10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 28, 2003

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File No. 33-9875

BOSTON ACOUSTICS, INC.

(Exact name of registrant as specified in its charter)

Massachusetts	04-2662473
(State or other jurisdiction of incorporation or organization)	(I.R.S. employer identification no.)

300 Jubilee Drive Peabody, Massachusetts	01960
(Address of Principal Executive Offices)	(Zip Code)

(978) 538-5000

(Registrant’s telephone number, including area code)

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 þ    No ¨

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

There were 4,391,595 shares of Common Stock issued and outstanding as of August 12, 2003.

Boston Acoustics, Inc.

Index

	Page
Part I:    Financial Information
Item 1.    Financial Statements
Consolidated Balance Sheets—March 29, 2003 and June 28, 2003 (Unaudited)	4
Consolidated Statements of Operations (Unaudited)—Three months ended June 29, 2002 and June 28, 2003	6
Consolidated Statements of Cash Flows (Unaudited)—Three months ended June 29, 2002 and June 28, 2003	7
Notes to Unaudited Consolidated Financial Statements	8
Item 2.     Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
Part II:    Other Information
Items 1 through 6	16
Signatures	17
Certifications	18

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PART I:    FINANCIAL INFORMATION

Item 1:    Financial Statements

3

Boston Acoustics, Inc. and Subsidiaries

Consolidated Balance Sheets

Assets

	March 29, 2003		June 28, 2003
			(Unaudited)
Current Assets:
Cash and cash equivalents	$	6,941,222	$	6,575,370
Accounts receivable, net of allowance for doubtful accounts of approximately $312,000 and $340,000 at March 29, 2003 and June 28, 2003, respectively		6,582,033		8,030,270
Inventories		11,919,039		10,087,821
Deferred income taxes		3,577,000		3,577,000
Prepaid income taxes		1,449,000		1,449,000
Prepaid expenses and other current assets		1,009,369		984,020
Total current assets		31,477,663		30,703,481
Property and Equipment, at Cost:
Machinery and equipment		16,449,563		16,568,048
Building and improvements		8,795,567		8,795,567
Office equipment and furniture		5,473,707		5,679,551
Land		1,815,755		1,815,755
Motor vehicles		264,969		279,219
		32,799,561		33,138,140
Less-Accumulated depreciation and amortization		20,609,012		21,182,224
		12,190,549		11,955,916
Other Assets, Net		996,172		995,594
	$	44,664,384	$	43,654,991

The accompanying notes are an integral part of these consolidated financial statements.

4

Boston Acoustics, Inc. and Subsidiaries

Consolidated Balance Sheets

Liabilities and Shareholders’ Equity

	March 29, 2003			June 28, 2003
				(Unaudited)
Current Liabilities:
Accounts payable	$	5,630,246		$	4,923,524
Accrued payroll and payroll-related expenses		602,589			596,486
Dividends payable		374,136			373,286
Other accrued expenses		2,079,095			1,925,163
Total current liabilities		8,686,066			7,818,459
Minority Interest in Joint Venture		37,344			24,015
Shareholders’ Equity:
Common stock, $.01 par value— Authorized—8,000,000 shares Issued—5,100,314 shares		51,003			51,003
Additional paid-in capital		1,191,988			1,191,988
Subscriptions receivable		(230,917	)		—
Retained earnings		42,978,409			42,820,910
		43,990,483			44,063,901
Less—Treasury stock, 698,700 and 708,700 shares, at March 29, 2003 and June 28, 2003, respectively, at cost		8,049,509			8,251,384
Total shareholders’ equity		35,940,974			35,812,517
	$	44,664,384		$	43,654,991

The accompanying notes are an integral part of these consolidated financial statements.

5

Boston Acoustics, Inc. and Subsidiaries

Consolidated Statements of Operations

(Unaudited)

	Three Months Ended
	June 29, 2002			June 28, 2003
Net sales	$	18,257,277		$	12,597,197
Cost of goods sold		12,448,444			8,017,458
Gross profit		5,808,833			4,579,739
Selling and marketing expenses		2,626,924			2,141,390
General and administrative expenses		1,231,520			1,111,307
Engineering and development expenses		1,554,583			1,119,561
Total operating expenses		5,413,027			4,372,258
Income from operations		395,806			207,481
Interest income		31,137			23,043
Interest expense		(19,165	)		(7,937	)
Other income		18,831			92,200
Income before provision for income taxes		426,609			314,787
Provision for income taxes		150,000			99,000
Net income	$	276,609		$	215,787
Net income per share
Basic	$	.06		$	.05
Diluted	$	.06		$	.05
Weighted average common shares outstanding (Note 3):
Basic		4,595,595			4,400,276
Diluted		4,673,688			4,400,372
Dividends per share	$	.085		$	.085

The accompanying notes are an integral part of these consolidated financial statements.

6

Boston Acoustics, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

	Three Months Ended
	June 29, 2002			June 28, 2003
Operating activities
Net income	$	276,609		$	215,787
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		801,485			573,212
Charge related to conversion of subscriptions receivable		—			29,042
Changes in assets and liabilities, net of acquisition:
Accounts receivable		(280,147	)		(1,448,237	)
Inventories		(197,034	)		1,831,218
Prepaid expenses and other current assets		(67,737	)		25,349
Accounts payable		933,270			(706,722	)
Accrued payroll and other accrued expenses		61,621			(160,035	)
Net cash provided by operating activities		1,528,067			359,614
Investing activities
Purchases of property and equipment		(248,351	)		(338,579	)
Decrease (increase) in other assets		6,197			(12,751	)
Net cash used in investing activities		(242,154	)		(351,330	)
Financing activities
Dividends paid		(390,626	)		(374,136	)
Repayments on line of credit		(1,250,000	)		—
Net cash used in financing activities		(1,640,626	)		(374,136	)
Net decrease in cash and cash equivalents		(354,713	)		(365,852	)
Cash and cash equivalents, beginning of period		5,134,558			6,941,222
Cash and cash equivalents, end of period	$	4,779,845		$	6,575,370
Supplemental Disclosure of Noncash Financing and Investing Activities
Dividends payable	$	390,626		$	373,286
Partial forgiveness of recourse notes	$	—		$	90,443
Conversion of recourse notes into non-recourse notes	$	—		$	140,474
Increase (decrease) in minority interest in foreign subsidiary	$	5,355		$	(13,329	)
Supplemental Disclosure of Cash Flow Information
Cash paid for income taxes	$	22,000		$	912
Cash paid for interest	$	19,557		$	7,937

The accompanying notes are an integral part of these consolidated financial statements.

7

Boston Acoustics, Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(1)    Basis of Presentation

The unaudited consolidated financial statements included herein have been prepared by Boston Acoustics, Inc. and subsidiaries (the Company), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission and include, in the opinion of management, all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of interim period results. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations. The Company believes, however, that its disclosures are adequate to make the information presented not misleading. The results for the three-month period ended June 28, 2003 are not necessarily indicative of results to be expected for the full fiscal year. These financial statements should be read in conjunction with the Company’s Annual Report included in its Form 10-K for fiscal year ended March 29, 2003.

(2)    Stock-Based Compensation

The Company follows Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (APB 25) and related interpretations, in accounting for its stock-based compensation plans, rather than the alternative fair value accounting method provided for under Statement of Financial Accounting Standards (SFAS) No. 123, Accounting for Stock-Based Compensation. Under APB 25, when the exercise price of options granted under these plans equals the market price of the underlying stock on the date of grant, no compensation expense is required. In accordance with Emerging Issues Task Force (EITF) 96-18, the Company records compensation expense equal to the fair value of options and warrants granted to non-employees over the vesting period, which is generally the period of service.

The following tables illustrate the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of SFAS No. 123 to stock-based employee compensation. The Company has computed the pro forma disclosures required under SFAS No. 123 for all stock options granted to employees of the Company for the three-month periods ended June 29, 2002 and June 28, 2003, respectively, using the Black-Scholes option-pricing model prescribed by SFAS No. 123.

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Pro forma disclosure.    The pro forma effect on the Company’s financial statements of applying SFAS No. 123 for all options to purchase common stock of the Company would be as follows:

	For the three months ended
	June 29, 2002			June 28, 2003
Net income, as reported	$	276,609		$	215,787
Less: Total stock-based employee compensation expense determined under fair value based method for all awards		338,524			228,903
Pro forma net loss	$	(61,915	)	$	(13,116	)
Basic and diluted net income per share:
As reported	$	0.06		$	0.05
Pro forma	$	(0.01	)	$	—

(3)    Inventories

Inventories are stated at the lower of cost (first-in, first-out) or market and consist of the following:

	March 29, 2003		June 28, 2003
Raw materials	$	3,404,077	$	2,657,672
Work-in-process		1,181,683		1,057,154
Finished goods		7,333,279		6,372,995
	$	11,919,039	$	10,087,821

Work-in-process and finished goods inventories consist of materials, labor and manufacturing overhead.

(4)    Net Income Per Common Share

The Company follows the provisions of Statement of Financial Accounting Standards (SFAS) No. 128, Earnings per Share. This standard requires presentation of both basic and diluted earnings per share on the face of the consolidated statements of operations. These consolidated financial statements have been prepared and presented based on this standard. For the three-month periods ended June 28, 2003 and June 29, 2002, there were 601,127 and 190,800 options respectively, that have been excluded from the weighted-average number of common and dilutive potential shares outstanding, as their effect would be antidilutive.

The computation of basic and diluted shares outstanding, as required by SFAS No. 128, is as follows:

	For the three months ended
	June 29, 2002	June 28, 2003
Basic weighted-average common shares outstanding	4,595,595	4,400,276
Dilutive effect of assumed exercise of stock options	78,093	96
Weighted-average common shares outstanding assuming dilution	4,673,688	4,400,372

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(5)    Revenue Recognition

The Company recognizes revenue in accordance with the Securities and Exchange Commission’s Staff Accounting Bulletin 101 (SAB 101), Revenue Recognition.

Revenue is recognized when products are shipped to customers, provided that there are no uncertainties regarding customer acceptance, there is persuasive evidence of an arrangement, the sales price is fixed or determinable and collection of the related receivable is probable.

At the time of revenue recognition, the Company provides reserves for sales rebates, timely pay discounts, and freight reserves.

The Company charges many of its customers shipping and freight costs related to the delivery of its products. Accordingly, the Company follows the provisions of Emerging Issues Task Force (EITF) Issue No. 00-10, Accounting for Shipping and Handling Fees and Costs. Amounts charged to customers are included in net sales in the accompanying consolidated statements of operations. The related shipping and handling costs are recorded in cost of sales in the accompanying consolidated statements of operations.

(6)    Segment Reporting

The Company has determined that it has two reportable segments: 1) core, and 2) original equipment manufacturer (OEM) and multimedia.

The accounting policies of the segments are the same as those described in the summary of significant accounting policies. The Company does not allocate operating expenses between its two reportable segments. Accordingly, the Company’s measure of profit for each reportable segment is based on gross profit.

Three months ended June 28, 2003	Core		OEM and Multimedia		Total
Net Sales	$	10,644,541	$	1,952,656	$	12,597,197
Gross profit	$	4,223,709	$	356,030	$	4,579,739
Three months ended June 29, 2002	Core		OEM and Multimedia		Total
Net Sales	$	12,800,078	$	5,457,199	$	18,257,277
Gross profit	$	4,968,339	$	840,494	$	5,808,833

(7)    Significant Customers and Concentration of Credit Risk

For the three-month periods ended June 28, 2003 and June 29, 2002, one OEM/Multimedia customer represented approximately 15% and 29% of the Company’s net sales, respectively, and one core customer represented approximately 31% and 13% of net sales, respectively. One OEM/Multimedia customer represented approximately 7% of net accounts receivable and one core customer represented approximately 40% of net accounts receivable at June 28, 2003.

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(8)    International Operations

The Company maintains sales concentrations in Europe, Asia, and Canada in addition to distributing product through three foreign subsidiaries. Export sales accounted for approximately 16% and 15% of net sales for the three-month periods ended June 28, 2003 and June 29, 2002, respectively.

(9)    Accounting for Customer Consideration

The Company follows the provisions of EITF Issue No. 01-09, Accounting for Consideration Given by a Vendor to a Customer (Including a Reseller of the Vendor’s Products). The Company offers cooperative advertising programs to its largest customers whereby the customers can earn sales credits for approved advertisements involving the Company’s products. The Company records these credits as an adjustment to the selling price of its products. For the three-month periods ending June 28, 2003 and June 29, 2002, cooperative advertising credits included as sales adjustments were approximately $527,000 and $633,000, respectively.

(10)    Recent Accounting Pronouncements

In May 2002, the Financial Accounting Standards Board (FASB) issued SFAS No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections. Among other things, SFAS No. 145 rescinds SFAS 4, Reporting Gains and Losses from Extinguishment of Debt and eliminates the requirement that gains and losses from the extinguishment of debt be classified as an extraordinary item, net of related income tax effects, unless the criteria in Accounting Principles Board Opinion 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 are met. Adoption of this statement is generally required in fiscal years beginning after May 15, 2002. The Company has adopted the provisions of SFAS No. 145 and the adoption did not have a material impact on the Company’s consolidated financial statements.

In December 2002, the EITF reached conclusion on EITF Issue No. 00-21, Accounting for Revenue Arrangements with Multiple Deliverables. This consensus provides guidance in determining when a revenue arrangement with multiple deliverables should be divided into separate units of accounting, and, if separation is appropriate, how the arrangement consideration should be allocated to the identified accounting units. The provisions of EITF No. 00-21 are effective for revenue arrangements entered into in fiscal periods beginning after June 15, 2003. The Company currently does not have revenue arrangements with multiple deliverables but will evaluate any multiple element arrangements in accordance with this EITF upon its effective date for new arrangements into which the Company enters.

In January 2003, the FASB issued Interpretation No. 46, Consolidation of Variable Interest Entities (FIN 46) to clarify the conditions under which assets, liabilities and activities of another entity should be consolidated into the financial statements of a company. FIN 46 requires the consolidation of a variable interest entity by a company that bears the majority of the risk of loss from the variable interest entity’s activities, is entitled to receive a majority of the variable interest entity’s residual returns, or both. The adoption of FIN 46 is not expected to have a material impact on the Company’s financial position or results of operations.

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ITEM 2.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS

Results of Operations

The following table sets forth the results of operations for the three-month period ended June 29, 2002 and June 28, 2003 expressed as percentages of net sales.

	Three Months Ended
	June 29, 2002		June 28, 2003
Net sales	100.0	%	100.0	%
Cost of goods sold	68.2		63.6
Gross profit	31.8		36.4
Selling and marketing expenses	14.4		17.0
General and administrative expenses	6.8		8.8
Engineering and development expenses	8.5		8.9
Total operating expenses	29.7		34.7
Income from operations	2.1		1.7
Interest income (expense), net	0.1		0.1
Other income	0.1		0.7
Income before provision for income taxes	2.3		2.5
Provision for income taxes	0.8		0.8
Net income	1.5	%	1.7	%

Net sales decreased 31 percent, from approximately $18,257,000 during the first quarter of fiscal 2003 to approximately $12,597,000 during the first quarter of fiscal 2004. The overall reduction in net sales is the result primarily of the continued difficult economic environment and its significant impact on both of the Company’s business segments. Net sales of the Company’s Core products decreased approximately 17% (or approximately $2,156,000), while net sales of the OEM/Multimedia segment were down 64% (or approximately $3,505,000) compared to the same three-month period a year ago. The decrease in the Core segment is primarily attributable to a decrease in aftermarket automotive product category sales and a smaller decrease in home product category sales, as compared to the corresponding quarter a year ago.

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The significant decrease in the OEM/Multimedia segment was anticipated. As a result measures were taken to reduce operating costs to offset the reduction in net sales.

During the three-month period ended June 28, 2003, the Company introduced new powered subwoofers to the Company’s acclaimed PV series of products replacing discontinued models. The PV700 and PV900 have suggested retails of $500 and $700 each respectively. Introductions of upgraded versions of existing product offerings, while permitting the Company to remain competitive, are not likely to result in significant increases in revenue over the long term.

Expenses included in the cost of goods sold line item are raw material, direct labor, freight, and indirect costs associated with the Company’s manufacturing operations.

The Company’s gross margin for the three-month period ended June 28, 2003 increased as a percentage of net sales from 31.8% to 36.4% due primarily to a larger portion of the total sales being derived from the Core business segment products. The Core business segment reflects sales of product categories that reflect higher margins and have also benefited from the continued improvements in manufacturing efficiencies, including cost reduction initiatives implemented at the end of the fourth quarter of fiscal 2003.

Gross margin for the OEM/Multimedia segment sales increased during the three-month period ended June 28, 2003 as compared to the same period a year ago because of a one-time reimbursement for rework costs from a subcontractor. Without the effect of this reimbursement, the OEM/Multimedia segment gross margin for the three-month period ended June 28, 2003 would have been approximately three percent.

Selling and marketing expenses include payroll and payroll-related costs as well as corporate advertising and literature costs associated with the sale and marketing of the Company’s products. Expenses included in the general and administrative expenses line item are management and administrative payroll and other expenses associated with the Company’s operations outside of manufacturing, research and development and sales and marketing, and include professional services, consulting arrangements, and investor relations expenditures. Engineering and development expenses include payroll and payroll-related expenses attributed to the design and enhancement of existing products along with the creation of new products; associated expenses include supplies, samples, test equipment, and inventory consumed.

Total operating expenses, although increasing as a percentage of net sales, have decreased in absolute dollars by approximately $1,041,000 during the three-month period ended June 28, 2003, as compared to the corresponding period a year ago. This decrease is the result of the corporate reorganization and rationalization plan implemented in the fourth quarter of fiscal 2003, resulting in reduced payroll costs and other expenses across all departments during the first quarter of fiscal 2004. Selling and marketing expenses have decreased in absolute dollars (approximately $486,000) primarily due to a decrease in payroll and payroll-related expenses (approximately $231,000) and corporate advertising and literature expenses (approximately $221,000) as compared to the same period a year ago. General and administrative expenses decreased in absolute dollars (approximately $120,000) due to a decrease in payroll and payroll-related expenses (approximately $130,000) and the decrease in value of donations contributed to charitable organizations (approximately $98,000) offset by an increase in legal and tax consulting fees (approximately $76,000) attributable to the Company’s research and tax credit accruals as compared to the same three-month period a year ago. Engineering and development expenses have decreased in absolute dollars (approximately $435,000) due to a reduction in payroll and payroll-related expenses (approximately $224,000) and consulting fees (approximately $138,000) as compared to the corresponding period in fiscal 2003.

The Company posted net interest income of approximately $15,000 for the three-month period ended June 28, 2003 compared to approximately $12,000 for the corresponding period last year. The increase is due to the Company’s repayment of its outstanding line of credit balance during fiscal 2003. At June 28, 2003,

13

the Company did not have any borrowings under either of its lines of credit as compared to $1,250,000 at June 29, 2002.

The Company’s effective income tax rate decreased to 31.4% for the three-month period ended June 28, 2003 from 35.2% for the three-month period ended June 29, 2002. The reduction in the Company’s effective income tax rate for fiscal 2004 results from research and development tax credits that have been identified and accrued during the current period.

Net income for the three-month period ended June 28, 2003 decreased from approximately $277,000 for the same period last year to $216,000 while diluted earnings per share decreased from $.06 to $.05 per share. The decrease is primarily attributable to the reduction in net sales partially offset by the increase in gross profit and the decrease in operating expenses resulting from the corporate reorganization and rationalization plan implemented during the fourth quarter of fiscal year 2003.

Liquidity and Capital Resources

As of June 28, 2003, the Company’s working capital was approximately $22,885,000, an increase of $93,000 since the end of fiscal 2003. The increase in working capital was due to an increase in accounts receivable and a decrease in accounts payable offset by a decrease in inventory. The Company’s cash and cash equivalents were approximately $6,575,000 at June 28, 2003, a decrease of $366,000 since March 29, 2003. Current liabilities decreased by approximately $868,000 due to a decrease in accounts payable and other accrued liabilities. The Company has two lines of credit with two U.S. banking institutions totaling $26,500,000. At June 28, 2003, the Company did not have any borrowings under either of these lines of credit.

Based on current market prices, management believes that the Company’s stock is undervalued and that the current Company stock repurchase program is a good investment of available funds. Repurchases are made from time to time on the open market at prevailing market prices and in negotiated transactions off the market. The repurchase program is expected to continue through the end of the current fiscal year unless extended or shortened by the Board of Directors. Repurchased shares will be held in treasury and, at the present, the Company has no plans for their reissuance.

Given the Company’s historical profitability and its ability to manage expenses, the Company believes that its current resources are adequate to meet its requirements for working capital and capital expenditures through the foreseeable future.

Significant Customers

For the three-month period ending June 28, 2003 sales of multimedia speaker systems to one OEM customer accounted for 15% of the Company’s net sales. Based on information currently available from our OEM customer, the Company anticipates that our OEM sales will decrease during fiscal 2004 as compared to fiscal 2003. The Company’s management has taken steps (including pursuit of additional OEM customers, expansion of the Company’s aftermarket automotive products offerings and renewed efforts to increase sales of the Company’s Core products), which it believes will mitigate the consequences of the expected decline in orders from this customer.

One Core customer accounted for approximately 31% of the Company’s net sales for the three-month period ended June 28, 2003 as compared to 13% of net sales for the corresponding period a year ago. In addition to its strategy of expanding the Company’s product offerings, management continues its efforts to enlarge and diversify its customer base for all products in order to reduce dependence on any single customer.

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Cautionary Statements

The Private Securities Litigation Reform Act of 1995 contains certain safe harbors regarding forward-looking statements. From time to time, information provided by the Company or statements made by its directors, officers, or employees may contain “forward-looking” information which involve risk and uncertainties. Any statements in this report that are not statements of historical fact are forward-looking statements (including, but not limited to, statements concerning the characteristics and growth of the Company’s market and customers, the Company’s objectives and plans for future operations, and the Company’s expected liquidity and capital resources). Such forward-looking statements are based on a number of assumptions and involve a number of risks and uncertainties, and accordingly, actual results could differ materially. Factors that may cause such differences include, but are not limited to: the continued and future acceptance of the Company’s products, the rate of growth in the audio industry; the presence of competitors with greater technical, marketing and financial resources; the Company’s ability to promptly and effectively respond to technological change to meet evolving consumer demands; capacity and supply constraints or difficulties; and the Company’s ability to successfully integrate new operations. The words “believe,” “expect,” “anticipate,” “intend” and “plan” and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made. For a further discussion of these and other significant factors to consider in connection with forward-looking statements concerning the Company, reference is made to Exhibit 99 of the Company’s Form 8-K filed on July 18, 1996.

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PART II:    OTHER INFORMATION

Item 1.    Legal Proceedings

None

Item 2.    Changes in Securities

None

Item 3.    Defaults Upon Senior Securities

None

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

None

Item 5.    Other Information

None

Item 6.    Exhibits and Reports on Form 8-K

The following exhibits are filed herewith:

31.1 and 31.2    Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1 and 32.2    Certifications pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

The following reports on Form 8-K were filed during the quarter ended June 28, 2003:

a.) Item 5. Resignation of President.

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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.

	BOSTON ACOUSTICS, INC. Registrant
Date: August 12, 2003	By:	/s/    ANDREW G. KOTSATOS
		Andrew G. Kotsatos Director, Chairman of the Board and Treasurer

Date: August 12, 2003	By:	/s/    MOSES A. GABBAY
		Moses A. Gabbay Director, President and Chief Executive Officer

Date: August 12, 2003	By:	/s/    DEBRA A. RICKER-ROSATO
		Debra A. Ricker-Rosato Vice President and Chief Accounting Officer

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EX-31.1

Exhibit 31.1

Certifications

I, Moses A. Gabbay, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Boston Acoustics, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a. designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b. evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

c. presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a. all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6. The registrant’s other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: August 12, 2003

By:	/s/    MOSES A. GABBAY
	Moses A. Gabbay President and Chief Executive Officer

EX-31.2

Exhibit 31.2

I, Debra A. Ricker-Rosato, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Boston Acoustics, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a. designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b. evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

c. presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a. all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6. The registrant’s other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: August 12, 2003

By:	/s/    DEBRA A. RICKER-ROSATO
	Debra A. Ricker-Rosato Vice President – Finance (Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Boston Acoustics, Inc. (the “Company”) on Form 10-Q for the period ending June 28, 2003 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Moses A. Gabbay, Chief Executive Officer of the Company, certify, solely pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to our knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) as applicable of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/    MOSES A. GABBAY

Moses A. Gabbay

President and Chief Executive Officer

August 12, 2003

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Boston Acoustics, Inc. (the “Company”) on Form 10-Q for the period ending June 28, 2003 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Debra A. Ricker-Rosato, Principal Financial Officer of the Company, certify, solely pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to our knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) as applicable of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/    DEBRA A. RICKER-ROSATO

Debra A. Ricker-Rosato

Principal Financial Officer

August 12, 2003