10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

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

For the Fiscal Year Ended February 29, 2004

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	95-2988062
(State of Other Jurisdiction of Incorporation or Organization)	(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)

     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 o

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

     As of May 14, 2004, there were 19,988,857 outstanding shares of the Registrant’s common stock, par value $0.01 per share (“common stock”), which is the only class of common stock of the Registrant.

     As of August 31, 2003, the aggregate market value of the shares of common stock held by non-affiliates of the Registrant, computed based on the closing sale price of $3.23 per share as reported by Nasdaq, was approximately $35.6 million.

     Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12(b)-2).

Yes o  No x

Documents Incorporated by Reference

     Portions of the registrant’s Proxy Statement for the 2004 Annual Meeting of Stockholders, which will be filed with the Securities and Exchange Commission not later than 120 days after February 29, 2004, are incorporated by reference into Part III of this Report.

TABLE OF CONTENTS

		Page
	PART I
Item 1.	Business		1
	Executive Officers of the Registrant		8
Item 2.	Properties		8
Item 3.	Legal Proceedings		9
Item 4.	Submission of Matters to a Vote of Security Holders		10
	PART II
Item 5.	Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		10
Item 6.	Selected Financial Data		12
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		12
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk		19
Item 8.	Financial Statements and Supplementary Data		20
Item 9.	Change in and Disagreements with Accountants on Accounting and Financial Disclosure		20
Item 9A.	Controls and Procedures		20
	PART III
Item 10.	Directors and Executive Officers of the Registrant		21
Item 11.	Executive Compensation		21
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		21
Item 13.	Certain Relationships and Related Transactions		22
Item 14.	Principal Accountant Fees and Services		22
	PART IV
Item 15.	Exhibits, Financial Statement Schedules, and Reports on Form 8-K		23
	CONSOLIDATED FINANCIAL STATEMENTS AND NOTES
Report of Independent Registered Public Accounting Firm			F-1
Consolidated Balance Sheets at February 29, 2004 and February 28, 2003			F-2
Consolidated Statements of Operations for the three years in the period ended February 29, 2004			F-3
Consolidated Statements of Stockholders’ Equity for the three years in the period ended February 29, 2004			F-4
Consolidated Statements of Cash Flows for the three years in the period ended February 29, 2004			F-5
Notes to Consolidated Financial Statements			F-6
EXHIBIT 3.7
EXHIBIT 10.55
EXHIBIT 23.1
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32.1
EXHIBIT 32.2

PART I

Item 1. Business

General

     Meade Instruments Corp. is a multinational consumer optics company that designs, manufactures, imports and distributes telescopes, telescope accessories, binoculars, riflescopes, spotting scopes, microscopes, night vision and other consumer optical products. Meade Instruments is dedicated to bringing innovative, cutting-edge, consumer-friendly products to the consumer optics marketplace. Meade® is recognized throughout the world as the premier name in telescopes, telescope accessories and other innovative consumer optical products such as CaptureView™, a binocular with an integrated digital camera, and the recently introduced NightView™, a new compact night vision monocular that is built on an innovative and proprietary digital imaging technology. The Company’s Bresser® brand, active in the European market for nearly 30 years, is the consumer’s choice in binoculars and smaller-aperture telescopes throughout Europe. To expand its brand name offerings and extend its reach into the worldwide sporting goods marketplace, the Company acquired Simmons Outdoor Corp. (“Simmons”) in October 2002. Simmons, a highly-regarded and well-known designer and distributor of riflescopes and binoculars, offers complete binocular and riflescope product lines under the Simmons®, Weaver® and Redfield® brand names. The Simmons, Weaver and Redfield brand names have long histories in the sporting goods channel (the Redfield brand name is nearly 100 years old) with loyal customers and an image of high quality, reliability and superb value.

     The Company believes that its suite of brand names has uniquely positioned the Company in the consumer optics marketplace. Strong brand names, backed by the industry’s leading engineering team, allow the Company to bring to market what it believes to be the broadest, most technically advanced and highly respected line of consumer optical products available. The Company offers numerous different telescope, riflescope and binocular models as well as hundreds of accessory products for consumer telescope and sports optics buyers. The Company’s telescopes range in aperture from under 2 inches to 16 inches and in retail price from less than $100 to more than $15,000. The Company offers several families of riflescopes and binoculars under its various brand names at retail price points from about $10 to more than $500. Whether a consumer is a serious amateur astronomer, an avid naturalist or someone just looking for a good binocular, Meade Instruments offers a complete range of quality products to satisfy almost any desire the consumer optics buyer may have.

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

     Meade has consistently emphasized a business plan that is concentrated on new product development, supply chain management, effective targeted marketing and customer service. As an indication of its commitment to product development, the Company committed $2.0 million, $3.0 million and $2.2 million to research and development during fiscal 2004, 2003 and 2002, respectively, and has, over the last five fiscal years, committed $10.6 million in the aggregate to research and development. These research and development expenditures were centered on the development of technologically advanced telescopes, new products for the general consumer and sports optics markets as well as product improvement and industrial applications of the Company’s existing technologies.

     The Company manufactures a complete line of advanced astronomical telescopes in Irvine, California, including the production of all of the advanced optical systems, which are critical components of telescopes. Many of the Company’s less-expensive telescopes and its binoculars and riflescopes, as well as certain component parts for its

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small to midrange telescopes, are manufactured under proprietary designs by manufacturers located in Asia, including mainland China, Taiwan, Korea, the Philippines and Japan. The Company also assembles many of its small to midrange products into finished products in the Company’s wholly owned Mexican assembly plant (See Item 2. Properties).

     The Company complements its efforts in new product development with an aggressive marketing plan. The Company’s marketing plan includes print advertising in astronomy, outdoor and hunting related magazines and, at times, in general consumer magazines, as well as jointly developed advertising campaigns with many of the Company’s key retail partners, and point-of-sale marketing displays. In addition, Meade publishes comprehensive, full-color, high-quality product catalogs that provide significant product exposure for a broad range of consumers including the serious amateur astronomer, the avid birder, the weekend sports enthusiast or the hunter.

     On September 1, 1999 the Company acquired 100% of the equity interests in Bresser Optik GmbH & Co. KG, and Bresser Optik Geschaftsfuhrung und Verwaltungs GmbH (collectively “Bresser”), for $5.0 million in cash and 201,830 shares of the Company’s common stock valued at approximately $2.0 million. Bresser is a German distributor of binoculars, telescopes, microscopes and other consumer optical products. Bresser has provided the Company greater foreign distribution opportunities for the Company’s products. Moreover, Bresser’s significant presence in the binocular and low-priced telescope market in Europe has strengthened the Company’s penetration into these markets. In January 2000, the Company also purchased what was formerly its German distributor for approximately $1.1 million cash.

     On October 25, 2002 the Company acquired 100% of the outstanding common stock of Simmons Outdoor Corp. for $20.8 million cash ($16.0 million was paid at close; the balance was paid in December, 2002). Simmons, a designer and distributor of riflescopes, binoculars and other consumer sports optics, offers products under the Simmons, Weaver and Redfield brand names. To fund a portion of the purchase price, the Company sold 3,292,000 shares of its common stock in a private placement for net cash proceeds of $7.3 million. The balance of the purchase price was funded through borrowings on the Company’s bank line of credit.

     In the United States and Canada, the Company distributes its products through a network of more than 600 specialty retailers, distributors and mass merchandisers, which offer the Company’s products in more than 11,000 retail store locations. The Company also sells certain of its products to selected national mail order dealers. In addition to products sold through Meade Europe (formerly Bresser) channels, Meade sells its products internationally through a network of over 40 foreign distributors, many of which service dealer locations in their respective countries. Revenues from customers outside North America were $36.3 million for the fiscal year ended February 29, 2004, and accounted for approximately 26% of the Company’s net sales for the fiscal year ended February 29, 2004 (See Note 8 of Notes to Consolidated Financial Statements). The Company intends to continue to pursue an integrated strategy of product line expansion, aggressive marketing, and expansion of the Company’s domestic and international distribution networks.

     During fiscal 2002, the Company began to pursue industrial applications for its technologies and its product development and manufacturing capabilities. To that end, the Company announced several relationships with companies involved in free-space optics communication technologies and digital imaging applications in the scientific research and medical diagnostic equipment markets. Many of those companies have since ceased doing business. Meade’s principal source of revenue in the industrial marketplace is the sale of digital CCD imagers used in a life sciences research system manufactured and sold by the Eastman Kodak Company’s Scientific Imaging Systems group (based in Rochester, NY and New Haven, CT). However, sales to Eastman Kodak amounted to less than 1% of net sales for the year ended February 29, 2004. The Company does not believe sales of products into industrial markets will contribute meaningfully to top-line sales or profitability for the foreseeable future.

Industry Overview

     Market-size data for the consumer optics industry are difficult to obtain because nearly all of the companies in the industry are privately held. The Company believes the overall size of the consumer optics market is driven, in part, by the introduction of new products.

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     The Company offers products at numerous price points in the consumer optics market, from advanced astronomical telescopes, state-of-the-art riflescopes and cutting-edge binoculars with integrated digital cameras to less-expensive telescopes for beginning amateur astronomers and low-priced binoculars for the casual observer.

     The advanced astronomical telescope market is characterized by frequent technological developments, including the relatively recent introduction of electronic and computer-aided features. Serious amateur astronomers demand that the optical, electronic and mechanical performance of the telescopes and accessories they purchase be of very high quality. These advanced telescopes continue to drive the technological advances specifically in the telescope industry and generally in the consumer optics industry.

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

     The binocular market is typically characterized less by technological developments than by styling, features and price. However, the Company believes its introduction of the CaptureView binocular with an integrated digital camera demonstrates that innovation can drive binocular sales as well. Among the first to market with the concept of an integrated binocular/digital camera, Meade’s CaptureView series offers a superior quality product at an attractive retail price (ranging from about $79 to $199 at most retail outlets in the U.S.). The principal features considered by binocular buyers include: (1) the diameter of the objective lenses, which serve to collect light, (2) the types of prisms used to right the visual image — either porro prisms (which give some binoculars the familiar zig-zag profile) or roof prisms that permit straight line designs, and (3) the magnification, or power, of the optical system. A binocular’s field of view, anti-reflective lens coatings and eye relief are also considered by consumers buying binoculars. Binoculars typically range in size from mini binoculars that generally have objective lenses not larger than 26mm to professional-level binoculars that can support objective lenses exceeding 60mm in diameter. Binocular retail prices range from under $10 to several thousand dollars. The Company’s binoculars, offered under the Meade, Bresser, Simmons, Weaver and Redfield brand names, as well as various private label names, generally sell for between $10 and $400 at retail.

     The riflescope (and pistol scope) market demands a product that is rugged, absolutely waterproof and unerringly accurate. Like the binocular and telescope markets, features, styling and price are prime motivators in the riflescope market. Brand reputation is also a critical element in the riflescope consumer’s buying decision. The principal features considered by rifle and pistol scope buyers include: (1) light gathering ability and light transmission which are principally dependent on the diameter of the objective lens and the effectiveness of the anti-reflective coatings applied to the various lens surfaces in the scope, (2) waterproof/fogproof/shockproof integrity and durability of construction, (3) eye relief, which measures the distance from the shooter’s eye to the surface of the ocular lens, (4) ease of adjustment for windage and elevation, and (5) magnification – riflescopes typically offer variable magnification but come in fixed magnifications as well. Rifle and pistol scopes are sized by the diameter of the objective lens, which typically ranges from 20mm to 50mm, and are priced from under $30 to nearly $2,000 at retail. The Company’s rifle and pistol scopes, offered under the Simmons, Weaver and Redfield brand names, generally sell for between $30 and $600 at retail.

     Meade Instruments Corp. believes that it is uniquely positioned in the marketplace to capitalize on its strong family of brand names, its research and development resources, its history of innovation and its manufacturing capabilities, to bring new and innovative products to the consumer and sports optics markets.

Competitive Strengths

     The Company believes that it derives significant benefits from its position as a leading designer and distributor of telescopes, binoculars, riflescopes, spotting scopes, microscopes, night vision and other consumer optical related products. These benefits include its ability to offer its customers one of the most innovative, broadest product lines

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available, embodying both high quality and value. The Company attributes its success to the following competitive strengths:

     New Products/Research and Development. The Company places a primary emphasis on product innovation and quality through its research and development efforts. The Company employs an in-house engineering staff that develops new products for the broad spectrum of markets the Company sells into as well as technological advances and improvements to existing products. The Company is able to obtain additional benefits by out-sourcing certain research and development services to supplement its internal expertise. Meade believes that the members of its senior-level engineering management team are among the most experienced in the consumer optics industry. The Company, its management and its employees are dedicated to the goal of producing technically superior yet price-competitive products and have been responsible for some of the consumer optics industry’s most technically advanced, easy to use, consumer optical products. During fiscal 2004, the Company established an engineering office in mainland China. The Chinese office is staffed with engineers that work under the supervision of the Company’s domestic engineering team. The Company believes that this facility’s proximity to the Company’s Asian suppliers will allow more efficient coordination between the Company and its Asian suppliers as well as improve the overall efficiency of the Company’s design process.

     Broad Line of Products. The Company has pursued a strategy in which it uses the advancements in microprocessor technology to build on its existing know-how in advanced telescope design and operation to bring computer technology and features to consumer optical products at lower and lower price points. Through its acquisitions of Bresser in 1999, and Simmons in 2002, the Company has expanded its product lines to include a wide variety of binoculars and telescopes under the Bresser brand name (a well-known and respected brand in Germany and throughout Europe) and complete lines of riflescopes, pistol scopes and binoculars under the Simmons, Weaver and Redfield brand names. As a result, the Company offers numerous different telescope, riflescope, spotting scopes and binocular models with several different optical configurations, as well as hundreds of accessory products for the consumer telescope and sports optics buyers. The Company’s telescopes range in aperture from under 2 to 16 inches and in retail price from less than $100 to more than $15,000. The Company offers several families of riflescopes and binoculars under its several brand names at retail price points from about $10 to more than $500. During fiscal 2004, Meade and Weaver introduced a new compact night vision monocular that is built on an innovative and proprietary digital imaging technology that yields crisp, detail-rich images. Whether a consumer is a serious amateur astronomer, an avid hunter or someone just looking for a good binocular, Meade offers a complete range of quality products to satisfy almost any desire the consumer optics buyer may have.

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

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

     Broad Distribution Network. The Company’s sales force in the U.S. and in Germany works closely with specialty retailers, distributors and mass merchandisers on product quality, technical knowledge and customer service. Meade expanded its distribution network with the acquisition of Simmons. Simmons distributes its

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products, inside and outside the U.S., principally through mass merchandisers and distributors in the sporting goods marketplace. Meade did not have significant presence in the sporting goods marketplace prior to the acquisition of Simmons. The Company has its own on-site graphic arts departments to work with specialty retailers, distributors and mass merchandisers to produce print advertising, hang-tags for displays within retail outlets and other point-of-sale support. This capability provides the Company’s customers with a comprehensive marketing program to assist in their sales efforts. As a result of these efforts, Meade has become a major supplier of telescopes, binoculars and riflescopes to such retailers as Discovery Channel Store, Aldi (Germany), Wal-Mart, Sam’s Club, Dick’s Sporting Goods and Jerry’s Sport Center. Meade Europe also has continued to expand the Company’s international presence.

     Superior Customer Service. Meade believes that its high levels of customer service and technical support are important factors that differentiate it from its competitors. In an effort to provide each of the Company’s customers with post-sale service and to relieve them of the burden of such service, Meade has established multiple dedicated toll-free telephone numbers so that its customers and end users can call the Company’s support personnel with any questions relating to its products. In addition to giving its customers personal attention, the Company believes that providing this toll-free assistance also reduces product returns by better educating first-time users about the operation of its products.

Products

     Meade has developed and expanded its product line to include a full line of telescopes and accessories for the beginning, intermediate and serious amateur astronomer. The Company offers a complete line of binoculars from small aperture theater glasses to full-size waterproof roof-prism glasses and the Company’s recently introduced CaptureView binocular with an integrated digital camera. The Company’s product offerings also include a complete line of riflescopes from the lower-to-moderate priced Simmons and Redfield lines to the higher priced precision scopes in the Weaver line. During fiscal 2004, Meade and Weaver introduced a new compact night vision monocular that is built on an innovative and proprietary digital imaging technology that yields crisp, detail-rich images. Moreover, in addition to adding new products, the Company continually refines and improves its existing products. Certain of Meade’s products are described in greater detail below:

     Advanced Astronomical Telescopes. Among the Company’s most sophisticated products are its LX series Schmidt-Cassegrain and Maksutov-Cassegrain telescopes, which incorporate an optical system that provides high-quality resolution, contrast and light transmission. The LX series offers the serious amateur astronomer a broad range of products, from the attractively priced Autostar-controlled LX90, to the state-of-the-art LX200GPS line. The LX200GPS telescopes, available in 7, 8, 10, 12, 14 and 16-inch apertures, are the most popular of the Company’s telescopes among serious amateur astronomers. The LX200GPS telescopes feature a Global Positioning System (“GPS”) receiver for automatic telescope alignment and a built-in computer library of more than 145,000 celestial objects. These objects are cataloged in the Company’s proprietary hand-held computerized Autostar II control system. By entering any of the celestial objects presented on the Autostar II display, the telescope automatically locates and tracks the selected object. Advanced telescopes also include the Company’s LXD75 series. The LXD75 series offers the more serious amateur a wide variety of advanced features on larger aperture telescopes at economical prices. The advanced astronomical telescopes collectively represented approximately 2% of telescope units shipped and approximately 17% of the Company’s net sales for the fiscal year ended February 29, 2004.

     Entry-Level Telescopes. Designed specifically for the beginning to intermediate amateur astronomer or terrestrial observer, the Company’s less-expensive 60mm to 130mm refracting, reflecting and spotting scopes and the ETX series telescopes include many of the features of the more advanced telescopes at economical prices. With the NG and NGC series of telescopes (the “NG telescopes”) and the Digital Electronic Series telescopes (the “DS telescopes”), with apertures ranging from 60mm to 130mm, and the ETX series, with apertures ranging from 70mm to 125mm, some of the most sophisticated features of the Company’s advanced telescopes are made available at some of the Company’s lowest retail price points. Equipped with the hand-held Autostar Computer Controller, the ETX series and the DS telescopes can find and track any one of one thousand or more celestial objects at the push of a button. The Autostar, with its “go to” capability, brought to the general consumer for prices starting at a few hundred dollars, features that had previously been available only on the most sophisticated high-end telescopes selling for thousands of dollars. The Company offers several variations of its small refracting and reflecting

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telescopes (including its traditional models, the NG telescopes and the DS telescopes) for distribution on a semi-exclusive basis to specific specialty retailers. These telescope models comprise the lower-price end of the Company’s telescope product line. Sales of entry-level telescopes comprised approximately 98% of the Company’s telescope units shipped and approximately 35% of the Company’s net sales for the fiscal year ended February 29, 2004.

     Binoculars. The Company expanded its market presence in binoculars with the acquisition of Simmons in 2002 and Bresser in 1999. The Simmons brands are widely recognized in the sports optics marketplace as quality products at competitive prices. The Bresser name is equally well recognized in Germany and other countries in Europe as a quality supplier of a wide range of binoculars. Sales of Bresser branded binoculars accounted for over one third of Meade Europe’s sales during fiscal 2004. The Company also sells a complete line of consumer binoculars through its existing domestic distribution network under the Meade brand name. The Company’s CaptureView line of binoculars with integrated digital cameras are sold under the Meade and Simmons brand names. The binoculars sold by the Company are purchased from manufacturers outside the United States. Binocular sales, comprising over one million units in fiscal 2004, represented approximately 21% of the Company’s net sales for the fiscal year ended February 29, 2004.

     Rifle and pistol scopes. The Company expanded its product offerings to include riflescopes and pistol scopes with the acquisition of Simmons in October 2002. Simmons sells riflescopes under the Simmons, Weaver and Redfield brand names. Riflescope sales accounted for most of the Company’s sales attributed to Simmons during fiscal 2004. The riflescopes sold by the Company are purchased from manufacturers outside the United States. Riflescopes represented approximately 18% of the Company’s net sales for the fiscal year ended February 29, 2004.

     Accessories. The Company also offers accessories for each of its principal product lines that range from additional eyepieces and celestial observation software for telescopes to bore sighters for riflescopes. Approximately 250 telescope accessory products are currently available from the Company. Sales of accessories represented approximately 6% of the Company’s net sales for the fiscal year ended February 29, 2004. Other miscellaneous products such as industrial optical and digital imaging products, microscopes and other consumer optical products accounted for approximately 3% of the Company’s net sales for fiscal 2004.

Intellectual Property

     Whenever possible, the Company seeks to obtain intellectual property protection for the products it designs, develops, manufactures and sells. The Company also takes steps to protect its intellectual property, including, without limitation, the initiation of formal legal proceedings (see Item 3. Legal Proceedings). The Company’s intellectual property includes, among other things, various utility and design patents, and numerous trademarks relating to the Company’s products. The Company intends to seek the benefit of its intellectual property for so long as applicable law provides.

Sales and Marketing

     The Company’s products are sold through a domestic network of mail order dealers, specialty retailers, distributors and mass merchandisers. Internationally, the Company’s products are sold through its wholly owned subsidiary in Germany to specialty retailers and mass merchandisers and through a network of foreign distributors and dealers in other countries around the world. The Company’s high-end telescopes are generally sold through mail order dealers or single and multiple-location specialty retailers. Meade’s less-expensive telescopes are sold in similar venues but are sold principally through mass merchandisers. The Company’s binoculars and riflescopes are sold principally through a network of domestic distributors, as well as through specialty retailers and mass merchandisers. The Company maintains direct contact with its larger dealers and its domestic and foreign distributors through the Company’s sales professionals. A network of independent representatives is used to maintain contact with its smaller specialty retailers. Included among the Company’s customers are the following retail outlets, mass merchandisers and foreign distributors: Discovery Channel Stores, Wal-Mart, Aldi (Germany), MIC International Corp. (Japan), Sam’s Club, Dick’s Sporting Goods and Jerry’s Sport Center. For additional information about geographic areas, see Note 8 of Notes to Consolidated Financial Statements.

     The Company’s sales force works closely with its dealers, specialty retailers, distributors and mass merchandisers on product quality, technical knowledge and customer service. The Company employs approximately forty-two persons in sales and customer service positions in the U.S. and Europe, all of whom have significant industry experience. The Company’s internal sales personnel are supplemented by a network of regional sales representatives. Together, these individuals advise the Company’s specialty retailers about the quality features of the Company’s products and provide answers to questions from specialty retailers as well as directly from end users of the Company’s products. The Company stresses service to both its customers and end users by providing marketing assistance in the form of hang-tags, catalog layouts and other print media as well as dedicated toll free customer service telephone numbers. In addition to giving its customers personal attention, the Company believes

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toll free telephone numbers also help reduce the number of product returns from end users who are generally unfamiliar with the assembly and operation of telescopes, binoculars and riflescopes. The Company’s dedication to providing a high level of customer service is one factor that management believes sets Meade apart from its competition.

     The Company’s telescope products are regularly advertised in most major domestic and international telescope and astronomy-related magazines and periodicals with comprehensive, full color, technically informative advertisements which present a consistent message of innovation and quality about the Company and its products. Innovation and quality is also the theme in the Simmons advertising and marketing programs. The Simmons brands are regularly advertised in several of the most widely circulated hunting and outdoors consumer magazines. The Company also focuses advertising dollars on point-of-sale promotions and displays in partnership with its retail customers to jointly market the Company’s products to the end consumer.

     Throughout fiscal 2004, the Company sold its products to mail order dealers, to distributors and to more than 600 specialty retailers and mass merchandisers that offer Meade’s products in more than 11,000 retail store outlets. During the fiscal years 2004, 2003 and 2002, Wal-Mart (including Sam’s Club), accounted for approximately 11%, 15%, and 13% of the Company’s net sales, respectively. During the fiscal years 2003 and 2002, Discovery Channel Store accounted for approximately 11% of the Company’s net sales, respectively. The Company’s ten largest customers, in the aggregate, accounted for approximately 34% of the Company’s net sales in fiscal 2004. The loss of, or the failure to replace, any significant portion of the sales made to any significant customer could adversely affect results of operations of the Company to the extent the Company did not replace any such lost sales with increased sales to existing or new customers.

     The Company has experienced, and expects to continue to experience, substantial fluctuations in its sales, gross margins and profitability from quarter to quarter (see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Seasonality).

Operations

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

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

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

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

     The Company works closely with factories in the Far East to develop proprietary product designs. In an effort to mitigate the risks associated with reliance on any one supplier, Meade maintains relationships with several suppliers in the Far East. Most of such suppliers are located in mainland China. Many of the Company’s products purchased during fiscal 2004 were supplied by these Chinese manufacturers. The Company owns many of the key designs, molds and dies used by such suppliers. Meade regularly sends product and design engineers to such suppliers to

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monitor the manufacturing processes at the various plants that produce its products and accessories. Meade also regularly commits at least one of its United States-based quality control engineers to the Far East.

     In fiscal year 2000 the Company began an assembly operation in a 26,000 sq. ft. building located in Tijuana, Mexico (the “Mexico Facility”). In December 1999, the Mexico Facility was expanded to approximately 50,000 sq. ft. At February 29, 2004, this facility employed approximately 250 people engaged in the assembly of several products including less-expensive and mid-range telescopes, electronic sub-assemblies, and accessory products.

Competition

     The consumer optics market is highly competitive and sensitive to consumer needs and preferences. In the telescope market, Meade competes in the United States and Canada with Celestron Acquisition LLC (“Celestron”), and Bushnell Performance Optics, Inc. (“Bushnell”) and, to a lesser extent, with other smaller companies which service niche markets. In Europe and Japan, the Company competes primarily with Celestron, Vixen Optical Industries, Ltd., and with other smaller regional telescope importers and manufacturers. Some of the Company’s current and potential competitors in the telescope market may possess greater financial or technical resources and competitive cost advantages due to a number of factors, including, without limitation, lower taxes and substantially lower costs of labor associated with manufacturing.

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

Employees

     As of February 29, 2004, Meade had approximately 680 full-time employees. The Company believes that it offers competitive compensation and benefits and that its employee relations are good. None of the Company’s United States-based employees is represented by a union. The Company’s employees at the Mexico Facility are represented by a union. The success of the Company’s future operations depends in large part on the Company’s ability to attract and retain highly skilled technical, marketing and management personnel. There can be no assurance that the Company will be successful in attracting and retaining such key personnel.

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

Executive Officers of the Registrant

     See Item 10. Directors and Executive Officers of the Registrant contained herein.

Item 2. Properties

     During fiscal 2004, the Company leased a 161,000 square foot manufacturing, distribution and corporate facility and a 42,000 square foot warehouse, both of which are located in Irvine, California. The manufacturing, distribution and corporate facility lease expires in 2007. The warehouse lease expired in March 2003 and the Company vacated the premises as of April 1, 2003. Simmons leases a 96,000 square foot distribution facility in Thomasville, Georgia that includes 6,000 square feet of office space. The Simmons lease expires in December 2007. The Company leases

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45,000 square feet of warehouse space in Meridian, Mississippi on a month-to-month basis. The Company also leases a 50,000 square foot assembly plant in Tijuana, Mexico. The Tijuana lease expires in 2004 with three, five-year options. The Company owns a 30,000 square foot office and distribution facility located in Borken, Germany. The Company also leases a 1,200 square foot office space, in Graefelfing, Germany with a cancellation notice period of 6 months to the end of any calendar year. The Company’s management believes that all facilities occupied by the Company are adequate for present requirements, and that the Company’s current equipment is in good condition and suitable for the operations involved.

Item 3. Legal Proceedings

     On October 17, 2001, the Company filed suit (“the ‘376 lawsuit”) against Tasco Sales, Inc. (“Tasco”) and Celestron International, Inc. (“Celestron 1”), charging the two companies with patent infringement and unfair competition. The complaint, filed in the United States District Court, Central District of California, Southern Division (Case No. SA-CV 01-976 (GLT)), alleges that Tasco and Celestron 1 willfully infringed Meade’s Patent No. 6,304,376, entitled “Fully Automated Telescope System With Distributed Intelligence” (the “’376 Patent”). In addition to seeking compensation for damages incurred, including enhanced damages, the suit seeks to enjoin Tasco and Celestron 1 from continuing to manufacture or sell products that infringe Meade’s patent. On or around November 7, 2001, the defendants filed an answer, subsequently amended, to the complaint in which they denied the Company’s allegations and set forth various affirmative defenses. On or around November 19, 2001, the defendants filed a counterclaim, also subsequently amended, against the Company for declaratory judgment of non-infringement of the Company’s patent, for declaratory judgment that the Company’s patent is unenforceable and invalid, and for claims that the Company is infringing a Celestron 1 design patent, U.S. Patent No. D438,221 (the “’221 Patent”), and Celestron 1’s trade dress. The counterclaim further alleges that the Company has willfully infringed the’221 Patent and seeks an unspecified amount of damages, enhanced damages, and an injunction and other unspecified relief against the Company. However, this design-patent counterclaim was later dismissed with prejudice as to Meade products on sale up to that time.

     On June 4, 2002, the Company filed suit (“the ‘799 lawsuit”) against Celestron 1, Tasco and other related or affiliated parties charging the defendants with patent infringement. The complaint, filed in the United States District Court, Central District of California, Southern Division (Case No. SA CV 02-544 (GLT)), alleges that the defendants willfully infringed Meade’s Patent No. 6,392,799, entitled “Fully Automated Telescope System With Distributed Intelligence” (the “‘799 Patent”). The ‘799 Patent covers the Company’s “level the telescope and point it North” alignment technology (the “Telescope Alignment Technology”), which allows a telescope user to easily align a computer operated telescope. In addition to seeking compensation for damages incurred, including enhanced damages, the suit seeks to enjoin Tasco, Celestron 1, and the other defendants from continuing to manufacture or sell products that infringe Meade’s telescope alignment patent.

     On June 7, 2002, the Company filed suit (the ‘942 lawsuit) against Celestron 1, Tasco and other related or affiliated parties, charging the defendants with correction of patent inventorship, false and misleading representations in violation of the Lanham Act, unfair competition and fraudulent business practices. The complaint, filed in the United States District Court, Central District of California, Southern Division (Case No. SA-CV 02-558 (GLT)), alleges that the defendants misappropriated the Company’s Telescope Alignment Technology and subsequently conspired to obtain United States Patent No. 6,369,942, entitled “Auto-alignment tracking telescope mount” (the “‘942 Patent”), by fraudulently representing themselves as the inventors and owners of the Telescope Alignment Technology. In addition to other remedies, the suit seeks to establish that Meade invented the Telescope Alignment Technology and that equitable and legal title to the ‘942 Patent should be vested in the Company

     Celestron 1 and Tasco, in May 2002, transferred certain of their assets in an assignment for the benefit of creditors proceeding to James Feltman, an assignee. Assignee James Feltman subsequently sold the assets on or around June 24, 2002 to a new Celestron entity, Celestron Acquisition LLC (“Celestron 2”). Celestron 2 has appeared as a defendant and counterclaimant in the above-referenced lawsuits. James Feltman is also a named defendant in the ‘799 lawsuit, but not the ‘376 and ‘942 lawsuits.

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     On November 21, 2002, Celestron 2 filed an action alleging that Meade products infringe United States Patent No. 6,467,738 entitled “Tripod Structure for Telescopes” (the “‘738 Patent”). The complaint seeks injunctive relief, compensatory and treble damages in an unspecified amount, and attorneys’ fees and costs. Meade has filed an answer denying all claims in Celestron 2’s complaint.

     On September 9, 2003, the Company, Celestron 2, and James Feltman agreed to pursue non-binding mediation of all pending litigation between the parties. As part of the mediation process, the parties agreed to stay all pending litigation (including the discovery process) in the above four cases. This mediation took place on May 10, 2004. Pursuant to a binding settlement agreement signed by the parties at the mediation, a settlement was reached as to all pending litigation among the parties on the terms of one of two settlement alternatives. In the event the conditions of the first settlement alternative (the “First Alternative”) are not satisfied on or before August 15, 2004, the pending litigation will be considered settled on the terms of the second settlement alternative (the “Second Alternative”). Pursuant to the terms of the First Alternative, in exchange for cash payments to be made by Meade, Meade will acquire the exclusive rights to Celestron’s computerized telescope technology. Consummation of the First Alternative is subject to the satisfaction of certain conditions, including approval of the United States Federal Trade Commission and Meade obtaining approval of its board of directors. If the First Alternative is not consummated, the Second Alternative will be effective. Pursuant to the terms of the Second Alternative, Meade grants a license to Celestron under which Celestron will pay Meade a royalty on any products sold by Celestron that includes or uses any “level the telescope and point it North” or similar telescope alignment technology until the expiration of the last patent licensed by Meade to Celestron. Regardless of which settlement alternative is consummated: (i) Celestron agrees that Meade’s ‘376 and ‘799 patents are valid and enforceable (such patents relate to Meade’s distributed intelligence and level the telescope and point it North technology); (ii) Meade agrees that Celestron’s ‘221 and ‘738 patents are valid and enforceable (such patents relate to the design of certain of Celestron’s telescope tripods and mounts and were the patents alleged by Celestron to have been infringed by Meade in its counterclaims); (iii) Celestron grants Meade paid-up, royalty free licenses for the rights to use the designs covered by Celestron’s ‘221 and ‘738 patents; (iv) Celestron will stipulate to correction of inventorship of its ‘942 patent and will transfer ownership of such patent to Meade; and (v) the parties will promptly dismiss with prejudice all claims and counterclaims in the pending litigation between them, including claims for past damages.

     The Company is also involved from time to time in litigation incidental to its business. Management believes that the outcome of such litigation will not have a material adverse effect on the financial position, results of operations or cash flows of the Company.

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

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

PART II

Item 5. Market for the Registrant’s Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities

     The Company’s common stock is listed on the Nasdaq National Market under the symbol “MEAD”. The high and low sales prices on a per share basis for the Company’s common stock during each quarterly period for the fiscal years ended February 29, 2004 and February 28, 2003, respectively, were:

Year Ended February 29, 2004:	High		Low		Year Ended February 28, 2003:	High		Low
Fourth quarter	$	4.30	$	3.19	Fourth quarter	$	3.75	$	2.75
Third quarter	$	4.76	$	3.15	Third quarter	$	4.75	$	2.56
Second quarter	$	3.59	$	2.71	Second quarter	$	5.87	$	3.00
First quarter	$	3.30	$	2.31	First quarter	$	6.01	$	2.25

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     The reported closing sales price of the Company’s common stock on the Nasdaq National Market on May 14, 2004 was $3.25. As of May 14, 2004, there were 189 holders of record of the Company’s common stock.

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

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Item 6. Selected Financial Data

SELECTED CONSOLIDATED FINANCIAL INFORMATION

     The following data have been derived from the Company’s audited consolidated financial statements, including the consolidated balance sheets at February 29, 2004 and February 28, 2003 and the consolidated statements of operations for the three years ended February 29, 2004 and the notes thereto appearing elsewhere herein.

	Year Ended February 28/29,
	2004		2003		2002			2001		2000
	(In thousands of dollars, except per share amounts)
Income Statement Data:
Net sales	$	138,281	$	110,817	$	94,718		$	123,000		$	126,808
Cost of sales		99,380		76,923		70,108			82,809			75,780
Gross profit		38,901		33,894		24,610			40,191			51,028
Selling expenses		18,106		14,248		12,920			21,782			15,471
General and administrative expenses		12,671		12,628		9,098			8,439			10,355
ESOP contribution expense		859		905		1,367			2,997			1,861
Research and development expenses		2,038		3,008		2,167			2,062			1,361
Operating income (loss)		5,227		3,105		(942	)		4,911			21,980
Interest expense		1,046		1,137		1,345			2,036			977
Income (loss) before income taxes		4,181		1,968		(2,287	)		2,875			21,003
Income tax provision (benefit)		1,729		830		(845	)		1,589			9,048
Net income (loss)		2,452		1,138		(1,442	)		1,286			11,955
Per share information:
Net income (loss) — basic	$	0.13	$	0.07	$	(0.10	)	$	0.09		$	0.85
Net income (loss) — diluted	$	0.13	$	0.07	$	(0.10	)	$	0.08		$	0.80
Weighted average common shares outstanding — basic		18,983		16,410		15,100			14,700			14,112
Weighted average common shares outstanding — diluted		19,174		16,624		15,100			15,600			14,944
Balance Sheet Data:
Working capital	$	57,523	$	51,275	$	41,802		$	38,867		$	36,553
Total assets		88,562		84,995		64,823			76,466			64,091
Total current liabilities		20,901		21,403		12,224			25,944			16,485
Long-term debt, net of current portion		1,729		2,139		2,463			—			4,500
Stockholders’ equity		64,878		60,255		50,108			50,351			42,665

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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

Critical Accounting Policies and Estimates

     The Company’s financial statements are prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make certain estimates, judgments and assumptions that it believes are reasonable based upon the information available. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. Actual results may differ from these estimates under different assumptions or conditions. The significant accounting policies which management believes are the most critical to aid in fully understanding and evaluating the Company’s reported financial results include the following:

Revenue Recognition

     Revenues are generally recorded when title transfers and the risks of ownership are passed to customers. Under certain circumstances, the Company accepts product returns. Material management judgments must be made and

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used in connection with establishing the sales returns estimates. The Company continuously monitors and tracks returns and records revenues net of provisions for returns. The Company’s estimate of sales returns is based upon several factors including historical experience, current market and economic conditions, customer demand and acceptance of the Company’s products and/or any notification received by the Company of such a return. Historically, sales returns have been within management’s estimates; however, actual returns may differ significantly, either favorably or unfavorably, from management’s estimates depending on actual market conditions at the time of the return.

Allowance for Doubtful Accounts

     Management analyzes specific customer accounts receivable, customer credit-worthiness, historical bad debt expenses, current economic trends and changes in customer payment terms when evaluating the adequacy of the allowance for doubtful accounts. If the financial condition of any of the Company’s customers were to deteriorate to the point of impairing the customer’s ability to make payments on its account, additional allowances would be required. While credit losses have been generally within management’s expectations and the provisions established, significant deterioration in the liquidity or financial position of any of the Company’s major customers or any group of customers could have a material adverse impact on the collectibility of accounts receivable and future operating results.

Inventories

     Inventories are stated at the lower of cost, as determined using the first-in, first-out (“FIFO”) method, or market. Costs include materials, labor and manufacturing overhead. The Company evaluates the carrying value of its inventories taking into account such factors as historical and anticipated future sales compared with quantities on hand and the price the Company expects to obtain for its products in their respective markets. The Company also evaluates the composition of its inventories to identify any slow-moving or obsolete product. These evaluations require material management judgments, including estimates of future sales, continuing market acceptance of the Company’s products, and current market and economic conditions. Inventory reserves are established, based on such judgments, for any inventories that are identified as having a net realizable value less than its cost. Historically, the net realizable value of the Company’s inventories has generally been within management’s estimates. However, if the Company is not able to meet its sales expectations, or if market conditions deteriorate significantly from management’s estimates, reductions in the net realizable value of the Company’s inventories could have a material adverse impact on future operating results.

Product warranties

     The Company provides reserves for the estimated cost of product warranty-related claims at the time of sale, and periodically adjusts the provision to reflect actual experience. The amount of warranty liability accrued reflects management’s best estimate of the expected future cost of honoring Company obligations under its warranty plans. Additionally, from time to time, specific warranty accruals may be made if unforeseen technical problems arise. Meade and Bresser branded products, principally telescopes and binoculars, are generally covered by a one-year limited warranty. Many of the Simmons products, principally riflescopes and binoculars, have lifetime limited warranties.

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Results of Operations

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

	Year Ended February 28/29 ,
	2004			2003			2002
Net sales		100.0	%		100.0	%		100.0	%
Cost of sales		71.9			69.4			74.0
Gross profit		28.1			30.6			26.0
Operating expenses:
Selling expenses		13.1			12.9			13.7
General and administrative expenses		9.2			11.4			9.6
ESOP contribution expense		0.6			0.8			1.4
Research and development expenses		1.5			2.7			2.3
Total operating expenses		24.4			27.8			27.0
Income (loss) from operations		3.7			2.8			(1.0	)
Interest expense		0.7			1.0			1.4
Income (loss) before income taxes		3.0			1.8			(2.4	)
Provision (benefit) for income taxes		1.2			0.8			(0.9	)
Net income (loss)		1.8			1.0			(1.5	)

Fiscal 2004 Compared to Fiscal 2003

     Net sales increased from $110.8 million in fiscal 2003 to $138.3 million in fiscal 2004, an increase of 24.8%. The increase over the prior year is principally due to the inclusion of a full year of net sales at Simmons. The Company acquired Simmons in October 2002. Simmons sales included in net sales for the fiscal years ended 2004 and 2003 were approximately $32 million and $10 million, respectively. Sales of the Company’s mid-priced and higher-priced telescopes increased over the prior year by approximately $7 million, due in part, management believes, to increased demand fostered by the Mars opposition that occurred during the summer months of calendar 2003 (Mars passed notably close to earth during 2003). Partially offsetting those increases were decreases in sales of digital camera/binoculars and accessories.

     Gross profit increased from $33.9 million (30.6% of net sales) in fiscal 2003 to $38.9 million (28.1% of net sales) in fiscal 2004, an increase of 14.8%. The increase in gross profit was due to higher sales volume during fiscal 2004. Contributing to the decrease in gross profit as a percent of net sales were increased sales of riflescopes and binoculars, products that typically carry margins that are lower than historical Company-wide margins. Meade branded products continued to experience pricing pressure, which also contributed to the lower gross margins.

     Selling expenses increased from $14.2 million (12.9% of net sales) in fiscal 2003 to $18.1 million (13.9% of net sales) in fiscal 2004, an increase of 27.1%. This increase was due, principally, to the inclusion of a full year of selling expenses at Simmons. The increase in selling expenses over the prior year attributable to Simmons was approximately $4 million.

     General and administrative expenses remained relatively flat at $12.6 million (11.4% of net sales) in fiscal 2003 and $12.7 million (9.2% of net sales) in fiscal 2004. The full year Simmons general and administrative expenses increased by approximately $1 million over the prior year. Also increasing by approximately $1 million over the prior year were compensation expenses offset by decreases in professional and consulting fees.

     ESOP contribution expense for the fiscal years ended 2003 and 2004 remained flat at $0.9 million (0.8% and 0.6% of net sales, respectively). The ESOP expense remained relatively flat because the number of shares allocated to the plan for fiscal 2004 was unchanged from 2003 and the average market price of the stock over the fiscal 2004 year was little changed from the prior year. Changes in this non-cash charge are due to changes in the average market price of the Company’s stock and in the number of shares allocated to the Employee Stock Ownership Plan during the year. The non-cash ESOP contribution expense may fluctuate as the number of shares allocated and/or the market value of the Company’s common stock changes.

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     Research and development expenses decreased from $3.0 million (2.7% of net sales) in fiscal 2003 to $2.0 million (1.5% of net sales) in fiscal 2004, a decrease of 32.2%. This decrease was due to a reduction in engineering personnel and outside consulting costs principally in response to diminished demand for the Company’s industrial optical products. The Company’s research and development efforts are principally concentrated on product improvement and new product development for the Company’s core consumer products market.

     Interest expense for the fiscal years ended 2003 and 2004 remained flat at approximately $1.1 million (1.0% and 0.8% of net sales, respectively). Average borrowing rates and average outstanding borrowing remained relatively unchanged during fiscal 2004.

Fiscal 2003 Compared to Fiscal 2002

     Net sales increased from $94.7 million in fiscal 2002 to $110.8 million in fiscal 2003, an increase of 17.0%. Sales of the Company’s binoculars, including the digital camera/binocular, and sales of the Company’s telescope products for the more serious amateur astronomer accounted for increases of approximately $16 million and $9 million, respectively, over net sales in the prior year. Also included in net sales for the year ended February 28, 2003 was approximately $10 million from Simmons. Partially offsetting those increases was a decrease in sales of smaller-aperture, less-expensive telescopes.

     Gross profit increased from $24.6 million (26.0% of net sales) in fiscal 2002 to $33.9 million (30.6% of net sales) in fiscal 2003, an increase of 37.7%. The increase in gross profit as a percent of net sales was due to a change in product sales mix and covering fixed costs with higher volume. Sales from Simmons contributed approximately $1.7 million to gross profit. Gross margin on Simmons sales was below the consolidated Company gross margin for the year due, in part, to sales of close-out inventory on hand at the date of the acquisition.

     Selling expenses increased from $12.9 million (13.7% of net sales) in fiscal 2002 to $14.2 million (12.9% of net sales) in fiscal 2003, an increase of 10.3%. This increase was due, in part, to an increase of approximately $1.8 in advertising and marketing expenses with a significant portion of that increase related to television, radio and print advertising associated with the introduction of the Company’s digital camera/binocular. Selling expenses also include approximately $0.6 million associated with Simmons. These increases were partially offset by a decrease in the Company’s provision for bad debts during the year.

     General and administrative expenses increased from $9.1 million (9.6% of net sales) in fiscal 2002 to $12.6 million (11.4% of net sales) in fiscal 2003, an increase of 38.8%. This increase was due, in part, to an over $2.5 million increase in legal, professional and consulting fees with a significant portion of that increase incurred in connection with the ongoing Tasco and Celestron patent infringement litigation and with the Company’s effort to acquire certain of the assets of Tasco and Celestron. The Company did not consummate such proposed acquisition. Also contributing to the increase over the prior year was approximately $0.5 million in general and administrative expenses from Simmons and an increase of approximately $0.5 million in salaries, wages and bonuses over the prior year.

     ESOP contribution expense decreased from $1.4 million (1.4% of net sales) in fiscal 2002 to $0.9 million (.8% of net sales) in fiscal 2003, a decrease of 33.8%. The decrease in this non-cash charge was due to decreases in the average market price of the Company’s stock and in the number of shares allocated to the Employee Stock Ownership Plan during the year. The non-cash ESOP contribution expense may fluctuate as the number of shares allocated and the market value of the Company’s common stock changes.

     Research and development expenses increased from $2.2 million (2.3% of net sales) in fiscal 2002 to $3.0 million (2.7% of net sales) in fiscal 2003, an increase of 38.8%. In the prior year, approximately $500,000 of research and development expenses incurred were reimbursed by a customer of the Company on a non-contingent basis. A similar expense reimbursement did not occur during the current year, thus accounting for most of the increase year-over-year. The Company does not expect research and development expenses to continue to increase by the dollar amounts or at the rate experienced in the current year. With demand for the Company’s industrial products diminished, research and development costs associated with those product lines will be rationalized.

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     Interest expense decreased from $1.3 million for fiscal 2002 (1.4% of net sales) to $1.1 million for fiscal 2003 (1.0% of net sales), a decrease of 15.5%. This decrease was principally due to lower average borrowings and lower cost of funds as compared to the prior year.

Seasonality

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

Liquidity and Capital Resources

     As of February 29, 2004, the Company had $7.8 million in cash. The Company funded its operations during the fiscal year with internally generated cash flow. Operating cash flows were generated principally by net income, positive adjustments to net income for depreciation, amortization, bad debt and ESOP charges, and net positive cash flows from changes in its balance sheet accounts, principally from an increase in income taxes payable. For the year, cash flows from operations totaled approximately $9.1 million. Continuing its effort to manage its inventories, the Company achieved inventory turns of approximately 2.5 times in fiscal 2004 compared to just under 2.5 times in fiscal 2003 (excluding the effects of the Simmons acquisition). 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 October 25, 2002, the Company amended its credit agreement with its U.S. bank (the “U.S. credit agreement”). The amendment principally involved increasing the revolving credit facility and incorporating the Simmons acquisition into the credit agreement. The amended agreement provided the Company with a $35.6 million credit facility consisting of a $34.0 million revolving credit line (the “U.S. revolving loan”) and a $1.6 million term loan (the “U.S. term loan”).

     Amounts outstanding on the U.S. revolving loan and U.S. term loan at February 29, 2004 were approximately $5.0 million and $1.1 million, respectively. Availability under the U.S. revolving loan (which is subject to a borrowing base with standard advance rates against eligible accounts receivable and inventories) at February 29, 2004 was approximately $12.0 million. The U.S. term loan is collateralized by domestic machinery and equipment. The credit facility has a three-year term, is collateralized by substantially all of the domestic assets of the Company and its domestic subsidiaries and contains certain financial covenants including, but not limited to, fixed charge coverage ratios. Amounts outstanding under the U.S. revolving loan bear interest at the bank’s base rate (or LIBOR rate) plus applicable margins (4.25% at February 29, 2004). Under the terms of the U.S. credit agreement, the Company was required to enter into an interest-rate swap to convert the variable interest rate on its U.S. term loan to a fixed interest rate. The resulting cost of funds (7.9% per annum) is currently higher than that which would have been available if the variable rate had been applied during the period. Under the interest-rate swap contract, the Company has agreed with the bank to exchange, at specified intervals, the difference between variable-rate and fixed-rate interest amounts, calculated by reference to agreed-upon notional amounts. The change in the fair value of the interest rate swap for the year ended February 29, 2004 was an unrealized gain of $32,000 which is included in other comprehensive income for the year ended February 29, 2004.

16

     In July 2003, the Company’s German subsidiary renegotiated its agreement with a bank to provide up to approximately $4.8 million in revolving loans (subject to a borrowing base of eligible accounts receivable and inventories) expiring in July 2004. The German subsidiary also has an agreement with the bank that provides a term loan expiring June 2006 collateralized by land and buildings owned by the German subsidiary (collectively, the “European Loans”). The European Loans are guaranteed by the U.S. parent company up to approximately $3.3 million at February 29, 2004. The guarantee expires the earlier of the termination of the bank agreement or July 31, 2008. Outstanding amounts on the revolving loan and the term loan in Europe at February 29, 2004 were approximately $13,000 and $1.2 million, respectively. The European Loans bear interest at the bank’s base rate plus or minus applicable margins (7.75% and 6.0%, respectively at February 28, 2003).

     The Company continues to depend on operating cash flow and availability under its bank lines of credit to provide short-term liquidity. In the event the Company’s plans require more capital than is presently anticipated, additional sources of liquidity such as debt or equity financings, may be required to meet its capital needs. There can be no assurance that such additional sources of capital will be available on reasonable terms, if at all. However, management believes that operating cash flow and bank borrowing capacity in connection with the Company’s business should provide sufficient liquidity for the Company’s obligations for at least the next twelve months.

     Capital expenditures, including financed purchases of equipment, aggregated $0.6 million, $0.7 million and $0.7 million for the fiscal years ended February 29, 2004, and February 28, 2003 and 2002, respectively.

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

     The following table summarizes the Company’s contractual obligations as of February 29, 2004, and the effect such obligations are expected to have on its liquidity and cash flows in future periods:

			Payments due by period:
			Up to						After
Contractual Obligations:	Total		1 year		1-3 years		3-5 years		5 years
Long-term debt	$	2,309,000	$	580,000	$	1,729,000	$	—	$	—
Non-cancelable operating leases		7,215,000		1,722,000		3,476,000		1,561,000		456,000
Total contractual cash obligations	$	9,524,000	$	2,302,000	$	5,205,000	$	1,561,000	$	456,000

     The preceding table assumes that any operating leases with renewal options that expire during fiscal 2004 or fiscal 2005 will be renewed under the terms of the governing lease agreement.

Inflation

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

New Accounting Pronouncements

     In January 2003, the Company adopted SFAS 146, which addresses accounting for costs associated with exit or disposal activities. In addition, the FASB issued FIN 46, which requires that certain variable interest entities be consolidated by the primary beneficiary of the entity if the equity investors in the entity do not have a controlling financial interest or do not have sufficient equity at risk. FIN 46 is effective immediately for all variable interest

17

entities created after January 31, 2003. For all such entities created prior to February 1, 2003, FIN 46 is effective for interim or annual fiscal periods ending after December 15, 2003. The adoption of these statements did not have a material effect on the Company’s financial position or results of operations.

     In April 2003, the FASB issued SFAS No. 149, Amendment of Statement No. 133 on Derivative Instruments and Hedging Activities. This statement is effective for contracts entered into or modified after June 30, 2003 and for hedging relationships designated after June 30, 2003. It amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities. SFAS 149 amends SFAS 133 for decisions made as part of the Derivatives Implementation Group process that effectively required amendments to SFAS 133, in connection with other FASB projects dealing with financial instruments and in connection with implementation issues raised in relation to the application of the definition of a derivative. The application of this statement did not have an impact on the Company’s consolidated financial statements.

     In May 2003, the FASB issued SFAS No. 150, Certain Financial Instruments with Characteristics of Both Liabilities and Equity. This statement establishes standards for how a company clarifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires a company to classify such instruments as liabilities, whereas they previously may have been classified as equity. SFAS 150 is effective for all financial instruments entered into or modified after May 31, 2003, and otherwise is effective July 1, 2003. The application of this statement did not have an impact on the Company’s consolidated financial statements.

Forward-Looking Information

     The preceding “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section contains various “forward looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended, which represent the Company’s reasonable judgment concerning the future and are subject to risks and uncertainties that could cause the Company’s actual operating results and financial position to differ materially, including the following: the Company’s ability to expand the markets for telescopes, binoculars, riflescopes, microscopes, night vision and other optical products; the Company’s ability to continue to develop and bring to market new and innovative products that will be accepted by consumers; the Company’s ability to integrate, develop and grow the Simmons business; the Company’s ability to further 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 further develop the business of its European subsidiary; the Company’s ability to recognize any benefits from its engineering office in China; the Company experiencing fluctuations in its sales, gross margins and profitability from quarter to quarter consistent with prior periods; the Company’s expectation that its contingent liabilities will not have a material effect on the Company’s financial position or results of operations; the extent to which the Company will be able to leverage its design and manufacturing expertise in the areas of free-space optics and digital imaging; and the Company’s expectation that it will have sufficient funds to meet any working capital requirements during the foreseeable future with internally generated cash flow and borrowing ability.

     In addition to other information in this report, the Company cautions that certain factors, including, without limitation, the following, should be considered carefully in evaluating the Company and its business and that such factors may cause the Company’s actual operating results to differ materially from those set forth in the forward looking statements described above or to otherwise be adversely affected:

     Our business is vulnerable to changing economic conditions, including:

• a decline in general economic conditions;

• uncertainties affecting consumer spending; and

• changes in interest rates causing a reduction of investment income or in the value of market interest rate sensitive instruments.

18

     Our intellectual property rights are subject to risks, including:

• the potential that we may be unable to obtain and maintain patents and copyrights to protect our computerized telescope and other product technology;

• competitors’ infringement upon Meade’s existing intellectual property; and

• approval of competitors’ patent applications that may restrict our ability to compete effectively.

     Our business is subject to other risks, including:

• a general decline in demand for the Company’s products;

• an inability to continue to design and manufacture products that will achieve and maintain commercial success;

• the potential that we may fail to penetrate the binocular and riflescope markets and achieve meaningful sales;

• any significant interruption of our manufacturing abilities in our domestic or Mexican facilities or in any of our suppliers located in the Far East;

• greater than anticipated competition;

• any loss of, or the failure to replace, any significant portion of the sales made to any significant customer of the Company; and

• increasing ESOP charges in the event the market price of the Company’s stock increases.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

     The Company is exposed to certain levels of market risks, including changes in foreign currency exchange rates and interest rates. Market risk is the potential loss arising from adverse changes in market rates and prices, such as foreign currency exchange and interest rates. The Company conducts business in a number of foreign countries and is primarily exposed to currency exchange-rate risk with respect to its transactions and net assets denominated in the Euro. Business activities in various currencies expose the Company to the risk that the eventual net United States dollar cash inflows resulting from transactions with foreign customers and suppliers denominated in foreign currencies may be adversely affected by changes in currency exchange rates. In prior years foreign currency fluctuations have not had a material impact on Meade’s revenues or results of operations. There can be no assurance that European or other 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, financial condition or cash flows.

     The Company has adopted a hedging program to manage its foreign currency exchange rate and interest rate risks. Upon continuing evaluation and when deemed appropriate by management, the Company may enter into hedging instruments to manage its foreign currency exchange and interest rate risks.

     Under the terms of its credit agreement, the Company was required to enter into an interest-rate swap to convert the variable interest rate on its U.S. Term Loan to a fixed interest rate. The resulting cost of funds (7.9% per annum) is currently higher than that which would have been available if the variable rate had been applied during the period. Under the interest-rate swap contract, the Company has agreed with the bank to exchange, at specified intervals, the difference between variable-rate and fixed-rate interest amounts, calculated by reference to agreed-upon notional

19

amounts. The change in the fair value of the interest rate swap for the period ended February 29, 2004 was an unrealized gain of $32,000 which is included in other comprehensive income for the year ended February 29, 2004.

     The Company’s financial instruments consist of cash, accounts receivable, accounts payable, and long-term obligations. The Company’s exposure to market risk for changes in interest rates relates primarily to short-term investments and short-term obligations. As a result, the Company does not expect fluctuations in interest rates to have a material impact on the fair value of these instruments.

Item 8. Financial Statements and Supplementary Data

     The consolidated financial statements commence at page F-1 of this report and an index thereto is included in Part IV, Item 15 of this report.

SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

     The following table (in thousands of dollars, except per share amounts) presents unaudited financial results for each of the eight quarters in the period ended February 29, 2004. The Company believes that all necessary adjustments have been included to present fairly the quarterly information when read in conjunction with the consolidated financial statements and notes included elsewhere in this Report. The operating results for any quarter are not necessarily indicative of the results for any subsequent quarter.

	Fiscal 2004										Fiscal 2003
	First			Second		Third		Fourth			First			Second			Third		Fourth
	Quarter			Quarter		Quarter		Quarter			Quarter			Quarter			Quarter		Quarter
Net sales	$	24,491		$	28,284	$	54,448	$	31,058		$	20,053		$	24,035		$	44,519	$	22,210
Gross profit		5,733			8,161		16,556		8,451			6,187			7,382			14,961		5,364
Operating income (loss)		(966	)		297		5,905		(9	)		(595	)		452			5,176		(1,928	)
Net income (loss)		(712	)		40		3,376		(252	)		(507	)		134			2,896		(1,385	)
Net income (loss) per share - basic		(0.04	)		0.00		0.18		(0.01	)		(0.03	)		(0.04	)		0.17		(0.07	)
Net income (loss) per share - diluted		(0.04	)		0.00		0.17		(0.01	)		(0.03	)		(0.04	)		0.17		(0.07	)

     Quarterly results can be affected by a number of factors including the timing of orders, production delays or inefficiencies, and raw materials availability. See “Item 1, Business — Operations — Materials and Supplies.”

Item 9. Changes in and Disagreements With Accountants On Accounting and Financial Disclosure

     None.

Item 9A. Controls and Procedures

          As of the end of the period covered by this report, the Company’s chief executive officer and chief financial officer have evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). These disclosure controls and procedures are designed to ensure that the information required to be disclosed by the Company in the reports it files under the Exchange Act is gathered, analyzed and disclosed with adequate timeliness, accuracy and completeness.

          The Company’s chief executive officer and chief financial officer concluded, based on their evaluation, that the Company’s disclosure controls and procedures are effective for the Company, taking into consideration the size and nature of the Company’s business and operations.

          No change in the Company’s internal control over financial reporting occurred during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

20

PART III

Item 10. Directors and Executive Officers of the Registrant

Executive Officers of the Registrant

     Set forth below are the names, ages, titles and present and past positions of the persons serving as executive officers of the Company as of May 14, 2004:

Name	Age		Position
Steven G. Murdock		52	Chief Executive Officer, President, Secretary, Director
Brent W. Christensen		45	Senior Vice President — Finance and Chief Financial Officer
Mark D. Peterson		42	Senior Vice President and General Counsel
Robert L. Davis		37	Senior Vice President — Corporate Development

     Steven G. Murdock has been the Company’s President, Chief Executive Officer and Secretary since June 1, 2003 and a director of the Company since April 1996. Mr. Murdock was the Company’s President and Chief Operating Officer from October 1990 to May 31, 2003 and the Company’s Secretary since April 1996. From May 1980 to October 1990, Mr. Murdock was the Company’s Vice President of Optics. From November 1968 to May 1980, Mr. Murdock worked as the optical manager for Coulter Optical, Inc., an optics manufacturer. Mr. Murdock received a BS degree in business administration from California State University at Northridge.

     Brent W. Christensen has been the Company’s Senior Vice President — Finance and Chief Financial Officer since March 2002. Mr. Christensen was the Company’s Vice President — Finance from June 1995 and Chief Financial Officer from April 1996. From August 1993 to June 1995, he worked as the Company’s controller. Mr. Christensen is a Certified Public Accountant, and from January 1985 to August 1993, he worked as an audit manager with Ernst & Young LLP. Mr. Christensen received a BA degree in business administration from California State University at Fullerton.

     Mark D. Peterson has been the Company’s Senior Vice President and General Counsel since March 2002. Mr. Peterson was the Company’s Vice President and General Counsel from October 1997. From October 1991 to October 1997, Mr. Peterson was an attorney with O’Melveny & Myers LLP, specializing in corporate and securities law. Mr. Peterson received a BS degree in accounting from Brigham Young University and a JD degree from the University of California — Berkeley, Boalt Hall School of Law.

     Robert L. Davis has been the Company’s Senior Vice President — Corporate Development since March 2003. Mr. Davis was the Company’s Senior Vice President and Assistant General Counsel from March 2002 to February 2003. Mr. Davis was the Company’s Vice President and Assistant General Counsel from December 1999 to February 2002. From September 1996 to December 1999, Mr. Davis was an attorney with O’Melveny & Myers LLP, specializing in corporate and securities law. From August 1994 to September 1996 he worked as an attorney with Morrison & Foerster LLP, specializing in corporate finance and labor and employment law. Mr. Davis received a BA degree in English and a JD degree from Brigham Young University.

Item 11. Executive Compensation

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

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

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

21

Equity Compensation Plan Information

     The following table provides information as of February 29, 2004 with respect to shares of Meade common stock that may be issued under the Company’s various equity compensation plans.

	A		B		C
					Number of
					Securities
					Remaining Available
					for Future Issuance
	Number of				Under Equity
	Securities to be				Compensation Plans
	Issued upon				(Excluding
	Exercise of		Weighted Average		Securities
	Outstanding		Exercise Price of		Reflected in Column
Plan Category	Options		Outstanding Options		A)
Equity compensation plans approved by Shareholders		3,436,181	$	4.54		1,346,073
Equity compensation plans not approved by shareholders		310,000		25.87		0
Total		3,746,181	$	6.31		1,346,073

Item 13. Certain Relationships and Related Transactions

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

Item 14. Principal Accountant Fees and Services

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

22

PART IV

Item 15. Exhibits, Financial Statement Schedules, and Reports On Form 8-K

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

		Page
		Number
1. Financial Statements:
	Report of Independent Registered Public Accounting Firm	F-1
	Consolidated Balance Sheets at February 29, 2004 and February 28, 2003	F-2
	Consolidated Statements of Operations for each of the three years in the period ended February 29, 2004	F-3
	Consolidated Statements of Stockholders’ Equity for each of the three years in the period ended February 29, 2004	F-4
	Consolidated Statements of Cash Flows for each of the three years in the period ended February 29, 2004	F-5
	Notes to Consolidated Financial Statements	F-6
2. Financial Statement Schedules:
	For each of the three years in the period ended February 29, 2004 — II — Valuation and Qualifying Accounts. All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted
3. Exhibits included or incorporated herein: See Exhibit Index

(b) Reports on Form 8-K.

     The Company filed the following Reports with the SEC:

1.	Form 8-K, filed on January 15, 2004, furnishing a press release announcing the Company’s financial results for the quarterly period ended November 30, 2003.
2.	Form 8-K, filed on February 18, 2004, covering a press release announcing the Company’s participation in an investors conference.

23

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

     In our opinion, the consolidated financial statements listed in the index appearing under Item 15(a)(1) on page 23, present fairly, in all material respects, the financial position of Meade Instruments Corp. and its subsidiaries at February 29, 2004 and February 28, 2003, and the results of their operations and their cash flows for each of the three years in the period ended February 29, 2004, in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the index appearing under 15(a)(2) on page 23, presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

     A discussed in Note 2 to the consolidated financial statements, the Company adopted Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets” on March 1, 2002 and as a result changed its method of accounting for goodwill.

/s/ PRICEWATERHOUSECOOPERS LLP

PricewaterhouseCoopers LLP

Orange County, California
May 21, 2004

F-1

MEADE INSTRUMENTS CORP.

CONSOLIDATED BALANCE SHEETS

	February 29,			February 28,
	2004			2003
ASSETS
Current assets:
Cash	$	7,806,000		$	2,445,000
Accounts receivable, less allowance for doubtful accounts of $704,000 in 2004 and $714,000 in 2003		22,462,000			22,364,000
Inventories		39,777,000			40,050,000
Deferred income taxes		7,888,000			6,438,000
Prepaid income taxes		—			818,000
Prepaid expenses and other current assets		491,000			563,000
Total current assets		78,424,000			72,678,000
Goodwill		1,548,000			1,548,000
Acquisition-related intangible assets, net		3,742,000			4,109,000
Property and equipment, net		4,551,000			5,842,000
Other assets, net		297,000			818,000
	$	88,562,000		$	84,995,000
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Bank line of credit	$	5,059,000		$	9,063,000
Accounts payable		5,319,000			5,464,000
Accrued liabilities		6,884,000			6,293,000
Income taxes payable		3,059,000			—
Current portion of long-term debt and capital lease obligations		580,000			583,000
Total current liabilities		20,901,000			21,403,000
Long-term debt		1,729,000			2,139,000
Deferred income taxes		1,054,000			1,198,000
Commitments and contingencies
Stockholders’ equity:
Common stock; $0.01 par value; 50,000,000 shares authorized; 19,989,000 and 19,806,000 shares issued and outstanding at February 29, 2004 and February 28, 2003, respectively		200,000			198,000
Additional paid-in capital		40,445,000			39,979,000
Retained earnings		25,891,000			23,439,000
Accumulated other comprehensive income		882,000			96,000
		67,418,000			63,712,000
Unearned ESOP shares		(2,540,000	)		(3,457,000	)
Total stockholders’ equity		64,878,000			60,255,000
	$	88,562,000		$	84,995,000

See accompanying notes to consolidated financial statements.

F-2

MEADE INSTRUMENTS CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

	Year Ended February 28/29
	2004		2003		2002
Net sales	$	138,281,000	$	110,817,000	$	94,718,000
Cost of sales		99,380,000		76,923,000		70,108,000
Gross profit		38,901,000		33,894,000		24,610,000
Selling expenses		18,106,000		14,248,000		12,920,000
General and administrative expenses		12,671,000		12,628,000		9,098,000
ESOP contribution expense		859,000		905,000		1,367,000
Research and development expenses		2,038,000		3,008,000		2,167,000
Operating income (loss)		5,227,000		3,105,000		(942,000	)
Interest expense		1,046,000		1,137,000		1,345,000
Income (loss) before income taxes		4,181,000		1,968,000		(2,287,000	)
Provision (benefit) for income taxes		1,729,000		830,000		(845,000	)
Net income (loss)	$	2,452,000	$	1,138,000	$	(1,442,000	)
Net income (loss) per share — basic and diluted	$	0.13	$	0.07	$	(0.10	)
Weighted average common shares outstanding — basic		18,983,000		16,410,000		15,100,000
Weighted average common shares outstanding — diluted		19,174,000		16,624,000		15,100,000

See accompanying notes to consolidated financial statements.

F-3

MEADE INSTRUMENTS CORP.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

								Accumulated
	Common Stock				Additional Paid-in			Other Comprehensive			Retained			Unearned
	Shares		Amount		Capital			Income (Loss)			Earnings			ESOP Shares			Total
Balance at February 28, 2001		16,472,000	$	165,000	$	32,367,000		$	(359,000	)	$	23,743,000		$	(5,565,000	)	$	50,351,000
Shares issued as compensation		9,000		—		32,000			—			—			—			32,000
Release of ESOP shares		—		—		175,000			—			—			1,192,000			1,367,000
Comprehensive income:
Currency translation adjustment		—		—		—			(174,000	)		—			—			(174,000	)
Interest rate swap valuation		—		—		—			(26,000	)		—			—			(26,000	)
Net loss		—		—		—			—			(1,442,000	)		—			(1,442,000	)
Total comprehensive income		—		—		—			—			—			—			(1,642,000	)
Balance at February 28, 2002		16,481,000		165,000		32,574,000			(559,000	)		22,301,000			(4,373,000	)		50,108,000
Release of ESOP shares		—		—		(11,000	)		—			—			916,000			905,000
Shares issued as compensation		8,000		—		38,000			—			—			—			38,000
Exercise of stock options		25,000		—		67,000			—			—			—			67,000
Shares issued in common stock offering		3,292,000		33,000		7,311,000			—			—			—			7,344,000
Comprehensive income (loss):
Currency translation adjustment		—		—		—			678,000			—			—			678,000
Interest rate swap valuation		—		—		—			(23,000	)		—			—			(23,000	)
Net income		—		—		—			—			1,138,000			—			1,138,000
Total comprehensive income		—		—		—			—			—			—			1,793,000
Balance at February 28, 2003		19,806,000		198,000		39,979,000			96,000			23,439,000			(3,457,000	)		60,255,000
Release of ESOP shares		—		—		(58,000	)		—			—			917,000			859,000
Exercise of stock options		183,000		2,000		424,000			—			—			—			426,000
Tax benefit of stock options exercised		—		—		100,000						—			—			100,000
Comprehensive income (loss):
Currency translation adjustment		—		—		—			851,000			—			—			851,000
Interest rate swap valuation		—		—		—			32,000			—			—			32,000
Unrealized loss in marketable securities, net of tax		—		—		—			(97,000	)		—			—			(97,000	)
Net income		—		—		—			—			2,452,000			—			2,452,000
Total comprehensive income		—		—		—			—			—			—			3,238,000
Balance at February 29, 2004		19,989,000	$	200,000	$	40,445,000		$	882,000		$	25,891,000		$	(2,540,000	)	$	64,878,000

See accompanying notes to consolidated financial statements.

F-4

MEADE INSTRUMENTS CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended February 28/29,
	2004			2003			2002
Cash flows from operating activities:
Net income (loss)	$	2,452,000		$	1,138,000		$	(1,442,000	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		2,427,000			2,161,000			2,092,000
ESOP contribution		859,000			905,000			1,367,000
Allowance for doubtful accounts		1,210,000			163,000			2,090,000
Changes in assets and liabilities, net of effects of acquisitions:
Accounts receivable		(1,095,000	)		(5,268,000	)		(4,061,000	)
Inventories		828,000			4,987,000			11,342,000
Deferred income taxes		(1,695,000	)		1,942,000			(107,000	)
Prepaid expenses and other current assets		458,000			2,416,000			1,105,000
Other assets		290,000			595,000			(581,000	)
Accounts payable		(277,000	)		(265,000	)		2,166,000
Accrued liabilities		637,000			1,192,000			(543,000	)
Income taxes payable		3,039,000			—			—
Net cash provided by operating activities		9,133,000			9,966,000			13,428,000
Cash flows from investing activities:
Capital expenditures		(626,000	)		(734,000	)		(731,000	)
Acquisition of Simmons, net of cash acquired		—			(20,826,000	)		—
Net cash used in investing activities		(626,000	)		(21,560,000	)		(731,000	)
Cash flows from financing activities:
Payments on long-term debt		(667,000	)		(565,000	)		(2,575,000	)
Net proceeds from the sale of common stock		—			7,344,000			—
Proceeds from long-term debt		—			—			1,075,000
Net (payments) borrowings under bank lines of credit		(4,032,000	)		5,710,000			(11,243,000	)
Exercise of stock options		426,000			67,000			—
Payments under capital lease obligations		(25,000	)		(190,000	)		(242,000	)
Net cash provided by (used in) financing activities		(4,298,000	)		12,366,000			(12,985,000	)
Effect of exchange rate changes on cash		1,152,000			477,000			351,000
Net increase in cash		5,361,000			1,196,000			63,000
Cash at beginning of year		2,445,000			1,249,000			1,186,000
Cash at end of year	$	7,806,000		$	2,445,000		$	1,249,000
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$	1,046,000		$	1,141,000		$	1,364,000
Income taxes	$	—		$	250,000		$	350,000

See accompanying notes to consolidated financial statements.

F-5

MEADE INSTRUMENTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. The Company and Operations

The Company

     Meade Instruments Corp. (the “Company”), a Delaware corporation, is a multinational consumer and industrial optics company that designs, manufactures, imports and distributes telescopes, telescope accessories, binoculars, riflescopes, spotting scopes, microscopes, night vision and other consumer optical products. The Company has operations in the United States, Germany, Mexico and China.

2. Summary of Significant Accounting Policies

Principles of consolidation

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

Revenue recognition

     Revenues are generally recorded when title transfers and the risks of ownership are passed to customers. Under certain circumstances, the Company accepts product returns. Material management judgments must be made and used in connection with establishing the sales returns estimates. The Company continuously monitors and tracks returns and records revenues net of provisions for returns. The Company’s estimate of sales returns is based upon several factors including historical experience, current market and economic conditions, customer demand and acceptance of the Company’s products and/or any notification received by the Company of such a return. Historically, sales returns have been within management’s estimates; however, actual returns may differ significantly, either favorably or unfavorably, from management’s estimates depending on actual market conditions at the time of the return.

Foreign currency translation

     The assets and liabilities of the Company’s foreign operations are translated at end of period exchange rates, principally the Euro. Revenues and expenses are translated at the average exchange rates prevailing during the period. The effects of unrealized exchange rate fluctuations on translating foreign currency assets and liabilities into U.S. dollars are accumulated in stockholders’ equity as a component of other comprehensive income. The effects of foreign currency transactions denominated in a currency other than its foreign entities’ functional currency are included in general and administrative expenses.

Allowance for doubtful accounts

     Management analyzes specific customer accounts receivable, customer credit-worthiness, historical bad debt expenses, current economic trends and changes in customer payment terms when evaluating the adequacy of the allowance for doubtful accounts. If the financial condition of any of the Company’s customers were to deteriorate to the point of impairing the customer’s ability to make payments on its account, additional allowances may be required. While credit losses have historically been within management’s expectations and the provisions established, significant deterioration in the liquidity or financial position of any of the Company’s major customers or any group of customers could have a material adverse impact on the collectibility of accounts receivable and future operating results.

Inventories

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

F-6

MEADE INSTRUMENTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

evaluates the composition of its inventories to identify any slow-moving or obsolete product. These evaluations require material management judgments, including estimates of future sales, continuing market acceptance of the Company’s products, and current market and economic conditions. Inventory reserves are established, based on such judgments, for any inventories that are identified as having a net realizable value less than its cost. Historically, the net realizable value of the Company’s inventories has been within management’s estimates. However, if the Company is not able to meet its sales expectations; or if market conditions deteriorate significantly from management’s estimates, reductions in the net realizable value of the Company’s inventories could have a material adverse impact on future operating results.

Property and equipment

     Property and equipment are stated at cost and are depreciated using the straight-line method over the estimated useful lives of the assets. Buildings and related improvements are depreciated over seven to twenty-five years. All other property and equipment, except property held under capital leases, is depreciated over three to seven years. Properties held under capital leases are recorded at the present value of the noncancellable lease payments over the term of the lease and are amortized over the shorter of the lease term or the estimated useful lives of the assets.

Goodwill and acquisition-related intangible assets

     In July 2001, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 141, “Business Combinations,” and SFAS No. 142, “Goodwill and Other Intangible Assets.” SFAS No. 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001, and establishes specific criteria for the recognition of goodwill separate from other intangible assets. SFAS No. 142 requires that goodwill and identifiable intangible assets determined to have an indefinite life no longer be amortized, but instead be tested for impairment at least annually. The Company adopted SFAS No. 142 effective March 1, 2002.

     The difference between the purchase price and the fair value of net tangible assets at the date of acquisition is included in the accompanying consolidated balance sheet as goodwill and acquisition-related intangible assets. Amortization periods for the intangible assets subject to amortization, range from seven to fifteen years, depending on the nature of the assets acquired. The carrying value of goodwill and acquisition-related intangible assets, including the related amortization period, are evaluated in the fourth quarter of each fiscal year.

     The Company’s reporting units for purposes of applying the provisions of SFAS 142 are Meade Europe and Simmons. SFAS 142 requires the Company to compare the fair value of the reporting unit to its carrying amount on an annual basis to determine if there is potential impairment. If the fair value of the reporting unit is less than its carrying value, an impairment loss is recorded to the extent that the fair value of the goodwill within the reporting unit is less than its carrying value. If the carrying amount of the goodwill exceeds its fair value, an impairment loss is recognized. Fair value is determined based on discounted cash flows. As of February 29, 2004, the Company does not believe any impairment of goodwill has occurred.

     Acquisition-related intangible assets are reviewed whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. The Company reviews the recoverability by comparing the estimated future cash flows on an undiscounted basis to the net book value of the assets. In the event that projected undiscounted cash flows are less than the net book value of the assets, the carrying value of the assets are written down to their fair value, less costs to sell. Fair value is generally based on a discounted cash flow analysis. Assets that are to be disposed of are measured at the lower of cost or fair value, less costs to sell.

F-7

MEADE INSTRUMENTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

     At February 29, 2004 and February 28, 2003, goodwill and acquisition-related intangible assets included the following:

		February 28/29,
		2004					2003
	Amortization Periods	Gross Carrying		Accumulated			Gross Carrying		Accumulated
	(Years)	Amount		Amortization			Amount		Amortization
Goodwill	none	$	1,548,000	$	—		$	1,548,000	$	—
Acquisition-related intangible assets:
Brand names	none		2,041,000		—			2,041,000		—
Customer relationships	10		1,390,000		(139,000	)		1,390,000		—
Trademarks	7-15		1,398,000		(948,000	)		1,398,000		(720,000	)
Total acquisition-related intangible assets			4,829,000		(1,087,000	)		4,829,000		(720,000	)
Total goodwill and acquisition-related intangible assets		$	6,377,000	$	(1,087,000	)	$	6,377,000	$	(720,000	)

     The changes in the carrying amount of goodwill and acquisition-related intangible assets for the years ended February 29, 2004 and February 28, 2003 are as follows:

	Non-amortizing			Amortizing
	intangible assets			intangible assets
Balance, net, February 28, 2002	$	1,907,000		$	905,000
New assets acquired		2,041,000			1,390,000
Adjustment to goodwill		(359,000	)		—
Amortization		—			(227,000	)
Balance, net, February 28, 2003		3,589,000			2,068,000
Amortization		—			(367,000	)
Balance, net, February 29, 2004	$	3,589,000		$	1,701,000

     As of February 29, 2004, estimated amortization expense for the next two fiscal years is approximately $367,000 per year and $139,000 per year beginning in fiscal 2007.

     The following pro forma summary presents the Company’s net income (loss) and per share information as if the Company had been accounting for its goodwill under SFAS No. 142 for the three years ended February 29, 2004.

	Year ended February 28/29,
	2004		2003		2002
Reported net income (loss)	$	2,452,000	$	1,138,000	$	(1,442,000	)
Add back goodwill amortization, net of tax		—		—		101,000
Adjusted net income (loss)	$	2,452,000	$	1,138,000	$	(1,341,000	)
Reported earnings (loss) per share, basic and diluted	$	0.13	$	0.07	$	(0.10	)
Adjusted basic and diluted earnings (loss) per share	$	0.13	$	0.07	$	(0.09	)

Income taxes

     The Company uses the liability method of accounting for income taxes. Under this method deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates that will be in effect when the differences are expected to reverse. The

F-8

MEADE INSTRUMENTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Company files its tax return for the year ending August 31, rather than for the financial reporting period ending the last day of February.

Advertising

     The Company expenses the costs of advertising, including production costs, as incurred. For the years ended February 29, 2004, and February 28, 2003 and 2002, the Company incurred advertising and marketing expenses of approximately $5,465,000, $4,406,000 and $2,857,000, respectively.

Research and development

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

Earnings (loss) per share

     Basic earnings (loss) per share amounts exclude the dilutive effect of potential shares of common stock. Basic earnings (loss) per share is based upon the weighted-average number of shares of common stock outstanding, which excludes unallocated ESOP shares. Diluted earnings (loss) per share is based upon the weighted-average number of shares of common stock and dilutive potential shares of common stock outstanding for each period presented. Potential shares of common stock include outstanding stock options which are included under the treasury stock method. Potential shares of common stock of 65,000 have been excluded from diluted weighted average shares of common stock for fiscal 2002, as the effect would be anti-dilutive.

     The following is a reconciliation of the denominators of the basic and diluted earnings (loss) per share computations for the fiscal years ended February 29, 2004, and February 28, 2003 and 2002.

	Year Ended February 28/29 ,
	2004		2003		2002
Net income (loss)	$	2,452,000	$	1,138,000	$	(1,442,000	)
Shares outstanding — basic		18,983,000		16,410,000		15,100,000
Effect of dilutive securities:
Stock options		191,000		214,000		—
Shares outstanding — diluted		19,174,000		16,624,000		15,100,000
Net income — basic and diluted	$	0.13	$	0.07	$	(0.10	)

Comprehensive income

     Comprehensive income (loss) is defined as a change in the equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources and, at February 29, 2004, includes foreign currency translation adjustments, an unrealized loss in marketable securities and adjustments to the fair value of highly effective derivative instruments. As of February 29, 2004 and February 28, 2003, accumulated other comprehensive income consists of the following:

	February 28/29
	2004			2003
Foreign currency translation adjustments	$	996,000		$	145,000
Unrealized loss in marketable securities, net of tax		(97,000	)		—
Change in fair value of interest rate swap		(17,000	)		(49,000	)
Total accumulated other comprehensive income	$	882,000		$	96,000

Concentration of credit risk

     Financial instruments which potentially subject the Company to concentration of credit risk are principally accounts receivable. The Company maintains an allowance for doubtful accounts at a level deemed appropriate by

F-9

MEADE INSTRUMENTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

management based on historical and other factors that affect collectibility. Several customers filed for bankruptcy during fiscal 2002 and 2001. Based upon the Company’s assessment of the recoverability of the receivables from these customers and in the opinion of management, the Company has established adequate provisions related to these receivables.

Fair value of financial instruments

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

Derivative Instruments and Hedging Activities

     The Company may enter into interest rate swap agreements or foreign exchange contracts to offset certain operational and balance sheet exposures and to manage its exposure to interest and exchange rate movements. These contracts are entered into to support product sales, purchases and financing transactions made in the normal course of business, and accordingly, are not speculative in nature. The Company uses interest rate swaps to convert floating-rate debt to fixed-rate debt. Interest rate swap agreements are executed as an integral part of specific debt transactions and involve payment of a fixed rate and receipt of a floating rate and specified intervals. The Company may enter into foreign exchange contracts to manage risk associated with fluctuations on certain firm sales and purchase commitments denominated in foreign currencies.

     All derivatives are recognized on the balance sheet at their fair value. On the date that the Company enters into a derivative contract, it designates the derivative as either (a) a hedge of a forecasted transaction or the variability of cash flows that are to be received or paid in connection with a recognized asset or liability (a “cash flow” hedge), or (b) a hedge of an exposure to changes in the fair value of an asset, liability, or an unrecognized firm commitment (a “fair value” hedge). Changes in the fair value of a derivative that is highly effective, and that is designated and qualifies as a cash flow hedge to the extent that the hedge is effective, are recorded in Other Comprehensive Income until earnings are affected by the variability of cash flows of the hedged transaction (e.g., until periodic settlements of a variable asset or liability are recorded in earnings). Any hedge ineffectiveness (which represents the amount by which the changes in the fair value of the derivative exceed the variability in the cash flows of the forecasted transaction) is recorded in current-period earnings. Changes in the fair value of a derivative that is highly effective, and that is designated and qualifies as a foreign-currency hedge, are recorded in either current-period earnings or Other Comprehensive Income, depending on whether the hedging relationship satisfies the criteria for a fair-value or cash-flow hedge.

     The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk-management objective and strategy for undertaking various hedge transactions. This process includes linking all derivatives that are designated as cash flow hedges or specific firm commitments or forecasted transactions. The Company also formally assesses (both at the hedge’s inception and on an ongoing basis) whether the derivatives that are used in hedging transactions have been highly effective in offsetting changes in the cash flows of hedged items and whether those derivatives may be expected to remain highly effective in future periods. All components of each derivative’s gain or loss are included in the assessment of hedge effectiveness.

     When it is determined that a derivative is not, or has ceased to be, highly effective as a hedge, the Company discontinues hedge accounting prospectively. A derivative ceases to be highly effective when (a) the Company determines that the derivative is no longer effective in offsetting changes in the cash flows of a hedged item such as firm commitments or forecasted transactions, (b) it is no longer probable that the forecasted transaction will occur, (c) the derivative expires or is sold, terminated or exercised, or (d) management determines that designating the derivative as a hedging instrument is no longer appropriate.

     When the Company discontinues hedge accounting because it is no longer probable that the forecasted transaction will occur in the originally expected period, the gain or loss on the derivative remains in Accumulated Other Comprehensive Income and is reclassified into earnings when the forecasted transaction affects earnings. However, if it is probable that a forecasted transaction will not occur by the end of the originally specified time

F-10

MEADE INSTRUMENTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

period or within an additional two-month period of time thereafter, the gains and losses that were accumulated in Accumulated Other Comprehensive Income will be recognized immediately in earnings. In a situation in which hedge accounting is discontinued and the derivative remains outstanding, the Company will carry the derivative at its fair value on the balance sheet, recognizing changes in the fair value in current-period earnings.

Use of estimates in the preparation of financial statements

     The preparation of consolidated financial statements, in conformity with accounting principles generally accepted in the United States, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the respective reporting periods. Actual results could differ from those estimates. Estimates are used in accounting for, among other items, sales returns and reserves, allowances for doubtful accounts, excess and obsolete inventory, income taxes, asset impairment, anticipated transactions to be hedged, litigation reserves and contingencies.

Product warranties

     The Company provides reserves for the estimated cost of product warranty-related claims at the time of sale, and periodically adjusts the provision to reflect actual experience. The amount of warranty liability accrued reflects management’s best estimate of the expected future cost of honoring Company obligations under its warranty plans. Additionally, from time to time, specific warranty accruals may be made if unforeseen technical problems arise. Meade and Bresser branded products, principally telescopes and binoculars, are generally covered by a one-year limited warranty. Many of the Simmons products, principally riflescopes and binoculars, have lifetime limited warranties. Changes in the warranty liability, which is included as a component of accrued liabilities on the accompanying Consolidated Balance Sheet, follows.

	February 28/29,
	2004			2003
Beginning balance	$	1,794,000		$	461,000
Warranty accrual		367,000			1,731,000
Labor and material usage		(775,000	)		(1,154,000	)
Effect of change in foreign currency exchange rates		41,000			—
Simmons warranty liability assumed		—			756,000
Ending balance	$	1,427,000		$	1,794,000

Stock-based compensation

     The Company accounts for employee stock-based compensation in accordance with the intrinsic value method described in Accounting Principles Board Opinion No. 25 and related interpretations. The Company has adopted the disclosure only provisions of SFAS No. 123. Accordingly, no compensation cost has been recognized for the fixed stock option plans. Had compensation cost for the Company’s stock-based compensation plans been determined based on the fair value at the grant dates for awards under those plans, consistent with the method prescribed by SFAS No. 123, the Company’s net income (loss) and earnings (loss) per share would have been reduced to the pro forma amounts indicated below.

	Year Ended February 28/29,
	2004			2003			2002
Reported net income (loss)	$	2,452,000		$	1,138,000		$	(1,442,000	)
Compensation cost		(682,000	)		(1,587,000	)		(2,079,000	)
Pro forma net income (loss)	$	1,770,000		$	(449,000	)	$	(3,521,000	)
Reported earnings (loss) per share – basic and diluted	$	0.13		$	0.07		$	(0.10	)
Pro forma earnings (loss) per share – basic and diluted	$	0.09		$	(0.03	)	$	(0.23	)

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

	Year Ended February 28/29,
	2004			2003			2002
Weighted average expected life (years)		6.0			6.0			4.0
Volatility		69.3	%		100.9	%		93.8	%
Risk-free interest rate		3.01	%		3.75	%		4.18	%
Expected dividends	None			None			None
Weighted average fair value of options granted	$	1.90		$	2.19		$	3.62

Accounting pronouncements

     In January 2003, the Company adopted SFAS 146, which addresses accounting for costs associated with exit or disposal activities. In addition, the FASB issued FIN 46, which requires that certain variable interest entities be consolidated by the primary beneficiary of the entity if the equity investors in the entity do not have a controlling financial interest or do not have sufficient equity at risk. FIN 46 is effective immediately for all variable interest entities created after January 31, 2003. For all such entities created prior to February 1, 2003, FIN 46 is effective for

F-11

MEADE INSTRUMENTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

interim or annual fiscal periods ending after December 15, 2003. The adoption of these statements did not have a material effect on the Company’s financial position or results of operations.

     In April 2003, the FASB issued SFAS No. 149, Amendment of Statement No. 133 on Derivative Instruments and Hedging Activities. This statement is effective for contracts entered into or modified after June 30, 2003 and for hedging relationships designated after June 30, 2003. It amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities. SFAS 149 amends SFAS 133 for decisions made as part of the Derivatives Implementation Group process that effectively required amendments to SFAS 133, in connection with other FASB projects dealing with financial instruments and in connection with implementation issues raised in relation to the application of the definition of a derivative. The application of this statement did not have an impact on the Company’s consolidated financial statements.

     In May 2003, the FASB issued SFAS No. 150, Certain Financial Instruments with Characteristics of Both Liabilities and Equity. This statement establishes standards for how a company clarifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires a company to classify such instruments as liabilities, whereas they previously may have been classified as equity. SFAS 150 is effective for all financial instruments entered into or modified after May 31, 2003, and otherwise is effective July 1, 2003. The application of this statement did not have an impact on the Company’s consolidated financial statements.

Reclassifications

     Certain reclassifications have been made to conform prior year information to the fiscal 2004 presentation.

3. Acquisition of Simmons Outdoor Corp.

     On October 25, 2002 the Company acquired 100% of the outstanding common stock of Simmons Outdoor Corp. (“Simmons”) for $20,829,000 cash ($16,000,000 was paid at close; the balance, $4,829,000 was paid in December, 2002). Simmons is a designer and distributor of riflescopes, binoculars and other consumer sports optics offering products under the Simmons, Weaver and Redfield brand names. The acquisition of Simmons presents the Company with opportunities to enter into the consumer sports optics marketplace with brand names that management believes are highly recognized and well regarded. To fund a portion of the purchase price, the Company sold 3,291,801 shares of its common stock in a private placement for net cash proceeds of $7,344,000. The balance of the purchase price was funded through borrowings on the Company’s bank line of credit. The acquisition of Simmons was accounted for as a purchase as prescribed by Statement of Financial Accounting Standards No. 141, Business Combinations. The purchase price allocation is based upon evaluations and other studies of the fair value of the assets acquired. The excess of the purchase price over the estimated fair value of the net tangible assets acquired is included in acquisition related intangible assets at February 29, 2004, and has been allocated to the value of the brand names and customer relationships acquired.

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

Current assets (excluding cash of $3,000)	$	19,227,000
Property, plant and equipment		239,000
Intangible assets		3,431,000
Current liabilities		(2,071,000	)
Total purchase price	$	20,826,000

     As of December 6, 2001, Simmons was a wholly owned subsidiary of Blount International, Inc. (“Blount”). On December 7, 2001, Blount sold Simmons to Alliant Techsystems, Inc. (“ATK”). The accompanying unaudited pro forma consolidated condensed financial information reflects Blount’s (predecessor) basis for periods prior to December 7, 2001 and ATK’s (successor) basis for periods subsequent to December 6, 2001.

     The following table presents unaudited pro forma condensed consolidated financial information for the years ended February 28, 2003 and 2002, respectively, as though the acquisition occurred on March 1, 2001. The pro

F-12

MEADE INSTRUMENTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

forma information for the year ended February 28, 2003 has been prepared by combining the statement of operations of Meade for the year ended February 28, 2003 and the statement of operations of Simmons (successor) for the eight months ended October 2002. The pro forma information for the year ended February 28, 2002 has been prepared by combining the statement of operations of Meade for the year ended February 28, 2002 and the statement of operations of Simmons (predecessor) for the year ended December, 2001.

	Year Ended
	February 28,
	2003		2002
Net sales	$	128,441,000	$	121,644,000
Operating income (loss)	$	4,258,000	$	(3,274,000	)
Net income (loss)	$	982,000	$	(4,496,000	)
Basic and diluted earnings (loss) per share	$	0.05	$	(0.24	)

     The unaudited pro forma financial information is presented for information purposes only and is not necessarily indicative of the operating results that would have occurred had the acquisitions taken place on March 1, 2001. In addition, the pro forma results are not intended to be a projection of the future results and do not reflect any synergies that might have been achieved from the combined operations.

4. Bank Debt

     On October 25, 2002, the Company amended its credit agreement with its U.S. bank (the “U.S. credit agreement”). The amendment principally involved increasing the revolving credit facility and incorporating the Simmons acquisition into the credit agreement. The amended agreement provided the Company with a $35,645,000 credit facility consisting of a $34,000,000 revolving credit line (the “U.S. revolving loan”) and a $1,645,000 term loan (the “U.S. term loan”).

     Amounts outstanding on the U.S. revolving loan and U.S. term loan at February 29, 2004 were approximately $5,047,000 and $1,085,000, respectively. Availability under the U.S. revolving loan (which is subject to a borrowing base with standard advance rates against eligible accounts receivable and inventories) at February 29, 2004 was approximately $12,000,000. The U.S. term loan is collateralized by domestic machinery and equipment. The credit facility has a three-year term, is collateralized by substantially all of the domestic assets of the Company and its domestic subsidiaries and contains certain financial covenants including, but not limited to, fixed charge coverage ratios. Amounts outstanding under the U.S. revolving loan bear interest at the bank’s base rate (or LIBOR rate) plus applicable margins (4.25% at February 29, 2004). Under the terms of the U.S. credit agreement, the Company was required to enter into an interest-rate swap to convert the variable interest rate on its U.S. term loan to a fixed interest rate. The resulting cost of funds (7.9% per annum) is currently higher than that which would have been available if the variable rate had been applied during the period. Under the interest-rate swap contract, the Company has agreed with the bank to exchange, at specified intervals, the difference between variable-rate and fixed-rate interest amounts, calculated by reference to agreed-upon notional amounts. The change in the fair value of the interest rate swap for the year ended February 29, 2004 was an unrealized gain of $32,000 which is included in other comprehensive income for the year ended February 29, 2004.

     In July 2003, the Company’s German subsidiary renegotiated its agreement with a bank to provide up to approximately $4,800,000 in revolving loans (subject to a borrowing base of eligible accounts receivable and inventories) expiring in July 2004. The German subsidiary also has an agreement with the bank that provides a term loan expiring June 2006 collateralized by land and buildings owned by the German subsidiary (collectively, the “European Loans”). The European Loans are guaranteed by the U.S. parent company up to approximately $3,250,000 at February 29, 2004. The guarantee expires on the earlier of the termination of the bank agreement or July 31, 2008. Outstanding amounts on the revolving loan and the term loan in Europe at February 29, 2004 were approximately $13,000 and $1,224,000, respectively. The European Loans bear interest at the bank’s base rate plus or minus applicable margins (7.75% and 6.0%, respectively at February 29, 2004).

     Aggregate maturities of long-term debt at February 29, 2004 are as follows:

F-13

MEADE INSTRUMENTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Fiscal Year:	Amount
2005	$	580,000
2006		825,000
2007		904,000
Total	$	2,309,000

     The Company continues to depend on operating cash flow and availability under its bank lines of credit to provide short-term liquidity. In the event the Company’s plans require more capital than is presently anticipated, additional sources of liquidity such as debt or equity financings, may be required to meet its capital needs. There can be no assurance that such additional sources of capital will be available on reasonable terms, if at all. However, management believes that operating cash flow and bank borrowing capacity in connection with the Company’s business should provide sufficient liquidity for the Company’s obligations for at least the next twelve months.

5. Commitments and Contingencies

     In December 1996 the Company executed a lease commencing October 1, 1997 for its corporate office and manufacturing facilities in California. The lease term is ten years, extendable for an additional ten years (two terms of five years each) at the Company’s option. Lease commitments for this lease are subject to 9% increases at the beginning of the months 31, 61 and 91. In February 2000, the Company entered into a lease for warehouse space located near the Company’s corporate headquarters. That warehouse lease expired in March 2003 and the Company vacated the premise on April 1, 2003. In November 2003, a lease for office space in Florida was terminated. The Simmons subsidiary operates in a leased facility in Georgia. The Simmons facility lease term is eight years expiring in December 2007, with an option to renew for four additional four-year terms. Monthly rentals are adjusted at prescribed dates generally based on changes in the consumer price index. In November 2002, the Company leased warehouse space in Mississippi. The Mississippi facility lease is on a month-to-month basis.

     In August 1999, the Company entered into a lease for an assembly facility in Tijuana, Mexico. The lease term is five years with three, five-year renewal options. In January 2000, the Company entered into a lease for an office, repair and distribution facility in Graefelfing, Germany. During fiscal 2003, the Graefelfing space was reduced to office space only.

F-14

MEADE INSTRUMENTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

     Aggregate future minimum commitments under noncancellable leases and other agreements at February 29, 2004 that have remaining terms in excess of one year are as follows:

Fiscal Year	Operating
2005	$	1,722,000
2006		1,689,000
2007		1,787,000
2008		1,294,000
2009		267,000
Thereafter		456,000
Net minimum lease payments	$	7,215,000

     The preceding table assumes that any operating leases with renewal options that expire during fiscal 2004 or fiscal 2005 will be renewed under the terms of the governing lease agreement. For the fiscal years ended February 29, 2004, and February 28, 2002 and 2001, the Company incurred rent expense of $2,371,000, $2,731,000 and $2,312,000, respectively.

     In 2001 and 2002, the Company filed suits against Tasco Sales, Inc. (“Tasco”) and Celestron International, Inc. (“Celestron”), charging the two companies with patent infringement and unfair competition. The complaints allege that a number of Tasco’s and Celestron’s consumer telescopes willfully infringe certain of the Company’s U.S. patents. In addition to seeking compensation for damages incurred, the suits seek to enjoin Tasco and Celestron from continuing to manufacture or sell products that infringe certain of the Company’s patents. Tasco and Celestron filed answers and certain counterclaims which deny the Company’s allegations. The counterclaims also allege, among other things, that the Company is infringing a Celestron design patent.

     On September 9, 2003, the Company and Celestron agreed to pursue non-binding mediation of all pending litigation between the parties. As part of the mediation process, the parties agreed to stay all pending litigation between them (including the discovery process). This mediation took place on May 10, 2004. Pursuant to a binding settlement agreement signed by the parties at the mediation, a settlement was reached as to all pending litigation among the parties on the terms of one of two settlement alternatives. In the event the conditions of the first settlement alternative (the “First Alternative”) are not satisfied on or before August 15, 2004, the pending litigation will be considered settled on the terms of the second settlement alternative (the “Second Alternative”). Pursuant to the terms of the First Alternative, in exchange for cash payments to be made by Meade, Meade will acquire the exclusive rights to Celestron’s computerized telescope technology. Consummation of the First Alternative is subject to the satisfaction of certain conditions, including approval of the United States Federal Trade Commission and Meade obtaining approval of its board of directors. If the First Alternative is not consummated, the Second Alternative will be effective. Pursuant to the terms of the Second Alternative, Meade grants a license to Celestron under which Celestron will pay Meade a royalty on any products sold by Celestron that include or use any “level the telescope and point it north” or similar telescope alignment technology until the expiration of the last patent licensed by Meade to Celestron. Regardless of which settlement alternative is consummated: (i) Celestron agrees that Meade’s distributed intelligence and “level north” patents are valid and enforceable; (ii) Meade agrees that certain of Celestron’s tripod and mount patents are valid (these patents are alleged by Celestron to have been infringed by Meade in its counterclaims); (iii) Celestron grants Meade paid-up, royalty free licenses for the rights to use the designs covered by the aforementioned tripod and mount patents; (iv) Celestron will stipulate to correction of inventorship of its United States Patent No. 6,369,942, entitled “Auto-alignment tracking telescope mount” and will transfer ownership of such patent to Meade; and (v) the parties will promptly dismiss with prejudice all claims and counterclaims in the pending litigation between them, including claims for past damages.

     The Company is involved from time to time in litigation incidental to its business. Management believes that the outcome of current litigation will not have a material adverse effect on the Company’s financial condition, results of operations, or cash flows.

F-15

MEADE INSTRUMENTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

6. Employee Stock Ownership Plan

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

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

     For the years ended February 29, 2004 and February 28, 2003 and 2002, the Company recognized ESOP contribution expense of $859,000, $905,000 and $1,367,000, respectively.

     As of February 29, 2004, approximately 2,001,000 shares in the ESOP trust have been allocated to individual participants. Allocations to individual participant accounts are generally made in the ratio that the compensation of each participant bears to the total compensation of all such participants. There are approximately 999,000 shares in suspense at February 29, 2004, including approximately 250,000 shares committed to be released as of February 29, 2004.

     The fair value of the common stock upon purchase from the existing stockholders in April 1996 was determined to be $3.67 per share. Under the terms of the ESOP, the fair value of the common stock at any plan year end is to be determined by an independent appraiser so long as the stock is not readily tradable on an established market. The fair value of the shares held by the ESOP at February 29, 2004 was $3.74 per share, the market price as determined by the Nasdaq National Market. At February 29, 2004 there was no repurchase obligation.

7. Income Taxes

     Pretax income (loss) from continuing operations for each of the three years ended February 29, 2004 and February 28, 2003 and 2002 consists of the following:

	Year Ended February 28/29,
	2004		2003		2002
Domestic	$	979,000	$	1,045,000	$	(2,496,000	)
Foreign		3,202,000		923,000		209,000
	$	4,181,000	$	1,968,000	$	(2,287,000	)

F-16

MEADE INSTRUMENTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

	Year Ended February 28/29,
	2004			2003			2002
Current:
Federal	$	1,191,000		$	(785,000	)	$	(609,000	)
State		482,000			(262,000	)		(84,000	)
Foreign		1,157,000			97,000			(168,000	)
		2,830,000			(950,000	)		(861,000	)
Deferred:
Federal		(1,081,000	)		1,130,000			51,000
State		(208,000	)		356,000			(51,000	)
Foreign		188,000			294,000			16,000
		(1,101,000	)		1,780,000			16,000
	$	1,729,000		$	830,000		$	(845,000	)

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

	Year Ended
	February 28/29,
	2004			2003			2002
Federal income tax rate		34.0	%		34.0	%		(34.0)	%
State income taxes, of federal income tax benefit		4.3			3.4			(8.1	)
Non-deductible ESOP charge		—			—			2.6
Foreign income		1.8			4.6			3.0
Other		1.3			0.2			(0.4	)
		41.4	%		42.2	%		(36.9)	%

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

	February 29,			February 28,
	2004			2003
Sales returns	$	979,000		$	1,038,000
Inventory and accounts receivable		4,099,000			3,768,000
Accrued liabilities		2,780,000			1,629,000
Intangibles		(1,054,000	)		(1,198,000	)
Other		30,000			3,000
	$	6,834,000		$	5,240,000

     As of February 29, 2004, Meade had approximately $2,408,000 of state net operating loss carry forwards available to offset future taxable income, which begin to expire in 2014.

8. Business Segments, Geographic Data and Major Customers

     The Company is a multinational consumer optics company that designs, manufactures, imports and distributes telescopes, telescope accessories, binoculars, riflescopes and other optical products. The Company is organized and operates as one segment in two principal geographic locations — North America and Europe. The following tables present information about product sales and geographic data for the fiscal years ended February 29, 2004 and February 28, 2003 and 2002.

F-17

MEADE INSTRUMENTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

	Year Ended February 28/29,
	2004		2003		2002
Product sales:
Telescope and telescope accessories	$	81,024,000	$	73,489,000	$	81,864,000
Binoculars		28,991,000		26,611,000		9,960,000
Riflescopes		24,878,000		8,300,000		—
Other		3,388,000		2,417,000		2,894,000
	$	138,281,000	$	110,817,000	$	94,718,000

	Year Ended February 28/29,
	2004		2003		2002
Geographic data — product sales:
North America	$	101,995,000	$	83,628,000	$	69,290,000
Germany		14,477,000		18,120,000		16,631,000
Other foreign/export		21,809,000		9,069,000		8,797,000
	$	138,281,000	$	110,817,000	$	94,718,000

	February 28/29,
	2004		2003		2002
Geographic data — long-lived assets:
North America	$	5,916,000	$	8,701,000	$	6,218,000
Germany		3,420,000		3,616,000		4,579,000
	$	9,336,000	$	12,317,000	$	10,797,000

     The Company generated 11%, 15% and 13% of its revenue from one customer during the years ended February 29, 2004, and February 28, 2003 and 2002, respectively. The Company generated 11% of its revenue from another customer during the years ended February 28, 2003 and 2002.

9. Stock Incentive Plan

     In February 1997, the Company’s Board of Directors adopted the 1997 Stock Incentive Plan (the “Plan”). The Plan provides for the grant of incentive and non-qualified stock options, restricted stock, stock appreciation rights (“SARs”), and performance share awards to certain key employees (including officers, whether or not directors) of the Company or its subsidiaries. The Company has received director and stockholder approval to grant options and other awards with respect to 5,500,000 shares of common stock under the Plan. Awards under the Plan generally vest after six months and become exercisable over a two to four-year period, or as determined by the Compensation Committee of the Board of Directors. Stock options generally remain exercisable for a period of ten years from the date of grant. The Board of Directors has also granted non-qualified stock options to purchase common stock to each of the Company’s non-employee directors. The non-employee directors are granted 5,000 options each when elected and 5,000 each upon their re-election to the Board of Directors at the Company’s Annual Meeting each year. The directors’ options generally become exercisable in equal annual amounts over three years.

F-18

MEADE INSTRUMENTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

     Option activity under the Plan during fiscal years 2004, 2003 and 2002 was as follows:

				Weighted
	Option			Average
	Shares			Exercise Price
Options outstanding at February 29, 2001		3,423,000			6.41
Granted		43,000			5.33
Exercised		—			—
Forfeited		(9,000	)		6.51
Options outstanding at February 28, 2002		3,457,000			6.39
Granted		918,000			2.41
Exercised		(25,000	)		2.31
Cancelled		(450,000	)		11.17
Forfeited		(108,000	)		5.15
Options outstanding at February 28, 2003		3,792,000			4.92
Granted		653,000			2.92
Exercised		(183,000	)		2.33
Cancelled		—			—
Forfeited		(826,000	)		5.51
Options outstanding at February 29, 2004		3,436,000			4.54

Options Outstanding						Options Exercisable
			Weighted
			Average	Weighted				Weighted
			Remaining	Average				Average
Exercise Prices	Shares		Contractual Life	Exercise Price		Shares		Exercise Price
$2.31 – $3.81		1,565,000	7.4 years	$	2.83		791,000	$	2.86
$4.44 – $5.59		1,612,000	5.3 years	$	4.94		1,601,000		4.95
$6.25 – $10.31		46,000	6.0 years	$	7.75		46,000		7.71
$11.06 – $12.13		175,000	5.9 years	$	11.23		175,000		11.23
$17.13 – $27.75		38,000	6.3 years	$	22.90		35,000		22.90
		3,436,000					2,648,000

     The exercise price of options granted to employees was equal to the market price at the grant date. Options granted to employees generally become exercisable 25% after one year and ratably over the following 36 months or as otherwise determined by the Board of Directors. At February 29, 2004, 3,418,000 outstanding options for common stock were vested under the Plan. The option prices under the Plan range from $2.31 to $27.75 per share and are exercisable over periods ending no later than 2014.

F-19

MEADE INSTRUMENTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

10. Composition of Certain Balance Sheet Accounts

     The composition of inventories is as follows:

	February 29,		February 28,
	2004		2003
Raw materials	$	7,691,000	$	7,442,000
Work in process		6,193,000		4,972,000
Finished goods.		25,893,000		27,636,000
	$	39,777,000	$	40,050,000

     The composition of property and equipment is as follows:

	February 29,			February 28,
	2004			2003
Land	$	198,000		$	180,000
Buildings		2,110,000			1,891,000
Molds and dies		5,947,000			5,770,000
Machinery and equipment		3,659,000			3,426,000
Furniture and fixtures		2,765,000			2,426,000
Autos and trucks		176,000			176,000
Leasehold improvements		1,280,000			1,259,000
		16,135,000			15,128,000
Less accumulated depreciation and amortization		(11,584,000	)		(9,286,000	)
	$	4,551,000		$	5,842,000

     The gross value of assets under capital leases included above is $0 and $589,000 at February 29, 2004, and February 28, 2003, respectively. For the fiscal years ended February 29, 2004 and February 28, 2003 and 2002, the Company incurred depreciation expense of $2,298,000, $2,030,000 and $1,790,000, respectively.

     The composition of accrued liabilities is as follows:

	February 29,		February 28,
	2004		2003
Salaries, wages, bonuses and other associated payroll costs	$	3,028,000	$	1,950,000
Advertising and marketing expenses		1,012,000		351,000
Professional fees		332,000		745,000
Warranty costs		1,427,000		1,794,000
Other		1,085,000		1,453,000
	$	6,884,000	$	6,293,000

F-20

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: May 28, 2004	MEADE INSTRUMENTS CORP.
	By:	/s/ STEVEN G. MURDOCK
		Steven G. Murdock
		President, Chief Executive Officer
		and Secretary

By:	/s/ BRENT W. CHRISTENSEN
	Brent W. Christensen
	Senior Vice President, Finance and
	Chief Financial Officer

II — VALUATION AND QUALIFYING ACCOUNTS

	Balance At
	Beginning of		Charged to Costs		Charged to Other				Balance At End
Allowance for Doubtful Accounts	Period		and Expenses		Accounts(3)		Deductions(1)		of Period
Year ended February 28, 2002	$	2,175,000	$	2,090,000			$	2,033,000	$	2,232,000
Year ended February 28, 2003	$	2,232,000	$	163,000			$	1,681,000	$	714,000
Year ended February 29, 2004	$	714,000	$	1,210,000	$	5,000	$	1,215,000	$	704,000

	Balance At
	Beginning of		Charged to Costs		Charged to Other				Balance At End
Allowance for Excess Inventories	Period		and Expenses		Accounts(3)		Deductions(2)		of Period
Year ended February 28, 2002	$	9,106,000	$	281,000			$	288,000	$	9,099,000
Year ended February 28, 2003	$	9,099,000					$	1,590,000	$	7,509,000
Year ended February 29, 2004	$	7,509,000	$	1,471,000	$	236,000	$	1,101,000	$	8,115,000

(1)	Principally recoveries and write-off of delinquent accounts
(2)	Principally sale or destruction of previously reserved inventory
(3)	Effect of exchange rate changes during the period

EXHIBIT INDEX

Exhibit		Incorporation
Number	Description	Reference
2.1†	Interest Purchase Agreement, dated as of July 15-16, 1999, by and among Bresser Optik GmbH & Co. KG, a German limited partnership, Bresser Optik Geschaftsfuhrung und Verwaltungs GmbH, a German limited liability company, Rudolph Bresser, the Company and Meade Instruments Europe Corp., a California corporation (excluding Exhibits and Schedules thereto)	(h)
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).	(o)
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.	(o)
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.	(o)
3.1†	Certificate of Incorporation of the Company, as amended	(c)
3.7	Amended and Restated Bylaws of the Company, as amended
4.1†	Specimen stock certificate	(d)
10.7†	Industrial Lease (Single Tenant; Net; Stand-Alone), dated December 20, 1996, between The Irvine Company and the Company	(a)
10.13†+	Meade Instruments Corp. Employee Stock Ownership Plan (the “ESOP”), as amended and restated effective as of January 1, 1999.	(f)
10.14†+	Employee Stock Ownership Trust Agreement, as Amended and Restated as of April 9, 1997, between the Company and Wells Fargo Bank, N.A	(e)
10.15†+	Employee Stock Ownership Plan Loan and Pledge Agreement, dated April 23, 1996, between the ESOP and the Company, as amended	(a)
10.20†	Form of Trademark Distribution Agreement for EEC Countries	(a)
10.21†	Form of Trademark Distribution Agreement for Non-EEC Countries	(a)
10.24†	Celtic Master Lease, dated as of February 23, 1995, by and between the Company and Celtic Leasing Corp.	(b)

Exhibit		Incorporation
Number	Description	Reference
10.29†+	Meade Instruments Corp. 1997 Stock Incentive Plan, as amended	(m)
10.30†	Form of Agreement of Merger, by and between the Company and the predecessor of the Company	(b)
10.33†	Agreement, dated as of May 5, 1998, by and between the Company and Weidy Optical Co., Ltd.
10.35†+	Form Indemnification Agreement, by and between the Company and each member of the Board of Directors and certain executive officers	(e)
10.42†+	Form Employment Agreement, by and between the Company and current executive officers of the Company	(j)
10.43†	Lease Agreement, dated as of August 16, 1999, as amended, by and among Refugio Geffroy De Flourie, Meade Instruments Mexico, S. De R. L. De C.V. and Meade Instruments Holding Corp.	(j)
10.44†+	Amendment No. 1 to Amended and Restated Employee Stock Ownership Plan	(k)
10.45†	Credit Agreement, dated as of September 24, 2001, between Bank of America, N.A. as the Lender and Meade Instruments Corp. as the Borrower (excluding Exhibits and Schedules thereto)	(l)
10.46†	Amendment No. 1 to Credit Agreement, dated as of April 15, 2002, between Bank of America, N.A. as the Lender and Meade Instruments Corp. as the Borrower (excluding Exhibits and Schedules thereto)	(n)
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)	(o)
10.48†	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	(o)
10.49†	Registration Rights Agreement, dated as of October 22, 2002, by and among Meade Instruments Corp. and each of the Purchasers Named on the Signature Page thereof	(o)
10.50†+	Amendment No. 2 to Amended and Restated Employee Stock Ownership Plan	(p)
10.51†	Transition Agreement, dated as of April 18, 2003, by and between Meade Instruments Corp., a Delaware corporation, and John C. Diebel, an individual (excluding the Exhibit thereto)	(q)
10.52†	Registration Rights Agreement, dated as of April 18, 2003, by and between Meade Instruments Corp., a Delaware corporation, and John C. Diebel, an individual	(q)
10.53†+	Nonqualified Stock Option Agreement, dated as of April 12, 2000, by and between Meade Instruments Corp. and Rolf Bresser	(q)
10.54†	First Amendment to Amended and Restated Credit Agreement, dated October 23, 2003	(r)
10.55	Lease Agreement, dated March 26, 1992, as amended, by and between Realty Four and Simmons Outdoor Corporation
23.1	Consent of PricewaterhouseCoopers LLP
31.1	Sarbanes-Oxley Act Section 302 Certification by Steven G. Murdock

Exhibit		Incorporation
Number	Description	Reference
31.2	Sarbanes-Oxley Act Section 302 Certification by Brent W. Christensen.
32.1	Sarbanes-Oxley Act Section 906 Certification by Steven G. Murdock
32.2	Sarbanes-Oxley Act Section 906 Certification by Brent W. Christensen

†	Previously filed with the Securities and Exchange Commission as set forth in the following table:
+	Management contract or compensatory plan or arrangement.
(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 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.
(l)	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.
(m)	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.
(n)	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.
(o)	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.
(p)	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.
(q)	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.
(r)	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.

EX-3.7

EXHIBIT 3.7

AMENDED AND RESTATED BYLAWS

OF

MEADE INSTRUMENTS CORP., as amended

TABLE OF CONTENTS

			Page
ARTICLE I		Offices		1
	1.01	Registered Office		1
	1.02	Principal Office		1
	1.03	Other Offices		1
ARTICLE II		Meetings of Stockholders		1
	2.01	Annual Meetings		1
	2.02	Special Meetings		1
	2.03	Place of Meetings		1
	2.04	Notice of Meetings		2
	2.05	Adjustments		2
	2.06	Quorum		2
	2.07	Conduct of Meetings		3
	2.08	Voting		3
	2.09	List of Stockholders		4
	2.10	Inspectors of Election		4
	2.11	No Action By Consent of Stockholders		4
	2.12	Fixing Date for Determination of Stockholders of Record		4
	2.13	Stockholder Proposals		5
	2.14	Notice of Stockholder Nominees		6
ARTICLE III		Board of Directors		7
	3.01	General Powers		7
	3.02	Number, Classes, Term of Office		7
	3.03	Election of Directors		7
	3.04	Resignations		8
	3.05	Vacancies		8
	3.06	Place of Meeting, Etc.		8
	3.07	Participation by Telephone		8
	3.08	Regular Meetings		8
	3.09	Special Meetings		8
	3.10	Quorum and Manner of Acting		9
	3.11	Action by Consent		9
	3.12	Compensation		9
	3.13	Committees of Directors		9
	3.14	Rights of Preferred Stock		10
ARTICLE IV		Officers		10
	4.01	Corporate Officers		10
	4.02	Election, Term of Office and Qualifications		10
	4.03	Removal		10

			Page
	4.04	Resignations		10
	4.05	Vacancies		11
	4.06	Chairman of the Board		11
	4.07	Chief Executive Officer		11
	4.08	President and Chief Operating Officer		11
	4.09	Vice Presidents		11
	4.10	Chief Financial Officer		11
	4.11	Secretary		11
	4.12	Treasurer		12
	4.13	Compensation		12
ARTICLE V		Contracts, Checks, Drafts, Bank Accounts, Etc.		12
	5.01	Execution of Contracts		12
	5.02	Checks, Drafts, Etc.		12
	5.03	Deposits		12
	5.04	General and Special Bank Accounts		13
ARTICLE VI		Shares and Their Transfer		13
	6.01	Certificates for Stock		13
	6.02	Transfers of Stock		13
	6.03	Regulations		14
	6.04	Lost, Stolen, Destroyed and Mutilated Certificates		14
ARTICLE VII		Indemnification		14
	7.01	Authorization For Indemnification		14
	7.02	Advance of Expenses		14
	7.03	Insurance		15
	7.04	Non-exclusivity		15
ARTICLE VIII		Miscellaneous		15
	8.01	Seal		15
	8.02	Waiver of Notices		16
	8.03	Amendments		16
	8.04	Representation of Other Corporations		16
	8.05	Fiscal Year		16

ii

AMENDED AND RESTATED BYLAWS

OF
MEADE INSTRUMENTS CORP.,
A DELAWARE CORPORATION

ARTICLE I

Offices

     1.01 Registered Office. The registered office of Meade Instruments Corp. (hereinafter the “Corporation”) in the State of Delaware shall be in the City of Wilmington, County of New Castle, and the name of the registered agent in charge thereof shall be the agent named in the Certificate of Incorporation until changed by the Board of Directors (the “Board”).

     1.02 Principal Office. The principal office for the transaction of the business of the Corporation shall be at such place as may be established by the Board. The Board is granted full power and authority change the principal office from one location to another.

     1.03 Other Offices. The Corporation may also have an office or offices at such other place or places, either within or without the State of Delaware, as the Board may from time to time determine or as the business of the Corporation may require.

ARTICLE II

Meetings of Stockholders

     2.01 Annual Meetings. Annual meetings of the stockholders of the Corporation for the purpose of electing directors and for the transaction of such other business as may properly come before such meetings may be held at such time, date and place as the Board shall determine by resolution.

     2.02 Special Meetings. A special meeting of the stockholders for the transaction of any proper business may only be called in accordance with the provisions of the Corporation’s Certificate of Incorporation (the “Certificate of Incorporation”).

     2.03 Place of Meetings. All meetings of the stockholders shall be held at such places, within or without the State of Delaware, as may from time to time be designated by the person or persons calling the respective meeting and specified in the respective notices or waivers of notice thereof.

     2.04 Notice of Meetings.

     (a) Written notice of each meeting of the stockholders, whether annual or special, shall be given to each stockholder of record entitled to vote at such meeting. Except as otherwise required by law, the written notice shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting. If mailed, notice is given when deposited in the United States mail, postage prepaid, directed to the stockholder at the stockholder’s address as it appears on the records of the Corporation. Except as otherwise required by law, no publication of any notice of a meeting of the stockholders shall be required. Every notice of a meeting of the stockholders shall state the place, date and hour of the meeting, and, in the case of a special meeting, shall also state the purpose or purposes for which the meeting is called.

     (b) Whenever notice is required to be given to any stockholder to whom (i) notice of two consecutive annual meetings, and all notices of meetings to such person between such two consecutive annual meetings, or (ii) all, and at least two, payments (if sent by first class mail) of dividends or interest on securities during a twelve-month period, have been mailed addressed to such person at such person’s address as shown on the records of the Corporation and have been returned undeliverable, the giving of such notice to such person shall not be required. Any action or meeting which shall be taken or held without notice to such person shall have the same force and effect as if such notice had been duly given. If any person shall deliver to the Corporation a written notice setting forth such person’s then current address, the requirement that notice be given to such person shall be reinstated.

     2.05 Adjournments. Any meeting of stockholders, annual or special, may adjourn from time to time to reconvene at the same or some other place. Notice need not be given of any such adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken; provided, however, if the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. At the adjourned meeting the Corporation may transact any business which might have been transacted at the original meeting.

     2.06 Quorum. Except as otherwise provided by law, the holders of record of a majority in voting interest of the shares of stock of the Corporation entitled to be voted thereat, present in person or by proxy, shall constitute a quorum for the transaction of business at any meeting of the stockholders of the Corporation or any adjournment thereof. A meeting at which a quorum is initially present may continue to transact business until adjournment, notwithstanding the withdrawal of enough shares, whether present in person or by proxy, to leave less than a quorum, provided that any action taken (other than adjournment) is approved by at least a majority of the shares required to constitute a quorum, or by any greater number of shares otherwise required to take such action by applicable law, these Bylaws or the Certificate of Incorporation. In the absence of a quorum at any meeting or any adjournment thereof, a majority in voting interest of the stockholders present in person or by proxy and entitled to vote thereat or, in the absence therefrom of all the stockholders, any officer entitled to preside at, or to act as secretary of, such meeting may adjourn such meeting from time to time.

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     2.07 Conduct of Meetings. Meetings of stockholders shall be presided over by the Chairman of the Board, if any, or in his absence by the Vice Chairman of the Board, if any, or in his absence by the President, or in his absence by a Vice President, or in the absence of the foregoing persons by a chairman designated by the Board, or in the absence of any such designation by a chairman chosen at the meeting. The Secretary shall act as secretary of the meeting, but in his absence the chairman of the meeting may appoint any person to act as secretary of the meeting. Subject to the requirements of applicable law, all annual and special meetings of stockholders shall be conducted in accordance with such rules and procedures as the Board may establish and, as to matters not governed by such rules and procedures, as the chairman of such meeting shall determine.

     2.08 Voting.

     (a) Unless otherwise provided by the General Corporation Law of the State of Delaware or the Certificate of Incorporation, each stockholder shall be entitled to one vote for each outstanding share of stock of the Corporation held by such stockholder. Each stockholder shall, at each meeting of the stockholders, be entitled to vote in person or by proxy each share or fractional share of the stock of the Corporation having voting rights on the matter in question and which shall have been held by him and registered in his name on the books of the Corporation on the date fixed pursuant to Section 2.12 of these Bylaws as the record date for the determination of stockholders entitled to notice of and to vote at such meeting.

     (b) Shares of its own stock belonging to the Corporation or to another corporation, if a majority of the shares entitled to vote in the election of directors in such other corporation is held, directly or indirectly, by the Corporation, shall neither be entitled to vote nor be counted for quorum purposes. Persons holding stock of the Corporation in a fiduciary capacity shall be entitled to vote such stock. Persons whose stock is pledged shall be entitled to vote, unless in the transfer by the pledgor on the books of the Corporation he shall have expressly empowered the pledgee to vote thereon, in which case only the pledgee, or his proxy, may represent such stock and vote thereon. Stock having voting power standing of record in the names of two or more persons, whether fiduciaries, members of a partnership, joint tenants, tenants in common, tenants by the entirety or otherwise, or with respect to which two or more persons (including proxyholders) have the same fiduciary relationship, shall be voted in accordance with the provisions of the General Corporation Law of the State of Delaware.

     (c) Any such voting rights may be exercised by the stockholder entitled thereto in person or by his proxy appointed by an instrument in writing, subscribed by such stockholder or by his attorney thereunto authorized and delivered to the secretary of the meeting; provided, however, that no proxy shall be voted or acted upon after three years from its date unless such proxy shall provide for a longer period. The attendance at any meeting of a stockholder who may theretofore have given a proxy shall not have the effect of revoking the same unless he shall in writing so notify the secretary of the meeting prior to the voting of the proxy. Except as otherwise provided in the Certificate of Incorporation, in these Bylaws or by law, at any meeting of the stockholders the affirmative vote of the majority of shares present in person or represented by proxy at the meeting and entitled to vote on the subject matter shall be the act of the stockholders. Shares withdrawn from a meeting prior to a vote of stockholders shall not be deemed present for purposes of determining the number of shares necessary to approve

3

any action taken at the meeting subsequent to the withdrawal of the shares. The vote at any meeting of the stockholders on any question need not be by written ballot, unless so directed by the chairman of the meeting. On a vote by ballot each ballot shall be signed by the stockholder voting, or by his proxy, if there be such proxy, and it shall state the number of shares voted.

     2.09 List of Stockholders. The Secretary of the Corporation shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present.

     2.10 Inspectors of Election. If at any meeting of the stockholders a vote by written ballot shall be taken on any question, the chairman of such meeting may appoint an inspector or inspectors of election to act with respect to such vote. Each inspector of election so appointed shall first subscribe an oath faithfully to execute the duties of an inspector of election at such meeting with strict impartiality and according to the best of his ability. Such inspectors of election shall decide upon the qualification of the voters and shall report the number of shares represented at the meeting and entitled to vote on such question, shall conduct and accept the votes, and, when the voting is completed, shall ascertain and report the number of shares voted respectively for and against the question. Reports of inspectors of election shall be in writing and subscribed and delivered by them to the Secretary of the Corporation. The inspectors of election need not be stockholders of the Corporation, and any officer of the Corporation may be an inspector of election on any question other than a vote for or against a proposal in which he shall have a material interest.

     2.11 No Action By Consent of Stockholders. Whenever, and so long as, the Corporation is subject to the reporting requirements of Section 12 or 15(d) of the Securities Exchange Act of 1934 (or any successor law), any action required or permitted to be taken at any annual or special meeting of stockholders may be taken only upon the vote of stockholders at an annual or special meeting duly noticed and called in accordance with the General Corporation Law of the State of Delaware and may not be taken by written consent of stockholders without a meeting.

     2.12 Fixing Date for Determination of Stockholders of Record.

     (a) In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board, and which record date shall not be more than sixty (60) nor less than ten (10) days before the date of such meeting. If no record date is fixed by the Board, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice

4

is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of such meeting; provided, however, that the Board may fix a new record date for the adjourned meeting.

     (b) In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty (60) days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board adopts the resolution relating thereto.

     2.13 Stockholder Proposals.

     (a) At any meeting of the stockholders, only such business shall be conducted as shall have been brought before the meeting by or at the direction of the Board of Directors or by any stockholder of the Corporation who is a stockholder of record at the time of giving the notice provided for in this Section 2.13, who shall be entitled to vote at such meeting and who complies with the procedures set forth below. For business to be properly brought before a stockholder meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation. To be timely, a stockholder’s notice must be delivered to or mailed and received at the principal executive offices of the Corporation not less than sixty (60) days nor more than ninety (90) days prior to the meeting; provided, however, that in the event that less than seventy (70) days’ notice or prior public disclosure of the date of the meeting is given or made to stockholders, notice by the stockholder to be timely must be so received not later than the close of business on the 10th day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure thereof was made, whichever occurred first. A stockholder’s notice to the Secretary shall set forth as to each matter the stockholder proposes to bring before the meeting (i) a brief description of the business desired to be brought before the meeting and the reasons for conducting such business at the meeting, (ii) the name and record address of the stockholder proposing such business, (iii) the class and number of shares of the Corporation which are beneficially owned by the stockholder, and (iv) any material interest of the stockholder in such business. Notwithstanding the foregoing, nothing in this Section 2.13 shall be interpreted or construed to require the inclusion of information about any such proposal in any proxy statement distributed by, at the direction of, or on behalf of the Board. Notwithstanding anything in these Bylaws to the contrary, no business shall be conducted at a stockholder meeting except in accordance with the procedures set forth in this Section 2.13. For purposes of this Section 2.13, any adjournment(s) or postponement(s) of the original meeting shall be deemed for purposes of notice to be a continuation of the original meeting and no business may be brought before any reconvened meeting unless such timely notice of such business was given to the Secretary of the Corporation for the meeting as originally scheduled.

     (b) If the chairman of the meeting shall determine, based on the facts, that business was not properly brought before the meeting in accordance with the provisions of this

5

Section 2.13, the chairman shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted. Notwithstanding the foregoing provisions of Section 2.13(a) and 2.13(b), a stockholder shall also comply with all applicable requirements of the Securities Exchange Act of 1934, and the rules and regulations thereunder with respect to the matters set forth in this Section 2.13.

     2.14 Notice of Stockholder Nominees.

     (a) Only persons who are nominated in accordance with the procedures set forth in these Bylaws shall be eligible to serve as directors. Nominations of persons for election to the Board of Directors of the Corporation shall be made only at a meeting of stockholders and only (1) by or at the direction of the Board of Directors or a committee thereof or (2) by any stockholder of the Corporation who is a stockholder of record at the time of giving of notice provided for in this Section 2.14, who shall be entitled to vote for the election of directors at the meeting and who complies with the notice procedures set forth in this Section 2.14. Such nominations, other than those made by or at the direction of the Board, must be made pursuant to timely notice in writing to the Secretary of the Corporation. To be timely, a stockholder’s notice shall be delivered to or mailed and received at the principal executive offices of the Corporation not less than sixty (60) days nor more than ninety (90) days prior to the meeting; provided, however, that in the event that less than seventy (70) days’ notice or prior public disclosure of the date of the meeting is given or made to stockholders, notice by the stockholder to be timely must be received not later than the close of business on the 10th day following the day on which such notice of the date of the meeting was mailed or such public disclosure thereof was made, whichever occurred first. Such stockholder’s notice shall set forth: (i) as to each person whom the stockholder proposes to nominate for election or re-election as a director, all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended, (including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected); and (ii) as to the stockholder giving the notice (A) the name and address, as they appear on the Corporation’s books, of such stockholder, and (B) the class and number of shares of the Corporation which are beneficially owned by such stockholder. Notwithstanding the foregoing, nothing in this Section 2.14 shall be interpreted or construed to require the inclusion of information about any such nominee in any proxy statement distributed by, at the direction of, or on behalf of the Board. Notwithstanding anything in these Bylaws to the contrary, no person shall be eligible to serve as a director of the Corporation unless nominated in accordance with the procedures set forth in this Section 2.14. Notwithstanding the foregoing provisions of this Section 2.14, a stockholder shall also comply with all applicable requirements of the Securities Exchange Act of 1934, and the rules and regulations thereunder with respect to the matters set forth in this Section 2.14. For purposes of this Section 2.14, any adjournment(s) or postponement(s) of the original meeting shall be deemed for purposes of notice to be a continuation of the original meeting and no nominations by a stockholder of persons to be elected directors of the Corporation may be made at any such reconvened meeting unless pursuant to a notice which was timely for the meeting on the date originally scheduled.

6

     (b) If the chairman of the meeting shall determine, based on the facts, that a nomination was not made in accordance with the procedures prescribed by this Section 2.14, the chairman shall so declare to the meeting and the defective nomination shall be disregarded.

ARTICLE III

Board of Directors

     3.01 General Powers. The property, business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors.

     3.02 Number, Classes, Term of Office.

     (a) The number of directors of the Corporation shall not be less than three (3) nor more than fifteen (15), with the exact number of directors to be determined from time to time solely by resolution adopted by the affirmative vote of a majority of the directors then in office. The exact number of directors shall be six (6) until changed, within the limits specified above, by resolution, duly approved by the Board of Directors. The maximum and minimum number of directors permitted under these Bylaws may not be amended without a duly adopted amendment to these Bylaws approved in accordance with the provisions of the Corporation’s Certificate of Incorporation. The directors shall be divided into three classes, designated Class I, Class II and Class III. Each class shall consist, as nearly as may be possible, of one-third of the total number of directors constituting the entire Board of Directors. Except as otherwise provided in the Certificate of Incorporation, each director shall serve for a term ending on the date of the third annual meeting of stockholders next following the annual meeting at which such director was elected. Notwithstanding the foregoing, each of the directors of the Corporation shall hold office until his successor shall have been duly elected and qualified or until he shall resign or shall have been removed in the manner hereinafter provided.

     (b) No person may stand for election to, or be elected to, the Board of Directors or be appointed by the directors to fill a vacancy on the Board of Directors who shall have made, or be making, improper or unlawful use of the Corporation’s confidential information, or who has interests which conflict materially with the interests of the Corporation. Directors need not be stockholders.

     3.03 Election of Directors. The directors shall be elected by the stockholders of the Corporation, and at each election the persons receiving the greatest number of votes, up to the number of directors then to be elected, shall be the persons then elected. The election of directors is subject to any provisions contained in the Certificate of Incorporation relating thereto, including provisions for a classified Board and no cumulative voting.

     3.04 Resignations. Any director of the Corporation may resign at any time by giving written notice to the Board or to the Secretary of the Corporation. Any such resignation shall take effect at the time specified therein, or, if the time be not specified, it shall take effect immediately upon its receipt; and unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.

7

     3.05 Vacancies. Except as otherwise provided in the Certificate of Incorporation, any vacancy in the Board, whether because of death, resignation, disqualification, an increase in the number of directors or any other cause, may be filled by a majority of the remaining directors, although less than a quorum. Each director so chosen to fill a vacancy shall hold office until his successor shall have been elected and qualified or until he shall resign or shall have been removed in the manner hereinafter provided.

     3.06 Place of Meeting, Etc. The Board may hold any of its meetings at such place or places within or without the State of Delaware as the Board may from time to time by resolution designate or as shall be designated by the person or persons calling the meeting or in the notice or a waiver of notice of any such meeting.

     3.07 Participation by Telephone. Directors may participate in any regular or special meeting of the Board, or any meeting of any committee of the Board, by means of conference telephone or similar communications equipment pursuant to which all persons participating in the meeting of the Board can hear each other, and such participation shall constitute presence in person at such meeting.

     3.08 Regular Meetings. Regular meetings of the Board may be held at such times as the Board shall from time to time by resolution determine. If any day fixed for a regular meeting shall be a legal holiday at the place where the meeting is to be held, then the meeting shall be held at the same hour and place on the next succeeding business day not a legal holiday. Except as otherwise required by law, notice of regular meetings need not be given.

     3.09 Special Meetings. Special meetings of the Board shall be held whenever called by the Chairman of the Board, the Chief Executive Officer or any two or more directors. Except as otherwise provided by law or by these Bylaws, notice of the time and place of each such special meeting shall be mailed to each director, addressed to him at his residence or usual place of business, at least five (5) days before the day on which the meeting is to be held, or shall be sent to him at such place by telegraph, overnight courier, telecopy communication or cable or be delivered personally not less than forty-eight (48) hours before the time at which the meeting is to be held. Except where otherwise required by law or by these Bylaws, notice of the purpose of a special meeting need not be given.

     3.10 Quorum and Manner of Acting. Except as otherwise provided in these Bylaws, the Certificate of Incorporation or by law, the presence of a majority of the authorized number of directors shall be required to constitute a quorum for the transaction of business at any meeting of the Board, and all matters shall be decided at any such meeting, a quorum being present, by the affirmative votes of a majority of the directors present. A director who withdraws from a meeting shall not be deemed present at the meeting for purposes of determining the number of director votes necessary to approve any action taken at the meeting subsequent to the withdrawal of the director. A meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of a sufficient number of directors to leave less than a quorum, provided any action taken is approved by at least a majority of the required quorum for such meeting or by such greater number as may be required by these Bylaws, the Certificate of Incorporation or applicable law. In the absence of a quorum, a majority of directors

8

present at any meeting may adjourn the same from time to time until a quorum shall be present. Notice of any adjourned meeting need not be given. The directors shall act only as a Board, and the individual directors shall have no power as such.

     3.11 Action by Consent. Any action required or permitted to be taken at any meeting of the Board or of any committee thereof may be taken without a meeting if a written consent thereto is signed by all members of the Board or of such committee, as the case may be, and such written consent is filed with the minutes of proceedings of the Board or committee.

     3.12 Compensation. The directors shall receive such compensation for their services as directors as may be fixed by resolution of the Board from time to time. The Board may also provide that the Corporation shall reimburse a director for any expense incurred by the director on account of the director’s attendance at any meetings of the Board or committees of the Board. Neither the payment of such compensation nor the reimbursement of such expenses shall be construed to preclude any director from serving the Corporation or its subsidiaries in any other capacity and receiving compensation therefor.

     3.13 Committees of Directors. The Board may, by resolution passed by a majority of the whole Board, designate one or more committees, each committee to consist of one or more of the directors of the Corporation. Any such committee, to the extent provided in the resolution of the Board and except as otherwise limited by law, shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the Certificate of Incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the Corporation’s property and assets, recommending to the stockholders a dissolution of the Corporation or a revocation of a dissolution, or amending the Bylaws of the Corporation; and unless the resolution of the Board of Directors, the Certificate of Incorporation or these Bylaws expressly so provide, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock or to adopt a certificate of ownership and merger pursuant to Delaware law. Any such committee shall keep written minutes of its meetings and report the same to the Board at the next regular meeting of the Board. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board to act at the meeting in the place of any such absent or disqualified member.

     3.14 Rights of Preferred Stock. Notwithstanding anything else contained in these Bylaws, whenever the holders of one or more classes or series of Preferred Stock shall have the right, voting separately as a class or series, to elect directors, the nomination, election, term of office, filling of vacancies, removal and other features of directorships shall be governed by the terms of the certificate of designation for such class or series.

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ARTICLE IV

Officers

     4.01 Corporate Officers.

     (a) The officers of the Corporation shall be a Chief Executive Officer, a President, one or more executive-level Vice Presidents (the number thereof and their respective titles to be determined by the Board), a Secretary and a Chief Financial Officer, each to be appointed at the discretion of the Board, and such other officers as may be appointed in accordance with the provisions of Section 4.01(b).

     (b) In addition to the officers specified in Section 4.01(a), the Chief Executive Officer or the President may appoint such other officers as they may deem necessary or advisable, including a Chairman of the Board, one or more Assistant Secretaries, a Treasurer, one or more Assistant Treasurers, one or more Vice Presidents and one or more Assistant Vice Presidents, each of whom shall hold office for such period, have such authority and perform such duties as the Chief Executive Officer or the President may from time to time determine.

     (c) Any number of offices may be held by the same person.

     4.02 Election, Term of Office and Qualifications. Each officer shall hold office until such officer shall resign or shall be removed or otherwise disqualified to serve, or the officer’s successor shall be appointed and qualified.

     4.03 Removal. Any officer of the Corporation may be removed, with or without cause, at any time at any regular or special meeting of the Board by a majority of the directors of the Board at the time in office or, except in the case of an officer appointed by the Board, by any officer of the Corporation or committee of the Board upon whom or which such power of removal may be conferred by the Board.

     4.04 Resignations. Any officer may resign at any time by giving written notice of his resignation to the Board, the President or the Secretary of the Corporation. Any such resignation shall take effect at the time specified therein, or, if the time be not specified, upon receipt thereof by the Board, President or Secretary; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.

     4.05 Vacancies. A vacancy in any office because of death, resignation, removal, disqualification or other cause may be filled for the unexpired portion of the term thereof in the manner prescribed in these Bylaws for regular appointments or elections to such office.

     4.06 Chairman of the Board. The Chairman of the Board, if such an officer is elected, shall preside at all meetings of the stockholders and the Board and shall have such other powers and duties as may from time to time be assigned to him by the Board or prescribed by the Bylaws.

     4.07 Chief Executive Officer. The Chief Executive Officer of the Corporation shall be the chief executive officer of the Corporation unless otherwise determined by the Board, and shall have, subject to the control of the Board, general and active supervision and management over the business of the Corporation and over its several officers, assistants, agents

10

and employees. In the absence or nonappointment of a Chairman of the Board, the Chief Executive Officer shall preside at all meetings of the stockholders and at all meetings of the Board if present thereat.

     4.08 President and Chief Operating Officer. The President and Chief Operating Officer of the Corporation shall be the chief operating officer of the Corporation subject to the authority of the Chief Executive Officer, and shall report directly to the Chief Executive Officer. The President and Chief Operating Officer shall have such powers and perform such duties as the Board and/or Chief Executive Officer may from time to time prescribe.

     4.09 Vice Presidents. Each Vice President shall have such powers and perform such duties as the Board may from time to time prescribe.

     4.10 Chief Financial Officer. The Chief Financial Officer shall supervise, have custody of, and be responsible for all funds and securities of the Corporation. The Chief Financial Officer shall deposit all such funds in the name of the Corporation in such banks, trust companies or other depositories as shall be selected by the Board or in accordance with authority delegated by the Board. The Chief Financial Officer shall receive, and give receipts for, moneys due and payable to the Corporation from any source whatsoever. The Chief Financial Officer shall exercise general supervision over expenditures and disbursements made by officers, agents and employees of the Corporation and the preparation of such records and reports in connection therewith as may be necessary or desirable. The Chief Financial Officer shall, in general, perform all other duties incident to the office of Chief Financial Officer and such other duties as from time to time may be assigned to the Chief Financial Officer by the Board.

     4.11 Secretary. The Secretary shall have the duty to record the proceedings of all meetings of the Board, of the stockholders, and of all committees of which a secretary shall not have been appointed in one or more books provided for that purpose. The Secretary shall see that all notices are duly given in accordance with these Bylaws and as required by law; shall be custodian of the seal of the Corporation and shall affix and attest the seal to all documents to be executed on behalf of the Corporation under its seal; and, in general, he shall perform all the duties incident to the office of Secretary and such other duties as may from time to time be assigned to him by the Board.

     4.12 Treasurer. The Treasurer shall have such powers and perform such duties as the Board may from time to time prescribe. Unless otherwise provided by the Board, the Chief Financial Officer shall be the Treasurer of the Corporation.

     4.13 Compensation. The compensation of the officers of the Corporation shall be fixed from time to time by the Board. None of such officers shall be prevented from receiving such compensation by reason of the fact that he is also a director of the Corporation. Nothing contained herein shall preclude any officer from serving the Corporation, or any subsidiary corporation, in any other capacity and receiving proper compensation therefor.

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ARTICLE V

Contracts, Checks, Drafts, Bank Accounts, Etc.

     5.01 Execution of Contracts. The Board, except as in these Bylaws otherwise provided, may authorize any officer or officers, agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the Corporation, and such authority may be general or confined to specific instances; and unless so authorized by the Board or by these Bylaws, no officer, agent or employee shall have any power or authority to bind the Corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or in any amount.

     5.02 Checks, Drafts, Etc. All checks, drafts or other orders for payment of money, notes or other evidence of indebtedness, issued in the name of or payable to the Corporation, shall be signed or endorsed by such person or persons and in such manner as, from time to time, shall be determined by resolution of the Board. Each such person shall give such bond, if any, as the Board may require.

     5.03 Deposits. All funds of the Corporation not otherwise employed shall be deposited from time to time to the credit of the Corporation in such banks, trust companies or other depositories as the Board may select, or as may be selected by any officer or officers, assistant or assistants, agent or agents, or attorney or attorneys of the Corporation to whom such power shall have been delegated by the Board. For the purpose of deposit and for the purpose of collection for the account of the Corporation, the President, any Vice President or the Chief Financial Officer, (or any other officer or officers, assistant or assistants, agent or agents, or attorney or attorneys of the Corporation who shall from time to time be determined by the Board) may endorse, assign and deliver checks, drafts and other orders for the payment of money which are payable to the order of the Corporation.

     5.04 General and Special Bank Accounts. The Board may from time to time authorize the opening and keeping of general and special bank accounts with such banks, trust companies or other depositories as the Board may select or as may be selected by any officer or officers, assistant or assistants, agent or agents, or attorney or attorneys of the Corporation to whom such power shall have been delegated by the Board. The Board may make such special rules and regulations with respect to such bank accounts, not inconsistent with the provisions of these Bylaws, as it may deem expedient.

ARTICLE VI

Shares and Their Transfer

     6.01 Certificates for Stock.

     (a) The shares of the Corporation shall be represented by certificates, provided that the Board may provide by resolution or resolutions that some or all of any or all classes or series of its stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the Corporation. Notwithstanding the adoption of such a resolution by the Board, every holder of stock

12

represented by certificates and upon request every holder of uncertificated shares shall be entitled to have a certificate, in such form as the Board shall prescribe, signed by, or in the name of the Corporation by the Chairman or Vice Chairman of the Board, or the President or Vice President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the Corporation representing the number of shares registered in certificate form. Any of or all of the signatures on the certificates may be a facsimile. In case any officer, transfer agent or registrar who has signed, or whose facsimile signature has been placed upon, any such certificate, shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, such certificate may nevertheless be issued by the Corporation with the same effect as though the person who signed such certificate, or whose facsimile signature shall have been placed thereupon, were such officer, transfer agent or registrar at the date of issue.

     (b) A record shall be kept of the respective names of the persons, firms or corporations owning the stock represented by such certificates, the number and class of shares represented by such certificates, respectively, and the respective dates thereof, and in case of cancellation, the respective dates of cancellation. Every certificate surrendered to the Corporation for exchange or transfer shall be cancelled, and no new certificate or certificates shall be issued in exchange for any existing certificate until such existing certificate shall have been so cancelled, except in cases provided for in Section 6.04.

     6.02 Transfers of Stock. Transfers of shares of stock of the Corporation shall be made only on the books of the Corporation by the registered holder thereof, or by such holder’s attorney thereunto authorized by power of attorney duly executed and filed with the Secretary, or with a transfer clerk or a transfer agent appointed as provided in Section 6.03, and upon surrender of the certificate or certificates for such shares properly endorsed and the payment of all taxes thereon. The person in whose name shares of stock stand on the books of the Corporation shall be deemed the owner thereof for all purposes as regards the Corporation. Whenever any transfer of shares shall be made for collateral security, and not absolutely, such fact shall be so expressed in the entry of transfer if, when the certificate or certificates shall be presented to the Corporation for transfer, both the transferor and the transferee request the Corporation to do so.

     6.03 Regulations. The Board may make such rules and regulations as it may deem necessary or appropriate, not inconsistent with these Bylaws, concerning the issue, transfer and registration of certificates for shares of the stock of the Corporation. It may appoint, or authorize any officer or officers to appoint, one or more transfer clerks or one or more transfer agents and one or more registrars, and may require all certificates for stock to bear the signature or signatures of any of them.

     6.04 Lost, Stolen, Destroyed and Mutilated Certificates. In any case of loss, theft, destruction or mutilation of any certificate of stock, another may be issued in its place upon proof of such loss, theft, destruction or mutilation and upon the giving of a bond of indemnity to the Corporation in such form and in such sum as the Board may direct; provided, however, that a new certificate may be issued without requiring any bond when, in the judgment of the Board, it is proper so to do.

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ARTICLE VII

Indemnification

     7.01 Authorization For Indemnification. The Corporation shall indemnify, in the manner and to the full extent permitted by law, any person (or the estate, heirs, executors, or administrators of any person) who was or is a party to, or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether or not by or in the right of the Corporation, and whether civil, criminal, administrative, investigative or otherwise, by reason of the fact that such person is or was a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent shall not, of itself, create a presumption that the person did not act in good faith and in a manner which such person reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, that such person had reasonable cause to believe that such person’s conduct was unlawful.

     7.02 Advance of Expenses. Costs and expenses (including attorneys’ fees) incurred by or on behalf of a director or officer in defending or investigating any action, suit, proceeding or investigation shall be paid by the Corporation in advance of the final disposition of such matter, if such director or officer shall undertake in writing to repay any such advances in the event that it is ultimately determined that such person is not entitled to indemnification. Notwithstanding the foregoing, no advance shall be made by the Corporation if a determination is reasonably and promptly made by the Board by a majority vote of a quorum of disinterested directors, or (if such a quorum is not obtainable or, even if obtainable, a quorum of disinterested directors so directs) by independent legal counsel, that, based upon the facts known to the Board or counsel at the time such determination is made, (a) the director or officer acted in bad faith or deliberately breached such person’s duty to the Corporation or its stockholders, and (b) as a result of such actions by the director or officer, it is more likely than not that it will ultimately be determined that such director or officer is not entitled to indemnification.

     7.03 Insurance. The Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise or as a member of any committee or similar body against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person’s status as such, whether or not the Corporation would have the power to indemnify such person against such liability under the provisions of this Article or applicable law.

     7.04 Non-exclusivity. The right of indemnity and advancement of expenses provided herein shall not be deemed exclusive of any other rights to which any director or officer or any other person seeking indemnification or advancement of expenses from the Corporation may be entitled under applicable law, any agreement, vote of stockholders or disinterested

14

directors or otherwise, both as to action in such person’s official capacity and as to action in another capacity while holding such office. Any agreement for indemnification of or advancement of expenses to any director, officer, employee or other person may provide rights of indemnification or advancement of expenses which are broader or otherwise different from those set forth herein.

ARTICLE VIII

Miscellaneous

     8.01 Seal. The Corporation may have a corporate seal which shall have the name of the Corporation inscribed thereon and shall be in such form as may be approved from time to time by the Board of Directors. It shall not be necessary to the validity of any instrument executed by any authorized officer or officers of the Corporation that the execution of such instrument be evidenced by the corporate seal, and all documents, instruments, contracts and writings of all kinds signed on behalf of the Corporation by any authorized officer or officers shall be as effectual and binding on the Corporation without the corporate seal, as if the execution of the same had been evidenced by affixing the corporate seal thereto. The Board may give general authority to any officer to affix the seal of the Corporation and to attest the affixing by signature.

     8.02 Waiver of Notices. Whenever notice is required to be given by these Bylaws or the Certificate of Incorporation or by law, the person entitled to said notice may waive such notice in writing, either before or after the time stated therein, and such waiver shall be deemed equivalent to notice. Attendance of a person at a meeting (whether in person or by proxy in the case of a meeting of stockholders) shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of any regular or special meeting of the stockholders, directors or members of a committee of directors need be specified in any written waiver of notice.

     8.03 Amendments. Except as otherwise provided herein or by law, and subject to the Certificate of Incorporation, these Bylaws, or any of them, may be altered, amended or repealed, and new Bylaws may be adopted, (i) by the stockholders, at any annual meeting of stockholders, or at any special meeting of stockholders, provided that notice of such proposed amendment, modification, repeal or adoption is given in the notice of meeting, or (ii) by the Board. Any Bylaws made or altered by the stockholders may be altered or repealed by either the Board or the stockholders.

     8.04 Representation of Other Corporations. The Chief Executive Officer, President, any Vice President or the Secretary of this Corporation is authorized to vote, represent and exercise on behalf of this Corporation all rights incident to any and all shares of any other corporation or corporations standing in the name of this Corporation. The authority herein granted to said officers to vote or represent on behalf of this Corporation any and all shares held by this Corporation in any other corporation or corporations may be exercised either by such

15

officers in person or by any person authorized so to do by proxy or power of attorney duly executed by said officers.

     8.05 Fiscal Year. The fiscal year of the Corporation shall be determined by resolution of the Board.

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CERTIFICATE OF SECRETARY

OF

MEADE INSTRUMENTS CORP.,
a Delaware corporation

     The undersigned, Steven G. Murdock, does hereby certify that he is the Secretary of Meade Instruments Corp., a Delaware corporation (the “Company”), and that attached hereto as Exhibit A is a true, complete and correct copy of the Amended and Restated Bylaws of the Company, effective as of May 28, 2003.

     IN WITNESS WHEREOF, the undersigned has signed his name to this certificate this 28th day of May, 2003.

     /s/ Steven G. Murdock  

Steven G. Murdock 

Secretary 

EX-10.55

                                                                   EXHIBIT 10.55

                                 LEASE AGREEMENT

      THIS AGREEMENT made and entered into this 26 day of March 1992, between
REALTY FOUR, a Georgia General Partnership of Thomas County, Georgia,
hereinafter called Lessor, and SIMMONS OUTDOOR CORPORATION, a Delaware
Corporation, hereinafter called Lessee,

                                  WITNESSETH:

PREMISES LEASED: That Lessor has leased and by these presents does grant,
demise, and lease unto Lessee the following described premises:

      Located in the City of Thomasville, Thomas County, Georgia, in Plantation
      Oak Industrial Park, a 6 acre lot, more or less, bounded on the north by
      Plantation Oak Drive, on the west by a 40 foot utility easement deeded to
      the City of Thomasville paralleling the new west bypass, on the east by
      the yet-to-be named street between the Heilig-Meyers building and subject
      property and on the south by a line constructed by measuring 500 feet
      south along the easterly property line from the intersection of subject
      property lines at the new street and Plantation Oak Drive to a point,
      thence westerly at a right angle to the easterly property line to the
      intersection of the westerly boundary of subject property. Additionally,
      Lessor shall have an option to purchase an additional 400 feet of land to
      the south of subject property for a period of 8 years, the same being the
      original term of this lease, for the purpose of extending the building
      described by the attached specifications and to be built upon subject
      property.

TERM AND RENTAL: TO HAVE AND TO HOLD the same for a term of eight (8) years,
commencing on the fifteenth day of August, 1992 or upon completion sufficient
for occupancy. Construction work on the building is to begin by April 1, 1992,
with a completion date no later than September 15, 1992.

Lessee shall pay Lessor or its assigns a monthly rental of TEN THOUSAND ONE
HUNDRED DOLLARS ($10,100.00) to be paid on or before the first day of each month
by Lessee in advance to Lessor for the first four years of this lease. This base
rental shall be adjusted to increase or decrease by 60% of the change in the
consumer price index over the previous four year term of the lease to determine
the new monthly rental for the following four years. Lessee may renew this lease
for four additional four year terms at a new lease amount to be computed as
follows: the base rental at the end of the preceding period shall be adjusted to
increase or decrease by 60% of the change in the consumer price index over the
previous term of the lease to determine the new monthly rental for the following
four year term. Lessee shall give written notice to Lessor of the exercise of
this option not



                        LEASE AGREEMENT continued, page 2

less than ninety days prior to the expiration of the term hereof and such option
shall be exercisable only in the absence of material default uncured after
notice.

It is further mutually agreed between the parties as follows:

1.    DESCRIPTION OF LESSOR'S WORK: Lessor, at its sole cost, agrees to purchase
and prepare land and construct the buildings through completion, certification
and occupancy, in complete accordance with plans and specifications approved by
Lessee and Lessor prior to commencement to construction. Said approved plans and
specifications are herewith specifically made a part of this lease and a copy
thereof is attached. Lessee shall be required to accept occupancy of leased
premises upon completion of all the improvements according to plans and
specifications by Lessee.

2.    TITLE AND ENJOYMENT: Lessor covenants that it will have a fee simple title
to the demised premises but it is understood, however, that Lessor will encumber
the land in borrowing money necessary to effect construction of the improvements
herein contemplated and the rights of Lessee shall be subordinate and subject to
the rights of the holder of such security instrument as shall be executed by
Lessor securing the loan, subject to lender's agreement not to disturb Lessee's
quiet enjoyment of the premises. In order for Lessor to obtain the requisite
financing for the contemplated construction, Lessee agrees to provide
satisfaction to Lessor's bank that lease payments will be made for the full term
of this lease, or any other form of guaranty sufficient for Lessor to obtain the
requisite financing.

Lessor agrees to protect the rights of Lessee to the free and unrestricted use
and occupancy of the demised premises and does hereby agree that it will notify
Lessee of the amount of the loan which may be secured in the manner aforesaid,
the terms of such loan and that Lessee may pay all rental payments directly to
the holder of such security instrument during such period of time as Lessor
shall default in the payment of any installment which shall become due under the
terms of such security instrument.

3.    TAXES AND INSURANCE: Lessor shall pay ad valorem taxes and take advantage
of all discounts offered for prompt payment of same, and upon presentation of
the paid tax bills, Lessee shall reimburse Lessor for said ad valorem taxes.
Lessee shall pay property insurance premiums during the term of this lease in
such amount that the property is insured for 10O% of its replacement value or
highest insurable value if less than 100%. During the term of this Lease, Lessee
shall procure and maintain in full force and effect public liability insurance,
naming Lessor and Lessee as co-insureds covering claims for personal injury or
property damage occurring on or about the Leased premises under a policy of
general liability insurance with limits of not less than $1,000,000.00 with
respect to all occurrences during each calendar year. Lessor and Lessee shall
provide each other with



                        LEASE AGREEMENT continued, page 3

certificates of all insurance policies required to be procured and maintained by
them hereunder. All such policies shall provide that the insurers will not
cancel or change the insurance coverage afforded thereby without first giving
Lessor and Lessee ten (10) days prior written notice. Lessee shall be
responsible, at its expense, for insuring all its furniture, trade fixtures,
equipment, and other personal property of Lessee located on the Leased Premises.

4.    USE OF PREMISES: Premises shall be used by Lessee for the purpose of
warehousing and distribution of sports optical equipment and related activities,
but Lessee shall have the right to use the Leased Premises for any other lawful
purposes that do not create a nuisance, upon the written consent of the Lessor,
which consent shall not be unreasonably withheld. Lessee may use the Leased
Premises for outdoor storage, provided such storage area is adequately screened
from view and provided further that such storage is permitted by applicable
laws, codes and regulations and does not create a nuisance. Lessor represents to
Lessee that the Leased Premises is zoned to permit the use thereof as a sports
optical warehousing and distribution facility. Lessee covenants not to knowingly
use the premises for illegal purposes nor in such manner as to violate any
applicable and valid law, rule or regulation of any governmental body, and to
occupy and use said premises in a careful, safe and proper manner, and not
permit waste thereon.

5.    REPAIRS BY LESSOR: Lessor covenants and warrants leased premises will be
well built, properly constructed, structurally safe and sound, and suitable and
fit for Lessee's use. If the roof, exterior walls or other structural portions
of the building shall need or require repairs not caused by fire or other
casualty for which the Lessor is insured and not caused by the negligence or
fault of the Lessee, Lessor, after receiving notice from Lessee shall make such
repairs at the Lessor's expense.

6.    REPAIRS BY LESSEE: Lessee will, at its own expense, except for those items
covered under Lessor's insurance policy, maintain the building and equipment
including but not limited to the following: the heating and air conditioning
equipment, replacing all filters on a regular and timely basis, canopies,
exterior and interior doors, plate glass, electrical lighting and wiring, both
interior and exterior, drainage pipes for any utilities or fixtures, gutters and
downspouts, floor covering and redecorate the interior of the premises whenever
it deems same necessary. Lessor shall be responsible for the maintenance of the
roof, but shall not be held responsible for any loss or damage incurred as a
result of any defect or leakage in same.

At the expiration, or any prior termination, of the original or any renewal term
of this lease, Lessee will surrender the premises to Lessor in as good condition
as received, except for ordinary wear and tear, and damage by fire or other
casualty.



                        LEASE AGREEMENT continued, page 4

7.    REMODELING: Lessee shall have the right and privilege to make from time to
time any alterations, changes and improvements, at its own expense, which Lessee
considers necessary to adapt the premises to the changing needs of Lessee's
business. However, Lessee shall obtain prior approval, which shall not be
unreasonably withheld, of Lessor to any such alterations, changes and
improvements which will affect the structural design of the premises.

8.    FIXTURES AND EQUIPMENT: Lessee nay install and operate in and upon the
premises such trade fixtures, equipment, machinery and appliances as it shall
consider necessary to the conduct of its business on the premises, provided all
laws, rules and regulations of governmental bodies with respect to installation
and operation thereof shall be fully and completely complied with by Lessee. On
the expiration of this lease, or on the expiration of any extension, renewal, or
sooner termination thereof, Lessee may remove all or any part of such fixtures,
equipment, machinery and appliances installed on the premises by Lessee,
provided, however that Lessee shall repair any damage to the premises which may
be caused by such installation, operation or removal. No electrical wiring or
fixtures shall be removed.

9.    ASSIGNMENT AND SUBLETTING: Lessee may transfer and assign this lease or
sublet the premises with the permission, which shall not be unreasonably
withheld, of Lessor, subject to any existing restrictions; but in such event,
Lessee shall remain liable for all rents and obligations of Lessee hereunder for
the remainder of the term of this lease.

10.   LESSOR'S LIABILITY FOR DAMAGE: Lessor shall not be liable for any damage
to Lessee's fixtures or merchandise caused by fire or other insurable hazards,
regardless of the cause thereof, and Lessee hereby releases Lessor of any and
all liabilities for such damage.

11.   DESTRUCTION OF OR DAMAGE TO PREMISES: If there occurs any fire, explosion
or other casualty to the leased premises or any portion thereof resulting in
damage or destruction to the leased premises, Lessee shall promptly notify
Lessor in writing of such damage and Lessor shall thereupon cause the damage to
be repaired forthwith unless the lease is terminated as hereinafter provided. If
the leased premises or any part thereof shall be rendered untenantable for
Lessee's intended use as a result of such damage, Lessee's obligation to pay
rent hereunder shall be reduced and abated in proportion to the amount of gross
rentable area of the premises rendered untenantable as the result of such
casualty. If premises are to be rebuilt or repaired Lessor agrees that such
rebuilding or repairs shall be complete within 150 days from date of said
destruction. Said rent reduction shall commence on the date such damage occurs
and end on the date the leased premises are restored and again ready for
occupancy. In the event the leased premises are damaged to the extent of more
than fifty percent (50%) of the replacement cost thereof, either Lessor or
Lessee may elect to terminate this lease with within thirty (30)



                        LEASE AGREEMENT continued, page 5

days from the date of such damage by giving written notice thereof to the other
and thereupon this lease shall immediately terminate and Lessee shall have no
further obligation hereunder other than to pay the rent accrued to the date of
such damage.

12.   PERMITS, UTILITIES, ETC.: Lessee agrees to pay all license, permit fees
and occupational taxes, all expenses for gas, electricity, water, fuel and all
other utilities used on or furnished to Leased Premises during the term of this
Lease.

13.   DAMAGE TO PERSONS: Lessee shall be responsible for any and all causes of
action, claims or demands for damages for personal injuries, or for loss, damage
or injury to property, and any and all other causes of action, claims or demands
of every kind and character, caused by or arising from the use, occupancy or
operation of the leased premises by Lessee, or Lessee's agents, servants,
employees, invites or licensees, and Lessee agrees fully to indemnify and save
harmless Lessor against liability for any and all such causes of action, claims
and demands whatsoever, and will at its own expense, defend any and all actions
or proceedings brought against Lessor on account of any such causes of action,
claims or demands. Provided, however, that nothing contained in this paragraph
of this lease shall affect in any way or is intended to affect in any way
contract made by Lessor with any insurance carrier for the purpose of protecting
Lessor or insuring Lessor against any and all such causes of action, claims or
demands, damages or injuries.

14.   NO ESTATE IN LAND: This contract shall create the relationship of landlord
and tenant between Lessor and Lessee. Lessee has only a usufruct, not subject to
levy and sale and non-assignable except as herein provided.

15.   RIGHTS AND POWERS: All rights, powers and privileges conferred hereunder
upon parties hereto shall be cumulative but not restrictive to those given by
law.

16.   HOLDING OVER: If Lessee remains in possession after expiration of the
term hereof, with Lessor's acquiescence and without any distinct written
agreement of parties, Lessee shall be tenant at will; and there shall be no
renewal of this lease by operation of law.

17.   SURRENDER OF PREMISES: At termination of this lease from any cause, Lessee
shall surrender premises and keys thereof to Lessor in same condition as at
commencement of term, natural wear and tear only excepted.

18.   SERVICE OF NOTICE: Lessee hereby appoints as its agent to receive the
service of all dispossessory or distraint proceedings and notices thereunder,
and all notices required under this lease, the person in charge of said premises
at the time, or occupying premises; and if no person in charge or occupying the
same, then such service or notice may be made by attaching the



                        LEASE AGREEMENT continued, page 6

same on the main entrance to premises, A copy of all notices under this lease
shall also be sent to Lessee's last known address, if different from premises,
which last known address shall be as follows:_____________________________, or
at such other address as Lessee may from time to time designate to Lessor in
writing. Any notice to Lessee shall also be with a copy to Law Offices of J.
James Donnellan, III. Notice to Lessor may be sent to Lessor at P. O. Box 828,
Thomasville, Georgia 31799, or at such other address as Lessor may from time to
time designate to Lessee in writing.

19.   REMEDIES OF LESSOR IN EVENT OF DEFAULT BY Lessee: In the event Lessee
shall default in the payment of any monthly rental herein provided for, and such
default shall continue to fifteen (15) days after Lessor shall have notified
Lessee in writing of the existence of such default, or if Lessee shall default
in the performance of any of the other covenants, promises, and agreements
herein set forth and contained for Lessee to keep and perform, and such default
shall continue for thirty (30) days after Lessor shall have notified Lessee in
writing of the existence of such default; or if Lessee is adjudicated a
bankrupt; or if a permanent receiver is appointed for Lessee's property,
including Lessee's interest in leased premises, and such receiver is not removed
within sixty (60) days after written notice from Lessor to Lessee to obtain such
removal; or if, whether voluntarily or involuntarily, Lessee takes advantage of
any debtor relief proceeding under any present or future law whereby the rent,
or any part thereof, is or is proposed to be reduced or payment thereof
deferred; or if Lessee makes an assignment for benefit of creditors; or if the
leased premises of Lessee's effects or interest therein should be levied upon or
attached under any process against Lessee not satisfied or dissolved within
thirty (30) days after written notice from Lessor to Lessee to obtain
satisfaction or dissolution thereof; then, and in any of the said events (said
events being hereinafter referred to as events of default) Lessee shall be
deemed to have breached this lease agreement and Lessor shall have the right at
its option either to:

(a)   Enter upon and take possession of said leased premises, as Lessee's agent
and without terminating this lease and re-rent the premises at the best price
obtainable by reasonable effort with or without advertisement for any term
Lessor deems proper. Lessor shall notify Lessee of the proposed terms of the
re-rental and unless within fourteen (14) days after the mailing of said notice
Lessee produces an acceptable tenant willing to rent immediately for the same
term at a better price than thus negotiated, Lessee shall be conclusively bound
by Lessor's terms and rent. Lessee shall thereupon become and thereafter be
liable and indebted to Lessor for, and upon demand, then or from time to time
thereafter made, shall pay to Lessor the difference between the amount of the
rent herein specified and the amount of rent which shall be collected and
received from the demised premises for each month during the remainder of the
term herein provided



                        LEASE AGREEMENT continued, page 7

remaining after taking possession thereof by the Lessor, or

(b)   Forthwith cancel and terminate this lease by notice in writing to Lessee;
and if such notice shall be given all rights of Lessee to the use and occupancy
of said leased premises shall terminate as of the date set forth in such
notice, and Lessee will at once surrender possession of the premises to the
Lessor and remove all Lessee's effects therefrom, and Lessor may forthwith
re-enter the premises and repossess itself thereof. No termination of this lease
prior to the normal expiration thereof shall affect Lessor's right to collect
rent for the period prior to termination thereof.

20.   PLANS AND SPECIFICATIONS: Lessor agrees to construct the building
additions in accordance with the plans and specifications attached hereto.
Lessee hereby covenants that it has examined said plans and specifications,
approved the same and is aware of the contents thereof, the same being the plans
and specifications prepared by Lessor. Lessee agrees to accept the premises when
completed in accordance with said plans and specifications.

21.   PROVISION FOR ADDITIONAL SPACE: Lessor agrees to construct additional
warehouse space complete with 5" thick concrete floor, roof, walls, fire
sprinkler system, lighting, fire and security alarm, insulation, ridge vents and
liner panels all in accordance with the specifications which are a part of this
lease agreement in increments of 6,000 square feet with 12,000 square feet being
the minimum amount of additional space added at one time for a base cost
increase in the annual rental of $1.35 per square foot during the first four
year term of this lease. After the first four year term the base cost of
additional space shall be increased or decreased by 60% of the change in the
consumer price index the same as the rental for the original improvements. Each
time the size of the building is increased, the lease shall be renewed for a new
full four year term and the rent adjusted to increase or decrease by 60% of the
change in the consumer price index over the previous term of the lease.

22.   PROVISIONS FOR TEMPORARY SPACE: In the event that leased premises are not
ready for occupancy by Lessee by September 15, 1992, Lessor shall provide at its
expense suitable temporary warehouse space for use by Lessee until such time
building is ready for occupancy.



                        LEASE AGREEMENT continued, page 8

23.   MISCELLANEOUS PROVISIONS: This Lease shall be construed and interpreted
under the laws of the State of Georgia. This Lease may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which shall constitute one and the same instrument. The
headings in this Lease Agreement shall not in any way affect its meaning or
interpretation.

No change or modification of this lease shall be valid unless made in writing
between the parties.

This Lease Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns; provided, however,
that the provisions of this paragraph shall not be construed to allow any
assignment of this Lease by Lessee without the requisite written consent of
Lessor.

In witness whereof Lessor and Lessee have hereto set their hands and affixed
their seals the date first above written.

Signed, sealed and delivered by Lessor in the presence of us in Thomas County,
Georgia:

/s/ Gail C. Murphy                              /s/ Harry M. Tomlinson, Partner
- ------------------------                        --------------------------------
Notary public                                   Lessor

NOTARY PUBLIC, GEORGIA
RESIDING IN THOMAS COUNTY
MY COMMISSION EXPIRES APRIL 30, 1999

Signed, sealed and delivered
by Lessee in the presence of
us in________ County,________

/s/ Gail C. Murphy                              /s/ Frederick Cofe
- ------------------------                        --------------------------------
Notary Public                                   Lessee, President
                                                Attest:

NOTARY PUBLIC GEORGIA
RESIDING IN THOMAS COUNTY
MY COMMISSION EXPIRES APRIL 30, 1999
                                                /s/ Tim Robinson
                                                --------------------------------
                                                Secretary

                                                Corporate seal



                           BUILDING SPECIFICATIONS for
                 60,000 square Foot Distribution Warehouse with
                           6000 Square Foot Office in
                              THOMASVILLE, GEORGIA
                                       for
                             SIMMONS OUTDOOR CORP.
                                   March, 1992

      DESCRIPTION OF WORK: Provide a six acre site with option to purchase an
additional four acres complete with 240 foot wide by 250 foot long by 20 foot
eaves height distribution warehouse complete with four 9' x 10' dock doors, one
14' x 14' grade level door, 80 foot x 75 foot office, restrooms and warehouse
manager's office in warehouse, complete with paving, walks, fencing, drives,
fire sprinkler system, electronic security system, fencing and landscaping as
more fully described herein and on the attached plans.

      BUILDING DESCRIPTION: The warehouse building shall be a pre-engineered
metal building with galvalume roof and painted wall panels. Interior frames
shall be spaced at 25 foot intervals with steel pipe columns spaced every 60
feet to provide support for the main frames. The office shall have wood framed
walls and metal framed roof with a metal roof the same as the main warehouse.
Exterior office walls shall be brick veneer with vertical facade above. All
office windows shall be double 3' x 4'-4" fixed glass insulated bronze aluminum
units.

      FLOOR AND FOUNDATION: Foundation design shall be based on a minimum soil
bearing capacity of 3000 pounds per square foot and shall be a monolithic
slab-on-grade type. The concrete for the floor shall have a minimum strength in
compression of 3000 pounds per square inch. The warehouse floor shall be five
inches thick and be reinforced with 6 x 6 x 6 gauge welded wire mesh. All floors
shall be troweled to a smooth, hard finish and a six mil polyethylene vapor
barrier shall be placed under the floor slab. The office floor shall be 4" thick
and reinforced with 6 x 6 x 10 gauge mesh. The soil under a five foot outer
perimeter of the warehouse shall be pre-treated for termites before the concrete
is placed and all the office and restroom areas shall be treated.

      ROOF: Roof panels shall be 26 gauge galvalume coated steel panels with a
20 year guarantee by the manufacturer. Eighty light transmitting panels 3' x 10'
and twenty 9" x 10" ridge vents shall be provided.

      EXTERIOR WALLS: Warehouse exterior walls shall be 26 gauge steel panels
with a factory applied siliconized polyester enamel coating in a color to be
selected by the owner. The interior perimeter of the warehouse walls shall be
covered with white 26 gauge steel liner panels extending from the floor to eight
feet above the floor to serve as protection for the wall insulation and the
outer wall panels. The office exterior walls shall be framed with SYP 2 x 6
lumber on 24" centers, sheathed and covered with brick veneer to approximately
ceiling height. The walls above shall have a vertical facade framed with steel
and wood and covered with metal facade panels in a color to be selected by the
owner.



                         BUILDING SPECIFICATIONS, page 2

      FLASHING AND TRIM: All flashing and trim shall have a paint finish the
same as the wall panels in a color to be selected by the owner. Gutter and
downspouts are included.

      INSULATION: All roof areas and exterior walls of the warehouse shall be
insulated with 2 inches of fiberglass metal building insulation with a Lamtec
WMP-VR vapor barrier facing. The main office exterior walls shall have R-19
fiberglass insulation and the ceiling shall have R-19 fiberglass batts. The
offices and rest rooms in the warehouse shall have exterior walls framed with 2
x 4 lumber and shall receive R-12 wall insulation and R-19 ceiling insulation.

      INTERIOR WALLS: The main office interior partitions shall be framed from
2x4 wood studs and covered with 1/2 inch Sheetrock, taped and finished to 9 foot
ceiling height. Office, hall, lunch room, foyer and rest room walls shall be
primed with oil based paint and covered with a fabric backed vinyl wall covering
in a pattern to be selected by the owner. Equipment rooms shall be painted with
two coats of satin finish latex wall paint. The warehouse side of the main
office wall and the office and rest rooms in the warehouse shall be covered with
white 26 gauge steel panels.

      CEILING: The ceilings in the office and restrooms in the warehouse shall
be 1/2" Sheetrock. The main office ceiling shall be Class A 2' x 4' suspended
acoustical ceiling tile in a white steel grid. The area above the warehouse
restrooms and office shall be decked for light storage.

      INTERIOR DOORS: Office interior doors shall be flush solid core stained
birch 3' x 6'-8" x 1-3/8" units with stained jambs and colonial trim.

      EXTERIOR DOORS: Four 9' x 10' truck dock doors with mechanical
edge-of-dock dockboards and 50 inch dock height and one 14' x 14' grade level
door will be provided. Three 3' x 7' personnel doors as shown on the plan shall
be provided. The two primary office doors shall be a 3' x 7' aluminum and glass
doors recessed to provide weather protection. The five sectional overhead doors
shall be equipped with chain link gates to provide security for the warehouse
when the doors are open for ventilation.

      PLUMBING: The office shall have two rest rooms meeting the handicap code
with the balance of the restroom requirements being met by the facilities in the
warehouse. A water drinking fountain shall be provided in the hall near the
office restrooms as shown on the plan. All water and sewer service to be
provided by the City of Thomasville.



                         BUILDING SPECIFICATIONS, page 3

      ELECTRICAL: The Lessor shall provide power and lighting for the offices,
rest rooms and lunch room and lighting for the warehouse. Warehouse lighting
shall be provided by 100 high intensity 400 watt metal halide fixtures. Office
lighting shall be provided by 2' x 4' four tube recessed ceiling fluorescent
fixtures. Adequate power shall be provided for office heating and cooling.

      HEATING, VENTILATION AND AIR CONDITIONING: The main office shall be heated
and cooled by three five ton electric heat pumps. The warehouse restrooms and
office shall be heated and cooled with one two ton electric heat pump. The
warehouse shall be heated with five natural gas fired 300,000 BtuH unit heaters
to provide about 50 degree F. warehouse temperature.

      FLOOR COVERING: All floors in the main office and warehouse office and
restrooms shall have a twelve dollar per square yard floor covering allowance
and may be either commercial grade vinyl tile or carpet. Warehouse floors shall
be natural concrete with sealer.

      FENCE: A 6 foot high 11 gauge chain link fence with three strands of
barbed wire shall be located as shown on the plan.

      PAVING: The area shown on the plot plan as paved shall be covered with a
minimum of 1-1/2" hot plant mix asphalt over prepared and compacted soil cement
base.

      FIRE SPRINKLER SYSTEM: A wet pipe automatic sprinkler system based on NFPA
#231-C for rack storage of Class IV materials stored in double row racks to a
maximum storage height of 16'-0" shall be provided in the building. This system
does not include sprinkler heads in racks. Sprinkler heads in the offices to be
chrome pendant type.

      ALARM SYSTEM: An electronic security system to monitor the fire sprinkler
system, doors, windows and gates shall be provided and connected to a central
computer by local telephone line for 24 hour per day supervision. This system to
be U. L. approved.

      LANDSCAPING AND STORM WATER RUNOFF CONTROL: Landscaping as required by the
City of Thomasville and the Restrictive Covenants of the Plantation Oak
Industrial Park shall be provided. Storm water retention is the responsibility
of the Owner of the Park.


                            LEASE ADDENDUM AGREEMENT

      THIS ADDENDUM to the original lease dated March 26, 1992, made and entered
into this 1st day of April 1992, between REALTY FOUR, a Georgia General
Partnership of Thomas County, Georgia, hereinafter called Lessor, and SIMMONS
OUTDOOR CORPORATION, a Delaware Corporation, herainaftar called Lessee,

                                  WITNESSETH:

ITEM ONE: Lessee agrees to put on deposit at Commercial Bank in Thomasville,
Thomas County, Georgia, $30,000.00 upon signing this addendum and an additional
$30,000.00 upon occupancy of Leased Premises. Said deposit shall be subject to
this agreement and shall earn interest in Commercial Bank's prevailing Corporate
Money Market Account.

ITEM TWO: At any time prior to the beginning of the third year should Lessee
default in the payment of any monthly rental in accordance with paragraph 19 of
the Lease Agreement, the corpus of the deposit shall be used to make the
scheduled monthly rental payment. Lessee shall be in default until corpus is
fully replenished to its original beginning amount. Should Lessee remain in
default for two consecutive monthly rental periods, the entire remaining deposit
with accrued interest shall be paid to Lessor in addition to other remedies of
default as provided in the Lease Agreement. Should Lessee make all lease
payments on time for the first two years after occupancy, this deposit shall be
returned to Lessee. This additional payment does not relieve Lessee from its
obligations under the lease.

In witness whereof Lessor and Lessee have hereto set their hands and affixed
their seals the date first above written.

Signed, sealed and delivered
by Lessor in the presence of
us in Thomas County, Georgia:

/s/ Barbara C. Brinson                          /s/ Harry  M. Tomlinson
- -------------------------                       --------------------------------
Notary Public                                   Lessor

[STAMP]

Signed, sealed and delivered
by Lessee in  the presence of
us in Dade County, FLORIDA

/s/ Deter J. Spadofern                          Frederick Cofe
- -------------------------                       --------------------------------
Notary Public                                   Lessee, President

[STAMP]                                         Attest:

                                                /s/ Tim Robinson
                                                --------------------------------
                                                Secretary

                                                Corporate Seal



                         SECOND LEASE ADDENDUM AGREEMENT

      THIS ADDENDUM to the original lease dated March 26, 1992 and the first
addendum agreement to said lease dated April 1, 1992, made and entered into this
6th day of June, 1995, between REALTY FOUR, a Georgia General Partnership of
Thomas County, Georgia, hereinafter called Lessor, and SIMMONS OUTDOOR
CORPORATION, a Delaware Corporation, hereinafter called Lessee,

                                   WITNESSETH

      WHEREAS, Paragraph 21 of the original lease agreement dated March 26,
1992, between the Lessor and Lessee made provisions for the Lessor to construct
for the Lessee additional warehouse space and set forth the method for computing
the cost and rent for the additional space and the method of extending the lease
agreement between the parties; and

      WHEREAS, the Lessee has requested the Lessor to construct additional space
pursuant to the provisions of Paragraph 21 of the original lease between the
parties dated March 26, 1992.

      NOW THEREFORE, in consideration of the sum of One ($1.00) Dollar in cash
this day paid by the Lessee to the Lessor, and of the mutual agreements
hereinafter set forth, Lessor and Lessee agree as follows:

      1.    The Lessor agrees to expand the warehouse which the Lessee is
currently leasing under the lease agreement between the parties dated March 26,
1992 by constructing an additional 30,000 square feet of warehouse space in
accordance with the plans and/or specifications attached hereto and marked as
Exhibit "A".

      2.    The parties agree that the terms of the lease and the rental payment
on the lease will be modified and the new term of the lease will be eight years
beginning from the date the warehouse expansion is completed by the Lessor
(which is estimated to be September 1, 1995) and the new rental to be paid by
the Lessee to the Lessor for the premises will be $14,840.00 per month beginning
upon the completion of the warehouse expansion by the Lessor (which is estimated
to be September 1, 1995). The Lessor and Lessee agree that the new monthly
rental of the premises after the completion of the warehouse expansion will
remain in effect for four years and thereafter the monthly rental will then be
adjusted to increase or decrease pursuant to the adjustment provisions contained
in the original lease agreement between the Lessor and Lessee dated March 26,
1992. The parties further agree that the Lessee shall now have the option of
renewing this lease for four additional four year terms beginning at the
expiration of the new eight year term set forth in this second lease addendum
agreement which is estimated to be September 1, 2003.

      3.    The parties agree that the expansion cost of $1.35 per square feet
set forth in paragraph 21 of the original lease agreement will apply only to
expansions completed prior



to March 26, 1996 and thereafter the expansion cost will be increased or
decreased pursuant to the adjustment provision contained in the original lease
agreement between the Lessor and Lessee dated March 26, 1992.

      4.    Except as hereinabove modified all the terms and conditions of the
original lease between the parties dated March 26, 1992 and the first addendum
agreement to said lease dated April 1, 1992 shall remain the same.

      IN WITNESS WHEREOF, Lessor and Lessee have hereunto set their hand and
affixed their seals the date first above written.

                                                REALTY FOUR, a Georgia
                                                General Partnership

Signed, Sealed and Delivered
in the presence of us:                          By: /s/ Harry M. Tomlinson
                                                --------------------------------
                                                        General Partner

Beverly Reese
- -----------------------
Unofficial Witness

Barbara C. Brinson
- -----------------------
Notary Public

[STAMP]
                                                SIMMONS OUTDOOR CORPORATION,
                                                a Delaware Corporation

Signed, Sealed and Delivered
in the presence of us:                          By: /s/ Rolf P. Wilkerson
                                                --------------------------------
                                                        V.P. Operations

Jann Furmey                                     Attest: N. N. Swon
- -----------------------                                -------------------------
Unofficial Witness                                      Secretary

/s/ Margaret James                                     LESSEE
- -----------------------
Notary Public

[NOTARY STAMP]



                                                                     EXHIBIT "A"

                       SPECIFICATIONS FOR ADDITIONAL WORK
                                       ON
                      SIMMONS OUTDOOR CORPORATION WAREHOUSE
                                       IN
                              THOMASVILLE, GEORGIA

                                  MAY 8, 1995

1. Expand the warehouse by 30,000 square feet. The warehouse addition will
include floor, skylights, lighting, electrical outlets, walls, liner panels,
insulation, alarm, unit heaters and sprinkler system just like the existing
building. The rear wall panels and framing will be relocated 125 feet further to
the rear of the building. There will not be a partition where the rear end wall
is now located.

2. Include a 12' x 15' receiving office in the corner by the present receiving
dock with one 3'x6'-8" personnel door and two 4' x 4' fixed glass windows, one
on each of the two inside walls. Behind the receiving office in the new
addition, provide a 12' x 24' quality assurance room with two double 3' x 4'-4"
single hung windows to the outside with undivided lights and one 3' x 6-8"
personnel door with half glass opening into the warehouse. Add two rest rooms
like those in the warehouse at the front of the building. Inside walls will be
5/8" painted firecode Sheetrock, ceilings to be suspended ceilings like in the
main office at the front of the building. The outside walls will be covered
with metal panels like the warehouse office at the front of the building. Remove
one toilet and install a urinal in the front men's rest room and install the
toilet and one urinal in the new men's rest room. Do not air condition the new
rest rooms. Offices are to be heated and air conditioned by through-the-wall
package units. Provide one wall mounted storage cabinet in each rest room.
Provide vinyl floor covering in the rest rooms, carpet in the offices and Q.A.
room.

3. Include a 12' x 18' x 8" returns department office in the present returns
department area of the main warehouse with suspended ceiling, painted Sheetrock
walls, through the wall heating and cooling system, three 4' x 4' fixed glass
windows, one 3' x 6'-8" door, carpeted floor, vinyl base.

4. Install two dock doors like the doors at the existing shipping area in the
center bay of the addition. Add paving for trucks to serve the two new dock
doors as shown on the revised site plan.

5. Add eleven new parking spaces at the end of the existing parking lot as shown
on the revised site plan.

6. Omit paving of the grassed area between the existing shipping and receiving
docks. This was discussed at one time but the decision was made to postpone this
work.

7. Do not provide the proposed 20' x 40' x 12' clear height pallet storage shed
with open sides near the existing shipping dock that was discussed at one time.

8. Relocate the fence to maintain the same clearance from the addition as from
the existing building.

9. Add personnel emergency egress (3' x 7' personnel doors) as required by the
Life Safety Code in the warehouse addition.

10. Change two fixed glass windows in the repair room to single hung, revise
alarm system to include new windows, doors and the new work in the warehouse
area.


                     MEMORANDUM OF SECOND LEASE ADDENDUM AGREEMENT

GEORGIA, THOMAS COUNTY.

      THE INSTRUMENT has been executed by REALTY FOUR, a Georgia General
Partnership composed of C. W. McKinnon, Jr., Harry M. Tomlinson, Charles D.
Reichert and William M. Inman, hereinafter referred to an the "Lessor", and
SIMMONS OUTDOOR CORPORATION, a Delaware corporation, hereinafter referred to an
the "Lessee", for the purpose of evidencing that a Lease Agreement has been
entered into between Lessor and Lessee dated as of March 26,1992, amended April
1,1992, in connection with the following described property:

      ALL OF THAT TRACT OR PARCEL OF LAND lying, being and situate in the City
of Thomasville, Thomas County, Georgia, comprising 6.24 acres and being all of
Tract One as shown on a plat of survey prepared for Realty Four by Robert P.
Jolley, Jr., Georgia Registered Land Surveyor No. 1886, dated April 10,1992 and
recorded in Plat Cabinet 2, Page 9-B, of the Deed Records of Thomas County,
Georgia, and more particularly described by metes and bounds according to said
plat of survey as follows:

      TO REACH A POINT OF BEGINNING COMMENCE at the intersection of the eastern
margin of the 200 foot right-of-way of Thomasville West By-Pass with the
southern margin of the 80 foot right-of-way of Plantation Oak Drive and from
said point run south 89 degrees 58 minutes 56 seconds east a distance of 50.98
feet to an iron pin, which is the POINT AND PLACE OF BEGINNING; from said point
of beginning continue south 89 degrees 58 minutes 56 seconds east a distance of
569.4 feet to a point marked by an iron pin; thence run south 40 degrees 54
minutes 40 seconds east a distance of 26.2 feet to a point marked by an iron pin
located on the western margin of the 80 foot right-of-way of a proposed street;
thence run south 08 degrees 10 minutes 08 seconds west along said western margin
of the 80 foot right-of-way of said proposed street a distance of 480 feet to a
point marked by an iron pin; thence run north 81 degrees 49 minutes 32 seconds
west a distance of 606.19 feet to a point marked by an iron pin on the eastern
margin of a strip of land identified as "City of Thomasville W & L"; thence run
north 11 degrees 18 minutes 06 seconds east along the eastern margin of said
City of Thomasville W & L strip of land a distance of 416.99 feet to the point
and place of beginning,

which was amended on June 6, 1995, which amended lease includes the following
described additional real property:

      ALL OF THAT TRACT OR PARCEL OF LAND lying, being and situate in the City
of Thomasville, Thomas County, Georgia, comprising 5.66 acres and being all of
Tract II as shown on a plat of survey prepared for Realty Four by Robert P.
Jolley, Jr., Georgia Registered Surveyor No. 1886, dated April 10, 1992 and
recorded in Plat Cabinet 2, Page 9-B, of the Deed Records of Thomas County,
Georgia, and more particularly described by metes and bounds according to said
plat of survey as follows:

      TO REACH A POINT OF BEGINNING COMMENCE at the intersection of the eastern
margin of the 200 foot right-of-way of Thomasville West By-Pass with the
southern margin of the 80 foot right-of-way of Plantation Oak Drive and from
said point run south 89 degrees 58 minutes 56 seconds east a distance of 50.98
feet to an iron pin; thence run south 89 degrees 58 minutes 56 seconds east a
distance of 569.4 feet to a point marked by an iron pin; thence run south 40
degrees 54 minutes 40 seconds east a distance of 26.2 feet to a point marked by
an iron pin located on the western margin of the 80 foot right-of-way of a
proposed street; thence run south 08 degrees 10 minutes 08 seconds west along
said western margin of the 80- foot right-of-way of said proposed street a
distance of 480 feet to a point marked by an iron pin to the POINT AND PLACE OF
BEGINNING; from said point of beginning continue south 08 degrees 10 minutes 28
seconds west along the western margin of the 80 foot right-of-way of the
proposed street a distance of 400 feet to a point marked by an ion pin; thence
run north 81 degrees 49 minutes 32 seconds west a distance of 624.71 feet to a
point marked by an iron pin located on the eastern margin of a strip of land
identified as "City of Thomasville W & L"; thence run in a northerly direction
along a curve of the easterly margin of said City of Thomasville W & L strip of
land a distance of 134.25 feet to a point, which point is located a chord
distance of north 09 degrees 52 minutes 58 seconds east 134.24 feet from the
last mentioned point; thence continuing along the eastern margin of said City of
Thomasville W & L strip of land run north 11 degrees 18 minutes 06 seconds east
a distance of 266.22 feet to a point marked by an iron pin; thence run south 81
degrees 49 minutes 32 seconds east a distance of 606.19 feet to the point and
place of beginning.

      The above described property is subject to the restrictive covenants dated
December 14, 1987 and recorded January 15, 1992, in Deed Book 332, Pages
293-301, of the Deed Records of Thomas County, Georgia.

      The term of the lease is for a period of eight (8) years commencing on
September 1, 1995. (estimated date of warehouse expansion)

      The second lease addendum agreement lease contains an option to renew the
same for four (4) additional periods of four (4) years following the initial
8-year term.

      IN WITNESS WHEREOF, Lessor and Lessee have executed this Memorandum of
Second Lease Addendum Agreement under seal, as of the 21st day of September,
1995, but effective June 6, 1995.

                 LESSOR:                        REALTY FOUR, a Georgia General
                                                Partnership

                                                 By: Harry M. Tomlinson
                                                    ----------------------------
                                                    Harry M. Tomlinson, Partner

Signed, Sealed and Delivered
in the presence of us:

/s/ [ILLEGIBLE]
- -----------------------
Unofficial Witness

/s/ Paul J. McCollin
- -----------------------
Notary Public

[NOTARY STAMP]
                LESSEE:                     SIMMONS OUTDOOR CORPORATION

                                            By: /s/ [ILLEGIBLE]
                                            ----------------------------------
                                                    President
                                                    Title

                                            Attest: /s/ Rolf P. Wilkerson (L.S.)
Signed, Sealed and Delivered,                       ----------------------------
in the presence of us:                              V.P. Operations
                                                    --------------------------
                                                    Title

Sandy J. Sandlin
- -----------------------
Unofficial Witness


Kathleen A. Clark
- -----------------------
Notary Public

[NOTARY STAMP]                                    (AFFIX CORPORATE SEAL)



                         THIRD LEASE ADDENDUM AGREEMENT

      THIS ADDENDUM to the original lease dated March 26,1992 and the first
addendum agreement to said lease dated April 1,1993 and the second addendum
agreement to said lease dated June 6,1995 made and entered into this 2nd day of
November, 1999, between REALTY FOUR, a Georgia General Partnership of Thomas
County, Georgia, hereinafter called Lessor, and SIMMONS OUTDOOR CORPORATION, a
Delaware Corporation, hereinafter called Lessee.

                                   WITNESSETH:

      WHEREAS, Lessee has requested certain improvements to leased property at
201 Plantation Oak Drive in Thomasville, Georgia, said property being leased by
agreement between Lessor and Lessee as described above and

      WHEREAS, Lessee and Lessor have agreed to the scope of work and the cost
of same

      NOW THEREFORE, in consideration of One Dollar ($1,00) in cash this day
paid by the Lessee to the Lessor and the mutual agreements hereinafter set
forth, Lessee and Lessor agree as follows:

      1.    Lessor agrees to build new repair facilities in the warehouse,
modify the existing repair facilities in the office portion of the building,
expand the break room, add to the quality assurance offices, expand parking, and
add two 25 ton air conditioning units to the warehouse in accordance with the
plans and specifications attached hereto and marked as Exhibit "A".

      2.    The parties agree that the term of the lease and the rental payment
on the lease will be modified and the new term of the lease will be eight years
beginning January 1, 2000 and the new rental to be paid by the Lessee to the
Lessor for the premises will be $19,020.00 per month beginning January 1, 2000.
The Lessor and Lessee agree that the new monthly rental will remain in effect
for four years and thereafter the monthly rental will then be adjusted to
increase or decrease pursuant to the adjustment provisions contained in the
original lease agreement between the Lessor and Lessee dated March 26,1992. The
parties further agree that the Lessee shall now have the option of renewing this
lease for four additional four-year terms beginning at the expiration of the new
eight year term set forth in this third lease addendum agreement which is
December 31, 2007.

      3.    Except as hereinabove modified all the terms and conditions of the
original lease between the parties dated March 26,1992 and the first addendum
agreement to said lease dated April 1,1993 and the second addendum agreement to
said lease dated June 6,1995 shall remain the same.



                     THIRD LEASE ADDENDUM AGREEMENT, page 2

      IN WITNESS WHEREOF, Lessor and Lessee have hereunto set their hand and
affixed their seals the day and year first written above.

For Lessor                          REALTY FOUR, A Georgia General Partnership,

                                                by  /s/ Harry M. Tomlinson
                                                  ------------------------------
                                                 General Partner

Signed, sealed and delivered
in the presence of us:

Elizabeth Garces
- -----------------------
Unofficial Witness

STATE OF GEORGIA
COUNTY OF THOMAS

Before me, the undersigned authority, on this day personally appeared Harry M.
Tomlinson, in behalf of REALTY FOUR, Lessor, a person known to me to be the
person whose name is subscribed to the foregoing instrument, and acknowledged to
me that he is one of the four (4) general partners of REALTY FOUR and that he
executed the same for the purpose therein expressed as his act and deed in the
capacity therein stated.

Given under my hand and seal of office, this 3rd day of November, 1999.

NOTARY PUBLIC, THOMAS COUNTY,
GEORGIA MY COMMISSION EXPIRED DEC. 15, 2001

/s/ Lorianne M. Crosby
- -----------------------
Notary Public
My Commission Expires:
(NOTARY SEAL AFFIXED)



                     THIRD LEASE ADDENDUM AGREEMENT, page 3

For Lessee:                              SIMMONS OUTDOOR CORPORATION, a Delaware
                                         Corporation,

                                         By  /s/ Richard H. Irving,III(Seal)
                                             --------------------------------
                                                  Vice President

                                         Attest: /s/ L. Daniel Morris, JR.(Seal)
                                                --------------------------------
                                                      Asst Sec
                                                (CORPORATE SEAL AFFIXED)

                                   ATTESTATION

Signed, sealed and delivered in the presence of us in the County of Montgomery
and State of Alabama by Richard H. Irving, III and L. Daniel Morris, Jr., who
after being duly sworn, testify that they hold the offices of Vice President and
Asst. Secretary, respectively, and further provided proof that they were the
said officers of SIMMONS OUTDOOR CORPORATION, a Delaware corporation, and
testified and provided proof that they were duly empowered by the corporation to
execute the foregoing in its behalf for the purposes therein expressed and that
they each personally know the truth of the statements set forth herein.

/s/ Carole K. Putman
Unofficial Witness

Given under my hand and seal of office, this 2nd day of November, 1999.

/s/ Tracy O. Thompson
Notary Public
My Commission Expires: 11/21/99
(NOTARY SEAL AFFIXED)



                                   EXHIBIT "A"
                      SPECIFICATIONS FOR ADDITIONAL WORK AT
                           SIMMONS OUTDOOR CORPORATION
                             IN THOMASVILLE, GEORGIA
                                       FOR
                         THIRD LEASE ADDENDUM AGREEMENT
                                 OCTOBER, 1999

DESCRIPTION OF WORK: Add new repair department facilities in the northeast
corner of the warehouse. Beginning at the northeast corner of the warehouse
these new facilities shall extend 48' along the north wall of the warehouse and
87'4" along the east wall of the warehouse. The width shall be 19'4" from the
outsides of the stud walls as shown on the plan labeled "New Repair Department".
Ceiling height shall be 9' as shown on the drawing labeled "Cross section at new
repair department offices". A 20' x 25' cage with white 26 gauge steel wall
panels 11' high will be built at the end of the new repair department with one
new 3' x 7' personnel door as shown on the plan. The existing exit from the
warehouse near the northeast corner will be relocated to the end of the new cage
as shown on the plan.

Rework the old repair department by adding two walls and two doors to divide the
space into two new offices and a new conference room. Relocate one door and
remove another door in the old repair office as shown on the plan labeled
"Rework old Repair Department".

Build a 15' x 39'4" addition to the quality assurance department as shown on the
floor plan drawing labeled "Addition to QC area". Ceiling height in the addition
to the QC area shall be 8' as shown on the cross section drawing labeled "Cross
section at quality assurance addition". Add two windows in the warehouse wall
located as shown on overall plan labeled "Simmons Outdoor Warehouse Floor Plan".

Build a 14'8" x 27' addition to the break room as shown on the plan labeled
"Break Room Addition".

Expand the parking lot by adding the paving shown on the overall plan labeled
"Simmons Outdoor Warehouse Floor Plan".

Add two 25 ton air conditioning units to the warehouse each with 60 feet of
horizontal duct for air distribution over the work areas. Locate these machines
as shown on the overall plan labeled "Simmons Outdoor Warehouse Floor Plan".

Add hoods over the six fresh air intake louvers located on the west wall of the
warehouse.

DEMOLITION: The existing office in the area where the new repair department is
to be located will be removed. The wall separating the break room from the
warehouse will be removed as shown on the plan labeled "Break Room Addition"
after the new walls are in place.



                     SPECIFICATIONS FOR ADDITIONAL WORK AT
                 SIMMONS OUTDOOR CORPORATION IN THOMASVILLE, GA
                                     PAGE 2

EXTERIOR WALLS: New walls shall be framed from 2x4 studs on 16" centers and
covered on the office side with 1/2 inch drywall, taped and finished to the
ceiling height shown on the plans. Drywall shall receive two coats of satin
finish latex wall paint. The exterior of the new walls around the new repair
offices, quality assurance and break room shall be covered with white 26 gauge
steel "R" panels extending two feet above the ceiling height.

INTERIOR WALLS: New partition walls shall be framed from 2x4 studs on 16"
centers and covered on both sides with 1/2 inch drywall, taped and finished to
the ceiling height shown on the plans. Drywall shall receive two coats of satin
finish latex wall paint.

INSULATION: The perimeter walls of the new repair department, break room
addition and quality assurance addition shall have 3-1/2" fiberglass building
insulation and the suspended ceilings shall have R-19 fiberglass batts.

CEILING: Ceilings shall be Class A 2' x 4' suspended moisture resistant
acoustical ceiling tile in a white steel grid. The ceiling grid shall be
supported from 6" steel Zee purlins at 5' on centers, more or less, which shall
rest on top of the stud walls.

INTERIOR DOORS: New interior doors shall be flush solid core stained birch 3' x
6'-8" x 1-3/8" units with stained jambs and colonial trim. See the plans for the
location of doors with light kits.

SLATWALL: The entire west wall of the new conference room shall have Slatwall
with grooves on 3" centers installed from the corner by the air handling unit to
the corner by the new cabinet. The Slatwall shall receive two coats of satin
finish enamel after installation.

WINDOWS: The new exterior windows shown on the plan for the north and east
warehouse walls shall be double 3' x 4'4" insulated windows the same type as in
the existing office. The new exterior windows in the west wall of the warehouse
shall be the same type as the existing windows in the west wall of the
warehouse. The interior windows shown on the plans for the break room and
quality assurance rooms shall be 4' x 4' fixed 1/4" plate glass in a wood
frame, stained and varnished to match the other interior windows in the quality
assurance rooms. The doors marked GL on the plan shall have fixed tempered glass
panels to match the windows in the other wood doors in the office.

PLUMBING: No new plumbing is included in this work.

ELECTRICAL: A new 120/208 volt three phase 600 amp panel will be added next to
the existing service to the building to provide the required electrical capacity
for the two new 25 ton air conditioners. Four tube lay-in fluorescent fixtures,
duplex receptacles and switches for the lights shall be provided as shown on the
plans.



                     SPECIFICATIONS FOR ADDITIONAL WORK AT
                 SIMMONS OUTDOOR CORPORATION IN THOMASVILLE, GA
                                     PAGE 3

HEATING, VENTILATION AND AIR CONDITIONING: The new repair department will be
heated and cooled by one 5 ton split heat pump. The existing ducts to the break
room will be capped off and a new 3-ton split air conditioning machine with 10
KW of electric heat will be installed for the combined break room area. A new
2-1/2 ton split system air conditioner with 10 KW of electric heat will provide
heating and cooling for the four rooms of the quality assurance department. Two
25 ton packaged air conditioning units shall be installed on the west wall of
the warehouse in the location shown on the plan labeled "Simmons Outdoor
Warehouse Floor Plan". These units will be supported at floor level on the
outside of the warehouse west wall by a welded steel frame. Return air will be
drawn into each machine at floor level from the warehouse and supplied through a
horizontal duct running from the machine approximately 14 feet above the floor
to the first row of building columns 60 feet to the east of the machines.

FIRE SPRINKLER SYSTEM ADDITIONS: The new repair department, the addition to the
break room and the addition to the quality assurance department will have
semi-recess chrome pendant sprinkler heads installed to provide fire sprinkler
protection. Sprinkler heads should work in their existing location in the new
conference room and two new offices where the old repair department was located
but will be relocated if necessary. No new sprinkler heads will be added to the
20' x 25' cage area. Walls are to remain low enough so as to cause no
interference with the existing fire sprinklers at the roof deck.

FLOOR COVERING: The floors in the new repair department shall have a thirteen
dollar per square yard floor covering allowance and may be either commercial
grade vinyl tile or carpet. The existing tile floor in the new conference room
and two new offices in the old repair department will be covered with commercial
grade carpet. The floor of the addition to the break room will have commercial
grade vinyl tile. New floor covering for the two original rooms of the quality
control department and the two new rooms shall have a thirteen dollar per square
yard floor covering allowance and may be either commercial grade vinyl tile or
carpet. The perimeter of all new rooms shall receive vinyl cove base.

CAGE: A 20' x 25' cage with white 26 gauge steel wall panels 11' high will be
built at the end of the new repair department with one new 3' x 7' personnel
door with cylinder lock as shown on the plan. Panels will be attached to
cold-formed steel framing. No additional lighting is provided for the cage.

HOODS: Provide and install six hoods over the automatic intake dampers in the
southwest wall of the warehouse. The hoods will be fabricated from 26 gauge
steel panels with a paint finish the same as the exterior walls of the
warehouse. Only the bottom of the hood will be open.

CABINETS: Provide a cabinet for the new conference room as shown on the drawing
labeled "Proposed Cabinet for Simmons Outdoor Conference room".



                     SPECIFICATIONS FOR ADDITIONAL WORK AT
                 SIMMONS OUTDOOR CORPORATION IN THOMASVILLE, GA
                                     PAGE 4

PAVING: The new area shown on the plan labeled "Simmons Outdoor Warehouse Floor
Plan" as paved, approximately 187 feet long by 42' wide, shall be covered with
1-1/2" hot plant mix asphalt over prepared and compacted soil cement base. Two
concrete sidewalks shall connect the new paving with the existing paving. The
area between existing and new paving will be landscaped as required by the City
of Thomasville Building Department.

ALARM SYSTEM: The existing electronic fire and burglary security system in the
building will be modified as required to compensate for the changes made to the
building.

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (File Nos. 333-64609, 333-94933, 333-94937, 333-42832, and 333-86818) and Form S-3 (File No. 333-101404) of Meade Instruments Corporation of our report dated May 21, 2004 relating to the financial statements and financial statement schedule, which appears in this Form 10-K.

PricewaterhouseCoopers
Orange County, California
May 28, 2004

EX-31.1

Exhibit 31.1

CERTIFICATIONS

     I, Steven G. Murdock, certify that:

     1. I have reviewed this annual report on Form 10-K of Meade Instruments Corp.;

     2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

     3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

     4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and
c)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

     5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting

Date: May 28, 2004

By:	/s/ Steven G. Murdock,
President, CEO and Secretary

EX-31.2

Exhibit 31.2

CERTIFICATIONS

     I, Brent W. Christensen, certify that:

     1. I have reviewed this annual report on Form 10-K of Meade Instruments Corp.;

     2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

     3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

     4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and
c)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

     5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting

Date: May 28, 2004

By:	/s/ Brent W. Christensen,
Senior Vice President — Finance and CFO

EX-32.1

Exhibit 32.1

Written Statement
Pursuant To
18 U.S.C. Section 1350

     The undersigned, Steven G. Murdock, the Chief Executive Officer of Meade Instruments Corp. (the “Company”), pursuant to 18 U.S.C. ss. 1350, hereby certifies that:

     (i) the Form 10-K for the fiscal year ended February 29, 2004 of the Company (the “Report”) fully complies with the requirements of section 13(a) and 15(d) of the Securities Exchange Act of 1934; and

     (ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 28, 2004

By: /s/ Steven G. Murdock

This certification accompanies this Report on Form 10-K pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by such Act, be deemed filed by the Company for purposes of Section 18 of the Security Exchange Act of 1934, as amended.

EX-32.2

Exhibit 32.2

Written Statement
Pursuant To
18 U.S.C. Section 1350

     The undersigned, Brent W. Christensen, the Chief Financial Officer of Meade Instruments Corp. (the “Company”), pursuant to 18 U.S.C. ss. 1350, hereby certifies that:

     (i) the Form 10-K for the fiscal year ended February 29, 2004 of the Company (the “Report”) fully complies with the requirements of section 13(a) and 15(d) of the Securities Exchange Act of 1934; and

     (ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 28, 2004

By: /s/ Brent W. Christensen

This certification accompanies this Report on Form 10-K pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by such Act, be deemed filed by the Company for purposes of Section 18 of the Security Exchange Act of 1934, as amended.