##### Table of Contents



Form 10-Q
 SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2005
 Commission file number: 0-24091
 Tweeter Home Entertainment Group, Inc.
 (Exact name of Registrant as specified in its charter)
 DELAWARE
    
    04-3417513(State or other jurisdiction of
    
    (I.R.S. Employer Identification No.)incorporation or organization)
 40 PEQUOT WAY
CANTON, MA 02021  (Address of principal executive offices including zip code)
 781-830-3000  (Registrants telephone number including area code)
  þ o
 Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule
12b-2 of the Exchange Act). þ o
  TITLE OF CLASS
Common Stock, $.01 par value
    
    OUTSTANDING AT AUGUST 5, 2005
24,642,179




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##### Table of Contents



TWEETER HOME ENTERTAINMENT GROUP, INC. AND SUBSIDIARIES
QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
  
 PAGEPART I  FINANCIAL INFORMATIONItem 1.
    
    Condensed Consolidated Financial Statements (Unaudited).Condensed Consolidated Balance Sheets as of June 30, 2004, September 30, 2004 and June 30, 2005.
    
    
    2Condensed Consolidated Statements of Operations for the Three and Nine Months Ended June 30, 2004 and 2005.
    
    
    3Condensed Consolidated Statements of Cash Flows for the Nine Months Ended June 30, 2004 and 2005.
    
    
    4Notes to Condensed Consolidated Financial Statements (Unaudited).
    
    
    5Item 2.
    
    Management's
Discussion and Analysis of Financial Condition and Results of
Operations.
    
    
    12Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk.
    
    
    17Item 4.
    
    Controls and Procedures.
    
    
    17PART II  OTHER INFORMATIONItem 1.
    
    Legal Proceedings.
    
    
    19Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds.
    
    
    19Item 3.
    
    Defaults Upon Senior Securities.
    
    
    19Item 4.
    
    Submission of Matters to a Vote of Security Holders.
    
    
    19Item 5.
    
    Other Information.
    
    
    19Item 6.
    
    Exhibits.
    
    
    19SIGNATURESEXHIBIT INDEXEX-31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley ActEX-31.2 Certification of interim Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley ActEX-32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350EX-32.2 Certification of interim Chief Financial Officer pursuant to 18 U.S.C. Section 1350




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Tweeter Home Entertainment Group, Inc. and Subsidiaries
 
 Condensed Consolidated Balance Sheets
 June 30,
    
    September 30,
    
    June 30,2004
    
    2004
    
    2005(Unaudited)
    
    
    
    
    
    (Unaudited)AssetsCurrent Assets:Cash and cash equivalents
    
    $
    1,414,604
    
    
    $
    2,801,005
    
    
    $
    1,425,126Accounts receivable, net of allowance for
doubtful accounts of $1,110,000, $475,000, and
$755,000 at June 30, 2004, September 30, 2004,
and June 30, 2005, respectively
    
    
    23,084,785
    
    
    
    17,795,922
    
    
    
    23,780,637Inventory
    
    
    113,513,914
    
    
    
    106,562,804
    
    
    
    102,409,660Deferred tax assets
    
    
    6,179,564
    
    
    
    7,801,864
    
    
    
    Prepaid expenses and other current assets
    
    
    19,317,555
    
    
    
    17,019,121
    
    
    
    19,854,145Total current assets
    
    
    163,510,422
    
    
    
    151,980,716
    
    
    
    147,469,568Property and equipment, net
    
    
    123,274,762
    
    
    
    124,863,799
    
    
    
    118,752,686Long-term investments
    
    
    2,069,515
    
    
    
    2,304,166
    
    
    
    1,766,741Deferred tax assets
    
    
    8,595,538
    
    
    
    14,470,743
    
    
    
    Intangible assets, net
    
    
    1,416,667
    
    
    
    1,246,667
    
    
    
    736,667Goodwill
    
    
    
    
    
    
    4,885,133
    
    
    
    5,250,868Other assets, net
    
    
    1,988,084
    
    
    
    1,461,909
    
    
    
    1,622,969Total assets
    
    $
    300,854,988
    
    
    $
    301,213,133
    
    
    $
    275,599,499Liabilities and Stockholders EquityCurrent Liabilities:Current portion of long-term debt
    
    $
    9,361,699
    
    
    $
    3,184,274
    
    
    $
    15,930,161Current portion of deferred consideration
    
    
    
    
    
    
    518,199
    
    
    
    484,866Accounts payable
    
    
    30,817,593
    
    
    
    41,637,673
    
    
    
    36,033,843Accrued expenses
    
    
    22,764,956
    
    
    
    28,362,551
    
    
    
    42,286,678Customer deposits
    
    
    21,257,984
    
    
    
    21,893,905
    
    
    
    20,776,176Deferred warranty
    
    
    124,063
    
    
    
    93,625
    
    
    
    19,750Total current liabilities
    
    
    84,326,295
    
    
    
    95,690,227
    
    
    
    115,531,474Long-term debt, net of current portion
    
    
    38,943,292
    
    
    
    35,001,930
    
    
    
    38,179,877Other Long-Term Liabilities:Rent related accruals
    
    
    10,779,164
    
    
    
    11,071,389
    
    
    
    16,463,630Deferred warranty
    
    
    11,758
    
    
    
    
    
    
    
    Deferred consideration
    
    
    
    
    
    
    3,030,413
    
    
    
    2,666,763Total other long-term liabilities
    
    
    10,790,922
    
    
    
    14,101,802
    
    
    
    19,130,393Total liabilities
    
    
    134,060,509
    
    
    
    144,793,959
    
    
    
    172,841,744Commitments and ContingenciesStockholders EquityPreferred stock, $.01 par value, 10,000,000
shares authorized, no shares issued
    
    
    
    
    
    
    
    
    
    
    Common stock, $.01 par value, 60,000,000 shares
authorized; 25,994,803, 26,175,965, and
26,245,750 shares issued at June 30, 2004,
September 30, 2004, and June 30, 2005,
respectively
    
    
    259,948
    
    
    
    261,760
    
    
    
    262,457Additional paid in capital
    
    
    301,893,101
    
    
    
    304,006,333
    
    
    
    304,594,395Unearned equity compensation
    
    
    (119,471
    )
    
    
    (75,727
    )
    
    
    Accumulated other comprehensive income
    
    
    87,083
    
    
    
    115,391
    
    
    
    101,327Accumulated deficit
    
    
    (133,558,019
    )
    
    
    (146,136,052
    )
    
    
    (200,498,969
    )Total
    
    
    168,562,642
    
    
    
    158,171,705
    
    
    
    104,459,210Less treasury stock: 1,698,869, 1,676,537, and
1,603,571 shares at June 30, 2004, September 30,
2004, and June 30, 2005, at cost, respectively
    
    
    (1,768,163
    )
    
    
    (1,752,531
    )
    
    
    (1,701,455
    )Total stockholders equity
    
    
    166,794,479
    
    
    
    156,419,174
    
    
    
    102,757,755Total liabilities and stockholders equity
    
    $
    300,854,988
    
    
    $
    301,213,133
    
    
    $
    275,599,499
 See notes to unaudited condensed consolidated financial statements.
 2




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##### Table of Contents



Tweeter Home Entertainment Group, Inc. and Subsidiaries
 
 Condensed Consolidated Statements of Operations
 (Unaudited)
 Three Months Ended
    
    Nine Months EndedJune 30,
    
    June 30,2004
    
    2005
    
    2004
    
    2005Total revenue
    
    $
    162,894,700
    
    
    $
    166,577,644
    
    
    $
    591,947,452
    
    
    $
    606,840,000Cost of sales
    
    
    (98,948,079
    )
    
    
    (103,278,246
    )
    
    
    (362,183,724
    )
    
    
    (365,347,594
    )Gross profit
    
    
    63,946,621
    
    
    
    63,299,398
    
    
    
    229,763,728
    
    
    
    241,492,406Selling expenses
    
    
    59,566,531
    
    
    
    64,958,212
    
    
    
    194,167,327
    
    
    
    217,252,499Corporate, general and administrative
expenses
    
    
    12,917,869
    
    
    
    15,153,251
    
    
    
    35,991,142
    
    
    
    38,259,705Amortization of intangibles
    
    
    170,000
    
    
    
    170,000
    
    
    
    510,000
    
    
    
    510,000Non-cash compensation charges
    
    
    19,024
    
    
    
    1,410
    
    
    
    5,298,034
    
    
    
    75,727Restructuring charges
    
    
    
    
    
    
    16,867,876
    
    
    
    
    
    
    
    16,867,876Operating loss from continuing operations
    
    
    (8,726,803
    )
    
    
    (33,851,351
    )
    
    
    (6,202,775
    )
    
    
    (31,473,401
    )Interest expense
    
    
    (833,802
    )
    
    
    (780,137
    )
    
    
    (2,140,587
    )
    
    
    (2,008,369
    )Interest income
    
    
    1,870
    
    
    

    30
    
    
    
    327,667
    
    
    
    14,071Gain on sale of equity investments
    
    
    
    
    
    
    9,869,065
    
    
    
    
    
    
    
    9,869,065Loss from continuing operations before
income taxes
    
    
    (9,558,735
    )
    
    
    (24,762,393
    )
    
    
    (8,015,695
    )
    
    
    (23,598,634
    )Income taxes provision (benefit)
    
    
    (3,823,494
    )
    
    
    
    
    
    
    (3,206,277
    )
    
    
    21,920,538Net loss from continuing operations before
income from equity investments
    
    
    (5,735,241
    )
    
    
    (24,762,393
    )
    
    
    (4,809,418
    )
    
    
    (45,519,172
    )Income from equity investments, net of tax
    
    
    100,901
    
    
    
    248,566
    
    
    
    373,324
    
    
    
    539,511Net loss from continuing operations
    
    
    (5,634,340
    )
    
    
    (24,513,827
    )
    
    
    (4,436,094
    )
    
    
    (44,979,661
    )Discontinued operations:Pre-tax loss from discontinued operations
    
    
    (845,143
    )
    
    
    (7,430,137
    )
    
    
    (1,924,184
    )
    
    
    (9,383,256
    )Income tax benefit
    
    
    (338,057
    )
    
    
    
    
    
    
    (769,674
    )
    
    
    Loss from discontinued operations
    
    
    (507,086
    )
    
    
    (7,430,137
    )
    
    
    (1,154,510
    )
    
    
    (9,383,256
    )Net loss
    
    $
    (6,141,426
    )
    
    $
    (31,943,964
    )
    
    $
    (5,590,604
    )
    
    $
    (54,362,917
    )Basic loss per share:Loss from continuing operations
    
    $
    (0.23
    )
    
    $
    (1.00
    )
    
    $
    (0.18
    )
    
    $
    (1.84
    )Loss from discontinued operations
    
    
    (0.02
    )
    
    
    (0.30
    )
    
    
    (0.05
    )
    
    
    (0.38
    )Net loss per share
    
    $
    (0.25
    )
    
    $
    (1.30
    )
    
    $
    (0.23
    )
    
    $
    (2.22
    )Diluted loss per share:Loss from continuing operations
    
    $
    (0.23
    )
    
    $
    (1.00
    )
    
    $
    (0.18
    )
    
    $
    (1.84
    )Loss from discontinued operations
    
    
    (0.02
    )
    
    
    (0.30
    )
    
    
    (0.05
    )
    
    
    (0.38
    )Net loss per share
    
    $
    (0.25
    )
    
    $
    (1.30
    )
    
    $
    (0.23
    )
    
    $
    (2.22
    )Weighted average shares outstanding:Basic
    
    
    24,220,419
    
    
    
    24,600,731
    
    
    
    24,082,977
    
    
    
    24,538,937Diluted
    
    
    24,220,419
    
    
    
    24,600,731
    
    
    
    24,082,977
    
    
    
    24,538,937
 See notes to unaudited condensed consolidated financial statements.
 3




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##### Table of Contents



Tweeter Home Entertainment Group, Inc. and Subsidiaries
 
 Condensed Consolidated Statements of Cash Flows
 (Unaudited)
 Nine Months EndedJune 30,2004
    
    2005CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
    
    $
    (5,590,604
    )
    
    $
    (54,362,917
    )Adjustments to reconcile net loss to net cash provided by (used
in) operating activities:Depreciation and amortization
    
    
    17,223,318
    
    
    
    18,699,385Recognition
of deferred lease incentive
    
    
    
    
    
    
    179,670Non-cash compensation
    
    
    5,298,033
    
    
    
    75,727Gain on sale of equity investments, net
    
    
    
    
    
    
    (9,869,065
    )Impairment charge
    
    
    
    
    
    
    7,853,925(Gain) loss on disposal of property and equipment
    
    
    (2,430
    )
    
    
    28,589Provision for doubtful accounts
    
    
    324,928
    
    
    
    308,015Tax benefit from options exercised
    
    
    186,805
    
    
    
    45,853Deferred income tax (benefit) provision
    
    
    (3,686,986
    )
    
    
    22,282,497Amortization of deferred gain on sale leaseback
    
    
    (33,632
    )
    
    
    (33,632
    )Income from equity investments
    
    
    (622,206
    )
    
    
    (733,475
    )Changes in operating assets and liabilities:Increase in accounts receivable
    
    
    (5,146,149
    )
    
    
    (6,292,730
    )Decrease in inventory
    
    
    4,094,994
    
    
    
    3,909,846Decrease (increase) in prepaid expenses and other assets
    
    
    7,174,754
    
    
    
    (3,329,642
    )(Decrease) increase in accounts payable and accrued expenses
    
    
    (1,495,243
    )
    
    
    7,928,694Increase (decrease) in customer deposits
    
    
    89,147
    
    
    
    (1,117,729
    )(Decrease) increase in rent related accruals
    
    
    (243,457
    )
    
    
    2,196,205Decrease in deferred considerations
    
    
    
    
    
    
    (396,983
    )Decrease in deferred warranty
    
    
    (177,822
    )
    
    
    (73,875
    )Net cash provided by (used in) operating activities
    
    
    17,393,450
    
    
    
    (12,701,642
    )CASH FLOWS FROM INVESTING ACTIVITIES:Purchase of property and equipment
    
    
    (12,932,775
    )
    
    
    (19,755,118
    )Proceeds from sale of property and equipment
    
    
    23,100
    
    
    
    231,638Proceeds from sale leaseback
    
    
    
    
    
    
    2,946,707Proceeds from sale of equity investment
    
    
    
    
    
    
    10,248,966Purchase of equity investment
    
    
    
    
    
    
    (300,000
    )Distributions from equity investments
    
    
    646,569
    
    
    
    1,435,754Net cash used in investing activities
    
    
    (12,263,106
    )
    
    
    (5,192,053
    )CASH FLOWS FROM FINANCING ACTIVITIES:Increase in amount due to bank
    
    
    1,996,774
    
    
    
    12,756,970Net (payments) proceeds of long term debt
    
    
    (9,323,645
    )
    
    
    3,166,864Proceeds from options exercised
    
    
    1,475,626
    
    
    
    337,161Proceeds from employee stock purchase plan
    
    
    285,056
    
    
    
    256,821Net cash (used in) provided by financing activities
    
    
    (5,566,189
    )
    
    
    16,517,816DECREASE IN CASH AND CASH EQUIVALENTS
    
    
    (435,845
    )
    
    
    (1,375,879
    )CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
    
    
    1,850,449
    
    
    
    2,801,005CASH AND CASH EQUIVALENTS, END OF PERIOD
    
    $
    1,414,604
    
    
    $
    1,425,126
 See notes to unaudited condensed consolidated financial statements.
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##### Table of Contents



TWEETER HOME ENTERTAINMENT GROUP, INC. AND SUBSIDIARIES
 
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 1. Basis of Presentation
  2.
Summary of Selected Accounting Policies
  5




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##### Table of Contents



Property and Equipment
 Rent
Related Accruals 
 Advertising
 Three Months Ended
    
    Nine Months EndedJune 30,
    
    June 30,2004
    
    2005
    
    2004
    
    2005Gross advertising
    
    $
    8,191,139
    
    
    $
    8,603,348
    
    
    $
    33,970,130
    
    
    $
    37,718,447Cooperative advertising funds
    
    
    (983,681
    )
    
    
    (304,762
    )
    
    
    (2,390,148
    )
    
    
    (464,784
    )Net advertising
    
    $
    7,207,458
    
    
    $
    8,298,586
    
    
    $
    31,579,982
    
    
    $
    37,253,663
 Stock-based
compensation Accounting for Stock-Based Compensation Accounting for Equity Instruments That Are Issued to Other Than Employees for
Acquiring, or in Conjunction with Selling, Goods or Services
  Three Months Ended
    
    Nine Months EndedJune 30,
    
    June 30,2004
    
    2005
    
    2004
    
    2005Risk free interest rate
    
    
    3.38
    %
    
    
    4.08
    %
    
    
    3.41
    %
    
    
    3.36
    %Expected life of options grants
    
    
    7.7
    
    
    
    10.0
    
    
    
    7.4
    
    
    
    10.0Expected volatility of underlying stock
    
    
    81.38
    %
    
    
    82.97
    %
    
    
    80.07
    %
    
    
    83.21
    %
 6




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Three Months Ended
    
    Nine Months EndedJune 30,
    
    June 30,2004
    
    2005
    
    2004
    
    2005Net loss as reported
    
    $
    (6,141,426
    )
    
    $
    (31,943,964
    )
    
    $
    (5,590,604
    )
    
    $
    (54,362,917
    )Total stock-based
employee compensation
expense recorded, net of
related tax effects
    
    
    11,414
    
    
    
    1,410
    
    
    
    173,203
    
    
    
    75,727Total stock-based
employee compensation
expense determined under
fair value based method
for all awards, net of
related tax effects
    
    
    (2,032,997
    )
    
    
    (1,158,208
    )
    
    
    (5,011,975
    )
    
    
    (3,488,013
    )Pro forma net loss
    
    $
    (8,163,009
    )
    
    $
    (33,100,762
    )
    
    $
    (10,429,376
    )
    
    $
    (57,775,203
    )Loss per shareBasic  as reported
    
    $
    (0.25
    )
    
    $
    (1.30
    )
    
    $
    (0.23
    )
    
    $
    (2.22
    )Basic  pro forma
    
    $
    (0.34
    )

    
    $
    (1.35
    )
    
    $
    (0.43
    )
    
    $
    (2.35
    )Diluted  as reported
    
    $
    (0.25
    )
    
    $
    (1.30
    )
    
    $
    (0.23
    )
    
    $
    (2.22
    )Diluted  pro forma
    
    $
    (0.34
    )
    
    $
    (1.35
    )
    
    $
    (0.43
    )
    
    $
    (2.35
    )
 Share-Based Payment
 3. Restructuring Charges
  Accounting for
Costs Associated with Exit or Disposal Activities
  Lease terminationand other related
    
    Professional
    
    
    
    
    
    Non-cashcharges
    
    fees
    
    Severance
    
    charges
    
    TotalTotal restructuring charge
Payments
Non-cash charges
    
    $
    8,158,236
(250,000
-
    )
    
    $
    2,344,929
(76,206
-
    )
    
    $
    436,059
(137,774
-
    )
    
    $
    5,928,652
-
(5,928,652
    )
    
    $
    16,867,876
(463,980
(5,928,652
    )
)Balance as of June 30, 2005
    
    $
    7,908,236
    
    
    $
    2,268,723
    
    
    $
    298,285
    
    
    $
    0
    
    
    $
    10,475,244
  4. Discontinued Operations
  5. Income Taxes
 Accounting for Income Taxes
 6. Net Loss per Share
  Three Months Ended
    
    Nine Months EndedJune 30,
    
    June 30,2004
    
    2005
    
    2004
    
    2005Basic Loss Per Share:Numerator:Net loss from
continuing operations
    
    $
    (5,634,340
    )
    
    $
    (24,513,827
    )
    
    $
    (4,436,094
    )
    
    $
    (44,979,661
    )Denominator:Weighted average
common shares
outstanding
    
    
    24,220,419
    
    
    
    24,600,731
    
    
    
    24,082,977
    
    
    
    24,538,937Basic loss per share
    
    $
    (0.23
    )
    
    $
    (1.00
    )
    
    $
    (0.18
    )
    
    $
    (1.84
    )
 7




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##### Table of Contents



Three Months Ended
    
    Nine Months EndedJune 30,
    
    June 30,2004
    
    2005
    
    2004
    
    2005Diluted Loss Per Share:Numerator:
    
    $
    (5,634,340
    )
    
    $
    (24,513,827
    )
    
    $
    (4,436,094
    )
    
    $
    (44,979,661
    )Denominator:Weighted average
shares outstanding
    
    
    24,220,419
    
    
    
    24,600,731
    
    
    
    24,082,977
    
    
    
    24,538,937Potential common stock
outstanding
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    24,220,419
    
    
    
    24,600,731
    
    
    
    24,082,977
    
    
    
    24,538,937Diluted loss per share
    
    $
    (0.23
    )
    
    $
    (1.00
    )
    
    $
    (0.18
    )
    
    $
    (1.84
    )Anti dilutive options and
warrants not included in
earnings per share
calculation
    
    
    4,315,114
    
    
    
    4,342,352
    
    
    
    4,314,312
    
    
    
    4,429,388Price range of anti
dilutive options and
warrants
    
    $
    0.305 to $32.125
    
    
    $
    0.305 to $32.125
    
    
    $
    0.305 to $32.125
    
    
    $
    0.305 to $32.125
 7. Comprehensive Income
  Three Months Ended
    
    Nine Months EndedJune 30,
    
    June 30,2004
    
    2005
    
    2004
    
    2005Net loss
    
    $
    (6,141,426
    )
    
    $
    (31,943,964
    )
    
    $
    (5,590,604
    )
    
    $
    (54,362,917
    )Change in fair
value of long-term
investments
    
    
    (5,062
    )
    
    
    771
    
    
    
    12,142
    
    
    
    1,457Change in fair
value of interest
rate forward
contract
    
    
    91,767
    
    
    
    
    
    
    
    90,872
    
    
    
    (15,521
    )Comprehensive loss
    
    $
    (6,054,721
    )
    
    $
    (31,943,193
    )
    
    $
    (5,487,590
    )
    
    $
    (54,376,981
    )
 8. Intangible Assets and Goodwill
  As of September 30, 2004
    
    As of June 30, 2005Gross Carrying
    
    Accumulated
    
    Gross Carrying
    
    AccumulatedAmount
    
    Amortization
    
    Amount
    
    AmortizationTradenames
    
    $
    3,400,000
    
    
    $
    2,153,333
    
    
    $
    3,400,000
    
    
    $
    2,663,333
  Goodwill
  8




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Current assets
    
    $
    2,596,246Property and equipment
    
    
    1,039,778Goodwill
    
    
    5,250,868Total assets acquired
    
    
    8,886,892Current liabilities
    
    
    1,889,759Assumed debt
    
    
    2,028,183Total liabilities assumed
    
    
    3,917,942Total purchase price
    
    $
    4,968,950
  9. Related-Party Transactions
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10. New Accounting Pronouncements
 Share-Based Payment
   11. Subsequent events
 Officer
Appointments
   Credit Facility Amended
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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 INTRODUCTION
  Accounting for the Impairment or
Disposal of Long Lived Assets
 RESULTS OF OPERATIONS
 THREE MONTHS ENDED JUNE 30, 2005 AS COMPARED TO THREE MONTHS ENDED JUNE 30, 2004
 Total Revenue.
 .
 Cost of Sales and Gross Profit.
 Selling Expenses.
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Corporate, General and Administrative Expenses.
 Amortization of Intangibles.
 Non-cash Compensation Charge.
 Discontinued
Operations. Accounting for the Impairment or Disposal of
Long-Lived Assets
 Restructuring
Charges.
 Interest Expense.
 Gain on Sale of Equity Investment.
 Income from Equity Investment.
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Income
Taxes. Accounting for Income Taxes,
 Seasonality.
 NINE MONTHS ENDED JUNE 30, 2005 AS COMPARED TO NINE MONTHS ENDED JUNE 30, 2004
 Total Revenue. .
 Cost of Sales and Gross Profit .
 Selling Expenses.
 Corporate, General and Administrative Expenses.
 Amortization of Intangibles.
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Non-cash Compensation Charge.
 Discontinued Operations. Accounting for the Impairment or Disposal of
Long-Lived Assets
 Restructuring Charges.
 Interest Expense.
 Interest Income.
 Gain
on Sale of Equity Investment.
 Income from Equity Investment.
 Income
Taxes. Accounting for Income Taxes
 BALANCE
SHEET COMPARISON: JUNE 30, 2005 AS COMPARED TO SEPTEMBER 30, 2004 and JUNE 30, 2004
 Inventory
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Accounts Receivable.
 Current Portion of Long-Term Debt.
 Accounts Payable.
 Rent Related Accruals.
 LIQUIDITY AND CAPITAL RESOURCES
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FORWARD-LOOKING STATEMENTS
  
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   
 ITEM 4. CONTROLS AND PROCEDURES
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PART II. OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 ITEM 5. OTHER INFORMATION
  
 ITEM 6. EXHIBITS
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SIGNATURES
  TWEETER HOME ENTERTAINMENT GROUP, INC.By:
    
    /s/ Joseph G. McGuireJoseph G. McGuire,President and Chief Executive OfficerBy:
    
    /s/ Paul BurmeisterPaul Burmeister,interim Chief Financial Officer