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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended May 31, 2011
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission File Number 0-22183
 
 MEADE INSTRUMENTS CORP.
 (Exact name of registrant as specified in its charter)
 Delaware
    
    95-2988062(State or other jurisdiction
    
    (I.R.S. Employerof incorporation or organization)
    
    Identification No.)27 Hubble, Irvine, CA
    
    92618(Address of principal executive offices)
    
    (Zip Code)
 (949) 451-1450
(Registrants telephone number, including area code)
 þ o
 o o
  Non-accelerated filer o
    
    Large Accelerated filer o
    
    Accelerated filer o
    
    Smaller reporting company þ
 o þ




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MEADE INSTRUMENTS CORP.
REPORT ON FORM 10-Q FOR THE QUARTER ENDED
May 31, 2011
 TABLE OF CONTENTS
 Page No.PART I  FINANCIAL INFORMATIONItem 1. Financial StatementsConsolidated Balance Sheets (Unaudited)  May 31, 2011 and February 28, 2011
    
    
    2Consolidated Statements of Operations (Unaudited)  Three Months Ended May 31, 2011 and 2010
    
    
    3Consolidated Statements of Cash Flows (Unaudited)  Three Months Ended May 31, 2011 and 2010
    
    
    4Notes to Consolidated Financial Statements (Unaudited)
    
    
    5Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    11Item 3. Quantitative and Qualitative Disclosure About Market Risk
    
    
    14Item 4. Controls and Procedures
    
    
    14PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    16Item 1A. Risk Factors
    
    
    16Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    16Item 3. Defaults Upon Senior Securities
    
    
    16Item 4. Reserved
    
    
    16Item 5. Other Information
    
    
    16Item 6. Exhibits
    
    
    16Signatures
    
    
    17Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2




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ITEM 1.
    
    FINANCIAL STATEMENTS.
 MEADE INSTRUMENTS CORP.
 
 CONSOLIDATED BALANCE SHEETS
 (In thousands, except per share data)
 (Unaudited)
 May 31,
    
    
    February 28,2011
    
    
    2011ASSETSCurrent assets:Cash
    
    $
    3,974
    
    
    $
    5,076Accounts receivable, less allowance for
doubtful accounts of $73 at May 31,
2011 and $408 at February 28, 2011
    
    
    2,638
    
    
    
    2,784Inventories
    
    
    6,509
    
    
    
    6,038Prepaid expenses and other current assets
    
    
    464
    
    
    
    245Total current assets
    
    
    13,585
    
    
    
    14,143Property and equipment, net
    
    
    218
    
    
    
    257Acquisition-related intangible assets, net
    
    
    832
    
    
    
    875Other assets, net
    
    
    110
    
    
    
    109$
    14,745
    
    
    $
    15,384LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    1,501
    
    
    $
    1,704Accrued liabilities
    
    
    1,894
    
    
    
    2,149Total current liabilities
    
    
    3,395
    
    
    
    3,853Deferred rent
    
    
    24
    
    
    
    24Commitments and contingenciesStockholders equity:Common stock; $0.01 par value; 2,500
shares authorized; 1,167 shares issued
and outstanding at May 31, 2011 and
February 28, 2011
    
    
    12
    
    
    
    12Additional paid-in capital
    
    
    52,623
    
    
    
    52,572Accumulated deficit
    
    
    (41,309
    )
    
    
    (41,077
    )Total stockholders equity
    
    
    11,326
    
    
    
    11,507$
    14,745
    
    
    $
    15,384
   2




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MEADE INSTRUMENTS CORP.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (In thousands, expect per share data)
 (Unaudited)
 Three Months EndedMay 31,2011
    
    
    2010Net sales
    
    $
    4,173
    
    
    $
    5,502Cost of sales
    
    
    2,804
    
    
    
    4,368Gross profit
    
    
    1,369
    
    
    
    1,134Selling
    
    
    459
    
    
    
    553General and administrative
    
    
    944
    
    
    
    1,236Research and development
    
    
    199
    
    
    
    204Operating loss
    
    
    (233
    )
    
    
    (859
    )Interest income
    
    
    (1
    )
    
    
    (1
    )Loss before income taxes
    
    
    (232
    )
    
    
    (858
    )Income tax expense
    
    
    
    
    
    
    Net loss
    
    $
    (232
    )
    
    $
    (858
    )Net loss per sharebasic and diluted
    
    $
    (0.20
    )
    
    $
    (0.74
    )Weighted average common shares outstandingbasic and diluted
    
    
    1,167
    
    
    
    1,167
   3




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MEADE INSTRUMENTS CORP.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In thousands)
 (Unaudited)
 Three Months EndedMay 31,2011
    
    
    2010Cash flows from operating activities:Net loss
    
    $
    (232
    )
    
    $
    (858
    )Adjustments to reconcile loss from
continuing operations to net cash used in
operating activities:Depreciation and amortization
    
    
    83
    
    
    
    131Bad debt expense
    
    
    9
    
    
    
    (3
    )Stock-based compensation
    
    
    51
    
    
    
    129Deferred rent amortization
    
    
    
    
    
    
    2Changes in assets and liabilities:Accounts receivable
    
    
    137
    
    
    
    (1,136
    )Inventories
    
    
    (471
    )
    
    
    792Prepaid expenses and other current assets
    
    
    (217
    )
    
    
    (172
    )Accounts payable
    
    
    (203
    )
    
    
    70Accrued liabilities
    
    
    (255
    )
    
    
    (113
    )Net cash used in operating activities
    
    
    (1,098
    )
    
    
    (1,158
    )Cash flows from investing activities:Capital expenditures
    
    
    (4
    )
    
    
    (6
    )Net cash used in investing activities
    
    
    (4
    )
    
    
    (6
    )Cash flows from financing activities
    
    
    
    
    
    
    Net decrease in cash
    
    
    (1,102
    )
    
    
    (1,164
    )Cash at beginning of period
    
    
    5,076
    
    
    
    5,055Cash at end of period
    
    $
    3,974
    
    
    $
    3,891
   4




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MEADE INSTRUMENTS CORP.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)
 A. The Consolidated Financial Statements Have Been Prepared by the Company and are Unaudited.
    B. Liquidity
       5




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MEADE INSTRUMENTS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 (Unaudited)
  C. Stock Based Compensation
 Share-Based Payment
   D. Composition of Certain Balance Sheet Accounts
  May 31,
    
    
    February 28,2011
    
    
    2011(In thousands)Due from factor
    
    $
    2,366
    
    
    $
    3,405Accounts receivable, other
    
    
    272
    
    
    
    (621
    )$
    2,638
    
    
    $
    2,784
    6




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MEADE INSTRUMENTS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 (Unaudited)
  May 31,
    
    
    February 28,2011
    
    
    2011(In thousands)Raw materials
    
    $
    2,148
    
    
    $
    2,264Work-in-process
    
    
    1,207
    
    
    
    1,624Finished goods
    
    
    3,154
    
    
    
    2,150$
    6,509
    
    
    $
    6,038
  Amortization
    
    May 31, 2011
    
    
    February 28, 2011Periods
    
    Gross Carrying
    
    
    Accumulated
    
    
    Net Book
    
    
    Gross Carrying
    
    
    Accumulated
    
    
    Net Book(In Years)
    
    Amount
    
    
    Amortization
    
    
    Value
    
    
    Amount
    
    
    Amortization
    
    
    Value(In thousands)Trademarks
    
    7-15
    
    $
    424
    
    
    $
    (335
    )
    
    $
    89
    
    
    $
    424
    
    
    $
    (326
    )
    
    $
    98Completed
technologies
    
    12
    
    
    1,620
    
    
    
    (877
    )
    
    
    743
    
    
    
    1,620
    
    
    
    (843
    )
    
    
    777Total
    
    
    
    $
    2,044
    
    
    $
    (1,212
    )
    
    $
    832
    
    
    $
    2,044
    
    
    $
    (1,169
    )
    
    $
    875
  AmortizingIntangibleAssets(In thousands)Balance, net, February 28, 2011
    
    $
    875Amortization
    
    
    (43
    )Balance, net, May 31, 2011
    
    $
    832
  Fiscal Year
    
    

Amounts(In thousands)2012
    
    $
    1282013
    
    
    1712014
    
    
    1622015
    
    
    1352016
    
    
    135Thereafter
    
    
    101Total
    
    $
    832
  May 31,
    
    
    February 28,2011
    
    
    2011(In thousands)Molds and dies
    
    $
    7,358
    
    
    $
    7,357Machinery and equipment
    
    
    4,484
    
    
    
    4,482Furniture and fixtures
    
    
    251
    
    
    
    251Autos and trucks
    
    
    199
    
    
    
    199Leasehold improvements
    
    
    139
    
    
    
    13912,431
    
    
    
    12,428Less accumulated depreciation and amortization
    
    
    (12,213
    )
    
    
    (12,171
    )$
    218
    
    
    $
    257
  7




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MEADE INSTRUMENTS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 (Unaudited)
  E. Commitments and Contingencies
  F. Loss Per Share
   May 31,
    
    
    February 28,2011
    
    
    2011(In thousands)Stock options outstanding
    
    
    77
    
    
    
    78Restricted shares outstanding
    
    
    
    
    
    
    
  Three Months EndedMay 31,2011
    
    
    2010(In thousands)Basic weighted average number of shares
    
    
    1,167
    
    
    
    1,167Dilutive potential shares of common stock
    
    
    
    
    
    
    Diluted weighted average number of shares outstanding
    
    
    1,167
    
    
    
    1,167Number of options excluded from the calculation of
weighted average shares because the exercise prices
were greater than the average market price of the
Companys common stock
    
    
    76
    
    
    
    78Potential shares of common stock excluded from the
calculation of weighted average shares
    
    
    1
    
    
    
    
  G. Product Warranties
 ® ®
  8




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MEADE INSTRUMENTS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 (Unaudited)
  Three Months EndedMay 31,2011
    
    
    2010(In thousands)Beginning balance
    
    $
    810
    
    
    $
    883Warranty accrual
    
    
    43
    
    
    
    62Labor and material usage
    
    
    (103
    )
    
    
    (86
    )Ending balance
    
    $
    750
    
    
    $
    859
 H. Income Taxes
 Accounting for Income Taxes
   Unrecognized Tax Benefits
    9




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MEADE INSTRUMENTS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 (Unaudited)
 I. Subsequent Events
   EBITDA
    
    Steven Murdock Bonus
    
    
    John Elwood Bonus> $112,000 < $224,000
    
    $
    12,500
    
    
    $
    8,500> $224,000 < $336,000
    
    $
    25,000
    
    
    $
    17,000> $336,000 < $448,000
    
    $
    37,500
    
    
    $
    25,500> $448,000 < $560,000
    
    $
    50,000
    
    
    $
    34,000> $560,000
    
    $
    62,500
    
    
    $
    42,500
    10




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ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
 The following discussion of our financial condition and results of operations should be read
in conjunction with our consolidated financial statements and related notes included in this Form
10-Q. This discussion contain forward-looking statements that involve risks and uncertainties.
Our actual results may differ materially from those anticipated in these forward-looking statements
due to known and unknown risks, uncertainties and other factors, including those risks discussed in
Risk Factors in the Companys annual report on Form 10-K . Those risk factors expressly qualify
all subsequent oral and written forward-looking statements attributable to us or persons acting on
our behalf. We do not have any intention or obligation to update forward-looking statements
included in this Form 10-Q after the date of this Form 10-Q , except as required by law.
 Overview of the Company
  ® ®
 Critical Accounting Policies and Estimates
    11




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New Accounting Pronouncements
  Results of Operations
 st th
 Three Months Ended May 31, 2011 Compared to Three Months Ended May 31, 2010
      12




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Seasonality
  Liquidity and Capital Resources
       13




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Inflation
  Forward-Looking Information
  
 ITEM 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
  
 ITEM 4.
    
    CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures.
   14




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Changes in Internal Control over Financial Reporting
   15




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PART II  OTHER INFORMATION
 
 ITEM 1.
    
    LEGAL PROCEEDINGS
  
 ITEM 1A.
    
    RISK FACTORS
  
 ITEM 2.
    
    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  
 ITEM 3.
    
    DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4.
    
    RESERVED
  
 ITEM 5.
    
    OTHER INFORMATION
  
 ITEM 6.
    
    EXHIBITS
 Exhibit No.
    
    Exhibit Title or Description31.1
    
    
    Rule 13a-14(a)/15d-14(a) Certification  Principal Executive Officer31.2
    
    
    Rule 13a-14(a)/15d-14(a) Certification  Principal Financial Officer32.1
    
    
    Certification Pursuant to 18 U.S.C. Section 1350, As Adopted
Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002  Chief
Executive Officer32.2
    
    
    Certification Pursuant to 18 U.S.C. Section 1350, As Adopted
Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002  Chief
Financial Officer
  16




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SIGNATURES
  MEADE INSTRUMENTS CORP.Dated: July 15, 2011
    By:
    /s/ STEVEN G. MURDOCKSteven G. MurdockChief Executive OfficerBy:
    /s/ JOHN A. ELWOODJohn A. ElwoodSenior Vice President  Finance and AdministrationChief Financial Officer  17




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EXHIBIT INDEX
 Exhibit No.
    
    Exhibit Title or Description31.1
    
    
    Rule 13a-14(a)/15d-14(a) Certification  Principal Executive Officer31.2
    
    
    Rule 13a-14(a)/15d-14(a) Certification  Principal Financial Officer32.1
    
    
    Certification Pursuant to 18 U.S.C. Section 1350, As Adopted
Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002  Chief
Executive Officer32.2
    
    
    Certification Pursuant to 18 U.S.C. Section 1350, As Adopted
Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002  Chief
Financial Officer
  18