<PAGE>

________________________________________________________________________________
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                 ______________

                                    FORM 10-K

(Mark One)

              [X] Annual Report Pursuant to Section 13 or 15(d) of
                       the Securities Exchange Act of 1934
                    for the fiscal year ended March 30, 2002
                                       or

               [_] Transition Report pursuant Section 13 or 15(d)
                     of the Securities Exchange Act of 1934
             for the transition period from __________ to __________

                           Commission File No. 33-9875
                           ___________________________

                             BOSTON ACOUSTICS, INC.
             (Exact Name of Registrant as Specified in its Charter)

Massachusetts                                               04-2662473
(State or other Jurisdiction                                (I.R.S. Employer
  of Incorporation or                                       Identification No.)
      Organization)

300 Jubilee Drive
Peabody, Massachusetts                                      01960
(Address of Principal Executive Offices)                    (Zip Code)

                                 (978) 538-5000
               (Registrant's Telephone Number,Including Area Code)

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

             None.

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

                8,000,000 shares of Common Stock ($.01 Par Value)
                                (Title of Class)


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 the 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. [X]

The aggregate market value of the voting stock held by non-affiliates of the
registrant was $39,187,949 as of June 3, 2002.

There were 4,595,595 shares of Common Stock issued and outstanding as of June 3,
2002.

________________________________________________________________________________

                       DOCUMENTS INCORPORATED BY REFERENCE

(1)  Registrant's Annual Report to Stockholders for the fiscal year ended March
     30, 2002 (Part II, Items 5, 6, 7, 8 and Part III, Item 14 (a)(1))

(2)  Proxy Statement for Registrant's Annual Meeting of Stockholders to be held
     on August 13, 2002 (Part IV, Items 10, 11, 12 and 13)

<PAGE>


                             BOSTON ACOUSTICS, INC.

Securities and Exchange Commission
 Item Number and Description                                            Page
-----------------------------                                           ----
                                     PART I

ITEM    1.   Business                                                    1

ITEM    2.   Properties                                                  7

ITEM    3.   Legal Proceedings                                           7

ITEM    4.   Submission of Matters to a Vote of Security Holders         7

                                     PART II

ITEM    5.   Market for Registrant's Common Equity
             and Related Stockholder Matters                             8

ITEM    6.   Selected Financial Data                                     8

ITEM    7.   Management's Discussion and Analysis of Financial
             Condition and Results of Operations                         9

ITEM    8.   Financial Statements and Supplementary Data                16

ITEM    9.   Changes in and Disagreements with Accountants on
             Accounting and Financial Disclosure                        16

                                    PART III

ITEM    10.  Directors and Executive Officers of the Registrant         17

ITEM    11.  Executive Compensation                                     17

ITEM    12.  Security Ownership of Certain Beneficial
             Owners and Management                                      17

ITEM    13.  Certain Relationships and Related Transactions             17

                                     PART IV

ITEM    14.  Exhibits, Financial Statement Schedules and
             Reports on Form 8-K                                        18

SIGNATURES                                                              20

INDEX TO FINANCIAL STATEMENT SCHEDULES                                 F-1

Inasmuch as the calculation of shares of the registrant's voting stock held by
non-affiliates requires a calculation of the number of shares held by
affiliates, such figure, as shown on the cover page hereof, represents the
Registrant's best good faith estimate for purposes of this Annual Report on Form
10-K, and the Registrant disclaims that such figure is binding for any other
purpose. The aggregate market value of Common Stock indicated is based upon
$13.05, the price at which the Common Stock was last sold on June 3, 2002 as
reported by The Nasdaq Stock Market. All outstanding shares beneficially owned
by executive officers and directors of the registrant or by any shareholder
beneficially owning more than 10% of registrant's Common Stock, as disclosed
herein, were considered for purposes of this disclosure to be held by
affiliates.

                                       -i-

<PAGE>


                                     Part I

Item 1. Business

Boston Acoustics, Inc. (the "Company", or "Boston") engineers, manufactures, and
markets moderately-priced, high-quality audio systems for use in home audio and
video entertainment systems, in after-market automotive audio systems and in
multimedia computer environments. The Company believes that its products deliver
better sound quality than other comparably priced audio systems. Most of the
Company's products are assembled by the Company from purchased components,
although certain home, automotive and multimedia speakers are manufactured by
others according to Company specifications and under the direction of Boston
Acoustics personnel. All of the Company's products and subassemblies, including
those supplied by outside sources, have been designed or specified by the
Company's engineering department. Boston Acoustics' speakers are marketed
nationwide through selected audio and audio-video specialty dealers and through
distributors in many foreign countries. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations - International
Operations" on Page 15.

The Company was organized as a Massachusetts corporation in 1979 by Andrew G.
Kotsatos, Chairman of the Board, and former Chief Executive Officer, Francis L.
Reed, who passed away in November 1996. Its principal executive offices and
manufacturing facilities are located at 300 Jubilee Drive, Peabody,
Massachusetts.

Products

The Company has determined it has two reportable business industry segments:
Core, and original equipment manufacturer (OEM) and Multimedia. Prior to fiscal
1998, the Company operated as a single segment. The Company's reportable
segments are strategic business units that sell the Company's products to
distinct distribution channels. Both segments derive their revenues from the
sale of audio systems. They are managed separately because each segment requires
distinct selling and marketing strategies, as the class of customers within each
segment is different. Each business segment has distinct product lines as
discussed below.

The Home loudspeaker line consists of four bookshelf models currently ranging in
price from $150 to $400 per pair, four floor-standing systems currently priced
from $500 to $1,600 per pair, a series of hardwood bookshelf and floor-standing
speakers ranging from $700 to $2,700 per pair, two home theater
subwoofer/satellite systems currently priced at $1,000 and $1,500 per system, a
five-piece satellite system priced at $1,500 per system, and four powered
subwoofers priced at $300, $450, $700, and $1,200 each. Additional products for
the home theater market include six different center channel speakers currently
ranging in price from $200 to $600 each, a diffuse-field surround speaker priced
at $800 per pair, and three models of micro satellites which accommodate space
restrictions ranging in price between $100 and $325 each. The Company also
produces magnetically shielded versions of most of its models and produces four
indoor/outdoor speaker systems (Voyager(R) 3, Voyager 2, Voyager Pro, and Grand
Voyager) priced from $220 to $700 per pair. Prices referenced are $U.S.
suggested retail prices.

The Designer line is a collection of speaker systems engineered for installing
in the walls and ceilings of homes, businesses, and recreational vehicles. These
systems are designed to blend into any decor and to be every bit as musical and
exciting as the Company's reference-quality speaker systems.

                                        1

<PAGE>

There are currently 14 speaker models in the Designer line, ranging in price
from $130 to $2,000 per pair, two powered subwoofers priced at $500 each, and
one subwoofer power amplifier priced at $600. The Designer line includes the VRi
series, the 300 series, and the installed powered subwoofer systems.

The Automotive series of products consists of 45 models of after-market
automotive speakers with prices currently ranging from $70 to $750 per pair. The
automotive line includes high-quality full-range replacement speakers,
sophisticated component systems, and subwoofers. The component systems with
system specific crossovers, permit flexible speaker placement and provide sound
rivaling that of fine home speakers. The Company manufactures both raw drivers
and enclosed systems for any installation blueprint. The automotive line
includes the FS Series, the FX Series, the Boston Rally(R) RC Series of
component speakers, the Boston Rally RX Coaxial Series, the Competitor Series
subwoofer and enclosure systems, the Generator Series subwoofers, the Boston
Rally RM Series, and the premium performance ProSeries speaker systems.

The Multimedia category of products which are sold through the Company's
retailers, and through business arrangements with several leading distributors
and computer retailers, consists of five high performance powered
subwoofer/satellite speaker systems for computing environments and are priced
from $30 to $300 per system. The OEM sales of multimedia speaker systems sold to
Gateway, Inc. ("Gateway"), a leading direct marketer of PC products, include the
BA745 subwoofer/satellite system and the BA7800 audio system designed for
desktop theater applications such as DVD movies and PC games. These products are
available either as a component of certain pre-configured computer systems
offered by Gateway, or as an upgrade option on those configurations that do not
include Boston Acoustics' products as standard.

New Products

In fiscal 2002, as in previous years, Boston Acoustics met the challenges of the
changing marketplace with new systems for all of our target markets. These new
products, described below, are intended to supplement or replace those products
which have matured, to increase penetration into current markets, and to gain
footholds in new markets.

In fiscal 2002, the Company expanded its successful range of VR-M series of
loudspeakers with the addition of the VR-M80 and VR-M90 floor-standing speakers.
The VR-M80 and VR-M90 sell for $2,000 and $2,700 per pair, respectively. These
elegant, full-range loudspeakers completed the VR-M line. The Boston Bravo, at
$200 per speaker, was introduced as a versatile product for use as a surround
speaker, a main speaker, or a speaker for background music applications. Its
unique, quarter-cylinder shape allows it to blend seamlessly where any two or
three room surfaces meet. A matching center channel version, the Boston Bravo
Center with a suggested retail of $250, is suitable for placement on top of tube
televisions. The introduction of the System 9500 home theater system provided
dealers with a step-up 5.1 speaker package, where previously the Company had not
offered a speaker system at or near the $1,500 price point. The Unity DVD home
theater system, a $1,000 combination of a Boston 5.1 speaker package with a DVD
player/receiver manufactured by Kenwood Electronics, gave the Company exposure
in the rapidly expanding segment of the consumer electronics marketplace.

During fiscal 2002, the Company added the VRi Series, a reference series
consisting of six in-wall and in-ceiling speakers to its Designer product line.
The VRi560 and VRi580 in-wall speakers, as well as the VRi565 and VRi585
in-ceiling speakers, are designed for use in the finest whole-house music
systems. The VRi553 and VRi593 are designed for use in in-wall home theater
systems. The VRi series features Boston's VR aluminum dome tweeter, a patent
pending tweeter pivoting mechanism, and cast aluminum speaker baffles. The VRi
line is voiced to match Boston's VR-M series of home speakers. The suggested
retails are as follows: the VRi565 is $700 per pair; VRi560,

                                        2

<PAGE>

$800 per pair; VRi585, $900 per pair; Vri580, $1,000 per pair; Vri553, $1,200
per pair; and VRi593, $2,000 per pair.

To complement the Designer line of products, in fiscal 2002, the Company
introduced, a series of installed subwoofers, designed for use when a consumer
wants the low frequency output of a subwoofer, but does not wish to see a box in
the listening room. The series consists of the VRiSub82 in-wall subwoofer, the
Sub10F in-floor subwoofer, and the SA1 subwoofer power amplifier. Each SA1
amplifier will power up to two Sub10Fs, or two VRiSub82s. The suggested retails
of the VRiSub82 and the Sub10F are $500 each and the SA1 is priced at $600.

During fiscal 2002, the Company introduced two new multimedia products, the
BA745 and the BA7800. The BA745 is a compact, self-powered speaker system that
brings dynamic, full-range sound to the desktop for high fidelity playback of
CD's and MP3's, computer games, or DVD movies. It is a three-piece system with
two micro-sized satellites and a sleek subwoofer. Three channels of
amplification are housed in the subwoofer cabinet, one for the subwoofer and two
for the satellites. The system has convenient connections for both headphone and
microphone use located on the right satellite. The BA7800 is a high-powered 4.1
audio system, featuring four high-performance satellite speakers and a potent
8-inch subwoofer. A powerful onboard 5-channel amplifier is actively-equalized
for optimum sound, while Boston's proprietary BassTrac(R) circuitry assures
clean bass at all listening levels. Drawing upon Boston Acoustics' years of
expertise in home theater and music system design, this system delivers
top-of-the-line sound for desktop applications. The BA7800 has both headphone
and microphone jacks conveniently located on the right satellite.

Engineering and Development

The Company's engineering and development department is actively engaged in the
development of new products and manufacturing processes, the improvement of
existing products and the research of new materials for use in the Company's
products. The Company designs or specifies all of its products and
subassemblies, including those supplied by outside sources.

The Company's engineering and development staff includes 51 full-time employees
and five outside consultants. During fiscal years 2000, 2001 and 2002, the
Company spent approximately $5,936,000, $5,316,000, and $5,252,000 respectively,
for engineering and development.

Marketing

The Company employs 22 salespersons and retains 13 manufacturer's
representatives who service the Company's U.S. and Canada dealer network.
In addition, the Company retained the services of two freelance public relations
consultants (one in the United States, one in Europe) to assist in the
professional promotion of the Company and its products. Boston Acoustics' home
audio, Designer Series (in-wall/in-ceiling models) and outdoor speaker products
are distributed in the United States and Canada through approximately 430
selected audio or audio specialist retailers, some of whom have multiple
outlets, and to selected custom installers. The Company's car audio products are
sold through approximately 240 similarly specialized retailers, some of whom
also sell the Company's home audio products. The Company's dealers usually stock
and sell a broad range of audio products including, in most cases, the Company's
competitor's products. The Company seeks dealers who emphasize quality products
and who are knowledgeable about the products they sell. The Company's Multimedia
products are sold through an OEM agreement with Gateway, through the Company's
retailers, and through business arrangements with several leading distributors
and computer retailers. One customer accounted for 44% of net sales in fiscal
2000, 46% in fiscal 2001 and 31% in fiscal 2002.

Boston Acoustics' products are also exported to dealers in Canada and sold
through exclusive distributors in over 50 foreign countries, primarily in
Europe, Asia/Pacific, and South/Central

                                        3

<PAGE>

America. Export sales accounted for approximately 17% of net sales in fiscal
2000, 17% in fiscal 2001 and 15% in fiscal 2002.

The Company emphasizes the high performance-to-price ratio of its products in
its advertising and promotion. Boston Acoustics believes that specialty
retailers can be effective in introducing retail customers to the high dollar
value of the Company's products. The Company directly supports its domestic
dealers and international distributors via a cooperative advertising program,
prepared advertisements, detailed product literature, and point of purchase
materials. The Company also regularly advertises in national specialist
magazines including Sound and Vision, Car Audio and Electronics, Eurotuner
(previously Max Power), Audio Video Interiors, Home Theater, Mobile
Entertainment, Super Street, Sport Compact Car, Sport Truck, and Audio Video
International. During fiscal 2002, the Company spent approximately $2,302,000
(2.8% of net sales) for advertising.

Competition

The Company competes primarily on the basis of product performance, price, and
the strength of its dealer organization.

The market for branded loudspeaker systems is served by many manufacturers, both
foreign and domestic. Many products are available over a broad price range, and
the market is highly fragmented and competitive. The Company distributes its
products primarily through specialty retailers where it competes directly for
space with other branded speaker manufacturers. Audio systems produced by many
of the Company's competitors can be purchased by consumers through mass
merchandisers, department stores, mail-order merchants through the internet and
factory-owned outlet stores. The Company believes it is more advantageous to
distribute through specialty retailers who provide product demonstration,
technical information and service, and face-to-face sales support to consumers.

Boston Acoustics competes with a substantial number of branded speaker
manufacturers, including Bose Corporation, Infinity and JBL (divisions of Harman
International Industries), B&W, Polk Audio, Inc., and Klipsch and Associates,
Inc. Some of these competitors have greater technical and financial resources
than the Company and may have broader brand recognition than Boston Acoustics.

In addition to competition from branded loudspeaker manufacturers, the Company's
products compete indirectly with single name "integrated systems." Integrated
systems contain all the various components needed to form an audio system, and
are sold by Sony, Pioneer, Bose, JVC, Yamaha, and many others. Integrated
systems are generally sold through mass merchandisers and department stores,
although many of the Company's dealers also sell integrated systems. During the
past two years, home theater systems with Integrated DVD video have garnered
significant market share. While these systems were historically sold in mass
merchants or "big box" retailers, the Company's dealers are selling systems at
the higher price point.

Manufacturing and Suppliers

Most of the Company's products are assembled by the Company from components
specially fabricated for the Company, although certain loudspeaker models and
multimedia audio systems are manufactured by others in certain foreign countries
according to Company specifications.

The Company purchases materials and component parts from approximately 220
suppliers located in the United States, Canada, Europe, and the Far East.
Although Boston Acoustics relies on single suppliers for certain parts, the
Company could, if necessary, develop multiple sources of supply for these parts.
The Company does not have long-term fixed price contracts or arrangements for
inventory supplied by any foreign or domestic manufacturers. The Company did
have one inventory supplier, which accounted for more than 10% of the Company's
purchases during fiscal year 2002. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- International Operations" on
page 15.

                                        4

<PAGE>

Seasonality and Consumer Discretion

The home and automotive audio markets are both somewhat seasonal, with a
majority of home speaker retail sales normally occurring in the period October
through March and a majority of automotive speaker retail sales normally
occurring in the period March through September.

The Company's sales and earnings can also be affected by changes in the general
economy since purchases of home entertainment and automotive audio products,
including loudspeakers, are discretionary for consumers.

Selected unaudited quarterly financial data for the Company's last two fiscal
years is presented below:

 Quarterly Financial Data (Amounts in Thousands Except Per Share Data)

<TABLE>
<CAPTION>
                                       First      Second     Third     Fourth
                                      Quarter     Quarter   Quarter    Quarter      Year
<S>                                  <C>        <C>        <C>        <C>         <C>
 Year Ended March 30, 2002
 Net Sales                           $ 19,896   $ 20,539   $ 22,634   $ 20,130    $ 83,199
 Gross Profit                           5,510      6,399      7,883      6,408      26,200
 Net Income                               171        736      1,516      1,487       3,910
 Basic Earnings Per Share                0.03       0.15       0.32       0.32        0.82
 Diluted Earnings Per Share              0.03       0.15       0.32       0.32        0.82

 Year Ended March 31, 2001
 Net Sales                           $ 22,823   $ 34,584   $ 33,682   $ 26,624    $117,713
 Gross Profit                           7,264      9,711      9,529      4,739      31,243
 Net Income (Loss)                      1,149      2,238      1,831     (1,321)      3,897
 Basic Earnings (Loss) Per Share         0.23       0.46       0.37      (0.27)       0.79
 Diluted Earnings (Loss) Per Share       0.23       0.45       0.36      (0.27)       0.79
</TABLE>


Because the Company works on a 5-4-4 week quarter, there is an extra week every
five years. The second quarter of fiscal 2001 represents 14 weeks of sales and
earnings compared to 13 weeks during the second quarter of fiscal 2002. Fiscal
2002, therefore, represents 52 weeks of sales and earnings compared to 53 weeks
during fiscal 2001.

The quarterly sales and earnings pattern in any given year may not be indicative
of quarterly results to be expected in any other year.



Patents and Trademarks

Boston Acoustics holds eleven United States patents and numerous international
patents, which relate to certain audio technologies, assemblies and cabinet
design. The Company also currently has several registered trademarks including
Boston(R), Boston Acoustics(R), PowerVent(R), BassTrac(R), MagnaGuard(R),
Voyager(R), SoundBar(R), Boston Rally(R), DirectVent(R), Kortec(R),
ProSeries(R), SST(R),

                                        5

<PAGE>

VR(R) and RadialVent(R). Trademarks used by the Company's subsidiary, Snell
Acoustics ("Snell") include Snell Acoustics, Snell Multimedia, Snell Music &
Cinema, and Room Ready(R). The Company believes that its growth, competitive
position and success in the marketplace are more dependent on its technical and
marketing skills and expertise than upon the ownership of patent and trademark
rights. There can be no assurance that any patent or trademark would ultimately
be proven valid if challenged.

Significant Customers

The Company's financial results for the fiscal year ended March 30, 2002 include
significant OEM sales of multimedia speaker systems to Gateway. The terms of
these sales are governed by the Master Supply Agreement between Gateway and the
Company which defines such issues as ordering and invoicing procedures, shipping
charges, warranties, repair service support, product safety requirements, etc.
This Master Supply Agreement with Gateway does not contain minimum or scheduled
purchase requirements; therefore, purchase orders by Gateway may fluctuate
significantly from quarter to quarter. Based on information currently available
from our OEM customer, the Company anticipates that our OEM sales should
decrease during the fiscal year ending March 29, 2003. Although the loss of
Gateway as a customer or the loss of any significant portion of orders from
Gateway could have a material adverse effect on the Company's business, results
of operations and financial condition, the Company's management has taken steps
which it believes will mitigate the adverse consequences of the expected decline
in orders from Gateway.

Backlog

The Company currently has no significant backlog. The Company's policy is to
maintain sufficient inventories of finished goods to fill all orders within two
business days of receipt.

Warranties

Boston Acoustics warrants its home speakers to be free from defects in materials
and workmanship for a period of five years, its Designer Series speakers for a
period of two years, its automotive speakers for one year and its multimedia
audio speaker systems for a period of one to three years. During the years ended
March 30, 2002, March 31, 2001, and March 25, 2000, warranty costs recorded by
the Company were approximately $174,000, $270,000, and $221,000, respectively.

Employees

As of May 18, 2002, the Company had 271 full-time employees who were engaged as
follows: 144 in production and materials management; 51 in engineering and
development; 48 in marketing and sales support; and 28 in administration.

None of the Company's employees are represented by a collective bargaining
agreement and the Company believes that its relations with its employees are
satisfactory.

Executive Officers of the Registrant

The information required by this item is incorporated by reference to the
sections entitled "Executive Compensation" in the Registrant's definitive Proxy
Statement for its Annual Meeting of Stockholders to be held August 13, 2002.

                                       6

<PAGE>

Item 2. Properties

The Company owns its principal executive offices and manufacturing facilities
which sit on 15 acres of land at 300 Jubilee Drive, Peabody, Massachusetts.

The Company's subsidiary, Snell Acoustics, leases all of the properties used in
its business. Snell maintains its principal executive offices and manufacturing
facilities at 143 Essex Street, Haverhill, Massachusetts. A total of 65,090
square feet of space is leased from an unrelated party under an operating lease
which expires in September 2002.

Item 3. Legal Proceedings

There are no material legal proceedings affecting the Company.

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

There were no matters submitted to a vote of shareholders during the fourth
quarter of fiscal 2002.

                                       7

<PAGE>

                                     PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder
        Matters

The common stock of Boston Acoustics, Inc. has been listed on the NASDAQ
National Market System under the symbol BOSA since its initial public offering
on December 12, 1986. The following table sets forth high and low closing prices
by quarter as reported by NASDAQ:

                                  Fiscal 2002          High        Low
                                  First Quarter       11.750      10.100
                                  Second Quarter      12.050       8.530
                                  Third Quarter       12.150       8.750
                                  Fourth Quarter      12.000       9.260

                                  Fiscal 2001          High        Low
                                  First Quarter       12.438       9.125
                                  Second Quarter      14.125      10.813
                                  Third Quarter       15.688      12.375
                                  Fourth Quarter      15.625      10.766

There were approximately 107 shareholders of record as of March 30, 2002.
Shareholders who beneficially own common stock held in nominee or street name
are not included in the number of shareholders of record.

Item 6. Selected Financial Data

The selected financial data presented below are derived from the Company's
audited financial statements for each year in the five-year period ended March
30, 2002.

(Amounts in Thousands Except Per Share Data)

<TABLE>
<CAPTION>
                                         2002      2001      2000      1999      1998
<S>                                   <C>      <C>       <C>       <C>        <C>
Income Statement Data
Net Sales                             $83,199  $117,713  $107,998  $117,968   $82,399
Net Income                              3,910     3,897     6,647    11,264     9,576
Basic Earnings Per Share                 0.82      0.79      1.32      2.26      1.83
Diluted Earnings Per Share               0.82      0.79      1.25      2.14      1.74
Weighted Average Shares Outstanding
  Basic                                 4,775     4,914     5,017     4,988     5,232
  Diluted                               4,785     4,962     5,303     5,255     5,512
Dividends Per Share                      0.34      0.34      0.34      0.34      0.33
Balance Sheet Data
Working Capital                       $22,668  $ 32,502  $ 24,702  $ 29,471   $20,319
Total Assets                           48,418    58,032    52,737    53,239    42,499
Shareholders' Equity                   37,998    38,879    36,546    33,872    23,904
</TABLE>

                                       8

<PAGE>

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

Results of Operations

The following table sets forth the results of operations for the years ended
March 30, 2002, March 31, 2001, and March 25, 2000 expressed as percentages of
net sales.

                                                    For the Year Ended

                                         March 30,     March 31,    March 25,
                                           2002         2001          2000
                                        (52 weeks)   (53 weeks)   (52 weeks)
-----------------------------------------------------------------------------

Net sales                                100.0%       100.0%            100.0%

Cost of goods sold                        68.5         73.5              68.8
-----------------------------------------------------------------------------

  Gross profit                            31.5         26.5              31.2

Selling and marketing expenses            12.5         10.8              10.3
General and administrative expenses        5.8          4.6               4.7
Engineering and development expenses       6.3          4.5               5.5
-----------------------------------------------------------------------------
   Total operating expenses               24.6         19.9              20.5
-----------------------------------------------------------------------------

   Income from operations                  6.9          6.6              10.7

Interest income (expense), net            (0.2)        (0.5)             (0.6)

Other expense, net                        (0.1)        (0.4)             (0.1)

  Income before provision for
    income taxes                           6.6          5.7              10.0

Provision for income taxes                 1.9          2.4               3.9
-----------------------------------------------------------------------------

  Net income                               4.7%         3.3%              6.1%
=============================================================================

Fiscal 2002 Compared with Fiscal 2001

Net sales for the fiscal year decreased 29%, to $83.2 million compared to $117.7
million in fiscal 2001. Fiscal 2002 reflects 52 weeks of sales and earnings
compared to 53 weeks during fiscal 2001. The overall sales decrease was the
result of a 53% (approximately $30.9 million) decrease in sales of the OEM and
multimedia segment accompanied with a 6% (approximately $3.6 million) decrease
in sales of the Core business segment compared to fiscal 2001. Both business
segments were negatively impacted by the downturn in the global economy,
particularly the softness in the personal computer business, and International
core sales compared to fiscal 2001. Despite the drop in sales, however, net
income remained essentially the same as a year ago, at $3.9 million, and diluted
earnings per share rose from $0.79 to $.82.

                                       9

<PAGE>

During fiscal 2002, the Company's OEM and multimedia segment sales were
primarily sold through our OEM customer, Gateway, Inc. ("Gateway"), a leading
direct marketer of PC products. The Company's sales to Gateway were primarily
three-piece speaker systems during fiscal 2002 as compared to both three-piece
and two-piece speaker systems in fiscal 2001. During the first nine months of
fiscal 2002, products sold to Gateway included the Digital BA735
subwoofer/satellite system and the Digital BA7500 thin panel audio system
designed for desktop theater applications such as DVD movies and PC games.
During the fourth quarter of fiscal 2002, the Company replaced these two speaker
systems with the BA745 and BA7800, models with enhanced feature sets compared to
the digital models they replaced.

New product introductions throughout fiscal 2002 in the Core home entertainment
product categories contributed to the improvement in our overall operating
results despite the difficult uncertainty in the U.S. economy and international
markets. During the year, the Company expanded its successful range of VR-M
series of loudspeakers with the addition of two floor-standing models. The
VR-M80 and the VR-M90 with suggested retails of $2,000 and $2,700 per pair,
respectively, are available in cherry real wood veneer. The Company introduced
its Boston Bravo(TM), a multi-purpose, compact speaker suitable for use as a
surround speaker, a main speaker or a speaker for background music applications.
The Boston Bravo, available in white or black, retails for $200. A matching
center channel version, the Boston Bravo Center, retailing for $250 each, is
suitable for placement on top of tube televisions. During the third quarter of
fiscal 2002, the Company introduced the new Unity DVD Home Theater System. The
Unity is a co-branded system featuring a high-performance receiver/DVD player
manufactured by Kenwood Corporation and a six-speaker Boston Acoustics' home
theater system, including an 8-inch,100-watt powered subwoofer. The Unity has a
manufacturer's suggested retail price ("MSRP") of $1,000. The Company also
introduced two new home theater six-speaker systems during the fall of 2001. The
System 9000II, with a suggested retail of $1,000, is comprised of two Micro 90x
II front satellite speakers, two Micro 80x II surround speakers, a Micro 90c II
center channel speaker and a matching 10-inch, 120-watt powered subwoofer. The
System 9500, with a suggested retail of $1,500, is a 5.1 speaker package
consisting of a 12-inch, 300-watt powered subwoofer, four Micro 90x II
satellites, and a Micro 90c II center channel. Both the System 9000II and the
System 9500 are available in traditional black finish or buffed silver-gray
finish.

During the second quarter of fiscal 2002, the Company made initial shipments of
its new VRi Series of installed speaker systems consisting of six models of
unique in-wall rectangles and ceiling-mount rounds. The VRi Series, with
suggested retails ranging from $700 to $2,000 per pair, offer high-end in-home
solutions for custom installations. To complement the Designer line of products,
the Company introduced a series of installed subwoofers. The series consists of
the VriSub82 in-wall subwoofer and the Sub10F in-floor subwoofer, both with
suggested retails of $500 each, and the SA1 subwoofer power amplifier which
retails for $600.

The Company's gross margin increased as a percentage of net sales from 26.5% in
fiscal 2001 to 31.5% in fiscal 2002. The increase was primarily the result of
improved manufacturing efficiencies, reduced scrap and rework costs, the
elimination of contract labor and off-site warehousing costs, as well as, lower
inventory write-offs for obsolete and slow-moving inventory as compared to the
same period a year ago. The OEM/Multimedia segment sales, which has lower gross
margins, represented only 32.8% of total net sales during fiscal 2002 as
compared to 49.5% of total net sales in fiscal 2001. The combination of the
smaller portion of OEM/Multimedia segment sales, the introduction of new core
products designed with higher gross margins and the enhanced manufacturing
efficiencies resulted in an improvement in our overall gross margin.

Total operating expenses, despite increasing as a percentage of net sales from
19.9% to 24.6% due to the lower overall sales level, decreased in absolute
dollars by approximately $3.0 million. Selling and marketing expenses have
decreased by approximately $2.2 million primarily due to a decrease in salaries
and related expenses, lower travel expenditures and reduced advertising costs
associated with both the Core and multimedia product categories. General and
administrative expenses have decreased by approximately $664,000. The decrease
is primarily attributable to the write down of the goodwill of Boston Acoustics
Deutschland, GmbH during fiscal 2001, along with a reduction in

                                       10

<PAGE>

certain administrative expenses pertaining to the subsidiary. In addition, the
Company had lower expenses during fiscal 2002 relating to personnel recruitment
and insurance costs. The decrease of approximately $64,000 of engineering and
development expenses is attributed to lower payroll-related expenses, lower
travel expenditures and a decrease in depreciation expenses related to research
and development equipment as compared to the same period a year ago.

Interest expense, net for the fiscal year decreased in both absolute dollars and
as a percentage of net sales compared to the corresponding period a year ago.
The decrease is due to lower borrowing rates and the repayment of $9.0 million
of the Company's outstanding line of credit during fiscal 2002.

Other expense, net for fiscal 2002 included a charge of approximately $69,000
for foreign currency translation losses related to the strength of the USD and
its effect on the Company's foreign subsidiaries.

The Company's effective income tax rate decreased during fiscal 2002 from 42.4%
to 28.5% primarily resulting from the U.S. Company's fourth quarter bad debt
deduction for intercompany receivables from its wholly-owned German subsidiary.
The write-off of this receivable created taxable income in the German subsidiary
that will allow the Company to utilize and benefit the net operating loss
carryforwards associated with the German subsidiary.

Net income for fiscal 2002 remained consistent with fiscal 2001 at approximately
$3.9 million, while diluted earnings per share increased 4% to $0.82 per share
as compared to the same period a year ago. Net income remained consistent in
spite of the 29% reduction in net sales due to increased gross margin
percentages in the Core business, lower percentage of overall sales attributed
to the OEM/Multimedia segment, reduced operating expenses, reduced interest
charges, and a lower effective income tax rate.

Fiscal 2001 Compared with Fiscal 2000

Net sales increased 9%, from approximately $108.0 million in fiscal 2000 to
$117.7 million in fiscal 2001. Because the Company works on a 5-4-4 week
quarter, there is an extra week of sales and operations every five years. The
second quarter of fiscal 2001 represents 14 weeks of sales and earnings compared
to 13 weeks during the second quarter of fiscal 2000. Fiscal 2001, therefore,
represents 53 weeks of sales and earnings compared to 52 weeks during fiscal
2000.

The overall sales increase was due to increases in both business segments during
the first eight months of the fiscal year offset by the slowing economy and
industry-wide decline in U.S. retail sales that began impacting the Core segment
in December 2000. Although the OEM and Multimedia segment reflected an increase
over the corresponding period a year ago, the increase was lower than originally
expected. The overall sales increase in the OEM and Multimedia segment resulted
primarily from sales of the BA65, the Company's first entry-level speaker system
for computers. The BA65, a powered two-piece speaker system that offers
performance similar to Boston's more expensive multimedia products was
introduced in June 2000 and was made available through our OEM customer,
Gateway. In addition, the Company experienced increased sales of its retail
range of multimedia speaker systems offered through Multimedia retail and
distribution channels.

New product introductions in the Core home entertainment product categories
during the second and third quarters of fiscal 2001 contributed to the overall
results of the Core segment. The VR-MC center channel speaker system and the
VR-MX surround speaker were introduced to compliment the VR-M50 and VR-M60
Monitor bookshelf speaker systems introduced last fiscal year. The VR-MC with a
suggested retail of $600 and the VR-MX with a suggested retail of $800 per
pair are both available in cherry or black ash real wood veneer. The Lynnfield
VR910 and VR920 high performance center channel speaker systems with suggested
retails of $350 and $600, respectively, have end caps shaped and colored to
match the design of our Lynnfield VR900 series of floor standing speakers. These
models were introduced during the first quarter of fiscal 2001. Sales of the
PowerVent(R) powered subwoofer systems introduced last fiscal year continued to
augment the Core business and offer high-quality bass reproduction for home
entertainment systems. The CX line of

                                       11

<PAGE>

after-market automotive speakers was replaced by the FX Series during the third
quarter of fiscal 2001. The new FX Series includes nine models ranging from $70
per pair to $140 per pair U.S. (MSRP). In addition, during the last half of the
year, the Company introduced a new entry-level line of component automotive
systems, the FS Series. The FS50 and FS60 with suggested retails of $220 each
and the FS80 with a suggested retail of $230 deliver high quality sound and
broaden our product range of after-market automotive speaker systems.

The Company's gross margin decreased as a percentage of net sales from 31.2% in
fiscal 2000 to 26.5% in fiscal 2001 due to increased production expenses
including those associated with the Company's efforts to complete the
fulfillment of back orders experienced during the first quarter of fiscal 2001.
These expenses included the hiring of temporary contract labor, increased
overtime and rework, as well as higher scrap, freight, and warehousing costs as
compared to the same period a year ago. Gross margins were also negatively
impacted by the sales mix of the OEM/Multimedia segment of sales, which have
lower gross margins and represented a larger portion of total net sales in
fiscal 2001 as compared to fiscal 2000. During the fourth quarter of fiscal
2001, the Company's gross margin was affected by write-offs for obsolete and
slow-moving inventory, rework of specific finished goods inventory, and
restructuring charges related to the cutbacks of personnel in both January and
March of 2001.

During fiscal 2001, total operating expenses increased by approximately $1.3
million but decreased as a percentage of net sales from 20.5% to 19.9%. Selling
and marketing expenses increased by approximately $1.5 million, as well as,
increased as a percentage of net sales primarily due to increased salaries and
benefits relating to additional personnel hired in the beginning of the fiscal
year and increased advertising and related expenditures associated with both the
Core and Multimedia product categories. General and administrative expenses
increased by approximately $354,000 while decreasing slightly as a percentage of
net sales. The increase is attributable to increases in payroll-related costs,
insurance expenses, and the write down of the goodwill associated with the
acquisition of the Company's German subsidiary in fiscal 1999. Engineering and
development expenses decreased by approximately $620,000, as well as, decreased
as a percentage of net sales primarily due to lower consulting fees and lower
outside services as compared to the same period a year ago.

Interest expense, net for the fiscal year decreased by approximately $82,000 and
as a percentage of net sales compared to the corresponding period a year ago,
due to lower borrowing rates, despite an increase in the Company's line of
credit borrowings during the second fiscal quarter of approximately $5 million.

Other expense, net for fiscal 2001 include a charge of approximately $434,000
for foreign currency translation losses related to the strength of the USD and
its effect on the Company's foreign subsidiaries.

The Company's effective income tax rate increased during fiscal 2001 from 38.6%
to 42.4% primarily as a result of the inability to benefit net operating losses
sustained by the Company's subsidiaries outside the U.S., including the foreign
currency translation charge recorded in the fourth quarter and higher state tax
liabilities as compared to a year ago.

Net income decreased 41% to approximately $3.9 million, while diluted earnings
per share decreased 37% to $0.79 per share as compared to the same period a year
ago. The decrease in net income for fiscal 2001 is primarily the result of the
increases in production expenses during the year, inventory rework and
write-downs during the fourth quarter, a change in the product mix in the OEM
and Multimedia business segment resulting in lower gross margins, and higher
foreign currency translation costs as compared to the same period a year ago.

                                       12

<PAGE>

Liquidity and Capital Resources

As of March 30, 2002, the Company's working capital was approximately
$22,668,000, a decrease of approximately $9,800,000 from March 31, 2001. The
decrease in working capital was primarily due to decreases in inventory and
accounts receivable, as well as, an increase in the current maturity of the line
of credit, partially offset by an increase in cash and cash equivalents. At
March 30, 2002, the Company's inventory decreased by approximately $10,252,000
compared to March 31, 2001 levels, primarily as a result of a reduction in
purchases pertaining to both the Core and OEM segments of the business. Cash and
cash equivalents increased by approximately $2,349,000, compared to levels at
the end of fiscal 2001 primarily due to cash provided by operating activities
exceeding cash expended for repayments of the line of credit as well as
purchases of treasury stock. Current liabilities increased by approximately
$1,277,000 to approximately $10,402,000 primarily as a result of an increase in
the current maturity of the line of credit. Long-term debt decreased by
$10,000,000 as a result of repayments of $9,000,000 and a reclassification of
the remaining $1,000,000 to current liabilities during fiscal 2002. The Company
has two lines of credit with two banking institutions totaling $26,500,000. At
March 30, 2002, the Company had borrowings totaling $2,500,000 under its $25
million revolving credit agreement and $0 outstanding under its $1.5 million
revolving credit agreement. On May 1, 2002, the Company renewed its $25 million
revolving credit agreement for a term of three years maturing on July 1, 2005.

Net cash increased in fiscal 2002 and fiscal 2001 by $2,349,000 and $1,279,000,
respectively. Net cash decreased in fiscal 2000 by $590,000. Net cash provided
by operating activities in fiscal years 2002, 2001 and 2000 was approximately
$18,138,000, $1,117,000, and $15,187,000, respectively. Differences in cash
flows from operating activities over this three-year period were primarily
related to significant year-to-year changes in net income, accounts receivable,
inventories and accounts payable. Net cash used in investing activities for
fiscal years 2002, 2001 and 2000 was approximately $1,950,000, $3,323,000, and
$4,483,000, respectively. Net cash used in investing activities in fiscal years
2002, 2001 and 2000 were for improvements to the existing facility and purchases
of property and equipment. Net cash (used in) provided by financing activities
in fiscal years 2002, 2001 and 2000 was approximately ($13,840,000), $3,485,000,
and ($11,294,000), respectively. In fiscal 2002, net cash used in financing
activities included $9,000,000 of repayments of borrowings under one of the
Company's credit facilities. In addition, during fiscal 2002, the Company
repurchased 332,200 shares of common stock for approximately $3,192,000. In
fiscal 2001, net cash provided by financing was the result of net borrowings
under one of the Company's line of credit of approximately $5,048,000. In fiscal
2000, net cash used in financing activities included $7,313,000 of net
repayments of borrowings under one of the Company's credit facilities. In
addition, during fiscal 2000, the Company repurchased 172,500 shares of common
stock for approximately $2,428,000.

The Company believes that its current resources are adequate to meet its
requirements for working capital and capital expenditures at least through
fiscal 2003.

Critical Accounting Policies

Our significant accounting policies are described in Note 1 to the consolidated
financial statements included in Item 8 of this Form 10-K. We believe that our
most critical accounting policies include revenue recognition, sales returns and
other allowances and allowance for bad debts, and inventory related reserves.

   Revenue Recognition

         We recognize revenue in accordance with the Securities and Exchange
         Commission's Staff Accounting Bulletin 101 ("SAB 101"), Revenue
         Recognition.

         Revenue is recognized when products are (1) shipped to customers
         provided that there are no uncertainties regarding customer acceptance,
         (2) when the sales price is fixed or determinable and (3) collection
         of the related receivable is probable. At the time of revenue
         recognition, we provide reserves for sales returns and rebates, timely

                                       13

<PAGE>

         pay discounts, and freight reserves. The determination of criteria (4)
         and (5) are based on management's judgements regarding the fixed nature
         of sales price for the products delivered and the collectibility of
         those amounts. At the time of revenue recognition, we accrue a warranty
         reserve for estimated costs to provide warranty services. Our estimate
         of costs to service our warranty obligations is based on historical
         experience and expectation of future conditions.

   Sales returns and other allowances, and allowance for bad debts

         Our management must make estimates of potential future product returns
         related to current period product revenue. Management analyzes
         historical returns, current economic trends and changes in customer
         demand for our products when evaluating the adequacy of the reserve for
         sales returns and other allowances. Significant management judgements
         and estimates must be made and used in connection with establishing the
         sales returns and other allowances in any accounting period. Similarly,
         our management must make estimates of the uncollectibility of our
         accounts receivable. Management specifically analyzes accounts
         receivable and historical bad debts, customer concentrations, customer
         credit-worthiness, current economic trends and changes in our customer
         payment terms when evaluating the adequacy of the allowance for
         doubtful accounts. Historically, we have not experienced any
         significant losses related to individual customers or groups of
         customers in any particular industry or geographic area.

   Inventories

         Inventories are stated at the lower of cost (first-in, first-out) or
         market and consist of raw material and work-in-process and finished
         goods. Work-in-process and finished goods inventories consist of
         materials, labor and manufacturing overhead.

         We value our inventory at the lower of the actual cost to purchase
         and/or manufacture the inventory or the current estimated market value
         of the inventory. We regularly review inventory quantities on hand and
         record a provision for excess and obsolete inventory based primarily on
         our estimated forecast of product demand and production requirements
         for the next twelve months. As demonstrated during 2001, demand for our
         products can fluctuate significantly. A significant increase in the
         demand for our products could result in a short-term increase in the
         cost of inventory purchases while a significant decrease in demand
         could result in an increase in the amount of excess inventory
         quantities on hand.

New Accounting Standards

In July 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of Financials Accounting Standards ("SFAS") No. 141, Business Combinations. SFAS
No. 141 requires all business combinations initiated after June 30, 2001 to be
accounted for using the purchase method. This statement is effective for all
business combinations initiated after June 30, 2001.

In July 2001, the FASB issued SFAS No. 142, Goodwill and Other Intangible
Assets. This statement applies to goodwill and intangible assets acquired after
June 30, 2001, as well as goodwill and intangible assets previously acquired.
Under this statement, goodwill as well as certain other intangible assets
determined to have an infinite life will no longer be amortized; instead, these
assets will be reviewed for impairment on a periodic basis. This statement is
effective for the Company for the first quarter in the fiscal year ended March
29, 2003. The Company's adoption of SFAS No.141 and 142 is not expected to have
a material impact on the Company's consolidated financial statements.

In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or
Disposal of Long-lived Assets, which supercedes SFAS No. 121. SFAS No. 144
further refines the requirements of SFAS No. 121 that companies (i) recognize an
impairment loss only if the carrying amount of a long-lived asset is not
recoverable based on its undiscounted future cash flows and (ii) measure an

                                       14

<PAGE>

impairment loss as the difference between the carrying amount and the fair value
of the asset. In addition, SFAS No. 144 provides guidance on accounting and
disclosure issues surrounding long-lived assets to be disposed of by sale. This
statement is effective for the Company for the first quarter in the fiscal year
ended March 29, 2003. The Company does not believe the adoption of this
statement will have a material impact on its financial position.

Quantitative and Qualitative Disclosures about Market Risk

(a)  Derivative Financial Instruments, Other Financial Instruments, and
     Derivative Commodity Instruments.

As of March 30, 2002, the Company did not participate in any derivative
financial instruments, or other financial and commodity instruments for which
fair value disclosure would be required under SFAS No. 107. All of the Company's
investments are considered cash equivalents and consist of money market
accounts. Accordingly, the Company has no quantitative information concerning
the market risk of participating in such investments.

(b)  Primary Market Risk Exposures

The Company's primary market risk exposures are in the areas of interest rate
risk and foreign currency exchange rate risk. The Company's investment portfolio
of cash equivalents is subject to interest rate fluctuations, but the Company
believes this risk is immaterial due to the short-term nature of these
investments.

For the year ended March 30, 2002, foreign currency translation losses were
approximately $69,000 and were the result of a strong USD as compared to the
foreign currencies of the Company's subsidiaries. As of March 30, 2002, the
Company had not engaged in any foreign currency hedging activities.

Significant Customers

The Company's financial results for the fiscal year ended March 30, 2002 include
significant OEM sales of multimedia speaker systems to Gateway. During fiscal
2002, Gateway accounted for 31% of the Company's net sales. The terms of these
sales are governed by the Master Supply Agreement between Gateway and the
Company which defines such issues as ordering and invoicing procedures, shipping
charges, warranties, repair service support, product safety requirements, etc.
This Master Supply Agreement with Gateway does not contain minimum or scheduled
purchase requirements; therefore, purchase orders by Gateway may fluctuate
significantly from quarter to quarter. Based on information currently available
from our OEM customer, the Company anticipates that our OEM sales should
decrease during fiscal 2003 as compared to fiscal 2002. Although the loss of
Gateway as a customer or the loss of any significant portion of orders from
Gateway could have a material adverse effect on the Company's business, results
of operations and financial condition, the Company's management has taken steps
which it believes will mitigate the adverse consequences of the expected decline
in orders from Gateway.

International Operations

Export sales accounted for approximately 15% of the Company's net sales during
fiscal 2002 and 17% during fiscal 2001 and fiscal 2000, respectively, with sales
concentrations in Europe, Asia and Canada. The Company also distributes its
products through its three foreign subsidiaries. The Company obtains a
substantial supply of inventory from manufacturers located in foreign countries.
The Company has no long-term, fixed price contracts or arrangements for
inventory supplied by such foreign manufacturers. The Company could readily
obtain such inventory from other sources, but there can be no assurance that it
would not be at some delay. Any substantial delay in obtaining inventory from
another supplier could have an adverse effect on the Company's business, results
of operations and financial condition. A number of factors beyond the control of
the Company, including, but not limited to, changes in world politics, unstable
governments in foreign customer and

                                       15

<PAGE>

manufacturer nations and inflation, may affect the operations or financial
condition of the Company's foreign customers and manufacturers, as well as the
timing of orders and deliveries of Boston Acoustics' products by such customers
and manufacturers.

Cautionary Statements

The Private Securities Litigation Reform Act of 1995 contains certain safe
harbors regarding forward-looking statements. From time to time, information
provided by the Company or statements made by its directors, officers, or
employees may contain "forward-looking" information which involve risk and
uncertainties. Any statements in this report that are not statements of
historical fact are forward-looking statements (including, but not limited to,
statements concerning the characteristics and growth of the Company's market and
customers, the Company's objectives and plans for future operations, and the
Company's expected liquidity and capital resources). Such forward-looking
statements are based on a number of assumptions and involve a number of risks
and uncertainties, and accordingly, actual results could differ materially.
Factors that may cause such differences include, but are not limited to: the
continued and future acceptance of the Company's products, the rate of growth in
the audio industry; the presence of competitors with greater technical,
marketing and financial resources; the Company's ability to promptly and
effectively respond to technological change to meet evolving consumer demands;
capacity and supply constraints or difficulties; and the Company's ability to
successfully integrate new operations. The words "believe," "expect,"
"anticipate," "intend" and "plan" and similar expressions identify
forward-looking statements. Readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date the statement
was made. For a further discussion of these and other significant factors to
consider in connection with forward-looking statements concerning the Company,
reference is made to Exhibit 99 of the Company's Form 8-K filed on July 18,
1996.

Item 8. Financial Statements and Supplementary Data

The Financial Statements of the Company are set forth following Page 20 of this
report.

Item 9. Changes in and Disagreements with Accountants on Accounting
        and Financial Disclosure

None.

                                       16

<PAGE>

                                    PART III

Item 10. Directors and Executive Officers of the Registrant

Pursuant to General Instruction G (3) of Form 10-K and Instruction 3 to Item
401(b), the information required by this item concerning executive officers,
including certain information incorporated herein by reference to the
information appearing in the Company's definitive Proxy Statement for its Annual
Meeting of Stockholders to be held on August 13, 2002 concerning Andrew G.
Kotsatos, who is the Chairman of the Board and Treasurer of the Company, Moses
A. Gabbay, Chief Executive Officer of the Company, and Allan J. Evelyn,
President, is set forth in Part I, Item 1, hereof, under the heading "Executive
Officers of the Registrant". Information concerning Directors, including Messrs.
Kotsatos, Gabbay and Evelyn, is incorporated by reference to the sections
entitled "Proposal No. 1 - Election of Directors", "Board of Directors" and
"Compensation Interlocks and Insider Participation" in the Registrant's
definitive Proxy Statement for its Annual Meeting of Stockholders to be held
August 13, 2002.

There is incorporated herein by reference to the discussion under "Compliance
with Section 16(a) of the Securities Exchange Act of 1934" in the Company's
definitive Proxy Statement for its Annual Meeting of Stockholders to be held
August 13, 2002 the information with respect to delinquent filings of reports
pursuant to Section 16(a) of the Securities Exchange Act of 1934.

Item 11. Executive Compensation

The information required by this item is incorporated by reference to the
sections entitled "Executive Compensation" in the Registrant's definitive Proxy
Statement for its Annual Meeting of Stockholders to be held August 13, 2002.

Item 12. Security Ownership of Certain Beneficial Owners and
         Management

The information required by this item is incorporated by reference to the
section entitled "Principal and Management Stockholders" in the Registrant's
definitive Proxy Statement for its Annual Meeting of Stockholders to be held
August 13, 2002.

Item 13. Certain Relationships and Related Transactions

The information required by this item is incorporated by reference to the
section entitled "Certain Relationships and Transactions" in the Registrant's
definitive Proxy Statement for its Annual Meeting of Stockholders to be held
August 13, 2002.

                                       17

<PAGE>

                                     PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form
         8-K.

(a) The following documents are included as part of this report:

         (1) Financial Statements

         See the Index to Financial Statements following Page 20 of this report.

         (3) Listing of Exhibits

                  Exhibits
                  --------

         3.1.         -  Articles of Organization (1)
         3.2.         -  Amendment to Articles of Organization (1)
         3.3.         -  Second Amendment to Articles of Organization (1)
         3.4.         -  Bylaws (1)
         4.1.         -  Specimen Share Certificate (1)
         10.1.+       -  1996 Stock Plan adopted by Boston Acoustics, Inc.
                         on February 20, 1996, as amended (3)
         10.2.+       -  1986 Incentive Stock Option Plan adopted by Boston
                         Acoustics, Inc. on October 15, 1986, as amended (2)
         10.3.+       -  1997 Stock Plan adopted by Boston Acoustics, Inc. on
                         May 28, 1997, as amended (7)
         10.4.#       -  Purchase Agreement dated March 27, 1997 by and between
                         Gateway 2000, Inc. and Boston Acoustics, Inc. (3)
         10.5.#       -  Letter of Agreement dated January 14, 1997 by and
                         between Gateway 2000, Inc. and Boston Acoustics, Inc.
                         (3)
         10.6.#       -  Master Supply Agreement dated July 19, 1999 by and
                         between Gateway, Inc. and Boston Acoustics, Inc. (4)
         10.7.#       -  Letter of Agreement dated December 22, 1997 by and
                         between Gateway 2000, Inc. and Boston Acoustics,
                         Inc. (5)
         10.8.#       -  Letter of Agreement dated May 14, 1998 by and between
                         Gateway 2000, Inc. and Boston Acoustics, Inc. (8)
         10.9. *      -  Amended and Restated Loan Agreement dated as of May 1,
                         2002 between Boston Acoustics, Inc. and Citzens Bank
                         of Massachusetts.
         10.10.*      -  Amended and Restated Revolving Credit Note dated as of
                         May 1, 2002 in the amount of $25,000,000 made by
                         Boston Acoustics, Inc. payable to the order of Citizens
                         Bank of Massachusetts.
         13.   **     -  2002 Annual Report to Shareholders
         21.          -  Subsidiaries of the Registrant (3)
         23.   *      -  Consent of Independent Public Accountants
         99.1         -  "Safe Harbor" Statement under Private Securities
                         Litigation Reform Act of 1995 (6)
         99.2*        -  Letter to the Securities and Exchange Commission
                         regarding Arthur Andersen LLP

                                       18

<PAGE>

*    Indicates an exhibit which is filed herewith.
**   Indicates an exhibit which is filed subsquently.
+    Indicates an exhibit which constitutes an executive compensation plan.
#    Indicates that portions of the exhibit have been omitted pursuant to an
     order granting a request for confidential treatment.

___________________

(1)  Incorporated by reference to the similarly numbered exhibits in Part II of
the Company's Registration Statement on Form S-1, File No. 33-9875.

(2)  Incorporated by reference to the similarly numbered exhibit in Item 14 of
the Company's Annual Report on Form 10-K for the year ended March 27, 1993.

(3)  Incorporated by reference to the similarly numbered exhibit in Item 14 of
the Company's Annual Report on Form 10-K for the fiscal year ended March 29,
1997.

(4)  Incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report
on Form 10-Q for fiscal quarter ended September 25, 1999.

(5)  Incorporated by reference to Exhibit 10.A. to the Company's Quarterly
Report on Form 10-Q for the fiscal quarter ended December 27, 1997.

(6)  Incorporated by reference to the similarly numbered exhibit in Item 14 of
the Company's Annual Report on Form 10-K for the fiscal year ended March 30,
1996.

(7)  Incorporated by reference to Exhibit 4.1. to the Company's Registration
Statement on Form S-8, File No. 333-84714.

(8)  Incorporated by reference to Exhibit 10.L. to the Company's Annual Report
on Form 10-K for the fiscal year ended March 28, 1998.


(b)    Reports on Form 8-K

No reports on Form 8-K were filed by the Registrant during the last quarter
covered by this report, and no other such reports were filed subsequent to March
30, 2002 through the date of this report.

                                       19

<PAGE>


                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Peabody,
Commonwealth of Massachusetts, on the 3rd day of June 2002.

                                            BOSTON ACOUSTICS, INC.
                                             (Registrant)


                                            BY: s/ Andrew G. Kotsatos
                                                -------------------------------
                                                Andrew G. Kotsatos
                                                Chairman of the Board

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

Signatures                     Capacities                                  Date

s/ Andrew G. Kotsatos                                                    6/03/02
----------------------------   Director, Chairman of the
Andrew G. Kotsatos             Board and Treasurer

s/ Moses A. Gabbay                                                       6/03/02
----------------------------   Director and Chief Executive
Moses A. Gabbay                Officer

s/ Allan J. Evelyn                                                       6/03/02
----------------------------   Director and President
Allan J. Evelyn

s/ Debra A. Ricker-Rosato                                                6/03/02
----------------------------   Vice President and
Debra A. Ricker-Rosato         Chief Accounting Officer

s/ Alexander E. Aikens, III                                              6/03/02
----------------------------   Director
Alexander E. Aikens, III

s/ George J. Markos                                                      6/03/02
----------------------------   Director
George J. Markos

s/ Lisa M. Mooney                                                        6/03/02
----------------------------   Director
Lisa M. Mooney

s/ Fletcher H. Wiley                                                     6/03/02
----------------------------   Director
Fletcher H. Wiley

                                       20

<PAGE>

Index



                                                                        Page

Report of Independent Public Accountants                                   1

Consolidated Balance Sheets--March 30, 2002 and
March 31, 2001                                                             2

Consolidated Statements of Income for the Years Ended
March 30, 2002, March 31, 2001 and March 25, 2000                          3

Consolidated Statements of Shareholders' Equity for the
Years Ended March 30, 2002, March 31, 2001 and March 25, 2000              4

Consolidated Statements of Cash Flows for the Years
Ended March 30, 2002, March 31, 2001 and March 25, 2000                    5

Notes to Consolidated Financial Statements                              6-19







                                      F-1

<PAGE>

Report of Independent Public Accountants


To Boston Acoustics, Inc. and Subsidiaries:

We have audited the accompanying consolidated balance sheets of Boston
Acoustics, Inc. (a Massachusetts corporation) and subsidiaries (the Company) as
of March 30, 2002 and March 31, 2001 and the related consolidated statements of
income, shareholders' equity and cash flows for each of the three years in the
period ended March 30, 2002. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these consolidated financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Boston Acoustics,
Inc. and subsidiaries as of March 30, 2002 and March 31, 2001 and the results of
their operations and their cash flows for each of the three years in the period
ended March 30, 2002 in conformity with accounting principles generally accepted
in the United States.


/s/ Arthur Andersen LLP
Arthur Andersen LLP
Boston, Massachusetts
May 13, 2002

1

<PAGE>

BOSTON ACOUSTICS, INC. AND SUBSIDIARIES

Consolidated Balance Sheets



<TABLE>
<CAPTION>
                                                                             March 30,       March 31,
Assets                                                                         2002            2001
<S>                                                                        <C>             <C>
Current Assets:
   Cash and cash equivalents                                               $  5,134,558    $  2,785,846
   Accounts receivable, net of allowance for doubtful
     accounts of approximately $366,000 and $385,000
     in 2002 and 2001, respectively                                          10,830,538      11,426,411
   Inventories                                                               14,370,308      24,622,417
   Deferred income taxes                                                      1,724,000       2,044,000
   Prepaid expenses and other current assets                                  1,010,792         747,844
                                                                           ------------    ------------

         Total current assets                                                33,070,196      41,626,518
                                                                           ------------    ------------

Property and Equipment, at cost:
   Machinery and equipment                                                   16,833,179      15,132,205
   Building and improvements                                                  8,795,567       8,816,515
   Office equipment and furniture                                             5,067,810       4,907,967
   Land                                                                       1,815,755       1,815,755
   Motor vehicles                                                               255,956         253,164
                                                                           ------------    ------------

                                                                             32,768,267      30,925,606


   Less--Accumulated depreciation and amortization                           18,848,303      15,533,147
                                                                           ------------    ------------

                                                                             13,919,964      15,392,459
                                                                           ------------    ------------

Other Assets, Net                                                             1,428,286       1,012,671
                                                                           ------------    ------------



                                                                           $ 48,418,446    $ 58,031,648
                                                                           ============    ============


<CAPTION>
                                                                             March 30,       March 31,
Liabilities and Shareholders' Equity                                           2002            2001
<S>                                                                        <C>             <C>
Current Liabilities:
   Accounts payable                                                        $  5,230,684    $  2,743,371
   Accrued payroll and payroll-related expenses                               1,185,529       1,779,942
   Dividends payable                                                            390,626         418,990
   Other accrued expenses                                                     1,095,369       2,682,654
   Current maturity of line of credit                                         2,500,000       1,500,000
                                                                           ------------    ------------



         Total current liabilities                                           10,402,208       9,124,957
                                                                           ------------    ------------

Line of Credit, Net of Current Maturity                                               -      10,000,000
                                                                           ------------    ------------

Commitments (Note 9)

Minority Interest in Joint Venture                                               18,265          27,325
                                                                           ------------    ------------


Shareholders' Equity:
   Common stock, $0.01 par value-
     Authorized--8,000,000 shares
     Issued--5,100,314 and 5,101,814 shares in
       2002 and 2001, respectively                                               51,003          51,018
   Additional paid-in capital                                                 1,191,988       1,191,973
   Subscriptions receivable                                                    (272,917)       (292,417)
   Retained earnings                                                         42,648,558      40,357,136
                                                                           ------------    ------------

                                                                             43,618,632      41,307,710

   Less--Treasury stock, 504,700 and 172,500 shares in
   2002 and 2001, respectively, at cost                                       5,620,659       2,428,344
                                                                           ------------    ------------

         Total shareholders' equity                                          37,997,973      38,879,366
                                                                           ------------    ------------

                                                                           $ 48,418,446    $ 58,031,648
                                                                           ============    ============
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

2

<PAGE>

BOSTON ACOUSTICS, INC. AND SUBSIDIARIES

Consolidated Statements of Income

<TABLE>
<CAPTION>
                                                                                  For the Year Ended
                                                                                  ------------------
                                                                    March 30, 2002   March 31, 2001  March 25, 2000
<S>                                                                 <C>              <C>             <C>
Net Sales                                                           $   83,198,583   $  117,712,559  $  107,997,650

Cost of Goods Sold                                                      56,998,493       86,469,935      74,248,866
                                                                    --------------   --------------  --------------

         Gross profit                                                   26,200,090       31,242,624      33,748,784
                                                                    --------------   --------------  --------------

Selling and Marketing Expenses                                          10,446,858       12,689,399      11,166,266

General and Administrative Expenses                                      4,806,545        5,470,738       5,116,648

Engineering and Development Expenses                                     5,252,466        5,316,005       5,935,690
                                                                    --------------   --------------  --------------

         Total operating expenses                                       20,505,869       23,476,142      22,218,604
                                                                    --------------   --------------  --------------

         Income from operations                                          5,694,221        7,766,482      11,530,180

Interest Income                                                            155,910          120,241         111,941

Interest Expense                                                          (310,773)        (681,624)       (754,982)

Other Expense, Net                                                         (68,959)        (433,782)        (65,622)
                                                                    --------------   --------------  --------------

         Income before provision for income taxes                        5,470,399        6,771,317      10,821,517

Provision for Income Taxes                                               1,560,000        2,874,000       4,175,000
                                                                    --------------   --------------  --------------

         Net income                                                 $    3,910,399   $    3,897,317  $    6,646,517
                                                                    ==============   ==============  ==============

Net Income per Share:
   Basic                                                            $         0.82   $         0.79  $         1.32
                                                                    ==============   ==============  ==============
   Diluted                                                          $         0.82   $         0.79  $         1.25
                                                                    ==============   ==============  ==============

Weighted Average Common Shares Outstanding (Note 2):
   Basic                                                                 4,774,746        4,914,206       5,016,954
                                                                    ==============   ==============  ==============
   Diluted                                                               4,784,926        4,962,027       5,302,734
                                                                    ==============   ==============  ==============

Dividends per Share                                                 $         0.34   $         0.34  $         0.34
                                                                    ==============   ==============  ==============
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

3

<PAGE>

BOSTON ACOUSTICS, INC. AND SUBSIDIARIES

Consolidated Statements of Shareholders' Equity

<TABLE>
<CAPTION>
                                              Common Stock       Additional                                               Total
                                          Number of   $0.01 Par   Paid-in    Subscriptions    Retained     Treasury    Shareholders'
                                           Shares       Value     Capital      Receivable     Earnings       Stock        Equity
<S>                                       <C>         <C>        <C>         <C>             <C>          <C>           <C>
Balance, March 27, 1999                   5,011,700   $  50,117  $  636,581  $           -   $33,185,516  $         -   $33,872,214

   Exercise of stock options and
   warrants                                  69,064         690     281,953       (126,667)            -            -       155,976

   Dividends                                      -           -           -              -    (1,700,121)           -    (1,700,121)

   Purchase of 172,500 shares of
   common stock                                   -           -           -              -             -   (2,428,344)   (2,428,344)

   Net income                                     -           -           -              -     6,646,517            -     6,646,517
                                          ---------   ---------  ----------  -------------   -----------  -----------   -----------

Balance, March 25, 2000                   5,080,764      50,807     918,534       (126,667)   38,131,912   (2,428,344)   36,546,242

   Exercise of stock options                 21,050         211     273,439       (209,950)            -            -        63,700

   Repayment of subscriptions
   receivable                                     -           -           -         44,200             -            -        44,200

   Dividends                                      -           -           -              -    (1,672,093)           -    (1,672,093)

   Net income                                     -           -           -              -     3,897,317            -     3,897,317
                                          ---------   ---------  ----------  -------------   -----------  -----------   -----------

Balance, March 31, 2001                   5,101,814      51,018   1,191,973       (292,417)   40,357,136   (2,428,344)   38,879,366

   Repurchase of common stock and
   forgiveness of subscription receivable    (1,500)        (15)         15         19,500             -            -        19,500

   Purchase of 332,200 shares of
   common stock                                   -           -           -              -             -   (3,192,315)   (3,192,315)

   Dividends                                      -           -           -              -    (1,618,977)           -    (1,618,977)

   Net income                                     -           -           -              -     3,910,399            -     3,910,399
                                          ---------   ---------  ----------  -------------   -----------  -----------   -----------

Balance, March 30, 2002                   5,100,314   $  51,003  $1,191,988  $    (272,917)  $42,648,558  $(5,620,659)  $37,997,973
                                          =========   =========  ==========  =============   ===========  ===========   ===========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

4

<PAGE>

BOSTON ACQUSTICS, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>

                                                                                    For the Year Ended
                                                                     March 30, 2002    March 31, 2001   March 25, 2000
<S>                                                                 <C>               <C>              <C>
Cash Flows from Operating Activities:
   Net income                                                       $     3,910,399   $     3,897,317  $     6,646,517
   Adjustments to reconcile net income to net cash provided by
   operating activities-
     Depreciation and amortization                                        3,317,849         3,737,753        2,740,763
     Deferred income taxes                                                        -          (597,000)         (72,000)
     Changes in assets and liabilities, net of acquisition-
       Accounts receivable                                                  595,873         1,206,221          (45,713)
       Inventories                                                       10,252,109        (5,288,902)       2,318,332
       Prepaid expenses and other current assets                           (262,948)          277,025         (546,695)
       Accounts payable                                                   2,487,313        (3,258,787)       3,536,957
       Accrued payroll and other accrued expenses                        (2,162,198)        1,143,124          968,745
       Accrued income taxes                                                       -                 -         (359,689)
                                                                    ---------------   ---------------  ---------------

         Net cash provided by operating activities                       18,138,397         1,116,751       15,187,217
                                                                    ---------------   ---------------  ---------------

Cash Flows from Investing Activities:
   Purchases of property and equipment                                   (1,842,661)       (3,275,681)      (4,090,642)
   Increase in other assets                                                (107,368)          (47,274)        (392,093)
                                                                    ---------------   ---------------  ---------------

         Net cash used in investing activities                           (1,950,029)       (3,322,955)      (4,482,735)
                                                                    ---------------   ---------------  ---------------

Cash Flows from Financing Activities:
   Proceeds from exercise of stock options                                        -            63,700          155,976
   Net proceeds from (payments on) line of credit                        (9,000,000)        5,047,713       (7,312,731)
   Purchase of treasury stock                                            (3,192,315)                -       (2,428,344)
   Dividends paid                                                        (1,647,341)       (1,670,304)      (1,708,888)
   Repayment of subscriptions receivable                                          -            44,200                -
                                                                    ---------------   ---------------  ---------------

         Net cash (used in) provided by financing activities            (13,839,656)        3,485,309      (11,293,987)
                                                                    ---------------   ---------------  ---------------

Net Increase (Decrease) in Cash and Cash Equivalents                      2,348,712         1,279,105         (589,505)

Cash and Cash Equivalents, beginning of fiscal year                       2,785,846         1,506,741        2,096,246
                                                                    ---------------   ---------------  ---------------

Cash and Cash Equivalents, end of fiscal year                       $     5,134,558   $     2,785,846  $     1,506,741
                                                                    ===============   ===============  ===============

Supplemental Disclosure of Noncash Financing and Investing
Activities:
   Dividends payable                                                $       390,626   $       418,990  $       417,201
                                                                    ===============   ===============  ===============
   Forgiveness of subscription receivable                           $        19,500   $             -  $             -
                                                                    ===============   ===============  ===============
   Exercise of stock options through the issuance of
     subscriptions receivable                                       $             -   $       209,950  $       126,667
                                                                    ===============   ===============  ===============
   Minority interest in foreign subsidiary                          $         9,060   $        27,325  $             -
                                                                    ===============   ===============  ===============

Supplemental Disclosure of Cash Flow Information:
   Cash paid for income taxes                                       $     2,339,290   $     3,161,000  $     5,446,130
                                                                    ===============   ===============  ===============
   Cash paid for interest                                           $       348,296   $       658,387  $       768,878
                                                                    ===============   ===============  ===============
</TABLE>



The accompanying notes are an integral part of these consolidated financial
statements.

5

<PAGE>

BOSTON ACOUSTICS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements
March 30, 2002


(1)  OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES

     Boston Acoustics, Inc. and subsidiaries (the Company) engineers,
     manufactures and markets home loudspeakers, automotive speakers and
     speakers for multimedia environments. The Company's products are
     principally marketed in the United States, Canada, Europe and Asia through
     selected audio and audio-video specialty dealers and distributors.

     The accompanying consolidated financial statements reflect the operations
     of Boston Acoustics Inc., its wholly-owned subsidiaries: BA Acquisition
     Corp. (also known as Snell Acoustics); Boston Acoustics Securities
     Corporation (a Massachusetts securities corporation); Boston Acoustics
     Foreign Sales Corporation; Boston Acoustics Italia, S.r.l (an Italian
     corporation) and Boston Acoustics Deutschland, GmbH (a German corporation),
     and its majority-owned subsidiary, Boston Acoustics UK, Ltd. (a United
     Kingdom corporation). During fiscal 2001, the Company contributed
     approximately $27,000 to become a 51% owner of Boston Acoustics UK, Ltd.
     The Company has recorded the remaining 49% interest in Boston Acoustics UK,
     Ltd. (approximately $27,000) as a minority interest on the accompanying
     consolidated balance sheets. All significant intercompany amounts have been
     eliminated in consolidation.

     The accompanying consolidated financial statements reflect the application
     of the following significant accounting policies:

     (a)  Revenue Recognition

          The Company recognizes revenue in accordance with the Securities and
          Exchange Commission's Staff Accounting Bulletin 101 (SAB 101), Revenue
          Recognition.

          Revenue is recognized when products are shipped to customers, provided
          that there are no uncertainties regarding customer acceptance, there
          is persuasive evidence of an arrangement, the sales price is fixed or
          determinable and collection of the related receivable is probable.

          At the time of revenue recognition, the Company provides reserves for
          sales returns and rebates, timely pay discounts, and freight reserves.

     (b)  Cash and Cash Equivalents

          The Company considers all highly liquid investments with original
          maturities of 90 days or less to be cash equivalents.

6

<PAGE>

BOSTON ACOUSTICS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements
March 30, 2002


     (c)  Inventories

          Inventories are stated at the lower of cost (first-in, first-out) or
          market and consist of the following:

                                                March 30, 2002   March 31, 2001

            Raw materials and work-in-process   $    5,662,983   $    8,374,305
            Finished goods                           8,707,325       16,248,112
                                                --------------   --------------

                                                $   14,370,308   $   24,622,417
                                                ==============   ==============

          Work-in-process and finished goods inventories consist of materials,
          labor and manufacturing overhead.

     (d)  Reclassifications

          Certain amounts in the prior-period consolidated financial statements
          have been reclassified to conform to the current period's
          presentation.

     (e)  Depreciation and Amortization

          The Company provides for depreciation and amortization using both the
          straight-line and accelerated methods by charges to operations in
          amounts estimated to allocate the cost of the assets over their
          estimated useful lives, as follows:

                                                            Estimated
                        Asset Classification               Useful Life

                Machinery and equipment                     3-5 years
                Building and improvements                    39 years
                Office equipment and furniture              3-5 years
                Motor vehicles                                3 years

     (f)  Warranty Costs

          Warranty costs are estimated and recorded by the Company at the time
          of product shipment. During the years ended March 30, 2002, March 31,
          2001 and March 25, 2000, warranty costs recorded by the Company were
          approximately $174,000, $270,000 and $221,000, respectively.

     (g)  Foreign Currency Translation

          In accordance with Statement of Financial Accounting Standards (SFAS)
          No. 52, Foreign Currency Translation, the Company has determined that
          the functional currency of its foreign subsidiaries is the U.S.
          dollar. Accordingly, all monetary assets and liabilities for these
          entities are translated at year-end exchange rates, while nonmonetary
          items are translated at historical rates. Income and expense accounts
          are translated at the average rates in effect

7

<PAGE>

BOSTON ACOUSTICS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements
March 30, 2002


          during the year. Gains or losses from changes in exchange rates are
          recognized in consolidated income in the year of occurrence. During
          the years ended March 30, 2002, March 31, 2001 and March 25, 2000,
          foreign currency translation losses were approximately $69,000,
          $434,000 and $66,000, respectively, and were included in other expense
          in the accompanying consolidated statements of income.

     (h)  Income Taxes

          The Company provides for income taxes in accordance with SFAS No. 109,
          Accounting for Income Taxes. SFAS No. 109 requires the recognition of
          deferred tax assets and liabilities for the expected future tax
          consequences of temporary differences between the financial reporting
          and tax bases of assets and liabilities.

     (i)  Postretirement and Postemployment Benefits

          The Company has no obligation for postretirement or postemployment
          benefits.

     (j)  Use of Estimates

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

     (k)  Concentration of Credit Risk

          SFAS No. 105, Disclosure of Information about Financial Instruments
          with Off-Balance-Sheet Risk and Financial Instruments with
          Concentrations of Credit Risk, requires disclosure of any significant
          off-balance-sheet risks and credit risk concentrations. The Company
          has no significant off-balance-sheet credit risks such as those
          associated with foreign exchange contracts, option contracts, or other
          foreign hedging arrangements. The Company is subjected to
          concentration of credit risk with respect to its cash and cash
          equivalents and accounts receivable balances. The Company maintains
          the majority of its cash balances with three highly credit worthy
          financial institutions. The Company's accounts receivable credit risk
          is not concentrated within any geographic area and does not represent
          a significant credit risk to the Company. The Company maintains an
          allowance for potential credit losses, but historically it has not
          experienced any significant losses related to individual customers or
          groups of customers in any particular industry or geographic area.

8

<PAGE>

BOSTON ACOUSTICS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements
March 30, 2002


          Significant customers with respect to accounts receivable and sales
          are as follows:

          <TABLE>
           <CAPTION>
                                                                         Accounts
                             Net Sales for the Year Ended            Receivable as of
                            March 30,     March 31,    March 25,   March 30,   March 31,
                              2002          2001         2000        2002        2001
          <S>              <C>          <C>           <C>         <C>         <C>
          Customer A            31%           46%          44%         17%         23%
          Customer B            16%           10%          10%         28%         12%
          Customer C              *             *            *         10%         10%
          </TABLE>

         *Customer does not exceed 10% of net sales.

     (l)  Financial Instruments

          SFAS No. 107, Disclosures about Fair Value of Financial Instruments,
          requires disclosure about the fair value of financial instruments.
          Financial instruments consist of cash equivalents, accounts
          receivable, accounts payable, subscriptions receivable and lines of
          credit. The estimated fair values of these financial instruments
          approximate their carrying values. The Company's cash equivalents are
          generally obligations of the federal government or investment-grade
          corporate or municipal issuers. The Company, by policy, limits the
          amount of credit exposure to any one financial institution.

     (m)  Impairment of Long-Lived Assets

          The Company follows the provisions of SFAS No. 121, Accounting for the
          Impairment of Long-Lived Assets and for Long-Lived Assets to Be
          Disposed Of. SFAS No. 121 addresses accounting and reporting
          requirements for impairment of long-lived assets based on their fair
          market values. The carrying value of long-lived assets held and used
          are periodically reviewed by the Company based on the expected future
          undiscounted operating cash flows of the related business unit. During
          fiscal 2001, the Company determined that goodwill of approximately
          $236,000 related to the acquisition of Boston Acoustics Deutschland,
          GmbH was impaired and as a result wrote it down to zero. This amount
          is included in general and administrative expenses in the accompanying
          statement of income for the year ended March 31, 2001. Based on its
          most recent analysis, the Company believes that no other material
          impairment of long-lived assets exists as of March 30, 2002.

     (n)  Comprehensive Income

          The Company follows the provisions of SFAS No. 130, Reporting
          Comprehensive Income. Comprehensive income is defined as the change in
          equity of a business enterprise during a period from transactions and
          other events and circumstances from non-owner sources. There were no
          differences between net income and comprehensive income for any of the
          periods presented.

9

<PAGE>

BOSTON ACOUSTICS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements
March 30, 2002


     (o)  Recent Accounting Pronouncements

          In July 2001, the Financial Accounting Standards Board (FASB) issued
          SFAS No. 141, Business Combinations. SFAS No. 141 requires all
          business combinations initiated after June 30, 2001 to be accounted
          for using the purchase method. This statement is effective for all
          business combinations initiated after June 30, 2001.

          In July 2001, the FASB issued SFAS No. 142, Goodwill and Other
          Intangible Assets. This statement applies to goodwill and intangible
          assets acquired after June 30, 2001, as well as goodwill and
          intangible assets previously acquired. Under this statement, goodwill,
          as well as certain other intangible assets determined to have infinite
          lives will no longer be amortized; instead, these assets will be
          reviewed for impairment on a periodic basis, at least annually. This
          statement is effective for the Company for the first quarter in the
          fiscal year ended March 29, 2003. The Company's adoption of SFAS No.
          141 and No. 142 is not expected to have a material impact on the
          Company's consolidated financial statements.

          In August 2001, the FASB issued SFAS No. 144, Accounting for the
          Impairment or Disposal of Long-Lived Assets, which supercedes SFAS No.
          121. SFAS No. 144 further refines the requirements of SFAS No. 121
          that companies (i) recognize an impairment loss only if the carrying
          amount of a long-lived asset is not recoverable based on its
          undiscounted future cash flows and (ii) measure an impairment loss as
          the difference between the carrying amount and the fair value of the
          asset. In addition, SFAS No. 144 provides guidance on accounting and
          disclosure issues surrounding long-lived assets to be disposed of by
          sale. This statement is effective for the Company for the first
          quarter in the fiscal year ended March 29, 2003. The Company does not
          believe the adoption of this statement will have a material impact on
          its financial position.

(2)  NET INCOME PER SHARE

     The Company follows the provisions of SFAS No. 128, Earnings per Share.
     This standard requires presentation of both basic and diluted earnings per
     share on the face of the consolidated statements of income. These financial
     statements have been prepared and presented based on this standard.

10

<PAGE>

BOSTON ACOUSTICS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements
March 30, 2002


     The computation of basic and diluted shares outstanding, as required by
     SFAS No. 128, is as follows:

                                                    For the Year Ended
                                           March 30,    March 31,     March 25,
                                             2002         2001          2000

     Basic weighted average common
     shares outstanding                    4,774,746    4,914,206     5,016,954

     Dilutive effect of assumed
     exercise of stock options                10,180       47,821       285,780
                                         -----------  -----------   -----------

     Weighted average common shares
     outstanding assuming dilution         4,784,926    4,962,027     5,302,734
                                         ===========  ===========   ===========

     For the years ended March 30, 2002, March 31, 2001 and March 25, 2000,
     518,738, 296,214 and 213,600 options, respectively, have been excluded from
     the weighted average number of common and dilutive potential shares
     outstanding, as their effect would be antidilutive.

(3)  INCOME TAXES

     The components of the Company's net deferred tax assets consist of the tax
     effects of temporary differences between the financial reporting and tax
     bases of assets and liabilities. A valuation allowance has been provided
     for the portion of the deferred tax assets related to net operating loss
     carryforwards of the Company's Italian and UK subsidiaries, as the
     realizability of this asset is uncertain. The Company expects to realize
     the remaining deferred tax amounts.

11

<PAGE>

BOSTON ACOUSTICS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements
March 30, 2002


   The approximate income tax effect of each temporary difference is as follows:


<TABLE>
<CAPTION>
                                                 March 30,        March 31,
                                                   2002             2001
       <S>                                   <C>               <C>
       Current deferred tax asset-
        Accrued expenses not currently
         deductible                          $      342,000    $      905,000
        Receivable reserves                         600,000           462,000
        Inventory reserves                          782,000           677,000
        Foreign net operating losses                212,000           450,000
                                             --------------    --------------

                                                  1,936,000         2,494,000

       Noncurrent deferred tax asset-
         Depreciation                               701,000           381,000
                                             --------------    --------------

               Total deferred tax assets          2,637,000         2,875,000

       Valuation allowance                         (212,000)         (450,000)
                                             --------------    --------------

               Net deferred tax assets       $    2,425,000    $    2,425,000
                                             ==============    ==============
</TABLE>

   The noncurrent deferred income taxes are included in other assets in the
   accompanying consolidated balance sheets.

   The components of the provision for income taxes shown in the accompanying
   consolidated statements of income consist of the following:

<TABLE>
<CAPTION>
                                         March 30,         March 31,         March 25,
                                           2002              2001              2000
   <S>                               <C>              <C>               <C>
   Current-
      Federal                        $    1,302,000   $    2,885,000    $    3,467,000
      State                                 258,000          586,000           780,000
                                     --------------   --------------    --------------

                                          1,560,000        3,471,000         4,247,000
                                     --------------   --------------    --------------

   Deferred-
      Federal                                     -         (499,000)          (60,000)
      State                                       -          (98,000)          (12,000)
                                     --------------   --------------    --------------

                                                  -         (597,000)          (72,000)
                                     --------------   --------------    --------------

         Provision for income
         taxes                       $    1,560,000   $    2,874,000    $    4,175,000
                                     ==============   ==============    ==============
</TABLE>

12

<PAGE>

BOSTON ACOUSTICS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements
March 30, 2002


        The Company's effective income tax rate varies from the amount computed,
        using the statutory U.S. income tax rate, as follows:
<TABLE>
<CAPTION>
                                                 March 30,       March 31,       March 25,
                                                   2002            2001            2000
        <S>                                  <C>              <C>              <C>
        Federal statutory rate                        34.0%           34.0%           34.1%

        Increase in taxes resulting from
        state income taxes, net of
        federal income tax benefit                     4.7             5.7             4.9

        Foreign sales corporation / Extra
        territorial income exclusion                  (0.9)           (2.0)           (1.1)

        Change in valuation allowance
        related to foreign subsidiaries               (9.0)            4.2             0.5

        Other                                         (0.3)            0.5             0.2
                                             -------------    ------------     -----------

                                                      28.5%           42.4%           38.6%
                                             =============    ============     ===========
</TABLE>

   (4)  SHAREHOLDERS' EQUITY

        (a)  Stock Options

             The Company maintained an incentive option plan (the 1986 Plan)
             that expired in October of 1996. The Company did not have any
             options outstanding under the 1986 Plan as of March 31, 2001. In
             February 1996, the Board of Directors approved a new incentive
             stock option plan (the 1996 Plan) authorizing the issuance of
             incentive stock options and nonqualified stock options for the
             purchase of up to 300,000 shares of common stock. The 1996 Plan is
             administered by the Board of Directors, and options are granted at
             not less than the fair market value of the Company's common stock
             on the date of grant. As of March 30, 2002, the Company has 238,000
             options outstanding under the 1996 Plan.

             In May 1997, the Board of Directors approved a new stock option
             plan (the 1997 Plan) authorizing the issuance of incentive stock
             options and nonqualified stock options for the purchase of up to
             950,000 shares of common stock. The 1997 Plan permits the granting
             of nonqualified stock options and incentive stock options. As of
             March 30, 2002, the Company has 464,300 options outstanding under
             the 1997 Plan.

13

<PAGE>

BOSTON ACOUSTICS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements
March 30, 2002

         The following is a summary of stock option activity under the 1986
         Plan, the 1996 Plan and the 1997 Plan:

<TABLE>
<CAPTION>
                                                                            Weighted
                                              Number        Range of         Average
                                                of          Exercise        Exercise
                                             Options         Prices           Price
         <S>                               <C>          <C>               <C>
         Outstanding at March 27, 1999        524,250   $    11.67-20.25  $      15.64
            Granted                           127,375        11.63-12.88         11.80
            Exercised                         (11,500)       11.67-13.00         12.71
            Canceled                           (4,492)       13.00-20.25         17.84
                                           ----------   ----------------  ------------

         Outstanding at March 25, 2000        635,633        11.63-20.25         14.90
            Granted                           228,000         9.63-10.81         10.25
            Exercised                         (21,050)             13.00         13.00
            Canceled                         (201,983)       11.63-20.25         14.78
                                           ----------   ----------------  ------------

         Outstanding at March 31, 2001        640,600         9.63-20.25         13.35
            Granted                           206,250         9.26-10.37          9.74
            Canceled                         (144,550)        9.63-20.25         12.51
                                           ----------   ----------------  ------------

         Outstanding at March 30, 2002        702,300   $     9.26-20.25  $      12.46
                                           ==========   ================  ============

         Exercisable at March 30, 2002        372,583   $     9.26-20.25  $      13.67
                                           ==========   ================  ============

         Exercisable at March 31, 2001        277,221   $    11.63-20.25  $      15.12
                                           ==========   ================  ============

         Options available for future
         grant at March 30, 2002              518,400
                                           ==========
</TABLE>

         The Company has determined that it will continue to account for
         stock-based compensation for employees under Accounting Principles
         Board Opinion No. 25, Accounting for Stock Issued to Employees, and
         elect the disclosure-only alternative under SFAS No. 123 Accounting for
         Stock-Based Compensation (SFAS No. 123) for options granted after
         January 1, 1996 using the Black-Scholes option pricing model prescribed
         by SFAS No. 123. The Company follows the provisions of SFAS No. 123,
         which requires the measurement of the fair value of stock options and
         warrants issued to other than employees to be included in the statement
         of income. The weighted average assumptions used for proforma purposes
         are as follows:

                                   March 30,        March 31,        March 25,
                                      2002            2001             2000

         Risk-free interest rate  4.74%-5.01%      6.17%-6.25%      6.03%-6.78%
         Expected dividend
            yield (per share)     $0.34            $0.34            $0.34
         Expected lives           5-10 years       5-10 years       5-10 years
         Expected volatility      60%              56%              48%

14

<PAGE>

BOSTON ACOUSTICS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements
March 30, 2002


          The weighted average grant date fair value per share of options
          granted during the years ended March 30, 2002, March 31, 2001 and
          March 25, 2000 under these plans is $4.46, $4.99 and $5.02,
          respectively.

          As of March 30, 2002, March 31, 2001 and March 25, 2000, the weighted
          average remaining contractual life of outstanding options under these
          plans is 6.19 years, 7.69 years and 6.09 years, respectively.

          Had compensation cost for these plans been determined consistent with
          SFAS No. 123, the Company's net income and basic and diluted net
          income per share would have been reduced to the following pro forma
          amounts:

                                         March 30,     March 31,      March 25,
                                           2002          2001           2000

           Net income-
              As reported              $ 3,910,399   $ 3,897,317  $   6,646,517
              Pro forma                  2,752,299     3,199,827      5,795,414

           Net income per share, as
           reported-
              Basic                    $      0.82   $      0.79  $        1.32
              Diluted                         0.82          0.79           1.25

           Net income per share,
           pro forma-
              Basic                    $      0.58   $      0.65  $        1.16
              Diluted                         0.58          0.64           1.09

     (b)  Warrant

          In connection with a supply agreement entered into in March 1997, the
          Company granted a customer a fully exercisable warrant to purchase up
          to 150,000 shares of common stock at an exercise price of $11.67 per
          share. In accordance with SFAS No. 123, the Company calculated the
          value of these warrants at $484,000, which was charged to operations
          during fiscal 1998, as product was shipped to the customer. In July
          1999, the customer exercised all outstanding warrants through a
          cashless exercise, resulting in the issuance of 57,564 shares of
          common stock.

     (c)  Subscriptions Receivable

          During fiscal 2000 and 2001, the Company allowed certain of its
          employees to exercise options that were issued under certain stock
          option plans in exchange for the issuance of full recourse promissory
          notes. The notes bear interest at rates between 7.0%-7.5% per annum
          and are due and payable in full on maturity dates between June 18,
          2002 and November 20, 2003.

15

<PAGE>

BOSTON ACOUSTICS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements
March 30, 2002


(5)     LOAN AGREEMENT AND LINES OF CREDIT

        In June 1997, the Company entered into an unsecured revolving loan
        agreement with a bank for $25,000,000. The loan matures on June 1, 2005.
        Interest is charged at LIBOR on the first day of the interest period
        plus a fixed-rate spread based on certain financial ratios (ranging from
        2.38% to 2.40% as of March 30, 2002). As of March 30, 2002, $2,500,000
        was outstanding under this revolving loan agreement, of which all of
        this amount has been classified as short-term, as the Company expects to
        repay this amount during fiscal 2003. In connection with this agreement,
        the Company must comply with certain financial and restrictive
        covenants, including maintaining minimum levels of profitability. As of
        March 30, 2002, the Company was in compliance with all covenants.

        The Company also has a $1,500,000 unsecured line of credit with another
        bank available for letters of credit, bankers' acceptances and direct
        advances. Interest on letters of credit and bankers' acceptances is
        based on the prevailing rate (1.5% at March 30, 2002). Direct advances
        accrue interest at the bank's commercial base rate (4.75% at March 30,
        2002). No amounts were outstanding under this line of credit at March
        30, 2002 and March 31, 2001.

        The Company also has a DM 250,000 line of credit with a German bank. At
        March 30, 2002, there were no amounts outstanding under this line of
        credit.

(6)     SEGMENT REPORTING

        The Company has determined that it has two reportable segments: core,
        and original equipment manufacturer (OEM) and multimedia. The Company's
        reportable segments are strategic business units that sell the Company's
        products to distinct distribution channels. Both segments derive their
        revenues from the sale of audio systems. They are managed separately
        because each segment requires different selling and marketing strategies
        as the class of customers within each segment is different. The
        Company's disclosure of segment performance is based on the way that
        management organizes the segments within the enterprise for making
        operating decisions and assessing performance.

16

<PAGE>

BOSTON ACOUSTICS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements
March 30, 2002


     The accounting policies of the segments are the same as those described in
     the summary of significant accounting policies. The Company does not
     allocate operating expenses between its two reportable segments.
     Accordingly, the Company's measure of profit for each reportable segment is
     based on gross profit.

                                                       OEM and
                                           Core      Multimedia       Total
     2002

     Net sales                          $55,918,159  $27,280,424   $ 83,198,583
                                        ===========  ===========   ============

     Gross profit                       $21,769,311  $ 4,430,779   $ 26,200,090
                                        ===========  ===========   ============

     Depreciation and amortization      $ 1,887,845  $   241,768   $  2,129,613
                                        ===========  ===========   ============

     Capital expenditures               $ 1,605,973  $   236,688   $  1,842,661
                                        ===========  ===========   ============

     2001

     Net sales                          $59,495,432  $58,217,127   $117,712,559
                                        ===========  ===========   ============

     Gross profit                       $19,605,868  $11,636,756   $ 31,242,624
                                        ===========  ===========   ============

     Depreciation and amortization      $ 1,232,441  $   871,292   $  2,103,733
                                        ===========  ===========   ============

     Capital expenditures               $ 3,023,627  $   252,054   $  3,275,681
                                        ===========  ===========   ============

     2000

     Net sales                          $58,797,803  $49,199,847   $107,997,650
                                        ===========  ===========   ============

     Gross profit                       $21,633,212  $12,115,572   $ 33,748,784
                                        ===========  ===========   ============

     Depreciation and amortization      $   988,573  $   148,701   $  1,137,274
                                        ===========  ===========   ============

     Capital expenditures               $ 3,466,081  $   624,561   $  4,090,642
                                        ===========  ===========   ============

     Total assets specifically identifiable within each reportable segment are
     listed in the table below. Assets included in the OEM and Multimedia
     segment consist of accounts receivable, inventories and fixed assets.

                                           March 30, 2002     March 31, 2001

                Core                       $   44,180,158     $   46,822,555
                OEM and Multimedia              4,238,288         11,209,093
                                           --------------     --------------

                                           $   48,418,446     $   58,031,648
                                           ==============     ==============

17

<PAGE>

BOSTON ACOUSTICS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements
March 30, 2002


     The following table identifies sales by geographic region. Sales are
     attributed to countries based on location of customer:

                                            For the Year Ended
                                            ------------------
                          March 30, 2002   March 31, 2001   March 25, 2000

          United States   $   70,606,271   $   97,229,002   $   89,638,049
          Other               12,592,312       20,483,557       18,359,601
                          --------------   --------------   --------------

                          $   83,198,583   $  117,712,559   $  107,997,650
                          ==============   ==============   ==============

     No individual country included in "Other" accounted for more than 10% of
     net sales for the fiscal years presented above.

(7)  OTHER ACCRUED EXPENSES

     Other accrued expenses consist of the following:

                                           March 30, 2002   March 31, 2001

          Inventory rework and warranty    $      200,000   $    1,125,705
          Advertising                             449,064          774,965
          Other                                   446,305          781,984
                                           --------------   --------------

                                           $    1,095,369   $    2,682,654
                                           ==============   ==============

     During fiscal 2001, the Company recorded an accrued expense of $900,000
     that represented the estimated cost of rework for one of its finished goods
     products. The Company completed the rework during fiscal 2002.

(8)  EMPLOYEE BENEFIT PLAN

     The Company has a 401(k) Retirement Plan (the 401(k) Plan). The 401(k) Plan
     is a defined contribution plan established under the provisions of Section
     401(k) of the Internal Revenue Code. The Company may make a matching
     contribution of 25% of each participant's contribution, up to a maximum of
     5% of a participant's compensation for the plan year. The Company
     contributed approximately $59,000, $90,000 and $84,000 to the 401(k) Plan
     during fiscal years 2002, 2001 and 2000, respectively.

(9)  COMMITMENTS

     The Company has leased certain of its facilities under operating lease
     agreements that expire in fiscal 2003. The leases require payments of
     approximately $48,000 through 2003. Total rent expense for fiscal 2002,
     2001 and 2000 was approximately $247,000, $615,000 and $388,000,
     respectively.

18

<PAGE>

BOSTON ACOUSTICS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements
March 30, 2002


(10) ACCOUNTS RECEIVABLE RESERVES

<TABLE>
<CAPTION>
                                              Allowance for Doubtful Accounts
                                              -------------------------------
                                      Balance,    Charged to
                                     Beginning    Costs and                    Balance,
                                      of Year      Expenses   Deductions/(1)/ End of Year
        <S>                          <C>         <C>         <C>             <C>
        For the fiscal year ended-
           March 30, 2002            $  385,000  $    41,000  $     (60,000)  $   366,000
                                     ==========  ===========  =============   ===========

           March 31, 2001            $  345,000  $    61,000  $     (21,000)  $   385,000
                                     ==========  ===========  =============   ===========

           March 25, 2000            $  463,000  $     7,000  $    (125,000)  $   345,000
                                     ==========  ===========  =============   ===========
</TABLE>

     /(1)/ Amounts deemed uncollectible net of recoveries of previously reserved
     amounts.

<TABLE>
<CAPTION>
                                          Reserve for Off-Invoice Allowances/(2)/
                                          ---------------------------------------
                                       Balance,
                                      Beginning  Charged to                    Balance,
                                       of Year    Revenues      Deductions    End of Year
        <S>                          <C>         <C>          <C>             <C>
        For the fiscal year ended-
           March 30, 2002            $2,711,000  $12,771,000  $ (12,477,000)  $ 3,005,000
                                     ==========  ===========  =============   ===========

           March 31, 2001            $2,563,000  $13,581,000  $ (13,433,000)  $ 2,711,000
                                     ==========  ===========  =============   ===========

           March 25, 2000            $2,102,000  $11,715,000  $ (11,254,000)  $ 2,563,000
                                     ==========  ===========  =============   ===========
</TABLE>

     /(2)/ Amounts are net against accounts receivable and include allowances
     for sales rebates, timely pay discounts and freight rebates.

19