751365--4/15/2008--VIRCO_MFG

related topics

{cost, regulation, environmental}

{property, intellectual, protect}

{provision, law, control}

{capital, credit, financial}

{customer, product, revenue}

{acquisition, growth, future}

{product, liability, claim}

{stock, price, operating}

{cost, operation, labor}

We are affected by the cost of energy, and increases in energy prices could reduce our margins and profits. Approximately 40% of our sales are priced through one contract, under which we are the exclusive supplier of classroom furniture. We operate in a seasonal business, and require significant amounts of working capital through our existing credit facility to fund acquisitions of inventory, fund expenses for freight and installation, and finance receivables during the summer delivery season. Restrictions imposed by the terms of our existing credit facility may limit our operating and financial flexibility. We may require additional capital in the future, which may not be available or may be available only on unfavorable terms. An inability to protect our intellectual property could have a significant impact on our business. If third parties claim that we infringe upon their intellectual property rights, we may incur liability and costs and may have to redesign or discontinue an infringing product. We could be required to incur substantial costs to comply with environmental requirements. Violations of, and liabilities under, environmental laws and regulations may increase our costs or require us to change our business practices. We are subject to potential labor disruptions, which could have a significant impact on our business. Our insurance coverage may not adequately insulate us from expenses for product defects. Holders of approximately 45% of the shares of our stock have entered into an agreement restricting the sale of the stock. Our corporate documents and Delaware law contain provisions that could discourage, delay or prevent a change in control of our company. Our stock price has historically been volatile, and investors in our common stock could suffer a decline in value.

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751365--4/15/2008--VIRCO_MFG_CORPORATION