Meade Instruments Corp. (Form: 8-K)

Meade Instruments Corporation
6001 OAK CANYON, IRVINE, CALIFORNIA 92618-5200 U.S.A.
(949) 451-1450 n FAX: (949) 451-1460 n www.meade.com

May 24, 2007, IRVINE, Calif. –– Meade Instruments Corp. (Nasdaq NM: MEAD) a leading designer and manufacturer of optical products including telescopes and riflescopes today announced its financial results for the fiscal fourth quarter and full year 2007.

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Consolidation of four U.S. facilities with expectation of $3 million in annualized savings.

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Improvement in operations, supply chain and shipping performance; Past Due backlog reduced by nearly 30%; Company is already in production for high season deliveries.

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Introduction of breakthrough new product mySKY™, a personal multimedia handheld sky exploration guide, and other soon to be released products; New products expected to fuel revenue growth in fiscal 2008.

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Net sales of $102 million for the year ended February 28, 2007 compared to $120 million in the fiscal year ended February 28, 2006.

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Net loss per share for the fiscal year ended February 28, 2007 was $0.98 per share compared to a net loss of $0.72 per share in the fiscal year ended February 28, 2006.

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Company expects significant revenue and operating margin improvements for the current fiscal year ending February 28, 2008.

Steve Muellner, president and chief executive officer of Meade, commented, “During fiscal 2007 we addressed a number of key challenges in the business and implemented a strategic plan targeted at significantly improving our operational and financial performance in fiscal 2008. Over the last several quarters, we believe we have executed well on these operational objectives and achieved the results needed to enter fiscal 2008 with the right resources and operational processes needed to grow sales and bring the company to profitability. In regards to these resources, the Company is currently working with its bank to renew the existing credit facility for an additional two years, which will be critical to accommodate the growth we are forecasting.”

The Company reported net sales were $101.5 million for the fiscal year ended February 28, 2007 compared to $119.8 million for the same period last year. Net loss was $0.98 per share for the fiscal year ended February 28, 2007 compared to a net loss of $0.72 per share in the full fiscal year in 2006. The decrease in net revenue and net income was attributable primarily to previously disclosed challenges in the Company’s operations and supply chain related to riflescope and telescope production; costs associated with the Company’s restructuring and turnaround, including headcount reductions and consolidation of facilities; a reduction in gross margin due to the Company’s program to aggressively reduce its worldwide inventory and product SKUs; and expenses associated with the Company’s financial restatements of prior years’ results.

“Over the last year, our operating plan has included continued operations and supply chain improvement, new product introductions to fuel revenue growth, headcount reductions, key additions to the senior management team, cost savings from facility consolidation, and further improvements in our operating cost structure,” continued Steve Muellner. “We have received production samples for nearly all remaining new Simmons riflescopes that we expect to ship in quantity this season, and we are continuing our efforts to expand our supplier base. The telescope supply problems experienced last year with our Asian manufacturers have been largely resolved and we are receiving a steady supply of these products that meet our high quality standards. Most recently, we launched mySKY™, the first full-color multimedia handheld sky exploration guide. Orders for this new product category are exceeding our expectations even though product shipments won’t begin until June. We look forward to keeping you updated as we accomplish our objectives for the year.”

The Company’s management will host a conference call today to discuss its fiscal 2007 results and Meade Instruments’ business outlook. To participate in the teleconference, which begins at 5:30 a.m. PT (8:30 a.m. ET) today, please call 1-888-802-2275 or 1-913-312-1267 approximately 10 minutes prior to the conference call start time. Investors can also listen to the call live via the Internet at www.meade.com. An audio replay of the call will be available starting at 8:00AM PT (11:00AM ET) today and through May 31, 2007. Investors can access the replay by dialing 1-888-203-1112 (international callers should dial 1-719-457-0820) and entering the passcode 3674224.

About Meade Instruments
Meade is a leading designer and manufacturer of optical products including telescopes and accessories for the beginning to serious amateur astronomer. Meade offers a complete line of binoculars under the Bresser®, Meade® and Simmons® brand names that address the needs of everyone from the casual observer to the serious sporting or birding observer. Meade also offers a complete line of riflescopes under the Simmons®, Weaver® and Redfield® brand names. The Company distributes its products worldwide through a network of specialty retailers, mass merchandisers and domestic and foreign distributors. Additional information on Meade is available at www.meade.com.

“Safe-Harbor” Statement under the Private Securities Litigation Reform Act of 1995: This news release contains comments and forward-looking statements based on current plans, exceptions, events, and financial and industry trends that may affect the Company’s future operating results and financial position expectation, including, without limitation, the Company’s expectation that its facilities consolidation will result in $3 million of annualized savings; its expectation that its mySKY™ and other new products will fuel growth during fiscal 2008; the Company’s ability to significantly improve its operational and financial performance, including, improving its operating cost structure, gross and operating margins, revenue, and profitability; its ability to improve its supply chain; it’s ability to successfully obtain a new or renewed credit facility that will meet its working capital needs; and its expectation that it will ship sufficient product quantities this season; and the Company’s expectation that it has executed on its operational objectives sufficient to achieve future sales growth and profitability. Such statements involve risks and uncertainties which cannot be predicted or quantified and which may cause future activities and results of operations to differ materially from those discussed above. Such risks and uncertainties include, without limitation: the Company’s ability to execute on programs to improve its supply chain and operational efficiency; management’s capability of improving financial and operational performance, which may impact the Company’s compliance with bank covenants; the Company successfully expanding its supplier base in order to mitigate risk to its supply chain; the Company’s ability to produce sufficient products to meet customer demand; the Company’s loss of and failure to replace any significant customer; as well as the other risks and uncertainties previously set forth in the Company’s filings with the Securities and Exchange Commission. The historical results achieved are not necessarily indicative of future prospects of the Company. For additional information, please refer to the Company’s filings with the Securities and Exchange Commission.

MEADE INSTRUMENTS CORP.
STATEMENT OF OPERATIONS DATA
(Unaudited)
(in thousands, except per share data)


	Three Months Ended						Year Ended
	February 28,						February 28,
	2007			2006			2007			2006
Net sales	$	15,707		$	23,341		$	101,535		$	119,835
Cost of sales		14,905			19,506			84,065			90,333

Gross profit		802			3,835			17,470			29,502
Selling expenses		4,362			3,959			17,646			18,286
General and administrative expenses		4,269			4,151			15,173			13,082
ESOP expense		73			81			302			343
Research and development expenses		667			398			1,840			1,464

Operating loss		(8,569	)		(4,754	)		(17,491	)		(3,673	)
Interest expense		311			349			803			1,203

Loss before income taxes		(8,880	)		(5,103	)		(18,294	)		(4,876	)
Income tax provision (benefit)		(388	)		8,112			888			9,104

Net loss	$	(8,492	)	$	(13,215	)	$	(19,182	)	$	(13,980	)

Per share information:
Net loss — basic and diluted	$	(0.43	)	$	(0.68	)	$	(0.98	)	$	(0.72	)
Weighted average common shares outstanding—basic		19,675			19,419			19,608			19,419

Weighted average common shares outstanding—diluted		19,675			19,419			19,608			19,419


	February 28,		February 28,
	2007		2006
ASSETS

Current assets:
Cash	$	4,048	$	7,589
Accounts receivable, net		12,445		16,822
Inventories		25,289		34,359
All other current assets		443		395
Long-term assets		12,904		13,075

	$	55,129	$	72,240

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:
Bank lines of credit	$	860	$	4,229
Accounts payable		8,551		5,899
Accrued liabilities and other current liabilities		7,010		7,079
Income taxes payable		1,415		133
Long-term debt and other obligations		2,817		3,172
Total stockholders’ equity		34,476		51,728

	$	55,129	$	72,240

MEADE INSTRUMENTS
May 24, 2007
5:30AM PST/8:30 AM EST
Q4 FY 2007 CONFERENCE CALL

Thank you and good day everyone and welcome to today’s conference call. Joining us on the call are Steve Muellner, President and Chief Executive Officer, and Paul Ross, Chief Financial Officer.

Before we begin, as usual, we would like to remind everyone of the cautionary language regarding forward-looking statements contained in today’s news release, which also applies to any such statements made during this conference call. During the course of this call the Company may make forward-looking statements regarding future events or the financial performance of the Company. We wish to caution you that such statements are just predictions and actual events or results may differ materially. For a list of risks and uncertainties that may affect future earnings, please refer to the Company’s Form 10-K and Form 10-Q reports filed with the U.S. Securities and Exchange Commission. Investors should not place undue reliance on such forward-looking statements and the Company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

STEVE MUELLNER:
On today’s call, we’ll provide you with a summary of our fiscal 2007 financial and operational results and an overview of our objectives for fiscal 2008. But first, I am happy to report that we have reached a settlement in principle on the class action and stockholder derivative suits; both settlements are contingent upon court approval.

Fiscal 2007 was a year of foundation-building for the company, as we took several definitive actions to put Meade back on the path to growth and profitability. As we have discussed in past conference calls, we identified four key initiatives that are critical to our achieving these goals:

First, we had to resolve our supply chain difficulties to ensure we had adequate supply to meet demand.

Second, we invested in product development to create new and exciting products that would immediately contribute to growth on our sales line.

It’s been a little over one year since I started with the Company and I am proud to report that we have achieved significant progress in all four of these areas. While our financial results for fiscal 2007 reflect the considerable problems Meade faced 12 months ago, as well as the costs involved with driving improvements, we believe that the stage is now set for substantial improvement in our financial results for Fiscal ’08.

During fiscal 2007, we regained full compliance with Nasdaq and the SEC and consolidated our operations to bring future costs in line with expected revenues. We also installed a new and seasoned operations team with decades of experience in overseas manufacturing of specialty consumer goods. Led by our SVP of Operations, Don Finkle, this team has been tasked with getting all of our offshore manufacturing up to full capacity, delivering riflescopes and telescopes in a timely fashion and according to marketplace and customer requirements. We will continue to expend major efforts against the ultimate goal of total resolution of all supply chain issues that had developed over the past couple of years.

And it’s no small thing to be able to report to you that as of today nearly 100% of our Simmons line of riflescopes is already in production to meet our Q3 and Q4 hunting season needs. And we expect that the entire line will be shipping to our retail partners before the end of the year.

During this past year we also invested in top industry sales and marketing leaders and increased our investment in research and development. The immediate result of this R&D investment has just been launched under the name mySKY™,– with the first shipments scheduled for June – and initial orders for this product are already well above expectations. In a minute I’ll talk more about MySky and some of the different steps Meade is taking today to grow the market for this breathtakingly innovative product.

The legacy issues that existed back twelve months ago weren’t created overnight and it shouldn’t surprise anyone to hear that it will take time to fully resolve them. We now have put the right team in place that is committed, focused and equipped with the tools and resources necessary to turn around the performance of the Company and create long-term value for our shareholders.

Joining the Meade team most recently in this effort is our new CFO, Paul Ross, who became a part of the Company in mid-March 2007. Prior to joining Meade, Paul was the chief financial officer and treasurer of a Nasdaq-listed manufacturer of power supply products for use in communications and other technology markets, with more than $330 million in annual revenues. Paul has already added a new energy and level of experience and knowledge to our team and it’s my pleasure to finally be able to introduce him on today’s call.

Net sales for fiscal 2007 were $101.5 million compared with $119.8 in fiscal 2006. The decrease in revenue year-over-year was primarily driven by the Company’s well-known supply chain constraints related to riflescopes and ETX telescope products. Our gross profit margin for the year of 17% was negatively impacted by the reduced level of sales, an unusually high level of low or negative margin sales as the Company sought to aggressively reduce its inventory levels, and further write-downs of slow-moving inventory. Excluding the impact of these lower margin sales, inventory write-downs, and other unusual items unique to the restructuring of the Company, we estimate that a normal gross margin for fiscal 2007 would have been in a range around 24%, which still reflects the continued supply chain challenges we faced last year.

Operating expenses increased $1.8 million in fiscal 2007 over fiscal 2006. The increase in operating costs were primarily driven by legal and accounting fees related to the Company’s financial restatement, as well as severance and other costs related to the restructuring of the Company. Excluding these one-time costs, which were approximately $2.3 million, the Company’s operating costs would have actually decreased year-over-year.

Interest expense was lower in fiscal 2007 over fiscal 2006 primarily due to lower borrowings. Tax expense for fiscal 2007 represents the tax provision for our profitable European subsidiary. We did not recognize any tax benefits for our U.S. operations during the year.

I’d now like to take a few moments to comment on our balance sheet and cash flows for the year. Despite the $19 million net loss we incurred in fiscal 2007, we generated a positive $2.6 million from operations, which was primarily achieved through excellent working capital management. We exited fiscal 2007 with a healthy balance sheet and a very minimal level of debt.

Looking ahead to fiscal 2008, we are forecasting significant improvements in our gross and operating margins, as we expect that these unusual costs that we incurred in fiscal 2007 will not recur. While we as management believe that it is too early in the turnaround process to offer specific financial guidance on a quarter by quarter basis, we are expecting significant improvements in our operating results on a year over year basis, as Steve will now discuss.

STEVE MUELLNER:
As I mentioned earlier, we believe that our fiscal 2007 financial results reflect the lingering effects of the deep-rooted operational issues that we have since made significant steps in eradicating during the year. Our focus in fiscal 2008 will be to build on the foundation created in fiscal year 2007 and to focus on renewable and sustainable profitability. While we continue to focus on our strategic initiatives, here are the basic milestones that investors should look for during fiscal 2008:

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First, look for improving top-line revenue, especially during the peak shipping seasons in our fiscal third quarter. With the initial deliveries of mySKY and dramatically increased deliveries of riflescopes and telescopes from our Asian suppliers, we expect to report solid revenue growth as the year progresses. It must be noted that this is despite the fact that Discovery Stores, one of our top ten customers, recently announced that they would close all of their stores prior to the holiday season. Of course we are disappointed in this development and the loss of a good customer, but we nonetheless believe that we can deliver modest top-line growth despite this loss of Discovery.

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Second, look for improving gross and operating margins. During fiscal 2007 we consolidated four facilities into one and incurred a number of costs while drastically reducing our inventory. Most of these activities are now behind us and we expect to return the Company to a normal gross margin percentage. At the same time, we do not expect to incur the same level of SG&A as we reported for F’07 as many of those expenses were related to the downsizing of our operations and financial restatements. We have reduced our SG&A cost structure and have forecast another significant year-over-year decrease in these costs.

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Our goals for fiscal 2008 have not changed since our discussions in January and February, which are to achieve break-even results (plus or minus) at the operating income line, with a small loss after interest expense and taxes. While not yet able to report an actual profit, this will represent a huge improvement over the results for each of the past two years. This year is clearly the inflection point in the turnaround of the Company and the point from which we believe we can start generate more meaningful profits.

Now I would like to spend a few moments discussing our flagship new product of fiscal 2008, the mySKY Personal Guide for Sky Exploration. mySKY™ is the first ever full-color, handheld multimedia sky exploration guide and was launched at the end of last month. Some of the more important, ground-breaking features and benefits for our customers include:

2) Full-color LCD viewing screen for complete identification and awe inspiring video tours of the heavens;

4) A long-lasting battery system, delivering twice the operation time as our competitor; and

5) A comprehensive multimedia library with a database of over 30,000 celestial objects.

mySKY is unlike any other handheld guide out there and initial feedback on this product has been overwhelmingly positive. I can actually say that every customer who has seen mySKY says it is far superior to the leading competitor — Celestron’s SKY SCOUT. Currently this product is being sampled by distributors and initial orders of this new innovative – and market expanding product – have exceeded our expectations. The launch of this mySKY will continue through the first half of the year with an aggressive PR and marketing campaign designed to build awareness and interest in the advantages of mySKY.

Before we turn the call over to the operator for questions, I would like to reaffirm with our shareholders that the Meade management team is committed to continuing execution on our milestones and ever increasing value to our shareholders. We have a clearly defined set of initiatives which we believe will get us there, and we are committed to delivering on our plan for fiscal 2008.


Delaware	0-22183	95-2988062
_____________________ (State or other jurisdiction	_____________ (Commission	______________ (I.R.S. Employer
of incorporation)	File Number)	Identification No.)

6001 Oak Canyon, Irvine, California		92618-5200
_________________________________ (Address of principal executive offices)		___________ (Zip Code)


	Meade Instruments Corp.

May 24, 2007	By:	Paul E. Ross

		Name: Paul E. Ross
		Title: Senior Vice President - Finance & CFO


Exhibit No.		Description

99.1		Press Release, dated May 24, 2007.
99.2		Management Presentation from the Meade Instruments Corp. Q4 and Fiscal Year ended February 28, 2007 Investor Conference Call.


Date of Report (Date of Earliest Event Reported):		May 24, 2007


Registrant’s telephone number, including area code:		949 451-1450


Paul Ross Meade Instruments Corp. (949) 451-1450		Brandi Piacente The Piacente Group, Inc. (212) 481-2050 Email: brandi@tpg-ir.com