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, 1999
                          -----------------------------------
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 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.

                                        1



<PAGE>



The  aggregate  market value of the voting stock held by  non-affiliates  of the
Registrant was $655,787,898 (based upon closing price on the Nasdaq Stock Market
on January 31, 2000).

The number of shares  outstanding of each of the registrant's  classes of common
stock, as of January 31, 2000 was:

Class                                                       Outstanding

Class A common stock $.01 par value                            17,859,826
Class B common stock $.01 par value                             2,260,954


                                     PART I


Item 1 - Business

(a)      General Development of Business

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

         o handsets and  accessories for wireless  communications  
         o fulfillment services for wireless carriers 
         o automotive  entertainment and security products 
         o automotive electronic accessories 
         o consumer electronics

     The  Company  generally  markets  its  products  under the  well-recognized
Audiovox  brand  name,  which it has used for over 35 years.  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 to benefit from growing market
opportunities  in the wireless  industry and to exploit  emerging  niches in the
consumer  electronics  business.  During the third quarter of 1999,  the Company
became the third  largest  seller of wireless  products  and the second  largest
seller of CDMA  handsets in the United  States.  CDMA is  currently  the fastest
growing technology in the wireless industry.

     The Company operates in two primary markets:

         o    Wireless  communications.  The Wireless Group,  which accounts for
              approximately  80%  of  revenues,   sells  wireless  handsets  and
              accessories  through  Bell  Operating   Companies,   domestic  and
              international  wireless  carriers  and their  agents,  independent
              distributors and retailers.

         o    Mobile and consumer electronics.  The Electronics Group, which
              accounts  for  approximately  20% of  revenues,  sells  autosound,
              mobile  video,   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.

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<PAGE>




     The  business  grew  significantly  in fiscal  1999  primarily  because  of
increased sales of digital handsets. Net sales have increased as follows:

                                                                        Percent
                                           1998             1999        Change
                                           ----             ----        ------
                                               ($ in millions)

Wireless                                     $442           $   930        110%
Electronics                                   175               230         32
                                            -----          --------       -----
         Total                               $617            $1,160         88%
                                             ====            ======      ======

     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 the design, development and testing of all of its
products and perform 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.
In the wireless business,  the Company was among the first to introduce wireless
handsets  and  mobile  phones  with  one-touch  dialing,  analog  caller  ID and
voice-activated  dialing as standard features. In its electronics business,  the
Company was among the first to introduce mobile video entertainment products and
the MP-3 Internet music  player/recorders.  The Company stands behind all of its
products by providing warranties and customer and end user service support.

Strategy

     The Company's objective is to leverage the  well-recognized  Audiovox brand
name  and its  extensive  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:

         Enhance and capitalize on the Audiovox brand name. The Company believes
         that the "Audiovox" brand name is one of its greatest strengths. During
         the past 35 years,  the Company has invested  heavily to establish  the
         Audiovox name as a well-known  consumer  brand for  communications  and
         electronics  products.  The Company's  wireless handsets generally bear
         the Audiovox brand name or are co-branded with a wireless  carrier.  To
         further  benefit  from the  Audiovox  name,  the Company  continues  to
         introduce  new  products  using  its  brand  name  and  recently  began
         licensing its 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 using all digital standards.
         The  Company's  wide  selection of wireless  products  will allow it to
         satisfy different carrier demands, both domestic and international.

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<PAGE>



         Capitalize on niche market  opportunities  in the consumer  electronics
         industry.  The  Company  intends  to  continue  to  use  its  extensive
         distribution   and  supply  networks  to  capitalize  on  niche  market
         opportunities  in  the  consumer  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.

         Expand international presence.  During fiscal 2000, the Company intends
         to expand  its  international  wireless  business  as it  continues  to
         introduce products compatible with international wireless technologies,
         such as GSM, TDMA and CDMA.

         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 added value 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 carrier  fulfillment  services 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.

     Audiovox 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.

(b)      Financial Information About Industry Segments

     The Company's  industry segments are the Wireless Group and the Electronics
Group.  Net sales,  income  before  provision  for income taxes and total assets
attributable  to each  segment for each of the last three years are set forth in
Note 20 of the Company's consolidated financial statements included herein.

(c)      Narrative Description of Business

                                 Wireless Group

     The Wireless Group,  which accounts for  approximately 80% of the Company's
revenues,  markets  wireless  handsets  and  accessories  through  domestic  and
international wireless carriers and their agents,  independent  distributors and
retailers. The Wireless Group operates in the wireless communications industry.

Wireless products and technology

     The  Wireless  Group  sells an array of analog  and  digital  handsets  and
accessories  in a  variety  of  technologies.  In fiscal  1998,  sales of analog
handsets represented 81% of total unit sales. In fiscal 1999, the Wireless Group
expanded its line of digital handsets and increased its digital sales efforts

                                        4



<PAGE>



and, for fiscal 1999,  digital products  represented 56% of the Wireless Group's
total unit sales.  The Wireless Group  generally  markets its wireless  products
under the  Audiovox  brand  name or  co-brands  its  products  with its  carrier
customers,  such as Bell Atlantic,  GTE Mobilnet,  AirTouch and PrimeCo Personal
Communications L.P.

     In addition  to  handsets,  the  Wireless  Group  sells a complete  line of
accessories that includes batteries, hands-free kits, battery eliminators, cases
and hands-free earphones. During 2000, the Wireless Group intends to broaden its
digital  product  offerings  and introduce  handsets with new features,  such as
Internet access and other interactive technologies, as well as tri-mode products
that combine digital and analog technologies.

Wireless marketing and distribution

     The Wireless  Group sells  wireless  products to the wireless  carriers and
their respective agents,  distributors and retailers. In addition, a majority of
its handsets are designed to carrier  specifications.  In fiscal 1998,  the five
largest  wireless  customers,  Bell Atlantic,  AirTouch  Communications,  United
States  Cellular,  PrimeCo  Personal  Communications  LP and Auto Club  Cellular
Corporation,  accounted  for  59.6%  of its net  wireless  sales.  Two of  these
customers,   Bell  Atlantic  and  AirTouch,   accounted  for  25.6%  and  20.8%,
respectively,  of the  Wireless  Group's net sales for fiscal  1998.  For fiscal
1999,  the  five  largest  wireless  customers  were  Bell  Atlantic,   AirTouch
Communications,  PrimeCo  Personal  Communications  LP, MCI  Worldcom and United
States   Cellular.   Two  of  these   customers,   Bell  Atlantic  and  AirTouch
Communications,  accounted  for 24.4% and 18.6%,  respectively,  of the Wireless
Group's net sales for fiscal  1999.  These  customers  represented  65.9% of net
sales during fiscal 1999.

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

     The Wireless Group operates  approximately  20 subscriber  facilities under
the names Quintex or American  Radio.  In addition,  the Wireless Group licenses
the trade names  Audiovox(R),  American  Radio(R) and  Quintex(R) to five retail
outlets in selected markets in the United States. The Wireless Group also serves
as an agent for the following carriers in selected areas: MCI Worldcom,  Sprint,
BellSouth Mobility, Inc., GTE Mobilnet of the Southeast,  Inc. and United States
Cellular.  For fiscal 1999,  revenues from these  operations  were 5.7% of total
wireless revenues.

     The Wireless  Group's  policy is to ship its products  within 24 hours of a
requested  shipment date from public  warehouses in Miami,  Florida and Toronto,
Canada  and  from  leased  facilities  located  in  Hauppauge,  New York and Los
Angeles, California.

                                        5



<PAGE>



Wireless product development, warranty and customer service

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

        o  determines  future  market  feature  requirements  with its  wireless
             customers 
        o work 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  standards 
        o supervises testing of the products in its carrier markets to ensure 
             compliance with carrier specifications

     The  Wireless  Group's  Hauppauge  facility is ISO-9001  registered,  which
requires  it to  carefully  monitor  quality  standards  in  all  facets  of its
business.

     The Wireless  Group  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,  the  Wireless  Group  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  warranty,
the Wireless Group has 1,178 independent  warranty centers throughout the United
States and Canada and has warranty repair stations in its headquarters facility.
The Wireless Group 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

     The  Wireless   Group   purchases   its  wireless   products  from  several
manufacturers  located in Pacific Rim countries,  including Japan, China, Korea,
Taiwan and Malaysia.  In selecting its suppliers,  the Wireless Group  considers
quality,  price, service,  market conditions and reputation.  The Wireless Group
generally  purchases its products under short-term  purchase orders and does not
have long-term  contracts with its suppliers.  The Wireless Group  considers its
relations  with its  suppliers to be good.  The  Wireless  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.

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,  demand for  value-added  services,  rapid  technological
development and industry consolidation.  Currently, the Wireless Group's primary
competitors  for  wireless  handsets  include  Ericsson,   Motorola,  Nokia  and
Qualcomm.  Qualcomm has announced plans to sell its wireless handset business to
Kyocera  Corporation.  When  the  sale is  completed,  Kyocer  will  become  the
Company's direct competitor.

     The  Wireless  Group  also  competes  with  numerous  established  and  new
manufacturers and  distributors,  some of whom sell the same or similar products
directly to its customers.  Historically,  the Wireless Group's competitors have
also included some of its own suppliers and customers. Many

                                        6



<PAGE>



of the  Wireless  Group's  competitors  offer  more  extensive  advertising  and
promotional programs than it does.

     The Wireless Group 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,  the Wireless Group believes
that  competition  will  continually  be required  to support an  infrastructure
capable of providing these services. The Wireless Group's ability to continue to
compete  successfully  will  largely  depend on its  ability  to  perform  these
value-added services at a reasonable cost.

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

     As a result of global  competitive  pressures,  there has been  significant
consolidation among the Wireless Group's customers, including:

       o       Vodafone and AirTouch Communications, which merged in 1999
       o       Bell Atlantic and GTE,  which expect to finalize their merger by
                early 2000, and then fold the new wireless business into a joint
                venture with Vodafone
       o        SBC Communications, which acquired Ameritech in 1999
       o        MCI Worldcom and Sprint, which recently announced plans to merge

     These consolidations may result in greater competition for a smaller number
of  large  customers  and may  favor  one or more of its  competitors  over  the
Wireless Group.

                                Electronics Group

Electronics Industry

     The 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  and JVC, as well as 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.  For example, the transition from analog to
digital technology is leading to the development of a new generation of consumer
electronic  products.  Some of these  products  include MP-3 players for playing
audio downloaded from the Internet, digital radio and DVD mobile video systems.

                                        7



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Electronics products

     The Company's electronics products consist of two major categories,  mobile
electronics and consumer electronics.

     Mobile electronics products include:

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

     o    mobile video  products,  including  overhead and center console mobile
          entertainment  systems,  video  cassette  players  and game  options o
          automotive  security  and  remote  start  systems o  automotive  power
          accessories

     Consumer electronics include:

        o         home and portable stereos
        o         FRS two-way radios
        o         LCD televisions
        o         MP-3 Internet music player/recorders

     The  Electronics  Group markets its products  under the  Audiovox(R)  brand
name,  as  well  as  several  other  Audiovox-owned  trade  names  that  include
Prestige(R),  Pursuit(R) and Rampage(TM).  Sales by both the Company's Malaysian
and Venezuelan  subsidiaries  fall under the Electronics  Group.  For the fiscal
years ended  November 30, 1998 and November 30, 1999,  the  Electronics  Group's
sales by product category were as follows:

                                                                      Percent
                                         1998             1999        Change
                                         ----             ----        ------
                                            ($ in millions)
  
Mobile electronics                       $163.3            $192.0        17.6%
Consumer electronics                       11.8              38.2       223.7
                                       --------          --------       ------
         Total                           $175.1            $230.2        31.5%
                                       ========            ======      =======

     In the coming years, the Electronics  Group intends 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 sales figures.  However, the
Company  licensed  customers have told it that, for fiscal 1999, they sold $27.7
million in licensed goods for which the Company received  license fees.  License
sales promote the Audiovox brand name without adding any significant costs.

                                        8



<PAGE>



Electronics distribution and marketing

     The Electronics Group sells its electronics products to:

        o         mass merchants
        o         power retailers
        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
Daimler  Chrysler,  General Motors  Corporation  and Nissan.  OEM projects are a
significant  portion of the Electronics  Group sales.  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.

     The Electronics  Group's five largest customers in fiscal 1998, Gulf States
Toyota, Kmart,  Southeast Toyota, Alkon International and Costco,  accounted for
16.4% of its net electronics  sales. No single customer  accounted for more than
10% of the  Electronics  Group's net sales in fiscal 1998.  For fiscal 1999, the
Electronics  Group's five largest customers were Nissan,  Best Buy, Sears, AAFES
and  Gulf  States  Toyota,  and they  represented  23.9%  of net  sales.  Nissan
represented approximately 12% of net sales for fiscal 1999.

     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
Norfolk,  Virginia;  Sparks, Nevada; Miami, Florida and Toronto, Canada and from
leased facilities located in Hauppauge, New York.

Electronics product development, warranty and customer service

     Although  the  Electronics  Group  does  not  have  its  own  manufacturing
facilities, it works closely with its customers and suppliers
in the design, development and testing of its

                                        9



<PAGE>



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
location. 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

     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 19  independent  warranty
centers throughout the United States and Canada. 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.

Electronics suppliers

     The Electronics Group purchases its electronics products from manufacturers
located in several Pacific Rim countries, including Japan, China, 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,  Korea,  China and Hong Kong to
provide local  supervision of supplier  performance  with regard to, among other
things, price negotiations,  delivery and quality control. The Electronics Group
generally  purchases its product under  short-term  purchase orders and does not
have long-term contracts with its suppliers.

     For fiscal 1999,  the  percentage of the  Electronics  Group's  electronics
purchases from its largest suppliers were:

        o         Nutek Corporation --12.7%
        o         Namsung Corporation -- 8.8%
        o         Action Electronics -- 6.9%


     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  electronics  business is highly competitive across
all of its product lines,  and the  Electronics  Group competes with a number of
well-established  companies  that  manufacture  and sell similar  products.  The
Electronics  Group's  mobile  electronics   products  compete  against  factory-

                                       10

<PAGE>

supplied  radios,  security  and  mobile  video  systems  from  subsidiaries  of
automobile  manufacturers,  including General Motors, Ford and Daimler Chrysler.
The  Electronics  Group's  mobile  electronics  products  also  compete  in  the
automotive aftermarket against major companies such as Sony, Panasonic,  Kenwood
and Pioneer.  The Electronics Group's consumer electronics product lines compete
against major consumer electronic companies,  such as JVC, Panasonic,  Motorola,
RCA and AIWA. Brand name,  design,  features and price are the major competitive
factors across all of its product lines.

(d) 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 20 to the Company's  consolidated  financial  statements  included
herein.  During fiscal 1999, the Company exported  approximately $100 million in
product sales.

Trademarks

     The  Company   markets   products  under  several   trademarks,   including
Audiovox(R), Prestige(R), Pursuit(R) and Rampage(TM) . The trademark Audiovox(R)
is registered in  approximately  63 countries.  The Company  believes that these
trademarks  are  recognized  by  customers  and  are  therefore  significant  in
marketing its products.

                                  Other Matters

Equity Investments

     The Company has several 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>         <S>
TALK Corporation              30.8%         1994        Distribution rights for wireless
                                                            products and autosound products
                                                            from Shintom Ltd.

Audiovox Specialized                        1997        Distribution of products for van, RV
    Applications              50.0%                        and other specialized vehicles.

                              20.0%         1997        Distribution of wireless products and
Bliss-Tel Company,                                          accessories in Thailand.
    Ltd.

</TABLE>



                                       11



<PAGE>



Employees

     The  Company  employs  approximately  950  people,  which  number  has been
relatively  stable  for the  past  several  years.  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 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              66      President, Chief Executive Officer and
                                         Chairman of the Board of Directors
Philip Christopher          51      Executive Vice President and a Director
Charles M. Stoehr           53      Senior Vice President, Chief Financial 
                                         Officer and a Director
Patrick M. Lavelle          48      Senior Vice President, Electronics Division
                                         and a Director
Ann M. Boutcher             49      Vice President, Marketing and a Director
Richard A. Maddia           41      Vice President, MIS  and a Director
Paul C. Kreuch, Jr.*        61      Director
Dennis F. McManus*          49      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.
Christopher serves on the Executive Committee of the Cellular Telephone Industry
Association.


                                       12



<PAGE>



     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 1982. In
1991, Mr. Lavelle was elected Senior Vice President, with responsibility for the
Company's mobile and consumer electronics  division.  Mr. Lavelle was elected to
the Board of Directors in 1993. Mr. Lavelle also serves as a board member of the
Mobile  Electronics  Division of the Consumer  Electronics  Association and is a
co-chair of the Mobile Information Technology Subdivision.

     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 has been a Principal of Secura  Burnett Co., LLC since October 1998.
From  December  1997 through  September  1998,  he was the  President  and Chief
Executive  Officer of Lafayette  American Bank. From June 1996 through  November
1997,  he was a Senior Vice  President at Handy HRM Corp.,  an executive  search
firm.  From 1993 through  1996,  Mr. Kreuch was an Executive  Vice  President of
NatWest Bank N.A. and, before that, was President of National  Westminster  Bank
USA.

     Dennis F. McManus was elected to the Board of Directors in March 1998.  Mr.
McManus has been self-employed as a telecommunications  consultant since January
1, 1998.  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.

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


I
tem 2 - Properties

     As of  November  30,  1999,  the  Company  leased a total  of  thirty-three
operating  facilities  located in eleven states and one Canadian  province.  The
Wireless Group utilizes  twenty-four of these facilities  located in California,
Georgia, New Jersey, New York, Pennsylvania, Tennessee, Virginia and Canada. The
Electronics  Group  utilizes  nine of these  facilities  located in  California,
Florida, Massachusetts, New York, Ohio, Texas and Canada. These facilities serve
as offices,  warehouses,  distribution  centers or retail locations for both the
Wireless Group and the Electronics  Group.  Additionally,  the Company  utilizes
public warehouse facilities located in Norfolk,  Virginia and Sparks, Nevada for
its  Electronics  Group and in Miami,  Florida,  Toronto,  Canada  and  Tilburg,
Netherlands for its Wireless Group. The Company also owns and leases  facilities
in Venezuela and Malaysia 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.  The Company does not expect any pending
litigation  to have a  material  adverse  effect on its  consolidated  financial
position.

                                       13



<PAGE>




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 1999.


                                     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.  Prior to January 13, 2000,  the Class A Common Stock was
traded on the American  Stock  Exchange  under the symbol VOX. 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 345 holders of
record of our Class A Common Stock and 4 holders of Class B  Convertible  Common
Stock.

Class A Common Stock

                                                                 Average
                                                                 Daily
                                                                Trading
Fiscal Period                  High               Low            Volume
-------------                  ----               ---            ------

1998
   First Quarter                9.00              5.75          103,038
   Second Quarter               7.44              4.75           77,516
   Third Quarter                7.44              3.63           82,948
   Fourth Quarter               6.75                             42,024

1999
   First Quarter                                                 43,260
   Second Quarter               8.94              5.94           48,416
   Third Quarter               16.00              8.44          151,232
   Fourth Quarter              30.00             14.50          222,102



                                       14



<PAGE>




I
tem 6 - Selected Financial Data

Years ended November 30, 1995, 1996, 1997, 1998 and 1999:

<TABLE>

                                                 1995           1996          1997        1998        1999
                                                 ----           ----          ----        ----        ----
                                                                          (Dollars in thousands)

<S>                                           <C>           <C>           <C>          <C>          <C>       
Net sales                                     $  500,740    $  597,915    $  639,082   $  616,695   $1,159,537
Net income (loss)                                (11,883)      (26,469)       21,022        2,972       27,246
Net income (loss) per common share,  basic         (1.31)        (2.82)         1.11         0.16         1.43
Net income (loss) per common share, diluted        (1.31)        (2.82)         1.09         0.16         1.39
Total assets                                     308,428       265,545       289,827      279,679      475,083
Long-term obligations, less current
   installments                                  142,802        70,413        38,996       33,724      122,798
Stockholders' equity                             114,595       131,499       187,892      177,720      216,744
</TABLE>


This selected financial data includes:

for 1995:

o    a pre-tax charge of $2.9 million associated with the issuance of warrants;
o    a  pre-tax  charge  of  $11.8  million  of  inventory  write-downs  and the
     downsizing of the Company's retail operations;
o    a pre-tax gain on the sale of an equity investment of $8.4 million; and
o    a $31.7 million increase in stockholders'  equity,  net of tax, as a result
     of an unrealized  gain on marketable  securities  which is not reflected in
     net income compared to what sockholders' equity would have been without the
     unrealized gain.

for 1996:

o    a pre-tax charge of $26.3 million  related to the exchange of $41.3 million
     of  subordinated  convertible  debentures  into 6,806,580  shares of common
     stock and a related tax expense of $2.9 million;
o    a $10.3 million increase in stockholders'  equity,  net of tax, as a result
     of an unrealized  gain on marketable  securities  which is not reflected in
     net income compared to what sockholders' equity would have been without the
     unrealized gain; and
o    a $64.7  million  increase  in  stockholders'  equity  as a  result  of the
     exchange of $41.3 million of subordinated  convertible  debentures which is
     not reflected in net income.

for 1997:

o    a pre-tax charge of $12.7 million  related to the exchange of $21.5 million
     of  subordinated  convertible  debentures  into 2,860,925  shares of common
     stock and a related tax expense of $158,000;
o    a pre-tax gain of $37.5  million on sale of shares of CellStar  Corporation
     held by the Company and a related tax expense of $14.2 million;
o    a $12.2 million increase in stockholders'  equity,  net of tax, as a result
     of an unrealized  gain on marketable  securities  which is not reflected in
     net income compared to what sockholders' equity would have been without the
     unrealized gain;
o    a $773,000 increase in stockholders'  equity, net of tax, as a result of an
     unrealized gain on equity collar which is not reflected in net income; and
o    a $33.6  million  increase  in  stockholders'  equity  as a  result  of the
     exchange of $21.5 million of subordinated  convertible  debentures which is
     not reflected in net income.

                                       15



<PAGE>



for 1998:

o    a pre-tax charge of $6.6 million for inventory write-downs;
o    a $4.2 million increase in stockholders' equity, net of tax, as a result of
     an unrealized gain on marketable  securities  which is not reflected in net
     income  compared to what  sockholders'  equity  would have been without the
     unrealized gain; and
o    a $929,000 increase in stockholders'  equity, net of tax, as a result of an
     unrealized gain on a hedge of available-for-sale securities.

for 1999:

o    a pre-tax charge of $2.0 million due to the other-than-temporary decline in
     the market value of its Shintom common stock;
o    a pre-tax  gain of $3.8  million on the  issuance of  subsidiary  shares to
     Toshiba Corporation; and
o    a $9.9 million increase in stockholders' equity, net of tax, as a result of
     an unrealized gain on marketable  securities  which is not reflected in net
     income  compared to what  sockholders'  equity  would have been without the
     unrealized gain.



Item 7 - Management's  Discussion  and Analysis of Financial  Condition and
          Results of  Operations  
            (Dollars in  thousands,  except  share and per share data)

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 and  Section  21E of the
Securities  Exchange Act of 1934.  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

                                       16



<PAGE>



or  implied  by these  forward-looking  statements.  Forward-looking  statements
include statements relating to, among other things:

          o    growth trends in the wireless, automotive and consumer electronic
               businesses
          o    technological and market developments in the wireless, automotive
               and consumer electronics businesses
          o    liquidity
          o    availability of key employees
          o    expansion into international markets
          o    the availability of new consumer electronic 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        significant competition in the wireless, automotive 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        the loss of key employees
       o        foreign currency risks
       o        political instability
       o        changes in U.S. federal, state and local and foreign laws
       o        changes in regulations and tariffs
       o        seasonality and cyclicality
       o        inventory obsolescence and availability

     The  Company  markets  its  products  under the  Audiovox  brand as well as
private labels to a large and diverse distribution network both domestically and
internationally. The Company operates through two marketing groups: Wireless and
Electronics. The Wireless Group consists of Audiovox Communications Corp. (ACC),
a 95%-owned  subsidiary  of  Audiovox,  and  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, to a lesser
extent,  carriers  overseas.  Quintex  is  for  the  direct  sale  of  handsets,
accessories and wireless telephone service.

     The Electronics Group consists of Audiovox  Electronics (AE), a division of
Audiovox,  and Audiovox  Communications  (Malaysia) Sdn. Bhd., Audiovox Holdings
(M) Sdn. Bhd. and Audiovox Venezuela, C.A., which are wholly-owned subsidiaries.
The Electronics Group markets automotive sound and security systems,  electronic
car  accessories,  home and portable sound  products,  FRS radios and in-vehicle
video systems.  Sales are made through an extensive distribution network of mass
merchandisers,  power retailers and others. In addition,  the Company sells some
of its products directly to automobile manufacturers on an OEM basis.

     The Company allocates interest and certain shared expenses to the marketing
groups based upon 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  1996  through  1999,  several  major  events and trends  have
affected the Company's results and financial conditions.

     The Wireless  Group  increased  its handset sales from 2.1 million units in
fiscal 1996 to 3.3 million  units in fiscal 1998 to 6.1 million  units in fiscal
1999. This increase in sales was primarily due to:


     o    the introduction of digital technology,  which has allowed carriers to
          significantly increase subscriber capacity

     o    increased number of carriers competing in each market

     o    reduced cost of service and expanded feature options

     During this period,  the Company's unit gross profit margin declined due to
continued strong competition and increased sales of digital handsets, which have
a lower gross profit margin percentage than analog handsets.  Despite the margin
decline,  the Company's gross margin dollars increased  significantly due to the
large increases in net sales.

     Sales by the  Electronics  Group  were  $188.4  million  in 1996 and $193.9
million in 1997,  but  declined in 1998 to $175.1  million,  primarily  due to a
financial  crisis in Asia,  particularly  Malaysia.  Sales for fiscal  1999 have
increased  31% to $230.6  million  over fiscal 1998 . During  this  period,  the
Company's sales were impacted by the following items:

     o    the growth of our  consumer  electronic  products  business  from $2.9
          million in fiscal 1996 to $38.2 million in fiscal 1999


<PAGE>
     o    the introduction of mobile video  entertainment  systems and other new
          technologies

     o    the Asian financial crisis in 1998

     Gross margins in the Company's electronics business increased from 18.9% in
1996 to 20.3% for fiscal 1999 due, in part,  to higher  margins in mobile  video
products and other new technologies and products.

     The Company's total operating expenses have not increased  materially since
1996, despite its increase in sales. Total operating expenses were $83.3 million
in 1996 and $96.4  million in 1999.  The  Company  has  invested  in  management
systems and improved its operating facilities to increase its efficiency.

     During  the  period  1996  to  1999,   the  Company's   balance  sheet  was
strengthened  by  the  conversion  of  $63  million  of it  $65  million  6 1/4%
subordinated  convertible  debentures  due 2001 into  approximately  9.7 million
shares of Class A common  stock and the net gain of $23.2  million from the sale
of CellStar stock held by the Company.

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






                                       17



<PAGE>

Results of Operations

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


<TABLE>
                                                           Percentage of Net Sales
                                                          Years Ended November 30,
                                               ----------------------------------------
                                                         1997      1998      1999
                                                         ----      ----      ----
<S>                                                       <C>       <C>       <C>  
Net sales:

     Wireless


        Wireless products                                 62.1%     65.3%     76.5%
        Activation commissions                             4.9       3.7       2.2
        Residual fees                                      0.7       0.7       0.3
        Other                                              1.9       1.9       1.1
                                                         -----     -----     -----
           Total Wireless                                 69.5      71.6      80.1
                                                         -----     -----     -----

     Electronics

        Sound                                             14.4      12.7       6.8
        Mobile electronics                                15.2      13.8       9.8
        Consumer electronics                               0.7       1.9       3.3
                                                         -----     -----     -----
           Total Electronics                              30.3      28.4      19.9

        Other                                              0.1        --        --
                                                         -----     -----     -----
           Total net sales                               100.0     100.0     100.0

Cost of sales                                            (83.3)    (85.6)    (88.4)
                                                         -----     -----     -----
Gross profit                                              16.7      14.4      11.6

Selling                                                   (6.0)     (5.7)     (3.2)
General and administrative                                (5.8)     (5.9)     (3.8)
Warehousing, assembly and repair                          (1.9)     (2.0)     (1.3)
                                                         -----     -----     -----
        Total operating expenses                         (13.7)    (13.6)     (8.3)
                                                         -----     -----     -----

Operating income                                           3.0       0.8       3.3

Interest and bank charges                                 (0.4)     (0.8)     (0.4)
Income in equity investments, management fees
  and related income, net                                  0.2       0.2       0.3
Gain on sale of investments                                5.9       0.1       0.3
Gain on issuance of subsidiary shares                      --        --        0.3
Debt conversion expense                                   (2.0)      --        --
Other income (expense)                                     --        0.3      (0.2)
Provision for income taxes                                (3.5)     (0.1)     (1.3)
                                                         -----     -----     -----
                                                           3.3 %     0.5 %     2.3 %
                                                         =====     =====     =====
Net income
</TABLE>


                                       18



<PAGE>



     The net sales and  percentage  of net sales by product  line and  marketing
group for the fiscal years ended November 30, 1997,  1998 and 1999 are reflected
in the following table.  Certain  reclassifications  and recaptionings have been
made to the data for periods  prior to fiscal 1999 in order to conform to fiscal
1999 presentation.


<TABLE>

                                                   Fiscal Year Ended November 30,
                                        ----------------------------------------------------------------------------------------
                                          1997                1998                  1999
                                          ----                ----                  ----
                                                          (Dollars in thousands)

<S>                              <C>             <C>   <C>             <C>   <C>             <C>  
Net sales:
     Wireless

        Wireless products        $  396,510      62.1% $  402,606      65.3% $  886,509      76.5%
        Activation commissions       31,061       4.9      22,785       3.7      25,873       2.2
        Residual fees                 4,688       0.7       4,452       0.7       3,674       0.3
        Other                        12,141       1.9      11,747       1.9      13,247       1.1
                                 ----------     -----  ----------     -----  ----------     -----
           Total Wireless           444,400      69.5     441,590      71.6     929,303      80.1
                                 ----------     -----  ----------     -----  ----------     -----
     Electronics

        Sound                        91,763      14.4      78,338      12.7      78,713       6.8
        Mobile electronics           97,446      15.2      84,973      13.8     113,371       9.8
        Consumer electronics          4,701       0.7      11,794       1.9      38,150       3.3
                                 ----------     -----  ----------     -----  ----------     -----
           Total Electronics        193,910      30.3     175,105      28.4     230,234      19.9
     Other                              772       0.1        --        --            --      --
                                 ----------     -----  ----------     -----  ----------     -----
           Total                 $  639,082     100.0% $  616,695     100.0% $1,159,537     100.0%
                                 ==========     =====  ==========     =====  ==========     =====
</TABLE>




Fiscal 1998 Compared to Fiscal 1999

Consolidated Results

     Net sales for fiscal 1999 were  $1,159,537,  an 88% increase from net sales
of $616,595 in fiscal 1998.  Wireless  Group sales were  $929,303 in fiscal year
1999,  a 110%  increase  from sales of  $441,590 in fiscal  1998.  Unit sales of
wireless  handsets  increased 83.2% to  approximately  6,067,000 units in fiscal
1999 from  3,311,000  units in fiscal  1998.  The average  selling  price of the
Company's  handsets increased to $140 per unit in fiscal 1999 from $114 per unit
in fiscal 1998.

     Electronics  Group sales were  $230,234 in fiscal 1999, a 31% increase from
sales of $175,105 in fiscal  1998.  This  increase  was largely due to increased
sales in the mobile video and consumer  electronics  product lines. Sales by the
Company's   international   subsidiaries  increased  14.2%  in  fiscal  1999  to
approximately  $25,100 as a result of  improvements  in both the  Malaysian  and
Venezuelan subsidiaries.

     Gross profit margin for fiscal 1999 was 11.6%,  compared to 14.4% in fiscal
1998. This decline in profit margin resulted primarily from margin reductions in
the Wireless Group  attributable to increased sales of digital  handsets,  which
have lower margins than analog handsets, and was also affected by

                                       19



<PAGE>



decreases in Latin American sales and margins.  Gross profit  increased 52.1% to
$134,628 in fiscal 1999, versus $88,541 in fiscal 1998.

     Operating  expenses  were  $96,391 in fiscal  1999,  compared to $83,670 in
fiscal 1998. As a percentage of net sales,  operating expenses decreased to 8.3%
in fiscal 1999 from 13.6% in fiscal 1998.  Operating  income for fiscal 1999 was
$38,237, an increase of $33,366 from fiscal 1998.

     Net income for fiscal 1999 was $27,246, an increase of 817% from net income
of $2,972 in fiscal  1998.  Earnings  per share were  $1.43,  basic,  and $1.39,
diluted, in fiscal 1999 compared to $0.16, basic and diluted, in fiscal 1998.

Wireless Results

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

<TABLE>

                                      1998                 1999
                                      ------               -----
<S>                           <C>           <C>      <C>           <C>  
Net sales:
     Wireless products        $ 402,606     91.1%    $ 886,509     95.4%
     Activation commissions      22,785      5.1        25,873      2.8
     Residual fees                4,452      1.0         3,674      0.4
     Other                       11,747      2.7        13,247      1.4
                              ---------    -----     ---------    -----
         Total net sales        441,590    100.0       929,303    100.0
Gross profit                     52,270     11.8        87,807      9.5
Total operating expenses         48,257     10.9        49,888      5.4
                              ---------    -----     ---------    -----
Operating income                  4,013     0.9        37,919      4.1
Other expense                    (5,799)    (1.3)       (6,664)    (0.7)
                              ---------    -----     ---------    -----
Pre-tax income (loss)         $  (1,786)    (0.4)%   $  31,255      3.4%
                              =========    =====     =========    =====
</TABLE>


     The Wireless Group is composed of ACC and Quintex, both subsidiaries of the
Company.  Since  principally  all of the net sales of Quintex  are wireless in
nature, all operating results of Quintex are being included in the discussion of
the Wireless Group's product line.

     Net sales were $929,303 in fiscal 1999,  an increase of $487,713,  or 110%,
from fiscal 1998. Unit sales of wireless  handsets  increased by 2,756,000 units
in fiscal 1999, or 83.2%,  to  approximately  6,067,000 from 3,311,000 in fiscal
1998. This increase was attributable to sales of portable, digital products. The
addition of four new suppliers also provided a variety of new digital,  wireless
producst that  contribute to the sales  increase.  The average  selling price of
handsets  increased to $140 per unit in fiscal 1999 from $114 per unit in fiscal
1998. The number of new wireless  subscriptions  processed by Quintex  increased
21.7% in fiscal 1999, with a corresponding increase in activation commissions of
approximately  $3,088 in fiscal 1999. The average commission received by Quintex
per activation  decreased by approximately 6.7% in fiscal 1999 from fiscal 1998.
Unit gross profit  margins  increased to 7.8% in fiscal 1999 from 7.3% in fiscal
1998,  reflecting  increased  selling prices,  which were partially  offset by a
corresponding  increase of 22.7% in average unit cost.  During fiscal 1998,  the
Company  recorded  a $6,600  charge  to adjust  the  carrying  value of  certain
cellular inventories, partially offset by a $1,000 credit from a supplier.

                                       20



<PAGE>



This  charge  was the result of a software  problem in certain  analog  cellular
phones,  as well as a  continuing  decrease  in the  selling  prices  of  analog
telephones due to pressure from the presence of digital  handsets in the market.
While the analog  handset  market is still quite large,  the Wireless  Group may
experience  lower gross  profits in the future due to the price  sensitivity  of
this market.

     Operating  expenses  increased  to $49,888 in fiscal  1999 from  $48,257 in
fiscal 1998. As a percentage of net sales, however, operating expenses decreased
to 5.4% during  fiscal 1999 compared to 10.9% in fiscal 1998.  Selling  expenses
decreased to $22,784 in fiscal 1999 from  $24,201 in fiscal  1998,  primarily in
divisional  marketing and  advertising,  partially offset by increases in travel
expenses.  General and  administrative  expenses  increased to $18,059 in fiscal
1999  from  $15,904  in  fiscal  1998,  primarily  due to  temporary  personnel,
insurance expense and provisions for doubtful  accounts.  Warehousing,  assembly
and repair  expenses  increased  to $9,045 in fiscal  1999 from $8,150 in fiscal
1998, primarily due to direct labor expenses. Pre-tax income for fiscal 1999 was
$31,255, an increase of $33,041 from fiscal 1998.

     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.

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>

                                   1998                     1999
                                   ----                    ------
Net sales:
<S>                         <C>              <C>    <C>              <C>  
     Sound                  $  78,338        44.8%  $  78,713        34.2%
     Mobile electronics        84,973        48.5     113,371        49.2
     Consumer electronics      11,794         6.7      38,150        16.6
                            ---------      ------   ---------      ------
        Total net sales       175,105       100.0     230,234       100.0
Gross profit                   36,433        20.8      46,819        20.3
Total operating expenses       27,126        15.5      32,977        14.3
                            ---------      ------   ---------      ------
Operating income                9,307         5.3      13,842         6.0
Other expense                  (3,370)       (1.9)     (2,546)       (1.1)
                            ---------      ------   ---------      ------
Pre-tax income              $   5,937         3.4%  $  11,296         4.9%
                            =========      ======   =========      ======
</TABLE>


     Net sales were $230,234 in fiscal 1999, a 31.5%  increase from net sales of
$175,105 in fiscal  1998.  All  product  categories  experienced  an increase in
sales,  particularly in the mobile and consumer electronics product lines. Sales
of mobile video,  in the mobile  electronics  category,  increased  over 400% in
fiscal  1999 to  approximately  $52  million  from $10  million in fiscal  1998.
Consumer electronics  increased over 200% to $38,150 in fiscal 1999 from $11,794
in fiscal 1998.  These increases were partially  offset by decreases in Prestige
audio and SPS sound lines.

                                       21



<PAGE>

     Operating  expenses  were  $32,977 in fiscal 1999,  a 21.6%  increase  from
operating  expenses of $27,126 in fiscal 1998. Selling expenses increased during
fiscal 1999, primarily in salaries,  commissions and divisional marketing. These
increases  were  partially  offset by  decreases  in  advertising.  General  and
administrative   expenses  increased  from  fiscal  1998,  mostly  in  salaries,
provision  for  doubtful  accounts  and  temporary  personnel.  Warehousing  and
assembly expenses increased to $5,991 in fiscal 1999 from $4,434 in fiscal 1998,
primarily due to tooling expenses,  warehousing and direct labor. Pre-tax income
for fiscal 1999 was $11,296, an increase of $5,359 from fiscal 1998.

     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.  Also,  certain of its products are subject to price fluctuations
which could affect the carrying  value of  inventories  and gross margins in the
future.

Other Income and Expense

     Interest  expense and bank charges  decreased  $57 during  fiscal 1999 from
fiscal 1998.

     Management  fees and  equity  in  income  from  joint  venture  investments
increased  by  approximately  $3,150 for fiscal 1999  compared to fiscal 1998 as
detailed in the following table:

<TABLE>

                                              1998                        1999
                        -----------------------------------   -----------------------------------------------
                                               (Dollars in thousands)

                                          Equity                           Equity
                            Management    Income              Management   Income
                               Fees       (Loss)     Total       Fees      (Loss)    Total
                            --------     -------    -------    -------    -------    -------
<S>                           <C>        <C>        <C>        <C>       <C>        <C>    
Bliss-tel                         --     $   (13)   $   (13)      --     $   (55)   $   (55)
ASA                               --       1,860      1,860       --       3,506      3,506
TALK                              --        (509)      (509)      --       1,121      1,121
G.L.M                         $      7      --            7       --        --         --
Pacific                           --        (337)      (337)      --        --         --
Posse                               29        70         99    $    30        30         60
Quintex West                      --        --         --         --        (375)      (375)
                              --------   -------    -------    -------   -------    -------

                              $     36   $ 1,071    $ 1,107    $    30   $ 4,227    $ 4,257
                              ========   =======    =======    =======   =======    =======
</TABLE>



     During 1998,  the Company  purchased  400,000  Japanese yen  (approximately
$3,132) of Shintom  debentures  and  exercised its option to convert the Shintom
debentures into shares of Shintom common stock. These shares are included in the
Company's available-for-sale  marketable securities at November 30, 1998. During
the fourth quarter of 1999, the Company recorded an other-than-temporary decline
in market  value of its  Shintom  common  stock in the  amount  of $1,953  and a
related  deferred tax recovery of $761.  The  write-down  has been recorded as a
component of other expense in the consolidated statements of income.

                                       22



<PAGE>



     During 1998,  the Company  purchased an additional  1,400,000  Japanese yen
(approximately $9,586) of Shintom Debentures and exercised its option to convert
737,212 Japanese yen of Shintom  debentures into shares of Shintom common stock.
The Company sold the Shintom  common stock yielding net proceeds of $5,830 and a
gain of $787.

     During 1999,  the Company  purchased an additional  3,100,000  Japanese yen
(approximately  $27,467)  of  Shintom  Debentures  and  exercised  its option to
convert  2,882,788  Japanese  yen of Shintom  debentures  into shares of Shintom
common stock. The Company sold the Shintom common stock yielding net proceeds of
$27,916 and a gain of $3,501. As of November 30, 1999, the remaining  debentures
of  1,125,024  Japanese  yen are  included in the  Company's  available-for-sale
marketable securities.

     As of December  1999,  the Company  completed the  liquidation  of Audiovox
Pacific Pty. Ltd.


Provision for Income Taxes

     Income taxes are  provided  for at a blended  federal and state rate of 40%
for profits from normal  business  operations.  During fiscal 1999,  the Company
implemented various tax strategies which have resulted in lowering the effective
tax rate.

Fiscal 1997 Compared to Fiscal 1998

Consolidated Results

     Net sales were  $616,695  for 1998,  a decrease of $22,387,  or 3.5%,  over
1997. The decrease in net sales was accompanied by a  corresponding  decrease in
gross profit margins to 14.4% from 16.7% in 1997.  Operating  expenses decreased
to $83,670 from $87,067, a 3.9% decrease.  Operating income for 1998 was $4,871,
a decrease of $14,824, or 75.3%, compared to 1997. During 1997, the Company sold
1,835,000  shares of its  holdings of CellStar  for a net gain of $23,232.  Also
during  1997,  the Company  exchanged  $21,479 of its  subordinated  convertible
debentures for 2,860,925  shares of Class A common stock.  Costs associated with
this exchange were $12,844, including income taxes.

                                       23



<PAGE>

Wireless Group Results

     Net sales in 1998 were $441,590,  a decrease of $2,810, or 0.6%, from 1997.
Unit sales of wireless  handsets  increased  354,000 units, or 12.0%, over 1997.
Average unit selling  prices  decreased  approximately  6.9%.  The number of new
wireless   subscriptions   processed  by  Quintex   decreased   22.8%,   with  a
corresponding  decrease in activation  commissions of approximately $8,276. Part
of the  decrease  was due to the closing of some retail  locations.  The average
commission  received by Quintex per activation  also decreased by  approximately
4.9% from 1997. Unit gross profit margins  decreased to 7.3% from 11.1% in 1997,
primarily  due to  reduced  selling  prices,  which were  partially  offset by a
corresponding  decrease of 3.0% in average unit cost.  In addition,  the Company
recorded a $6.6 million charge to adjust the carrying value of certain  wireless
inventories,  partially  offset by a $1.0 million  credit from a supplier.  This
charge  was the result of a software  problem in a line of analog  handsets,  as
well as a continuing  decrease in the selling  prices of analog  handsets due to
pressure from the growing presence of digital handsets in the market.  While the
analog market is still sizable,  the Wireless  Group may experience  lower gross
profits  in the  future  due to the  price  sensitivity  of this  market  place.
Operating  expenses  decreased to $48,257 from  $49,582.  As a percentage of net
sales,  operating  expenses  decreased to 10.9% during 1998 compared to 11.2% in
1997.  Selling expenses  decreased  $1,763 from 1997,  primarily in commissions,
salesmen salaries, payroll taxes and benefits,  partially offset by increases in
market   development   funds   and   co-operative   advertising.   General   and
administrative  expenses  increased  over 1997 by $632,  primarily  in occupancy
costs and temporary personnel.  Warehousing and assembly expenses decreased over
1997 by $194,  primarily in tooling and direct labor.  Pre-tax loss for 1998 was
$1,786, a decrease of $13,368 compared to 1997.

                                       24



<PAGE>



     The net  sales  and  percentage  of net  sales of the  Wireless  Group  are
reflected in the following table:

<TABLE>

                                     1997                    1998
                              ------------------     ------------------
                                          (Dollars in thousands)
<S>                           <C>           <C>      <C>           <C>  
Net sales:
     Wireless product         $ 396,510     89.2%    $ 402,606     91.1%
     Activation commissions      31,061      7.0        22,785      5.1
     Residual fees                4,688      1.1         4,452      1.0
     Other                       12,141      2.7        11,747      2.7
                              ---------    -----     ---------    -----
         Total net sales        444,400    100.0       441,590    100.0
Gross profit                     66,117     14.9        52,270     11.8
Total operating expenses         49,582     11.2        48,257     10.9
                              ---------    -----     ---------    -----
Operating income                 16,535      3.7         4,013      0.9
Other expense                    (4,953)    (1.1)       (5,799)    (1.3)
                              ---------    -----     ---------    -----
Pre-tax income (loss)         $  11,582      2.6%    $  (1,786)    (0.4)%
                              =========    =====     =========    =====
</TABLE>



Electronics Group Results

     Net sales in 1998 were $175,105,  a decrease of approximately  $18,805,  or
9.7% from 1997. This decrease was primarily from a $21.3 million decrease in net
sales in our  foreign  subsidiaries,  primarily  Malaysia,  composed  chiefly of
security and accessory products.  Domestic operation sales of autosound,  mobile
and consumer electronics products increased approximately $4.7 million, or 3.7%,
from 1997.  The main  components  of this  increase  were our  mobile  video and
consumer  products  categories.  The  domestic  operations  sales  grew  by $7.3
million, or 5.9%, before the Heavy Duty Sound division was transferred to one of
our equity investments during 1997.

     Operating  expenses  decreased 3.1% from 1997 to $27,126,  primarily in our
international  operations.  This was partially offset by an increase in domestic
operating  expenses.  Selling  expenses  decreased  during  1998,  primarily  in
commissions and salaries in our foreign  companies and market  development funds
and  co-operative  advertising  in our domestic  operations.  This was partially
offset by increases in domestic commissions and trade show expenses. General and
administrative  expenses decreased from 1997, mostly in foreign office expenses,
bad debt expense and  executive  salaries,  both  domestic  and  foreign.  These
decreases were partially offset by increases in office  salaries,  domestically,
and  professional  fees,  both  domestic and foreign.  Warehousing  and assembly
expenses  increased from 1997,  primarily in field warehousing and direct labor.
Pre-tax  income  decreased  $2,065 from in 1997,  primarily due to a decrease of
$2.6 million from foreign operations, partially offset by an increase in pre-tax
income from domestic operations.

                                       25



<PAGE>



     The net sales and  percentage  of net  sales of the  Electronics  Group are
reflected in the following table:

<TABLE>

                                    1997                   1998
                            ------------------     ------------------
                                        (Dollars in thousands)
<S>                         <C>           <C>      <C>           <C>  
Net sales:
     Sound                  $  91,763     47.3%    $  78,338     44.8%
     Mobile electronics        97,446     50.3        84,973     48.5
     Consumer electronics       4,701      2.4        11,794      6.7
                            ---------    -----     ---------    -----
        Total net sales       193,910    100.0       175,105    100.0
Gross profit                   40,326     20.8        36,433     20.8
Total operating expenses       27,989     14.4        27,126     15.5
                            ---------    -----     ---------    -----
Operating income               12,337      6.4         9,307      5.3
Other expense                  (4,335)    (2.2)       (3,370)    (1.9)
                            ---------    -----     ---------    -----
Pre-tax income              $   8,002      4.1%    $   5,937      3.4%
                            =========    =====     =========    =====
</TABLE>



Other Income and Expense

     Interest  expense and bank charges  increased $2,227 during 1998 from 1997.
This increase was primarily due to an increase in average  outstanding  interest
bearing  debt.   Another  major  factor  was  the  increase  in  interest  rates
experienced by our subsidiary in Venezuela.  The increase in the rates,  coupled
with  the  additional  outstanding  debt  as a  result  of the  growth  of  that
operation, resulted in an increase in Venezuelan interest expense of $975.

     Management  fees and  equity  in  income  from  joint  venture  investments
decreased  by  approximately  $361 for 1998  compared to 1997 as detailed in the
following table:

<TABLE>

                                   1997                        1998
                    -------------------------------   ----------------------------
                                           (Dollars in thousands)

                                 Equity                         Equity
                    Management   Income              Management  Income
                       Fees      (Loss)     Total       Fees    (Loss)      Total
                      -------   -------    -------    -------   -------    -------

<S>                   <C>       <C>        <C>        <C>       <C>        <C>    
Bliss-tel                --        --         --         --     $   (13)   $   (13)
ASA                      --     $ 1,857    $ 1,857       --       1,860      1,860
TALK                     --        --         --         --        (509)      (509)
G.L.M                 $    12      --           12    $     7      --            7
Pacific                  --        (685)      (685)      --        (337)      (337)
Posse                      97       187        284         29        70         99
                      -------   -------    -------    -------   -------    -------
                      $   109   $ 1,359    $ 1,468    $    36   $ 1,071    $ 1,107
                      =======   =======    =======    =======   =======    =======
</TABLE>



                                       26



<PAGE>



     During 1997,  the Company sold a total of 1,835,000  shares of CellStar for
net proceeds of $45,937 and a net gain of $23,232.

     During 1998,  the Company  purchased  400,000  Japanese Yen  (approximately
$3,132) of Shintom  Debentures.  The Company exercised its option to convert the
Shintom  Debentures  into  shares of  Shintom  common  stock.  These  shares are
included in the Company's  available-for-sale  marketable securities at November
30,  1998.   During  the  fourth  quarter  of  1999,  the  Company  recorded  an
other-than-temporary  decline in market value of its Shintom common stock in the
amount of $1,953.  The  write-down  has been  recorded as a  component  of other
expense  in the  consolidated  statements  of  income.  In  connection  with the
write-down,  the Company also  recorded a deferred tax recovery in the amount of
$761 in the accompanying consolidated statements of income.

     During 1998,  the Company  purchased an additional  1,400,000  Japanese yen
(approximately  $9,586) of Shintom Debentures.  The Company exercised its option
to convert  737,212  Japanese yen of Shintom  Debentures  into shares of Shintom
common stock. The Company sold the Shintom common stock yielding net proceeds of
$5,830 and a gain of $787.

     During  January 1997,  the Company  completed an exchange of $21,479 of its
subordinated  debentures  for  2,860,925  shares of Class A common  stock.  As a
result of this exchange, the Company recorded a charge of $12,686. The charge to
earnings  represents  (1) the  difference in the fair market value of the shares
issued in the  exchange  and the fair market value of the shares that would have
been  issued  under  the terms of the  original  conversion  feature  plus (2) a
write-off of the debt issuance costs associated with the subordinated debentures
plus (3) expenses  associated with the exchange offer. The exchange  resulted in
taxable  income due to the  difference in the face value of the bonds  converted
and the fair  market  value of the shares  issued  and,  as such,  a current tax
expense of $158 was  recorded.  An increase in paid in capital was reflected for
the face value of the bonds  converted,  plus the  difference in the fair market
value of the shares  issued in the  exchange  and the fair  market  value of the
shares that would have been issued  under the terms of the  original  conversion
feature for a total of $33,592.

Provision for Income Taxes

     Income taxes are  provided  for at a blended  federal and state rate of 40%
for profits from normal business  operations.  During 1998, the Company recorded
$350 of tax benefit as a result of certain tax  examinations.  In addition,  the
Company implemented various tax strategies,  which have resulted in lowering the
effective tax rate.  During 1997, the Company had several  non-operating  events
which had tax provisions calculated at specific rates,  determined by the nature
of the transaction.

Liquidity and Capital Resources

         The  Company's  cash  position at November  30, 1999 was  approximately
$3,871   below  the  November  30,  1998  level.   Operating   activities   used
approximately  $95,616,  primarily  from  increases in accounts  receivable  and
inventory  partially  offset by an  increase in  accounts  payable.  Even though
accounts  receivable and inventory have  increased,  days on hand have decreased
approximately  4%  for  both  accounts   receivable  and  inventory.   Investing
activities used approximately $1,124,  primarily from the purchase of investment
securities and the purchase of property, plant and equipment, partially

                                       27



<PAGE>



offset  by the  proceeds  from  the  sale of  investment  securities.  Financing
activities provided approximately  $92,884,  primarily from net borrowings under
line of credit agreements.

     On July 28, 1999,  the Company  amended and  restated its credit  agreement
with a group of  lenders  led by The Chase  Manhattan  Bank,  as  administrative
agent. The amended and restated credit agreement increased the Company's maximum
borrowings available from $112,500 to $200,000. Effective December 20, 1999, the
Company  amended the credit  agreement  to increase  its maximum  borrowings  to
$250,000.   The  amended  and  restated  credit  agreement   contains  covenants
requiring,  among other things,  minimum  quarterly and annual levels of pre-tax
income and net worth. Under the amended and restated credit agreement:




<PAGE>



               o    the Company may not incur a pre-tax loss in excess of $1,000
                    for any  fiscal  quarter  and may not  incur a  consolidated
                    pre-tax loss in any two consecutive fiscal quarters;

               o    the Company may not permit  consolidated  pre-tax income for
                    the period of two consecutive  fiscal quarters ending on May
                    31, 2000,  May 31, 2001,  May 31, 2002,  May 31, 2003 or May
                    31, 2004 to be less than $1,5000;  or ending on November 30,
                    1999,  November  30, 2000,  November 30, 2001,  November 30,
                    2002 or November 30, 2003 to be less than $2,500;

               o    the Company may not permit a consolidated pre-tax income for
                    any fiscal year ending on or after  November  30, 1999 to be
                    less than $4,000;

               o    the  Company  must  maintain  a net  worth  base  amount  of
                    $175,000,  plus  50% of  consolidated  net  income  for each
                    fiscal year ending on or after November 30, 1999; and

               o    the Company must, at all times, maintain a debt to net worth
                    ratio of not more than 1.75 to 1. 

     The amended and restated credit  agreement also contains  restrictions  and
limitations  on,  among other items,  the  Company's  ability to pay  dividends,
repurchase stock and make capital expenditures or acquisitions.

     Borrowings under the credit facility bear interest,  payable monthly, based
on the annual  interest rate publicly  announced by The Chase  Manhattan Bank as
its prime rate in effect at its principal office in New York plus the applicable
margin,  which is based on the consolidated  pre-tax income for four consecutive
quarters.  The  applicable  margin  presently  in effect is 0%. This margin will
increase to .25% if consolidated  pre-tax income for four  consecutive  quarters
falls  below  $4,000.  The  Company  may also  borrow on a LIBOR  basis plus the
applicable  margin. At present,  the margin above LIBOR is 1.50%,  which will be
reduced to 1.25% on February 28, 2000. This margin will increase to 1.50% if the
Company's  consolidated pre-tax income for four consecutive quarters is equal to
or greater than $10,000 but less than $15,000,  and to 1.75% if its consolidated
pre-tax income for four  consecutive  quarters is less than $10,000.  The margin
will be 1.25% if consolidated  pre-tax income for four  consecutive  quarters is
equal to or greater than $15,000.

     The Company's ability to borrow under its credit facility is conditioned on
a formula  that  takes into  account  the  amount  and  quality of its  accounts
receivable and inventory.  The Company's  obligations under the credit agreement
are guaranteed by its subsidiaries  and are secured by its accounts  receivable.
The amended and restated credit agreement expires on July 28, 2004.

     The  Company  believes  that it has  sufficient  liquidity  to satisfy  its
anticipated  working  capital and capital  expenditure  needs for the reasonable
foreseeable future.

     The Company also has  revolving  credit  facilities  in Malaysia to finance
additional working capital needs. As of November 30, 1999, the available line of
credit for direct borrowing,  letters of credit,  bankers' acceptances and other
forms of  credit  approximated  $8,158.  The  Malaysian  credit  facilities  are
partially  secured by the Company  under one standby  letter of credit  totaling
$1,300 and two standby  letters of credit  totaling  $5,320 and are payable upon
demand or upon  expiration of the standby  letters of credit on January 15, 2000
and August 31, 2000,  respectively.  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.

Impact of Inflation and Currency Fluctuation

     Inflation  has not had a  significant  impact  on the  Company's  financial
position  or  operating  results.  To the extent  that the  Company  expands its
operations  into 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 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

                                       28



<PAGE>



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.

Year 2000 Date Compliance

     The  Company is not aware of any year 2000 issues  that have  affected  its
business.  In preparation for the year 2000, the Company incurred internal staff
costs as well as consulting and other expenses.  Year 2000 expenses totaled less
than $1 million.  These expenses were not significant because,  during 1996, the
Company replaced or updated a significant portion of its computer systems,  both
hardware and software, with year 2000 compliant systems.

     It is possible that the Company's computerized systems could be affected in
the  future  by the year 2000  issue.  The  Company  has  numerous  computerized
interfaces  with third parties that are possibly  vulnerable to failure if those
third  parties have not  adequately  addressed  their year 2000  issues.  System
failures  resulting from these issues could cause significant  disruption to the
Company's operations.

Recent Accounting Pronouncements

     The  Financial  Accounting  Standards  Board (FASB) issued  Statement  137,
"Accounting for Derivative  Instruments and Hedging Activities - Deferral of the
Effective Date of FASB Statement No. 133."  Statement 137 amends  Statement 133,
"Accounting for Derivative Instruments and Hedging Activities," which was issued
in June 1998 and was to be  effective  for all fiscal  quarters of fiscal  years
beginning  after June 15,  1999.  Statement  137 defers  the  effective  date of
Statement 133 to all fiscal  quarters of fiscal years  beginning  after June 15,
2000. Earlier application is permitted. Statement 133 establishes accounting and
reporting  standards for derivative  instruments,  including certain  derivative
instruments embedded in other contracts and for hedging activities.  It requires
that an entity  recognize all derivatives as either assets or liabilities in the
statement of financial  position and measures  those  instruments at fair value.
Management of the Company has not yet  determined  the impact,  if any, that the
implementation of Statement 133 will have on its financial position,  results of
operations or liquidity.


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.

                                       29



<PAGE>



Marketable Securities

     Marketable  securities  at November  30,  1999,  which are recorded at fair
value of $30,401 and include net unrealized  gains of $15,981,  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 $3,040 as of November 30, 1999. 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.

     The change in fair value of the Company's  long-term  debt resulting from a
hypothetical  10%  decrease  in interest  rates as of  November  30, 1999 is not
material.

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.  Intercompany  transactions  with
foreign  subsidiaries  and equity  investments  are  typically  not hedged.  The
potential loss in fair value for such net currency position resulting from a 10%
adverse change in quoted foreign currency exchange rates as of November 30, 1999
is not material.

     In  addition,  the  Company  holds debt  denominated  in  Japanese  yen and
recognizes foreign currency translation  adjustments in net income to the extent
the  adjustment  is greater  than the  adjustment  from the  translation  of the
Company's  investment in its TALK joint  venture.  The potential  loss resulting
from a  hypothetical  10% adverse  change in the quoted  Japanese yen rate as of
November 30, 1999 is approximately $431. Actual results may differ.

     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, 1999, the Company had translation exposure
to various  foreign  currencies  with the most  significant  being the Malaysian
ringgit,  Thailand baht and Canadian  dollar.  The Company also has a Venezuelan
subsidiary  in which  translation  adjustments  are included in net income.  The
potential  loss  resulting  from a  hypothetical  10%  adverse  change in quoted
foreign  currency  exchange  rates,  as of November 30,  1999,  amounts to $816.
Actual results may differ.

     Certain of the Company's  investments in marketable  securities are subject
to risk from changes in the  Japanese  yen rate. A portion of these  investments
are hedged with a yen  denominated  loan. As of November 30, 1999, the amount of
loss in fair value  resulting  from a  hypothetical  10%  adverse  change in the
Japanese yen rate, for the investments that are not hedged,  approximates  $118.
Actual results may differ.

                                       30



<PAGE>




Item 8 - Consolidated Financial Statements and Supplementary Data

     The  consolidated  financial  statements  of the Company as of November 30,
1998 and 1999 and for each of the years in the three-year  period ended November
30, 1999,  together with the independent  auditors'  report thereon of KPMG LLP,
independent auditors, are filed under this Item 8.

     Selected  unaudited,  quarterly  financial  data of the Company for the
years ended November 30, 1998 and 1999 appears below:

<TABLE>

                                                                              QUARTER ENDED
                                                          ----------------------------------------------------
                                                          Feb. 28    May 31         Aug. 31     Nov. 30
                                                          -------    ------         -------     -------

1998

<S>                                                       <C>         <C>            <C>        <C>    
Net sales                                                 $120,974    132,411        154,501    208,809
Gross profit                                                22,259     14,044         24,878     27,360
Operating expenses                                          19,724     22,001         20,950     20,995
Income (loss) before provision for (recovery of) income
  taxes                                                      2,236     (8,720)         4,201      6,084
Provision for (recovery of) income taxes                       597     (4,025)         1,620      2,637
Net income (loss)                                            1,639     (4,695)         2,581      3,447
Net income (loss) per common share (basic)                    0.09      (0.24)          0.14       0.18
Net income (loss) per common share (diluted)                  0.09      (0.24)          0.14       0.18

                                                                                                   1999

Net sales                                                  210,266    242,069        296,732    410,470
Gross profit                                                26,220     28,721         35,279     44,408
Operating expenses                                          21,018     23,501         23,764     28,108
Income before provision for income taxes                     5,087     10,680         10,415     16,541
Provision for income taxes                                   2,105      4,226          3,986      5,160
Net income                                                   2,982      6,454          6,429     11,381
Net income per common share (basic)                           0.16       0.34           0.34       0.59
Net income per common share (diluted)                         0.16       0.34           0.32       0.56
</TABLE>





                                       31



<PAGE>









                          Independent Auditors' Report

The Board of Directors and Stockholders
Audiovox Corporation:

We have  audited  the  accompanying  consolidated  balance  sheets  of  Audiovox
Corporation  and  subsidiaries as of November 30, 1998 and 1999, and the related
consolidated statements of income,  stockholders' equity and cash flows for each
of  the  years  in  the  three-year   period  ended  November  30,  1999.  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  generally   accepted  auditing
standards.  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,  1998 and 1999,  and the results of their
operations and their cash flows for each of the years in the  three-year  period
ended  November 30, 1999,  in  conformity  with  generally  accepted  accounting
principles.

                                                     s/KPMG LLP
                                                     ----------
                                                     KPMG  LLP

Melville, New York
January 13, 2000


                                       32



<PAGE>



                      AUDIOVOX CORPORATION AND SUBSIDIARIES

                           Consolidated Balance Sheets
                           November 30, 1998 and 1999

                        (In thousands, except share data)

<TABLE>

                                                                                    1998           1999
                                                                                   ---------    ---------
<S>                                                                                <C>          <C>      
Assets
Current assets:
   Cash                                                                            $   9,398    $   5,527
   Accounts receivable, net                                                          131,120      237,272
   Inventory, net                                                                     72,432      136,554
   Receivable from vendor                                                                956        9,327
   Prepaid expenses and other current assets                                           6,502        7,940
   Deferred income taxes, net                                                          6,088        7,675
                                                                                   ---------    ---------
      Total current assets                                                           226,496      404,295
Investment securities                                                                 17,089       30,401
Equity investments                                                                    10,387       13,517
Property, plant and equipment, net                                                    17,828       19,629
Excess cost over fair value of assets acquired and other intangible assets, net        6,052        5,661
Other assets                                                                           1,827        1,580
                                                                                   ---------    ---------
                                                                                   $ 279,679    $ 475,083
                                                                                   =========    =========
Liabilities and Stockholders' Equity
Current liabilities:

   Accounts payable                                                                $  34,063    $  76,382
   Accrued expenses and other current liabilities                                     15,376       29,068
   Income taxes payable                                                                5,210        8,777
   Bank obligations                                                                    7,327       15,993
   Documentary acceptances                                                             3,911        1,994
                                                                                   ---------    ---------
      Total current liabilities                                                       65,887      132,214
Bank obligations                                                                      17,500      102,007
Deferred income taxes, net                                                             3,595        8,580
Long-term debt                                                                         6,331        5,932
Capital lease obligation                                                               6,298        6,279
                                                                                   ---------    ---------
      Total liabilities                                                               99,611      255,012
                                                                                   ---------    ---------
Minority interest                                                                      2,348        3,327
                                                                                   ---------    ---------

Stockholders' equity:
   Preferred stock, liquidation preference of $2,500                                   2,500        2,500
   Common stock:
      Class A; 30,000,000 authorized;  17,258,573 and 17,827,946 issued 1998 and
         1999, respectively; 16,760,518 and 17,206,909 outstanding 1998

         and 1999, respectively                                                          173          179
      Class B convertible; 10,000,000 authorized; 2,260,954 issued and
         outstanding                                                                      22           22
   Paid-in capital                                                                   143,339      149,278
   Retained earnings                                                                  35,896       63,142
   Accumulated other comprehensive income (loss)                                      (1,550)       5,165
   Gain on hedge of available-for-sale securities, net                                   929          929
   Treasury stock, at cost, 498,055 and 621,037 Class A common stock 1998
      and 1999, respectively                                                          (3,589)      (4,471)
                                                                                   ---------    ---------
      Total stockholders' equity                                                     177,720      216,744
                                                                                   ---------    ---------
Commitments and contingencies

      Total liabilities and stockholders' equity                                   $ 279,679    $ 475,083
                                                                                   =========    =========
</TABLE>




See accompanying notes to consolidated financial statements.

                                       33



<PAGE>
                      AUDIOVOX CORPORATION AND SUBSIDIARIES

                        Consolidated Statements of Income
                  Years Ended November 30, 1997, 1998 and 1999

                      (In thousands, except per share data)


<TABLE>

                                                          1997            1998           1999
                                                        -----------    -----------    -----------
<S>                                                     <C>            <C>            <C>        
Net sales                                               $   639,082    $   616,695    $ 1,159,537

Cost of sales (including an inventory write-down to
   market in 1998 of $6,600)                                532,320        528,154      1,024,909
                                                        -----------    -----------    -----------

Gross profit                                                106,762         88,541        134,628
                                                        -----------    -----------    -----------

Operating expenses:
   Selling                                                   38,044         35,196         36,606
   General and administrative                                37,000         35,890         44,748
   Warehousing, assembly and repair                          12,023         12,584         15,037
                                                        -----------    -----------    -----------
      Total operating expenses                               87,067         83,670         96,391
                                                        -----------    -----------    -----------

Operating income                                             19,695          4,871         38,237
                                                        -----------    -----------    -----------

Other income (expense):
   Debt conversion expense                                  (12,686)          --             --
   Interest and bank charges                                 (2,542)        (4,769)        (4,712)
   Equity in income of equity investments, management
      fees and related income, net                            1,468          1,107          4,257
   Gain on sale of investments                               37,471            787          3,501
   Gain on issuance of subsidiary shares                       --             --            3,800
   Other, net                                                    36          1,805         (2,360)
                                                        -----------    -----------    -----------
      Total other income (expense)                           23,747         (1,070)         4,486
                                                        -----------    -----------    -----------

Income before provision for income taxes                     43,442          3,801         42,723

Provision for income taxes                                   22,420            829         15,477
                                                        -----------    -----------    -----------

Net income                                              $    21,022    $     2,972    $    27,246
                                                        ===========    ===========    ===========

Net income per common share (basic)                     $      1.11    $      0.16    $      1.43
                                                        ===========    ===========    ===========

Net income per common share (diluted)                   $      1.09    $      0.16    $      1.39
                                                        ===========    ===========    ===========
</TABLE>













See accompanying notes to consolidated financial statements.

                                       34



<PAGE>
                      AUDIOVOX CORPORATION AND SUBSIDIARIES

                 Consolidated Statements of Stockholders' Equity
                  Years Ended November 30, 1997, 1998 and 1999

                        (In thousands, except share data)



<TABLE>
                                                                             Accum-
                                                                              ulated
                                                                             Other               Gain on
                                                                            Compre-  Unrealized  Hedge of            Total
                                                       Unearned             hensive  Gain on     Available           Stock-
                            Preferred Common    Paid-In  Compen    Retained  Income   Equity      for Sale  Treasuryholders'
                              Stock    Stock    Capital -sation    Earnings  (Loss)   Collar     Securities  Stock  Equity
                             -------- -------   ----------------   -------- -------- --------    --------   --------  --------
<S>                            <C>       <C>    <C>        <C>      <C>       <C>                                     <C>    
Balances at
  November 30, 1996             2,500     163    107,958    (125)    11,902    9,101     --          --         --     131,499
Comprehensive income:
  Net income                     --      --         --      --       21,022     --       --          --         --      21,022
  Other comprehensive 
    income (loss),
   net of tax:
   Foreign currency 
     translation
     adjustment                  --      --         --      --         --     (2,252)    --          --         --      (2,252)
   Unrealized gain on 
     marketable
     securities, net of tax 
     effect of       --
     $  1,174                    --     --          --      --         --       1,917     --          --         --      1,917
                                                                                                                      --------
   Other comprehensive
     income (loss)                                                                                      (335)
                                                                                                                      --------
Comprehensive income                                                                                                    20,687
Compensation expense             --      --          118      17       --       --       --          --         --         135
Options and non-performance 
  restricted
  stock forfeitures due to 
  employee
  terminations                   --      --          (23      23       --       --       --          --         --        --
Issuance of 352,194 shares 
  of common
  stock                          --         3      3,489    --         --       --       --          --         --       3,492
Conversion of debentures int
  2,860,925
  shares                         --        29     33,592    --         --       --       --          --         --      33,621
Issuance of warrants             --      --          106    --         --       --       --          --         --         106
Acquisition of 290,000 commo
 shares                          --      --         --      --         --       --       --          --       (2,421)   (2,421)
Unrealized gain on equity
   collar, net
  of tax effect of $473          --      --         --      --         --       --        773        --         --         773
                             -------- -------   ----------------   -------- -------- --------    --------   --------  --------
Balances at
  November 30, 1997             2,500     195    145,240     (85)    32,924    8,766      773        --       (2,421)  187,892
Comprehensive income:
  Net income                     --      --         --      --        2,972     --       --          --         --       2,972
  Other comprehensive
   income (loss),
   net of tax:
   Foreign currency 
     translation
     adjustment                  --      --         --      --         --     (2,276)    --          --         --      (2,276)
   Unrealized loss on 
     marketable
     securities, net of 
     tax effect of
     $  4,928                    --     --          --      --         --     (8,040)    --          --         --      (8,040)
                                                                                                                      --------
   Other comprehensive 
      income (loss)                                                                                   (10,316)
                                                                                                                      --------
Comprehensive
   income (loss)                                                                                             (7,344)
                                                                                                                      --------
Compensation expense 
  (income)                       --      --          (23      76       --       --       --          --         --          53
Options and non-performance 
  restricted
  stock forfeitures due 
  to employee
  terminations                   --      --           (9       9       --       --       --          --         --        --
Purchase of warrants             --      --       (1,869)   --         --       --       --          --         --      (1,869)
Acquisition of 208,055 
  common shares                  --      --         --      --         --       --       --          --       (1,168)   (1,168)
Sale of equity collar, net
   of tax
  effect of $1,043               --      --         --      --         --       --       (773)        929       --         156
                             -------- -------   ----------------   -------- -------- --------    --------   --------  --------
Balances at
  November 30, 1998             2,500     195    143,339    --        35,896 (1,550)    --           929     (3,589)  177,720

</TABLE>


See accompanying notes to consolidated financial statements.

                                       35



<PAGE>


                     AUDIOVOX CORPORATION AND SUBSIDIARIES

          Consolidated Statements of Stockholders' Equity (continued)
                  Years Ended November 30, 1997, 1998 and 1999

                        (In thousands, except share data)

<TABLE>

                                                                                Accum-
                                                                                ulated
                                                                                Other               Gain on
                                                                                Compre-  Unrealized  Hedge of                Total
                                                            Unearned            hensive  Gain on     Available               Stock-
                                 Preferred Common  Paid-In    Compen   Retained  Income   Equity      for Sale  Treasury    holders'
                                   Stock    Stock  Capital   -sation   Earnings  (Loss)   Collar     Securities  Stock      Equity
                                  ---------------- --------  --------  -------- -------- --------    --------   --------    --------

<S>                                 <C>       <C>   <C>       <C>      <C>          <C>     <C>       <C>       <C>    
Comprehensive income:
  Net income                           -       -        -        -     27,246          -        -       -          -      27,246
  Other comprehensive 
    income, net of
   tax:
   Foreign currency 
     translation
     adjustment                        -       -        -        -         -         940        -       -          -         940
   Unrealized gain on 
      marketable
     securities, net of 
     tax effect             
     of $3,540                         -       -        -        -         -       5,775        -       -          -       5,775
                                                                                                                       ---------
   Other comprehensive 
      income                                                                                                              6,715
                                                                                                                       ---------
Comprehensive income                                                                                                      33,961
Compensation expense (income)          -       -       158       -         -           -        -       -          -         158
Exercise of stock options
    into 364,550
  shares of common stock 
  and issuance                         -
  of 39,305 shares under the
   Restriceted
  Stock Plan                                   4     2,775       -         -           -        -       -          -       2,779
Tax benefit of stock options
 exercised                              -             1,101       -         -           -        -       -          -       1,101
Conversion of debentures into
   70,565
  shares                               -       1     1,248       -         -           -        -       -          -       1,249
Issuance of warrants                   -       1       662       -         -           -        -       -          -         663
Purchase of warrants                   -       -        (5)      -         -           -        -       -          -         (5)
Acquisition of 122,982 
  common shares                         -       -         -       -         -           -        -       -       (882)       (882)
                                    -----   ----   -------  ------    ------      ------ --------    ----     ------     -------
Balances at                         2,500    201   149,278       -     63,142      5,165        -     929     (4,471)    216,744
                                   =====     ===  ========  ======    =======     ====== ========    ====     ======     =======
  November 30, 1999
</TABLE>














See accompanying notes to consolidated financial statements.

                                       36



<PAGE>
                      AUDIOVOX CORPORATION AND SUBSIDIARIES

                      Consolidated Statements of Cash Flows
                  Years Ended November 30, 1997, 1998 and 1999

                                 (In thousands)

<TABLE>

                                                                            1997         1998         1999
                                                                         ---------    ---------    ---------
Cash flows from operating activities:

<S>                                                                      <C>          <C>          <C>      
   Net income                                                            $  21,022    $   2,972    $  27,246
   Adjustment to reconcile net income to net cash provided by (used
      in)  operating activities:
      Debt conversion expense                                               12,386         --           --
      Depreciation and amortization                                          1,903        2,471        3,288
      Provision for bad debt expense                                         1,300          581        3,255
      Equity in income of equity investments                                (1,468)      (1,107)      (4,257)
      Minority interest                                                      1,623         (320)        (220)
      Gain on sale of investments                                          (37,471)        (787)      (3,501)
      Gain on issuance of subsidiary shares                                   --           --         (3,800)
      Other-than-temporary decline in market value of investment
        security                                                              --           --          1,953
      Deferred income tax benefit, net                                      (3,123)        (902)        (565)
      Provision for unearned compensation                                      135           53         --
      Expense relating to issuance of warrants                                 106         --           --
      Gain on disposal of property, plant and equipment, net                    (9)        (151)          36
   Changes in:
      Accounts receivable                                                    6,853      (27,940)    (109,889)
      Receivable from vendor                                                  --          4,266       (8,371)
      Inventory                                                            (36,823)      31,705      (64,533)
      Accounts payable, accrued expenses and other current liabilities      (2,855)       9,385       56,615
      Income taxes payable                                                   2,181       (4,034)       4,022
      Prepaid expenses and other, net                                       (2,659)       1,186        3,105
                                                                         ---------    ---------    ---------
        Net cash provided by (used in) operating activities                (36,899)      17,378      (95,616)
                                                                         ---------    ---------    ---------

Cash flows from investing activities:

   Purchases of investment securities                                       (4,706)     (12,719)     (14,151)
   Purchases of property, plant and equipment, net                          (3,986)      (4,932)      (4,822)
   Net proceeds from sale of investment securities                          45,937        5,830       11,201
   Proceeds from sale of equity collar                                        --          1,499         --
   Proceeds from distribution from equity investment                           450        1,125        1,648
   Proceeds from issuance of subsidiary shares                                --           --          5,000
                                                                         ---------    ---------    ---------
        Net cash provided by (used in) investing activities                 37,695       (9,197)      (1,124)
                                                                         ---------    ---------    ---------

Cash flows from financing activities:

   Net borrowings (repayments) under line of credit agreements              (3,765)      (5,047)      93,428
   Net borrowings (repayments) under documentary acceptances                   413           (3)      (1,917)
   Debt issuance costs                                                         (13)        --         (1,175)
   Principal payments on capital lease obligation                             --            (26)         (19)
   Proceeds from issuance of Class A common stock                            2,328         --           --
   Proceeds from exercise of stock options and warrants                       --           --          3,449
   Repurchase of Class A common stock                                       (2,421)      (1,168)        (882)
   Purchase of warrants                                                       --         (1,869)        --
                                                                         ---------    ---------    ---------
        Net cash provided by (used in) financing activities                 (3,458)      (8,113)      92,884
                                                                         ---------    ---------    ---------
Effect of exchange rate changes on cash                                       (243)        (115)         (15)
                                                                         ---------    ---------    ---------
Net decrease in cash                                                        (2,905)         (47)      (3,871)
Cash at beginning of period                                                 12,350        9,445        9,398
                                                                         ---------    ---------    ---------
Cash at end of period                                                    $   9,445    $   9,398    $   5,527
                                                                         =========    =========    =========
</TABLE>


See accompanying notes to consolidated financial statements.

                                       37



<PAGE>
                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued

                      AUDIOVOX CORPORATION AND SUBSIDIARIES


                   Notes to Consolidated Financial Statements

                        November 30, 1997, 1998 and 1999

             (Dollars in thousands, except share and per share data)

(1)      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  throughout  the world.  These  products and services
                  include handsets and accessories for wireless  communications,
                  fulfillment   services  for  wireless   carriers,   automotive
                  entertainment  and security  products,  automotive  electronic
                  accessories and consumer electronics.

                  The Company operates in two primary markets:

                  (1)      Wireless  communications.  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.  The  Electronics
                           Group  sells   autosound,   mobile   electronics  and
                           consumer  electronics  primarily  to mass  merchants,
                           power  retailers,   specialty   retailers,   new  car
                           dealers,   original  equipment  manufactures  (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.   All  significant  intercompany
                  balances   and   transactions    have   been   eliminated   in
                  consolidation.

         (c)      Cash Equivalents

                  Investments  with original  maturities of three months or less
                  are   considered   cash   equivalents.   There  were  no  cash
                  equivalents at November 30, 1998 or 1999.

               (d)  Cash  Discounts,  Co-operative  Advertising  Allowances  and
                    Market DevelopmentFunds
                    ----------------------------------------------------------

                  The Company  accrues for estimated cash  discounts,  trade and
                  promotional  co-operative  advertising  allowances  and market
                  development  funds at the time of sale.  These  discounts  and
                  allowances  are  reflected  in the  accompanying  consolidated
                  financial statements

                                                                     (Continued)
                                       38



<PAGE>
                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued

                  as a reduction of accounts  receivable as they are utilized by
                  customers to reduce their trade indebtedness to the Company.

         (e)      Inventory

                  Inventory consists principally of finished goods and is stated
                  at the lower of cost  (primarily on a weighted  moving average
                  basis) or market.  The markets in which the  Company  competes
                  are  characterized by declining prices,  intense  competition,
                  rapid   technological   change  and   frequent   new   product
                  introductions.  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.  During
                  the second quarter of 1998,  the Company  recorded a charge of
                  approximately  $6,600  to  accurately  reflect  the  Company's
                  inventory  at the lower of cost or market.  No estimate can be
                  made of losses that are reasonably  possible should additional
                  write-downs to market be required in the future.

         (f)      Investment Securities

                  The Company  classifies its debt and equity  securities in one
                  of   three   categories:   trading,   available-for-sale,   or
                  held-to-maturity.  Trading  securities  are  bought  and  held
                  principally  for the purpose of selling them in the near term.
                  Held-to-maturity  securities are those securities in which the
                  Company has the ability and intent to hold the security  until
                  maturity.  All other  securities  not  included  in trading or
                  held-to-maturity are classified as available-for-sale.

                  Trading and available-for-sale securities are recorded at fair
                  value.  Held-to-maturity  securities are recorded at amortized
                  cost,  adjusted for the  amortization or accretion of premiums
                  or discounts.  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  or
                  held-to-maturity   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.  Premiums  and
                  discounts  are  amortized  or  accreted  over  the life of the
                  related  held-to-maturity  security as an  adjustment to yield
                  using the  effective  interest  method.  Dividend and interest
                  income are recognized when earned.

                                                                     (Continued)
                                       39



<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued

         (g)      Derivative Financial Instruments

                  The Company,  as a policy,  does not use derivative  financial
                  instruments  for  trading  purposes.   A  description  of  the
                  derivative financial instruments used by the Company follows:

                  (1)      Forward Exchange Contracts

                           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
                           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 (Note 19(a)(1)).

                  (2)      Equity Collar

                           As of November  30,  1997,  the Company had an equity
                           collar  for   100,000  of  its  shares  in   CellStar
                           Corporation  (CellStar)  (Note 8). The equity  collar
                           was recorded on the balance  sheet at fair value with
                           gains and losses on the equity collar  reflected as a
                           separate  component  of  stockholders'  equity  (Note
                           19(a)(2)).  The equity collar acted as a hedging item
                           for  the  CellStar  shares.  The  investment  in  the
                           CellStar  shares  is an  available-for-sale  security
                           carried at fair market  value with  unrealized  gains
                           and  losses  recorded  as  a  separate  component  of
                           accumulated other comprehensive income (loss).

                  The  Financial   Accounting   Standards  Board  (FASB)  issued
                  Statement No. 137, "Accounting for Derivative  Instruments and
                  Hedging  Activities - Deferral of the  Effective  Date of FASB
                  Statement  No.  133"  (Statement  137).  Statement  137 amends
                  Statement  133,  "Accounting  for Derivative  Instruments  and
                  Hedging Activities",  which was to be effective for all fiscal
                  quarters  of  fiscal  years  beginning  after  June 15,  1999.
                  Statement  137 defers the  effective  date of Statement 133 to
                  all fiscal quarters of fiscal years beginning

                                                                     (Continued)
                                       40



<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued

                  after June 15, 2000. Statement 133 established  accounting and
                  reporting  standards  for  derivative  instruments,  including
                  certain  derivative  instruments,  embedded in other contracts
                  and for hedging activities.  Management of the Company has not
                  yet determined the impact, if any, that the  implementation of
                  Statement 133 will have on its financial position,  results of
                  operations or liquidity.

         (h)      Debt Issuance Costs

                  Costs incurred in connection  with the  restructuring  of bank
                  obligations (Note 11(a)) have been  capitalized.  During 1999,
                  the Company  capitalized  $1,220 in fees  associated  with the
                  amendment to the Company's credit agreement. These charges are
                  amortized  over  the  lives  of  the  respective   agreements.
                  Amortization  expense of these costs  amounted to $37 and $160
                  for the years ended November 30, 1997 and 1999,  respectively.
                  During 1997, the Company wrote-off $245 of debt issuance costs
                  (Note 12).  There was no  amortization  of debt issuance costs
                  for the year ended November 30, 1998.

         (i)      Property, Plant and Equipment

                  Property,  plant and equipment  are stated at cost.  Equipment
                  under  capital lease is stated at the present value of minimum
                  lease   payments.    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                 5 years
                    Automobiles                                    3 years

                  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.

         (j)      Intangible Assets

                  Intangible    assets    consist   of   patents,    trademarks,
                  non-competition agreements and the excess cost over fair value
                  of  assets  acquired  for  subsidiary   companies  and  equity
                  investments. Excess cost over fair value of assets acquired is
                  being amortized,  on a straight-line  basis,  over periods not
                  exceeding twenty years.  The costs of other intangible  assets
                  are amortized on a straight-line  basis over their  respective
                  lives.

                  Accumulated  amortization  approximated  $2,148  and $2,583 at
                  November 30, 1998 and 1999, respectively.  Amortization of the
                  excess cost over fair value of assets acquired

                                                                     (Continued)
                                       41



<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued

                  and other  intangible  assets  amounted to $363, $382 and $429
                  for  the  years  ended  November  30,  1997,  1998  and  1999,
                  respectively.

                  On an ongoing  basis,  the Company  reviews the  valuation and
                  amortization  of  its  intangible  assets.  As a  part  of its
                  ongoing  review,  the  Company  estimates  the  fair  value of
                  intangible  assets  taking into  consideration  any events and
                  circumstances which may diminish fair value.

                  The  recoverability  of the  excess  cost over  fair  value of
                  assets  acquired  is  assessed  by  determining   whether  the
                  amortization  over its remaining life can be recovered through
                  undiscounted  future  operating  cash  flows  of the  acquired
                  operation. The amount of impairment, if any, is measured based
                  on projected  discounted  future  operating cash flows using a
                  discount rate reflecting the Company's  average cost of funds.
                  The assessment of the  recoverability  of the excess cost over
                  fair value of assets  acquired  will be impacted if  estimated
                  future operating cash flows are not achieved.

         (k)      Equity Investments

                  The Company has common stock  investments  which are accounted
                  for by the equity method (Note 10).

         (l)      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  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,   length  of  service   commissions  and  residual
                  commissions  based  upon  usage  on the  accrual  basis.  Such
                  commissions  approximated $35,749, $27,237 and $29,547 for the
                  years ended  November 30, 1997,  1998 and 1999,  respectively.
                  Related  commissions  paid to outside selling  representatives
                  for cellular  activations are included in cost of sales in the
                  accompanying consolidated statements of income and amounted to
                  $19,924,  $13,877 and $19,884 for the years ended November 30,
                  1997, 1998 and 1999, respectively.

                                                                     (Continued)
                                       42



<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued

         (m)      Advertising

                  The Company  expenses  the costs of  advertising  as incurred.
                  During the years ended  November 30, 1997,  1998 and 1999, the
                  Company had no direct response advertising.

         (n)      Warranty Expenses

                  Warranty expenses are accrued at the time of sale based on the
                  Company's  estimated  cost  to  repair  expected  returns  for
                  products.  At November 30, 1998 and 1999,  the  liability  for
                  future  warranty   expense  amounted  to  $1,915  and  $5,104,
                  respectively.

         (o)      Foreign Currency

                  With the  exception  of a subsidiary  operation in  Venezuela,
                  which has been deemed a hyper  inflationary  economy,,  assets
                  and liabilities of those  subsidiaries and equity  investments
                  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.   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 accumulated in the cumulative foreign currency translation
                  account in accumulated  other  comprehensive  income.  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
                  income.

                  Exchange gains and losses on hedges of foreign net investments
                  and on  intercompany  balances of a long-term  nature are also
                  recorded  in  the  cumulative  foreign  currency   translation
                  adjustment account in accumulated other comprehensive  income.
                  Exchange  gains and  losses on  available-for-sale  investment
                  securities and the related hedge of such investment securities
                  is  recorded  in the  unrealized  gain  (loss)  on  marketable
                  securities in accumulated other  comprehensive  income.  Other
                  foreign  currency  transaction  gains  (losses)  of  $871  and
                  $(1,046)  for the  years  ended  November  30,  1998 and 1999,
                  respectively,  were  included in other  income.  Other foreign
                  currency gains and losses were not material for the year ended
                  November 30, 1997.

         (p)      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  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

                                                                     (Continued)
                                       43



<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued

                  income in the years in which those  temporary  differences are
                  expected to be  recovered  or settled.  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.

         (q)      Net Income Per Common Share

                  In February 1997, the FASB issued Statement No. 128, "Earnings
                  per  Share"  (Statement  128).   Statement  128  replaces  the
                  calculation  of primary and fully  diluted  earnings per share
                  with basic and diluted earnings per share.  Basic earnings per
                  share  excludes  any  dilution.  It is based upon the weighted
                  average number of common shares outstanding during the period.
                  Diluted  earnings per share  reflects the  potential  dilution
                  that would occur if  securities  or other  contracts  to issue
                  common stock were  exercised or converted  into common  stock.
                  The Company adopted Statement 128 in fiscal 1998. Earnings per
                  share amounts for all periods  presented have been restated to
                  conform to the new presentation.

         (r)      Supplementary Financial Statement Information

                  Advertising expenses approximated $16,981, $15,789 and $15,390
                  for  the  years  ended  November  30,  1997,  1998  and  1999,
                  respectively.

                  Interest income of approximately $1,525, $896 and $943 for the
                  years ended November 30, 1997, 1998 and 1999, respectively, is
                  included  in  other,  net,  in the  accompanying  consolidated
                  statements of income.

         (s)      Use of Estimates

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

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

                  The Company  accounts for its long-lived  assets in accordance
                  with the  provisions  of  Statement  of  Financial  Accounting
                  Standards No.121, "Accounting for the Impairment of Long-Lived
                  Assets  and  for  Long-Lived   Assets  to  be  Disposed  of  "
                  (Statement 121). Statement 121 requires that long-lived assets
                  and  certain   identifiable   intangibles   be  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

                                                                     (Continued)
                                       44



<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued

                  be held and used is measured  by  comparison  of the  carrying
                  amount of an asset to the future net cash flows expected to be
                  generated by the asset.  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 assets. Assets to be disposed of are reported at
                  the lower of the  carrying  amount or fair  value less cost to
                  sell.

         (u)      Accounting for Stock-Based Compensation

                  The  Company  applies  the  intrinsic  value-based  method  of
                  accounting  prescribed  by Accounting  Principles  Board (APB)
                  Opinion No. 25,  "Accounting  for Stock Issued to  Employees",
                  and related interpretations, in accounting for its stock-based
                  compensation plans.

         (v)      Reporting Comprehensive Income

                  Effective  December 1, 1998, the Company adopted  Statement of
                  Financial    Accounting    Standards   No.   130,   "Reporting
                  Comprehensive  Income" (Statement 130). Statement 130 requires
                  that  all  items  recognized  under  accounting  standards  as
                  components  of  comprehensive  income be reported in an annual
                  financial statement that is displayed with the same prominence
                  as other  annual  financial  statements.  Other  comprehensive
                  income may include foreign currency  translation  adjustments,
                  minimum pension liability adjustments and unrealized gains and
                  losses  on  investment  securities  classified  as  available-
                  for-sale.   The  Company  adopted  this  accounting   standard
                  effective December 1, 1998, as required.  Prior year financial
                  statements   have  been   reclassified   to   conform  to  the
                  presentation required by Statement 130.

         (w)      Reclassifications

                  Certain  reclassifications have been made to the 1997 and 1998
                  consolidated  financial  statements in order to conform to the
                  1999 presentation.

(2)      Business Acquisitions

         During 1997,  the Company  formed  Audiovox  Venezuela  C.A.  (Audiovox
         Venezuela), an 80%- owned subsidiary,  for the purpose of expanding its
         international  business. The Company made an initial investment of $478
         which  was used by  Audiovox  Venezuela  to  obtain  certain  licenses,
         permits and fixed assets.

(3)      Issuance of Subsidiary Shares

         On March 31, 1999, Toshiba Corporation, a major supplier,  purchased 5%
         of the Company's  subsidiary,  Audiovox  Communications  Corp. (ACC), a
         supplier of wireless products for $5,000

                                                                     (Continued)
                                       45



<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued

         in  cash.  The  Company  currently  owns  95%  of  ACC;  prior  to  the
         transaction  ACC was a  wholly-  owned  subsidiary.  As a result of the
         issuance  of ACC's  shares,  the  Company  recognized  a gain of $3,800
         ($2,204 after provision for deferred  taxes).  The gain on the issuance
         of the  subsidiary's  shares have been  recognized in the statements of
         income in accordance  with the Company's  policy on the  recognition of
         such transactions.

(4)      Supplemental Cash Flow Information

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


<TABLE>
                                                        For the Years Ended November 30,
                                                        --------------------------------
                                                         1997           1998           1999
                                                         ----           ----           ----
<S>                                                    <C>            <C>           <C>     Cash paid during the years for:
Interest, excluding bank charges, net of $801
     capitalized in 1998                               $  1,560       $ 1,587       $  2,994
Income taxes                                            $23,530       $ 4,496        $12,039
</TABLE>


         Non-cash Transactions:

         During  January 1997,  the Company  completed an exchange of $21,479 of
         its $65,000 6 1/4 % convertible  subordinated debentures  (Subordinated
         Debentures) into 2,860,925 shares of Class A common stock (Note 12).

         During  1997,  the Company  issued a credit of $1,250 on open  accounts
         receivable  and  issued  250,000  shares of its  Class A common  stock,
         valued at five  dollars per share,  in exchange  for a 20%  interest in
         Bliss-tel Company, Limited (Bliss-tel) (Note 10).

         During 1997, the Company  contributed  $6,475 in net assets in exchange
         for a 50% ownership interest in Audiovox Specialized Applications,  LLC
         (ASA)  which  resulted  in $5,595 of excess cost over fair value of net
         assets (Note 10).

         As of November 30, 1997,  the Company  recorded an  unrealized  holding
         gain relating to the equity collar,  net of deferred  income taxes,  of
         $773 as a separate component of stockholders' equity (Note 19).

         During 1998, a capital lease obligation of $6,340 was incurred when the
         Company entered into a building lease (Note 18).

                                                                     (Continued)
                                       46



<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued

         During  1998,  the  Company  sold its  equity  collar for  $1,499.  The
         transaction  resulted  in a net  gain on  hedge  of  available-for-sale
         securities  of $929  which is  reflected  as a  separate  component  of
         stockholders' equity (Note 19).

         During  1998 and 1999,  the  Company  exercised  its  option to convert
         1,137,212 and 2,882,788 Japanese yen (approximately $8,176 and $24,026)
         of  Shintom  Co.  Ltd.  (Shintom)   convertible   debentures   (Shintom
         debentures)  into  approximately  7,500,000  and  48,100,000  shares of
         Shintom common stock, respectively (Note 8).

         During the years ended  November 30, 1997,  1998 and 1999,  the Company
         recorded an  unrealized  holding  gain  relating to  available-for-sale
         marketable equity securities,  net of deferred income taxes, of $1,917,
         $(8,040)  and  $5,775,   respectively,   as  a  separate  component  of
         accumulated other comprehensive income (Note 16).

         During 1999, $1,249 of its $65,000 6 1/4% subordinated  debentures were
         converted into 70,565 shares of Class A common stock (Note 12).

(5)      Transactions With Major Suppliers

         The Company engages in transactions  with Shintom and TALK  Corporation
         (TALK).  Shintom  is a  stockholder  who  owns  all of the  outstanding
         Preferred  Stock of the  Company at  November  30,  1998 and 1999.  The
         Company has a 30.8% interest in TALK (Note 10).

         Transactions with Shintom and TALK include  financing  arrangements and
         inventory  purchases which  approximated 29%, 19% and 11% for the years
         ended  November  30,  1997,  1998  and  1999,  respectively,  of  total
         inventory  purchases.  At November  30, 1998 and 1999,  the Company had
         recorded  $15 and  $20,  respectively,  of  liability  due to TALK  for
         inventory purchases included in accounts payable.  The Company also has
         documentary  acceptance  obligations payable to TALK as of November 30,
         1998 and 1999 (Note 11(b)).  At November 30, 1998 and 1999, the Company
         had recorded a  receivable  from TALK in the amount of $734 and $3,741,
         respectively,  a portion of which is payable with  interest  (Note 10),
         which is  reflected  as  receivable  from  vendor  on the  accompanying
         consolidated financial statements.

         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.

         Inventory  purchases from another major supplier  approximated 32%, 42%
         and 39% of total  inventory  purchases for the years ended November 30,
         1997, 1998 and 1999, 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,

                                                                     (Continued)
                                       47



<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued

         however,  could  cause a delay in product  availability  and a possible
         loss of sales, which would affect operating results adversely.

(6)      Accounts Receivable

         Accounts receivable is comprised of the following:

                                                                November 30,

<TABLE>
                                                          1998                1999
                                                         --------          -----------

<S>                                                      <C>                 <C>     
Trade accounts receivable                                $142,211            $254,477
Receivables from equity investments (Note 10)               1,035               1,057
                                                         --------            --------
                                                          143,246             255,534
Less:
   Allowance for doubtful accounts                          2,944               5,645
   Allowance for cellular deactivations                       875               1,261
   Allowance for co-operative advertising, cash
       discounts and market development funds               8,307              11,356
                                                         --------            --------
                                                         $131,120            $237,272
                                                         ========            ========
</TABLE>


(7)      Receivable from Vendor

         The Company  recorded  receivable from vendor in the amount of $956 and
         $9,327 as of November 30, 1998 and 1999, respectively.  Receivable from
         vendor represents  prepayments on product shipments,  defective product
         reimbursements and interest receivable at a rate of 6.5% on amounts due
         from TALK (Note 10).

                                                                     (Continued)
                                       48



<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued

(8)      Investment Securities

         As of November 30, 1999, the Company's  investment  securities  consist
         primarily  of  1,730,000  shares of CellStar  Common  Stock,  1,904,000
         shares of Shintom  common stock and  1,125,024  Japanese yen of Shintom
         debentures,  which were  classified  as  available-for-sale  marketable
         securities.   As  of  November  30,  1998,  the  Company's   investment
         securities  consist  primarily of 1,730,000  shares of CellStar  Common
         Stock,  1,904,000  shares of Shintom common stock and 662,788  Japanese
         yen of Shintom debentures,  which were classified as available-for-sale
         marketable securities.  The cost, gross unrealized gains and losses and
         aggregate fair value of the investment securities available-for-sale as
         of November 30, 1999 were as follows:

<TABLE>

                            1998                                1999
               ------------------------------------   ---------------------------
                         Gross     Gross                         Gross
                       Unrealized Unrealized Aggregate        Unrealized  Aggregate
                         Holding   Holding   Fair                Holding    Fair
                Cost      Gain     Loss      Value     Cost      Gain      Value
               -------   ------   -------   -------   -------   -------   -------
<S>            <C>       <C>                <C>       <C>       <C>       <C>    
CellStar
  Common
  Stock        $ 2,715   $8,422      --     $11,137   $ 2,715   $13,936   $16,651
Shintom
  Common
  Stock          3,132     --     $ 1,723     1,409     1,179      --       1,179
Shintom
  Debentures     4,543     --        --       4,543    10,526     2,045    12,571
               -------   ------   -------   -------   -------   -------   -------
               $10,390   $8,422   $ 1,723   $17,089   $14,420   $15,981   $30,401
               =======   ======   =======   =======   =======   =======   =======
</TABLE>


         The Shintom debentures mature on September 30, 2002.

         A related  deferred tax  liability of $2,546 and $6,053 was recorded at
         November  30,  1998  and  1999,  respectively,  as a  reduction  to the
         unrealized  holding gain included in  accumulated  other  comprehensive
         income.

         During 1997, the Company sold 1,835,000 shares of CellStar Common Stock
         yielding  net  proceeds of  approximately  $45,937  and a gain,  net of
         taxes, of approximately $23,232.

         During 1998, the Company purchased 400,000 Japanese yen  (approximately
         $3,132) of Shintom  debentures  and exercised its option to convert the
         Shintom  debentures  into shares of Shintom common stock.  These shares
         are included in the Company's available-for-sale  marketable securities
         at November 30, 1998.  During the fourth  quarter of 1999,  the Company
         recorded  an  other-than-  temporary  decline  in  market  value of its
         Shintom common stock in the amount of $1,953 and a related deferred tax
         benefit of $761.  The  write-down  has been recorded as a component of
         other expense in the consolidated statement of income.

                                                                     (Continued)
                                       49



<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued

         During 1998, the Company purchased an additional 1,400,000 Japanese yen
         (approximately  $9,586) of Shintom  debentures and exercised its option
         to convert  737,212  Japanese yen of Shintom  debentures into shares of
         Shintom  common  stock.  The  Company  sold the  Shintom  common  stock
         yielding net proceeds of $5,830 and a gain of $787.

         During 1999, the Company purchased an additional 3,100,000 Japanese yen
         (approximately  $27,467) of Shintom debentures and exercised its option
         to convert 2,882,788  Japanese yen of Shintom debentures into shares of
         Shintom  common  stock.  The  Company  sold the  Shintom  common  stock
         yielding net proceeds of $27,916 and a gain of $3,501.

(9)      Property, Plant and Equipment

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

                                                       November 30,
                                                     1998               1999
                                                  ----------         -----------
Land                                               $     363          $     363
Buildings                                              1,605              1,605
Property under capital lease                           7,141              7,141
Furniture, fixtures and displays                       3,184              1,878
Machinery and equipment                                5,023              5,363
Computer hardware and software                         9,767              9,655
Automobiles                                              633                580
Leasehold improvements                                3,943              2,968
                                                   ---------           -------
                                                      31,659             29,553
Less accumulated depreciation and amortization      (13,831)            (9,924)
                                                   ---------           --------
                                                   $ 17,828           $ 19,629
                                                   =========          ========

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

         Computer   software  includes   approximately   $3,149  and  $2,927  of
         unamortized  costs as of  November  30,  1998 and  1999,  respectively,
         related to the acquisition and  installation of management  information
         systems for internal use.

         Depreciation  and  amortization  of plant  and  equipment  amounted  to
         $1,503,  $2,089 and $2,875 for the years ended November 30, 1997,  1998
         and  1999,  respectively.  Included  in  accumulated  depreciation  and
         amortization is  amortization  of computer  software costs of $19, $350
         and  $1,051  for the years  ended  November  30,  1997,  1998 and 1999,
         respectively. Included in

                                                                     (Continued)
                                       50



<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued

         accumulated  depreciation  and amortization is amortization of property
         under  capital  lease of $160 and $240 for the year ended  November 30,
         1998 and 1999, respectively.

(10)     Equity Investments

         As of November 30, 1999, the Company had a 30.8% ownership  interest in
         TALK,  a major  supplier of the Company.  As of November 30, 1999,  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.  As of November 30, 1999,  the Company had a 20% ownership
         interest  in  Bliss-tel  which  distributes   cellular  telephones  and
         accessories   in   Thailand.   Additionally,   the   Company   had  50%
         non-controlling  ownership interests in five 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;  Audiovox Pacific
         Pty.,  Limited  (Audiovox  Pacific)  which was a former  distributor of
         cellular  telephones  and  automotive  sound and  security  products in
         Australia  and  New  Zealand;  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; and Quintex West, which is
         in the cellular telephone and related communication  products business,
         as well as the  automotive  aftermarket  products  business on the west
         coast of the United States.

         During 1997, the Company purchased a 20% equity investment in Bliss-tel
         in exchange for 250,000  shares of the  Company's  Class A common stock
         and a credit for open accounts  receivable  of $1,250.  The issuance of
         the common stock resulted in an increase to additional  paid-in capital
         of approximately $1,248. In connection with the purchase, excess of the
         fair  value of net  assets  acquired  over cost  amounting  to $320 was
         recorded and is being amortized on a straight-line basis over 10 years.

         During  1997,  the  Company  purchased  a 50%  equity  investment  in a
         newly-formed  company,  ASA,  for  approximately  $11,131.  The Company
         contributed  the net assets of its Heavy Duty Sound  division,  its 50%
         interest in Audiovox  Specialty  Markets Co. (ASMC) and $4,656 in cash.
         In connection with this investment,  excess cost over fair value of net
         assets  acquired  of $5,595  resulted,  which is being  amortized  on a
         straight-line  basis  over 20  years.  The  other  investor  (Investor)
         contributed  its 50%  interest  in  ASMC  and  the  net  assets  of ASA
         Electronics  Corporation.  In  connection  with  this  investment,  the
         Company  entered into a stock  purchase  agreement with the Investor in
         ASA. The agreement  provides for the sale of 352,194  shares of Class A
         Common Stock at $6.61 per share  (aggregate  proceeds of  approximately
         $2,328) by the Company to the Investor.  The transaction  resulted in a
         net increase to additional paid-in capital of approximately $2,242. The
         selling  price of the shares are subject to adjustment in the event the
         Investor sells shares at a loss during a 90-day period,  beginning with
         the later of the effective  date of the  registration  statement  filed
         with the Securities and Exchange

                                                                     (Continued)
                                       51



<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued

         Commission to register such shares or May 13, 1998.  The  adjustment to
         the selling  price will equal the loss incurred by the Investor up to a
         maximum of 50% of the shares. During 1998, the Investor sold its shares
         at a loss which resulted in the Company  recording an adjustment to the
         selling  price of $410 as  additional  excess  cost over fair  value of
         assets  acquired.  No further  adjustments  to the selling price can be
         made.

         The Company's net sales to the equity  investments  amounted to $6,132,
         $4,528 and $4,605 for the years ended November 30, 1997, 1998 and 1999,
         respectively.  The  Company's  purchases  from the  equity  investments
         amounted to $7,484,  $91,095 and $146,803 for the years ended  November
         30, 1997, 1998 and 1999,  respectively.  The Company  recorded  $2,027,
         $1,752 and $1,735 of outside  representative  commission  expenses  for
         activations and residuals  generated by G.L.M. on the Company's  behalf
         during fiscal year 1997, 1998 and 1999, respectively.

         Included in accounts receivable at November 30, 1998 and 1999 are trade
         receivables  due from its  equity  investments  aggregating  $1,035 and
         $1,057,  respectively.  Receivable from vendor includes $833 and $3,741
         due from TALK as of  November  30, 1998 and 1999,  respectively,  which
         represents  prepayments on product shipments and interest.  Interest is
         payable  in  monthly  installments  at 6.5% on  amounts  due from TALK.
         Amounts  representing  prepayments of $3,500 were repaid via receipt of
         product  shipments  in December  1999.  At November  30, 1998 and 1999,
         other long-term assets include management fee receivables of $1,271 and
         $459, respectively. At November 30, 1998 and 1999, included in accounts
         payable  and  other  accrued   expenses  were   obligations  to  equity
         investments  aggregating $1,049 and $1,015,  respectively.  Documentary
         acceptance  obligations were outstanding from TALK at November 30, 1999
         (Note 11(b)).

         For the years ended November 30, 1997,  1998 and 1999,  interest income
         earned on equity  investment notes and other  receivables  approximated
         $653,  $480 and $482,  respectively.  Interest  expense on  documentary
         acceptances  payable to TALK approximated  $203, $256 and $228 in 1997,
         1998 and 1999, respectively.

(11)     Financing Arrangements

         (a)      Bank Obligations

                  The  Company  maintains  a  revolving  credit  agreement  with
                  various financial institutions. During the year ended November
                  30, 1999, the credit agreement was amended and restated in its
                  entirety, extending the expiration date to July 27, 2004. As a
                  result,  bank obligations under the credit agreement have been
                  classified as long-term at November 30, 1999.  The amended and
                  restated credit  agreement  provides for $200,000 of available
                  credit, including $15,000 for foreign currency borrowings.  In
                  December  1999,  the credit  agreement  was  further  amended,
                  resulting in an increase in available credit to $250,000.

                                                                     (Continued)
                                       52



<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued

                  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 is
                  secured by accounts  receivable,  inventory  and the Company's
                  shares of ACC. As of November 30, 1999, availability of credit
                  under the credit  agreement is a maximum  aggregate  amount of
                  $200,000, subject to certain conditions,  based upon a formula
                  taking into  account  the amount and  quality of its  accounts
                  receivable and inventory.  At November 30, 1999, the amount of
                  unused available credit is $46,930.  The credit agreement also
                  allows  for  commitment  up to  $50,000  in  forward  exchange
                  contracts (Note 19(a)(1)).

                  Outstanding obligations under the credit agreement at November
                  30, 1999 and 1998 were as follows:

                                                       November 30,
                                                   1998           1999
                                                 --------       ---------

                   Revolving Credit Notes         $ 2,500        $ 47,007
                   Eurodollar Notes                15,000          55,000
                                                  -------        --------
                                                  $17,500        $102,007
                                                  =======        ========

                  Interest rates are as follows:  revolving credit notes at .50%
                  above the prime rate, which was approximately  8.5%, 7.75% and
                  8.5% at November 30, 1997,  1998 and 1999,  respectively,  and
                  Eurodollar  Notes at 1.50%  above  the  Libor  rate  which was
                  approximately  5.97%,  5.62% and 6.48% at November  30,  1997,
                  1998 and 1999, respectively. The maximum commitment fee on the
                  unused  portion  of the line of credit is .50% as of  November
                  30, 1999.

                  The credit  agreement  contains several  covenants  requiring,
                  among  other  things,  minimum  levels of  pre-tax  income and
                  minimum levels of net worth and working capital. Additionally,
                  the  agreement   includes   restrictions  and  limitations  on
                  payments  of   dividends,   stock   repurchases   and  capital
                  expenditures.  During 1998, the Company  violated its covenant
                  regarding maintenance of pre-tax income for the fiscal quarter
                  and six months ended May 31, 1998 which was waived.

                  The Company also has revolving  credit  facilities in Malaysia
                  (Malaysian  Credit  Agreement) to finance  additional  working
                  capital needs. As of November 30, 1998 and 1999, the available
                  line of  credit  for  direct  borrowing,  letters  of  credit,
                  bankers'  acceptances  and other forms of credit  approximated
                  $8,195 and $8,158,  respectively.  The credit  facilities  are
                  partially  secured by one  standby  letter of credit  totaling
                  $1,300 and two standby letters of credit totaling  $5,320,  by
                  the Company and payable upon demand or upon  expiration of the
                  standby  letters of credit on January  15, 2000 and August 31,
                  2000,

                                                                     (Continued)
                                       53



<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued

                  respectively.   The  obligations  of  the  Company  under  the
                  Malaysian  Credit  Agreement  are secured by the  property and
                  building   owned  by   Audiovox   Communications   Sdn.   Bhd.
                  Outstanding  obligations  under the Malaysian Credit Agreement
                  at November  30, 1998 and 1999 were  approximately  $4,711 and
                  $5,843,  respectively.  At November  30, 1999  interest on the
                  credit  facility  ranged from 7.4% to 9.6%.  At  November  30,
                  1998,  interest  on the credit  facility  ranged  from 9.5% to
                  12.0%.  At November 30, 1997,  interest on the credit facility
                  ranged from 8.25% to 11.10%.

                  As of November 30, 1998 and 1999, Audiovox Venezuela had notes
                  payable  of  1,500,000  and  1,275,500   Venezuelan   Bolivars
                  (approximately  $2,617 and  $2,000 at  November  30,  1998 and
                  1999) outstanding to a bank.  Interest on the notes payable is
                  10.7%.  The notes are  scheduled to be repaid  within one year
                  and, as such,  are classified as short term. The notes payable
                  are  secured  by a standby  letter of credit in the  amount of
                  $3,000,  by the  Company  and is payable  upon  demand or upon
                  expiration of the standby letter of credit on June 30, 2000.

                  The maximum  month-end  amounts  outstanding  under the credit
                  agreement and Malaysian Credit Agreement borrowing  facilities
                  during the years ended  November 30, 1997,  1998 and 1999 were
                  $28,420,   $42,975   and   $110,595,   respectively.   Average
                  borrowings  during the years ended November 30, 1997, 1998 and
                  1999 were $18,723, $26,333 and $29,835,  respectively, and the
                  weighted  average  interest  rates were  7.7%,  8.7% and 9.6%,
                  respectively.

                  During 1999,  the Company  entered into a wholesale  financing
                  agreement  with  a  financial  institution  to  finance  up to
                  $15,000  of  inventory  purchases  of a  particular  supplier.
                  Amounts  outstanding  under  this  agreement  were  $8,150  at
                  November 30, 1999.  Borrowings under the agreement are secured
                  by the inventory purchased. Payments on the borrowings are due
                  within 30 days. Interest is payable after stipulated due dates
                  at a rate of prime plus 1 1/2%,  which was 10% at November 30,
                  1999. The agreement contains several covenants.

         (b)      Documentary Acceptances

                  The Company had various unsecured documentary acceptance lines
                  of  credit  available  with  suppliers  to  finance  inventory
                  purchases.  The  Company  does  not  have  written  agreements
                  specifying the terms and amounts  available under the lines of
                  credit.  At  November  30,  1998 and 1999,  $3,911 and $1,994,
                  respectively,  of documentary  acceptances were outstanding of
                  which all was due to TALK.

                  The  maximum  month-end  documentary  acceptances  outstanding
                  during the years ended  November 30, 1997,  1998 and 1999 were
                  $4,162,  $4,809 and $5,033,  respectively.  Average borrowings
                  during the years ended November 30, 1997, 1998 and 1999 were

                                                                     (Continued)
                                       54



<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued

                  $3,199,  $3,885 and  $3,755,  respectively,  and the  weighted
                  average  interest  rates,  including fees, were 6.3%, 6.6% and
                  6.1%, respectively.

(12)     Long-Term Debt

         A summary of long-term debt follows:

                                                                 November 30,
                                                                1998      1999

          Convertible subordinated debentures:
            6 1/4%, due 2001, convertible at $17.70 per share   $2,269   $1,020
          Subordinated note payable                              4,062    4,912
                                                                ------   ------
                                                                 6,331    5,932
          Less current installments                               --       --
                                                                ------   ------
                                                                $6,331   $5,932
                                                                ======   ======


         On March 15, 1994,  the Company  completed the sale of $65,000,  6 1/4%
         subordinated   debentures  due  2001  and  entered  into  an  indenture
         agreement.  The subordinated  debentures are convertible into shares of
         the  Company's  Class A common  stock,  par value  $.01 per share at an
         initial  conversion  price of $17.70 per share,  subject to  adjustment
         under certain  circumstances.  The indenture agreement contains various
         covenants. The bonds are subject to redemption by the Company in whole,
         or in part,  at any time after  March 15,  1997,  at certain  specified
         amounts.  On May 9,  1995,  the  Company  issued  warrants  to  certain
         beneficial holders of these subordinated debentures (Note 15(d)).

         On November 25, 1996,  the Company  completed an exchange of $41,252 of
         its $65,000  Subordinated  Debentures  for 6,806,580  shares of Class A
         Common  Stock  (Exchange).  As a result  of the  Exchange,  a charge of
         $26,318  was  recorded.  The  charge  to  earnings  represents  (i) the
         difference  in the  fair  market  value  of the  shares  issued  in the
         Exchange  and the fair market  value of the shares that would have been
         issued under the terms of the original  conversion  feature plus (ii) a
         write-off of the debt issuance costs  associated with the  Subordinated
         Debentures (Note 1(h)) plus (iii) expenses associated with the Exchange
         offer. The Exchange resulted in taxable income due to the difference in
         the face value of the bonds  converted and the fair market value of the
         shares  issued  and,  as such,  a current  tax  expense  of $2,888  was
         recorded.  An increase to paid in capital  was  reflected  for the face
         value of the bonds  converted,  plus the  difference in the fair market
         value of the shares issued in the Exchange and the fair market value of
         the shares that would have been issued  under the terms of the original
         conversion feature for a total of $63,564.

                                                                     (Continued)
                                       55



<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued

         During  January  1997,  the  Company  completed   additional  exchanges
         totaling $21,479 of its $65,000  subordinated  debentures for 2,860,925
         shares of Class A common stock (Additional  Exchanges).  As a result of
         the  Additional  Exchanges,  similar to that of the Exchange  described
         earlier,  a charge of  $12,686,  tax expense of $158 and an increase to
         paid in capital of $33,592, was recorded.

         During  fiscal  1999,  holders  of the  Company's  65,000  subordinated
         debentures  exercised  their option to convert  $1,249  debentures  for
         70,565 shares of the Company's Class A common stock.  As a result,  the
         remaining subordinated debentures are $1,020 as of November 30, 1999.

         On October  20,  1994,  the Company  issued a note  payable for 500,000
         Japanese yen (approximately  $4,062 and $4,912 on November 30, 1998 and
         1999,  respectively)  to finance its  investment in TALK (Note 10). The
         note is scheduled  to be repaid on October 20, 2004 and bears  interest
         at 4.1%.  The note can be repaid by cash  payment  or by giving  10,000
         shares of its TALK  investment to the lender.  The lender has an option
         to acquire  2,000  shares of TALK held by the Company in  exchange  for
         releasing  the  Company  from 20% of the face  value of the note at any
         time after October 20, 1995.  This note and the  investment in TALK are
         both  denominated in Japanese yen, and, as such,  the foreign  currency
         translation adjustments are recorded in accumulated other comprehensive
         income. Any foreign currency translation  adjustment resulting from the
         note will be recorded in other comprehensive  income to the extent that
         the  adjustment  is less  than or  equal  to the  adjustment  from  the
         translation  of the  investment in TALK.  Any portion of the adjustment
         from the  translation of the note that exceeds the adjustment  from the
         translation  of the  investment in TALK is a  transaction  gain or loss
         that will be included in earnings.

          Maturities  on  long-term  debt for the next five fiscal  years are as
          follows:

         2000                                                         -
         2001                                                    $1,020
         2002                                                         -
         2003                                                         -
         2004                                                    $4,912
                                                                 ======



                                                                     (Continued)
                                       56



<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued

(13)     Income Taxes

          The  components of income (loss) before the provision for income taxes
          are as follows:

                                        November 30,
                                       -------------
                                 1997       1998       1999
                                -------   --------    -------
          Domestic Operations   $42,613   $  5,380    $42,668
          Foreign Operations        829     (1,579)        55
                                -------   --------    -------
                                $43,442   $  3,801    $42,723
                                =======   ========    =======

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

<TABLE>

                                                                             November 30,
                                                                             ------------
                                                             1997      1998       1999
                                                            -------   -------     ------

<S>                                                         <C>       <C>        <C>     
          Statement of income                               $22,420   $   829    $ 15,477
          Stockholders' equity:
             Unrealized holding gain (loss) on investment
                  securities recognized for financial
                  reporting purposes                          1,174    (4,928)      3,540
             Unrealized holding gain on equity collar
                  recognized for financial reporting
                  purposes                                      473    (1,043)         - 
             Income tax benefit of employee stock option
                exercises                                      --        --        (1,101)
                                                            -------   -------    --------
                  Total income tax expense benefit          $24 067   $(5,142)   $ 17,916
                                                            =======   =======    ========
</TABLE>




                                                                     (Continued)
                                       57



<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued

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


              Federal     Foreign    State        Total

1997:
   Current    $ 23,316    $ 1,159    $  1,068    $ 25,543
   Deferred     (2,845)      --          (278)     (3,123)
              --------    -------    --------    --------
              $ 20,471    $ 1,159    $    790    $ 22,420
              ========    =======    ========    ========

1998:
   Current    $  1,499    $  (119)   $    351    $  1,731
   Deferred       (819)      --           (83)       (902)
              --------    -------    --------    --------
              $    680    $  (119)   $    268    $    829
              ========    =======    ========    ========

1999:
   Current    $ 14,565    $  (116)   $  1,593    $ 16,042
   Deferred       (118)      (431)        (16)       (565)
              --------    -------    --------    --------
              $ 14,447    $  (547)   $  1,577    $ 15,477
              ========    =======    ========    ========


     A reconciliation  of the provision for income taxes computed at the Federal
     statutory rate to the reported provision for income taxes is as follows:

<TABLE>

                                                   November 30,
                                ---------------------------------------------------------------
                                       1997                 1998                  1999
                                -------------------   -------------------  --------------------
<S>                             <C>            <C>    <C>           <C>    <C>            <C>  
Tax provision at  Federal
   statutory rates              $ 15,205       35.0%  $ 1,292       34.0%  $ 14,953       35.0%
Expense relating to exchange
   of subordinated debentures      4,578       10.5      --          --        --          --
Undistributed income (losses)
   from equity investments           123        0.3       287        7.6       (373)      (0.9)
State income taxes, net of
   Federal benefit                 1,637        3.8       260        6.8      1,025        2.4
Decrease in beginning-of-the-
   year balance of the
   valuation allowance for
   deferred tax assets              (180)      (0.4)     (340)      (8.9)      (989)      (2.3)
Foreign tax rate differential        323        0.7       (82)      (2.2)        38        0.1
Benefit of concluded
   examination                      --          --       (350)      (9.2)      --          --
Other, net                           734        1.7      (238)      (6.3)       823        1.9
                                --------      -----   -------     -------  --------      ------
                                $ 22,420       51.6%  $   829       21.8%  $ 15,477       36.2%
                                ========      =====   =======     =======  ========       =====
</TABLE>



                                                                     (Continued)
                                                        58



<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued

         The  significant  components  of deferred  income tax  recovery for the
         years ended November 30, 1999 and 1998 are as follows:


<TABLE>
                                                                        November 30,
                                                                        1998     1999
                                                                        -----    -----
<S>                                                                    <C>        <C> 
          Deferred tax (recovery) expense (exclusive of the effect
               of other components listed below)                        $(562)   $ 424
          Decrease in beginning-of-the-year  balance of the valuation
               allowance for deferred tax assets                         (340)    (989)
                                                                        -----    -----
                                                                        $(902)   $(565)
                                                                        =====    =====
</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,
                                                                              1998             1999
                                                                              ----             ----
<S>                                                                            <C>        <C>    
          Deferred tax assets:
               Accounts receivable, principally due to allowance for
                  doubtful accounts and cellular deactivations                 $ 1,210    $ 1,977
               Inventory, principally due to additional costs
                  capitalized for tax purposes pursuant to the Tax
                  Reform Act of 1986                                               325        617
               Inventory, principally due to valuation reserve                   1,882      1,702
               Accrual for future warranty costs                                   563        615
               Plant, equipment and certain intangibles, principally
                  due to depreciation and amortization                             804        957
               Net operating loss carryforwards, state and foreign               2,338      1,327
               Equity collar                                                       570        570
               Accrued liabilities not currently deductible                        346        348
               Other                                                               405        121
                                                                               -------    -------
                    Total gross deferred tax assets                              8,443      8,234
               Less: valuation allowance                                        (2,373)    (1,384)
                                                                               -------    -------
                    Net deferred tax assets                                      6,070      6,850
                                                                               -------    -------

          Deferred tax liabilities:
               Investment securities                                            (3,577)    (6,323)
               Issuance of subsidiary shares                                      --       (1,432)
                                                                               -------    -------
                    Total gross deferred tax liabilities                        (3,577)    (7,755)
                                                                               -------    -------
                    Net deferred tax asset (liability)                         $ 2,493    $  (905)
                                                                               =======    =======
</TABLE>

                                                                     (Continued)
                                       59

<PAGE>
                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued
  
             The net  change in the  total  valuation  allowance  for the year
          ended November 30, 1999 was a decrease of $989. 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.  The  Company has
          established  valuation  allowances  primarily for net  operating  loss
          carryforwards in certain states and foreign countries as well as other
          deferred  tax  assets in  foreign  countries.  Based on the  Company's
          ability to carry back future reversals of deferred tax assets to taxes
          paid in current and prior years and the Company's  historical  taxable
          income record,  adjusted for unusual items,  management believes it is
          more likely than not that the Company  will realize the benefit of the
          net  deferred  tax assets  existing at  November  30,  1999.  Further,
          management believes the existing net deductible temporary  differences
          will reverse during periods in which the Company 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, however, could be reduced in the near term if estimates of
          future taxable income during the carryforward period are reduced.

         At November 30, 1999, the Company had net operating loss  carryforwards
         for state and  foreign  income tax  purposes of  approximately  $7,250,
         which are available to offset future state and foreign  taxable income,
         if any, which will expire through the year ended November 30, 2018.

(14)     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,
                                   ------------------------       -------------------------
                                      1998           1999            1998           1999
                                   ---------      ----------      ---------      ----------

<S>                      <C>          <C>             <C>            <C>             <C>                   <S>
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 A Common Stock       0.01    30,000,000      30,000,000     16,760,518      17,206,909     One         Class 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>


    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.

                                                                     (Continued)
                                       60



<PAGE>


                     AUDIOVOX CORPORATION AND SUBSIDIARIES

             Notes to Consolidated Financial Statements, Continued

    The 50,000 shares of non-cumulative Preferred Stock outstanding are owned by
    Shintom and have  preference  over both classes of common stock in the event
    of liquidation or dissolution.

     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, 1998 and 1999,
     498,055  and  621,037  shares,  respectively,  were  repurchased  under the
     Program at an average price of $7.21 and $7.20 per share, respectively, for
     an aggregate amount of $3,589 and $4,471, respectively.

    As of November  30, 1998 and 1999,  1,963,480  and  1,598,930  shares of the
    Company's Class A common stock are reserved for issuance under the Company's
    Stock Option and Restricted  Stock Plans and 4,167,117 and 3,946,522 for all
    convertible  securities  and warrants  outstanding  at November 30, 1998 and
    1999 (Notes 12 and 15).

    Undistributed earnings from equity investments included in retained earnings
    amounted to $2,324 and $4,219 at November 30, 1998 and 1999, respectively.

(15)         Stock-Based Compensation and Stock Warrants

    (a)      Stock Options

             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 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
             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
             exercisable  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.  The  Company  recorded  $31 in
             compensation  expense  for the year ended  November  30,  1999.  No
             compensation  expense was recorded for the years ended November 30,
             1997 and 1998.

                                                                     (Continued)
                                       61



<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued

     Information regarding the Company's stock options is summarized below:

                                                          Weighted
                                                          Average
                                          Number          Exercise
                                         of Shares         Price

Outstanding at
    November 30, 1996                    548,750            8.78
             Granted                   1,260,000            7.09
             Exercised                         -               -
             Canceled                  (109,000)           10.95
                                      ----------           -----
Outstanding at
    November 30, 1997                  1,699,750            7.38
             Granted                      10,000            4.63
             Exercised                         -               -
             Canceled                   (16,000)            8.79
                                      ----------          ------

Outstanding at
    November 30, 1998                  1,693,750            7.33
             Granted                   1,542,500           14.98
             Exercised                 (364,550)            7.64
             Canceled                      (500)           13.00
                                      ----------           -----
Outstanding at
    November 30, 1999                 2,871,200            11.41
                                      ==========           =====
Options exercisable,                  1,181,200             7.51
                                      ==========          ======
    November 30, 1999

                  At  November  30, 1998 and 1999,  207,302 and 184,775  shares,
                  respectively, were available for future grants under the terms
                  of these plans.

                  The per share  weighted  average  fair value of stock  options
                  granted  during  1997 was $5.73 on the date of the grant using
                  the  Black-Scholes  option-pricing  model  with the  following
                  weighted  average  assumptions:  risk  free  interest  rate of
                  6.49%,   expected  dividend  yield  of  0.0%,  expected  stock
                  volatility of 70% and an expected option life of 10 years.

                  The per share  weighted  average  fair value of stock  options
                  granted  during  1998 was $3.45 on the date of grant using the
                  Black-Scholes option-pricing model with the following weighted
                  average assumptions: risk free interest rate of 5.7%, expected
                  dividend yield of 0.0%,  expected stock  volatility of 60% and
                  an expected option life of 10 years.

                                                                     (Continued)
                                       62



<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued

                  The per share  weighted  average  fair value of stock  options
                  granted  during  1999 was $9.83 on the date of grant using the
                  Black-Scholes option-pricing model with the following weighted
                  average assumptions: risk free interest rate of 5.9%, expected
                  dividend yield of 0.0%,  expected stock  volatility of 60% and
                  an expected option life of 10 years.

                  The Company  applies  Opinion 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.  Had the  Company
                  determined  compensation  cost  based on the fair value at the
                  grant date for its stock  options  under  Statement  123,  the
                  Company's  net income and net  income per common  share  would
                  have been reduced to the pro-forma amounts indicated below:

<TABLE>

                                                      1997          1998          1999
                                                      ----          ----          ----

          Net income:
<S>                                                <C>          <C>         <C>       
             As reported                           $   21,022   $   2,972   $   27,246
             Pro-forma                                 18,786       1,336       25,494

          Net income per common share (basic):

             As reported                           $        1.11$       0.16$        1.43
             Pro-forma                                      0.99        0.07         1.33

          Net income per common share (diluted):

             As reported                           $        1.09$       0.16$        1.39
             Pro-forma                                      0.97        0.07         1.30
</TABLE>


                  Pro-forma  net  income  reflect  only  options  granted  after
                  November 30, 1995.  Therefore,  the full impact of calculating
                  compensation cost for stock options under Statement 123 is not
                  reflected in the pro-forma net income 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 may not be  representative of the effects
                  on reported net income for future years.

                                                                     (Continued)
                                       61



<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued

                  Summarized  information about stock options  outstanding as of
                  November 30, 1999 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    1,259,700       7.12           7.22        1,059,700          7.02
$8.01 - 13.00      121,500      11.77           5.20          121,500         11.77
$13.01 - 15.00   1,490,000      15.00           9.78             --             --
</TABLE>


         (b)      Restricted Stock Plan

                  The  Company  has  restricted  stock  plans  under  which  key
                  employees and directors may be awarded restricted stock. Total
                  restricted  stock  outstanding,  granted under these plans, at
                  November   30,   1998  and  1999  was   77,871   and   13,750,
                  respectively.  Awards under the  restricted  stock plan may be
                  performance  accelerated  shares  or  performance-  restricted
                  shares.  During  fiscal 1999,  32,222  performance-accelerated
                  shares and 12,103 performance  restricted shares were granted.
                  No performance  accelerated  shares or performance  restricted
                  shares  were  granted  in 1997 or 1998.  During  fiscal  1999,
                  19,796  performance  restricted  shares lapsed. No performance
                  accelerated shares or performance  restricted shares lapsed in
                  fiscal years 1997 or 1998.

                  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.  Compensation
                  expense (income) for these grants for the years ended November
                  30,   1997,   1998  and  1999  were  $135,   $(23)  and  $127,
                  respectively.

         (c)      Employee Stock Purchase Plan

                  In May 1993, the stockholders approved the 1993 Employee Stock
                  Purchase  Plan.  The stock  purchase  plan  provides  eligible
                  employees an opportunity  to purchase  shares of the Company's
                  Class A common stock through  payroll  deductions up to 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 last  business day of each
                  month.

                                                                     (Continued)
                                       62



<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued

                  The Company  bears the cost of the  remaining 15 % of the fair
                  market  value of the shares as well as any broker  fees.  This
                  Plan provides for purchases of up to 1,000,000 shares.

         (d)      Stock Warrants

                  In December  1993,  the Company  granted  warrants to purchase
                  50,000  shares of Class A Common Stock at a purchase  price of
                  $14.375 per share as part of the  acquisition of H & H Eastern
                  Distributors,  Inc.  During  fiscal 1999,  the  warrants  were
                  surrendered for  cancellation,  and the holder agreed to waive
                  registration rights in exchange for $5.

                  On May 9, 1995,  the Company  issued  1,668,875  warrants in a
                  private placement,  each convertible into one share of Class A
                  common stock at $7 1/8,  subject to  adjustment  under certain
                  circumstances.  The  warrants  were  issued to the  beneficial
                  holders as of June 3, 1994,  of  approximately  $57,600 of the
                  Company's subordinated debentures in exchange for a release of
                  any claims such  holders may have  against  the  Company,  its
                  agents,  directors  and  employees  in  connection  with their
                  investment in the subordinated  debentures.  As a result,  the
                  Company  incurred a warrant  expense of $2,900 and  recorded a
                  corresponding  increase to paid-in  capital.  The warrants are
                  not exercisable after March 15, 2001, unless sooner terminated
                  under certain  circumstances.  John J. Shalam, Chief Executive
                  Officer of the  Company,  has granted the Company an option to
                  purchase  1,668,875  shares of Class A common  stock  from his
                  personal  holdings.  The  exercise  price of this option is $7
                  1/8, plus the tax impact,  if any, should the exercise of this
                  option be treated as dividend income rather than capital gains
                  to  Mr.   Shalam.   During   1998,   the   Company   purchased
                  approximately  1,324,075 of these warrants at a price of $1.30
                  per warrant,  pursuant to the terms of a self-tender offer. In
                  connection   with  this  purchase,   the  option  to  purchase
                  1,324,075 shares from John J. Shalam's  personal  holdings was
                  canceled.  As of November 30, 1999, 344,800 remaining warrants
                  are outstanding.

                  During fiscal 1997, the Company  granted  warrants to purchase
                  100,000  shares  of  Class A Common  Stock,  which  have  been
                  reserved,  at  $6.75  per  share.  The  warrants,   which  are
                  exercisable  in  whole  or in  part at the  discretion  of the
                  holder,  expire on  January  29,  2002.  During the year ended
                  November 30, 1999, all of the warrants were exercised.

         (e)      Profit Sharing Plans

                  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  of $500,
                  $150 and $800 was made by the  Company  to the  United  States
                  plan  in   fiscal   1997,   1998   and   1999,   respectively.
                  Contributions   required  by  law  to  be  made  for  eligible
                  employees in Canada were not material.

                                                                     (Continued)
                                       63



<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued

(16)     Accumulated Other Comprehensive Income

         The change in net  unrealized  gain (loss) on marketable  securities of
         $1,917, $(8,040) and $5,775 for the years ended November 30, 1997, 1998
         and 1999 is net of tax of $1,174,  $(4,928)  and $3,540,  respectively.
         Reclassification  adjustments of $23,232,  $488 and $2,171 are included
         in the net  unrealized  gain (loss) on  marketable  securities  for the
         years ended November 30, 1997, 1998 and 1999, 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.

(17)     Net Income Per Common Share

         A  reconciliation  between the numerators and denominators of the basic
         and diluted earnings per common share is as follows:

<TABLE>

                                                           For the Years Ended
                                                                November 30,
                                                      1997           1998            1999
                                                      ----           ----            ----
<S>                                                <C>           <C>           <C>        
Net income (numerator for net income per
         common share, basic)                      $    21,022   $     2,972   $    27,246
Interest on 6 1/4% convertible subordinated
  debentures, net of tax                                   185          --              84
                                                   -----------   -----------   -----------
Adjusted net income (numerator for net income
  per common share, diluted)                       $    21,207   $     2,972   $    27,330
                                                   ===========   ===========   ===========
Weighted average common shares (denominator
  for net income per common share, basic)           18,948,356    19,134,529    19,100,047

Effect of dilutive securities:
   Employee stock options and stock warrants           237,360          --         430,560
   Employee stock grants                                70,845          --          62,175
   Convertible debentures                              251,571          --         110,551
                                                   -----------   -----------   -----------

Weighted average common and potential common
  shares outstanding (denominator for net income
  per common share, diluted)                        19,508,132    19,134,529    19,703,333
                                                   ===========   ===========   ===========
Net income per common share, basic                 $      1.11   $      0.16   $      1.43
                                                   ===========   ===========   ===========
Net income per common share, diluted               $      1.09   $      0.16   $      1.39
                                                   ===========   ===========   ===========

</TABLE>



                                                                     (Continued)
                                       64



<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued

         Employee  stock  options  and stock  warrants  totaling  1,908,438  and
         2,779,363 for the years ended November 30, 1997 and 1998, respectively,
         were not included in the net income per share calculation because their
         effect would have been anti-dilutive. There were no anti-dilutive stock
         options and stock warrants for the year ended November 30, 1999.

(18)     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 9). In connection  with the capital  lease,  the Company
         paid certain construction costs on behalf of its principal  stockholder
         and chief  executive  officer in the  amount of  $1,301.  The amount is
         payable to the Company with 8% interest.

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

         At November 30, 1999,  the Company was obligated  under  non-cancelable
         capital and operating leases for equipment and warehouse facilities for
         minimum annual rental payments as follows:

                                                  Capital          Operating
                                                    Lease            Leases

2000                                              $    522          $  1,955
2001                                                   530             1,473
2002                                                   553             1,225
2003                                                   554               820
2004                                                   553                81
Thereafter                                          13,099               658
                                                   -------        ----------
Total minimum lease payments                        15,811          $  6,212
                                                                    ========
Less:  amount representing interest                  9,513
                                                  --------
Present value of net minimum lease payments          6,298
Less: current installments                              19
                                                ----------
Long-term obligation                               $ 6,279
                                                   =======

         Rental expense for the  above-mentioned  operating lease agreements and
         other leases on a month- to-month basis approximated $2,516, $2,563 and
         $2,552  for  the  years  ended  November  30,  1997,   1998  and  1999,
         respectively.

         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, 1999,  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:

          2000                                  $960
          2001                                   941
          2002                                   941
          2003                                   667
                                                ====

(19)     Financial Instruments

         (a)      Derivative Financial Instruments

                  (1)      Forward Exchange Contracts

                           At November  30, 1998,  the Company had  contracts to
                           exchange  foreign  currencies  in the form of forward
                           exchange  contracts  in the amount of  $5,352.  These
                           contracts have varying maturities with none exceeding
                           one year as of November  30,  1998.  At November  30,
                           1999,  the  Company  had  no  contracts  to  exchange
                           foreign  currencies  in the form of forward  exchange
                           contracts.  For the years ended  November  30,  1997,
                           1998 and 1999,  gains and losses on foreign  currency
                           transactions which were not hedged were not material.
                           For the years ended November 30, 1997, 1998 and 1999,
                           there  were  no  gains  or  losses  as  a  result  of
                           terminating hedges prior to the transaction date.

                  (2)      Equity Collar

                           The  Company   entered  into  an  equity   collar  on
                           September  26,  1997 to hedge some of the  unrealized
                           gains  associated  with its  investment  in  CellStar
                           (Note  8).  The  equity   collar   provided  that  on
                           September  26,  1998,  the  Company  can put  100,000
                           shares of CellStar to the counter party to the equity
                           collar  (the bank) at $38 per share in  exchange  for
                           the bank  being  able to call the  100,000  shares of
                           CellStar at $51 per share. The Company has designated
                           this  equity  collar  as a hedge  of  100,000  of its
                           shares in CellStar being that it provides the Company
                           with protection  against the market value of CellStar
                           shares falling

                                                                     (Continued)
                                       65



<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued

                           below $38. Given the high  correlation of the changes
                           in the market  value of the item being  hedged to the
                           item  underlying  the  equity  collar,   the  Company
                           applied hedge accounting for this equity collar.  The
                           equity  collar is recorded  on the  balance  sheet at
                           fair value with gains and losses on the equity collar
                           reflected as a separate  component of equity.  During
                           1998,  the Company sold its equity collar for $1,499.
                           The  transaction  resulted  in a net gain on hedge of
                           available-for-sale   securities   of  $929  which  is
                           reflected as a separate  component  of  stockholders'
                           equity.  The net gain on the  equity  collar  will be
                           reflected in the  consolidated  statements  of income
                           upon sale of the CellStar shares.

                  The  Company  is  exposed  to  credit  losses  in the event of
                  nonperformance  by the counter parties to its forward exchange
                  contracts.  The Company  anticipates,  however,  that  counter
                  parties will be able to fully satisfy their  obligations under
                  the  contracts.  The  Company  does not obtain  collateral  to
                  support  financial   instruments,   but  monitors  the  credit
                  standing of the counter parties.

         (b)      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. and Audiovox
                  Venezuela  (Note  11(a)).  The  Company  had  open  commercial
                  letters of credit of  approximately  $24,914 and  $41,173,  of
                  which $20,576 and $28,727 were accrued for purchases  incurred
                  as of November 30, 1998 and 1999,  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.  and Quintex West which aggregate $475. There
                  is no market for these guarantees and they were issued without
                  explicit cost.  Therefore,  it is not practicable to establish
                  its fair value.

         (c)      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,
                  cellular carriers and service providers, distributors, agents,
                  mass merchandisers, warehouse clubs and independent retailers.

                                                                     (Continued)
                                       66



<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued

                  At November  30, 1998,  three  customers,  which  included two
                  cellular  carrier and service  providers and a Bell  Operating
                  Company  accounted for approximately  18.0%,  13.8% and 13.5%,
                  respectively,  of accounts  receivable.  At November 30, 1999,
                  three  customers,  which  included  two  cellular  carrier and
                  service  providers and a Bell Operating  Company accounted for
                  approximately  15.8%,  15.5%  and  11.1%,   respectively,   of
                  accounts receivable.

                  During  the  year  ended  November  30,  1997,  two  customers
                  accounted for approximately 11.3% and 9.0%,  respectively,  of
                  the Company's  1997 sales.  During the year ended November 30,
                  1998,  two  customers  accounted for  approximately  18.3% and
                  14.9%,  respectively,  of the Company's 1998 sales. During the
                  year ended November 30, 1999,  three  customers  accounted for
                  approximately  19.6%,  14.9% and 12.7%,  respectively,  of the
                  Company's 1999 sales.

                  The Company generally grants credit based upon analyses of its
                  customers'  financial  position  and  previously   established
                  buying  and  payment   patterns.   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. A relatively
                  small number of the Company's significant customers are deemed
                  to be highly leveraged.

         (d)      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 maturity of these instruments.  The
                  estimated  fair value of the Company's  financial  instruments
                  are as follows:

<TABLE>

                                        November 30, 1998     November 30, 1999
                                        -----------------    -----------------
                                        Carrying   Fair      Carrying   Fair
                                         Amount    Value      Amount    Value

          <S>                            <C>       <C>       <C>        <C>     
          Investment securities          $17,089   $17,089   $ 30,401   $ 30,401
          Long-term obligations          $23,831   $24,202   $107,939   $109,261
          Forward exchange contract         --     $ 5,352       --         --
               obligation (derivative)
          </TABLE>



                                                                     (Continued)
                                       67



<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued

                  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:

                  Investment Securities

                  The carrying amount represents fair value, which is based upon
                  quoted market prices and conversion  features at the reporting
                  date (Note 8).

                  Long-Term Obligations

                  The carrying amount of bank debt under the Company's revolving
                  credit agreement  approximates fair value because the interest
                  rate on the  bank  debt is  reset  every  quarter  to  reflect
                  current  market  rates..  With  respect  to  the  subordinated
                  debentures, fair values are based on quoted market price.

                  Forward Exchange Contracts (Derivative)

                  The fair value of the  forward  exchange  contracts  are based
                  upon  exchange  rates  at  November  30,  1999 and 1998 as the
                  contracts are short term.

                  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.

(20)     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, power retailers,
         specialty retailers, new car dealers,  original equipment manufacturers
         (OEM),  independent  installers of automotive  accessories and the U.S.
         military.

         The Company  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

                                                                     (Continued)
                                       68



<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued

         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
         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 year ended  November 30, 1997,  one customer of the Wireless
         segment accounted for approximately  11.3% of the Company's 1997 sales.
         During the year ended  November 30, 1998, two customers of the Wireless
         segment  accounting for approximately  18.3% and 14.9% of the Company's
         1998 sales. During the year ended November 30, 1999, three customers of
         the Wireless segment accounted for approximately 19.6%, 14.9% and 12.7%
         of the Company's 1999 sales.  No customers in the  Electronics  segment
         exceeded 10% of the consolidated sales in fiscal 1997, 1998 or 1999.

<TABLE>

                                                                   Consolidated
                                 Wireless   Electronics  Corporate   Totals

1997
<S>                              <C>        <C>          <C>         <C>     
Net sales                        $444,400   $ 193,910    $    772    $639,082
Intersegment sales
   (purchases), net                     6          (6)       --          --
Interest income                        46          31       1,448       1,525
Interest expense                    4,551       3,169      (5,546)      2,174
Depreciation and amortization         775         630         498       1,903
Debt conversion expense              --          --        12,686      12,686
Income (loss) before provision
   for income tax                  11,582       8,002      23,858      43,442
Total assets                      138,136      86,632      65,059     289,827
Non-cash items:
   Provision for bad debt
       expense                        354         934          12       1,300
   Deferred income tax benefit       --          --         3,123       3,123
   Minority interest                 --          --         1,623       1,623
   Capital expenditures             1,340         744       1,902       3,986
</TABLE>




(Continued)
                                       69



<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued

<TABLE>


                                                                   Consolidated
                                 Wireless   Electronics  Corporate   Totals


1998
<S>                               <C>        <C>                     <C>    
Net sales                         441,590    175,105      --         616,695
Intersegment sales
   (purchases), net                (1,125)     1,125      --            --
Interest income                       215        165       517           897
Interest expense                    5,536      4,068    (5,173)        4,431
Depreciation and amortization         877        570     1,024         2,471
Income (loss) before provision
   for income tax                  (1,786)     5,937      (350)        3,801
Total assets                      138,136     79,597    61,946       279,679
Non-cash items:
   Provision for bad debt
       expense                        316        533      (268)          581
   Deferred income tax benefit       --         --         902           902
   Minority interest                 --         --        (320)         (320)
   Capital expenditures             1,003        475     3,454         4,932

1999
Net sales                         929,303    230,234      --       1,159,537
Intersegment sales
   (purchases), net                (1,149)     1,449      --            --
Interest income                        65         80       793           938
Interest expense                    6,098      3,268    (5,307)        4,059
Depreciation and amortization         987        748     1,553         3,288
Income (loss) before provision
   for income tax                  31,255     11,296       172        42,723
Total assets                      256,954    122,163    96,229       475,346
Non-cash items:
   Provision for bad debt
       expense                      1,914        705       636         3,255
   Deferred income tax benefit       --         --         565           565
   Minority interest                 --         --        (220)         (220)
   Capital expenditures             1,747      1,211     1,864         4,822
</TABLE>




                                                                     (Continued)
                                       70



<PAGE>


                      AUDIOVOX CORPORATION AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued

     Net sales and  long-lived  assets by location for the years ended  November
30, 1997, 1998 and 1999 were as follows.

<TABLE>

                             Net Sales                           Long-Lived Assets
                   -----------------------------         -------------------------
                    1997      1998          1999         1997      1998      1999
                    ----      ----          ----         ----      ----      ----

<S>               <C>        <C>          <C>          <C>       <C>       <C>    
United States     $499,417   $ 531,307    $1,059,536   $47,694   $50,469   $68,126
Canada              18,323      15,789        23,146      --        --        --
Argentina           39,832      27,354        22,831      --        --        --
Peru                 7,426      10,514         9,913      --        --        --
Portugal            14,028       2,024          --        --        --        --
Malaysia            31,660       7,592         7,780     1,903     1,348     1,275
Venezuela           10,867      14,358        22,853       696     1,366     1,387
Mexico, Central
    America and

    Caribbean       10,493       7,289        10,568      --        --        --
Other foreign
    countries        7,036         468         2,910      --        --        --
                  --------   ---------    ----------   -------   -------   -------
Total             $639,082   $ 616,695    $1,159,537   $50,293   $53,183   $70,788
                  ========   =========    ==========   =======   =======   =======
</TABLE>



(21)     Contingencies

         The  Company  is a  defendant  in  litigation  arising  from the normal
         conduct of its  affairs.  The impact of the final  resolution  of these
         matters  on the  Company's  results of  operations  or  liquidity  in a
         particular reporting period is not known. Management is of the opinion,
         however,  that the  litigation  in which the Company is a defendant  is
         either  subject  to product  liability  insurance  coverage  or, to the
         extent not covered by such insurance,  will not have a material adverse
         effect on the Company's consolidated financial position.

          The  Company  has  guaranteed   certain   obligations  of  its  equity
          investments and has established standby letters of credit to guarantee
          the bank obligations of Audiovox Communications Sdn. Bhd. and Audiovox
          Venezuela (Note 19(b)).

(22)     Subsequent Event

         The Company is  anticipating  selling  2,000,000  shares of its Class A
         Common Stock to the public  during the first quarter of fiscal 2000. In
         connection  with  this  offering,  the  Company  has  recorded  $600 in
         deferred  costs which have been included in prepaid  expenses and other
         assets on the accompanying  consolidated  balance sheet at November 30,
         1999.

                                       71



<PAGE>




I
tem 9 - Changes in and  Disagreements  with  Accountants on Accounting and
           Financial Disclosure

None


                                    PART III


Item 10 - Directors and Executive Officers of the Registrant

         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 February 28, 2000,  which will be
filed pursuant to Regulation 14A under the Securities  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.


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.


                                     PART IV


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

(a) (1)

The following are included in Item 8 of this Report:

Independent Auditors' Report

Consolidated  Balance  Sheets of Audiovox  Corporation  and  Subsidiaries  as of
November 30, 1998 and 1999.

Consolidated  Statements of Income of Audiovox  Corporation and Subsidiaries for
the Years Ended November 30, 1997, 1998 and 1999.

Consolidated  Statements of  Stockholders'  Equity of Audiovox  Corporation  and
Subsidiaries for the Years Ended November 30, 1997, 1998 and 1999.

                                       72



<PAGE>



Consolidated  Statements of Cash Flows of Audiovox  Corporation and Subsidiaries
for the Years Ended November 30, 1997, 1998 and 1999.

Notes to Consolidated Financial Statements.

(a) (2)

Financial Statement Schedules of the Registrant for the Years Ended November 30,
1997, 1998 and 1999.

Independent Auditors' Report on Financial Statement Schedules

   Schedule                                             Page
    Number      Description                            Number
    ------      -----------                            ------
      II        Valuation and Qualifying Accounts        81


All other financial  statement schedules not listed are omitted because they are
either not required or the information is otherwise included.

                                       73



<PAGE>











                          Independent Auditors' Report

The Board of Directors and Stockholders
   Audiovox Corporation:


Under the date of January  13,  2000 we  reported  on the  consolidated  balance
sheets of Audiovox  Corporation  and  subsidiaries  as of November  30, 1998 and
1999, and the related consolidated  statements of income,  stockholders' equity,
and cash flows for each of the years in the three-year period ended November 30,
1999,  which are included in the  Company's  1999 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 1999 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  financial  statement  schedule
based on our audits.

In our opinion,  such 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.

                                                            s/KPMG  LLP
                                                            -----------
                                                              KPMG  LLP



Melville, New York
January 13, 2000


                                       74



<PAGE>



(3)      Exhibits

         See Item 14(c) for Index of Exhibits.

(b)      Reports on Form 8-K

         During the fourth quarter, the Registrant filed one report on Form 8-K.
         The Form 8-K, dated July 28, 1999 and filed October 27, 1999,  reported
         that the  Company  had entered  into the Fourth  Amended  and  Restated
         Credit Agreement (the Amendment).

(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).

3.2                     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).

21                      Subsidiaries of the Registrant  (filed herewith).
23                      Independent Auditors' Consent  (filed herewith).
27                      Financial Data Schedule (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.

                                       75



<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 1, 2000                          BY:s/John J. Shalam
                                            ----------------
                                           John J. Shalam, President
                                            and Chief Executive Officer



                                       76



<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>

Signature                        Title                                      Date
                                 President;
                                 Chief Executive Officer

<S>                              <C>                                        <S>
s/John J. Shalam                 (Principal Executive Officer               February 1, 2000
------------------------------
John J. Shalam                    and Director
                                 Executive Vice President and

s/Philip Christopher             Director                                   February  1, 2000
------------------------------
Philip Christopher

                                 Senior Vice President,
                                 Chief Financial Officer (Principal
s/Charles M. Stoehr              Financial and Accounting                   February 1, 2000
------------------------------
Charles M. Stoehr                Officer) and Director

s/Patrick M. Lavelle             Director                                   February 1, 2000
------------------------------
Patrick M. Lavelle

s/Ann Boutcher                   Director                                   February 1, 2000
------------------------------
Ann Boutcher

s/Richard A. Maddia              Director                                   February 1, 2000
------------------------------
Richard A. Maddia

s/Paul C. Kreuch, Jr.            Director                                   February 1, 2000
------------------------------
Paul C. Kreuch, Jr.

s/Dennis McManus                 Director                                   February 1, 2000
------------------------------
Dennis McManus
</TABLE>


                                       77





                                                                     Schedule II

                      AUDIOVOX CORPORATION AND SUBSIDIARIES

                        Valuation and Qualifying Accounts

                  Years Ended November 30, 1997, 1998 and 1999
                                 (In thousands)


<TABLE>

                  Column A             Column B         Column C        Column D   Column E
                  --------             --------         --------        --------   --------

                                      Balance at Charged to  Charged                 Balance
                                      Beginning  Costs and   to Other                At End
                 Description           Of Year    Expenses   Accounts  Deductions   Of Year
                 -----------          ---------  ---------- ---------  ----------  --------
1997

<S>                                    <C>       <C>                   <C>         <C>    
Allowance for doubtful accounts        $ 3,115   $ 1,300       --      $    918    $ 3,497
Cash discount allowances                   314      --         --           125        189
Co-op advertising and volume
   rebate allowances                     6,977    12,283       --        13,588      5,672
Allowance for cellular deactivations     1,666      --         --           303      1,363
Reserve for warranties and product
   repair costs                          4,975     2,316       --         3,223      4,068
                                       -------   -------   --------    --------    -------
                                       $17,047   $15,899       --      $ 18,157    $14,789
                                       =======   =======   ========    ========    =======

1998

Allowance for doubtful accounts        $ 3,497   $   581       --      $  1,134    $ 2,944
Cash discount allowances                   189      --         --            19        170
Co-op advertising and volume
   rebate allowances                     5,672    12,129       --         9,664      8,137
Allowance for cellular deactivations     1,363      --         --           488        875
Reserve for warranties and product
   repair costs                          4,068     2,306       --         2,289      4,085
                                       -------   -------   --------    --------    -------
                                       $14,789   $15,016       --      $ 13,594    $16,211
                                       =======   =======   ========    ========    =======

1999

Allowance for doubtful accounts        $ 2,944   $ 3,342       --      $   (641)   $ 5,645
Cash discount allowances                   170        49       --          --          219
Co-op advertising and volume
   rebate allowances                     8,137    12,122       --        (9,122)    11,137
Allowance for cellular deactivations       875       386       --          --        1,261
Reserve for warranties and product
   repair costs                          4,085     4,486       --          (800)     7,771
                                       -------   -------   --------    --------    -------
                                       $16,211   $20,385       --      $(10,563)   $26,033
                                                      =======         =======        =======      =========        =======
</TABLE>




                                       78















                           SUBSIDIARIES OF REGISTRANT



                                                       Jurisdiction of
Subsidiaries                                           Incorporation

Audiovox Communications Corp.                          Delaware
Quintex Mobile Communications Corp.                    Delaware
American Radio Corp.                                   Georgia
Audiovox Holding Corp.                                 New York
Audiovox Canada Limited                                Ontario
Audiovox Communications (Malaysia) Sdn. Bhd.           Malaysia
Audiovox Holdings (M) Sdn. Bhd.                        Malaysia
Audiovox Venezuela C.A.                                Venezuela



                                   Exhibit 21




                          Independent Auditors' Consent





The Board of Directors
Audiovox Corporation:


We consent to  incorporation  by reference in the  registration  statements (No.
33-18119 and  33-65580) on Form S-8 and (No.  333-00811) on Form S-3 of Audiovox
Corporation and  subsidiaries of our report dated January 13, 2000,  relating to
the consolidated  balance sheets of Audiovox  Corporation and subsidiaries as of
November 30, 1998 and 1999, and the related  consolidated  statements of income,
stockholders' equity and cash flows for each of the years in the three-year
period ended November 30, 1999, and the related schedule,  which report appears
in the November 30, 1999 annual report on Form 10-K of Audiovox  Corporation and
subsidiaries.





                                              s/KPMG LLP
                                                KPMG LLP




Melville, New York
February 1, 2000

                                   Exhibit 23








<TABLE> <S> <C>
                                      
<ARTICLE>                                  5
<CIK>                                      0000807707
<NAME>                                     Audiovox Corporation
<MULTIPLIER>                               1000
                                            
<S>                                          <C>
<PERIOD-TYPE>                              12-Mos
<FISCAL-YEAR-END>                          Nov-30-1999
<PERIOD-END>                               Nov-30-1999
<CASH>                                                                 5,527
<SECURITIES>                                                               0
<RECEIVABLES>                                                        242,888
<ALLOWANCES>                                                           5,616
<INVENTORY>                                                          136,554
<CURRENT-ASSETS>                                                     404,295
<PP&E>                                                                29,553
<DEPRECIATION>                                                         9,924
<TOTAL-ASSETS>                                                       475,083
<CURRENT-LIABILITIES>                                                132,214
<BONDS>                                                                5,932
<PREFERRED-MANDATORY>                                                      0
<PREFERRED>                                                            2,500
<COMMON>                                                                 201
<OTHER-SE>                                                           214,043
<TOTAL-LIABILITY-AND-EQUITY>                                         475,083
<SALES>                                                            1,129,990
<TOTAL-REVENUES>                                                   1,159,537
<CGS>                                                              1,005,025
<TOTAL-COSTS>                                                      1,024,909
<OTHER-EXPENSES>                                                           0
<LOSS-PROVISION>                                                       3,255
<INTEREST-EXPENSE>                                                     4,712
<INCOME-PRETAX>                                                       42,723
<INCOME-TAX>                                                          15,477
<INCOME-CONTINUING>                                                   27,246
<DISCONTINUED>                                                             0
<EXTRAORDINARY>                                                            0
<CHANGES>                                                                  0
<NET-INCOME>                                                          27,246
<EPS-BASIC>                                                           1.43
<EPS-DILUTED>                                                           1.39
        

</TABLE>