8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

Date of Report: December 7, 2006

VIRCO MFG. CORPORATION

(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of incorporation) 001-8777
(Commission File Number) 95-1613718
(IRS Employer Identification No.)

2027 Harpers Way
Torrance, California
(Address of principal executive offices)
90501
(Zip Code)

Registrant’s telephone number, including area code: (310) 533-0474

Not Applicable
(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o     Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o     Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o     Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o     Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operation and Financial Condition

     On December 7, 2006, Virco Mfg. Corporation issued a press release reporting its financial results for the third quarter ended October 31, 2006. The press release is attached hereto as Exhibit 99.1. The information in this Item 2.02 and the exhibit hereto are furnished to, but not filed with, the Securities and Exchange Commission.

Item 9.01 Financial Statements and Exhibits

     Exhibit 99.1 — Press Release dated December 7, 2006

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	VIRCO MFG. CORPORATION (Registrant)
Date: December 12, 2006	/s/ Robert A. Virtue
	(Signature)
	Name:	Robert A. Virtue
	Title:	Chief Executive Officer and Chairman of the Board of Directors

EXHIBIT INDEX

Exhibit No.	Description
99.1	Press Release dated December 7, 2006

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE	Contact:
	Robert A. Virtue, President
	Douglas A. Virtue, Executive Vice President
	Robert E. Dose, Chief Financial Officer
	Virco Mfg. Corporation
	(310) 533-0474

Virco Announces Third Quarter Results

Torrance, California — December 7, 2006 — Virco Mfg. Corporation (AMEX: VIR) today released its third quarter results in the following letter to shareholders from Robert A. Virtue, President and CEO:

The positive trends of the first two quarters continued into the third quarter, producing a $12.2 million year-to-date improvement in net income through nine months. Sales for the third quarter increased 4.5%, to $73.7 million from $70.5 million, generating a profit of $5.8 million compared to a loss of $2.2 million last year. Through nine months sales have increased 4.0%, to $186.8 million from $179.6 million, generating a net profit of $10.4 million versus a loss of $1.8 million. Here are the numbers:

	Three Months Ended					Nine Months Ended
	10/31/2006		10/31/2005			10/31/2006		10/31/2005
	(in thousands, except per share data)
Sales	$	73,678	$	70,484		$	186,788	$	179,644
Cost of sales		46,586		50,400			119,819		123,649
Gross margin		27,092		20,084			66,969		55,995
Selling, general & administrative & other		21,139		22,418			56,331		57,896
Income (loss) before taxes		5,953		(2,334	)		10,638		(1,901	)
Income tax expense (benefit)		120		(140	)		240		(109	)
Net income (loss)	$	5,833	$	(2,194	)	$	10,398	$	(1,792	)
Net income (loss) per share — basic	$	0.41	$	(0.17	)	$	0.77	$	(0.14	)
Net income (loss) per share — diluted	$	0.41	$	(0.17	)	$	0.77	$	(0.14	)
Weighted average shares outstanding — basic		14,362		13,146			13,475		13,111
Weighted average shares outstanding — diluted		14,364		13,357			13,499		13,350

	10/31/2006		01/31/2006		10/31/2005
	(in thousands)
Current assets	$	57,041	$	52,246	$	50,009
Non-current assets		59,484		62,474		62,947
Current liabilities		31,112		36,758		28,345
Non-current liabilities		30,363		38,862		36,877
Stockholders’ equity		55,050		39,100		47,734

Four key elements are responsible for this year’s improved results:

1.	Higher selling prices, which have finally caught up with escalating raw material costs;
2.	Balance between operating costs and revenue, achieved through three restructurings and accumulated depreciation of property, plant and equipment;
3.	Levelized factory output, and related manufacturing efficiencies that moderated quarterly results through the even distribution of overhead absorption; and
4.	Equipment for Educators™, which reinforced our position as the innovation leader in complete furniture, fixtures and equipment solutions for K-12 learning environments.

The impact of these factors is most easily illustrated in a year-over-year comparison of quarterly results. Two things stand out: the dramatic improvement of this year’s third quarter compared to last year’s, and the similarity between this year’s second and third quarters. Last year’s third quarter was negatively impacted by Hurricane Katrina and the last of our restructurings. The similar results of this year’s second and third quarters are more typical of our historic pattern and are due to the combined effects of items 1 — 4 above.

     Comparison of Quarterly Results Through Nine Months, 2006 vs. 2005

	First Quarter						Second Quarter						Third Quarter
	2006			2005			2006			2005			2006			2005
	(in thousands, except percentages)
Sales	$	34,515		$	33,254		$	78,595		$	75,906		$	73,678		$	70,484
Gross margin	$	11,494		$	9,407		$	28,383		$	26,504		$	27,092		$	20,084
GM/% to sales		33.3	%		28.3	%		36.1	%		34.9	%		36.8	%		28.5	%
SG&A and others	$	14,761		$	15,090		$	20,431		$	20,388		$	21,139		$	22,418
SG&A/% to sales		42.7	%		45.4	%		26.0	%		26.9	%		28.7	%		31.8	%
Net (loss) income	$	(3,267	)	$	(5,683	)	$	7,832		$	6,085		$	5,833		$	(2,194	)

Current market conditions and better balance between revenue and operating expense suggest that these trends may be sustainable. We expect to incur a loss in the fourth quarter but it will be smaller than last year’s. Tax obligations for this year’s profit will be negligible due to net operating loss (NOL) carry-forwards.

Our turnaround has not been accomplished through a “harvest strategy” that mortgages the future by failing to invest in new products and services. On the contrary, we have more new products in the pipeline than at any time in the past decade. Several will be introduced early next spring for the 2007 delivery season. We’ve also continued to enhance the productivity and versatility of our infrastructure, most recently through the addition of injection- and compression-molding equipment, a chrome plating line, and automated tooling to support new products. We’ll be unveiling a new website this winter that incorporates many features from our proprietary PlanSCAPE^® software, as well as the convenience of on-line B2B ordering for our direct public school customers.

All of our product development and infrastructure enhancements have been accomplished within a very disciplined capital expenditures budget that remains substantially below the annual depreciation of our property, plant and equipment (PP&E). We said several years ago that as we digested the extraordinarily large investments of the late 1990s, our new infrastructure would transform itself from a burden into an operating annuity. That process is now nearing completion.

At the beginning of 1998, immediately before our major expansion in Conway, PP&E of $37.5 million generated annual depreciation of $7.1 million. At the beginning of 2002 those figures increased to $94.6 million and $15.8 million, respectively. By the end of this year PP&E will have declined to approximately $48 million, with annual depreciation of about $7 million.

The high productivity of recent capital expenditures has encouraging financial implications for the future. We believe this low-cost model of organic growth offers potential for better returns on invested capital, especially as Equipment for Educators™ reaches critical mass and begins to generate unit volume growth. Although we prefer this approach because of its financial efficiency, we also remain vigilant for strategic acquisitions that meet our product assortment, cost and integration requirements.

We usually wait until year-end to thank our shareholders, employees, customers, financial partners, and suppliers for their support. Under the circumstances we feel those thanks are due now. By giving thanks we’re not saying that we’re done. On the contrary, we intend to continue the initiatives that have carried us through this difficult period with even more diligence in the coming years.

This news release contains “forward-looking statements” as defined by the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, statements regarding: new business strategies; the cost and availability of steel and other raw materials; the continuing impact of our Assemble-to-Ship and Equipment for Educators programs on earnings; market demand and acceptance of new products; development of new distribution channels; pricing; and seasonality. Forward-looking statements are based on current expectations and beliefs about future events or circumstances, and you should not place undue reliance on these statements. Such statements involve known and unknown risks, uncertainties, assumptions and other factors, many of which are out of our control and difficult to forecast. These factors may cause actual results to differ materially from those which are anticipated. Such factors include, but are not limited to: changes in general economic conditions including raw material, energy and freight costs; the seasonality of our markets; the markets for school and office furniture generally; the specific markets and customers with which we conduct our principal business; and the response of competitors to our price increases. See our Annual Report on Form 10K for year ended January 31, 2006, and other materials filed with the Securities and Exchange Commission for a further description of these and other risks and uncertainties applicable to our business. We assume no, and hereby disclaim any, obligation to update any of our forward-looking statements. We nonetheless reserve the right to make such updates from time to time by press release, periodic reports or other methods of public disclosure without the need for specific reference to this press release. No such update shall be deemed to indicate that other statements which are not addressed by such an update remain correct or create an obligation to provide any other updates.

End of filing