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Approximately $1.1 million or 65% of the net increase in inventories of approximately $1.7 million during the nine months ended November 30, 2012 was due to an increase in inventories relating to the Company’s new LX800 and LX600 products which have taken longer to develop than expected and are not yet ready to be shipped.
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The Company reported net sales of $13.8 million for the nine months ended November 30, 2012, a decrease of $3.8 million or 22% from net sales of $17.6 million in the same period in the prior year. Approximately $2.9 million or 77% of this decrease was attributable to reduced net sales of low-end telescopes, spotting scopes and microscopes to mass retail customers due to increased competition from the Company’s Chinese-owned competitors and reduced demand for these products by consumers. Approximately $0.4 million or 10% of the decrease in net sales was attributable to a reduction in net sales of high-end telescopes due to delays in shipments of the Company’s new LX800 and LX600 products, which are still under development, and the impact that delay has had on net sales of other high-end telescope products, offset partially by increased demand for solar telescopes. Approximately $0.5 million or 13% of the decrease in net sales was due to a reduction in sales of other products due to decreased demand for those products.
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The situation is like deja vu but this time around it's even worse than Meade's last near-death experience back in about 2007. They still had some room to move then (primarily by transferring all manufacturing to their Mexican factory), but now cheap Chinese imports have taken much of the low end of the market, the high end is shrinking and their new product lines have been delayed, leaving the Coronado solar scopes as the only positive area. Unfortunately, Meade's financial resources are now so depleted that without an injection of capital the present situation may prove terminal.