SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
_________________
FORM 8-K/A
AMENDMENT NO. 1 TO CURRENT REPORT
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) October 25, 2002
_________________
MEADE INSTRUMENTS CORP.
(Exact Name of Registrant as Specified in Charter)
Delaware 0-22183 95-2988062
(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
6001 Oak Canyon, Irvine, CA 92618
(Address of principal executive offices) (Zip Code)
(949) 451-1450
Registrant's telephone number, including area code
_________________
================================================================================
On November 7, 2002, Meade Instruments Corp. ("Meade" or the
"Registrant") filed an initial Current Report on Form 8-K with the Securities
and Exchange Commission reporting, among other transactions, the acquisition by
Meade of all of the outstanding capital stock of Simmons Outdoor Corporation
("Simmons").
This Amendment No. 1 to such Form 8-K amends Item 7, Financial Statements, Pro
Forma Financial Information and Exhibits, to include the historical financial
statements of Simmons and the pro forma information as required by Item 7.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Business Acquired.
AUDITED FINANCIAL STATEMENTS OF SIMMONS OUTDOOR CORPORATION:
Independent auditors' report............................................................. 5
Balance sheets at December 31, 2001 (Successor) and 2000 (Predecessor)................... 6
Statements of operations for the periods from December 7, 2001 to December 31,
2001 (Successor), January 1, 2001 to December 6, 2001 (Predecessor), and the
years ended December 31, 2000 and 1999 (Predecessor)..................................... 7
Statements of cash flows for the periods from December 7, 2001 to December 31,
2001 (Successor), January 1, 2001 to December 6, 2001 (Predecessor) and the
years ended December 31, 2000 and 1999 (Predecessor)..................................... 8
Statements of stockholder's equity for the periods from December 7, 2001 to
December 31, 2001 (Successor), January 1, 2001 to December 6, 2001 (Predecessor)
and the years ended December 31, 2000 and 1999 (Predecessor)............................. 9
Notes to the financial statements........................................................10
UNAUDITED FINANCIAL STATEMENTS OF SIMMONS OUTDOOR CORPORATION:
Balance sheets at June 30, 2002 and December 31, 2001....................................17
Statements of operations for the six months ended June 30, 2002 (Successor)
and 2001(Predecessor)....................................................................18
Statements of cash flows for the six months ended June 30, 2002 (Successor)
and 2001(Predecessor)....................................................................19
Notes to the unaudited financial statements..............................................20
(b) Pro Forma Financial Information.
Pro forma combined consolidated condensed statements.....................................22
Pro forma combined consolidated condensed statement of operations for the twelve
months ended February 28, 2002...........................................................23
Pro forma combined consolidated condensed statement of operations for the six
months ended August 31, 2002.............................................................24
Pro forma combined consolidated condensed balance sheet at August 31, 2002...............25
Notes to pro forma combined consolidated condensed financial statements..................26
2
(c) Exhibits.
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).
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.
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.
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).
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.
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.
23.1 Consent of Deloitte & Touche LLP, independent accountants for
Simmons Outdoor Corporation.
* Incorporated by reference to the same numbered exhibit to the
Registrant's Form 8-K filed with the Securities and Exchange Commission
on November 7, 2002.
_____
3
INDEX TO FINANCIAL STATEMENTS
AUDITED FINANCIAL STATEMENTS OF SIMMONS OUTDOOR CORPORATION:
Independent auditors' report............................................................. 5
Balance sheets at December 31, 2001 (Successor) and 2000 (Predecessor)................... 6
Statements of operations for the periods from December 7, 2001 to December 31,
2001 (Successor), January 1, 2001 to December 6, 2001 (Predecessor), and the
years ended December 31, 2000 and 1999 (Predecessor)..................................... 7
Statements of cash flows for the periods from December 7, 2001 to December 31,
2001 (Successor), January 1, 2001 to December 6, 2001 (Predecessor) and the
years ended December 31, 2000 and 1999 (Predecessor)..................................... 8
Statements of stockholder's equity for the periods from December 7, 2001 to
December 31, 2001 (Successor), January 1, 2001 to December 6, 2001 (Predecessor)
and the years ended December 31, 2000 and 1999 (Predecessor)............................. 9
Notes to the financial statements........................................................10
UNAUDITED FINANCIAL STATEMENTS OF SIMMONS OUTDOOR CORPORATION:
Balance sheets at June 30, 2002 and December 31, 2001....................................17
Statements of operations for the six months ended June 30, 2002 (Successor)
and 2001(Predecessor)....................................................................18
Statements of cash flows for the six months ended June 30, 2002 (Successor)
and 2001(Predecessor)....................................................................19
Notes to the unaudited financial statements..............................................20
4
INDEPENDENT AUDITORS' REPORT
To the Stockholder of
Simmons Outdoor Corporation
We have audited the accompanying balance sheets of Simmons Outdoor Corporation
(the Company) as of December 31, 2001 (Successor) and 2000 (Predecessor), and
the related statements of operations, cash flows, and stockholder's equity for
the periods from December 7, 2001 to December 31, 2001 (Successor), from January
1, 2001 to December 6, 2001 (Predecessor), and the years ended December 31, 2000
and 1999 (Predecessor). These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Simmons Outdoor Corporation as of December
31, 2001 (Successor) and 2000 (Predecessor) and the results of its operations,
cash flows, and stockholder's equity for the periods from December 7, 2001 to
December 31, 2001 (Successor), from January 1, 2001 to December 6, 2001
(Predecessor), and the years ended December 31, 2000 and 1999 (Predecessor) in
conformity with accounting principles generally accepted in the United States of
America.
As discussed in Note 8, a majority of the Predecessor Company's operating
expenses were allocated from its parent and affiliates.
/s/ Deloitte & Touche LLP
Minneapolis, Minnesota
November 25, 2002
5
SIMMONS OUTDOOR CORPORATION
BALANCE SHEETS
DECEMBER 31, 2001 AND 2000 (IN THOUSANDS)
- ---------------------------------------------------------------------------------------
SUCCESSOR PREDECESSOR
2001 2000
ASSETS
CURRENT ASSETS:
Accounts receivable, net (Note 3) $ 4,968 $ 12,444
Inventory, net (Note 4) 9,665 11,679
Deferred income tax asset (Note 10) 359 1,079
Other assets 90 104
------------ ------------
Total current assets 15,082 25,306
Property, plant, and equipment, net (Note 5) 293 104
Goodwill (Note 6) 2,519 18,919
------------ ------------
Total assets $ 17,894 $ 44,329
============ ============
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Checks outstanding in excess of bank balance $ 150 $ 38
Accounts payable 564 1,703
Due to related parties (Note 8) 2,977 1,359
Accrued expenses (Note 7) 737 836
------------ ------------
Total current liabilities 4,428 3,936
COMMITMENTS AND CONTINGENCIES (Note 9)
STOCKHOLDER'S EQUITY:
Parent company equity (Note 8) 13,565 33,929
Retained earnings (deficit) (99) 6,464
------------ ------------
Total stockholder's equity 13,466 40,393
------------ ------------
Total liabilities and stockholder's equity $ 17,894 $ 44,329
============ ============
See notes to the financial statements.
6
SIMMONS OUTDOOR CORPORATION
STATEMENTS OF OPERATIONS
DECEMBER 7, 2001 TO DECEMBER 31, 2001; JANUARY 1, 2001 TO DECEMBER 6, 2001; AND
YEARS ENDED DECEMBER 31, 2000 AND 1999 (IN THOUSANDS)
- -------------------------------------------------------------------------------------------------------------
SUCCESSOR PREDECESSOR
------------- -----------------------------------------------
DECEMBER 7, JANUARY 1,
2001 2001 YEAR YEAR
TO TO ENDED ENDED
DECEMBER 31, DECEMBER 6, DECEMBER 31, DECEMBER 31,
2001 2001 2000 1999
SALES $ 1,125 $ 25,801 $ 41,277 $ 45,499
COST OF SALES 958 23,955 33,793 37,098
------------ ------------ ------------ ------------
Gross profit 167 1,846 7,484 8,401
OPERATING EXPENSES:
Selling and marketing (Note 8) 171 2,347 3,915 3,763
General and administrative (Note 8) 95 1,532 1,530 1,475
------------ ------------ ------------ ------------
Total operating expenses 266 3,879 5,445 5,238
------------ ------------ ------------ ------------
(LOSS) INCOME BEFORE INTEREST AND
INCOME TAXES (99) (2,033) 2,039 3,163
INTEREST EXPENSE (Note 8) -- 1,880 3,620 844
------------ ------------ ------------ ------------
(LOSS) INCOME BEFORE INCOME TAXES (99) (3,913) (1,581) 2,319
INCOME TAX (BENEFIT) PROVISION (Note 10) -- (1,394) (357) 1,050
------------ ------------ ------------ ------------
NET (LOSS) INCOME $ (99) $ (2,519) $ (1,224) $ 1,269
============ ============ ============ ============
See notes to the financial statements.
7
SIMMONS OUTDOOR CORPORATION
STATEMENTS OF CASH FLOWS
DECEMBER 7, 2001 TO DECEMBER 31, 2001 (SUCCESSOR); JANUARY 1, 2001 TO DECEMBER 6, 2001;
AND YEARS ENDED DECEMBER 31, 2000 AND 1999 (PREDECESSOR) (IN THOUSANDS)
- -----------------------------------------------------------------------------------------------------------------------------
SUCCESSOR PREDECESSOR
------------- -----------------------------------------------
DECEMBER 7, JANUARY 1,
2001 2001 YEAR YEAR
TO TO ENDED ENDED
DECEMBER 31, DECEMBER 6, DECEMBER 31, DECEMBER 31,
2001 2001 2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $ (99) $ (2,519) $ (1,224) $ 1,269
Adjustments to reconcile net (loss) income to net cash
(used in) provided by operating activities:
Depreciation 3 29 62 93
Amortization -- 512 546 546
Deferred income taxes -- (478) (72) (1,007)
Changes in assets and liabilities:
Accounts receivable 2,240 5,236 (6,642) (1,158)
Due to (from) related parties (2,888) (2,972) 8,466 3,132
Inventory 453 1,561 244 (4,532)
Other assets 38 10 826 (440)
Checks outstanding in excess of bank balance 93 19 38
Accounts payable 140 (1,279) (1,699) 1,508
Accrued expenses 20 (119) (628) 672
------------ ------------ ------------ ------------
Net cash (used in) provided by operating
activities -- -- (83) 83
CAPITAL EXPENDITURES -- -- (81) (10)
------------ ------------ ------------ ------------
(DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS -- -- (164) 73
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD -- -- 164 91
------------ ------------ ------------ ------------
CASH AND CASH EQUIVALENTS AT END
OF PERIOD $ -- $ -- $ -- $ 164
============ ============ ============ ============
See notes to the financial statements.
8
SIMMONS OUTDOOR CORPORATION
STATEMENT OF STOCKHOLDER'S EQUITY
- --------------------------------------------------------------------------------
PARENT
COMPANY RETAINED
EQUITY EARNINGS
PREDECESSOR
BALANCES AT DECEMBER 31, 1998 $33,929 $ 6,419
Net income -- 1,269
-------- --------
BALANCES AT DECEMBER 31, 1999 33,929 7,688
Net loss -- (1,224)
-------- --------
BALANCES AT DECEMBER 31, 2000 33,929 6,464
Net loss -- (2,519)
-------- --------
BALANCES AT DECEMBER 6, 2001 $33,929 $ 3,945
======== ========
- --------------------------------------------------------------------------------
SUCCESSOR
BALANCES AT DECEMBER 7, 2001 $13,565 $ --
Net loss -- (99)
-------- --------
BALANCES AT DECEMBER 31, 2001 $13,565 $ (99)
======== ========
See notes to the financial statements.
9
SIMMONS OUTDOOR CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 7, 2001 TO DECEMBER 31, 2001 (SUCCESSOR); JANUARY 1, 2001 TO DECEMBER
6, 2001 (PREDECESSOR); AND YEARS ENDED DECEMBER 31, 2000 AND 1999 (PREDECESSOR)
(IN THOUSANDS)
- --------------------------------------------------------------------------------
1. NATURE OF THE BUSINESS
Simmons Outdoor Corporation (Simmons or the Company) distributes
sporting optical systems under the brand names of Simmons(R), Weaver(R),
and Redfield(R). The Company is located in Thomasville, Georgia. The
Company was owned by Blount International, Inc. (Blount) prior to
December 7, 2001, when it was sold to Alliant Techsystems Inc. (ATK)
along with several other subsidiaries of Blount. Since the date of
acquisition it has been ATK's intent to sell Simmons as the business was
not consistent with ATK's business strategy. The acquisition of Simmons
was accounted for as a purchase, and the assets and liabilities were
recorded at their fair value at the date of acquisition. The financial
statements of Simmons reflect Blount's (Predecessor) basis for periods
prior to December 7, 2001 and ATK's (Successor) basis for periods
subsequent to December 6, 2001. The financial statements of the
Successor reflect ATK's recapitalization of Simmons based on ATK's
allocation of purchase price. The recapitalization is treated as a
non-cash transaction in the statements of stockholder's equity and cash
flows.
On October 25, 2002, ATK completed the sale of 100% of the stock in
Simmons to Meade Instruments Corp. for $16 million plus a working
capital purchase price adjustment. Accordingly, on that date, the
Company became a wholly owned subsidiary of Meade Instruments Corp.
The financial statements have been prepared on the accrual basis of
accounting.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CHECKS OUTSTANDING IN EXCESS OF BANK BALANCE - The Company does not
maintain any significant cash accounts other than a zero balance account
which is funded daily by its parent company.
ACCOUNTS RECEIVABLE - Receivables consist primarily of trade
receivables, net of the allowance for cash discounts and the allowance
for doubtful accounts. An affiliate of Simmons completes the billing and
collection of trade accounts receivable on behalf of Simmons.
DUE FROM (TO) RELATED PARTIES - Due from (to) related parties represents
the net of trade receivables collected and cash advances made to the
Company or its vendors as of the balance sheet date.
GOODWILL - Goodwill represents the excess of purchase price over the
fair value of the net assets acquired. Goodwill was being amortized on a
straight-line basis over 40 years for periods prior to December 7, 2001.
Upon its acquisition by ATK, the Company re-established the balance of
goodwill based on the excess of purchase price over the fair value of
assets acquired and liabilities assumed. In accordance with Statement of
Financial Accounting Standards (SFAS) No. 142, GOODWILL AND OTHER
INTANGIBLE ASSETS, the goodwill recorded upon the Company's acquisition
by ATK is not being amortized.
INCOME TAXES - The Company follows SFAS No. 109, ACCOUNTING FOR INCOME
TAXES. Under SFAS No. 109, the deferred tax provision is determined
under the liability method. Under this method, deferred tax assets and
liabilities are recognized based on the differences between the
financial statement and income tax bases of assets and liabilities using
presently enacted income tax rates.
10
REVENUE RECOGNITION - The Company recognizes revenue when title passes,
which generally occurs when shipped.
SIGNIFICANT CUSTOMERS - Sales to Wal-Mart Stores Inc. represented
approximately 25%, 22%, 25%, and 24% of the Company's total sales in the
period ended December 7, 2001 to December 31, 2001, from January 1, 2001
to December 6, 2001 and the years ended December 31, 2000 and 1999,
respectively.
INVENTORY - Inventory, consisting primarily of finished goods, is stated
at the lower of cost (computed on a first-in, first-out (FIFO) basis) or
market.
SHIPPING AND HANDLING COSTS - The Company incurs expenses for the
delivery of incoming goods and services and the shipment of goods to
customers. These expenses are recognized in the period in which they
occur and are classified as gross revenues if billed and cost of goods
sold if incurred by the Company in the financial statements in
accordance with the Financial Accounting Standards Board's Emerging
Issues Task Force's Issue (EITF) No. 00-10, ACCOUNTING FOR SHIPPING AND
HANDLING FEES AND COSTS.
SALES INCENTIVES - The Company provides various sales incentives to
customers in the form of coupons, rebates, discounts, free product, and
advertising allowances. The cost of such expenses is recorded at the
time of sale and revenue recognition and is recorded as a reduction to
revenue in accordance with EITF No. 00-14, ACCOUNTING FOR CERTAIN SALES
INCENTIVES.
ADVERTISING COSTS - Advertising costs are expensed as incurred except
for cooperative advertising, which is accrued over the period the
revenues are recognized, and sales materials such as brochures and
catalogs, which are expensed over the period used. Advertising costs are
included in selling and marketing expense in the statements of
operations and were included in the allocation of expenses from related
parties (see Note 8).
IMPAIRMENT OF LONG-LIVED ASSETS - The Company reviews long-lived assets
for impairment when events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. If impairment
indicators are present and the estimated future undiscounted cash flows
are less than the carrying value of the assets and any related goodwill,
the carrying value is reduced to the estimated fair value as measured by
the discounted cash flows.
DERIVATIVE FINANCIAL INSTRUMENTS - On January 1, 2001, the Company
adopted SFAS No. 133, as amended by SFAS No. 138, ACCOUNTING FOR
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES. The adoption did not have
a material impact on the results of operations. As of December 31, 2001,
the Company did not have any derivative contracts outstanding.
USE OF ESTIMATES - The preparation of the financial statements in
conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions
that affect amounts reported therein. Due to the inherent uncertainty
involved in making estimates, actual results reported in future periods
may differ from those estimates.
NEW ACCOUNTING PRONOUNCEMENTS - In June 2001, the Financial and
Accounting Standards Board (FASB) issued SFAS No. 141, BUSINESS
COMBINATIONS. This statement discontinues the use of the
pooling-of-interests method of accounting for business combinations.
This statement is effective for all business combinations after June 30,
2001. The provisions of this statement did not affect the Company's
financial statements.
In June 2001, the FASB issued SFAS No. 142, GOODWILL AND OTHER
INTANGIBLE ASSETS. The statement requires discontinuing the amortization
of goodwill and other intangible assets with indefinite useful lives.
11
Instead, these assets are to be tested periodically for impairment and
written down to their fair market value as necessary.
In August 2001, the FASB issued SFAS No. 143, ACCOUNTING FOR ASSET
RETIREMENT OBLIGATIONS. SFAS No. 143 requires entities to record the
fair value of a liability for an asset retirement obligation in the
period in which it is incurred. When the liability is initially
recorded, the entity capitalizes a cost by increasing the carrying
amount of the related long-lived asset. Over time, the liability is
accreted to its present value each period, and the capitalized cost is
depreciated over the useful life of the related asset. Upon settlement
of the liability, an entity either settles the obligation for its
recorded amount or incurs a gain or loss upon settlement. SFAS No. 143
is effective for fiscal years beginning after June 15, 2002. The Company
expects to adopt SFAS No. 143 on January 1, 2003. The Company has not
yet determined the impact of SFAS No. 143 on its financial statements.
In August 2001, the FASB issued SFAS No. 144, ACCOUNTING FOR THE
IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS, which address accounting
and reporting for the impairment or disposal of long-lived assets. SFAS
No. 144 supersedes SFAS No. 121, ACCOUNTING FOR THE IMPAIRMENT OF
LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF. SFAS No.
144 establishes a single accounting model for long-lived assets to be
disposed of by sale and expands on the guidance provided by SFAS No. 121
with respect to cash flow estimations. SFAS No. 144 becomes effective
for the Company in fiscal year 2002. The Company is evaluating SFAS No.
144 and has not yet determined the impact of adoption on its financial
statements.
In July 2002, the FASB issued SFAS No. 146, ACCOUNTING FOR COSTS
ASSOCIATED WITH EXIT OR DISPOSAL ACTIVITIES. This statement requires
that a liability for a cost associated with an exit or disposal activity
be recognized when the liability is incurred, rather than when a company
commits to an exit plan as was previously required. SFAS No. 146 is
effective for exit or disposal activities that are initiated after
December 31, 2002. The Company is evaluating SFAS No. 146 and has not
yet determined the impact of adoption on its financial statements.
3. ACCOUNTS RECEIVABLE
Receivables at December 31, 2001 and 2000 consisted of the following:
Successor Predecessor
2001 2000
Trade accounts receivable $ 5,467 $ 12,808
Other receivables 10 32
------------ ------------
Gross receivables 5,477 12,840
Less allowances (509) (396)
------------ ------------
Net accounts receivable $ 4,968 $ 12,444
============ ============
12
4. INVENTORY
Inventory at December 31, 2001 and 2000 consisted of the following:
Successor Predecessor
2001 2000
Raw materials and packaging $ 788 $ 2,112
Work-in-process 1,667 2,439
Finished goods 7,210 7,128
------------ ------------
Net inventory $ 9,665 $ 11,679
============ ============
5. PROPERTY, PLANT, AND EQUIPMENT
Property, plant, and equipment is stated at cost and depreciated over
estimated useful lives using the straight-line method. Leasehold
improvements are depreciated over the term of the lease (see Note 9),
and office equipment and computers are depreciated over 3-5 years.
Property, plant, and equipment at December 31, 2001 and 2000 consisted
of the following:
Successor Predecessor
2001 2000
Leasehold improvements $ 8 $ 23
Office equipment 175 472
Computers 110 362
------------- -------------
Gross property, plant, and equipment 296 857
Less accumulated depreciation (3) (753)
------------- -------------
Net property, plant, and equipment $ 293 $ 104
============= =============
Depreciation expense was $3, $29, $62, and $93 in the periods ended
December 31, 2001, December 6, 2001, December 31, 2000, and December 31,
1999, respectively.
6. GOODWILL
Goodwill at December 31, 2001 and 2000 consisted of the following:
Successor Predecessor
2001 2000
Gross goodwill $ 2,519 $ 21,638
Less accumulated amortization (2,719)
------------- -------------
Net goodwill $ 2,519 $ 18,919
============= =============
Goodwill amortization expense was $0, $512, $546 and $546 in the period
from December 7, 2001 to December 31, 2001, January 1, 2001 to December
6, 2001, and for the years ended December 31, 2000 and 1999,
respectively.
13
7. ACCRUED EXPENSES
The components of accrued expenses at December 31, 2001 and 2000 are as
follows:
Successor Predecessor
2001 2000
Accrued rebates, discounts, and other allowances $ 401 $ 436
Accrued employee compensation and benefits 313 277
Other accruals 23 123
------------- -------------
Total accrued expenses $ 737 $ 836
============= =============
8. RELATED-PARTY TRANSACTIONS
Certain expenses were allocated to the Predecessor Company by Blount or
Blount's other subsidiaries, including all selling and marketing
expenses other than sales commissions, certain administrative expenses
of Blount's corporate office, pension expense, and interest expense
(which was based on working capital employed).
Management believes that amounts allocated are reasonable in relation to
the value of goods and services received from Blount and its
subsidiaries.
These allocations are summarized by income statement classification as
follows:
Successor
Company Predecessor Company
------------- --------------------------------------------
December 7, January 1,
2001 2001 Year Year
to to Ended Ended
December 31, December 6, December 31, December 31,
2001 2001 2000 1999
Selling and marketing $ - $ 2,108 $ 2,947 $ 2,609
Allocated interest expense - 1,880 3,620 844
--------- ----------- ------------ ------------
Total $ - $ 3,988 $ 6,567 $ 3,453
========= =========== ============ ============
Amounts due to related parties (including ATK and its subsidiaries) as
of December 31, 2001 was $2,977. Amounts due to related parties
(including Blount and its subsidiaries) as of December 31, 2000 was
$1,359.
9. COMMITMENTS AND CONTINGENCIES
LEASES - The Company leases its distribution and administrative facility
under an operating lease. The Company also leases various office
equipment. Rent expense incurred on these operating leases was $19,
$214, $252, and $204 in the periods ended December 31, 2001, December 6,
2001, December 31, 2000 and December 31, 1999, respectively.
14
Minimum rental commitments payable under noncancelable lease commitments
outstanding at December 31, 2001 in each of the following years ended
December 31 are:
2002 $ 228
2003 228
2004 228
2005 228
2006 228
Thereafter 229
-----------
$ 1,369
===========
10. INCOME TAXES
Income tax (benefit) expense consisted of the following:
Predecessor Company
--------------------------------------------
January 1,
2001 Year Year
To Ended Ended
December 6, December 31, December 31,
2001 2000 1999
Current:
Federal $ (779) $ (242) $ 1,748
State (135) (43) 309
----------- ---------- -----------
(914) (285) 2,057
Deferred:
Federal (410) (61) (855)
State and foreign (70) (11) (152)
----------- ---------- -----------
(480) (72) (1,007)
----------- ---------- -----------
Income tax (benefit) expense $ (1,394) $ (357) $ 1,050
=========== ========== ===========
Income taxes for the Successor period of December 7, 2001 to December
31, 2001 were not significant.
A reconciliation of income tax (benefit) expense to the amount computed
using the U.S. federal statutory tax rate of 34% is as follows:
Predecessor Company
--------------------------------------------
January 1,
2001 Year Year
To Ended Ended
December 6, December 31, December 31,
2001 2000 1999
Income taxes computed at
the statutory rate of 34% $ (1,330) $ (538) $ 788
State income taxes, net of
federal benefit (156) (63) 93
Nondeductible goodwill and
other 92 244 169
----------- ---------- -----------
$ (1,394) $ (357) $ 1,050
=========== ========== ===========
15
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax
purposes and tax credit carryforwards. Significant items comprising the
net deferred tax asset shown on the statement of financial position are
as follows at December 31:
Successor Predecessor
2001 2000
Current:
Accounts receivable $ 203 $ 128
Inventory 781
Distributors rebate 156 170
------------ ------------
Net deferred income tax asset $ 359 $ 1,079
============ ============
16
SIMMONS OUTDOOR CORPORATION
BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)
ASSETS
SUCCESSOR
----------------------------
JUNE 30, DECEMBER 31,
2002 2001
------------- -------------
Current assets:
Cash........................................................ $ 40
Accounts receivable, net.................................... 6,792 $ 4,968
Inventory, net.............................................. 13,600 9,665
Deferred income tax asset .................................. 359 359
Other assets................................................ 48 90
------------- -------------
Total current assets................................ 20,839 15,082
Property and equipment, net .................................. 262 293
Goodwill...................................................... 2,519 2,519
------------- -------------
Total assets........................................ $ 23,620 $ 17,894
============= =============
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Cash overdrafts............................................. $ 150
Accounts payable............................................ $ 2,579 564
Due to related parties...................................... 7,369 2,977
Accrued expenses............................................ 433 737
------------- -------------
Total current liabilities........................... 10,381 4,428
Commitments and contingencies
Parent company equity......................................... 13,565 13,565
Retained deficit.............................................. (326) (99)
------------- -------------
Total stockholder's equity 13,239 13,466
------------- -------------
Total liabilities and stockholder's equity.......... $ 23,620 $ 17,894
============= =============
See accompanying notes to financial statements.
17
SIMMONS OUTDOOR CORPORATION
STATEMENTS OF OPERATIONS
(IN THOUSANDS)
(UNAUDITED)
SUCCESSOR PREDECESSOR
------------- -------------
SIX MONTHS ENDED JUNE 30,
2002 2001
------------- -------------
Sales.......................................... $ 10,808 $ 12,536
Cost of sales.................................. 8,791 11,172
------------- -------------
Gross profit................... 2,017 1,364
Operating expenses:
Selling and marketing....................... 1,378 1,178
General and administrative.................. 519 746
------------- -------------
Total operating expenses................. 1,897 1,924
------------- -------------
Income (loss) before interest and income taxes. 120 (560)
Interest expense............................... 473 1,025
------------- -------------
Loss before income taxes....................... (353) (1,585)
Income tax benefit............................. (126) (565)
------------- -------------
Net loss....................................... $ (227) $ (1,020)
============= =============
See accompanying notes to financial statements.
18
SIMMONS OUTDOOR CORPORATION
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
SUCCESSOR PREDECESSOR
-------------- -------------
SIX MONTHS ENDED JUNE 30,
2002 2001
-------------- -------------
Cash flows from operating activities:
Net loss......................................... $ (227) $ (1,020)
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization.................................. 273
Depreciation.................................. 31 25
Deferred taxes................................ 360
Changes in assets and liabilities:
Accounts receivable......................... (1,824) (974)
Due to related parties...................... 4,392 2,901
Inventory................................... (3,935) (134)
Other assets................................ 42 (22)
Cash overdrafts............................. (150) (26)
Accounts payable............................ 2,015 (462)
Accrued expenses............................ (304) (921)
-------------- -------------
Net cash provided by operating activities 40 -
-------------- -------------
Net increase in cash and cash equivalents.......... 40 -
Cash and cash equivalents at beginning of period... - -
-------------- -------------
Cash and cash equivalents at end of period......... $ 40 $ -
============== =============
See accompanying notes to financial statements.
19
SIMMONS OUTDOOR CORPORATION
NOTES TO FINANCIAL STATEMENTS
(IN THOUSANDS)
(UNAUDITED)
A. BASIS OF PRESENTATION AND RESPONSIBILITY FOR FINANCIAL STATEMENTS
As of and for the six months ended June 30, 2001, Simmons Outdoor Corporation
(the Company) was a wholly-owned subsidiary of Blount International, Inc.
(Blount). On December 7, 2001, the Company was sold to Alliant Techsystems Inc.
(ATK), so that as of and for the six months ended June 30, 2002, the Company was
a wholly-owned subsidiary of ATK. The accompanying financial statements of the
Company reflect Blount (predecessor) basis for periods prior to December 7, 2001
and ATK's (successor) basis for periods subsequent to December 6, 2001.
Management of the Company is responsible for the unaudited financial statements
for the six months ended June 30, 2002 and 2001. These financial statements are
unaudited but, in the opinion of management, include all adjustments necessary
for a fair presentation of the Company's financial position as of June 30, 2002
and 2001, and its results of operations for the six-month periods then ended.
Sales, expenses, cash flows, assets, and liabilities can and do vary during the
year. The Company's business is seasonal due primarily to the fall hunting and
holiday seasons, typically resulting in higher sales during the third and fourth
calendar quarters. Therefore, the results and trends in these interim financial
statements may not be the same as those for the full year.
B. RECEIVABLES
Receivables consisted of the following:
June 30, December 31,
2002 2001
-------------- --------------
Trade accounts receivable $ 7,104 $ 5,467
Other receivables - 10
-------------- --------------
Gross receivables 7,104 5,477
Less: Allowances (312) (509)
-------------- --------------
Net accounts receivable $ 6,792 $ 4,968
============== ==============
C. INVENTORY
Inventory consisted of the following:
June 30, December 31,
2002 2001
-------------- --------------
Raw materials and packaging $ 759 $ 788
Work-in-process 1,253 1,667
Finished goods 11,588 7,210
-------------- --------------
Total $ 13,600 $ 9,665
============== ==============
D. SUBSEQUENT EVENT
On October 25, 2002, ATK completed the sale of 100% of the stock of the Company
to Meade Instruments Corp. (Meade) for $16 million plus an estimated
approximately $4 million working capital purchase price adjustment. Accordingly,
on that date, the Company became a wholly-owned subsidiary of Meade.
20
PRO FORMA COMBINED CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS OF
MEADE INSTRUMENTS CORP. FOR THE
TWELVE MONTHS ENDED FEBRUARY 28, 2002
AND THE SIX MONTHS ENDED AUGUST 31, 2002
REFLECTING THE ACQUISITION OF SIMMONS
INDEX TO PRO FORMA FINANCIAL INFORMATION
Pro forma combined consolidated condensed statements.........................22
Pro forma combined consolidated condensed statement of operations
for the twelve months ended February 28, 2002................................23
Pro forma combined consolidated condensed statement of operations for
the six months ended August 31, 2002.........................................24
Pro forma combined consolidated condensed balance sheet at August 31, 2002...25
Notes to pro forma combined consolidated condensed financial statements......26
21
UNAUDITED PRO FORMA COMBINED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
On October 25, 2002, Meade Instruments Corp., a Delaware corporation ("Meade"),
and MTSC Holdings Corp., a California corporation and wholly owned subsidiary of
Meade, acquired from Alliant Techsystems Inc., a Delaware corporation, and
ATK Commercial Ammunition Company Inc., a Delaware corporation, all of the
issued and outstanding shares of common stock of Simmons Outdoor Corporation, a
Delaware corporation ("Simmons"). Simmons is a distributor and marketer of a
broad range of riflescopes and binoculars under the Simmons(R), Redfield(R)and
Weaver(R)brand names.
As of December 6, 2001, Simmons was a wholly-owned subsidiary of Blount
International, Inc. (Blount). On December 7, 2001, Simmons was sold to Alliant
Techsystems Inc. The accompanying unaudited pro forma consolidated condensed
financial statements of Meade reflect Blount (predecessor) basis for
periods prior to December 7, 2001 and ATK's (successor) basis for periods
subsequent to December 6, 2001.
The unaudited pro forma consolidated condensed statements of income give effect
on a purchase accounting basis to the acquisition of Simmons. The pro forma
consolidated condensed statement of income for the twelve months ended February
28, 2002 has been prepared by combining the consolidated statement of income of
Meade for the twelve months ended February 28, 2002 with the statements of
operations of Simmons (predecessor) for the period January 1, 2001 through
December 6, 2001, and Simmons (successor) for the period December 7, 2001
through December 31, 2001. The pro forma consolidated condensed statement of
income for the six months ended August 31, 2002 has been prepared by combining
the statements of Meade for the six months ended August 31, 2002 and the
statement of operations of Simmons (successor) for the six months ended June 30,
2002.
The unaudited pro forma consolidated condensed statements of income for the
twelve months ended February 28, 2002 and the six months ended August 31, 2002
assume that the acquisition occurred on March 1, 2001. The unaudited pro forma
consolidated condensed statements of income do not purport to represent the
results of operations of Meade had the transaction and events assumed
herein occurred on the dates specified, nor are they necessarily indicative of
the results of operations that may be achieved in the future. The pro forma
adjustments are based on management's preliminary purchase price allocations,
pending completion by Meade of the final evaluation of the fair values of
the net assets acquired. Upon completion of the evaluation of the fair values of
the net assets acquired, actual results may differ materially from those
presented herein.
The unaudited pro forma consolidated financial information is based upon certain
assumptions and adjustments described in the notes to the pro forma consolidated
financial statements. The pro forma consolidated financial information should be
read in conjunction with (a) the historical financial statements, and related
notes, of Meade contained in Meade's quarterly report on Form 10-Q for the
quarter ended August 31, 2002 and in the Annual Report on Form 10-K for the year
ended February 28, 2002 and (b) Simmons' historical financial statements
referenced on page 4 of this report.
22
PRO FORMA COMBINED CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED FEBRUARY 28, 2002
MEADE SIMMONS
TWELVE MONTHS COMBINED TWELVE PRO FORMA PRO FORMA
ENDED MONTHS ENDED ADJUSTMENTS NOTES COMBINED
FEBRUARY 28, DECEMBER 31,
2002 2001 (1)
---------------- ----------------- -------------- ------ ----------------
Sales................................... $ 94,718,000 $ 26,926,000 $ 121,644,000
Cost of sales........................... 70,108,000 24,913,000 95,021,000
---------------- ----------------- ----------------
Gross profit......................... 24,610,000 2,013,000 26,623,000
Selling expense......................... 12,920,000 2,518,000 15,438,000
General and administrative expenses..... 9,098,000 1,627,000 $ 200,000 A 10,925,000
ESOP expenses 1,367,000 - 1,367,000
Research and development expenses....... 2,167,000 - 2,167,000
---------------- ----------------- ----------------
Operating income (loss).............. (942,000) (2,132,000) (3,274,000)
Interest expense........................ 1,345,000 1,880,000 878,000 B 4,103,000
---------------- ----------------- ----------------
Income (loss) before income taxes.... (2,287,000) (4,012,000) (7,377,000)
Provision (benefit) for income taxes.... (845,000) (1,394,000) 1,394,000 C (2,881,000)
(2,036,000) C
---------------- ----------------- ----------------
Net income (loss)....................... $ (1,442,000) $ (2,618,000) $ (4,496,000)
---------------- ----------------- ----------------
Earnings (loss) per share - basic....... $ (0.10) $ (0.24)
---------------- ----------------- ----------------
Earnings (loss) per share - diluted..... $ (0.10) $ (0.24)
---------------- ----------------- ----------------
Weighted average shares outstanding -
basic................................... 15,100,000 3,292,000 D 18,392,000
---------------- ----------------- ----------------
Weighted average shares outstanding -
diluted................................. 15,100,000 3,292,000 D 18,392,000
---------------- ----------------- ----------------
(1) Includes the results of operations for Simmons for both the predecessor and
successor periods. See notes to the audited financial statements included
herein.
23
PRO FORMA COMBINED CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED AUGUST 31, 2002
MEADE SIMMONS
SIX MONTHS ENDED SIX MONTHS ENDED PRO FORMA PRO FORMA
AUGUST 31, 2002 JUNE 30, 2002 ADJUSTMENTS NOTES COMBINED
---------------- ---------------- -------------- ------ ---------------
Sales.................................... $ 44,088,000 $ 10,808,000 $ 54,896,000
Cost of sales............................ 30,519,000 8,791,000 39,310,000
---------------- ---------------- ---------------
Gross profit.......................... 13,569,000 2,017,000 15,586,000
Selling expense.......................... 6,081,000 1,378,000 7,459,000
General and administrative expenses...... 5,723,000 519,000 $ 100,000 A 6,342,000
ESOP expenses 428,000 - 428,000
Research and development expenses........ 1,480,000 - 1,480,000
---------------- ---------------- ---------------
Operating income (loss)............... (143,000) 120,000 (123,000)
Interest expense......................... 435,000 473,000 439,000 B 1,347,000
---------------- ---------------- ---------------
Income (loss) before income taxes..... (578,000) (353,000) (1,470,000)
Provision (benefit) for income taxes..... (205,000) (126,000) 126,000 C (562,000)
(357,000) C
---------------- ---------------- ---------------
Net income (loss)........................ $ (373,000) $ (227,000) $ (908,000)
---------------- ---------------- ---------------
Earnings (loss) per share - basic........ $ (0.02) $ (0.05)
---------------- ---------------
Earnings (loss) per share - diluted...... $ (0.02) $ (0.05)
---------------- ---------------
Weighted average shares outstanding - basic 15,107,000 3,292,000 D 18,399,000
Weighted average shares outstanding -
diluted.................................. 15,107,000 3,292,000 D 18,399,000
24
PRO FORMA COMBINED CONSOLIDATED CONDENSED BALANCE SHEET
AT AUGUST 31, 2002
ASSETS
MEADE SIMMONS PRO FORMA PRO FORMA
AUGUST 31, 2002 JUNE 30, 2002 ADJUSTMENTS NOTES COMBINED
-------------------------------------------------------------------------------------
Current assets:
Cash.............................. $ 562,000 $ 40,000 $ 602,000
Accounts receivable, net.......... 23,241,000 6,792,000 30,033,000
Inventories, net.................. 34,802,000 13,600,000 48,402,000
Deferred tax...................... 7,011,000 359,000 7,370,000
Prepaids and other current assets. 606,000 48,000 654,000
------------------------------------ -----------------
Total current assets............ 66,222,000 20,839,000 87,061,000
Other assets........................ 3,762,000 2,519,000 (2,519,000) E 5,673,000
1,911,000 A
Property and equipment, net......... 6,411,000 262,000 6,673,000
------------------------------------ -----------------
Total assets $ 76,395,000 $ 23,620,000 $ 99,407,000
------------------------------------ -----------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Line of credit.................... $ 9,463,000 $ - $ 8,619,000 B $ 18,082,000
Accounts payable.................. 7,929,000 2,579,000 10,508,000
Accrued liabilities............... 5,732,000 433,000 4,000,000 B 10,165,000
Due to related parties............ - 7,369,000 (7,369,000) F -
Current portion long-term debt.... 535,000 - 535,000
------------------------------------ -----------------
Total current liabilities....... 23,659,000 10,381,000 39,290,000
Long-term debt...................... 2,458,000 - 2,458,000
Stockholders' equity:
Parent company equity............. - 13,565,000 (13,565,000) G -
Common stock...................... 165,000 - 33,000 D 198,000
Additional paid-in capital........ 32,613,000 - 7,348,000 D 39,961,000
Retained earnings (deficit)....... 21,928,000 (326,000) 326,000 H 21,928,000
Unearned ESOP shares.............. (4,007,000) - (4,007,000)
Accumulated other comprehensive
income......................... (421,000) - (421,000)
------------------------------------ -----------------
Total stockholder's equity...... 50,278,000 13,239,000 57,659,000
------------------------------------ -----------------
Total liabilities and equity.... $ 76,395,000 $ 23,620,000 $ 99,407,000
------------------------------------ -----------------
25
NOTES TO PRO FORMA COMBINED CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS
FOR THE TWELVE MONTHS ENDED FEBRUARY 28, 2002
AND FOR THE SIX MONTHS ENDED AUGUST 31, 2002
Note A On October 25, 2002, Meade Instruments Corp., a Delaware corporation
("Meade"), and MTSC Holdings Corp., a California corporation and wholly
owned subsidiary of the Company, acquired from Alliant Techsystems
Inc., a Delaware corporation, and ATK Commercial Ammunition Company
Inc., a Delaware corporation, all of the issued and outstanding shares
of common stock of Simmons Outdoor Corporation, a Delaware corporation
("Simmons"). Simmons is a distributor and marketer of a broad range of
riflescopes and binoculars under the Simmons(R), Redfield(R)and
Weaver(R)brand names. Meade's preliminary estimate of purchase price in
excess of the fair value of the net assets acquired is $1,911,000.
Meade's preliminary estimate of purchase price allocable to intangible
assets with indefinite lives and goodwill is $911,000. Amortizable
intangible assets are preliminarily estimated at $1,000,000 and have
been amortized on a straight-line basis over five years. Accordingly,
the amortization expense for the year ended February 28, 2002 and for
the six months ended August 31, 2002 is $200,000 and $100,000,
respectively. Upon completion of the evaluation of the fair values of
the net assets acquired, actual results may differ materially from
those presented herein. Following is a preliminary allocation of the
purchase price:
Bank debt (Note B) $ 8,619,000
Cash from net stock offering proceeds (Note D) $ 7,381,000
Working Capital Adjustment (Note B) $ 4,000,000
-----------
Total Consideration $20,000,000
-----------
Estimated Liabilities assumed $ 3,012,000
-----------
Total Purchase Price $23,012,000
===========
Current Assets $20,839,000
Non-Current Assets $ 262,000
Goodwill and Intangibles $ 1,911,000
-----------
Total $23,012,000
===========
Note B In connection with the acquisition Meade borrowed from its bank
approximately $8,619,000 to satisfy a portion of the purchase price at
the close (on October 25, 2002). Meade expects to borrow and then to
pay to the sellers an additional approximately $4,000,000 based upon a
working capital purchase price adjustment. The purchase price
adjustment is expected to be paid not later than December 25, 2002.
Accordingly, Meade has calculated additional interest expense based
upon the estimated total bank borrowings of $12,619,000 at an annual
LIBOR rate plus three percent, or approximately 7.0% for the periods
presented. The adjustments reflect additional interest expense for the
year ended February 28, 2002 and for the six months ended August 31,
2002 of $878,000 and $439,000, respectively.
Note C Represents the elimination of the tax benefit at Simmons of
$1,394,000 and $126,000 for the year ended December 31, 2001 and the
six months ended June 30, 2002, respectively. Adjustments of
($2,036,000) and ($357,000), reflect the tax effect of the pro forma
adjustments for intangible asset amortization (see Note A), interest
expense (see Note B), and the elimination of the Simmons tax benefit,
at a rate of 40%.
Note D Concurrent with the acquisition, Meade sold approximately 3,292,000
shares of its common stock in a private equity offering for net
proceeds of approximately $7,381,000 to fund the cash purchase price at
the close.
Note E Adjustment to eliminate Simmons' goodwill.
Note F Adjustment to eliminate amounts due to related parties of Simmons
that were not assumed by Meade.
Note G Adjustment to eliminate Simmons' parent company equity.
Note H Adjustment to eliminate Simmons' retained deficit.
26
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, hereunto duly authorized.
MEADE INSTRUMENTS CORP.
By: /S/ MARK D. PETERSON
-------------------------------
Mark D. Peterson
SENIOR VICE PRESIDENT AND
GENERAL COUNSEL
Dated: November 27, 2002
27