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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-K



|x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------------------



| | FOR THE FISCAL YEAR ENDED MARCH 31, 2004
| | ----------------------------------------



OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------



| | FOR THE TRANSITION PERIOD FROM  TO
.
| | ------------------------------------



Commission file number 0-26924



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AMX Corporation

(Exact name of registrant as specified in its charter)



|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Texas                                                          |  | 75-1815822                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification no.)



|                                         |  |           
|---------------------------------------- |  | ----------
|3000 Research Drive, Richardson, Texas   |  | 75082     
|(Address of principal executive offices) |  | (Zip Code)



Registrants
telephone number, including area code:



(469) 624-8000



Securities registered pursuant to Section 12(b) of the
Act:



None



Securities registered pursuant to Section 12(g) of the Act:



Common Stock, $0.01 par value

(Title of Class)



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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 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 ̈



Indicate by check mark if
disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrants knowledge, in definitive proxy or information statements incorporated by reference in
Part III of this Form 10-K or any amendment to this Form 10-K. ̈



Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).    Yes ̈No  x



The aggregate market value of
the voting stock (which consists solely of shares of Common Stock) held by non-affiliates of the registrant as of September 30, 2003, computed by reference to the closing sales price of the registrants Common Stock on the Nasdaq National
Market on such date, was approximately $62,916,000.



The number
of shares of the registrants Common Stock outstanding as of June 8, 2004 was 11,832,475.



DOCUMENTS INCORPORATED BY REFERENCE



Portions of the registrants Proxy Statement for the 2004 Annual Meeting of Shareholders are incorporated by reference into Part III hereof.

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PART I



Item 1.Business.



Overview



AMX Corporation (AMX, or the Company), incorporated in Texas in March 1982, is a leading designer, developer, marketer and
distributor of sophisticated systems that control a variety of otherwise incompatible electronic devices and integrated systems. AMX simplifies the automation and integration of audio/video, environmental and communications technologies through the
combination of a powerful processing platform and intuitive user interfaces. Due to its expansive architecture and flexibility, the Companys systems provide control solutions for many different vertical markets, such as Broadcasting,
Education, Entertainment, Government, Healthcare, Hotels, Houses of Worship, Network Operations Centers, Presentation Facilities, Retail, and Residential Applications including Home Theater, Home Automation, and Private Transportation.



AMX systems provide centralized control for thousands of different
electronic devices, including but not limited to video components, audio components, teleconferencing devices, lighting equipment, educational media, environmental control systems, and security systems. AMX embraces open standards and protocols,
enabling end users to communicate with their control systems, as well as send and receive commands through standards-based networks, including WiFi-based protocols and Ethernet.



AMXs product strategy focuses on delivering products that fall within the following areas of device, asset and content
control:



Device Control



Applications in the commercial market for the Companys integrated
device control systems include: control of presentation equipment and audience environment in corporate board rooms, business training centers, and distance learning classrooms; automation controls for presentation audio, video and digital signage
in retail stores, hotels, meeting and convention facilities; security camera control, video distribution, and public address systems for stadiums and theme parks; multimedia and teleconferencing support for government and educational facilities; and
decision support centers for industrial applications. In the residential market, the Companys products enable individuals to create an integrated home automation system that can control audio, video and home theater systems, lighting,
motorized drapes, heating and air conditioning units, closed circuit cameras, security systems, and other home electronic equipment.



Asset Control



The Company offers solutions to manage, monitor and protect businesses and educational institutions investment in facilities containing
advanced technology and electronics. The Companys Resource Management Suite of software products includes an enhanced version of AMXs successful MeetingManager software, as well as a new product called AssetManager. The Resource Management Suite facilitates the process of scheduling rooms, and managing, monitoring and securing equipment in business and
campus-wide environments.



Powered by AMXs NetLinx
controller, MeetingManager 2.0Pro IT Edition, which was introduced in June 2004, is designed for institutions with advanced means for managing the scheduling and preparation of meeting rooms, in addition to asset management functions such as
monitoring and securing room equipment and reporting on device usage. AssetManager includes all the features of MeetingManager, but at a lower price point for those environments where scheduling management is not a needed function.



Content Control



In September 2003, AMX announced the acquisition of Media Access Solutions,
a U.S.-based content storage, management, and distribution company. With this acquisition, AMX introduced the MAX product



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line: a series of personal integrated content servers designed to store, manage, and distribute digital audio and digital video. MAX allows users to build
and control a library of digital media with ease and to instantly play the content simultaneously from different integrated environments. We believe that MAX differentiates AMX in the market by its large storage capacity, ability to store and
retrieve in native format, and ease-of-use. This product builds a foundation for other types of content control solutions AMX expects to continue to develop and introduce.



The Companys system sales are made through dealers and distributors who are supported by Company sales and support
offices in various geographic areas. In addition, the Company utilizes independent manufacturers representatives in areas not served by Company offices. In the United States, the Company principally relies on specialized third-party dealers of
electronic and audio-visual equipment to sell, install, support, and service its products. In addition to maintaining an office in the United Kingdom, the Company relies on an international network of exclusive distributors and dealers to serve its
worldwide markets. Dealers and distributors use AMX design software to tailor the Companys control system for the unique requirements of each installation. The Company also sells various customized products, primarily user interface devices,
to OEMs and other large customers.



The Company believes that
the market for its products continues to grow and diversify due to the increasing functionality, greater affordability, and widespread use of a diverse array of electronic devices, particularly sophisticated audio, video, and presentation equipment.
Many of these devices have separate control mechanisms that are incompatible due to the absence of any one widely accepted control standard. This creates a need for an integrated control system such as those offered by the Company.



The Companys strategy is to take advantage of the growth in the market
for its products by bringing the power and flexibility of integrated control technology to a wide variety of settings. Elements of the Companys strategy include:



| |  | Development of new software to simplify system programming;
| | - | -----------------------------------------------------------



| |  | Emphasis on customer support and service;
| | - | -----------------------------------------



| |  | International distribution expansion;
| | - | -------------------------------------



| |  | Flexible systems to accommodate emerging technologies;
| | - | ------------------------------------------------------



| |  | Development of alliances with key electronic industry companies;
| | - | ----------------------------------------------------------------



| |  | Commitment to dealer training; and
| | - | ----------------------------------



| |  | Vertical market development
| | - | ---------------------------



Industry Overview



In
the last two decades, there has been a tremendous increase in the number of electronic and other programmable devices incorporated throughout commercial and residential applications, particularly in telecommunications and audio/visual equipment.
This growth has been fueled by increased affordability and performance of the equipment. The sheer volume and wide variety of such devices, and the lack of a standardized operating control protocol, has created a demand for integrated control
systems in commercial and residential applications worldwide.



In the commercial marketplace, there is a tremendous need for integrated control systems in meeting areas, conference rooms, training facilities and building-wide applications. Boardrooms, technology enriched classrooms and similar
applications throughout the world are designed to exploit networking technologies with an emphasis on consistent design, functionality and serviceability. Information technology professionals require convenient and reliable systems to monitor,
secure and maintain integrated equipment. Corporate end users desire a system that provides advanced control, but is easy to use and understand. In the residential market, the



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amount of integrated control systems in use continues to grow rapidly. Homeowners increasingly want a single control system in the home, taking the concept
of the connected home well beyond the traditional personal computer application. As a result, new homebuilders are frequently including infrastructure required to support fully integrated control systems.



In addition to active marketing and educational efforts presented by
manufacturers in the commercial and residential marketplaces, the entire industry is supported by several trade associations, most notably ICIA (International Communications Industries Association), CEDIA (Custom Electronic Design and Installation
Association), NAB (National Association of Broadcasters), NSCA (National Systems Contractor Association), CEA (Consumer Electronics Association), CABA (Continental Automated Building Association), and AIA (American Institute of Architects). These
key associations coordinate trade shows, provide regular training programs, and actively develop their respective markets within the industry.



Our Markets



The Companys products are most commonly used in the following markets and applications:



Commercial



Broadcasting. From local television stations to major news networks,
AMX control systems enable broadcast organizations to manage, organize and share data across connected servers, and provide quick access for video playbacks and editing. The Companys systems can be found in 20thCentury Fox Post Production Studios, ESC Entertainment, Revolution Studios, CNN News Networks, and National Public Radio.



Education. From grade school to collegiate settings,
the Company provides integrated control for lecture halls, auditoriums and classrooms. AMX products facilitate the teaching process by allowing instructors to manage presentations, record and stream lectures over the Internet, activate in-classroom
microphones and cameras, and perform other presentation related tasks. The Companys systems can be found around the world in such schools as the University of Notre Dame, Georgetown University, Columbia University, Georgia Institute of
Technology, Wake Forest, University of Minnesota, University of North Carolina, Lehigh University, University of Southern California, the Harvard School of Public Health, the Singapore American School, Loyola Law School, Dallas Independent School
District, Houston Independent School District, Allen Independent School District, Digital Harbor High School, and New York City Public Schools.



Entertainment. From local sports bars to large museums, the Companys products offer interactive control in a variety of different ways,
including: managing restaurant reservations and monitoring restaurant occupancy, managing content on multiple televisions in sports bars, managing special effects equipment, and changing the ways fountains dance outside hotels. The Companys
systems are used in various entertainment venues across the United States, including Disney World, EPCOT Center, Sea World, Virginia Air and Space Museum, JFK Museum, Universal Studios, Busch Gardens, the Rock and Roll Hall of Fame, and the
Smithsonian Museums. The Companys systems are also currently being used in stadiums and other sports facilities, including Rentschler Field, Lambeau Field, Pepsi Center, BankOne Ballpark, Camden Yards, Ameriquest Field in Arlington, Georgia
Dome, the United Center in Chicago, and MCI Center.



Government. From the courtroom to the war room, AMX products help government agencies work more effectively and efficiently, including such functionality as: displaying videotaped depositions and other evidence on courtroom monitors,
controlling voting and request-to-speak systems, controlling multiple presentation monitors locally or around the globe, and providing centralized control for monitoring and security systems. The Companys systems are being used by federal,
state, and local government entities such as the White House, The Pentagon, Camp David, U.S. Army Command Center, State of Maryland Intelligent Highway Vehicle Control System, the Dallas Police Academy, the California Senate, the Maryland State
Senate, the Louisiana House of Representatives, the Library of Congress in Washington, D.C., and war rooms at the U.S. Army War College.



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Healthcare. From rural clinics to major hospital groups, the Companys products help improve
access to healthcare technology. For example, the Companys products are used by medical facilities to broadcast surgical procedures to doctors worldwide using live videoconference feeds, to share a diagnosis with knowledgeable colleagues
around the world in real-time, or to give people with physical challenges the ability to operate equipment with a touch of a button. The Companys systems can be found in the Center for Disease Control and Prevention, Medtronic World
Headquarters, The Cleveland Clinic, the University of Florida Brain Institute in Gainesville, and the Lehigh Valley Hospital in Allentown, Pennsylvania. The Companys systems can also be found in the Rooms of Magic built for
childrens hospitals by the Elf Foundation.



Hotels. From upscale bed-and-breakfasts to large luxury hotels, AMX products are used to provide guests with convenient room service capabilities, to provide small or large-scale environmental control, or to control hotel
conferencing and banquet hall facilities. The Companys systems can be found in the Four Seasons Hotel-Las Colinas, Renaissance Hollywood Hotel in Hollywood, Trump Tower in Miami, Clift Hotel in San Francisco, Doubletree Hotels, Bellagio Hotel
& Casino, Caesars Palace and The Mansion at MGM Grand in Las Vegas.



Houses of Worship. From small to large congregations, AMX products can be used to monitor and adjust the audio, video, and lighting, and to provide overall comfort to the congregation. Additionally, the
Companys products can be used to help tape and edit the service for those unable to attend and stream the presentation over the Internet. The Companys systems can be found in the Fellowship Church in Grapevine, Texas, The National
Presbyterian Church in Washington, D.C., Prestonwood Baptist Church and First United Methodist Church (both in Plano, Texas), St. Marys Cathedral in Sydney, Australia, and Crossroads Christian Church in Evansville, Indiana.



Network Operations Centers.From law enforcement agencies to global
communication operators, AMX products facilitate the remote command and control of various networks by providing the means to operate integrated surveillance systems, troubleshoot systems and equipment, and to control lighting systems, video
monitors, and audio equipment. The Companys systems are currently being used in decision support centers in industrial settings such as the Center for Disease Control and Prevention, the Network Emergency Response Assistance Center of Bell
South Services, Inc., the Decision Command Center of Burlington Northern Railroad, EDS, and Monroe County Office of Emergency Preparedness.



Presentation Facilities. From small office conference rooms to world commercial centers, AMX products are used to manage presentations, operate
lighting systems, activate videos and music, and coordinate global videoconferences. An increasing portion of the board, conference, meeting, and training rooms constructed or remodeled are being designed to include integrated control systems. AMX
control systems are used in the facilities of many of the Fortune 500 companies. The Companys systems can be found at AT&T, Best Buy Co. Inc., Coca Cola, EDS, Exxon Mobil, Intel, J.P. Morgan Chase, Lucent Technologies, Microsoft, Motorola,
Nokia, Proctor & Gamble, Reebok International, and The Vanguard Group.



Retail.From local retail stores to global retail chains, AMX provides the ability to manage and route unique audio and video content to each in-store department on a real-time basis and play customized
advertisements based upon current specials or consumer demographics. Key installations in the retail market include Christies Auction House in New York City, Apple Computer, Inc., Lucky Strike Bowling Alleys, Jillians, Iggys Sports
Grill Franchises, and Dickson Cyber Express & Cafe in Hong Kong.



Residential



The residential market
remains a very fragmented marketplace with numerous providers and a wide range of products and services. AMX control systems can be found in Home Theater, Home Automation, and Private Transportation applications. The Company has developed
standardized control products designed to increase its penetration of the residential market. The Company believes that the opportunities in the residential market will continue to expand as fully integrated automation systems become more widely
accepted as an essential component of the connected home.



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Home Theater. AMX products allow for integrated control of home theater applications. Among many
other applications, AMX systems can be used to close the drapes, dim the lighting, start the movie and adjust the sound.



Home Automation. AMX products allow homeowners to use one or more intuitive touch panels to centrally control a variety of otherwise incompatible
devices, such as lighting, climate control systems, sprinklers, security systems and alarms, intercoms, pool and spa equipment, fans, and audio/video equipment.



Private Transportation. AMX products are used in yachts, private jets, limousines and other forms of transportation to automate environmental
settings such as audio, video, lighting, and climate controls.



Business
Strategy



The Companys strategy is to take advantage
of the growth in the markets for its main products by bringing the power and flexibility of integrated control technology to a wide variety of settings. Elements of the Companys strategy include:



Development of new software to simplify system programming. The
Company believes that enhanced software investment can increase system sales by simplifying programming requirements for its dealers. For example, the Company continues to introduce new software tools and improve existing software tools that enable
dealers to more easily program the Companys systems by employing graphical user interfaces. The Company believes that these enhancements can provide its dealers with simplified customization techniques that will reduce programming time and
thus enhance sales of the Companys products.



Emphasis
on customer support and service. The Company believes that the support, service and training it provides to its customers are key competitive advantages. The Company provides technical support, on-site repair and support as needed, and on-line
software support to its dealers and end users. The Companys customer support and service originates from its headquarters in Richardson, Texas. However, in order to provide quality and timely customer support, the Company has also established
domestic offices in Philadelphia, Pennsylvania; Costa Mesa, California; and Tampa, Florida; and international offices in York, United Kingdom; and Brussels, Belgium.



International distribution expansion.The Company believes that the international market presents a significant
opportunity for the Company, and continues to expand its distribution presence overseas to take advantage of this opportunity. In addition to its two international offices, the Company currently markets its products outside the United States through
a network of international distributors with exclusive rights to sell AMX products.



Flexible systems to accommodate emerging technologies.The Company believes that an important competitive advantage is the flexible, modular design of its systems, which are expandable and which can accommodate
a wide variety of control formats. This design maximizes the ability of the Companys products to accommodate new technologies in electronic devices as they are developed. NetLinx, the Companys latest product platform, represents a
significant enhancement increasing both speed and functionality. NetLinx is compatible with the Companys existing Axcess and Landmark systems and expands their functionality by allowing them to utilize Internet Control System Protocol. The
Company believes that a single platform system such as NetLinx that can accommodate the constant changes in system design and technology is essential relative to the demands of the industry.



Development of alliances with key electronic industry companies. In an
effort to develop and maintain proactive, strategic business relationships with key manufacturers of electronic equipment, AMX has developed the Inconcert program. This continuously growing alliance of companies provides a consistent, proven programming standard for seamless, fully integrated,
one-touch control automation. This alliance allows AMX and other manufacturers to work in harmony. The Companys systems simplify the automation and integration of



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audio/video, environmental and communications technologies through intuitive user interfaces, and are engineered to communicate with any electronic
equipment. The Inconcert program is a platform for other manufacturers to provide the protocols for their latest equipment to ensure seamless interoperability of their products within the AMX control system. Inconcert gives designers, programmers,
installers and end users the reassurance that AMX control will work with the latest product offerings from other manufacturers. From the initial specification through completion, AMX technology and Inconcert alliance equipment communicate together
to bring convenience, productivity and security to any commercial or residential environment.



Commitment to dealer training. The Company has its primary training facility at its headquarters in Richardson, Texas, where dealers and distributors are provided training to program, install, and service the
Companys systems. The Company also provides training at its other regional and international locations to accommodate the geographic distribution of its dealers; thereby reducing the dealers cost of travel. The Company believes that its
commitment to dealer training has resulted in a growing, increasingly well-trained group of dealers who are serving a range of discrete vertical markets. The Company operates the AMX Certified Expert program, or ACE program. The ACE
program allows individuals to attain AMX certifications in system design, installation, and programming. Once all three certifications have been achieved, the individual becomes a Certified Expert or an ACE. In addition, the Company
reviews the capabilities and performance of all its dealers on a semi-annual basis. Dealer training is a critical process because the Companys dealers, rather than the Company, have direct relationships with the end users, and a well trained
and monitored dealer network will provide a quality installation that will result in a greater level of customer satisfaction. The success of the dealer network allows the Company to minimize the need to service end users.



Development of vertical markets. The Company believes that
complementing the current technology platform with value added products, services and partnerships, can further leverage the successes that the Company has experienced in multiple vertical markets. These enhancements improve the Companys
competitive position and provide useful information to the Company for product development efforts.



Product Components



The
Companys current systems and products are offered in a variety of configurations designed to meet the changing needs of individual end users. A typical AMX integrated system consists of a touch panel or other type of user interface such as a
keypad, a central controller, communication and integration software, and a series of controlled devices, such as audio visual systems, computers, lights, climate control systems, security systems, and window treatments. AMX systems are also
increasingly designed to include a content server. Prices for a complete system vary substantially depending upon the configuration of the system. The components of a typical AMX system are further described as follows:



User Interfaces are the users window to the system.
AMX user interfaces come in a variety of shapes and sizes to match any system requirement, including small hand-held wireless remotes, wall mounted keypads, and color touch panels that can interactively guide the user through an application.



Central Controllers are components that perform the
direct handshake to the various components of a users system, such as audio-visual systems, computers, lights, security systems, and window treatments. The controllers tie together a variety of often dissimilar parts into a unified
control network.



Communications and Integration
Software runs inside the system, acting as the central brain between the user and the system components, providing the handshake logic and customized functionality for an installation.



Content Servers allow the user to store, manage, protect and
distribute audio and video content to any display device, simply and seamlessly.



Controlled Devices represent a vast array of otherwise non-compatible electronic and mechanical appliances that the user wishes to operate from a centralized location. The Companys systems can be
programmed to



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operate a vast array of such devices, primarily in three basic segments: communications devices, such as telephones, intercomm systems, and computers;
environmental devices, such as lights, thermostats, security systems, and window treatments; and audio-visual devices, such as televisions, VCRs, DVDs, cameras and satellite systems.



Customer Support and Service



The Company believes that the support and service it provides to its customers are key competitive advantages and, as part of its strategy, will continue
to focus on the development of such support and service. Examples of the services the Company provides to domestic and international customers are:



| |  | Tiered levels of support based on the size of the customer;
| | - | -----------------------------------------------------------



| |  | Centralized and regional technical support;
| | - | -------------------------------------------



| |  | On-site technical support;
| | - | --------------------------



| |  | Centralized and regional training;
| | - | ----------------------------------



| |  | System design services;
| | - | -----------------------



| |  | Custom programming services; and
| | - | --------------------------------



| |  | Warranty and non-warranty product repair.
| | - | -----------------------------------------



The Company is committed to make it easy for customers to do business with AMX.



Sales, Distribution, and Marketing



The Company markets and sells its products worldwide through distribution channels that include a direct sales team, manufacturers representatives
in the U.S., dealers and distributors internationally, as well as OEM and custom product arrangements. The Company relies on third parties to sell, install, support, and service its integrated remote control systems, a strategy that it believes is
best suited for broad domestic and international market coverage.



Domestic Markets



The Company has
established relationships with approximately 700 of the leading system integrators in the United States. The Company believes that utilizing the sales force of dealers that are already selling systems integration services to potential purchasers of
electronic equipment is the most effective way to reach a broad range of customers. The Company believes that the inclusion of an AMX system in the package of electronic equipment sold to end-users enhances the profitability of the dealers
systems sales. The Companys agreements with its dealers involve non-exclusive arrangements that may be canceled by either party at will and contain no minimum purchase requirements on the part of the dealers. Domestic sales represented
approximately $56.3 million, $55.4 million, and $62.6 million, or 66%, 67%, and 71% of the Companys total sales during the fiscal years ended March 31, 2004, 2003 and 2002, respectively.



International Markets



Outside the United States, independent distributors with exclusive
distribution rights market the Companys custom products in 66 countries, with direct dealers serving an additional 16 countries. The Companys agreements with its distributors grant exclusive distribution rights as to a specific
geographic area. Sales outside of the United States represented approximately $29.6 million, $27.2 million, and $25.0 million, or 34%, 33%, and 29% of the Companys total sales during the fiscal years ended March 31, 2004, 2003 and 2002,
respectively. See Note 9 in the audited financial statements for additional information.



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Research and Development



The timely development and introduction of new products and services is essential to maintaining the Companys competitive position. Accordingly,
the Company is continually involved in the development, enhancement and expansion of hardware and operating software capabilities. The Company has expanded its research and development efforts in its core product offerings in order to significantly
enhance existing product lines and develop new products. Current areas of focus in the Companys research and development efforts include:



| |  | Enhancements to the NetLinx architecture, and improvements to software design tools which will allow for simplified programming and thus enable additional users of the
Companys more traditional platforms to migrate to the newer NetLinx platform;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Development of next generation touch panel interface devices;
| | - | -------------------------------------------------------------



| |  | Development of content control devices; and
| | - | -------------------------------------------



| |  | Development of strategic partnerships that leverage the benefits of existing technologies.
| | - | ------------------------------------------------------------------------------------------



Research and development expenses were approximately $10.4 million, $9.2 million, and $6.9 million in the fiscal years ended
March 31, 2004, 2003 and 2002, which represented approximately 12%, 11%, and 8% of net sales in those periods, respectively.



Manufacturing



The Companys primary manufacturing strategy is to contract with a small number of ISO Certified manufacturers. This outsourcing extends from
prototyping to volume manufacturing, and includes activities such as material procurement, final assembly, test, and quality control. The Company procures nearly all of its products through this outsourcing strategy. In fiscal 2003, the Company
entered into an agreement with Arrow Electronics, Inc., a large electronic component distributor, to act as the Companys supply-chain partner. Under this arrangement, the distributor provides the procurement and logistical support for all
electronic components utilized by the manufacturers of the Companys products. We believe that this manufacturing strategy allows the Company to:



| |  | provide consistent product quality;
| | - | -----------------------------------



| |  | provide reliable product availability;
| | - | --------------------------------------



| |  | realize economies of scale in manufacturing;
| | - | --------------------------------------------



| |  | conserve the working capital required to fund inventory;
| | - | --------------------------------------------------------



| |  | adjust manufacturing volumes quickly to meet changes in demand;
| | - | ---------------------------------------------------------------



| |  | avoid interruptions due to component allocations;
| | - | -------------------------------------------------



| |  | minimize capital expenditures; and
| | - | ----------------------------------



| |  | reduce the time-to-market of new product introductions.
| | - | -------------------------------------------------------



The principal components of AMX products are printed circuit boards, electronic components (including microprocessors), displays and metal or plastic
housings. Substantially all of the Companys products are purchased as finished products from turnkey vendors. The Company generally does not have long-term agreements with its suppliers.



In order to implement the manufacturing strategy, the Company currently
procures its products from five turnkey vendors. Approximately 85% of the Companys revenue is derived from products manufactured by these turnkey vendors. Working with a limited number of vendors allows the Company to effectively manage
product quality, availability, and cost. However, a significant procurement interruption from any of the Companys



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significant vendors could have a material adverse impact on the Companys operations. The Company is actively pursuing strategies to mitigate the risk
of such an interruption in the Companys supply chain.



Backlog



The Company generally ships standard products promptly
following receipt of an order. The Companys backlog of orders for standard products has generally been less than 45 days at any given time. While OEM and other large customers typically place orders for products several months prior to the
scheduled shipment date, these orders are subject to rescheduling and cancellation. As a result, the Company does not consider its backlog to be a meaningful indicator of future sales.



Competition



The Companys principal direct competitor in custom residential control systems and custom commercial control systems is Crestron. Crestron is a
privately owned manufacturer of control systems for commercial and residential applications. The residential market is currently extremely diverse in its product functionality, and as a result there are a variety of manufacturers that supply
products to the residential market. The commercial market also has several companies that compete in particular sectors of the Companys business, but with the exception of Crestron, no other company competes in all of them. The Company assumes
that there are other companies with substantial financial, technical, manufacturing, and marketing resources currently engaged in the development and marketing of products similar to those produced by the Company and that such companies may enter
one or more of the Companys markets at any time.



Intellectual
Property



The Company currently relies on a combination of
patent, copyright and trademark laws, trade secrets, confidentiality provisions and other contractual provisions to protect its intellectual property rights. Despite efforts to protect these intellectual property rights, unauthorized parties may
misappropriate or infringe on the Companys patents, trade secrets, copyrights, trademarks, service marks and similar intellectual property rights. The Company currently has 9 registered U.S. patents and 13 pending U.S. patent applications.
Internationally, the Company has 6 registered patents and 29 pending international patent applications. Even if the Company obtains such patents, we cannot assure you that the patent rights will be valuable, create a competitive barrier, or will be
free from infringement. The Company faces additional risk when conducting business in countries that have poorly developed or inadequately enforced intellectual property laws. In any event, competitors may independently develop similar or superior
technologies or duplicate the technologies the Company has developed, which could substantially limit the value of its intellectual property.



Government Regulation



The Companys domestic business operations are subject to certain federal, state, and local laws and regulations relating to radio frequency
electromagnetic emissions generated by its products. Certain of its products must comply with Federal Communications Commission regulations before the products may be marketed in the United States. There can be no assurance that the Companys
products will comply with such regulations or that Federal Communications Commission regulations will remain constant with respect to the Companys current or future products. Failure to comply with Federal Communications Commission regulations
for products under development or a change in existing regulations by the Federal Communications Commission that would make products non-compliant could have a material adverse effect on the Companys results of operations. Because the
requirements imposed by such laws and regulations are frequently changed, the Company is unable to predict its ability to comply with, or the ultimate cost of compliance with, such requirements.



European Community regulations relating to electromagnetic emissions and
immunity testing became effective January 1, 1996. Failure to receive EC approval on new products may limit or eliminate the Companys



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ability to sell new products in EC member countries and would have an adverse effect on the results of operations.



Employees



As of March 31, 2004, the Company employed 346 people of which 27 are located outside the United States, primarily in the
United Kingdom. None of the Companys employees are represented by a labor union or subject to a collective bargaining agreement. The Company believes that its employee relations are good.



Available Information on AMX Corporations Website



AMX maintains an Internet website at www.amx.com. AMX
Corporations periodic reports with the Securities and Exchange Commission (SEC) (including annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and Section 16 filings) are accessible through the
Investors section of the website under SEC Filings. In addition, the SEC maintains an Internet website at www.sec.gov that contains periodic reports that AMX files with the SEC electronically.



Item 2.Properties.



The Company occupies buildings that contain approximately 161,000 square
feet of floor space. All of this space is leased under agreements that expire at various dates. The Companys headquarters in Richardson, Texas are leased through August 2010. The principal facilities are located as follows:



|                           |  |                         |  |                                                              
|-------------------------- |  | ----------------------- |  | -------------------------------------------------------------
|Location                   |  | Approximate Square Feet |  | Description                                                  
|Richardson, Texas          |  | 130,000                 |  | Offices, engineering, research and development, and warehouse
|Costa Mesa, California     |  | 4,000                   |  | Offices                                                      
|Philadelphia, Pennsylvania |  | 13,000                  |  | Offices                                                      
|Tampa, Florida             |  | 2,000                   |  | Offices                                                      
|York, England              |  | 9,000                   |  | Offices, engineering, and warehouse                          
|Belgium                    |  | 3,000                   |  | Offices                                                      



All facilities are
suitable for the Companys business. Each facility is fully utilized, with the exception of the headquarters location in Richardson, which contains approximately 14,000 square feet of additional floorspace that is available for future
expansion. All furniture and equipment owned and leased by the Company is well maintained and suitable for its operations.



The Company considers its current facilities adequate and believes that suitable additional space will be available, as needed, to accommodate further
physical expansion of its corporate operations.



Item 3.Legal
Proceedings.



The Company is party to ordinary
litigation incidental to its business, none of which is expected to have a material adverse effect on the results of operations, financial position or liquidity of the Company.



Item 4.Submission of Matters to a Vote of Security Holders.



None.



11



---

PART II



Item 5.Market For Registrants Common Equity and Related Stockholder Matters.



Stock Prices



The following table sets forth, for the periods indicated, the high and low closing sale prices for the Common Stock for the
fiscal years ended March 31, 2003 and 2004.



|               |  |      |       |     |   |     
|-------------- |  | ---- | ----- | --- | - | ----
|Fiscal 2003    |  | High |       | Low
|First Quarter  |  | $    | 2.80  |     | $ | 1.18
|Second Quarter |  |      | 2.50  |     |   | 1.11
|Third Quarter  |  |      | 3.10  |     |   | 1.75
|Fourth Quarter |  |      | 3.02  |     |   | 1.94
|               |  |     
|Fiscal 2004    |  |      |       |    
|First Quarter  |  | $    | 3.05  |     | $ | 1.93
|Second Quarter |  |      | 6.39  |     |   | 3.01
|Third Quarter  |  |      | 8.32  |     |   | 4.50
|Fourth Quarter |  |      | 10.68 |     |   | 8.06



As of May 27, 2004,
there were approximately 215 holders of record of our Common Stock.



Dividend Policy



The Company has never paid
dividends on its Common Stock and does not anticipate paying dividends on its Common Stock in the foreseeable future in order to retain all available earnings generated by operations for the development and growth of the business. In addition,
although the Company has no outstanding bank obligations at March 31, 2004, the Company may not pay dividends without the prior consent of the lending bank under the terms of the Companys available line of credit. Any future determination as
to the payment of dividends will be at the discretion of the Board of Directors and will depend upon the Companys operating results, financial condition, capital requirements, general business conditions, and such other factors that the Board
of Directors deems relevant.



Securities Authorized for Issuance Under
Equity Compensation Plans



The following table summarizes
information with respect to equity compensation plans approved by security holders and equity compensation plans not approved by security holders as of March 31, 2004:



|                                                           |  |                                                                                          |  |                                                                          |      |                                                                                                                                        |          
|---------------------------------------------------------- |  | ---------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------ | ---- | -------------------------------------------------------------------------------------------------------------------------------------- | ---------
|                                                           |  | (a)                                                                                      |  | (b)                                                                      |      | (c)                                                                                                                                   
|Plan Category                                              |  | Number of Securities ToBe Issued Upon Exercise ofOutstanding Options,Warrants and Rights |  | Weighted-AverageExercise Price ofOutstanding Options,Warrants and Rights |      | Number of SecuritiesRemaining Available ForFuture Issuance UnderEquity Compensation Plans(Excluding SecuritiesReflected in
Column (a))
|Equity Compensation Plans Approved By Security Holders     |  | 1,895,970                                                                                |  | $                                                                        | 4.08 |                                                                                                                                        | 1,735,725
|Equity Compensation Plans Not Approved By Security Holders |  |                                                                                         |  |                                                                          |     |                                                                                                                                        |         
|                                                           |  |                                                                                          |  |                                                                          |      |                                                                                                                                        |          
|Total                                                      |  | 1,895,970                                                                                |  | $                                                                        | 4.08 |                                                                                                                                        | 1,735,725
|                                                           |  |                                                                                          |  |                                                                          |      |                                                                                                                                        |          



Recent Sales of Unregistered
Securities



None



12



---

Item 6.Selected Consolidated Financial Data.



(in thousands, except per share amounts)



|                                                                             |  |                              |        |   |      |   |        |         |  |   |         |   |  |      |        |   |  |   |        |  
|---------------------------------------------------------------------------- |  | ---------------------------- | ------ | - | ---- | - | ------ | ------- |  | - | ------- | - |  | ---- | ------ | - |  | - | ------ | -
|                                                                             |  | Fiscal Years Ended March 31, |       
|                                                                             |  | 2004                         |        |   | 2003 |   |        | 2002(2) |  |   | 2001(2) |   |  | 2000 |       
|Income Statement Data:                                                       |  |                              |        |   |      |   |        |         |  |   |         |   |  |      |        |   |  |   |        |  
|Commercial system sales                                                      |  | $                            | 74,064 |   |      | $ | 72,220 |         |  | $ | 72,995  |   |  | $    | 72,520 |   |  | $ | 59,274 |  
|Residential system sales                                                     |  |                              | 11,879 |   |      |   | 10,391 |         |  |   | 14,612  |   |  |      | 21,460 |   |  |   | 18,921 |  
|                                                                             |  |                              |        |   |      |   |        |         |  |   |         |   |  |      |        |   |  |   |        |  
|Net sales                                                                    |  |                              | 85,943 |   |      |   | 82,611 |         |  |   | 87,607  |   |  |      | 93,980 |   |  |   | 78,195 |  
|Cost of sales                                                                |  |                              | 39,733 |   |      |   | 40,472 |         |  |   | 46,262  |   |  |      | 49,280 |   |  |   | 37,277 |  
|                                                                             |  |                              |        |   |      |   |        |         |  |   |         |   |  |      |        |   |  |   |        |  
|Gross profit                                                                 |  |                              | 46,210 |   |      |   | 42,139 |         |  |   | 41,345  |   |  |      | 44,700 |   |  |   | 40,918 |  
|Selling and marketing expenses                                               |  |                              | 22,951 |   |      |   | 20,713 |         |  |   | 27,792  |   |  |      | 33,035 |   |  |   | 30,061 |  
|Research and development expenses                                            |  |                              | 10,355 |   |      |   | 9,210  |         |  |   | 6,854   |   |  |      | 9,720  |   |  |   | 7,544  |  
|General and administrative expenses                                          |  |                              | 7,226  |   |      |   | 8,392  |         |  |   | 8,515   |   |  |      | 8,731  |   |  |   | 6,637  |  
|Restructuring costs(1)                                                       |  |                              |       |   |      |   |       |         |  |   | 298     |   |  |      | 675    |   |  |   | 2,961  |  
|                                                                             |  |                              |        |   |      |   |        |         |  |   |         |   |  |      |        |   |  |   |        |  
|Operating income (loss)                                                      |  |                              | 5,678  |   |      |   | 3,824  |         |  |   | (2,114  | ) |  |      | (7,461 | ) |  |   | (6,285 | )
|Interest expense                                                             |  |                              | (96    | ) |      |   | (415   | )       |  |   | (727    | ) |  |      | (1,090 | ) |  |   | (547   | )
|Other income (expense), net                                                  |  |                              | 583    |   |      |   | 9      |         |  |   | (96     | ) |  |      | (168   | ) |  |   | 64     |  
|                                                                             |  |                              |        |   |      |   |        |         |  |   |         |   |  |      |        |   |  |   |        |  
|Income (loss) before income taxes                                            |  |                              | 6,165  |   |      |   | 3,418  |         |  |   | (2,937  | ) |  |      | (8,719 | ) |  |   | (6,768 | )
|Income tax expense (benefit)                                                 |  |                              | 43     |   |      |   | 302    |         |  |   | 2,347   |   |  |      | (494   | ) |  |   | (2,643 | )
|                                                                             |  |                              |        |   |      |   |        |         |  |   |         |   |  |      |        |   |  |   |        |  
|Net income (loss)                                                            |  | $                            | 6,122  |   |      | $ | 3,116  |         |  | $ | (5,284  | ) |  | $    | (8,225 | ) |  | $ | (4,125 | )
|                                                                             |  |                              |        |   |      |   |        |         |  |   |         |   |  |      |        |   |  |   |        |  
|Income (loss) per common sharebasic                                         |  | $                            | 0.54   |   |      | $ | 0.28   |         |  | $ | (0.48   | ) |  | $    | (0.87  | ) |  | $ | (0.47  | )
|Income (loss) per common sharediluted                                       |  | $                            | 0.50   |   |      | $ | 0.28   |         |  | $ | (0.48   | ) |  | $    | (0.87  | ) |  | $ | (0.47  | )
|Shares used for basic income (loss) per share                                |  |                              | 11,370 |   |      |   | 11,140 |         |  |   | 11,006  |   |  |      | 9,486  |   |  |   | 8,734  |  
|Shares used for diluted income (loss) per share                              |  |                              | 12,220 |   |      |   | 11,155 |         |  |   | 11,006  |   |  |      | 9,486  |   |  |   | 8,734  |  
|Balance Sheet Data:                                                          |  |                              |        |   |      |   |        |         |  |   |         |   |  |      |        |   |  |   |        |  
|Cash                                                                         |  | $                            | 9,382  |   |      | $ | 4,961  |         |  | $ | 1,245   |   |  | $    | 1,608  |   |  | $ | 987    |  
|Accounts receivable, net                                                     |  |                              | 11,191 |   |      |   | 9,820  |         |  |   | 13,579  |   |  |      | 12,604 |   |  |   | 9,414  |  
|Inventories                                                                  |  |                              | 7,328  |   |      |   | 7,274  |         |  |   | 11,700  |   |  |      | 14,311 |   |  |   | 11,928 |  
|Working capital                                                              |  |                              | 18,369 |   |      |   | 12,320 |         |  |   | 8,273   |   |  |      | 8,895  |   |  |   | 14,981 |  
|Total assets                                                                 |  |                              | 36,925 |   |      |   | 30,480 |         |  |   | 38,014  |   |  |      | 46,162 |   |  |   | 37,126 |  
|Accounts payable                                                             |  |                              | 4,869  |   |      |   | 3,167  |         |  |   | 7,295   |   |  |      | 11,422 |   |  |   | 4,793  |  
|Long-term debt; including current portion, line of credit, and notes payable |  |                              |       |   |      |   | 4,021  |         |  |   | 9,634   |   |  |      | 8,568  |   |  |   | 3,994  |  
|Shareholders equity                                                         |  |                              | 26,041 |   |      |   | 19,055 |         |  |   | 15,789  |   |  |      | 20,398 |   |  |   | 22,958 |  

---

|(1) | The charge for the fiscal year ended March 31, 2002 represents restructuring costs recorded for a company-wide severance action in November 2001, offset by reversals of
restructuring actions taken for the fiscal year ended March 31, 2000. The charge for the fiscal year ended March 31, 2001 represents restructuring costs recorded for the shutdown of the Consumer Broadband Division and severance actions taken in the
fourth quarter, offset by reversals of restructuring actions taken for the fiscal year ended March 31, 2000. The charge for the fiscal year ended March 31, 2000 represents restructuring costs recorded for the shutdown of operations in Salt Lake City
and disposal of the Synergy division.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | See Managements Discussion and Analysis of Financial Condition and Results of Operations for a discussion of other accounting charges recorded in fiscal 2002 and 2001.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------



13



---

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



The following commentary should
be read in conjunction with the Consolidated Financial Statements and Notes thereto included in this report.



Certain information included herein contains forward-looking statements (as defined in the Private Securities Litigation Reform Act of 1995) regarding
future events or the future financial performance of the Company, and is subject to a number of risks and other factors which could cause the actual results of the Company to differ materially from those contained in and anticipated by the
forward-looking statements. These risks, assumptions and uncertainties include: the Companys strategic alliances; the ability to develop distribution channels for new products; dependence on suppliers, dealers and distributors; reliance on the
functionality of systems or equipment, whether the Companys systems and equipment or those of its customers, dealers, distributors, or manufacturers; domestic and international economic conditions; the financial condition of the Companys
key customers and suppliers; the complexity of new products; ongoing research and development; reliance on third party manufacturers; foreign exchange risks; the ability to realize operating efficiencies; dependence on key personnel; the lack of an
industry standard; reliance on others for technology; the ability to protect intellectual property; the quick product life cycle; the resources necessary to compete; the possible effect of government regulations; possible liability for copyright
violations on the Internet with the use of the Companys products; and other risks referenced from time to time in the Companys filings with the Securities and Exchange Commission. The forward-looking statements contained herein are
necessarily dependent upon assumptions, estimates and data that may be incorrect or imprecise. Accordingly, any forward-looking statements included herein do not purport to be predictions of future events or circumstances and may not be realized.
Forward-looking statements contained herein include, but are not limited to, forecasts, projections and statements relating to product development and acceptance, inflation, future acquisitions and anticipated capital expenditures. All forecasts and
projections in the report are based on managements current expectations of the Companys near term results, based on current information available pertaining to the Company, including the aforementioned risk factors. Actual results could
differ materially. The Company is under no duty, and expressly disclaims any responsibility to, update any of the forward-looking statements contained in this Form 10-K.



Overview



Fiscal 2004 Review



The Company continues to build upon the foundation that was established by the management team in fiscal 2002 when a corporate-wide reorganization plan
was initiated (see Corporate Reorganization and Company History below). In conjunction with this reorganization, the Company implemented several improved business processes and strategies in order to:



| |  | Refocus the Companys efforts on the core business of control systems and solutions;
| | - | ------------------------------------------------------------------------------------



| |  | Establish fiscal responsibility and cost containment to strengthen our financial position;
| | - | ------------------------------------------------------------------------------------------



| |  | Introduce new products that provide content and control solutions to reclaim market share; and
| | - | ----------------------------------------------------------------------------------------------



| |  | Implement development, sales and marketing strategies to produce long-term revenue growth.
| | - | ------------------------------------------------------------------------------------------



Prior to fiscal 2004, the Company made significant progress towards these objectives. The Company continued to build upon
these accomplishments during fiscal 2004 as follows:



| |  | Introduced over 40 new products among 3 product families to significantly upgrade and enhance the Companys product portfolio;
| | - | ------------------------------------------------------------------------------------------------------------------------------



| |  | Acquired Media Access Solutions and introduced the associated MAX product line, a new series of integrated content servers which are complimentary to the existing product base and
are designed to store, manage and distribute large quantities of digital audio and digital video;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



14



---

| |  | Strengthened our financial position, generating operating cash flow of $10.8 million, which allowed the Company to pay off its bank debt as of March 31, 2004 while carrying a cash
balance of $9.4 million into fiscal 2005;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Created several key internal sales and marketing management positions to compliment our manufacturing representative base; and
| | - | ------------------------------------------------------------------------------------------------------------------------------



| |  | Entered into an exclusive agreement with RGB Communications to distribute AMX products in the United Kingdom.
| | - | -------------------------------------------------------------------------------------------------------------



New products accounted for more than 33% of revenue for fiscal 2004 and made
a significant contribution to the 4% year over year revenue growth. The Company has implemented several additional sales and marketing initiatives in order to improve communications with end users, to further develop market applications for AMX
products, and to sell the value of AMX products and solutions in the areas of device, asset, and content control.



The Company continues to refine its manufacturing outsourcing strategy. This and other operational improvements made since fiscal 2001 have produced
improved profit margins. However, the Company may leverage the improved profit margins in the future to generate additional top-line growth.



These recent accomplishments enabled the Company to produce 4% revenue growth over fiscal 2003 and report $0.50 diluted income per share versus $0.28 per
share for fiscal 2003. Although the domestic economy continues to impact revenues, the Company has returned to profitability, is generating operating cash flows, and has made significant progress on the goals and objectives that management believes
will produce long-term revenue and earnings growth.



Corporate Reorganization and Company History



During fiscal 2000 and 2001, the Company changed its name to Panja Inc. and invested significant resources in broadband Internet appliance products and a retail distribution strategy for such products. During this period, the Company
diverted its marketing and development efforts from its core business to focus on this broadband strategy.



During this same period, the Company also spent considerable resources on two additional projects: 1) the implementation of a new enterprise resource
planning system, and 2) the move into new headquarter facilities in Richardson, Texas. Certain aspects of the Internet growth segment ultimately began to lose momentum and the Company struggled to implement its new consumer broadband strategy. At
the same time, the Company began to see an erosion of the sales growth of its core product offerings because marketing and development efforts in fiscal 2000 and 2001 had been diverted to focus on the broadband strategy.



As a result of these developments, the Company implemented a corporate-wide
restructuring plan in the fourth quarter of fiscal 2001 which included the decision to discontinue the Consumer Broadband Division and its retail distribution strategy. As a result of the restructuring and other business and economic trends in the
fourth quarter of fiscal 2001, the Company recorded restructuring and other charges of approximately $5.2 million to record severance costs, to record inventory and receivable reserves, and to write-off other assets. In conjunction with the
Companys return to its core business strategy, and as a result of customer feedback, the Company returned to doing business as AMX Corporation and formally changed its name at the 2001 shareholder meeting.



In conjunction with the restructuring, new management was recruited in most
key functional areas of the Company. This new management team continued to improve the Companys infrastructure and reposition the Company for the future based on current market and business trends. As a result, the Company recorded additional
charges of approximately $8.2 million during the second quarter of fiscal 2002. These charges included reserves for inventory obsolescence of $2.4 million, a charge of $0.7 million taken to write-off certain assets, additional receivable related
reserves of $0.5 million, a write-off of miscellaneous intangibles of $0.3



15



---

million, and a valuation allowance against deferred tax assets of $4.2 million. The charges were necessary due to several factors, including an adjustment to
the revenue forecast based on existing trends in the market and economy in September 2001, a lower than anticipated demand of older product lines, continued adjustments to usage requirements for certain raw materials as the Companys sourcing
strategy progressed, and implementation issues with the Companys ERP software which resulted in purchases of the wrong mix or quantities of certain products during the second quarter of fiscal 2002. As a result of the aforementioned charges
and historical operating performance, the Company recorded a tax provision of approximately $4.2 million during the quarter ended September 30, 2001 in order to record a valuation allowance against its remaining deferred tax assets. Although the
Company anticipated future sustained profitability, accounting principles required that historical operating performance weigh heavily in assessing the realizability of deferred tax assets. Subsequently, the Company announced further realignments to
its corporate structure resulting in the elimination of 66 Dallas-based positions, and recorded a severance related restructuring charge of $0.6 million during the quarter ended December 31, 2001. In the fourth quarter of fiscal 2002, Congress
passed the Job Creation and Worker Assistance Act of 2002, under which the period allowed for carrying back net operating losses from certain tax years was extended from two years to five years. As a result, the Company recorded a tax benefit of
$2.0 million during the fourth quarter of fiscal 2002 due to the immediate realization of deferred tax assets for which a valuation allowance had been recorded during the quarter ended September 30, 2001.



During the latter half of fiscal 2002, the Companys new management team
implemented strict cost control and inventory management measures, and initiated several sales and marketing initiatives. During fiscal 2003, the Company continued such improvements by reengineering its sales organization, adding additional direct
and indirect sales representatives domestically, and adding new distribution partners internationally while closing its Singapore distribution subsidiary. In addition, the Company made aggressive investments in product development. Research and
development spending grew by 34% and 12% in fiscal 2003 and 2004, respectively.



As a result of the strategic investments in research and development, the Company introduced a variety of new products in the latter half of fiscal 2003 and throughout 2004 which have contributed to revenue growth,
including the award winning Modero line of touchpanels and the NI Series of integrated controllers. The Company has also improved its liquidity and financial position during the last two fiscal years as a result of the above operational
improvements. The Company generated $10.8 million of operating cash flows during each of the fiscal years ended March 31, 2004 and 2003. As of March 31, 2004, the Company has no outstanding debt compared to outstanding debt of $9.6 million as of
March 31, 2002, while cash has increased from $1.2 million to $9.4 million during the same period.



Critical Accounting Policies and Estimates



AMXs discussion and analysis of its financial condition and results of operations are based upon the Companys consolidated financial statements, which have been prepared in accordance with accounting
principles generally accepted in the United States. The preparation of these financial statements requires the Company to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Management bases
its estimates and assumptions on historical experience and various other factors that are believed to be reasonable under the circumstances. These estimates and assumptions are evaluated on an ongoing basis. Actual results could differ from these
estimates under different assumptions or conditions.



The
Company believes the following critical accounting policies affect its more significant judgments and estimates used in preparation of its consolidated financial statements.



Revenue Recognition



Revenue is recognized upon shipment of the product and transfer of title to the customer. A provision is made for estimated sales returns and
allowances on product sales in the same period as the related revenues are recorded. These estimates are based on historical sales returns, analysis of credit memo data and other known factors.



16



---

Credit Risk



The Company provides credit in the normal course of business to its dealers and distributors. The Company generally does not
require collateral or a deposit when providing credit. The Company performs ongoing credit

evaluations of its customers and maintains estimated allowances
for possible credit losses based upon reviews of specific account balances, historical loss trends, current economic conditions, and other relevant considerations.



Inventories



Inventory reserves are recorded for damaged, obsolete, excess and slow-moving inventory. Management uses estimates to record these reserves. Slow-moving
inventory is reviewed by product and may be partially or fully reserved depending on the type of product, the length of time the product has been included in inventory, estimated future sales, and other relevant factors.



Self Insurance Reserves for Medical Claims



The Company self-insures a portion of its employees medical benefits.
As a result, management is required to regularly estimate the value of unpaid benefits based upon historical trends and uses that information to record its liability for benefits that have been incurred but not yet paid. The Company has stop loss
insurance coverage in effect to cover the costs of medical claims over certain deductible amounts for any given plan year for an individual claimant or in the aggregate. However, the trend of medical claims may significantly and unexpectedly change,
in which case the Companys liability for unpaid claims may no longer be accurate. This could cause the Company to either increase or decrease its expense in a material amount in the period the change occurs.



Income Taxes



The measurement of deferred income tax assets is adjusted by a valuation
allowance, if necessary, to recognize future tax benefits only to the extent, based on available evidence, that it is more likely than not that such benefits will be realized. An increase or decrease in the estimated valuation allowance recorded
against the Companys deferred tax assets would increase or decrease net income in the period such determination was made.



Recent Accounting Pronouncements



In December 2003, the SEC issued Staff Accounting Bulletin (SAB) No. 104, Revenue Recognition, which supercedes SAB 101, Revenue
Recognition in Financial Statements. SAB 104 primarily rescinds the accounting guidance contained in SAB 101 related to multiple-element revenue arrangements that was superceded as a result of the issuance of EITF 00-21. The adoption of SAB 104
did not have an impact on AMX Corporations consolidated results of operations or financial position.



17



---

Results of Operations



The following table contains the Companys consolidated statements of operations for each of the three years in the period ended March 31, 2004 (in
thousands):



|                                    |  |                             |        |   |  |     |   |      |   |        |   |  |     |      |  |   |        |   |  |     |  
|----------------------------------- |  | --------------------------- | ------ | - |  | --- | - | ---- | - | ------ | - |  | --- | ---- |  | - | ------ | - |  | --- | -
|                                    |  | Fiscal Year Ended March 31, |       
|                                    |  | 2004                        |        |   |  |     |   | 2003 |   |        |   |  |     | 2002 |  |   |        |  
|Commercial sales                    |  | $                           | 74,064 |   |  | 86  | % |      | $ | 72,220 |   |  | 87  | %    |  | $ | 72,995 |   |  | 83  | %
|Residential sales                   |  |                             | 11,879 |   |  | 14  | % |      |   | 10,391 |   |  | 13  | %    |  |   | 14,612 |   |  | 17  | %
|                                    |  |                             |        |   |  |     |   |      |   |        |   |  |     |      |  |   |        |   |  |     |  
|Net sales                           |  |                             | 85,943 |   |  | 100 | % |      |   | 82,611 |   |  | 100 | %    |  |   | 87,607 |   |  | 100 | %
|Cost of sales                       |  |                             | 39,733 |   |  | 46  | % |      |   | 40,472 |   |  | 49  | %    |  |   | 46,262 |   |  | 53  | %
|                                    |  |                             |        |   |  |     |   |      |   |        |   |  |     |      |  |   |        |   |  |     |  
|Gross profit                        |  |                             | 46,210 |   |  | 54  | % |      |   | 42,139 |   |  | 51  | %    |  |   | 41,345 |   |  | 47  | %
|                                    |  |                             |        |   |  |     |   |      |   |        |   |  |     |      |  |   |        |   |  |     |  
|Selling and marketing expenses      |  |                             | 22,951 |   |  | 27  | % |      |   | 20,713 |   |  | 25  | %    |  |   | 27,792 |   |  | 32  | %
|Research and development expenses   |  |                             | 10,355 |   |  | 12  | % |      |   | 9,210  |   |  | 11  | %    |  |   | 6,854  |   |  | 8   | %
|Restructuring costs                 |  |                             |       |   |  | 0   | % |      |   |       |   |  | 0   | %    |  |   | 298    |   |  | 0   | %
|General and administrative expenses |  |                             | 7,226  |   |  | 8   | % |      |   | 8,392  |   |  | 10  | %    |  |   | 8,515  |   |  | 10  | %
|                                    |  |                             |        |   |  |     |   |      |   |        |   |  |     |      |  |   |        |   |  |     |  
|Total operating expenses            |  |                             | 40,532 |   |  | 47  | % |      |   | 38,315 |   |  | 46  | %    |  |   | 43,459 |   |  | 50  | %
|                                    |  |                             |        |   |  |     |   |      |   |        |   |  |     |      |  |   |        |   |  |     |  
|Operating income (loss)             |  |                             | 5,678  |   |  | 7   | % |      |   | 3,824  |   |  | 5   | %    |  |   | (2,114 | ) |  | -2  | %
|Interest expense                    |  |                             | (96    | ) |  | 0   | % |      |   | (415   | ) |  | -1  | %    |  |   | (727   | ) |  | -1  | %
|Other income (expense), net         |  |                             | 583    |   |  | 1   | % |      |   | 9      |   |  | 0   | %    |  |   | (96    | ) |  | 0   | %
|                                    |  |                             |        |   |  |     |   |      |   |        |   |  |     |      |  |   |        |   |  |     |  
|Income (loss) before income taxes   |  |                             | 6,165  |   |  | 7   | % |      |   | 3,418  |   |  | 4   | %    |  |   | (2,937 | ) |  | -3  | %
|Income tax expense                  |  |                             | 43     |   |  | 0   | % |      |   | 302    |   |  | 0   | %    |  |   | 2,347  |   |  | 3   | %
|                                    |  |                             |        |   |  |     |   |      |   |        |   |  |     |      |  |   |        |   |  |     |  
|Net income (loss)                   |  | $                           | 6,122  |   |  | 7   | % |      | $ | 3,116  |   |  | 4   | %    |  | $ | (5,284 | ) |  | -6  | %
|                                    |  |                             |        |   |  |     |   |      |   |        |   |  |     |      |  |   |        |   |  |     |  



Fiscal 2004
Results Compared to Fiscal 2003



Revenue. The
Company recorded revenue during the fiscal years ended March 31, 2004 and 2003 as follows (in thousands):



|                 |  |      |        |      |   |        |  |    |   
|---------------- |  | ---- | ------ | ---- | - | ------ |  | -- | --
|Market           |  | 2004 |        | 2003 |   | Change | 
|Commercial:      |  |      |        |      |   |        |  |    |   
|Domestic         |  | $    | 44,454 |      | $ | 44,990 |  | (1 | )%
|International    |  |      | 29,610 |      |   | 27,230 |  | 9  | % 
|                 |  |      |        |      |   |        |  |    |   
|Total Commercial |  |      | 74,064 |      |   | 72,220 |  | 3  | % 
|                 |  |      |        |      |   |        |  |    |   
|Residential      |  |      | 11,879 |      |   | 10,391 |  | 14 | % 
|                 |  |      |        |      |   |        |  |    |   
|Total Revenue    |  | $    | 85,943 |      | $ | 82,611 |  | 4  | % 
|                 |  |      |        |      |   |        |  |    |   



Total revenue
increased 4% over fiscal 2003. Total commercial revenue was up 3% compared to prior year revenue, consisting of a 9% increase in international commercial revenue, offset by a slight decline in domestic commercial revenue. The residential channel
reported 14% revenue growth over fiscal 2003. The Company has recently made significant investments in research and development, and has launched a number of new products during the last 18 to 24 months, including 40 new products that began shipping
in December 2003. The Company has also increased its sales, marketing and training initiatives to educate the marketplace about these new products. These products and initiatives have had a positive impact on the Companys revenue, particularly
in the international commercial and residential channels. The impact to the domestic commercial channel has not been as favorable, primarily a result of the poor economic conditions in the United States. Additionally, domestic commercial revenue
continues to experience some of the residual impact of the Companys focus on the



18



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broadband initiative in fiscal 2000 and 2001, as well as the other operational issues in those years. Internationally, the Company markets its products using
a two-tier structure. The Companys distributors were able to buffer the dealers and end-users from some of these historical operational issues. Therefore, these issues did not have the same impact on the international channel. The lack of
focus on the core business in fiscal 2000 and 2001 had the largest impact on the Companys residential channel. However, the new product offerings and a renewed focus on the residential channel have enabled the Company to report strong
year-over-year growth in residential revenue.



Gross
Margins. Gross margins for the year ended March 31, 2004 were 54%, up from 51% in the prior year. The improved margins reflect cost reductions produced by our outsourcing production strategy, strong margins from new products, and the impact of
higher overall revenue coverage on a semi-fixed cost base.



Selling and Marketing Expense. Selling and marketing expenses were up to $23.0 million or 27% of net sales compared to $20.7 million or 25% of net sales in fiscal 2003. This increase represents the incremental spending for sales and
marketing programs promoting the Companys recent product introductions.



Research and Development Expense. Research and development expenses were $10.4 million or 12% of net sales compared to $9.2 million or 11% of net sales for fiscal 2003. This increase reflects the Companys
recent investments in research and development as the Company expanded its portfolio of products and introduced new and innovative control and automation solutions to the market.



General and Administrative Expense. General and administrative expenses were $7.2 million or 8% of net sales compared
to $8.4 million or 10% of net sales for fiscal 2003. This decrease is primarily a result of lower salaries and benefits of approximately $300,000, lower bad debt expenses of approximately $250,000, and lower

overall administrative spending including approximately $140,000 savings generated from the closure of the AMX Singapore direct sales office in September 2002.



Interest Expense and Other Income.Interest expense was
$0.1 million or 0.1% of net sales compared to $0.4 million or 0.5% of net sales for fiscal 2003. This decline is primarily attributable to lower average outstanding balances on the Companys revolving line of credit during fiscal 2004. As of
March 31, 2004, the Company had paid its outstanding bank debt in full. Other income was approximately $0.6 million compared to $10,000 for fiscal 2003. This change is primarily related to foreign exchange gains in fiscal 2004 associated with
exchange rate fluctuations between the U.S. dollar and the British pound. The U.S. dollar is the functional currency of the Companys U.K. subsidiary.



Income Tax Expense. The Companys effective tax rate was approximately 0.7% versus 9% for the year ago period. The tax provision of $43,000
for fiscal 2004 principally represents domestic alternative minimum tax and foreign taxes for the Companys U.K. subsidiary. The Company does not currently record a significant tax provision or benefit on its U.S. operations because the Company
has recorded a full valuation allowance against its net deferred tax assets. As a result, as the Company incurs domestic tax expense or benefit, an offsetting decrease or increase is recorded to the valuation allowance. The decline in the effective
tax rate from the year ago period is a result of certain tax planning strategies and changes in the relationship between domestic and foreign pre-tax operating results.



Net Income. For the reasons described above, net income increased from $3.1 million or $0.28 per diluted share for
the fiscal year ended March 31, 2003 to $6.1 million or $0.50 per diluted share for the fiscal year ended March 31, 2004.



19



---

Fiscal 2003 Results Compared to Fiscal 2002



Revenue.The Company recorded revenue during the fiscal years ended
March 31, 2003 and 2002 as follows (in thousands):



|                 |  |      |        |      |   |        |  |     |   
|---------------- |  | ---- | ------ | ---- | - | ------ |  | --- | --
|Market           |  | 2003 |        | 2002 |   | Change | 
|Commercial:      |  |      |        |      |   |        |  |     |   
|Domestic         |  | $    | 44,990 |      | $ | 48,021 |  | (6  | )%
|International    |  |      | 27,230 |      |   | 24,974 |  | 9   | % 
|                 |  |      |        |      |   |        |  |     |   
|Total Commercial |  |      | 72,220 |      |   | 72,995 |  | (1  | )%
|                 |  |      |        |      |   |        |  |     |   
|Residential      |  |      | 10,391 |      |   | 14,612 |  | (29 | )%
|                 |  |      |        |      |   |        |  |     |   
|Total Revenue    |  | $    | 82,611 |      | $ | 87,607 |  | (6  | )%
|                 |  |      |        |      |   |        |  |     |   



Total revenue declined
6% over fiscal 2002. Total commercial revenue was down slightly compared to fiscal 2002. Domestic commercial revenue decreased 6% from fiscal 2002. The decline in domestic commercial revenue is a result of the residual impact of the Companys
focus on a broadband initiative in fiscal 2000 and 2001, as opposed to the Companys core business, as well as other historical operational issues. Additionally, the Company believes that the slow down in the domestic economy negatively
affected domestic revenue in fiscal 2003. These issues also adversely affected the Companys residential sales, which declined 29% from fiscal 2002. The international distribution channel operates principally in a two-tier structure, in which
the Company sells and ships product to its distributors. The international distributors in turn sell the products to dealers. The distributors were able to buffer the dealers from some of the historical operational issues that resulted from the
Companys focus on its broadband initiative. As a result, these issues had a lesser impact on the Companys international channel, which was up 9% over fiscal 2002.



Gross Margins. Gross margins for the year ended March 31, 2003 were 51%, up from 47% in the year ended March 31,
2002. Fiscal 2002 margins were negatively impacted by the aforementioned inventory obsolescence charges of $2.4 million taken in September 2001. Excluding the obsolescence charges recorded in September 2001, fiscal 2002 margins were 50%. The margin
improvement is a reflection of lower costs in the Companys manufacturing operations as a result of the continued implementation of the Companys outsourcing strategy, vendor consolidation, and management directed operational efficiencies.



Selling and Marketing Expense. Selling and marketing
expenses declined significantly to $20.7 million or 25% of net sales compared to $27.8 million or 32% of net sales for the year ended March 31, 2002. The decrease in selling and marketing expenses is primarily a result of cost control initiatives
launched in the latter half of fiscal 2002, including reduced headcount in the Companys domestic and international sales organizations.



Research and Development Expense. Research and development expenses were $9.2 million or 11% of net sales compared to $6.9 million or 8% of net
sales for fiscal 2002. The Company increased its fiscal 2003 research and development spending significantly over prior year levels to expand its product portfolio in order to drive long-term sales growth.



General and Administrative Expense. General and administrative
expenses were $8.4 million or 10% of net sales compared to $8.5 million or 10% of net sales for the year ago period. Excluding the aforementioned charges of $0.6 million recorded in September 2001 to reserve receivables and write-off certain
intangible assets, fiscal 2002 general and administrative expenses were $7.9 million or 9% of net sales. The increase in general and administrative expenses in fiscal 2003 is primarily a result of increased salary and incentive compensation expense,
offset by lower professional service fees.



Interest
Expense.Interest expense was $0.4 million or 0.5% of net sales compared to $0.7 million or 0.8% of net sales for fiscal 2002. This decline is primarily attributable to lower average outstanding balances on the Companys revolving line of
credit during fiscal 2003.



20



---

Income Tax Expense. The Companys effective tax rate was approximately 9% for the fiscal year
ended March 31, 2003. The tax provision of $302,000 recorded for the year principally represented foreign taxes on the Companys U.K. subsidiary. The Company does not currently record a tax provision or benefit on its U.S. operations because
the Company recorded a full valuation allowance on its deferred tax assets. As a result, as the Company incurs domestic tax expense or benefit, an offsetting decrease or increase is recorded to the valuation allowance. The Company assesses the
realizability of its deferred tax assets on an ongoing basis and will eliminate the valuation allowance when warranted based on sustained profitable operating results.



Net Income (Loss).For the reasons described above, the Company generated net income of $3.1 million or $0.28 per
diluted share for the fiscal year ended March 31, 2003 compared to a net loss of $5.3 million or $0.48 per diluted share for the fiscal year ended March 31, 2002.



Liquidity and Capital Resources



In the twelve months ended March 31, 2004, the Company generated $10.8 million of cash from operations, including net income of $6.1 million. Other
significant components of operating cash flows included non-cash related items of $3.9 million and an increase in payables and other accrued expenses of $3.5 million, offset by an increase in receivables of $1.8 million, an increase in inventory of
$0.4 million, and increases in prepaid and other current assets of $0.5 million. In the twelve months ended March 31, 2003, the Company generated $10.8 million of cash from operations, including net income of $3.1 million. Other significant
components of operating cash flows included non-cash related items of $4.4 million, collections of receivables of $3.1 million, a reduction of inventory of $3.6 million, and net income tax refunds of $2.0 million, offset by a decline in accounts
payable of $4.1 million and accrued expenses of $1.1 million. Days sales outstanding were 44 days as of March 31, 2004 and 2003, while inventory turns were 5.7 and 5.2 for the same periods. The increase in inventory turns is related to better
inventory management and the Companys migration to outsourced manufacturing. Capital expenditures for the twelve months ended March 31, 2004 were $2.9 million as compared to $1.6 million in the twelve months ended March 31, 2003. This increase
is primarily a result of tooling and demonstration related equipment related to new product introductions during the year.



The Company has a revolving line of credit with Bank One, N.A. (Bank One). The line of credit provides for borrowings of up to $10 million
subject to borrowing base limitations. As of March 31, 2004, there were no outstanding borrowings under the revolving line of credit. The line of credit provides for interest at varying rates based on the Companys choice of the prime lending
rate or the London Inter-Bank Offered Rate. The line of credit is collateralized by receivables, inventory, intellectual property, and the net assets of the wholly-owned U.K. subsidiary. Available future borrowings under the facilitys
borrowing base limits amounted to $10 million as of March 31, 2004. The line of credit contains various restrictive and financial covenants. The Company is in compliance with each of these covenants as of March 31, 2004. This revolving line of
credit expires on September 29, 2004. The Company anticipates that the revolving line of credit will be renewed upon maturity with similar terms and conditions.



As of March 31, 2003, the Company had outstanding borrowings of approximately $1.0 million under an unsecured term note with Bank One. The term note
provided for quarterly payments of principal and interest through April 30, 2004. The Company paid the last installment on the term note early, and had no outstanding borrowings under the term note as of March 31, 2004.



The Company believes that cash flow from operations and the funding available
under existing and future credit facilities will be adequate to fund working capital and capital expenditure requirements at least through 2005.



Item 7A.Quantitative and Qualitative Disclosures About Market Risk.



The Company had no outstanding debt as of March 31, 2004, compared to $4.0 million at March 31, 2003.



21



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Interest Rate Risk



The Company does not have significant exposure to variable interest rates related to outstanding debt balances as the Company did not have any outstanding
debt as of March 31, 2004.



The Company does not have
significant exposure to changing interest rates on invested cash, which was approximately $9.4 million and $5.0 million at March 31, 2004 and 2003 respectively, because the Company invests its cash mainly in short term investments with an initial
maturity of three months or less.



To date, the Company has not
entered into any derivative financial instruments to manage interest rate risk and is currently not evaluating the future use of any such financial instruments.



Foreign Currency Exchange Rate Risk



The Company transacts business in various foreign currencies through its wholly-owned subsidiary in York, England. Accordingly, the Company is subject to
exposure from adverse movements in foreign currency exchange rates. The Company generally mitigates this risk by transacting business in the functional currency of each of its subsidiaries, thus creating a natural hedge by paying expenses incurred
in the local currency. The Company is also subject to exposure from the translation of the net asset position of the U.K. subsidiary from the local currency (the British pound) to the functional currency, the U.S. dollar. As of March 31, 2004, the
Company had not entered into any derivative financial instruments to manage foreign currency risk. A hypothetical 10% plus or minus fluctuation in all applicable non-U.S. exchange rates would have an earnings impact of approximately $380,000 and
$290,000 for fiscal 2004 and 2003, respectively, based on fiscal year end balances and rates.



Item 8.Financial Statements.



Information called for by this item is set forth in the Companys Consolidated Financial Statements contained in this report. The Companys Consolidated Financial Statements begin at page F-1 hereunder.



Item 9.Changes in and Disagreements With Accountants on
Accounting and FinancialDisclosure.



None.



Item 9A.Controls and
Procedures



Under the supervision and with the
participation of AMX Corporations management, including the Companys Chief Executive Officer and Chief Financial Officer, AMX has evaluated the effectiveness of the design and operation of its disclosure controls and procedures (as
defined in Rule 13a-14(c) under the Securities Exchange Act of 1934) within the 90 days prior to the date of this Report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls
and procedures are effective. There have been no significant changes in AMX Corporations internal controls or in other factors that could significantly affect internal controls subsequent to the date that the Company completed its evaluation.



22



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PART III



Item 10.Directors and Executive Officers of the Registrant.



Executive Officers



The presentation of Executive Officers of the Registrant appears in the Registrants Proxy Statement for the 2004 Annual Meeting of Shareholders
(Proxy Statement), which is incorporated by reference herein.



Directors



The presentation of Directors of
the Registrant appears in the Registrants Proxy Statement for the 2004 Annual Meeting of Shareholders (Proxy Statement), which is incorporated by reference herein.



Codes of Conduct



AMX Corporation has adopted a Code of Conduct that is applicable to all AMX employees and to the Board of Directors, and a separate Finance Code of
Conduct that is applicable to the Chief Executive Officer, Chief Financial Officer, Corporate Controller, and all other employees of the finance organization. Both of these documents are available on the Companys website at www.amx.com
in the Investor Relations section under Corporate Governance.



Section 16(a)
Beneficial Ownership Reporting Compliance



The
presentation of Section 16(a) Beneficial Ownership Reporting Compliance of the Registrant appears in the Proxy Statement, which is incorporated by reference herein.



Item 11.Executive Compensation.



The presentation of Executive Compensation of the Registrant appears in the Proxy Statement, which is incorporated by
reference herein.



Item 12.Security Ownership of Certain
Beneficial Owners and Management and Related Stockholder                Matters.



The presentation of the Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters of
the Registrant appears in the Proxy Statement, which is incorporated by reference herein.



Item 13.Certain Relationships and Related Transactions.



The presentation of Certain Relationships and Related Transactions of the Registrant appears in the Proxy Statement, which is incorporated by reference
herein.



Item 14.Principal Accountant Fees and
Services



The presentation of Principal
Accountant Fees and Services of the Registrant appears in the Proxy Statement, which is incorporated by reference herein.



23



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PART IV



Item 15.Exhibits, Financial Statement Schedules, and Reports on Form 8-K.



(a) (1) Financial Statements.



The financial statements filed as a part of this Annual Report on Form 10-K are listed in the Index to Consolidated Financial
Statements on page F-1 hereof.



(2) Financial Statement
Schedules.



Schedule IIValuation and
Qualifying Accounts has been included on page F-18 of this annual report. All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related
instructions or are inapplicable and therefore have been omitted.



(3) Exhibits.



The following exhibits are filed as a
part of this Annual Report on Form 10-K.



3.1

Amended and Restated Articles of Incorporation of the Registrant (Incorporated by reference from Exhibit 3.1 to the Companys Form S-8 filed March 11, 1996, File no.
333-2202).3.2

Articles of Amendment to the Articles of Incorporation of the Company (incorporated by reference from Exhibit 99.1 to the Registrants Current Report on Form 8-K, filed September 10,
1999, File No. 0-026924).3.3

Articles of Amendment to the Articles of Incorporation of the Company (incorporated by reference from Exhibit 3.1 to the Registrants Form 10-Q for the period ended September 30, 2001,
File No. 0-026924).3.4

Amended and Restated Bylaws of the Registrant (incorporated by reference from Exhibit 3.4 to the Registrants Form 10-K for the fiscal year ended March 31, 2002, File no.
0-26924).4.1

Specimen Certificate for Common Stock of Registrant (Incorporated by reference from Exhibit 4.1 to the Companys Form S-1 filed September 13, 1995, as amended, File no.
33-96886).4.2

Registration Rights Agreement dated as of March 30, 1995 by and among Registrant, the persons listed on Schedule 1.1 thereto, Scott D. Miller, Peter D. York, Joe Hardt and Billie I.
Williamson (Incorporated by reference from Exhibit 4.2 to the Companys Form S-1 filed September 13, 1995, as amended, File no. 33-96886).4.3

First Amendment dated September 12, 1995 to Registration Rights Agreement dated as of March 30, 1995 by and among Registrant, the persons listed on Schedule 1.1 thereto, Scott D. Miller,
Peter D. York, Joe Hardt, and Billie I. Williamson (Incorporated by reference from Exhibit 4.3 to the Companys Form S-1 filed September 13, 1995, as amended, File no. 33-96886).4.4

Second Amendment dated February 22, 2001 to Registration Rights Agreement dated as of March 30, 1995 by and among Registrant, J. Joseph Hardt, Scott D. Miller and Peter D. York. (Incorporated
by reference from Exhibit 4.4 to the Registrants Form 10-K for the fiscal year ended March 31, 2001, File no. 0-26924).4.5

Declaration of Registration Rights made October 14, 1997, by the Registrant for the benefit of certain shareholders and employees of PHAST Corporation pursuant to the Stock Purchase
Agreement, as hereinafter defined (Incorporated by reference from Exhibit 4.2 to the Registrants Form 10-Q, for the period ending December 31, 1997, File no. 0-26924).4.6

Registration Rights Agreement dated February 22, 2001 between the Registrant and Scott Miller (Incorporated by reference from Exhibit 4.6 to the Registrants Form 10-K for the fiscal
year ended March 31, 2001, File no. 0-26924).




24



---

4.7

Common Stock Warrant No. 001 issued to Intel Corporation to purchase 238,057 shares of Common Stock (Incorporated by reference from Exhibit 4.2 to the Registrants Form 10-Q, for the
period ending December 31, 1999, File no. 0-26924).4.8

Common Stock Warrant No. 002 issued to Intel Corporation to purchase 79,352 shares of Common Stock (Incorporated by reference from Exhibit 4.2 to the Registrants Form 10-Q, for the
period ending December 31, 1999, File no. 0-26924).4.9

Securities Purchase and Investor Rights Agreement dated December 15, 1999 (Incorporated by reference from Exhibit 4.2 to the Registrants Form 10-Q, for the period ending December 31,
1999, File no. 0-26924).10.1

AMX Corporation 1993 Stock Option Plan, accompanied by forms of Incentive Stock Option and Non-qualified Stock Option Agreements (Incorporated by reference from Exhibit 10.1 to the
Registrants Form S-1 filed September 13, 1995, as amended, File no. 33-96886).10.2

1996 Employee Stock Purchase Plan, accompanied by forms of Enrollment/Change Form, Section 16b Participation Form and Stock Purchase Agreement (Incorporated by reference from Exhibit 10.4 to
the Registrants Form S-1 filed September 13, 1995, as amended, File no. 33-96886).10.3

First Amendment to AMX Corporation 1996 Employee Stock Purchase Plan (Incorporated by reference from Exhibit 10.5 to the Registrants Form 10-Q for the period ended September 30, 2001,
File no. 0-26924).10.4

Second Amendment to AMX Corporation 1996 Employee Stock Purchase Plan (Incorporated by reference from Exhibit 10.6 to the Registrants Form 10-Q for the period ended September 30, 2001,
File no. 0-26924).10.5

AMX Corporation 1999 Equity Incentive Plan (Incorporated by reference from Exhibit 10.25 to the Registrants Form 10-K for the fiscal year ending March 31, 1999, File no.
0-26924).10.6

Letter Loan Agreement dated as of September 30, 2002 (Incorporated by reference from Exhibit 10.2 to the Registrants Form 10-Q for the period ended September 30, 2002, File No.
0-26924).10.7

First Amendment to Letter Loan Agreement and Related Promissory Notes (Incorporated by reference from Exhibit 10.1 to the Registrants Form 10-Q for the period ended September 30, 2003,
File No. 0-26924).10.8

Lease Agreement dated November 22, 1999 by and between the Registrant and DalMac/GoldCor Real Estate Venture, Ltd. (Incorporated by reference from Exhibit 10.10 to the Registrants Form
10-K for the fiscal year ended March 31, 2001, File no. 0-26924).10.9

First Amendment to Lease Agreement dated January 10, 2000 by and between the Registrant and DalMac/GoldCor Real Estate Venture, Ltd. (Incorporated by reference from Exhibit 10.11 to the
Registrants Form 10-K for the fiscal year ended March 31, 2001, File no. 0-26924).10.10

Second Amendment to Lease Agreement dated May 1, 2001 by and between the Registrant and DalMac/GoldCor Real Estate Venture, Ltd. (Incorporated by reference from Exhibit 10.13 to the
Registrants Form 10-K for the fiscal year ended March 31, 2001, File no. 0-26924).10.11

Employment Agreement dated February 8, 2002 between the Registrant and Robert J. Carroll (Incorporated by reference from Exhibit 10.24 to the Registrants Form 10-K for the fiscal year
ended March 31, 2002, File no. 0-26924).10.12

Employment Agreement dated December 3, 2001 between the Registrant and Chris Apple (Incorporated by reference from Exhibit 10.24 to the Registrants Form 10-K for the fiscal year ended
March 31, 2003, File No. 0-26924).




25



---

10.13

Employment Agreement dated July 9, 2001 between the Registrant and Carl Evans (Incorporated by reference from Exhibit 10.26 to the Registrants Form 10-K for the fiscal year ended March
31, 2003, File No. 0-26924).10.14

Employment Agreement dated February 17, 2003 between the Registrant and Scott Norder (Incorporated by reference from Exhibit 10.28 to the Registrants Form 10-K for the fiscal year ended
March 31, 2003, File No. 0-26924).10.15

Employment Agreement dated December 3, 2001 between the Registrant and Rashid Skaf (Incorporated by reference from Exhibit 10.29 to the Registrants Form 10-K for the fiscal year ended
March 31, 2003, File No. 0-26924).10.16

Employment Agreement dated June 1, 2003 between the Registrant and Patrick Gallagher (Incorporated by reference from Exhibit 10.1 to the Registrants Form 10-Q for the period ended
June 30, 2003, File No. 0-26924).10.17

Employment Agreement dated June 1, 2003 between the Registrant and Michael Olinger (Incorporated by reference from Exhibit 10.1 to the Registrants Form 10-Q for the period ended
June 30, 2003, File No. 0-26924).21.1

Schedule of Subsidiaries (Incorporated by reference from Exhibit 21.1 to the Registrants Form 10-K for the fiscal year ended March 31, 2003, File No. 0-26924).23.1

Consent of Independent Auditors.31.1

Certification of Robert J. Carroll, Chairman of the Board, President and Chief Executive Officer, pursuant to Rule 13a-14 and 15d-14 of the Securities Exchange Act of 1934.31.2

Certification of C. Chris Apple, Vice President, Chief Financial Officer, pursuant to Rule 13a-14 and 15d-14 of the Securities Exchange Act of 1934.32.1

Certification of Robert J. Carroll, Chairman of the Board, President and Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.32.2

Certification of C. Chris Apple, Vice President, Chief Financial Officer and Secretary, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.


---

| | Filed herewith.
|- | ---------------



(b) Reports on Form 8-K.



Current report on Form 8-K dated as of April 29, 2004, and filed on April 30, 2004, regarding the Registrants press release
for the fourth quarter and fiscal year ended March 31, 2004.



26



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SIGNATURES



Pursuant to the requirements of Section 13 or 15(d) 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.



AMX CORPORATIONBy:

/S/    ROBERT J.
CARROLLRobert J. Carroll, Chairman of the Board, Chief Executive Officer, President and Director




June 18, 2004



Pursuant to the requirements of the
Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated and on the dates indicated below.



|                                            |  |                                                                                                      |  |              
|------------------------------------------- |  | ---------------------------------------------------------------------------------------------------- |  | -------------
|Signature                                   |  | Title                                                                                                |  | Date         
|                                            |  |                                                                                                     
|/S/    ROBERT J.
CARROLLRobert J.
Carroll   |  | Chairman of the Board, Chief Executive Officer, President and Director (Principal Executive Officer) |  | June 18, 2004
|                                            |  |                                                                                                     
|/S/    C. CHRIS
APPLEC. Chris
Apple         |  | Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)              |  | June 18, 2004
|                                            |  |                                                                                                     
|/S/    JOHN E.
WILSONJohn E.
Wilson         |  | Director                                                                                             |  | June 18, 2004
|                                            |  |                                                                                                     
|/S/    THOMAS L.
HARRISONThomas L.
Harrison |  | Director                                                                                             |  | June 18, 2004
|                                            |  |                                                                                                     
|/S/    LARRY N.
GOLDSTEINLarry N.
Goldstein |  | Director                                                                                             |  | June 18, 2004
|                                            |  |                                                                                                     
|/S/    RICHARD L.
SMITHRichard L.
Smith     |  | Director                                                                                             |  | June 18, 2004
|                                            |  |                                                                                                     
|/S/    DAVID R.
RICHARDDavid R.
Richard     |  | Director                                                                                             |  | June 18, 2004



27



---

AMX CORPORATION



INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



|                                                                                                  |  |     
|------------------------------------------------------------------------------------------------- |  | ----
|                                                                                                  |  | Page
|                                                                                                  | 
|Report of Independent Auditors                                                                    |  | F-2 
|                                                                                                  | 
|Consolidated Balance Sheets at March 31, 2004 and 2003                                            |  | F-3 
|                                                                                                  | 
|Consolidated Statements of Operations for the Years Ended March 31, 2004, 2003 and 2002           |  | F-4 
|                                                                                                  | 
|Consolidated Statements of Shareholders Equity for the Years Ended March 31, 2004, 2003 and 2002 |  | F-5 
|                                                                                                  | 
|Consolidated Statements of Cash Flows for the Years Ended March 31, 2004, 2003 and 2002           |  | F-6 
|                                                                                                  | 
|Notes to Consolidated Financial Statements                                                        |  | F-7 



F-1



---

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



The Board of Directors and Shareholders

AMX Corporation



We have
audited the accompanying consolidated balance sheets of AMX Corporation as of March 31, 2004 and 2003, and the related consolidated statements of operations, shareholders equity, and cash flows for each of the three years in the period ended
March 31, 2004. We have also audited the accompanying schedule of Valuation and Qualifying Accounts as of March 31, 2004, 2003 and 2002, and for the years then ended. These financial statements and financial statement schedule are the responsibility
of the Companys management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits.



We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.



In our opinion,
the financial statements referred to above present fairly, in all material respects, the consolidated financial position of AMX Corporation at March 31, 2004 and 2003, and the consolidated results of its operations and its cash flows for each of the
three years in the period ended March 31, 2004, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as
a whole, presents fairly in all material respects the information set forth therein.



/s/ Ernst & Young LLP



Dallas, Texas

April 23, 2004



F-2



---

AMX CORPORATION



CONSOLIDATED BALANCE SHEETS



|                                                                                             |  |           |            |   |      |   |            |  
|-------------------------------------------------------------------------------------------- |  | --------- | ---------- | - | ---- | - | ---------- | -
|                                                                                             |  | March 31, |           
|                                                                                             |  | 2004      |            |   | 2003 |  
|ASSETS                                                                                       |  |           |            |   |      |   |            |  
|Current assets:                                                                              |  |           |            |   |      |   |            |  
|Cash and cash equivalents                                                                    |  | $         | 9,382,193  |   |      | $ | 4,960,700  |  
|Receivables, less allowance for doubtful accounts of $712,000 for 2004 and $983,000 for 2003 |  |           | 11,191,289 |   |      |   | 9,820,272  |  
|Inventories                                                                                  |  |           | 7,328,173  |   |      |   | 7,274,059  |  
|Prepaid expenses                                                                             |  |           | 933,349    |   |      |   | 981,874    |  
|Other current assets                                                                         |  |           | 149,868    |   |      |   | 252,491    |  
|                                                                                             |  |           |            |   |      |   |            |  
|                                                                                             |  |          
|Total current assets                                                                         |  |           | 28,984,872 |   |      |   | 23,289,396 |  
|Furniture and equipment, at cost, net                                                        |  |           | 6,995,467  |   |      |   | 6,899,187  |  
|Deposits and other                                                                           |  |           | 944,901    |   |      |   | 291,447    |  
|                                                                                             |  |           |            |   |      |   |            |  
|                                                                                             |  |          
|Total assets                                                                                 |  | $         | 36,925,240 |   |      | $ | 30,480,030 |  
|                                                                                             |  |           |            |   |      |   |            |  
|                                                                                             | 
|LIABILITIES AND SHAREHOLDERS EQUITY                                                         |  |           |            |  
|                                                                                             |  |          
|Current liabilities:                                                                         |  |           |            |   |      |   |            |  
|Line of credit                                                                               |  | $         |           |   |      | $ | 3,000,000  |  
|Accounts payable                                                                             |  |           | 4,869,085  |   |      |   | 3,167,108  |  
|Accrued compensation                                                                         |  |           | 2,466,911  |   |      |   | 1,549,503  |  
|Other accrued expenses                                                                       |  |           | 3,279,898  |   |      |   | 2,486,833  |  
|Current portion of long-term debt                                                            |  |           |           |   |      |   | 766,088    |  
|                                                                                             |  |           |            |   |      |   |            |  
|Total current liabilities                                                                    |  |           | 10,615,894 |   |      |   | 10,969,532 |  
|                                                                                             |  |          
|Long-term debt, less current portion                                                         |  |           |           |   |      |   | 255,363    |  
|                                                                                             |  |          
|Other long-term liabilities                                                                  |  |           | 268,087    |   |      |   | 199,842    |  
|                                                                                             |  |          
|Commitments and contingencies                                                                |  |           |            |   |      |   |            |  
|                                                                                             |  |          
|Shareholders equity:                                                                        |  |           |            |   |      |   |            |  
|Preferred stock, $0.01 par value:                                                            |  |           |            |   |      |   |            |  
|Authorized shares10,000,000 Issued sharesnone                                              |  |           |           |   |      |   |           |  
|Common stock, $0.01 par value:                                                               |  |           |            |   |      |   |            |  
|Authorized shares40,000,000 Issued shares12,093,839 for 2004 and 11,699,334 for 2003       |  |           | 120,938    |   |      |   | 116,993    |  
|Additional capital                                                                           |  |           | 25,370,893 |   |      |   | 24,406,702 |  
|Deferred compensation                                                                        |  |           | (104,541   | ) |      |   |           |  
|Retained earnings (accumulated deficit)                                                      |  |           | 5,122,253  |   |      |   | (1,000,118 | )
|Less treasury stock (496,476 shares for 2004 and 2003)                                       |  |           | (4,468,284 | ) |      |   | (4,468,284 | )
|                                                                                             |  |           |            |   |      |   |            |  
|Total shareholders equity                                                                   |  |           | 26,041,259 |   |      |   | 19,055,293 |  
|                                                                                             |  |           |            |   |      |   |            |  
|Total liabilities and shareholders equity                                                   |  | $         | 36,925,240 |   |      | $ | 30,480,030 |  
|                                                                                             |  |           |            |   |      |   |            |  



See accompanying notes.



F-3



---

AMX CORPORATION



CONSOLIDATED
STATEMENTS OF OPERATIONS



|                                    |  |                      |             |   |      |   |             |      |  |   |             |  
|----------------------------------- |  | -------------------- | ----------- | - | ---- | - | ----------- | ---- |  | - | ----------- | -
|                                    |  | Year ended March 31, |            
|                                    |  | 2004                 |             |   | 2003 |   |             | 2002 | 
|                                    |  |                      |            
|Commercial system sales             |  |                      | $74,064,331 |   |      |   | $72,220,256 |      |  |   | $72,995,356 |  
|Residential system sales            |  |                      | 11,878,733  |   |      |   | 10,391,196  |      |  |   | 14,611,855  |  
|                                    |  |                      |             |   |      |   |             |      |  |   |             |  
|Net sales                           |  |                      | 85,943,064  |   |      |   | 82,611,452  |      |  |   | 87,607,211  |  
|Cost of sales                       |  |                      | 39,732,712  |   |      |   | 40,472,183  |      |  |   | 46,262,061  |  
|                                    |  |                      |             |   |      |   |             |      |  |   |             |  
|Gross profit                        |  |                      | 46,210,352  |   |      |   | 42,139,269  |      |  |   | 41,345,150  |  
|Selling and marketing expenses      |  |                      | 22,951,341  |   |      |   | 20,713,768  |      |  |   | 27,791,907  |  
|Research and development expenses   |  |                      | 10,355,453  |   |      |   | 9,209,844   |      |  |   | 6,854,273   |  
|Restructuring costs                 |  |                      |            |   |      |   |            |      |  |   | 298,529     |  
|General and administrative expenses |  |                      | 7,225,550   |   |      |   | 8,391,868   |      |  |   | 8,514,615   |  
|                                    |  |                      |             |   |      |   |             |      |  |   |             |  
|Total operating expenses            |  |                      | 40,532,344  |   |      |   | 38,315,480  |      |  |   | 43,459,324  |  
|                                    |  |                      |             |   |      |   |             |      |  |   |             |  
|Operating income (loss)             |  |                      | 5,678,008   |   |      |   | 3,823,789   |      |  |   | (2,114,174  | )
|Interest expense                    |  |                      | (95,601     | ) |      |   | (414,629    | )    |  |   | (727,152    | )
|Other income (expense), net         |  |                      | 582,624     |   |      |   | 9,597       |      |  |   | (95,817     | )
|                                    |  |                      |             |   |      |   |             |      |  |   |             |  
|Income (loss) before income taxes   |  |                      | 6,165,031   |   |      |   | 3,418,757   |      |  |   | (2,937,143  | )
|Income tax expense                  |  |                      | 42,660      |   |      |   | 302,388     |      |  |   | 2,346,627   |  
|                                    |  |                      |             |   |      |   |             |      |  |   |             |  
|Net income (loss)                   |  | $                    | 6,122,371   |   |      | $ | 3,116,369   |      |  | $ | (5,283,770  | )
|                                    |  |                      |             |   |      |   |             |      |  |   |             |  
|Basic income (loss) per share       |  | $                    | 0.54        |   |      | $ | 0.28        |      |  | $ | (0.48       | )
|                                    |  |                      |             |   |      |   |             |      |  |   |             |  
|Diluted income (loss) per share     |  | $                    | 0.50        |   |      | $ | 0.28        |      |  | $ | (0.48       | )
|                                    |  |                      |             |   |      |   |             |      |  |   |             |  











See accompanying notes.



F-4



---

AMX CORPORATION



CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY



|                                                                           |                  |              |        |                   |         |                      |   |                 |                           |        |          |                |  |   |                                            |   |  |                          |  |   |            |   |  |   |        |   |  |   |            |  
|-------------------------------------------------------------------------- | ---------------- | ------------ | ------ | ----------------- | ------- | -------------------- | - | --------------- | ------------------------- | ------ | -------- | -------------- |  | - | ------------------------------------------ | - |  | ------------------------ |  | - | ---------- | - |  | - | ------ | - |  | - | ---------- | -
|                                                                           |                  | Common Stock |        | AdditionalCapital |         | DeferredCompensation |   |                 | RetainedEarnings(Deficit) |        |          | Treasury Stock |  |   | AccumulatedOtherComprehensiveIncome (Loss) |   |  | TotalShareholdersEquity | 
|                                                                           |                  |              |        |                   |         |                     
|                                                                           |                  |              |        |                   |         |                     
|                                                                           | Number of Shares |              | Amount |                   |         |                      |   | Numberof Shares |                           | Amount |          |                | 
|Balance at March 31, 2001                                                  |                  | 11,258,718   |        | $                 | 112,587 |                      | $ | 23,585,287      |                           | $      |         |                |  | $ | 1,167,283                                  |   |  | 496,476                  |  | $ | (4,468,284 | ) |  | $ | 1,103  |   |  | $ | 20,397,976 |  
|Net loss                                                                   |                  |             |        |                   |        |                      |   |                |                           |        |         |                |  |   | (5,283,770                                 | ) |  |                         |  |   |           |   |  |   |       |   |  |   | (5,283,770 | )
|Equity adjustment from foreign currency translation                        |                  |             |        |                   |        |                      |   |                |                           |        |         |                |  |   |                                           |   |  |                         |  |   |           |   |  |   | (1,103 | ) |  |   | (1,103     | )
|                                                                           |                  |              |        |                   |         |                      |   |                 |                           |        |          |                |  |   |                                            |   |  |                          |  |   |            |   |  |   |        |   |  |   |            |  
|Total comprehensive loss                                                   |                  |              |        |                   |         |                      |   |                 |                           |        |          |                |  |   |                                            |   |  |                          |  |   |            |   |  |   |        |   |  |   | (5,284,873 | )
|Exercise of stock options and purchases under employee stock purchase plan |                  | 324,807      |        |                   | 3,248   |                      |   | 672,607         |                           |        |         |                |  |   |                                           |   |  |                         |  |   |           |   |  |   |       |   |  |   | 675,855    |  
|                                                                           |                  |              |        |                   |         |                      |   |                 |                           |        |          |                |  |   |                                            |   |  |                          |  |   |            |   |  |   |        |   |  |   |            |  
|Balance at March 31, 2002                                                  |                  | 11,583,525   |        |                   | 115,835 |                      |   | 24,257,894      |                           |        |         |                |  |   | (4,116,487                                 | ) |  | 496,476                  |  |   | (4,468,284 | ) |  |   |       |   |  |   | 15,788,958 |  
|Net income and comprehensive income                                        |                  |             |        |                   |        |                      |   |                |                           |        |         |                |  |   | 3,116,369                                  |   |  |                         |  |   |           |   |  |   |       |   |  |   | 3,116,369  |  
|Purchases under employee stock purchase plan                               |                  | 115,809      |        |                   | 1,158   |                      |   | 148,808         |                           |        |         |                |  |   |                                           |   |  |                         |  |   |           |   |  |   |       |   |  |   | 149,966    |  
|                                                                           |                  |              |        |                   |         |                      |   |                 |                           |        |          |                |  |   |                                            |   |  |                          |  |   |            |   |  |   |        |   |  |   |            |  
|Balance at March 31, 2003                                                  |                  | 11,699,334   |        |                   | 116,993 |                      |   | 24,406,702      |                           |        |         |                |  |   | (1,000,118                                 | ) |  | 496,476                  |  |   | (4,468,284 | ) |  |   |       |   |  |   | 19,055,293 |  
|Net income and comprehensive income                                        |                  |             |        |                   |        |                      |   |                |                           |        |         |                |  |   | 6,122,371                                  |   |  |                         |  |   |           |   |  |   |       |   |  |   | 6,122,371  |  
|Exercise of stock options and purchases under employee stock purchase plan |                  | 194,505      |        |                   | 1,945   |                      |   | 580,191         |                           |        |         |                |  |   |                                           |   |  |                         |  |   |           |   |  |   |       |   |  |   | 582,136    |  
|Award of restricted stock                                                  |                  | 200,000      |        |                   | 2,000   |                      |   | 384,000         |                           |        | (386,000 | )              |  |   |                                            |   |  |                         |  |   |           |   |  |   |       |   |  |   |           |  
|Amortization of deferred compensation                                      |                  |             |        |                   |        |                      |   |                |                           |        | 281,459  |                |  |   |                                            |   |  |                         |  |   |           |   |  |   |       |   |  |   | 281,459    |  
|                                                                           |                  |              |        |                   |         |                      |   |                 |                           |        |          |                |  |   |                                            |   |  |                          |  |   |            |   |  |   |        |   |  |   |            |  
|Balance at March 31, 2004                                                  |                  | 12,093,839   |        | $                 | 120,938 |                      | $ | 25,370,893      |                           | $      | (104,541 | )              |  | $ | 5,122,253                                  |   |  | 496,476                  |  | $ | (4,468,284 | ) |  | $ |       |   |  | $ | 26,041,259 |  
|                                                                           |                  |              |        |                   |         |                      |   |                 |                           |        |          |                |  |   |                                            |   |  |                          |  |   |            |   |  |   |        |   |  |   |            |  







See accompanying notes.



F-5



---

AMX CORPORATION



CONSOLIDATED
STATEMENTS OF CASH FLOWS



|                                                                                         |  |                      |            |   |      |   |            |      |  |   |            |  
|---------------------------------------------------------------------------------------- |  | -------------------- | ---------- | - | ---- | - | ---------- | ---- |  | - | ---------- | -
|                                                                                         |  | Year ended March 31, |           
|                                                                                         |  | 2004                 |            |   | 2003 |   |            | 2002 | 
|Operating Activities                                                                     |  |                      |            |   |      |   |            |      |  |   |            |  
|Net income (loss)                                                                        |  | $                    | 6,122,371  |   |      | $ | 3,116,369  |      |  | $ | (5,283,770 | )
|Adjustments to reconcile net income (loss) to net cash provided by operating activities: |  |                      |            |   |      |   |            |      |  |   |            |  
|Depreciation                                                                             |  |                      | 2,734,666  |   |      |   | 2,969,716  |      |  |   | 3,927,411  |  
|Stock based compensation charge                                                          |  |                      | 281,459    |   |      |   |           |      |  |   |           |  
|Amortization                                                                             |  |                      | 133,149    |   |      |   |           |      |  |   | 509,924    |  
|Write-down of demonstration equipment                                                    |  |                      |           |   |      |   |           |      |  |   | 708,813    |  
|Write-down of goodwill                                                                   |  |                      |           |   |      |   |           |      |  |   | 90,197     |  
|Provision for losses on receivables                                                      |  |                      | 435,934    |   |      |   | 648,729    |      |  |   | 735,322    |  
|Provision for inventory obsolescence                                                     |  |                      | 324,089    |   |      |   | 820,327    |      |  |   | 3,083,792  |  
|Loss on disposal of property and equipment                                               |  |                      | 68,394     |   |      |   |           |      |  |   |           |  
|Deferred income taxes                                                                    |  |                      | (87,325    | ) |      |   |           |      |  |   | 4,331,632  |  
|Changes in operating assets and liabilities:                                             |  |                      |            |   |      |   |            |      |  |   |            |  
|Receivables                                                                              |  |                      | (1,806,951 | ) |      |   | 3,110,303  |      |  |   | (1,710,574 | )
|Inventories                                                                              |  |                      | (378,203   | ) |      |   | 3,605,825  |      |  |   | (473,201   | )
|Prepaid expenses and other assets                                                        |  |                      | (599,062   | ) |      |   | (232,129   | )    |  |   | 1,077,968  |  
|Accounts payable                                                                         |  |                      | 1,701,977  |   |      |   | (4,128,237 | )    |  |   | (4,127,113 | )
|Accrued expenses                                                                         |  |                      | 1,787,802  |   |      |   | (1,147,994 | )    |  |   | (311,707   | )
|Income taxes                                                                             |  |                      | 41,848     |   |      |   | 2,019,266  |      |  |   | (2,147,496 | )
|                                                                                         |  |                      |            |   |      |   |            |      |  |   |            |  
|Net cash provided by operating activities                                                |  |                      | 10,760,148 |   |      |   | 10,782,175 |      |  |   | 411,198    |  
|                                                                                         |  |                      |           
|Investing Activities                                                                     |  |                      |            |   |      |   |            |      |  |   |            |  
|Purchase of furniture and equipment                                                      |  |                      | (2,908,947 | ) |      |   | (1,603,892 | )    |  |   | (2,514,298 | )
|Proceeds from sale of furniture and equipment                                            |  |                      | 9,607      |   |      |   |           |      |  |   |           |  
|                                                                                         |  |                      |            |   |      |   |            |      |  |   |            |  
|Net cash used in investing activities                                                    |  |                      | (2,899,340 | ) |      |   | (1,603,892 | )    |  |   | (2,514,298 | )
|                                                                                         |  |                      |           
|Financing Activities                                                                     |  |                      |            |   |      |   |            |      |  |   |            |  
|Sale of common stocknet proceeds, and exercises of stock options                        |  |                      | 582,136    |   |      |   | 149,966    |      |  |   | 675,855    |  
|Net increase (decrease) in line of credit                                                |  |                      | (3,000,000 | ) |      |   | (4,600,000 | )    |  |   | 2,050,000  |  
|Repayments of long-term debt                                                             |  |                      | (1,021,451 | ) |      |   | (1,013,001 | )    |  |   | (983,997   | )
|                                                                                         |  |                      |            |   |      |   |            |      |  |   |            |  
|Net cash provided by (used in) financing activities                                      |  |                      | (3,439,315 | ) |      |   | (5,463,035 | )    |  |   | 1,741,858  |  
|Effect of exchange rate changes on cash                                                  |  |                      |           |   |      |   |           |      |  |   | (1,103     | )
|                                                                                         |  |                      |            |   |      |   |            |      |  |   |            |  
|Net increase (decrease) in cash and cash equivalents                                     |  |                      | 4,421,493  |   |      |   | 3,715,248  |      |  |   | (362,345   | )
|Cash and cash equivalents at beginning of year                                           |  |                      | 4,960,700  |   |      |   | 1,245,452  |      |  |   | 1,607,797  |  
|                                                                                         |  |                      |            |   |      |   |            |      |  |   |            |  
|Cash and cash equivalents at end of year                                                 |  | $                    | 9,382,193  |   |      | $ | 4,960,700  |      |  | $ | 1,245,452  |  
|                                                                                         |  |                      |            |   |      |   |            |      |  |   |            |  



See accompanying notes.



F-6



---

AMX CORPORATION



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



March 31, 2004



1. Description of Business and Summary of
Significant Accounting Policies



Description of Business



AMX Corporation (AMX, or the
Company), incorporated in Texas in March 1982, is a leading designer, developer, marketer and distributor of sophisticated systems that control a variety of otherwise incompatible electronic devices and integrated systems. The Company
sells primarily to dealers and distributors in the United States, Canada, Mexico, Latin America, Europe, Australia, the Middle East, and the Far East.



Principles of Consolidation



The Companys financial statements include the accounts of all wholly owned subsidiaries. All significant inter-company balances have been
eliminated.



Cash and Short Term Investments



The Company generally invests its excess cash in money market funds and in
highly liquid investments with an initial maturity of three months or less. The investments include investment grade commercial paper and U.S. government securities and are classified as cash equivalents. The Companys debt and marketable
equity securities have been classified as available for sale. The carrying value of such securities approximates fair value.



Inventories



Inventories are stated at the lower of cost (first-in, first-out basis) or market. Inventories are categorized as raw materials, work-in-progress or
finished goods. Inventory reserves are recorded for damaged, obsolete, excess and slow-moving inventory. Management uses estimates to record these reserves. Slow-moving inventory is reviewed by product and may be partially or fully reserved
depending on the type of product, the length of time the product has been included in inventory, estimated future sales, and other relevant factors.



Depreciation



Depreciation of property and equipment is provided in amounts sufficient to relate the cost of depreciable assets to operations over their estimated
service lives using the straight-line depreciation method. The estimated lives used in determining depreciation generally range from 3 to 5 years for furniture, fixtures and equipment, and up to 10 years for leasehold improvements.



Concentration of Credit Risk



During the years ended March 31, 2004, 2003 and 2002, the Company realized
approximately 34%, 33%, and 29%, respectively, of total revenues from foreign sales and had approximately 39% and 38%, respectively, of trade receivables due from foreign customers at March 31, 2004 and 2003. Of the total receivables outstanding,
approximately 13% of such receivables are denominated in foreign currencies and are thus subject to foreign exchange rate risk. The Company currently has one active subsidiary outside the U.S. in the United Kingdom. The assets of foreign
subsidiaries represented 12% and 14% of consolidated assets at March 31, 2004 and 2003, respectively.



The Company provides credit in the normal course of business to its dealers and distributors. The Company generally does not require collateral or a
deposit when providing credit. The Company performs ongoing credit evaluations of its customers and maintains estimated allowances for possible credit losses based upon reviews of specific account balances, historical loss trends, current economic
conditions, and other relevant considerations.



F-7



---

AMX CORPORATION



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Recent Accounting Pronouncements



In December 2003, the SEC issued Staff Accounting Bulletin (SAB) No. 104, Revenue Recognition, which
supercedes SAB 101, Revenue Recognition in Financial Statements. SAB 104 primarily rescinds the accounting guidance contained in SAB 101 related to multiple-element revenue arrangements that was superceded as a result of the issuance of EITF
00-21. The adoption of SAB 104 did not have an impact on AMX Corporations consolidated results of operations or financial position.



Use of Estimates



The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make
estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.



Revenue Recognition



Revenue is recognized upon shipment of the product and transfer of title to the customer. A provision is made for estimated sales returns and allowances
on product sales in the same period as the related revenues are recorded. These estimates are based on historical sales returns, analysis of credit memo data and other known factors.



Income Taxes



The Companys income taxes are computed using the asset and liability method of accounting. Under the asset and liability method, a deferred tax
asset or liability is recognized for estimated future tax effects attributable to temporary differences and carryforwards. The measurement of deferred income tax assets is adjusted by a valuation allowance, if necessary, to recognize future tax
benefits only to the extent, based on available evidence, that it is more likely than not that such benefits will be realized.



Net Income (Loss) Per Common Share, Including Pro Forma Effects of Stock-Based Compensation



The Company accounts for stock-based compensation utilizing the provisions of Accounting Principles Board Opinion (APB) No.
25, Accounting for Stock Issued to Employees, and related interpretations. The Company accounts for stock-based compensation for non-employees under the fair value method prescribed by Statement of Financial Accounting Standards (SFAS) No.
123, Accounting for Stock-Based Compensation.



Pro forma
information regarding net income (loss) and net income (loss) per share is required by SFAS 123, and has been determined as if the Company had accounted for its employee stock purchase plan and other stock options under the fair value method. The
fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model. The following weighted-average assumptions were used for grants under the fixed option plans in 2004, 2003 and 2002, respectively:
dividend yield of 0% for all periods; expected volatility of 86.7%, 102.6%, and 94.8%; risk-free interest rate of 3.2%, 3.2% and 4.5%; and expected lives of 6 years for all periods. The weighted-average fair value of options granted under the
Companys stock option plans during 2004, 2003, and 2002 was $2.94, $1.78, and $2.16, respectively. The effects of applying SFAS No. 123 in the pro forma disclosures are not likely to be representative of the effects on pro forma net income in
future years due to the variability of the inputs required in the Black-Scholes option-pricing model.



F-8



---

AMX CORPORATION



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



The following table sets forth the computation of basic and diluted net income (loss) per share for
each of the last three fiscal years and illustrates the pro-forma effect on net income (loss) and net income (loss) per share if the Company had applied the fair value recognition provisions of SFAS No. 123:



|                                                                                         |  |                      |            |   |      |   |            |      |  |   |            |  
|---------------------------------------------------------------------------------------- |  | -------------------- | ---------- | - | ---- | - | ---------- | ---- |  | - | ---------- | -
|                                                                                         |  | Year ended March 31, |           
|                                                                                         |  | 2004                 |            |   | 2003 |   |            | 2002 | 
|Numerator:                                                                               |  |                      |            |   |      |   |            |      |  |   |            |  
|Net income (loss) as reported                                                            |  | $                    | 6,122,371  |   |      | $ | 3,116,369  |      |  | $ | (5,283,770 | )
|Add: Total stock-based compensation expense included in reported net income (loss)       |  |                      | 281,459    |   |      |   |           |      |  |   |           |  
|Deduct: Total stock-based compensation determined under fair value method for all awards |  |                      | (1,664,507 | ) |      |   | (1,416,130 | )    |  |   | (945,000   | )
|                                                                                         |  |                      |            |   |      |   |            |      |  |   |            |  
|Net income (loss)pro forma                                                              |  | $                    | 4,739,323  |   |      | $ | 1,700,239  |      |  | $ | (6,228,770 | )
|                                                                                         |  |                      |            |   |      |   |            |      |  |   |            |  
|                                                                                         |  |                      |           
|Denominator:                                                                             |  |                      |            |   |      |   |            |      |  |   |            |  
|Denominator for basic net income (loss) per shareWeighted-average shares outstanding    |  |                      | 11,369,559 |   |      |   | 11,139,670 |      |  |   | 11,006,372 |  
|Effect of dilutive securities:                                                           |  |                      |            |   |      |   |            |      |  |   |            |  
|Employee stock options and restricted stock                                              |  |                      | 849,957    |   |      |   | 15,443     |      |  |   |           |  
|                                                                                         |  |                      |            |   |      |   |            |      |  |   |            |  
|                                                                                         |  |                      |           
|Denominator for diluted net income (loss) per share                                      |  |                      | 12,219,516 |   |      |   | 11,155,113 |      |  |   | 11,006,372 |  
|                                                                                         |  |                      |            |   |      |   |            |      |  |   |            |  
|                                                                                         |  |                      |           
|Basic net income (loss) per shareas reported                                            |  | $                    | 0.54       |   |      | $ | 0.28       |      |  | $ | (0.48      | )
|                                                                                         |  |                      |            |   |      |   |            |      |  |   |            |  
|Diluted net income (loss) per shareas reported                                          |  | $                    | 0.50       |   |      | $ | 0.28       |      |  | $ | (0.48      | )
|                                                                                         |  |                      |            |   |      |   |            |      |  |   |            |  
|Basic net income (loss) per sharepro forma                                              |  | $                    | 0.42       |   |      | $ | 0.15       |      |  | $ | (0.57      | )
|                                                                                         |  |                      |            |   |      |   |            |      |  |   |            |  
|Diluted net income (loss) per sharepro forma                                            |  | $                    | 0.39       |   |      | $ | 0.15       |      |  | $ | (0.57      | )
|                                                                                         |  |                      |            |   |      |   |            |      |  |   |            |  



Of the total stock
options outstanding, approximately 375,000 and 1,581,000 options were excluded from the computation of diluted earnings per share in fiscal 2004 and 2003 because the option exercise price was greater than the average market price of the common
shares for the period, and therefore the effect would have been anti-dilutive. Had the Company reported net income for fiscal 2002, 567,000 potentially dilutive shares would have been included in the computation of diluted income per share.



Self Insurance Reserves for Medical Claims



The Company self-insures a portion of its employees medical benefits.
As a result, management is required to regularly estimate the value of unpaid benefits based upon historical trends and uses that information to record its liability for benefits that have been incurred but not yet paid. The Company has stop loss
insurance coverage in effect to cover the costs of medical claims over certain deductible amounts for any given plan year for an individual claimant or in the aggregate. However, the trend of medical claims may significantly and unexpectedly change,
in which case the Companys liability for unpaid claims may no longer be accurate. This could cause the Company to either increase or decrease its expense in a material amount in the period the change occurs.



Restructuring



Historically, the Company recorded restructuring charge liabilities in accordance with Emerging Issues Task Force (EITF)
Issue No. 94-3. During the fiscal year ended March 31, 2002, the Company recorded restructuring



F-9



---

AMX CORPORATION



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



charges of approximately $0.3 million under EITF 94-3. Effective December 31, 2002, the Company adopted SFAS No. 146, Accounting for Costs Associated with
Exit or Disposal Activities. The Company will account for any future exit or disposal activities in accordance with SFAS No. 146. In some circumstances, the recording of restructuring liabilities requires management to make certain estimates.
Although no significant changes in estimates are anticipated, actual costs may differ from managements estimates.



Foreign Currency Translation



The functional currency of the Companys subsidiary in the United Kingdom is the U.S. dollar. Assets and liabilities denominated in foreign currency
are translated into U.S. dollars at the current rate of exchange existing at year-end and historical rates, as applicable, and revenues and expenses are translated at the average monthly exchange rates. Translation gains and losses result from
translating all accounts of the Companys U.K. subsidiary into U.S. dollars and charged to income.



Shipping and Handling Costs



Shipping and handling costs that the Company incurs related to product shipments to customers are included in cost of sales.



Advertising



The Company expenses the costs of advertising when incurred. Advertising costs were $565,000, $427,000 and $482,000 for the years ended March 31, 2004,
2003 and 2002, respectively.



Reclassifications



Certain prior year amounts have been reclassified to conform to the current
year presentation.



2. Inventories



The components of inventories are as follows:



|                 |  |      |           |      |   |          
|---------------- |  | ---- | --------- | ---- | - | ---------
|                 |  | 2004 |           | 2003
|Raw materials    |  | $    | 1,334,743 |      | $ | 1,921,444
|Work in progress |  |      | 479,557   |      |   | 310,910  
|Finished goods   |  |      | 5,513,873 |      |   | 5,041,705
|                 |  |      |           |      |   |          
|                 |  | $    | 7,328,173 |      | $ | 7,274,059
|                 |  |      |           |      |   |          



3. Furniture and Equipment



The general classes of furniture and equipment are as
follows:



|                               |  |      |             |   |      |   |             |  
|------------------------------ |  | ---- | ----------- | - | ---- | - | ----------- | -
|                               |  | 2004 |             |   | 2003 |  
|Equipment, including computers |  | $    | 19,877,297  |   |      | $ | 17,527,970  |  
|Furniture and fixtures         |  |      | 3,346,151   |   |      |   | 3,210,730   |  
|Leasehold improvements         |  |      | 1,503,263   |   |      |   | 1,420,993   |  
|                               |  |      |             |   |      |   |             |  
|                               |  |      | 24,726,711  |   |      |   | 22,159,693  |  
|Less accumulated depreciation  |  |      | (17,731,244 | ) |      |   | (15,260,506 | )
|                               |  |      |             |   |      |   |             |  
|                               |  | $    | 6,995,467   |   |      | $ | 6,899,187   |  
|                               |  |      |             |   |      |   |             |  



F-10



---

AMX CORPORATION



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



4. Debt



The Company has a revolving line of credit with Bank One, N.A. (Bank One). The line of credit provides for borrowings of up to $10 million
subject to borrowing base limitations. As of March 31, 2004, there were no outstanding borrowings under the revolving line of credit. The line of credit provides for interest at varying rates based on the Companys choice of the prime lending
rate or the London Inter-Bank Offered Rate. As of March 31, 2004 and 2003, the interest rate on the revolving line of credit was approximately 4.0% and 4.5%, respectively. The line of credit is collateralized by receivables, inventory,
intellectual property, and the net assets of the wholly-owned U.K. subsidiary. Available future borrowings under the facilitys borrowing base limits amounted to $10 million as of March 31, 2004. This revolving line of credit expires on
September 29, 2004. The Company anticipates that the revolving line of credit will be renewed upon maturity with similar terms and conditions. The line of credit contains various restrictive and financial covenants. The Company is in compliance with
each of these covenants as of March 31, 2004.



As of March 31,
2003, the Company had borrowings of approximately $1.0 million under an unsecured term note with Bank One. The term note provided for quarterly payments of principal and interest through April 30, 2004. The Company paid the last installment on the
term note early, and had no outstanding borrowings under the term note as of March 31, 2004.



Interest paid amounted to approximately $104,000, $424,000, and $708,000 for the years ended March 31, 2004, 2003 and 2002, respectively.



5. Employee Benefit Plans



The Company has a 401(k) plan available to all U.S. employees who are at least 21 years of age and meet certain service requirements. Employees can
contribute up to 60% of their salary subject to statutory limitations. Effective April 1, 2003, the Company reinstated a Company match. Under the terms of the plan, the Company match may be funded using participant forfeitures of prior Company
contributions that are held by the plan, or by cash contributions from the Company. Company matching contributions for the years ended March 31, 2004, 2003 and 2002 were $127,000, $0 and $271,000, respectively. The Company match for the year ended
March 31, 2004 was funded entirely by participant forfeitures.



The Companys 1996 Employee Stock Purchase Plan permits eligible employees to purchase common stock through payroll deductions. The price of the common stock purchased under the 1996 Employee Stock Purchase Plan is 85% of the lower of
the fair market value of the common stock at the beginning or at the end of each offering period. The Plan provides for two six-month offering periods each year beginning on the first trading day on or after January 1 and July 1. For the years ended
March 31, 2004, 2003 and 2002, 101,561, 115,809, and 87,773 shares were issued under this plan. As of March 31, 2004, there were 282,630 shares available for future issuance under the Plan. Shares issued under the Employee Stock Purchase Plan are
considered non-compensatory for the determination of compensation expense under APB No. 25, but are included as compensation expense in the pro forma disclosures required by SFAS No. 123 in Footnote 1.



F-11



---

AMX CORPORATION



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



6. Income Taxes



The components of the Companys income tax provision were as follows:



|                      |  |                      |         |   |      |   |         |      |  |   |            |  
|--------------------- |  | -------------------- | ------- | - | ---- | - | ------- | ---- |  | - | ---------- | -
|                      |  | Year Ended March 31, |        
|                      |  | 2004                 |         |   | 2003 |   |         | 2002 | 
|Federal income taxes: |  |                      |         |   |      |   |         |      |  |   |            |  
|Current               |  | $                    | 36,914  |   |      | $ | (80,712 | )    |  | $ | (2,102,034 | )
|Deferred              |  |                      |        |   |      |   |        |      |  |   | 4,201,682  |  
|State income taxes    |  |                      | 84,375  |   |      |   | 16,768  |      |  |   | 178,392    |  
|Foreign income taxes  |  |                      | (78,629 | ) |      |   | 366,332 |      |  |   | 68,587     |  
|                      |  |                      |         |   |      |   |         |      |  |   |            |  
|                      |  | $                    | 42,660  |   |      | $ | 302,388 |      |  | $ | 2,346,627  |  
|                      |  |                      |         |   |      |   |         |      |  |   |            |  



Foreign operations
generated a profit before tax of approximately $0.1 million and $1.6 million for the years ended March 31, 2004 and 2003, respectively. Foreign operations incurred a loss before tax of approximately $0.2 million for the year ended March 31, 2002.
Undistributed earnings (approximately $3.7 million at March 31, 2004) of non-U.S. subsidiaries have been indefinitely reinvested and, accordingly, no provision has been made for taxes due upon repatriation of these earnings.



The income tax provision differs from amounts computed by applying the U.S.
federal statutory tax rate to income (loss) before income taxes as follows:



|                                                                                                  |  |                      |            |   |      |   |            |      |  |   |           |  
|------------------------------------------------------------------------------------------------- |  | -------------------- | ---------- | - | ---- | - | ---------- | ---- |  | - | --------- | -
|                                                                                                  |  | Year ended March 31, |           
|                                                                                                  |  | 2004                 |            |   | 2003 |   |            | 2002 | 
|                                                                                                  |  |                      |           
|Federal income tax (benefit) at statutory rate                                                    |  | $                    | 2,096,110  |   |      | $ | 1,162,378  |      |  | $ | (998,629  | )
|                                                                                                  |  |                      |           
|State income tax, net of federal tax                                                              |  |                      | 189,643    |   |      |   | 278,292    |      |  |   | 117,739   |  
|                                                                                                  |  |                      |           
|Benefit of income reported through Foreign Sales Corporation and Extra Territorial Income benefit |  |                      | (316,090   | ) |      |   | (224,523   | )    |  |   | (254,931  | )
|                                                                                                  |  |                      |           
|Effect of non-U.S. tax rates                                                                      |  |                      | (8,522     | ) |      |   | (137,055   | )    |  |   | 61,015    |  
|                                                                                                  |  |                      |           
|Change in valuation allowance                                                                     |  |                      | (2,019,276 | ) |      |   | (1,090,008 | )    |  |   | 3,737,380 |  
|                                                                                                  |  |                      |           
|Effect of non-deductible meals and entertainment expenses                                         |  |                      | 53,670     |   |      |   | 68,803     |      |  |   | 100,022   |  
|                                                                                                  |  |                      |           
|Recognition of research and development credit                                                    |  |                      |           |   |      |   | 381,959    |      |  |   | (541,857  | )
|                                                                                                  |  |                      |           
|Other                                                                                             |  |                      | 47,125     |   |      |   | (137,458   | )    |  |   | 125,888   |  
|                                                                                                  |  |                      |            |   |      |   |            |      |  |   |           |  
|                                                                                                  |  |                      |           
|                                                                                                  |  | $                    | 42,660     |   |      | $ | 302,388    |      |  | $ | 2,346,627 |  
|                                                                                                  |  |                      |            |   |      |   |            |      |  |   |           |  



The Company recorded a
tax provision of approximately $4.2 million during the quarter ended ended September 30, 2001 in order to record a full valuation allowance against its deferred tax assets. This valuation allowance was recorded as a result of the accounting charges
and operating performance of the Company in fiscal years 2000, 2001, and through the quarter ended September 30, 2001. Although the Company anticipated future sustained profitability, generally accepted accounting principles required that historical
operating performance weigh heavily in assessing the realizability of deferred tax assets. In the fourth quarter of fiscal 2002, Congress passed the Job Creation and Worker Assistance Act of 2002, under which the period allowed for carrying back net
operating losses from certain tax years was extended from two to five years. As a result, the Company was



F-12



---

AMX CORPORATION



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



able to immediately realize $2.0 million of the deferred tax assets for which a valuation allowance had previously been recorded. Accordingly, the Company
recorded a tax benefit of $2.0 million during the fourth quarter of fiscal 2002. The Company assesses the realizability of its deferred tax assets on an ongoing basis and will eliminate the valuation allowance when warranted based on sustained
profitable operating results.



Significant components of
deferred tax assets and liabilities are as follows:



|                                 |  |      |            |   |      |   |            |  
|-------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | -
|                                 |  | 2004 |            |   | 2003 |  
|Deferred tax assets:             |  |      |            |   |      |   |            |  
|Net operating loss carryforwards |  | $    | 3,150,456  |   |      | $ | 4,309,588  |  
|Inventories                      |  |      | 1,437,550  |   |      |   | 1,693,274  |  
|Allowance for doubtful accounts  |  |      | 235,974    |   |      |   | 340,576    |  
|Tax credit carryforwards         |  |      | 579,707    |   |      |   | 579,707    |  
|Accrued expenses and other       |  |      | 622,054    |   |      |   | 588,889    |  
|                                 |  |      |            |   |      |   |            |  
|                                 |  |      | 6,025,741  |   |      |   | 7,512,034  |  
|Valuation allowance              |  |      | (4,499,015 | ) |      |   | (6,518,291 | )
|                                 |  |      |            |   |      |   |            |  
|                                 |  |      | 1,526,726  |   |      |   | 993,743    |  
|Deferred tax liabilities:        |  |      |            |   |      |   |            |  
|Prepaid expenses                 |  |      | (407,508   | ) |      |   | (378,191   | )
|Furniture and equipment          |  |      | (961,650   | ) |      |   | (545,309   | )
|Other                            |  |      | (70,243    | ) |      |   | (70,243    | )
|                                 |  |      |            |   |      |   |            |  
|                                 |  |      | (1,439,401 | ) |      |   | (993,743   | )
|                                 |  |      |            |   |      |   |            |  
|Net deferred tax asset           |  | $    | 87,325     |   |      | $ |           |  
|                                 |  |      |            |   |      |   |            |  



The net deferred tax
asset balance of $87,325 at March 31, 2004 represents a deferred tax asset attributable to the Companys foreign subsidiary and is included in other long-term assets in the balance sheet.



Net income tax payments of approximately $76,000 were made in the year ended
March 31, 2004, consisting of federal alternative minimum tax and state tax payments, offset by foreign tax refunds. Net income tax refunds of approximately $1.9 million were received in the year ended March 31, 2003, consisting of federal tax
refunds, offset by foreign and state income tax payments. Net income tax payments of approximately $162,000 were made in the year ended March 31, 2002, consisting of foreign and state income tax payments offset by federal tax refunds.



At March 31, 2004, the Company has approximately $9.1 million of federal net
operating loss carryforwards, which begin to expire in 2012. Of this amount, $3.6 million is subject to limitations under the Internal Revenue Code. The Company has approximately $2.2 million of state net operating loss carryforwards that expire at
various dates. Research and development credit carryforwards amount to $0.6 million and begin to expire in 2019.



7. Commitments and Contingencies



The Company leases real property and equipment. Under certain leases, the Company is required to pay costs such as taxes, insurance, and operating
expenses in addition to the rental payments. Rental expense under operating leases for the years ended March 31, 2004, 2003 and 2002, was approximately $2.0 million, $2.0 million, and $2.3 million, respectively.



F-13



---

AMX CORPORATION



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



At March 31, 2004 future minimum payments for non-cancelable operating leases are as follows:



|                    |  |   |           
|------------------- |  | - | ----------
|2005                |  | $ | 1,679,517 
|2006                |  |   | 1,615,646 
|2007                |  |   | 1,671,519 
|2008                |  |   | 1,662,916 
|2009                |  |   | 1,645,929 
|2010 and thereafter |  |   | 2,331,733 
|                    |  |   |           
|                    |  | $ | 10,607,260
|                    |  |   |           



The Company uses five
turnkey vendors to manufacture its products. Approximately 85% of the Companys revenue is derived from products manufactured by these turnkey vendors. During the normal course of business, the Company enters into agreements with contract
manufacturers and suppliers that allow them to procure material based upon estimated material usage requirements and forecasted demand for the Companys products. As of March 31, 2004, the Company has outstanding purchase commitments of
approximately $16.4 million, compared with $12.9 million as of March 31, 2003. The Company has entered into certain purchase agreements relating to inventory items that are currently classified by the Company as either slow moving or obsolete
inventory. The Company anticipates incurring cancellation or restocking charges associated with these purchase agreements and has a reserve of approximately $150,000 for such anticipated restocking charges.



The Company is involved in legal activities and disputes arising in the
ordinary course of business. The Company believes that it has adequate legal defenses and that the ultimate outcome of these matters will not have a material adverse effect on the Companys consolidated financial position, results of operations
or cash flows.



8. Shareholders Equity and Stock Options



On December 15, 1999, the Company and Intel Corporation
(Intel) entered into an agreement pursuant to which, among other things, the Company issued to Intel, in consideration of services provided by Intel under such agreement, a warrant to purchase 79,352 shares of Common Stock
(Business Warrant) which was to vest upon the occurrence of certain co-development and co-marketing efforts between the Company and Intel related to the Companys former consumer broadband market strategy. On December 15, 1999, the
Company and Intel also entered into a Securities Purchase and Investor Rights Agreement (Purchase Agreement) pursuant to which Intel purchased 423,212 shares of Common Stock and was issued a vested warrant to purchase 238,057 shares of
Common Stock (Equity Warrant). The aggregate purchase price under the Purchase Agreement for the Common Stock and the Equity Warrant was $5,000,000. The Business Warrant and the Equity Warrant each have an exercise price of $21.54 per
share (Exercise Price) and a term of five years.



Subsequent to this transaction, the Company discontinued the Consumer Broadband Division and all related product and marketing activity. As a result, the events under which the Business Warrant was to vest have not occurred and are not
expected to occur in the future. Additionally, Intel has divested its shares of Common Stock and is not expected to exercise the Equity Warrant.



The Company has never paid dividends on its Common Stock and does not anticipate paying dividends on its Common Stock in the foreseeable future in order
to retain all available earnings generated by operations for the development and growth of the business. In addition, under the terms of the Companys current line of credit, the Company may not pay dividends without the prior consent of the
lending bank.



F-14



---

AMX CORPORATION



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



The Company has three stock-based compensation plans outstanding, which are described below. No
compensation cost is recognized for its fixed option plans because the exercise price of the Companys employee stock options equals or exceeds the market price of the underlying stock on the date of the grant.



Under the Companys 1995 Stock Option Plan, the Company may grant
options for up to 1,000,000 shares of common stock. All options have a term of ten years and vest over a four-year period. The Companys 1995 Director Stock Option Plan authorized the granting of stock options for up to 250,000 shares to
non-employee directors. All options granted under this plan are fully vested and have a term of ten years.



Under the Companys 1999 Equity Incentive Plan, the Company may grant various long-term incentive awards, including stock options and restricted
stock awards, for up to 3,000,000 shares of common stock. Stock options granted under the 1999 Equity Incentive Plan have a term of ten years and generally vest over periods ranging from three to four years.



A summary of the status of the Companys options is presented below:



|                                                         |  |            |   |  |                               |     
|-------------------------------------------------------- |  | ---------- | - |  | ----------------------------- | ----
|                                                         |  | Shares     |   |  | WeightedAverageExercise Price
|Outstanding at March 31, 2001                            |  | 2,403,752  |   |  | $                             | 6.87
|Options granted                                          |  | 888,000    |   |  |                               | 2.75
|Options exercised                                        |  | (232,211   | ) |  |                               | 1.77
|Options canceled                                         |  | (1,202,590 | ) |  |                               | 7.68
|                                                         |  |            |   |  |                               |     
|                                                         |  |           
|Outstanding at March 31, 2002                            |  | 1,856,951  |   |  |                               | 5.01
|Options granted                                          |  | 367,287    |   |  |                               | 2.19
|Options canceled                                         |  | (362,325   | ) |  |                               | 6.28
|                                                         |  |            |   |  |                               |     
|                                                         |  |           
|Outstanding at March 31, 2003                            |  | 1,861,913  |   |  |                               | 4.21
|Options granted                                          |  | 258,600    |   |  |                               | 4.13
|Options exercised                                        |  | (92,944    | ) |  |                               | 3.41
|Options canceled                                         |  | (131,599   | ) |  |                               | 6.49
|                                                         |  |            |   |  |                               |     
|                                                         |  |           
|Outstanding at March 31, 2004                            |  | 1,895,970  |   |  | $                             | 4.08
|                                                         |  |            |   |  |                               |     
|                                                         |  |           
|Available for grants in future periods at March 31, 2004 |  | 1,735,725  |   |  |                               |     
|                                                         |  |            |   |  |                               |     



On April 22, 2003, the
Compensation Committee of the Company awarded 200,000 shares of restricted stock to key officers pursuant to the 1999 Equity Incentive Plan. The restricted stock awards vest as follows: 50% immediately upon grant, 25% on April 22, 2004, and 25% on
April 22, 2005. The market value of the restricted stock was $1.93 per share. Through March 31, 2004, the Company has recorded approximately $281,000 of stock compensation charges related to this grant of restricted shares. The remaining deferred
compensation balance as of March 31, 2004 of $105,000 will be recognized as compensation expense ratably over the remaining vesting term.



F-15



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AMX CORPORATION



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



The following table summarizes information about stock options outstanding under the plans as of
March 31, 2004:



|                         |  |                     |  |                                          |  |                               |       |         |           |                               |   |      
|------------------------ |  | ------------------- |  | ---------------------------------------- |  | ----------------------------- | ----- | ------- | --------- | ----------------------------- | - | -----
|                         |  | Options Outstanding |  | Options Exercisable                     
|Range of Exercise Prices |  | Options             |  | WeightedAverageRemainingContractual Life |  | WeightedAverage ExercisePrice |       | Options |           | WeightedAverage ExercisePrice
|$1.34 to $2.53           |  | 805,953             |  | 8.08 years                               |  | $                             | 2.27  |         | 497,621   |                               | $ | 2.34 
|$2.55 to $3.15           |  | 462,914             |  | 7.50 years                               |  |                               | 2.83  |         | 281,254   |                               |   | 2.84 
|$3.63 to $8.75           |  | 481,653             |  | 6.19 years                               |  |                               | 5.60  |         | 380,987   |                               |   | 5.66 
|$8.81 to $17.50          |  | 145,450             |  | 5.57 years                               |  |                               | 13.02 |         | 145,450   |                               |   | 13.02
|                         |  |                     |  |                                          |  |                               |       |         |           |                               |   |      
|                         |  | 1,895,970           |  | 7.27 years                               |  | $                             | 4.08  |         | 1,305,312 |                               | $ | 4.61 
|                         |  |                     |  |                                          |  |                               |       |         |           |                               |   |      



There were 1,062,999
and 686,262 exercisable options at March 31, 2003 and 2002, respectively, and the weighted-average exercise price of those options was $4.95 and $6.63, respectively.



9. Geographic Information



The Company is engaged in one line of business: the design, development, marketing and distribution of systems that allow control of electronic equipment
and the distribution of information from the Internet to these devices. International sales which include export sales and sales from foreign operations account for a significant portion of the Companys revenues. Domestic sales represented
approximately $56.3 million, $55.4 million, and $62.6 million, or 66%, 67%, and 71% of the Companys total sales during the fiscal years ended March 31, 2004, 2003 and 2002, respectively. Sales outside of the United States, consisting of
products sold primarily in Europe, Canada, Mexico, Asia, and Australia, represented approximately $29.6 million, $27.2 million, and $25.0 million, or 34%, 33%, and 29% of the Companys total sales during the fiscal years ended March 31, 2004,
2003 and 2002, respectively. Approximately 11%, 10%, and 10% of net sales for the years ended March 31, 2004, 2003 and 2002, respectively, were from the Companys international locations. Approximately 12%, 14%, and 12% of identifiable assets
for the years ended March 31, 2004, 2003 and 2002, respectively, were located outside of the U.S., primarily in the United Kingdom. U.S. export sales totaled $20.3 million, $19.4 million, and $16.5 million for the years ended March 31, 2004, 2003
and 2002, respectively.



Export sales from the Companys
U.S. operations to unaffiliated customers were as follows for the fiscal year ended March 31 (in thousands):



|                         |  |      |        |      |   |        |  |   |       
|------------------------ |  | ---- | ------ | ---- | - | ------ |  | - | ------
|                         |  | 2004 |        | 2003 |   | 2002  
|Europe                   |  | $    | 7,535  |      | $ | 6,970  |  | $ | 6,342 
|Asia and the Pacific Rim |  |      | 7,747  |      |   | 6,619  |  |   | 5,267 
|Canada and Latin America |  |      | 2,800  |      |   | 4,144  |  |   | 3,750 
|Middle East and Africa   |  |      | 2,253  |      |   | 1,621  |  |   | 1,187 
|                         |  |      |        |      |   |        |  |   |       
|                         |  | $    | 20,335 |      | $ | 19,354 |  | $ | 16,546
|                         |  |      |        |      |   |        |  |   |       



10. Related Party Transactions



A close relative of an executive officer of the Company
owns one of the Companys international distributors. During fiscal 2004, the Company recorded revenue of approximately $1.2 million from this distributor, and had an accounts receivable balance from this distributor of approximately $0.5
million as of March 31, 2004, a portion of which is secured by a letter of credit. The terms and conditions extended to this distributor are comparable to the terms and conditions extended to other similar international distributors.



F-16



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AMX CORPORATION



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



11. Unaudited Quarterly Financial Data



The following table sets forth unaudited quarterly data for the eight quarters ended March 31, 2004 (in thousands, except
per share amounts):



|                         |  |                    |        |              |   |             |  |               |        |              |   |              |  |             |        |               |   |        |  |   |        |  |   |       
|------------------------ |  | ------------------ | ------ | ------------ | - | ----------- |  | ------------- | ------ | ------------ | - | ------------ |  | ----------- | ------ | ------------- | - | ------ |  | - | ------ |  | - | ------
|                         |  | Three Months Ended
|                         |  | June 30,2002       |        | Sept 30,2002 |   | Dec 31,2002 |  | March 31,2003 |        | June 30,2003 |   | Sept 30,2003 |  | Dec 31,2003 |        | March 31,2004
|                         |  |                    |        |              |   |             |  |              
|Net sales                |  | $                  | 20,195 |              | $ | 22,226      |  | $             | 20,268 |              | $ | 19,922       |  | $           | 19,322 |               | $ | 22,282 |  | $ | 21,375 |  | $ | 22,964
|                         |  |                    |        |              |   |             |  |              
|Gross profit             |  |                    | 10,226 |              |   | 11,397      |  |               | 10,115 |              |   | 10,402       |  |             | 10,362 |               |   | 11,918 |  |   | 11,357 |  |   | 12,574
|                         |  |                    |        |              |   |             |  |              
|Operating income         |  |                    | 682    |              |   | 1,572       |  |               | 486    |              |   | 1,084        |  |             | 898    |               |   | 1,754  |  |   | 1,277  |  |   | 1,749 
|                         |  |                    |        |              |   |             |  |              
|Net income               |  |                    | 490    |              |   | 1,318       |  |               | 385    |              |   | 923          |  |             | 932    |               |   | 1,675  |  |   | 1,440  |  |   | 2,075 
|                         |  |                    |        |              |   |             |  |              
|Basic income per share   |  | $                  | 0.04   |              | $ | 0.12        |  | $             | 0.03   |              | $ | 0.08         |  | $           | 0.08   |               | $ | 0.15   |  | $ | 0.13   |  | $ | 0.18  
|                         |  |                    |        |              |   |             |  |              
|Diluted income per share |  | $                  | 0.04   |              | $ | 0.12        |  | $             | 0.03   |              | $ | 0.08         |  | $           | 0.08   |               | $ | 0.14   |  | $ | 0.12   |  | $ | 0.16  



F-17



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Schedule II



AMX Corporation



VALUATION AND QUALIFYING ACCOUNTS



Years ended March 31, 2002, 2003 and 2004

(in thousands)



|                                 |  |                              |       |           |   |                              |  |   |                        |   |  |   |      
|-------------------------------- |  | ---------------------------- | ----- | --------- | - | ---------------------------- |  | - | ---------------------- | - |  | - | -----
|                                 |  | Balance atbeginningof period |       | Additions |   | Deductions,Recoveries &Other |  |   | Balanceat endof period
|Allowance for Doubtful Accounts: |  |                              |       |           |   |                              |  |   |                        |   |  |   |      
|Fiscal 2002                      |  | $                            | 363   |           | $ | 735                          |  | $ | 32                     |   |  | $ | 1,130
|Fiscal 2003                      |  | $                            | 1,130 |           | $ | 649                          |  | $ | (796                   | ) |  | $ | 983  
|Fiscal 2004                      |  | $                            | 983   |           | $ | 436                          |  | $ | (707                   | ) |  | $ | 712  
|Inventory Reserve:               |  |                              |       |           |   |                              |  |   |                        |   |  |   |      
|Fiscal 2002                      |  | $                            | 3,098 |           | $ | 3,084                        |  | $ | (2,171                 | ) |  | $ | 4,011
|Fiscal 2003                      |  | $                            | 4,011 |           | $ | 820                          |  | $ | (2,043                 | ) |  | $ | 2,788
|Fiscal 2004                      |  | $                            | 2,788 |           | $ | 324                          |  | $ | (1,090                 | ) |  | $ | 2,022
|Tax Valuation Allowance:         |  |                              |       |           |   |                              |  |   |                        |   |  |   |      
|Fiscal 2002                      |  | $                            | 3,871 |           | $ | 4,211                        |  | $ | (474                   | ) |  | $ | 7,608
|Fiscal 2003                      |  | $                            | 7,608 |           | $ |                             |  | $ | (1,090                 | ) |  | $ | 6,518
|Fiscal 2004                      |  | $                            | 6,518 |           | $ |                             |  | $ | (2,019                 | ) |  | $ | 4,499



F-18