##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q

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

For the quarterly period ended June 30, 2003

Commission File Number 000-30138

ROCKFORD CORPORATION

(Exact Name of Registrant as Specified in its Charter)


|                                |  |                    
|------------------------------- |  | -------------------
|ARIZONA                         |  | 86-0394353         
|(State or Other Jurisdiction of |  | (I.R.S. Employer   
|Incorporation or Organization)  |  | Identification No.)
|                                |  |                    
|600 South Rockford Drive        |  | 85281              
|Tempe, Arizona                  |  | (Zip Code)         
|(Address of Principal Executive |  |                    
|Offices)                        |  |                    

(480) 967-3565
(Registrants Telephone Number, Including Area Code)

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

|                                                                                                                     |               |  |             | 
|-------------------------------------------------------------------------------------------------------------------- | ------------- |  | ----------- | 
|                                                                                                                     | Yes     [X]   |  | No    [   ] | 
|                                                                                                                     |               |  |             | 
|Indicate by check mark whether the Registrant
is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act)
|                                                                                                                     | Yes     [   ] |  | No     [X]  | 

Indicate the number of shares of each of the issuers classes of common stock,
as of the latest practical date:

As of June 30, 2003, there were 8,883,067 shares of Common Stock, $.01 par
value per share, outstanding. This is the only class of common stock of the
Company registered under Section 12(g) of the Securities Act of 1933.





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TABLE OF CONTENTS



|                              |                                                                                               |                                                                  |  |  |  |  |  | 
|----------------------------- | --------------------------------------------------------------------------------------------- | ---------------------------------------------------------------- |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION
|                              | Item 1. Financial Statements                                                                 
|                              |                                                                                               | CONDENSED CONSOLIDATED BALANCE SHEETS                           
|                              |                                                                                               | CONDENSED CONSOLIDATED INCOME STATEMENTS (UNAUDITED)            
|                              |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)     
|                              |                                                                                               | Notes to Condensed Consolidated Financial Statements (Unaudited)
|                              | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                              | Item 3. Quantitative and Qualitative Disclosures about Market Risk                           
|                              | Item 4. Controls and Procedures                                                              
|Part II. Other Information   
|                              | Item 1. Legal Proceedings.                                                                   
|                              | Item 4. Submission of Matters to a Vote of Security Holders                                  
|                              | Item 6. Exhibits and Reports on Form 8-K                                                     
|SIGNATURES                   
|Exhibit 31.1                 
|Exhibit 31.2                 
|Exhibit 32                   



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##### Table of Contents



ROCKFORD CORPORATION AND SUBSIDIARIES

TABLE OF CONTENTS

|               |  |                                                                                       |  |                                                                                              |    |      |   | 
|-------------- |  | ------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------- | -- | ---- | - | 
|               |  |                                                                                       |  |                                                                                              |    | Page
|               |  |                                                                                       |  |                                                                                              |    |     
|Part I:        |  | Financial Information                                                                 |  |                                                                                              |    |     
|Item 1.        |  | Financial Statements (Unaudited)                                                      |  |                                                                                              |    |     
|               |  |                                                                                       |  | Condensed
Consolidated Balance Sheets  June 30, 2003 and December 31, 2002                  |    |      | 1 | 
|               |  |                                                                                       |  | Condensed
Consolidated Income Statements  Three and Six Months Ended June 30, 2003 and 2002 |    |      | 2 | 
|               |  |                                                                                       |  | Condensed
Consolidated Statements of Cash Flows  Six Months Ended June 30, 2003 and 2002    |    |      | 3 | 
|               |  |                                                                                       |  | Notes to Condensed Consolidated Financial Statements  June 30, 2003                         |    |      | 4 | 
|Item 2.        |  | Managements Discussion
and Analysis of Financial Condition and Results of Operations |  |                                                                                              | 8  |     
|Item 3.        |  | Quantitative and Qualitative Disclosures about Market Risk                            |  |                                                                                              | 17 |     
|Item 4.        |  | Controls and Procedures                                                               |  |                                                                                              | 17 |     
|Part II:       |  | Other Information                                                                     |  |                                                                                              |    |     
|Item 1.        |  | Legal Proceedings                                                                     |  |                                                                                              | 18 |     
|Item 4.        |  | Submission of Matters to a Vote of Security Holders                                   |  |                                                                                              | 19 |     
|Item 6.        |  | Exhibits and Reports on Form 8-K                                                      |  |                                                                                              | 19 |     
|Signatures     |  |                                                                                       |  |                                                                                              | 20 |     
|Certifications |  |                                                                                       |  |                                                                                              | 21 |     





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##### Table of Contents






PART I. FINANCIAL INFORMATION




Item 1.  Financial Statements




ROCKFORD CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

|                                                       |                                                                                                                |   |                                  |        |              |   |         |        | 
|------------------------------------------------------ | -------------------------------------------------------------------------------------------------------------- | - | -------------------------------- | ------ | ------------ | - | ------- | ------ | 
|                                                       |                                                                                                                |   | June 30,                         |        | December 31,
|                                                       |                                                                                                                |   | 2003                             |        | 2002        
|                                                       |                                                                                                                |   |                                  |        |             
|                                                       |                                                                                                                |   | (Unaudited)                      |        | (Note)      
|                                                       |                                                                                                                |   | (In thousands except share data)
|Assets                                                 |                                                                                                                |   |                                  |        |              |   |         |       
|Current assets:                                        |                                                                                                                |   |                                  |        |              |   |         |       
|                                                       | Cash and cash equivalents                                                                                      |   | $                                | 755    |              |   | $       | 304    | 
|                                                       | Accounts receivable, less allowances of $3,674 and $2,996 at
June 30, 2003 and December 31, 2002, respectively |   |                                  | 50,016 |              |   |         | 32,890 | 
|                                                       | Inventories, net                                                                                               |   |                                  | 38,796 |              |   |         | 32,445 | 
|                                                       | Deferred income taxes                                                                                          |   |                                  | 5,161  |              |   |         | 5,160  | 
|                                                       | Income taxes receivable                                                                                        |   |                                  | 347    |              |   |         | 1,844  | 
|                                                       | Prepaid expenses and other                                                                                     |   |                                  | 4,776  |              |   |         | 4,395  | 
|                                                       |                                                                                                                |   |                                  |        |              |   |         |       
|Total current assets                                   |                                                                                                                |   | 99,851                           |        |              |   | 77,038  |       
|Property and equipment, net                            |                                                                                                                |   | 16,701                           |        |              |   | 15,262  |       
|Deferred income taxes                                  |                                                                                                                |   | 292                              |        |              |   | 292     |       
|Goodwill, net                                          |                                                                                                                |   | 7,067                            |        |              |   | 6,890   |       
|Other assets                                           |                                                                                                                |   | 1,630                            |        |              |   | 1,708   |       
|                                                       |                                                                                                                |   |                                  |        |              |   |         |        | 
|Total assets                                           |                                                                                                                | $ | 125,541                          |        |              | $ | 101,190 |       
|                                                       |                                                                                                                |   |                                  |        |              |   |         |       
|Liabilities and shareholders equity                   |                                                                                                                |   |                                  |        |              |   |         |       
|Current liabilities:                                   |                                                                                                                |   |                                  |        |              |   |         |       
|                                                       | Accounts payable                                                                                               |   | $                                | 18,463 |              |   | $       | 10,753 | 
|                                                       | Accrued salaries and incentives                                                                                |   |                                  | 2,113  |              |   |         | 1,978  | 
|                                                       | Accrued warranty                                                                                               |   |                                  | 4,952  |              |   |         | 4,595  | 
|                                                       | Other accrued expenses                                                                                         |   |                                  | 8,576  |              |   |         | 6,105  | 
|                                                       | Current portion of notes payable, long-term debt and capital
lease obligations                                 |   |                                  | 21,843 |              |   |         | 1,253  | 
|                                                       |                                                                                                                |   |                                  |        |              |   |         |        | 
|Total current liabilities                              |                                                                                                                |   | 55,947                           |        |              |   | 24,684  |       
|Notes payable and long-term debt, less current portion |                                                                                                                |   | 100                              |        |              |   | 8,611   |       
|Capital lease obligations, less current portion        |                                                                                                                |   | 923                              |        |              |   | 1,416   |       
|Minority Interest                                      |                                                                                                                |   | 679                              |        |              |   | 933     |       
|Shareholders equity:                                  |                                                                                                                |   |                                  |        |              |   |         |       
|                                                       | Common stock, $.01 par value  Authorized shares - 40,000,000                                                  |   |                                  |        |              |   |         |        | 
|                                                       | Issued shares - 8,883,067 shares at June 30, 2003, and
8,747,197 at December 31, 2002                          |   |                                  | 89     |              |   |         | 87     | 
|                                                       | Additional paid-in capital                                                                                     |   |                                  | 35,619 |              |   |         | 35,131 | 
|                                                       | Retained earnings                                                                                              |   |                                  | 30,085 |              |   |         | 29,198 | 
|                                                       | Accumulated other comprehensive income                                                                         |   |                                  | 2,099  |              |   |         | 1,130  | 
|                                                       |                                                                                                                |   |                                  |        |              |   |         |       
|Total shareholders equity                             |                                                                                                                |   | 67,892                           |        |              |   | 65,546  |       
|                                                       |                                                                                                                |   |                                  |        |              |   |         |        | 
|Total liabilities and shareholders equity             |                                                                                                                | $ | 125,541                          |        |              | $ | 101,190 |       
|                                                       |                                                                                                                |   |                                  |        |              |   |         |       

Note: The balance sheet at December 31, 2002, has been derived from the
audited financial statements at that date but does not include all of the
information and footnotes required by accounting principles generally accepted
in the United States for complete financial statements. See notes to condensed
consolidated financial statements.

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ROCKFORD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED INCOME STATEMENTS (UNAUDITED)

|                                |         |                            |        |                                       |       |                  |        |       |       |      |        |       |        |   |        |       |        | 
|------------------------------- | ------- | -------------------------- | ------ | ------------------------------------- | ----- | ---------------- | ------ | ----- | ----- | ---- | ------ | ----- | ------ | - | ------ | ----- | ------ | 
|                                |         |                            |        | Three months ended                    |       | Six months ended
|                                |         |                            |        | June 30,                              |       | June 30,        
|                                |         |                            |        | 2003                                  |       | 2002             |        | 2003  |       | 2002
|                                |         |                            |        |                                       |       |                  |        |       |       |     
|                                |         |                            |        | (In thousands, except per share data)
|Revenues                        |         | $                          | 56,568 |                                       |       | $                | 51,228 |       |       | $    | 96,191 |       |        | $ | 94,961 |      
|Cost of goods sold              |         |                            | 36,241 |                                       |       |                  | 31,199 |       |       |      | 63,025 |       |        |   | 58,410 |      
|                                |         |                            |        |                                       |       |                  |        |       |       |      |        |       |        |   |        |      
|Gross profit                    |         |                            | 20,327 |                                       |       |                  | 20,029 |       |       |      | 33,166 |       |        |   | 36,551 |      
|Operating expenses:             |         |                            |        |                                       |       |                  |        |       |       |      |        |       |        |   |        |      
|                                |         | Sales and marketing        |        |                                       | 9,680 |                  |        |       | 7,594 |      |        |       | 17,078 |   |        |       | 14,838 | 
|                                |         | General and administrative |        |                                       | 5,768 |                  |        |       | 5,925 |      |        |       | 11,186 |   |        |       | 10,576 | 
|                                |         | Research and development   |        |                                       | 2,113 |                  |        |       | 1,148 |      |        |       | 4,347  |   |        |       | 2,124  | 
|                                |         |                            |        |                                       |       |                  |        |       |       |      |        |       |        |   |        |      
|Total operating expenses        |         |                            | 17,561 |                                       |       |                  | 14,667 |       |       |      | 32,611 |       |        |   | 27,538 |      
|                                |         |                            |        |                                       |       |                  |        |       |       |      |        |       |        |   |        |      
|Operating income                |         |                            | 2,766  |                                       |       |                  | 5,362  |       |       |      | 555    |       |        |   | 9,013  |      
|Interest and other income, net  |         |                            | 285    |                                       |       |                  | 337    |       |       |      | 333    |       |        |   | 152    |      
|                                |         |                            |        |                                       |       |                  |        |       |       |      |        |       |        |   |        |      
|Income before income tax        |         |                            | 3,051  |                                       |       |                  | 5,699  |       |       |      | 888    |       |        |   | 9,165  |      
|Income tax expense              |         |                            | 1,302  |                                       |       |                  | 2,112  |       |       |      | 255    |       |        |   | 3,400  |      
|                                |         |                            |        |                                       |       |                  |        |       |       |      |        |       |        |   |        |      
|Income before minority interest |         |                            | 1,749  |                                       |       |                  | 3,587  |       |       |      | 633    |       |        |   | 5,765  |      
|Minority Interest               |         |                            | 85     |                                       |       |                  |       |       |       |      | 254    |       |        |   |       |      
|                                |         |                            |        |                                       |       |                  |        |       |       |      |        |       |        |   |        |      
|Net income                      |         | $                          | 1,834  |                                       |       | $                | 3,587  |       |       | $    | 887    |       |        | $ | 5,765  |      
|                                |         |                            |        |                                       |       |                  |        |       |       |      |        |       |        |   |        |      
|Net income per common share:    |         |                            |        |                                       |       |                  |        |       |       |      |        |       |        |   |        |      
|                                | Basic   |                            | $      | 0.21                                  |       |                  | $      | 0.42  |       |      | $      | 0.10  |        |   | $      | 0.69  |       
|                                |         |                            |        |                                       |       |                  |        |       |       |      |        |       |        |   |        |      
|                                | Diluted |                            | $      | 0.20                                  |       |                  | $      | 0.38  |       |      | $      | 0.10  |        |   | $      | 0.62  |       
|                                |         |                            |        |                                       |       |                  |        |       |       |      |        |       |        |   |        |      
|Weighted average shares:        |         |                            |        |                                       |       |                  |        |       |       |      |        |       |        |   |        |      
|                                | Basic   |                            |        | 8,829                                 |       |                  |        | 8,508 |       |      |        | 8,799 |        |   |        | 8,392 |       
|                                |         |                            |        |                                       |       |                  |        |       |       |      |        |       |        |   |        |      
|                                | Diluted |                            |        | 9,188                                 |       |                  |        | 9,384 |       |      |        | 9,155 |        |   |        | 9,303 |       
|                                |         |                            |        |                                       |       |                  |        |       |       |      |        |       |        |   |        |      

See notes to condensed consolidated financial statements.

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ROCKFORD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

|                                                                                            |                                     |                                                     |        |                           |        |      |        |         |        |  
|------------------------------------------------------------------------------------------- | ----------------------------------- | --------------------------------------------------- | ------ | ------------------------- | ------ | ---- | ------ | ------- | ------ | -
|                                                                                            |                                     |                                                     |        | Six months ended June 30,
|                                                                                            |                                     |                                                     |        | 2003                      |        | 2002
|                                                                                            |                                     |                                                     |        |                           |        |     
|                                                                                            |                                     |                                                     |        | (In thousands)           
|Operating activities                                                                        |                                     |                                                     |        |                           |        |      |        |        
|Net income                                                                                  |                                     | $                                                   | 887    |                           |        | $    | 5,765  |        
|Adjustments to reconcile net income to net cash
(used in) provided by operating activities: |                                     |                                                     |        |                           |        |      |        |        
|                                                                                            | Depreciation and amortization       |                                                     |        | 2,250                     |        |      |        | 2,404   |       
|                                                                                            | Loss (gain) on sale of fixed assets |                                                     |        | 5                         |        |      |        | (10     | )     
|                                                                                            | Provision for doubtful accounts     |                                                     |        | 404                       |        |      |        | 498     |       
|                                                                                            | Provision for inventory allowances  |                                                     |        | 476                       |        |      |        | 704     |       
|                                                                                            | Minority Interest                   |                                                     |        | (254                      | )      |      |        |        |       
|Changes in operating assets and liabilities:                                                |                                     |                                                     |        |                           |        |      |        |        
|                                                                                            | Accounts receivable                 |                                                     |        | (17,636                   | )      |      |        | (14,982 | )     
|                                                                                            | Inventories                         |                                                     |        | (6,826                    | )      |      |        | (1,143  | )     
|                                                                                            | Prepaid expenses and other assets   |                                                     |        | (172                      | )      |      |        | 1,430   |       
|                                                                                            | Accounts payable                    |                                                     |        | 7,694                     |        |      |        | 1,762   |       
|                                                                                            | Accrued salaries and incentives     |                                                     |        | 135                       |        |      |        | 1,432   |       
|                                                                                            | Accrued warranty                    |                                                     |        | 357                       |        |      |        | (141    | )     
|                                                                                            | Income taxes payable                |                                                     |        | 1,150                     |        |      |        | 685     |       
|                                                                                            | Other accrued expenses              |                                                     |        | 2,422                     |        |      |        | 2,588   |       
|                                                                                            |                                     |                                                     |        |                           |        |      |        |        
|                                                                                            |                                     | Net cash (used in) provided by
operating activities |        |                           | (9,108 | )    |        |         | 992    |  
|Investing activities                                                                        |                                     |                                                     |        |                           |        |      |        |        
|Purchases of property and equipment                                                         |                                     |                                                     | (3,761 | )                         |        |      | (2,977 | )      
|Proceeds from disposal of property and equipment                                            |                                     |                                                     | 18     |                           |        |      | 10     |        
|Acquisitions of business, net of cash acquired                                              |                                     |                                                     | 357    |                           |        |      | 55     |        
|Increase in other assets                                                                    |                                     |                                                     | (98    | )                         |        |      | (625   | )      
|                                                                                            |                                     |                                                     |        |                           |        |      |        |        
|                                                                                            |                                     | Net cash used in investing activities               |        |                           | (3,484 | )    |        |         | (3,537 | )
|Financing activities                                                                        |                                     |                                                     |        |                           |        |      |        |        
|Net proceeds from notes payable, long-term debt                                             |                                     |                                                     | 12,099 |                           |        |      | 1,210  |        
|Payments on notes payable and long-term debt                                                |                                     |                                                     |       |                           |        |      | (1,970 | )      
|Payments on capital lease obligations                                                       |                                     |                                                     | (514   | )                         |        |      | (384   | )      
|Proceeds from the exercise of stock options and
warrants                                    |                                     |                                                     | 488    |                           |        |      | 896    |        
|                                                                                            |                                     |                                                     |        |                           |        |      |        |        
|                                                                                            |                                     | Net cash provided by (used in)
financing activities |        |                           | 12,073 |      |        |         | (248   | )
|Effect of exchange rate changes on cash                                                     |                                     |                                                     | 970    |                           |        |      | 1,088  |        
|                                                                                            |                                     |                                                     |        |                           |        |      |        |        
|Net increase (decrease) in cash and cash equivalents                                        |                                     |                                                     | 451    |                           |        |      | (1,705 | )      
|Cash and cash equivalents at beginning of period                                            |                                     |                                                     | 304    |                           |        |      | 2,411  |        
|                                                                                            |                                     |                                                     |        |                           |        |      |        |        
|Cash and cash equivalents at end of period                                                  |                                     | $                                                   | 755    |                           |        | $    | 706    |        
|                                                                                            |                                     |                                                     |        |                           |        |      |        |        

See notes to condensed consolidated financial statements.

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Rockford Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
June 30, 2003

1. Basis of Presentation

Unaudited Interim Financial Information

We have prepared our unaudited condensed consolidated financial statements in
accordance with accounting principles generally accepted in the United States
for interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by accounting principles generally accepted
in the United States for complete financial statements. In the opinion of
management, we have made all adjustments (consisting of normal recurring
accruals) necessary for a fair presentation.

Operating results for the three-month and six-month periods ended June 30,
2003, are not necessarily indicative of the results you may expect for the year
ending December 31, 2003.

For further information, refer to the consolidated financial statements and
footnotes included as part of our Form 10-K for the year ended December 31,
2002, filed with the Securities and Exchange Commission (SEC) on March 7,
2003.

Derivative Financial Instruments

Effective January 1, 2001, Rockford adopted Statement of Financial Accounting
Standards (SFAS) No. 133, Accounting for Derivative Instruments and Hedging
Activities,as subsequently amended by SFAS 137 and SFAS 138, which revises
the accounting and disclosure requirements related to derivative financial
instruments. SFAS No. 133 requires all derivatives to be recognized as assets
or liabilities at fair value. During the three months ended June 30, 2003
Rockford entered into several foreign forward contracts to hedge foreign
denominated assets with foreign denominated liabilities in order to mitigate
the risk of significant changes in earnings due to short-term foreign exchange
fluctuations. Changes in the fair value of derivatives were recognized through
net income. At June 30, 2003 Rockford had settled all foreign currency forward
contracts.

Stock-based Compensation

Rockford accounts for stock-based compensation using the intrinsic value method
prescribed in Accounting Principles Board (APB) Opinion No. 25, Accounting
for Stock Issued to Employees, and has adopted the disclosure-only alternative
of Statement of Financial Accounting Standards (SFAS) No. 123, Accounting
for Stock-based Compensation, and SFAS No. 148, Accounting for Stock-Based
Compensation - Transition and Disclosure. Rockford grants stock options for a
fixed number of shares to employees with an exercise price equal to the fair
value of the shares at date of grant. Fair value of the underlying shares is
determined by the market price at the date of the grant. Stock option grants to
non-employees are charged to expense based upon the fair value of the options
granted.

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The following table represents the effect on net income and earnings per share
if Rockford had applied the fair value based method and recognition provisions
of SFAS No. 123, Accounting for Stock-Based Compensation,to Rockfords
stock-based employee compensation:

|                                     |         |   |                                       |      |                  |   |       |      |      |   |      |      |  |   |       |      | 
|------------------------------------ | ------- | - | ------------------------------------- | ---- | ---------------- | - | ----- | ---- | ---- | - | ---- | ---- |  | - | ----- | ---- | 
|                                     |         |   | Three months ended                    |      | Six months ended
|                                     |         |   | June 30,                              |      | June 30,        
|                                     |         |   | 2003                                  |      | 2002             |   | 2003  |      | 2002
|                                     |         |   |                                       |      |                  |   |       |      |     
|                                     |         |   | (In thousands, except per share data)
|Net income as reported               |         | $ | 1,834                                 |      |                  | $ | 3,587 |      |      | $ | 887  |      |  | $ | 5,765 |     
|Proforma SFAS No. 123 expense        |         |   | (113                                  | )    |                  |   | (81   | )    |      |   | (188 | )    |  |   | (163  | )   
|                                     |         |   |                                       |      |                  |   |       |      |      |   |      |      |  |   |       |     
|Proforma net income                  |         | $ | 1,721                                 |      |                  | $ | 3,506 |      |      | $ | 699  |      |  | $ | 5,602 |     
|                                     |         |   |                                       |      |                  |   |       |      |      |   |      |      |  |   |       |     
|Proforma net income per common share |         |   |                                       |      |                  |   |       |      |      |   |      |      |  |   |       |     
|                                     | Basic   |   | $                                     | 0.19 |                  |   | $     | 0.41 |      |   | $    | 0.08 |  |   | $     | 0.67 | 
|                                     |         |   |                                       |      |                  |   |       |      |      |   |      |      |  |   |       |     
|                                     | Diluted |   | $                                     | 0.19 |                  |   | $     | 0.37 |      |   | $    | 0.08 |  |   | $     | 0.60 | 
|                                     |         |   |                                       |      |                  |   |       |      |      |   |      |      |  |   |       |     

For purposes of proforma disclosures, the estimated fair value of the options
is amortized to expense over the options vesting period.

2. Inventories

Inventories consist of the following:

|                 |  |                |        |              |  |   |        |  
|---------------- |  | -------------- | ------ | ------------ |  | - | ------ | -
|                 |  | June 30,       |        | December 31,
|                 |  | 2003           |        | 2002        
|                 |  |                |        |             
|                 |  | (In thousands)
|Raw materials    |  | $              | 11,383 |              |  | $ | 9,053  |  
|Work in progress |  |                | 2,215  |              |  |   | 2,330  |  
|Finished goods   |  |                | 28,978 |              |  |   | 24,386 |  
|                 |  |                |        |              |  |   |        |  
|                 |  |                | 42,576 |              |  |   | 35,769 |  
|Less allowances  |  |                | (3,780 | )            |  |   | (3,324 | )
|                 |  |                |        |              |  |   |        |  
|                 |  | $              | 38,796 |              |  | $ | 32,445 |  
|                 |  |                |        |              |  |   |        |  

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3. Income Per Share

The following table sets forth the computation of basic and diluted net income
per share:

|                                                                               |                                                                     |                        |       |                                       |     |                  |       |       |     |      |       |       |     |   |       |       |     | 
|------------------------------------------------------------------------------ | ------------------------------------------------------------------- | ---------------------- | ----- | ------------------------------------- | --- | ---------------- | ----- | ----- | --- | ---- | ----- | ----- | --- | - | ----- | ----- | --- | 
|                                                                               |                                                                     |                        |       | Three months ended                    |     | Six months ended
|                                                                               |                                                                     |                        |       | June 30,                              |     | June 30,        
|                                                                               |                                                                     |                        |       | 2003                                  |     | 2002             |       | 2003  |     | 2002
|                                                                               |                                                                     |                        |       |                                       |     |                  |       |       |     |     
|                                                                               |                                                                     |                        |       | (In thousands, except per share data)
|Numerator:                                                                     |                                                                     |                        |       |                                       |     |                  |       |       |     |      |       |       |     |   |       |      
|                                                                               | Numerator for basic and diluted net income per share                |                        | $     | 1,834                                 |     |                  | $     | 3,587 |     |      | $     | 887   |     |   | $     | 5,765 |    
|                                                                               |                                                                     |                        |       |                                       |     |                  |       |       |     |      |       |       |     |   |       |      
|Denominator:                                                                   |                                                                     |                        |       |                                       |     |                  |       |       |     |      |       |       |     |   |       |      
|                                                                               | Denominator for basic net income per share,
weighted average shares |                        |       | 8,829                                 |     |                  |       | 8,508 |     |      |       | 8,799 |     |   |       | 8,392 |    
|                                                                               | Effect of dilutive securities:                                      |                        |       |                                       |     |                  |       |       |     |      |       |       |     |   |       |       |    
|                                                                               |                                                                     | Employee stock options |       |                                       | 354 |                  |       |       | 869 |      |       |       | 352 |   |       |       | 904 | 
|                                                                               |                                                                     | Warrants               |       |                                       | 5   |                  |       |       | 7   |      |       |       | 4   |   |       |       | 7   | 
|                                                                               |                                                                     |                        |       |                                       |     |                  |       |       |     |      |       |       |     |   |       |      
|                                                                               | Dilutive potential common shares                                    |                        |       | 359                                   |     |                  |       | 876   |     |      |       | 356   |     |   |       | 911   |    
|                                                                               |                                                                     |                        |       |                                       |     |                  |       |       |     |      |       |       |     |   |       |      
|Denominator for diluted net income per share,
adjusted weighted average shares |                                                                     |                        | 9,188 |                                       |     |                  | 9,384 |       |     |      | 9,155 |       |     |   | 9,303 |      
|                                                                               |                                                                     |                        |       |                                       |     |                  |       |       |     |      |       |       |     |   |       |      
|Basic net income per share                                                     |                                                                     | $                      | 0.21  |                                       |     | $                | 0.42  |       |     | $    | 0.10  |       |     | $ | 0.69  |      
|                                                                               |                                                                     |                        |       |                                       |     |                  |       |       |     |      |       |       |     |   |       |      
|Diluted net income per share                                                   |                                                                     | $                      | 0.20  |                                       |     | $                | 0.38  |       |     | $    | 0.10  |       |     | $ | 0.62  |      
|                                                                               |                                                                     |                        |       |                                       |     |                  |       |       |     |      |       |       |     |   |       |      

At June 30, 2003, options to purchase approximately 541,000 shares of Rockford
stock were excluded from the calculation of the diluted net income per share
because they were anti-dilutive.

4. Restructuring

During the three months ended June 30, 2003, Rockford continued the
restructuring of its MB Quart operations in Germany. The restructuring reduced
operating income by approximately $367,000 primarily due to accrued and
incurred severance costs related to reductions in the number of employees in
Germany.

During the six months ended June 30, 2003, Rockford has restructured its
operations in Germany, Arizona and Michigan, which management expects will
result in improved efficiencies, customer service and cost savings. The
restructuring of MB Quarts operations in Germany reduced the year to date
operating income by approximately $792,000. The Arizona and Michigan
restructuring resulted in severance and benefit costs of approximately
$423,000, which increased the selling, general and administrative expenses for
the six months ended June 30, 2003.

During the three months ended March 31, 2003, Rockford discontinued its
Japanese subsidiarys operations and began selling products to an independent
distributor in Japan to enhance profitability. The write down of assets and
additional closure costs associated with the shutdown of the Japanese
distribution facility resulted in approximately $1,100,000 of expenses. These
expenses were partially offset by a reduced tax liability of $900,000 related
to a deduction for the write off of Rockfords investment in the stock of the
Japanese subsidiary and the write off of bad debt related to the Japanese
subsidiary. The deduction partially offsets the expense resulting in a net
loss of approximately $200,000 relating to the Japanese subsidiary during the
first quarter of 2003.

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The following table shows, for the periods indicated, restructuring charges by
location of operations:

|                            |  |                    |         |                  |  |                    |           |  |  |   |         | 
|--------------------------- |  | ------------------ | ------- | ---------------- |  | ------------------ | --------- |  |  | - | ------- | 
|                            |  | Three months ended |         | Six months ended |  | Reserve Balance at
|Description                 |  | June 30, 2003      |         | June 30, 2003    |  | June 30, 2003     
|                            |  |                    |         |                  |  |                   
|Germany operations          |  | $                  | 367,000 |                  |  | $                  | 792,000   |  |  | $ | 528,000 | 
|United States operations    |  |                    |        |                  |  |                    | 423,000   |  |  | $ | 174,000 | 
|Japan operations            |  |                    |        |                  |  |                    | 200,000   |  |  |   |        | 
|                            |  |                    |         |                  |  |                    |           |  |  |   |         | 
|Total restructuring charges |  | $                  | 367,000 |                  |  | $                  | 1,415,000 |  |  | $ | 702,000 | 
|                            |  |                    |         |                  |  |                    |           |  |  |   |         | 

5. Leases

The $5.0 million capital lease credit facility under which Rockford previously
funded leases expired on June 28, 2003. Rockford used the capital lease credit
facility for the purchase of capital equipment under agreements structured as
three-year capital lease obligations. As at June 30, 2003, the capital lease
credit facility had an outstanding balance of $1.9 million with a
weighted-average interest rate of 5.67% per annum. Expiration of the existing
leases is not accelerated and future minimum payments will continue through the
remaining terms originally established in the agreements.

6. Subsequent Events

One of the covenants in
Rockfords credit facility requires maintenance of minimum
levels of EBITDA computed on a rolling 3 month basis. Rockford was in
compliance with this debt covenant (and all of its other debt
covenants) as at June 30, 2003. At July 31, 2003, however,
monthly results indicate a potential violation of this debt covenant. Rockford
has notified its banks of the potential covenant violation and based on initial
discussions with its banks the current credit facility may be modified to eliminate
the covenant violation. Notwithstanding Rockfords belief that it
will be able to modify the credit facility to eliminate this
potential covenant violation, Rockford has elected to treat the
entire $20.6 million credit facility balance as a current liability
as at June 30, 2003. Because of the scheduled expiration of the facility at
July 5, 2004, this treatment would have become effective as at July
5, 2003 in any event. Rockford does not have any credit facilities
or other contracts that will be affected by this treatment.

7. Recent Accounting Pronouncements

The following paragraphs discuss three recent accounting pronouncements that
may affect reporting on our financial statements; however, we do not expect the
adoption of any of these accounting pronouncements will have a material impact
on our financial statements.

In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity. SFAS No. 150
establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity. It
requires that an issuer classify a financial instrument that is within its
scope as a liability (or an asset in some circumstances). Many of those
instruments were previously classified as equity. SFAS No. 150 is effective for
financial instruments entered into or modified after May 31, 2003, and
otherwise is effective at the beginning of the first interim period beginning
after June 15, 2003. It is to be implemented by reporting the cumulative effect
of a change in an accounting principle for financial instruments created before
the issuance date of SFAS No. 150 and still existing at the beginning of the
interim period of adoption. Rockford does not believe that the adoption of SFAS
No. 150 will have a material impact on our consolidated financial position or
results of operations.

In January 2003, the FASB issued FASB Interpretation No. 46, Consolidation of
Variable Interest Entities (FIN

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46). This interpretation of Accounting Research Bulletin No. 51, Consolidated
Financial Statements, addresses consolidation of variable interest entities.
FIN 46 requires certain variable interest entities to be consolidated by the
primary beneficiary if the entity does not effectively disperse risks among the
parties involved. The provisions of FIN 46 are effective immediately for those
variable interest entities created after January 31, 2003. The provisions are
effective for the first period beginning after June 15, 2003 for those variable
interests held prior to February 1, 2003. Rockford does not currently have any
variable interest entities as defined in FIN 46. Accordingly, we do not believe
that the adoption of FIN 46 will have a material impact on our consolidated
financial position or results of operations.

In November 2002, the FASB issued FASB Interpretation No. 45, Guarantors
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others (FIN 45). FIN 45 requires that upon
issuance of a guarantee, a guarantor must recognize a liability for the fair
value of an obligation assumed under a guarantee. FIN 45 also requires
additional disclosures by a guarantor in its interim and annual financial
statements about the obligations associated with guarantees issued. The
recognition provisions of FIN 45 are effective for any guarantees issued or
modified after December 31, 2002. Rockford does not currently have any
guarantees of entities not included in our consolidated financial statements
and has not historically provided such guarantees. Accordingly, we do not
believe that the adoption of FIN 45 will have a material impact on our
consolidated financial position or results of operations.




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

You should read this discussion and analysis of financial condition and results
of operations in conjunction with our unaudited condensed consolidated
financial statements and the related disclosures included elsewhere in this
report, and Managements Discussion and Analysis of Financial Condition and
Results of Operations included as part of our Form 10-K for the year 2002,
filed with the SEC on March 7, 2003.

Forward-Looking Statements

We make forward-looking statements in this report including, without
limitation, statements concerning the future of our industry, product
development, business strategy (including the possibility of future
acquisitions), continued acceptance and growth of our products, dependence on
significant customers and suppliers, and the adequacy of our available cash
resources. Our statements may contain projections of results of operations or
of financial condition. You may identify these statements by our use of
forward-looking terminology such as may, will, believe, expect,
anticipate, estimate, continue or other similar words.

Forward-looking statements are subject to many risks and uncertainties. We
caution you not to place undue reliance on our forward-looking statements,
which speak only as at the date on which they are made. Our actual results may
differ materially from those described in our forward-looking statements. We
disclaim any obligation or undertaking
to update our forward-looking statements to reflect changes in our expectations
or changes in events, conditions, or circumstances on which our expectations
are based.

When considering our forward-looking statements, you should keep in mind the
risk factors and other cautionary statements identified in this report, in our
Annual Report on Form 10-K for the year 2002, filed with the SEC on March 7,
2003, and in Exhibit 99.9 to our Annual Report, Risk Factors That May Affect
Rockfords Operating

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Results, Business Prospects and Stock Price. The risk
factors noted throughout this report and our Annual Report, particularly in the
discussion in Exhibit 99.9 to our Annual Report, and other risk factors that we
have not anticipated or discussed, could cause our actual results to differ
significantly from those anticipated in our forward-looking statements.

Overview

Rockford designs, manufacturers and distributes high-performance audio systems
for the mobile, professional and home theater audio markets. Our mobile audio
products are sold primarily in the worldwide mobile audio aftermarket to
consumers who want to improve the audio systems in their cars, trucks, boats
and airplanes. We market our mobile audio products under the Rockford Fosgate,
Lightning Audio, Q-Logic and MB Quart brand names, selling products that
include digital and analog amplifiers, speakers, source units, CD changers and
accessories. During the three months ended June 30, 2003, Rockford began
selling mobile audio products using the 2 Fast 2 Furiousbrand name under a
cross-marketing promotional campaign licensed by Universal Studios. Based on
dollar sales in 2002 of all our brands, we rank first in U.S. market share for
mobile audio amplifiers and second for mobile audio speakers.

We sell home theater products under the MB Quart, Fosgate Audionics and NHT
brands. We also sell professional audio products under the MB Quart, NHT, and
Hafler brands. Additionally we have invested in SimpleDevices Inc., which
licenses its standards-based SimpleWare and SimpleMedia Services software to
consumer electronics, PC, automotive and network equipment OEMs. We began
shipping licensed SimpleDevices products for home applications under the OmniFi
brand and plan to begin shipping products suitable for mobile applications
during the 3rd Quarter of 2003.

We manufacture amplifiers, signal processors and various accessories at our
facilities in Tempe, Arizona, and mid-range speakers, woofers and subwoofers at
our facility in Grand Rapids, Michigan. We manufacture Q-Logic enclosure and
kick panel products at our facilities in Stillwater, Oklahoma. We manufacture
most of our MB Quart products, and have begun to manufacture some Rockford
Fosgate speakers, at our facility in Obrigheim, Germany.

We generated over 95% of our sales in the quarter ended June 30, 2003, and over
97% of our sales in the quarter ended June 30, 2002, from our mobile audio
products.

In the U.S., we sell almost all of our mobile audio products using commissioned
independent sales representative firms who are supported by our employee
regional managers. Internationally, we sell products in 65 countries. In
Germany we sell through wholly owned subsidiaries using commissioned
independent sales representatives. In Canada, Austria, Switzerland and Italy we
sell through commissioned independent sales representatives. In other
countries, we sell our products to independent distributors who resell them to
retailers. During 2003, we closed our
Japanese subsidiary and started selling our products to an independent
distributor who sells them to Japanese retailers.

Sales of our mobile audio products to Best Buy accounted for 23.6% of our sales
for the six months ended June 30, 2003, and 15.1% of our sales for the six
months ended June 30, 2002. No other customer accounted for more than 10% of
our sales during these periods. Sales of our 2 Fast 2 Furiousproducts under
the Lightning Audio Bolt brand to Wal-Mart were less than 10% of our sales for
the three-months and six-months ended June 30, 2003; however,

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they were a
significant percentage for the quarter. Our business plans contemplate that
Best Buy and Wal-Mart will continue to account for a significant portion of our
sales for the foreseeable future.

We anticipate that Best Buy and Wal-Mart will help us to smooth out our normal
sales seasonality. For our specialty and audio-video dealers, our peak-selling
season is in the spring and summer and our slowest season is typically in the
fourth quarter. We believe we experience this seasonality because our core
consumers tend to buy mobile audio products during the spring and summer when
many of them are on semester breaks and when generally more favorable weather
facilitates installation of our products. Best Buy sales, while strong in May
and June, are not as concentrated among our core consumers and are also strong
in the fourth quarter. We expect our sales to Wal-Mart will reach a new
consumer base and have a seasonal pattern comparable to our sales to Best Buy,
which will also help to smooth our seasonal sales pattern.

Best Buy and Wal-Mart are not obligated to any long-term purchases of our
products and have considerable discretion to reduce, change or terminate
purchases of our products. The loss of these two customers or significant
reductions in their purchases of our products would materially reduce our
sales.

We believe our acquisition of NHT will also moderate the seasonality of our
sales in future years, since home audio and home theater sales tend to be more
concentrated in the third and fourth quarters of the year.

During the three months ended June 30, 2003, we continued the restructuring of
our MB Quart operations in Germany. The restructuring reduced operating income
by approximately $792,000 for the six months ended June 30, 2003 primarily due
to accrued and incurred severance costs related to reductions in the number of
employees in Germany. We expect these restructuring efforts will result in
improved efficiencies and customer service as well as cost savings.

Results of Operations

The following table shows, for the periods indicated, selected
consolidated statements of operations data expressed as a percentage of net
sales:

|                                           |                            |  |                    |      |                  |  |       |      |      |  |       |      |  |  |       |      | 
|------------------------------------------ | -------------------------- |  | ------------------ | ---- | ---------------- |  | ----- | ---- | ---- |  | ----- | ---- |  |  | ----- | ---- | 
|                                           |                            |  | Three months ended |      | Six months ended
|                                           |                            |  | June 30,           |      | June 30,        
|                                           |                            |  | 2003               |      | 2002             |  | 2003  |      | 2002
|                                           |                            |  |                    |      |                  |  |       |      |     
|Net sales                                  |                            |  | 100.0              | %    |                  |  | 100.0 | %    |      |  | 100.0 | %    |  |  | 100.0 | %   
|Cost of goods sold                         |                            |  | 64.1               |      |                  |  | 60.9  |      |      |  | 65.5  |      |  |  | 61.5  |     
|                                           |                            |  |                    |      |                  |  |       |      |      |  |       |      |  |  |       |     
|Gross profit                               |                            |  | 35.9               |      |                  |  | 39.1  |      |      |  | 34.5  |      |  |  | 38.5  |     
|Operating expenses:                        |                            |  |                    |      |                  |  |       |      |      |  |       |      |  |  |       |     
|                                           | Sales and marketing        |  |                    | 17.1 |                  |  |       | 14.8 |      |  |       | 17.8 |  |  |       | 15.6 | 
|                                           | General and administrative |  |                    | 10.2 |                  |  |       | 11.6 |      |  |       | 11.6 |  |  |       | 11.2 | 
|                                           | Research and development   |  |                    | 3.7  |                  |  |       | 2.2  |      |  |       | 4.5  |  |  |       | 2.2  | 
|                                           |                            |  |                    |      |                  |  |       |      |      |  |       |      |  |  |       |     
|Sales, general and administrative expenses |                            |  | 31.0               |      |                  |  | 28.6  |      |      |  | 33.9  |      |  |  | 29.0  |     
|                                           |                            |  |                    |      |                  |  |       |      |      |  |       |      |  |  |       |     
|Operating income                           |                            |  | 4.9                |      |                  |  | 10.5  |      |      |  | 0.6   |      |  |  | 9.5   |     
|Interest and other income, net             |                            |  | 0.5                |      |                  |  | 0.6   |      |      |  | 0.3   |      |  |  | 0.2   |     
|                                           |                            |  |                    |      |                  |  |       |      |      |  |       |      |  |  |       |     
|Income before tax                          |                            |  | 5.4                |      |                  |  | 11.1  |      |      |  | 0.9   |      |  |  | 9.7   |     
|Income tax expense                         |                            |  | 2.3                |      |                  |  | 4.1   |      |      |  | 0.3   |      |  |  | 3.6   |     
|Minority interest                          |                            |  | 0.1                |      |                  |  |      |      |      |  | 0.3   |      |  |  |      |     
|                                           |                            |  |                    |      |                  |  |       |      |      |  |       |      |  |  |       |     
|Net income                                 |                            |  | 3.2                | %    |                  |  | 7.0   | %    |      |  | 0.9   | %    |  |  | 6.1   | %   
|                                           |                            |  |                    |      |                  |  |       |      |      |  |       |      |  |  |       |     

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Cost of goods sold primarily consists of raw materials, direct labor and
manufacturing costs associated with production of our products as well as
warranty, in-bound freight, warehousing and customer service expenses.

Sales and marketing expenses primarily consist of salaries, sales commissions
and costs of advertising, trade shows, distributor and sales representative
conferences and freight.

General and administrative expenses primarily consist of salaries, facilities
and other costs of our accounting, finance, management information systems,
administrative and executive departments, as well as legal, accounting and
other professional fees and expenses associated with our business.

Research and development expenses primarily consist of salaries associated with
our research and development personnel and legal costs related to our
intellectual property.

Geographic Distribution of Sales

Our sales by geographic region were as follows:

|               |                 |   |                    |        |                  |   |        |        |      |   |        |        |  |   |        |        | 
|-------------- | --------------- | - | ------------------ | ------ | ---------------- | - | ------ | ------ | ---- | - | ------ | ------ |  | - | ------ | ------ | 
|               |                 |   | Three months ended |        | Six months ended
|               |                 |   | June 30,           |        | June 30,        
|               |                 |   | 2003               |        | 2002             |   | 2003   |        | 2002
|               |                 |   |                    |        |                  |   |        |        |     
|               |                 |   | (In thousands)     |        | (In thousands)  
|REGION:        |                 |   |                    |        |                  |   |        |        |      |   |        |        |  |   |        |       
|United States  |                 | $ | 44,810             |        |                  | $ | 42,119 |        |      | $ | 78,739 |        |  | $ | 78,355 |       
|Other Americas |                 |   | 3,622              |        |                  |   | 1,868  |        |      |   | 4,989  |        |  |   | 4,863  |       
|Europe         |                 |   | 6,570              |        |                  |   | 5,383  |        |      |   | 10,101 |        |  |   | 8,732  |       
|Asia           |                 |   | 1,566              |        |                  |   | 1,858  |        |      |   | 2,362  |        |  |   | 3,011  |       
|               |                 |   |                    |        |                  |   |        |        |      |   |        |        |  |   |        |       
|               | Total sales (1) |   | $                  | 56,568 |                  |   | $      | 51,228 |      |   | $      | 96,191 |  |   | $      | 94,961 | 
|               |                 |   |                    |        |                  |   |        |        |      |   |        |        |  |   |        |       



---

|(1) |  | Sales are attributed to geographic regions based on the location of
customers. No single foreign country accounted for greater than 10% of
our sales.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------

Six Months Ended June 30, 2003, Compared to Six Months Ended June 30, 2002

In the following discussion, certain increases or decreases may differ due to
rounding.

Net Sales. Sales increased by $1.2 million, or 1.3%, to $96.2 million for the
six months ended June 30, 2003, from $95.0 million for the six months ended
June 30, 2002. The increase in sales was primarily the result of growth in
big-box retailers related to the 2 Fast 2 Furiousproducts and shipments of NHT
products. This growth more than offset sales declines in the domestic specialty
dealer channel as a result of continued difficulties and slowness in the mobile
audio market and also offset the failure to secure expected sales because of
the delayed release of our OmniFi brand products.

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U.S. sales increased by $0.3 million, or less than 0.1%, to $78.7 million for
the six months ended June 30, 2003, from $78.4 million for the six months ended
June 30, 2002. International sales increased by $0.9 million, or 5.1%, to
$17.5 million for the six months ended June 30, 2003, from $16.6 million for
the six months ended June 30, 2002.

Cost of Goods Sold. Cost of goods sold increased by $4.6 million, or 7.9%, to
$63.0 million for the six months ended June 30, 2003, from $58.4 million for
the six months ended June 30, 2002. As a percent of sales, cost of goods sold
increased to 65.5% for the six months ended June 30, 2003, from 61.5% for the
six months ended June 30, 2002. The primary reasons for this increase were a
heavier mix of lower-margined product, higher levels of markdown required to
clear end-of-life inventory in a difficult market, an increase in in-bound
freight costs associated with our accelerated delivery of products to Wal-Mart
and restructuring costs related to our German operations.

Sales and Marketing Expenses. Sales and marketing expenses increased by $2.2
million, or 15.1%, to
$17.1 million for the six months ended June 30, 2003, from $14.8 million for
the six months ended June 30, 2002. As a percent of sales, sales and marketing
expenses increased to 17.8% for the six months ended June 30, 2003, from 15.6%
for the six months ended June 30, 2002. The increase as a percent of sales was
primarily due to costs associated with Universal Studios licensing fees for our
2 Fast 2 Furiousproducts, additional cost related to the acquisitions of NHT
and SimpleDevices, restructuring costs and increased out-bound freight and
Canadian duty costs.

General and Administrative Expenses. General and administrative expenses
increased by $0.6 million, or 5.8%, to $11.2 million for the six months ended
June 30, 2003, from $10.6 million for the six months ended June 30, 2002. As a
percent of sales, general and administrative expenses increased to 11.6% for
the six months ended June 30, 2003, from 11.1% for the six months ended June
30, 2002. The increase as a percent of sales was driven primarily by $0.9
million of abandoned acquisition costs, costs associated with the closing of
Rockfords Japanese subsidiary, restructuring costs and additional costs
related to the acquisitions of NHT and SimpleDevices.

Research and Development Expenses. Research and development expenses increased
by $2.2 million, or 104.7%, to $4.3 million for the six months ended June 30,
2003, from $2.1 million for the six months ended June 30, 2002. As a percent
of sales, these expenses increased to 4.5% for the six months ended June 30,
2003, from 2.2% for the six months ended June 30, 2002. The increase is
primarily due to increased personnel and product development costs relating to
development of new products for our core brands in anticipation of next years
new product releases. In addition, some of the increase was attributable to
development costs related to the acquisitions of NHT and SimpleDevices and an
increase in legal costs associated with the defense of the Fiori patent matter.

Operating Income. Operating income decreased by $8.5 million, or 93.8%, to
$0.6 million for the six months ended June 30, 2003, from $9.0 million for the
six months ended June 30, 2002. As a percent of sales, operating income
decreased to 0.6% for the six months ended June 30, 2003, from 9.5% for the
three months ended June 30, 2002. This decrease is primarily attributable a
decline in specialty dealer sales, restructuring costs, abandoned acquisition
costs, legal costs and additional costs related to the acquisitions of NHT and
SimpleDevices.

Interest and Other Income, Net. Interest and other income, net, primarily
consists of interest expense and currency gains and losses. Interest and other
income, net, decreased by $0.1 million to result in income of $0.3 million for
the six months ended June 30, 2003, compared to income of $0.2 million for the
six months ended June 30, 2002. The decrease was primarily due to foreign
currency gains, which were partially offset by increased interest expense due

12



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to the increased balance of our line of credit.

Income Tax Expense. Income tax expense decreased by $3.1 million, or 92.5%, to
$0.3 million for the six months ended June 30, 2003, from $3.4 million for the
six months ended June 30, 2002. The effective income tax rates were 22.3% for
the six months ended June 30, 2003, and 37.1% for the six months ended June 30,
2002. The decrease in effective income tax rates was primarily due to the tax
benefits related to the substantial closure of our Japanese subsidiary,
partially offset by a net loss from SimpleDevices for which no tax benefit was
recorded.

Three Months Ended June 30, 2003, Compared to Three Months Ended June 30, 2002

In the following discussion, certain increases or decreases may differ due to
rounding.

Net Sales. Sales increased by $5.3 million, or 10.4%, to $56.6 million for the
three months ended June 30, 2003, from $51.2 million for the three months ended
June 30, 2002. The increase in sales was primarily the result of
growth in big-box retailers related to the 2 Fast 2 Furiousproducts, shipments
of NHT products and international growth. The increase more than offset sales
declines in our domestic specialty dealer channel as a result of continued
slowness in the mobile audio market and also offset the failure to secure
expected sales because of the delayed release of our OmniFi brand products.

U.S. sales increased by $2.7 million, or 6.4%, to $44.8 million for the three
months ended June 30, 2003, from $42.1 million for the three months ended June
30, 2002. International sales increased by $2.6 million, or 29.1%, to $11.8
million for the three months ended June 30, 2003, from $9.1 million for the
three months ended June 30, 2002.

Cost of Goods Sold. Cost of goods sold increased by $5.0 million, or 16.2%, to
$36.2 million for the three months ended June 30, 2003, from $31.2 million for
the three months ended June 30, 2002. As a percent of sales, cost of goods
sold increased to 64.1% for the three months ended June 30, 2003, from 60.9%
for the three months ended June 30, 2002. The primary reasons for this
increase were a heavier mix of lower-margined product and an increase in
in-bound freight costs associated with our accelerated delivery of products to
Wal-Mart.

Sales and Marketing Expenses. Sales and marketing expenses increased by $2.1
million, or 27.5%, to
$9.7 million for the three months ended June 30, 2003, from $7.6 million
for the three months ended June 30, 2002. As a percent of sales, sales and
marketing expenses increased to 17.1% for the three months ended June 30, 2003,
from 14.8% for the three months ended June 30, 2002. The increase as a percent
of sales was primarily due to costs associated with Universal Studios licensing
fees for the 2 Fast 2 Furiousproducts and additional cost related to the
acquisitions of NHT and SimpleDevices.

General and Administrative Expenses. General and administrative expenses
decreased by $0.1 million, or 2.7%, to $5.8 million for the three months ended
June 30, 2003, from $5.9 million for the three months ended June 30, 2002. As a
percent of sales, general and administrative expenses decreased to 10.2% for
the three months ended June 30, 2003, from 11.6% for the three months ended
June 30, 2002. The decrease was primarily attributable to reduced
performance-based compensation expense offset by $0.9 million of abandoned
acquisition costs, restructuring costs associated with our German operations
and additional costs related to the acquisitions of NHT and SimpleDevices.

Research and Development Expenses. Research and development expenses increased
by $1.0 million, or 84.1%, to $2.1 million for the three months ended June 30,
2003, from $1.1 million for the three months ended June 30, 2002. As a percent
of sales, these expenses increased to 3.7% for the three months ended June 30,
2003, from 2.2% for the

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three months ended June 30, 2002. The increase is
primarily due to increased personnel and product development costs relating to
development of new products for our core brands in anticipation of next years
new product releases. In addition, some of the increase was attributable to
development costs related to the acquisitions of NHT and SimpleDevices and an
increase in legal costs associated with the defense of the Fiori patent matter.

Operating Income. Operating income decreased by $2.6 million, or 48.4%, to
$2.8 million for the three months ended June 30, 2003, from $5.4 million for
the three months ended June 30, 2002. As a percent of sales, operating income
decreased to 4.9% for the three months ended June 30, 2003, from 10.5% for the
three months ended June 30, 2002. This decrease is primarily attributable to a
decline in specialty dealer sales, restructuring costs, abandoned acquisition
costs, legal costs and additional costs related to the acquisitions of NHT and
SimpleDevices.

Interest and Other Income, Net. Interest and other income, net, primarily
consists of interest expense and currency gains and losses. Interest and other
income, net, remained flat at $0.3 million for the three months ended June 30,
2003 compared to the three months ended June 30, 2002. An increase in foreign
currency gains was offset by
increased interest expense due to the increased balance of our line of credit.

Income Tax Expense. Income tax expense decreased by $0.8 million, or 38.4%, to
$1.3 million for the three months ended June 30, 2003, from $2.1 million for
the three months ended June 30, 2002. The effective income tax rates were
41.5% for the three months ended June 30, 2003, and 37.1% for the three months
ended June 30, 2002. The higher effective income tax rate for the second
quarter of 2003 was due to a net loss from SimpleDevices for which no tax
benefit was recorded.

Liquidity and Capital Resources

We have financed our business primarily using existing working capital, cash
flows from operations, the proceeds from our initial public offering, and bank
borrowings. On June 28, 2001, we entered into a $30.0 million revolving credit
facility with Bank of America, N.A. and Bank One, Arizona, N.A. We had working
capital of $43.9 million at June 30, 2003, compared to $52.4 million at
December 31, 2002. The treatment of our credit facility as a
current liability reduced our working capital by the entire $20.6
million balance of that facility. At June 30, 2003, we maintained $ 0.8 million of cash and
cash equivalent balances.

As at June 30, 2003, we had a balance of $20.6 million on our $30.0 million
bank credit facility, which is collateralized by substantially all of our
assets and consists of a swing line of credit and a revolving line of credit.
The swing line of credit has a blended variable interest rate per annum of
Prime plus 100 basis points. The revolving line of credit has a blended
variable interest rate of LIBOR plus 300 basis points. As of June 30, 2003, the
bank credit facility had a weighted average interest rate of 4.18% per annum.
The bank credit facility is scheduled to mature on July 5, 2004. The bank
credit facility contains provisions that, among other things, require that we
maintain certain minimum levels of EBITDA, total leverage ratio, net worth and
debt service coverage and also limit the amount of total debt incurred and
annual capital expenditures. We were in compliance with all debt covenants as
at June 30, 2003.

One of the covenants in our credit
facility requires that we maintain minimum levels of EBITDA computed
on a rolling 3 month basis. We must comply with this covenant each
month, which makes our compliance difficult to plan for and subject
to unusual events in a single month. Although we were in compliance
with this debt covenant (and all of our other debt covenants) as at
June 30, 2003, our July 31, 2003 monthly results may have
caused us to violate this debt covenant primarily because of a sales
shortfall compared to plan.
We are putting in place a plan to address this shortfall, but the
monthly nature of the covenant did not allow us to correct the
violation before the end of July. In the absence of changes to this
covenant, we anticipate that we would continue to violate its
requirements through September because of the presence of the July
numbers in the computation of 3 month rolling EBITDA through that
date. We believe the sales shortfall will not materially affect our
ability to achieve previously issued guidance for the second half of
the year.

We have notified our banks of our
potential July
covenant violation and based on our initial discussions we believe we
should be able to modify our current credit facility to eliminate this
potential covenant violation. We do not anticipate that
this potential violation will
cause our banks to take action that would
substantially restrict the availability under our credit line or
otherwise accelerate the maturity date of our credit facility. We
intend to pursue discussions with both of our banks with a goal of
putting a revised credit facility in place before the end of
September. These discussions are at a very early stage and we cannot
be certain whether we will be able to achieve this goal.

Because our credit facility is
scheduled to expire on July 5, 2004, its entire balance of $20.6
million would otherwise become a current liability at July 5, 2003.
Notwithstanding our belief that we will be able to modify our credit
facility to eliminate the potential covenant violation, we have
elected because of the violation to treat the entire balance of our
credit facility as a current liability as at June 30, 2003. We do not
have any credit facilities or other contracts that will be affected
by this treatment.

The $5.0 million capital lease credit facility under which we previously funded
leases expired on June 28, 2003. We used the capital lease credit facility for
the purchase of capital equipment under agreements structured as three-year
capital lease obligations. As at June 30, 2003, the capital lease credit
facility had an outstanding balance of $1.9 million with a weighted-average
interest rate of 5.67% per annum. Expiration of the existing leases is not
accelerated and future minimum payments will continue through the remaining
terms originally established in the agreements.

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We believe additional sources
of capital lease credit availability can be obtained to replace the expired
facility.

Net cash (used in) provided by operating activities was $(9.1) million for the
six months ended June 30, 2003, and $1.0 million for the six months ended June
30, 2002. Cash (used in) provided by operating activities is less than net
income due to the effect of increasing accounts receivables, inventories and
prepaid expenses, which was partially offset by an increase in accounts
payable, income taxes payable and other accrued expenses.

Net cash used in investing activities was $(3.5) million for the six months
ended June 30, 2003, and $(3.5) million for the six months ended June 30, 2002.
Net cash used in investing activities was primarily related to purchases of
property and equipment.

Net cash provided by (used in) financing activities was $12.1 million for the
six months ended June 30, 2003, and $(0.2) million for the six months ended
June 30, 2002. Net cash provided by financing activities during the six months
ended June 30, 2003, was primarily a result of increased borrowings on our bank
credit facility, which was
partially offset by payments on capital leases.

We believe our existing resources and anticipated cash flows from operations,
coupled with availability on our credit facility, will be sufficient to meet
our cash needs for the next twelve months. However, our increased borrowings on
our line of credit have reduced the amount available to us to accommodate
growth of new brands or to pursue acquisitions. In anticipation of growth
related to the launch of our new OmniFi brand we have begun negotiations with
our financial institutions to expand our current credit facility.
Based on our initial discussions with our banks, we believe that we
should be able to modify our current credit facility. We intend to
pursue discussions with both of our banks with a goal of putting a
revised facility in place before the end of September. These
discussions are at a very early stage and we cannot be certain
whether we will be able to achieve this goal. Should we
pursue an acquisition larger than our existing resources can support, we may
need to seek additional debt or equity resources.

Critical Accounting Policies and Estimates

The methods, estimates and judgments we use in applying our accounting policies
have a significant impact on the results we report in our consolidated
condensed financial statements. We evaluate our estimates and judgments on an
on-going basis. We base our estimates on historical experience and assumptions
that we believe to be reasonable under the circumstances. Our experience and
assumptions form the basis for our judgments about the carrying value of assets
and liabilities that are not readily apparent from other sources. Actual
results may vary from what we anticipate and different assumptions or estimates
about the future could change our reported results. We believe the following
accounting policies are the most critical to us, in that they are important to
the portrayal of our financial statements and they require our most difficult,
subjective or complex judgments in the preparation of our consolidated
financial statements:

Revenue Recognition.We recognize revenue pursuant to Staff Accounting Bulletin
No. 101, Revenue Recognition in Financial Statements. Accordingly, we recognize
revenue and record sales, net of related discounts, when all of the following
criteria are met:



| |  |  | Persuasive evidence of an arrangement exists;          
| | - |  | -------------------------------------------------------
|
| |  |  | Ownership has transferred to the customer;             
|
| |  |  | The price to the customer is fixed or determinable; and
|
| |  |  | Collectibility is reasonably assured.                  

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We sell almost all of our products F.O.B. our facility, so that upon shipment
of products, the above criteria are met and revenue is recognized.
Additionally, we recognize revenue from the sale of software in accordance with
SOP 97-2, Software Revenue Recognition.Revenue is recorded from packaged
software and license fees when persuasive evidence of an arrangement exists,
the software product has been shipped, the fees are fixed and determinable,
collectibility is reasonably assured and vendor-specific objective evidence of
fair value exists for any undeliverable products or services (elements) of
the arrangement.

We also record reductions to revenue for estimated customer returns and
additional sales incentive offerings such as growth and volume incentive
rebates and prompt pay discounts based on historical rates. Should a greater
proportion of customers return product or redeem incentives than we estimate,
we may need to make additional reductions to revenue.

Intangible Assets.On January 1, 2002, we adopted Statement of Financial
Accounting Standards (SFAS) No. 141, Business Combinations, and SFAS No. 142,
Goodwill and Other Intangible Assets. When we account for acquired businesses
as purchases, we allocate purchase prices to the assets, definite-lived
intangible assets, and liabilities
acquired based on the estimated fair values on the respective acquisition
dates. Based on these values, any excess purchase price over the fair value of
the net assets acquired is allocated to goodwill

Prior to January 1, 2002, we amortized goodwill over the useful life of the
underlying asset, not to exceed 15 years. On January 1, 2002, we began
accounting for goodwill under the provisions of SFAS Nos. 141 and 142. As at
June 30, 2003, we had gross goodwill of $7,441,000 and accumulated amortization
of $374,000. For the three and six months ended June 30, 2003 and 2002, we did
not recognize amortization expense related to goodwill. We completed two
acquisitions in the third quarter of 2001 and two acquisitions in the fourth
quarter of 2002 and have not recorded any amortization for these acquisitions
on amounts allocated to goodwill in accordance with SFAS No. 141.

In assessing the recoverability of our goodwill and other intangibles, we must
make assumptions about estimated future cash flows and other factors to
determine the fair value of the respective assets. If these estimates or their
related assumptions change in the future, we may be required to record
impairment charges for these assets not previously recorded. Some factors we
consider important which could trigger an impairment review include the
following:



| |  |  | Significant underperformance relative to expected historical or projected future operating results;          
| | - |  | -------------------------------------------------------------------------------------------------------------
|
| |  |  | Significant changes in the manner of our use of the acquired assets or the strategy for our overall business;
|
| |  |  | Our market capitalization relative to net book value; and                                                    
|
| |  |  | Significant negative industry or economic trends.                                                            

We have tested goodwill for impairment using the two-step process prescribed in
SFAS No. 142. The first step is a screen for potential impairment, while the
second step measures the amount of the impairment, if any. We performed the
first of the required impairment tests for goodwill as at December 31, 2002,
and determined that our goodwill is not impaired and it is not necessary to
undertake the second step in the two-step process. During the three months and
six months ended June 30, 2003 and 2002, we did not record any impairment
losses related to goodwill and other intangible assets.

Allowance for Doubtful Accounts.We maintain an allowance for doubtful
accounts, based on historical rates, for estimated losses resulting from the
inability of our customers to make required payments. If the financial
condition of

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our customers were to deteriorate, resulting in an impairment of
their ability to make payments, additional allowances might be required.

Excess and Obsolete Inventory.We maintain a reserve for estimated obsolescence
or unmarketable inventory equal to the difference between the cost of inventory
and the estimated market value based upon assumptions about future demand and
market conditions. If actual future demand or market conditions are less
favorable than those we project, additional inventory write-downs might be
required. Any change to the reserve arising from forecast revisions is
reflected in cost of sales in the period the revision is made.

Warranty.We maintain a warranty reserve, based on historical rates, for costs
associated with the repair or replacement of product that fails to meet our
standard warranty against defects in material and workmanship. Should actual
product failure rates differ significantly from our estimates, revisions to our
estimated accruals would be required.




Item 3. Quantitative and Qualitative Disclosures about Market Risk

Our primary market risk exposures are in the areas of interest rate risk and
foreign currency exchange rate risk. We did not have any derivative financial
instruments as at June 30, 2003. Our holdings of cash equivalents are subject
to interest rate fluctuations, but we believe this risk is immaterial due to
the short-term nature of these investments and the relatively small cash
balances we carry.

The value of the U.S. dollar affects our financial results. Changes in exchange
rates may positively or negatively affect our revenues, gross margins,
operating expenses and shareholders equity as expressed in U.S. dollars.
Historically, our exposure to currency exchange rate fluctuations was modest
due to the fact that we sold our products primarily in U.S. dollars and held
only a small percentage of our assets outside the U.S. However, we conduct a
growing portion of our business in foreign currency and are increasing our
billings in local currencies in Canada and Europe.

At June 30, 2003, we had not engaged in any significant foreign currency
hedging activities, but instead have attempted to minimize currency exposure
risk through natural hedges, which balance foreign denominated assets with
foreign denominated liabilities. There can be no assurance that such an
approach will be successful, especially if a significant and sudden decline
occurs in the value of local currencies. During the first quarter of 2003, our
Board of Directors approved and we began to implement a new foreign currency
hedging policy, although no hedging activity occurred in the first quarter of
2003. During the second quarter of 2003, we entered into several foreign
currency forward contracts on a limited basis; however, at June 30, 2003 there
were no outstanding hedges. We anticipate an increase in the volume of our
foreign currency hedging as we fully implement our hedging program. The goal
of our hedging program is to provide stability to the U.S. dollar values of
non-function currency cash flows. Although it is impossible to eliminate all
currency risk, implementation of this program should mitigate the risk of
significant changes in our earnings due to short-term foreign exchange
fluctuations.




Item 4. Controls and Procedures

Our principal executive officer and principal accounting officer are
responsible for establishing and maintaining adequate internal control over our
financial reporting. They have reviewed our disclosure controls and procedures
as of June 30, 2003, the end of our 2nd Quarter, in order to comply with the

SECs requirements for certification of this Form 10-Q.

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Since we became public we have maintained a disclosure policy committee, which
currently includes our CEO, CFO, Director of Finance, Treasurer, Director of
Investor Relations, and General Counsel. Our officers, directors, and
employees are responsible to inform the committee about material developments
in our business so that the committee can decide when we need to make new
filings with the SEC or make disclosures to the public markets about
developments in our business. Our principal executive officer and principal
accounting officer reviewed our processes to confirm that they give reasonable
assurance that our controls will meet their objectives and concluded that they
do so. They did not identify, and are not aware of, any material weaknesses in
our internal controls.

The disclosure policy committee, other senior managers, and our finance staff
are responsible for preparation of our periodic reports. Our finance staff and
senior managers:



| |  |  | monitor our operations and financial performance on a regular basis,
| | - |  | --------------------------------------------------------------------
|
| |  |  | evaluate how our performance may affect our reports to the SEC, and 
|
| |  |  | schedule preparation of our periodic reports.                       

We use our Oracle information system to develop the financial information used
in our reports beginning shortly after the end of each reporting period.
Members of our finance staff and our senior managers compile this information,
as well as reports about our business from our officers, directors, and
employees, and use the compiled information to prepare our reports to the SEC.
Our procedures have allowed us to file our reports within the times that the
SECs rules require.

We are currently evaluating what changes will be needed to meet the accelerated
time frames the SEC recently adopted and to satisfy the enhanced reporting
relating to internal controls required by the Sarbanes Oxley Act and subsequent
SEC regulations. We do not anticipate material changes in our internal
procedures to address the accelerated reporting requirements, other than
slightly accelerated internal deadlines for compilation of information and
preparation of initial drafts. We are currently in the process of establishing
an enhanced internal control process, including an additional internal auditor,
to further enhance our internal controls. We did not make any change in our
internal review of our financial reporting during the second quarter of 2003.

Based on their review of our disclosure controls and policies, our principal
executive officer and principal accounting officer concluded that our
disclosure controls and procedures are effective and that they allow us to
comply with our periodic reporting obligations. We believe the reports we have
filed are in compliance with the SECs requirements.

We have not made significant changes to our internal controls, and are not
aware of changes in other factors that could significantly affect these
controls, during the second quarter of 2003 or since the end of that quarter.




Part II. Other Information




Item 1. Legal Proceedings.

Since the date of our Annual Report for the year 2002, filed with the SEC
on March 7, 2003, there have been no additional material developments in
connection with the patent claim described in the Legal Proceedings section of
our Annual Report.

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We are and may continue to be a party to various lawsuits and arbitrations
from time to time. As at June 30, 2003, we were not a party to any legal
proceedings that we believe are material, other than the effect of the expenses
associated with the Fiori patent matter described in our Annual Report for the
year 2002.




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

We held our annual meeting of shareholders on Wednesday, April 23, 2003.
The election of all our directors was submitted to our shareholders at the
meeting and the shareholders re-elected all six of our directors. The names of
the directors elected, and the number of votes each received, is as follows:

|                   |  |           |           |               |  |             |   |                  |  |  |        |  |  |  |   | 
|------------------ |  | --------- | --------- | ------------- |  | ----------- | - | ---------------- |  |  | ------ |  |  |  | - | 
|Name               |  | Votes For |           | Votes Against |  | Abstentions |   | Broker Non-Votes
|                   |  |           |           |               |  |             |   |                 
|W. Gary Suttle     |  |           | 8,279,883 |               |  |             | 0 |                  |  |  | 25,600 |  |  |  | 0 | 
|Nicholas G. Bartol |  |           | 8,278,883 |               |  |             | 0 |                  |  |  | 25,600 |  |  |  | 0 | 
|Ralph B. Godfrey   |  |           | 8,278,883 |               |  |             | 0 |                  |  |  | 25,600 |  |  |  | 0 | 
|Jerry E. Goldress  |  |           | 8,278,883 |               |  |             | 0 |                  |  |  | 25,600 |  |  |  | 0 | 
|Timothy C. Bartol  |  |           | 8,278,883 |               |  |             | 0 |                  |  |  | 25,600 |  |  |  | 0 | 
|John P. Lloyd      |  |           | 8,278,883 |               |  |             | 0 |                  |  |  | 25,600 |  |  |  | 0 | 




Item 6. Exhibits and Reports on Form 8-K



| | (a) |  | Exhibits
| | --- |  | --------

|        |      |                         |  |                                                                                                                                                                                                                       
|------- | ---- | ----------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |      |                        
|Number  |      | Description of Document
|        |      |                        
|        | 3.1  |                         |  | Articles of Incorporation+                                                                                                                                                                                            
|        |      |                         |  |                                                                                                                                                                                                                       
|        | 3.2  |                         |  | Restated Bylaws as amended through July 27, 2000++                                                                                                                                                                    
|        |      |                         |  |                                                                                                                                                                                                                       
|        | 3.3  |                         |  | Amendment to Articles of Incorporation filed on January 12,
1988+                                                                                                                                                     
|        |      |                         |  |                                                                                                                                                                                                                       
|        | 3.4  |                         |  | Amendment to Articles of Incorporation filed on May 12,
1999+                                                                                                                                                         
|        |      |                         |  |                                                                                                                                                                                                                       
|        | 3.5  |                         |  | Amendment to Articles of Incorporation filed on May 17,
1999+                                                                                                                                                         
|        |      |                         |  |                                                                                                                                                                                                                       
|        | 3.7  |                         |  | Amendment to Articles of Incorporation filed on July 1,
1999+                                                                                                                                                         
|        |      |                         |  |                                                                                                                                                                                                                       
|        | 4.1  |                         |  | Specimen Common Stock Certificate+                                                                                                                                                                                    
|        |      |                         |  |                                                                                                                                                                                                                       
|        | 4.2  |                         |  | Reference is made to the Articles of Incorporation, as
amended, and the Restated Bylaws, as amended, filed as
Exhibits 3.1, 3.2, 3.3, 3.4, 3.5 and 3.7 for a description
of the rights of the holders of Common Stock.
|        |      |                         |  |                                                                                                                                                                                                                       
|        | 31.1 |                         |  | Certification Required by Section 302 of the Sarbanes-Oxley Act                                                                                                                                                       
|        |      |                         |  |                                                                                                                                                                                                                       
|        | 31.2 |                         |  | Certification Required by Section 302 of the Sarbanes Oxley Act                                                                                                                                                       
|        |      |                         |  |                                                                                                                                                                                                                       
|        | 32   |                         |  | Certification Required by Section 906 of the Sarbanes-Oxley Act                                                                                                                                                       
|        |      |                         |  |                                                                                                                                                                                                                       
|        | 99.1 |                         |  | Risk Factors That May Affect Rockfords Operating Results,
Business Prospects and Stock Price+++                                                                                                                      

| |  |   |  |                                                                                                                                   
| |  | - |  | ----------------------------------------------------------------------------------------------------------------------------------
| |  | + |  | Previously filed with our registration statement on Form S-1, which the
SEC declared effective on April 19, 2000 and/or amendments

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| |  |     |  |                                                                                                                
| |  | --- |  | ---------------------------------------------------------------------------------------------------------------
| |  | ++  |  | Previously filed on August 11, 2000 with our Quarterly Report on Form
10-Q for the quarter ended June 30, 2000.
| |  |     |  |                                                                                                                
| |  | +++ |  | Previously filed on March 7, 2003, with our Annual Report on Form 10-K
for the year ended December 31, 2002.   



| | (b) |  | During the period from April 1, 2003, through June 30, 2003, Rockford
filed the following reports on Form 8-K:
| | --- |  | --------------------------------------------------------------------------------------------------------------



| |                                                                                                                                                                                                                                                             
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | April 25, 2003 Report disclosing on Item 9 that Rockford had issued a news
release regarding Rockfords results of operations for the
1st Quarter of 2003 and for the year 2003. This report
furnished a copy of the press release under Item 9 of Form
8-K.
|
| | May 14, 2003 Report disclosing on Item 9 that our CEO and CFO had
certified Rockfords annual report as required by Section
906 of the Sarbanes-Oxley Act of 2002. This report
furnished a copy of the certification under Item 9 of Form
8-K.              




SIGNATURES

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

|                      |  |                      |  |                                      
|--------------------- |  | -------------------- |  | -------------------------------------
|                      |  | ROCKFORD CORPORATION
|                      |  |                      |  |                                      
|Date: August 14, 2003 |  | By:                  |  | /s/ James M. Thomson                 
|                      |  |                      |  |                                      
|                      |  |                      |  | James M. Thomson                     
|                      |  |                      |  | Vice President of Finance,           
|                      |  |                      |  | Chief Financial Officer and Secretary
|                      |  |                      |  | (Principal Financial Officer         
|                      |  |                      |  | and Duly Authorized Officer)         

20