1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act of 1934 FORM 10-Q For Quarter Ended October 31, 2000 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 (I.R.S. Employer incorporation or organization) 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 [X] No [ ] The number of shares outstanding of each of the issuer's classes of common stock, as of December 1, 2000. Common Stock 11,344,694 Shares* * Adjusted for 10% stock dividend declared August 15, 2000, date of record September 7, 2000, payable September 29, 2000. 2 VIRCO MFG. CORPORATION INDEX Part I. Financial Information Item 1. Financial Statements (unaudited) Condensed consolidated balance sheets - October 31, 2000 and January 31, 2000 Condensed consolidated statements of income - Three months ended October 31, 2000 and 1999 Condensed consolidated statements of income - Nine months ended October 31, 2000 and 1999 Condensed consolidated statements of cash flows - Nine months ended October 31, 2000 and 1999 Notes to condensed consolidated financial statements - October 31, 2000 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Item 3. Quantitative and Qualitative Disclosures about Market Risk Part II. Other Information Item 4. Submission of matters to a vote of Security Holders None Item 6. Exhibits and Reports on Form 8-K Exhibit (11) - Statement re: Computation of Earnings Per Share Signatures 2 3 PART I Item 1. Financial Statements VIRCO MFG. CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS Unaudited (Note 1) (Dollar amounts in thousands, except per share data) ASSETS 10/31/2000 1/31/2000 ------ ---------- --------- Current assets Cash $ 359 $ 1,072 Accounts and notes receivable 45,238 27,584 Less allowance for doubtful accounts (429) (200) --------- --------- Net accounts and notes receivable 44,809 27,384 Inventories (Note 2) Finished goods 27,546 35,795 Work in process 10,706 9,260 Raw materials and supplies 12,911 12,003 --------- --------- Total inventories 51,163 57,058 Income taxes receivable -- 1,753 Prepaid expenses and deferred income tax 2,050 2,659 --------- --------- Total current assets 98,381 89,926 Property, plant & equipment Cost 149,784 136,315 Less accumulated depreciation (55,534) (48,378) --------- --------- Net property, plant & equipment 94,250 87,937 Other assets 13,025 13,000 --------- --------- Total assets $ 205,656 $ 190,863 ========= ========= See notes to condensed consolidated financial statements. 3 4 VIRCO MFG. CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS Unaudited (Note 1) (Dollar amounts in thousands, except per share data) LIABILITIES AND STOCKHOLDERS' EQUITY 10/31/2000 1/31/2000 ------------------------------------ ---------- --------- Current liabilities Checks released but not yet cleared bank $ 4,798 $ 4,786 Accounts payable 11,152 19,749 Accrued compensation and employee benefits 8,784 10,333 Current maturities on long-term debt 2,049 1,998 Income tax payable 2,283 -- Other current liabilities 4,836 1,637 --------- --------- Total current liabilities 33,902 38,503 Non-current liabilities Long term debt (less current portion) 54,711 46,027 Other non-current liabilities 8,306 7,968 --------- --------- Total non-current liabilities 63,017 53,995 Deferred income taxes 4,531 4,531 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; 11,992,244 issued at 10/31/2000 and 10,952,350 shares issued at 1/31/2000 120 110 Additional paid-in capital 97,416 84,635 Retained earnings 18,459 20,242 Less treasury stock at cost (660,786 shares at 10/31/2000 and 621,874 shares at 1/31/2000) (11,125) (10,692) Less unearned ESOP shares (244) (41) Less accumulated comprehensive loss (420) (420) --------- --------- Total stockholders' equity 104,206 93,834 --------- --------- Total liabilities and stockholders' equity $ 205,656 $ 190,863 ========= ========= See notes to condensed consolidated financial statements. 4 5 VIRCO MFG. CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME Unaudited (Note 1) (Dollar amounts in thousands, except per share data) Three Months Ended -------------------------- 10/31/2000 10/31/1999 ---------- ---------- Net sales $ 95,866 $ 93,895 Cost of goods sold 67,550 60,212 -------- -------- Gross profit 28,316 33,683 Selling, general and administrative and other 23,978 22,661 Provision for doubtful accounts (52) -- Interest expense 1,491 506 Other income (4,052) -- -------- -------- 21,365 23,167 Income before income taxes 6,951 10,516 Income taxes 2,711 4,102 -------- -------- Net income $ 4,240 $ 6,414 ======== ======== Earnings per share $ .37 $ .56 Earnings per share - assuming dilution $ .37 $ .55 Weighted average shares outstanding (a) 11,335 11,446 Weighted average shares outstanding - assuming dilution (a) 11,487 11,658 Dividend per share Cash (a) $ .02 $ .02 Stock 10% 10% (a) Adjusted for 10% stock dividend declared August 15, 2000. See notes to condensed consolidated financial statements. 5 6 VIRCO MFG. CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME Unaudited (Note 1) (Dollar amounts in thousands, except per share data) Nine Months Ended --------------------------- 10/31/2000 10/31/1999 ---------- ---------- Net sales $ 241,041 $ 219,598 Cost of goods sold 166,475 144,086 --------- --------- Gross profit 74,566 75,512 Selling, general and administrative and other 63,066 55,322 Provision for doubtful accounts 217 381 Interest expense 4,257 1,815 Gain on sale of real estate (7,945) -- Other income (4,052) -- --------- --------- 55,543 57,518 Income before income taxes 19,023 17,994 Income taxes 7,419 7,018 --------- --------- Net income $ 11,604 $ 10,976 ========= ========= Earnings per share $ 1.02 $ .95 Earnings per share - assuming dilution $ 1.01 $ .94 Weighted average shares outstanding (a) 11,360 11,523 Weighted average shares outstanding - assuming dilution (a) 11,501 11,738 Dividend per share Cash (a) $ .06 $ .05 Stock 10% 10% (a) Adjusted for 10% stock dividend declared August 15, 2000. See notes to condensed consolidated financial statements. 6 7 VIRCO MFG. CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Unaudited (Note 1) (Dollar amounts in thousands) Nine Months Ended ------------------------- 10/31/2000 10/31/1999 ---------- ---------- Cash flows from operating activities Net income $ 11,604 $ 10,976 Adjustments to reconcile net income to net cash used in operating activities: Depreciation 9,838 7,198 Provision for doubtful accounts 217 381 (Gain)Loss on sales of fixed assets (7,950) 175 Change in assets and liabilities: Accounts and notes receivable (17,642) (18,762) Inventories 5,895 3,631 Prepaid expenses and deposits 609 253 Income taxes receivable/payable 4,036 2,371 Accounts payable and accrued expenses (6,608) 3,952 -------- -------- Net cash (used in) provided by operating activities (1) 10,175 Cash flows from investing activities Capital expenditures (18,331) (26,343) Proceeds from sale of fixed assets 10,130 41 Net investment in life insurance (14) (1,046) -------- -------- Net cash used in investing activities (8,215) (27,348) Cash flows from financing activities Issuance of long-term debt 10,252 24,563 Repayment of long-term debt (1,517) (1,690) Payment of cash dividend (608) (592) Purchase of treasury stock (433) (3,741) Issuance of common stock 12 31 Loans to ESOP (203) 54 -------- -------- Net cash provided by financing activities 7,503 18,625 Net change in cash (713) 1,452 Cash at beginning of period 1,072 1,086 -------- -------- Cash at end of period $ 359 $ 2,538 ======== ======== See notes to condensed consolidated financial statements. 7 8 VIRCO MFG. CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS October 31, 2000 and October 31, 1999 Note 1: The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles 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-month period ended October 31, 2000 are not necessarily indicative of the results that may be expected for the year ended January 31, 2001. The balance sheet at January 31, 2000 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles 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, 2000. Note 2. Inventory Year end financial statements reflect inventories verified by physical counts with the material content valued by the LIFO method. At this interim date, 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 October 31, 2000. Management continually monitors production costs, material costs and inventory levels to determine that interim inventories are fairly stated. Note 3. Income Taxes Income taxes for the nine months ended October 31, 2000 were computed using the effective tax rate estimated to be applicable for the full fiscal year, which is subject to ongoing review and evaluation by management. Note 4. Significant Accounting Policies The weighted average number of shares used in the computation of diluted net income per share was 11,487,000 and 11,658,000 for the quarter ended October 31, 2000 and October 31, 1999, respectively. The weighted average number of shares used in the computation of diluted net income per share was 11,501,000 and 11,738,000 for the nine months ended October 31, 2000 and October 31, 1999, respectively. Per share and weighted-average share amounts for the three months and nine months ended October 31, 1999 have been restated to reflect a 10% stock dividend payable on September 29, 2000 to stockholders of record as of September 7, 2000. Comprehensive income includes net income and minimum pension liability adjustments. Comprehensive income was $4,240,000 and $6,414,000 for the quarter ended October 31, 2000 and October 31, 1999, respectively. Comprehensive income was $11,604,000 and $10,976,000 for the nine months ended October 31, 2000 and October 31, 1999, respectively. 8 9 The Financial Accounting Standards Board has issued Statement of Financial Accounting Standards (SFAS) 133, "Accounting for Derivative Instruments and for Hedging Activities, as amended by SFAS No. 138 "Accounting for Certain Derivative Instruments and Certain Hedging Activities-an Amendment of FASB Statement 133." SFAS 133, as amended, requires derivatives to be recorded on the balance sheet at fair value and establishes special accounting for the following three types of hedges: hedges of changes in the fair value of assets, liabilities or firm commitments (referred to as fair value hedges); hedges of the variable cash flows of forecasted transactions (cash flow hedges); and hedges of foreign currency exposures of net investments in foreign operations. The accounting treatment and criteria for each of the three types of hedges is unique. Changes in fair value of derivatives that do not meet the criteria of one of these three categories of hedges would be included in income. The Company does not believe that adopting this standard will have a material effect on its financial position, results of operations and cash flows. Currently, the Company does not anticipate adopting this standard before February 1, 2001, the required effective date. In December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin (SAB) No. 101, Revenue Recognition in Financial Statements, which summarizes the SEC Staff's views on applying certain generally accepted accounting principles to revenue recognition in financial statements. Additionally, the Company is considering the effect of Emerging Issues Task Force (EITF) No. 00-10, Accounting for Shipping and Handling Fees and Costs, which addresses in a sale transaction for goods, how the seller should classify amounts billed and incurred for shipping and handling in the income statement and the composition or types of costs that would be required to be classified as costs of goods sold. The Company does not believe that these pronouncements will have a material effect on its revenue recognition policies or on net income. The Company plans to make any required reclassifications of amounts billed and incurred for shipping and handling in the fourth quarter of the fiscal year ending January 31, 2001. Note 5. Gain on Sale of Real Estate On April 25, 2000, the Company finalized the sale of its Torrance, California, warehouse. The Company received $9,385,000 in cash and recorded a $7,945,000 pre-tax gain on disposition during the quarter ended April 30, 2000. Note 6. Amendment to Credit Facility On July 1, 2000, the credit facility with Wells Fargo Bank was expanded to $90,000,000 from $80,000,000. The maximum principal amount available under this note was reduced by $10,000,000 on September 30, 2000 and shall be reduced automatically on January 1, 2001 and January 1, 2002, by the amount of $10,000,000. Note 7. Other Income In October 2000, the Company entered into a confidential settlement of a dispute involving past services related to the installation of non-manufacturing equipment for which it received a final cash payment in November 2000. This payment is a non-recurring amount unrelated to the Company's ongoing operations. In the third quarter October 31, 2000, the Company recognized $4,052,000 in other income from this settlement. Note 8. Subsequent Event 9 10 Subsequent to the quarter ended October 31, 2000, the Company embarked on a program to consolidate many of the functions currently performed by its Conway and Torrance divisions. Beginning in the fourth quarter of 2000 and continuing through 2001, the Company will be consolidating the staffs and activities of its division accounting, engineering, purchasing, customer service, and human resources departments. At the same time, the Company will be converting the Torrance and Conway divisions to cost centers instead of profit centers. The consolidation involves the immediate layoff of approximately 140 employees at both divisions. The cost of severance packages associated with the layoff, which will be recorded in the fourth quarter of this year ending January 31, 2001, is expected to be approximately $750,000 to $1,000,000. 10 11 VIRCO MFG. CORPORATION Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Results of Operations: For the third quarter ended October 31, 2000, the Company earned net income of $4,240,000 on sales of $95,866,000 compared to net income of $6,414,000 on sales of $93,895,000 in the same period last year. Earnings were $.37 per share compared to $.55 per share in the same period last year, after giving effect to the 10% stock dividend declared August 15, 2000. For the nine months ended October 31, 2000, the Company earned net income of $11,604,000 on sales of $241,041,000 compared to net income of $10,976,000 on sales of $219,598,000 in the same period last year. Earnings were $1.01 per share compared to $.94 per share in the same period last year, after giving effect to the 10% stock dividend declared August 15, 2000. Sales for the third quarter and year to date are consistent with Virco's seasonal business cycle, which produces diminished first quarter sales followed by strong second and third quarter deliveries of educational furniture. Sales for the third quarter increased slightly compared to the same period last year. Backlog at October 31, 2000 was slightly lower compared to the same time last year. Approximately 94% of the increase in sales for the three months ended October 31, 2000 were from educational sales and the balance from commercial sales. The increase in education sales was attributable to the Company pursuing an aggressive pricing policy during the bidding season of late 1999/early 2000 with the intention of filling up our new factory capacity. Revenues for the year have increased 9.8%, but unit prices in 17 of our top 20 product lines, which together represent over 87% of our total sales, actually registered lower average prices than in 1999. Gross profit for the third quarter ended October 31, 2000, as a percentage of sales, decreased by 6.3% compared to the same period last year. Gross profit for the nine months ended October 31, 2000, as a percentage of sales, decreased by 3.5% compared to the same period last year. In addition to the reduction in selling prices described above, the Company incurred increases in material prices for steel, key plastic resins and packaging. Finally, when the rate of growth in sales slowed down during the third quarter, the Company reduced levels of production in the factories, incurring unfavorable manufacturing variances. The Company is taking immediate action to correct both the pricing and cost issues, but given the seasonal nature of our business, we expect the fourth quarter to continue the current negative trend. Selling, general and administrative expense for the third quarter ended October 31, 2000 increased by $1,265,000 as compared to the same period last year. For the nine months ended October 31, 2000, selling, general and administrative expense increased by $7,580,000 as compared to the same period last year. The increase for the third quarter and for the nine months ended October 31, 2000 was attributable to increased shipping and warehousing costs, increased depreciation expense, increased retirement expense and offset slightly by decreased product liability costs and decreased professional and contract services. The Company also incurred additional costs such as increased customer service representatives and installation staff in order to provide enhanced levels of customer service and on-time delivery. Interest expense increased by $985,000 for the quarter ended October 31, 2000 as compared to the same period last year. For the nine months ended October 31, 2000, interest expense increased by $2,442,000 as compared to the same period last year. The increase in interest expense was attributable to a higher average borrowing balance as a result of increased capital spending on the Conway, Arkansas facility, increased capital investment on the SAP Enterprise Resource Planning System and increased cash used to build inventory for summer delivery. 11 12 Other income increased by $4,052,000 for quarter and the nine months ended October 31, 2000 as compared to the same period last year. The increase was attributable to the Company entered into a confidential settlement of a dispute involving past services related to the installation of non-manufacturing equipment for which the Company received a final cash payment in November 2000. This payment is a non-recurring amount unrelated to the Company's ongoing operations. Financial Condition: As a result of seasonally high shipments and a settlement of a dispute discussed above, accounts and notes receivable increased by approximately $17,642,000 and inventory decreased by $5,895,000 compared to year-end. Capital spending for the nine months ended October 31, 2000 was $18,331,000 compared to $26,343,000 for the same period last year. For the nine months ended October 31, 2000, capital investments included machinery and equipment and construction of the second 400,000 sq. ft. segment of the 800,000 sq. ft. warehouse and distribution facility in Conway, Arkansas. As discussed in the Company's 1999 annual report, construction on the first 400,000 sq. ft. segment began in March 1999 and was completed and fully operational in December 1999. The second 400,000 sq. ft. segment is in operation as of July 31, 2000. Higher capital spending for the same period in last year was primarily related to the Conway, Arkansas facility expansion and SAP project. The Company believes that its investments in infrastructure and information systems will ultimately deliver improved operating efficiency. For further discussions on these two projects, please refer to the Company's 1999 annual report. These capital investments and the ongoing capital expenditures are being financed through credit facilities established with Wells Fargo Bank, the sale of real estate, and operating cash flow. On July 1, 2000, the credit facility with Wells Fargo Bank was expanded to $90,000,000 from $80,000,000. The maximum principal amount available under this note was reduced by $10,000,000 on September 30, 2000 and shall be reduced automatically on January 1, 2001 and January 1, 2002, by the amount of $10,000,000. At October 31, 2000, the Company has approximately $28,407,000 available under its credit facility with Wells Fargo Bank. The Company has reached the end of its current cycle of heavy capital investments. For the next three to five years, depending on sales volume and market conditions, we expect capital investments to be no greater than depreciation expense. Next year this figure will be even lower, probably in the range of $6,000,000 to $8,000,000. This will free cash flow from operations which will be used to pay down debt associated with our new Conway facility. The Company is also pursuing the sale of three other facilities no longer necessary for operations: our original factory in Los Angeles, California, which has been held as a rental property, and our former woodshop and compression molding plants in Conway, Arkansas, which have been used as warehouses. The combined appraised value of these properties is approximately $9,000,000. Proceeds from these sales will be used to pay down long-term debt. Net cash (used in) provided by operating activities for the nine months ended October 31, 2000 was ($1,000) compared to $10,175,000 for the same period last year. The decrease of $10,176,000 in cash provided by operating activities was primarily due to increases in inventory levels, as well as the reduction of accounts payable and accrued expenses partly offset by increased tax payable primarily due to the gain from the sale of the Torrance warehouse during the first quarter ended April 30, 2000. Issuance of long term debt was $10,252,000 for the nine months ended October 31, 2000 as compared to $24,563,000 for the same period last year. The reduction of $14,311,000 is primarily attributable to the cash proceeds received as a result of sale of Torrance warehouse, reduction in capital expenditures and reduction of treasury stock purchase activities offset by a reduction in cash provided by operating activities. Long term debt was $63,017,000 as of October 31, 2000 compared to $53,995,000 as of January 31, 2000. 12 13 In April 1998, the Board of Directors approved a stock buyback program giving authorization to buy back up to $5,000,000 of common stock. The amount authorized was subsequently increased to $14,000,000. As of October 31, 2000, the Company has repurchased approximately 630,000 shares at a cost of approximately $11,000,000 since the inception of this program in April 1998. For the nine months ended October 31, 2000, the Company repurchased approximately $433,000 of treasury stock as compared to $3,741,000 for the same period last year. The Company intends to continue buying back shares of common stock as long as the Company believes the shares are undervalued and operating cash flows and borrowing capacity under the Wells Fargo line allow. On August 15, 2000, the Company's Board of Directors authorized a 10% stock dividend payable on September 29, 2000 to stockholders on record as of September 7, 2000. In the same meeting, the Board also authorized a $0.02 per share cash dividend payable on October 31, 2000 to stockholders on record as of October 13, 2000. For the nine months ended October 31, 2000, the Company paid $608,000 in cash dividends as compared to $592,000 for the same period last year. The Company believes that cash flows 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. Year 2000 Compliance As of the date of this report, the Company has experienced no significant problems related to the Year 2000 issue. After extensive system verification and testing, all computerized information and process control systems are operating normally. The performance of critical customers and suppliers continues without notable change. Production and business activities are normal at all locations. The Company continues to monitor the status of its operations, suppliers and distribution channels to ensure no significant interruptions. Forward-Looking Statements From time to time, the Company or its representatives have made or 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," "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 costs, 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 year ended January 31, 2000. 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 Risk. 13 14 On February 22, 2000, the Company entered into an interest rate swap agreement with Wells Fargo Bank. The initial notional swap amount is $30,000,000 for the period February 22, 2000 through February 29, 2001. The notional swap amount then decreases to $20,000,000 until the end of the swap agreement, March 3, 2003. The swap agreement is in consideration for a fixed rate at 7.23% plus a fluctuating margin of 1.25% to 1.50%. As of October 31, 2000, the Company has borrowed $48,990,000 under its Wells Fargo credit facility, of which $30,000,000 is subject to the interest rate swap agreement as described above and the remaining contain variable interest rates. Accordingly, a 100 basis point upward fluctuation in the lender's base rate would cause the Company to incur additional interest charges of approximately $117,000 per fiscal quarter and $387,000 for the nine months ended October 31, 2000. The Company would benefit from a similar interest savings if the base rate were to fluctuate downward by a like amount. 14 15 PART II VIRCO MFG. CORPORATION Other Information Item 4. Submission of matters to a vote of Security Holders NONE Item 6. Exhibits and Reports on Form 8-K Exhibit (11) - Statement re: Computation of Earnings Per Share 15 16 VIRCO MFG. CORPORATION Exhibit (11) - Statement re: Computation of Earnings Per Share Three Months Ended Nine Months Ended 31-Oct 31-Oct ---------------------------- ----------------------------- 2000 1999 2000 1999 ----------- ----------- ------------ ----------- Diluted earnings per share Weighted average shares outstanding 11,335,000 11,446,000 11,360,000 11,523,000 Net effect of dilutive stock options - based on the treasury stock method using average market price 152,000 212,000 141,000 215,000 ----------- ----------- ------------ ----------- Totals 11,487,000 11,658,000 11,501,000 11,738,000 =========== =========== ============ =========== Net income $ 4,240,000 $ 6,414,000 $ 11,604,000 $10,976,000 =========== =========== ============ =========== Per share amount $ 0.37 $ 0.55 $ 1.01 $ 0.94 =========== =========== ============ =========== Weighted average shares outstanding for the three months and nine months ended October 31, 1999 were adjusted for 10% stock dividend declared August 15, 2000. 16 17 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. CORPORATION Date: December 8, 2000 By: /s/ Robert E. Dose -------------------- ----------------------------------- Robert E. Dose Vice President - Finance Date: December 8, 2000 By: /s/ Bassey Yau --------------------- ----------------------------------- Bassey Yau Corporate Controller 17