UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549


                                   FORM 8-K/A
                                (Amendment No. 1)

                             CURRENT REPORT PURSUANT
                          TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934


Date of report (Date of earliest event reported):    July 8, 2003

                              AUDIOVOX CORPORATION
             (Exact Name of Registrant as Specified in Its Charter)


                                    DELAWARE
                 (State or Other Jurisdiction of Incorporation)

           0-28839                               13-1964841
    (Commission File Number)               (IRS Employer Identification No.)


         180 Marcus Boulevard, Hauppauge, New York                        11788
         (Address of Principal Executive Offices)                     (Zip Code)

                                 (631) 231-7750
              (Registrant's Telephone Number, Including Area Code)

                 150 Marcus Boulevard, Hauppauge, New York 11788
          (Former Name or Former Address, if Changed Since Last Report)

     Check the  appropriate  box below if the Form 8-K  filing  is  intended  to
simultaneously  satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):

     |_| Written  communications  pursuant to Rule 425 under the  Securities Act
(17 CFR 230.425)

     |_| Soliciting  material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)

     |_|  Pre-commencement  communications  pursuant to Rule 14d-2(b)  under the
Exchange Act (17 CFR 240.14d-2(b))

     |_|  Pre-commencement  communications  pursuant to Rule 13e-4(c)  under the
Exchange Act (17 CFR 240.13e- 4(c))


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Item 2. Acquisition or Disposition of Assets

     Pursuant  to  a  First  Amended  and  Restated  Stock  and  Asset  Purchase
Agreement,  dated as of June 2, 2003  (the  "Agreement"),  by and among  Recoton
Audio Corporation,  Recoton Home Audio, Inc., Recoton Mobile Electronics,  Inc.,
Recoton International  Holdings,  Inc. ("RIH"),  Recoton Corporation and Recoton
Canada Ltd.  (collectively,  the  "Sellers")  , JAX Assets Corp.  ("Buyer")  and
Audiovox  Corporation  ("Registrant"),  as guarantor,  on July 8, 2003, Buyer, a
wholly owned subsidiary of Registrant, closed on the acquisition of audio assets
of certain  Sellers  (the  "Assets")  and the shares of RIH (the  "Stock").  The
Assets  consist of the brand names  Jensen,  Accoustic  Research  and Advent and
substantially all of the audio inventory,  accounts  receivable and other assets
of certain Sellers.  The Stock consists of all the issued and outstanding shares
of RIH, the sole shareholder of Recoton German Holdings GmbH.

     Seller used the Assets in connection with its worldwide  audio  electronics
distribution  business  and  Registrant  intends to  continue  to use the Assets
substantially for the same purpose.

     There is no material relationship between Seller and Registrant, any of its
affiliates,  any  director or officer of  Registrant,  or any  associate  of any
director or officer.

     Registrant  purchased  the Assets and Stock from Sellers for  approximately
$40,000,000 (the "Cash Purchase  Price") subject to post-closing  adjustment for
inventory and accounts  receivable  balances.  In addition,  Registrant  assumed
$3,776,000  in debt  related to the  acquisition  of the Stock in RIH. The total
purchase  price was  partially  financed with  proceeds of  approximately  $12.8
million of long-term debt obtained by the Company  shortly after the acquisition
with the balance paid from available cash on hand.

Item 7. Financial Statements, Pro Forma Financial Information And Exhibits

     (a)  Financial Statements of Business Acquired

          The  historical  financial  statements of the audio  business group of
          Recoton  Corporation as of and for each of the years in the three year
          period ended December 31, 2002  (incorporated  by reference to Exhibit
          2.1 of  Audiovox  Corporation's  Current  Report on Form  8-K/A  filed
          September 22, 2003)

     (b)  Pro Forma Financial Information

          The pro forma balance sheet as of May 31, 2003 and proforma statements
          of  operations  for the six months ended May 31, 2003 and for the year
          ended November 30, 2002  (incorporated  by reference to Exhibit 2.1 of
          Audiovox  Corporation's  Current Report on Form 8-K/A filed  September
          22, 2003)

     (c)  Exhibits

          2.1  First  Amended and Restated  Stock and Asset  Purchase  Agreement
               made  and  entered  into  as of  June 2,  2003  (incorporated  by
               reference to Exhibit 2.1 of Audiovox Corporation's Current Report
               on Form 8-K filed July 23, 2003)

          99.1 Financial   Statements  of  Audio   Business   Group  of  Recoton
               Corporation

          99.2 Unaudited  Pro-Forma  Condensed Combined Financial  Statements of
               Audiovox Corporation and Audio Recoton




                                        2




                                   SIGNATURES

     Pursuant to the  requirements  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


                                           By:s/Charles M. Stoehr
                                              ----------------------------------
                                                 Charles M. Stoehr
                                                 Senior Vice President and
                                                 Chief Financial Officer


Dated: October 7, 2004


                                        3

               REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS




To the Board of Directors
  of Audiovox Corporation
Hauppauge,  New York


     We have  audited  the  accompanying  combined  balance  sheets of the AUDIO
BUSINESS GROUP OF RECOTON  CORPORATION ("The Group") as at December 31, 2001 and
2002 and the related  combined  statements of operations and cash flows for each
of the three  years in the  period  ended  December  31,  2002.  These  combined
financial  statements  are the  responsibility  of the Group's  management.  Our
responsibility is to express an opinion on these combined  financial  statements
based on our audits.

     We conducted our audits with the standards of the Public Company Accounting
Oversight  Board  (United  States).  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
the 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 combined financial statements referred to above present
fairly, in all material  respects,  the combined financial position of the Group
as at December 31, 2001 and 2002 and the results of its  operations and its cash
flows for each of the three  years in the  period  ended  December  31,  2002 in
conformity with accounting principles generally accepted in the United States.


                                      /s/ Cornick, Garber & Sandler, LLP
                                            Cornick, Garber & Sandler, LLP
                                           CERTIFIED PUBLIC ACCOUNTANTS

New York, New York
August 22, 2003


                                  Exhibit 99.1





                   Audio Business Group of Recoton Corporation

                             Combined Balance Sheet
                             (Dollars in thousands)




                                                                                    December 31,        June 30,
                                                                                 2001         2002        2003
                                                                                ------       ------      -----
                                                                                                       (unaudited)
                                   ASSETS
Current assets:
                                                                                            
       Cash and cash equivalents                                                $  1,915      2,758  $   2,223
       Accounts receivable (less allowance for doubtful accounts of
        $1,682 in 2001, $1,406 in 2002 and $5,436 in 2003)                        66,626     31,042     12,322
       Inventories                                                                50,801     25,365     21,858
       Prepaid expenses and other current assets                                   2,710      3,221      3,365
                                                                                --------    --------  --------
          Total current assets                                                   122,052     62,386     39,768

       Property and equipment, net                                                 2,465      3,100      2,830
       Trademarks and patents, net                                                 3,499      3,466      3,466
       Goodwill, net                                                              16,247       --         --
       Other                                                                       1,237        717        731
                                                                                --------    --------  --------
                                                                                $145,500   $ 69,669   $ 46,795
                                                                                ========   ========   ========
          Total assets

                                    LIABILITIES

   Current liabilities:
       Bank loans payable                                                                  $  7,865  $   3,776
       Accounts payable                                                         $ 22,769     18,250     18,558
       Accrued expenses                                                            3,666      3,491      2,223
                                                                                --------    --------  --------
          Total current liabilities                                               26,435     29,606     24,557

       Due to Recoton Corporation and its other subsidiaries - net                55,868      1,011       --
       Other liabilities                                                             119        231        244
                                                                                --------    --------  --------

              Total liabilities                                                   82,422     30,848     24,801
                                                                                --------    --------  --------

   Commitments and contingencies

                                   GROUP EQUITY
       Group equity                                                               63,078     38,821     41,078
       Less receivables from Recoton Corporation and its other subsidiaries         --         --      (19,084)
                                                                                --------    --------  --------

          Net group equity                                                        63,078     38,821     21,994
                                                                                --------    --------  --------

          Total liabilities and group equity                                    $145,500   $ 69,669   $ 46,795
                                                                                ========   ========   ========


See accompanying notes to the combined financial. Exhibit 99.1 Audio Business Group of Recoton Corporation Combined Statements of Operations (Dollars in thousands) Years Ended Six Months Ended December 31, June 30, ------------------------------- --------------------- 2000 2001 2002 2002 2003 ------ ------ ------ ------ ----- (Unaudited) Net sales $210,341 $207,944 $211,399 $112,800 $ 35,551 Cost of sales 147,372 142,912 161,064 80,044 35,047 ------------------------------- -------------------- Gross profit 62,969 65,032 50,335 32,756 504 Selling, general and administrative expenses 41,712 44,046 46,668 22,086 19,326 -------------------------------- -------------------- Operating income (loss) 21,257 20,986 3,667 10,670 (18,822) ------------------------------- -------------------- Other (income) expenses: Interest expense 2,764 2,854 2,645 1,340 628 Investment income (210) (693) (519) (9) - ------------------------------- -------------------- Net other expenses 2,554 2,161 2,126 1,331 628 ------------------------------- -------------------- Income (loss) from continuing operations before income taxes and cumulative effect of change in accounting principle 18,703 18,825 1,541 9,339 (19,450) Income tax provision (benefit) 7,434 7,455 787 3,582 (1,750) ------------------------------- -------------------- Income (loss) from continuing operations before cumulative effect of change in accounting principle 11,269 11,370 754 5,757 (17,700) (Loss) from discontinued operations, net of taxes (15) (396) (1,134) (304) - Cumulative effect of change in accounting principle - - (16,247) (16,247) - ------------------------------- -------------------- Net income (loss) $ 11,254 $ 10,974 $(16,627) $(10,794) $(17,700) =====================================================
See accompanying notes to the combined statements. Exhibit 99.1 Audio Business Group of Recoton Corporation Combined Statement of Cash Flows (Dollars in thousands) Years Ended Six Months Ended December 31, June 30, ------------------------------ ---------------------- 2000 2001 2002 2002 2003 ------ ------ ------ ------ ----- (Unaudited) Cash flows from operating activities: Net income (loss) $ 11,254 $ 10,974 $(16,627) $(10,794) $(17,700) --------------------------------------------------- Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Loss on impairment of goodwill - - 16,247 16,247 - Depreciation 1,785 1,266 1,571 553 787 Amortization on intangibles 827 823 - - - Provision for losses on accounts receivable 17 650 659 185 4,338 Deferred income taxes (37) (37) - - - Loss on sale of discontinued operation - - 474 - - Change in asset and liability accounts: Accounts receivable (1,384) (9,167) 37,722 (4,271) 15,841 Inventories (13,666) 3,037 26,479 1,390 4,787 Prepaid expenses and other current assets (421) 2,265 (357) (3,558) (80) Other assets 422 (637) 753 25 24 Accounts payable, accrued expenses and other liabilities (5,201) 7,229 (4,983) 8,523 (1,737) Net advances from (repayments to) Recoton Corporation and its other subsidiaries for operating activities 4,619 (15,435) (67,305) (6,009) (2,101) --------------------------------------------------- Total adjustments (13,039) (10,006) 11,260 13,085 21,859 --------------------------------------------------- Net cash provided by (used for) operating activities (1,785) 968 (5,367) 2,291 4,159 --------------------------------------------------- Cash flows from investing activities: Expenditures for property and equipment (415) (1,352) (2,043) (884) (262) Proceeds from sale of discontinued operation - - 795 - - --------------------------------------------------- Net cash flows provided by (used in) investing activities (415) (1,352) (1,248) (884) (262) --------------------------------------------------- Cash flows from financing activities: Net borrowings (repayments) under revolving credit agreements - - 7,073 - (4,648) --------------------------------------------------- Net cash flows provided by (used in) financing activities - - 7,073 - (4,648) --------------------------------------------------- Effect of exchange rate changes on cash and cash equivalents (423) (205) 385 354 216 --------------------------------------------------- Net increase (decrease) in cash and cash equivalents (2,623) (589) 843 1,761 (535) Cash and cash equivalents, beginning of period 5,127 2,504 1,915 1,915 2,758 --------------------------------------------------- Cash and cash equivalents, end of period $ 2,504 $ 1,915 $ 2,758 $ 3,676 $ 2,223 =================================================== Supplemental disclosures: Interest paid $ 333 $ 1,147 $ 1,305 $ 347 $ 687 =================================================== Income taxes paid (refunded) $ 2,139 $ 2,181 $ 612 $ (394) $ 468 ===================================================
See accompanying notes to the combined statements. Exhibit 99.1 AUDIO BUSINESS GROUP OF RECOTON CORPORATION NOTES TO COMBINED FINANCIAL STATEMENTS (INFORMATION AS AT JUNE 30, 2003 AND FOR THE SIX MONTH PERIODS ENDED JUNE 30, 2002 AND 2003 IS UNAUDITED) (DOLLARS IN THOUSANDS) Note A -Summary of Significant Accounting Policies Basis of Presentation - Description of Business On July 8, 2003, a wholly-owned subsidiary of Audiovox Corporation acquired the outstanding capital stock of the Italian, German and Japanese subsidiaries of Recoton Corporation ("Recoton") together with certain assets and business of certain of Recoton's subsidiaries, as follows: Recoton Audio Corporation Recoton Home Audio, Inc. Recoton Mobile Electronics, Inc. Since April 2003, Recoton was operating under Chapter XI of the Federal Bankruptcy Act. The attached financial statements combine the accounts of the above entities, which are collectively referred to as the Audio Business Group (the "Group"). For purposes of these financial statements, all expenses applicable to the operations and management of the Group, including allocated costs and expenses from Recoton's Shared Services Group, have been included. However, certain executive level costs of Recoton, which are duplicative of costs incurred at the subsidiary level and certain interest costs on debt not directly incurred by the Audio Business Group have not been allocated to it, as these costs either would not have existed if the Group operated on a stand-alone basis or the allocable portion of such costs is not reasonably determinable. The attached financial statements do, however, report a provision for U.S. and foreign income taxes on the stand-alone profits of the Group, while on a consolidated basis Recoton recorded no U.S. income tax expense as a result of consolidated losses for these periods. The individual accounts of the Group's "NHT" Division which was sold to a third party in 2002 have been reflected as a discontinued business operation. The Group is a developer and marketer of consumer home and mobile, audio and video products generally for aftermarket use. The Group's products are sold primarily to retailers located in the United States and Europe. In addition to its domestic facilities, the Group maintains office and warehouse facilities in Asia and Western Europe. Principles of Combination The combined financial statements include the accounts of the companies comprising the Group as described above. All significant intercompany accounts and transactions between members of the Group have been eliminated. Unaudited Interim Financial Statements The unaudited interim financial information reflects all normal recurring adjustments which, in the opinion of management, are deemed necessary for a fair presentation of the results for the interim periods. As a result of the bankruptcy filing of Recoton, results for the interim period ended June 30, 2003 are not considered indicative of the results to be expected for the year. Exhibit 99.1 (Continued) AUDIO BUSINESS GROUP OF RECOTON CORPORATION NOTES TO COMBINED FINANCIAL STATEMENTS (INFORMATION AS AT JUNE 30, 2003 AND FOR THE SIX MONTH PERIODS ENDED JUNE 30, 2002 AND 2003 IS UNAUDITED) (DOLLARS IN THOUSANDS) Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, operating results and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include inventory provision, sales returns, allowance for doubtful accounts, market development accruals and lives of long-lived assets. Actual results could differ from those estimates. Cash The Group's cash accounts in foreign banks, which comprise a substantial portion of the cash and cash equivalents on the balance sheets, are not insured by the FDIC. Inventories The Group's merchandise inventory is carried at the lower of cost or market on a first-in, first-out basis. The Group writes down inventory for estimated obsolescence or unmarketable inventory equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions. If actual conditions are less favorable than those projected by management, additional inventory write-downs may be required. Inventory write-downs for the year ended December 31, 2002 and the six months ended June 30, 2003 were affected by the decline in Recoton's business in the latter part of 2002 and its ultimate bankruptcy filing in 2003, which affected the sales value of inventory, including the resale value of returned merchandise. Such write-downs aggregated approximately $9,500 for the year ended December 31, 2002 and $5,600 for the six months ended June 30, 2003. Allowance for Doubtful Accounts The Group maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. If the financial condition of the Group's customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. Market Development Accruals The Group estimates expenses for customer programs and incentive offerings, including: special pricing agreements, price protection, promotions and other volume-based incentives. If market conditions were to decline, the Group takes actions to increase customer incentive offerings possibly resulting in an incremental expense at the time the incentive is offered. Exhibit 99.1 (Continued) AUDIO BUSINESS GROUP OF RECOTON CORPORATION NOTES TO COMBINED FINANCIAL STATEMENTS (INFORMATION AS AT JUNE 30, 2003 AND FOR THE SIX MONTH PERIODS ENDED JUNE 30, 2002 AND 2003 IS UNAUDITED) (DOLLARS IN THOUSANDS) Depreciation of Property and Equipment Depreciation is computed over the estimated useful lives of the assets on the straight-line method. Interest cost associated with financing of construction is capitalized. Computer Software Costs In accordance with the Statement of Position ("SOP") 98-1, "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use," the Group capitalizes costs of software developed for internal use. In 2002, the Group capitalized approximately $1,287 associated with the implementation of its new ERP system. Goodwill and Trademarks Effective January 1, 2002, Recoton adopted Statement of Financial Accounting Standards ("SFAS") No. 141, "Business Combinations," and SFAS No. 142, "Goodwill and Other Intangible Assets." The guidance in SFAS No. 141 supersedes APB Opinion No. 16, "Business Combinations." Upon adoption of SFAS No. 142, goodwill amortization ceased. Goodwill is now subject to fair-value based impairment tests performed, at a minimum, on an annual basis. In addition, a transitional goodwill impairment test was required as of the January 1, 2002 adoption date. These impairment tests are conducted on each business of the Group where goodwill is recorded and may require two steps. The initial step is designed to identify potential goodwill impairment by comparing an estimate of fair value for each applicable business to its respective carrying value. For those businesses where the carrying value exceeds fair value, a second step is performed to measure the amount of goodwill impairment in existence, if any. During the second quarter of 2002, Recoton completed the first step of the two-step transitional goodwill impairment test required by SFAS No. 142 and reported that it considered its goodwill to be impaired as of January 1, 2002. Based on the foregoing, the $16.2 million recorded value of the Group's goodwill was considered to be fully impaired as at January 1, 2002 and the impairment loss was recognized as a cumulative effect of change in accounting principle at that date. Trademarks were being amortized over a term of 40 years. However, as a result of the application of SFAS 142 they were considered to have an indefinite life and their amortization was discontinued as of January 1, 2002. The following income statement information is presented as if the Group stopped amortizing goodwill and trademarks as of January 1, 2000. Year Ended December 31, 2000 2001 Net income $11,254 $10,974 Goodwill and trademarks amortization, net of tax 744 769 ------- ------- Pro forma net income $11,998 $11,743 ======= =======
Exhibit 99.1 (Continued) AUDIO BUSINESS GROUP OF RECOTON CORPORATION NOTES TO COMBINED FINANCIAL STATEMENTS (INFORMATION AS AT JUNE 30, 2003 AND FOR THE SIX MONTH PERIODS ENDED JUNE 30, 2002 AND 2003 IS UNAUDITED) (DOLLARS IN THOUSANDS) Deferred Tax Valuation Allowance As a result of the consolidated operations of Recoton and its subsidiaries, the Group has recorded a valuation allowance for all of its deferred tax assets since January 1, 2000 as these assets will not be realized through future tax benefits. Translation of Foreign Financial Statements The assets and liabilities of the foreign companies in the Group are translated into United States dollars at rates of exchange as of the balance sheet dates. Operating accounts are translated at average rates of exchange during the year. Gains and losses on translation are included as a component of the Group's equity on the combined balance sheets. Such translation gains (losses) aggregated approximately ($1.9) million and $.7 million at December 31, 2001 and 2002 and ($.9) million at June 30, 2003. Fair Value of Financial Instruments As a result of the subsequent bankruptcy filing of Recoton in 2003, it is not practicable to determine whether the carrying value at December 31, 2001 and 2002 and June 30, 2003 of the Group's financial instruments approximate their fair values. Sales Recognition Revenue is recognized when products are shipped. The Group offers its customers rights of return and stock rotation rights. Due to these rights, the Group continuously monitors and tracks product returns and records a provision for the estimated future amount of such future returns, based on historical experience and any notification it receives of pending returns. Historically, such returns have been within the Group's expectations and the provisions established. However, in 2003 a significant decrease in product sales was experienced by the Group due to Recoton's bankruptcy filing and the loss of certain major customers and the resulting returns credits (approximately $8.5 million) which have been provided for at December 31, 2002 had a material adverse impact on its operating results for the period. Shipping and Handling Costs Shipping and handling costs include all direct costs to deliver inventory to customers. Such amounts, which are included in selling, general and administrative expenses in the statements of operations, aggregated approximately $6,345, $6,484 and $6,963 for the years ended December 31, 2000, 2001 and 2002, respectively, and $3,750 and $1,304 for the respective six month periods ended June 30, 2002 and 2003. Advertising Costs Advertising expenses are charged to operations at the time the advertising first takes place. Advertising expense charged to operations aggregated approximately $2,144, $1,789 and $1,863 for the years ended December 31, 2000, 2001 and 2002, respectively, and $834 and $181 for the respective six month periods ended June 30, 2002 and 2003. Exhibit 99.1 (Continued) AUDIO BUSINESS GROUP OF RECOTON CORPORATION NOTES TO COMBINED FINANCIAL STATEMENTS (INFORMATION AS AT JUNE 30, 2003 AND FOR THE SIX MONTH PERIODS ENDED JUNE 30, 2002 AND 2003 IS UNAUDITED) (DOLLARS IN THOUSANDS) Research and Development Research and development costs for new products aggregated approximately $1,390, $1,506 and $1,423 for the years ended December 31, 2000, 2001 and 2002, respectively, and $753 for the six months ended June 30, 2002. Comprehensive Income (Loss) and Group Equity Transactions with Recoton Comprehensive income or loss, representing the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources, includes all changes in equity except those resulting from investments by owners and distributions to owners. The Group's comprehensive income (loss) has been comprised of net income (loss) and foreign currency translation adjustments as follows: Six Months Ended Years Ended December 31, June 30, ------------------------ --------- 2000 2001 2002 2002 2003 -------- -------- -------- -------- -------- Net income (loss) $ 11,254 $ 10,974 $(16,627) $(10,794) $(17,700) Net change in cumulative foreign currency translation adjustments (116) (900) 2,601 1,253 (1,561) -------- -------- -------- -------- -------- Total comprehensive income (loss) $ 11,138 $ 10,074 $(14,026) $ (9,541) $(19,261) ======== ======== ======== ======== ========
The following reconciles the changes in Group equity in the attached combined financial statements: Six Months Years Ended December 31, Ended June 30, ------------------------------- -------------- 2000 2001 2002 2003 -------- -------- -------- -------- Balance - beginning of period $ 33,467 $ 50,294 $ 63,078 $ 38,821 Net change in cumulative foreign currency translation adjustment (116) (900) 2,601 (1,561) Net income (loss) 11,254 10,974 (16,627) (17,700) Less dividends to Recoton -- -- (16,169) -- Add contributions of intercompany loans to capital 5,689 2,710 5,938 21,518 -------- -------- -------- -------- Balance - end of period $ 50,294 $ 63,078 $ 38,821 $ 41,078 ======== ======== ======== ========
In addition, as a result of the then pending bankruptcy proceedings of Recoton, the net receivable from Recoton and its other subsidiaries at June 30, 2003 has been reflected as a reduction of Group equity on the combined balance sheet at that date. Exhibit 99.1 (Continued) AUDIO BUSINESS GROUP OF RECOTON CORPORATION NOTES TO COMBINED FINANCIAL STATEMENTS (INFORMATION AS AT JUNE 30, 2003 AND FOR THE SIX MONTH PERIODS ENDED JUNE 30, 2002 AND 2003 IS UNAUDITED) (DOLLARS IN THOUSANDS) Foreign Exchange Contracts Gains and losses on foreign exchange forward contracts that are designated as hedges are included in other liabilities or other receivables, respectively. Periodically, the Group has entered into various types of foreign currency agreements, but does not have any significant holding in, nor issue, financial instruments for trading and speculative purposes. The Group uses foreign exchange forward contracts to hedge risk of changes in foreign currency exchange rates associated with firm commitments of less than one year that are denominated in foreign currency. The forward exchange contracts have little credit risk as the counter-parties in each case are principally large banks with high credit ratings. Such fair values are determined by the Group based upon available market information and appropriate valuation methodologies and accordingly may not be indicative on the amounts the Group would realize in a current market exchange. Derivative Instruments and Hedging Activities During the first quarter of 2001, the Group adopted SFAS No. 133 and 138, "Accounting for Derivative Instruments and Hedging Activities." Implementation of SFAS 133 and SFAS 138 did not have a material impact on the Group's consolidated financial statements. Impairment or Disposal of Long-Lived Assets On January 1, 2002, the Group adopted SFAS No. 144, "Accounting for the Impairment or Disposal of Long- Lived Assets." SFAS 144 applies to all long-lived assets, including discontinued operations and develops one accounting model for long-lived assets to be disposed of by sale. SFAS 144 supersedes SFAS 121 and the accounting and reporting provisions of APB No. 30, "Reporting the Results of Operations, Reporting the Effects of Disposal of a Segment of a Business and Extraordinary, Unusual and Infrequently Occurring Events and Transactions" ("APB 30"), for the disposal of a segment of a business. In December 2002, the net assets and business of the Group's "NHT" division were sold for approximately $795, resulting in a loss of approximately $472. That loss together with the following net results of "NHT's" operations are reflected as discontinued operations in the attached statements of operations as follows: Six Months Years Ended December 31, Ended June 30, -------------------------------- -------------- 2000 2001 2002 2002 -------- -------- -------- --------- Sales $ 10,370 $ 8,751 $ 7,054 $ 4,164 ======== ======== ======== ======== Gross profit $ 3,788 $ 3,467 $ 2,813 $ 1,688 ======== ======== ======== ======== Net (loss) $ (15) $ (396) $ (661) $ (304) Loss on sale -- -- (472) -- -------- -------- -------- --------- Net loss from discontinued operations $ (15) $ (396) $ (1,133) $ (304) ======== ======== ======== ========
The net assets of the "NHT" division at December 31, 2001 were immaterial. Exhibit 99.1 (Continued) AUDIO BUSINESS GROUP OF RECOTON CORPORATION NOTES TO COMBINED FINANCIAL STATEMENTS (INFORMATION AS AT JUNE 30, 2003 AND FOR THE SIX MONTH PERIODS ENDED JUNE 30, 2002 AND 2003 IS UNAUDITED) (DOLLARS IN THOUSANDS) Vendor Incentives In November 2001, the Emerging Issues Task Force ("EITF") reached a consensus on EITF Issue 01-09, "Accounting for Consideration Given by a Vendor to a Customer or a Reseller of the Vendor's Products" ("EITF 01-09"), which is a codification of EITF 00-14, 00-22 and 01-09. This issue presumes that consideration from a vendor to a customer or reseller of the vendor's products to be a reduction of the selling prices of the vendor's products, unless the consideration relates to a separate identifiable benefit and the benefit's fair value can be established. Effective January 1, 2002, the Group adopted the provisions of EITF 01-09. The adoption of this pronouncement did not have a material impact to its financial position or results of operations. The majority of vendor consideration granted by the Group relates to sales incentives such as promotions, trade ads, volume-based incentives and co-op advertising agreements with the Group's retail customers. Based on the requirements of EITF 01-09, the Group has included all sales incentives as a reduction of sales and co-op advertising costs as a component of selling, general and administrative expenses for all periods presented. Total vendor sales incentives now characterized as reductions of revenue that previously would have been classified as selling, general and administrative costs were approximately $13,206, $8,561 and $12,075 for the years ended December 31, 2000, 2001 and 2002, respectively, and $3,338 and $3,591 for the respective six month periods ended June 30, 2002 and 2003. Note B -Inventories Inventories are summarized as follows: As of As of December 31, June 30, 2001 2002 2003 ------- ------- ------- Raw materials and work-in-process $ 4,270 $ 2,667 $ 1,516 Finished goods 34,006 20,027 18,685 Merchandise in transit 12,525 2,671 1,657 ------- ------- ------- Totals $50,801 $25,365 $21,858 ======= ======= =======
Exhibit 99.1 (Continued) AUDIO BUSINESS GROUP OF RECOTON CORPORATION NOTES TO COMBINED FINANCIAL STATEMENTS (INFORMATION AS AT JUNE 30, 2003 AND FOR THE SIX MONTH PERIODS ENDED JUNE 30, 2002 AND 2003 IS UNAUDITED) (DOLLARS IN THOUSANDS) Note C -Property and Equipment: Property and equipment are summarized as follows: Estimated As of As of Useful Life December 31, June 30, (Years) 2001 2002 2003 ------- ------- ------- ------------ Buildings, leaseholds and improvements $ 551 $ 400 $ 655 10 - 40 Machinery and equipment 2,806 2,357 2,434 3 - 10 Furniture, fixtures and office equipment 2,032 2,953 3,221 5 - 10 Tools and dies 2,879 3,350 3,482 2 - 10 ------- ------- ------- Totals 8,268 9,060 9,792 Less accumulated depreciation and amortization (5,803) (5,960) (6,962) ------- ------- ------- Balance $ 2,465 $ 3,100 $ 2,830 ======= ======= =======
The Group recorded $1,785, $1,266 and $1,571 of depreciation expense in the years ended December 31, 2000, 2001 and 2002, respectively, and $553 and $787 for the respective six month periods ended June 30, 2002 and 2003. Note D - Bank Loan Payable In October 2000, the Group's German companies entered into a 50 million Deutsche Mark annually renewable revolving credit facility (up to approximately $25.5 million with interest at 2.5% over European LIBOR (or a total of 5.55% at December 31, 2002). At December 31, 2002, the factoring facility supported a $16 million letter of credit issued in favor of a financial institution as security for Recoton's borrowings in the United States. Outstanding borrowings under this facility were $7.8 million as of December 31, 2002 and $3.7 million as of June 30, 2003. Substantially all of the assets of the Group have been pledged under the terms of either the above loan or loans of Recoton. Exhibit 99.1 (Continued) AUDIO BUSINESS GROUP OF RECOTON CORPORATION NOTES TO COMBINED FINANCIAL STATEMENTS (INFORMATION AS AT JUNE 30, 2003 AND FOR THE SIX MONTH PERIODS ENDED JUNE 30, 2002 AND 2003 IS UNAUDITED) (DOLLARS IN THOUSANDS) Note E -Income Taxes Income taxes applicable to income (loss) from continuing operations computed on the Group's stand-alone operations before cumulative effect of change in accounting principle, are comprised of the following: Six Months Ended Years Ended December 31, June 30, ------------------------ ------------------ 2000 2001 2002 2002 2003 ---- ---- ---- ---- ---- Currently payable (refundable) Federal $ 4,937 $ 4,639 $(1,192) $ 2,452 State and local 804 755 (194) 399 Foreign 1,730 2,098 2,173 729 $ (1,750) --------- --------- -------- --------- -------- Totals 7,471 7,492 787 3,580 (1,750) Deferred (37) (37) - - - --------- --------- -------- --------- -------- Net provision $ 7,434 $ 7,455 $ 787 $ 3,580 $ (1,750) ========= ========= ======== ========= =========
The following table reconciles statutory U.S. federal income taxes on the Group's income (loss) from continuing operations before income taxes and cumulative effect of change in accounting to the Group's actual income tax provision. Years Ended December 31, Six Months Ended June 30, -------------------------- -------------------------- 2000 2001 2002 2002 2003 ------ ------ ------ ------ ----- Rate Amount Rate Amount Rate Amount Rate Amount Rate Amount Statutory U.S. Federal income tax provision (benefit) 34.0% $6,359 34.0% $6,400 34.0% $524 34.0% $3,176 (34.0)% $(6,613) Effect of: State and local tax provision (benefit) (net of federal effect) 2.8 530 2.6 498 (8.3) (128) 2.8 263 - - Valuation allowances on the tax benefits of domestic losses - - - - - - - - 26.0 5,054 Difference between U.S. and foreign income tax rates on foreign earnings (losses) 1.9 364 2.0 376 25.5 392 1.3 122 (1.0) (191) Other items (net) 1.0 181 1.0 181 (0.2) (1) 0.2 19 - - ------------------------------------------------------------------------------------ Actual income tax provision (credits) 39.7% $7,434 39.6% $7,455 51.0% $787 38.3% $3,580 (9.0)% $(1,750) ==================================================================================
There was no income tax benefit attributable to the write-off of goodwill as of January 1, 2002. The principal temporary differences from which deferred tax assets and liabilities arise are primarily the allowance for estimated doubtful accounts and estimated sales returns, estimated warranty reserves, tax basis adjustments to inventory and the difference in basis and amortization periods of trademarks and package design costs. As at December 31, 2001 and 2002 and June 30, 2003, valuation allowances have been recorded equal to Exhibit 99.1 (Continued) AUDIO BUSINESS GROUP OF RECOTON CORPORATION NOTES TO COMBINED FINANCIAL STATEMENTS (INFORMATION AS AT JUNE 30, 2003 AND FOR THE SIX MONTH PERIODS ENDED JUNE 30, 2002 AND 2003 IS UNAUDITED) (DOLLARS IN THOUSANDS) the net deferred tax assets. Historically, the domestic companies in the Group filed consolidated tax returns with Recoton, which returns have reflected losses for several years. Therefore, it had been determined that it is more likely than not that these deferred tax assets will not be realized. Note F -Commitments and Contingencies Leases Aggregate minimum rental payments under the Group's long-term leases of premises at December 31, 2002, which expire at various dates through 2008 are as follows: Year ending December 31: 2003 $ 850 2004 836 2005 836 2006 828 2007 819 2008 205 ------- Total $4,374 ====== Rent expense was $1,658, $1,594 and $1,408 for the years ended December 31, 2000, 2001 and 2002, respectively, and $659 and $765 for the respective six month periods ended June 30, 2002 and 2003. Legal Proceedings At June 30, 2003, various suits and claims arising in the ordinary course of business are pending against the Group. Dispositions of these matters are not expected to materially affect the Group's consolidated financial position, cash flows or results of operations, either as a result of Recoton's bankruptcy filing or their settlement or adjudication. Note G -Concentrations In 2000, 2001 and 2002, sales to one customer represented approximately 32.7%, 33.6% and 32.6% of combined net sales. In each of the six month periods ended June 30, 2002 and 2003 sales to one customer represented 36.6% and 11.2% of combined net sales. The Group has sourced certain products from single suppliers. However, to lessen the risks of offshore manufacturing, the Group maintained substantial inventories of long-lead-time items and continually evaluated alternative supply sources. Exhibit 99.1 (Continued) AUDIO BUSINESS GROUP OF RECOTON CORPORATION NOTES TO COMBINED FINANCIAL STATEMENTS (INFORMATION AS AT JUNE 30, 2003 AND FOR THE SIX MONTH PERIODS ENDED JUNE 30, 2002 AND 2003 IS UNAUDITED) (DOLLARS IN THOUSANDS) Note H -Transactions with Recoton and Its Other Subsidiaries Transactions with Recoton and its other subsidiaries are as follows: Six Month December 31, Ended June 30, ------------------------ --------------- 2000 2001 2002 2002 2003 ------ ------ ------ ------ ----- Sales to Recoton and its other subsidiaries $2,871 $2,381 $4,143 $1,472 $ 470 Allocated operating costs and expenses from Recoton 7,356 7,508 8,398 4,526 1,894 Interest expense on intercompany borrowings 2,431 1,707 1,277 993 4
Exhibit 99.1 (Continued)
                UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

On July 8, 2003, a newly formed wholly-owned  subsidiary of Audiovox Corporation
(the Company) acquired for approximately  $41.8 million the outstanding  capital
stock of the Italian,  German and Japanese  subsidiaries of Recoton  Corporation
(Recoton)  together  with  certain  assets  and the  businesses  of  certain  of
Recoton's  United States  subsidiaries.  The Recoton  entities are  collectively
referred  to as  the  Audio  Business  Group  (the  Group).  As of the  date  of
acquisition  of the Group and since April  2003,  Recoton  was  operating  under
Chapter XI of the Federal Bankruptcy Code.

The Group is a developer  and  marketer of consumer  home and mobile,  audio and
video  products  generally for  aftermarket  use. The Group's  products are sold
primarily to retailers located in the United States and Europe.

The total purchase price was partially  financed with proceeds of  approximately
$12.8  million of  long-term  debt  obtained  by the Company  shortly  after the
acquisition with the balance paid from available cash on hand.

The  unaudited  pro  forma  combined  financial  statements  give  effect to the
acquisition of the Group under the purchase method of accounting.  The following
unaudited proforma condensed combined  statements of operations  information has
been prepared to illustrate the effects of the acquisition and related financing
had these  transactions  been  completed as of December 1, 2001.  The  following
unaudited  proforma  condensed  balance sheet information as of May 31, 2003 has
been prepared  assuming the  acquisition  had been  completed at that date.  The
proforma   adjustments   are  based  upon  available   information  and  certain
assumptions that Audiovox believes are reasonable under the circumstances.

The unaudited pro forma combined  financial  information  reflects a preliminary
allocation of the purchase price based on market valuations in process as at the
date of the  preparation of these  statements,  which  valuations are subject to
revision upon completion. It is therefore subject to revision upon determination
of the fair value of assets acquired and liabilities assumed.

The pro forma  periods  for the year  ended  November  30,  2002 and for the six
months  ended May 31,  2003 are the  Company's  historical  financial  reporting
periods.  Recoton and the Group have  historically  reported on a calendar  year
basis with equivalent interim quarterly basis reporting. The unaudited pro forma
financial statements combine the historical  consolidated amounts of the Company
at May 31,  2003  and for the six  months  then  ended  and for the  year  ended
November  30,  2002 with those of the Group as at June 30,  2003 and for the six
months ended June 30, 2003 and for the year ended December 31, 2002. The Company
believes  the  effect  of  the  difference  in  the  reporting  periods  is  not
significant to an understanding of the pro forma results of operations.

The  proforma   information,   while  helpful  in  illustrating   the  financial
characteristics of the combined company,  does not attempt to predict or suggest
future results.  The proforma  information also does not attempt to show how the
combined  company would  actually have performed had the companies been combined
as of December 1, 2001.  If the  companies  had  actually  been  combined at the
beginning of the periods  presented,  these companies and businesses  might have
performed differently.  You should not rely on proforma financial information as
an indication  of the results that would have been achieved if the  acquisitions
had  taken  place  earlier  or  the  future  results  that  the  companies  will
experience.

These unaudited proforma condensed combined financial  statements should be read
in  conjunction  with the historical  financial  statements of the Group and the
historical financial statements of Audiovox Corporation.



                                  Exhibit 99.2
                                        1





                              Audiovox Corporation
                   Unaudited Pro Forma Combined Balance Sheet
                                  May 31, 2003
                                 (In thousands)



                                                                                           Audio       Pro Forma
                                                                             Audiovox     Recoton     Adjustments     Pro Forma

                                                                                                       
Cash                                                                          $   24,122  $    2,223  $ (41,800)(1)   $        936
                                                                                                             (9)(1)
                                                                                                          3,600 (4)
                                                                                                         12,800 (2)
Accounts receivable, net                                                         160,735      12,322       (599)(3)        172,458
Inventory, net                                                                   172,684      21,858       (816)(3)        193,726
Receivable from vendor                                                            11,446           -          -             11,446
Assets held for sale                                                                   -           -      3,600 (3)              -
                                                                                                         (3,600)(4)
Prepaid and other current assets                                                  17,666       3,365       (140)(1)         20,891
                                                                              ----------------------------------------------------
      Total current assets                                                       386,653      39,768    (26,964)           399,457

Property, plant and equipment, net                                                15,616       2,830       (625)(1)         17,821
Excess cost over fair value of assets acquired and other intangible assets,
    net                                                                            7,512           -          -              7,512
Intangibles                                                                                    3,466      9,986 (1)          7,801
                                                                                                         (2,185)(3)
                                                                                                         (3,466)(1)
Equity investments                                                                11,665           -          -             11,665
Other assets                                                                       9,205         731          -              9,936
                                                                              ----------------------------------------------------
      Total assets                                                            $  430,651  $   46,795  $ (23,254)      $    454,192
                                                                              ====================================================

Accounts payable                                                              $   34,033  $   18,558  $ (13,787)(1)   $     38,804
Accrued expenses                                                                  34,628       2,223       (273)(1)         36,578
Accrued sales incentives                                                           8,245           -          -              8,245
Income taxes payable                                                              10,099           -          -             10,099
Bank obligations                                                                   3,245       3,776          -              7,021
                                                                              ----------------------------------------------------
      Total current liabilities                                                   90,250      24,557    (14,060)           100,747

Other                                                                                  -         244          -                244
Long-term debt                                                                     8,132           -     12,800 (2)         20,932
Capital lease obligation                                                           6,111           -          -              6,111
Deferred income taxes payable                                                      1,983           -          -              1,983
Deferred compensation                                                              4,293           -          -              4,293
                                                                              ----------------------------------------------------
      Total liabilities                                                          110,769      24,801     (1,260)           134,310
                                                                              ----------------------------------------------------

Minority interest                                                                  5,359           -          -              5,359

Stockholders' equity                                                             314,523      21,994    (21,994)(1)        314,523
                                                                              ----------------------------------------------------
      Total equity                                                               314,523      21,994    (21,994)           314,523
                                                                              ----------------------------------------------------
      Total liabilities and equity                                            $  430,651  $   46,795  $ (23,254)       $   454,192
                                                                              ====================================================



See the accompanying notes to the unaudited pro forma combined financial statements.
Exhibit 99.2 2 Audiovox Corporation Unaudited Pro Forma Combined Statement of Income Six Months Ended May 31, 2003 (In thousands, except per share amounts) Audio Pro Forma Audiovox Recoton Adjustments Pro Forma Net sales $ 597,828 $ 35,551 $ (932)(5) $ 632,447 Cost of sales 546,748 35,047 (654)(5) 581,141 -------------------------------------------------------- Gross profit 51,080 504 (278) 51,306 Selling, general, administrative, warehouse and technical support expenses 43,565 19,326 93 (6) 62,984 -------------------------------------------------------- Operating income (loss) 7,515 (18,822) (371) (11,678) Interest 4 (7) (353)(8) (2,118) (628) (145)(9) (3,240) Other Income (expense) 587 - - 587 -------------------------------------------------------- Income (loss) from continuing operations before provision for (recovery of) income taxes and minority interest 5,984 (19,450) (865) (14,331) Provision for (recovery of) income taxes 1,958 (1,750) (5,537)(10) (5,329) Minority interest (743) - - (743) -------------------------------------------------------- Net income (loss) $ 3,283 $ (17,700) $ 4,672 $ (9,745) ======================================================== Net income (loss) per common share - basic $ 0.15 $ (0.45) =========== =========== Net income (loss) per common share - diluted $ 0.15 $ (0.45) =========== =========== Weighted average number of common shares outstanding: Basic 21,834,099 21,834,099 =========== =========== Diluted 21,949,521 21,834,099 =========== =========== See the accompanying notes to the unaudited pro forma combined financial statements.
Exhibit 99.2 3 Audiovox Corporation Unaudited Pro Forma Combined Statement of Income ForThe Twelve Months Ended November 30, 2002 (In thousands, except per share amounts) Audio Pro Forma Audiovox Recoton Adjustments Pro Forma Net sales $1,100,382 $211,399 $ (6,569)(5) $1,305,212 Cost of sales 1,025,783 161,064 (4,275)(5) 1,182,572 ------------------------------------------------------ Gross profit 74,599 50,335 (2,294) 122,640 Selling, general, administrative, warehouse and technical support expenses 88,675 46,668 378 (6) 135,721 ------------------------------------------------------ Operating income (loss) (14,076) 3,667 (2,672) (13,081) Gain on issuance of subsidiary's shares 14,269 - - 14,269 Interest (4,219) (2,645) 1,277(7) (6,583) (706)(8) (290)(9) Other Income (expense) (2,377) 519 - (1,858) ------------------------------------------------------ Income (loss) from operations before provision for (recovery of) income taxes, minority interest (6,403) 1,541 (2,391) (7,253) Provision for (recovery of) income taxes 12,932 787 (932)(10) 12,787 Minority interest 5,055 - - 5,055 ------------------------------------------------------ Income (loss) from continuing operations $ (14,280) $ 754 $ (1,459) $ (14,985) ====================================================== Loss from continuing operations per common share - basic $ (0.65) $ (0.69) =========== ========== Loss from continuing operations per common share - diluted $ (0.65) $ (0.69) =========== ========== Weighted average number of common shares outstanding: Basic 21,850,035 21,850,035 ========== ========== Diluted 21,850,035 21,850,035 =========== ========== See the accompanying notes to the unaudited pro forma combined financial statements.
Exhibit 99.2 4 Audiovox Corporation Notes to Unaudited Pro Forma Combined Financial Statements For The Year Ended November 30, 2002 and Six Month Period Ended May 31, 2003 (In thousands, except per share amounts) NOTE 1 - Group Pro Forma Adjustments 1. Represents the adjustment to record the acquisition of certain United States subsidiaries of the Audio Business Group of Recoton Corporation and the stock of its Italian, Germa and Japanese subsidiaries (the Group) by adjusting their historical values of certain assets and liabilities which were not acquired and recording assets and liabilities acquired at their preliminary estimated fair values. The acquisition cost is approximately $41.8 million in cash, including estimated transaction costs of $1.5 million. We have allocated the purchase price to acquire assets and liabilities based on a preliminary valuation in accordance with the purchase method of accounting. The excess of the estimated purchase price over the fair valu of assets and liabilities acquired of $9,986,000 has been preliminarily allocated to trademarks, with an indefinite useful life. The actual allocation of purchase price to assets and liabilities acquired will b dependent upon the final valuation study. The acquisition is assumed to be funded with bank loan proceeds of $12.8 million, cash on hand and cash obtained in the acquisition an cash obtained from the sale of the Group's marine products division as noted below. 2. Represents the partial financing of the purchas price with bank debt of approximately $12.8 million (euro $11.9 million) 3. Represents the classification of accounts receivable, inventory and trademark attributabl to the marine products division of the Group as assets held for sale based upon their estimated fair values. The sale of the marine division assets is required since the Company is precluded from selling marine products as a result of its joint venture agreement with Audiovox Specialized Applications, Inc. (ASA), an equity investee of the Company. 4. Represents the sale of the marine division assets and liabilities of the Group classified as assets held for sale to ASA for $3.6 million. 5. Elimination of sales and cost of sales of the marine products division as a result of its sal to ASA. 6. Represents additional compensation expense related to compensation agreements entered into with management of the German subsidiary of the Group. 7. Represents the elimination of the Group's historical allocated interest expense. 8. Represents the pro forma interest expense from the beginning of the period on the bank loan utilized to partially fund the acquisition of the Group utilizing an interest rate of 5.5%. 9. Elimination of interest income related to cash utilized to partially fund the acquisition of the Group. 10. Represents the income tax benefit of the proforma adjustments for the twelve months ende November 30, 2002 and six months ended May 31, 2003 and the tax benefit resultin from the combined operations for the six months ended May 31, 2003. Exhibit 99.2 5