##### Table of Contents



SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2001

Commission File Number 000-30138

ROCKFORD CORPORATION(Exact Name of Registrant as Specified in its Charter)

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

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, 2001, there were 8,172,924 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
|Part II. Other Information   
|                              | Item 1. Legal Proceedings.                                                                   
|                              | Item 5. Other Information                                                                    
|                              | Item 6. Exhibits and Reports on Form 8-K                                                     
|SIGNATURES                   
|Index to Exhibits            
|Exhibit 10.41                
|Exhibit 10.42                
|Exhibit 10.43                



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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, 2001 and December 31, 2000                                  |                                                   |  |   |   
|          
|
|           |         | Condensed Consolidated Income Statements                                 |                                                   |  | 2 |   
|          
|          
|          
|          
|           |         | Three and Nine Months Ended September 30, 2001 and 2000                   |                                                   |  |   |   
|          
|
|           |         | Condensed Consolidated Statements of Cash Flows                          |                                                   |  | 3 |   
|          
|          
|          
|          
|           |         | Nine Months Ended September 30, 2001 and 2000                             |                                                   |  |   |   
|          
|
|           |         | Notes to Condensed Consolidated Financial Statements  September 30, 2001 |                                                   |  | 4 |   
|          
|
|           | Item 2. |                                                                           | Management's Discussion and Analysis of Financial |  |   | 7  |     
|           |         | Condition and Results of Operations                                       |                                                   |  |   |   
|          
|
|Part II:   |         | Other Information                                                         |                                                   |  |   |   
|          
|
|           | Item 1. |                                                                           | Legal Proceedings                                 |  |   | 13 |     
|          
|
|           | Item 5. |                                                                           | Other Information                                 |  |   | 14 |     
|          
|
|           | Item 6. |                                                                           | Exhibits and Reports on Form 8-K                  |  |   | 19 |     
|          
|
|Signatures |         |                                                                           |                                                   |  |   |    | 20   | 





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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,
|                                                       |                                               |                                                                                                                                                                 |        | 2001           |        | 2000        
|                                                       |                                               |                                                                                                                                                                 |        |                |        |             
|                                                       |                                               |                                                                                                                                                                 |        | (Unaudited)    |        | (Note)      
|                                                       |                                               |                                                                                                                                                                 |        | (In thousands)
|Assets                                                 |                                               |                                                                                                                                                                 |        |                |        |              |        |   
|                                                      
|                                                      
|                                                      
|                                                      
|Current assets:                                        |                                               |                                                                                                                                                                 |        |                |        |              |        |   
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                               | Cash                                                                                                                                                            |        | $              | 2,590  |              |        | $  | 2,750  | 
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                               | Accounts receivable, less allowances of $2,573,000 and
$1,427,000 at September 30, 2001 and December 31, 2000,
respectively                                     |        |                | 30,492 |              |        |    | 28,488 | 
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                               | Inventories, net                                                                                                                                                |        |                | 33,002 |              |        |    | 20,406 | 
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                               | Deferred income taxes                                                                                                                                           |        |                | 3,648  |              |        |    | 3,596  | 
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                               | Prepaid expenses and other                                                                                                                                      |        |                | 2,930  |              |        |    | 2,091  | 
|                                                       |                                               |                                                                                                                                                                 |        |                |        |              |        |   
|Total current assets                                   |                                               |                                                                                                                                                                 | 72,662 |                |        |              | 57,331 |   
|                                                      
|                                                      
|                                                      
|                                                      
|Property and equipment, net                            |                                               |                                                                                                                                                                 | 9,708  |                |        |              | 5,996  |   
|                                                      
|                                                      
|                                                      
|                                                      
|Deferred income taxes                                  |                                               |                                                                                                                                                                 | 637    |                |        |              | 605    |   
|                                                      
|                                                      
|                                                      
|                                                      
|Goodwill, net                                          |                                               |                                                                                                                                                                 | 5,038  |                |        |              | 2,275  |   
|                                                      
|                                                      
|                                                      
|                                                      
|Other assets                                           |                                               |                                                                                                                                                                 | 648    |                |        |              | 711    |   
|                                                       |                                               |                                                                                                                                                                 |        |                |        |              |        |   
|Total assets                                           |                                               | $                                                                                                                                                               | 88,693 |                |        | $            | 66,918 |   
|                                                       |                                               |                                                                                                                                                                 |        |                |        |              |        |   
|Liabilities and shareholders equity                   |                                               |                                                                                                                                                                 |        |                |        |              |        |   
|                                                      
|                                                      
|                                                      
|                                                      
|Current liabilities:                                   |                                               |                                                                                                                                                                 |        |                |        |              |        |   
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                               | Accounts payable                                                                                                                                                |        | $              | 7,553  |              |        | $  | 7,118  | 
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                               | Accrued salaries and incentives                                                                                                                                 |        |                | 2,790  |              |        |    | 2,561  | 
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                               | Accrued warranty                                                                                                                                                |        |                | 4,786  |              |        |    | 4,621  | 
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                               | Income taxes payable                                                                                                                                            |        |                | 701    |              |        |    | 449    | 
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                               | Other accrued expenses                                                                                                                                          |        |                | 4,425  |              |        |    | 4,468  | 
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                               | Current portion of notes payable, long-term debt and capital
lease obligations                                                                                  |        |                | 1,783  |              |        |    | 935    | 
|                                                       |                                               |                                                                                                                                                                 |        |                |        |              |        |   
|Total current liabilities                              |                                               |                                                                                                                                                                 | 22,038 |                |        |              | 20,152 |   
|                                                      
|                                                      
|                                                      
|                                                      
|Notes payable and long-term debt, less current portion |                                               |                                                                                                                                                                 | 13,500 |                |        |              | 0      |   
|                                                      
|                                                      
|                                                      
|                                                      
|Capital lease obligations, less current portion        |                                               |                                                                                                                                                                 | 895    |                |        |              | 434    |   
|                                                      
|                                                      
|                                                      
|                                                      
|Shareholders equity:                                  |                                               |                                                                                                                                                                 |        |                |        |              |        |   
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                               | Common stock, $.01 par value  Authorized shares  40,000,000
Issued shares - 8,172,924 shares at September 30, 2001, and
7,997,529 shares at December 31, 2000 |        |                | 82     |              |        |    | 80     | 
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                               | Additional paid-in capital                                                                                                                                      |        |                | 30,061 |              |        |    | 29,504 | 
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                               | Retained earnings                                                                                                                                               |        |                | 22,194 |              |        |    | 16,695 | 
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Accumulated other comprehensive income (loss) |                                                                                                                                                                 |        | (71            | )      |              |        | 53 |       
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Treasury stock  832 shares                   |                                                                                                                                                                 |        | (6             | )      |              |        | 0  |       
|                                                       |                                               |                                                                                                                                                                 |        |                |        |              |        |   
|Total shareholders equity                             |                                               |                                                                                                                                                                 | 52,260 |                |        |              | 46,332 |   
|                                                       |                                               |                                                                                                                                                                 |        |                |        |              |        |   
|Total liabilities and shareholders equity             |                                               | $                                                                                                                                                               | 88,693 |                |        | $            | 66,918 |   
|                                                       |                                               |                                                                                                                                                                 |        |                |        |              |        |   

Note: The balance sheet at December 31, 2000 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.

See notes to condensed consolidated financial statements.





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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,    
|                                         |  | 2001                                  |        | 2000              |  | 2001 |        | 2000
|                                         |  |                                       |        |                   |  |      |        |     
|                                         |  | (In thousands, except per share data)
|Revenues                                 |  | $                                     | 36,562 |                   |  | $    | 36,370 |      |  | $ | 118,727 |  |  | $ | 116,095 | 
|                                        
|                                        
|                                        
|                                        
|Cost of goods sold                       |  |                                       | 24,577 |                   |  |      | 24,491 |      |  |   | 77,966  |  |  |   | 73,165  | 
|                                         |  |                                       |        |                   |  |      |        |      |  |   |         |  |  |   |         | 
|Gross profit                             |  |                                       | 11,985 |                   |  |      | 11,879 |      |  |   | 40,761  |  |  |   | 42,930  | 
|                                        
|                                        
|                                        
|                                        
|Operating expenses:                      |  |                                       |        |                   |  |      |        |      |  |   |         |  |  |   |         | 
|                                        
|                                        
|                                        
|                                        
|Sales and marketing                      |  |                                       | 5,962  |                   |  |      | 5,000  |      |  |   | 17,974  |  |  |   | 17,796  | 
|                                        
|                                        
|                                        
|                                        
|General and administrative               |  |                                       | 3,272  |                   |  |      | 3,501  |      |  |   | 10,973  |  |  |   | 11,087  | 
|                                        
|                                        
|                                        
|                                        
|Research and development                 |  |                                       | 925    |                   |  |      | 722    |      |  |   | 2,387   |  |  |   | 2,079   | 
|                                        
|                                        
|                                        
|                                        
|Abandoned acquisition costs              |  |                                       | 551    |                   |  |      | 0      |      |  |   | 551     |  |  |   | 0       | 
|                                         |  |                                       |        |                   |  |      |        |      |  |   |         |  |  |   |         | 
|Total operating expenses                 |  |                                       | 10,710 |                   |  |      | 9,223  |      |  |   | 31,885  |  |  |   | 30,962  | 
|                                         |  |                                       |        |                   |  |      |        |      |  |   |         |  |  |   |         | 
|Operating income                         |  |                                       | 1,275  |                   |  |      | 2,656  |      |  |   | 8,876   |  |  |   | 11,968  | 
|                                        
|                                        
|                                        
|                                        
|Interest and other expense (income), net |  |                                       | (67    | )                 |  |      | 79     |      |  |   | 234     |  |  |   | 813     | 
|                                         |  |                                       |        |                   |  |      |        |      |  |   |         |  |  |   |         | 
|Income before income tax                 |  |                                       | 1,342  |                   |  |      | 2,577  |      |  |   | 8,642   |  |  |   | 11,155  | 
|                                        
|                                        
|                                        
|                                        
|Income tax expense                       |  |                                       | 489    |                   |  |      | 925    |      |  |   | 3,211   |  |  |   | 4,160   | 
|                                         |  |                                       |        |                   |  |      |        |      |  |   |         |  |  |   |         | 
|Net income                               |  | $                                     | 853    |                   |  | $    | 1,652  |      |  | $ | 5,431   |  |  | $ | 6,995   | 
|                                         |  |                                       |        |                   |  |      |        |      |  |   |         |  |  |   |         | 
|Net income per share:                    |  |                                       |        |                   |  |      |        |      |  |   |         |  |  |   |         | 
|                                        
|                                        
|                                        
|                                        
|Basic                                    |  | $                                     | 0.10   |                   |  | $    | 0.21   |      |  | $ | 0.67    |  |  | $ | 1.08    | 
|                                         |  |                                       |        |                   |  |      |        |      |  |   |         |  |  |   |         | 
|Diluted                                  |  | $                                     | 0.10   |                   |  | $    | 0.19   |      |  | $ | 0.61    |  |  | $ | 0.90    | 
|                                         |  |                                       |        |                   |  |      |        |      |  |   |         |  |  |   |         | 
|Weighted average shares:                 |  |                                       |        |                   |  |      |        |      |  |   |         |  |  |   |         | 
|                                        
|                                        
|                                        
|                                        
|Basic                                    |  |                                       | 8,172  |                   |  |      | 7,810  |      |  |   | 8,087   |  |  |   | 6,503   | 
|                                         |  |                                       |        |                   |  |      |        |      |  |   |         |  |  |   |         | 
|Diluted                                  |  |                                       | 8,957  |                   |  |      | 8,643  |      |  |   | 8,905   |  |  |   | 7,794   | 
|                                         |  |                                       |        |                   |  |      |        |      |  |   |         |  |  |   |         | 

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        
|                                                                                            |                                        |   |                                                     |        | 2001              |         | 2000   
|                                                                                            |                                        |   |                                                     |        |                   |         |        
|                                                                                            |                                        |   |                                                     |        | (In thousands)   
|Operating activities                                                                        |                                        |   |                                                     |        |                   |         |         |       
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Net income                                                                                  |                                        | $ | 5,431                                               |        |                   | $       | 6,995   |       
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Adjustments to reconcile net income to net cash provided
by (used in) operating activities: |                                        |   |                                                     |        |                   |         |         |       
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                            | Depreciation and amortization          |   |                                                     | 2,803  |                   |         |         | 2,881  |  
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                            | Gain on sale of property and equipment |   |                                                     | (4     | )                 |         |         | (3     | )
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                            | Provision for doubtful accounts        |   |                                                     | 847    |                   |         |         | 387    |  
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                            | Provision for inventory                |   |                                                     | 1,082  |                   |         |         | 875    |  
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Changes
in operating assets and liabilities, net of effects of business
acquisitions:       |                                        |   |                                                     |        |                   |         |         |       
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                            | Accounts receivable                    |   |                                                     | 96     |                   |         |         | (9,132 | )
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                            | Inventories                            |   |                                                     | (6,457 | )                 |         |         | (4,201 | )
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                            | Prepaid expenses and other assets      |   |                                                     | (284   | )                 |         |         | (114   | )
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                            | Accounts payable                       |   |                                                     | (441   | )                 |         |         | 559    |  
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                            | Accrued salaries and incentives        |   |                                                     | (935   | )                 |         |         | (1,524 | )
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                            | Accrued warranty                       |   |                                                     | (140   | )                 |         |         | 871    |  
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                            | Income taxes payable                   |   |                                                     | 239    |                   |         |         | 1,497  |  
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                            | Other accrued expenses                 |   |                                                     | (652   | )                 |         |         | 571    |  
|                                                                                            |                                        |   |                                                     |        |                   |         |         |       
|                                                                                            |                                        |   | Net cash provided by (used in) operating
activities |        |                   | 1,585   |         |        |   | (338   | )
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Investing activities                                                                        |                                        |   |                                                     |        |                   |         |         |       
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Purchases of property and equipment                                                         |                                        |   | (3,875                                              | )      |                   |         | (2,960  | )     
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Proceeds from sale of property and equipment                                                |                                        |   | 4                                                   |        |                   |         | 3       |       
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Acquisition
of businesses, net of cash acquired                                             |                                        |   | (11,206                                             | )      |                   |         | 0       |       
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Increase in other assets                                                                    |                                        |   | (585                                                | )      |                   |         | (203    | )     
|                                                                                            |                                        |   |                                                     |        |                   |         |         |       
|                                                                                            |                                        |   | Net cash used in investing activities               |        |                   | (15,662 | )       |        |   | (3,160 | )
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Financing activities                                                                        |                                        |   |                                                     |        |                   |         |         |       
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Proceeds from (payments on) bank line of credit and
other debt                              |                                        |   | 13,977                                              |        |                   |         | (15,698 | )     
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Payments on capital lease obligations                                                       |                                        |   | (557                                                | )      |                   |         | (483    | )     
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Proceeds from the exercise of stock options and warrants                                    |                                        |   | 558                                                 |        |                   |         | 487     |       
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Proceeds from sale of capital stock                                                         |                                        |   | 0                                                   |        |                   |         | 24,119  |       
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Treasury shares purchased                                                                   |                                        |   | (6                                                  | )      |                   |         | 0       |       
|                                                                                            |                                        |   |                                                     |        |                   |         |         |       
|                                                                                            |                                        |   | Net cash provided by financing activities           |        |                   | 13,972  |         |        |   | 8,425  |  
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Effect of exchange rate changes on cash                                                     |                                        |   | (55                                                 | )      |                   |         | (273    | )     
|                                                                                            |                                        |   |                                                     |        |                   |         |         |       
|Net increase (decrease) in cash and cash equivalents                                        |                                        |   | (160                                                | )      |                   |         | 4,654   |       
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Cash and cash equivalents at beginning of period                                            |                                        |   | 2,750                                               |        |                   |         | 917     |       
|                                                                                            |                                        |   |                                                     |        |                   |         |         |       
|Cash and cash equivalents at end of period                                                  |                                        | $ | 2,590                                               |        |                   | $       | 5,571   |       
|                                                                                            |                                        |   |                                                     |        |                   |         |         |       

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, 2001

1. Basis of Presentation

We have prepared our unaudited condensed consolidated financial statements in
accordance with generally accepted accounting principles 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 and nine month periods ended September
30, 2001 are not necessarily indicative of the results you may expect for the
year ending December 31, 2001.

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, 2000, filed with the SEC on March 13, 2001.

2. Inventories

Inventories consist of the following:

|                 |  |                |        |              |  |   |        |  
|---------------- |  | -------------- | ------ | ------------ |  | - | ------ | -
|                 |  | September 30,  |        | December 31,
|                 |  | 2001           |        | 2000        
|                 |  |                |        |             
|                 |  | (In thousands)
|Raw materials    |  | $              | 10,515 |              |  | $ | 7,330  |  
|                
|                
|                
|                
|Work-in-progress |  |                | 1,539  |              |  |   | 863    |  
|                
|                
|                
|                
|Finished goods   |  |                | 23,647 |              |  |   | 13,659 |  
|                 |  |                |        |              |  |   |        |  
|                 |  |                | 35,701 |              |  |   | 21,852 |  
|                
|                
|                
|                
|Less allowances  |  |                | (2,699 | )            |  |   | (1,446 | )
|                 |  |                |        |              |  |   |        |  
|                 |  | $              | 33,002 |              |  | $ | 20,406 |  
|                 |  |                |        |              |  |   |        |  

4



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##### Table of Contents



Rockford Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)(continued)

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,    
|                                                                                                              |                                                                         |                        |       | 2001                                  |     | 2000              |       | 2001  |     | 2000
|                                                                                                              |                                                                         |                        |       |                                       |     |                   |       |       |     |     
|                                                                                                              |                                                                         |                        |       | (In thousands, except per share data)
|Numerator:                                                                                                    |                                                                         |                        |       |                                       |     |                   |       |       |     |      |       |       |     |   |       |      
|                                                                                                             
|                                                                                                             
|                                                                                                             
|                                                                                                             
|                                                                                                              | Net income                                                              |                        | $     | 853                                   |     |                   | $     | 1,652 |     |      | $     | 5,431 |     |   | $     | 6,995 |      
|                                                                                                             
|                                                                                                             
|                                                                                                             
|                                                                                                             
|                                                                                                              | Effect of dilutive securities
interest impact of convertible
debentures |                        |       | 0                                     |     |                   |       | 1     |     |      |       | 0     |     |   |       | 24    |      
|                                                                                                              |                                                                         |                        |       |                                       |     |                   |       |       |     |      |       |       |     |   |       |      
|Numerator for diluted net income
per share, income available to common shareholders after assumed conversions |                                                                         | $                      | 853   |                                       |     | $                 | 1,653 |       |     | $    | 5,431 |       |     | $ | 7,019 |      
|                                                                                                              |                                                                         |                        |       |                                       |     |                   |       |       |     |      |       |       |     |   |       |      
|Denominator:                                                                                                  |                                                                         |                        |       |                                       |     |                   |       |       |     |      |       |       |     |   |       |      
|                                                                                                             
|                                                                                                             
|                                                                                                             
|                                                                                                             
|                                                                                                              | Denominator for basic net
income per share, weighted
average shares     |                        |       | 8,172                                 |     |                   |       | 7,810 |     |      |       | 8,087 |     |   |       | 6,503 |      
|                                                                                                             
|                                                                                                             
|                                                                                                             
|                                                                                                             
|                                                                                                              | Effect of dilutive securities:                                          |                        |       |                                       |     |                   |       |       |     |      |       |       |     |   |       |       |      
|                                                                                                             
|                                                                                                             
|                                                                                                             
|                                                                                                             
|                                                                                                              |                                                                         | Employee stock options |       |                                       | 780 |                   |       |       | 798 |      |       |       | 813 |   |       |       | 1,030 | 
|                                                                                                             
|                                                                                                             
|                                                                                                             
|                                                                                                             
|                                                                                                              |                                                                         | Warrants               |       |                                       | 5   |                   |       |       | 4   |      |       |       | 5   |   |       |       | 14    | 
|                                                                                                             
|                                                                                                             
|                                                                                                             
|                                                                                                             
|                                                                                                              |                                                                         | Convertible debentures |       |                                       | 0   |                   |       |       | 31  |      |       |       | 0   |   |       |       | 247   | 
|                                                                                                              |                                                                         |                        |       |                                       |     |                   |       |       |     |      |       |       |     |   |       |      
|                                                                                                              | Dilutive potential common shares                                        |                        |       | 785                                   |     |                   |       | 833   |     |      |       | 818   |     |   |       | 1,291 |      
|                                                                                                              |                                                                         |                        |       |                                       |     |                   |       |       |     |      |       |       |     |   |       |      
|Denominator for diluted net
income per share, adjusted
weighted average shares and
assumed conversions        |                                                                         |                        | 8,957 |                                       |     |                   | 8,643 |       |     |      | 8,905 |       |     |   | 7,794 |      
|                                                                                                              |                                                                         |                        |       |                                       |     |                   |       |       |     |      |       |       |     |   |       |      
|Basic net income per share                                                                                    |                                                                         | $                      | 0.10  |                                       |     | $                 | 0.21  |       |     | $    | 0.67  |       |     | $ | 1.08  |      
|                                                                                                              |                                                                         |                        |       |                                       |     |                   |       |       |     |      |       |       |     |   |       |      
|Diluted net income per share                                                                                  |                                                                         | $                      | 0.10  |                                       |     | $                 | 0.19  |       |     | $    | 0.61  |       |     | $ | 0.90  |      
|                                                                                                              |                                                                         |                        |       |                                       |     |                   |       |       |     |      |       |       |     |   |       |      

4. Abandoned Acquisition Costs

During the three months ended September 30, 2001,
the Company discontinued its pursuit of a potential acquisition
candidate. This resulted in a charge of $551,000 during the period
relating to previously deferred direct costs of acquisition.

5. Acquisitions

Audio Innovations.As at August 1, 2001, we acquired the Audio Innovations
business by purchasing all of the outstanding shares of common stock
of AI Research, Inc., an Oklahoma corporation. We paid the
shareholders of AI Research $4 million at the closing and used approximately
$2 million to pay outstanding AI Research debt. We also anticipate making payments of $500,000
to the selling shareholders over the next three years if we meet
agreed upon profitability and
sales goals for the Audio Innovations business. We financed the purchase price
using borrowings from our line of credit.

The business was not a material business
acquisition as is defined by the Security and Exchange Commission
Rules and Regulations. The acquisition was accounted for using the
purchase method of accounting in accordance with Statement of
Financial Accounting Standards Number 141 (SFAS 141), which was
effective for the Company on July 1, 2001. The assets acquired and
liabilities assumed were recorded at their fair values at the date of
acquisition with $2.9 million recorded as goodwill. In accordance
with SFAS 141 goodwill is not amortized for acquisitions consummated
after June 30, 2001. The results of operations of Audio Innovations
have been included with our results of operations commencing on
August 1, 2001.

5



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##### Table of Contents



Rockford Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)(continued)

MB Quart. As at September 1, 2001, we acquired a new German subsidiary, MB
Quart GmbH, as a subsidiary of our existing German subsidiary, Rockford Europe
GmbH. Through MB Quart GmbH, we entered into agreements with Dr. Werner
Schreiber, a receiver appointed under German bankruptcy law to manage the
business of MB Quart Akustik GmbH. Under these agreements, MB Quart GmbH
acquired substantially all of the operating assets of MB Quart Akustik GmbH, and we
directly acquired all of the stock of its U.S. subsidiary, MB Quart Electronics
USA, Inc. We paid approximately $6 million for all of these assets. We financed the
purchase price, as well as working capital requirements for this acquired
business, using borrowings from our line of credit.

The business was not a material business
acquisition as is defined by the Security and Exchange Commission
Rules and Regulations. The current assets acquired and current
liabilities assumed were recorded at their fair values at the date of
acquisition. The remaining portion of the purchase price was assigned
to property and equipment with no amounts being assigned to
intangible assets or goodwill. The results of operations of MB Quart
have been included with our results of operations commencing
September 1, 2001.

On October 1, 2001, we announced that we are consolidating MB
Quarts U.S. subsidiary operations with our operations in Gilbert, Arizona and Grand
Rapids, Michigan. This consolidation was contemplated by management at the time of the acquisition and
the related costs of severance, employee relocation, and certain
other exit costs will be accounted for as additional direct costs of
acquisition of the business in accordance with EITF 95-3.

6. Pending Adoption of Accounting Standard

In June 2001, the FASB issued SFAS 141 and Statement of Financial Accounting Standards No. 142, Goodwill and Other
Intangible Assets (SFAS 142). SFAS 141 became effective on July 1,
2001, eliminated the use of pooling of interests for all business combinations
initiated after June 29, 2001, and also established specific criteria for the
recognition of intangible assets separate from goodwill. As we
historically reflected acquisitions using the purchase method, SFAS
141 is not expected to have a significant impact on us. SFAS 142
requires that a company no longer amortize the goodwill and intangible assets
determined to have an indefinite life and also requires an annual impairment
testing of those assets. SFAS 142 must be adopted in the first quarter of the
first fiscal year beginning after December 15, 2001. We will adopt
SFAS 142 on January 1, 2002. We are currently evaluating the full
impact that SFAS 141 and SFAS 142 will have on our consolidated financial
statements, and believe that SFAS 142 will not have a material impact
on our
financial statements as amortization of goodwill and certain other intangible
assets does not represent a significant expense for us. For the three
and nine months ended September 30, 2001, amortization expense related to
goodwill and indefinite life intangibles was approximately $14 thousand and $42
thousand, respectively. In accordance with SFAS 141, we did not
amortize goodwill for acquisitions taking place during the three
months ended September 30, 2001. In addition, upon adoption, we will perform
the first of the required impairment tests of goodwill and indefinite life
intangibles and have not yet determined what the effect of these tests will be
on our financial position or results of operations.

6



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##### Table of Contents






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

You 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 2000,
filed with the SEC on March 13, 2001.

Forward-Looking Statements

We make forward-looking statements in this report including, without
limitation, statements concerning the future of our industry, product
development, business strategy (including the possibility of future
acquisitions), continued acceptance and growth of our products, dependence on
significant customers and suppliers, and the adequacy of our available cash
resources. 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
will almost certainly differ materially from those described in our
forward-looking statements. We disclaim any obligation or undertaking to
update or revise our forward-looking statements to reflect changes in our
expectations or changes in events, conditions, or circumstances on which our
expectations are based.

Our forward-looking statements discuss future expectations. They may contain
projections of results of operations or of financial condition or state other
forward-looking information. 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 2000,
filed with the SEC on March 13, 2001, 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.

Overview

We design, manufacture and distribute high performance car audio systems and
products under the Rockford Fosgate, Lightning Audio, Q-Logic, and MB Quart
brands. We sell professional audio products under the Hafler and MB Quart
brands. We also sell home audio and home theater products under the MB Quart
and Fosgate Audionics brands. We acquired both the Q-Logic and MB Quart brands
as a result of acquisitions that closed during the third quarter of 2001.

Our corporate headquarters and electronics manufacturing facilities are located
in Tempe, Arizona. We manufacture speakers at our facility in Grand Rapids,
Michigan. We manufacture Q-Logic products at our recently acquired facility in
Stillwater, Oklahoma and MB Quart products at our recently acquired facility in
Obrigheim, Germany. We use warehouses strategically located in the U.S.,
Canada, Japan, Singapore and Germany that enhance our ability to serve our
markets faster and, we believe, more cost effectively than many of our
competitors.

We generated over 98% of our sales in the quarters ended September 30, 2001 and
2000 from our car audio products.

7



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##### Table of Contents



In the U.S., we sell our car audio products using commissioned independent
sales representatives who are supported by our employee regional managers.
Internationally, we sell products in over 60 countries. In most countries
outside the U.S., we sell our products through independent distributors who
purchase our products and resell them to retailers. As part of our efforts to
convert selected foreign markets to a one-step distribution system, we now sell
through wholly owned subsidiaries using commissioned independent sales
representatives in Germany, Austria, Switzerland and Japan. We also sell
through commissioned independent sales representatives in Canada.

Sales of our car audio products to Best Buy accounted for 15.7% of our sales
for the nine months ended September 30, 2001 and 16.5% of our sales for the
nine months ended September 30, 2000. Our business plans contemplate that Best
Buy will continue to account for a significant portion of our sales for the
foreseeable future.

For a discussion of the Audio Innovations and MB Quart businesses that we
acquired during the third quarter of 2001, please refer to Part II, Item 5 of
this report.

Results of Operations

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

|                                         |  |                    |       |                   |  |      |       |      |  |  |       |   |  |  |       |  
|---------------------------------------- |  | ------------------ | ----- | ----------------- |  | ---- | ----- | ---- |  |  | ----- | - |  |  | ----- | -
|                                         |  | Three months ended |       | Nine months ended
|                                         |  | September 30,      |       | September 30,    
|                                         |  | 2001               |       | 2000              |  | 2001 |       | 2000
|                                         |  |                    |       |                   |  |      |       |     
|Net sales                                |  |                    | 100.0 | %                 |  |      | 100.0 | %    |  |  | 100.0 | % |  |  | 100.0 | %
|                                        
|                                        
|                                        
|                                        
|Cost of goods sold                       |  |                    | 67.2  |                   |  |      | 67.3  |      |  |  | 65.7  |   |  |  | 63.0  |  
|                                         |  |                    |       |                   |  |      |       |      |  |  |       |   |  |  |       |  
|Gross profit                             |  |                    | 32.8  |                   |  |      | 32.7  |      |  |  | 34.3  |   |  |  | 37.0  |  
|                                        
|                                        
|                                        
|                                        
|Operating expenses:                      |  |                    |       |                   |  |      |       |      |  |  |       |   |  |  |       |  
|                                        
|                                        
|                                        
|                                        
|Sales and marketing                      |  |                    | 16.3  |                   |  |      | 13.7  |      |  |  | 15.1  |   |  |  | 15.3  |  
|                                        
|                                        
|                                        
|                                        
|General and administrative               |  |                    | 9.0   |                   |  |      | 9.7   |      |  |  | 9.2   |   |  |  | 9.5   |  
|                                        
|                                        
|                                        
|                                        
|Research and development                 |  |                    | 2.5   |                   |  |      | 2.0   |      |  |  | 2.0   |   |  |  | 1.8   |  
|                                         |  |                    |       |                   |  |      |       |      |  |  |       |   |  |  |       |  
|Abandoned acquisition costs              |  |                    | 1.5   |                   |  |      | 0     |      |  |  | 0.5   |   |  |  | 0     |  
|                                         |  |                    |       |                   |  |      |       |      |  |  |       |   |  |  |       |  
|Total operating expenses                 |  |                    | 29.3  |                   |  |      | 25.4  |      |  |  | 26.8  |   |  |  | 26.6  |  
|                                         |  |                    |       |                   |  |      |       |      |  |  |       |   |  |  |       |  
|Operating income                         |  |                    | 3.5   |                   |  |      | 7.3   |      |  |  | 7.5   |   |  |  | 10.4  |  
|                                        
|                                        
|                                        
|                                        
|Interest and other expense (income), net |  |                    | (0.2  | )                 |  |      | 0.2   |      |  |  | 0.2   |   |  |  | 0.8   |  
|                                         |  |                    |       |                   |  |      |       |      |  |  |       |   |  |  |       |  
|Income before tax                        |  |                    | 3.7   |                   |  |      | 7.1   |      |  |  | 7.3   |   |  |  | 9.6   |  
|                                        
|                                        
|                                        
|                                        
|Income tax expense                       |  |                    | 1.4   |                   |  |      | 2.5   |      |  |  | 2.7   |   |  |  | 3.6   |  
|                                         |  |                    |       |                   |  |      |       |      |  |  |       |   |  |  |       |  
|Net income                               |  |                    | 2.3   | %                 |  |      | 4.6   | %    |  |  | 4.6   | % |  |  | 6.0   | %
|                                         |  |                    |       |                   |  |      |       |      |  |  |       |   |  |  |       |  

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.

8



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##### Table of Contents



Research and development expenses primarily consist of salaries associated with
our research and development personnel.

Abandoned acquisition costs consist of costs we had
capitalized throughout the
previous quarters related to the pursuit of an acquisition candidate.
We discontinued our pursuit of the
acquisition during the third quarter of 2001 and, accordingly, expensed these costs.

Geographic Distribution of Sales

Our sales by geographic region were as follows:

|                |  |                    |        |                   |  |      |        |      |  |   |         |  |  |   |         | 
|--------------- |  | ------------------ | ------ | ----------------- |  | ---- | ------ | ---- |  | - | ------- |  |  | - | ------- | 
|                |  | Three months ended |        | Nine months ended
|                |  | September 30,      |        | September 30,    
|                |  | 2001               |        | 2000              |  | 2001 |        | 2000
|                |  |                    |        |                   |  |      |        |     
|                |  | (In thousands)     |        | (In thousands)   
|REGION:         |  |                    |        |                   |  |      |        |      |  |   |         |  |  |   |         | 
|               
|               
|               
|               
|United States   |  | $                  | 30,543 |                   |  | $    | 30,274 |      |  | $ | 98,711  |  |  | $ | 97,047  | 
|               
|               
|               
|               
|Other Americas  |  |                    | 2,281  |                   |  |      | 1,823  |      |  |   | 7,471   |  |  |   | 6,484   | 
|               
|               
|               
|               
|Europe          |  |                    | 2,185  |                   |  |      | 2,197  |      |  |   | 6,702   |  |  |   | 5,968   | 
|               
|               
|               
|               
|Asia            |  |                    | 1,553  |                   |  |      | 2,076  |      |  |   | 5,843   |  |  |   | 6,596   | 
|                |  |                    |        |                   |  |      |        |      |  |   |         |  |  |   |         | 
|Total sales (1) |  | $                  | 36,562 |                   |  | $    | 36,370 |      |  | $ | 118,727 |  |  | $ | 116,095 | 
|                |  |                    |        |                   |  |      |        |      |  |   |         |  |  |   |         | 



---

|(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, 2001 Compared to Nine Months Ended September 30, 2000

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

Net Sales. Sales increased by $2.6 million, or 2.2%, to $118.7 million for the
nine months ended September 30, 2001 from $116.1 million for the nine months
ended September 30, 2000. Excluding currency effects, sales increased 2.9% for
the nine months ended September 30, 2001. The increase in sales was primarily
attributable to the addition of our new brands, Audio Innovations, MB
Quart and InstallEdge.com, our OEM
sales to Nissan, which began in the third quarter of 2001, and growth
in Lightning Audio sales. The increase in these sales was partially offset by a decrease in Rockford
Fosgate sales during the period, which reflects the soft consumer market.

U.S. sales increased by $1.6 million, or 1.6%, to $98.7 million for the nine
months ended September 30, 2001 from $97.1 million for the nine months ended
September 30, 2000. International sales increased by $1.0 million, or 5.3%, to
$20.0 million for the nine months ended September 30, 2001 from $19.0 million
for the nine months ended September 30, 2000.

9



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##### Table of Contents



Cost of Goods Sold. Cost of goods sold increased by $4.8 million, or 6.6%, to
$78.0 million for the nine months ended September 30, 2001 from $73.2 million
for the nine months ended September 30, 2000. Substantially all of the
increase was due to increased sales of lower margined product. As a percent of
sales, cost of goods sold increased to 65.7% for the nine months ended
September 30, 2001 from 63.0% for the nine months ended September 30, 2000.
The primary reasons for the increase as a percent of sales included a mix shift
toward lower margined products, a more aggressive stance on pricing and
promotional programs to increase market share, and end-of-life discounts on
source units.

Sales and Marketing Expenses. Sales and marketing expenses increased by $0.2
million, or 1.1%, to $18.0 million for the nine months ended September 30, 2001 from $17.8
million for the nine months ended September 30, 2000. As a percent of sales,
sales and marketing expenses decreased to 15.1% for the nine months ended
September 30, 2001 from 15.3% for the nine months ended September 30, 2000.
The decrease as a percent of sales primarily was because of lower commissions
and because some expenses in this category are fixed and do not fluctuate with
sales.

General and Administrative Expenses. General and administrative expenses
decreased slightly by $0.1 million, or 0.9%, to $11.0 million for the nine
months ended September 30, 2001 from $11.1 million for the nine months ended
September 30, 2000. As a percent of sales, general and administrative expenses
decreased to 9.2% for the nine months ended September 30, 2001 from 9.5% for
the nine months ended September 30, 2000.

Research and Development Expenses. Research and development expenses increased
by $0.3 million, or 14.3%, to $2.4 million for the nine months ended September
30, 2001 from $2.1 million for the nine months ended September 30, 2000. As a
percent of sales, these expenses increased to 2.0% for the nine months ended
September 30, 2001 from 1.8% for the nine months ended September 30, 2000.

Abandoned Acquisition Costs.Abandoned
acquisition costs of $0.6
million were incurred during the period ended September 30,
2001, when we discontinued our pursuit of a potential acquisition
candidate. These costs represent the direct costs relating to the
acquisition that we had deferred throughout previous quarters. As a percent
of sales, abandoned acquisition costs represent 0.5% of sales for the nine
months ended September 30, 2001.

Operating Income. Operating income decreased by $3.1 million, or 25.8%, to
$8.9 million for the nine months ended September 30, 2001 from $12.0 million
for the nine months ended September 30, 2000. As a percent of sales, operating
income decreased to 7.5% for the nine months ended September 30, 2001 from
10.4% for the nine months ended September 30, 2000. This decrease primarily was
attributable to a mix shift toward lower margined products, a more aggressive
stance on pricing and promotional programs to increase market share, the
expensing of abandoned acquisition costs and end-of-life discounts on source
units.

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 $0.6 million, or 75.0%, to $0.2 million for the nine
months ended September 30, 2001 from $0.8 million for the nine months ended
September 30, 2000. This decrease was primarily attributable to lower usage of
our credit facility in 2001. We began using our new credit facility in the
third quarter of 2001, in order to finance acquisitions, but had not made
significant use of our credit facilities earlier in 2001. We had made greater
use of our old credit facility early in 2000, prior to our initial public
offering.

Income Tax Expense. Income tax expense decreased by $1.0 million, or 23.8%, to
$3.2 million for the nine months ended September 30, 2001 from $4.2 million for
the nine months ended September 30, 2000. The effective income tax rates were 37.2% for the nine months ended September 30, 2001 and 37.3% for
the nine months ended September 30, 2000.

10



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##### Table of Contents



Three Months Ended September 30, 2001 Compared to Three Months Ended September
30, 2000

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

Net Sales. Sales increased by $0.2 million, or 0.5%, to $36.6 million for the
three months ended September 30, 2001 from $36.4 million for the three months
ended September 30, 2000. Excluding currency effects, sales increased by 1.1%
for the three months ended September 30, 2001. The increase in sales primarily
was attributable to the addition of our new brands, Audio Innovations, MB Quart
and InstallEdge.com, and our OEM sales to Nissan, which began in the third
quarter of 2001. The increase in these sales was partially offset by a
decrease in Rockford Fosgate sales during the period, which reflects the soft
consumer market and the disruptions caused by the events of
September 11.

U.S. sales increased by $0.2 million, or 0.7%, to $30.5 million for the three
months ended September 30, 2001 from $30.3 million for the three months ended
September 30, 2000. International sales decreased slightly by $0.1 million, or
1.6%, to $6.0 million for the three months ended September 30, 2001 from $6.1
million for the three months ended September 30, 2000.

Cost of Goods Sold. Cost of goods sold increased slightly, by $0.1 million or
0.4%, to $24.6 million for the three months ended September 30, 2001 from $24.5
million for the three months ended September 30, 2000. As a percent of sales,
cost of goods sold decreased slightly to 67.2% for the three months ended
September 30, 2001 from 67.3% for the three months ended September 30, 2000.

Sales and Marketing Expenses. Sales and marketing expenses increased by $1.0
million, or 20.0%, to $6.0 million for the three months ended September 30, 2001 from $5.0
million for the three months ended September 30, 2000. As a percent of sales,
sales and marketing expenses increased to 16.3% for the three months ended
September 30, 2001 from 13.7% for the three months ended September 30, 2000.
The increase in sales and marketing expenses was primarily related to higher
freight expense and the additional expenses from our acquisitions, partially
offset by lower commissions.

General and Administrative Expenses. General and administrative expenses
decreased by $0.2 million, or 5.7%, to $3.3 million for the three months ended
September 30, 2001 from $3.5 million for the three months ended September 30,
2000. As a percent of sales, general and administrative expenses decreased to
9.0% for the three months ended September 30, 2001 from 9.7% for the three
months ended September 30, 2000. We have focused significant efforts on
controlling operational spending, however some expenses are fixed over the
short run and cannot be quickly reduced.

Research and Development Expenses. Research and development expenses increased
by $0.2 million, or 28.6%, to $0.9 million for the three months ended September
30, 2001 from $0.7 million for the three months ended September 30, 2000. As a
percent of sales, these expenses increased to 2.5% for the three months ended
June 20, 2001 from 2.0% for the three months ended September 30, 2000.

Abandoned Acquisition Costs.Abandoned
acquisition costs of $0.6
million were incurred during the period ended September 30,
2001, when we discontinued our pursuit of a potential acquisition
candidate. These costs represent the direct costs relating to the
acquisition that we had deferred throughout previous quarters. As a percent
of sales, abandoned acquisition costs represent 1.5% of sales for the three
months ended September 30, 2001.

11



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Operating Income. Operating income decreased by $1.4 million, or 51.9%, to
$1.3 million for the three months ended September 30, 2001 from $2.7 million
for the three months ended September 30, 2000. As a percent of sales,
operating income decreased to 3.5% for the three months ended September 30,
2001 from 7.3% for the three months ended September 30, 2000. This decrease
primarily was attributable to a mix shift toward lower margined
products, a more aggressive stance on pricing and promotional programs
to increase market share, and the additional expenses from our acquisitions and
the write-off of abandoned acquisition costs.

Interest and Other Expense (Income), Net. Interest and other expense (income),
net, primarily consists of interest expense and currency gains and losses.
Interest and other expense (income), net, improved by $0.2 million, to ($0.1)
million income for the three months ended September 30, 2001 from $0.1 million
expense for the three months ended September 30, 2000, primarily due to
currency gains.

Income Tax Expense. Income tax expense decreased by $0.4 million, to $0.5
million for the three months ended September 30, 2001 from $0.9 million for the
three months ended September 30, 2000. The effective income tax rates were
36.4% for the three months ended September 30, 2001 and 35.9% for the three
months ended September 30, 2000.

Liquidity and Capital Resources

We had working capital of $50.6 million at September 30, 2001, compared to
$37.3 million at December 31, 2000. At September 30, 2001, we maintained $2.6
million of cash balances.

On June 28, 2001, we entered into a $30 million revolving credit facility with
Bank of America, N.A. and Bank One, Arizona, N.A. This new credit facility
replaced a $20 million line previously maintained with another financial
institution.

As at September 30, 2001 we had a balance of $13.5 million on our new bank
credit facility, which is collateralized by substantially all of our assets.
The line-of-credit has a blended variable interest rate per annum of LIBOR plus
150 basis points or prime plus no basis points. As at September 30, 2001, the
revolving line-of-credit had a weighted average interest rate of 5.16% per
annum. The bank credit facility is scheduled to mature on June 27, 2003. The
credit facility includes provisions that, among other things, require that we
maintain certain minimum levels of EBITDA and debt service coverage and also
limit the amount of our debt and annual capital expenditures.

We also have a $5.0 million capital lease credit facility under which we may
fund leases until July 1, 2002. 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, 2001, the capital lease credit
facility had an outstanding balance of $1.7 million with a weighted-average
interest rate of 6.92% per annum.

Net cash provided by (used in) operating activities was $1.5 million for the
nine months ended September 30, 2001, and ($0.3) million for the nine months
ended September 30, 2000. Cash provided by operating activities is less than
net income primarily due to the effect of increasing inventories, relating to
increased product offerings, which offset the cash provided by net income.
Additionally our inventories increased during the third quarter of 2001, due to
the planned termination on July 31, 2001, of our agreement to have another
company supply all of our Connecting
Punch accessories. We acquired the other companys Connecting Punch
inventories on the termination date. We believe this change will allow us to
increase our margins on sales of Connecting Punch accessories, but it requires

12



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##### Table of Contents



that we maintain a substantial inventory that we did not previously hold.

Net cash used in investing activities was $15.7 million for the nine months
ended September 30, 2001, and $3.2 million for the nine months ended September
30, 2000. Net cash used in investing activities was primarily related to the
acquisitions of Audio Innovations and MB Quart in the third quarter of 2001 and
to purchases of property and equipment.

Net cash provided by financing activities was $14.0 million for the nine months
ended September 30, 2001, and $8.4 million for the nine months ended September
30, 2000. Net cash provided by financing activities for 2001 was primarily a
result of borrowing from our new credit facility established on June 28, 2001.
The majority of this borrowing was for the financing of our recent
acquisitions. Net cash provided by financing activities for 2001 also includes
$0.6 million of proceeds from the exercise of stock options. Net cash provided
by financing activities for 2000 was primarily a result of the net proceeds of
$24.1 million received from our initial public offering on April 20, 2000,
partially offset by the repayment of our credit facility and other debt
obligations.

We may pursue additional acquisitions of businesses, products or technologies
that could complement or expand our business and product offerings. Any
material acquisition could result in an increase in working capital
requirements depending on the amount, timing and nature of the consideration we
agree to pay.

Audio Innovations.As at August 1, 2001, we acquired the Audio Innovations
business by acquiring all of the outstanding shares of common
stock of AI Research, Inc., an Oklahoma corporation. We paid the
shareholders of AI Research $4 million at the closing and used approximately
$2 million to pay outstanding AI Research debt. We also anticipate making payments of $500,000
to the selling shareholders over the next three years if we meet
agreed upon profitability and
sales goals for the Audio Innovations business. We financed the purchase price
using borrowings from our line of credit.

MB Quart.As at September 1, 2001, we acquired a new German subsidiary, MB
Quart GmbH, as a subsidiary of our existing German subsidiary, Rockford Europe
GmbH. Through MB Quart GmbH, we entered into agreements with Dr. Werner
Schreiber, a receiver appointed under German bankruptcy law to manage the
business of MB Quart Akustik GmbH. Under these agreements, MB Quart GmbH
acquired substantially all of the operating assets of MB Quart Akustik GmbH, and we
directly acquired all of the stock of its U.S. subsidiary, MB Quart Electronics
USA, Inc. We paid approximately $6 million for all of these assets. We
financed the purchase price, as well as working capital requirements for this
acquired business, using borrowings from our line of credit.

We believe our existing resources and anticipated cash flows from operations
will be sufficient to meet our cash needs for the next twelve months. This is
the case even taking into account our Audio Innovations and MB Quart
acquisitions. However, should we pursue an acquisition larger than our
existing resources can support, we may need to seek additional debt or equity
resources.




Part II. Other Information




Item 1. Legal Proceedings.

In our Annual Report on Form 10-K for the year 2000, filed with the SEC on
March 13, 2001, we described a patent claim made against us by Integrated
Electronic Technologies and its principal, David Fiori. The claim, which IET
and Fiori have pursued intermittently since 1998, alleges that our patented
TOPAZ circuit design infringes IET and Fiori patents. The TOPAZ circuit is used
in our higher-priced

13



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##### Table of Contents



Punch line of car audio amplifiers and
in our Hafler professional amplifiers. Since March 13, 2001, we have engaged in additional
discussions with Fiori and his counsel relating to the complaint filed early
this year. Based on our belief that our products do not infringe the patents,
and other available defenses, we have refused to make a material payment to
settle the claim. Fiori served the complaint on us on June 26, 2001, and we
filed an answer on July 16, 2001. Our answer denied all liability, asserted
various defenses, and requested a finding that our products do not infringe on
any of the patents in question. We continue to believe that these claims are
without merit and intend to defend this matter vigorously.

During September 2001, we were served with a complaint and request for a
Temporary Restraining Order filed in Orange County, California, by P.B. Clarke
& Associates. P.B. Clarke is the former employer of John Patterson, the
employee we have retained to manage our new InstallEdge.com business. The
complaint alleged that Mr. Patterson had improperly used P.B. Clarkes
confidential information and sought a temporary restraining order to prevent
further misappropriation of that information. After a hearing, the judge found
that there was insufficient basis for an injunction and denied P.B. Clarkes
request for a TRO. The matter is now scheduled for trial in June 2002. We
believe that there is no basis for P.B. Clarkes complaint and, based on the
evidence presented at the hearing, have demanded that P.B. Clarke dismiss its
complaint. Should P.B. Clarke fail to do so, we intend to defend this matter
vigorously.

Our Audio Innovations and MB Quart businesses are not party to any material
legal proceedings, aside from actions in the ordinary course of business.

In addition to the above, we are and may continue to be a party to various
lawsuits and arbitrations from time to time. As of September 30, 2001, we were
not a party to any legal proceedings that we believe are material.




Item 5. Other Information

We completed two acquisitions in the third quarter of 2001, including:



| |  | the acquisition of the Audio Innovations business as at August 1, 2001; and    
|- |  | -------------------------------------------------------------------------------
| 
| |  | the acquisition of the assets of MB Quart Akustik GmbH as at September 1, 2001.

Neither acquisition was large enough to require a current report on Item 2 of
Form 8-K at the time of the acquisition, but we did report each acquisition in
press releases issued on July 31, 2001 (for Audio Innovations) and on September
5, 2001 (for MB Quart). This section of our report is designed to provide a
more complete description of the businesses we acquired, 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 Audio Innovations and MB Quart businesses we have acquired.

Overview of the Acquisitions

Audio Innovations.As at August 1, 2001, we acquired the Audio Innovations
business by acquiring all of the outstanding shares of common stock
of AI Research, Inc., an Oklahoma corporation. We paid the
shareholders of AI Research $4 million at the closing and used approximately
$2 million to pay outstanding AI Research debt. We also anticipate making payments of $500,000
to the selling shareholders over the next three years if we meet
agreed upon profitability and
sales goals for the Audio Innovations business. We financed the purchase price
using borrowings from our line of credit.

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MB Quart. As at September 1, 2001, we acquired a new German subsidiary, MB
Quart GmbH, as a subsidiary of
our existing German subsidiary, Rockford Europe
GmbH. Through MB Quart GmbH, we entered into agreements with Dr. Werner
Schreiber, a receiver appointed under German bankruptcy law to manage the
business of MB Quart Akustik GmbH. Under these agreements, MB Quart GmbH
acquired substantially all of the operating assets of MB Quart Akustik GmbH, and we
directly acquired all of the stock of its U.S. subsidiary, MB Quart Electronics
USA, Inc. We paid approximately $6 million for all of these assets. We
financed the purchase price, as well as working capital requirements for this
acquired business, using borrowings from our line of credit.

MB Quart Akustik GmbH had been placed into receivership under German bankruptcy
law in May 2001 when its principal banks refused to provide additional funding
because of defaults under their loan agreements with MB Quart Akustik GmbH. MB
Quart Akustik GmbH had been the subject of a leveraged buyout in 1998 and, in
our view, failed principally because of inadequate capitalization after the
buyout, unstable management, and poor marketing decisions in its European home
audio business. We believe that we will be able to correct these issues and
complete a turnaround that new management began just before the receivership.

Additional Risk Factors

Because Audio Innovations and MB Quart operate in the same industry as our
existing businesses, they are generally subject to the same risks as those
existing businesses. For a discussion of these risks, please refer to our
Annual Report on Form 10-K for the year 2000, filed with the SEC on March 13,
2001, and in Exhibit 99.1 to our Annual Report, Risk Factors That May Affect
Rockfords Operating Results, Business Prospects and Stock Price.

As you evaluate our business after these acquisitions, you should take into
account that we may have difficulty integrating Audio Innovations and MB Quart.
If we have difficulty, these acquisitions could reduce our income and distract
us from our core business.To acquire these two businesses we paid
approximately $12 million in cash and have invested additional funds since the
acquisitions to provide working capital. We may not successfully integrate and
operate these businesses and they may take management attention away from our
core business as we attempt to integrate them. If we are not successful in
integrating these businesses, our failure could reduce our income and impair
our management of our core business.

Description of Products

Audio Innovations Products. Audio Innovations develops and markets branded car
audio products including Q-Logic Speaker Enclosures, Q-Forms Kick Panels, and
Q-Customs Enclosures. Each of these products are designed to hold car audio
speakers, providing an effective and convenient method for installing improved
speakers in cars, trucks, and SUVs. These products complement our existing
Rockford Fosgate and Lightning Audio products, since many consumers will
purchase an Audio Innovations product as the box to hold Rockford Fosgate or
Lightning Audio speakers.

Audio Innovations products have U.S. retail prices from $29.95 to $ 319.95 for
each enclosure.

Audio Innovations has an additional business selling garage storage
cabinets for home use, with retail prices ranging from $69.00 to $289.95.

MB Quart Products. MB Quart is located in Obrigheim, in southwestern Germany,
where it develops, engineers and manufactures loudspeaker products and
technologies, primarily for the car audio market. Its strength in the car market is in tweeter, coaxial and component speakers, the speakers used to
reproduce mid-range and higher frequency sounds for quality audio systems. In
this market, it is a highly respected premium brand. In
addition to car
audio speakers, MB Quart also manufactures and distributes home audio speakers
and professional headphones.

15



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In the U.S. MB Quart sells 5 series of mobile speaker products, including:



| |  | 11 models of Q-Series speakers, with U.S. retail prices from $649.00 to $1,499.00 per pair;       
|- |  | --------------------------------------------------------------------------------------------------
| 
| |  | 10 models of Premium Series speakers, with U.S. retail prices from $479.00 to $829.00 per pair;   
| 
| |  | 19 models of Reference Series speakers, with U.S. retail prices from $249.00 to $499.00 per pair; 
| 
| |  | 20 models of Discus Series speakers, with U.S. retail prices from $109.00 to $399.00 per pair; and
| 
| |  | 2 models of Nautic Series speakers, with U.S. retail prices from $249.00 to $449.00 per pair.     

MB Quart also sells



| |  | bookshelf, tower, and in-wall speakers for home audio use, with
U.S. retail prices ranging from $99.00 to $1,799.00 per pair; and
|- |  | ---------------------------------------------------------------------------------------------------------------------------------
| 
| |  | headphones for professional use, with U.S. retail prices ranging
from $150.00 to $1,944.00 per pair.                             

Sales, Marketing, and Distribution

Since both Audio Innovations and MB Quart operate in the car audio market, we
anticipate marketing these brands using many of the marketing techniques and
strategies we use to market our Rockford Fosgate and Lightning Audio brand
products. We intend to maintain the distinct identities of the brands, since
each is well respected in its niche.

Audio Innovations products are sold primarily in the U.S. to customers
including consumer electronics retailers Best Buy and Circuit City, catalog
retailer Crutchfield Corporation, and over 1,000 audio/video and specialty
dealers.

MB Quart products are sold worldwide, with primary distribution in the U.S. and
Europe. In the U.S., MB Quart products are sold in over 800 audio/video and
specialty dealers. In the U.S., MB Quart does not sell its products through the
national consumer electronics chains like Best Buy and Circuit City.

Both Audio Innovations and MB Quart products are sold to retailers in the U.S.
through independent sales representatives, who identify, recruit and sell to
dealers in their regions. Audio Innovations uses 18 independent sales
representatives and also sells directly to national accounts such as Best Buy
and Circuit City. MB Quart uses 16 independent sales representatives in the
U.S.

The structure and compensation for the Audio Innovations and MB Quart sales
representatives is comparable to the structure and compensation we use for our existing Rockford
Fosgate and Lightning Audio products in the U.S. and there is some overlap
among the representatives for each product line. We anticipate maintaining the
independent sales representatives for each product line (with some overlap
continuing), but expect to combine a number of back-office functions into our
existing operations to improve efficiency and take advantage of economies of
scale.

In Europe, MB Quart distributes its car audio and home audio products directly
to dealers in Germany and Austria and sells in 16 other countries through
independent distributors. The basic structure of compensation for sales
representatives and distributors who sell MB Quart products in Europe is
similar to the structure for our sales representatives and distributors who
sell Rockford Fosgate products in Europe.

16



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##### Table of Contents



Competition

Both Audio Innovations and MB Quart products are sold in the car audio market,
facing essentially the same competition and competitors as those identified in
our Annual Report for Rockford Fosgate and Lightning Audio products.

Audio Innovations operates in a small niche of the car audio market and its
principal competition is often custom boxes that dealers will build for
customers. As a result, its market tends to be somewhat more fragmented than
the car audio market in general.

MB Quart operates at the high end of the car audio market, competing
primarily with specialty manufacturers of speakers such as Boston Acoustics and
Polk Audio for sales of premium quality speakers. This is a highly competitive
market, although the competition is generally based more upon perceived quality
and performance rather than upon price.

MB Quart also competes in the home audio and home theater speaker market. This
market is highly fragmented, with literally dozens of companies competing for
sales. These include:



| |  | large consumer electronics manufacturers such as Sony, Pioneer,
Recoton (using its NHT and Audio Research brands), and Harman
Industries (using its Infinity, JBL, and Revel brands); and
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | smaller specialty companies, such as Boston Acoustics, Polk Audio,
Celestion, and Yamaha.                                                                                                

MB Quart is a relatively small player in this market, in terms of sales volume,
although we believe it has a positive reputation for well-engineered and high
quality products.

Research and Development

Audio Innovations has a staff of seven devoted to research and development
activities related to its speaker enclosure business. This staff is
focused on in-house design and tooling for Audio Innovations products and
on supporting Audio Innovations production capability for the custom
design of wood and plastic products.

MB Quart has a research and development staff of 19, all located at its
facility in Obrigheim, Germany. This staff provides services for MB Quart
comparable to the services our research and development staff in the U.S.
provides for our Rockford Fosgate and Lightning Audio products.

Manufacturing

Audio Innovations manufactures its products at leased facilities in Stillwater,
Oklahoma.

MB Quart manufactures its products at a facility in Obrigheim, Germany. MB
Quart uses cellular manufacturing processes similar to those we use in our U.S.
manufacturing facilities, but has not used just-in-time supply management to
the extent that we have. MB Quart has focused on integrated manufacturing of
speakers and has extensive tooling capabilities that have contributed to its
reputation for quality.

17



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##### Table of Contents



Employees

As at September 30, 2001, Audio Innovations employed 93 people at its
facilities in Stillwater, Oklahoma, including 71 engaged in manufacturing, 7 in
research and development, 4 in sales and marketing and 11 in administration.
We anticipate maintaining all of the operations that existed in Stillwater
before our acquisition, other than the integration of some back-office and
information technology functions into our existing operations.

As at September 30, 2001, MB Quart employed 153 full time people at its
facilities in Obrigheim, Germany, including 116 engaged in manufacturing, 19 in
research and development, 9 in sales and marketing and 9 in administration. It
also employed 9 part time employees (4 in sales and 5 in administration) and 5
trainees. The employees in Obrigheim are members of a workers council and are
represented by a union, but we believe that our relations with the workers
council, union, and employees are good. We anticipate retaining all of these
employees and their operations in Obrigheim.

MB Quarts U.S. subsidiary also employed 23 people at its U.S. headquarters in
Walpole, Massachusetts. On October 1, 2001, we announced that we are
consolidating and relocating the MB Quart office and warehouse in Walpole. Key
MB Quart personnel will be relocated into our facilities in Gilbert, Arizona.
Additionally, MB Quarts finished goods inventory will be relocated to our
existing warehouse facilities in Grand Rapids, Michigan. We expect to
complete this move by December 31, 2001.

Properties

Audio Innovations operates in leased facilities, totaling 65,000 square feet,
in Stillwater, Oklahoma. The facilities are leased from the former
shareholders of AI Research under leases for a term of 5 years ending on June
30, 2006, and with annual lease payments of approximately $100,800.

MB Quart operates in owned facilities, on land totaling approximately 19,792
square meters and with buildings totaling approximately 6,550 square meters.
We acquired the land and buildings in connection with our acquisition of the MB
Quart Akustik GmbH assets.

MB Quarts U.S. subsidiary leases approximately 19,500 square feet of building
space in Walpole, Massachusetts, under a lease that expires on February 1, 2006.
We announced the closing of this facility on October 1, 2001, and intend to
sublease the facility for the remainder of the lease term. The annual lease
for this facility is $118,000.

Intellectual Property

Audio Innovations principal trademarks and trade names include:



| |  |  | Audio Innovations;
| | - |  | -------------------
|
| |  |  | Q-Logic;          
|
| |  |  | Q-Forms; and      
|
| |  |  | Q-Customs         

MB Quarts principal trademarks and trade names include:



| |  |  | MB Quart®; 
| | - |  | -----------
|
| |  |  | Q-Series;  
|
| |  |  | Discus; and
|
| |  |  | Nautic     

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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+                                                                                                                                                                                               
|       
|       
|       
|       
|3.6     |  | Amendments to Bylaws adopted by the board of directors on
May 14, 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, 3.6, and 3.7 for a description
of the rights of the holders of Common Stock                                 
|       
|       
|       
|       
|10.41   |  | English translation of the Asset Purchase Agreement between a
subsidiary of Rockford Corporation and Dr Werner Schreiber, a
receiver under German bankruptcy law. Under this Agreement, the
subsidiary acquired the assets of MB Quart Akustik GmbH         
|       
|       
|       
|       
|10.42   |  | English translation of the Deed between a subsidiary of Rockford
Corporation and Dr Werner Schreiber, a receiver under German
bankruptcy law. Under this deed, the subsidiary acquired the
real estate assets of MB Quart Akustik GmbH                      
|       
|       
|       
|       
|10.43   |  | English translation of the Deed between Rockford Corporation and
Dr Werner Schreiber, a receiver under German bankruptcy law.
Under this Deed, Rockford acquired the shares of MB Quart
Electronics USA, Inc. (the U.S. subsidiary of MB Quart Akustik
GmbH)



---

|+  |  | 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 September 30, 2000.               



|(b) |  | Rockford did not file any reports on Form 8-K during the quarter for
which this report is filed.
|--- |  | ------------------------------------------------------------------------------------------------

19



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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 14, 2001 |  | By:                  |  | /s/ James M. Thomson                                                                                                                       
|                        |  |                      |  |                                                                                                                                            
|                        |  |                      |  | James M. Thomson
Vice President of Finance,
Chief Financial Officer and Secretary
(Principal Financial Officer
and Duly Authorized Officer)

20



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##### Table of Contents






Index to Exhibits



|(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+                                                                                                                                                                                           
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|3.4     |  | Amendment to Articles of Incorporation filed on May 12,
1999+                                                                                                                                                                                               
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|3.5     |  | Amendment to Articles of Incorporation filed on May 17,
1999+                                                                                                                                                                                               
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|3.6     |  | Amendments to Bylaws adopted by the board of directors on
May 14, 1999+                                                                                                                                                                                     
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|3.7     |  | Amendment to Articles of Incorporation filed on July 1,
1999+                                                                                                                                                                                               
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|4.1     |  | Specimen Common Stock Certificate+                                                                                                                                                                                                                          
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|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, 3.6, and 3.7 for a description
of the rights of the holders of Common Stock                                 
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|10.41   |  | English translation of the Asset Purchase Agreement between a
subsidiary of Rockford Corporation and Dr Werner Schreiber, a
receiver under German bankruptcy law. Under this Agreement, the
subsidiary acquired the assets of MB Quart Akustik GmbH         
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|10.42   |  | English translation of the Deed between a subsidiary of Rockford
Corporation and Dr Werner Schreiber, a receiver under German
bankruptcy law. Under this deed, the subsidiary acquired the
real estate assets of MB Quart Akustik GmbH                      
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|10.43   |  | English translation of the Deed between Rockford Corporation and
Dr Werner Schreiber, a receiver under German bankruptcy law.
Under this Deed, Rockford acquired the shares of MB Quart
Electronics USA, Inc. (the U.S. subsidiary of MB Quart Akustik
GmbH)



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|+  |  | Previously filed with our registration statement on Form S-1, which the
SEC declared effective on April 19, 2000 and/or amendments.
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|++ |  | Previously filed on August 11, 2000 with our Quarterly Report on Form
10-Q for the quarter ended September 30, 2000.               



|(b) |  | Rockford did not file any reports on Form 8-K during the quarter for
which this report is filed.
|--- |  | ------------------------------------------------------------------------------------------------