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<SEC-DOCUMENT>0000950148-01-501810.txt : 20010917
<SEC-HEADER>0000950148-01-501810.hdr.sgml : 20010917
ACCESSION NUMBER:		0000950148-01-501810
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		3
CONFORMED PERIOD OF REPORT:	20010731
FILED AS OF DATE:		20010914

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			VIRCO MFG CORPORATION
		CENTRAL INDEX KEY:			0000751365
		STANDARD INDUSTRIAL CLASSIFICATION:	PUBLIC BUILDING AND RELATED FURNITURE [2531]
		IRS NUMBER:				951613718
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			0131

	FILING VALUES:
		FORM TYPE:		10-Q
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-08777
		FILM NUMBER:		1737571

	BUSINESS ADDRESS:	
		STREET 1:		2027 HARPERS WAY
		CITY:			TORRANCE
		STATE:			CA
		ZIP:			90501
		BUSINESS PHONE:		3105330474

	MAIL ADDRESS:	
		STREET 1:		P O BOX 44846
		CITY:			LOS ANGELES
		STATE:			CA
		ZIP:			90044
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>v75741e10-q.txt
<DESCRIPTION>FORM 10-Q
<TEXT>
<PAGE>   1

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                   Quarterly Report under Section 13 or 15(d)
                     of the Securities Exchange Act of 1934

                                    FORM 10-Q


For Quarter Ended   July 31, 2001          Commission File Number    1-8777
                 -------------------                              ------------

                             VIRCO MFG. CORPORATION
- --------------------------------------------------------------------------------
             (Exact Name of Registrant as Specified in its Charter)

             Delaware                                         95-1613718
- ---------------------------------                       -----------------------
  (State or other jurisdiction of                          (I.R.S. Employer
   incorporation or organization)                         Identification No.)


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

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

                                   No change
- --------------------------------------------------------------------------------
              Former name, former address and former fiscal year,
                          if changed since last report.


     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes    [X]      No  [ ]

     The number of shares outstanding of each of the issuer's classes of common
stock, as of September 4, 2001.

         Common Stock                             12,322,947 Shares*

* Adjusted for 10% stock dividend declared August 21, 2001, date of record
September 6, 2001, payable September 28, 2001.



<PAGE>   2


                             VIRCO MFG. CORPORATION

                                      INDEX

Part I.  Financial Information

     Item 1.   Financial Statements (unaudited)

               Condensed consolidated balance sheets - July 31, 2001 and January
               31, 2001

               Condensed consolidated statements of income - Three months ended
               July 31, 2001 and 2000.

               Condensed consolidated statements of income - Six months ended
               July 31, 2001 and 2000.

               Condensed consolidated statements of cash flows - Six months
               ended July 31, 2001 and 2000.

               Notes to condensed consolidated financial statements - July 31,
               2001

     Item 2.   Management's Discussion and Analysis of Financial Condition and
               Results of Operations

     Item 3.   Quantitative and Qualitative Disclosures about Market Risk

Part II. Other Information

     Item 4.   Submission of matters to a vote of Security Holders

     Item 6.   Exhibits and Reports on Form 8-K

     Signatures




                                       2
<PAGE>   3



                                     PART I


Item 1. Financial Statements

                             VIRCO MFG. CORPORATION

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                               Unaudited (Note 1)



(Dollar amounts in thousands, except per share data)

<TABLE>
<CAPTION>

        ASSETS                                        7/31/2001       1/31/2001
        ------                                        ---------       ---------
<S>                                                   <C>             <C>
Current assets
    Cash                                              $   2,696       $     351

    Accounts and notes receivable                        48,568          25,345
      Less allowance for doubtful accounts                 (551)           (200)
                                                      ---------       ---------
      Net accounts and notes receivable                  48,017          25,145

    Inventories (Note 2)
      Finished goods                                     25,415          27,009
      Work in process                                    13,928          14,442
      Raw materials and supplies                         18,332          16,588
                                                      ---------       ---------
      Total inventories                                  57,675          58,039

    Income taxes receivable                               1,972           2,508
    Prepaid expenses and deferred income tax              2,334           2,930
                                                      ---------       ---------
Total current assets                                    112,694          88,973

Property, plant & equipment
      Cost                                              153,819         153,504
      Less accumulated depreciation                     (64,669)        (58,859)
                                                      ---------       ---------
      Net property, plant & equipment                    89,150          94,645

Other assets                                             15,938          15,931
                                                      ---------       ---------
Total assets                                          $ 217,782       $ 199,549
                                                      =========       =========
</TABLE>



See notes to condensed consolidated financial statements.



                                       3
<PAGE>   4


                             VIRCO MFG. CORPORATION

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                               Unaudited (Note 1)


(Dollar amounts in thousands, except per share data)

<TABLE>
<CAPTION>

        LIABILITIES AND STOCKHOLDERS' EQUITY                                     7/31/2001         1/31/2001
        ------------------------------------                                     ---------         ---------

<S>                                                                                <C>             <C>
Current liabilities
    Checks released but not yet cleared bank                                       $   1,241       $   2,216
    Accounts payable                                                                  15,476          13,930
    Accrued compensation and employee benefits                                         9,542          10,775
    Current maturities on long-term debt                                              12,101          12,101
    Other current liabilities                                                          5,815           6,778
                                                                                   ---------       ---------
Total current liabilities                                                             44,175          45,800

Non-current liabilities
    Long term debt (less current portion)                                             62,061          43,741
    Other non-current liabilities                                                     14,252          11,334
                                                                                   ---------       ---------
Total non-current liabilities                                                         76,313          55,075

Deferred income taxes                                                                  4,533           4,533

Stockholders' equity
    Preferred stock:
      Authorized 3,000,000 shares, $.01 par value; none issued or outstanding             --              --

    Common stock:
      Authorized 25,000,000 shares, $.01 par value; 12,033,231 issued at
      7/31/2001 and 12,032,233 shares issued at 1/31/2001
                                                                                         120             120
    Additional paid-in capital                                                        97,654          97,656
    Retained earnings                                                                 10,920          10,645
    Less treasury stock at cost, 830,551 shares at 7/31/2001 and 749,246
    shares at 1/31/2001)                                                             (12,827)        (12,009)
    Less unearned ESOP shares                                                           (934)           (696)
     Less accumulated comprehensive loss                                              (2,172)         (1,575)
                                                                                   ---------       ---------
Total stockholders' equity                                                            92,761          94,141
                                                                                   ---------       ---------
Total liabilities and stockholders' equity                                         $ 217,782       $ 199,549
                                                                                   =========       =========

</TABLE>

See notes to condensed consolidated financial statements.



                                       4
<PAGE>   5



                             VIRCO MFG. CORPORATION

                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                               Unaudited (Note 1)



(Dollar amounts in thousands, except per share data)

<TABLE>
<CAPTION>

                                                                        Three Months Ended
                                                                   --------------------------
                                                                   7/31/2001        7/31/2000
                                                                   ---------        ---------
                                                                                Restated (Note 1)
<S>                                                                 <C>              <C>
Net sales                                                           $89,193          $96,578
Cost of goods sold                                                   60,844           64,810
                                                                    -------          -------
Gross profit                                                         28,349           31,768

Selling, general and administrative and other                        19,640           23,155
Interest expense                                                      1,349            1,614
                                                                    -------          -------
                                                                     20,989           24,769

Income before income taxes                                            7,360            6,999
Income taxes                                                          2,870            2,737
                                                                    -------          -------

Net income                                                          $ 4,490          $ 4,262
                                                                    =======          =======


Earnings per share                                                  $   .37          $   .34

Earnings per share - assuming dilution                              $   .36          $   .34


Weighted average share outstanding (a)                               12,238           12,494
Weighted average share outstanding - assuming dilution (a)           12,367           12,651

Dividend per share
Cash (a)                                                            $   .02          $   .02

</TABLE>



(a) Adjusted for 10% stock dividend declared August 21, 2001.

See notes to condensed consolidated financial statements.


                                       5
<PAGE>   6



                             VIRCO MFG. CORPORATION

                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                               Unaudited (Note 1)

(Dollar amounts in thousands, except per share data)

<TABLE>
<CAPTION>

                                                                                     Six Months Ended
                                                                               ----------------------------
                                                                               7/31/2001          7/30/2000
                                                                               ---------          ---------
                                                                                              Restated (Note 1)
<S>                                                                            <C>                <C>
Net sales                                                                      $ 131,650          $ 143,010
Cost of goods sold                                                                91,818             96,761
                                                                               ---------          ---------
   Gross profit                                                                   39,832             46,249

Selling, general and administrative and other                                     36,102             40,145
Interest expense                                                                   2,456              2,766
Loss (Gain) on sale of fixed assets                                                   86             (7,945)
                                                                               ---------          ---------
                                                                                  38,644             34,966

Income before income taxes and cumulative effect of accounting change              1,188             11,283
Income taxes                                                                         463              4,404
                                                                               ---------          ---------
Net income before cumulative effect of accounting change                             725              6,879

Cumulative effect of accounting change                                              --                 (297)
                                                                               ---------          ---------
Net income                                                                     $     725          $   6,582
                                                                               =========          =========

Amounts per common share - basic (a)
Income before cumulative effect of accounting change                           $     .06          $     .55
Cumulative effect of accounting change                                              --                 (.02)
                                                                               ---------          ---------
Net income                                                                     $     .06          $     .53
                                                                               =========          =========

Amounts per common share - assuming dilution (a)
Income before cumulative effect of accounting change                           $     .06          $     .54
Cumulative effect of accounting change                                              --                 (.02)
                                                                               ---------          ---------
Net income                                                                     $     .06          $     .52
                                                                               =========          =========

Weighted average share outstanding (a)                                            12,329             12,498
Weighted average share outstanding - assuming dilution (a)                        12,458             12,650

Dividend per share
Cash (a)                                                                       $     .04          $     .04


</TABLE>

(a) Adjusted for 10% stock dividend declared August 21, 2001.

See notes to condensed consolidated financial statements.


                                       6
<PAGE>   7



                             VIRCO MFG. CORPORATION

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                               Unaudited (Note 1)

(Dollar amounts in thousands)

<TABLE>
<CAPTION>
                                                                                    Six Months Ended
                                                                              ----------------------------
                                                                              7/31/2001          7/31/2000
                                                                              ---------          ---------
<S>                                                                            <C>                <C>
Cash flows from operating activities
    Net income                                                                 $    725           $  6,582
    Adjustments to reconcile net income to net cash used in operating
    activities:
    Cumulative effect of accounting change                                         --                  297
    Depreciation                                                                  7,835              6,320
    Provision for doubtful accounts                                                 329                269
    (Gain)Loss on sales of fixed asset                                               86             (7,945)
    Change in assets and liabilities:
      Accounts and notes receivable                                             (23,201)           (27,875)
      Inventories                                                                   364            (14,710)
      Prepaid expenses and deposits                                                 994                408
      Income taxes receivable/payable                                               536              1,439
      Accounts payable and accrued expenses                                         298              6,891
                                                                               --------           --------
Net cash used in operating activities                                           (12,034)           (28,324)

Cash flows from investing activities
    Capital expenditures                                                         (2,880)           (12,466)
    Proceeds from sale of assets                                                    454              9,389
    Net investment in life insurance                                                 (7)               (21)
                                                                               --------           --------
Net cash used in investing activities                                            (2,433)            (3,098)

Cash flows from financing activities
    Issuance of long-term debt                                                   19,360             32,810
    Repayment of long-term debt                                                  (1,040)              (941)
    Payment of cash dividend                                                       (450)              (413)
    Purchase of treasury stock                                                     (817)              (283)
    Issuance of common stock                                                         (3)                 2
    Loans to ESOP                                                                  (238)               (74)
                                                                               --------           --------
Net cash provided by financing activities                                        16,812             31,101

Net change in cash                                                                2,345               (321)
Cash at beginning of period                                                         351              1,072
                                                                               --------           --------
Cash at end of period                                                          $  2,696           $    751
                                                                               ========           ========

</TABLE>

See notes to condensed consolidated financial statements


                                       7
<PAGE>   8

                             VIRCO MFG. CORPORATION

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                         July 31, 2001 and July 31, 2000


Note 1.   The accompanying unaudited condensed consolidated financial statements
          have been prepared in accordance with generally accepted accounting
          principles for interim financial information and with the instructions
          to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do
          not include all of the information and footnotes required by generally
          accepted accounting principles for complete financial statements. In
          the opinion of management, all adjustments (consisting of normal
          recurring accruals) considered necessary for a fair presentation have
          been included. Operating results for the three-month and six-month
          periods ended July 31, 2001 are not necessarily indicative of the
          results that may be expected for the year ended January 31, 2002. The
          balance sheet at January 31, 2001 has been derived from the audited
          financial statements at that date but does not include all of the
          information and footnotes required by generally accepted accounting
          principles for complete financial statements. For further information,
          refer to the consolidated financial statements and footnotes thereto
          included in the Company's annual report on Form 10-K for the year
          ended January 31, 2001.

          During the fourth quarter of fiscal year 2000, the Company changed its
          method of accounting for revenue recognition in accordance with Staff
          Accounting Bulletin No. 101, "Revenue Recognition in the Financial
          Statements." Pursuant to Financial Accounting Standards Board
          Statement No. 3, "Reporting Accounting Changes in Interim Financial
          Statements," effective February 1, 2000, the Company recorded the
          cumulative effect of the accounting change and accordingly, the
          quarterly information for the first quarter of 2000, which had
          previously been reported, has been restated. Additionally, net sales
          and gross profit have been adjusted to reflect reclassifications to
          conform to the presentation required by EITF 00-10, "Accounting for
          Shipping and Handling Fees and Costs," which the Company also adopted
          during the fourth quarter of fiscal year 2000.

Note 2.   Inventory

          Year end financial statements reflect inventories verified by physical
          counts with the material content valued by the LIFO method. At this
          interim date, there has been no physical verification of inventory
          quantities. Cost of sales is recorded at current cost. The effect of
          penetrating LIFO layers is not recorded at interim dates unless the
          reduction in inventory is expected to be permanent. No such adjustment
          has been made for the period ended July 31, 2001. Management
          continually monitors production costs, material costs and inventory
          levels to determine that interim inventories are fairly stated.

Note 3.   Income Taxes

          Income taxes for the three months and six months ended July 31, 2001
          were computed using the effective tax rate estimated to be applicable
          for the full fiscal year, which is subject to ongoing review and
          evaluation by management.

Note 4.   Significant Accounting Policies

          The weighted average number of shares used in the computation of
          diluted net income per share were 12,367,000 and 12,651,000 for the
          quarter ended July 31, 2001 and July 31, 2000, respectively. The
          weighted average number of shares used in the computation of diluted
          net income per share were 12,458,000 and 12,650,000 for the six months
          ended July 31, 2001 and July 31, 2000, respectively. Per share and
          weighted-average share amounts for the second quarter and six months
          ended July 31,


                                       8
<PAGE>   9

          2000 have been restated to reflect a 10% stock dividend payable on
          September 28, 2001 to stockholders of record as of September 6, 2001.

          Comprehensive income includes net income and minimum pension liability
          adjustments. Comprehensive income was $4,465,000 and $4,262,000 for
          the quarter ended July 31, 2001 and July 31, 2000, respectively.
          Comprehensive income was $128,000 and $6,582,000 for the six months
          ended July 31, 2001 and July 31, 2000, respectively.

          In June 1998, the Financial Accounting Standards Board issued
          Statement No. 133 "Accounting for Derivative Instruments and Hedging
          Activities," (SFAS 133, as amended by SFAS 138), which is required to
          be adopted in years beginning after June 15, 2000. The Company has
          adopted the new Statement effective February 1, 2001. The Statement
          requires the Company to recognize all derivatives on the balance sheet
          at fair value. Derivatives that are not hedges must be adjusted to
          fair value and reflected as income or expense. If the derivative is a
          hedge, depending on the nature of the hedge, changes in the fair value
          of derivatives are either offset against commitments through earnings
          or recognized in other comprehensive income until the hedge item is
          recognized in earnings. The ineffective portion of a derivative's
          change in fair value is immediately recognized in earnings.

          The Company enters into interest rate swap contracts to reduce its
          exposure to fluctuations in interest rates. At July 30, 2001, the
          Company had one interest rate swap contract which was accounted for as
          a cash flow hedge. The transition adjustment to implement SFAS 133
          resulted in recording a liability and an offset to Other Comprehensive
          Loss which was $552,000, net of an applicable income tax benefit of
          $368,000 at February 1, 2001. There is no impact to current earnings
          due to hedge ineffectiveness.

Note 5.   Gain on Sale of Real Estate

          On April 25, 2000, the Company finalized the sale of its Torrance,
          California, warehouse. The Company received $9,385,000 in cash and
          recorded $7,945,000 pre-tax gain on disposition during the quarter
          ended April 30, 2000.

Note 6.   Interest Rate Swap Contract

          It is the Company's policy to enter into interest rate swap contracts
          only to the extent necessary to reduce exposure to fluctuations in
          interest rates. The Company does not enter into interest rate swap
          contracts for speculative purposes. Interest rate swaps are
          contractual agreements between the Company and third parties to
          exchange fixed and floating interest payments periodically without the
          exchange of the underlying principal amounts (notional amounts). In
          the unlikely event that a counterparty fails to meet the terms of an
          interest rate swap contract, the Company's exposure is limited to the
          interest rate differential on the notional amount. The Company does
          not anticipate non-performance by the counterparty. The Company only
          entered into one interest rate swap contract, which matures on March
          3, 2003. At July 31, 2001, the notional amount of the swap was


                                       9
<PAGE>   10

          $20,000,000 with an affixed payment rate of 7.23% and a fluctuating
          receiving rate based upon LIBOR.

          At July 31, 2001 the carrying value approximated the fair value of
          $995,000. During the quarter ended July 31, 2001, the Company recorded
          an additional loss amount of $25,000 (net of an applicable income tax
          benefit of $17,000) in other comprehensive loss in order to account
          for the change in fair value. The fair value of the swap is estimated
          on pricing models using current assumptions.


Note 7.   New Accounting Standards

          In June 2001, the Financial Accounting Standards Board issued SFAS No.
          141, "Business Combinations," and SFAS No. 142, "Goodwill and Other
          Intangible Assets," which supersedes Accounting Principles Board
          Opinion No. 17, SFAS No. 141 is effective for any business combination
          completed subsequent to June 30, 2001, and SFAS No. 142 is effective
          for fiscal years beginning after December 15, 2001. Under SFAS No.
          142, goodwill deemed to have an indefinite life will no longer be
          amortized and will be subjected to annual impairment tests. Other
          intangible assets will continue to be amortized over their useful
          lives. Accordingly, the Company will apply the provisions of SFAS No.
          141 should it enter into any business combinations after June 30,
          2001.  The Company believes SFAS No. 142 will not have any effect on
          the Company's financial position, results of operations or cash flows.



                                       10
<PAGE>   11


                             VIRCO MFG. CORPORATION


Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations.

Results of Operations:

For the second quarter of 2001, the Company had a net income of $4,490,000 on
sales of $89,193,000 compared to a net income of $4,262,000 on sales of
$96,578,000 in the same period last year. Earnings were $.36 per share compared
to $.34 per share in the same period last year, after giving effect to the 10%
stock dividend declared August 21, 2001. For the six months ended July 31, 2001,
the Company earned net income of $725,000 on sales of $131,650,000 compared to
net income of $6,582,000 on sales of $143,010,000 in the same period last year.
Earnings were $.06 per share compared to $.52 per share in the same period last
year, after giving effect to the 10% stock dividend declared August 21, 2001.

The second quarter and year to date results are consistent with Virco's seasonal
business cycle, which produces diminished first quarter sales followed by strong
second and third quarter deliveries of educational furniture. The seasonal
nature of Virco's sales has intensified due to strategic marketing decisions and
changes in the buying pattern of educational customers. Sales for the second
quarter decreased $7,385,000 compared to the same period last year. Backlog at
July 31, 2001 was approximately $3,000,000 higher compared to the same time last
year.

Gross profit for the second quarter decreased slightly compared to the same
period last year. The decline in margin is attributable to a significant
reduction in manufacturing hours during the second quarter compared to the same
period last year and substantially offset by an increase in prices and
reductions in spending. In the prior year, the Company built a large quantity of
finished goods inventory to stock during the first and second quarters in
anticipation of large deliveries of furniture in the second and third quarters
of 2000. The prior year sales were less than expected resulting in disappointing
third and fourth quarter results as the Company cut production and incurred
severance costs to reduce its workforce.

For the current year, the Company has maintained a reduced cost structure,
employing approximately 525 (19%) fewer employees during the second quarter of
2001 compared to the prior year. At August 1, 2001, the Company employed
approximately 625 (21%) fewer employees than at the same date last year,
reflecting a reduction in summer hiring. The reduction in production hours
resulted in unfavorable production variances compared to the prior year, but has
allowed the Company to reduce inventories compared to the prior year despite
reduced levels of sales.

During the second quarter, the Company has more fully implemented a
manufacturing strategy it refers to as "Assemble to Ship". Under this strategy,
the Company builds components to stock instead of building finished goods to
stock. The Company then assembles the finished product as customer orders
determine production quantities and color combinations. This ATS stategy has
been complimented with policy of seasonal workforce assignments. The Company has
traditionally relied upon seasonal hiring to help meet peak summer shipping
demands. In the current quarter, the Company paid seasonal incentives to
fabrication employees who transferred to assembly and warehouse positions during
the summer. This strategy played a significant role in achieving the workforce
reductions referenced above.


                                       11
<PAGE>   12


The Company believes that it can support a greater volume and variety of
customer orders with a smaller investment in inventory and a smaller but more
experienced permanent workforce utilizing these strategies.

Selling, general and administrative expense and other for the quarter ended July
31, 2001 decreased by approximately $3,515,000 compared to the same period last
year. The reduction was primarily attributable to reduced freight expense
resulting from lower unit sales volume and overall reduction in spending.

Interest expense decreased by $265,000 due to a lower average borrowing balance
and lower interest rates for the quarter ended July 31, 2001 compared to the
same period last year. The decrease in borrowings was attributable to reduced
capital spending and decreased levels of inventory.




                                       12
<PAGE>   13


Financial Condition:

As a result of seasonally high shipments in the second quarter, accounts
receivable increased by approximately $23,201,000 compared to year-end. This
increase in accounts receivable was financed through the credit facility with
Wells Fargo Bank.

Capital spending for the six months ended July 31, 2001 was $2,880,000 compared
to $12,466,000 for the same period last year. In the prior year, the Company
completed a significant investment cycle at the Conway, Arkansas manufacturing
and distribution facility. With the completion of this investment, the Company
intends to significantly curtail capital spending. The Company has established a
goal of limiting capital spending to approximately $7,000,000 for 2001, which is
approximately one-half of anticipated depreciation expense. Capital expenditures
are being financed through credit facilities established with Wells Fargo Bank
and operating cash flow. Beginning May 1, 2001, the credit facility with Wells
Fargo Bank is expanded to $80,000,000 from $70,000,000. The maximum principal
amount available under this note shall be reduced automatically on September 1,
2001, and on each January 1, commencing January 1, 2001, by the amount of
$10,000,000. If cash flow permits, the Company intends to prepay a portion of
the line used to finance the Conway, Arkansas expansion in the fourth quarter.
At July 31, 2001, the Company has approximately $13,122,000 available under its
credit facility with Wells Fargo Bank.

Net cash used in operating activities for the six months ended July 31, 2001 was
$12,034,000 compared to $28,324,000 for the same period last year. The decrease
in cash used in operating activities was primarily due to the reduced inventory
level. Long term debt was $62,061,000 as of July 31, 2001 compared to
$43,741,000 as of January 31, 2001.

In April 1998, the Board of Directors approved a stock buyback program giving
authorization to buy back up to $5,000,000 of common stock. The amount
authorized was subsequently increased to $14,000,000. As of July 31, 2001, the
Company has repurchased approximately 800,000 shares at a cost of approximately
$12,300,000 since the inception of this program in April 1998. The Company
intends to continue buying back shares of common stock as long as the Company
believes the shares are undervalued and operating cash flows and borrowing
capacity under the Wells Fargo line allow.

On August 21, 2001, the Company's Board of Directors authorized a 10% stock
dividend payable on September 28, 2001 to stockholders on record as of September
6, 2001. In the same meeting, the Board also authorized a $0.02 per share cash
dividend payable on October 31, 2001 to stockholders on record as of October 12,
2001. For the three months and six months ended July 31, 2001, the Company paid
$224,000 and $450,000 in cash dividends, respectively.

The Company believes that cash flows from operations, together with the
Company's unused borrowing capacity with Wells Fargo Bank will be sufficient to
fund the Company's debt service requirements, capital expenditures and working
capital needs.

Forward-Looking Statements



                                       13
<PAGE>   14



From time to time, the Company or its representatives have made or may make
forward-looking statements, orally or in writing, including those contained
herein. Such forward-looking statements may be included in, without limitation,
reports to stockholders, press releases; oral statements made with the approval
of an authorized executive officer of the Company and filings with the
Securities and Exchange Commission. The words or phrases "anticipates,"
`expects," "will continue," "estimates," "projects," or similar expressions are
intended to identify "forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. The results contemplated by
the Company's forward-looking statements are subject to certain risks and
uncertainties that could cause actual results to vary materially from
anticipated results, including without limitation, material costs, availability
and cost of labor, demand for the Company's products, and competitive conditions
affecting selling prices and margins, capital costs and general economic
conditions. Such risks and uncertainties are discussed in more detail in the
Company's Annual Report on Form 10-K for the year ended January 31, 2001.

The Company's forward-looking statements represent its judgment only on the
dates such statements were made. By making any forward-looking statements, the
Company assumes no duty to update them to reflect new, changed or unanticipated
events or circumstances.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

On February 22, 2000, the Company entered into an interest rate swap agreement
with Wells Fargo Bank. The initial notional swap amount is $30,000,000 for the
period February 22, 2000 through February 29, 2001. The notional swap amount
then decreases to $20,000,000 until the end of the swap agreement, March 3,
2003. The swap agreement is in consideration for a fixed rate at 7.23% plus a
fluctuating margin of 1.25% to 1.50%.

As of July 31, 2001, the Company has borrowed $68,000,000 under its Wells Fargo
credit facility, of which $20,000,000 is subject to the interest rate swap
agreement as described above and the remaining contain variable interest rates.
Accordingly, a 100 basis point upward fluctuation in the lender's base rate
would cause the Company to incur additional interest charges of approximately
$156,000 per fiscal quarter and $283,000 for the six months ended July 31, 2001.
The Company would benefit from a similar interest savings if the base rate were
to fluctuate downward by a like amount.




                                       14
<PAGE>   15


                                     PART II

                             VIRCO MFG. CORPORATION

                                Other Information


Item 4.   Submission of matters to a vote of Security Holders
          The following is a description of matters submitted to a vote of
          registrant's stockholders at the Annual Meeting of Stockholders held
          June 12, 2001.

          Election of three directors whose term expire in 2004.

<TABLE>
<CAPTION>

                                                  Votes For
                                                  ---------
            <S>                                   <C>
            Douglas A. Virtue                     9,467,311
            George W. Ott                         9,513,169
            John H. Stafford                      9,508,553

</TABLE>


Item 6.  Exhibits and Reports on Form 8-K

         Exhibit (3.2) - Bylaws of the Company dated September 10, 2001

         Exhibit (11) - Statement re: Computation of Earnings Per Share


                                       15
<PAGE>   16




                             VIRCO MFG. CORPORATION

                                   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 thereunto duly authorized.


                                      VIRCO MFG. CORPORATION




Date:   September 14, 2001            By:       /s/ Robert E. Dose
     -----------------------------        --------------------------------------
                                          Robert E. Dose
                                          Vice President - Finance




Date:   September 14, 2001            By:      /s/  Bassey Yau
     -----------------------------        --------------------------------------
                                          Bassey Yau
                                          Corporate Controller




                                       16

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.2
<SEQUENCE>3
<FILENAME>v75741ex3-2.txt
<DESCRIPTION>EXHIBIT 3.2
<TEXT>
<PAGE>   1




                             VIRCO MFG. CORPORATION

                   Exhibit (3.2) - AMENDED AND RESTATED BYLAWS


                            ARTICLE I - STOCKHOLDERS

     Section 1.01. Annual Meeting.

     (a) An annual meeting of the stockholders, for the election of directors to
succeed those whose terms expire and for the transaction of such other business
as may properly come before the meeting, shall be held at such place, on such
date, and at such time as the Board of Directors shall each year fix, which date
shall be within 13 months of the last annual meeting of stockholders.

     (b) To be properly brought before an annual meeting of stockholders,
nominations of persons for election to the Board of Directors of the Corporation
and the proposal of business to be considered by the stockholders at an annual
meeting of stockholders must be either (i) specified in the notice of meeting
(or any supplement thereto) given by or at the direction of the Board of
Directors (or any duly authorized committee thereof), (ii) otherwise properly
brought before the annual meeting by or at the direction of the President, the
Chairman of the Board of Directors or by vote of a majority of the full Board of
Directors, or (iii) otherwise brought before the annual meeting by any
stockholder of the Corporation who is a stockholder of record on the date of the
giving of the notice provided for in the following paragraph (c), who is
entitled to vote at the meeting and who complied with the notice procedures set
forth in this Section 1.01.

     (c) For nominations or other business to be properly brought before an
annual meeting by a stockholder under this Section 1.01, the stockholder must
have given timely notice thereof in writing to the Secretary of the Corporation
and such business must be a proper subject for stockholder action under the
Delaware General Corporation Law ("DGCL"). To be timely, a stockholder's notice
must be delivered to the Secretary at the principal executive offices of the
Corporation not less than 120 days prior to the first anniversary of the
preceding year's annual meeting; provided, however, that if the date of the
annual meeting is advanced by more than 40 days or delayed by more than 40 days
from such anniversary date, then notice by the stockholder to be timely must be
delivered not later than the close of business on the later of the 120th day
prior to the annual meeting or the 10th day following the day on which the date
of the meeting is publicly announced. Such stockholder's notice must set forth
(i) as to each person whom the stockholder proposes to nominate for election or
reelection as a director all information relating to such person that is
required to be disclosed in solicitations of proxies for election of directors,
or is otherwise required, in each case pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") (including such
person's written consent to being named in the proxy statement as a nominee and
to serving as a director if elected); (ii) as to any other business that the
stockholder proposes to bring before the meeting, a brief description of the
business desired to be brought before the meeting, the reasons for conducting
such business at the meeting and any material interest in such business of such
stockholder and the beneficial owner, if any, on whose behalf the proposal is
made; and (iii) as to the stockholder giving the notice and the beneficial
owners, if any, on whose behalf the nomination or proposal is made,

<PAGE>   2


(A) the name and address of such stockholder, as they appear on the
Corporation's books, and of such beneficial owner, (B) the number of shares of
the Corporation which are owned (beneficially or of record) by such stockholder
and such beneficial owner, (C) a description of all arrangements or
understandings between such stockholder and such beneficial owner and any other
person or persons (including their names) in connection with the proposal of
such business by such stockholder and any material interest of such stockholder
and of such beneficial owner in such business, and (D) a representation that
such stockholder or its agent or designee intends to appear in person or by
proxy at the annual meeting to bring such business before the meeting.

     (d) Notwithstanding anything in this Section 1.01 to the contrary, if the
number of directors to be elected to the Board of Directors of the Corporation
is increased and there is no public announcement specifying the size of the
increased Board of Directors made by the Corporation at least 120 days prior to
the first anniversary of the preceding year's annual meeting, then a
stockholder's notice required by this Section 1.01 will also be considered
timely, but only with respect to nominees for any new positions created by such
increase, if it is delivered to the Secretary at the principal executive offices
of the Corporation not later than the close of business on the 10th day
following the day on which such public announcement is first made by the
Corporation.

     (e) Only such business may be conducted at a special meeting of
stockholders as has been brought before the meeting pursuant to the
Corporation's notice of meeting. Nominations of persons for election to the
Board of Directors may be made at a special meeting of stockholders at which
directors are to be elected pursuant to the Corporation's notice of meeting (i)
by or at the direction of the Board of Directors or (ii) by any stockholder of
the Corporation who is a stockholder of record at the time of giving the notice
required by this Section 1.01, who is entitled to vote at the meeting and who
complies with the notice procedures set forth in this Section 1.01. Nominations
by stockholders of persons for election to the Board of Directors may be made at
such a special meeting of stockholders if the stockholder's notice required by
this Section 1.01 is delivered to the Secretary at the principal executive
offices of the Corporation not later than the close of business on the later of
the 120th day prior to such special meeting or the 10th day following the day on
which public announcement is first made of the date of the special meeting and
of the nominees proposed by the Board of Directors to be elected at such
meeting.

     (f) Only those persons who are nominated in accordance with the procedures
set forth in this Section 1.01 will be eligible for election as directors at any
meeting of stockholders. Only business brought before the meeting in accordance
with the procedures set forth in this Section 1.01 may be conducted at a meeting
of stockholders. The chairman of the meeting has the power and duty to determine
whether a nomination or any business proposed to be brought before the meeting
was made in accordance with the procedures set forth in this Section 1.01 and,
if any proposed nomination or business is not in compliance with this Section
1.01, to declare that such defective proposal shall be disregarded.

     (g) For purposes of this Section 1.01, "public announcement" shall include
disclosure in a press release reported by the Dow Jones News Service, Associated
Press, Business Wire, PR Newswire or comparable national news service or in a
document publicly filed by the Corporation with the Securities and Exchange
Commission pursuant to the Exchange Act.

<PAGE>   3

     (h) Notwithstanding the foregoing provisions of this Section 1.01, a
stockholder shall also comply with all applicable requirements of the Exchange
Act and the rules and regulations thereunder with respect to the matters set
forth in this Section 1.01. Nothing in this Section 1.01 shall be deemed to
remove any obligation of stockholders to comply with the requirements of Rule
14a-8 under the Exchange Act with respect to proposals requested to be included
in the Corporation's proxy statement pursuant to said Rule 14a-8.

     Section 1.02. Special Meetings.

     (a) Special meetings of the stockholders, other than those required by
statute, may be called at any time as set forth in the Certificate of
Incorporation of the Corporation.

     (b) Only such business shall be conducted at a special meeting of
stockholders as shall have been brought before the meeting pursuant to the
Corporation's notice of meeting. Nominations of persons for election to the
Board of Directors may be made at a special meeting of stockholders at which
directors are to be elected pursuant to the Corporation's notice of meeting (i)
by or at the direction of the Board of Directors or (ii) by any stockholder of
record of the Corporation who is a stockholder of record at the time of giving
of notice provided for in this paragraph, who shall be entitled to vote at the
meeting and who complies with the notice procedures set forth in Section 1.01.
Nominations by stockholders of persons for election to the Board of Directors
may be made at such a special meeting of stockholders if the stockholder's
notice required by paragraph (c) of Section 1.01 shall be delivered to the
Secretary at the principal executive offices of the Corporation not later than
the close of business on the later of the 120th day prior to such special
meeting or the 10th day following the day on which public announcement is first
made of the date of the special meeting and of the nominees proposed by the
Board of Directors to be elected at such meeting.

     (c) Notwithstanding the foregoing provisions of this Section 1.02, a
stockholder shall also comply with all applicable requirements of the Exchange
Act and the rules and regulations thereunder with respect to matters set forth
in this Section 1.02. Nothing in this Section 1.02 shall be deemed to affect any
rights of stockholders to request inclusion of proposals in the Corporation's
proxy statement pursuant to Rule 14a-8 under the Exchange Act.

     Section 1.03. Notice of Meetings. Notice of the place, if any, date, and
time of all meetings of the stockholders, and the means of remote
communications, if any, by which stockholders and proxyholders may be deemed to
be present in person and vote at such meeting, shall be given, not less than 10
nor more than 60 days before the date on which the meeting is to be held, to
each stockholder entitled to vote at such meeting, except as otherwise provided
herein or required by law (meaning, here and hereinafter, as required from time
to time by the DGCL or the Certificate of Incorporation of the Corporation).

     When a meeting is adjourned to another time or place, notice need not be
given of the adjourned meeting if the time and place, if any, thereof, and the
means of remote communications, if any, by which stockholders and proxyholders
may be deemed to be present in person and vote at such adjourned meeting are
announced at the meeting at which the adjournment is taken; provided, however,
that if the date of any adjourned meeting is more than 30 days after the date
for which the meeting was originally noticed, or if a new record date is fixed
for the adjourned


<PAGE>   4

meeting, notice of the place, if any, date, and time of the adjourned meeting
and the means of remote communications, if any, by which stockholders and
proxyholders may be deemed to be present in person and vote at such adjourned
meeting, shall be given in conformity herewith. At any adjourned meeting, any
business may be transacted which might have been transacted at the original
meeting.

     Section 1.04. Quorum. At any meeting of the stockholders, the holders of a
majority of all of the shares of the stock entitled to vote at the meeting,
present in person or by proxy, shall constitute a quorum for all purposes,
unless or except to the extent that the presence of a larger number may be
required by law. Where a separate vote by a class or classes or series is
required, a majority of the shares of such class or classes or series present in
person or represented by proxy shall constitute a quorum entitled to take action
with respect to that vote on that matter.

     If a quorum shall fail to attend any meeting, the chairman of the meeting
may adjourn the meeting to another place, if any, date, or time.

     Section 1.05. Organization. Such person as the Board of Directors may have
designated or, in the absence of such a person, the Chairman of the Board or, in
his or her absence, the President of the Corporation or, in his or her absence,
such person as may be chosen by the holders of a majority of the shares entitled
to vote who are present, in person or by proxy, shall call to order any meeting
of the stockholders and act as chairman of the meeting. In the absence of the
Secretary of the Corporation, the secretary of the meeting shall be such person
as the chairman of the meeting appoints.

     Section 1.06. Conduct of Business. The chairman of any meeting of
stockholders shall determine the order of business and the procedure at the
meeting, including such regulation of the manner of voting and the conduct of
discussion as seem to him or her in order. The chairman shall have the power to
adjourn the meeting to another place, if any, date and time. The date and time
of the opening and closing of the polls for each matter upon which the
stockholders will vote at the meeting shall be announced at the meeting.

     Section 1.07. Proxies and Voting. At any meeting of the stockholders, every
stockholder entitled to vote may vote in person or by proxy authorized by an
instrument in writing or by a transmission permitted by law filed in accordance
with the procedure established for the meeting. Any copy, facsimile
telecommunication or other reliable reproduction of the writing or transmission
created pursuant to this paragraph may be substituted or used in lieu of the
original writing or transmission for any and all purposes for which the original
writing or transmission could be used, provided that such copy, facsimile
telecommunication or other reproduction shall be a complete reproduction of the
entire original writing or transmission.

     The Corporation may, and to the extent required by law, shall, in advance
of any meeting of stockholders, appoint one or more inspectors to act at the
meeting and make a written report thereof. The Corporation may designate one or
more alternate inspectors to replace any inspector who fails to act. If no
inspector or alternate is able to act at a meeting of stockholders, the person
presiding at the meeting may, and to the extent required by law, shall, appoint
one or more inspectors to act at the meeting. Each inspector, before entering
upon the discharge of his or her duties, shall take and sign an oath faithfully
to execute the duties of inspector with strict


<PAGE>   5


impartiality and according to the best of his or her ability. Every vote taken
by ballots shall be counted by a duly appointed inspector or inspectors.

     All elections shall be determined by a plurality of the votes cast, and
except as otherwise required by law, all other matters shall be determined by a
majority of the votes cast affirmatively or negatively.

     Section 1.08. Stock List. A complete list of stockholders entitled to vote
at any meeting of stockholders, arranged in alphabetical order for each class of
stock and showing the address of each such stockholder and the number of shares
registered in his or her name, shall be open to the examination of any such
stockholder for a period of at least 10 days prior to the meeting in the manner
provided by law.

     The stock list shall also be open to the examination of any stockholder
during the whole time of the meeting as provided by law. This list shall
presumptively determine the identity of the stockholders entitled to vote at the
meeting and the number of shares held by each of them.

                         ARTICLE II - BOARD OF DIRECTORS

     Section 2.01. Number of Directors. The authorized number of directors of
the Corporation shall be nine, and such authorized number shall not be changed
except by a Bylaw or amendment thereof duly adopted by the stockholders in
accordance with the Certificate of Incorporation or by a majority of the Whole
Board amending this Section 2.01. For purposes of these Bylaws, the term "Whole
Board" shall mean the total number of authorized directors whether or not there
exist any vacancies in previously authorized directorships.

     Section 2.02. Newly Created Directorships and Vacancies. Subject to the
rights of the holders of any series of preferred stock then outstanding, newly
created directorships resulting from any increase in the authorized number of
directors or any vacancies in the Board of Directors resulting from death,
resignation, retirement, disqualification, removal from office or other cause
shall, unless otherwise required by law or by resolution of the Board of
Directors, be filled only by a majority vote of the directors then in office,
though less than a quorum (and not by stockholders), and directors so chosen
shall serve for a term expiring at the annual meeting of stockholders at which
the term of office of the class to which they have been elected expires or until
such director's successor shall have been duly elected and qualified. No
decrease in the number of authorized directors shall shorten the term of any
incumbent director.

     Section 2.03. Regular Meetings. Regular meetings of the Board of Directors
shall be held at such place or places, on such date or dates, and at such time
or times as shall have been established by the Board of Directors and publicized
among all directors. A notice of each regular meeting shall not be required.

     Section 2.04. Special Meetings. Special meetings of the Board of Directors
may be called by the Chairman of the Board, the President or by a majority of
the Whole Board and shall be held at such place, on such date, and at such time
as they or he or she shall fix. Notice of the place, date, and time of each such
special meeting shall be given to each director by whom it is not waived by
mailing written notice not less than two days before the meeting or by telephone
or


<PAGE>   6

by telegraphing or telexing or by facsimile or electronic transmission of the
same not less than 24 hours before the meeting. Unless otherwise indicated in
the notice thereof, any and all business may be transacted at a special meeting.
The Board of Directors may postpone or reschedule any previously scheduled
special meeting.

     Section 2.05. Quorum. At any meeting of the Board of Directors, a majority
of the total number of the Whole Board shall constitute a quorum for all
purposes. If a quorum shall fail to attend any meeting, a majority of those
present may adjourn the meeting to another place, date, or time, without further
notice or waiver thereof.

     Section 2.06. Participation in Meetings By Conference Telephone. Members of
the Board of Directors, or of any committee thereof, may participate in a
meeting of such Board of Directors or committee by means of conference telephone
or other communications equipment by means of which all persons participating in
the meeting can hear each other and such participation shall constitute presence
in person at such meeting.

     Section 2.07. Conduct of Business. At any meeting of the Board of
Directors, business shall be transacted in such order and manner as the Board of
Directors may from time to time determine, and all matters shall be determined
by the vote of a majority of the directors present, except as otherwise provided
herein or required by law. Action may be taken by the Board of Directors without
a meeting if all members thereof consent thereto in writing or by electronic
transmission, and the writing or writings or electronic transmission or
transmissions are filed with the minutes of proceedings of the Board of
Directors. Such filing shall be in paper form if the minutes are maintained in
paper form and shall be in electronic form if the minutes are maintained in
electronic form.

     Section 2.08. Compensation of Directors. Unless otherwise restricted by the
Certificate of Incorporation, the Board of Directors shall have the authority to
fix the compensation of the directors. The directors may be paid their expenses,
if any, of attendance at each meeting of the Board of Directors and may be paid
a fixed sum for attendance at each meeting of the Board of Directors or paid a
stated salary or paid other compensation as director. No such payment shall
preclude any director from serving the Corporation in any other capacity and
receiving compensation therefor. Members of special or standing committees may
be allowed compensation for attending committee meetings.

                            ARTICLE III - COMMITTEES

     Section 3.01. Committees of the Board of Directors. The Board of Directors
may from time to time designate committees of the Board of Directors, with such
lawfully delegable powers and duties as it thereby confers, to serve at the
pleasure of the Board of Directors and shall, for those committees and any
others provided for herein, elect a director or directors to serve as the member
or members, designating, if it desires, other directors as alternate members who
may replace any absent or disqualified member at any meeting of the committee.
In the absence or disqualification of any member of any committee and any
alternate member in his or her place, the member or members of the committee
present at the meeting and not disqualified from voting, whether or not he or
she or they constitute a quorum, may by unanimous vote appoint another member of
the Board of Directors to act at the meeting in the place of the absent or
disqualified member.


<PAGE>   7


     Section 3.02. Conduct of Business. Each committee may determine the
procedural rules for meeting and conducting its business and shall act in
accordance therewith, except as otherwise provided herein or required by law.
Adequate provision shall be made for notice to members of all meetings;
one-third of the members shall constitute a quorum unless the committee shall
consist of one or two members, in which event one member shall constitute a
quorum; and all matters shall be determined by a majority vote of the members
present. Action may be taken by any committee without a meeting if all members
thereof consent thereto in writing or by electronic transmission, and the
writing or writings or electronic transmission or transmissions are filed with
the minutes of the proceedings of such committee. Such filing shall be in paper
form if the minutes are maintained in paper form and shall be in electronic form
if the minutes are maintained in electronic form.

                              ARTICLE IV - OFFICERS

     Section 4.01. Generally. The officers of the Corporation shall consist of a
Chairman of the Board, a President, one or more Vice Presidents, a Secretary, a
Treasurer and such other officers as may from time to time be appointed by the
Board of Directors. Officers shall be elected annually by the Board of
Directors. Each officer shall hold office until his or her successor is elected
and qualified or until his or her earlier resignation or removal. Any number of
offices may be held by the same person. The salaries of officers elected by the
Board of Directors shall be fixed from time to time by the Board of Directors or
by such officers as may be designated by resolution of the Board of Directors.

     Section 4.02. Chairman of the Board. The Chairman of the Board shall be the
chief executive officer of the Corporation. Subject to the provisions of these
Bylaws and to the direction of the Board of Directors, he or she shall have the
responsibility for the general management and control of the business and
affairs of the Corporation and shall perform all duties and have all powers
which are commonly incident to the office of chief executive or which are
delegated to him or her by the Board of Directors. He or she shall have power to
sign all stock certificates, contracts and other instruments of the Corporation
that are authorized and shall have general supervision and direction of all of
the other officers, employees and agents of the Corporation.

     Section 4.03. President. The President shall be the chief operating officer
of the Corporation. He or she shall have general responsibility for the
management and control of the operations of the Corporation and shall perform
all duties and have all powers which are commonly incident to the office of
chief operating officer or which are delegated to him or her by the Board of
Directors. Subject to the direction of the Board of Directors and the Chairman
of the Board, the President shall have power to sign all stock certificates,
contracts and other instruments of the Corporation which are authorized and
shall have general supervision of all of the other officers (other than the
Chairman of the Board or any Vice Chairman), employees and agents of the
Corporation.

     Section 4.04. Vice President. Each Vice President shall have such powers
and duties as may be delegated to him or her by the Board of Directors. One Vice
President shall be designated by the Board of Directors to perform the duties
and exercise the powers of the President in the event of the President's absence
or disability.


<PAGE>   8


     Section 4.05. Treasurer and Chief Financial Officer. The Treasurer shall be
the Chief Financial Officer of the Corporation and shall have the responsibility
for maintaining the financial records of the Corporation. He or she shall make
such disbursements of the funds of the Corporation as are authorized and shall
render from time to time an account of all such transactions and of the
financial condition of the Corporation. The Treasurer shall also perform such
other duties as the Board of Directors may from time to time prescribe.

     Section 4.06. Secretary. The Secretary shall issue all authorized notices
for, and shall keep minutes of, all meetings of the stockholders and the Board
of Directors. He or she shall have charge of the corporate books and shall
perform such other duties as the Board of Directors may from time to time
prescribe.

     Section 4.07. Delegation of Authority. The Board of Directors may from time
to time delegate the powers or duties of any officer to any other officers or
agents, notwithstanding any provision hereof.

     Section 4.08. Removal. Any officer of the Corporation may be removed at any
time, with or without cause, by the Board of Directors.

     Section 4.09. Action with Respect to Securities of Other Corporations.
Unless otherwise directed by the Board of Directors, the President or any
officer of the Corporation authorized by the President shall have power to vote
and otherwise act on behalf of the Corporation, in person or by proxy, at any
meeting of stockholders of or with respect to any action of stockholders of any
other Corporation in which this Corporation may hold securities and otherwise to
exercise any and all rights and powers which this Corporation may possess by
reason of its ownership of securities in such other Corporation.

                                ARTICLE V - STOCK

     Section 5.01. Certificates of Stock. Each stockholder shall be entitled to
a certificate signed by, or in the name of the Corporation by, the President or
a Vice President, and by the Secretary or an Assistant Secretary, or the
Treasurer or an Assistant Treasurer, certifying the number of shares owned by
him or her. Any or all of the signatures on the certificate may be by facsimile.

     Section 5.02. Transfers of Stock. Transfers of stock shall be made only
upon the transfer books of the Corporation kept at an office of the Corporation
or by transfer agents designated to transfer shares of the stock of the
Corporation. Except where a certificate is issued in accordance with Section
5.04, an outstanding certificate for the number of shares involved shall be
surrendered for cancellation before a new certificate is issued therefor.

     Section 5.03. Record Date. In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders, or
to receive payment of any dividend or other distribution or allotment of any
rights or to exercise any rights in respect of any change, conversion or
exchange of stock or for the purpose of any other lawful action, the Board of
Directors may, except as otherwise required by law, fix a record date, which
record date shall not precede the date on which the resolution fixing the record
date is adopted and which record date shall not be more than 60 nor less than 10
days before the date of any meeting of stockholders, nor



<PAGE>   9

more than 60 days prior to the time for such other action as hereinbefore
described; provided, however, that if no record date is fixed by the Board of
Directors, the record date for determining stockholders entitled to notice of or
to vote at a meeting of stockholders shall be at the close of business on the
day next preceding the day on which notice is given or, if notice is waived, at
the close of business on the day next preceding the day on which the meeting is
held, and, for determining stockholders entitled to receive payment of any
dividend or other distribution or allotment of rights or to exercise any rights
of change, conversion or exchange of stock or for any other purpose, the record
date shall be at the close of business on the day on which the Board of
Directors adopts a resolution relating thereto.

     A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.

     Section 5.04. Lost, Stolen or Destroyed Certificates. In the event of the
loss, theft or destruction of any certificate of stock, another may be issued in
its place pursuant to such regulations as the Board of Directors may establish
concerning proof of such loss, theft or destruction and concerning the giving of
a satisfactory bond or bonds of indemnity.

     Section 5.05. Regulations. The issue, transfer, conversion and registration
of certificates of stock shall be governed by such other regulations as the
Board of Directors may establish.

                              ARTICLE VI - NOTICES

     Section 6.01. Notices. If mailed, notice to stockholders shall be deemed
given when deposited in the mail, postage prepaid, directed to the stockholder
at such stockholder's address as it appears on the records of the Corporation.
Without limiting the manner by which notice otherwise may be given effectively
to stockholders, any notice to stockholders may be given by electronic
transmission in the manner provided in Section 232 of the DGCL.

     Section 6.02. Waivers. A written waiver of any notice, signed by a
stockholder or director, or waiver by electronic transmission by such person,
whether given before or after the time of the event for which notice is to be
given, shall be deemed equivalent to the notice required to be given to such
person. Neither the business nor the purpose of any meeting need be specified in
such a waiver. Attendance at any meeting shall constitute waiver of notice
except attendance for the sole purpose of objecting to the timeliness of notice.

                           ARTICLE VII - MISCELLANEOUS

     Section 7.01. Facsimile Signatures. In addition to the provisions for use
of facsimile signatures elsewhere specifically authorized in these Bylaws,
facsimile signatures of any officer or officers of the Corporation may be used
whenever and as authorized by the Board of Directors or a committee thereof.

     Section 7.02. Corporate Seal. The Board of Directors may provide a suitable
seal, containing the name of the Corporation, which seal shall be in the charge
of the Secretary. If and


<PAGE>   10

when so directed by the Board of Directors or a committee thereof, duplicates of
the seal may be kept and used by the Treasurer or by an Assistant Secretary or
Assistant Treasurer.

     Section 7.03. Reliance upon Books, Reports and Records. Each director, each
member of any committee designated by the Board of Directors, and each officer
of the Corporation shall, in the performance of his or her duties, be fully
protected in relying in good faith upon the books of account or other records of
the Corporation and upon such information, opinions, reports or statements
presented to the Corporation by any of its officers or employees, or committees
of the Board of Directors so designated, or by any other person as to matters
which such director or committee member reasonably believes are within such
other person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Corporation.

     Section 7.04. Fiscal Year. The fiscal year of the Corporation shall be as
fixed by the Board of Directors.

     Section 7.05. Time Periods. In applying any provision of these Bylaws which
requires that an act be done or not be done a specified number of days prior to
an event or that an act be done during a period of a specified number of days
prior to an event, calendar days shall be used, the day of the doing of the act
shall be excluded, and the day of the event shall be included.

            ARTICLE VIII - INDEMNIFICATION OF DIRECTORS AND OFFICERS

     Section 8.01. Right to Indemnification. Each person who was or is made a
party or is threatened to be made a party to or is otherwise involved in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "proceeding"), by reason of the fact that he or she
is or was a director or an officer of the Corporation or is or was serving at
the request of the Corporation as a director, officer or trustee of another
corporation or of a partnership, joint venture, trust or other enterprise,
including service with respect to an employee benefit plan (hereinafter an
"indemnitee"), whether the basis of such proceeding is alleged action in an
official capacity as a director, officer or trustee or in any other capacity
while serving as a director, officer or trustee, shall be indemnified and held
harmless by the Corporation to the fullest extent authorized by the DGCL, as the
same exists or may hereafter be amended (but, in the case of any such amendment,
only to the extent that such amendment permits the Corporation to provide
broader indemnification rights than such law permitted the Corporation to
provide prior to such amendment), against all expense, liability and loss
(including attorneys' fees, judgments, fines, ERISA excise taxes or penalties
and amounts paid in settlement) reasonably incurred or suffered by such
indemnitee in connection therewith; provided, however, that, except as provided
in Section 8.03 with respect to proceedings to enforce rights to
indemnification, the Corporation shall indemnify any such indemnitee in
connection with a proceeding (or part thereof) initiated by such indemnitee only
if such proceeding (or part thereof) was authorized by the Board of Directors of
the Corporation.

     Section 8.02. Right to Advancement of Expenses. In addition to the right to
indemnification conferred in Section 8.01, an indemnitee shall also have the
right to be paid by the Corporation the expenses (including attorney's fees)
incurred in defending any such proceeding in advance of its final disposition
(hereinafter an "advancement of expenses"); provided, however, that, if the DGCL
requires, an advancement of expenses incurred by an indemnitee in his or her


<PAGE>   11

capacity as a director or officer (and not in any other capacity in which
service was or is rendered by such indemnitee, including, without limitation,
service to an employee benefit plan) shall be made only upon delivery to the
Corporation of an undertaking (hereinafter an "undertaking"), by or on behalf of
such indemnitee, to repay all amounts so advanced if it shall ultimately be
determined by final judicial decision from which there is no further right to
appeal (hereinafter a "final adjudication") that such indemnitee is not entitled
to be indemnified for such expenses under this Section 8.02 or otherwise.

     Section 8.03. Right of Indemnitee to Bring Suit. If a claim under Section
8.01 or 8.02 is not paid in full by the Corporation within 60 days after a
written claim has been received by the Corporation, except in the case of a
claim for an advancement of expenses, in which case the applicable period shall
be 20 days, the indemnitee may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim. If successful in whole or
in part in any such suit, or in a suit brought by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the indemnitee
shall be entitled to be paid also the expense of prosecuting or defending such
suit. In (a) any suit brought by the indemnitee to enforce a right to
indemnification hereunder (but not in a suit brought by the indemnitee to
enforce a right to an advancement of expenses) it shall be a defense that, and
(b) in any suit brought by the Corporation to recover an advancement of expenses
pursuant to the terms of an undertaking, the Corporation shall be entitled to
recover such expenses upon a final adjudication that, the indemnitee has not met
any applicable standard for indemnification set forth in the DGCL. Neither the
failure of the Corporation (including its directors who are not parties to such
action, a committee of such directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
suit that indemnification of the indemnitee is proper in the circumstances
because the indemnitee has met the applicable standard of conduct set forth in
the DGCL, nor an actual determination by the Corporation (including its
directors who are not parties to such action, a committee of such directors,
independent legal counsel, or its stockholders) that the indemnitee has not met
such applicable standard of conduct, shall create a presumption that the
indemnitee has not met the applicable standard of conduct or, in the case of
such a suit brought by the indemnitee, be a defense to such suit. In any suit
brought by the indemnitee to enforce a right to indemnification or to an
advancement of expenses hereunder, or brought by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the burden of
proving that the indemnitee is not entitled to be indemnified, or to such
advancement of expenses, under this Article VIII or otherwise shall be on the
Corporation.

     Section 8.04. Non-Exclusivity of Rights. The rights to indemnification and
to the advancement of expenses conferred in this Article VIII shall not be
exclusive of any other right which any person may have or hereafter acquire
under any statute, the Corporation's Certificate of Incorporation, Bylaws,
agreement, vote of stockholders or directors or otherwise.

     Section 8.05. Insurance. The Corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other
enterprise against any expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the DGCL.

     Section 8.06. Indemnification of Employees and Agents of the Corporation.
The Corporation may, to the extent authorized from time to time by the Board of
Directors, grant rights

<PAGE>   12

to indemnification and to the advancement of expenses to any employee or agent
of the Corporation to the fullest extent of the provisions of this Article VIII
with respect to the indemnification and advancement of expenses of directors and
officers of the Corporation.

     Section 8.07. Nature of Rights. The rights conferred upon indemnitees in
this Article VIII shall be contract rights and such rights shall continue as to
an indemnitee who has ceased to be a director, officer or trustee and shall
inure to the benefit of the indemnitee's heirs, executors and administrators.
Any amendment, alteration or repeal of this Article VIII that adversely affects
any right of an indemnitee or its successors shall be prospective only and shall
not limit or eliminate any such right with respect to any proceeding involving
any occurrence or alleged occurrence of any action or omission to act that took
place prior to such amendment or repeal.

                             ARTICLE IX - AMENDMENTS

     In furtherance and not in limitation of the powers conferred by law, the
Board of Directors is expressly authorized to adopt, amend and repeal these
Bylaws subject to the power of the holders of capital stock of the Corporation
to adopt, amend or repeal the Bylaws; provided, however, that, with respect to
the power of holders of capital stock to adopt, amend and repeal Bylaws of the
Corporation, notwithstanding any other provision of these Bylaws or any
provision of law which might otherwise permit a lesser vote or no vote, but in
addition to any affirmative vote of the holders of any particular class or
series of the capital stock of the Corporation required by law, these Bylaws or
any preferred stock, the affirmative vote of the holders of at least 75% of the
voting power of all of the then-outstanding shares entitled to vote generally in
the election of directors, voting together as a single class, shall be required
to adopt, amend or repeal any provision of these Bylaws.

<PAGE>   13



                            CERTIFICATE OF SECRETARY



The undersigned hereby certifies:

     1. That I am the duly elected and acting Secretary of Virco Mfg.
Corporation, a Delaware corporation; and

     2. That the foregoing Bylaws, comprising 13 pages, including this page,
constitute the Bylaws of said corporation as duly adopted by action of the Board
of Directors as of September 10, 2001.

     IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed the seal
of said corporation as of the 10th day of September, 2001.



                                        /s/ Robert E. Dose
                                    --------------------------------
                                       Robert E. Dose, Secretary



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-11
<SEQUENCE>4
<FILENAME>v75741ex11.txt
<DESCRIPTION>EXHIBIT 11
<TEXT>
<PAGE>   1



                             VIRCO MFG. CORPORATION

         Exhibit (11) - Statement re: Computation of Earnings Per Share


<TABLE>
<CAPTION>

                                                           Three Months Ended                 Six Months Ended
                                                                July 31                           July 31
                                                      ----------------------------      ----------------------------
                                                         2001              2000             2001             2000
                                                      -----------      -----------      -----------      -----------
<S>                                                   <C>              <C>              <C>              <C>
Diluted earnings per share

Average shares outstanding                             12,238,000       12,494,000       12,329,000       12,498,000

Net effect of dilutive stock options -
based on treasury stock
method using average market price                         129,000          157,000          129,000          152,000
                                                      -----------      -----------      -----------      -----------
Totals                                                 12,367,000       12,651,000       12,458,000       12,650,000
                                                      ===========      ===========      ===========      ===========

Net income before cumulative effect of change in      $ 4,490,000      $ 4,262,000      $   725,000      $ 6,582,000
                                                      ===========      ===========      ===========      ===========
accounting principle

Per share amount before cumulative effect
of change in accounting principle                     $       .36      $       .34      $       .06      $       .52
                                                      ===========      ===========      ===========      ===========

</TABLE>


Weighted average shares outstanding for the three months and six months ended
July 31, 2000 were adjusted for 10% stock dividend declared August 21, 2001.




</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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