<PAGE> 1
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED MAY 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 0-22183
--------------------
MEADE INSTRUMENTS CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 95-2988062
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
6001 OAK CANYON, IRVINE, CA 92618
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(949) 451-1450
--------------------
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Number of shares of common stock outstanding as of May 31, 2000 is
16,392,202 shares, giving effect to the two-for-one stock split declared by the
Company on May 5, 2000 and paid on June 19, 2000 to all stockholders of record
as of May 22, 2000.
================================================================================
1
<PAGE> 2
MEADE INSTRUMENTS CORP.
TABLE OF CONTENTS
PART I -- FINANCIAL INFORMATION
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
Consolidated Balance Sheets (Unaudited) -- May 31, 2000 and February 29, 2000 .................... 3
Consolidated Statements of Income (Unaudited) -- Three Months Ended May 31, 2000 and 1999 ........ 4
Consolidated Statements of Cash Flows (Unaudited) -- Three Months Ended May 31, 2000 and 1999 .... 5
Notes to Consolidated Financial Statements (Unaudited) ........................................... 6
Management's Discussion and Analysis of Financial Condition and Results of Operations ............ 7-9
PART II -- OTHER INFORMATION
Other Information................................................................................. 10
SIGNATURES........................................................................................ 11
EXHIBIT INDEX..................................................................................... 12
</TABLE>
2
<PAGE> 3
ITEM 1. FINANCIAL STATEMENTS.
MEADE INSTRUMENTS CORP.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
MAY 31, FEBRUARY 29,
2000 2000
------------ ------------
<S> <C> <C>
Current assets:
Cash ........................................................................... $ 929,000 $ 2,180,000
Accounts receivable, less allowance for doubtful accounts of $3,831,000 at
May 31, 2000 and $3,861,000 at February 29,2000 ............................. 13,021,000 8,451,000
Inventories .................................................................... 38,191,000 34,311,000
Deferred income taxes .......................................................... 7,770,000 7,770,000
Prepaid expenses and other current assets ...................................... 2,617,000 326,000
------------ ------------
Total current assets ................................................... 62,528,000 53,038,000
Other assets ..................................................................... 3,717,000 4,087,000
Property and equipment, net of accumulated depreciation of $4,253,000 at
May 31, 2000 and $3,915,000 at February 29,2000 ................................ 7,467,000 6,966,000
------------ ------------
$ 73,712,000 $ 64,091,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Bank line of credit ............................................................ $ 11,678,000 $ 2,784,000
Accounts payable ............................................................... 4,513,000 3,889,000
Accrued liabilities ............................................................ 5,167,000 6,479,000
Income taxes payable ........................................................... -- 2,550,000
Current portion, long-term debt and capital lease obligations .................. 1,014,000 783,000
------------ ------------
Total current liabilities .............................................. 22,372,000 16,485,000
------------ ------------
Long-term debt, net of current portion ........................................... 4,250,000 4,500,000
Long-term capital lease obligations, net of current portion ...................... 392,000 441,000
------------ ------------
Commitments and contingencies
Stockholders' equity:
Common stock, $0.01 par value, 20,000,000 shares authorized; 16,392,000 and
16,214,000 shares issued and outstanding at May 31, 2000 and
February 29, 2000, respectively .............................................. 164,000 162,000
Additional paid-in capital ..................................................... 29,328,000 26,749,000
Retained earnings .............................................................. 23,826,000 22,457,000
Accumulated other comprehensive income ......................................... (337,000) (333,000)
------------ ------------
52,981,000 49,035,000
Unearned ESOP shares ........................................................... (6,283,000) (6,370,000)
------------ ------------
Total stockholders' equity ............................................. 46,698,000 42,665,000
------------ ------------
$ 73,712,000 $ 64,091,000
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 4
MEADE INSTRUMENTS CORP.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MAY 31,
-----------------------------
2000 1999
------------ ------------
<S> <C> <C>
Net sales .................................................. $ 22,790,000 $ 17,101,000
Cost of sales .............................................. 13,505,000 9,984,000
------------ ------------
Gross profit ............................................. 9,285,000 7,117,000
Selling expenses ........................................... 3,352,000 2,291,000
General and administrative expenses ........................ 2,117,000 2,282,000
ESOP contribution expense .................................. 649,000 322,000
Research and development expenses .......................... 458,000 265,000
------------ ------------
Operating income ......................................... 2,709,000 1,957,000
Interest (income) expense .................................. 234,000 (15,000)
------------ ------------
Income before income taxes ................................. 2,475,000 1,972,000
Provision for income taxes ................................. 1,106,000 828,000
------------ ------------
Net income ................................................. $ 1,369,000 $ 1,144,000
============ ============
Basic earnings per share ................................... $ 0.09 $ 0.08
============ ============
Diluted earnings per share ................................. $ 0.09 $ 0.08
============ ============
Weighted average number of shares outstanding -- basic ..... 14,563,000 13,860,000
============ ============
Weighted average number of shares outstanding -- diluted ... 15,896,000 14,480,000
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 5
MEADE INSTRUMENTS CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MAY 31,
----------------------------
2000 1999
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income ..................................................... $ 1,369,000 $ 1,144,000
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization ............................... 447,000 239,000
ESOP contribution ........................................... 649,000 322,000
Allowance for doubtful accounts ............................. (39,000) 400,000
Changes in assets and liabilities:
Decrease (increase) in accounts receivable ................ (4,550,000) 1,730,000
Increase in inventories ................................... (4,023,000) (4,454,000)
Decrease (increase) in prepaid expenses and other assets .. 177,000 (415,000)
Increase in accounts payable .............................. 642,000 1,949,000
(Decrease) increase in accrued liabilities ................ (1,848,000) 248,000
Decrease in income taxes payable .......................... (2,821,000) (1,747,000)
----------- -----------
Net cash used in operating activities .................. (9,997,000) (584,000)
----------- -----------
Cash flows from investing activities:
Capital expenditures ........................................... (888,000) (1,090,000)
----------- -----------
Net cash used in investing activities .................. (888,000) (1,090,000)
----------- -----------
Cash flows from financing activities:
Net borrowings under bank line of credit ....................... 8,970,000 483,000
Payments under capital lease obligations ....................... (68,000) (71,000)
Exercise of stock options ...................................... 735,000 10,000
----------- -----------
Net cash provided by financing activities .............. 9,637,000 422,000
----------- -----------
Effect of exchange rate changes on cash .......................... (3,000)
-----------
Net decrease in cash ............................................. (1,251,000) (1,252,000)
Cash at beginning of period ...................................... 2,180,000 1,283,000
----------- -----------
Cash at end of period ............................................ $ 929,000 $ 31,000
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE> 6
MEADE INSTRUMENTS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
A. THE CONSOLIDATED FINANCIAL STATEMENTS HAVE BEEN PREPARED BY THE COMPANY AND
ARE UNAUDITED.
In management's opinion, the information and amounts furnished in this
report reflect all adjustments (consisting of normal recurring adjustments)
considered necessary for the fair presentation of the financial position and
results of operations for the interim periods presented. These financial
statements should be read in conjunction with the Company's Annual Report on
Form 10-K for the fiscal year ended February 29, 2000.
The Company has experienced, and expects to continue to experience,
substantial fluctuations in its sales, gross margins and profitability from
quarter to quarter. Factors that influence these fluctuations include the volume
and timing of orders received, changes in the mix of products sold, market
acceptance of the Company's products, competitive pricing pressures, the
Company's ability to meet increasing demand and delivery schedules and the
timing and extent of research and development expenses, marketing expenses and
product development expenses. In addition, a substantial portion of the
Company's net sales and operating income typically occur in the third quarter of
the Company's fiscal year primarily due to disproportionately higher customer
demand for less-expensive telescopes during the Christmas holiday season. The
results of operations for the quarters ended May 31, 2000 and 1999,
respectively, are not necessarily indicative of the operating results for the
entire fiscal year.
B. STOCK SPLIT
On May 5, 2000 the Company declared a two-for-one stock split of the
Company's common stock, which was effected in the form of a dividend. The
dividend was paid on June 19, 2000 to stockholders of record on May 22, 2000.
All share and per share amounts in the accompanying consolidated financial
statements and the notes thereto have been adjusted to reflect the stock split.
C. COMPOSITION OF CERTAIN BALANCE SHEET ACCOUNTS
The composition of inventories is as follows:
<TABLE>
<CAPTION>
MAY 31, FEBRUARY 29,
2000 2000
----------- ------------
<S> <C> <C>
Raw materials ...... $ 9,058,000 $ 7,335,000
Work-in-process .... 4,653,000 6,600,000
Finished goods ..... 24,480,000 20,376,000
----------- -----------
$38,191,000 $34,311,000
=========== ===========
</TABLE>
Included in prepaid expenses and other current assets at May 31, 2000 is
$2,122,000 of prepaid income taxes.
D. COMMITMENTS AND CONTINGENCIES
On April 2, 1998 a complaint was filed against the Company alleging
infringement of a U.S. patent by the Company. On April 29, 1999, the Company
filed a motion requesting summary judgment that the Company has not infringed
the patent and a motion requesting summary judgment that the patent is invalid.
On June 30, 1999, the court granted the motion for summary judgment of
non-infringement. On July 2, 1999, the court held that the Company has not
infringed the patent. On July 27, 1999 the opposing party filed a purported
notice of appeal with respect to the summary judgment motion. On May 2, 2000 the
Company filed a motion to dismiss the appeal. On June 23, 2000 the court granted
Meade's motion and ordered a dismissal of the appeal. On July 7, 2000, the
opposing party filed a petition for rehearing the appeal. In the event of any
further proceedings on the merits, the Company intends to vigorously defend the
judgment before the appellate court. The ultimate liability of the Company under
this action is not presently determinable. After discussion with counsel, and in
light of the summary judgment, it is the opinion of management that such
liability is not expected to have a material effect on the Company's financial
position or results of operations.
E. COMPREHENSIVE INCOME
6
<PAGE> 7
Statement of Financial Accounting Standards No. 130 ("SFAS 130"), Reporting
Comprehensive Income establishes standards for reporting and displaying of
comprehensive income and its components in the Company's consolidated financial
statements. Comprehensive income is defined in SFAS 130 as the change in equity
(net assets) of a business enterprise during a period from transactions and
other events and circumstances from non-owner sources. Total comprehensive
income was $1,365,000 for the quarter ended May 31, 2000. The difference from
net income as reported is the change in the cumulative currency translation
adjustment.
F. On July 13, 2000 the stockholders of Meade Instruments Corp. approved an
amendment to the Company's Certificate of Incorporation to increase the number
of authorized shares of common stock from 20,000,000 to 50,000,000.
7
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
RESULTS OF OPERATIONS
The nature of the Company's business is seasonal. Historically, sales in the
third quarter have been higher than sales achieved in each of the other three
fiscal quarters of the year. Thus, expenses and, to a greater extent, operating
income vary by quarter. Caution, therefore, is advised when appraising results
for a period shorter than a full year, or when comparing any period other than
to the same period of the previous year.
Three Months Ended May 31, 2000 Compared to Three Months Ended May 31, 1999
Net sales for the first quarter of fiscal 2001 were $22.8 million compared
to $17.1 million for the first quarter of fiscal 2000, an increase of 33.3%.
This increase was due to improved sales of domestically produced high-end
telescopes and sales of imported less-expensive telescopes. Sales attributable
to the Company's European subsidiary also contributed approximately $2.2 million
to the increase over the prior year.
Gross profit increased from $7.1 million (41.5% of net sales) for the first
quarter of fiscal 2000 to $9.3 million (40.7% of net sales) for the first
quarter of fiscal 2000, an increase of 30.5%. The decrease in gross profit as a
percent of net sales was due to the lower gross margins contributed by the
European subsidiary.
Selling expenses increased from $2.3 million (13.4% of net sales) for the
first quarter of fiscal 2000 to $3.4 million (14.7% of net sales) for the first
quarter of fiscal 2001, an increase of 46.3%. This increase was primarily due to
increases in advertising and marketing expenses. The Company expects advertising
and marketing expenses to continue to increase over the prior year due primarily
to an expanded print advertising campaign aimed at marketing the Company's
less-expensive telescope lines. Selling expenses attributable to the European
subsidiary also contributed to the increase in selling expenses for the first
quarter of fiscal 2001.
General and administrative expenses decreased from $2.3 million (13.3% of
net sales) for the first quarter of fiscal 2000 to $2.1 million (9.3% of net
sales) for the first quarter of fiscal 2001, a decrease of 7.2%. This decrease
was principally due to decreases in personnel related costs and professional
costs that were partially offset by general and administrative expenses at the
Company's European subsidiary.
ESOP contribution expense increased from $322,000 (1.9% of net sales) for
the first quarter of fiscal 2000 to $649,000 (2.8% of net sales) for the first
quarter of fiscal 2001, an increase of 101.6%. The increase in this non-cash
charge was due to increases in the average market price of the Company's stock
allocated to the Employee Stock Ownership Plan during the quarter. To the extent
that the market value of the Company's common stock continues to rise, the
non-cash ESOP contribution expense is expected to continue to increase.
Research and development expenses increased from $265,000 (1.5% of net
sales) for the first quarter of fiscal 2000 to $458,000 (2.0% of net sales) for
the first quarter of fiscal 2001, an increase of 72.8%. This increase was
principally due to higher engineering personnel related costs and outside
consulting costs.
Interest expense was $234,000 for the first quarter of fiscal 2001 compared
to interest income of $15,000 for the first quarter of fiscal 2000. The increase
was principally due to interest expense on the $5.0 million Term Loan and
interest expense on short-term borrowings at the Company's European subsidiary.
LIQUIDITY AND CAPITAL RESOURCES
For the three months ended May 31, 2000 the Company funded its operations
with internally generated cash flow and short-term borrowings from banks.
Internally generated cash flow from net income adjusted for non-cash charges was
more than offset by increases in accounts receivable and inventories, a decrease
in accrued liabilities and payment of income taxes. The increase in inventories
(up $3.9 million from February 29, 2000) is consistent with the increase in
inventories during the first quarter of the prior year and is due to anticipated
sales for the second and third quarters of the Company's fiscal year 2001. Net
working capital totaled approximately $40.2 million at
8
<PAGE> 9
May 31, 2000, up from $36.6 million at February 29, 2000. Working capital
requirements fluctuate during the year due to the seasonal nature of the
business. These requirements are typically financed through a combination of
internally generated cash flow from operating activities and short-term bank
borrowings.
On August 31, 1999 the Company entered into a new loan agreement (the "Loan
Agreement") with a bank, replacing its existing credit facilities. The Loan
Agreement provides the Company with an aggregate $40 million credit facility
consisting of a five year $35 million revolving credit facility (the "Revolving
Loan") and a five year $5 million term loan (the "Term Loan). The Term Loan is
subject to quarterly amortization payments of $250,000 beginning September 30,
2000. The Term Loan is also subject to mandatory prepayments upon the happening
of certain events. Amounts outstanding under the Revolving Loan and Term Loan
bear interest, at the Company's option, at a base rate or eurodollar rate plus
an applicable margin. The Company's obligations under the Loan Agreement are
guaranteed by each of the Company's domestic subsidiaries and are secured by
substantially all of the assets of the Company and its domestic subsidiaries.
The Loan Agreement contains certain financial covenants and customary
affirmative and negative covenants and events of default. In connection with the
acquisition of Bresser the Company borrowed $5 million under the Term Loan on
August 31, 1999.
Capital expenditures, including financed purchases of equipment, aggregated
$888,000 and $1.7 million for the three months ended May 31, 2000 and 1999,
respectively. The Company had no material capital expenditure commitments at May
31, 2000.
The Company believes that its internally generated cash flow and borrowing
ability will be sufficient to meet its operating, working capital and capital
expenditure requirements through the near term. In the event that the Company
requires more capital than is presently anticipated, the Company's remaining
cash balances may be consumed and additional sources of liquidity, such as debt
or equity financings, may be required to meet its capital needs. There can be no
assurance that additional capital beyond the amounts the Company currently
requires will be available on reasonable terms, if at all.
NEW ACCOUNTING PRONOUNCEMENTS
In December 1999, the Securities and Exchange Commission (the "SEC")
released Staff Accounting Bulletin ("SAB") No. 101, which provides guidance on
the recognition, presentation and disclosure of revenue in financial statements
filed with the SEC. The Company is required to be in conformity with the
provisions of SAB 101 no later than fourth quarter 2001 and the Company does not
expect a material change in its financial condition or results of operations as
a result of SAB 101.
YEAR 2000
To date, the Company has not experienced any material Year 2000 problems
with its enterprise information system software, or its internal software
applications, products, machinery, equipment or operating systems. The third
parties with whom the Company has material relationships have not, to date,
reported to the Company any material Year 2000 problems. The Company will
continue to monitor the Year 2000 compliance of its enterprise information
system and other computer systems. Latent Year 2000 related issues may arise as
the computer systems are more fully utilized. Accordingly, there can be no
assurance that the Company will not in the future experience any Year 2000
problems. The Company's total incremental costs of addressing Year 2000 issues
has not been material to date. Monitoring costs past January 1, 2000 are not
expected to be material.
FORWARD-LOOKING INFORMATION
The preceding "Management's Discussion and Analysis of Financial Conditions
and Results of Operations" section contains various "forward looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities and Exchange Act of 1934, as amended, which
represent the Company's reasonable judgment concerning the future and are
subject to risks and uncertainties that could cause the Company's actual
operating results and financial position to differ materially, including the
following: the Company's ability to expand the markets for telescopes,
binoculars and other optical products as a result of its increased advertising
and marketing efforts; the Company's ability to continue to develop and bring to
market new
9
<PAGE> 10
and innovative products; the Company's ability to integrate and develop its
wholly-owned manufacturing facility in Mexico in combination with its existing
manufacturing capabilities; the Company expanding its distribution network; the
Company's ability to integrate and further develop the business of Bresser Optik
GmbH & Co. KG, which the Company acquired in September 1999, in combination with
the Company's existing business; the Company experiencing fluctuations in its
sales, gross margins and profitability from quarter to quarter consistent with
prior periods; the extent to which Meade will supply key components for TeraBeam
Corporation; and the Company's expectation that it will have sufficient funds to
meet any working capital requirements during the foreseeable future with
internally generated cash flow and borrowing ability.
In addition to other information in this report, the Company cautions that
certain factors, including, without limitation, the following, should be
considered carefully in evaluating the Company and its business and that such
factors may cause the Company's actual operating results to differ materially
from those set forth in the forward looking statements described above or to
otherwise be adversely affected: any significant decline in general economic
conditions or uncertainties affecting consumer spending; any general decline in
demand for the Company's products; any inability to continue to design and
manufacture products that will achieve and maintain commercial success; any
failure of the Company to penetrate the binocular market and achieve meaningful
sales; any unexpected termination or interruption of the Company's manufacturing
arrangements, both internally and at the Taiwanese Factory; greater than
anticipated competition; any loss of, or the failure to replace, any significant
portion of the sales made to any significant customer of the Company; the
inherent risks associated with international sales, including variations in
local economies, fluctuating exchange rates (including conversion to Euros),
increased difficulty of inventory management, greater difficulty in accounts
receivable collections, increasing ESOP charges in the event the market price of
the Company's stock increases, costs and risks associated with localizing
products for foreign countries, changes in tariffs and other trade barriers,
adverse foreign tax consequences, cultural differences affecting product demand
and customer service and burdens of complying with a variety of foreign laws;
and the inherent risks associated with products manufactured or assembled
outside of the United States, including, among other things, imposition of
quotas or trade sanctions, fluctuating exchange rates, shipment delays or
political instability and any material effect on the Company's business and
operations by the advent of the Year 2000.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The Company is exposed to certain levels of market risks, including changes
in foreign currency exchange rates and interest rates. Market risk is the
potential loss arising from adverse changes in market rates and prices, such as
foreign currency exchange and interest rates.
The Company conducts business overseas in a number of foreign currencies,
principally in Europe. These currencies have been relatively stable against the
U.S. dollar for the past several years. As a result, foreign currency
fluctuations have not had a material impact historically on Meade's revenues or
results of operations. There can be no assurance that European currencies will
remain stable relative to the U.S. dollar or that future fluctuations in the
value of foreign currencies will not have a material adverse effect on the
Company's business, operating results, revenues and financial condition. The
Company has and will continue to consider the adoption of a foreign currency
hedging program.
The Company does not enter into derivatives or other financial instruments
for trading, speculative purposes or to manage its interest rate risk. The
Company's financial instruments consist of cash, accounts receiveable, accounts
payable, and long-term obligations. The Company's exposure to market risk for
changes in interest rates related primarily to short-term investments and
short-term obligations. As a result, the Company does not expect fluctuations in
interest rates to have a material impact on the fair value of these instruments.
10
<PAGE> 11
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Meade Instruments Corporation v. Reddwarf Starware, LLC, aka Reddwarf
Instruments, LLC ("Reddwarf"), Civil No. 98-240 GLT. United States District
Court for the Central District of California. Appeal No. 99-1517. United States
Court of Appeals for the Federal Circuit. Action for declaratory relief
initiated by a complaint filed March 16, 1998, by the Company for declaratory
judgment of non-infringement of Reddwarf's U.S. Patent No. 4,764,881, for
declaratory judgment that Reddwarf's patent is invalid, void and unenforceable,
and for an injunction and damages under Federal antitrust statutes and for an
injunction and other relief under California unfair competition statutes. A
counterclaim dated June 3, 1998 alleging infringement by the Company's LX200
series telescope system (and unspecified other products) of Reddwarf's U.S.
Patent No. 4,764,881 was also filed against the Company. The counterclaim
further alleges that the infringement is willful and seeks unspecified damages,
an injunction and other relief against the Company. The Company contends the
counterclaim is without merit and vigorously contests its allegations. On April
29, 1999, the Company filed a motion requesting summary judgment that the
Company has not infringed Reddwarf's patent and a motion requesting summary
judgment that the patent is invalid. On June 30, 1999, the District Court
granted the motion for summary judgment of non-infringement. On July 2, 1999,
the court held that the Company has not infringed Reddwarf's patent and that
Reddwarf shall take nothing by its counterclaim. On July 27, 1999 Reddwarf filed
a purported notice of appeal to the Federal Circuit from the District Court's
order granting summary judgment. On May 2, 2000, Meade filed a motion in the
Federal Circuit to dismiss Reddwarf's appeal on the ground that Reddwarf had
failed to properly appeal from the District Court's final judgment. On June 23,
2000, the Federal Circuit granted Meade's motion and ordered dismissal of the
appeal. On or about July 7, 2000, Reddwarf filed with the Federal Circuit a
petition for rehearing and a suggestion for rehearing en banc. The Federal
Circuit has not yet ruled on that petition. In the event of any further
proceedings on the merits, the Company intends to vigorously defend the judgment
before the appellate court. Due to the uncertainties of litigation, the Company
is unable to provide an evaluation of the likelihood of an unfavorable outcome
in the case, or an estimate of the amount of potential loss in the event of an
unfavorable outcome.
ITEM 2. CHANGES IN SECURITIES
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
6(a) Exhibits filed with this Form 10-Q.
Exhibit No. 3.4 Certificate of Amendment of Certificate of
Incorporation of Meade Instruments Corp., a Delaware corporation; and
Exhibit No. 27 Financial Data Schedule for the three months ended May
31, 2000.
6(b) Reports on Form 8-K.
None.
11
<PAGE> 12
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
Dated: July 17, 2000
MEADE INSTRUMENTS CORP.
By: /s/ JOHN C. DIEBEL
-------------------------------
John C. Diebel
Chairman of the Board
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ JOHN C. DIEBEL Chairman of the Board and Chief Executive Officer July 17, 2000
---------------------------------------- (Principal Executive Officer)
John C. Diebel
/s/ STEVEN G. MURDOCK Director, President, July 17, 2000
---------------------------------------- Chief Operating Officer and Secretary
Steven G. Murdock
/s/ BRENT W. CHRISTENSEN Vice President, Finance and July 17, 2000
---------------------------------------- Chief Financial Officer
Brent W. Christensen (Principal Financial and Accounting Officer)
/s/ JOSEPH A. GORDON, JR. Director and Senior Vice President July 17, 2000
---------------------------------------- of North American Sales
Joseph A. Gordon, Jr.
/s/ TIMOTHY C. MCQUAY Director July 17, 2000
----------------------------------------
Timothy C. McQuay
---------------------------------------- Director
Harry L. Casari
---------------------------------------- Director
Michael P. Hoopis
</TABLE>
12
<PAGE> 13
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------ -----------
<S> <C>
3.4 Certificate of Amendment of Certificate of Incorporation of Meade
Instruments Corp., a Delaware corporation
27 Financial Data Schedule for the three months ended May 31, 2000
</TABLE>
13
