<SEC-DOCUMENT>0001193125-12-420190.txt : 20121108
<SEC-HEADER>0001193125-12-420190.hdr.sgml : 20121108
<ACCEPTANCE-DATETIME>20121010212024
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0001193125-12-420190
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20121010

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>
<DOCUMENT>
<TYPE>CORRESP
<SEQUENCE>1
<FILENAME>filename1.htm
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<TITLE>Correspondence</TITLE>
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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">October&nbsp;10, 2012 </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:Times New Roman" SIZE="2">Terence O&#146;Brien </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Accounting Branch Chief </FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Division of Corporation Finance </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">U.S. Securities
and Exchange Commission </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Washington, DC 20549 </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Re:</B></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Virco Mfg. Corporation </B></FONT></TD></TR></TABLE>
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<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>&nbsp;&nbsp;&nbsp;&nbsp;</B></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Form 10-K for Fiscal Year Ended January&nbsp;31, 2012 </B></FONT></TD></TR></TABLE>
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<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>&nbsp;&nbsp;&nbsp;&nbsp;</B></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Filed April&nbsp;25, 2012 </B></FONT></TD></TR></TABLE>
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<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>&nbsp;&nbsp;&nbsp;&nbsp;</B></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>File No.&nbsp;1-8777 </B></FONT></TD></TR></TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Dear
Mr.&nbsp;O&#146;Brien, </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">This letter responds to your letter dated September&nbsp;12,&nbsp;2012, regarding Virco Mfg. Corporation&#146;s (the
&#147;Company&#148;) Annual Report on Form 10-K (the &#147;Form 10-K&#148;) for the fiscal year ended January&nbsp;31,&nbsp;2012 (filed April&nbsp;25, 2012). Each of your comments from the September&nbsp;12,&nbsp;2012 letter is set forth below,
followed by our related response. </FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><U>Item&nbsp;7. Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations,
page 19 </U></FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><U>Results of Operations, page 23 </U></FONT></P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2"><I>1.</I></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2"><I>In future filings, please provide a discussion and analysis of gross profit margin to provide investors with an understanding of the relationship between cost of
sales to net sales. </I></FONT></TD></TR></TABLE> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Our MD&amp;A currently includes, on pages 23-24 of the Form 10-K, a section titled &#147;Cost of
Sales,&#148; which states cost of sales as a percentage of sales and discusses any significant changes in cost of sales. Due to the close relationship between cost of sales and gross profit margin, we respectfully submit that the existing disclosure
adequately conveys the material information regarding gross profit margin. Accordingly, and based upon our conversation with the Staff on September&nbsp;24, 2012, the Company proposes not to revise its disclosure in response to the comment.
</FONT></P> <P STYLE="font-size:18px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2"><I>2.</I></FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2"><I>In future filings, please quantify the extent to which increases/decreases in volumes sold, increases/decreases in prices, raw material cost
changes, raw material inflation </I></FONT></P></TD></TR></TABLE>

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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Terence O&#146;Brien </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:Times New Roman" SIZE="2">October 10, 2012 </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"> Page
 2
 </FONT></P> <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2"><I>
pass-through, the introduction of new products, and foreign exchange effects attributed to the increase or decrease in net sales, cost of sales, and gross profit margins. Please refer to Items
303(a)(3)(iii), and 303(a)(3)(iv) of Regulation S-X for guidance. In addition, please quantify the impact of other factors you identified that contributed to fluctuations in the line items comprising income from continuing operations, as
appropriate. Please refer to Item&nbsp;303(a)(3)(i) of Regulation S-X and Section&nbsp;501.12.b.3 of the Financial Reporting Codification for guidance. Please also refer to your response letter dated December&nbsp;18, 2003, comment number 2 in which
you agreed to provide the requested quantified information. </I></FONT></TD></TR></TABLE> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">The Company will, in future filings, quantify the impact of
disclosed factors when material in accordance with Items 303(a)(3)(i), <BR>303(a)(3)(iii)&nbsp;and 303(a)(3)(iv) of Regulation S-K and Section&nbsp;501.12.b.3 of the Financial Reporting Codification. Please be aware that some of the factors listed
in the comment are not always applicable to the Company. For example: </FONT></P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="5%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#149;</FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2">Foreign exchange rates do not impact our net sales because all of the Company&#146;s sales (including its foreign sales) are denominated in U.S.
dollars. Purchases of raw materials and components from overseas suppliers are also denominated in U.S. dollars, and all manufacturing and other operations are performed in the U.S. </FONT></P></TD></TR></TABLE>
<P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TR>
<TD WIDTH="5%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#149;</FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2">The Company&#146;s sales agreements generally do not permit the Company to charge its customers a raw material inflation pass-through.
</FONT></P></TD></TR></TABLE> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="5%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#149;</FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2">The Company sells thousands of different SKU&#146;s and offers many different price points for products that service the same functional need. Because
the Company&#146;s product mix is constantly changing and traditional price-volume comparisons do not contemplate product mix changes, it would be impractical for the Company to quantify the impact of &#147;increases/decreases in volumes sold&#148;
and &#147;increases/decreases in prices.&#148; </FONT></P></TD></TR></TABLE> <P STYLE="font-size:18px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2"><I>3.</I></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2"><I>In future filings, please disclose your manufacturing capacity utilization for each period presented. Please also disclose the impact to cost of sales and gross
profit margin for material changes in the manufacturing capacity utilization. </I></FONT></TD></TR></TABLE> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">The Company acknowledges this comment. Similar
to the above response to comment 2, the Company will, in future filings, quantify any material impact on financial statement line items caused by material changes in the Company&#146;s manufacturing capacity utilization. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Due to the seasonal nature of our business, our manufacturing and distribution capacity requirements and utilization are dictated by capacity required to
service our customers for the </FONT></P>

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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Terence O&#146;Brien </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:Times New Roman" SIZE="2">October 10, 2012 </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"> Page
 3
 </FONT></P> <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">
months of June, July, and August, when the Company delivers 50% of its annual sales volume. Disclosure of a low level of utilization during the seasonally slow periods may incorrectly suggest the
Company has significant excess capacity, while in reality the existing capacity is necessary to effectively service our customers&#146; seasonal summer demand. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:Times New Roman" SIZE="2">As discussed in the MD&amp;A (see page 20 of the Form 10-K), the Company proactively develops new products for our markets and new processes to support these products. The Company also enhances factory
automation with new machinery each year. Utilization metrics can vary dramatically from machine to machine and process to process and are not measured or monitored on a &#147;factory&#148; basis. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Finally, the concept of &#147;seasonal capacity&#148; can apply to other functional areas of the Company. An example is our line of credit. Our seasonal
borrowing requirements or &#147;capacity&#148; are also determined by the seasonal demands during June, July, or August. In fact, the reason the Company can compete effectively in our niche market is because we structure our operations around
seasonality. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">In response to the comment, the Company proposes to augment the discussion about seasonality that is on pages 7-8 of the
Form<BR> 10-K (see sections titled &#147;Seasonality&#148; and &#147;Working Capital Requirements During the &#145;Peak&#146; Summer Season&#148;). The new disclosure would discuss the pattern that our manufacturing capacity utilization generally
follows. We believe this type of disclosure would be more useful to investors. Specifically, we propose to add the following paragraphs to the &#147;Seasonality&#148; section on page 7 of the Form 10-K: </FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">As a result of the seasonality of our business, our manufacturing capacity is dictated by the capacity requirement during the months of
June, July, and August. Because of this seasonality, factory utilization is lower during the slow season. The Company utilizes a variety of tactics to address this seasonal business. During the summer months, which comprise our second and third
fiscal quarters, our personnel utilization generally is at or close to full capacity. The Company utilizes temporary labor and significant overtime to meet the seasonal requirements. During the slow portions of the year, temporary labor and overtime
are eliminated to moderate the off-season costs. Our manufacturing facility capacity utilization generally remains less than 100% during these summer months; because physical structure capacity cannot be adjusted as readily as personnel capacity, we
have secured sufficient physical structure capacity to accommodate our current needs as well as for anticipated future growth. Our physical structure utilization is significantly lower during the first and fourth quarters of each year than it is
during the second and third quarters. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">The Company utilizes a comparable strategy to address warehousing and distribution
requirements. During summer months, temporary labor is hired to supplement </FONT></P>

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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Terence O&#146;Brien </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:Times New Roman" SIZE="2">October 10, 2012 </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"> Page
 4
 </FONT></P> <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">
experienced warehouse and distribution personnel. More than 90% of the Company&#146;s freight is provided by third-party carriers. The Company has secured sufficient warehouse capacity to
accommodate our current needs as well as anticipated future growth. </FONT></P> <P STYLE="font-size:18px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2"><I>4.</I></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2"><I>We note that you are anticipating cost savings of $9-10&nbsp;million per year exclusive of costs to hire temporary employees from your 20% reduction in headcount
through the voluntary early retirement program and attrition. In future filings, please quantify the impact the reduction in headcount had on your subsequent loss before income taxes (i.e., the amount by which expenses decreased) and cash flows,
including whether the actual results were in line with the anticipated savings. If the anticipated savings were not achieved as expected or are achieved in periods other than as expected, please disclose as such, the reasons for the differences and
the likely effects on future operating results and liquidity. Please refer to SAB Topic 5:P.4 for guidance. </I></FONT></TD></TR></TABLE> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">The Company
will, in future filings, quantify the impact the reduction in headcount had on our net income/loss before income taxes and cash flows, including whether the actual results were in line with the anticipated savings. If the anticipated savings are not
achieved as expected or are achieved in periods other than as expected, the Company will disclose as such, the reasons for the differences and the likely effects on future operating results and liquidity, to the extent material. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">The Company will provide this disclosure in its Forms 10-K for the fiscal years ended January&nbsp;31, 2013 and January&nbsp;31, 2014, which are the
reports that will be required, pursuant to Item&nbsp;303(a) of Regulation S-K, to discuss the period during which the reduction in headcount took place. </FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px"><FONT
STYLE="font-family:Times New Roman" SIZE="2"><U>Liquidity and Capital Resources, page 26 </U></FONT></P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2"><I>5.</I></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2"><I>We note your discussion on page 6 that you supplement your manufactured products with items purchased for resale. Please disclose the portion of your inventory that
represents items purchased for resale for each period presented, or disclose that these inventory items are immaterial. </I></FONT></TD></TR></TABLE> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">The
Company will, in future filings, disclose that the portion of our inventory that represents items purchased for resale is immaterial. If the amount becomes material, the Company will disclose the amount (either the dollar amount or as a percentage
of total inventory). </FONT></P> <P STYLE="font-size:18px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2"><I>6.</I></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2"><I>We note your reliance on cash available under your revolving credit facility to meet your cash obligations for the next 12 months. In future filings, please clarify
whether the amount you disclose as available borrowings under your revolving credit facility takes into consideration all of your debt covenants. </I></FONT></TD></TR></TABLE>

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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Terence O&#146;Brien </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:Times New Roman" SIZE="2">October 10, 2012 </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"> Page
 5
 </FONT></P> <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">The Company
acknowledges this comment. Based upon our conversation with the Staff on September&nbsp;24, 2012, in disclosing in future filings the amount available under the credit facility, the Company will also disclose any other material restrictions to which
that amount is subject in the credit facility, to the extent such material restrictions exist. </FONT></P> <P STYLE="font-size:18px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2"><I>7.</I></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2"><I>We note that you amended your Revolving Credit and Security Agreement on July&nbsp;27,&nbsp;2012, to amend certain financial covenants. In future filings, please
disclose all of the financial covenants required to be met. This disclosure should include the minimum/maximum ratios and amounts permitted under the financial covenants in addition to the actual ratios and amounts achieved for the current reporting
period. This disclosure will allow investors to easily understand your current status in meeting your financial covenants. Please refer to Sections 501.13.b.2 and 501.13.c. of the Financial Reporting Codification for guidance.
</I></FONT></TD></TR></TABLE> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">The Company will, in future filings, disclose the material financial covenants we are required to meet, as well as our
actual ratios achieved for such financial covenants, if appropriate per Sections 501.13.b.2 and 501.13.c of the Financial Reporting Codification. </FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px"><FONT
STYLE="font-family:Times New Roman" SIZE="2"><U>Consolidated Balance Sheets, page 36 </U></FONT></P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2"><I>8.</I></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2"><I>Please tell us your consideration of the guidance in ASC 470-10-45-3 &#150; 45-6 regarding the classification of the amounts outstanding under your Revolving Credit
Facility. </I></FONT></TD></TR></TABLE> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">We have considered the guidance in ASC 470-10-45-3 to 45-6 with regard to the classification of the amounts
outstanding under our Revolving Credit Facility. While the Revolving Credit Facility does include a lock-box arrangement with the lender, we have determined that the underlying Revolving Credit Facility agreement does not include any subjective
acceleration clauses that would otherwise require current classification of the liability associated with borrowings under the Revolving Credit Facility or disclosure. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:Times New Roman" SIZE="2">The classification of the liability under the Revolving Credit Facility is impacted by a clean-down requirement under the agreement that requires the Company to reduce borrowings under the line to less
than $6 million for a period of 60 days during the fourth quarter of our fiscal year. The Company records $6 million of long-term debt, with any borrowings over this amount classified as current based on the clean-down requirement and based on
intent and ability to borrow $6 million under the Revolving Credit Facility on a long-term basis. </FONT></P>

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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Terence O&#146;Brien </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:Times New Roman" SIZE="2">October 10, 2012 </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"> Page
 6
 </FONT></P> <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><U>1. Summary of
Business and Significant Accounting Policies, page 41 </U></FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><U>Property, Plant and Equipment, page 42 </U></FONT></P>
<P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2"><I>9.</I></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2"><I>In future filings, please disclose the amount of repairs and maintenance costs recognized for each period presented, or disclose that such amounts are immaterial.
</I></FONT></TD></TR></TABLE> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">The Company acknowledges this comment and will, in future filings, disclose the amount of repairs and maintenance costs
recognized for each period presented if such amount is material. </FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><U>Revenue Recognition, page 44 </U></FONT></P>
<P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2"><I>10.</I></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2"><I>We note your disclosure on page 6 that you offer your customers varying levels of delivery and/or installation options in connection with the sale of your products.
In future filings, please provide the disclosures required by ASC 605-25-50-2, and provide us with the disclosures you intend to include in future filings. Or, provide us with an explanation as to how you determined that your contracts with your
customers do not contain multiple elements. </I></FONT></TD></TR></TABLE> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">The Company will provide disclosure similar to the following in its future
filings: </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">Revenue Recognition </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%"><FONT
STYLE="font-family:Times New Roman" SIZE="2">The Company recognizes revenue in accordance with Financial Accounting Standards Board (&#147;FASB&#148;) Accounting Standards Codification (&#147;ASC&#148;) Topic 605, &#147;Revenue Recognition.&#148;
Revenue is recognized when title passes under its various shipping terms, when installation services are substantially complete, and when collectability is reasonably assured. The Company reports sales net of sales returns and allowances and sales
taxes imposed by various government authorities, where applicable. In most instances, the Company sells furniture on bids and contracts, which may include multiple elements. For sales that include freight to the customer, many sales are delivered on
the same day shipped, with an average delivery being in route for 1 to 2 days. Installation, which involves carrying the furniture to the classroom and setting the desks and chairs in place, typically occurs the day the furniture is delivered.
</FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">In accordance with ASC 605-25 (&#147;ASC 605-25&#148;), &#147;Revenue Recognition &#150; Multiple-Element Arrangements&#148;,
revenue arrangements with multiple deliverables are generally accounted for by the Company on a combined unit of accounting as our </FONT></P>

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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Terence O&#146;Brien </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:Times New Roman" SIZE="2">October 10, 2012 </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"> Page
 7
 </FONT></P> <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">
customers control our ability to deliver and install the furniture, and as a result the furniture delivery and installation are generally provided at the same time. We recognize the consideration
for the combined unit of accounting once the final item has been delivered and installed. </FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><U>Shipping and Installation Fees, page 44
</U></FONT></P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2"><I>11.</I></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2"><I>Please disclose the amount of revenues recognized for shipping fees and installation fees for each period presented. If the individual and aggregate fees are less
than 10% of revenues, please disclose this fact. </I></FONT></TD></TR></TABLE> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">The Company acknowledges this comment. The Company rarely itemizes
installation fees and infrequently itemizes freight fees when it quotes prices to or bills its customers, and it does not allocate such fees internally. Where we do itemize such fees, they are immaterial (less than 1% of revenues on an aggregate
basis). In view of the fact that the Company itemizes these fees on its bills to only a relatively small number of its customers, the Company believes it would be misleading to single out these amounts and portray them as the entirety of the
Company&#146;s revenues for freight and installation fees. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">In addition, the Company does track its shipping and installation expenses and has
disclosed such expenses on page 44 of the Form 10-K. Shipping and installation expenses in the aggregate were less than 10% of revenues in each of the last three fiscal years. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:Times New Roman" SIZE="2">Based on the above, the Company proposes not to revise its disclosure in response to the comment. </FONT></P>
<P STYLE="margin-top:18px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><U>10. Warranty, page 55 </U></FONT></P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2"><I>12.</I></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2"><I>In future filings, please revise the tabular reconciliation of the changes in your liability for product warranties to separately present payments made, accruals
issued during the reporting period, and changes related to preexisting warranties. Please refer to ASC 460-10-50-8.c. for guidance. </I></FONT></TD></TR></TABLE> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT
STYLE="font-family:Times New Roman" SIZE="2">In response to this comment and based upon our conversation with the Staff on September&nbsp;24, 2012, the Company will, in future filings, revise the tabular reconciliation of the changes in liability
for product warranties to separately present payments made, accruals related to product warranties issued during the reporting period, and changes in the liability for accruals related to preexisting warranties. </FONT></P>

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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Terence O&#146;Brien </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:Times New Roman" SIZE="2">October 10, 2012 </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"> Page
 8
 </FONT></P> <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Per the
Staff&#146;s request, we hereby acknowledge that </FONT></P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="1%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#149;</FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2">the Company is responsible for the adequacy and accuracy of the disclosure in the filing; </FONT></P></TD></TR></TABLE>
<P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="1%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#149;</FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2">Staff comments or changes to disclosure in response to Staff comments do not foreclose the Commission from taking any action with respect to the
filing; and </FONT></P></TD></TR></TABLE> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="1%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#149;</FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2">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. </FONT></P></TD></TR></TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">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&nbsp;&amp; Crutcher LLP at (310)&nbsp;552-8581. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Sincerely, </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">/s/ Robert E. Dose </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Robert E. Dose </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Vice President Finance
</FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2">cc:</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">Tracey Smith, Staff Accountant </FONT></TD></TR></TABLE>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">Al Pavot, Staff Accountant </FONT></TD></TR></TABLE>
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