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<SEC-DOCUMENT>0000950123-10-003801.txt : 20100323
<SEC-HEADER>0000950123-10-003801.hdr.sgml : 20100323
<ACCEPTANCE-DATETIME>20100120165117
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0000950123-10-003801
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20100120

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:		CORRESP

	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>
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<SEQUENCE>1
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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="right" style="font-size: 10pt; margin-top: 12pt">January&nbsp;20, 2010
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Mr.&nbsp;Terence O&#146;Brien<BR>
Branch Chief<BR>
Division of Corporation Finance<BR>
Securities and Exchange Commission<BR>
100 F Street, N.E.<BR>
Washington, D.C. 20549

</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">RE:</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Virco Mfg. Corporation</B><BR><B>
Form&nbsp;10-K for the fiscal year ended January&nbsp;31, 2009</B><BR><B>
Filed April&nbsp;16, 2009</B><BR><B>
File No.&nbsp;1-8777</B></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Dear Mr.&nbsp;O&#146;Brien:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This letter responds to your letter dated January&nbsp;8, 2010, regarding Virco Mfg. Corporation&#146;s
(&#147;Virco&#148; or the &#147;Company&#148;) Annual Report on Form 10-K (the &#147;Form&nbsp;10-K&#148;) for the fiscal year ended
January&nbsp;31, 2009 (filed April&nbsp;16, 2009). A copy of this letter was also faxed to Jenn Do at (703)
813-6968, whose name appeared on the original fax we received. Each of your comments from the
January&nbsp;8, 2010 letter is set forth below, followed by our related response.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U><B>Results of Operations</B></U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>1.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>We note your response to comment 1 in your letter dated February&nbsp;12, 2007,
whereby you indicated that more than 90&nbsp;percent of the Company&#146;s sales are priced
under multi-year, bid basis-type contracts and that in future filings, you would
quantify the percentage of sales derived from such contracts. However, it appears
neither the business section on pages 6-7 nor MD&#038;A contains this information. Because
you have been experiencing sales declines due to the recessionary economy and
given that these contracts impact your ability to increase selling prices,
it appears that such information would be helpful for investors to better understand
to what extent sales are impacted by contract constraints. For example, on page 6 you
state that during the period covered by these annual contracts, the Company has very
limited and in some cases no ability to increase selling prices. However, on page 25
under your sales discussion, you indicate that you were able to raise prices, at least
modestly, through the third quarter of fiscal 2009. Therefore, please confirm to us
that you will revise future filings accordingly, or otherwise explain to us why such
information is not material information for investors.</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Since we delivered to you our response letter dated February&nbsp;12, 2007, Virco has been able to build
more flexibility into many of its current contracts, including its largest and most important
contract with a nationwide purchasing organization.</TD>
</TR>




</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Despite this improvement in contract terms, however, the Company remains
susceptible to volatility in commodity prices for the reasons described below.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In an effort to best communicate the risks associated with commodity pricing, the
Company endeavors to communicate the most relevant and useful information to its
investors. As more fully articulated below, because the risks to our business
caused by the price of commodities result more from the interplay between the
seasonality and nature of our business and the flexibility afforded to us under all
of our contracts than simply our percentage of sales under annual contracts, the
Company does not believe the percentage of sales derived from our annual contracts
is material information for investors. In future filings, the Company will more
fully articulate the nature of its contracts and the consequent risk from
seasonality and volatile commodity prices. Our reasons for this are as follows:</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>First, in our letter dated February&nbsp;12, 2007, we stated that the portion of sales
under annual contracts was greater than 90%. This is not unique to Virco, as Virco
competes with other providers of Furniture, Fixtures, and Equipment (FF&#038;E) in the
education market for these annual contracts. As such, the total cumulative
percentage of sales under annual contracts is not a metric that is measured or used
by management. We believe that if this metric is not significant enough to warrant
measuring or monitoring by management, it is unlikely that this metric is material
to financial statement users.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Second, while we have endeavored to build increased pricing flexibility into the
terms of our contracts as a result of the extreme volatility in the price of steel
we experienced several years ago, we believe the risks related to the seasonal
nature of the Company&#146;s business coupled with the terms of our contracts are more
relevant than simply the total percentage of sales under annual contracts. During
the last five years, the Company has experienced unusual and severe price
volatility in two of its largest raw materials, steel and oil (which impacts
plastic, energy and freight). During the second quarter of 2008, the Company saw
the cost of steel increase nearly 80%. The price increase you reference affected
the majority (but not all) of our customers, but only applied to orders received in
the third quarter. All orders received during and before the end of the second
quarter, including the backlog of orders in house on July&nbsp;31, 2008 were shipped at
prices quoted prior to July&nbsp;31. Due to the seasonality of our business, the effect
of the increased cost of steel and customer price increase straddled our seasonal
peak. Approximately 67% of our annual orders were received in the first six months
prior to the price increase, and an even greater percentage, nearly 75%, of annual
shipments were under pricing in effect prior to the third quarter. As a result,
the time delay between our incurrence of rising steel costs, on the one hand, and
our
implementation of price increases, on the other hand, adversely impacted our gross
margin for the year.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Third, we believe an understanding of our most significant individual contract, how
our customers use this contract, and how Virco uses this contract is of far greater
value to our investors. In order to provide investors with the most relevant
information regarding our contracts that distinguishes Virco from other providers</TD>
</TR>




</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&nbsp;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>of FF&#038;E, the Company includes extensive disclosure regarding the one
significant nationwide contract that is unique to Virco, provides a competitive
advantage to Virco, and is used to price approximately 40% of the Company&#146;s annual
sales volume. We believe the discussion of this significant contract provides
investors with far more relevant information than simply reporting the portion of
sales sold under annual contracts.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In light of the foregoing, in future filings, the Company will more fully
articulate the nature of its contracts and the consequent risk from volatile
commodity prices, taking into account, among other things, the facts noted above.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>2.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Based on your disclosure on page 36, it appears that Ernst &#038; Young are your independent
auditors, who provided separate reports on your financial statements (page 38) and internal control
over financial reporting (page 37), as well as a consent (Exhibit&nbsp;23.1). However, their
signatures arc not included in these reports. Please advise.</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Virco Mfg. Corporation did obtain audit reports on Virco&#146;s financial statements and internal
control over financial reporting as well as a consent from Ernst &#038; Young, Virco&#146;s independent
auditor, all of which were in the form and dated as filed in the Form 10-K and were manually signed
by Ernst &#038; Young prior to the filing of the Form 10-K. Documentation of such signatures were
inadvertently excluded from the Form 10-K as filed and will be disclosed in future filings with
respect to future reports.</TD>
</TR>



</TABLE>
</DIV>
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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Per the Staff&#146;s request, we hereby acknowledge that</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the Company is responsible for the adequacy and accuracy of the disclosure in the
filings;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Staff comments or changes to disclosure in response to Staff comments do not
foreclose the Commission from taking any action with respect to the filings; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the Company may not assert Staff comments as a defense in any proceeding initiated
by the Commission or any person under the federal securities laws of the United
States.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We appreciate the Staff&#146;s responsiveness with respect to the Company&#146;s filings and look
forward to resolving any concerns the Staff may have. If you have any questions, please contact me
at (310)&nbsp;533-3372 or Ari Lanin of Gibson, Dunn and Crutcher at (310)&nbsp;552-8581.
</DIV>

<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Sincerely,<BR>
<BR>
<BR>
<div style="border-bottom: 1px solid #000000">/s/ Robert E.
Dose</div>
Robert E. Dose<BR>
Vice President Finance<BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
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