Virco Mfg. Corporation Def 14a, 6/18/02

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION

Filed by the Registrant X Box

Filed by a Party other than the Registrant Box

Check the appropriate box: Box

The Annual Meeting of Stockholders of Virco Mfg. Corporation, a Delaware corporation, will be held at 2:00 p.m. on Tuesday, June 18, 2002 at 2027 Harpers Way, Torrance, California, for the following purposes:


	1. To elect three directors to serve until the 2005 Annual Meeting of Stockholders and until their successors are elected and qualified; and

	2. To transact such other business as may properly come before the meeting.

These items are more fully described in the following pages, which are made part of this notice.

The Board of Directors has fixed the close of business on May 3, 2002 as the record date for the determination of stockholders entitled to notice of and to vote at the Annual Meeting and any adjournments and postponements thereof.

To ensure that your vote is recorded promptly, please vote as soon as possible, even if you plan to attend the annual meeting. Most stockholders have three options for submitting their vote: (1) via the Internet, (2) by phone or (3) by mail, using the paper proxy card. For further details, see your proxy card. If you have Internet access, we encourage you to record your vote on the Internet. It is convenient for you, and it also saves your company significant postage and processing costs.


	By Order of the Board of Directors

	/s/ ROBERT E. DOSE

	Robert E. Dose, Secretary

This Proxy Statement is being mailed to stockholders of Virco Mfg. Corporation, a Delaware corporation (the “Company”), on or about May 24, 2002 in connection with the solicitation by the Board of Directors of proxies to be used at the Annual Meeting of Stockholders of the Company to be held on Tuesday, June 18, 2002 at 2:00 p.m. at 2027 Harpers Way, Torrance, California and any and all adjournments and postponements thereof.

The cost of preparing, assembling and mailing the Notice of Annual Meeting of Stockholders, Proxy Statement and form of proxy and the solicitation of proxies will be paid by the Company. Proxies may be solicited in person or by telephone, telegraph, e-mail or other electronic means by personnel of the Company who will not receive any additional compensation for such solicitation. The Company will pay brokers or other persons holding stock in their names or the names of their nominees for the expenses of forwarding soliciting material to their principals.

We encourage you to conserve natural resources, as well as reduce printing and mailing costs, by signing up for electronic delivery of Virco stockholder communications. With electronic delivery, you will be able to access documents such as the annual report and the proxy statement on our website. To sign up, please consult the instructions included with your proxy card.

The close of business on May 3, 2002 has been fixed as the record date for the determination of stockholders entitled to notice of and to vote at the meeting. On that date there were 12,139,242 shares of the Company’s Common Stock, par value $.01 per share, outstanding. All voting rights are vested exclusively in the holders of the Company’s Common Stock. Each share is entitled to one vote on any matter that may be presented for consideration and action by the stockholders, except that as to the election of directors, stockholders may cumulate their votes. Because three directors are to be elected, cumulative voting means that each stockholder may cast a number of votes equal to three times the number of shares actually owned. That number of votes may be cast for one nominee, divided equally among the three nominees or divided among the nominees in any other manner. The proxy holders will have authority, in their discretion, to vote cumulatively for less than all of the nominees.

In all matters other than the election of directors, the affirmative vote of the majority of shares of Common Stock present in person or represented by proxy at the meeting and entitled to vote on the subject matter would be the act of the stockholders. Directors will be elected by a plurality of the votes of the Common Stock present in person or represented by proxy. Abstentions will be treated as the equivalent of a negative vote for the purpose of determining whether a proposal has been adopted and will have no effect for the purpose of determining whether a director has been elected. Broker non-votes are not counted for the purpose of determining the votes cast on a proposal.

Proxies will be voted for management’s nominees for election as directors and in accordance with the recommendations of the Board of Directors contained in the Proxy Statement, unless the stockholder otherwise directs in his proxy. Where the stockholder has appropriately directed how the proxy is to be voted, it will be voted according to his direction. Any stockholder has the power to revoke his proxy at any time before it is voted at the meeting by submitting written notice of revocation to the Secretary of the Company at 2027 Harpers Way, Torrance, California 90501, by filing a duly executed proxy bearing a later date, either in person at the annual meeting, via the internet, by telephone, or by mail. For more information on voting, please consult the instructions included with your proxy card.

The Certificate of Incorporation of the Company provides for the division of the Board of Directors into three classes as nearly equal in number as possible. In accordance with the Certificate of Incorporation, the Board of Directors has nominated Donald S. Friesz, Glen D. Parish and James R. Wilburn (each of whom is currently a director) to serve as directors in Class II of the Board of Directors with a term expiring in 2005.

It is intended that the proxies solicited by this Proxy Statement will be voted in favor of the election of Messrs. Friesz, Parish and Wilburn, unless authority to do so is withheld. Should any of such nominees be unable to serve as a director or should any additional vacancy occur before the election (which events are not anticipated), proxies may be voted for a substitute nominee selected by the Board of Directors or the authorized number of directors may be reduced. If for any reason the authorized number of directors is reduced, the proxies will be voted, in the absence of instructions to the contrary, for the election of the remaining nominees named in this Proxy Statement. In the event that any person other than the nominees named below should be nominated for election as a director, the proxies may be voted cumulatively for less than all of the nominees.

The following table sets forth certain information with respect to each of the three nominees, as well as each of the six continuing directors.

Each director of the Company serving in 2001 attended at least 75% of the 2001 meetings of the Board of Directors and each committee on which he served. The Board of Directors held six meetings in 2001. Directors who are also officers of the Company or its subsidiaries receive no additional compensation for their services as directors. Other directors received a retainer of $4,500 per quarter, a fee of $1,000 for each Board meeting and a fee of $750 for each committee meeting attended. In 2001, Messrs. Friesz, Montgomery, Ott, Patrick, Stafford and Wilburn each received options to purchase 2,000 shares of Common Stock at $9.88 per share (2,200 shares at $8.98 per share after adjusting for a 10% stock dividend issued in 2001 under the Company’s 1997 Stock Incentive Plan). At the February 2001 meeting of the Board of Directors, the Compensation Committee (i) established a fee of $500 for each telephonic board meeting attended by outside directors, (ii) approved an additional annual retainer of $2,000 per year for Committee chairmen, (iii) affirmed the annual option grant to outside directors of 2,000 shares, and (iv) approved a pension plan for non-employee directors who have served as such for at least 10 years, providing for a series of quarterly payments (equal to the portion paid to non-employee directors for service without regard to attendance at Board meetings or committee service) for such director’s lifetime following the date on which such director ceases to be a director for any reason other than death.

The Board of Directors has an Audit Committee that in 2001 was composed of Messrs. Friesz, Patrick, Stafford and Wilburn. It is with great sadness that the Company reports that Mr. Stafford passed away in March 2002. The Company expects to appoint a replacement to fill Mr. Stafford’s position on the Audit Committee at the June 2002 meeting of the Board of Directors. The Audit Committee held two on-sight meetings and four telephonic meetings in 2001. The functions of the Audit Committee include reviewing the financial statements of the Company, the scope of the annual audit by the Company’s independent auditors and the audit reports rendered by such independent auditors. The Audit Committee may also examine and consider other appropriate matters. The Audit Committee acts pursuant to a written charter adopted by the Board of Directors, which appeared as Appendix A to the Company’s 2000 proxy statement. As of the date of this proxy statement, each of the Audit Committee members is an “independent director” as defined by the listing standards of the American Stock Exchange, except perhaps Mr. Patrick. Although Mr. Patrick may not be deemed to be an independent director due to consulting work performed by him in connection with our Conway expansion project, the Board believes that it is in the best interests of the Company and its stockholders that Mr. Patrick continue to serve on the Audit Committee. This is because Mr. Patrick has significant accounting and financial experience and expertise that the Board believes is critical in the execution of the oversight function to be performed by an effective Audit Committee. Moreover, Mr. Patrick is not an employee of, or a relative of an employee of, the Company, and the Board believes that the consulting work

performed for the Company by Mr. Patrick was minor in 2001. Hence, the Board believes that Mr. Patrick will perform his functions with the same fortitude and integrity as the other members of the Audit Committee. Finally, the Board expects to continue to reevaluate the composition of the Audit Committee on an annual basis to ensure that its composition remains in the best interests of the Company and its stockholders.

The Board of Directors has a Compensation Committee that in 2001 was composed of Messrs. Montgomery, Ott and Patrick. The function of this Committee is to make recommendations to the Board regarding changes in salaries and benefits. The Compensation Committee held one meeting in 2001.

The Company established a nominating committee in June 2001 that was composed of Messrs. Friesz, Montgomery, Patrick, and Stafford. The Nominating Committee’s function is to identify and recommend from time to time candidates for nomination for election as directors of the Company. The Nominating Committee did not meet formally in 2002. The Nominating Committee is composed of the outside directors of the Company. Hence, Mr. Gruber will be a member of the Nominating Committee for 2002.

The following table sets forth information as of April 30, 2002 (unless otherwise indicated) relating to the beneficial ownership of the Company’s Common Stock (i) by each person known by the Company to own beneficially more than 5% of the outstanding shares of Common Stock of the Company, (ii) by each director or nominee of the Company, (iii) by each executive officer of the Company named in the Summary Compensation Table below and (iv) by all officers and directors of the Company as a group. The number of shares beneficially owned is deemed to include shares of Common Stock in which the persons named have or share either investment or voting power. Unless otherwise indicated, the mailing address of each of the persons named is 2027 Harpers Way, Torrance, California 90501.

(1)

Except as indicated in the footnotes to this table and pursuant to applicable community property laws, to the knowledge of the Company, the persons named in this table have sole voting and investment power with respect to all shares beneficially owned by them. For purposes of this table, a person is deemed to have “beneficial ownership” as of a given date of any security that such person has the right to acquire within 60 days after such date. Amounts for Messrs. Robert Virtue, Douglas Virtue, Friesz, Gruber, Montgomery, Ott, Parish, Patrick, Stafford, Wilburn, Dose, Wonder, and all executive officers and


	directors as a group, include 77,587, 28,998, 16,106, 0, 924, 3,289, 8,252, 8,863, 8,863, 6,964, 37,508, 20,820, and 309,233 and shares issuable upon exercise of options, respectively, and 8,005, 6,469, 0, 0, 0, 0, 4,566, 0, 0, 0, 5,551, 5,771 and 29,320 shares held under the Company’s Employee Stock Ownership Plan as of December 31, 2001, respectively.

(2)	As of February 15, 2002, according to public filings. Bruce S. Sherman is Chief Executive Officer of Private Capital Management, Inc. (“PCM”) and Gregg J. Powers is President of PCM. In these capacities, Messrs. Sherman and Powers exercise shared dispositive and voting power with respect to 1,537,316 shares held by PCM’s clients and managed by PCM. Mr. Sherman has sole dispositive and voting power with respect to 40,767 shares. Messrs. Sherman and Powers disclaim beneficial ownership for the shares held by PCM’s clients and disclaim the existence of a group. The address for Messrs. Sherman and Powers is 8889 Pelican Bay Blvd., Naples, Florida 34108.

(3)	As of February 12, 2002, according to public filings. Dimensional Fund Advisors Inc. (“Dimensional”), a registered investment advisor, furnishes investment advice to four registered investment companies, and serves as investment manager to certain other commingled group trusts and separate accounts (these investment companies, trusts and accounts are the “Funds”). In its role as investment advisor or manager, Dimensional possesses voting and/or investment power over the shares of the Company’s Common Stock that are owned by the Funds. Dimensional disclaims beneficial ownership of such shares. Dimensional’s principal business address is 1299 Ocean Avenue, 11th floor, Santa Monica, California 90401.

(4)	Does not include 1,488,584 shares owned beneficially by Mr. Robert Virtue’s adult children, including Mr. Douglas Virtue, as to which Mr. Robert Virtue disclaims beneficial ownership.

(5)	Less than 1%.

All information with respect to beneficial ownership of the shares referred to above is based upon filings made by the respective beneficial owners with the Securities and Exchange Commission or information provided to the Company by such beneficial owners.

Douglas Virtue is Robert Virtue’s son. The total number of shares beneficially owned by Mr. Robert Virtue, his brothers Raymond W. Virtue and Richard J. Virtue, his sister, Nancy Virtue Cutshall, their children and their mother, Mrs. Julian A. Virtue, aggregate 5,760,032 shares or 47% of the total shares of Common Stock outstanding.

Robert A. Virtue, Richard J. Virtue, Raymond W. Virtue, Nancy Virtue Cutshall and certain of their respective spouses and children (the “Stockholders”) and the Company have entered into an agreement with respect to certain shares of the Company’s Common Stock received by the Stockholders as gifts from their father, Julian A. Virtue, including shares received in subsequent stock dividends in respect of such shares. Under the agreement, each Stockholder who proposes to sell any of such shares is required to provide the remaining Stockholders notice of the terms of such proposed sale. Each of the remaining Stockholders is entitled to purchase any or all of such shares on the terms set forth in the notice. Any shares not purchased by such remaining Stockholders may be purchased by the Company on such terms. The agreement also provides for a similar right of first refusal in the event of the death or bankruptcy of a Stockholder, except that the purchase price for the shares is to be based upon the then prevailing sales price of the Company’s Common Stock on the American Stock Exchange.

The following table sets forth the compensation for services rendered in all capacities to the Company and its subsidiaries during the years indicated for the Chief Executive Officer and the other four most highly compensated officers of the Company:


(1)	Excludes compensation in the form of other personal benefits, which, for each of the executive officers, did not exceed the lesser of $50,000 or 10% of the total of annual salary and bonus reported for each year.

(2)	For 2001, consists entirely of amounts representing the value of Company-paid split-dollar premiums under the Management Employees Life Insurance Plan. See “Management Employees Life Insurance Plan” and “Executive Survivorship Life Insurance Plan.” The foregoing amounts represent the actuarial value of the benefit to the executive officers of the current year’s insurance premium paid by the Company in excess of that required to fund the death benefits under the policies.

(3)	Granted pursuant to the Company’s 1993 and 1997 Stock Incentive Plans at the market price of the Common Stock on the date of grant and adjusted for stock dividends and, in the case of the 1999 grants, a 3 for 2 stock split.

(4)	For Larry O. Wonder, represents forgiveness of indebtedness to the Company in the amount of $116,875.

Shown below is information concerning grants of options issued by the Company to the Named Executive Officers during the fiscal year ended January 31, 2002:


(1)	Granted on August 21, 2001 pursuant to the 1997 Stock Plan with 100% vesting at the first anniversary date and adjusted for a 10% stock dividend declared in 2001.

(2)	The 5% and 10% assumed rates of appreciation are specified under the rules of the Securities and Exchange Commission and do not represent the Company’s estimate or projection of the future price of its Common Stock. The actual value, if any, which a Named Executive Officer may realize upon the exercise of stock options will be based upon the difference between the market price of the Common Stock on the date of exercise and the exercise price.

Shown below is information relating to the exercise of stock options during 2001 for each executive officer of the Company named in the Summary Compensation Table above:


(1)	Options exercised by Messrs. Robert Virtue and Douglas Virtue were retained and added to the shares beneficially owned by such individuals.

(2)	Adjusted for stock dividends.

(3)	Calculated using closing price on February 1, 2002 of $9.25.

In August 1985, the Board of Directors adopted the Virco Important Performers Plan (the “VIP Plan”), which is a nonqualified plan providing additional retirement and death benefits for certain employees identified by the Board of Directors or the committee administering the Plan as contributing materially to the continued growth, development and future business of the Company. The VIP Plan provides that each officer or employee whose annual base salary exceeds $90,000 will be a participant in the Plan. Benefits under the VIP Plan are payable to or on behalf of each participant upon retirement, normally at age 62, or upon death prior to retirement. The Company is funding its obligations under the VIP Plan through the purchase of life insurance policies on the participants.

During the fiscal year-ended January 31, 2001, the VIP Plan was amended to provide that vesting for each participant begins immediately upon participation in the VIP Plan. Vesting occurs at 10% for each full year subsequent to such date. Under the VIP Plan, each participant will receive a benefit payable at retirement equal to 50% of the average base salary during the last five years offset by the monthly benefit accrued under the Employees Retirement Plan. Participants with fewer than ten years of participation who retire after reaching age 60 will be entitled to reduced pro rata benefits based on the number of years they have participated in the VIP Plan. In the event of the death of a participant prior to retirement, death benefits are payable for a fifteen-year period to the deceased participant’s beneficiaries.

The estimated annual benefits payable upon retirement at age 62 for Messrs. Robert Virtue, Douglas Virtue, Parish, Dose and Wonder are $134,000, $55,000, $45,000, $45,000 and $43,000, respectively, assuming that the current compensation of each executive officer remains constant until retirement.

The Employees Retirement Plan of the Company is a non-contributory, defined benefit retirement plan governed by the Employee Retirement Income Security Act of 1974. With limited exceptions, all employees of the Company and its participating subsidiaries (including executive officers) are eligible to participate provided they meet certain service requirements. Benefits are paid to or on behalf of each participant upon retirement, normally at age 65, and under certain circumstances upon death. Benefits under the Plan are credited to the employee each year based upon years of service and remuneration during such year of service.

Retirement benefits vest partially after three years of service and fully after seven years of service, or upon the participant’s 65th birthday. Benefits payable under the Plan are adjusted to reflect the form of payment elected by the participant. The following table shows the annual pension benefits for retirement at age 65 which would be payable to retiring employees with representative earnings and years of service:


(1)	Represents annual retirement benefits payable at normal retirement age. To the extent a participant’s service was rendered prior to February 1, 1964, the effective date of the Plan, actual benefits will be slightly lower than the benefits shown in the table.

(2)	The benefits shown are for straight-life annuity payments and are not subject to deduction for Social Security or other offset amounts; alternative forms of benefit payments are available under the Plan.

(3)	Assumed average compensation is based upon regular base compensation before deduction for taxes or group insurance averaged for each year in the Plan.

Messrs. Robert Virtue, Douglas Virtue, Parish, Dose and Wonder have 44, 15, 42, 10 and 22 credited years of service and $74,000, $99,000, $40,000, $133,000 and $95,000 of assumed average compensation, respectively, under the Plan. From time to time the Company may amend the formula used to determine the benefits applicable to certain management personnel who also participate in the VIP Plan, with the effect that no change results in such individual’s overall retirement benefits as determined under the VIP Plan, but solely the plan under which such benefits are paid.

In August 1985, the Board of Directors adopted the Management Employees Life Insurance Plan, which provides for the Company to obtain life insurance policies on management employees selected by the Board. Currently, all officers and employees earning an annual salary exceeding $90,000 are entitled to participate in the Plan and may elect coverage under the Plan of $100,000. Officers may elect coverage under the Plan of up to $300,000 in increments of $50,000.

The premiums for the policies are paid partially by the participants pursuant to the formula set forth in the Plan, with the Company paying the remaining portion. The Company retains an interest in the death benefit payable under the policy for each participant in an amount approximately equal to the aggregate amount of premium payments made by the Company with respect to such participant’s policy. The remainder of the death benefit is payable to the participant’s beneficiaries. Upon the first to occur of reaching the age of 65, actual retirement or termination of employment, each participant is entitled to have the Company assign the policy to the participant or his designee, provided that the participant first reimburses the Company for all premiums previously paid by the Company for the policy.

In August 1985, the Board of Directors adopted the Executive Survivorship Life Insurance Plan, which provides special life insurance benefits to a group of management employees selected by the Board. Under this Plan, the Company maintains insurance policies on the lives of the participants and their spouses. Robert A. Virtue is currently the only executive officer participating in the Plan.

In August 1985, the Board of Directors approved the Widow’s Salary Continuation Plan, which provides for surviving widow benefits to be paid by the Company upon the deaths of Messrs. Julian A. Virtue and Donald Heyl, the former President of the Company. The widow of Mr. Virtue is currently receiving $5,000 per month under the Plan. In 2001, the Company paid $60,000 to Mrs. Virtue. In addition, it is with great sadness that the Company reports that Mr. Heyl passed on in April 2002. As a consequence, the Company will pay the widow of Mr. Heyl $5,000 per month under the Plan beginning in May 2002. The Company expects that collections under a life insurance policy purchased on the life of Mr. Heyl will substantially offset its obligations to Ms. Heyl.

None of Virco’s named executive officers has employment or severance arrangements.

During 1994 the Company entered into a consulting arrangement with Diversified Business Resources, Inc. (“Diversified”), a consulting firm that is partially owned by Donald A. Patrick, who is a Director. During 2001, the Company paid $16,000 to Diversified in connection with the Conway, Arkansas re-configuration project.

Robert K. Montgomery is a member of the Board of Directors of the Company as a Class III Director. Mr. Montgomery is a partner of the law firm Gibson, Dunn & Crutcher LLP, which has provided legal services to the Company. The Company expects that such law firm will continue to render legal services to the Company.

The Compensation Committee of the Board of Directors is responsible for developing the Company’s executive compensation policies and making recommendations to the Board of Directors with respect to these policies. In addition, the Committee makes annual recommendations to the Board of Directors concerning the compensation paid to the Chief Executive Officer and to each of the other executive officers of the Company.

The goals of the Company’s executive compensation policy are to attract and retain qualified executives and to ensure that their efforts are directed toward the long-term interests of the Company and its stockholders. The Company is striving to generally position executive salaries at median competitive levels and to rely on variable, performance-based bonuses to play a significant role in determining total compensation. In addition, by establishing the 1993 and 1997 Stock Incentive Plans, the Company further linked executive and stockholder interests.

The Compensation Committee annually reviews salaries, bonuses and other aspects of executive compensation. In general, the purpose of such annual reviews is to ensure that the Company’s overall executive compensation program remains competitive with comparable businesses and that total executive pay reflects both the individual’s performance as well as the overall performance of the Company.

Each year, the performance of executives is reviewed and, based upon an assessment of individual performance and the Company’s performance, a corresponding salary increase may be awarded. In 2001, based on a comparison of the Company’s executive compensation levels and plans with those of other companies in the furniture manufacturing business, the Compensation Committee concluded that the Company’s executive salaries had to be adjusted to keep pace with those of comparable companies. As a result, the salary increases awarded to the Company’s Chief Executive Officer and other executive officers in 2001 reflected primarily the Compensation Committee’s determination to adjust salaries to perceived competitive levels, as well as the Compensation Committee’s evaluation of the overall performance of the Company and the performance of each executive officer.

The salary of Mr. Robert A. Virtue, the Company’s Chief Executive Officer, was determined on the foregoing basis. In addition to consideration of the salary levels of the chief executive officer of other furniture manufacturers, the Board considered the Company’s operating results in 2000, the Company’s stock performance, the effect of the general economy on the Company’s performance and the success of the Company in addressing certain goals.

Early each year the Board of Directors considers and approves an annual profit plan for the Company, which establishes a target level of overall Company profits, excluding certain non-recurring items. The bonuses payable to the Chief Executive Officer and the other executive officers are tied to the Company’s actual performance relative to the annual profit plan. Commencing in 2001, a consolidated bonus plan was utilized to determine the bonuses of divisional general managers, as well as the Chief Executive Officer and the other executive officers. In 2001, the Chief Executive Officer was eligible to receive a bonus equal to 60% of his salary and each of the executive officers was eligible to receive a bonus equal to 50% of his salary if the annual profit plan target level had been achieved. In general, the amount of the bonus paid was subject to a 1% adjustment for each $70,000 difference between the actual profits and the plan’s targeted profit level or, for

divisional general managers, a similar formula to adjust for the difference between the actual results and the targeted results.


	THE COMPENSATION COMMITTEE OF
	THE BOARD OF DIRECTORS

	Robert K. Montgomery George W. Ott
	Donald A. Patrick

The report of the Compensation Committee of the Board of Directors shall not be deemed incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933 or under the Securities Exchange Act of 1934, except to the extent that the Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under such Acts.

The Audit Committee reviews the Company’s financial reporting process on behalf of the Board of Directors. Management has the primary responsibility for the financial statements and the reporting process. The Company’s independent auditors are responsible for expressing an opinion on the conformity of our audited financial statements with accounting principles generally accepted in the United States.

In this context, the Audit Committee has reviewed the audited financial statements included in the Company’s annual report on Form 10-K with management and the independent auditors, including their judgment of the quality and appropriateness of accounting principles, the reasonableness of significant judgments and the clarity of the disclosures in the financial statements. In addition, the Audit Committee has discussed with the independent auditors the matters required to be discussed by Statement on Auditing Standards No. 61 (Communication with Audit Committees). In addition, the Audit Committee has received from the independent auditors the written disclosures required by Independence Standards Board No. 1 (Independence Discussions with Audit Committees) and discussed with them their independence from the Company and its management. The Audit Committee has also considered whether the independent auditors provision of non-audit services to the Company is compatible with the auditor’s independence.

In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors, and the Board has approved, that the audited financial statements be included in the Company’s Annual Report on SEC Form 10-K for the year ended January 31, 2002, for filing with the Securities and Exchange Commission.


	THE AUDIT COMMITTEE OF
	THE BOARD OF DIRECTORS

	Donald S. Friesz Donald A. Patrick
	James R. Wilburn

The report of the Audit Committee of the Board of Directors shall not be deemed incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933 or under the Securities Exchange Act of 1934, except to the extent that the Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under such Acts.

The stock performance graph set forth below illustrates the Company’s performance in total stockholder return over the period February 1, 1997 through January 31, 2002 relative to the following external indices: (a) the American Stock Exchange market value index (“AMEX Market Index”) and (b) a peer group¹. Each line on the stock performance graph assumes that $100.00 was invested in the Common Stock and the respective indices on February 1, 1997. The graph then tracks the value of these investments, assuming reinvestment of dividends, through January 31, 2002.

The cumulative total return shown on the stock performance graph indicates historical results only and is not necessarily indicative of future results.

Ernst & Young LLP, upon the recommendation of the Audit Committee of the Board of Directors of the Company, continues as the accounting firm selected by the Board of Directors to examine the accounts of the Company for the current year. Representatives of Ernst & Young LLP will be present at the Annual Meeting and will have an opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions.

The aggregate fees billed by Ernst & Young LLP for professional services rendered for the audit of the Company’s annual financial statements for the fiscal year ended January 31, 2002 and for the reviews of the financial statements included in the Company’s Quarterly Reports on Form 10-Q for that fiscal year were $332,000.

During the year ended January 31, 2002, Ernst & Young LLP did not provide the Company with any services related to financial information systems design and implementation.

The Company estimates that the aggregate fees for all other services rendered by Ernst & Young LLP during the year ended January 31, 2002 were $94,000. These fees consist mainly of $30,000 relating to pension plan and 401(k) plan audits and $64,000 relating to preparation of the Company’s tax returns.

Compliance with Section 16 of the Securities Exchange Act of 1934. Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company’s officers, directors and persons who own more than 10% of any equity security of the Company to file reports of ownership and changes in ownership with the Securities and Exchange Commission and to furnish copies of these reports to the Company. Based solely on a review of the copies of the forms that the Company received, the Company believes that all such forms required during the fiscal year ended January 31, 2002 were filed on a timely basis.

2003 Stockholder Proposal or Nominations. Proposals of stockholders intended to be presented at the 2003 Annual Meeting of Stockholders must be received by the Company by January 14, 2003 for inclusion in the Company’s proxy statement and form of proxy relating to that meeting.

Additional Matters Considered at Annual Meeting. The Board of Directors does not know of any matters to be presented at the 2002 Annual Meeting other than as stated herein. If other matters do properly come before the Annual Meeting, the persons named on the accompanying proxy card will vote the proxies in accordance with their judgment in such matters.

Availability of Annual Report. The Annual Report to the Stockholders of the Company for the fiscal year ended January 31, 2002 including financial statements, is being mailed to stockholders concurrently herewith and is also available online at http://www.virco.com/Pages/set1a.htm.

THE COMPANY WILL ALSO PROVIDE WITHOUT CHARGE A COPY OF ITS ANNUAL REPORT ON FORM 10-K, INCLUDING FINANCIAL STATEMENTS AND RELATED SCHEDULES, FILED WITH THE SECURITIES AND EXCHANGE COMMISSION UPON REQUEST IN WRITING FROM ANY PERSON WHO WAS HOLDER OF RECORD, OR WHO REPRESENTS IN GOOD FAITH HE/SHE WAS A BENEFICIAL OWNER, OF COMMON STOCK OF THE COMPANY ON MAY 3, 2002. ANY SUCH REQUEST SHALL BE ADDRESSED TO THE COMPANY


	By Order of the Board of Directors

	/s/ ROBERT E. DOSE

	Robert E. Dose
	Secretary

The undersigned hereby appoints ROBERT A. VIRTUE, DOUGLAS A. VIRTUE and ROBERT E. DOSE, and each of them, with power to act without the other and with power of substitution, as proxies and attorneys-in-fact and hereby authorizes them to represent and vote, as provided on the other side, all the shares of Virco Mfg. Corporation Common Stock which the undersigned is entitled to vote, and, in their discretion, to vote upon such other business as may properly come before the Annual Meeting of Stockholders of the Company to be held June 18, 2002 or any adjournment thereof, with all powers which the undersigned would possess if present at the Meeting.

Access your Virco Mfg. Corporation stockholder account online via Investor ServiceDirect^SM(ISD).

Mellon Investor Services LLC, agent for Virco Mfg. Corporation Investor Services, now makes it easy and convenient to get current information on your stockholder account. After a simple, and secure process of establishing a Personal Identification Number (PIN), you are ready to log in and access your account to:

Visit us on the web at http://www.melloninvestor.com
and follow the instructions shown on this page.

Step 1: First Time Users — Establish a PIN
You must first establish a Personal Identification Number (PIN) online by following the directions provided in the upper right portion of the web screen as follows. You will also need your Social Security Number (SSN) available to establish a PIN.

Investor ServiceDirect^SM is currently only available for domestic individual and joint accounts.

Please be sure to remember your PIN, or maintain it in a secure place for future reference.

Step 2: Log in for Account Access
You are now ready to log in. To access your account please enter your:

If you have more than one account, you will now be asked to select the appropriate account.

Step 3: Account Status Screen
You are now ready to access your account information. Click on the appropriate button to view or initiate transactions.

• Certificate History
• Book-Entry Information
• Issue Certificate
• Payment History
• Address Change
• Duplicate 1099

For Technical Assistance Call 1-877-978-7778 between
9am-7pm Monday-Friday Eastern Time

Withhold for the nominees you list below. (Write that nominee’s name in the space provided below.)

By checking the box to the right, I consent to future delivery of annual reports, proxy statements, prospectuses and other materials and shareholder communications electronically via the internet at a webpage which will be disclosed to me. I understand that the Company may no longer distribute printed materials to me from any future shareholder meeting until such consent is revoked. I understand that I may revoke my consent at any time by contacting the Company’s transfer agent, Mellon Investor Services LLC, Ridgefield Park, NJ and that costs normally associated with electronic delivery, such as usage and telephone charges as well as any costs I may incur in printing documents, will be my responsibility.

NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such.

Internet and telephone voting is available through 4PM Eastern Time
the business day prior to annual meeting day.

Your telephone or Internet vote authorizes the named proxies to vote your shares in the same manner
as if you marked, signed and returned your proxy card.

If you vote your proxy by Internet or by telephone,
you do NOT need to mail back your proxy card.

You can view the Annual Report and Proxy Statement
on the internet at: http://www.virco.com/Pages/set1a.htm


		Preliminary Proxy Statement				Confidential, For Use of Commission Only (as permitted by Rule 14a-6(e)(2))




		Definitive Proxy Statement




		Definitive Additional Materials




		Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12


Payment of Filing Fee:




		No fee required.




		Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.




(1)		Title of each class of securities to which transaction applies:














(2)		Aggregate number of securities to which transaction applies:














(3)		Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11:














(4)		Proposed maximum aggregate value of transaction:














(5)		Total fee paid:














		Fee paid previously with preliminary materials:














		Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.




(1)		Amount Previously Paid:














(2)		Form, Schedule or Registration Statement No.:














(3)		Filing Party:














(4)		Date Filed:


NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
PROXY STATEMENT
PROPOSAL 1 ELECTION OF DIRECTORS
BOARD COMMITTEES, MEETINGS & COMPENSATION
SECURITY OWNERSHIP
EXECUTIVE COMPENSATION
EMPLOYMENT CONTRACTS AND CHANGE OF CONTROL ARRANGEMENTS
CERTAIN TRANSACTIONS
REPORT ON EXECUTIVE COMPENSATION
REPORT OF THE AUDIT COMMITTEE
STOCKHOLDER RETURN PERFORMANCE PRESENTATION
RELATIONSHIP WITH INDEPENDENT AUDITORS
OTHER MATTERS
PROXY CARD


				Director
Name	Age		Principal Occupation	Since

Nominees for Directors Whose Terms Expire in 2005:
Donald S. Friesz		72	Vice President Sales and Marketing of the Company from 1982 to February 1996. Mr. Friesz has been retired since 1996		1992
Glen D. Parish		64	Vice President since 1999; General Manager of the Conway Division since 1999; previously Vice President of Conway Sales and Marketing		1999
James R. Wilburn		69	Dean of the School of Public Policy, Pepperdine University, since September 1997; previously Dean of the School of Business and Management, Pepperdine University (1982-1994); Professor of Business Strategy, Pepperdine University (1994-1996); director of First Fidelity Thrift since February 1995		1986
Continuing Directors Whose Terms Expire in 2003:
Robert A. Virtue		69	Chairman of the Board and Chief Executive Officer of the Company since 1990; President of the Company since August 1982		1956
Robert K. Montgomery		63	Partner of Gibson, Dunn & Crutcher LLP law firm since 1971		2000
Donald A. Patrick		77	Vice President and a founder of Diversified Business Resources, Inc. (mergers, acquisitions and business consultants) since 1988		1983


				Director
Name	Age		Principal Occupation	Since

Continuing Directors Whose Terms Expire in 2004:
Douglas A. Virtue		43	Executive Vice President since December 1997; previously General Manager of the Torrance Division of the Company since 1992		1992
George W. Ott		70	President and Founder of Ott and Hansen since 1976; advisory director to Compensation Resource Group (past five years)		1994
Evan M. Gruber		47	Chairman and Chief Executive officer of Modtech Holdings, Inc. (modular buildings business) since 1990; he serves on the board of directors of Modtech Holdings, Inc., and currently holds or has previously held directorship positions with Energy and Environmental Research Corporation, J.V. Electronics, Inc., Class Leasing, Inc. and Airmid LLP		2002

ATTEND

If you plan to attend the Annual Meeting, please mark the WILL ATTEND box

Please disregard if you have previously provided your consent decision.


		Amount and Nature
		of Beneficial		Percent of
Name of Beneficial Owner		Ownership(1)		Class

Bruce S. Sherman/ Gregg J. Powers(2)			1,537,316		12.7	%
Dimensional Fund Advisors Inc.(3)			894,400		7.4	%
Robert A. Virtue(4)			363,339		3.0	%
	Chairman of the Board of Directors, President, Chief Executive Officer
Douglas A. Virtue			507,425		4.2	%
	Director, Executive Vice President
Donald S. Friesz			82,099		(5)
	Director
Evan M. Gruber			0		(5)
	Director
Robert K. Montgomery			924		(5)
	Director
George W. Ott			11,719		(5)
	Director
Glen D. Parish			15,004		(5)
	Director, Vice President, General Manager
Donald A. Patrick			51,763		(5)
	Director
John H. Stafford			13,987		(5)
	Director
James R. Wilburn			15,599		(5)
	Director
Robert E. Dose			46,251		(5)
	Vice President Finance, Secretary, Treasurer
Larry O. Wonder			29,713		(5)
	Vice President, Sales
All executive officers and directors as a group (15 persons)			1,251,431		10.05	%


								Long-Term
								Compensation
								Awards

				Annual Compensation				Securities
								Underlying		All Other
Name and Principal Position		Year		Salary(1)		Bonus(4)		Options(3)		Compensation(2)

Robert A. Virtue			2001	$	378,163		—		—	$	9,400
	Chairman of the Board and		2000		406,162		—		—		10,000
	Chief Executive Officer		1999		378,263		—		1,996		58,000
Douglas A. Virtue			2001		199,753		—		—		3,900
	Executive Vice President		2000		199,675		—		—		3,900
			1999		184,888		—		1,996		3,900
Glen D. Parish			2001		181,193		—		11,000		2,600
	Vice President, General Manager		2000		177,856		—		—		2,800
			1999		95,182		—		1,663		2,600
Robert E. Dose			2001		180,989		—		—		4,500
	Vice President, Finance,		2000		172,242		—		—		4,900
	Secretary and Treasurer		1999		164,373		—		1,996		4,700
Larry O. Wonder			2001		185,462		—		—		5,900
	Vice President, Sales		2000		160,635		116,875		—		5,700
			1999		147,909		—		1,996		5,700



										Potential Realizable
										Value at Assumed
	Number of		% of Total							Annual Rates of Stock
	Securities		Options							Price Appreciation For
	Underlying		Granted to			Exercise				Option Term(2)
	Options		Employees in			Price		Expiration
Name	Granted(#)(1)		Fiscal Year			($/Share)		Date		5%($)		10%($)

Robert A. Virtue		—		—			—		—		—		—
Douglas A. Virtue		—		—			—		—		—		—
Glen D. Parish		11,000		50	%	$	9.70		8/21/11	$	67,149	$	170,196
Robert E. Dose		—		—			—		—		—		—
Larry O. Wonder		—		—			—		—		—		—



Assumed	Years of Service(1)(2)
Average
Compensation(3)	10		20		30

$ 25,000	$	2,260	$	4,520	$	6,780
50,000		4,760		9,520		14,280
75,000		7,260		14,520		21,780
100,000		9,760		19,520		29,280
125,000		12,260		24,520		36,780
150,000		14,760		29,520		44,280
175,000		15,760		31,519		47,279




	1997		1998		1999		2000		2001		2002


VIRCO MFG. CORPORATION	$	100.00		269.81		200.03		156.57		138.17		141.15
PEER GROUP	$	100.00		144.99		190.71		102.42		73.27		91.80
AMEX MARKET INDEX	$	100.00		114.07		118.18		139.28		146.36		128.71


•	View account status	•	View payment history for dividends




•	View certificate history	•	Make address changes




•	View book-entry information	•	Obtain a duplicate 1099 tax form




		•	Establish/change your PIN


THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO DIRECTION IS INDICATED, WILL BE VOTED “FOR” THE PROPOSALS THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS		Please mark your votes as indicated in this example


			WITHHELD
		FOR	FOR ALL
1.	Election of Directors Nominees:




01 02 03	Donald S. Friesz. Glen D. Parish James R. Wilburn


Internet http://www.eproxy.com/vir		Telephone 1-800-435-6710		Mail




Use the Internet to vote your proxy. Have your proxy card in hand when you access the web site. You will be prompted to enter your control number, located in the box below, to create and submit an electronic ballot.	OR	Use any touch-tone telephone to vote your proxy. Have your proxy card in hand when you call. You will be prompted to enter your control number, located in the box below, and then follow the directions given.	OR	Mark, sign and date your proxy card and return it in the enclosed postage-paid envelope.


Signature	Signature	Date