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VIRCO MFG CORPORATION
--01-31
No
No
Yes
Smaller Reporting Company
10-Q
false
2011-07-31
Q2
2012
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<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 1 - us-gaap:OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-->
<div align="left" style="font-family: 'Times New Roman',Times,serif">
<!-- xbrl,ns -->
<!-- xbrl,nx -->
<div align="center" style="font-size: 10pt; margin-top: 0pt"><b></b>
</div>
<div align="left">
</div>
<div align="center" style="font-size: 10pt; margin-top: 0pt"><b></b>
</div>
<div align="center" style="font-size: 10pt; margin-top: 0pt"><b></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Note 1. Basis of Presentation</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">The accompanying unaudited condensed consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the United States for interim
financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three and six months ended July 31,
2011, are not necessarily indicative of the results that may be expected for the fiscal year
ending January 31, 2012. The balance sheet at January 31, 2011, 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,
2011 (“Form 10-K”). All references to the “Company” refer to Virco Mfg. Corporation and its
subsidiaries.
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 2 - virc:SeasonalityTextBlock-->
<div align="left" style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Note 2. Seasonality</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">The market for educational furniture is marked by extreme seasonality, with over 50% of the
Company’s total sales typically occurring from June to September 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.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">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.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">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 on-going basis, management
evaluates its estimates, including those related to market demand, labor costs, and stocking
inventory.
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 3 - us-gaap:AccountingChangesAndErrorCorrectionsTextBlock-->
<div align="left" style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Note 3. New Accounting Standards</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">There were no accounting pronouncements applicable to the Company in the second quarter of 2011.
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 4 - us-gaap:InventoryDisclosureTextBlock-->
<div align="left" style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Note 4. Inventories</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">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.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">Management continually monitors production costs, material costs and inventory levels to determine
that interim inventories are fairly stated.
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 5 - us-gaap:DebtDisclosureTextBlock-->
<div align="left" style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Note 5. Debt</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">At July 31, 2011, the Company had outstanding borrowings pursuant to its revolving line of credit
with Wells Fargo Bank, National Association (the “Lender”) of $28,292,000. The revolving line
generally provides for advances of up to 80% on eligible accounts receivable and 20% — 55% on
eligible inventory, subject to the specific terms of the facility. The advance rates fluctuate
depending on the time of year and the types of assets. The revolving credit facility will mature
on June 30, 2012, with interest payable monthly at a fluctuating rate equal to the Wells Fargo
Bank’s prime rate plus 1.25%. The facility had an unused commitment fee of 0.375% as of July 31,
2011. Availability under the line was $16,996,000 at July 31, 2011.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">The terms of the revolving line of credit are set forth in the Second Amended and Restated Credit
Agreement (as amended, the “Credit Agreement”), dated as of March 12, 2008, between the Company
and the Lender. The Credit Agreement has been amended from time to time to modify covenants or
other terms and conditions. The most recent amendment, Amendment No.8, was entered into effective
May 31, 2011. Amendment No. 8 extended the maturity date of the loan to June 30, 2012. No other
terms were modified in the Credit Agreement as a result of Amendment No. 8.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">The revolving credit facility with the Lender is subject to financial covenants that include
a maximum leverage ratio and a minimum net income requirement. The Credit Agreement also places
certain restrictions on capital expenditures, incurrence of indebtedness and liens, dividends and
the repurchase of the Company’s common stock. The revolving credit facility is secured by
substantially all of the assets of the Company and its subsidiary, including the Company’s
accounts receivable, inventories, equipment and real property. The
Company was not in
compliance with the minimum net income covenant requirement and leverage covenant
under its revolving credit facility for the period ended July 31, 2011. While
the Company is currently in discussions with the Lender to obtain a waiver in
order to remedy this noncompliance, there is no guarantee that such a waiver will be
provided. If it is not, the Lender, at its option, could declare all amounts owing under the
revolving credit facility to be immediately due and payable, and undertake remedies available
under the security documents and applicable law in respect of its security interest in
substantially all of the assets pledged by the Company under the
revolving credit facility. Management believes that the carrying value of debt approximated fair value at July 31, 2011 and
2010, as all of the long-term debt bears interest at variable rates based on prevailing market
conditions.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">The description set forth herein of the Credit Agreement is qualified in its entirety by the terms
of the Credit Agreement, which, together with each amendment thereto, has been filed with the
Securities and Exchange Commission.
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 6 - us-gaap:IncomeTaxDisclosureTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Note 6. Income Taxes</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">The Company recognizes deferred income taxes under the asset and liability method of accounting
for income taxes in accordance with the provisions of Statement of Financial Accounting Standards
(“SFAS”) No. 109, “Accounting for Income Taxes.” Deferred income taxes are recognized for
differences between the financial statement and tax 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 the more likely than not criteria and a valuation allowance was recorded against the
majority of the net deferred tax assets at July 31, 2011 and January 31, 2011. The second quarter
2011 effective tax rate of 1.53% was impacted by the full valuation allowance recognized against
the federal and combined states deferred tax and discrete items associated with non-taxable
permanent differences. The second quarter 2010 effective tax rate of 18.93% was
impacted by the forecasted profit levels resulted in a larger rate impact of state taxes and
discrete items associated with non-taxable permanent differences.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">The Internal Revenue Service (the “IRS’’) has completed the examination of all federal income tax
returns through 2008 with no issues pending or unresolved. The years 2009 and 2010 remain open for
examination by the IRS. The years 2006 through 2010 remain open for examination by state tax
authorities. The Company is not currently under state examination.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">The specific timing of when the resolution of each tax position will be reached is uncertain. As
of July 31, 2011, 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.
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 7 - us-gaap:EarningsPerShareTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Note 7. Net Income (Loss) per Share</b>
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="52%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 0px solid #000000">Three Months Ended</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 0px solid #000000">Six Months Ended</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 0px solid #000000">7/31/2011</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 0px solid #000000">7/31/2010</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 0px solid #000000">7/31/2011</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 0px solid #000000">7/31/2010</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="15" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="14">(In thousands, except per share data)</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Net income (loss)
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">2,732</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">4,037</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(2,668</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(1,044</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Average shares outstanding
</div></td>
<td> </td>
<td> </td>
<td align="right">14,274</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">14,168</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">14,240</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">14,162</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Net effect of dilutive stock options
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">based on the treasury stock method using average market price
</div></td>
<td> </td>
<td> </td>
<td align="right">18</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">6</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="15" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Totals
</div></td>
<td> </td>
<td> </td>
<td align="right">14,292</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">14,174</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">14,240</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">14,162</td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Net income (loss) per share — basic
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">0.19</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">0.28</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(0.19</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(0.07</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Net income (loss) per share — diluted
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">0.19</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">0.28</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(0.19</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(0.07</td>
<td nowrap="nowrap">)</td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">Certain exercisable and non-exercisable stock options were not included in the computation of
diluted net loss per share at July 31, 2011 and 2010, because their inclusion would have been
anti-dilutive. The number of stock options outstanding, which met this anti-dilutive criterion for
the six months ended July 31, 2011 and 2010, was 22,000 and 10,000, respectively.
</div>
</div>
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<!-- Begin Block Tagged Note 8 - us-gaap:DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Note 8. Stock Based Compensation</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt"><b>Stock Incentive Plans</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">The Company had three stock option plans at July 31, 2011. The 2011 Stock Incentive Plan (the
“2011 Plan”), the 2007 Stock Incentive Plan (the “2007 Plan”), and the 1997 Stock Incentive Plan
(the “1997 Plan”). The 2011 Plan was approved at the June 21, 2011 Annual Stockholder Meeting.
Under the 2011 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. As of July 31, 2011, no awards have been made
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 and will be under the 2011 Plan 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 issued 68,960 shares of restricted stock under the 2007 Plan to the non-employee members
of the Board of Directors on June 21, 2011. These shares of restricted stock vest over a one year
period. As of July 31, 2011, there were approximately 131,200 shares available for future
issuance under the 2007 Plan.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">The 1997 Plan expired in 2007 and had 12,100 unexercised options outstanding at July 31, 2011.
Stock options awarded under the 1997 Plan had to be at exercise prices equal to the fair market
value of the Company’s common stock on the date of the grant. These options expired on August 21,
2011. Stock options generally have a maximum term of 10 years and generally become exercisable
ratably over a five-year period.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Restricted Stock and Stock Unit Awards</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt"><b>Accounting for the Plans</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">The following table presents a summary of restricted stock and stock unit awards at July 31, 2011
and 2010:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="40%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Unamortized</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Compensation</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 0px solid #000000">Expense for 3 months ended</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 0px solid #000000">Expense for 6 months ended</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Cost at</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">7/31/2011</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">7/31/2010</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">7/31/2011</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">7/31/2010</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">7/31/2011</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="19" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>2007 Stock Incentive Plan</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Grants of 68,960 Shares of Restricted
Stock, issued 6/21/2011, vesting over
1 year
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">33,000</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">33,000</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">166,000</td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Grants of 56,455 Shares of Restricted
Stock, issued 6/8/2010, vesting over
1 year
</div></td>
<td> </td>
<td> </td>
<td align="right">15,000</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">29,000</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">58,000</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">29,000</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Grants of 49,854 Shares of Restricted
Stock, issued 6/16/2009, vesting over
1 year
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">14,000</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">58,000</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Grants of 382,500 Shares of Restricted
Stock, issued 6/16/2009, vesting over
5 years
</div></td>
<td> </td>
<td> </td>
<td align="right">58,000</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">67,000</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">125,000</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">134,000</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">679,000</td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Grants of 262,500 Restricted Stock
Units, issued 6/19/2007, vesting over
5 years
</div></td>
<td> </td>
<td> </td>
<td align="right">75,000</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">89,000</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">165,000</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">178,000</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">263,000</td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="19" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Totals for the period
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">181,000</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">199,000</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">381,000</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">399,000</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">1,108,000</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="19" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Stockholders’ Rights</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">On October 15, 1996, the Board of Directors declared a dividend of one preferred stock purchase
right (the “Rights”) for each outstanding share of the 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. 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 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.
</div>
</div>
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<!-- Begin Block Tagged Note 9 - us-gaap:StockholdersEquityNoteDisclosureTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Note 9. Comprehensive Loss and Stockholders’ Equity</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">Comprehensive loss for the six months ended July 31, 2011 and 2010 was the same as net loss
reported on the Statements of Operations. Accumulated other comprehensive loss at July 31, 2011
and 2010 and January 31, 2011 is composed of minimum pension liability adjustments.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">During the six months ended July 31, 2011, the Company did not repurchase any shares of its common
stock. As of July 31, 2011, $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.
</div>
</div>
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<!-- Begin Block Tagged Note 10 - us-gaap:PensionAndOtherPostretirementBenefitsDisclosureTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Note 10. Retirement Plans</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">The Company and its subsidiaries cover all employees under a noncontributory defined benefit
retirement plan, entitled the Virco Employees’ Retirement Plan (the “Employees Retirement 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.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">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 five years in the VIP Plan, offset by benefits earned under the
Employees Retirement Plan. As more fully described in the Form 10-K, benefit accruals under this
plan were frozen effective December 31, 2003.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">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.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">The net periodic pension costs (income) for the Employees Retirement Plan, the VIP Plan, and the
Non-Employee Directors Retirement Plan for the three and six months each ended July 31, 2011 and
2010 were as follows (in thousands):
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="28%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="23" style="border-bottom: 1px solid #000000">Three Months Ended</td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">Non-Employee Directors</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 0px solid #000000">Pension Plan</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 0px solid #000000">VIP Retirement Plan</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 0px solid #000000">Retirement Plan</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">2011</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">2010</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">2011</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">2010</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">2011</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">2010</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="23" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Service cost
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Interest cost
</div></td>
<td> </td>
<td> </td>
<td align="right">360</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">352</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">95</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">87</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">6</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">6</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Expected return on plan assets
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(289</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(262</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Amortization of prior service cost
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">13</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Recognized net actuarial loss or
(gain)
</div></td>
<td> </td>
<td> </td>
<td align="right">262</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">243</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(10</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(7</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="23" nowrap="nowrap" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Net periodic pension cost (income)
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">333</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">333</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">108</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">87</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(4</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(1</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="23" nowrap="nowrap" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="28%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="23" style="border-bottom: 1px solid #000000">Six Months Ended</td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">Non-Employee Directors</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 0px solid #000000">Pension Plan</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 0px solid #000000">VIP Retirement Plan</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 0px solid #000000">Retirement Plan</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">2011</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">2010</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">2011</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">2010</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">2011</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">2010</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="23" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Service cost
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Interest cost
</div></td>
<td> </td>
<td> </td>
<td align="right">720</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">704</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">190</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">174</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">12</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">12</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Expected return on plan assets
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(578</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(524</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Amortization of prior service cost
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">26</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Recognized net actuarial loss or
(gain)
</div></td>
<td> </td>
<td> </td>
<td align="right">524</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">486</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(20</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(14</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="23" nowrap="nowrap" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Net periodic pension cost (income)
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">666</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">666</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">216</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">174</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(8</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(2</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="23" nowrap="nowrap" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 11 - us-gaap:ProductWarrantyDisclosureTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Note 11. Warranty</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">The Company accrues an estimate of its exposure to warranty claims based upon both current and
historical product sales data and warranty costs incurred. The Company’s products carry a ten-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.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">The following is a summary of the Company’s warranty claim activity for the three and six months
ended July 31, 2011 and 2010 (in thousands):
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="52%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 0px solid #000000">Three Months Ended</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 0px solid #000000">Six Months Ended</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 0px solid #000000">7/31/2011</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 0px solid #000000">7/31/2010</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 0px solid #000000">7/31/2011</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 0px solid #000000">7/31/2010</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="15" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">(In thousands)</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Beginning accrued warranty balance
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">2,150</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">1,675</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">2,300</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">1,675</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Provision
</div></td>
<td> </td>
<td> </td>
<td align="right">276</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">261</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">348</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">453</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Costs incurred
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(626</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(261</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(848</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(453</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="15" nowrap="nowrap" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Ending accrued warranty balance
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">1,800</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">1,675</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">1,800</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">1,675</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="15" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 12 - us-gaap:SubsequentEventsTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Note 12. Subsequent Events</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">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, except for the
disclosure set forth below, no subsequent events occurred that required recognition or disclosure
in the financial statements.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">On September 1, 2011, the Company initiated a voluntary early retirement / severance program and
scheduled additional furlough weeks to occur during the non-peak season. The Company will be
taking further actions to reduce costs by consolidating and
reorganizing departments. The financial effect of our early
retirement / severance program and further actions to reduce costs
cannot be estimated at this time.
</div>
</div>
0000751365