<PAGE>

                                   FORM 10-K

                      SECURITIES AND EXCHANGE COMMISSION

                            Washington, D.C. 20549

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

                    For the fiscal year ended July 31, 1999

                                      or

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


      For the transition period from  ______________ to _______________

                       Commission File Number:  0-15240

                          LOWRANCE ELECTRONICS, INC.
            ------------------------------------------------------
            (Exact name of registrant as specified in its charter)

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

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

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

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

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

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.    Yes  X    No _____
                                                -----

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


              Aggregate Market Value of the Voting Stock Held By
                Non-Affiliates on October 26, 1999 - $8,022,609

                       Number of Shares of Common Stock
                  Outstanding on October 26, 1999 - 3,768,796

                      DOCUMENT INCORPORATED BY REFERENCE
         Proxy Statement for Annual Meeting of Stockholders to be held
                         December 14, 1999 - Part III
<PAGE>

                                   FORM 10-K

               Annual Report for Fiscal Year Ended July 31, 1999

                          LOWRANCE ELECTRONICS, INC.

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

<TABLE>
<CAPTION>
                                                                      Page
                                                                      ----
<S>                                                              <C>
                                    PART I

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

Item 2.   Properties............................................      11

Item 3.   Legal Proceedings.....................................      12

Item 4.   Submission of Matters to a Vote of Security Holders...      12


                                    PART II

Item 5.   Market for Registrant's Common Equity and Related
          Stockholder Matters...................................      12

Item 6.   Selected Financial Data...............................      13

Item 7.   Management's Discussion and Analysis of Financial
          Condition and Results of Operations...................      14

Item 8.   Financial Statements and Supplementary Data...........      23

Item 9.   Changes in and Disagreements with Accountants on
          Accounting and Financial Disclosure...................      24


                                   PART III

Item 10.  Directors and Executive Officers of the Registrant....      24

Item 11.  Executive Compensation................................      24

Item 12.  Security Ownership of Certain Beneficial Owners
          and Management........................................      24

Item 13.  Certain Relationships and Related Transactions........      24


                                    PART IV

Item 14.  Exhibits, Financial Statement Schedules, and
          Reports on Form 8-K...................................      24
                                                                 and F-1 to F-17

Signatures.......................................................      29
</TABLE>
<PAGE>

                          LOWRANCE ELECTRONICS, INC.
                                 Annual Report
                       For the Year Ended July 31, 1999


                                    PART I

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

General
-------

    The Company designs, manufactures, and markets sonars (also known as depth
sounders) and accessories for use in recreational and commercial boating.  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 also designs, manufactures, and markets Global Positioning System (GPS)
navigational receivers that may be attached to and used with certain of the
Company's liquid crystal display (LCD) sonars or to provide stand-alone
navigational information.  The GPS navigational receivers can be used in a
variety of marine and non-marine applications, such as aviation, hunting,
hiking, and backpacking.  The sonars and GPS navigational receivers are marketed
under the Company's three trade names, "Lowrance" "Eagle", and "Sea", primarily
through wholesalers, original equipment manufacturers (OEMs), mail-order
catalogs, mass merchandisers, and other retail outlets in all fifty states and
to a lesser and limited extent in sixty-five foreign countries.

    The Company was formed in 1957, incorporated in 1958, and re-organized as a
Delaware corporation in 1986.  As used herein, the term "Company" refers to
Lowrance Electronics, Inc., (including its subsidiaries) and its predecessors,
unless the context indicates otherwise.

    The Company's principal executive offices are located at 12000 East Skelly
Drive, Tulsa, Oklahoma, 74128, and its telephone number is (918) 437-6881.


Products
--------

    The Company's products consist of sonars and related equipment, such as
water temperature gauges, and Global Positioning System (GPS) navigational
products.

    Sonars
    ------

        Each sonar consists of a transmitter, receiver, display, and transducer.
    The transmitter, receiver, and display are normally combined in one housing
    connected by a cable to the transducer.  The housing containing the
    transmitter, receiver, and display is normally mounted where it may be
    viewed by the boat operator, and the transducer is mounted under or in the
    hull of a boat.  The transmitter takes electrical energy and sends it
    through the cable to the transducer, which converts the electrical energy to
    sound pulses.  These sound pulses travel through the water until they hit
    the bottom or an object such as fish or a shipwreck and then bounce back as
    an echo.  The transducer converts the echoes back to electrical impulses
    which are sent to the receiver.  The receiver processes the impulses and
    transmits the information to the display for use by the boater.

                                       1
<PAGE>

        The Company's sonars are either waterproof or weatherproof and are
    designed to withstand the harsh environments and shocks encountered by sport
    boats.  Sport boats, unlike offshore commercial boats, are usually open and
    subject to shock, rain, salt spray, and temperature extremes that constantly
    test the durability of the sonar.  The Company's sonars are also designed
    for the needs of sport fishermen who, unlike their commercial counterparts,
    are sometimes more interested in the size, depth, and location of individual
    fish, depth of the thermocline, and underwater structures, rather than the
    location of large schools of fish.  The Company's sonars are designed for
    and used by both fresh and saltwater sports fishermen and boaters.  The
    Company's sonars feature a variety of transducers manufactured by the
    Company in different sizes and shapes to fit all types of boats and with
    different frequencies and angles for both deep and shallow water use.    The
    Company's sonars are distinguished by the type of display--graphic liquid
    crystal displays (LCDs) and flashers and digital LCDs (other sonars).

        Graphic Liquid Crystal Display (LCD) Sonars.  The Company's LCD products
        -------------------------------------------
        are easier to use, provide more advanced capabilities, and incorporate
        advanced signal processing, which allows automatic operation of LCD
        sonars in a way that sets the controls for best performance whether at
        trolling or high speeds.  The Company markets eighteen LCD sonar models.
        All of the models utilize advanced computer technology and are keyboard
        controlled.  The Company's LCD models graphically display the depth of
        the water, bottom contour, fish, and other underwater objects on a LCD
        and digitally display the water depth.  Ten models can also digitally
        display the surface temperature of the water, boat speed, and distance
        traveled.  LCD sonars are easier to read and interpret than the
        Company's flasher sonars.  Because LCD sonars have no moving parts, they
        are more durable than other sonars.  The more advanced models usually
        retail from $350 to $550.  The other LCD models, with fewer features,
        usually retail from $99 to $300.  The Company's various LCD models range
        in maximum depth capabilities from 350 feet to 2,500 feet.

        Other Sonars.  The Company's others sonars include flasher displays and
        ------------
        digital displays. Flasher models were the first type of sonar products
        designed and manufactured by the Company. The 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 sonars are marketed and used solely to
        determine water depth which is digitally depicted on a LCD. The flasher
        and digital sonars have varying depth capabilities ranging from 60 feet
        for flashers to 1,000 feet for digital sonars and range in retail price
        from $140 to $300.

    Global Positioning System (GPS)
    -------------------------------

        The Global Positioning System offers worldwide navigational
    information for users via a constellation of twenty-four satellites. The
    system offers precise global navigation for land, sea, and air applications
    providing constant updates of an individual's or object's position in
    latitude, longitude, and altitude. Additionally, GPS measures speed and
    direction of travel. The Company's GPS navigational modules may be attached
    to and used with one of the Company's LCD sonars and two LCD mapping models.
    The combination sonar/GPS models (module

                                       2
<PAGE>

    included) usually retail from $700 to $1000, and the stand-alone, gimbal-
    mounted GPS mapping models (module included) retail from $549 to $900.

        The Company's gimbal mount Global Map 2000 product displays the user's
    position on a pictorial background map in addition to providing the
    navigational information and course plotter available in all Lowrance and
    Eagle GPS products. Further, the user, at their option, can purchase mapping
    cartridges with contain over 7,000 highly detailed nautical charts. The
    Global Map 2000 retails for approximately $899 including the GPS module and
    cartridge reader. This unit is also sonar capable with the purchase of a
    sonar access module. During the fourth quarter of fiscal 1998 the Company
    introduced four new gimbal mount GPS products at breakthrough retail prices
    ranging from $549 to $699. These products each contain detailed built-in
    mapping capabilities plus unique software which allows the user to upload up
    to 2 megabytes of additional customized mapping detail from the Company's
    proprietary IMS MapCreate CD ROM database which is included free. The IMS
    MapCreate CD-ROM includes all of Lowrance's acclaimed IMS SmartMaps, IMS
    WorldMaps, U.S. Navigation Aids, U.S. Wrecks and Obstructions, plus U.S.
    Rural Roads and more.

        In addition to the Company's gimbal-mounted GPS products, it offers an
    extensive range of portable, hand-held GPS navigation receivers. The first
    such product, the Eagle AccuNav Sport, began shipping in fiscal 1994,
    followed by the Lowrance GlobalNav Sport in fiscal 1995. During fiscal 1996,
    the Company began shipping its first hand-held GPS mapping receiver, the
    Lowrance GlobalMap Sport, with capabilities similar to that of the GlobalMap
    2000. Also during fiscal 1996, the Company manufactured and sold its first
    portable GPS receivers specifically designed for use by commercial and
    private pilots. In fiscal 1997, the Company began shipping its breakthrough
    12-channel GPS receivers. Currently, the Company has upgraded all of its
    hand-held GPS models to include 12 parallel-channel receivers. All of the
    Company's hand-held GPS products feature high resolution displays, detailed
    plotting and/or mapping functions, easy zoom-in/zoom-out operation and
    enhanced software which includes a unique "initialize from map" feature,
    sunrise/sunset and lunar phase information, position averaging, and
    emergency nearest waypoint feature. The AirMap 100 and AirMap 300 also offer
    an HSI-style screen, and a detailed database of all North and South American
    airports including runway diagrams, restricted air spaces, tower and
    communication frequencies, obstructions and aviation services available.

    Accessories
    -----------

        The Company also has a line of accessories consisting of water
    temperature gauges, cables, portable power packs, map data cartridges, map
    data CD ROMS, and various mounting brackets, which are used primarily in
    conjunction with the Company's sonars and GPS products.

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

    The following table sets forth the percentage of total sales of LCD and
other sonars and accessories, including GPS navigational products, sold by the
Company in the past three fiscal years.

                                       3
<PAGE>

<TABLE>
<CAPTION>
                                     Percent of Total Product Sales
                                    ---------------------------------
                                       1997        1998        1999
                                    ----------  ----------  ---------
<S>                                 <C>         <C>         <C>
Type of Sonar Displays -
 LCD's, including combination
  navigation units                     51.4%       54.5%      54.6%
 Other sonars                           4.0         3.7        3.6
GPS, including stand-alone units
 and modules                           35.8        31.1       32.7
Accessories                             8.8        10.7        9.1
                                      -----       -----      -----
   Total                              100.0%      100.0%     100.0%
                                      =====       =====      =====
</TABLE>


Distribution
------------

    The Company markets its products under three trade names, "Lowrance",
"Eagle", and "Sea". Sales of the Lowrance and Eagle brand products account for
over 99% of total sales. Sales of Eagle products, as a percentage of total sales
were approximately 54% in 1997, 47% in 1998, and 42% in 1999.

    The Lowrance line in both sonar and GPS, with its selection of eighteen
interchangeable transducers and its more complicated keyboard, is intended for
the more sophisticated user. The wide choice of transducers available with the
Lowrance sonars allows for greater installation and operating flexibility
through selection of a transducer of the appropriate size, shape, and frequency
to meet the boater's specific needs. As a result of recent developments in
transducer design, the Company packages its Lowrance sonar models with a high-
performance transducer suitable for use on nearly all types of boat hulls.
Lowrance customers can exchange this transducer for credit toward one which
better meets their specialized requirement for installation or operation.
Generally, the boater will require special assistance with the installation and
operation of a Lowrance sonar. To this end, the Company sells its Lowrance line
primarily to boat manufacturers, wholesalers, and retailers that the Company
believes have basic knowledge of the installation, use, and service of the
Lowrance line and can pass on such knowledge to customers. As of July 31, 1999,
the Company had approximately 2,200 wholesalers and retailers purchasing
products in the Lowrance line. A sonar installation subsidy is offered to
authorized dealers that sell and install Lowrance products as a means of sharing
the costs of the installation. 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 the
fisherman and boat owner as to the product's use. Terms of payment for products
in the Lowrance line vary based on the time of the season with the longest
dating terms of 120 days being offered for shipments during the first quarter of
the fiscal year.

    The Eagle line is sold primarily to mass merchandisers, mail-order catalog
companies, retail sporting goods stores, and wholesalers that usually do not
provide technical assistance to the consumer regarding the installation and
operation of sonars and GPS. 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 prepackages each Eagle sonar with a universal
transducer designed to work adequately on most boats and has simplified the
sonar's operating requirements. The Eagle sonars do not have all of the
installation and operating flexibility of the Lowrance sonars but are less
expensive to the consumer. Terms of payment for products in the Eagle line are
generally thirty days. However, dating terms similar to those for the Lowrance
line are also offered.

    Beginning in fiscal 1995, the Company began marketing a third brand of sonar
and GPS navigational products, "Sea".  During fiscal 1999, this brand

                                       4
<PAGE>

was discontinued. "Sea" never represented more than two percent of total sales.

    The Company's products are sold in all fifty states and sixty-five countries
internationally.  The Company's international sales totaled $25,000,000 in
fiscal 1997, $22,000,000 in fiscal 1998, and $18,000,000 in fiscal 1999,
representing approximately , 24%, 24%, and 20% of total net sales in each
respective fiscal year.  See Note 9 to the consolidated financial statements.
The two largest international markets for the Company's products are Canada and
Australia, where the Company maintains its own distribution warehouses for sales
and distribution of its products.  Sales in neither of these two countries
represented 10% or more of the Company's total annual sales for the latest three
fiscal years.

    LEI Extras, Inc., a wholly-owned subsidiary, allows consumers to purchase by
mail-order extended warranties for their sonar units and accessories that
otherwise would be difficult to obtain.  Because LEI Extras, Inc., is not
intended to directly compete 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 10% and 13% of the Company's
net sales in fiscal years 1997 and 1999, respectively.  No customers accounted
for 10% or more of net sales in fiscal 1998.  The top ten customers, including
Wal-Mart Stores, Inc., accounted for approximately 34%, 32%, and 36% in 1997,
1998 and 1999, respectively, of the Company's net sales.


Inventories and Backlog
-----------------------

    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 significant inventories of
finished goods to permit it to fill orders promptly after receipt.  The
Company's receipt of orders generally peaks upon the introduction of a new
product 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".

    As of October 26, 1999, the Company's backlog of orders exceeded 4.6
million, including orders for new products which represented 0% of the backlog.
The backlog one year ago at this time was $9.6 million.  Backlog is not
necessarily comparable from year to year because of the significant impact on
backlog resulting from the timing and pent-up demand for the introduction of the
Company's new products each year.  While the Company believes that the present
backlog of orders is firm, the orders for its products are subject to
cancellation without further obligation by the customer at any time prior to
shipment.


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

    To support the sales of its 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 highly-technical nature of the Company's products
makes education of the user an important aspect of the Company's promotional
activities.  Through educating and familiarizing the user with the practical
benefits and use of sonar and GPS products, the Company endeavors to create
demand for its products.

                                       5
<PAGE>

    To satisfy this need, the Company utilizes a sales force of sixteen full-
time employees to promote its products worldwide.  Additionally, the Company
employs six manufacturer's representative groups to augment in 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 sonar and GPS
products and demonstrate the practical benefits of these technologies.  The
sales personnel train wholesalers and dealers to sell the Company's products,
give demonstrations at outdoor recreation and boat shows, and participate in
store promotions, seminars, and talks.

    To supplement the sales force, the Company has a part-time independent sales
group known as the "pro-staff".  The pro-staff consists of approximately one
hundred and fifty 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 tackle, and boat, hunting and aviation shows.

    The Company also advertises its products in newspapers, magazines, and on
television.  Within such advertising expenditures are separate advertising
programs designed specifically for the Lowrance line and the Eagle line.

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

    In addition to advertising expenses and public relations activities, the
Company incurs promotional expenses which include sponsorship of fishing
tournaments, store promotions, and contributions to environmental groups.  The
Company, through its Eagle brand, became an Affiliate Sponsor of the new Wal-
Mart FLW tournament trail in 1998 and will continue this sponsorship through
fiscal 2000.  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
provides OEM sonar products.  Dealer and distributor support includes the
availability of point-of-purchase displays, posters, videos, and product
simulators to assist in displaying the Company's products.


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

Sonar and Sonar/GPS Combination Units -
-------------------------------------

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

    Competition in the sports fishing and recreational boating market for the
Company's products is based upon a number of factors, including quality,

                                       6
<PAGE>

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, with no significant influx of new
participants to either boating or fishing in recent years.  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 products internationally.


Hand-held GPS Units -
---------------------

    The hand-held GPS market has expanded rapidly in the past several years,
however, the growth rate slowed in 1999.  Target markets for these products
include, but are not limited to boating, sportfishing, hunting, hiking, off-road
vehicles, and aviation.  According to independent marketing research
commissioned by the Company and issued in September 1999, the market segment
that the Company operates in approximates the size of the sonar market.
According to this same study, the Company's market share was found to be
approximately 20%.  Long term growth in the Company's GPS market share will
require continued development of advanced GPS technologies which can be quickly
brought to market at competitive prices.

    Two competing GPS companies currently dominate this market and the Company
believes these two competitors combined continue to control in excess of 65% of
the hand-held GPS market.  The primary reason for their success is that both
companies have introduced and marketed several products retailing for under $200
and were the first to market hand-held GPS products into the recreational
market.  Both companies offer a range of higher priced products with more
features than their lowest priced models including products specifically aimed
at the avionics market.  In 1997, one of these competitors introduced a combined
GPS and sonar model and a sonar-only model. In 1999, the same competitor
introduced two new sonar-only models and additional new sonar products are
expected in 2000.  The Company anticipates that this could negatively impact
sales of its products in fiscal 2000, especially in international markets where
the Company's products are currently priced higher than similar competitive
models.

    Currently, the Company offers six Lowrance hand-held products, which retail
at prices between $169 and $799.  The Company began shipping its Lowrance Global
Map 100 and Eagle MapGuide Pro hand-held GPS products with its proprietary IMS
MapCreate CD ROM database included during the fourth quarter of fiscal 1998.
These two models have exclusive features which will allow the user to supplement
the unit's built-in mapping data with up to 2 megabytes of customized maps
created from the CD ROM database.  During fiscal 1999 the Company consolidated
all of its handheld GPS products under the Lowrance brand.  All of the Company's
GPS products feature 12 parallel-channel receivers, high resolution displays,
and internal battery back-up for stored information.  All of the Company's
handheld GPS's also utilize rechargeable batteries that retail for as little as
$49.

    The Company's line of hand-held GPS products has helped the Company expand
its presence in multiple non-marine retail markets and outlets.  These products,
combined with an extensive advertising and promotion campaign in 1997,
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.

                                       7
<PAGE>

    The Company has attempted to differentiate its products through quality,
technological development, performance, price, and service.  The Company
believes its products offer a competitive advantage due to quality,
technological advancement, and the wide range of features.  This advantage
results from the Company's long history of product innovation, such as Advanced
Signal Processing (ASP), fully waterproof sonar/Loran-C and sonar/GPS
combination units, Grayline, interchangeable high-performance transducers and
dual-frequency capability, and innovative features such as optional Broadview
sonars, split screen sonar/navigational displays, digitized and CD ROM mapping
capabilities and programmable "windows".

    The Company has been an industry leader in offering advanced performance
products at strategically acceptable price points.  Further, the Company
believes that its service programs, designed to rapidly respond to the
customers' needs, along with the extended warranty programs covering the
Lowrance, Eagle and Sea product lines, are the most comprehensive services
available to the customer in the industry.


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

    The Company's operations and competitive position are dependent to a large
extent upon its ability to anticipate and react to the technological innovations
inherent in its industry. The Company has been engaged in the development of
sonars 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 a portable sonar capable of locating individual fish and their depths.
Among other significant sonar advancements, the Company developed and patented
an effective interface suppression system and interchangeable high speed
transducers which permit operation of sonar at boat speeds of up to 70 miles per
hour. The Company also introduced in 1979 a 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 and "Supertwist" high visibility liquid crystal displays.
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 effect of
varying water conditions, boat speeds, and interference sources, adjusting the
sonar's many settings for optimum performance. Based on the Company's belief
that the United States military's GPS would be the preferred method of
navigation in the future, if it became affordable, the Company introduced six
marine GPS products in 1992, with most at breakthrough price points. The
SupraPro ID, a new sonar model introduced in 1994, retailed for under $100,
provided users with four times the resolution of its nearest competitive model.
Another model new in 1994, 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, revolutionized the GPS market in
1994 by offering users all the highly-detailed navigation plotting features
previously available only on larger and more costly gimbal-mounted GPS products
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
provide expansive underwater coverage and innovative "three dimensional" images
of bottom contours in addition to traditional detailed "2D" views. Six new 1995
products offered the Company's new "Broadview" technology. By purchasing a
"Broadview" accessory transducer (which can be installed on the transom or on a
trolling motor), users can expand their sonar coverage to search out -- left or
right -- to detect fish and cover down and outward from the boat. In 1996, the
Company introduced and delivered its first hand-held GPS mapping products. In
fiscal 1998, the Company introduced two new sonar

                                       8
<PAGE>

products with enhanced display screen resolution and newly designed cases, as
well as enhanced operating software in several of its sonar and GPS products.
Additionally, the Company delivered four new hand-held GPS products, each
utilizing new 12 parallel-channel receiver technology and three of which offered
exclusive technology which allows the user to upload detailed customized maps
from a CD ROM into the units memory. Two new gimbal-mount products, one a
GPS/mapping only product and the other a GPS/mapping/sonar combo model, also
offered this unique CD ROM capability, and began shipping during the fourth
quarter of fiscal 1998.

    Research and development expenditures of the Company were $3,936,000 in
fiscal 1997, $2,650,000 in fiscal 1998, and $2,226,000 in fiscal 1999.  The
Company plans additional development of its LCD sonars to increase performance
and versatility and is conducting research and development into other marine
electronic equipment utilizing technology with which it is familiar.  Also, the
Company intends to develop additional GPS products for use in marine and non-
marine applications.

    To augment its continued investment in product research and development, the
Company has invested in several new manufacturing and design technologies:
Surface Mount Technology (SMT) production equipment, Computer Aided Design (CAD)
systems, Application Specific Integrated Circuits (ASICS), Tape Automated
Bonding (TAB), Tab-On-Glass (TOG), and Liquid Crystal Display (LCD) assembly.
These advanced technologies, which were essential to the development of the
Company's new sonar and GPS products, have allowed the Company to reduce its
material and manufacturing costs and to provide even greater product
performance.


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

    Through fiscal 1993, the Company manufactured substantially all of its
products at its plant in Tulsa, Oklahoma.  In fiscal 1994, the Company began
manufacturing most of its high volume transducer and cable assemblies in a
25,000 square foot leased manufacturing facility in Ensenada, Mexico, with the
finished assemblies shipped to Tulsa for final inspection, packaging, and
shipping.  During fiscal 1997, the Company expanded its production operation in
Mexico by consolidating its existing manufacturing operations in Ensenada,
Mexico into a newly constructed 88,000 square foot leased facility which has
been constructed to allow expansion to 108,000 square feet as the Company
requires more operating space.  Currently, the Company utilizes 70,000 square
feet for manufacturing, including a 26,000 square foot clean room within the
88,000 square feet presently occupied by the Company.  In the expanded Mexico
facility, the Company manufactures its transducer and cable assemblies as well
as assembles most of the liquid crystal displays used in its products.
Additionally, the Company performs final assembly, final testing and packing
operations on all of its products in the Mexico facility.  The transfer of the
final assembly and liquid crystal display assembly operations from the Company's
Tulsa facility began in August 1996 and was completed in July 1997.  The Company
expects to move 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 Tulsa manufacturing facilities, with its expanded Mexico
operation, 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

                                       9
<PAGE>

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 sonars, 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 supplier at a time.

    The Company has never experienced a substantial interruption in product
shipment resulting in the loss of any material amount of sales due to
unavailability of or delay in receiving component parts.  However, if for any
reason (such as a protracted strike, war, fire, explosion, or wind damage
affecting production at the supplier's manufacturing plant or import
restrictions or a damaged or destroyed mold or a supplier being unable to obtain
certain raw materials necessary to produce component parts), certain critical
component parts were to become unavailable or the shipment of such parts were to
be substantially delayed, such unavailability or delay could materially and
adversely affect the Company's ability to produce its products on a timely basis
until an alternative source of supply or a replacement mold could be made
available.  This could adversely affect the Company's results of operations.
The use of alternate components may, in some cases, require the Company to
redesign other components or its sub-assemblies and the Company could experience
manufacturing delays.  The extent of the impact upon the Company's sales and
earnings would depend upon the products affected and the time of year of the
interruption.

    To protect against interruptions and loss of sales, the Company maintains a
limited amount of safety inventory of component parts and some insurance
coverage against loss of supply.  The Company limits the amount of safety stock
to avoid the cost of carrying raw material inventory and problems associated
with obsolescence.  To further protect against interruptions, the Company is
selective of its suppliers, and with limited exceptions, relies upon those who
are substantial in size, financial strength, background, and experience.


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

    Substantially all of the Company's products are sold with a full one-year
warranty.  The Company offers the consumer the right to extend the warranty for
an additional two years on sonar and GPS products by purchasing an extended
warranty package.  Warranty expenses have averaged approximately 2.2% of sales
during the last three fiscal years.  The Company emphasizes service after the
sale in connection with its products by providing a prepaid, pre-addressed
shipping label packed with each unit for use by the consumer located in the
United States electing to return the unit to the Company for warranty or non-
warranty repairs.  Warranty and non-warranty repairs are available from the
Company's plant in Tulsa, Oklahoma, and from dealers and distributors in sixty-
five foreign countries.

                                       10
<PAGE>

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

    Since 1970, the Company has obtained thirty-eight patents expiring at
various dates from 1987 through 2018.  Since 1970, thirteen design patents have
also been issued.  See "Product Research and Development" above.  All of the
Company's patents have been assigned to secure the Company's accounts receivable
and inventory line of credit financing.  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 insure its
products remain protected from attack from competitors.

    The Company has registered forty-eight trademarks with the United States
Patent Office including the trademark, "Lowrance" and the trademark "Eagle",
with an accompanying logo and has additional trademark applications filed.


Employees
---------

    As of July 31, 1999, the Company employed 943 persons on a full-time basis
of whom approximately 871 were involved in manufacturing and materials.  Of the
780 full time employees involved in manufacturing and materials, 204 employees
are located in the Company's headquarters in Tulsa and 576 are located in the
Company's leased manufacturing facility in Ensenada, Mexico.  The remaining 163
employees were engaged in research and development, sales and marketing, and
administration.  During the year, the Company utilizes temporary workers to
allow it to adjust its workforce as its production needs change.  All of the
temporary workers are located in the Tulsa facility.  At July 31, 1999, there
were no temporary production workers engaged by the Company.  Additionally, the
Company retains, on a part-time basis, over 150 independent contractors, the
"pro-staff", that assist in promoting its products.

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


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

    The Company maintains its offices and manufacturing and warehouse facilities
at 12000 East Skelly Drive, Tulsa, Oklahoma, 74128.  The Company's Tulsa
facilities are located on approximately 23 acres of land and consist primarily
of a masonry building containing approximately 116,000 square feet of floor
space, of which 25,000 square feet are used for manufacturing operations, 46,000
square feet for warehousing, and 45,000 square feet for office and laboratory
space.

    Prior to fiscal 1997, the Company, through its Mexican subsidiary, leased a
25,000 square foot manufacturing facility in Ensenada, Mexico.  In fiscal 1997,
the Company expanded its Ensenada, Mexico operations by leasing a new 88,000
square foot manufacturing facility which has been constructed to permit the
Company to expand into the built out, but unfinished 20,000 square foot, second
floor affording the Company 108,000 square feet.   The Company presently is
using 70,000 square feet for manufacturing including a 26,000

                                       11
<PAGE>

square foot clean room of the 88,000 square feet occupied by the Company. During
fiscal 1997, the existing facility was eliminated and combined with operations
in the new facility.

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

    The Company believes that its facilities and equipment are well suited to
its needs and are properly maintained.  The Company's current manufacturing
facilities, including the expanded Mexico facility 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 26, 1999, the Company had more than 400 actual holders of its
Common Stock.  The Company has not paid cash dividends for over twenty years.
The Company's inventory and accounts receivable line of credit agreement
prohibits the payment of dividends without the prior written consent of the
lender.  The Company anticipates that for the foreseeable future its earnings
will be retained for use in its business and no cash dividends will be paid on
the Common Stock.  Declaration of dividends in the future will remain within the
discretion of the Company's Board of Directors and will depend upon the
Company's growth, profitability, financial condition, and other relevant
factors.

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

<TABLE>
<CAPTION>
                        1998               1999
                   ---------------  -----------------
                    High     Low      High      Low
                     $        $        $         $
                   ------  -------  --------  -------
    <S>            <C>     <C>      <C>       <C>
    1st Quarter     6 1/2   4 7/32   4 5/8     2
    2nd Quarter     7 1/4   5        7 13/16   2 1/2
    3rd Quarter     8 1/2   5 1/2    6 3/8     3 7/8
    4th Quarter     7 1/8   3 7/16   6 1/2     5 9/16
</TABLE>

                                       12
<PAGE>

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

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

<TABLE>
<CAPTION>
                                             Years Ended July 31,
                             -------------------------------------------------

                              1995      1996      1997       1998       1999
                             -------   -------  --------    -------    -------
                                 (in thousands, except per share amounts)
<S>                          <C>       <C>      <C>         <C>        <C>
Operating Data:
 Net sales                   $91,116   $94,579  $104,659    $91,706    $89,753
 Gross profit                $31,069   $31,988  $ 26,881    $25,645    $30,047
 Income (loss) before
  income taxes and
  extraordinary credit       $ 2,061   $ 2,199  $ (7,877)   $(3,166)   $ 2,109
 Net income (loss)           $ 1,422   $ 1,743  $ (5,190)   $(3,995)   $ 2,109

Per Share Data:
 Weighted average number
   of shares outstanding
    Basic                      3,352     3,352     3,352      3,608      3,768
    Diluted                    3,396     3,387     3,352      3,608      3,768

 Net income (loss)
    Basic                    $   .42   $   .52  $  (1.55)   $ (1.11)   $   .56
    Diluted                  $   .42   $   .51  $  (1.55)   $ (1.11)   $   .56

Balance Sheet Data:
 Working capital             $14,777   $18,509  $ 17,798    $19,633    $17,630
 Total assets                $40,228   $47,108  $ 61,366    $52,247    $35,994
 Long term debt, less
   current maturities        $ 9,975   $13,705  $ 21,176    $23,038    $17,103
 Stockholders' equity        $13,452   $15,196  $  9,952    $ 7,172    $ 9,494
</TABLE>

                                       13
<PAGE>

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

General
-------

    The following table sets forth for the periods indicated the relative
percentages that certain items of income and expense bear to net sales:

<TABLE>
<CAPTION>
                                           Years Ended July 31,
                                    --------------------------------

                                       1997        1998       1999
                                    ----------  ----------  --------
                                         (percent of net sales)
<S>                                 <C>         <C>         <C>
    Net sales                           100.0%      100.0%    100.0%
    Cost of sales                        74.3        72.0      66.5
                                        -----       -----     -----

        Gross profit                     25.7        28.0      33.5

    Operating expenses:
      Selling and administrative         25.7        23.1      22.7
      Severance and merger costs            -           -       1.3
      Research and development            3.8         2.9       2.5
                                        -----       -----     -----

        Operating income (loss)          (3.8)        2.0       7.0

    Interest expense                     (2.3)       (3.8)     (3.3)
    Other, net                           (1.4)       (1.6)     (1.4)
                                        -----       -----     -----
    Income (loss) before income
      taxes                              (7.5)       (3.4)      2.3
    Provision (benefit) for
      income taxes                       (2.6)        1.0         -
                                        -----       -----     -----

    Net income (loss)                    (4.9)       (4.4)      2.3
                                        =====       =====     =====
</TABLE>

    Demand for the Company's products is seasonal with approximately 30% to 40%
of its sales and a majority of its net income usually occurring in the third
quarter (February, March, and April).  During this period, 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.  Generally, with the exception of the third quarter, quarterly results
are dependent on the timing and acceptance of new product introductions,
advertising, and product availability, and as such, the Company does not
experience any consistent quarterly trends for those three quarters.

                                       14
<PAGE>

    The following table sets forth the quarterly results for the past three
fiscal years:

<TABLE>
<CAPTION>
     Years Ended July 31            Sales         Net Income (Loss)
----------------------------  ----------------    -----------------
                                     (dollars in thousands)
<S>                           <C>        <C>      <C>       <C>
          1997
          ----
First Quarter (Aug.-Oct.)     $ 14,110    13.5%   $(2,371)    (45.7)%
Second Quarter (Nov.-Jan.)      20,114    19.2     (1,246)    (24.0)
Third Quarter (Feb.-Apr.)       39,594    37.8      1,209      23.3
Fourth Quarter (May-July)       30,841    29.5     (2,782)    (53.6)
                              --------   -----    -------   -------

         Total for Year       $104,659   100.0%   $(5,190)    100.0%
                              ========   =====    =======   =======

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

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

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

         Total for Year       $ 89,753   100.0%   $ 2,109    (100.0)%
                              ========   =====    =======   =======
</TABLE>

    Demand for the Company's products is affected by the rapidly changing
technological environment of consumer electronics.  If the Company fails to
anticipate technological innovations advanced by its competitors and introduce
technologically competitive products, demand for the Company's products will
diminish.  In each of the past three fiscal years, new product sales have
accounted for more than 10% of total sales.

    Additionally, sales of the Company's products are affected by adverse
changes in economic conditions, increased oil prices or adverse weather
conditions.  The Company believes that the lower-priced and easier to use LCD
sonar products available in recent years attracted an increased number of less
serious fishermen to the marketplace who are more likely to reduce their
purchase of sonar products during adverse economic conditions and /or prolonged
adverse weather conditions.  The Company believes that the sonar market in the
United States and Canada is mature, with no significant growth in boating or
fishing participation in recent years.  Any opportunity for growth in these
markets will rely on the ability of the Company to increase its market share.
Some market growth for sonar products is anticipated as related to international
markets as the Company continues to focus efforts in these areas.  International
sales for 1999 decreased from 1998 by $4.3 million (19%).  Canadian and
Australian sales were down 16%, and all other International sales decreased 22%,
primarily because of weak economic conditions in several key international
markets and increased competition.  The total market for GPS products, both
domestic and international, is expected to continue to expand.  The Company's
future success in GPS is heavily dependent upon keeping pace with competitors
who are rapidly introducing new products and new pricing strategies in the
increasingly competitive marketplace.  Accordingly, the Company's future sales
could be adversely affected by a reduction in consumer spending, a decline in

                                       15
<PAGE>

recreational boating and sport fishing resulting from significant increases in
oil prices, or new product introductions by competitors.

    Sales of sonar products including combination sonar/GPS units were up $.7
million (1.3%) from fiscal 1998 to 1999, following a decrease of $3.4 million
(5.4%) from fiscal 1997 to 1998.  The increase in sonar sales when comparing
1998 to 1999 results from generally favorable weather conditions during the peak
selling season and the effect of three new sonar models which began shipping
during the second quarter of fiscal 1999.  The decline in sonar sales when
comparing 1997 to 1998 results from a generally poor retail selling season due
to adverse weather conditions, as well as the Company's significantly reduced
advertising expenditures and reduced tradeshow activity, and the effects of
price increases on certain sonar models.  Sales of GPS products decreased $2.6
million (8.4%) from fiscal 1998 to 1999 and decreased $9.6 million (23%) from
fiscal 1997 to 1998.  The decrease in GPS sales for both years results from
increased competition at lower price points and significant reductions in
advertising and marketing efforts.

    The Company's production of its products is scheduled on the basis of sales
forecasts rather than actual orders.  Products are designed and manufactured and
parts are ordered in advance of the peak sales period so that products can be
shipped within days of receipt of customers' orders.  The Company's
profitability is largely dependent upon its ability to accurately forecast and
plan for market demand for its products in advance of the peak selling season
and to meet the demand of the peak sales months with technologically acceptable
products at acceptable prices.

    The Company begins planning for sales during each fiscal year in February or
March of the preceding year.  The planning includes the preparation of an annual
sales forecast for the upcoming fiscal year.  The forecast is reviewed by the
Company at least monthly, and if necessary, the forecast is revised.  The
forecast of products must allow time for ordering raw materials and parts, which
may take as long as five months for delivery following the Company's order, and
for manufacturing so that the Company has a build-up of finished goods inventory
sufficient to meet demand prior to the peak sales months.  Failure by the
Company to accurately forecast market trends, introduction of technological
advancements, or the demand for particular models can result in a build-up of
raw material and finished goods inventory that is obsolete or must be liquidated
at reduced prices.  The build-up of raw material and finished goods inventory in
anticipation of orders during the peak selling season, cash outlays required to
purchase tooling to manufacture new products, together with extended payment
terms of up to 150 days offered by the Company which historically result in a
significant increase in working capital requirements from a low in June through
August to a high in September through December.

    The Company uses a Material Requirements Planning (MRP) system to control
inventory by eliminating stockpiling and by utilizing a continuous flow method
of manufacturing.  Under the continuous flow method of manufacturing, parts and
supplies are ordered and scheduled for purchase and delivery only at such time
as they are expected to be needed in the manufacturing process.  The MRP system
also results in a reduction of the Company's safety stock and a shorter
manufacturing cycle.  However, extenuating circumstances can and do occur which
render a MRP system ineffective at controlling inventory levels.  Such
circumstances were experienced during 1997 and are discussed below in "Working
Capital".

    The following discussion and analysis relate to factors that have affected
the financial condition and operating results of the Company for fiscal years
1997 through 1999.  Reference should also be made to the Consolidated Financial
Statements and the notes thereto included elsewhere herein.

                                       16
<PAGE>

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

Net Sales
---------

    Net sales for fiscal 1999 decreased 2.1% from fiscal 1998.  All of the sales
decrease was the result of a decline in unit sales as the average price per unit
was unchanged.

    The decrease in unit sales resulted from a decline in sales of the Company's
lower priced portable and gimble mount GPS navigation products.  Increased sales
of sonar units partially offset the decline in GPS navigation units.  The
decline in GPS navigation units results from increased competition, particularly
at the entry level price points below $200, and limited spending on advertising
and marketing.  Sonar sales increased due to favorable weather conditions during
the peak selling season and the introduction of three new sonar products.

    Net sales for fiscal 1998  decreased 12.4% from fiscal 1997.  Unit sales,
which includes sonar units, combination sonar/navigation units, and stand alone
navigation units decreased 16.3% and the average price per unit increased 1.2%.

    The decrease in unit sales resulted from a 28.4% reduction in the sales of
the Company's navigation products coupled with a 7.6% reduction in sales of
sonar products.  Reduced sales of the Company's low and mid cost navigation
products (43% decrease in units) was offset by increases in the unit sales of
portable mapping, aviation and high-end gimble units (28% increase in units).
Sales of the Lowrance sonar products increased 2.3%, offset by a decrease of
19.2% in the sales of Eagle sonar products.  The decreases in navigation sales
resulted from a significant reduction in advertising expenditures, price
increases in certain low cost models, and increased competition at the lower
price points.  The decreases in Eagle sonar sales resulted from generally weak
market conditions during the spring selling season caused by adverse weather
conditions in certain of the Company's key markets in North America.  The
Company believes that the Eagle products are generally purchased by the less
serious fisherman which are more likely to be influenced by poor weather
conditions.  Additionally, reduced advertising and consumer outdoor show
exposure along with price increases on certain models had a negative impact in
Eagle sonar sales.

    Net sales for fiscal 1997 increased 10.7% over fiscal 1996.  Unit sales
increased 19.4% and the average price per unit decreased 7.9%.

    When comparing fiscal 1997 to 1996, unit sales increased because of higher
sales of the Company's new low-cost hand-held GPS products which are sold
primarily to mass merchandisers, mail order catalog companies, retail sporting
goods stores and wholesalers.  This increase was slightly offset by decreased
sales of the Company's sonar products. The increase in GPS sales resulted from
the continuing expansion of this market, as well as the Company's introduction
of the $199 Eagle Explorer and the $239 Lowrance GlobalNav 200 models which
began shipping in the second and third quarters of fiscal 1997, respectively.
Also, the two new portable GPS products with mapping capabilities, which began
shipping in late 1996, were available for the entire year in 1997.  The decrease
in the average price per unit resulted from increased sales of the Explorer and
GlobalNav units and an increased weighting in the sonar sales mix toward low-
priced sonar units.  This weighting was the result of limited availability of
the Company's six new mid and upper priced sonar products.  Production delays
resulted in several of these products shipping in limited quantities until late
in the third quarter.  Additionally, retailers are allocating more shelf space
and are open to allocate more inventory dollars to GPS at the expense of sonar
products due to the rapid growth and market potential of GPS.

                                       17
<PAGE>

Gross Profit
------------

    The gross margin percentage increased from 28.0% to 33.5% from fiscal 1998
to 1999.  The increase results from, (1) lower manufacturing costs resulting
from improved efficiencies and moving additional manufacturing functions from
the Company's Tulsa facility to the Company's Mexico manufacturing facility, (2)
a shift in mix from lower margin/low priced GPS products to higher margin sonar
products and higher priced GPS mapping products, and (3) price increases on
certain sonar and GPS models.

    The gross margin percentage increased from 25.7% to 28.0% from fiscal 1997
to fiscal 1998, due primarily to, (1) the shift in mix of units sold away from
the Company's low and mid-priced GPS units which generally have a
correspondingly low profit margin, (2) a continuing shift of manufacturing
operations to the Company's Mexico facility in fiscal 1998, (3) more efficient
operations offset by lower total volumes in fiscal 1998 versus 1997, and (4)
price increases on certain GPS and sonar models.

    The gross profit margin decreased from 33.8% in fiscal 1996 to 25.7% in 1997
due primarily to: 1) the shift in mix of units sold to the low-priced GPS units
which generally have a correspondingly low profit margin; 2) unplanned
production of certain new 1997 products in the Company's Tulsa production
facility versus in the new Mexico facility; 3) inefficiencies in certain
production processes in the Tulsa production facility; and 4) high production
labor cost and employee turnover in Tulsa due to record low unemployment in that
labor market.  Additionally, the new sonar products, which began shipping in
volume in the second and third quarters of 1997, generally carry above average
margins for the Company, but were not available for much of the year.


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

    Operating expenses, excluding severance and merger costs, as a percentage of
net sales decreased from 26.0% in 1998 to 25.2% in 1999.  Total costs decreased
by $1,299,000.  The decline in costs result from the continuation of an
austerity program begun during fiscal 1998 and to a lesser extent lower variable
costs resulting from lower sales.

    During 1999 the Company recognized $770,000 in severance costs related to
Tulsa workforce reductions.  These efforts were aimed at reducing costs through
headcount elimination, as well as the transferring of certain production related
jobs to Lowrance's Mexico manufacturing facility.  The total number of employees
effected was 61.  Additionally, the Company incurred $431,000 in costs
associated with its pending merger with Orbital Sciences Corporation.

    Operating expenses, as a percentage of net sales decreased to 26.0% versus
29.5% in 1997.  Total costs decreased by $6,960,000.  The major factors
contributing to this decrease were  (1) a reduction of approximately $5.6
million in advertising, selling and marketing expenditures and (2) reduced
research and development expenditures and general and administrative costs,
offset by increases in other variable operating expenses, namely, product
returns costs.

    Operating expenses, as a percentage of net sales increased from 28.3% in
fiscal 1996 to 29.5% in 1997.  Total cost increased $4,106,000.  The major
factors contributing to this increase were 1) $3,400,000 additional advertising
and marketing expenses related to the Company's push to acquire market share in
the GPS market and in introducing the new sonar products;  2) other variable
selling expenses, such as freight-out and product returns cost, were up
approximately $700,000 due to increased volumes, and 3) research and development
expenditures were up $500,000 due to the Company's continuing

                                       18
<PAGE>

efforts to develop new products. Expense reductions in general and
administrative costs partially offset the effects of the above increases.

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

    Interest expense in 1999 decreased by $616,000 when compared to 1998 due to
a lower average borrowings on the Company's line of credit.  The average
borrowings were lower due to improved profitability and increased inventory
turnover.

    Interest expense in 1998 increased by $1.1 million due to (1) increased
average borrowing levels related to the Company's revolving credit line as well
as new term loan borrowings of $5,000,000, (2) a .75% increase in the interest
rate under the revolving credit line and (3) an increase in interest charged by
the Company's suppliers due to the Company's continuing inability to pay within
stated terms.

    Interest expense in fiscal 1997 increased by $517,000 from 1996 due to
increased borrowing levels primarily associated with the Company's revolving
credit line.  The increased borrowings under the revolving credit line resulted
from higher working capital needs to support increased sales levels, the buildup
of  inventories, and for support of the move of certain manufacturing operations
to the Company's Mexico manufacturing facility.


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

    The effective tax rate for fiscal 1997, 1998 and 1999 was (34.1%), 26.2% and
0%.  For fiscal 1998, the Company established a valuation allowance of
$2,000,000 against the net deferred tax asset which resulted in a 26.2%
effective income tax expense.  For 1999, Lowrance recorded no net income tax
provision.  The valuation allowance was reduced by the income tax provision of
$616,000 to $1,384,000 resulting in no income tax provision for 1999.


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

    Net income (loss) as a percentage of net sales was 2.3% in fiscal 1999,
(4.4%) in fiscal 1998, and (4.9%) in fiscal 1997.


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

    The Company's working capital needs increase in the fall and winter months
as the Company manufactures and stockpiles its products for the peak sales
months of January, February, March, and April.  Also, the days outstanding in
the Company's accounts receivable increase in the off-season due to favorable
purchase terms offered to customers in order to stimulate sales during these
slow periods.

    The Company's primary sources of liquidity are cash flow from operations, an
accounts receivable and inventory line of credit, lease financing as well as
financing provided by the Company's vendors.  The line of credit allows the
Company to borrow up to 85% of its qualifying accounts receivable, 30% of
qualifying raw materials inventory, and 60% of qualifying finished goods
inventory.  Borrowings for inventory, however, are limited to $13,000,000.  A
yearly lease line of credit is usually established to finance the acquisition of
qualifying equipment and certain other assets.

    Traditionally, the Company's near-term liquidity is at its lowest during the
period August through December due to limits on borrowings against inventories,
cash outlays required to purchase tooling to manufacture new

                                       19
<PAGE>

products, and extended payment terms offered to customers to stimulate sales
during the seasonally slow period. As previously described, it is during this
period that the Company begins to manufacture and build-up inventory levels in
anticipation of product demands for the peak sales months. By the end of the
second quarter, sales historically increase and the Company's sources of
liquidity begin to improve.

    In fiscal 1996, the Company announced plans to expand its Mexican
manufacturing operation to meet increasing demand for its products, particularly
GPS models.  The Company entered into a long-term lease for a new manufacturing
facility and was responsible for funding a large portion of the leasehold
improvements necessary for the building to meet its specific production needs.
In addition to funding the leasehold improvements, it was necessary to build
additional inventory levels during the last few months of fiscal 1996 to support
expected sales during the first quarter of fiscal 1997.

    During fiscal 1997, the Company began relocating certain of its
manufacturing operations to its new plant in Mexico.  The start-up of the new
facility in Mexico was substantially on schedule.  However, record low
unemployment rates in Tulsa resulted in excessive turnover of production workers
and an inability to maintain sufficient trained staff to support the Company's
substantially increased production schedule intended to support record demand
for its GPS products.  This problem was magnified by management's focus on the
start-up of the new Mexico facility and production delays of the Company's six
new sonar models.  These problems caused an excessive build-up of raw material
and work-in process inventories that the Company could not convert to finished
goods during the fiscal year.  These factors resulted in inventories remaining
well above historical levels throughout fiscal 1997.  Management implemented
controls to better manage production scheduling and inventory levels.  During
fiscal 1998, first and second quarter sales exceeded 1997 levels for the same
periods, however, sales unexpectedly declined during the third and fourth
quarters.  The timing of the sales decline did not allow for reductions of
shipments of raw materials from vendors based on the long lead times for certain
component parts.  As a result, inventory levels during 1998 continued to be
higher than historical levels.  Inventory gradually declined throughout fiscal
1999 as the Company consistently met its production and sales objectives.

    Cash flows provided by financing activities for fiscal 1997 were used to
finance capital additions (not financed by leases) of $2.7 million and to
provide funds consumed in operating activities of $2.6 million.

    Cash flows provided by financing activities were used to finance the net
capital additions for fiscal 1998 and net cash used in operating activities.
The Company's financing package was amended in August and December 1997, which
gave the Company $5,000,000 in additional term loan financing ($1.8 million was
repaid during fiscal 1998).  The amendments also gave the Company an additional
$3 million in borrowing capacity secured by certain inventories and receivables
located outside of the United States.  The interest rate under the revolving
line of credit was increased to prime plus 1.5% from prime plus .75%.

    In November 1998, the Company's financing package was amended, giving the
Company additional term borrowings of $1.8 million under an existing term loan
and deferring principal payments until March 1, 1999 on an aggregate total term
loan of $4.8 million (including the additional $1.8 million borrowing).  This
amended term loan requires monthly principal payments of $80,000 which began
March 1, 1999.

    Cash flows provided by operating activities for fiscal 1999 of $7.8 million
were used to fund $.7 million of capital additions and to reduce outstanding
debt.

                                       20
<PAGE>

    Management expects the sources discussed above to satisfy the Company's
current financing needs.  At July 31, 1999 there were approximately $1.8 million
of borrowings available under the Company's revolving line of credit and all
vendors were paid current.  This availability is expected to decline during the
first quarter and the Company expects some delays in making payments to vendors
during the second quarter as it has historically done.  As sales increase toward
the end of the second quarter, liquidity is expected to improve with payments to
vendors returning to a current status during the third quarter.


Working Capital
---------------

    The Company's working capital ratio was 2.9 at July 31, 1999 and 1.9 at July
31, 1998.  This improvement was the result of utilizing cash flows from net
income and inventory reductions to eliminate past due accounts payable and to
reduce indebtedness.


Long-Term Debt and Revolving Credit Agreement
---------------------------------------------

    At July 31, 1999, the Company's term and revolving credit loan agreement,
which is more fully described in Note 3 to the Consolidated Financial
Statements, provided for interest at a rate of 1.5% over prime with maximum
borrowings of up to $26,500,000 on the revolving line of credit.

    In August and December 1997, the Company expanded the borrowings available
under its term and revolving credit loan agreements.  This amended financing
package included an additional $5 million of term loans and up to $3 million of
additional borrowings under its revolving line of credit secured by certain
inventories and receivables located outside the United States.  Of the
additional $5 million of term loans, $1.8 million  was repaid during fiscal
1998.

    In November 1998, the Company's financing package was amended to allow for
an additional term loan of $1.8 million, as discussed above.


Capital Expenditures
--------------------

    Capital expenditures were $3,790,000, $1,304,000, and $716,000 for the years
ended July 31, 1997, 1998, and 1999, respectively.  Of the fiscal 1999 total,
substantially all of this amount was related to production equipment and
tooling.


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.  Due to
the intense market pressures on prices, the Company does not believe that it
will be able to pass on inflationary increases in its selling prices.
Accordingly, the Company concentrates on changes in design, manufacturing
process, material scheduling, and sourcing to help contain costs.  The Company
does not expect that the effects of inflation will have a significant impact on
its profitability in the near future.  Additionally, 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.

                                       21
<PAGE>

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

    The Company adopted the provisions of SFAS No. 130, Reporting Comprehensive
Income, effective for the year ended July 31, 1999.  This Statement requires
that all items that are required to be recognized under accounting standards as
components of comprehensive income be reported in a financial statement that is
displayed with the same prominence as other financial statements.  The adoption
of this Statement did not have a significant effect on the Company's
consolidated financial statements.

    The Company adopted the provisions of SFAS No. 131, Disclosures about
Segments of an Enterprise and Related Information effective for the year ended
July 31, 1999.  This Statement establishes standards for reporting information
about operating segments in annual financial statements and requires reporting
of selected information about operating segments in interim financial reports
issued to stockholders.  It also establishes standards for related disclosures
about products and services, geographic areas and major customers.  The adoption
of this Statement did not have a significant effect on the Company's
consolidated financial statements.

    In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities.  SFAS No. 133
establishes accounting and reporting standards requiring that every derivative
instrument (including certain derivative instruments embedded in other
contracts) be recorded in the balance sheet as either an asset or liability
measured at its fair value.  SFAS No. 133 requires that changes in the
derivative's fair value be recognized currently in earnings unless specific
hedge accounting criteria are met.  Special accounting for qualifying hedges
allows a derivative's gains and losses to offset related results on the hedged
item in the income statement.  Companies must formally document, designate, and
assess the effectiveness of transactions that receive hedge accounting.  SFAS
No. 133, as amended by SFAS No. 137, is effective for fiscal years beginning
after June 15, 2000.  SFAS No. 133 cannot be applied retroactively and must be
applied to (a) derivative instruments and (b) certain derivative instruments
embedded in hybrid contracts that were issued, acquired, or substantively
modified after December 31, 1997.  The Company has not yet quantified the impact
of adopting SFAS No. 133 on its financial statements and has not determined the
timing of or method of the adoption of SFAS No. 133.  However, as of July 31,
1998, the Company had no outstanding derivative instruments.


Year 2000 Compliance
--------------------

    The Company is taking appropriate steps to ensure that its computer systems
will properly recognize date sensitive information when the year changes to 2000
or "00".  Systems that do not properly recognize such information could generate
erroneous data or cause a system to fail.  The Company has evaluated its
computer systems to identify those that could be effected by this issue.  All
significant systems have been modified and tested.  Management believes that all
significant systems are year 2000 compliant.  The costs to modify the Company's
systems were not significant.  The Company is also communicating with key
suppliers and vendors to coordinate year 2000 compliance.

    The highest risk area for the Company related to the year 2000 issues is
noncompliance by third parties.  At this time, the most reasonably likely worst
case scenario would be year 2000 noncompliance by third parties that comprised a
significant level of business conducted with the Company.  Depending upon the
level of noncompliance, the Company could be adversely impacted by such things
as communication problems with third parties, including order processing,
purchase order placement and/or scheduling

                                       22
<PAGE>

problems related to the manufacturing of the Company's products. The major risk
areas associated with third party noncompliance have been identified. Based upon
its assessment of third party assurances at this time, the Company does not
anticipate any material disruptions in its business activities as a result of
third party year 2000 noncompliance, although it cannot be certain that such
disruptions will not occur.


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

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


Merger with Orbital Sciences Corporation
----------------------------------------

    On March 11, 1999, Lowrance announced an agreement to merge with California-
based Magellan Corporation, a leading satellite access company, as part of a
merger agreement between Lowrance, Magellan and Magellan's parent company
Orbital Sciences Corporation (NYSE:ORB).  According to the merger agreement,
Lowrance shareholders will receive between 745,000 and 1,250,000 shares of
Orbital common stock, with the actual number of Orbital shares issued to be
determined by the market price of Orbital stock prior to closing.  On August 26,
1999 the Company restated and amended its agreement whereby each share of
outstanding common stock of the Company will be converted at the time of the
merger into the right to receive $7.30 for each share of the Company Common
Stock.  On October 12, 1999 Lowrance shareholders approved the merger.  The
transaction was anticipated to close in October, but certain conditions set
forth in the merger agreement have not been satisfied, including receipt of the
consent of Orbital's lenders.

Outlook
-------

    The Company anticipates continued profitability in fiscal 2000, primarily as
the result of continuing cost reduction efforts, continuing favorable economic
and market conditions, and lower manufacturing cost related to continuing
efficiencies from the Company's Mexico manufacturing facility.  Management
currently anticipates positive cash flows from operations in fiscal 2000 based
on attaining current projections for net income and inventory levels.  The
expectation for continued profitability based on the above factors constitutes
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934.  The Company
believes that these forecasts are based on reasonable assumptions, however, no
assurances can be given that these goals will be achieved.  If the Company
experiences production delays due to raw materials shortages or unforeseen
competitive pressures, this could have a material adverse affect on current
projections.  Also, because of the dynamic environment in which the Company
operates, one or more key factors which are discussed in "Part I, Item 1.
Business" could have an adverse effect on results for the upcoming year.


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

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

                                       23
<PAGE>

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

    None.


                                   PART III

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

    Incorporated by reference to the Company's Proxy Statement to be filed with
the Securities and Exchange Commission in connection with the Company's 1998
annual meeting.


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

    Incorporated by reference to the Company's Proxy Statement to be filed with
the Securities and Exchange Commission in connection with the Company's 1998
annual meeting.


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

    Incorporated by reference to the Company's Proxy Statement to be filed with
the Securities and Exchange Commission in connection with the Company's 1999
annual meeting.


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

    Incorporated by reference to the Company's Proxy Statement to be filed with
the Securities and Exchange Commission in connection with the Company's 1999
annual meeting.

                                    PART IV

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

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

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

          Index to Consolidated Financial Statements                  F-1

          Report of Independent Public Accountants                    F-2

         Consolidated Balance Sheets - July 31, 1998 and 1999         F-3

          Consolidated Statements of Income (Loss) for the Years
             Ended July 31, 1997, 1998, and 1999                      F-4

          Consolidated Statements of Stockholders' Equity for the
             Years Ended July 31, 1997, 1998, and 1999                F-5

          Consolidated Statements of Cash Flows for the Years
             Ended July 31, 1997, 1998, and 1999                      F-6

          Notes to Consolidated Financial Statements
             for the Years Ended July 31, 1997, 1998, and 1999        F-7
</TABLE>

                                       24
<PAGE>

      2. Exhibits:

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

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

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

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

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

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

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

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

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

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

                                       25
<PAGE>

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

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

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

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

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

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

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

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

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

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

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

                                       26
<PAGE>

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

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

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

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

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

         10.22    Second Amendment to Loan and Security Agreement dated November
                  1, 1996, by and between the Company and Fleet Capital
                  Corporation (formally Shawmut Capital Corporation), filed
                  herewith.

         10.23    Third Amendment to Loan and Security Agreement dated December
                  31, 1996, by and between the Company and Fleet Capital
                  Corporation (formally Shawmut Capital Corporation), filed
                  herewith.

         10.24    Fourth Amendment to Loan and Security Agreement dated August
                  14, 1997, by and between the Company and Fleet Capital
                  Corporation (formally Shawmut Capital Corporation), filed
                  herewith.

         10.25    Fifth Amendment to Loan and Security Agreement dated August
                  25, 1997, by and between the Company and Fleet Capital
                  Corporation (formally Shawmut Capital Corporation), filed
                  herewith.

         10.26    Sixth Amendment to Loan and Security Agreement dated August
                  28, 1997, by and between the Company and Fleet Capital
                  Corporation (formally Shawmut Capital Corporation), filed
                  herewith.

                                       27
<PAGE>

         10.27    Seventh Amendment to Loan and Security Agreement dated
                  November 6, 1997, by and between the Company and Fleet Capital
                  Corporation (formally Shawmut Capital Corporation), filed
                  herewith.

         10.28    Eighth Amendment to Loan and Security Agreement dated December
                  9, 1997, by and between the Company and Fleet Capital
                  Corporation (formally Shawmut Capital Corporation), filed
                  herewith.

         10.29    Ninth Amendment to Loan and Security Agreement dated September
                  14, 1998, by and between the Company and Fleet Capital
                  Corporation (formally Shawmut Capital Corporation), filed
                  herewith.

         10.30    Tenth Amendment to Loan and Security Agreement dated November
                  12, 1998, by and between the Company and Fleet Capital
                  Corporation (formally Shawmut Capital Corporation), filed
                  herewith.

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

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

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

      The Company filed a form 8-k dated August 30, 1999 with the SEC on August
      31, 1999 disclosing that the Company had amended and restated its
      Agreement and Plan of Merger with Orbital Sciences Corporation whereby
      each share of outstanding common stock of the Company will be converted at
      the time of the merger into the right to receive $7.30 for each share of
      the Company common stock. The original agreement and plan of merger
      contemplated the exchange of the Company common stock for common stock of
      Orbital Sciences Corporation.

                                        28
<PAGE>

                  INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                  Page
----------------------------------------------------------------------
<S>                                                               <C>

Report of Independent Public Accountants                           F-2

Consolidated Balance Sheets - July 31, 1998 and 1999               F-3

Consolidated Statements of Income (Loss) for the Years
  Ended July 31, 1997, 1998, and 1999                              F-4

Consolidated Statements of Stockholders' Equity for the
  Years Ended July 31, 1997, 1998, and 1999                        F-5

Consolidated Statements of Cash Flows for the Years Ended
  July 31, 1997, 1998, and 1999                                    F-6

Notes to Consolidated Financial Statements for the Years Ended
  July 31, 1997, 1998, and 1999                                    F-7
</TABLE>

                                      F-1
<PAGE>

                   REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


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

We have audited the accompanying consolidated balance sheets of Lowrance
Electronics, Inc., (a Delaware corporation) and subsidiaries as of July 31, 1999
and 1998, and the related consolidated statements of income (loss),
stockholders' equity, and cash flows for each of the three years in the period
ended July 31, 1999. 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 generally accepted auditing
standards. 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, 1999 and 1998, and the results of their operations
and their cash flows for each of the three years in the period ended July 31,
1999, in conformity with generally accepted accounting principles.


                                                   ARTHUR ANDERSEN LLP


Tulsa, Oklahoma
September 28, 1999
(except with respect to the matters
discussed in Note 13, as to which
the date is October 12, 1999)

                                      F-2
<PAGE>

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

<TABLE>
<CAPTION>
                                                         JULY 31,
                                                  --------------------
                                                   1998           1999
                                                  -------        -----
                                                     (in thousands)
<S>                                             <C>            <C>
CURRENT ASSETS:
 Cash and cash equivalent                       $   637        $   457
 Trade accounts receivable, net of reserves
  of $683,000 in 1998 and $512,000 in 1999       13,742         11,464
 Inventories (Note 2)                            25,224         13,348
 Current deferred income taxes                    1,457          1,214
 Prepaid expenses                                   610            544
                                                -------        -------
   Total current assets                          41,670         27,027

PROPERTY, PLANT, AND EQUIPMENT, net (Note 2)      9,891          8,008

OTHER ASSETS                                        277            208

DEFERRED INCOME TAXES                               409            751
                                                -------        -------

                                                $52,247        $35,994
                                                =======        =======

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

CURRENT LIABILITIES:
 Current maturities of long-term debt           $ 3,498        $ 2,107
 Accounts payable                                15,026          3,321
 Accrued liabilities:
   Compensation and benefits                      1,729          1,873
   Product costs                                  1,130          1,150
   Other                                            654            946
                                                -------        -------
     Total current liabilities                   22,037          9,397
                                                -------        -------

LONG-TERM DEBT, less current maturities
  (Note 3)                                       23,038         17,103
                                                -------        -------

SERIES "A" REDEEMABLE PREFERRED STOCK, $.50 par
   value, 70,000 shares authorized and issued
   (Note 5)                                           -              -

STOCKHOLDERS' EQUITY, per accompanying
 statements (Note 5):
 Preferred stock, no par value, 230,000 shares
   authorized, none issued                            -              -
 Common stock, $.10 par value, 10,000,000
   shares authorized, and 3,768,796 shares
   issued                                           377            377
 Paid-in capital                                  7,073          7,073
 Retained earnings                                  219          2,328
 Foreign currency translation adjustment           (497)          (284)
                                                -------        -------
   Total stockholders' equity                     7,172          9,494
                                                -------        -------
                                                $52,247        $35,994
                                                =======        =======
</TABLE>

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

                                      F-3
<PAGE>

                          LOWRANCE ELECTRONICS, INC.
                          --------------------------
                   CONSOLIDATED STATEMENTS OF INCOME (LOSS)
                   ----------------------------------------

<TABLE>
<CAPTION>
                                                              FOR THE YEARS ENDED JULY 31,
                                                       ---------------------------------------
                                                          1997            1998           1999
                                                       ----------      ---------      --------
                                                       (in thousands, except per share amounts)
<S>                                                    <C>             <C>            <C>
NET SALES                                               $104,659        $91,706        $89,753
COST OF SALES                                             77,778         66,061         59,706
                                                        --------        -------        -------

 Gross profit                                             26,881         25,645         30,047
                                                        --------        -------        -------

OPERATING EXPENSES:
 Selling and administrative                               26,894         21,220         20,345
 Severence and Merger Costs (Note 12)                          -              -          1,201
 Research and development                                  3,936          2,650          2,226
                                                        --------        -------        -------

 Total operating expenses                                 30,830         23,870         23,772
                                                        --------        -------        -------

 Operating income (loss)                                  (3,949)         1,775          6,275
                                                        --------        -------        -------

OTHER EXPENSES:
 Interest                                                  2,398          3,509          2,893
 Other                                                     1,530          1,432          1,273
                                                        --------        -------        -------

 Total other expenses                                      3,928          4,941          4,166
                                                        --------        -------        -------

INCOME (LOSS) BEFORE INCOME TAXES                         (7,877)        (3,166)         2,109

PROVISION (BENEFIT) FOR INCOME
  TAXES (Note 7)                                          (2,687)           829              0
                                                        --------        -------        -------

NET INCOME (LOSS)                                       $ (5,190)       $(3,995)       $ 2,109
                                                        ========        =======        =======

NET INCOME (LOSS) PER COMMON SHARE (Note 5)
   Basic and Diluted                                    $  (1.55)       $ (1.11)       $   .56
                                                        ========        =======        =======

WEIGHTED AVERAGE COMMON
 SHARES OUTSTANDING (Note 5)
   Basic and Diluted                                       3,352          3,608          3,768
                                                        ========        =======        =======

OTHER COMPREHENSIVE INCOME
  (Loss) Net of Tax:

NET INCOME (LOSS)                                         (5,190)        (3,995)         2,109
                                                        ========        =======        =======

FOREIGN CURRENCY TRANSLATION ADJUSTMENT                      (54)          (300)           213
                                                        --------        -------        -------

COMPREHENSIVE INCOME (LOSS)                             $ (5,244)       $(4,295)       $ 2,322
                                                        ========        =======        =======
</TABLE>

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

                                      F-4
<PAGE>

                          LOWRANCE ELECTRONICS, INC.
                          --------------------------
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                -----------------------------------------------
               FOR THE YEARS ENDED JULY 31, 1997, 1998, AND 1999
               -------------------------------------------------
                                   (Note 5)
                                   --------

<TABLE>
<CAPTION>
                                                                  Foreign
                                                                  Currency
                             Common Stock   Paid-In  Retained   Translation
                            --------------
                            Shares  Amount  Capital  Earnings    Adjustment
                            ------  ------  -------  ---------  ------------
                                             (in thousands)
<S>                         <C>     <C>     <C>      <C>        <C>
Balance -
  July 31, 1996              3,352    $335   $5,600   $ 9,404         $(143)
Net loss                         -       -        -    (5,190)            -
Foreign currency
  translation adjustment         -       -        -         -           (54)
                            ------  ------  -------   -------         -----

Balance -
  July 31, 1997              3,352     335    5,600     4,214          (197)
Net loss                         -       -        -    (3,995)            -
Exercise of common stock
  options                       75       7      196         -             -
Issuance of common stock       341      35    1,277         -             -
Foreign currency
  translation adjustment         -       -        -         -          (300)
                            ------  ------  -------   -------         -----

Balance -
  July 31, 1998              3,768     377    7,073       219          (497)
Net income                       -       -        -     2,109             -
Foreign currency
  translation adjustment         -       -        -         -           213
                            ------  ------  -------   -------         -----

Balance -
  July 31, 1999              3,768    $377   $7,073   $ 2,328         $(284)
                            ======  ======  =======   =======         =====
</TABLE>


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

                                      F-5
<PAGE>

                          LOWRANCE ELECTRONICS, INC.
                          --------------------------
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                     -------------------------------------
                                   (Note 8)

<TABLE>
<CAPTION>
                                                      FOR THE YEARS ENDED JULY 31,
                                               ----------------------------------------
                                                   1997          1998            1999
                                               ------------   ----------     ----------
                                                            (in thousands)
<S>                                            <C>            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)                              $ (5,190)     $ (3,995)         2,109
  Adjustments to reconcile net income (loss)
   to net cash used in operating activities:
   Depreciation and amortization                    2,837         2,897          2,578
   Gain on sale of fixed assets                        (7)           (2)            (7)
   Foreign currency translation adjustment            (54)         (300)           213
  Change in operating assets and liabilities:
   (Increase)decrease in trade accounts
    receivable                                     (3,525)        2,604          2,278
   (Increase)decrease in inventories               (7,107)        2,656         11,876
   Decrease (increase) in
    income tax refund receivable                     (957)          957              -
   (Increase)decrease in prepaid expenses
    and deferred income taxes                      (1,633)          526            (33)
   (Increase)decrease in other assets                (396)          555             69
   Increase(decrease) in accounts payable          13,338        (6,470)       (11,705)
   Increase(decrease) in accrued liabilities          129        (1,080)           456
                                                 --------      --------       --------

   Net cash provided by (used) in operating
    activities                                     (2,565)       (1,652)         7,834
                                                 --------      --------       --------

CASH FLOWS FROM INVESTING ACTIVITIES:
 Capital expenditures                              (2,722)         (583)          (716)
 Proceeds from sale of property, plant
   and equipment                                        -             -             28
                                                 --------      --------       --------

   Net cash used in investing activities           (2,722)         (583)          (688)
                                                 --------      --------       --------

CASH FLOWS FROM FINANCING ACTIVITIES:
 Borrowings under line of credit                  104,213        93,397         82,740
 Repayments of borrowings under line of
   credit                                         (97,117)      (94,613)       (89,464)
 Borrowings under term loan                           500         5,000          1,800
 Principal payments on term loan and
   capital lease obligations                       (2,064)       (3,293)        (2,402)
 Proceeds from issuance of common stock                 -         1,515              -
                                                 --------      --------       --------

   Net cash provided by
     financing activities                           5,532         2,006         (7,326)
                                                 --------      --------       --------

   Net increase(decrease) in cash and
     cash equivalent                                  245          (229)          (180)
CASH AND CASH EQUIVALENT - beginning of year          621           866            637
                                                 --------      --------       --------

CASH AND CASH EQUIVALENT - end of year           $    866      $    637       $    457
                                                 ========      ========       ========

</TABLE>

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

                                      F-6
<PAGE>

                          LOWRANCE ELECTRONICS, INC.
                          --------------------------
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  ------------------------------------------
               FOR THE YEARS ENDED JULY 31, 1997, 1998, and 1999
               -------------------------------------------------

(1) BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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


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

    Property and Depreciation -
    -------------------------
    Property, plant, and equipment is stated at cost.  For financial reporting
    purposes, depreciation is provided on a straight-line basis over the
    estimated service lives of the respective classes of property.  The building
    is being depreciated using an estimated useful life of thirty years, while
    the estimated lives for other assets range from two to fifteen years.  Fully
    depreciated property and equipment with a cost of approximately $16 million
    is still in use as of July 31, 1999.

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

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

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

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

                                      F-7
<PAGE>

    Derivatives -
    -----------
    The Company uses forward sales contracts to hedge against losses due to
    changes in foreign currencies.  Gains and losses realized from the contracts
    are recognized currently as other income or expense.  Gains and losses
    resulting from the contracts have not had a material impact on the Company's
    results of operations.  There are no open forward sales contracts at July
    31, 1999.

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

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

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

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

    Cash and Cash Equivalent -
    ------------------------
    For purposes of the Consolidated Statements of Cash Flows, the Company
    considers only certificates of deposit with a maturity of three months or
    less to be cash equivalents.

    Advertising -
    -----------
    Advertising costs are expensed as incurred.  The Company expensed
    approximately $4,200,000, $2,700,000, and $2,500,000 during the years 1997,
    1998 and 1999, respectively, for advertising.

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

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

                                      F-8
<PAGE>

    Recently Issued Accounting Principles
    -------------------------------------
    The Company adopted the provisions of SFAS No. 130, Reporting Comprehensive
    Income, effective for the year ended July 31, 1999.  This Statement requires
    that all items that are required to be recognized under accounting standards
    as components of comprehensive income be reported in a financial statement
    that is displayed with the same prominence as other financial statements.
    The adoption of this Statement did not have a significant effect on the
    Company's consolidated financial statements.

    The Company adopted the provisions of SFAS No. 131, Disclosures about
    Segments of an Enterprise and Related Information effective for the year
    ended July 31, 1999. This Statement established standards for reporting
    information about operating segments in annual financial statements and
    requires reporting of selected information about operating segments in
    interim financial reports issued to stockholders. It also establishes
    standards for related disclosures about products and services, geographic
    areas and major customers. The adoption of this Statement did not have a
    significant effect on the Company's consolidated financial statements.

   In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
   Accounting for Derivative Instruments and Hedging Activities. SFAS No. 133
   establishes accounting and reporting standards requiring that every
   derivative instrument (including certain derivative instruments embedded in
   other contracts) be recorded in the balance sheet as either an asset or
   liability measured at its fair value. SFAS No. 133 requires that changes in
   the derivative's fair value be recognized currently in earnings unless
   specific hedge accounting criteria are met. Special accounting for qualifying
   hedges allows a derivative's gains and losses to offset related results on
   the hedged item in the income statement. Companies must formally document,
   designate, and assess the effectiveness of transactions that receive hedge
   accounting. SFAS No. 133, as amended by SFAS No. 137, is effective for fiscal
   years beginning after June 15, 2000. SFAS No. 133 cannot be applied
   retroactively and must be applied to (a) derivative instruments and (b)
   certain derivative instruments embedded in hybrid contracts that were issued,
   acquired, or substantively modified after December 31, 1997. The Company has
   not yet quantified the impact of adopting SFAS No. 133 on its financial
   statements and has not determined the timing of or method of the adoption of
   SFAS No. 133. However, as of July 31, 1999, the Company had no outstanding
   derivative instruments.

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

                                      F-9
<PAGE>

(2) BALANCE SHEET DETAIL

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

<TABLE>
<CAPTION>
                                                            1998      1999
                                                          --------  --------
                                                            (in thousands)
      <S>                                                 <C>       <C>
      Raw materials                                       $ 6,127   $ 4,255
      Work-in-process                                       4,820     2,579
      Finished goods                                       15,887     7,818
      Excess, obsolete, and realization reserves           (1,610)   (1,304)
                                                          -------   -------

       Total inventories                                  $25,224   $13,348
                                                          =======   =======

 <CAPTION>
    Property, Plant, and Equipment -                        1998      1999
    -------------------------------                       --------  --------
                                                            (in thousands)
    <S>                                                   <C>       <C>
      Land                                                $   557   $   557
      Building and improvements                             4,354     4,491
      Machinery and equipment                              24,990    25,230
      Office furniture and fixtures                         5,141     3,549
                                                          -------   -------
                                                           35,042    33,827
      Less - accumulated depreciation                      25,151    25,819
                                                          -------   -------
       Net property, plant, and equipment                 $ 9,891   $ 8,008
                                                          =======   =======

</TABLE>

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

<TABLE>
<CAPTION>
                                                            1998      1999
                                                          --------  --------
                                                            (in thousands)
      <S>                                                 <C>       <C>
      Machinery and equipment                             $ 5,438   $ 4,054
      Office furniture and fixtures                         1,007       400
                                                          -------   -------
                                                            6,445     4,454
      Less - accumulated depreciation                       3,234     1,953
       Net property, plant, and equipment                 -------   -------
         under capitalized leases                         $ 3,211   $ 2,501
                                                          =======   =======
<CAPTION>
    Reserve for Doubtful Accounts and Sales                 1998      1999
    ---------------------------------------               --------  --------
      Returns                                               (in thousands)
      -------
      Balance, beginning of period                        $   907   $   683

      Charged to expense                                      329       164
      Net (write-offs) recoveries                            (553)     (335)
                                                          -------   -------
      Balance, end of period                              $   683   $   512
                                                          =======   =======

    Excess, Obsolete, and Realization Reserve
    -----------------------------------------
      Balance, beginning of period                        $ 1,226   $ 1,610
      Charged to expense                                    1,190     1,391
      Net (write-offs) recoveries                            (806)   (1,697)
                                                          -------   -------
      Balance, end of period                              $ 1,610   $ 1,304
                                                          =======   =======
</TABLE>

                                      F-10
<PAGE>

(3) LONG-TERM DEBT AND REVOLVING CREDIT LINE

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

<TABLE>
<CAPTION>
                                                 1998     1999
                                               -------  -------
                                                (in thousands)
<S>                                            <C>      <C>
      Revolving credit line                    $17,404  $10,680
      Term loans                                 5,410    6,251
      Capitalized equipment lease
       obligations, payable in monthly
       installments of approximately
       $83,000, including interest at
       rates from 7.9% to 10.4%, with final
       payments ranging from December 1999
       through November 2001                     3,722    2,279
                                               -------  -------
                                                26,536   19,210
      Less - current maturities                  3,498    2,107
                                               -------  -------

       Total long-term debt                    $23,038  $17,103
                                               =======  =======
</TABLE>

    Future maturities of the above debt obligations at July 31, 1999, are
    approximately $2,107,000, $16,919,000, and $184,000, for the years ending
    July 31, 2000 through 2002, respectively.

    At July 31, 1998, the Company had a $33.9 million financing package which
    consisted of $7.4 million in term loans together with a $26.5 million
    revolving credit line.  The revolving credit line provides for borrowings up
    to $26.5 million based on varying percentages of qualifying categories of
    receivables and inventories and carried an interest rate of prime plus 1.5%.
    Borrowing against inventories is limited to $13 million in total.

    During September and November 1998, the Company's financing package was
    amended.  Significant provisions of the amendments included changes in
    certain financial covenants and an additional advance of $1.8 million on an
    existing term loan.  This amended term loan requires monthly principal
    payments of $80,000 which began in March 1999.

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

    The agreement requires, among other things, that the Company maintain a
    minimum tangible net worth, limits the ratio of total liabilities to
    tangible net worth and requires the Company to maintain a minimum fixed
    charge ratio.  Additionally, the agreement limits the level of operating
    leases, and limits capital expenditures and capital leases.  Violation of
    any of these 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 debt covenants at July 31, 1999.

                                      F-11
<PAGE>

    The Company's indebtedness is collateralized by substantially all of the
    Company's assets.  The Company had unfunded outstanding checks at July 31,
    1998 and 1999 of $1.3 million and $1.1 million, respectively.  These
    outstanding checks are included in accounts payable.

    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.

<TABLE>
<CAPTION>
                                             Years Ended July 31,
                                       ---------------------------------
                                          1997        1998       1999
                                       ----------  ----------  ---------
                                                (in thousands)
<S>                                    <C>         <C>         <C>
    Highest amount borrowed              $24,095     $20,872    $19,169
    Average amount borrowed              $16,202     $18,025    $16,457
    Weighted average interest rate           9.1%       10.4%      10.3%
</TABLE>

(4) LEASES

    Capital Leases -
    --------------
    Certain equipment is leased under agreements that are structured as capital
    leases.  Accordingly, such equipment has been recorded as an asset, and the
    discounted value of the remaining lease obligations has been recorded as a
    liability in the accompanying Consolidated Balance Sheets (See Note 3).

    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, 1999, (in thousands):

<TABLE>
<CAPTION>
<S>                                                         <C>
       Years ending July 31:
          2000                                              $1,039
          2001                                               1,266
          2002                                                 194
          2003                                                   -
                                                            ------
       Total minimum lease payments                          2,499
       Less amounts representing interest                      220
                                                            ------

       Present value of net minimum lease payments          $2,279
                                                            ======

       Current portion of obligations under
        capital leases                                      $  868

       Long-term portion of obligations under
         capital leases                                     $1,411
</TABLE>

    Operating Leases -
    ----------------
    During 1997, 1998 and 1999, the Company recorded $1,765,000, $1,889,000
    and $1,655,000, respectively, of expense related to operating leases.

    At July 31, 1999, future minimum rental payments for operating leases
    totaled $6,503,000.  On August 30, 1996, the Company entered into a ten year
    non-cancelable lease for a manufacturing facility in Ensenada, Mexico.  The
    lease has a fair market purchase option after three years and accordingly
    was accounted for as an operating lease.  Payments for this facility are
    approximately $51,500 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, 2000

                                      F-12
<PAGE>

    through July 31, 2004 (including the rental for the Mexican facility
    assuming the purchase option is not exercised) are approximately $1,359,000,
    $984,000, $827,000, $791,000, and $808,000, respectively, and $1,734,000
    thereafter.

(5) STOCKHOLDERS' EQUITY AND RELATED ITEMS

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

    Following is a summary of outstanding and exercisable options under the Plan
    as of July 31 for the respective years set forth below:

                                           1997
                                          ------
      Total outstanding                   75,000
      Average option price                $ 2.71

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

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

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

    The Company adopted the disclosure-only provisions of SFAS 123 "Accounting
    for Stock-Based Compensation."  Accordingly, no compensation

                                      F-13
<PAGE>

    cost has been recognized for the stock option plans. Had compensation cost
    for the Company's stock option plans been determined consistent with the
    provisions of SFAS 123, the Company's net income (loss) and earnings (loss)
    per share would have been changed to the pro forma amounts indicated below:

<TABLE>
<CAPTION>
                                      1997      1998     1999
                                    --------  --------  -------
<S>                                 <C>       <C>       <C>
      NET INCOME (LOSS):
           As reported              $(5,190)  $(3,995)   $2,110
           Pro forma                 (5,344)   (4,144)    1,956

      EARNINGS (LOSS) PER SHARE:
           Basic-as reported        $ (1.55)  $ (1.11)   $  .56
           Diluted-as reported        (1.55)    (1.11)      .56
           Pro forma-Basic            (1.59)    (1.15)      .52
           Pro forma-Diluted          (1.59)    (1.15)      .52
</TABLE>

    Because the SFAS 123 method of accounting has not been applied to options
    granted prior to August 1, 1995, the resulting pro forma compensation cost
    may not be representative of that to be expected in future years.

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


(6) RETIREMENT PLANS

       Substantially all U.S. Company employees participate in the Lowrance
    Savings Plans which require the Company to contribute 3% of the
    participants' qualified earnings to the Plans.  Also, each participant may
    make contributions of qualified earnings into the Plans which will be
    matched by the Company at 100% for the first $10 per pay period and 50%
    thereafter, not to exceed 3% of compensation.  Contributions made by the
    Company to the Plans for the years ended July 31, 1997, 1998, and 1999 were
    approximately $678,000, $462,000, and $590,000, respectively.

(7) INCOME TAXES

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

<TABLE>
<CAPTION>
                           Years Ended July 31,
                        -----------------------------
                           1997        1998      1999
                         ------      ------    ------
                               (in thousands)
     <S>                <C>          <C>       <C>
     Current            $  (823)     $  93     $  99
     Deferred             1,864)       736       (99)
                        -------      -----     -----

       Total            $(2,687)     $ 829     $   -
                        =======      =====     =====
</TABLE>

                                      F-14
<PAGE>

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

<TABLE>
<CAPTION>
                                           Years Ended July 31,
                                        --------------------------
                                          1997      1998     1999
                                        --------  --------  ------
      <S>                               <C>       <C>       <C>
      Statutory rate                       34.0%    (34.0)%  34.0%
      Change in valuation allowance           -      63.2   (29.2)
      Foreign income taxes                   .9       2.8     4.7
      State income taxes                    (.9)     (2.3)   (1.6)
      Research & development credits          -      (1.4)      -
      Other                                 (.1)     (2.1)   (7.9)
                                         ------    ------   -----

      Effective rate                      (34.1)%    26.2%      -%
                                         ======    ======   =====
</TABLE>

    The Company accounts for income taxes in accordance with Statement No. 109
    of the Financial Accounting Standards Board which requires an asset and
    liability approach to financial accounting and reporting for income taxes.
    The difference between the financial statement and tax bases of assets and
    liabilities is determined and deferred tax assets or liabilities are
    computed for those differences that have future tax consequences. The
    Company had a net operating loss carryforward of approximately $5.6 million
    and $9.3 million at July 31, 1997 and July 31, 1998, which expires July 31,
    2012 and July 31, 2013. After the completion of the fourth quarter of fiscal
    1998, the Company determined that a valuation allowance of $2,000,000
    against the net operating loss carryforward was necessary as of July 31,
    1998. During 1999, the valuation allowance was reduced to $1,384,000.
    Statement No. 109 requires that deferred tax assets be reduced by a
    valuation allowance if it is more likely than not that some portion or all
    of the deferred tax asset will not be realized.

    The tax effect of temporary differences giving rise to the Company's
    consolidated deferred income taxes at July 31 are as follows:

<TABLE>
<CAPTION>
                                                      1998      1999
                                                   --------  --------
                                                     (in thousands)
       <S>                                         <C>       <C>
       Deferred tax assets -
         Reserves for product costs                $   466   $   574
         Reserves for compensation and benefits        499       137
         State tax credit carryforwards                286       376
         Accounts receivable reserves                  142        44
         Other accruals                                 64        83
         NOL carryforward                            3,457     3,047
                                                   -------   -------
                                                   $ 4,914   $ 4,261
         Less: valuation allowance                  (2,000)   (1,384)
         Net deferred tax asset                      2,914     2,877
                                                   =======   =======

       Deferred tax liabilities -
         Depreciation                              $ 1,048   $   912
                                                   =======   =======
</TABLE>

                                      F-15
<PAGE>

(8)  CONSOLIDATED STATEMENTS OF CASH FLOWS

     The Company acquired approximately $1,068,000 and $721,000 in equipment
     under capital lease obligations during 1997 and 1998. These transactions
     were accounted for as non-cash investing and financing activities, and
     therefore, are not included in the Consolidated Statements of Cash Flows.
     Interest of approximately $2,398,000 and $3,422,000 and $2,744,000 was paid
     during 1997, 1998, and 1999, respectively. No income tax payments were made
     in 1997, 1998 or 1999. An income tax refund of $957,000 was received in
     1998.


(9)  SALES BY GEOGRAPHIC REGION

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

<TABLE>
<CAPTION>
                                      1997      1998      1999
                                    --------  --------  --------
                                           (in thousands)
       <S>                          <C>       <C>       <C>
       Net sales:
         Domestic                   $ 79,217   $69,376   $71,681
         Export sales                 12,010    10,116     7,849
         Foreign sales                13,432    12,214    10,223
                                    --------   -------   -------

          Total                     $104,659   $91,706   $89,753
                                    ========   =======   =======
</TABLE>

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


(10) SALES TO A MAJOR CUSTOMER

     During 1997 and 1999, one customer accounted for approximately 10% and 13%,
     respectively, of consolidated net sales in each year. No other customer
     accounted for 10% or more of consolidated net sales in 1997, 1998, or 1999.


(11) CONCENTRATIONS OF CREDIT RISK

     The Company extends credit to various companies in the marine and
     non-marine markets in the normal course of business. Within these markets,
     certain concentrations of credit risk exist. These concentrations of credit
     risk may be similarly affected by changes in economic or other conditions
     and may, accordingly, impact the Company's overall credit risk. However,
     management believes that receivables are well diversified, thereby reducing
     the potential credit risk and that allowances for doubtful accounts are
     adequate to absorb estimated losses at July 31, 1999.

                                      F-16
<PAGE>

     At July 31, 1998 and 1999, trade receivables related to these group
     concentrations were:

<TABLE>
<CAPTION>
                                1998   1999
                               -----  -----
<S>                            <C>    <C>

       Marine                    45%    50%
       Non-Marine                55%    50%
</TABLE>

(12) SEVERANCE AND TRANSACTION COSTS

     During 1999 the Company recognized $770,000 in severance costs related to
     Tulsa workforce reductions. These efforts were aimed at reducing costs
     through headcount elimination, as well as the transferring of certain
     production related jobs to Lowrance's Mexico manufacturing facility. The
     total number of employees effected was 61. Additionally, the Company
     incurred $431,000 in costs associated with its pending merger with Orbital
     Sciences Corporation.

(13) MERGER WITH ORBITAL SCIENCES CORPORATION

     On March 11, 1999, Lowrance announced an agreement to merge with
     California-based Magellan Corporation, a leading satellite access company,
     as part of a merger agreement between Lowrance, Magellan and Magellan's
     parent company Orbital Sciences Corporation. According to the merger
     agreement, Lowrance shareholders will receive between 745,000 and 1,250,000
     shares of Orbital common stock, with the actual number of Orbital shares
     issued to be determined by the market price of Orbital stock prior to
     closing. On August 26, 1999 the Company restated and amended its agreement
     whereby each share of outstanding common stock of the Company will be
     converted at the time of the merger into the right to receive $7.30 for
     each share of the Company's common stock. On October 12, 1999 Lowrance
     shareholders approved the merger. The transaction was anticipated to close
     in October, but certain conditions set forth in the merger agreement have
     not been satisfied, including receipt of the consent of Orbital's lenders.

                                      F-17
<PAGE>

                                  SIGNATURES

    Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                   LOWRANCE ELECTRONICS, INC.


DATE:    October 26, 1999          BY:/s/ Darrell J. Lowrance
       -------------------------     -------------------------------------
                                      Darrell J. Lowrance,
                                      President and
                                      Chief Executive Officer


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

<TABLE>
<S>                         <C>                                  <C>
/s/ Darrell J. Lowrance
---------------------------
Darrell J. Lowrance         President, Chief Executive           October 26, 1999
                            (Principal Executive Officer)


/s/ Mark C. Wilmoth
---------------------------
Mark C. Wilmoth             Vice President of Finance and        October 26, 1999
                            (Principal Financial Officer and
                            Principal Accounting Officer)


/s/ Alpo F. Crane
---------------------------
Alpo F. Crane               Director                             October 26, 1999


/s/ Willard P. Britton
---------------------------
Willard P. Britton          Director                             October 26, 1999


/s/ Peter F. Foley, III
---------------------------
Peter F. Foley, III         Director                             October 26, 1999


/s/ Ronald G. Weber
---------------------------
Ronald G. Weber             Executive Vice President of          October 26, 1999
                            Technology and Engineering
                            and Director


/s/ Robert F. Biolchini
---------------------------
Robert F. Biolchini         Secretary and Director               October 26, 1999
</TABLE>

                                       29