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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-K
 (Mark One)
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Fiscal Year Ended February 28, 2006
 OR
 o
    
    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
(State or Other Jurisdiction of Incorporation or 
Organization)
    
    95-2988062
(I.R.S. Employer Identification)6001 Oak Canyon, Irvine, California
(Address of principal executive offices)
    
    92618
(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)
 o þ
 o þ
 þ o
 Form 10-K þ
  o o þ
 o þ




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Explanatory Note
Restatement of Consolidated Financial Statements




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TABLE OF CONTENTS
 PagePART IItem 1
    
    Business
    
    
    1Item 1.A.
    
    Risk Factors
    
    
    10Item 2.
    
    Properties
    
    
    15Item 3.
    
    Legal Proceedings
    
    
    15Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    16PART IIItem 5.
    
    Market for the Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    17Item 6.
    
    Selected Financial Data
    
    
    17Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    21Item 7A.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    33Item 8.
    
    Financial Statements and Supplementary Data
    
    
    33Item 9.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    35Item 9A.
    
    Controls and Procedures
    
    
    35Item 9B.
    
    Other Information
    
    
    38PART IIIItem 10.
    
    Directors and Executive Officers of the Registrant
    
    
    39Item 11.
    
    Executive Compensation
    
    
    43Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    47Item 13.
    
    Certain Relationships and Related Transactions
    
    
    50Item 14.
    
    Principal Accountant Fees and Services
    
    
    50PART IVItem 15.
    
    Exhibits and Financial Statement Schedules
    
    
    52CONSOLIDATED FINANCIAL STATEMENTS AND NOTESReport of Independent Registered Public Accounting Firm
    
    
    F-1Report of Independent Registered Public Accounting Firm
    
    
    F-2Consolidated Balance Sheets at February 28, 2006 and February 28, 2005
    
    
    F-3Consolidated Statements of Operations for the three years in the period ended February 28, 2006
    
    
    F-4Consolidated Statements of Stockholders Equity for the three years in the period ended February 28, 2006
    
    
    F-5Consolidated Statements of Cash Flows for the three years in the period ended February 28, 2006
    
    
    F-6Notes to Consolidated Financial Statements
    
    
    F-7EXHIBIT 21.1EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2




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PART I
 
 Item 1. Business
 General
 ® ® ® ® ® ®
    1




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2




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Industry Overview
       3




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Competitive Strengths
  New Products/Research and Development.
 Broad Line of Products.
 Optical Systems Expertise.
 4




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Quality Control.
 Broad Distribution Network.
 Superior Customer Service.
 Products
  Advanced Astronomical Telescopes.
 5




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Entry-Level Telescopes.
 Binoculars.
 6




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Rifle and pistol scopes
 Accessories.
 Intellectual Property
    Sales and Marketing
   7




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Operations
 Materials and Supplies.
 Polishing and Figuring.
 Optical Testing.
 Optical Alignment and Centration.
 8




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Competition
   Employees
   Available Information
  9




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Item 1.A. Risk Factors
 We rely on independent contract manufacturers and, as a result, we are exposed to potential
disruptions in product supply.
   Our future success depends upon our ability to respond to changing consumer demands and
successfully market new products.
  Our business and the success of our products could be harmed if we are unable to maintain our brand
image.
 ® ® ® ® ® ®
 10




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Our business could be harmed if we fail to maintain appropriate inventory levels.
  We face intense competition, including competition from companies with significantly greater
resources, and, if we are unable to compete effectively with these competitors, our market share
may decline and our business could be harmed.
   We depend upon a relatively small group of customers for a large portion of our sales.
  Our international sales and third-party manufacturing operations are subject to the risks of doing
business abroad, particularly in China, which could affect our ability to sell or manufacture our
products in international markets, obtain products from foreign suppliers or control product costs.
  11




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Our business could be harmed if our contract manufacturers or suppliers violate labor, trade or
other laws.
   We may be unable to successfully execute our growth and profitability strategies.
  12




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The disruption, expense and potential liability associated with existing and unanticipated future
litigation against us could have a material adverse effect on our business, results of operations,
financial condition and cash flows.
  Our failure to comply with any of the financial covenants in our U.S. line of credit facility or
other debt agreements could have a material adverse impact on our business.
  Our business may be negatively impacted as a result of changes in the economy.
  Our quarterly revenues and operating results fluctuate as a result of a variety of factors,
including seasonal fluctuations in the demand for consumer optics, delivery date delays and
potential fluctuations in our annualized tax rate, which may result in volatility of our stock
price.
  13




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Changes in currency exchange rates could affect our revenues and operating results.
  Our trademarks, design patents, utility patents and other intellectual property rights may not be
adequately protected outside the United States.
  Our ability to compete could be jeopardized if we are unable to protect our intellectual property
rights or if we are sued for intellectual property infringement.
 ® ® ® ® ® ®
 14




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We are exposed to potential risks from recent legislation requiring public companies to evaluate
controls under Section 404 of the Sarbanes-Oxley Act of 2002.
  
 Item 2. Properties
  
 Item 3. Legal Proceedings
       15




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Item 4. Submission of Matters to a Vote of Security Holders
  16




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PART II
 
 Item 5. Market for the Registrants Common Equity and Related Stockholder Matters and Issuer
Purchases of Equity Securities
  Year Ended February 28, 2006
    
    High
    
    LowFourth quarter
    
    $
    3.10
    
    
    $
    2.59Third quarter
    
    $
    2.95
    
    
    $
    2.35Second quarter
    
    $
    2.89
    
    
    $
    2.19First quarter
    
    $
    3.47
    
    
    $
    2.45
 Year Ended February 29, 2005:
    
    High
    
    LowFourth quarter
    
    $
    3.53
    
    
    $
    3.03Third quarter
    
    $
    3.65
    
    
    $
    2.89Second quarter
    
    $
    3.50
    
    
    $
    2.87First quarter
    
    $
    4.28
    
    
    $
    2.84
   
 Item 6. Selected Financial Data
 SELECTED CONSOLIDATED FINANCIAL INFORMATION
   17




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Year Ended February 28/29,(In thousands of dollars, except share and per share amounts)2006
(e)
    
    
    

2005
(e)
    
    

2005
(e)
    
    
    

2004
(e)
    
    

2004
(e)
    
    
    
    2003 (a)(e)
    
    
    2003 (e)
    
    
    
    2002 (e)
    
    
    2002 (e)as reported
    
    
    as restated
    
    
    
    as reported
    
    
    as restated
    
    
    
    as reported
    
    
    as restated
    
    
    
    as reported
    
    
    as restatedConsolidated Statements of
Operations Data (c):Net sales
    
    $
    119,835
    
    
    
    $
    111,799
    
    
    $
    111,799
    
    
    
    $
    138,281
    
    
    $
    138,281
    
    
    
    $
    110,817
    
    
    $
    110,817
    
    
    
    $
    94,718
    
    
    $
    94,718Cost of sales
    
    
    90,333
    
    
    
    
    83,605
    
    
    
    83,608
    
    
    
    
    99,380
    
    
    
    99,499
    
    
    
    
    76,923
    
    
    
    77,205
    
    
    
    
    70,108
    
    
    
    70,208Gross profit
    
    
    29,502
    
    
    
    
    28,194
    
    
    
    28,191
    
    
    
    
    38,901
    
    
    
    38,782
    
    
    
    
    33,894
    
    
    
    33,612
    
    
    
    
    24,610
    
    
    
    24,510Selling expenses
    
    
    18,286
    
    
    
    
    16,046
    
    
    
    16,063
    
    
    
    
    18,106
    
    
    
    18,223
    
    
    
    
    14,248
    
    
    
    14,509
    
    
    
    
    12,920
    
    
    
    12,985General and administrative
expenses (b)
    
    
    13,082
    
    
    
    
    10,211
    
    
    
    10,251
    
    
    
    
    12,671
    
    
    
    13,117
    
    
    
    
    12,628
    
    
    
    13,720
    
    
    
    
    9,098
    
    
    
    9,481ESOP contribution expense
    
    
    343
    
    
    
    
    419
    
    
    
    419
    
    
    
    
    859
    
    
    
    859
    
    
    
    
    905
    
    
    
    905
    
    
    
    
    1,367
    
    
    
    1,367Research and development
expenses
    
    
    1,464
    
    
    
    
    2,018
    
    
    
    2,032
    
    
    
    
    2,038
    
    
    
    2,133
    
    
    
    
    3,008
    
    
    
    3,298
    
    
    
    
    2,167
    
    
    
    2,256Operating income (loss)
    
    
    (3,673
    )
    
    
    
    (500
    )
    
    
    (574
    )
    
    
    
    5,227
    
    
    
    4,450
    
    
    
    
    3,105
    
    
    
    1,180
    
    
    
    
    (942
    )
    
    
    (1,579
    )Interest expense
    
    
    1,203
    
    
    
    
    888
    
    
    
    888
    
    
    
    
    1,046
    
    
    
    1,046
    
    
    
    
    1,137
    
    
    
    1,137
    
    
    
    
    1,345
    
    
    
    1,345Income (loss) before
income taxes
    
    
    (4,876
    )
    
    
    
    (1,388
    )
    
    
    (1,462
    )
    
    
    
    4,181
    
    
    
    3,404
    
    
    
    
    1,968
    
    
    
    43
    
    
    
    
    (2,287
    )
    
    
    (2,924
    )Income tax provision (benefit)
    
    
    9,104
    
    
    
    
    (513
    )
    
    
    (531
    )
    
    
    
    1,729
    
    
    
    1,651
    
    
    
    
    830
    
    
    
    135
    
    
    
    
    (845
    )
    
    
    (1,097
    )Net income (loss)
    
    $
    (13,980
    )
    
    
    $
    (875
    )
    
    $
    (931
    )
    
    
    $
    2,452
    
    
    $
    1,753
    
    
    
    $
    1,138
    
    
    $
    (92
    )
    
    
    $
    (1,442
    )
    
    $
    (1,827
    )Per share information:Net income (loss)  basic
    
    $
    (0.72
    )
    
    
    $
    (0.05
    )
    
    $
    (0.05
    )
    
    
    $
    0.13
    
    
    $
    0.09
    
    
    
    $
    0.07
    
    
    $
    (0.01
    )
    
    
    $
    (0.10
    )
    
    $
    (0.12
    )Net income (loss)  diluted
    
    $
    (0.72
    )
    
    
    $
    (0.05
    )
    
    $
    (0.05
    )
    
    
    $
    0.13
    
    
    $
    0.09
    
    
    
    $
    0.07
    
    
    $
    (0.01
    )
    
    
    $
    (0.10
    )
    
    $
    (0.12
    )Weighted average common
shares outstanding  basic
    
    
    19,419
    
    
    
    
    19,288
    
    
    
    19,288
    
    
    
    
    18,983
    
    
    
    18,983
    
    
    
    
    16,410
    
    
    
    16,410
    
    
    
    
    15,100
    
    
    
    15,100Weighted average common
shares outstanding  diluted
    
    
    19,419
    
    
    
    
    19,288
    
    
    
    19,288
    
    
    
    
    19,174
    
    
    
    19,174
    
    
    
    
    16,624
    
    
    
    16,410
    
    
    
    
    15,100
    
    
    
    15,100Consolidated Balance
Sheet Data (d):Working capital
    
    $
    41,825
    
    
    
    $
    53,579
    
    
    $
    53,579
    
    
    
    $
    57,523
    
    
    $
    57,523
    
    
    
    $
    51,275
    
    
    $
    51,275
    
    
    
    $
    41,802
    
    
    $
    41,802Total assets
    
    
    72,240
    
    
    
    
    88,749
    
    
    
    90,021
    
    
    
    
    88,562
    
    
    
    89,819
    
    
    
    
    84,995
    
    
    
    86,276
    
    
    
    
    64,823
    
    
    
    65,418Total current liabilities
    
    
    17,340
    
    
    
    
    22,557
    
    
    
    22,557
    
    
    
    
    20,901
    
    
    
    20,901
    
    
    
    
    21,403
    
    
    
    21,403
    
    
    
    
    12,224
    
    
    
    12,224Long-term debt, net of
current portion
    
    
    1,410
    
    
    
    
    1,241
    
    
    
    1,241
    
    
    
    
    1,729
    
    
    
    1,729
    
    
    
    
    2,139
    
    
    
    2,139
    
    
    
    
    2,463
    
    
    
    2,463Deferred rent
    
    
    222
    
    
    
    
    
    
    
    
    349
    
    
    
    
    
    
    
    
    389
    
    
    
    
    
    
    
    
    427
    
    
    
    
    
    
    
    
    414Additional paid-in capital
    
    
    44,890
    
    
    
    
    40,442
    
    
    
    44,323
    
    
    
    
    40,445
    
    
    
    44,324
    
    
    
    
    39,979
    
    
    
    44,109
    
    
    
    
    32,574
    
    
    
    34,389Retained earnings
    
    
    8,086
    
    
    
    
    25,016
    
    
    
    22,066
    
    
    
    
    25,891
    
    
    
    22,997
    
    
    
    
    23,439
    
    
    
    21,244
    
    
    
    
    22,301
    
    
    
    21,336Deferred compensation
    
    
    (507
    )
    
    
    
    
    
    
    
    (8
    )
    
    
    
    
    
    
    
    (117
    )
    
    
    
    
    
    
    
    (1,081
    )
    
    
    
    
    
    
    
    (669
    )Stockholders equity
    
    
    51,728
    
    
    
    
    64,951
    
    
    
    65,874
    
    
    
    
    64,878
    
    
    
    65,746
    
    
    
    
    60,255
    
    
    
    61,109
    
    
    
    
    50,108
    
    
    
    50,289
 
 (a)
    
    The Company acquired Simmons on October 25, 2002 (see Item 1. Business. herein).(b)
    
    The Company adopted SFAS No. 142 on March 1, 2002 and as such ceased amortizing goodwill (see
Note 2. of Notes to Consolidated Financial Statements).(c)
    
    The adjustments for the correction of errors related to stock-based compensation and rent are
allocated to cost of sales, selling expenses, general and administrative expenses and research
and development expenses, as appropriate. The tax effect of the adjustments is reflected in
the income tax provision (benefit) line.(d)
    
    The cumulative effect of the adjustments for the correction of errors related to stock-based
compensation and rent on selected balance sheet data are shown herein. 18




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(e)
    
    The Company accounts for employee stock-based compensation in accordance with the
intrinsic value method described in Accounting Principles Board Opinion No. 25, Accounting for
Stock Issued to Employeesand related interpretations. The Company has adopted the disclosure only
provisions of SFAS No. 123 as amended by SFAS No. 148, Accounting for Stock Based Compensation 
Transition and Disclosure. The Company recognizes compensation expense under APB 25 relating to
certain stock options granted with exercise prices below fair market value on the date of grant and
restricted stock. 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 (loss) and earnings (loss) per
share would have been reduced to the pro forma amounts indicated below. Year Ended February 28/29,(In thousands of dollars, except per share amounts)2006
    
    
    
    2005
    
    
    2005
    
    
    
    2004
    
    
    2004
    
    
    
    2003
    
    
    2003
    
    
    
    2002
    
    
    2002as reported
    
    
    as restated (1)
    
    
    
    as reported
    
    
    as restated (1)
    
    
    
    as reported
    
    
    as restated (1)
    
    
    
    as reported
    
    
    as restated (1)Reported net
(loss) income
    
    $
    (13,980
    )
    
    
    $
    (875
    )
    
    $
    (931
    )
    
    
    $
    2,452
    
    
    $
    1,753
    
    
    
    $
    1,138
    
    
    $
    (92
    )
    
    
    $
    (1,442
    )
    
    $
    (1,827
    )Compensation cost,
net of taxes under
APB25
    
    
    21
    
    
    
    
    
    
    
    
    80
    
    
    
    
    
    
    
    
    722
    
    
    
    
    
    
    
    
    1,222
    
    
    
    
    
    
    
    
    356Compensation cost,
net of taxes under
SFAS No. 123
    
    
    (531
    )
    
    
    
    (886
    )
    
    
    (943
    )
    
    
    
    (682
    )
    
    
    (684
    )
    
    
    
    (1,587
    )
    
    
    (1,558
    )
    
    
    
    (2,079
    )
    
    
    (1,870
    )Pro forma net
(loss) income
    
    $
    (14,490
    )
    
    
    $
    (1,761
    )
    
    $
    (1,794
    )
    
    
    $
    1,770
    
    
    $
    1,791
    
    
    
    $
    (449
    )
    
    $
    (428
    )
    
    
    $
    (3,521
    )
    
    $
    (3,341
    )Reported (loss)
earnings per share
 basic and diluted
    
    $
    (0.72
    )
    
    
    $
    (0.05
    )
    
    $
    (0.05
    )
    
    
    $
    0.13
    
    
    $
    0.09
    
    
    
    $
    0.07
    
    
    $
    (0.01
    )
    
    
    $
    (0.10
    )
    
    $
    (0.12
    )Pro forma (loss)
earnings per
share  basic and
diluted
    
    $
    (0.75
    )
    
    
    $
    (0.09
    )
    
    $
    (0.09
    )
    
    
    $
    0.09
    
    
    $
    0.09
    
    
    
    $
    (0.03
    )
    
    $
    (0.03
    )
    
    
    $
    (0.23
    )
    
    $
    (0.22
    )
 
 (1)
    
    See Note 3. Restatement of Previously Issued Financial Statements, of Notes to
Consolidated Financial Statements. 19




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Supplemental Unaudited Information Regarding Restatement Adjustments
    After-tax effect of adjustments for the year ended February 28/29, (in thousands of dollars)Cumulativeeffect ofadjustmentsto retainedearnings atFebruary28, 2003
    
    
    2003
    
    
    2002
    
    
    2001
    
    
    2000
    
    
    1999
    
    
    1998Stock-based
compensation
expense
    
    $
    1,936
    
    
    $
    1,222
    
    
    $
    356
    
    
    $
    166
    
    
    $
    117
    
    
    $
    40
    
    
    $
    35Rent
expense
    
    
    259
    
    
    
    8
    
    
    
    29
    
    
    
    33
    
    
    
    78
    
    
    
    78
    
    
    
    33Stock-based
compensation and
rent
expense
    
    $
    2,195
    
    
    $
    1,230
    
    
    $
    385
    
    
    $
    199
    
    
    $
    195
    
    
    $
    118
    
    
    $
    68
 20




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Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
 The following discussion of our financial condition and results of operations should be read
in conjunction with our consolidated financial statements and related notes included elsewhere in
this Form 10-K . This discussion contains forward-looking statements that involve risks and
uncertainties. Our actual results may differ materially from those anticipated in these
forward-looking statements due to known and unknown risks, uncertainties and other factors,
including those risks discussed in Risk Factors and elsewhere in this Form 10-K . Those risk
factors expressly qualify all subsequent oral and written forward-looking statements attributable
to us or persons acting on our behalf. We do not have any intention or obligation to update
forward-looking statements included in this Form 10-K after the date of this Form 10-K , except as
required by law.
 Restatement of Consolidated Financial Statements
  21




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Overview
   22




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Critical Accounting Policies and Estimates
  Revenue Recognition
  Inventories
  23




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Goodwill and Intangible Assets
 Goodwill and
Intangible Assets
 Income taxes
  24




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Results of Operations
  Year Ended February 28/29 ,2006
    
    
    2005
    
    
    2004as restated
    
    
    as restated(1)
    
    
    (1)Net sales
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Cost of sales
    
    
    75.4
    
    
    
    74.8
    
    
    
    72.0Gross profit
    
    
    24.6
    
    
    
    25.2
    
    
    
    28.0Operating expenses:Selling expenses
    
    
    15.3
    
    
    
    14.4
    
    
    
    13.2General and administrative expenses
    
    
    10.9
    
    
    
    9.2
    
    
    
    9.5ESOP contribution expense
    
    
    0.3
    
    
    
    0.3
    
    
    
    0.6Research and development expenses
    
    
    1.2
    
    
    
    1.8
    
    
    
    1.5Total operating expenses
    
    
    27.7
    
    
    
    25.7
    
    
    
    24.8(Loss) income from operations
    
    
    (3.1
    )
    
    
    (0.5
    )
    
    
    3.2Interest expense
    
    
    1.0
    
    
    
    0.8
    
    
    
    0.7(Loss) income before income taxes
    
    
    (4.1
    )
    
    
    (1.3
    )
    
    
    2.5(Benefit) provision for income taxes
    
    
    7.6
    
    
    
    (0.5
    )
    
    
    1.2Net (loss) income
    
    
    (11.7
    )
    
    
    (0.8
    )
    
    
    1.3
 
 (1)
    
    See Note 3. Restatement of Previously Issued Financial Statements, of Notes to Consolidated
Financial Statements. Fiscal 2006 Compared to Fiscal 2005
    25




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Fiscal 2005 Compared to Fiscal 2004
  26




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27




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Seasonality
  Liquidity and Capital Resources
    28




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29




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Payments due by period:Up to
    
    
    
    
    
    
    
    
    
    
    AfterContractual Obligations:
    
    Total
    
    
    1 year
    
    
    1-3 years
    
    
    3-5 years
    
    
    5 yearsLong-term debt
    
    $
    2,674,000
    
    
    $
    1,289,000
    
    
    $
    328,000
    
    
    $
    328,000
    
    
    $
    729,000Non-cancelable operating leases and
other contractual obligations
    
    
    3,173,000
    
    
    
    1,898,000
    
    
    
    1,273,000
    
    
    
    2,000
    
    
    
    Total contractual cash obligations
    
    $
    5,847,000
    
    
    $
    3,187,000
    
    
    $
    1,601,000
    
    
    $
    330,000
    
    
    $
    729,000
  Inflation
  New Accounting Pronouncements
 Accounting and Disclosure Guidance for the
Foreign Earnings Repatriation Provision within the American Jobs Creation Act of 2004
  30




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31




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Forward-Looking Information
  32




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Item 7A. Quantitative and Qualitative Disclosures About Market Risk
     
 Item 8. Financial Statements and Supplementary Data
  SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
   33




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Fiscal 2006 (in thousands of dollars except per share amounts)
 First
    
    
    First
    
    
    
    Second
    
    
    Second
    
    
    
    Third
    
    
    Third
    
    
    
    FourthQuarter
    
    
    Quarter
    
    
    
    Quarter
    
    
    Quarter
    
    
    
    Quarter
    
    
    Quarter
    
    
    
    Quarteras reported
    
    
    as restated (1)
    
    
    
    as reported
    
    
    as restated (1)
    
    
    
    as reported
    
    
    as restated (1)Net sales
    
    $
    21,525
    
    
    $
    21,525
    
    
    
    $
    21,877
    
    
    $
    21,877
    
    
    
    $
    53,092
    
    
    $
    53,092
    
    
    
    $
    23,341Cost of sales
    
    
    15,546
    
    
    
    15,533
    
    
    
    
    16,883
    
    
    
    16,870
    
    
    
    
    38,437
    
    
    
    38,424
    
    
    
    
    19,506Gross profit
    
    
    5,979
    
    
    
    5,992
    
    
    
    
    4,994
    
    
    
    5,007
    
    
    
    
    14,655
    
    
    
    14,668
    
    
    
    
    3,835Selling expenses
    
    
    3,693
    
    
    
    3,693
    
    
    
    
    4,106
    
    
    
    4,106
    
    
    
    
    6,528
    
    
    
    6,528
    
    
    
    
    3,959General and
administrative
expenses
    
    
    2,898
    
    
    
    2,880
    
    
    
    
    3,059
    
    
    
    3,041
    
    
    
    
    3,028
    
    
    
    3,010
    
    
    
    
    4,151ESOP expenses
    
    
    92
    
    
    
    92
    
    
    
    
    79
    
    
    
    79
    
    
    
    
    91
    
    
    
    91
    
    
    
    
    81Research and
development
expenses
    
    
    369
    
    
    
    369
    
    
    
    
    302
    
    
    
    302
    
    
    
    
    395
    
    
    
    395
    
    
    
    
    398Operating income
(loss)
    
    
    (1,073
    )
    
    
    (1,042
    )
    
    
    
    (2,552
    )
    
    
    (2,521
    )
    
    
    
    4,613
    
    
    
    4,644
    
    
    
    
    (4,754
    )Interest expense
    
    
    204
    
    
    
    204
    
    
    
    
    231
    
    
    
    231
    
    
    
    
    419
    
    
    
    419
    
    
    
    
    349Income (loss)
before income taxes
    
    
    (1,277
    )
    
    
    (1,246
    )
    
    
    
    (2,783
    )
    
    
    (2,752
    )
    
    
    
    4,194
    
    
    
    4,225
    
    
    
    
    (5,103
    )Provision (benefit)
for income taxes
    
    
    (484
    )
    
    
    (464
    )
    
    
    
    (1,309
    )
    
    
    (1,288
    )
    
    
    
    2,730
    
    
    
    2,744
    
    
    
    
    8,112Net income (loss)
    
    $
    (793
    )
    
    $
    (782
    )
    
    
    $
    (1,474
    )
    
    $
    (1,464
    )
    
    
    $
    1,464
    
    
    $
    1,481
    
    
    
    $
    (13,215
    )Net income (loss)
per share  basic
and diluted
    
    $
    (0.04
    )
    
    $
    (0.04
    )
    
    
    $
    (0.08
    )
    
    $
    (0.08
    )
    
    
    $
    0.08
    
    
    $
    0.08
    
    
    
    $
    (0.68
    )
 34




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Fiscal 2005 (2) (in thousands of dollars except per share amounts)
 First
    
    
    First
    
    
    
    Second
    
    
    Second
    
    
    
    Third
    
    
    Third
    
    
    
    Fourth
    
    
    FourthQuarter
    
    
    Quarter
    
    
    
    Quarter
    
    
    Quarter
    
    
    
    Quarter
    
    
    Quarter
    
    
    
    Quarter
    
    
    Quarteras reported
    
    
    as restated (1)
    
    
    
    as reported
    
    
    as restated (1)
    
    
    
    as reported
    
    
    as restated (1)
    
    
    
    as reported
    
    
    as restated (1)Net sales
    
    $
    19,740
    
    
    $
    19,740
    
    
    
    $
    22,633
    
    
    $
    22,633
    
    
    
    $
    49,687
    
    
    $
    49,687
    
    
    
    $
    19,739
    
    
    $
    19,739Cost of sales
    
    
    14,912
    
    
    
    14,927
    
    
    
    
    16,939
    
    
    
    16,935
    
    
    
    
    35,775
    
    
    
    35,771
    
    
    
    
    15,979
    
    
    
    15,975Gross profit
    
    
    4,828
    
    
    
    4,813
    
    
    
    
    5,694
    
    
    
    5,698
    
    
    
    
    13,912
    
    
    
    13,916
    
    
    
    
    3,760
    
    
    
    3,764Selling expenses
    
    
    3,402
    
    
    
    3,419
    
    
    
    
    3,850
    
    
    
    3,850
    
    
    
    
    5,911
    
    
    
    5,911
    
    
    
    
    2,883
    
    
    
    2,883General and
administrative
expenses
    
    
    2,599
    
    
    
    2,654
    
    
    
    
    2,578
    
    
    
    2,573
    
    
    
    
    2,223
    
    
    
    2,218
    
    
    
    
    2,811
    
    
    
    2,806ESOP expenses
    
    
    103
    
    
    
    103
    
    
    
    
    95
    
    
    
    95
    
    
    
    
    130
    
    
    
    130
    
    
    
    
    91
    
    
    
    91Research and
development
expenses
    
    
    525
    
    
    
    539
    
    
    
    
    442
    
    
    
    442
    
    
    
    
    672
    
    
    
    672
    
    
    
    
    379
    
    
    
    379Operating income
(loss)
    
    
    (1,801
    )
    
    
    (1,902
    )
    
    
    
    (1,271
    )
    
    
    (1,262
    )
    
    
    
    4,976
    
    
    
    4,985
    
    
    
    
    (2,404
    )
    
    
    (2,395
    )Interest expense
    
    
    151
    
    
    
    151
    
    
    
    
    199
    
    
    
    199
    
    
    
    
    283
    
    
    
    283
    
    
    
    
    255
    
    
    
    255Income (loss)
before income taxes
    
    
    (1,952
    )
    
    
    (2,053
    )
    
    
    
    (1,470
    )
    
    
    (1,461
    )
    
    
    
    4,693
    
    
    
    4,702
    
    
    
    
    (2,659
    )
    
    
    (2,650
    )Provision (benefit)
for income taxes
    
    
    (793
    )
    
    
    (830
    )
    
    
    
    (589
    )
    
    
    (585
    )
    
    
    
    1,894
    
    
    
    1,905
    
    
    
    
    (1,025
    )
    
    
    (1,021
    )Net income (loss)
    
    $
    (1,159
    )
    
    $
    (1,223
    )
    
    
    $
    (881
    )
    
    $
    (876
    )
    
    
    $
    2,799
    
    
    $
    2,797
    
    
    
    $
    (1,634
    )
    
    $
    (1,629
    )Net income (loss)
per share  basic
and diluted
    
    $
    (0.06
    )
    
    $
    (0.06
    )
    
    
    $
    (0.05
    )
    
    $
    (0.05
    )
    
    
    $
    0.14
    
    
    $
    0.14
    
    
    
    $
    (0.08
    )
    
    $
    (0.08
    )
 
 (1)
    
    See Note 3 Restatement of Previously Issued Financial Statements, of Notes to Consolidated
Financial Statements.(2)
    
    The Company recorded certain adjustments to the February 28, 2005 consolidated balance sheet
to reflect the cumulative effect of the restatements described in Note 3 Restatement of
Previously Issued Financial Statements, of Notes to Consolidated Financial Statements. Such
adjustments related primarily to stock-based compensation expense, rent expense and income taxes.  
 Item 9. Changes in and Disagreements With Accountants On Accounting and Financial Disclosure
 Principal Accountant Fees and Services
 
 Item 9A. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures.
  35




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36




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Remediation of Material Weakness in Internal Control over Financial Reporting of Stock-Based
Compensation Expense
  37




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Remediation of Controls over the Preparation, Analysis, documentation, and Review of the Income Tax
Provision Calculation
  Changes in Internal Control over Financial Reporting
  Limitations on Effectiveness of Controls.
  
 Item 9B. Other Information
  38




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##### Table of Contents



PART III
 
 Item 10. Directors and Executive Officers of the Registrant
  Directors of the Registrant
 DirectorName and Age
    
    Business Experience and Directorships
    
    SinceSteven G. Murdock (54)
    
    Steven G. Murdock served as the
Companys Chief Executive Officer
from June 2003 to May 2006 and as
its President and Chief Operating
Officer from October 1990 to June
2003. As of May 8, 2006, Mr. Murdock
is serving the Company as a director
and as a consultant and is a private
investor. From May 1980 to October
1990, Mr. Murdock served as 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.
    
    
    1996Harry L. Casari (70)
    
    Harry L. Casari was named Chairman
of the Board of the Company as of
June 1, 2003. Mr. Casari is
currently a private investor. He
worked as a Certified Public
Accountant for Ernst & Young LLP
from 1969 until 1994 when he retired
as a Partner. Mr. Casari received a
BS degree in business administration
from the University of Denver. He
serves as a member of the board of
directors of Cohu, Inc., Orange 21,
Inc. and Catcher Holdings, Inc.
    
    
    1997Paul D. Sonkin (38)
    
    Paul D. Sonkin has served as the
Chief Investment Officer to
Hummingbird Value Fund, L.P., a
Delaware limited partnership, since
its inception in December 1999, to
Hummingbird Microcap Value Fund, LP,
since its inception in March 2002,
to Hummingbird Concentrated Fund,
LP, since its inception in January
2004, and to Tarsier Nanocap Value
Fund, LP since its inception in June
2005. Since January 1998, Mr.
Sonkin has served as an adjunct
professor at Columbia University
Graduate School of Business, where
he teaches courses on securities
analysis and value investing. From
May 1998 to May 1999, Mr. Sonkin was
a senior analyst at First Manhattan
& Co., a firm that specializes in
mid and large cap value investing.
From May 1995 to May 1998 Mr. Sonkin
was an analyst and portfolio manager
at Royce & Associates, which
practices small and micro cap value
investing. Mr. Sonkin is a member
of the Board of Directors of Vodavi
Technologies Inc., a NASDAQ listed
company that designs, develops,
markets, and supports a broad range
of business telecommunications
solutions. Mr. Sonkin received an
MBA from Columbia University and a
BA degree in Economics from Adelphi
University.
    
    
    2006
 39




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##### Table of Contents



DirectorName and Age
    
    Business Experience and Directorships
    
    SinceTimothy C. McQuay (55)
    
    Timothy C. McQuay has been a
Managing Director  Investment
Banking at A.G. Edwards & Sons, Inc.
since August 1997. From May 1995 to
August 1997, Mr. McQuay was a
Partner at Crowell, Weedon & Co. and
from October 1994 to August 1997 he
also served as Managing Director 
Corporate Finance. From May 1993 to
October 1994, Mr. McQuay served as
Vice President, Corporate
Development with Kerr Group, Inc., a
New York Stock Exchange listed
plastics manufacturing company. From
May 1990 to May 1993, Mr. McQuay
served as Managing Director 
Merchant Banking with Union Bank.
Mr. McQuay received a BA degree in
economics from Princeton University
and a MBA degree in finance from the
University of California at Los
Angeles. He serves as a member of
the board of directors of Keystone
Automotive Industries, Inc.
    
    
    1997Frederick H. Schneider, Jr. (50)
    
    Frederick H. Schneider, Jr. has
served as the Chief Financial
Officer of Skechers USA, Inc. since
January 2006. From July 2004 to
January 2006, Mr. Schneider served
as a Senior Managing Director at
Pasadena Capital Partners, LLC, a
private equity investment firm.
Prior to working at Pasadena Capital
Partners, LLC, Mr. Schneider was an
independent private equity investor
and consultant. From September 1994
to January 1998, he served as Chief
Financial Officer and Principal of
Leonard Green & Partners, L.P., a
merchant banking firm. From June
1978 to September 1994, he was
employed by KPMG Peat Marwick,
including five years as an Audit and
Due Diligence Partner. Mr.
Schneider received a BA degree in
accounting and management from
Ambassador College. He serves as a
member of the board of directors of
Sport Chalet, Inc.
    
    
    2004James M. Chadwick (33)
    
    James M. Chadwick founded Monarch
Activist Partners LP, a Delaware
limited partnership, and has been
its managing partner since its
formation in January 2006. From
January 2003 to June 2005, Mr.
Chadwick was the managing member of
Pacific Coast Investment Partners,
LLC, a hedge fund specializing in
shareholder activism. From April
1999 to October 2002, Mr. Chadwick
served as an analyst for Relational
Investors, LLC, a registered
investment advisor. Mr. Chadwick is
a Director of AirNet Systems, Inc.,
an American Stock Exchange listed
specialty air carrier company for
time-sensitive deliveries. Mr.
Chadwick graduated with a BA in
History from the University of
California Los Angeles.
    
    
    2006Michael P. Hoopis (55)
    
    Michael P. Hoopis has served as the
Chief Executive Officer of Targus
Group International, Inc. since
October 2006. From November 1999 to
April 2006, Mr. Hoopis served as the
President and Chief Executive
Officer of Water Pik Technologies,
Inc. From October 1998 to November
1999, Mr. Hoopis was President and
Chief Executive Officer of the
consumer products segment of
Allegheny Teledyne, Inc., the
predecessor to Water Pik
Technologies, Inc. From July 1996 to
September 1998, Mr. Hoopis served as
President of Worldwide Household
Products, Black & Decker
Corporation. From May 1992 to July
1996, Mr. Hoopis served as President
of Price Pfister, Inc., a division
of Black & Decker Corporation. Mr.
Hoopis received his BS degree in
industrial engineering from the
University of Rhode Island.
    
    
    2000
 40




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##### Table of Contents



DirectorName and Age
    
    Business Experience and Directorships
    
    SinceVernon L. Fotheringham (58)
    
    Vernon L. Fotheringham is the
Managing Director of MaxServ (NZ)
Ltd., a development stage broadband
service company since August 2006.
He is also a Managing Member of
Maxband, LLC representing JRC millimetric microwave products in North America since 2003. Previously
he was the Executive Director of GPC
Asia, Ltd., an outsource management organization providing operations and strategic planning for Asian wireless service providers. From May 2004 until
October 2005 he was the President
and Chief Executive Officer of
Adaptix, Inc., a technology
development manufacturer of
broadband wireless access network
equipment. Mr. Fotheringham has
been a managing director of SDR
Holdings, LLC, which holds the founders equity in Adaptix, Inc., from July 2003 until
the present. From October 2002
until July 2003 he was the President
and CEO of Broadstorm, Inc., a pioneering developer of the technology
that has become the core of the broadband wireless Mobil WiMax standard. From
June 1998 to January 2001, Mr.
Fotheringham was the Chairman of
Bazillion, Inc. a global Integrated
Service Provider. From March 1993 to
November 1997, Mr. Fotheringham was
the founder, chairman and CEO of
Advanced Radio Telecom Corporation which pioneered the wireless broadband service industry.
Mr. Fotheringham received a BA
degree in fine arts from California
State University, Fullerton.
    
    
    2001Steven L. Muellner (56)
    
    Steven L. Muellner has been the
Companys President, Chief Executive
Officer and a member of the Board
since May 8, 2006. From December
2004 until April 2006, Mr. Muellner
was a private investor. From August
1998 to December 2004, Mr. Muellner
served as President of Variflex,
Inc., an outdoor sports products
supplier. From July 1996 to May
1998, Mr. Muellner was President and
Co-Chief Executive Officer of
Applause Enterpirses, a distributor
of childrens toys and licensed
merchandise. From 1995 to 1996, Mr.
Muellner served as executive vice
president of sales and marketing at
Caradon Doors and Windows, a leading
provider of custom doors and
windows. From 1987 to 1994, Mr.
Muellner served in various
capacities, including, president,
vice president of sales and
marketing and vice president of
marketing at LouverDrape, Inc., a
distributor of window coverings, and
from 1983 to 1987, Mr. Muellner
served in various capacities,
including product manager, at
Frito-Lay, Inc. Mr. Muellner
received his Masters degree in
business administration from Cornell
University and BS from the
University of Minnesota in
Minneapolis.
    
    
    2006
  Executive Officers of the Registrant
 Name
    
    Age
    
    PositionSteven L. Muellner
    
    
    56
    
    
    Chief Executive Officer, President, DirectorBrent W. Christensen
    
    
    47
    
    
    Senior Vice President  Finance and Chief Financial OfficerMark D. Peterson
    
    
    44
    
    
    Senior Vice President, General Counsel and SecretaryRobert L. Davis
    
    
    39
    
    
    Senior Vice President  SalesDonald Finkle
    
    
    48
    
    
    Senior Vice President  Operations
 41




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##### Table of Contents



Steven L. Muellner
 Brent W. Christensen
 Mark D. Peterson
 Robert L. Davis
 Donald
W. Finkle
 42




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##### Table of Contents



Item 11. Executive Compensation
 Summary of Executive Compensation
  Summary Compensation Table
 Long Term Compensation (4)Annual
    
    Securities
    
    RestrictedCompensation(2)
    
    Underlying
    
    Stock
    
    All OtherSalary
    
    Bonus
    
    Options
    
    Awards
    
    Compensation(7)Name and Principal Position
    
    Year
    
    ($)
    
    ($)
    
    (#)(3)
    
    ($)
    
    ($)Steven G. Murdock(1)
    
    
    2006
    
    
    
    450,000
    
    
    
    0
    
    
    
    0
    
    
    
    165,000
    (5)
    
    
    Chief Executive Officer and
    
    
    2005
    
    
    
    450,000
    
    
    
    0
    
    
    
    100,000
    
    
    
    
    
    
    
    President and Secretary
    
    
    2004
    
    
    
    443,300
    
    
    
    325,300
    
    
    
    75,000
    
    
    
    
    
    
    
    Mark D. Peterson
    
    
    2006
    
    
    
    290,800
    
    
    
    0
    
    
    
    0
    
    
    
    82,500
    (6)
    
    
    8,630Senior Vice President,
    
    
    2005
    
    
    
    281,600
    
    
    
    0
    
    
    
    50,000
    
    
    
    
    
    
    
    8,860General Counsel and Secretary
    
    
    2004
    
    
    
    258,600
    
    
    
    194,800
    
    
    
    40,000
    
    
    
    
    
    
    
    16,900Robert L. Davis
    
    
    2006
    
    
    
    268,300
    
    
    
    0
    
    
    
    0
    
    
    
    82,500
    (6)
    
    
    8,630Senior Vice President 
    
    
    2005
    
    
    
    259,100
    
    
    
    0
    
    
    
    50,000
    
    
    
    
    
    
    
    8,860Sales
    
    
    2004
    
    
    
    237,900
    
    
    
    181,600
    
    
    
    40,000
    
    
    
    
    
    
    
    16,900Brent W. Christensen
    
    
    2006
    
    
    
    232,800
    
    
    
    0
    
    
    
    0
    
    
    
    82,500
    (6)
    
    
    8,630Senior Vice President  Finance
    
    
    2005
    
    
    
    225,600
    
    
    
    0
    
    
    
    50,000
    
    
    
    
    
    
    
    8,860and Chief Financial Officer
    
    
    2004
    
    
    
    206,900
    
    
    
    155,800
    
    
    
    40,000
    
    
    
    
    
    
    
    16,900
 
 (1)
    
    Mr. Murdock resigned as Chief Executive Officer as of May 8, 2006. He will remain a member
of the Board and a consultant for the Company. Mr. Steven L. Muellner was appointed as Chief
Executive Officer and President on May 8, 2006.(2)
    
    The aggregate amount of perquisites and other personal benefits, securities or property
paid to each of the Named Executive Officers during the three fiscal years presented in the table
did not exceed the lesser of 10% of such officers total annual salary and bonus for each such
fiscal year or $50,000. Therefore, no Other Annual Compensation column has been included in this
table.(3)
    
    All stock options granted to the Named Executive Officers were non-qualified options
granted under the Companys 1997 Stock Incentive Plan, as amended (the Plan).(4)
    
    The following table reflects the aggregated restricted stock holdings for each of the
Named Executive Officers as of the end of the 2006 fiscal year and the value of such restricted
stock based on the market value of the stock on February 28, 2006 (the last day of trading for the
2006 fiscal year): Number of Shares
    
    Value ofof Unvested
    
    UnvestedRestricted Stock
    
    Restricted Stockat February 28,
    
    at February 28,2006
    
    2006 ($)Steven G. Murdock
    
    
    60,000
    
    
    $
    171,000Mark D. Peterson
    
    
    30,000
    
    
    
    85,500Robert L. Davis
    
    
    30,000
    
    
    
    85,500Brent W. Christensen
    
    
    30,000
    
    
    
    85,500
 (5)
    
    Represents the grant to Mr. Murdock of 60,000 restricted shares of common stock. The
value set forth above is based on the closing price on the date of grant, May 24, 2005, which was
$2.75 per share. The grant included the right to receive dividends on the restricted shares. Upon
Mr. Murdocks resignation on May 8, 2006, 20,000 of such shares were deemed fully vested and the
remaining 40,000 unvested shares were forfeited.
 43




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##### Table of Contents



(6)
    
    Represents the grant to each Named Executive Officer of 30,000 restricted shares of
common stock. The shares are scheduled to vest in annual installments over a three-year term and
are also subject to performance-based vesting requirements. The value set forth above is based on
the closing price of the common stock on the date of grant, May 24, 2005, which was $2.75 per
share. As of November 1, 2006, 10,000 shares subject to each of these grants had vested. The value
of the remaining 20,000 unvested shares for each Named Executive Officer was
$38,400 based on the $1.92 closing price of the common stock on that date. The grants include
the right to receive dividends on the restricted shares.(7)
    
    Amounts represent the aggregate value of shares of the Companys Common Stock (based upon
the share price as of the end of each respective fiscal year) allocated to each Named Executive
Officers account under the Companys Employee Stock Ownership Plan (ESOP) pursuant to (i) the
Companys matching contribution under the ESOP for amounts deferred under the Companys 401(k) Plan
and (ii) the Companys contribution under the ESOP.
 Summary of Option Grants
  Summary of Options Exercised
  Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values
 Number of Securities
    
    Value of Unexercised inShares
    
    
    
    
    
    Underlying Unexercised
    
    The Money Options atAcquired on
    
    Value
    
    Options at Fiscal Year End
    
    Fiscal Year-End(1)Exercise
    
    Realized
    
    Exercisable/Unexercisable
    
    Exercisable/Unexercisable#
    
    $
    
    #
    
    $Steven G. Murdock
    
    
    0
    
    
    
    0
    
    
    
    696,388/48,612
    
    
    
    43,200/0Mark D. Peterson
    
    
    0
    
    
    
    0
    
    
    
    295,554/24,446
    
    
    
    32,400/0Robert L. Davis
    
    
    0
    
    
    
    0
    
    
    
    164,223/24,446
    
    
    
    10,080/0Brent W. Christensen
    
    
    0
    
    
    
    0
    
    
    
    290,554/24446
    
    
    
    32,400/0
 
 (1)
    
    These amounts represent the difference between the market value of the securities
underlying the options on February 28, 2006 (the last day of trading for the 2006 fiscal
year) and the exercise price of in-the-money options. Directors Fees
  44




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##### Table of Contents



COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
  45




---



##### Table of Contents



EMPLOYMENT AGREEMENTS
 Employment Agreements
  Severance Agreements
   46




---



##### Table of Contents



Change in Control Arrangements
  
 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
  Security Ownership Table
 Amount andNature of
    
    PercentBeneficial
    
    ofName and Address
    
    Ownership
    
    ClassHummingbird Management, LLC(1)
    
    
    2,813,288
    
    
    
    13.94
    %Dimensional Fund Advisors Inc.(2)
    
    
    1,744,081
    
    
    
    8.64
    %Wellington Management Company, LLP(3)
    
    
    1,013,500
    
    
    
    5.02
    %Steven L. Muellner(4)
    
    
    0
    
    
    
    *Harry L. Casari(4)(5)
    
    
    65,799
    
    
    
    *Steven G. Murdock(4)(6)
    
    
    1,381,000
    
    
    
    6.84
    %Timothy C. McQuay(4)(7)
    
    
    62,999
    
    
    
    *Michael P. Hoopis(4)(8)
    
    
    32,999
    
    
    
    *Vernon L. Fotheringham(4)(9)
    
    
    19,999
    
    
    
    *Frederick H. Schneider, Jr. (4)(10)
    
    
    4,999
    
    
    
    *Paul D. Sonkin (4)(11)
    
    
    2,897,054
    
    
    
    14.35
    %James M. Chadwick (4)(12)
    
    
    567,213
    
    
    
    2.81
    %Mark D. Peterson(4)(13)
    
    
    366,244
    
    
    
    1.79
    %Robert L. Davis(4)(14)
    
    
    234,033
    
    
    
    1.15
    %Brent W. Christensen(4)(15)
    
    
    373,224
    
    
    
    1.82
    %Meade Instruments Corp. Employee Stock Ownership Plan(4)(16)
    
    
    1,391,713
    
    
    
    6.90
    %All current directors and executive officers as a group (12 persons)(17)
    
    
    6,005,563
    
    
    
    28.37
    %
 47




---



##### Table of Contents



*
    
    Less than 1%(1)
    
    According to a Schedule 13D, dated as of June 14, 2006, filed with the Securities and
Exchange Commission, Hummingbird Management, LLC (f/k/a Morningside Value Investors, LLC), a
Delaware limited liability company (Hummingbird), has sole voting power as to 2,813,288 of
such shares, sole dispositive power as to 2,813,288 of such shares, shared voting power as to
none of such shares and shared dispositive power as to none of such shares. Hummingbird, as
investment manager, and Hummingbird Capital LLC, as general partner, may be deemed to have
sole voting and investment authority over 775,581 shares of Common Stock owned by The
Hummingbird Value Fund, L.P., 818,478 shares of Common Stock owned by The Hummingbird Microcap
Value Fund, L.P., and 1,219,229 shares of Common Stock owned by The Hummingbird Concentrated
Fund, L.P. Paul D. Sonkin, managing member and control person of Hummingbird (Sonkin), has
sole voting and dispositive power as to an additional 40,666 shares of Common Stock and shared
dispositive power as to an additional 43,100 shares which if included with the 2,813,288
shares listed above would result in a total of 2,897,054 shares or 14.35% of the total
outstanding Common Stock. See footnote 11 below. The mailing address of Hummingbird is 460
Park Avenue, 12th Floor, New York, NY 10022.(2)
    
    According to a Schedule 13G, dated as of February 1, 2006, filed with the Securities and
Exchange Commission, Dimensional Fund Advisors Inc., a Delaware corporation (Dimensional),
has sole voting power as to 1,744,081 of such shares, sole dispositive power as to 1,744,081
of such shares, shared voting power as to none of such shares and shared dispositive power as
to none of such shares. Dimensional is an Investment Advisor under Section 13d-1(b)(1)(ii)(E)
of the Exchange Act. The mailing address of Dimensional is 1299 Ocean Avenue, 11th Floor,
Santa Monica, CA 90401.(3)
    
    According to a Schedule 13G, dated as of February 14, 2006, filed with the Securities and
Exchange Commission, Wellington Management Company, LLP, a Massachusetts limited liability
partnership (Wellington), has sole voting power as to none of such shares, sole dispositive
power as to none of such
shares, shared voting power as to 363,500 of such shares and shared dispositive power as to
1,013,500 of such shares. Wellington is an Investment Advisor as defined in Section
13d-1(b)(1)(ii)(E) of the Exchange Act. The mailing address of Wellington is 75 State Street,
Boston, MA 02109.(4)
    
    The address for all directors and executive officers of the Company and the Companys
Employee Stock Ownership Plan (ESOP) Committee is c/o Meade Instruments Corp., 6001 Oak
Canyon, Irvine, CA 92618.(5)
    
    Includes 62,999 shares subject to options that are currently exercisable or will become
exercisable on or before December 31, 2007.(6)
    
    Includes 1,361,000 shares held by Steven G. Murdock, as Trustee of the Steven G. Murdock
Trust u/a/d August16, 2001.(7)
    
    Includes 62,999 shares subject to options that are currently exercisable or will become
exercisable on or before December 31, 2007.(8)
    
    Includes 32,999 shares subject to options that are currently exercisable or will become
exercisable on or before December 31, 2007.(9)
    
    Includes 19,999 shares subject to options that are currently exercisable or will become
exercisable on or before December 31, 2007.(10)
    
    Includes 4,999 shares subject to options that are currently exercisable or will become
exercisable on or before December 31, 2007. 48




---



##### Table of Contents



(11)
    
    Includes 2,813,288 shares held by Mr. Sonkin, as managing member and control person of
Hummingbird. Also includes 40,666 shares of Common Stock held in Mr. Sonkins and his wife
Ms. Sonkins IRA Accounts and 43,100 shares of Common Stock held in IRA Accounts of various
other parties for which Mr. Sonkin has dispositive power but disclaims beneficial ownership.
See footnote 1 above.(12)
    
    Includes 567,213 shares held by Mr. Chadwick, as co-managing member of Chadwick Capital
Management LLC, a Delaware limited liability company and the general partner of Monarch
Activist Partners LP, a Delaware limited partnership.(13)
    
    Includes 311,666 shares subject to options that are currently exercisable or will become
exercisable on or before December 31, 2007 and 20,000 shares subject to a restricted stock
award, dated May 24, 2005, which includes a three-year term time-based as well as a
performance-based restriction schedule. Also includes 5,202 shares held by Mr. Peterson in an
IRA account and 19,376 shares allocated to Mr. Petersons ESOP account as an ESOP participant.
Mr. Petersons ESOP shares are fully vested. Excludes 1,391,713 shares held by the ESOP as of
June 30, 2006. Mr. Peterson is a member of the ESOP Committee and, other than as a
participant, disclaims beneficial ownership of any of the shares owned by the ESOP. If the
1,391,713 shares owned by the ESOP were included, Mr. Peterson would be deemed to beneficially
own 1,757,857 shares, or 8.58%. See footnotes 16 and 17 below.(14)
    
    Includes 180,335 shares subject to options that are currently exercisable or will become
exercisable on or before December 31, 2007 and 20,000 shares subject to a restricted stock
award, dated May 24, 2005, which includes a three-year term time-based as well as a
performance-based restriction schedule. Also includes 10,475 shares held by Mr. Davis in an
IRA account and 13,223 shares allocated to Mr. Davis ESOP account as an ESOP participant. Mr.
Davis ESOP shares are fully vested. Excludes 1,391,713 shares held by the ESOP as of June
30, 2006. Mr. Davis is a member of the ESOP Committee and, other than as a participant,
disclaims beneficial ownership of any of the shares owned by the ESOP. If the 1,391,713 shares
owned by the ESOP were included, Mr. Davis would be deemed to beneficially own 1,625,746
shares, or 7.98%. See footnotes 16 and 17 below.(15)
    
    Includes 306,666 shares subject to options that are currently exercisable or will become
exercisable on or before December 31, 2007 and 20,000 shares subject to a restricted stock
award, dated May 24, 2005, which includes a three-year term time-based as well as a
performance-based restriction schedule. Also includes 5,202 shares held by Mr. Christensen in
an IRA account and 31,356 shares allocated to Mr. Christensens ESOP account as an ESOP
participant. Mr. Christensens ESOP shares are fully vested. Excludes 1,391,713 shares held by
the ESOP as of June 30, 2006. Mr. Christensen is a member of the ESOP Committee and, other
than as a participant, disclaims beneficial ownership of any of the shares owned by the ESOP.
If the 1,391,713 shares owned by the ESOP were included, Mr. Christensen would be deemed to
beneficially own 1,764,937 shares, or 8.61%. See footnotes 16 and 17 below.(16)
    
    Includes both allocated and unallocated shares owned by the ESOP. Unallocated shares (as well
as allocated shares for which the ESOP has not received voting instructions) are voted by the
trustee of the ESOP, Wells Fargo Bank, N.A. (the Trustee), as directed by the ESOP
Committee. Each participant in the ESOP is entitled to direct the Trustee as to how to vote
            shares allocated to his or her ESOP account, irrespective of whether the participants shares
are vested. Any allocated shares of Common Stock for which participants do not provide voting
instructions are voted by the Trustee in the manner directed by the ESOP Committee. The ESOP
Committee is comprised of Mark D. Peterson, the Companys Senior Vice President, General
Counsel and Secretary, Robert L. Davis, the Companys Senior Vice President  Sales, and Brent
W. Christensen, the Companys Senior Vice President  Finance and Chief Financial Officer.
Each of the members of the ESOP Committee, other than as a participant, disclaims beneficial
ownership of any of the shares owned by the ESOP. The Trustees address is 4365 Executive
Drive, Suite 1700, San Diego, CA 92121-2130.(17)
    
    Includes 982,662 shares subject to options that are currently exercisable or will become
exercisable on or before December 31, 2007 and 60,000 shares subject to restricted stock
awards, dated May 24, 2005, which includes a three-year term time-based as well as a
performance-based restriction schedule. Also includes 5,202,
 49




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##### Table of Contents



10,475 and 5,202 shares held by each of Messrs. Peterson, Davis and Christensen, respectively,
in an IRA account. Also includes 19,376, 13,223 and 31,356 shares allocated to Messrs.
Petersons, Davis and Christensens ESOP accounts, respectively, as ESOP participants. Messrs.
Petersons, Davis and Christensens ESOP shares are fully vested. Excludes 1,391,713 shares
held by the ESOP as of June 30, 2006. Messrs. Peterson, Davis and Christensen are members of
the ESOP Committee and, other than as a participant, each disclaims beneficial ownership of any
of the shares owned by the ESOP. If the 1,391,713 shares owned by the ESOP were included, all
directors and officers as a group would be deemed to beneficially own 7,397,276 shares, or
34.94%. See footnotes 5 through 16 above.
 Equity Compensation Plan Information
  A
    
    
    B
    
    
    CNumber ofSecuritiesRemaining Availablefor Future IssuanceNumber of
    
    
    
    
    
    
    Under EquitySecurities to be
    
    
    
    
    
    
    Compensation PlansIssued upon
    
    
    
    
    
    
    (ExcludingExercise of
    
    
    Weighted Average
    
    
    SecuritiesOutstanding
    
    
    Exercise Price of
    
    
    Reflected in ColumnPlan Category
    
    Options
    
    
    Outstanding Options
    
    
    A)Equity compensation plans approved
by Shareholders
    
    
    3,844,000
    
    
    $
    4.18
    
    
    
    644,000Equity compensation plans not approved by
shareholders
    
    
    310,000
    
    
    
    25.87
    
    
    
    0Total
    
    
    4,154,000
    
    
    $
    5.80
    
    
    
    644,000
 
 Item 13. Certain Relationships and Related Transactions
  
 Item 14. Principal Accountant Fees and Services
 Relationship With Independent Accountants
    50




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##### Table of Contents



Fees Paid to Independent Auditors
  Type of Fee
    
    2/28/06
    
    2/28/05($)
    
    ($)PWC
    
    MAAudit Fees 
professional services
rendered for the audit of
the Companys annual
financial statements and
the review of the
financial statements
included in the Companys
Form 10-Qs
    
    
    66,000
    
    
    
    262,000
    
    
    
    211,000Audit-Related Fees 
services that are
reasonably related to the
performance of the audit
or review of the
Companys financial
statements, including
reviews of registration
statements filed with the
SEC
    
    
    
    
    
    
    86,000
    
    
    
    20,000Tax Fees  professional
services rendered for tax
compliance, tax
consulting and tax
    
    
    82,000
    
    
    
    42,000
    
    
    
    136,000All Other Fees
    
    
    20,000
    
    
    
    
    
    
    
    13,000
 Audit Committee Pre-Approval Policies and Procedures.
 51




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##### Table of Contents



PART IV
 
 Item 15. Exhibits and Financial Statement Schedules
  PageNumber1. Financial Statements:Report of Independent Registered Public Accounting Firm
    
    
    F-1Report of Independent Registered Public Accounting Firm
    
    
    F-2Consolidated Balance Sheets at February 28, 2006 and 2005
    
    
    F-3Consolidated Statements of Operations for each of the three years in the
period ended February 28, 2006
    
    
    F-4Consolidated Statements of Stockholders Equity for each of the three years
in the period ended February 28, 2006
    
    
    F-5Consolidated Statements of Cash Flows for each of the three years in the
period ended February 28, 2006
    
    
    F-6Notes to Consolidated Financial Statements
    
    
    F-72. Financial Statement Schedule:For each of the three years in the period ended February 28, 2006  II 
Valuation and Qualifying Accounts.3. Exhibits included or incorporated herein: See Exhibit Index
 52




---



##### Table of Contents



Report of Independent Registered Public Accounting Firm
        F-1




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
    
  F-2




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##### Table of Contents



MEADE INSTRUMENTS CORP.
 
 CONSOLIDATED BALANCE SHEETS
 February 28,
    
    
    February 28,2006
    
    
    2005as restated (1)ASSETSCurrent assets:Cash
    
    $
    7,589,000
    
    
    $
    3,929,000Accounts receivable, less allowance for doubtful accounts of
$483,000 in 2006 and $687,000 in 2005
    
    
    16,822,000
    
    
    
    17,549,000Inventories, net
    
    
    34,359,000
    
    
    
    47,149,000Deferred income taxes
    
    
    
    
    
    
    6,738,000Prepaid expenses and other current assets
    
    
    395,000
    
    
    
    771,000Total current assets
    
    
    59,165,000
    
    
    
    76,136,000Goodwill
    
    
    2,115,000
    
    
    
    4,331,000Acquisition-related intangible assets, net
    
    
    5,018,000
    
    
    
    3,375,000Property and equipment, net
    
    
    5,371,000
    
    
    
    4,343,000Deferred income taxes
    
    
    
    
    
    
    1,601,000Other assets, net
    
    
    571,000
    
    
    
    235,000$
    72,240,000
    
    
    $
    90,021,000LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Bank lines of credit
    
    $
    4,229,000
    
    
    $
    9,827,000Accounts payable
    
    
    5,899,000
    
    
    
    3,954,000Accrued liabilities
    
    
    5,773,000
    
    
    
    4,775,000Income taxes payable
    
    
    133,000
    
    
    
    3,225,000Current portion of long-term debt and capital lease obligations
    
    
    1,306,000
    
    
    
    776,000Total current liabilities
    
    
    17,340,000
    
    
    
    22,557,000Long-term debt and capital lease obligations
    
    
    1,410,000
    
    
    
    1,241,000Deferred income taxes
    
    
    1,540,000
    
    
    
    Deferred rent
    
    
    222,000
    
    
    
    349,000Commitments and contingenciesStockholders equity:Common stock; $0.01 par value; 50,000,000 shares authorized;
20,004,000 and 20,002,000 shares issued and outstanding at
February 28, 2006 and 2005, respectively
    
    
    200,000
    
    
    
    200,000Additional paid-in capital
    
    
    44,890,000
    
    
    
    44,323,000Retained earnings
    
    
    8,086,000
    
    
    
    22,066,000Deferred compensation
    
    
    (507,000
    )
    
    
    (8,000
    )Accumulated other comprehensive income
    
    
    682,000
    
    
    
    1,374,00053,351,000
    
    
    
    67,955,000Unearned ESOP shares
    
    
    (1,623,000
    )
    
    
    (2,081,000
    )Total stockholders equity
    
    
    51,728,000
    
    
    
    65,874,000$
    72,240,000
    
    
    $
    90,021,000
 
 (1)
    
    See Note 3. Restatement of Previously Issued Financial Statements, of Notes to Consolidated
Financial Statements.  F-3




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##### Table of Contents



MEADE INSTRUMENTS CORP.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 Year Ended February 28/292006
    
    
    2005
    
    
    2004as restated (1)
    
    
    as restated (1)Net sales
    
    $
    119,835,000
    
    
    $
    111,799,000
    
    
    $
    138,281,000Cost of sales
    
    
    90,333,000
    
    
    
    83,608,000
    
    
    
    99,499,000Gross profit
    
    
    29,502,000
    
    
    
    28,191,000
    
    
    
    38,782,000Selling expenses
    
    
    18,286,000
    
    
    
    16,063,000
    
    
    
    18,223,000General and administrative expenses
    
    
    13,082,000
    
    
    
    10,251,000
    
    
    
    13,117,000ESOP contribution expense
    
    
    343,000
    
    
    
    419,000
    
    
    
    859,000Research and development expenses
    
    
    1,464,000
    
    
    
    2,032,000
    
    
    
    2,133,000Operating (loss) income
    
    
    (3,673,000
    )
    
    
    (574,000
    )
    
    
    4,450,000Interest expense
    
    
    1,203,000
    
    
    
    888,000
    
    
    
    1,046,000(Loss) income before income taxes
    
    
    (4,876,000
    )
    
    
    (1,462,000
    )
    
    
    3,404,000(Benefit) provision for income taxes
    
    
    9,104,000
    
    
    
    (531,000
    )
    
    
    1,651,000Net (loss) income
    
    $
    (13,980,000
    )
    
    $
    (931,000
    )
    
    $
    1,753,000Net (loss) income per share  basic and diluted
    
    $
    (0.72
    )
    
    $
    (0.05
    )
    
    $
    0.09Weighted average common shares outstanding  basic
    
    
    19,419,000
    
    
    
    19,288,000
    
    
    
    18,983,000Weighted average common shares outstanding  diluted
    
    
    19,419,000
    
    
    
    19,288,000
    
    
    
    19,174,000
 
 (1)
    
    See Note 3. Restatement of Previously Issued Financial Statements, of Notes to Consolidated
Financial Statements.  F-4




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##### Table of Contents



MEADE INSTRUMENTS CORP.
 
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
 AccumulatedAdditional
    
    
    OtherCommon Stock
    
    
    Paid-in
    
    
    Comprehensive
    
    
    Deferred
    
    
    Retained
    
    
    UnearnedShares
    
    
    Amount
    
    
    Capital
    
    
    Income (Loss)
    
    
    Compensation
    
    
    Earnings
    
    
    ESOP Shares
    
    
    TotalBalance at February 28, 2003  as
previously reported
    
    
    19,806,000
    
    
    $
    198,000
    
    
    $
    39,979,000
    
    
    $
    96,000
    
    
    $
    
    
    
    $
    23,439,000
    
    
    $
    (3,457,000
    )
    
    $
    60,255,000Adjustments to opening stockholders
equity
    
    
    
    
    
    
    
    
    
    
    4,130,000
    
    
    
    
    
    
    
    (1,081,000
    )
    
    
    (2,195,000
    )
    
    
    
    
    
    
    854,000Balance at February 28, 2003  as
restated (1)
    
    
    19,806,000
    
    
    
    198,000
    
    
    
    44,109,000
    
    
    
    96,000
    
    
    
    (1,081,000
    )
    
    
    21,244,000
    
    
    
    (3,457,000
    )
    
    
    61,109,000Release of ESOP shares
    
    
    
    
    
    
    
    
    
    
    (58,000
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    917,000
    
    
    
    859,000Exercise of stock options
    
    
    183,000
    
    
    
    2,000
    
    
    
    424,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    426,000Tax benefit of stock options exercised
and forfeited
    
    
    
    
    
    
    
    
    
    
    (2,000
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,000
    )Amortization of stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    815,000
    
    
    
    
    
    
    
    
    
    
    
    815,000Reversal of deferred compensation for
option forfeitures and cancellations
    
    
    
    
    
    
    
    
    
    
    (149,000
    )
    
    
    
    
    
    
    149,000
    
    
    
    
    
    
    
    
    
    
    
    Comprehensive income (loss):Currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    851,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    851,000Interest rate swap valuation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32,000Unrealized loss in marketable
securities, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (97,000
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (97,000
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,753,000
    
    
    
    
    
    
    
    1,753,000Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,539,000Balance at February 29, 2004  as
restated (1)
    
    
    19,989,000
    
    
    
    200,000
    
    
    
    44,324,000
    
    
    
    882,000
    
    
    
    (117,000
    )
    
    
    22,997,000
    
    
    
    (2,540,000
    )
    
    
    65,746,000Release of ESOP shares
    
    
    
    
    
    
    
    
    
    
    (40,000
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    459,000
    
    
    
    419,000Exercise of stock options
    
    
    13,000
    
    
    
    
    
    
    
    32,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32,000Tax benefit of stock options exercised
and forfeited
    
    
    
    
    
    
    
    
    
    
    2,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,000Amortization of stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    114,000
    
    
    
    
    
    
    
    
    
    
    
    114,000Reversal of deferred compensation for
option forfeitures and cancellations
    
    
    
    
    
    
    
    
    
    
    5,000
    
    
    
    
    
    
    
    (5,000
    )
    
    
    
    
    
    
    
    
    
    
    Comprehensive income (loss):Currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    378,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    378,000Interest rate swap valuation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,000Reclassification of realized loss on
sale of marketable securities, net of
tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    97,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    97,000Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (931,000
    )
    
    
    
    
    
    
    (931,000
    )Total comprehensive (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (439,000
    )Balance at February 28, 2005  as
restated (1)
    
    
    20,002,000
    
    
    
    200,000
    
    
    
    44,323,000
    
    
    
    1,374,000
    
    
    
    (8,000
    )
    
    
    22,066,000
    
    
    
    (2,081,000
    )
    
    
    65,874,000Release of ESOP shares
    
    
    
    
    
    
    
    
    
    
    (115,000
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    458,000
    
    
    
    343,000Exercise of stock options
    
    
    2,000
    
    
    
    
    
    
    
    4,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,000Tax benefit of stock options exercised
and forfeited
    
    
    
    
    
    
    
    
    
    
    (1,000
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,000
    )Amortization of stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,000
    
    
    
    
    
    
    
    
    
    
    
    3,000Reversal of deferred compensation for
option forfeitures and cancellations
    
    
    
    
    
    
    
    
    
    
    (2,000
    )
    
    
    
    
    
    
    2,000
    
    
    
    
    
    
    
    
    
    
    
    Issuance of restricted stock
    
    
    
    
    
    
    
    
    
    
    681,000
    
    
    
    
    
    
    
    (681,000
    )
    
    
    
    
    
    
    
    
    
    
    Amortization of restricted stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    177,000
    
    
    
    
    
    
    
    
    
    
    
    177,000Comprehensive income (loss):Currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (692,000
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (692,000
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13,980,000
    )
    
    
    
    
    
    
    (13,980,000
    )Total comprehensive (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,672,000
    )Balance at February 28, 2006
    
    
    20,004,000
    
    
    $
    200,000
    
    
    $
    44,890,000
    
    
    $
    682,000
    
    
    $
    (507,000
    )
    
    $
    8,086,000
    
    
    $
    (1,623,000
    )
    
    $
    51,728,000
 
 (1)
    
    See Note 3. Restatement of Previously Issued Financial Statements, of Notes to
Consolidated Financial Statements.  F-5




---



##### Table of Contents



MEADE INSTRUMENTS CORP.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Year Ended February 28/29,2006
    
    
    2005
    
    
    2004as restated (1)
    
    
    as restated (1)Cash flows from operating activities:Net (loss) income
    
    $
    (13,980,000
    )
    
    $
    (931,000
    )
    
    $
    1,753,000Adjustments to reconcile net (loss) income to net cash provided
by operating activities:Depreciation and amortization
    
    
    2,385,000
    
    
    
    2,014,000
    
    
    
    2,427,000ESOP contribution
    
    
    343,000
    
    
    
    419,000
    
    
    
    859,000Allowance for doubtful accounts
    
    
    310,000
    
    
    
    203,000
    
    
    
    1,210,000Deferred income taxes
    
    
    9,826,000
    
    
    
    (439,000
    )
    
    
    (1,773,000
    )Stock-based compensation
    
    
    3,000
    
    
    
    114,000
    
    
    
    815,000Deferred rent amortization
    
    
    (127,000
    )
    
    
    (40,000
    )
    
    
    (38,000
    )Changes in assets and liabilities, net of effects of acquisitions:Accounts receivable
    
    
    225,000
    
    
    
    4,869,000
    
    
    
    (1,095,000
    )Inventories
    
    
    12,030,000
    
    
    
    (6,658,000
    )
    
    
    828,000Prepaid expenses and other current assets
    
    
    352,000
    
    
    
    (289,000
    )
    
    
    458,000Other assets
    
    
    (393,000
    )
    
    
    321,000
    
    
    
    290,000Accounts payable
    
    
    2,123,000
    
    
    
    (1,823,000
    )
    
    
    (277,000
    )Accrued liabilities
    
    
    1,132,000
    
    
    
    (2,565,000
    )
    
    
    637,000Income taxes payable
    
    
    (2,716,000
    )
    
    
    114,000
    
    
    
    3,039,000Net cash provided by (used in) operating activities
    
    
    11,513,000
    
    
    
    (4,691,000
    )
    
    
    9,133,000Cash flows from investing activities:Capital expenditures
    
    
    (2,815,000
    )
    
    
    (898,000
    )
    
    
    (626,000
    )Acquisitions, net of cash acquired
    
    
    
    
    
    
    (2,474,000
    )
    
    
    Net cash used in investing activities
    
    
    (2,815,000
    )
    
    
    (3,372,000
    )
    
    
    (626,000
    )Cash flows from financing activities:Payments on long-term debt
    
    
    (824,000
    )
    
    
    (583,000
    )
    
    
    (667,000
    )Borrowing on a long-term bank note
    
    
    1,675,000
    
    
    
    
    
    
    
    Net (payments) borrowings under bank lines of credit
    
    
    (5,598,000
    )
    
    
    4,768,000
    
    
    
    (4,032,000
    )Exercise of stock options, with tax benefit
    
    
    4,000
    
    
    
    37,000
    
    
    
    426,000Payments under capital lease obligations
    
    
    (17,000
    )
    
    
    (27,000
    )
    
    
    (25,000
    )Net cash (used in) provided by financing activities
    
    
    (4,760,000
    )
    
    
    4,195,000
    
    
    
    (4,298,000
    )Effect of exchange rate changes on cash
    
    
    (278,000
    )
    
    
    (9,000
    )
    
    
    1,152,000Net (decrease) increase in cash
    
    
    3,660,000
    
    
    
    (3,877,000
    )
    
    
    5,361,000Cash at beginning of year
    
    
    3,929,000
    
    
    
    7,806,000
    
    
    
    2,445,000Cash at end of year
    
    $
    7,589,000
    
    
    $
    3,929,000
    
    
    $
    7,806,000Supplemental disclosures of cash flow information:Interest paid
    
    $
    1,203,000
    
    
    $
    888,000
    
    
    $
    1,046,000Issuance of restricted stock
    
    
    681,000
    
    
    
    
    
    
    
    Purchase of equipment under capital lease
    
    
    21,000
    
    
    
    
    
    
    
    Income taxes
    
    
    2,295,000
    
    
    
    (245,000
    )
    
    $
    
 
 (1)
    
    See Note 3. Restatement of Previously Issued Financial Statements, of Notes to Consolidated
Financial Statements.  F-6




---



##### Table of Contents



MEADE INSTRUMENTS CORP.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. The Company and Operations
 The Company
  2. Summary of Significant Accounting Policies
 Basis of presentation and consolidation
  Revenue recognition
  Foreign currency
  Allowance for doubtful accounts
  F-7




---



##### Table of Contents



MEADE INSTRUMENTS CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
  Inventories
  Property and equipment
  Goodwill and acquisition-related intangible assets
    F-8




---



##### Table of Contents



MEADE INSTRUMENTS CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
    February 28/29,2006
    
    
    2005Amortization Periods
    
    
    Gross Carrying
    
    
    Accumulated
    
    
    Gross Carrying
    
    
    Accumulated(Years)
    
    
    Amount
    
    
    Amortization
    
    
    Amount
    
    
    AmortizationGoodwill
    
    
    none
    
    
    $
    2,115,000
    
    
    $
    
    
    
    $
    4,331,000
    
    
    $
    Acquisition-related
intangible assets:Brand names
    
    
    none
    
    
    $
    2,041,000
    
    
    
    
    
    
    $
    2,041,000
    
    
    
    Customer
relationships
    
    
    10
    
    
    
    1,390,000
    
    
    
    (417,000
    )
    
    
    1,390,000
    
    
    $
    (278,000
    )Trademarks
    
    
    7-15
    
    
    
    1,938,000
    
    
    
    (1,451,000
    )
    
    
    1,398,000
    
    
    
    (1,176,000
    )Completed
technologies
    
    
    12
    
    
    
    1,620,000
    
    
    
    (103,000
    )
    
    
    
    
    
    
    Other
    
    
    1
    
    
    
    56,000
    
    
    
    (56,000
    )
    
    
    
    
    
    
    Total
acquisition-related
intangible assets
    
    
    
    
    
    
    7,045,000
    
    
    
    (2,027,000
    )
    
    
    4,829,000
    
    
    
    (1,454,000
    )Total goodwill and
acquisition-related
intangible assets
    
    
    
    
    
    $
    9,160,000
    
    
    $
    (2,027,000
    )
    
    $
    9,160,000
    
    
    $
    (1,454,000
    )
  AmortizationAcquisition-related
    
    period
    
    
    Gross carryingintangible asset
    
    (in years)
    
    
    amountCompleted technologies
    
    
    12
    
    
    $
    1,620,000Trademarks
    
    
    9
    
    
    
    540,000Other
    
    
    1
    
    
    
    56,000Goodwill
    
    none
    
    
    567,000Total
    
    
    
    
    
    $
    2,783,000
 F-9




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##### Table of Contents



MEADE INSTRUMENTS CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
  Non-amortizing
    
    
    Amortizingintangible assets
    
    
    intangible assetsBalance, net, February 29, 2004
    
    $
    3,589,000
    
    
    $
    1,701,000New assets acquired
    
    
    2,783,000
    
    
    
    Amortization
    
    
    
    
    
    
    (367,000
    )Balance, net, February 28, 2005
    
    
    6,372,000
    
    
    
    1,334,000Completion of fair value evaluation of Coronado intangible assets
    
    
    (2,216,000
    )
    
    
    2,216,000Amortization
    
    
    
    
    
    
    (573,000
    )Balance, net, February 28, 2006
    
    $
    4,156,000
    
    
    $
    2,977,000
  Fiscal Year
    
    Amount2007
    
    $
    336,0002008
    
    
    336,0002009
    
    
    336,0002010
    
    
    336,0002011
    
    
    336,000Thereafter
    
    
    1,297,000Total
    
    $
    2,977,000
 Income taxes
 Accounting for Income Taxes
  Shipping and handling costs
  F-10




---



##### Table of Contents



MEADE INSTRUMENTS CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 Advertising
  Research and development
  Earnings (loss) per share
   Year Ended February 28/29 ,2006
    
    
    2005
    
    
    2004as restated (1)
    
    
    as restated (1)Net (loss) income
    
    $
    (13,980,000
    )
    
    $
    (931,000
    )
    
    $
    1,753,000Shares outstanding  basic
    
    
    19,419,000
    
    
    
    19,288,000
    
    
    
    18,983,000Effect of dilutive securities: Stock options
    
    
    
    
    
    
    
    
    
    
    191,000Shares outstanding  diluted
    
    
    19,419,000
    
    
    
    19,288,000
    
    
    
    19,174,000Net (loss) income  basic and diluted
    
    $
    (0.72
    )
    
    $
    (0.05
    )
    
    $
    0.09
 
 (1)
    
    See Note 3. Restatement of Previously Issued Financial Statements, of Notes to Consolidated
Financial Statements. F-11




---



##### Table of Contents



MEADE INSTRUMENTS CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 Comprehensive income (loss)
  Concentration of credit risk
  Fair value of financial instruments
  Derivative Instruments and Hedging Activities
    F-12




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##### Table of Contents



MEADE INSTRUMENTS CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
   Use of estimates in the preparation of consolidated financial statements
  Product warranties
  February 28,2006
    
    
    2005Beginning balance
    
    $
    1,173,000
    
    
    $
    1,427,000Warranty accrual
    
    
    706,000
    
    
    
    623,000Labor and material usage
    
    
    (794,000
    )
    
    
    (898,000
    )Effect of change in foreign currency exchange rates
    
    
    (32,000
    )
    
    
    21,000Ending balance
    
    $
    1,053,000
    
    
    $
    1,173,000
 F-13




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##### Table of Contents



MEADE INSTRUMENTS CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 Stock-based compensation
 Accounting for Stock Issued
to Employees Accounting for Stock Based Compensation  Transition and
Disclosure
 Year Ended February 28/29,2006
    
    
    2005
    
    
    2004as restated (1)
    
    
    as restated (1)Reported net (loss) income
    
    $
    (13,980,000
    )
    
    $
    (931,000
    )
    
    $
    1,753,000Compensation cost, net of taxes under APB 25
    
    
    21,000
    
    
    
    80,000
    
    
    
    722,000Compensation cost, net of taxes under SFAS No. 123
    
    
    (531,000
    )
    
    
    (943,000
    )
    
    
    (684,000
    )Pro forma net (loss) income
    
    $
    (14,490,000
    )
    
    $
    (1,794,000
    )
    
    $
    1,791,000Reported (loss) earnings per share  basic and diluted
    
    $
    (0.72
    )
    
    $
    (0.05
    )
    
    $
    0.09Pro forma (loss) earnings per share  basic and diluted
    
    $
    (0.75
    )
    
    $
    (0.09
    )
    
    $
    0.09
 
 (1)
    
    See Note 3. Restatement of Previously Issued Financial Statements, of Notes to
Consolidated Financial Statements.  Year Ended February 28/29,2006
    
    2005
    
    2004as restated (1)
    
    as restated (1)Weighted average expected life (years)
    
    
    6.0
    
    
    
    6.0
    
    
    
    6.0Volatility
    
    
    29.0
    %
    
    
    33.1
    %
    
    
    69.3
    %Risk-free interest rate
    
    
    3.98
    %
    
    
    3.65
    %
    
    
    3.01
    %Expected dividends
    
    None
    
    None
    
    NoneWeighted average fair value of options granted at fair value
    
    $
    2.28
    
    
    $
    1.98
    
    
    $
    1.87Weighted average fair value of options granted at below fair value
    
    $
    
    
    
    $
    2.12
    
    
    $
    2.73
 
 (1)
    
    See Note 3. Restatement of Previously Issued Financial Statements, of Notes to Consolidated
Financial Statements. Recent accounting pronouncements
 Accounting and Disclosure Guidance for the
Foreign Earnings Repatriation Provision within the American Jobs Creation Act of 2004
 F-14




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##### Table of Contents



MEADE INSTRUMENTS CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
      F-15




---



##### Table of Contents



MEADE INSTRUMENTS CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
     3. Restatement of Previously Issued Financial Statements
  F-16




---



##### Table of Contents



MEADE INSTRUMENTS CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
     F-17




---



##### Table of Contents



MEADE INSTRUMENTS CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
      F-18




---



##### Table of Contents



For the years endedFebruary 28/29,2005
    
    
    2004Stock-based compensation and rent expenses included in:Cost of sales:As previously reported
    
    $
    83,605,000
    
    
    $
    99,380,000Adjustment for stock-based compensation expense
    
    
    19,000
    
    
    
    134,000Adjustment for rent expense
    
    
    (16,000
    )
    
    
    (15,000
    )As restated
    
    $
    83,608,000
    
    
    $
    99,499,000Selling expenses:As previously reported
    
    $
    16,046,000
    
    
    $
    18,106,000Adjustment for stock-based compensation expense
    
    
    17,000
    
    
    
    117,000As restated
    
    $
    16,063,000
    
    
    $
    18,223,000General and administrative expenses:As previously reported
    
    $
    10,211,000
    
    
    $
    12,671,000Adjustment for stock-based compensation expense
    
    
    64,000
    
    
    
    469,000Adjustment for rent expense
    
    
    (24,000
    )
    
    
    (23,000
    )As restated
    
    $
    10,251,000
    
    
    $
    13,117,000Research and development expenses:As previously reported
    
    $
    2,018,000
    
    
    $
    2,038,000Adjustment for stock-based compensation expense
    
    
    14,000
    
    
    
    95,000As restated
    
    $
    2,032,000
    
    
    $
    2,133,000Operating (loss) income:As previously reported
    
    $
    (500,000
    )
    
    $
    5,227,000As restated
    
    $
    (574,000
    )
    
    $
    4,450,000(Loss) income before income taxes:As previously reported
    
    $
    (1,388,000
    )
    
    $
    4,181,000As restated
    
    $
    (1,462,000
    )
    
    $
    3,404,000(Benefit) provision for income taxes:As previously reported
    
    $
    (513,000
    )
    
    $
    1,729,000As restated
    
    $
    (531,000
    )
    
    $
    1,651,000Net (loss) income:As previously reported
    
    $
    (875,000
    )
    
    $
    2,452,000As restated
    
    $
    (931,000
    )
    
    $
    1,753,000Basic and diluted net (loss) income per share:As previously reported
    
    $
    (0.05
    )
    
    $
    0.13As restated
    
    $
    (0.05
    )
    
    $
    0.09
 F-19




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##### Table of Contents



MEADE INSTRUMENTS CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 At February 28,2005Deferred tax assets, long-term:As previously reported
    
    $
    329,000Adjustment for stock-based compensation expense
    
    
    1,135,000Adjustment for rent expense
    
    
    137,000As restated
    
    $
    1,601,000Deferred rent:As previously reported
    
    $
    As restated
    
    $
    349,000Additional paid in capital:As previously reported
    
    $
    40,442,000As restated for stock-based compensation
    
    $
    44,323,000Retained earnings:As previously reported
    
    $
    25,016,000Adjustment for stock-based compensation expense
    
    
    (2,738,000
    )Adjustment for rent expense
    
    
    (212,000
    )As restated
    
    $
    22,066,000Deferred compensation (equity):As previously reported
    
    $
    As restated for stock-based compensation
    
    $
    (8,000
    )
  4. Acquisition of Coronado Technology Group, LLC
  Accounts receivable
    
    $
    72,000Inventories
    
    
    312,000Property, plant, equipment
    
    
    367,000Other assets
    
    
    70,000Intangible assets:Completed technologies
    
    
    1,620,000Trademarks
    
    
    540,000Other
    
    
    56,000Goodwill
    
    
    567,000Current liabilities
    
    
    (1,071,000
    )Long-term liabilities, net of current portion
    
    
    (59,000
    )Total purchase price
    
    $
    2,474,000
 F-20




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##### Table of Contents



MEADE INSTRUMENTS CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
  5. Bank and other debt
    F-21




---



##### Table of Contents



MEADE INSTRUMENTS CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
    F-22




---



##### Table of Contents



MEADE INSTRUMENTS CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
  February 28,
    
    
    February 28,2006
    
    
    2005U.S. bank revolving line of credit
    
    $
    4,229,000
    
    
    $
    9,816,000European bank revolving line of credit
    
    
    
    
    
    
    11,000Total bank lines of credit
    
    $
    4,229,000
    
    
    $
    9,827,000U.S. term loan
    
    $
    245,000
    
    
    $
    665,000European term loan no.1
    
    
    867,000
    
    
    
    1,129,000European term loan no.2
    
    
    1,549,000
    
    
    
    Notes payable
    
    
    13,000
    
    
    
    223,000Capital lease obligations
    
    
    42,000
    
    
    
    Total debt and capital lease obligations
    
    
    2,716,000
    
    
    
    2,017,000Less current portion:U.S. term loan
    
    
    (245,000
    )
    
    
    (420,000
    )European term loan no.1
    
    
    (867,000
    )
    
    
    (169,000
    )European term loan no.2
    
    
    (164,000
    )
    
    
    Notes payable
    
    
    (13,000
    )
    
    
    (176,000
    )Capital lease obligations
    
    
    (17,000
    )
    
    
    (11,000
    )Total current portion long-term
debt and capital lease obligations
    
    
    (1,306,000
    )
    
    
    (776,000
    )Total long-term debt and capital lease obligations
    
    $
    1,410,000
    
    
    $
    1,241,000
   Fiscal Year:
    
    Amount2007
    
    $
    1,289,0002008
    
    
    164,0002009
    
    
    164,0002010
    
    
    164,0002011
    
    
    164,000Thereafter
    
    
    729,000Total
    
    $
    2,674,000
  F-23




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##### Table of Contents



MEADE INSTRUMENTS CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 6. Commitments and Contingencies
    Fiscal Year
    
    Capital
    
    
    Operating2007
    
    $
    19,000
    
    
    $
    1,879,0002008
    
    
    19,000
    
    
    
    1,209,0002009
    
    
    6,000
    
    
    
    39,0002010
    
    
    2,000
    
    
    
    Net minimum lease payments
    
    
    46,000
    
    
    $
    3,127,000Less amount representing interest
    
    
    4,000Capital lease obligations
    
    $
    42,000
    F-24




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##### Table of Contents



MEADE INSTRUMENTS CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
       7. Employee Stock Ownership Plan
  F-25




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##### Table of Contents



MEADE INSTRUMENTS CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
      8. Income Taxes
  Year Ended February 28/29,2006
    
    
    2005
    
    
    2004as restated (1)
    
    
    as restated (1)Domestic
    
    $
    (8,659,000
    )
    
    $
    (4,376,000
    )
    
    $
    202,000Foreign
    
    
    3,783,000
    
    
    
    2,914,000
    
    
    
    3,202,000$
    (4,876,000
    )
    
    $
    (1,462,000
    )
    
    $
    3,404,000
 
 (1)
    
    See Note 3. Restatement of Previously Issued Financial Statements, of Notes to Consolidated
Financial Statements F-26




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##### Table of Contents



MEADE INSTRUMENTS CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
  Year Ended February 28/29,2006
    
    
    2005
    
    
    2004as restated (1)
    
    
    as restated (1)Current:Federal
    
    $
    (1,523,000
    )
    
    $
    (524,000
    )
    
    $
    1,104,000State
    
    
    (645,000
    )
    
    
    (261,000
    )
    
    
    467,000Foreign
    
    
    1,392,000
    
    
    
    502,000
    
    
    
    1,157,000(776,000
    )
    
    
    (283,000
    )
    
    
    2,728,000Deferred:Federal
    
    
    (2,475,000
    )
    
    
    (358,000
    )
    
    
    (1,060,000
    )State
    
    
    (159,000
    )
    
    
    (512,000
    )
    
    
    (205,000
    )Foreign
    
    
    10,000
    
    
    
    622,000
    
    
    
    188,000Deferred tax asset valuation allowance
    
    
    12,504,000
    
    
    
    
    
    
    
    9,880,000
    
    
    
    (248,000
    )
    
    
    (1,077,000
    )$
    9,104,000
    
    
    $
    (531,000
    )
    
    $
    1,651,000
 
 (1)
    
    See Note 3. Restatement of Previously Issued Financial Statements, of Notes to Consolidated
Financial Statements.  Year Ended February 28/29,2006
    
    
    2005
    
    
    2004as restated (1)
    
    
    as restated (1)Federal income tax rate
    
    
    (34.0
    )%
    
    
    (34.0
    )%
    
    
    34.0
    %State income taxes, net of federal income tax benefit
    
    
    (0.3
    )
    
    
    (9.7
    )
    
    
    3.9Federal and state refunds received from refund claims
    
    
    (14.0
    )
    
    
    (31.5
    )
    
    
    Foreign income
    
    
    (1.0
    )
    
    
    35.5
    
    
    
    2.2Research and development credits
    
    
    (1.8
    )
    
    
    (2.1
    )
    
    
    (2.9
    )Stock-based compensation
    
    
    
    
    
    
    0.8
    
    
    
    6.8Valuation allowance
    
    
    241.9
    
    
    
    
    
    
    
    Other
    
    
    (4.1
    )
    
    
    4.7
    
    
    
    4.5186.7
    %
    
    
    (36.3
    )%
    
    
    48.5
    %
 
 (1)
    
    See Note 3. Restatement of Previously Issued Financial Statements, of Notes to Consolidated
Financial Statements.  F-27




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##### Table of Contents



MEADE INSTRUMENTS CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
  February 28,
    
    
    February 28,2006
    
    
    2005as restated (1)Sales returns
    
    $
    669,000
    
    
    $
    1,154,000Inventory and accounts receivable
    
    
    3,407,000
    
    
    
    4,367,000Accrued liabilities
    
    
    872,000
    
    
    
    1,217,000Intangibles
    
    
    (1,290,000
    )
    
    
    (1,224,000
    )Credits
    
    
    3,771,000
    
    
    
    1,549,000Fixed assets
    
    
    754,000
    
    
    
    170,000Stock-based compensation
    
    
    1,068,000
    
    
    
    1,135,000Net operating losses
    
    
    1,713,000
    
    
    
    Other
    
    
    
    
    
    
    (29,000
    )Total deferred tax assets
    
    
    10,964,000
    
    
    
    8,339,000Less valuation allowance
    
    
    (12,504,000
    )
    
    
    $
    (1,540,000
    )
    
    $
    8,339,000
 
 (1)
    
    See Note 3. Restatement of Previously Issued Financial Statements, of Notes to Consolidated
Financial Statements.  9. Business Segments, Geographic Data and Major Customers
  Year Ended February 28/29,2006
    
    
    2005
    
    
    2004Product sales:Telescope and telescope accessories
    
    $
    74,997,000
    
    
    $
    58,823,000
    
    
    $
    81,024,000Binoculars
    
    
    24,665,000
    
    
    
    25,192,000
    
    
    
    28,991,000Riflescopes
    
    
    12,120,000
    
    
    
    21,643,000
    
    
    
    24,878,000Other
    
    
    8,053,000
    
    
    
    6,141,000
    
    
    
    3,388,000$
    119,835,000
    
    
    $
    111,799,000
    
    
    $
    138,281,000
 F-28




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##### Table of Contents



MEADE INSTRUMENTS CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 Year Ended February 28/29,2006
    
    
    2005
    
    
    2004Geographic data  product sales:North America
    
    $
    74,562,000
    
    
    $
    79,732,000
    
    
    $
    101,995,000Germany
    
    
    13,790,000
    
    
    
    12,296,000
    
    
    
    14,477,000Other foreign/export
    
    
    31,483,000
    
    
    
    19,771,000
    
    
    
    21,809,000$
    119,835,000
    
    
    $
    111,799,000
    
    
    $
    138,281,000
 February 28/29,2006
    
    
    2005
    
    
    2004Geographic data  long-lived assets:North America
    
    $
    8,409,000
    
    
    $
    9,046,000
    
    
    $
    5,916,000Germany
    
    
    4,666,000
    
    
    
    3,238,000
    
    
    
    3,420,000$
    13,075,000
    
    
    $
    12,284,000
    
    
    $
    9,336,000
  10. Stock Incentive Plan
   WeightedOption
    
    
    AverageShares
    
    
    Exercise PriceOptions outstanding at February 28, 2003
    
    
    3,792,000
    
    
    
    4.92Granted
    
    
    653,000
    
    
    
    2.92Exercised
    
    
    (183,000
    )
    
    
    2.33Forfeited
    
    
    (826,000
    )
    
    
    5.51Options outstanding at February 29, 2004
    
    
    3,436,000
    
    
    
    4.54Granted
    
    
    588,000
    
    
    
    3.07Exercised
    
    
    (13,000
    )
    
    
    2.48Forfeited
    
    
    (41,000
    )
    
    
    7.96Options outstanding at February 28, 2005
    
    
    3,970,000
    
    
    
    4.26Granted
    
    
    32,000
    
    
    
    2.66Exercised
    
    
    (2,000
    )
    
    
    2.31Forfeited
    
    
    (156,000
    )
    
    
    6.32Options outstanding at February 28, 2006
    
    
    3,844,000
    
    
    
    4.18
 F-29




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##### Table of Contents



MEADE INSTRUMENTS CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 At February 28, 2006Options Outstanding
    
    

Options
ExercisableWeightedAverage
    
    
    Weighted
    
    
    
    
    
    
    WeightedNumber of
    
    
    Remaining
    
    
    Average
    
    
    Number of
    
    
    AverageExercise Prices
    
    Options
    
    
    Contractual Life
    
    
    Exercise Price
    
    
    Options
    
    
    Exercise Price$2.31 - $4.10
    
    
    2,087,000
    
    
    6.2 years
    
    $
    2.89
    
    
    
    1,780,000
    
    
    $
    2.87$4.44 - $5.59
    
    
    1,560,000
    
    
    3.3 years
    
    $
    4.94
    
    
    
    1,560,000
    
    
    $
    4.94$6.25 - $10.31
    
    
    41,000
    
    
    3.9 years
    
    $
    7.48
    
    
    
    41,000
    
    
    
    7.48$11.06 - $12.13
    
    
    139,000
    
    
    4.0 years
    
    $
    11.17
    
    
    
    139,000
    
    
    
    11.17$17.13 - $27.75
    
    
    17,000
    
    
    4.4 years
    
    $
    27.13
    
    
    
    17,000
    
    
    
    27.133,844,000
    
    
    
    
    
    
    
    
    
    
    
    3,537,000
   11. Composition of Certain Balance Sheet Accounts
  February 28,
    
    
    February 28,2006
    
    
    2005Raw materials
    
    $
    6,895,000
    
    
    $
    7,449,000Work in process
    
    
    4,871,000
    
    
    
    6,023,000Finished goods
    
    
    22,593,000
    
    
    
    33,677,000$
    34,359,000
    
    
    $
    47,149,000
  February 28,
    
    
    February 28,2006
    
    
    2005Land
    
    $
    191,000
    
    
    $
    205,000Buildings
    
    
    3,937,000
    
    
    
    2,222,000Molds and dies
    
    
    6,796,000
    
    
    
    6,482,000Machinery and equipment
    
    
    4,250,000
    
    
    
    3,900,000Furniture and fixtures
    
    
    3,225,000
    
    
    
    3,168,000Autos and trucks
    
    
    208,000
    
    
    
    176,000Leasehold improvements
    
    
    1,416,000
    
    
    
    1,427,00020,023,000
    
    
    
    17,580,000Less accumulated depreciation and amortization
    
    
    (14,652,000
    )
    
    
    (13,237,000
    )$
    5,371,000
    
    
    $
    4,343,000
 F-30




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##### Table of Contents



MEADE INSTRUMENTS CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
   February 28,
    
    
    February 28,2006
    
    
    2005Salaries, wages, bonuses and other associated payroll costs
    
    $
    1,848,000
    
    
    $
    1,349,000Warranty costs
    
    
    1,053,000
    
    
    
    1,173,000Freight expenses
    
    
    491,000
    
    
    
    459,000Advertising and marketing expenses
    
    
    264,000
    
    
    
    425,000Professional fees
    
    
    212,000
    
    
    
    437,000Other
    
    
    1,905,000
    
    
    
    932,000$
    _5,773,000
    
    
    $
    4,775,000
 F-31




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##### Table of Contents



SIGNATURES
  Dated: November 27, 2006
    
    MEADE INSTRUMENTS CORP.By:
    
    /s/ STEVEN L. MUELLNERSteven L. MuellnerPresident and Chief Executive Officer
  Signature
    
    Title
    
    Date/s/ Steven L. Muellner
    
    Director, President, Chief Executive Officer
(Principal Executive Officer)
    
    November 27, 2006Steven L. Muellner/s/ Brent W. Christensen
Brent W. Christensen
    
    Senior Vice President  Finance and
Chief Financial Officer
(Principal Financial and Accounting Officer)
    
    November 27, 2006/s/ Harry L. Casari
    
    Director and Chairman of the Board
    
    November 27, 2006Harry L. Casari/s/ Timothy C. McQuay
    
    Director
    
    November 27, 2006Timothy C. McQuay/s/ Michael P. Hoopis
    
    Director
    
    November 27, 2006Michael P. Hoopis/s/ Vernon L. Fotheringham
    
    Director
    
    November 27, 2006Vernon L. Fotheringham/s/ Frederick H. Schneider
    
    Director
    
    November 27, 2006Frederick H. Schneider/s/ Steven G. Murdock
    
    Director
    
    November 27, 2006Steven G. Murdock/s/ Paul D. Sonkin
    
    Director
    
    November 27, 2006Paul D. Sonkin/s/ James M. Chadwick
    
    Director
    
    November 27, 2006James M. Chadwick




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##### Table of Contents



II  VALUATION AND QUALIFYING ACCOUNTS
 Balance AtAllowance for
    
    Beginning of
    
    
    Charged to Costs
    
    
    Charged to Other
    
    
    
    
    
    
    Balance At EndDoubtful Accounts
    
    Period
    
    
    and Expenses
    
    
    Accounts(3)
    
    
    Deductions(1)
    
    
    of PeriodYear ended
February 29, 2004
    
    $
    714,000
    
    
    $
    1,210,000
    
    
    $
    (5,000
    )
    
    $
    1,215,000
    
    
    $
    704,000Year ended
February 28, 2005
    
    $
    704,000
    
    
    $
    203,000
    
    
    $
    5,000
    
    
    $
    225,000
    
    
    $
    687,000Year ended
February 28, 2006
    
    $
    687,000
    
    
    $
    310,000
    
    
    $
    (13,000
    )
    
    $
    501,000
    
    
    $
    483,000
 Balance AtAllowance for
    
    Beginning of
    
    
    Charged to Costs
    
    
    Charged to Other
    
    
    
    
    
    
    Balance At EndExcess Inventories
    
    Period
    
    
    and Expenses
    
    
    Accounts(3)
    
    
    Deductions(2)
    
    
    of PeriodYear ended
February 29, 2004
    
    $
    7,509,000
    
    
    $
    1,471,000
    
    
    $
    236,000
    
    
    $
    1,101,000
    
    
    $
    8,115,000Year ended
February 28, 2005
    
    $
    8,115,000
    
    
    $
    2,788,000
    
    
    $
    99,000
    
    
    $
    2,331,000
    
    
    $
    8,671,000Year ended
February 28, 2006
    
    $
    8,671,000
    
    
    $
    1,711,000
    
    
    $
    277,000
    
    
    $
    3,479,000
    
    
    $
    7,180,000
 
 (1)
    
    Principally recoveries and write-off of delinquent accounts(2)
    
    Principally sale or destruction of previously reserved inventory(3)
    
    Reflects the effect of exchange rate changes during the period




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##### Table of Contents



EXHIBIT INDEX
 IncorporationExhibit
    
    Description
    
    Reference2.1
    
    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,
and Rudolf Bresser, an individual, on the one hand, and the Company and
Meade Instruments Europe Corp., a California corporation, on the other
(excluding Exhibits and Schedules thereto)
    
    (h)2.2
    
    Stock Purchase Agreement, dated as of September 14, 2002, by and among
Alliant Techsystems, Inc., a Delaware corporation, ATK Commercial Ammunition
Company Inc., a Delaware corporation, Meade Instruments Corp., a Delaware
corporation, and MTSC Holdings Corp., a California corporation and
wholly-owned subsidiary of Meade Instruments Corp. (excluding Exhibits and
Schedules thereto)
    
    (p)2.3
    
    First Amendment to Stock Purchase Agreement, dated as of October 4, 2002, by
and among Alliant Techsystems, Inc., a Delaware corporation, ATK Commercial
Ammunition Company Inc., a Delaware corporation, Meade Instruments Corp., a
Delaware corporation, and MTSC Holdings Corp., a California corporation and
wholly-owned subsidiary of Meade Instruments Corp.
    
    (p)2.4
    
    Second Amendment to Stock Purchase Agreement, dated as of October 24, 2002,
by and among Alliant Techsystems, Inc., a Delaware corporation, ATK
Commercial Ammunition Company Inc., a Delaware corporation, Meade
Instruments Corp., a Delaware corporation, and MTSC Holdings Corp., a
California corporation and wholly-owned subsidiary of Meade Instruments
Corp.
    
    (p)3.1
    
    Certificate of Incorporation of the Company, as amended
    
    (c)3.4
    
    Certificate of Amendment of Certificate of Incorporation of Meade
Instruments Corp.
    
    (k)3.7
    
    Amended and Restated Bylaws of the Company, as amended
    
    (u)3.8
    
    Amendment to Article III, Section 3.02(a), of the Amended and Restated
Bylaws of the Company
    
    (hh)4.1
    
    Specimen Stock Certificate
    
    (d)4.2
    
    Subscription Agreement, dated as of October 22, 2002, by and among Meade and
the Purchasers Named on the Signature Page thereto
    
    (q)4.3
    
    Registration Rights Agreement, dated as of October 22, 2002, by and among
Meade and Purchasers Named therein
    
    (q)4.4
    
    Registration Rights Agreement, dated as of April 18, 2003, by and between
Meade Instruments Corp. and John C. Diebel
    
    (s)10.7
    
    Industrial Lease (Single Tenant; Net; Stand-Alone), dated December 20, 1996,
between the Company and The Irvine Company
    
    (a)10.14+
    
    Employee Stock Ownership Plan (ESOP) Trust Agreement, as Amended and
Restated as of April 9, 1997, between the Company and Wells Fargo Bank, N.A.
    
    (e)10.24
    
    Celtic Master Lease, dated as of February 23, 1995, between the Company and
Celtic Leasing Corp.
    
    (b)10.35
    
    Form Indemnification Agreement between the Company and each member of the
Board of Directors and certain executive officers of the Company
    
    (e)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 Instruments Holding Corp.
    
    (j)10.47
    
    Amended and Restated Credit Agreement, dated as of October 25, 2002, by and
among Bank of America, N.A., as the Lender, and Meade Instruments Corp. and
Simmons Outdoor Corporation, as the Borrowers (excluding Exhibits and
Schedules thereto)
    
    (p)




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##### Table of Contents



IncorporationExhibit
    
    Description
    
    Reference10.48
    
    Subscription Agreement, dated as of October 22, 2002, by and among Meade
Instruments Corp. and each of the Purchasers Named on the Signature Page
thereof.
    
    (p)10.51+
    
    Transition Agreement, by and between Meade Instruments Corp. and John
Diebel, dated April 18, 2003
    
    (s)10.53+
    
    Nonqualified Stock Option Agreement, dated as of April 12, 2000, by and
between Meade and Rolf Bresser
    
    (bb)10.54
    
    First Amendment to Amended and Restated Credit Agreement dated October 27,
2003
    
    (t)10.55
    
    Lease Agreement, dated as of March 26, 1992, between Simmons Outdoor
Corporation and Realty Four, and three Addendum Agreements thereto, dated
April 1, 1992, June 6, 1995 and November 2, 1999, respectively
    
    (u)10.56
    
    Settlement Agreement, effective May 10, 2004, between Meade Instruments
Corp. on the one hand, and Celestron Acquisition, LLC and James Feltman, on
the other (excluding Exhibits thereto)
    
    (v)10.57
    
    Second Amendment to Amended and Restated Credit Agreement, dated July 9, 2004
    
    (w)10.58
    
    Asset Purchase Agreement, dated as of October 20, 2004, by and between
Coronado Technology Group, L.L.C., an Arizona limited liability company,
together with Geraldine Hogan, David Lunt, Jordan Frazier, Andrew G. Lunt,
and Nicholas J. Ilka on the one hand, and Meade Instruments Corp., a
Delaware corporation and Coronado, Inc., a California corporation, on the other
    
    (x)10.59
    
    First Amendment to Asset Purchase Agreement, dated as of December 1, 2004,
by and between Coronado Technology Group, L.L.C., .an Arizona limited
liability company, together with Geraldine Hogan, David Lunt, Jordan
Frazier, Andrew G. Lunt, and Nicholas J. Ilka on the one hand, and Meade
Instruments Corp., a Delaware corporation and Coronado, Inc., a California
corporation and wholly-owned subsidiary of Meade that subsequently changed
its name to Coronado Instruments, Inc., a California corporation, on the
other (excluding Schedules and Exhibits)
    
    (y)10.60
    
    Third Amendment to Amended and Restated Credit Agreement, dated December 15,
2004, and entered into by and among Bank of America, N.A. and Meade
Instruments Corp., a Delaware corporation, Simmons Outdoor Corp., a Delaware
corporation, and Coronado Instruments, Inc., a California corporation
    
    (z)10.61+
    
    Meade Instruments Corp. Employee Stock Ownership Plan, As Amended and
Restated Effective as of January 1, 1999, as amended
    
    (pp)10.62+
    
    Meade Instruments Corp. Employee Stock Ownership Plan Loan and Pledge
Agreement, between the ESOP and the Company, as amended
    
    (pp)10.63+
    
    Meade Instruments Corp. 1997 Stock Incentive Plan, as amended.
    
    (pp)10.64+
    
    Form Employment Agreement
between the Company and executive officers of the Company
    
    (pp)10.65+
    
    Form Non-Qualified Stock Option Agreement between the Company and recipients
of non-qualified options granted pursuant to the Meade Instruments 1997
Stock Incentive Plan, as amended
    
    (pp)10.66+
    
    Form Non-Qualified Stock Option Agreement between the Company and
non-employee directors of the Company receiving options granted pursuant to
Section 8 of the Meade Instruments 1997 Stock Incentive Plan, as amended
    
    (pp)10.67+
    
    Form Restricted Stock Agreement by and between the Company and recipients of
restricted shares of the Companys Common Stock granted pursuant to the
Companys 1997 Stock Incentive Plan, as amended
    
    (pp)10.68
    
    Fourth Amendment to Amended and Restated Credit Agreement, dated May 27,
2005, and entered into by and among Bank of America, N.A. and Meade
Instruments Corp., a Delaware corporation, Simmons Outdoor Corp., a Delaware
corporation, and Coronado Instruments, Inc., a California corporation
    
    (aa)




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##### Table of Contents



IncorporationExhibit
    
    Description
    
    Reference10.69
    
    Fifth Amendment to Amended and Restated Credit Agreement, dated October 12,
2005, and entered into by and among Bank of America, N.A. and Meade
Instruments Corp., a Delaware corporation, Simmons Outdoor Corp., a Delaware
corporation, and Coronado Instruments, Inc., a California corporation
    
    (cc)10.70
    
    Seasonal Loan Agreement, dated July 15 and 26, 2005, between Meade
Instruments Europe GmbH & Co. KG and VR Bank Westmuensterland KG
    
    (dd)10.71
    
    Long Term Loan Agreement, dated August 5, 2005, between Meade Instruments
Europe GmbH & Co. KG, the Owner, and VR Bank Westmuensterland KG, the
Creditor
    
    (dd)10.72+
    
    Offer of Employment for the position of Chief Executive Officer and
President, dated April 28, 2006, for Mr. Steven L. Muellner by Meade Instruments
Corporation
    
    (ff)10.73+
    
    Non-Qualified Stock Option Agreement between Meade Instruments Corp. and
Steven L. Muellner, granting 500,000 stock options, pursuant to the
Meade Instruments 1997 Stock Incentive Plan, as amended
    
    (gg)10.74+
    
    Non-Qualified Stock Option Agreement between Meade Instruments Corp. and
Steven L. Muellner, granting 200,000 stock options, subject to stockholder approval
at the Companys 2006 Annual meeting of Stockholders
    
    (gg)10.75+
    
    Executive Severance Agreement, dated May 8, 2006, as entered into by and
between Steven G. Murdock and Meade Instruments Corp., a Delaware
corporation
    
    (hh)10.76+
    
    Registration Rights Agreement, dated May 16, 2006, and entered into by and
between Meade Instruments Corp., a Delaware corporation and Steven Murdock
    
    (hh)10.77+
    
    Settlement Agreement, dated June 13, 2006, and entered into by and among, on
the one hand, Hummingbird Value Fund, L.P., Hummingbird Management, LCC,
Hummingbird Microcap Value Fund, L.P., Hummingbird Capital, LCC, Hummingbird
Concentrated Fund, L.P., Summit Street Value Fund, L.P., Summit Street
Management, LLC, Summit Street Capital, LLC, Monarch Activist Partners L.P.,
Chadwick Capital Management, LLC, Sohail Malad, Arthur T. Williams, III,
Jennifer A. Wallace, Paul D. Sonkin, and James Chadwick (the Investor Group)
and on the other hand, Meade Instruments Corp
    
    (ii)10.78
    
    Sixth Amendment to Amended and Restated Credit Agreement, dated June 13,
2006, and entered into by and among Bank of America, N.A. and Meade
Instruments Corp., a Delaware corporation, Simmons Outdoor Corp., a Delaware
corporation, and Coronado Instruments, Inc., a California corporation
    
    (ii)10.79
    
    Seventh Amendment to Amended and Restated Credit Agreement, dated July 31,
2006, and entered into by and among Bank of America, N.A. and Meade
Instruments Corp., a Delaware corporation, Simmons Outdoor Corp., a Delaware
corporation, and Coronado Instruments, Inc., a California corporation
    
    (jj)10.80+
    
    Employment Agreement, dated August 16, 2006, by and between Meade
Instruments Corp. and Donald W. Finkle
    
    (kk)10.81
    
    Eighth Amendment to Amended and Restated Credit Agreement, dated September
29, 2006, and entered into by and among Bank of America, N.A. and Meade
Instruments Corp., a Delaware corporation, Simmons Outdoor Corp., a Delaware
corporation, and Coronado Instruments, Inc., a California corporation
    
    (ll)10.82+
    
    Performance Share Award Agreement, dated October 18, 2006, by and between
Meade Instruments Corp. and Steven L. Muellner
    
    (mm)10.83
    
    Ninth Amendment to Amended and Restated Credit Agreement, dated October 31,
2006, and entered into by and among Bank of America, N.A. and Meade
Instruments Corp., a Delaware corporation, Simmons Outdoor Corp., a Delaware
corporation, and Coronado Instruments, Inc., a California corporation
    
    (nn)10.84*
    
    Buyers Agency Agreement, dated as of November 2, 2006, by and between Meade
Instruments Corp., a Delaware corporation, and ThreeSixty Sourcing Ltd., a
Hong Kong corporation
    
    (oo)16.1
    
    Dismissal of PricewaterhouseCoopers as certifying accountant
    
    (ee)




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##### Table of Contents



IncorporationExhibit
    
    Description
    
    Reference21.1
    
    Subsidiaries of the Registrant31.1
    
    Sarbanes-Oxley Act Section 302 Certification by Steven L. Muellner31.2
    
    Sarbanes-Oxley Act Section 302 Certification by Brent W. Christensen32.1
    
    Sarbanes-Oxley Act Section 906 Certification by Steven L. Muellner32.2
    
    Sarbanes-Oxley Act Section 906 Certification by Brent W. Christensen
 
 
    
    Previously filed with the Securities Exchange Commission as set forth in the following table:+
    
    Management contract or compensatory plan or arrangement.*
    
    Certain portions of this exhibit have been omitted pursuant to a confidential treatment request
filed separately with the Securities and Exchange Commission(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 29, 2000.(k)
    
    Incorporated by reference to the Companys Quarterly Report on Form 10-Q for the Quarterly
Period Ended May 31, 2000, as filed with the Securities and Exchange Commission on July 17,
2000.(l)
    
    Incorporated by reference to the Companys Annual Report on Form 10-K for the Fiscal Year
Ended February 29, 2001, as filed with the Securities and Exchange Commission on May 29, 2001.(m)
    
    Incorporated by reference to the Companys Quarterly Report on Form 10-Q for the Quarterly
Period Ended August 31, 2001, as filed with the Securities and Exchange Commission on October
15, 2001.(n)
    
    Incorporated by reference to the Companys Registration Statement on Form S-8 (Registration
No. 333-86818), relating to the Companys Stock Incentive Plan, as amended, as filed with the
Securities and Exchange Commission on April 24, 2002.(o)
    
    Incorporated by reference to the Companys Annual Report on Form 10-K for the Fiscal Year
Ended February 28, 2002, as filed with the Securities and Exchange Commission on May 29, 2002.(p)
    
    Incorporated by reference to the Companys Current Report on Form 8-K, as filed with the
Securities and Exchange Commission on November 7, 2002.(q)
    
    Incorporated by reference to the Companys Registration Statement on Form S-3 (Registration
No. 333-101404), as filed with the Securities and Exchange Commission on November 22, 2002.




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##### Table of Contents



(r)
    
    Incorporated by reference to the Companys Quarterly Report on Form 10-Q for the Quarterly
Period Ended November 30, 2002, as filed with the Securities and Exchange Commission on
January 14, 2003.(s)
    
    Incorporated by reference to the Companys Current Report on Form 8-K, as filed with the
Securities and Exchange Commission on April 22, 2003.(t)
    
    Incorporated by reference to the Companys Quarterly Report on Form 10-Q for the Quarterly
Period Ended November 30, 2003, as filed with the Securities and Exchange Commission on
January 14, 2004.(u)
    
    Incorporated by reference to the Companys Annual Report on Form 10-K for the Fiscal Year
Ended February 29, 2004, as filed with the Securities and Exchange Commission on June 1, 2004.(v)
    
    Incorporated by reference to the Companys Current Report on Form 8-K, as filed with the
Securities and Exchange Commission on July 12, 2004.(w)
    
    Incorporated by reference to the Companys Quarterly Report on Form 10-Q for the Quarterly
Period Ended May 31, 2004, as filed with the Securities and Exchange Commission on July 15,
2004.(x)
    
    Incorporated by reference to the Companys Current Report on Form 8-K, as filed with the
Securities and Exchange Commission on October 21, 2004.(y)
    
    Incorporated by reference to the Companys Current Report on Form 8-K, as filed with the
Securities and Exchange Commission on December 6, 2004.(z)
    
    Incorporated by reference to the Companys Current Report on Form 8-K, as filed with the
Securities and Exchange Commission on December 16, 2004.(aa)
    
    Incorporated by reference to the Companys Current Report on Form 8-K, as filed with the
Securities and Exchange Commission on May 31, 2005.(bb)
    
    Incorporated by reference to the Companys Annual Report on Form 10-K for the Fiscal
Year Ended February 28, 2003, as filed with the Securities and Exchange Commission on May
29, 2003.(cc)
    
    Incorporated by reference to the Companys Current Report on Form 8-K, as filed with
the Securities and Exchange Commission on October 17, 2005.(dd)
    
    Incorporated by reference to the Companys Current Report on Form 10-Q, as filed with
the Securities and Exchange Commission on November 30, 2005.(ee)
    
    Incorporated by reference to the Companys Current Report on Form 8-K, as filed with
the Securities and Exchange Commission on March 2, 2006.(ff)
    
    Incorporated by reference to the Companys Current Report on Form 8-K, as filed with
the Securities and Exchange Commission on May 4, 2006.(gg)
    
    Incorporated by reference to the Companys Current Report on Form 8-K, as filed with
the Securities and Exchange Commission on May 11, 2006.(hh)
    
    Incorporated by reference to the Companys Current Report on Form 8-K, as filed with
the Securities and Exchange Commission on May 18, 2006.(ii)
    
    Incorporated by reference to the Companys Current Report on Form 8-K, as filed with
the Securities and Exchange Commission on June 15, 2006.(jj)
    
    Incorporated by reference to the Companys Current Report on Form 8-K, as filed with
the Securities and Exchange Commission on August 1, 2006.(kk)
    
    Incorporated by reference to the Companys Current Report on Form 8-K, as filed with
the Securities and Exchange Commission on August 18, 2006.(ll)
    
    Incorporated by reference to the Companys Current Report on Form 8-K, as filed with
the Securities and Exchange Commission on October 2, 2006.(mm)
    
    Incorporated by reference to the Companys Current Report on Form 8-K, as filed with
the Securities and Exchange Commission on October 19, 2006.(nn)
    
    Incorporated by reference to the Companys Current Report on Form 8-K, as filed with
the Securities and Exchange Commission on October 31, 2006.(oo)
    
    Incorporated by reference to the Companys Current Report on Form 8-K, as filed with
the Securities and Exchange Commission on November 17, 2006.(pp)
    
    Incorporated by reference to the Companys Annual Report on Form 10-K for the Fiscal
Year Ended February 28, 2005, as filed with the Securities and Exchange Commission on May 31, 2005.