DRAFT-3/27/97

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                          ----------------------------

                                    FORM 10-K

                        FOR ANNUAL AND TRANSITION REPORTS
                     PURSUANT TO SECTIONS 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
(MARK ONE)

[ x ]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
           EXCHANGE ACT OF 1934

           FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996

                                       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: 0-5860

                               RECOTON CORPORATION
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

          NEW YORK                                    11-1771737
 (State or Other Jurisdiction of         (I.R.S. Employer Identification No.
 Incorporation or Organization)



                  2950 LAKE EMMA ROAD, LAKE MARY, FLORIDA 32746
               (Address of Principal Executive Offices) (Zip Code)

       Registrant's telephone number, including area code: (407) 333-8900

        Securities registered pursuant to Section 12(b) of the Act: NONE

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

                          COMMON STOCK, $.20 PAR VALUE
                                (Title of Class)


<PAGE>
                          [Continuation of Cover Page]

         Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
reporting 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. |_|

         State the aggregate market value of the voting stock held by
non-affiliates of the registrant. The aggregate market value shall be computed
by reference to the price at which the stock was sold, or the average bid and
asked prices of such stock, as of a specified date within 60 days prior to the
date of filing.

          $128,322,036 based on the closing price on the Nasdaq Stock Market of
$13.50 as of March 21, 1997

         Indicate the number of shares outstanding of each of the registrant's
classes of common stock as of the latest practicable date.

             11,377,183 shares of Common Stock as of March 21, 1997

                       DOCUMENTS INCORPORATED BY REFERENCE

         Portions of the definitive Proxy Statement to be filed with the
Securities and Exchange Commission (the "Commission") not later than 120 days
after the end of the fiscal year covered by this Form 10-K with respect to the
registrant's Annual Meeting of Shareholders to be held in 1997 are incorporated
by reference into Part III of this Form 10-K.

         Various exhibits, as listed in Item 14 of Part IV, have been
incorporated by reference.

<PAGE>


                                     PART I

ITEM 1.  BUSINESS

OVERVIEW

     Recoton Corporation, by itself and through its subsidiaries (collectively,
Recoton or the Company), is a worldwide marketer and producer of consumer
electronic products, generally for aftermarket use, primarily sold to retailers
and original equipment manufacturers. Recoton's diverse product line includes
high-fidelity loud speakers, home theater speaker systems, bookshelf speakers, a
complete line of car audio products including in-dash, CD and cassette players,
amplifiers, speakers and installation accessories and other audio products;
video game and computer products; 900 Megahertz (MHz) wireless technology
products; and other highly functional accessories for audio, car audio,
camcorder, cellular and standard telephone, home office, multimedia, music, and
video products. The Company's products are sold under the Advent(R), Ambico(R),
Ampersand(TM), AR(R)/Acoustic Research(R), Calibron(R), Discwasher(R), Heco(TM),
InterAct(R), Jensen(R), MacAudio(TM), Magnat(TM), NHT(R) (Now Hear This),
Parsec(R), PhaseLinear(R), Recoton(R), Rembrandt(R), Ross(R), SoleControl(R)
SoundQuest(TM) and STD(R) brand names, among others.

          Recoton Corporation was incorporated in New York State in 1936, and
has significantly expanded its product lines through selected acquisitions,
research efforts and product development. In August 1996 Recoton acquired
International Jensen Incorporated (Jensen), a leading marketer of home and
automotive loudspeakers; it did not acquire the original equipment manufacturing
(OEM) business of Jensen. Sales of Jensen for its fiscal year ending prior to
the acquisition, excluding the OEM business, were over $150 million. Immediately
following the acquisition, Jensen changed its name to Recoton Audio Corporation
(RAC). The Jensen acquisition followed the Company's growth into the field of
hi-fidelity, high-performance loudspeaker design and marketing started with the
formation of Recoton's Christie Design Corporation subsidiary in 1995.

         In 1995, the Company significantly expanded its video and computer game
accessory business with the acquisition of STD Holding Limited, a Hong
Kong-based company (STD), and the business of its U.S. distribution arm now
operating under the name InterAct Accessories, Inc. Sales of STD and its
subsidiaries for the fiscal year prior to the acquisition were US$40 million.

         Recoton's research and development activities have led to innovative
products using 900 MHz wireless technology, whose signals transmit through
walls, floors and ceilings up to 150 feet away. The 900 MHz products include
stereo headphones, amplified speakers, a portable weather-resistant
outdoor/indoor loudspeaker, microphones and universal remote controls. Among
other innovative products, Recoton has also developed the "CD20" adapter, which
allows a portable compact disc (CD) player to operate through an automobile
cassette player; the CD HydroBath(R), a non-contact multimedia CD cleaner; and
amplified TV and AM/FM radio antennas.

INDUSTRY BACKGROUND

         The consumer electronics market is large and diverse, having evolved
from phonographs, radios, home stereos and televisions to encompass a wide
variety of innovative technologies and products. These include personal
computers, CD players, camcorders, video cassette recorders (VCRs), cellular and
cordless telephones and video game systems. Some of these products (such as CD
players, camcorders and VCRs) have reached a plateau of maturity, while others
(such as cellular telephones, video game products, computer products and home
theater systems) are still growing in consumer acceptance. Advances in certain
technologies for mature products such as televisions, camcorders and telephones
are leading to new innovations such as high definition television (HDTV), flat
screen televisions, new TV delivery systems such as direct broadcast satellite
(DBS) systems and the new digital video disc (DVD) systems, which deliver
ultra-high quality pictures and stereo sound. These advances may herald a new
growth in consumer electronics as they are phased in.

         The broadening and expansion of the consumer electronics market has
been due to a greater awareness of consumer electronics products and changes in
consumer tastes, lifestyles and work habits, including a growing desire to spend
more time at home, whether for relaxation or work. This trend has been seen in
the strong growth in "home theater" listening and viewing environments and
multimedia products and in the increasing popularity of telecommuting, with the
need for more sophisticated home offices.

         The growth of consumer electronics over the last decade also has led to
the development of a distinct market for consumer electronics accessories and
other aftermarket enhancements. The market for these products is broad and
highly fragmented, ranging from low-end products such as audio and video cables,
cassette cleaners and phone cords, to more sophisticated products such as remote
controls, stereo headphones, amplified antennas, wireless speakers and
high-performance loudspeakers. Many of these products are necessary to maintain
and operate consumer electronics products while others are used to expand,
upgrade or enhance the functionality of particular products.

         The consumer electronics retailing market, which is the primary outlet
for accessory products, is subject to intense competition among a wide variety
of retailers, such as consumer electronics superstores, department stores, mass
merchants, catalog showrooms, direct mail merchants, and office and warehouse
clubs. Competitive pressures have lead to shrinking gross margins on consumer
electronics products, leading retailers to increase their emphasis on
accessories. Although accessories typically sell at lower retail prices, the
gross profit margins realized on accessories typically are higher than on more
expensive, price sensitive, consumer electronics equipment. Additionally,
inventory costs and floor space required to display and sell accessories are
substantially less. Home and car speakers and car amplifiers typically sell at
higher profit margins than do televisions and portable audio systems.

         Retailers also have found that a broad offering of accessories provides
additional services to the consumer which allow retailers to differentiate
themselves from their competitors. In addition, retailers recognize that having
accessories available can encourage add-on sales to a consumer electronics
purchase, lead to impulse purchases and encourage repeat visits by customers,
all of which provide the opportunity for selling additional consumer electronics
products and accessories.

         Recoton believes that retailers are devoting more floor space each year
to accessories, enhancing their in-store accessory merchandising and spending
more on accessory advertising and promotion. Recoton believes that in order to
achieve greater purchasing and operating economies and to reduce costs,
retailers are looking for suppliers which offer a broad assortment of consumer
electronics accessories and can provide timely product availability and strong
merchandising support.

PRODUCTS

         Recoton offers a broad line of over 3750 consumer electronics products
for home and automotive aftermarket use in many consumer electronics categories.
The products are offered under a number of highly recognized brand names and are
positioned, packaged and priced to appeal to virtually every level of retailer
and customer. Suggested retail prices for most of Recoton's products range from
approximately $2 to $500, while some of Recoton's audio speakers and other newer
products have suggested retail prices of up to $4,300.

         Recoton aims to continually expand its product offerings to remain at
the forefront of the consumer electronics market. The Company frequently
solicits feedback from its retailers on accessories for existing products, as
well as for new consumer electronics categories. Through its research and
development capabilities and its continual efforts to identify acquisition
opportunities, Recoton believes that it is able to respond rapidly to meet new
and changing consumer demands for accessories.

         The following is a detailed description (in alphabetic order) of the
Company's products; there is, however, a large degree of overlap among these
product categories:

          o    Antennas. A complete line of amplified and passive indoor
               television and AM/FM antennas is offered under the Recoton,
               Parsec and Rembrandt brand names. Recoton believes that it has
               been and continues to be an innovator in the introduction of
               amplified antennas. Recoton also believes that it has one of the
               leading industry positions in this market and that this market is
               growing due in part to the fact that most manufacturers have
               discontinued supplying antennas with new TV sets. Recoton's
               amplified antennas are ideal for use with the new DBS satellite
               receiver dishes, which dishes cannot receive local TV broadcasts.

          o    Audio Accessories. An extensive line of audio accessories
               designed for use with stereo and monaural systems (including
               home, portable and car systems), CD players, cassette tape
               recorders, phonographs and radios is offered under the Discwasher
               and Recoton brand names. Products include cables and connectors,
               AC/DC power adapters, inverters, intercoms, microphones, surge
               protection devices, foreign voltage adapters/converters and blank
               audio cassettes.

          o    Camcorder Accessories. A comprehensive line of camcorder
               accessory products is offered under the Ambico brand name. These
               products include tripods, batteries, camera bags,
               chargers/dischargers, cables, dust covers, filters, lenses,
               lights, microphones and monopods. The line features video
               transfer systems, as well as various editing effects mixers,
               video title writers, audio mixers and video enhancers/faders.

          o    Car Audio Products. Various audio electronic products for the
               automobile and marine aftermarket are sold under the Advent
               Mobile(TM), Jensen and PhaseLinear brand names in the United
               States and Magnat and MacAudio (and certain of the U.S.) brand
               names in Europe. These automotive products include speakers,
               subwoofers, amplifiers, cassette receivers, equalizers,
               electronic crossovers, signal processors and CD players and
               changers. An exclusive line of high quality car audio accessory
               products is offered under the Ampersand, RoadGear(TM)and
               SoundQuest brand names. These products include wires and cables
               with gold- plated connectors, power cables, wiring and
               installation kits, gold-plated battery terminals and rings,
               capacitors, isolators, and assorted connectors and adapters, as
               well as the "Audio Forms" in-door speaker enclosures sold under
               the SoundQuest brand name.

          o    Carrying and Storage Cases. A line of softsided carry cases for
               CDs and audio cassettes is offered under the Discwasher and
               PerfectCase(TM)brand names. The lines include CD wallets, with
               capacities from 12 to 96 CDs; player/CD cases, which hold from 10
               to 24 CDs in addition to a portable CD player; CD cases, which
               hold from 15 to 60 CDs; and audio cassette cases, which have
               capacities from 15 to 96 cassettes. These cases are available in
               many colors, designs and fabrics and are packaged under the
               PerfectCase name by Discwasher.

          o    CD/Audio Cassette Accessories. A broad line of CD and audio
               cassette accessories is offered under the Discwasher and Recoton
               brand names. These products include cleaning and maintenance
               items, such as the CD HydroBath non- contract hydrodynamic
               multimedia cleaner for all types of CDs, a CD laser lens cleaner,
               storage boxes, connection cables and Recoton's proprietary CD20
               adapter, which permits a portable CD player to be played through
               a car, portable or home audio cassette players.

          o    Cellular and Other Telephone Accessories. An extensive line of
               add-on and replacement accessories for the expanding cellular
               telephone market is offered under the Recoton brand name.
               Products including nickel cadmium and nickel metal-hydride
               batteries, battery eliminators, travel chargers, desk-top
               chargers, "hands-free" kits, extended-life kits and antennas,
               among other products, compliment the cellular phones of virtually
               all leading manufacturers. Numerous other telecommunications
               accessories are offered under the Recoton brand name. These
               products include antennas and rechargeable batteries for cordless
               phones, cables, extension cords, coiled handset cords, and
               "do-it-yourself" installation items, such as duplex and triplex
               adapters and wall plates. Recoton's patented Tanglefree(TM)
               adapter eliminates the twisting from coiled telephone cords.

          o    Computer/Multi-Media Accessories. A complete computer accessory
               product line is offered under the InterAct and Recoton brand
               names. These products include joy sticks and controllers,
               shielded computer speakers, UL-listed surge protection devices,
               connection cables, disc and disc drive cleaning products, dust
               covers, copy holders, mouse and wrist pads, stands for monitors
               and printers, storage cabinets, screen filters with
               anti-radiation properties, paper, ribbons and storage cases.

          o    Game (Video and Computer) Accessories. An expanding line of video
               and computer game accessories for use with leading game consoles
               made by Nintendo, Sony and Sega and for personal computers is
               offered under the InterAct and Recoton brand names. These
               products include joysticks, controllers, cleaners, maintenance
               kits, replacement AC power adapters switches, control pads,
               lights, screen magnifiers and carry bags for hand-held games.

          o    Headphones and Speakers. A full line of stereo headphones and
               mini- and bookshelf-sized stereo speakers is offered under the
               InterAct, Discwasher and Recoton brand names and, in Europe,
               under the Ross name. Some of these products also are sold to OEM
               customers. Headphone models include earbud, lightweight,
               convertible, headband, and open- and closed-earcup models. Mini
               and bookshelf sized stereo speakers, in both amplified and
               nonamplified versions, are offered for use with portable CD and
               cassette players and computers. Some of these speakers feature
               graphic equalizers, base booster circuits and battery or AC
               operation.

          o    Loudspeakers. Advanced design and technology hi-fidelity,
               hi-performance stereo and home theater loudspeaker systems are
               offered under the Advent, AR/Acoustic Research, Jensen, NHT (Now
               Hear This), and Recoton brand names and, in Europe, under the
               MacAudio, Magnat and Heco brand names. Each of the speaker lines
               is positioned to reach a different target market. In addition,
               there are a wide variety of wireless 900 MHz amplified speakers
               for indoor and outdoor use, speakers for use with computer sound
               cards and a wide variety of stereo speakers for CD listening.

          o    900 MHz and Other Wireless Technologies. A proprietary line of
               wireless products, including patented 900 MHz products, using 900
               MHz technology and 433 MHz and 20.4 GH3 technology to transmit
               pictures and sound signals from a TV, VCR, cable box, satellite
               box, stereo or sound system through walls, floors and ceilings to
               stereo headphones, amplified loudspeakers, both indoor and
               outdoor types, or to other television sets within 150 feet is
               offered under the Recoton brand name. Recoton believes it is the
               leader in developing and marketing a broad range of 900 MHz
               wireless technology products such as stereo headphones, amplified
               speaker systems and video broadcast systems. These products offer
               performance comparable to hard-wired systems and have been
               expanded to include wireless microphones, public address systems,
               a portable outdoor/indoor weather-resistant speaker, computer
               speakers and home theater speakers.

          o    Remote Controls. A complete line of advanced-technology,
               universal remote controls for replacement of lost or damaged
               remotes is offered under the SoleControl and Recoton brand names.
               They allow remote operation of televisions, VCRs and other
               electronic products, and are offered with various features at
               different price levels. Recoton believes that its remote controls
               contain the largest code library in today's market and therefore
               can operate virtually all remote-controllable manufactured
               products. In 1996, the Company introduced a new, advanced
               technology, combination 900 MHz wireless RF (radio frequency) and
               IR (infrared) universal remote control. This unique remote
               control sends signals through walls, floors and ceilings to
               operate remote control products in other rooms and also functions
               as a standard line-of-sight remote control.

          o    Video Accessories. A broad line of accessories that are used for
               the installation, maintenance, interconnection and enhancement of
               VCRs and camcorders is offered under the Recoton brand name.
               These products include Recoton's Gold Connection(TM)line of
               hookup and dubbing cables, blank VHS video tapes, video head
               cleaners, video rewinders, dust covers, connectors, splitters and
               storage products. Recoton also offers many switching, dubbing,
               listening and viewing accessories that can enhance the visual and
               audio performance of televisions and VCRs.

CUSTOMERS AND DISTRIBUTION

         Recoton seeks to provide access to its products on a global basis in as
many countries and through as many distribution channels as possible. The
Company's customers include catalog showrooms, consumer electronics retailers,
department stores, direct mail retailers, drugstore chains, mass merchants,
office and warehouse clubs and music and video chains. Recoton has a strong and
diverse customer base of more than 1,000 retail customers which the Company
believes have more than 30,000 outlets in the United States and Canada. In
addition, Recoton has over 2,000 customers for its car stereo installation
products. The Company's European customer base is similarly diverse.

         Within the past few years, Recoton has expanded its presence in the
Asian, Canadian and European markets. Through its Hong Kong subsidiaries and
Recoton Japan, Recoton sells products to customers in China, Japan and other
Asian countries and, through its Hong Kong subsidiaries, it sells Asian-sourced
products to Asian and European-based OEM customers. Through its Canadian
subsidiary, Recoton markets and distributes products to Canadian retailers.
Through its German, Italian, English and Hong Kong subsidiaries, Recoton markets
and distributes audio products to European retailers and distributors. The STD
acquisition in 1995 generated significant growth in terms of Asian sourcing and
sales and the Jensen acquisition in 1996 has led to significant growth in
European sales. Recoton views its OEM and international customer base as an
important source for continued growth.

         Recoton believes that its broad customer franchise provides it with
significant competitive advantages and will continue to be a source of future
growth. While some of Recoton's retail customers carry Recoton's broad product
lines, others carry only certain lines or products and are viewed by Recoton as
prospects for additional sales. The strong customer base provides a distribution
channel for new products, including products acquired through recent
acquisitions. Recoton expects to benefit as its existing retail customers open
new retail locations. As the retail consumer electronics business is highly
cost-competitive, it is normal to expect that various retailers (including
chains) will suffer economic reversals, and may cease operations. While Recoton
has lost some customers due to bankruptcy or merger, such events have not to-
date had any major adverse economic impact on the Company.

         Recoton also makes significant sales of selected products to original
equipment manufacturers and via private labels to other accessory vendors which
purchase products ranging from audio, video, CD and telephone accessories to
Recoton's wireless products. The Company also engages in limited direct sales.

         Although certain of Recoton's customers have contributed significantly
to Recoton's sales, no customer represented more than 10% of its sales in any of
the last three years. Historically, the Company's sales and earnings have been
higher in the second half of each year.

FOREIGN AND DOMESTIC OPERATIONS

         Since 1995, foreign operations have become a more significant portion
of Recoton's business. Information with respect to Recoton's operations by
geographic area is set forth in the financial statements (see Note P of the
Notes to Financial Statements, Item 8 below). Export sales from Recoton
Corporation and its domestic subsidiaries were less than 10% of consolidated
sales in each of the three years ended December 31, 1994, 1995 and 1996.

SALES, MARKETING AND CUSTOMER SUPPORT

         Recoton's marketing strategy is to develop strong relationships with a
broad array of customers. Recoton seeks to establish partnership relationships
with its retail customers by offering "one-stop shopping" for its products, so
as to better attract and support retailers who are consolidating their vendor
relationships to achieve greater purchasing and operating economies, and by
offering extensive marketing, inventory management and customer support
services, including the following:

          o    Consumer Support Programs. The Company offers toll-free "hot
               lines" staffed by trained, product-knowledgeable people who
               provide instructions and setup and other information for all
               Recoton products. They also handle "money back" guarantees and
               "repair or replace" warranties on certain products.

          o    Distinctive Packaging. The Company's packaging approach is to
               offer modern, easy to understand, color-coded packages designed
               to attract consumer attention, increase brand awareness and
               provide detailed product information.

          o    Drop Shipping. The Company provides retailers "just-in-time"
               inventory management through immediate delivery to multiple
               retail locations.

          o    Electronic Data Interchange. The Company has established
               computer-based systems to enable customers to send orders, track
               shipping, receive invoices and make payment by computer, thereby
               expediting the ordering and payment process, lessening errors of
               transcription and reducing personnel costs.

          o    Extensive Product Promotion. Promotional efforts include in-store
               merchandising, advertising and elaborate product displays for all
               product lines.

          o    In-Store Inventory Management. Through detailing, the Company
               periodically counts restocks and fills in-store accessory
               displays.

          o    Pre-Ticketing Services. Recoton places its customers' price
               stickers on items prior to shipment from price lists provided by
               retail customers.

          o    Product Display Designs. The Company provides retailers with a
               computerized color picture of their individual in-store accessory
               layout, called planograms, to help them maximize display and
               sales. The planograms depict how the actual merchandise will look
               on-site, fully stocked, and are accompanied by a detailed report
               with each item's cost, suggested retail price, anticipated turns
               and resulting projected revenue and profit.

         Retailers can work with Recoton's sales staff or utilize Recoton's
modern, high visibility color catalogs to choose either a wide assortment of
products, a limited number of "best seller" items or any other combination as
desired. Recoton also offers pre-selected assortments of accessories based on
the national movement of its products. Most of Recoton's smaller accessory
products are supplied in attractive blister packs designed to be displayed in
hang-tag fashion on five-row pegboards or slat boards, typically ranging from 2
to 24 feet wide.

         Recoton further supports its products by advertising in leading trade
and consumer publications, participating in trade shows and engaging in a wide
variety of regional promotions and sales incentive programs. Recoton's
promotional efforts have included television advertisements and Sunday newspaper
advertising supplements devoted exclusively to its products.

         Recoton's products are marketed throughout the United States, Canada,
Europe and internationally in a number of foreign countries by Recoton's
employed sales executives and regional managers and independent sales
representative organizations. Recoton compensates its independent sales
representatives on a commission basis. Regional sales staff personnel work in
the field with Recoton's customers and independent sales representative
organizations.

         The Company has no significant backlog orders.

ACQUISITIONS

         STRATEGY AND OVERVIEW

         A significant part of Recoton's growth strategy has been to expand
through acquisitions. Through 12 acquisitions since 1989, Recoton has obtained
new products and technologies, strengthened its new product offerings, increased
its manufacturing capacity, enhanced overseas distribution capabilities and
broadened its customer base. Recoton seeks to maximize the benefit of each
acquisition by reducing the overhead, manufacturing, sourcing, packaging,
distribution, sales and advertising expenses of the acquired business through
consolidation and coordination. While there may be certain duplications of
expenses immediately following an acquisition, Recoton believes that cost
savings will result from the introduction of efficiencies of scale, thereby
making Recoton and its products more competitive.

         ACQUISITION HISTORY

         Since 1989, Recoton has acquired all or selected assets or product
lines of, or merged with, the following companies:


YEAR           COMPANY                            PRINCIPAL PRODUCT LINES

1997           Tambalan Limited                   Headphones and other
                                                  consumer products sold
                                                  under the Ross name in
                                                  the UK and other countries
                                                  in the European Union

1996           Heco  GMBH                         Home speakers

1996           International                      Loudspeakers and other
               Jensen                             audio products for home
               Incorporated and                   and automotive aftermarket
               subsidiaries                       use

1995           STD Holding                        Video and computer game
               Limited                            joysticks, controllers
               and subsidiaries                   and accessories marketed
                                                  primarily under the trade
                                                  name InterAct and other
                                                  names

1995           Ampco Industries,                  Products for car stereo
               Inc., d/b/a                        installation operations
               Ampersand

1994           Sound Quest, Inc.                  Car stereo installation
                                                  and accessory products

1994           Infrared Research                  Universal remote controls
               Laboratories, Inc.                 marketed under the trade
                                                  name SoleControl

1992           Ambico, Inc.                       Camcorder and video
                                                  accessories

1991           Discwasher Inc.                    Consumer electronics
                                                  maintenance products

1991           Parsec Delaware                    AM/FM radio and TV antennas
               Ltd.

1989           All Channel                        Indoor television antennas
               Products  Inc.                     marketed  under the trade
                                                  name Rembrandt

1989           Calibron, Inc.                     Stereo headphones and
                                                  consumer electronics
                                                  accessories


         JENSEN ACQUISITION

         On August 28, 1996, a Recoton subsidiary merged with International
Jensen Incorporated, a Delaware corporation. The Company did not acquire
Jensen's original equipment manufacturing (OEM) business, however. Jensen was
renamed Recoton Audio Corporation (Recoton Audio or RAC). Recoton Audio,
directly and through its U.S. and foreign subsidiaries, is an international
designer, assembler and marketer of home and car stereo loudspeakers, car stereo
players and amplifiers sold under the Advent, Jensen, PhaseLinear, and NHT (Now
Hear This) and in Europe, Mac Audio and Magnat brand names. Its sales for the
last fiscal year prior to the acquisition, excluding the sales by the OEM
business, were over $150 million. The Company also acquired the AR/Acoustic
Research trademarks in the transaction, which marks previously had been licensed
by Jensen to the Company.

         The shareholders of Jensen other than Robert G. Shaw, the former
Chairman of the Board, President and Chief Executive Officer of Jensen (and the
current President and a director of RAC), and William Blair Leverage Fund, L.P.
(WBLCF) received $11.00 in cash for each Jensen share held by them and Mr. Shaw
and WBLCF received $8.90 in cash for each Jensen share. The aggregate merger
consideration paid to the Jensen stockholders was approximately $55.6 million.
Jensen had approximately $34 million in notes and loans payable immediately
after the merger.

         Bridge financing for the acquisition and related costs in the
approximate amount of $60 million was provided by The Chase Manhattan Bank and
other lenders party to a credit facility in the initial amount of $120 million.
Such facility was also used to repay certain existing indebtedness of Recoton
and Jensen, and can be used to provide working capital, for letters of credit
and, within certain limits, for financing additional acquisitions. In January
1997, the Company privately placed $75 million in senior notes and used the
proceeds to refinance that portion of the facility previously used for the
Jensen acquisition and for other corporate purposes.

         Recoton Audio's speaker assembly operations are in Benicia, California;
its research and development and warehousing operations are in Schiller Park,
Illinois; and its corporate headquarters is currently in Lincolnshire, Illinois.
Recoton plans to close the Lincolnshire office and move most of RAC's corporate
operations to Florida in late 1997. Recoton Audio's subsidiaries have operations
in Germany, Italy, the United Kingdom and Japan. The operations of the Magnat
and Mac Audio subsidiaries in Germany were consolidated in late 1996.

         The merger was preceded by the sale of Jensen's OEM business, including
its component manufacturing facilities, to IJI Acquisition Corp. (IJI
Acquisition) and the sale of the OEM business receivables to Harris Trust and
Savings Bank, both sales yielding an aggregate of approximately $18.5 million
(after final balance sheet adjustments), with IJI Acquisition also assuming
related debt and liabilities. IJI Acquisition was renamed International Jensen
Incorporated after the acquisition of Jensen by the Company. IJI Acquisition's
sole stockholder is Robert G. Shaw. Mr. Shaw is also President and a director of
RAC and, after the merger, was elected to the Board of Recoton.

         Recoton Audio and IJI Acquisition are parties to a number of
agreements, including a Management Services Agreement, a Supply and Services
Agreement, a Shared Facilities Agreement, a Non-Competition Agreement and a
License Agreement. Pursuant to the Management Services Agreement, which has an
initial term of one year and is automatically renewed unless otherwise
terminated, Mr. Shaw and certain other employees of the Company are authorized
to perform various managerial and administrative services for IJI Acquisition
during the course of their employment by the Company, for which IJI Acquisition
pays Recoton a fee. The Supply and Services Agreement provides for IJI
Acquisition to supply Recoton Audio's requirements for certain products and
services for a term of twelve months. The Shared Facilities Agreement governs
the use of facilities in Schiller Park and Lincolnshire, Illinois leased by
Recoton Audio but also used by IJI Acquisition; such agreement may be terminated
by Recoton Audio or IJI Acquisition at any time on six-month's notice after
February 1997. The Non-Competition Agreement provides that Recoton Audio and IJI
Acquisition each will not compete in certain areas of each other's business,
with certain exceptions. Pursuant to the License Agreement, Recoton Audio has
granted IJI Acquisition a ten-year, world-wide royalty- bearing license to use
the trademarks of Recoton Audio in OEM business applications in the automotive,
truck, recreation vehicle, aircraft or other motorized vehicle markets.

         HECO AND TAMBALAN ACQUISITIONS

         A significant component of the business acquired through the merger
with Jensen was its European sales operations. Recoton has expanded the RAC
presence in the European Union through two recent acquisitions. In late 1996
Recoton acquired the Heco brand of home speakers through a purchase of selected
assets from the receiver in bankruptcy of Heco GmbH. These assets included
trademarks, intellectual property, inventory, tools, office equipment and
selected other assets, as well as the right to use a manufacturing facility in
eastern Germany through June 1997. The purchase price, including closing costs,
was approximately $1.3 million. During its last year of operations prior to the
acquisition, Heco's sales were approximately $12.2 million.

         In February 1997, Recoton acquired the stock of Tambalan Limited, a
United Kingdom corporation trading under the name Ross Consumer Products
(Tambalan). Tambalan sells headphones and other consumer products under the name
"Ross" in the United Kingdom and other European Union countries and, through its
Hong Kong operations, to various Pacific area markets. The purchase price,
exclusive of closing costs, was approximately $285,000; at the time of the
closing, Tambalan had notes and loans payable of approximately $2.9 million. The
annual sales of Tambalan were approximately US $ 8 million in its last fiscal
year prior to the acquisition.

RESEARCH AND DEVELOPMENT

         Recoton maintains research and development facilities at its Florida,
California, Illinois and Hong Kong locations and in addition utilizes selected
outside engineering arrangements. In conjunction with its agents, customers and
contract manufacturers, Recoton continuously reviews its product line and
identifies, develops and introduces new products for growing areas of consumer
demand. Recoton seeks to develop innovative products to achieve attractive
margins and to expand Recoton's brand name recognition.

         Through its product development efforts, Recoton has been able to
establish new retail accounts, enhance existing customer relationships, attract
a growing base of consumer electronics companies as OEM customers and
differentiate itself from its competitors. Recoton has recently expanded its
engineering department to increase its in-house development capabilities.

         Recoton has focused much of its R&D efforts on developing new and
advanced audio and video products based on its 900 MHz wireless technology.
Wireless products which Recoton has brought to market include a home theater
speaker system, stereo headphones, amplified indoor stereo speakers, a portable
weather-resistant outdoor speaker, microphones, a public address system, a
computer speaker system, a combination radio frequency/infrared (RF/IR) remote
control and a wireless monitoring system.

          Additional products in development include new advanced 900 MHz
headphones and speakers, a wireless 2.4 GHz transmission system permitting
Recoton to offer its wireless audio and video products on a worldwide basis, and
a spread-spectrum transmission system for wireless audio and video that provides
low-interference, longer-distance, high-end CD-quality performance for wireless
audio, video and security video products. The Company is in the process of
redesigning the speaker lines sold under the Jensen and Advent brands and adding
models to the AR/Acoustic Research line of speakers. InterAct will begin
manufacturing a line of surge protectors in the second half of 1997 which
contain unique child safety features. In development are additions to InterAct's
line of joysticks and controllers for use with Nintendo 64 bit consoles.

         In 1994, 1995 and 1996, Recoton's expenditures for research and
development were approximately $942,000, $1,608,000 and $2,897,000 respectively,
and for product and packaging design were approximately $699,000, $1,214,000 and
$1,331,000 respectively. The growth in R&D expenditures is primarily reflective
of the acquisition and growth of the STD business and, to a lesser degree, the
growth of the speaker business through Christie Design and Recoton Audio.

PRODUCTION

         Recoton's strategy is to produce high-quality low-cost consumer
electronics products for its retail and OEM customers.

         Recoton utilizes third-party manufacturers, primarily in China, Hong
Kong and Taiwan, for a majority of its products or components of such products.
Components for loudspeakers and certain other car audio products, however, are
currently sourced in the United States from IJI Acquisition but it is
anticipated that these products may also be re-sourced to Asian vendors in the
future. The Company's vendors are required to produce products in accordance
with strict specifications and quality control standards set by Recoton, in
either finished form or as components, for assembly at Recoton's Florida or
California facilities.

          Operations at Recoton's Lake Mary, Florida facilities include molding,
hot stamping, bottle filling, silk screening, packaging and electronics
assembly. Operations conducted at the NHT and Christie Design facilities in
California include molding, packaging and home speaker assembly, as well as
manufacturing of speakers sold under the NHT and AR/Acoustic Research brands and
speakers for the Company's OEM customers. Operations conducted at the Heco
facility in Germany include home speaker assembly.

         The Company's facilities in the People's Republic of China are used
primarily to manufacture video game and computer accessories sold under the
InterAct brand but are also used to manufacture other Recoton products.
Recoton's in-house capabilities have been a major strength in obtaining and
increasing its OEM business.

         Recoton coordinates most of its offshore sourcing for the North
American market with its buying agents. These agents coordinate information
flows with Recoton's suppliers, provide translation services, facilitate
financing, conduct quality control inspections and oversee shipping. Recoton's
high volume allows it to consolidate shipments and ship frequently, thereby
obtaining preferential shipping rates and lowering costs. It has been necessary,
however, from time to time to utilize more expensive air shipments in order to
meet customers' time sensitive needs. Recoton's Hong Kong subsidiaries
coordinate sourcing and shipping to customers located in Asia, Europe and
Australia.

         Recoton generally uses standard parts and components which can be
purchased from multiple sources, although in certain instances a business
decision is made to source certain products from a single supplier. Recoton's
wireless products are among the products currently sourced from one vendor,
which in turn subcontracts component manufacturing to other sources. While the
loss of any single-source vendor could have a short-term adverse impact on the
manufacturing and shipping of products if inventory levels were depleted,
Recoton does not believe that the loss of any single vendor would have a
long-term adverse effect. Recoton's policy of maintaining substantial inventory
helps to lessen the risks of off-shore manufacturing. Recoton also maintains
additional inventory of long-lead-time items and continually evaluates
alternative supply sources.

COMPETITION

         The consumer electronics market is highly fragmented and subject to
intense competition. Recoton's competitors include (i) various companies which
offer broad lines of consumer electronics products; (ii) other companies which
offer certain product lines; and (iii) manufacturers of brand name consumer
electronics hardware. Specific competitors include Zenith, Philips, Thomson/RCA
and Sony with respect to various accessories; Bose, Boston Acoustics, Infinity,
JBL and Polk with respect to home speakers; and Kenwood, Panasonic, Pioneer and
Sony with respect to automotive aftermarket audio products. Certain of Recoton's
existing or potential competitors have greater financial, technical, marketing
or manufacturing resources and may develop new products that are superior to
those of Recoton.

         Recoton competes primarily on the basis of product variety and quality,
customer service and support, product reliability, company and brand name
reputation, ability to meet customer delivery needs, price, product features and
the proprietary nature of certain products. Recoton believes that it competes
favorably with respect to these factors.

TRADEMARKS AND PATENTS

         Recoton believes that it has established a high level of brand name
recognition with its retailers and their customers. Recoton sells products under
the Advent(R), Ambico(R), Ampersand(TM), AR(R)/Acoustic Research(R),
Calibron(R), Discwasher(R), InterAct(TM), Jensen(R), NHT(R) (Now Hear This),
Parsec(R), PhaseLinear(R), Recoton(R), Rembrandt(R), Sole Control(R),
SoundQuest(TM) and STD(R) brand names, among others . It also sells products
overseas under the Heco(TM), Magnat(TM), MacAudio(TM) and Ross(TM) names, among
others, in addition to sales under certain brand names used in the United
States. Recoton also has over 50 additional United States registered trademarks
for a variety of its individual products, as well as similar or additional marks
overseas. As a result of its own product development, recent acquisitions and
exclusive licenses, Recoton has over 25 United States patents, including patents
on its 900 MHz wireless products, non-contact hydrodynamic multimedia compact
disc cleaning product, CD-to-cassette adapter, video synchronizing separator,
cassette head demagnetizer, cassette head cleaner, antennas and an adapter to
eliminate tangles in coiled telephone cords.

         Recoton licenses certain of its proprietary rights for use in products
manufactured by others. Recoton on occasion receives communications from others
asserting that certain of Recoton's products may be covered by such parties'
patent or intellectual property rights. Recoton believes that its products do
not infringe on the intellectual property rights of any third parties.

EMPLOYEES

         At December 31, 1996, Recoton had approximately 2,500 employees
worldwide, of which approximately 1,130 reside in the United States or Canada,
approximately 1,250 reside in Hong Kong, the People's Republic of China or Japan
and approximately 120 reside in Germany, Italy or England. The number of
employees in the People's Republic of China fluctuates significantly on a
seasonal basis. Of such U.S. or Canadian employees, approximately 95 were
engaged in sales and marketing, 30 in engineering, research and development, 775
in operations, manufacturing and warehousing and 230 in management, support
services and administration. Approximately 600 employees at Recoton's Lake Mary,
Florida premises are covered by a collective bargaining agreement with the Glass
Molders, Pottery, Plastics & Allied Workers International Union, which runs
through August 3, 1999. Recoton considers its employee relations to be good.

DIRECTORS AND EXECUTIVE OFFICERS OF RECOTON

         The following table sets forth the names, ages and positions of the
directors and executive officers of the Company as of December 31, 1996:

NAME                            AGE     POSITION

Robert L. Borchardt             59       Director; President, Co-Chairman
                                         of the Board, Chief
                                         Executive Officer
Herbert H. Borchardt            90       Director; Co-Chairman of the
                                         Board
Stuart Mont                     56       Director; Chief Operating Officer,
                                         Chief Financial Officer,
                                         Executive Vice President-Operations,
                                         Secretary
Peter Wish                      61       Director; Executive Vice
                                         President-Administration
Peter E. Dayton                 60       Senior Vice President-National
                                         Sales
Terrence O'Flynn                52       Senior Vice President-OEM Sales
Dennis Wherry                   52       Senior Vice President-Operations
Craig W. Dykes                  38       Vice President-Information Systems
Peter M. Ildau                  59       Vice President-Corporate
                                         Communications
Joseph H. Massot                52       Director; Vice President,
                                         Treasurer, Principal Accounting
                                         Officer, Assistant Secretary
William T. McGreevy             53       Vice President-Engineering
Richard D. Miller               35       Vice President-Compliance
Kevin J. Murphy                 46       Vice President-Marketing
Robert G. Shaw                  56       Director; Vice President; President of
                                         Recoton Audio Corporation
George Calvi                    46       Director
Paul Feffer                     75       Director
Irwin S. Friedman               63       Director
Joseph M. Idy                   56       Director
Ronald E. McPherson             67       Director

         Robert L. Borchardt has served as a director of Recoton since 1964, as
President since 1976, as Co-Chairman since 1992, as Co-Chief Executive Officer
from 1992 until 1996 and as Chief Executive Officer since 1996. He was a Vice
President from 1964 until 1969, Executive Vice President from 1969 until 1976
and Treasurer from 1969 until 1975. He started working for the Company in 1961.
He is Chairman of the Board of Directors and on the Executive Board of the
Consumer Electronic Manufacturing Association (CEMA), a division of the
Electronics Industries Association, is on the Board of Governors of the
Electronic Industries Association and is a trustee of the Electronics Industries
Foundation. Robert Borchardt is Herbert Borchardt's son.

         Herbert H. Borchardt has served as a director of Recoton since 1945 and
as Co-Chairman since 1992 and as Co-Chief Executive Officer from 1992 until
1996. He served as Executive Vice President from 1945 until 1952, as President
from 1952 until 1976 and as Chairman from 1976 until 1992.

         Stuart Mont has served as a director of Recoton since 1975 and as Chief
Operating Officer since December 1993. He has also served as Chief Financial
Officer since June 1992, as Secretary since February 1989 and as Executive Vice
President-Operations since 1992. He served as a Vice President from 1978 until
February 1989, as Treasurer from 1975 until 1989 and as Senior Vice President
from February 1989 until 1992. He was elected President of Recoton Canada Ltd.
in 1992.

         Peter Wish has served as a director of Recoton since 1969 and as
Executive Vice President-Administration since 1992. He served as Vice President
from 1969 until 1976 and as Executive Vice President from 1976 until 1992.

         Peter E. Dayton has served as Senior Vice President-National Sales
since December 1993. He served as Vice President-Sales from 1989 until 1993, as
National Sales Manager from January 1987 to 1989 and as National Account Sales
Manager from 1982 until 1987.

         Terrence O'Flynn has served as Senior Vice President-OEM Sales since
June 1996. He was Senior Vice President-Marketing from June 1994 until June
1996. Prior thereto, he was Director of Marketing of the Ladies Professional
Golf Association from 1993 to 1996, President and a member of the Board of
Directors of Mitsubishi Electronics America - Consumer Products Group from 1990
to 1993 and, prior thereto, Executive Vice President of Mitsubishi Electronics
America - Consumer Products Group.

         Dennis Wherry has served as Senior Vice President-Operations since
December 1993. He served as Senior Vice President-Operations of the Calibron
Division from 1991 until December 1993. He was President of Calibron, Inc. from
1985 until its assets were acquired by the Company in 1989. Between 1989 and
1991, he was an employee of the Company responsible for Florida operations.

         Craig W. Dykes has served as Vice President-Information Systems since
January 1991. He served as Assistant Vice President from 1989 until 1991 and as
Director of Information Systems from 1987 until 1989. He was elected a Vice
President of Recoton Canada Ltd. in 1994.

         Peter M. Ildau has served as Vice President-Corporate Communications
since December 1993. Between December 1991 and December 1993 he was Vice
President-Advertising and from October 1990 until December 1991 he was Director
of Marketing.

         Joseph H. Massot has served as a director of Recoton since 1985, as
Principal Accounting Officer, Vice President and Treasurer since 1989 and as
Assistant Secretary since 1983. He served as Recoton's Controller and Assistant
Treasurer from 1978
until 1989.

         William T. McGreevy has served as Vice President-Engineering since
December 1991. From September 1989 to December 1991 he was Director of
Engineering.

          Richard D. Miller has served as Vice President-Compliance since
December 1995. From January 1995 until December 1995 he was Recoton's Compliance
Officer. Prior thereto, he was a Trade Specialist (April 1992-January 1995) and
Import Specialist (January 1989-April 1992) with the U.S. Customs Service.

     Kevin J. Murphy has served as Vice President-Marketing since June 1996. He
was Vice President-Purchasing for January 1991 until June 1996. He served as
Director of Purchasing from 1988 until 1991, as Assistant Vice President from
February 1989 until 1991 and as Regional Sales Manager from 1980 until 1988.

         Robert G. Shaw has served as a director of Recoton and a Vice President
of Recoton since August 1996. He has been President and a director of Jensen/RAC
since 1984 and was Chairman of the Board of Jensen from 1984 until August 1996,
when Jensen was acquired by Recoton. RAC was acquired by the Company in August
1996. He has been President, a Director and the sole stockholder of
International Jensen Incorporated (f/k/a IJI Acquisition Corp.) since January
1996. RAC sold its original equipment manufacturing business to IJI at the time
of RAC's acquisition by the Company. Mr. Shaw is also a director of Gibraltar
Packaging Group, Inc., a manufacturer and marketer of printed paperboard
packaging, and a trustee of Beloit College.

         George Calvi has served as a director of Recoton since 1984. He was
Executive Vice President-Sales and Marketing of the Company from 1992 until
1996, Senior Vice President- Sales and Marketing from 1988 until 1992 and Vice
President from 1978 until 1988.

         Paul Feffer has served as a director of Recoton since June 1996. He has
been Chairman of Feffer Consulting Co., Inc., an international media consulting
firm, since 1991 and a consultant to Merck & Company's publishing division. He
founded Feffer and Simons Inc. in 1955, which was sold to Doubleday & Co. in
1962 (where he remained as President of the subsidiary Feffer and Simons until
1986) and was Chairman of Baker & Taylor International, a subsidiary of W. R.
Grace & Co., from 1987 until 1991. Feffer & Simons and Baker & Taylor
specialized in international publishing and book and magazine distribution and
development of overseas markets for U.S. publishers.

         Irwin S. Friedman has served as a director of Recoton since 1982. He
has been President, Chief Executive Officer and principal shareholder of I.
Friedman Equities, Inc., a corporate financial consulting firm, for more than
five years.

          Joseph M. Idy has served as a director of Recoton since 1990. He has
been a stockbroker and money manager at PaineWebber Inc. for more than fifteen
years and Senior Vice President of PaineWebber Inc. since 1989.

         Ronald E. McPherson has served as a director of Recoton since 1969.
Until his retirement in 1989, he served as Secretary of the Company from 1964
and as Vice President of the Company from 1978.

ITEM 2.  PROPERTIES.

          U.S.A. Recoton's principal domestic manufacturing, assembling,
packaging, product research and development, warehousing and distribution
operations are located in Lake Mary, Florida, a suburb of Orlando. The Lake Mary
complex, owned by the Company, consists of two buildings totaling approximately
445,000 square feet situated on two near-by parcels aggregating approximately 43
acres, and includes state-of-the art office, warehouse, manufacturing and
distribution facilities. The Company plans to erect an additional 318,000 square
foot warehouse facility on its Lake Mary property at an estimated cost of
approximately $5 million. The Company currently leases sales and corporate
office space in New York City, New York; warehouse facilities in Maitland,
Florida; sales offices in Ft. Lauderdale, Florida; sales office and warehouse
facilities in Baltimore, Maryland; offices near Lake Tahoe, Nevada;
administration, sales, R&D, engineering and distribution facilities near
Chicago, Illinois (two separate facilities); manufacturing, warehouse and office
facilities near Los Angeles, California; assembly, warehouse and office
facilities near San Francisco, California (two separate facilities); and sales
offices in San Francisco, California.

         Canada, Europe and Far East. Canadian offices and warehouse facilities
are located in Ontario, Canada. German distribution and office facilities are
near Cologne. Italian office facilities are near Bologna and Milan. United
Kingdom office facilities are near Bolton and Manchester. Hong Kong facilities
include one leased office facility and a paid-up ground lease for offices.
Certain manufacturing facilities in the People's Republic of China are owned by
the Company and others are leased. All foreign facilities, other than certain
manufacturing facilities in the People's Republic of China, are leased.


 ITEM 3.  LEGAL PROCEEDINGS.

         Customs Investigation. In July 1994, agents of the United States
Customs Service, working in conjunction with the United States Attorney's office
in Orlando, Florida, seized property (primarily compact disc cleaners and
universal television remote controls) and business records from the Company's
Lake Mary, Florida facility pursuant to a search warrant. The government's
investigation of possible criminal and civil issues remains pending. It appears
that the issues in the investigation may relate to country of origin marking
requirements, duty-free import status under the Caribbean Basin Initiative,
duties with respect to dies, molds and tooling used overseas, commissions paid
to agents and importation of merchandise subject to textile quotas. An
administrative proceeding has been commenced by the Customs Service under
Section 596 of the Tariff Act (19 U.S.C. Section 1595a) to determine the
disposition of the seized merchandise. Recoton's management is unable to predict
what claims, if any, might be asserted against Recoton as a result of the
investigation or the financial impact of any such claim on Recoton.

          Litigation Regarding Jensen. Two separate actions were commenced in
1996 against Recoton and others in the courts of the state of Delaware in
connection with the merger with Jensen: In Re International Jensen Incorporated
Shareholders Litigation (Chancery Court, Delaware, Civil Action No. 14992) and
Emerson Radio Corp. v. Recoton Audio Corporation, Robert G. Shaw, David G.
Chandler, Robert H. Jenkins, Norman H. McMillan, William Blair Leveraged Capital
Fund, L.P, RC Acquisition Sub, Inc., IJI Acquisition Corp. and Recoton
Corporation (Chancery Court, Delaware, Civil Action No. 15130NC). A separate
case was commenced in the Federal District Court in Chicago, Illinois by Jensen
against Emerson Radio Corporation (Emerson), a competing suitor for Jensen, in
which Emerson has asserted claims against the Company, International Jensen
Incorporated v. Emerson Radio Corp. and Eugene Davis (U.S. District Court,
Northern District of Illinois, Eastern Division, No. 96C 2816), and another case
was commenced in such court by Recoton against Emerson, Recoton Corporation v.
Emerson Radio Corporation (U.S. District Court, Northern District of Illinois,
Eastern Division, No. 96 C 9602).

         The claim by Emerson in the Delaware action was dismissed on motion by
Emerson, without prejudice, on March 7, 1997. The Company understands that the
stockholders litigation will be withdrawn, subject only to a claim by the
plaintiffs' counsel for fees and expenses. The two Illinois cases are currently
on hold pending resolution of settlment discussions between the parties. The
following is a summary of the history of these four cases.

         STOCKHOLDER SUITS. On May 9, 1996, Randi Marcus filed an action in the
Court of Chancery of the State of Delaware against Jensen, its directors,
Recoton, RC Acquisition Sub Inc. (RC Acquisition), IJI Acquisition Corp. (IJI
Acquisition), William Blair & Company and WBLCF seeking to enjoin the Jensen
merger. The complaint alleged (i) that Jensen's directors and affiliates of some
of the directors had breached their fiduciary duty by taking various actions,
including approving and continuing to pursue the sale of the original equipment
manufacturing business of Jensen to Robert Shaw, refusing to pursue the
allegedly higher priced proposal from Emerson Radio Corp. (Emerson) and imposing
allegedly inappropriate asset lockups and termination fees; (ii) that Recoton
and the other defendants had aided and abetted the alleged breaches of fiduciary
duty; and (iii) that various agreements of Jensen with Recoton and others
(including the termination fee provisions of the Merger Agreement, a
license/option agreement between Jensen and Recoton regarding the Jensen
trademarks Acoustic Research and AR, an agreement between Recoton and Robert
Shaw pursuant to which Recoton would receive certain proceeds if Mr. Shaw sold
his shares of Jensen stock under certain circumstances and a stock option and
voting agreement with WBLCF relating to stock of Jensen (the Stock Option and
Voting Agreement) were invalid as a matter of Delaware law. The plaintiff
requested temporary and permanent injunctive and declaratory relief, rescission
of various agreements, such other equitable or damage relief as the court found
proper and an award of attorneys' fees and expenses.

         On May 20, 1996, a second stockholder of Jensen, Harbor Finance
Partners, filed a purported class action in the Court of Chancery of the State
of Delaware against Jensen, its directors, Recoton and RC Acquisition, seeking
to enjoin the merger, alleging claims similar to those asserted in the Marcus
action, and seeking similar legal and equitable relief. On July 3, 1996, the
stockholder cases were consolidated into a single action, and an amended
consolidated stockholder complaint was filed. On July 16, 1996, the Delaware
court denied the plaintiffs' motion for an order to expedite discovery and to
schedule a hearing on the plaintiffs' application for a preliminary injunction
to enjoin the merger, determining that the merger would not result in
irreparable harm to the plaintiffs because any alleged wrongful conduct could be
adequately remedied by a money damages award. By Memorandum Opinion dated August
20, 1996, the Delaware Chancery Court denied in its entirety the motion for a
preliminary injunction made by the plaintiffs and Emerson, which sought to
enjoin the special meeting of the stockholders of Jensen scheduled to take place
on August 28, 1996 to vote on the merger. As stated in a status report submitted
by counsel to plaintiffs on or about February 27, 1997, the plaintiffs expect to
file a motion to dismiss the case, approve notice to the class and apply for
attorneys fees.

         EMERSON SUIT. On July 30, 1996, Emerson filed an action in the Court of
Chancery of the State of Delaware against Jensen, its directors, WBLCF, IJI
Acquisition, Recoton and RC Acquisition, seeking to enjoin the merger and the
sale of Jensen's OEM business. The complaint alleged (i) that Jensen and its
directors failed to act in good faith to negotiate with Emerson, rejecting
allegedly superior offers from Emerson and failing to act reasonably in order to
obtain the best price in the sale of Jensen; (ii) that the defendants
deliberately interfered with the prospective business relationship between
Emerson and Jensen; and (iii) that Recoton and WBLCF aided and abetted the
alleged breaches of fiduciary duty by Jensen's Board of Directors. Emerson
sought preliminary and permanent injunctive and declaratory relief, the awarding
of compensatory damages against the defendants and such other and further relief
as the court finds proper. As noted above, Emerson's motion for a preliminary
injunction enjoining the August 28, 1996 meeting to vote on the merger was
denied. Emerson filed a notice of dismissal of its case without prejudice on
March 7, 1997.

         ILLINOIS LITIGATION. On May 10, 1996, Jensen filed an action in the
Federal District Court in Chicago, Illinois against Emerson and its President
for violations of proxy solicitation rules and for breach of a confidentiality
agreement with Jensen. On May 20, 1996, Emerson filed a counterclaim in this
action alleging that Jensen and Robert Shaw fraudulently induced Emerson to
enter into the confidentiality agreement and failed to negotiate with Emerson in
good faith. Emerson requested rescission of the Confidentiality Agreement and
such other equitable or damage relief as the court found proper and an award of
attorneys' fees and expenses. On July 2, 1996, Emerson filed an amended
counterclaim and third party complaint in the Chicago Federal District Court
making allegations similar to those in its original counterclaim and additional
claims that Jensen and Mr. Shaw continued to mislead Emerson and negotiate in
bad faith, with Recoton and WBLCF added as alleged co-conspirators with respect
to such continuing conduct. WBLCF was later dismissed as a third-party defendant
without prejudice. On August 8, 1996, Emerson amended its counterclaims and
third party complaint to add claims against Jensen for alleged violation of
Section 14(a) of the Securities Exchange Act of 1934 and moved for a temporary
restraining order and preliminary injunction enjoining Jensen from proceeding
with the August 28, 1996 special meeting of stockholders called to vote on the
merger; utilizing at the special meeting any proxies allegedly improperly
solicited; and enforcing the confidentiality agreement against Emerson.

         By Memorandum Opinion dated August 26, 1996, the District Court
abstained from considering Emerson's motion for a temporary restraining order
and a preliminary injunction in light of the proceedings in the Delaware
Chancery Court. On October 22, 1996, Emerson moved for leave to supplement its
counterclaim and third-party complaint to include an additional counterclaim
against Jensen (which had changed its name to Recoton Audio Corporation) for
breach of contract. By Summons and Complaint of that same date, Recoton
commenced an action against Emerson in the Chicago District Court for Emerson's
bad faith interference in Recoton's acquisition of Jensen.

     On or about November 18, 1996, Recoton and RAC moved to dismiss the claims
brought against them by Emerson, and Emerson moved to dismiss the complaints
filed against it by RAC and Recoton. The Court ruled on such motions on January
23, 1997 by denying Emerson's motion to dismiss RAC's complaint; granting
Recoton's and RAC's motions to dismiss Emerson's Second Amended Counterclaims
and Third-Party Complaint on procedural grounds, without prejudice to Emerson
re-filing an amended pleading; and requiring that Recoton and Emerson address
the choice of law issue with respect to Emerson's motion to dismiss Recoton's
complaint. On February 13, 1997, Emerson filed its Third Amended Counterclaims
and Third Party Complaint against RAC, Mr. Shaw and Recoton, alleging claims of
breach of contract against Jensen, fraudulent inducement against Jensen and Mr.
Shaw, and tortuous interference against Recoton. On March 14, 1997, Recoton and
RAC moved to dismiss Emerson's Third Amended Counterclaims and Third Party
Complaint and Recoton filed its response to Emerson's motion to dismiss
Recoton's complaint, addressing the choice of law issues as required by the
Court. This court has placed these cases on hold pending resolution of current
settlement discussions between the parties.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

         Not applicable.

                                     PART II

ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.




         The Company's Common Stock is traded on the Nasdaq Stock Market
National Market System under the symbol "RCOT." The following table sets forth
for the periods indicated the high and low sale prices of the Company's Common
Shares as reported on the Nasdaq Stock Market (adjusted for stock dividends)
since January 1, 1995:

QUARTER ENDED                                         HIGH              LOW

1995
         March 31..............................       $19.50           $14.00
         June 30...............................        22.50            13.50
         September 30..........................        29.00            18.00
         December 31...........................        28.00            15.75

1996
         March 31..............................       $22.50           $16.50
         June 30...............................        21.25            16.50
         September 30..........................        18.25            14.25
         December 31...........................        17.00            13.00

1997
         March 31 (through March 21, 1997)            $17.125          $13.25

         On March 21, 1997, the last reported sale price for the Company's
Common Shares on the Nasdaq Stock Market was $13.50 per share. As of March 21,
1997, there were 413 record holders of the Common Shares.

         The Company has never paid cash dividends on its Common Shares and does
not anticipate paying cash dividends on its Common Shares in the foreseeable
future. The Company's policy has been to retain all available earnings for the
development and growth of its business. Pursuant to the Adjustable Rate Senior
Notes due January 6, 2007 (the Senior Notes), the Company may not pay dividends
in cash or property unless the aggregate of all dividends, plus other restricted
payments (as defined) and basket investments (as defined) does not exceed $5
million plus 50% (or minus 100% in the case of a loss) of consolidated net
income for the period commencing on January 1, 1997 and ending on and including
the last day of the fiscal quarter of the Company most recently ended as of the
date such basket investment is made or such dividend or other restricted payment
is declared or made; and the Company is not in default under such Senior Notes.
In deciding whether to pay dividends in the future, the Company's Board of
Directors will consider factors it deems relevant, including the Company's
earnings and financial condition and its working capital and capital expenditure
requirements.

         The Company did not sell any equity securities during fiscal 1996 that
were not registered under the Securities Act of 1933, as amended.

ITEM 6.  SELECTED FINANCIAL DATA.

         The selected consolidated financial data presented below as of and for
each of the fiscal years in the five-year period ended December 31, 1996 are
derived from the consolidated financial statements of Recoton Corporation and
its subsidiaries, which financial statements have been audited by Cornick,
Garber & Sandler, LLP, independent public accountants, whose report relating to
the consolidated financial statements for the three years ended December 31,
1996 appears in this report. The selected consolidated financial data should be
read in conjunction with the consolidated financial statements and notes thereto
of the Company and "Management's Discussion and Analysis of Financial Condition
and Results of Operations" included elsewhere in this report.


<TABLE>
<CAPTION>
                                                                    YEAR ENDED DECEMBER 31,

                                                       1992         1993         1994        1995         1996
                                                                (In thousands, except per share data)
STATEMENT OF OPERATIONS DATA:
<S>                                                 <C>         <C>          <C>         <C>           <C>
 Net sales........................................  $76,682     $121,364     $163,973    $212,677      $331,700
 Cost of sales....................................   44,680       72,607       97,317     129,981       206,715
                                                     ------      -------      -------    --------      --------
    Gross profit..................................   32,002       48,757       66,656      82,696       124,985
 Selling, general and administrative expenses        24,922       36,290       49,454      62,747       109,194
                                                    -------      -------      -------    --------       --------
                                                      7,080       12,467       17,202      19,949        15,791

 Interest expense.................................      768        1,106          608         793         4,946
 Reversal of estimated cost of patent litigation       (490)       ---            ---        ---            ---
 Provision for consolidation of facilities              565        ---            ---        ---            ---
 Net investment income ...........................     (101)         (11)        (479)       (569)        (271)
                                                       -----      -------      -------    -------  ------------

 Income before income taxes ......................    6,338       11,372       17,073      19,725        11,116
 Income tax provision.............................    2,675        4,050        5,269       4,672         2,736
                                                      -----       ------       ------     -------   -----------

     Net income...................................   $3,663       $7,322      $11,804     $15,053        $8,380
                                                     ======       ======      =======     =======    ==========

 Net income per share (1).........................    $0.48        $0.86        $1.12       $1.31         $0.72
                                                      =====        =====        =====       =====         =====

 Weighted average number of common and common
  share equivalents outstanding (2)                   8,093        8,539       10,572       11,466       11,640
                                                      =====       =====       =======       ======       ======



<CAPTION>
                                                                          DECEMBER 31,

                                                       1992         1993         1994        1995         1996
                                                       ----         ----         ----        ----         ----
                                                                      (In thousands)
BALANCE SHEET DATA:

 Working capital..................................   $20,101      $30,454    $ 83,223    $ 96,402      $158,807
 Total assets.....................................    59,811       75,439     118,764     185,054       334,733
 Short-term debt, including current portion of
  long-term debt..................................    14,952       22,101         863      18,307        51,628
 Long-term debt...................................     2,317        6,083       5,221      20,511       101,753
 Stockholders' equity.............................    30,191       37,839      96,634     119,397       128,474
---------------
</TABLE>

     (1) Represents net income per share on a fully diluted basis. On a primary
basis, net income per share was $.58, $.86, $1.12, $1.32 and $.72 for 1992,
1993, 1994, 1995 and 1996 respectively.

     (2) As adjusted to give effect to share distributions effected in the form
of stock dividends.
<PAGE>

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.

                              RESULTS OF OPERATIONS

         The following table sets forth the statement of operations data of the
Company expressed as a percentage of net sales for the periods indicated:

<TABLE>
<CAPTION>
                               YEAR ENDED DECEMBER 31,

                                                           1992       1993         1994       1995      1996
                                                           ----       ----         ----       ----      ----
<S>                                                       <C>         <C>         <C>        <C>        <C>
Net sales.....................................            100.0%      100.0%      100.0%     100.0%     100.0%
Cost of sales.................................              58.3        59.8        59.3       61.1      62.3
                                                          ------      ------      ------     ------     -----
 Gross profit.................................              41.7        40.2        40.7       38.9      37.7
Selling, general and administrative expenses                32.5        29.9        30.2       29.5      32.9
                                                          ------       ------      ------    ------     -----
                                                             9.2        10.3        10.5        9.4       4.8
Interest expense..............................               1.0         0.9         0.4        0.4       1.5
Reversal of estimated cost of patent litigation             (0.6)        --          --          --        --
Provision for consolidation of facilities                    0.6         --          --          --        --
Investment income (net).......................              (0.1)        --         (0.3)      (0.3)       --
                                                             -----     ------     ------       ------   -----
Income before income taxes                                   8.3         9.4        10.4        9.3       3.3
Income tax provision..........................               3.5         3.4         3.2        2.2       0.8
                                                          -------     -------      -------     -------  -----
 Net income...................................               4.8%        6.0%        7.2%       7.1%      2.5%
                                                          ========     ========     ======     =======  ======
</TABLE>

COMPARISON OF YEARS ENDED DECEMBER 31, 1996 AND 1995

          Net sales increased from 1995 to 1996 by $119.0 million or 55.9%, to
$331.7 million. The sales increase is primarily attributable to sales of the
speaker and related product lines which were procured with the acquisition of
the branded product lines of International Jensen Incorporated (now known as
Recoton Audio Corporation, or RAC) in late August 1996 and to a full year's
sales of the InterAct and STD video game and multi-media product lines acquired
in September 1995. RAC's net sales were $64.6 million from the date of
acquisition, while InterAct/STD's net sales in 1996 were $79.6 million, an
increase of $55.0 million over the 4-month period of 1995.

         Gross profit increased from 1995 to 1996 by $42.3 million to $125.0
million, but decreased as a percentage of net sales from 38.9% in 1995 to 37.7%
in 1996. The dollar increase resulted from increased sales, of which RAC,
InterAct and STD were the primary contributors. The decrease in gross profit
percentage in 1996 was primarily attributable to the following factors: lower
than anticipated gross margins on the Company's speaker products sold by
Christie Design Corporation and RAC; a change in product mix; aggressive pricing
aimed at expanding the Company's market share in a soft consumer electronics
sales environment; and increased airfreight charges due to strong demand for new
video game products.

         Selling, general and administrative expenses increased in 1996 by $46.4
million to $109.2 million, and increased as a percentage of net sales from 29.5%
in 1995 to 32.9% in 1996. The major portions of the dollar increase were
attributable to the acquired RAC operations and also the inclusion of STD
operations for all of 1996. The percentage increase was primarily attributable
to several factors including the continuing earnout expenses related to the
acquisition of STD; higher market development expenses; the costs of Christie
Design Corporation (a subsidiary engaged in the design and marketing of audio
products which began shipments in the first quarter of 1996); increased research
and development expenses; and higher costs related to the expanded Lake Mary,
Florida facility. As the consolidation of the RAC operations into the Florida
facility occurs in the latter half of 1997, certain duplicate selling, general
and administrative expenses which occurred in 1996 should be eliminated.

         Interest expense increased by approximately $4.2 million to $4.9
million during 1996. The increase is primarily attributable to the increased
debt associated with the acquisition and operations of RAC (acquired in August
1996), the acquisition of STD (acquired in September 1995), and the financing of
the Company's new Lake Mary, Florida warehouse facility. Interest expense is
expected to increase in 1997 as the debt for RAC is carried for a full year.

         The effective income tax rate increased to 24.6% of pre-tax income in
1996 from 23.7% in 1995. This increase is due principally to a higher proportion
of income earned in Europe which is taxed at effective rates equal to or higher
than the U.S., but partially offset by the income earned by the Company's
subsidiaries in Hong Kong and China, which are taxed at a maximum rate of 16.5%.
The effective income tax rate for the year ended December 31, 1996 may not be
indicative of the effective income tax rate for the year ending December 31,
1997 or thereafter because of changes in the proportion of domestic and foreign
taxable income which might occur.

         Income per share of $0.72 in 1996 on both a primary and fully-diluted
basis was based on 11,638,000 (11,640,000 on a fully-diluted basis) shares as
compared with $1.32 on a primary basis and $1.31 on a fully diluted basis based
on 11,402,000 (11,466,000 on a fully diluted basis) shares, for 1995.

     The adoption of Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of" effective January 1, 1996 had no effect on the Company's
operations. Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation," also became effective January 1, 1996. The Company
has decided to continue accounting for employee stock-based compensation under
APB 25 rules, as permitted under SFAS No. 123, and has disclosed in the
footnotes to its annual financial statement for the year ended December 31, 1996
the pro forma effect on net income and income per share as if it had adopted the
new standard's alternative accounting treatment.

COMPARISON OF YEARS ENDED DECEMBER 31, 1995 AND 1994

         Net sales increased from 1994 to 1995 by $48.7 million or 29.7%, to
$212.7 million. The sales increase is attributable to sales of the Interact,
Performance and STD brands (1995 sales were $24.6 million) which were acquired
by the Company in September 1995 through the acquisition of STD Holding Limited
(STD), strong sales of the Company's OEM product lines, increased international
sales by the Company's Hong Kong marketing and Canadian subsidiaries, the
continued growth of the Company's 900 MHz wireless audio and video line and the
introduction of new products, including computer and cellular phone accessories.

         Gross profit increased from 1994 to 1995 by $16.0 million to $82.7
million but decreased as a percentage of net sales from 40.7% in 1994 to 38.9%
in 1995. The percentage decrease was due primarily to a change in product mix
and aggressive pricing aimed at expanding market share. The change in product
mix included sales of newly introduced cellular phone accessories and universal
TV remote control products, which have lower gross margins and sales of OEM
products, which typically carry lower gross margins, yet have lower associated
selling expenses.

          Selling, general and administrative expenses increased in 1995 by
$13.3 million to $62.7 million, but decreased as a percentage of net sales from
30.2% to 29.5%. Approximately $6.8 million of the increase was attributable to
the acquired STD operation with the balance attributable to increased selling
expenses related to the increased sales volume. The percentage decrease was due
to the increased proportion of sales to OEM customers and increased operating
efficiencies, which were however offset by increased research and development,
advertising and marketing expenses.

         Interest expense in 1995 was approximately $793,000 of which
approximately $600,000 was attributable to the acquisition and the operations of
STD. The Company borrowed $13 million to finance the acquisition and also
assumed STD's bank obligations. Interest expense on domestic borrowings in 1995
decreased by approximately $388,000.

         The effective income tax rate decreased to 23.7% of pre-tax income in
1995 from 30.9% in 1994, principally as a result of the higher proportion of
income earned by the Company's subsidiaries in Hong Kong and China, which are
taxed at a maximum rate of 16.5%. The effective income tax rate for the year
ended December 31, 1995 may not be indicative of the effective income tax rate
for the year ending December 31, 1996 or thereafter because of the changes in
the proportion of domestic and foreign taxable income which might occur.

         Income per share in 1995 was $1.32 on a primary basis and $1.31 on a
fully-diluted basis. The 1995 per share calculations were based on 11,402,000
(11,466,000 on a fully-diluted basis) average common and common equivalent
shares outstanding, as compared with 10,560,000 and 10,572,000 shares,
respectively, for 1994. The increase in average shares outstanding in 1995
primarily results from the 1,740,000 shares sold in the public offering of the
Company's Common Shares in April 1994 being included in the earnings per share
calculation for a full year and the 406,092 shares issued as part of the STD
purchase in September 1995.

                         LIQUIDITY AND CAPITAL RESOURCES

          In August 1996, the Company entered into a multibank $120 million
bridge facility, which was subsequently increased to $135 million, to
accommodate the acquisition of RAC and to finance the Company's on-going
operations. In January 1997, the Company completed a $75 million private
placement of 10 year senior notes, the proceeds of which were utilized to reduce
the bridge facility, which facility was then converted and increased to a
four-year $15 million term loan and a three-year $50 million committed revolving
line of credit. The four-year term loan refinanced at more favorable interest
rates $15 million of RAC indebtedness assumed on its acquisition. At December
31, 1996, outstanding borrowings and letters of credit under the bridge loan
were approximately $134.8 million, of which $90 million has been classified as
long term debt.

         At December 31, 1996, the Company had working capital of approximately
$158.8 million as compared to approximately $96.4 million at December 31, 1995.
The Company's ratio of current assets to current liabilities, however, was 2.6
to 1 at December 31, 1996 as compared with 3.2 to 1 at December 31, 1995. The
August 1996 acquisition of RAC brought about a major change in the components of
the Company's working capital, and its ratio, and is the primary reason for the
$62.4 million net increase in working capital. Trade receivables of RAC
accounted for approximately $40.2 million of the $46.3 million net increase in
overall receivables. Similarly, inventories increased approximately $40.5
million, with RAC accounting for approximately $33.3 million of that increase;
the balance of the increase was due to projected increases in sales volume.
Additionally, short-term bank loans and the current portion of long- term debt
as a whole increased approximately $33.3 million as a result of financing the
acquisition and operations of RAC and its subsidiaries. Accounts payable and
accrued expenses increased approximately $23.9 million, with RAC accounting for
approximately $12.7 million; the balance was necessary to support the increase
in inventory.

         In August 1994, the Board of Directors authorized the repurchase by the
Company of up to 500,000 outstanding Common Shares. In 1995, 42,366 shares were
purchased for $.7 million; no shares were repurchased in 1996. In June 1996, the
Board of Directors authorized under certain circumstances, the purchase from
time to time of additional shares of the Company's stock from certain officers.
In July 1996, the Company purchased 65,000 shares of stock from an officer, for
approximately $1.2 million. Any future repurchases may be limited by the terms
of the Company's new loan agreements.

         In April 1995, Recoton formed Christie Design Corporation, then located
in (Chatsworth) California. This wholly-owned subsidiary, which develops and
markets speaker products, commenced manufacturing and shipments in March 1996.
Through December 31, 1996, the Company has expended approximately $3.7 million
of start-up and capital costs for this subsidiary.

         In September 1995, Recoton acquired STD, a Hong Kong-based
international manufacturer and marketer of multimedia and computer accessories,
including video game joysticks, controllers and accessories and computer
speakers sold under the InterAct and STD brand names. STD's operations are in
Hong Kong, the People's Republic of China and Maryland (U.S.A.). The total cost
of the purchase of $22.7 million was paid through a combination of cash and
406,092 Recoton Common Shares (valued at $8.3 million). In connection with the
acquisition the Company assumed notes and loans payable of approximately $6.1
million. The cash portion of the purchase price was initially borrowed under
existing bank lines of credit. In December 1995, the Company obtained a
five-year bank term loan to replace these borrowings.

         In August 1996, Recoton acquired the branded product lines of RAC (then
known as International Jensen Incorporated), a leading marketer of home and
automotive loudspeakers and automotive electronics, for a total cost of
approximately $60.2 million, which includes closing costs and estimated
consolidation costs. In connection with the acquisition, Recoton assumed
approximately $34 million in notes and loans payable. The transaction occurred
by merger with a Recoton subsidiary, after the sale of Jensen's original
equipment manufacturing business to a third party.

         In December 1996, the Company through a German subsidiary, acquired
selected assets of Heco GmbH and Heco Electronics GmbH (both in Germany), for a
cost of approximately $1.3 million. Heco is a leading brand of home speakers in
Germany.

         In February 1997, Recoton acquired the outstanding stock of Tambalan
Limited (Tambalan) at a cost of approximately $285,000 and assumed certain
outstanding debt of approximately $2.9 million. Tambalan markets headphones and
other consumer electronic products in the United Kingdom and other European
countries under the trade name Ross Consumer Products. Tambalan is located in
England and also has a branch operation in Hong Kong.

         The Company has plans to erect a 318,000 square foot building on its
Lake Mary, Florida property. The estimated cost of the building construction is
approximately $5 million.

          To date foreign currency fluctuations have not materially affected the
Company's results of operations. The Company believes there is currently a
limited exposure to loss due to foreign currency risks in its Asian
subsidiaries. The Hong Kong dollar has been pegged to the U.S. dollar at an
official exchange rate of HK $7.73 to US $1.00. Historically, there have been no
material fluctuations in the Hong Kong/United States and the Hong Kong/Chinese
exchange rates. However, as a result of the RAC, Heco, and Tambalan
acquisitions, the Company's newly acquired operations in Western Europe will be
exposed to any future variations in foreign exchange rates. If there is any
material adverse change in the relationship between the European and Canadian
currencies with the United States dollar, such change would adversely affect the
results of the Company's European and Canadian operations, as reflected in the
Company's financial statements (see Note P of the Consolidated Financial
Statements).

         The Company has no other material commitments for capital expenditures,
although it will continue to evaluate possible acquisitions which may be
attractive to the growth of the Company.

 ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

(a)(1) INDEX TO FINANCIAL STATEMENTS

                                                                 PAGE

         Independent Auditors' Report                            F-1

         Recoton Corporation and Subsidiaries --

           Consolidated Balance Sheets as
           at December 31, 1995 and 1996                         F-2

           Consolidated Statements of Operations for
           the years ended December 31, 1994, 1995
           and 1996                                              F-3

           Consolidated Statements of Stockholders'
           Equity for the years ended December 31, 1994,
           1995 and 1996                                         F-4 to F-6

           Consolidated Statements of Cash Flows for
           the years ended December 31, 1994, 1995
           and 1996                                              F-7 to F-8

           Notes to Financial Statements                         F-9 to F-26

(a)(2)     INDEX TO FINANCIAL STATEMENT SCHEDULE

         Independent Auditor's Report on
         Supplemental Schedule                                   F-27

         Recoton Corporation and Subsidiaries --

                Schedule II   -- Valuation and
                    Qualifying Accounts                          F-28

         Other financial statement schedules have not been filed because the
conditions requiring the filing do not exist or the required information is
provided in the consolidated financial statements, including the notes thereto.

         The individual financial statements of the Company have been omitted
because the requirements for omission have been met.
<PAGE>
                          Independent Auditors' Report


Board of Directors
Recoton Corporation

          We have audited the accompanying consolidated balance sheets of
RECOTON CORPORATION AND SUBSIDIARIES as at December 31, 1995 and 1996 and the
related consolidated statements of operations, stockholders' equity and cash
flows for each of the three years in the period ended December 31, 1996. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

          We conducted our audits in accordance with generally accepted auditing
standards. 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 Recoton
Corporation and Subsidiaries as at December 31, 1995 and 1996, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1996 in conformity with generally
accepted accounting principles.



                                    /S/ Cornick Garber & Sandler, LLP
                                    CERTIFIED PUBLIC ACCOUNTANTS


New York, New York
February 28, 1997
<PAGE>
                      RECOTON CORPORATION AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                         (TABULAR AMOUNTS IN THOUSANDS)



                         ASSETS                          As at December 31,
                                                         1995           1996
Current assets:
   Cash and cash equivalents                        $   12,393     $   29,130
   Accounts receivable (less allowance
    for doubtful accounts of $1,587,000 in 1995
    and $3,119,000 in 1996)                             55,019        101,278
   Inventories                                          66,484        106,987
   Prepaid, refundable and deferred income taxes                       12,182
   Prepaid expenses and other current assets             6,583          8,687

                  Total current assets                 140,479        258,264

Property and equipment (at cost, less accumulated
   depreciation and amortization)                       24,163         30,578
Trademarks and patents (less accumulated amortization)   1,589          5,509
Goodwill (less accumulated amortization)                16,391         31,251
Deferred income taxes                                    1,069          5,985
Other assets                                             1,363          3,146

                  T O T A L                           $185,054       $334,733

                                   LIABILITIES

Current liabilities:
   Bank loans and drafts payable                      $ 13,176       $ 42,945
   Current portion of long-term debt                     5,131          8,683
   Accounts payable                                     15,144         28,634
   Accrued expenses                                      7,417         17,834
   Income taxes payable                                  3,209          1,361

                  Total current liabilities             44,077         99,457

Long-term debt (less current portion above)             20,511        101,753
Other noncurrent liabilities                             1,069          5,049

                  Total liabilities                     65,657        206,259

Commitments and contingencies (Notes B, N and 0)

                              STOCKHOLDERS' EQUITY

Preferred stock - $1.00 par value each - authorized
   10,000,000 shares; none issued                          --            --
Common stock - $.20 par value each - authorized
   25,000,000 shares; issued 12,296,160 shares in
   1995 and 12,597,982 shares in 1996                    2,459          2,520
Additional paid-in capital                              72,926         75,913
Retained earnings                                       48,797         57,177
Cumulative foreign translation adjustment                 (300)        (1,021)

                  Total                                123,882        134,589

Treasury stock - 1,132,770 shares in 1995 and
    1,225,067 shares in 1996, at cost                   (4,485)        (6,115)

                  Total stockholders' equity           119,397        128,474

                  T O T A L                           $185,054       $334,733

            The notes to financial statements are made a part hereof.
<PAGE>
                      RECOTON CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)


                                                    Year Ended December 31,
                                              1994         1995         1996

Net sales                                   $163,973    $212,677      $331,700

Cost of sales                                 97,317     129,981       206,715

Gross profit                                  66,656      82,696       124,985

Selling, general and administrative
   expenses                                   49,454      62,747       109,194
Interest expense                                 608         793         4,946
Investment income                               (479)       (569)         (271)

         T o t a l                            49,583      62,971       113,869

Income before income taxes                    17,073      19,725        11,116
Income tax provision                           5,269       4,672         2,736

NET INCOME                                  $ 11,804    $ 15,053     $   8,380

Income per share:
   Primary                                     $1.12       $1.32          $.72

   Assuming full dilution                      $1.12       $1.31          $.72

Average number of shares used in computing
  per share amounts:
   Primary                                    10,560      11,402        11,638

   Assuming full dilution                     10,572      11,466        11,640

            The notes to financial statements are made a part hereof.
<PAGE>
<TABLE>
<CAPTION>
                      RECOTON CORPORATION AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                  YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
              (TABULAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AMOUNTS)

                                                                                Cumulative
                                                                                 Foreign
                                                      Additional                 Currency
                                  Common      Stock    Paid-In     Retained     Translation        Treasury Stock
                                  Shares      Amount   Capital     Earnings      Adjustment      Shares       Amount

<S>                              <C>         <C>       <C>         <C>          <C>              <C>         <C>
BALANCE - JANUARY 1, 1994        6,389,506   $1,278   $18,172     $21,940       $(194)           1,067,693   $3,357

Net income for the year                                            11,804
Public offering of common stock  1,740,000      348    46,183
Exercise of stock options           97,371       20       756
Repurchase of stock                                                                                  6,166      125
Share distribution in the form
   of 50% stock dividend
   (including cash paid for
   fractional shares)            3,566,321      713      (717)
Foreign currency translation
   adjustment                                                                    (187)

BALANCE - DECEMBER 31, 1994     11,793,198    2,359    64,394      33,744        (381)           1,073,859    3,482

Net income for the year                                            15,053
Exercise of stock options           96,870       19       339                                        4,649       99
Repurchases of stock                                                                                42,366      710
Stock issued for acquisition
   of STD Holding Limited          406,092       81     8,193
Stock acquired in cancellation
   of $194,000 loan receivable                                                                      11,896      194
Foreign currency translation
   adjustment                                                                      81
                                ----------    -----  --------     -------       ------           ---------    -----
BALANCE - DECEMBER 31, 1995     12,296,160    2,459    72,926      48,797        (300)           1,132,770    4,485

Net income for the year                                                         8,380
Exercise of stock options          301,822       61     2,987                                       27,297      476
Repurchases of stock                                                                                65,000    1,154
Foreign currency translation
   adjustment                                                                                         (721)

BALANCE - DECEMBER 31, 1996     12,597,982   $2,520   $75,913     $57,177     $(1,021)           1,225,067   $6,115
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                       RECOTON CORPORATION AND SUBSIDIARIES

                                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                                          (TABULAR AMOUNTS IN THOUSANDS)


                                                                            Year Ended December 31,
INCREASE (DECREASE) IN CASH AND                                 1994                 1995               1996
    CASH EQUIVALENTS
<S>                                                          <C>                   <C>                 <C>

Cash flows from operating activities:
  Net income                                                 $ 11,804              $ 15,053            $8,380

 Adjustments to reconcile results of
   operations to net cash provided by
    operating activities:
    Depreciation                                                1,677                 2,496             5,194
    Amortization of intangibles                                   765                 1,120             3,045
    Provision for losses on accounts receivable                   367                   847             1,259
    Deferred income taxes                                        (305)                 (776)             (312)
    Change in asset and liability accounts
      (net of effects of acquisitions):
       Accounts receivable                                     (7,575)              (13,242)          (12,210)
       Inventory                                              (15,896)              (14,195)           (6,039)
       Prepaid and refundable income taxes                                                             (1,242)
       Prepaid expenses and other current assets               (1,616)               (1,858)            3,305
       Other assets                                              (187)                   95              (347)
       Accounts payable and accrued expenses                    4,668                   923               586
       Income taxes payable                                     1,281                 1,114            (2,124)
       Other noncurrent liabilities                               (26)                   43             1,751

             Total adjustments                                (16,847)              (23,433)           (7,134)

             Net cash provided by (used for)
                  operating activities                         (5,043)               (8,380)            1,246

Cash flows from investing activities:
   Payments for acquisitions (net of
       cash acquired of approximately $2,340,000
       in 1995 and $3,014,000 in 1996)                         (2,994)              (12,883)          (55,909)
   Expenditures for trademarks, patents and
      intellectual property                                       (96)                 (771)             (195)
   Expenditures for property and equipment                     (4,420)              (10,561)           (7,383)

           Net cash used for investing activities              (7,510)              (24,215)          (63,487)

Cash flows from financing activities:

   Net borrowings (repayments) under credit
      agreements                                             $(20,800)              $13,193        $  (10,368)
   Net proceeds from bridge loans                                                                     129,364
   Repayments of bank loans assumed upon
      acquisition of businesses                                (1,175)               (2,273)          (36,173)
   Net proceeds from long-term bank borrowings                                       20,000
   Repayment of long-term bank borrowings                      (1,379)                 (943)           (5,206)
   Net proceeds from public offering of common
      stock                                                    46,531
   Proceeds from exercise of stock options                        134                   198             1,387
   Purchases of treasury stock                                   (125)                 (710)           (1,154)
   Income tax benefit applicable to exercise
      of stock options                                            641                    62             1,185
   Payments for fractional shares                                  (4)

           Net cash provided by
              financing activities                             23,823                29,527            79,035

Effect of foreign exchange rate changes
   on cash of foreign subsidiaries                                 17                   (14)              (57)

NET INCREASE (DECREASE) IN CASH AND
   CASH EQUIVALENTS                                            11,287                (3,082)           16,737

Cash and cash equivalents - January 1                           4,188                15,475            12,393

CASH AND CASH EQUIVALENTS -
     DECEMBER 31                                              $15,475               $12,393           $29,130

Supplemental disclosures of cash paid for:
   Interest                                                   $   642               $   713           $ 4,451

   Income taxes                                               $ 3,653               $ 4,429           $ 5,686
</TABLE>

            The notes to financial statements are made a part hereof.
<PAGE>
                      RECOTON CORPORATION AND SUBSIDIARIES

                          NOTES TO FINANCIAL STATEMENTS

NOTE A - DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

          DESCRIPTION OF BUSINESS:

          The Company operates in one line of business, as a producer and
          marketer of a comprehensive line of consumer electronic products
          generally for aftermarket use. The Company's products are sold
          primarily to retailers and original equipment manufacturers located
          principally in the United States, Canada, the Far East and Europe. In
          addition to its domestic facilities, the Company maintains office and
          warehouse facilities in Asia, Canada and Western Europe and
          manufacturing and assembly facilities in the People's Republic of
          China and Germany.

          PRINCIPLES OF CONSOLIDATION:

          The consolidated financial statements include the accounts of Recoton
          Corporation (Company) and its subsidiaries, which are wholly-owned.
          All material intercompany accounts and transactions have been
          eliminated in consolidation.

          USE OF ESTIMATES:

          The preparation of financial statements in conformity with generally
          accepted accounting principles requires management to make estimates
          and assumptions that affect the reported amounts of assets and
          liabilities and disclosure of contingent assets and liabilities at the
          date of the financial statements and the reported amounts of revenues
          and expenses during the reporting period. Actual results could differ
          from those estimates.

          TRANSLATION OF FOREIGN SUBSIDIARY FINANCIAL STATEMENTS:

          The assets and liabilities of the Company's foreign subsidiaries are
          translated into United States dollars at year end rates of exchange.
          Operating accounts are translated at average rates of exchange during
          the year. Gains and losses on translation are reflected as a separate
          component of stockholders' equity on the consolidated balance sheet.
          Also included in the separate component of stockholders' equity are
          the effects of exchange rate changes on certain intercompany balances
          with foreign subsidiaries which are not intended to be settled on a
          current basis.

          CASH AND CASH EQUIVALENTS:

          Cash equivalents on the balance sheet and statement of cash flows are
          comprised of money market mutual funds, certificates of deposit with a
          maturity of three months or less and U.S. Treasury bills purchased
          within three months of their maturity. Due to the nature and size of
          the Company and the volume of its transactions, it maintains certain
          domestic cash accounts in excess of FDIC insured limits and cash
          accounts in foreign banks which are not insured by the FDIC.

          FAIR VALUE OF FINANCIAL INSTRUMENTS:

          In management's opinion, the carrying value at December 31, 1996 and
          December 31, 1995 of the Company's financial instruments approximates
          their fair value because of their short maturities or, for the
          majority of long-term debt, because it was recently incurred.

          INVENTORIES:

          Inventories are stated at the lower of cost (first-in, first-out
          method) or market, representing estimated net realizable value.

          DEPRECIATION OF PROPERTY AND EQUIPMENT:

          For financial accounting purposes, depreciation is computed over the
          estimated useful lives of the assets on the straight-line method. For
          income tax purposes, accelerated depreciation methods are utilized for
          certain assets.

          AMORTIZATION OF TRADEMARKS AND PATENTS:

          Trademarks are being amortized over terms of 5 to 40 years. Patents
          are being amortized over the terms of the related patent, or a shorter
          period, based on the estimated commercial life of the related product.

          GOODWILL:

          Goodwill, representing the excess of the purchase price over the fair
          value of the net identifiable assets acquired in business combinations
          treated as purchases, is being charged to operations on a
          straight-line basis over periods of 15 to 30 years. At each balance
          sheet date, the Company reviews for impairment the unamortized
          goodwill balance from each of its acquisitions. If it appears that
          there has been a change in events or circumstances which indicates
          that the unamortized balance may not be fully recoverable, an
          evaluation is made using undiscounted estimated future cash flows and
          estimated current values of the acquired businesses or related assets,
          as appropriate.

          INCOME PER SHARE:

          Primary income per share is based on the weighted average number of
          common and, if material, common equivalent shares outstanding during
          each year. Fully diluted income per share is based on the weighted
          average number of common and common equivalent shares outstanding. The
          per share amounts for 1994 give effect to the stock split effected in
          the form of a stock dividend in that year.


NOTE B -  ACQUISITIONS:

          In January 1994, the Company purchased for approximately $450,000
          certain tangible assets and proprietary rights of Infrared Research
          Labs, Inc., a supplier of universal remote control devices.

          In September 1994, the Company acquired from Sound Quest, Inc.
          selected assets relating to its automotive audio accessory product
          line and assumed certain liabilities at a net cost of $2.5 million.
          The agreement provides that an additional purchase price, not to
          exceed $1.2 million, is contingently payable to Sound Quest, Inc. over
          the five year period ending December 31, 1999 based on increases in
          sales of the product line (as defined) over base period sales, of
          which approximately $300,000 has been recorded through December 31,
          1996. Goodwill of approximately $2.6 million, representing the excess
          of the consideration paid over the fair value of the net assets
          acquired, is being charged to operations over 15 years.

          In February 1995, the Company purchased, for approximately $722,000,
          selected assets of Ampersand (a division of Ampco Industries, Inc.).
          Ampersand is a manufacturer and supplier of car stereo installation
          accessories.

          Effective August 31, 1995, the Company acquired, in a purchase
          transaction, the outstanding stock of STD Holding Limited ("STD"), as
          well as certain net assets owned by one of STD's subsidiaries. STD is
          a manufacturer and marketer of video game joysticks, controllers and
          computer accessories. The purchase price was approximately $22.7
          million, which included the issuance of 406,092 shares of the
          Company's common stock with a market value of approximately $8.3
          million. The $13 million excess of consideration paid over the fair
          market value of the net assets acquired has been recorded as goodwill,
          which is being amortized to operations over 15 years.

          On August 28, 1996, the Company acquired for cash, in a purchase
          transaction, all of the outstanding stock of International Jensen
          Incorporated ("Jensen"). The purchase price, which was partially
          financed from the proceeds of a bridge loan facility, was
          approximately $60.2 million, which includes investment banker fees and
          other closing costs and approximately $3 million estimated relocation,
          severance and other costs to eliminate duplicate facilities and
          consolidate certain of Jensen's operations into the Company's Lake
          Mary, Florida facilities in 1997. This transaction was preceded by
          Jensen's sale of its original equipment manufacturing business to a
          member of its management.

          The $15.6 million excess of the total cost of the Jensen purchase over
          the fair market value of the net identifiable assets acquired has been
          recorded as goodwill, which is being amortized to operations over 30
          years.

          The results of operations of the foregoing acquisitions are included
          in the accompanying financial statements from their respective dates
          of acquisition.

          The following presents, on an unaudited pro forma basis, the net
          sales, net earnings and earnings per share of the Company as if the
          Jensen and STD acquisitions had each occurred on January 1, 1995. The
          information for Jensen is based on its audited financial statements
          for the year ended February 28, 1996 and unaudited financial
          information for the period from January 1, 1996 to August 28, 1996,
          after eliminating its original equipment manufacturing operations and
          certain costs and expenses pertaining to the acquisition which are
          unrelated to the operations acquired. The information for STD is based
          on its unaudited historical information for the eight months ended
          August 31, 1995. The pro forma information does not purport to be
          indicative of the results of operations that would have occurred had
          the transactions taken place at the beginning of the periods
          presented, nor is it indicative of the expected future results of
          operations.

                                     In Thousands (Except Per Share Data)
                                           Year Ended December 31,
                                            1995                  1996

          Net sales                       $395,432             $437,390

          Net earnings                    $  8,250             $  1,083

          Primary earnings per share          $.71                 $.09

          In December 1996 the Company acquired for approximately $1.3 million
          the Heco brand of home speakers in Germany through a purchase of
          selected assets from the receiver in bankruptcy of Heco GmbH.

          In February 1997 the Company acquired the outstanding stock of
          Tambalan Limited (Tambalan) at a cost of approximately $285,000, plus
          closing costs and the assumption of certain outstanding bank and other
          loans of approximately $2.9 million. Tambalan sells headphones and
          other consumer products in the United Kingdom and other European
          countries trading under the name Ross Consumer Products. It also has
          branch operations in Hong Kong.

          The operations of both Heco and Tambalan prior to acquisition were
          immaterial in relation to those of the Company.


NOTE C -  INVENTORIES:

          Inventories are summarized as follows:

                                                     (In Thousands)
                                                       December 31,
                                                  1995           1996

          Raw materials and work-in-process     $22,237        $28,778
          Finished goods                         35,132         69,170
          Merchandise in-transit                  9,115          9,039

             T O T A L                          $66,484       $106,987


NOTE D -  PROPERTY AND EQUIPMENT:

          Property and equipment are summarized as follows:

                                           (In Thousands)           Estimated
                                             December 31,          Useful Life
                                       1995          1996            (Years)

          Land                      $  3,016      $  3,281
          Buildings, leaseholds
           and improvements (1)       12,926        14,345          15 - 40
          Machinery and equipment      5,820         7,806           3 - 10
          Furniture, fixtures and
           office equipment            4,571         7,494           2 - 7
          Tools and dies               6,077         9,777           2 - 5

              Totals                  32,410        42,703

          Less accumulated depreciation
            and amortization           8,247        12,125

              Balance                $24,163       $30,578

(1)       Includes capitalized interest costs of approximately $298,000 in 1995.

NOTE E -  BANK LOANS AND DRAFTS PAYABLE:

          In August 1996, the Company entered into a multi-bank, $120 million
          bridge loan facility which was increased to $135 million in December
          1996. At December 31, 1996, approximately $130.1 million was
          outstanding under this facility. On January 6, 1997, the Company sold,
          to institutional investors in a private placement, $75 million of
          ten-year senior notes, the proceeds of which were used to reduce the
          bridge loan facility, which was then converted to a $50 million
          revolving credit facility expiring in August 1999 and a four-year $15
          million term loan. The $15 million term loan was used to refinance at
          lower rates certain debt assumed in the Jensen acquisition. The
          balance sheet at December 31, 1996 gives effect to these transactions
          and, accordingly, the $90 million aggregate of the ten-year and
          four-year loans has been classified as long-term debt (see Note F).
          The balance due under the revolving credit facility has been
          classified as a current liability at December 31, 1996 because the
          related agreement requires that borrowings be reduced to zero for one
          thirty-day period during each twelve months the facility is
          outstanding. Interest on borrowings under the revolving credit
          facility is payable at rates negotiated with banks at the time
          borrowings are made. Additionally, the banks require the maintenance
          of various financial ratios.

          The Company's Hong Kong subsidiaries have lines-of-credit of
          approximately $14 million with three overseas banks. The banks have a
          security interest to the extent of merchandise purchased using trust
          receipt loans. Short-term bank loans under the lines aggregate
          approximately $2.8 million at December 31, 1996.

          The weighted average interest rate on outstanding borrowings under the
          credit agreements at December 31, 1996 was approximately 6.8%.
          Outstanding letters of credit, which aggregated approximately $7.6
          million at December 31, 1996, reduce the amounts available under these
          lines.

NOTE F -  LONG-TERM DEBT:

          Long-term debt included in the consolidated balance sheets is
          summarized as follows:

                                                        (In Thousands)
                                                       As at December 31,
                                                     1995              1996

          Senior ten-year notes payable (1)                        $  75,000
          Notes payable - banks (2):
            Due in monthly installments of
              $58,350 through October 1998, plus
              interest at 6.91% a year             $  1,983            1,283
            Due in quarterly installments of
              $650,155 through December 2000,
              plus interest at 7.80% a year          13,000           10,402
            Due in monthly installments of
              $116,670 through December 2000,
              plus interest at 6.60% a year           7,000            5,600
            Due in quarterly installments of
              $937,500 through January 2001,
              plus interest which varies
              with changes in certain of the
              Company's financial ratios and
              changes in the LIBOR rate
              (approximately 6.4% at December
              31, 1996)                                               15,000
            Mortgages collateralized by certain land
              and building in Lake Mary, Florida
              payable in monthly installments of
              $36,368 to June 2001 with a final
              installment aggregating approximately
              $2 million due in July 2001.  The
              payments include interest at 7.99%
              to 8.40% a year                         3,238            3,061

          Other debt                                    421               90

          Total long-term debt                       25,642          110,436
          Less current portion                        5,131            8,683

          Noncurrent portion                        $20,511         $101,753

       1) In January 1997, the Company sold in a private placement to
          institutional investors $75 million of adjustable rate senior notes,
          the proceeds of which were used to partially repay certain bank loans
          outstanding at December 31, 1996 (see Note E). The notes are payable
          in equal annual principal installments of $10,714,286 beginning in
          January 2001. Interest is payable quarterly at 8.12% a year, subject
          to a retroactive adjustment to 8.75% a year based on the measurement
          of certain financial ratios at September 30, 1997 and December 31,
          1997. The note agreement provides for, among other things, the
          maintenance of various specified financial ratios and minimum tangible
          net worth requirements (as defined), contains limitations and
          restrictions on additional borrowings, the payment of dividends,
          repurchases of the Company's common stock, engaging in business not
          directly related to the consumer electronics industry, investments,
          mergers and sales of the Company's assets, other than in the ordinary
          course of business (as defined).

          The agreement also provides, under certain circumstances, for the
          acceleration of the payment of all or a portion of the notes in the
          event of a sale of the Company's assets (as defined) or in the event
          the Company should request a waiver of the restrictions on mergers or
          consolidations with other entities.

       2) The bank loan agreements contain covenants and restrictions similar
          to, but generally less restrictive than, the senior notes payable.

          The noncurrent portion of long-term debt at December 31, 1996 is
          payable as follows:

             Year ending December 31:                         (In Thousands)
               1998                                             $    8,578
               1999                                                  7,991
               2000                                                  7,997
               2001                                                 12,901
               Subsequent to December 31, 2001                      64,286

                      T O T A L                                   $101,753


NOTE G -  STOCKHOLDERS' EQUITY:

          In February 1993, the Board of Directors authorized the Recoton
          Corporation Stock Bonus Plan, which provides for the issuance to
          officers and key employees an aggregate of up to 300,000 shares of
          stock held in treasury. Such plan is administered by a committee of
          the Board of Directors. Awards under the plan are charged to
          operations based on the fair market value of the shares at the date of
          issuance.

          In April 1994, the Company completed a public offering of 1,740,000
          shares of common stock, which resulted in net proceeds to the Company
          of $46.5 million. The $46.2 million excess of the net proceeds over
          the par value of the shares issued was credited to additional paid-in
          capital.

          In July 1994 the Company effected a three-for-two stock split in the
          form of a 50% stock dividend and issued 3,566,321 common shares in
          connection therewith. Since the par value per share of the common
          stock did not change, the aggregate par value of the shares issued was
          transferred to the common stock account from additional paid-in
          capital.

          In August 1994 the Board of Directors authorized the repurchase by the
          Company of up to 500,000 shares of its outstanding common stock. In
          1994, a total of 6,166 shares were repurchased for approximately
          $125,000 and in 1995, an additional 42,366 shares were repurchased for
          approximately $710,000. Future repurchases of shares may be limited
          under the terms of the Company's loan agreements (see Note F).

          In August 1995, the Company issued 406,092 shares of common stock in
          connection with the purchase of STD (see Note B).

          In October 1995, the Company adopted a shareholders' rights plan. The
          plan becomes operative in certain events involving the acquisition of
          20% or more of the Company's common stock or the commencement of a
          tender or exchange offer by any person or group in a transaction not
          approved by the Company's Board of Directors. Upon the occurrence of
          such an event, each right, unless redeemed by the Board at a
          redemption price of $0.01 per right, entitles its holder to purchase
          for $100 an amount of common stock of the Company, or in certain
          circumstances the acquirer, having a market value of twice the
          purchase price. 250,000 shares of Series A Junior Participating
          Preferred Shares have been reserved in connection with the rights
          plan.

          In connection with the exercise of incentive stock options, in 1995,
          51,602 shares of common stock were issued in exchange for 4,649 shares
          of previously issued common stock with a market value of approximately
          $99,000 and in 1996, 161,368 shares of common stock were issued in
          exchange for 27,297 shares of previously issued common stock with a
          market value of approximately $475,000; no cash was received in
          connection with these transactions. Other transactions with respect to
          stock options are described in Note H.

          In July 1996, the Company purchased from an officer 65,000 shares of
          previously issued common stock for approximately $1,154,000
          representing the fair market value of the shares on the date of the
          purchase.


NOTE H -  STOCK OPTIONS:

          At December 31, 1996, the Company has three stock option plans.

          Options to purchase 17,066 shares are outstanding under the Company's
          1982 Incentive Stock Option Plan. No additional options are available
          for grant under this plan.

          The Company's Nonqualified Plan provides for the granting of options
          to purchase up to 346,666 shares of common stock.

          The Company's 1991 Stock Option Plan provides for the granting of
          options to purchase up to 2,500,000 shares of common stock; such
          options may be either incentive stock options (as defined in the
          Internal Revenue Code) or nonqualified options. An employment
          agreement with Mr. Robert Borchardt, the Company's President,
          Co-Chairman of the Board and Chief Executive Officer, provides for the
          granting of nonqualified options each year for the duration of the
          agreement, based on a formula related to annual increases in
          consolidated net income, as defined. Pursuant to the agreement,
          options to purchase 79,741 shares were granted from this plan in 1996
          applicable to the Company's 1995 operations.

          Also, at December 31, 1996 there are outstanding nonqualified options
          to purchase an aggregate of 18,750 shares of common stock, of which
          options to purchase 7,500 shares at $20.67 a share were granted to a
          director of the Company in 1994 and options to purchase 10,000 shares
          at $16.00 a share were granted to a consulting firm in 1995.

          The length, vesting schedule, option price and other terms of the
          options are determined at the time each option is granted, although
          the term of options cannot exceed 10 years and incentive stock option
          prices may not be less than the fair market value of the stock on its
          date of grant. Since all outstanding options to officers and employees
          were granted for at least the fair market value of the Company's stock
          at the dates of grant and are considered fixed plan options, no charge
          has been made to operations for these options. No income tax benefit
          is received by the Company upon the granting or exercise of incentive
          stock options but it may receive income tax benefits for nonqualified
          stock options when they are exercised. Such income tax benefits are
          credited to additional paid-in capital when realized.

          The Company has adopted the disclosure only provisions of Statement of
          Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock
          Based Compensation", for stock options granted to employees, officers
          and directors and, therefore, continues to apply Accounting Principles
          Board Opinion No. 25 and related interpretations in its accounting for
          stock option plans. Accordingly, no compensation cost has been
          recognized for options granted under its stock option plans. If the
          Company had elected to recognize compensation cost for options granted
          under these plans in 1995 and 1996 based on their fair values at the
          grant dates, consistent with the method of SFAS No. 123, net income
          and income per share would have been reduced to the pro forma amounts
          indicated below:

                                          Year Ended December 31,
                                            1995              1996
                                          (In thousands, except per
                                             share information)
            Net income:
              As reported                 $15,053           $ 8,380
              Pro forma                    13,581             5,539
            Income per share:
              As reported                   $1.32              $.72
              Pro forma                      1.19               .48

          The fair values of the Company's stock options used to compute the pro
          forma net income and income per share disclosures are their estimated
          present values at grant date using the Black-Scholes option pricing
          model with the following assumptions for 1995 and 1996; expected
          volatility of 46.3%, risk free interest rates ranging from 5.2% to
          7.6% and expected holding periods ranging from 3 years to 10 years.

          A summary of the status of the Company's outstanding stock options as
          of December 31, 1995 and 1996 and changes during the years then
          ended is presented below:

<TABLE>
<CAPTION>
                                                             Year Ended December 31,
                                                        1995                             1996
                                                                 Weighted                       Weighted
                                                                 Average                        Average
                                                                 Exercise                       Exercise
                                              Shares             Price             Shares       Price
           Stock Options                      (000's)            Per Share         (000's)      Per Share
          <S>                                 <C>                <C>                 <C>          <C>
           Outstanding at beginning
           of year                            1,005            $    9.00           1,315         $12.23
              Granted                           414                17.98             285          17.05
              Exercised                         (97)                3.06            (302)          6.17
              Forfeited/expired                  (7)               14.68             (29)         18.03

           Outstanding at end of year         1,315            $   12.23           1,269         $14.62

           Exercisable at year end              667            $    8.09             848         $13.88

           Weighted - average fair
           value of options granted
           during the year                $   10.89            $   10.88
</TABLE>


          The following table summarizes information about stock options
          outstanding at December 31, 1996:

<TABLE>
<CAPTION>
                                         Options Outstanding                    Options Exercisable
                                                   Weighted          Weighted                           Weighted
                                                   Average           Average                            Average
                                                   Remaining         Exercise                          Exercise
            Range of                  Shares       Contractual       Price             Shares          Price
            Exercise Prices           (000's)      Life              Per Share         (000's)        Per Share

            <S>                        <C>           <C>                <C>              <C>              <C>
            $  1.13  to  $  3.33       237           4.3 years          $  2.75          237              $  2.75
              12.25  to    16.75       659           8.1 years            15.51          330                15.77
              18.07  to    24.00       373           7.5 years            20.58          281                21.03

               Totals                1,269                                               848
</TABLE>

NOTE I -  CONCENTRATIONS:

          As of December 31, 1996, the Company is not aware of any significant
          customer or lender that could, if suddenly eliminated, severely impact
          its operations. No single customer accounted for sales in excess of
          10% of consolidated net sales for each of the three years ended
          December 31, 1996. Revenue from export sales from the United States
          was less than 10% of consolidated net sales during this period. The
          Company currently sources certain products from single suppliers.
          However, to lessen the risks of off-shore manufacturing, the Company
          maintains substantial inventories of long-lead-time items and
          continually evaluates alternative supply sources. Information about
          the Company's domestic operations and foreign subsidiaries is set
          forth in Note P.


NOTE J -  RESEARCH AND DEVELOPMENT:

          Research and development costs for new products aggregated
          approximately $942,000 in 1994, $1,608,000 in 1995 and $2,897,000 in
          1996.


NOTE K -  ADVERTISING COSTS:

          Advertising costs aggregated approximately $661,000 in 1994,
          $1,453,000 in 1995 and $2,768,000 in 1996.


NOTE L -  INCOME TAXES:

          Income taxes on the statements of operations are comprised of the
          following:

                                                      (In Thousands)
                                                  Year Ended December 31,
                                                 1994         1995        1996
           Currently payable (refundable):
             Federal                            $4,075       $3,071     $   467
             State and local                       610          283         (28)
             Foreign                               889        2,094       2,609

                 Totals                          5,574        5,448       3,048

           Deferred                               (305)        (776)       (312)

                 Net provision                  $5,269       $4,672      $2,736

          Pretax income (loss) was derived from foreign and domestic sources as
          follows:

                                                      (In Thousands)
                                                  Year Ended December 31,
                                                 1994         1995        1996

               Foreign                         $ 5,476      $12,431     $14,598
               Domestic                         11,597        7,294      (3,482)

               Totals                          $17,073      $19,725     $11,116

          Deferred tax assets and liabilities and the principal temporary
          differences from which they arise are:

                                                             (In Thousands)
                                                              December 31,
                                                             1995         1996
         Deferred tax assets:
            Allowance for estimated doubtful
               accounts and estimated sales returns,
               allowances and discounts                   $   632        $2,660
            Tax basis adjustments to inventory                412         2,725
            Deferred compensation accruals                    369           441
            Difference in basis and amortization periods
               of patents, trademarks and package
               design costs                                   899           540
            Cumulative foreign translation adjustment         165           250
            Estimated Jensen consolidation costs                          1,120
            Net operating loss and tax credit carryforward                8,089
            Other                                              19           946
                Total                                       2,496        16,771

         Less valuation allowance                                        (3,253)

                Total deferred tax assets                   2,496        13,518
            Deferred tax liabilities:
            Accelerated depreciation of property
               and equipment                                  383           792
            Tax basis adjustments to prepaid
               catalog costs                                  169           159
            Other                                               3           107

                Total deferred tax liabilities                555         1,058

                         Net deferred tax asset            $1,941       $12,460

          As a result of the Jensen acquisition, the Company has acquired
          domestic net operating loss carryforwards of approximately $8 million
          and tax credit carryforwards of approximately $1.8 million, which
          expire primarily from 2000 through 2009. Utilization of the loss
          carryforwards is subject to an annual limitation of approximately $3
          million as a result of the provisions of Section 382 of the Internal
          Revenue Code. In addition, the Company has available foreign net
          operating loss carryforwards of approximately $1.3 million, expiring
          in 1998, which are available to reduce future income taxes in Italy.
          The Company has recorded a net deferred tax asset for the tax benefit
          of such carryforwards considered more likely than not to be realized
          prior to their expiration and a valuation allowance for the tax
          benefit of the balance of such carryforwards. If the amounts subject
          to the valuation allowance are subsequently realized, their income tax
          benefit will be recorded as a reduction of the then unamortized
          goodwill related to the Jensen acquisition.

          The following table reconciles the statutory federal income tax rate
          to the Company's effective income tax rates:

                                                  Year Ended December 31,
                                           1994           1995         1996

          Statutory federal rate           34.0%          34.0%       34.0%
          Effect of:
           State and local income
             taxes (net of federal
             benefit)                       2.3             .9         (.9)
          Tax benefit of prior year
             loss carryforward of
             Canadian subsidiary            (.9)
          Difference between U.S.
             and foreign income tax
             rates on earnings of
             foreign subsidiaries          (5.1)         (11.2)       (9.6)
          Other items (net)                  .6                        1.1
          Effective income tax
             rates                         30.9%          23.7%       24.6%

          The Company has not provided for additional U.S. income taxes which
          would be payable upon the payment of dividends from its Hong Kong
          subsidiaries, because the earnings of these subsidiaries are
          considered indefinitely invested there. Such additional taxes would
          aggregate approximately $4.4 million based on the subsidiaries'
          undistributed earnings which aggregate approximately $24.5 million for
          income tax purposes at December 31, 1996. The foregoing amounts are
          stated net of U.S. Sub-Part F taxes paid, or payable, which are
          considered the equivalent of repatriated earnings.


NOTE M -  EMPLOYEE BENEFIT PLANS:

          The Company's profit sharing plans for eligible domestic nonunion
          employees provide for annual contributions as authorized by the Board
          of Directors of up to the maximum allowable as a tax deduction by the
          Treasury Department. Profit sharing expense was approximately $250,000
          in both 1994 and 1995 and $363,000 in 1996.


NOTE N -  COMMITMENTS:

          The Company leases certain facilities and equipment under long-term
          operating leases which expire at various times through December 2002.
          Additionally, certain warehouse space and sales offices are leased on
          a month-to-month basis.

          Aggregate minimum rental payments under long-term leases for premises
          and equipment are as follows:

          Year ending December 31:               (In Thousands)
            1997                                   $  2,966
            1998                                      2,669
            1999                                      2,335
            2000                                      1,426
            2001                                        914
            2002                                        312

          T O T A L                                 $10,622

          Rent expense was approximately $826,000 in 1994, $1,335,000 in 1995
          and $1,827,000 in 1996.

          An agreement with Mr. Herbert Borchardt, the Company's Co-Chairman of
          the Board, provides for a current minimum annual compensation of
          approximately $219,000 while he remains Co-Chairman and $183,000
          thereafter, for life, for consulting services. The payments are
          subject to increases based on changes in the consumer price index. The
          foregoing amounts have been adjusted to reflect the current index.

          Effective January 1, 1995, the Company entered into an employment
          agreement with Mr. Robert Borchardt, the Company's President,
          Co-Chairman of the Board and Chief Executive Officer. The agreement
          provides for a 1995 annual salary of $850,000, which is to be
          increased annually by the greater of 6% or the change in the consumer
          price index, and annual bonuses and nonqualified stock option grants
          based on formulas related to annual increases in the consolidated net
          income of the Company. Additionally, in connection with the signing of
          the agreement, the Company granted Mr. Borchardt nonqualified options
          for 100,000 shares in 1995 and 150,000 shares in 1996. The agreement
          terminates on December 31, 2004 and is automatically renewable for
          successive two year periods. If an election is made not to renew the
          agreement, Mr. Borchardt may thereafter be retained as a consultant to
          the Company for life.

          In connection with certain business acquisitions and the formation of
          new subsidiaries in 1995 and 1996, the Company entered into employment
          agreements with certain key employees, which expire at various times
          through December 2001. The agreements provide for specified annual
          salaries. Certain agreements include provisions for annual increases
          based on changes in consumer price indexes and provide for performance
          based bonuses relating to the results of operations of the acquired
          entity or newly formed subsidiary, which are payable in either cash,
          stock or a combination thereof.


NOTE O -  LITIGATION AND U.S. CUSTOMS INQUIRY:

          In connection with the Jensen acquisition, two separate actions were
          commenced against the Company and others in the courts of the State of
          Delaware in 1996: (i) In Re International Jensen Incorporated
          Shareholders Litigation, and (ii) Emerson Radio Corp. v. Recoton Audio
          Corporation, Robert G. Shaw, David G. Chandler, Robert H. Jenkins,
          Norman H. McMillan, William Blair Leveraged Capital Fund, L.P., RC
          Acquisition Sub, Inc., IJI Acqusition Corp. and Recoton Corporation.
          The claim by Emerson Radio Corporation (Emerson) was dismissed on
          motion by Emerson, without prejudice on March 7, 1997 and, based on
          representations made by the shareholders' counsel to the court, the
          Company expects that the shareholders litigation will be withdrawn,
          subject only to a claim by the plaintiffs' counsel for fees and
          expenses.

          In addition, a separate action was commenced by Jensen against
          Emerson in Federal Court in Chicago claiming Emerson violated the
          proxy soliciation rules and breached its confidentiality agreeement in
          which action Emerson has alleged claims of breach of contract and
          fraudulent inducement against Jensen and tortuous interference against
          Recoton. Recoton has instituted a separate case against Emerson
          claiming bad faith interference with the Jensen acquisition. The court
          has placed these cases on hold pending resolution of current
          settlement discussions between the parties.

          In July 1994, the U.S. Customs Service and U.S. Attorney's office
          obtained certain property with a cost of approximately $150,000 and
          business records from the Company's Florida facility pursuant to a
          search warrant. The government's investigation of possible criminal
          and civil issues remains pending. It appears that the issues in this
          investigation may be related to country of origin marking
          requirements, duty-free import status under the Caribbean Basin
          Initiative, duties with respect to dies, molds and tooling used
          overseas, commissions paid to agents and importation of merchandise
          subject to textile quotas. An administrative proceeding (which would
          allow the Company to recover the seized property), however, has been
          commenced by the Customs Service under Section 596 of the Tariff Act
          to determine the disposition of the seized merchandise. Management is
          unable to predict what claims, if any, might be asserted against the
          Company as a result of the investigation or the financial impact of
          any such claims on the Company.


NOTE P -  DOMESTIC AND FOREIGN OPERATIONS:

          Information applicable to the Company's domestic operations and
          foreign subsidiaries is summarized as follows:

                                                     (In Thousands)
                                                  Year Ended December 31,
                                               1994         1995        1996
           Net sales:
             To unaffiliated customers:
                United States               $ 140,905    $175,774      $257,088
                Asia                           11,715      21,869        29,941
                Canada                         11,353      15,034        18,570
                Europe                                                   26,101
                 Total                        163,973     212,677       331,700
             Intercompany sales between
               geographic areas:
                 United States                  2,327       5,651         5,988
                 Asia                                      24,379        35,780
                 Less eliminations             (2,327)    (30,030)      (41,768)

                Consolidated                 $163,973    $212,677      $331,700

          Intercompany sales between geographic areas are priced to achieve a
          targeted profit to the purchaser/distributor.



                                                      (In Thousands)
                                                  Year Ended December 31,
                                               1994         1995          1996
          Pre-tax income (loss):
             United States                   $11,597     $  7,294    $ (3,482)
             Asia                              4,948       14,987       11,171
             Canada                              528          963          845
             Europe                                                      2,312
             Eliminations                                  (3,519)         270

               Consolidated                  $17,073      $19,725      $11,116

                                                    (In Thousands)
                                                       December 31,
                                              1994          1995        1996
          Identifiable assets at year end:
             United States                  $104,430     $145,230     $238,641
             Asia                              7,562       29,844       37,013
             Canada                            6,772        9,980       11,551
             Europe                                                     47,528

                 Consolidated               $118,764     $185,054     $334,733
<PAGE>
              Independent Auditors' Report on Supplemental Schedule


Board of Directors
Recoton Corporation


          In connection with our audits of the consolidated financial statements
of RECOTON CORPORATION AND SUBSIDIARIES at December 31, 1995 and 1996 and for
each of the three years in the period ended December 31, 1996, we have also
audited Schedule II for each of the three years ended December 31, 1996,
included in this annual report on Form 10-K. In our opinion, such schedule
presents fairly the information required to be set forth therein.


                                              /s/ Cornick Garber & Sandler, LLP
                                              CERTIFIED PUBLIC ACCOUNTANTS


New York, New York
February 28, 1997
<PAGE>
                                                       SCHEDULE II

<TABLE>
<CAPTION>
                      RECOTON CORPORATION AND SUBSIDIARIES

                        VALUATION AND QUALIFYING ACCOUNTS
                                 (IN THOUSANDS)




              COLUMN A                   COLUMN B                  COLUMN C                COLUMN D        COLUMN E

                                                                   Additions
                                        Balance at       Charged to       Charged to                         Balance
                                         beginning        costs and          other                           at end
     Description                         of period         expenses        accounts        Deductions*      of period


Allowance for possible
losses:

   Year ended December 31,
<S>                                     <C>                <C>                <C>          <C>              <C>
      1994                              $  881            $  367                          $  259           $  989

   Year ended December 31,
      1995                              $  989            $  847                          $  249           $1,587

   Year ended December 31,
      1996                              $1,587            $1,259         $1,627**         $1,354           $3,119
</TABLE>

*Represents write-offs of uncollectible accounts, net of recoveries.

**Represents allowance recorded upon acquisition of Jensen.

<PAGE>

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
         ACCOUNTING AND FINANCIAL DISCLOSURE.

                  Not applicable.

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

         That portion of Recoton's definitive Proxy Statement appearing under
the caption "Election of Directors," to be filed with the Commission pursuant to
Regulation 14A within 120 days after December 31, 1996 and to be used in
connection with the Annual Meeting of Stockholders of Recoton currently
scheduled to be held in 1997 (the "1997 Annual Meeting") is hereby incorporated
by reference. The information regarding the executive officers of Recoton is
contained under "Directors and Executive Officers of Recoton" under Item 1 to
this Report.

ITEM 11.  EXECUTIVE COMPENSATION.

         That portion of Recoton's definitive Proxy Statement appearing under
the caption "Compensation of Executive Officers," to be filed with the
Commission pursuant to Regulation 14A within 120 days after December 31, 1996
and to be used in connection with Recoton's 1997 Annual Meeting is hereby
incorporated by reference.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.

         That portion of Recoton's definitive Proxy Statement appearing under
the caption "Security Ownership of Certain Beneficial Owners and Management," to
be filed with the Commission pursuant to Regulation 14A within 120 days after
December 31, 1996 and to be used in connection with Recoton's 1997 Annual
Meeting is hereby incorporated by reference.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         That portion of Recoton's definitive Proxy Statement appearing under
the caption "Certain Relationships and Related Transactions," to be filed with
the Commission pursuant to Regulation 14A within 120 days after December 31,
1996 and to be used in connection with Recoton's 1997 Annual Meeting is hereby
incorporated by reference.

                                     PART IV


ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K.

         (a)(1) and (2).  FINANCIAL STATEMENTS AND FINANCIAL
STATEMENT SCHEDULES:

                  See "Index to Financial Statements" set forth in Item 8,
"Financial Statements and Supplementary Data" at page 29 of this Report.

         (a)(3).  EXHIBITS REQUIRED TO BE FILED BY ITEM 601 OF
REGULATION S-K:

                  (3)      ARTICLES OF INCORPORATION AND BY-LAWS:

                           3.1.     Restated Certificate of Incorporation of
                                    Recoton Corporation, as filed January 28,
                                    1997 (filed herewith)

                           3.2.     By-Laws of Recoton as amended October 19,
                                    1995 (incorporated by  reference to Exhibit
                                    3(ii) to the Registrant's Quarterly Report
                                    on  Form 10-Q for the quarter ended
                                    September 30, 1995)

                  (4)      INSTRUMENTS DEFINING THE RIGHTS OF SECURITY
                           HOLDERS, INCLUDING INDENTURES:

                           4.1.     Form of Common Stock Certificate (filed
                                    herewith)

                           4.2      Rights Agreement, dated as of October 27,
                                    1995, between Recoton Corporation and
                                    ChaseMellon Shareholder Services, L.L.C. as
                                    Rights Agent (incorporated by reference to
                                    Exhibit 4 to the Registrant's Current Report
                                    on Form 8-K dated October 27, 1995)

                  (10)     MATERIAL CONTRACTS (an asterisk indicates
                           management contracts and compensatory
                           plans or arrangements):

                           10.1.    Consulting Agreement, effective as of
                                    May 18, 1987, between  Recoton and Herbert
                                    Borchardt (incorporated by reference to
                                    Exhibit  10(F) to the Registrant's Form 10-K
                                    for the year ended December  31, 1987)*

                           10.2     Amendment dated March 20, 1997 to Consulting
                                    Agreement between Recoton Corporation and
                                    Herbert Borchardt dated August 28, 1996
                                    (filed herewith)

                           10.3.    Employment Agreement between Recoton
                                    Corporation and Robert  L. Borchardt, dated
                                    October 25, 1995 (incorporated by reference
                                    to   Exhibit (10)(1) to the Registrant's
                                    Quarterly Report on Form 10-Q  for the
                                    quarter ended September 30, 1995)*

                           10.4.    Deferred Compensation Agreement, effective
                                    as of July 1, 1982, between Recoton and
                                    Robert Borchardt (incorporated by reference
                                    to Exhibit 10(C) to the Registrant's
                                    Registration Statement on Form S- 2, filed
                                    on October 12, 1983, File No.
                                    2-87097).*

                           10.5.    Deferred Compensation Agreement, effective
                                    as of October 1, 1982, between Recoton and
                                    Peter Wish (incorporated by reference to
                                    Exhibit 10(E) to the Registrant's
                                    Registration Statement on Form S- 2, filed
                                    on October 12, 1983, File No.
                                    2-87097).*

                           10.6.    Deferred Compensation Agreement,
                                    effective as of October 1, 1991,  between
                                    Recoton and George Calvi (incorporated by
                                    reference to  Exhibit 10(O) to the
                                    Registrant's Form 10-K for the year ended
                                    December 31, 1991).*

                           10.7.    Split Dollar Life Insurance Agreements,
                                    effective as of February 24,  1989, among
                                    Recoton and Trudi Borchardt and Marvin
                                    Schlacter  and Robert Borchardt in the
                                    aggregate face amount of $2,750,000
                                    (incorporated by reference to Exhibit 10(G)
                                    to the Registrant's Form  10-K for the year
                                    ended December 31, 1988) (note: the
                                    previously filed agreement relating to
                                    insurance in the principal amount of
                                    $250,000 has been canceled).*

                           10.8.    Split Dollar Life Insurance Agreements,
                                    effective as of December 17, 1993, among
                                    Recoton, the Robert and Trudi Borchardt 1993
                                    Family Trust and Robert L. Borchardt in the
                                    face amounts of $6,500,000; $3,500,000; and
                                    $1,300,000 (incorporated by reference to
                                    Exhibit 10(G) to the Registrant's Annual
                                    Report on Form 10-K for the period ended
                                    December 31, 1993).*

                           10.9.    Recoton Corporation 1982 Stock Option
                                    Plan, as revised October  23, 1991
                                    (incorporated by reference to Exhibit 10(J)
                                    to the  Registrant's Quarterly Report on
                                    Form 10-Q for the period ended  September
                                    30, 1991).*

                           10.10.   Recoton Corporation 1991 Stock Option
                                    Plan, as revised September  15, 1993
                                    (incorporated by reference to Exhibit 10(I)
                                    to the  Registrant's Annual Report on
                                    Form 10-K for the period ended  December 31,
                                    1993).*

                            10.11.  Recoton Corporation Nonqualified Stock
                                    Option Plan, as revised  September 15, 1993
                                    (incorporated by reference to Exhibit 10(J)
                                    to  the Registrant's Annual Report on
                                    Form 10-K for the period ended  December 31,
                                    1993).*

                           10.12.   Recoton Corporation Stock Bonus Plan,
                                    as revised September 15,  1993 (incorporated
                                    by reference to Exhibit 10(K) to the
                                    Registrant's  Annual Report on Form 10-K for
                                    the period ended December 31,  1993).*

                           10.13.   Recoton Corporation Code Section 401(K)
                                    Profit Sharing Plan and Trust Agreement, as
                                    amended and restated December 29, 1994
                                    (incorporated by reference to Exhibit 10(K)
                                    to the Registrant's Annual Report on Form
                                    10-K for the period ended December 31,
                                    1994).*

                           10.14.   Option Agreement, dated May 5, 1994,
                                    with I. Friedman Equities,  Inc.
                                    (incorporated by reference to Exhibit 10(L)
                                    to the Registrant's  Annual Report on
                                    Form 10-K for the period ended December 31,
                                    1994).

                           10.15.   Common Stock Purchase Option, as of
                                    March 1, 1995, with the Equity Group, Inc.
                                    (incorporated by reference to Exhibit 10.14
                                    to the Registrant's Annual Report on Form
                                    10-K for the year ended December 31, 1995)

                           10.16.   Stock Purchase Agreement dated as of August
                                    31, 1995, among Recoton Corporation, Recoton
                                    (Far East) Limited, STD Holding Limited
                                    (STD) and the other shareholders of STD
                                    including, as exhibits, employment
                                    agreements with Stephen Chu (as President of
                                    STD),* David Chu (as Vice President of
                                    STD)* and Patrick Ho (as Vice President,
                                    Marketing of STD)* (incorporated by
                                    reference to Exhibit 1 to the Registrant's
                                    Current Report of Form 8-K dated September
                                    5, 1995)

                           10.17.   Asset Purchase Agreement dated as of
                                    August 31, 1995 among  Recoton Corporation,
                                    InterAct Accessories, Inc., STD Holding
                                    Limited, Stephen Chu and others (including,
                                    as an exhibit, an  employment agreement with
                                    Todd Hays (as President and Chief  Operating
                                    Officer of InterAct Accessories, Inc.)*
                                    (incorporated by  reference to Exhibit 2 to
                                    the Registrant's Current Report of Form 8-K
                                    dated September 5, 1995)

                            10.18.  Fourth Amended and Restated Agreement
                                    and Plan of Merger  between Recoton
                                    Corporation, RC Acquisition Sub, Inc. and
                                    International Jensen Incorporated dated as
                                    of January 3, 1996  (incorporated by
                                    reference to Exhibit 2.1 to the Registrant's
                                    Current  Report on Form 8-K dated June 23,
                                    1996)

                           10.19.   Third Amended and Restated Agreement
                                    for Purchase and Sale of  the Assets of the
                                    OEM Business of International Jensen
                                    Incorporated  by and to IJI Acquisition
                                    Corp. dated as of January 3, 1996
                                    (incorporated by reference to Exhibit 2.2.to
                                    Jensen's Current Report  on Form 8-K dated
                                    June 23, 1996)

                           10.20.   Receivables Sales Agreement among
                                    International Jensen  Incorporated, IJI
                                    Acquisition Corp. and Harris Trust and
                                    Savings  Bank dated as of august 28, 1996
                                    (incorporated by reference to  Exhibit 4 to
                                    the Registrant's Current Report on Form 8-K
                                    dated  August 28, 1997)

                           10.21.   Management Services Agreement among IJI
                                    Acquisition Corp. and  International Jensen
                                    Incorporated dated August 28, 1996
                                    (incorporated by reference to Exhibit 6 to
                                    the Registrant's Current  Report on Form 8-K
                                    dated August 28, 1997)

                           10.22.   Supply and Services Agreement among IJI
                                    Acquisition Corp. and  International Jensen
                                    Incorporated dated August 28, 1996
                                    (incorporated by reference to Exhibit 7 to
                                    the Registrant's current  Report on Form 8-K
                                    dated August 28, 1996).

                           10.23.   Shared Facilities Agreement among IJI
                                    Acquisition Corp. and  International Jensen
                                    Incorporated dated August 28, 1996
                                    (incorporated by reference to Exhibit 8 to
                                    the Registrant's current  Report on Form 8-K
                                    dated August 28, 1996).

                           10.24.   Non-Competition Agreement among IJI
                                    Acquisition Corp. and  International Jensen
                                    Incorporated dated August 28, 1996
                                    (incorporated by reference to Exhibit 9 to
                                    the Registrant's current  Report on Form 8-K
                                    dated August 28, 1996).

                           10.25.   License Agreement among IJI Acquisition
                                    Corp. and International Jensen Incorporated
                                    dated August 28, 1996 (incorporated by
                                    reference to Exhibit 10 to the Registrant's
                                    current Report on Form 8-K dated August 28,
                                    1996).

                            10.26.  Amended and Restated Employment
                                    Agreement between RC Acquisition Sub, Inc.,
                                    Robert G. Shaw, International Jensen
                                    Incorporated and Recoton Corporation dated
                                    August 28, 1996 (filed herewith)*.

                           10.27.   Form of Transitional Employment
                                    Agreement dated November 9,  1995, by and
                                    between International Jensen Incorporated
                                    and selected  employees of International
                                    Jensen Incorporated (incorporated by
                                    reference to Exhibit 10.2 to Jensen's
                                    Quarterly Report on Form 10-Q  for the
                                    quarterly period ended November 30, 1995,
                                    filed with the  Commission on or about
                                    January 12, 1996)*

                           10.28.   Credit Agreement among Recoton Corporation,
                                    The Chase Manhattan Bank, and the Lenders
                                    made party thereto dated as of August 27,
                                    1996 (incorporated by reference to Exhibit 5
                                    to the Registrant's Current Report on Form
                                    8-K dated August 28, 1997)

                           10.29.   Amendment and Waiver to Credit
                                    Agreement filed as Exhibit 10.28, dated as
                                    of August 27, 1996 (filed herewith)

                           10.30.   Amendment to Credit Agreement filed as
                                    Exhibit 10.28, dated as of December 20,
                                    1996 (filed herewith)

                           10.31.   Note Purchase Agreement dated January
                                    6, 1997 between Recoton Corporation and the
                                    several purchasers (filed herewith).

                  (11)     STATEMENT RE COMPUTATION OF PER SHARE
                           EARNINGS:  not applicable

                  (12)     STATEMENT COMPUTATION OF RATIOS:  not applicable.

                  (13)     ANNUAL REPORT TO SECURITY HOLDERS, FORM 10-Q OR
                           QUARTERLY REPORT TO  SECURITYHOLDERS:  not
                           applicable.

                  (16)     LETTER RE CHANGE IN CERTIFYING ACCOUNTANT:  not
                           applicable.

                  (18)     LETTER RE CHANGE IN ACCOUNTING PRINCIPLES:  not
                           applicable.

                  (21)     SUBSIDIARIES OF THE REGISTRANT:

                           COMPANY JURISDICTION

                           Recoton Canada Ltd.                      Ontario,
                                                                    Canada
                           Recoton (Far East) Limited               Hong Kong
                           STD Holding Limited*                     Hong Kong
                           STD Electronic International Limited**   Hong Kong
                           STD Manufacturing Limited**              Hong Kong
                           STD Plastic Industrial Limited**         Hong Kong
                           STD Trading Limited**                    Hong Kong
                           Peak Hero Limited**                      Hong Kong
                           Ever Smart Management Limited**          Hong Kong
                           STD Industrial (Shenzhen) Limited**      P.R. of
                                                                    China
                           STD (Tianjin) International Trade
                              Development Company Limited**         P.R of
                                                                    China
                           Christie Design Corporation              Delaware
                           InterAct Accessories, Inc.               Delaware
                           Recoton Audio Corporation                Delaware
                           ReCone, Inc.***                          Delaware
                           Specialty Audio, Inc. ***                California
                           Jensen Japan, Inc. ***                   Illinois
                           RAC-FSC***                               U.S. Virgin
                                                                    Islands
                           Recoton International Holdings, Inc. *** Delaware
                           Recoton European Holdings, Inc. ***      Delaware
                           Recoton German Holdings GmbH***          Germany
                           Mac Audio Electronic GmbH***             Germany
                           Magnat Audio-Produkte GmbH***            Germany
                           Recoton Audio-Produkte GmbH***           Germany
                           Arcona s.r.l. ***                        Italy
                           Entel s.r.l. ***                         Italy
                           Recoton (UK) Limited***                  United
                                                                    Kingdom
                           Tambalan Limited***                      United
                                                                    Kingdom


                           *   Subsidiary of Recoton (Far East) Limited
                           **  Subsidiary of STD Holding Limited
                           *** Direct or indirect subsidiary of Recoton
                               Audio Corporation

                  (22)     PUBLISHED REPORT REGARDING MATTERS SUBMITTED TO
                           VOTE OF SECURITY HOLDERS:
                           not applicable.

                  (23)     CONSENT OF EXPERTS AND COUNSEL:  Consent of the
                           Independent
                           Public Accountants.

                  (24)     POWER OF ATTORNEY:  not applicable.

                  (27)     FINANCIAL DATA SCHEDULE:  filed herewith.

                  (28)     INFORMATION FROM REPORTS FURNISHED TO STATE
                           INSURANCE REGULATORY AUTHORITIES:   not
                           applicable.

                  (29)     ADDITIONAL EXHIBITS:  not applicable

         (b) REPORTS ON FORM 8-K: The Registrant filed a report on Form 8-K/A on
November 8, 1996, filing under Item 7 (Financial Statements, Pro Forma Financial
Information and Exhibits) certain pro forma financial statements in connection
with the acquisition of International Jensen Incorporated.

<PAGE>

                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act
of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.

                                           RECOTON CORPORATION


                                           By: /S/ ROBERT L. BORCHARDT
                                                  Robert L. Borchardt
                                                  Co-Chairman, Chief
                                                  Executive Officer and
                                                  President

                                           Date:  March 28, 1997


         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 and on the dates indicated.

SIGNATURE                                   POSITION              DATE


/S/ ROBERT L. BORCHARDT       President, Co-Chairman,           March 28, 1997
Robert L. Borchardt           Chief Executive Officer
                              (Principal Executive
                              Officer) and Director

/S/ HERBERT H. BORCHARDT      Co-Chairman and                   March 28, 1997
Herbert H. Borchardt          Director


/S/ STUART MONT              Chief Operating Officer,           March 28, 1997
Stuart Mont                  Chief Financial Officer
                             (Principal Financial Officer)
                             and Director

/S/ GEORGE CALVI             Director                           March 28, 1997
George Calvi


/S/ PETER WISH               Director                           March 28, 1997
Peter Wish


/S/ JOSEPH H. MASSOT        Treasurer (Principal                March 28, 1997
Joseph H. Massot            Accounting Officer)
                            and Director

/S/ IRWIN S. FRIEDMAN       Director                            March 28, 1997
Irwin S. Friedman


/S/ JOSEPH M. IDY           Director                            March 28, 1997
Joseph M. Idy


/S/ RONALD E. MCPHERSON     Director                            March 28, 1997
Ronald E. McPherson


/S/ PAUL FEFFER             Director                            March 28, 1997
Paul Feffer

/S/ ROBERT SHAW
 Robert Shaw               Director                             March 28, 1997

/S/ STEPHEN CHU            Director                             March 28, 1997
Stephen Chu

<PAGE>

                                  EXHIBIT INDEX


EXHIBIT NO.


3.1    Restated Certificate of Incorporation of Recoton Corporation, as
       filed January 28, 1997

4.1    Form of Common Stock Certificate

10.2   Amendment dated March 20, 1997 to Consulting Agreement between Recoton
       Corporation and Herbert Borchardt (dated August 28, 1996

10.26  Amended and Restated Employment Agreement between RC Acquisition
       Sub, Inc., Robert G. Shaw, International Jensen Incorporated and Recoton
       Corporation

10.29  Amendment and Waiver to Credit Agreement filed as Exhibit 10.28,
       dated as of August 27, 1996

10.30  Amendment to Credit Agreement filed as Exhibit 10.28, dated as of
       December 20, 1996

10.31  Note Purchase Agreement dated January 6, 1997 between Recoton Corporation
       and the several purchasers

23     Consent of the Independent Public Accountants

27     Financial Data Schedule