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Virco Announces Third Quarter Results

TORRANCE, Calif., Dec. 9, 2010 (GLOBE NEWSWIRE) -- Virco Mfg. Corporation (Nasdaq:VIRC) today announced third quarter and year-to-date results in the following letter to stockholders from Robert A. Virtue, President and CEO:

Results for the third quarter ended October 31, 2010, continued to track the constrained trajectory of the first half of the year, reflecting ongoing funding challenges in our core market of publicly-funded K-12 educational furniture and equipment.

For the three months of August through October, traditionally the tail end of our summer delivery season, revenue was $60,779,000 compared to $62,920,000 in the same period last year, a decline of 3.4%. Lower prices in response to a highly competitive environment reduced gross profit in the three months ended October 31, 2010 to $17,193,000 from $21,045,000 in the corresponding period last year, a decline of 18.3%. Revenue for the nine months ended October 31, 2010 was $158,002,000 versus $164,592,000 in the corresponding period last year, a decline of 4%. Gross profit for the nine months ended October 31, 2010 was $46,436,000 versus $55,121,000 in the corresponding period last year, a decline of 15.8%. 

As with the last several recessions, the public sector continues to lag the overall economic recovery. 2010 has been a year of significantly lower tax receipts for many states and municipalities and it now appears that 2011 will also be a challenging year for these smaller government entities.

Here are our results for the third quarter and the nine months ended October 31, 2010, and the comparable period last year:
  Three Months Ended Nine Months Ended
  10/31/2010 10/31/2009 10/31/2010 10/31/2009
  (In thousands, except share data) (In thousands, except share data)
Net sales $60,779 $62,920 $158,002 $164,592
Cost of sales 43,586 41,875 111,566 109,471
Gross profit 17,193 21,045 46,436 55,121
Selling, general administrative & other expense 17,316 17,500 48,075 49,370
Income (loss) before income taxes (123) 3,545 (1,639) 5,751
Income tax (benefits) expense  (277) 640 (749) 1,787
Net income (loss) $154 $2,905 $(890) $3,964
Cash dividend declared $0.05 $0.05 $0.10 $0.10
Net income (loss) per share - basic (a) $0.01 $0.21 $(0.06) $0.28
Net income (loss) per share - diluted 0.01 0.20 (0.06) 0.28
Weighted average shares outstanding - basic (a) 14,152 14,162 14,123 14,172
Weighted average shares outstanding - diluted 14,174 14,182 14,123 14,182
(a) Net loss per share - diluted was calculated based on basic shares outstanding due to the anti-dilutive effect on the inclusion of common stock equivalent shares.
  10/31/2010 1/31/2010 10/31/2009
Current assets $53,256 $56,906 $53,043
Non-current assets 58,725 61,194 59,865
Current liabilities 22,714 22,926 21,091
Non-current liabilities 26,519 30,236 23,098
Stockholders' equity 62,748 64,938 68,719

We are frequently asked when we expect things to improve. Despite some encouraging individual projects and what now, at the end of the season, appears to have been a modest gain in market share for 2010, the underlying ills facing our market seem likely to persist for at least one more delivery cycle, and possibly two. In addition to the continuing challenges facing tax-supported government spending, it now appears that municipal and state bonds may be entering a period of difficulty. Bond funding has been one of the more reliable and resilient elements of our market for the past few years, so this new development concerns us.

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