UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

                Annual Report Pursuant to Section 13 or 15(d) of
                       the Securities Exchange Act of 1934

For the fiscal year ended           November 30, 2003
Commission file number              0-28839

                              AUDIOVOX CORPORATION
             (Exact name of registrant as specified in its charter)

         Delaware                                        13-1964841
(State or other jurisdiction of                          (I.R.S. Employer
incorporation or organization)                          Identification Number)

150 Marcus Blvd., Hauppauge, New York                     11788
(Address of principal executive offices)                (Zip Code)

Registrant's telephone number, including area code   (631) 231-7750

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

                            Name of Each Exchange on
     Title of each class:                          Which Registered

Class A Common Stock $.01 par value                Nasdaq Stock Market

Securities registered pursuant to Section 12(g) of the Act:
                                                           None

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
requirement for the past 90 days.

                                     Yes       X              No
                                           -----------              ----------

Indicate by check mark whether Registrant is an accelerated filer (as defined in
Exchange Act Rule 12b-2).

                                     Yes       X              No
                                           -----------              ----------




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<PAGE>



Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K (sec 229.405 of this chapter) is not  contained  herein,  and
will not be  contained,  to the best of  registrant's  knowledge,  in definitive
proxy or information  statements  incorporated  by reference in Part III of this
Form 10-K or any amendment to this Form 10-K.
                                                       --------

The  aggregate  market value of the common stock held by  non-affiliates  of the
Registrant was $159,259,586 (based upon closing price on the Nasdaq Stock Market
on May 30, 2003).

The number of shares  outstanding of each of the registrant's  classes of common
stock, as of February 20, 2004 was:

         Class                                           Outstanding

         Class A common stock $.01 par value                  20,741,338
         Class B common stock $.01 par value                   2,260,954

DOCUMENTS INCORPORATED BY REFERENCE

(1)  Portions of the  Registrant's  Proxy Statement  relating to its 2004 Annual
     Stockholders Meeting, to be filed subsequently-Part III.


                                        2


<PAGE>



                                                 Table of Contents


<TABLE>

<S>                                                                                                               <C>

 PART I   .........................................................................................................4

          Item 1 - Business........................................................................................4

          Item 2 - Properties.....................................................................................26

          Item 3 - Legal Proceedings..............................................................................26

          Item 4 - Submission of Matters to a Vote of Security Holders............................................27


 PART II  ........................................................................................................27

          Item 5 - Market for the Registrant's Common Equity and Related Stockholder Matters......................27

          Item 6 - Selected Consolidated Financial Data...........................................................29

          Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations..........31

          Item 7a - Quantitative and Qualitative Disclosures About Market Risk....................................69

          Item 8 - Consolidated Financial Statements and Supplementary Data.......................................69

          Item 9 - Changes in and Disagreements with Accountants on Accounting and Financial Disclosure..........140

          Item 9a - Controls and Procedures......................................................................141


 PART III .......................................................................................................141

          Item 10 - Directors and Executive Officers of the Registrant...........................................141

          Item 11 - Executive Compensation.......................................................................142

          Item 12 - Security Ownership of Certain Beneficial Owners and Management...............................142

          Item 13 - Certain Relationships and Related Transactions...............................................142

          Item 14 - Principal Accountant Fees and Services.......................................................142


 PART IV  .......................................................................................................142

          Item 15 - Exhibits, Consolidated Financial Statement Schedules and Reports on Form 8-K.................142

 SIGNATURES......................................................................................................148
 </TABLE>




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<PAGE>




                                     PART I


Item 1 - Business
All tabular presentation is in thousands unless otherwise indicated.

(a)  Restatement of Consolidated Financial Statements

     Audiovox Corporation  (Audiovox or the Company) has previously restated its
consolidated  financial  statements for the fiscal years ended November 30, 2000
and 2001 and for the fiscal quarters during the year ended November 30, 2001 and
the fiscal 2002 quarters  ended  February 28, 2002,  May 31, 2002 and August 31,
2002. In addition,  the Company  previously  reclassified  certain expenses from
operating expenses to cost of sales for fiscal 2001 and for each of the quarters
in the nine  months  ended  August  31,  2002.  Please  refer  to the  Company's
previously filed Form 10-K for the year ended November 30, 2002 for details.

(b)  General Development of Business

     The Company was incorporated in Delaware on April 10, 1987, as successor to
a business  founded in 1960 by John J. Shalam,  our President,  Chief  Executive
Officer and controlling stockholder. Its principal executive offices are located
at 150 Marcus Boulevard,  Hauppauge, New York 11788, and the telephone number is
631-231-7750.

     On  July  8,  2003,  the  Company,  through  a  newly-formed,  wholly-owned
subsidiary,  acquired in cash (i) certain  accounts  receivable,  inventory  and
trademarks  from the U.S.  audio  operations of Recoton  Corporation  (the "U.S.
audio business") or (Recoton) and (ii) the outstanding  capital stock of Recoton
German Holdings GmbH (the  "international  audio business"),  the parent holding
company of Recoton Corporation's Italian, German and Japanese subsidiaries,  for
$40,046, net of cash acquired,  including transaction costs of $1.9 million. The
primary  reason for this  transaction  was to expand the  product  offerings  of
Audiovox  and to obtain  certain  long-standing  trademarks  such as  Jensen(R),
Acoustic  Research(R) and others. The Company also acquired an obligation with a
German financial  institution as a result of the purchase of the common stock of
Recoton German Holdings GmbH.

     The Company  designs and markets a diverse  line of products  and  provides
related services throughout the world. These products and services include:

     o    handsets and accessories for wireless communications
     o    mobile entertainment and security products
     o    mobile electronic products and accessories
     o    consumer electronic products and accessories

     The Company  markets its  products  under the  well-recognized  Audiovox(R)
brand name and others,  such as Jensen(R),  Magnate(R),  Mac Audio(R),  Heco(R),
Acoustic  Research(R)  and Advent(R),  as well as private labels through a large
and diverse  distribution  network both  domestically and  internationally.  The
Company   was  a  pioneer  in  the   wireless   industry,   selling   its  first
vehicle-installed  wireless  telephone  in 1984 as a  natural  expansion  of its
automotive  aftermarket products business.  The Company's extensive distribution
network and its long-standing industry relationships have allowed the  Company  


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<PAGE>



to benefit from growing  market  opportunities  in the wireless  industry and to
exploit emerging niches in the consumer electronics business.

     The Company operates in two primary markets:

     o    Wireless communications. The Wireless Group (Wireless), which accounts
          for  approximately  61% of revenues  in fiscal  2003,  sells  wireless
          handsets and accessories  through domestic and international  wireless
          carriers and their agents, independent distributors and retailers.

     o    Mobile and consumer electronics.  The Electronics Group (Electronics),
          which accounts for approximately 39% of revenues in fiscal 2003, sells
          autosound,   mobile  electronics  and  consumer   electronics  through
          domestic and  international  distribution  channels  primarily to mass
          merchants,  power  retailers,  specialty  retailers,  new car dealers,
          original equipment  manufacturers  (OEMs),  independent  installers of
          automotive accessories and the U.S. military.

     Since  2001,   several  factors  have  affected  the  Wireless  Group.  New
subscriber  subscriptions  have slowed,  the  consolidation  within our wireless
customer  base has created a more  competitive  market with a smaller  number of
customers and there has been a slow down in the development of new  technologies
which have slowed consumer  demand from one technology to another.  In addition,
testing for  acceptances  have become more complex which have caused a slow down
in product  introductions.  However new  technology,  such as camera phones,  is
expected to have a favorable impact on the Wireless Group.

     The Electronics Group has been positively  influenced by an increase in the
sale of consumer and mobile  electronics.  Specifically,  sales for portable DVD
players,  DVD in a bag  products,  satellite  radios and flat panel screens have
increased due to higher customer demand. In addition, the recent acquisitions of
Recoton  trademarks  (Jensen(R),  Magnate(R),  Mac Audio(R),  Heco(R),  Acoustic
Research(R)  and Advent(R)) and Code-Alarm  have  contributed to the increase in
Electronic Group sales (see Note 6 to the consolidated financial statements) .

     The following table shows net sales by group:


<TABLE>

                                                   Percent
                                                    Change
                       2001 (1)   2002     2003    2001/2003
                       -------   ------   ------   ----------


<S>                    <C>      <C>      <C>         <C>    
Wireless               $  979   $  727   $  806      (17.7)%
Electronics               298      373      518       73.8 %
                        ------   ------   ------     -------
     Total              $1,277   $1,100   $1,324       3.7 %
                        ======   ======   ======     =======
</TABLE>


     (1) See Note (2) of Notes to Consolidated Financial Statements.

     To remain flexible and limit our research and fixed costs, the Company does
not  manufacture its products.  Instead,  the Company has  relationships  with a
broad group of  suppliers  who  manufacture  its  products.  The  Company  works
directly with its suppliers in feature design, development and testing of all 


                                        5


<PAGE>



of its products  and performs  certain  software  installations  or upgrades for
wireless products and some assembly functions for its electronics products.

     The  Company's  product  development  efforts  focus  on  meeting  changing
consumer demand for  technologically-advanced,  high-quality  products,  and the
Company consults with customers  throughout the design and development  process.
The Company  stands  behind all of its  products  by  providing  warranties  and
end-user service support.

Strategy

     The  Company's  objective  is to leverage the  well-recognized  Audiovox(R)
brand name, which now includes  Jensen(R),  Acoustic  Research(R) and Advent(R),
and its  extensive  international  distribution  network  to  capitalize  on the
growing   worldwide  demand  for  wireless  products  and  continue  to  provide
innovative  mobile and  consumer  electronics  products  in response to consumer
demand. The key elements of the Company's strategy are:

     Increase   market   penetration  by  enhancing  and   capitalizing  on  the
     Audiovox(R) brand name. The Company believes that the  "Audiovox(R)"  brand
     name,  which  includes  Prestige(R),  Pursuit(R),  Rampage(TM),  Jensen(R),
     Magnate(R),  Mac Audio(R),  Heco(R), Acoustic Research(R) and Advent(R), is
     one of its greatest  strengths.  During the past 43 years,  the Company has
     invested to establish the Audiovox(R)  name as a well-known  consumer brand
     for wireless and  electronics  products.  The Company's  wireless  handsets
     generally bear the  Audiovox(R)  brand name or are co-branded with either a
     wireless carrier or brand name of its supplier. To further benefit from the
     Audiovox(R) name, the Company continues to introduce new products using its
     brand name and licenses its brand name for selected consumer products.

     Expand wireless technology offerings to increase market opportunities.  The
     Company  intends to continue to offer an array of  technologically-advanced
     wireless products,  including the planned introduction of wireless handsets
     with video, cameras and enhanced Internet capabilities.  The Company's wide
     selection of wireless  products will allow it to satisfy  different carrier
     demands, both domestically and internationally.

     Capitalize on niche market opportunities in the electronics  industry.  The
     Company  intends to continue to use its extensive  distribution  and supply
     networks to capitalize on niche market  opportunities,  such as navigation,
     mobile video, satellite radio, DVD's, flat panel TV's, and vehicle tracking
     systems, in the electronics industry. The Company believes that focusing on
     high-demand,  high-growth  niche products  results in better profit margins
     and growth potential for its electronics business.

     Continue to maintain an  international  presence.  During fiscal 2003,  the
     Company  expanded  its  international  presence  with  its  acquisition  of
     Recoton's   European  assets,   and  the  Company  intends  to  expand  its
     international  business,  both in the Wireless and Electronics  Groups. The
     Company  plans to introduce  new  products  compatible  with  international
     wireless   technologies,   such   as  GSM   (Global   System   for   Mobile
     Communications),  CDMA (Code  Division  Multiple  Access) and GPRS (General
     Packet Radio Services) and expand the mobile electronics category.


                                        6


<PAGE>



     Continue to outsource  manufacturing to increase operating leverage. One of
     the key components of the Company's  business  strategy is outsourcing  the
     manufacturing  of its  products.  This  allows the  Company to deliver  the
     latest  technological  advances  without  the fixed costs  associated  with
     manufacturing.

     Continue to provide  value-added  services to customers and suppliers.  The
     Company  believes  that it provides key services,  such as product  design,
     development  and testing,  sales  support,  product repair and warranty and
     software upgrading, more efficiently than its customers and suppliers could
     provide  for  themselves.  The  Company  intends to continue to develop its
     value- added services as the market evolves and customer needs change.

     (c)  Financial Information About Industry Segments

     The Company's  industry segments are the Wireless Group and the Electronics
Group. Net sales, income (loss) before provision for (recovery of) income taxes,
net income (loss) and total assets  attributable to each segment for each of the
last three fiscal years are set forth in Note 19 of the  Company's  consolidated
financial statements included herein.

     (d)  Narrative Description of Business

                                 Wireless Group

     Wireless, which accounts for approximately 61% of the Company's revenues in
fiscal 2003,  markets  wireless  handsets and accessories  through  domestic and
international wireless carriers and their agents,  independent  distributors and
retailers.

Wireless products

     Wireless sells an array of digital  handsets,  hand-held  computing devices
and accessories in a variety of technologies, principally CDMA. Digital products
represented 99% of Wireless' 2003 total unit sales.  Wireless  generally markets
its wireless products under the Audiovox(R) brand name or co-brands its products
with its carrier customers, such as Verizon Wireless and Bell Distribution, Inc.
or with the brand name of the supplier.

     In addition to handsets, Wireless sells a complete line of accessories that
includes batteries, hands-free kits, battery eliminators, cases and data cables.
In fiscal  2004,  Wireless  intends to continue  to broaden its digital  product
offerings  and introduce  handsets  with new features such as wireless  handsets
with video, cameras and enhanced Internet capabilities.

Wireless distribution and marketing

Wireless  sells  wireless  products  to  wireless  carriers  and  the  carrier's
respective agents,  distributors and retailers.  In addition,  a majority of its
handsets are designed to meet carrier  specifications.  In fiscal 2001, the five
largest   wireless   customers   were   Verizon   Wireless,   PrimeCo   Personal
Communications  LP, Sprint Spectrum LP, Bell  Distribution Inc. and Brightpoint,
Inc. One of these customers accounted for 44.8% of Wireless' net sales and 35.0%
of consolidated net sales for fiscal 2001. In fiscal 2002, the five largest


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<PAGE>



wireless customers (Verizon Wireless,  Bell Distribution,  Inc., Sprint Spectrum
LP, Telus Mobility and AllTel  Communications)  represented 71% of Wireless' net
sales and 47% of  consolidated  net sales  during  fiscal  2002.  Three of these
customers accounted for 36%, 11% and 10%,  respectively,  of Wireless' net sales
for fiscal 2002. In fiscal 2003, the five largest  wireless  customers  (Verizon
Wireless,  Bell  Distribution,  Inc., Virgin Mobile,  Sprint Spectrum LP, and US
Cellular)  represented  72% of Wireless' net sales and 44% of  consolidated  net
sales during fiscal 2003.  Three of these  customers  accounted for 34%, 15% and
12%, respectively, of Wireless' net sales for fiscal 2003.

     In addition,  Wireless  promotes its  products  through  trade and consumer
advertising,  participation  at trade shows and direct  personal  contact by its
sales  representatives.  Wireless  also  assists  wireless  carriers  with their
marketing   campaigns  by   scripting   telemarketing   presentations,   funding
co-operative  advertising  campaigns,   developing  and  printing  custom  sales
literature,   logistic  services,  conducting  in-house  training  programs  for
wireless   carriers  and  their  agents  and  providing   assistance  in  market
development.

     Wireless  operates  approximately  six  retail  facilities  under  the name
Quintex. In addition, Wireless licenses the trade name Quintex(R) to ten outlets
in selected  markets in the United States.  Wireless also serves as an agent (in
activating  cell phone  numbers) for the following  carriers in selected  areas:
Tmobile, Nextel, Suncom, NTelos, AT & T Wireless,  Verizon Wireless,  Sprint and
Sprint  Spectrum LP. For fiscal 2003,  revenues  from Quintex were 4.8% of total
Wireless revenues and 2.9% of consolidated revenues.

     Wireless'  policy is to ship its  products  within 24 hours of a  requested
shipment  date from public  warehouses  in Florida,  New York,  California , New
Jersey,  Canada and the  Netherlands and from leased  facilities  located in New
York and California.

Wireless product development, warranty and customer service

     Although Wireless does not have its own manufacturing  facilities, it works
closely with both  customers and suppliers in feature  design,  development  and
testing of its products. In particular, Wireless:

     o    with  its  wireless   customers,   determines  future  market  feature
          requirements
     o    works with its suppliers to develop products containing those features
     o    participates  in the  design  of the  features  and  cosmetics  of its
          wireless products
     o    tests  products  in its  own  facilities  to  ensure  compliance  with
          Audiovox(R) standards
     o    supervises  testing of the  products in its carrier  markets to ensure
          compliance with carrier specifications

     Wireless' Hauppauge facility is ISO-9001:2000 certified,  which requires it
to carefully monitor quality standards in all facets of its business.

     Wireless  believes  customer service is an important tool for enhancing its
brand name and its relationship with carriers.  In order to provide full service
to its customers,  Wireless warranties its wireless products to the end-user for
periods  ranging from up to one year for portable  handsets to up to three years
for mobile car phones.  To support its  warranties,  Wireless has  approximately



                                        8


<PAGE>



2,600 independent  warranty centers  throughout the United States and Canada and
has experienced  technicians in its warranty repair stations at its headquarters
facility. Wireless has experienced customer service representatives who interact
directly  with both  end-users  and its  customers.  These  representatives  are
trained to respond to  questions  on handset  operation  and warranty and repair
issues.

Wireless suppliers

     Wireless purchases its wireless products from several manufacturers located
in Pacific Rim  countries,  including  Japan,  China,  South  Korea,  Taiwan and
Malaysia.  In  selecting  its  suppliers,  Wireless  considers  quality,  price,
service,  market  conditions and reputation.  Wireless  generally  purchases its
products  under  short-term  purchase  orders and does not enter into  long-term
contracts  with  its  suppliers.  Wireless  considers  its  relations  with  its
suppliers to be good.  Wireless believes that alternative  sources of supply are
currently  available,  although there could be a time lag and increased costs if
it were to have an unplanned shift to a new supplier which could have a material
impact on the Company.  One wireless vendor accounted for  approximately  83% of
Wireless'  2003  purchases.  In addition,  approximately  15% of Wireless'  2003
purchases were from Toshiba,  a related party (see Related Party  Transaction of

I
tem 7 - Management's Discussion and Analysis of Financial Condition and Results
of Operations.)

Wireless competition

     The market for wireless handsets and accessories is highly  competitive and
is characterized by intense price  competition,  significant  price erosion over
the life of a product  whose life cycle has  continued  to  shorten,  demand for
value-added services, rapid technological development and industry consolidation
of both customers and manufacturers.  Currently,  Wireless' primary  competitors
for wireless handsets include Motorola, LG, Nokia, Kyocera and Samsung.

     Wireless also competes with numerous  established and new manufacturers and
distributors,  some of whom sell the same or similar  products  directly  to its
customers.  Historically,  Wireless'  competitors have also included some of its
own suppliers and customers.  Many of Wireless' competitors offer more extensive
advertising and promotional programs than it does.

     Wireless  competes for sales to carriers,  agents and  distributors  on the
basis of its products and services and price.  As its  customers  are  requiring
greater value-added  logistic services,  Wireless believes that competition will
continually be required to support an infrastructure  capable of providing these
services.  Wireless'  ability to continue to compete  successfully  will largely
depend on its ability to perform  these  value-added  services  at a  reasonable
cost.

     Wireless'  products  compete  primarily  on the  basis of value in terms of
price,  features  and  reliability.  There have been,  and will  continue to be,
several  periods  of  extreme  price  competition  in  the  wireless   industry,
particularly  when one or more of its  competitors has sought to sell off excess
inventory  by  lowering  its  prices  significantly  or  carriers  canceling  or
modifying sales programs.

     As a result of global  competitive  pressures,  there have been significant
consolidations  in the domestic wireless industry which has caused extreme price
competition.  These  consolidations  may  result in  greater  competition  for a
smaller number of large  customers and may favor one or more of its  competitors
over Wireless.


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<PAGE>



                                Electronics Group

Electronics Industry

     The mobile and  consumer  electronics  industry  is large and  diverse  and
encompasses a broad range of products. There are many large manufacturers in the
industry, such as Sony, RCA, Panasonic,  Kenwood,  Motorola, Samsung and JVC, as
well as other large companies that specialize in niche products. The Electronics
Group  participates  in selected niche markets such as autosound,  mobile video,
vehicle security and selected consumer electronics.

     The  introduction  of new products and  technological  advancements  drives
growth in the  electronics  industry.  Some of these  products  include  digital
satellite radio,  portable DVD, home and mobile video systems,  flat panel TV's,
navigation systems, MP3 players and two-way radios.

Electronics products

     The  Company's  electronics  products  consist of three  major  categories:
mobile electronics, sound and consumer electronics.

     Mobile electronics products include:

     o    mobile video  products,  including  overhead and mobile  entertainment
          systems, video cassette and DVD players
     o    automotive security and remote start systems
     o    automotive power accessories
     o    navigation systems

         Sound products include:

     o    autosound products, such as radios, speakers,  amplifiers, CD changers
          and satellite radios

     Consumer electronics include:

     o    home and portable stereos
     o    two-way radios
     o    LCD televisions
     o    DVD players
     o    MP3 players
     o    cordless telephones

     The  Electronics  Group markets its products  under the  Audiovox(R)  brand
name,  as well as several other  Audiovox-owned  or usage right trade names that
include Prestige(R),  Pursuit(R),  Jensen(R),  Acoustic Research(R),  Advent(R),
Rampage(TM)  and  Code-Alarm.  In addition,  sales by the  Company's  Malaysian,
Venezuelan and American Radio subsidiaries fall under the Electronics Group. The



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<PAGE>



Electronics Group's sales by product category were as follows:


<TABLE>

                                                                  Percent
                                                                   Change
                                  2001 (1)   2002      2003       2001/2003
                                  -------  --------  --------     ---------
                                            (millions)
<S>                              <C>       <C>       <C>           <C>  
          Mobile electronics     $  157.7  $  229.3  $  294.5      86.7%
          Sound                      57.5      56.3      78.4      36.3
          Consumer electronics       80.3      86.5     144.3      79.7
          Other                       2.2       0.6       0.5     (77.3)
                                  -------  --------  --------     ------
                Total            $  297.7  $  372.7  $  517.7      73.9%
                                 ========  ========  ========     ======
</TABLE>


     (1) See Note (2) of Notes to Consolidated Financial Statements.

     The increase in Electronic's  sales reflects new product  introductions  in
the mobile and consumer electronics  categories.  In addition,  sound sales have
increased as a result of the Recoton  acquisition,  offset by a continuing trend
in lower sales for  full-featured  sound systems as automakers are incorporating
these products at the factory instead of as an aftermarket option.

     In the future,  the Electronics Group will continue to focus its efforts on
new  technologies  to take  advantage  of market  opportunities  created  by the
digital  convergence  of  data,  communications,  navigation  and  entertainment
products.

Licensing

     In the late 1990's,  the Company began to license its brand name for use on
selected  products,  such as home and portable stereo  systems.  Actual sales of
licensed products are not included in the Company's reported net sales. However,
licensed  customers  have reported  sales of $52.4 million in licensed  goods in
2003  compared to $43.6 million in 2002 for which the Company  received  license
fees.  License  sales  promote the  Audiovox(R)  brand name  without  adding any
significant costs.  License fees are recognized on a per unit basis upon sale to
the  end-user  and are  recorded in other  income.  License  fees in fiscal 2003
approximated $1,116 compared to approximately $922 in fiscal 2002.

Electronics distribution and marketing

     The Electronics Group sells its electronics products to:

     o    mass merchants
     o    chain stores
     o    specialty retailers
     o    distributors
     o    new car dealers
     o    the U.S. military

     The Electronics  Group also sells its products under OEM arrangements  with
domestic and/or international  subsidiaries of automobile  manufacturers such as



                                       11


<PAGE>



Ford Corporation,  Daimler Chrysler,  General Motors Corporation and Nissan. OEM
projects  accounted for  approximately  10% of the Electronics  Group's sales in
2003 versus 14.0% in 2002. These projects  require a close  partnership with the
customer  as  the  Electronics   Group  develops   products  to  their  specific
requirements. Three of the largest auto makers, General Motors, Daimler Chrysler
and Ford  require QS  registration  for all of their  vendors.  The  Electronics
Group's Hauppauge facility is both QS 9000 and ISO 9001 registered. In addition,
Audiovox Electronics is Q1 rated for the Ford Motor Company.

     In fiscal 2001, the Electronics  Group's five largest customers  (Wal-Mart,
Target,  Ford,  KMart and Circuit  City)  represented  27.0% of the  Electronics
Group's  net sales and 6.3% of  consolidated  net  sales.  In fiscal  2002,  the
Electronics Group's five largest customers (Circuit City, Target, Walmart, Sam's
Wholesale  Club and  Gulf  States  Toyota)  represented  25% of the  Electronics
Group's net sales and 8% of the  consolidated  net sales.  In fiscal  2003,  the
Electronics  Group's five largest  customers  (Target,  Circuit City,  Best Buy,
Costco  Wholesale and Wal Mart)  represented 34% of the Electronics  Group's net
sales and 13% of consolidated net sales.

     As part of the Electronics  Group's sales process,  the  Electronics  Group
provides value-added management services including:

     o    product design and development
     o    engineering and testing
     o    technical and sales support
     o    electronic data interchange (EDI)
     o    product repair services and warranty
     o    nationwide installation network

     The  Electronics  Group has  flexible  shipping  policies  designed to meet
customer  needs.  In  the  absence  of  specific  customer   instructions,   the
Electronics  Group ships its products  within 24 to 48 hours from the receipt of
an order.  The  Electronics  Group makes  shipments  from public  warehouses  in
Virginia,  Nevada, Florida, New Jersey, California and Venezuela and from leased
facilities located in New York, Venezuela, Malaysia and Germany.

Electronics product development, warranty and customer service

     The Electronics Group works closely with its customers and suppliers in the
design, development and testing of its products. For the Electronics Group's OEM
automobile  customers,  the  Electronics  Group  performs  extensive  validation
testing  to  ensure  that  its  products  meet  the  special  environmental  and
electronic  standards of the  manufacturer.  The Electronics Group also performs
final  assembly  of  products  in  its  Hauppauge  and  Europe  locations.   The
Electronics Group's product development cycle includes:

     o    working with key customers and suppliers to identify  consumer  trends
          and potential demand
     o    working  with the  suppliers  to design and  develop  products to meet
          those  demands  
     o    evaluating  and testing the products in our own  facilities  to ensure
          compliance with our standards
     o    performing software design and validation testing



                                       12


<PAGE>



     The  Electronics  Group  provides  a  warranty  to  the  end-users  of  its
electronics  products,  generally  ranging  from 90  days up to the  life of the
vehicle for the original owner on some of its automobile-installed  products. To
support its warranties,  the Electronics Group has independent  warranty centers
throughout the United States,  Canada,  Europe,  Venezuela and Malaysia.  At its
Hauppauge  facility,  the  Electronics  Group has a customer  service group that
provides  product  information,  answers  questions  and  serves as a  technical
hotline for installation help for both end-users and its customers.

     The Electronics  Group Hauppauge  facility is QS-9000:1998  (ISO-9001:1994)
ISO-14001/EN ISO 14001 certified, which requires it to carefully monitor quality
standards in all facets of its business.

Electronics suppliers

     The Electronics Group purchases its electronics products from manufacturers
located in several Pacific Rim countries,  including Japan,  China, South Korea,
Taiwan,  Singapore  and  Malaysia.  The  Electronics  Group  also  uses  several
manufacturers in the United States for cruise  controls,  mobile video and power
amplifiers.  In selecting its  manufacturers,  the  Electronics  Group considers
quality, price, service, market conditions and reputation. The Electronics Group
maintains buying offices or inspection offices in Taiwan, South Korea, China and
Hong Kong to provide local  supervision  of supplier  performance  such as price
negotiations,  delivery and quality  control.  The  Electronics  Group generally
purchases  its  products  under  short-term  purchase  orders  and does not have
long-term  contracts with its  suppliers.  The  Electronics  Group believes that
alternative sources of supply are currently available, although there could be a
time  lag and  increased  costs if it were to have an  unplanned  shift to a new
supplier which may have a material impact on the Company.

     The Electronics Group considers relations with its suppliers to be good. In
addition,  the Electronics Group believes that alternative sources of supply are
generally available within 120 days.

Electronics competition

     The Electronics  Group's business is highly  competitive  across all of its
product  lines and competes  with a number of  well-established  companies  that
manufacture  and  sell  similar   products.   The  Electronics   Group's  mobile
electronics products compete against  factory-supplied radios (including General
Motors,  Ford and Daimler  Chrysler),  security and mobile  video  systems . The
Electronics  Group's mobile electronics  products also compete in the automotive
aftermarket against major companies such as Sony, Panasonic, Kenwood, Alpine and
Pioneer.  The Electronics  Group's  consumer  electronics  product lines compete
against major  consumer  electronic  companies,  such as JVC,  Sony,  Panasonic,
Motorola,  RCA, Samsung and AIWA. Brand name, design, features and price are the
major competitive factors across all of its product lines.

(e)  Financial  Information  About  Foreign and Domestic  Operations  and Export
     Sales

     The amounts of net sales and long-lived assets, attributable to each of the
Company's  geographic  segments  for each of the last three fiscal years are set
forth in Note 19 to the Company's  consolidated  financial  statements  included
herein.  During fiscal 2001, 2002 and 2003, the Company  exported  approximately
$215, $233 and $249 million, respectively, in product sales.



                                       13


<PAGE>



Trademarks

     The  Company   markets   products  under  several   trademarks,   including
Audiovox(R),   Prestige(R),   Pursuit(R),   Rampage(TM),   Jensen(R),   Acoustic
Research(R),  Code-Alarm(R),  Car  Link(R),  Movies 2 Go(R) and  Advent(R).  The
trademark  Audiovox(R) is registered in approximately 67 countries.  The Company
believes  that these  trademarks  are  recognized by customers and are therefore
significant in marketing its products.

(f)  Availability of Reports

     We  make  available   financial   information,   news  releases  and  other
information on our Web site at www.audiovox.com. There is a direct link from the
Web site to a third party Securities and Exchange  Commissions (SEC) filings Web
site,  where our  annual  report on Form 10-K,  quarterly  reports on Form 10-Q,
current  reports  on Form  8-K and any  amendments  to  these  reports  filed or
furnished  pursuant to Section 13(a) or 15(d) of the Securities  Exchange Act of
1934 are  available  free of charge as soon as reasonably  practicable  after we
file such reports and amendments  with, or furnish them to the SEC. In addition,
the Company has adopted a code of ethics which is available  free of charge upon
request.  Any such  request  should be directed to the  attention  of: Chris Lis
Johnson,  Company Secretary,  150 Marcus Boulevard,  Hauppauge,  New York 11788,
(631) 231-7750.

                                  Other Matters

Equity Investments

     The Company has  investments  in  unconsolidated  joint ventures which were
formed to market its products in specific market  segments or geographic  areas.
The  Company  seeks to blend its  financial  and  product  resources  with local
operations to expand its  distribution and marketing  capabilities.  The Company
believes its joint ventures provide a more cost-effective  method of focusing on
specialized  markets.  The  Company  does  not  participate  in  the  day-to-day
management of these joint ventures.

         The Company's significant joint ventures are:


<TABLE>

                            Percentage    Formation
           Venture           Ownership       Date                           Function

<S>                          <C>         <C>              <C>
                                                          Distribution of products for marine,
Audiovox Specialized                                         van, RV and other specialized
    Applications               50.0%         1997            vehicles.
                               
Bliss-Tel Company,             20.0%         1997         Distribution of wireless products and
    Ltd.                                                     accessories in Thailand.
</TABLE>


Employees

     The Company employs approximately 1,000 people. The Company's headcount has
been  relatively  stable for the past several years,  but will change based upon
economic conditions within the two groups.


                                       14


<PAGE>



The Company  considers its relations with its employees to be good. No employees
are covered by collective bargaining agreements.

Directors and Executive Officers of the Registrant

     The directors and executive  officers of the Company are listed below.  All
officers of the Company are elected by the Board of Directors to serve  one-year
terms. There are no family  relationships among officers,  or any arrangement or
understanding  between any officer  and any other  person  pursuant to which the
officer was selected. Unless otherwise indicated,  positions listed in the table
have been held for more than five years.


Name                      Age     Current Position

John J. Shalam            70      President, Chief Executive Officer and
                                       Chairman of the Board of Directors

Philip Christopher        55      Executive Vice President and a Director

Charles M. Stoehr         57      Senior Vice President, Chief Financial Officer
                                       and a Director

Patrick M. Lavelle        52      Senior Vice President and a Director

Ann M. Boutcher           53      Vice President, Marketing and a Director

Richard A. Maddia         45      Vice President, MIS  and a Director

Paul C. Kreuch, Jr.*      65      Director

Dennis F. McManus*        53      Director

Irving Halevy*            87      Director

Peter A.  Lesser*         68      Director

*Member of the Audit and Compensation Committees

     John J.  Shalam has served as  President,  Chief  Executive  Officer and as
Director of Audiovox or its  predecessor  since 1960.  Mr. Shalam also serves as
President  and a Director  of most of  Audiovox's  operating  subsidiaries.  Mr.
Shalam is on the Board of Directors of the Electronics  Industry Association and
is on the Executive Committee of the Consumer Electronics Association.

     Philip  Christopher,  our Executive Vice President,  has been with Audiovox
since 1970 and has held his current position since 1983.  Before 1983, he served
as Senior Vice President of Audiovox. Mr. Christopher is Chief Executive Officer
of Audiovox's  wireless  subsidiary,  Audiovox  Communications  Corp.  From 1973
through  1987,  he  was a  Director  of  our  predecessor,  Audiovox  Corp.  Mr.



                                       15


<PAGE>



Christopher serves on the Executive Committee of the Cellular Telephone Industry
Association.

     Charles M. Stoehr has been our Chief  Financial  Officer since 1979 and was
elected  Senior  Vice  President  in 1990.  Mr.  Stoehr has been a  Director  of
Audiovox  since  1987.  From  1979  through  1990,  he was a Vice  President  of
Audiovox.

     Patrick M. Lavelle has been a Vice  President of the Company since 1980 and
was  appointed  Senior Vice  President  in 1991.  He was elected to the Board of
Directors in 1993. Mr. Lavelle is Chief  Executive  Officer and President of the
Company's subsidiary, Audiovox Electronics Corp. Mr. Lavelle is also a member of
the Board of Directors and Executive Committee of the Consumer Electronics Board
and serves as Chairman of its Mobile Electronics Division.

     Ann M. Boutcher has been our Vice  President of Marketing  since 1984.  Ms.
Boutcher's  responsibilities  include the development and  implementation of our
advertising,  sales promotion and public  relations  programs.  Ms. Boutcher was
elected to the Board of Directors in 1995.

     Richard A. Maddia has been our Vice President of Information  Systems since
1992. Prior thereto, Mr. Maddia was Assistant Vice President,  MIS. Mr. Maddia's
responsibilities include development and maintenance of information systems. Mr.
Maddia was elected to the Board of Directors in 1996.

     Paul C. Kreuch, Jr. was elected to the Board of Directors in February 1997.
Mr. Kreuch is a Managing  Director of WJM Associates,  Inc., a leading executive
development firm. Prior career responsibilities include Executive Vice President
of NatWest Bank, N.A. from 1993 to 1996, and, before that, President of National
Westminster Bank, USA.

     Dennis F. McManus was elected to the Board of Directors in March 1998.  Mr.
McManus is  currently  the Vice  President - New Product  Marketing  at the LSSi
Corporation.   Prior  to  that  Mr.   McManus  had  been   self-employed   as  a
telecommunications  consultant.  Before that, he was employed by NYNEX Corp. for
over 27 years,  most recently as a Senior Vice President and Managing  Director.
Mr. McManus held this position from 1991 through December 31, 1997.

     Irving  Halevy  served on the Board of Directors  from 1987 to 1997 and was
re-elected to the Board of Directors in 2001. Mr. Halevy is a retired  professor
of Industrial  Relations and Management at Fairleigh Dickinson  University where
he taught from 1952 to 1986. He was also a panel member of the Federal Mediation
and Conciliation Service.

     Peter A. Lesser is the  President  of X-10 (USA),  Inc.,  a  wholesaler  of
electronic home control and security  systems.  Mr. Lesser is founder of and has
also served as a director and stockholder of X-10 Limited,  the Hong Kong parent
company  of  X-10-  (USA),  Inc.  since  1979.  He is a  Member-at-Large  of the
Executive Board of the Consumer Electronics Association. From 1997 through 1999,
Mr. Lesser served as the President of the Security Industry Association.

     All of our executive officers hold office at the discretion of the Board of
Directors.




                                       16


<PAGE>



Cautionary Factors That May Affect Future Results

     We have identified  certain risk factors that apply to either Audiovox as a
whole or one of our specific business units. You should carefully  consider each
of the  following  risk  factors  and all of the other  information  included or
incorporated  by  reference in this Form 10-K.  If any of these risks,  or other
risks  not  presently  known  to us or  that  we  currently  believe  not  to be
significant, develop into actual events, then our business, financial condition,
liquidity,  or results of operations could be materially adversely affected.  If
that happens, the market price of our common stock would likely decline, and you
may lose all or part of your investment.

We May Not Be Able to Compete  Successfully in the Highly  Competitive  Wireless
Industry.

     The market for wireless handsets and accessories is highly  competitive and
is characterized by:

     o    intense price competition
     o    shorter product life cycles
     o    significant price erosion over the life of a product
     o    inventory write-downs
     o    industry consolidation
     o    rapid technological development
     o    the demand by wireless  carriers for value-added  services provided by
          their suppliers

     Our primary  competitors for wireless handsets currently are Motorola,  LG,
Nokia,  Kyocera  and  Samsung.  In  addition,  we compete  with  numerous  other
established and new manufacturers  and distributors,  some of whom sell the same
or similar  products  directly to our customers.  Historically,  our competitors
have  also  included  some  of our  own  suppliers  and  customers.  Many of our
competitors  offer more extensive  advertising and promotional  programs than we
do.

     During the last decade,  there have been several  periods of extreme  price
competition, particularly when one or more or our competitors has sought to sell
off excess inventory by lowering its prices significantly.  In particular,  when
technologies  changed  in 2000 from  analog to  digital,  several  of our larger
competitors  lowered  their prices  significantly  to reduce their  inventories,
which required us to similarly  reduce our prices.  These price reductions had a
material adverse effect on our profitability. There can be no assurance that our
competitors will not do this again,  because,  among other reasons, many of them
have  significantly  greater  financial  resources  than we do and can withstand
substantial  price  competition.  Since we sell  products  that tend to have low
gross  profit-margins,  price competition has had, and may in the future have, a
material adverse effect on our financial performance.

The Electronics  Business Is Highly Competitive;  Our Electronics  Business Also
Faces Significant Competition from Original Equipment Manufacturers (OEMs).

     The market for  electronics is highly  competitive  across all three of our
product  lines.  We  compete  against  many   established   companies  who  have
substantially  greater resources than us. In addition,  we compete directly with
OEMs,  including  divisions  of  well-known  automobile  manufacturers,  in  the
autosound,  auto security,  mobile video and accessories industry. Most of these



                                       17


<PAGE>



companies have  substantially  greater financial and other resources than we do.
We believe that OEMs have increased  sales pressure on new car dealers with whom
they have close business  relationships to purchase  OEM-supplied  equipment and
accessories.  OEMs have also  diversified  and improved  their product lines and
accessories in an effort to increase sales of their products. To the extent that
OEMs succeed in their efforts, this success would have a material adverse effect
on our  sales of  automotive  entertainment  and  security  products  to new car
dealers.

Wireless  Carriers  and  Suppliers  May Not  Continue to  Outsource  Value-Added
Services;  We May Not Be Able to  Continue  to Provide  Competitive  Value-Added
Services.

     Wireless   carriers  purchase  from  us,  rather  than  directly  from  our
suppliers, because, among other reasons, we provide added services valued by our
customers.  In order to maintain our sales  levels,  we must continue to provide
these  value-added  services at reasonable  costs to our  carrier-customers  and
suppliers, including:

     o    product sourcing
     o    product distribution
     o    marketing
     o    custom packaging
     o    warranty support
     o    programming wireless handsets
     o    testing for carrier system acceptance

     Our  success  depends on the  wireless  equipment  manufacturers,  wireless
carriers,   network  operators  and  resellers  continuing  to  outsource  these
functions  rather than  performing  them  in-house.  To encourage the use of our
services, we must keep our prices reasonable. If our internal costs of supplying
these  services  increase,  we may not be able to raise our prices to pass these
costs along to our customers and suppliers. As a result of the consolidations in
the  telecommunications  industry,  wireless  carriers,  which  are the  largest
customers  of our  wireless  business,  may  attempt to perform  these  services
themselves.  Alternatively,  our customers  and suppliers may transact  business
directly  with each other rather than through us. If our  customers or suppliers
begin to perform these  services  internally  or do business  directly with each
other, it could have a material adverse effect on our sales and our profits.

Our Success Depends on Our Ability to Keep Pace with  Technological  Advances in
the Wireless Industry.

     Rapid   technological   change  and  frequent  new  product   introductions
characterize the wireless  product market.  Our success depends upon our ability
to:

     o    identify  the new  products  necessary  to  meet  the  demands  of the
          wireless marketplace and
     o    locate  suppliers  who are able to  manufacture  those  products  on a
          timely and cost-effective basis.

Since  we do not  make  any of our  own  products  and do not  conduct  our  own
research,  we cannot assure you that we will be able to source the products that
advances  in  technology  require  to  remain  competitive.   Furthermore,   the
introduction or expected introduction of new products or technologies may


                                       18


<PAGE>



depress  sales  of  existing  products  and  technologies.  This may  result  in
declining  prices and  inventory  obsolescence.  Since we maintain a substantial
investment in product  inventory,  declining  prices and inventory  obsolescence
could have a material adverse effect on our business and financial results. (see
further discussions in Business Overview Page 32).

     As a result of the emergence of the digital  market,  which resulted in the
reduction of selling prices of analog  hand-held  phones,  we recorded an analog
inventory  write-down to market of $13.5 million in fiscal 2001. This write-down
had a material  adverse effect on our  profitability.  As a result of increasing
pricing  pressures and a surplus of supply created by other  manufacturers  also
attempting  to sell off analog  inventories,  there was a drop off in demand for
analog products.  The write-down was based upon the drop in demand,  as carriers
no longer  promoted  analog  product  and  notified  the Company  that  previous
indications for orders of analog phones were no longer viable. Also during 2001,
the Company  recorded an  additional  inventory  write-down  to market of $7,150
associated with older digital products as newer products were being introduced.

     During fiscal 2002 and 2003,  Wireless  recorded  inventory  write-downs of
$13.8 and $2.8 million, respectively, due to more current technological advances
in the market.  These write-downs were made based upon open purchase orders from
customers and selling prices subsequent to the respective balance sheet dates as
well as  indications  from customers  based upon the then current  negotiations.
There can be no assurance  that this will not occur again given the emergence of
new technologies.

We  Depend on a Small  Number of Key  Customers  For a Large  Percentage  of Our
Sales.

     The wireless  industry is characterized by a small number of key customers.
Specifically,  70%,  71% and 72% of our  wireless  sales  were to five  wireless
customers in fiscal 2001, 2002 and 2003,  respectively.  The loss of one or more
of these customers would have a material impact on our business.

We Do Not Have Long-term Sales Contracts with Any of Our Customers.

     Sales of our wireless  products are made by written purchase orders and are
terminable at will by either party.  The unexpected loss of all or a significant
portion of sales to any one of our large customers could have a material adverse
effect  on our  performance.  Sales  of our  electronics  products  are  made by
purchase order and are  terminated at will at the option of either party.  We do
not have long-term  sales  contracts  with any of our customers.  The unexpected
loss of all or a  significant  portion  of sales  to any one of these  customers
could result in a material adverse effect on our performance.

We Could Lose Customers or Orders as a Result of  Consolidation  in the Wireless
Telecommunications Carrier Industry.

     As a result of global  competitive  pressures,  there has been  significant
consolidation   in  the  wireless   industry  which  has  caused  extreme  price
competition. Future consolidations could cause us to lose business if any of the
new  consolidated  entities  do  not  perform  as  they  expect  to  because  of
integration or other problems. In addition,  these consolidations will result in
a smaller  number of wireless  carriers,  leading to greater  competition in the
wireless  handset market and may favor one or more of our  competitors  over us.
This could also lead to fluctuations in our quarterly results and carrying value
of our  inventory.  If any of these new entities  orders less product from us or



                                       19


<PAGE>



elects  not to do  business  with us or  demands  pricing  changes  in  order to
compete,  it would have a material  adverse  effect on our  business.  In fiscal
2003, the five largest wireless customers (Verizon Wireless,  Bell Distribution,
Inc.,  Virgin Mobile,  Sprint  Spectrum LP and US Cellular)  represented  72% of
Wireless' net sales and 44% of consolidated  net sales during fiscal 2003. Three
customers  each accounted for 34%, 15% and 12%,  respectively,  of Wireless' net
sales for fiscal 2003.

Sales in Our  Electronics  Business  Are  Dependent on New Products and Consumer
Acceptance.

     Our electronics  business  depends,  to a large extent, on the introduction
and availability of innovative  products and technologies.  Significant sales of
new  products in niche  markets,  such as  navigation,  portable DVD players and
mobile video systems, have fueled the recent growth of our electronics business.
If we are not able to continually  introduce new products that achieve  consumer
acceptance, our sales and profit margins will decline.

Since We Do Not Manufacture Our Products,  We Depend on Our Suppliers to Provide
Us with  Adequate  Quantities of High Quality  Competitive  Products on a Timely
Basis.

     We do not manufacture our products.  We do not have long-term contracts but
have exclusive distribution  arrangements with certain suppliers.  The suppliers
can only sell their  products  through  the Company  for a given  geographic  or
designated  market area.  Most of our products are imported from suppliers under
short-term purchase orders. Accordingly, we can give no assurance that:

     o    our supplier relationships will continue as presently in effect
     o    our  suppliers  will be able to obtain  the  components  necessary  to
          produce high-quality, technologically-advanced products for us
     o    we will be able to obtain adequate  alternatives to our supply sources
          should they be interrupted
     o    if obtained,  alternatively  sourced products of satisfactory  quality
          would be delivered on a timely basis, competitively priced, comparably
          featured or acceptable to our customers
     o    exclusive  geographic or market area  distribution  agreements will be
          renewed

     Because of the  increased  demand for  wireless  and  consumer  electronics
products,  there have  been,  and still  could be,  industry-wide  shortages  of
components. As a result, on occasion our suppliers have not been able to produce
the  quantities  of these  products  that we  desire.  Our  inability  to supply
sufficient   quantities  of  products  that  are  in  demand  could  reduce  our
profitability and have a material adverse effect on our  relationships  with our
customers.  If any of our supplier relationships were terminated or interrupted,
we could experience an immediate or long-term supply shortage,  which could have
a  material  adverse  effect  on us. It is likely  that our  supply of  wireless
products would be interrupted before we could obtain alternative products.

Because We Purchase a  Significant  Amount of Our  Products  from  Suppliers  in
Pacific Rim  Countries,  We Are Subject to the Economic  Risks  Associated  with
Changes in the Social, Political, Regulatory and Economic Conditions Inherent in
These Countries.

     We import most of our products from suppliers in the Pacific Rim. Countries
in the Pacific Rim have experienced  significant social,  political and economic
upheaval over the past several years. Because of the large concentrations of our


                                       20


<PAGE>


purchases in Pacific Rim  countries,  particularly  Japan,  China,  South Korea,
Taiwan and Malaysia,  any adverse changes in the social,  political,  regulatory
and economic  conditions in these countries may materially  increase the cost of
the  products  that we buy from our  foreign  suppliers  or delay  shipments  of
products,  which  could  have a  material  adverse  effect on our  business.  In
addition,  our  dependence  on  foreign  suppliers  forces us to order  products
further in advance than we would if our products were manufactured domestically.
This  increases the risk that our products will become  obsolete or face selling
price reductions before we can sell our inventory.

We Plan to Expand the International  Marketing and Distribution of Our Products,
Which Will Subject Us to Additional Business Risks.

     As part of our business  strategy,  we intend to increase our international
sales,  although we cannot assure you that we will be able to do so.  Conducting
business  outside of the United  States  subjects us to  significant  additional
risks, including:

     o    export and  import  restrictions,  tax  consequences  and other  trade
          barriers
     o    currency fluctuations
     o    greater difficulty in accounts receivable collections
     o    economic and political instability
     o    foreign exchange controls that prohibit payment in U.S. dollars
     o    increased complexity and costs of managing and staffing  international
          operations

     For  instance,  our  international  sales have been  affected by  political
unrest and currency fluctuation in Venezuela.  Any of these factors could have a
material  adverse  effect on our  business,  financial  condition and results of
operations.

Fluctuations in Foreign  Currencies  Could Have a Material Adverse Impact on Our
Business.

     We cannot  predict the effect of exchange rate  fluctuations  on our future
operating   results.   Also,  due  to  the  short-term   nature  of  our  supply
arrangements,  the  relationship of the U.S.  dollar to foreign  currencies will
impact price quotes when negotiating new supply arrangements denominated in U.S.
dollars. As a result, we could experience declining selling prices in our market
without the benefit of cost  decreases on purchases  from  suppliers or we could
experience  increasing  costs  without  an  ability  to pass  the  costs  to the
customers.  We cannot assure you that we will be able to  effectively  limit our
exposure to foreign  currencies.  Foreign currency  fluctuations could cause our
operating  results to decline and have a material  adverse effect on our ability
to compete. Many of our competitors manufacture products in the United States or
outside the Pacific Rim, which could place us at a competitive  disadvantage  if
the value of the Pacific Rim  currencies  increased  relative to the currency in
the countries where our competitors obtain their products.

Trade  Sanctions  Against  Foreign  Countries or Foreign  Companies Could Have a
Material Adverse Impact on Our Business.

As a result of trade  disputes,  the United  States and foreign  countries  have
occasionally  imposed  tariffs,  regulatory  procedures and importation  bans on
certain products, including wireless handsets that have been produced in foreign
countries. Trade sanctions or regulatory procedures involving a country in which


                                       21


<PAGE>



we conduct a substantial amount of business could have a material adverse effect
on our operations.  Some of the countries we purchase  products from are: China,
Japan, South Korea,  Taiwan and Malaysia.  China and Japan have been affected by
such sanctions in the past. In addition,  the United States has imposed, and may
in the future impose,  sanctions on foreign companies for anti-dumping and other
violations  of U.S.  law. If sanctions  were imposed on any of our  suppliers or
customers, it could have a material adverse effect on our operations.

We May Not Be Able to  Sustain  Our  Recent  Growth  Rates  or  Maintain  Profit
Margins.

     Sales of our  wireless  products,  a large  portion  of our  business  that
operates on a high-volume,  low-margin basis, have varied significantly over the
past  several  years,  from   approximately  $423  million  in  fiscal  1998  to
approximately $1.4 billion for fiscal 2000 back to approximately $806 million in
2003.  Sales of our  electronics  products  also  increased  significantly  from
approximately  $182  million for fiscal 1998 to  approximately  $518 million for
fiscal  2003.  We may not be able to continue to achieve  this  overall  revenue
growth  rate or  maintain  profit  margins  because,  among  other  reasons,  of
increased  competition  and  technological  changes,  which  can be  seen in the
decline  of our  Wireless  Group.  In  addition,  we expect  that our  operating
expenses  will  continue to increase  as we seek to expand our  business,  which
could also result in a  reduction  in profit  margins if we do not  concurrently
increase our sales proportionately.

If Our Sales During the Holiday Season Fall below Our  Expectations,  Our Annual
Results Could Also Fall below Expectations.

     Seasonal consumer shopping patterns  significantly affect our business.  We
generally  make a  substantial  amount  of  our  sales  and  net  income  during
September, October and November, our fourth fiscal quarter. We expect this trend
to continue. December is also a key month for us, due largely to the increase in
promotional  activities  by our  customers  during the  holiday  season.  If the
economy  faltered  in these  periods,  if our  customers  altered  the timing or
frequency  of their  promotional  activities  or if the  effectiveness  of these
promotional  activities  declined,  particularly  around the holiday season,  it
could have a material adverse effect on our annual financial results.

A Decline in General  Economic  Conditions Could Lead to Reduced Consumer Demand
for the Discretionary Products We Sell.

     Consumer spending patterns,  especially discretionary spending for products
such as consumer electronics and wireless handsets, are affected by, among other
things,  prevailing  economic  conditions,   wage  rates,  inflation,   consumer
confidence and consumer perception of economic conditions. A general slowdown in
the U.S. economy or an uncertain  economic outlook could have a material adverse
effect on our sales.

We Depend  Heavily on Existing  Management  and Key Personnel and Our Ability to
Recruit and Retain Qualified Personnel.

     Our success  depends on the  continued  efforts of John J.  Shalam,  Philip
Christopher, C. Michael Stoehr and Patrick Lavelle, each of whom has worked with
Audiovox for over two decades,  as well as our other executive  officers and key



                                       22


<PAGE>



employees.  We only have one employment  contract,  with Philip  Christopher and
none  with  any  other  executive  officers  or  key  employees.   The  loss  or
interruption  of the  continued  full-time  service of certain of our  executive
officers and key employees could have a material adverse effect on our business.

     In addition,  to support our continued growth, we must effectively recruit,
develop  and  retain  additional   qualified  personnel  both  domestically  and
internationally.  Our  inability  to  attract  and  retain  necessary  qualified
personnel could have a material adverse effect on our business.

We Are Responsible for Product Warranties and Defects.

     Even though we outsource  manufacturing,  we provide  warranties for all of
our products for which we have provided an estimated  liability.  Therefore,  we
are highly  dependent on the quality of our  suppliers.  The  warranties for our
electronics  products  range from 90 days to the  lifetime  of a vehicle for the
original owner. The warranties for our current wireless products generally range
from 12 to 15 months.  In addition,  if we are required to repair a  significant
amount of product, the value of the product could decline while we are repairing
the product.

Our  Capital  Resources  May Not Be  Sufficient  to Meet Our Future  Capital and
Liquidity Requirements.

     We believe that we currently have sufficient resources to fund our existing
operations  for the  foreseeable  future  through our cash flows and  borrowings
under our credit facility.  However,  we may need additional  capital to operate
our business if:

     o    market conditions change
     o    our business plans or assumptions change
     o    we make significant acquisitions
     o    we need to make  significant  increases  in  capital  expenditures  or
          working capital

     The Company's  principal source of liquidity  expires in July 2004, and the
Company is currently in negotiations  with the bank to extend this facility.  We
cannot assure you that we would be able to raise additional capital on favorable
terms,  if at all. If we could not obtain  sufficient  funds to meet our capital
requirements,  we would have to curtail our  business  plans.  We may also raise
funds to meet our capital requirements by issuing additional equity, which could
be dilutive to our stockholders,  though there can be no assurance that we would
be able to do this.

Restrictive  Covenants  in Our  Credit  Facility  May  Restrict  Our  Ability to
Implement Our Growth Strategy, Respond to Changes in Industry Conditions, Secure
Additional Financing and Make Acquisitions.

     Our credit facility contains restrictive covenants that:

     o    require us to attain specified pre-tax income
     o    limit our ability to incur additional debt
     o    require us to achieve specific financial ratios
     o    restrict our ability to make capital expenditures or acquisitions



                                       23


<PAGE>



     If our  business  needs  require  us to take  on  additional  debt,  secure
financing or make significant capital  expenditures or acquisitions,  and we are
unable to comply with these  restrictions,  we would be forced to negotiate with
our lenders to waive these covenants or amend the terms of our credit  facility.
At May 31, 2001,  November  30, 2001 and the first  quarter  ended  February 28,
2002,  the  Company was not in  compliance  with  certain of its pre-tax  income
covenants.  The Company  received a waiver for the  November  30,  2001  pre-tax
income  violation  subsequent to its issuance of the November 30, 2001 financial
statements.  In addition,  the Company received waivers for the May 31, 2001 and
February 28, 2002 violations.

     At November 30, 2002, the Company was not in compliance with certain of its
pre-tax income covenants.  Furthermore, as of November 30, 2002, the Company was
also not in  compliance  with  the  requirement  to  deliver  audited  financial
statements 90 days after the  Company's  fiscal year end, and as of February 28,
2003, the requirement to deliver  unaudited  quarterly  financial  statements 45
days after the Company's quarter end and had not received a waiver.  The Company
subsequently  obtained a waiver for the  November 30, 2002 and February 28, 2003
violations.  The  Company  was in  compliance  with  all its bank  covenants  at
November  30,  2003.  While the  Company  has  historically  been able to obtain
waivers for such violations,  there can be no assurance that future negotiations
with its  lenders  would be  successful  or that the  Company  will not  violate
covenants  in the future,  therefore,  resulting  in amounts  outstanding  to be
payable upon demand.  This credit  agreement has no cross  covenants  with other
credit facilities.

     Achieving  pre-tax  income is  significantly  dependant  upon the timing of
customer acceptance of new technologies,  customer demand and the ability of our
vendors to supply sufficient  quantities to fulfill anticipated customer demand,
among other factors.

There Are Claims of Possible Health Risks from Wireless Handsets.

     Claims   have  been  made   alleging  a  link   between   the   non-thermal
electromagnetic  field  emitted by  wireless  handsets  and the  development  of
cancer,  including  brain cancer.  The television  program 20/20 on ABC reported
that  several of the  handsets  available  on the  market,  when used in certain
positions,  emit  radiation to the user's brain in amounts higher than permitted
by the Food and Drug  Administration.  The  scientific  community  is divided on
whether there is any risk associated  with the use of wireless  handsets and, if
so, the magnitude of the risk. Unfavorable publicity,  whether or not warranted,
medical studies or findings or litigation  could have a material  adverse effect
on our growth and financial results.

     In the past, several  plaintiffs' groups have brought class actions against
wireless handset  manufacturers  and  distributors,  including us, alleging that
wireless  handsets have caused cancer.  To date,  none of these actions has been
successful.  However,  actions based on these or other claims may succeed in the
future and have a material adverse effect on us.

Several  Domestic and Foreign  Governments  Are  Considering,  or Have  Recently
Adopted, Legislation That Restricts the Use of Wireless Handsets While Driving.

     Several foreign  governments  have adopted,  and a number of U.S. state and
local  governments are considering or have recently  enacted,  legislation  that



                                       24


<PAGE>



would restrict or prohibit the use of a wireless handset while driving a vehicle
or, alternatively,  require the use of a hands-free telephone. For example, Ohio
and New York have adopted  statutes that restricts the use of wireless  handsets
or requires the use of a hands-free  kit while driving.  Widespread  legislation
that  restricts  or prohibits  the use of wireless  handsets  while  operating a
vehicle could have a material adverse effect on our future growth.

Our Stock Price Could Fluctuate Significantly.

     The market  price of our common  stock  could  fluctuate  significantly  in
response to various factors and events, including:

     o    operating results being below market expectations
     o    announcements  of  technological  innovations or new products by us or
          our competitors
     o    loss of a major customer or supplier
     o    changes in, or our failure to meet,  financial estimates by securities
          analysts
     o    industry developments
     o    economic and other external factors
     o    period-to-period fluctuations in our financial results
     o    financial crises in foreign countries
     o    general downgrading of our industry sector by securities analysts

     In addition, the securities markets have experienced  significant price and
volume  fluctuations  over the past several years that have often been unrelated
to the operating performance of particular companies.  These market fluctuations
may also have a material adverse effect on the market price of our common stock.

Our Securities Will Continue to be Listed on the Nasdaq National Market Pursuant
to Exceptions.

     Following the Company's  hearing with the Nasdaq related to its late filing
of certain  annual and  quarterly  forms with the SEC,  the Company was notified
that it must  become  timely in its  filings  and  continue  in the future to be
timely to insure its continued listing on the Nasdaq National Market.

John J. Shalam,  Our President and Chief Executive  Officer,  Owns a Significant
Portion of Our Common Stock and Can Exercise Control over Our Affairs.

     Mr. Shalam beneficially owns approximately 54% of the combined voting power
of both  classes  of common  stock.  This  will  allow him to elect our Board of
Directors  and,  in  general,  to  determine  the  outcome  of any other  matter
submitted to the stockholders  for approval.  Mr. Shalam's voting power may have
the effect of delaying or preventing a change in control of Audiovox.

     We have two classes of common stock:  Class A common stock is traded on the
Nasdaq Stock Market under the symbol VOXX,  and Class B common  stock,  which is
not publicly traded and substantially all of which is beneficially  owned by Mr.
Shalam. Each share of Class A common stock is entitled to one vote per share and
each share of Class B common  stock is  entitled  to ten votes per  share.  Both
classes vote together as a single class,  except in certain  circumstances,  for
the  election  and  removal of  directors  and as  otherwise  may be required by
Delaware law. Since our charter permits


                                       25


<PAGE>



shareholder  action  by  written  consent,  Mr.  Shalam  may  be  able  to  take
significant corporate actions without prior notice and a shareholder meeting.


I
tem 2 - Properties

     As of  November  30,  2003,  the  Company  leased  a total  of  twenty-nine
operating  facilities  located in eleven states. The leases have been classified
as operating  leases,  with the exception of one, which is recorded as a capital
lease.  Wireless utilizes eight of these facilities  located in California,  New
York,  Virginia and Canada.  The Electronics Group utilizes  twenty-one of these
facilities located in California,  Florida,  Georgia,  Massachusetts,  New York,
Ohio,  Tennessee,  Texas  and  Michigan.  These  facilities  serve  as  offices,
warehouses,  distribution  centers or retail  locations  for both  Wireless  and
Electronics.  Additionally,  the Company  utilizes public  warehouse  facilities
located in Norfolk, Virginia and Sparks, Nevada for its Electronics Group and in
Miami,  Florida,  Toronto,  Canada,  Farmingdale,  New York,  Rancho  Dominguez,
California and Tilburg,  Netherlands  for its Wireless  Group.  The Company also
leases facilities in Germany and Venezuela for its Electronics Group.


Item 3 - Legal Proceedings

     The  Company is  currently,  and has in the past  been,  a party to routine
litigation  incidental to its business.  From time to time, the Company receives
notification of alleged  violations of registered  patent holders'  rights.  The
Company has either  been  indemnified  by its  manufacturers  in these  matters,
obtained  the benefit of a patent  license or has decided to  vigorously  defend
such claims.

     On September 17, 2003, Audiovox Electronics Corporation ("AEC") settled the
action for patent  infringement  that was  instituted  by Nissho  Iwai  American
Corporation  against AEC in the United  State  District  Court for the  Southern
District  of  New  York.  Pursuant  to  the  settlement  Nissho  granted  AEC  a
non-exclusive  license for a payment covering any alleged past infringements and
a per unit  payment  for  future  infringement.  Neither  party  to the  lawsuit
admitted any liability or any merit to the allegations of either party.

     The Company and Audiovox  Communications  Corp.  ("ACC"),  along with other
manufacturers of wireless phones and cellular service  providers,  were named as
defendants in two class action lawsuits alleging non-compliance with FCC ordered
emergency 911 call processing capabilities. These lawsuits were consolidated and
transferred  to the United States  District  Court for the Northern  District of
Illinois,  which  in turn  referred  the  cases  to the  Federal  Communications
Commission  ("FCC") to determine if the  manufacturers and service providers are
in  compliance   with  the  FCC's  order  on  emergency   911  call   processing
capabilities.  The Company  and ACC intend to  vigorously  defend  this  matter.
However, no assurances regarding the outcome of this matter can be given at this
point in the litigation.

     In June 2003, Audiovox  Communications  Corp. settled the litigation it had
instituted against Northcoast Communications, LLC ("Northcoast"). ACC received a
partial payment of its claimed amount from Northcoast.  In addition,  Northcoast
withdrew its counterclaims with prejudice.  A Stipulation of Discontinuance with
prejudice  was filed in the  Supreme  Court of the State of New York,  County of
Suffolk.



                                       26


<PAGE>



     During 2001, the Company,  along with other  suppliers,  manufacturers  and
distributors of hand-held wireless telephones,  was named as a defendant in five
class action lawsuits  alleging  damages relating to exposure to radio frequency
radiation  from  hand-held  wireless  telephones.  These class actions have been
consolidated  and transferred to a  Multi-District  Litigation  Panel before the
United  States  District  Court of the District of  Maryland.  On March 5, 2003,
Judge Catherine C. Blake of the United States District Court for the District of
Maryland   granted  the  defendants'   consolidated   motion  to  dismiss  these
complaints.  Plaintiffs  have  appealed to the United  States  Circuit  Court of
Appeals,  Fourth  Circuit.  The appeal  pending before the United States Circuit
Court of Appeals,  Fourth  Circuit in the  consolidated  class  action  lawsuits
(Pinney, Farina, Gilliam, Gimpelson and Naquin) against ACC and other suppliers,
manufacturers  and  distributors  as  well as  wireless  carriers  of  hand-held
wireless  telephones  alleging  damages  relating  to risk of  exposure to radio
frequency  radiation from the wireless  telephones has not yet been heard. It is
anticipated that the appeal will be heard in May 2004.

     The Company had been the subject of an administrative  agency investigation
involving  alleged  reimbursement  of a fixed nominal amount of federal campaign
contributions during the years 1995 and 1996. During the third quarter of fiscal
2003, the Company entered into a Conciliation Agreement and paid a civil penalty
in the amount of $620.

     During the third quarter of fiscal 2003, a certain Venezuelan employee, who
is also a minority  shareholder in Audiovox Venezuela,  submitted a claim to the
Venezuela  Labor Court for severance  compensation  of  approximately  $560. The
Court  approved the claim and it was paid and expensed by Audiovox  Venezuela in
the third quarter of fiscal 2003. The Company is challenging the payment of this
claim  and will  seek  reimbursement  from  the  Venezuelan  shareholder  or the
Company's insurance carrier.

     The  Company  does  not  expect  the  outcome  of any  pending  litigation,
separately  and in the  aggregate,  to have a  material  adverse  effect  on its
business, consolidated financial position or results of operations.


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

     No matters were  submitted to a vote of security  holders during the fourth
quarter of fiscal 2003.


                                     PART II


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

Summary of Stock Prices and Dividend Data

     The Class A Common  Stock of Audiovox are traded on the Nasdaq Stock Market
under the symbol  VOXX.  No  dividends  have been paid on the  Company's  common
stock.  The Company is restricted by agreements with its financial  institutions
from the payment of common stock  dividends  while certain loans are outstanding
(see Liquidity and Capital  Resources of Management's  Discussion and Analysis).
There are approximately 617 holders of record of our Class A Common Stock and



                                       27


<PAGE>



four holders of Class B Convertible Common Stock.


<TABLE>

Class A Common Stock                                                          Average
                                                                              Daily
                                                                             Trading
Fiscal Period                                    High          Low            Volume

<S>                                                <C>          <C>           <C>    
2002
   First Quarter                                   8.25         6.00          117,420
   Second Quarter                                  8.93         6.50           82,356
   Third Quarter                                   9.05         5.95           91,708
   Fourth Quarter                                 11.53         6.30           71,940

2003
   First Quarter                                  11.60         7.77          167,418
   Second Quarter                                  9.70         6.10           95,459
   Third Quarter                                  14.03         9.15          123,680
   Fourth Quarter                                 14.90        11.00           95,333
</TABLE>


     We have not paid or declared  any cash  dividends on our common  stock.  We
have retained,  and currently anticipate that we will continue to retain, all of
our earnings for use in developing our business.  Future cash dividends, if any,
will be paid at the discretion of our Board of Directors and will depend,  among
other things, upon our future operations and earnings,  capital requirements and
surplus,  general financial condition,  contractual  restrictions and such other
factors as our Board of Directors may deem relevant.

Equity Compensation Table

     The following table sets forth  information  regarding the Company's equity
compensation plans in effect as of November 30, 2003:

<TABLE>


                                                                                          Number of securities
                                                                                         remaining available for
                                                                                          future issuance under
                                  Number of securities to        Weighted average          equity compensation
                                be issued upon exercise of       exercise price of          plans (excluding
                                   outstanding options,        outstanding options,      securities reflected in
Plan Category                    warrants and rights         warrants and rights      first reporting column)
-------------                   ---------------------       --------------------      -----------------------
<S>                                  <C>                          <C>                           <C>    
  Equity compensation plans
      approved by security
      holders                        2,569,864                    $11.77                        234,253
  Equity compensation plans
      not approved by security
      holders (a)                      150,000                     11.12                           --
                                     ---------                    ------                        -------
  Total                              2,719,864                    $11.76                        234,253
                                     =========                    ======                        =======
</TABLE>


(a)  Represents  30,000 stock  options  issued to outside  directors and 120,000
     warrants  issued  to  outside  legal  counsel.  See  Note  16 of  Notes  to
     Consolidated Financial Statements.


                                       28


<PAGE>





Item 6 - Selected Consolidated Financial Data

     The  following  selected  consolidated  financial  data  should  be read in
conjunction  with  the   consolidated   financial   statements,   the  notes  to
consolidated  financial statements and "Management's  Discussion and Analysis of
Financial Condition and Results of Operations",  which are included elsewhere in
this report. The consolidated statements of operations data for each of the five
fiscal years in the period ended November 30, 2003, and the consolidated balance
sheet data as of the end of each such fiscal year,  are derived from our audited
consolidated financial statements (in thousands except per share data).




                                       29


<PAGE>



     See  "Management's  Discussion  and  Analysis of  Financial  Condition  and
Results of  Operations--Recent  Event" and Note 2,  "Restatement of Consolidated
Financial  Statements",  and Note 22,  "Unaudited  Quarterly  Financial Data" of
Notes  to  Consolidated  Financial  Statements  for  more  detailed  information

regarding the  restatement  of our  consolidated  financial  statements  for the
fiscal years ended November 30, 2000 and 2001 and restated  unaudited  quarterly
data for fiscal  quarters during the year ended November 30, 2001 and the fiscal
2002 quarters  ended  February 28, 2002,  May 31, 2002 and August 31, 2002.  The
Company  did not  restate the year ended  November  30, 1999 as any  restatement
amounts  applicable  to that year were not material and were  recorded in fiscal
2000.


<TABLE>

                                                                    Years Ended November 30,
                                         -------------------------------------------------------------------------------
                                           1999          2000 (1)        2001 (1)     2002           2003
                                           ----          --------        --------     ----           ----

Consolidated  Statement of
   Operations Data

<S>                                    <C>           <C>           <C>            <C>            <C>        
Net sales (2)(3)                       $ 1,149,537   $ 1,670,291   $ 1,276,591    $ 1,100,382    $ 1,323,902
Operating income                            38,237        39,629        (9,236)       (14,076)        21,803
Income (loss) before extraordinary
   item and cumulative effect of a
   change in accounting for negative
   goodwill                                 27,246        25,303        (7,198)       (14,280)        11,239
Extraordinary item                            --           2,189          --             --             --
Cumulative effect of a change in
   accounting for negative goodwill           --            --            --              240           --
Net income (loss)                           27,246        27,492        (7,198)       (14,040)        11,239
Income (loss) per common share
   before extraordinary item and
   cumulative effect of a change in
   accounting for negative goodwill:
   Basic                                      1.43          1.19         (0.33)         (0.65)          0.51
   Diluted                                    1.39          1.12         (0.33)         (0.65)          0.51
Net income (loss) per common share:
   Basic                                      1.43          1.29         (0.33)         (0.64)          0.51
   Diluted                                    1.39          1.22         (0.33)         (0.64)          0.51

Consolidated Balance Sheet Data

Total assets                           $   486,220   $   517,586   $   544,497    $   551,235        579,703
Working capital                            272,081       305,369       284,166        292,687        304,354
Long-term obligations, less current
   installments                            122,798        23,468        10,040         18,250         29,639
Stockholders' equity                       216,744       330,766       323,220        309,513        325,728
</TABLE>


(1)  See Note (2) of Notes to Consolidated Financial Statements.

(2)  Effective  March 1, 2002, the Company  adopted  Emerging  Issues Task Force
     (EITF) Issue No. 01-9, "Accounting for Consideration Given by a Vendor to a
     Customer".  Upon adoption of this Issue, the Company reclassified its sales
     incentives offered to its customers from selling expenses to net sales. For
     purposes of  comparability,  these  reclassifications  have been  reflected
     retroactively for all periods presented.



                                       30


<PAGE>



(3)  In fiscal 2001, the Company adopted the provisions of EITF Issue No. 00-10,
     "Accounting  for Shipping and Handling Fees and Costs",  which requires the
     Company to report all amounts billed to a customer  related to shipping and
     handling as revenue.  The Company  has  reclassified  such billed  amounts,
     which were previously  netted in cost of sales, to net sales.  Gross profit
     has remained  unchanged by this  adoption.  For purposes of  comparability,
     these  reclassifications have been reflected  retroactively for all periods
     presented.


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

Forward-looking Statements

     This Report on Form 10-K  contains  forward-looking  statements  within the
meaning of Section 27A of the  Securities  Act of 1933, as amended,  and Section
21E of the  Securities  Exchange Act of 1934,  as amended.  Words such as "may,"
"believe,"  "estimate,"  "expect,"  "plan," "intend,"  "project,"  "anticipate,"
"continues,"  "could,"  "potential,"   "predict"  and  similar  expressions  may
identify   forward-   looking   statements.   The   Company   has  based   these
forward-looking  statements on its current  expectations  and projections  about
future events,  activities or  developments.  The Company's actual results could
differ  materially from those  discussed in or implied by these  forward-looking
statements.  Forward-looking  statements include  statements  relating to, among
other things:

     o    growth  trends  in  the  wireless,   mobile  and  consumer  electronic
          businesses
     o    technological  and market  developments  in the wireless,  automotive,
          mobile and consumer electronics businesses
     o    liquidity
     o    availability of key employees
     o    expansion into international markets
     o    the availability of new consumer electronic products
     o    the availability of new wireless products

     These   forward-looking   statements   are  subject  to   numerous   risks,
uncertainties and assumptions about the Company including, among other things:

     o    the ability to keep pace with technological advances
     o    impact of future selling prices on Company profitability and inventory
          carrying value
     o    significant  competition  in  the  wireless,  automotive,  mobile  and
          consumer electronics businesses
     o    quality and consumer acceptance of newly introduced products
     o    the relationships with key suppliers
     o    the relationships with key customers
     o    possible increases in warranty expense
     o    changes in the Company's business operations
     o    the loss of key employees
     o    foreign currency risks
     o    political instability
     o    changes in U.S. federal, state and local and foreign laws


                                       31


<PAGE>



     o    changes in regulations and tariffs
     o    seasonality and cyclicality
     o    inventory obsolescence and availability
     o    consolidations  in the  wireless  and  retail  industries,  causing  a
          decrease  in the number of carriers  and retail  stores that carry our
          products
     o    changes in global or local economic conditions

Restatement of Consolidated Financial Statements

     The Company has previously restated its consolidated  financial  statements
for the  fiscal  years  ended  November  30,  2000 and  2001 and for the  fiscal
quarters  during the year ended  November 30, 2001 and the fiscal 2002  quarters
ended  February 28, 2002,  May 31, 2002 and August 31,  2002.  In addition,  the
Company previously reclassified certain expenses from operating expenses to cost
of sales for fiscal 2001 and for each of the  quarters in the nine months  ended
August 31, 2002.  Please refer to the Company's  previously  filed Form 10-K for
the year ended November 30, 2002 for details.

Business Overview

     The Company markets its products under the Audiovox(R) brand name and other
brand names such as Jensen(R),  Acoustic  Research(R) and Advent(R),  as well as
private   labels  through  a  large  and  diverse   distribution   network  both
domestically  and  internationally.  The Company  operates through two marketing
groups: Wireless and Electronics.

     Wireless  consists  of Audiovox  Communications  Corp.  (ACC),  a 75%-owned
subsidiary of Audiovox, and Quintex Mobile Communications Corp. (Quintex), which
is  a  wholly-owned  subsidiary  of  ACC.  ACC  markets  wireless  handsets  and
accessories  primarily on a wholesale  basis to wireless  carriers in the United
States and  carriers  overseas  primarily  in the CDMA (Code  Division  Multiple
Access)  market.  Based on unit sales,  ACC has a substantial  share of the CDMA
market,  which  is  directly  impacted  by new  product  introductions  and high
customer  concentration (see Cautionary Factors that May Affect Future Results).
Quintex is a small  operation for the direct sale of handsets,  accessories  and
wireless telephone  service.  Quintex also receives residual fees and activation
commissions  from the carriers.  Residuals are paid by the carriers based upon a
percentage of usage of customers  activated by Quintex for a period of time (1-5
years). Quintex also sells a small volume of electronics products not related to
wireless which are categorized as "other" sales.

     The Electronics Group consists of four wholly-owned subsidiaries:  Audiovox
Electronics  Corporation (AEC),  American Radio Corp., Code Systems, Inc. (Code)
and Audiovox  Europe  Holdings GmbH (Audiovox  Europe) and three  majority-owned
subsidiaries,  Audiovox  Communications  (Malaysia) Sdn. Bhd., Audiovox Holdings
(M) Sdn. Bhd. and Audiovox Venezuela,  C.A. The Electronics Group markets,  both
domestically  and  internationally,   automotive  sound  and  security  systems,
electronic car  accessories,  home and portable sound products,  two-way radios,
in-vehicle video systems,  flat-screen  televisions,  DVD players and navigation
systems.  Sales are made  through  an  extensive  distribution  network  of mass
merchandisers  and others.  In addition,  the Company sells some of its products
directly to automobile  manufacturers  on an OEM basis.  American Radio Corp. is
also involved on a limited basis in the wireless marketplace and these sales are
categorized as "other".



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<PAGE>



     The Company  allocates  interest  and certain  shared  expenses,  including
treasury,  legal,  human  resources and  information  systems,  to the marketing
groups based upon both actual and estimated  usage.  General  expenses and other
income items that are not readily  allocable  are not included in the results of
the two marketing groups.

     From  fiscal  1999  through  2003,  several  major  events and trends  have
affected the Company's results and financial conditions.  Such events and trends
are discussed below.

     Handset  sales in our Wireless  Group  increased  from 6.1 million units in
fiscal 1999 to an all-time  high of 8.9 million units in fiscal 2000 as a result
of the  introduction  of digital  technology,  reduced cost of service plans and
expanded  feature  options  which  attracted  more  subscribers  to the carriers
systems.  During 2001 through 2003, as a result of the change in technology from
analog to digital,  the consolidation of our carrier customer base and increased
price competition from our competitors,  the Wireless Group's overall growth was
impacted.  Further during this period,  the addition of several new  competitors
had an effect on the Company's  sales.  These factors resulted in a reduction of
our net sales to 4.7 million  units in 2003.  This overall trend in our wireless
business from 1999 was impacted by:

     o    the introduction of digital technology,  which has allowed carriers to
          significantly increase subscriber capacity
     o    reduced cost of service and expanded feature options
     o    consolidation of carrier customers
     o    price competition
     o    increased competition
     o    shortened product life cycle
     o    product testing and acceptance complexity

     In fiscal 2001, 2002 and 2003, the Company recorded  inventory  write-downs
to market of $20,650, $13,823 and $2,817,  respectively.  These write-downs were
primarily  due  to  increased  pricing   pressures,   competition  and  changing
technologies.  Wireless' gross profit margins were  negatively  impacted by 2.1,
1.9 and 0.3 percentage points,  respectively,  as a result of these write-downs.
As the life cycle for wireless products shortens,  the timing of product testing
and acceptance for new wireless technology has become critical. Complex wireless
technology has caused delays in product testing and acceptance  which may result
in delayed product  introductions.  This trend of product testing,  competition,
price  erosion,  and changing  technologies  will continue to affect the overall
wireless business segment.

     In fiscal  2001,  2002 and 2003,  Wireless  recorded  $12,555,  $3,216  and
$1,137,  respectively,  into income due to reversals of  previously  established
sales  incentive  accruals.  Wireless'  gross  profit  margins  were  positively
impacted by 1.3, 0.4 and 0.1  percentage  points,  respectively,  as a result of
these reversals. See further discussion in critical accounting policies.

     In our  Electronics  Group,  sales were  $239.6  million in 1999 and $517.7
million in 2003.  During this period,  the Company's  sales were impacted by the
following items:

     o    the growth of our consumer  electronic  products  business  from $38.2
          million in fiscal 1999 to $144.3 million in fiscal 2003 was a result


                                       33


<PAGE>



          of the introduction of new consumer goods
     o    the introduction of mobile video  entertainment  systems and other new
          technologies
     o    growth of OEM business o acquisition of Recoton in fiscal 2003 and the
          formation of Audiovox Europe

     Both of the Company's segments, Electronics and Wireless, are influenced by
the  introduction  of new products  and changes in  technology  (see  Cautionary
Factors That May Affect Future  Results:  Our success  depends on our ability to
keep pace with technological advances in the wireless industry).

     During fiscal 2002 and 2003, the Company introduced several new products in
our  Electronics  segment,  which  included  an extended  line of  portable  DVD
products for the consumer market,  new flat panel TV's and satellite  radios. In
our Wireless group, the technology has evolved to new 1X technology,  color view
screens and camera phones, PDA's with built-in wireless capabilities and certain
1X phones have the  availability  to utilize the new GPS locator  systems.  As a
result of the  continuous  introduction  of new products,  the Company must sell
existing  older  models  prior to new product  introduction  or the value of the
inventory may be impacted (see Critical  Accounting  Policies - Inventory,  MD&A
Discussions).

     Gross margins in the Company's electronics business have decreased to 16.6%
for fiscal 2003 from 18.1% in 2000 due to increased  sales to mass merchants and
a change in the product mix,  partially offset by higher margins in mobile video
products,   other  new   technologies   and  products  and  the  growth  of  the
international business.

     In fiscal 2001,  2002 and 2003,  Electronics  recorded $298, $716 and $886,
respectively,  into income upon the  expiration  of  unclaimed  sales  incentive
accruals.  As a  result,  Electronics'  gross  profit  margins  were  positively
impacted by 0.1, 0.2 and 0.2 percentage points, respectively.

     The Company's total operating expenses have increased at a slower rate than
sales since 1999. Total  consolidated  operating  expenses were $96.4 million in
1999 and  $102.4  million  in 2003.  In fiscal  2003,  operating  expenses  have
increased  6.2% since 1999,  compared to sales  growth of 15.2% since 1999.  The
Company  has  invested  in  management  information  systems  and its  operating
facilities to increase its efficiency.

     During fiscal 2002,  the Company's  financial  position was improved by the
sale of 20% of its previously  95%-owned  subsidiary,  ACC, to Toshiba for $27.2
million.  This sale was offset by the Recoton  acquisition  in fiscal 2003 which
approximated $40.0 million, net of cash acquired.

     All financial information, except share and per share data, is presented in
thousands.

Critical Accounting Policies and Estimates

General

     The  consolidated  financial  statements  of the  Company  are  prepared in
conformity with accounting principles generally accepted in the United States of
America.  As such, the Company is required to make certain estimates,  judgments



                                       34


<PAGE>


and  assumptions  that  management   believes  are  reasonable  based  upon  the
information available. These estimates and assumptions,  which can be subjective
and  complex,  affect the  reported  amounts of assets and  liabilities  and the
disclosure of contingent assets and liabilities at the dates of the consolidated
financial  statements and the reported  amounts of revenues and expenses  during
the  reporting  periods.  As a result,  actual  results  could  differ from such
estimates and assumptions. The significant accounting policies which the Company
believes are the most critical to aid in fully  understanding and evaluating the
reported consolidated financial results include the following:

Revenue Recognition

     The Company recognizes revenue from product sales at the time of passage of
title  and risk of loss to the  customer  either  at FOB  Shipping  Point or FOB
Destination,  based upon  terms  established  with the  customer.  Any  customer
acceptance provisions, which are related to product testing, are satisfied prior
to  revenue  recognition.  There are no further  obligations  on the part of the
Company subsequent to revenue recognition except for returns of product from the
Company's  customers.  The Company does accept returns of products,  if properly
requested,  authorized,  and  approved by the  Company.  The Company  records an
estimate of returns of products  to be  returned  by its  customers.  Management
continuously  monitors and tracks such product returns and records the provision
for the estimated amount of such future returns,  based on historical experience
and any notification  the Company  receives of pending returns.  The Electronics
segment's  selling  price to its customers is a fixed amount that is not subject
to refund or adjustment or contingent upon additional rebates.

     The  Wireless  segment has sales  agreements  with certain  customers  that
provide for a rebate of the selling  price to such  customers if the  particular
product  is  subsequently  sold at a lower  price to the same  customer  or to a
different  customer.  The rebate period extends for a relatively short period of
time. Historically,  the amounts of such rebates paid to customers have not been
material. The Company estimates the amount of the rebate based upon the terms of
each individual  arrangement,  historical  experience and future expectations of
price  reductions,  and the Company records its estimate of the rebate amount at
the time of the sale.

Sales Incentives

     Both of the  Company's  segments,  Wireless  and  Electronics,  offer sales
incentives  to  its  customers  in the  form  of  (1)  co-operative  advertising
allowances;  (2) market development funds and (3) volume incentive rebates.  The
Electronics  segment also offers other trade  allowances to its  customers.  The
terms of the sales  incentives  vary by customer  and are  offered  from time to
time.  Except for other  trade  allowances,  all sales  incentives  require  the
customer to purchase the Company's  products during a specified  period of time.
All sales incentives  require the customer to claim the sales incentive within a
certain time period.  Although all sales incentives  require  customers to claim
the sales  incentive  within a certain  time period  (referred  to as the "claim
period"), the Wireless segment historically has settled sales incentives claimed
after the claim  period has  expired if a customer  demands  payment.  The sales
incentive  liabilities  are settled either by the customer  claiming a deduction
against an outstanding account receivable owed to the Company by the customer or
by the customer  requesting  a check from the Company.  The Company is unable to
demonstrate  that an  identifiable  benefit  of the  sales  incentives  has been
received as such, all costs associated with sales incentives are classified as a
reduction  of net  sales.  The  following  is a  summary  of the  various  sales
incentive programs offered by the Company and the related accounting policies:


                                       35


<PAGE>




     Co-operative   advertising   allowances   are  offered  to   customers   as
reimbursement  towards their costs for print or media  advertising  in which our
product is featured on its own or in conjunction with other companies'  products
(e.g., a weekly advertising circular by a mass merchant).  The amount offered is
either based upon a fixed  percentage  of the  Company's  sales  revenue or is a
fixed  amount per unit sold to the  customer  during a  specified  time  period.
Market development funds are offered to customers in connection with new product
launches  or  entering  into new  markets.  Those new  markets can be either new
geographic  areas or new customers.  The amount offered for new product launches
is based upon a fixed  percentage of the Company's sales revenue to the customer
or is a fixed  amount  per unit sold to the  customer  during a  specified  time
period. The Company accrues the cost of co-operative  advertising allowances and
market  development  funds  at the  later  of when the  customer  purchases  our
products or when the sales incentive is offered to the customer.

     Volume  incentive   rebates  offered  to  customers  require  that  minimum
quantities of product be purchased during a specified period of time. The amount
offered is either based upon a fixed  percentage of the Company's  sales revenue
to the customer or is a fixed amount per unit sold to the  customer.  Certain of
the volume incentive rebates offered to customers include a sliding scale of the
amount of the sales incentive with different  required minimum  quantities to be
purchased.  The customer's  achievement of the sales threshold and  consequently
the  measurement  of the  total  rebate  for  the  Wireless  segment  cannot  be
reasonably estimated.  Accordingly,  the Wireless segment recognizes a liability
for the maximum  potential  amount of the rebate with the  exception  of certain
volume  incentive  rebates that include very aggressive  tiered levels of volume
purchases.  For volume  incentive  rebates that include very  aggressive  tiered
levels of volume purchase,  the Wireless segment  recognizes a liability for the
rebate as the  underlying  revenue  transactions  that result in progress by the
customer  toward  earning the rebate or refund on a program by program basis are
recognized.  The Electronics segment makes an estimate of the ultimate amount of
the rebate their  customers  will earn based upon past history with the customer
and other facts and  circumstances.  The Electronics  segment has the ability to
estimate these volume  incentive  rebates,  as there does not exist a relatively
long  period of time for a  particular  rebate to be  claimed,  the  Electronics
segment does have historical  experience with these sales incentive programs and
the  Electronics  segment  does  have a large  volume of  relatively  homogenous
transactions.  Any changes in the estimated amount of volume  incentive  rebates
are recognized immediately using a cumulative catch-up adjustment.

     With respect to the accounting  for  co-operative  advertising  allowances,
market development funds and volume incentive rebates,  there was no impact upon
the adoption of EITF 01-9,  "Accounting for Consideration Given by a Vendor to a
Customer  (Including  a Reseller  of Vendor's  Products)"  (EITF  01-9),  as the
Company's  accounting  policy  prior to March 1,  2002 was  consistent  with its
accounting policy after the adoption of EITF 01-9.

     Other trade  allowances are additional  sales  incentives  that the Company
provides to the Electronics segment customers  subsequent to the related revenue
being  recognized.  In  accordance  with EITF  01-9,  the  Company  records  the
provision for these  additional  sales incentives at the later of when the sales
incentive is offered or when the related revenue is recognized.  Such additional
sales  incentives are based upon a fixed  percentage of the selling price to the
customer, a fixed amount per unit, or a lump-sum amount.



                                       36


<PAGE>



     The accrual for sales  incentives at November 30, 2002 and 2003 was $12,151
and $21,894,  respectively. The Company's sales incentive liability may prove to
be inaccurate,  in which case the Company may have understated or overstated the
provision required for these arrangements. Therefore, although the Company makes
its best estimate of its sales  incentive  liability,  many  factors,  including
significant  unanticipated changes in the purchasing volume of its customers and
the lack of claims made by customers of offered and accepted  sales  incentives,
could have  significant  impact on the Company's  liability for sales incentives
and the Company's reported operating results.

     For the fiscal years ended November 30, 2001,  2002 and 2003,  reversals of
previously  established sales incentive liabilities amounted to $14,369,  $4,716
and $2,940, respectively.  These reversals include unearned sales incentives and
unclaimed  sales  incentives.  Unearned sales  incentives  are volume  incentive
rebates where the customer did not purchase the required  minimum  quantities of
product during the specified time.  Volume  incentive  rebates for both segments
are  reversed  into income in the period when the  customer did not purchase the
required minimum quantities of product during the specified time. Unearned sales
incentives for fiscal years ended  November 30, 2001,  2002 and 2003 amounted to
$9,051,  $1,354 and $1,310,  respectively.  Unclaimed sales incentives are sales
incentives  earned by the customer  but the customer has not claimed  payment of
the earned sales  incentive  from the Company.  Unclaimed  sales  incentives for
fiscal years ended November 30, 2001,  2002 and 2003 amounted to $5,318,  $3,362
and $1,630, respectively.

     The  accrual  for earned but  unclaimed  sales  incentives  is  reversed by
Wireless  only when  management  is able to conclude,  based upon an  individual
judgment of each sales incentive, that it is remote that the customer will claim
the sales  incentive.  The  methodology  applied for  determining the amount and
timing of reversals  for the Wireless  segment is  disciplined,  consistent  and
rational.  The  methodology is not systematic  (formula  based),  as the Company
makes an estimate as to when it is remote that the sales  incentive  will not be
claimed.  Reversals by the Wireless  segment of unclaimed sales  incentives have
historically  occurred in varying  periods up to 12 months after the recognition
of the accrual.  In deciding on whether to reverse the sales incentive liability
into  income,  the  Company  makes an  assessment  as to the  likelihood  of the
customer  ever  claiming  the funds  after  the claim  period  has  expired  and
considers the specific  facts and  circumstances  pertaining  to the  individual
sales incentive.  The factors considered by management in making the decision to
reverse  accruals for unclaimed sales  incentives  include (i) past practices of
the customer  requesting payments after the expiration of the claim period; (ii)
recent negotiations with the customer for new sales incentives; (iii) subsequent
communications  with the  customer  with regard to the status of the claim;  and
(iv) recent activity in the customer's account.

     The Electronics segment reverses earned but unclaimed sales incentives upon
the  expiration of the claim period.  The Company  believes that the reversal of
earned but unclaimed sales incentives for Electronics upon the expiration of the
claim period is a disciplined,  rational,  consistent  and systematic  method of
reversing unclaimed sales incentives.  For the Electronics segment, the majority
of sales incentive programs are calendar-year programs. Accordingly, the program
ends on the month following the fiscal year end and the claim period expires one
year from the end of the program.

Accounts Receivable

     The Company  performs  ongoing  credit  evaluations  of its  customers  and



                                       37


<PAGE>


adjusts  credit  limits based upon payment  history and the  customer's  current
credit   worthiness,   as  determined  by  a  review  of  their  current  credit
information. The Company continuously monitors collections and payments from its
customers  and  maintains a provision  for  estimated  credit  losses based upon
historical experience and any specific customer collection issues that have been
identified.  The Company's  reserve for estimated  credit losses at November 30,
2003 was  $6,947.  While  such  credit  losses  have  historically  been  within
management's  expectations  and the provisions  established,  the Company cannot
guarantee  that it will continue to  experience  the same credit loss rates that
have been experienced in the past. Since the Company's  accounts  receivable are
concentrated  in a relatively few number of customers,  a significant  change in
the liquidity or financial  position of any one of these  customers could have a
material  adverse  impact  on  the  collectability  of  the  Company's  accounts
receivables and future operating results.

Inventories

     The  Company  values  its  inventory  at the  lower of the  actual  cost to
purchase  (primarily  on a weighted  moving  average  basis)  and/or the current
estimated  market  value  of the  inventory  less  expected  costs  to sell  the
inventory.  The  Company  regularly  reviews  inventory  quantities  on-hand and
records a provision for excess and obsolete  inventory  based  primarily on open
purchase  orders from  customers  and selling  prices  subsequent to the balance
sheet date as well as  indications  from  customers  based upon the then current
negotiations. As demonstrated in recent years, demand for the Company's products
can fluctuate significantly. A significant sudden increase in the demand for the
Company's  products  could  result  in a  short-term  increase  in the  cost  of
inventory  purchases  while a significant  decrease in demand could result in an
increase in the amount of excess inventory quantities on-hand. In addition,  the
Company's industry is characterized by rapid  technological  change and frequent
new  product  introductions  that could  result in an  increase in the amount of
obsolete inventory quantities on-hand. In such situations, the Company generally
does not obtain price  protection from its vendors,  however,  on occasion,  the
Company has received price protection which reduces the cost of inventory. Since
price  protection  reduces  the cost of  inventory,  as the  Company  sells  the
inventory for which it has received price protection, the amount is reflected as
a reduction to cost of sales.  There can be no assurances  that the Company will
be  successful  in  negotiating  such price  protection  from its vendors in the
future.

     The Company has, on occasion,  performed  upgrades on certain  inventory on
behalf of its vendors.  The reimbursements the Company receives to perform these
upgrades are reflected as a reduction to the cost of inventory and is recognized
as a reduction to cost of sales as the related inventory is sold.  Additionally,
the  Company's  estimates  of  excess  and  obsolete  inventory  may prove to be
inaccurate,  in which case the Company may have  understated  or overstated  the
provision  required for excess and  obsolete  inventory.  In the future,  if the
Company's  inventory is  determined  to be  overvalued,  it would be required to
recognize   such  costs  in  its  cost  of  goods  sold  at  the  time  of  such
determination.  Likewise, if the Company does not properly estimate the lower of
cost  or  market  of  its  inventory  and  it  is  therefore  determined  to  be
undervalued,  it may  have  over-reported  its cost of  goods  sold in  previous
periods and would be required to recognize such additional  operating  income at
the time of sale.  Therefore,  although the Company makes every effort to ensure
the  accuracy  of its  forecasts  of  future  product  demand,  any  significant
unanticipated  changes  in demand or  technological  developments  could  have a
significant  impact on the value of the  Company's  inventory  and its  reported
operating results.



                                       38


<PAGE>



     The Company maintains a significant investment in inventory and, therefore,
is  subject  to the risk of  losses  on  write-downs  to  market  and  inventory
obsolescence. The Company decided to substantially exit the analog phone line of
business to reflect the shift in the  wireless  industry  from analog to digital
technology  and  recorded a charge of  approximately  $13,500  during the second
quarter  of 2001 to  reduce  its  carrying  value  of its  analog  inventory  to
estimated  market value.  During the fourth quarter of 2001,  Wireless  recorded
inventory  write-downs  to market of  $7,150  as a result  of the  reduction  of
selling prices  primarily  related to digital  hand-held phones during the first
quarter of 2002 in  anticipation  of new digital  technologies.  During the year
ended November 30, 2002,  Wireless recorded  inventory  write-downs to market of
$13,823.

     During fiscal 2003, Wireless recorded inventory write-downs of $2,817 based
upon open purchase  orders from customers and selling  prices  subsequent to the
respective  balance sheet dates as well as indications  from our customers based
upon current negotiations. It is reasonably possible that additional write-downs
to market may be required in the future  given the  continued  emergence  of new
technologies,  however, no estimate can be made of such write-downs. At November
30,  2003,  Wireless  had on  hand  approximately  15,600  units  of  previously
written-down inventory, with an extended value of approximately $800.

     For certain  inventory  items,  the  Company is  entitled to receive  price
protection  in the event the  selling  price to its  customers  is less than the
purchase price from the manufacturer. The Company records such price protection,
as necessary,  at the time of the sale of the units.  For fiscal 2001,  2002 and
2003,  price  protection  of $ 4,550,  $27,683 and  $13,031,  respectively,  was
recorded as a reduction to cost of sales as the related inventory was sold. (see
Cautionary  Factors That May Affect Future  Results:  Our success depends on our
ability to keep pace with technological advances in the wireless industry.)

Goodwill and Other Intangible Assets

     Goodwill and Other  Intangible  assets consist of the excess cost over fair
value of assets acquired and (goodwill) and other intangible assets (patents and
trademarks).  Goodwill, which includes equity investment goodwill, is calculated
as the  excess  of the cost of  purchased  businesses  over  the  value of their
underlying  net  assets.  Goodwill  and  other  intangible  assets  that have an
indefinite life are not amortized.

     On an annual  basis,  we test  goodwill  and other  intangible  assets  for
impairment.  To determine the fair value of these intangible  assets,  there are
many  assumptions  and estimates  used that  directly  impact the results of the
testing. We have the ability to influence the outcome and ultimate results based
on the assumptions and estimates we choose. To mitigate undue influence,  we set
criteria  that are  reviewed  and  approved  by  various  levels of  management.
Additionally,  we evaluate our recorded intangible assets with the assistance of
a third-party valuation firm, as necessary.

Warranties

     The  Company  offers  warranties  of  various  lengths  depending  upon the
specific  product.  The  Company's  standard  warranties  require the Company to
repair or replace  defective  product  returned to the Company by both end users


                                       39


<PAGE>


and its  customers  during such  warranty  period at no cost to the end users or
customers. The Company records an estimate for warranty related costs based upon
its actual  historical  return rates and repair costs at the time of sale, which
are  included in cost of sales.  The  estimated  liability  for future  warranty
expense  amounted to $12,006 at November  30, 2003,  which has been  included in
accrued  expenses and other current  liabilities.  While the Company's  warranty
costs  have  historically  been  within  its  expectations  and  the  provisions
established,  the Company  cannot  guarantee that it will continue to experience
the same warranty return rates or repair costs that have been experienced in the
past. A significant  increase in product return rates, or a significant increase
in the costs to repair the  Company's  products,  could have a material  adverse
impact on its operating  results for the period or periods in which such returns
or additional costs materialize.

Income Taxes

     The Company  accounts  for income  taxes in  accordance  with  Statement of
Financial  Accounting  Standards (SFAS) No. 109,  "Accounting for Income Taxes".
This Statement  establishes financial accounting and reporting standards for the
effects of income taxes that result from an enterprise's  activities  during the
current and preceding  years.  It requires an asset and  liability  approach for
financial accounting and reporting of income taxes.

     The  realization of tax benefits of deductible  temporary  differences  and
operating  loss or tax credit  carryforwards  will depend on whether the Company
will have  sufficient  taxable  income of an  appropriate  character  within the
carryback  and  carryforward  period  permitted  by the  tax  law to  allow  for
utilization  of the deductible  amounts and  carryforwards.  Without  sufficient
taxable income to offset the deductible amounts and  carryforwards,  the related
tax benefits will expire  unused.  The Company has  evaluated  both positive and
negative evidence in making a determination as to whether it is more likely than
not that all or some  portion of the  deferred  tax asset will not be  realized.
Effective  May 29, 2002,  the  Company's  ownership  in the  Wireless  Group was
decreased  to 75%  (see  Note  3).  As  such,  the  Company  no  longer  files a
consolidated  U.S.  Federal tax return.  As a result,  the  realizability of the
Wireless  Group's  deferred tax assets are assessed on a stand-alone  basis. The
Company's  Wireless Group has incurred  cumulative  losses in recent years,  and
therefore  based  upon  these  cumulative  losses  and  other  material  factors
(including the Wireless Group's inability to reasonably and accurately  estimate
future  operating  and  taxable  income  based  upon  the  volatility  of  their
historical  operations),  the Company has determined that it is more likely than
not that some of the  benefits of the Wireless  Group's  deferred tax assets and
carryforwards  will  expire  unused.   Accordingly,   the  Company  recorded  an
additional  valuation allowance of $13,090 during fiscal year ended November 30,
2002 related to the Wireless Group's deferred tax assets. During the fiscal year
ended  November 30, 2003,  the valuation  allowance was reduced by $641 due to a
reduction in various temporary differences.

     Furthermore,  the Company  provides tax  reserves  for  Federal,  state and
international  exposures relating to potential tax examination issues,  planning
initiatives and compliance  responsibilities.  The development of these reserves
requires  judgments  about tax issues,  potential  outcomes  and timing and is a
subjective critical estimate.




                                       40


<PAGE>



Results of Operations

     The following table sets forth for the periods indicated certain statements
of operations data for the Company expressed as a percentage of net sales:


<TABLE>

                                                              Percentage of Net Sales
                                                             Years Ended November 30,
                                                           ---------------------------
                                                            2001 (1)   2002      2003
                                                            ------    ------    ------

Net sales (2):
<S>                                                          <C>       <C>       <C>  
     Wireless
         Wireless products                                   74.3%     63.7%     59.4%
         Activation commissions                               2.1       2.2       1.3
         Residual fees                                        0.2       0.2       0.2
         Other                                                0.1       0.1       --
                                                            ------    ------    ------
            Total Wireless                                   76.7      66.1      60.9
                                                            ------    ------    ------
     Electronics
         Mobile electronics                                  12.4      20.8      22.2
         Sound                                                4.5       5.1       5.9
         Consumer electronics                                 6.3       7.9      10.9
         Other                                                0.1       0.1       0.1
                                                            ------    ------    ------
            Total Electronics                                23.3      33.9      39.1
                                                            ------    ------    ------
            Total net sales                                 100.0     100.0     100.0
Cost of sales                                               (94.4)    (93.2)    (90.6)
                                                            ------    ------    ------
Gross profit                                                  5.6       6.8       9.4
Selling                                                      (2.4)     (2.7)     (2.8)
General and administrative                                   (3.6)     (5.0)     (4.5)
Warehousing and technical support                            (0.3)     (0.4)     (0.5)
                                                            ------    ------    ------
         Total operating expenses                            (6.3)     (8.1)     (7.8)
                                                            ------    ------    ------
Operating income (loss)                                      (0.7)     (1.3)      1.6
Interest and bank charges                                    (0.5)     (0.4)     (0.3)
Equity in income in equity investments                        0.3       0.2       0.2
Gain on issuance of subsidiary shares                         --        1.3       --
Other, net                                                    --       (0.4)      0.1
                                                            ------    ------    ------
Income (loss) before provision for (recovery of) income
     taxes, minority interest and cumulative effect          (0.9)     (0.6)      1.6
Provision for (recovery of) income taxes                     (0.3)      1.2       0.7
Minority interest                                             0.1       0.4        --
Cumulative effect                                              --        --        --
                                                            ------    ------    ------
Net income (loss)                                            (0.6)%    (1.3)%    0.9 %
                                                            =======   =======   ======
</TABLE>


(1)  See Note (2) of Notes to Consolidated Financial Statements.

(2)  Effective  March 1, 2002, the Company  adopted  Emerging  Issues Task Force
     (EITF) Issue No. 01-9, "Accounting for Consideration Given by a Vendor to a
     Customer".  Upon adoption of this Issue, the Company reclassified its sales
     incentives offered to its customers from selling expenses to net sales. 


                                       41


<PAGE>



     Previously  reported operating income (loss) has remained unchanged by this
     adoption. For purposes of comparability,  these reclassifications have been
     reflected retroactively for all periods presented.

     The net sales and  percentage  of net sales by product  line and  marketing
group for the fiscal years ended November 30, 2001,  2002 and 2003 are reflected
in the following table.  Certain  reclassifications  and recaptionings have been
made to the data for periods  prior to fiscal 2003 in order to conform to fiscal
2003 presentation.


<TABLE>

                                                     Fiscal Years Ended November 30,
                            ---------------------------------------------------------------------------
                                   2001 (1)                      2002                        2003
                            -----------------------    ---------------------      ---------------------

Net sales:

<S>                         <C>             <C>        <C>             <C>        <C>             <C>  
Wireless
   Products                 $  948,921      74.3%      $  700,658      63.7%      $  787,297      59.4%
   Activation commissions       26,879       2.1           24,393       2.2           16,652       1.3
   Residual fees                 2,396       0.2            2,187       0.2            2,261       0.2
   Other                           692       0.1              420       0.1              --      --
                            ----------     ------      ----------     ------      ----------     ------
      Total Wireless           978,888      76.7          727,658      66.1          806,210      60.9
                            ----------     ------      ----------     ------      ----------     ------

Electronics
   Mobile electronics          157,706      12.4          229,327      20.8          294,519      22.2
   Sound                        57,456       4.5           56,281       5.1           78,413       5.9
   Consumer electronics         80,380       6.3           86,472       7.9          144,240      10.9
   Other                         2,160       0.1              644       0.1              520       0.1
                            ----------     ------      ----------     ------      ----------     ------
      Total Electronics        297,702      23.3          372,724      33.9          517,692      39.1
                            ----------     ------      ----------     ------      ----------     ------
      Total                 $1,276,591     100.0%      $1,100,382     100.0%      $1,323,902     100.0%
                            ==========     ======      ==========     ======      ==========     ======

</TABLE>


(1)  See Note (2) of Notes to Consolidated Financial Statements.

Management Key Indicators

     Management reviews the following financial and non-financial  indicators to
assess the performance of the Company's operating results:

     o    Net Sales by product  class -  Management  reviews  this  indicator in
          order to determine  sales trends for certain  product  classes as this
          indicator  is  directly   impacted  by  unit  sales  and  new  product
          introductions.
     o    Gross profit margin - This indicator  allows  management to assess the
          effectiveness of product introductions,  timing of product acceptances
          and significance of inventory write- downs.
     o    Operating Expenses as a % of net sales - This indicator is reviewed to
          determine  the  efficiency  of  operating  expenses in relation to the
          Company's operations and identify significant fluctuations or possible
          future trends.
     o    Inventory and Accounts  Receivable  turnover - Inventory purchases and
          accounts receivable  collections are two significant liquidity factors



                                       42


<PAGE>


          that  determine the Company's  ability to fund current  operations and
          determine if additional borrowings may be necessary for future capital
          outlays.

     o    Major acquisitions and transactions-  Management consistently monitors
          the  aforementioned  key  indicators  as well as economic and industry
          conditions   during    consideration   of   major   acquisitions   and
          transactions, such as the recent Recoton acquisition.

Fiscal 2002 Compared to Fiscal 2003
Consolidated Results

Net Sales

     Consolidated  net sales for  fiscal  2003  increased  $223,520  or 20.3% to
$1,323,902  as compared  with  $1,100,382  in fiscal 2002 and were impacted by a
$135 increase in sales incentives expense.

     Wireless  Group sales were  $806,210 in fiscal 2003, a 10.8%  increase from
sales of $727,658 in fiscal 2002. Unit sales of wireless handsets decreased 5.9%
to  approximately  4,657,000 units in fiscal 2003 from  approximately  4,950,000
units in fiscal  2002.  However,  the  average  selling  price of the  Company's
handsets  increased to $163 per unit in fiscal 2003 from $136 per unit in fiscal
2002 due to higher selling prices of new product introductions.

     Electronics Group sales were $517,692 in fiscal 2003, a 38.9% increase from
sales of $372,724 in fiscal  2002.  This  increase  was largely due to increased
sales in the mobile video and consumer  electronics product lines as a result of
new product introductions in digital video. Furthermore,  this increase was also
due to the addition of $26,377 in sales by Audiovox Europe (see Note 6) from the
Recoton  acquisition.  Sound  sales  increased  as a  result  of the  Jensen(R),
Magnate(R),   Mac  Audio(R),   Heco(R),   Acoustic  Research(R)  and  Advent(R),
trademarks which was acquired during the Recoton  acquisition.  This increase in
sound was  partially  offset by a change in the  marketplace  as  fully-featured
sound systems are being  incorporated  into vehicles at the factory  rather than
being sold in the  aftermarket.  This declining  trend in  fully-featured  sound
systems is expected to continue  except in the  satellite  radio  product  line.
Excluding  Audiovox Europe,  sales by the Company's  international  subsidiaries
decreased  $12,128 or 55.2% in fiscal 2003 due to a 68.1%  decrease in Venezuela
due to the temporary  shut-down of the operations  attributable to political and
economic  instability  and a 41.6% decrease in Malaysia as a result of lower OEM
sales.

Gross Profit

     Gross  profit  margin for fiscal 2003 was 9.4%,  compared to 6.8% in fiscal
2002.  This increase in profit margin  resulted  primarily  from lower  Wireless
inventory  write-downs  and a  change  in the  mix of  sales  from  Wireless  to
Electronics, which carries a higher gross margin. Margins for the Wireless Group
increased to 4.7% from 2.0% due to lower  inventory  write-downs  as a result of
maintaining   lower  inventory   levels  and  improved   inventory   management.
Specifically,  Wireless  inventory  write-downs  were  $2,817  for  fiscal  2003
compared to $13,823 in fiscal 2002. During fiscal 2003, there was no significant
impact  to our  gross  profit  margins  on the  subsequent  sale  of  previously
written-down  inventory.  Margins for the  Electronics  Group increased to 16.6%
from  16.1%  due to  margins  achieved  from  Audiovox  Europe  from the sale of
Magnate(R), Mac Audio(R),  Heco(R), Acoustic Research(R) and Advent(R) products.
Consolidated gross margins were also adversely impacted by late wireless product



                                       43


<PAGE>



introductions and increased sales  incentives.  Further trends in the operations
will be discussed in detail in each individual marketing group MD&A discussion.

Operating Expenses

     Operating expenses  increased $13,728 to $102,403 in fiscal 2003,  compared
to $88,675 in fiscal 2002.  As a  percentage  of net sales,  operating  expenses
decreased to 7.8% in fiscal 2003 from 8.1% in fiscal 2002.  Major  components of
this  increase  were a $2,848  increase  in  advertising  due to an  increase in
general  promotions  to support the  growing  business  and $7,755 of  operating
expenses for Audiovox  Europe which was acquired in the third  quarter of fiscal
2003. In addition,  direct labor costs increased $1,771 as a result of increased
production,  primarily in the Electronics Group, and employee benefits increased
$2,785 due to a payment made to certain Venezuela  executives,  increased profit
sharing  accruals and health care costs.  The above  increases  were offset by a
$4,318  decrease in bad debt  expense,  primarily as a result of  recoveries  of
former customers and improved credit worthiness of current customers as compared
to the prior year. Operating income for fiscal 2003 was $21,803,  compared to an
operating loss of $14,076 in 2002.

Net Income (Loss)

     As a result of new product  introductions,  a growing  economy and improved
gross profit margins,  net income for fiscal 2003 was $11,239  compared to a net
loss of $14,040 in fiscal 2002.  Net income per share for fiscal 2003 was $0.51,
basic and  diluted  compared  to a net loss per share of $0.64 for fiscal  2002,
basic and diluted.

Wireless Results

     The  following  table  sets forth for the fiscal  years  indicated  certain
statements  of  operations  data for Wireless  expressed as a percentage  of net
sales:


<TABLE>

                                                 2002                       2003
                                         ---------------------      ---------------------

<S>                                      <C>             <C>        <C>             <C>  
Net sales:
     Wireless products                   $ 700,658       96.3%      $ 787,297       97.7%
     Activation commissions                 24,393        3.3          16,652        2.1
     Residual fees                           2,187        0.3           2,261        0.2
     Other                                     420        0.1            --       --
                                         ---------      ------      ----------    -------
         Total net sales                   727,658      100.0         806,210      100.0
Gross profit                                14,291        2.0          37,977        4.7
Operating expenses
     Selling                                11,148        1.5          10,959        1.4
     General and administrative             21,522        3.0          16,773        2.1
     Warehousing and technical support       2,593        0.4           2,827        0.3
                                         ---------      ------      ----------    -------
         Total operating expenses           35,263        4.9          30,559        3.8
                                         ---------      ------      ----------    -------
Operating income (loss)                    (20,972)      (2.9)          7,418        0.9
Other expense                               (3,934)      (0.5)         (1,801)      (0.2)
                                         ---------      ------      ----------    -------
Pre-tax income (loss)                    $ (24,906)      (3.4)%    $   5,617        0.7%
                                         =========      =======    ===========    =======
</TABLE>


                                       44
<Page>
     Wireless is composed of ACC and Quintex, both subsidiaries of the Company.

Net Sales

     Net sales increased  $78,552,  or 10.8%, to $806,210 from fiscal 2002. Unit
sales of wireless  handsets  decreased by approximately  293,000 units in fiscal
2003, or 5.9%, to  approximately  4,657,000 units from 4,950,000 units in fiscal
2002. This decrease in unit sales was attributable to late  introductions of new
product and slower growth in the wireless industry, however, the average selling
price of handsets  increased  to $163 per unit in fiscal 2003 from $136 per unit
in  fiscal  2002.  This  increase  was  due  to  higher  selling  prices  of the
newly-introduced digital flip phones with color screens, web-browsing and camera
capability. The Company expects selling prices for digital phones to increase as
enhancements in digital technology expand digital phone capabilities.

     There  was a  decrease  in  sales  incentives  expense  of  $7,780,  net of
reversals of $1,137 as a result of late product introductions as compared to the
prior year offset by a reduction in reversals for unclaimed sales incentives. In
the prior year, the Company  introduced a new phone which had a sales  incentive
program  with a large  customer  that  resulted in an increase of  approximately
$18,000 in sales incentives.  Reversals for unclaimed sales incentives decreased
$1,902 as  compared  to the prior  year due to an  increase  in claims of earned
sales  incentives  from  larger  customers  as compared to the prior year as the
Company has focused more emphasis on this area.  These sales incentive  programs
are expected to continue as the Company  introduces new technology and products.
Also,  sales  incentives  will  either  increase  or  decrease  based  upon  our
competition and our customer demands.

Gross Profit

     Gross  profit  margins  increased  to 4.7% as compared to 2.0% in 2002 as a
result of the introduction of higher margin products,  decreased sales incentive
programs,  lower inventory  write-downs and decreased temporary personnel costs.
During fiscal 2003,  as compared to fiscal 2002,  there was a decrease of $7,780
in sales incentive expense as a result of fewer new product  introductions,  net
of reversals of $1,137.

     For fiscal  2002,  gross  margins  were  negatively  impacted by  inventory
write-downs  of  $13,823  or 1.9%  compared  to  $2,817  or 0.3%  in  2003.  The
write-downs recorded in 2003 were based upon open purchase orders from customers
and selling prices as well as indications  from our customers based upon current
negotiations.  The  decrease  in  inventory  write-downs  was  primarily  due to
Wireless  maintaining  lower  inventory  levels in fiscal 2003,  which consisted
primarily of newer  products as compared to fiscal  2002.  As compared to fiscal
2002,  which had several  products near the end of their  respective life cycle,
fiscal 2003 inventory  levels consists  primarily of  newly-introduced  products
which  achieved  higher  margins as compared to the prior year.  At November 30,
2003,  the  Company  had  on  hand  approximately  15,600  units  of  previously
written-down  inventory which,  after  write-down,  had an approximate  extended
value of $800.  The Company plans to sell these items to its existing  customers
during the next year. A majority of the units that were previously  written-down
in fiscal 2002 have been sold.  The  remaining  balance of inventory  previously
written-down  in fiscal 2002 is not material and will be sold in the next fiscal
year.  None of this  inventory  was  scrapped.  The Company  expects that as new
products are introduced, existing models on hand are effected by price 


                                       45


<PAGE>



competition  from  our  competitors  and  demand  by  our  customers,  it  could
experience additional write- downs in the future.

     Temporary personnel costs decreased $1,904 due to Wireless maintaining less
inventory on hand during fiscal 2003, which resulted in fewer software  upgrades
being  performed as compared to the prior year.  Gross  margins  were  favorably
impacted by  reimbursement  from a vendor for  software  upgrades  performed  on
inventory  sold of  $1,331  and $557 for  fiscal  2002 and  2003,  respectively.
Without this reimbursement, gross margins would have been lower by 0.2% and 0.1%
for fiscal 2002 and 2003,  respectively.  In addition,  the Company has recorded
price protection of $27,683 and $13,031 for fiscal 2002 and 2003,  respectively,
from a vendor for certain inventory, recorded as a reduction to cost of sales as
the related  inventory  was sold.  Without this price  protection,  gross profit
margins  would  have  been  lower by 4.5% and 1.6%  for  fiscal  2002 and  2003,
respectively.

Operating Expenses

     Operating  expenses  decreased $4,704 in fiscal 2003 from fiscal 2002. As a
percentage of net sales operating  expenses decreased to 3.8% during fiscal 2003
compared to 4.8% in fiscal 2002.  Excluding the $3,200 bonus provision  recorded
in  connection  with the  Toshiba  transaction  in 2002 (see Note 3) and  $3,492
decrease in bad debt expense (see discussion  below),  operating  expenses would
have increased $1,988 or 7.0% in fiscal 2003 from fiscal 2002.

     Selling  expenses  decreased  $189 in fiscal 2003  compared to fiscal 2002,
primarily as a result of:

     o    Decline in commissions of $651 due to lower commissionable sales, as a
          result of a decrease in Quintex sales and  restructuring of commission
          deals with salesmen.

     o    As a result of restructuring the above commission deals, base salaries
          of salesman increased $299.

     o    Trade show expenses increased $158 as the Wireless group was attending
          more shows and promotions as new products were being introduced.

     General  and  administrative  expenses  decreased  $4,749  in  fiscal  2003
compared to the prior year, primarily as a result of:

     o    A  $3,022   decrease  in  officer's   salaries   primarily  due  to  a
          non-recurring bonus provision and new executive  compensation contract
          in connection with the Toshiba transaction in 2002 (see Note 3).

     o    Bad debt expense  decreased  $3,492 primarily due to the recovery of a
          previously charged bad debt and a customer who filed for bankruptcy in
          2002,  which  did not  recur in  fiscal  2003.  The  Company  does not
          consider  this  decrease  in bad  debt  expense  to be a trend  in the
          overall accounts receivable.



                                       46


<PAGE>



     o    The  above  decreases  were  offset  by a $947  increase  in  employee
          benefits due to increased  profit sharing accruals and costs under the
          employee health care plan.

     o    Taxes and  licenses  increased  $371  primarily  due to a 2002 battery
          recycling refund that did not repeat in 2003.

     o    Additionally,  insurance  expense increased $409 as a result of higher
          premiums  for general and umbrella  insurance  policies as a result of
          the increase in sales and business activity.

     Warehousing and technical  support expenses  increased $234 for fiscal 2003
from 2002, primarily as a result of:

     o    Increases in direct  labor,  payroll taxes and benefits of $470 due to
          additional personnel in engineering for product  development,  testing
          and warranty call center for customer  service as products have become
          more complex.

     o    The above  increase  was  partially  offset by a decrease  in overseas
          buying offices of $263 due to non-usage of the Korean buying office.

Numerous other individually insignificant fluctuations account for the remaining
net change in operating expenses.

Pre-tax Income (Loss)

     As a result of the increase in sales due to new product introductions, less
inventory write-downs and a reduction in operating expenses,  pre-tax income for
fiscal 2003 was $5,617, compared to a pre-tax loss of $24,906 for fiscal 2002.

     Management believes that the wireless industry is extremely competitive and
that this  competition  could  affect gross  margins and the  carrying  value of
inventories in the future as new competitors enter the marketplace.  The Company
competes against suppliers with  significantly  greater financial  resources and
who are able to offer more extensive advertising and greater promotions than the
Company does.  This pressure from increased  competition is further  enhanced by
the consolidation of many of Wireless' customers into a smaller group, dominated
by only a few, large customers.  Also, timely delivery and carrier acceptance of
new product  could  affect our  quarterly  performance.  Our  suppliers  have to
continually  add new  products in order for  Wireless to improve its margins and
gain market share.  These new products  require  extensive  testing and software
development  which could delay entry into the market and affect our sales in the
future. In addition,  given the anticipated emergence of new technologies in the
wireless industry,  the Company will need to sell existing inventory  quantities
of current technologies to avoid further write-downs to market.




                                       47


<PAGE>



Electronics Results

     The  following  table  sets forth for the fiscal  years  indicated  certain
statements of income data for the Electronics Group expressed as a percentage of
net sales:


<TABLE>

                                                 2002                           2003
                                         ---------------------       ---------------------


Net sales:
<S>                                      <C>             <C>         <C>            <C>  
     Mobile electronics                  $ 229,327       61.5%       $294,519       56.9%
     Sound                                  56,281       15.1          78,413       15.1
     Consumer electronics                   86,472       23.2         144,240       27.9
     Other                                     644        0.2             520        0.1
                                         ---------      ------       ---------     -------
        Total net sales                    372,724      100.0         517,692      100.0

Gross profit                                60,037       16.1          85,985       16.6

Operating expenses
     Selling                                15,944        4.3          22,159        4.3
     General and administrative             23,300        6.2          30,981        6.0
     Warehousing and technical support       1,137        0.3           2,760        0.5
                                         ---------      ------       ---------     -------
        Total operating expenses            40,381       10.8          55,900       10.8
                                         ---------      ------       ---------     -------

Operating income                            19,656        5.3          30,085        5.8
Other expense                               (1,927)      (0.5)           (545)      (0.1)
                                         ---------      ------       ---------     -------
Pre-tax income                           $  17,729        4.8%      $  29,540        5.7%
                                         =========      ======      ==========     =======
</TABLE>

Net Sales

     Net sales  increased  $144,968,  or 38.9%,  to  $517,692  from net sales of
$372,724 in fiscal 2002.  Sales of Audiovox  Europe  accounted  for $26,377,  or
18.2%,  of this  increase as a result of the Recoton  acquisition  (see Note 6).
Mobile  electronics sales increased $65,192 (28.4%) during 2003 from 2002. Sales
of Mobile Video within the Mobile  Electronics  category  increased  over 38% in
fiscal  2003  from  fiscal  2002 as a result  of the  introduction  of new video
digital product,  satellite radio and navigation products.  Consumer Electronics
increased  $57,768  (66.8%) to $144,240  in fiscal  2003 from  $86,472 in fiscal
2002, primarily in sales of DVD/video-in-a-bag  and portable DVD players.  Sound
sales also  increased as a result of the  Jensen(R),  Magnate(R),  Mac Audio(R),
Heco(R),  Acoustic  Research(R) and Advent(R),  trademarks which usage right was
acquired  during the Recoton  acquisition.  This increase in sound was partially
offset by a change in the marketplace as fully-featured  sound systems are being
incorporated  into  vehicles  at the  factory  rather  than  being  sold  in the
aftermarket. This declining trend in fully-featured sound systems is expected to
continue, offset by the Jensen acquisitions and increased sales in the satellite
radio product line.

     There  was an  increase  in sales  incentives  expense  of  $7,915,  net of
reversals of $1,803,  to $14,080,  due to higher sales  volume.  The increase in


                                       48


<PAGE>


sales  resulted  in an  increase  in sales  incentives  as many sales  incentive
programs are based on a percentage of sales.  These sales incentive programs are
expected to continue and will either increase or decrease based upon competition
and customer demands.  Net sales in the Company's Malaysian subsidiary decreased
$4,844 (41.6%) from last year  primarily from lower OEM business.  The Company's
Venezuelan  subsidiary  experienced  a decrease of $6,160  (68.1%) in sales from
last year,  due to the  temporary  closing of the  offices  due to the impact of
economic and political  instability in the country.  These decreases were offset
by additional  sales from Audiovox  Europe of $26,377 since the  acquisition  of
Recoton on July 8, 2003.

Gross Profit

     Gross profit margins increased to 16.6% in fiscal 2003 from 16.1% in fiscal
2002.  This  increase  was due to  margins  achieved  in  Audiovox  Europe  from
Jensen(R), Magnate(R), Mac Audio(R), Heco(R), Acoustic Research(R) and Advent(R)
products  as well as an  increase  in  Code-Alarm  margins  due to a decline  in
production  and warranty  costs.  This increase was offset by an increase in the
sales of video  products  sold through  consumer  channels,  which carry a lower
gross margin as opposed to other product lines. In addition,  there was a $7,915
increase in sales incentive  expense,  net of reversals of $1,803, due to higher
sales volume.

Operating Expenses

     Operating  expenses  increased  $15,519 in fiscal  2003,  a 38.4%  increase
compared to fiscal 2002.  The AEC group  (Audiovox  Electronics,  Code-Alarm and
American Radio)  accounted for $7,735 or 49.8% of the fiscal 2003 increase.  The
international  group  (Audiovox  Europe,  Malaysia and Venezuela)  accounted for
$7,784 or 50.2% of the  fiscal  2003  increase  which was  primarily  due to the
Recoton acquisition.  As a percentage of net sales,  operating expenses remained
consistent at 10.8%.

     Selling  expenses  increased  $6,215 during fiscal 2003 of which $3,761 and
$2,454 was attributable to the AEC group and international group, respectively.

     o    The  increase  for the AEC group was  primarily  due to  increases  of
          $1,359 in commissions due to an increase in  commissionable  sales and
          salesman salaries, payroll taxes and benefits of $1,161 as a result of
          higher  employee  wages and the  hiring of  additional  employees.  In
          addition,  advertising  expense  increased $827 as a result of general
          promotions in an effort to support the growing business.

     o    The  increase  for the  international  group was due to  approximately
          $2,640  of  Audiovox  Europe  expenses  offset by a $186  decrease  in
          Malaysia  and  Venezuela.  Audiovox  Europe  expenses  were  primarily
          comprised of $1,285 in commissions, $241 of salesman salaries and $951
          of advertising  due to the  operations of Recoton,  which was acquired
          during the third quarter of fiscal 2003.  The decrease in Malaysia and
          Venezuela was mainly due to a $130 decrease in commissions as a result
          of a decline in commissionable sales.

     General and administrative  expenses increased $7,681 during fiscal 2003 of
which  $2,405  and $5,276 was  attributable  to the AEC group and  international
group, respectively.

     o    The  increase  for the AEC group was  primarily  due to an increase of



                                       49


<PAGE>



          $1,647 in salaries and payroll taxes as a result of hiring  additional
          employees  and  increase  in employee  wages to support the  increased
          business.  Corporate  allocations increased $666 and insurance expense
          increased  $248  due to  higher  premiums  as a  result  of  increased
          business activities. In addition, higher costs for the employee health
          care  plan and  increased  profit  sharing  accruals  caused  employee
          benefits to increase $582. The above  increases were partially  offset
          by a $974 decrease in bad debt expense due to the bad debt recovery in
          fiscal  2003  of a 2002  customer  write-off.  The  Company  does  not
          consider  this  decrease  in bad  debt  expense  to be a trend  in the
          overall accounts receivable.

     o    The increase for the international group was due to $4,533 of Audiovox
          Europe  expenses  and  a  $743  increase  in  Malaysia  and  Venezuela
          expenses.  Audiovox Europe expenses were primarily comprised of $1,793
          in salaries and related payroll taxes,  $570 of office expenses,  $765
          of occupancy costs and $356 of depreciation as a result of the Recoton
          acquisition.  The  increase in Malaysia  and  Venezuela  expenses  was
          primarily  due to an  increase  in  Venezuela's  employee  benefits of
          $1,129 due to a payment  made to  certain  Venezuela  executives  as a
          result  of  restructuring  actions  for  claims  made and for  further
          potential  termination claims. The above increase was partially offset
          by a $190  decrease  in  salaries  due  to  employee  terminations  in
          Venezuela.

     Warehouse and technical support  increased $1,623 or 142.7%.  This increase
was primarily due to a $1,385  increase in direct labor and payroll taxes due to
the  hiring  of  additional  employees  and  includes  $583 of  Audiovox  Europe
expenses. In addition, the increase in warehouse and technical support is due to
the hiring of additional  engineers as the increase in sales volume has resulted
in the Company  providing added customer service.  Furthermore,  overseas buying
office expenses  increased $472 as a result of increased  costs  associated with
operating this office.

     Numerous  other  individually  insignificant  fluctuations  account for the
remaining net change in operating expenses.

Pre-tax Income (Loss)

     As a result of  increased  sales due to new product  introductions  and the
Recoton  acquisition,  increased  gross  profit,  offset by increased  operating
expenses,  pre-tax  income for fiscal 2003 was $29,540,  compared to $17,729 for
fiscal 2002.

     The Company  believes that the  Electronics  Group has an expanding  market
with a certain  level of volatility  related to both domestic and  international
new car sales and general  economic  conditions.  Also,  all of its products are
subject  to  price  fluctuations  which  could  affect  the  carrying  value  of
inventories and gross margins in the future.

Consolidated Other Income and Expense

     Interest  expense and bank charges  increased  $383 during fiscal 2003 from
fiscal 2002,  primarily  due to interest  incurred on German debt  acquired as a
result of the Recoton  acquisition,  offset by lower average borrowings from the
Company's primary credit facility during fiscal 2003.



                                       50


<PAGE>



     Equity in income of equity  investees  increased  $1,500  for  fiscal  2003
compared to fiscal 2002.  The majority of the increase was due to an increase in
the equity  income of ASA as a result of  improved  gross  margins  achieved  in
marine industry sales.

     Other expenses decreased as a result of foreign exchange translation in our
Venezuelan  subsidiary  due  to the  decreased  devaluation  of  the  Venezuelan
currency  against  the U.S.  Dollar as compared  to fiscal  2002.  Specifically,
foreign  exchange losses were $850 in fiscal 2003 compared to $2,819 in 2002. In
addition,   in  fiscal  2002,  the  Company  recorded  an   other-than-temporary
impairment  for  investment  in common  stock of  Shintom  Co.,  Ltd.  of $1,158
compared to $21 in fiscal 2003.  Included in other expenses for fiscal 2003 is a
$620 settlement of an  administrative  agency  investigation  involving  alleged
reimbursement of a fixed nominal amount of federal campaign contributions during
the years 1995 through 1996.

     In fiscal 2002,  the Company also  recognized a gain of $14,269 on the sale
of ACC shares to Toshiba (Note 3) which did not recur in fiscal 2003.

     Minority   interest  income  decreased  $5,445  compared  to  fiscal  2002,
primarily  due to Wireless  recording net income in fiscal 2003 as compared to a
net loss in fiscal 2002.

Consolidated Provision for Income Taxes

     The effective tax rate for 2002 was an expense of 202.0% as compared to the
effective  tax rate for 2003 which was an expense of 44.7%.  The decrease in the
effective  tax rate is  principally  due to the Company  recording an additional
valuation  allowance for wireless  deferred taxes in fiscal 2002,  which did not
recur in fiscal 2003.  Effective May 29, 2002,  the  Company's  ownership in the
Wireless Group was decreased to 75% (see Note 3). As such, the Company now files
two consolidated  U.S.  Federal tax returns,  one for the Wireless Group and one
for the  Electronics  Group.  As a result,  the  realizability  of the  Wireless
Group's  deferred tax assets are assessed on a stand-alone  basis. The Company's
Wireless  Group has incurred  cumulative  losses in recent  years and  therefore
based upon these  cumulative  losses and other material  factors  (including the
Wireless  Group's  inability  to  reasonably  and  accurately   estimate  future
operating  and taxable  income  based upon the  volatility  of their  historical
operations),  the  Company has  determined  that it is more likely than not that
some  of  the  benefits  of  the  Wireless   Group's  deferred  tax  assets  and
carryforwards  will expire  unused,  accordingly,  the  Company has  recorded an
additional  valuation allowance of $13,090 during fiscal year ended November 30,
2002  related  to the  Wireless  Group's  deferred  tax  assets.  The  valuation
allowance  relates  principally  to the  deferred  tax  assets  of the  Wireless
segment,  which has recorded  cumulative  losses in recent years, and to certain
state net operating losses which the Company has determined are more likely than
not to expire  unused.  During  November 30, 2003,  the valuation  allowance was
reduced by $641 due to a reduction in various temporary differences.




                                       51


<PAGE>



Fiscal 2001 Compared to Fiscal 2002
Consolidated Results

Net Sales

     Net sales for fiscal 2002 were $1,100,382,  a 13.8% decrease from net sales
of $1,276,591 in fiscal 2001.  Wireless Group sales were $727,658 in fiscal year
2002,  a 25.7%  decrease  from sales of $978,888 in fiscal  2001.  Unit sales of
wireless  handsets  decreased 29.3% to  approximately  4,950,000 units in fiscal
2002 from  approximately  7,000,000 units in fiscal 2001.  However,  the average
selling  price of the  Company's  handsets  increased to $136 per unit in fiscal
2002 from $127 per unit in fiscal 2001 as a result of new product introductions.
Wireless  sales were  impacted  by late  introductions  of new  products  by its
vendor,  delays in acceptances testing by our customers and slower growth in the
wireless industry.

     Electronics Group sales were $372,724 in fiscal 2002, a 25.2% increase from
sales of $297,702 in fiscal  2001.  This  increase  was largely due to increased
sales in the  mobile  video  and  consumer  electronics  product  lines as newer
digital video  products were offered to our customers.  Offsetting  some of this
increase  were sound sales,  which  continue to decline  given the change in the
marketplace as fully-featured sound systems are being incorporated into vehicles
at the factory rather than being sold in the  aftermarket.  This declining trend
in sound systems is expected to continue  except in the satellite  radio product
line.  Sales by the  Company's  international  subsidiaries  decreased  21.5% in
fiscal 2002 to approximately $21,971 due to a 39.2% decrease in Venezuela due to
political and economic  instability  and a 7.4% decrease in Malaysia as a result
of lower OEM sales.  Sales were also impacted by increased  sales  incentives of
$23,035, primarily in the Wireless Group.

Gross Profit

     Gross  profit  margin for fiscal 2002 was 6.8%,  compared to 5.6% in fiscal
2001.  However,  this increase in profit margin  resulted  primarily  from lower
inventory  write-downs  to market of $6,827  in 2002  compared  to 2001.  During
fiscal 2002, there was no significant  impact to our gross profit margins on the
subsequent sale of previously written-down inventory. There was also a change in
the mix of sales from Wireless product sales to Electronics product sales, which
carry a higher gross  margin.  Wireless  margins  were  impacted by late product
introductions  by its  suppliers.  This  trend  of  late  product  introductions
continues  to have a major effect on the gross  margins of the  Wireless  Group.
Margins  declined  to 16.1% from 16.5% in the  Electronics  Group.  Consolidated
gross  margins  were also  adversely  impacted by  increased  sales  incentives,
principally in the Wireless  Group.  Further  trends in the  operations  will be
discussed in detail in each individual marketing group MD&A discussion.

Operating Expenses

     Operating expenses increased $8,049 to $88,675 in fiscal 2002,  compared to
$80,626  in fiscal  2001.  As a  percentage  of net  sales,  operating  expenses
increased to 8.1% in fiscal 2002 from 6.3% in fiscal 2001.  Major  components of
this increase were  compensation  expenses of $3,200  related to the sale of ACC
shares  to  Toshiba  and the  impact  of Code  acquisition  (Note 6 of  Notes to
Consolidated  Financial Statements) of $1,852.  Additionally,  bad debt expenses
increased  $2,948  principally  in the  Wireless  Group as a result of  economic



                                       52


<PAGE>


conditions in South America and increased  insurance expense,  particularly with
general liability insurance,  of $1,167. This increase in operating expenses was
partially  offset by  reductions in employee  benefits  expense of $1,332 due to
reduced bonuses and lower health care costs.  Operating loss for fiscal 2002 was
$14,076, compared to operating loss of $9,236 in 2001.

Net Loss

     Net loss for  fiscal  2002 was  $14,040  compared  to net loss of $7,198 in
fiscal  2001.  Loss per share  for  fiscal  2002 was  $0.64,  basic and  diluted
compared to $0.33 for fiscal 2001, basic and diluted.

Wireless Results

     The  following  table  sets forth for the fiscal  years  indicated  certain
statements  of  operations  data for Wireless  expressed as a percentage  of net
sales:


<TABLE>

                                                   2001 (1)                  2002
                                         ---------------------      ----------------------

Net sales:
<S>                                      <C>             <C>        <C>             <C>  
     Wireless products                   $ 948,921       96.9%      $ 700,658       96.3%
     Activation commissions                 26,879        2.8          24,393        3.3
     Residual fees                           2,396        0.2          2,187        0.3
     Other                                     692        0.1             420        0.1
                                         ----------     ------      ----------    --------
         Total net sales                   978,888      100.0         727,658      100.0

Gross profit                                21,980        2.2          14,291        2.0

Operating expenses
     Selling                                13,108        1.3          11,148        1.5
     General and administrative             16,077        1.6          21,522        3.0
     Warehousing and technical support       2,761        0.3           2,593        0.4
                                         ----------     ------      ----------    --------
         Total operating expenses           31,946        3.2          35,263        4.9
                                         ----------     ------      ----------    --------

Operating loss                              (9,966)      (1.0)        (20,972)      (2.9)
Other expense                               (7,690)      (0.8)         (3,934)      (0.5)
                                         ----------     -------     ----------    --------
Pre-tax loss                             $ (17,656)      (1.8)%     $ (24,906)      (3.4)%
                                         ==========     =======     ==========    ========
</TABLE>


(1)  See Note (2) of Notes to Consolidated Financial Statements.

     Wireless is composed of ACC and Quintex, both subsidiaries of the Company.

Net Sales

     Net sales were  $727,658 in fiscal 2002, a decrease of $251,230,  or 25.7%,
from fiscal 2001. Unit sales of wireless  handsets  decreased by 2,050,000 units
in fiscal 2002, or 29.3%, to approximately  4,950,000 units from 7,000,000 units
in fiscal 2001.  This decrease was  attributable  to decreased  sales of digital
handsets  due to  delayed  new  product  introductions,  longer  testing  cycles



                                       53


<PAGE>



required by our customers and overall  lower demand for wireless  products.  The
average selling price of handsets, however, increased to $136 per unit in fiscal
2002 from $127 per unit in fiscal 2001.  This increase was due to higher selling
prices of the newly-introduced 1X digital products.

     Sales incentives  expense increased $20,845 (net of reversals)  compared to
2001 due to increased sales incentive  programs and a reduction in the reversals
for unclaimed sales  incentives.  In connection with the introduction of the new
1X phones,  one sales  incentive  program with a large  customer  resulted in an
increase of $18,000 in sales  incentives.  The  reversals  for  unclaimed  sales
incentives  decreased  by $2,374  in fiscal  2002  compared  to fiscal  2001 for
Wireless due to more of the Company's  larger  customers  claiming  earned sales
incentives  as compared to prior  periods.  These sales  incentive  programs are
expected to continue and will either increase or decrease based upon competition
and customer demands.

Gross Profit

     Gross profit  margins  remained  essentially  unchanged at 2.0% vs. 2.2% in
2001  due to the  sales of new,  higher  margin  products  and  lower  inventory
write-downs,  offset by increased sales incentive programs.  The Company expects
due to market  conditions,  competition  and  customer  concentration,  it could
experience   increased  sales  incentives  expense  in  the  future.   Inventory
write-downs  were $20,650 in 2001 compared to $13,823 in 2002.  The  write-downs
recorded  in 2002 were a result of the  reduction  of selling  prices  primarily
related to older model,  digital hand-held phones and other wireless products in
anticipation  of newer digital  technologies.  At November 30, 2002, the Company
had on hand  approximately  630,000 units of previously  written-down  inventory
which, after write-down, had an extended value of approximately $84,638. The new
technology  that was  introduced  during the second quarter of 2002 was 1XXT and
GPS phones. In addition to inventory  write-downs recorded in previous quarters,
the Company  determined the valuation of the older technology  digital models on
hand as of November 30, 2002 by reviewing  open purchase  orders from  customers
and selling  prices  subsequent to the balance sheet date as well as indications
from  customers  based upon current  negotiations.  A majority of the units that
were  previously  written-down  in fiscal  2001 have been  sold.  The  remaining
balance of inventory previously  written-down in fiscal 2001 is not material and
none of this  inventory was scrapped.  The Company  expects that,  due to market
conditions  and  customer   consolidation,   it  could   experience   additional
write-downs in the future.

     Gross margins were favorably  impacted by  reimbursement  from a vendor for
software  upgrades  performed on inventory  sold of $1,615 and $1,331 for fiscal
2001 and 2002,  respectively.  Without this  reimbursement,  gross margins would
have been lower by 0.1% and 0.2% for  fiscal  2001 and 2002,  respectively.  The
Company has received price  protection of $4,550 and $32,643 for fiscal 2001 and
2002,  respectively,  from a vendor for certain  inventory,  of which $4,550 and
$27,683 was recorded as a reduction to cost of sales,  as related  inventory was
sold.  The other  $4,960 in price  protection  for 2002 has been  reflected as a
reduction to the remaining inventory cost. Without this price protection,  gross
profit  margins would have been lower by 0.5% and 4.5% for fiscal 2001 and 2002,
respectively. The Company has an agreement with its vendor for additional future
price protection with respect to specific inventory items, if needed.




                                       54


<PAGE>



Operating Expenses

     Operating  expenses  increased $3,317 in fiscal 2002 from fiscal 2001. As a
percentage of net sales operating  expenses increased to 4.8% during fiscal 2002
compared to 3.3% in fiscal 2001.

     Selling  expenses  decreased  $1,960  in  fiscal  2002  from  fiscal  2001,
primarily  in  commissions  of $2,246 from  reduced  sales in Mexico,  $587 from
reduced  sales in Europe  and the  balance  from lower  over-all  commissionable
sales.  Travel and entertainment  decreased $126 due to a reduction in the sales
force and less  international  travel.  These decreases were partially offset by
increases  in  advertising  and trade  show  expense  of $498  primarily  due to
increased  sales  promotions and broadcast media  advertising of $274.  Numerous
other  individually  insignificant  fluctuations  account for the  remaining net
change in selling expenses.

     General and  administrative  expenses  increased $5,445 in fiscal 2002 from
fiscal  2001,  primarily  in  salaries  of $2,818 due to $3,200  bonus  payments
associated with the Toshiba  transaction (Note 3), insurance expense of $681 due
to increased insurance premiums for general liability coverage,  occupancy costs
of $128 due to increased rent, real estate taxes and utilities, bad debt expense
of $2,853  primarily  due to two accounts in Venezuela and Argentina as a result
of the  political and economic  conditions  and one account in the United States
for slow  payment.  The Company  does not  consider  this a trend in the overall
accounts  receivable.  Depreciation  and  amortization  increased  $236  due  to
purchase of additional  testing equipment as new 1X product is being introduced.
These increases were partially  offset by decreases in travel and  entertainment
of $193 due to less salesmen  traveling as a result of lower sales and a reduced
budget for travel and  entertainment,  employee  benefits of $634 as a result of
reduction  in profit bonus and  reductions  in health plan costs due to improved
claim experience and licenses of $466 due to a non-recurring licensing fee.

     Warehousing and technical  support  expenses  decreased $168 in fiscal 2002
from fiscal  2001,  primarily  in direct  labor,  taxes and benefits of $130 and
overseas  buying  offices of $107 due to lower expenses in the buying offices in
South Korea as a result of reduced sales.  These decreases were partially offset
by an increase in travel of $69 due to increased  travel for product  compliance
testing.  Numerous  other  individually  insignificant  fluctuations  in various
categories account for the remaining net change in operating expenses.

Pre-tax Loss

     Pre-tax  loss for fiscal 2002 was  $24,906,  compared to $17,656 for fiscal
2001.

     Management believes that the wireless industry is extremely competitive and
that this  competition  could  affect gross  margins and the  carrying  value of
inventories  in the  future  as new  competitors  enter  the  marketplace.  This
pressure from increased  competition is further enhanced by the consolidation of
many of Wireless' customers into a smaller group, dominated by only a few, large
customers.  Also,  timely  delivery and carrier  acceptance of new product could
affect our quarterly  performance.  These new products require extensive testing
and software  development which could delay entry into the market and affect our
sales in the  future.  In  addition,  given  the  anticipated  emergence  of new
technologies  in the wireless  industry,  the Company will need to sell existing
inventory  quantities of current  technologies  to avoid further  write-downs to
market.


                                       55


<PAGE>



Electronics Results

     The  following  table  sets forth for the fiscal  years  indicated  certain
statements of income data for the Electronics Group expressed as a percentage of
net sales:


<TABLE>

                                                 2001 (1)                  2002
                                         ---------------------     ----------------------


Net sales:
<S>                                      <C>             <C>        <C>             <C>  
     Mobile electronics                  $ 157,706       53.0%      $ 229,327       61.5%
     Sound                                  57,456       19.3          56,281       15.1
     Consumer electronics                   80,380       27.0         86,472       23.2
     Other                                   2,160        0.7            644        0.2
                                         ----------    -------     ----------     -------
        Total net sales                    297,702      100.0        372,724      100.0

Gross profit                                49,088       16.5         60,037       16.1

Operating expenses
     Selling                                14,449        4.9          15,944        4.3
     General and administrative             19,547        6.6          23,300        6.2
     Warehousing and technical support       1,134        0.3           1,137        0.3
                                         ----------    -------     ----------     -------
        Total operating expenses            35,130       11.8          40,381       10.8
                                         ----------    -------     ----------     -------

Operating income                            13,958        4.7          19,656        5.3
Other expense                                 (178)      (0.1)         (1,927)      (0.5)
                                         ----------    -------     ----------     -------
Pre-tax income                           $  13,780        4.6%     $  17,729        4.8%
                                         ==========    =======     ==========     ======
</TABLE>


(1)  See Note (2) of Notes to Consolidated Financial Statements.

Net Sales

     Net sales were $372,724 in fiscal 2002, a 25.2%  increase from net sales of
$297,702 in fiscal 2001. Mobile and consumer  electronics'  sales increased over
last year, partially offset by a decrease in Sound and other. Mobile electronics
increased  $71,621  (45.4%) during 2002 from 2001.  Sales of Mobile Video within
the Mobile  Electronics  category  increased over 59% in fiscal 2002 from fiscal
2001 as a result of the  introduction  of new video digital  product,  satellite
radio and navigation products.  Consumer Electronics  increased $6,092 (7.6%) to
$86,472  in fiscal  2002 from  $80,380  in fiscal  2001,  primarily  in sales of
video-in-a-bag  and portable DVD players.  These increases were partially offset
by a decrease  in the sound  category,  particularly  AV and  Prestige(R)  audio
lines. Given change in the marketplace,  fully-featured  sound systems are being
incorporated  into  vehicles  at the  factory  rather  than  being  sold  in the
aftermarket.  This  declining  trend in sound  systems is  expected  to continue
except in the satellite radio product line.

     Sales  incentives  expense  increased  $2,190 (net of reversals)  due to an
increase in sales as compared to the prior year in the consumer goods  category,



                                       56


<PAGE>


which  requires more promotion  support.  As many sales  incentive  programs are
based on a percentage of sales, the increase in sales resulted in an increase in
sales incentives.

     Net sales in the Company's Malaysian subsidiary decreased from last year by
approximately  $933 (7.4%)  primarily  from lower OEM  business.  The  Company's
Venezuelan  subsidiary  experienced  a decrease of $5,823  (39.2%) in sales from
last year,  primarily  from lower OEM  business  and the impact of economic  and
political instability in the country.

Gross Profit

     Gross profit margins decreased to 16.1% in fiscal 2002 from 16.5% in fiscal
2001  despite  an  increase  in sales.  The  gross  margin  decreased  in Sound,
partially  offset  by  an  increase  in  Mobile  Electronics  and  international
operations.  Also affecting  margins was the  integration of Code-Alarm into the
Electronics  Group (see Note 6). During 2002,  the Company was in the process of
converting  Code  from  their own  domestic  manufacturing  to  having  products
produced  by  overseas  vendors.   As  a  result,   Code's  gross  margins  were
significantly  lower than other product lines in the  Electronics  Group.  Lower
margins  from Code were  partially  offset by higher  margins  in new  models of
consumer and mobile electronics. This integration of Code has been completed.

Operating Expenses

     Operating  expenses  increased $5,251 in fiscal 2002, a 14.9% increase from
operating  expenses in fiscal  2001.  As a  percentage  of net sales,  operating
expenses decreased to 10.8% during fiscal 2002 compared to 11.8% in fiscal 2001.

     Selling  expenses  increased  $1,495  during  fiscal  2002,   primarily  in
commissions  of $911 due to  increased  commissionable  sales in the  video  and
consumer  goods  product  categories,  which  has a  different  commission  rate
structure and grew faster than other product groups,  salaries of $598 primarily
due to Code, a new company,  newly hired  international  salesmen and travel and
entertainment of $144 due to increased travel to support increased business both
in the Segment's  core  business and its two  subsidiaries,  American  Radio and
Code.  These increases were partially offset by decreases of $262 in advertising
and trade shows.

     General and  administrative  expenses  increased  $3,753 from fiscal  2001,
mostly in salaries of $1,713  primarily  due to Code,  increased  bonuses due to
sales increases and increased head count,  travel and  entertainment of $234 due
to  additional  business  and  acquisitions,  office  expenses  of  $122  due to
increased  use of employment  agencies,  for  additional  staff to support sales
growth,  equipment  repair  of  $101  due to  increased  maintenance  of  office
equipment, insurance expense of $378 due to higher premiums on general liability
and Ocean Cargo as shipments and sales have increased, professional fees of $589
due to litigation  expenses related to royalties and other matters and increased
use of  consulting  services  related  to a new  customer's  navigation  system,
occupancy  costs of $260 due to relocation of the display  department to another
separate  facility,  bad  debt  expense  of  $311  due  to  non-  payment  by an
international customer, which is not indicative of a trend, and depreciation and
amortization  of $163 due to general  expansion of the facilities to support the
growing  operations.  These  increases  were  partially  offset by  decreases in
equipment rentals of $111 due to the elimination of certain office machines.


                                       57


<PAGE>



     Warehousing and technical support expenses remained  essentially  unchanged
at $1,137 in fiscal 2002 from fiscal 2001 compared to $1,134 in fiscal 2002.

Pre-tax Income

     Pre-tax income for fiscal 2002 was $17,729,  compared to $13,780 for fiscal
2001.

     The Company  believes that the  Electronics  Group has an expanding  market
with a certain  level of volatility  related to both domestic and  international
new car sales and general  economic  conditions.  Also,  all of its products are
subject  to  price  fluctuations  which  could  affect  the  carrying  value  of
inventories and gross margins in the future.

Consolidated Other Income and Expense

     Interest expense and bank charges  decreased $1,703 during fiscal 2002 from
fiscal 2001, primarily due to lower interest rates on lower borrowing levels.

     Equity in income of equity investees decreased by approximately  $1,807 for
fiscal 2002  compared to fiscal 2001.  The majority of the decrease was due to a
decrease  in the equity  income of ASA due to a general  slow down in the market
for their products.

     Other expenses increased as a result of foreign exchange translation in our
Venezuelan  subsidiary as a result of the devaluation of the Venezuelan currency
against the U.S.  Dollar and the  effects of the change from  hyper-inflationary
accounting for foreign exchange translation to non-hyper-inflationary accounting
in fiscal 2002.  During fiscal 2001, the Company  accounted for foreign exchange
translation in its Venezuelan  subsidiary under  hyper-inflationary  method. The
foreign exchange losses were $333 in 2001 and $2,819 in 2002.

     In addition,  in fiscal 2002, the Company recorded an  other-than-temporary
impairment  for  investment  in common stock of Shintom Co.,  Ltd. of $1,158 and
recognized a gain of $14,269 on the sale of ACC shares to Toshiba (Note 3).

Consolidated Provision for Income Taxes

     The  effective  tax rate for 2001 was a (benefit) of (31.6%) as compared to
the effective tax rate for 2002 which was an expense of 202.0%.  The increase in
the  effective  tax  rate  is  principally  due to  the  increase  in  valuation
allowance,  relating to various deferred tax assets. Effective May 29, 2002, the
Company's  ownership in the Wireless Group was decreased to 75% (see Note 3). As
such, the Company now files two consolidated  U.S. Federal tax returns,  one for
the  Wireless  Group  and  one for  the  Electronics  Group.  As a  result,  the
realizability  of the  Wireless  Group's  deferred  tax assets are assessed on a
stand-alone basis. The Company's  Wireless Group has incurred  cumulative losses
in recent  years and  therefore  based  upon these  cumulative  losses and other
material  factors  (including the Wireless  Group's  inability to reasonably and
accurately   estimate  future  operating  and  taxable  income  based  upon  the
volatility of their historical  operations),  the Company has determined that it
is more  likely  than not that  some of the  benefits  of the  Wireless  Group's
deferred  tax assets and  carryforwards  will expire  unused,  accordingly,  the


                                       58


<PAGE>


Company has recorded an additional  valuation allowance of $13,090 during fiscal
year ended  November  30, 2002  related to the  Wireless  Group's  deferred  tax
assets.  The increase in the  valuation  allowance  relates  principally  to the
deferred  tax assets of the  Wireless  segment,  which has  recorded  cumulative
losses in recent  years,  and to certain  state net  operating  losses which the
Company has determined are more likely than not to expire unused.

Liquidity and Capital Resources

     The Company has historically  financed its operations  primarily  through a
combination  of  available  borrowings  under  bank lines of credit and debt and
equity  offerings.  The  amount  of  financing  is  dependent  primarily  on the
collection of accounts receivable and purchase of inventory.  As of November 30,
2003, the Company had working capital of $304,354, which includes cash of $4,702
compared with working  capital of $292,687 at November 30, 2002,  which includes
cash of $2,758.

     Operating  activities  provided  cash of $24,070 and $28,996 in fiscal 2002
and 2003, respectively.  Net income provided $11,239 for operating activities in
fiscal 2003.

     The following  significant  fluctuations in the balance sheet impacted cash
flow from operations:

     o    Decrease in  inventory as a result of  increased  inventory  turnover,
          which  approximated  4.7 during  fiscal 2003 compared to 4.0 in fiscal
          2002.  The  increased  turnover is a result of improved  management of
          Wireless  inventory and increased sales.  Although this is a favorable
          condition,  the  Company  cannot  guarantee  this to be a trend in the
          future.

     o    The above increase in cash flow was partially offset by an increase in
          accounts  receivable  due to increased  sales and accounts  receivable
          purchased  in  connection  with  the  Recoton  acquisition.   Accounts
          receivable turnover improved to 5.8 during fiscal 2003 compared to 5.2
          in the prior year. While collections of accounts receivable and credit
          quality of customers has improved, the Company does not expect this to
          be a trend as accounts  receivable  collections  are often impacted by
          general  economic  conditions.  In addition,  cash flow from operating
          activities was reduced due to a decrease in accounts payable.

     Investing activities used $40,319, primarily as a result of the following:

     o    On July 8, 2003,  the Company,  through a  newly-formed,  wholly-owned
          subsidiary,   acquired  in  cash  (i)  certain  accounts   receivable,
          inventory and  trademarks  from the U.S.  audio  operations of Recoton
          Corporation  (the  "U.S.  audio  business")  and (ii) the  outstanding
          capital  stock of Recoton  German  Holdings  GmbH (the  "international
          audio business"),  the parent holding company of Recoton  Corporations
          Italian,  German and Japanese  subsidiaries,  for $40,046, net of cash
          acquired, including transaction costs of $1.9 million (see Note 6).

     o    In June 2003 the Company  purchased a building for expansion  purposes
          for $3,513, which includes closing costs.

     o    The  Company  sold   accounts   receivable,   inventory   and  related
          intangibles to an equity investee (see Note 6) for $3,600.


                                       59


<PAGE>




     Financing  activities  provided  $12,965,  primarily  due to debt  proceeds
received  as a result of the  Recoton  acquisition  (see Note 6),  offset by net
repayments of bank obligations.

     The  Company's  Board of  Directors  approved the  repurchase  of 1,563,000
shares of the  Company's  Class A common  stock in the open market under a share
repurchase  program (the Program).  No shares were  purchased  under the Program
during  fiscal  2003.  As of November 30, 2002 and 2003,  1,072,737  shares were
repurchased  under the  Program  at an  average  price of $7.93 per share for an
aggregate amount of $8,511.

     The  Company's  principal  source  of  liquidity  is its  revolving  credit
agreement,  which  expires July 27, 2004.  The Company is currently  negotiating
with the bank to  extend  this  agreement  for an  additional  three  years.  At
November  30,  2003,  the credit  agreement  provided  for $150,000 of available
credit,  including $10,000 for foreign currency borrowings.  An amendment to the
credit  agreement  reduced  its credit  availability  from  $200,000 to $150,000
during the third  quarter of 2003 as a result of the Company's  working  capital
position and current anticipated  borrowing  requirements.  The foreign currency
borrowing sublimit was simultaneously reduced from $15,000 to $10,000.

     Under the credit  agreement,  the Company may obtain credit  through direct
borrowings  and letters of credit.  The  obligations  of the  Company  under the
credit agreement are guaranteed by certain of the Company's subsidiaries and are
secured by accounts  receivable,  inventory and the Company's shares of ACC. The
Company's  ability to borrow  under its credit  facility is a maximum  aggregate
amount of $150,000,  subject to certain conditions,  based upon a formula taking
into account the amount and quality of its accounts  receivable  and  inventory.
The credit agreement contains several covenants  requiring,  among other things,
minimum levels of pre-tax income and minimum levels of net worth.  Additionally,
the agreement  includes  restrictions  and limitations on payments of dividends,
stock repurchases and capital expenditures.  At November 30, 2003, the amount of
unused  available  credit is  $109,184.  The credit  agreement  also  allows for
commitments  up  to  $50,000  in  forward  exchange  contracts.   The  continued
availability of this financing is dependent upon the Company's operating results
which would be  negatively  impacted  by a decrease in demand for the  Company's
products.

     At November 30, 2002, the Company was not in compliance with certain of its
pre-tax income covenants.  Furthermore, as of November 30, 2002, the Company was
also not in  compliance  with  the  requirement  to  deliver  audited  financial
statements 90 days after the  Company's  fiscal year end, and as of February 28,
2003, the requirement to deliver  unaudited  quarterly  financial  statements 45
days after the Company's quarter end and had not received a waiver. Accordingly,
the Company  recorded its  outstanding  domestic bank  obligations of $36,883 in
current liabilities at November 30, 2002.

     Subsequent  to  November  30,  2002,  the  Company  repaid its fiscal  2002
obligation  of $36,883 in full and borrowed  additional  funds during the fourth
quarter of fiscal 2003,  resulting in domestic bank  obligations  outstanding at
November 30, 2003 of $31,709. The Company subsequently obtained a waiver for the
November  30,  2002  and  February  28,  2003  violations.  The  Company  was in
compliance  with all its bank covenants at November 30, 2003.  While the Company
has historically  been able to obtain waivers for such violations,  there can be
no assurance  that future  negotiations  with its lenders would be successful or
that the Company will not violate covenants in the future, therefore,  resulting
in amounts outstanding to be payable upon demand.


                                       60


<PAGE>



     The Company also has revolving credit facilities in Malaysia and Germany to
finance  additional  working capital needs. The obligations of the Company under
the  Malaysian  credit  facilities  are secured by the  property and building in
Malaysia owned by Audiovox Communications Sdn. Bhd. As of November 30, 2003, the
available  line of credit for  direct  borrowing,  letters  of credit,  bankers'
acceptances and other forms of credit approximated  $3,600. The Malaysian credit
facilities are partially  secured by the Company under three standby  letters of
credit of $800 each and are payable on demand or upon  expiration of the standby
letters of credit, which expire in January, July and July 2004, respectively.

     The German credit facility consists of accounts receivable  factoring up to
16,000 Euros and a working capital facility,  secured by accounts receivable and
inventory,  up to 5,000 Euros.  The facilities are renewable on an annual basis.
On September 2, 2003, the Company's  subsidiary,  Audiovox Europe Holdings GmbH.
borrowed  12 million  Euros under a new term loan  agreement  to  reimburse  for
acquisition costs with Recoton (see Note 12).

     At  November  30,  2003,  the Company had  additional  outstanding  standby
letters of credit  for  insurance  purposes  aggregating  $678  which  expire on
various dates from May to July 2004.

     The Company has guaranteed  the  borrowings of one of its 50%-owned  equity
investees (GLM) at a maximum of $300. During the quarter ended May 31, 2003, the
Company adopted FIN 45, "Guarantors  Accounting and Disclosure  Requirements for
Guarantors,  Including  Guarantees  of  Indebtedness  of Others"  (FIN 45).  The
Company has not modified this  guarantee  after  December 31, 2002. No liability
has been recorded for this guarantee on the accompanying  consolidated financial
statements.

     The Company has certain  contractual  cash obligations and other commercial
commitments which will impact its short and long-term liquidity. At November 30,
2003, such obligations and commitments are as follows:


<TABLE>

                                                  Payments Due By Period
                               -------------------------------------------------
                                           Less
                                           than      1-3       4-5       Over
Contractual Cash Obligations    Total     1 Year    Years     Years     5 Years
----------------------------    -------   -------   -------   -------   -------

<S>                             <C>       <C>       <C>       <C>       <C>    
Capital lease obligations (1)   $13,652   $   553   $ 1,113   $ 1,157   $10,829
Operating leases (2)             14,340     3,946     6,040     4,166       188
                                -------   -------   -------   -------   -------
      Total contractual cash    $27,992   $ 4,499   $ 7,153   $ 5,323   $11,017
        obligations             =======   =======   =======   =======   =======

</TABLE>





                                       61


<PAGE>





<TABLE>

                                                 Amount of Commitment
                                                 Expiration per period
                                --------------------------------------------------

                                   Total     Less
Other Commercial                  Amounts    than     1-3        4-5     Over
  Commitments                    Committed  1 Year    Years     Years    5 years
-------------------              --------- -------   -------   -------   ----

<S>                             <C>        <C>      <C>       <C>        <C>
Lines of credit (3)             $ 39 940   $39,940      --        --     --
Standby letters of credit (3)      3,078     3,078      --        --     --
Guarantees (4)                       300       300      --        --     --
Debt (5)                          21,722     3,433   $ 5,258   $13,031   --
Commercial letters of credit(3)    2,541     2,541      --        --     --
                                 -------   -------   -------   -------   ----
   Total commercial              $67,581   $49,292   $ 5,258   $13,031   --
     commitments                 ========  ========  =======   =======   ====

</TABLE>


(1)  Refer to Note 17 of Notes to Consolidated Financial Statements.
(2)  Refer to Note 17 of Notes to Consolidated Financial Statements.
(3)  Refer to Note 18 of Notes to Consolidated Financial Statements.
(4)  Refer to Note 21 of Notes to Consolidated Financial Statements.
(5)  Refer to Notes 12 and 13 of Notes to Consolidated Financial Statements.

     The Company regularly reviews its cash funding requirements and attempts to
meet those requirements  through a combination of cash on hand, cash provided by
operations,  available borrowings under bank lines of credit and possible future
public or private debt and/or equity offerings.  At times, the Company evaluates
possible  acquisitions of, or investments in,  businesses that are complementary
to those of the  Company,  which  transaction  may require the use of cash.  The
Company  believes  that its cash,  other liquid  assets,  operating  cash flows,
credit arrangements,  access to equity capital markets, taken together,  provide
adequate  resources to fund ongoing  operating  expenditures.  In the event that
they do not, the Company may require  additional  funds in the future to support
its working  capital  requirements  or for other  purposes and may seek to raise
such  additional  funds through the sale of public or private equity and/or debt
financings  as well as from  other  sources.  No  assurance  can be  given  that
additional financing will be available in the future or that if available,  such
financing will be obtainable on terms favorable to the Company when required.

Related Party Transactions

     The Company has entered into several related party  transactions  which are
described below.

Leasing Transactions

     During  1998,  the  Company  entered  into a  30-year  capital  lease for a
building with its principal  stockholder and chief executive  officer,  which is
the  headquarters  of the Wireless  operation.  Payments on the lease were based
upon the construction costs of the building and the then-current interest rates.
The effective interest rate on the capital lease obligation is 8%. In connection



                                       62


<PAGE>



with the  capital  lease,  the  Company  paid  certain  costs on  behalf  of its
principal  stockholder  and chief  executive  officer  in the  amount of $1,301.
During 2001 and 2002, the entire balance of $1,301 was repaid to the Company.

     During 1998, the Company entered into a sale/leaseback transaction with its
principal stockholder and chief executive officer for $2,100 of equipment, which
has been classified as an operating  lease.  The lease is a five-year lease with
monthly  payments of $34 and has been extended for an additional  two years.  No
gain or loss was recorded on the  transaction as the book value of the equipment
equaled the fair market value.

     The Company also leases certain facilities from its principal  stockholder.
Rentals  for  such  leases  are  considered  by  management  of the  Company  to
approximate  prevailing  market rates.  Total lease payments  required under the
leases for the five-year period ending November 30, 2008 are $5,224.

Amounts Due from Officers

     A note due from an officer/director of the Company,  which bore interest at
the LIBOR rate, to be adjusted quarterly, plus 1.25% per annum, was paid in full
during  fiscal  2002.  In  addition,  at  November  30,  2002,  the  Company had
outstanding  notes due from various  officers of the Company  aggregating  $235,
which have been  included in prepaid  expenses and other  current  assets on the
accompanying  consolidated  balance sheet.  The notes bore interest at the LIBOR
rate plus 0.5% per annum.  Principal  and interest  were payable in equal annual
installments  beginning  July 1, 1999 through July 1, 2003.  The notes have been
paid in full.  In  addition,  no new notes with  officers  or  directors  of the
Company have been entered into.

Transactions with Shintom and TALK

     In April  2000,  Audiovox  Japan (AX  Japan),  a  wholly-owned  subsidiary,
purchased land and a building (the  Property)  from Shintom Co., Ltd.  (Shintom)
for  770,000,000  Yen  (approximately  $7,300)  and  entered  into  a  leaseback
agreement  whereby  Shintom  leased  the  Property  from AX Japan for a one-year
period.  The lease was being  accounted  for as an operating  lease by AX Japan.
Shintom is a stockholder who owns all of the outstanding  preferred stock of the
Company and is a manufacturer  of products  purchased by the Company through its
previously-owned equity investee, TALK Corporation (TALK). The Company currently
holds  stock in Shintom  and has  previously  invested  in  Shintom  convertible
debentures.

     The purchase of the Property by AX Japan was  financed  with a  500,000,000
Yen  ($4,671)  subordinated  loan  obtained  from Vitec  Co.,  Ltd.  (Vitec),  a
150,000,000  Yen loan ($1,397)  from Pearl First  (Pearl) and a 140,000,000  Yen
loan ($1,291) from the Company. The land and building were included in property,
plant and equipment, and the loans were recorded as notes payable on the balance
sheet as of November 30, 2001 . Changes arising from the fluctuations in the Yen
exchange rate were reflected as a component of accumulated  other  comprehensive
loss. Vitec is a major supplier to Shintom,  and Pearl is an affiliate of Vitec.
The loans bore  interest  at 5% per  annum,  and  principle  is payable in equal
monthly  installments over a six-month period beginning six months subsequent to
the date of the  loans.  The  loans  from  Vitec  and  Pearl  were  subordinated
completely  to the loan  from the  Company  and,  in  liquidation,  the  Company
receives payment first.



                                       63


<PAGE>



     Upon the  expiration  of six months  after the transfer of the title to the
Property  to AX Japan,  Shintom  had the option to  repurchase  the  Property or
purchase  all of the shares of stock of AX Japan.  This option could be extended
for one additional  six month period.  The option to repurchase the building was
at a price of  770,000,000  Yen plus the equity capital of AX Japan (which in no
event can be less than 60,000,000 Yen) and could only be made if Shintom settles
any rent due AX Japan  pursuant to the lease  agreement.  The option to purchase
the shares of stock of AX Japan was at a price not less than the  aggregate  par
value of the shares and, subsequent to the purchase of the shares, AX Japan must
repay the outstanding  loan due to the Company.  If Shintom did not exercise its
option to repurchase the Property or the shares of AX Japan,  or upon occurrence
of  certain  events,  AX  Japan  could  dispose  of the  Property  as it  deemed
appropriate.  The events  which  result in the ability of AX Japan to be able to
dispose of the Property include Shintom  petitioning for bankruptcy,  failing to
honor a check,  failing  to pay rent,  etc.  If Shintom  failed,  or at any time
became  financially or otherwise unable to exercise its option to repurchase the
Property, Vitec had the option to repurchase the Property or purchase all of the
shares of stock of AX Japan under similar terms as the Shintom options.

     AX Japan  had the  option  to  delay  the  repayment  of the  loans  for an
additional six months if Shintom extended its options to repurchase the Property
or stock of AX  Japan.  In  September  2000,  Shintom  extended  its  option  to
repurchase  the Property and AX Japan  delayed its repayment of the loans for an
additional six months.

     In March 2001, upon the expiration of the additional  six-month period, the
Company  and  Shintom  agreed to extend  the  lease for an  additional  one-year
period. In addition, Shintom was again given the option to purchase the Property
or shares of stock of AX Japan after the  expiration  of a  six-month  period or
extend the option for one additional  six-month  period. AX Japan was also given
the option to delay the repayment of the loans for an  additional  six months if
Shintom extended its option for an additional six months.

     In October 2002,  the Company sold all of its shares in Audiovox  Japan (AX
Japan),  a  wholly-  owned  subsidiary  of the  Company,  to RMS Co.,  Ltd.,  an
unrelated party to the Company. The purchase price of the shares was 60,000 Yen.
As a result of this transaction,  the purchaser repaid in full 113,563 Yen which
represented  the full  balance of amounts  then owed to the Company by AX Japan.
The agreement  required the purchaser to immediately change the name of AX Japan
to RMS Co.,  Ltd.,  and the  Company  resigned  from all  officer  and  Board of
Directors  positions.  The Company has no further  relationship  or obligations,
whether contingent or direct, to RMS Co., Ltd., formerly known as AX Japan.

     As a  result  of  the  completion  of  this  transaction,  all  assets  and
liabilities  of AX Japan have been  removed from the  accompanying  consolidated
balance sheet as of November 30, 2002,  specifically,  the land and the building
and the notes  payable for the Vitec Co.,  Ltd (Vitec)  150,000 Yen loan and the
Pearl First  (Pearl) a 140,000 Yen loan.  As a result of this  transaction,  the
Company recovered in Yen its initial  investment in AX Japan as well as its loan
to  finance  the  purchase  of the  land  and  building.  However,  the  Company
recognized a $338 loss on the sale of its shares in AX Japan, as the sales price
was  less  than  the  value  of the  net  assets  of AX  Japan  sold  to  Vitec.
Contributing  to the loss on sale were foreign  currency loss and other expenses
that will not be  recovered.  The loss on the sale of the shares of AX Japan has
been  included  in other  net on the  accompanying  consolidated  statements  of
operations for the year ended November 30, 2002.



                                                        64


<PAGE>



     The Company  engages in  transactions  with Shintom and TALK.  TALK,  which
holds world-wide  distribution rights for product  manufactured by Shintom,  has
given  the  Company  exclusive  distribution  rights  on all  wireless  personal
communication  products for all  countries  except  Japan,  China,  Thailand and
several  mid-eastern  countries.  Through October 2000, the Company held a 30.8%
interest in TALK. The Company no longer holds an equity interest in TALK.

     Transactions  with  Shintom and TALK  include  financing  arrangements  and
inventory  purchases which  approximated 1.5%, 0.7% and 0.1% for the years ended
November 30, 2001, 2002 and 2003, respectively, of total inventory purchases. At
November 30, 2001,  2002 and 2003,  the Company had  recorded  $331,  $0 and $6,
respectively,  of  liability  due to TALK for  inventory  purchases  included in
accounts payable.  At November 30, 2001, 2002 and 2003, the Company had recorded
a  receivable  from TALK in the  amount  of $265,  $13 and $0,  respectively,  a
portion of which is payable with interest, which is reflected in receivable from
vendors on the accompanying consolidated financial statements.  During 2002, the
Company  recorded an impairment  charge of $1,158 on the 634,666  Shintom shares
owned at November 30, 2002.

Transactions with Toshiba

     On March 31, 1999, Toshiba purchased 5% of the Company's subsidiary, ACC, a
supplier of wireless  products for $5,000 in cash. The Company then owned 95% of
ACC; prior to the  transaction  ACC was a wholly-owned  subsidiary.  In February
2001,  the  Board of  Directors  of ACC,  declared  a  dividend  payable  to its
shareholders,  Audiovox Corporation, a then 95% shareholder, and Toshiba, a then
5% shareholder.  ACC paid Toshiba its share of the dividend,  which approximated
$1,034 in the first  quarter of 2001.  The dividend  equaled 5.0% of ACC's prior
year net income.  There were no dividends  declared  during 2002, due to the net
loss of ACC during 2001. During the second quarter of 2002, Toshiba purchased an
additional 20% of ACC. Under the terms of the transaction,  Toshiba acquired, in
exchange for $23,900 cash,  the additional  shares of ACC. In addition,  Toshiba
paid $8,100 in exchange for an $8,100  convertible  subordinated note (the Note)
due from ACC.  The Note bears  interest  at a per annum rate equal to 1 3/4% and
interest is payable annually on May 31st of each year,  commencing May 31, 2003.
The unpaid principal  amount shall be due and payable,  together with all unpaid
interest on May 31, 2007 which will  automatically  renew for an additional five
years. In accordance with the provisions of the Note,  Toshiba may, at any time,
convert  the  balance  of the Note  into  additional  shares  of ACC in order to
maintain a 25% maximum  interest in ACC. The cost per share of the note is equal
to the per share cost for the $23,900 cash payment of 20% of ACC's shares.

     In  connection  with  the  transaction,  ACC  and  Toshiba  entered  into a
distribution  agreement whereby ACC will be Toshiba's exclusive  distributor for
the sale of  Toshiba  products  in the  United  States,  Canada,  Mexico and all
countries in the Caribbean  and Central and South America  through May 29, 2007.
The distribution  agreement  established certain annual minimum purchase targets
for ACC's  purchase of Toshiba  products  for each fiscal year during the entire
term of the agreement.  In the event that ACC fails to meet the minimum purchase
target, Toshiba shall have the right to convert ACC's exclusive  distributorship
to a  non-exclusive  distributorship  for the remaining  term of the  agreement.
Also,  in  accordance  with the terms of the  stockholders  agreement,  upon the
termination of the  distribution  agreement in accordance  with certain terms of
the distribution  agreement,  Toshiba maintains a put right and Audiovox Corp. a
call right, to repurchase all of the shares held by the other party for a price


                                       65


<PAGE>



equal to the fair market value of the shares as calculated  in  accordance  with
the agreement.  Pursuant to the agreement,  the put right is only exercisable if
ACC  terminates  the  distribution  agreement or if another  strategic  investor
acquires a direct or indirect equity ownership  interest in excess of 20% in the
Company.  The call right is only  exercisable if Toshiba elects to terminate the
distribution agreement after its initial five (5) year term.

     Additionally  in  connection  with the  transaction,  ACC  entered  into an
employment  agreement  with the  President  and  Chief  Executive  Officer  (the
Executive) of ACC through May 29, 2007. Under the agreement,  ACC is required to
pay the  Executive  an annual base salary of $500 in addition to an annual bonus
equal to 2% of ACC's annual earnings before income taxes.  Audiovox Corp., under
the employment agreement, was required to establish and pay a bonus of $3,200 to
key employees of ACC, including the Executive, to be allocated by the Executive.
The bonus was for services  previously  rendered in connection  with the Toshiba
purchase  of  additional  shares of ACC,  and,  accordingly,  the bonus has been
included in general and administrative  expenses in the accompanying  statements
of operations  for the year ended  November 30, 2002. The Executive was required
to utilize all or a portion of the bonus allocated to him to repay the remaining
outstanding  principal and accrued interest owed by the Executive to the Company
pursuant to the unsecured  promissory note in favor of Audiovox Corp. During the
year ended  November 30,  2002,  the  Executive  was paid $1,800 less the amount
outstanding under the promissory note of $651.

     As a result of the issuance of ACC's shares, the Company recognized a gain,
net of expenses of $1,735,  of $14,269  ($8,847  after  provision  for  deferred
taxes). The gain on the issuance of the subsidiary's  shares has been recognized
in the accompanying consolidated statements of operations.

     Inventory on hand at November 30, 2002 and November 30, 2003 purchased from
Toshiba approximated $138,467 and $22,405,  respectively.  At November 30, 2002,
the Company recorded receivables from Toshiba aggregating  approximately $12,219
primarily for price protection and software upgrades.  At November 30, 2003, the
Company  recorded  receivables  from  Toshiba  aggregating  approximately  $709,
primarily for software upgrades.

     At November  30, 2003,  the Company had  inventory on hand in the amount of
$18,841,  which were  purchased from Toshiba and have been recorded in inventory
and accounts payable on the accompanying consolidated balance sheet. The payment
terms are such that the  payable  is  non-interest  bearing  and is  payable  in
accordance with the terms established in the distribution agreement, which is 30
days. On occasion,  the Company is entitled to receive  price  protection in the
event the selling  price to its  customers is less than the purchase  price from
Toshiba.  The Company will record such price  protection,  if necessary,  at the
time of the sale of the units.  The Company had no other amounts  outstanding to
Toshiba at November 30, 2003.

Impact of Inflation and Currency Fluctuation

     Inflation  has not had a  significant  impact  on the  Company's  financial
position or operating results other than the effect of our 80%-owned  Venezuelan
subsidiary  ceasing to be  considered a highly-  inflationary  economy in fiscal
2002.  Venezuela  was no longer  deemed a  hyper-inflationary  economy as of the
first  quarter of fiscal  2002.  On  January  22,  2003,  and as a result of the
National  Civil  Strike,  the  Venezuelan  government  suspended  trading of the



                                       66


<PAGE>



Venezuelan   Bolivar  and  set  the  currency  at  a  stated   government  rate.
Accordingly,   until  further  guidance  is  issued,  the  Company's  80%  owned
Venezuelan  subsidiary  will  translate its financial  statements  utilizing the
stated government rate.

     To the extent that the Company  expands its operations  into Europe,  Latin
America and the Pacific Rim, the effects of inflation and currency  fluctuations
in those areas could have growing  significance  to its financial  condition and
results of operations.  Fluctuations in the foreign exchange rates in Europe and
Pacific Rim countries  have not had a material  adverse  effect on the Company's
consolidated financial position, results of operations or liquidity.

     While the prices that the Company pays for the products  purchased from its
suppliers  are  principally   denominated  in  United  States   dollars,   price
negotiations depend in part on the relationship  between the foreign currency of
the foreign  manufacturers  and the United States dollar.  This  relationship is
dependent upon, among other things, market, trade and political factors.

Seasonality

     The Company typically  experiences some seasonality in its operations.  The
Company  generally   experiences  a  substantial  amount  of  its  sales  during
September,  October and  November.  December is also a key month for the Company
due to  increased  demand for its  products  during  the  holiday  season.  This
increase results from increased promotional and advertising  activities from the
Company's customers to end-users.

Off-Balance Sheet Arrangements

     The  Company  does  not  maintain  any  off-balance   sheet   arrangements,
transactions,  obligations or other relationships with  unconsolidated  entities
that would be  expected  to have a material  current or future  effect  upon our
financial condition or results of operations.

Recent Accounting Pronouncements

     In  November  2002,  the  FASB  issued  Interpretation  No.  45  (FIN  45),
"Guarantor's  Accounting and Disclosure  Requirements for Guarantors,  Including
Guarantees of Indebtedness  of Others".  FIN 45 elaborates on the disclosures to
be made by a guarantor in its interim and annual financial  statements about its
obligations under certain  guarantees that it has issued. It also clarifies that
a  guarantor  is required to  recognize,  at the  inception  of a  guarantee,  a
liability  for the fair  value  of the  obligation  undertaken  in  issuing  the
guarantee.  The initial recognition and initial measurement provisions of FIN 45
are  applicable on a prospective  basis to guarantees  issued or modified  after
December  31,  2002,  irrespective  of the  guarantor's  fiscal  year  end.  The
disclosure  requirements  of FIN 45 are effective  for  financial  statements of
interim or annual periods  ending after  December 15, 2002. The Company  adopted
FIN 45 during the quarter  ended May 31,  2003.  The  adoption of FIN 45 did not
have a material  effect on the  Company's  consolidated  financial  position  or
results of operations.

     In April 2003,  the FASB issued SFAS No. 149 (SFAS No. 149),  "Amendment of
Statement 133 on Derivative  Instruments and Hedging  Activities".  SFAS No. 149
amends  and  clarifies  the  accounting   guidance  on  derivative   instruments
(including  certain  derivative  instruments  embedded in other  contracts)  and
hedging activities that fall within the scope of SFAS No. 133, "Accounting for


                                       67


<PAGE>



Derivative  Instruments and Hedging  Activities."  SFAS No. 149 is effective for
all  contracts  entered  into or  modified  after June 30,  2003,  with  certain
exceptions,  and for hedging  relationships  designated after June 30, 2003. The
guidance is to be applied  prospectively.  The  adoption of SFAS No. 149 did not
have a  material  effect on the  Company's  financial  condition  or  results of
operations.

     In May 2003, the FASB issued SFAS No. 150 (SFAS No. 150),  "Accounting  for
Certain  Financial  Instruments  with  Characteristics  of both  Liabilities and
Equity".  SFAS No. 150 changes the  accounting  guidance  for certain  financial
instruments  that,  under  previous  guidance,  could be classified as equity or
"mezzanine"  equity by now  requiring  those  instruments  to be  classified  as
liabilities  (or assets in some  circumstances)  in the  statement  of financial
position. Further, SFAS No. 150 requires disclosure regarding the terms of those
instruments and settlement alternatives. SFAS No. 150 is generally effective for
all financial  instruments  entered into or modified  after May 31, 2003, and is
otherwise effective at the beginning of the first interim period beginning after
June 15, 2003.  The  adoption of SFAS No. 150 did not have a material  effect on
the Company's financial condition or results of operations.

     In January  2003,  the FASB  issued  FASB  Interpretation  No. 46 (FIN 46),
"Consolidation of Variable Interest Entities,  an Interpretation of Arb No. 51",
which  addresses  consolidation  by business  enterprises  of variable  interest
entities  (VIEs) either:  (1) that do not have sufficient  equity  investment at
risk  to  permit  the  entity  to  finance  its  activities  without  additional
subordinated  financial  support,  or (2) in which the equity  investors lack an
essential  characteristic of a controlling financial interest. In December 2003,
the FASB completed  deliberations  of proposed  modifications to FIN 46 (Revised
Interpretations)  resulting in multiple  effective  dates based on the nature as
well as the creation date of the VIE.  VIEs created after January 31, 2003,  but
prior to January 1, 2004,  may be  accounted  for either  based on the  original
interpretation   or  the   Revised   Interpretations.   However,   the   Revised
Interpretations  must be applied no later than the first  quarter of fiscal year
2004. VIEs created after January 1, 2004 must be accounted for under the Revised
Interpretations. The Company is currently evaluating the impact of FIN 46 on its
financial statements.

     In August 2003,  the EITF  reached a final  consensus  regarding  Issue No.
03-5,  "Applicability  of AICPA  Statement of Position  97-2,  Software  Revenue
Recognition  to   Non-Software   Deliverables   in  an  Arrangement   Containing
More-Than-Incidental   Software".  EITF  03-5  involves  whether  non-  software
deliverables   included  in  an  arrangement  that  contains  software  that  is
more-than-incidental  to the products or services as a whole are  included  with
the scope of SOP 97-2 "Software  Revenue  Recognition".  This new  pronouncement
will not have an impact on the  Company's  financial  condition  or  results  of
operations.

     In December 2003, the SEC issued Staff  Accounting  Bulletin (SAB) No. 104,
"Revenue  Recognition"  (SAB No.  104),  which  codifies,  revises and  rescinds
certain sections of SAB No. 101,  "Revenue  Recognition",  in order to make this
interpretive  guidance  consistent  with current  authoritative  accounting  and
auditing  guidance and SEC rules and  regulations.  The changes noted in SAB No.
104 did not have a material  effect on our  consolidated  results of operations,
consolidated financial position or consolidated cash flows.




                                       68


<PAGE>




Item 7a - Quantitative and Qualitative Disclosures About Market Risk

Market Risk Sensitive Instruments

     The market risk inherent in the Company's market risk sensitive instruments
and positions is the potential  loss arising from adverse  changes in marketable
equity security prices, foreign currency exchange rates and interest rates.

Marketable Securities

     Marketable  securities  at November  30,  2003,  which are recorded at fair
value of $9,512,  include a net  unrealized  gain of $1,831 and have exposure to
price risk. This risk is estimated as the potential loss in fair value resulting
from a hypothetical  10% adverse change in prices quoted by stock  exchanges and
amounts to $951 as of November 30, 2003. Actual results may differ.

Interest Rate Risk

     The Company's bank loans expose earnings to changes in short-term  interest
rates since interest rates on the underlying  obligations are either variable or
fixed for such a short period of time as to  effectively  become  variable.  The
fair  values of the  Company's  bank  loans are not  significantly  affected  by
changes in market interest rates.

Foreign Exchange Risk

     In order to reduce the risk of foreign currency exchange rate fluctuations,
the  Company  hedges  transactions  denominated  in a  currency  other  than the
functional  currencies   applicable  to  each  of  its  various  entities.   The
instruments  used for hedging are forward  contracts with banks.  The changes in
market value of such contracts  have a high  correlation to price changes in the
currency of the related hedged transactions. There were no hedge transactions at
November 30, 2003.  Intercompany  transactions  with  foreign  subsidiaries  and
equity  investments are typically not hedged.  Therefore,  the potential loss in
fair value for a net currency  position  resulting  from a 10% adverse change in
quoted  foreign  currency  exchange  rates  as  of  November  30,  2003  is  not
applicable.

     The Company is subject to risk from changes in foreign  exchange  rates for
its  subsidiaries  and equity  investments  that use a foreign currency as their
functional  currency and are translated into U.S. dollars.  These changes result
in cumulative  translation  adjustments  which are included in accumulated other
comprehensive income. On November 30, 2003, the Company had translation exposure
to  various  foreign  currencies  with  the most  significant  being  the  Euro,
Malaysian  ringgit,  Thailand  baht and  Canadian  dollar.  The  potential  loss
resulting  from a hypothetical  10% adverse  change in quoted  foreign  currency
exchange rates, as of November 30, 2003,  amounts to $1,195.  Actual results may
differ.


Item 8 - Consolidated Financial Statements and Supplementary Data

     The  consolidated  financial  statements  of the Company as of November 30,
2003 and for the year then  ended,  together  with the report of Grant  Thornton
LLP, independent certified public accountants, are filed under this Item 8.


                                       69


<PAGE>



     The  consolidated  financial  statements  of the Company as of November 30,
2002 and for each of the years in the two-year  period ended  November 30, 2002,
together with the  independent  auditors'  report  thereon of KPMG LLP are filed
under this Item 8.


                                       70


<PAGE>






               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS





Board of Directors and Stockholders
Audiovox Corporation



We  have  audited  the  accompanying  consolidated  balance  sheet  of  Audiovox
Corporation  and  subsidiaries  (the "Company") as of November 30, 2003, and the
related  consolidated   statements  of  operations,   stockholders'  equity  and
comprehensive  income  (loss)  and cash  flows  for the year then  ended.  These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

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

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects, the financial position of Audiovox Corporation
and  subsidiaries  as of November 30, 2003, and the results of their  operations
and their  cash  flows for the year then  ended in  conformity  with  accounting
principles generally accepted in the United States of America.

We have also audited Schedule II as of and for the year ended November 30, 2003.
In our  opinion,  this  schedule,  when  considered  in  relation  to the  basic
consolidated  financial  statements taken as a whole,  presents  fairly,  in all
material respects, the information therein.




/s/ Grant Thornton LLP
GRANT THORNTON LLP

Melville, New York
February 19, 2004



                                       71


<PAGE>




                          Independent Auditors' Report



The Board of Directors and Stockholders
Audiovox Corporation:

We  have  audited  the  accompanying  consolidated  balance  sheet  of  Audiovox
Corporation  and   subsidiaries  as  of  November  30,  2002,  and  the  related
consolidated  statements of operations,  stockholders'  equity and comprehensive
loss and cash flows for each of the years in the two-year  period ended November
30, 2002. These consolidated  financial statements are the responsibility of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
consolidated financial statements based on our audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects, the financial position of Audiovox Corporation
and  subsidiaries  as of November 30, 2002, and the results of their  operations
and their cash flows for each of the years in the two-year period ended November
30, 2002, in conformity with  accounting  principles  generally  accepted in the
United States of America.

As  discussed in Note 1,  effective  December 1, 2001,  the Company  adopted the
provisions of Statement of Financial Accounting  Standards  (Statement) No. 141,
"Business  Combinations"  and Statement No. 142,  "Goodwill and Other Intangible
Assets".

As discussed in Note 2 to the accompanying  consolidated  financial  statements,
the   consolidated   statements   of   operations,   stockholders'   equity  and
comprehensive loss and cash flows for the year ended November 30, 2001 have been
restated.



                                                    s/KPMG LLP
                                                      KPMG LLP

Melville, New York
May 30, 2003




                                       72


<PAGE>



                      AUDIOVOX CORPORATION AND SUBSIDIARIES
                           Consolidated Balance Sheets
                           November 30, 2002 and 2003
                 (In thousands, except share and per share data)


<TABLE>

                                                                                                         2002         2003
                                                                                                      ---------    ---------

Assets
Current assets:
<S>                                                                                                   <C>          <C>      
   Cash                                                                                               $   2,758    $   4,702
   Accounts receivable                                                                                  186,564      266,421
   Inventory                                                                                            290,064      219,664
   Receivables from vendors                                                                              14,174        7,830
   Prepaid expenses and other current assets                                                              7,626       12,371
   Deferred income taxes                                                                                  7,653        9,531
                                                                                                      ---------    ---------
      Total current assets                                                                              508,839      520,519
Investment securities                                                                                     5,405        9,512
Equity investments                                                                                       11,097       13,142
Property, plant and equipment                                                                            18,381       20,242
Excess cost over fair value of assets acquired                                                            6,826        7,532
Intangible assets                                                                                          --          8,043
Other assets                                                                                                687          713
                                                                                                      ---------    ---------
                                                                                                      $ 551,235    $ 579,703
                                                                                                      =========    =========
Liabilities and Stockholders' Equity
Current liabilities:
   Accounts payable                                                                                   $ 121,127    $  94,864
   Accrued expenses and other current liabilities                                                        34,983       42,816
   Accrued sales incentives                                                                              12,151       21,894
   Income taxes payable                                                                                   7,643       13,218
   Bank obligations                                                                                      40,248       39,940
   Current portion of long-term debt                                                                       --          3,433
                                                                                                      ---------    ---------
      Total current liabilities                                                                         216,152      216,165
Long-term debt                                                                                            8,140       18,289
Capital lease obligation                                                                                  6,141        6,070
Deferred income taxes                                                                                     2,704        3,178
Deferred compensation                                                                                     3,969        5,280
                                                                                                      ---------    ---------
      Total liabilities                                                                                 237,106      248,982
                                                                                                      ---------    ---------
Minority interest                                                                                         4,616        4,993
                                                                                                      ---------    ---------
Commitments and contingencies
Stockholders' equity:
   Preferred stock, $50 par value; 50,000 shares authorized and outstanding, liquidation preference
      of $2,500                                                                                           2,500        2,500
   Series preferred stock $.01 par value, 1,500,000 shares authorized; no shares issued or
      outstanding                                                                                          --           --
   Common stock:
      Class A $.01 par value; 60,000,000 shares authorized; 20,632,182 and
         20,728,382 shares issued in 2002 and 2003, respectively; and 19,559,445
         and 19,655,645 shares outstanding
         in 2002 and 2003, respectively                                                                     207          207
      Class B $.01 par value convertible; 10,000,000 shares authorized; 2,260,954 shares issued
         and outstanding                                                                                     22           22
   Paid-in capital                                                                                      250,917      252,104
   Retained earnings                                                                                     69,396       80,635
   Accumulated other comprehensive income (loss)                                                         (5,018)      (1,229)
   Treasury stock, at cost, 1,072,737 shares of Class A common stock                                     (8,511)      (8,511)
                                                                                                      ---------    ---------
      Total stockholders' equity                                                                        309,513      325,728
                                                                                                      ---------    ---------
      Total liabilities and stockholders' equity                                                      $ 551,235    $ 579,703
                                                                                                      =========    =========
</TABLE>


See accompanying notes to consolidated financial statements.


                                       73


<PAGE>



                      AUDIOVOX CORPORATION AND SUBSIDIARIES
                      Consolidated Statements of Operations
                  Years Ended November 30, 2001, 2002 and 2003
                 (In thousands, except share and per share data)


<TABLE>

                                                                                     2001            2002             2003
                                                                                 ------------    ------------    ------------
                                                                                   Note 2

<S>                                                                              <C>             <C>             <C>         
Net sales                                                                        $  1,276,591    $  1,100,382    $  1,323,902
Cost of sales                                                                       1,205,201       1,025,783       1,199,696
                                                                                 ------------    ------------    ------------
Gross profit                                                                           71,390          74,599         124,206
                                                                                 ------------    ------------    ------------

Operating expenses:
   Selling                                                                             30,039          29,509          36,514
   General and administrative                                                          46,505          55,292          60,106
   Warehousing and technical support                                                    4,082           3,874           5,783
                                                                                 ------------    ------------    ------------
      Total operating expenses                                                         80,626          88,675         102,403
                                                                                 ------------    ------------    ------------
Operating income (loss)                                                                (9,236)        (14,076)         21,803
                                                                                 ------------    ------------    ------------

Other income (expense):
   Interest and bank charges                                                           (5,922)         (4,219)         (4,602)
   Equity in income of equity investees                                                 3,586           1,779           3,279
   Gain on issuance of subsidiary shares                                                 --            14,269            --
   Other, net                                                                              90          (4,156)            556
                                                                                 ------------    ------------    ------------
      Total other income (expense), net                                                (2,246)          7,673            (767)
                                                                                 ------------    ------------    ------------
Income (loss) before provision for (recovery of) income taxes, minority
   interest and cumulative effect of a change in accounting for negative
   goodwill                                                                           (11,482)         (6,403)         21,036
Provision for (recovery of) income taxes                                               (3,627)         12,932           9,407
Minority interest income (expense)                                                        657           5,055            (390)
                                                                                 ------------    ------------    ------------
Income (loss) before cumulative effect of a change in accounting for
   negative goodwill                                                                   (7,198)        (14,280)         11,239
Cumulative effect of a change in accounting for negative goodwill                        --               240            --
                                                                                 ------------    ------------    ------------
Net income (loss)                                                                $     (7,198)   $    (14,040)   $     11,239
                                                                                 ============    ============    ============

Net income (loss) per common share (basic) before cumulative effect of a change
   in accounting for negative goodwill
                                                                                 $      (0.33)   $      (0.65)   $       0.51
   Cumulative effect of a change in accounting for negative goodwill                     --              0.01            --
                                                                                 ------------    ------------    ------------
Net income (loss) per common share (basic)                                       $      (0.33)   $      (0.64)   $       0.51
                                                                                 ============    ============    ============

Net income (loss) per common share (diluted) before cumulative effect of a
   change in accounting for negative goodwill
                                                                                 $      (0.33)   $      (0.65)   $       0.51
   Cumulative effect of a change in accounting for negative goodwill                     --              0.01            --
                                                                                 ------------    ------------    ------------
Net income (loss) per common share (diluted)                                     $      (0.33)   $      (0.64)   $       0.51
                                                                                 ============    ============    ============

Weighted average number of common shares outstanding (basic)                       21,877,100      21,850,035      21,854,610
                                                                                 ============    ============    ============
Weighted average number of common shares outstanding (diluted)                     21,877,100      21,850,035      22,054,320
                                                                                 ============    ============    ============
</TABLE>









See accompanying notes to consolidated financial statements.


                                       74


<PAGE>



                      AUDIOVOX CORPORATION AND SUBSIDIARIES
 Consolidated Statements of Stockholders' Equity and Comprehensive Income (Loss)
                  Years Ended November 30, 2001, 2002 and 2003
                        (In thousands, except share data)


<TABLE>

                                                                                                   Accum-
                                                                                                   ulated
                                                               Class A                             other
                                                                 and                               compre-                    Total
                                                               Class B                             hensive                    stock-
                                                   Preferred     common    Paid-in     Retained    income     Treasury      holders'
                                                    stock        stock     capital     earnings    (loss)       stock         equity
                                                   --------   ---------   ---------   ---------   ----------   ----------  ---------
<S>                                                <C>        <C>         <C>         <C>         <C>          <C>         <C>     
Balances at
   November 30, 2000, Note (2)                     $  2,500   $     226   $ 248,468   $ 90,634    $  (5,058)   $ (6,004)   $330,766

Comprehensive loss:
   Net loss, as restated                               --          --          --       (7,198)        --          --        (7,198)
   Other comprehensive loss, net of tax:
     Foreign currency translation adjustment           --          --          --         --           (455)       --          (455)
     Unrealized loss on marketable securities,
       net of tax effect of $(509)                     --          --          --         --           (831)       --          (831)
                                                                                                                           ---------
     Other comprehensive loss                          --          --          --         --           --          --        (1,286)
                                                                                                                           ---------
Comprehensive loss                                     --          --          --         --           --          --        (8,484)
Exercise of stock options into 10,000 shares
  of common stock                                      --          --            77       --           --          --            77
Conversion of stock warrants into 314,800 shares
  of common stock                                      --             3       2,240       --           --          --         2,243
Repurchase of 147,045 shares of common stock           --          --          --         --           --        (1,382)     (1,382)
                                                   --------   ---------   ---------   ---------   ----------   ----------  ---------
Balances at
   November 30, 2001, Note (2)                        2,500         229     250,785     83,436       (6,344)     (7,386)    323,220

Comprehensive loss:
   Net loss                                            --          --          --      (14,040)        --          --       (14,040)
   Other comprehensive income, net of tax:
     Foreign currency translation adjustment           --          --          --         --            904        --           904
     Unrealized gain on marketable securities,
       net of tax effect of $260                       --          --          --         --            422        --           422
                                                                                                                           ---------
     Other comprehensive income                        --          --          --         --           --          --         1,326
                                                                                                                           ---------
Comprehensive loss                                     --          --          --         --           --          --       (12,714)
Exercise of stock options into 16,336 shares of
  common stock                                         --          --           132       --           --          --           132
Repurchase of 163,200 shares of common stock           --          --          --         --           --        (1,125)     (1,125)
                                                   --------   ---------   ---------   ---------   ----------   ----------  ---------
Balances at
   November 30, 2002                                  2,500         229     250,917     69,396       (5,018)     (8,511)    309,513

Comprehensive income:
   Net income                                          --          --          --       11,239         --          --        11,239
   Other comprehensive income, net of tax:
     Foreign currency translation adjustment           --          --          --         --          2,055        --         2,055
     Unrealized gain on marketable securities,
       net of tax effect of $1,063                     --          --          --         --          1,734        --         1,734
                                                                                                                           ---------
     Other comprehensive income                        --          --          --         --           --          --         3,789
                                                                                                                           ---------
Comprehensive income                                   --          --          --         --           --          --        15,028
Exercise of stock options into 96,200 shares of
  common stock                                         --          --           674       --           --          --           674
Tax benefit of stock options exercised                 --          --           216       --           --          --           216
Issuance of stock warrants                             --          --           297       --           --          --           297
                                                   --------   ---------   ---------   ---------   ----------   ----------  ---------
Balances at
   November 30, 2003                               $  2,500   $     229   $ 252,104   $ 80,635    $  (1,229)   $ (8,511)   $325,728
                                                   ========   =========   =========   =========   ==========   ==========  =========

</TABLE>






See accompanying notes to consolidated financial statements.


                                       75


<PAGE>

                      AUDIOVOX CORPORATION AND SUBSIDIARIES
                      Consolidated Statements of Cash Flows
                  Years Ended November 30, 2001, 2002 and 2003
                                 (In thousands)



<TABLE>

                                                                                 2001         2002          2003
                                                                                ---------    ---------    ---------
                                                                                Note 2

Cash flows from operating activities:
<S>                                                                             <C>          <C>          <C>      
   Net income (loss)                                                            $  (7,198)   $ (14,040)   $  11,239
   Adjustments to reconcile net income (loss) to net cash flows (used in)
      provided by operating activities
      Depreciation and amortization                                                 4,476        4,780        4,581
      Provision for bad debt expense                                                1,936        4,884          566
      Equity in income of equity investees                                         (3,586)      (1,779)      (3,279)
      Minority interest                                                              (657)      (5,055)         390
      Gain on issuance of subsidiary shares                                          --        (14,269)        --
      Other-than-temporary decline in market value of investment security            --          1,158           21
      Deferred income tax expense (benefit), net                                   (3,332)       9,904       (2,468)
      (Gain) loss on disposal of property, plant and equipment, net                   (18)         (69)         274
      Tax benefit on stock options exercised                                         --           --            216
      Cumulative effect of a change in accounting for negative goodwill              --           (240)        --
      Non-cash stock compensation                                                    --           --            297
   Changes in operating assets and liabilities, net of assets and liabilities
      acquired
      Accounts receivable                                                          35,797       48,555      (64,553)
      Inventory                                                                   (67,735)     (64,548)      94,341
      Receivables from vendors                                                     (1,263)      (7,346)       6,348
      Prepaid expenses and other assets                                             1,863       (7,983)      (2,693)
      Investment securities-trading                                                (1,635)        (125)      (1,312)
      Accounts payable, accrued expenses and other current liabilities            (29,745)      66,644      (20,160)
      Income taxes payable                                                         (2,979)       3,599        5,188
                                                                                ---------    ---------    ---------

        Net cash provided by (used in) operating activities                       (74,076)      24,070       28,996
                                                                                ---------    ---------    ---------

Cash flows from investing activities:
   Purchases of property, plant and equipment                                      (2,869)      (3,159)      (5,454)
   Proceeds from sale of property, plant and equipment                                261        7,250          265
   Proceeds from distribution from an equity investee                               4,634          947        1,316
   Net proceeds from issuance of subsidiary shares                                   --         22,158         --
   Proceeds from sale of assets to equity investee                                   --           --          3,600
   Purchase of acquired business, net of acquired cash                               --         (7,106)     (40,046)
                                                                                ---------    ---------    ---------

        Net cash provided by (used in) investing activities                         2,026       20,090      (40,319)
                                                                                ---------    ---------    ---------

Cash flows from financing activities:
   Borrowings from bank obligations                                               901,628      403,043      277,983
   Repayments on bank obligations                                                (832,329)    (454,300)    (278,544)
   Proceeds from issuance of convertible subordinated debentures                     --          8,107         --
   Payment of dividend to minority shareholder of subsidiary                       (1,034)        --           --
   Principal payments on capital lease obligation                                     (29)         (55)         (61)
   Proceeds from exercise of stock options and warrants                             2,317          132          674
   Repurchase of Class A common stock                                              (1,382)      (1,125)        --
   Proceeds from issuance of long-term debt                                          --           --         12,913
   Principal payments on subordinated debt                                           (486)        --           --
                                                                                ---------    ---------    ---------

        Net cash provided by (used in) financing activities                        68,685      (44,198)      12,965
                                                                                ---------    ---------    ---------
</TABLE>


                                       76


<PAGE>


                              Audiovox Corporation
                Consolidated Statements of Cash Flows (continued)
                  Years Ended November 30, 2001, 2002 and 2003
                                 (In thousands)

<TABLE>



                                                                                 2001         2002          2003
                                                                                ---------    ---------    ---------
                                                                                Note 2

<S>                                                                             <C>          <C>          <C>      
Effect of exchange rate changes on cash                                               (41)        (229)         302
                                                                                ---------    ---------    ---------

Net increase (decrease) in cash                                                    (3,406)        (267)       1,944

Cash at beginning of period                                                         6,431        3,025        2,758
                                                                                ---------    ---------    ---------
Cash at end of period                                                           $   3,025    $   2,758    $   4,702
                                                                                =========    =========    =========

</TABLE>







































See accompanying notes to consolidated financial statements.


                                       77


<PAGE>



                      AUDIOVOX CORPORATION AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements
                        November 30, 2001, 2002 and 2003
             (Dollars in thousands, except share and per share data)


(1)  Description of Business and Summary of Significant Accounting Policies

     (a)  Description of Business

          Audiovox  Corporation  and its  subsidiaries  (the Company) design and
          market a diverse line of products and provide related  services,  such
          as warranty and activations, throughout the world.

          The  Company  operates  in two  primary  markets  (which  are also the
          Company's reportable segments for accounting purposes):

          (1)  Wireless  communications  (Wireless).  The Wireless Group markets
               wireless   handsets   and   accessories   through   domestic  and
               international  wireless  carriers and their  agents,  independent
               distributors and retailers.

          (2)  Mobile and consumer  electronics  (Electronics).  The Electronics
               Group  sells   autosound,   mobile   electronics   and   consumer
               electronics   primarily  to  mass  merchants,   power  retailers,
               specialty   retailers,   new  car  dealers,   original  equipment
               manufacturers  (OEMs),   independent   installers  of  automotive
               accessories and the U.S. military.

     (b)  Principles of Consolidation

          The consolidated financial statements include the financial statements
          of  Audiovox  Corporation  and  its  wholly-owned  and  majority-owned
          subsidiaries.  Minority  interest of  majority-owned  subsidiaries are
          calculated based upon the respective minority ownership percentage and
          included  on  the   consolidated   balance  sheet.   All   significant
          intercompany   balances  and  transactions  have  been  eliminated  in
          consolidation.

     (c)  Cash and Cash Equivalents

          Investments  with  original  maturities  of three  months  or less are
          considered  cash  equivalents.  There  were  no  cash  equivalents  at
          November 30, 2002 and 2003.

     (d)  Revenue Recognition

          The  Company  recognizes  revenue  from  product  sales at the time of
          passage  of  title  and  risk of loss to the  customer  either  at FOB
          Shipping Point or FOB Destination,  based upon terms  established with


                                                                     (Continued)

                                       78


<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                        November 30, 2001, 2002 and 2003
             (Dollars in thousands, except share and per share data)


          the customer. Any customer acceptance provisions, which are related to
          product testing, are satisfied prior to revenue recognition. There are
          no  further  obligations  on the  part of the  Company  subsequent  to
          revenue  recognition  except for returns of product from the Company's
          customers.  The Company  does  accept  returns of products if properly
          requested, authorized and approved by the Company. The Company records
          an estimate  of returns of  products to be returned by its  customers.
          Management  continuously  monitors and tracks such product returns and
          records the provision for the estimated amount of such future returns,
          based  on  historical  experience  and any  notification  the  Company
          receives of pending returns.  The Electronics  segment's selling price
          to its  customers  is a fixed  amount that is not subject to refund or
          adjustment or contingent upon additional rebates.

          The Wireless segment has sales agreements with certain  customers that
          provide for a rebate of the  selling  price to such  customers  if the
          particular  product is subsequently  sold at a lower price to the same
          customer or to a different  customer.  The rebate period extends for a
          relatively  short  period of time.  Historically,  the amounts of such
          rebates  paid  to  customers  have  not  been  material.  The  Company
          estimates  the  amount  of the  rebate  based  upon the  terms of each
          individual arrangement,  historical experience and future expectations
          of price  reductions,  and the  Company  records  its  estimate of the
          rebate amount at the time of the sale.

     (e)  Sales Incentives

          Both of the Company's segments, Wireless and Electronics,  offer sales
          incentives  to  its   customers  in  the  form  of  (1)   co-operative
          advertising  allowances;  (2) market  development funds and (3) volume
          incentive  rebates.  The  Electronics  segment also offers other trade
          allowances to its customers. The terms of the sales incentives vary by
          customer  and are  offered  from time to time.  Except for other trade
          allowances,  all sales incentives require the customer to purchase the
          Company's  products  during a  specified  period  of time.  All  sales
          incentives  require the customer to claim the sales incentive within a
          certain time period.  Although all sales incentives  require customers
          to claim the sales incentive within a certain time period (referred to
          as the "claim period"),  the Wireless segment historically has settled
          sales  incentives  claimed  after the claim  period  has  expired if a
          customer demands payment. The sales incentive  liabilities are settled
          either by the  customer  claiming a deduction  against an  outstanding
          account  receivable  owed to the  Company  by the  customer  or by the
          customer requesting a check from the Company. The Company is unable to
          demonstrate  that an identifiable  benefit of the sales incentives has
          been received as such, all costs  associated with sales incentives are
          classified as a reduction of net sales.  The following is a summary of
          the various sales  incentive  programs  offered by the Company and the
          related accounting policies:

                                                                     (Continued)

                                       79


<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                        November 30, 2001, 2002 and 2003
             (Dollars in thousands, except share and per share data)


          Co-operative  advertising  allowances  are  offered  to  customers  as
          reimbursement  towards their costs for print or media  advertising  in
          which our product is featured on its own or in conjunction  with other
          companies'  products  (e.g., a weekly  advertising  circular by a mass
          merchant).  The amount offered is either based upon a fixed percentage
          of the  Company's  sales  revenue to the customer or is a fixed amount
          per unit sold to the customer  during a specified time period.  Market
          development  funds are offered to  customers  in  connection  with new
          product  launches or entering into new markets.  Those new markets can
          be either new geographic  areas or new  customers.  The amount offered
          for new  product  launches  is based  upon a fixed  percentage  of the
          Company's  sales revenue to the customer or is a fixed amount per unit
          sold to the  customer  during a  specified  time  period.  The Company
          accrues the cost of  co-operative  advertising  allowances  and market
          development  funds at the  later of when the  customer  purchases  our
          products or when the sales incentive is offered to the customer.

          Volume  incentive  rebates  offered to customers  require that minimum
          quantities of product be purchased  during a specified period of time.
          The amount  offered is either  based  upon a fixed  percentage  of the
          Company's  sales revenue to the customer or is a fixed amount per unit
          sold to the customer.  Certain of the volume incentive rebates offered
          to  customers  include  a  sliding  scale of the  amount  of the sales
          incentive with different  required minimum quantities to be purchased.
          The customer's  achievement of the sales threshold and,  consequently,
          the measurement of the total rebate for the Wireless segment cannot be
          reasonably estimated.  Accordingly,  the Wireless segment recognizes a
          liability  for the maximum  potential  amount of the rebate,  with the
          exception  of certain  volume  incentive  rebates  that  include  very
          aggressive  tiered levels of volume  purchases.  For volume  incentive
          rebates that include very aggressive tiered levels of volume purchase,
          the  Wireless  segment  recognizes  a liability  for the rebate as the
          underlying  revenue  transactions  that  result  in  progress  by  the
          customer  toward  earning the rebate or refund on a program by program
          basis are recognized. The Electronics segment makes an estimate of the
          ultimate  amount of the rebate  their  customers  will earn based upon
          past history with the customer and other facts and circumstances.  The
          Electronics segment has the ability to estimate these volume incentive
          rebates as there does not exist a relatively long period of time for a
          particular  rebate to be claimed,  the  Electronics  segment does have
          historical  experience  with these sales  incentive  programs  and the
          Electronics segment does have a large volume of relatively  homogenous
          transactions.  Any changes in the estimated amount of volume incentive
          rebates  are  recognized   immediately  using  a  cumulative  catch-up
          adjustment.

          With  respect  to  the   accounting   for   co-operative   advertising
          allowances,  market  development  funds and volume incentive  rebates,

                                                                     (Continued)

                                       80


<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                        November 30, 2001, 2002 and 2003
             (Dollars in thousands, except share and per share data)


          there was no impact upon the  adoption of EITF 01-9,  "Accounting  for
          Consideration Given by a Vendor to a Customer (Including a Reseller of
          Vendor's  Products)" (EITF 01-9), as the Company's  accounting  policy
          prior to March 1, 2002 was consistent with its accounting policy after
          the adoption of EITF 01-9.

          Other  trade  allowances  are  additional  sales  incentives  that the
          Company provides to the Electronics  segment  customers  subsequent to
          the related  revenue being  recognized.  In accordance with EITF 01-9,
          the  Company  records  the  provision  for  these   additional   sales
          incentives at the later of when the sales incentive is offered or when
          the related revenue is recognized.  Such additional  sales  incentives
          are  based  upon a  fixed  percentage  of  the  selling  price  to the
          customer, a fixed amount per unit, or a lump-sum amount.

          The accrual  for sales  incentives  at November  30, 2002 and 2003 was
          $12,151 and  $21,894,  respectively.  The  Company's  sales  incentive
          liability  may prove to be  inaccurate,  in which case the Company may
          have  understated  or  overstated  the  provision  required  for these
          arrangements.  Therefore, although the Company makes its best estimate
          of its sales incentive liability, many factors,  including significant
          unanticipated  changes in the  purchasing  volume of its customers and
          the lack of claims made by  customers  of offered and  accepted  sales
          incentives, could have a significant impact on the Company's liability
          for sales incentives and the Company's reported operating results.

          For the fiscal years ended November 30, 2001, 2002 and 2003, reversals
          of previously  established  sales  incentive  liabilities  amounted to
          $14,369,  $4,716 and $2,940,  respectively.  These  reversals  include
          unearned sales  incentives and unclaimed  sales  incentives.  Unearned
          sales incentives are volume  incentive  rebates where the customer did
          not purchase the required  minimum  quantities  of product  during the
          specified  time.  Volume  incentive  rebates  for  both  segments  are
          reversed  into income in the period when the customer did not purchase
          the required minimum  quantities of product during the specified time.
          Unearned  sales  incentives  for fiscal years ended November 30, 2001,
          2002 and 2003  amounted to $9,051,  $1,354 and  $1,310,  respectively.
          Unclaimed sales incentives are sales incentives earned by the customer
          but the customer has not claimed payment of the earned sales incentive
          from the Company.  Unclaimed  sales  incentives for fiscal years ended
          November  30,  2001,  2002 and 2003  amounted  to  $5,318,  $3,362 and
          $1,630, respectively.

          The accrual for earned but unclaimed  sales  incentives is reversed by
          Wireless  only when  management  is able to  conclude,  based  upon an
          individual  judgement of each sales incentive,  that it is remote that
          the customer will claim the sales incentive.  The methodology  applied
          for determining the amount and timing of reversals for the Wireless

                                                                     (Continued)

                                       81


<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                        November 30, 2001, 2002 and 2003
             (Dollars in thousands, except share and per share data)


          segment is  disciplined,  consistent and rational.  The methodology is
          not systematic (formula based), as the Company makes an estimate as to
          when it is  remote  that the  sales  incentive  will  not be  claimed.
          Reversals by the Wireless  segment of unclaimed sales  incentives have
          historically  occurred  in varying  periods up to 12 months  after the
          recognition  of the  accrual.  In  deciding  on whether to reverse the
          sales incentive liability into income, the Company makes an assessment
          as to the likelihood of the customer ever claiming the funds after the
          claim  period  has  expired  and  considers  the  specific  facts  and
          circumstances  pertaining  to  the  individual  sales  incentive.  The
          factors  considered  by  management  in making the decision to reverse
          accruals for unclaimed sales incentives  include (i) past practices of
          the customer  requesting  payments  after the  expiration of the claim
          period;  (ii)  recent  negotiations  with the  customer  for new sales
          incentives;  (iii)  subsequent  communications  with the customer with
          regard to the status of the claim;  and (iv)  recent  activity  in the
          customer's account.

          The Electronics segment reverses earned but unclaimed sales incentives
          upon the expiration of the claim period. The Company believes that the
          reversal of earned but unclaimed sales incentives for Electronics upon
          the  expiration  of  the  claim  period  is a  disciplined,  rational,
          consistent  and  systematic   method  of  reversing   unclaimed  sales
          incentives.  For  the  Electronics  segment,  the  majority  of  sales
          incentive  programs  are  calendar-year  programs.   Accordingly,  the
          program ends on the month  following the fiscal year end and the claim
          period expires one year from the end of the program.

     (f)  Accounts Receivable

          The  majority  of the  Company's  accounts  receivable  are  due  from
          companies in the wireless,  retail,  mass merchant and OEM industries.
          Credit is extended  based on an evaluation  of a customer's  financial
          condition  and,  generally,   collateral  is  not  required.  Accounts
          receivable  are  generally  due  within  30-60  days and are stated at
          amounts due from customers, net of an allowance for doubtful accounts.
          Accounts  outstanding  longer than the  contracted  payment  terms are
          considered past due.

          The Company performs  ongoing credit  evaluations of its customers and
          adjusts  credit limits based upon payment  history and the  customer's
          current credit worthiness,  as determined by a review of their current
          credit information.  The Company continuously monitors collections and
          payments  from its  customers  and maintains a provision for estimated
          credit  losses  based  upon  historical  experience  and any  specific
          customer  collection  issues  that have been  identified.  While  such
          credit losses have historically been within management's  expectations
          and the provisions  established,  the Company cannot guarantee that it
          will continue to experience the same credit loss rates that have

                                                                     (Continued)

                                       82


<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                        November 30, 2001, 2002 and 2003
             (Dollars in thousands, except share and per share data)


          been experienced in the past. Since the Company's accounts  receivable
          is concentrated in a relatively few number of customers, a significant
          change in the  liquidity  or  financial  position  of any one of these
          customers could have a material  adverse impact on the  collectability
          of the Company's accounts receivables and future operating results.

          Accounts receivable is comprised of the following:


<TABLE>

                                                        November 30,
                                                   --------------------
                                                     2002       2003
                                                    --------   --------


          <S>                                      <C>        <C>     
          Trade accounts receivable and other       $195,228   $275,695
          Less:
             Allowance for doubtful accounts           6,829      6,947
             Allowance for cellular deactivations      1,628      1,127
             Allowance for cash discounts                207      1,200
                                                    --------   --------
                                                    $186,564   $266,421
                                                    ========   ========
</TABLE>


          The following is a rollforward of the allowance for doubtful accounts:


<TABLE>

                                   November 30,
                              -------------------
                               2002       2003
                              -------    -------

          <S>                 <C>        <C>    
          Beginning balance   $ 4,715    $ 6,829
          Expense               4,884        566
          Deductions           (2,770)      (448)
                              -------    -------
          Ending balance      $ 6,829    $ 6,947
                              =======    =======
</TABLE>


     (g)  Inventory

          Inventory consists  principally of finished goods and is stated at the
          lower of the actual cost to purchase  (primarily on a weighted  moving
          average  basis)  and/or  the  current  estimated  market  value of the
          inventory  less  expected  costs to sell the  inventory.  The  Company
          regularly reviews inventory quantities on-hand and records a provision
          for excess and obsolete  inventory  based  primarily on open  purchase
          orders from  customers  and selling  prices  subsequent to the balance
          sheet date as well as indications  from customers  based upon the then
          current negotiations.  As demonstrated in recent years, demand for the
          Company's products can fluctuate  significantly.  A significant sudden
          increase in the demand for the  Company's  products  could result in a


                                                                     (Continued)

                                       83


<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                        November 30, 2001, 2002 and 2003
             (Dollars in thousands, except share and per share data)


          short-term  increase  in the  cost  of  inventory  purchases  while  a
          significant  decrease  in demand  could  result in an  increase in the
          amount  of excess  inventory  quantities  on-hand.  In  addition,  the
          Company's industry is characterized by rapid technological  change and
          frequent new product introductions that could result in an increase in
          the  amount  of  obsolete  inventory   quantities   on-hand.  In  such
          situations,  the Company  generally  does not obtain price  protection
          from its vendors, however, on occasion, the Company has received price
          protection which reduces the cost of inventory. Since price protection
          reduces the cost of inventory,  as the Company sells the inventory for
          which it has received price  protection,  the amount is reflected as a
          reduction  to cost of  sales.  There  can be no  assurances  that  the
          Company will be successful in negotiating  such price  protection from
          its vendors in the future.

          The Company has, on occasion,  performed upgrades on certain inventory
          on behalf of its vendors.  The  reimbursements the Company receives to
          perform  these  upgrades  are  reflected as a reduction to the cost of
          inventory  and is  recognized  as a reduction  to cost of sales as the
          related inventory is sold.  Additionally,  the Company's  estimates of
          excess and obsolete  inventory  may prove to be  inaccurate,  in which
          case the Company may have  understated  or  overstated  the  provision
          required for excess and obsolete  inventory.  Therefore,  although the
          Company  makes every effort to ensure the accuracy of its forecasts of
          future product demand, any significant unanticipated changes in demand
          or technological  developments  could have a significant impact on the
          value of the Company's inventory and its reported operating results.

          The Company  maintains a  significant  investment  in  inventory  and,
          therefore,  is subject to the risk of losses on  write-downs to market
          and inventory obsolescence.  The Company decided to substantially exit
          the analog phone line of business to reflect the shift in the wireless
          industry  from analog to digital  technology  and recorded a charge of
          approximately  $13,500 during the second quarter of 2001 to reduce its
          carrying  value of its analog  inventory  to estimated  market  value.
          During  the  fourth  quarter  of  2001,  Wireless  recorded  inventory
          write-downs  to  market of  $7,150  as a result  of the  reduction  of
          selling prices  primarily  related to digital  hand-held phones during
          the first quarter of 2002 in anticipation of new digital technologies.
          During the year ended November 30, 2002,  Wireless recorded  inventory
          write-downs to market of $13,823.

          During the year ended November 30, 2003,  Wireless recorded  inventory
          write-downs  of $2,817 based upon open purchase  orders with customers
          at lower selling  prices,  as well as  indications  from our customers
          based upon then current  negotiations.  It is reasonably possible that
          additional  write-downs  to market may be required in the future given
          the continued emergence of new technologies, however, no estimate can

                                                                     (Continued)

                                       84


<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                        November 30, 2001, 2002 and 2003
             (Dollars in thousands, except share and per share data)


          be made of such  write-downs.  At November 30,  2003,  Wireless had on
          hand approximately 15,600 units of previously  written-down inventory,
          with an extended value of approximately $800.

          For certain  inventory items, the Company is entitled to receive price
          protection  in the event the selling  price to its  customers  is less
          than the purchase  price from the  manufacturer.  The Company  records
          such price  protection,  as necessary,  at the time of the sale of the
          units.  For fiscal 2001,  2002 and 2003,  price  protection of $4,550,
          $27,683 and $13,031, respectively, was recorded as a reduction to cost
          of sales as the related inventory was sold.

     (h)  Investment Securities

          The Company classifies its equity securities in one of two categories:
          trading or available- for-sale. Trading securities are bought and held
          principally  for the  purpose  of selling  them in the near term.  All
          other   securities   not  included  in  trading  are   classified   as
          available-for-sale.

          Trading and available-for-sale  securities are recorded at fair value.
          Unrealized holding gains and losses on trading securities are included
          in earnings.  Unrealized  holding gains and losses, net of the related
          tax  effect,  on  available-for-sale   securities  are  excluded  from
          earnings  and  are  reported  as  a  component  of  accumulated  other
          comprehensive  income until  realized.  Realized gains and losses from
          the sale of available-for-sale securities are determined on a specific
          identification basis.

          A decline in the market value of any available-for-sale security below
          cost that is deemed  other-than-temporary  results in a  reduction  in
          carrying  amount to fair value.  The impairment is charged to earnings
          and a new cost basis for the  security is  established  (such a charge
          was recorded  during  fiscal 2002 and fiscal 2003 - Note 8).  Dividend
          and interest income are recognized when earned.  The Company considers
          numerous factors,  on a case by case basis, in evaluating  whether the
          decline in market value of an  available-for-sale  security below cost
          is other-than-temporary. Such factors include, but are not limited to,
          (i) the length of time and the  extent to which the  market  value has
          been less than cost;  (ii) the  financial  condition and the near-term
          prospects  of the  issuer of the  investment;  and (iii)  whether  the
          Company's  intent to retain the  investment  for the period of time is
          sufficient to allow for any anticipated recovery in market value.



                                                                     (Continued)

                                       85


<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                        November 30, 2001, 2002 and 2003
             (Dollars in thousands, except share and per share data)


     (i)  Derivative Financial Instruments

          The Company accounts for derivatives and hedging  activities under the
          provisions of Statement of Financial  Accounting  Standards (SFAS) No.
          133,  "Accounting for Derivative  Instruments and Hedging Activities",
          as amended (Statement 133).  Statement 133 requires the recognition of
          all derivative  financial  instruments as either assets or liabilities
          in the  statements  of financial  condition and  measurement  of those
          instruments  at fair  value.  Changes  in the  fair  values  of  those
          derivatives  are  reported in earnings or other  comprehensive  income
          (loss)  depending on the  designation of the derivative and whether it
          qualifies for hedge  accounting.  The  accounting for gains and losses
          associated  with  changes  in the fair value of a  derivative  and the
          effect on the  consolidated  financial  statements  will depend on its
          hedge  designation  and  whether  the  hedge is  highly  effective  in
          achieving  offsetting  changes  in the fair value or cash flows of the
          asset or liability hedged.  Under the provisions of Statement 133, the
          method that will be used for assessing the  effectiveness of a hedging
          derivative,  as well as the  measurement  approach for determining the
          ineffective aspects of the hedge, must be established at the inception
          of the hedged instrument.

          The  Company's  evaluations  of hedge  effectiveness  are  subject  to
          assumptions based on the terms and timing of the underlying exposures.
          For a fair value hedge, both the effective and ineffective portions of
          the change in fair value of the derivative  instrument,  along with an
          adjustment  to the  carrying  amount of the hedge  item for fair value
          changes  attributable  to the hedge risk,  are recognized in earnings.
          For a cash  flow  hedge,  changes  in the fair  value of a  derivative
          instrument that is highly effective are deferred in accumulated  other
          comprehensive  income or loss  until  the  underlying  hedged  item is
          recognized  in earnings.  The  ineffective  portion is  recognized  in
          earnings immediately.  If a fair value or cash flow hedge was to cease
          to qualify for hedge accounting or be terminated, it would continue to
          be carried on the balance sheet at fair value until settled, but hedge
          accounting  would  be  discontinued  prospectively.  If  a  forecasted
          transaction were no longer probable of occurring,  amounts  previously
          deferred in accumulated other comprehensive income would be recognized
          immediately in earnings.

          The  Company,  as  a  policy,   does  not  use  derivative   financial
          instruments for trading  purposes.  The Company  conducts  business in
          several  foreign  currencies  and, as a result,  is subject to foreign
          currency  exchange  rate risk due to the effects  that  exchange  rate
          movements of these currencies have on the Company's costs. To minimize
          the effect of exchange rate  fluctuations on costs, the Company enters
          into forward exchange rate contracts.  The Company,  as a policy, does
          not enter into forward exchange  contracts for trading  purposes.  The
          forward exchange rate contracts are entered into as hedges of

                                                                     (Continued)

                                       86


<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                        November 30, 2001, 2002 and 2003
             (Dollars in thousands, except share and per share data)


          inventory purchase commitments and of trade receivables due in foreign
          currencies.

          Gains and losses on the forward  exchange  contracts  that  qualify as
          hedges are  reported as a  component  of the  underlying  transaction.
          Foreign currency transactions which have not been hedged are marked to
          market on a current  basis with gains and  losses  recognized  through
          income and  reflected in other  income  (expense).  In  addition,  any
          previously  deferred  gains and losses on hedges which are  terminated
          prior to the  transaction  date are  recognized in current income when
          the hedge is terminated.

          At  November  30,  2002 and 2003,  the  Company  had no  contracts  to
          exchange foreign currencies in the form of forward exchange contracts.
          For the years ended November 30, 2001, 2002 and 2003, gains and losses
          on  foreign  currency  transactions  which  were not  hedged  were not
          material.  For the years ended November 30, 2001, 2002 and 2003, there
          were no gains or losses as a result of terminating hedges prior to the
          transaction date.

     (j)  Debt Issuance Costs

          Costs  incurred  in  connection   with  the   restructuring   of  bank
          obligations  (Note  12)  have  been  capitalized.  These  charges  are
          amortized  over the lives of the respective  agreements.  Amortization
          expense of these costs  amounted to $336,  $379 and $528 for the years
          ended November 30, 2001, 2002 and 2003, respectively.

     (k)  Property, Plant and Equipment

          Property,  plant and  equipment are stated at cost.  Property under a
          capital  lease  is  stated  at the  present  value  of  minimum  lease
          payments.  Major improvements are capitalized and minor  replacements,
          maintenance  and  repairs  are  charged to expense as  incurred.  Upon
          retirement  or  disposal of assets,  the cost and related  accumulated
          depreciation  are  removed  from  the  consolidated   balance  sheets.
          Depreciation  is  calculated  on the  straight-line  method  over  the
          estimated useful lives of the assets as follows:


               Buildings                                      20-30 years
               Furniture, fixtures and displays                5-10 years
               Machinery and equipment                         5-10 years
               Computer hardware and software                   3-5 years
               Automobiles                                        3 years



                                                                     (Continued)

                                       87


<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                        November 30, 2001, 2002 and 2003
             (Dollars in thousands, except share and per share data)


          Leasehold  improvements  are  amortized  over the shorter of the lease
          term or  estimated  useful life of the asset.  Assets  acquired  under
          capital lease are amortized over the term of the lease.

          Capitalized  computer  software  costs  obtained  for internal use are
          amortized on a straight- line basis.

     (l)  Goodwill and Other Intangible Assets

          Goodwill and other  intangible  assets consists of the excess over the
          fair value of assets acquired  (goodwill) and other intangible  assets
          (patents and trademarks).

          Prior to the  adoption  of SFAS 142,  "Goodwill  and Other  Intangible
          Assets"  (SFAS No.  142),  the Company  amortized  goodwill  and other
          intangible  assets on a  straight-line  basis  over  their  respective
          lives.

          In July 2001, the Financial  Accounting  Standards Board (FASB) issued
          SFAS No. 141 "Business  Combinations"  (SFAS No. 141) and SFAS No.142.
          The Company early adopted the  provisions of SFAS No. 141 and SFAS No.
          142 as of December 1, 2001.  SFAS No. 141  requires  that the purchase
          method of accounting be used for all future business  combinations and
          specifies   criteria   intangible   assets   acquired  in  a  business
          combination  must  meet  to be  recognized  and  reported  apart  from
          goodwill.  As a result of adopting the  provisions of SFAS No. 141 the
          Company accounted for the acquisitions of Code-Alarm and Recoton under
          the purchase  method of accounting in accordance with SFAS No.141 (see
          Note 6).

          SFAS No.  142  requires  that  goodwill  and  intangible  assets  with
          indefinite useful lives no longer be amortized, but instead tested for
          impairment at least annually or more  frequently if an event occurs or
          circumstances  change  that could more likely than not reduce the fair
          value of a reporting unit below its carrying amount. SFAS No. 142 also
          requires  that  intangible  assets  with  estimable  useful  lives  be
          amortized over their  respective  estimated  useful lives and reviewed
          for impairment in accordance  with SFAS No. 144,  "Accounting  for the
          Impairment or Disposal of Long-Lived Assets".

          As a result of adopting  the  provisions  of SFAS No. 142, the Company
          did not record  amortization  expense relating to its goodwill and the
          Company reassessed the useful lives and residual lives of all acquired
          intangible   assets  to  make  any   necessary   amortization   period
          adjustments.  Based upon that assessment,  no adjustments were made to
          the amortization period or residual values of other intangible assets.


                                                                     (Continued)

                                       88


<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                        November 30, 2001, 2002 and 2003
             (Dollars in thousands, except share and per share data)


          The cost of other intangible  assets with definite lives are amortized
          on a straight-line basis over their respective lives. In addition, the
          Company was not required  under SFAS No. 142 to assess the useful life
          and residual value of its goodwill as the Company's  goodwill,  at the
          time of adoption, was equity method goodwill and, as such, this equity
          method  goodwill will continue to be evaluated  for  impairment  under
          Accounting  Principles  Board No. 18, "The Equity Method of Accounting
          for Investments in Common Stock",  as amended.  For intangible  assets
          with indefinite lives, including goodwill,  recorded subsequent to the
          adoption of SFAS No. 142, the Company  performed its annual impairment
          test which indicated no reduction is required.

          The  following  table  presents  adjusted net income (loss) and income
          (loss) per share data  restated to include the  retroactive  impact of
          the adoption of SFAS No. 142:


<TABLE>

                                                                           Years Ended November 30,
                                                                   2001              2002              2003
                                                              --------------    --------------    --------------
                                                                  Note (2)

<S>                                                           <C>               <C>               <C>           
Reported net income (loss) before cumulative effect of a
  change in accounting for negative goodwill                  $       (7,198)   $      (14,280)   $       11,239
  Cumulative effect of a change in accounting principle for            
      negative goodwill, net of tax                                    --                 240               --
                                                              --------------    --------------    --------------
Reported net income (loss)                                            (7,198)          (14,040)           11,239
  Add back:
  Goodwill amortization, net of tax                                      224              --                --
                                                              --------------    --------------    --------------
Adjusted net income (loss)                                    $       (6,974)   $      (14,040)   $       11,239
                                                              ==============    ==============    ==============

Basic net income (loss) per common share:
  Reported net income (loss) before accounting change         $        (0.33)   $        (0.65)   $         0.51
  Cumulative effect of a change in accounting principle for                
      negative goodwill, net of tax                                     --                0.01              --
                                                              --------------    --------------    --------------
  Net income (loss)                                                    (0.33)            (0.64)             0.51
  Goodwill amortization, net of tax                                     0.01              --                --
                                                              --------------    --------------    --------------
Adjusted net income (loss)                                    $        (0.32)   $        (0.64)   $         0.51
                                                              ==============    ==============    ==============
Diluted net income (loss) per common share:
  Reported net income (loss) before accounting change         $        (0.33)   $        (0.65)   $         0.51
  Cumulative effect of a change in accounting principle for                                        
      negative goodwill, net of tax                                     --                0.01              --
                                                              --------------    --------------    --------------
  Net income (loss)                                                    (0.33)            (0.64)             0.51
  Goodwill amortization, net of tax                                     0.01              --                --
                                                              --------------    --------------    --------------
Adjusted net income (loss)                                    $        (0.32)   $        (0.64)   $         0.51
                                                              ==============    ==============    ==============
Weighted average common shares outstanding:
  Basic                                                           21,877,100        21,850,035        21,854,610
                                                              ==============    ==============    ==============
  Diluted                                                         21,877,100        21,850,035        22,054,320
                                                              ==============    ==============    ==============
</TABLE>



                                                                     (Continued)

                                       89


<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                        November 30, 2001, 2002 and 2003
             (Dollars in thousands, except share and per share data)


          Goodwill

          The change in carrying amount of goodwill is as follows:


<TABLE>

                                                                  November 30,
                                                              ------------------
                                                               2002     2003
                                                              ------   ------

          <S>                                                 <C>      <C>   
          Net beginning balance                               $4,732   $6,826
          Write off of unamortized negative goodwill upon
               change in accounting principle                    240     --
          Goodwill acquired in connection with the purchase
               of certain assets of Code-Alarm (Note 6)        1,854     --
          Adjustments of certain acquired assets of Code-
               Alarm (Note 6)                                   --        706
                                                              ------   ------
          Net ending balance                                  $6,826   $7,532
                                                              ======   ======
</TABLE>


          Other Intangible Assets


<TABLE>

                                                      November 30, 2002
                                             --------------------------------------
                                              Gross
                                             Carrying   Accumulated       Total Net
                                              Value     Amortization     Book Value

          <S>                                 <C>            <C>        <C>   
          Patents subject to amortization     $677           $677        --
          Trademarks subject to
               amortization                     34             34        --
                                               ----          ----       ---
          Total                                $711          $711        --
                                               ====         ====        ===
</TABLE>




                                                                     (Continued)

                                       90


<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                        November 30, 2001, 2002 and 2003
             (Dollars in thousands, except share and per share data)




<TABLE>

                                                  November 30, 2003
                                 ---------------------------------------
                                   Gross
                                  Carrying   Accumulated      Total Net
                                   Value     Amortization    Book Value

          <S>                     <C>        <C>            <C>    
          Patents subject to
               amortization        $  677     $  677           --
          Trademarks subject to
               amortization            34        34           --
          Trademarks not subject
               to amortization
               (Note 6)             8,043       --           $8,043
                                   ------     ------         ------
          Total                    $8,754     $  711         $8,043
                                   ======     ======         ======
</TABLE>



               At  November  30,  2003,   all   intangible   assets  subject  to
               amortization   have  been  fully  amortized.   Accordingly,   the
               estimated  aggregate   amortization   expense  for  each  of  the
               succeeding years ending November 30, 2008 amounts to $0.

          (m)  Equity Investments

               The Company has common stock  investments which are accounted for
               by the equity  method as the Company  owns between 20% and 50% of
               the common stock.

               The  Company  applies  the  equity  method of  accounting  to its
               investments  in entities  where the  Company has  non-controlling
               ownership  interests.  The  Company's  share of its equity method
               investees  earnings  or losses is  included  in the  consolidated
               statements of  operations.  The Company  eliminates  its pro rata
               share of gross profit on sales to its equity method investees for
               inventory  on hand at the  investees  at the end of the  year.  A
               description of the Company's  equity  investments and the related
               transactions between the Company and these investees is discussed
               in Note 10.

          (n)  Cellular Telephone Commissions

               Under various agency agreements,  the Company receives an initial
               activation  commission  for  obtaining  subscribers  for cellular
               telephone  services.  The agreements  may contain  provisions for
               additional  commissions  based upon usage and length of continued
               subscription.  The  agreements  also provide for the reduction or

                                                                     (Continued)

                                       91


<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                        November 30, 2001, 2002 and 2003
             (Dollars in thousands, except share and per share data)


               elimination  of initial  activation  commissions  if  subscribers
               deactivate  service within  stipulated  periods.  The Company has
               provided a liability for estimated cellular  deactivations  which
               is  reflected   in  the   accompanying   consolidated   financial
               statements as a reduction of accounts receivable.

               The Company  recognizes sales revenue for the initial  activation
               and residual  commissions  based upon usage on the accrual basis.
               Such commissions  approximated  $29,859,  $26,756 and $19,046 for
               the years ended November 30, 2001,  2002 and 2003,  respectively.
               Related  commissions paid to outside selling  representatives for
               cellular  activations  are  included  in  cost  of  sales  in the
               accompanying  consolidated  statements of operations and amounted
               to $22,390,  $18,673 and $12,246 for the years ended November 30,
               2001, 2002 and 2003, respectively.

          (o)  Advertising

               The  Company  expenses  the  cost  of  advertising  as  incurred,
               excluding  co-operative  advertising  (see sales  incentives Note
               24). During the years ended November 30, 2001, 2002 and 2003, the
               Company had no direct response advertising.

          (p)  Product Warranties and Product Repair Costs

               The Company  generally  warrants  its  products  against  certain
               manufacturing and other defects.  The Company provides warranties
               for all of its  products  ranging from 90 days to the lifetime of
               the  product.  Warranty  expenses are accrued at the time of sale
               based on the Company's  estimated cost to repair expected returns
               of  products  for  warranty  matters.  This  liability  is  based
               primarily on historical  experiences of actual warranty claims as
               well  as  current  information  on  repair  costs.  The  warranty
               liability  of $9,143 and $12,006 is recorded in accrued  expenses
               in the  accompanying  consolidated  balance sheets as of November
               30, 2002 and 2003, respectively. In addition, the Company records
               a reserve for product  repair  costs.  This reserve is based upon
               the quantities of defective  inventory on hand and an estimate of
               the cost to repair  such  defective  inventory.  The  reserve for
               product  repair  costs of  $6,267  and  $6,506 is  recorded  as a
               reduction to inventory in the accompanying  consolidated  balance
               sheets as of November 30, 2002 and 2003,  respectively.  Warranty
               claims and product  repair  costs  expense for each of the fiscal
               years ended November 30, 2001, 2002 and 2003 were $11,319, $6,985
               and $12,015, respectively.



                                                                     (Continued)

                                       92


<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                        November 30, 2001, 2002 and 2003
             (Dollars in thousands, except share and per share data)


               The following table provides the changes in the Company's product
               warranties and product repair costs for 2002 and 2003:


<TABLE>

                                                              2002         2003
                                                             --------    --------

          <S>                                                <C>         <C>     
          Beginning balance                                  $ 13,066    $ 15,410
          Liabilities accrued for warranties issued during
               the period                                       6,985      12,015
          Warranty claims paid during the period               (4,641)     (8,913)
                                                             --------    --------
          Ending balance                                     $ 15,410    $ 18,512
                                                             ========    ========
</TABLE>


          (q)  Foreign Currency

               With the exception of a subsidiary operating in Venezuela,  which
               was deemed a hyper-inflationary  economy in fiscal 2001,  assets
               and  liabilities  of  those  subsidiaries  and  equity  investees
               located  outside the United States whose cash flows are primarily
               in local  currencies have been translated at rates of exchange at
               the  end  of  the  period  or  historical   exchange   rates,  as
               appropriate  in accordance  with SFAS No. 52,  "Foreign  Currency
               Translation".  Revenues and expenses have been  translated at the
               weighted  average  rates of exchange in effect during the period.
               Gains and losses  resulting from  translation are recorded in the
               cumulative  foreign currency  translation  account in accumulated
               other   comprehensive   income  (loss).   For  the  operation  in
               Venezuela,  financial statements are translated at either current
               or historical exchange rates, as appropriate.  These adjustments,
               along  with  gains  and  losses  on  currency  transactions,  are
               reflected in the consolidated statements of operations for fiscal
               2001.  During the first quarter of fiscal 2002 (January 1, 2002),
               Venezuela ceased to be deemed a hyper- inflationary economy.

               Exchange gains and losses on intercompany balances of a long-term
               nature  are also  recorded  in the  cumulative  foreign  currency
               translation  account in accumulated  other  comprehensive  income
               (loss). Foreign currency transaction gains (losses) of $200, $418
               and $(232) for the years ended November 30, 2001,  2002 and 2003,
               respectively, were included in other income (expense).

          (r)  Income Taxes

               Income  taxes are  accounted  for  under the asset and  liability
               method.  Deferred tax assets and  liabilities  are recognized for
               the future tax consequences  attributable to differences  between
               the financial  statement  carrying amounts of existing assets and


                                                                     (Continued)

                                       93


<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                        November 30, 2001, 2002 and 2003
             (Dollars in thousands, except share and per share data)


               liabilities and their respective tax bases and operating loss and
               tax credit carryforwards. Deferred tax assets and liabilities are
               measured  using  enacted  tax rates  expected to apply to taxable
               income  in the years in which  those  temporary  differences  are
               expected  to be  recovered  or settled  (Note 14).  The effect on
               deferred tax assets and  liabilities  of a change in tax rates is
               recognized  in income in the period that  includes the  enactment
               date.

          (s)  Net Income (Loss) Per Common Share

               Basic  net  income  (loss)  per  common  share is based  upon the
               weighted average number of common shares  outstanding  during the
               period.  Diluted net income (loss) per common share  reflects the
               potential  dilution  that  would  occur  if  securities  or other
               contracts to issue common stock were  exercised or converted into
               common stock.

               A  reconciliation  between the numerators and denominators of the
               basic and diluted income (loss) per common share is as follows:


<TABLE>

                                                                                    Years Ended
                                                                                    November 30,
                                                                    ----------------------------------------------
                                                                         2001              2002             2003
                                                                    --------------    -------------    -----------
                                                                       Note (2)

<S>                                                                 <C>               <C>              <C>        
          Net income (loss) (numerator for net income (loss) per
             common share, basic)                                   $       (7,198)   $     (14,040)   $    11,239
          Interest on 6 1/4% convertible subordinated debentures,
             net of tax                                                          5             --             --
                                                                    --------------    -------------    -----------
          Adjusted net income (loss) (numerator for net income
             per common share, diluted)                             $       (7,203)   $     (14,040)   $    11,239
                                                                    ==============    =============    ===========
          Weighted average value of common shares outstanding
             (denominator for net income (loss) per common
             share, basic)                                              21,877,100       21,850,035     21,854,610
          Effect of dilutive securities:
             Employee stock options and stock warrants                        --               --          199,710
                                                                    --------------    -------------    -----------
          Weighted average value of common and potential
            common shares outstanding (denominator for net
            income (loss)  per common share, diluted)                   21,877,100       21,850,035     22,054,320
                                                                    ==============    =============    ===========

          Net income (loss) per common share before cumulative
            effect of accounting change for negative goodwill:
            Basic                                                   $        (0.33)   $       (0.65)   $      0.51
                                                                    ==============    =============    ===========
            Diluted                                                 $        (0.33)   $       (0.65)   $      0.51
                                                                    ==============    =============    ===========
          Net income (loss) per common share:
            Basic                                                   $        (0.33)   $       (0.64)   $      0.51
                                                                    ==============    =============    ===========
            Diluted                                                 $        (0.33)   $       (0.64)   $      0.51
                                                                    ==============    =============    ===========
</TABLE>



                                                                     (Continued)

                                       94


<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                        November 30, 2001, 2002 and 2003
             (Dollars in thousands, except share and per share data)


               Employee stock options and stock warrants totaling  2,595,108 and
               1,540,000  for the  years  ended  November  30,  2002  and  2003,
               respectively,  were not  included  in the net  income  (loss) per
               common  share  calculation  because  their effect would have been
               anti-dilutive.  Dilutive  net loss per common  share for fiscal
               2001 and 2002 is the same as basic net loss per common  share due
               to the  anti-dilutive  effect of the potential  exercise of stock
               options and warrants.

          (t)  Supplementary Financial Statement Information

               Interest  income  of  approximately  $670,  $509 and $516 for the
               years ended November 30, 2001,  2002 and 2003,  respectively,  is
               included  in  other,   net,  in  the  accompanying   consolidated
               statements of operations.

          (u)  Use of Estimates

               The  preparation  of  financial  statements  in  conformity  with
               accounting  principles generally accepted in the United States of
               America  requires  management to make  estimates and  assumptions
               that  affect the  reported  amounts  of assets  and  liabilities,
               including  the  allowance  for doubtful  accounts,  allowance for
               cellular  deactivations,  inventory valuation,  recoverability of
               deferred tax assets,  valuation  of  long-lived  assets,  accrued
               sales  incentives,   warranty  reserves  and  disclosure  of  the
               contingent assets and liabilities at the date of the consolidated
               financial  statements  and the  reported  amounts of revenues and
               expenses during the reporting period. Actual results could differ
               from those estimates.

          (v)  Accounting  for  the  Impairment  of  Long-Lived  Assets  and for
               Long-Lived Assets to be Disposed of

               Effective  December 1, 2002,  the Company  adopted  SFAS No. 144,
               "Accounting for the Impairment or Disposal of Long-Lived Assets",
               which  establishes  accounting  and  reporting  standards for the
               impairment or disposal of long-lived assets. SFAS No. 144 removes
               goodwill from its scope and retains the  requirements of SFAS No.
               121,  "Accounting for the Impairment of Long-Lived Assets and for
               Long-Lived  Assets to be Disposed of",  regarding the recognition
               of impairment losses on long-lived assets held for use.

               Long-lived  assets  and  certain  identifiable   intangibles  are
               reviewed   for   impairment   whenever   events  or   changes  in
               circumstances  indicate that the carrying  amount of an asset may
               not be recoverable.  Recoverability of assets to be held and used
               is measured by a comparison of the carrying amount of an asset to


                                                                     (Continued)

                                       95


<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                        November 30, 2001, 2002 and 2003
             (Dollars in thousands, except share and per share data)


               future  undiscounted  net cash flows  expected to be generated by
               the asset.  Recoverability of assets held for sale is measured by
               comparing  the carrying  amount of the assets to their  estimated
               fair market value.  If such assets are considered to be impaired,
               the  impairment  to be  recognized  is  measured by the amount by
               which the carrying  amount of the assets exceed the fair value of
               the assets.

          (w)  Accounting for Stock-Based Compensation

               The Company  applies the  intrinsic  value  method as outlined in
               Accounting Principles Board Opinion No. 25, "Accounting for Stock
               Issued to Employees" (APB No. 25), and related interpretations in
               accounting  for stock options and share units granted under these
               programs.  Under the  intrinsic  value  method,  no  compensation
               expense is  recognized  if the  exercise  price of the  Company's
               employee  stock options equals the market price of the underlying
               stock  on the  date of  grant.  SFAS  No.  123,  "Accounting  for
               Stock-Based  Compensation",  requires  that the  Company  provide
               pro-forma  information  regarding  net  income and net income per
               common  share as if  compensation  cost for the  Company's  stock
               option  programs had been  determined in accordance with the fair
               value  method  prescribed   therein.   The  Company  adopted  the
               disclosure  portion of SFAS No. 148,  "Accounting for Stock-Based
               Compensation   -  Transition  and   Disclosure"   requiring  more
               prominent proforma  disclosures as described in SFAS No. 123. The
               following  table  illustrates the effect on net income and income
               per common share as if the Company had measured the  compensation
               cost for the Company's stock option programs under the fair value
               method in each period presented:


<TABLE>

                                                             Years Ended
                                                             November 30,
                                                  ------------------------------------
                                                     2001        2002         2003
                                                   --------    --------    ----------
                                                   Note (2)

Net income (loss):
<S>                                                <C>         <C>         <C>       
        As reported                                $ (7,198)   $(14,040)   $   11,239
        Stock based compensation expense              2,287         864          --
                                                   --------    --------    ----------
        Pro-forma                                  $ (9,485)   $(14,904)   $   11,239
                                                   ========    ========    ==========

     Net income (loss) per common share (basic):
        As reported                                $  (0.33)   $  (0.64)   $     0.51
        Pro-forma                                     (0.43)      (0.68)   $     0.51
</TABLE>




                                                                     (Continued)

                                       96


<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                        November 30, 2001, 2002 and 2003
             (Dollars in thousands, except share and per share data)


<TABLE>

                                                                       Years Ended
                                                             November 30,
                                                  ------------------------------------
                                                     2001        2002         2003
                                                   --------    --------    ----------
                                                   Note (2)


     Net income (loss) per common share (diluted):
<S>                                                <C>         <C>           <C>       
        As reported                                $  (0.33)   $  (0.64)     $  0.51
        Pro-forma                                     (0.43)      (0.68)     $  0.51
</TABLE>


               Pro-forma  net income (loss)  reflect only options  granted after
               November  30,  1995.  Therefore,  the full impact of  calculating
               compensation  cost for stock  options  under  SFAS No. 123 is not
               reflected in the pro-forma net income  (loss)  amounts  presented
               above because  compensation  cost is reflected  over the options'
               vesting period and compensation cost for options granted prior to
               December 1, 1995 was not considered. Therefore, the pro-forma net
               income  (loss)  may  not  be  representative  of the  effects  on
               reported net income (loss) for future years.

          (x)  Accumulated Other Comprehensive Income (Loss)

               Other  comprehensive  income (loss) may include foreign  currency
               translation  adjustments,  minimum pension liability  adjustments
               and  unrealized   gains  and  losses  on  investment   securities
               classified  as  available-for-sale  and fair market value changes
               for cash flow hedges.

               The change in net unrealized gain (loss) on marketable securities
               of $(831), $422 and $1,734 for the years ended November 30, 2001,
               2002  and  2003  is  net  of  tax of  $(509),  $260  and  $1,063,
               respectively.   The  currency  translation  adjustments  are  not
               adjusted   for  income   taxes  as  they  relate  to   indefinite
               investments in non-U.S. subsidiaries and equity investments.

          (y)  New Accounting Pronouncements

               In November 2002, the FASB issued Interpretation No. 45 (FIN 45),
               "Guarantor's   Accounting   and   Disclosure   Requirements   for
               Guarantors,  Including Guarantees of Indebtedness of Others". FIN
               45 elaborates on the disclosures to be made by a guarantor in its
               interim and annual  financial  statements  about its  obligations
               under certain  guarantees  that it has issued.  It also clarifies
               that a guarantor is required to recognize,  at the inception of a
               guarantee,  a  liability  for the fair  value  of the  obligation


                                                                     (Continued)

                                       97


<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                        November 30, 2001, 2002 and 2003
             (Dollars in thousands, except share and per share data)


               undertaken in issuing the guarantee.  The initial recognition and
               initial  measurement  provisions  of FIN 45 are  applicable  on a
               prospective basis to guarantees issued or modified after December
               31, 2002,  irrespective of the  guarantor's  fiscal year end. The
               disclosure  requirements  of FIN 45 are  effective  for financial
               statements of interim or annual periods ending after December 15,
               2002. The Company adopted FIN 45 during the quarter ended May 31,
               2003.  The  adoption of FIN 45 did not have a material  effect on
               the  Company's  consolidated  financial  position  or  results of
               operations.

               In April  2003,  the FASB  issued  SFAS No.  149 (SFAS No.  149),
               "Amendment of Statement 133 on Derivative Instruments and Hedging
               Activities".  SFAS No. 149 amends and  clarifies  the  accounting
               guidance on derivative  instruments (including certain derivative
               instruments  embedded in other contracts) and hedging  activities
               that fall  within  the  scope of SFAS No.  133,  "Accounting  for
               Derivative  Instruments and Hedging  Activities." SFAS No. 149 is
               effective for all contracts  entered into or modified  after June
               30, 2003, with certain exceptions,  and for hedging relationships
               designated  after June 30,  2003.  The  guidance is to be applied
               prospectively.  The  adoption  of SFAS  No.  149  did not  have a
               material effect on the Company's  financial  condition or results
               of operations.

               In May  2003,  the FASB  issued  SFAS No.  150  (SFAS  No.  150),
               "Accounting    for    Certain    Financial    Instruments    with
               Characteristics  of both  Liabilities  and Equity".  SFAS No. 150
               changes the accounting guidance for certain financial instruments
               that, under previous  guidance,  could be classified as equity or
               "mezzanine"  equity  by now  requiring  those  instruments  to be
               classified as liabilities  (or assets in some  circumstances)  in
               the  statement  of  financial  position.  Further,  SFAS No.  150
               requires disclosure  regarding the terms of those instruments and
               settlement alternatives.  SFAS No. 150 is generally effective for
               all financial  instruments entered into or modified after May 31,
               2003,  and is otherwise  effective at the  beginning of the first
               interim  period  beginning  after June 15, 2003.  The adoption of
               SFAS No.  150 did not have a  material  effect  on the  Company's
               financial condition or results of operations.

               In January 2003, the FASB issued FASB  Interpretation No. 46 (FIN
               46),   "Consolidation   of   Variable   Interest   Entities,   an
               Interpretation  of ARB No. 51", which addresses  consolidation by
               business enterprises of variable interest entities (VIEs) either:
               (1)  that do not have  sufficient  equity  investment  at risk to
               permit the entity to finance its  activities  without  additional
               subordinated  financial  support,  or (2)  in  which  the  equity
               investors  lack  an  essential  characteristic  of a  controlling
               financial   interest.   In  December  2003,  the  FASB  completed
               deliberations  of  proposed  modifications  to  FIN  46  (Revised
               Interpretations)  resulting in multiple  effective dates based on


                                                                     (Continued)

                                       98


<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                        November 30, 2001, 2002 and 2003
             (Dollars in thousands, except share and per share data)


               the nature as well as the creation  date of the VIE. VIEs created
               after  January  31,  2003,  but prior to January 1, 2004,  may be
               accounted for either based on the original  interpretation or the
               Revised  Interpretations.  However,  the Revised  Interpretations
               must be applied no later  than the first  quarter of fiscal  year
               2004.  VIEs created  after  January 1, 2004 must be accounted for
               under the  Revised  Interpretations.  The  Company  is  currently
               assessing the impact of the adoption of FIN 46.

               In August  2003,  the EITF  reached a final  consensus  regarding
               Issue No.  03-5,  "Applicability  of AICPA  Statement of Position
               97-2, Software Revenue  Recognition to Non-Software  Deliverables
               in an Arrangement Containing More-Than-Incidental Software". EITF
               03-5 involves whether  non-software  deliverables  included in an
               arrangement that contains  software that is  more-than-incidental
               to the  products  or services  as a whole are  included  with the
               scope  of SOP  97-2  "Software  Revenue  Recognition".  This  new
               pronouncement will not have an impact on the Company's  financial
               condition or results of operations.

               In December 2003, the SEC issued Staff Accounting  Bulletin (SAB)
               No. 104,  "Revenue  Recognition"  (SAB No. 104),  which codifies,
               revises and rescinds  certain  sections of SAB No. 101,  "Revenue
               Recognition",   in  order  to  make  this  interpretive  guidance
               consistent  with current  authoritative  accounting  and auditing
               guidance and SEC rules and regulations.  The changes noted in SAB
               No.  104 did  not  have a  material  effect  on our  consolidated
               results  of  operations,   consolidated   financial  position  or
               consolidated cash flows.

          (z)  Shipping and Handling Costs

               In fiscal 2001, the Company  adopted the provisions of EITF Issue
               No. 00-10, "Accounting for Shipping and Handling Fees and Costs",
               which  requires  the  Company to report all  amounts  billed to a
               customer related to shipping and handling as revenue. The Company
               includes all costs  incurred for shipping and handling as cost of
               sales.  The Company has reclassified  such billed amounts,  which
               were previously netted in cost of sales to net sales. As a result
               of this  reclassification,  net  sales  and  cost of  sales  were
               increased by $1,548 for year ended November 30, 2001.

          (aa) Issuances of Subsidiary Stock

               The  Company's  accounting  policy on the issuances of subsidiary
               stock is to  recognize  through  earnings the gain on the sale of
               the  shares  as long as the sale of the  shares  is not part of a
               broader corporate  reorganization  planned or contemplated by the


                                                                     (Continued)

                                       99


<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                        November 30, 2001, 2002 and 2003
             (Dollars in thousands, except share and per share data)


               Company and realization of the gain is assured.

          (bb) Reclassifications

               Certain  reclassifications  have  been  made to the 2001 and 2002
               consolidated financial statements in order to conform to the 2003
               presentation.

(2)  Restatement of Consolidated Financial Statements

     The Company has previously restated its consolidated  financial  statements
     for the fiscal  years ended  November  30, 2000 and 2001 and for the fiscal
     quarters  during  the year ended  November  30,  2001 and the  fiscal  2002
     quarters  ended  February  28, 2002,  May 31, 2002 and August 31, 2002.  In
     addition,  the  Company  previously   reclassified  certain  expenses  from
     operating  expenses  to cost of sales for  fiscal  2001 and for each of the
     quarters in the nine months  ended  August 31,  2002.  Please  refer to the
     Company's  previously  filed Form 10-K for the year ended November 30, 2002
     for details.

(3)  Issuance of Subsidiary Shares

     On May 29, 2002, Toshiba Corporation  (Toshiba) purchased an additional 20%
     of Audiovox Communications Corp. (ACC), a majority-owned  subsidiary of the
     Company.   Such  purchase   accounted  for   approximately   31  shares  at
     approximately $774 per share, for approximately $23,900 in cash, increasing
     Toshiba's total ownership interest in ACC to 25%. In addition, Toshiba paid
     $8,107 in exchange for an $8,107 convertible  subordinated note (the Note).
     The Note bears interest at a per annum rate equal to 1 3/4% and interest is
     payable  annually on May 31st of each year,  commencing  May 31, 2003.  The
     unpaid principal amount shall be due and payable,  together with all unpaid
     interest,  on May 31, 2007 and automatically  renews for an additional five
     years. In accordance  with the provisions of the Note,  Toshiba may convert
     the balance of the Note into additional  shares of ACC in order to maintain
     a 25% interest in ACC, but under no  circumstances  can Toshiba convert the
     Note to exceed a 25% interest in ACC.

     In connection with the  transaction,  the Company,  ACC and Toshiba entered
     into a stockholders agreement.  The stockholders agreement provides for the
     composition of the board of directors of ACC and identifies  certain items,
     other than in the ordinary  course of business,  that ACC cannot do without
     prior approval from Toshiba. The agreement does not require or preclude ACC
     from paying  dividends on a pro-rata basis. The agreement may be terminated
     upon the mutual  written  agreement  of the  parties,  if the  distribution
     agreement,  which is  discussed  below,  is  terminated  or if either party
     commences a bankruptcy or similar proceeding.

                                                                     (Continued)

                                       100


<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                        November 30, 2001, 2002 and 2003
             (Dollars in thousands, except share and per share data)


     The Company has historically been the exclusive  distributor for Toshiba in
     the United States and Canada.  In connection with the transaction,  ACC and
     Toshiba formalized this distribution  arrangement  whereby ACC is Toshiba's
     exclusive  distributor  for the sale of Toshiba  cellular  products  in the
     United  States,  Canada,  Mexico and all  countries  in the  Caribbean  and
     Central and South America through May 29, 2007. The distribution  agreement
     provides for 30-day payment terms. The distribution  agreement  established
     certain  annual  minimum  purchase  targets  for ACC's  purchase of Toshiba
     products for each fiscal year during the entire term of the  agreement.  In
     the event that ACC fails to meet the minimum purchase target, Toshiba shall
     have  the  right  to  convert   ACC's   exclusive   distributorship   to  a
     non-exclusive  distributorship  for the  remaining  term of the  agreement.
     Also, in accordance with the terms of the stockholders agreement,  upon the
     termination of the distribution  agreement in accordance with certain terms
     of the  distribution  agreement,  Toshiba  maintains  a put  right  and the
     Company a call  right,  to  repurchase  all of the shares held by the other
     party  for a  price  equal  to the  fair  market  value  of the  shares  as
     calculated in accordance with the agreement. Pursuant to the agreement, the
     put right is only exercisable if ACC terminates the distribution  agreement
     or if  another  strategic  investor  acquires a direct or  indirect  equity
     ownership interest in excess of 20% in Audiovox Corporation. The call right
     is only  exercisable  if  Toshiba  elects  to  terminate  the  distribution
     agreement after its initial five (5) year term.

     In May 2002, the Company granted seven stock  appreciation  units in ACC to
     its Chief Executive  Officer of ACC and seven stock  appreciation  units in
     ACC to the Chief Executive Officer of the Company. Each unit has a value of
     approximately  $774,  which was based upon the then fair value per share of
     ACC based upon the value of shares sold to Toshiba.

     Each stock  appreciation  unit  equals  the value of one ACC share.  All of
     these units vested upon the date of grant,  however, all of these units are
     contingent upon the following  future events (i) an initial public offering
     of ACC or (ii) a change of  control  of ACC as  defined  where in its Chief
     Executive  Officer  resigns within 90 days from the change of control date.
     Further,  as these  specified  events were not  considered  probable at the
     grant date and since  these  units had no value at  November  30,  2002 and
     2003, no expense has been recorded with respect to these stock appreciation
     units.

     Additionally,  ACC entered into an employment  agreement with the President
     and Chief  Executive  Officer (the  Executive)  of ACC through May 29, 2007
     (Note 21).  Under the  agreement,  ACC is required to pay the  Executive an
     annual base  salary of $500 in  addition to an annual  bonus equal to 2% of
     ACC's  annual  earnings  before  income  taxes.  The  Company,   under  the
     employment  agreement,  was required to establish and pay a bonus of $3,200
     to key employees of ACC,  including the  Executive,  to be allocated by the
     Executive. The bonus was for services previously rendered and, accordingly,
     the bonus has been included in general and administrative expenses in the

                                                                     (Continued)

                                       101


<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                        November 30, 2001, 2002 and 2003
             (Dollars in thousands, except share and per share data)


     accompanying statements of operations for the year ended November 30, 2002.
     The  Executive  was  required  to  utilize  all or a  portion  of the bonus
     allocated to him to repay the remaining  outstanding  principal and accrued
     interest  owed by the  Executive to the Company  pursuant to the  unsecured
     promissory  note in favor of the Company  (Note 20).  During the year ended
     November 30, 2002, the Executive was paid $1,800 less an amount outstanding
     under a promissory note of $651.

     As a result of the issuance of ACC's shares, the Company recognized a gain,
     net of expenses of $1,735,  of $14,269 ($8,847 after provision for deferred
     taxes)  during the quarter  ended May 31,  2002.  The gain  represents  the
     excess of the sale  price  per share  over the  carrying  amount  per share
     multiplied  by the  number of shares  issued  to  Toshiba.  The gain on the
     issuance of the subsidiary's shares has been recognized in the accompanying
     consolidated  statements of operations for the year ended November 30, 2002
     in  accordance  with  the  Company's  policy  on the  recognition  of  such
     transactions, which is an allowable method under Staff Accounting Bulleting
     Topic 5.H.

     Minority  interest income  (expense)  relating to Toshiba's  minority share
     ownership in ACC for the years ended  November 30, 2001,  2002 and 2003 was
     $501, $4,741 and $(1,066), respectively.

(4)  Supplemental Cash Flow Information

     The  following is  supplemental  information  relating to the  consolidated
     statements of cash flows:


<TABLE>

                                          Years Ended November 30,
                                         2001      2002      2003
                                        -------   -------   -------
Cash paid during the years for:
<S>                                     <C>       <C>       <C>    
     Interest, excluding bank charges   $ 3,883   $ 1,303   $ 1,857
     Income taxes                       $ 3,550   $ 2,478   $10,556
</TABLE>



         Non-cash Transactions:

         During the years ended November 30, 2001, 2002 and 2003, the Company
         recorded an unrealized holding gain (loss) relating to
         available-for-sale marketable equity securities, net of deferred income
         taxes, of $(831), $422 and $1,734, respectively, as a separate
         component of accumulated other comprehensive income (loss) (Note 8).

     During fiscal 2003, the Company issued warrants for the purchase of 120,000


                                                                     (Continued)

                                       102


<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                        November 30, 2001, 2002 and 2003
             (Dollars in thousands, except share and per share data)


     shares of common stock to non-employees and recorded a charge to operations
     of $297,000 (Note 16).

     As a result of stock option  exercises,  the Company recorded a tax benefit
     of $216 during  fiscal  2003 which is  included  in paid-in  capital in the
     accompanying consolidated financial statements.

     During  fiscal 2001,  314,800  warrants were  exercised and converted  into
     314,800 shares of common stock.

(5)  Transactions With Major Suppliers

     (a)  ACC Dividend

          In February  2001,  the board of  directors of ACC declared a dividend
          payable  to  its  stockholders,   Audiovox  Corporation,  a  then  95%
          stockholder,  and Toshiba,  a then 5% stockholder for their respective
          share of net income for the previous  fiscal  years.  ACC paid Toshiba
          its  share of the  dividend,  which  approximated  $1,034 in the first
          quarter of fiscal 2001. There were no dividends declared during fiscal
          2002 and 2003.

     (b)  Sale/Leaseback Transaction

          In April 2000,  Audiovox Japan (AX Japan), a wholly-owned  subsidiary,
          purchased  land and a building (the  Property)  from Shintom Co., Ltd.
          (Shintom) for 770,000,000 Yen (approximately  $7,300) and entered into
          a leaseback  agreement  whereby  Shintom  leased the Property  from AX
          Japan for a one-year  period.  The lease was being accounted for as an
          operating lease by AX Japan.  Shintom is a stockholder who owns all of
          the  outstanding  preferred stock of the Company and is a manufacturer
          of  products  purchased  by the Company  through its  previously-owned
          equity investee,  TALK Corporation (TALK). The Company currently holds
          stock in Shintom and has  previously  invested in Shintom  convertible
          debentures.

          The  purchase  of  the  Property  by AX  Japan  was  financed  with  a
          500,000,000  Yen ($4,671)  subordinated  loan obtained from Vitec Co.,
          Ltd. (Vitec), a 150,000,000 Yen loan ($1,397) from Pearl First (Pearl)
          and a 140,000,000  Yen loan  ($1,291)  from the Company.  The land and
          building were included in property, plant and equipment, and the loans
          were recorded as notes payable on the balance sheet as of November 30,
          2001 . Changes arising from the  fluctuations in the Yen exchange rate
          were reflected as a component of accumulated other comprehensive loss.
          Vitec is a major  supplier to Shintom,  and Pearl is an  affiliate  of
          Vitec.  The loans bore  interest  at 5% per annum,  and  principle  is
          payable  in  equal  monthly   installments  over  a  six-month  period


                                                                     (Continued)

                                       103


<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                        November 30, 2001, 2002 and 2003
             (Dollars in thousands, except share and per share data)


          beginning six months  subsequent  to the date of the loans.  The loans
          from Vitec and Pearl were subordinated completely to the loan from the
          Company and, in liquidation, the Company receives payment first.

          Upon the  expiration  of six months after the transfer of the title to
          the  Property to AX Japan,  Shintom had the option to  repurchase  the
          Property  or  purchase  all of the  shares of stock of AX Japan.  This
          option  could be extended for one  additional  six month  period.  The
          option to repurchase  the building was at a price of  770,000,000  Yen
          plus the  equity  capital  of AX Japan  (which in no event can be less
          than  60,000,000  Yen) and could only be made if Shintom  settles  any
          rent due AX Japan  pursuant  to the  lease  agreement.  The  option to
          purchase  the shares of stock of AX Japan was at a price not less than
          the aggregate par value of the shares and,  subsequent to the purchase
          of the  shares,  AX Japan must repay the  outstanding  loan due to the
          Company.  If Shintom did not  exercise  its option to  repurchase  the
          Property  or the  shares of AX Japan,  or upon  occurrence  of certain
          events,   AX  Japan  could  dispose  of  the  Property  as  it  deemed
          appropriate.  The events which result in the ability of AX Japan to be
          able to  dispose  of the  Property  include  Shintom  petitioning  for
          bankruptcy,  failing to honor a check,  failing to pay rent,  etc.  If
          Shintom failed, or at any time became  financially or otherwise unable
          to  exercise  its option to  repurchase  the  Property,  Vitec had the
          option to  repurchase  the  Property or purchase  all of the shares of
          stock of AX Japan under similar terms as the Shintom options.

          AX Japan had the  option to delay  the  repayment  of the loans for an
          additional  six months if Shintom  extended its options to  repurchase
          the Property or stock of AX Japan. In September 2000, Shintom extended
          its  option  to  repurchase  the  Property  and AX Japan  delayed  its
          repayment of the loans for an additional six months.

          In March 2001, upon the expiration of the additional six-month period,
          the Company and Shintom  agreed to extend the lease for an  additional
          one-year  period.  In addition,  Shintom was again given the option to
          purchase  the  Property  or  shares  of stock of AX  Japan  after  the
          expiration  of a  six-month  period  or  extend  the  option  for  one
          additional  six-month  period.  AX Japan was also  given the option to
          delay  the  repayment  of the loans for an  additional  six  months if
          Shintom extended its option for an additional six months.

          In October 2002, the Company sold all of its shares in AX Japan to RMS
          Co.,  Ltd., an unrelated  party to the Company.  The purchase price of
          the  shares  was  60,000  Yen.  As a result of this  transaction,  the
          purchaser  repaid  in full  113,563  Yen  which  represented  the full
          balance of amounts then owed to the Company by AX Japan. The agreement

                                                                     (Continued)

                                       104


<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                        November 30, 2001, 2002 and 2003
             (Dollars in thousands, except share and per share data)


          required the purchaser to  immediately  change the name of AX Japan to
          RMS Co., Ltd., and the Company  resigned from all officer and board of
          directors  positions.  The  Company  has no  further  relationship  or
          obligations,  whether contingent or direct to RMS Co., Ltd.,  formerly
          known as AX Japan.

          As a result of the  completion  of this  transaction,  all  assets and
          liabilities  of AX Japan  have  been  removed  from  the  accompanying
          consolidated  balance sheet as of November 30, 2002,  specifically the
          land and the building and the notes  payable for the Vitec 150,000 Yen
          loan and the Pearl 140,000 Yen loan. As a result of this  transaction,
          the Company  recovered  in Yen its initial  investment  in AX Japan as
          well as its loan to finance  the  purchase  of the land and  building.
          However,  the Company recognized a $338 loss on the sale of its shares
          in AX  Japan,  as the  sales  price was less than the value of the net
          assets  of AX Japan  sold to Vitec.  Contributing  to the loss on sale
          were  foreign  currency  loss  and  other  expenses  that  will not be
          recovered.  The loss on the sale of the  shares  of AX Japan  has been
          included  in  other,   net,  under  other  income   (expense)  in  the
          accompanying  consolidated statements of operations for the year ended
          November 30, 2002.

     (c)  Inventory Purchases - Other

          Two wireless suppliers,  including Toshiba,  approximated 75%, 67% and
          63% of total  inventory  purchases  for the years ended  November  30,
          2001, 2002 and 2003, respectively. Although there are a limited number
          of  manufacturers  of its  products,  management  believes  that other
          suppliers could provide similar products on comparable terms. A change
          in suppliers, however, could cause a delay in product availability and
          a  possible  loss of  sales,  which  would  affect  operating  results
          adversely.

(6)  Business Acquisitions

     Code Systems, Inc.

     On March 15, 2002, Code Systems, Inc. (Code), a wholly-owned  subsidiary of
     Audiovox Electronics Corp. (AEC), a wholly-owned subsidiary of the Company,
     purchased  certain assets of Code, an automotive  security product company.
     The purpose of this acquisition was to expand brand recognition and improve
     OEM production  with  manufacturers.  The results of operations of Code are
     included in the  accompanying  consolidated  financial  statements from the
     date of purchase.  The purchase price  consisted of  approximately  $7,100,
     paid in cash at the closing, and a debenture (CSI Debenture) whose value is
     linked to the future  earnings of Code. An adjustment to the  allocation of


                                                                     (Continued)

                                       105


<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                        November 30, 2001, 2002 and 2003
             (Dollars in thousands, except share and per share data)

     the  purchase  price was made to certain  acquired  assets  resulting in an
     increase to goodwill of $706 during the year ended  November 30, 2003.  The
     payment  of any  amount  under the terms of the CSI  Debenture  is based on
     performance  and is  scheduled  to occur in the first  calendar  quarter of
     2006.  The Company  accounted for the  transaction  in accordance  with the
     purchase method of accounting. As a result of the transaction,  goodwill of
     $2,560 was recorded.  The purchase price  allocation for the acquisition of
     Code is final.

     Simultaneous  with this business  acquisition,  the Company  entered into a
     purchase and supply  agreement with a third party.  Under the terms of this
     agreement,  the third  party  will  purchase  or direct  its  suppliers  to
     purchase certain  products from the Company.  In exchange for entering into
     this  agreement,  the Company issued 50 warrants in its  subsidiary,  Code,
     which vest  immediately.  These  warrants were deemed to have minimal value
     based upon the then current value of Code. Furthermore, the agreement calls
     for the issuance of  additional  warrants  based upon the future  operating
     performance of Code.

     Based  upon  the  contingent  nature  of the  debenture  and  warrants,  no
     recognition  was given to the Code  debenture  or  warrants  as the related
     contingencies were not considered probable and such warrants had not vested
     at November 30, 2002 or 2003.

     Recoton Audio Group

     On  July  8,  2003,  the  Company,  through  a  newly-formed,  wholly-owned
     subsidiary, acquired in cash (i) certain accounts receivable, inventory and
     trademarks from the U.S. audio operations of Recoton Corporation (the "U.S.
     audio  business")  or (Recoton) and (ii) the  outstanding  capital stock of
     Recoton German  Holdings GmbH (the  "international  audio  business"),  the
     parent  holding  company  of  Recoton  Corporation's  Italian,  German  and
     Japanese  subsidiaries,  for  $40,046,  net  of  cash  acquired,  including
     transaction costs of $1.9 million.  The primary reason for this transaction
     was to expand the  product  offerings  of AEC and to obtain  certain  long-
     standing trademarks such as Jensen(R), Acoustic Research(R) and others. The
     Company also acquired an obligation with a German financial  institution as
     a result of the  purchase of the common  stock of Recoton  German  Holdings
     GmbH.  This  obligation  is  secured  by the  acquired  company's  accounts
     receivable and inventory.

     The results of  operations  of this  acquisition  have been included in the
     consolidated financial statements from the date of acquisition.

     The  acquisition  is being  accounted  for  using  the  purchase  method of
     accounting in accordance  with SFAS No. 141. SFAS No. 141 requires that the
     total cost of the  acquisition  be allocated to the tangible and intangible
     assets acquired and liabilities assumed based upon their respective fair

                                                                     (Continued)

                                       106


<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                        November 30, 2001, 2002 and 2003
             (Dollars in thousands, except share and per share data)


     values at the date of acquisition.

     The following  summarizes  the allocation of the purchase price to the fair
     value  of the  assets  acquired  and  liabilities  assumed  at the  date of
     acquisition:


<TABLE>

Assets acquired:
<S>                                                                                  <C>     
     Accounts receivable                                                             $ 12,291
     Inventory                                                                         21,979
     Other current assets                                                               4,014
     Property, plant and equipment                                                      2,201
     Trademarks                                                                        10,303
                                                                                     --------
         Total assets acquired                                                         50,788
                                                                                     --------

Liabilities assumed:
     Accounts payable and other current liabilities                                     6,966
     Long-term debt                                                                     3,776
                                                                                     --------
         Total liabilities assumed                                                     10,742
                                                                                     --------
     Cash paid, net of cash acquired                                                 $ 40,046
                                                                                     ========
</TABLE>


     The excess of the  estimated  purchase  price over the fair value of assets
     and  liabilities  acquired of $10,303 was allocated to trademarks,  with an
     indefinite  useful life.  The  allocation  of purchase  price to assets and
     liabilities acquired was based upon an independent valuation study, and the
     purchase price is final.

     Subsequent to July 8, 2003, the Company sold accounts receivable, inventory
     and trademarks  ($524, $816 and $2,260,  respectively)  attributable to the
     marine  products  division  of  the  Electronics  Group  based  upon  their
     estimated fair values which resulted in no gain or loss to the Company. The
     sale of the  marine  division  assets  was  required  since the  Company is
     precluded  from selling  marine  products as a result of its joint  venture
     agreement with Audiovox  Specialized  Applications,  Inc.  (ASA), an equity
     investee of the Company.



                                                                     (Continued)

                                       107


<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                        November 30, 2001, 2002 and 2003
             (Dollars in thousands, except share and per share data)


     The following unaudited pro-forma financial  information for the year ended
     November  30,  2003  represents  the  combined  results  of  the  Company's
     operations and the Recoton  acquisition as if the Recoton  acquisition  had
     occurred  at the  beginning  of the  year  of  acquisition.  The  unaudited
     pro-forma financial information does not necessarily reflect the results of
     operations  that would have  occurred had the Company  constituted a single
     entity during such periods.


<TABLE>

                                          Years Ended
                                         November 30,
                                ----------------------------
                                    2002          2003
                                ------------   ------------

<S>                             <C>            <C>        
     Revenue                    $ 1,305,212    $ 1,364,291
     Net loss                       (14,985)        (3,961)
     Net loss per share-basic
          and diluted           $     (0.69)   $     (0.18)
</TABLE>


     On August 29, 2003, the Company  entered into a call/put  option  agreement
     with certain  employees of Audiovox  Europe,  whereby  these  employees can
     acquire up to a maximum of 20% of the  Company's  stated  share  capital in
     Audiovox  Europe at a call price equal to the same proportion of the actual
     price paid by the Company for Audiovox  Europe.  The put options  cannot be
     exercised  until  the  later  of (i)  November  30,  2008 or (ii)  the full
     repayment (including interest) of an inter-company loan granted to Audiovox
     Europe in the amount of 5.3  million  Euros.  Notwithstanding  the lapse of
     these time periods, the put options become immediately exercisable upon (i)
     the sale of Audiovox  Europe or (ii) the termination of employment or death
     of the  employee.  The put price to be paid to the employee  upon  exercise
     will be the then net asset value per share of Audiovox Europe. Accordingly,
     the Company recognizes compensation expense based on 20% of the increase in
     Audiovox Europe's net assets representing the incremental change of the put
     price over the call option  price.  Compensation  expense for these options
     amounted to $388 for the year ended November 30, 2003.

(7)  Receivables from Vendors

     The Company has recorded  receivables from vendors in the amount of $14,174
     and $7,830 as of November 30, 2002 and 2003, respectively. Receivables from
     vendors  represent  prepayments  on product  shipments,  defective  product
     reimbursements  and amounts due from  Toshiba.  At November 30,  2002,  the
     Company recorded receivables from Toshiba aggregating approximately $12,219
     for price  protection  and software  upgrades.  Subsequent  to November 30,
     2002, the receivables from Toshiba were paid in full. At November 30, 2003,
     the Company  recorded  receivables from Toshiba  aggregating  approximately
     $709,  primarily for software  upgrades.  In addition,  one wireless vendor
     represented $2,211 of the November 30, 2003 vendor receivable balance.

                                                                     (Continued)

                                       108


<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                        November 30, 2001, 2002 and 2003
             (Dollars in thousands, except share and per share data)



(8)  Investment Securities

     As of November 30, 2002,  the Company's  investment  securities  consist of
     $1,456 of  available-for-  sales  marketable  securities,  which relates to
     306,000  shares  (after a 5 for 1 reverse  stock split) of CellStar  Common
     Stock,  1,904,000 shares of Shintom Common Stock and trading  securities of
     $3,949 which consist of mutual funds that are held in  connection  with the
     deferred compensation plan.

     As of November 30, 2003,  the Company's  investment  securities  consist of
     $4,232 of  available-for-  sales  marketable  securities,  which relates to
     306,000  shares of CellStar  Common Stock and trading  securities of $5,280
     which consist of mutual funds that are held in connection with the deferred
     compensation plan.

     During  fiscal  2002 and  2003,  the  Company  recorded  a  $1,158  and $21
     other-than-temporary  impairment of its Shintom common stock, respectively,
     due to a decline in the value of Shintom stock.

     The cost, gross unrealized gains and losses and aggregate fair value of the
     investment  securities  available-for-sale as of November 30, 2002 and 2003
     were as follows:



<TABLE>

                                           2002                                 2003
            ----------------------------------------------- ---------------------------------------------

                        Gross      Other-than-                        Gross      Other-than-
                      Unrealized   Temporary    Aggregate           Unrealized   Temporary       Aggregate
                       Holding     Impairment     Fair               Holding     Impairment         Fair
             Cost     Gain (Loss)   Charge       Value      Cost    Gain (Loss)    Charge           Value
           -------    -----------  -----------  ---------  -------  -----------   -----------    ---------

<S>        <C>        <C>           <C>         <C>       <C>       <C>          <C>            <C>    
CellStar
  Common
   Stock   $ 2,401    $  (966)          --      $ 1,435   $ 2,401   $ 1,831          --         $ 4,232
Shintom
  Common
  Stock      1,179       --         $(1,158)        21        21      --         $   (21)         --
           -------    -------       -------    -------   -------   -------       --------      -------
           $ 3,580    $  (966)      $(1,158)   $ 1,456   $ 2,422   $ 1,831       $   (21)      $ 4,232
           =======    =======       =======    =======   =======   =======       =======       =======
</TABLE>


     Related deferred tax  assets/(liabilities) of $367 and $(696) were recorded
     at  November  30,  2002  and  2003,  respectively,  as a  reduction  to the
     unrealized holding gain (loss) included in accumulated other  comprehensive
     income (loss).


                                                                     (Continued)

                                       109


<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                        November 30, 2001, 2002 and 2003
             (Dollars in thousands, except share and per share data)


         During fiscal 2002 and 2003, the net unrealized holding (loss)/gain on
         trading securities that has been included in earnings is $(558) and
         $656, respectively.

(9)  Property, Plant and Equipment

     A summary of property, plant and equipment, net, is as follows:


<TABLE>

                                                                November 30,
                                                           ---------------------
                                                            2002        2003
                                                           --------    --------

<S>                                                        <C>         <C>     
          Land                                             $    363    $    648
          Buildings                                           1,605       4,244
          Property under capital lease                        7,142       7,142
          Furniture, fixtures and displays                    2,404       2,228
          Machinery and equipment                             8,204       8,061
          Construction in progress                             --           196
          Computer hardware and software                     14,467      12,702
          Automobiles                                           769         924
          Leasehold improvements                              4,305       4,614
                                                           --------    --------
                                                             39,259      40,759
          Less accumulated depreciation and amortization    (20,878)    (20,517)
                                                           --------    --------
                                                           $ 18,381    $ 20,242
                                                           ========    ========
</TABLE>


     The  amortization  of the  property  under  capital  lease is  included  in
     depreciation and amortization expense.

     Computer  software  includes  approximately  $1,450 and $794 of unamortized
     costs as of  November  30,  2002 and  2003,  respectively,  related  to the
     acquisition and installation of management information systems for internal
     use.

     Depreciation and amortization of property, plant and equipment amounted to
     $4,174,  $4,768 and $4,581 for the years ended November 30, 2001, 2002 and
     2003,  respectively.  Included in accumulated depreciation and amortization
     is amortization  of computer  software costs of $776, $850 and $500 for the
     years ended  November 30, 2001, 2002 and 2003,  respectively.  Included in
     accumulated  depreciation  and  amortization  is  amortization  expense  of
     property  under capital lease of $240 for each of the years ended  November
     30, 2001, 2002 and 2003, respectively.



                                                                     (Continued)

                                       110


<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                        November 30, 2001, 2002 and 2003
             (Dollars in thousands, except share and per share data)


(10) Equity Investments

     As of November 30,  2003,  the  Company's  72% owned  subsidiary,  Audiovox
     Communications  Sdn.  Bhd.,  had a 29%  ownership  interest  in  Avx  Posse
     (Malaysia) Sdn. Bhd. (Posse) which monitors car security commands through a
     satellite  based  system in Malaysia.  In  addition,  the Company had a 20%
     ownership interest in Bliss-tel which distributes  cellular  telephones and
     accessories in Thailand, and the Company had 50% non-controlling  ownership
     interests in three other entities:  Protector Corporation (Protector) which
     acts as a distributor of chemical protection treatments;  ASA which acts as
     a  distributor  to  specialized  markets for RV's and van  conversions,  of
     televisions and other automotive  sound,  security and accessory  products;
     and G.L.M. Wireless Communications,  Inc. (G.L.M.) which is in the cellular
     telephone,  pager and communications  business in the New York metropolitan
     area.

     The Company's net sales to the equity investees amounted to $2,656,  $3,504
     and  $4,277  for  the  years  ended  November  30,  2001,  2002  and  2003,
     respectively. The Company's purchases from the equity investees amounted to
     $5,592,  $1,883 and $1,978 for the years ended November 30, 2001,  2002 and
     2003,  respectively.  The Company  recorded $746,  $644 and $296 of outside
     representative  commission expenses for activations and residuals generated
     by G.L.M.  on the  Company's  behalf  during  fiscal  2001,  2002 and 2003,
     respectively.

     Included in  accounts  receivable  at November  30, 2002 and 2003 are trade
     receivables  due from its  equity  investments  aggregating  $817 and $934,
     respectively.  At November 30, 2002 and 2003,  included in accounts payable
     and  other  accrued  expenses  were   obligations  to  equity   investments
     aggregating $6 and $6, respectively.

     For the years ended  November  30,  2001,  2002 and 2003,  interest  income
     earned on equity investment notes and other receivables  approximated $157,
     $2 and $0, respectively.

     As discussed in Note 6, the Company sold $3,600 of marine  division  assets
     to ASA in connection with the Recoton acquisition.

     The following presents summary financial  information for ASA. Such summary
     financial  information  has been provided  herein based upon the individual
     significance of this  unconsolidated  equity investment to the consolidated
     financial information of the Company.  Furthermore,  based upon the lack of
     significance to the consolidated  financial  information of the Company, no
     summary financial information for the Company's other equity investments

                                                                     (Continued)

                                       111


<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                        November 30, 2001, 2002 and 2003
             (Dollars in thousands, except share and per share data)


     has been provided herein:


<TABLE>

                                   November 30,
                                ------------------
                                  2002      2003
                                -------    -------

<S>                             <C>       <C>    
          Current assets        $20,533   $22,518
          Non-current assets      2,332     4,803
          Current liabilities     3,447     4,640
          Members' equity        19,418    22,681
</TABLE>


<TABLE>


                                    Years Ended
                                     November 30,
                             --------------------------
                                2001    2002      2003
                             -------   -------   ------

<S>                          <C>       <C>       <C>    
          Net sales          $63,336   $44,168   $44,671
          Gross profit        17,226    10,301    12,034
          Operating income     5,581       216     2,607
          Net income           6,908     3,486     5,895
</TABLE>


     The Company's share of income from this  unconsolidated  equity  investment
     for fiscal 2001, 2002 and 2003 was $3,454, $1,743 and $2,948, respectively.

(11) Accrued Expenses and Other Current Liabilities

     Accrued expenses and other current liabilities consist of the following:


<TABLE>

                                      November 30,
                                  ------------------
                                   2002      2003
                                  -------   -------

<S>                               <C>       <C>    
          Commissions             $ 4,676   $ 5,180
          Employee compensation     3,070     5,564
          Future warranty           9,143    12,006
          Freight and duty          2,272     3,572
          Other taxes payable         410     2,707
          Other                    15,412    13,787
                                  -------   -------
                                  $34,983   $42,816
                                  =======   =======
</TABLE>




                                                                     (Continued)

                                       112


<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                        November 30, 2001, 2002 and 2003
             (Dollars in thousands, except share and per share data)


(12) Financing Arrangements

     (a)  Bank Obligations

          The Company's  principal  source of liquidity is its revolving  credit
          agreement  which  expires  July 27,  2004.  The  Company is  currently
          negotiating  with the bank to extend this  agreement for an additional
          three years, of which no assurance can be given. At November 30, 2003,
          the credit  agreement  provided  for  $150,000  of  available  credit,
          including $10,000 for foreign currency borrowings. An amendment to the
          credit  agreement  reduced its credit  availability  from  $200,000 to
          $150,000  during the third  quarter of fiscal  2003 as a result of the
          Company's working capital position and current  anticipated  borrowing
          requirements.    The   foreign   currency   borrowing   sublimit   was
          simultaneously reduced from $15,000 to $10,000.

          Under the credit  agreement,  the  Company may obtain  credit  through
          direct  borrowings  and  letters of  credit.  The  obligations  of the
          Company under the credit  agreement  are  guaranteed by certain of the
          Company's   subsidiaries  and  are  secured  by  accounts  receivable,
          inventory  and the Company's  shares of ACC common stock.  At November
          30,  2003,  the amount of unused  available  credit is  $109,184.  The
          credit  agreement also allows for commitments up to $50,000 in forward
          exchange contracts.

          Outstanding   domestic  obligations  under  the  credit  agreement  at
          November 30, 2002 and 2003 were as follows:


<TABLE>

                                      November 30,
                                   -----------------
                                     2002     2003
                                   -------   -------

<S>                                <C>       <C>    
          Revolving Credit Notes   $16,883   $11,709
          Eurodollar Notes          20,000    20,000
                                   -------   -------
                                   $36,883   $31,709
                                   =======   =======
</TABLE>


          Interest rates are as follows:  revolving  credit notes at 0.25% above
          the Prime Rate at  November  30,  2001,  0.50% above the Prime Rate at
          November  30,  2002 and 0.75% above the Prime  Rate at  November  30,
          2003,  which was 5.5%,  4.8% and 4.75% at November 30, 2001,  2002 and
          2003, respectively.  Eurodollar Notes at 1.75% above Libor at November
          30, 2001, 2.50% above Libor at November 30, 2002 and 2.75% above Libor
          at  November  30, 2003 which was 3.4%,  3.9% and 3.9% at November  30,
          2001, 2002 and 2003,  respectively.  The Company pays a commitment fee
          on the unused portion of the credit line.

                                                                     (Continued)

                                       113


<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                        November 30, 2001, 2002 and 2003
             (Dollars in thousands, except share and per share data)


          The Company's ability to borrow under its credit facility is a maximum
          aggregate  amount of $150,000,  subject to certain  conditions,  based
          upon a formula  taking  into  account  the amount  and  quality of its
          accounts  receivable  and  inventory.  The credit  agreement  contains
          several  covenants  requiring,  among other things,  minimum levels of
          pre-tax  income and  minimum  levels of net worth.  Additionally,  the
          agreement  includes   restrictions  and  limitations  on  payments  of
          dividends, stock repurchases and capital expenditures.

          At November 30, 2002,  the Company was not in compliance  with certain
          of its pre-tax income covenants. Furthermore, as of November 30, 2002,
          the Company was also not in compliance with the requirement to deliver
          audited  financial  statements 90 days after the Company's fiscal year
          end, and as of February 28, 2003, the requirement to deliver unaudited
          quarterly financial statements 45 days after the Company's quarter end
          and had not received a waiver.  Accordingly,  the Company recorded its
          outstanding   domestic   bank   obligations   of  $36,883  in  current
          liabilities at November 30, 2002.

          Subsequent  to November 30, 2002,  the Company  repaid its fiscal 2002
          obligation of $36,883 in full and borrowed additional funds during the
          fourth quarter of fiscal 2003,  resulting in domestic bank obligations
          outstanding at November 30, 2003 of $31,709.  The Company subsequently
          obtained a waiver for the  November  30,  2002 and  February  28, 2003
          violations.  The Company was in compliance with all its bank covenants
          at November 30, 2003. While the Company has historically  been able to
          obtain  waivers for such  violations,  there can be no assurance  that
          future  negotiations  with its lenders would be successful or that the
          Company will not violate covenants in the future, therefore, resulting
          in  amounts  outstanding  to  be  payable  upon  demand.  This  credit
          agreement has no cross covenants with other credit facilities.

          The  Company  also  has  revolving   credit   facilities  in  Malaysia
          (Malaysian  Credit  Agreement) to finance  additional  working capital
          needs.  As of November  30,  2003,  the  available  line of credit for
          direct borrowing,  letters of credit,  bankers'  acceptances and other
          forms  of  credit  approximated  $3,600.  The  credit  facilities  are
          partially  secured by three standby letters of credit of $800 each and
          are payable upon demand or upon  expiration of the standby  letters of
          credit in January, July and July 2004,  respectively.  The obligations
          of the Company under the Malaysian  Credit  Agreement are also secured
          by the  property and building  owned by Audiovox  Communications  Sdn.
          Bhd.  Outstanding  obligations under the Malaysian Credit Agreement at
          November  30,  2002 and 2003 were  approximately  $3,317  and  $2,721,
          respectively.  At November 30, 2003,  interest on the credit  facility
          ranged  from 4.75% to 6.5%.  At  November  30,  2002,  interest on the
          credit facility ranged from 4.75% to 6.0%.

                                                                     (Continued)

                                       114


<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                        November 30, 2001, 2002 and 2003
             (Dollars in thousands, except share and per share data)


          The Company also had a revolving  credit facility in Brazil to finance
          additional  working capital needs.  The Brazilian  credit facility was
          secured by the Company under a standby  letter of credit in the amount
          of $200,  which  expired on December 9, 2002 and was payable on demand
          or upon  expiration of the standby  letter of credit.  At November 30,
          2002,  outstanding  obligations  under  the  credit  facility  was 172
          Brazilian  Bolivars,  and interest on the credit  facility ranged from
          19% to 29%.

          At November 30, 2003, the Company had additional  outstanding  standby
          letters of credit  aggregating $678 which expire on various dates from
          May to July 2004.

     (b)  Debt/Loan Agreement

          On  September  2, 2003,  the  Company's  subsidiary,  Audiovox  Europe
          Holdings GmbH, (Audiovox Europe) borrowed 12 million Euros under a new
          term loan agreement.  This agreement was for a 5 year term loan with a
          financial institution  consisting of two tranches.  Tranche A is for 9
          million  Euros and  Tranche B is for 3  million  Euros.  The term loan
          matures  on  August  30,   2008.   Payments  are  due  in  60  monthly
          installments  and interest  accrues at (i) 2.75% over the Euribor rate
          for the Tranche A and (ii) 3.5% over the three months Euribor rate for
          Tranche B. Any  amount  repaid  may not be  reborrowed.  The term loan
          becomes  immediately  due and  payable if a change of  control  occurs
          without permission of the financial institution.

          Audiovox Corporation guarantees 3 million Euros of this term loan. The
          term loan is  secured by the  pledge of the stock of  Audiovox  Europe
          Holdings GmbH and on all brands and trademarks of the Audiovox  Europe
          Holdings  Group.  The term loan  requires the  maintenance  of certain
          yearly  financial  covenants that are  calculated  according to German
          Accounting  Standards for Audiovox Europe Holdings.  Should any of the
          financial covenants not be met, the financial institution may charge a
          higher interest rate on any outstanding borrowings. The short and long
          term amounts  outstanding under this agreement were $3,226 and $9,736,
          respectively,  at  November  30,  2003 and have been  included  in the
          accompanying consolidated balance sheet.

     (c)  Factoring Arrangements

          The Company has available a 16,000 Euro factoring  arrangement  with a
          German  financial   institution  for  its  recently   acquired  German
          operations.  Selected  accounts  receivable  are  purchased  from  the
          Company on a  non-recourse  basis at 80% of face value and  payment of
          the remaining 20% upon receipt from the customer of the balance of the
          receivable  purchased.  The rate of interest is Euribor plus 2.5%, and


                                                                     (Continued)

                                       115


<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                        November 30, 2001, 2002 and 2003
             (Dollars in thousands, except share and per share data)


     the Company pays 0.4% of its gross sales as a fee for this arrangement. The
     amount  outstanding  under this  agreement was $5,510 at November 30, 2003,
     and has been included in bank obligations in the accompanying  consolidated
     balance sheet.

(13) Long-Term Debt to Toshiba

     As discussed in Note 3, on May 29, 2002,  Toshiba  purchased an  additional
     20% of ACC.  In  connection  with the  transaction,  an $8,107  convertible
     subordinated note (the Note) was issued to Toshiba. The Note bears interest
     at a per annum rate equal to 1 3/4% and interest is payable annually on May
     31st of each year,  commencing  May 31, 2003. The unpaid  principal  amount
     shall be due and payable,  together  with all unpaid  interest,  on May 31,
     2007 and  automatically  renews for an additional five years. In accordance
     with the  provisions  of the Note,  Toshiba  may convert the balance of the
     Note into  additional  shares  of ACC in order to  maintain  a maximum  25%
     interest in ACC.  The total amount  outstanding  under the Note at November
     30,  2003  was  $8,107  and has  been  included  as  long-term  debt in the
     accompanying consolidated balance sheet.

     The following is a maturity table for debt and bank obligations outstanding
     at November 30, 2003:


<TABLE>

                       Total
                       Amounts
                       Committed   2004     2005      2006       2007    2008
                       -------   -------   -------   -------   -------   -------

<S>                    <C>       <C>       <C>       <C>       <C>       <C>    
     Lines of credit   $39,940   $39,940   $  --     $  --     $  --     $  --
     Debt               21,722     3,433     2,662     2,596    10,697     2,334
                       -------   -------   -------   -------   -------   -------
     Total             $61,662   $43,373   $ 2,662   $ 2,596   $10,697   $ 2,334
                       =======   =======   =======   =======   =======   =======
</TABLE>




                                                                     (Continued)

                                       116


<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                        November 30, 2001, 2002 and 2003
             (Dollars in thousands, except share and per share data)


(14) Income Taxes

     The  components  of income  (loss)  before the  provision for (recovery of)
     income  taxes,  minority  interest  and  cumulative  effect  of a change in
     accounting for negative goodwill are as follows:


<TABLE>

                                       November 30,
                           ------------------------------------
                             2001         2002         2003
                           ---------    ---------    ---------
                            Note (2)

<S>                        <C>          <C>          <C>      
     Domestic Operations   $(11,535)    $  (7,584)   $  17,391
     Foreign Operations           53        1,181        3,645
                           ---------    ---------    ---------
                           $ (11,482)   $  (6,403)   $  21,036
                           =========    =========    =========
</TABLE>


     Total income tax expense (benefit) was allocated as follows:


<TABLE>

                                                        November 30,
                                                 -------------------------------
                                                  2001        2002       2003
                                                 --------    --------    --------
                                                 Note (2)

<S>                                              <C>         <C>         <C>     
     Statement of operations                     $ (3,627)   $ 12,932    $  9,407
     Stockholders' equity:
        Unrealized holding gain (loss) on
             investment securities recognized
             for financial reporting purposes        (509)        260       1,063
        Tax benefit of stock options exercised       --           (17)       (216)
                                                 --------    --------    --------
             Total income tax expense
               (benefit)                         $ (4,136)   $ 13,175    $ 10,254
                                                 ========    ========    ========

</TABLE>




                                                                     (Continued)

                                       117


<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                        November 30, 2001, 2002 and 2003
             (Dollars in thousands, except share and per share data)


     The provision for (recovery of) income taxes is comprised of:


<TABLE>

                   Federal     Foreign      State       Total
                   --------    --------    --------    --------

     2001:
     Note (2)
<S>                <C>         <C>         <C>         <C>      
        Current    $ (1,751)   $    359    $  1,097    $   (295)
        Deferred     (2,407)        153      (1,078)     (3,332)
                   --------    --------    --------    --------
                   $ (4,158)   $    512    $     19    $ (3,627)
                   ========    ========    ========    ========


     2002:
        Current    $   (525)   $  1,604    $  1,949    $  3,028
        Deferred      8,645         180       1,079       9,904
                   --------    --------    --------    --------
                   $  8,120    $  1,784    $  3,028    $ 12,932
                   ========    ========    ========    ========

     2003:
        Current    $  6,643    $  4,153    $  1,079    $ 11,875
        Deferred     (1,737)       (906)        175      (2,468)
                   --------    --------    --------    --------
                   $  4,906    $  3,247    $  1,254    $  9,407
                   ========    ========    ========    ========
</TABLE>


     A reconciliation  of the provision for income taxes computed at the Federal
     statutory  rate to income (loss) before income taxes and minority  interest
     and the actual provision for income taxes is as follows:


<TABLE>

                                                                    November 30,
                                  ---------------------------------------------------------------------------------
                                             2001                       2002                        2003
                                  -------------------------   -------------------------  ---------------------------
                                          Note (2)

<S>                                  <C>           <C>           <C>            <C>           <C>            <C>  
Tax provision at  Federal statutory
   rates                             $ (4,019)     (35.0)%       $ (2,241)      (35.0)%       $  7,363       35.0%
State income taxes, net of Federal
   benefit                                 12        0.1              338         5.3            1,132        5.4
Increase (decrease) in the
   valuation allowance for
   deferred tax assets                   (227)      (2.0)          13,090       204.4             (641)      (3.1)
Foreign tax rate differential             448        4.0            1,372        21.4            1,971        9.4
Permanent and other, net                  159        1.3              373         5.9             (418)      (2.0)
                                     --------     --------       --------       ------        --------      ------
                                     $ (3,627)     (31.6)%       $ 12,932       202.0%        $  9,407       44.7%
                                     ========     ========       ========       ======        ========      ======
</TABLE>


     The significant  components of deferred  income tax expense  (recovery) for


                                                                     (Continued)

                                       118


<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                        November 30, 2001, 2002 and 2003
             (Dollars in thousands, except share and per share data)


     the years ended November 30, 2002 and 2003 are as follows:


<TABLE>

                                                                     November 30,
                                                               ------------------------
                                                                  2002        2003
                                                                --------    --------

<S>                                                             <C>         <C>      
          Deferred tax expense (recovery) (exclusive of the
               effect of other components listed below)         $ (3,186)   $ (1,827)
          Increase (decrease) in the balance of the valuation
               allowance for deferred tax assets                  13,090        (641)
                                                                --------    --------
                                                                $  9,904    $ (2,468)
                                                                ========    ========
</TABLE>


     The tax  effects of  temporary  differences  that give rise to  significant
     portions of the deferred tax assets and deferred  liabilities are presented
     below:

<TABLE>

                                                                  November 30,
                                                             ---------------------
                                                                2002        2003
                                                              --------    --------
<S>                                                           <C>         <C>     
Deferred tax assets:
     Accounts receivable, principally due to allowance
        for doubtful accounts and cellular deactivations      $  1,723    $  2,094
     Inventory, principally due to additional costs
        capitalized for tax purposes pursuant to the Tax
        Reform Act of 1986                                       1,617       1,561
     Inventory, principally due to valuation reserve             7,521       7,480
     Accrual for future warranty costs                           3,249       3,460
     Plant, equipment and certain intangibles, principally
        due to depreciation and amortization                     1,863       2,112
     Net operating loss carryforwards, federal, state and
        foreign                                                  4,926       4,203
     Foreign tax credits                                         1,347       2,895
     Accrued liabilities not currently deductible and other        520         298
     Investment securities                                         719        (355)
     Deferred compensation plans                                 1,537       2,037
                                                              --------    --------
          Total gross deferred tax assets                       25,022      25,785
     Less: valuation allowance                                 (13,206)    (12,565)
                                                              --------    --------
          Net deferred tax assets                               11,816      13,220
                                                              --------    --------
Deferred tax liabilities:
     Issuance of subsidiary shares                              (6,867)     (6,867)
                                                              --------    --------
          Total gross deferred tax liabilities                  (6,867)     (6,867)
                                                              --------    --------
          Net deferred tax asset                              $  4,949    $  6,353
                                                              ========    ========
</TABLE>


     The net change in the total valuation allowance for the year ended November


                                                                     (Continued)

                                       119


<PAGE>

                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                        November 30, 2001, 2002 and 2003
             (Dollars in thousands, except share and per share data)


     30, 2003 was a decrease of $641,  primarily  resulting  from a reduction in
     the valuation  allowance  recorded on certain of ACC's deferred tax assets.
     After this valuation  allowance,  the net deferred tax assets  remaining on
     the consolidated balance sheet represent deferred tax assets generated from
     the Electronics Group.

     A valuation allowance is provided when it is more likely than not that some
     portion, or all, of the deferred tax assets will not be realized.  Based on
     the Electronics  Group's ability to carry back future reversals of deferred
     tax  assets to taxes paid in current  and prior  years and the  Electronics
     Group's  historical  taxable  income  record,  adjusted for unusual  items,
     management  believes it is more likely than not that the Electronics  Group
     will  realize  the  benefit  of the net  deferred  tax assets  existing  at
     November 30, 2003. Further, management believes the existing net deductible
     temporary  differences will reverse during periods in which the Electronics
     Group  generates net taxable  income.  There can be no assurance,  however,
     that the  Company  will  generate  any  earnings or any  specific  level of
     continuing  earnings in the future.  The amount of the  deferred  tax asset
     considered realizable by the Electronics Group, therefore, could be reduced
     in the  near  term  if  estimates  of  future  taxable  income  during  the
     carryforward period are reduced.

     At  November  30,  2003,  the  Wireless  Group  had  a net  operating  loss
     carryforward for federal income tax purposes of approximately $6,639, which
     is available to offset future  taxable  income,  if any,  which will expire
     through the year ended November 30, 2023.

(15) Capital Structure

     The Company's capital structure is as follows:

<TABLE>
                                                                                                              Voting
                                                                                                              Rights
                             Par                                                      Shares                   Per       Liquidation
         Security           Value              Shares Authorized                      Outstanding              Share         Rights
         --------           -----                                                                             ------        -------
                                        -------------------------------      ------------------------------
                                                 November 30,                         November 30,
                                        -------------------------------      ------------------------------
                                             2002             2003                2002            2003
                                             ----             ----                ----            ----
                                                                                                                        
<S>                        <C>                   <C>             <C>                 <C>             <C>                
Preferred Stock            $50.00                50,000          50,000              50,000          50,000      -     $50 per share

Series Preferred Stock     $ 0.01             1,500,000       1,500,000                   -               -      -             -
                                                                                                                        Ratably
                                                                                                                          with Class
Class A Common Stock       $ 0.01            60,000,000      60,000,000          19,559,445      19,655,645     One       B

Class B Common Stock       $ 0.01            10,000,000      10,000,000           2,260,954       2,260,954     Ten     Ratably
                                                                                                                         with Class
                                                                                                                          A
</TABLE>

                                                                     (Continued)
                                      120

<PAGE>

                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                        November 30, 2001, 2002 and 2003
             (Dollars in thousands, except share and per share data)

     The  holders of Class A and Class B common  stock are  entitled  to receive
     cash or property  dividends  declared by the Board of Directors.  The Board
     can declare cash  dividends for Class A common stock in amounts equal to or
     greater than the cash dividends for Class B common stock.  Dividends  other
     than cash must be declared equally for both classes.  Each share of Class B
     common  stock  may,  at any time,  be  converted  into one share of Class A
     common stock.

     The 50,000 shares of  non-cumulative  Preferred Stock outstanding are owned
     by Shintom  (see Notes 5 and 8) and have  preference  over both  classes of
     common stock in the event of liquidation or dissolution.  These shares have
     no dividend rights.

     The  Company's  Board of  Directors  approved the  repurchase  of 1,563,000
     shares of the  Company's  Class A common  stock in the open market  under a
     share repurchase  program (the Program).  As of November 30, 2002 and 2003,
     1,072,737 shares were repurchased  under the Program at an average price of
     $7.93 for an aggregate amount of $8,511.

     As  of  November  30,  2002  and  2003,  2,900,317  and  2,804,117  shares,
     respectively,  of the  Company's  Class A common  stock  are  reserved  for
     issuance  under the  Company's  Stock  Option and  Restricted  Stock Plans.
     During fiscal 2003,  120,000  warrants were issued to outside counsel (Note
     16).  Warrants are  outstanding  that may be converted  into shares of Code
     (Note 6).

     Undistributed   earnings  from  equity  investments  included  in  retained
     earnings  amounted  to $4,496 and  $6,127 at  November  30,  2002 and 2003,
     respectively.

(16) Stock-Based Compensation and Retirement Plans

     (a)  Stock Options and Warrants

          The Company  applies  APB No. 25 in  accounting  for its stock  option
          grants and,  accordingly,  no compensation cost has been recognized in
          the financial  statements for its stock options which have an exercise
          price equal to or greater than the fair value of the stock on the date
          of the grant.

          The  Company  has  stock  option  plans  under  which   employees  and
          non-employee  directors may be granted incentive stock options (ISO's)
          and non-qualified stock options (NQSO's) to purchase shares of Class A
          common stock.  Under the plans,  the exercise  price of the ISO's will
          not be less  than the  market  value of the  Company's  Class A common
          stock or greater than 110% of the market value of the Company's  Class
          A common stock on the date of grant.  The exercise price of the NQSO's


                                                                     (Continued)

                                       121


<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                        November 30, 2001, 2002 and 2003
             (Dollars in thousands, except share and per share data)


          may not be less than 50% of the market value of the Company's  Class A
          common  stock on the date of grant.  The options  must be exercised no
          later than ten years after the date of grant. The vesting requirements
          are determined by the Board of Directors at the time of grant.

          Compensation  expense is recorded  with  respect to the options  based
          upon the quoted market value of the shares and the exercise provisions
          at the date of grant. No  compensation  expense was recorded for stock
          options during the years ended November 30, 2001, 2002 and 2003.

          At  November  30,  2002 and 2003,  219,253  and  234,253  shares  were
          available   for  future   grants  under  the  terms  of  these  plans,
          respectively.

     (b)  Stock Warrants

          During fiscal 2003, the Company issued  non-transferable  warrants for
          the purchase of 120,000 shares to outside legal counsel.  The warrants
          vested  immediately  upon  issuance,  and the  exercise  price  of the
          warrants  was equal to the market  price on the date of  issuance.  In
          accordance  with APB No.  25 and SFAS 123,  the  Company  recorded  an
          expense  equal to the fair value of the  warrants,  as these  warrants
          were issued to non-employees for services performed.  Accordingly, the
          Company   recorded  $297  of  expense   during  fiscal  2003  for  the
          aforementioned   warrants   which  is   reflected   in   general   and
          administrative expenses in the accompanying consolidated statements of
          operations for the fiscal year ended November 30, 2003.

          No stock  options or  warrants  were  granted in fiscal 2001 or fiscal
          2002.



                                                                     (Continued)

                                       122


<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                        November 30, 2001, 2002 and 2003
             (Dollars in thousands, except share and per share data)


          Information  regarding  the  Company's  stock  options and warrants is
          summarized below:


<TABLE>

                                                              Weighted
                                                              Average
                                                  Number      Exercise
                                                of Shares     Price
                                               -----------  ------------

<S>                                            <C>          <C>      
Outstanding at November 30, 2000                2,749,900    $   11.61
         Granted                                     --            --
         Exercised                                (10,000)        7.69
         Canceled/Lapsed                             --            --
                                               ----------    ---------
Outstanding at November 30, 2001                2,739,900        11.62
         Granted                                     --            --
         Exercised                                (16,336)        7.69
         Canceled/Lapsed                          (12,500)       13.75
                                               ----------    ---------
Outstanding at November 30, 2002                2,711,064        11.64
         Granted                                  120,000        11.02
         Exercised                                (96,200)        6.90
         Canceled/Lapsed                          (15,000)       15.00
                                               ----------    ---------

Outstanding at November 30, 2003                2,719,864    $   11.76
                                               ==========    =========
Options and warrants exercisable at November
         30, 2003                               2,719,864    $   11.76
                                               ==========    =========
</TABLE>


          Summarized information about stock options and warrants outstanding as
          of November 30, 2003 is as follows:


<TABLE>

                                        Outstanding                                     Exercisable
                    ---------------------------------------------------     ------------------------------------
                                        Weighted           Weighted
                                        Average            Average                              Weighted
    Exercise                            Exercise             Life                                Average
     Price             Number            Price            Remaining            Number             Price
     Range            of Shares        of Shares           In Years           of Shares         of Shares
----------------    -------------    --------------    ----------------     -------------    ---------------

<S>                        <C>             <C>                <C>                 <C>                <C> 
$4.63-8.00                 1,026,664       7.24               3.19           1,026,664                7.24
$8.01-13.00                  228,200       11.30              4.22             228,200               11.30
$13.01-15.00               1,465,000       15.00              5.78           1,465,000               15.00
</TABLE>



                                                                     (Continued)

                                       123


<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                        November 30, 2001, 2002 and 2003
             (Dollars in thousands, except share and per share data)


     (c)  Restricted Stock Plan

          The Company has  restricted  stock plans under which key employees and
          directors may be awarded restricted stock. Awards under the restricted
          stock    plan    may    be    performance-accelerated    shares    or
          performance-restricted  shares.  There were no  performance-restricted
          accelerated shares or  performance-restricted  shares granted in 2001,
          2002 and 2003.

          Compensation  expense  for  the   performance-accelerated   shares  is
          recorded  based upon the quoted market value of the shares on the date
          of grant. Compensation expense for the  performance-restricted  shares
          is recorded  based upon the quoted  market  value of the shares on the
          balance  sheet date.  There was no  restricted  stock  outstanding  at
          November 30, 2001, 2002 and 2003.

     (d)  Employee Stock Purchase Plan

          In April 2000,  the  stockholders  approved  the 2000  Employee  Stock
          Purchase  Plan of up to  1,000,000  shares.  The stock  purchase  plan
          provides  eligible  employees an opportunity to purchase shares of the
          Company's Class A common stock through payroll deductions at a minimum
          of 2% and a  maximum  of  15% of  base  salary  compensation.  Amounts
          withheld are used to purchase Class A common stock on the open market.
          The cost to the  employee  for the  shares is equal to 85% of the fair
          market  value of the shares on or about the  quarterly  purchase  date
          (December  31, March 31, June 30 or September  30). The Company  bears
          the cost of the  remaining  15% of the fair market value of the shares
          as well as any broker fees.

          The Company's employee stock purchase plan is a non-compensatory plan,
          in  accordance  with APB No.  25,  for which the  related  expense  is
          recorded in general and  administrative  expenses in the  consolidated
          statement of operations.

     (e)  Profit Sharing Plans/ 401(k) Plan

          The Company  has  established  two  non-contributory  employee  profit
          sharing plans for the benefit of its eligible  employees in the United
          States and Canada. The plans are administered by trustees appointed by
          the Company.  A contribution  accrual of $300 and $600 was recorded by
          the  Company  for the  United  States  plan in  fiscal  2001 and 2003,
          respectively.  No  accruals  for  contributions  were  recorded by the
          Company in fiscal 2002.  Contributions  required by law to be made for
          eligible  employees  in  Canada  were  not  material  for all  periods
          presented.


                                                                     (Continued)

                                       124


<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                        November 30, 2001, 2002 and 2003
             (Dollars in thousands, except share and per share data)


          The Company also has a 401(k) plan for eligible employees. The Company
          matches a portion of the participant's contributions after one year of
          service  under a  predetermined  formula  based  on the  participant's
          contribution  level. The Company's  contributions  were $160, $114 and
          $135  for  the  year  ended   November  30,   2001,   2002  and  2003,
          respectively.  Shares  of  the  Company's  Common  Stock  are  not  an
          investment  option in the Savings  Plan and the  Company  does not use
          such shares to match participants' contributions.

     (f)  Deferred Compensation Plan

          Effective   December  1,  1999,   the   Company   adopted  a  Deferred
          Compensation  Plan (the Plan) for a select  group of  management.  The
          Plan is  intended  to provide  certain  executives  with  supplemental
          retirement benefits as well as to permit the deferral of more of their
          compensation than they are permitted to defer under the Profit Sharing
          and 401(k) Plan. The Plan provides for a matching  contribution  equal
          to 25% of the  employee  deferrals up to $20. The Plan is not intended
          to be a qualified  plan under the  provisions of the Internal  Revenue
          Code. All compensation  deferred under the Plan is held by the Company
          in an investment trust which is considered an asset of the Company.

          The  investments,  which amounted to $5,280 at November 30, 2003, have
          been  classified as trading  securities and are included in investment
          securities  on  the  accompanying  consolidated  balance  sheet  as of
          November 30, 2003.  The return on these  underlying  investments  will
          determine  the  amount of  earnings  credited  to the  employees.  The
          Company  has the option of  amending  or  terminating  the Plan at any
          time. The deferred compensation  liability is reflected as a long-term
          liability  on  the  accompanying  consolidated  balance  sheet  as  of
          November 30, 2003.  Compensation  expense and investment income (loss)
          are recorded in the accompanying consolidated statements of operations
          in connection with this deferred compensation plan.

(17) Lease Obligations

     During 1998,  the Company  entered into a 30-year lease for a building with
     its  principal  stockholder  and chief  executive  officer.  A  significant
     portion  of the lease  payments,  as  required  under the lease  agreement,
     consists of the debt service payments  required to be made by the principal
     stockholder  in connection  with the financing of the  construction  of the
     building.  For financial reporting purposes,  the lease has been classified
     as a capital lease, and, accordingly, a building and the related obligation
     of approximately $6,340 was recorded (Note 20). The effective interest rate
     on the capital lease obligation is 8.0%.

                                                                     (Continued)

                                       125


<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                        November 30, 2001, 2002 and 2003
             (Dollars in thousands, except share and per share data)


     During 1998, the Company entered into a sale/leaseback transaction with its
     principal  stockholder and chief executive officer for $2,100 of equipment,
     which has been classified as an operating  lease.  The lease is a five-year
     lease with monthly  payments of $34 and has been extended for an additional
     two years.  No gain or loss was  recorded  on the  transaction  as the book
     value of the equipment equaled the fair market value.

     At  November  30,  2003,  the Company was  obligated  under  non-cancelable
     capital and operating  leases for equipment  and warehouse  facilities  for
     minimum annual rental payments as follows:


<TABLE>

                                                                   Capital            Operating
                                                                    Lease               Leases

<C>                                                                 <C>                <C>      
2004                                                                $     553          $   3,946
2005                                                                      552              3,309
2006                                                                      561              2,731
2007                                                                      577              2,499
2008                                                                      580              1,667
Thereafter                                                             10,829                188
                                                                     --------          ---------
       Total minimum lease payments                                    13,652          $  14,340
                                                                                       =========
Less:  amount representing interest                                     7,517
                                                                    ---------
       Present value of net minimum lease
         payments                                                       6,135
Less: current installments included in accrued
       expenses and other current liabilities                              65
                                                                    ---------
Long-term obligation                                                $   6,070
                                                                    =========
</TABLE>


     Rental expense for the above-mentioned operating lease agreements and other
     leases on a month- to-month basis  approximated  $2,958,  $3,191 and $3,735
     for the years ended November 30, 2001, 2002 and 2003, respectively.



                                                                     (Continued)

                                       126


<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                        November 30, 2001, 2002 and 2003
             (Dollars in thousands, except share and per share data)


     The Company  leases  certain  facilities  and equipment  from its principal
     stockholder and several officers. Rentals for such leases are considered by
     management  of the  Company to  approximate  prevailing  market  rates.  At
     November 30, 2003,  minimum  annual rental  payments on these related party
     leases,  in addition to the capital lease  payments,  which are included in
     the above table, are as follows:


                2004                 $1,264
                2005                  1,021
                2006                    912
                2007                    940
                2008                    968
                Thereafter              119
                                     ------
                                     $5,224
                                     ======

(18) Financial Instruments

     (a)  Off-Balance Sheet Risk

          Commercial  letters  of credit are  issued by the  Company  during the
          ordinary course of business  through major domestic banks as requested
          by certain  suppliers.  The  Company  also issues  standby  letters of
          credit  principally  to secure  certain bank  obligations  of Audiovox
          Communications  Sdn. Bhd.  (Note 12). The Company had open  commercial
          letters of credit of approximately  $8,129 and $2,541, of which $3,740
          and $468 were accrued for  purchases  incurred as of November 30, 2002
          and 2003,  respectively.  The terms of these letters of credit are all
          less  than  one  year.  No  material  loss  is   anticipated   due  to
          nonperformance  by the counter parties to these  agreements.  The fair
          value of these  open  commercial  and  standby  letters  of  credit is
          estimated to be the same as the contract values based on the nature of
          the fee arrangements with the issuing banks.

          The  Company is a party to joint and several  guarantees  on behalf of
          G.L.M.  which aggregate $300.  There is no market for these guarantees
          and they were  issued  without  explicit  cost.  Therefore,  it is not
          practicable to establish its fair value.

     (b)  Concentrations of Credit Risk

          Financial  instruments,  which  potentially  subject  the  Company  to
          concentrations   of  credit  risk,   consist   principally   of  trade
          receivables.  The Company's  customers are located  principally in the
          United  States and Canada  and  consist  of,  among  others,  wireless
          carriers   and   service   providers,   distributors,   agents,   mass


                                                                     (Continued)

                                       127


<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                        November 30, 2001, 2002 and 2003
             (Dollars in thousands, except share and per share data)


          merchandisers, warehouse clubs and independent retailers.

          At November 30, 2002,  one  customer,  a wireless  carrier and service
          provider,  accounted for  approximately  27% of consolidated  accounts
          receivable.  At November 30, 2003, three wireless customers  accounted
          for 13%, 12% and 12% of consolidated accounts receivable.

          During the years ended November 30, 2001,  2002 and 2003, one customer
          accounted for  approximately  35%, 24% and 21% of the Company's fiscal
          2001, 2002 and 2003 sales, respectively.

          The  Company  generally  grants  credit  based  upon  analyses  of its
          customers'  financial  position and previously  established buying and
          payment  patterns.  For certain  customers,  the  Company  establishes
          collateral  rights in accounts  receivable  and  inventory and obtains
          personal  guarantees from certain  customers  based upon  management's
          credit evaluation.

          A  portion  of the  Company's  customer  base  may be  susceptible  to
          downturns  in  the  retail  economy,   particularly  in  the  consumer
          electronics industry. Additionally,  customers specializing in certain
          automotive sound,  security and accessory  products may be impacted by
          fluctuations in automotive sales.

     (c)  Fair Value

          The  carrying  value  of all  financial  instruments  classified  as a
          current asset or liability is deemed to approximate fair value because
          of the short term maturity of these  instruments.  The estimated  fair
          value of the Company's financial instruments is as follows:


<TABLE>

                                   November 30, 2002     November 30, 2003
                                 -------------------- --------------------
                                  Carrying    Fair    Carrying    Fair
                                   Amount    Value      Amount   Value
                                 ---------- -------   --------  ---------
<S>                               <C>       <C>       <C>       <C>    
          Investment securities   $ 5,405   $ 5,405   $ 9,512   $ 9,512
          Bank obligations        $36,883   $36,883   $39,940   $39,940
</TABLE>


          The following  methods and assumptions  were used to estimate the fair
          value  of  each  class  of  financial  instruments  for  which  it  is
          practicable to estimate that value:



                                                                     (Continued)

                                       128


<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                        November 30, 2001, 2002 and 2003
             (Dollars in thousands, except share and per share data)


          Investment Securities

          The carrying amount represents fair value,  which is based upon quoted
          market prices at the reporting date (Note 8).

          Long-Term Obligations

          The carrying amount of bank debt under the Company's  revolving credit
          agreement  and  foreign  debt  approximates  fair  value  because  the
          interest  rate on the bank  debt is reset  every  quarter  to  reflect
          current market rates.

          Limitations

          Fair value  estimates are made at a specific  point in time,  based on
          relevant  market  information  and  information  about  the  financial
          instrument.  These  estimates  are  subjective  in nature and  involve
          uncertainties  and matters of  significant  judgment  and,  therefore,
          cannot be determined  with  precision.  Changes in  assumptions  could
          significantly affect the estimates.

(19) Segment Information

          The  Company  has two  reportable  segments  which  are  organized  by
          products:  Wireless  and  Electronics.  The Wireless  segment  markets
          wireless  handsets and accessories  through domestic and international
          wireless  carriers  and their  agents,  independent  distributors  and
          retailers. The Electronics segment sells autosound, mobile electronics
          and  consumer  electronics,  primarily  to mass  merchants,  specialty
          retailers,  new car dealers,  original equipment  manufacturers (OEM),
          independent   installers  of  automotive   accessories  and  the  U.S.
          military.

          The  Company's  chief  decision  maker  evaluates  performance  of the
          segments  based upon income before  provision  for income  taxes.  The
          accounting policies of the segments are the same as those described in
          the summary of significant  accounting  policies (Note 1). The Company
          allocates  interest and certain shared expenses,  including  treasury,
          legal and human resources, to the segments based upon estimated usage.
          Intersegment  sales are reflected at cost and have been  eliminated in
          consolidation.  A  royalty  fee on the  intersegment  sales,  which is
          eliminated in consolidation,  is recorded by the segments and included
          in  other  income  (expense).  Certain  items  are  maintained  at the
          Company's corporate headquarters  (Corporate) and are not allocated to
          the segments.  They primarily include costs associated with accounting
          and certain  executive  officer salaries and bonuses and certain items
          including investment securities,  equity investments,  deferred income

                                                                     (Continued)

                                       129


<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                        November 30, 2001, 2002 and 2003
             (Dollars in thousands, except share and per share data)



          taxes,  certain  portions  of excess  cost  over fair  value of assets
          acquired,  jointly- used fixed assets and debt. The jointly-used fixed
          assets are the  Company's  management  information  systems,  which is
          jointly used by the Wireless and Electronics segments and Corporate. A
          portion  of  the  management   information  systems  costs,  including
          depreciation and amortization  expense,  are allocated to the segments
          based upon estimates made by management.  Segment  identifiable assets
          are  those  which  are  directly  used  in or  identified  to  segment
          operations.

          During the years ended November 30, 2001,  2002 and 2003, one customer
          of the Wireless segment accounted for  approximately  35%, 24% and 21%
          of the  Company's  consolidated  fiscal  2001,  2002 and  2003  sales,
          respectively.  No customers in the Electronics segment exceeded 10% of
          consolidated sales in fiscal 2001, 2002 or 2003.


<TABLE>

                                                                                               Consolidated
                                                   Wireless       Electronics    Corporate       Totals

2001, Note (2)

<S>                                                <C>            <C>                          <C>        
Net sales                                          $   978,888    $   297,703          --      $ 1,276,591
Interest income                                            138             91   $       441            670
Equity in income of equity investees                      --               45         3,541          3,586
Interest expense                                         7,711          2,039        (4,575)         5,175
Depreciation and amortization                              878          1,408         2,190          4,476
Income (loss) before provision for (recovery of)
   income taxes and minority interest                  (17,656)        13,623        (7,449)       (11,482)
Total assets                                           347,393        138,779        58,325        544,497
Goodwill, net                                             --              370         4,362          4,732
Non-cash items:
   Provision for bad debt expense                          629          1,091           216          1,936
   Deferred income tax (benefit)                          --             --          (3,332)        (3,332)
   Minority interest                                      --             --           1,830          1,830
Capital expenditures                                     1,082            992           795          2,869
</TABLE>



                                                                     (Continued)

                                       130


<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                        November 30, 2001, 2002 and 2003
             (Dollars in thousands, except share and per share data)


<TABLE>

                                                                                               Consolidated
                                                       Wireless     Electronics    Corporate       Totals
2002

<S>                                                     <C>           <C>                      <C>      
Net sales                                               727,658       372,724         --       1,100,382
Interest income                                              81           169          259           509
Equity in income of equity investees                       --              37        1,742         1,779
Interest expense                                          3,984         1,605       (2,409)        3,180
Depreciation and amortization                             1,114         1,571        2,095         4,780
Income (loss) before provision for (recovery of)
   income taxes, minority interest, and cumulative
   effect                                               (24,906)       17,415        1,088        (6,403)
Total assets                                            304,337       209,231       37,667       551,235
Goodwill, net                                              --           2,224        4,602         6,826
Non-cash items:
   Provision for bad debt expense                         3,482         1,402         --           4,884
   Deferred income tax expense                             --            --          9,904         9,904
   Minority interest                                       --            --          4,616         4,616
Capital expenditures                                      1,093         1,321          745         3,159

2003

Net sales                                               806,210       517,692         --       1,323,902
Interest income                                              45           254          217           516
Equity in income of equity investees                       --              35        3,244         3,279
Interest expense                                          1,798         3,917       (2,194)        3,521
Depreciation and amortization                             1,056         1,884        1,641         4,581
Income (loss) before provision for (recovery of)
   income taxes and minority interest                     5,617        29,540      (14,121)       21,036
Total assets                                            199,304       339,541       40,858       579,703
Goodwill, net                                              --           2,930        4,602         7,532
Non-cash items:
   Provision for bad debt expense                           (10)          576         --             566
   Deferred income tax expense                             --            --         (2,468)       (2,468)
   Minority interest                                       --            --          4,993         4,993
Capital expenditures                                        274         1,099        4,081         5,454
</TABLE>


          In accordance with SFAS No. 142,  Corporate  wrote-off its unamortized
          negative  goodwill of $240 as of the date of adoption,  which has been
          reflected in the consolidated statements of operations as a cumulative
          effect of a change in accounting principle for the year ended November
          30, 2002.  The  implementation  of SFAS No. 142 was  immaterial to the
          segments.

          Goodwill  was  acquired  in  connection  with the  purchase of certain
          assets of  Code-Alarm,  Inc. by Code  Systems,  Inc.,  a  wholly-owned
          subsidiary of Audiovox Electronics Corp. (Note 6).

                                                                     (Continued)

                                                        131


<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                        November 30, 2001, 2002 and 2003
             (Dollars in thousands, except share and per share data)


          Net  sales  and  long-lived  assets by  location  for the years  ended
          November 30, 2001, 2002 and 2003 were as follows.


<TABLE>

                                     Net Sales                     Long-Lived Assets
                 --------------------------------------   -----------------------------------

                    2001         2002         2003          2001         2002          2003
                  ----------   ----------   ----------   ----------   ----------   ----------
                    Note (2)

<S>               <C>          <C>          <C>          <C>          <C>          <C>       
United States     $1,061,853   $  867,154   $1,074,547   $   34,820   $   40,506   $   55,256
Canada                85,796      143,368      135,952         --           --           --
Argentina              2,684          985           64         --           --           --
Peru                   4,148          313          441         --           --           --
Japan                   --           --            456        6,545         --           --
Malaysia              12,570       11,637        7,720        1,220        1,038        1,010
Venezuela             22,422       16,744        2,908        8,339          852          511
Mexico, Central
    America and
    Caribbean         77,134       28,655       60,093         --           --           --
Chile                  1,077       21,711        9,776         --           --           --
Europe                  --           --         27,708         --           --          2,407
Other foreign           --           --
    countries          8,907        9,815        4,237         --
                  ----------   ----------   ----------   ----------   ----------   ----------
Total             $1,276,591   $1,100,382   $1,323,902   $   50,924   $   42,396   $   59,184
                  ==========   ==========   ==========   ==========   ==========   ==========
</TABLE>


(20) Related Party Transactions

          A note  due  from  an  officer/director  of the  Company,  which  bore
          interest at the LIBOR rate, to be adjusted  quarterly,  plus 1.25% per
          annum,  was paid in full during fiscal 2002. In addition,  at November
          30, 2002, the Company had outstanding  notes due from various officers
          of the Company  aggregating  $235, which have been included in prepaid
          expenses and other  current  assets on the  accompanying  consolidated
          balance sheet. The notes bore interest at the LIBOR rate plus 0.5% per
          annum.   Principal   and   interest   were  payable  in  equal  annual
          installments  beginning  July 1, 1999 through July 1, 2003.  The notes
          have been paid in full.  In  addition,  no new notes with  officers or
          directors of the Company have been entered into.

          The Company also leases  certain  facilities  and  equipment  from its
          principal stockholder (Note 17).

          During the years ended November 30, 2001,  2002 and 2003, 34%, 38% and
          10% of the Company's purchases,  respectively, were from Toshiba (Note
          3). At November  30,  2002,  the  Company  recorded  receivables  from
          Toshiba  aggregating  approximately  $12,219 for price  protection and
          software  upgrades.   At  November  30,  2003,  the  Company  recorded


                                                                     (Continued)

                                       132


<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                        November 30, 2001, 2002 and 2003
             (Dollars in thousands, except share and per share data)


          receivables from Toshiba aggregating  approximately $709 primarily for
          software upgrades.

          At November 30, 2003,  the Company had  inventory on hand from Toshiba
          in the amount of $18,841,  which has been  recorded in  inventory  and
          accounts payable on the accompanying  consolidated  balance sheet. The
          payment terms are such that the payable is non-interest bearing and is
          payable in accordance  with the terms  established  in a  distribution
          agreement with Toshiba, which is 30 days. For certain inventory items,
          the Company is entitled to receive  price  protection in the event the
          selling  price to its  customers is less than the purchase  price from
          the  manufacturer.  The  Company  records  such price  protection,  as
          necessary, at the time of the sale of the units. For fiscal 2001, 2002
          and  2003,   price   protection   of  $4,550,   $27,683  and  $13,031,
          respectively,  was  recorded  as a  reduction  to cost of sales as the
          related inventory was sold.

          On May  29,  2002,  Toshiba  purchased  an  additional  20% of ACC for
          $23,900 in cash, bringing Toshiba's total ownership interest in ACC to
          25%. In addition,  an $8,107 convertible  subordinated note (the Note)
          was issued to  Toshiba.  The Note bears  interest  at a per annum rate
          equal to 1 3/4% and  interest is payable  annually on May 31st of each
          year,  commencing May 31, 2003. The unpaid  principle  amount shall be
          due and payable,  together with all unpaid  interest,  on May 31, 2007
          and  automatically  renews for an additional five years. In accordance
          with the  provisions  of the Note,  Toshiba may convert the balance of
          the Note into additional  shares of ACC in order to maintain a maximum
          25% interest in ACC.

          In  connection  with the  transaction,  ACC and Toshiba  formalized  a
          distribution   agreement  whereby  ACC  will  be  Toshiba's  exclusive
          distributor  for the sale of Toshiba  products  in the United  States,
          Canada,  Mexico and all  countries  in the  Caribbean  and Central and
          South America through May 29, 2007. Pursuant to the agreement, the put
          right is only exercisable if ACC terminates the distribution agreement
          or if another strategic  investor acquires a direct or indirect equity
          ownership interest in excess of 20% in the Company.  Toshiba maintains
          a put right and the Company a call  right,  to  repurchase  all of the
          shares  held by the other  party for a price  equal to the fair market
          value of the shares as calculated in  accordance  with the  agreement.
          Audiovox's  call  right  is only  exercisable  if  Toshiba  elects  to
          terminate the  distribution  agreement after its initial five (5) year
          term (see Note 3).

(21) Commitments and Contingencies

          Contingencies

          The Company is currently, and has in the past been, a party to routine
          litigation incidental to its business.  From time to time, the Company
          receives  notification  of alleged  violations  of  registered  patent
          holders' rights. The Company has either been indemnified by its

                                                                     (Continued)

                                       133


<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                        November 30, 2001, 2002 and 2003
             (Dollars in thousands, except share and per share data)


          manufacturers  in these  matters,  obtained  the  benefit  of a patent
          license or has decided to vigorously defend such claims.

          On September 17, 2003, AEC settled the action for patent  infringement
          that was instituted by Nissho Iwai American Corporation against AEC in
          the United State District Court for the Southern District of New York.
          Pursuant to the settlement Nissho granted AEC a non-exclusive  license
          for a payment covering any alleged past  infringements  and a per unit
          payment for future infringement. Neither party to the lawsuit admitted
          any liability or any merit to the allegations of either party.

          The Company and ACC, along with other manufacturers of wireless phones
          and cellular service providers,  were named as defendants in two class
          action lawsuits alleging non-compliance with FCC ordered emergency 911
          call processing  capabilities.  These lawsuits were  consolidated  and
          transferred  to the  United  States  District  Court for the  Northern
          District of Illinois,  which in turn referred the cases to the Federal
          Communications  Commission  ("FCC") to determine if the  manufacturers
          and  service  providers  are in  compliance  with the  FCC's  order on
          emergency 911 call processing capabilities. The Company and ACC intend
          to vigorously defend this matter. However, no assurances regarding the
          outcome of this matter can be given at this point in the litigation.

          In June 2003,  ACC settled the  litigation it had  instituted  against
          Northcoast Communications,  LLC ("Northcoast"). ACC received a partial
          payment of its claimed amount from Northcoast. In addition, Northcoast
          withdrew  its   counterclaims   with   prejudice.   A  Stipulation  of
          Discontinuance  with  prejudice  was filed in the Supreme Court of the
          State of New York, County of Suffolk.

          During 2001, the Company,  along with other  suppliers,  manufacturers
          and  distributors  of hand- held wireless  telephones,  was named as a
          defendant in five class action lawsuits  alleging  damages relating to
          exposure  to  radio  frequency   radiation  from  hand-held   wireless
          telephones. These class actions have been consolidated and transferred
          to a Multi-District Litigation Panel before the United States District
          Court of the District of Maryland.  On March 5, 2003,  Judge Catherine
          C. Blake of the  United  States  District  Court for the  District  of
          Maryland granted the defendants'  consolidated motion to dismiss these
          complaints.  Plaintiffs  have  appealed to the United  States  Circuit
          Court of Appeals, Fourth Circuit. The appeal pending before the United
          States Circuit Court of Appeals,  Fourth  Circuit in the  consolidated
          class action lawsuits (Pinney, Farina, Gilliam,  Gimpelson and Naquin)
          against ACC and other  suppliers,  manufacturers  and  distributors as
          well as wireless carriers of hand-held  wireless  telephones  alleging
          damages relating to risk of exposure to radio frequency radiation from
          the wireless telephones has not yet been heard. It is anticipated that
          the appeal will be heard in May 2004.

                                                                     (Continued)

                                       134


<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                        November 30, 2001, 2002 and 2003
             (Dollars in thousands, except share and per share data)



          The  Company  had  been  the  subject  of  an  administrative   agency
          investigation  involving  alleged  reimbursement  of a  fixed  nominal
          amount of  federal  campaign  contributions  during the years 1995 and
          1996.  During the third  quarter of fiscal 2003,  the Company  entered
          into a  Conciliation  Agreement and paid a civil penalty in the amount
          of $620.

          During  the  third  quarter  of  fiscal  2003,  a  certain  Venezuelan
          employee,  who is also a minority  shareholder in Audiovox  Venezuela,
          submitted  a  claim  to  the  Venezuela   Labor  Court  for  severance
          compensation of  approximately  $560. The Court approved the claim and
          it was paid and expensed by Audiovox Venezuela in the third quarter of
          fiscal 2003. The Company is challenging  the payment of this claim and
          will  seek  reimbursement  from  the  Venezuelan  shareholder  or  the
          Company's insurance carrier.

          The Company  does not expect the  outcome of any  pending  litigation,
          separately and in the aggregate,  to have a material adverse effect on
          its   business,   consolidated   financial   position  or  results  of
          operations.

          Commitments

          The Company has  guaranteed  the  borrowings  of one of its  50%-owned
          equity investees (GLM) at a maximum of $300. During the second quarter
          of fiscal 2003, the Company adopted FIN 45, "Guarantors Accounting and
          Disclosure  Requirements  for  Guarantors,   Including  Guarantees  of
          Indebtedness  of Others" (FIN 45).  The Company has not modified  this
          guarantee  after December 31, 2002. No liability has been recorded for
          this guarantee on the accompanying consolidated financial statements.

          ACC entered into an employment  agreement with the President and Chief
          Executive  Officer (the  Executive)  of ACC through May 29, 2007 (Note
          3).  Under the  agreement,  ACC is  required to pay the  Executive  an
          annual base salary of $500 in addition to an annual  bonus equal to 2%
          of ACC's annual earnings before income taxes.



                                                                     (Continued)

                                       135


<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                        November 30, 2001, 2002 and 2003
             (Dollars in thousands, except share and per share data)


(22) Unaudited Quarterly Financial Data

     Selected  unaudited,  quarterly financial data of the Company for the years
     ended November 30, 2002 and 2003 appears below:


<TABLE>

                                                                          QUARTER ENDED
(Dollars in thousands, except per share data)           Feb. 28         May 31         Aug. 31         Nov. 30
                                                       --------         ------         -------         -------
                                                       Note (2)        Note (2)        Note (2)

2002
<S>                                                     <C>             <C>             <C>             <C>    
Net sales                                               184,269         297,267         301,992         316,853
Gross profit                                             13,723          18,653          27,468          14,755
Operating expenses                                       18,946          24,089          21,283          24,356
Income (loss) before provision for (recovery
   of) income taxes, minority interest, and
   cumulative effect                                    (7,554)           7,737           4,985        (11,571)
Provision for (recovery of) income taxes                (1,500)           4,320           2,416           7,696
Minority interest income                                    557             256              49           4,193
Income (loss) before cumulative effect of
   accounting change for negative goodwill              (5,497)           3,673           2,618        (15,074)
Cumulative effect of accounting change for
   negative goodwill                                        240               -               -               -
Net income (loss)                                       (5,257)           3,673           2,618        (15,074)
Net income (loss) per common share before
   cumulative effect of accounting change for
   negative goodwill:
     Basic                                               (0.25)            0.17            0.12          (0.69)
     Diluted                                             (0.25)            0.17            0.12          (0.69)
Net income (loss)
     Basic                                               (0.24)            0.17            0.12          (0.69)
     Diluted                                             (0.24)            0.17            0.12          (0.69)
</TABLE>



                                                                     (Continued)

                                       136


<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                        November 30, 2001, 2002 and 2003
             (Dollars in thousands, except share and per share data)


<TABLE>

                                                                          QUARTER ENDED
(Dollars in thousands, except per share data)           Feb. 28         May 31         Aug. 31         Nov. 30
                                                       --------         ------         -------         -------

2003
<S>                                                     <C>             <C>             <C>             <C>    
Net sales                                               296,818         301,010         265,822         460,252
Gross profit                                             25,468          25,612          27,831          45,295
Operating expenses                                       21,007          22,558          25,381          33,457
Income before provision for income taxes,
   minority interest, and cumulative effect               2,628           3,355           2,442          12,611
Provision for income taxes                                1,040             918           2,606           4,843
Minority interest income (expense)                        (380)           (363)             811           (458)
Net income                                                1,208           2,074             647          7,310
Net income per common share before
   cumulative effect:
     Basic                                                 0.06            0.10            0.03            0.33
     Diluted                                               0.05            0.09            0.03            0.33
Net income
     Basic                                                 0.06            0.10            0.03            0.33
     Diluted                                               0.05            0.09            0.03            0.33
</TABLE>



(23) Fourth Quarter Adjustments for Fiscal 2002

     During  the  fourth  quarter  of fiscal  2002,  the  Company  recorded  the
     following  adjustments  to  its  statement  of  operations  (i)  a  $13,090
     valuation  allowance  for  deferred  tax assets that were  considered  more
     likely than not to be  unrecoverable  related to the Wireless segment (Note
     14);  (ii) an  inventory  obsolescence  charge of $7,665 and $2,725 for the
     Wireless Group and Electronics Group,  respectively,  relating to inventory
     (Note 1); (iii) a $1,158 other-than-temporary  impairment charge related to
     investment  securities  (Note 8); (iv) a $2,091 bad debt reserve related to
     certain  customers  whose  financial  condition  and  ability  to pay their
     outstanding  receivables became doubtful during the fourth quarter; and (v)
     the reversal of unearned sales incentives of $763 and $947 for the Wireless
     Group and Electronics Group, respectively.  The Company has determined that
     none of these adjustments relate to prior quarters.

                                                                     (Continued)

                                       137


<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                        November 30, 2001, 2002 and 2003
             (Dollars in thousands, except share and per share data)


(24) Accrued Sales Incentives

     During the quarter ended May 31, 2002,  the Company  adopted the provisions
     of EITF 01-9.  As a result of adopting  EITF 01-9 in 2002,  the Company has
     reclassified co-operative advertising,  market development funds and volume
     incentive  rebate  costs  (collectively   sales  incentives),   which  were
     previously  included in selling expenses,  to net sales as the Company does
     not receive an  identifiable  benefit in connection  with these costs. As a
     result of this  reclassification,  net sales and  selling  expenses,  after
     restatement,  were reduced by $11,100 for the year ended November 30, 2001.
     There  was no  further  impact  on  the  Company's  consolidated  financial
     statements  as a  result  of the  adoption  of EITF  01-9 as the  Company's
     historical accounting policy with respect to the recognition and measure of
     sales incentives is consistent with EITF 01-9.

     A summary of the  activity  with respect to sales  incentives  for the last
     three years on a segment and consolidated basis is provided below:

<TABLE>

     Wireless

                                           Fiscal     Fiscal     Fiscal
                                            2001       2002        2003
                                          --------    --------    --------
                                          Note (2)

<S>                                       <C>         <C>         <C>     
     Opening balance                      $ 11,700    $  5,209    $  7,525
     Accruals                               19,680      31,186      21,327
     Payments                              (13,616)    (25,654)    (20,426)
     Reversals for unearned incentives      (7,535)       (570)       (393)
     Reversals for unclaimed incentives     (5,020)     (2,646)       (744)
                                          --------    --------    --------
     Ending balance                       $  5,209    $  7,525    $  7,289
                                          ========    ========    ========
</TABLE>



<TABLE>

         Electronics

                                           Fiscal     Fiscal     Fiscal
                                            2001       2002        2003
                                          --------    --------    --------
                                          Note (2)

<S>                                       <C>         <C>         <C>     
     Opening balance                      $  2,894    $  3,265    $  4,626
     Accruals**                              5,789       7,665      19,994
     Payments                               (3,604)     (4,804)     (8,212)
     Reversals for unearned incentives      (1,516)       (784)       (917)
     Reversals for unclaimed incentives       (298)       (716)       (886)
                                          --------    --------    --------
     Ending balance                       $  3,265    $  4,626    $ 14,605
                                          ========    ========    ========
</TABLE>


<TABLE>
                                                                     (Continued)

                                       138


<PAGE>

                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
                        November 30, 2001, 2002 and 2003
             (Dollars in thousands, except share and per share data)


         Consolidated
                                           Fiscal     Fiscal     Fiscal
                                            2001       2002        2003
                                          --------    --------    --------
                                          Note (2)

<S>                                       <C>         <C>         <C>     
     Opening balance                      $ 14,594    $  8,474    $ 12,151
     Accruals                               25,469      38,851      41,321
     Payments                              (17,220)    (30,458)    (28,638)
     Reversals                             (14,369)     (4,716)     (2,940)
                                          --------    --------    --------
     Ending balance                       $  8,474    $ 12,151    $ 21,894
                                          ========    ========    ========
</TABLE>


     The majority of the reversals of  previously  established  sales  incentive
     liabilities pertain to sales recorded in prior periods.

     **Included in  Electronics  accruals is $4,111 of accrued sales  incentives
     acquired from the acquisition of Recoton (Note 6).

(25) Subsequent Event

     On February 19, 2004,  the Company  announced  that it signed a non-binding
     letter of intent to sell a controlling  interest in the Company's  wireless
     subsidiary,  ACC, to Curitel Communications Inc., (or one of its affiliates
     or  subsidiaries)  a  leading  mobile  phone  manufacturer  in South  Korea
     (Curitel).  Currently,  Audiovox  owns  75% of ACC  and  Toshiba  owns  the
     remaining interest.

     The  transaction  is  subject  to  a  number  of  contingencies,  including
     satisfactory  completion  of due  diligence,  negotiation  and  signing  of
     definitive agreements and requisite approvals. The terms of the transaction
     have not been  finalized.  The Company  must also  consider  all  proposals
     submitted  and  there  can  be  no  assurances  that  this,  or  any  other
     transaction, will be completed or as to any terms that may be negotiated.



                                       139


<PAGE>




I
tem 9 -  Changes  in and  Disagreements  with  Accountants  on  Accounting  and
            Financial Disclosure

(a)  Previous Principal Independent Accountants and Auditors.

     (i) On October 16, 2003,  the Board of Directors of  Registrant  approved a
resolution  authorizing  the dismissal of KPMG LLP ("KPMG")  effective as of the
close of business on that date. The decision of the Board of Directors was based
on the recommendation of the Audit Committee of the Board of Directors. KPMG had
been engaged as the Registrant's principal accountants since 1980.

     (ii) The audit reports of KPMG on the Registrant's  consolidated  financial
statements  as of and for the years  ended  November  30,  2002 and 2001 did not
contain any adverse  opinion or a disclaimer of opinion nor were they  qualified
or modified as to uncertainty, audit scope, or accounting principles, except for
a modification of accounting  principles as their report included a reference to
a footnote which discusses that effective  December 1, 2001, the Company adopted
the provisions of Statement of Financial  Accounting  Standards  (Statement) No.
141, "  Business  Combinations"  and  Statement  No.  142,  "Goodwill  and Other
Intangible  Assets"  and a  reference  to a footnote  which  discusses  that the
consolidated  balance sheet as of November 30, 2001 and the related consolidated
statements of operations,  stockholders'  equity and comprehensive income (loss)
and cash flows for the years ended November 30, 2000 and 2001 were restated.

     (iii) In connection  with the audits of the two fiscal years ended November
30, 2002 and 2001,  and the  subsequent  interim  periods  preceding the date of
determination  of  termination of the engagement of KPMG, the Registrant was not
in disagreement  with KPMG on any matter of accounting  principles or practices,
financial  statement   disclosure,   or  auditing  scope  or  procedure,   which
disagreement,  if not resolved to the  satisfaction  of KPMG,  would have caused
KPMG to make reference to the subject matter of the  disagreement  in connection
with their reports.

     (iv) In connection  with the audits of the two fiscal years ended  November
30, 2002 and 2001,  and the  subsequent  interim  periods  preceding the date of
determination   of  termination  of  the  engagement  of  KPMG,  there  were  no
"reportable  events"  except  that  KPMG  reported  to  the  Registrant's  Audit
Committee that KPMG considered two matters involving internal controls and their
operation to be material weaknesses.  Specifically, in connection with its audit
of the consolidated  financial statements of Registrant and its subsidiaries for
the fiscal year ended November 30, 2002, KPMG reported that a material  weakness
existed  related to the  technical  competence  of the  Registrant's  accounting
personnel and  recommended  significantly  enhancing the accounting  staff.  The
Registrant  is  addressing  this concern and is in the process of enhancing  its
accounting staff. Additionally, KPMG reported that it considered a deficiency in
internal controls over sales incentives  arrangements with its customers to be a
material  weakness.  Included  in  KPMG's  recommendations  in this  area  was a
standardized approach to the documentation of sales incentive arrangements, both
internally  and  externally.  A  similar  issue,  relative  to the  Registrant's
Wireless segment, was also reported to the Audit Committee of Registrant by KPMG
in March 2002. The Registrant began implementing KPMG's  recommendations for its
Wireless and Electronics segments in November 2002 and May 2003, respectively.




                                       140


<PAGE>



(b)  New Principal Independent Accountants and Auditors.

     On October 16,  2003,  the Audit  Committee  of the Board of  Directors  of
Registrant engaged Grant Thornton LLP as the Registrant's certifying accountants
for the fiscal year ending  November 30, 2003.  The Registrant has not consulted
with Grant  Thornton LLP during its two most recent  fiscal years nor during any
subsequent  interim  period prior to its  appointment  as auditor for the fiscal
year  2003  audit  regarding  the  application  of  accounting  principles  to a
specified  transaction,  either  completed  or  proposed,  or the  type of audit
opinion  that  might  be  rendered  on   Registrant's   consolidated   financial
statements.


Item 9a - Controls and Procedures

     Within the 90-day period  immediately  preceding the filing of this Report,
the Company's Chief Executive  Officer and Principal  Financial Officer has each
evaluated  the   effectiveness  of  the  Company's   "Disclosure   Controls  and
Procedures"  and has concluded  that they were  effective.  As such term is used
above,  the Company's  Controls and Procedures are controls and other procedures
of the  Company  that are  designed to ensure  that  information  required to be
disclosed  by the  Company in the  reports  that it files or  submits  under the
Securities Exchange Act of 1934 is recorded, processed, summarized and reported,
within the time periods  specified in the Security Exchange  Commission's  rules
and forms.  Disclosure  Controls and  Procedures  include,  without  limitation,
controls  and  procedures  designed  to ensure that  information  required to be
disclosed by the Company in such reports is accumulated and  communicated to the
Company's management,  including its principal executive officer or officers and
principal   financial  officer  or  officers,   or  persons  performing  similar
functions,   as  appropriate  to  allow  timely  decisions   regarding  required
disclosure.

     There were no significant  changes in the Company's internal controls or in
other factors that could  significantly  affect such controls  subsequent to the
date that the Company's Chief Executive Officer and Principal  Financial Officer
conducted their evaluations of the Disclosure Controls and Procedures, including
any  corrective  actions with regard to  significant  deficiencies  and material
weaknesses.


                                    PART III


Item 10 - Directors and Executive Officers of the Registrant

             Section 16(a) Beneficial Ownership Reporting Compliance

     Information  regarding this item is set forth under the captions  "Election
of  Directors"  and  "Compliance  with Section 16(a) of the Exchange Act" of the
Company's  Proxy  Statement  to be dated  March 23,  2004,  which  will be filed
pursuant to Regulation  14A under the  Securities  and Exchange Act of 1934 (the
Proxy  Statement)  and is  incorporated  herein by reference.  Information  with
regard to Executive Officers is set forth in Item 1 of this Form 10-K.

     The Company has adopted a code of ethics for all employees  and  directors,
including the principal executive officer,  other executive officers,  principal
finance officer and other financial  personnel.  A copy of the code of ethics is
available  free of charge upon request.  Any such request  should be directed to
the attention of: Chris Lis Johnson,  Company  Secretary,  150 Marcus Boulevard,
Hauppauge, New York 11788, (631) 231-7750.


                                       141


<PAGE>





Item 11 - Executive Compensation

     The  information  regarding  this  item  is set  forth  under  the  caption
"Executive  Compensation"  of the Proxy Statement and is incorporated  herein by
reference.


Item 12 - Security Ownership of Certain Beneficial Owners and Management

     The  information  regarding  this  item  is set  forth  under  the  caption
"Beneficial   Ownership  of  Common  Stock"  of  the  Proxy   Statement  and  is
incorporated herein by reference.


Item 13 - Certain Relationships and Related Transactions

     Information  regarding  this item is set forth under the  caption  "Certain
Relationships  and Related  Party  Transactions"  of the Proxy  Statement and is
incorporated herein by reference.


Item 14 - Principal Accountant Fees and Services

     Information  regarding this item is set forth under the caption  "Principal
Accountant Fees and Services" of the Proxy Statement and is incorporated  herein
by reference.


                                     PART IV


Item 15 - Exhibits,  Consolidated  Financial  Statement Schedules and Reports on
            Form 8-K

(a) (1)

The following are included in Item 8 of this Report:

Report of Independent Certified Public Accountants:  Grant Thornton LLP

Independent Auditors' Report:  KPMG LLP

Consolidated Balance Sheets of Audiovox Corporation and Subsidiaries as of
November 30, 2002 and 2003.

Consolidated Statements of Operations of Audiovox Corporation and Subsidiaries
for the Years Ended November 30, 2001, 2002 and 2003.

Consolidated Statements of Stockholders' Equity and Comprehensive Income (Loss)
of Audiovox Corporation and Subsidiaries for the Years Ended November 30, 2001,
2002 and 2003.

Consolidated Statements of Cash Flows of Audiovox Corporation and Subsidiaries
for the Years Ended November 30, 2001, 2002 and 2003.

Notes to Consolidated Financial Statements.




                                       142


<PAGE>



(a) (2)

Financial Statement Schedules of the Registrant for the Years Ended November 30,
2001, 2002 and 2003.

Independent Auditors' Report on Financial Statement Schedule:  KPMG LLP


   Schedule                                                       Page
    Number      Description                                      Number
    ------      -----------                                      ------
                Valuation and Qualifying Accounts                 151
      II

All other financial statement schedules not listed are omitted because they are
either not required or the information is otherwise included.


                                       143


<PAGE>








                          Independent Auditors' Report






The Board of Directors and Stockholders
   Audiovox Corporation:


Under the date of May 30, 2003 we reported on the consolidated  balance sheet of
Audiovox  Corporation and  subsidiaries as of November 30, 2002, and the related
consolidated  statements of operations,  stockholders'  equity and comprehensive
loss and cash flows for each of the years in the two-year  period ended November
30, 2002,  which are included in the Company's  2003 annual report on Form 10-K.
In  connection  with our  audits of the  aforementioned  consolidated  financial
statements,  we  also  audited  the  related  consolidated  financial  statement
schedule in the 2003 annual  report on Form 10-K.  This  consolidated  financial
statement  schedule  is the  responsibility  of the  Company's  management.  Our
responsibility is to express an opinion on this consolidated financial statement
schedule based on our audits.

In our opinion, such consolidated financial statement schedule,  when considered
in relation to the basic  consolidated  financial  statements  taken as a whole,
presents fairly, in all material respects, the information set forth therein.

As  discussed in Note 1,  effective  December 1, 2001,  the Company  adopted the
provisions of Statement of Financial Accounting  Standards  (Statement) No. 141,
"Business  Combinations"  and Statement No. 142,  "Goodwill and Other Intangible
Assets".

As discussed in Note 2 to the accompanying  consolidated  financial  statements,
the   consolidated   statements   of   operations,   stockholders'   equity  and
comprehensive  loss and cash  flows for the year ended  November  2001 have been
restated.



                                            s/KPMG  LLP
                                            --------------------------------
                                              KPMG  LLP

Melville, New York
May 30,  2003



                                                        144


<PAGE>



(3)      Exhibits

         See Item 15(c) for Index of Exhibits.

(b) Reports on Form 8-K

(c)      Exhibits


<TABLE>

    Exhibit
    Number              Description

<S>                     <C>
3.1                     Certificate of Incorporation of the Company (incorporated 
                         by reference to the Company's Registration Statement on 
                         Form S-1; No. 33-107, filed May 4, 1987).

3.1a                        Amendment to Certificate of Incorporation
                            (incorporated by reference to the Company's Annual
                            Report on Form 10-K for the year ended November 30,
                            1993).

3.1b                        Amendment to Certificate of Incorporation
                            (incorporated by reference to the Company's Annual
                            Report on Form 10-K for the year ended November 30,
                            2000).

3.2                     By-laws of the Company (incorporated by reference to the
                          Company's Registration Statement on Form S-1; No. 33-10726, 
                          filed May 4, 1987).

10.1                    The Fourth Amended and Restated Credit Agreement among the 
                          Registrant and the several banks and financial institutions 
                           dated as of July 28, 1999 (incorporated
                            by reference to the Company's Form 8-K filed via EDGAR on October 27,
                            1999).

10.2                        First Amendment, dated as of October 13, 1999, to
                            the Fourth Amended and Restated Credit Agreement
                            among the Registrant and the several banks and
                            financial institutions (incorporated by reference to
                            the Company's Form 8-K filed via EDGAR on October
                            27, 1999).

10.3                        Second Amendment, dated as of December 20, 1999, to
                            the Fourth Amended and Restated Credit Agreement
                            among the Registrant and the several banks and
                            financial institutions (incorporated by reference to
                            the Company's Form 8-K filed via EDGAR on January
                            13, 2000).

10.4                        Securities Purchase Agreement made and entered into
                            as of May 29, 2002, by and among Toshiba
                            Corporation, Audiovox Communications Corp. and
                            Audiovox Corporation (incorporated by reference to
                            the Company's Form 8-K filed via EDGAR on June 6,
                            2002).

10.5                        Stockholders Agreement made and entered into as of
                            May 29, 2002, by and among Toshiba Corporation,
                            Audiovox Communications Corp. and Audiovox
                            Corporation (incorporated by reference to the
                            Company's Form 8-K filed via EDGAR on June 6, 2002).



                                       145


<PAGE>



    Exhibit
    Number              Description


10.6                    Distribution Agreement made and entered into as of May 29, 2002, by and between
                        Toshiba Corporation and Audiovox Communications Corp.(incorporated by
                        reference to the Company's Form 8-K filed via EDGAR on June 6, 2002).

10.7                    Non-Negotiable Subordinated Convertible Promissory Note dated May 31, 2002
                        by Audiovox Communications Corp. in favor of  Toshiba Corporation (incorporated
                        by reference to the Company's Form 8-K filed via EDGAR on June 6, 2002).

10.8                    Employment Agreement effective as of May 29, 2002 by and among Audiovox
                        Communications Corp., Philip Christopher and Audiovox Corporation (incorporated
                        by reference to the Company's Form 8-K filed via EDGAR on June 6, 2002).

10.9                    Trademark License Agreement made as of May 29, 2002
                        between Audiovox Corporation and Audiovox Communications
                        Corp.(incorporated by reference to the Company's Form
                        8-K filed via EDGAR on June 6, 2002).

10.10                   Non-Negotiable Demand Note dated May 29, 2002 by Audiovox Communications
                        Corp. in favor of Audiovox Corporation (incorporated by reference to the Company's
                        Form 8-K filed via EDGAR on June 6, 2002).

10.11                   Sixth Amendment and Consent, dated as of May 28, 2002 to
                        the Fourth Amended and Restated Credit Agreement, dated
                        as of July 28, 1999 (as amended) among Audiovox
                        Corporation, the several banks and other financial
                        institutions from time to time parties thereto
                        (collectively the "Lenders") and JPMorgan Chase Bank, as
                        administrative and collateral agent for the Lenders
                        (incorporated by reference to the Company's Form 8-K
                        filed via EDGAR on June 6, 2002).

10.12                   Waiver dated as of March 13, 2003 to the Fourth Amended
                        and Restated Credit Agreement, dated as of July 28, 1999
                        among Audiovox Corporation, the several banks and other
                        financial institutions from time to time parties thereto
                        (collectively the "Lenders") and JPMorgan Chase Bank, as
                        administrative and collateral agent for the Lenders
                        (incorporated by reference to the Company's Form 8-K
                        filed via EDGAR on March 14, 2003).

10.13                   Amendment and Waiver dated as of June 10, 2003 to the
                        Fourth Amended and Restated Credit Agreement, dated as
                        of July 28, 1999 among Audiovox Corporation, the several
                        banks and other financial institutions from time to time
                        parties thereto (collectively the "Lenders") and
                        JPMorgan Chase Bank, as administrative and collateral
                        agent for the Lenders (incorporated by reference to the
                        Company's Form 8-K filed via EDGAR on June 12, 2003).



                                       146


<PAGE>



    Exhibit

    Number              Description


10.14                   Ninth Amendment effective June 26, 2003 to the Fourth
                        Amended and Restated Credit Agreement dated as of July
                        28, 1999 among Audiovox Corporation, the several banks
                        and other financial institutions from time to time
                        parties thereto (collectively the "Lenders") and
                        JPMorgan Chase Bank, as administrative and collateral
                        agent for the Lenders (incorporated by reference to the
                        Company's Form 8-K filed via EDGAR on July 1, 2003).

10.15                   First Amended and Restated Stock and Asset Purchase
                        Agreement, dated as of June 2, 2003, by and among
                        Recoton Recoton Audio Corporation, Recoton Home Audio,
                        Inc., Recoton Mobile Electronics, Inc., Recoton
                        International Holdings, Inc. ("RIH"), Recoton
                        Corporation and Recoton Canada Ltd. (collectively, the
                        "Sellers") , JAX Assets Corp. ("Buyer") and Audiovox
                        Corporation ("Registrant"), as guarantor (incorporated
                        by reference to the Company's Form 8-K filed via EDGAR
                        on July 23, 2003).

10.16                   Long Term Incentive Compensation Award to John J.  Shalam (incorporated by
                        reference to the Company's Annual Report on Form 10-K for the year ended
                        November 30, 2002).

10.17                   Long Term Incentive Compensation Award to Philip Christopher (incorporated
                        by reference to the Company's Annual Report on Form 10-K for the year ended
                        November 30, 2002).

21                      Subsidiaries of the Registrant  (filed herewith).

23.1                    Consent of Grant Thornton LLP (filed herewith).

23.2                    Consent of KPMG LLP (filed herewith).

31.1                    Certification Pursuant to Rule 13a-14(a) of The Securities Exchange Act of 1934
                        (filed herewith)

31.2                    Certification Pursuant to Rule 13a-14(a) of The Securities Exchange Act of 1934
                        (filed herewith)

32.1                    Certification Pursuant to Rule 13a-14(a) And Rule 15d-14(a) Section 1350, Chapter
                        63 of Title 18 of the United State Code, As Adopted Pursuant to Section 906
                        of The Sarbanes-Oxley Act of 2002 (filed herewith).

32.2                    Certification Pursuant to Rule 13a-14(a) And Rule 15d-14(a) Section 1350, Chapter
                        63 of Title 18 of the United State Code, As Adopted Pursuant to Section 906
                        of The Sarbanes-Oxley Act of 2002 (filed herewith).
</TABLE>


(d)      All other schedules are omitted because the required information is
         shown in the financial statements or notes thereto or because they are
         not applicable.


                                       147


<PAGE>




                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                                   AUDIOVOX CORPORATION



February 24, 2004                         BY:s/John J. Shalam
                                             -----------------------------
                                              John J. Shalam, President
                                                and Chief Executive Officer




                                       148


<PAGE>



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


<TABLE>

<S>                                             <C>                                      <C> 
Signature                                       Title                                      Date

                                                  President;
                                                Chief Executive Officer
s/John J. Shalam                                (Principal Executive Officer               February 24, 2004
----------------                                  and Director
John J. Shalam           

                                                Executive Vice President and
s/Philip Christopher                            Director                                   February 24, 2004
--------------------
Philip Christopher
                                                Senior Vice President,
                                                Chief Financial Officer
                                                (Principal Financial and                   February 24, 2004
s/Charles M. Stoehr                             Accounting Officer) and
-------------------
Charles M. Stoehr                               Director

s/Patrick M. Lavelle                            Director                                   February 24, 2004
--------------------
Patrick M. Lavelle

s/Ann Boutcher                                  Director                                   February 24, 2004
--------------
Ann Boutcher

s/Richard A. Maddia                             Director                                   February 24, 2004
-------------------
Richard A. Maddia

s/Paul C. Kreuch, Jr.                           Director                                   February 24, 2004
---------------------
Paul C. Kreuch, Jr.
s/Dennis McManus                                Director
-----------------
Dennis McManus                                                                             February 24, 2004
s/Irving Halevy                                 Director
---------------
Irving Halevy                                                                              February 24, 2004



                                       149


<PAGE>



Signature                                       Title                                      Date
---------
/s/Peter A.  Lesser                             Director                                   February 24, 2004
-------------------
Peter A.  Lesser

</TABLE>


                                       150


<PAGE>


                                                                     SCHEDULE II
                      AUDIOVOX CORPORATION AND SUBSIDIARIES
                        Valuation and Qualifying Accounts
                  Years Ended November 30, 2001, 2002 and 2003
                                 (In thousands)


<TABLE>

               Column A              Column B                   Column C            Column D         Column E
               --------              ---------        -------------------------     -----------      --------
                                                        Gross
                                                        Amount    Reversals of
                                       Balance at     Charged to  Previously                           Balance
                                       Beginning      Costs and   Established                          At End
             Description                Of Year       Expenses    Accruals        Deductions (a)      Of Year
             -----------               --------       --------    --------        --------------     --------

2001(b)

<S>                                    <C>            <C>         <C>            <C>                 <C>     
     Allowance for doubtful accounts   $  6,297       $  1,936        --         $  3,518            $  4,715
     Cash discount allowances               195          2,630        --            2,643                 182
     Accrued sales incentives            14,594         25,469    $(14,369)        17,220               8,474
     Allowance for cellular
     deactivations                        1,254          3,382        --            2,601               2,035
     Reserve for warranties and
        product
        repair costs                     12,374         11,319        --           10,627              13,066
                                       --------      --------    --------       --------             --------
                                       $ 34,714       $ 44,736    $(14,369)       $ 36,609           $ 28,472
                                       ========       ========    ========        ========           ========

2002

     Allowance for doubtful accounts   $  4,715       $  4,884        --          $  2,770           $  6,829
     Cash discount allowances               182          2,858        --            2,833                 207
     Accrued sales incentives             8,474         38,851    $ (4,716)        30,458              12,151
     Allowance for cellular
     deactivations                        2,035          2,308        --            2,715               1,628
     Reserve for warranties and
        product
        repair costs                     13,066          6,985        --           4,641               15,410
                                       --------       --------    --------       --------             --------
                                       $ 28,472       $ 55,886    $ (4,716)      $ 43,417             $ 36,225
                                       ========       ========    ========       ========             ========

2003

     Allowance for doubtful accounts   $  6,829       $    566        --         $    448             $  6,947
     Cash discount allowances               207          5,007        --            4,014                1,200
     Accrued sales incentives            12,151         41,321    $ (2,940)        28,638               21,894
     Allowance for cellular
        deactivations                     1,628          3,780        --            4,281                1,127
     Reserve for warranties and
        product
        repair costs                     15,410         12,015        --            8,913               18,512
                                       --------      --------    --------        --------             --------
                                       $ 36,225       $ 62,689    $ (2,940)      $ 46,294             $ 49,680
                                       ========       ========    ========       ========             ========
</TABLE>


(a)  For the  allowance for doubtful  accounts,  cash  discount  allowances  and
     accrued  sales  incentives,   deductions  represent  currency  effects  and
     payments  made or  credits  issued  to  customers.  For the  allowance  for
     cellular deactivations, deductions represent credits taken against accounts
     receivable by carrier customers for  deactivations of previously  activated
     wireless  customers.  For the reserve  for  warranties  and product  repair
     costs,  deductions  represent  payments for labor and parts made to service
     centers and vendors for the repair of units returned under warranty.

(b)  See Note (2) of Notes to Consolidated Financial Statements.


                                       151




                                            SUBSIDIARIES OF REGISTRANT



                                                          Jurisdiction of
Subsidiaries                                              Incorporation
------------                                              -------------
Audiovox Communications Corp.                             Delaware
Audiovox Electronics Corporation                          Delaware
Quintex Mobile Communications Corp.                       Delaware
American Radio Corp.                                      Georgia
Audiovox Holding Corp.                                    New York
Audiovox Communications Canada Co.                        Ontario
Audiovox Communications (Malaysia) Sdn. Bhd.              Malaysia
Audiovox Holdings (M) Sdn. Bhd.                           Malaysia
Audiovox Venezuela C.A.                                   Venezuela
Audiovox Europe Holdings GmbH                             Germany



                                                    Exhibit 21




               CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS








We have issued our report dated February 19, 2004, accompanying the consolidated
financial  statements  and  schedule  included in the Annual  Report of Audiovox
Corporation and  subsidiaries on Form 10-K for the year ended November 30, 2003.
We hereby  consent  to the  incorporation  by  reference  of said  report in the
Registration  Statements of Audiovox Corporation on Forms S-8 (Registration Nos.
333-36762 and 333-82073).




/s/ GRANT THORNTON LLP 
GRANT THORNTON LLP


Melville, New York
February 19, 2004

                                  Exhibit 23.1





                          Independent Auditors' Consent





The Board of Directors and Stockholders
Audiovox Corporation:


We consent to the  incorporation  by reference in  registration  statement  Nos.
333-36762 and 333- 82073 on Form S-8 of Audiovox Corporation of our report dated
May 30,  2003,  with  respect  to the  consolidated  balance  sheet of  Audiovox
Corporation  and   subsidiaries  as  of  November  30,  2002,  and  the  related
consolidated  statements of operations,  stockholders'  equity and comprehensive
loss and cash flows for each of the years in the two-year  period ended November
30, 2002, and the related financial statement schedule,  which report appears in
the November  30, 2003 annual  report on Form 10-K of Audiovox  Corporation  and
subsidiaries.

Our report dated May 30, 2003 contained explanatory  paragraphs that stated that
the  Company  adopted  the  provisions  of  Statement  of  Financial  Accounting
Standards  (Statement) No. 141,  "Business  Combinations" and Statement No. 142,
"Goodwill and Other Intangible  Assets" and that the consolidated  statements of
operations,  stockholders'  equity and comprehensive loss and cash flows for the
year ended November 30, 2001 have been restated.


                                                              s/KPMG LLP
                                                                KPMG LLP

Melville, New York
February 24, 2004



                                  Exhibit
 23.2


                 CERTIFICATION PURSUANT TO RULE 13a-14(a) OF THE
                         SECURITIES EXCHANGE ACT OF 1934


     I, John J. Shalam, certify that:

     1. I have reviewed this annual report on Form 10-K of Audiovox Corporation;

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

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

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

          a) Designed such disclosure  controls and  procedures,  or caused such
     disclosure controls and procedures to be designed under our supervision, to
     ensure that material information relating to the registrant,  including
 its
     consolidated  subsidiaries,  is made  known to us by  others  within  those
     entities,  particularly  during the  period in which  this  report is being
     prepared;

          b) Evaluated the effectiveness of the registrant's disclosure controls
     and  procedures  and  presented  in this report our  conclusions  about the
     effectiveness of the disclosure  controls and procedures,  as of the end of
     the period covered by this report based on such evaluation; and

          c)  Disclosed in this report any change in the  registrant's  internal
     control over financial reporting that occurred during the registrant's most
     recent fiscal quarter (the  registrant's  fourth fiscal quarter in the case
     of an annual report) that has materially affected,  or is reasonably likely
     to materially  affect,  the  registrant's  internal  control over financial
     reporting; and

     5. The registrant's other certifying officer(s) and I have disclosed, based
on our most recent evaluation of internal control over financial  reporting,  to
the registrant's  auditors and to the audit committee of the registrant's  board
of directors (or persons performing the equivalent function):

          a) All significant  deficiencies and material weaknesses in the design
     or  operation  of  internal  control  over  financial  reporting  which are
     reasonably  likely to adversely affect the registrant's  ability to record,
     process, summarize and report financial information; and

          b) Any fraud,  whether or not material,  that  involves  management or
     other employees who have a significant  role in the  registrant's  internal
     control over financial reporting.


Date:    February 24, 2004         By:  /s/ John J. Shalam                     
                                        ---------------------------------------
                                        John J. Shalam
                                        Chief Executive Officer


                                  Exhibit 31.1


                 CERTIFICATION PURSUANT TO RULE 13a-14(a) OF THE
                         SECURITIES EXCHANGE ACT OF 1934


     I, Charles M. Stoehr, certify that:

     1. I have reviewed this annual report on Form 10-K of Audiovox Corporation;

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

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

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

          a) Designed such disclosure  controls and  procedures,  or caused such
     disclosure controls and procedures to be designed under our supervision, to
     ensure that material information relating to the registrant,  including its
     consolidated
  subsidiaries,  is made  known to us by  others  within  those
     entities,  particularly  during the  period in which  this  report is being
     prepared;

          b) Evaluated the effectiveness of the registrant's disclosure controls
     and  procedures  and  presented  in this report our  conclusions  about the
     effectiveness of the disclosure  controls and procedures,  as of the end of
     the period covered by this report based on such evaluation; and

          c)  Disclosed in this report any change in the  registrant's  internal
     control over financial reporting that occurred during the registrant's most
     recent fiscal quarter (the  registrant's  fourth fiscal quarter in the case
     of an annual report) that has materially affected,  or is reasonably likely
     to materially  affect,  the  registrant's  internal  control over financial
     reporting; and

     5. The registrant's other certifying officer(s) and I have disclosed, based
on our most recent evaluation of internal control over financial  reporting,  to
the registrant's  auditors and to the audit committee of the registrant's  board
of directors (or persons performing the equivalent function):

          a) All significant  deficiencies and material weaknesses in the design
     or  operation  of  internal  control  over  financial  reporting  which are
     reasonably  likely to adversely affect the registrant's  ability to record,
     process, summarize and report financial information; and

          b) Any fraud,  whether or not material,  that  involves  management or
     other employees who have a significant  role in the  registrant's  internal
     control over financial reporting.


Date:    February 24, 2004              By:  /s/ Charles M. Stoehr            
                                             ---------------------------------
                                             Charles M. Stoehr
                                             Chief Financial Officer


                                  Exhibit 31.2


           CERTIFICATION PURSUANT TO RULE 13a-14(a) AND RULE 15d-14(a)
         SECTION 1350, CHAPTER 63 OF TITLE 18 OF THE UNITED STATE CODE,
                    AS ADOPTED PURSUANT TO SECTION 906 OF THE
                           SARBANES-OXLEY ACT OF 2002




     In  connection  with the  Annual  Report  on Form  10-K for the year  ended
November 30, 2003 (the "Report") of Audiovox  Corporation  (the  "Company"),  as
filed with the Securities and Exchange Commission on the date hereof, I, John J.
Shalam,  the Chief Executive  Officer of the Company certify,  to the best of my
knowledge, that:

     (1) The Report fully  complies  with the  requirements  of Section 13(a) or
15(d) of the Securities Exchange Act of 1934, as amended; and

     (2)  The  information  contained  in the  Report  fairly  presents,  in all
material  respects,  the  financial  condition  and results of operations of the
Company.



/s/John J. Shalam                   
John J. Shalam
President and Chief Executive Officer
February 24, 2004

                                  Exhibit 32.1




           CERTIFICATION PURSUANT TO RULE 13a-14(a) AND RULE 15d-14(a)
         SECTION 1350, CHAPTER 63 OF TITLE 18 OF THE UNITED STATE CODE,
                    AS ADOPTED PURSUANT TO SECTION 906 OF THE
                           SARBANES-OXLEY ACT OF 2002




     In  connection  with the  Annual  Report  on Form  10-K for the year  ended
November 30, 2003, (the "Report") of Audiovox  Corporation (the  "Company"),  as
filed with the Securities and Exchange Commission on the date hereof, I, Charles
M. Stoehr, the Chief Financial Officer of the Company certify, to the best of my
knowledge, that:

     (1) The Report fully  complies  with the  requirements  of Section 13(a) or
15(d) of the Securities Exchange Act of 1934, as amended; and

     (2)  The  information  contained  in the  Report  fairly  presents,  in all
material  respects,  the  financial  condition  and results of operations of the
Company.



/s/Charles M. Stoehr                         
Charles M. Stoehr
Chief Financial Officer
February 24, 2004


                                  Exhibit 32.2