<PAGE>



                                  United States
                       Securities and Exchange Commission
                             Washington, D.C. 20549


                                    FORM 10-Q

(Mark One)

[X]  Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
     Exchange Act of 1934 For the Quarterly Period Ended October 31, 2000

                                      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 0-22532

                           ULTIMATE ELECTRONICS, INC.
             (Exact name of registrant as specified in its charter)


                  DELAWARE                            84-0585211

         (State or other jurisdiction of            (I.R.S. employer
          incorporation or organization)           identification no.)


             321 WEST 84TH AVENUE, SUITE A, THORNTON, COLORADO 80260
               (Address of principal executive offices, zip code)

                                 (303) 412-2500
              (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                                    YES X   NO
                                       ---    ---

The number of outstanding shares of common stock as of December 7, 2000 was
10,920,355.



<PAGE>




                           ULTIMATE ELECTRONICS, INC.

                                    FORM 10-Q

                                      INDEX

<TABLE>
<CAPTION>
                                                                                                 Page No.
<S>                                                                                              <C>
      PART I.    FINANCIAL INFORMATION

      Item 1.    Financial Statements:

                 Condensed Consolidated Balance Sheets as of October 31, 2000 (unaudited) and
                 January 31, 2000 .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .        3

                 Consolidated Statements of Operations for the three and nine months ended
                 October 31, 2000 (unaudited) and October 31, 1999 (unaudited) .  .  .  .  .        4

                 Condensed Consolidated Statements of Cash Flows for the nine months ended
                 October 31, 2000 (unaudited) and October 31, 1999 (unaudited) .  .  .  .  .        5

                 Notes to Condensed Consolidated Financial Statements (unaudited) .  .  .  .        6

      Item 2.    Management's Discussion and Analysis of Financial Condition and
                 Results of Operations  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .        7

      Item 3.    Quantitative and Qualitative Disclosures About Market Risk .  .  .  .  .  .       11

      PART II.   OTHER INFORMATION

      Item 1.    Legal Proceedings.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .       11

      Item 2.    Changes in Securities  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .       11

      Item 3.    Defaults Upon Senior Securities .  .  .  .  .  .  .  .  .  .  .  .  .  .  .       11

      Item 4.    Submission of Matters to a Vote of Security Holders  .  .  .  .  .  .  .  .       11

      Item 5.    Other Information.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .       11

      Item 6.    Exhibits and Reports on Form 8-K.  .  .  .  .  .  .  .  .  .  .  .  .  .  .       12
</TABLE>

                                       2


<PAGE>



PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS


                           ULTIMATE ELECTRONICS, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS

             (amounts in thousands, except share and per share data)

<TABLE>
<CAPTION>
                                                         October 31,   January 31,
                                                            2000          2000
                                                         ------------  -----------
                                                         (Unaudited)
<S>                                                      <C>           <C>
ASSETS:
Current assets:
   Cash and cash equivalents                             $     4,728   $   17,311
   Accounts receivable, net                                   24,104       20,420
   Merchandise inventories, net                               79,305       51,269
   Investments available for sale                                  -       12,003
   Other assets                                                3,050        2,331
                                                         ------------  -----------
      Total current assets                                   111,187      103,334
Property and equipment, net                                   64,711       52,261
Property under capital leases, including related
   parties, net                                                1,371        1,473
Goodwill, net                                                  1,820        2,026
Other assets                                                     590          935
                                                         ------------  -----------
      Total assets                                       $   179,679   $  160,029
                                                         ============  ===========

LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
   Accounts payable                                      $    41,252   $   27,626
   Accrued liabilities                                        20,353       21,322
   Revolving line of credit                                   13,716            -
   Deferred revenue                                            2,431        3,066
   Other current liabilities                                     178          394
                                                         ------------  -----------
      Total current liabilities                               77,930       52,408
Bonds payable                                                      -       11,700
Deferred revenue, less current portion                         3,362        5,111
Capital lease obligations, including related parties           1,685        1,760
Other long term liabilities                                      160          178
                                                         ------------  -----------
     Total long term liabilities                               5,207       18,749
Commitments
Stockholders' equity:
   Preferred stock, par value $.01 per share
      Authorized shares - 10,000,000
      No shares issued and outstanding                             -            -
   Common stock, par value $.01 per share
      Authorized shares - 15,000,000
      Issued and outstanding shares: 10,817,355 and
      10,705,318 at October 31, 2000 and January
      31, 2000                                                   108          107
   Additional paid-in capital                                 71,273       70,801
   Retained earnings                                          25,161       17,964
                                                         ------------  -----------
      Total stockholders' equity                              96,542       88,872
                                                         ------------  -----------
      Total liabilities and stockholders' equity         $   179,679   $  160,029
                                                         ============  ===========
</TABLE>

    See accompanying notes to Condensed Consolidated Financial Statements.


                                       3

<PAGE>






                                         ULTIMATE ELECTRONICS, INC.
                                    CONSOLIDATED STATEMENTS OF OPERATIONS
                                                 (UNAUDITED)

                                (amounts in thousands, except per share data)

<TABLE>
<CAPTION>
                                                          Three Months Ended          Nine Months Ended
                                                             October 31,                 October 31,
                                                       -------------------------  --------------------------
                                                          2000          1999         2000          1999
                                                       ------------  -----------  ------------  ------------
<S>                                                    <C>           <C>          <C>           <C>
Sales                                                   $  117,207    $  91,899    $  314,191    $  254,262
Cost of goods sold                                          79,473       64,004       213,687       177,221
                                                       ------------  -----------  ------------  ------------
Gross profit                                                37,734       27,895       100,504        77,041
Selling, general and administrative expenses                32,285       24,444        88,547        69,892
                                                       ------------  -----------  ------------  ------------
Income from operations                                       5,449        3,451        11,957         7,149
Interest expense, net                                           29          591           75          1,979
                                                       ------------  -----------  ------------  ------------
Income before taxes and extraordinary item                   5,420        2,860        11,882         5,170
Income tax expense                                           2,033        1,058         4,431         1,914
                                                       ------------  -----------  ------------  ------------
Income before extraordinary item                             3,387        1,802         7,451         3,256
Extraordinary loss on early extinguishment of debt,
   net of taxes                                                  -            -           254             -
                                                       ------------  -----------  ------------  ------------
Net income                                               $   3,387    $   1,802     $   7,197     $   3,256
                                                       ============  ===========  ============  ============

Earnings per share before extraordinary item - basic     $    . 31    $    . 21     $    . 69     $    . 39
Earnings per share before extraordinary item - diluted   $    . 30    $    . 20     $    . 65     $    . 36
Earnings per share - basic                               $    . 31    $    . 21     $    . 67     $    . 39
Earnings per share - diluted                             $    . 30    $    . 20     $    . 63     $    . 36
Weighted average shares outstanding - basic                 10,804        8,454        10,757         8,277
Weighted average shares outstanding - diluted               11,455        9,159        11,390         8,962
</TABLE>


   See accompanying notes to Condensed Consolidated Financial Statements.


                                       4

<PAGE>



                            ULTIMATE ELECTRONICS, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

                              (amounts in thousands)

<TABLE>
<CAPTION>
                                                             Nine Months Ended
                                                                October 31,
                                                          -------------------------
                                                             2000         1999
                                                          -----------  ------------
<S>                                                       <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash (used in) provided by operating activities        $ (8,677)     $  9,319

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of investments available for sale         12,003             -
Purchases of property and equipment                         (18,089)       (4,348)
                                                          -----------  ------------
Net cash used in investing activities                        (6,086)       (4,348)

CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term bonds payable               (11,700)            -
Net proceeds (paydown) on revolving credit agreement         13,716       (13,188)
Proceeds from issuance of common stock                            -        30,744
Principal payments on term loans and capital lease
  obligations                                                  (309)         (422)
Proceeds from exercise of stock options                         473           229
                                                          -----------  ------------
Net cash provided by financing activities                     2,180        17,363
                                                          -----------  ------------
Net (decrease) increase in cash and cash equivalents        (12,583)       22,334

Cash and cash equivalents at beginning of period             17,311         4,421
                                                          -----------  ------------
Cash and cash equivalents at end of period                 $  4,728     $  26,755
                                                          ===========  ============
</TABLE>

    See accompanying notes to Condensed Consolidated Financial Statements.


                                       5

<PAGE>

                           ULTIMATE ELECTRONICS, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

                                OCTOBER 31, 2000


1.   SIGNIFICANT ACCOUNTING POLICIES

     BACKGROUND

     Ultimate Electronics, Inc. is a leading specialty retailer of home
     entertainment and consumer electronics products. As of December 8, 2000,
     the Company operates thirty-six stores, including seventeen stores in
     Arizona, Idaho, Iowa, Nevada, New Mexico, Oklahoma, South Dakota and Utah
     under the trade name Ultimate Electronics, eleven stores in Colorado under
     the trade name SoundTrack and eight stores in Minnesota under the trade
     name Audio King.

     The Company's unaudited condensed consolidated financial statements have
     been prepared by the Company in accordance with accounting principles
     generally accepted in the United States for interim financial reporting and
     the regulations of the Securities and Exchange Commission for quarterly
     reporting. Accordingly, they do not include all information and footnotes
     required by accounting principles generally accepted in the United States
     for complete financial statements. In the opinion of the Company, the
     statements include all adjustments, consisting only of normal recurring
     adjustments that are necessary for a fair presentation of the financial
     position, results of operations and cash flows for the interim periods.
     Operating results for the three and nine month periods ended October 31,
     2000 are not necessarily indicative of the results that may be expected for
     the year ending January 31, 2001. Seasonal fluctuations in sales of the
     Company's products result primarily from the purchasing patterns of
     individual consumers during the holiday selling season. These patterns
     tend to moderately concentrate sales in the latter half of the year,
     particularly in the fourth quarter. For further information, refer to the
     financial statements and footnotes thereto included in the Company's Annual
     Report on Form 10-K for the year ended January 31, 2000 and other filings
     with the Securities and Exchange Commission.

     PRINCIPLES OF CONSOLIDATION

     The unaudited condensed consolidated financial statements include the
     accounts of all subsidiaries. All intercompany accounts and transactions
     have been eliminated upon consolidation.

     BOND REDEMPTION

     On March 31, 2000 the Company paid $13,111,000 to redeem, in full, its
     outstanding bonds payable. The bonds were redeemable by the Company at par
     any time at or after March 31, 2000. The bonds were redeemed at a
     redemption price of 100% of the principal amount and all accrued and unpaid
     interest as of such date, which totaled $111,000. As a result of the
     redemption of the bonds, the Company recognized an extraordinary loss of
     $254,000 (net of taxes).

     NEW STORE OPENINGS

     On July 27, 2000 the Company entered the Phoenix, Arizona metropolitan area
     with two new stores. The Company opened two additional new Phoenix area
     stores on November 21, 2000 and December 6, 2000. The Company also opened a
     new store in Colorado Springs, Colorado on November 8, 2000.


                                       6

<PAGE>

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

            Management's discussion and analysis of financial condition and
            results of operations and the financial statements and accompanying
            notes may contain statements that are not historical facts but are
            forward-looking statements that involve risks and uncertainties that
            could cause future results to vary materially from projected
            results. Such statements address activities, events or developments
            that the Company expects, believes, projects, intends, estimates,
            plans or anticipates will, should, could or may occur, including
            reference to future profitability and steps being taken to achieve
            that result. Factors that could cause actual results to differ
            materially from the Company's projections, forecasts, estimates and
            expectations include, but are not limited to: risks related to the
            Company's ability to open and operate new stores; the Company's
            ability to profitably relocate and/or expand existing stores and the
            willingness of vendors to permit product sales over the internet;
            significant competition, including new competition from internet
            retailers; seasonal fluctuations in the Company's business; changes
            in trade regulations and currency fluctuations; risks regarding
            increases in promotional activities of competitors; the presence or
            absence of new products or product features in the Company's
            merchandise categories; changes in the distribution strategy of the
            Company's vendors; changes in vendor support for advertising and
            promotional programs; changes in the Company's merchandise sales
            mix; the results of financing efforts; fluctuations in consumer
            demand and preferences and general economic conditions. Please refer
            to a discussion of these and other factors in the Company's Annual
            Report on Form 10-K for the year ended January 31, 2000 and other
            filings with the Securities and Exchange Commission. The Company
            disclaims any intent or obligation to update publicly these
            forward-looking statements, whether as a result of new information,
            future events or otherwise.

           RESULTS OF OPERATIONS

           Sales for the three months ending October 31, 2000 increased 28% to
           $117.2 million from $91.9 million for the three months ending October
           31, 1999. Sales for the nine months ending October 31, 2000 were
           $314.2 million, a 24% increase from sales of $254.3 million for the
           nine months ending October 31, 1999. Sales of comparable stores were
           up 12% and 15%, respectively, for the three and nine months ending
           October 31, 2000. Sales of new digital technology products such as
           HDTV, DVD and digital camcorders continued to be the primary drivers
           of the comparable store sales growth.

           Gross profit for the three months ending October 31, 2000 increased
           35% to $37.7 million (32.2% of sales) from $27.9 million (30.4% of
           sales) for the three months ending October 31, 1999. Gross profit for
           the nine months ending October 31, 2000 increased 30% to $100.5
           million (32.0% of sales) from $77.0 million (30.3% of sales) for the
           nine months ending October 31, 1999. The increase in gross profit was
           related to the change in the Company's extended warranty program as
           well as the strong sales in the digital categories listed above.

           Selling, general and administrative expenses for the three months
           ending October 31, 2000 were $32.3 million (27.5% of sales) compared
           to $24.4 million (26.6% of sales) for the three months ending October
           31, 1999. Selling, general and administrative expenses for the nine
           months ending October 31, 2000 were $88.5 million (28.2% of sales)
           compared to $69.9 (27.5% of sales) for the nine months ending October
           31, 1999. The increase in selling, general and administrative
           expenses as a percentage of sales was directly related to preopening
           costs for five new stores and one relocated store as well as variable
           costs associated with the higher margins.

           As further discussed in the Company's 10-K for the year ending
           January 31, 2000, the Company changed its accounting with respect to
           the recognition of revenues from the sale of obligor warranty
           contracts as a result of a November 1999 clarification made by the
           Securities and Exchange Commission. The Company gave retroactive
           effect to this change by restatement of its previously published
           financial


                                       7

<PAGE>


           statements beginning with fiscal year 1996 (refer to the Company's
           report on Form 8-K filed on February 11, 2000 for the impact of the
           restatement on prior periods).

           The Company recorded income from operations of $5.4 million (4.7% of
           sales) for the three months ending October 31, 2000 compared to
           income from operations of $3.5 million (3.8% of sales) for the three
           months ending October 31, 1999. Income from operations was $12.0
           million (3.8% of sales) for the nine months ending October 31, 2000
           compared to $7.1 million (2.8% of sales) for the nine months ending
           October 31, 1999.

           Net interest expense decreased to $29,000 and $75,000 for the three
           and nine months ending October 31, 2000 from $591,000 and $2.0
           million for the three and nine months ending October 31, 1999. This
           decrease was partially due to lower average amounts outstanding under
           the Company's revolving line of credit. The Company used a portion of
           the proceeds from its secondary stock offering completed in October
           1999 (the "1999 Offering") to pay off $6.8 million then outstanding
           under its line of credit on October 22, 1999. In addition, on March
           31, 2000 the Company redeemed, in full, its 10.25% bonds which
           decreased interest expense compared to the prior year. Lastly,
           interest expense for the nine months ended October 31, 2000 was
           offset by $350,000 of interest income on the Company's investment
           portfolio acquired with proceeds from the 1999 Offering. The Company
           recorded $34,000 of interest income in the nine months ending October
           31, 1999.

           Extraordinary loss on early extinguishment of debt of $254,000 (net
           of taxes) relates to the repayment, in full, of the Company's 10.25%
           bonds on March 31, 2000.

           LIQUIDITY AND CAPITAL RESOURCES

           Historically, the Company's primary sources of liquidity for funding
           expansion and growth have been net cash from operations, revolving
           credit lines, term debt and issuances of common stock. The Company's
           primary cash requirements are related to expenditures for new store
           openings and the relocation and/or remodeling of existing store
           locations. These expenditures include preopening expenses and
           additional inventory for new or relocated stores, as well as working
           capital to support the Company's inventory requirements and selling,
           general and administrative expenses. The Company currently operates a
           total of thirty-six stores in ten states.

           Net cash used in operating activities was $8.7 million for the nine
           months ending October 31, 2000 compared to net cash provided by
           operating activities of $9.3 million for the nine months ending
           October 31, 1999. The decrease in cash provided by operating
           activities was primarily the result of increased merchandise
           inventory levels in the current year to support the increased sales
           levels.

           Net cash used in investing activities was $6.1 million for the nine
           months ending October 31, 2000 compared to net cash used in investing
           activities of $4.3 million for the nine months ending October 31,
           1999. During the first quarter of the current year, the Company
           received $12.0 in proceeds from the sale of an investment available
           for sale, which matured on March 29, 2000. The Company had capital
           expenditures of $18.1 million directly related to new store openings
           and the relocation and expansion of an existing store location during
           the nine months ended October 31, 2000 compared to capital
           expenditures of $4.3 million in the same period of the previous year.

           Net cash provided by financing activities was $2.2 million for the
           nine months ending October 31, 2000 compared to net cash provided by
           financing activities of $17.4 million for the nine months ending
           October 31, 1999. Net cash provided by financing activities for the
           current year related primarily to net borrowings on the Company's
           revolving line of credit which were partially offset by repayment, in
           full, of the Company's 10.25% bonds on March 31, 2000. Net cash
           provided by financing activities for the


                                       8

<PAGE>

           prior year were primarily the result of $30.7 million in proceeds
           from the Company's secondary stock offering offset by $13.2 million
           in revolving line of credit net paydowns.

            The Company intends to expand into select metropolitan areas in the
            Rocky Mountain, Midwest and Southwest regions with 30,000 to 36,000
            square foot stores. In certain smaller markets, the store size may
            be as small as 20,000 square feet. With the exception of the
            Thornton, Colorado facility, all current stores are leased. On July
            27, 2000 the Company entered the Phoenix, Arizona metropolitan area
            with two new stores. The Company opened its third Phoenix area store
            on November 21, 2000 and a fourth store on December 6, 2000. The
            Company intends to open four additional stores in the Phoenix
            metropolitan area over the next twelve months. The Company also
            opened its second store in Colorado Springs, Colorado on November
            8, 2000. On September 11, 2000 the Company announced its entrance
            into the Oklahoma City, Oklahoma market with plans to open two new
            stores in the summer of fiscal 2002. On October 31, 2000 the company
            announced plans for six new stores in the St. Louis, Missouri area
            with three stores expected to open in fiscal 2002.

            The Company continues to analyze new store opportunities in existing
            markets to replace or expand some of its smaller locations. In May
            2000, the Company relocated a 9,300 square foot store located in the
            Minneapolis/St. Paul area to a 35,000 square foot store. The
            Company's Fort Collins, Colorado store is expected to be expanded
            from 16,600 to 22,000 square feet in fiscal 2002. The Company also
            intends to relocate and expand its Arvada, Colorado store in fiscal
            2002 and will be analyzing opportunities in the Minneapolis/St. Paul
            area over the next few years to relocate and/or expand a number of
            those locations.

            The cost of these future stores is anticipated to average $3.3
            million per store. Leasehold improvements, fixtures and equipment
            are expected to average $2.2 million, depending on tenant
            allowances. The inventory requirement for the Company's new stores
            is expected to average approximately $1.5 million, approximately
            $750,000 of which will be financed through trade credit. Preopening
            expenses for new stores are expected to average $350,000, and
            include such items as advertising prior to opening, recruitment and
            training of new employees and other costs associated with opening
            stores. In the event of relocations of existing stores, preopening
            costs are expected to average $150,000 and will be higher if the
            Company is forced to terminate existing store leases prior to their
            maturity.

            The Company's expansion strategy focuses on identification of
            attractive metropolitan areas in the Rocky Mountain, Midwest and
            Southwest regions based on an evaluation of local market
            opportunities, as well as the size, strength and merchandising
            philosophy of potential competitors. The Company obtains demographic
            analyses of major metropolitan areas to determine new store
            locations and potential sales volumes, as well as the optimum number
            of stores to open in a specific market. The Company's specific
            location strategy focuses on power centers or freestanding locations
            near shopping malls. In choosing sites within a market, the Company
            applies standard site selection criteria that take into account
            numerous factors including local demographics, traffic patterns,
            highway visibility and overall retail activity.

            On September 30, 1998, the Company executed a three year $40 million
            credit agreement, as amended, with Foothill Capital Corporation, a
            wholly owned subsidiary of Wells Fargo Bank. Borrowings under this
            revolving line of credit are limited to the lesser of $40 million or
            80% of eligible inventory and a portion of accounts receivable. As
            of October 31, 2000, the entire $40 million facility was available
            to the Company, of which $13.7 million was outstanding. Borrowings
            bear interest, payable monthly, based on a blend of LIBOR plus 2%
            and Wells Fargo Bank's prime rate minus 0.375%. Inventories,
            accounts receivable, equipment and intangibles secure the
            borrowings. The facility includes negative covenants that limit
            the Company's ability to, without the bank's prior approval, and
            subject to various exceptions, incur indebtedness, create liens,
            enter into mergers and consolidations, pay dividends, repurchase
            the Company's capital stock, issue guarantees, sell or engage in
            transactions with affiliates.


                                      9

<PAGE>

            The facility also contains covenants regulating the Company's gross
            margins, inventory levels, tangible net worth and capital
            expenditures. The Company was in compliance with all borrowing
            covenants as of October 31, 2000.

            On March 23, 1995, the Company completed an offering for the sale of
            $13,000,000 aggregate principal amount of bonds payable (the
            "Bonds"). On March 31, 2000, the Company paid $13,111,000 to redeem
            the Bonds in full. The Bonds were redeemable by the Company at par
            any time at or after March 31, 2000. The Bonds were redeemed at a
            redemption price of 100% of the principal amount and all accrued and
            unpaid interest as of such date, which totaled $111,000. As a result
            of the redemption of the Bonds, the Company recognized an
            extraordinary loss of $254,000 (net of taxes).

            The Company believes that its cash flows from operations and
            borrowings under its credit facility will be sufficient to fund the
            Company's operations, debt repayment and expansion through fiscal
            2001. To fund the capital requirements for its anticipated expansion
            plans beyond fiscal 2001, the Company may be required to seek
            additional financing, which may take the form of expansion of its
            existing credit facility, or possibly additional debt or equity
            financings. The Company may also re-mortgage its Thornton facility.
            There can be no assurance that the Company will be able to obtain
            such funds on favorable terms, if at all.

            SEASONALITY

            The Company's business is affected by seasonal consumer buying
            patterns. As is the case with many other retailers, the Company's
            sales and profits have been greatest in the fourth quarter (which
            includes the holiday selling season). Due to the importance of the
            holiday selling season, any factors negatively impacting the holiday
            selling season could have a material adverse impact on the Company's
            financial condition and results of operations. Operating results are
            dependent on a number of factors, including discretionary consumer
            spending, which is affected by local, regional and national economic
            conditions affecting disposable consumer income, such as employment,
            business conditions, interest rates and taxation. The Company's
            quarterly results of operations may fluctuate significantly as a
            result of a number of factors, including:

            -  the timing of new or relocated and expanded store openings;
            -  expenses related to relocation and expansion;
            -  unexpected changes in volume related rebates from manufacturers;
            -  the success of new stores; and
            -  the impact of new stores on existing stores.

            As the Company has opened additional stores or relocated and
            expanded stores within markets it already serves, sales at existing
            stores have been adversely affected. Such adverse effects may occur
            in the future. The Company's quarterly operating results also may be
            affected by increases in merchandise costs, price changes in
            response to competitive factors, new and increased competition and
            product availability.

            IMPACT OF INFLATION

            The Company believes, because of competition among manufacturers and
            the technological changes in the consumer electronics industry,
            inflation has not had a significant effect on results of operations
            during the last few years.


                                       10

<PAGE>

ITEM 3.    QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

           The following discusses the Company's exposure to market risks
           related to changes in interest rates and other general market risks.
           All of the Company's investment and financing decisions are
           supervised or managed by its executive committee. This discussion
           contains forward-looking statements that are subject to risks and
           uncertainties. Actual results could vary materially as a result of a
           number of factors, including, but not limited to, changes in
           interest rates and other general market risks, and those set forth
           IN "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
           RESULTS OF OPERATIONS" appearing elsewhere in this Form 10-Q.

           CASH AND CASH EQUIVALENTS. As of October 31, 2000, the Company had
           $4.7 million in non-restricted cash and cash equivalents held in
           various non-interest bearing accounts. Management considers all
           highly liquid investments purchased with an original maturity of
           three months or less to be cash equivalents. All cash and cash
           equivalents investments are readily convertible to known amounts of
           cash, and so near their maturity they present insignificant risk of
           changes in value because of changes in interest rates. The Company
           does not expect any material loss with respect to its cash and cash
           equivalents as a result of interest rate changes, and the estimated
           fair value of its cash and cash equivalents approximates original
           cost.

           OUTSTANDING DEBT OF THE COMPANY. The Company had a $40 million
           revolving line of credit on October 31, 2000. Borrowings under the
           line of credit bear interest, payable monthly, based on a blend of
           LIBOR plus 2% and Wells Fargo Bank's prime rate minus 0.375%.
           Borrowings under this credit facility were $13.7 million as of
           October 31, 2000. Increases in interest rates could increase
           interest expense associated with future borrowings by the Company,
           if any. The Company has not hedged against interest rate changes.

PART II.   OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS.

           From time to time, the Company is a party to certain legal
           proceedings arising in the ordinary course of its business.
           Management believes that any resulting liability, individually or in
           the aggregate, will either be covered by insurance or will not have a
           material adverse effect on the Company's financial condition.

ITEM 2.    CHANGES IN SECURITIES.

           None

ITEM 3.    DEFAULTS UPON SENIOR SECURITIES.

           None

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

           None

ITEM 5.    OTHER INFORMATION.

           None


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<PAGE>

ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K.

               (a) Exhibits:

                   Documents filed with this report:

                   27         Financial Data Schedule


               (b) Reports on Form 8-K:

                   On September 15, 2000 the Company filed a report on Form 8-K
                   disclosing under Item 5 that the Company's Board of
                   Director's had approved on August 23, 2000 the amendment and
                   restatement of its 2000 Equity Incentive Plan and its
                   Employee Stock Purchase Plan.


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<PAGE>



                                  SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                Ultimate Electronics, Inc.




Date:  December 8, 2000         By:  /s/ Alan E. Kessock
     ------------------------      ---------------------------------
                                   Alan E. Kessock
                                   Senior Vice President, Chief Financial
                                   Officer, Secretary and a Director
                                   (Principal Financial and Accounting Officer)


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