IRVINE, Calif., Oct. 13, 2009 (GLOBE NEWSWIRE) -- Meade Instruments Corp. (Nasdaq:MEAD), a leading designer, manufacturer and distributor of optical products, including telescopes, binoculars and microscopes, today reported net sales of $7.6 million for the three month periods ended August 31, 2009, compared to $7.6 million during the three months ended August 31, 2008. The Company reported a net loss of $1.1 million, or $0.95 per share, for the three months ended August 31, 2009, compared with a net loss of $2.0 million, or $1.73 per share, for the three months ended August 31, 2008. Excluding the $0.8 million gain on the sale of the Simmons brand and associated inventory in June 2008, the Company would have reported a net loss of $2.8 million, or $2.41 per share for the three months ended August 31, 2008.
The results of the Company's former European operations, which were sold in January 2009, have been classified in the prior year as a discontinued operation in accordance with generally accepted accounting principles, as explained in the Company's fiscal 2009 Form 10-K.
In addition, all share and per share amounts have been adjusted retroactively by the one-for-twenty ratio used in the reverse stock split executed on August 7, 2009.
Q2 Results
Although net sales were $7.6 million for both of the three month periods ended August 31, 2009 and 2008, net sales of the Company's telescopes, binoculars and microscopes during the three months ended August 31, 2009 increased by $1.1 million in as much as the sales during the three months ended August 31, 2008 included approximately $1.1 million related to its former sport optics brands (which were not classified as discontinued operations). This increase was due to sales of new products, including the Company's new ETX-LS(R) telescope, as well as an increase in sales of the Company's high end telescopes, the latter of which was attributable to improvements in the Company's manufacturing operations at its plant in Mexico.
Gross profit for the three months ended August 31, 2009 was $1.3 million or 17% of net sales, compared with $1.0 million or 13% of net sales in the three months ended August 31, 2008. Meade's gross profit improved over the prior year due to lower costs of sales primarily attributable to lower costs associated with the Company's manufacturing operations in Mexico-including the benefit of favorable foreign currency exchange rates, consolidation of the Company's operation in Mexico from two buildings into one, better operating efficiencies and reductions in other indirect costs.
Selling, general and administrative expenses decreased by approximately 42% or $1.6 million, primarily due to reduced discretionary spending, headcount reductions and reduced facility costs related to the relocation of the Company's former Irvine, California corporate headquarters to a lower cost facility.
Research and development expenses were lower by 74% due to completion of its new product introduction in the first quarter ended May 31, 2009.
Liquidity
Cash used in operating activities during the six months ended August 31, 2009 was approximately $4.1 million, compared to $7.9 million in the prior year-a decrease of approximately $3.8 million or 48%. Approximately $2.5 million or 61% of the $4.1 million of cash used in operating activities during the six months ended August 31, 2009 related to changes in working capital associated with the seasonality of the Company's business. Approximately $1.6 million of cash used in operating activities during the six months ended August 31, 2009 related to the Company's loss from continuing operations, excluding non-cash charges such as depreciation and stock compensation, compared to $3.9 million in the prior period-a decrease of approximately $2.3 million or 59%.
The Company's cash balance as of August 31, 2009 was approximately $2.1 million and the Company has no long term debt. In addition, the Company has an undrawn $10.0 million asset backed credit facility with First Capital of which $2.7 million was available based on the Company's accounts receivable as of August 31, 2009. The Company is still working with its lender on the availability under the $3.0 million inventory component of the facility.
Management Commentary
"The improvement in our second-quarter fiscal 2010 results compared to our prior year's second quarter results was due to the actions we have taken over the past year to streamline the Company and improve operations," said Steven Murdock, Chief Executive Officer of Meade. "Although we have been able to improve gross margins and we have realized cost savings, the Company still has work to do in lowering its cost structure to bring it in line with reduced revenue. We continue to implement further actions and are taking proactive measures to further decrease corporate overhead and manufacturing expenses in order to improve the Company's performance relative to the decreased market for relatively expensive, highly discretionary products such as ours."
Mr. Murdock continued, "Historically, the third quarter of our fiscal year typically reflected significantly higher revenues and better results from operations than the other quarters. With the sale of our discontinued European operations, which were much more seasonal than our continuing operations, and changes in our customer and product mix, we do not expect revenues or our results from operations in our third quarter to be significantly higher than our second quarter. We are taking a cautious stance for the remainder of the year given the ongoing significant contractions in consumer discretionary spending. The weakened macroeconomic environment suggests that business will continue to be challenging for retailers and related manufacturers of consumer products such as Meade. It is possible that our revenues and results from operations in our third quarter will be lower than our second quarter. While we continue to take measures to reduce our costs and increase our results from operations, we do not anticipate achieving profitability during the remainder of fiscal 2010. We are concentrating on improving our quality and performance and are looking for ways to build on the actions taken in fiscal 2009 and 2010 to further improve the Company's operating results in fiscal 2011."
ABOUT MEADE INSTRUMENTS
Meade Instruments is a leading designer, manufacturer and distributor of optical products including telescopes and accessories for the beginning to serious amateur astronomer. Meade offers a complete line of binoculars that address the needs of everyone from the casual observer to the serious sporting or birding observer. The Company distributes its products worldwide through a network of specialty retailers, mass merchandisers and domestic and foreign distributors. Additional information on Meade is available at http://www.meade.com.
"Safe-Harbor" Statement under the Private Securities Litigation Reform Act of 1995: This news release contains comments and forward-looking statements based on current plans, expectations, events, and financial and industry trends that may affect the Company's future operating results and financial position, including, without limitation, the Company's expectations that the cost savings and improved gross margins can be sustained and will be a key driver toward profitability; that the Company will continue to implement further cost reductions. Such statements involve risks and uncertainties which cannot be predicted or quantified and which may cause future activities and results of operations to differ materially from those discussed above. Such risks and uncertainties include, without limitation: the Company's ability to execute on its restructuring initiatives and achieve the projected cost savings, as well as the potential need for further restructuring activities; the Company's ability to retain its credit facility; as well as other risks and uncertainties previously set forth in the Company's filings with the Securities and Exchange Commission. The historical results achieved are not necessarily indicative of future prospects of the Company. For additional information, please refer to the Company's filings with the Securities and Exchange Commission.
MEADE INSTRUMENTS CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS DATA
(In thousands, expect per share data)
(Unaudited)
Three Months Ended Six Months Ended
August 31, August 31,
-------------------- ---------------------
2009 2008 2009 2008
------- ------- -------- --------
Net sales $ 7,597 $ 7,632 $11,830 $ 14,797
Cost of sales 6,300 6,629 9,420 12,904
------- ------- -------- --------
Gross profit 1,297 1,003 2,410 1,893
Gross margin 17% 13% 20% 13%
Selling expenses 707 1,091 1,324 2,260
General and
administrative
expenses 1,570 2,805 2,994 5,217
Research and
development
expenses 150 576 407 860
ESOP expense -- 139 -- 179
------- ------- -------- --------
Operating
expenses 2,427 4,611 4,725 8,516
Gain on brand
sales -- (796) -- (5,264)
------- ------- -------- --------
Operating loss (1,130) (2,812) (2,315) (1,359)
Interest (income)
expense, net (21) 30 (27) 118
------- ------- -------- --------
Loss before
income taxes (1,109) (2,842) (2,288) (1,477)
Income tax
benefit -- (782) (13) (965)
------- ------- -------- --------
Loss from
continuing
operations (1,109) (2,060) (2,275) (512)
Income from
discontinued
operations,
net of tax -- 42 -- 251
------- ------- -------- --------
Net loss $(1,109) $(2,018) $(2,275) $ (261)
======= ======= ======== ========
Loss from
continuing
operations per
share-basic and
diluted $ (0.95) $ (1.76) $ (1.95) $ (0.44)
======= ======= ======== ========
Income from
discontinued
operations,
net of tax per
share-basic
and diluted $ -- $ 0.04 $ -- $ 0.22
======= ======= ======== ========
Net loss per
share-basic and
diluted $ (0.95) $ (1.73) $ (1.95) $ (0.22)
======= ======= ======== ========
Weighted average
common shares
outstanding-
basic and
diluted 1,167 1,168 1,168 1,168
======= ======= ======== ========
MEADE INSTRUMENTS CORP.
PRELIMINARY BALANCE SHEET DATA
(In thousands, except per share data)
(Unaudited)
Aug. 31, Feb. 28,
2009 2009
-------- --------
ASSETS
Current assets:
Cash $ 2,118 $ 5,890
Restricted cash 300 700
Accounts receivable 6,033 2,488
Inventories, net 8,701 8,895
All other current assets 388 553
-------- --------
Current assets, total 17,540 18,526
Long term Assets 1,982 2,040
-------- --------
$ 19,522 $ 20,566
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,751 $ 1,702
Accrued liabilities and other current
liabilities 3,112 3,330
-------- --------
Current liabilities, total 5,863 5,032
Deferred rent 8 --
Total stockholders' equity 13,651 15,534
-------- --------
$ 19,522 $ 20,566
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MEADE INSTRUMENTS CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS DATA
(In thousands)
(Unaudited)
Six Months Ended
August 31,
----------------------
2009 2008
-------- -------
Cash flows from operating activities:
Net loss $ (2,275) $ (261)
Income from discontinued operations,
net of tax -- 251
-------- -------
Loss from continuing operations (2,275) (512)
Adjustments to reconcile loss from
continuing operations to net cash
used in operating activities:
Gain on brand sales -- (5,264)
Depreciation and amortization 269 506
ESOP contribution -- 179
Allowance for doubtful accounts (54) 47
Deferred income taxes -- 793
Stock-based compensation 392 281
Deferred rent amortization 8 117
Gain on sale of fixed assets (3) --
Changes in assets and liabilities:
Accounts receivable (3,490) 608
Inventories 190 (592)
Prepaid expenses and other current
assets 165 (87)
Accounts payable 1,449 (2,427)
Accrued lease termination fee (400) --
Accrued liabilities (381) (1,567)
-------- -------
Net cash used in operating activities (4,130) (7,918)
-------- -------
Cash flows from investing activities:
Proceeds from brand sales -- 15,250
Capital expenditures (45) (75)
Reduction in restricted cash 400 --
Proceeds from sale of fixed assets 3 --
-------- -------
Net cash provided by investing
activities 358 15,175
-------- -------
Cash flows from financing activities:
Net payments under bank lines of credit -- (5,877)
-------- -------
Net cash used in financing activities -- (5,877)
Cash flows from discontinued operations -- (1,625)
-------- -------
Net decrease in cash (3,772) (245)
-------- -------
Cash at beginning of period 5,890 970
-------- -------
Cash at end of period $ 2,118 $ 725
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