<PAGE>

                               F O R M   1 0 - K

      S E C U R I T I E S   A N D   E X C H A N G E   C O M M I S S I O N

                                 Washington, D.C.  20549

(Mark One)
  [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
      ACT OF 1934 [FEE REQUIRED]

                    For the fiscal year ended July 31, 2000
                                      or

  [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

           For the transition period from  ___________ to __________

                       Commission File Number:  0-15240

               L O W R A N C E   E L E C T R O N I C S,  I N C.
             ----------------------------------------------------
            (Exact name of registrant as specified in its charter)


        Delaware                                     44-0624411
 ------------------------               ------------------------------------
 (State of incorporation)               (I.R.S. Employer Identification No.)


                     12000 East Skelly Drive
                          Tulsa, Oklahoma                          74128
              ----------------------------------------          ----------
              (Address of principal executive offices)          (Zip Code)

Registrant's telephone number, including area code: (918) 437-6881

          SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

                               Common Stock, par
                             value $.10 per share
                             --------------------
                               (Title of class)

     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 if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K for any amendment to
this Form 10-K.  [X]

              Aggregate Market Value of the Voting Stock Held By
                Non-Affiliates on October 18, 2000 - $6,399,254

                       Number of Shares of Common Stock
                  Outstanding on October 18, 2000 - 3,768,796

                      DOCUMENT INCORPORATED BY REFERENCE
         Proxy Statement for Annual Meeting of Stockholders to be held
                         December 12, 2000 - Part III
<PAGE>

                                   FORM 10-K

               Annual Report for Fiscal Year Ended July 31, 2000

                          LOWRANCE ELECTRONICS, INC.

                                                                 Page
                                                                 ----

                             Table of Contents
                      -------------------------------

                                  PART I

Item 1.     Business............................................... 1

Item 2.     Properties.............................................14

Item 3.     Legal Proceedings......................................14

Item 4.     Submission of Matters to a Vote of Security Holders....14


                                  PART II

Item 5.     Market for Registrant's Common Equity and Related
            Stockholder Matters....................................15

Item 6.     Selected Financial Data................................15

Item 7.     Management's Discussion and Analysis of Financial
            Condition and Results of Operations....................16

Item 8.     Financial Statements and Supplementary Data............21

Item 9.     Changes in and Disagreements with Accountants on
            Accounting and Financial Disclosure....................21


                                 PART III

Item 10.    Directors and Executive Officers of the Registrant.....21

Item 11.    Executive Compensation.................................21

Item 12.    Security Ownership of Certain Beneficial Owners
            and Management.........................................21

Item 13.    Certain Relationships and Related Transactions.........22


                                 PART IV

Item 14.    Exhibits, Financial Statement Schedules, and
            Reports on Form 8-K....................................22
                                                      and F-1 to F-17

Signatures  .......................................................26
<PAGE>

                          LOWRANCE ELECTRONICS, INC.
                                 Annual Report
                       For the Year Ended July 31, 2000


                                 PART I

Item 1. Business
------- --------

General     (For this Annual Report, the term "Company" refers to
-------
            Lowrance Electronics, Inc., including its subsidiaries and
            its predecessors, unless  the context indicates otherwise.)

    Founded in 1957, incorporated in 1958 and re-organized as a Delaware
corporation in 1986, the Company, today, remains the world leader in the design,
manufacture and sales of sportfishing SONAR (also known as fish finders or depth
finders) and Global Positioning Systems (GPS/Mapping). The Company commands
almost 50% of the total worldwide annual unit sales of sportfishing SONAR
through dual-brand marketing of its "Lowrance" and "Eagle" trade names.  In
support of those two brands, the Company also markets a complete line of related
accessories (transducers, temp/speed/distance sensors, mounting systems, GPS
receivers/antennas, detailed CD-ROM mapping software, SONAR/GPS computer
interfaces and a variety of cables/connectors, etc.). The Company's SONAR
instruments are used primarily by sports fishermen to: detect underwater
structure, schools of baitfish, and individual game fish; determine bottom depth
as well as bottom composition/hardness; and display water surface temperature,
trolling speed and distance traveled readings. Fishermen and boaters also
utilize the Company's SONAR products as critical navigational and safety devices
for determining bottom depth in lakes, rivers, coastal and offshore waters.  The
Company's 12-parallel channel GPS receivers offer consumers faster satellite
lock-ons and more accurate GPS navigation.  Whether using the built-in custom
background world map, the Company's exclusive MapCreate CD-ROM detailed mapping
software, or compatible Navionics digitized mapping, fishermen and boaters can
determine precisely where they are relative to landmarks on the map, then see
exactly what is under their boats as well. Several products offer combined
SONAR/GPS-mapping capabilities; others provide stand-alone SONAR or GPS
capabilities. Some models are gimbal-mounted in brackets; some can be panel-
mounted in a console; others are hand-held products. The GPS navigational
receivers can be used in a variety of marine and non-marine applications such as
fishing, boating, hunting, camping/backpacking, RV/off-road vehicles, aviation
and automobile navigation. The Company's SONAR and GPS products are marketed
primarily through wholesale distributors, dealers, original equipment boat
manufacturers (OEMs), mail-order catalogs, mass merchants and other retail
outlets in all fifty states and in sixty-five foreign countries.

    The Company's principal U.S. corporate offices are located at 12000 East
Skelly Drive, Tulsa, Oklahoma 74128, and the main telephone number is
918.437.6881. The corporate offices encompass: Engineering, Sales and Marketing,
Order Management, Customer Service, Product Warranty and Repair, Purchasing,
Accounting, and LEI Extras, Inc. (accessory sales). Over 200 professional staff
and management personnel are employed at the Tulsa corporate facility. The
primary U.S. Warehouse/Distribution Center is also located in Tulsa, OK at 1541
North Garnett Road, 74116 - Phone 918.438.8790.      The Company's principal
manufacturing facility, Electronica Lowrance, is located in Ensenada, Mexico,
approximately 100 miles south of San Diego, California.  There are over 700
manufacturing and production support at the Ensenada plant.

                                       1
<PAGE>

Products
--------


    The Company's dual-brand product lines consist primarily of SONAR and
GPS/Mapping navigational products, along with popular accessories for both
brands and product categories.

    SONAR Systems
    -------------

        The components of a typical SONAR (SOund Navigation And Ranging) system
    are: (1) A SONAR head unit with LCD display, keypad and internal circuitry
    including a transmitter and receiver; (2) A transducer (which transmits and
    receives sound waves through the water); and (3) A power source (i.e., the
    12-Volt marine battery already installed on most boats). The head unit is
    connected by cable to the transducer which is often mounted on the transom
    of a boat or banded to a trolling motor so that when in use, the transducer
    is always slightly beneath the surface and has a smooth flow of water around
    it. The head unit containing the transmitter, receiver and display is
    normally mounted on the console (gimbal bracket or panel mount) where it can
    be easily viewed by the boat operator; occasionally, a second SONAR head
    unit is mounted on the bow near the trolling motor so the angler can observe
    the fish finder clearly when fishing from the forward deck. The SONAR
    components work together by first generating an electrical impulse in the
    transmitter, then converting that energy into sound waves in the transducer
    and transmitting those ultrasonic pulses down through the water. When the
    sound waves strike objects such as the bottom, an underwater structure, a
    shipwreck, a school of baitfish or an individual game fish - they rebound,
    creating echoes. The transducer converts the echoes back into electrical
    impulses which are sent to the receiver.  The receiver processes the
    impulses and transmits the information to the display for use by the boater.
    This sounding process repeats itself many times per second, each time at a
    slightly different location (assuming the boat is moving) and instantly and
    accurately paints detailed pictures of the underwater world by combining the
    results of numerous soundings.  The resultant SONAR images are extremely
    helpful to anglers and boaters in their interpretation of suspended targets
    and the bottom.

        The Company's SONAR products are extremely durable and completely
    waterproof and are designed to withstand the harsh environments, including
    the shock and vibration encountered by sport boats.  Sport boats, unlike
    offshore commercial boats, are usually open to direct sun and are subject to
    shock, rain, salt spray and temperature extremes that constantly test the
    durability of a SONAR.  The Company's products are also designed
    specifically for the needs of sport fishermen who, unlike their commercial
    counterparts, are sometimes more interested in the size, depth and location
    of individual game fish, depth of thermoclines, or underwater structures,
    rather than the location of large schools of fish.  The Company's SONAR
    units are designed for and used by both freshwater and saltwater sports
    fishermen and boaters. The Company's SONAR models can typically utilize a
    variety of transducers manufactured by the Company in different sizes,
    shapes, frequencies and beam angles, to fit all types of boats and for every
    deep and shallow water application. The Company's SONAR instruments are
    distinguished primarily by the types of their displays. Today, the vast
    majority of its products utilize graphic liquid crystal displays (LCDs),
    although the Company still manufactures significant numbers of flashers and
    digital LCDs (other SONARs).

     Graphic Liquid Crystal Display (LCD) SONAR - The Company pioneered LCD
     ------------------------------------------
     technology with regard to LCD use in SONAR products.  The Company was the
     first to employ high-resolution, high-contrast Film SuperTwist LCD
     technology, which has earned it a reputation for high-quality SONAR
     instruments with the very best target detail and separation in the

                                       2
<PAGE>

     industry. During 2000, the Company announced that by 2001, all its SONAR
     products will have Film SuperTwist displays, from the basic $99 Eagle unit,
     to the top-of-the-line Lowrance products. At ICAST 2000, the Company
     introduced a whole new LCX-15 and LCX-16 Series of big-screen, high-
     performance monochrome transflective, color transflective and color TFT
     (Thin Film Transistor) Lowrance LCD products.  Patterned after the superb
     performance qualities of their X-15 and X-16 paper graph ancestors, some of
     these new LCD products have up to 6.38", 640 x 480 pixel screens, offering
     much higher levels of resolution and readability.  Plus, they offer
     unprecedented record/playback capabilities with reusable, compact digital
     Multi-Media Cards (MMC). One of the new Lowrance color LCDs, the LCX-16Ci,
     was presented the prestigious "Best of Show" Award at ICAST 2000.

        Also during the 4th quarter of 2000, the Company introduced 7 new Eagle
     SONAR and GPS-mapping LCD products: first, there were 3 new entry-level
     SONAR units in the FishEasy Series (FishEasy, FishEasy ST, and FishEasy
     Portable); next was the TriFinder 3Beam SONAR that produces the widest
     underwater coverage yet - up to 150 with ASP on; the Status is the new 160
     x 160 pixel, SONAR/GPS-mapping combo; the new Eagle Journey is a stand-
     alone, 12-parallel channel GPS/mapping-only unit; and finally, the Accura
     240 offers a 240 x 240 pixel high-resolution LCD screen that produces
     superior target detail.

        In general, the Company's LCD products are easier to use, provide more
     advanced capabilities and incorporate numerous patented features. For
     example, Advanced Signal Processing (ASP), constantly monitors boat speed,
     water conditions and other sources of interference, and automatically
     adjusts all critical SONAR settings for the best pictures possible and
     superior performance, whether a boat is trolling or traveling at high
     speed.  Additionally, the Company's GRAYLINE innovation clearly separates
     fish and vital structure on or near the bottom from the true bottom and
     also helps define changes in bottom hardness and composition. All of the
     Company's SONAR models utilize advanced  computer technology and are
     keyboard controlled. The LCD models graphically display the bottom contour,
     fish and other underwater targets on an LCD and digitally display the water
     depth.  Several models can also display digital readings for the surface
     temperature of the water, boat speed and distance traveled.  Most anglers
     agree that the current high-resolution LCD SONAR instruments are far easier
     to read and interpret than flasher SONAR models.  Also, LCD SONAR units
     have no moving parts; therefore, they are more durable than other SONAR
     types.  The Company's entry-level to lower mid-range LCD SONAR products
     typically feature at least 128 vertical pixel screens and 600 watts of
     peak-to-peak power, producing depth capabilities to 600 feet or more.
     These products are normally priced in the $99 to $200 suggested retail
     price (SRP) range.  The mid-range to upper-middle products typically offer
     larger, 160 to 240 vertical pixel LCD displays and power outputs from 600
     to 3,000 Watts peak-to-peak, with depth capabilities from 600 to 1,200
     feet.  They're typically priced in the $250 to $450 SRP range.

     The new  big-screen Lowrance units will feature 240 to 480 vertical pixel
     LCDs, offer 50/200 kHz dual-frequency selectivity and produce up to 8,000
     Watts peak-to-peak power, resulting in depth capabilities to 4,000 feet or
     more.  These new advanced models will retail from $759 to $2,199, depending
     on whether they are packaged as SONAR-only or as combo SONAR/GPS-mapping
     instruments. The Company will market a total of 15 LCD SONAR models in
     2001, including 2 color units, the LCX-15CT and LCX-16Ci.

     Other SONAR Types - The Company's other SONAR types include flasher models
     -----------------
     and digital models.  Flashers were the first type of SONAR

                                       3
<PAGE>

     products designed and manufactured by the Company in 1957. The basic
     display consists of a neon bulb affixed to a spinning disk. The bulb lights
     when it receives a SONAR signal, flashing next to the appropriate depth
     mark on a calibrated circular dial. Digital SONAR units are marketed and
     used solely to determine water depth which is depicted only by a digital
     depth readout displayed on an LCD. The flasher and digital SONAR models
     have varying depth capabilities ranging from 300 feet for flashers to 400
     feet for digital units and range in retail price from approximately $140 to
     $300.

     Global Positioning System (GPS) - The  U.S.  Department  of  Defense's
     ------------------------------
     Global Positioning System offers worldwide navigational information for

     users via a constellation of twenty-four satellites.  The system provides
     precise global navigation for land, water and air applications delivering
     constant updates of an individual or object's position in latitude,
     longitude and altitude.  Additionally, GPS measures speed and direction of
     travel. During 2000, the accuracy level of the non-military,
     commercial/consumer segment of the system was enhanced by 10-times when the
     government turned-off Selective Availability (SA). The Company's own tests,
     based on data recorded immediately before and after the shutdown of SA,
     confirmed that position accuracy levels did improve overnight from a
     maximum discrepancy area the size of a football field - down to a maximum
     discrepancy area the size of a tennis court, or approximately 10-meters.
     Industry specialists believe that in combination with the public's
     heightened awareness of the advantages offered by GPS, this improved GPS
     accuracy will spark significant new sales of consumer GPS products over the
     next 5 years.

            The Company has always been a leader in the development of marine
     navigational technology and related products, including GPS, and was the
     first to introduce a 5-parallel channel hand-held GPS model for both the
     marine and general outdoor sports markets. By fiscal 1997, the Company's
     GPS technology had evolved exclusively into 12-parallel channel marine,
     outdoors and general aviation receivers for even faster satellite lock-ons
     and greater accuracy.  The Company's popular GPS products now utilize much
     smaller antennas and have become considerably more user-friendly. Added to
     these important advantages is the Company's breakthrough digitized mapping.
     Whether users choose to rely on the built-in, custom Lowrance background
     world map loaded into every mapping product at no extra cost - or if they
     choose to purchase the optional MapCreate GPS Accessories Pack with
     detailed mapping CD-ROM software and PC computer interface cables,
     consumers will be able to pinpoint their locations precisely on their GPS
     maps using landmark references, including roads and streets all around
     them.  And with the Company's combo SONAR/GPS-mapping models, fishermen and
     boaters can not only find themselves on the map,  but also see exactly what
     is under their boats as well.  During 2000, five popular existing Lowrance
     marine and outdoor GPS products and two avionics GPS models were marketed
     very successfully: the LMS-160 Map, the GlobalMap 1600, the GlobalNav 310,
     LMS-350A, GlobalMap 2000, the GlobalMap 100 (hand-held) and the AirMap 100
     and AirMap 300 aviation products.

        During the 4th quarter of 2000, at ICAST in Chicago, the Company
     announced the introduction of 5 brand new Lowrance GPS/mapping products:
     the big-screen LCX-15MT combo SONAR/GPS-capable Monochrome Transflective;
     the  LCX-15CT combo SONAR/GPS-capable Color Transflective; the LCX-16Ci
     combo SONAR/GPS Color Illuminated, with TFT display; the GlobalMap3000MT
     GPS/mapping-only unit;  and the new personal hand-held GPS, the iFINDER.
     These exciting new gimbal-mount and hand-held GPS/mapping products offer
     state-of-the-art technology previously not available to the sportfishing
     and outdoor sports markets. From

                                       4
<PAGE>

     record/playback capabilities, with reusable compact digital Multi-Media
     Cards (MMC) on the gimbal models, to greatly increased internal flash
     memory that protects stored data for up to 100 years, these bold new
     products have attracted much attention within the trade and in the media.
     The iFINDER personal hand-held GPS/mapping unit, with its colorful
     changeable faceplate options called FaceOFFS and 8MB of flash memory, is
     expected to set new sales records in the future. From two brilliant new
     color LCD displays on the LCX-15CT and LCX-16Ci, to high-resolution
     Monochrome Transflective (MT) screens on the LCX-15MT and the
     GlobalMap3000MT, screen detail has never been better. In addition, 2 new
     Eagle GPS products were introduced at ICAST 2000: the Status SONAR/GPS-
     mapping combo; and the Journey stand-alone GPS/mapping-only unit.

        All these GPS products feature built-in, erasable, triple-layered
     Lowrance custom background maps containing enhanced mapping detail for
     bodies of water, shorelines and highways from southern Canada to northern
     Mexico, plus Hawaii and the Bahamas.  The greatest detail is concentrated
     on U.S. shorelines, coastal waterways, lakes and rivers.  Consumers will
     have the option to customize their GPS maps to exacting proportions with
     the Company's exclusive MapCreate CD-ROM software option and/or optional
     Navionics software.  A unique "cookie cutter" map chooser feature lets the
     user maximize memory space by creating and downloading only the specific
     detailed mapping segments he/she wants. This convenient, easy-to-use CD-ROM
     software has replaced all the individual mapping cartridges required for
     the Company's previous mapping products. A sampling of additional GPS
     features included in the new Lowrance big-screen units are:  two waterproof
     input ports for MMC cards; mega-memory storage for up to 1,000 waypoints,
     plus 1,000 event markers and up to 100 routes; 10 savable plot trails with
     up to 10,000 points per trail; choice of 42 different graphic icons to mark
     favorite spots; 34 different map ranges, from 0.1-to-4,000 miles, with one-
     touch zoom-in/zoom-out control; internal flash memory protects stored data
     for up to 100 years; high-impact protective cover safeguards screen and
     keypad when not in use; completely sealed and waterproof; and a full 1-year
     warranty on every product.

        The Company's hand-held GPS products, the GlobalMap100, the new iFINDER,
     the AirMap100 and the AirMap300 all feature high resolution Film SuperTwist
     LCD displays, detailed mapping functions,  easy  zoom-in/zoom-out
     operation  and  enhanced  software   which   includes  a unique "initialize
     from map"  feature,  sunrise/sunset  and  lunar phase  information,
     position averaging and emergency nearest waypoint feature.  The AirMap 100
     and AirMap 300 also offer an HSI-style screen and a detailed Jeppesen
     database of all North and South American airports including runway
     diagrams, restricted air spaces, navigation aids communication frequencies,
     obstructions and aviation services available.

    SONAR and GPS Accessories
    -------------------------

        The Company also markets a full line of accessories through its
    subsidiary, LEI Extras, Inc.  Primary accessory items consist of transducers
    (50kHz, 192kHz, and 200kHz), water temperature and boat speed sensors,
    cables (power, transducer, and GPS), portable power packs, ice fishing
    accessories, GPS detailed mapping CD-ROM software, PC computer interface
    cables, power adapter cables, caps and other clothing items and various
    mounting brackets, all of which are used in conjunction with the Company's
    SONAR and GPS products.

                                       5
<PAGE>

Product Sales
-------------

    The following table sets forth the percentage of total sales of SONAR, GPS
and other products sold by the Company in the past three fiscal years.
<TABLE>
<CAPTION>

                             Percent of Total Product Sales
                             ------------------------------
<S>                              <C>      <C>     <C>
                                  1998    1999    2000
                                  -----   -----   -----

 SONAR                             58.2%   58.2%   73.8%
 GPS                               31.1    32.7    14.4
 Other                             10.7     9.1    11.8
                                  -----   -----   -----
                       Total:     100.0%  100.0%  100.0%
                                  =====   =====   =====

</TABLE>
Product Distribution
--------------------

    As pointed out earlier, the Company markets its products under two trade
names, "Lowrance" and "Eagle".  Sales of Lowrance products as a percentage of
total sales were approximately 53% in 1998, 58% in 1999 and 52% in 2000.

    The Lowrance line in both SONAR and GPS, with its large selection of
interchangeable transducers and its more extensive features, is intended for the
more sophisticated user.  The wide choice of transducers available with Lowrance
SONAR models allows for greater installation and operating flexibility through
selection of a transducer of the appropriate size, shape, beam angle and
frequency to meet the angler or boater's specific needs.  As a result of the
Company's large investment in the development of high-performance transducer
designs, the Company now packages many of its Lowrance and Eagle SONAR units
with its patented Skimmer model, a high-performance transducer that is suitable
for use on nearly all types of boat hulls and will perform well at boat speeds
up to 70 mph. Lowrance customers can, however, exchange their Skimmer transducer
for credit toward a different model if it better meets their specialized
requirements for installation or operation.  Generally, the boater will require
special assistance with the installation  and  operation of a  Lowrance SONAR.
To this end,  the Company sells its Lowrance line primarily to boat
manufacturers, wholesalers and retailers the Company believes have sufficient
knowledge of the installation, use and service of the Lowrance line and can
communicate such knowledge to customers.  As of July 31, 2000, the Company had
approximately 2,200 wholesalers and retailers purchasing products in the
Lowrance line.  A SONAR Installation Subsidy (SIS) is offered as a means of
sharing the cost of the installation to authorized dealers that sell and install
Lowrance products.  The Company is convinced that, over the past three years,
the Lowrance line has been sold primarily through dealers having the requisite
level of knowledge to sell, install and properly instruct fishermen and boat
owners as to their products' effective use.  Terms of payment for products in
the Lowrance line vary based on the time of the season, with the longest dating
terms of 120 days being offered for shipments during the first quarter of the
fiscal year.

    The Eagle line is sold primarily to mass merchants, mail-order catalog
companies, retail sporting goods stores and wholesalers that do not usually
provide technical assistance to the consumer regarding the installation and
operation of SONAR and GPS products.  Recognizing that special assistance will
not be available as to the selection of an appropriate transducer or the
operation of an Eagle SONAR or GPS, the Company pre-packages each Eagle SONAR
with a universal Skimmer 20, 192 kHz transducer designed to work adequately on
most boats. The operation requirements for the entry-level Eagle SONAR

                                       6
<PAGE>

units have also been simplified for the less sophisticated SONAR user.  While
the typical Eagle SONAR does not have the same installation and operating
flexibility as its Lowrance counterpart, it is, on the other hand, normally less
expensive to the consumer.  Terms of payment for products in the Eagle line are
generally thirty days.  However, dating terms similar to those for the Lowrance
line are also offered.

    The Company's products are sold in all fifty states and sixty-five countries
internationally.  The Company's international sales totaled $22 million in 1998,
$18 million in 1999, and $13 million in 2000, representing approximately 24%,
20%, and 18% of total net sales, respectively.  The two largest international
markets for the Company's products are Canada and Australia, where the Company
maintains its own warehouses for sales and distribution of its products.  Annual
sales in any one foreign country did not account for 10% or more of the
Company's total annual sales during the last three fiscal years. With the
addition of its new in-house marketing team in 2000 (capable of much greater
international sales support), in combination with the introduction of several
exciting new products with significant international consumer appeal, the
Company expects international sales growth over the next 5 years.

    LEI Extras, Inc., a wholly-owned subsidiary, permits Lowrance and Eagle
customers to purchase, via internet, toll-free phone or mail-order, quality
Lowrance accessories that might not be carried by a dealer and would otherwise
be difficult to obtain.  Because LEI Extras, Inc., is not intended to compete
directly with retail outlets that carry the Company's products, the Company does
not expect revenues from its mail-order operations to be significant.

    Sales to Wal-Mart Stores, Inc. accounted for 13% of the Company's net sales
in both 1999 and 2000.  No other customer accounted for 10% or more of net sales
in fiscal 1998, 1999 or 2000.

Inventories
-----------

    The Company normally manufactures its products in anticipation of, and not
in response to, customer orders and fills orders within a short period of time
after receipt.  Thus, the Company must maintain inventories of finished goods to
permit it to fill orders promptly.  The Company's receipt of orders generally
peaks upon the introduction of new products and during the peak sales months of
January, February, March, and April.  See "Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations".

Advertising and Promotion
-------------------------

    To support the sales of its Lowrance and Eagle products to wholesalers, mass
merchandisers, mail-order catalog companies and others, the Company actively
promotes and advertises its products to fishermen, boat owners and increasingly
to other outdoor enthusiasts.  The high-tech nature of the Company's products
makes education of the user an important aspect of the Company's promotional
activities.  Through educating and familiarizing potential buyers with the
practical benefits and use of SONAR and GPS/mapping products, the Company
endeavors to create demand for its products.  The Company's internet web sites,
www.lowrance.com, www.eagleSONAR.com and www.lei-extras.com, have played a major
----------------  ------------------     ------------------
role in educating consumers about the Company's product lines.  A special "SONAR
Tutorial" featured on the web site has been extremely popular with potential
buyers.

    During the third quarter of 2000, the Company's new VP of Marketing formed a
new internal Marketing Communications Department comprised of a core staff of 5
communications specialists.  The positions include a Promotional Programs
Coordinator, a Manager of Advertising & Public Relations, an Art

                                       7
<PAGE>

Director and a Director of Marketing Communications. The new department has
extensive in-house computer graphics and writing capabilities and will be
responsible for the future creative development of all advertisements, product
catalogs, product packaging, collateral materials including sales flyers and
product spec sheets, retail point-of-purchase displays and sales support
materials. The benefits offered the Company by this new marketing group are
numerous. For example, the Company has resigned its relationship with its
previous advertising agency and is placing its own ads, thus saving the annual
agency service and production fees as well as receiving the typical 15% agency
commissions on media purchases. The new department provides much faster reaction
times to media opportunities. Also, the department has offered to graphically
layout the Company's product pages for several large national retail catalog
sales customers and those customers have accepted. This action will ensure great
consistency in the future appearance of the Company's products, as well as an
overall improved "quality look" in the various catalogs. The Marketing
Department will plan and execute a coordinated marketing communications program
that will consist of: print media advertising, TV fishing show sponsorships,
national bass and walleye tournament sponsorships, Pro-Team sponsorships,
SONAR/GPS training seminars and a concentrated public relations and promotional
strategy that will result in greatly increased media exposure for the Company's
products.

    Assisting in the promotional effort, the Company also utilizes its sales
force of seventeen full-time employees to promote its products worldwide.
Additionally, the Company employs four manufacturer's representative groups to
augment the sales force in various parts of the United States.  The sales
personnel employed by the Company and the manufacturer's representatives have
the knowledge and time necessary to educate wholesalers, dealers, fishermen and
boat owners  on the proper use of SONAR and GPS products and demonstrate
the practical benefits of these technologies.  The sales personnel train
wholesalers and dealers to sell the Company's products, give demonstrations at
outdoor recreation and boat shows and participate in store promotions, seminars
and related product presentations.

    To supplement the sales force, the Company has a part-time independent sales
group known as the "Pro-Staff". The Pro-Staff consists of approximately two
hundred fishing professionals, tournament fishermen, serious outdoors
enthusiasts and pilots trained and equipped by the Company to promote the
Company's products at fishing tournaments, store promotions, club talks,
seminars and at tackle, boat, hunting and aviation shows.

    As referenced earlier, the Company advertises its products in magazines,
newspapers and on television.  Within such advertising expenditures are separate
advertising programs designed specifically for the Lowrance and Eagle trade
names.

    Public relations activities include a variety of press releases covering new
products and feature stories highlighting use of SONAR and GPS/Mapping
navigational products; press trips, where products are demonstrated to members
of the outdoor media; distribution of product photo imagery and other technical
support for writers and broadcasters.

    In addition to advertising expenses and public relations activities, the
Company incurs promotional expenses which include sponsorship of fishing
tournaments, store promotions and contributions to environmental groups.  The
Company, through its Eagle trade name, became an Affiliate Sponsor of the new
Wal-Mart FLW tournament trail in 1998 and will continue this sponsorship through
fiscal 2003.  The Wal-Mart FLW tour offers the world's largest cash prize for
bass tournaments, including a $1,000,000 purse.  The Wal-Mart FLW tour is
sponsored by Genmar Holdings which also owns numerous boat

                                       8
<PAGE>

manufacturers, including Ranger, Lund, Crestliner and Carver Yachts, to whom the
Company provides OEM SONAR products.  Dealer and distributor support includes
the availability of point-of-purchase displays, posters, videos and product
simulators to assist in displaying the Company's products.


Competition
-----------

SONAR and SONAR/GPS Combination Units -
-------------------------------------

    The Company encounters competition from a number of domestic and foreign
manufacturers.  More than 300 brands of SONAR have been offered to the consumer
since the Company's formation in 1957.  Presently, there are more than twenty-
five competitors worldwide.  Historically, the SONAR market, as it relates to
SONAR products marketed primarily to sports fishermen and recreational boat
owners, has been dominated by the Company and Techsonic Industries, Inc.
According to independent marketing research commissioned by the Company and
issued in September 1999, the Company together with this competitor account for
over 70% of SONAR sales within this market segment in the United States.  In
this study, the Company's total market share (Eagle and Lowrance brands
combined) was found to be approximately 50%.  The Company believes that the
study accurately reflects current market conditions.

    Competition in the sports fishing and recreational boating market for the
Company's products is based upon a number of factors including quality,
technological development, performance, service and price.  The primary basis
for competition is technological innovation and price.  In order to maintain its
competitive position, the Company must continually enhance and improve its
products and anticipate rapid, major technological innovations and  changes
within the industry.  Further, the Company believes the SONAR market in the
United States and Canada is mature.  Accordingly, the Company's primary
opportunity for sales growth in these markets is to take market share from its
competitors.  The Company continues to identify and pursue significant new
market opportunities for its SONAR and GPS/mapping products internationally.


Hand-held GPS/Mapping Units -
---------------------------

    The hand-held GPS/mapping market has expanded rapidly in the past several
years.  Target markets for these products include, but are not limited to,
boating, sportfishing, hunting, hiking, RV and off-road vehicles and aviation.
Long term growth in the Company's GPS market share will require continued
development of advanced GPS technologies that can be quickly brought to market
at competitive prices with sales bolstered by aggressive advertising and
promotional programs.

    Two competing GPS companies currently dominate this market and the Company
believes these two competitors, combined, continue to control in excess of 65%
of the hand-held GPS market.  The primary reason for their success is that both
companies have introduced and marketed several products retailing for under $200
and were the first to market hand-held GPS products to the outdoor recreational
market.  Both companies offer a full range of higher priced products with more
features than their lower priced models, including products specifically aimed
at the avionics market.  In 1997, one of these competitors, Garmin
International, Inc., introduced a combined GPS/  SONAR model and one SONAR-only
model. In 1999, the same competitor introduced two new SONAR-only models.  In
2000, the same competitor announced three new offshore "Blue" Series SONAR
products, two freshwater gimbal-mount SONAR & GPS products and two new hand-held
GPS units.  In addition, they have supported sales of their expanding product
lines with advertising and promotional

                                       9
<PAGE>

programs. The Company believes these competitive marketing strategies have
negatively impacted sales of its products in fiscal 2000, especially in
international markets.

    Currently, the Company offers four Lowrance hand-held GPS/mapping products,
which retail at suggested prices between $199 and $799.  Three of the Lowrance
hand-helds in 2000 were popular existing products carried over from previous
years: the GlobalMap 100, the AirMap 100 and the AirMap 300.  During the 4th
quarter of 2000, the Company announced the new, sleekly designed, personal hand-
held GPS, the iFINDER. Its 160 x 120 pixel, Film SuperTwist display produces
stunning map detail and superb screen contrast and resolution. Aside from its
optional FaceOFFS (changeable faceplates in five striking colors), the iFINDER,
at a SRP of $259, offers an impressive list of GPS/mapping features: built-in
custom Lowrance background world map; capable of using MapCreate CD-ROM detailed
mapping software and/or compatible Navionics software; 8MB of programmable flash
memory; storage of up to 500 waypoints and 1,000 event markers; 3 savable plot
trails with up to 3,000 points per trail, and stores up to 99 routes; choice of
28 different graphic icons to mark favorite spots; 32 different map ranges from
0.1-to-2,000 miles;  operates on two AA batteries;  10-year internal lithium
back-up battery; backlighted screen; searchable points-of-interest feature; and
a waterproof carrying case. All of the Company's GPS products feature 12
parallel-channel receivers for faster satellite lock-ons and more accurate GPS
navigation.

    The Company's line of hand-held GPS products has helped the Company expand
its presence in multiple non-marine retail markets and outlets.  These products,
combined with an extensive advertising and promotional campaign 3 years ago,
significantly increased consumer awareness and recognition of the

Eagle and Lowrance brand names in historically non-traditional markets.
Currently, the Company enjoys distribution through several outdoor recreational
outlets which serve hikers, campers, skiers, climbers and other outdoor
enthusiasts.

    The Company attempts attempted to differentiate its SONAR and GPS products
through quality, technological development, performance, price and service.  The
Company believes its products do offer competitive advantages due to quality,
technological advancement and the wide range of features.  These advantages
result from the Company's long history of product innovation, such as Advanced
Signal Processing (ASP), fully waterproof SONAR/Loran-C and SONAR/GPS
combination units, GRAYLINE, interchangeable high-performance transducers and
dual-frequency capability and innovative products and features such as the
Broadview 3-Beam transducer (TriFinder3Beam SONAR), split-screen SONAR/GPS-
mapping navigational displays, digitized and CD-ROM  detailed GPS mapping
software,  plus programmable "windows".

    The Company has been an industry leader in offering advanced, high-
performance products at acceptable price points.  Further, the Company believes
that its excellent service programs, designed to respond rapidly to customer
needs, are the most comprehensive such services available to the consumer.


Product Research and Development -
--------------------------------

    The Company's successful operations and strong competitive position are
dependent to a great extent upon its ability to anticipate and react to the
technological innovations inherent within its industry.  The Company has been
engaged in the development of SONAR products and the refinement of its existing
SONAR models since its formation in 1957.  See "Patents and Trademarks" below.
In 1957, the Company invented and marketed the first portable SONAR, capable of
locating individual fish and their depths, as well

                                      10
<PAGE>

as the bottom depth.  Among other significant SONAR advancements, the Company
developed and patented an effective interference suppression system and designed
the first interchangeable high-speed transducers which permit operation of SONAR
at boat speeds up to 70 mph.  The Company also introduced, in 1979, the first
computer-controlled SONAR with microprocessor chip and software allowing high-
speed boating with accurate depth readings and no false signals.  In 1987, the
Company introduced the industry's first high-resolution, "Film SuperTwist"
liquid crystal displays with enhanced visibility.  In 1989, the Company
introduced the first fully waterproof SONAR/navigation combination units
featuring Loran-C circuitry and software contained solely in the antenna/coupler
module.  Advanced Signal Processing (ASP), a breakthrough in automatic SONAR
control developed in 1990, constantly evaluates the effects of varying water
conditions, boat speeds and interference sources, adjusting the SONAR's critical
settings for optimum performance.  Based on the Company's belief that the United
States Department of Defense's GPS would be the preferred method of navigation
in the future (once it became affordable), the Company introduced six marine GPS
products in 1992, most at breakthrough price points.  The SupraPro ID, a new
SONAR model introduced in 1994, retailed for under $100, and provided users with
four times the resolution of its nearest competitive model.  Another new 1994
model, the GlobalMap1000, represented the first fully waterproof mapping unit
with a built-in mapping database and the capability of using highly-popular
detailed mapping cartridges.  The AccuNav Sport hand-held GPS product, which
retailed for under $400, revolutionized the GPS market in 1994 by offering users
all the highly-detailed navigation plotting features previously available only
on larger and more costly gimbal-mounted GPS products, yet at less than half the
price.  In 1995, the Company introduced its latest generation of "3D" SONAR
products, the ULTRAIII 3D and the X-70A 3D, which provided expansive underwater
coverage and innovative "three dimensional" images of bottom contours in
addition to traditional detailed "2D" views.  Six new 1995 products utilized the
Company's new Broadview technology.  By purchasing a "Broadview" accessory
transducer (which could be installed on the transom or on a trolling motor),
users could expand their SONAR coverage, to search out, left or right, to detect
fish and bottom structure down and outward from their boats.  In 1996, the
Company introduced and delivered its first hand-held GPS/mapping products.  In
fiscal 1998, the Company introduced two new SONAR products with enhanced display
screen resolution and newly designed cases, as well as enhanced operating
software in several of its SONAR and GPS products.  Additionally, the Company
delivered four new hand-held GPS products, each utilizing advanced 12-parallel
channel receiver technology and three of which offered the exclusive capability
of allowing the user to download detailed customized maps from a CD-ROM into the
unit's memory.  Two new gimbal-mount products, one a GPS/mapping-only product
and the other a GPS/mapping/SONAR combo model, also offered this unique CD-ROM
capability and began shipping during the fourth quarter of fiscal 1998.  In
fiscal 1999, the new products introduced by the Company at the end of 1998 were
continued, as R&D turned its full attention to exciting new breakthrough
technology slated for introduction late in fiscal 2000.  At Chicago's ICAST 2000
trade/consumer show in July, 2000, the Company debuted its new lineup of four
Lowrance big-screen, high-performance, gimbal-mount, color and monochrome
transflective and color TFT liquid crystal SONAR and GPS-mapping products.  The
LCX-15MT and LCX-15CT are SONAR units that are fully GPS/mapping capable, with
the simple addition of the optional MapCreate GPS Accessories Pack.  The LCX-
16Ci is a full SONAR/GPS-mapping combo right out of the box. The GlobalMap3000MT
is a stand-alone, 12-parallel channel GPS/mapping-only unit and the iFinder is a
hand-held personal GPS/Mapping unit.  The LCX-16Ci was presented the highest
honor, the "Best of Show" Award for product innovation at ICAST 2000. As
mentioned previously, 7 new Eagle SONAR and GPS/mapping products were also
introduced at ICAST 2000, including the FishEasy Series, TriFinder 3Beam, Accura
240, Status and Journey.

                                      11
<PAGE>

    Research and development expenditures for the Company were $2,650,000 in
fiscal 1998, $2,226,000 in fiscal 1999 and $2,900,000 in fiscal 2000.  The
Company plans additional development of its LCD SONARs to increase performance
and versatility, and is conducting research and development into other potential
marine electronic products utilizing technology with which the Company is
familiar.  Also, the Company intends to develop additional GPS/mapping products
for use in marine and non-marine applications.  To augment its continued
investment in product research and development, the Company has invested in
several new manufacturing and design technologies: Surface Mount Technology
(SMT) production equipment, Computer Aided Design (CAD) systems, Application
Specific Integrated Circuits (ASICS), Tape Automated Bonding (TAB), Tab-On-Glass
(TOG), and Liquid Crystal Display (LCD) assembly.  These advanced technologies,
which were essential to the development of the Company's new SONAR and GPS
products, have allowed the Company to reduce its material and manufacturing
costs and to provide even greater product performance.


Manufacturing and Suppliers -
---------------------------

    Through fiscal 1993, the Company manufactured substantially all of its
products at its plant in Tulsa, Oklahoma.  In fiscal 1994, the Company began
manufacturing most of its high volume transducer and cable assemblies in a
25,000 square foot leased manufacturing facility in Ensenada, Mexico, with the
finished assemblies shipped to Tulsa for final inspection, packaging, and
shipping.  During fiscal 1997, the Company expanded its production operation in
Mexico by consolidating its existing manufacturing operations in Ensenada,
Mexico into a newly constructed 108,000 square foot leased facility.  Currently,
the Company utilizes 86,000 square feet for manufacturing, including a 42,000
square foot clean room.  In the expanded Mexico facility, the Company
manufactures its transducer and cable assemblies as well as assembles most of
the liquid crystal displays used in its products.  Additionally, the Company
performs final assembly, final testing and packing operations on all of its
products in the Mexico facility.  The transfer of the final assembly and liquid
crystal display assembly operations from the Company's Tulsa facility began in
August 1996 and was completed in July 1997.  The Company moved its circuit board
assembly and testing operations to its Mexico facility in fiscal 2000, thereby
eliminating all manufacturing operations in its facility in Tulsa.  The
manufacturing process primarily involves the assembly of component parts
purchased from suppliers.  Quality control and functional testing, including
component testing, sub-assembly testing, and final testing of finished products
are an integral part of the Company's manufacturing process.  The Company's
manufacturing facilities are sufficient to allow significantly increased
production without substantial future capital investments.

    Certain component parts of the Company's products are technologically
advanced and/or specifically designed for the Company's use and thus are
presently available only through single-source suppliers, some of which are
located in foreign countries.  Certain other component parts are available from
a number of suppliers, but the Company largely relies on single-source suppliers
for these parts.  Purchasing from a single source in these instances allows the
Company to have more consistent quality in the component parts and to receive
quantity discounts and permits the Company to establish long-standing
relationships with its suppliers.  The Company believes long-standing
relationships lead to better performance with suppliers by shortening delivery
time, improving quality and fostering a better understanding of and adaptation
to the nature of the Company's needs and the suppliers' capabilities.

    With respect to plastic component parts, such as housings for SONAR units,
the Company, because of the expense, generally maintains only one mold for each
plastic part.  Although typically the Company owns each mold and

                                      12
<PAGE>

could move it to another supplier, the Company is thereby limited to one
concurrent supplier.

    The Company has never experienced a substantial interruption in product
distribution due to unavailability of or delay in receiving component parts,
resulting in the loss of any material amount of sales.  However, if for any
reason (such as a protracted strike, war, fire, explosion or wind damage
affecting production at the supplier's manufacturing plant, changes in import
restrictions, a damaged or destroyed mold or a supplier being unable to obtain
certain raw materials necessary to produce component parts), certain critical
component parts were to become unavailable or the shipment of such parts were to
be substantially delayed, such unavailability or delay could materially and
adversely affect the Company's ability to produce its products on a timely basis
until an alternative source of supply or a replacement mold could be made
available.  This could adversely affect the Company's results of operations.
The use of alternate components may, in some cases, require the Company to
redesign other components or its sub-assemblies and the Company could experience
manufacturing delays.  The extent of the impact upon the Company's sales and
earnings would depend upon the products affected and the time of year of the
interruption. To protect against interruptions and loss of sales, the Company
maintains a limited amount of safety inventory of component parts and some
insurance coverage against loss of supply.  The Company limits the amount of
safety stock to avoid the cost of carrying raw material inventory and problems
associated with obsolescence.  To further protect against interruptions, the
Company is selective of its suppliers and, with limited exceptions, relies upon
those who are substantial in size, financial strength, background and
experience.


Product Warranty and Support Services
-------------------------------------

    Substantially, all of the Company's products are sold with a full one-year
warranty.  The Company emphasizes service after the sale in connection with its
products by providing a prepaid, pre-addressed shipping label packed with each
unit for use by the consumer located in the United States electing to return the
unit to the Company for warranty or non-warranty repairs.  Warranty and non-
warranty repairs are available from the Company's plant in Tulsa, Oklahoma, and
from dealers and distributors in sixty-five foreign countries.


Patents and Trademarks
----------------------

    Since 1970, the Company has obtained thirty-eight patents expiring at
various dates from 1987 through 2018.  Since 1970, thirteen design patents have
also been issued.  See "Product Research and Development" above.  All of the
Company's patents have been assigned to secure the Company's revolving credit
line.  The Company does not expect that the expiration of patents will have an
adverse impact on the Company's operations.

    Notwithstanding the number of patents it has obtained, the Company believes
that its technical and proprietary expertise and continuation of technological
advances are more important factors to the protection of its ongoing proprietary
interests and markets than its patents.  However, the Company will, under
certain limited circumstances, continue to file patent applications to ensure
its products remain protected from competitor attack.

    The Company has registered forty-six trademarks with the United States
Patent Office including the trademark, "Lowrance" and the trademark "Eagle",
with an accompanying logo and has filed additional trademark applications.   The
Company has also registered forty-seven trademarks in eighteen foreign
countries.

                                      13
<PAGE>

Employees
---------

    As of July 31, 2000, the Company employed 887 persons on a full-time basis
of whom approximately 734 were involved in manufacturing, quality and materials.
Of the 734 full time employees involved in manufacturing and materials, 98
employees are located in the Company's headquarters in Tulsa and 636 are located
in the Company's leased manufacturing facility in Ensenada, Mexico.  The
remaining 153 employees were engaged in research and development, sales,
marketing and administration.  Additionally, the Company retains, on a part-time
basis, over 150 independent contractors, or "pro-staff", that assist in
promoting its products.

    The Company has never experienced a work stoppage and none of its employees
are represented by a union.  Management considers its employee relations to be
excellent.


Item 2. Properties
------- ----------

    The Company maintains corporate offices at 12000 East Skelly Drive, Tulsa,
Oklahoma, since 1970.  The Company's facility includes 116,000 square foot
building and approximately 23 acres of land.

    The Company leases a 108,000 square foot manufacturing facility in Ensenada,
Mexico.  The Company presently is using approximately 86,000 square feet for
manufacturing including a 42,000 square foot clean room.

    The Company also leases a 79,000 square foot facility for warehousing and
shipping in Tulsa, Oklahoma and 2,500 square feet and 3,500 square feet of
warehousing, shipping and office space in Australia and Canada, respectively.

    The Company believes that its facilities and equipment are well suited to
its needs and are properly maintained.  The Company's current manufacturing
facilities are sufficient to allow for increased production without significant
capital investment.  The facilities and equipment are believed to be operating
in substantial compliance with all current regulations.  All the facilities and
equipment are, in the opinion of the Company, adequately insured.


Item 3. Legal Proceedings.
------- -----------------

    None.


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

    None.

                                      14
<PAGE>

                                 PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
------- ---------------------------------------------------------------------

    As of October 18, 2000, the Company had more than 400 actual holders of its
Common Stock.  The Company has not paid cash dividends for over twenty years.
The Company's revolving credit line prohibits the payment of dividends without
the prior written consent of the lender.  The Company anticipates that for the
foreseeable future its earnings will be retained for use in its business and no
cash dividends will be paid on the Common Stock.  Declaration of dividends in
the future will remain within the discretion of the Company's Board of Directors
and will depend upon the Company's growth, profitability, financial condition,
and other relevant factors.

    The Company's Common Stock is traded in the over-the-counter market and is
listed with the NASDAQ National Market System under the NASDAQ symbol of "LEIX".
The table below reflects the high and low trade prices for each of the Company's
fiscal quarters for the latest two fiscal years.  The trade prices reflect
inter-dealer prices, without retail mark up, mark down, or commission and do not
necessarily represent actual transactions.
<TABLE>
<CAPTION>

                              1999              2000
                        ----------------   --------------
                         High      Low      High     Low
                           $        $         $       $
                        -------   ------   -------  -----
        <S>             <C>      <C>      <C>       <C>
        1st Quarter       4 5/8        2     7 1/4      6
        2nd Quarter     7 13/16    2 1/2   6 27/32  4 1/2
        3rd Quarter       6 3/8    3 7/8   6 11/16  3 7/8
        4th Quarter       6 1/2   5 9/16   5 13/16  3 1/2

</TABLE>

Item 6. Selected Financial Data
------- -----------------------

    The selected financial information shown below has been extracted from the
consolidated financial statements included elsewhere in this report and from
other financial information of the Company not appearing herein.  The balance
sheet information is presented as of the end of the fiscal years shown.  The
information set forth below should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the consolidated financial statements and related notes included elsewhere
herein.

                                      15
<PAGE>

<TABLE>
<CAPTION>

                                                                                       Years Ended July 31,
                                                                      -----------------------------------------------------
                                                                        1996      1997        1998        1999       2000
                                                                      -------   --------     -------     -------    -------
                                                                              (in thousands, except per share amounts)
<S>                                                                  <C>        <C>         <C>         <C>        <C>
Operating and Per Share Data Excluding Severance and Merger Costs
Operating Data:
 Net sales                                                            $94,579   $104,659     $91,706     $89,753    $73,209
 Gross profit                                                          31,988     26,881      25,645      30,047     27,899
   Percent of sales                                                      33.8%      25.7%       28.0%       33.5%      38.1%

 Operating income (loss)                                                4,064     (5,250)        519       6,234      5,750
   Percent of sales                                                       4.3%      (5.0%)        .6%        6.9%       7.9%

 Income(loss) before taxes                                              2,199      (7,877)    (3,166)      3,310      3,724
   Percent of sales                                                       2.3%      (7.5%)      (3.5%)       3.7%       5.1%

 Net income (loss)                                                      1,743     (5,190)     (3,995)      3,310      4,674
   Percent of sales                                                       1.8%      (5.0%)      (4.4%)       3.7%       6.4%

Per Share Data
 Net income (loss)
   Basic                                                              $   .52   $  (1.55)    $ (1.11)    $   .88    $  1.24
   Diluted                                                                .51      (1.55)      (1.11)        .88       1.24

Operating and Per Share Data Including Severance and Merger Costs
Operating Data:
 Income (loss) before
  income taxes                                                        $ 2,199   $ (7,877)    $(3,166)    $ 2,109    $ 1,523
 Net income (loss)                                                      1,743     (5,190)     (3,995)      2,109      2,473

Per Share Data:
 Net income (loss)
   Basic                                                              $   .52   $  (1.55)    $ (1.11)    $   .56    $   .66
   Diluted                                                                .51      (1.55)      (1.11)        .56        .66

 Cash dividends per
  common share                                                              -          -           -           -          -

Balance Sheet Data:
 Working capital                                                      $18,509   $ 17,798     $19,633     $17,630    $11,030
 Total assets                                                          47,108     61,366      52,247      35,994     29,221
 Long term debt, less
   current maturities                                                  13,705     21,176      23,038      17,103      8,573
 Stockholders' equity                                                  15,196      9,952       7,172       9,494     11,955

</TABLE>

Item 7. Management's Discussion and Analysis of Financial Condition and Results
------- -----------------------------------------------------------------------
        of Operations
        -------------

Results of Operations
---------------------

Net Sales and Gross Profit
--------------------------

Net sales of SONAR and combination SONAR/GPS navigation units for fiscal 2000
decreased 6.8% from fiscal 1999 resulting from a 3.1% decrease in unit sales.
The decrease is primarily related to a lack of new product introductions during
fiscal 2000.  However, fiscal 2000 gross profit for the SONAR and SONAR/GPS
navigation units increased 11.9% compared to fiscal 1999.

                                      16
<PAGE>

During fiscal 2000, the Company discontinued certain non-mapping portable GPS
navigation units.  The discontinuance of these products resulted in a decrease
in net sales of stand-alone GPS navigation units of 53.6% from fiscal 1999 and a
54.6% decrease in unit sales.  Fiscal 2000 gross profit for the stand-alone GPS
navigation units decreased 59.2% compared to fiscal 1999.

Total net sales decreased 18.4% in fiscal 2000 compared to fiscal 1999 while
gross profit decreased 7.2%.  However, the gross profit margin increased to
38.1% in fiscal 2000 compared to 33.5% in fiscal 1999.  The increased gross
profit margin resulted from:  (1) lower manufacturing costs due to the
relocation of the remaining manufacturing operations to the Company's Mexico
facility; (2) the discontinuance of certain low margin, non-mapping portable GPS
navigation units; and (3) lower raw material costs.

Net sales of SONAR and combination SONAR/GPS navigation units for fiscal 1999
increased 12.7% from fiscal 1998 resulting from a 5.9% increase in unit sales.
The increase is primarily related to the introduction of three new SONAR
products during fiscal 1999 and price increases on certain product models.
Gross profit on these units increased 19.5% in fiscal 1999 compared to fiscal
1998.

Net sales of stand-alone GPS navigation units decreased 23.2% from fiscal 1998
on a unit decrease of 25.4%.  The decline in GPS navigation units resulted from
increased competition, particularly at the entry level price points below $200
per unit and limited spending on advertising and marketing.

Total net sales decreased 2.1% in fiscal 1999 compared to fiscal 1998.  Gross
profit increased 17.2% resulting from an increase in the gross profit margin to
33.5% in fiscal 1999 from 28.0% in 1998.  The increased gross profit margin
resulted from:  (1) lower manufacturing costs due to improved efficiencies and
the move of additional manufacturing processes to the Company's Mexico facility;
(2) a shift in the mix of products to more of the higher margin SONAR and
combination SONAR/GPS navigation units from the lower margin GPS navigation
units; and (3) the impact of the price increases on certain of the SONAR and
combination SONAR/GPS navigation units.


Operating Expenses
------------------

Selling and administrative expenses decreased 10.8% in fiscal 2000 compared to
fiscal 1999.  The decrease is primarily due to lower variable selling costs and
lower headcount.  Research and development expenses increased 30.3% in fiscal
2000 compared to fiscal 1999 resulting from the Company's renewed focus on new
product offerings for fiscal 2001.  Total operating expenses, excluding
severance and merger costs, decreased 7.0% in fiscal 2000 compared to fiscal
1999.

Selling and administrative expenses decreased 4.0% in fiscal 1999 compared to
fiscal 1998.  The decrease is primarily due to lower selling and marketing
expenses in response to cost reduction initiatives.  Research and development
expenses decreased 16%, also in response to the cost reduction initiatives.
Total operating expenses, excluding severance and merger costs, decreased 5.2%
in fiscal 1999 compared to fiscal 1998.

During fiscal 2000 and fiscal 1999, the Company incurred $1.9 million and $.8
million, respectively, in severance costs.  All severance costs in 2000 related
to the Company's completion of the relocation of the remaining manufacturing
processes to Mexico.  The severance costs in 1999 related to the move to Mexico
as well as cost reduction initiatives.  During fiscal 2000 and fiscal 1999, the
Company incurred $.3 million and $.4 million in costs associated with the
terminated merger with Orbital Sciences Corporation.

                                      17
<PAGE>

Operating Income
----------------

Operating income, excluding severance and merger costs, as a percent of sales
was 7.9% in fiscal 2000, 6.9% in fiscal 1999 and .6% in fiscal 1998.


Interest Expense
----------------

Interest expense in fiscal 2000 decreased by 34.6% due to reduced debt levels
resulting from continued reductions in accounts receivable and inventories and a
reduction in the interest rate on the credit facility in March to prime plus .5%
from prime plus 1.5%.

Interest expense in fiscal 1999 decreased by 17.6% due to reduced debt levels
resulting from improved profitability and reductions in inventories and
receivables.


Income Taxes
------------

    The effective tax rate for fiscal 2000, 1999 and 1998 was (62.4%), 0% and
26.2%, respectively. In fiscal 2000, due to continued profitability, the
remaining valuation allowance against the net deferred tax asset was reversed
which was the primary factor resulting in the negative effective tax rate.  The
effective tax rate was 0% in fiscal 1999 as the reduction in the valuation
allowance offset the income tax provision.  In fiscal 1998, the effective tax
rate was 26.2% as the continued losses resulted in the need to provide a
valuation allowance against the net deferred tax asset.


Income/(Loss)
-------------

Net income (loss), excluding severance and merger costs, was $4.7 million; $3.3
million; and ($4.0 million), respectively, in fiscal 2000, 1999 and 1998.  As a
percent of sales, the net income (loss), excluding severance and merger costs,
was 6.4%; 3.7%; and (4.4%), respectively, for the same periods.

Net income (loss) was $2.5 million; $2.1 million; and ($4.0 million),
respectively, in fiscal 2000, 1999 and 1998.


Liquidity and Capital Resources
-------------------------------

    The Company's primary sources of liquidity are cash flows from operations, a
$26.5 million revolving credit line and lease financing.  The revolving credit
line includes a borrowing base of 85% of qualifying accounts receivable, 30% of
qualifying raw materials inventory, and 60% of qualifying finished goods
inventory.  Borrowings from inventories are limited to $13 million. Management
expects the sources discussed above to satisfy the Company's current financing
needs.

The Company has an overall $33.9 million financing package consisting of the
revolving credit line discussed above and $7.4 million in term loans.  At July
31, 2000, the term loans had a remaining balance of $5.0 million.  The term
loans require monthly payments of $103,000.

In March 2000, the Company amended its credit agreement covering the revolving
credit line and its term loans.  The amendment extended the maturity of the
agreement from December 31, 2000 to December 31, 2002 with a renewal option to
extend the agreement to December 31, 2003.  The amendment also reduced the
interest rate on the revolving credit line and the term loans to prime plus

                                      18
<PAGE>

 .5% from prime plus 1.5%. At July 31, 2000, the Company had $4.2 million
available under the revolving credit line, a 133% increase over July 31, 1999.
Due to increased profitability in fiscal 2000 and fiscal 1999 and the reduction
of inventory and receivable balances, the Company has significantly reduced its
outstanding debt and increased the available borrowings under the revolving
credit line.

During fiscal 1998 and early in fiscal 1999, additional borrowings were
necessary due to unprofitable operations and increased inventory and receivable
balances.  During fiscal 1998, the Company's financing package was amended to
increase the borrowing capacity by $3 million, provide an additional term loan
of $5 million and increase the interest rate to prime plus 1.5% from prime plus
 .75%.  During November 1998, the Company's financing package was again amended
to provide an additional term loan of $1.8 million and defer term loan principal
payments until March 1, 1999 on an aggregate term loan principal of $4.8
million.

Cash flows from operations were $9.8 million in fiscal 2000.  The operating cash
flows were utilized to fund capital expenditures of $1.4 million and reduce debt
by $8.3 million.  The fiscal 2000 operating cash flows increased over fiscal
1999 by 25.2%.

Cash flows from operations were $7.8 million in fiscal 1999.  The operating cash
flows were utilized to fund capital expenditures of $.7 million and reduce debt
by $7.3 million.

Cash flows from operations were ($1.7) million in fiscal 1998.  Internally
financed capital expenditures of $.6 million, capital expenditures financed with
leases of $.7 million and the cash utilized in operations resulted in an
increase in debt of $2.7 million.


Effects of Inflation
--------------------

    A significant portion of the Company's costs and expenses consist of
materials, supplies, salaries, and wages that are affected by inflation.  In
addition certain electronic parts which are in high industry demand are subject
to market-driven price increases.  The Company does not believe that it will be
able to pass on inflationary increases in its selling prices.  Accordingly, the
Company concentrates on changes in design, manufacturing process, material
scheduling, and sourcing to help contain costs.  A significant portion of the
Company's raw material items are sourced overseas.  Significant devaluation of
the dollar relative to these currencies would not be able to be passed on in the
form of price increases to consumers.


Recently-Issued Accounting Principles
-------------------------------------

    In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities.  SFAS No. 133
establishes accounting and reporting standards requiring that every derivative
instrument (including certain derivative instruments embedded in other
contracts) be recorded in the balance sheet as either an asset or liability
measured at its fair value.  SFAS No. 133 requires that changes in the
derivative's fair value be recognized currently in earnings unless specific
hedge accounting criteria are met.  Special accounting for qualifying hedges
allows a derivative's gains and losses to offset related results on the hedged
item in the income statement.  Companies must formally document, designate, and
assess the effectiveness of transactions that receive hedge accounting.  SFAS
No. 133, as amended by SFAS No. 137, is effective for fiscal years beginning
after June 15, 2000.  SFAS No. 133 cannot be applied retroactively and must be
applied to (a) derivative instruments and (b)

                                      19
<PAGE>

certain derivative instruments embedded in hybrid contracts that were issued,
acquired, or substantively modified after December 31, 1997. The adoption of
SFAS No. 133 will not have a significant impact on the Company's consolidated
financial statements.


Quantitative and Qualitative Disclosure About Market Risk
---------------------------------------------------------

    The Company is exposed to cash flow and interest rate risk due to changes in
interest rates with respect to its long-term debt.  See Note 3 to the
consolidated financial statements for details on the Company's long-term debt.


Quarterly Information
---------------------

    Demand for the Company's products is seasonal.  During the third quarter,
the Company's customers purchase the Company's products so that the products
will be available to sport fishermen and recreational boat owners for the peak
fishing and boating season. The Company does not experience any consistent
quarterly trends for the remaining three quarters.

    The following table sets forth certain quarterly information for the past
three fiscal years:
<TABLE>
<CAPTION>


    Years Ended July 31,             Sales         Net Income (Loss)
----------------------------  -----------------   ------------------
                                        (dollars in thousands)
        2000
----------------------------
<S>                           <C>       <C>      <C>        <C>
First Quarter (Aug.-Oct.)      $13,438    18.4%   $(1,280)   (51.7)%
Second Quarter (Nov.-Jan.)      17,346    23.7       (284)    (11.5)
Third Quarter (Feb.-Apr.)       25,366    34.6      2,474     100.0
Fourth Quarter (May-July)       17,059    23.3      1,563      63.2
                               -------   -----    -------   -------

         Total for Year        $73,209   100.0%   $ 2,473     100.0%
                               =======   =====    =======   =======


            1999
----------------------------
First Quarter (Aug.-Oct.)      $16,208    18.1%   $(1,308)   (62.0)%
Second Quarter (Nov.-Jan.)      17,922    20.0       (559)    (26.5)
Third Quarter (Feb.-Apr.)       32,600    36.3      2,996     142.1
Fourth Quarter (May-July)       23,023    25.6        980      46.4
                               -------   -----    -------   -------

         Total for Year        $89,753   100.0%   $ 2,109     100.0%
                               =======   =====    =======   =======

            1998
----------------------------
First Quarter (Aug.-Oct.)      $20,039    21.8%   $  (838)   (21.0)%
Second Quarter (Nov.-Jan.)      20,324    22.2       (337)     (8.4)
Third Quarter (Feb.-Apr.)       28,354    30.9        619      15.5
Fourth Quarter (May-July)       22,989    25.1     (3,439)    (86.1)
                               -------   -----    -------   -------

         Total for Year        $91,706   100.0%   $(3,995)  (100.0)%
                               =======   =====    =======   =======

</TABLE>
Outlook and Uncertainties
-------------------------

    Certain matters discussed in this report, excluding historical information,
include certain forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended, that involve risks and uncertainties.  The
Company and its representatives may from time to time make written or verbal
forward-looking statements, including statements contained in filings with the
Securities and Exchange Commission and in the report to

                                      20
<PAGE>

stockholders. Statements that address the Company's operating performance,
events or developments that the Company expects or anticipates will occur in the
future, including statements relating to sales and earnings growth, statements
expressing general optimism about future operating results, and statements
relating to liquidity and future financing plans are forward-looking statements.
Although the Company believes that such forward-looking statements are based on
management's then-current views and reasonable assumption, no assurance can be
given that every objective will be reached. Such statements are made in reliance
on the "safe harbor" protections provided under the Private Securities
Litigation Act of 1995.

As required by the Private Securities Litigation Reform Act of 1995, the Company
hereby identifies the following factors that could cause actual results to
differ materially from any results projected, forecasted, estimated or budgeted
by the Company in forward-looking statements:

        .   Continued profitability in fiscal 2001 and positive cash flows from
            operations in fiscal 2001 are based on attaining current projections
            for net income.

        .   Production delays due to raw material shortages or unforeseen
            competitive pressures could have a material adverse effect on
            current projections.

        .   Because of the dynamic environment in which the Company operates,
            one or more key factors discussed in "Part I, Item 1. Business"
            could have an adverse effect on results for the upcoming year.


Item 8.  Financial Statements and Supplementary Data
-------  -------------------------------------------

    The Consolidated Financial Statements and Supplementary Data are indexed in
Item 14 hereof.


Item 9.  Changes in and Disagreements with Accountants on Accounting and
-------  ---------------------------------------------------------------
       Financial Disclosures
       ---------------------

    None.


                                 PART III

Item 10.  Directors and Executive Officers of the Registrant
--------  --------------------------------------------------

    Incorporated by reference to the Company's Proxy Statement to be filed with
the Securities and Exchange Commission in connection with the Company's 2000
annual meeting.


Item 11.  Executive Compensation
--------  ----------------------

    Incorporated by reference to the Company's Proxy Statement to be filed with
the Securities and Exchange Commission in connection with the Company's 2000
annual meeting.


Item 12.  Security Ownership of Certain Beneficial Owners and Management
--------  --------------------------------------------------------------

    Incorporated by reference to the Company's Proxy Statement to be filed with
the Securities and Exchange Commission in connection with the Company's 2000
annual meeting.

                                      21
<PAGE>

Item 13.  Certain Relationships and Related Transactions
--------  ----------------------------------------------

    Incorporated by reference to the Company's Proxy Statement to be filed with
the Securities and Exchange Commission in connection with the Company's 2000
annual meeting.


                                 PART IV

Item 14.  Exhibits, Financial Statements, and Reports on Form 8-K
-------   -------------------------------------------------------

  (a) Financial Statements and Exhibits:
      ---------------------------------

                                                                        Page
                                                                        ----
      1. Consolidated Financial Statements:
<TABLE>
<CAPTION>
<S>                                                                      <C>

         Index to Consolidated Financial Statements                      F-1

           Report of Independent Public Accountants                      F-2

         Consolidated Balance Sheets - July 31, 1999 and 2000            F-3

           Consolidated Statements of Operations and Comprehensive
             Income for the Years Ended July 31, 1998, 1999, and 2000    F-4

           Consolidated Statements of Stockholders' Equity for the
             Years Ended July 31, 1998, 1999, and 2000                   F-5

           Consolidated Statements of Cash Flows for the Years
             Ended July 31, 1998, 1999, and 2000                         F-6

           Notes to Consolidated Financial Statements
             for the Years Ended July 31, 1998, 1999, and 2000           F-7

</TABLE>
      2. Exhibits:

         3.1      Certificate of Incorporation of Lowrance Electronics, Inc.,
                  previously filed as Exhibit 3.1 to the Company's Registration
                  Statement on Form S-1 (SEC File No. 33-9464), which is
                  incorporated herein by reference thereto.

         3.2      By-Laws of Lowrance Electronics, Inc., previously filed as
                  Exhibit 3.2 to the Company's Registration Statement on Form S-
                  1 (SEC File No. 33-9464), which is incorporated herein by
                  reference thereto.

         4.1      Shareholders' Agreement dated December 22, 1978, by and
                  between Darrell J. Lowrance, James L. Knight, and Ben V.
                  Schneider previously filed as Exhibit 4.3 to the Company's
                  Registration Statement on Form S-1 (SEC File No. 33-9464),
                  which is incorporated by reference thereto.

         4.2      First Amendment to Shareholders' Agreement dated October 7,
                  1986 by and between Darrell J. Lowrance, James L. Knight, and
                  Ben V. Schneider previously filed as Exhibit 4.4 to the
                  Company's Registration Statement on Form S-1 (SEC File No. 33-
                  9464), which is incorporated by reference thereto.

                                      22
<PAGE>

         4.3      Agreement between Stockholders dated October 7, 1986, by and
                  between the Company and Darrell J. Lowrance, James L. Knight,
                  and Ben V. Schneider previously filed as Exhibit 4.5 to the
                  Company's Registration Statement on Form S-1 (SEC File No. 33-
                  9464), which is incorporated herein by reference thereto.

         10.1     1986 Incentive Stock Option Plan of the Company previously
                  filed as Exhibit 10.1 to the Company's Registration Statement
                  on Form S-1 (SEC File No. 33-9464), which is incorporated
                  herein by reference thereto.

         10.2     Lowrance Retirement Plan and Trust previously filed as Exhibit
                  10.2 to the Company's Registration Statement on Form S-1 (SEC
                  File No. 33-9464), which is incorporated herein by reference
                  thereto.

         10.3     Form of Distributor Agreements previously filed as Exhibit
                  10.4 to the Company's Registration Statement on Form S-1 (SEC
                  File No. 33-9464), which is incorporated herein by reference
                  thereto.

         10.4     Form of Service Center Agreement previously filed as Exhibit
                  10.5 to the Company's Registration Statement on Form S-1 (SEC
                  File No. 33-9464), which is incorporated herein by reference
                  thereto.

         10.5     Credit Agreement dated April 27, 1989, by and between the
                  Company and Norwest Business Credit, Inc., previously filed as
                  Exhibit 10.8 to the Company's 1989 Annual Report on Form 10-K,
                  which is incorporated herein by reference thereto.

         10.6     Promissory note dated April 27, 1989, by the Company in favor
                  of Norwest Leasing, Inc., previously filed as Exhibit 10.7 to
                  the Company's 1989 Annual Report on Form 10-K, which is
                  incorporated herein by reference thereto.

         10.7     1989 Stock Option Plan of the Company previously filed as
                  Appendix A to the Company's Proxy Statement for its Annual
                  Meeting of Stockholders held on December 12, 1989, which is
                  incorporated herein by reference thereto.

         10.8     First, Second, and Third Amendments to Credit Agreement dated
                  April 27, 1989, by and between the Company and Norwest
                  Business Credit, Inc., previously filed as Exhibit 10.8 to the
                  Company's 1990 Annual Report on Form 10-K, which is
                  incorporated herein by reference thereto.

         10.9     Fourth and Fifth Amendments to Credit Agreement dated April
                  27, 1989, by and between the Company and Norwest Business
                  Credit, Inc., previously filed as Exhibit 10.9 to the
                  Company's 1992 Annual Report on Form 10-K, which is
                  incorporated herein by reference thereto.

         10.10    Sixth Amendment to Credit Agreement dated March 17, 1993, by
                  and between the Company and Norwest Business Credit, Inc.,
                  which is incorporated herein by reference thereto.

                                      23
<PAGE>

         10.11    Seventh Amendment to Credit Agreement dated October 21, 1993,
                  by and between the Company and Norwest Business Credit, Inc.,
                  previously filed as Exhibit 10.11 to the Company's 1993 Annual
                  Report on Form 10-K, which is incorporated herein by reference
                  thereto.

         10.12    Eighth Amendment to Credit Agreement dated September 29, 1993,
                  by and between the Company and Norwest Business Credit, Inc.,
                  previously filed as Exhibit 10.12 to the Company's 1993 Annual
                  Report on Form 10-K, which is incorporated herein by reference
                  thereto.

         10.13    Loan and Security Agreement dated December 15, 1993, by the
                  Company in favor of Barclays Business Credit, Inc., which is
                  incorporated herein by reference thereto.

         10.14    Amended and Restated Secured Promissory Note dated October 16,
                  1995, by and between the Company and Shawmut Capital
                  Corporation (formally Barclays Business Credit, Inc.), which
                  is incorporated herein by reference thereto.

         10.15    Amended and Restated Revolving Credit Notes dated October 16,
                  1995, by and between the Company and Shawmut Capital
                  Corporation (formally Barclays Business Credit, Inc.), which
                  is incorporated herein by reference thereto.

         10.16    First Amendment to Loan and Security Agreement dated October
                  16, 1995, by and between the Company and Shawmut Capital
                  Corporation (formally Barclays Business Credit, Inc.), which
                  is incorporated herein by reference thereto.

         10.17    Amended and Restated Stock Pledge Agreement dated October 16,
                  1995, by and between the Company and Shawmut Capital
                  Corporation (formally Barclays Business Credit, Inc.), which
                  is incorporated herein by reference thereto.

         10.18    Unconditional Guaranty dated October 16, 1995, by and between
                  Sea Electronics, Inc. and Shawmut Capital Corporation, which
                  is incorporated herein by reference thereto.

         10.19    First Amendment to Mortgage, Security Agreement, Financing
                  Statement and Assignment of Rents dated October 16, 1995, by
                  and between the Company and Shawmut Capital Corporation
                  (formally Barclays Business Credit, Inc.) previously filed as
                  Exhibit 10.19 to the Company's 1996 Annual Report on Form 10-
                  K, which is incorporated herein by reference thereto.

         10.20    Lease Agreement entered into by and between Eric Juan De Dios
                  Flourie Geffroy and Electronica Lowrance De Mexico, S. A. de
                  C. V. dated August 30, 1996, previously filed as Exhibit 10.20
                  to the Company's 1996 Annual Report on Form 10-K, which is
                  incorporated herein by reference thereto.

         10.21    Lease Agreement entered into by and between Refugio Geffroy De
                  Flourie, Eric Juan De Dios Flourie Geffroy,

                                      24
<PAGE>

                  Elizabeth Flourie Geffroy, Edith Flourie Geffroy and
                  Electronica Lowrance De Mexico, S. A. de C. V. dated August
                  30, 1996, previously filed as Exhibit 10.21 to the Company's
                  1996 Annual Report on Form 10-K, which is incorporated herein
                  by reference thereto.

         10.22    Second Amendment to Loan and Security Agreement dated November
                  1, 1996, by and between the Company and Fleet Capital
                  Corporation (formally Shawmut Capital Corporation), which is
                  incorporated herein by reference thereto.

         10.23    Third Amendment to Loan and Security Agreement dated December
                  31, 1996, by and between the Company and Fleet Capital
                  Corporation (formally Shawmut Capital Corporation), which is
                  incorporated herein by reference thereto.

         10.24    Fourth Amendment to Loan and Security Agreement dated August
                  14, 1997, by and between the Company and Fleet Capital
                  Corporation (formally Shawmut Capital Corporation), which is
                  incorporated herein by reference thereto.

         10.25    Fifth Amendment to Loan and Security Agreement dated August
                  25, 1997, by and between the Company and Fleet Capital
                  Corporation (formally Shawmut Capital Corporation), which is
                  incorporated herein by reference thereto.

         10.26    Sixth Amendment to Loan and Security Agreement dated August
                  28, 1997, by and between the Company and Fleet Capital
                  Corporation (formally Shawmut Capital Corporation), which is
                  incorporated herein by reference thereto.

         10.27    Seventh Amendment to Loan and Security Agreement dated
                  November 6, 1997, by and between the Company and Fleet Capital
                  Corporation (formally Shawmut Capital Corporation), which is
                  incorporated herein by reference thereto.

         10.28    Eighth Amendment to Loan and Security Agreement dated December
                  9, 1997, by and between the Company and Fleet Capital
                  Corporation (formally Shawmut Capital Corporation), which is
                  incorporated herein by reference thereto.

         10.29    Ninth Amendment to Loan and Security Agreement dated September
                  14, 1998, by and between the Company and Fleet Capital
                  Corporation (formally Shawmut Capital Corporation), which is
                  incorporated herein by reference thereto.

         10.30    Tenth Amendment to Loan and Security Agreement dated November
                  12, 1998, by and between the Company and Fleet Capital
                  Corporation (formally Shawmut Capital Corporation), which is
                  incorporated herein by reference thereto.

         10.31    Eleventh Amendment to Loan and Security Agreement dated March
                  14, 2000, by and between the Company and Fleet Capital, filed
                  herewith.

         22.1     Subsidiaries of the Company previously filed as Exhibit 22.1
                  to the Company's 1993 Annual Report on Form 10-K, which is
                  incorporated herein by reference thereto.

         22.12    Subsidiaries of the Company previously filed as Exhibit 22.12
                  to the Company's 1995 Annual Report on Form 10-K, which is
                  incorporated herein by reference thereto.

                                      25
<PAGE>

                  INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



                                                                  Page
----------------------------------------------------------------------


Report of Independent Public Accountants                           F-2

Consolidated Balance Sheets - July 31, 1999 and 2000               F-3

Consolidated Statements of Operations and Comprehensive Income
  for the Years Ended July 31, 1998, 1999, and 2000                F-4

Consolidated Statements of Stockholders' Equity for the
  Years Ended July 31, 1998, 1999, and 2000                        F-5

Consolidated Statements of Cash Flows for the Years Ended
  July 31, 1998, 1999, and 2000                                    F-6

Notes to Consolidated Financial Statements for the Years Ended
  July 31, 1998, 1999, and 2000                                    F-7


                                      F-1
<PAGE>

                   REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To the Shareholders and Board of Directors of Lowrance Electronics, Inc.:

We have audited the accompanying consolidated balance sheets of Lowrance
Electronics, Inc., (a Delaware corporation) and subsidiaries as of July 31, 2000
and 1999, and the related consolidated statements of operations and
comprehensive income, stockholders' equity, and cash flows for each of the three
years in the period ended July 31, 2000.  These financial statements are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States.  Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement.  An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.  An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation.  We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Lowrance Electronics, Inc. and
subsidiaries as of July 31, 2000 and 1999, and the results of their operations
and their cash flows for each of the three years in the period ended July 31,
2000, in conformity with accounting principles generally accepted in the United
States.



                                                    ARTHUR ANDERSEN LLP



Tulsa, Oklahoma
September 28, 2000

                                      F-2
<PAGE>

                          LOWRANCE ELECTRONICS, INC.
                          --------------------------
                          CONSOLIDATED BALANCE SHEETS
                          ---------------------------

                                    ASSETS
                                    ------

                                                            JULY 31,
                                                    -----------------------
                                                      1999           2000
                                                   --------       --------
                                                          (in thousands)
CURRENT ASSETS:
 Cash and cash equivalent                            $   457        $   589
 Trade accounts receivable, net of reserves
  of $512,000 in 1999 and $551,000 in 2000            11,464          6,649
 Inventories                                          13,348         11,277
 Current deferred income taxes                         1,214            774
 Prepaid expenses                                        544            434
                                                     -------        -------
   Total current assets                               27,027         19,723
                                                     -------        -------

PROPERTY, PLANT, AND EQUIPMENT, net                    8,008          7,240

OTHER ASSETS                                             208            186

DEFERRED INCOME TAXES                                    751          2,072
                                                     -------        -------

                                                     $35,994        $29,221
                                                     =======        =======


                     LIABILITIES AND STOCKHOLDERS' EQUITY
                     ------------------------------------


CURRENT LIABILITIES:
 Current maturities of long-term debt                $ 2,107        $ 2,299
 Accounts payable                                      3,321          2,958
 Accrued liabilities:
   Compensation and benefits                           1,873          1,738
   Product costs                                       1,150          1,036
   Other                                                 946            662
                                                     -------        -------
     Total current liabilities                         9,397          8,693
                                                     -------        -------

LONG-TERM DEBT, less current maturities               17,103          8,573
                                                     -------        -------

SERIES "A" REDEEMABLE PREFERRED STOCK, $.50 par
   value, 40,000 shares authorized and issued              -              -

STOCKHOLDERS' EQUITY, per accompanying
 statements:
 Preferred stock, no par value, 230,000 shares
   authorized, none issued                                 -              -
 Common stock, $.10 par value, 10,000,000
   shares authorized, and 3,768,796 shares issued        377            377
 Paid-in capital                                       7,073          7,073
 Retained earnings                                     2,328          4,801
 Foreign currency translation adjustment                (284)          (296)
                                                     -------        -------
   Total stockholders' equity                          9,494         11,955
                                                     -------        -------
                                                     $35,994        $29,221
                                                     =======        =======

The accompanying notes are an integral part of these consolidated balance
sheets.

                                      F-3
<PAGE>

                          LOWRANCE ELECTRONICS, INC.
                          --------------------------
        CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
        --------------------------------------------------------------



                                              FOR THE YEARS ENDED JULY 31,
                                        ----------------------------------------
                                           1998           1999          2000
                                        ----------------------------------------
                                        (in thousands, except per share amounts)

NET SALES                                      $91,706    $89,753   $73,209
COST OF SALES                                   66,061     59,706    45,310
                                               -------    -------   -------

 Gross profit                                   25,645     30,047    27,899
                                               -------    -------   -------

OPERATING EXPENSES:
 Selling and administrative                     22,476     21,587    19,249
 Severance and merger costs                          -      1,201     2,201
 Research and development                        2,650      2,226     2,900
                                               -------    -------   -------

 Total operating expenses                       25,126     25,014    24,350
                                               -------    -------   -------

 Operating income                                  519      5,033     3,549

OTHER EXPENSES:
 Interest                                        3,509      2,893     1,891
 Other                                             176         31       135
                                               -------    -------   -------

 Total other expenses                            3,685      2,924     2,026
                                               -------    -------   -------

INCOME (LOSS) BEFORE INCOME TAXES               (3,166)     2,109     1,523

PROVISION (BENEFIT) FOR INCOME TAXES               829          -      (950)
                                               -------    -------   -------

NET INCOME (LOSS)                              $(3,995)   $ 2,109   $ 2,473
                                               =======    =======   =======

NET INCOME (LOSS) PER COMMON SHARE
   Basic and Diluted                          $  (1.11)   $   .56   $   .66
                                               =======    =======   =======

WEIGHTED AVERAGE COMMON
 SHARES OUTSTANDING
   Basic and Diluted                             3,608      3,769     3,769
                                               =======    =======   =======

OTHER COMPREHENSIVE INCOME
  (LOSS) NET OF TAX:

NET INCOME (LOSS)                              $(3,995)   $ 2,109   $ 2,473


FOREIGN CURRENCY TRANSLATION ADJUSTMENT           (300)       213       (12)
                                               -------    -------   -------

COMPREHENSIVE INCOME (LOSS)                    $(4,295)   $ 2,322   $ 2,461
                                               =======    =======   =======

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

                                      F-4
<PAGE>

                          LOWRANCE ELECTRONICS, INC.
                          --------------------------
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                -----------------------------------------------
               FOR THE YEARS ENDED JULY 31, 1998, 1999, AND 2000
               ------------------------------------------------

<TABLE>
<CAPTION>


                                                                        Foreign
                                 Common Stock                          Currency
                            --------------------  Paid-In   Retained Translation
                               Shares     Amount  Capital  Earnings   Adjustment
                            ------------  ------  -------  ---------  -----------
                                               (in thousands)
<S>                         <C>           <C>     <C>      <C>        <C>

Balance -
  July 31, 1997                    3,352    $335   $5,600   $ 4,214        $(197)
Net loss                               -       -        -    (3,995)           -
Exercise of common stock
  options                             75       7      196         -            -
Issuance of common stock             342      35    1,277         -            -
Foreign currency
  translation adjustment               -       -        -         -         (300)
                            ------------  ------  -------   -------        -----

Balance -
  July 31, 1998                    3,769     377    7,073       219         (497)
Net income                             -       -        -     2,109            -
Foreign currency
  translation adjustment               -       -        -         -          213
                            ------------  ------  -------   -------        -----

Balance -
  July 31, 1999                    3,769     377    7,073     2,328         (284)
Net income                             -       -        -     2,473            -
Foreign currency
  translation adjustment               -       -        -         -          (12)
                            ------------  ------  -------   -------        -----

Balance -
  July 31, 2000                    3,769    $377   $7,073   $ 4,801        $(296)
                            ============  ======  =======   =======        =====

</TABLE>



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

                                      F-5
<PAGE>

                          LOWRANCE ELECTRONICS, INC.
                          --------------------------
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                     -------------------------------------



                                                  FOR THE YEARS ENDED JULY 31,
                                                 -------------------------------
                                                    1998       1999       2000
                                                 --------    --------   --------
                                                          (in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)                              $ (3,995)  $  2,109   $  2,473
  Adjustments to reconcile net income (loss)
   to net cash provided by (used in)
   operating activities:
   Depreciation and amortization                    2,897      2,578      2,160
   Gain on sale of fixed assets                        (2)        (7)       (54)
   Foreign currency translation adjustment           (300)       213        (12)
  Change in operating assets and liabilities:
   (Increase)decrease in trade accounts
    receivable                                      2,604      2,278      4,815
   (Increase)decrease in inventories                2,656     11,876      2,071
   Decrease (increase) in
    income tax refund receivable                      957          -          -
   (Increase)decrease in prepaid expenses
    and deferred income taxes                         526        (33)      (771)
   (Increase)decrease in other assets                 555         69         22
   Increase(decrease) in accounts payable          (6,470)   (11,705)      (363)
   Increase(decrease) in accrued liabilities       (1,080)       456       (533)
                                                 --------   --------   --------

   Net cash provided by (used) in operating
    activities                                     (1,652)     7,834      9,808
                                                 --------   --------   --------

CASH FLOWS FROM INVESTING ACTIVITIES:
 Capital expenditures                              (1,304)      (716)    (1,392)
 Proceeds from sale of property, plant
   and equipment                                        -         28         54
                                                 --------   --------   --------

  Net cash provided by (used in) investing
   activities                                      (1,304)      (688)    (1,338)
                                                 --------   --------   --------

CASH FLOWS FROM FINANCING ACTIVITIES:
 Borrowings under line of credit                   93,397     82,740     69,913
 Repayments of borrowings under line of
   credit                                         (94,613)   (89,464)   (76,143)
 Borrowings under term loan                         5,000      1,800          -
 Capital lease borrowings                             721          -          -
 Principal payments on term loan and
   capital lease obligations                       (3,293)    (2,402)    (2,108)
 Proceeds from issuance of common stock             1,515          -          -
                                                 --------   --------   --------

  Net cash provided by (used in)
     financing activities                           2,727     (7,326)    (8,338)
                                                 --------   --------   --------

  Net increase(decrease)in cash and
     cash equivalent                                 (229)      (180)       132
CASH AND CASH EQUIVALENT - beginning of year          866        637        457
                                                 --------   --------   --------

CASH AND CASH EQUIVALENT - end of year           $    637   $    457   $    589
                                                 ========   ========   ========


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

                                      F-6
<PAGE>

                          LOWRANCE ELECTRONICS, INC.
                          --------------------------
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  ------------------------------------------
               FOR THE YEARS ENDED JULY 31, 1998, 1999, and 2000
               -------------------------------------------------


(1) BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    Business -
    --------

    Lowrance Electronics, Inc., and subsidiaries (the Company) design,
    manufacture, market and distribute SONARs (also known as depth-sounders and
    fish-finders), global positioning system (GPS) navigational equipment and
    other marine electronic products and various related accessories.  The
    Company's SONARs are principally used by sports fishermen for detecting the
    presence of fish and by sports fishermen and boaters as navigational and
    safety devices for determining bottom depth in lakes, rivers, and coastal
    waters.  The Company's GPS receivers are used in a variety of marine and
    non-marine applications, including aviation, hunting, hiking and
    backpacking.

    Principles of Consolidation -
    ---------------------------

    The consolidated financial statements include the accounts of the Company
    and its wholly-owned subsidiaries.  All material intercompany transactions
    and accounts have been eliminated in consolidation.

    Property and Depreciation -
    -------------------------

    Property, plant, and equipment is stated at cost.  For financial reporting
    purposes, depreciation is provided on a straight-line basis over the
    estimated service lives of the respective classes of property.  The building
    is being depreciated using an estimated useful life of thirty years, while
    the estimated lives for other assets range from two to fifteen years.  Fully
    depreciated property and equipment with a cost of approximately $18 million
    is still in use as of July 31, 2000.

    When property is retired, or otherwise disposed of, the cost and related
    accumulated depreciation are removed from the accounts, and the resulting
    gain or loss is credited or charged to operations.

    Maintenance, repairs, and renewals, including replacement of minor items of
    physical properties, are charged to income; major additions and betterments
    to physical properties are capitalized.

    Research and Development Costs -
    ------------------------------
    Costs associated with the development of new products and changes to
    existing products are charged to expense as incurred and include an
    allocation of indirect costs.

    Foreign Currency Translations -
    -----------------------------

    Foreign currency transactions and financial statements are translated in
    accordance with Statement of Financial Accounting Standards ("SFAS") No. 52.
    Assets and liabilities are translated to U.S. dollars at the current
    exchange rate.  Income and expense accounts are translated using the
    weighted average exchange rate for the period.  Adjustments arising from
    translation of foreign financial statements are reflected in the cumulative
    translation adjustment in the equity section of the consolidated balance
    sheets.  Transaction gains and losses are included in net income (loss).

                                      F-7
<PAGE>

    Use of Estimates in the Preparation of Financial Statements -
    -----------------------------------------------------------

    The preparation of financial statements in conformity with accounting
    principles generally accepted in the United States requires management to
    make estimates and assumptions that affect the reported amounts of assets
    and liabilities and disclosure of contingent assets and liabilities at the
    date of the financial statements and the reported amounts of revenues and
    expenses during the reporting period.  Actual results could differ from
    those estimates.

    Accrued Product Costs -
    ---------------------

    Product Warranties - The majority of the Company's sales are made under a
    one-year product warranty.  A provision is made at the time of sale for the
    estimated future warranty costs.

    Dealer Premium Coupons - The Company offers a SONAR installation subsidy to
    qualified boat and motor dealers of its Lowrance product line.  At the time
    of shipment, the Company provides for the estimated cost of this program.

    Returns and Refurbishments - Estimated costs related to refurbishment of
    returned goods are accounted for by providing a reserve based on the
    Company's historical experience.  These reserves are analyzed and adjusted
    quarterly.  Returns are recorded as a reduction of net sales at the time of
    receipt of the goods.

    Cash and Cash Equivalent -
    ------------------------

    For purposes of the Consolidated Statements of Cash Flows, the Company
    considers all highly liquid investments with original maturites of three
    months or less to be cash equivalents.

    Advertising -
    -----------

    Advertising costs are expensed as incurred.  The Company expensed
    approximately $2.7 million, $2.5 million and $2.0 million during the years
    1998, 1999 and 2000, respectively, for advertising.

    Fair Value of Financial Instruments -
    -----------------------------------

         Cash and cash equivalents, accounts receivable and accounts payable -
         -------------------------------------------------------------------
         The carrying amount of these assets and liabilities approximates fair
         value because of the short maturity of these instruments.

         Long-term debt and revolving credit line - The amounts outstanding
         ----------------------------------------
     under the Company's term loan and revolving credit line bear interest at
     current floating market rates, thus their carrying amounts approximate fair
     market value. Interest rates underlying capitalized equipment leases
     approximate current market rates.

    Recently Issued Accounting Principles -
    -------------------------------------

    In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
    Accounting for Derivative Instruments and Hedging Activities.  SFAS No. 133
    establishes accounting and reporting standards requiring that every
    derivative instrument (including certain derivative instruments embedded in
    other contracts) be recorded in the balance sheet as either an asset or
    liability measured at its fair value.  SFAS No. 133 requires that changes in
    the derivative's fair value be recognized currently in earnings unless
    specific hedge accounting criteria are met.  Special accounting for
    qualifying hedges allows a derivative's gains and losses to offset related
    results on the hedged item in the income statement.  Companies must formally
    document, designate, and assess the effectiveness of transactions that
    receive

                                      F-8
<PAGE>

    hedge accounting. SFAS No. 133, as amended by SFAS No. 137, is effective for
    fiscal years beginning after June 15, 2000. SFAS No. 133 cannot be applied
    retroactively and must be applied to (a) derivative instruments and (b)
    certain derivative instruments embedded in hybrid contracts that were
    issued, acquired, or substantively modified after December 31, 1997. The
    Company's adoption of SFAS No. 133 will not have a significant impact on the
    Company's consolidated financial statements.

    Reclassifications -
    -----------------
    Certain reclassifications have been made to prior years' consolidated
    financial statements to conform to the current year presentation.

                                      F-9
<PAGE>

(2) BALANCE SHEET DETAIL

    Inventories -
    -------------

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


                                                             1999      2000
                                                          -------   -------
                                                            (in thousands)
      Raw materials                                       $ 4,255   $ 4,164
      Work-in-process                                       2,579     1,023
      Finished goods                                        7,818     7,547
      Excess, obsolete, and realization reserves           (1,304)   (1,457)
                                                          -------   -------

       Total inventories                                  $13,348   $11,277
                                                          =======   =======


    Property, Plant, and Equipment -                         1999      2000
    --------------------------------             -        -------   -------
                                                            (in thousands)
      Land                                                $   557   $   557
      Building and improvements                             4,491     5,163
      Machinery and equipment                              25,230    25,434
      Office furniture and fixtures                         3,549     3,695
                                                          -------   -------
                                                           33,827    34,849
      Less - accumulated depreciation                      25,819    27,609
                                                          -------   -------
       Net property, plant, and equipment                 $ 8,008   $ 7,240
                                                          =======   =======

    The property, plant, and equipment accounts include the following amounts
    for leased property under capitalized leases:

                                                          1999      2000
                                                       -------    ------
                                                        (in thousands)
      Machinery and equipment                             $ 4,054   $ 3,271
      Office furniture and fixtures                           400       260
                                                          -------   -------
                                                            4,454     3,531
      Less - accumulated depreciation                       1,953     2,043
                                                          -------   -------
       Net property, plant, and equipment
         under capitalized leases                         $ 2,501   $ 1,488
                                                          =======   =======


    Reserve for Doubtful Accounts and Sales                 1999     2000
    ---------------------------------------               -------   ------
    Returns                                                (in thousands)
    --------

      Balance, beginning of period                        $   683   $   512
      Charged to expense                                      164       255
      Net (write-offs) recoveries                            (335)     (216)
                                                          -------   -------
      Balance, end of period                              $   512   $   551
                                                          =======   =======

    Excess, Obsolete, and Realization Reserve
    -----------------------------------------

      Balance, beginning of period                        $ 1,610   $ 1,304
      Charged to expense                                    1,391       599
      Net (write-offs) recoveries                          (1,697)     (446)
                                                          -------    ------
      Balance, end of period                              $ 1,304   $ 1,457
                                                          =======   =======

                                      F-10
<PAGE>

(3) LONG-TERM DEBT AND REVOLVING CREDIT LINE

    Long-term debt and the revolving credit line are summarized below:


                                                       1999      2000
                                                     -------   -------
                                                       (in thousands)

      Revolving credit line                          $10,680   $ 4,450
      Term loans                                       6,251     5,013
      Capitalized equipment lease
       obligations, payable in monthly
       installments of approximately
       $83,000, including interest at
       rates from 7.9% to 10.4%, with final
       payments ranging from August 2000
       through December 2002                           2,279     1,409
                                                     -------   -------
                                                      19,210    10,872
      Less - current maturities                        2,107     2,299
                                                     -------   -------

       Total long-term debt                          $17,103   $ 8,573
                                                     =======   =======


   Future maturities of the above debt obligations at July 31, 2000, are
   approximately $2.2 million, $1.6 million, and $7.1 million, for the years
   ending July 31, 2001 through 2003, respectively.

   At July 31, 2000, the Company had a $33.9 million financing package which
   consisted of $7.4 million in term loans together with a $26.5 million
   revolving credit line.  The revolving credit line provides for borrowings up
   to $26.5 million based on varying percentages of qualifying categories of
   receivables and inventories.  Borrowing against inventories is limited to $13
   million in total.  At July 31, 2000, the Company had $4.2 million available
   under the revolving credit line.

   During March 2000, the Company's financing package was amended. This
   amendment extended the term of the agreement from December 31, 2000 to
   December 31, 2002 and includes a renewal option through December 31, 2003
   assuming neither party terminates.    Significant provisions of the amendment
   include changes in certain financial covenants and the lowering of the
   interest rate on the revolving credit line and term loan from prime plus 1.5%
   to prime plus .5% (10% as of July 31, 2000).

   The terms of the foregoing agreement include a commitment fee based on the
   unused portion of the bank credit line in lieu of compensating balances.

   The agreement requires, among other things, that the Company maintain a
   minimum tangible net worth, limits the ratio of total liabilities to tangible
   net worth and requires the Company to maintain a minimum fixed charge ratio.
   Additionally, the agreement limits the amount of operating leases, capital
   expenditures and capital leases.  Violation of any of these provisions,
   except for the fixed charge ratio, would constitute an event of default
   which, if not cured, would empower the lender to declare all amounts
   immediately payable.  Violation of the fixed charge ratio results in an
   increase in the interest rate on the revolving credit line and term loan of
   .5%.  The agreement also contains a provision that in the event of a defined
   change of ownership, the agreement may be terminated.  The Company was in
   compliance with all debt covenants at July 31, 2000.

                                      F-11
<PAGE>

    The Company's indebtedness is collateralized by substantially all of the
    Company's assets.

    Average short-term borrowings under the revolving credit line and related
    interest rates shown in the following table are weighted by using the
    average month-end principal balances.


                                             Years Ended July 31,
                                         ------- ----------------------
                                           1998       1999       2000
                                         -------     -------    -------
                                               (in thousands)
     Highest amount borrowed             $20,872     $19,169    $11,451
     Average amount borrowed             $18,025     $16,457      8,864
     Weighted average interest rate         10.4%       10.3%      10.6%


(4) LEASES

    Capital Leases -
    --------------

    Certain equipment is leased under agreements that are structured as capital
    leases.  Accordingly, such equipment has been recorded as an asset, and the
    discounted value of the remaining lease obligations has been recorded as a
    liability in the accompanying Consolidated Balance Sheets.

    The following is a schedule by years of future minimum lease payments under
    capital leases, together with the present value of the net minimum lease
    payments as of July 31, 2000, (in thousands):

    Years ending July 31:
          2001                                                       $1,036
          2002                                                          350
          2003                                                           99
                                                                     ------
       Total minimum lease payments                                   1,485
       Less-amounts representing interest                                76
                                                                     ------

       Present value of net minimum lease payments                   $1,409
                                                                     ======

       Current portion of obligations under
        capital leases                                               $  981

       Long-term portion of obligations under
        capital leases                                               $  428

    Operating Leases -
    ----------------

    During 1998, 1999 and 2000, the Company recorded $1.9 million, $1.7
    million and $1.4 million, respectively, of expense related to operating
    leases.

    At July 31, 2000, future minimum rental payments for operating leases
    totaled $5.4 million.  On August 30, 1996, the Company entered into a ten
    year non-cancelable lease for a manufacturing facility in Ensenada, Mexico.
    The lease has a fair market purchase option after three years and
    accordingly was accounted for as an operating lease.  Payments for this
    facility are approximately $53,050 per month.  The lease also includes rent
    escalations of 3% per year.  Total future minimum rental payments under
    operating leases for the years ending July 31, 2001 through July 31, 2005
    (including the rental for the Mexican facility assuming the purchase option
    is not exercised) are approximately $1.1

                                      F-12
<PAGE>

    million, $.9 million, $.8 million, $.8 million, and $.8 million,
    respectively, and $1.0 million thereafter.


(5) STOCKHOLDERS' EQUITY AND RELATED ITEMS

    The Company's 1989 Stock Option Plan provides for a maximum of 400,000
    common shares available for issue.  Options and stock appreciation rights
    granted cannot have terms greater than ten years.  The Plan provides for
    non-qualified stock options to be granted at an option price of not less
    than 100% of the fair market value of the Company's Common Stock at the date
    of grant.

    In 1998, all 75,000 outstanding common stock options were exercised at a
    weighted average price of $2.71 per share.  No additional options were
    granted.

    There were no outstanding options under the Plan as of July 31, 1998, 1999
    or 2000.

    On May 13, 1996, the Company issued 70,000 shares of Series "A" Redeemable
    Preferred Stock in a private placement to five key officers of the Company.
    The Series "A" Preferred Stock is a nonvoting stock paying a noncumulative
    dividend of 2 1/2 cents.  Each share of Series "A" Preferred Stock is
    convertible into five shares of the Company's Common Stock at a cash
    purchase price of $5.00 per share of Common Stock, but only if (i) the Chief
    Executive Officer of the Company sells in excess of 30 percent of his Common
    Stock of the Company or (ii) the Company sells substantially all of its
    assets and operations to a third party.  The Series "A" Preferred Stock has
    been issued for a term of ten years for a purchase price of $6.875 per
    share.  The Company financed the total purchase price of $481,250 for the
    five key officers of the Company pursuant to Promissory Notes bearing
    interest at Chase prime and Security Agreements where all of such Series "A"
    Preferred Stock is pledged to the Company to secure the Promissory Notes.
    In the event the Series "A" Preferred Stock is not converted within the ten
    year term, the holder is required to surrender the Series "A" Preferred
    Stock for cancellation by the Company in exchange for the Company forgiving
    the principal amount of the Promissory Note.  If any of the key officers
    terminate their employment with the Company for any reason, except death,
    they immediately forfeit ownership rights to the Series "A" Preferred Stock
    which is immediately surrendered to the Company for cancellation in exchange
    for cancellation of the principal amount owing on the Promissory Note,
    provided all accrued interest on the Promissory Note is paid to the date of
    the key employee's termination.  The Promissory Notes receivables have been
    netted against Preferred Stock in the Consolidated Balance Sheets.  During
    fiscal 2000, three of the key officers terminated employment with the
    Company.  Accordingly, their ownership rights in 30,000 shares of Series "A"
    Preferred Stock were forfeited.  At July 31, 2000, there are 40,000 shares
    of Series "A" Preferred Stock outstanding.

    During fiscal 1998, members of the Company's Board of Directors purchased
    341,338 shares of newly issued, unregistered and restricted common stock in
    a private placement for $1,310,738 in cash.

    The Company adopted the disclosure-only provisions of SFAS 123 "Accounting
    for Stock-Based Compensation."  Accordingly, no compensation cost has been
    recognized for the stock option plans.  Had compensation cost for the
    Company's stock option plans been determined

                                      F-13
<PAGE>

    consistent with the provisions of SFAS 123, the Company's net income (loss)
    and earnings (loss) per share would have been changed to the pro forma
    amounts indicated below:


                                       1998      1999    2000
                                    -------    ------  ------
      NET INCOME (LOSS):
           As reported              $(3,995)   $2,109  $2,473
           Pro forma                 (4,144)    1,956   2,385

      EARNINGS (LOSS) PER SHARE:
           Basic-as reported        $ (1.11)   $  .56  $  .66
           Diluted-as reported        (1.11)      .56     .66
           Pro forma-Basic            (1.15)      .52     .63
           Pro forma-Diluted          (1.15)      .52     .63


    The fair value of each option grant is estimated on the date of grant using
    the Modified Black-Scholes European option pricing model with the following
    weighted average assumption:  dividend yield of 0%, expected volatility of
    85.84%, risk-free interest rate of 6.41% and expected life of five years.


(6) RETIREMENT PLANS

    Substantially all U.S. Company employees participate in the Lowrance
    Savings Plans which require the Company to contribute 3% of the
    participants' qualified earnings to the Plans.  Also, each participant may
    make contributions of qualified earnings into the Plans which will be
    matched by the Company at 100% for the first $10 per pay period and 50%
    thereafter, not to exceed 3% of compensation.  Contributions made by the
    Company to the Plans for the years ended July 31, 1998, 1999, and 2000 were
    approximately $462,000, $590,000, and $502,000, respectively.


(7) INCOME TAXES

    The provision (benefit) for income taxes consists of the following:

                             Years Ended July 31,
                        -------------------------------
                         1998           1999      2000
                        -----          -----   -------
                               (in thousands)
     Current            $  93          $  99   $   485
     Deferred             736            (99)   (1,435)
                        -----          -----   -------

        Total           $ 829          $   -   $  (950)
                        =====                  =======

                                      F-14
<PAGE>

    The provision (benefit) for income taxes differs from the amount calculated
by multiplying income (loss) before provision (benefit) for income taxes by the
statutory Federal income tax rate due to the following:

                                          Years Ended July 31,
                                       -------------------------
                                          1998    1999    2000
                                        ------   -----   ------
      Statutory rate                    (34.0)%   34.0%    34.0%
      Change in valuation allowance       63.2   (29.2)   (90.9%)
      Foreign income taxes                 2.8     4.7      7.2%
      State income taxes                  (2.3)   (1.6)     2.0%
      Research & development credits      (1.4)      -        -
      Tax treatment of foreign
      operations                             -       -    (13.6%)
      Other                               (2.1)   (7.9)   (1.1%)
                                        ------   -----   ------

      Effective rate                      26.2%      -%  (62.4%)
                                        ======   =====   ======


   The Company accounts for income taxes in accordance with Statement No. 109
   of the Financial Accounting Standards Board which requires an asset and
   liability approach to financial accounting and reporting for income taxes.
   The difference between the financial statement and tax bases of assets and
   liabilities is determined and deferred tax assets or liabilities are computed
   for those differences that have future tax consequences.  The Company has a
   net operating loss carryforward of approximately $2,502,000 at July 31, 2000,
   which expires in July 31, 2012 and July 31, 2013.  After the completion of
   the fourth quarter of fiscal 1998, the Company determined that a valuation
   allowance of $2,000,000 against the net operating loss carryforward was
   necessary as of July 31, 1998.  During 1999, the valuation allowance was
   reduced to $1,384,000.  Statement No. 109 requires that deferred tax assets
   be reduced by a valuation allowance if it is more likely than not that some
   portion or all of the deferred tax asset will not be realized.  After the
   completion of the fourth quarter of fiscal 2000, the Company determined that
   it is more likely than not that the deferred tax asset related to the net
   operating loss carryforward will be realized.  Accordingly, the valuation
   allowance was eliminated.

                                      F-15
<PAGE>

    The tax effect of temporary differences giving rise to the Company's
consolidated deferred income taxes at July 31 are as follows:
                                            1999     2000
                                          --------- -------
                                           (in thousands)
Deferred tax assets -
 Reserves for product costs                $   574   $  484
 Reserves for compensation and benefits        137      155
 State tax credit carryforwards                376      509
 Accounts receivable reserves                   44       54
 Other                                          83       81
 NOL carryforward                            3,047    2,502
                                           -------   ------
                                           $ 4,261   $3,785
 Less- valuation allowance                  (1,384)       -
                                                     ------
 Net deferred tax asset                      2,877    3,785
                                           =======   ======

Deferred tax liabilities -
 Depreciation                              $ 1,010   $  852
                                           =======   ======

(8) CONSOLIDATED STATEMENTS OF CASH FLOWS

    Interest of approximately $3.5 million and $2.9 million and $1.9 million was
    paid during 1998, 1999, and 2000, respectively.  No income tax payments were
    made in 1998 or 1999.  An income tax payment of $5,499 was made in 2000
    related to Alternative Minimum Tax.  An income tax refund of $957,000 was
    received in 1998.


(9) SALES BY GEOGRAPHIC REGION

    The Company markets its products internationally through foreign
    distributors, except in Canada and Australia where it has established its
    own distribution operations.  The following table presents a summary of
    domestic and foreign sales:


                       1998           1999       2000
                      -------        -------    -------
                                  (in thousands)
       Net sales:
         Domestic     $69,376        $71,681    $60,335
         Foreign       22,330         18,072     12,874
                      -------        -------    -------

          Total       $91,706        $89,753    $73,209
                      =======        =======    =======


      The majority of foreign sales are concentrated in Canada, Australia and
      Europe.


(10)  SALES TO A MAJOR CUSTOMER

      During both 1999 and 2000, one customer accounted for approximately 13% of
      consolidated net sales in each year. No other customer accounted for 10%
      or more of consolidated net sales in 1998, 1999 or 2000.

                                      F-16
<PAGE>

(11)  CONCENTRATIONS OF CREDIT RISK

      The Company extends credit to various companies in the marine and non-
      marine markets in the normal course of business. Within these markets,
      certain concentrations of credit risk exist. These concentrations of
      credit risk may be similarly affected by changes in economic or other
      conditions and may, accordingly, impact the Company's overall credit risk.
      However, management believes that receivables are well diversified,
      thereby reducing the potential credit risk and that allowances for
      doubtful accounts are adequate to absorb estimated losses at July 31,
      2000.

      At July 31, 1999 and 2000, trade receivables related to these group
      concentrations were:


                                        1999   2000
                                        ----   ----

       Marine                           50%    54%
       Non-Marine                       50%    46%


(12)  SEVERANCE AND MERGER COSTS

      During 1999 and 2000, the Company recognized $.8 million and $1.9 million,
      respectively, in severance costs primarily related to transferring certain
      production related jobs to the Company's Mexico manufacturing facility.
      The total number of employees affected was 161. Severance costs for all
      identified employees were fully accrued as of January 31, 2000.

      The Company incurred $.4 million and $.3 million during 1999 and 2000,
      respectively, in costs associated with its terminated merger with Orbital
      Sciences Corporation.

                                      F-17
<PAGE>

(b)  Reports on Form 8-K:
---  -------------------

      On September 15, 2000 the Company filed a form 8-K dated September 7, 2000
      with the SEC presenting the current principal stockholder information.


                                   SIGNATURES

    Pursuant to the requirements of Section 13 or 15(d) 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.

                                LOWRANCE ELECTRONICS, INC.


DATE:    October 18, 2000         BY:/s/ Darrell J. Lowrance
       -------------------------     -------------------------------------
                                    Darrell J. Lowrance,
                                    President and
                                    Chief Executive Officer


    Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated and on the dates indicated:

/s/ Darrell J. Lowrance
---------------------------
Darrell J. Lowrance     President, Chief Executive      October 18, 2000
                        (Principal Executive Officer)


/s/ Douglas J. Townsdin
---------------------------
Douglas J. Townsdin     Vice President of Finance and   October 18, 2000
                        Chief Financial Officer
                        (Principal Financial Officer and
                        Principal Accounting Officer)


/s/ Willard P. Britton
---------------------------
Willard P. Britton      Director                        October 18, 2000


/s/ Peter F. Foley, III
---------------------------
Peter F. Foley, III     Director                        October 18, 2000


/s/ Ronald G. Weber
---------------------------
Ronald G. Weber         Executive Vice President of     October 18, 2000
                        Technology and Engineering
                        and Director


/s/ H. Wayne Cooper
---------------------------
H. Wayne Cooper         Secretary                       October 18, 2000

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