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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

For the Quarterly Period Ended December 31, 2003

or

For the transition period from              to             

Commission File Number 0-26924

AMX CORPORATION

(Exact name of registrant as specified in its charter)

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

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AMX CORPORATION

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2003

INDEX

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AMX CORPORATION

CONSOLIDATED BALANCE SHEETS

See accompanying notes.

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AMX CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

See accompanying notes.

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AMX CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

See accompanying notes.

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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, are unaudited (except for the March 31, 2003 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 31, 2003 are not necessarily indicative of the results that may be expected for the entire fiscal year ending March 31, 2004.

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 and nine months ended December 31, 2003 and 2002, and illustrates the effect on net income and net income per share if the Company had applied the fair value recognition provisions of SFAS No. 123:

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Of the total stock options outstanding, 329,516 and 1,042,575 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 months ended December 31, 2003 and 2002, 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:

4. Debt

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.

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 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 assess 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 Company has recorded a tax provision of $34,000 and $129,000 for the quarter and nine months ended December 31, 2003, respectively, which principally represents domestic alternative minimum tax and foreign taxes on the Company’s U.K. subsidiary.

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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 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.

7. Restricted Stock Award

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.

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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. 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.

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.

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).

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Applications in 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 sales are made through dealers and distributors who are supported by Company sales and support offices in various geographic areas. In addition, the Company utilizes independent manufacturers’ representatives in areas not served by Company offices. In the United States, the Company principally relies on over 700 specialized third-party dealers of electronic and audio-visual equipment to sell, install, support, and service its products. In addition to maintaining an office in the United Kingdom, the Company relies on an international network of exclusive distributors and over 1,200 dealers to serve its worldwide markets. Dealers and distributors use AMX design software to tailor the Company’s control system for the unique requirements of each installation. The Company also sells various customized products, primarily user interface devices, to OEMs and other large customers.

The Company believes that the market for its products continues to grow and diversify due to the increasing functionality, greater affordability, and widespread use of a diverse array of electronic devices, particularly sophisticated audio, video, and presentation equipment. Many of these devices have separate control mechanisms that are incompatible due to the absence of any one widely accepted control standard. This creates a need for an integrated control system such as those offered by the Company.

The Company’s strategy is to take advantage of the growth in the market for its products by bringing the power and flexibility of integrated control technology to a wide variety of settings. Elements of the Company’s strategy include:

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:

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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, 2003 and 2002 (in thousands, except for per share amounts):

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Three Months Ended December 31, 2003 Results Compared to Three Months Ended December 31, 2002

The Company recorded sales during the quarters ended December 31, 2003 and 2002 as follows:

Total revenue increased $1.1 million over the year ago quarter, including revenue growth in each sector. Total commercial revenue increased 5%, consisting of a 4% increase in domestic commercial revenue and a 6% increase in international commercial revenue. Residential revenue was up 11% over the year ago quarter. In December 2003, the Company began shipping three additional product lines consisting of approximately 40 new products. The percentage of revenue from these products and the other products introduced in the last 18 months continues to increase. Management believes these products will continue to contribute to sales growth as the products are incorporated into upcoming projects.

Gross margins of 53.1% for the quarter ended December 31, 2003 were up from margins of 49.9% for the year ago quarter. Efficiencies gained from the Company’s outsourcing strategy continue to have a positive impact on operating margins compared to the year ago quarter.

Selling and marketing expenses increased to $5.7 million or 27% of net sales compared to $5.2 million or 26% of net sales for the third quarter of fiscal 2003. 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 quarter of fiscal 2003. Growth in research and development spending has slowed somewhat after the heavy investments in research and development during the first six months of fiscal 2004. During fiscal 2004, the Company has introduced new and innovative control and automation solutions and expanded its portfolio of products, including 3 new product lines and approximately 40 new products that began shipping in December. 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 expense was approximately $13,000 compared to $89,000 for the third quarter of fiscal 2003. This decline is attributable to lower average daily outstanding balances on the Company’s revolving line of credit and term note compared to the year ago quarter. Other income was approximately $210,000 compared to $5,000 in the year ago quarter. This change is primarily related to foreign exchange gains in the current year associated with exchange rate fluctuations between the U.S. dollar and the British pound. The U.S. dollar is the functional currency of the Company’s U.K. subsidiary.

The Company’s effective tax rate was approximately 2.3% for the quarter ended December 31, 2003 versus 4% for the year ago quarter. The tax provision of $34,000 recorded for the quarter principally represents domestic alternative minimum tax and foreign taxes for the Company’s U.K. subsidiary. The

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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 quarter is a result of certain tax planning strategies and changes in the relationship between domestic and foreign pre-tax operating results.

Nine Months Ended December 31, 2003 Results Compared to Nine Months Ended December 31, 2002

The Company recorded sales during the nine months ended December 31, 2003 and 2002 as follows:

Total revenue increased slightly over the year ago period. Total commercial revenue declined 1%, consisting of a 3% decrease in domestic commercial revenue, which was offset by a 3% increase in international commercial revenue. Residential revenue was up 10% over the year ago period. In December 2003, the Company began shipping three additional product lines consisting of approximately 40 new products. The percentage of revenue from these products and the other products introduced in the last 18 months continues to increase. Management believes these products will continue to contribute to sales growth as the products are incorporated into upcoming projects.

Gross margins of 53.4% for the nine months ended December 31, 2003 were up from margins of 50.6% for the comparable prior year period. Efficiencies gained from the Company’s outsourcing strategy continue to have had a positive impact on operating margins.

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

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$332,000 compared to $14,000 for the nine months ended December 31, 2002. This change is primarily related to foreign exchange gains in the current year associated with exchange rate fluctuations between the U.S. dollar and the British pound. The U.S. dollar is the functional currency of the Company’s U.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

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.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

From March 31, 2003 until December 31, 2003, there were no material changes from the information concerning market risk contained in the Company’s Annual Report on Form 10-K for the year ended March 31, 2003, as filed with the Securities and Exchange Commision on June 25, 2003 (file no. 0-26924).

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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 December 31, 2003.

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.

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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

Current report on Form 8-K dated as of January 22, 2004, and filed on January 26, 2004, regarding the Registrant’s press release for the third quarter ended December 31, 2003.

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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.

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