<PAGE>   1
===============================================================================
                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC  20549

                         -----------------------------

                                  FORM 10-K/A

                                  AMENDMENT #1

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

                  FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1996

             [ ] 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 0-9725

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

            DELAWARE                                     75-1539534
(State or other jurisdiction of                       (I.R.S. Employer
incorporation or organization)                      Identification No.)

            2030 MAIN STREET, SUITE 1120, IRVINE, CALIFORNIA  92614
             (Address of principal executive offices)      (Zip Code)
      Registrant's telephone number, including area code:  (714) 660-1232

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

      Title of each class          Name of each exchange on which registered:
-------------------------------    ------------------------------------------  
 Common Stock, $.03 Par Value               American Stock Exchange

7 3/4% Convertible Subordinated             American Stock Exchange
     Debentures, Due 2001

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

         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  [ ]

         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 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.

         The aggregate market value of the voting stock held by non-affiliates
of the registrant on December 20, 1996, 1996 based on the closing price of the
Common Stock on the American Stock Exchange was approximately $8,927,692.

         Indicated below is the number of shares outstanding of each class of
the registrant's Common Stock, as of December 20, 1996.

<TABLE>
<CAPTION>

      Title of Each Class of Common Stock              Number of Outstanding
      -----------------------------------              ---------------------
          <S>                                              <C>
          Common Stock, $.03 par value                      5,742,523

</TABLE>

                      DOCUMENTS INCORPORATED BY REFERENCE

                  Document                            Part of the Form 10-K
   -----------------------------------                ---------------------
   Proxy Statement for the 1997 Annual                       Part III
          Meeting of Stockholders

===============================================================================
<PAGE>   2
                                    PART III

ITEM 10.    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

         The directors and executive officers of the Company as of December 20,
1996 were as follows:

<TABLE>
<CAPTION>
 OFFICER
 DIRECTOR/EXECUTIVE NAME             AGE                     PRESENT POSITION                          SINCE
 -----------------------             ---                     ----------------                          -----
 <S>                                 <C>    <C>                                                        <C>
 Jim C. Cowart                       45     Chairman of the Board and Chief Executive                  1992
                                                Officer
 Harvey B. Cash                      58     Director                                                   1993
 Amin J. Khoury                      57     Director                                                   1993
 David A. Lahar                      39     Director                                                   1992
 Thomas E. McInerney                 55     Director                                                   1996
 Richard H. Stowe                    53     Director                                                   1996
 William H. Watkins, Jr.             55     Director                                                   1983
 John P. Grazer                      42     President and Chief Financial Officer                      1993
 Richard A. Kain                     58     Senior Vice President - North American                     1995
                                              Operations
 George M. Korchinsky                55     Managing Director - European Operations and                1996
                                              Senior Vice President
 Amir Asadi                          38     Vice President - Information Systems                       1996
 Jonathan Shultz                     36     Vice President - Finance and Administration                1996
 Stephen F. Weber                    45     Vice President - Marketing                                 1996
</TABLE>
-------------------------------------------

JIM C. COWART, since December 31, 1992, has served as the Chairman of the Board
and Chief Executive Officer of the Company and formerly served as Vice
President of Strategic Development of the Company. Since February 1992, Mr.
Cowart has served as Chairman of EOS Capital, Inc., a private capital firm
which has been, from time to time, retained by the Company.   Mr. Cowart is
also a director of B/E Aerospace, Inc. ("BEAV" - NASD), a leading manufacturer
of aircraft cabin interior products.  Mr. Cowart has been a director of the
Company since October 1992. Mr. Cowart and Mr. Cash are first cousins.

HARVEY B. CASH, from June 1985 to present, has been a general partner of
InterWest Partners III, and from June 1989 to present, Mr. Cash has been a
general partner of InterWest Partners IV, both of which are venture capital
firms.  Mr. Cash, since December 1983, has also been a general partner of Berry
Cash Southwest Partnership, a venture capital firm.  Mr. Cash is a director of
Cirrus Logic, Inc. ("CRUS" - NASD), a semiconductor company; Cyrix Corporation
("CYRX" - NASD), a manufacturer and distributor of math co-processors; and
ProNet, Inc., ("PNET" - NASD), a distributor of medical pagers and electronic
tracking systems.  Mr. Cash has served as a director of the Company since
September 1993. Mr. Cash and Mr. Cowart are first cousins.

AMIN J. KHOURY, since July 1987, has served as Chairman of the Board of B/E
Aerospace, Inc. ("BEAV" - NASD), a leading manufacturer of aircraft cabin
interior products.  From July 1987 until March 1996, Mr. Khoury also served as
Chief Executive Officer of B/E Aerospace, Inc.  Mr. Khoury is Chairman of the
Board of Directors of Applied Extrusion Technologies, Inc. ("AETC" - NASD), a
manufacturer of packaging films, polymer nets and other specialty products.
Since July 1994, Mr. Khoury has also served as director of Brooks Automation,
Inc., a supplier of wafer handling systems on modules for the electronics
industry.  Mr. Khoury has been a director of the Company since January 1993,
with the exception of the period from approximately July 1, 1993 to November
23, 1993.






                                       2
<PAGE>   3

DAVID A. LAHAR, since February 1992 has served as President of EOS Capital,
Inc., a private capital firm which has been, from time to time, retained by the
Company.  From December 31, 1992 until July 1996, Mr. Lahar also served as the
President of the Company and formerly served as the Chief Financial Officer of
the Company.  Mr. Lahar has been a director of the Company since October 1992.

THOMAS E. MCINERNEY, since 1987, has been a general partner of Welsh, Carson,
Anderson & Stowe and has been a general partner of the respective sole general
partners of its associated limited partnerships.  Mr. McInerney, since 1988,
has served as a Director of DecisionOne Holdings Corp. ("DOCI" - NASD), and
from 1994 to 1995, served as its Chairman. Mr. McInerney is also a director of
Bisys Group, Inc. ("BSYS" - NASD).  Mr. McInerney has been a director of the
Company since March 1996.

RICHARD H. STOWE, since 1979, has been a general partner of Welsh, Carson,
Anderson & Stowe and has been a general partner of the respective sole general
partners of its associated limited partnerships.  Mr. Stowe is a director of
EmCare Holdings Inc. ("EMCR" - NASD), a provider of physician services
management in hospital emergency departments; Medaphis Corporation ("MEDA" -
NASD), a provider of accounts receivable management services to
hospital-affiliated physicians and hospitals; Health Management Systems,
Inc.("HMSY" - NASD), a provider of revenue enhancement services for health care
providers and payors, and several private companies.  Mr. Stowe has been a
director of the Company since March 1996.

WILLIAM H. WATKINS, JR., since December 1971, has been a partner and certified
public accountant with Watkins, Watkins & Keenan, a certified public accounting
firm.  Mr. Watkins is a director of Sport Supply Group, Inc. ("GYM" - NYSE), a
leading direct marketer of sporting goods and athletic equipment.  Mr. Watkins
has been a director of the Company since 1983.

JOHN P. GRAZER, since October 1996, has served as President and Chief Financial
Officer.  From May 1993 to October 1996 Mr. Grazer served as Senior Vice
President, Finance and Administration of the Company.  From 1992 to April 1993,
Mr. Grazer served as Vice President of Finance and Administration of Home
Fashions Inc.  From 1990 to 1992, Mr. Grazer served as Vice President of
Finance and Chief Financial Officer of RB Industries, Inc.  From 1985 to 1990,
Mr. Grazer served as Vice President, Finance of Amplica, Inc. a COMSAT company.

RICHARD A. KAIN, since October 1996, has served as Senior Vice President -
North American Operations.  Mr. Kain joined Aurora in May, 1995 as Vice
President Operations and General Manager.  From 1985 to 1995, Mr. Kain served
as Vice President Operations for Symbol Technologies, Inc.  From 1984 to 1985,
Mr. Kain served as Vice President - Operations for Pancretec, Inc.  From 1978
to 1984, Mr. Kain served as Manager - Manufacturing Scientific Instruments
Division for Beckman Instruments, Inc.

GEORGE M. KORCHINSKY is Managing Director - European Operations and Senior Vice
President.  Mr. Korchinsky joined Aurora in November 1996.  From May 1991 to
October 1996, Mr. Korchinsky served as Vice President & Managing Director -
Europe, Middle East, Africa for Symantec.  From January 1989 to May 1991, Mr.
Korchinsky served as General Manager Northern & Central Europe from Cognos Ltd.
From January 1987 to January 1989, Mr. Korchinsky served as Managing Director
Data Communications Equipment for Paradyne Ltd. and from 1984 to 1987 held
various sales, marketing and technical management positions with Paradyne Ltd.

AMIR ASADI joined Aurora in April 1996 as Vice President - Information Systems.
From June 1990 to April 1996, Mr. Asadi served as Vice President, Information
Systems for Home Fashions Inc.  From October 1987 to June 1990, Mr. Asadi
served as Director, Systems Development of Beech Street of California.  From
May 1986 to October 1987, Mr. Asadi served as Information Systems Consultant,
Project Manager for Fremont Indemnity.




                                       3
<PAGE>   4

JONATHAN SHULTZ, since October 1996, has served as Vice President Finance and
Administration.  Since joining Aurora in October 1992, Mr. Shultz has held the
following positions:  From May 1995 to October 1996, Mr. Shultz served as Vice
President Finance and Administration, ARS Division.  From June 1994 to May
1995, Mr. Shultz served as Vice President Controller/Treasurer.  From September
1993 to June 1994, Mr. Shultz served as Corporate Controller, and from October
1992 to September 1993, he served as Controller, Micro-C Division.  From
January 1986 to October 1992, Mr. Shultz served as Audit Manager/Technology
Coordinator for Ernst & Young.

STEPHEN F. WEBER, since May 1996, has served as Vice President Marketing.  From
January 1995 to May 1996, Mr. Weber was a co-founder of MindShare Associates,
LLC.  From July 1993 to January 1995, Mr. Weber served as Director, Storage
Marketing for Avnet EMG.  From March 1992 to July 1993, Mr. Weber served as
Corporate Marketing Manager for Avnet EMG.  From 1984 to 1992, Mr. Weber was a
sales representative for Anthem Electronics.


ITEM 11.    EXECUTIVE COMPENSATION.

SUMMARY COMPENSATION TABLE

         The following table sets forth information with respect to the
compensation paid by the Company to the Named Executive Officers during fiscal
1996, 1995 and 1994:

<TABLE>
<CAPTION>
                                                                                  LONG TERM
                                                                                COMPENSATION
                                                                                   AWARDS
                                                                                -------------
                                                  ANNUAL COMPENSATION            SECURITIES
                                 FISCAL        ------------------------          UNDERLYING         ALL OTHER
 NAME AND PRINCIPAL POSITION      YEAR         SALARY             BONUS          OPTIONS (#)      COMPENSATION (1)
 ---------------------------     ------        ------             -----         -------------     ----------------
 <S>                              <C>       <C>                   <C>             <C>                    <C>
 Jim C. Cowart,                   1996      $ 190,961             $ 10,534        1,334,954 (3)          $  1,928
   Chairman of the Board          1995        168,080              112,742 (2)       66,000 (4)             4,126
   and Chief Executive            1994        124,519               60,000           20,000                 4,324
   Officer

 David A. Lahar, (5)              1996      $ 186,793             $ 10,534          671,546 (6)          $  1,915
   President                      1995        166,238              114,742 (2)       66,000 (4)             3,775

                                  1994        124,519               60,000           20,000                 2,794

 John P. Grazer,                  1996      $ 170,936             $ 10,514          899,668 (7)          $  3,963
   President and Chief            1995        143,322              106,425 (2)       66,000 (4)             4,893
   Financial Officer              1994        133,384               50,000           20,000                 3,406


 Harold Haagsma, (8)              1996      $ 149,808             $ 50,083           67,027 (9)          $  3,404
   President, Asset Recovery      1995        145,000               58,875           16,000 (4)             5,387
   Services, a division of AEG    1994        123,616               32,639           20,000                 3,916

 Richard A. Kain                  1996      $ 144,616             $ 36,000          100,000 (10)            4,726
   Senior Vice President,         1995         45,000                3,125           20,000 (4)                --
   North American Operations      1994             --                   --               --                    --

 William H. McMahon, Jr., (11)    1996      $ 206,093              $67,347           19,805 (12)         $  5,985
   President, Century Division    1995        167,231               71,139           40,000 (4)          $  5,020
   a division of AEG              1994         61,385               15,250           35,000                    --
</TABLE>
-------------------------------------------


                                       4
<PAGE>   5


(1)     The amounts disclosed in this column consist only of Company
        contributions under the Company's 401(k) plan.

(2)     In connection with the completion of the recapitalization of the
        Company on March 29, 1996, Messrs. Cowart, Lahar and Grazer received
        bonuses in the amounts of $112,000, $114,000 and $105,000, respectively,
        in respect of 1995 performance that became payable in the event that a
        satisfactory recapitalization of the Company was obtained.

(3)     During May 1996, Mr. Cowart surrendered for cancellation all of
        his outstanding options to purchase shares of Common Stock, and he was
        issued replacement options under the Company's 1996 Stock Option Plan
        (the "1996 Plan") to purchase an aggregate of 1,334,954 shares of
        Company Common Stock consisting of 288,387 Tranche A Options, 288,387
        Tranche A1 Options, 379,090 Tranche B Options and 379,090 Tranche C
        Options.

(4)     During May 1995, the Compensation and Stock Option Committee of
        the Board of Directors offered each optionee the opportunity to
        surrender for cancellation his or her outstanding options and replace
        such outstanding options with non-qualified stock options to acquire
        eighty percent (80%) of the number of shares of the Company's Common
        Stock as canceled, at a price per share equal to twenty-five cents
        ($0.25) over the closing price of the Company's Common Stock on May 15,
        1995.

(5)     Mr. Lahar resigned from the Company effective August 1, 1996.

(6)     During May 1996, Mr. Lahar surrendered for cancellation all of
        his outstanding options to purchase shares of Common Stock, and he was
        issued replacement options under the 1996 Plan to purchase an aggregate
        of 671,546 shares of Company Common Stock, consisting of 288,387 Tranche
        A Options, 288,387 Tranche A1 Options, 94,772 Tranche B Options.  Mr.
        Lahar's options expire, unless earlier exercised, on July 31, 2001.

(7)     During May 1996, Mr. Grazer surrendered for cancellation all of
        his outstanding options to purchase shares of Common Stock, and he was
        issued replacement options under the 1996 Plan to purchase an aggregate
        of 899,668 shares of Company Common Stock, consisting of 154,987 Tranche
        A Options, 154,987 Tranche A1 Options, 294,847 Tranche B Options and
        294,847 Tranche C Options.

(8)     Mr. Haagsma resigned from the Company effective November 1, 1996.

(9)     During May 1996, Mr. Haagsma surrendered for cancellation all of
        his outstanding options to purchase shares of Common Stock, and he was
        issued replacement options under the 1996 Plan to purchase an aggregate
        of 67,027 shares of Company Common Stock, consisting of 58,000 Tranche A
        Options, 9,027 Tranche B Options.  Mr. Haagsma's options expire, unless
        earlier exercised, on July 30, 1997.

(10)    During May 1996, Mr. Kain surrendered for cancellation all of
        his outstanding options to purchase shares of Common Stock, and he was
        issued replacement options under the 1996 Plan to purchase an aggregate
        of 100,000 shares of Company Common Stock, consisting of 3,000 Tranche A
        Options, 20,973 Tranche B Options and 76,027 Tranche C Options.

(11)    Mr. McMahon resigned from the Company effective June 28, 1996.

(12)    During May 1996, Mr. McMahon surrendered for cancellation all of
        his outstanding options to purchase shares of Common Stock, and he was
        issued replacement options under the 1996 Plan to purchase an aggregate
        of 19,805 shares of Company Common Stock, consisting of 14,800 Tranche A
        Options, 5,005 Tranche B Options.  Mr. McMahon's options expire, unless
        earlier exercised, on March 31, 1997.





                                       5
<PAGE>   6
COMPENSATION OF DIRECTORS

         Each non-employee director receives $2,500 for each quarter that such
person serves as a director of the Company.  Officers of the Company do not
receive any fees for serving on the Board of Directors.  Non-employee directors
are automatically granted nonqualified stock options to purchase 25,000 shares
of Common Stock upon election to the Board of Directors and options to purchase
5,000 shares of Common Stock on the date of each annual meeting of the
Company's stockholders when such non-employee director has served on the Board
of Directors for the immediately preceding 181 consecutive days, has agreed to
serve as a director upon such re-election and is re-elected to the Board of
Directors.  All directors are entitled to reimbursement for expenses incurred
for attendance at each meeting.

EMPLOYMENT AGREEMENTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS

         Jim C. Cowart.  Mr. Cowart and the Company entered into an employment
letter effective as of May 18, 1995, pursuant to which he currently serves as
Chairman of the Board and Chief Executive Officer of the Company.  Under the
employment letter, Mr. Cowart receives an annual base salary and an incentive
bonus based upon certain financial performance targets of the Company.  If the
Company terminates Mr.  Cowart's employment without cause (as defined in the
letter), Mr. Cowart's compensation and option vesting will continue for twelve
(12) months.  In the event of a change of control of the Company, Mr. Cowart's
stock options vest immediately, and his compensation will continue for a period
of two years.

         John P. Grazer.  Mr. Grazer and the Company entered into an employment
letter effective as of October 22, 1996, pursuant to which he currently serves
as President and Chief Financial Officer of the Company.  Under the employment
letter, Mr. Grazer receives an annual base salary and an incentive bonus based
upon certain financial performance targets of the Company.  If the Company
terminates Mr. Grazer's employment without cause (as defined in the letter),
Mr. Grazer's compensation will continue for fifteen (15) months.  In the event
of a change of control of the Company that leads to Mr. Grazer's termination,
Mr. Grazer's compensation will continue for a period of fifteen (15) months,
and his stock options will vest immediately (unless otherwise determined by the
Compensation Committee).

COMPENSATION AND STOCK OPTION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN
COMPENSATION DECISIONS

         General. Harvey B. Cash, Thomas E. McInerney (Chairman) and Richard H.
Stowe served on the Compensation and Stock Option Committee of the Board of
Directors during the last fiscal year. Neither Mr. Cash, Mr. McInerney nor Mr.
Stowe are current or former officers or employees of the Company.

         During fiscal 1996, Jim C. Cowart (Chairman of the Board and Chief
Executive Officer of the Company) served as a director and member of the
compensation committee of the Board of Directors of B/E Aerospace, Inc.  Amin
J. Khoury, a director of the Company, is Chairman of the Board of B/E
Aerospace, Inc.





                                       6
<PAGE>   7
ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

         The following table and notes thereto set forth certain information
with respect to the beneficial ownership of the Company's Common Stock as of
January 31, 1997 by (i) each of the "Named Executive Officers" (as defined in
Regulation S-K to the 1933 Securities Act, as amended), (ii) each director of
the Company, (iii) each beneficial owner of more than 5% of the Company's
Common Stock and (iv) all executive officers and directors of the Company as a
group.

         Except as otherwise indicated, each of the stockholders named below
has sole voting and investment power with respect to the shares of Common Stock
beneficially owned:


<TABLE>
<CAPTION>
                                                                                AMOUNT AND           PERCENT OF
                                                          CLASS OF         NATURE OF BENEFICIAL     OUTSTANDING
 NAME AND ADDRESS OF BENEFICIAL OWNER                       STOCK             OWNERSHIP (1)           SHARES
 -----------------------------------------              ------------       --------------------     -----------
 <S>                                                    <C>                   <C>                      <C>
 Harvey B. Cash*                                        Common Stock             150,368 (2)              ***
 Jim C. Cowart*/**                                      Common Stock             537,022 (3)             2.19%
 John P. Grazer**                                       Common Stock             238,586 (4)              ***
 Harold Haagsma**                                       Common Stock              67,027 (5)              ***
 Richard A. Kain**                                      Common Stock              14,143 (6)              ***
 Amin J. Khoury*                                        Common Stock              41,250 (7)              ***
 David A. Lahar*                                        Common Stock             692,833 (8)             2.82%
 Thomas E. McInerney*                                   Common Stock          18,192,284 (9)            74.07%
 William H. McMahon, Jr.**                              Common Stock              23,898(10)              ***
 Richard H. Stowe*                                      Common Stock          18,180,519(11)            74.02%
 William H. Watkins, Jr.*                               Common Stock              38,250(12)              ***
 WCAS Capital Partners II, L.P.                         Common Stock             738,295(13)             2.99%
     320 Park Avenue, Suite 2500
     New York, NY  10022-6815
 Welsh, Carson, Anderson & Stowe VII, L.P.              Common Stock          20,985,513(13)(14)        74.19%
     320 Park Avenue, Suite 2500
     New York, NY  10022-6815
 WCAS Information Partners, L.P.                        Common Stock             235,294(13)(14)          ***
     320 Park Avenue, Suite 2500
     New York, NY  10022-6815
 Directors and Executive Officers                       Common Stock          23,836,995(15)            79.62%
     as a group (9 persons) 
-------------------------------------------
</TABLE>

*    Director

**   Named Executive Officer

***  Less than one percent





                                       7
<PAGE>   8

(1)     Sole voting and investment power unless otherwise indicated,
        subject to community property laws where applicable.  Shares of Common
        Stock that can be acquired through the conversion of Convertible
        Preferred Stock are deemed outstanding for the purpose of computing the
        percentage of beneficial ownership. Shares of Common Stock that were not
        outstanding but that could be acquired through the exercise of stock
        options or the conversion of convertible debentures within 60 days of
        January 31, 1997 are deemed outstanding for the purpose of computing the
        percentage of outstanding shares beneficially owned by a particular
        person.  However, such shares are not deemed outstanding for the purpose
        of computing the percentage of outstanding shares beneficially owned by
        any other person.

(2)     Includes (i) currently exercisable stock options to purchase
        36,250 shares of the Company's Common Stock, (ii) 2,000 shares of the
        Company's Convertible Preferred Stock directly owned by Mr. Cash, which
        if converted, represents 94,118 shares of Common Stock and (iii) 20,000
        shares of Common Stock owned by Mr. Cash.

(3)     Includes (i) currently exercisable stock options to purchase
        395,175 shares of the Company's Common Stock, (ii) 2,000 shares of the
        Company's Convertible Preferred Stock directly owned by Mr. Cowart,
        which if converted, represents 94,118 shares of Common Stock and (iii)
        47,729 shares of Common Stock owned by Mr. Cowart.

(4)     Includes (i) currently exercisable stock options to purchase
        235,155 shares of the Company's Common Stock and (ii) 3,431 shares of
        Common Stock owned by Mr. Grazer.

(5)     Includes currently exercisable stock options to purchase 67,027
        shares of the Company's Common Stock.

(6)     Includes (i) currently exercisable stock options to purchase
        10,943 shares of the Company's Common Stock and (ii) 3,200 shares of
        Common Stock owned by Mr. Kain.

(7)     Includes (i) currently exercisable stock options to purchase
        36,250 shares of the Company's Common Stock and (ii) 5,000 shares of
        Common Stock owned by Mr. Khoury.

(8)     Includes (i) currently exercisable stock options to purchase
        671,546 shares of the Company's Common Stock and (ii) 21,287 shares of
        Common Stock owned by Mr. Lahar.

(9)     Includes (i) currently exercisable stock options to purchase
        6,250 shares of the Company's Common Stock, (ii) 1,750 shares of the
        Company's Convertible Preferred Stock owned directly by Mr. McInerney,
        which if converted, represents 82,353 shares of Common Stock, (iii)
        607,211 shares of the Company's Common Stock beneficially owned by WCAS
        Capital Partners, II L.P., of which Mr. McInerney is a general partner
        of its sole general partner, (iv) 366,800 shares of the Company's
        Convertible Preferred Stock, which if converted, represents 17,261,176
        shares of Common Stock beneficially owned by Welsh, Carson, Anderson &
        Stowe VII, L.P. of which Mr. McInerney is a general partner of its sole
        general partner and (v) 5,000 shares of the Company's Convertible
        Preferred Stock, which if converted, represents 235,294 shares of Common
        Stock beneficially owned by WCAS Information Partners, L.P. of which Mr.
        McInerney is a general partner of its sole general partner.

(10)    Includes (i) currently exercisable stock options to purchase
        19,805 shares of the Company's Common Stock and (ii) 4,093 shares of
        Common Stock owned by Mr. McMahon.

(11)    Includes (i) currently exercisable stock options to purchase 6,250
        shares of the Company's Common Stock, (ii) 1,500 shares of the Company's
        Convertible Preferred Stock owned directly by Mr. Stowe, which if
        converted, represents 70,588 shares of Common Stock, (iii) 607,211
        shares of the Company's Common Stock beneficially owned by WCAS Capital
        Partners, II L.P.,





                                       8
<PAGE>   9

          of which Mr. Stowe is a general partner of its sole general partner,
          (iv) 366,800 shares of the Company's Convertible Preferred Stock,
          which if converted, represents 17,261,176 shares of Common Stock
          beneficially owned by Welsh, Carson, Anderson & Stowe VII, L.P., of
          which Mr. Stowe is a general partner of its sole general partner and
          (v) 5,000 shares of the Company's Convertible Preferred Stock, which
          if converted, represents 235,294 shares of Common Stock beneficially
          owned by WCAS Information Partners, L.P., of which Mr. Stowe is a
          general partner of its sole general partner.

(12)      Includes (i) currently exercisable stock options to purchase 36,250
          shares of the Company's Common Stock and (ii) 2,000 shares of Common
          Stock owned by Mr. Watkins.

(13)      Messrs. McInerney and Stowe are general partners of the
          respective sole general partners of WCAS Capital Partners II, L.P.,
          Welsh, Carson, Anderson & Stowe VII, L.P. and WCAS Information
          Partners, L.P., and may be deemed to beneficially own the shares of
          Common Stock and Convertible Preferred stock owned by such
          partnerships.

(14)      Reflects ownership of Convertible Preferred Stock, which if
          converted, represents shares of Common Stock beneficially owned.

(15)      Includes (i) 5,999,348 shares of Common Stock issuable upon
          exercise of stock options, warrants and convertible debentures and
          (ii) 379,050 shares of Convertible Preferred Stock, which if
          converted, represents 17,837,647 shares of Common Stock.



ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         None





                                       9
<PAGE>   10
                                   SIGNATURES

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



                                     AURORA ELECTRONICS, INC.


February 12, 1997                    By:  /s/ John P. Grazer
                                          -------------------------------
                                          John P. Grazer,
                                          President and Chief Financial Officer
                                          (Principal Financial Officer)






















                                       10
<PAGE>   11
                                INDEX TO EXHIBITS
<TABLE>
<CAPTION>

Exhibit
Number                              Description of Exhibits                   
--------       -----------------------------------------------------------------
<S>            <C>
 3.1           The Restated Certificate of Incorporation of the Company, as    
               amended (incorporated by reference from Exhibit 3.1 to the
               Company's Transition Report on Form 10-K for the transition
               period from December 31, 1991 to September 30, 1992).
 
 3.2           Bylaws of the Company, as amended (incorporated by reference    
               from Exhibit 4.2 to the Company's Registration Statement on Form
               S-8 (Registration No. 33-79426)).
 
 4.1           Indenture between the Company and MBank Dallas, National        
               Association relating to the Company's 7-3/4% Convertible
               Subordinated Debentures due 2001, including form of
               Debenture (incorporated by reference from Exhibit 4.1 to
               the Company's Registration Statement on Form S-2
               (Registration No. 33-4276)).
 
 4.2           First Supplemental Indenture relating to the Company's 7-3/4%
               Convertible Subordinated Debentures, dated December 1, 1987,
               between the Company and MTrust Corp., National Association,
               appointing MTrust Corp. as successor trustee to MBank Dallas
               (incorporated by reference from Exhibit 4.2 to the Company's
               Annual Report on Form 10-K for the fiscal year ended September
               30, 1993).
 
 4.3           Tripartite Agreement relating to the Company's 7-3/4% Convertible
               Subordinated Debentures, dated as of January 7, 1990, by and
               among MTrust Corp., National Association, Ameritrust Texas N.A.,
               and the Company (incorporated by reference from Exhibit 4.3 to
               the Company's Annual Report on Form 10-K for the fiscal year
               ended December 31, 1989).
 
 4.4           Second Supplemental Indenture relating to the Company's 7-3/4% 
               Convertible Subordinated Debentures, dated to be effective
               as of November 30, 1992, between the Company and Society National
               Bank (incorporated by reference from Exhibit 4.4 to the Company's
               Post-Effective Amendment No. 1 to Registration Statement on Form
               S-3 (No. 33-32377)).
 
 4.5           Certificate of Designations, Preferences and Rights of
               Convertible [__] Preferred Stock dated March 1996 relating to
               400,000 shares of Preferred Stock.
 
 4.6           Common Stock Purchase Warrant (Paribas), Form of Warrant to
               Purchase 94,903 Shares of Common Stock of Aurora Electronics,
               Inc., dated May 12, 1994, issued to each of Banque Paribas and
               Banque Indosuez (incorporated by reference from Exhibit 4.2 to
               the Company's Report on Form 8-K dated May 26, 1994).

</TABLE>


                                       11
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<TABLE>
<CAPTION>

Exhibit
Number                              Description of Exhibits                   
--------       -----------------------------------------------------------------
<S>            <C>
   4.7         Common Stock Warrant (Lender) Banque Indosuez, Form of    
               Warrant to Purchase Shares of Common Stock of Aurora
               Electronics, Inc., dated May 12, 1994, issued to each of Banque
               Paribas, Banque Indosuez and Union Bank (incorporated by
               reference from Exhibit 4.3 to the Company's Report on
               Form 8-K dated May 26, 1994).
 
   4.8         Aurora Electronics, Inc. Common Stock Purchase Warrant, dated 
               September 30, 1996, issued to Welsh, Carson, Anderson & Stowe
               VII, L.P.
 
   4.9         Aurora Electronics, Inc. Common Stock Purchase Warrant, dated  
               September 30, 1996, issued to WCAS Capital Partners II, L.P.
 
   4.10        Form of Aurora Electronics, Inc. Common Stock Purchase Warrant,
               issued to Welsh, Carson, Anderson & Stowe VII, L.P.
 
   4.11        Form of Aurora Electronics, Inc. Common Stock Purchase Warrant,
               issued to WCAS Capital Partners II, L.P.
 
  10.1         Aurora Electronics, Inc. 1993 Stock Option Plan, as amended by 
               Amendment No. 1 dated to be effective as of March 1, 1994 and by
               Amendment No. 2 dated to be effective as of March 1, 1994
               (incorporated by reference from Exhibit 4.3 to the Company's
               Registration Statement on Form S-8 (Registration No. 33-79426)).
 
  10.2         Aurora Electronics, Inc. 1996 Stock Option Plan (incorporated by
               reference from Exhibit 10.19 to the Company's Form 10-Q for the
               quarter ended June 30, 1996).
 
  10.3         Form of Indemnification Agreement entered into between the    
               Company and each of the directors of the Company (incorporated
               by reference from Exhibit 10.3 to the Company's Annual Report on
               Form 10-K for the fiscal year ended December 31, 1991).
 
 *10.4.2       Letter Agreement, dated October 22, 1996, between the Company 
               and John P. Grazer relating to employment.
</TABLE>

                                       12
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<TABLE>
<CAPTION>

Exhibit
Number                              Description of Exhibits                   
--------       -----------------------------------------------------------------
<S>            <C>
  10.5         Letter Agreement, dated March 1, 1994, between the Company and 
               Jim C. Cowart relating to employment (incorporated by reference
               from Exhibit 10.5 to the Company's Annual Report on Form 10-K
               for the fiscal year ended September 30, 1994).
 
  10.5.1       Letter Agreement, dated May 18, 1995, between the Company and  
               Jim C. Cowart relating to employment (incorporated by reference
               from Exhibit 10.5.1 to the Company's Annual Report on Form 10-K
               for the fiscal year ended September 30, 1995)
 
  10.8         Standard Multi-Tenant Net Lease, dated November 3, 1992, by and
               between Sorrento Mesa Properties, Inc. and Micro-C Corporation
               (now Aurora Electronics Group, Inc.) (incorporated by reference
               from Exhibit 10.7 to the Company's Annual Report on Form 10-K
               for the fiscal year ended September 30, 1993).

</TABLE>

                                       13
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<TABLE>
<CAPTION>

Exhibit
Number                              Description of Exhibits                   
--------       -----------------------------------------------------------------
<S>            <C>
 10.9          Standard Industrial Lease - Net, dated March 27, 1984, by and   
               between Northgate Investment Company (now David Pick) and
               Repair Services, Inc. (now Aurora Electronics Group, Inc.)
               (incorporated by reference from Exhibit 10.8 to the Company's
               Annual Report on Form 10-K for the fiscal year ended September
               30, 1993).
 
 10.10         Standard Industrial / Commercial Single Tenant Lease - Net dated
               November 30, 1994, by and between The Equitable Life Assurance
               Society of the United States and Aurora Electronics Group, Inc.
               (incorporated by reference from Exhibit 10.9 to the
               Company's Annual Report on Form 10-K for the fiscal year
               ended September 30, 1994).
 
 10.11         Standard Lease Agreement dated October 27, 1992, by and between 
               Crow-Brindell-Mitchell and Aurora Electronics Group, Inc. as
               Assignee of CCB Computer Brokers, Inc. d/b/a Century Computer
               Services, Inc. (incorporated by reference from Exhibit 10.10 to
               the Company's Annual Report on Form 10-K for the fiscal year
               ended September 30, 1994).
 
 10.12         Lease Agreement Shelby Distribution Center dated November 11,
               1994 by and between J. Shea Leatherman, William A. Leatherman,
               Jr., Irwin L. Zanone and Aurora Electronics Group, Inc.
               (incorporated by reference from Exhibit 10.11 to the Company's
               Annual Report on Form 10-K for the fiscal year ended September
               30, 1994).
 
 10.13         Lease dated July 14, 1988, by and between American National Bank
               and Trust Company of Chicago and BSN Corp. (now Aurora
               Electronics, Inc.) (incorporated by reference from Exhibit 10.12 
               to the Company's Annual Report on Form 10-K for the fiscal year
               ended September 30, 1994).
 
 10.14         Form of Tax Indemnity Agreement by and between the Company 
               and SSG (incorporated by reference from Exhibit 10.9 to the
               Company's Annual Report on Form 10-K for the fiscal year ended
               December 31, 1991).
 
 10.15         Stock Purchase Agreement, dated as of September 30, 1992, by and
               among the Company, Robert E. Morris and Norma J. Morris, Trustees
               of the Robert and Norma Morris Family Trust and The Robert and
               Norma Morris Charitable Remainder Unitrust (incorporated by
               reference from Exhibit 2.1 to Form 8-K filed on October 19,
               1992).
</TABLE>

                                       14


 
<PAGE>   15
<TABLE>
<CAPTION>

Exhibit
Number                              Description of Exhibits                   
--------       -----------------------------------------------------------------
<S>            <C>
 10.16         Merger Agreement and Plan of Reorganization, dated September 12,
               1993, by and between the Company and FRS, Inc. (incorporated by
               reference from Exhibit 2.1 to the Company's Current Report on
               Form 8-K, dated October 15, 1993).

 10.17         Asset Purchase Agreement, dated March 15, 1994 to be effective as
               of March 1, 1994, as amended, by and among the Company, Aurora
               Electronics Group, Inc. and CCB Computer Brokers, Inc. and CCM
               Computers International, Ltd. (incorporated by reference from
               Exhibit (b)(1) to the Company's Quarterly Report on Form 10-Q for
               the quarter ended March 31, 1994).
 
 10.18         Aurora Electronics, Inc. 401-K Plan (incorporated by reference 
               from Exhibit 10.13 to the Company's Annual Report on Form 10-K
               for the fiscal year ended September 30, 1993).
 
 10.19         Securities Purchase Agreement among Aurora Electronics, Inc., 
               Welsh, Carson, Anderson & Stowe VII, L.P., WCAS Capital Partners
               II, L.P. and the Several Purchasers Named Therein, dated February
               21, 1996, incorporated by reference from Exhibit (b)(2) of the
               Company's Issuer Tender Offer Statement on Schedule 13E-4, which
               was filed with the Securities and Exchange Commission on February
               23, 1996.
 
 10.20         Aurora Electronics Inc. Offer to Purchase for Cash up to
               6,500,000 Shares of Its Common Stock at $2.875 Per Share, dated
               February 23, 1996, incorporated by reference from Exhibit (a)(1)
               of the Company's Issuer Tender Offer Statement on Schedule 13E-4,
               which was filed with the Securities and Exchange Commission on
               February 23, 1996.

 10.21         Credit Agreement among Aurora Electronics Group, Inc., as 
               Borrower, the Guarantors Named Therein, the Lenders Named therein
               and Chemical Bank, N.A., as Agent, dated March 29, 1996
               (incorporated by reference from Exhibit 10.21 to the Company's
               Report on Form 8-K dated March 29, 1996).
 
 10.22         $15,000,000 Tranche A Note between Aurora Electronics Group, 
               Inc., as Maker, and Chemical Bank, N.A., as Lender, dated March
               29, 1996 (incorporated by reference from Exhibit 10.22 to the
               Company's Report on Form 8-K dated March 29, 1996).
 
 10.23         $20,000,000 Tranche B Note between Aurora Electronics Group, 
               Inc., as Maker, and Chemical Bank, N.A., as Lender, dated March
               29, 1996 (incorporated by reference from Exhibit 10.23 to the
               Company's Report on Form 8-K dated March 29, 1996).
 
</TABLE>

                                       15
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 <TABLE>
<CAPTION>

Exhibit
Number                              Description of Exhibits                   
--------       -----------------------------------------------------------------
<S>            <C>
 10.24         Pledge Agreement among Aurora Electronics Group, Inc.,         
               Aurora Electronics, Inc. and Chemical Bank, N.A., dated March
               29, 1996 (incorporated by reference from Exhibit 10.24
               to the Company's Report on Form 8-K dated March 29,
               1996).
 
 10.25         Security Agreement among Aurora Electronics Group, Inc.,       
               Aurora Electronics, Inc. and Chemical Bank, N.A., dated March
               29, 1996 (incorporated by reference from Exhibit 10.25
               to the Company's Report on Form 8-K dated March 29,
               1996).
 
 10.26         Security Agreement and Mortgage -- Patents and Trademarks      
               among Aurora Electronics Group, Inc., Aurora Electronics, Inc.
               and Chemical Bank, N.A., dated March 29, 1996
               (incorporated by reference from Exhibit 10.26 to the
               Company's Report on Form 8-K dated March 29, 1996).
 
 10.27         Assignment for Security (Patents) among Aurora Electronics     
               Group, Inc., as Assignor, and Chemical Bank, as Assignee,
               dated March 29, 1996 (incorporated by reference from
               Exhibit 10.27 to the Company's Report on Form 8-K dated
               March 29, 1996).
 
 10.28         Assignment for Security (Patents) among Aurora Electronics,    
               Inc., as Assignor, and Chemical Bank, as Assignee, dated March
               29, 1996 (incorporated by reference from Exhibit 10.28
               to the Company's Report on Form 8-K dated March 29,
               1996).
 
 10.29         Assignment for Security (Trademarks) among Aurora              
               Electronics Group, Inc., as Assignor, and Chemical Bank, as
               Assignee, dated March 29, 1996 (incorporated by reference from
               Exhibit 10.29 to the Company's Report on Form 8-K dated
               March 29, 1996).
 
 10.30         Assignment for Security (Trademarks) among Aurora              
               Electronics, Inc., as Assignor, and Chemical Bank, as Assignee,
               dated March 29, 1996 (incorporated by reference from
               Exhibit 10.30 to the Company's Report on Form 8-K dated
               March 29, 1996).
 
 10.31         Registration Rights Agreement, among Aurora Electronics, Inc.,
               Welsh, Carson, Anderson & Stowe VII, L.P., and WCAS Capital
               Partners II, L.P., dated March 29, 1996. 
 
 10.32         Aurora Electronics, Inc. 10% Senior Subordinated Note due
               September 30, 2001, by Aurora Electronics, Inc. as payor to WCAS
               Capital Partners II, L.P., as payee, dated March 29, 1996.

 10.33         Financial Support Agreement, among Aurora Electronics, Inc.,
               Aurora Electronics Group, Inc., Welsh, Carson, Anderson & Stowe
               VII, L.P., and WCAS Capital Partners II, L.P., dated as of
               September 30, 1996. 

 10.34         Limited (Overadvance) Guarantee, made by Welsh, Carson, Anderson
               & Stowe, VII, L.P. and WCAS Capital Partners II, L.P., each a
               Guarantor, and collectively, the Guarantors, in favor of The
               Chase Manhattan Bank (formerly known as Chemical Bank), as Agent
               for the Lenders, dated as of September 30, 1996.

 10.35         Limited (Acquisition) Guarantee, made by Welsh, Carson, Anderson
               & Stowe, VII, L.P. and WCAS Capital Partners II, L.P., each a
               Guarantor, and collectively, the Guarantors, in favor of The
               Chase Manhattan Bank (formerly known as Chemical Bank), as Agent
               for the Lenders, dated as of September 30, 1996. 

 10.36         Form of Note, Aurora Electronics Group, Inc. 10% Senior
               Subordinated Note due September 30, 2001, by Aurora Electronics
               Group, Inc. as payor.

 10.37         Amendment No. 1 to Registration Rights Agreement, among Aurora
               Electronics, Inc. and the parties listed on Schedule I thereto,
               dated as of September 30, 1996.

 11            Computation of Earnings Per Share 

</TABLE>
 
 
 
                                       16
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<TABLE>
<CAPTION>

Exhibit
Number                              Description of Exhibits                   
--------       -----------------------------------------------------------------
<S>            <C>
                                                             
21.1           Subsidiaries of the Company:
                                                             JURISDICTION
                    NAME                                   OF INCORPORATION
               ----------------------------                ----------------
               Aurora Electronics Group, Inc.                California
               Aurora Electronics Limited                    United Kingdom
               Micro-C (Barbados) Ltd.                       Barbados

 23.1          Consent of Arthur Andersen LLP                 
 27            Financial Data Schedule
</TABLE>

--------------------
*Filed herewith.


                                       17