EX-99.1 2 v19669exv99w1.htm EXHIBIT 99.1 exv99w1
 

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 Fourth Quarter Results
Torrance, California — April 17, 2006 — Virco Mfg. Corporation today announced higher sales and narrowed losses for the fourth quarter and year ended January 31, 2006, in the following letter to shareholders from Robert A. Virtue, President and CEO:
Sales for the year ended January 31, 2006 increased 7% compared to the prior year, to $214,450,000 from $199,854,000. Losses narrowed to $9,574,000 from $13,955,000. Despite a price increase early in the year, escalating raw material costs without corresponding price increases continued to prevent any net improvement in margins through the first three quarters.
                 
    Twelve Months Ended  
(In thousands except per share data)   1/31/2006     1/31/2005  
 
Sales
   $ 214,450     $ 199,854  
Cost of sales
     149,785       143,415  
     
Gross margin
     64,665       56,439  
 
                
Selling, general, administrative, interest and others
     74,348       70,319  
     
Loss before taxes
     (9,683 )     (13,880 )
Income tax expense (benefit)
     (109 )     115  
     
Net loss
   $ (9,574 )   $ (13,995 )
     
 
                
Net loss per share (a)
Basic
   $ (0.73 )   $ (1.07 )
 
                
Weighted average shares outstanding (a)
Basic
     13,114       13,112  
 
(a)   Net loss per share was calculated based on basic shares outstanding due to the anti-dilutive effect on the inclusion of common stock equivalent shares.
At the end of the third quarter we completed a small and, we hope, final restructuring. More importantly, we initiated our 2006 price increase. It took effect in several phases, beginning early in the fourth quarter and culminating in mid-January, 2006. These actions corresponded with more stable raw material costs and yielded a solid improvement in gross margins. For the fourth quarter, sales were up 11% but gross margins were up 120%.
                 
    Three Months Ended  
    (unaudited)  
(In thousands except per share data)   1/31/2006     1/31/2005  
 
Sales
   $ 34,806     $ 31,218  
Cost of sales
     26,136       27,284  
     
Gross margin
     8,670       3,934  
 
                
Selling, general, administrative, interest and others
     16,452       15,265  
     

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    Three Months Ended  
    (unaudited)  
(In thousands except per share data)   1/31/2006     1/31/2005  
 
Loss before taxes
     (7,782 )     (11,331 )
Income tax expense
     —       115  
     
Net loss
   $ (7,782 )   $ (11,446 )
     
 
                
Net loss per share (a)
Basic
   $ (0.59 )   $ (0.87 )
 
                
Weighted average shares outstanding (a)
Basic
     13,137       13,120  
 
(a)   Net loss per share was calculated based on basic shares outstanding due to the anti-dilutive effect on the inclusion of common stock equivalent shares.
                                 
    Quarterly Results (Unaudited)  
In thousands, except per share data   Apr. 30     Jul. 31     Oct. 31     Jan. 31  
 
Year ended January 31, 2006:
                                
Net sales
   $ 33,254     $ 75,906     $ 70,484     $ 34,806  
Gross profit
     9,407       26,504       20,084       8,670  
Net (loss) income
     (5,683 )     6,085       (2,194 )     (7,782 )
 
                                
Year ended January 31, 2005:
                                
Net sales
   $ 30,321     $ 68,813     $ 69,502     $ 31,218  
Gross profit
     10,317       21,797       20,391       3,934  
Net (loss) income
     (4,601 )     2,031       21       (11,446 )
Gross margins on shipments, incoming orders and backlog have continued their improvement through the first two months of 2006. The improvement is distributed across all customer groups and product lines, indicating good acceptance of our integrated marketing program called Equipment for Educators. This program features:
  •   An expanded product assortment;
 
  •   Compelling new products like ZUMA® and ZUMAfrd®
 
  •   PlanSCAPE® proprietary software for full project management; and
 
  •   Convenient national and regional contracts for schools, public agencies and non-profit organizations.
Equipment for Educators is supported by the rapid and reliable performance of our factories. Despite the operational challenges of the past three years, our factories have continued to reduce lead times, expand offerings, and lower fixed costs. Overhead in absolute dollars and as a percent of sales was lower in 2005 than in 1997, the year before our major expansion in Conway, Arkansas. Disciplined capital expenditures relative to depreciation again contributed to cash flows, which were slightly positive for the second year in a row.
Our Form 10K, released concurrently with this letter, contains a thorough discussion of fiscal 2005 results. We will also publish, in our traditional form, an Annual Report with an expanded discussion of Equipment for Educators and our new variable cost structure. The Annual Report will be mailed along with our proxy statement in mid-May.
As we look forward to continued improvement after three difficult years, it’s especially appropriate to thank our shareholders, our customers, our employees, our vendors, and the good people at Wells Fargo. Your support continues to be appreciated.
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; market demand and acceptance of

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new product; 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; the cost and availability of raw materials and fuel; 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 we file 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

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