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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                ----------------

                                    FORM 10-K
(MARK ONE)

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

                   FOR THE FISCAL YEAR ENDED FEBRUARY 28, 2001

                                       OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

                           COMMISSION FILE NO. 0-22183

                             MEADE INSTRUMENTS CORP.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                                ----------------

               DELAWARE                             95-2988062
     (STATE OF OTHER JURISDICTION         (I.R.S. EMPLOYER IDENTIFICATION)
   OF INCORPORATION OR ORGANIZATION)

  6001 OAK CANYON, IRVINE, CALIFORNIA                 92618
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)            (ZIP CODE)

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (949) 451-1450

                                ----------------

        SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE

           SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

                     COMMON STOCK, $0.01 PAR VALUE PER SHARE
                                (TITLE OF CLASS)

     Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

     On May 5, 2000 the Company declared a two-for-one stock split which was
paid in the form of a dividend on June 19, 2000 to all stockholders of record as
of May 22, 2000. All share and per share amounts contained herein reflect such
stock split.

    As of May 15, 2001, there were 16,472,000 outstanding shares of the
Registrant's common stock, par value $0.01 per share ("common stock"), which is
the only class of common stock of the Registrant. As of May 15, 2001 the
aggregate market value of the shares of common stock held by non-affiliates of
the Registrant, computed based on the closing sale price of $4.90 per share as
reported by Nasdaq, was approximately $51.2 million.

                       DOCUMENTS INCORPORATED BY REFERENCE

     The information called for by Part III is incorporated by reference to the
definitive Proxy Statement for the 2001 Annual Meeting of Stockholders of the
Registrant which will be filed with the Securities and Exchange Commission not
later than 120 days after February 28, 2001.

================================================================================

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                                TABLE OF CONTENTS

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                                     PART I

Item 1.  Business..........................................................................................        1
         Executive Officers of the Registrant..............................................................        7
Item 2.  Properties........................................................................................        8
Item 3.  Legal Proceedings.................................................................................        8
Item 4.  Submission of Matters to a Vote of Security Holders...............................................        9

                                     PART II

Item 5.  Market for the Registrant's Common Equity and Related Stockholder Matters.........................        9
Item 6.  Selected Financial Data...........................................................................       10
Item 7.  Management's Discussion and Analysis of Financial Condition and Results of Operations.............       11
Item 7A. Quantitative and Qualitative Disclosures About Market Risk........................................       16
Item 8.  Financial Statements and Supplementary Data.......................................................       16
Item 9.  Change in and Disagreements with Accountants on Accounting and Financial Disclosure...............       16

                                    PART III

Item 10. Directors and Executive Officers of the Registrant................................................       16
Item 11. Executive Compensation............................................................................       16
Item 12. Security Ownership of Certain Beneficial Owners and Management....................................       16
Item 13. Certain Relationships and Related Transactions....................................................       16

                                     PART IV

Item 14. Exhibits, Financial Statement Schedule, and Reports on Form 8-K...................................       17

                   CONSOLIDATED FINANCIAL STATEMENTS AND NOTES

Report of Independent Accountants..........................................................................      F-1
Consolidated Balance Sheets at February 28, 2001 and February 29, 2000.....................................      F-2
Consolidated Statements of Income for each of the three years in the period ended February 28, 2001........      F-3
Consolidated Statements of Stockholders' Equity for the three years in the period ended
  February 28, 2001........................................................................................      F-4
Consolidated Statements of Cash Flows for the three years in the period ended
  February 28, 2001........................................................................................      F-5
Notes to Consolidated Financial Statements.................................................................      F-6
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                                     PART I

ITEM 1. BUSINESS

GENERAL

     Meade Instruments Corp. is a multinational consumer optics company that
designs, manufactures, imports and distributes telescopes, telescope
accessories, binoculars and other optical products. Meade's dedication to
product innovation has led to the successful introduction of a wide range of
products, resulting in what the Company believes to be the broadest and most
complete line of telescopes and telescope accessories available. The Company
offers more than 50 different telescope models with several different optical
configurations, as well as more than 250 accessory products. The Company's
telescopes range in aperture from 2 to 16 inches and in retail price from less
than $100 to more than $15,000. The Company also offers a complete line of
binoculars from small aperture theater glasses to full-size waterproof models at
retail price points from approximately $10 to more than $300.

     Since its founding in 1972, Meade has strived to develop a reputation for
providing the amateur astronomer with technically sophisticated products at
competitive prices. Combining its manufacturing expertise with its dedication to
innovation, quality and value, Meade has developed and produced some of the
industry's most technologically advanced consumer telescopes at affordable
prices. Although professional and institutional applications of Meade's
telescopes are not Meade's primary market, the Company's Schmidt-Cassegrain
telescopes are used by many universities, scientific laboratories and aerospace
companies throughout the world. The Company has capitalized on its brand name
recognition among serious amateur astronomers and its ability to bring advanced
technology to lower price points to market successfully its less-expensive
telescopes to beginning and intermediate amateur astronomers. Meade has become a
major supplier of telescopes to such retailers as Discovery Channel Stores
(formerly The Nature Company), Aldi (Germany), Wal-Mart, Costco and Sam's Club.

     Meade was sold by its founder and current Chief Executive Officer to an
investor in 1986 and was then reacquired by the Company's senior management in
1991. After the reacquisition, management emphasized a business plan that
concentrated on new product development, securing a reliable supplier of
less-expensive telescopes, effective targeted marketing and customer service. To
those ends the Company committed nearly $2.1 million to research and development
during fiscal 2001 and has, over the last five fiscal years, committed nearly
$5.9 million in the aggregate to research and development. These research and
development expenditures were centered on the development of technologically
advanced less-expensive telescopes as well as product improvement and industrial
applications of the Company's existing technologies.

     Meade manufactures nearly the complete line of its advanced astronomical
telescopes in Irvine, California, including the production of all of the
advanced optical systems, which are critical components of telescopes. Many of
the Company's less-expensive telescopes are manufactured under proprietary
designs by manufacturers principally located in Taiwan and mainland China. The
Company also sources component parts for small to midrange telescopes and
related accessories from several suppliers in mainland China, Taiwan and Japan
that are assembled into finished product in the Company's wholly-owned Mexican
assembly plant (See Item 2. Properties).

     The Company's business plan complements its efforts in new product
development with an aggressive marketing plan. The Company's marketing plan
includes print advertising in astronomy related magazines and in general
consumer magazines. The marketing plan also includes extensive co-operative
advertising campaigns with many of the Company's key retail partners, as well as
point-of-sale marketing displays. In addition, Meade publishes a comprehensive,
full-color, high-quality product catalog that provides significant product
exposure to the serious amateur astronomer as well as an abridged version of its
product catalog aimed at the casual observer.

     On September 1, 1999 the Company acquired 100% of the stock and equity
interests in Bresser Optik GmbH & Co. KG, and Bresser Optik Geschaftsfuhrung und
Verwaltungs GmbH (collectively "Bresser"), for $5.0 million in cash and 201,830
shares of the Company's common stock valued at approximately $2.0 million.
Bresser is a German distributor of binoculars, telescopes, microscopes and other
consumer optical products. Bresser has provided the Company greater distribution
opportunities for the Company's products. Moreover, Bresser's significant
presence in the binocular and low-priced telescope market in Europe has
strengthened the Company's


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<PAGE>   4

penetration into these markets. In January 2000, the Company also purchased what
was formerly its German distributor for approximately $1.1 million cash.

     In the United States and Canada, the Company distributes its products
through a network of more than 500 specialty retailers and mass merchandisers,
which offer Meade's products in more than 3,000 retail store locations. The
Company also sells certain of its telescope models to selected national mail
order dealers. In addition to products sold through Meade Europe (formerly
Bresser) channels, Meade sells its products internationally through a network of
over 30 foreign distributors, many of which service retail locations in their
respective countries. Revenues from customers outside North America accounted
for approximately 20.9% of the Company's net sales for the fiscal year ended
February 28, 2001 (See Note 8 of Notes to Consolidated Financial Statements).
The Company intends to continue to pursue an integrated strategy of product line
expansion, aggressive marketing, and expansion of the Company's domestic and
international distribution networks.

     Following the close of fiscal 2000, the Company announced that it will be
an original equipment manufacturer for TeraBeam Corporation ("TeraBeam"), an
emerging service provider for gigabit IP connectivity in metropolitan areas.
Meade supplies the Seattle-based company with key components for TeraBeam's
free-space optical wireless network. The components use existing Meade telescope
and optical technology. The ultimate quantities and timing of the products
ordered by TeraBeam will depend upon TeraBeam's market roll-out.

     In addition to continuing its efforts in the free-space optical market, the
Company intends to leverage its design and manufacturing expertise in the area
of CCD imaging for commercial and industrial applications.

INDUSTRY OVERVIEW

     Market-size data for the telescope and binocular industries are difficult
to obtain because many of the companies in the industry are either private or
subsidiaries or divisions of larger public companies. The Company believes that
the overall size of the telescope market is driven, in part, by the introduction
of new products.

     The Company produces products at numerous price points in the consumer
optics market, from advanced astronomical telescopes for serious amateur
astronomers to less-expensive telescopes for beginning to intermediate amateur
astronomers. Advanced astronomical telescopes are characterized by frequent
technological developments, including the relatively recent introduction of
electronic and computer-aided features. Serious amateur astronomers demand that
the optical, electronic and mechanical performance of the telescopes and
accessories they purchase be of very high quality. These advanced telescopes
continue to drive the technological advances in the industry.

     Telescopes are generally offered in three different optical configurations:
(a) refracting telescopes, which use a lens at the upper end of the optical tube
to collect light; (b) reflecting telescopes, which use a concave mirror as the
primary optical element; and (c) catadioptric (mirror-lens) telescopes, which
employ a combination of mirrors and lenses to form the image. Each type has its
own advantages: refractors are easy to maintain, yield sharp images and are
relatively inexpensive in smaller apertures; reflectors generally are the
lowest-cost means of purchasing larger apertures and are well suited to the
intermediate amateur astronomer; and mirror-lens telescopes are more portable in
larger apertures and are popular among serious amateur astronomers.

COMPETITIVE STRENGTHS

     Meade believes that it derives significant benefits from its position as a
leading designer and distributor of telescopes and other optical related
products. These benefits include its ability to offer its customers one of the
most innovative, broadest product lines available, embodying both high quality
and value. The Company attributes its success to the following competitive
strengths:

     New Products/Research and Development. Meade places a primary emphasis on
product innovation and quality through its research and development efforts. The
Company currently employs seventeen engineers on-site, developing new
core-business products, new products for the industrial optical and imaging
markets, as well as technological advances and improvements to existing
products. The Company is able to obtain additional benefits by out-sourcing
certain research and development services to supplement its internal expertise.
Meade believes that the members of its senior level management are among the
most experienced in the telescope industry. The


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Company's three most experienced officers have been employed in this industry
for an average of over 23 years. The Company, its management and its employees
are dedicated to the goal of producing technically superior yet
price-competitive products and have been responsible for some of the industry's
most technically advanced, easy to use, consumer telescopes.

     Broadest Line of Products. The Company's strategy has been to use the
tremendous advancements in microprocessor technology, building on its existing
know-how in advanced telescope design and operation, to bring computer
technology and features to telescopes at lower and lower price points. As a
result, the Company believes it currently has the most complete and technically
advanced line of telescopes available, including more than 50 different
telescope models with several different optical configurations as well as more
than 250 accessory products. The Company's telescopes range in aperture from 2
to 16 inches and in retail price from less than $100 to more than $15,000.

     Optical Systems Expertise. Meade has made substantial investments to
develop an expertise in optical engineering, providing it with the ability to
produce high quality optics on-site in Irvine, California. Meade employs highly
skilled opticians who use sophisticated manufacturing techniques and equipment,
including specialized optical polishing machines and vacuum-coating machines, to
produce what the Company believes to be the highest quality optics available in
the consumer telescope market.

     Quality Control. Meade's manufacturing and engineering personnel coordinate
the manufacturing process in order to ensure that product quality is maintained
at a high level within an efficient cost structure. The Company has in place
quality controls covering all aspects of the manufacturing process of its
products, from each product's precision optical system to its final assembly and
testing. Certain of the Company's less expensive and mid-range telescope models
are assembled at the Company's assembly plant located in Tijuana, Mexico. The
Company manufactures the majority of its high-end advanced telescopes in its
manufacturing facility in Irvine, California, while many of the Company's
less-expensive telescopes are produced for the Company by manufacturers in
Taiwan and China. Meade regularly sends product and design engineers to the Far
East to monitor the manufacturing processes at the various plants that produce
its telescopes, telescope components, binocular products and accessories. Meade
also regularly commits at least one of its United States based quality control
engineers to the Far East.

     Broad Distribution Network. The Company's sales force in the U.S. and in
Germany works closely with specialty retailers, distributors and mass
merchandisers on product quality, technical knowledge and customer service.
Meade has its own on-site graphic arts departments to work with specialty
retailers, distributors and mass merchandisers to produce print advertising,
hang-tags for displays within retail outlets and other point-of-sale support.
This capability provides the Company's customers with a comprehensive marketing
program to assist in their sales efforts. As a result of these efforts, Meade
has become a major supplier of telescopes to such retailers as Discovery Channel
Store (formerly The Nature Company), Aldi (Germany), Wal-Mart, Costco, and Sam's
Club. Meade also has an expanding international presence with the addition of
Meade Europe. Revenues from customers outside North America were $25.7 million
for the fiscal year ended February 28, 2001.

     Superior Customer Service. Meade believes that its high levels of customer
service and technical support are important factors that differentiate it from
its competitors. In an effort to provide each of the Company's customers with
post-sale service and to relieve them of the burden of such service, Meade has
established multiple dedicated toll-free telephone numbers so that its customers
and end users can call the Company's support personnel with any questions
relating to its products. In addition to giving its customers personal
attention, the Company believes that providing this toll-free assistance also
reduces product returns by better educating first-time users about telescope
operation. In addition, in an effort to simplify assembly of the Company's
products, Meade pre-assembles a substantial portion of its telescopes prior to
packaging. Meade also makes available to telescope owners astronomical software
and other product enhancements.


                                       3
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PRODUCTS

     Meade has developed and expanded its product line to include a full line of
telescopes and accessories for the beginning, intermediate and serious amateur
astronomer. The Company also offers a complete line of binoculars from small
aperture theater glasses to full-size waterproof roof-prism glasses. Moreover,
in addition to adding new products, the Company continually refines and improves
its existing products. Certain of Meade's products are described in greater
detail below:

     Advanced Astronomical Telescopes. Among the Company's most sophisticated
products are its LX series Schmidt-Cassegrain and Maksutov-Cassegrain
telescopes, which incorporate an optical system that provides high-quality
resolution, contrast and light transmission. The LX series offers the serious
amateur astronomer a broad range of products from the economical 8" LX10 to the
state-of-the-art 16" LX200. The model LX200 telescopes, also available in 7, 8,
10 and 12-inch apertures, are the most popular of the Company's telescopes among
serious amateur astronomers. The LX200 telescopes feature a built-in computer
library of 64,350 celestial objects. These objects are cataloged in the
Company's proprietary hand-held electronic keypad command center, which operates
the computerized control system for the LX200 telescopes. By entering any of the
celestial objects into the keypad, the telescope automatically locates and
tracks the selected object. In fiscal 2001, the Company introduced its LX90.
This telescope brought together the Company's recognized optical standard for 8"
Schmidt-Cassegrains with its revolutionary Autostar technology at a very
attractive price point. The advanced astronomical telescopes collectively
represented approximately 2% of telescope units shipped and approximately 15% of
the Company's net sales for the fiscal year ended February 28, 2001.

     Entry-Level Telescopes. Designed specifically for the beginning to
intermediate amateur astronomer or terrestrial observer, the Company's
less-expensive 60mm to 114mm refracting and reflecting telescopes and the ETX
series telescopes include many of the features of the more advanced telescopes
at economical prices. With the introduction of the Digital Electronic Series of
60mm to 114mm telescopes (the "DS telescopes") and the ETX series (with
apertures ranging from 60mm to 125mm), some of the most sophisticated features
of the Company's advanced telescopes were made available at some of the
Company's lowest retail price points. Equipped with the optional hand-held
Autostar Computer Controller, the ETX series and the DS telescopes can find and
track any one of several thousand celestial objects at the push of a button. The
Autostar, with its "go to" capability, brought to the general consumer for a few
hundred dollars, features that had previously been available only on the most
sophisticated high-end telescopes selling for thousands of dollars. The Company
offers several variations of its small refracting and reflecting telescopes
(both its traditional models and the DS telescopes) for distribution on a
semi-exclusive basis to specific specialty retailers. These telescope models
comprise the lower-price end of the Company's product line. Sales of entry-level
telescopes comprised approximately 98% of the Company's telescope units shipped
and approximately 61% of the Company's net sales for the fiscal year ended
February 28, 2001.

     Binoculars. The Company expanded its market presence in binoculars with the
acquisition of Bresser. The Bresser name is widely recognized in Germany and
other countries in Europe as a quality supplier of a wide range of binoculars.
Binocular sales accounted for over one half of the sales attributed to Germany
during fiscal year 2001. The Company also sells a complete line of consumer
binoculars through its existing domestic distribution network. The binoculars
sold by the Company are purchased from manufacturers outside the United States.
Binoculars represented approximately 6% of the Company's net sales for the
fiscal year ended February 28, 2001.

     Accessories. The Company also offers accessories for each of its telescope
series that range from additional eyepieces and camera adapters to CCD
autoguider/imagers and celestial observation software. Approximately 250
accessory products are currently available from the Company. Sales of
accessories represented approximately 17% of the Company's net sales for the
fiscal year ended February 28, 2001. Other miscellaneous products such as
commercial optical products, microscopes and magnifying glasses accounted for
approximately 1% of the Company's net sales for fiscal year 2001.

     Other Products. Following the close of fiscal 2000, the Company announced
that it will be an original equipment manufacturer for TeraBeam, an emerging
service provider for gigabit IP connectivity in metropolitan areas. Meade
supplies the Seattle-based company with key components for TeraBeam's free-space
optical wireless network. The components use existing Meade optical technology.
The ultimate quantities and timing of the products ordered by TeraBeam will
depend upon TeraBeam's market roll-out. In addition to continuing its efforts in
the free-space optical market, the Company intends to leverage its design and
manufacturing expertise in the area of CCD imaging for commercial and industrial
applications.


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SALES AND MARKETING

     The Company's telescopes, binoculars and accessories are sold through a
domestic network of mail order dealers, specialty retailers and mass
merchandisers. Internationally, the Company's products are sold through its
wholly-owned subsidiary in Germany to specialty retailers and mass merchandisers
and through a network of foreign distributors in other countries around the
world. The Company's high-end products are generally sold through mail order
dealers or single and multiple location specialty retailers. Meade's
less-expensive products are sold in a similar manner but are sold principally
through mass merchandisers. The Company maintains direct contact with its larger
dealers and foreign distributors through the Company's sales professionals. A
network of independent representatives is used to maintain contact with its
smaller specialty retailers. Included among the Company's customers are the
following retail outlets, mass merchandisers and foreign distributors: Discovery
Channel Stores (formerly The Nature Company), Wal-Mart, Aldi (Germany), MIC
International Corp. (Japan), Sam's Club and Costco.

     The Company's sales force works closely with its dealers, specialty
retailers, distributors and mass merchandisers on product quality, technical
knowledge and customer service. The Company employs approximately sixteen
persons in sales positions, all of whom have significant industry experience.
These individuals advise the Company's specialty retailers about the quality
features of the Company's products and provide answers to questions from
specialty retailers as well as directly from amateur astronomers. The Company
stresses service to both its customers and end users by providing marketing
assistance in the form of hang-tags, catalog layouts and other print media as
well as dedicated toll free customer service telephone numbers. In addition to
giving its customers personal attention, the Company believes toll free
telephone numbers also help reduce the number of product returns from end users
who are generally unfamiliar with the assembly and operation of telescopes. In
an effort to further simplify assembly and use of the Company's products, Meade
pre-assembles a substantial portion of its telescopes prior to packaging. (See
"Business -- Competitive Strengths -- Superior Customer Service.") The Company's
products are regularly advertised in most major domestic and international
telescope and astronomy-related magazines and periodicals with comprehensive,
full color, technically informative advertisements which present a consistent
message of innovation and quality about the Company and its products. In
addition, the Company has engaged in an aggressive marketing program aimed at
expanding the existing telescope market through more traditional consumer
oriented print media. The Company's dedication to providing a high level of
customer service is one factor that management believes sets Meade apart from
its competition.

     Throughout fiscal 2001, the Company sold its products to mail order dealers
and to more than 500 specialty retailers and mass merchandisers that offer
Meade's products in more than 3,000 retail store outlets. During fiscal 2001,
Discovery Channel Store ("DCS", formerly The Nature Company), accounted for
approximately 13% of the Company's net sales. During fiscal year 2000 no
customer accounted for 10% or more of the Company's net sales. During fiscal
1999, DCS accounted for approximately 14% of the Company's net sales. The
Company's ten largest customers, in the aggregate, accounted for approximately
52% of the Company's net sales in fiscal year 2001. The loss of, or the failure
to replace, any significant portion of the sales made to any significant
customer could adversely affect results of operations of the Company to the
extent the Company did not replace any such lost sales with increased sales to
existing or new customers.

OPERATIONS

     Materials and Supplies. The Company purchases high grade optical glass in
order to avoid imperfections that can degrade optical performance. Lenses and
mirrors for the Company's domestically manufactured telescopes are individually
polished and hand-figured by master opticians to achieve a high level of
resolution. The Company purchases metal telescope components from numerous
foundries, metal stamping and metal working companies. Certain of the Company's
products contain computerized drive systems and other electronic circuitry. The
components of these computerized drive and electronic systems are purchased from
various suppliers and are generally assembled by third party vendors.

     Polishing and Hand Figuring. After a Schmidt-Cassegrain, Maksutov-
Cassegrain, ED-refractor or Newtonian glass surface is fine ground, the mirror
or lens is polished for up to 16 hours to obtain full transmission or
reflectivity. It is at this point that the Company's opticians perform the final
lens or mirror shaping (a process called figuring).


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     Optical Testing. As each of the Company's ED-refractors, Maksutov-
Cassegrain optical sets, Schmidt-Cassegrain optical sets, or parabolic Newtonian
primary mirrors progress through the grinding, polishing and hand-figuring
stages of development, they are repeatedly tested and re-tested for
irregularities, smoothness of figure and correction.

     Optical Alignment and Centration. Finished, individually-matched
Maksutov-Cassegrain and Schmidt-Cassegrain optical sets and matched ED-refractor
doublet objective lenses are sent to the optical alignment and centration
department, where each optical set is placed into a special optical tube that
permits rotation of the optical elements about their optical axes. With optimal
orientation fixed, each optics set is placed into machined housings of an
optical tube or collimation lens cell. The optical system is once again tested
and only after passing this final test is an optical tube system ready to be
used.

     During fiscal 2001, as in years past, many of the Company's less-expensive
telescopes were manufactured exclusively for the Company in Taiwan. For the past
decade the Company has worked closely with a factory in Taiwan (the "Taiwanese
Factory"), developing proprietary telescope designs and ensuring that the
manufacturing processes produced telescopes that met the Company's quality
standards. In May 1998, in order to assure a reliable source of quality
less-expensive telescopes, the Company and the Taiwanese Factory entered into a
supply agreement ("the 1998 agreement") wherein the Taiwanese Factory agreed to
manufacture certain telescopes exclusively for sale through Meade and wherein
Meade agreed to purchase many of its less-expensive telescopes from the
Taiwanese Factory. In order to diversify its supply, the Company has developed
relationships with other quality makers of telescopes and telescope accessories
in the far east, principally in mainland China. Many of the Company's
telescopes, telescope components and telescope accessories purchased during
fiscal 2001 were supplied by these Chinese manufacturers. The 1998 agreement
with the Taiwanese Factory originally expired on December 31, 2003. The 1998
agreement was mutually terminated in April 2001. The Company owns many of the
designs, molds and dies used by the Taiwanese Factory. Those designs, mold and
dies will continue to be used only in the manufacture of products purchased by
the Company. Meade regularly sends product and design engineers to the far east
to monitor the manufacturing processes at the various plants that produce its
telescopes, telescope components, binocular products and accessories. Meade also
regularly commits at least one of its United States based quality control
engineers to the Far East.

     During fiscal year 2000 the Company began an assembly operation in a 26,000
sq. ft. building located in Tijuana, Mexico (the "Mexico Facility"). In December
1999, the Mexican Facility was expanded to approximately 50,000 sq. ft. At
February 28, 2001, this facility employed approximately 110 people engaged in
the assembly of several products including less-expensive and mid-range
telescopes, electronic sub-assemblies, and accessory products.

COMPETITION

     The telescope and binocular industries are highly competitive and sensitive
to consumer needs and preferences. In the telescope market, Meade competes in
the United States and Canada with Celestron (owned by Tasco), Bushnell, Tasco
and, to a lesser extent, with other significantly smaller companies which
service niche markets. In Europe and Japan, the Company competes primarily with
Celestron, Tasco, Vixen Optical Industries, Ltd., and with other smaller
regional telescope importers and manufacturers. In addition, some of the
Company's current and potential competitors in the telescope market may possess
greater financial or technical resources and competitive cost advantages due to
a number of factors, including, without limitation, lower taxes and
substantially lower costs of labor associated with manufacturing.

     In the binocular market, which is generally more competitive than the
telescope market, with a greater number of competitors at each price point, the
Company competes primarily with Bushnell, Tasco, Nikon Inc., Canon Inc., Minolta
Camera, Co., Ltd., Pentax Corporation and various smaller manufacturers and
resellers. Many of these competitors in the binocular market have significantly
greater brand name recognition and financial and technical resources than those
of the Company, and many have long-standing positions, customer relationships
and established brand names in their respective markets.


                                       6
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EMPLOYEES

     As of February 28, 2001, Meade had 496 full-time employees. The Company
believes that it offers competitive compensation and other benefits and that its
employee relations are good. None of the Company's United States-based employees
is represented by a union. The Company's employees at the Mexico Facility are
represented by a union. The success of the Company's future operations depends
in large part on the Company's ability to attract and retain highly skilled
technical, marketing and management personnel. There can be no assurance that
the Company will be successful in attracting and retaining such key personnel.

     In order to enable its employees to share in the Company's growth and
prosperity, Meade established the Meade Instruments Corp. Employee Stock
Ownership Plan (the "ESOP"), effective March 1, 1996. The ESOP provides
participating United States-based employees an opportunity to receive beneficial
ownership of Meade's common stock.

                      EXECUTIVE OFFICERS OF THE REGISTRANT

     Set forth below are the names, ages, titles and present and past positions
of the persons serving as executive officers of the Company as of May 15, 2001:

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        NAME                                     AGE                       POSITION
        ----                                     ---                       --------
<S>                                              <C>   <C>
        John C. Diebel..........................  57   Chairman of the Board and Chief Executive Officer
        Steven G. Murdock.......................  49   President, Chief Operating Officer, Secretary, Director
        Joseph A. Gordon, Jr....................  51   Senior Vice President -- North American Sales, Director
        Brent W. Christensen....................  42   Vice President -- Finance and Chief Financial Officer
        Mark D. Peterson........................  39   Vice President and General Counsel
        Kenneth W. Baun.........................  53   Vice President -- Engineering
        Robert A. Wood, III.....................  40   Vice President -- Manufacturing
        Robert L. Davis.........................  34   Vice President and Assistant General Counsel
</TABLE>

     JOHN C. DIEBEL founded Meade Instruments Corp. in 1972. He has been the
Chairman of the Board and Chief Executive Officer of the Company for the
majority of the time since December 1975. Prior to founding the Company, Mr.
Diebel worked as an engineer for TRW Inc. and Hughes Aircraft Co. Mr. Diebel
graduated from the California Institute of Technology with BS and MS degrees in
electrical engineering and received a Ph.D. degree in electrical engineering
from the University of Southern California.

     STEVEN G. MURDOCK, a director of the Company since April 1996, has been the
Company's President and Chief Operating Officer since October 1990 and the
Company's Secretary since April 1996. From May 1980 to October 1990, Mr. Murdock
was the Company's Vice President of Optics. From November 1968 to May 1980, Mr.
Murdock worked as the optical manager for Coulter Optical, Inc., an optics
manufacturer. Mr. Murdock received a BS degree in business administration from
California State University at Northridge.

     JOSEPH A. GORDON, JR., a director of the Company since April 1996, has been
the Company's Senior Vice President -- North American Sales since June 1995.
From December 1984 to June 1995, he worked as the Company's Vice President --
North American Sales. From January 1981 to December 1984, Mr. Gordon was the
Vice President of Sales at Celestron. Mr. Gordon received a BS degree in
marketing from the University of Cincinnati.

     BRENT W. CHRISTENSEN has been the Company's Vice President -- Finance since
June 1995 and Chief Financial Officer since April 1996. From August 1993 to June
1995, he worked as the Company's controller. Mr. Christensen is a Certified
Public Accountant, and from January 1985 to August 1993, he worked as an audit
manager with Ernst & Young LLP. Mr. Christensen received a BA degree in business
administration from California State University at Fullerton.

     MARK D. PETERSON has been the Company's Vice President and General Counsel
since October 1997. From October 1991 to October 1997, Mr. Peterson was an
attorney with O'Melveny & Myers LLP, specializing in


                                       7
<PAGE>   10

corporate and securities law. Mr. Peterson received a BS degree in accounting
from Brigham Young University and a JD degree from the University of California
-- Berkeley, Boalt Hall School of Law.

     KENNETH W. BAUN has been the Company's Vice President -- Engineering since
June 1995. From March 1995 to June 1995, he worked as an engineering manager for
the Company. From 1991 to 1995, Mr. Baun was the President of Summit Instruments
Corp., a producer of disk drive test equipment. In addition, from 1973 to 1980,
Mr. Baun worked as an engineering department manager at UNISYS. Mr. Baun
received a BA degree in electrical engineering and an MS degree in computer
science from the University of California at Los Angeles.

     ROBERT A. WOOD, III has been the Company's Vice President - Manufacturing
since June 1995. From March 1991 to June 1995, he was the Company's
Manager-Optics. From October 1988 to March 1991, he worked as a project engineer
for the Company. Mr. Wood received a BS degree in electronics engineering
technology from Brigham Young University.

     ROBERT L. DAVIS has been the Company's Vice President and Assistant General
Counsel since December 1999. From September 1996 to December 1999, Mr. Davis was
an attorney with O'Melveny & Myers LLP, specializing in corporate and securities
law. From August 1994 to September 1996 he worked as an attorney with Morrison &
Foerster LLP, specializing in corporate finance and labor and employment law.
Mr. Davis received a BA degree in English and a JD degree from Brigham Young
University.

ITEM 2. PROPERTIES

     The Company leases a 161,000 square foot manufacturing, distribution and
corporate facility and a 42,000 square foot warehouse both of which are located
in Irvine, California. The leases expire in 2007 and 2003, respectively. The
Company also leases a 50,000 square foot assembly plant in Tijuana, Mexico. The
Tijuana lease expires in 2004 with three, five year options. The Company owns a
30,000 square foot office and distribution facility located in Borken, Germany.
The Company also leases a 13,500 square foot office, repair and distribution
facility in Graefelfing, Germany which expires in August 2002. The Company's
management believes that all facilities occupied by the Company are adequate for
present requirements; and that the Company's current equipment is in good
condition and suitable for the operations involved.

ITEM 3. LEGAL PROCEEDINGS

     Meade Instruments Corporation v. Reddwarf Starware, LLC, aka Reddwarf
Instruments, LLC ("Reddwarf"), Civil No. SACV 98-240 GLT, United States District
Court for the Central District of California, and Appeal No. 99-1517, United
States Court of Appeals for the Federal Circuit. Action for declaratory relief
initiated by a complaint filed March 16, 1998, by the Company for declaratory
judgment of non-infringement of Reddwarf's U.S. Patent No. 4,764,881, for
declaratory judgment that Reddwarf's patent is invalid, void, and unenforceable,
for an injunction and damages under federal antitrust statutes, and for an
injunction and other relief under California unfair competition statutes.
Reddwarf has filed a counterclaim, alleging infringement by the Company's LX200
series telescope system (and unspecified other products) of Reddwarf's U.S.
Patent No. 4,764,881. The counterclaim further alleges that the infringement is
willful and seeks an unspecified amount of damages, an injunction, and other
relief against the Company.

     On June 29, 1999, the Court granted the Company's Motion for Summary
Judgment of Non-Infringement. On August 10, 1999, the Court granted in part and
denied in part the Company's Motion for Attorney's Fees under 35 U.S.C. Section
285 and, in an order of October 14, 1999, the Court determined that the amount
of attorneys' fees to be awarded to the Company from Reddwarf is $33,681.50.

     On July 27, 1999, Reddwarf filed a Notice of Appeal to United States Court
of Appeals for the Federal Circuit. On June 23, 2000, the Court of Appeals
granted the Company's motion to dismiss Reddwarf's appeal. On February 27, 2001,
the Court of Appeals denied Reddwarf's petition for panel rehearing and, on
March 12, 2001, the Court of Appeals denied Reddwarf's petition for en banc
rehearing. Reddwarf's time to file a petition for a writ of certiorari, seeking
review by the United States Supreme Court, extends until June 11, 2001. Due to
the uncertainties of litigation, the Company is unable to provide an evaluation
of the likelihood of an unfavorable outcome should the Supreme Court grant
certiorari or in the event of other additional proceedings in this matter, or an
estimate of the amount of the potential loss in the event of an unfavorable
outcome.

     The Company is also involved from time to time in litigation incidental to
its business. Management believes that the outcome of current litigation will
not have a material adverse effect on the Company.


                                       8
<PAGE>   11

     Prior to the reacquisition of the Company by certain members of its senior
management, Meade agreed to be bound by the provisions of an order ("Order") of
the United States Federal Trade Commission ("FTC") prohibiting the Company from
making certain acquisitions. The Order provides that before Meade may acquire
any stock, equity interest or assets, other than purchases of manufactured
product in the ordinary course of business, of any company engaged in the
manufacture or sale of Schmidt-Cassegrain telescopes with apertures of 8 to 11
inches in the United States, Meade must provide the FTC with prior notice of
such event. The Order is effective until August 19, 2001.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     No matters were submitted to a vote of the Company's stockholders during
the fourth quarter of the fiscal year covered by this report.

                                     PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
        MATTERS

     The Company's initial public offering was completed on April 14, 1997 (the
"Offering"), and from that date to the present, the Company's common stock has
been listed on the Nasdaq National Market under the symbol "MEAD". The high and
low sales prices on a per share basis for the Company's common stock during each
quarterly period for the fiscal years ended February 28, 2001 and February 29,
2000 were:

<TABLE>
<CAPTION>
YEAR ENDED FEBRUARY 28, 2001:       HIGH    LOW     YEAR ENDED FEBRUARY 29, 2000:    HIGH     LOW
-----------------------------      ------  ------   -----------------------------   ------   ------
<S>                                <C>     <C>      <C>                             <C>      <C>
Fourth quarter................     $ 9.19  $ 3.56   Fourth quarter...............   $30.25   $23.63
Third quarter.................     $24.63  $ 8.00   Third quarter................   $30.50   $20.00
Second quarter................     $33.00  $13.06   Second quarter...............   $20.50   $14.00
First quarter.................     $39.50  $10.88   First quarter................   $13.88   $10.63
</TABLE>

     The reported closing sales price of the Company's common stock on the
Nasdaq National Market on May 15, 2001 was $4.90. As of May 15, 2001, there were
161 holders of record of the Company's common stock.

     Other than dividends paid to the Company's ESOP in August 1996, the Company
has not paid any cash dividends on its common stock and does not anticipate
declaring or paying any cash dividends on its common stock in the foreseeable
future. Although the Company intends to make future contributions to the ESOP
upon Board approval, no cash dividends (other than dividends paid to all holders
of common stock) will be paid to the ESOP with respect to future periods.


                                       9
<PAGE>   12

ITEM 6. SELECTED FINANCIAL DATA

                   SELECTED CONSOLIDATED FINANCIAL INFORMATION

     The following data have been derived from the Company's audited
consolidated financial statements, including the consolidated balance sheets at
February 28 (29), 2001 and 2000 and the consolidated statements of income for
the three years ended February 28, 2001 and the notes thereto appearing
elsewhere herein.

<TABLE>
<CAPTION>
                                                            YEAR ENDED FEBRUARY 28 (29),
                                              --------------------------------------------------------
                                                2001        2000       1999        1998         1997
                                              --------    --------    -------    --------     --------
                                                 (IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS)
<S>                                           <C>         <C>         <C>        <C>          <C>

INCOME STATEMENT DATA:
Net sales ................................    $123,000    $126,808    $76,321    $ 59,905     $ 47,151
Cost of sales ............................      82,809      75,780     44,255      38,245       31,845
                                              --------    --------    -------    --------     --------
  Gross profit ...........................      40,191      51,028     32,066      21,660       15,306
Selling expenses .........................      21,782      15,471     12,268       6,771        4,759
General and administrative expenses ......       8,439      10,355      7,325       5,464        5,970
ESOP contribution expense ................       2,997       1,861      1,200       1,100           --
Research and development expenses ........       2,062       1,361        978         854          628
                                              --------    --------    -------    --------     --------
  Operating income .......................       4,911      21,980     10,295       7,471        3,949
Interest expense .........................       2,036         977        473       1,034        1,657
                                              --------    --------    -------    --------     --------
  Income before income taxes .............       2,875      21,003      9,822       6,437        2,292
Income taxes .............................       1,589       9,048      4,223       2,702          960
                                              --------    --------    -------    --------     --------
Net income before accretion ..............       1,286      11,955      5,599       3,735        1,332
Accretion on redeemable preferred
  stock(1) ...............................          --          --         --        (374)      (4,310)
                                              --------    --------    -------    --------     --------
Net income (loss) available to common
  stockholders ...........................    $  1,286    $ 11,955    $ 5,599    $  3,361     $ (2,978)
                                              ========    ========    =======    ========     ========
Per share information:
Net income before adjustment to net income
  available per common share -- basic ....    $   0.09    $   0.85    $  0.41    $   0.29     $   0.17
Accretion on redeemable preferred stock(1)          --          --         --       (0.03)       (0.55)
                                              --------    --------    -------    --------     --------
Net income (loss) per share available to
  common stockholders -- basic ...........    $   0.09    $   0.85    $  0.41    $   0.26     $  (0.38)
                                              ========    ========    =======    ========     ========
Net income (loss) per share available
  to common stockholders -- diluted ......    $   0.08    $   0.80    $  0.40    $   0.26     $  (0.38)
                                              ========    ========    =======    ========     ========
Weighted average common shares
  outstanding -- basic ...................      14,700      14,112     13,718      12,820        7,876
                                              ========    ========    =======    ========     ========
Weighted average common shares
  outstanding -- diluted .................      15,600      14,944     14,070      12,970        7,876
                                              ========    ========    =======    ========     ========

BALANCE SHEET DATA:
Working capital ..........................    $ 38,867    $ 36,553    $21,388    $ 15,417     $  6,252
Total assets .............................      76,466      64,091     34,624      24,592       20,524
Total current liabilities ................      25,944      16,485      9,134       5,829       11,775
Long-term debt, net of current portion ...          --       4,500         --          --        6,599
Redeemable preferred stock ...............          --          --         --          --        6,490
Stockholders' equity (deficit) ...........      50,351      42,665     25,267      18,422       (4,952)
</TABLE>

--------

(1) Represents accretion reflecting original issue discount and accrued
    dividends on the redeemable preferred stock. In January 1997 the Company
    entered into a binding agreement to redeem its redeemable preferred stock
    earlier than the original mandatory redemption date. The accretion was
    accelerated in the fiscal year ended February 28, 1997 to reflect the new
    redemption date (April 14, 1997) and the Company recorded an additional $3.4
    million in accelerated accretion on the redeemable preferred stock pursuant
    to the redemption agreement (resulting in an aggregate $4.3 million
    accretion for fiscal 1997). The Company recorded a final accretion
    adjustment of approximately $374,000 during the first quarter of fiscal 1998
    related to the redemption of the redeemable preferred stock.


                                       10
<PAGE>   13

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

     The following discussion and analysis of the Company's financial condition
and results of operations is qualified in its entirety by, and should be read in
conjunction with, the more detailed information and consolidated financial
statements, including the notes thereto, appearing elsewhere in this Report.

RESULTS OF OPERATIONS

     The following table sets forth, for the periods indicated, certain items
from the Company's statements of income as a percentage of net sales for the
periods indicated.

<TABLE>
<CAPTION>
                                         YEAR ENDED FEBRUARY 28 (29),
                                         ----------------------------
                                         2001        2000       1999
                                         -----       -----      -----
<S>                                      <C>         <C>        <C>
Net sales ...........................    100.0%      100.0%     100.0%
Cost of sales .......................     67.3        59.8       58.0
                                         -----       -----      -----
Gross profit ........................     32.7        40.2       42.0
Operating expenses:
  Selling expenses ..................     17.7        12.2       16.0
  General and administrative expenses      6.9         8.2        9.6
  ESOP contribution expense .........      2.4         1.4        1.6
  Research and development expenses .      1.7         1.1        1.3
                                         -----       -----      -----
     Total operating expenses .......     28.7        22.9       28.5
                                         -----       -----      -----
Income from operations ..............      4.0        17.3       13.5
Interest expense ....................      1.7         0.8        0.6
                                         -----       -----      -----
Income before income taxes ..........      2.3        16.5       12.9
Provision for income taxes ..........      1.3         7.1        5.5
                                         -----       -----      -----
Net income ..........................      1.0         9.4        7.4
                                         =====       =====      =====
</TABLE>

FISCAL 2001 COMPARED TO FISCAL 2000

     Net sales decreased from $126.8 million in fiscal 2000 to $123.0 million in
fiscal 2001, a decrease of 3.0%. During fiscal 2001, lower unit sales of
less-expensive telescopes manufactured in Asia, lower telescope accessory sales,
the negative effect of seasonal promotional markdowns and product promotions,
and decreased sales from the Company's European subsidiary more than offset
increases in sales of both the Company's advanced telescopes manufactured
domestically and less-expensive and mid-range products assembled in the
Company's Mexican facility.

     Gross profit decreased from $51.0 million (40.2% of net sales) in fiscal
2000 to $40.2 million (32.7% of net sales) in fiscal 2001, a decrease of 21.2%.
The decrease in gross profit was principally due to the decrease in net sales
from the prior year and a decrease in the gross margin percentage. The decrease
in the gross margin percentage was principally due to the effect of charges to
gross profit of approximately $3 million and approximately $6.1 million, taken
in the third and fourth quarter, respectively. These charges related to the
aforementioned seasonal product markdowns and promotions as well as to
provisions for excess inventories resulting from the lower sales volume. Gross
profit was also negatively affected by lower average gross margins on products
sold at the Company's European subsidiary.

     Selling expenses increased from $15.5 million (12.2% of net sales) in
fiscal 2000 to $21.8 million (17.7% of net sales) in fiscal 2001, an increase of
40.8%. This increase principally reflects higher advertising and marketing
expenses that increased by more than $4 million over the prior year. Those
expenses were part of an aggressive print media and point-of-sale advertising
campaign aimed at the general consumer throughout the year but concentrated
during the Christmas holiday buying period. Also contributing to the increase
over the prior year was higher bad debt expenses brought on by certain customer
bankruptcies and other general selling expense increases.

     General and administrative expenses decreased from $10.4 million (8.2% of
net sales) in fiscal 2000 to $8.4 million (6.9% of net sales) in fiscal 2001, a
decrease of 18.5%. This decrease was principally due to decreases in
compensation expenses during the year. Also contributing to the decrease were
lower professional and consulting fees and other sundry expense reductions.


                                       11
<PAGE>   14

     ESOP contribution expense increased from $1.9 million (1.4% of net sales)
in fiscal 2000 to $3.0 million (2.4% of net sales) in fiscal 2001, an increase
of 61.0%. The increase in this non-cash charge was due to increases in the
average market price of the Company's stock allocated to the Employee Stock
Ownership Plan during fiscal 2001. The non-cash ESOP contribution expense may
fluctuate as the market value of the Company's common stock changes.

     Research and development expenses increased from $1.4 million (1.1% of net
sales) in fiscal 2000 to $2.1 million (1.7% of net sales) in fiscal 2001, an
increase of 51.5%. This increase was due to increased engineering personnel
costs, outside consulting costs and parts and supplies costs related to
telescope and other consumer related products, the development of industrial
optical products for TeraBeam Corporation and the development of certain CCD
imaging products for commercial and industrial applications.

     Interest expense increased from $977,000 for the fiscal year 2000 to $2.0
million for fiscal 2001, an increase of 108.4%. This increase was due to
interest expense on the $5.0 million Term Loan, higher average borrowings on the
Company's bank lines of credit and higher average market interest rates compared
to the prior period.

     The provision for income taxes increased to 55.3% of income before income
taxes for fiscal year 2001 compared to 43.1% in the prior year. The increase in
the tax rate was principally due to the impact of non-deductible permanent
differences between the Company's tax books and its financial statements. The
most significant of these differences was the ESOP charge.

FISCAL 2000 COMPARED TO FISCAL 1999

     Net sales increased from $76.3 million in fiscal 1999 to $126.8 million in
fiscal 2000, an increase of 66.2%. This increase was primarily due to increases
in unit sales of less-expensive telescopes including those manufactured
domestically and those manufactured in Taiwan and continuing strong sales of
telescope accessories. Approximately $13.0 million of the increase in net sales
was attributable to the Bresser acquisition.

     Gross profit increased from $32.1 million (42.0% of net sales) in fiscal
1999 to $51.0 million (40.2% of net sales) in fiscal 2000, an increase of 59.1%.
While gross margin for the Company's core business experienced little change
from the previous year, overall gross margin declined due to the acquisition of
Bresser. As a distributor only of optical products, Bresser is subject to gross
margins that are typically lower than the margins the Company, as a manufacturer
and distributor, has experienced in the past.

     Selling expenses increased from $12.3 million (16.0% of net sales) in
fiscal 1999 to $15.5 million (12.2% of net sales) in fiscal 2000, an increase of
26.1%. This dollar increase principally reflects higher freight costs, higher
commissions and other selling costs to support higher sales volumes in fiscal
2000 as compared to fiscal 1999.

     General and administrative expenses increased from $7.3 million (9.6% of
net sales) in fiscal 1999 to $10.4 million (8.2% of net sales) in fiscal 2000,
an increase of 41.4%. This dollar increase was generally due to increases in
personnel and benefit related costs.

     ESOP contribution expense increased from $1.2 million (1.6% of net sales)
in fiscal 1999 to $1.9 million (1.4% of net sales) in fiscal 2000, an increase
of 55.1%. The increase in this non-cash charge was due to increases in the
average market price of the Company's stock allocated to the Employee Stock
Ownership Plan during fiscal 2000. The non-cash ESOP contribution expense may
fluctuate as the market value of the Company's common stock changes.

     Research and development expenses increased from $978,000 (1.3% of net
sales) in fiscal 1999 to $1.4 million (1.1% of net sales) in fiscal 2000, an
increase of 39.2%. This dollar increase was due to higher personnel related
costs and higher outside consulting costs during fiscal 2000 as compared to the
prior fiscal year.


                                       12
<PAGE>   15

     Interest expense increased from $473,000 for the fiscal year ended February
28, 1999 to $977,000 for fiscal 2000, an increase of 106.6%. This increase was
principally due to interest expense on the $5.0 million Term Loan and interest
expense on short-term bank borrowings in Germany for the period.

SEASONALITY AND QUARTERLY RESULTS OF OPERATIONS

     The Company has experienced, and expects to continue to experience,
substantial fluctuations in its sales, gross margins and profitability from
quarter to quarter. Factors that influence these fluctuations include the volume
and timing of orders received, changes in the mix of products sold, market
acceptance of the Company's products, competitive pricing pressures, the
Company's ability to meet increasing demand and delivery schedules, the timing
and extent of research and development expenses, the timing and extent of
product development costs and the timing and extent of advertising expenditures.
In addition, a substantial portion of the Company's net sales and operating
income typically occurs in the third quarter of the Company's fiscal year
primarily due to disproportionately higher customer demand for less-expensive
telescopes during the holiday season. The Company continues to experience
significant sales to mass merchandisers. Mass merchandisers, along with
specialty retailers, purchase a considerable amount of their inventories to
satisfy such seasonal customer demand. These purchasing patterns have caused the
Company to increase its level of inventory during its second and third quarters
in response to such demand or anticipated demand. As a result, the Company's
working capital requirements have correspondingly increased at such times.

     The following tables (in thousands of dollars) present unaudited financial
results for each of the eight quarters in the period ended February 28, 2001.
The Company believes that all necessary adjustments have been included to
present fairly the quarterly information when read in conjunction with the
consolidated financial statements and notes included elsewhere in this Report.
The operating results for any quarter are not necessarily indicative of the
results for any subsequent quarter.

<TABLE>
<CAPTION>
                                           FISCAL 2001                                  FISCAL 2000
                           -----------------------------------------     ----------------------------------------
                            FIRST     SECOND      THIRD     FOURTH        FIRST     SECOND      THIRD     FOURTH
                           QUARTER    QUARTER    QUARTER    QUARTER      QUARTER    QUARTER    QUARTER    QUARTER
                           -------    -------    -------    --------     -------    -------    -------    -------
<S>                        <C>        <C>        <C>        <C>          <C>        <C>        <C>        <C>

Net sales .............    $22,790    $35,630    $42,424    $ 22,156     $17,101    $24,134    $63,725    $21,848
Gross profit ..........      9,285     14,333     14,086       2,487       7,117     10,137     24,764      9,010
Operating income (loss)      2,709      5,063      4,301      (7,162)      1,957      3,957     14,256      1,810
Net income (loss) .....      1,369      2,632      1,986      (4,701)      1,144      2,216      7,696        899
</TABLE>

     Quarterly results can be affected by a number of factors including the
timing of orders, production delays or inefficiencies, and raw materials
availability. See "Business -- Operations -- Materials and Supplies."

LIQUIDITY AND CAPITAL RESOURCES

     The Company funded its operations with internally generated cash flow and
short-term borrowings from banks. Internally generated cash flow from net income
adjusted for non-cash charges was more than offset by increases in accounts
receivable, inventories and prepaid income taxes. A substantial portion of the
Company's net sales typically occur in the third quarter primarily due to
disproportionately higher customer demand for less-expensive telescopes during
the Christmas holiday season. The increase in inventories was due to
significantly lower than expected unit and dollar sales for the third quarter of
the Company's fiscal year 2001. The increase in accounts receivable was
principally due to the timing of sales and cash collections during the fourth
quarter of fiscal 2001 compared to the prior year. With an August tax year end
and the unexpected decline in third and fourth quarter sales and profits coupled
with a higher than expected tax deduction from the exercise of stock options,
the Company's estimated tax payments generated significant prepaid taxes at
February 28, 2001. Net working capital totaled approximately $38.9 million at
February 28, 2001, up from $36.6 million at February 29, 2000. Working capital
requirements fluctuate during the year due to the seasonal nature of the
business. These requirements are typically financed through a combination of
internally generated cash flow from operating activities and short-term bank
borrowings.


                                       13
<PAGE>   16

     On September 1, 1999 the Company acquired 100% of the stock and equity
interests in Bresser for $5.0 million in cash and 201,830 shares of the
Company's common stock valued at approximately $2.0 million. Bresser is a German
distributor of binoculars, telescopes, microscopes and other consumer optical
products. To fund the cash portion of the purchase price the Company borrowed
$5.0 million under the Term Loan on August 31, 1999. Bresser has provided the
Company greater international distribution opportunities for its products.
Further, Bresser's significant presence in the binocular and low-priced
telescope market has strengthened the Company's penetration into these markets.
Further to that end, in January 2000, the Company purchased what was formerly
its German distributor for approximately $1.1 million cash.

     On August 31, 1999 the Company entered into a loan agreement (the "Loan
Agreement") with a bank, replacing its then existing credit facilities. The Loan
Agreement provided the Company with an aggregate $40.0 million credit facility
consisting of a five year $35.0 million revolving credit line (the "Revolving
Loan") and a five year $5.0 million term loan (the "Term Loan"). The Term Loan
was subject to quarterly amortization payments of $250,000 beginning September
30, 2000. In connection with the acquisition of Bresser, the Company borrowed
$5.0 million under the Term Loan on August 31, 1999. The Term Loan was also
subject to mandatory prepayments upon the happening of certain events. Amounts
outstanding under the Revolving Loan and Term Loan bore interest, at the
Company's option, at a base rate or eurodollar rate plus an applicable margin.
The Company's obligations under the Loan Agreement are guaranteed by each of the
Company's domestic subsidiaries and are secured by substantially all of the
assets of the Company and its domestic subsidiaries. The Loan Agreement
contained certain financial covenants and customary affirmative and negative
covenants and events of default. As of February 28, 2001, the Company was in
breach of the financial covenants set forth in the Loan Agreement. The Company
has received a Waiver Agreement (the "Waiver") from the bank covering the breach
as of February 28, 2001. The Waiver modifies the covenants through August 31,
2001, at which time the Company would again be required to be in compliance with
the original covenants. The Waiver also reduced the amount of borrowings under
the revolving credit line to $22,500,000. The Company is currently negotiating
to renew its loan agreement with the bank. The Company anticipates the new loan
agreement to be in the form of a $42,000,000 revolving credit facility and a
$3,000,000 term loan. Availability under the new loan agreement would be subject
to a borrowing base with standard advance rates against eligible accounts
receivable and inventories and would be collateralized by substantially all of
the assets of the Company and its domestic subsidiaries. Management believes the
Company will be able to enter into the new loan agreement in order to meet its
working capital needs for the foreseeable future. However, there can be no
assurance that the Company will be successful in entering into a new loan
agreement with its current lender. Should the Company be unable to do so, it
would be required to seek alternative sources of capital in order to repay its
current borrowings with the bank. There can be no assurance that such
alternative sources of capital will be available on reasonable terms, if at all.
Failure to obtain such alternative sources of capital would have a material
adverse effect on the Company's financial condition and its ability to achieve
its business plan and objectives.

     Capital expenditures, including financed purchases of equipment, aggregated
$2.4 million, $2.7 million and $2.1 million for the fiscal years ended February
28(29), 2001, 2000 and 1999, respectively. Included in purchases of equipment
for fiscal 1999 is approximately $1.3 million for equipment sold and leased back
under operating leases. The Company had no material capital expenditure
commitments as of February 28, 2001.

     Contributions to the Company's Employee Stock Ownership Plan ("ESOP") are
accounted for as a contribution expense on the Company's income statement and
are accrued quarterly based upon the expected annual contribution amount. As
quarterly contributions are accrued, the corresponding number of shares are
added to the Weighted Average Common Shares Outstanding and Unearned ESOP Shares
on the Company's Balance Sheet are reduced. The ESOP uses the contributions to
repay amounts due on the ESOP Loan. The ESOP contribution expense is a net
non-cash charge which is added back to net income to arrive at cash flows
provided by operating activities. As the Company makes these non-cash
contributions to the ESOP to fund the repayment of the ESOP Loan, the Company
will realize cash tax savings equal to the product of the tax basis of the
contributions, multiplied by the applicable statutory tax rates in effect at the
time.

     Based on the Company's expectations regarding the new loan agreement as set
forth above, the Company believes that internally generated cash flow and
borrowing ability will be sufficient to meet its operating, working capital and
capital expenditure requirements for the foreseeable future. In the event that
the Company requires more capital than is presently anticipated, the Company's
cash balances may be consumed and additional sources of liquidity, such as debt
or equity financings, may be required to meet its capital needs. There can be no
assurance that additional capital beyond the amounts the Company currently
requires will be available on reasonable terms, if at all.



                                       14
<PAGE>   17

INFLATION

     The Company does not believe that inflation has had a material effect on
the results of operations during the past three years. There can be no assurance
that the Company's business will not be affected by inflation in the future.

NEW ACCOUNTING PRONOUNCEMENTS

     In June 1998 the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133; Accounting for Derivative Instruments
and Hedging Activities ("SFAS 133"). SFAS 133 is required to be adopted in
fiscal years beginning after June 15, 2000 and establishes accounting and
reporting standards for derivative instruments and for hedging activities. The
Company does not anticipate that the adoption of SFAS 133 will have a material
impact on its financial position or results of operations.

FORWARD-LOOKING INFORMATION

     The preceding "Management's Discussion and Analysis of Financial Condition
and Results of Operations" section contains various "forward looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities and Exchange Act of 1934, as amended, which
represent the Company's reasonable judgment concerning the future and are
subject to risks and uncertainties that could cause the Company's actual
operating results and financial position to differ materially, including the
following: the Company's ability to expand the markets for telescopes,
binoculars and other optical products as a result of its increased advertising
and marketing efforts; the Company's ability to continue to develop and bring to
market new and innovative products; the Company's ability to integrate and
develop its wholly-owned manufacturing facility in Mexico in combination with
its existing manufacturing capabilities; the Company expanding its distribution
network; the Company's ability to integrate and further develop the business of
Bresser in combination with the Company's existing business; the Company
experiencing fluctuations in its sales, gross margins and profitability from
quarter to quarter consistent with prior periods; the extent to which the
Company will be able to execute a new loan agreement; the extent to which the
Company will be able to leverage its design and manufacturing expertise in the
areas of free-space optics and CCD imaging; and the Company's expectation that
it will have sufficient funds to meet any working capital requirements during
the foreseeable future with internally generated cash flow and borrowing
ability.

     In addition to other information in this report, the Company cautions that
certain factors, including, without limitation, the following, should be
considered carefully in evaluating the Company and its business and that such
factors may cause the Company's actual operating results to differ materially
from those set forth in the forward looking statements described above or to
otherwise be adversely affected: any significant decline in general economic
conditions or uncertainties affecting consumer spending; any general decline in
demand for the Company's products; any inability to continue to design and
manufacture products that will achieve and maintain commercial success; any
failure of the Company to penetrate the binocular market and achieve meaningful
sales; any significant interruption of the Company's manufacturing abilities in
its domestic or Mexican facilities or in any of its suppliers located in the far
east; greater than anticipated competition; any loss of, or the failure to
replace, any significant portion of the sales made to any significant customer
of the Company; the inherent risks associated with international sales,
including variations in local economies, fluctuating exchange rates (including
conversion to Euros), increased difficulty of inventory management, greater
difficulty in accounts receivable collections, costs and risks associated with
localizing products for foreign countries, changes in tariffs and other trade
barriers, adverse foreign tax consequences, cultural differences affecting
product demand and customer service and burdens of complying with a variety of
foreign laws; the inherent risks associated with products manufactured or
assembled outside of the United States, including, among other things,
imposition of quotas or trade sanctions, fluctuating exchange rates, shipment
delays or political instability and increasing ESOP charges in the event the
market price of the Company's stock increases.


                                       15
<PAGE>   18

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The Company is exposed to certain levels of market risks, including changes
in foreign currency exchange rates and interest rates. Market risk is the
potential loss arising from adverse changes in market rates and prices, such as
foreign currency exchange and interest rates.

     The Company conducts business in a number of foreign currencies,
principally in Europe. These currencies have been relatively stable against the
U.S. dollar for the past several years. As a result, foreign currency
fluctuations have not had a material impact historically on Meade's revenues or
results of operations. There can be no assurance that European currencies will
remain stable relative to the U.S. dollar or that future fluctuations in the
value of foreign currencies will not have a material adverse effect on the
Company's business, operating results, revenues and financial condition. The
Company has and will continue to consider the adoption of a foreign currency
hedging program.

     The Company does not enter into derivatives or other financial instruments
for trading, speculative purposes or to manage its interest rate risk. The
Company's financial instruments consist of cash, accounts receivable, accounts
payable, and long-term obligations. The Company's exposure to market risk for
changes in interest rates relates primarily to short-term investments and
short-term obligations. As a result, the Company does not expect fluctuations in
interest rates to have a material impact on the fair value of these instruments.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     Information with respect to this item is set forth in Item 14.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

     None.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     Information with respect to this item is incorporated by reference from the
Company's definitive Proxy Statement to be filed with the Commission within 120
days after the close of the Company's fiscal year. Information regarding
executive officers of the Company is set forth under the caption "Executive
Officers of the Registrant" in Item 1 hereof.

ITEM 11. EXECUTIVE COMPENSATION

     Information with respect to this item is incorporated by reference from the
Company's definitive Proxy Statement to be filed with the Commission within 120
days after the close of the Company's fiscal year.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     Information with respect to this item is incorporated by reference from the
Company's definitive Proxy Statement to be filed with the Commission within 120
days after the close of the Company's fiscal year.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Information with respect to this item is incorporated by reference from the
Company's definitive Proxy Statement to be filed with the Commission within 120
days after the close of the Company's fiscal year.


                                       16
<PAGE>   19

                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON FORM 8-K

     (a) The following documents are filed as part of this report:

<TABLE>
<CAPTION>
                                                                                                 PAGE
                                                                                                NUMBER
                                                                                                ------
<S>      <C>                                                                                    <C>

     1.  Financial Statements:
         Report of Independent Accountants....................................................    F-1
         Consolidated Balance Sheets at February 28, 2001 and February 29, 2000...............    F-2
         Consolidated Statements of Income for each of the three years
         in the period ended February 28, 2001................................................    F-3
         Consolidated Statements of Stockholders' Equity for each of the three years
         in the period ended February 28, 2001................................................    F-4
         Consolidated Statements of Cash Flows for each of the three years
         in the period ended February 28, 2001................................................    F-5
         Notes to Consolidated Financial Statements...........................................    F-6
     2.  Financial Statement Schedules:
         For each of the three years in the period ended February 28, 2001-- II
         -- Valuation and Qualifying Accounts
         All other schedules for which provision is made in the applicable
         accounting regulation of the Securities and Exchange Commission are not
         required under the related instructions or are inapplicable, and
         therefore have been omitted.

     3.  Exhibits included or incorporated herein: See Exhibit Index.
</TABLE>

     (b) Reports on Form 8-K:

         None.


                                       17
<PAGE>   20

                        REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of
Meade Instruments Corp.

     In our opinion, the consolidated financial statements listed in the index
appearing under Item 14(a)(1) on page 17 present fairly, in all material
respects, the financial position of Meade Instruments Corp. and its subsidiaries
at February 28, 2001 and February 29, 2000, and the results of their operations
and their cash flows for each of the three years in the period ended February
28, 2001, in conformity with accounting principles generally accepted in the
United States of America. In addition, in our opinion, the financial statement
schedule listed in the index appearing under 14(a)(2) on page 17, presents
fairly, in all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements. These financial
statements and financial statement schedule are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements and financial statement schedule based on our audits. We
conducted our audits of these statements in accordance with auditing standards
generally accepted in the United States of America, which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit 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.

/s/ PRICEWATERHOUSECOOPERS LLP

PricewaterhouseCoopers LLP

Orange County, California
April 18, 2001


                                      F-1
<PAGE>   21

                             MEADE INSTRUMENTS CORP.

                           CONSOLIDATED BALANCE SHEETS

                                     ASSETS

<TABLE>
<CAPTION>
                                                                                    FEBRUARY 28,       FEBRUARY 29,
                                                                                        2001               2000
                                                                                    ------------       ------------
<S>                                                                                 <C>                <C>

Current assets:
  Cash .......................................................................      $  1,186,000       $  2,180,000
  Accounts receivable, less allowance for doubtful accounts of
     $2,175,000 in 2001 and $3,861,000 in 2000 ...............................        10,254,000          8,451,000
  Inventories ................................................................        41,651,000         34,311,000
  Deferred income taxes ......................................................         6,915,000          7,770,000
  Prepaid income taxes .......................................................         4,230,000                 --
  Prepaid expenses and other current assets ..................................           575,000            326,000
                                                                                    ------------       ------------
          Total current assets ...............................................        64,811,000         53,038,000
Other assets .................................................................         3,950,000          4,087,000
Property and equipment, net ..................................................         7,705,000          6,966,000
                                                                                    ------------       ------------
                                                                                    $ 76,466,000       $ 64,091,000
                                                                                    ============       ============
                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Bank line of credit ........................................................      $ 14,585,000       $  2,784,000
  Accounts payable ...........................................................         2,522,000          3,889,000
  Accrued liabilities ........................................................         4,051,000          6,479,000
  Income taxes payable .......................................................                --          2,550,000
  Current portion of long-term debt and capital lease obligations ............         4,786,000            783,000
                                                                                    ------------       ------------
          Total current liabilities ..........................................        25,944,000         16,485,000
                                                                                    ------------       ------------
Long-term bank debt ..........................................................                --          4,500,000
Long-term capital lease obligations, net of current portion ..................           171,000            441,000
                                                                                    ------------       ------------
Commitments and contingencies

Stockholders' equity:
  Common stock; $0.01 par value; 50,000,000 shares authorized; 16,472,000 and
    16,214,000 shares issued and outstanding at February 28, 2001 and February
    29, 2000, respectively ...................................................           165,000            162,000
  Additional paid-in capital .................................................        32,367,000         26,749,000
  Retained earnings ..........................................................        23,743,000         22,457,000
  Accumulated other comprehensive income .....................................          (359,000)          (333,000)
                                                                                    ------------       ------------
                                                                                      55,916,000         49,035,000
  Unearned ESOP shares .......................................................        (5,565,000)        (6,370,000)
                                                                                    ------------       ------------
          Total stockholders' equity .........................................        50,351,000         42,665,000
                                                                                    ------------       ------------
                                                                                    $ 76,466,000       $ 64,091,000
                                                                                    ============       ============
</TABLE>

          See accompanying notes to consolidated financial statements.


                                      F-2
<PAGE>   22

                             MEADE INSTRUMENTS CORP.

                        CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
                                                    YEAR ENDED FEBRUARY 28 (29),
                                         -----------------------------------------------
                                             2001              2000             1999
                                         ------------      ------------      -----------
<S>                                      <C>               <C>               <C>

Net sales .........................      $123,000,000      $126,808,000      $76,321,000
Cost of sales .....................        82,809,000        75,780,000       44,255,000
                                         ------------      ------------      -----------
  Gross profit ....................        40,191,000        51,028,000       32,066,000
Selling expenses ..................        21,782,000        15,471,000       12,268,000
General and administrative expenses         8,439,000        10,355,000        7,325,000
ESOP contribution expense .........         2,997,000         1,861,000        1,200,000
Research and development expenses .         2,062,000         1,361,000          978,000
                                         ------------      ------------      -----------
  Operating income ................         4,911,000        21,980,000       10,295,000
Interest expense ..................         2,036,000           977,000          473,000
                                         ------------      ------------      -----------
  Income before income taxes ......         2,875,000        21,003,000        9,822,000
Provision for income taxes ........         1,589,000         9,048,000        4,223,000
                                         ------------      ------------      -----------
Net income ........................      $  1,286,000      $ 11,955,000      $ 5,599,000
                                         ============      ============      ===========
Net income per share -- basic .....      $       0.09      $       0.85      $      0.41
                                         ============      ============      ===========
Net income per share -- diluted ...      $       0.08      $       0.80      $      0.40
                                         ============      ============      ===========
Weighted average common shares
  outstanding -- basic ............        14,700,000        14,112,000       13,718,000
                                         ============      ============      ===========
Weighted average common shares
  outstanding -- diluted ..........        15,600,000        14,944,000       14,070,000
                                         ============      ============      ===========
</TABLE>


          See accompanying notes to consolidated financial statements.


                                      F-3
<PAGE>   23

                             MEADE INSTRUMENTS CORP.

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                             ACCUMULATED
                                           COMMON STOCK        ADDITIONAL       OTHER
                                     ----------------------     PAID-IN     COMPREHENSIVE    RETAINED     UNEARNED
                                       SHARES       AMOUNT      CAPITAL      INCOME (LOSS)   EARNINGS    ESOP SHARES      TOTAL
                                     ----------    --------   -----------   --------------  -----------  -----------   ------------
<S>                                  <C>           <C>        <C>           <C>             <C>          <C>           <C>
Balance at February 28, 1998 ......  15,751,000    $158,000   $21,366,000             --    $ 4,903,000  $(8,005,000)  $ 18,422,000
Exercise of stock options .........      13,000          --        46,000             --             --           --         46,000
Release of ESOP shares ............          --          --       312,000             --             --      888,000      1,200,000
Net income available to
  common stockholders .............          --          --            --             --      5,599,000           --      5,599,000
                                     ----------    --------   -----------      ---------    -----------  -----------   ------------
Balance at February 28, 1999 ......  15,764,000     158,000    21,724,000             --     10,502,000   (7,117,000)    25,267,000
Exercise of stock options .........     248,000       2,000       932,000             --             --           --        934,000
Tax benefit of stock options
  exercised .......................          --          --       937,000             --             --           --        937,000
Release of ESOP shares ............          --          --     1,114,000             --             --      747,000      1,861,000
Shares issued in Bresser
  acquisition .....................     202,000       2,000     2,042,000             --             --           --      2,044,000
Comprehensive income:
    Currency translation adjustment          --          --            --      $(333,000)            --           --       (333,000)
    Net income available to
      common stockholders .........          --          --            --             --     11,955,000           --     11,955,000
                                                                                                                       ------------
Total comprehensive income ........          --          --            --             --             --           --     11,622,000
                                     ----------    --------   -----------      ---------    -----------  -----------   ------------
Balance at February 29, 2000 ......  16,214,000     162,000    26,749,000       (333,000)    22,457,000   (6,370,000)    42,665,000
Exercise of stock options .........     258,000       3,000     1,040,000             --             --           --      1,043,000
Tax benefit of stock options
  exercised .......................          --          --     2,386,000             --             --           --      2,386,000
Release of ESOP shares ............          --          --     2,192,000             --             --      805,000      2,997,000

Comprehensive income:
    Currency translation adjustment          --          --            --        (26,000)            --           --        (26,000)
    Net income available to
      common stockholders .........          --          --            --             --      1,286,000           --      1,286,000
                                                                                                                       ------------
Total comprehensive income ........          --          --            --             --             --           --      1,260,000
                                     ----------    --------   -----------      ---------    -----------  -----------   ------------
Balance at February 28, 2001 ......  16,472,000    $165,000   $32,367,000      $(359,000)   $23,743,000  $(5,565,000)  $ 50,351,000
                                     ==========    ========   ===========      =========    ===========  ===========   ============
</TABLE>


          See accompanying notes to consolidated financial statements.


                                      F-4
<PAGE>   24

                             MEADE INSTRUMENTS CORP.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                           YEAR ENDED FEBRUARY 28 (29),
                                                               -------------------------------------------------
                                                                   2001               2000              1999
                                                               ------------       ------------       -----------
<S>                                                            <C>                <C>                <C>

Cash flows from operating activities:
Net income ..............................................      $  1,286,000       $ 11,955,000       $ 5,599,000
Adjustments to reconcile net income to net cash
  provided by (used in) operating activities: ...........                --                 --                --
  Depreciation and amortization .........................         1,946,000          1,296,000           755,000
  ESOP contribution .....................................         2,997,000          1,861,000         1,200,000
  Allowance for doubtful accounts .......................         1,815,000          1,567,000         1,758,000
  Changes in assets and liabilities, net of effects of
    acquisitions:
    Accounts receivable .................................        (3,646,000)         2,854,000        (6,598,000)
    Inventories .........................................        (7,551,000)       (10,318,000)       (2,281,000)
    Deferred income taxes ...............................           781,000         (3,357,000)       (2,504,000)
    Prepaid expenses and other current assets ...........        (5,151,000)            44,000           (17,000)
    Other assets ........................................            64,000             92,000            87,000
    Accounts payable ....................................        (1,338,000)           454,000           177,000
    Accrued liabilities .................................        (2,310,000)           737,000         2,694,000
    Income taxes payable ................................           386,000          1,324,000           385,000
                                                               ------------       ------------       -----------
      Net cash provided by (used in) operating activities       (10,721,000)         8,509,000         1,255,000
                                                               ------------       ------------       -----------
Cash flows from investing activities:
    Capital expenditures ................................        (2,428,000)        (1,911,000)       (2,921,000)
    Acquisition of Bresser Optik net of cash acquired ...                --         (4,968,000)               --
    Acquisition of certain assets of Astrocom ...........                --         (1,147,000)               --
    Proceeds from the sale and lease back of equipment ..                --                 --         1,323,000
                                                               ------------       ------------       -----------
      Net cash used in investing activities .............        (2,428,000)        (8,026,000)       (1,598,000)
                                                               ------------       ------------       -----------
Cash flows from financing activities:
    Payments on long-term debt ..........................          (500,000)          (183,000)               --
    Proceeds from long-term loan ........................                --          5,000,000                --
    Net payments (borrowings) under bank line of credit .        11,922,000         (4,926,000)               --
    Net proceeds from issuance of common stock ..........                --                 --            46,000
    Redemption of preferred stock .......................                --                 --                --
    Exercise of stock options ...........................         1,043,000            934,000                --
    Payments under capital lease obligations ............          (268,000)          (367,000)          (69,000)
                                                               ------------       ------------       -----------
      Net cash provided by (used in) financing activities        12,197,000            458,000           (23,000)
                                                               ------------       ------------       -----------
Effect of exchange rate changes on cash .................           (42,000)           (44,000)               --
                                                               ------------       ------------       -----------
Net increase (decrease) in cash .........................          (994,000)           897,000          (366,000)
Cash at beginning of year ...............................         2,180,000          1,283,000         1,649,000
                                                               ------------       ------------       -----------
Cash at end of year .....................................      $  1,186,000       $  2,180,000       $ 1,283,000
                                                               ============       ============       ===========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
     Interest ...........................................      $  2,036,000       $    789,000       $   503,000
     Income taxes .......................................      $  5,050,000       $ 11,038,000       $ 6,342,000
Non-cash financing activities:
     Capital lease obligations ..........................      $     24,000       $    614,000       $   170,000
                                                               ------------       ------------       -----------
</TABLE>


          See accompanying notes to consolidated financial statements.


                                      F-5
<PAGE>   25
                             MEADE INSTRUMENTS CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  THE COMPANY AND OPERATIONS

THE COMPANY

     Meade Instruments Corp. (the "Company"), a Delaware corporation, is a
multinational consumer optics company that designs, manufactures, imports and
distributes telescopes, telescope accessories, binoculars and other optical
products. The Company has operations in the United States, Germany and Mexico.

OPERATIONS

     During fiscal 2001, the Company experienced lower than anticipated unit
sales of less-expensive telescopes manufactured in Asia, lower telescope
accessory sales, the negative effect of seasonal promotional markdowns and
product promotions, and decreased sales from the Company's European subsidiary.
This caused the Company to be in breach of the financial covenants of its loan
agreement. See Note 4. The Company has received a Waiver Agreement (the
"Waiver") from the bank covering the breach as of February 28, 2001. The Waiver
modifies the covenants through August 31, 2001, at which time the Company would
again be required to be in compliance with the original covenants. The Waiver
also reduced the amount of borrowings under the revolving credit line to
$22,500,000. The Company is currently negotiating to renew its loan agreement
with the bank. The Company anticipates the new loan agreement to be in the form
of a $42,000,000 revolving credit facility and a $3,000,000 term loan.
Availability under the new loan agreement would be subject to a borrowing base
with standard advance rates against eligible accounts receivable and inventories
and would be collateralized by substantially all of the assets of the Company
and its domestic subsidiaries. Management believes the Company will be able to
enter into the new loan agreement in order to meet its working capital needs for
the foreseeable future. However, there can be no assurance that the Company will
be successful in entering into a new loan agreement with its current lender.
Should the Company be unable to do so, it would be required to seek alternative
sources of capital in order to repay its current borrowings with the bank. There
can be no assurance that such alternative sources of capital will be available
on reasonable terms, if at all. Failure to obtain such alternative sources of
capital would have a material adverse effect on the Company's financial
condition and its ability to achieve its business plan and objectives.

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

   Principles of consolidation

     The accompanying consolidated financial statements include the accounts of
the Company and all of its 100%-owned subsidiaries and reflect the elimination
of all significant intercompany account balances and transactions.

   Revenue recognition

     Revenues are generally recorded when title transfers and the risks of
ownership are passed to customers. Provisions for returns are provided for in
the same period the related sales are recorded.

   Foreign currency translation

     The assets and liabilities of the Company's foreign operations are
translated at end of period exchange rates. Revenues and expenses are translated
at the average exchange rates prevailing during the period. The effects of
unrealized exchange rate fluctuations on translating foreign currency assets and
liabilities into U.S. dollars are accumulated in stockholders' equity as a
component of other comprehensive income.

   Allowance for doubtful accounts

     The Company evaluates the collectibility of its accounts receivable at
least quarterly, based upon various factors including the financial condition
and payment history of major customers and an overall review of collections
experience on other accounts and economic factors or events expected to affect
the Company's future collections experience.

   Inventories

     Inventories are stated at the lower of cost, as determined using the
first-in, first-out ("FIFO") method, or market. Costs include materials, labor
and manufacturing overhead. The Company evaluates the carrying value of its
inventories at least quarterly, taking into account such factors as historical
and anticipated future sales compared with quantities on hand and the price the
Company expects to obtain for its products in their respective markets compared
with historical costs.

   Property and equipment

     Property and equipment are stated at cost and are depreciated using the
straight-line method over the estimated useful lives of the assets. Buildings
and related improvements are depreciated over seven to twenty-five years. All
other property and equipment, except property held under capital lease, is
depreciated over three to seven years.

                                      F-6
<PAGE>   26

                             MEADE INSTRUMENTS CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


Properties held under capital leases are recorded at the present value of the
noncancellable lease payments over the term of the lease and are amortized over
the shorter of the lease term or the estimated useful lives of the assets.

   Goodwill and intangibles

     The difference between the purchase price and the fair value of net assets
acquired (goodwill) at the date of acquisition is included in the accompanying
consolidated balance sheets in other assets. Goodwill and intangible assets are
amortized over the estimated period to be benefited which ranges from seven to
fifteen years. Goodwill and intangible assets are reviewed whenever events or
changes in circumstances indicate that the carrying amount of such assets may
not be recoverable. The Company reviews the recoverability by comparing the
estimated future cash flows on an undiscounted basis to the net book value of
the assets. In the event that projected undiscounted cash flows are less than
the net book value of the assets, the carrying value of the assets are written
down to their fair value, less costs to sell. Fair value is generally based on a
discounted cash flow analysis. Assets that are to be disposed of are measured at
the lower of cost or fair value, less costs to sell.

   Income taxes

     The Company uses the liability method of accounting for income taxes. Under
this method deferred tax assets and liabilities are determined based on
differences between financial reporting and tax bases of assets and liabilities
and are measured using the enacted tax rates that will be in effect when the
differences are expected to reverse. The Company files its tax return for the
year ending August 31, rather than for the financial reporting period ending the
last day of February.

   Advertising

     The Company expenses the production costs of advertising as incurred. For
the years ended February 28(29), 2001, 2000 and 1999, the Company incurred
advertising expenses of approximately $10,800,000, $6,400,000 and $6,300,000,
respectively.

   Research and development

     Expenditures for research and development costs are charged to expense as
incurred.

   Net income per share

     Basic earnings per share amounts exclude the dilutive effect of potential
common shares. Basic earnings per share is based upon the weighted-average
number of common shares outstanding. Diluted earnings per share is based upon
the weighted-average number of common shares and dilutive potential common
shares outstanding. Potential common shares are outstanding stock options under
the Company's stock incentive plan which are included under the treasury stock
method.

     The following is a reconciliation of the denominators of the basic and
diluted earnings per share computations for the fiscal years ended February 28
(29), 2001, 2000 and 1999.

<TABLE>
<CAPTION>
                                                YEAR ENDED FEBRUARY 28 (29),
                                        ---------------------------------------------
                                           2001             2000             1999
                                        -----------      -----------      -----------
<S>                                     <C>              <C>              <C>
Net income .......................      $ 1,286,000      $11,955,000      $ 5,599,000
                                        ===========      ===========      ===========
Shares outstanding-basic .........       14,700,000       14,112,000       13,718,000
Effect of dilutive securities:
  Stock options ..................          900,000          832,000          352,000
                                        -----------      -----------      -----------
Shares outstanding-diluted .......       15,600,000       14,944,000       14,070,000
                                        ===========      ===========      ===========
Net income - basic ...............      $      0.09      $      0.85      $      0.41
                                        ===========      ===========      ===========
Net income - diluted .............      $      0.08      $      0.80      $      0.40
                                        ===========      ===========      ===========
</TABLE>

     On May 5, 2000, the Company declared a two-for-one stock split of the
Company's common stock, to be effected in the form of a stock dividend. The
dividend was paid on June 19, 2000 to stockholders of record on May 22, 2000.
All share and per share amounts in the accompanying consolidated financial
statements and notes thereto have been adjusted to reflect the stock split.


                                      F-7
<PAGE>   27

                             MEADE INSTRUMENTS CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


   Comprehensive income

     Comprehensive income is defined as a change in the equity of a business
enterprise during a period from transactions and other events and circumstances
from non-owner sources. In the accompanying financial statements, the only
component of comprehensive income other than net income is currency translation
adjustments.

   Concentration of credit risk

     Financial instruments which potentially subject the Company to
concentration of credit risk are principally accounts receivable. The Company
maintains an allowance for doubtful accounts at a level deemed appropriate by
management based on historical and other factors that affect collectibility. One
of the Company's significant customers filed for voluntary reorganization during
fiscal year 1999. Another of the Company's significant customers and several
smaller customers filed for bankruptcy during fiscal 2001. Based upon the
Company's assessment of the recoverability of the receivables from these
customers and in the opinion of management, the Company has established adequate
provisions related to these receivables.

   Fair value of financial instruments

     The carrying amounts of cash, accounts receivable, prepaid expenses and
other current assets, accounts payable, accrued liabilities, and short-term
loans approximate fair value due to the short maturity of these instruments.

   Use of estimates in the preparation of financial statements

     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
respective reporting periods. Actual results could differ from those estimates.

   Stock-based compensation

     The Company has adopted the disclosure only provisions of Statement of
Financial Accounting Standards ("SFAS") No. 123 for stock options issued to
employees. Compensation cost for stock-based compensation issued to employees
has been measured using the intrinsic value method provided by Accounting
Principles Board No. 25.

   Accounting pronouncements

     In December 1999, the Securities and Exchange Commission (the "SEC")
released Staff Accounting Bulletin ("SAB") No. 101, which provides guidance on
the recognition, presentation and disclosure of revenue in financial statements
filed with the SEC. The Company adopted SAB 101 in the fourth quarter of 2001
and its adoption has not had a material effect on the Company's results of
operations or financial position.

     In June 1998 the Financial Accounting Standards Board issued SFAS No. 133;
Accounting for Derivative Instruments and Hedging Activities. SFAS 133 is
required to be adopted in fiscal years beginning after June 15, 2000 and
establishes accounting and reporting standards for derivative instruments and
for hedging activities. Management does not expect the adoption of SFAS 133 to
have a material impact on the Company's financial position or results of
operations.

   Reclassifications

     Certain reclassifications have been made to conform prior year information
to the fiscal 2001 presentation.


                                      F-8
<PAGE>   28

                             MEADE INSTRUMENTS CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


3.   ACQUISITIONS

     On September 1, 1999 the Company acquired 100% of the stock and equity
interests in Bresser Optik GmbH & Co. KG, and Bresser Optik Geschaftsfuhrung und
Verwaltungs GmbH (collectively "Bresser"), for $5,000,000 in cash and
201,830 shares of the Company's common stock valued at $2,044,000. Bresser is a
German distributor of binoculars, telescopes, microscopes and other consumer
optical products. To fund the cash portion of the purchase price the Company
borrowed $5,000,000 under the Term Loan on August 31, 1999. The acquisition of
Bresser was accounted for using the purchase method of accounting. The purchase
price allocation was based upon appraisals, evaluations and other studies of
fair value of the assets acquired. The excess of the purchase price over the
fair value of net assets acquired is included in other assets at February 29,
2000 and is being amortized on a straight-line basis over the period to be
benefited which is estimated to be fifteen years.

     The following table presents unaudited consolidated pro forma financial
information for the two years ended February 29, 2000, as though the acquisition
occurred on March 1, 1998.

<TABLE>
<CAPTION>
                                              YEAR ENDED
                                           FEBRUARY 28 (29),
                                    ------------------------------
                                        2000              1999
                                    ------------      ------------
                                              (UNAUDITED)
<S>                                 <C>               <C>
            Net sales ........      $133,023,000      $101,507,000
            Operating income .      $ 22,095,000      $ 11,802,000
            Net income .......      $ 11,768,000      $  5,660,000
            Earnings per share
              Basic ..........      $       0.83      $       0.41
              Diluted ........      $       0.79      $       0.40
</TABLE>

     The unaudited pro forma financial information is presented for information
purposes only and is not necessarily indicative of the operating results that
would have occurred had the acquisitions taken place on March 1, 1998. In
addition, the pro forma results are not intended to be a projection of the
future results and do not reflect any synergies that might be achieved from the
combined operations.

     A summary of the purchase price allocation of the acquisition is as
follows:

<TABLE>
<S>                                                       <C>
          Current assets (excluding cash of $32,000)      $ 12,251,000
          Property, plant and equipment ............         1,782,000
          Trademark ................................         1,398,000
          Goodwill .................................         2,325,000
          Current liabilities ......................       (10,744,000)
                                                          ------------
                    Total purchase price ...........      $  7,012,000
                                                          ============
</TABLE>

     In January 2000 the Company's German subsidiary acquired certain assets of
Astrocom GmbH, formerly the Company's German distributor. For consideration of
approximately $1,100,000 cash the Company acquired certain property and
equipment, inventory and customer accounts. The acquisition is not material to
the results of operations or the financial position of the Company.

4.   BANK DEBT

     On August 31, 1999 the Company entered into a loan agreement (the "Loan
Agreement") with a bank, replacing its then existing credit facilities. The Loan
Agreement provided the Company with an aggregate $40,000,000 credit facility
consisting of a five year $35,000,000 revolving credit facility (the "Revolving
Loan") and a five year $5,000,000 term loan (the "Term Loan"). In connection
with the acquisition of Bresser Optik (see Note 3), the Company borrowed
$5,000,000 under the Term Loan on August 31, 1999. The Term Loan was subject to
quarterly principal amortization payments of $250,000 beginning September 30,
2000. The Term Loan was also subject to

                                      F-9
<PAGE>   29

                             MEADE INSTRUMENTS CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


mandatory prepayments upon the happening of certain events. Amounts outstanding
under the Revolving Loan and Term Loan bore interest, at the Company's option,
at a base rate (9.0% at February 28, 2001 or eurodollar rate plus an applicable
margin. The Loan Agreement contained certain financial covenants and customary
affirmative and negative covenants and events of default. As of February 28,
2001, the Company was in breach of the financial covenants set forth in the Loan
Agreement. The Company has received the Waiver from the bank covering the breach
as of February 28, 2001. The Waiver modifies the covenants through August 31,
2001 at which time the Company would again be required to be in compliance with
the original covenants. The Waiver also reduced the amount of borrowings under
the revolving credit line to $22,500,000. (See Note 1.)

At February 28, 2001 the Company guaranteed up to approximately $3,500,000 of
indebtedness of its German operating subsidiary. Short-term bank borrowings at
the German subsidiary, totaling $1,745,000 at February 28, 2001, bear interest
at the banks' base rates (ranging from 5.7% to 8.7% at February 28, 2001).

5.   COMMITMENTS AND CONTINGENCIES

     In December 1996 the Company executed a lease commencing October 1, 1997
for its corporate office and manufacturing facilities. The lease term is ten
years, extendable for an additional ten years (two terms of five years each) at
the Company's option. Lease commitments for this lease are subject to 9%
increases at the beginning of the months 31, 61 and 91. In February 2000, the
Company entered into a lease for warehouse space located near the Company's
corporate headquarters. The warehouse lease expires in 2003.

     In August 1999, the Company entered into a lease for an assembly facility
in Tijuana, Mexico. The lease term is five years with three, five year renewal
options. In January 2000, the Company entered into a lease for an office, repair
and distribution facility in Graefelfing, Germany. The lease expires in August
2002.

     Aggregate future minimum commitments under noncancellable leases and other
agreements at February 28, 2001 that have remaining terms in excess of one year
are as follows:

<TABLE>
<CAPTION>
FISCAL YEAR                                       CAPITAL        OPERATING
-----------                                      ----------      ----------
<S>                                              <C>             <C>

          2002 ............................      $  288,000      $2,190,000
          2003 ............................         185,000       2,014,000
          2004 ............................          29,000       1,174,000
          2005 ............................              --       1,070,000
          2006 ............................              --       1,070,000
          Thereafter ......................              --       1,848,000
                                                 ----------      ----------
          Net minimum lease payments ......         502,000      $9,366,000
          Less amount representing interest          45,000      ==========
                                                 ----------
          Capital lease obligations .......      $  457,000
                                                 ==========
</TABLE>

     For the fiscal years ended February 28 (29), 2001, 2000 and 1999, the
Company incurred rent expense of $2,294,000, $1,521,000 and $1,207,000,
respectively.

     On June 3, 1998 a complaint was filed against the Company alleging
infringement of a U.S. patent by the Company. On April 29, 1999, the Company
filed a motion requesting summary judgment that the Company has not infringed
the patent and a motion requesting summary judgment that the patent is invalid.
On June 30, 1999, the court granted the motion for summary judgment of
non-infringement. On July 2, 1999, the court held that the Company has not
infringed the patent. On July 27, 1999 the opposing party filed a purported
notice of appeal with respect to the summary judgment motion. On May 2, 2000 the
Company filed a motion to dismiss the appeal. On June 23, 2000 the court granted
the Company's motion and ordered a dismissal of the appeal. On July 7, 2000, the
opposing party filed a petition for rehearing of the appeal. On March 12, 2001,
the appellate court denied the opposing party's petition for a rehearing of the
appeal. In the event of any further proceedings on the merits, the


                                      F-10
<PAGE>   30

                             MEADE INSTRUMENTS CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


Company intends to vigorously defend the judgment. The ultimate liability of the
Company under this action is not presently determinable. After discussion with
counsel, and in light of the summary judgment and actions of the appellate
court, it is the opinion of management that such liability is not expected to
have a material effect on the Company's financial position or results of
operations.

     The Company is involved from time to time in litigation incidental to its
business. Management believes that the outcome of current litigation will not
have a material adverse effect on the Company.

6.   EMPLOYEE STOCK OWNERSHIP PLAN

     Adoption of the ESOP was effective March 1, 1996 and covers all employees
of the Company who meet certain service and eligibility requirements. A
participant becomes 100% vested in his ESOP account if, while employed at the
Company, the participant (i) reaches his 60th birthday, (ii) becomes disabled
(as defined), (iii) dies, or (iv) achieves three years of credited service (as
defined). Distributions of a participant's vested account are directed by the
ESOP's Administrative Committee. The Company provides a put option to any
participant who receives a distribution of Company stock, unless the stock is
readily tradable on an established market.

     In April 1996 the ESOP purchased 3,000,000 shares of common stock held by
the existing stockholders for $11,000,000. The ESOP financed the purchase of the
common stock (the "financed shares") with the proceeds of an $11,000,000 term
loan (the "acquisition loan") from the Company. The financed shares are held by
the Meade Instruments Corp. Employee Stock Ownership Trust (the "ESOP trust").
The ESOP pledged the financed shares to the Company as security for the
acquisition loan. The financed shares were initially credited to a suspense
account on the books of the ESOP and will be allocated to the accounts of
individual ESOP participants, as of each plan year end, for payments made on the
acquisition loan. The acquisition loan has a twenty year term and bears interest
at 6% per annum. Principal and interest is due annually, subject to the Company
making contributions to the ESOP to fund the principal and interest payments.
The release of financed shares from collateral is based on a formula defined in
the plan. The Company accounts for its ESOP in accordance with Statement of
Position 93-6. Accordingly, the shares pledged as collateral are reported as
unearned ESOP shares in the balance sheet. As shares are committed to be
released from collateral, the Company records compensation expense, and the
shares become outstanding for net income per share purposes. Any dividends on
allocated shares are recorded as a reduction of retained earnings; any dividends
on unallocated ESOP shares are recorded as a reduction of debt and accrued
interest.

     For the years ended February 28 (29), 2001, 2000 and 1999, the Company
recognized ESOP contribution expense of $2,997,000, $1,861,000 and $1,200,000,
respectively.

     As of February 28, 2001 approximately 1,206,000 shares in the ESOP trust
have been allocated to individual participants. Allocation to individual
participant accounts are made in the ratio that the compensation of each
participant bears to the total compensation of all such participants. There are
approximately 220,000 shares committed to be released as of February 28, 2001.
Shares in suspense at February 28, 2001 are 1,794,000.

     The fair value of the common stock upon purchase from the existing
stockholders in April 1996 was determined to be $3.67 per share. Under the terms
of the ESOP, the fair value of the common stock at any plan year end is to be
determined by an independent appraiser so long as the stock is not readily
tradable on an established market. The fair value of the shares held by the ESOP
at February 28, 2001 was $6.25 per share, the market price as determined by the
Nasdaq National Market. At February 28, 2001 there was no repurchase obligation.


                                      F-11
<PAGE>   31

                             MEADE INSTRUMENTS CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


7.   INCOME TAXES

     Pretax income from continuing operations for each of the three years ended
February 28 (29), 2001, 2000 and 1999 consists of the following:

     Significant components of the provision for income taxes are as follows:

<TABLE>
<CAPTION>
                          YEAR ENDED FEBRUARY 28 (29),
               -------------------------------------------------
                   2001               2000              1999
               ------------       ------------       -----------
<S>            <C>                <C>                <C>

Domestic.....  $  2,847,000       $ 19,474,000       $ 9,822,000
Foreign .....        28,000          1,529,000                --
               ------------       ------------       -----------
               $  2,875,000       $ 21,003,000       $ 9,822,000
               ============       ============       ===========

<CAPTION>
                          YEAR ENDED FEBRUARY 28 (29),
               -------------------------------------------------
                   2001               2000              1999
               ------------       ------------       -----------
<S>            <C>                <C>                <C>

Current:
  Federal....  $    766,000       $  9,753,000       $ 5,250,000
  State .....       266,000          1,976,000         1,477,000
  Foreign....            --            676,000                --
               ------------       ------------       -----------
                  1,032,000         12,405,000         6,727,000
               ------------       ------------       -----------
Deferred:
  Federal....       508,000         (2,886,000)       (1,982,000)
  State .....        49,000           (575,000)         (522,000)
  Foreign....            --            104,000                --
               ------------       ------------       -----------
                    557,000         (3,357,000)       (2,504,000)
               ------------       ------------       -----------
               $  1,589,000       $  9,048,000       $ 4,223,000
               ============       ============       ===========
</TABLE>

     The provision for income taxes differed from the amount computed by
applying the U.S. federal statutory rate to income before income taxes due to
the effects of the following:

<TABLE>
<CAPTION>
                                                                       YEAR ENDED
                                                                    FEBRUARY 28 (29),
                                                           ---------------------------------
                                                            2001          2000         1999
                                                           ------        ------       ------
<S>                                                          <C>           <C>          <C>

Federal income tax rate .............................        34.0%         35.0%        34.0%
State income taxes, net of federal income tax benefit        12.3           5.7          6.1
Non-deductible ESOP charge ..........................        26.3           1.7          5.0
Favorable resolution of tax issues ..................       (15.7)           --           --
Other ...............................................        (1.6)          0.7         (2.1)
                                                           ------        ------       ------
                                                             55.3%         43.1%        43.0%
                                                           ======        ======       ======
</TABLE>

     The significant components of the net deferred tax asset were as follows:

<TABLE>
<CAPTION>
                                      FEBRUARY 28,    FEBRUARY 29,
                                          2001            2000
                                      ------------    ------------
<S>                                   <C>             <C>

Sales returns ...................      $2,754,000      $2,640,000
Inventory and accounts receivable       2,618,000       2,368,000
Accrued liabilities .............       1,202,000       2,412,000
Other ...........................         341,000         350,000
                                       ----------      ----------
                                       $6,915,000      $7,770,000
                                       ==========      ==========
</TABLE>

8.   BUSINESS SEGMENTS, GEOGRAPHIC DATA AND MAJOR CUSTOMERS

     The Company is a multinational consumer optics company that designs,
manufactures, imports and distributes telescopes, telescope accessories,
binoculars and other optical products. The Company is organized and operates as
one segment in two principal geographic locations - North America and Europe.
The following tables present


                                      F-12
<PAGE>   32
                             MEADE INSTRUMENTS CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

information about product sales and geographic data for the fiscal years ended
February 28 (29), 2001, 2000 and 1999.

<TABLE>
<CAPTION>
                                                     YEAR ENDED FEBRUARY 28 (29),
                                          -----------------------------------------------
                                              2001              2000             1999
                                          ------------      ------------      -----------
<S>                                       <C>               <C>               <C>
Product sales:
Telescope and telescope accessories.....  $113,610,000      $117,393,000      $74,031,000
Binoculars .............................     7,732,000         8,135,000        2,290,000
Other ..................................     1,658,000         1,280,000               --
                                          ------------      ------------      -----------
                                          $123,000,000      $126,808,000      $76,321,000
                                          ============      ============      ===========

<CAPTION>
                                                     YEAR ENDED FEBRUARY 28 (29),
                                          -----------------------------------------------
                                              2001              2000             1999
                                          ------------      ------------      -----------
<S>                                       <C>               <C>               <C>
Geographic data - product sales:
North America ..........................  $ 97,300,000      $ 98,309,000      $64,721,000
Germany ................................    13,751,000        15,734,000        2,115,000
Other foreign ..........................    11,949,000        12,765,000        9,485,000
                                          ------------      ------------      -----------
                                          $123,000,000      $126,808,000      $76,321,000
                                          ============      ============      ===========

<CAPTION>
                                                     YEAR ENDED FEBRUARY 28 (29),
                                          -----------------------------------------------
                                              2001              2000             1999
                                          ------------      ------------      -----------
<S>                                       <C>               <C>               <C>
Geographic data - long-lived assets:
North America ..........................  $  6,666,000      $  5,461,000      $ 3,828,000
Germany ................................     4,989,000         5,093,000               --
                                          ------------      ------------      -----------
                                          $ 11,655,000      $ 10,554,000      $ 3,828,000
                                          ============      ============      ===========
</TABLE>

     The Company generated 13% of its revenue from one customer during the year
ended February 28, 2001. No single customer accounted for 10% or more of the
Company's revenue for the year ended February 29, 2000. The Company generated
14% of its revenue from one customer during the year ended February 28, 1999.

9.   STOCK INCENTIVE PLAN

     In February 1997, the Company's Board of Directors adopted the 1997 Stock
Incentive Plan (the "Plan"). The Plan provides for the grant of incentive and
non-qualified stock options, restricted stock, stock appreciation rights
("SARs"), and performance share awards to certain key employees (including
officers, whether or not directors) of the Company or its subsidiaries. The
Company has received director and stockholder approval to grant options and
other awards with respect to 4,000,000 shares of common stock under the Plan.
Awards under the Plan generally vest after six months and become exercisable
over a four-year period, or as determined by the Compensation Committee of the
Board of Directors. Stock options generally remain exercisable for a period of
ten years from the date of grant. The Board of Directors has also granted
non-qualified stock options to purchase common stock to each of the Company's
non-employee directors. The non-employee directors are granted 5,000 options
each when elected and 5,000 each upon their re-election to the Board of
Directors at the Company's Annual Meeting each year. The directors' options vest
in equal annual amounts over three years. Option activity during fiscal years
2001 and 2000 was as follows:

<TABLE>
<CAPTION>
                                                                WEIGHTED
                                                OPTION          AVERAGE
                                                SHARES       EXERCISE PRICE
                                               ---------     --------------
<S>                                            <C>           <C>
Options outstanding at February 28, 1999       1,798,000          4.18
Granted ................................         940,000          5.57
Exercised ..............................        (248,000)         3.77
Forfeited ..............................         (64,000)         5.09
                                               ---------
Options outstanding at February 29, 2000       2,426,000          4.92
Granted ................................       1,266,000          8.78
Exercised ..............................        (258,000)         4.20
Forfeited ..............................         (11,000)         6.94
                                               ---------
Options outstanding at February 28, 2001       3,423,000          6.41
                                               =========
</TABLE>

                                      F-13
<PAGE>   33

                             MEADE INSTRUMENTS CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


<TABLE>
<CAPTION>
                       OPTIONS OUTSTANDING                              OPTIONS EXERCISABLE
----------------------------------------------------------------    --------------------------
                              WEIGHTED AVERAGE      WEIGHTED                       WEIGHTED
                                  REMAINING         AVERAGE                        AVERAGE
EXERCISE PRICES     SHARES    CONTRACTUAL LIFE   EXERCISE PRICE      SHARES     EXERCISE PRICE
---------------   ---------   ----------------   --------------     ---------   --------------
<S>               <C>         <C>                <C>                <C>         <C>
 $ 3.50 - $ 3.81    362,000       6.2 years          $ 3.56           347,000       $3.56
 $ 4.44 - $ 5.59  2,273,000       8.2 years            4.92         1,009,000        4.82
 $ 6.47 - $10.31     44,000       8.5 years            8.77            17,000        8.45
 $11.06 - $12.13    670,000       9.0 years           11.20            28,000       12.05
 $17.13 - $27.75     74,000       9.3 years           21.29
                  ---------                                         ---------
                  3,423,000                                         1,401,000
                  =========                                         =========
</TABLE>

     The exercise price of options granted to employees was equal to the market
price at the grant date. Options granted to employees generally become
exercisable 25% after one year and ratably over the following 36 months or as
otherwise determined by the Board of Directors. At February 28, 2001,
outstanding options for common stock held by Company employees totaled 3,423,000
of which 2,806,000 were vested. The option prices range from $3.50 to $27.75 per
share and are exercisable over periods ending no later than 2011.

     The Company has adopted the disclosure only provisions of SFAS No. 123.
Accordingly, no compensation cost has been recognized for the fixed stock option
plans. Had compensation cost for the Company's stock-based compensation plans
been determined based on the fair value at the grant dates for awards under
those plans, consistent with the method prescribed by SFAS No. 123, the
Company's net income available to common stockholders and earnings per share
would have been reduced to the pro forma amounts indicated below.

<TABLE>
<CAPTION>
                                                                   YEAR ENDED FEBRUARY 28 (29),
                                                        ---------------------------------------------------
                                                           2001                2000               1999
                                                        -----------       --------------      -------------
<S>                                                     <C>               <C>                 <C>

Pro forma:
Net income (loss) available to common stockholders...   $  (690,000)      $   11,362,000      $   5,311,000
Earnings (loss) per share-basic......................         (0.05)                0.81               0.39
Earnings (loss) per share-diluted....................         (0.05)                0.73               0.39
</TABLE>

     The pro forma disclosures are not representative of the effects on net
income available to common stockholders and earnings per share in future years.

     The fair value of the Company's stock options used to compute pro forma net
income and earnings per share disclosures is the estimated present value at
grant date using the Black-Scholes option-pricing model with the following
assumptions:

<TABLE>
<CAPTION>
                                                     YEAR ENDED FEBRUARY 28 (29)
                                                    -----------------------------
                                                    2001        2000        1999
                                                    -----       -----       -----
<S>                                                 <C>         <C>         <C>

Weighted average expected life (years)...........     4.0         4.0         4.0
Volatility.......................................    83.5%       38.6%       30.2%
Risk-free interest rate..........................    5.01%       6.64%       5.25%
Expected dividends                                   None        None        None
Weighted average fair value of options granted...   $5.64       $2.28       $1.34
</TABLE>

10.  COMPOSITION OF CERTAIN BALANCE SHEET ACCOUNTS

     The composition of inventories is as follows:

<TABLE>
<CAPTION>
                     FEBRUARY 28,     FEBRUARY 29,
                         2001             2000
                     ------------     ------------
<S>                  <C>              <C>

Raw materials......  $ 9,915,000      $ 7,335,000
Work in process....    7,919,000        6,600,000
Finished goods.....   23,817,000       20,376,000
                     -----------      -----------
                     $41,651,000      $34,311,000
                     ===========      ===========
</TABLE>


                                      F-14
<PAGE>   34

                             MEADE INSTRUMENTS CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


     The composition of other assets is as follows:

<TABLE>
<CAPTION>
                              FEBRUARY 28,      FEBRUARY 29,
                                  2001              2000
                              ------------      ------------
<S>                           <C>               <C>

Goodwill....................  $ 2,325,000       $ 2,325,000
Trademarks..................    1,398,000         1,398,000
Other long-term assets......      742,000           504,000
                              -----------       -----------
                                4,465,000         4,227,000
Accumulated amortization....     (515,000)         (140,000)
                              -----------       -----------
                              $ 3,950,000       $ 4,087,000
                              ===========       ===========
</TABLE>

     The composition of property and equipment is as follows:

<TABLE>
<CAPTION>
                                                    FEBRUARY 28,       FEBRUARY 29,
                                                        2001               2000
                                                    ------------       ------------
<S>                                                 <C>                <C>

Land.............................................   $    164,000       $    168,000
Buildings........................................      1,679,000          1,728,000
Molds and dies...................................      5,041,000          3,354,000
Machinery and equipment..........................      3,224,000          2,776,000
Furniture and fixtures...........................      1,810,000          1,636,000
Autos and trucks.................................        176,000            153,000
Leasehold improvements...........................      1,077,000          1,066,000
                                                    ------------       ------------
                                                      13,171,000         10,881,000
Less accumulated depreciation and amortization...     (5,466,000)        (3,915,000)
                                                    ------------       ------------
                                                    $  7,705,000       $  6,966,000
                                                    ============       ============
</TABLE>

     The gross value of assets under capital leases included above are
$1,724,000 and $1,700,000 at February 28, 2001, and February 29, 2000,
respectively. For the fiscal years ended February 28(29), 2001, 2000 and 1999,
the Company incurred depreciation expense of $1,551,000, $1,156,000 and
$755,000, respectively.

     The composition of accrued liabilities is as follows:

<TABLE>
<CAPTION>
                                                                FEBRUARY 28,    FEBRUARY 29,
                                                                    2001            2000
                                                                ------------    ------------
<S>                                                             <C>             <C>

Salaries, wages, bonuses and other associated payroll costs.     $1,110,000      $3,039,000
Advertising, cooperative advertising, shows
  and convention expenses...................................      1,609,000       1,131,000
Professional fees...........................................        225,000         999,000
Other.......................................................      1,107,000       1,310,000
                                                                 ----------      ----------
                                                                 $4,051,000      $6,479,000
                                                                 ==========      ==========
</TABLE>


                                      F-15
<PAGE>   35

                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: May 30, 2001
                                                MEADE INSTRUMENTS CORP.

                                                By: /s/ JOHN C. DIEBEL
                                                    ----------------------------
                                                    John C. Diebel
                                                    Chairman of the Board
                                                    and Chief Executive Officer

     Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
                  SIGNATURE                                         TITLE                              DATE
                  ---------                                         -----                              ----
<S>                                               <C>                                              <C>

          /s/ JOHN C. DIEBEL                      Chairman of the Board and Chief Executive        May 30, 2001
-------------------------------------------         Officer (Principal Executive Officer)
              John C. Diebel


         /s/ STEVEN G. MURDOCK                   Director, President, Chief Operating Officer      May 30, 2001
-------------------------------------------                     and Secretary
             Steven G. Murdock


       /s/ BRENT W. CHRISTENSEN                         Vice President -- Finance and              May 30, 2001
-------------------------------------------                Chief Financial Officer
           Brent W. Christensen                  (Principal Financial and Accounting Officer)


       /s/ JOSEPH A. GORDON, JR.                 Director and Senior Vice President -- North       May 30, 2001
-------------------------------------------                     American Sales
           Joseph A. Gordon, Jr.


         /s/ TIMOTHY C. MCQUAY                                     Director                        May 30, 2001
-------------------------------------------
             Timothy C. McQuay
</TABLE>

<PAGE>   36

                     II - VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>
                                  BALANCE AT
                                 BEGINNING OF    CHARGED TO COSTS   CHARGED TO OTHER                  BALANCE AT END
ALLOWANCE FOR DOUBTFUL ACCOUNTS     PERIOD         AND EXPENSES         ACCOUNTS       DEDUCTIONS(1)    OF PERIOD
-------------------------------  ------------    ----------------   ----------------   -------------  --------------
<S>                              <C>             <C>                <C>                <C>            <C>
Year ended February 28, 1999      $  485,000        $1,810,000                          $   52,000      $2,243,000
Year ended February 29, 2000      $2,243,000        $1,598,000         $82,000          $   62,000      $3,861,000
Year ended February 28, 2001      $3,861,000        $1,867,000                          $3,553,000      $2,175,000
</TABLE>

<TABLE>
<CAPTION>
                                   BALANCE AT
                                  BEGINNING OF   CHARGED TO COSTS   CHARGED TO OTHER                  BALANCE AT END
ALLOWANCE FOR EXCESS INVENTORIES     PERIOD        AND EXPENSES         ACCOUNTS        DEDUCTIONS       OF PERIOD
--------------------------------  ------------   ----------------   ----------------    ----------    --------------
<S>                               <C>            <C>                <C>                <C>            <C>
Year ended February 28, 1999      $1,890,000                                            $  165,000      $1,725,000
Year ended February 29, 2000      $1,725,000        $  859,000                                          $2,584,000
Year ended February 28, 2001      $2,584,000        $6,522,000                                          $9,106,000
</TABLE>

----------
(1)  Write-off of delinquent accounts

<PAGE>   37

                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
     EXHIBIT                                                                                            INCORPORATION
      NUMBER                                           DESCRIPTION                                        REFERENCE
      ------                                           -----------                                     ------------
<S>               <C>                                                                                  <C>

    2.1+          Interest Purchase Agreement, dated as of July 15-16, 1999, by and among Bresser
                  Optik GmbH & Co. KG, a German limited partnership, Bresser Optik Geschaftsfuhrung
                  und Verwaltungs GmbH, a German limited liability company, Rudolph Bresser, the
                  Company and Meade Instruments Europe Corp., a California corporation (excluding
                  Exhibits and Schedules thereto)                                                          (h)

    3.1+          Certificate of Incorporation of the Company, as amended                                  (c)

    3.2+          Amended and Restated Bylaws of the Company                                               (i)

    3.3           Amendment to Amended and Restated Bylaws of the Company                                  (j)

    4.1+          Specimen stock certificate                                                               (d)

   10.7+          Industrial Lease (Single Tenant; Net; Stand-Alone), dated December 20, 1996,
                  between The Irvine Company and the Company                                               (a)

   10.13+         Meade Instruments Corp. Employee Stock Ownership Plan (the "ESOP"), as amended and
                  restated effective as of January 1, 1999                                                 (f)

   10.14+         Employee Stock Ownership Trust Agreement, as Amended and Restated as of April 9,
                  1997, between the Company and Wells Fargo Bank, N.A                                      (e)

   10.15+         Employee Stock Ownership Plan Loan and Pledge Agreement, dated April 23, 1996,
                  between the ESOP and the Company, as amended                                             (a)

   10.20+         Form of Trademark Distribution Agreement for EEC Countries                               (a)

   10.21+         Form of Trademark Distribution Agreement for Non-EEC Countries                           (a)

   10.24+         Celtic Master Lease, dated as of February 23, 1995, by and between the Company and
                  Celtic Leasing Corp                                                                      (b)

   10.29+         Meade Instruments Corp. 1997 Stock Incentive Plan, as amended                            (g)

   10.30+         Form of Agreement of Merger, by and between the Company and the predecessor of the
                  Company                                                                                  (b)

   10.31+         Preferred Stock Redemption Agreement, dated as of January 31, 1997, by and between
                  the Company and Churchill                                                                (b)

   10.33+         Agreement, dated as of May 5, 1998, by and between the Company and Weidy Optical
                  Co., Ltd                                                                                 (e)

   10.35+         Form Indemnification Agreement, by and between the Company and each member of the
                  Board of Directors and certain executive officers                                        (e)

   10.41+         Loan Agreement, dated as of August 31, 1999, by and among the Company, the lenders
                  named therein and Bank of America, N.A., as Administrative Agent for itself and
                  for the other lenders (excluding Exhibits and Schedules thereto)                         (h)

   10.42+         Form Employment Agreement, by and between the Company and current executive
                  officers of the Company                                                                  (j)

   10.43+         Lease Agreement, dated as of August 16, 1999, as amended, by and among Refugio
                  Geffroy De Flourie, Meade Instruments Mexico, S. De R. L. De C.V. and Meade              (j)
                  Instruments Holding Corp

   10.44          Amendment No. 1 to Amended and Restated Employee Stock Ownership Plan

   23.1           Consent of PricewaterhouseCoopers LLP
</TABLE>

----------

+    Previously filed with the Securities and Exchange Commission as set forth
     in the following table:

<PAGE>   38

(a)  Incorporated by reference to the Company's Registration Statement on Form
     S-1 (Registration No. 333-21123), as filed with the Securities and Exchange
     Commission on February 4, 1997.

(b)  Incorporated by reference to the Company's Amendment No. 1 to Registration
     Statement on Form S-1 (Registration No. 333-21123), as filed with the
     Securities and Exchange Commission on February 27, 1997.

(c)  Incorporated by reference to the Company's Amendment No. 2 to Registration
     Statement on Form S-1 (Registration No. 333-21123), as filed with the
     Securities and Exchange Commission on March 13, 1997.

(d)  Incorporated by reference to the Company's Amendment No. 3 to Registration
     Statement on Form S-1 (Registration No. 333-21123), as filed with the
     Securities and Exchange Commission on March 25, 1997.

(e)  Incorporated by reference to the Company's Annual Report on Form 10-K for
     the Fiscal Year Ended February 28, 1998, as filed with the Securities and
     Exchange Commission on May 29, 1998.

(f)  Incorporated by reference to the Company's Registration Statement on Form
     S-8 relating to the Company's Employee Stock Ownership Plan, as filed with
     the Securities and Exchange Commission on April 16, 1999.

(g)  Incorporated by reference to the Company's 1999 Proxy Statement on Schedule
     14A, as filed with the Securities and Exchange Commission on June 8, 1999.

(h)  Incorporated by reference to the Company's Current Report on Form 8-K, as
     filed with the Securities and Exchange Commission on September 15, 1999.

(i)  Incorporated by reference to the Company's Quarterly Report on Form 10-Q
     for the Quarterly Period Ended November 30, 1999, as filed with the
     Securities and Exchange Commission on January 14, 2000.

(j)  Incorporated by reference to the Company's Annual Report on Form 10-K for
     the Fiscal Year Ended February 29, 2000, as filed with the Securities and
     Exchange Commission on May 30, 2000.