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TORRANCE, Calif., June 12, 2013 (GLOBE NEWSWIRE) -- Virco Mfg. Corporation (Nasdaq:VIRC) today announced first quarter results in the following letter to stockholders from Robert A. Virtue, President and CEO:
Our first quarter results reflect the continued softness in public school funding. Sales declined by 16% from $23,668,000 in the first quarter of fiscal 2012 to $19,890,000 in the first quarter of fiscal 2013. Although sales declined, pre-tax operating loss improved in the first quarter of fiscal 2013 compared to the comparable period of the prior year from $(4,817,000) to $(4,484,000).
Publicly funded entities are continuing to suffer severe budget challenges. Although tax revenues are recovering to pre-recession levels, structural spending deficits continue to adversely impact budgets for education spending, typically the largest line item in a state budget. Most states, cities, counties, and school districts are facing continued constraints in operating budgets requiring cutbacks in personnel and services, leaving less money for replacement furniture. Completed bond funded construction projects, for which furniture is typically purchased and installed, are expected to decline modestly in 2013 compared to 2012.
As discussed more fully in the Company's annual report on Form 10-K for the year ended January 31, 2013, the Company has made substantial reductions in its cost structure over the last two years, enabling the Company to reduce operating losses for our traditionally slow first quarter despite a reduction in revenue. A voluntary early retirement program in the fall of 2011, normal attrition of employees who were not replaced, and a small reduction in force completed in May of 2013 have contributed to this reduced cost structure. The Company is entering the summer of 2013 with approximately 30% fewer employees compared to the summer of 2011. This reduction in force was concentrated in manufacturing, and included both direct labor and indirect positions. The intent of the Company is to meet the seasonal demand for production and distribution through more aggressive use of temporary seasonal workers. Aggressive use of seasonal labor will enable the Company to reduce structural spending during the traditionally slow first and fourth quarters.