Meade Instruments Corp. (MEAD) filed Quarterly Report for the period ended 2009-05-31.
Meade Instruments Corp. is a multinational consumer optics company thatdesigns manufactures imports and distributes telescopes telescopeaccessories binoculars and other optical products. Meade's dedication toproduct innovation has led to the successful introduction of a wide range of products resulting in what they believe to be the broadest and most complete line of telescopes and telescope accessories available. They offer more different telescope models with several different optical configurations as well as accessory products. Meade Instruments Corp. has a market cap of $4 million; its shares were traded at around $0.171 with and P/S ratio of 0.2.
Highlight of Business Operations:
The Company adopted the provisions of FIN 48 on March 1, 2007. As a result of the implementation of FIN 48, the Company recognized no material increase in the liability for unrecognized income tax benefits. At February 28, 2009, unrecognized tax benefits, all of which affect the effective tax rate if recognized, were $0.1 million. Management does not anticipate that there will be a material change in the balance of unrecognized tax benefits within the next 12 months. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. As of February 28, 2009, accrued interest related to uncertain tax benefit was less than $0.1 million. The tax years 2004-2007 remain open to examination by the major taxing jurisdictions to which the Company is subject. However, the amount of net operating loss carryforwards can be adjusted for federal tax purposes for the three years (four years for the major state jurisdictions in which the Company operates) after the net operating loss is utilized.
The Company reported net sales of $4.2 million for the quarter ended May 31, 2009, a decrease of $3.0 million or 41% from net sales of $7.2 million in the same period last year. Approximately $2.3 million of that decrease was due to the Company’s sale of its former sport optics brands last year and the resulting elimination of the revenue associated with those products. The remaining $0.7 million of the decrease was due to a decline in sales of most of the Company’s remaining products, partially offset by an increase in sales of its high end telescopes which is attributable to improvements in the Company’s manufacturing operations in Mexico, which had just begun full manufacturing operations in the first quarter of fiscal 2009. Reduced distribution outlets, increased competition and weak demand were factors contributing to the decline in sales.
General and administrative expenses for the quarter ending May 31, 2009 were $1.4 million, a decrease of $1.0 million or 42% compared to $2.4 million in the same quarter in the prior year. Most of the decrease in general and administrative expenses was due to reduction in headcounts and excess facility costs associated with our former Irvine, California corporate headquarters.
During the first quarter of the prior year, the Company sold its Weaver and Redfield sport optics brands and associated inventory for gross proceeds of $8 million. This sale resulted in a gain of approximately $4.5 million. Excluding this gain, the Company would have reported a net loss of $2.7 million, or $0.12 per share, compared to a net loss of $1.2 million of $0.05 per share in the current year.
At May 31, 2009, we had cash and cash equivalents of $4.4 million, as compared to $5.9 million at February 28, 2009, a decrease of $1.5 million primarily due to the Company’s loss from operations.
Net cash used in operating activities decreased from $3.6 million in the first quarter of fiscal 2009 to $1.7 million in the first quarter of fiscal 2010—a decrease of $1.9 million or 53% due primarily to the decrease in operating loss excluding Gain on brand sales, which decreased from $3.0 million in the first quarter of fiscal 2009 to $1.2 million in the first quarter of fiscal 2010—a decrease of $1.8 million or 60%.
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