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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c)
or Section 240.14a-12
VIRCO MFG. CORPORATION
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(Name of Registrant as Specified In Its Charter)
VIRCO MFG. CORPORATION
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2)
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(4) and 0-11
1) Title of each class of securities to which transaction applies:
_____________________________________________________________
2) Aggregate number of securities to which transaction applies:
_____________________________________________________________
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
____________________________________________________________
4) Proposed maximum aggregate value of transaction:
_____________________________________________________________
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
______________________________________________________________
2) Form, Schedule or Registration Statement No.:
_______________________________________________________________
3) Filing Party:
_______________________________________________________________
4) Date Filed:
_______________________________________________________________
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VIRCO MFG. CORPORATION
BOX 44846 HANCOCK STATION, LOS ANGELES, CALIFORNIA 90044
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 18, 1996
The Annual Meeting of Stockholders of Virco Mfg. Corporation, a Delaware
corporation, will be held at 2:00 p.m. on Tuesday, June 18, 1996 at 2027
Harpers Way, Torrance, California, for the following purposes:
1. To elect three directors to serve until the 1999 Annual Meeting of
Stockholders and until their successors are elected and qualified;
2. To transact such other business as may properly come before the meeting.
The Board of Directors has fixed the close of business on May 6, 1996 as the
record date for the determination of stockholders entitled to notice of and to
vote at the Annual Meeting and any adjournments and postponements thereof.
Whether or not you expect to attend the meeting, please date, sign and return
the enclosed proxy. If you attend the meeting, you may vote in person whether
or not you have returned a proxy.
By Order of the Board of Directors
James R. Braam, Secretary
Los Angeles, California
May 17, 1996
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VIRCO MFG. CORPORATION
BOX 44846, HANCOCK STATION, LOS ANGELES, CALIFORNIA 90044
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PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS, JUNE 18, 1996
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GENERAL INFORMATION
This Proxy Statement is being mailed to stockholders of Virco Mfg.
Corporation, a Delaware corporation (the "Company"), on or about May 17, 1996
in connection with the solicitation by the Board of Directors of proxies to be
used at the Annual Meeting of Stockholders of the Company to be held on
Tuesday, June 18, 1996 at 2:00 p.m. at 2027 Harpers Way, Torrance, California
and any and all adjournments and postponements thereof.
The cost of preparing, assembling and mailing the Notice of Annual Meeting of
Stockholders, Proxy Statement and form of proxy and the solicitation of proxies
will be paid by the Company. Proxies may be solicited in person or by
telephone or telegraph by personnel of the Company who will not receive any
additional compensation for such solicitation. The Company will pay brokers or
other persons holding stock in their names or the names of their nominees for
the expenses of forwarding soliciting material to their principals.
RECORD DATE AND VOTING
The close of business on May 6, 1996 has been fixed as the record date for
the determination of stockholders entitled to notice of and to vote at the
meeting. On that date there were 5,369,360 shares of the Company's Common
Stock, par value $.01 per share, outstanding. All voting rights are vested
exclusively in the holders of the Company's Common Stock. Each share is
entitled to one vote on any matter that may be presented for consideration and
action by the stockholders, except that as to the election of directors,
stockholders may cumulate their votes. Because three directors are to be
elected, cumulative voting means that each stockholder may cast a number of
votes equal to three times the number of shares actually owned. That number of
votes may be cast for one nominee, divided equally among the three nominees or
divided among the nominees in any other manner. The proxy holders will have
authority, in their discretion, to vote cumulatively for less than all of the
nominees.
In all matters other than the election of directors, the affirmative vote of
the majority of shares of Common Stock present in person or represented by
proxy at the meeting and entitled to vote on the subject matter would be the
act of the stockholders. Directors will be elected by a plurality of the votes
of the Common Stock present in person or represented by proxy. Abstentions
will be treated as the equivalent of a negative vote for the purpose of
determining whether a proposal has been adopted and will have no effect for the
purpose of determining whether a director has been elected. Broker non-votes
are not counted for the purpose of determining the votes cast on a proposal.
Proxies will be voted for management's nominees for election as directors
unless the stockholder otherwise directs in his proxy. Where the stockholder
has appropriately directed how the proxy is to be voted, it will be voted
according to his direction. Any stockholder has the power to revoke his proxy
at any time before it is voted at the meeting by submitting written notice of
revocation to the Secretary of the Company, or by filing a duly executed proxy
bearing a later date. A proxy will not be voted if the stockholder who
executed it is present at the meeting and elects to vote the shares represented
thereby in person.
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SECURITY OWNERSHIP
SHARES OWNED BY MANAGEMENT AND PRINCIPAL STOCKHOLDERS
The following table sets forth information as of April 16, 1996 (unless
otherwise indicated) relating to the beneficial ownership of the Company's
Common Stock (i) by each person known by the Company to own beneficially more
than 5% of the outstanding shares of Common Stock of the Company, (ii) by each
director or nominee of the Company, (iii) by each executive officer of the
Company named in the Summary Compensation Table below and (iv) by all officers
and directors of the Company as a group. The number of shares beneficially
owned is deemed to include shares of Common Stock in which the persons named
have or share either investment or voting power. Unless otherwise indicated,
the mailing address of each of the persons named is Box 44846, Hancock Station,
Los Angeles, California 90044.
AMOUNT AND NATURE
OF BENEFICIAL PERCENT OF
NAME OF BENEFICIAL OWNER OWNERSHIP(1) CLASS
------------------------ ----------------- ----------
Dimensional Fund Advisors Inc.(2) . 319,997 5.9%
Lazard Freres & Co.(3) . . . . . . 301,400 5.6
Raymond W. Virtue (4) . . . . . . . 88,847 1.7
Director, Vice President
Robert A. Virtue (5) . . . . . . . 184,264 3.4
Chairman of the Board of Directors,
Chief Executive Officer
Douglas A. Virtue . . . . . . . . . 188,195 3.5
Director, Vice President
Donald S. Friesz . . . . . . . . . 52,139 (6)
Director, Vice President Sales
and Marketing
George W. Ott . . . . . . . . . . . 2,172 (6)
Director
Donald A. Patrick . . . . . . . . . 8,452 (6)
Director
John H. Stafford . . . . . . . . . 1,266 (6)
Director
Hugh D. Tyler . . . . . . . . . . . 16,152 (6)
Director, Vice President
James R. Wilburn . . . . . . . . . 2,397 (6)
Director
James R. Braam . . . . . . . . . . 13,050 (6)
Vice President Finance, Secretary
All executive officers and directors
as a group(15 persons) . . . . . 573,049 10.5
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(1) Except as indicated in the footnotes to this table and pursuant to
applicable community property laws, to the knowledge of
the Company, the persons named in this table have sole voting and
investment power with respect to all shares beneficially owned by them.
For purposes of this table, a person is deemed to have "beneficial
ownership" as of a given date of any security that such person has the
right to acquire within 60 days after such date. Amounts for Messrs.
Raymond Virtue, Robert Virtue, Douglas Virtue, Friesz, Patrick, Stafford,
Tyler and Braam, and all executive officers and directors as a group,
include 11,979, 19,965, 7,986, 11,979, 752, 752, 11,979 and 11,979, and
77,371, shares issuable upon exercise of options, respectively.
(2) As of December 31, 1995, according to information provided to the
Company. Dimensional Fund Advisors Inc. ("Dimensional"), a registered
investment advisor, is deemed to have beneficial ownership of 319,997
shares of the Company's Common Stock, all of which shares are held in
portfolios of DFA Group Trust and DFA Participation Group Trust, investment
vehicles for qualified employee benefit plans, for which Dimensional serves
as investment manager. Dimensional disclaims
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beneficial ownership of all such shares. The principal business address of
Dimensional is 1299 Ocean Avenue, 11th floor, Santa Monica, California
90401.
(3) As of December 31, 1995, according to public filings. Lazard Freres &
Co. ("Lazard"), a registered investment advisor, is deemed to have
beneficial ownership of 301,400 shares of the Company's Common Stock. The
principal business address of Lazard is 30 Rockefeller Plaza, New York, NY
10020.
(4) Does not include 256,075 shares owned beneficially by Mr. Raymond
Virtue's adult children as to which Mr. Virtue disclaims beneficial
ownership.
(5) Does not include 565,026 shares owned beneficially by Mr. Robert
Virtue's adult children, including Mr. Douglas Virtue, as to which Mr.
Robert Virtue disclaims beneficial ownership.
(6) Less than 1%.
All information with respect to beneficial ownership of the shares referred
to above is based upon filings made by the respective beneficial owners with
the Securities and Exchange Commission or information provided to the Company
by such beneficial owners.
Robert A. Virtue and Raymond W. Virtue are siblings and Douglas Virtue is
Robert Virtue's son. The total number of shares beneficially owned Mr. Robert
Virtue, Mr. Raymond Virtue, their brother, Richard J. Virtue, their sister,
Nancy Virtue Cutshall, their children and their mother, Mrs. Julian A. Virtue,
aggregate 2,596,735 shares or 48.0% of the total shares of Common Stock
outstanding.
Robert A. Virtue, Richard J. Virtue, Raymond W. Virtue, Nancy Virtue Cutshall
and certain of their respective spouses and children (the "Stockholders") and
the Company have entered into an agreement with respect to certain shares of
the Company's Common Stock received by the Stockholders as gifts from their
father, Julian A. Virtue, including shares received in subsequent stock
dividends in respect of such shares. Under the agreement, each Stockholder who
proposes to sell any of such shares is required to provide the remaining
Stockholders notice of the terms of such proposed sale. Each of the remaining
Stockholders is entitled to purchase any or all of such shares on the terms set
forth in the notice. Any shares not purchased by such remaining Stockholders
may be purchased by the Company on such terms. The agreement also provides for
a similar right of first refusal in the event of the death or bankruptcy of a
Stockholder, except that the purchase price for the shares is to be based upon
the then prevailing sales price of the Company's Common Stock on the American
Stock Exchange.
COMPLIANCE WITH SECTION 16 OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's directors, executive officers and persons who own more
than 10% of a registered class of the Company's Common Stock (collectively,
"Insiders") to file initial reports of ownership (Forms 3) and reports of
changes in ownership of Common Stock (Forms 4 and 5) with the Securities and
Exchange Commission as well as the Company and any exchange upon which the
Company is listed. Pursuant to the rules under Section 16(a), the Company is
required to identify Insiders that the Company knows have failed to file or
filed late Section 16(a) reports during the previous fiscal year.
To the Company's knowledge, based solely on a review of the copies of the
reports furnished to the Company, during the fiscal year ended January 31,
1996(1), all Section 16(a) filing requirements applicable to its Insiders were
complied with.
__________________________________
(1) The Company uses a fiscal year which ends on January 31. Accordingly, the
Company's 1995 fiscal year ended on January 31, 1996. References to any
particular year refer to the fiscal year.
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ELECTION OF DIRECTORS
The Certificate of Incorporation of the Company provides for the division of
the Board of Directors into three classes as nearly equal in number as
possible. In accordance with the Certificate of Incorporation, the Board of
Directors has nominated James R. Wilburn, Hugh D. Tyler and Donald S. Friesz
(each of whom is currently a director) to serve as directors in Class II of the
Board of Directors with a term expiring in 1999.
It is intended that the proxies solicited by this Proxy Statement will be
voted in favor of the election of Messrs. Wilburn, Tyler and Friesz, unless
authority to do so is withheld. Should any of such nominees be unable to serve
as a director or should any additional vacancy occur before the election (which
events are not anticipated), proxies may be voted for a substitute nominee
selected by the Board of Directors or the authorized number of directors may be
reduced. If for any reason the authorized number of directors is reduced, the
proxies will be voted, in the absence of instructions to the contrary, for the
election of the remaining nominees named in this Proxy Statement. In the event
that any person other than the nominees named below should be nominated for
election as a director, the proxies may be voted cumulatively for less than all
of the nominees.
The following table sets forth certain information with respect to each of
the three nominees, as well as each of the six continuing directors.
DIRECTOR
NAME AGE PRINCIPAL OCCUPATION SINCE
---- --- -------------------- ----------
NOMINEES FOR DIRECTORS WHOSE TERMS EXPIRE IN 1999:
James R. Wilburn 63 Professor of Business Strategy at the 1986
School of Business and Management of
Pepperdine University since 9/94;
previously the Dean of such school
from 1987 until 8/94
Hugh D. Tyler 54 Vice President of the Company since 1988
6/88; General Manager of the Conway
Division since 1988; previously
Controller of the Conway Division
Donald S. Friesz 67 Vice President Sales and Marketing 1992
from 1982 to 2/96
CONTINUING DIRECTORS WHOSE TERMS EXPIRE IN 1997:
Donald A. Patrick 71 President and a founder of Diversified 1983
Business Resources (mergers, acquisitions
and business consultants) since 1988
Raymond W. Virtue 54 Vice President of the Company since 1983
June 1983; previously President of Delkay
Plastics Corp. (a former wholly-owned
subsidiary of the Company)
Robert A. Virtue 63 Chairman of the Board and Chief 1956
Executive Officer of the Company since
1990; President of the Company since
August 1982
CONTINUING DIRECTORS WHOSE TERMS EXPIRE IN 1998:
George W. Ott 64 President and Founder of Ott and 1994
Hansen since 1976
John H. Stafford 75 Retired since 1983; previously Partner 1985
of Main Hurdman, a predecessor of KPMG
Peat Marwick (certified public accountants)
Douglas A. Virtue 37 Vice President, General Manager of the 1992
Los Angeles Division of the Company since
April 1992; previously Marketing Services
Manager (1989-1992), Contract Administrator
1988) and in production control of the Company
(1985-1988)
Each director of the Company serving in 1995 attended at least 75% of the
1995 meetings of the Board of Directors and each committee on which he served.
Directors who are also officers of the Company or its subsidiaries receive no
additional compensation for their services as directors. Other directors
receive
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a retainer of $2,500 per quarter and a fee of $500 for each meeting of the
Board of Directors or Audit Committee attended. The Board of Directors held
six meetings in 1995.
The Company's 1993 Stock Incentive Plan provides that, on the first business
day after the date of the annual meeting of stockholders of the Company, each
nonemployee director will automatically be granted an option to purchase 500
shares of Common Stock (a "Nonemployee Director Option"). Nonemployee Director
Options become exercisable with respect to 20% of the shares subject to such
option on each anniversary of the grant date with full vesting occurring on the
fifth anniversary date, subject to certain provisions which may accelerate the
vesting of Nonemployee Director Options. In 1995, Messrs. Ott, Patrick,
Stafford and Wilburn each received options to purchase 500 shares of Common
Stock (550 shares after adjusting for a stock dividend paid in 1995) at $7.73
per share.
The Board of Directors has an Audit Committee that in 1995 was composed of
Messrs. Ott, Patrick, Stafford and Wilburn. The Audit Committee held one
meeting in 1995. The functions of the Audit Committee include reviewing the
financial statements of the Company, the scope of the annual audit by the
Company's independent auditors and the audit reports rendered by such
independent auditors. The Audit Committee may also examine and consider other
appropriate matters.
The Board of Directors has a Compensation Committee that in 1995 was composed
of Messrs. Ott, Patrick, Stafford and Wilburn. The function of this Committee
is to make recommendations to the Board regarding changes in salaries and
benefits. The Compensation Committee held one meeting in 1995.
The Company does not have a nominating committee. The Board of Directors
performs the functions which might otherwise be performed by such a committee.
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EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation for services rendered in all
capacities to the Company and its subsidiaries during the years indicated for
the Chief Executive Officer and the other four most highly compensated officers
of the Company:
LONG-TERM
COMPENSATION
AWARDS
COMPENSATION ----------
------------------- OPTION ALL OTHER
NAME AND TITLE YEAR SALARY(1) BONUS (SHARES) COMPENSATION(2)
- --------------- ---- --------- ----- ---------- ----------------
Robert A. Virtue 1995 $293,258 $100,700 -- $58,600
Chairman of the
Board and Chief 1994 251,010 105,750 -- 58,600
Executive Officer 1993 209,363 70,407 33,275 49,300
Donald S. Friesz 1995 150,345 40,600 -- 14,600
Vice President Sales 1994 134,184 58,500 -- 14,600
and Marketing 1993 123,106 41,813 19,965 4,600
Hugh D. Tyler 1995 150,035 31,900 -- 12,300
Vice President 1994 134,249 45,500 -- 12,300
1993 117,126 40,246 19,965 1,600
James R. Braam 1995 145,098 40,600 -- 17,100
Vice President, 1994 143,348 58,500 -- 17,100
Finance
1993 126,921 41,813 19,965 5,000
Raymond W. Virtue 1995 145,019 35,980 -- 41,300
Vice President 1994 118,437 51,750 -- 41,300
1993 121,580 37,092 19,965 39,200
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(1) Excludes compensation in the form of other personal benefits, which,
for each of the executive officers, did not exceed the lesser of
$50,000 or 10% of the total of annual salary and bonus reported for
each year.
(2) For 1995, consists of (i) $14,500, $14,600, $12,300, $17,100 and
$6,800, representing the value of Company-paid split-dollar premiums
under the Management Employees Life Insurance Plan, and (ii) $44,100,
$0, $0, $0 and $34,500, representing the value of Company-paid split-
dollar premiums under the Executive Survivorship Life Insurance Plan,
for insurance policies on the lives of each of Messrs. Robert Virtue,
Friesz, Tyler, Braam and Raymond Virtue (and, if applicable, their
spouses), respectively. See "Management Employees Life Insurance Plan"
and "Executive Survivorship Life Insurance Plan." The foregoing amounts
represent the actuarial value of the benefit to the executive officers
of the current year's insurance premium paid by the Company in excess
of that required to fund the death benefits under the policies.
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AGGREGATED OPTION EXERCISES AND YEAR-END OPTION VALUES
Shown below is information relating to the exercise of stock options during
1995 for each executive officer of the Company named in the Summary
Compensation Table above:
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTION
FISCAL YEAR-END AT FISCAL YEAR-END(1)
SHARES ACQUIRED VALUE (EXERCISABLE/ (EXERCISABLE/
NAME ON EXERCISE REALIZED UNEXERCISABLE) UNEXERCISABLE)
--------------- ----------------- ---------- -------------- --------------
Robert A. Virtue -- -- 13,310/19,965 $56,868/85,301
Donald S. Friesz -- -- 7,986/11,979 34,121/51,181
Hugh D. Tyler -- -- 7,986/11,979 34,121/51,181
James R. Braam -- -- 7,986/11,979 34,121/51,181
Raymond W. Virtue -- -- 7,986/11,979 34,121/51,181
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(1) Calculated using closing price on January 31, 1996 of $9.25.
EMPLOYEES RETIREMENT PLAN
The Employees Retirement Plan of the Company is a non-contributory, defined
benefit retirement plan governed by the Employee Retirement Income Security Act
of 1974. With limited exceptions, all employees of the Company and its
participating subsidiaries (including executive officers) are eligible to
participate provided they meet certain service requirements. Benefits are paid
to or on behalf of each participant upon retirement, normally at age 65, and
under certain circumstances upon death. Benefits under the Plan are credited
to the employee each year based upon years of service and remuneration during
such year of service.
Retirement benefits vest partially after three years of service and fully
after seven years of service, or upon the participant's sixty-fifth birthday.
Benefits payable under the Plan are adjusted to reflect the form of payment
elected by the participant. The following table shows the annual pension
benefits for retirement at age 65 which would be payable to retiring employees
with representative earnings and years of service:
PENSION PLAN TABLE
ASSUMED
AVERAGE
COMPENSATION(3) YEARS OF SERVICE(1)(2)
------------------------------------------- -------------------------------
10 20 30
--------- --------- ---------
$ 25,000.................... $2,260 $4,520 $6,780
50,000.................... 4,760 9,520 14,280
75,000.................... 7,260 14,520 21,780
100,000.................... 9,760 19,520 29,280
125,000.................... 12,260 24,520 36,780
150,000.................... 14,760 29,520 44,280
175,000.................... 17,260 34,520 51,780
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(1) Represents annual retirement benefits payable at normal retirement
age. To the extent a participant's service was rendered
prior to February 1, 1964, the effective date of the Plan, actual benefits
will be slightly lower than the benefits shown in the table.
(2) The benefits shown are for straight-life annuity payments and are not
subject to deduction for Social Security or other offset amounts;
alternative forms of benefit payments are available under the Plan.
(3) Assumed average compensation is based upon regular base compensation
before deduction for taxes or group insurance averaged for each year in the
Plan.
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Messrs. Robert Virtue, Friesz, Tyler, Braam and Raymond Virtue have 38, 35,
13, 25 and 31 credited years of service and $68,000, $54,000, $62,000, $113,000
and $56,000 of assumed average compensation, respectively, under the Plan.
VIRCO IMPORTANT PERFORMERS PLAN
In August 1985, the Board of Directors adopted the Virco Important Performers
Plan, which is an unqualified plan providing additional retirement and death
benefits for certain employees identified by the Board of Directors or the
committee administering the Plan as contributing materially to the continued
growth, development and future business of the Company. On December 7, 1993,
the Plan was amended to provide that each officer or employee whose annual
salary exceeds $66,000 will be a participant in the Plan. Benefits under the
Plan are payable to or on behalf of each participant upon retirement, normally
at age 65, or upon death prior to retirement. The Company is funding its
obligations under the Plan through the purchase of life insurance policies on
the participants.
Vesting for each participant begins at the later date of such participant's
fiftieth birthday or his birthday in the year he enters the Plan. Vesting
occurs at 10% for each full year subsequent to such date. On December 7, 1993,
the Plan was amended to provide that each participant will receive a benefit
payable at retirement equal to 50% of the average base salary during the last
five years offset by the monthly benefit accrued under the Employees Retirement
Plan. Participants with fewer than ten years of participation who retire after
reaching age 60 will be entitled to reduced pro rata benefits based on the
number of years they have participated in the Plan. In the event of the death
of a participant prior to retirement, death benefits are payable for a fifteen-
year period to the deceased participant's beneficiaries.
The estimated annual benefits payable upon retirement at age 65 for Messrs.
Robert Virtue, Friesz, Tyler, Braam and Raymond Virtue are $106,000, $55,000,
$42,000, $55,000 and $35,000, assuming that the current compensation of each
executive officer remains constant until retirement.
MANAGEMENT EMPLOYEES LIFE INSURANCE PLAN
In August 1985, the Board of Directors adopted the Management Employees Life
Insurance Plan, which provides for the Company to obtain life insurance
policies on management employees selected by the Board. Currently, all
officers and employees earning an annual salary exceeding $33,300 are entitled
to participate in the Plan. Employees whose salaries exceed $33,300 but are
less than $66,000 may elect to receive $50,000 under the Plan. Employees whose
salaries exceed $66,000 may elect coverage under the Plan of up to $100,000 in
increments of $50,000. Officers may elect coverage under the Plan of up to
$300,000 in increments of $50,000.
The premiums for the policies are paid partially by the participants pursuant
to the formula set forth in the Plan, with the Company paying the remaining
portion. The Company retains an interest in the death benefit payable under
the policy for each participant in an amount equal to the aggregate amount of
premium payments made by the Company with respect to such participant's policy.
The remainder of the death benefit is payable to the participant's
beneficiaries. Upon the first to occur of reaching the age of 65, actual
retirement or termination of employment, each participant is entitled to have
the Company assign the policy to the participant or his designee, provided that
the participant first reimburses the Company for all premiums previously paid
by the Company for the policy.
EXECUTIVE SURVIVORSHIP LIFE INSURANCE PLAN
In August 1985, the Board of Directors adopted the Executive Survivorship
Life Insurance Plan, which provides special life insurance benefits to a group
of management employees selected by the Board. Under this Plan, the Company
maintains insurance policies on the lives of the participants and their
spouses. Robert A. Virtue and Raymond W. Virtue are currently the only
executive officers participating in the
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Plan. The amount of each of the insurance policies maintained by the Company
under the Plan on the lives of Robert A. Virtue and Raymond W. Virtue and their
current or former spouses is $1,250,000. In 1985, the Company also purchased
$1,250,000 of insurance under the Plan on the lives of Richard Cutshall, who
was then a management employee of the Company, and his spouse Nancy Virtue
Cutshall, who is the beneficial owner of 4.7% of the Company's outstanding
shares. In connection with their divorce in 1987, Mr. Cutshall, who is now
deceased, transferred his interest in such insurance to Mrs. Cutshall. As a
result of such transaction, the policy previously maintained on the life of Mr.
Cutshall was terminated and a $2,500,000 policy is now maintained under the
Plan on the life of Mrs. Cutshall.
The premiums for the policies are paid partially by the participants pursuant
to a formula set forth in the Plan, with the Company paying the remaining
amount. The Company retains an interest in the death benefit payable under the
policy of each participant and spouse in an amount equal to the aggregate
amount of premium payments made by the Company with respect to the policy of
such participant or spouse. The remainder of the death benefit is payable to
the designated beneficiaries of the deceased participant or spouse. Upon the
first to occur of the participant's reaching age 65, retiring or ceasing to be
an employee of the Company for any reason other than death, the participant or
his designee is required to purchase the Company's interest in the
participant's policy and the spouse or the spouse's designee is similarly
required to purchase the Company's interest in the spouse's policy. The amount
to be paid to the Company upon such purchase is the aggregate amount of the
Company's previous premium payments on such policy. In the event a participant
in the Plan dies before reaching age 65 and while an employee of the Company,
the Company remains obligated to maintain the insurance policy under the Plan
on the life of such participant's spouse.
WIDOW'S SALARY CONTINUATION PLAN
In August 1985, the Board of Directors approved the Widow's Salary
Continuation Plan, which provides for surviving widow benefits to be paid by
the Company upon the deaths of Messrs. Julian A. Virtue and Donald Heyl, the
former President of the Company. The widow of Mr. Virtue is currently
receiving $5,000 per month under the Plan. In 1995, the Company paid $60,000
to Mrs. Virtue. Upon the death of Mr. Heyl, his surviving widow will receive
$60,000 annually during her lifetime. The Company is funding its obligation to
Mr. Heyl under this Plan through the purchase of life insurance on the life of
Mr. Heyl.
CERTAIN TRANSACTIONS
In 1989 the Company loaned $75,000 to Larry O. Wonder, the Company's Vice
President, Education Sales Group. The loan is secured by a second trust deed
on Mr. Wonder's home and accrues interest at a rate equal to the Wells Fargo
prime interest rate. As of January 1996, the outstanding balance on the loan
including accrued interest is $119,494.
During 1994 the Company entered into a consulting arrangement with
Diversified Business Resources, Inc. ("Diversified"), a consulting firm which
is owned by Donald A. Patrick, who is a Director. During 1995 the Company paid
$265,000 to Diversified in connection with the Company's relocation of its
offices and facilities to Torrance, California, the Company's data processing
committee, and the investigation of the possible sale of the Company's factory
in Mexico.
During the last fiscal year, the Virco Mfg. Corporation Employee Stock
Ownership Plan purchased an aggregate of 12,271, 5,184 and 5,000 shares of the
Company's Common Stock from Raymond Virtue, Nancy Virtue Cutshall and Andrew
Virtue, Robert Virtue's brother, sister and son, respectively, for an aggregate
purchase price of $119,998, $44,712 and $43,271, respectively. The price per
share for the purchases was calculated by the trustee of the plan using the
average closing price of the Common Stock for the 10 consecutive trading days
prior to the purchase in which 1,000 or more shares were traded, discounted by
5%.
9
12
REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is responsible for
developing the Company's executive compensation policies and making
recommendations to the Board of Directors with respect to these policies. In
addition, the Committee makes annual recommendations to the Board of Directors
concerning the compensation paid to the Chief Executive Officer and to each of
the other executive officers of the Company.
EXECUTIVE COMPENSATION POLICY
The goals of the Company's executive compensation policy are to attract and
retain qualified executives and to ensure that their efforts are directed
toward the long-term interests of the Company and its stockholders. The
Company is striving to generally position executive salaries at median
competitive levels and to rely on variable, performance-based bonuses to play a
significant role in determining total compensation. In addition, by
establishing the 1993 Stock Incentive Plan, the Company further linked
executive and stockholder interests.
The Compensation Committee annually reviews salaries, bonuses and other
aspects of executive compensation. In general, the purpose of such annual
reviews is to ensure that the Company's overall executive compensation program
remains competitive with comparable businesses and that total executive pay
reflects both the individual's performance as well as the overall performance
of the Company.
BASE SALARY
Each year, the performance of executives is reviewed and, based upon an
assessment of individual performance and the Company's performance, a
corresponding salary increase may be awarded. In 1995, based on a comparison
of the Company's executive compensation levels and plans with those of other
companies in the furniture manufacturing business, the Compensation Committee
concluded that the Company's executive salaries had to be adjusted to keep pace
with those of comparable companies. As a result, the salary increases awarded
to the Company's Chief Executive Officer and other executive officers in 1995
reflected primarily the Compensation Committee's determination to adjust
salaries to perceived competitive levels, as well as the Compensation
Committee's evaluation of the overall performance of the Company and the
performance of each executive officer.
The salary of Mr. Robert A. Virtue, the Company's Chief Executive Officer,
was determined on the foregoing basis. In addition to consideration of the
salary levels of the chief executive officer of other furniture manufacturers,
the Board considered the Company's operating results in 1994, the Company's
stock performance, the effect of the general economy on the Company's
performance and the success of the Company in addressing certain goals.
BONUSES
Early each year the Board of Directors considers and approves an annual
profit plan for the Company, which establishes a target level of overall
Company profits, excluding certain non-recurring items. The bonuses payable to
the Chief Executive Officer and the other executive officers are tied to the
Company's actual performance relative to the annual profit plan. However,
bonuses of divisional general managers are based upon divisional operating
results. In 1995, the Chief Executive Officer was eligible to receive a bonus
equal to 45% of his salary and each of the executive officers was eligible to
receive a bonus equal to 35% of his salary if the annual profit plan target
level or target divisional operating results, as applicable, had been achieved.
In general, the amount of the bonus paid was subject to a 2% adjustment for
each $100,000 difference between the actual profits and the plan's targeted
profit level or, for divisional general managers, a similar formula to adjust
for the difference between the actual results and the targeted results.
10
13
THE COMPENSATION COMMITTEE OF
THE BOARD OF DIRECTORS
George W. Ott John H. Stafford
Donald A. Patrick James R. Wilburn
The report of the Compensation Committee of the Board of Directors shall not
be deemed incorporated by reference by any general statement incorporating by
reference this proxy statement into any filing under the Securities Act of 1933
or under the Securities Exchange Act of 1934, except to the extent that the
Company specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such Acts.
11
14
STOCKHOLDER RETURN PERFORMANCE PRESENTATION
The stock performance graph set forth below illustrates the Company's
performance in total stockholder return over the period February 1, 1991
through January 31, 1996 relative to the following external indices: (a) the
American Stock Exchange market value index ("AMEX Market Index") and (b) a peer
group.(1) Each line on the stock performance graph assumes that $100.00 was
invested in the Common Stock and the respective indices on February 1, 1991.
The graph then tracks the value of these investments, assuming reinvestment of
dividends, through January 31, 1996.
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
OF COMPANY, AMEX MARKET INDEX AND PEER GROUP
[GRAPH]
VIRCO MFG. AMEX MARKET
CORPORATION PEER GROUP INDEX
-------------- ----------- ------------
1991 . . . 100.00 100.00 100.00
1992 . . . 178.17 123.29 120.78
1993 . . . 152.49 121.08 145.92
1994 . . . 201.92 144.58 176.83
1995 . . . 252.10 126.18 145.48
1996 . . . 298.57 161.74 186.07
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(1) The peer group comprises all companies identified by Media General
Financial Services as being within the "other business and
institutional equipment" industry group, as follows: Educational
Development Corporation, Hon Industries Inc., Jansko, Inc., Kimball
International, Inc., Lear Seating Co., The Micro General Corporation,
Herman Miller Inc., Mity Lite, Inc., Norwood Promotional Products, Inc.,
Plasti-Line Inc., Tab Products Co., Inc., Winslow Furniture, Inc. and the
Company.
The cumulative total return shown on the stock performance graph indicates
historical results only and is not necessarily indicative of future results.
12
15
RELATIONSHIP WITH INDEPENDENT AUDITORS
Ernst & Young, upon the recommendation of the Audit Committee of the Board of
Directors of the Company, continues as the accounting firm selected by the
Board of Directors to examine the accounts of the Company for the current year.
Representatives of Ernst & Young will be present at the Annual Meeting, will
have an opportunity to make a statement if they desire to do so and will be
available to respond to appropriate questions.
OTHER MATTERS
Proposals of stockholders intended to be presented at the 1997 Annual Meeting
of Stockholders must be received by the Company by January 17, 1997, for
inclusion in the Company's proxy statement and form of proxy relating to that
meeting.
The Board of Directors does not know of any matters to be presented at the
1996 Annual Meeting other than as stated herein. If other matters do properly
come before the Annual Meeting, the persons named on the accompanying proxy
card will vote the proxies in accordance with their judgment in such matters.
The Annual Report to the Stockholders of the Company for the fiscal year
ended January 31, 1996, including financial statements, is being mailed to
stockholders concurrently herewith.
THE COMPANY WILL ALSO PROVIDE WITHOUT CHARGE A COPY OF ITS ANNUAL REPORT ON
FORM 10-K, INCLUDING FINANCIAL STATEMENTS AND RELATED SCHEDULES, FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION UPON REQUEST IN WRITING FROM ANY PERSON WHO
WAS HOLDER OF RECORD, OR WHO REPRESENTS IN GOOD FAITH HE WAS A BENEFICIAL
OWNER, OF COMMON STOCK OF THE COMPANY ON MAY 6, 1996. ANY SUCH REQUEST SHALL
BE ADDRESSED TO THE COMPANY AT BOX 44846 HANCOCK STATION, LOS ANGELES,
CALIFORNIA, ATTENTION: SECRETARY.
Stockholders are urged to date and sign the enclosed proxy and return it
promptly in the enclosed envelope.
By Order of the Board of Directors
James R. Braam, Secretary
Los Angeles, California
May 17, 1996
13
16
PROXY PROXY
VIRCO MFG. CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 18,1996
The undersigned hereby appoints ROBERT A. VIRTUE, DOUGLAS A. VIRTUE and
JAMES R. BRAAM, and each of them, with full power of substitution in each, as
proxies of the undersigned to attend and vote, as designated on the reverse
side, all shares of Virco Mfg. Corporation, a Delaware corporation (the
"Company"), which the undersigned may be entitled to vote at the Annual Meeting
of Stockholders to be held June 18, 1996 and any adjournment or postponement
thereof:
PLEASE DATE, SIGN ON REVERSE SIDE AND RETURN IN ACCOMPANYING ENVELOPE.
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FOLD AND DETACH HERE
17
Please mark
your vote as [X]
indicated in
this example
1. Election of Directors:
FOR
all nominees WITHHOLD James R. Wilburn, Hugh D. Tyler and
listed (except AUTHORITY Donald S. Friesz
as marked) to vote for all
to the contrary nominees listed (INSTRUCTION: To withhold authority
[ ] [ ] to vote for any individual nominee, write
nominee's name on the space provided
below)
2. In their discretion, the Proxies ----------------------------------------
are authorized to vote upon such
other business as may properly
come before the meeting.
ANY PREVIOUS PROXY EXECUTED BY THE
UNDERSIGNED IS HEREBY REVOKED
Receipt of the notice of the
meeting, the proxy statement and
the annual report of the Company
for the year ended January 31, 1996,
is hereby acknowledged.
THIS PROXY WILL BE VOTED AS DIRECTED
ABOVE. IN THE ABSENCE OF ANY DIRECTION,
THIS PROXY WILL BE VOTED FOR THE
ELECTION AS DIRECTORS OF ALL OF THE
NOMINEES NAMED, AND IN THE DISCRETION
OF THE PROXIES ON SUCH OTHER BUSINESS
AS MAY PROPERLY COME BEFORE
THE MEETING.
Signature(s)_________________________________________________Date________, 1996
Note: Please sign exactly as addressed hereon. If the stock is jointly held
each owner must sign. Executor, administrators, trustees, guardians and
attorneys should so indicate when signing. Attorneys should submit powers of
attorney.
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FOLD AND DETACH HERE