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F O R M   1 0  K/A  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  (Mark One) [ü]
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [FEE REQUIRED]
 
 [   ]
    
    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.   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
[ü]   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.        [   ] Indicate by check mark whether the registrant is an accelerated file (as
defined in Exchange Act Rule 12b-2). Yes [   ]        No   [ü] Aggregate Market Value of the Voting Stock Held By
Non-Affiliates on October 22, 2003  $23,618,372 Aggregate Market Value of the Voting Stock Held By
Non-Affiliates on January 31, 2003  $10,541,435 Number of Shares of Common Stock
Outstanding on October 22, 2003  3,761,196 DOCUMENTS INCORPORATED BY REFERENCE
NONE




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We are filing this amendment No. 1 to Form 10-K to reflect the restatement of
our financial statements for the fiscal year ended July 31, 2003. Please see
Note 12 to the Consolidated Financial Statements for specific information
related to the restatement.




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FORM 10-K/A Annual Report for Fiscal Year Ended July 31, 2003 LOWRANCE ELECTRONICS, INC.  
 Table of Contents PagePART IItem 1. Business
    
    
    1Item 2. Properties
    
    
    18Item 3. Legal Proceedings
    
    
    18Item 4. Submission of Matters to a Vote of Security Holders
    
    
    18PART IIItem 5. Market for Registrants Common Equity and Related Stockholder Matters
    
    
    18Item 6. Selected Financial Data
    
    
    19Item 7. Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    20Item 7a. Quantitative and Qualitative Disclosures About
Market Risk
    
    
    26Item 8. Financial Statements and Supplementary Data
    
    
    26Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
    
    
    27Item 9a. Controls and Procedures
    
    
    27PART IIIItem 10. Directors and Executive Officers of the Registrant
    
    
    27Item 11. Executive Compensation
    
    
    30Item 12. Security Ownership of Certain Beneficial Owners
and Management
    
    
    35Item 13. Certain Relationships and Related Transactions
    
    
    37Item 14. Principal Accounting Fees and Services
    
    
    37PART IVItem 15. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K
    
    37 and F-1 to F-20Signatures
    
    
    44Certification of Principal Executive OfficerCertification of Principal Financial OfficerCertification Pursuant to 18 U.S.C. Section 1350




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LOWRANCE ELECTRONICS, INC.
Annual Report
For the Year Ended July 31, 2003 
 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 designs, manufactures, and sells sportfishing
SONAR(also known as fish finders or depth finders). The Company also designs,
manufactures and sells Global Positioning Systems(GPS/Mapping). In support of
those two brands, the Company also markets a complete line of related
accessories (200 kHz single and 50/200 kHz dual-frequency transducers,
temp/speed/distance sensors, mounting systems, GPS+WAAS receiver/antennas,
detailed CD-ROM mapping software, SONAR/GPS computer interfaces, rewritable
Multi-Media Cards (MMC) and Secure Digital (SD) cards, MMC/SD card readers,
along with a variety of cables/connectors, etc.). The Companys SONAR
instruments are used primarily by sports fishermen to: detect underwater
structure, thermoclines, 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+WAAS
receiver/antennas offer consumers faster satellite lock-ons and more accurate
GPS navigation, fully enabled for reception of the Federal Aviation
Administrations Wide Area Augmentation System (WAAS) satellite signals which
provide enhanced positional accuracy up to 3 meters or less in select WAAS
coverage areas of the U.S.A. Whether using the built-in custom background map,
or the Companys exclusive MapCreate CD-ROM detailed mapping software, or its
newly introduced preprogrammed FreedomMaps plug-&-play high-detail digital
mapping cards, or compatible Navionics® HotMaps, Classic XL, and Gold
electronic mapping charts, fishermen and boaters can determine precisely where
they are relative to landmarks on the maps, then see exactly what is under
their boats as well. Several products offer combined SONAR/GPS+WAAS mapping
capabilities; others provide stand-alone SONAR or GPS+WAAS capabilities. Some
models are gimbal-mounted in brackets; some can be panel-mounted in a console;
and 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
retail outlets, mail-order catalogs, mass merchants, wholesale distributors,
dealers and original equipment boat manufacturers (OEMs), in all fifty states
and in fifty-three foreign countries. The Companys internet address is www.lowrance.com. Securities and
Exchange Commission (SEC) filings for the Company may be accessed free of
charge through a direct link to the SEC website. This direct link may be
accessed by selecting Press Releases in the Information section of the
Companys home page and then selecting SEC Filings. Filings which may be
accessed include the annual report on Form 10-K, the quarterly reports on Form
10-Q, current reports on Form 8-K and any amendments to those reports filed or
furnished pursuant to Section 13 or 15(d) of the Securities and Exchange Act of
1934. The Companys principal U.S. corporate offices are located at 12000 East
Skelly Drive, Tulsa, Oklahoma 74128, and the main telephone number is 1




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918.437.6881. The corporate offices encompass: Engineering, Sales and
Marketing, Order Management, Customer Service, Product Warranty and Repair,
Purchasing, Accounting, Warehouse/Distribution, and LEI Extras, Inc. (accessory
sales). Over 200 professional staff and management personnel are employed at
the Tulsa corporate facility. The Companys principal manufacturing facility,
Electronica Lowrance, is located in Ensenada, Mexico, approximately 80 miles
south of San Diego, California. There are approximately 600 manufacturing and
production support personnel at the Ensenada facility. Products The Companys dual-brand product lines consist primarily of SONARand
GPS+WAAS Mappingnavigational 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 unitwith 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. Frequently, 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 translates the information
into graphic images displayed on the LCD for use by the boater. This sounding
process repeats itself many times per second, each time at a slightly different
location within a body of water (assuming the boat is moving), instantly and
accurately painting detailed pictures of the underwater world by combining the
results of numerous soundings. The ensuing SONAR images are extremely helpful
to anglers and boaters in their interpretation of suspended targets,
thermoclines (temperature layers within the vertical water column),
fish-attracting structure, and the composition and hardness of the bottom. The Companys SONAR products are extremely durable, completely waterproof
and are designed to withstand harsh saltwater 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 unit. 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 2




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(LCDs), either in monochrome using up to 16 levels of gray scale, or in color
employing up to 256 colors. Graphic Liquid Crystal Display (LCD) SONAR -The Company was the first to
employ LCD technology with regard to LCD use in SONAR products and was also the
first to utilize high-resolution, high-contrast, Film SuperTwist LCD
technology, which, when incorporated into its SONAR instruments, provides the
very best target detail and separation in the industry. By 2003, all the
Companys entry-level to advanced monochrome SONAR products sold under both
trade names had Film SuperTwist displays. Also during 2003, the Company
expanded its popular family of LCX Series,big-screen, high-performance
Monochrome Transflective and Color TFT (Thin Film Transistor) Lowrance LCD
products with the all-new LCX-19Cand LCX-104Cmodels, designed primarily for
the Companys expanding coastal and Great Lakes markets. Patterned after the
legendary performance qualities of their X-15 and X-16 paper graph ancestors,
these LCD products feature up to 10.4diagonal, 640 x 480 pixel screens (over
307,000 total pixels), offering exceptional levels of resolution and
readability. The LCX-18C, LCX-19Cand LCX-104Cmodels feature full 256-color
displays with programmable color palettes to match the viewing preferences of
individual users. These high-detail units, typically, will separate individual
fish suspended less than 1 apart. In addition, they offer another Lowrance
industry first: paper-free record/play capabilities with standard reusable,
compact digital media cards - Multi-Media Card (MMC) or Secure Digital (SD) -
available in 8MB to 256MB memory capacities. The 10.4 large-screen 256-color,
dual-frequency SONAR/GPS+WAAS mapping combo, the LCX-104C,received the
prestigious Best In Marine Electronics CategoryAward in the New Product
Showcase at ICAST 2003. During fiscal 2003, the Company began production of 6 new Lowrance200 kHz
SONAR LCD products, announced previously at major trade and consumer shows:
the X47, X47EX, X67C, X87, X97and LMS-320. These products offered exceptional
features for their minimum advertised prices (MAP). For example, at a
breakthrough $299 MAP, the new 256-color X67CSONAR has an exceptional sunlight
viewable, 320x240 pixel LCD; a FishReveal feature to show fish hidden in
surface clutter, weed beds and other types of underwater cover; a full-screen
color FasTrack flasher display; HyperScroll to enhance the display of fish
targets at higher boat speeds; a patented 200 kHz Skimmer® transducer with an
integrated water temp sensor; a sporty new case design; and 800 watts of
peak-to-peak transmit power, producing depth capabilities to 600 feet. At an
upper-middle price point, the LMS-320($549 MAP), a combo SONAR/GPS+WAAS
mapping unit (also available in a 50/200 kHz dual-frequency pack), offered even
more impressive features: a new compact case design; 3,000 watts of
peak-to-peak transmit power; depth capability to 1,000 feet; built-in temp
sensor; FishReveal; HyperScroll; and one waterproof slot for reusable digital
MMC/SD media cards to record/play SONAR graphs (like the big-screen,
top-of-the-line units) and to display optional MapCreate, FreedomMaps and
Navionics® detailed mapping from electronic charts (some incorporating depth
contour lines, real-time tide and current data); and a high-impact protective
cover to guard the screen and keypad when not in use. In addition to the 6new Lowrance 200 kHz SONAR models, 4all-new, compact
to mid-sized, 50/200 kHz dual-frequency (DF) SONAR products went into
production during fiscal 2003: the X58DF, X88DF, X98DF, plus the dual-frequency
packing of the new LMS-320.Loaded with many of the same professional
fish-finding features of their single-frequency counterparts, these new
dual-frequency models actually added performance features, with enhanced power,
deeper depth capability, and temp/speed/distance log readings standard in every
DF product. These models range in price from $219 MAP for the X58DF, to $449
MAP for the X98DF. They were suited for use on coastal salt water fishing
boats, as well as for tracking downrigger balls in Great Lakes fishing
applications. 3




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Also in fiscal 2003, 2new Lowrance stand-alone GPS+WAAS mapping models,
the GlobalMap® 3200 (5 diagonal, 320x320 pixel, monochrome LCD) and the
GlobalMap® 7000C (10.4 diagonal, 256-color, 640x480 pixel TFT) began shipping.
As with all 2003 Lowrance GPS mapping models, these products came with the
enhanced built-in background map of the continental U.S. and Hawaii that
includes over 60,000 navigational aids, 10,000 wrecks and obstructions in
coastal and Great Lakes waters, as well as metro areas, select major
streets/highways, and interstate exit services for multi-purpose land and water
navigation. Designed to meet the navigational needs of fresh water and salt
water anglers and boaters, these two new gimbal-mount GPS+WAAS products also
provided consumers the Companys exclusive digital media card record/playback
capability, as well as additional choices in digitized electronic chart
options. The GlobalMap® 3200 was priced at $399 MAP, and the big-screen,
256-color GlobalMap® 7000C, was priced at $1,799 MAP. Throughout fiscal 2003, the four Lowrance iFINDER® hand-held, portable
GPS+WAAS mapping models (iFINDER®, iFINDER® Plus, Atlantis and Express)
introduced previously in 2002, continued gaining exposure and popularity in the
marketplace. These hand-held navigational instruments are small enough to carry
in a shirt pocket, yet have large, easy-to-read LCD displays with backlighting
for night use. The iFINDER® offers several advantages to the outdoors
enthusiast  custom built-in background map, as well as the option of
preprogrammed regional FreedomMaps digital mapping cards, or user-created,
high-detail maps from Lowrances exclusive MapCreate CD-ROM mapping software.
Users simply create the maps they want and download from a PC to a reusable
MMC/SD memory card, with the ability to instantly expand the units record
memory with the insertion of a single 8MB to 256MB card. Purchasers can also
personalize the look of their iFINDER® with colorful FaceOffs covers in red,
yellow, blue, camouflage and black. The iFINDER® has internal memory capable
of storing up to 1,000 waypoints, 1,000 event markers, 100 routes and 10
plot-trails (up to 10,000 points per trail). Also during fiscal 2003, the Company began distribution of 3 new Eagle®
200 kHz SONAR LCD products, all with platinum gray cases: one new expansion
product in the Eagle Cuda Series of entry-level SONAR units, the new Cuda
168EX,with its wider 4.5 diagonal screen and priced at $119.99 suggested
retail (SRP); a new 5, high-resolution, 320x320 pixel fishfinder, the
FishMark 320,at a price of $199.99 SRP; and the FishElite 320($449.99 SRP),
combo SONAR/GPS+WAAS mapping unit with digital media card record/play
capability and choices in electronic mapping to include a custom built-in
background map, plus optional FreedomMaps, MapCreate and Navionics®
electronic charts. A new 2003 Eagle® stand-alone GPS+WAAS mapping unit, the
IntelliMap 320, at $349.99 MAP, offered all the same mapping capabilities, but
without the SONAR features. In addition to the new 200 kHz, single-frequency, Eagle® SONAR products,
the Company also announced 3new Eagle® 50/200 kHz, dual-frequency (DF) models:
The SeaFinder 240DF, SeaFinder 320DF, and SeaCharter 320DFSONAR/GPS+WAAS
combo. These DF models were priced at $149,99, $239.99, and $499.99 MAP
respectfully. The Eagle® SeaFinder 320DF and SeaCharter 320DF models came with
500 watts RMS power, depth capabilities to 1,500 feet, and all three models
included speed/temp/distance log readings. Late in the 4th quarter of fiscal 2003 at ICAST, the Company announced to
the trade 5 new Eagle®and Lowrance SONAR and SONAR/GPS products for fiscal
2004: (1)- the new Eagle®Cuda 240 S/GPScombination SONAR/GPS plotter, with
full 12-parallel channel GPS plotter navigational functions, at a price of
$199.99 SRP; (2)- the Lowrance M56 S/MapMarine mapping product, at $299 MAP,
with full SONAR and GPS-mapping features to include an internal, built-in,
high-detail chart with special hydrography mapping covering major inland lakes,
and the coasts of the continental U.S., featuring enhanced shoreline detail,
navigational aids, and wrecks and obstructions; (3)- the new Lowrance color
M68C 4




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S/Mapmarine mapping SONAR and GPS product ($399 MAP), with the
identical high-detail hydrography mapping of the M56 S/MAP model, but with a
256-color, sunlight viewable TFT display; (4)- the new Lowrance X67C
IceMachine color ice fishing portable ($399 MAP) with its custom,
water-repellent carrying bag and sure-grip handle, rubberized no-stick base,
dual-zippers, 12-volt/7-amp sealed rechargeable battery, battery tie-downs, a
battery charger, plus a uniquely designed ice fishing transducer with
adjustable outrigger arm for easy transducer placement and depth adjustment.
The X67C IceMachine also accepts numerous transducer options for all-season
portable fishfinder fun; and (5)- the all-new Lowrance LCF-1440in-dash digital
LCD flasher, at $199 MAP, offering an easier fit, real-time fishfinder
performance, better viewing, and more features including water temp readings. In a strategic plan to gain additional competitive advantage within its
SONAR and GPS markets, the Company delayed the internal announcement of its
additional new 2004Lowrance and Eagle® product lineups to its salesmen,
dealers and distributors until the 1st quarter of fiscal 2004. At a National
Sales Meeting held in September of 2003 in Tulsa, OK, the Company announced 16
additional new Lowrance and 5 additional Eagle®2004 products (for a grand
total of 26 new models, including the 5 introduced previously at ICAST), most
of which will begin shipping either toward the end of calendar year 2003, or at
the beginning of calendar year 2004. In actuality, while only 26 models have
been announced, a total of 31 new Lowrance and Eagle products will be delivered
during fiscal 2004. For Eagle®, in addition to the Cuda 240 S/GPSmodel, the 5 other
innovative new products for 2004 will include: (1)- the FishMark 480, 200 kHz
SONAR, with a high-resolution 480x480 pixel Film SuperTwist LCD with 16-level
gray scale and enhanced new amber LED backlighting, plus water temp readings,
all at an SRP of $199.99; (2)- the new FishElite 480($449.99 SRP), 200 kHz
combo SONAR/GPS+WAAS mapping unit with pro-grade fish-finding features, 480x480
high-detail display with 16 levels of gray scale, plus full GPS-mapping
capability to include the 12-parallel channel GPS+WAAS receiver/antenna,
enhanced built-in background map, and optional high-detail, FreedomMaps,
MapCreate, and Navionics® electronic charts; (3)- a new 50/200 kHz,
dual-frequency (DF) SONAR model, the SeaFinder 480DF, priced at $239.99 MAP,
with 500 watts of RMS power for depths to 1,500 feet, enhanced 480x480 display
and LED backlighting, plus temp/speed/distance log readings standard; and (4)-
the new SeaCharter 480DF, 50/200 kHz, dual-frequency SONAR/GPS+WAAS
combination ($499.99 MAP), with high-resolution 480X480 pixel LCD, 16-level
gray scale, depth capability to 1,500 feet, speed/temp/ distance log readings,
and with all the same GPS-mapping features as the previously discussed Eagle®
mapping products, to include a custom background map with U.S. coastal and
Great Lakes navigational aids, wrecks and obstructions, as well as optional,
high-detail coastal and Great Lakes mapping such as Navionics® Classic XL and
Gold electronic charts, plus the Companys exclusive FreedomMaps and
MapCreate digital chart options; and (5)- the new IntelliMap 480
gimbal-mount, stand-alone GPS+WAAS mapping unit ($349.99 MAP) with 480x480 LCD,
digital media card record/play capability, enhanced built-in background map,
plus several higher-detail, digitized electronic mapping options. For the Lowrancebrand, in addition to the M56 S/Map, M68C S/Map, X67C
IceMachine and the LCF-1440models introduced previously at ICAST, the new
fiscal 2004products announced during the 2003 National Sales Meeting included
16 additional products (for a grand total of 20 new Lowrance models). First, for fiscal 2004, there will be 7 new Lowrance 480x480 pixel, 5
diagonal, high-resolution monochrome SONAR and SONAR/GPS+WAAS mapping products:
(1)- the X125($299 MAP), 200 kHz, single-frequency fishfinder with built-in
water temp, 2,400 watts peak-to-peak power for depths to 900 feet, amber LED
backlighting, and a full-screen flasher SONAR mode; (2)- the X126DF($349 MAP), 5




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a 50/200 kHz, dual-frequency SONAR version of the X125 model, with 500 watts
RMS power for depths to 1,700 feet, and with temp/speed/distance log readings;
(3)- the X135($399 MAP), high-powered (4,000 watts peak-to-peak), 200 kHz
SONAR for depths to 1,000 feet, with white LED backlighting, and built-in water
temp readings; (4)- the X136DF($449 MAP), dual-frequency, 50/200 kHz SONAR
version of the X135, with white LEDs, 500 watts RMS power for depth
capabilities to 2,500 feet, and temp/speed/distance readings; (5)- the LMS-480M
($549 MAP) single-frequency, 200 kHz, 480x480 pixel monochrome, SONAR/GPS+WAAS
mapping combo with the same electronic chart mapping options discussed
previously, plus the enhanced, custom, built-in background map; (6)- an
LMS-480M DF packing($599 MAP), 50/200 kHz, dual-frequency SONAR/GPS version of
the LMS-480M, incorporating 500 watts RMS power for depths to 2,500 feet, white
LED backlighting, and identical GPS-mapping performance features, to include
complete compatibility with Navionics® HotMaps, XL and Gold electronic chart
options for coastal and Great Lakes applications; and (7)- the new 480x480,
stand-alone GPS+WAAS mapping instrument, the GlobalMap®4800M($399 MAP), with
built-in custom background map with navigational aids and wrecks and
obstructions in U.S. coastal and Great Lakes waters, one slot for a reusable
digital media card, plus FreedomMaps, MapCreate, and Navionics® electronic
chart options. The 7 new Lowrance 5 diagonal, 480x480 monochrome models will
provide affordable SONAR and GPS navigational solutions for a variety of fresh
water and salt water fishing and boating marine electronics requirements. Also announced at the 2003 National Sales Meeting, were 5 brand new
320x240 pixel, 5, 256-color, 1/4 VGA, TFT SONAR and SONAR/GPS+WAAS models.
The new 2004 Lowranceproducts include: (1)- the X100C($499 MAP), 200 kHz,
single-frequency SONAR, with white LED backlighting, 2,400 watts of
peak-to-peak power for depths to 900 feet, and built-in water temp readings;
(2)- the X105C DF($549 MAP), 50/200 kHz, dual-frequency model, for salt water
or downrigger tracking, with 500 watts RMS power for depths to 2,500 feet, and
built-in temp/speed/distance traveled readings; (3)- the LMS-330C($649 MAP),
256-color, 200 kHz, combination SONAR/GPS+WAAS mapping instrument with features
including 2,400 watts of peak-to-peak power for depths to 900 feet, built-in
water temp readings, enhanced custom internal background map, as well as full
compatibility with the Companys exclusive FreedomMaps and MapCreate
high-detail digitized mapping options, as well as Navionics® HotMaps, Classic
XL and Gold charts on digital media cards; (4)- the LMS-335C DF($699 MAP),
dual-frequency, 50/200 kHz, model, with 500 watts RMS power for depths to 2,500
feet, and built-in temp/speed/distance traveled readings, plus all the same
GPS-mapping features of the LMS-330C; and (5)- the GlobalMap®3300C($499 MAP),
gimbal-mount GPS+WAAS mapping instrument with the same 256-color, 320x240
pixel, TFT display that produces mapping detail and is easily readable in
direct sunlight. Other than their price-points, starting under $500, the key
feature that will help differentiate these 5 new Lowrance 5 color products
from competitive models is their viewability in direct sunlight. During its September 2003 National Sales Meeting, the Company introduced 2
other new 2004 Lowrance SONAR/GPS and hand-held mapping products: First, the
M68C S/Map IceMachine color ice fishing portable pack($499 MAP), which
incorporates the all-new, M68C S/Map SONAR/GPS+WAAS mapping unit. With SONAR
and marine-based GPS-mapping capabilities to include storage of 1,000
waypoints, 1,000 event markers, and 100 savable/retraceable plot-trails, the
256-color, 320x240 active matrix TFT display in the new M68C S/Map IceMachine
optimizes cold climate performance just like its SONAR-only counterpart, the
X67C IceMachine. With numerous transducer options available, the M68C S/Map
IceMachine offers year-round fish-finding versatility. Secondly, the Company
announced another hand-held GPS+WAAS mapping model within its iFINDER® Series:
the iFINDER®Pro. At $199 MAP, the iFINDER® Pro features a higher-resolution,
240x180 pixel Film SuperTwist LCD display, advanced white LED backlighting,
dual micro-processors for higher-speed screen updates, and the new iFINDER® Pro
not only accepts the Companys exclusive FreedomMaps and MapCreate detailed 6




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digital mapping options, but also Navionics® HotMaps, Classis XL and Gold
electronic chart options. Completing the Companys new fiscal 2004 product announcements for
Lowrance were 2 new portable Lowrance Avionics models, the AirMap®500($499
MAP) with a 3 diagonal, 240x180 pixel LCD, and the AirMap®1000($799 MAP)
with a 5 diagonal, 320x320 display. In the AirMap® tradition for peak
performance and value, these totally new aviation GPS+WAAS mapping portables
provide precise, versatile, air/sea/land navigation. Pilot-developed and
tested, easy-to-use, and fully loaded with advanced features, each model comes
in a complete, ready-to-fly package that includes everything a pilot could
possibly need. The Companys LCD products incorporate numerous technological advancements
such as Advanced Signal Processing (ASP), which constantly monitors boat
speed, water conditions and other sources of interference, and automatically
adjusts all crucial SONAR settings for the best pictures possible and the best
performance for nearly all situations, whether a boat is trolling or traveling
at high speed. The Companys patented, low-profile Skimmer® transducers
identify fish out to 60° with high sensitivity settings, and perform well at
boat speeds up to 70 mph. The Companys GRAYLINE® and COLORLINE innovations
clearly separate fish and vital structure, on or near the bottom, from the true
bottom and also help define changes in bottom hardness and composition. All of
the Companys SONAR models utilize 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 trolling speed and distance traveled. The Companys new
entry-level to lower mid-range LCD SONAR products will feature from 128 to 480
vertical pixel screens and from 800 to 1,500 watts of peak-to-peak power,
producing depth capabilities from 600 to 800 feet or more. These products are
normally priced in the $79 to $200 SRP range. The mid to upper-middle range
products typically offer larger, 240 to 480 vertical pixel LCD displays and
power outputs from 2,400 to 4,000 watts peak-to-peak, with depth capabilities
from 800 to 1,000 feet. These units are typically priced in the $299 to $649
MAP range. The top-of-the-line, large-screen LCX Lowrance units feature 240 to 480
vertical pixel and 320 to 640 horizontal pixel LCDs. These advanced models,
with screen sizes from 6 to 10.4 diagonally, retail from $699 to $2,399,
depending on whether they are packaged as SONAR-only or as combo SONAR/GPS+WAAS
mapping instruments. Between its Lowrance and Eagle® brands, the Company will
market approximately 39 LCD SONAR modelsin fiscal 2004, including 11 color
units. In addition, a projected 7 LCD, GPS+WAAS, stand-alone mapping units
will be offered, including 4 color models. Add the 5 iFINDER® hand-held GPS
models and the 2 new AirMap® aviation products, and the grand total for both
the Lowrance and Eagle® brands comes to 55 productsfor the fiscal 2004 lineup. Other SONAR Types -The Companys other SONAR types include flashermodels and
digitalmodels. Flashers were the first type of SONAR 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. An all-new, in-dash, digital LCD flasher, the
LCF-1440($199 MAP), has been introduced for fiscal 2004. Global Positioning System (GPS) -The U.S. Department of Defenses Global
Positioning System offers worldwide navigational data for users via a 7




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constellation composed of up to thirty-one, block II 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. Wide Area Augmentation System (WAAS) GPS -In recent years, the Federal
Aviation Administration (FAA) began installation of an enhancement to the GPS
system primarily for avionics use in the United States. Called WAAS, for Wide
Area Augmentation System, the new navigational data produced, improves the
level of GPS accuracy to approximately 1-3 meters, including enhanced altitude
readings, which are particularly beneficial to general aviation and commercial
pilots. Eventually, Americas WAAS system will be comprised of several
geostationary satellites. Currently, however, only two satellites are
installed and functional, providing GPS coverage primarily to the coastal areas
of the U.S. Consequently, the system is only effective in select areas of
America. While other countries have similar WAAS systems planned for the
future, they are far from complete today; so it is important to remember that,
WAAS is not available worldwide as is the U.S. Department of Defense (DOD)
system. With an eye to the future, however, beginning in fiscal 2002, the
Company announced that all of its new 12-parallel channel Lowrance and Eagle®
GPS-mapping products will include WAAS as well as the standard worldwide DOD
GPS system. The choice will be left completely to the user, via a simple menu
selection. The Company 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 digitized mapping technology.
Whether users choose to rely on the all-new, enhanced built-in custom Lowrance
background map loaded into every mapping product at no extra cost  or if they
choose to purchase the optional FreedomMaps (preprogrammed plug-&-play
regional maps), or the MapCreate GPS Accessories Pack with detailed mapping
CD-ROM software, rewritable MMC memory card, and PC computer MMC/SD card
reader, consumers will be able to pinpoint their locations precisely on their
GPS maps using landmark references, including surrounding shorelines, roads and
streets and 2,000,000 Points-of-Interest as of January 1, 2004, to include
marinas, restaurants, hotels, airports, emergency services, and more. With the
Companys combination SONAR/GPS+WAAS mapping models, fishermen and boaters can
pinpoint their location on the map, see precisely what targets are under their
boats, and mark their favorite spots as well as recording up to 1,000
waypoints, 1,000 event markers (with 42 different icons), 100 routes and up to
100 plot-trails with up to 10,000 points per trail. This critical stored data
remains safe and accessible for years, permitting users to return to their
previously recorded
adventure spots or to repeat specific journeys with great ease at any time in
the future. 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, 200kHz and 50/200kHz dual-frequency), water temperature and
boat speed sensors, cables (power, transducer, and GPS), portable power packs,
ice fishing accessories, GPS antenna/receivers, detailed mapping CD-ROM
software, rewritable digital Multi-Media Cards (MMC), PC computer MMC/SD memory
card readers, power adapter cables, and various mounting brackets, all of which
are used in conjunction with the Companys SONAR and GPS products. 8




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Product Sales The following table sets forth the percentage of total sales of SONAR, GPS
and OTHER products sold by the Company over the past three fiscal years. Percent of Total Product Sales 2001
    
    2002
    
    2003SONAR & SONAR/GPS combos
    
    
    74.5
    %
    
    
    76.2
    %
    
    
    79.9
    %GPS (Hand-held & stand-alone)
    
    
    12.2
    
    
    
    9.2
    
    
    
    8.4Other
    
    
    13.3
    
    
    
    14.6
    
    
    
    11.7Total:
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
 Product Distribution The Company markets its products under two trade names, Lowrance and
Eagle. Sales of Lowrance products, as a percentage of total sales were
approximately 54% in 2001, 54% in 2002, and 55% in 2003. As of July 31, 2003,
the Company had approximately 1,500 active wholesale and retail customers. 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, cone angle
and frequency to meet the angler or boaters specific needs. The Company now
packages many of its Lowrance and Eagle® SONAR units with its patented Skimmer®
models, a series of high-performance transducers that are suitable for use on
nearly all types of boat hulls. These sleekly designed transducers slice
cleanly through the water, performing well at boat speeds up to 70 mph.
Lowrance customers can, however, exchange their Skimmer® transducers 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 unit. To
this end, the Company sells its Lowrance line primarily to retailers,
wholesalers, and boat manufacturers the Company believes have sufficient
knowledge of the installation, use, and service of the Lowrance line and can
communicate such expertise to their customers. 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 and generating
additional income for the dealers. The Company believes 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 through 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
unit with a universal transom-mount, 200 kHz or 50/200 kHz Skimmer® transducer
designed to work adequately on most boats. The operation requirements for the
entry-level Eagle® SONAR units have also been simplified for the less
sophisticated SONAR user. While the typical Eagle® SONAR does not offer the
same installation and operating flexibility as its Lowrance counterpart, it
does, on the other hand, normally cost less to the consumer. Terms of payment 9




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for products in the Eagle® line are generally thirty days. However, dating
terms similar to those for the Lowrance line are also available. The Companys products are sold in all fifty states domestically and
fifty-three countries internationally. The Companys international sales
totaled $15 million in 2001, $17 million in 2002, and $20 million in 2003,
representing approximately 20%, 21%, and 23% 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 for the latest
three fiscal years. With the addition of certain in-house marketing/advertising
capabilities in 2000 (offering greater international sales support
capabilities)  in combination with the introduction of new products with
specific international consumer appeal, the Company expects international sales
growth over the next five 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 12%, 9%, and 7% of the
Companys net sales in 2001, 2002 and 2003, respectively. No other customer
accounted for 10% or more of net sales in fiscal 2001, 2002, or 2003. 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 reaches the highest point 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 websites, 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 website
has been popular with potential buyers. The information included on these
websites is not intended to be a part of this Form 10-K/A. The internal Marketing Communications Department is comprised of a core
staff of six communications specialists. The positions include a Promotional
Programs Coordinator, a Manager of Advertising & Public Relations, a Graphic
Communications Manager, a Marketing Communications Traffic Manager, a Director
of Marketing Communications and a Vice President of Marketing. The department
has extensive in-house computer graphics and copywriting capabilities and is
responsible for the creative development of all advertisements, product 10




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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 internal marketing group
are numerous. For example, the Company pays no annual advertising agency
service and production fees, and also receives the typical 15% agency
commissions on Company direct media buys. The department also provides much
faster reaction times to media opportunities. In addition, the department has
met with great success in graphically laying out the Companys product pages
for several large national retail catalog sales customers for the past two
years. This action ensures consistency in the appearance of the Companys
products, as well as an overall improved quality look in the various
catalogs. The Marketing Department plans and executes annual coordinated
marketing communications programs that consist of: print media advertising, TV
fishing show sponsorships, national/regional/state bass, walleye and saltwater
species tournament sponsorships, Pro-Team sponsorships, SONAR/GPS training
seminars, and a concentrated public relations and promotional strategy that
results 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 at 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 over 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+WAAS 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 to include sample products for
on-the-water tests. 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, has been an Affiliate Sponsor of the
successful Wal-Mart FLW Tournament Trail since 1998 and will continue this
sponsorship through December 31, 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 manufacturers including Ranger, Lund, Crestliner and Carver Yachts, to
whom the Company sells OEM SONAR products. During the 4th quarter of fiscal
2001, the Lowrance trade name was announced as the new official and exclusive
SONAR/GPS sponsor for the BassMasters Tournament Trail, the oldest and largest
professional bass circuit in America. This highly promoted and successful 11




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tournament series is owned by ESPN Television and is backed locally, regionally
and nationally by the Bass Anglers Sportsman Society (B.A.S.S.), which has a
membership of well over 500,000 anglers in the U.S. Lowrance also sponsors the
Professional Walleye Trail (PWT) and the related In-Fisherman television
series. Between its two trade names, the Company controls the SONAR/GPS
sponsorships of the largest and most successful bass and walleye tournament
trails in the world. Dealer/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+WAAS 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. 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 that 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+WAAS mapping products
internationally. Hand-held Portable GPS+WAAS Mapping Units - The hand-held GPS+WAAS mapping market has expanded rapidly over the past
several years. Target markets for these products include, but are not limited
to, boating, sportfishing, hunting, hiking, RV and off-road vehicles, business
travelers 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. The Companys four portable
models introduced in 2002, the iFINDER®, iFINDER®Plus, iFINDER®Atlantisand
iFINDER®Expressfollowed by the new iFINDER®Profor 2004, as well as the 2
new AirMap®500and AirMap®1000portable aviation models, are expected to
provide significant new opportunities for increased sales of hand-held and
portable GPS+WAAS mapping products. Two competing GPS companies, (Garmin® International, Inc. and the
Magellan product line of Thales Navigation) currently dominate this market.
Both companies initially introduced and marketed several non-mapping products
retailing for under $150 and were some of the first to market hand-held GPS
products. Both companies offer a full range of higher priced products with
more features than their lower priced models, and one produces products
specifically aimed at the avionics market. The Company believes the
competitive marketing strategies of these two companies continued to negatively
impact sales of its products in fiscal 2003, especially in international
markets. In 2003, the Company marketed six Lowrance hand-held GPS/mapping products,
which retailed at suggested prices between $149 and $599. Two of the Lowrance
hand-helds in 2003 were existing products carried over from previous years: the
GlobalMap® 100 and the AirMap® 100. During fiscal 2003, the Company continued 12




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distribution of its 4 personal hand-held GPS+WAAS, iFINDER® models. The large
160 x 120 pixel, Film SuperTwist display produces stunning map detail and
superb screen contrast and resolution. Its unique pocket-sized case will easily
slip into any shirt pocket. Along with its optional FaceOffs (changeable
faceplates in five striking colors), the iFINDER®, with its four different
initial model offerings ranging in retail price-points from $149 to $249,
offers an impressive list of GPS+WAAS mapping features: built-in custom
Lowrance background map with interstate exit services; capability of using the
MapCreate CD-ROM detailed mapping software option with 60,000 navigational
aids and 10,000 wrecks and obstructions in U.S. coastal and Great Lakes waters,
as well as an expanded database containing 2,000,000 searchable
Points-of-Interest as of January 2004, such as marinas, restaurants, hotels,
airports, emergency services and more; instantly-expandable memory with a slot
for one rewritable Multi-Media Card (MMC) or Secure Digital (SD) memory card
available in 8MB to 256MB memory capacities for downloading custom mapping;
storage of up to 1,000 waypoints and 1,000 event markers; 10 savable plot
trails with up to 10,000 points per trail, and stores up to 100 routes; choice
of 42 different graphic icons to mark favorite spots; 37 different map ranges
from .05-to-4,000 miles; operates on two AA batteries; internal back-up memory
to keep GPS data safely stored and accessible for years; backlighted screen;
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 iFINDER® models are also WAAS enabled for even greater
positioning accuracy at select locations. The new iFINDER® Pro model ($199
MAP) will feature a greatly enhanced 240x180 pixel display, with white LED
backlighting, dual micro-processors for faster screen updates, and will accept
optional FreedomMaps and MapCreate detailed digital mapping, as well as
Navionics® HotMaps, Classic XL and Gold electronic chart options. Each
iFINDER® Pro will be packaged with a free 12 volt adapter power cable. 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 continuing advertising and promotional campaigns, have
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 who
serve hikers, campers, skiers, climbers and other outdoor enthusiasts. The Company attempts to differentiate its SONAR and GPS+WAAS 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 and SONAR/GPS
combination units, GRAYLINE®, COLORLINE, FishReveal, HyperScroll,
interchangeable high-performance transducers and dual-frequency capability and
innovative products and features such as the Broadview 3-beam transducer with
super-wide 150° underwater coverage (TriFinder 2), split-screen SONAR/GPS+WAAS
mapping navigational displays, exclusive preprogrammed, plug-&-play,
high-detail regional FreedomMaps loaded onto digital media cards, MapCreate
CD-ROM detailed mapping software, compatibility with Navionics® Classic XL,
Gold and HotMaps electronic charts, programmable data-panels, super
high-resolution color and monochrome LCD displays with up to 480 vertical
pixels, and 8,000 watts of peak-to-peak transmit power available in a series of
sportfishing SONAR capable of producing depth capabilities to 3,000 feet and
more. The Companys strategy is to be an industry leader in offering advanced,
high-performance products at extremely affordable 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. 13




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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 new 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
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 for 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 GlobalMap®1000, 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, transformed 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 ULTRA®III 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 including the AirMap®. In fiscal 1997,
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 combination model
went into distribution in fiscal 1998. In fiscal 1999, R&D turned its full
attention to 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 were SONAR units
that were fully GPS-mapping capable, with the simple addition of a MapCreate
GPS Accessories Pack option. The LCX-16Ci was a full SONAR/GPS-mapping
combination unit right out of the box. The GlobalMap®3000MT was a stand-alone,
12-parallel channel GPS/mapping-only unit. The LCX-16Ci was presented
the highest honor, the Best of Show Award for product innovation at ICAST
2000. 14




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Seven new Eagle SONAR and GPS-mapping products were also introduced at
ICAST 2000, including the FishEasy Series, TriFinder 3Beam, Accura® 240,
Status and Journey. Then, in the 4th quarter of fiscal 2001, the Company
announced the completion of a full line of new compact SONAR/GPS-mapping
products for 2002, to be added to the top-of-the-line, big-screen models
introduced in 2000. At ICAST 2001, the new X51, X71, X91, LMS-240 and
GlobalMap®2400 models were announced to the trade and the media, along with the
new Eagle FishEasy2 Series, TriFinder2, FishMark160 and FishMark240 SONAR
units. The entry-level X51 (at $199 SRP) and the FishEasy2 (at $129 SRP)
SONAR products had 240 vertical pixel displays, 1500 watts of peak-to-peak
transmit power producing depth penetration to 800 feet, a new FishReveal
feature with 10-levels of gray that revealed fish hidden in surface clutter,
weeds or other types of cover, and a HyperScroll feature that enhanced the
display of fish targets at higher boat speeds. Two of the new compact,
mid-sized Lowrance products, the LMS-240 and the GlobalMap® 2400, utilized
Multi-Media Card (MMC) technology for downloading detailed map segments from
CD-ROM. All of the new Lowrance models came with built-in water surface temp
sensors and most were packed with a high-impact protective cover. For fiscal 2003, Lowrance announced 26 new models and delivered 28 new
Lowrance and Eagle products, more than the Company has ever introduced in a
single model year. Enhanced design capabilities permitted the Company to
design and build a new low-cost entry-level Cuda Series of fishfinders that
range in price from $79, $99, to $119 SRP. These products all feature built-in
water temperature readings, quick-release mounting systems with adjustable
tilt, and easy to connect/disconnect uniplug connectors. The $99 model also
has a high-resolution, 168 vertical pixel LCD, the best screen resolution
available at that price-point. Lowrance designed all of its new
mid-to-upper-middle priced SONAR and GPS models with 320x320 resolution, which
resulted in enhanced underwater target detail and target separation. One of
the new high-resolution products, the Eagle FishMark 320, was offered at a SRP
of $199, the same price-point as the previous years model with the 160x160
resolution. The new products for Lowrance in 2003 included a series of two new
10.4 diagonal, 256-color, full VGA, TFT models, including one SONAR/GPS+WAAS
mapping combo and one color GPS+WAAS stand-along mapping model. These color
displays offered improved viewing in the brightest of sunlight. For fiscal 2004, Lowrance continues an aggressive design schedule with the
announcement of 26 new models and the planned delivery of a total of 31 new
Lowrance and Eagle products. GPS and mapping have been added to the entry
level products, starting with a combination GPS/SONAR/Plotter in the Cuda
family that will retail for under $200. Other entry level GPS/SONAR/Mapping
products will follow with built-in high detail lake and shoreline maps covering
the USA. A new line of mid-size, high resolution products will be introduced
with 480x480 resolution. These will replace last years 320x320 products. In
addition, many more color units are being introduced in various screen
resolutions. New technology enables these to have improved readability in
bright sunlight. Two new aviation GPS/Mapping models are being introduced.
The first, the AirMap 500, includes plug-in data cards in a small hand-held
size and is smaller than the model it replaces, yet has a larger, higher
resolution display than that of the previous model. The second, the AirMap
1000, has an even larger 320x320 resolution display. Research and development expenditures for the Company were $3,083,000 in
fiscal 2001, $2,650,000 in fiscal 2002, and $4,191,000 in fiscal 2003. The
Company plans additional development of its LCD SONAR 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+WAAS mapping
products for use in marine and non-marine applications. To augment its
continued investment in product research and development, the Company utilizes
several manufacturing and design technologies: Surface Mount Technology (SMT)
production 15




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##### Table of Contents



equipment, Computer Aided Design (CAD) systems, Application Specific
Integrated Circuits (ASICS), Tape Automated Bonding (TAB), Tab-On-Glass (TOG),
Components-On-Glass (COG) and Liquid Crystal Display (LCD) assembly. These
advanced technologies, which have been essential to the development of the
Companys breakthrough 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 within the 108,000 square feet presently
occupied by the Company. In the expanded Mexico facility, the Company
manufactures its transducer and cable assemblies as well as assembling 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 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 could move it
to another supplier, the Company is 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 16




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##### Table of Contents



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, strong financially,
and offer proven track records 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 free shipping, through a prepaid Return Authorization
(R.A.) system, when requested by consumers located in the United States
electing to return their units 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 forty-seven
foreign countries. The Company also offers two-year extended warranties for an
additional one-time fee through its LEI Extras subsidiary. Patents and Trademarks Since 1970, the Company has obtained thirty-nine patents expiring at
various dates from 1987 through 2017. 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 attack by
competitors. 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-five trademarks in nineteen foreign
countries. Employees As of July 31, 2003, the Company employed 767 persons on a full-time basis
of whom approximately 599 were involved in manufacturing, quality and
materials. Of the 599 full time employees involved in manufacturing and
materials, 82 employees are located in the Companys headquarters in Tulsa and
517 are located in the Companys leased manufacturing facility in Ensenada,
Mexico. The remaining 168 employees were engaged in research and development,
sales and marketing and administration. Additionally, the Company retains, on
a part-time
basis, over 200 independent contractors, or Pro-Staff, who assist in
promoting its products. 17




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##### Table of Contents



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 has maintained its corporate offices at 12000 East Skelly
Drive, Tulsa, Oklahoma, since 1970. The Companys facility includes a 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 2,500 square feet and 3,500 square feet of
warehousing, shipping and office facilities 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. 
 PART II 
 Item 5. Market for Registrants Common Equity and Related Stockholder Matters As of October 22, 2003, the Company had more than 400 holders of its
Common Stock. The Companys revolving credit line prohibits the payment of
dividends without the prior written consent of the lender. The Company
announced a special dividend of $0.25 per common share payable on August 15,
2003 to shareholders of record as of August 13, 2003 after obtaining approval
from the lender. 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 financial results and the favorable tax treatment of dividend
payments. 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 most recent 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. 2002
    
    2003High
    
    Low
    
    High
    
    Low$
    
    $
    
    $
    
    $1st Quarter
    
    
    3.37
    
    
    
    2.22
    
    
    
    4.70
    
    
    
    3.052nd Quarter
    
    
    2.82
    
    
    
    2.10
    
    
    
    6.80
    
    
    
    3.853rd Quarter
    
    
    4.75
    
    
    
    2.35
    
    
    
    7.36
    
    
    
    5.294th Quarter
    
    
    6.25
    
    
    
    2.92
    
    
    
    9.78
    
    
    
    6.84
 18




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##### Table of Contents



Item 6. Selected Financial Data The selected financial information shown below has been derived from the
consolidated financial statements included elsewhere in this report and from
other consolidated financial statements filed previously and 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. Years Ended July 31,(in thousands, except per share amounts)1999
    
    2000
    
    2001
    
    2002
    
    2003(1)Operating and Per Share DataOperating Data:Net sales
    
    $
    89,753
    
    
    $
    73,209
    
    
    $
    73,419
    
    
    $
    79,501
    
    
    $
    88,297Gross profit
    
    
    30,047
    
    
    
    27,899
    
    
    
    26,335
    
    
    
    29,926
    
    
    
    37,261Percent of sales
    
    
    33.5
    %
    
    
    38.1
    %
    
    
    35.9
    %
    
    
    37.6
    %
    
    
    42.2
    %Operating income
    
    
    5,033
    
    
    
    3,549
    
    
    
    2,103
    
    
    
    5,255
    
    
    

    7,881Percent of sales
    
    
    5.6
    %
    
    
    4.8
    %
    
    
    2.9
    %
    
    
    6.6
    %
    
    
    8.9
    %Income before taxes
    
    
    2,109
    
    
    
    1,523
    
    
    
    99
    
    
    
    3,935
    
    
    
    6,862Percent of sales
    
    
    2.3
    %
    
    
    2.1
    %
    
    
    0.1
    %
    
    
    4.9
    %
    
    
    7.8
    %Net income
    
    
    2,109
    
    
    
    2,473
    
    
    
    37
    
    
    
    2,389
    
    
    
    4,645Percent of sales
    
    
    2.3
    %
    
    
    3.4
    %
    
    
    0.1
    %
    
    
    3.0
    %
    
    
    5.3
    %Per Share Data:Net incomeBasic
    
    $
    0.56
    
    
    $
    0.66
    
    
    $
    0.01
    
    
    $
    0.63
    
    
    $
    1.23Diluted
    
    
    0.56
    
    
    
    0.66
    
    
    
    0.01
    
    
    
    0.63
    
    
    
    1.19Cash dividends per
common share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance Sheet Data:Working capital
    
    $
    17,630
    
    
    $
    10,874
    
    
    $
    16,503
    
    
    $
    12,681
    
    
    $
    18,149Total assets
    
    
    35,894
    
    
    
    29,297
    
    
    
    37,656
    
    
    
    30,762
    
    
    
    35,417Long term debt, less
current maturities
    
    
    17,103
    
    
    
    8,573
    
    
    
    14,418
    
    
    
    6,183
    
    
    
    5,825Stockholders equity
    
    
    9,494
    
    
    
    11,955
    
    
    
    11,877
    
    
    
    14,359
    
    
    
    19,608
  (1)
    
    The financial statements for fiscal 2003 have been restated as discussed
in Note 12 to the consolidated financial statements contained in Item 8. 19




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Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations Results of Operations As discussed in Note 12 to the consolidated financial statements, the Companys
July 31, 2003 financial statements have been restated. The accompanying
managements discussion and analysis gives effect to that restatement. Fiscal 2003  Sales and Margin During the second, third and fourth quarters of fiscal 2003, the Company began
shipping its twenty-eight new SONAR/GPS products. The new products include new
SONAR units at most previously available price points, including two within our
largest volume price point, plus six new stand-alone GPS units. In addition,
one of the new SONAR units created a new price point for the Company at $79,
while one of the new SONAR/GPS navigation units created another new price point
for the Company at $2,499. Total net sales increased by $8.8 million, or 11.1%, during fiscal 2003 as
compared to fiscal 2002, while total unit sales increased by approximately
20.8%. This year over year increase in sales is due primarily to the new
products introduced during fiscal 2003. The gross profit margin increased by $7.3 million, or 24.5%, during fiscal 2003
as compared to fiscal 2002. The gross margin percentage increased to 42.2% as
compared to 37.6% in fiscal 2002 as a result of increased volume as well as
cost reductions. Fiscal 2002  Sales and Margin During the second and third quarters of fiscal 2002, the Company began shipping
the eleven new SONAR/GPS products announced at ICAST 2001. The new products
included new SONAR units at our largest volume price point and two GPS units.
The new GPS units were the iFinder, a hand-held unit, and a high-volume, high
margin GPS navigation unit. Total net sales increased by $6.1 million, or 8.3% during fiscal 2002 as
compared to fiscal 2001, while total unit sales increased approximately 7.0%.
The year over year increase was primarily attributable to the fiscal 2002 new
product introductions. The gross profit margin increased by $3.6 million, or 13.6%, during fiscal 2002
as compared to fiscal 2001. The gross margin percentage increased to 37.6% as
compared to 35.9% in fiscal 2001 as a result of increased volume as well as
cost reductions. Fiscal 2003  Operating Expenses and Income Operating expenses increased by $4.7 million during fiscal 2003 as compared to
fiscal 2002. Operating expenses as a percentage of sales increased from 31.0%
in fiscal 2002 to 33.3% in fiscal 2003. During fiscal 2003, selling and administrative expenses increased by $3.2
million due primarily to increased advertising and marketing effort relative to
the Companys 2003 product introduction. Selling and administrative expenses
as a percentage of sales increased to 28.5% during fiscal 2003 as compared to
27.7% for fiscal 2002. 20




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##### Table of Contents



Research and development expenses increased by $1.5 million relative primarily
to new product design for the Companys new product introductions. Research
and development expenses as a percentage of sales increased to 4.7% during
fiscal 2003 as compared to 3.3% for fiscal 2002. In preparation for the new
2004 products, the Company hired seven additional engineers in the third and
fourth quarters of fiscal 2003. Operating income increased by $2.6 million, or 50.0%, in fiscal 2003 and was
8.9% of sales as compared to 6.6% of sales in fiscal 2002. Fiscal 2002  Operating Expenses and Income Operating expenses increased by $439,000 during fiscal 2002 as compared to
fiscal 2001. Operating expenses as a percentage of sales decreased from 33.0%
in fiscal 2001 to 31.0% in fiscal 2002. During fiscal 2002, selling and administrative expenses increased by $1.2
million due primarily to increased advertising and marketing effort related to
the Companys 2002 product introductions. Selling and administrative expenses
as a percentage of sales decreased to 27.7% during fiscal 2002 as compared to
28.3% for fiscal 2001. Research and development expense decreased by $.4 million resulting from the
transition from the fiscal 2002 new product development cycle to the fiscal
2003 product development cycle. Research and development expenses as a
percentage of sales decreased to 3.3% during fiscal 2002 as compared to 4.2%
for fiscal 2001. At the conclusion of the product development cycle, the
design engineers actively participate in the introduction of the new products
into manufacturing. Therefore, the expenses associated with their activities
become part of the manufacturing costs instead of the research and development
costs. The introduction of the new 2002 products into manufacturing began at
the end of the second quarter and continued in the third quarter of fiscal
2002. In preparation for the new 2003 products, the Company hired six
additional engineers in the third and fourth quarters of fiscal 2002. Operating income increased by $3,152,000, or 149.9%, in fiscal 2002 and was
6.6% of sales as compared to 2.9% of sales in fiscal 2001. Fiscal 2003  Interest Expense Interest expense decreased $435,000 in fiscal 2003 as compared to fiscal 2002,
a decrease of 30.5%. This decrease is related to carrying, on average, $2.1
million in lower debt balances, and to interest rate decreases. In addition,
in November 2002, the credit facility was amended. The amendment included a
lowering of the spread over prime from 1.0% to .5% and the addition of LIBOR
based interest rate options. The interest rate on the Companys primary
financing facility ranged from 5.75% down to 5.0% for fiscal 2003 as compared
to rates from 7.75% down to 5.75% for the same period last year. The prime
rate ranged from 4.75% to 4.0% for fiscal 2003 as compared to rates from 6.75%
to 4.75% for the same period last year. Fiscal 2002  Interest Expense Interest expense decreased $328,000 or 18.7% in fiscal 2002 as compared to
fiscal 2001 primarily due to lower debt balances during fiscal 2002 resulting
from lower inventories and higher sales and interest rate decreases resulting
from reductions in the prime rate of 1.5% since July 31, 2001. The prime rate
reductions were partially offset by an increase in the spread over prime from
prime plus .5% to prime plus 1% on the credit facility. 21




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##### Table of Contents



Income Taxes The effective tax rates for fiscal 2003, 2002 and 2001 were 32.3%, 39.3% and
62.6%, respectively. The effective tax rates differ from the statutory rates
due to the impact of foreign taxes, the U.S. treatment of foreign operations,
state taxes and permanent differences in the treatment of items from an income
tax versus financial reporting perspective. The change in effective tax rates
is primarily due to foreign taxes that do not fluctuate in direct proportion to
our consolidated income. Net Income Net income was $4.6 million, $2.4 million and $.04 million, respectively, in
fiscal 2003, 2002 and 2001. Off-Balance Sheet Arrangements The Company has no off-balance sheet arrangements as described in Section 13(j)
of the Securities Exchange Act of 1934. Liquidity and Capital Resources The Companys primary sources of liquidity are cash flows from operating
activities, a $26.5 million line of credit and lease financing. The line of
credit includes a borrowing base of 85% of qualifying accounts receivable, 30%
of qualifying raw material inventory and 60% of qualifying finished goods
inventory with borrowings from inventories limited to $13 million. At July 31,
2003, the Company had $7.8 million available under the revolving credit line. The Company has an overall $33.9 million financing facility consisting of the
revolving credit line discussed above and $7.4 million in term loans. At July
31, 2003, the term loans had a remaining balance of $1.3 million with required
monthly payments of $103,000 plus interest. During November 2002 the Company amended its financing facility. This
amendment extended the term of the agreement for the revolving credit line from
December 31, 2003 to December 31, 2005. Significant provisions of the
amendment include changes in certain financial covenants, the lowering of the
interest rate from prime plus 1.0% to prime plus .5% on all loans under the
facility and the addition of LIBOR based interest rate options. In addition,
the amendment allows for a permanent $1.5 million seasonal overadvance
facility. At April 30, 2003, the Company exceeded its third quarter maximum inventory
level covenant; however, the bank waived this violation as an event of default
under the terms of the revolving credit line and removed the covenant for the
July 31, 2003 reporting date. As of September 10, 2003, the bank removed
altogether the maximum inventory level covenant. The Company was in compliance with all loan covenants at July 31, 2003. Cash flows provided by operating activities were $2.9 million in fiscal 2003
compared to $10.0 million in fiscal 2002. The decrease was primarily due to
increased inventory levels in fiscal 2003 compared to decreased inventory
levels in fiscal 2002, which was partially offset by higher earnings in fiscal
2003. Operating cash flows were utilized to fund capital expenditures of $1.6
million and reduce debt by $1.4 million. An additional $1.2 million in capital
expenditures was funded by capital lease borrowings. 22




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##### Table of Contents



Cash flows provided by operating activities were $10.0 million in fiscal 2002
compared to cash used in operating activities of $3.0 million in 2001. The
increase was due primarily to increased income and decreased inventories.
Operating cash flows were utilized to fund capital expenditures of $1.1 million
and reduce debt by $8.8 million. An additional $.5 million in capital
expenditures was funded by capital lease borrowings. Discontinued finished goods inventory attributable to fiscal 2002 product
decisions was approximately $156,000 at July 31, 2003 as compared to $3.4
million at July 31, 2002; as of September 30, 2003, the inventory balance
relating to these products was $75,000. Inventory on hand at July 31, 2003 for
products the Company expects to discontinue during fiscal 2004 was $723,000; as
of September 30, 2003, the finished goods inventory balance relating to these
products was $438,000. All discontinued finished goods inventories are carried
at cost, which management believes to be lower than expected net realizable
value. The Company expects the remaining inventory of discontinued finished
goods products to be sold by the end of fiscal 2004. Management monitors all
inventories via various inventory control and review processes which include,
but are not limited to, forecast review and inventory reduction meetings,
graphical presentations and forecast versus inventory status reports.
Management believes these processes are adequate. Demand for the Companys products is seasonal. The Company utilizes the
revolving credit line to address its seasonal liquidity needs. Management
believes the sources of liquidity discussed above are adequate to satisfy the
Companys current working capital and capital equipment needs. Critical Accounting Policies The Company must exercise judgment in estimating certain costs included in its
results of operations. Footnote No. 1 to the Consolidated Financial Statements
describes the significant accounting policies and the fact that estimates and
assumptions are inherent in the reported assets, liabilities, and results of
operations. The more significant areas of judgment relate to the warranty and
inventory reserves. With respect to warranty reserves, the Company estimates both the expected
return rates by the consumers and the estimated repair costs utilizing
historical data. With respect to inventory reserves, the Company estimates the
level of reserves based upon expected usage information for raw materials and
historical selling trends for finished goods. The Company evaluates the effect
of new product introductions on its finished goods inventory and determines at
fiscal year-end the amounts on-hand for those products which the Company
expects to discontinue as a result of new product introductions during the next
model year. Based on forecasted sales, these finished goods inventories are
valued at cost, which management believes to be lower than expected net
realizable value. The estimates referred to above may be subject to adjustment if actual results
differ significantly from historical trends and costs. 23




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##### Table of Contents



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 processes, 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 Standards The Company adopted Financial Accounting Standards Board (FASB) Statement No.
142, Goodwill and Other Intangible Assets, Statement No. 143, Accounting for
Asset Retirement Obligations, and Statement No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets during fiscal 2003. The adoption
of these statements did not impact the Companys financial position or results
of operations. In November 2002, the Financial Accounting Standards Board (FASB) issued
Interpretation No. 45, Guarantors Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Others (FIN
45). The initial recognition and initial measurement provisions of the
interpretation are applicable on a prospective basis to guarantees issued or
modified after December 31, 2002. The disclosure requirements are effective
for financial statements of interim or annual periods ending after December 15,
2002. The adoption of FIN 45 did not impact the Companys financial position
or results of operations. 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. 24




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##### Table of Contents



Sales, Gross Profit & Net Income (Loss) Years Ended July 31,
    
    Sales
    
    Gross Profit
    
    Net Income (Loss)
    
    Net Income (Loss)(As PreviouslyReported)2003 (1)First Quarter (Aug-Oct)
    
    $
    11,155
    
    
    
    12.6
    %
    
    $
    4,123
    
    
    
    11.1
    %
    
    $
    (1,473
    )
    
    
    (31.7
    %)
    
    $
    (1,432
    )
    
    
    (29.0
    %)Second Quarter (Nov-Jan)
    
    
    21,514
    
    
    
    24.4
    %
    
    
    7,729
    
    
    
    20.7
    %
    
    
    527
    
    
    
    11.3
    %
    
    
    620
    
    
    
    12.6
    %Third Quarter (Feb-Apr)
    
    
    32,414
    
    
    
    36.7
    %
    
    
    16,118
    
    
    
    43.3
    %
    
    
    4,352
    
    
    
    93.7
    %
    
    
    4,407
    
    
    
    89.4
    %Fourth Quarter (May-Jul)
    
    
    23,214
    
    
    
    26.3
    %
    
    
    9,291
    
    
    
    24.9
    %
    
    
    1,239
    
    
    
    26.7
    %
    
    
    1,336
    
    
    
    27.0
    %Total for Year
    
    $
    88,297
    
    
    
    100.0
    %
    
    $
    37,261
    
    
    
    100.0
    %
    
    $
    4,645
    
    
    
    100.0
    %
    
    $
    4,931
    
    
    
    100.0
    %2002First Quarter (Aug-Oct)
    
    $
    11,023
    
    
    
    13.9
    %
    
    $
    3,004
    
    
    
    10.0
    %
    
    $
    (1,887
    )
    
    
    (79.0
    %)Second Quarter (Nov-Jan)
    
    
    17,077
    
    
    
    21.5
    %
    
    
    5,966
    
    
    
    19.9
    %
    
    
    (6
    )
    
    
    (0.2
    %)Third Quarter (Feb-Apr)
    
    
    32,689
    
    
    
    41.1
    %
    
    
    12,967
    
    
    
    43.3
    %
    
    
    3,417
    
    
    
    143.0
    %Fourth Quarter (May-Jul)
    
    
    18,712
    
    
    
    23.5
    %
    
    
    7,989
    
    
    
    26.7
    %
    
    
    865
    
    
    
    36.2
    %Total for Year
    
    $
    79,501
    
    
    
    100.0
    %
    
    $
    29,926
    
    
    
    100.0
    %
    
    $
    2,389
    
    
    
    100.0
    %2001First Quarter (Aug-Oct)
    
    $
    12,644
    
    
    
    17.2
    %
    
    $
    4,312
    
    
    
    16.4
    %
    
    $
    (1,042
    )
    
    
    (2816.2
    %)Second Quarter (Nov-Jan)
    
    
    19,206
    
    
    
    26.2
    %
    
    
    7,387
    
    
    
    28.1
    %
    
    
    647
    
    
    
    1748.6
    %Third Quarter (Feb-Apr)
    
    
    23,282
    
    
    
    31.7
    %
    
    
    8,925
    
    
    
    33.9
    %
    
    
    861
    
    
    
    2327.0
    %Fourth Quarter (May-Jul)
    
    
    18,287
    
    
    
    24.9
    %
    
    
    5,711
    
    
    
    21.7
    %
    
    
    (429
    )
    
    
    (1159.4
    %)Total for Year
    
    $
    73,419
    
    
    
    100.0
    %
    
    $
    26,335
    
    
    
    100.0
    %
    
    $
    37
    
    
    
    100.0
    %
  (1)
    
    As restated, see Note 12 to the Consolidated Financial Statements contained
in Item 8. Earnings (Loss) per Share, Basic & Diluted Weighted AverageShares Outstanding
    
    Earnings per Share
    
    Earnings per Share(As PreviouslyReported)Years Ended July 31,
    
    Basic
    
    Diluted
    
    Basic
    
    Diluted
    
    Basic
    
    Diluted2003 (1)First Quarter (Aug-Oct)
    
    
    3,761,196
    
    
    
    3,761,196
    
    
    $
    (0.39
    )
    
    $
    (0.39
    )
    
    $
    (0.38
    )
    
    $
    (0.38
    )Second Quarter (Nov-Jan)
    
    
    3,761,196
    
    
    
    3,885,319
    
    
    
    0.14
    
    
    
    0.14
    
    
    
    0.16
    
    
    
    0.16Third Quarter (Feb-Apr)
    
    
    3,761,196
    
    
    
    3,902,302
    
    
    
    1.15
    
    
    
    1.11
    
    
    
    1.17
    
    
    
    1.13Fourth Quarter (May-Jul)
    
    
    3,761,196
    
    
    
    3,931,735
    
    
    
    0.33
    
    
    
    0.31
    
    
    
    0.35
    
    
    
    0.34Year-ended July 31, 2003
    
    
    3,761,196
    
    
    
    3,893,324
    
    
    
    1.23
    
    
    
    1.19
    
    
    
    1.31
    
    
    
    1.272002First Quarter (Aug-Oct)
    
    
    3,768,796
    
    
    
    3,768,796
    
    
    $
    (0.50
    )
    
    $
    (0.50
    )Second Quarter (Nov-Jan)
    
    
    3,768,796
    
    
    
    3,768,796
    
    
    
    (0.00
    )
    
    
    (0.00
    )Third Quarter (Feb-Apr)
    
    
    3,766,347
    
    
    
    3,826,082
    
    
    
    0.91
    
    
    
    0.89Fourth Quarter (May-Jul)
    
    
    3,763,594
    
    
    
    3,870,306
    
    
    
    0.23
    
    
    
    0.22Year-ended July 31, 2003
    
    
    3,766,888
    
    
    
    3,818,126
    
    
    
    0.63
    
    
    
    0.632001First Quarter (Aug-Oct)
    
    
    3,768,796
    
    
    
    3,768,796
    
    
    $
    (0.28
    )
    
    $
    (0.28
    )Second Quarter (Nov-Jan)
    
    
    3,768,796
    
    
    
    3,768,796
    
    
    
    0.17
    
    
    
    0.17Third Quarter (Feb-Apr)
    
    
    3,768,796
    
    
    
    3,768,796
    
    
    
    0.23
    
    
    
    0.23Fourth Quarter (May-Jul)
    
    
    3,768,796
    
    
    
    3,768,796
    
    
    
    (.11
    )
    
    
    (.11
    )Year-ended July 31, 2003
    
    
    3,768,796
    
    
    
    3,768,796
    
    
    
    0.01
    
    
    
    0.01
  (1)
    
    As restated, see Note 12 to the Consolidated Financial Statements contained
in Item 8. 25




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##### Table of Contents



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 and
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 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 assumptions, 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 Reform 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:  
    
    Financial performance and cash flow from operations in fiscal 2004 are based on
attaining current projections.
    
    Production delays due to raw material shortages or unforeseen competitive
pressures could have a materially 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 of this Form 10-K could have an
adverse effect on expected results for fiscal 2004. 
 Item 7a. Quantitative and Qualitative Disclosures 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.
A .5% increase in the prime rate in fiscal 2003 would have had a negative
after-tax impact of approximately $35,000. The Company is subject to foreign currency risk due to the location of its
manufacturing facility in Mexico and sales from each of its distribution
facilities in Canada and Australia, which are denominated in the local
currency. Sales to other countries are denominated in U.S. dollars. Although
fluctuations have occurred in the Mexican peso, the Canadian dollar and the
Australian dollar, such fluctuations have not historically had a significant
impact on the Companys financial statements taken as a whole. Future
volatility in these exchange rates could have a significant impact on the
Companys financial statements. 
 Item 8. Financial Statements and Supplementary Data The consolidated financial statements and supplementary data are indexed in
Items 14 and 7 hereof, respectively. The consolidated financial statements for
the fiscal year ended July 31, 2001 were audited by Arthur Andersen LLP.
Arthur Andersen has since ceased operations. The consolidated financial
statements for the fiscal years ended July 31, 2002 and 2003 were audited by
Deloitte & Touche LLP. 26




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##### Table of Contents



Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures The change in the Companys independent auditors was previously reported on
Form 8-K filed with the Securities and Exchange Commission on July 10, 2002. 
 Item 9a. Controls and Procedures The Principal Executive Officer and Principal Financial Officer have evaluated
the effectiveness of the design and operation of the Companys disclosure
controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the
Exchange Act) as of the end of the period covered by this report. In making
this evaluation, the Company has considered matters relating to its restatement
of previously issued financial statements for the year ended July 31, 2003,
including the process that was undertaken to ensure that all material
adjustments necessary to correct the previously issued financial statements
were recorded. Based on that evaluation, the Companys Principal Executive
Officer and Principal Financial Officer have concluded that these controls and
procedures were effective as of that date. In connection with the evaluation described above, there have been no changes
in the Companys internal control over financial reporting (as such term is
defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the
year ended July 31, 2003 that have materially affected, or are reasonably
likely to materially affect, the Companys internal control over financial
reporting. 
 PART III 
 Item 10. Directors and Executive Officers of the Registrant Directors The directors of the Company are as follows: Darrell J. Lowrance. Mr. Lowrance, age 65, a founder of the Company, has been
with the Company since its formation in 1957. He currently serves as President
and Chief Executive Officer and a Director of the Company, positions he has
held since 1964, and is active in the day to day operations of the Company.
During 1983 and 1984, Mr. Lowrance served as President of the American Fishing
Tackle Manufacturers Association (AFTMA). In July 1988, Mr. Lowrance returned
to the Board of Directors of AFTMA, a position he previously held from 1978
through 1986. Additionally, in April 1989, Mr. Lowrance was elected as a
director of the National Association of Marine Products and Services. Peter F. Foley, III. Mr. Foley, age 67, has served as a director since October
1991 and has been President of Boone Bait Company, a company engaged in the
manufacture of saltwater fishing lures, since 1953. For more than 30 years,
Mr. Foley has served on numerous boards related to the marine industry,
including the American Fishing Tackle Manufacturers Association (AFTMA).
Further, he has been awarded government grants, as an industry expert in
international marketing of fishing tackle products, to study and report on key
opportunities for the industry. M. Wayne Williams. Mr. Williams, age 66, a retired CPA, has been a director
since August 2002. He was employed by Electronic Data Systems (EDS) from 1976
until his retirement in 1996. While at EDS, he was responsible for the
preparation of company financial statements in accordance with Generally
Accepted Accounting Principles (GAAP), as well as the overview of all
Securities and Exchange Commission (SEC) reporting. He was also responsible
for statutory, contract, and GAAP reporting for the companys wholly owned
insurance subsidiary. Prior to EDS, he was an audit manager with the
accounting firm of 27




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##### Table of Contents



Touche Ross & Co., working in audit, tax and consulting, using Generally
Accepted Auditing Standards (GAAS). George W. Jones. Mr. Jones, age 65, has been a director since April 2001. Mr.
Jones is a retired Branch Manager and Vice President for The Equitable of New
York, a national insurance and financial services provider. All directors of the Company are elected annually and serve until their
successors are duly elected and qualified. Executive Officers The executive officers of the Company are as follows: Darrell J. Lowrance. Mr. Lowrance, age 65, has served as President and Chief
Executive Officer since 1964. Ronald G. Weber. Mr. Weber, age 59, has served as Executive Vice President of
Engineering and Manufacturing since July 2000. Prior thereto, Mr. Weber was
the Senior Vice President of Engineering since 1980 and was subsequently
promoted to Executive Vice President of Technology and Engineering in December
1993. Mark C. McQuown. Mr. McQuown, age 51, has served as Vice President of Sales
since February 2000. Prior thereto, Mr. McQuown was Director of Sales since
August 1997. Mr. McQuown joined the Company in June 1984 as a Zone Sales
Manager and was subsequently promoted to Regional Sales Manager in June 1988,
Director of International Sales in February 1995 and Director of International,
Government and Industrial Sales in June 1996. Bob G. Callaway. Mr. Callaway, age 60, has served as Vice President of
Marketing since March 2000. Mr. Callaway joined Lowrance in August 1987 as
Manager of Video Communications and was promoted to Director of Video
Communications in October 1993. He subsequently joined Addvantage Media as
Vice President-Field Service Group in March 1997. He worked as a freelance
marketing consultant from October 1998 and in July 1999 joined T.D. Williamson
as Manager of Marketing Resources before returning to Lowrance in March 2000. Jane M. Kaiser. Ms. Kaiser, age 43, has served as Vice President of Customer
Operations since February 2000. Prior thereto, Ms. Kaiser was Director of
Customer/Sales Service since August 1997. Ms. Kaiser joined the Company in May
1995 as Cost Productivity Analyst and was subsequently promoted to Director of
Cost Productivity in December 1995. Prior to joining the Company, Ms. Kaiser
was employed by Kimberly Clark for nine years. Ms. Kaiser holds an MBA from
Oklahoma State University and a CPA from the state of Illinois. Douglas J. Townsdin. Mr. Townsdin, age 40, has served as Vice President of
Finance and Chief Financial Officer since March 2000. Prior thereto, Mr.
Townsdin was a Senior Manager with Arthur Andersen LLP since 1990. All officers of the Company are elected annually at an organizational meeting
of the Board of Directors immediately following the annual meeting. Audit Committee Financial Expert The Companys Board of Directors has determined that the Company has at least
one audit committee financial expert serving on its Audit Committee. M. Wayne
Williams, the financial expert, is independent, as that term is used in Item
7(d)(3)(iv) of Schedule 14A under the Exchange Act. 28




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##### Table of Contents



Audit Committee The Company has a separately designated standing audit committee established in
accordance with section 3(a)(58)(A) of the Exchange Act. The 2003 Audit
Committee is composed of the following members: M. Wayne Williams-Chairman,
Peter F. Foley, III, and George W. Jones. Section 16(a) Beneficial Ownership Reporting Compliance Each of the following persons failed to file on a timely basis a Form 4
required by Section 16(a) of the Exchange Act during the most recent fiscal
year or prior fiscal years: Ronald G. Weber, Mark C. McQuown, Bob G. Callaway,
Jane M. Kaiser and Douglas J. Townsdin. Code of Ethics The Company has adopted a Code of Ethics that applies to the Companys
principal executive officer, principal financial and accounting officer, and
other officers designated annually by the President and Chief Executive
Officer. A copy of the Companys Code of Ethics is attached hereto as Exhibit
14.0. 29




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##### Table of Contents



Item 11. Executive Compensation The following table sets forth the aggregate cash compensation earned by the
executive officers listed (the Named Executive Officers) for services
rendered in all capacities to the Company for the fiscal years ended July 31,
2003, 2002 and 2001. (3)(2)
    
    SecuritiesOther
    
    Underlying
    
    (4)(1)
    
    Annual
    
    Options/
    
    AllName of Individual/Principal
    
    
    
    
    
    Salary
    
    Bonus
    
    Compensation
    
    SARS
    
    OtherPosition
    
    Year
    
    ($)
    
    ($)
    
    ($)
    
    (#s)
    
    ($)Darrell J. Lowrance
    
    
    2003
    
    
    
    429,200
    
    
    
    304,700
    
    
    
    
    
    
    
    
    
    
    
    24,000President and Chief
    
    
    2002
    
    
    
    429,200
    
    
    
    193,100
    
    
    
    
    
    
    
    
    
    
    
    25,100Executive Officer
    
    
    2001
    
    
    
    421,300
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26,200Ronald G. Weber
    
    
    2003
    
    
    
    253,700
    
    
    
    118,000
    
    
    
    
    
    
    
    
    
    
    
    6,000Executive Vice President
    
    
    2002
    
    
    
    251,100
    
    
    
    50,700
    
    
    
    
    
    
    
    34,453
    (5)
    
    
    7,100Of Engineering and
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    115,547
    (6)Manufacturing
    
    
    2001
    
    
    
    229,600
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,500Douglas J. Townsdin
    
    
    2003
    
    
    
    156,200
    
    
    
    72,600
    
    
    
    
    
    
    
    
    
    
    
    6,000Vice President of Finance
    
    
    2002
    
    
    
    156,200
    
    
    
    31,200
    
    
    
    
    
    
    
    25,000
    (5)
    
    
    3,900Chief Financial Officer
    
    
    2001
    
    
    
    154,300
    
    
    
    
    
    
    
    17,100
    
    
    
    
    
    
    
    1,700Mark C. McQuown
    
    
    2003
    
    
    
    159,000
    
    
    
    74,000
    
    
    
    
    
    
    
    
    
    
    
    6,000Vice President of Sales
    
    
    2002
    
    
    
    159,000
    
    
    
    31,800
    
    
    
    17,500
    
    
    
    25,000
    (5)
    
    
    5,0002001
    
    
    
    156,200
    
    
    
    
    
    
    
    20,300
    
    
    
    
    
    
    
    10,800Bob G. Callaway
    
    
    2003
    
    
    
    155,700
    
    
    
    72,400
    
    
    
    
    
    
    
    
    
    
    
    3,900Vice President of Marketing
    
    
    2002
    
    
    
    155,700
    
    
    
    31,100
    
    
    
    15,600
    
    
    
    25,000
    (5)
    
    
    3,9002001
    
    
    
    153,900
    
    
    
    
    
    
    
    25,400
    
    
    
    
    
    
    
    1,900Jane M. Kaiser
    
    
    2003
    
    
    
    150,000
    
    
    
    69,700
    
    
    
    
    
    
    
    
    
    
    
    5,800Vice President of Customer
    
    
    2002
    
    
    
    148,300
    
    
    
    30,000
    
    
    
    
    
    
    
    25,000
    (5)
    
    
    4,400Operations
    
    
    2001
    
    
    
    125,000
    
    
    
    
    
    
    
    18,500
    
    
    
    
    
    
    
    9,600
  (1)
    
    The Companys Executive Bonus Plan for fiscal year 2003 provided for a
performance bonus pool measured entirely on the basis of the Companys
pretax, prebonus earnings compared to targeted pretax, prebonus earnings.
This bonus pool was to be divided, based on certain predetermined
percentages, between the Companys President and five Vice Presidents. In
order to earn any performance bonus, it was necessary for pretax, prebonus
income to exceed $4.4 million, which the Company did and, accordingly,
performance bonuses of $580,000 were paid. The Executive Bonus Plan for
fiscal year 2003 also provided for discretionary bonuses for executive
officers, except the President, granted at the recommendation of the
President on the basis of individual performance not to exceed 15% of
their respective salaries. The President did exercise his right to
recommend discretionary bonuses for executive officers of the Company to 30




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##### Table of Contents



the Compensation and Nominating Committee of the Board of Directors.
Accordingly, discretionary bonuses of $131,000 were paid.(2)
    
    The remuneration described in other annual compensation includes the cost
to the Company of benefits furnished to the executive officers, including
premiums for life and health insurance, personal use of Company
automobiles or automobile allowances and other personal benefits provided
to such individuals that are extended in connection with the conduct of
the Companys business. During fiscal 2003, no executive officers
received other compensation in excess of 10% of such officers cash
compensation.(3)
    
    Refer to the description below for a complete discussion of the stock
options that the Board of Directors awarded under the 2001 Stock Option
Plan, contingent upon Shareholder approval. Such shareholder approval was
given on December 11, 2001.(4)
    
    Other compensation resulted from contributions to the Lowrance Savings
Plan and Trust on behalf of the listed executive officers. Also included
are directors fees of $18,000, $20,000, and $24,000 paid to Mr. Lowrance
and $0, $2,000, and $23,000 paid to Mr. Weber in 2003, 2002 and 2001,
respectively.(5)
    
    Incentive stock options awarded under the 2001 Stock Option Plan. Refer
to the description below for a complete discussion of this plan.(6)
    
    Non-qualified stock options awarded under the 2001 Stock Option Plan.
Refer to the description below for a complete discussion of this plan. The following table sets forth information concerning the exercise of stock
options during fiscal 2003 by each of the named executive officers and the
fiscal year-end value of unexercised options. Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values Shares
    
    
    
    
    
    Exercisable Number of securities
    
    Value of unexercised in-acquired
    
    
    
    
    
    underlying unexercised
    
    the-money option/SARs aton
    
    Value
    
    options/SARS at FY-end
    
    FY-endexercise
    
    realized
    
    Exercisable
    
    Unexercisable
    
    Exercisable
    
    UnexercisableName
    
    (#)
    
    ($)
    
    (#)
    
    (#)
    
    ($)
    
    ($)Ronald G. Weber
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    34,453
    (1)
    
    
    
    
    
    
    196,727
    
    
    
    
    
    
    
    
    
    
    
    115,547
    (2)
    
    
    
    
    
    
    659,773Douglas J. Townsdin
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,000
    (1)
    
    
    
    
    
    
    142,750Mark C. McQuown
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,000
    (1)
    
    
    
    
    
    
    142,750Bob G. Callaway
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,000
    (1)
    
    
    
    
    
    
    142,750Jane M. Kaiser
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,000
    (1)
    
    
    
    
    
    
    142,750
  (1)
    
    Incentive Stock Options(2)
    
    Non-Qualified Stock Options 31




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##### Table of Contents



Compensation of Directors Each director receives compensation of $12,000 per year, an additional fee of
$1,000 for each meeting of the Board of Directors and $750 for each Committee
meeting attended. All directors are reimbursed for certain reasonable
out-of-pocket expenses incurred in attending meetings of the Board of Directors
or Committee meetings. Employee Contracts and Termination of Employment and Change-in-Control
Arrangements Employment and Severance Arrangements. The Company has entered into employment
agreements (the Employment Agreements) with Bob G. Callaway, Mark C. McQuown,
Douglas J. Townsdin and Jane M. Kaiser. The summary of such Employment
Agreements contained herein does not purport to be complete and is qualified in
its entirety by reference to the Employment Agreements which are attached
hereto as Exhibits 10.33 through 10.36. The initial term of the Employment
Agreements runs for a period of 24 months. Each agreement has a renewal term
of an additional 24 months unless proper notice (as defined in the Employment
Agreement) is given prior to the expiration of the initial term by either
party. Under the terms of the Employment Agreements, if the employment of any
executive is terminated other than for cause (as defined therein), then each
such executive would be entitled to payment of their salary in accordance with
the Companys standard payroll practices for the remainder of the initial term
of the agreement or a period of twelve months, whichever is longer. If the
employment of the executive is terminated upon a change of control of the
Company (as defined therein), then each such executive would be entitled to a
lump sum payment equal to 24 months of their salary. As of October 22, 2003
the maximum aggregate amount of cash benefits payable to each executive would
be $318,000 for Mark C. McQuown, $312,000 for Douglas J. Townsdin, $311,000 for
Bob G. Callaway and $300,000 for Jane M. Kaiser. Stock Option Plans.On July 2, 2001, the Company adopted the 2001 Stock Option
Plan which provides for a maximum of 300,000 common shares available for issue.
The Plan provides for incentive stock options, non-qualified stock options and
stock appreciation rights and is designed to serve as an incentive for
attracting and retaining qualified, competent employees and directors.
Depending upon the type of option, the options and stock appreciation rights
granted cannot have terms greater than ten years and six months. The plan
requires incentive 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. The plan is administered by the Compensation and Nominating Committee
and was approved by the shareholders at the Annual Meeting held December 11,
2001. As of July 31, 2003, five persons were eligible for consideration to
receive options under the 2001 Stock Option Plan. On July 25, 2001, the Compensation and Nominating Committee recommended and the
Board of Directors approved that a total of 134,453 incentive stock options be
granted and 115,547 non-qualified stock options be granted under the 2001 Stock
Option Plan, all at an exercise price of $2.67, the fair market value on the
date of grant. Under the terms of the Stock Option Agreements signed by each
of the five persons to whom options were granted, their respective options may
be exercised in whole or in part only upon or after the first to occur of the
following events: (i) the occurrence of any transaction by which Darrell J. 32




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##### Table of Contents



Lowrance sells 100% of the shares he then owns directly in a private placement,
registered public offering or through Rule 144 sales; (ii) upon the sale by the
Company of all or substantially all of the Companys assets and operations to a
third party; or (iii) on or after July 24, 2010. Retirement Plan.The Lowrance Savings Plan and Trust (the Retirement Plan)
requires the Company to contribute to the Retirement Plan up to 6% of each
participants salary annually. Participants include all U.S. employees of the
Company, including executive officers, who have completed one year of
employment with at least 1,000 hours of service. The Company makes a fixed
contribution of 3% of each participants salary. In addition, if an employee
makes voluntary contributions, the Company will make additional contributions
equal to 50% of each dollar contributed by the employee, not to exceed 3% of
the employees compensation. Each participants interest in the Companys
contributions vests fully over a period of seven years. Generally, a
participants interest in the Companys contributions may be withdrawn only
upon termination or in certain hardship situations. Board Compensation Committee Report on Executive Compensation The members of the Compensation and Nominating Committee are Mr. Peter F.
Foley, III, M. Wayne Williams and Mr. George W. Jones. Each member of the
Committee is a non-employee director. In determining the compensation payable to the Companys executive officers, it
is the basic philosophy of the Committee that the total annual compensation for
these individuals should be at a level which is competitive with the
marketplace in companies of similar size for positions of similar scope and
responsibility. In determining the appropriateness of compensation levels, the
Committee annually reviews the Companys compensation policies and compensation
information/surveys, which provide a comparison of the fixed and variable
portions of the executive officers compensation. The key elements of the total annual compensation for executive officers
consists of a base salary and variable compensation in the form of annual bonus
and stock options. The base salaries are generally set based upon the
information referenced above. Annual bonuses typically consist of two
components, a performance bonus based entirely on the basis of the Companys
pretax, prebonus earnings and a discretionary bonus for executive officers,
except the President, which is recommended by the President on the basis of
individual performance. The base salary for the Chief Executive Officer is reviewed relative to the
Wall Street Journal/Mercer Human Resource Consulting CEO Compensation Survey
and falls below the median level in this survey. The committee has set the
base pay for the Chief Executive at the current level which it believes is
reasonable compared to the survey information and due to his tenure with the
Company and his irreplaceable knowledge of and personal contacts and
relationships in the industries in which the Company operates. All of the
Chief Executives incentive pay is based on achieving targeted pretax, prebonus
earnings levels with no discretionary bonus component. 33




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Performance Graph COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
AMONG THE COMPANY, NASDAQ US AND NASDAQ ELECTRONIC COMPONENT (PERFORMANCE GRAPH) 34




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##### Table of Contents



Item 12. Security Ownership of Certain Beneficial Owners and Management The following table sets forth information with respect to the Companys equity
compensation plans. It describes the stock options issued under the 2001 Stock
Option Plan, which is the only existing equity compensation plan approved by
shareholders. The Company has no other equity compensation plans not approved
by shareholders. Equity Compensation Plan Information (a)
    
    (b)
    
    (c)Number of securities to be
    
    Weighted average exerciseissued upon exercise of
    
    price of outstanding
    
    Number of securities remaining available foroutstanding options, warrants
    
    options, warrants and
    
    future issuance under equity compensation plansPlan Category
    
    and rights
    
    rights
    
    (excluding securities reflected in column (a))Equity compensation
plans approved by
security holders
    
    
    250,000
    
    
    $
    2.67
    
    
    
    50,000Equity compensation
plans not approved
by security holders
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    250,000
    
    
    $
    2.67
    
    
    
    50,000
 The following table sets forth, as of October 22, 2003, the number and
percentages of outstanding shares of the Common Stock beneficially owned by all
persons known by the Company to own more than 5% of the Companys Common Stock,
by each director of the Company, and by all officers and directors of the
Company as a group: 35




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##### Table of Contents



PRINCIPAL SHAREHOLDERS Name and Address
    
    Amount and Nature of
    
    Percentageof Beneficial Owner
    
    Beneficial Ownership
    
    of SharesDarrell J. Lowrance (1)
    
    
    1,908,123
    
    
    
    (2)   50.7
    %12000 East Skelly Drive
Tulsa, OK 74128-2486Bonanza Master Fund, Ltd.
    
    
    206,100
    
    
    
    5.5
    %8225 Douglas Avenue, Ste 423
Dallas, TX 75225Peter F. Foley, III (3)
    
    
    54,183
    
    
    
    1.4
    %Boone Bait Company
    
    Direct1501 Minnesota Avenue
Winter Park, FL 32789Ronald G. Weber (4)
    
    
    36,645
    
    
    
    1.0
    %12000 East Skelly Drive
Tulsa, OK 74128-2486George W. Jones (3)
    
    
    20,000
    
    
    
    *7607 So. Marion
    
    DirectTulsa, OK 74136M. Wayne Williams (3)
    
    
    5,500
    
    
    
    *2800 Hacienda Ct.
    
    DirectPlano, TX 75023Mark C. McQuown (4)
    
    
    100
    
    
    
    *12000 East Skelly Drive
    
    DirectTulsa, OK 74128-2486Bob G. Callaway (4)
    
    
    0
    
    
    
    N/A12000 East Skelly Drive
Tulsa, OK 74128-2486Jane M. Kaiser (4)
    
    
    0
    
    
    
    N/A12000 East Skelly Drive
Tulsa, OK 74128-2486Douglas J. Townsdin (4)
    
    
    0
    
    
    
    N/A12000 East Skelly Drive
Tulsa, OK 74128-2486All directors and
    
    
    2,024,551
    
    
    
    (5)   53.8
    %officers as a group
(including those listed
above, nine persons total)
  (1)
    
    Director and Executive Officer.(2)
    
    Includes 324,408 shares held indirectly in an individual
retirement account with Mr. Lowrance having the sole voting and
investment power, and 3,725 owned indirectly by an immediate family
member.(3)
    
    Director.(4)
    
    Executive Officer. 36




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##### Table of Contents



(5)
    
    All securities owned by officers and directors are owned
directly except for 328,133 shares described in note (2) above. * Less than 1% 
 Item 13. Certain Relationships and Related Transactions The Company has no relationships or transactions that require reporting under
this item. 
 Item 14. Principal Accounting Fees and Services Audit Fees Fees paid to Deloitte and Touche LLP for the audit of the Companys annual
financial statements included in the registrants reports on Form 10-K and
review of the financial statements included in the registrants reports on Form
10-Q were $117,000 during fiscal 2003. Audit fees of $114,000 were paid to
Arthur Andersen LLP during fiscal 2002. Audit-Related Fees There were no additional fees paid or payable to Deloitte & Touche LLP for any
audit services provided for in fiscal 2003 other than that disclosed above.
Additional fees of $32,000 were paid to Arthur Andersen LLP during fiscal 2002
for research and consultation regarding the details of the 2001 Stock Option
Plan. Tax Fees Fees paid to Deloitte & Touche LLP for services rendered for preparation of the
Companys state and federal income tax returns, tax compliance, tax advice and
tax planning were $22,000 for fiscal 2003. Fees paid to Arthur Andersen LLP
during fiscal 2002 for tax return preparation, tax compliance, tax advice and
tax planning were $19,000. All Other Fees There were no additional fees paid or payable to Deloitte & Touche LLP or
Arthur Andersen LLP for any other services provided during fiscal 2003 or 2002,
respectively. Audit Committees Pre-Approval Policies and Procedures The Audit Committee pre-approves the selection of auditors and their respective
fees for services to be rendered for audit and tax services. The Audit
Committee pre-approves 100% of audit, tax and all other services provided by
any audit firms. No audit work was performed by persons other than the principal accountants
full-time, permanent employees. 
 PART IV 
 Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K (a) Financial Statements and Exhibits: Page1. Consolidated Financial Statements:Index to Consolidated Financial Statements
    
    
    F-1Report of Independent Registered Public Accounting Firm -
Fiscal 2003 and 2002
    
    
    F-2
 37




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PageReport of
Independent Public Accountants - Fiscal 2001
    
    
    F-3Consolidated
Balance Sheets - July 31, 2002 and 2003
    
    
    F-4Consolidated Statements of Income and Comprehensive
Income for the Years Ended July 31, 2001, 2002, and 2003
    
    
    F-5Consolidated Statements of Stockholders Equity for the
Years Ended July 31, 2001, 2002, and 2003
    
    
    F-6Consolidated Statements of Cash Flows for the Years
Ended July 31, 2001, 2002, and 2003
    
    
    F-7Notes to Consolidated Financial Statements
for the Years Ended July 31, 2001, 2002, and 2003
    
    
    F-8
 2. Exhibits: 3.1
    
    Restated Certificate of Incorporation of Lowrance
Electronics, Inc., previously filed as Exhibit 3.1 to the
Companys Quarterly Report on Form 10-Q dated October 31, 2002,
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 2003 Annual Report on Form
10-K, 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.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.10.2
    
    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.10.13
    
    Loan and Security Agreement dated December 15, 1993,
by the Company in favor of Barclays Business Credit, Inc.,
previously filed as Exhibit 10.13 to the Companys 1994
 38




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Annual Report on Form 10-K, 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 (formerly Barclays Business Credit, Inc.),
previously filed as Exhibit 10.14 to the Companys 1995 Annual
Report on Form 10-K, 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 (formerly Barclays Business Credit, Inc.),
previously filed as Exhibit 10.15 to the Companys 1995 Annual
Report on Form 10-K, 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 (formerly Barclays Business Credit, Inc.),
previously filed as Exhibit 10.16 to the Companys 1995 Annual
Report on Form 10-K, 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 (formerly Barclays Business Credit, Inc.),
previously filed as Exhibit 10.17 to the Companys 1995 Annual
Report on Form 10-K, 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, previously filed as Exhibit 10.18 to the Companys
1995 Annual Report on Form 10-K, 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
(formerly 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, 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 (formerly Shawmut Capital
 39




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##### Table of Contents



Corporation), previously filed as Exhibit 10.22 to the
Companys 1997 Annual Report on Form 10-K, 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 (formerly Shawmut Capital Corporation), previously
filed as Exhibit 10.23 to the Companys 1997 Annual Report on
Form 10-K, 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 (formerly Shawmut Capital Corporation),
previously filed as Exhibit 10.24 to the Companys 1997 Annual
Report on Form 10-K, 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 (formerly Shawmut Capital Corporation), previously
filed as Exhibit 10.25 to the Companys 1997 Annual Report on
Form 10-K, 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 (formerly Shawmut Capital Corporation), previously
filed as Exhibit 10.26 to the Companys 1998 Annual Report on
Form 10-K, 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 (formerly Shawmut Capital Corporation),
previously filed as Exhibit 10.27 to the Companys 1998 Annual
Report on Form 10-K, 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 (formerly Shawmut Capital Corporation),
previously filed as Exhibit 10.28 to the Companys 1998 Annual
Report on Form 10-K, 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 (formerly Shawmut Capital Corporation), previously
filed as Exhibit 10.29 to the Companys 1998 Annual Report on
Form 10-K, 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 (formerly Shawmut Capital Corporation), previously
filed as Exhibit 10.30 to the Companys 1998 Annual Report on
Form 10-K, 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
 40




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Capital, previously filed as Exhibit 10.31 to the
Companys 2000 Annual Report on Form 10-K, which is
incorporated herein by reference thereto.10.32
    
    Twelfth Amendment to Loan and Security Agreement
dated October 18, 2000, by and between the Company and Fleet
Capital, previously filed as Exhibit 10.32 to the Companys
October 31, 2000 Quarterly Report on Form 10-Q, which is
incorporated herein by reference thereto.10.33
    
    Employment Agreement for Douglas J. Townsdin,
dated as of April 7, 2000, previously filed as Exhibit 10.33 to
the Companys 2001 Annual Report on Form 10-K, which is
incorporated herein by reference thereto.10.34
    
    Employment Agreement for Bob G. Callaway, dated as
of March 27, 2000, previously filed as Exhibit 10.34 to the
Companys 2001 Annual Report on Form 10-K, which is
incorporated herein by reference thereto.10.35
    
    Employment Agreement for Mark C. McQuown, dated as
of April 7, 2000, previously filed as Exhibit 10.35 to the
Companys 2001 Annual Report on Form 10-K, which is
incorporated herein by reference thereto.10.36
    
    Employment Agreement for Jane M. Kaiser, dated as
of April 7, 2000, previously filed as Exhibit 10.36 to the
Companys 2001 Annual Report on Form 10-K, which is
incorporated herein by reference thereto.10.37
    
    Lease Agreement entered into by and between Eric
Juan de Dios Flourie Geffroy, Refugio Geffroy de Flourie,
Elizabeth Pierret Pepita Flourie Geffroy, Edith Elizabeth
Cuquita Flourie Geffroy and Lowrance Electronica de Mexico,
S.A. de C.V. dated May 11, 2001, previously filed as Exhibit
10.37 to the Companys 2001 Annual Report on Form 10-K, which
is incorporated herein by reference thereto.10.38
    
    Amended and Restated 2001 Stock Option Plan for
the Company, previously filed as Exhibit 10.38 to the Companys
2003 Annual Report on Form 10-K, which is incorporated herein
by reference thereto.10.39
    
    Amended and Restated NonQualified Stock Option
Agreement between the Company and Ron G. Weber dated July 18,
2003, previously filed as Exhibit 10.39 to the Companys 2003
Annual Report on Form 10-K, which is incorporated herein by
reference thereto.10.40
    
    Amended and Restated Incentive Stock Option
Agreement between the Company and Ron G. Weber dated July 18,
2003, previously filed as Exhibit 10.40 to the Companys 2003
Annual Report on Form 10-K, which is incorporated herein by
reference thereto.10.41
    
    Amended and Restated Incentive Stock Option
Agreement between the Company and Douglas Townsdin dated July
18, 2003, previously filed as Exhibit 10.41 to the Companys
2003 Annual Report on Form 10-K, which is incorporated herein
by reference thereto.
 41




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##### Table of Contents



10.42
    
    Amended and Restated Incentive Stock Option
Agreement between the Company and Bob G. Callaway dated July
18, 2003, previously filed as Exhibit 10.42 to the Companys
2003 Annual Report on Form 10-K, which is incorporated herein
by reference thereto.10.43
    
    Amended and Restated Incentive Stock Option
Agreement between the Company and Mark McQuown dated July 18,
2003, previously filed as Exhibit 10.43 to the Companys 2003
Annual Report on Form 10-K, which is incorporated herein by
reference thereto.10.44
    
    Amended and Restated Incentive Stock Option
Agreement between the Company and Jane M. Kaiser dated July 18,
2003, previously filed as Exhibit 10.44 to the Companys 2003
Annual Report on Form 10-K, which is incorporated by reference
thereto.10.45
    
    Thirteenth Amendment to Loan and Security
Agreement dated October 19, 2001, by and between the Company
and Fleet Capital, previously filed as Exhibit 10.45 to the
Companys Quarterly Report on Form 10-Q dated October 31, 2001,
which is incorporated herein by reference thereto.10.46
    
    Fourteenth Amendment to Loan and Security
Agreement dated March 11, 2002 by and between the Company and
Fleet Capital, previously filed as Exhibit 10.46 to the
Companys 2002 Quarterly Report on Form 10-Q, which is
incorporated herein by reference thereto.10.47
    
    Fifteenth Amendment to Loan and Security Agreement
dated November 26, 2002, by and between the Company and Fleet
Capital, previously filed as Exhibit 10.47 to the Companys
2003 Quarterly Report on Form 10-Q dated October 31, 2002,
which is incorporated herein by reference thereto.10.48
    
    Letter agreement dated September 10, 2003 by and
between the Company and Fleet Capital, previously filed as
Exhibit 10.48 to the Companys 2003 Annual Report on Form 10-K,
which is incorporated herein by reference thereto.14.0
    
    Code of Ethics, previously filed as Exhibit 14.0 to
the Companys 2003 Annual Report on Form 10-K, which is
incorporated herein by reference thereto.22.13
    
    Subsidiaries of the Company as of July 31, 2001,
previously filed as Exhibit 22.13 to the Companys 2001 Annual
Report on Form 10-K, which is incorporated herein by reference
thereto.31.1
    
    Certification of the Principal Executive Officer,
pursuant to Exchange Act Rules 13a-14 and 15d-14, executed by
Darrell J. Lowrance, President and Chief Executive Officer of
Lowrance Electronics, Inc., filed herewith.31.2
    
    Certification of the Principal Financial Officer,
pursuant to Exchange Act Rules 13a-14 and 15d-14, executed by
Douglas J. Townsdin, Vice President of Finance and Chief
Financial Officer of Lowrance Electronics, Inc., filed herewith.
 42




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##### Table of Contents



32.1
    
    Certification of Periodic Financial Report, pursuant
to 18 U.S.C. Section 1350, executed by Darrell J. Lowrance,
President and Chief Executive Officer of Lowrance Electronics,
Inc. and Douglas J. Townsdin, Vice President of Finance and
Chief Financial Officer of Lowrance Electronics, Inc., filed
herewith.99.2
    
    Calculation of 2002 weighted average shares
outstanding as of July 31, 2002, previously filed as Exhibit
99.2 to the Companys 2003 Annual Report on Form 10-K, which is
incorporated herein by reference thereto.
 (b) Reports on Form 8-K: On June 11, 2003, the Company filed a Form 8-K with the SEC regarding
its press release of the same date which announced its financial results
for the third quarter and nine months ended April 30, 2003. A copy of
this press release was furnished as an exhibit to this report on Form
8-K. On August 5, 2003, the Company filed a Form 8-K with the SEC regarding
its press release of the same date which announced a special dividend
and sales results for the fiscal year ended July 31, 2003. A copy of
this press release was furnished as an exhibit to this report on Form
8-K. 43




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##### Table of Contents



Index to Consolidated Financial Statements PageReport of Independent Registered Public Accounting Firm -
Fiscal 2003 and 2002
    
    
    F-2Report of
Independent Public Accountants - Fiscal 2001
    
    
    F-3Consolidated
Balance Sheets - July 31, 2002 and 2003
    
    
    F-4Consolidated Statements of Income and Comprehensive
Income for the Years Ended July 31, 2001, 2002, and 2003
    
    
    F-5Consolidated Statements of Stockholders Equity for the
Years Ended July 31, 2001, 2002, and 2003
    
    
    F-6Consolidated Statements of Cash Flows for the Years
Ended July 31, 2001, 2002, and 2003
    
    
    F-7Notes to Consolidated Financial Statements
for the Years Ended July 31, 2001, 2002, and 2003
    
    
    F-8
 F-1




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Lowrance Electronics, Inc.: We have audited the accompanying consolidated balance sheets of Lowrance
Electronics, Inc. and subsidiaries as of July 31, 2003 and 2002, and the
related consolidated statements of income and comprehensive income,
stockholders equity, and cash flows for the years then ended. These financial
statements are the responsibility of the Companys management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits. The Companys consolidated financial
statements for the year ended July 31, 2001 were audited by other auditors who
have ceased operations. Those auditors expressed an unqualified opinion on
those financial statements in their report dated October 19, 2001. We conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (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, such consolidated financial statements present fairly, in all
material respects, the financial position of Lowrance Electronics, Inc. and
subsidiaries as of July 31, 2003 and 2002, and the results of their operations
and their cash flows for the years then ended in conformity with accounting
principles generally accepted in the United States of America. As discussed in Note 12, the accompanying 2003 consolidated financial
statements have been restated. DELOITTE & TOUCHE LLP Tulsa, Oklahoma
October 21, 2003
(June 15, 2004 as to the effects of the restatement discussed in Note 12) F-2




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This is a photocopy of Arthur Andersens opinion as issued in the Companys
2001 Form 10-K. The opinion has not been reissued by Arthur Andersen LLP. 
 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,
2001 and 2000, 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, 2001. 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, 2001 and 2000, and the results of their operations
and their cash flows for each of the three years in the period ended July 31,
2001, in conformity with accounting principles generally accepted in the United
States. ARTHUR ANDERSEN LLP Tulsa, Oklahoma
October 19, 2001 F-3




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LOWRANCE ELECTRONICS, INC. 
 CONSOLIDATED BALANCE SHEETS
  JULY 31,2002
    
    2003(As Restated,See Note 12)ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    903
    
    
    $
    1,206Trade accounts receivable, net of reserves
of $787,000 in 2002 and $732,000 in 2003
    
    
    7,695
    
    
    
    8,431Inventories
    
    
    12,130
    
    
    
    15,941Current deferred income taxes
    
    
    1,161
    
    
    
    894Prepaid expenses
    
    
    1,012
    
    
    
    1,290Total current assets
    
    
    22,901
    
    
    
    27,762PROPERTY, PLANT, AND EQUIPMENT, net
    
    
    7,104
    
    
    
    7,593OTHER ASSETS
    
    
    49
    
    
    
    62DEFERRED INCOME TAXES
    
    
    708
    
    
    
    TOTAL ASSETS
    
    $
    30,762
    
    
    $
    35,417LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIES:Current maturities of long-term debt
    
    $
    1,817
    
    
    $
    2,061Accounts payable
    
    
    4,420
    
    
    
    2,951Accrued liabilities:Compensation and benefits
    
    
    2,210
    
    
    
    2,704Product costs
    
    
    720
    
    
    
    1,004Other
    
    
    1,053
    
    
    
    893Total current liabilities
    
    
    10,220
    
    
    
    9,613LONG-TERM DEBT, less current maturities
    
    
    6,183
    
    
    
    5,825DEFERRED INCOME TAXES
    
    
    
    
    
    
    371STOCKHOLDERS EQUITY, per accompanying
statements:Common stock, $.10 par value, 10,000,000 shares
authorized, 3,761,196 shares and 3,768,796 shares
issued at July 31, 2003 and 2002, respectively;
3,761,196 shares outstanding at
July 31, 2003 and 2002
    
    
    377
    
    
    
    377Paid-in capital
    
    
    7,073
    
    
    
    7,418Treasury stock, at cost (7,600 shares)
    
    
    (26
    )
    
    
    Retained earnings
    
    
    7,227
    
    
    
    11,846Accumulated other comprehensive loss
    
    
    (292
    )
    
    
    (33
    )Total stockholders equity
    
    
    14,359
    
    
    
    19,608TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    30,762
    
    
    $
    35,417
 The accompanying notes are an integral part of these consolidated financial
statements. F-4




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##### Table of Contents



LOWRANCE ELECTRONICS, INC. 
 CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
  FOR THE YEARS ENDED JULY 31,2001
    
    2002
    
    2003(As Restated,See Note 12)NET SALES
    
    $
    73,419
    
    
    $
    79,501
    
    
    $
    88,297COST OF SALES
    
    
    47,084
    
    
    
    49,575
    
    
    
    51,036Gross profit
    
    
    26,335
    
    
    
    29,926
    
    
    
    37,261OPERATING EXPENSES:Selling and administrative
    
    
    20,778
    
    
    
    22,021
    
    
    
    25,189Merger costs
    
    
    371
    
    
    
    
    
    
    
    Research and development
    
    
    3,083
    
    
    
    2,650
    
    
    
    4,191Total operating expenses
    
    
    24,232
    
    
    
    24,671
    
    
    
    29,380Operating income
    
    
    2,103
    
    
    
    5,255
    
    
    
    7,881OTHER EXPENSES:Interest
    
    
    1,752
    
    
    
    1,424
    
    
    
    989Other
    
    
    252
    
    
    
    (104
    )
    
    
    30Total other expenses
    
    
    2,004
    
    
    
    1,320
    
    
    
    1,019INCOME BEFORE INCOME TAXES
    
    
    99
    
    
    
    3,935
    
    
    
    6,862PROVISION FOR INCOME TAXES
    
    
    62
    
    
    
    1,546
    
    
    
    2,217NET INCOME
    
    $
    37
    
    
    $
    2,389
    
    
    $
    4,645NET INCOME PER COMMON SHAREBasic
    
    $
    .01
    
    
    $
    .63
    
    
    $
    1.23Diluted
    
    $
    .01
    
    
    $
    .63
    
    
    $
    1.19WEIGHTED AVERAGE COMMON
SHARES OUTSTANDINGBasic
    
    
    3,769
    
    
    
    3,767
    
    
    
    3,761Diluted
    
    
    3,769
    
    
    
    3,818
    
    
    
    3,893DIVIDENDS
    
    NONE
    
    NONE
    
    NONECOMPREHENSIVE INCOME (LOSS):NET INCOME
    
    $
    37
    
    
    $
    2,389
    
    
    $
    4,645FOREIGN CURRENCY TRANSLATION ADJUSTMENT, NET OF TAX
    
    
    (115
    )
    
    
    119
    
    
    
    259COMPREHENSIVE INCOME (LOSS)
    
    $
    (78
    )
    
    $
    2,508
    
    
    $
    4,904
 The accompanying notes are an integral part of these consolidated financial
statements. F-5




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##### Table of Contents



LOWRANCE ELECTRONICS, INC. 
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
 FOR THE YEARS ENDED JULY 31, 2001, 2002, and 2003
  AccumulatedCommon Stock
    
    Paid-In
    
    Treasury
    
    Retained
    
    OtherComprehensive
    
    TotalShares
    
    Amount
    
    Capital
    
    Stock
    
    Earnings
    
    Income(Loss)
    
    EquityBalance-
July 31, 2000
    
    
    3,769
    
    
    $
    377
    
    
    $
    7,073
    
    
    $
    
    
    
    $
    4,801
    
    
    $
    (296
    )
    
    $
    11,955Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    37
    
    
    
    
    
    
    
    37Other comprehensive income:Foreign currency
translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (115
    )
    
    
    (115
    )Balance-
July 31, 2001
    
    
    3,769
    
    
    
    377
    
    
    
    7,073
    
    
    
    
    
    
    
    4,838
    
    
    
    (411
    )
    
    
    11,877Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,389
    
    
    
    
    
    
    
    2,389Other comprehensive income:Foreign currency
translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    119
    
    
    
    119Treasury stock purchases
    
    
    (8
    )
    
    
    
    
    
    
    
    
    
    
    (26
    )
    
    
    
    
    
    
    
    
    
    
    (26
    )Balance-
July 31, 2002
    
    
    3,761
    
    
    
    377
    
    
    
    7,073
    
    
    
    (26
    )
    
    
    7,227
    
    
    
    (292
    )
    
    
    14,359Net income (as restated,
see Note 12)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,645
    
    
    
    
    
    
    
    4,645Stock option
plan expense, (as restated, see Note 12)
    
    
    
    
    
    
    
    
    
    
    345
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    345Other comprehensive income:Foreign currency
translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    259
    
    
    
    259Retirement of treasury
stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26
    
    
    
    (26
    )
    
    
    
    
    
    
    Balance-
July 31, 2003 (as
restated, see Note 12)
    
    
    3,761
    
    
    $
    377
    
    
    $
    7,418
    
    
    $
    
    
    
    $
    11,846
    
    
    $
    (33
    )
    
    $
    19,608
 The accompanying notes are an integral part of these consolidated financial
statements. F-6




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##### Table of Contents



LOWRANCE ELECTRONICS, INC. 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
  FOR THE YEARS ENDED JULY 31,2001
    
    2002
    
    2003(As RestatedSee Note 12)CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    37
    
    
    $
    2,389
    
    
    $
    4,645Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:Depreciation and amortization
    
    
    1,849
    
    
    
    2,194
    
    
    
    2,319Gain on sale of fixed assets
    
    
    (4
    )
    
    
    (8
    )
    
    
    (21
    )Deferred income taxes
    
    
    (100
    )
    
    
    1,164
    
    
    
    1,346Stock option plan expense
    
    
    
    
    
    
    
    
    
    
    345Change in operating assets and liabilities:(Increase)decrease in trade accounts
receivable
    
    
    (175
    )
    
    
    (951
    )
    
    
    (736
    )(Increase)decrease in inventories
    
    
    (7,575
    )
    
    
    6,722
    
    
    
    (3,811
    )(Increase)decrease in prepaid expenses
    
    
    (115
    )
    
    
    (463
    )
    
    
    (278
    )(Increase)decrease in other assets
    
    
    135
    
    
    
    2
    
    
    
    (13
    )Increase(decrease) in accounts payable
    
    
    2,750
    
    
    
    (1,288
    )
    
    
    (1,469
    )Increase(decrease) in accrued liabilities
    
    
    244
    
    
    
    227
    
    
    
    618Net cash provided by (used in) operating
activities
    
    
    (2,954
    )
    
    
    9,988
    
    
    
    2,945CASH FLOWS FROM INVESTING ACTIVITIES:Capital expenditures
    
    
    (851
    )
    
    
    (1,084
    )
    
    
    (1,566
    )Proceeds from sale of property, plant
and equipment
    
    
    4
    
    
    
    8
    
    
    
    21Net cash used in investing activities
    
    
    (847
    )
    
    
    (1,076
    )
    
    
    (1,545
    )CASH FLOWS FROM FINANCING ACTIVITIES:Borrowings under line of credit
    
    
    77,306
    
    
    
    68,303
    
    
    
    83,968Repayments of borrowings under line of
credit
    
    
    (70,976
    )
    
    
    (75,151
    )
    
    
    (83,391
    )Treasury stock purchases
    
    
    
    
    
    
    (26
    )
    
    
    Principal payments on term loan and
capital lease obligations
    
    
    (2,309
    )
    
    
    (1,948
    )
    
    
    (1,933
    )Net cash provided by (used in)
financing activities
    
    
    4,021
    
    
    
    (8,822
    )
    
    
    (1,356
    )Effect of exchange rate changes on cash
    
    
    (115
    )
    
    
    119
    
    
    
    259Net increase in cash and cash equivalents
    
    
    105
    
    
    
    209
    
    
    
    303CASH AND
CASH EQUIVALENTS - beginning of year
    
    
    589
    
    
    
    694
    
    
    
    903CASH AND
CASH EQUIVALENTS - end of year
    
    $
    694
    
    
    $
    903
    
    
    $
    1,206SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:Cash paid during the year for:Interest
    
    $
    1,752
    
    
    $
    1,424
    
    
    $
    989Income taxes
    
    
    32
    
    
    
    8
    
    
    
    1,346SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING
AND FINANCING ACTIVITIES:Capital expenditures funded by capital
lease borrowings
    
    $
    1,422
    
    
    $
    481
    
    
    $
    1,242
 The accompanying notes are an integral part of these consolidated financial
statements. F-7




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##### Table of Contents



LOWRANCE ELECTRONICS, INC. 
 NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEARS ENDED JULY 31, 2001, 2002 and 2003
  (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, automotive,
hunting, hiking and backpacking.Principles of Consolidation -The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries. All significant intercompany
transactions and accounts have been eliminated in consolidation.Revenue Recognition -Revenue for product sales is recognized at the time of product shipment
since the terms of sale are FOB, shipping point. Sales are recorded net
of certain costs as described below under Accrued Product Costs. Due to
the seasonality of certain products, the Company will offer extended
credit terms of up to 120 days during certain periods.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 are as follows:
leasehold and building improvements, 15-20 years; machinery and equipment,
5-7 years; and office furniture and fixtures, 3-5 years. Fully
depreciated property and equipment with a cost of approximately $21.1
million is still in use as of July 31, 2003.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.Inventory -Inventories are stated at the lower of cost (first-in, first-out) or
market. All discontinued finished goods inventories are carried at cost,
which management believes to be lower than expected realizable value.
Management monitors the carrying value of inventories using inventory
control and review processes which include, but are not limited to, sales
forecast review, inventory status reports and inventory reduction F-8




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##### Table of Contents



programs. The Company estimates the required level of inventory reserves
based upon expected usage information for raw materials and historical
selling trends for finished goods. Actual results could vary from these
estimates.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 accumulated
other comprehensive income in the stockholders equity section of the
consolidated balance sheets. Transaction gains and losses are included in
net income.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 as a reduction of revenue based on historical coupon return
rates. This reserve is analyzed and adjusted no less than quarterly.Returns and Refurbishments - The Company accepts product returns only on
a limited, case-by-case basis. Estimated costs related to refurbishment
of approved returns as of the end of each period 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 Equivalents -For purposes of the consolidated statements of cash flows, the Company
considers all highly liquid investments with original maturities of three
months or less at time of purchase to be cash equivalents.Advertising -Advertising costs are expensed as incurred. The Company expensed
approximately $2.5 million, $3.3 million and $3.9 million during the years
2001, 2002 and 2003, respectively, for advertising. F-9




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##### Table of Contents



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 Standards -The Company adopted Financial Accounting Standards Board (FASB) Statement
No. 142, Goodwill and Other Intangible Assets, Statement No. 143,
Accounting for Asset Retirement Obligations, and Statement No. 144,
Accounting for the Impairment or Disposal of Long-Lived Assets during
fiscal 2003. The adoption of these statements did not impact the
Companys financial position or results of operations.In November 2002, the Financial Accounting Standards Board (FASB) issued
Interpretation No. 45, Guarantors Accounting and Disclosure Requirements
for Guarantees, Including Indirect Guarantees of Indebtedness of Others
(FIN 45). The initial recognition and initial measurement provisions of
the interpretation are applicable on a prospective basis to guarantees
issued or modified after December 31, 2002. The disclosure requirements
are effective for financial statements of interim or annual periods ending
after December 15, 2002. The adoption of FIN 45 did not impact the
Companys financial position or results of operations.Stock Based Compensation -The Company has a stock based compensation plan which is more fully
described in Note 5. The Company accounts for stock options utilizing the
intrinsic value method for variable awards under the provisions of
Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock
Issued to Employees. Accordingly, compensation cost is measured as the
excess, if any, of the quoted market price of the Companys stock at the
end of each reporting period over the amount an employee must pay to
acquire the stock, amortized over the vesting period. The Company
recognized compensation cost of approximately $345,000 in fiscal 2003.Had the Company recognized compensation expense for these stock options
under the provisions of Statement of Financial Accounting Standards (SFAS)
No. 123, Accounting for Stock-Based Compensation, net income and earnings
per share would have been changed to the pro forma amounts indicated
below: F-10




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##### Table of Contents



2001
    
    2002
    
    2003NET INCOME (in thousands):As reported
    
    $
    37
    
    
    $
    2,389
    
    
    $
    4,645Compensation cost, net
of tax
    
    
    
    
    
    
    
    
    
    
    286Compensation cost-fair value
method, net of tax
    
    
    (50
    )
    
    
    (41
    )
    
    
    (43
    )Pro forma
    
    
    (13
    )
    
    
    2,348
    
    
    
    4,888EARNINGS PER SHARE:Basic
    
    $
    .01
    
    
    $
    .63
    
    
    $
    1.23Diluted
    
    
    .01
    
    
    
    .63
    
    
    
    1.19Pro forma-Basic
    
    
    .00
    
    
    
    .62
    
    
    
    1.30Pro forma-Diluted
    
    
    .00
    
    
    
    .62
    
    
    
    1.26
  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: exercise price of $2.67, dividend
yield of 0%, expected volatility of 93.42%, risk-free interest rate of
5.31% and expected life of ten years. The weighted average grant date
fair value of the options was $2.39, for a total value of $597,500.Taxes -The Company accounts for income taxes in accordance with Statement No. 109
of the Financial Accounting Standards Board, Accounting for Income Taxes,
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 provides a valuation allowance
on deferred tax assets when, in managements opinion, it is more likely
than not that such assets will not be realized.(2)
    
    BALANCE SHEET DETAILInventories -Inventories consist of the following at July 31, 2002
    
    2003(in thousands)Raw materials
    
    $
    3,350
    
    
    $
    4,290Work-in-process
    
    
    2,135
    
    
    
    2,608Finished goods
    
    
    7,186
    
    
    
    9,598Reserves
    
    
    (541
    )
    
    
    (555
    )Total inventories
    
    $
    12,130
    
    
    $
    15,941
 F-11




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##### Table of Contents



Discontinued finished goods inventory attributable to fiscal 2002 product
decisions was approximately $156,000 at July 31, 2003 as compared to $3.4
million at July 31, 2002; as of September 30, 2003, the inventory balance
relating to these products was $75,000. Inventory on hand at July 31,
2003 for products the Company expects to discontinue during fiscal 2004
was $723,000; as of September 30, 2003, the inventory balance relating to
these products was $438,000. All discontinued finished goods inventories
are carried at cost, which management believes to be lower than expected
realizable value. The Company expects the remaining inventory of
discontinued products to be sold during fiscal 2004.Property, Plant, and Equipment -Property, Plant, and Equipment consist of the following at July 31, 2002
    
    2003(in thousands)Land
    
    $
    557
    
    
    $
    557Building and improvements
    
    
    5,305
    
    
    
    5,318Machinery and equipment
    
    
    28,531
    
    
    
    26,580Office furniture and fixtures
    
    
    3,760
    
    
    
    4,33938,153
    
    
    
    36,794Less- accumulated depreciation
    
    
    31,049
    
    
    
    29,201Net
property, plant, & equip.
    
    $
    7,104
    
    
    $
    7,593
  Fully depreciated property and equipment with a cost of approximately
$21.1 million is still in use as of July 31, 2003.Property, plant and equipment at July 31 includes the following amounts
held in the Companys manufacturing facility in Mexico: 2002
    
    2003(in thousands)Land
    
    $
    
    
    
    $
    Building and improvements
    
    
    1,367
    
    
    
    1,311Machinery and equipment
    
    
    8,581
    
    
    
    8,683Office furniture and equipment
    
    
    52
    
    
    
    5110,000
    
    
    
    10,045Less- accumulated depreciation
    
    
    6,526
    
    
    
    6,936Net
property, plant, & equip.
    
    $
    3,474
    
    
    $
    3,109
  The property, plant, and equipment accounts at July 31
include the following amounts for leased property under
capitalized leases: 2002
    
    2003(in thousands)Machinery and equipment
    
    $
    3,212
    
    
    $
    3,982Less -accumulated depreciation
    
    
    1,627
    
    
    
    1,496Net
property, plant, & equip.
under capitalized leases
    
    $
    1,585
    
    
    $
    2,486
 F-12




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##### Table of Contents



Reserves for Doubtful Accounts, Sales Returns and Cash Discounts Reserves for doubtful accounts, sales returns and cash discounts consist
of the following at July 31, 2002
    
    2003(in thousands)Balance, beginning of period
    
    $
    718
    
    
    $
    787Charged to expense
    
    
    291
    
    
    
    275Net write-offs
    
    
    (222
    )
    
    
    (330
    )Balance, end of period
    
    $
    787
    
    
    $
    732
 Inventory Reserves Excess, obsolete and realization reserves consist of the following at July
31, 2002
    
    2003(in thousands)Balance, beginning of period
    
    $
    1,606
    
    
    $
    541Adjustment to provision
    
    
    24
    
    
    
    215Inventory dispositions
    
    
    (1,089
    )
    
    
    (201
    )Balance, end of period
    
    $
    541
    
    
    $
    555
 Product Warranties The following represents a tabular presentation of the changes in
the Companys aggregate product warranty liability for the reporting
period. 2002
    
    2003(in thousands)Balance, beginning of period
    
    $
    889
    
    
    $
    720Warranty cost incurred
    
    
    (1,691
    )
    
    
    (1,786
    )New warranties issued
    
    
    1,529
    
    
    
    2,045Change in beginning of period
estimate
    
    
    (6
    )
    
    
    25Balance, end of period
    
    $
    720
    
    
    $
    1,004
  (3)
    
    LONG-TERM DEBT AND REVOLVING CREDIT LINE Long-term debt and the revolving credit line at July 31 are summarized
below: 2002
    
    2003(in thousands)Revolving credit line
    
    $
    3,932
    
    
    $
    4,50Term loans due in monthly installments
of $103,000 plus interest
    
    
    2,538
    
    
    
    1,300Capitalized equipment lease
obligations, payable in monthly
installments of approximately
$81,000, including interest at
rates from 3.9% to 13.5%, with
final payments ranging from
September 2004 through June 2008
    
    
    1,530
    
    
    
    2,0778,000
    
    
    
    7,886Less - current maturities
    
    
    1,817
    
    
    
    2,061Total long-term debt
    
    $
    6,183
    
    
    $
    5,825
 F-13




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##### Table of Contents



Future maturities of the above debt obligations at July 31, 2003, are
approximately $2.1 million, $.8 million, $4.9 million, $36,000 and
$13,000, for the years ending July 31, 2004 through 2008, respectively. At July 31, 2003, the Company had a $33.9 million financing facility which
consisted of $7.4 million in term loans and a $26.5 million revolving
credit line. At July 31, 2003, the term loans had a remaining balance of
$1.3 million. 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, 2003, the Company had $7.8 million
available under the revolving credit line. During November 2002 the Company amended its financing facility. This
amendment extended the term of the agreement for the revolving credit line
from December 31, 2003 to December 31, 2005. Significant provisions of the
amendment include changes in certain financial covenants, the lowering of
the interest rate from prime plus 1.0% to prime plus .5% on all loans under
the facility and the addition of LIBOR based interest rate options. In
addition, the amendment allows for a permanent $1.5 million seasonal
overadvance facility. As of April 30, 2003, the Company exceeded its third quarter maximum
inventory level covenant; however, the bank waived this violation as an
event of default under the terms of the revolving credit line and removed
the covenant for the July 31, 2003 reporting date. As of September 10,
2003, the bank removed altogether the maximum inventory level covenant. The terms of the foregoing agreement include a commitment fee of .25% 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 and a minimum fixed charge ratio, limit the
ratio of total liabilities to tangible net worth and maintain minimum
EBITDA (Earnings before Interest, Taxes, Depreciation and Amortization).
Additionally, the agreement limits the amount of operating leases, capital
expenditures and capital leases and prohibits the payment of dividends
without the prior written consent of the lender. The Company announced a
special dividend of $0.25 per common share on August 15, 2003 to
shareholders of record as of August 13, 2003 after obtaining approval from
the lender. The declaration of dividends is within the discretion of the
Companys Board of Directors and depends upon, among other things, the
Companys financial results and the favorable tax treatment of dividend
payments. Violation of any of the aforementioned provisions would
constitute an event of default which, if not cured, would empower the
lender to declare all amounts immediately payable. 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
covenants at July 31, 2003. The Companys indebtedness is collateralized by substantially all of the
Companys assets. F-14




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##### Table of Contents



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 31,2001
    
    2002
    
    2003(dollars in thousands)Highest amount borrowed
    
    $
    17,017
    
    
    $
    15,802
    
    
    $
    14,827Average amount borrowed
    
    
    11,818
    
    
    
    11,131
    
    
    
    9,507Weighted average interest rate
    
    
    8.9
    %
    
    
    6.5
    %
    
    
    4.7
    %
  (4)
    
    LEASES Capital
Leases - Certain equipment is leased under capital lease agreements. Accordingly,
such equipment is recorded as an asset, and the discounted value of the
remaining lease obligations is 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, 2003, (in thousands): Years ending July 31:2004
    
    
    1,0542005
    
    
    8072006
    
    
    3902007
    
    
    362008
    
    
    13Total minimum lease payments
    
    
    2,300Less-amounts representing interest
    
    
    223Present value of net minimum lease payments
    
    $
    2,077Current portion of obligations under
capital leases
    
    $
    921Long-term portion of obligations under
capital leases
    
    $
    1,156
 Operating Leases - During 2001, 2002 and 2003, the Company recorded $1.2 million, $1.2
million and $.9 million, respectively, of expense related to operating
leases. At July 31, 2003, future minimum rental payments for operating leases
totaled $2.8 million. On August 30, 1996, the Company entered into a
ten-year non-cancelable lease for a manufacturing facility in Ensenada,
Mexico. Lease payments for this facility are approximately $58,000 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, 2004 through July 31, 2008 (including the rental for the Mexican
facility assuming the purchase option is not exercised) are approximately
$.9 million, $.8 million, $.8 million, $.2 million, and $.1 million,
respectively. F-15




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##### Table of Contents



(5)
    
    STOCKHOLDERS EQUITY AND RELATED ITEMS On July 2, 2001, the Company adopted the 2001 Stock Option Plan which
provides for a maximum of 300,000 common shares available for issue to
selected members of management. The Plan provides for incentive stock
options, non-qualified stock options and stock appreciation rights.
Depending upon the type of option, the options and stock appreciation
rights granted cannot have terms greater than ten years and six months.
The plan requires incentive 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. On July 2, 2001, the Company issued 134,453
incentive stock options and 115,547 non-qualified stock options; these
same amounts were issued and outstanding as of July 31, 2001. Through
July 31, 2003, none of these options have been exercised or canceled, and
no shares are exercisable. On July 31, 2003, there were a total of 134,453 incentive stock options
and 115,547 non-qualified stock options outstanding under the 2001 Stock
Option Plan, all at an exercise price of $2.67, the fair market value on
the date of grant. Each option may be exercised, in whole or in part,
only upon the occurrence of one of the following events: (1) the
occurrence of any transaction by which the Chief Executive Officer of the
Company sells 100% of the shares he then owns directly, in a private
placement or registered public offering or through Rule 144 sales, or (2)
the sale by the Company of all or substantially all of the Companys
assets and operations to a third party, or (3) on or after July 24, 2010. In March 2002, the Board of Directors authorized the purchase of up to $1
million dollars of the Companys stock. These purchases must comply with
Rule 10b-18 of the Securities Exchange Act of 1934. As of July 31, 2003,
the Company had purchased 7,600 shares at a cost of $26,000 under this
program, which were reflected as treasury stock in the equity section of
the fiscal 2002 consolidated balance sheet and were retired during the
first quarter of fiscal 2003. F-16




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##### Table of Contents



Earnings per Share Calculation Basic and diluted earnings per share is calculated as follows: Income
    
    Shares
    
    Per-Share(Numerator)
    
    (Denominator)
    
    AmountFor the Year Ended July 31, 2003,Basic EPSNet Income available to
common stockholders
    
    $
    4,645,000
    
    
    
    3,761,196
    
    
    $
    1.23Effect of Dilutive Securities2001 Stock Option Plan Options
    
    
    
    
    
    
    132,128Diluted EPSNet Income available to
common stockholders + assumed
conversions
    
    $
    4,645,000
    
    
    
    3,893,324
    
    
    $
    1.19For the Year Ended July 31, 2002Basic EPSNet Income available to
common stockholders
    
    $
    2,389,000
    
    
    
    3,766,888
    
    
    $
    .63Effect of Dilutive Securities2001 Stock Option Plan Options
    
    
    
    
    
    
    51,238Diluted EPSNet Income available to
common stockholders + assumed
conversions
    
    $
    2,389,000
    
    
    
    3,818,126
    
    
    $
    0.63For the Year Ended July 31, 2001Basic EPSNet Income available to
common stockholders
    
    $
    37,000
    
    
    
    3,768,796
    
    
    $
    0.01Effect of Dilutive Securities2001 Stock Option Plan Options
    
    
    
    
    
    
    Diluted EPSNet Income available to
common stockholders + assumed
conversions
    
    $
    37,000
    
    
    
    3,768,796
    
    
    $
    0.01
 F-17




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##### Table of Contents



Related Party Disclosures- Darrell J. Lowrance, President and Chief
Executive Officer since 1964, owns 50.7% of the Companys outstanding
common stock and is active in the day to day operations of the Company.  (6)
    
    RETIREMENT PLAN Substantially all Company employees in the United States participate in
the Lowrance Savings Plan which requires the Company to contribute 3% of
the participants qualified earnings to the Plan. Also, each participant
may make contributions of qualified earnings into the Plan which will be
matched by the Company at 50% for each dollar contributed by the employee,
not to exceed 3% of compensation. Contributions made by the Company to
the Plan for the years ended July 31, 2001, 2002, and 2003 were
approximately $504,000, $433,000 and $541,000, respectively.  (7)
    
    INCOME TAXES The provision for income taxes consists of the following: Years Ended July 31,(in thousands)2001
    
    2002
    
    2003CurrentU.S.
    
    $
    32
    
    

    $
    8
    
    
    $
    878Foreign
    
    
    130
    
    
    
    203
    
    
    
    182162
    
    
    
    211
    
    
    
    1,060DeferredU.S.
    
    
    (100
    )
    
    
    1,335
    
    
    
    1,157Foreign
    
    
    
    
    
    
    
    
    
    
    (100
    )
    
    
    1,335
    
    
    
    1,157Total
    
    $
    62
    
    
    $
    1,546
    
    
    $
    2,217
 Foreign income taxes are based on $.5 million, $.5 million and $.5 million
of foreign earnings before income taxes during 2001, 2002 and 2003,
respectively. The provision for income taxes differs from the amount calculated
by multiplying income before provision for income taxes by the
statutory Federal income tax rate due to the following: Years Ended July 31,2001
    
    2002
    
    2003Statutory rate
    
    
    34.0
    %
    
    
    34.0
    %
    
    
    34.0
    %Foreign income taxes
    
    
    123.2
    
    
    
    5.1
    
    
    
    2.5State income taxes
    
    
    (11.3
    )
    
    
    2.6
    
    
    
    .3Non-deductible life insurance
premiums and entertainment
expenses
    
    
    39.4
    
    
    
    .8
    
    
    
    .7U. S. tax treatment of foreign
operations
    
    
    (202.2
    )
    
    
    (3.8
    )
    
    
    (2.3
    )Other
    
    
    79.5
    
    
    
    .6
    
    
    
    (2.9
    )Effective rate
    
    
    62.6
    %
    
    
    39.3
    %
    
    
    32.3
    %
 The Company had a net operating loss carryforward of approximately
$2,697,000 at July 31, 2002, all of which was utilized during fiscal 2003.
Deferred taxes on accumulated other comprehensive income were $20,000 and
$171,000 as of July 31, 2003 and 2002, respectively. F-18




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##### Table of Contents



The tax effect of temporary differences giving rise to the Companys
consolidated deferred income taxes at July 31 are as follows: 2002
    
    2003(in thousands)Deferred tax assets -Reserves for product costs
    
    $
    311
    
    
    $
    410Reserves for compensation and benefits
    
    
    464
    
    
    
    388State job tax credit carryforwards
    
    
    287
    
    
    
    287Accounts receivable reserves
    
    
    39
    
    
    
    45Other
    
    
    347
    
    
    
    110Net operating loss carryforward
    
    
    998
    
    
    
    Deferred tax assets
    
    
    2,446
    
    
    
    1,240Deferred tax liabilities -Depreciation
    
    
    577
    
    
    
    717Net deferred tax asset
    
    $
    1,869
    
    
    $
    523
 The net deferred tax asset is recorded as $1,161,000 in current assets and
$708,000 in non-current assets for fiscal 2002 and $894,000 in current
assets and $371,000 in non-current liabilities for fiscal 2003.  (8)
    
    OPERATING SEGMENT INFORMATION The Company has one reportable segment as the CEO and President, the
Companys Chief Decision Maker, provides oversight and review based upon
financial statements and financial information presented at the
consolidated level. 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: 2001
    
    2002
    
    2003(in thousands)Net sales:Domestic
    
    $
    58,726
    
    
    $
    62,538
    
    
    $
    67,960Foreign
    
    
    14,693
    
    
    
    16,963
    
    
    
    20,337Total
    
    $
    73,419
    
    
    $
    79,501
    
    
    $
    88,297
 The majority of foreign sales are concentrated in Canada, Australia and
Europe. 2001
    
    2002
    
    2003(in thousands)Net sales(foreign):Canada
    
    $
    4,805
    
    
    $
    4,701
    
    
    $
    5,413Australia
    
    
    3,501
    
    
    
    4,415
    
    
    
    5,552Other
    
    
    6,387
    
    
    
    7,847
    
    
    
    9,372Total
    
    $
    14,693
    
    
    $
    16,963
    
    
    $
    20,337
 Long-lived assets in foreign countries are disclosed in Note 2 to the
Consolidated Financial Statements, Property, Plant and Equipment. There
are no long-lived assets in any foreign country other than Mexico. F-19




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##### Table of Contents



(9)
    
    SALES TO A MAJOR CUSTOMER During 2001, 2002, and 2003 one customer accounted for approximately 12%,
9% and 7% of consolidated net sales, respectively. No other customer
accounted for 10% or more of consolidated net sales in 2001, and no
customer accounted for 10% or more of consolidated net sales in 2002 or
2003.  (10)
    
    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, 2003.  (11)
    
    MERGER COSTS During fiscal 2001, the Company incurred $.4 million in costs associated
with its terminated merger with Cobra Electronics, Inc.  (12)
    
    RESTATEMENT Subsequent to the issuance of the Companys 2003 consolidated financial
statements, the Companys management determined that the Company should
have been accounting for its stock option awards as variable awards. The
Company has historically accounted for the 250,000 stock option awards
under the 2001 Stock Option Plan as fixed; however, due to a specific plan
provision permitting cashless exercise payment terms as one of the
available methods for payment of the exercise price, the Company concluded
that variable treatment was appropriate under APB No. 25. As a result,
the accompanying 2003 consolidated financial statements have been restated
from the amounts previously reported. The effect of the error on the
Companys 2001 and 2002 consolidated financial statements was
insignificant and has been recognized in the 2003 financial statements. A
summary of the significant effects of the restatement is as follows: AsPreviously
    
    AsReported
    
    RestatedFor the year ended July 31, 2003:Selling and Administrative Expenses
    
    $
    24,844
    
    
    $
    25,189Operating Income
    
    
    8,226
    
    
    
    7,881Income Before Income Taxes
    
    
    7,207
    
    
    
    6,862Net Income
    
    
    4,931
    
    
    
    4,645Net Earnings Per Share:Basic
    
    $
    1.31
    
    
    $
    1.23Diluted
    
    $
    1.27
    
    
    $
    1.19As of July 31, 2003:Stockholders Equity
    
    $
    19,549
    
    
    $
    19,608
 F-20




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##### Table of Contents



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: June 15, 2004
    
    BY:/s/Darrell J. LowranceDarrell J. Lowrance,President andChief 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. LowranceDarrell J. Lowrance
    
    President and Chief Executive
    
    June 15, 2004Officer, and Director(Principal Executive Officer)/s/ Douglas J. TownsdinDouglas J. Townsdin
    
    Vice President of Finance and
    
    June 15, 2004Chief Financial Officer(Principal Financial Officer andPrincipal Accounting Officer)/s/ George W. Jones

George W. Jones
    
    Director
    
    June 15, 2004/s/ Jason C. Sauey

Jason C. Sauey
    
    Director
    
    June 15, 2004/s/ M. Wayne Williams

M. Wayne Williams
    
    Director
    
    June 15, 2004


44