notes to condensed consolidated financial statements - April 30, 2004Item 2.
    
    Managements Discussion and Analysis of Financial Condition
and Results of OperationsItem 3.
    
    Quantitative and Qualitative Disclosures about Market Risk.Item 4.
    
    Controls and ProceduresPart II. Other InformationItem 1.
    
    Legal ProceedingsItem 2.
    
    Changes in Securities and Use of ProceedsItem 3.
    
    Defaults Upon Senior SecuritiesItem 4.
    
    Submission of Matters to a Vote of Security HoldersItem 5.
    
    Other InformationItem 6.
    
    Exhibits and Reports on Form 8-K(a) ExhibitsExhibit 31.1  Certification of Robert A. Virtue, President, pursuant
to Rules 13a-14 and 15d-14 of the Securities Exchange Act, as adopted
pursuant to section 302 of the Sarbanes-Oxley Act of 2002Exhibit 31.2  Certification of Robert E. Dose, Vice President,
Finance, pursuant to Rules 13a-14 and 15d-14 of the Securities
Exchange Act, as adopted pursuant to section 302 of the
Sarbanes-Oxley Act of 2002Exhibit 32.1  Certification of Chief Executive Officer and Chief
Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 2




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(b) Reports on Form 8-KOn April 14, 2004, Virco Mfg. Corporation filed a Current Report on
Form 8-K pursuant to Item 5, our interim
report on the Companys financial results for the fourth quarter and
fiscal year ended January 31, 2004.On June 7, 2004, Virco Mfg. Corporation filed a Current Report on
Form 8-K pursuant to Item 5, our interim
report on the Companys financial results for the first quarter ended April 30, 2004.SignaturesExhibit 31.1Exhibit 31.2Exhibit 32.1
  3




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PART 1 
 Item 1. Financial Statements VIRCO MFG. CORPORATION 
 CONDENSED CONSOLIDATED BALANCE SHEETS 4/30/2004
    
    1/31/2004Unaudited (Note 1)ASSETSCurrent assetsCash
    
    $
    830
    
    
    $
    2,059Accounts and notes receivable
    
    
    13,618
    
    
    
    17,696Less allowance for doubtful accounts
    
    
    297
    
    
    
    225Net accounts and notes receivable
    
    
    13,321
    
    
    
    17,471Income tax receivable
    
    
    1,117
    
    
    
    1,423Inventories (Note 2)Finished goods
    
    
    21,670
    
    
    
    10,470Work in process
    
    
    19,414
    
    
    
    11,141Raw materials and supplies
    
    
    6,305
    
    
    
    6,860Total inventories
    
    
    47,389
    
    
    
    28,471Prepaid expenses
    
    
    956
    
    
    
    1,962Total current assets
    
    
    63,613
    
    
    
    51,386Property, plant & equipmentCost
    
    
    157,917
    
    
    
    157,271Less accumulated depreciation
    
    
    96,356
    
    
    
    93,913Net property, plant & equipment
    
    
    61,561
    
    
    
    63,358Goodwill and other intangible assets
    
    
    2,348
    
    
    
    2,350Other assets
    
    
    9,174
    
    
    
    9,174Total assets
    
    $
    136,696
    
    
    $
    126,268
 4




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##### Table of Contents



VIRCO MFG. CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS 4/30/2004
    
    1/31/2004Unaudited (Note 1)LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilitiesChecks released but not yet cleared bank
    
    $
    2,379
    
    
    $
    2,702Accounts payable
    
    
    13,104
    
    
    
    9,513Accrued compensation and employee benefits
    
    
    5,057
    
    
    
    5,636Current maturities on long-term debt
    
    
    11,764
    
    
    
    3,138Other current liabilities
    
    
    4,780
    
    
    
    4,993Total current liabilities
    
    
    37,084
    
    
    
    25,982Non-current liabilitiesAccrued self-insurance retention and other
    
    
    4,149
    
    
    
    4,053Accrued pension expenses
    
    
    12,295
    
    
    
    11,686Long term debt (less current portion)
    
    
    25,417
    
    
    
    22,195Total non-current liabilities
    
    
    41,861
    
    
    
    37,934Stockholders equityPreferred 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 shares issued
at 4/30/2004 and 1/31/2004
    
    
    146
    
    
    
    146Additional paid-in capital
    
    
    127,133
    
    
    
    127,133Accumulated deficit
    
    
    (46,013
    )
    
    
    (41,412
    )Less treasury stock at cost (1,487,530
shares at 4/30/2004 and 1/31/2004)
    
    
    (19,271
    )
    
    
    (19,271
    )Less accumulated comprehensive loss
    
    
    (4,244
    )
    
    
    (4,244
    )Total stockholders equity
    
    
    57,751
    
    
    
    62,352Total liabilities and stockholders equity
    
    $
    136,696
    
    
    $
    126,268
 5




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VIRCO MFG. CORPORATION 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited (Note 1) (Dollar amounts in thousands, except per share data) 3 Months Ended4/30/2004
    
    4/30/2003Net sales
    
    $
    30,321
    
    
    $
    31,180Cost of goods sold
    
    
    20,004
    
    
    
    20,769Gross profit
    
    
    10,317
    
    
    
    10,411Operating expenseSelling, general and administrative expense
    
    
    14,541
    
    
    
    16,596Interest expense
    
    
    377
    
    
    
    39414,918
    
    
    
    16,990Loss before income taxes
    
    
    (4,601
    )
    
    
    (6,579
    )Income tax benefit
    
    
    
    
    
    
    (2,566
    )Net loss
    
    $
    (4,601
    )
    
    $
    (4,013
    )Amounts per common share  basic (a)Net loss
    
    $
    (0.35
    )
    
    $
    (0.31
    )Dividend per common shareCash
    
    $
    
    
    
    $
    0.02
 (a) Net loss per share was calculated based on basic shares outstanding due to the
anti-dilutive effect on the inclusion of common stock equivalent shares. See Notes to Condensed Consolidated Financial Statements. 6




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VIRCO MFG. CORPORATION 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited (Note 1) (Dollar amounts in thousands) 3 Months Ended4/30/2004
    
    4/30/2003Operating activitiesNet loss
    
    $
    (4,601
    )
    
    $
    (4,013
    )Adjustments to reconcile net loss to net cash used
in operating activities:Depreciation
    
    
    2,467
    
    
    
    3,048Provision for doubtful accounts
    
    
    36
    
    
    
    61Loss on sale of property, plant and equipment
    
    
    2
    
    
    
    16Changes in assets and liabilities:Accounts and notes receivable
    
    
    4,114
    
    
    
    4,375Inventories
    
    
    (18,918
    )
    
    
    (18,321
    )Prepaid expenses and other current assets
    
    
    1,006
    
    
    
    982Income taxes receivable/payable
    
    
    306
    
    
    
    (4,204
    )Accounts payable and accrued expenses
    
    
    3,183
    
    
    
    4,647Net cash used in operating activities
    
    
    (12,405
    )
    
    
    (13,409
    )Investing activitiesCapital expenditures
    
    
    (678
    )
    
    
    (484
    )Proceeds from sale of property, plant and equipment
    
    
    6
    
    
    
    26Net cash used in investing activities
    
    
    (672
    )
    
    
    (458
    )Financing activitiesIssuance of long-term debt
    
    
    11,848
    
    
    
    14,154Repayment of long-term debt
    
    
    
    
    
    
    (355
    )Purchase of treasury stock
    
    
    
    
    
    
    (308
    )Payment of cash dividend
    
    
    
    
    
    
    (262
    )Issuance of common stock
    
    
    
    
    
    
    57Net cash provided by financing activities
    
    
    11,848
    
    
    
    13,286Net change in cash
    
    
    (1,229
    )
    
    
    (581
    )Cash at beginning of quarter
    
    
    2,059
    
    
    
    1,639Cash at end of quarter
    
    $
    830
    
    
    $
    1,058See Notes to Condensed Consolidated Financial Statements.
 7




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VIRCO MFG. CORPORATION 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS April 30, 2004  Note 1:
    
    The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with accounting
principles generally accepted in the United States for interim
financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include
all of the information and footnotes required by generally
accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three
months ended April 30, 2004, are not necessarily indicative of the
results that may be expected for the year ending January 31, 2005.
The balance sheet at January 31, 2004, 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, 2004.  Note 2.
    
    InventoriesYear end financial statements reflect inventories verified by
physical counts with the material content valued by the LIFO
method. At April 30, 2004, there has been no physical
verification of inventory quantities. Cost of sales is recorded
at current cost. The effect of penetrating LIFO layers is not
recorded at interim dates unless the reduction in inventory is
expected to be permanent. No such adjustment has been made for
the period ended April 30, 2004. LIFO reserves at April 30, 2004
and January 31, 2004 were $4,042,000. Management continually
monitors production costs, material costs and inventory levels to
determine that interim inventories are fairly stated.  Note 3.
    
    DebtFor fiscal 2004, the Company has entered into a revolving credit
facility with Wells Fargo Bank, amended and restated January 27, 2004,
which provides a term loan of $12,500,000 and a secured revolving line
of credit that varies with levels of inventory and receivables, up to a
maximum of $45,000,000. The term loan is a three-year amortizing line
with interest payable monthly at a fluctuating rate equal to the Banks
prime rate plus a fluctuating margin of 0.75%, or at LIBOR plus 3.25%.
Under the term loan, the Bank is entitled to require the Company to fix
the interest rate on up to $6 million of debt. Effective February 1,
2004, Virco purchased an interest rate swap from Wells Fargo Bank, that
effectively fixed the rate of interest on $6 million for a period of
three years at a rate of 6.32%. The revolving line has an 18-month
maturity with interest payable monthly at a fluctuating rate equal to
the Banks prime rate plus a margin of 0.50%, or at LIBOR plus 2.75%.
The revolving line also allows the Company the option to borrow under
30- 60- and 90-day fixed term rates at LIBOR plus 2.75%. 8




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Note 4.
    
    Income TaxesWe recognize deferred taxes by the asset and liability method of
accounting for income taxes in accordance with the provisions of
Statement of Financial Accounting Standards (SFAS) No. 109, Accounting
for Income Taxes. Deferred income taxes are recognized for differences
between the financial statement and tax bases of assets and liabilities
at enacted statutory tax rates in effect for the years in which the
differences are expected to reverse. The effect on deferred taxes of a
change in tax rates is recognized in income in the period that includes
the enactment date. In assessing the realizability of deferred tax
assets, we consider whether it is more likely than not that some
portion or all of the deferred tax assets will not be realized. The
ultimate realization of deferred tax assets is dependent upon the
generation of future taxable income or reversal of deferred tax
liabilities during the periods in which those temporary differences
become deductible. We consider the scheduled reversal of deferred tax
liabilities, projected future taxable income, and tax planning
strategies in making this assessment. Based on this consideration, we
believe it is more likely than not that the net deferred tax assets
will not be realized, and a valuation allowance has been recorded
against the net deferred tax assets at April 30, 2004 and January 31,
2004. At April 30, 2004, the Company had net operating loss carryforwards for federal
and state income tax purposes, expiring at various dates through 2024 if not
utilized. Federal net operating losses that can potentially be carried forward
total approximately $13.8 million at April 30, 2004. In the prior year, the
Company recorded an income tax benefit of $2.5 million, primarily attributable
to net operating loss carrybacks available. For the current year, the Company
did not accrue an income tax benefit.  Note 5.
    
    Net Loss Per ShareFor the quarter ended April 30, 2004 and 2003, net loss per share was
calculated based on basic shares outstanding at April 30, 2004 and
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 EndedApril 302004
    
    2003Net loss
    
    $
    (4,601,000
    )
    
    $
    (4,013,000
    )Average shares outstanding
    
    
    13,096,000
    
    
    
    13,110,000Net effect of dilutive stock options 
based on the treasury stock method using
average market price.
    
    
    11,000
    
    
    
    27,000Totals
    
    
    13,107,000
    
    
    
    13,137,000Net loss per share - basic
    
    $
    (0.35
    )
    
    $
    (0.31
    )
 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. 9




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The Companys reported and pro forma information for the
three-month periods ended April 30, 2004 and April 30, 2003 are as
follows: Three Months EndedApril 302004
    
    2003Net loss, as reported
    
    $
    (4,601,000
    )
    
    $
    (4,013,000
    )Deduct: Total stock-based employee
compensation expense determined under
the fair value based method for all
awards, net of related tax effects
    
    
    13,000
    
    
    
    10,000Pro forma net loss
    
    $
    (4,614,000
    )
    
    $
    (4,023,000
    )Basic earnings per share, as reported
    
    $
    (0.35
    )
    
    $
    (0.31
    )Basic earnings per share, pro forma
    
    $
    (0.35
    )
    
    $
    (0.31
    )
  Note 6.
    
    Comprehensive LossComprehensive loss for the quarter ended April 30, 2004 was $4,601,000,
the same as net income. Comprehensive loss for the quarter ended April
30, 2003 was $3,895,000. The difference between losses reported on the
statement of operations and comprehensive loss is primarily
attributable to adjustments to account for a derivative financial
instrument.Accumulated comprehensive loss at the quarter ended April 30, 2004 is
primarily composed of minimum pension liability adjustments.Note 7.
    
    Retirement PlansThe Company and its subsidiaries cover all employees under a
noncontributory defined benefit retirement plan, the Virco Employees
Retirement Plan (the Plan). Benefits under the Plan are based on years
of service and career average earnings.The Company also provides a supplementary retirement plan for certain
key employees, the VIP Retirement Plan (VIP Plan). The VIP Plan
provides a benefit of up to 50% of average compensation for the last five
years in the VIP Plan, offset by benefits earned under the Virco
Employees Retirement Plan.The Company also provides a non-qualified plan for non-employee
directors of the Company. The Plan provides a lifetime annual
retirement benefit equal to the directors annual retainer fee for the
fiscal year in which the director terminates his or her position with
the Board, subject to the director providing 10 years of service to the
Company. 10




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The net periodic pension costs for the Virco Employees Retirement Plan,
the VIP Retirement Plan and the Non-Employee Directors Retirement
Plans for the three months ended April 30, 2004 and 2003 were as follows (in
thousands): Pension Plan
    
    VIP Retirement Plan
    
    Non-Employee
Directors
Retirement Plan2004
    
    2003
    
    2004
    
    2003
    
    2004
    
    2003Service cost
    
    $
    57
    
    
    $
    346
    
    
    $
    65
    
    
    $
    200
    
    
    $
    5
    
    
    $
    5Interest cost
    
    
    321
    
    
    
    466
    
    
    
    83
    
    
    
    122
    
    
    
    6
    
    
    
    6Expected return on plan assets
    
    
    (250
    )
    
    
    (293
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization of transition amount
    
    
    (9
    )
    
    
    (10
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization of prior service cost
    
    
    95
    
    
    
    140
    
    
    
    (115
    )
    
    
    (124
    )
    
    
    22
    
    
    
    22Recognized net actuarial loss
    
    
    52
    
    
    
    270
    
    
    
    22
    
    
    
    102
    
    
    
    (6
    )
    
    
    (6
    )Settlement and curtailment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net periodic pension cost
    
    $
    266
    
    
    $
    919
    
    
    $
    55
    
    
    $
    300
    
    
    $
    27
    
    
    $
    27
 The Company previously disclosed in its financial statements for the
year ended January 31, 2004 that it expects to contribute approximately
$1 million to its deferred benefit plans in 2004.  Note 8.
    
    WarrantyThe Company provides a product warranty on most products. It generally
warrants that customers can return a defective product during the
specified warranty period following purchase in exchange for a
replacement product or that the Company can repair the product at no
charge to the customer. The Company determines whether replacement or
repair is appropriate in each circumstance. The Company uses historic
data to estimate appropriate levels of warranty reserves. Because
product mix, production methods, and raw material sources change over
time, historic data may not always provide precise estimates for future
warranty expense. The following is a summary of the Companys
warranty-claim activity for the quarter ended April 30, 2004. Accrued Warranty Balance at
    
    
    
    
    
    
    
    
    
    Accrued Warranty Balance atJanuary 31, 2004
    
    Provision
    
    Costs Incurred
    
    April 30, 2004$1,751,000
    
    $
    275,000
    
    
    $
    475,000
    
    
    $
    1,551,000
 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:  For the first quarter of 2004, the Company incurred a net loss of $4,601,000 on
sales of $30,321,000 compared to a net loss of $4,013,000 on sales of
$31,180,000 in the same period last year.Sales for the first quarter ended April 30, 2004 decreased by $859,000, a 3%
decrease, compared to the same period last year. Incoming orders for the same
period increased by approximately 2%. Backlog at April 30, 2004 increased by
approximately 8% compared to the prior year. As more fully disclosed in the
Form 10K for the fiscal year ended January 31, 2004, in the
prior year the Company
incurred a severe decline in sales volume, primarily due to decreased funding
levels at state and local governments. For the first quarter, the rate of
orders from publicly funded entities has stabilized.Gross profit for the first quarter, as a percentage of sales, increased
slightly compared to the same period last year. For the quarter ended April
30, 2004, the Company has incurred higher steel prices. In addition to higher
prices, the Company has not always been able to purchase the precise steel
desired. As a result, the Company has incurred yield variances.
The Company has been unable to pass the full impact of these increased
material costs to its customers in the current economic climate. Because steel
prices and availability over the next nine months is still quite uncertain, it
is not possible to accurately quantify the impact on the Company for the year,
but the cost could be in the range of $5-10 million dollars. For the first
quarter, the Company was able to offset the increased material cost with a
combination of selective price increases and decreased overhead
spending.Selling, general and administrative expense for the quarter ended April 30,
2004, declined by approximately $2 million compared to the same period last
year, and decreased as a percentage of sales by more than 5%. The decreased
expense is due to improved warehousing and freight efficiencies, reductions in
staffing, and freezing of the defined benefit plans.Interest expense decreased by approximately $17,000 compared to the same period
last year. The reduction is primarily due to lower borrowings.At April 30, 2004, the Company had net operating loss carryforwards for federal
and state income tax purposes, expiring at various dates through 2024 if not
utilized. Federal net operating losses that can potentially be carried forward
total approximately $13.8 million at April 30, 2004. In the prior year, the
Company recorded an income tax benefit of $2.5 million, primarily attributable
to net operating loss carrybacks available. For the current year, the Company
did not accrue an income tax benefit.Financial Condition:As a result of seasonally lower deliveries in the first quarter and fourth
quarter last year, accounts and notes receivable were $4,114,000 less than
January 31, 2004. The Company traditionally builds large quantities of
inventory during the first quarter in anticipation of seasonally high summer
shipments. For the current quarter, the Company increased inventory by nearly
$18,918,000 compared to year-end. This increase in inventory was financed
through the credit facility with Wells Fargo Bank. The Company significantly
reduced inventories at the end of fiscal year ended January 31, 2004 in
response to reduced sales volume. The Company maintained the year over year
reduction in inventory through the first quarter as order volume has not
returned to levels prior to fiscal year 2003. 12




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The Company has established a goal of limiting capital spending to
approximately $5,000,000 for 2004, which is approximately one-half of
anticipated depreciation expense. Capital spending for the quarter ended April
30, 2004, was $678,000 compared to $484,000 for the same period last year.
Capital expenditures are being financed through the Companys
credit facility established
with Wells Fargo Bank and operating cash flow.Net cash used in operating activities for the first quarter ended April 30,
2004 was $12,405,000 compared to $13,409,000 for the same period last year.
The decrease in cash used in operating activities was due to reduction in
estimated income tax liability payments during the quarter ended April 30, 2004
as compared to the same period last year.In April 1998, the Board of Directors approved a stock buyback program. As of
April 30, 2004, the Company has repurchased approximately 1,454,000 shares at a
cost of approximately $18,788,000 since the inception of this program. Under
the current Wells Fargo bank credit facility, the Company is restricted from buying back
additional shares.The Company believes that cashflows from operations, together with the
Companys unused borrowing capacity with Wells Fargo Bank will be sufficient to
fund the Companys debt service requirements, capital expenditures and working
capital needs. Approximately $6,500,000 was available for borrowing as of
April 30, 2004.Critical Accounting Policies and Estimates:The Companys critical accounting policies are outlined in its Form 10-K for
fiscal year ended January 31, 2004.Forward-Looking Statements:From time to time, the Company or its representatives have made and may make
forward-looking statements, orally or in writing, including those contained
herein. Such forward-looking statements may be included in, without
limitation, reports to stockholders, press releases, oral statements made with
the approval of an authorized executive officer of the Company and filings with
the Securities and Exchange Commission. The words or phrases anticipates,
expects, will continue, believes, estimates, projects, or similar
expressions are intended to identify forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. The results
contemplated by the Companys forward-looking statements are subject to certain
risks and uncertainties that could cause actual results to vary materially from
anticipated results, including without limitation, material availability and
cost of materials, especially steel; availability and cost of labor, demand for
the Companys products, and 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, 2004.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 RiskFor fiscal 2004, the Company has entered into a revolving credit facility with Wells
Fargo Bank, as amended and restated January 27, 2004, which provides a term loan
of $12,500,000 and a secured revolving line of credit that varies 13




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with levels of inventory and receivables, up to a maximum of $45,000,000. The term loan is
a three-year amortizing line with interest payable monthly at a fluctuating
rate equal to the Banks prime rate plus a fluctuating margin of 0.75%, or at LIBOR
plus 3.25%. Under the term loan, the Bank is
entitled to require the Company to fix the interest rate on up to $6 million of
debt. Effective February 1, 2004, the Company purchased an interest rate swap from
Wells Fargo Bank that effectively fixed the rate of interest on $6 million for
a period of three years at a rate of 6.32%. The revolving line has an 18-month
maturity with interest payable monthly at a fluctuating rate equal to the
Banks prime rate plus a margin of 0.50%, or at LIBOR plus 2.75%. The revolving
line also allows the Company the option to borrow under 30- 60- and 90-day
fixed term rates at LIBOR plus 2.75%. Accordingly, a 100 basis point upward
fluctuation in the lenders base rate would cause the Company to incur
additional interest charges of approximately $69,000 for the fiscal quarter
ended April 30, 2004. The Company would benefit from a similar interest
savings if the base rate were to fluctuate downward by a like amount. As of
April 30, 2004, the Company has borrowed $34,420,000 under its Wells Fargo term
loan and asset-based credit facility. 
 Item 4. Controls and Procedures (a) Evaluation of Disclosure Controls and Procedures The Company maintains disclosure controls and procedures that are designed to
ensure that information required to be disclosed in our reports filed with the
Securities and Exchange Commission (the SEC) pursuant to the Securities
Exchange Act of 1934 (the Exchange Act) is recorded, processed, summarized
and reported within the time periods specified in the SECs rules and forms,
and that such information is accumulated and communicated to the
Companys management, including its President and Chief Executive Officer and Chief
Financial Officer, as appropriate, to allow timely decisions regarding required
disclosure. Assessing the costs and benefits of such controls and procedures
necessarily involves the exercise of judgment by management, and such controls
and procedures, by their nature, can provide only reasonable assurance that
managements objectives in establishing them will be achieved. We carried out an evaluation, under the supervision and with the participation
of our companys management, including the Companys President and Chief
Executive Officer along with the Companys Chief Financial Officer, of the
effectiveness of the design and operation of the Companys disclosure controls
and procedures as of the end of the period covered by this Quarterly Report
pursuant to Exchange Act Rule 13a-15. Based upon the foregoing, the Companys
President and Chief Executive Officer, along with the Companys Chief Financial
Officer and other members of management concluded that the Companys disclosure
controls and procedures are effective in 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 the
Companys 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, its internal control
over financial reporting. 14




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PART II VIRCO MFG. CORPORATION OTHER INFORMATION 
 Item 1.
    
    Legal ProceedingsNone
 
 Item 2.
    
    Changes in Securities and Use of ProceedsNone
 
 Item 3.
    
    Defaults Upon Senior SecuritiesNone
 
 Item 4.
    
    Submission of Matters to a Vote of Security HoldersNone
 
 Item 5.
    
    Other InformationNone
 
 Item 6.
    
    Exhibits and Reports on Form 8-K(a) ExhibitsExhibit 31.1  Certification of Robert A. Virtue, President, pursuant
to Rules 13a-14 and 15d-14 of the Securities Exchange Act, as adopted
pursuant to section 302 of the Sarbanes-Oxley Act of 2002Exhibit 31.2  Certification of Robert E. Dose, Vice President,
Finance, pursuant to Rules 13a-14 and 15d-14 of the Securities
Exchange Act, as adopted pursuant to section 302 of the
Sarbanes-Oxley Act of 2002Exhibit 32.1  Certification of Chief Executive Officer and Chief
Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.(b) Reports on Form 8-KOn April 14, 2004, Virco Mfg. Corporation filed a Current Report on
Form 8-K pursuant to Item 5, our interim
report on the Companys financial results for the fourth quarter and
fiscal year ended January 31, 2004.On June 7, 2004, Virco Mfg. Corporation filed a Current Report on
Form 8-K pursuant to Item 5, our interim
report on the Companys financial results for the first quarter ended April 30, 2004.
 Signatures 15




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VIRCO MFG. CORPORATION




SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

VIRCO MFG. CORPORATIONDate: June 4, 2004
    
    By:
    
    /s/ Robert E. Dose

Robert E. Dose 
Vice President - FinanceDate: June 4, 2004
    
    By:
    
    /s/ Bassey Yau
Bassey Yau
Corporate Controller


16