UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



x ý	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended July 31, ~~2013~~2014



¨	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

(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 ý No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):



Large accelerated filer	¨	¨	Accelerated filer	¨
Non-accelerated filer	¨	¨ ~~(Do~~(Do not check if a smaller reporting company)	Smaller reporting company	ý

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No ý

The number of shares outstanding for each of the registrant’s classes of common stock, as of the latest practicable date:

Common Stock, $.01 par value — ~~14,730,319~~14,852,640 shares as of September ~~3, 2013.~~

~~Table of Contents~~5, 2014.

~~VIRCO MFG. CORPORATION~~

~~INDEX~~

TABLE OF CONTENTS



Part I. Financial Information	3
Item 1. Financial Statements	3
Unaudited condensed consolidated balance sheets — July 31, ~~2013,~~2014, January 31, ~~2013~~2014 and July 31, ~~201~~20132	3
Unaudited condensed consolidated statements of ~~income~~operations — Three months ended July 31, ~~2013~~2014 and ~~201~~20132	5
Unaudited condensed consolidated statements of ~~income~~operations — Six months ended July 31, ~~2013~~2014 and ~~2012~~2013	6
Unaudited condensed consolidated statements of comprehensive income (loss) — Three months ended July 31, ~~2013~~2014 and ~~201~~20132	7
Unaudited condensed consolidated statements of comprehensive income (loss) — Six months ended July 31, ~~2013~~2014 and ~~2012~~2013	8
Unaudited condensed consolidated statements of cash flows ~~— Six~~—Six months ended July 31, ~~2013~~2014 and ~~201~~20132	9
Notes to unaudited condensed consolidated financial statements — July 31, ~~201~~20143	10
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3. Quantitative and Qualitative Disclosures about Market Risk	19
Item 4. Controls and Procedures	20

Part II. Other Information	21
Item 1. Legal Proceedings	21
Item 1A. Risk Factors	21
Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities	21
Item 6. Exhibits	21
EX-3.2
EX-10.1
EX-31.1
EX-31.2
EX-32.1
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT

~~Table of Contents~~

PART ~~I — FINANCIAL INFORMATION~~

I. Financial Information

Item 1. Financial Statements

~~VIRCO MFG. CORPORATION~~Virco Mfg. Corporation

~~CONDENSED CONSOLIDATED BALANCE SHEETS~~Condensed Consolidated Balance Sheets


	7/31/2013		1/31/2013		7/31/2012		7/31/2014		1/31/2014		7/31/2013
	(In thousands, except share data)						(In thousands, except share data)
	Unaudited (Note 1)				Unaudited (Note 1)		Unaudited (Note 1)				Unaudited (Note 1)
Assets
Current assets:
Current assets
Cash	$	2,443	$	853	$	3,347	$	1,130	$	1,051	$	2,443
Trade accounts receivable, net	32,088		8,835		32,670
Trade accounts receivables, net							29,414		8,468		32,088
Other receivables	107		108		41		47		52		107
Income tax receivable	304		259		298		317		290		304
Inventories
Finished goods, net	14,137		4,968		14,439		20,145		7,237		14,137
Work in process, net	12,243		11,041		13,718		15,161		11,116		12,243
Raw materials and supplies, net	10,460		9,308		9,527		9,977		9,427		10,460
	36,840		25,317		37,684		45,283		27,780		36,840
Deferred tax assets, net							203		203		—
Prepaid expenses and other current assets	1,724		1,665		1,897		1,350		1,795		1,724
Total current assets	73,506		37,037		75,937		77,744		39,639		73,506
Property, plant and equipment:
Property, plant and equipment
Land	1,671		1,671		1,671		1,671		1,671		1,671
Land improvements	1,213		1,213		1,213		1,189		1,185		1,213
Buildings and building improvements	47,263		47,703		47,794		47,047		47,271		47,263
Machinery and equipment	116,335		119,407		119,591		113,152		115,667		116,335
Leasehold improvements	2,417		2,452		2,456		1,957		2,328		2,417
	168,899		172,446		172,725		165,016		168,122		168,899
Less accumulated depreciation and amortization	132,204		135,564		134,892		128,970		131,817		132,204
Net property, plant and equipment	36,695		36,882		37,833		36,046		36,305		36,695
Deferred tax assets, net	1,404		1,484		2,005		305		611		1,404
Other assets	6,722		6,835		6,972		6,990		6,789		6,722
Total assets	$	118,327	$	82,238	$	122,747	$	121,085	$	83,344	$	118,327

See ~~Notes to Unaudited Condensed Consolidated Financial Statements~~accompanying notes.

~~Table of Contents~~

~~VIRCO MFG. CORPORATION~~Virco Mfg. Corporation

~~CONDENSED CONSOLIDATED BALANCE SHEETS~~Condensed Consolidated Balance Sheets


	7/31/2013			1/31/2013			7/31/2012			7/31/2014			1/31/2014			7/31/2013
	(In thousands, except share data)									(In thousands, except share data)
	Unaudited (Note 1)						Unaudited (Note 1)			Unaudited (Note 1)						Unaudited (Note 1)
Liabilities
Current liabilities:
Current liabilities
Accounts payable	$	17,282		$	11,864		$	18,596		$	20,382		$	12,355		$	17,282
Accrued compensation and employee benefits	4,143			3,426			4,051			3,860			3,594			4,143
Current portion of long-term debt	22,668			4,053			20,843			27,545			2,248			22,668
Deferred tax liability	572			572			1,221
Deferred tax liabilities										—			—			572
Other accrued liabilities	8,110			4,596			8,120			7,293			4,459			8,110
Total current liabilities	52,775			24,511			52,831			59,080			22,656			52,775
Non-current liabilities:
Non-current liabilities
Accrued self-insurance retention	2,614			2,585			2,281			2,020			2,025			2,614
Accrued pension expenses	26,567			26,385			25,248			23,132			23,951			25,763
Income tax payable	98			142			505			37			69			98
Long-term debt, less current portion	6,000			—			6,000			6,000			6,000			6,000
Other accrued liabilities	1,372			1,595			2,436			1,092			1,038			1,372
Total non-current liabilities	36,651			30,707			36,470			32,281			33,083			35,847
Commitments and Contingencies
Stockholders’ equity:
Commitments and contingencies
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; Issued 14,730,319 shares at 7/31/2013; and 14,550,371 shares at 1/31/2013 and 7/31/2012	147			146			145
Authorized 25,000,000 shares, $.01 par value; issued and outstanding 14,852,640 shares at 7/31/2014 ; and 14,718,414 at 1/31/2014 and 14,730,319 shares at 07/31/2013										148			147			147
Additional paid-in capital	115,817			115,670			115,388			116,105			115,978			115,817
Accumulated deficit	(71,077		)	(72,810		)	(66,759		)	(73,191		)	(74,540		)	(71,077		)
Accumulated comprehensive loss	(15,986		)	(15,986		)	(15,328		)
Accumulated other comprehensive loss										(13,338		)	(13,980		)	(15,182		)
Total stockholders’ equity	28,901			27,020			33,446			29,724			27,605			29,705
Total liabilities and stockholders’ equity	$	118,327		$	82,238		$	122,747		$	121,085		$	83,344		$	118,327

See ~~Notes to Unaudited Condensed Consolidated Financial Statements~~accompanying notes.

~~Table~~Virco Mfg. Corporation

Condensed Consolidated Statements of ~~Contents~~

~~VIRCO MFG. CORPORATION~~

~~CONDENSED CONSOLIDATED STATEMENTS OF INCOME~~Income

Unaudited (Note 1)


	Three Months Ended				Three months ended
	7/31/2013		7/31/2012		7/31/2014		7/31/2013
	(In thousands, except per share data)				(In thousands, except per share data)
Net sales	$	56,933	$	60,392	$	53,192	$	56,933
Costs of goods sold	35,347		37,525		32,346		35,347
Gross profit	21,586		22,867		20,846		21,586
Selling, general and administrative expenses	14,417		15,145		14,770		14,417
Restructuring charges	412		—
Interest expense	472		463
Restructuring expense					62		412
Interest expense, net					505		472
Income (loss) before income taxes	6,285		7,259		5,509		6,285
Income tax expense (benefits)	75		206
Income tax expense (benefit)					306		75
Net income (loss)	$	6,210	$	7,053	$	5,203	$	6,210

Net income (loss) per common share:
Basic	$	0.43	$	0.49	$	0.35	$	0.43
Diluted	$	0.42	$	0.49	$	0.35	$	0.42
Weighted average shares outstanding:
Basic	14,570		14,369		14,725		14,570
Diluted	14,647		14,395		14,874		14,647

_______________

See ~~Notes to Unaudited Condensed Consolidated Financial Statements~~accompanying notes.

~~Table~~Virco Mfg. Corporation

Condensed Consolidated Statements of ~~Contents~~Income

Unaudited (Note 1)



	Six Months Ended
	7/31/2014		7/31/2013
	(In thousands, except per share data)
Net sales	$	76,722	$	76,823
Costs of goods sold	47,699		48,828
Gross profit	29,023		27,995
Selling, general and administrative expenses	26,492		24,919
Restructuring expense	62		475
Interest expense, net	834		800
Income (loss) before income taxes	1,635		1,801
Income tax expense (benefit)	287		38
Net income (loss)	$	1,348	$	1,763

Net income (loss) per common share:
Basic	$	0.09	$	0.12
Diluted	$	0.09	$	0.12
Weighted average shares outstanding:
Basic	14,687		14,506
Diluted	14,839		14,591

_______________

See accompanying notes.

Virco Mfg. Corporation

~~VIRCO MFG. CORPORATION~~

~~CONDENSED CONSOLIDATED STATEMENTS OF INCOME~~Condensed Consolidated Statements of Comprehensive Income (Loss)

Unaudited (Note 1)

Six Months Ended
7/31/2013 7/31/2012
(In thousands, except per share data)
Net sales $ 76,823
$ 84,060
Costs of goods sold 48,828
54,226
Gross profit 27,995
29,834
Selling, general and administrative expenses 24,919
26,674
Restructuring charges 475
—
Interest expense 800
718
Income (loss) before income taxes 1,801
2,442
Income tax expense (benefits) 38
222
Net income (loss) $ 1,763
$ 2,220
Dividend declared:
Cash $ 0.12
$ 0.15
Net income (loss) per common share: $ 0.12
$ 0.15
Basic
Diluted 14,506
14,333
Weighted average shares outstanding: 14,591
14,358

~~See Notes to Unaudited Condensed Consolidated Financial Statements~~

~~Table of Contents~~

~~VIRCO MFG. CORPORATION~~

~~CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)~~

~~Unaudited (Note 1)~~

Three Months Ended
7/31/2013 7/31/2012
(In thousands)
Net income (loss) $ 6,210
$ 7,053
Other comprehensive income (loss) —
—
Comprehensive income (loss) $ 6,210
$ 7,053

~~See Notes to Unaudited Condensed Consolidated Financial Statements~~



	Three months ended
	7/31/2014		7/31/2013
	(In thousands)
Net income (loss)	$	5,203	$	6,210
Other comprehensive income (loss) :
Pension adjustments, net of tax	321		402
Comprehensive income (loss)	$	5,524	$	6,612

See accompanying notes.

~~Table~~Virco Mfg. Corporation

Condensed Consolidated Statements of ~~Contents~~

~~VIRCO MFG. CORPORATION~~

~~CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)~~Comprehensive Income (Loss)

Unaudited (Note 1)


	Six Months Ended				Six months ended
	7/31/2013		7/31/2012		7/31/2014		7/31/2013
	(In thousands)				(In thousands)
Net income (loss)	$	1,763	$	2,220	$	1,348	$	1,763
Other comprehensive income (loss)	—		—
Other comprehensive income (loss) :
Pension adjustments, net of tax					642		804
Comprehensive income (loss)	$	1,763	$	2,220	$	1,990	$	2,567

See ~~Notes to Unaudited Condensed Consolidated Financial Statements~~

accompanying notes.

~~Table~~Virco Mfg. Corporation

Condensed Consolidated Statements of ~~Contents~~Cash Flows

~~VIRCO MFG. CORPORATION~~

~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS~~

Unaudited (Note 1)


	Six Months Ended						Six months ended
	7/31/2013			7/31/2012			7/31/2014			7/31/2013
	(In thousands)						(In thousands)
Operating activities
Net income (loss)	$	1,763		$	2,220		$	1,348		$	1,763
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	2,046			2,278			2,168			2,046
Provision for doubtful accounts	50			(20		)	60			50
(Gain) loss on sale of property, plant and equipment	(13		)	(1		)	—			(13		)
Deferred income taxes	—			195			275			—
Stock based compensation	275			415
Stock-based compensation							259			275
Pension settlement							—			—
Changes in operating assets and liabilities:
Trade accounts receivable	(23,304		)	(19,807		)	(20,978		)	(23,304		)
Other receivables	1			360			5			1
Inventories	(11,523		)	(9,894		)	(17,504		)	(11,523		)
Income taxes	(8		)	43			(27		)	(8		)
Prepaid expenses and other current assets	53			(245		)
Prepaid expenses and other assets							244			53
Accounts payable and accrued liabilities	9,477			10,456			10,966			9,593
Net cash provided by (used in) operating activities	(21,183		)	(14,000		)	(23,184		)	(21,067		)
Investing activities
Capital expenditures	(1,861		)	(902		)	(1,904		)	(1,861		)
Proceeds from sale of property, plant and equipment	19			2			—			19
Net investment in life insurance							—			—
Net cash provided by (used in) investing activities	(1,842		)	(900		)	(1,904		)	(1,842		)
Financing activities
Proceeds from long-term debt	28,851			28,423			33,545			28,851
Repayment of long-term debt	(4,236		)	(13,075		)	(8,248		)	(4,236		)
Common stock issued	—			2
Common stock repurchased							(130		)	(116		)
Cash dividend paid	—			—			—			—
Net cash provided by (used in) financing activities	24,615			15,350			25,167			24,499

Net increase (decrease) in cash	1,590			450			79			1,590
Cash at beginning of period	853			2,897
Cash at end of period	$	2,443		$	3,347
Cash at beginning of year							1,051			853
Cash at end of year							$	1,130		$	2,443

See ~~Notes to Unaudited Condensed Consolidated Financial Statements.~~

accompanying notes.

~~Table of Contents~~

VIRCO MFG. CORPORATION

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~Notes to unaudited Condensed Consolidated Financial Statements

July 31, ~~2013~~2014

Note 1. Basis of Presentation

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~~pursuant to the ~~instructions to Form 10-Q~~rules and ~~Article 10~~regulations of ~~Regulation S-X.~~the Securities and Exchange Commission. 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~~six months ended July 31, ~~2013~~,2014, are not necessarily indicative of the results that may be expected for the fiscal year ending January 31, ~~2014~~.2015. The balance sheet at January 31, ~~2013~~,2014, 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 fiscal year ended January 31, ~~2013~~2014 (“Form 10-K”). All references to the “Company” refer to Virco Mfg. Corporation and its subsidiaries.

Note 2. Correction of Immaterial Errors

Subsequent to the year ended January 31, 2014, the Company identified certain errors in the condensed consolidated balance sheets and consolidated statements of comprehensive income (loss) for the quarters ended April 30, July 31 and October 31, 2013. The Company previously recorded its quarterly net periodic pension cost as an increase to accrued pension expenses, when a portion of the net periodic pension cost attributed to the recognized net actuarial loss or (gain) should have been recorded as a decrease in the Company’s accumulated other comprehensive loss. These errors have no impact on the amounts previously reported in the Company’s statements of operations or statements of cash flows. Further, these errors have no impact on its consolidated financial statements as of and for the year ended January 31, 2014.

Management has evaluated the materiality of these errors quantitatively and qualitatively and has concluded that the corrections of these errors are immaterial to the condensed consolidated balance sheets, consolidated statements of comprehensive income (loss), and the financial statements as a whole. Accordingly, the Company has corrected the accompanying condensed consolidated balance sheet and consolidated statement of comprehensive income (loss) for the three and six months ended July 31, 2013, and it intends to revise its condensed consolidated balance sheets and consolidated statements of comprehensive income (loss) for the quarters ended October 31, 2013 through subsequent periodic filings. The effect of recording immaterial corrections in the condensed consolidated balance sheets and consolidated statements of comprehensive income (loss) for the quarters ended July 31 and October 31, 2013 are as follows:



	For the Quarter Ended July 31, 2013				For the Quarter Ended October 31, 2013
(in thousands)	As Previously Reported		As Corrected		As Previously Reported		As Corrected
Accrued pension expenses	$	26,567	$	25,763	$	26,398	$	25,192
Total stockholder’s equity	28,901		29,705		33,181		34,387
Net income (loss)	6,210		6,210		3,408		3,408
Comprehensive income (loss)	6,210		6,612		4,208		4,610
Impact for period-to-date comprehensive income (loss)	1,763		2,567		5,971		7,177

Note 3. Seasonality

The market for educational furniture is marked by extreme seasonality, with approximately 50% of the Company’s total sales typically occurring from June to August each year, which is the Company’s peak season. Hence, the Company typically builds and carries significant amounts of inventory during and in anticipation of this peak summer season to facilitate the rapid delivery requirements of customers in the educational market. This requires a large up-front investment in inventory, labor, storage and related costs as inventory is built in anticipation of peak sales during the summer months. As the capital required for this build-up generally exceeds cash available from operations, the Company has historically relied on third-party bank

financing to meet cash flow requirements during the build-up period immediately preceding the peak season. In addition, the Company typically is faced with a large balance of accounts receivable during the peak season. This occurs for two primary reasons. First, accounts receivable balances typically increase during the peak season as shipments of products increase. Second, many customers during this period are government institutions, which tend to pay accounts receivable more slowly than commercial customers.

The Company’s working capital requirements during and in anticipation of the peak summer season require management to make estimates and judgments that affect assets, liabilities, revenues and expenses, and related contingent assets and liabilities. On an ongoing basis, management evaluates its estimates, including those related to market demand, labor costs, and stocking inventory.

Note 3.4. New Accounting Standards

In ~~January~~July 2013, the ~~Financial Accounting Standards Board ("FASB")~~FASB issued ~~authoritative~~accounting guidance ~~that requires an entity to provide information about the amounts reclassified out of accumulated other comprehensive income (loss) by component. In addition, an entity is required to present, either~~ on the ~~face~~financial statement presentation of ~~the statement where~~an unrecognized tax benefit when a net ~~income is presented~~operating loss carryforward, or in the notes, significant amounts reclassified out of accumulated other comprehensive income (loss) by the respective line items of net income but only if the amount reclassified is required under GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures required under GAAP that provide additional detail about those amounts.similar tax loss, or a tax carryforward exists. The Company adopted ~~this~~the guidance effective February 1, ~~2013, but had no such reclassifications~~2014, the beginning of the Company's 2014 fiscal year. The guidance did not have a material impact on the Company's financial statements.

In April 2014, the FASB issued accounting guidance which changes the criteria for determining which disposals can be presented as discontinued operations and modifies related disclosure requirements. The guidance will be effective for fiscal years beginning on or after January 31, 2015 and interim periods within those annual periods with early adoption allowed. The Company does not expect the adoption to ~~report~~have a material impact on its financial statements.

In May 2014, the FASB issued a comprehensive new revenue recognition standard which will supersede previous existing revenue recognition guidance. The standard creates a five-step model for revenue recognition that requires companies to exercise judgment when considering contract terms and relevant facts and circumstances. The five-step model includes (1) identifying the ~~three months~~contract, (2) identifying the separate performance obligations in the contract, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations and (5) recognizing revenue when each performance obligation has been satisfied. The standard also requires expanded disclosures surrounding revenue recognition. The standard is effective for fiscal periods beginning after December 15, 2016 and allows for either full retrospective or ~~six months ended July 31, 2013.~~modified retrospective adoption. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements.

Note 4.5. Inventories

Inventories primarily consist of raw materials, work in progress, and finished goods of manufactured products. In addition, the Company maintains an inventory of finished goods purchased for resale. Inventories are stated at lower of cost or market and consist of materials, labor, and overhead. The Company determines the cost of inventory by the first-in, first-out method. The value of inventory includes any related production overhead costs incurred in bringing the inventory to its present location and condition. The Company records the cost of excess capacity as a period expense, not as a component of capitalized inventory valuation.

Management continually monitors production costs, material costs and inventory levels to determine that interim inventories are fairly stated.

Note 6. Debt

Outstanding balances (in thousands) for the Company’s long-term debt were as follows:




	7/31/2014		1/31/2014		7/31/2013
	(in thousands)
Revolving credit line	$	33,545	$	8,248	$	28,668
Other	—		—		—
Total debt	33,545		8,248		28,668
Less current portion	27,545		2,248		22,668
Non-current portion	$	6,000	$	6,000	$	6,000

1011

~~Table of Contents~~

~~Note 5. Debt~~

On December 22, 2011 (the Closing Date), the Company ~~and Virco Inc., a wholly owned subsidiary of the Company ("Virco" and, together with the Company, the "Borrowers")~~ entered into a Revolving Credit and Security Agreement (the ~~"Credit Agreement")~~Credit Agreement) with PNC Bank, National Association, as administrative agent and lender ~~("PNC")~~(PNC). On June 15, 2012, the ~~Borrowers~~Company entered into Amendment No. 1 ~~("Amendment~~(Amendment No. ~~1")~~1) to the Credit Agreement which, among other things, increased the borrowing availability thereunder by ~~$3,000,000~~$3,000,000 from $6,000,000 to $9,000,000 for the period from May 1 through July 14 of each year. On July 27, 2012, the ~~Borrowers~~Company entered into Amendment No. 2 ~~("Amendment~~(Amendment No. ~~2")~~2) to the Credit Agreement which, among other things, reduced the minimum EBITDA financial covenant contained therein for the five consecutive months ending June 2012 from ~~$1,600,000~~$1,600,000 to ~~$300,000~~.$300,000. On September 12, 2012, the ~~Borrowers~~Company entered into Amendment No. 3 ~~("Amendment~~(Amendment No. ~~3")~~3) to the Credit Agreement which, among other things, modified the minimum EBITDA covenant for the balance of the fiscal year. On December 6, 2012, the ~~Borrowers~~Company entered into Amendment No. 4 ~~("Amendment~~(Amendment No. ~~4")~~4) to the Credit Agreement which, among other things, waived the violation of the minimum EBITDA and minimum tangible net worth covenants at October 31, 2012 and eliminated the minimum EBITDA covenant at November 30, 2012. On March 1, 2013, the ~~Borrowers~~Company entered into Amendment No. 5 ~~("Amendment~~(Amendment No. ~~5")~~5) to the Credit Agreement, which among other things modified the minimum tangible net worth covenant for the periods from January 31, 2013 to January 31, 2014,, modified the minimum EBIDTA covenant for certain periods to January 31, 2014 and waived the violation of the minimum EBITDA covenant for the eleven consecutive fiscal month period ending December 31, 2012.

On January 9, 2014, the Company entered into Amendment No. 6 (Amendment No. 6) to the Credit Agreement, which, among other things, amended the definition of “Peak Season” and increased the peak season borrowing capacity. On April 15, 2014, the Company entered into Amendment No. 7 (Amendment No. 7) to the Credit Agreement, which, among other things, extended the maturity date of the Credit Agreement for three years until December 22, 2017, reduced the maximum availability under the Credit Agreement by 10,000,000 from $60,000,000 to $50,000,000, waived the violation of the minimum EBITDA covenant at January 31, 2014, waived the violation of the fixed charge coverage ratio covenant at January 31, 2014, included levels for the minimum tangible net worth financial covenant and a minimum EBITDA financial covenant for fiscal year 2014 and the minimum fixed charge coverage ratio until the maturity date of the Credit Agreement. On August 18, 2014, the Company entered into Amendment No. 8 (Amendment No. 8) to the Credit Agreement which, among other things, extended the draw period under the temporary equipment line.

The Credit Agreement, as amended, provides the ~~Borrowers~~Company with a secured revolving line of credit (the ~~"Revolving~~Revolving Credit ~~Facility")~~Facility) of up to $~~60,000,000~~50,000,000, with seasonal adjustments to the credit limit and subject to borrowing base limitations, and includes a sub-limit of up to $3,000,000 for issuances of letters of credit. The Revolving Credit Facility is an asset-based line of credit that is subject to a borrowing base limitation and generally provides for advances of up to 85% of eligible accounts receivable, plus a percentage equal to the lesser of 60% of the value of eligible inventory or 85% of the liquidation value of eligible inventory, plus an amount ranging from $~~4,000,000~~8,000,000 to $14,000,000 from ~~February 15~~January 1 through ~~August 15~~July 31 of each year, minus undrawn amounts of letters of credit and ~~reserves as per Amendment No. 5.~~reserves. The Revolving Credit Facility is secured by substantially all of the ~~Borrowers'~~Company's personal property and certain of the ~~Borrowers'~~Company's real property. The principal amount outstanding under the Credit Agreement and any accrued and unpaid interest is due no later than December 22, ~~2014,~~2017, and the Revolving Credit Facility is subject to certain prepayment penalties upon earlier termination of the Revolving Credit Facility. Prior to the maturity date, principal amounts outstanding under the Credit Agreement may be repaid and reborrowed at the option of the ~~Borrowers~~Company without premium or penalty, subject to borrowing base limitations, seasonal adjustments and certain other conditions.

The Revolving Credit Facility bears interest, at the ~~Borrowers'~~Company's option, at either the Alternate Base Rate (as defined in the Credit Agreement) or the Eurodollar Currency Rate (as defined in the Credit Agreement), in each case plus an applicable margin. The applicable margin for Alternate Base Rate loans is a percentage within a range of 0.75% to 1.75%, and the applicable margin for Eurodollar Currency Rate loans is a percentage within a range of 1.75% to 2.75%, in each case based on the EBITDA of the ~~Borrowers~~Company at the end of each fiscal quarter, and may be increased at PNC's option by 2.0% during the continuance of an event of default. Accrued interest with respect to principal amounts outstanding under the Credit Agreement is payable in arrears on a monthly basis for Alternative Base Rate loans, and at the end of the applicable interest period but at most every three months for Eurodollar Currency Rate loans.

The Credit Agreement contains a covenant that forbids the Company from issuing dividends or making payments with respect to the Company's capital stock, and contains numerous other covenants that limit under certain circumstances the ability of the ~~Borrowers~~Company and their subsidiaries to, among other things, merge with or acquire other entities, incur new liens, incur additional indebtedness, repurchase stock, sell assets outside of the ordinary course of business, enter into transactions with affiliates, or substantially change the general nature of the business of the ~~Borrowers,~~Company, taken as a whole. The Credit Agreement also requires the Company to maintain the following financial maintenance covenants: (1) a minimum tangible net worth amount, (2) a minimum fixed charge coverage ratio, and (3) a minimum EBITDA amount, in each case as of the end of the relevant monthly, quarterly or annual measurement period. As of July 31, 2014 the Credit Agreement required the Company to maintain: (1) a minimum tangible net worth of at least $26,350,000 for the fiscal quarter ending July 31, 2014, (2) a minimum fixed charge coverage ratio of at least 1.00 to 1.00 for the four consecutive fiscal quarters ending January 31, 2015, and (3) a minimum EBITDA amount of $4,420,000 for the six months ended July 31, 2014 and $5,512,000 for the twelve consecutive fiscal months ending January 31, 2015.

In addition, the Credit Agreement contains a clean down provision that requires the Company to reduce borrowings under the line to less than ~~$6,000,000~~$6,000,000 for a period of 60 consecutive days each fiscal year. The Company believes that normal operating cash flow will allow it to meet the clean down requirement with no adverse impact on the Company's liquidity. The Company was in compliance with its covenants at July 31, ~~2013~~.

2014.

~~Table of Contents~~

agreements governing certain indebtedness of the ~~Borrowers~~Company and certain defaults by the ~~Borrowers~~Company under other agreements that would materially adversely affect the ~~Borrowers,~~Company, (iv) certain events of bankruptcy, insolvency or liquidation involving the ~~Borrowers,~~Company, (v) judgments or judicial actions against the ~~Borrowers~~Company in excess of ~~$250,000~~,$250,000, subject to certain conditions, (vi) the failure of the Company to comply with Pension Benefit Plans (as defined in the Credit Agreement), (vii) the invalidity of loan documents pertaining to the Credit Agreement, (viii) a change of control of the ~~Borrowers~~Company and (ix) the interruption of operations of any of the ~~Borrowers'~~Company' manufacturing facilities for five consecutive days during the peak season or fifteen consecutive days during any other time, subject to certain conditions.

Pursuant to the Credit Agreement, substantially all of the ~~Borrowers'~~Company' accounts receivable are automatically and promptly swept to repay amounts outstanding under the Revolving Credit Facility upon receipt by the ~~Borrowers.~~Company. Due to this automatic liquidating nature of the Revolving Credit Facility, if the ~~Borrowers~~Company breach any covenant, violate any representation or warranty or suffer a deterioration in their ability to borrow pursuant to the borrowing base calculation, the ~~Borrowers~~Company may not have access to cash liquidity unless provided by PNC at its discretion. In addition, certain of the covenants and representations and warranties set forth in the Credit Agreement contain limited or no materiality thresholds, and many of the representations and warranties must be true and correct in all material respects upon each borrowing, which the ~~Borrowers~~Company expect to occur on an ongoing basis. There can be no assurance that the ~~Borrowers~~Company will be able to comply with all such covenants and be able to continue to make such representations and warranties on an ongoing basis.

The Company's line of credit with PNC is structured to provide seasonal credit availability during the Company's peak summer season. The Company believes that the Revolving Credit Facility will provide sufficient liquidity to meet its capital requirements in the next 12 months. Approximately ~~$20,192,000~~$18,360,000 was available for borrowing as of July 31, ~~2013~~.

2014.

The descriptions set forth herein of the Credit Agreement, Amendment No. 1, Amendment No. 2, Amendment No. 3, Amendment No. 4, Amendment No. 5, Amendment No. 6, Amendment No. 7 and Amendment No. 58 are qualified in their entirety by the terms of such agreements, each of which has been filed with the Securities and Exchange Commission.

Management believes that the carrying value of debt approximated fair value at July 31, 2014 and 2013, as all of the long-term debt bears interest at variable rates based on prevailing market conditions.

Note 6.7. Income Taxes

The Company recognizes deferred income taxes under the asset and liability method of accounting for income taxes in accordance with the provisions of ASC No. 740, “Accounting for Income Taxes.” Deferred income taxes are recognized for differences between the financial statement and tax basis 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, the Company considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. 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. Based on this consideration, the Company determined the realization of a majority of the net deferred tax assets ~~no longer met~~do not meet the more likely than not criteria and a valuation allowance was recorded against the majority of the net deferred tax assets at July 31, ~~2013~~.2014. The effective tax rate for the quarter ended July 31, ~~2013~~2014 was impacted by the valuation allowance ~~recognized against state deferred tax assets~~ and a discrete ~~items~~item associated with ~~non-taxable permanent differences.~~uncertain tax positions.

The Company is currently under IRS examination for the year ended January 31, 2013. The years ended January 31, ~~2010~~, ~~January 31,~~ 2012 and January 31, ~~2013~~2014 remain open for examination by the IRS. The ~~Company is not currently under IRS examination. The~~ years ended January 31, ~~2009~~2010 through January 31, ~~2013~~2014 remain open for examination by state tax authorities. The Company is ~~currently under examination by Texas for the year ended January 31, 2009. The Company is~~ not currently under any ~~other~~ state examinations.

The specific timing of when the resolution of each tax position will be reached is uncertain. As of July 31, ~~2013~~,2014, we do not believe that there are any positions for which it is reasonably possible that the total amount of unrecognized tax benefits will significantly increase or decrease within the next 12 months.

1213

Table of Contents

Note 7.8. Net Income (Loss) per Share


	Three Months Ended				Six Months Ended				Three Months Ended				Six Months Ended
	7/31/2013		7/31/2012		7/31/2013		7/31/2012		7/31/2014		7/31/2013		7/31/2014		7/31/2013
	(In thousands, except per share data)								(In thousands, except per share data)
Net income (loss)	$	6,210	$	7,053	$	1,763	$	2,220	$	5,203	$	6,210	$	1,348	$	1,763
Average shares outstanding	14,570		14,369		14,506		14,333		14,725		14,570		14,687		14,506
Net effect of dilutive stock options based on the treasury stock method using average market price	77		26		85		25		149		77		152		85
Totals	14,647		14,395		14,591		14,358		14,874		14,647		14,839		14,591

Net income (loss) per share - basic	$	0.43	$	0.49	$	0.12	$	0.15	$	0.35	$	0.43	$	0.09	$	0.12
Net income (loss) per share - diluted	$	0.42	$	0.49	$	0.12	$	0.15	$	0.35	$	0.42	$	0.09	$	0.12

Note ~~8. Stock Based~~9. Stock-Based Compensation and Stockholders’ Rights

Stock Incentive Plans

The ~~Company’s~~Company's two stock plans are the 2011 Employee Stock Incentive Plan (the “2011 Plan”) and the 2007 Employee Incentive Stock ~~Incentive~~ Plan (the “2007 Plan”). Under the 2011 Plan, the Company may grant an aggregate of ~~1,000,000~~2,000,000 shares to its employees and non-employee directors in the form of stock options or awards. ~~The 2007 Plan similarly allows for the issuance of up to~~ ~~1,000,000~~ ~~shares. As of~~ ~~July 31, 2013~~, ~~448,750~~ ~~and~~ ~~13,075~~ ~~shares remained available for issuance under the 2011 Plan and 2007 Plan, respectively.~~ Restricted stock or stock units awarded under the 2011 Plan are expensed ratably over the vesting period of the awards. The Company determines the fair value of its restricted stock unit awards and related compensation expense as the difference between the market value of the awards on the date of grant less the exercise price of the awards granted. The Company granted 518,626 awards under the 2011 Plan during the quarter ended July 31, 2014. As of July 31, 2014, there were approximately 830,694 shares available for future issuance under the 2011 Plan.

Under the 2007 Plan, the Company may grant an aggregate of 1,000,000 shares to its employees and non-employee directors in the form of stock options or awards. Restricted stock or stock units awarded under the 2007 Plan are expensed ratably over the vesting period of the awards. The Company determines the fair value of its restricted stock unit awards and related compensation expense as the difference between the market value of the awards on the date of grant less the exercise price of the awards granted.

~~No options have been issued~~ The Company granted 0 awards under ~~the 2011 Plan or~~ the 2007 Plan atduring 2013 and 0 awards under the 2007 Plan during the quarter ended July 31, ~~2013~~2014. ~~Stock options awarded to employees~~As of July 31, 2014, there were approximately 13,075 shares available for future issuance under the ~~2011 Plan and~~ 2007 ~~Plan have to be granted at exercise prices equal to the fair market value of the Company’s common stock on the date of grant.~~Plan.

The shares of common stock issued upon exercise of a previously granted stock option are considered new issuances from shares reserved for issuance upon adoption of the various plans. While the Company does not have a formal written policy detailing such issuance, it requires that the option holders provide a written notice of exercise to the stock plan administrator and payment for the shares prior to issuance of the shares.

~~Restricted Stock and Stock Unit Awards~~

Accounting for the Plans

Restricted Stock Unit Awards

The following table presents a summary of restricted stock and stock unit awards at July 31, ~~2013~~2014 and ~~2012~~:2013:

~~Table of Contents~~


												Unamortized Compensation				Expense for 3 months ended				Expense for 6 months ended				Unrecognized Compensation Cost at
												Unamortized Compensation
Date of		Units	Terms of	Expense for 3 months ended				Expense for 6 months ended				Cost at
Grants		Granted	Vesting	7/31/2013		7/31/2012		7/31/2013		7/31/2012		7/31/2013
Date of Grants														Units Granted	Terms of Vesting	7/31/2014		7/31/2013		7/31/2014		7/31/2013		7/31/2014
2011 Stock Incentive Plan	2011 Stock Incentive Plan
6/24/2014														28,626	1 year	$	13,000	$	—	$	13,000	$	—	$	62,000
6/24/2014														490,000	5 year	43,000		—		43,000		—		1,237,000
12/3/2013														10,000	1 year	6,000		—		12,000		—		—
6/25/2013		83,335	1 year	$	30,000	$	—	$	30,000	$	—	$	145,000	71,430	1 year	13,000		30,000		50,000		30,000		—
6/19/2012		31,250	1 year	4,000		8,286		17,000		8,286		—		31,250	1 year	—		4,000		—		17,000		—
6/19/2012		520,000	5 year	40,000		28,000		82,000		28,000		601,000		520,000	5 year	39,000		40,000		79,000		82,000		444,000
2007 Stock Incentive Plan	2007 Stock Incentive Plan
6/19/2012		78,125	1 year	11,000		20,714		41,000		20,714		—		78,125	1 year	—		11,000		—		41,000		—
3/21/2012		40,000	Immediate	—		—		—		80,000		—
6/21/2011		68,960	1 year	—		17,000		—		67,000		—
6/16/2009		382,500	5 year	49,000		56,000		105,000		113,000		155,000		382,500	5 year	15,000		49,000		62,000		105,000		—
6/19/2007		262,500	5 year	—		24,000		—		98,000		—
				$	134,000	$	154,000	$	275,000	$	415,000	$	901,000

Totals for the period																$	129,000	$	134,000	$	259,000	$	275,000	$	1,743,000

Stockholders’ Rights

~~Stockholders’ Rights~~

On October 15, 1996, the Board of Directors declared a dividend of one preferred stock purchase right (the ~~“Rights”~~"Rights") for each outstanding share of the ~~Company’s~~Company's common ~~stock. Each of the Rights entitles a stockholder to purchase for an exercise price of~~ ~~$50.00~~ (~~$20.70~~, as adjusted for stock splits and stock dividends), subject to adjustment, one one-hundredth of a share of Series A Junior Participating Cumulative Preferred Stock of the Company, or under certain circumstances, shares of common stock of the Company or a successor company with a market value equal to two times the exercise price.Stock. The Rights ~~are not exercisable, and would only become exercisable for all other persons when any person has acquired or commences to acquire a beneficial interest of at least~~ ~~20%~~ ~~of the Company’s outstanding common stock. The Rights have no voting privileges, and may be redeemed by the Board of Directors at a price of~~ ~~$.001~~ ~~per Right at any time~~were terminated on July 28, 2014 prior to ~~the acquisition of a beneficial ownership of 20% of the outstanding common stock. There are~~ ~~200,000~~ ~~shares (483,153~~ shares as adjusted by stock splits and stock dividends) of Series A Junior Participating Cumulative Preferred Stock reserved for issuance upon exercise of the Rights. On July 31, 2007, the Company and Mellon Investor Services LLC entered into an amendment to the Rights Agreement governing the Rights. The amendment, among other things, extended the term of the Rights issued under the Rights Agreement to ~~October 25, 2016, removed the dead-hand provisions from the Rights Agreement, and formally replaced the former Rights Agent, The Chase Manhattan Bank, with its successor-in-interest, Mellon Investor Services LLC.~~becoming exercisable.

Note 9.10. Stockholders’ Equity

During the three months ended July 31, ~~2013~~,2014, the Company did not repurchase any shares of its common stock. As of July 31, ~~2013~~,2014, $1.1 million remained available for repurchases of the Company’s common stock pursuant to the Company’s repurchase program approved by the Board of ~~Directors.~~Directors, subject to restriction under the Company's Credit Agreement with PNC. Pursuant to the Company’s Credit Agreement with PNC, ~~bank,~~ the Company is prohibited from repurchasing any shares of its stock except in cases where a repurchase is financed by a substantially concurrent issuance of new shares of the Company’s common stock.

Note ~~10.~~11. Retirement Plans

The Company and its subsidiaries cover employees under a noncontributory defined benefit retirement plan, entitled the Virco Employees’ Retirement Plan (the “Pension Plan”). Benefits under the Employees Retirement Plan are based on years of service and career average earnings. As more fully described in the Form 10-K, benefit accruals under the Employees Retirement Plan were frozen effective December 31, 2003.

The Company also provides a supplementary retirement plan for certain key employees, the VIP Retirement Plan (the “VIP Plan”). The VIP Plan provides a benefit of up to 50% of average compensation for the last 5 years in the VIP Plan, offset by benefits earned under the Pension Plan. As more fully described in the Form 10-K, benefit accruals under this plan were frozen effective December 31, 2003.

~~Table of Contents~~

The Company also provides a non-qualified plan for non-employee directors of the Company (the “Non-Employee Directors Retirement Plan”). The Non-Employee Directors Retirement 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. As more fully described in the Form 10-K, benefit accruals under this plan were frozen effective December 31, 2003.

The net periodic pension cost (income) for the Pension Plan, the VIP Plan, and the Non-Employee Directors Retirement Plan for the three months and six months ended July 31, ~~2013~~2014 and ~~2012~~2013 were as follows (in thousands):

Three Months Ended July 31,
Non-Employee Directors
Pension Plan VIP Retirement Plan Retirement Plan
2013 2012 2013 2012 2013 2012
Service cost $ —
$ —
$ —
$ —
$ —
$ —
Interest cost 322
325
83
88
4
5
Expected return on plan assets (276 ) (245 ) —
—
—
—
Settlement cost —
—
—
—
—
—
Amortization of prior service cost —
—
—
—
—
—
Recognized net actuarial loss or (gain) 350
360
55
51
(3 ) —
Net periodic pension cost (income) $ 396
$ 440
$ 138
$ 139
$ 1
$ 5


	Six Months Ended July 31,
											Non-Employee Directors					Three Months Ended
	Pension Plan						VIP Retirement Plan				Retirement Plan					Pension Plan						VIP Plan				Non-Employee Directors Retirement Plan
	2013			2012			2013		2012		2013			2012		7/31/2014			7/31/2013			7/31/2014		7/31/2013		7/31/2014			7/31/2013
Service cost	$	—		$	—		$	—	$	—	$	—		$	—	$	—		$	—		$	—	$	—	$	—		$	—
Interest cost	644			650			166		176		8			10		315			322			88		83		4			4
Expected return on plan assets	(552		)	(490		)	—		—		—			—		(275		)	(276		)	—		—		—			—
Settlement cost	—			—			—		—		—			—
Amortization of transition amount																—			—			—		—		—			—
Recognized (gain) loss due to curtailments																—			—			—		—		—			—
Amortization of prior service cost	—			—			—		—		—			—		—			—			—		—		—			—
Recognized net actuarial loss or (gain)	700			720			110		102		(6		)	—
Net periodic pension cost (income)	$	792		$	880		$	276	$	278	$	2		$	10
Recognized net actuarial (gain) loss																284			350			45		55		(8		)	(3		)
Benefit cost																$	324		$	396		$	133	$	138	$	(4	)	$	1



	Six months Ended
	Pension Plan						VIP Plan				Non-Employee Directors Retirement Plan
	7/31/2014			7/31/2013			7/31/2014		7/31/2013		7/31/2014			7/31/2013
Service cost	$	—		$	—		$	—	$	—	$	—		$	—
Interest cost	630			644			176		166		8			8
Expected return on plan assets	(550		)	(552		)	—		—		—			—
Amortization of transition amount	—			—			—		—		—			—
Recognized (gain) loss due to curtailments	—			—			—		—		—			—
Amortization of prior service cost	—			—			—		—		—			—
Recognized net actuarial (gain) loss	568			700			90		110		(16		)	(6		)
Benefit cost	$	648		$	792		$	266	$	276	$	(8	)	$	2

Note ~~11.~~12. Warranty Accrual

The Company provides a warranty against all substantial defects in material and workmanship. In 2005 the Company extended its standard warranty from five years to 10 years. Effective February 1, 2014 the Company modified its warranty to a limited lifetime warranty. The new warranty effective February 1, 2014 is not anticipated to have a significant effect on warranty expense. The Company’s warranty is not a guarantee of service life, which depends upon events outside the Company’s control and may be different from the warranty period. The Company accrues an estimate of its exposure to warranty claims based upon both ~~current and historical~~ product sales data and an analysis of actual warranty ~~costs~~claims incurred. ~~The Company’s products carry a~~ 10-year warranty. The Company periodically assesses the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary. The warranty liability is included in accrued liabilities in the accompanying consolidated balance sheets.

The following is a summary of the Company’s ~~warranty claim~~warranty-claim activity for the three months and six months ended July 31, ~~2013~~2014 and ~~2012~~ ~~(in thousands):~~

2013.


	Three Months Ended						Six Months Ended						Three Months Ended						Six Months Ended
	7/31/2013			7/31/2012			7/31/2013			7/31/2012			7/31/2014			7/31/2013			7/31/2014			7/31/2013
	(In thousands)												(In thousands)
Beginning accrued warranty balance	$	1,000		$	1,400		$	1,000		$	1,400
Beginning balance													$	1,000		$	1,000		$	1,000		$	1,000
Provision	75			88			216			199			83			75			218			216
Costs incurred	(75		)	(188		)	(216		)	(299		)	(83		)	(75		)	(218		)	(216		)
Ending accrued warranty balance	$	1,000		$	1,300		$	1,000		$	1,300
Ending balance													$	1,000		$	1,000		$	1,000		$	1,000

Note ~~12.~~13. Subsequent Events

We have evaluated subsequent events to assess the need for potential recognition or disclosure in this Quarterly Report on Form 10-Q. Such events were evaluated through the date these financial statements were issued. Based upon this evaluation, it was determined that, no subsequent events occurred that required recognition or disclosure in the financial statements.

Table of Contents

~~VIRCO MFG. CORPORATION~~

Item 2. ~~Management’s~~Management's Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations

The Company's order rates and results of operations for the first six months of ~~2013~~2014 continue to be ~~adversely impacted~~affected by economic conditions and the related impact on tax receipts and budgeted expenditures for public schools. Orders from bond funded projects continue to decline, but business from other sources of funding increased. After many years of decline, tax proceeds and related operating budgets for schools are beginning to stabilize, even increase in some cases, and new funding from programs such as STEM (Science, Technology, Engineering, and Math) are contributing to order rates. For the first six months project orders, which are typically new school construction or major renovations usually financed by bonds declined by nearly 20%. This decline was offset by orders from operating budgets and other grant programs. Order rates for the six months ended July 31, ~~2013~~2014 are ~~5.6% lower~~5.5% higher than the corresponding period last year, and ~~continue to~~ show ~~greater than normal~~ volatility on a month-to-month basis. Order rates for the ~~first quarter~~three month period ended ~~April 30, 2013~~July 31, 2014 were ~~significantly lower (24.1%) than the same period in the prior year, with the entire reduction in orders occurring in the first two months. For each of the next four months, order rates were~~5.6% greater than the corresponding ~~month in the prior~~period last year. ~~Order rates, in turn, for the three months ended July 31, 2013 were 6.1% greater than the three months ended July 31, 2012.~~

As discussed more ~~thoroughly~~fully in the ~~Company's Annual Report on~~ Form 10-K for the fiscal year ended January 31, ~~2013~~2014 (“Form 10-K”), the Company ~~substantially~~implemented a variety of cost saving initiatives over the prior 2.5 years that have reduced ~~its~~the number of full time ~~work force through an early retirement program and attrition, primarily~~employees by approximately 33% going into the beginning of the first quarter of 2014. This reduced cost structure has enabled the Company to reduce operating losses during the third and fourth quarters of 2011. In May of 2013, due to continued weakness in the economy and the resulting challenges facing the Company's business, the Company further reduced its workforce by 41 employees. The second quarter results include a charge of $412,000 related to this reduction. At July 31, 2013, the Company had 100 fewer permanent employees than at July 31, 2012 and 300 fewer employees than at July 31, 2011. As a result of these recent reductions in force, the Company has made greater utilization of temporary employees during the summer months and expects to benefit from a lower cost structure during the traditionallyseasonally slow first and fourth quarters.

The reduction in headcount was concentrated in manufacturing, and included both direct labor and indirect positions. It is the intent of the Company to meet the seasonal demand for production and distribution through more aggressive use of temporary seasonal workers. As a result of operating losses incurred during 2010 and 2011, the Company has established a substantial valuation allowance for deferred tax assets. For this reason, the discussion below will focus on pre-tax operating results.

For the three months ended July 31, ~~2013,~~2014, the Company earned a pre-tax profit of $5,509,000 on net sales of $53,192,000 compared to a pre-tax profit of $6,285,000 on net sales of $56,933,000 ~~compared to a pre-tax profit of $7,259,000 on net sales of $60,392,000~~ in the same period last year.

Net sales for the three months ended July 31, ~~2013~~2014 decreased by ~~$3,459,000,~~$3,741,000, a ~~5.7%~~6.6% decrease, compared to the same period last year. This decrease was the result of a reduction in unit volume partially offset by a slight increase in selling prices.

Unit volume during the second quarter declined largely as a result ~~of general economic conditions, which negatively impacted tax receipts,~~increased seasonality in our business. Order rates increased in the ~~funded status of public schools,~~second quarter, and ~~reduced levels of school construction completions. Incoming orders for the same period~~although shipments declined, backlog at July 31, 2014 increased ~~by 6.1%~~ compared to the prior year. ~~Backlog~~Substantially all of the increased backlog at July 31, ~~2013 increased by less than 11.5% compared to the prior year.~~2014 was shipped in August.

Gross margin as a percentage of sales ~~was relatively stable at 37.8%~~increased to 39.2% for the three months ended July 31, ~~2013~~2014 compared to 37.9% in the same period last year. Gross margin was ~~unfavorably~~favorably affected primarily by ~~a decrease~~an increase in overhead absorption as a result of ~~an 10% decrease~~a 13% increase in production hours ~~offset by reductions~~and a slight increase in ~~overhead spending.~~selling prices. Commodity costs ~~have been~~were stable compared to the prior year.

Selling, general and administrative expenses for the three months ended July 31, ~~2013, which include $412,000 of severance expenses, decreased~~2014, increased by ~~approximately $400,000~~$353,000 compared to the same period last year, ~~but~~and increased as a percentage of sales by nearly 1%2.5%. The ~~decrease~~increase in selling, general and administrative expenses as a percentage of sales was attributable to ~~a reduction in variable~~increased freight and service expenses, increased selling and ~~service costs due to~~marketing initiatives, and what the ~~reduced volume of shipments and due to cost reductions, offset by the severance expenses.~~Company believes will be non- recurring legal costs.

For the six months ended July 31, ~~2013,~~2014, the Company earned a pre-tax profit of $1,635,000 on net sales of $76,722,000 compared to a pre-tax profit of $1,801,000 on net sales of $76,823,000 ~~compared to a pre-tax profit of $2,442,000 on net sales of $84,060,000~~ in the same period last year.

Net sales for the six months ended July 31, ~~2013~~2014 decreased by ~~$7,237,000, an 8.6% decrease,~~$101,000 compared to the same period last year. This decrease was the result of a ~~reduction~~slight increase in unit volume ~~partially~~ offset by a slight ~~increase~~decrease in selling prices. Unit volume declined largely as a result of general economic conditions, which negatively impacted tax receipts, the funded status of public schools, and reduced levels of school construction completions. Incoming orders for the same period decreased by 5.6% compared to the prior year.

Gross margin as a percentage of sales improved to ~~36.4%~~37.8% for the six months ended July 31, ~~2013~~2014 compared to ~~35.5%~~36.4% in the same period last year. The improvement in gross margin was attributable to improved overhead absorption related to a ~~slight~~12% increase in ~~selling prices,~~production hours, factory spending that did not increase at the same rate as production hours, and stable commodity ~~costs, and a reduction in factory spending, offset by a decrease in overhead absorption as a result of a 7.0% reduction in production hours.~~costs.

Selling, general and administrative expenses for the six months ended July 31, ~~2013, which include $475,000 of severance expense, decreased~~2014, increased by approximately ~~$1,350,000~~$1,573,000 compared to the same period last year, ~~but~~and increased as a

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percentage of sales by ~~1.2%~~2.1%. The ~~decrease~~increase in selling, general and administrative expenses was attributable to ~~a reduction in variable~~increased freight and service expenses, increased selling and ~~service costs due to~~marketing initiatives, and what the ~~reduced volume of shipment and due to cost reductions.~~Company believes will be non- recurring legal costs.

In the first six months of ~~2013~~2014 the Company did not record significant income tax expense / (benefit). During the fourth quarter of 2010 the Company established a valuation allowance on the majority of deferred tax assets. ~~Because of this valuation allowance the~~The effective income tax ~~expense / (benefit) is expected to be relatively low, with income tax expense / (benefit) being primarily attributable to~~rate for

the quarter ended July 31, 2014 was impacted by the valuation allowance, alternative minimum taxes, ~~combined with income and~~ franchise taxes required by various ~~states.~~states and a discrete item associated with uncertain tax positions.

Liquidity and Capital Resources

Interest expense increased by approximately ~~$80,000~~$34,000 for the six months ended July 31, ~~2013,~~2014, compared to the same period last year. The increase was primarily due to increased borrowing costs related to the Company's line of credit with PNC Bank National Association (“PNC Bank”).

Net accounts receivable was ~~$582,000~~$2,674,000 lower at July 31, ~~2013~~2014 than at July 31, ~~2012~~2013 due to decreased ~~sales offset by slightly higher days sales outstanding.~~sales. Accounts receivable was ~~$23,253,000~~$20,946,000 greater at July 31, ~~2013~~2014 than at January 31, ~~2013~~2014 due to the seasonal business cycle. As discussed in the Company's Form 10-K, approximately 50% of the Company's annual sales volume is shipped in June through August. The Company traditionally builds large quantities of inventory during the first quarter of each fiscal year in anticipation of seasonally high summer shipments. For the first six months, the Company increased inventory by approximately ~~$11,523,000~~$17,503,000 compared to January 31, ~~2013.~~2014. This increase was ~~$1,630,000~~$5,980,000 more than the ~~$9,894,000~~$11,523,000 increase in the comparable period in ~~2012.~~2013. At the end of the second quarter inventory was approximately ~~$840,000 less~~$8,443,000 more compared to July 31, ~~2012.~~2013. Inventory increased more than prior year to accommodate the earlier opening of schools in August and increased backlog at July 31, 2014 compared to the prior year. The increase in accounts receivable and inventory at July 31, ~~2013~~2014 compared to the January 31, ~~2013,~~2014, was financed through the Company's credit facility with PNC Bank.

Borrowings under the Company's revolving line of credit with PNC Bank at July 31, ~~2013~~2014 increased by approximately ~~$1,824,000~~$4,877,000 compared to the borrowings at July 31, ~~2012.~~2013. The Company established a goal of limiting capital spending to less than $3,000,000 for fiscal year ~~2013,~~2014, which is less than the Company's anticipated depreciation expense. Capital spending for the six months ended July 31, ~~2013~~2014 was ~~$1,861,000~~$1,904,000 compared to ~~$902,000~~$1,861,000 for the same period last year. Capital expenditures are being financed through the Company's credit facility with PNC Bank and operating cash flow.

Net cash used in operating activities for the six months ended July 31, ~~2013,~~2014, was ~~$21,183,000~~$23,184,000 compared to ~~$14,000,000~~$21,067,000 for the same period last year. The increase in cash used was primarily attributable to an increase in cash used for ~~receivables, an increase~~inventory, a decrease in cash used for ~~inventory,~~receivables, and ~~a decrease~~an increase in accounts payable and accrued liabilities.

The Company believes that cash flows from operations, together with the Company's unused borrowing capacity with PNC Bank will be sufficient to fund the Company's debt service requirements, capital expenditures and working capital needs for the next twelve months.

Off Balance Sheet Arrangements

During the six months ended July 31, 2013, there were no material changes in the Company's off balance sheet arrangements or contractual obligations and commercial commitments from those disclosed in the Company's Form 10-K.

None.

Critical Accounting Policies and Estimates

The Company's critical accounting policies are outlined in its Form 10-K. There have been no changes in the ~~six months period~~quarter ended July 31, ~~2013.~~2014.

Forward-Looking Statements

From time to time, including in this Quarterly Report on Form 10-Q for the quarterly period ended July 31, ~~2013,~~2014, 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, availability of funding for educational institutions, availability and cost of materials, especially steel, 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 Form ~~10-K.The~~10-K.

The Company's forward-looking statements represent its judgment only on the dates such statements were made. By making any

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forward-looking statements, the Company assumes no duty to update them to reflect new, changed or unanticipated events or circumstances.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

On December 22, 2011, the Company and Virco Inc., a wholly owned subsidiary of the Company ("Virco" and, together with the Company, the "Borrowers") entered into a Revolving Credit and Security Agreement (the "Credit Agreement") with PNC Bank, National Association, as administrative agent and lender ("PNC"). On June 15, 2012, the Borrowers entered into Amendment No. 1 ("Amendment No. 1") to the Credit Agreement which, among other things, increased the borrowing availability thereunder by ~~$3,000,000~~ for the period from May 1 through July 14 of each year. On July 27, 2012, the Borrowers entered into Amendment No. 2 ("Amendment No. 2") to the Credit Agreement which, among other things, reduced the minimum EBITDA financial covenant contained therein for the five consecutive months ending June 2012 from ~~$1,600,000~~ to ~~$300,000~~. On September 12, 2012, the Borrowers entered into Amendment No. 3 ("Amendment No. 3") to the Credit Agreement which, among other things, modified the minimum EBITDA covenant for the balance of the fiscal year. On December 6, 2012, the Borrowers entered into Amendment No. 4 ("Amendment No. 4") to the Credit Agreement which, among other things, waived the violation of the minimum EBITDA and minimum tangible net worth covenants at October 31, 2012 and eliminated the minimum EBITDA covenant at November 30, 2012. On March 1, 2013, the Borrowers entered into Amendment No. 5 ("Amendment No. 5") to the Credit Agreement, which among other things modified the minimum tangible net worth covenant for the periods from ~~January 31, 2013~~ to ~~January 31, 2014~~, modified the minimum EBIDTA covenant for certain periods to January 31, 2014 and waived the violation of the minimum EBITDA covenant for the eleven consecutive fiscal month period ending December 31, 2012.Not applicable.

~~The Credit Agreement provides the Borrowers with a secured revolving line of credit ("the Revolving Credit Facility") of up to~~ ~~$60,000,000, with seasonal adjustments to the credit limit and subject to borrowing base limitations, and includes a sub-limit of up to~~ ~~$3,000,000~~ ~~for issuances of letters of credit. The Revolving Credit Facility is an asset-based line of credit that is subject to a borrowing base limitation and generally provides for advances of up to~~ ~~85%~~ ~~of eligible accounts receivable, plus a percentage equal to the lesser of~~ ~~60%~~ ~~of the value of eligible inventory or~~ ~~85%~~ ~~of the liquidation value of eligible inventory, plus an amount ranging from~~ ~~$4,000,000~~ to ~~$14,000,000~~ from February 15 through August 15 of each year, minus undrawn amounts of letters of credit and reserves as per Amendment No.5. The Revolving Credit Facility is secured by substantially all of the Borrowers' personal property and certain of the Borrowers' real property. The principal amount outstanding under the Credit Agreement and any accrued and unpaid interest is due no later than December 22, 2014, and the Revolving Credit Facility is subject to certain prepayment penalties upon earlier termination of the Revolving Credit Facility. Prior to the maturity date, principal amounts outstanding under the Credit Agreement may be repaid and reborrowed at the option of the Borrowers without premium or penalty, subject to borrowing base limitations, seasonal adjustments and certain other conditions.

The Revolving Credit Facility bears interest, at the Borrowers' option, at either the Alternate Base Rate (as defined in the Credit Agreement) or the Eurodollar Currency Rate (as defined in the Credit Agreement), in each case plus an applicable margin. The applicable margin for Alternate Base Rate loans is a percentage within a range of ~~0.75%~~ to ~~1.75%, and the applicable margin for Eurodollar Currency Rate loans is a percentage within a range of~~ ~~1.75%~~ to ~~2.75%, in each case based on the EBITDA of the Borrowers at the end of each fiscal quarter, and may be increased at PNC's option by~~ ~~2.0%~~ during the continuance of an event of default. Accrued interest with respect to principal amounts outstanding under the Credit Agreement is payable in arrears on a monthly basis for Alternative Base Rate loans, and at the end of the applicable interest period but at most every three months for Eurodollar Currency Rate loans.

~~In addition, the Credit Agreement contains a clean down provision that requires the Company to reduce borrowings under the line to less than~~ ~~$6,000,000~~ ~~for a period of~~ 60 consecutive days each fiscal year. The Company believes that normal operating cash flow will allow it to meet the clean down requirement with no adverse impact on the Company's liquidity. The Company was in compliance with its covenants at ~~July 31, 2013~~.

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Events of default (subject to certain cure periods and other limitations) under the Credit Agreement include, but are not limited to, (i) non-payment of principal, interest or other amounts due under the Credit Agreement, (ii) the violation of terms, covenants, representations or warranties in the Credit Agreement or related loan documents, (iii) any event of default under agreements governing certain indebtedness of the Borrowers and certain defaults by the Borrowers under other agreements that would materially adversely affect the Borrowers, (iv) certain events of bankruptcy, insolvency or liquidation involving the Borrowers, (v) judgments or judicial actions against the Borrowers in excess of ~~$250,000~~, subject to certain conditions, (vi) the failure of the Company to comply with Pension Benefit Plans (as defined in the Credit Agreement), (vii) the invalidity of loan documents pertaining to the Credit Agreement, (viii) a change of control of the Borrowers and (ix) the interruption of operations of any of the Borrowers' manufacturing facilities for five consecutive days during the peak season or fifteen consecutive days during any other time, subject to certain conditions.

Pursuant to the Credit Agreement, substantially all of the Borrowers' accounts receivable are automatically and promptly swept to repay amounts outstanding under the Revolving Credit Facility upon receipt by the Borrowers. Due to this automatic liquidating nature of the Revolving Credit Facility, if the Borrowers breach any covenant, violate any representation or warranty or suffer a deterioration in their ability to borrow pursuant to the borrowing base calculation, the Borrowers may not have access to cash liquidity unless provided by PNC at its discretion. In addition, certain of the covenants and representations and warranties set forth in the Credit Agreement contain limited or no materiality thresholds, and many of the representations and warranties must be true and correct in all material respects upon each borrowing, which the Borrowers expect to occur on an ongoing basis. There can be no assurance that the Borrowers will be able to comply with all such covenants and be able to continue to make such representations and warranties on an ongoing basis.

The Company's line of credit with PNC Bank is structured to provide seasonal credit availability during the Company's peak summer season. The Company believes that the Revolving Credit Facility will provide sufficient liquidity to meet its capital requirements in the next 12 months. Approximately ~~$20,192,000~~ ~~was available for borrowing as of~~ ~~July 31, 2013~~.

The descriptions set forth herein of the Credit Agreement, Amendment No. 1, Amendment No. 2, Amendment No. 3, Amendment No. 4 and Amendment No. 5 are qualified in their entirety by the terms of such agreements, each of which has been filed with the Securities and Exchange Commission.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in reports filed with the Securities and Exchange Commission (the “Commission”) pursuant to the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the Commission's rules and forms, and that such information is accumulated and communicated to the Company's management, including its Principal Executive Officer and Principal 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.

The Company carried out an evaluation, under the supervision and with the participation of the Company's management, including its Principal Executive Officer along with its Principal Financial Officer, of the effectiveness of the design and operation of disclosure controls and ~~procedures as of the end of the period covered by this Quarterly Report on Form 10-Q, pursuant to Exchange Act Rule 13a-15.~~procedures. Based upon the foregoing, the Company's Principal Executive Officer along with the Company's Principal Financial Officer concluded that ~~subject to the limitations noted above,~~ the Company's disclosure controls and procedures ~~are effective~~(as such term is defined in ~~ensuring that (i) information required to be disclosed by the Company in the reports that it files or submits~~Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act ~~is recorded, processed, summarized and reported, within~~of 1934, as amended) were effective as of the ~~time periods specified~~end of the period covered by this Quarterly Report on Form 10-Q.

Changes in the Commission's rules and forms and (ii) information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company's management, including its Principal Executive and Principal Financial Officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Internal Control ~~over~~Over Financial Reporting

There was no change in the Company's internal control over financial reporting during the ~~three months ended July 31, 2013~~second fiscal quarter of 2014 that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

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PART II — ~~OTHER INFORMATION~~

~~VIRCO MFG. CORPORATION~~Other Information

Item 1. Legal Proceedings

The Company has various legal actions pending against it arising in the ordinary course of business, which in the opinion of the Company, are not material in that management either expects that the Company will be successful on the merits of the pending cases or that any liabilities resulting from such cases will be substantially covered by insurance. While it is impossible to estimate with certainty the ultimate legal and financial liability with respect to these suits and claims, management believes that the aggregate amount of such liabilities will not be material to the results of operations, financial position, or cash flows of the Company.

Item 1A. Risk Factors

In our Form 10-K for the year ended January 31, 2013, we described material risk factors facing our business. Additional risks not presently known to us or that we currently deem immaterial may also impair our business operations. As of the date of this report, there have been no material changes to the risk factors described in our Form 10-K.Not applicable.

Item 2. Unregistered Sales of Equity ~~Securities;~~Securities and Use of Proceeds ~~and Issuer Purchases of Equity Securities~~

On June 6, 2008, the Board of Directors approved a $3,000,000 share repurchase program. As of July 31, 2013, $1,053,000 remained available for repurchase under this program. The Company did not repurchase any shares of its stock during the second quarter of 2013. Pursuant to the Company's Credit Agreement with PNC Bank, the Company is prohibited from repurchasing any shares of its stock except in cases where a repurchase is financed by a substantially concurrent issuance of new shares of the Company's common stock.

In addition, pursuant to the terms of the Company's Credit Agreement with PNC Bank, the Company is prohibited from paying dividends. Consequently, for at least as long as this covenant is included in the Company's Credit Agreement, no dividends will be paid by the Company to its stockholders.None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

Exhibit 3.2 - Amended and Restated Bylaws of the Company dated May 7, 2014.

Exhibit 10.1 - Eighth Amendment to Revolving Credit and Security Agreement, dated as of December 6, 2012, by and among Virco Mfg. Corporation and Virco, Inc., as borrowers, and PNC Bank, National Association, as the lender and administrative agent.

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 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.

Exhibit 101.INS — XBRL Instance Document.

Exhibit 101.SCH — XBRL Taxonomy Extension Schema Document.

Exhibit 101.CAL — XBRL Taxonomy Extension Calculation Linkbase Document.

Exhibit 101.LAB — XBRL Taxonomy Extension Label Linkbase Document.

Exhibit 101.PRE — XBRL Taxonomy Extension Presentation Linkbase Document.

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~~VIRCO MFG. CORPORATION~~SIGNATURES

~~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: September ~~13, 2013~~11, 2014	By:	/s/ Robert E. Dose
		Robert E. Dose
		Vice President — Finance



	Three Months Ended July 31,
											Non-Employee Directors
	Pension Plan						VIP Retirement Plan				Retirement Plan
	2013			2012			2013		2012		2013			2012
Service cost	$	—		$	—		$	—	$	—	$	—		$	—
Interest cost	322			325			83		88		4			5
Expected return on plan assets	(276		)	(245		)	—		—		—			—
Settlement cost	—			—			—		—		—			—
Amortization of prior service cost	—			—			—		—		—			—
Recognized net actuarial loss or (gain)	350			360			55		51		(3		)	—
Net periodic pension cost (income)	$	396		$	440		$	138	$	139	$	1		$	5