<PAGE>   1

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-Q

               QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 1999    Commission File No. 333-27341

                           TELEX COMMUNICATIONS, INC.
             (Exact name of Registrant as specified in its charter)


            DELAWARE                                            38-1853300
-------------------------------                             -------------------
(State or other jurisdiction of                             (I.R.S. Employer
incorporation or organization)                               Identification No.)

            9600 ALDRICH AVENUE SOUTH, MINNEAPOLIS, MINNESOTA 55420
                    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

      Registrant's telephone number, including area code:  (612) 884-4051



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

AS OF  JUNE 30, 1999 THERE WERE 110 SHARES OF TELEX COMMUNICATIONS, INC.,
$0.01 PAR VALUE, OUTSTANDING.


                        THIS DOCUMENT CONTAINS 23 PAGES.


<PAGE>   2



PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS
         ---------------------


                           TELEX COMMUNICATIONS, INC.
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)


<TABLE>
<CAPTION>
                                                                         JUNE 30,              DECEMBER 31,
                                                                           1999                    1998
                                                                  ----------------------  ----------------------
                                                                       (UNAUDITED)
<S>                                                                   <C>                     <C>
                                            ASSETS
Current assets:
    Cash and cash equivalents                                             $   3,482               $   3,431
    Accounts receivable, net                                                 64,108                  53,926
    Inventories                                                              68,685                  67,758
    Other current assets                                                     11,315                  10,822
                                                                        -----------             -----------
       Total current assets                                                 147,590                 135,937

Property, plant and equipment, net                                           47,938                  48,275
Deferred financing costs, net                                                10,876                  11,586
Intangible and other assets, net                                             76,067                  77,478
                                                                        -----------             -----------
                                                                          $ 282,471               $ 273,276
                                                                        ===========             ===========
                            LIABILITIES AND SHAREHOLDER'S DEFICIT
Current liabilities:
   Revolving lines of credit                                              $  20,688               $   5,703
   Current maturities of long-term debt                                       8,361                  10,811
   Accounts payable                                                          25,910                  20,920
   Accrued wages and benefits                                                12,515                   9,156
   Accrued interest                                                           6,542                   6,416
   Other accrued liabilities                                                 13,270                  14,158
   Income taxes payable                                                       5,680                   5,200
                                                                         ----------            ------------
      Total current liabilities                                              92,966                  72,364

Long-term debt                                                              316,948                 321,189
Other long-term liabilities                                                   9,065                   9,810
                                                                         ----------            ------------
      Total liabilities                                                     418,979                 403,363
                                                                         ----------            ------------
Shareholder's deficit:
   Common stock and capital in excess of par                                  3,089                   2,980
   Accumulated other comprehensive loss                                      (4,283)                 (1,400)
   Accumulated deficit                                                     (135,314)               (131,667)
                                                                         ----------            ------------
      Total shareholder's deficit                                          (136,508)               (130,087)
                                                                         ----------            ------------
                                                                          $ 282,471               $ 273,276
                                                                         ==========            ============
</TABLE>

                            See accompanying notes.




                                       2



<PAGE>   3



                           TELEX COMMUNICATIONS, INC.
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (IN THOUSANDS)
                                  (UNAUDITED)



<TABLE>
<CAPTION>
                                                                QUARTER ENDED                           SIX MONTHS ENDED
                                                   ----------------------------------------  --------------------------------------
                                                        JUNE 30,           SEPTEMBER 30,          JUNE 30,         SEPTEMBER 30,
                                                          1999                 1998                 1999                1998
                                                   -------------------  -------------------  ------------------  ------------------
<S>        <C>                 <C>                 <C>                  <C>                  <C>                 <C>
Net sales                                                     $86,761              $87,392            $166,171            $166,280
Cost of Sales                                                  54,190               55,085             104,970             104,317
                                                   ------------------   ------------------   -----------------   -----------------
      Gross profit                                             32,571               32,307              61,201              61,963
                                                   ------------------   ------------------   -----------------   -----------------
Operating expenses:
   Engineering                                                  3,672                3,750               7,410               7,556
   Selling, general and administrative                         19,800               18,333              38,124              36,758
   Corporate charges                                              429                  429                 858                 858
   Amortization                                                   703                  706               1,394               1,383
                                                   ------------------   ------------------   -----------------   -----------------
                                                               24,604               23,218              47,786              46,555
                                                   ------------------   ------------------   -----------------   -----------------
      Operating profit                                          7,967                9,089              13,415              15,408
Interest expense                                                9,012                9,068              18,130              18,367
Other income                                                     (521)              (1,469)             (2,052)             (1,632)
                                                   ------------------   ------------------   -----------------   -----------------
Income (loss) before taxes                                       (524)               1,490              (2,663)             (1,327)
Provision for income taxes                                        766                  210                 984                 555
                                                   ------------------   ------------------   -----------------   -----------------
      Net income (loss)                                       $(1,290)             $ 1,280            $ (3,647)           $ (1,882)
                                                   ==================   ==================   =================   =================
</TABLE>


                            See accompanying notes.



                                       3



<PAGE>   4



                           TELEX COMMUNICATIONS, INC.
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                  (UNAUDITED)




<TABLE>
<CAPTION>
                                                                                       SIX MONTHS ENDED
                                                                        -----------------------------------------------
                                                                               JUNE 30,              SEPTEMBER 30,
                                                                                 1999                     1998
                                                                        -----------------------  ----------------------
<S>                                                                      <C>                      <C>
OPERATING ACTIVITIES:
    Net loss                                                                           $(3,647)               $ (1,879)
    Adjustments to reconcile net loss to cash flows from operations:
        Depreciation, amortization and provision for bad debts                           7,371                   6,690
        Gain on sale of facilities and product lines                                      (234)                   (946)
        Stock option compensation expense and special charges                              109                     682
        Change in operating assets and liabilities                                      (9,096)                 10,799
        Change in long-term liabilities                                                     76                     768
                                                                        ----------------------   ---------------------
    Net cash provided by (used in) operating activities                                 (5,421)                 16,114
                                                                        ----------------------   ---------------------
INVESTING ACTIVITIES:
    Additions to property, plant and equipment                                          (5,280)                 (3,713)
    Other                                                                                    -                     (44)
    Proceeds from sale of facilities and product lines                                   2,248                   1,990
                                                                        ----------------------   ---------------------
    Net cash used in investing activities                                               (3,032)                 (1,767)
                                                                        ----------------------   ---------------------
FINANCING ACTIVITIES:
    Borrowings (payments) under revolving lines of credit, net                          15,455                  (9,268)
    Repayment of long-term debt                                                         (6,691)                 (4,045)
                                                                        ----------------------   ---------------------
    Net cash provided by (used in) financing activities                                  8,764                 (13,313)
                                                                        ----------------------   ---------------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS:                             (260)                     26
                                                                        ----------------------   ---------------------
CASH AND CASH EQUIVALENTS:
    Net increase (decrease)                                                                 51                   1,060
    Beginning of period                                                                  3,431                   2,224
                                                                        ----------------------   ---------------------
    End of period                                                                      $ 3,482                $  3,284
                                                                        ======================   =====================
SUPPLEMENTAL DISCLOSURES OF CASH PAID FOR:
    Interest                                                                           $17,187                $ 18,377
                                                                        ======================   =====================
    Income taxes (refunds), net                                                        $   653                $ (7,129)
                                                                        ======================   =====================
</TABLE>

                            See accompanying notes.


                                       4



<PAGE>   5



                           TELEX COMMUNICATIONS, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                  (UNAUDITED)

1. Telex Communications, Inc., formerly known as EV International, Inc. ("Telex"
   or the "Company"), a Delaware corporation, is a wholly owned subsidiary of
   Telex Communications Group, Inc. ("Holdings").  As used in these consolidated
   financial statements, unless otherwise indicated or the context otherwise
   requires, references to (i) "Holdings" shall mean Telex Communications Group,
   Inc., a Delaware corporation and the corporate parent of the Company; (ii)
   "Old Telex" shall refer to the Delaware corporation formerly named Telex
   Communications, Inc., a wholly owned subsidiary of Holdings, and its
   subsidiaries with respect to periods prior to the Mergers (as defined in Item
   2); (iii) the "Company" or "Telex" shall mean Telex Communications, Inc., a
   Delaware corporation formerly named EV International, Inc. ("EVI") and
   successor by merger to Old Telex, and its subsidiaries and includes, as the
   context may require, predecessor and successor companies; and (iv) "Old EVI"
   shall mean EVI and its subsidiaries with respect to periods prior to the
   Mergers and includes any predecessor companies.

        The condensed consolidated balance sheet as of June 30, 1999 and the
   condensed consolidated statements of operations and cash flows for the
   quarters and six months ended June 30, 1999 and September 30, 1998 have been
   prepared by the Company without being audited, pursuant to the rules and
   regulations of the Securities and Exchange Commission ("SEC").  Effective
   December 31, 1998 the Company changed its fiscal year end to December 31
   from March 31. The management's discussion and analysis that follows
   compares the results, which are not materially affected by seasonal
   fluctuations, for the second quarter ended June 30, 1999 with the prior
   year's second fiscal quarter ended September 30, 1998.  The results for
   prior year calendar quarter ended March 31, 1998 contain certain
   Merger-related costs and expenses, some of which are not easily
   quantifiable.  Therefore, the Company believes that for purposes of
   management's discussion and analysis, a comparison of the financial results
   for the second quarter and six months ended June 30, 1999 with the results
   for the second fiscal quarter and six months ended September 30, 1998 is
   more meaningful than a comparison with the results for the quarter and six
   months ended June 30, 1998, which includes a similar calendar quarter from
   two prior fiscal years ago.

        In the opinion of management, these financial statements reflect all
   adjustments (which include only normal recurring accruals) necessary to
   present fairly the financial position of Telex at June 30, 1999 and the
   results of its operations and cash flows for all periods presented.

        Certain information and footnote disclosures normally included in
   financial statements prepared in accordance with generally accepted
   accounting principles have been condensed or omitted. Therefore, these
   statements should be read in conjunction with the more detailed information,
   risk factors and financial statements, including the related notes, included
   in the Registration Statements on Form S-4 filed by Old Telex and Old EVI
   with the SEC on September 5, 1997 and July 30, 1997, respectively, and the
   Form 10-K for the transition period from April 1, 1998 to December 31, 1998
   filed by Telex with the SEC on March 31, 1999 (the "Form 10-K"). Unless
   otherwise defined herein, capitalized terms shall have the meaning set forth
   in the Form 10-K.

        The results of operations for interim periods are not necessarily
   indicative of results which will be realized for the full fiscal year.


                                       5



<PAGE>   6

2.  Inventories consist of the following, in thousands:


<TABLE>
<CAPTION>
                                June 30,              December 31,
                                  1999                    1998
                         ----------------------  ----------------------
                              (Unaudited)
<S>                      <C>                     <C>
Raw materials and parts                 $32,216                 $32,667
Work in process                           9,432                  10,690
Finished products                        27,037                  24,401
                         ----------------------  ----------------------
                                        $68,685                 $67,758
                         ======================  ======================
</TABLE>

3.  Telex's tax provision is calculated on a separate company basis, and Telex's
    taxable income is included in the consolidated federal income tax return of
    Holdings.  The Company has recorded a liability to Holdings for the tax
    benefit Telex received from Holdings in previous periods, which is included
    in other long-term liabilities.

4.  The Company recorded an income tax provision of $0.8 million and $1.0
    million on pre-tax losses of $0.5 million and $2.7 million for the quarter
    and six months ended June 30, 1999, respectively.  The income tax provision
    for the six months ended June 30,1999 is comprised of a U.S. Federal income
    tax benefit of $1.1 million which is offset by a deferred tax valuation
    allowance of $1.1 million and an income tax provision of $1.0 million
    attributed to income of certain foreign subsidiaries for the six months
    ended June 30, 1999.

    The company has a net deferred tax valuation allowance of $19.0 million at
    June 30, 1999 due to the uncertainty of the realization of future tax
    benefits.  Included in this valuation allowance is $1.1 million charged to
    income tax provision for the six months ended June 30, 1999.  The
    realization of the future tax benefits related to the deferred tax assets is
    dependent on many factors, including the Company's ability to generate
    taxable income within the net operating loss carry forward period.
    Management has considered these factors in reaching its conclusion as to the
    adequacy of the valuation allowance for financial reporting purposes.

5.  Effective April 1, 1998, the Company adopted SFAS No. 130, "Reporting
    Comprehensive Income."  This statement established standards for reporting
    and display of comprehensive income and its components.  Comprehensive
    income reflects the change in equity of a business enterprise during a
    period from transactions and other events and circumstances from non-owner
    sources.  For the Company, comprehensive net loss represents net loss
    adjusted for foreign currency translation adjustments and minimum pension
    liability adjustment.  Comprehensive net loss was $2.2 million and $6.6
    million for the quarter and six months ended June 30, 1999 and comprehensive
    net income was $3.0 million and comprehensive net loss was $1.2 for the
    quarter and six months ended September 30, 1998, respectively.

6.  Segment Information:

    Subsequent to the Mergers, the Company reorganized what had been classified
    as Old Telex's four strategic business units and Old EVI's four principal
    lines of business into the following two business segments:

    Professional Sound and Entertainment

    Professional Sound and Entertainment includes Old EVI's three principal
    lines of business within the overall professional audio market: (i) Fixed
    Installation; (ii) Professional Music Retail; and (iii)
    Concert/Recording/Broadcast, and Old Telex's Broadcast Communications

                                       6



<PAGE>   7


   Systems and Sound Reinforcement product groups (these businesses were
   previously part of Old Telex's Professional Sound and Entertainment Group).

   Multimedia/Audio Communications

   Multimedia/Audio Communications includes all of Old Telex's Multimedia/Audio
   Communications, RF/Communications and Hearing Instruments Groups, the Tape
   Duplication product group from Old Telex's Professional Sound and
   Entertainment Group, and Old EVI's Other Applications line of business,
   consisting of handheld microphones and earphones for field and aircraft
   communications, both military and civilian, equipment for high-speed
   duplication of audio tapes, and components marketed to original equipment
   manufacturers for incorporation into their products.

   The amounts in the following tables have been presented to coincide with the
   new business segments (in thousands).


                      FOR THE QUARTER ENDED JUNE 30, 1999


<TABLE>
<CAPTION>
                                                        Professional       Multimedia/
                                                          Sound and           Audio
                                                         Entertain-          Communi-
                                                            ment             cations          Corporate           Total
                                                      -----------------  ----------------  ----------------  ---------------
<S>                                                   <C>                <C>               <C>               <C>
Net sales                                             $    51,594        $    35,167       $      -          $   86,761
Cost of sales                                              30,222             23,968              -              54,190
                                                      -----------------  ----------------  ----------------  ---------------
    Gross profit                                           21,372             11,199              -              32,571
                                                      -----------------  ----------------  ----------------  ---------------
Operating expenses:
    Engineering                                               -                 -                3,672            3,672
    Selling, general and administrative                       -                 -               19,800           19,800
    Corporate charges                                         -                 -                  429              429
    Amortization of intangibles                               -                 -                  703              703
                                                      -----------------  ----------------  ----------------  ---------------
                                                              -                 -               24,604           24,604
                                                      -----------------  ----------------  ----------------  ---------------
Operating profit (loss)                                    21,372             11,199           (24,604)           7,967
Interest expense                                              -                 -                9,012            9,012
Other income                                                  -                 -                 (521)            (521)
Provision for income taxes                                    -                 -                  766              766
                                                      -----------------  ----------------  ----------------  ---------------
Net income (loss)                                     $    21,372        $    11,199       $   (33,861)      $   (1,290)
                                                      =================  ================  ================  ===============
Depreciation expense                                  $       655        $       781       $     1,003       $    2,439
                                                      =================  ================  ================  ===============
Capital expenditures                                  $     1,378        $       752       $     1,190       $    3,320
                                                      =================  ================  ================  ===============
</TABLE>

<TABLE>
<CAPTION>
                                                           United
                                                           States            Germany            Other             Total
                                                      -----------------  ----------------  ----------------  ---------------
<S>                                                   <C>                <C>               <C>               <C>
Net sales                                             $    55,769        $    12,521            18,471           86,761
                                                      =================  ================  ================  ===============
</TABLE>


                                       7



<PAGE>   8




                AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 1999


<TABLE>
<CAPTION>
                                          Professional           Multimedia/
                                           Sound and                Audio
                                           Entertain-             Communi-
                                              ment                 cations                 Corporate             Total
                                        ----------------       ---------------       ---------------------  --------------
<S>                                     <C>                    <C>                   <C>                    <C>
Net sales                               $   101,193            $   64,978            $        -             $   166,171
Cost of sales                                59,843                45,127                     -                 104,970
                                        ----------------       ---------------       ---------------------  --------------
   Gross profit                              41,350                19,851                     -                  61,201
                                        ----------------       ---------------       ---------------------  --------------
Operating expenses:
   Engineering                                 -                      -                      7,410                7,410
   Selling, general and administrative         -                      -                     38,124               38,124
   Corporate charges                           -                      -                        858                  858
   Amortization of intangibles                 -                      -                      1,394                1,394
                                        ----------------       ---------------       ---------------------  --------------
                                               -                      -                     47,786               47,786
                                        ----------------       ---------------       ---------------------  --------------
Operating profit (loss)                      41,350                19,851                  (47,786)              13,415
Interest expense                               -                      -                     18,130               18,130
Other income                                   -                      -                     (2,052)              (2,052)
Provision for income taxes                     -                      -                        984                  984
                                        ----------------       ---------------       ---------------------  --------------
Net income (loss)                       $    41,350            $   19,851            $     (64,848)         $    (3,647)
                                        ================       ===============       ====================   ==============
Depreciation expense                    $     1,422            $    1,195            $       2,170          $     4,787
                                        ================       ===============       ====================   ==============
Capital expenditures                    $     2,317            $    1,335            $       1,628          $     5,280
                                        ================       ===============       ====================   ==============
Total assets                            $   197,126            $   46,687            $      38,658          $   282,471
                                        ================       ===============       ====================   ==============
</TABLE>

<TABLE>
<CAPTION>
                                             United
                                             States                Germany                   Other               Total
                                        ----------------       ---------------       ---------------------  --------------
<S>                                     <C>                    <C>                   <C>                    <C>
Net sales                               $    98,156            $   18,679            $      49,336          $   166,171
                                        ================       ===============       ====================   ==============
Long-lived assets                       $   124,656            $    4,785            $       5,440          $   134,881
                                        ================       ===============       ====================   ==============
</TABLE>


                                       8



<PAGE>   9




                    FOR THE QUARTER ENDED SEPTEMBER 30, 1998


<TABLE>
<CAPTION>
                                            Professional       Multimedia/
                                              Sound and           Audio
                                             Entertain-          Communi-
                                                ment             cations               Corporate           Total
                                          -----------------  ----------------       ----------------  ---------------
<S>                                       <C>                <C>                    <C>               <C>
Net sales                                 $    54,779        $     32,613           $        -        $     87,392
Cost of sales                                  33,989              21,096                    -              55,085
                                          -----------------  ----------------       ----------------  ---------------
   Gross profit                                20,790              11,517                    -              32,307
                                          -----------------  ----------------       ----------------  ---------------
Operating expenses:
   Engineering                                    -                  -                     3,750             3,750
   Selling, general and administrative            -                  -                    18,333            18,333
   Corporate charges                              -                  -                       429               429
   Amortization of intangibles                    -                  -                       706               706
                                          -----------------  ----------------       ----------------  ---------------
                                                  -                  -                    23,218            23,218
                                          -----------------  ----------------       ----------------  ---------------
Operating profit (loss)                        20,790              11,517                (23,218)            9,089
Interest expense                                  -                  -                     9,068             9,068
Other income                                      -                  -                    (1,469)           (1,469)
Provision for income taxes                        -                  -                       210               210
                                          -----------------  ----------------       ----------------  ---------------
Net income (loss)                         $    20,790        $     11,517           $    (31,027)     $      1,280
                                          =================  ================       ================  ===============
Depreciation expense                      $       766        $        612           $        799      $      2,177
                                          =================  ================       ================  ===============
Capital expenditures                      $       556        $        109           $      1,232      $      1,897
                                          =================  ================       ================  ===============
</TABLE>

<TABLE>
<CAPTION>
                                               United
                                               States            Germany                 Other             Total
                                          -----------------  ----------------       ----------------  ---------------
<S>                                       <C>                <C>                    <C>               <C>
Net sales                                 $    54,698        $      7,174           $     25,520      $     87,392
                                          =================  ================       ================  ===============
</TABLE>


                                       9



<PAGE>   10




                  FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1998




<TABLE>
<CAPTION>
                                                        Professional           Multimedia/
                                                         Sound and                Audio
                                                         Entertain-              Communi-
                                                            ment                 cations               Corporate           Total
                                                      --------------         --------------          ------------  --------------
<S>                                                   <C>                    <C>                     <C>             <C>
Net sales                                             $      104,882          $      61,398           $      -        $   166,280
Cost of sales                                                 63,510                 40,807                  -            104,317
                                                      --------------         --------------          ------------  --------------
   Gross profit                                               41,372                 20,591                  -             61,963
                                                      --------------         --------------          ------------  --------------
Operating expenses:
   Engineering                                                 -                      -                     7,556           7,556
   Selling, general and administrative                         -                      -                    36,758          36,758
   Corporate charges                                           -                      -                       858             858
   Amortization of intangibles                                 -                      -                     1,383           1,383
                                                      --------------         --------------          ------------  --------------
                                                               -                      -                    46,555          46,555
                                                      --------------         --------------          ------------  --------------
Operating profit (loss)                                       41,372                 20,591               (46,555)         15,408
Interest expense                                               -                      -                    18,367          18,367
Other income                                                   -                      -                    (1,632)         (1,632)
Provision for income taxes                                     -                      -                       555             555
                                                      --------------         --------------         -------------   -------------
Net income (loss)                                     $       41,372           $     20,591           $   (63,845)    $    (1,882)
                                                      ==============         ==============         =============   =============
Depreciation expense                                  $        1,791           $      1,092           $     1,482     $     4,365
                                                      ==============         ==============         =============   =============
Capital expenditures                                  $        1,110           $        583           $     2,064     $     3,757
                                                      ==============         ==============         =============   =============
Total assets                                          $      213,099           $     49,067           $    24,411     $   286,577
                                                      ==============         ==============         =============   =============
</TABLE>



<TABLE>
<CAPTION>
                                                           United
                                                           States                Germany                Other              Total
                                                      --------------         --------------         -------------   -------------
<S>                                                   <C>                    <C>                    <C>                <C>
Net sales                                             $      101,848         $       14,420         $      50,012     $   166,280
                                                      ==============         ==============         =============   =============
Long-lived assets                                     $      128,633         $        5,196         $       4,798     $   138,627
                                                      ==============         ==============         =============   =============
</TABLE>

7.   During the Fiscal Year ended March 31, 1998, the Company recorded a
     restructuring charge of $6.2 million attributable to the Merger-related
     consolidation of certain product lines, and the consolidation of certain
     of its worldwide manufacturing, engineering, distribution, marketing,
     service and administrative operations to reduce costs, to better utilize
     the available manufacturing and operating capacity and to enhance
     competitiveness.  At June 30, 1999, the Company had a restructuring
     reserve of balance of $2.9 million.  As of June 30, 1999, the Company has
     charged to the restructuring reserve $3.3 million, consisting of $1.6
     million of cash expenditures and $1.7 million of non-cash charges.

8.   In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
     Instruments and Hedging Activities," effective for fiscal years beginning
     after June 15, 2000.  SFAS No. 133 establishes accounting and reporting
     standards requiring that every derivative instrument,

                                       10



<PAGE>   11


   including certain derivative instruments embedded in other contracts, be
   recorded on the balance sheet as either an asset or liability measured at
   its fair value.  SFAS No. 133 requires that changes in the derivative's fair
   value be recognized currently in earnings unless specific hedge criteria are
   met.  Special accounting for qualifying hedges allows a derivative's gains
   or losses to offset related results on the hedged item in the income
   statement and requires that a company must formally document, designate and
   assess the effectiveness of transactions that receive hedge accounting.  The
   Company has not quantified the impacts of adopting SFAS No. 133 and has not
   yet determined the timing or method of adoption.


                                       11



<PAGE>   12



ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

This Management's Discussion and Analysis of Financial Condition and Results of
Operations, as well as other sections of this Form 10-Q, may contain
forward-looking statements, including, without limitation, statements relating
to the Company's plans, strategies, objectives and expectations, that are based
on management's current opinions, beliefs, or expectations as to future results
or future events and are made pursuant to the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995.  Any such forward-looking
statements involve known and unknown risks and uncertainties and the Company's
actual results may differ materially from those forward-looking statements.
While made in good faith and with a reasonable basis based on information
currently available to the Company's management, there is no assurance that
such opinions or expectations will be achieved or accomplished.  The Company
does not undertake to update, revise or correct any of the forward-looking
information contained in this document.  The following factors, in addition to
those discussed elsewhere in this Form 10-Q, could affect the future results of
the Company, and could cause results to differ materially from those expressed
in such forward-looking statements: (i) the timely development and market
acceptance of new products; (ii) the financial resources of competitors and the
impact of competitive products and pricing; (iii) changes in general and
industry specific economic conditions on a national, regional or international
basis; (iv) changes in laws and regulations, including changes in accounting
standards; (v) the timing of the implementation of changes in operations to
effect cost savings; (vi) opportunities that may be presented to and pursued by
the Company following the Mergers; (vii) the Company's ability to access
external sources of capital; and (viii) such risks and uncertainties as are
detailed from time to time in the Company's Commission reports and filings.

GENERAL

The following discussion and analysis of the financial condition and results of
operations covers periods after completion of the Transactions (as defined
herein).  As a result of the Transactions, the Company has entered into new
financing arrangements and has a different capital structure than its
predecessors, Old EVI and Old Telex.  Pursuant to the Recapitalization of Old
Telex on May 6, 1997, the historical basis of all assets and liabilities was
retained for financial reporting purposes, and the repurchase of existing
Holdings Common Stock and issuance of new Holding Common Stock have been
accounted for as equity transactions.  The Mergers have been accounted for
essentially as a pooling of interests from May 6, 1997, the date on which Old
EVI and Old Telex came under common control.

Effective December 31, 1998 the Company changed its fiscal year end to December
31 from March 31.  The management's discussion and analysis that follows
compares the results, which are not materially affected by seasonal
fluctuations, for the second quarter ended June 30, 1999 with the prior year's
second fiscal quarter ended September 30, 1998.  The results for prior year
calendar quarter ended March 31, 1998 contain certain Merger-related costs and
expenses, some of which are not easily quantifiable.  Therefore, the Company
believes that for purposes of management's discussion and analysis, a
comparison of the financial results for the second quarter and six months ended
June 30, 1999 with the results for the second fiscal quarter and six months
ended September 30, 1998 is more meaningful than a comparison with the results
for the quarter and six months ended June 30, 1998, which includes a similar
calendar quarter from two prior fiscal years ago.

THE TRANSACTIONS

The Acquisition.  On February 10, 1997 (the "Acquisition Closing Date"),
pursuant to a purchase agreement dated December 12, 1996, (as amended, the
"Purchase Agreement") an acquisition

                                       12



<PAGE>   13


subsidiary wholly owned by Greenwich Street Capital Partners, L.P. ("GSCP") and
certain affiliated investors acquired from Mark IV Industries ("Mark IV") and
one of its subsidiaries all of the issued and outstanding capital stock of
Gulton Industries, Inc. ("Gulton"), the former parent of Old EVI, and each of
its subsidiaries for an initial cash purchase price of $151.5 million, plus $4.9
million in estimated adjustments paid on the closing date, which aggregate
amount is subject to further post-closing adjustments (the "Acquisition"). Mark
IV and the Company are currently disputing the post-closing adjustments pursuant
to the applicable provisions of the Purchase Agreement. Pursuant to this
arbitration, the Company has incurred professional fees of $2.0 million, of
which $0.6 million remain unpaid as of June 30, 1999. Any final adjustment in
purchase price, net of costs incurred from this arbitration will result in an
adjustment to goodwill.

Financing for the Acquisition, and the related fees and expenses, consisted of
(i) $57.6 million of equity capital provided by GSCP and certain affiliated
investors, (ii) a $60.0 million senior credit facility (consisting of a term
loan and a revolving credit facility), and (iii) a $75.0 million senior
subordinated credit facility issued as interim financing by Chase Securities
Inc. and Smith Barney Inc., the initial purchasers of the EVI Existing Notes
(as defined herein), and certain other lenders. Of these amounts, $156.4
million was used for the purchase price for the Acquisition and $10.4 million
was used for financing and transaction fees and expenses.

On March 24, 1997, Old EVI issued 11% Senior Subordinated Notes due 2007 in an
aggregate principal amount of $100.0 million (the "EVI Existing Notes"), all of
which were subsequently exchanged in September, 1997 for a like principal
amount of new 11% Senior Subordinated Notes due 2007, Series A (together with
the EVI Existing Notes, the "EVI Notes"), in an offering registered under the
Securities Act of 1933, as amended (the "Securities Act").  The proceeds from
the EVI Notes were used to repay the $75.0 million of indebtedness under the
interim financing in its entirety and a portion of Old EVI's term loan.  The
foregoing transactions, including the issuance of the EVI Notes, are referred
to herein as the "Acquisition Transactions." The Acquisition was accounted for
using the purchase method of accounting pursuant to which the purchase price
was allocated among the acquired assets and liabilities in accordance with
estimates of fair market value on February 10, 1997 (i.e., the Acquisition
Closing Date).

The Recapitalization. On May 6, 1997 (the "Recapitalization Closing Date"), Old
Telex completed a recapitalization (the "Recapitalization") pursuant to an
Agreement (the "Recapitalization Agreement") among Old Telex, Greenwich II, LLC
("G-II"), a Delaware limited liability company formed by GSCP and certain other
investors, and GST Acquisition Corp. ("GST"), a Delaware corporation and a
wholly owned subsidiary of G-II.  In connection with the Recapitalization, all
of the shares of common stock of Holdings ("Holdings Common Stock") and all
options and warrants to acquire Holdings Common Stock (other than certain
shares of Holdings Common Stock and certain options to acquire Holdings Common
Stock owned by certain members of management of Old Telex) were converted into
the right to receive an aggregate amount of cash (the "Recapitalization
Consideration") equal to  $253.9 million. In addition, in connection with the
Recapitalization Agreement, certain shares of Holdings Common Stock held by
management of Old Telex (such shares, the "Rollover Shares") and certain
options to acquire additional shares of Holdings Common Stock (the "Rollover
Options"), with an aggregate value of $21.2 million (which represented  14% of
the equity of Holdings on a non-diluted basis and  20% on a fully diluted
basis) were retained by such managers. In connection with the
Recapitalization, Old Telex completed (i) a tender offer (the "Tender Offer")
to repurchase all of Old Telex's then outstanding 12% Senior Notes due 2004, in
aggregate principal amount of $100.0 million, for $118.3 million (including
premium and consent fees along with accrued interest), and (ii) a solicitation
of consents with respect to certain amendments to the indenture pursuant to
which such notes were issued.  The Recapitalization, the financing thereof
(including the issuance by Old Telex of 10 1/2 % Senior Subordinated Notes due
2007 (the "Existing Telex Notes") to Chase Securities, Inc., Morgan Stanley &
Co. Incorporated and Smith Barney, Inc.), the Tender Offer and the payment of
the related fees and

                                       13



<PAGE>   14


expenses are herein referred to as the "Recapitalization Transaction."

The Recapitalization was financed by (i) $108.4 million of new equity provided
by GSCP and certain other co-investors, (ii) the Rollover Shares and Rollover
Options valued at $21.2 million, (iii) a $140.0 million senior secured credit
facility (the "Senior Secured Credit Facility") with The Chase Manhattan Bank,
Morgan Stanley Senior Funding, Inc. and certain other lenders, consisting of
(a) a $115.0 million term loan facility (the "Term Loan Facility"), and (b) a
$25.0 million revolving credit facility (the "Revolving Credit Facility"), (iv)
$125.0 million of Existing Telex Notes and (v) $36.5 of available cash of Old
Telex.  Of the $108.4 million of new equity contributed by GSCP and certain
other co-investors, $25.2 million consisted of proceeds from the issuance by
GST (a predecessor of Holdings) of Deferred Pay Subordinated Debentures due
2009 (the "GST Subordinated Debentures").

Pursuant to the Recapitalization of Old Telex on May 6, 1997, the historical
basis of all assets and liabilities was retained for financial reporting
purposes, and the repurchases of existing Holdings Common Stock and issuance of
new Holdings Common Stock have been accounted for as equity transactions.

In October 1997, Old Telex completed an exchange offer of $125.0 million
aggregate principal amount of new 10 1/2 % Senior Subordinated Notes Due 2007,
Series A (the "New Telex Notes"), which were registered under the Securities
Act, for a like principal amount of the Existing Telex Notes (together with the
New Telex Notes, the "Telex Notes").  All of the Existing Telex Notes were
tendered and accepted for exchange.

The Mergers.  On February 2, 1998 Old EVI merged with Old Telex, with Old EVI
surviving and changing its corporate name to "Telex Communications, Inc."  (the
"Mergers").  The Merger was effected pursuant to an agreement and plan of
merger, dated January 29, 1998 under which Greenwich I LLC ("G-I"), a
subsidiary wholly owned by GSCP and certain affiliated investors, exchanged all
of the issued and outstanding common and preferred stock of EVI Audio Holdings
("EVI Holdings"), the former parent of Old EVI, for 1,397,400 shares of
Holdings Common Stock, and 13,000 shares of Holdings' Series A Pay-in-Kind
Preferred Stock, respectively, and EVI Holdings was merged with and into
Holdings, with Holdings continuing as the surviving corporation (the "Parent
Merger" and together with the Merger, the "Mergers").  The Mergers have been
accounted for essentially as a pooling of interests from May 6, 1997, the date
on which Old EVI and Old Telex came under common control, and the financial
statements of the Company for Fiscal 1998 accordingly include the results of
Old Telex from May 6, 1997. Immediately prior to the Mergers, $12.7 million of
indebtedness outstanding under Old EVI's senior credit facility was paid in
full and Old EVI's senior credit facility was terminated.  Such indebtedness,
together with $0.4 million of certain fees and expenses associated with the
Mergers, was repaid by utilizing free cash at closing from Old EVI of $3.8
million and by borrowings under Old Telex's Revolving Credit Facility of $9.3
million.  Total fees and expenses incurred as a result of the Mergers were $1.7
million, including the $0.4 million paid at closing. The EVI Notes remain
outstanding following the Mergers.

The Acquisition Transactions, the Recapitalization Transaction, and the Mergers
are referred to herein collectively as the "Transactions."

OVERVIEW

The Company, formed as a result of the February 2, 1998 merger of Old Telex and
Old EVI (see "The Mergers"), is a leader in the design, manufacture and
marketing of sophisticated audio, wireless and multimedia communications
equipment to commercial, professional and industrial customers.  The Company
provides high value-added communications products designed to meet the specific
needs of customers in commercial, professional and industrial markets, and does
not

                                       14



<PAGE>   15


participate in the competitive retail consumer electronics market.  The Company
offers a comprehensive range of products worldwide for professional audio
systems as well as for multimedia and other communications product markets,
including wired and wireless microphones, wired and wireless intercom systems,
mixing consoles, signal processors, amplifiers, loudspeaker systems, headphones
and headsets, tape duplication products, talking book players, LCD projectors,
wireless LAN and PCS antennas, hearing aids and wireless assistive listening
devices.

Subsequent to the Mergers, the Company has reorganized its business into two
business segments:  Professional Sound and Entertainment and Multimedia/Audio
Communications.  Prior to the Mergers, essentially all of the Company's
business consisted of Old EVI's three principal lines of business within the
overall professional audio market:  Fixed Installation, Professional Music
Retail and Concert/Recording/Broadcast.  These businesses now comprise a part
of the Company's Professional Sound and Entertainment business segment.  In
addition, as a result of the Mergers, the Multimedia/Audio Communications
business segment (consisting mostly of businesses of Old Telex) accounts for a
significant proportion of the Company's business.

The Company maintains assets and/or operations in a number of foreign
jurisdictions, the most significant of which are Germany, the United Kingdom,
Japan, Singapore, and Hong Kong. In addition, the Company conducts business in
local currency in many countries, the most significant of which are Germany,
the United Kingdom, Japan, Singapore, Hong Kong, Canada, Australia, Switzerland
and France.  Exposure to U.S. dollar/German mark and U.S. dollar/British pound
exchange rate volatility is mitigated to some extent by the Company's ability
to source its production needs with existing manufacturing capacity in Germany
and Great Britain, and the exposure to the U.S. dollar/Japanese yen exchange
rate volatility is to some extent mitigated by sourcing products denominated in
yen from Japan or through contractual provisions in sales agreements with
certain customers.  Nevertheless, the Company has a direct and continuing
exposure to both positive and negative foreign currency movements.

The Company reports the foreign exchange gains or losses on transactions as
part of other income.  Gains and losses on translation of foreign currency
denominated balance sheets are classified as currency translation adjustments
and are included as part of shareholder's deficit.

RESULTS OF OPERATIONS

The following tables set forth, for the periods indicated, the Company's
net sales, in thousands:


<TABLE>
<CAPTION>
                                                        Quarter ended                       Six months ended
                                             ------------------------------------  ----------------------------------
                                                 June 30,         September 30,        June 30,       September 30,
                                                   1999               1998               1999              1998
                                             -----------------  -----------------  ----------------  ----------------
<S>                                          <C>                <C>                <C>               <C>
Net Sales:
  Professional Sound and Entertainment                 $51,594            $54,779          $101,193          $104,882
  Multimedia/Communications                             35,167             32,613            64,978            61,398
                                             -----------------  -----------------  ----------------  ----------------
                                                       $86,761            $87,392          $166,171          $166,280
                                             =================  =================  ================  ================
</TABLE>

QUARTER AND SIX MONTHS ENDED JUNE 30, 1999 COMPARED TO QUARTER AND SIX MONTHS
ENDED SEPTEMBER 30, 1998

Net Sales.  The Company's net sales decreased $0.6 million, or 0.7%, from $87.4
million in the quarter ended September 30, 1998 to $86.8 million in the quarter
ended June 30, 1999.  Net sales remained flat at $166.3 million for the six
months ended September 30, 1998 compared to $166.2 million for the six months
ended June 30, 1999.  A decrease in the Professional Sound

                                       15



<PAGE>   16


and Entertainment segment's net sales was offset by an increase in the
Multimedia/Audio Communications segment's net sales.

Net sales in the Company's Professional Sound and Entertainment segment
decreased $3.2 million, or 5.8%, from $54.8 million in the quarter ended
September 30, 1998 to $51.6 million in the quarter ended June 30, 1999.  Net
sales decreased $3.7 million, or 3.5% from $104.9 million for the six months
ended September 30, 1998 to $101.2 million for the six months ended June 30,
1999.  The decrease in net sales for the quarter and six months ended June 30,
1999 was attributed primarily to the discontinuation of certain product lines,
the sale of the Gauss business, and to the destruction by fire of the Company's
Mishawaka, IN factory partially offset by sales of new products.

Net sales in the Company's Multimedia/Audio Communications segment increased
$2.6 million, or 7.8%, from $32.6 million to in the quarter ended September 30,
1998 to $35.2 million in the quarter ended June 30, 1999.  Net sales increased
$3.6 million, or 5.8% from $61.4 million for the six months ended September 30,
1998 to $65.0 million for the six months ended June 30, 1999.  The increase in
net sales for the quarter and six months ended June 30, 1999 was attributed
primarily to the increase in new electronic imaging products.

Gross Profit.  The Company's gross profit increased $0.3 million, or 0.8%, from
$32.3 million in the quarter ended September 30, 1998 to $32.6 million in the
quarter ended June 30, 1999. Gross profit decreased $0.8 million, or 1.2% from
$62.0 million for the six months ended September 30, 1998 to $61.2 million for
the six months ended June 30, 1999.  As a percentage of sales, the gross margin
rate increased from 37.0% in the quarter ended September 30, 1998 to 37.5% in
the quarter ended June 30, 1999 and decrease from 37.3% for the six months
ended September 30, 1998 to 36.8% for the six months ended June 30, 1999.  The
increase in the gross margin rate for the quarter ended June 30, 1999 was
attributed mainly to the cost reduction efforts implemented by the Company
while the slight decrease in gross margin rate for the six months ended June
30, 1999 was attributed mainly to early in the year discounting and promotions
on initial sales of certain new products.

Engineering.  The Company's engineering expenses remained flat, decreasing $0.1
million, or 2.1%, from $3.8 million in the quarter ended September 30, 1998 to
$3.7 million in the quarter ended June 30, 1999.  Engineering expenses
decreased $0.2 million, or 1.9% from $7.6 million for the six months ended
September 30, 1998 to $7.4 million for the six months ended June 30, 1999.

Selling, General and Administrative. The Company's selling, general and
administrative expenses increased $1.5 million, or 8.0%, from $18.3 million in
the quarter ended September 30, 1998 to $19.8 million in the quarter ended June
30, 1999.  Selling, general and administrative expenses increased $1.3 million,
or 3.7% from $36.8 million for the six months ended September 30, 1998 to $38.1
million for the six months ended June 30, 1999.  The increase in selling,
general and administrative expenses was attributed mainly to increased spending
for information technology and advertising and promotion.

Corporate Charges. Corporate charges of $0.4 million and $0.9 million in the
quarter and six months ended June 30, 1999 and $0.4 million and $0.9 million in
the quarter ended September 30, 1998, respectively, represent fees to GSCP for
consulting and management services provided under a management and services
agreement.

Other income.  The Company's royalty income, together with gains on the sales
of certain of its facilities vacated in 1998 due to merger-related
restructuring and the expected business interruption insurance benefit
resulting from a fire that destroyed the Company's Mishawaka, IN facility,
exceeded other expenses in the quarter and six months ended June 30, 1999.


                                       16



<PAGE>   17


In the six months ended June 30, 1999, the Company recorded a gain of $0.2
million on $2.2 million of proceeds on the sales of certain vacated facilities
and certain product lines.

The Company's Mishawaka, IN facility was destroyed by fire in 1998.  The
Company has recognized the expected business interruption insurance benefit of
$1.0 million in the six months ended June 30, 1999.

Interest expense.  Interest expense decreased from $9.1 million and $18.4 in
the quarter and six months ended September 30, 1998 to $9.0 million and $18.1
million in the quarter and six months ended June 30, 1999.  The decrease was
primarily due to the reduction in outstanding indebtedness, partially offset by
slightly higher interest rates on the Company's Senior Secured Credit Facility.

LIQUIDITY AND CAPITAL RESOURCES

At June 30, 1999 the Company had cash and cash equivalents of $3.5 million
compared to $3.4 million at December 31, 1998.  The Company's principal source
of funds in the six months ended June 30, 1999 consisted of cash generated from
financing activities.  Net cash provided by financing activities was $8.8
million, while net cash used in operations was $5.4 million and cash used in
investing activities was $3.0 million, net of $2.2 million in proceeds from the
sales of certain product lines and vacated facilities.

The Company's investing activities consisted of capital expenditures to
maintain facilities, acquire machines or tooling, update certain manufacturing
processes, introduce new products and improve efficiency, offset by of $2.2
million in proceeds from the sales of certain product lines and vacated
facilities.  Capital expenditures totaled $5.3 million for the six months ended
June 30, 1999 compared with $3.8 million for the six months ended September 30,
1998.  The Company's ability to make capital expenditures is subject to certain
restrictions under its Senior Secured Credit Facility.

The Company's consolidated indebtedness increased $8.3 million from $337.7
million at December 31, 1998 to $346.0 million at June 30, 1999.  The increase
in indebtedness is comprised of increased borrowings under the Company's
Revolving Credit Facility, which were partially offset by scheduled and
accelerated principal reductions on the Company's Term Loan Facility.

The Company's liquidity needs arise primarily from debt service on indebtedness
incurred in connection with the Transactions, working capital needs and capital
expenditure requirements. The Company incurred substantial indebtedness in
connection with the Acquisition Transactions and the Recapitalization
Transaction.  As a result, debt service represents significant liquidity
requirements for the Company.

The Company relies mainly on internally generated funds, and, to the extent
necessary, borrowings under the Revolving Credit Facility and foreign working
capital lines to meet its liquidity needs.

The Company's current credit facilities include the Senior Secured Credit
Facility consisting of the Term Loan Facility of $100.3 million and the
Revolving Credit Facility, subject to certain borrowing base limitations, of
$25.0 million, and foreign working capital lines, subject to certain
limitations, of $6.1 million.  In certain instances the foreign working capital
lines are secured by a lien on foreign real property, leaseholds, accounts
receivable and inventory or are guaranteed by another subsidiary.


                                       17



<PAGE>   18


As of June 30, 1999, $8.4 million of the Company's $100.3 million Term Loan
Facility is payable in the next 12 months.  In addition, the Company had $15.7
million outstanding under the Revolving Credit Facility, and $5.0 million
outstanding under the foreign working capital lines.  Net availability at June
30, 1999 under the Revolving Credit Facility, computed by deducting $6.4
million of open letters of credit and applying applicable borrowing
limitations, totaled $2.9 million.  Net availability at June 30, 1999 under
foreign working lines totaled $1.1 million.  Outstanding balances under
substantially all of these credit facilities bear interest at floating rates
based upon the interest rate option selected by the Company; therefore, the
Company's financial condition is and will continue to be affected by changes in
the prevailing interest rates.  The effective interest rate under these credit
facilities in the six months ended June 30, 1999 was 8.2%.

Pursuant to the Term Loan Facility, the Company is required to make permanent
principal payments under (i) the $50.0 million Tranche A Term Loan Facility
($38.5 million outstanding at June 30, 1999), $4.0 million in the remainder of
1999 and $8.5 million, $11.0 million and $15.0 million of which is payable in
each of 2000, 2001 and 2002 (which has a final maturity date of November 6,
2002), respectively, and (ii) the $65.0 million Tranche B Term Loan Facility
($61.8 million outstanding at June 30, 1999), $0.1 million in the remainder of
1999 and $0.5 million, $0.5 million, $0.5 million, $24.1 million and $36.1
million of which is payable in each of 2000, 2001, 2002, 2003 and 2004 (which
has a final maturity date of November 6, 2004), respectively.  In addition,
under the terms of the Senior Secured Credit Facility, the Company is required
to make mandatory prepayments with (i) non-ordinary asset sale proceeds, (ii)
any additional indebtedness and equity proceeds (with certain exceptions) and
(iii) with 75% of the Excess Cash Flow of the Company and its subsidiaries for
each fiscal year. During the six months ended June 30, 1999, the Company made a
mandatory prepayment, equal to 75% of the Company's Excess Cash Flow, of $4.2
million.

The Company expects to generate additional cash flows from operations,
partially from collection of the increase in accounts receivable attributed to
a record sales month in June 1999, and has arranged a $4.0 million intercompany
line of credit with Holdings.  In addition, the Company is actively
implementing plans to reduce inventory, improve the accounts receivable
collection experience, and sell the remaining vacated property, vacant land and
other non-productive or non-core assets.

The Company believes that these additional sources of funds, together with the
Company's Revolving Credit Facility and cash from operations will be adequate
to meet its debt service and principle payment requirements, capital
expenditure needs, and working capital requirements. However, no assurance can
be given in this regard, because working capital requirements and other
circumstances may change.  The Company's future performance and its ability to
service its obligations will also be subject to future economic conditions and
to financial, business and other factors, many of which are beyond the
Company's control.

ENVIRONMENTAL MATTERS

The Company is a party in a number of environmental enforcement matters and
related claims which have arisen in the ordinary course of business.  Certain
environmental matters are indemnified by Mark IV, the former parent company of
Old EVI.  Based upon reliance of this indemnification, the Company believes
that such matters and claims, if finally determined in a manner adverse to the
Company, whether considered separately or in the aggregate, would not have a
material adverse effect on the operating results or financial condition of the
Company.  The Company believes that compliance with current federal, state and
local environmental protection laws and provisions should not have a material
adverse effect on the operating income or financial condition of the Company.
The assessment of materiality of such environmental matters and

                                       18



<PAGE>   19


claims is based on a gross determination of such charges that could occur and
does not give effect to possible third party recoveries.

YEAR 2000

Some companies' computer systems used today may be unable to interpret or
process data correctly after December 31, 1999 because they allow only two
digits to indicate the year in a date.  The Company uses computer systems for
various operations, including financial reporting, billing, order processing,
purchasing, inventory management and certain manufacturing operations.  In
addition, certain manufacturing systems, plant and facilities systems may
contain date-related functionality, software or embedded microprocessors that
could malfunction if they are not Year 2000 ready.

Most of the Company's products do not contain date-related functionality,
software or embedded microprocessors and therefore are not subject to Year 2000
issues.  The Company believes all its currently-produced products are Year 2000
ready.  The Company is completing programs to identify non-Year 2000 ready
products and is developing strategies to address problems, if any, for
customers who own such products.

The Company has completed an internal inventory and assessment of Year 2000
readiness of its computer hardware and software and it's non-information
technology and has in recent years replaced, modified or upgraded more than 80%
of its information systems with Year 2000 ready systems.  The replacement,
upgrade, changes to and testing of the Company's remaining critical non-ready
systems was completed in July 1999.

In addition to internal remediation activities, the Company has initiated
communications with key third parties, including suppliers and customers, to
determine the extent to which their systems, their products, or their
electronic data interchange with the Company, are vulnerable to Year 2000
issues.  Data collection continues and the Company has not yet received
sufficient information from such parties to fully assess the risks relating to
non-timely compliance by third parties.

The Company is in the process of developing contingency plans for critical
systems in the event that the Company or any of its key suppliers are not Year
2000 ready by the required dates.  The Company's target for finalizing such
contingency planning is September 1999.

If the systems of the Company or its key suppliers are not Year 2000 ready in a
timely fashion, the Company believes that the most likely worst case scenario
would include some temporary disruptions in the Company's acceptance and
processing of orders and billing and in its ability to secure raw materials for
production from suppliers.  This could cause a temporary interruption of some
materials or services the Company needs to make its products or process
customer orders, which could result in some delayed shipments to customers,
delayed collections and lost sales and profits for the Company.

The Company believes that the replacement, upgrade and changes to the remaining
non-ready critical systems to address Year 2000 issues will require incremental
future expenditures of less than $1.0 million.  The Company does not separately
track internal costs incurred for its Year 2000 program, which costs are
principally related to payroll costs for its information systems group.  The
costs of the Year 2000 program are being funded through operating cash flows
and are expensed as incurred or capitalized as appropriate.

Although the Company expects its critical systems to be ready by the third
quarter of 1999, there can be no assurance that its Year 2000 program will be
effective or that estimates about timing and cost will be accurate.  The
outcome of the Company's Year 2000 program is subject to a

                                       19



<PAGE>   20


number of risks and uncertainties, some of which (such as the availability of
qualified personnel and the Year 2000 preparation of third parties) are beyond
its control.  Therefore, there can be no assurances that the Company will not
incur material remediation costs beyond the above anticipated future costs, or
that the Company's business, financial condition, or results of operations will
not be significantly impacted if Year 2000 problems with its systems, or with
the products or systems of other parties with whom it does business, are not
resolved in a timely manner.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities" effective for fiscal years beginning after
June 15, 2000.  SFAS No. 133 establishes accounting and reporting standards
requiring that every derivative instrument, including certain derivative
instruments embedded in other contracts, be recorded in the balance sheet as
either an asset or liability measured at its fair value. SFAS No. 133 requires
that changes in the derivative's fair value be recognized currently in earnings
unless specific hedge criteria are met.  Special accounting for qualifying
hedges allow a derivative's gains or losses to offset related results on the
hedged item in the income statement and requires that a company must formally
document, designate and assess the effectiveness of transactions that receive
hedge accounting.  The Company has not quantified the impacts of adopting SFAS
No. 133 and has not yet determined the timing or method of adoption.


                                       20



<PAGE>   21


ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to various 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
exchange and interest rates.  The Company does not enter into derivatives or
other financial instruments for trading or speculative purposes. The
counter-parties to these transactions are major financial institutions.

EXCHANGE RATE SENSITIVITY ANALYSIS

The Company enters into forward exchange contracts principally to hedge the
currency fluctuations in transactions denominated in foreign currencies,
thereby limiting the Company's risk that would otherwise result from changes in
exchange rates.  During the quarter ended June 30, 1999, the principal
transactions hedged were certain intercompany balances attributed primarily to
intercompany sales.  Gains and losses on forward exchange contracts and the
offsetting losses and gains on the hedged transactions are reflected in the
consolidated statement of operations.

At June 30, 1999, the Company had $4.0 million of gross outstanding forward
exchange contracts, with a weighted remaining maturity of 33 days.

At June 30, 1999, the difference between the fair value of all outstanding
contracts, as estimated by the amount required to enter into offsetting
contracts with similar remaining maturities based on quoted prices, and the
contract amounts was immaterial.  A 10% fluctuation in exchange rates for these
currencies would change the fair value by approximately $0.4 million.  However,
since these contracts hedge foreign currency denominated transactions, any
change in the fair value of the contracts would be offset by changes in the
underlying value of the transactions being hedged.

INTEREST RATE AND DEBT SENSITIVE ANALYSIS

For fixed rate debt, interest rate changes affect the fair market value but do
not impact earnings or cash flows.  Conversely, for floating rate debt,
interest rate changes generally do not affect the fair market value but do
impact future earnings and cash flows, assuming other factors are held
constant.

At June 30, 1999, the Company had fixed rate debt of $225.0 million and
floating rate debt of $121.0 million.  Holding all other variables constant
(such as foreign exchange rates and debt levels), a one percentage point
decrease in interest rates would increase the unrealized fair market value of
the $225.0 million fixed rate debt by approximately $9.2 million.  The earnings
and cash flow impact for the next twelve months resulting from a one percentage
point increase in interest rates on the $121.0 million floating rate debt would
be approximately $1.2 million, holding all other variables constant.

                                       21



<PAGE>   22


PART II.  OTHER INFORMATION

ITEM 5    OTHER INFORMATION

    None.


ITEM 6    EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits

*10(h)   The 1997 Telex Communications Group, Inc. Amended and Restated Stock
         Option Plan

*10(ee)  Amended and Restated 1998 Telex Communications Group, Inc. Performance
         Stock Option Plan

27       Financial data schedule

__________________________
* Denotes management contract, executive compensation plan, or arrangement.


(b)  Reports on Form 8-K

   None.






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.



                         TELEX COMMUNICATIONS, INC.



Dated:  August 16, 1999     By:  /s/ Ned C. Jackson
        ---------------          ---------------------------------------------
                            Ned C. Jackson
                            President and Chief Executive Officer


                         TELEX COMMUNICATIONS, INC.


Dated:  August 16, 1999     By:   /s/ Richard J. Pearson
        ---------------           --------------------------------------------
                            Richard J. Pearson
                            Vice President and Chief Financial Officer




                                       22



<PAGE>   23


                           TELEX COMMUNICATIONS, INC.
                                   FORM 10-Q

                                 EXHIBIT INDEX


EXHIBIT
NUMBER     DESCRIPTION OF DOCUMENT

  *10(h)   The 1997 Telex Communications Group, Inc. Amended and Restated Stock
           Option Plan

  *10(ee)  Amended and Restated 1998 Telex Communications Group, Inc.
           Performance Stock Option Plan

  27       Financial data schedule




__________________________
* Denotes management contract, executive compensation plan, or arrangement.






                                       23