What changed in this filing

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Item 1. Financial Statements

2022-12-12 compared with 2022-09-13 · 90 added, 84 removed, 366 unchanged (32% of the section changed)

67 unchanged sentences

Operating income 8,800 2,517

Unrealized loss on investment in trust account 305 —

Unrealized gain on investment in trust account ( 220 ) —

Pension expense 259 570

10 unchanged sentences

See accompanying notes to unaudited condensed consolidated financial statements.

Unaudited Condensed Consolidated Statements of Operations

Six months ended

Unaudited Condensed Consolidated Statements of Income

Nine months ended

10/31/2022 10/31/2021

8 unchanged sentences

Interest expense 1,692 979

Income (loss) before income taxes 4,609 ( 109 )

Income before income taxes 12,803 1,511

Income tax expense 332 335

Net income (loss) $ 4,596 $ ( 149 )

Net income (loss) per common share:

Net income $ 12,471 $ 1,176

Net income per common share:

Basic $ 0.77 $ 0.07

10 unchanged sentences

Other comprehensive income:

Pension adjustments (net of tax expense of $ 0 and $ 803 at July 31, 2022 and 2021, respectively)

Pension adjustments (net of tax expense of $ 0 and $ 186 at October 31, 2022 and 2021, respectively)

Net comprehensive income $ 11,420 $ 1,891

1 unchanged sentence

Unaudited Condensed Consolidated Statements of Comprehensive Income

Six months ended

Nine months ended

10/31/2022 10/31/2021

(In thousands)

Net income (loss) $ 4,596 $ ( 149 )

Net income $ 12,471 $ 1,176

Other comprehensive income:

Pension adjustments (net of tax expense of $ 0 and $ 919 at July 31, 2022 and 2021, respectively)

Pension adjustments (net of tax expense of $ 0 and $ 1,105 at October 31, 2022 and 2021, respectively)

Net comprehensive income $ 16,286 $ 4,329

1 unchanged sentence

Unaudited Condensed Consolidated Statements of Cash Flows

Six months ended

Nine months ended

10/31/2022 10/31/2021

1 unchanged sentence

Operating activities

Net income (loss) $ 4,596 $ ( 149 )

Adjustments to reconcile net income (loss) to net cash used in operating activities:

Net income $ 12,471 $ 1,176

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 3,390 3,431

7 unchanged sentences

Non-cash unrealized loss on investment 85 —

Surrender of life insurance policies — ( 584 )

Changes in operating assets and liabilities:

5 unchanged sentences

Accounts payable and accrued liabilities 4,578 11,234

Net cash used in operating activities ( 19,970 ) ( 8,557 )

Net cash provided by operating activities 1,455 820

Investing activities:

15 unchanged sentences

Unaudited Consolidated Statements of Changes in Stockholders' Equity

Three-Month Period Ended July 31, 2022

Three-Month Period Ended October 31, 2022

In thousands, except share data Shares Amount Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Loss Total Stockholder's Equity

Balance at May 1, 2022 16,102,023 $ 161 $ 120,745 $ ( 72,262 ) $ ( 5,894 ) $ 42,750

Balance at August 1, 2022 16,210,985 $ 162 $ 120,684 $ ( 62,582 ) $ ( 5,759 ) $ 52,505

Net income — — — 7,875 — 7,875

4 unchanged sentences

Stock compensation expense — — 103 — — 103

Balance at July 31, 2022 16,210,985 $ 162 $ 120,684 $ ( 62,582 ) $ ( 5,759 ) $ 52,505

Three-Month Period Ended July 31, 2021

Balance at October 31, 2022 16,210,985 $ 162 $ 120,787 $ ( 54,707 ) $ ( 2,214 ) $ 64,028

Three-Month Period Ended October 31, 2021

In thousands, except share data Shares Amount Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Loss Total Stockholder's Equity

Balance at May 1, 2021 15,918,642 $ 159 $ 119,908 $ ( 55,951 ) $ ( 13,258 ) $ 50,858

Balance at August 1, 2021 16,102,023 $ 161 $ 119,985 $ ( 52,191 ) $ ( 10,998 ) $ 56,957

Net income — — — 1,325 — 1,325

4 unchanged sentences

Stock compensation expense — — 253 — — 253

Balance at July 31, 2021 16,102,023 $ 161 $ 119,985 $ ( 52,191 ) $ ( 10,998 ) $ 56,957

Six-Month Period Ended July 31, 2022

Balance at October 31, 2021 16,102,023 $ 161 $ 120,238 $ ( 50,866 ) $ ( 10,432 ) $ 59,101

Nine-Month Period Ended October 31, 2022

In thousands, except share data Shares Amount Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Loss Total Stockholder's Equity

6 unchanged sentences

Stock compensation expense — — 509 — — 509

Balance at July 31, 2022 16,210,985 $ 162 $ 120,684 $ ( 62,582 ) $ ( 5,759 ) $ 52,505

Six-Month Period Ended July 31, 2021

Balance at October 31, 2022 16,210,985 $ 162 $ 120,787 $ ( 54,707 ) $ ( 2,214 ) $ 64,028

Nine-Month Period Ended October 31, 2021

In thousands, except share data Shares Amount Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Loss Total Stockholder's Equity

Balance at February 1, 2021 15,918,642 $ 159 $ 119,655 $ ( 52,042 ) $ ( 13,585 ) $ 54,187

Net loss — — — ( 149 ) — ( 149 )

Net income — — — 1,176 — 1,176

Cash dividends — — — — — —

3 unchanged sentences

Stock compensation expense — — 759 — — 759

Balance at July 31, 2021 16,102,023 $ 161 $ 119,985 $ ( 52,191 ) $ ( 10,998 ) $ 56,957

Balance at October 31, 2021 16,102,023 $ 161 $ 120,238 $ ( 50,866 ) $ ( 10,432 ) $ 59,101

See accompanying notes to unaudited condensed consolidated financial statements.

Notes to unaudited Condensed Consolidated Financial Statements

July 31, 2022

October 31, 2022

Basis of Presentation

4 unchanged sentences

In the opinion of management, all adjustments considered necessary for a fair presentation have been included.

Operating results for the three months and six months ended July 31, 2022 are not necessarily indicative of the results that may be expected for the fiscal year ending January 31, 2023.

Operating results for the three months and nine months ended October 31, 2022 are not necessarily indicative of the results that may be expected for the fiscal year ending January 31, 2023.

The balance sheet at January 31, 2022 has been derived from the audited consolidated financial statements at that date, but does not include all of the information and notes required by accounting principles generally accepted in the United States for complete financial statements.

8 unchanged sentences

As the capital required for this build-up generally exceeds cash available from operations, the Company has generally relied on third-party bank financing to meet cash flow requirements during the build-up period immediately preceding the peak season.

In addition, the Company typically is faced with a large balance of accounts receivable during the peak season.

In addition, the Company typically is faced with an overall higher accounts receivable balance during the peak season.

This occurs for two primary reasons.

1 unchanged sentence

Second, many customers during this period are educational institutions and government entities, which tend to pay accounts receivable slower than commercial customers.

For the three and six months ended July 31, 2022, management believes that the traditional peak season has been and will continue to be impacted by economic conditions related to supply chain disruption and COVID 19, although not as severely as in the prior year.

For the three and nine months ended October 31, 2022, management believes that the traditional peak season has been and will continue to be impacted by economic conditions related to supply chain disruption and COVID 19, although not as severely as in the prior year.

The Company continues to experience supply chain disruptions for raw materials.

7 unchanged sentences

and the accounts receivable allowance for doubtful accounts.

Due to the inherent uncertainty involved in making assumptions and estimates, events and changes in circumstances arising after July 31, 2022, including those resulting from the continuing impacts of the COVID-19 pandemic and supply chain disruption, may result in actual outcomes that differ from those contemplated by our assumptions and estimates.

Due to the inherent uncertainty involved in making assumptions and estimates, events and changes in circumstances arising after October 31, 2022, including those resulting from the continuing impacts of the COVID-19 pandemic and supply chain disruption, may result in actual outcomes that differ from those contemplated by our assumptions and estimates.

New Accounting Pronouncements

30 unchanged sentences

If market conditions are less favorable than those anticipated by management, additional valuation adjustments may be required.

Due to reductions in sales volume in the past years, the Company’s manufacturing facilities are operating at reduced levels of capacity.

The Company records the cost of excess capacity as a period expense, not as a component of capitalized inventory valuation.

The following table presents a breakdown of the Company’s inventories as of July 31, 2022, January 31, 2022 and July 31, 2021:

The following table presents a breakdown of the Company’s inventories as of October 31, 2022, January 31, 2022 and October 31, 2021:

10/31/2022 1/31/2022 10/31/2021

4 unchanged sentences

Total inventories $ 57,465 $ 47,373 $ 40,483

The Company has operating leases on real property, equipment, and automobiles that expire at various dates.

The Company has operating leases on real property, equipment, and automobiles that expire at various dates though 2026.

The Company determines if an arrangement is a lease at inception and assesses classification of the lease at commencement.

All of the Company’s leases are classified as operating leases, as a lessee.

All of the Company’s leases are classified as operating leases.

The Company uses the implicit rate when readily determinable, or the incremental borrowing rate.

3 unchanged sentences

The quantitative information regarding our leases is as follows:

Three Months Ended Six Months Ended

Three Months Ended Nine Months Ended

10/31/2022 10/31/2021 10/31/2022 10/31/2021

10 unchanged sentences

Weighted-average discount rate 6.3 % 6.4 %

Minimum future lease payments for operating leases in effect as of July 31, 2022, are as follows:

Minimum future lease payments for operating leases in effect as of October 31, 2022, are as follows:

Operating Lease

17 unchanged sentences

On September 28, 2021, the Borrowers entered into an Amended and Restated Revolving Credit and Security Agreement (the “Restated Credit Agreement”) with PNC Bank, which amended and restated the prior Credit Agreement and effectively incorporated all of the prior amendments into an amended and restated form of agreement.

The Restated Credit Agreement permits the Company to issue dividends or make payments with respect to the Company’s capital stock in an aggregate amount up to $ 3,000,000 during any fiscal year, provided that no default shall have occurred or is continuing or would result from any such payment, and the Company must demonstrate pro forma compliance with a 12-month trailing fixed charge coverage ratio of not less than 1.20 :1.00 as of the fiscal quarter immediately preceding the date of any such dividend or payment.

The Restated Credit Agreement permits the Company to issue dividends or make payments with respect to the Company’s capital stock in an aggregate amount up to $ 3.0 million during any fiscal year, provided that no default shall have occurred or is continuing or would result from any such payment, and the Company must demonstrate pro forma compliance with a 12-month trailing fixed charge coverage ratio of not less than 1.20 :1.00 as of the fiscal quarter immediately preceding the date of any such dividend or payment.

The Restated Credit Agreement also requires the Company to maintain a minimum fixed charge coverage ratio, and contains numerous other covenants that limit under certain circumstances the ability of the Borrowers and their subsidiaries to, among other things, merge with or acquire other entities, incur new liens, incur additional indebtedness, sell assets outside of the ordinary course of business, enter into transactions with affiliates, or substantially change the general nature of the business of the Borrowers.

The other material terms of the Restated Credit Agreement are substantially the same as those of the original Credit Agreement, consisting of (i) a revolving line of credit with a Maximum Revolving Advance Amount of $ 65,000,000 that is subject to a borrowing base limitation and generally provides for advances of up to 85 % of eligible accounts receivable, plus a percentage equal to the lesser of 60 % of the value of eligible inventory or 85 % of the liquidation value of eligible inventory, plus $ 15,000,000 from January through July of each year, minus undrawn amounts of letters of credit and reserves.

Credit Agreement is secured by substantially all of the Borrowers’ personal property and certain of the Borrowers’ real property.

The other material terms of the Restated Credit Agreement are substantially the same as those of the original Credit Agreement, consisting of (i) a revolving line of credit with a Maximum Revolving Advance Amount of $ 65.0 million that is subject to a borrowing base limitation and generally provides for advances of up to 85 % of eligible accounts receivable, plus a percentage equal to the lesser of 60 % of the value of eligible inventory or 85 % of the liquidation value of eligible inventory, plus $ 15.0 million from January through July of each year, minus undrawn amounts of letters of credit and reserves.

The Restated Credit

Agreement is secured by substantially all of the Borrowers’ personal property and certain of the Borrowers’ real property.

The Restated Credit Agreement is subject to certain prepayment penalties upon early termination of the Restated Credit Agreement.

Prior to the maturity date, principal amounts outstanding under the Restated Credit Agreement may be repaid and reborrowed at the option of the Borrowers without premium or penalty, subject to borrowing base limitations, seasonal adjustments and certain other conditions, including reduced borrowings under the revolving line to less than or equal $ 10,000,000 for a period of 30 consecutive days during the fourth quarter of each fiscal year.

Prior to the maturity date, principal amounts outstanding under the Restated Credit Agreement may be repaid and reborrowed at the option of the Borrowers without premium or penalty, subject to borrowing base limitations, seasonal adjustments and certain other conditions, including reduced borrowings under the revolving line to less than or equal $ 10.0 million for a period of 30 consecutive days during the fourth quarter of each fiscal year.

The Restated Credit Agreement also contains certain financial covenants, including a fixed charge coverage ratio and limits on capital expenditures.

4 unchanged sentences

extended the final maturity date of the Revolving Credit Facility from March 19, 2023 to April 15, 2027;

increased the borrowing limit from $ 65,000,000 to $ 70,000,000 in July 2022 and August 2022, and increased the borrowing limit from $ 40,000,000 to $ 45,000,000 in October 2022;

increased the borrowing limit from $ 65.0 million to $ 70.0 million in July 2022 and August 2022, and increased the borrowing limit from $ 40,000,000 to $ 45,000,000 in October 2022;

waived the Company’s violation of the covenant to maintain a fixed charge coverage ratio of at least 1.00 for the period ended January 31, 2022;

1 unchanged sentence

permits a sale and leaseback transaction of the Company’s property at 1655 Amity Road and release of the lender’s pledge on the property, with the net proceeds to be used for a proposed share repurchase;

retired LIBOR pricing on the Revolving Credit Facility and replaced with BSBY index, with pricing tiers and spreads to remain the same;

retired LIBOR (London Inter-Bank Offered Rate) pricing on the Revolving Credit Facility and replaced with BSBY (Bloomberg Short-Term Bank Yield) index, with pricing tiers and spreads to remain the same;

extended the P-card, ACH Credit, and ACH debit facilities for an additional year beyond their current maturities;

Borrowers to pay a $ 250,000 extension fee and $ 75,000 waiver and amendment fee, with $ 200,000 due at closing and $ 125,000 due on the first anniversary of closing.

Based on the Company’s current projections, including COVID-19 related costs, raw material costs and its ability to introduce price increases, management believes it will maintain compliance with the financial covenants within Amendment No.

2, although there are uncertainties there within, such as raw material costs and supply chain challenges.

The Company was in compliance with its debt covenants as of July 31, 2022.

The Company was in compliance with its debt covenants as of October 31, 2022.

In addition to the financial covenants, the Restated Credit Agreement provides for customary events of default, subject to certain cure periods and other limitations.

2 unchanged sentences

The Company's revolving line of credit with PNC is structured to provide seasonal credit availability during the Company's peak summer season.

Approximately $ 37,498,000 was available for borrowing as of July 31, 2022.

The interest rate as of July 31, 2022 was 7.25 %.

Approximately $ 14.5 million was available for borrowing as of October 31, 2022.

The interest rate as of October 31, 2022 was 7.50 %.

The Company also incurs a fee on the unused portion of the revolving line of credit at a rate of 0.375 %.

Management believes that the carrying value of debt approximated fair value at July 31, 2022, as all of the long-term debt bears interest at variable rates based on prevailing market conditions.

In addition to the outstanding debt balance of $ 12.2 million on the Company's revolving credit line, the Company also carries a mortgage on a manufacturing building in Conway Arkansas.

The original note was dated August 2017 for $ 5.8 million, at a fixed rate of 4 % per year and 20 years term.

The outstanding amount under this note was $ 4.7 million as of October 31, 2022.

Management believes that the carrying value of debt approximated fair value at October 31, 2022, as all of the long-term debt bears interest at variable rates based on prevailing market conditions.

In assessing the realizability of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of its deferred tax assets will not be realized.

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income or reversal of deferred tax liabilities during the periods in which those temporary

differences become deductible.

The ultimate realization of deferred tax assets is dependent upon the

generation of future taxable income or reversal of deferred tax liabilities during the periods in which those temporary differences become deductible.

As a part of this evaluation, the Company assesses all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, the availability of tax carry backs, tax-planning strategies, and results of recent operations (including cumulative losses in recent years), to determine whether sufficient future taxable income will be generated to realize existing deferred tax assets.

2 unchanged sentences

and in certain state jurisdictions over the preceding twelve quarters ended January 31, 2022.

While the Company has taken significant measures to return to profitability, and order rates at the beginning of the year are favorable, the short-term outlook for the school furniture market is challenging, particularly relating to ongoing supply chain difficulties.

While the Company has taken significant measures to return to profitability, the short-term outlook for the school furniture market is challenging, particularly relating to ongoing supply chain difficulties.

During the fourth quarter of the year ended January 31, 2022, based on this evaluation, and after considering future reversals of existing taxable temporary differences and the effects of seasonality on the Company’s business, the Company determined the realization of a majority of the net deferred tax assets no longer met the more likely than not criteria and a valuation allowance was recorded against the majority of the net deferred tax assets.

Valuation allowances of $ 9,241,000 , $ 11,412,000 and $ 1,144,000 as of July 31, 2022, January 31, 2022 and July 31, 2021, respectively, are needed for federal deferred tax assets and certain state net operating loss carryforwards to reduce the carrying amount of deferred tax assets to an amount that is more likely than not to be realized.

The Company has taken significant measures to return to profitability, order rates for the first six months of the year were favorable, and the second quarter and year-to-date results are showing significant improvement compared to the prior year.

Despite these improvements the Company is still operating at a cumulative twelve quarter operating loss at July 31, 2022.

Valuation allowances of $ 8,893,000 , $ 11,412,000 and $ 1,237,000 as of October 31, 2022, January 31, 2022 and October 31, 2021, respectively, are needed for federal deferred tax assets and certain state net operating loss carryforwards to reduce the carrying amount of deferred tax assets to an amount that is more likely than not to be realized.

The Company has taken significant measures to return to profitability, order rates for the first nine months of the year were favorable, and the third quarter and year-to-date results are showing significant improvement compared to the prior year.

Despite these improvements the Company is still operating at a cumulative twelve quarter operating loss at October 31, 2022.

If the current favorable trends in operating income continue through the balance of the year, the Company will utilize a material portion of the net operating losses and will re-evaluate the balance of the valuation allowance on a quarterly basis.

For the three months ended July 31, 2022 and 2021, the effective income tax rates were 3.0 % and 24.6 %, respectively.

For the six months ended July 31, 2022 and 2021, the effective income tax rates were 0.3 % and ( 36.7 )%, respectively.

The change in effective tax rates for the three and six months ended July 31, 2022, was primarily due to the recording of a valuation allowance needed for federal deferred tax assets and certain state net operating loss carryforwards which commenced in the fourth quarter of fiscal year ended January 31, 2022 and continued through the period ended July 31, 2022.

The effective tax rate for the three and six months ended July 31, 2021 was primarily due to the change in forecasted mix of income before taxes in various jurisdictions, estimated permanent differences and the recording of a partial valuation allowance on net deferred tax assets.

For the three months ended October 31, 2022 and 2021, the effective income tax rates were 3.9 % and 18.2 %, respectively.

For the nine months ended October 31, 2022 and 2021, the effective income tax rates were 2.6 % and 22.2 %, respectively.

The change in effective tax rates for the three and nine months ended October 31, 2022, was primarily due to the recording of a valuation allowance needed for federal deferred tax assets and certain state net operating loss carryforwards which commenced in the fourth quarter of fiscal year ended January 31, 2022 and continued through the period ended October 31, 2022.

The effective tax rate for the three and nine months ended October 31, 2021 was primarily due to the change in forecasted mix of income before taxes in various jurisdictions, estimated permanent differences and the recording of a partial valuation allowance on net deferred tax assets.

The January 31, 2017 and subsequent fiscal years remain open for examination by the IRS and state tax authorities.

1 unchanged sentence

The Company is currently under IRS examination for its fiscal year ended January 31, 2016 Federal tax return.

Net Income (loss) per Share

Three Months Ended Six Months Ended

Net Income per Share

Basic net income per share is calculated by dividing net income by the weighted-average number of common shares outstanding.

Diluted net income per share is calculated by dividing net income by the weighted-average number of common shares outstanding plus the dilutive effect of stock award grants.

The following table sets forth the computation of basic and diluted income per share:

Three Months Ended Nine Months Ended

10/31/2022 10/31/2021 10/31/2022 10/31/2021

(In thousands, except per share data)

Net income (loss) $ 9,680 $ 3,760 $ 4,596 $ ( 149 )

Net income $ 7,875 $ 1,325 $ 12,471 $ 1,176

Weighted average shares of common stock outstanding 16,211 16,033 16,118 15,927

1 unchanged sentence

Totals 16,249 16,082 16,136 15,963

Net income (loss) per share - basic $ 0.60 $ 0.24 $ 0.29 $ ( 0.01 )

Net income (loss) per share - diluted (a) $ 0.60 $ 0.24 $ 0.29 $ ( 0.01 )

(a) For periods ended July 31, 2022, there were 0 dilutive shares of common stock equivalent included in the computation of net income per share.

For the six-month period ended July 31, 2021, approximately 1,500 shares of common stock equivalents were excluded in the computation of diluted net loss per share, as the effect would be anti-dilutive since the Company reported a net loss.

Net income per share - basic $ 0.49 $ 0.08 $ 0.77 $ 0.07

Net income per share - diluted $ 0.48 $ 0.08 $ 0.77 $ 0.07

Stock-Based Compensation

4 unchanged sentences

The Company determines the fair value of its restricted stock units or awards and related compensation expense as the difference between the market value of the units or awards on the date of grant less the exercise price of the units or awards granted.

During the six-month period ended July 31, 2022, the Company granted 0 awards, vested 114,470 shares according to their terms and forfeited 0 shares under the 2019 Plan.

As of July 31, 2022, there were approximately 608,435 shares available for future issuance under the 2019 Plan.

During the nine-month period ended October 31, 2022, the Company granted 0 awards, vested 114,470 shares according to their terms and forfeited 0 shares under the 2019 Plan.

As of October 31, 2022, there were approximately 608,435 shares available for future issuance under the 2019 Plan.

Under the 2011 Plan, the Company was originally allowed to grant an aggregate of up to 2,000,000 shares to its employees in the form of restricted stock units and non-employee directors in the form of restricted stock awards.

2 unchanged sentences

The 2011 Plan expired in 2021 and no new awards may be made under the 2011 Plan.

During the six-month period ended July 31, 2022, the Company vested 119,200 shares according to their terms and forfeited 0 shares under the 2011 Plan.

During the three months ended July 31, 2022, stock-based compensation expense related to restricted stock units and/or awards recognized in cost of goods sold and selling, general and administrative expenses was $ 37,000 and $ 116,000 , respectively.

During the three months ended July 31, 2021, stock-based compensation expense related to restricted stock units and/or awards recognized in cost of goods sold and selling, general and administrative expenses was $ 55,000 and $ 198,000 , respectively.

During the six months ended July 31, 2022, stock-based compensation expense related to restricted stock units and/or awards recognized in cost of goods sold and selling, general and administrative expenses was $ 92,000 and $ 314,000 , respectively.

During the six months ended July 31, 2021, stock-based compensation expense related to restricted stock units and/or awards recognized in cost of goods sold and selling, general and administrative expenses was $ 110,000 and $ 396,000 , respectively.

As of July 31, 2022, there was $ 755,000 of unrecognized compensation expense related to unvested restricted stock units and/or awards, which is expected to be recognized over a weighted average period of approximately 2 years.

During the nine-month period ended October 31, 2022, the Company vested 233,270 shares according to their terms and forfeited 0 shares under the 2011 Plan.

During the three months ended October 31, 2022, stock-based compensation expense related to restricted stock units and/or awards recognized in cost of goods sold and selling, general and administrative expenses was $ 28,000 and $ 75,000 , respectively.

During the three months ended October 31, 2021, stock-based compensation expense related to restricted stock units and/or awards recognized in cost of goods sold and selling, general and administrative expenses was $ 54,000 and $ 199,000 , respectively.

During the nine months ended October 31, 2022, stock-based compensation expense related to restricted stock units and/or awards recognized in cost of goods sold and selling, general and administrative expenses was $ 120,000 and $ 389,000 , respectively.

During the nine months ended October 31, 2021, stock-based compensation expense related to restricted stock units and/or awards recognized in cost of goods sold and selling, general and administrative expenses was $ 164,000 and $ 595,000 , respectively.

As of October 31, 2022, there was $ 652,000 of unrecognized compensation expense related to unvested restricted stock units and/or awards, which is expected to be recognized over a weighted average period of approximately 2 years.

Retirement Plans

4 unchanged sentences

As more fully described in the Annual Report on Form 10-K for the year ended January 31, 2022, benefit accruals under this plan were frozen since December 31, 2003.

The net periodic pension cost for the Pension Plan and the VIP Plan for the three and six months ended July 31, 2022 and 2021 were as follows:

The net periodic pension cost for the Pension Plan and the VIP Plan for the three and nine months ended October 31, 2022 and 2021 were as follows:

Combined Employee Retirement Plans

Three Months Ended Six Months Ended

Three Months Ended Nine Months Ended

10/31/2022 10/31/2021 10/31/2022 10/31/2021

(in thousands)

$ — $ — $ — $ —

Service cost $ — $ — $ — $ —

Interest cost 298 281 895 841

3 unchanged sentences

Recognized net actuarial loss 134 442 402 1,328

$ 196 $ 724 $ 391 $ 1,230

Benefit cost $ 259 $ 570 $ 650 $ 1,800

During the three and nine month periods ended October 31, 2022, the Company paid lump-sum distributions for the related benefit obligations.

As the amount of the lump-sum settlement exceeded the sum of the service and interest cost for the year, the distribution was treated as a settlement in accordance with U.S.

GAAP, resulting in plan settlement loss of $ 64,000 recorded in pension expense in the accompanying condensed consolidated statements of operations and an actuarial gain on the plan re-measurement of $ 3,347,000 , net of tax, recorded to accumulated other comprehensive income for the three and nine months ended October 31, 2021.

401(k) Retirement Plan

2 unchanged sentences

The plan includes Virco stock as one of the investment options.

At July 31, 2022 and 2021, the plan held 1,221,095 shares and 991,899 shares of Virco stock, respectively.

For the three months ended July 31, 2022 and 2021, the compensation costs incurred for employer match, which is paid in the form of Company stock, was $ 322,000 and $ 207,000 respectively.

For the six months ended July 31, 2022 and 2021, the compensation costs incurred for employer match, which is paid in the form of Company stock, was $ 652,000 and $ 391,000 respectively.

At October 31, 2022 and 2021, the plan held 1,250,468 shares and 1,026,096 shares of Virco stock, respectively.

For the three months ended October 31, 2022 and 2021, the compensation costs incurred for employer match, which is paid in the form of Company stock, was $ 333,000 and $ 217,000 respectively.

For the nine months ended October 31, 2022 and 2021, the compensation costs incurred for employer match, which is paid in the form of Company stock, was $ 985,000 and $ 608,000 respectively.

Warranty Accrual

6 unchanged sentences

The Company accrues an estimate of its exposure to warranty claims based upon both product sales data and an analysis of actual warranty claims incurred.

The following is a summary of the Company’s warranty-claim activity for the three and six months ended July 31, 2022 and 2021:

Three Months Ended Six Months Ended

The following is a summary of the Company’s warranty-claim activity for the three and nine months ended October 31, 2022 and 2021:

Three Months Ended Nine Months Ended

10/31/2022 10/31/2021 10/31/2022 10/31/2021

11 unchanged sentences

Delivery Costs

For the three months ended July 31, 2022 and 2021, shipping and classroom delivery costs of approximately $ 7,129,000 and $ 5,112,000 , respectively, were included in selling, general and administrative expenses in the accompanying condensed consolidated statements of operations.

For the six months ended July 31, 2022 and 2021, shipping and classroom delivery costs of approximately $ 10,383,000 and $ 8,033,000 , respectively, were included in selling, general and administrative expenses in the accompanying condensed consolidated statements of operations.

For the three months ended October 31, 2022 and 2021, shipping and classroom delivery costs of approximately $ 8,393,000 and $ 6,209,000 , respectively, were included in selling, general and administrative expenses in the accompanying condensed consolidated statements of operations.

For the nine months ended October 31, 2022 and 2021, shipping and classroom delivery costs of approximately $ 18,776,000 and $ 14,242,000 , respectively, were included in selling, general and administrative expenses in the accompanying condensed consolidated statements of operations.

Subsequent Events

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements