UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the Quarterly Period Ended ~~December~~June 3130, ~~2003~~2004

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

For the transition period from to

Commission File Number 0-26924

AMX CORPORATION

(Exact name of registrant as specified in its charter)


Texas		75-1815822
(State of Incorporation)		(I.R.S. Employer Identification No.)

3000 Research Drive Richardson, Texas		75082
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (800) 222-0193

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

Common Stock, $0.01 Par Value		11,~~570~~869,~~184~~958
(Title of Each Class)		(Number of Shares Outstanding at ~~January~~July 31, 2004)

AMX CORPORATION

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED ~~DECEMBER~~JUNE 3130, ~~2003~~2004

INDEX

		Page Number
Part I.	Financial Information (Unaudited)
Item 1.	Consolidated Balance Sheets at ~~December~~June 3130, ~~2003~~2004 and March 31, ~~2003~~2004	3
	Consolidated Statements of Operations for the Three and Nine Months Ended December 31, 2003 and 2002	4
	Consolidated Statements of Operations for the Three Months Ended June 30, 2004 and 2003	4
	Consolidated Statements of Cash Flows for the Nine Months Ended December 31, 2003 and 2002	5
	Consolidated Statements of Cash Flows for the Three Months ended June 30, 2004 and 2003	5
	Notes to Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	9
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	14
Item 4.	Controls and Procedures	1514
Part II.	Other Information
Item 5.	Other Information	16
Item 6.	Exhibits and Reports on Form 8-K	15
Item 6.	Exhibits and Reports on Form 8-K	16
	Signatures	16
	Signatures	17

AMX CORPORATION

CONSOLIDATED BALANCE SHEETS

	(Unaudited)December 31,2003			(Note 1)March 31,2003
	(Unaudited)			(Note 1)
	June 30,2004			March 31,2004
ASSETS
Current assets:
Cash and cash equivalents	$	812,~~235~~082,~~253~~355		$	49,~~960~~382,~~700~~193
Receivables, less allowance for doubtful accounts of $721,000 at December 31, 2003 and $983,000 at March 31, 2003		10,745,936			9,820,272
Receivables, less allowance for doubtful accounts of $726,000 at June 30, 2004 and $712,000 at March 31, 2004		13,062,531			11,191,289
Inventories		7,~~076~~098,~~241~~931			7,~~274~~328,~~059~~173
Prepaid expenses		1,~~301~~476,~~964~~995			~~981~~933,~~874~~349
Other current assets		~~217~~277,~~830~~683			~~252~~149,~~491~~868
Total current assets		2733,~~577~~998,~~224~~495			2328,~~289~~984,~~396~~872
Furniture and equipment, at cost, net		6,~~782~~553,~~720~~915			6,~~899~~995,~~187~~467
Deposits and other		~~907~~910,~~237~~244			~~291~~944,~~447~~901
Total assets	$	3541,~~267~~462,~~181~~654		$	3036,~~480~~925,~~030~~240
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Line of credit	$	1,500,000		$	3,000,000
Accounts payable	$	5,162,844		$	4,869,085
Accounts payable		3,889,205			3,167,108
Accrued compensation		1,856,604			2,466,911
Accrued compensation		2,303,976			1,549,503
Other accrued expenses		4,072,049			3,279,898
Other accrued expenses		3,474,836			2,486,833
Total current liabilities		11,091,497			10,615,894
Current portion of long-term debt		255,363			766,088
Other long-term liabilities		286,791			268,087
Total current liabilities		11,423,380			10,969,532
Long-term debt, less current portion		—			255,363
Other long-term liabilities		249,383			199,842
Commitments and contingencies
Shareholders’ equity:
Preferred stock, $0.01 par value:
Authorized shares - 10,000,000
Issued shares – none		—			—
Common stock, $0.01 par value:
Authorized shares — 40,000,000
Issued shares — 11,979,862 at December 31, 2003 and 11,699,334 at March 31, 2003		119,798			116,993
Issued shares — 12,333,453 at June 30, 2004 and 12,093,839 at March 31, 2004		123,334			120,938
Additional capital		2527,~~024~~392,~~651~~762			2425,~~406~~370,~~702~~893
Deferred compensation		(~~128~~1,~~666~~778,716	)		—(104,541	)
Retained earnings (accumulated deficit)		3,046,919			(1,000,118	)
Retained earnings		8,815,270			5,122,253
Less treasury stock (496,476 shares at December 31, 2003 and March 31, 2003)		(4,468,284	)		(4,468,284	)
Less treasury stock (496,476 shares at June 30, 2004 and March 31, 2004)		(4,468,284	)		(4,468,284	)
Total shareholders’ equity		2330,~~594~~084,~~418~~366			1926,~~055~~041,~~293~~259
Total liabilities and shareholders’ equity	$	3541,~~267~~462,~~181~~654		$	3036,~~480~~925,~~030~~240

See accompanying notes.

AMX CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

	(Unaudited)Three Months EndedDecember 31,						(Unaudited)Nine Months EndedDecember 31,
	(Unaudited)
	2003			2002			2003			2002
	Three Months Ended June 30,
Commercial system sales	$	18,284,924		$	17,472,044		$	54,622,843		$	55,066,558
	2004			2003
Residential system sales		3,090,523			2,795,678			8,356,573			7,622,849
Commercial system sales	$	21,281,615		$	16,691,374
Total sales		21,375,447			20,267,722			62,979,416			62,689,407
Residential system sales		4,287,010			2,631,055
Cost of sales		10,018,931			10,152,669			29,343,033			30,951,756
Net sales		25,568,625			19,322,429
Gross profit		11,356,516			10,115,053			33,636,383			31,737,651
Cost of sales		11,245,010			8,960,817
Selling and marketing expenses		5,739,972			5,180,153			16,490,923			15,950,295
Gross profit		14,323,615			10,361,612
Research and development expenses		2,516,061			2,460,789			7,826,626			6,851,638
Selling and marketing expenses		5,968,783			5,099,554
General and administrative expenses		1,823,607			1,988,450			5,390,248			6,196,406
Research and development expenses		2,544,262			2,550,139
Total operating expenses		10,079,640			9,629,392			29,707,797			28,998,339
General and administrative expenses		1,916,840			1,814,220
Operating income		1,276,876			485,661			3,928,586			2,739,312
Total operating expenses		10,429,885			9,463,913
Interest expense		(12,731	)		(89,158	)		(84,695	)		(331,861	)
Operating income		3,893,730			897,699
Other income (expense), net		210,257			5,127			332,484			13,924
Interest expense		(10,424	)		(42,973	)
Income before income taxes		1,474,402			401,630			4,176,375			2,421,375
Other income (expense), net		(15,284	)		88,817
Income tax expense		34,035			16,278			129,338			227,660
Income before income taxes		3,868,022			943,543
Net income	$	1,440,367		$	385,352		$	4,047,037		$	2,193,715
Income tax expense		175,005			11,982
Basic income per share	$	0.13		$	0.03		$	0.36		$	0.20
Net income	$	3,693,017		$	931,561
Diluted income per share	$	0.12		$	0.03		$	0.34		$	0.20
Basic net income per share	$	0.32		$	0.08
Diluted net income per share	$	0.29		$	0.08

See accompanying notes.

AMX CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

	(Unaudited)Nine Months Ended December 31,
	(Unaudited)
	2003			2002
	Three Months Ended June 30,
	2004			2003
Operating Activities
Net income	$	43,~~047~~693,~~037~~017		$	2931,~~193,715~~561
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		1771,~~996,850~~773			2663,~~285,014~~276
Stock based compensation charge		~~257~~178,~~334~~515			—209,083
Provision for losses on receivables		292,434			376,378
Amortization		36,567			—
Provision for inventory obsolescence		216,451			634,866
Provision for losses on receivables		58,900			131,719
Gain on sale of assets		(9,607	)		—
Provision for inventory obsolescence		34,542			130,023
Changes in operating assets and liabilities:
Receivables		(1,~~218~~930,~~098~~142	)		366,~~562,021~~392
Inventories		~~(18~~194,~~633~~700	)		1(471,~~314,787~~914	)
Prepaid expenses and other assets		(~~952~~673,~~151~~371	)		(~~419~~157,~~813~~074	)
Accounts payable		~~722~~293,~~097~~759			(31,~~192~~387,~~758~~295	)
Accrued expenses		141,~~770,867~~814			~~196~~(126,~~409~~969	)
Income taxes		72158,~~082~~734			1(113,~~555,958~~859	)
Net cash provided by operating activities		72,~~176~~858,~~663~~808			82,~~506~~649,~~577~~533
Investing Activities
Purchase of property and equipment		(1330,~~880,383~~221	)		(1441,~~526,163~~192	)
Proceeds from the sale of assets		9,607			—
Net cash used in investing activities		(330,221	)		(441,192	)
Net cash used in investing activities		(1,870,776	)		(1,526,163	)
Financing Activities
Sale of common stock – net proceeds, and exercises of stock options		234,754			75,992
Sales of common stock–net proceeds, and exercises of stock options		171,575			—
Decrease in line of credit		~~(1,500,000~~—	)		(3750,~~600,~~000	)
Repayments of long-term debt		~~(766,088~~—	)		(~~758~~255,~~150~~363	)
Net cash used in financing activities		(2,031,334	)		(4,282,158	)
Net cash provided by (used in) financing activities		171,575			(1,005,363	)
Net increase in cash and cash equivalents		32,~~274~~700,~~553~~162			21,~~698~~202,~~256~~978
Cash and cash equivalents at beginning of period		49,~~960~~382,~~700~~193			14,~~245~~960,~~452~~700
Cash and cash equivalents at end of period	$	812,~~235~~082,~~253~~355		$	36,~~943~~163,~~708~~678

See accompanying notes.

AMX CORPORATION

Notes to Consolidated Financial Statements

1.	Basis of Presentation

The accompanying consolidated financial statements, which should be read in conjunction with the consolidated financial statements and footnotes thereto included in the AMX Corporation (“AMX” or the “Company”) Annual Report on Form 10-K for the fiscal year ended March 31, ~~2003~~2004, are unaudited (except for the March 31, ~~2003~~2004 consolidated balance sheet, which was derived from the Company’s audited financial statements), but have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. Certain prior period amounts have been reclassified to conform to the current year presentation.

Operating results for the three ~~and nine~~ months ended ~~December~~June 3130, ~~2003~~2004 are not necessarily indicative of the results that may be expected for the entire fiscal year ending March 31, ~~2004~~2005.

2.	Net Income Per Common Share, Including Pro Forma Effects of Stock-Based Compensation

The Company accounts for stock-based compensation utilizing the provisions of Accounting Principles Board Opinion (APB) No. 25, Accounting for Stock Issued to Employees, and related interpretations. The Company accounts for stock-based compensation for non-employees under the fair value method prescribed by Statement of Financial Accounting Standards (SFAS) No. 123, Accounting for Stock-Based Compensation.

The following table sets forth the computation of basic and diluted net income per share for the ~~quarter~~quarters ~~and nine months~~ ended ~~December~~June 3130, ~~2003~~2004 and ~~2002~~2003, and illustrates the effect on net income and net income per share if the Company had applied the fair value ~~recognition~~ recognition provisions of SFAS No. 123:

	Three Months EndedDecember 31,						Nine Months EndedDecember 31,
	(Unaudited)
	2003			2002			2003			2002
	Three Months Ended June 30,
Numerator:
	2004			2003
Net income as reported	$	1,440,367		$	385,352		$	4,047,037		$	2,193,715
Numerator:
Add: Total stock-based compensation expense included in reported net income		24,126			—			257,334			—
Net income as reported	$	3,693,017		$	931,561
Deduct: Total stock-based compensation determined under fair value method for all awards		(324,818	)		(318,923	)		(1,422,946	)		(1,196,415	)
Add: Total stock-based compensation expense included in reported net income		178,515			209,083
Net income – pro forma	$	1,139,675		$	66,429		$	2,881,425		$	997,300
Deduct: Total stock-based compensation determined under fair value method for all awards		(472,504	)		(518,925	)
Denominator:
Net income – pro forma	$	3,399,028		$	621,719
Denominator for basic net income per share: Weighted-average shares outstanding		11,371,113			11,141,213			11,335,269			11,120,335
Denominator:
Effect of dilutive securities:
Denominator for basic net income per share – Weighted-average shares outstanding		11,557,974			11,279,781
Employee stock options and restricted stock		922,402			53,704			659,017			13,193
Effect of dilutive securities:
Denominator for diluted net income per share		12,293,515			11,194,917			11,994,286			11,133,528
Employee stock options and restricted stock		1,262,023			39,443
Basic net income per share – as reported	$	0.13		$	0.03		$	0.36		$	0.20
Denominator for diluted net income per share		12,819,997			11,319,224
Diluted net income per share – as reported	$	0.12		$	0.03		$	0.34		$	0.20
Basic net income per share – as reported	$	0.32		$	0.08
Basic net income per share – pro forma	$	0.10		$	0.01		$	0.25		$	0.09
Diluted net income per share – as reported	$	0.29		$	0.08
Diluted net income per share – pro forma	$	0.09		$	0.01		$	0.24		$	0.09
Basic net income per share – pro forma	$	0.29		$	0.06
Diluted net income per share – pro forma	$	0.27		$	0.05

Of the total stock options outstanding, ~~329~~138,~~516~~584 and 1,~~042~~546,~~575~~032 shares were excluded from the computation ~~of diluted income~~ ~~per share for the quarters ended December 31, 2003 and 2002, respectively, and 505,896 and 1,650,575 shares were excluded from the computation~~ of diluted income per share for the ~~nine~~quarters ~~months~~ ended ~~December~~June 3130, ~~2003~~2004 and ~~2002~~2003, respectively, because the option exercise price was greater than the average market price of the common shares for the period, and therefore the effect would have been anti-dilutive.

3.	Inventories

The components of inventories are as follows:

	December 31,2003		March 31, 2003
	(Unaudited)
Raw materials	$	1,492,996	$	1,921,445
	June 30, 2004		March 31, 2004
Work in progress		266,711		310,910
Raw materials	$	1,022,787	$	1,334,743
Finished goods		5,316,534		5,041,704
Work in progress		130,328		479,557
Total	$	7,076,241	$	7,274,059
Finished goods		5,945,816		5,513,873
Total	$	7,098,931	$	7,328,173

4. ~~Debt~~Line of Credit

The Company has a revolving line of credit with Bank One, N.A. (“Bank One”). The line of credit provides for borrowings of up to $10 million subject to ~~certain~~ borrowing base limitations. As of June 30, 2004, there were no outstanding borrowings under the revolving line of credit. The line of credit provides for interest at varying rates based on the Company’s choice of the prime lending rate or the London Inter-Bank Offered Rate. The line of credit is collateralized by receivables, inventory, intellectual property, and the net assets of the Company’s wholly-owned U.K. subsidiary. AtAvailable ~~December~~future ~~31,~~borrowings ~~2003, $1.5 million was outstanding~~ under the ~~revolving~~ ~~line~~facility’s ofborrowing ~~credit~~base ~~agreement~~limits ~~and~~amounted to $~~8.4~~10 million ~~was~~as ~~available~~of ~~for~~June ~~future~~30, ~~borrowings under the facility’s borrowing base limits~~2004. This revolving line of credit expires on September 29, 2004. The Company anticipates that the revolving line of credit will be renewed upon maturity with similar terms and conditions. The Company also has an unsecured term note with Bank One. The term note provides for quarterly payments of principal and interest through April 30, 2004 and has an outstanding principal balance of approximately $0.3 million as of December 31, 2003. Based on prevailing market rates, the carrying value of the Company’s short and long term debt approximates market. The line of credit ~~and~~contains ~~the term note contain~~ various restrictive and financial covenants. The Company is in compliance with each of these covenants as of ~~December~~June 3130, ~~2003~~2004.

5.	Income Taxes

During fiscal years 2001 and 2002, the Company recorded valuation allowances against its deferred tax assets, the effect of which was to fully reserve for the Company’s deferred tax assets as of the second fiscal quarter of ~~fiscal~~ 2002. Accordingly, the Company does not currently record a significant tax provision or benefit on its U.S. operations. As the Company incurs domestic tax expense or benefit, an offsetting decrease or increase is recorded to the valuation allowance. The Company ~~will~~assesses ~~assess~~ the realizability of its deferred tax assets on an ongoing basis and will eliminate the valuation allowance when warranted based on sustained ~~profitable~~ profitable operating results. The ~~Company has recorded a~~ tax provision of ~~$34,000~~approximately ~~and~~ $~~129~~175,000 recorded for the quarter ~~and~~represents ~~nine~~federal ~~months~~alternative ~~ended~~minimum ~~December 31~~taxes, ~~2003,~~state ~~respectively~~taxes, ~~which principally represents domestic alternative minimum tax~~ and foreign taxes on the Company’s U.K. subsidiary.

6.	Purchase Commitments with Contract Manufacturers and Suppliers

The Company uses several contract manufacturers and suppliers to provide raw materials and manufacturing services for its products. During the normal course of business, the Company enters into agreements with contract manufacturers and suppliers that allow them to procure material based upon estimated material usage requirements and forecasted demand for the Company’s products. As of June 30, 2004, the Company has outstanding purchase commitments of approximately $16.8 million, compared with $16.4 million as of March 31, 2004. The Company has entered into certain purchase agreements relating to inventory items that are currently classified by the Company as either slow moving or obsolete inventory. The Company

6. anticipates ~~Purchase~~incurring ~~Commitments~~cancellation or restocking charges associated with ~~Contract~~these ~~Manufacturers~~purchase agreements and ~~Suppliers~~has a reserve of approximately $135,000 for such anticipated restocking charges.

~~The Company uses several contract manufacturers and suppliers to provide raw materials and manufacturing services for its products~~7. ~~During~~Restricted ~~the~~Stock normal course of business, the Company enters into agreements with contract manufacturers and suppliers that allow them to procure material based upon estimated material usage requirements and forecasted demand for our products. As of December 31, 2003, the Company has outstanding purchase commitments of approximately $13.3 million, compared with $12.9 million as of March 31, 2003. The Company has entered into certain purchase agreements relating to inventory items that are currently classified by the Company as either slow moving or obsolete inventory. The Company anticipates incurring cancellation or restocking charges associated with these purchase agreements and has a reserve of approximately $150,000 for such anticipated restocking charges. Awards

7On April 22, 2003, the Compensation Committee of the Board of Directors of the Company awarded 200,000 shares of restricted stock to key officers pursuant to the 1999 Equity Incentive Plan (the “2003 Award”). ~~Restricted~~The ~~Stock~~2003 Award vested as follows: 50% on the date of grant, 25% on April 22, 2004, and 25% on April 22, 2005. The market value of the 2003 Award was $1.93 per share. On April 1, 2004, the Compensation Committee of the Board of Directors of the Company awarded an additional 199,000 shares of restricted stock to key officers pursuant to the 1999 Equity Incentive Plan (the “2004 Award”). The 2004 Award vests 100% on April 1, 2007. The market value of the restricted stock was $9.31 per share. The deferred compensation for each of the restricted stock awards is being recognized as compensation expense ratably over the vesting term of each award. As a result of the restricted stock awards, the Company recognized stock compensation charges of approximately $179,000 and $209,000 in the quarters ended June 30, 2004 and 2003, respectively.

On April 22, 2003, the Compensation Committee of the Company awarded 200,000 shares of restricted stock to key officers pursuant to the 1999 Equity Incentive Plan. The restricted stock awards vest as follows: 50% immediately upon grant, 25% on April 22, 2004, and 25% on April 22, 2005. The market value of the restricted stock was $1.93 per share. Through December 31, 2003, the Company has recorded approximately $257,000 of stock compensation charges related to this grant of restricted shares. The remaining deferred compensation balance as of December 31, 2003 of $129,000 will be recognized as compensation expense ratably over the remaining vesting term.

8.	Contingencies

The Company is party from time to time to ordinary litigation incidental to its business, none of which is expected to have a material adverse effect on the results of operations, financial position or liquidity of the Company.

9.	Related Party Transactions

A close relative of an executive officer of the Company owns one of the Company’s international distributors. During the quarter ended June 30, 2004, the Company recorded revenue of approximately $0.7 million from this distributor, and had an accounts receivable balance from this distributor of approximately $0.7 million as of June 30, 2004, a portion of which is secured by a letter of credit. The terms and conditions extended to this distributor are comparable to the terms and conditions extended to other similar international distributors.

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with the Consolidated Financial Statements and Notes thereto included elsewhere in this Quarterly Report on Form 10-Q and in the AMX Corporation (“AMX” or the “Company”) Annual Report on Form 10-K for the fiscal year ended March 31, ~~2003~~2004. The Company believes that all necessary adjustments (consisting only of normal recurring adjustments) have been included in the amounts stated below to present fairly the following information. Quarterly operating results have varied significantly in the past and can be expected to vary in the future. Results of operations for any particular period are not necessarily indicative of results of operations for a full year or future results.

Forward-Looking Information

Certain information included herein contains forward-looking statements (as defined in the Private Securities Litigation Reform Act of 1995) regarding future events or the future financial performance of the Company, and is subject to a number of risks and other factors which could cause the actual results of the Company to differ materially from those contained in and anticipated by the forward-looking statements. These risks, assumptions and uncertainties include: the Company’s strategic alliances; the ability to develop distribution channels for new products; dependence on suppliers, dealers and distributors; reliance on the functionality of systems or equipment, whether the Company’s systems and equipment or those of its customers, dealers, distributors, or manufacturers; domestic and international economic conditions; the financial condition of the Company’s key customers and suppliers; the complexity of new products; ongoing research and development; reliance on third party manufacturers; foreign exchange risks; the ability to realize operating efficiencies; dependence on key personnel; the lack of an industry standard; reliance on others for technology; the ability to protect intellectual property; the quick product life cycle; the resources necessary to compete; the possible effect of government regulations; possible liability for copyright violations on the Internet with the use of the Company’s products; and other risks referenced from time to time in the Company’s filings with the Securities and Exchange Commission. The forward-looking statements contained herein are necessarily dependent upon assumptions, estimates and data that may be incorrect or imprecise. Accordingly, any forward-looking statements included herein do not purport to be predictions of future events or circumstances and may not be realized. Forward-looking statements contained herein include, but are not limited to, forecasts, projections and statements relating to product development and acceptance, inflation, future acquisitions and anticipated capital expenditures. All forecasts and projections in the report are based on management’s current expectations of the Company’s near term results, based on current information available pertaining to the Company, including the aforementioned risk factors. Actual results could differ materially. The Company is under no duty, and expressly disclaims any responsibility to, update any of the forward-looking statements contained in this Form 10-Q.

Company Overview

AMX Corporation (“AMX”, or the “Company”), incorporated in Texas in March 1982, is a leading designer, developer, marketer and distributor of sophisticated systems that control a variety of otherwise incompatible electronic devices and integrated systems. AMX simplifies the automation and integration of audio/video, environmental and communications technologies through the combination of a powerful processing platform and intuitive user interfaces. Due to its expansive architecture and flexibility, the Company’s systems provide control solutions for many different vertical markets, such as Broadcasting, Education, Entertainment, Government, Healthcare, Hotels, Houses of Worship, Network Operations Centers, Presentation Facilities, Retail, and Residential Applications, including Home Theater, Home Automation, and Private Transportation. The Company’s systems are designed to leverage evolving technologies. AMX systems currently provide centralized control for thousands of different electronic devices, including but not limited to video components, audio components, teleconferencing devices, lighting equipment, educational media, environmental control systems, and security systems. The Company’s control systems incorporate Internet standards and protocols, enabling end users to communicate with their control systems, as well as send and receive commands, content or information from a remote location using any Internet connection, including wireless (WiFi).

~~Applications~~Executive inSummary the commercial market for the Company’s integrated control systems include: control of presentation equipment and audience environment in corporate board rooms, business training centers, and distance learning classrooms; automation controls for presentation audio, video and digital signage in hotels, meeting and convention facilities; security camera control, video distribution, and public address systems for stadiums and theme parks; multimedia and teleconferencing support for government and educational facilities; and decision support centers for industrial applications. In the residential market, the Company’s products enable individuals to create an integrated home automation system that can control audio, video and home theater systems, lighting, motorized drapes, heating and air conditioning units, closed circuit cameras, security systems, and other home electronic equipment.

The Company’s ~~system~~continues ~~sales~~to ~~are~~implement ~~made~~its ~~through~~business ~~dealers~~strategy ~~and~~as ~~distributors~~more ~~who~~fully ~~are~~documented ~~supported~~in bythe Company’s ~~sales~~Annual ~~and~~Report ~~support~~on ~~offices~~Form in10-K ~~various~~for ~~geographic~~the fiscal year ~~areas.~~ended InMarch ~~addition~~31, ~~the~~2004. ~~Company~~New ~~utilizes~~products, ~~independent~~defined ~~manufacturers’~~as ~~representatives~~products introduced in ~~areas~~the ~~not~~past ~~served~~two byyears, ~~Company~~have ~~offices.~~enhanced In the ~~United States, the~~ Company’s ~~principally~~market ~~relies~~penetration ~~on over 700 specialized third-party dealers of electronic~~ and ~~audio-visual~~ ~~equipment~~contributed to ~~sell,~~the ~~install,~~32% ~~support,~~quarter ~~and~~over ~~service~~quarter ~~its~~growth ~~products~~in sales. InNew ~~addition~~products toaccounted ~~maintaining~~for anover ~~office~~60% inof the sales ~~United~~revenue ~~Kingdom,~~for the ~~Company~~quarter. ~~relies~~At onthe anInfoComm ~~international~~tradeshow ~~network~~in ofJune ~~exclusive distributors and over 1~~2004,~~200~~ ~~dealers~~the toCompany ~~serve~~introduced ~~its worldwide~~several ~~markets.~~additional ~~Dealers~~new ~~and~~products ~~distributors~~that ~~use~~are ~~AMX~~expected ~~design software~~ to ~~tailor~~begin ~~the~~shipping ~~Company’s~~in ~~control~~September ~~system for the unique requirements of each installation~~2004. The Company also ~~sells~~expects ~~various~~to ~~customized~~continue ~~products,~~these ~~primarily~~new ~~user~~product ~~interface devices,~~introductions toat ~~OEMs~~the ~~and~~Cedia ~~other~~tradeshow ~~large~~in ~~customers~~September 2004.

~~The~~In ~~Company~~addition ~~believes~~to ~~that~~some ~~the~~improving ~~market~~global ~~for~~economic ~~its~~conditions, ~~products~~the ~~continues~~Company tois ~~grow~~continuing ~~and diversify due~~ to ~~the~~recapture ~~increasing~~market ~~functionality,~~share ~~greater~~utilizing ~~affordability,~~the ~~and~~strength ~~widespread use~~ of athe ~~diverse~~Company’s ~~array~~new ofand ~~electronic~~improved ~~devices,~~product ~~particularly sophisticated audio~~portfolio, ~~video,~~ and ~~presentation~~by ~~equipment. Many~~targeting ofkey ~~these~~accounts ~~devices~~with ~~have~~focused ~~separate~~sales ~~control~~efforts. ~~mechanisms~~In ~~that~~addition ~~are~~to ~~incompatible~~its traditional ~~due~~markets, to the ~~absence~~Company’s ofnew ~~any~~products ~~one~~have ~~widely~~allowed ~~accepted~~the ~~control~~Company ~~standard.~~to ~~This~~expand ~~creates~~its amarkets ~~need~~to ~~for~~continue anto ~~integrated~~generate ~~control~~top-line ~~system such as those offered by the Company~~growth.

~~The~~Net ~~Company’s~~sales ~~strategy~~of is$25.6 million for the quarter, combined with gross profit margins of 56% and carefully managed expenses, enabled the Company to ~~take~~report ~~advantage~~net income of $3.7 million, or $0.29 per diluted share, for the ~~growth~~quarter, compared to net income of $0.9 million, or $0.08 per diluted share, on net sales of $19.3 million in the ~~market for~~year ~~its~~ago ~~products~~quarter. byAlthough ~~bringing~~management believes that the ~~power~~Company is positioned for additional sales revenue and ~~flexibility~~earnings ofgrowth, ~~integrated~~the ~~control~~Company ~~technology~~continues to aoperate ~~wide~~with ~~variety~~limited ofbacklog ~~settings~~and has limited insight into future orders. ~~Elements~~Therefore, ofwe cannot assure you that the Company’s ~~strategy~~can ~~include:~~sustain the current revenue growth.

•Critical ~~Development~~Accounting ofPolicies ~~new~~and ~~software~~Estimates ~~to simplify system programming;~~

•AMX’s ~~Emphasis~~discussion and analysis of its financial condition and results of operations are based upon the Company’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires the Company to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Management bases its estimates and assumptions on ~~customer~~historical ~~support~~experience and ~~service;~~various other factors that are believed to be reasonable under the circumstances. These estimates and assumptions are evaluated on an ongoing basis. Actual results could differ from these estimates under different assumptions or conditions.

•The ~~International~~Company ~~distribution~~believes ~~expansion;~~there have been no significant changes to the items disclosed in the Critical Accounting Policies and Estimates section of Management’s Discussion and Analysis of Financial Condition and Results of Operations that was included in the Annual Report on Form 10-K for the year ended March 31, 2004.

•The ~~Flexible~~Company’s ~~systems~~quarterly operating results have varied significantly in the past, and can be expected to ~~accommodate~~vary ~~emerging~~in ~~technologies~~the future. These quarterly fluctuations have been the result of a number of factors. These factors include seasonal purchasing by the Company’s dealers and distributors, particularly from international distributors, OEMs, and other large customers; the timing of new product introductions by the Company and its competitors; fluctuations in commercial and residential construction and remodeling activity; changes in product or distribution channel mix, and changes in the Company’s business strategies.

• Development of alliances with key electronic industry companies;

• Commitment to dealer training; and

• Vertical market development.

The Company’s primary manufacturing strategy is to contract with a small number of ISO Certified manufacturers, located both domestically and internationally, in order to take advantage of the manufacturing expertise and efficiencies these vendors offer. This outsourcing extends from prototyping to volume manufacturing, and includes activities such as material procurement, final assembly, test, and quality control. The Company procures over 90% of its products through this outsourcing strategy. In fiscal 2003, the Company entered into an agreement with a large electronic component distributor to act as the Company’s supply-chain partner. Under this arrangement, the distributor provides the procurement and logistical support for all electronic components utilized by the manufacturers of the Company’s products. We believe that this manufacturing strategy allows the Company to:

• Provide consistent product quality;

• Provide reliable product availability;

• Realize economies of scale in manufacturing;

• Conserve the working capital required to fund inventory;

• Adjust manufacturing volumes quickly to meet changes in demand;

• Avoid interruptions due to component allocations;

• Minimize capital expenditures; and

• Reduce the time-to-market of new product introductions.

The Company’s quarterly operating results have varied significantly in the past, and can be expected to vary in the future. These quarterly fluctuations have been the result of a number of factors. These factors include seasonal purchasing by the Company’s dealers and distributors, particularly from international distributors, OEMs, and other large customers; the timing of new product introductions by the Company and its competitors; fluctuations in commercial and residential construction and remodeling activity; changes in product or distribution channel mix, and changes in the Company’s business strategies.

Results of Operations

The following table contains the Company’s consolidated statements of operations for the three ~~and nine~~-month periods ended ~~December 31~~June 30, 2004 ~~2003~~ and ~~2002 (in thousands, except for per share amounts)~~2003:

	Three Months EndedDecember 31(Unaudited)						Nine Months EndedDecember 31(Unaudited)
	2003			2002			2003			2002
Commercial sales	$	18,285		$	17,472		$	54,623		$	55,066
Residential sales		3,091			2,796			8,356			7,623
Total sales		21,376			20,268			62,979			62,689
Cost of sales		10,019			10,153			29,343			30,952
Gross profit		11,357			10,115			33,636			31,737
Gross profit percentage		53.1	%		49.9	%		53.4	%		50.6	%
Selling and marketing expenses		5,740			5,180			16,490			15,950
Research and development expenses		2,516			2,461			7,827			6,852
General and administrative expenses		1,824			1,988			5,390			6,196
Total operating expenses		10,080			9,629			29,707			28,998
Operating income		1,277			486			3,929			2,739
Interest expense		(13	)		(89	)		(85	)		(332	)
Other income (expense), net		210			5			332			14
Income before income taxes		1,474			402			4,176			2,421
Income tax expense		34			17			129			227
Net income	$	1,440		$	385		$	4,047		$	2,194
Basic income per share	$	0.13		$	0.03		$	0.36		$	0.20
Diluted income per share	$	0.12		$	0.03		$	0.34		$	0.20
Shares outstanding - basic		11,371			11,141			11,335			11,120
Shares outstanding - diluted		12,294			11,195			11,994			11,134

(In thousands, except for per share amounts)


	Three Months Ended June 30 (Unaudited)
	2004			Percent of Sales		2003			Percent of Sales
Commercial sales	$	21,282		83	%	$	16,692		86	%
Residential sales		4,287		17	%		2,631		14	%

Net sales		25,569		100	%		19,323		100	%
Cost of sales		11,245		44	%		8,961		46	%

Gross profit		14,324		56	%		10,362		54	%

Selling and marketing expenses		5,969		23	%		5,100		26	%
Research and development expenses		2,544		10	%		2,550		13	%
General and administrative expenses		1,917		7	%		1,814		9	%

Total operating expenses		10,430		41	%		9,464		49	%

Operating income		3,894		15	%		898		5	%
Interest expense		(10	)	0	%		(43	)	0	%
Other income, net		(16	)	0	%		89		0	%

Income before income taxes		3,868		15	%		944		5	%
Income tax provision		175		1	%		12		0	%

Net income	$	3,693		14	%	$	932		5	%

Basic income per share	$	0.32				$	0.08

Diluted income per share	$	0.29				$	0.08

Shares outstanding - basic		11,558					11,280

Shares outstanding - diluted		12,820					11,319

Three Months Ended ~~December~~June 3130, ~~2003~~2004 Results Compared to Three Months Ended ~~December~~June 3130, ~~2002~~2003

Sales. The Company recorded sales during the quarters ended ~~December~~June 3130, 2004 ~~2003~~ and ~~2002~~ 2003 as follows:

Market	~~December~~June 3130,~~2003~~ 2004		~~December~~June 3130,~~2002~~ 2003		Change
Commercial:
Domestic	$	1011,~~695~~592,~~398~~046	$	10,~~281~~805,~~452~~805	47	%
International		79,~~589~~689,~~526~~569		75,~~190~~885,~~592~~569	665	%
Total Commercial		1821,~~284~~281,~~924~~615		1716,~~472~~691,~~044~~374	528	%
Residential		34,~~090~~287,~~523~~010		2,~~795~~631,~~678~~055	1163	%
Total Sales	$	2125,~~375~~568,~~447~~625	$	2019,~~267~~322,~~722~~429	532	%

Total ~~revenue~~ sales increased 32% ~~$1.1 million~~ over the year ago quarter~~, including revenue growth in each sector~~. Total commercial ~~revenue~~sales increased 528%, consisting of a 465% increase in ~~domestic~~international commercial ~~revenue~~sales, and a 67% increase in ~~international~~domestic commercial ~~revenue~~sales. ~~Residential~~ ~~revenue~~The ~~was~~products upintroduced ~~11%~~ over the ~~year~~past ~~ago~~24 ~~quarter.~~months, Inand ~~December~~the ~~2003,~~sales initiatives designed to increase the ~~Company~~market ~~began~~awareness ~~shipping~~of ~~three~~such ~~additional~~products, ~~product~~have ~~lines~~contributed ~~consisting~~to ofthe ~~approximately~~sales 40growth, ~~new~~particularly ~~products~~in the international channel. The ~~percentage~~current product portfolio has enabled the Company to secure a number of ~~revenue~~significant ~~from~~projects in ~~these~~the international sector, contributing to the sales growth. The new products and sales initiatives have also contributed to the ~~other~~domestic ~~products introduced~~commercial growth, although we believe that the lag in the ~~last~~domestic 18economy ~~months~~has limited the domestic growth. The Company continues to ~~increase.~~modify ~~Management~~its ~~believes~~sales ~~these~~structure ~~products~~and ~~will~~develop ~~continue~~sales initiatives designed to ~~contribute~~target end users in order to ~~sales~~expand on the domestic commercial growth. asResidential sales increased 63% over the ~~products~~year ~~are~~ago ~~incorporated~~quarter, ~~into~~reflecting ~~upcoming~~the ~~projects~~benefits of the Company’s new portfolio of products and solutions.

Gross Profit Margins. Gross profit margins of 5356.10% for the quarter ended ~~December~~June 3130, ~~2003~~2004 were up from margins of 4953.96% for the year ago quarter. ~~Efficiencies~~The ~~gained~~cost ~~from~~of new products has declined over the ~~Company’s~~year ~~outsourcing~~ago ~~strategy~~quarter ~~continue~~as such products were moved to ~~have~~more efficient, full outsourced production at turnkey manufacturers. In addition, a ~~positive~~portion ~~impact~~of onthe ~~operating~~cost of sales represents fixed costs. Therefore, the higher sales levels produce higher profit margins. ~~compared~~In tothe coming quarters, the ~~year~~Company may ~~ago~~leverage ~~quarter~~the high margins by issuing discounts to drive further revenue growth.

Selling and Marketing Expense. Selling and marketing expenses increased to $56.70 million orand 27represented 23% of net sales for the quarter ended June 30, 2004, compared to $5.21 million, or 26% of net sales, for the ~~third~~year ~~quarter~~ago ~~of fiscal 2003~~quarter. The increase in selling and marketing expenses is a result of ~~incremental spending for sales and marketing programs associated with recent product introductions. Research and development expenses were $2.5 million or 12% of net sales, up $55,000 compared to~~ the ~~third~~continued ~~quarter of fiscal 2003. Growth in research and development spending has slowed somewhat after the heavy~~ investments in ~~research~~sales and ~~development during~~marketing ~~the~~programs ~~first~~that ~~six~~promote ~~months of fiscal 2004. During fiscal 2004,~~ the Company’s ~~has~~recent ~~introduced new and innovative control and automation solutions and expanded its portfolio of products, including 3 new~~ product ~~lines~~introductions and ~~approximately 40 new products that began shipping in December~~solutions. General and administrative expenses were $1.8 million or 9% of net sales compared to $2.0 million or 10% of net sales for the third quarter of fiscal 2003. This decrease is primarily a result of lower salaries and related benefit costs due to lower headcount.

~~Interest~~Research ~~expense was~~and ~~approximately~~Development ~~$13,000~~Expense. ~~compared~~Research toand ~~$89,000~~development ~~for~~expenses remained ~~the~~relatively ~~third~~flat quarter ofover ~~fiscal 2003~~quarter. ~~This~~The ~~decline~~Company is ~~attributable~~continuing toits ~~lower~~strategic ~~average~~product ~~daily~~development ~~outstanding~~efforts ~~balances on the Company’s revolving line of credit~~ and ~~term~~expects ~~note~~to ~~compared~~continue to ~~the~~expand ~~year~~its ~~ago quarter.~~portfolio ~~Other~~of ~~income~~innovative ~~was~~products ~~approximately~~and ~~$210,000~~solutions. ~~compared to $5~~However,~~000~~ in the ~~year~~Company ~~ago quarter. This change~~ is ~~primarily~~also ~~related~~continuing to manage ~~foreign~~overall ~~exchange~~costs ~~gains~~while investing in ~~the~~sales ~~current year associated with exchange rate fluctuations between the U.S. dollar~~ and ~~the British~~marketing ~~pound.~~initiatives ~~The~~to ~~U.S.~~expand ~~dollar is~~ the ~~functional~~market ~~currency~~coverage of ~~the~~its ~~Company’s~~existing Uproducts.K. ~~subsidiary.~~

~~The~~General ~~Company’s~~and ~~effective~~Administrative ~~tax~~Expense. ~~rate~~General ~~was~~and ~~approximately~~administrative 2expenses were $1.39 million or 7% of net sales for the quarter ended ~~December~~June 3130, ~~2003~~2004, compared ~~versus~~to 4$1.8 million, or 9% of net sales, for the year ago quarter. ~~The~~This ~~tax~~increase ~~provision of~~is ~~$34,000~~primarily ~~recorded~~as ~~for~~a ~~the~~result ~~quarter~~of ~~principally~~increased ~~represents~~professional ~~domestic~~services ~~alternative~~costs ~~minimum tax~~ and ~~foreign~~other ~~taxes~~general ~~for~~administrative ~~the Company’s U~~spending.K. ~~subsidiary. The~~

~~Company~~Interest ~~does~~Expense ~~not~~and ~~currently~~Other ~~record~~Income. aInterest ~~significant~~expense ~~tax~~was ~~provision~~approximately or$10,000 ~~benefit~~for onthe ~~its~~quarter ended ~~U.S.~~June ~~operations~~30, ~~because~~2004, versus $43,000 for the year ago quarter. The Company ~~has~~paid ~~recorded~~its aoutstanding ~~full~~bank ~~valuation~~debt ~~allowance against~~in ~~its~~full ~~net~~prior ~~deferred~~to ~~tax~~the ~~assets.~~end Asof afiscal ~~result~~2004, asreducing ~~the~~interest ~~Company~~costs ~~incurs~~for ~~domestic~~the ~~tax~~quarter ~~expense~~ended orJune ~~benefit~~30, an2004. ~~offsetting~~The ~~decrease~~interest orexpense ~~increase~~of is$10,000 ~~recorded~~primarily represents tofees on the ~~valuation~~Company’s ~~allowance~~unused line of credit. ~~Accordingly,~~Other ~~the~~expense ~~decline~~was inapproximately ~~the~~$15,000 ~~effective~~compared ~~tax~~to ~~rate~~other ~~from~~income of $89,000 in the year ago quarter. This change is aprimarily ~~result~~related ofto ~~certain~~current ~~tax~~year ~~planning~~foreign ~~strategies~~exchange ~~and~~losses ~~changes~~associated with inexchange ~~the~~rate ~~relationship~~fluctuations between ~~domestic~~the U.S. dollar and the British pound, while the Company recorded foreign ~~pre-tax~~exchange ~~operating~~gains ~~results~~in the year ago quarter. The U.S. dollar is the functional currency of the Company’s U.K. subsidiary.

~~Nine~~Income ~~Months~~Tax ~~Ended~~Expense. ~~December~~The 31Company’s effective tax rate was approximately 4.5% for the quarter ended June 30, ~~2003~~2004 ~~Results~~versus ~~Compared~~1% tofor ~~Nine~~the ~~Months~~year ~~Ended~~ago ~~December~~quarter. 31The tax provision of approximately $175,000 ~~2002~~recorded for the quarter principally represents foreign taxes on the Company’s U.K. subsidiary and estimated alternative minimum taxes. The Company does not currently record a normal tax provision on its U.S. operations because the Company has a full valuation allowance against its net deferred tax assets. As a result, as the Company incurs normal domestic tax expense, an offsetting decrease is recorded to the valuation allowance. The increase in the effective tax rate over the year ago quarter is related to increased alternative minimum taxes. The Company assesses the realizability of its deferred tax assets on an ongoing basis and will eliminate the valuation allowance when warranted based on sustained profitable operating results.

~~The~~Net ~~Company~~Income. ~~recorded~~For ~~sales~~the ~~during~~reasons described above, the ~~nine~~Company ~~months~~generated ~~ended~~net ~~December~~income 31of $3.7 million or $0.29 per diluted share for the quarter ended June 30, ~~2003~~2004 ~~and~~compared ~~2002~~to asnet ~~follows:~~income of $0.9 million or $0.08 per diluted share for the quarter ended June 30, 2003.

Market	December 31,2003		December 31,2002		Change
Commercial:
Domestic	$	33,786,955	$	34,849,188	(3	)%
International		20,835,888		20,217,370	3	%
Total Commercial		54,622,843		55,066,558	(1	)%
Residential		8,356,573		7,622,849	10	%
Total Sales	$	62,979,416	$	62,689,407	0	%

Liquidity and Capital Resources

~~Total~~In ~~revenue increased~~the ~~slightly~~three ~~over~~months ended June 30, 2004, the ~~year~~Company ~~ago~~generated ~~period~~$2.9 ~~Total~~million ~~commercial~~of ~~revenue~~cash ~~declined~~from 1%operations, ~~consisting~~including ofnet aincome of $3%.7 million. Other significant components of operating cash flows included non-cash related items of $1.1 million, a decrease in ~~domestic~~inventory ~~commercial~~of ~~revenue~~$0.2 million, ~~which~~and ~~was~~an increase of payables and other accrued liabilities of $0.5 million, offset by aan 3% increase in ~~international~~accounts receivable ~~commercial~~of ~~revenue~~$1.9 ~~Residential~~million ~~revenue~~due ~~was~~to upheavy ~~10%~~sales ~~over~~ in the ~~year~~latter ~~ago~~part ~~period~~of the quarter, and an increase in other current assets of $0.7 million. In ~~December~~the three months ended June 30, 2003, the Company ~~began~~generated ~~shipping~~$2.6 ~~three~~million ~~additional~~of ~~product~~cash ~~lines~~from ~~consisting~~operations, ofincluding net ~~approximately~~income 40of ~~new~~$0.9 ~~products~~million. ~~The~~Other ~~percentage~~significant components of ~~revenue~~operating ~~from~~cash ~~these~~flows ~~products~~included non-cash related items of $1.1 million, and ~~the~~an increase of payables of $1.4 million, offset by an increase in inventory of $0.5 million, an increase in other current ~~products~~assets ~~introduced~~of $0.1 million, and a decline in accrued liabilities of $0.2 million. Days sales outstanding were 46 and 45 days as of June 30, 2004 and 2003, respectively, while inventory turns were 6.3 and 4.7 for the ~~last~~same 18periods. ~~months~~The increase in ~~continues~~inventory turns is related to ~~increase.~~continued ~~Management~~improvements ~~believes~~in ~~these~~inventory ~~products~~management ~~will~~and ~~continue~~migration to ~~contribute~~outsourced manufacturing. The Company expects to ~~sales~~build ~~growth~~inventory asto ~~the~~accommodate anticipated demand for new products, ~~are~~which ~~incorporated~~may ~~into~~decrease ~~upcoming~~inventory ~~projects~~turns from the current levels for the remainder of the year. Capital expenditures for the three months ended June 30, 2004 were $0.3 million as compared to $0.4 million in the year ago quarter.

~~Gross~~The ~~margins~~Company has a revolving line of 53credit with Bank One, N.4%A. (“Bank One”). The line of credit provides for borrowings ~~the~~of ~~nine~~up ~~months~~to ~~ended~~$10 ~~December~~million 31subject to borrowing base limitations. As of June 30, ~~2003~~2004, there were upno ~~from~~outstanding ~~margins~~borrowings under the revolving line of 50credit.6% The line of credit provides for interest at varying rates based on the Company’s ~~comparable~~choice ~~prior~~of ~~year~~the ~~period~~prime lending rate or the London Inter-Bank Offered Rate. ~~Efficiencies~~The line of credit is collateralized by receivables, inventory, intellectual property, and the net assets of the wholly-owned U.K. subsidiary. Available future ~~gained~~borrowings ~~from~~under the ~~Company~~facility’s ~~outsourcing~~borrowing ~~strategy~~base ~~continue~~limits amounted to ~~have~~$10 ~~had~~million aas ~~positive~~of ~~impact~~June 30, 2004. This revolving line of credit expires on ~~operating~~September ~~margins~~29, 2004. The Company anticipates that the revolving line of credit will be renewed upon maturity with similar terms and conditions. The line of credit contains various restrictive and financial covenants. The Company is in compliance with each of these covenants as of June 30, 2004.

Selling and marketing expenses were up to $16.5 million or 26% of net sales compared to $16.0 million or 25% of net sales in the year ago period. This increase represents spending for certain sales and marketing programs promoting recent product introductions. Research and development expenses were $7.8 million or 12% of net sales compared to $6.9 million or 11% of net sales for the nine months ended December 31, 2002. This increase reflects the Company’s recent investments in research and development as the Company expanded its portfolio of products and introduced new and innovative control and automation solutions to the market. General and administrative expenses were $5.4 million or 9% of net sales compared to $6.2 million or 10% of net sales for the comparable year ago period. This decrease is primarily a result of lower salaries and benefits of approximately $200,000, lower legal fees of approximately $50,000, and lower overall administrative spending including approximately $100,000 savings generated from the closure of the AMX Singapore direct sales office.

Interest expense was approximately $85,000 compared to $332,000 for the nine months ended December 31, 2002. This decline is attributable to lower average daily outstanding balances on the Company’s revolving line of credit compared to the year ago period. Other income was approximately

~~$332,000~~The ~~compared~~Company tobelieves ~~$14,000~~that ~~for~~cash ~~the~~flow ~~nine~~from ~~months~~operations, ~~ended~~existing ~~December~~cash 31balances, ~~2002.~~and ~~This change is primarily related to foreign exchange gains in~~ the ~~current~~funding ~~year~~available ~~associated~~under ~~with~~existing ~~exchange~~and ~~rate~~future ~~fluctuations~~credit ~~between~~facilities ~~the~~will ~~U.S.~~be ~~dollar~~adequate ~~and~~to ~~the~~fund ~~British~~working ~~pound.~~capital ~~The~~and ~~U.S.~~capital ~~dollar~~expenditure isrequirements ~~the~~at ~~functional~~least ~~currency~~through offiscal ~~the Company’s U~~2006.K. ~~subsidiary.~~

The Company’s effective tax rate was approximately 3% versus 9% for the year ago period. The tax provision of $129,000 for the nine months ended December 31, 2003 principally represents domestic alternative minimum tax and foreign taxes for the Company’s U.K. subsidiary. The Company does not currently record a significant tax provision or benefit on its U.S. operations because the Company has recorded a full valuation allowance against its net deferred tax assets. As a result, as the Company incurs domestic tax expense or benefit, an offsetting decrease or increase is recorded to the valuation allowance. Accordingly, the decline in the effective tax rate from the year ago period is a result of certain tax planning strategies and changes in the relationship between domestic and foreign pre-tax operating results.

Liquidity and Capital Resources

In the nine months ended December 31, 2003, the Company generated $7.2 million of cash from operations, including net income and non-cash related items of $4.0 million and $2.8 million, respectively. Other significant components of operating cash flows included an increase of payables and accrued expenses of $2.6 million, offset by an increase in prepaids & other assets of $1.0 million and an increase in receivables of $1.2 million. Days sales outstanding were 45 and 43 as of December 31, 2003 and 2002, respectively, while inventory turns were 5.7 and 4.2 for the same periods. The increase in inventory turns is related to better inventory management and the Company’s migration to outsourced manufacturing. Capital expenditures for the nine months ended December 31, 2003 were $1.9 million as compared to $1.5 million in the year ago period. A significant portion of the Company’s capital expenditures relate to tooling equipment acquired in conjunction with new product development and introductions.

The Company has a revolving line of credit with Bank One, N.A. (“Bank One”). The line of credit provides for borrowings of up to $10 million subject to certain borrowing base limitations. The line of credit provides for interest at varying rates based on the Company’s choice of the prime lending rate or the London Inter-Bank Offered Rate. The line of credit is collateralized by receivables, inventory, intellectual property, and the net assets of the wholly-owned U.K. subsidiary. At December 31, 2003, $1.5 million was outstanding under the revolving line of credit agreement and $8.4 million was available for future borrowings under the facility’s borrowing base limits. This revolving line of credit expires on September 29, 2004. The Company anticipates that the revolving line of credit will be renewed upon maturity with similar terms and conditions. The Company also has an unsecured term note with Bank One. The term note provides for quarterly payments of principal and interest through April 30, 2004 and has an outstanding principal balance of approximately $0.3 million as of December 31, 2003. Based on prevailing market rates, the carrying value of the Company’s short and long term debt approximates market. The line of credit and the term note contain various restrictive and financial covenants. The Company is in compliance with each of these covenants as of December 31, 2003.

The Company believes that cash flow from operations and the funding available under existing and future credit facilities will be adequate to fund working capital and capital expenditure requirements at least through 2005.

Contingencies

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

From March 31, ~~2003~~2004 until ~~December~~June 3130, ~~2003~~2004, there were no material changes from the information concerning market risk contained in the Company’s ~~Annual~~ Annual Report on Form 10-K for the year ended March 31, ~~2003~~2004, as filed with the Securities and Exchange ~~Commision~~Commission on June 2518, ~~2003~~2004 (file no. 0-26924).

ITEM 4.

CONTROLS AND PROCEDURES

Based on their evaluation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), the Company’s principal executive and principal financial officers concluded that the Company’s disclosure controls and procedures were effective as of June 30, 2004.

There has been no change in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the Company’s fiscal quarter ended June 30, 2004, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

ITEM 4. CONTROLS AND PROCEDURES

There has been no change in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the Company’s fiscal quarter ended December 31, 2003, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

AMX CORPORATION

PART II. OTHER INFORMATION

Item 5. Other Information

On February 10, 2004, Robert J. Carroll, Chairman, President and Chief Executive Officer of AMX Corporation (the “Company”) entered into a stock trading plan, designed to comply with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended and the Company’s policies with respect to sales of stock by insiders. Under Rule 10b5-1, officers and directors may adopt a prearranged plan or contract for the sale of Company securities under specified conditions and at specified times. Mr. Carroll entered into the plan for asset diversification purposes and he will continue to have a significant ownership interest in the Company.

Mr. Carroll’s plan allows for the potential sale of 101,250 shares of the Company’s common stock from the date the plan was initiated until December 31, 2004 unless terminated earlier in accordance with the terms of the plan. Mr. Carroll will have no control over the timing of any sales under the plan, and there can be no assurance that the shares covered by the plan will actually be sold.

Item 6.

Exhibits and Reports on Form 8-K

Exhibits

* 10.1		Second Amendment to Letter Loan Agreement
* 31.1		Certification of Robert J. Carroll, Chairman of the Board, President and Chief Executive Officer, pursuant to Rule 13a-14 and 15d-14 of the Securities Exchange Act of 1934.
* 31.2		Certification of C. Chris Apple, Vice President, Chief Financial Officer, pursuant to Rule 13a-14 and 15d-14 of the Securities Exchange Act of 1934.
* 32.1		Certification of Robert J. Carroll, Chairman of the Board, President and Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
* 32.2		Certification of C. Chris Apple, Vice President, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*	Filed herewith.

b.	Reports on Form 8-K

Current report on Form 8-K dated as of ~~January~~July 2229, 2004, and filed on ~~January~~July 2629, 2004, regarding the Registrant’s press release for the ~~third quarter~~first quarter ended ~~December~~June 3130, ~~2003~~2004.

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AMX CORPORATION

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.

	~~AMX CORPORATION~~	AMX CORPORATION
Date: February 10, 2004	By:	/s/ C. Chris Apple
Date: August 12, 2004	By:	/s/ C. CHRIS APPLE
		C. Chris Apple Vice President, Chief Financial Officer (Duly Authorized Officer and Principal Financial Officer)
		C. Chris Apple Vice President and Chief Financial Officer

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Filing Compare · AMX CORP /TX/