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Virco Announces Fourth Quarter Results

TORRANCE, Calif., April 19, 2013 (GLOBE NEWSWIRE) -- Virco Mfg. Corporation (Nasdaq:VIRC) today announced fourth quarter and year-end results in the following letter to stockholders from Robert A. Virtue, President and CEO:

Despite continued softness and volatility in our core K-12 public school market, the structural changes we made over a year ago allowed us to reduce our operating loss by almost $10,000,000 in fiscal 2012. For the year, sales decreased by 4.5% from $166,441,000 to $158,856,000. Our net loss decreased from $13,803,000 in 2011 to $3,830,000 in 2012.

Results in the fourth quarter reflected the ongoing volatility and weaker demand in our market. Partly due to internal cost-saving measures including discretionary plant furloughs in December, shipments for the quarter declined from $26,294,000 in 2011 to $18,154,000 in 2012. However, incoming order rates for the quarter were 8% higher than in the fourth quarter of the previous year, allowing us to enter fiscal 2013 with a larger backlog. As more of our business shifts to furnishing newly-constructed schools versus day-to-day replacement of existing classroom furniture, we expect this volatility in shipments and incoming orders to continue, overlaid as always on our strong seasonal pattern of peak summer deliveries and lower fall, winter, and spring shipments.

As previously discussed in the Company's Form 10-K for the year ended January 31, 2012, in the fall of 2011Virco implemented a voluntary separation program that provided for early retirement and severance payments based on years of service to employees who voluntarily elected to retire.  At the beginning of the 2011 fiscal year, the Company had approximately 1,045 employees. At January 31, 2012, after the effect of the voluntary retirement program coupled with attrition, the Company employed approximately 825 persons, a 20% reduction. As a result of attrition and other measures, by January 31, 2013 the number of full time employees declined to 760. As noted above, cost savings from these staff reductions along with pricing initiatives and stable raw material costs allowed us to reduce operating losses by almost $10,000,000 compared to the prior year.  In addition to the improvements in pricing and cost structure, 2012 results benefited from relative stability for raw material costs. The stable raw material costs allowed for pricing improvements and cost reductions to directly benefit gross margin. This stability was a significant improvement compared to 2011, when steel increased by approximately 30% during the critical second quarter and certain plastics increased by nearly 30% over the second and third quarters.

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