e11vk
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 11-K
(Mark One)
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ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES AND EXCHANGE
ACT OF 1934 [FEE REQUIRED] |
For the fiscal year ended December 31, 2007
OR
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TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934 [NO FEE REQUIRED] |
For the transition period from to
Commission File Number 1-8777
Virco Mfg. Corporation 401(k) Plan
Virco Mfg. Corporation
2027 Harpers Way
Torrance, California 90501
INTRODUCTION
Virco Mfg. Corporation, a Delaware corporation, has established the 401(k) Plan (the Plan). The
Plan includes a cash or deferred arrangement plan intended to qualify under Sections 401(a) and
401(k) of the Internal Revenue Code of 1986, as amended.
REQUIRED INFORMATION
ITEM 1. Not applicable.
ITEM 2. Not applicable.
ITEM 3. Not applicable.
ITEM 4. Financial statements and exhibits
(a) Financial statements:
Financial statements and supplemental schedule prepared in accordance
with the financial reporting requirements of ERISA filed hereunder are
listed in the Index to Financial Statements in lieu of the
requirements of Items 1 to 3 above.
(b) Exhibit:
Consent of Independent Registered Public Accounting Firm
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INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
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15 |
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Exhibit |
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Consent of Independent Registered Public Accounting Firm |
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EXHIBIT 23.1 |
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, Virco Mfg. Corporation as
Plan Administrator has duly caused this Annual Report on Form 11-K for the year ended December 31,
2007, to be signed on its behalf by the undersigned hereunto duly authorized.
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Virco Mfg. Corporation 401(k) Plan |
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Date: June 25, 2008
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By:
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/s/ Robert E. Dose |
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Robert E. Dose |
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Vice President Finance |
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Report of Independent Registered Public Accounting Firm
Virco Mfg. Corporation
as Plan Administrator of the
Virco Mfg. Corporation 401(k) Plan
We have audited the accompanying statements of net assets available for benefits of Virco Mfg.
Corporation 401(k) Plan as of December 31, 2007 and 2006, and the related statement of changes in
net assets available for benefits for the year ended December 31, 2007. These financial statements
are the responsibility of the Plans management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. We
were not engaged to perform an audit of the Plans internal control over financial reporting. Our
audits included consideration of internal control over financial reporting as a basis for designing
audit procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Plans internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in all material
respects, the net assets available for benefits of the Plan at December 31, 2007 and 2006, and the
changes in its net assets available for benefits for the year ended December 31, 2007, in
conformity with U. S. generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the financial statements taken
as a whole. The accompanying supplemental schedule of assets (held at end of year) as of
December 31, 2007, is presented for purposes of additional analysis and is not a required part of
the financial statements but is supplementary information required by the Department of Labors
Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security
Act of 1974. This supplemental schedule is the responsibility of the Plans management. The
supplemental schedule has been subjected to the auditing procedures applied in our audits of the
financial statements and, in our opinion, is fairly stated in all material respects in relation to
the financial statements taken as a whole.
/s/ Ernst & Young LLP
Los Angeles, California
June 25, 2008
5
Virco Mfg. Corporation 401(k) Plan
Statements of Net Assets Available for Benefits
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December 31 |
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2007 |
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2006 |
Assets |
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Investments, at fair value: |
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Interest-bearing cash |
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$ |
1,331,709 |
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$ |
1,309,229 |
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Mutual funds |
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12,784,971 |
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11,156,222 |
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Common stocks |
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3,634,166 |
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3,930,248 |
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Participant loans |
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648,959 |
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568,890 |
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18,399,805 |
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16,964,589 |
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Participants contributions receivable |
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30,157 |
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59,055 |
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Total assets |
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18,429,962 |
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17,023,644 |
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Liabilities |
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Accounts payable |
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4,102 |
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Total liabilities |
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4,102 |
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Net assets available for benefits |
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$ |
18,425,860 |
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$ |
17,023,644 |
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See accompanying notes.
6
Virco Mfg. Corporation 401(k) Plan
Statement of Changes in Net Assets Available for Benefits
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Year ended December 31 |
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2007 |
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Additions to net assets attributed to: |
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Participant contributions |
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$ |
1,886,491 |
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Earnings on investments: |
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Interest and dividends |
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845,323 |
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Net appreciation in fair value |
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411,812 |
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Total additions |
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3,143,626 |
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Deductions from net assets attributable to: |
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Benefits paid to participants |
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1,741,410 |
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Total deductions |
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1,741,410 |
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Net increase |
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1,402,216 |
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Net assets available for plan benefits: |
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Beginning of year |
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17,023,644 |
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End of year |
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$ |
18,425,860 |
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See accompanying notes.
7
Virco Mfg. Corporation 401(k) Plan
Notes to Financial Statements
December 31, 2007
1. Plan Description
Virco Mfg. Corporation (the Company) established the Virco Mfg. Corporation Employee Stock
Ownership Plan (ESOP) effective as of April 1, 1993, as a leveraged employee stock ownership plan.
In January 2002, the Company amended and renamed the Plan the Virco Mfg. Corporation 401(k) Plan
(the Plan). Under the amended Plan, the leverage feature that allowed the Plan to obtain advances
from the bank to purchase Company common stock was discontinued. While the Plan continues to offer
the Company common stock as one of the investment options, the amended Plan no longer operates as a
leveraged employee stock ownership plan.
The Plan was designed to comply with Internal Section Code section 401(a) as a profit sharing plan,
and is subject to the applicable provisions of the Employee Retirement Income Security Act of 1974,
as amended (ERISA). The Plan is designed to enable employees to save for retirement and defer
payment of income taxes on the amount saved. A Plan committee comprising of at least two persons
appointed by the Companys Board of Directors administers the Plan.
The Plans assets are held and managed by Wilmington Trust Company (Wilmington Trust). As trustee,
Wilmington Trust invests cash received, interest and dividend income, and makes distributions to
participants.
Employees of the Company are eligible to participate if they have attained at least 18 years of age
and have completed six months of eligible service providing they worked at least 500 hours during
such plan year. Eligible employees may defer from 1% to 50% of basic compensation on a before-tax
basis, limited to $15,500 in 2007 (provision to the Internal Revenue Code); however, the maximum
contribution percentage decreases for highly compensated employees. Contributions are held by
Wilmington Trust in a money market account which earns interest until receipt of instructions from
the Plan Administrator on how to allocate the contributions among the investment funds.
Subject to the amendment or termination of the Plan, as of the last day of a Plan year, the Company
may, in its sole discretion, make a matching contribution to each participants account to the
extent that the participant has contributed to the Virco Mfg. Common Stock Fund. The Company may
also make an employer contribution to the Plan at its sole discretion. Any contribution may be made
in cash or in shares of Company common stock. The total amount of
Company contributions cannot exceed the amount deductible by the Company for federal income tax
purposes. The Company elected not to make any contributions during the year ended December 31,
2007.
8
Virco Mfg. Corporation 401(k) Plan
Notes to Financial Statements (continued)
1. Plan Description (continued)
Distributions from the Plan are made when a participant retires, dies (in which case, payment shall
be made to his or her beneficiary or, if none, his or her legal representatives), or otherwise
terminates employment with the Company. However, participants may make withdrawals while still
employed anytime after reaching the age of 59-1/2, or if the participant becomes disabled as
defined in the Plan document. Withdrawals can also be made while still employed due to a hardship
need. These withdrawals may be made once during any 12-month period and must comply with the
Internal Revenue Code Section 401(k) and the applicable regulations. Participants in the Virco Mfg.
Corporation Common Stock Fund may request Company common stock, valued at current market value, in
lieu of cash.
All shares of Company common stock allocated to participant accounts are voted by Wilmington Trust
in accordance with the participants instructions. Allocated shares not voted by participants are
voted pro rata by Wilmington Trust based on votes actually cast by participants.
The participant is immediately 100% vested in the value of his contributions and is automatically
100% vested in the value of any matching contributions on the participants 65th
birthday, death, or if he becomes permanently disabled while still employed by the Company.
However, if employment terminates before the age of 65 for a reason other than death or disability,
the participants vesting in the value of any matching or other Company contributions will be based
upon the participants years of vesting service and in accordance with the following schedule:
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Years of Service |
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Vested Interest |
Less than 2 |
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0 |
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2 |
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20 |
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40 |
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60 |
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80 |
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6 or more |
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100 |
% |
The amount to which the participant is not vested is subject to forfeiture in accordance with the
provisions of the Plan.
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Virco Mfg. Corporation 401(k) Plan
Notes to Financial Statements (continued)
1. Plan Description (continued)
The Company reserves the right to change or discontinue the Plan at any time. If the Plan is fully
or partially terminated within the meaning of applicable federal law, each affected participant
will be 100% vested in the value of his account as of the date of the Plan termination.
Participants who maintain account balances of $2,000 or more are eligible to borrow up to 50% of
their vested account balance. The amount borrowed cannot exceed $50,000 and the terms of the loans
are generally for a period of five years. Participant loans bear interest at the prime rate plus 1%
and are collateralized by the participants vested interest.
Additional information about the Plan is contained in the Virco Mfg. Corporation 401(k) Plan
Summary Plan Description. Copies of this document are available from the Company.
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying financial statements have been prepared on an accrual basis of accounting in
conformity with U.S. generally accepted accounting principles.
Valuation of Assets
Investments
are stated at fair value. The fair value of assets, except for
participant loans and cash accounts, is
determined on the basis of the quoted market and redemption values on the last business day of the
Plan year. The cost of investments sold is determined on the specific-identification method.
Participant loans and cash accounts are valued at their outstanding balance which approximates market.
Contributions
Contributions are recorded when the Company makes payroll deductions from, or reduces the
compensation of, Plan participants.
Earnings Allocation
Net investment income (loss) of each fund is allocated daily to the individual participants
accounts based on the ratio of each participants balance to the total account balances.
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Virco Mfg. Corporation 401(k) Plan
Notes to Financial Statements (continued)
2. Summary of Significant Accounting Policies (continued)
Benefit Payments
Benefits due to terminated participants and participant withdrawals are recorded on the date
distributions are made.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting
principles requires management to make estimates and assumptions that affect the amounts reported
in the financial statements and accompanying notes. Actual results could differ from those
estimates.
Effect of Recently Issued Accounting Standards
In September 2006, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 157, Fair Value Measurements (SFAS No. 157). This Standard defines fair
value, establishes a framework for measuring fair value in generally
accepted accounting principles,
and expands disclosures about fair value measurements. SFAS No. 157 is effective for financial
statements issued for fiscal years beginning after November 15, 2007. This pronouncement will be
effective for the Plans year beginning January 1, 2008.
Plan management is currently evaluating the effect that the
provisions of SFAS No. 157 will have on the Plans
financial statements.
3. Investments
Upon enrollment in the Plan, a participant may direct employee contributions among any or all of
the investment options.
Participants may change investment choices any business day by transferring a percentage from one
investment fund to another effective as of the end of any business day. The investments in shares
of the fund are valued at the closing net asset value per share as determined by the appropriate
fund portfolio at year-end.
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Virco Mfg. Corporation 401(k) Plan
Notes to Financial Statements (continued)
3. Investments (continued)
The fair values of individual investments that represent 5% or more of the Plans net assets at
December 31 are as follows:
Investments at fair value:
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2007 |
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2006 |
Alliance Growth & Income Fund |
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$ |
1,234,796 |
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$ |
1,099,703 |
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American Funds Growth Fund |
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1,889,129 |
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1,672,847 |
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* American Euro pacific Growth Fund |
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1,131,442 |
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692,679 |
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Bond Fund of America |
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1,448,207 |
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1,449,777 |
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Cash Management Trust of America Fund |
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1,202,029 |
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1,212,059 |
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* Capital World Growth & Income |
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1,008,178 |
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719,508 |
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Oppenheimer Quest Balanced Value Fund |
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8 |
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1,183,571 |
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Income Fund of America |
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1,259,052 |
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Paine Webber Brinson Tactical Allocation Fund |
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2,888,165 |
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DWS S&P 500 Index Fund |
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2,761,211 |
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Virco Mfg. Corporation common stock |
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3,634,166 |
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3,930,248 |
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* |
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These funds represent 5% or more of the Plans net assets at December 31, 2007,
but not at December 31, 2006. |
Investments held by the Plan (including investments bought, sold, as well as held during the
period) appreciated (depreciated) as follows during the year ended December 31, 2007:
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2007 |
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Mutual funds |
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$ |
633,518 |
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Common stock |
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(221,706 |
) |
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Net appreciation for the year |
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$ |
411,812 |
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The Plans exposure to credit loss in the event of nonperformance of investments is limited to the
carrying value of such investments. The Plans concentration of credit risk and market risk are
dictated by the Plans provisions as well as those of ERISA. Due to the level of risk associated
with certain investment securities and level of uncertainty related to changes in the value of
these investments, it is at least reasonably possible that changes in risks in the near term could
materially affect the amounts reported in the statements of net assets available for benefits and
statements of changes in net assets available for benefits.
Unallocated balances are held in the Wilmington Trust Company cash account and were $129,680 and
$97,170 at December 31, 2007 and 2006, respectively.
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Virco Mfg. Corporation 401(k) Plan
Notes to Financial Statements (continued)
4. Transactions With Parties-in-Interest
The Plan purchases Company common stock to fulfill participant contributions to the Virco Mfg.
Corporation Common Stock Fund through open market purchases and, from time to time, through
parties-in-interest transactions. The per share purchase price is determined to be the closing
market price on the day of transaction.
5. Income Tax Status
The Plan has received a determination letter from the Internal Revenue Service dated June 11, 2002,
stating that the Plan is qualified, in form, under Section 401(a) of the Internal Revenue Code (the
Code) and, therefore, the related trust is exempt from taxation. Subsequent to this determination
by the Internal Revenue Service, the plan was amended. Once qualified, the Plan is required to
operate in conformity with the Code to maintain its qualification. The plan administrator believes
the Plan is being operated in compliance with the applicable requirements of the code, and
therefore, believes that the Plan, as amended, is qualified and the related trust is tax exempt.
6. Administrative Expenses
Certain administrative functions are performed by officers or employees of the Company. No officers
or employees receive compensation from the Plan. Substantially all expenses associated with
establishment, operation and administration of the Plan are borne by the Company.
13
Virco Mfg. Corporation 401(k) Plan
EIN: 95-1613718 Plan Number: 002
Schedule H, Line 4iSchedule of Assets (Held at End of Year)
December 31, 2007
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Description |
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of |
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Identity of Issue |
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Investment |
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No. of Units |
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Current Value |
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Wilmington Trust Company* |
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Cash account |
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N/A |
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$ |
129,680 |
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Cash Management Trust of America Fund |
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Cash account |
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N/A |
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1,202,029 |
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Alliance Growth & Income Fund |
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Mutual fund |
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291,225.57 |
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1,234,796 |
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American Balanced Fund |
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Mutual fund |
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10,057.97 |
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194,219 |
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American Euro Pacific Growth Fund |
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Mutual fund |
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22,241.83 |
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1,131,442 |
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Bond Fund of America |
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Mutual fund |
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110,888.77 |
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1,448,207 |
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Capital Income Builders Fund |
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Mutual fund |
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5,436.87 |
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340,131 |
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Capital World Growth & Income |
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Mutual fund |
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22,599.82 |
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1,008,178 |
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DWS S&P 500 Index Fund |
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Mutual fund |
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141,964.56 |
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2,761,211 |
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Growth Fund of America |
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Mutual fund |
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55,546.26 |
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1,889,129 |
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Income Fund of America |
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Mutual fund |
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64,966.58 |
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1,259,052 |
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Lord Abbett Value Opportunity Fund |
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Mutual fund |
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44,571.65 |
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590,574 |
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MFS Strategic Value Fund |
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Mutual fund |
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44,390.34 |
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561,094 |
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MFS Technology Fund |
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Mutual fund |
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25,767.54 |
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366,930 |
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Oppenheimer Quest Balanced Value Fund |
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Mutual fund |
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0.53 |
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8 |
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Virco Mfg. Corporation * ( Common Stock ) |
Common stock |
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493,303.44 |
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3,634,166 |
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Participant* loans |
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* |
* |
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648,959 |
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$ |
18,399,805 |
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* |
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Party-in-interest. |
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** |
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The participant loans represent loans to 157 plan participants. The loans bear interest at the
prime rate as of the beginning of the quarter plus 1% and are collateralized by the participants
vested interests. The prime rate ranged from 8.25% to 7.25% in the current year. |
15