in response to these budgetary pressures , schools typically elect to retain teachers and spend less on repairs , maintenance and replacement furniture , which in turn reduces the demand for , and sales of , the company 's products . in recent years there has been an improvement in state and local tax collections , and most state and local governments have seen their tax receipts return to the pre-2008 levels . in response to the 2008 recession , passage of new bond issuances declined , and the related bond funded project completions decreased materially for several years . in recent years the completions of bond funded projects have recovered from the low point subsequent to 2008 , but projects remain well below the pre-2008 levels . in the recent elections we observed an increase in bond passages . due to the time requirement to plan and construct a new school or major remodel , there is a time lag frequently ranging from one to three years between bond passage and when the bond funding translates into furniture sales . sales of product for completions of new schools , additions and renovations improved in the year ended january 31 , 2019 , and is anticipated to be favorable for the year ending january 31 , 2020 ( `` fiscal 2020 `` ) . while the current operating environment continues to show moderate year-over-year improvement , under-funding of our education system continues to be an on-going concern . a 2016 report from the national council on school facilities estimates that on every school day , approximately 50 million students and six million adults use publicly funded k-12 facilities . for state and local governments , spending on these facilities is the largest capital expenditure outside of highways . it was estimated that public schools spend approximately $ 99 billion per year on maintenance , operations and capital spending . the study estimates that a desirable level of spending would be $ 145 billion , leaving an annual shortfall of $ 46 billion . the significant budgetary challenges faced by the education industry have had an impact on the company 's business model over this time frame and have created opportunities as well . in the 1990 's , the company 's primary customers were the school business officials at a school district , and deliveries of furniture typically were to a district warehouse . in response to their budgetary challenges , many school districts closed warehouses and reduced janitorial and support staff in order to retain 22 accredited teachers . selling efforts must now reach school principals and administrative staff in addition to the district business offices . sales priced under national contracts or buying groups are displacing competitive bids administered by professional purchasing departments . distribution has become a more meaningful component of our business as most deliveries are to school sites , and often include inside delivery to the classroom . this evolution adds to the seasonal challenges of our business , but also creates opportunities to suppliers that can execute during the short summer delivery window . the furniture industry in general , including the market for school furniture , has been significantly impacted by low cost competition from manufacturers based in china . competition from china increased dramatically after admission of china to the world trade organization in 2001. subsequent to this date , many of our domestic manufacturing competitors closed their factories and sourced product from china . to our knowledge , no new factories or significant manufacturing enhancements were constructed to support the school furniture market during this period . virco pursued a different strategy which exacerbated operating challenges following these events , but now leave us with what we believe to be a significant competitive advantage . during a period of robust education spending during the 1990 's , the company expanded and modernized its manufacturing and distribution facilities at the torrance , ca and conway , ar locations . during the last fifteen years , the company has worked continuously to significantly reduce and control its cost structure while concurrently expanding its product offering , expanding manufacturing process capabilities and more fully automating its facilities . for example , headcount of permanent employees as of january 31 , 2019 , was approximately 840 compared to a peak of nearly 2,950 in august 2000. factory overhead in fiscal 2019 declined by more than 50 % compared to fiscal 2001. the company accomplished this without closing a factory and while continuing to add new production processes , including flat metal forming , and other capabilities to support its ambitious product development program . our domestic fabrication allowed the company to develop significant product variety , color choices and custom products that are very difficult to replicate with a supply chain extending to china . finally , many education furniture products are bulky , with a large cube relative to the selling price . the cost of ocean freight from overseas for these bulky items offsets the cost advantages for overseas production . the company 's operating results can be impacted significantly by cost and volatility of commodities , especially steel , plastic , wood and energy . because a majority of the company 's sales are generated under annual contracts in which the company has limited ability to raise the price of its products during the term of the contract , if the costs of the company 's raw materials increase suddenly or unexpectedly , the company can not be certain that it will be able to implement corresponding increases in its sales prices in order to offset such increased costs . the company moderates this exposure by building significant quantities of finished goods and component parts during the first and second quarters . story_separator_special_tag in 2017 , congress passed the tax cuts and jobs act ( tcja ) on december 22 , 2017 which , among other changes , reduced the federal income tax rate effective january 1 , 2018 to 21 % . because virco 's fiscal year ended january 31 , 2018 , 11 of the 12 months were subject to the 34 % graduated rate and one month at the 21 % rate , for an effective federal rate of 32.9 % . as a result of the reduction in the federal tax rate , the value of the company 's deferred tax assets decreased by $ 4,438,000 as of january 31 , 2018. it is expected the effective tax rate for fiscal 2020 will be approximately 27 % . inflation and future change in prices we commit to annual contracts that determine selling prices for goods and services for periods of one year and occasionally longer . though the company has negotiated flexibility under many of these contracts that may allow the company to increase prices on future orders , the company does not have the ability to raise prices on orders received prior to any announced price increase . due to the intensely seasonal nature of our business , the company may receive significant orders during the first and second quarters for delivery in the second and third quarters . with respect to any of the contracts described above , if the costs of providing our products or services increase between the date the orders are received and the shipping date , we may not be able to implement corresponding increases in our sales prices for such products or services to offset the related increased costs . in fiscal 2017 , the cost of steel increased significantly , but the increase did not occur until after the company had sourced the majority of its steel for the summer delivery season . in fiscal 2018 , the cost of commodities increased over the course of the year but did not spike as suddenly as in some prior periods . in fiscal 2019 , the company incurred severe and sudden increase is material and component costs . in the first quarter , the federal government imposed a 25 % tariff on imported steel . the company purchases the majority of its steel from domestic sources , but the cost of domestic steel increased concurrently with the effective date of the tariffs on foreign steel . during the summer , the cost of imported components increased by as much as 15 % , primarily due to increased costs incurred by chinese suppliers . in october , a 10 % tariff was imposed on chinese furniture and components . 26 for fiscal 2020 , the company anticipates continued volatility in costs , particularly with respect to certain raw materials , transportation , and energy . anticipated adverse volatility for fiscal 2020 could be severe in light of tariffs imposed or threatened on imported commodities . there is continued uncertainty with respect to steel and other raw material costs , including plastics , that are affected by the price of oil . transportation costs may be adversely affected by increased oil prices , in the form of increased operation costs for our fleet , and surcharges on freight paid to third-party carriers . virco depends upon third party carriers for more than 90 % of customer deliveries . subsequent to 2010 , many carriers went out of business or were required to reduce the size of their fleets due to economic conditions and have not increased their fleets as the economy has improved . recent regulation and more stringent enforcement of federal regulations governing the transportation industry ( especially regarding drivers ) have adversely impacted the cost and availability of freight services . virco expects to incur continued pressure on employee benefit costs . the company has renewed health insurance contracts for its employees through december 2019 but costs after that date may be adversely impacted by current legislation , claim costs and industry consolidation . virco has aggressively addressed these costs by controlling headcount , freezing pension benefits and passing on a portion of increased medical costs to employees . to recover the cumulative impact of increased costs , the company has increased published list prices for fiscal 2020. due to current economic conditions , the company anticipates continued significant price competition in fiscal 2020 and may not be able to raise prices without risk of losing market share . as a significant portion of virco 's business is obtained through competitive bids , the company is carefully considering material and transportation costs as part of the bidding process . total material costs for fiscal 2020 , as a percentage of sales , could be higher than in fiscal 2019. the company is working to control and reduce costs by improving production and distribution methodologies , investigating new packaging and shipping materials and searching for new sources of purchased components and raw materials . story_separator_special_tag 1.75 % to 2.25 % , in each case based on the ebitda of the borrowers at the end of each fiscal quarter and may be increased at pnc 's option by 2.0 % during the continuance of an event of default . accrued interest with respect to principal amounts outstanding under the credit agreement is payable in arrears on a monthly basis for alternative base rate loans , and at the end of the applicable interest period but at most every three months for eurodollar currency rate loans . the interest rate at january 31 , 2019 was 6.25 % . for the fiscal year ended january 31 , 2016 , the credit agreement contained a covenant that forbade the company from issuing dividends or making payments with respect to the company 's capital stock . on april 4 , 2016 the company entered into an amendment allowing the company to pay dividends or conduct stock repurchases

liquidity and capital resources working capital requirements virco addresses liquidity and working capital requirements in the context of short-term seasonal requirements and long-term capital requirements of the business . the company 's core business of selling furniture to publicly funded educational institutions is extremely seasonal . the seasonal nature of this business permeates most of virco 's operational , capital and financing decisions . the company 's working capital requirements during and in anticipation of the peak summer season oblige management to make estimates and judgments that affect virco 's assets , liabilities , revenues and expenses . management expends a significant amount of time during the year , and especially in the fourth quarter of the prior year and first quarter , developing a stocking plan and estimating the number of employees , the amount of raw materials and the types of components and products that will be required during the peak season . if management underestimates any of these requirements , virco 's ability to fill customer orders on a timely basis or to provide adequate customer service may be diminished . if management overestimates any of these requirements , the company may be required to absorb higher storage , labor and related costs , each of which may affect profitability . on an ongoing basis , management evaluates such estimates , including those related to market demand , labor costs and inventory levels , and continually strives to improve virco 's ability to correctly forecast business requirements during the peak season each year . as part of virco 's efforts to address seasonality , financial performance and quality without sacrificing service or market share , management has been refining the company 's ats operating model . ats is virco 's version of mass-customization , which assembles standard , stocked components into customized configurations before shipment . the company 's ats program reduces the total amount of inventory and working capital needed to support a given level of sales . it does this by increasing the inventory 's versatility , delaying assembly until the last moment and reducing the amount of warehouse space needed to store finished goods .


 Write a concise suspicious activity report of the following text delimited by triple backquotes. Return your response as a formal report which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.
     ```liquidity and capital resources working capital requirements virco addresses liquidity and working capital requirements in the context of short-term seasonal requirements and long-term capital requirements of the business . the company 's core business of selling furniture to publicly funded educational institutions is extremely seasonal . the seasonal nature of this business permeates most of virco 's operational , capital and financing decisions . the company 's working capital requirements during and in anticipation of the peak summer season oblige management to make estimates and judgments that affect virco 's assets , liabilities , revenues and expenses . management expends a significant amount of time during the year , and especially in the fourth quarter of the prior year and first quarter , developing a stocking plan and estimating the number of employees , the amount of raw materials and the types of components and products that will be required during the peak season . if management underestimates any of these requirements , virco 's ability to fill customer orders on a timely basis or to provide adequate customer service may be diminished . if management overestimates any of these requirements , the company may be required to absorb higher storage , labor and related costs , each of which may affect profitability . on an ongoing basis , management evaluates such estimates , including those related to market demand , labor costs and inventory levels , and continually strives to improve virco 's ability to correctly forecast business requirements during the peak season each year . as part of virco 's efforts to address seasonality , financial performance and quality without sacrificing service or market share , management has been refining the company 's ats operating model . ats is virco 's version of mass-customization , which assembles standard , stocked components into customized configurations before shipment . the company 's ats program reduces the total amount of inventory and working capital needed to support a given level of sales . it does this by increasing the inventory 's versatility , delaying assembly until the last moment and reducing the amount of warehouse space needed to store finished goods .
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 Suspicious Activity Report : in response to these budgetary pressures , schools typically elect to retain teachers and spend less on repairs , maintenance and replacement furniture , which in turn reduces the demand for , and sales of , the company 's products . in recent years there has been an improvement in state and local tax collections , and most state and local governments have seen their tax receipts return to the pre-2008 levels . in response to the 2008 recession , passage of new bond issuances declined , and the related bond funded project completions decreased materially for several years . in recent years the completions of bond funded projects have recovered from the low point subsequent to 2008 , but projects remain well below the pre-2008 levels . in the recent elections we observed an increase in bond passages . due to the time requirement to plan and construct a new school or major remodel , there is a time lag frequently ranging from one to three years between bond passage and when the bond funding translates into furniture sales . sales of product for completions of new schools , additions and renovations improved in the year ended january 31 , 2019 , and is anticipated to be favorable for the year ending january 31 , 2020 ( `` fiscal 2020 `` ) . while the current operating environment continues to show moderate year-over-year improvement , under-funding of our education system continues to be an on-going concern . a 2016 report from the national council on school facilities estimates that on every school day , approximately 50 million students and six million adults use publicly funded k-12 facilities . for state and local governments , spending on these facilities is the largest capital expenditure outside of highways . it was estimated that public schools spend approximately $ 99 billion per year on maintenance , operations and capital spending . the study estimates that a desirable level of spending would be $ 145 billion , leaving an annual shortfall of $ 46 billion . the significant budgetary challenges faced by the education industry have had an impact on the company 's business model over this time frame and have created opportunities as well . in the 1990 's , the company 's primary customers were the school business officials at a school district , and deliveries of furniture typically were to a district warehouse . in response to their budgetary challenges , many school districts closed warehouses and reduced janitorial and support staff in order to retain 22 accredited teachers . selling efforts must now reach school principals and administrative staff in addition to the district business offices . sales priced under national contracts or buying groups are displacing competitive bids administered by professional purchasing departments . distribution has become a more meaningful component of our business as most deliveries are to school sites , and often include inside delivery to the classroom . this evolution adds to the seasonal challenges of our business , but also creates opportunities to suppliers that can execute during the short summer delivery window . the furniture industry in general , including the market for school furniture , has been significantly impacted by low cost competition from manufacturers based in china . competition from china increased dramatically after admission of china to the world trade organization in 2001. subsequent to this date , many of our domestic manufacturing competitors closed their factories and sourced product from china . to our knowledge , no new factories or significant manufacturing enhancements were constructed to support the school furniture market during this period . virco pursued a different strategy which exacerbated operating challenges following these events , but now leave us with what we believe to be a significant competitive advantage . during a period of robust education spending during the 1990 's , the company expanded and modernized its manufacturing and distribution facilities at the torrance , ca and conway , ar locations . during the last fifteen years , the company has worked continuously to significantly reduce and control its cost structure while concurrently expanding its product offering , expanding manufacturing process capabilities and more fully automating its facilities . for example , headcount of permanent employees as of january 31 , 2019 , was approximately 840 compared to a peak of nearly 2,950 in august 2000. factory overhead in fiscal 2019 declined by more than 50 % compared to fiscal 2001. the company accomplished this without closing a factory and while continuing to add new production processes , including flat metal forming , and other capabilities to support its ambitious product development program . our domestic fabrication allowed the company to develop significant product variety , color choices and custom products that are very difficult to replicate with a supply chain extending to china . finally , many education furniture products are bulky , with a large cube relative to the selling price . the cost of ocean freight from overseas for these bulky items offsets the cost advantages for overseas production . the company 's operating results can be impacted significantly by cost and volatility of commodities , especially steel , plastic , wood and energy . because a majority of the company 's sales are generated under annual contracts in which the company has limited ability to raise the price of its products during the term of the contract , if the costs of the company 's raw materials increase suddenly or unexpectedly , the company can not be certain that it will be able to implement corresponding increases in its sales prices in order to offset such increased costs . the company moderates this exposure by building significant quantities of finished goods and component parts during the first and second quarters . story_separator_special_tag in 2017 , congress passed the tax cuts and jobs act ( tcja ) on december 22 , 2017 which , among other changes , reduced the federal income tax rate effective january 1 , 2018 to 21 % . because virco 's fiscal year ended january 31 , 2018 , 11 of the 12 months were subject to the 34 % graduated rate and one month at the 21 % rate , for an effective federal rate of 32.9 % . as a result of the reduction in the federal tax rate , the value of the company 's deferred tax assets decreased by $ 4,438,000 as of january 31 , 2018. it is expected the effective tax rate for fiscal 2020 will be approximately 27 % . inflation and future change in prices we commit to annual contracts that determine selling prices for goods and services for periods of one year and occasionally longer . though the company has negotiated flexibility under many of these contracts that may allow the company to increase prices on future orders , the company does not have the ability to raise prices on orders received prior to any announced price increase . due to the intensely seasonal nature of our business , the company may receive significant orders during the first and second quarters for delivery in the second and third quarters . with respect to any of the contracts described above , if the costs of providing our products or services increase between the date the orders are received and the shipping date , we may not be able to implement corresponding increases in our sales prices for such products or services to offset the related increased costs . in fiscal 2017 , the cost of steel increased significantly , but the increase did not occur until after the company had sourced the majority of its steel for the summer delivery season . in fiscal 2018 , the cost of commodities increased over the course of the year but did not spike as suddenly as in some prior periods . in fiscal 2019 , the company incurred severe and sudden increase is material and component costs . in the first quarter , the federal government imposed a 25 % tariff on imported steel . the company purchases the majority of its steel from domestic sources , but the cost of domestic steel increased concurrently with the effective date of the tariffs on foreign steel . during the summer , the cost of imported components increased by as much as 15 % , primarily due to increased costs incurred by chinese suppliers . in october , a 10 % tariff was imposed on chinese furniture and components . 26 for fiscal 2020 , the company anticipates continued volatility in costs , particularly with respect to certain raw materials , transportation , and energy . anticipated adverse volatility for fiscal 2020 could be severe in light of tariffs imposed or threatened on imported commodities . there is continued uncertainty with respect to steel and other raw material costs , including plastics , that are affected by the price of oil . transportation costs may be adversely affected by increased oil prices , in the form of increased operation costs for our fleet , and surcharges on freight paid to third-party carriers . virco depends upon third party carriers for more than 90 % of customer deliveries . subsequent to 2010 , many carriers went out of business or were required to reduce the size of their fleets due to economic conditions and have not increased their fleets as the economy has improved . recent regulation and more stringent enforcement of federal regulations governing the transportation industry ( especially regarding drivers ) have adversely impacted the cost and availability of freight services . virco expects to incur continued pressure on employee benefit costs . the company has renewed health insurance contracts for its employees through december 2019 but costs after that date may be adversely impacted by current legislation , claim costs and industry consolidation . virco has aggressively addressed these costs by controlling headcount , freezing pension benefits and passing on a portion of increased medical costs to employees . to recover the cumulative impact of increased costs , the company has increased published list prices for fiscal 2020. due to current economic conditions , the company anticipates continued significant price competition in fiscal 2020 and may not be able to raise prices without risk of losing market share . as a significant portion of virco 's business is obtained through competitive bids , the company is carefully considering material and transportation costs as part of the bidding process . total material costs for fiscal 2020 , as a percentage of sales , could be higher than in fiscal 2019. the company is working to control and reduce costs by improving production and distribution methodologies , investigating new packaging and shipping materials and searching for new sources of purchased components and raw materials . story_separator_special_tag 1.75 % to 2.25 % , in each case based on the ebitda of the borrowers at the end of each fiscal quarter and may be increased at pnc 's option by 2.0 % during the continuance of an event of default . accrued interest with respect to principal amounts outstanding under the credit agreement is payable in arrears on a monthly basis for alternative base rate loans , and at the end of the applicable interest period but at most every three months for eurodollar currency rate loans . the interest rate at january 31 , 2019 was 6.25 % . for the fiscal year ended january 31 , 2016 , the credit agreement contained a covenant that forbade the company from issuing dividends or making payments with respect to the company 's capital stock . on april 4 , 2016 the company entered into an amendment allowing the company to pay dividends or conduct stock repurchases

