UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 þ Annual Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 For the fiscal year ended January 31, 2020. ¨ Transition Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 For the transition period from to 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 ...

[Part I. Financial Information](index=4&type=section&id=Part%20I.%20Financial%20Information) [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The unaudited condensed consolidated financial statements show a decrease in total assets, an increase in liabilities due to ASC 842, and improved net income despite lower sales [Unaudited Condensed Consolidated Balance Sheets](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to $139.9 million from January 2019 due to ASC 842, while total liabilities also rose to $75.3 million Consolidated Balance Sheet Highlights (in thousands) | Account | 10/31/2019 | 1/31/2019 | 10/31/2018 | | :--- | :--- | :--- | :--- | | **Total current assets** | $63,270 | $63,111 | $71,476 | | **Net property, plant and equipment** | $40,023 | $41,920 | $42,065 | | **Operating lease right-of-use assets** | $22,251 | $— | $— | | **Total assets** | $139,865 | $123,113 | $130,526 | | **Total current liabilities** | $25,392 | $32,125 | $34,361 | | **Total non-current liabilities** | $49,924 | $33,961 | $32,881 | | **Total stockholders' equity** | $64,549 | $57,027 | $63,284 | | **Total liabilities and stockholders' equity** | $139,865 | $123,113 | $130,526 | - The company adopted the new lease accounting standard ASC 842 on February 1, 2019, resulting in the initial recording of Right-of-Use (ROU) assets of approximately **$23.9 million** and lease liabilities of **$25.6 million**[42](index=42&type=chunk) [Unaudited Condensed Consolidated Statements of Income](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Income) Despite decreased net sales for both the three and nine months ended October 31, 2019, net income increased due to improved gross profit margins Three Months Ended October 31 (in thousands, except per share data) | Metric | 2019 | 2018 | Change | | :--- | :--- | :--- | :--- | | Net sales | $66,998 | $76,809 | -12.8% | | Gross profit | $26,845 | $26,430 | +1.6% | | Operating Income | $6,369 | $4,961 | +28.4% | | Net income | $3,892 | $2,932 | +32.7% | | Diluted EPS | $0.25 | $0.19 | +31.6% | Nine Months Ended October 31 (in thousands, except per share data) | Metric | 2019 | 2018 | Change | | :--- | :--- | :--- | :--- | | Net sales | $164,250 | $174,180 | -5.7% | | Gross profit | $64,668 | $61,247 | +5.6% | | Operating income | $12,951 | $9,348 | +38.5% | | Net lncome | $6,692 | $4,835 | +38.4% | | Diluted EPS | $0.43 | $0.31 | +38.7% | [Unaudited Condensed Consolidated Statements of Comprehensive Income](index=8&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Net comprehensive income for the three months ended October 31, 2019, decreased to $4.0 million, while for the nine-month period, it increased to $7.1 million Comprehensive Income Summary (in thousands) | Period | 10/31/2019 | 10/31/2018 | | :--- | :--- | :--- | | **Three Months Ended** | | | | Net income | $3,892 | $2,932 | | Net comprehensive income | $4,022 | $4,308 | | **Nine Months Ended** | | | | Net income | $6,692 | $4,835 | | Net comprehensive income | $7,082 | $4,862 | [Unaudited Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities significantly improved to $10.2 million for the nine months ended October 31, 2019, driven by higher net income and favorable working capital changes Cash Flow Summary - Nine Months Ended Oct 31 (in thousands) | Activity | 2019 | 2018 | | :--- | :--- | :--- | | Net cash provided by operating activities | $10,223 | $2,819 | | Net cash used in investing activities | ($2,963) | ($3,316) | | Net cash (used in) provided by financing activities | ($7,301) | $2,444 | | **Net (decrease) increase in cash** | **($41)** | **$1,947** | [Unaudited Condensed Consolidated Statements of Changes in Equity](index=11&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Equity) Total stockholders' equity increased to $64.5 million by October 31, 2019, primarily due to net income and stock-based compensation, with no cash dividends paid - Stockholders' equity increased to **$64.5 million** at October 31, 2019, from **$57.0 million** at February 1, 2019, mainly due to net income of **$6.7 million**[34](index=34&type=chunk) - The company paid no cash dividends in the first nine months of fiscal 2020, compared to **$697,000** in the same period of fiscal 2019[35](index=35&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the business's seasonality, adoption of ASC 842, revenue recognition, debt covenants, stock-based compensation, and retirement plans - The educational furniture market is highly seasonal, with about **50% of total sales** typically occurring from June to August, requiring significant upfront investment in inventory and reliance on bank financing[39](index=39&type=chunk) - The company's revolving credit facility with PNC Bank matures in March 2023, with an April 2019 amendment waiving a prior covenant violation and restricting dividend payments and stock repurchases through January 31, 2020[64](index=64&type=chunk)[71](index=71&type=chunk) - As of October 31, 2019, the company had **$3.1 million** of unrecognized compensation expense related to unvested restricted stock units, expected to be recognized over approximately **3 years**[82](index=82&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Despite a 5.7% decrease in net sales, pre-tax profit significantly increased due to improved gross margins, supported by price increases to offset rising costs Results of Operations - Nine Months Ended Oct 31 | Metric | 2019 | 2018 | | :--- | :--- | :--- | | Net Sales | $164,250,000 | $174,180,000 | | Pre-tax Profit | $10,177,000 | $6,594,000 | | Gross Margin % | 39.4% | 35.2% | - Sales for the first nine months decreased by **5.7%** due to a **14% decline** in order rates in the first six months, partially mitigated by a **27% increase** in order rates in the third quarter[102](index=102&type=chunk) - The company raised selling prices at the beginning of the year to compensate for increased costs of commodities (steel), imported components, labor, and freight, with no product price increased by less than **10%**[99](index=99&type=chunk) - Capital expenditures for the nine months were **$3.0 million**, down from **$3.3 million** in the prior year, financed through the credit facility and operating cash flow[109](index=109&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=26&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risk is interest rate fluctuations on its variable-rate bank borrowings, with a 100-basis point increase estimated to add $272,000 in interest charges - The company's main market risk is interest rate fluctuations on its variable-rate bank borrowings[118](index=118&type=chunk) - A hypothetical **100-basis point increase** in interest rates would have increased interest expense by approximately **$77,000** for the third quarter and **$272,000** for the nine months ended October 31, 2019[118](index=118&type=chunk) [Controls and Procedures](index=26&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were deemed effective as of October 31, 2019, with no material changes to internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of October 31, 2019[119](index=119&type=chunk) - No changes in internal control over financial reporting occurred during the fiscal quarter that have materially affected, or are reasonably likely to materially affect, internal controls[121](index=121&type=chunk) [Part II. Other Information](index=28&type=section&id=Part%20II.%20Other%20Information) [Legal Proceedings](index=28&type=section&id=Item%201.%20Legal%20Proceedings) Ongoing legal proceedings are not expected to materially affect the company's financial position, results of operations, or cash flows - Ongoing legal proceedings are not expected to be material to the company's financial condition[124](index=124&type=chunk) [Risk Factors](index=28&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K - The risk factors associated with the business have not materially changed from those disclosed in the Form 10-K filed on May 1, 2019[125](index=125&type=chunk) [Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities](index=28&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities,%20Use%20of%20Proceeds%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company reported no unregistered sales of equity securities or issuer purchases of equity securities during the period - The company reported no unregistered sales of equity securities or issuer purchases of equity securities during the period[126](index=126&type=chunk) [Defaults Upon Senior Securities](index=28&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - The company reported no defaults upon senior securities[127](index=127&type=chunk) [Mine Safety Disclosures](index=28&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - This item is not applicable to the company[128](index=128&type=chunk) [Other Information](index=28&type=section&id=Item%205.%20Other%20Information) The company reported no other information required to be disclosed under this item - The company reported no other information required to be disclosed under this item[129](index=129&type=chunk) [Exhibits](index=28&type=section&id=Item%206.%20Exhibits) The report lists filed exhibits, including CEO and CFO certifications as required by the Sarbanes-Oxley Act - Exhibits filed with the report include CEO and CFO certifications pursuant to Sarbanes-Oxley Sections 302 and 906[130](index=130&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ý Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended July 31, 2019 OR ¨ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to 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 Incorpo ...

Part I. Financial Information [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The unaudited condensed consolidated financial statements for the three months ended April 30, 2019, show increased net sales, a reduced net loss, and the impact of seasonal inventory build-up and ASC 842 adoption Condensed Consolidated Balance Sheets Selected Balance Sheet Data (in thousands) | Account | April 30, 2019 | Jan 31, 2019 | April 30, 2018 | | :--- | :--- | :--- | :--- | | **Total current assets** | $79,298 | $63,111 | $77,822 | | Inventories | $63,511 | $47,289 | $62,498 | | Net property, plant and equipment | $41,353 | $41,920 | $41,638 | | Operating lease right-of-use assets | $23,295 | $— | $— | | **Total assets** | **$163,308** | **$123,113** | **$139,507** | | **Total current liabilities** | $53,702 | $32,125 | $51,412 | | Total long-term debt | $16,508 | $15,910 | $13,990 | | **Total liabilities** | **$109,032** | **$66,086** | **$84,243** | | **Total stockholders' equity** | **$54,276** | **$57,027** | **$55,264** | - The adoption of the new lease standard (ASC 842) resulted in the recognition of **$23.3 million** in Operating lease right-of-use assets and corresponding lease liabilities as of April 30, 2019[8](index=8&type=chunk)[11](index=11&type=chunk)[28](index=28&type=chunk) - Inventories increased significantly to **$63.5 million** from **$47.3 million** at the end of the prior fiscal year, reflecting the seasonal build-up for the peak summer sales period[8](index=8&type=chunk)[24](index=24&type=chunk) Condensed Consolidated Statements of Operations Statements of Operations Highlights (in thousands, except per share data) | Metric | Three months ended April 30, 2019 | Three months ended April 30, 2018 | | :--- | :--- | :--- | | Net sales | $26,893 | $22,569 | | Gross profit | $9,084 | $7,685 | | Operating loss | $(3,597) | $(4,468) | | Net loss | $(3,067) | $(3,572) | | Net loss per share (Basic & Diluted) | $(0.20) | $(0.23) | - Net sales increased by **19.2%** year-over-year for the three months ended April 30, 2019[13](index=13&type=chunk)[81](index=81&type=chunk) - The company reported a reduced net loss of **$3.07 million** compared to a net loss of **$3.57 million** in the same period of the prior year, primarily due to higher sales[13](index=13&type=chunk) Condensed Consolidated Statements of Cash Flows Cash Flow Summary (in thousands) | Cash Flow Activity | Three months ended April 30, 2019 | Three months ended April 30, 2018 | | :--- | :--- | :--- | | Net cash used in operating activities | $(18,286) | $(16,992) | | Net cash used in investing activities | $(1,219) | $(1,141) | | Net cash provided by financing activities | $19,320 | $20,971 | | **Net (decrease) increase in cash** | **$(185)** | **$2,838** | - The significant cash outflow from operations was primarily driven by a **$16.2 million** increase in inventories, a typical seasonal trend for the company[19](index=19&type=chunk)[24](index=24&type=chunk) - Financing activities provided **$19.3 million** in cash, mainly from net proceeds from long-term debt, which was used to fund the seasonal inventory build-up and operating cash shortfall[19](index=19&type=chunk) Notes to Financial Statements Key notes detail the business's extreme seasonality, the adoption of ASC 842 for leases, amendments to the revolving credit facility, and dividend restrictions - The educational furniture market is highly seasonal, with approximately **50%** of total sales typically occurring from June to August, requiring a large up-front investment in inventory[24](index=24&type=chunk) - Effective February 1, 2019, the company adopted lease accounting standard ASC 842, resulting in the recording of right-of-use (ROU) assets of approximately **$23.8 million** and lease liabilities of **$25.6 million**[27](index=27&type=chunk)[28](index=28&type=chunk) - The company's revolving credit agreement was amended in March 2019 to increase the maximum amount to **$65 million** and in April 2019 to waive a prior covenant violation and amend future covenants[55](index=55&type=chunk)[57](index=57&type=chunk) - The credit agreement with PNC Bank restricts the company from issuing dividends or repurchasing stock through **January 31, 2020**[57](index=57&type=chunk)[66](index=66&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=21&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the 19.2% sales increase driven by backlog and price adjustments, offset by declining new order rates and a slight gross margin decrease due to higher costs and lower efficiency, with financing primarily from the revolving credit facility Q1 FY2020 vs Q1 FY2019 Performance | Metric | Q1 FY2020 (ended 4/30/19) | Q1 FY2019 (ended 4/30/18) | Change | | :--- | :--- | :--- | :--- | | Net Sales | $26,893,000 | $22,569,000 | +19.2% | | Pre-tax Loss | $(4,485,000) | $(5,034,000) | Improvement | | Gross Margin % | 33.8% | 34.1% | -0.3 ppt | | Order Rates | N/A | N/A | -18.2% YoY | | Order Backlog | $39,254,000 | $50,136,000 | -22.0% | - The company significantly increased selling prices at the beginning of the fiscal year to compensate for cost increases from steel tariffs, tariffs on Chinese products, and other costs, with full impact expected in Q2 and Q3[82](index=82&type=chunk) - Gross margin decreased due to higher factory employee compensation, increased material costs (steel, Chinese imports), selling from older, lower-priced backlog, and reduced factory efficiency from **13%** lower production levels[84](index=84&type=chunk) - The company believes cash flow from operations and its revolving line of credit, with **$4.0 million** available, will be sufficient to fund its needs for the next twelve months[90](index=90&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=23&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risk is interest rate fluctuations on its variable-rate bank borrowings, with a 100-basis point increase impacting interest expense by approximately **$74,000** - The company's main market risk is interest rate fluctuations on its variable-rate debt[99](index=99&type=chunk) - A **100-basis point** upward fluctuation in the base interest rate would have increased interest expense by approximately **$74,000** for the three months ended April 30, 2019, and **$61,000** for the same period in 2018[99](index=99&type=chunk) [Controls and Procedures](index=23&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of April 30, 2019, with no material changes to internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of **April 30, 2019**[100](index=100&type=chunk) - No changes in the company's internal control over financial reporting occurred during the fiscal quarter that have materially affected, or are reasonably likely to materially affect, its internal controls[102](index=102&type=chunk) Part II. Other Information [Legal Proceedings](index=24&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal actions, none of which are expected to materially impact its financial position, results of operations, or cash flows - The company states that pending legal proceedings are not expected to be material to its financial condition or results[104](index=104&type=chunk) [Risk Factors](index=24&type=section&id=Item%201A.%20Risk%20Factors) No material changes have occurred to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended January 31, 2019 - The risk factors associated with the business have not materially changed from those disclosed in the Annual Report on Form 10-K for the fiscal year ended **January 31, 2019**[105](index=105&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=24&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%2C%20Use%20of%20Proceeds%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company reported no unregistered sales of equity securities or issuer purchases of equity securities during the period - The company reported no unregistered sales of equity securities or issuer purchases of equity securities during the period[106](index=106&type=chunk) [Exhibits](index=24&type=section&id=Item%206.%20Exhibits) The report includes CEO and CFO certifications as required by Sarbanes-Oxley, along with XBRL-related documents - Exhibits filed with the report include CEO and CFO certifications pursuant to Sarbanes-Oxley Sections **302** and **906**, and XBRL data files[110](index=110&type=chunk)[111](index=111&type=chunk)[112](index=112&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 DELAWARE 95-1613718 (State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.) 2027 Harpers Way, Torrance, California 90501 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (310) 533-0474 Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered: Common Stock, $0.01 Par Value The NAS ...