TEMPE, AZ--(Marketwire - Oct 17, 2011) - Rockford Corporation (PINKSHEETS: [ ROFO ]) today announced financial results for the three and nine months ended September 30, 2011.

Net income for the three months ended September 30, 2011 was $1.2 million, compared to net income of $0.7 million for the comparable period in 2010. Net income for the nine months ended September 30, 2011 was $4.2 million, compared to net income of $2.5 million for the comparable period in 2010.

Net sales for the three months ended September 30, 2011, decreased 0.7% to $14.2 million compared to net sales of $14.3 million for the same period in 2010. Net sales for the nine months ended September 30, 2011, increased 12.3% to $47.8 million compared to net sales of $42.6 million for the same period in 2010. The increase in net sales for the nine month period was primarily due to increased sales in Rockford's core aftermarket, international and OEM sales channels. The decrease in net sales for the three months ended September 30, 2011 was primarily due to lower OEM royalty revenue. OEM royalty revenue for the nine months ended September 30, 2011, was $2.0 million compared to $2.2 million for the same period in 2010. As a percent of net sales, gross margin for the three months ended September 30, 2011 increased to 37.4% compared to 36.9% for the same period in 2010. As a percent of net sales, gross margin for the nine months ended September 30, 2011 increased to 38.5% compared to 37.0% for the same period in 2010. The increase in gross margin percentage for the three and nine month periods were primarily due to lower returns, discounts and in-bound freight costs as a percentage of sales.

Operating expenses for the three months ended September 30, 2011, were lower at $4.1 million compared to $4.5 million for the same period in 2010. Operating expenses for the nine months ended September 30, 2011, were higher at $14.1 million compared to $13.1 million for the same period in 2010. The increase in operating expenses for the nine month periods compared to the prior year were primarily due to higher variable expenses, such as outbound freight and commissions, resulting from higher sales volume and increased sales and promotional expenditures.

William R. Jackson, Rockford's Chief Executive Officer and President, commented, "Net sales were essentially flat for the third quarter of 2011 and up 12.3% year to date. All of our distribution channels remain stable and have shown growth year to date. The US market continues to be bumpy. Several dealers and distributors have reported improving retail trends, but a lack of floor traffic and fears about general consumer confidence are an ongoing concern. Our gross margins have improved and our expenses are in line with our plan."

Mr. Jackson stated, "Our overall supply chain remains in good condition. We are experiencing some difficulty with selective part outages, but not to the level of the past 12 to 18 months. A continued rise of the Chinese currency compared to the dollar may cause additional cost pressures heading into 2012. We are monitoring the currency environment carefully."

Mr. Jackson observed, "Rockford Fosgate products continue to do well in all of our channels. Our core line of amplifiers and speakers is tracking up in all channels year to date. Response to the new Punch woofer line has been very strong. Our Renegade, Lightning Audio and Brax/Helix brands continue to gain new dealers every month. Our OEM business remains stable and our Japanese based partners have returned to normal production after the earthquake and tsunami that reduced their operations in the second quarter."

Mr. Jackson continued: "We continue to work with our marketing partners, distributors and retailers to drive consumer awareness of Rockford Fosgate and car audio. In 2011 Rockford Fosgate was a sponsor of AMA Supercross. The consumer link between high performance car audio and high-octane motorsports is strong. In addition, our Street Team and Sound Lab demonstration vehicles are finishing up their final 2011 events and preparing for 2012."

Mr. Jackson concluded: "We feel good about our overall performance and market position. The entire Rockford team has performed well. We continue to be cautiously optimistic about the car audio market and our ability to grow in it."

Liquidity and Capital Resources

Rockford's cash provided by operations was $1.5 million for the nine month period ended September 30, 2011 as compared to $0.2 million provided by operations during the comparable period in 2010. Net income of $4.2 million was the primary source of cash from operations and an increase in accounts receivables of $2.8 million was the primary use of cash from operations.

Rockford's asset-based credit facility with Wells Fargo Capital Financial continues to have the terms described in Rockford's annual report for the year ended December 31, 2010. Under the agreement, pricing based on LIBOR was approximately 4.25% at September 30, 2011. As of September 30, 2011, Rockford was in compliance with all applicable covenants. Availability under the credit facility at September 30, 2011 was approximately $8.0 million in excess of the outstanding balance of $1.7 million. Other than ordinary course financing of trade payables, the Wells Fargo credit facility is Rockford's only significant debt financing arrangement.

Rockford anticipates, based on its operating plans and cash flow forecast, that cash flow from operations for 2011 and 2012, and available borrowings under its credit facility, will be adequate to meet Rockford's requirements for current capital expenditures, working capital, interest payments and stock repurchases, if any, for the next twelve months.

Stock Buyback Program

Rockford announced on March 31, 2011, that its Board of Directors approved a program to purchase up to 870,000 shares, or approximately 10%, of Rockford's Common Stock in the open market or through privately negotiated transactions. From March 31, 2011, to date Rockford has repurchased approximately 561,500 shares under this stock buyback program. After these repurchases Rockford has approximately 8.2 million shares outstanding, a reduction from approximately 8.8 million shares that were outstanding at March 31, 2011. The program will expire on December 31, 2012, but may be suspended or discontinued at any time.

About Rockford Corporation
Setting the standard for excellence in the mobile audio industry, Rockford Corporation markets and distributes high-performance audio systems for the mobile audio aftermarket and OEM market. Headquartered in Tempe, Arizona, Rockford Corporation distributes its products under the brands: Rockford Fosgate®, Rockford Acoustic Design®, Lightning Audio®, Brax™, Helix™ and Renegade®. For more information, please visit: [ www.rockfordfosgate.com ], [ www.rockfordacousticdesign.com ], [ www.lightningaudio.com ], [ www.braxhifi.com ], [ www.helixhifi.com ] and [ www.renegadecaraudio.com ].

Forward-looking Statement Disclosure

We make forward-looking statements in this press release including but not limited to statements about our results of operations. These statements may be identified by the use of forward-looking terminology such as "may," "will," "believe," "expect," "anticipate," "estimate," "continue," or other similar words.

Forward-looking statements are subject to many risks and uncertainties. Rockford cautions you not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. Actual results may differ materially from those anticipated in our forward-looking statements. Rockford disclaims any obligation or undertaking to update these forward-looking statements to reflect changes in our expectations or changes in events, conditions, or circumstances on which our expectations are based.

When considering our forward-looking statements, you should keep in mind the risk factors discussed in our press releases and earnings reports, as well as the risk factors generally applicable to a small business such as ours. We particularly call your attention to the risk factors and other cautionary statements identified on our investor relations web-site, [ http://www.rockfordcorp.com/ir/financialinfo.asp ] in a document titled "Risk Factors That May Affect Rockford's Operating Results, Business Prospects and Stock Price" (the "Risk Disclosure"). We updated the Risk Disclosure as of March 31, 2011. Our business is subject to the risk factors noted in the Risk Disclosure, other risk factors identified above and other risk factors we have not anticipated or discussed. These risk factors could cause our actual results to differ significantly from those anticipated in our forward-looking statements.