751365--4/16/2010--VIRCO_MFG

related topics

{capital, credit, financial}

{cost, regulation, environmental}

{customer, product, revenue}

{property, intellectual, protect}

{provision, law, control}

{operation, natural, condition}

{personnel, key, retain}

{product, liability, claim}

{acquisition, growth, future}

{condition, economic, financial}

{debt, indebtedness, cash}

{stock, price, operating}

{cost, contract, operation}

{cost, operation, labor}

We depend on outside suppliers who may be unable to meet our volume and quality requirements, and we may be unable to obtain alternative sources. 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 not be able to renew our credit facility on favorable terms, or at all, which would adversely affect our results of operations. If management does not accurately forecast the Company s requirements for the peak summer season, the Company s results of operations could be adversely affected. 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. The Patient Protection and Affordable Care Act may increase the cost of providing medical benefits to employees, which could have a significant adverse impact on our results of operations. We may not be able to manage our business effectively if we are unable to retain our experienced management team or recruit other key personnel. 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. Volatility in the equity markets or interest rates could substantially increase our pension costs and have a negative impact on our operating results. 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--4/16/2010--VIRCO_MFG_CORPORATION