##### 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 September 30, 2002

Commission File Number 000-30138

ROCKFORD CORPORATION

(Exact Name of Registrant as Specified in its Charter)


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

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

As of September 30, 2002, there were 8,696,714 shares of Common Stock,
$.01 par value per share, outstanding.





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TABLE OF CONTENTS



|                              |                                                                                               |                                                      |  |  |  |  |  | 
|----------------------------- | --------------------------------------------------------------------------------------------- | ---------------------------------------------------- |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION
|                              | Item 1. Financial Statements                                                                 
|                              |                                                                                               | CONDENSED CONSOLIDATED BALANCE SHEETS               
|                              |                                                                                               | CONDENSED CONSOLIDATED INCOME STATEMENTS            
|                              |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS     
|                              |                                                                                               | Notes to Condensed Consolidated Financial Statements
|                              | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                              | Item 4. Controls and Procedures.                                                             
|Part II. Other Information   
|                              | Item 1. Legal Proceedings.                                                                   
|                              | Item 5. Other Information                                                                    
|                              | Item 6. Exhibits and Reports on Form 8-K                                                     
|SIGNATURES                   
|EX-10.50                     
|EX-10.51                     
|EX-10.52                     
|EX-10.53                     



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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                                    |                                                   |  | 1 |   
|           |         | September 30, 2002 and December 31, 2001                                  |                                                   |  |   |   
|          
|          
|          
|          
|           |         | Condensed Consolidated Income Statements                                 |                                                   |  | 2 |   
|           |         | Three and Nine Months Ended September 30, 2002 and 2001                   |                                                   |  |   |   
|          
|          
|          
|          
|           |         | Condensed Consolidated Statements of Cash Flows                          |                                                   |  | 3 |   
|           |         | Nine Months Ended September 30, 2002 and 2001                             |                                                   |  |   |   
|          
|          
|          
|          
|           |         | Notes to Condensed Consolidated Financial Statements  September 30, 2002 |                                                   |  | 4 |   
|          
|          
|          
|          
|           | Item 2. |                                                                           | Management's Discussion and Analysis of Financial |  |   | 8  |     
|           |         | Condition and Results of Operations                                       |                                                   |  |   |   
|          
|          
|          
|          
|           | Item 4. |                                                                           | Controls and Procedures                           |  |   | 14 |     
|          
|          
|          
|          
|Part II:   |         | Other Information                                                         |                                                   |  |   |   
|          
|          
|          
|          
|           | Item 1. |                                                                           | Legal Proceedings                                 |  |   | 16 |     
|          
|          
|          
|          
|           | Item 5. |                                                                           | Other Information                                 |  |   | 16 |     
|          
|          
|          
|          
|           | Item 6. |                                                                           | Exhibits and Reports on Form 8-K                  |  |   | 18 |     
|          
|          
|          
|          
|Signatures |         |                                                                           |                                                   |  |   |    |      | 





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##### Table of Contents






PART I. FINANCIAL INFORMATION




Item 1. Financial Statements




ROCKFORD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

|                                                       |                                               |                                                                                                                                                          |        |                                  |        |              |        |      |        | 
|------------------------------------------------------ | --------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------- | ------ | -------------------------------- | ------ | ------------ | ------ | ---- | ------ | 
|                                                       |                                               |                                                                                                                                                          |        | September 30,                    |        | December 31,
|                                                       |                                               |                                                                                                                                                          |        | 2002                             |        | 2001        
|                                                       |                                               |                                                                                                                                                          |        |                                  |        |             
|                                                       |                                               |                                                                                                                                                          |        | (Unaudited)                      |        | (Note)      
|                                                       |                                               |                                                                                                                                                          |        |                                  |        |             
|                                                       |                                               |                                                                                                                                                          |        | (In thousands except share data)
|Assets                                                 |                                               |                                                                                                                                                          |        |                                  |        |              |        |     
|                                                      
|                                                      
|                                                      
|                                                      
|Current assets:                                        |                                               |                                                                                                                                                          |        |                                  |        |              |        |     
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                               | Cash and cash equivalents                                                                                                                                |        | $                                | 251    |              |        | $    | 2,411  | 
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                               | Accounts receivable, less allowances of $3,418 and $2,613 at
September 30, 2002 and December 31, 2001, respectively                                      |        |                                  | 35,976 |              |        |      | 28,036 | 
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                               | Inventories, net                                                                                                                                         |        |                                  | 30,861 |              |        |      | 28,165 | 
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                               | Deferred income taxes                                                                                                                                    |        |                                  | 4,491  |              |        |      | 4,500  | 
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                               | Income taxes receivable                                                                                                                                  |        |                                  |       |              |        |      | 1,874  | 
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                               | Prepaid expenses and other                                                                                                                               |        |                                  | 4,081  |              |        |      | 3,371  | 
|                                                       |                                               |                                                                                                                                                          |        |                                  |        |              |        |     
|Total current assets                                   |                                               |                                                                                                                                                          | 75,660 |                                  |        |              | 68,357 |     
|                                                      
|                                                      
|                                                      
|                                                      
|Property and equipment, net                            |                                               |                                                                                                                                                          | 11,083 |                                  |        |              | 9,976  |     
|                                                      
|                                                      
|                                                      
|                                                      
|Deferred income taxes                                  |                                               |                                                                                                                                                          | 394    |                                  |        |              | 394    |     
|                                                      
|                                                      
|                                                      
|                                                      
|Goodwill, net                                          |                                               |                                                                                                                                                          | 6,066  |                                  |        |              | 6,303  |     
|                                                      
|                                                      
|                                                      
|                                                      
|Other assets                                           |                                               |                                                                                                                                                          | 1,882  |                                  |        |              | 924    |     
|                                                       |                                               |                                                                                                                                                          |        |                                  |        |              |        |     
|Total Assets                                           |                                               | $                                                                                                                                                        | 95,085 |                                  |        | $            | 85,954 |     
|                                                       |                                               |                                                                                                                                                          |        |                                  |        |              |        |     
|Liabilities and shareholders equity                   |                                               |                                                                                                                                                          |        |                                  |        |              |        |     
|                                                      
|                                                      
|                                                      
|                                                      
|Current liabilities:                                   |                                               |                                                                                                                                                          |        |                                  |        |              |        |     
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                               | Accounts payable                                                                                                                                         |        | $                                | 7,922  |              |        | $    | 9,089  | 
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                               | Accrued salaries and incentives                                                                                                                          |        |                                  | 3,748  |              |        |      | 2,451  | 
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                               | Accrued warranty                                                                                                                                         |        |                                  | 4,473  |              |        |      | 4,815  | 
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                               | Other accrued expenses                                                                                                                                   |        |                                  | 6,771  |              |        |      | 5,210  | 
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                               | Income taxes payable                                                                                                                                     |        |                                  | 1,138  |              |        |      |       | 
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                               | Current portion of notes payable, long-term debt and capital
lease obligations                                                                           |        |                                  | 2,283  |              |        |      | 879    | 
|                                                       |                                               |                                                                                                                                                          |        |                                  |        |              |        |     
|Total current liabilities                              |                                               |                                                                                                                                                          | 26,335 |                                  |        |              | 22,444 |     
|                                                      
|                                                      
|                                                      
|                                                      
|Notes payable and long-term debt, less current portion |                                               |                                                                                                                                                          | 6,664  |                                  |        |              | 9,720  |     
|                                                      
|                                                      
|                                                      
|                                                      
|Capital lease obligations, less current portion        |                                               |                                                                                                                                                          | 449    |                                  |        |              | 833    |     
|                                                      
|                                                      
|                                                      
|                                                      
|Shareholders equity:                                  |                                               |                                                                                                                                                          |        |                                  |        |              |        |     
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                               | Common stock, $.01 par value  Authorized shares - 40,000,000
Issued shares - 8,696,714 shares at September 30, 2002, and
8,196,619 at December 31, 2001 |        |                                  | 87     |              |        |      | 82     | 
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                               | Additional paid-in capital                                                                                                                               |        |                                  | 31,509 |              |        |      | 30,341 | 
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                               | Retained earnings                                                                                                                                        |        |                                  | 29,508 |              |        |      | 22,918 | 
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Accumulated other comprehensive income (loss) |                                                                                                                                                          |        | 533                              |        |              |        | (384 | )     
|                                                       |                                               |                                                                                                                                                          |        |                                  |        |              |        |     
|Total shareholders equity                             |                                               |                                                                                                                                                          | 61,637 |                                  |        |              | 52,957 |     
|                                                       |                                               |                                                                                                                                                          |        |                                  |        |              |        |     
|Total liabilities and shareholders equity             |                                               | $                                                                                                                                                        | 95,085 |                                  |        | $            | 85,954 |     
|                                                       |                                               |                                                                                                                                                          |        |                                  |        |              |        |     

Note: The balance sheet at December 31, 2001, 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.

1



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##### Table of Contents






ROCKFORD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED INCOME STATEMENTS (UNAUDITED)

|                                         |                             |   |                                       |       |                   |   |        |       |      |   |         |        |  |   |         |        | 
|---------------------------------------- | --------------------------- | - | ------------------------------------- | ----- | ----------------- | - | ------ | ----- | ---- | - | ------- | ------ |  | - | ------- | ------ | 
|                                         |                             |   | Three months ended                    |       | Nine months ended
|                                         |                             |   | September 30,                         |       | September 30,    
|                                         |                             |   |                                       |       |                  
|                                         |                             |   | 2002                                  |       | 2001              |   | 2002   |       | 2001
|                                         |                             |   |                                       |       |                   |   |        |       |     
|                                         |                             |   | (In thousands, except per share data)
|Net sales                                |                             | $ | 40,583                                |       |                   | $ | 36,562 |       |      | $ | 135,545 |        |  | $ | 118,727 |       
|                                        
|                                        
|                                        
|                                        
|Cost of goods sold                       |                             |   | 26,315                                |       |                   |   | 24,577 |       |      |   | 84,726  |        |  |   | 77,966  |       
|                                         |                             |   |                                       |       |                   |   |        |       |      |   |         |        |  |   |         |       
|Gross profit                             |                             |   | 14,268                                |       |                   |   | 11,985 |       |      |   | 50,819  |        |  |   | 40,761  |       
|                                        
|                                        
|                                        
|                                        
|Operating expenses:                      |                             |   |                                       |       |                   |   |        |       |      |   |         |        |  |   |         |       
|                                        
|                                        
|                                        
|                                        
|                                         | Sales and marketing         |   |                                       | 6,302 |                   |   |        | 5,962 |      |   |         | 21,140 |  |   |         | 17,974 | 
|                                        
|                                        
|                                        
|                                        
|                                         | General and administrative  |   |                                       | 4,539 |                   |   |        | 3,272 |      |   |         | 15,112 |  |   |         | 10,973 | 
|                                        
|                                        
|                                        
|                                        
|                                         | Research and development    |   |                                       | 1,805 |                   |   |        | 925   |      |   |         | 3,928  |  |   |         | 2,387  | 
|                                        
|                                        
|                                        
|                                        
|                                         | Abandoned acquisition costs |   |                                       |      |                   |   |        | 551   |      |   |         | 4      |  |   |         | 551    | 
|                                         |                             |   |                                       |       |                   |   |        |       |      |   |         |        |  |   |         |       
|Total operating expenses                 |                             |   | 12,646                                |       |                   |   | 10,710 |       |      |   | 40,184  |        |  |   | 31,885  |       
|                                         |                             |   |                                       |       |                   |   |        |       |      |   |         |        |  |   |         |       
|Operating income                         |                             |   | 1,622                                 |       |                   |   | 1,275  |       |      |   | 10,635  |        |  |   | 8,876   |       
|                                        
|                                        
|                                        
|                                        
|Interest and other expense (income), net |                             |   | 278                                   |       |                   |   | (67    | )     |      |   | 126     |        |  |   | 234     |       
|                                         |                             |   |                                       |       |                   |   |        |       |      |   |         |        |  |   |         |       
|Income before income tax                 |                             |   | 1,344                                 |       |                   |   | 1,342  |       |      |   | 10,509  |        |  |   | 8,642   |       
|                                        
|                                        
|                                        
|                                        
|Income tax expense                       |                             |   | 519                                   |       |                   |   | 489    |       |      |   | 3,919   |        |  |   | 3,211   |       
|                                         |                             |   |                                       |       |                   |   |        |       |      |   |         |        |  |   |         |       
|Net income                               |                             | $ | 825                                   |       |                   | $ | 853    |       |      | $ | 6,590   |        |  | $ | 5,431   |       
|                                         |                             |   |                                       |       |                   |   |        |       |      |   |         |        |  |   |         |       
|Net income per share:                    |                             |   |                                       |       |                   |   |        |       |      |   |         |        |  |   |         |       
|                                        
|                                        
|                                        
|                                        
|                                         | Basic                       |   | $                                     | 0.10  |                   |   | $      | 0.10  |      |   | $       | 0.78   |  |   | $       | 0.67   | 
|                                         |                             |   |                                       |       |                   |   |        |       |      |   |         |        |  |   |         |       
|                                         | Diluted                     |   | $                                     | 0.09  |                   |   | $      | 0.10  |      |   | $       | 0.71   |  |   | $       | 0.61   | 
|                                         |                             |   |                                       |       |                   |   |        |       |      |   |         |        |  |   |         |       
|Weighted average shares:                 |                             |   |                                       |       |                   |   |        |       |      |   |         |        |  |   |         |       
|                                        
|                                        
|                                        
|                                        
|                                         | Basic                       |   |                                       | 8,656 |                   |   |        | 8,172 |      |   |         | 8,481  |  |   |         | 8,087  | 
|                                         |                             |   |                                       |       |                   |   |        |       |      |   |         |        |  |   |         |       
|                                         | Diluted                     |   |                                       | 9,406 |                   |   |        | 8,957 |      |   |         | 9,338  |  |   |         | 8,905  | 
|                                         |                             |   |                                       |       |                   |   |        |       |      |   |         |        |  |   |         |       

See notes to condensed consolidated financial statements.

2



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##### Table of Contents






ROCKFORD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

|                                                                                  |                                    |                                                     |        |                                 |        |      |         |        |         |  
|--------------------------------------------------------------------------------- | ---------------------------------- | --------------------------------------------------- | ------ | ------------------------------- | ------ | ---- | ------- | ------ | ------- | -
|                                                                                  |                                    |                                                     |        | Nine months ended September 30,
|                                                                                  |                                    |                                                     |        |                                
|                                                                                  |                                    |                                                     |        | 2002                            |        | 2001
|                                                                                  |                                    |                                                     |        |                                 |        |     
|                                                                                  |                                    |                                                     |        | (In thousands)                 
|Operating activities                                                              |                                    |                                                     |        |                                 |        |      |         |       
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Net income                                                                        |                                    | $                                                   | 6,590  |                                 |        | $    | 5,431   |       
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Adjustments to reconcile net income to net cash
provided by operating activities: |                                    |                                                     |        |                                 |        |      |         |       
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Depreciation and amortization      |                                                     |        | 3,540                           |        |      |         | 2,803  |        
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Gain on sale of fixed assets       |                                                     |        | (10                             | )      |      |         | (4     | )      
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Provision for doubtful accounts    |                                                     |        | 711                             |        |      |         | 847    |        
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Provision for inventory allowances |                                                     |        | 1,013                           |        |      |         | 1,082  |        
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Changes in operating assets and liabilities:                                      |                                    |                                                     |        |                                 |        |      |         |       
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Accounts receivable                |                                                     |        | (8,659                          | )      |      |         | 96     |        
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Inventories                        |                                                     |        | (3,746                          | )      |      |         | (6,457 | )      
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Prepaid expenses and other assets  |                                                     |        | 1,152                           |        |      |         | (284   | )      
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Accounts payable                   |                                                     |        | (1,167                          | )      |      |         | (441   | )      
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Accrued salaries and incentives    |                                                     |        | 1,296                           |        |      |         | (935   | )      
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Accrued warranty                   |                                                     |        | (342                            | )      |      |         | (140   | )      
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Income taxes payable               |                                                     |        | 1,143                           |        |      |         | 239    |        
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Other accrued expenses             |                                                     |        | 1,570                           |        |      |         | (652   | )      
|                                                                                  |                                    |                                                     |        |                                 |        |      |         |       
|                                                                                  |                                    | Net cash provided by operating
activities           |        |                                 | 3,091  |      |         |        | 1,585   |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Investing activities                                                              |                                    |                                                     |        |                                 |        |      |         |       
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Purchases of property and equipment                                               |                                    |                                                     | (4,646 | )                               |        |      | (3,875  | )     
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Proceeds from sale of property and equipment                                      |                                    |                                                     | 10     |                                 |        |      | 4       |       
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Acquisitions of business, net of cash acquired                                    |                                    |                                                     | 57     |                                 |        |      | (11,206 | )     
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Increase in other assets                                                          |                                    |                                                     | (721   | )                               |        |      | (585    | )     
|                                                                                  |                                    |                                                     |        |                                 |        |      |         |       
|                                                                                  |                                    | Net cash used in investing activities               |        |                                 | (5,300 | )    |         |        | (15,662 | )
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Financing activities                                                              |                                    |                                                     |        |                                 |        |      |         |       
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Net proceeds from notes payable, long-term debt                                   |                                    |                                                     | 1,581  |                                 |        |      | 13,977  |       
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Payments on notes payable and long-term debt                                      |                                    |                                                     | (3,060 | )                               |        |      |        |       
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Payments on capital lease obligations                                             |                                    |                                                     | (561   | )                               |        |      | (557    | )     
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Proceeds from the exercise of stock options and
warrants                          |                                    |                                                     | 1,168  |                                 |        |      | 558     |       
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Treasury shares purchased                                                         |                                    |                                                     |       |                                 |        |      | (6      | )     
|                                                                                  |                                    |                                                     |        |                                 |        |      |         |       
|                                                                                  |                                    | Net cash provided by (used in)
financing activities |        |                                 | (872   | )    |         |        | 13,972  |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Effect of exchange rate changes on cash                                           |                                    |                                                     | 921    |                                 |        |      | (55     | )     
|                                                                                  |                                    |                                                     |        |                                 |        |      |         |       
|Net decrease in cash and cash equivalents                                         |                                    |                                                     | (2,160 | )                               |        |      | (160    | )     
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Cash and cash equivalents at beginning of period                                  |                                    |                                                     | 2,411  |                                 |        |      | 2,750   |       
|                                                                                  |                                    |                                                     |        |                                 |        |      |         |       
|Cash and cash equivalents at end of period                                        |                                    | $                                                   | 251    |                                 |        | $    | 2,590   |       
|                                                                                  |                                    |                                                     |        |                                 |        |      |         |       

See notes to condensed consolidated financial statements.

3



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##### Table of Contents






Rockford Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

September 30, 2002

1. Basis of Presentation

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 generally accepted accounting principles
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 nine-month periods ended
September 30, 2002, are not necessarily indicative of the results you may
expect for the year ending December 31, 2002.

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,
2001, filed with the SEC on March 29, 2002.

2. Inventories

Inventories consist of the following:

|                 |  |                |        |              |  |   |        |  
|---------------- |  | -------------- | ------ | ------------ |  | - | ------ | -
|                 |  | September 30,  |        | December 31,
|                 |  | 2002           |        | 2001        
|                 |  |                |        |             
|                 |  | (In thousands)
|Raw materials    |  | $              | 11,356 |              |  | $ | 9,361  |  
|                
|                
|                
|                
|Work in progress |  |                | 2,011  |              |  |   | 1,424  |  
|                
|                
|                
|                
|Finished goods   |  |                | 20,684 |              |  |   | 20,263 |  
|                 |  |                |        |              |  |   |        |  
|                 |  |                | 34,051 |              |  |   | 31,048 |  
|                
|                
|                
|                
|Less allowances  |  |                | (3,190 | )            |  |   | (2,883 | )
|                 |  |                |        |              |  |   |        |  
|                 |  | $              | 30,861 |              |  | $ | 28,165 |  
|                 |  |                |        |              |  |   |        |  

4



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##### Table of Contents



ROCKFORD CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)

3. Earnings Per Share

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

|                                                                               |                                                                     |                        |       |                                       |     |                   |       |       |     |      |       |       |     |   |       |       |     | 
|------------------------------------------------------------------------------ | ------------------------------------------------------------------- | ---------------------- | ----- | ------------------------------------- | --- | ----------------- | ----- | ----- | --- | ---- | ----- | ----- | --- | - | ----- | ----- | --- | 
|                                                                               |                                                                     |                        |       | Three months ended                    |     | Nine months ended
|                                                                               |                                                                     |                        |       | September 30,                         |     | September 30,    
|                                                                               |                                                                     |                        |       |                                       |     |                  
|                                                                               |                                                                     |                        |       | 2002                                  |     | 2001              |       | 2002  |     | 2001
|                                                                               |                                                                     |                        |       |                                       |     |                   |       |       |     |     
|                                                                               |                                                                     |                        |       | (In thousands, except per share data)
|Numerator:                                                                     |                                                                     |                        |       |                                       |     |                   |       |       |     |      |       |       |     |   |       |      
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               | Numerator for diluted net income per share                          |                        | $     | 825                                   |     |                   | $     | 853   |     |      | $     | 6,590 |     |   | $     | 5,431 |    
|                                                                               |                                                                     |                        |       |                                       |     |                   |       |       |     |      |       |       |     |   |       |      
|Denominator:                                                                   |                                                                     |                        |       |                                       |     |                   |       |       |     |      |       |       |     |   |       |      
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               | Denominator for basic net income per
share, weighted average shares |                        |       | 8,656                                 |     |                   |       | 8,172 |     |      |       | 8,481 |     |   |       | 8,087 |    
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               | Effect of dilutive securities:                                      |                        |       |                                       |     |                   |       |       |     |      |       |       |     |   |       |       |    
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               |                                                                     | Employee stock options |       |                                       | 743 |                   |       |       | 780 |      |       |       | 850 |   |       |       | 813 | 
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               |                                                                     | Warrants               |       |                                       | 7   |                   |       |       | 5   |      |       |       | 7   |   |       |       | 5   | 
|                                                                               |                                                                     |                        |       |                                       |     |                   |       |       |     |      |       |       |     |   |       |      
|                                                                               | Dilutive potential common shares                                    |                        |       | 750                                   |     |                   |       | 785   |     |      |       | 857   |     |   |       | 818   |    
|                                                                               |                                                                     |                        |       |                                       |     |                   |       |       |     |      |       |       |     |   |       |      
|Denominator for diluted net income per
share, adjusted weighted average
shares |                                                                     |                        | 9,406 |                                       |     |                   | 8,957 |       |     |      | 9,338 |       |     |   | 8,905 |      
|                                                                               |                                                                     |                        |       |                                       |     |                   |       |       |     |      |       |       |     |   |       |      
|Basic net income per share                                                     |                                                                     | $                      | 0.10  |                                       |     | $                 | 0.10  |       |     | $    | 0.78  |       |     | $ | 0.67  |      
|                                                                               |                                                                     |                        |       |                                       |     |                   |       |       |     |      |       |       |     |   |       |      
|Diluted net income per share                                                   |                                                                     | $                      | 0.09  |                                       |     | $                 | 0.10  |       |     | $    | 0.71  |       |     | $ | 0.61  |      
|                                                                               |                                                                     |                        |       |                                       |     |                   |       |       |     |      |       |       |     |   |       |      

4. Subsequent Event

As at October 17, 2002, we purchased 63,336,955 shares of common stock of
SimpleDevices, Inc., a Delaware corporation. These shares are 76% of
SimpleDevices currently outstanding common stock, but are only 51% of the fully
diluted common shares assuming outstanding options granted to SimpleDevices
management and employees are all exercised. We believe the fully diluted
percentage is more meaningful in evaluating our ownership of SimpleDevices
because the options are granted at prices below the price we paid for the
shares and are intended to give the managers and employees a strong incentive
to grow SimpleDevices business. Our investment of $3.5 million was paid to
SimpleDevices, not to its current shareholders, and will be used for working
capital, to pay a convertible promissory note and for other corporate purposes.

SimpleDevices, located in San Mateo, California, licenses its
standards-based SimpleWare and SimpleMedia Services software to consumer
electronics, PC, automotive and network equipment OEMs. SimpleDevices has
created a new class of connected digital device applications that provide
automation, synchronization, scheduling, and unified interfaces and databases
across compatible devices.

5. Adoption of Accounting Standard

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 and liabilities acquired based on the
estimated fair values on
5Table of ContentsROCKFORD CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited) (continued)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
September 30, 2002, we had gross goodwill of $6,467,000 and accumulated
amortization of $401,000. We completed two acquisitions in the third quarter of
2001 and have not recorded any amortization for these acquisitions on amounts
allocated to goodwill in accordance with SFAS No. 141. Application of the
non-amortization provisions of SFAS No. 142 is expected to result in an
increase in income from continuing operations before income taxes of
approximately $42,000 and $126,000 for the three-month and nine-month periods
ended September 30, 2002, respectively.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
September 30, 2002, and determined that our market capitalization exceeds our
net book value. As a result, our goodwill is not impaired and it is not
necessary to undertake the second step in the two-step process. During the
quarter ended September 30, 2002, we did not record any impairment losses
related to goodwill and other intangible assets.6. Accounting PoliciesRevenue RecognitionWe 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
        
        Collectability is reasonably assured.These criteria are ordinarily satisfied and, accordingly, we recognize revenue
upon shipment of product since virtually all of our products are sold F.O.B.
our facility.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. We record these reductions based on
historical rates. Should a greater proportion of customers return product or
redeem incentives than our estimates, we may be required to make additional
reductions to revenue.6Table of ContentsROCKFORD CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited) (continued)Property and EquipmentProperty and equipment is stated at cost. Depreciation and amortization
are computed principally on the straight-line method for financial reporting
purposes over a two to ten year life. The building acquired in the MB Quart
acquisition, which is located in Obrigheim, Germany, is being depreciated over
a period of 25 years. Leasehold improvements are amortized on the straight-line
method over the shorter period of the lease term or the estimated useful life
of the asset.Foreign Currency TranslationWe have translated the financial statements of our foreign subsidiaries
into U.S. dollars in accordance with SFAS No. 52, Foreign Currency Translation.
All balance sheet accounts have been translated using the current exchange
rates at the balance sheet date. Income statement amounts have been translated
using the average exchange rate for the year. The gains and losses resulting
from the change in exchange rates from year-to-year have been reported
separately as a component of stockholders equity.7Table of Contents
Item 2. Managements Discussion and Analysis of Financial Condition and Results of OperationsYou should read this discussion and analysis of our 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 2001, filed with the SEC on March 29, 2002.Forward-Looking StatementsWe 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 2001, filed with the SEC on March
29, 2002, and in Exhibit 99.1 to our Annual Report, Risk Factors That May
Affect Rockfords Operating Results, Business Prospects and Stock Price. The
risk factors noted throughout this report and our Annual Report, particularly
in the discussion in Exhibit 99.1 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.OverviewRockford designs, manufactures and distributes high-performance audio
systems for the mobile, professional and home theater 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. Based on dollar sales in 2001 of all our brands, we ranked first
in U.S. market share for mobile audio amplifiers and second for mobile audio
speakers. We sell professional audio products under the Hafler and MB Quart
brands. We also sell home theater products under the MB Quart and Fosgate
Audionics brands.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 speaker
enclosure products at our facilities in Stillwater, Oklahoma. We manufacture
speakers, woofers, subwoofers, and headphones at our facility in Obrigheim,
Germany.8Table of ContentsWe generated over 98% of our sales in the quarters ended September 30,
2002 and 2001 from our mobile audio products.In the U.S., we sell our mobile audio products using commissioned
independent sales representative firms who are supported by our employee
regional managers. Internationally, we sell products in 71 countries. In Japan
and Germany we sell through wholly owned subsidiaries using commissioned
independent sales representatives. In Canada, Austria and Switzerland we sell
through commissioned independent sales representatives. In other countries, we
sell our products to independent distributors who resell them to retailers.Sales of our mobile audio products to Best Buy accounted for 16.7% of our
sales for the nine months ended September 30, 2002, and 15.7% of our sales for
the nine months ended September 30, 2001. Our business plans contemplate that
Best Buy will continue to account for a significant portion of our sales for
the foreseeable future. No other single customer accounts for more than 10% of
our sales.Results of OperationsThe following table shows, for the periods indicated, selected
consolidated statements of operations data expressed as a percentage of net
sales:

|                                         |                                                                   |  |                    |      |                   |  |       |      |      |  |       |      |  |  |       |      | 
|---------------------------------------- | ----------------------------------------------------------------- |  | ------------------ | ---- | ----------------- |  | ----- | ---- | ---- |  | ----- | ---- |  |  | ----- | ---- | 
|                                         |                                                                   |  | Three months ended |      | Nine months ended
|                                         |                                                                   |  | September 30,      |      | September 30,    
|                                         |                                                                   |  | 2002               |      | 2001              |  | 2002  |      | 2001
|                                         |                                                                   |  |                    |      |                   |  |       |      |     
|Net sales                                |                                                                   |  | 100.0              | %    |                   |  | 100.0 | %    |      |  | 100.0 | %    |  |  | 100.0 | %   
|                                        
|                                        
|                                        
|                                        
|Cost of goods sold                       |                                                                   |  | 64.8               |      |                   |  | 67.2  |      |      |  | 62.5  |      |  |  | 65.7  |     
|                                         |                                                                   |  |                    |      |                   |  |       |      |      |  |       |      |  |  |       |     
|Gross profit                             |                                                                   |  | 35.2               |      |                   |  | 32.8  |      |      |  | 37.5  |      |  |  | 34.3  |     
|                                        
|                                        
|                                        
|                                        
|Operating expenses:                      |                                                                   |  |                    |      |                   |  |       |      |      |  |       |      |  |  |       |     
|                                        
|                                        
|                                        
|                                        
|                                         | Sales and marketing                                               |  |                    | 15.5 |                   |  |       | 16.3 |      |  |       | 15.6 |  |  |       | 15.1 | 
|                                        
|                                        
|                                        
|                                        
|                                         | General and administrative, including
abandoned acquisition
costs |  |                    | 11.2 |                   |  |       | 10.5 |      |  |       | 11.2 |  |  |       | 9.7  | 
|                                        
|                                        
|                                        
|                                        
|                                         | Research and development                                          |  |                    | 4.5  |                   |  |       | 2.5  |      |  |       | 2.9  |  |  |       | 2.0  | 
|                                         |                                                                   |  |                    |      |                   |  |       |      |      |  |       |      |  |  |       |     
|Total operating expenses                 |                                                                   |  | 31.2               |      |                   |  | 29.3  |      |      |  | 29.7  |      |  |  | 26.8  |     
|                                         |                                                                   |  |                    |      |                   |  |       |      |      |  |       |      |  |  |       |     
|Operating income                         |                                                                   |  | 4.0                |      |                   |  | 3.5   |      |      |  | 7.8   |      |  |  | 7.5   |     
|                                        
|                                        
|                                        
|                                        
|Interest and other expense (income), net |                                                                   |  | 0.7                |      |                   |  | (0.2  | )    |      |  | 0.0   |      |  |  | 0.2   |     
|                                         |                                                                   |  |                    |      |                   |  |       |      |      |  |       |      |  |  |       |     
|Income before income tax                 |                                                                   |  | 3.3                |      |                   |  | 3.7   |      |      |  | 7.8   |      |  |  | 7.3   |     
|                                        
|                                        
|                                        
|                                        
|Income tax expense                       |                                                                   |  | 1.3                |      |                   |  | 1.4   |      |      |  | 2.9   |      |  |  | 2.7   |     
|                                         |                                                                   |  |                    |      |                   |  |       |      |      |  |       |      |  |  |       |     
|Net income                               |                                                                   |  | 2.0                | %    |                   |  | 2.3   | %    |      |  | 4.9   | %    |  |  | 4.6   | %   
|                                         |                                                                   |  |                    |      |                   |  |       |      |      |  |       |      |  |  |       |     

Cost of goods sold primarily consists of raw materials, direct labor and
manufacturing costs associated with production of our products as well as
warranty, 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.

9



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##### Table of Contents



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 |        | Nine months ended
|               |                 |   | September 30,      |        | September 30,    
|               |                 |   | 2002               |        | 2001              |   | 2002   |        | 2001
|               |                 |   |                    |        |                   |   |        |        |     
|               |                 |   | (In thousands)     |        | (In thousands)   
|REGION:        |                 |   |                    |        |                   |   |        |        |      |   |         |         |  |   |        |        
|              
|              
|              
|              
|United States  |                 | $ | 31,590             |        |                   | $ | 30,543 |        |      | $ | 109,946 |         |  | $ | 98,711 |        
|              
|              
|              
|              
|Other Americas |                 |   | 1,744              |        |                   |   | 2,281  |        |      |   | 6,607   |         |  |   | 7,471  |        
|              
|              
|              
|              
|Europe         |                 |   | 4,654              |        |                   |   | 2,185  |        |      |   | 13,386  |         |  |   | 6,702  |        
|              
|              
|              
|              
|Asia           |                 |   | 2,595              |        |                   |   | 1,553  |        |      |   | 5,606   |         |  |   | 5,843  |        
|               |                 |   |                    |        |                   |   |        |        |      |   |         |         |  |   |        |        
|               | Total sales (1) |   | $                  | 40,583 |                   |   | $      | 36,562 |      |   | $       | 135,545 |  |   | $      | 118,727 | 
|               |                 |   |                    |        |                   |   |        |        |      |   |         |         |  |   |        |        



---

|(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.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------

Nine Months Ended September 30, 2002, Compared to Nine Months Ended September 30, 2001

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

Net Sales. Sales increased by $16.8 million, or 14.2%, to $135.5 million
for the nine months ended September 30, 2002, from $118.7 million for the nine
months ended September 30, 2001. The increase in sales primarily was
attributable to the addition of sales from our acquired MB Quart brand,
increased sales from our Q-Logic brand, strong sales of our Lightning Audio
brand and increased sales of our OEM business. In an effort to build brand
image, we have discontinued shipping to several Rockford Fosgate brand dealers
who were not operating in a manner consistent with our policies. This reduced
sales of our Rockford Fosgate brand for the nine months ended September 30,
2002. These dealers accounted for approximately $11.1 million of sales for the
nine months ended September 30, 2001. We elected to forego these sales in
order to improve the quality of our dealer base and, if our efforts are
successful, anticipate increased sales to dealers who comply with our policies
will, over time, offset the foregone sales to these terminated dealers.

U.S. sales increased by $11.2 million, or 11.4%, to $109.9 million for the
nine months ended September 30, 2002, from $98.7 million for the nine months
ended September 30, 2001. International sales increased by $5.6 million, or
27.9%, to $25.6 million for the nine months ended September 30, 2002, from
$20.0 million for the nine months ended September 30, 2001.

Cost of Goods Sold. Cost of goods sold increased by $6.7 million, or
8.7%, to $84.7 million for the nine months ended September 30, 2002, from $78.0
million for the nine months ended September 30, 2001. Substantially all of the
increase was attributable to sales of our new MB Quart and Q-Logic brands. As a
percent of sales, cost of goods sold decreased to 62.5% for the nine months
ended September 30, 2002, from 65.7% for the nine months ended September 30,
2001. The primary reasons for the decrease as a percent of sales included a
mix shift toward

10



---



##### Table of Contents



higher margined products and cost reductions related to the direct
sourcing of our Connecting Punch accessories product.

Sales and Marketing Expenses. Sales and marketing expenses increased by
$3.1 million, or 17.6%, to
$21.1 million for the nine months ended September 30, 2002, from $18.0
million for the nine months ended September 30, 2001. As a percent of sales,
sales and marketing expenses increased to 15.6% for the nine months ended
September 30, 2002, from 15.1% for the nine months ended September 30, 2001.
The increase as a percent of sales was primarily due to higher cost structures
for our acquired MB Quart and Q-Logic brands, including higher freight costs as
a percent of sales associated with shipping Q-Logic product to Canada.

General and Administrative Expenses. General and administrative expenses,
including abandoned acquisition costs, increased by $3.6 million, or 31.2%, to
$15.1 million for the nine months ended September 30, 2002, from $11.5 million
for the nine months ended September 30, 2001. As a percent of sales, general
and administrative expenses, including abandoned acquisition costs, increased
to 11.2% for the nine months ended September 30, 2002, from 9.7% for the nine
months ended September 30, 2001. The increase as a percent of sales is
primarily due to a return to normal level of performance-based compensation
relating to achieved growth targets, legal costs and higher cost structures for
our acquired MB Quart and Q-Logic brands.

Research and Development Expenses. Research and development expenses
increased by $1.5 million, or 64.6%, to $3.9 million for the nine months ended
September 30, 2002, from $2.4 million for the nine months ended September 30,
2001. As a percent of sales, these expenses increased to 2.9% for the nine
months ended September 30, 2002, from 2.0% for the nine months ended September
30, 2001. The increase is primarily due to increased legal costs associated
with the defense of a patent matter and personnel and product development costs
relating to our acquired MB Quart and Q-Logic brands.

Operating Income. Operating income increased by $1.7 million, or 19.8%,
to $10.6 million for the nine months ended September 30, 2002, from $8.9
million for the nine months ended September 30, 2001. As a percent of sales,
operating income increased to 7.8% for the nine months ended September 30,
2002, from 7.5% for the nine months ended September 30, 2001. This increase is
primarily attributable to the mix shift toward higher margined products, cost
reductions related to the direct sourcing of accessories and reduced abandoned
acquisition costs. This increase was partially offset by normalized
performance-based compensation expense, higher cost structures for our acquired
MB Quart and Q-Logic brands, and legal costs associated with the defense of a
patent matter.

Interest and Other Expense, Net. Interest and other expense, net,
primarily consists of interest expense and currency gains and losses. Interest
and other expense, net, decreased by $0.1 million, or 46.2%, to $0.1 million
for the nine months ended September 30, 2002 from $0.2 million for the nine
months ended September 30, 2001. The decrease was primarily due to foreign
currency gains, which were partially offset by increased interest expense due
to the increased balance of our line of credit resulting from the MB Quart and
Q-Logic brand acquisitions.

Income Tax Expense. Income tax expense increased by $0.7 million, or
22.0%, to $3.9 million for the nine months ended September 30, 2002, from $3.2
million for the nine months ended September 30, 2001. The effective income tax
rates were 37.3% for the nine months ended September 30, 2002, and 37.2% for
the nine months ended September 30, 2001.

11



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##### Table of Contents



Three Months Ended September 30, 2002, Compared to Three Months Ended September 30, 2001

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

Net Sales. Sales increased by $4.0 million, or 11.0%, to $40.6 million
for the three months ended September 30, 2002, from $36.6 million for the three
months ended September 30, 2001. The increase in sales was primarily
attributable to increased market share of our Lightning Audio brand, the
addition of sales from our acquired MB Quart brand, increased sales of our
Q-Logic brand, and increased sales of our OEM business. Sales of our Rockford
Fosgate brand products remained relatively flat, reflective of a decline in the
domestic U.S. mobile audio market and our discontinued shipping to several
dealers who were not operating in a manner consistent with our policies. These
dealers accounted for approximately $3.5 million of sales for the three months
ended September 30, 2001. We elected to forego these sales in order to improve
the quality of our dealer base and, if our efforts are successful, anticipate
increased sales to dealers who comply with our policies will, over time, offset
the foregone sales to these terminated dealers.

U.S. sales increased by $1.1 million, or 3.4%, to $31.6 million for the
three months ended September 30, 2002, from $30.5 million for the three months
ended September 30, 2001. International sales increased by $3.0 million, or
49.4%, to $9.0 million for the three months ended September 30, 2002, from $6.0
million for the three months ended September 30, 2001. This increase was
primarily due to increased sales in Europe, Canada and Asia. We believe our
international sales growth rate is likely to continue to exceed our U.S. sales
growth rate in the short-term.

Cost of Goods Sold. Cost of goods sold increased by $1.7 million, or
7.1%, to $26.3 million for the three months ended September 30, 2002, from
$24.6 million for the three months ended September 30, 2001. Substantially all
of the increase was attributable to sales of our acquired MB Quart and Q-Logic
brands. As a percent of sales, cost of goods sold decreased to 64.8% for the
three months ended September 30, 2002, from 67.2% for the three months ended
September 30, 2001. The primary reasons for the decrease as a percent of sales
included a mix shift toward higher margined products and lower discounting.

Sales and Marketing Expenses. Sales and marketing expenses increased by
$0.3 million, or 5.7%, to
$6.3 million for the three months ended September 30, 2002, from $6.0
million for the three months ended September 30, 2001. As a percent of sales,
sales and marketing expenses decreased to 15.5% for the three months ended
September 30, 2002, from 16.3% for the three months ended September 30, 2001.
The increase as a percent of sales was primarily due to higher cost structures
of our acquired MB Quart and Q-Logic brands.

General and Administrative Expenses. General and administrative expenses,
including abandoned acquisition costs, increased by $0.7 million, or 18.7%, to
$4.5 million for the three months ended September 30, 2002, from $3.8 million
for the three months ended September 30, 2001. As a percent of sales, general
and administrative expenses, including abandoned acquisition costs, increased
to 11.2% for the three months ended September 30, 2002, from 10.5% for the
three months ended September 30, 2001. The increase as a percent of sales is
primarily due to a return to normal level of performance-based compensation
relating to achieved growth targets, legal costs and higher cost structures for
our acquired MB Quart and Q-Logic brands.

Research and Development Expenses. Research and development expenses
increased by $0.9 million, or 95.1%, to $1.8 million for the three months ended
September 30, 2002, from $0.9 million for the three months ended September 30,
2001. As a percent of sales, these expenses increased to 4.5% for the three
months ended September

12



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##### Table of Contents



30, 2002, from 2.5% for the three months ended September 30, 2001. The
increase is primarily due to increased legal costs associated with the defense
of a patent matter and personnel and product development costs relating to our
acquired MB Quart and Q-Logic brands.

Operating Income. Operating income increased by $0.3 million, or 27.2%,
to $1.6 million for the three months ended September 30, 2002, from $1.3
million for the three months ended September 30, 2001. As a percent of sales,
operating income increased to 4.0% for the three months ended September 30,
2002, from 3.5% for the three months ended September 30, 2001. This increase
primarily is attributable to a mix shift toward higher margined products, lower
discounting and reduced abandoned acquisition costs. This increase was
partially offset by normalized performance-based compensation expense,
increased legal expenses and higher cost structures for our acquired MB Quart
and Q-Logic brands.

Interest and Other Expense, Net. Interest and other expense, net,
primarily consists of interest expense and currency gains and losses. Interest
and other expense, net, increased by $0.4 million to an expense of $0.3 million
for the three months ended September 30, 2002, compared to income of $0.1
million for the three months ended September 30, 2001. The increase was
primarily due to foreign currency losses, compared to foreign currency gains in
the prior year, which were partially offset by decreased interest expense due
to reduced levels of our line of credit.

Income Tax Expense. Income tax expense remained relatively flat at $0.5
million for the three months ended September 30, 2002 and 2001. The effective
income tax rates were 38.6% for the three months ended September 30, 2002, and
36.4% for the three months ended September 30, 2001.

Liquidity and Capital Resources

We have financed our business primarily using existing working capital,
cash flows from operations and bank borrowings. During the second quarter of
2002 we extended the term of our $30.0 million revolving credit facility with
Bank of America, N.A. and Bank One, Arizona, N.A. to mature on June 28, 2004.
We had working capital of $49.3 million at September 30, 2002, compared to
$45.9 million at December 31, 2001. As at September 30, 2002, we maintained
$0.3 million of cash and cash equivalent balances.

As at September 30, 2002, we had a balance of $6.5 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 variable interest rate per annum of
Prime. The revolving line of credit has a blended variable interest rate of
LIBOR plus 150 basis points. As at September 30, 2002, the bank credit
facility had a weighted average interest rate of 4.1% per annum. The bank
credit facility contains provisions that, among other things, require that we
maintain certain minimum levels of EBITDA and debt service coverage and also
limit the amount of debt incurred and capital expenditures annually.

During the second quarter of 2002 we also extended our $5.0 million
capital lease credit facility under which we can fund leases until June 28,
2003, at which time the availability to enter into additional leases expires.
We use the capital lease credit facility for the purchase of capital equipment
under agreements structured as three-year capital lease obligations. As at
September 30, 2002, the capital lease credit facility had an outstanding
balance of $2.0 million with a weighted-average interest rate of 5.53% per
annum.

Net cash provided by operating activities was $3.1 million for the nine
months ended September 30, 2002, and $1.6 million for the nine months ended
September 30, 2001. Net cash provided by operating activities was primarily
related to the effect of increasing accrued salaries and incentives, other
accrued expenses, income taxes

13



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##### Table of Contents



payable and depreciation, which was partially offset by increases in
accounts receivable and inventory

Net cash used in investing activities was $5.3 million for the nine months
ended September 30, 2002, and $15.7 million for the nine months ended September
30, 2001. Current year net cash used in investing activities was primarily
related to purchases of property and equipment, while the prior years net cash
use was primarily related to the acquisitions of Audio Innovations and MB Quart
in the third quarter of 2001.

Net cash used in financing activities was $0.9 million for the nine months
ended September 30, 2002, and net cash provided by financing activities was
$14.0 million for the nine months ended September 30, 2001. Net cash used in
financing activities was primarily a result of the net repayments of our bank
credit facility, which was partially offset by proceeds from the exercise of
stock options and net proceeds from our long term debt..

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, should
we pursue an acquisition larger than our existing resources can support, we may
need to seek additional debt or equity resources.




Item 4. Controls and Procedures.

Our principal executive officer and principal accounting officer reviewed
our disclosure controls and procedures during the last 90 days in order to
comply with the SECs new requirements for certification of this Form 10-Q.

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.

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. We do not anticipate
material changes other than slightly accelerated internal deadlines for
compilation of information and preparation of initial drafts.

Based on their review of our disclosure controls and policies, our
principal executive officer and principal

14



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##### Table of Contents



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, since our principal executive officer and principal accounting
officer reviewed our disclosure controls and procedures.

15



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##### Table of Contents






Part II. Other Information




Item 1. Legal Proceedings.

Since the date of our Annual Report for the year 2001, filed with the SEC
on March 29, 2002, the patent claim described in the Legal Proceedings section
of our Annual Report has continued into an intensive fact discovery phase of
proceedings. As a result of initial proceedings, the products at issue in the
case have been reduced to 16 of our Punch brand amplifiers. We have incurred
substantial costs of defense, at a rate greater than we expected, which
contributed to our increased research and development costs during the quarter.
We anticipate that discovery and motions in the case will continue for at
least the next two quarters and will cause us to incur additional defense costs
during that period. A trial is likely sometime after the first quarter of
2003. We continue to believe that the claim involved in the case is without
merit and that we should ultimately prevail in this matter.

We are and may continue to be a party to various lawsuits and arbitrations
from time to time. As at September 30, 2002, we were not a party to any legal
proceedings that we believe are likely to have a material effect on our
business, other than the effect of the expenses associated with the Fiori
patent matter described above.




Item 5. Other Information

We completed the purchase of 51% of the common stock (on a fully diluted
basis) of SimpleDevices, Inc as at October 17, 2002. The purchase was not large
enough to require a current report on Item 2 of Form 8-K at the time of the
purchase, but we did report the purchase in a press release issued on October
24, 2002. Additionally, we signed a licensing agreement with Universal Studios
Consumer Products Group, which we also reported in a press release on October
24, 2002. This section of our report is designed to provide a more complete
description of the business we purchased and agreement we signed, since we do
not wish to wait to provide more information until we file our annual report
next spring. Therefore, we are including additional information in this report
describing the SimpleDevices business and Universal Studios Consumer Product
Group agreement.

Overview of the Acquisition

After the end of the third quarter, as at October 17, 2002, we purchased
63,336,955 shares of common stock of SimpleDevices, Inc. These shares are 76%
of SimpleDevices currently outstanding common stock, but are only 51% of the
fully diluted common shares assuming outstanding options granted to
SimpleDevices management and employees are all exercised. We believe the
fully diluted percentage is more meaningful in evaluating our ownership of
SimpleDevices because the options are granted at prices below the price we paid
for the shares and are intended to give the managers and employees a strong
incentive to grow SimpleDevices business. Our investment of $3.5 million was
paid to SimpleDevices, not to its current shareholders, and will be used for
working capital, to pay a convertible promissory note and for other corporate
purposes. Founded in 1999, SimpleDevices had received investments from
Motorola, Proxim, Casio and private investors, and is located in San Mateo,
California.

SimpleDevices Products and Technology

SimpleDevices is a software company that has developed connected digital
device applications for the home, automobile and portable devices. Its
standards-based SimpleWare and SimpleMedia Services software leverages
industry standards, such as 802.11b and Universal Plug and Play (UPnP), to
extend home networking technology beyond the PC or home gateway to a wide
variety of digital device applications. Its software enables a variety of
digital devices to access a centralized media database through a unified
interface and provides automation, synchronization, scheduling, and unified
interfaces and databases across compatible devices.
16Table of Contents

For the automobile, SimpleDevices software lets consumers conveniently
send digital content from their home PC to a device installed as part of their
car audio system. The device will then play back the digital content in the
car. This product introduces synchronization and scheduling capabilities
previously unavailable in car audio.

For the home, SimpleDevices software lets consumers conveniently send
digital content from their home PC to a device installed as part of their home
audio system or other audio device. The device will then play back the digital
content in the home. One partner-branded digital audio receiver is already
available to consumers and will wirelessly extend digital media to existing
home audio equipment.

We believe that SimpleDevices technology has the potential for a wide
range of applications, particularly for mobile audio and home audio.
SimpleDevices intends to use our investment to fund further improvements to its
technology that are intended to enhance its appeal to consumer electronics
manufacturers and consumers. It has licensed its software and technology to
consumer electronics, PC, automotive and network equipment OEMs.

SimpleDevices has applied for a total of 35 patents related to its
technology for connected digital device applications and one patent has been
granted. Even if more of its patent applications are granted, there can be no
assurance that the patents will cover significant elements of SimpleDevices
products or that SimpleDevices will be able to use its patents to protect its
products from competition by functionally equivalent devices.

SimpleDevices Business and Competition

We believe that SimpleDevices will contribute approximately $5 million in
sales in fiscal 2003. We expect the transaction to be neutral to earnings in
its first full year.

Simple Devices is an early stage company, with initial products using its
technology made available to consumers only in 2001. It did not have
significant revenues prior to our purchase of its stock. Because SimpleDevices
is addressing a newly developing market, its prospects for sales and profits
are particularly difficult to predict. Small changes in the pace of OEM and
consumer acceptance of its offerings could substantially increase or decrease
its revenues and profitability.

SimpleDevices business strategy is to license its software and technology
to computer and consumer electronics manufacturers who will incorporate
SimpleDevices technology into devices that they market. It does not plan to
develop its own distribution infrastructure for sale of devices to consumers.
As a result, its success depends both upon consumer acceptance of devices using
its technology and upon the willingness of OEMs, including computer makers,
consumer electronics manufacturers, and other device makers, to incorporate
SimpleDevices technology into their products.

A number of other companies, including companies in the computer and
consumer electronics industries, are attempting to develop products competitive
with those that SimpleDevices is developing. A number of these companies have
substantially greater resources than SimpleDevices. Although we believe
SimpleDevices products are more fully developed than those of its competitors,
and that they offer ease of use features that others have not developed, there
can be no assurance that SimpleDevices will be able to maintain this lead.

Because products in this category are newly developed, the ultimate
desires of consumers with respect to these products is uncertain and
unpredictable. In addition, the current difficult economic environment may
have an affect on OEMs, who may choose to defer new product introductions, and
on consumers, who may postpone purchases of new technology. These or other
issues could reduce Simple Devices sales and earnings below our expectations.

SimpleDevices operates out of offices at 2121 El Camino Real, 2nd Floor,
San Mateo, California. It leases these offices, which occupy approximately
3,271 square feet, under a lease that expires in January 31, 2003. It employs
17 employees, including 2 in administration, 12 in research & development, and
3 in sales and
marketing.

17



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Universal Studios Consumer Products Group Licensing Agreement

We have signed a licensing agreement with Universal Studios Consumer
Products Group that will allow us to use Universal trademarks relating to the
hit movie, The Fast and the Furious,and Universal Pictures upcoming sequel
The Fast and the Furious 2, in connection with selected Rockford Fosgate and
Lightning Audio products.

In addition, we have agreed to permit Universal to use our Rockford
Fosgate and Lightning Audio products in cars that are expected to be featured
in The Fast and the Furious 2, scheduled for release in Summer 2003.

Specific terms of the agreements are confidential. We believe, however,
that the agreements create significant potential for brand-enhancement and
cross-promotion.

The Fast and the Furiousand The Fast and the Furious 2are trademarks and
copyrights of Universal Studios. Licensed by Universal Studios Licensing LLLP.
All rights reserved.

The car and motorcycle action sequences depicted in The Fast and the
Furious film are dangerous. All stunts were performed in controlled
environments with professionally trained stunt crews on closed roads. No
attempts should be made to duplicate any action, driving or car play scenes
portrayed therein.

A Note to Parents: The Fast and the Furiousis rated R and The Fast and
the Furious 2is not yet rated. Consult www.filmratings.com for further
information.




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.
|       
|       
|       
|       
|10.50   |  | Stock Purchase Agreement between Rockford and SimpleDevices,
Inc., dated as of October 16, 2002.*                                                                                                                     

18



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##### Table of Contents



|      |  |                                                                                                                                                         
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------
|     
|     
|     
|     
|10.51 |  | Second Amended and Restated Voting Agreement among Rockford,
SimpleDevices, Inc., and the Shareholders of Simple Devices,
dated as of October 16, 2002.*
|     
|     
|     
|     
|10.52 |  | Master Merchandising License Agreement between Rockford and
Universal Studios Licensing LLLP, dated as of August 16,
2002.*                             
|     
|     
|     
|     
|10.53 |  | Product Placement Agreement between Rockford and Universal
Pictures, a division of Universal City Studios LLLP, dated as
of August 16, 2002 .           
|     
|     
|     
|     
|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
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|++  |  | 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 29, 2002, with our Annual Report on Form
10-K for the year ended December 31, 2001.                     
|   
|   
|   
|   
|*   |  | Portions of the document have been omitted and filed separately with the
Commission under a request for confidential treatment.   

(b) 
Rockford filed a report on Form 8-K, dated August 14, 2002,
furnishing under Item 7 the certification of our Quarterly
Report on Form 10Q for the quarter ended June 30, 2002 by
W. Gary Suttle, our Chief Executive Officer, and James M.
Thomson, our Chief Financial Officer pursuant to 18 U.S.C. Section
1350, as adopted in Section 906 of the Sarbanes-Oxley Act of 2002.




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: November 12, 2002 |  | By:                  |  | /s/ James M. Thomson                 
|                       
|                       
|                       
|                       
|                        |  |                      |  | James M. Thomson                     
|                       
|                       
|                       
|                       
|                        |  |                      |  | Vice President of Finance,           
|                       
|                       
|                       
|                       
|                        |  |                      |  | Chief Financial Officer and Secretary
|                       
|                       
|                       
|                       
|                        |  |                      |  | (Principal Financial Officer         
|                       
|                       
|                       
|                       
|                        |  |                      |  | and Duly Authorized Officer)         

CERTIFICATIONS

I, W. Gary Suttle, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Rockford
Corporation;                                                                                                                                                                                                                                                   
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly                                                                                                                                                                                                                   

19



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##### Table of Contents





|   |  | report, fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and for,
the periods presented in this quarterly report;                          
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:



| | a) |  | designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrants
ability to record, process, summarize and report financial data and
have identified for the registrants auditors any material
weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves management
or other employees who have a significant role in the registrants
internal controls; and                                                                                                                                        



|6. |  | The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                        |  |                            
|----------------------- |  | ---------------------------
|Date: November 12, 2002 |  |                            
|                       
|                       
|                       
|                       
|                        |  | /s/ W. Gary Suttle         
|                       
|                       
|                       
|                       
|                        |  | W. Gary Suttle             
|                       
|                       
|                       
|                       
|                        |  | President and CEO          
|                       
|                       
|                       
|                       
|                        |  | Principal Executive Officer

I, James M. Thomson, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of Rockford
Corporation;

2.     Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly
report;
20Table of Contents

3.     Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;

4.     The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:



| | a) |  | designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrants
ability to record, process, summarize and report financial data and
have identified for the registrants auditors any material
weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves management
or other employees who have a significant role in the registrants
internal controls; and                                                                                                                                        



|6. |  | The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                        |  |                            
|----------------------- |  | ---------------------------
|Date: November 12, 2002 |  |                            
|                       
|                       
|                       
|                       
|                        |  | /s/ James M. Thomson       
|                       
|                       
|                       
|                       
|                        |  | James M. Thomson           
|                       
|                       
|                       
|                       
|                        |  | Chief Financial Officer    
|                       
|                       
|                       
|                       
|                        |  | Principal Financial Officer

21



---



##### Table of Contents



Exhibit Index

|        |  |                                                                                                                                                                                                                       
|------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|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.
|       
|       
|       
|       
|10.50   |  | Stock Purchase Agreement between Rockford and SimpleDevices,
Inc., dated as of October 16, 2002.*                                                                                                                     
|       
|       
|       
|       
|10.51   |  | Second Amended and Restated Voting Agreement among Rockford,
SimpleDevices, Inc., and the Shareholders of SimpleDevices,
dated as of October 16, 2002.*                                                               
|       
|       
|       
|       
|10.52   |  | Master Merchandising License Agreement between Rockford and
Universal Studios Licensing LLLP, dated as of August 16,
2002.*                                                                                           
|       
|       
|       
|       
|10.53   |  | Product Placement Agreement between Rockford and Universal
Pictures, a division of Universal City Studios LLLP, dated as
of August 16, 2002.                                                                          
|       
|       
|       
|       
|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
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|++  |  | 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 29, 2002, with our Annual Report on Form
10-K for the year ended December 31, 2001.                     
|   
|   
|   
|   
|*   |  | Portions of the document have been omitted and filed separately with the
Commission under a request for confidential treatment.   

22