##### Table of Contents





SECURITIES AND EXCHANGE
    COMMISSION
 Washington, D.C.
    20549
      Form 10-K
  ANNUAL REPORT PURSUANT TO
    SECTION 13 OR 15(d)
 OF THE SECURITIES AND EXCHANGE ACT OF 1934
  FOR THE FISCAL YEAR ENDED DECEMBER 31, 2007
  Commission File Number
    000-30138
      ROCKFORD CORPORATION
 (Exact name of Registrant as
    Specified in Its Charter)
  Arizona

86-0394353(State or Other Jurisdiction
    of

(IRS EmployerIncorporation or
    Organization)

Identification
    No.)   600 South Rockford Drive
 Tempe, Arizona 85281
 (480) 967-3565
 (Address and Telephone Number of
    Principal Executive Offices)
      Securities Registered Pursuant to Section 12(b) of the
    Act:
 None
  Securities Registered Pursuant to Section 12(g) of the
    Act:
 Common Stock ($.01 Par Value)
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
    Large accelerated filer
    o

Accelerated filer
    o

Non-accelerated
    filer o

Smaller reporting
    Company þ(Do not check if a smaller reporting
    company)   Rule 12b-2)  Yes o þ
      Form 10-K.




---



##### 





ROCKFORD
    CORPORATIONFORM 10-K
    DECEMBER 31, 2007
  TABLE OF
    CONTENTS
   
 Securities and Exchange CommissionItem Number and Description

PagePART IItem 1.


Business


3Item 1A.


Risk Factors


9Item 2.


Properties


15Item 3.


Legal Proceedings


15Item 4.


Submission of Matters to a Vote of Security
    Holders


16PART IIItem 5.


Market for Registrants Common Equity,
    Related Stockholder Matters, and Issuer Purchases of Equity
    Securities


17Item 6.


Selected Financial Data


19Item 7.


Managements Discussion and Analysis of
    Financial Condition and Results of Continuing Operations


20Item 8.


Financial Statements and Supplementary Data


28Item 9.


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


51Item 9A.


Controls and Procedures


51Item 9B.


Other Information


51PART IIIItem 10.


Directors and Executive Officers and Corporate
    Governance


51Item 11.


Executive Compensation


52Item 12.


Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


52Item 13.


Certain Relationships and Related Transactions,
    and Director Independence


52Item 14.


Principal Accounting Fees and Services


52PART IVItem 15.


Exhibits, Financial Statement Schedules


52Signatures


55EX-10.79EX-10.80EX-21EX-23.1EX-31.1EX-31.2EX-32      
    Rockfords estimate that the number of shares held by
    non-affiliates as of June 30, 2007, was approximately
    5,212,344; and
    $2.35 per share, the price at which Rockfords shares were
    last sold as of June 30, 2007, as reported by The NASDAQ
    Stock Market. June 30, 2007, is the last business day of
    Rockfords most recently completed second fiscal quarter.   1




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##### Table of Contents



Forward-Looking
    Statements And Risk Factors
  We make forward-looking statements in this report including,
    without limitation, statements concerning the future of our
    industry, product development, business strategy, continued
    acceptance and growth of our products, dependence on significant
    customers and suppliers, and the adequacy of our available cash
    resources. Our statements may contain projections of results of
    operations or of financial condition. These statements may be
    identified by the use of forward-looking terminology such as
    may, will, believe,
    expect, anticipate,
    estimate, continue or other similar
    words.
  Forward-looking statements are subject to many risks and
    uncertainties. We caution you not to place undue reliance on
    these forward-looking statements, which speak only as at the
    date on which they are made. Actual results may differ
    materially from those described in these forward-looking
    statements. We disclaim any obligation or undertaking to update
    these forward-looking statements to reflect changes in our
    expectations or changes in events, conditions, or circumstances
    on which our expectations are based.
  When considering our forward-looking statements, you
    should keep in mind the risk factors and other cautionary
    statements identified in this report. The risk factors noted
    throughout this report, particularly in the discussion in
    Item 1A, and other risk factors that we have not
    anticipated or discussed, could cause our actual results to
    differ significantly from those anticipated in our
    forward-looking statements.
 2




---



##### Table of Contents



PART I  Item 1.
    Business  Rockford
    Business
      
    Primarily in the mobile audio aftermarket, where Rockfords
    products replace or supplement a vehicles original audio
    system. In this market Rockford sells its products under the
    Rockford Fosgate and Lightning Audio brands; and
    Secondarily as OEM mobile audio products, installed as original
    equipment in select vehicles. Rockfords OEM products are
    offered primarily in various Nissan and Mitsubishi automobiles.
    Rockfords OEM products are sold primarily under the
    Rockford Fosgate and Rockford Acoustic Design brands.  Rockfords
    Brands
    
    Rockford Fosgate.  Rockford offers distinctive
    product lines that produce powerful, high quality sound under
    the Rockford Fosgate brand. Rockford Fosgate mobile audio
    products are marketed under two primary product lines:  
    Punch Series  the line for the majority of
    Rockfords amplifiers, subwoofers, speakers and
    enclosures; and
    Power Series  the line for Rockfords higher
    performing amplifiers, subwoofers, and speakers.    
    Rockford Acoustic Design.  Rockford Acoustic
    Design is a premium brand, primarily for OEM products. Systems
    using this brand are currently offered in select Mitsubishi
    automobiles; and
    Lightning Audio.  Rockford sells amplifiers,
    subwoofers, speakers, and accessories under the Lightning Audio
    brand. Lightning Audio products are generally more moderately
    priced than Rockford Fosgate products.  InstallEdge.com.
  Rockford
    Strategy
    
    Continue to introduce new and technologically innovative mobile
    audio products that embody distinctive Rockford sound qualities;
    Expand Rockfords mobile audio OEM business; and
    Broaden Rockfords distribution by entering new
    distribution channels and increasing penetration of
    Rockfords existing distribution channels, both in the
    U.S. and internationally. 3




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##### Table of Contents



Rockford
    Products
  Percent
    of Sales by Product Class
    Year Ended December 31,2005


2006


2007Product Class:Amplifiers


43.8
%


45.8
%


42.2
%Speakers


35.4



34.9



36.2Accessories


10.7



12.8



14.1Others(1)


10.1



6.5



7.5Total


100.0
%


100.0
%


100.0
%     (1)
    
    Includes source units, enclosures, signal processors, digital
    media products, and other products. No single product class in
    this group accounted for more than 10% of Rockfords sales
    in any of these years.  Form 10-K.
  Aftermarket
    Mobile Audio Products
    
    Amplifiers.  Amplifiers increase the voltage
    and current coming from the source unit, providing more power
    than possible from a source unit alone. Amplifiers are essential
    for a high performance mobile audio system, particularly for
    consumers who desire strong bass (low frequency) performance;
    Subwoofers and Speakers.  Subwoofers and
    speakers accept a signal from a source unit or amplifier and
    translate it into sound. Subwoofers are speakers that are eight
    inches or greater in diameter and are designed to play bass
    frequencies. Speakers less than eight inches in diameter are not
    subwoofers and are designed to play higher frequencies.
    Aftermarket subwoofers and speakers provide dramatically
    improved sound quality compared to most OEM mobile audio systems
    and are often the single most important improvement consumers
    can make to their mobile audio systems;
    Accessories.  Accessories are the additional
    items required to install and use mobile audio products.
    Accessories include amplifier wiring kits, fuses, circuit
    breakers, interconnect cables, speaker cables, stiffening
    capacitors, battery clamps, connectors, adaptors, and
    carpet/fabric/surface applications. Accessories make
    Rockfords products compatible with OEM components and
    improve the performance of a mobile audio system;
    Signal Processors.  Signal processors provide
    the ability to tune the sound of the audio system
    for better performance and also simplify the installation of
    aftermarket amplifiers and speakers in OEM systems; and
    Enclosures.  Enclosures are used to enhance the
    bass performance of subwoofers and to position speakers in
    locations that produce better sound. 4




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##### Table of Contents



Amplifiers:
    
     Amplifiers under the Punch Series and Power Series
    lines, with rated power from 200 to 4,000 watts, and minimum
    advertised prices from $200 to $2,500. Rockfords
    amplifiers include 1, 2 and 4 channel alternatives, giving
    consumers the ability to select an optimum configuration for
    their system; In the amplifier category Rockford has also
    introduced a Hybrid Technology 15,000-watt amplifier, the
    limited edition HT15kW, at a minimum advertised price of $25,000;Subwoofers and
    Speakers:
    
     Subwoofers and speakers under Rockfords Punch
    Series and Power Series lines, with minimum advertised prices
    from $60 to $1,800;Accessories:
    
     Accessories under Rockfords Connecting Punch
    brand, including amplifier installation kits, interconnect and
    speaker cables, carpet/fabric/surface applications and
    stiffening capacitors;Signal Processors
    
     In the signal processor category Rockford offers its
    3Sixty Interactive Signal Processors in two models at minimum
    advertised prices of $399 and $699; andEnclosures:
    
     Subwoofer enclosures, including loaded
    enclosures that include a subwoofer and, in some cases, an
    amplifier, at minimum advertised prices from $149 to $399.    Amplifiers:
    
     Amplifier models with rated power from 60 to 2,000
    watts and minimum advertised prices from $100 to $1,000;Subwoofers and
    Speakers:
    
     Subwoofers and speakers with minimum advertised
    prices from $30 to $600; andAccessories:
    
     Accessories, including interconnect and speaker
    cables, stiffening capacitors, battery clamps and installation
    kits.    OEM
    Products
    New
    Products
    Engineering
    And Product Development
   5




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##### Table of Contents



Sales and
    Marketing
    
    Making regular calls to dealers and providing them with
    demonstration products, point-of-purchase displays and other
    marketing materials;
    Training dealer sales and installation personnel. For 2007 and
    2008 Rockford is re-emphasizing its Rockford Technical
    Training Institute training programs that are designed to
    enhance the ability of dealer personnel to design, sell and
    install superior audio systems using Rockfords products;
    Regular interaction with industry press editors who are often
    the opinion makers for salespeople at the retail level as well
    as end users;
    Support for competitors in regional and national car audio shows
    and competitions;
    Participation in professional and consumer trade shows;
    Maintaining product and brand information for consumers and
    retailers on Rockfords web sites; and
    Initiating targeted advertising in periodicals read by potential
    consumers.  www.rockfordcorp.com, www.rockfordfosgate.com, www.lightningaudio.com,
    www.rockfordacousticdesign.com, www.installedge.com
  Distribution
  North American Distribution.
         6




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##### Table of Contents



International Distribution.
  Competition
      
    Mobile Audio Amplifiers:  Alpine, JL Audio,
    Kenwood, Kicker, MTX, Pioneer and Sony;
    Mobile Audio Subwoofers and Speakers:  Alpine,
    Boston Acoustics, Infinity, JL Audio, Kenwood, Kicker, MTX,
    Pioneer and Sony;
    Mobile Audio Accessories:  Monster Cable, AAMP
    of America and Scoshe;      
    integrated additional functions such as navigation into vehicle
    electronic systems;
    changed the designs of their cars in ways that make (or are
    perceived to make) installation of aftermarket audio products
    more difficult or expensive; and
    somewhat improved the quality of their mobile audio offerings.    Sourcing
    and Manufacturing
     7




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##### Table of Contents



Intellectual
    Property
     Rockford
    Fosgate®

 Lightning
    Audio®   Rockfords Diamond R
    logo®

   Strike®   The
    Punch®

   Storm®   Rockford
Acoustic
Designtm

   Bolt®
3Sixtytm   Significant
    Customers and Seasonality
        16-24 year
 8




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##### Table of Contents



Product
    Support
        Employees
    Environmental
    Compliance
        Item 1A.
    Risk
    Factors  RISK
    FACTORS THAT MAY AFFECT ROCKFORDS OPERATING RESULTS,
    BUSINESS PROSPECTS AND STOCK PRICE
  Before you buy or sell Rockford stock, you should be aware
    that there are risks, including those described below and others
    Rockford has not anticipated or discussed. You should consider
    carefully these and other risk factors, together with all of the
    other information included in Rockfords filings with the
    SEC and Rockfords periodic press releases, before you
    decide to buy or sell shares of Rockfords common stock.
  As you consider these risk factors, Rockford also calls your
    attention to Rockfords statements about Forward Looking
    Statements and Risk Factors before Part I of this Annual
    Report.
 9




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##### Table of Contents



Rockfords
    products may not satisfy shifting consumer demand or compete
    successfully with competitors products.
    Aftermarket
    Mobile Audio Sales May Continue to Decline, Reducing the
    Potential Market Rockford is Seeking to Address
    
    General business conditions;
    Employment levels, especially among Rockfords core
    consumers (who tend to be less experienced workers and are
    particularly subject to layoff if employment levels decline);
    Consumer confidence in future economic conditions;
    Energy prices; and
    Interest and tax rates.    A
    decline in discretionary spending likely would reduce
    Rockfords sales.
    Rockford
    may lose market share and its brand image may erode as Rockford
    manages the distribution channels for its mobile audio
    products.
      
    Rockford may alienate its specialty dealer
    base.  Some specialty dealers or audio/video
    retailers may react to Rockfords big box and
    OEM strategies by reducing their purchases or even replacing
    Rockfords products with competing products; and
    Rockfords brand image may erode.  Selling
    in big box and OEM markets may erode Rockfords
    brand image, which could decrease Rockfords product prices
    and profit margins. 10




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##### Table of Contents



Any
    decrease in demand for Rockford amplifiers or speakers could
    significantly decrease sales.
    The
    loss of Best Buy or Nissan as a customer or significant
    reductions in their purchases of Rockfords products would
    reduce sales.
    Rockford
    may lose sales and market share if it is unable to compete
    successfully against current and future competition, including
    products offered by aftermarket suppliers and by auto
    manufacturers.
      If
    Rockford does not continue to develop, introduce and achieve
    market acceptance of new and enhanced products, sales may
    decrease.
         11




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##### Table of Contents



Rockfords
    OEM sales and royalty revenue depends on demand for the vehicles
    in which Rockfords OEM systems are offered. A decline in
    demand for those automobiles is likely to reduce OEM sales and
    royalty revenue.
    Seasonality
    of mobile audio sales causes Rockfords quarterly sales to
    fluctuate and may affect the trading price of its
    stock.
    Rockfords
    financial results may fluctuate significantly, making financial
    forecasting difficult and making Rockfords stock price
    volatile.
    
    The level of product, price and dealer competition;
    Size and timing of product orders and shipments, particularly by
    higher volume customers such as Best Buy, Wal-Mart, Nissan and
    Mitsubishi;
    Rockfords ability to develop new products and product
    enhancements that respond to changes in technology and consumer
    preferences while controlling costs;
    Weather conditions, which affect consumers willingness to
    install products;
    Capacity and supply constraints or difficulties; and
    Timing of Rockfords marketing programs and those of its
    competitors.      Rockford
    relies upon debt financing for a substantial part of its working
    capital; defaults on its debt or the unavailability of
    additional financing could make it impossible to carry out
    Rockfords business as currently structured.
    If
    Rockford fails to manage its inventory effectively, Rockford
    could incur additional costs or lose sales.
   12




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##### Table of Contents



Rockfords
    product supplies and international operations may be harmed by
    factors including political instability, currency exchange rates
    and changes in regulations that govern international
    transactions.
    
    Changes in tariff regulations;
    Political instability, war, terrorism and other political risks;
    Foreign currency exchange rate fluctuations;
    Establishing and maintaining relationships with local
    distributors and dealers;
    Lengthy shipping times and accounts receivable payment cycles;
    Import and export licensing requirements;
    Compliance with a variety of foreign laws and regulations,
    including unexpected changes in taxation and regulatory
    requirements;
    Greater difficulty in safeguarding intellectual property than in
    the U.S.; and
    Difficulty in staffing and managing geographically dispersed
    operations.    Loss
    of an international distributor may disrupt Rockfords
    sales.
    Currency
    fluctuations may reduce the profitability of Rockfords
    foreign sales.
    Currency
    fluctuations may increase the cost of Rockfords
    products.
   13




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##### Table of Contents



If
    Rockfords supplies of finished goods or components are
    interrupted, it may be unable to deliver its products to its
    customers.
      Rockford
    depends on a few suppliers for a large portion of its products.
    Interruptions in their ability or willingness to deliver
    products would reduce sales and damage customer
    relationships.
    Rockford
    may be unable to retain and attract key employees, which could
    impair Rockfords business.
    If
    Rockford is unable to enforce or defend its ownership and use of
    intellectual property, Rockfords business may
    decline.
     14




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##### Table of Contents



Rockford
    could suffer from internal control deficiencies.
    Rockfords
    executive officers and directors retain substantial control of
    Rockford, which may limit the liquidity and market price of its
    common stock.
    Virtually
    all of Rockfords shares are available for resale without
    significant restrictions. Their sale or potential sale may
    reduce Rockfords stock price.
    Rockfords
    anti-takeover provisions could affect the value of
    Rockfords stock.
    Item 2.
    Properties    ApproximateFunction

Location

Square Footage


Lease ExpirationCorporate headquarters and research and development

Tempe, Arizona


30,000


September 30, 2009Training

Tempe, Arizona


10,000


September 30, 2010Manufacturing and purchasing

Tempe, Arizona


22,000


December 31, 2008Warehousing, sales and customer service

Tempe, Arizona


25,000


December 31, 2008Warehousing

Gilbert, Arizona


91,000


March 31, 2009Warehousing

Grand Rapids, Michigan


83,000


June 30, 2009Total




261,000   Item 3.
    Legal
    Proceedings   15




---



##### Table of Contents




    $750,000 was paid in February 2007, $225,500 was paid on
    August 1, 2007, and $212,500 was paid on February 1,
    2008; and
    $212,500 each will be paid on August 1, and
    December 1, 2008.          Item 4.
    Submission
    of Matters to a Vote of Security Holders   16




---



##### Table of Contents



PART II  Item 5.
    Market
    for Registrants Common Equity and Related Stockholder
    Matters and Issuer Purchases of Equity Securities    High


LowFor the quarter ended:December 31, 2007

$
2.19


$
1.57September 30, 2007

$
2.38


$
1.59June 30, 2007

$
2.88


$
1.84March 31, 2007

$
2.85


$
2.17December 31, 2006

$
3.50


$
1.48September 30, 2006

$
4.19


$
3.20June 30, 2006

$
4.19


$
3.21March 31, 2006

$
4.20


$
2.86       Equity
    Compensation Plan Information
  Number of SecuritiesNumber of Securities to be


Weighted Average


Remaining Available forIssued Upon Exercise of


Exercise Price of


Future Issuance Under EquityOutstanding Options,


Outstanding Options,


Compensation Plans (ExcludingWarrants and Rights


Warrants and Rights


Securities Reflected in Column (a))Plan Category

(a)


(b)


(c)Equity compensation plans approved by security holders


1,697,464


$
4.14



91,600Equity compensation plans not approved by security holders


59,073



3.73



1,756,537


$
4.13



91,600  17




---



##### Table of Contents



Issuer
    Purchases of Equity Securities
  Maximum Numberof SharesTotal Number of


That May YetShares Purchased as Part of


be PurchasedTotal Number of


Average Price Paid


Publicly Announced


Under the PlansPeriod

Shares Purchased


per Share


Plans or Programs*


or ProgramsOctober 2007


50,000


$
2.06



50,000



420,000November 2007


399,700



1.99



399,700



20,300December 2007














20,300Total


449,700


$
2.00



449,700    18




---



##### Table of Contents



Item 6.
    Selected
    Financial Data    Years Ended December 31,2003


2004


2005


2006


2007(In thousands, except per share data)Consolidated Statements of Operations:Net sales

$
157,728


$
160,857


$
135,682


$
102,776


$
88,745Cost of goods sold


109,446



129,092



96,231



73,919



59,868Gross profit


48,282



31,765



39,451



28,857



28,877Operating expenses:Sales and marketing


28,823



27,461



22,845



16,772



13,273General and administrative


17,470



25,782



13,913



16,753



11,215Research and development


7,149



6,415



2,823



3,218



2,817Total operating expenses


53,442



59,658



39,581



36,743



27,305Operating income (loss)


(5,160
)


(27,893
)


(130
)


(7,886
)


1,572Interest and other expense, net


252



2,826



2,593



1,243



886Income (loss) from continuing operations before income taxes


(5,412
)


(30,719
)


(2,723
)


(9,129
)


686Income tax expense (benefit)


(2,483
)


4,597







(437
)


Income (loss) from continuing operations


(2,929
)


(35,316
)


(2,723
)


(8,692
)


686Discontinued operations:Loss from disposal of discontinued operations, net of taxes






(70
)


(1,019
)






Loss from discontinued operations, net of taxes


(2,735
)


(3,469
)


(345
)


(155
)


Total loss from discontinued operations


(2,735
)


(3,539
)


(1,364
)


(155
)


Net income (loss)

$
(5,664
)

$
(38,855
)

$
(4,087
)

$
(8,847
)

$
686Income (loss) per common share:Income (loss) from continuing operationsBasic

$
(0.33
)

$
(3.90
)

$
(0.29
)

$
(0.92
)

$
0.07Diluted

$
(0.33
)

$
(3.90
)

$
(0.29
)

$
(0.92
)

$
0.07Loss from discontinued operationsBasic

$
(0.31
)

$
(0.39
)

$
(0.15
)

$
(0.02
)

$
0.00Diluted

$
(0.31
)

$
(0.39
)

$
(0.15
)

$
(0.02
)

$
0.00Net income (loss):Basic

$
(0.64
)

$
(4.29
)

$
(0.44
)

$
(0.94
)

$
0.07Diluted

$
(0.64
)

$
(4.29
)

$
(0.44
)

$
(0.94
)

$
0.07Weighted average shares:Basic


8,866



9,066



9,258



9,388



9,325Diluted


8,866



9,066



9,258



9,388



9,342Consolidated Balance Sheet Data:Working capital

$
38,138


$
25,776


$
23,217


$
16,479


$
17,110Total assets


112,083



80,353



52,298



44,555



34,012Current portion of long-term debt and capital lease obligations


24,382



18,204



6,109



11,402



4,235Long-term debt and capital lease obligations






11,937



9,187



9,937



9,715Total liabilities


48,393



57,768



33,667



34,310



24,066Shareholders equity


63,207



22,585



18,631



10,245



9,946  19




---



##### Table of Contents



Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Continuing Operations    Results
    of Operations
  Overview
           20




---



##### Table of Contents



Year Ended December 312005


2006


2007Net sales


100.0
%


100.0
%


100.0
%Cost of goods sold


70.9



71.9



67.5Gross profit


29.1



28.1



32.5Operating expenses:Sales and marketing


16.8



16.3



15.0General and administrative


10.3



16.3



12.6Research and development


2.1



3.2



3.2Total operating expenses


29.2



35.8



30.8Operating income (loss)


(0.1
)


(7.7
)


1.8Interest and other expense, net


1.9



1.2



1.0Income (loss) from continuing operations before income taxes


(2.0
)


(8.9
)


0.8Income tax expense (benefit)






(0.4
)


Income (loss) from continuing operations


(2.0
)


(8.5
)


0.8Discontinued operations:Loss from disposal of discontinued operations


(0.7
)






Loss from discontinued operations


(0.3
)


(0.1
)


Total loss from discontinued operations


(1.0
)


(0.1
)


Net income (loss)


(3.0
)%


(8.6
)%


0.8
%           Geographic
    Distribution of Sales
    Year Ended December 31,Region(1)

2005


2006


2007


2007(In thousands, excluding % column)United States

$
112,657


$
86,017


$
71,771



80.9
%Other Americas


9,438



8,007



7,193



8.1
%Europe


9,042



5,316



6,069



6.8
%Asia


4,545



3,436



3,712



4.2
%Total sales

$
135,682


$
102,776


$
88,745



100.0
%     (1)
    
    Sales are attributed to geographic regions based on the location
    of customers. No single foreign country accounted for greater
    than 10% of Rockfords sales. 21




---



##### Table of Contents



In the following discussion, certain increases or decreases
    may differ due to rounding.
  Year
    Ended December 31, 2007 Compared to Year Ended
    December 31, 2006
  Net Sales.
    Gross Profit.
  Sales and Marketing Expenses.
  General and Administrative Expenses.
  Research and Development Expenses.
  Operating Income (Loss).
  Interest and Other Expense, Net.
  Income Tax Expense (Benefit).
 22




---



##### Table of Contents



Year
    Ended December 31, 2006 Compared to Year Ended
    December 31, 2005
  Net Sales.
    Gross Profit.
  Sales and Marketing Expenses.
  General and Administrative Expenses.
  Research and Development Expenses.
  Operating Loss From Continuing
    Operations.
  Interest and Other Expense.
 23




---



##### Table of Contents



Income Tax Expense (Benefit).
  Quarterly
    Results of Operations
      Consolidated
    Statement of Operations Data
  Three Months EndedMar. 31,


June 30,


Sept. 30,


Dec. 31,


Mar. 31,


June 30,


Sept. 30,


Dec. 31,2006


2006


2006


2006


2007


2007


2007


2007(In thousands, except per share data)Net sales

$
29,928


$
31,668


$
21,217


$
19,963


$
26,372


$
26,740


$
18,695


$
16,938Gross profit


7,858



10,373



6,016



4,610



7,880



8,398



6,278



6,321Income (loss) from continuing operations


(2,059
)


1,026



(2,919
)


(4,740
)


(867
)


970



91



492Income (loss) from discontinued operations


6



(114
)


(47
)


















Net income (loss)

$
(2,053
)

$
912


$
(2,966
)

$
(4,740
)

$
(867
)

$
970


$
91


$
492Net income (loss) per common share(1)Basic

$
(0.22
)

$
0.09


$
(0.32
)

$
(0.50
)

$
(0.09
)

$
0.10


$
0.01


$
0.05Diluted

$
(0.22
)

$
0.09


$
(0.32
)

$
(0.50
)

$
(0.09
)

$
0.10


$
0.01


$
0.05     (1)
    
    The sum of quarterly net income (loss) per common share does not
    equal annual net income (loss) per common share due to changes
    in the weighted average number of common shares outstanding.  Liquidity
    and Capital Resources
     24




---



##### Table of Contents




    Rockford had no cash and cash equivalents at December 31,
    2007 and December 31, 2006. Due to the daily sweep of cash
    by Wachovia Capital, described below, Rockford has reclassified
    cash and cash equivalents to net against its current debt
    balance.
    Rockfords net accounts receivable were $15.9 million
    at December 31, 2007 compared to $19.2 million at
    December 31, 2006. The decrease in accounts receivable
    balances is primarily due to the decrease in net sales in 2007
    compared to 2006.
    Rockfords inventory position decreased from
    $19.6 million at the end of 2006 to $14.4 million at
    December 31, 2007. This inventory decrease was primarily
    due to the initial phases of outsourcing manufacturing, improved
    inventory turns and the reduction of end of life inventory
    during 2007.
    Accounts payable decreased $1.3 million, from
    $7.1 million at December 31, 2006 to $5.8 million
    at December 31, 2007. This decrease was primarily due to
    lower purchase requirements resulting from lower sales.  EITF 95-22: Balance Sheet Classification of Borrowings Outstanding under
    Revolving Credit Agreements That Include both a Subjective
    Acceleration Clause and a Lock-Box Arrangement
   25




---



##### Table of Contents



Off
    Balance Sheet Arrangements
      Critical
    Accounting Policies and Estimates
      Revenue Recognition. Revenue Recognition in Financial Statements.
  
    Persuasive evidence of an arrangement exists;
    Ownership has transferred to the customer;
    The price to the customer is fixed or determinable; and
    Collectibility is reasonably assured.      Allowance for Doubtful Accounts.
 26




---



##### Table of Contents



Inventory.
  Warranty.
  Income taxes.
    Inflation.
  New
    Accounting Standards
  Fair Value Measurements.
  Business Combinations
 27




---



##### 



Item 8.
    Financial
    Statements and Supplementary Data  INDEX TO
    CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE
   
 Consolidated Financial Statements of Rockford
    Corporation and SubsidiariesReport of Independent Registered Public
    Accounting Firm


29Consolidated Balance Sheets as at
    December 31, 2006 and 2007


30Consolidated Statements of Operations for the
    years ended December 31, 2005, 2006 and 2007


31Consolidated Statements of Shareholders
    Equity for the years ended December 31, 2005, 2006 and
    2007


32Consolidated Statements of Cash Flows for the
    years ended December 31, 2005, 2006 and 2007


33Notes to Consolidated Financial Statements


34   28




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM  
               29




---



##### Table of Contents



ROCKFORD
    CORPORATION AND SUBSIDIARIES



CONSOLIDATED
    BALANCE SHEETS
    (In thousands, except share data)  December 31,2006


2007ASSETSCurrent assets:Cash and cash equivalents

$



$
Accounts receivable, less allowances of $1,267 and $929 at
    December 31, 2006 and 2007, respectively


19,242



15,885Inventories


19,612



14,352Prepaid expenses and other


1,998



1,224Total current assets


40,852



31,461Property and equipment, net


2,487



1,905Other assets


1,216



646Total assets

$
44,555


$
34,012LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable

$
7,094


$
5,794Accrued salaries and incentives


1,485



1,415Accrued warranty and returns


2,199



1,267Other accrued expenses


2,193



1,640Current portion of capital leases and other long-term liabilities


1,002



760Asset-based credit facility


10,400



3,475Total current liabilities


24,373



14,351Notes payable, less unaccreted discount of $222 and $130 at
    December 31, 2006 and 2007, respectively


9,278



9,582Long-term portion of capital lease and other long-term
    liabilities


659



133Total liabilities


34,310



24,066Commitments an Contingencies (Note 10)Shareholders equityCommon stock, $.01 par value. Authorized shares 
    40,000,000 Issued shares  9,390,970 and
    9,395,720 shares at December 31, 2006 and 2007,
    respectively


94



94Additional paid-in capital


37,995



38,319Accumulated deficit


(28,255
)


(27,569
)Accumulated other comprehensive income


411



Less: Treasury stock, at cost (449,700 shares at
    December 31, 2007)






(898
)Total shareholders equity


10,245



9,946Total liabilities and shareholders equity

$
44,555


$
34,012    30




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##### Table of Contents



ROCKFORD
    CORPORATION AND SUBSIDIARIES



CONSOLIDATED
    STATEMENTS OF OPERATIONS
    (In thousands, except per share data)  Year Ended December 31,2005


2006


2007Net sales

$
135,682


$
102,776


$
88,745Cost of goods sold


96,231



73,919



59,868Gross profit


39,451



28,857



28,877Operating expenses:Sales and marketing


22,845



16,772



13,273General and administrative


13,913



16,753



11,215Research and development


2,823



3,218



2,817Total operating expenses


39,581



36,743



27,305Operating income (loss)


(130
)


(7,886
)


1,572Interest expense


2,009



1,366



1,423Other expense (income)


584



(123
)


(537
)Income (loss) from continuing operations before income taxes


(2,723
)


(9,129
)


686Income tax benefit






(437
)


Income (loss) from continuing operations


(2,723
)


(8,692
)


686Discontinued operations:Loss from disposal of discontinued operations, net of taxes


(1,019
)






Loss from discontinued operations, net of taxes


(345
)


(155
)


Total loss from discontinued operations


(1,364
)


(155
)


Net income (loss)

$
(4,087
)

$
(8,847
)

$
686Income (loss) per common share:Income (loss) from continuing operationsBasic

$
(0.29
)

$
(0.92
)

$
0.07Diluted

$
(0.29
)

$
(0.92
)

$
0.07Loss from discontinued operationsBasic

$
(0.15
)

$
(0.02
)

$
0.00Diluted

$
(0.15
)

$
(0.02
)

$
0.00Net income (loss)Basic

$
(0.44
)

$
(0.94
)

$
0.07Diluted

$
(0.44
)

$
(0.94
)

$
0.07Weighted average shares:Basic


9,258



9,388



9,325Diluted


9,258



9,388



9,342    31




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##### Table of Contents



ROCKFORD
    CORPORATION AND SUBSIDIARIES



CONSOLIDATED
    STATEMENTS OF SHAREHOLDERS EQUITY
    (In thousands)  AccumulatedAdditional





OtherCommon Stock


Paid-In


Accumulated


Comprehensive


Treasury StockShares


Amount


Capital


Deficit


Income


Number


Amount


TotalBalance at December 31, 2004


9,205


$
92


$
37,329


$
(15,321
)

$
485






$



$
22,585Currency translation


















(88
)










(88
)Net loss














(4,087
)














(4,087
)Comprehensive loss






























(4,175
)Exercise of stock options, including tax benefit of $0


116



1



246



















247Issuance of shares for employee stock purchase plan


63



1



121



















122Repurchase of warrants issued with convertible notes










(148
)


















(148
)Balance at December 31, 2005


9,384



94



37,548



(19,408
)


397











18,631Currency translation


















14











14Net loss














(8,847
)














(8,847
)Comprehensive loss






























(8,833
)Exercise of stock options, including tax benefit of $0


7







16



















16Share-based compensation










431



















431Balance at December 31, 2006


9,391



94



37,995



(25,255
)


411











10,245Currency translation


















(411
)










(411
)Net income














686















686Comprehensive income






























275Exercise of stock options, including tax benefit of $0


5







11



















11Share-based compensation










313



















313Purchase of treasury stock






















450



(898
)


(898
)Balance at December 31, 2007


9,396


$
94


$
38,319


$
(27,569
)

$




450


$
(898
)

$
9,946    32




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##### Table of Contents



ROCKFORD
    CORPORATION AND SUBSIDIARIES



CONSOLIDATED
    STATEMENTS OF CASH FLOWS  Year Ended December 31,2005


2006


2007(In thousands)Cash flow from continuing operating activities:Net income (loss)

$
(4,087
)

$
(8,847
)

$
686Net loss from discontinued operations


(1,364
)


(155
)


Net income (loss) from continuing operations


(2,723
)


(8,692
)


686Adjustments to reconcile net income (loss) from continuing
    operations to net cash provided by (used in) operating
    activities:Depreciation and amortization


3,891



2,555



1,849Share based compensation expense






431



313Loss on legal settlement and special charges






1,518



1,098Gain on divestiture of business






(142
)


Realized translation gain










(411
)Gain on sale of brand rights


(844
)






Write-off of assets to fair market value


814







Net gain on buyback of notes and warrants


(112
)






Loss (gain) on sale of property and equipment


44



153



(35
)Provision for doubtful accounts


388



856



111Provision for inventory


549



974



507Changes in operating assets and liabilities:Accounts receivable


6,457



3,300



3,245Inventories


12,275



(2,768
)


4,752Prepaid expenses and other


361



2,271



739Accounts payable


(4,683
)


(2,534
)


(1,301
)Accrued salaries and incentives


(85
)


168



(573
)Accrued warranty and returns


(1,514
)


(935
)


(932
)Other accrued expenses


(2,120
)


(1,279
)


(1,107
)Net cash provided by (used in) operating activities


12,698



(4,124
)


8,941Cash flow from continuing investing activities:Purchases of property and equipment


(948
)


(1,505
)


(1,014
)Proceeds from sale of property and equipment


125



78



161Net proceeds from disposal of assets


2,098



972



400Proceeds from sale of brand rights and other assets


843







Increase (decrease) in other assets


(313
)


263



31Net cash provided by (used in) investing activities


1,805



(192
)


(422
)Cash flow from continuing financing activities:Proceeds from ( payments on) notes payable and warrants


(2,688
)






317Proceeds from bank debt and short term notes


139,394



114,765



86,047Payments on bank debt and short term notes


(151,490
)


(110,440
)


(92,972
)Payments on capital lease obligations






(39
)


(44
)Payments on litigation settlement










(980
)Proceeds from employee stock purchase plan


122







Purchase of treasury stock










(898
)Proceeds from exercise of stock options


247



16



11Net cash provided by (used in) financing activities


(14,415
)


4,302



(8,519
)Effect of exchange rate changes on cash from continuing
    operations


(88
)


14



Net decrease in cash and cash equivalents from continuing
    operations










Net decrease in cash flow from discontinued operations










Cash and cash equivalents at beginning of year










Cash and cash equivalents at end of year

$



$



$
Cash flow from discontinued operations:Cash flow provided by operating activities

$
54


$
34


$
Cash flow used in investing activities


(54
)






Cash flow provided by (used in) financing activities






(34
)


Effect of exchange rate changes on cash










Net decrease in cash flow from discontinued operations

$



$



$
    33




---



##### Table of Contents



ROCKFORD
    CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS
  1.
    Accounting
    Policies  Organization
    and Description of Business
      Principles
    of Consolidation
    Cash
    and Cash Equivalents
    Fair
    Value of Financial Instruments
    Revenue
    Recognition
    
    Persuasive evidence of an arrangement exists;
    Ownership has transferred to the customer;
    The price to the customer is fixed or determinable; and
    Collectibility is reasonably assured.     34




---



##### Table of Contents



ROCKFORD
    CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  Shipping
    and Handling Costs
    Accounts
    Receivable and Allowances
        Inventories
    Property
    and Equipment
    Impairment
    of Long-Lived Assets
  Accounting for
    the Impairment of Long-Lived Assets and for Long-Lived Assets to
    Be Disposed Of
  Goodwill
  Business Combinations Goodwill and Other Intangible Assets.
 35




---



##### Table of Contents



ROCKFORD
    CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Advertising
    Income
    Taxes
  Accounting for Income Taxes.
      Product
    Warranty Cost and Service Returns
      2005


2006


2007(In thousands)Balance at the beginning of year

$
4,789


$
3,185


$
2,199Provision for warranties and returns


10,882



6,674



3,694Net settlements made during the year


(12,486
)


(7,660
)


(4,626
)Balance at the end of the year

$
3,185


$
2,199


$
1,267   Income
    (Loss) per Common Share
  Earnings Per Share.
 36




---



##### Table of Contents



ROCKFORD
    CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  Significant
    Customers
    Foreign
    Currency Translation
  Foreign Currency Translation.
  Stock
    Based Compensation
  Accounting for
    Stock Issued to Employees Accounting for Stock-Based
    Compensation
    Accounting for Stock-Based
    Compensation
  Year Ended December 31, 2005(In thousands except per share data)Net loss as reported

$
(4,087
)Proforma SFAS No. 123R expense


(451
)Proforma net loss

$
(4,538
)Proforma loss per common shareBasic

$
(0.49
)Diluted

$
(0.49
)  37




---



##### Table of Contents



ROCKFORD
    CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Use of
    Estimates
    New
    Accounting Pronouncements
  Fair Value Measurements.
  Business Combinations
  2.
    Discontinued
    Operations  MB Quart.
    December 31, 2005(In thousands)Revenues

$
Cost of sales


Operating expenses


63Interest and other expense (income), net


Income tax benefit


Net loss

$
(63
)   Rockford Home Group.
 38




---



##### Table of Contents



ROCKFORD
    CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
          December 31,2005


2006(In thousands)Revenues

$
5,266


$
46Cost of sales


3,165



201Operating expenses


2,382



Interest and other expense (income), net


1



Net loss

$
(282
)

$
(155
)   3.
    Inventories    December 31,2006


2007(In thousands)Raw materials

$
4,801


$
3,564Work in progress


563



246Finished goods


14,248



10,542$
19,612


$
14,352  39




---



##### Table of Contents



ROCKFORD
    CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  4.
    Property
    and Equipment    December 31,2006


2007(In thousands)Machinery and equipment

$
13,230


$
10,501Tooling equipment


3,314



2,952Leasehold improvements


2,838



2,861Furniture and fixtures


297



297Computer software and hardware


1,722



2,229Construction in process


80



80Assets under capital leases


182



18221,663



19,102Less accumulated depreciation and amortization


(19,176
)


(17,197
)$
2,487


$
1,905     5.
    Notes
    Payable and Long-Term Debt    December 31,2006


2007(In thousands)Asset based credit facility

$
10,400


$
3,475Convertible senior subordinated secured notes


9,500



9,500Other






31819,900



13,293Less debt discount


(222
)


(130
)Less current portion


(10,400
)


(3,581
)$
9,278


$
9,582      40




---



##### Table of Contents



ROCKFORD
    CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  EITF 95-22: Balance Sheet Classification of Borrowings Outstanding under
    Revolving Credit Agreements That Include both a Subjective
    Acceleration Clause and a Lock-Box Arrangement
        Years Ending December 31,(In thousands)2008

$
7152009


9,6092010


1032011


3,4752012


$
13,902  41




---



##### Table of Contents



ROCKFORD
    CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  6.
    Leases      Capital


Operating Leases(In thousands)


(In thousands)2008

$
59


$
1,6962009


59



7262010






1192011






62012






Thereafter






Total minimum lease payments


118


$
2,547Less amount representing interest and taxes


19Total present value of capital obligation


99Less current portion


48Long-term obligation under capital leases

$
51     7.
    Income
    Taxes    December 31,2006


2007(In thousands)Deferred tax assets Inventory basis

$
1,592


$
1,021Basis in receivables


749



340Book over tax depreciation


301



680Accrued warranty


528



469Net operating loss carryforward


15,827



17,261Capital loss carryforward






945Federal and state credit carryforwards


2,402



1,974Accrued liabilities and other


514



719Gross deferred tax assets


21,913



23,409Valuation allowance


(21,913
)


(23,409
)Net deferred tax assets

$



$
    42




---



##### Table of Contents



ROCKFORD
    CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  Accounting for Income Tax.
        Year Ended December 31,2005


2006


2007(In thousands)Current:Federal expense (benefit)

$



$
(437
)

$
State expense (benefit)










Foreign expense










Total current expense (benefit)






(437
)


Deferred:Federal expense (benefit)










State expense (benefit)










Foreign expense(benefit)










Total deferred expense (benefit)










Income tax expense (benefit)

$



$
(437
)

$
  43




---



##### Table of Contents



ROCKFORD
    CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Year Ended December 31,2005


2006


2007(In thousands)Federal statutory rate  continuing operations

$
(1,022
)

$
(3,104
)

$
233Federal statutory rate  discontinued operations


(368
)


(53
)


State tax net of federal benefit










State tax operating loss carryforward


(552
)


(408
)


(136
)Nondeductible items


178



110



68Amount not taxable due to dissolution of subsidiary










(2,531
)Tax benefit on disposal of domestic subsidiary stock






(1,008
)


Federal and state tax credits


(1,100
)


(367
)


(138
)Loss of state net operating losses






267



Revision of contingency reserve






(437
)


Increase in valuation allowance


3,177



4,378



2,567Affiliate unbenefited losses






249



Other, net


(313
)


(64
)


(63
)Income tax benefit

$



$
(437
)

$
           2007(In thousands)Balance at beginning of year

$
1,071Additions based on tax positions relating to current year


Additions for tax positions of prior years


Reductions for tax positions of prior years


Settlements


Balance at ending of year

$
1,071  44




---



##### Table of Contents



ROCKFORD
    CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  2003-2007 years
  8.
    Common
    Stock Grants and Options      Accounting for Stock Issued to Employees Accounting for
    Stock-Based Compensation.
       45




---



##### Table of Contents



ROCKFORD
    CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
      2005


2006


2007Expected life of the award


5 years



5 years



5 yearsDividend yield


0
%


0
%


0
%Risk-free interest rate


4.5
%


4.6
%


5.1
%Expected volatility


0.46



0.47



0.48     Outstanding Options


WeightedWeighted


Average


AggregateAverage


Remaining


IntrinsicShares


Exercise Price


Contractual Term


ValueOutstanding at January 1, 2007


1,905,951


$
4.12Granted


70,000



2.45Exercised


(5,000
)


2.15Expired


(273,487
)


3.66Outstanding at December 31, 2007


1,697,464



4.14



6.5 years


$
Exercisable at December 31, 2007


1,380,937


$
4.48



6.0 years


$
       Options Outstanding


Options ExercisableNumber


Weighted





NumberOutstanding at


Average


Weighted


Outstanding at


WeightedDecember 31,


Remaining


Average


December 31,


AverageRange of Exercise Prices

2007


Contractual Life


Exercise Price


2007


Exercise Price$2.15 - $2.90


1,029,800



8.1


$
2.48



763,773


$
2.47$3.41 - $4.19


102,000



8.3


$
3.47



51,500


$
3.47$5.70 - $7.68


501,164



3.4


$
6.80



501,164


$
6.80$11.00


64,500



2.3


$
11.00



64,500


$
11.001,697,464











1,380,937  46




---



##### Table of Contents



ROCKFORD
    CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  9.
    Income
    (Loss) Per Share  Year Ended December 31,2005


2006


2007(In thousands, exceptper share data)Numerator:Income (loss) from continuing operations

$
(2,723
)

$
(8,692
)

$
686Plus:Income impact of assumed conversion of convertible debt










Income (loss) from continuing operations available to
    shareholders


(2,723
)


(8,692
)


686Loss from discontinued operations


(1,364
)


(155
)


Net income (loss) available to shareholders

$
(4,087
)

$
(8,847
)

$
686Denominator:Denominator for basic net income (loss) per share


9,258



9,388



9,325Effect of dilutive securities:Employee stock options










17Warrants










Dilutive potential common shares










17Denominator for diluted net income (loss) per share


9,258



9,388



9,342Income (loss) per common share:Income (loss) from continuing operationsBasic

$
(0.29
)

$
(0.92
)

$
0.07Diluted

$
(0.29
)

$
(0.92
)

$
0.07Loss from discontinued operationsBasic

$
(0.15
)

$
(0.02
)

$
0.00Diluted

$
(0.15
)

$
(0.02
)

$
0.00Net income (loss)Basic

$
(0.44
)

$
(0.94
)

$
0.07Diluted

$
(0.44
)

$
(0.94
)

$
0.07      47




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##### Table of Contents



ROCKFORD
    CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
      Year Ended December 31st2005


2006


2007Outstanding options


912



888



1,430Exercise price

$
6.27


$
6.04


$
4.51   10.
    Contingencies      11.
    Benefit
    Plan    12.
    Stock
    Purchase Program   48




---



##### Table of Contents



ROCKFORD
    CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  13.
    Segment
    Information    Year Ended December 31Region(1)

2005


2006


2007


% 2007(In thousands)United States

$
112,657


$
86,017


$
71,771



80.9
%Other Americas (includes Canada)


9,438



8,007



7,193



8.1
%Europe


9,042



5,316



6,069



6.8
%Asia


4,545



3,436



3,712



4.2
%Total sales to external customers

$
135,682


$
102,776


$
88,745



100
%     (1)
    
    Revenues are attributed to geographic regions based on the
    location of customers.    14.
    Disposal
    of Assets    MB Quart.
  Q-Logic.
 49




---



##### Table of Contents



ROCKFORD
    CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  15.
    Special
    Charges        Twelve Months EndedLiability at

December 31, 2007

Liability atDecember 31,

Reserve



Adjustments

December 31,2006

Recorded

Payments

To Reserve

2007Post Employment Costs:

$
615


$
1,174


$
(1,191
)

$
(14
)

$
584  50




---



##### Table of Contents



Item 9.
    Changes
    In and Disagreements with Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures  Conclusion
    Regarding the Effectiveness of Disclosure Controls and
    Procedures
  Rule 13a-15(e)
  Managements
    Annual Report on Internal Control Over Financial
    Reporting
  Exchange Act
    Rules 13a-15(f)
      Changes
    in Internal Controls
    Item 9B.
    Other
    Information   PART III  Item 10.
    Directors
    and Executive Officers and Corporate Governance  Regulation S-K
   51




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##### Table of Contents



Item 11.
    Executive
    Compensation    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters    Item 13.
    Certain
    Relationships and Related Transactions    Item 14.
    Principal
    Accounting Fees and Services   PART IV  Item 15.
    Exhibits,
    Financial Statement Schedules       52




---



##### Table of Contents



Exhibits
  ExhibitNumber

Description of Document3
.1

Articles of Incorporation+3
.2

Restated Bylaws as amended through July 27, 2000++3
.3

Amendment to Articles of Incorporation filed on January 12,
    1988+3
.4

Amendment to Articles of Incorporation filed on May 12,
    1999+3
.5

Amendment to Articles of Incorporation filed on May 17,
    1999+3
.7

Amendment to Articles of Incorporation filed on July 1,
    1999+4
.1

Conformed Copy of Indenture dated as of June 10, 2004
    between Rockford Corporation and BNY Western
    Trust Company###4
.2

Form of 4.5% Convertible Senior Subordinated Secured Note
    Due 2009###4
.3

Form of Warrant to Purchase Common Stock###4
.4

Conformed Copy of Registration Rights Agreement dated as of
    June 10, 2004 by and among Rockford Corporation, Piper
    Jaffray & Co. and the Buyers as defined therein###4
.5

Conformed Copy of Warrant Agent Agreement dated as of
    June 10, 2004 between Rockford Corporation and BNY Western
    Trust Company###4
.6

Conformed Copy of Security Agreement dated as of June 10,
    2004 among Rockford Corporation, Audio Innovations, Inc. and BNY
    Western Trust Company###4
.7

Conformed Copy of Intercreditor Agreement dated as of
    June 10, 2004 by and among Congress Financial Corporation
    (Western), BNY Western Trust Company, Rockford Corporation
    and Audio Innovations, Inc.###4
.8

Conformed Copy of Global Amendment to Notes, Warrants,
    Indenture, Security Agreement, Warrant Agent Agreement and
    Registration Rights Agreement and Waiver of Event of Default
    dated as of November 12, 2004 by and among Rockford
    Corporation, Audio Innovations, Inc., BNY Western
    Trust Company and the persons listed on the Schedule of
    Holders attached thereto as Exhibit A####4
.9

Conformed Copy of Amendment to Warrants, Warrant Agent Agreement
    and Registration Rights Agreement dated as of November 12,
    2004, by and among Rockford Corporation, BNY Western
    Trust Company and Piper Jaffray & Co####10
.62

Loan and Security Agreement among Rockford Corporation, Audio
    Innovations, Inc., Congress Financial Corporation (Western), and
    various Financial Institutions, dated March 29, 2004##10
.62.1

First Amendment to Loan and Security Agreement and Conditional
    Default Waiver among Congress Financial Corporation (Western),
    as a lender and as administrative and collateral agent for the
    lenders party to the Loan Agreement, Rockford Corporation, and
    Audio Innovations, Inc., dated as of June 10, 2004***10
.62.2

Second Amendment to Loan and Security Agreement among Congress
    Financial Corporation (Western) as a lender and as
    administrative and collateral agent for the lenders party to the
    Loan Agreement, Rockford Corporation and Audio Innovations,
    Inc., dated as of December 30, 2004***10
.63

Industrial Lease Agreement between Jerome A. and/or Cathy E.
    Reynolds and Rockford Corporation, dated as of May 1,
    2003***10
.66

Securities Purchase Agreement dated as of June 10, 2004
    between Rockford Corporation and the Buyers as defined
    therein#####10
.67

Third Amendment to Loan and Security Agreement, dated
    August 31, 2005, among Rockford, Rockfords wholly
    owned subsidiary Audio Innovations, Inc. (AII), and
    Wachovia Capital Finance Corporation (Western).**10
.70

Fourth amendment to Loan and Security Agreement and Consent,
    dated March 21, 2006, among Rockford, Rockfords
    wholly owned subsidiary Audio Innovations, Inc.
    (AII), and Wachovia Capital Finance Corporation
    (Western).****10
.74

Fifth amendment to Loan and Security Agreement and Consent,
    dated August 31, 2006, among Rockford, Rockfords
    wholly owned subsidiary Audio Innovations, Inc.
    (AII), and Wachovia Capital Finance Corporation
    (Western).**** 53




---



##### Table of Contents



ExhibitNumber

Description of Document10
.75

Agreement between Rockford and David Fiori dated
    February 22, 2007*****10
.76

Retirement and Salary Continuation Agreement between Rockford
    and W. Gary Suttle*****10
.77

Fifth Lease Amendment Between Centerpoint Properties Trust and
    Rockford Corporation, dated November 9, 2006*****10
.78

Sixth amendment to Loan and Security Agreement and Waiver, dated
    March 7, 2007, among Rockford, Rockfords wholly owned
    subsidiary Audio Innovations, Inc. (AII), and
    Wachovia Capital Finance Corporation (Western).*****10
.79

Seventh amendment to Loan and Security Agreement and Waiver,
    dated November 28, 2007, among Rockford, Rockfords
    wholly owned subsidiary Audio Innovations, Inc.
    (AII), and Wachovia Capital Finance Corporation
    (Western).10
.80

Revised form of Change of Control Agreement, entered into with 5
    executive officers (Mr. Jackson, Mr. Vasek,
    Ms. Mott, Mr. Matson, and Mr. Carlsness).21


List of Subsidiaries of Rockford Corporation23
.1

Consent of Independent Registered Public Accounting Firm31
.1

Certification pursuant to Exchange Act
    Rules 13a-14(a)
    and 15d-14(a), as adopted pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002 for W. Gary Suttle31
.2

Certification pursuant to Exchange Act
    Rules 13a-14(a)
    and 15d-14(a), as adopted pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002 for Richard G. Vasek32


Certification pursuant to 18 U.S.C. Section 1350, as
    adopted pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002     *
    
    Management contract or compensatory plan or arrangement+
    
    Previously filed with registration statement effective
    April 19, 2000 and/or amendments.++
    
    Previously filed on August 11, 2000 with Rockfords
    Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2000.+++
    
    Previously filed on March 29, 2002 with Rockfords
    Annual Report on
    Form 10-K
    for the year ended December 30, 2001.##
    
    Previously filed on May 17, 2004 with Rockfords
    Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 2004.###
    
    Previously filed on June 15, 2004 with Rockfords
    Current Report on
    Form 8-K.####
    
    Previously filed on November 15, 2004 with Rockfords
    Current Report on
    Form 8-K.#####
    
    Previously filed on June 15, 2004 as Exhibit 10.1 with
    Rockfords Current Report on
    Form 8-K.**
    
    Previously filed on November 14, 2005, with Rockfords
    quarterly report on Form 10Q for the quarter ended
    September 30, 2005.***
    
    Previously filed on April 15, 2005 with Rockfords
    Annual Report on
    Form 10-K
    for the year ended December 31, 2004.****
    
    Previously filed on November 14, 2006, with Rockfords
    quarterly report on Form 10Q for the quarter ended
    September 30, 2006.*****
    
    Previously filed on March 28, 2007, with Rockfords
    annual report on
    Form 10-K
    for the year ended December 31, 2006. 54




---



##### Table of Contents



SIGNATURES      By:
    /s/  WILLIAM
    R. JACKSON       Name

Title

Date/s/  WILLIAM
    R. JACKSONWilliam
    R. Jackson

President (Principal Executive Officer) and Director

March 12, 2008/s/  RICHARD
    G. VASEKRichard
    G. Vasek

Vice President of Finance and Chief Financial Officer, Secretary
    (Principal Financial Officer)

March 12, 2008/s/  MARK
    E. BARRIEREMark
    E. Barriere

Corporate Controller (Principal Accounting Officer)

March 12, 2008/s/  JERRY
    E. GOLDRESSJerry
    E. Goldress

Director

March 12, 2008/s/  TIMOTHY
    C. BARTOLTimothy
    C. Bartol

Director

March 12, 2008/s/  NICHOLAS
    G. BARTOLNicholas
    G. Bartol

Director

March 12, 2008/s/  RALPH
    B. GODFREYRalph
    B. Godfrey

Director

March 12, 2008/s/  JOHN
    P. LLOYDJohn
    P. Lloyd

Director

March 12, 2008  55




---



##### Table of Contents



EXHIBIT INDEX
  ExhibitNumber

Description of Document3
.1

Articles of Incorporation+3
.2

Restated Bylaws as amended through July 27, 2000++3
.3

Amendment to Articles of Incorporation filed on January 12,
    1988+3
.4

Amendment to Articles of Incorporation filed on May 12,
    1999+3
.5

Amendment to Articles of Incorporation filed on May 17,
    1999+3
.7

Amendment to Articles of Incorporation filed on July 1,
    1999+4
.1

Conformed Copy of Indenture dated as of June 10, 2004
    between Rockford Corporation and BNY Western
    Trust Company###4
.2

Form of 4.5% Convertible Senior Subordinated Secured Note
    Due 2009###4
.3

Form of Warrant to Purchase Common Stock###4
.4

Conformed Copy of Registration Rights Agreement dated as of
    June 10, 2004 by and among Rockford Corporation, Piper
    Jaffray & Co. and the Buyers as defined therein###4
.5

Conformed Copy of Warrant Agent Agreement dated as of
    June 10, 2004 between Rockford Corporation and BNY Western
    Trust Company###4
.6

Conformed Copy of Security Agreement dated as of June 10,
    2004 among Rockford Corporation, Audio Innovations, Inc. and BNY
    Western Trust Company###4
.7

Conformed Copy of Intercreditor Agreement dated as of
    June 10, 2004 by and among Congress Financial Corporation
    (Western), BNY Western Trust Company, Rockford Corporation
    and Audio Innovations, Inc.###4
.8

Conformed Copy of Global Amendment to Notes, Warrants,
    Indenture, Security Agreement, Warrant Agent Agreement and
    Registration Rights Agreement and Waiver of Event of Default
    dated as of November 12, 2004 by and among Rockford
    Corporation, Audio Innovations, Inc., BNY Western
    Trust Company and the persons listed on the Schedule of
    Holders attached thereto as Exhibit A####4
.9

Conformed Copy of Amendment to Warrants, Warrant Agent Agreement
    and Registration Rights Agreement dated as of November 12,
    2004, by and among Rockford Corporation, BNY Western
    Trust Company and Piper Jaffray & Co####10
.62

Loan and Security Agreement among Rockford Corporation, Audio
    Innovations, Inc., Congress Financial Corporation (Western), and
    various Financial Institutions, dated March 29, 2004##10
.62.1

First Amendment to Loan and Security Agreement and Conditional
    Default Waiveramong Congress Financial Corporation (Western), as
    a lender and as administrative and collateral agent for the
    lenders party to the Loan Agreement, Rockford Corporation, and
    Audio Innovations, Inc., dated as of June 10, 2004***10
.62.2

Second Amendment to Loan and Security Agreement among Congress
    Financial Corporation (Western) as a lender and as
    administrative and collateral agent for the lenders party to the
    Loan Agreement, Rockford Corporation and Audio Innovations,
    Inc., dated as of December 30, 2004***10
.63

Industrial Lease Agreement between Jerome A. and/or Cathy E.
    Reynolds and Rockford Corporation, dated as of May 1,
    2003***10
.66

Securities Purchase Agreement dated as of June 10, 2004
    between Rockford Corporation and the Buyers as defined
    therein#####10
.67

Third Amendment to Loan and Security Agreement, dated
    August 31, 2005, among Rockford, Rockfords wholly
    owned subsidiary Audio Innovations, Inc. (AII), and
    Wachovia Capital Finance Corporation (Western).**10
.70

Fourth amendment to Loan and Security Agreement and Consent,
    dated March 21, 2006, among Rockford, Rockfords
    wholly owned subsidiary Audio Innovations, Inc.
    (AII), and Wachovia Capital Finance Corporation
    (Western).****10
.74

Fifth amendment to Loan and Security Agreement and Consent,
    dated August 31, 2006, among Rockford, Rockfords
    wholly owned subsidiary Audio Innovations, Inc.
    (AII), and Wachovia Capital Finance Corporation
    (Western).****10
.75

Agreement between Rockford and David Fiori dated
    February 22, 2007.*****




---



##### Table of Contents



ExhibitNumber

Description of Document10
.76

Retirement and Salary Continuation Agreement between Rockford
    and W. Gary Suttle.*****10
.77

Fifth Lease Amendment Between Centerpoint Properties Trust and
    Rockford Corporation, dated November 9, 2006.*****10
.78

Sixth amendment to Loan and Security Agreement and Waiver, dated
    March 7, 2007, among Rockford, Rockfords wholly owned
    subsidiary Audio Innovations, Inc. (AII), and
    Wachovia Capital Finance Corporation (Western).*****10
.79

Seventh amendment to Loan and Security Agreement and Waiver,
    dated November 28, 2007, among Rockford, Rockfords
    wholly owned subsidiary Audio Innovations, Inc.
    (AII), and Wachovia Capital Finance Corporation
    (Western).10
.80

Revised form of Change of Control Agreement, entered into with 5
    executive officers (Mr. Jackson, Mr. Vasek,
    Ms. Mott, Mr. Matson, and Mr. Carlsness).21


List of Subsidiaries of Rockford Corporation23
.1

Consent of Independent Registered Public Accounting Firm31
.1

Certification pursuant to Exchange Act
    Rules 13a-14(a)
    and 15d-14(a), as adopted pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002 for W. Gary Suttle31
.2

Certification pursuant to Exchange Act
    Rules 13a-14(a)
    and 15d-14(a), as adopted pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002 for Richard G. Vasek32


Certification pursuant to 18 U.S.C. Section 1350, as
    adopted pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002     *
    
    Management contract or compensatory plan or arrangement+
    
    Previously filed with registration statement effective
    April 19, 2000 and/or amendments.++
    
    Previously filed on August 11, 2000 with Rockfords
    Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2000.+++
    
    Previously filed on March 29, 2002 with Rockfords
    Annual Report on
    Form 10-K
    for the year ended December 30, 2001.##
    
    Previously filed on May 17, 2004 with Rockfords
    Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 2004.###
    
    Previously filed on June 15, 2004 with Rockfords
    Current Report on
    Form 8-K.####
    
    Previously filed on November 15, 2004 with Rockfords
    Current Report on
    Form 8-K.#####
    
    Previously filed on June 15, 2004 as Exhibit 10.1 with
    Rockfords Current Report on
    Form 8-K.**
    
    Previously filed on November 14, 2005, with Rockfords
    quarterly report on Form 10Q for the quarter ended
    September 30, 2005.***
    
    Previously filed on April 15, 2005 with Rockfords
    Annual Report on
    Form 10-K
    for the year ended December 31, 2004.***
    
    Previously filed on April 15, 2005 with Rockfords
    Annual Report on
    Form 10-K
    for the year ended December 31, 2004.****
    
    Previously filed on November 14, 2006, with Rockfords
    quarterly report on Form 10Q for the quarter ended
    September 30, 2006.*****
    
    Previously filed on March 28, 2007, with Rockfords
    annual report on
    Form 10-K
    for the year ended December 31, 2006.