<PAGE>

                                 FORM 10-K

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

(Mark One)
[ ]  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, 2004
                                       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. [ ]

    Indicate by check mark whether the registrant is an accelerated filer (as
                      defined in Exchange Act Rule 12b-2).
                                 Yes [ ] No [X]


               Aggregate Market Value of the Voting Stock Held By
                 Non-Affiliates on August 30, 2004 - $49,504,957

                 Aggregate Market Value of the Voting Stock Held
              By Non-Affiliates on January 31, 2004 - $35,340,726

                        Number of Shares of Common Stock
                   Outstanding on August 30, 2004 - 3,761,196

                       DOCUMENTS INCORPORATED BY REFERENCE
                                      NONE

<PAGE>

                                    FORM 10-K
                Annual Report for Fiscal Year Ended July 31, 2004

                           LOWRANCE ELECTRONICS, INC.

                                Table of Contents

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

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

Item 2.        Properties.......................................................................................          9

Item 3.        Legal Proceedings................................................................................          9

Item 4.        Submission of Matters to a Vote of Security Holders..............................................          9

                                     PART II

Item 5.        Market for Registrant's Common Equity and Related Stockholder Matters............................          9

Item 6.        Selected Financial Data..........................................................................         10

Item 7.        Management's Discussion and Analysis of FinancialCondition and Results of Operations.............         11

Item 7a.       Quantitative and Qualitative Disclosures About Market Risk.......................................         19

Item 8.        Financial Statements and Supplementary Data......................................................         20

Item 9.        Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.............         20

Item 9a.       Controls and Procedures..........................................................................         20


                                    PART III

Item 10.       Directors and Executive Officers of the Registrant...............................................         20

Item 11.       Executive Compensation............................................................................        23

Item 12.       Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters....        28

Item 13.       Certain Relationships and Related Transactions....................................................        30

Item 14.       Principal Accounting Fees and Services ...........................................................        30

                                     PART IV

Item 15.       Exhibits, Financial Statement Schedules, and Reports on Form 8-K..................................        31
                                                                                                                   and F-1 to F-17

Signatures     ..................................................................................................        37
</TABLE>



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                           LOWRANCE ELECTRONICS, INC.
                                  ANNUAL REPORT
                        FOR THE YEAR ENDED JULY 31, 2004

                                     PART I

ITEM 1.  BUSINESS

                                    BUSINESS
OVERVIEW

We are a leader in the design, manufacturing and marketing of a comprehensive
line of high quality, cost-effective, sound navigation and ranging (SONAR) and
global positioning system (GPS) products. We market and sell our products
domestically and in 43 countries throughout the world, focusing on three primary
product markets: marine, consumer (which includes outdoor recreational use and
vehicular navigation systems) and aviation.

Approximately 80% of our total annual revenue is currently derived from sales of
SONAR and SONAR/GPS combination products to the marine market, used as
fishfinders and as navigational and safety devices by inland, coastal and
offshore fisherman as well as by recreational boaters. We also sell handheld and
portable GPS products used in avionic and vehicular navigational applications
and by outdoor enthusiasts for camping, hunting, hiking and other recreational
uses, as well as accessories associated with all of our products. Revenue growth
for our fiscal years ended July 31, 2002, 2003 and 2004 was 8.3%, 11.1% and
26.7%, respectively.

We are a leader in the marine electronics market, specifically in SONAR and
SONAR/GPS combination products. Our position in the market is primarily
attributable to our reputation for producing high quality products, new
technology development and speed to market with product innovations. We believe
that these attributes will enable us to gain market share in the fast growing
handheld and portable GPS product markets. Many of the design engineering and
manufacturing processes in our SONAR and SONAR/GPS production are currently
being used to produce our handheld and portable GPS products. This allows us to
expand faster into the GPS markets.

Our President and CEO, Darrell J. Lowrance, co-founded Lowrance in 1957. Our
initial product offering was the fish LO-K-TOR, the first electronic fishfinder
capable of displaying individual game fish, as well as schools of baitfish,
bottom structure and water depth. Today, we market a comprehensive line of
SONAR, GPS and SONAR/GPS combination products worldwide under two brand names,
Lowrance and Eagle. We market our products to dealers, distributors, mass
merchants and original equipment manufacturers who in turn sell our products in
the consumer marketplace. We have established a global distribution network
encompassing more than 1,480 wholesale and retail customers domestically and in
43 countries throughout the world.

We are headquartered in a 116,000 square foot facility in Tulsa, Oklahoma, where
we maintain design engineering, sales, marketing, testing, product distribution,
customer service operations and administration. Additionally, we operate a
108,000 square foot manufacturing and design engineering facility in Ensenada,
Mexico, where we manufacture all of our products. We also operate two
distribution centers in Canada and Australia, our two largest markets outside of
the United States.

INDUSTRY BACKGROUND

SONAR

The components of a typical SONAR system are: (1) a SONAR head unit with a
liquid crystal display (LCD), (2) a transducer (which transmits and receives
sound waves through the water), and (3) a power source. The SONAR first
generates an electrical impulse, which is converted into ultrasonic sound waves
in the transducer and transmitted down through the water. The ultrasonic waves
rebound when they strike objects, creating echoes. The transducer converts these
echoes back into electrical impulses and the receiver processes the impulses
into graphic images displayed on the LCD for use by the boater. This sounding
process repeats itself many times per second, each time at a slightly different

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location within a body of water (assuming the boat is moving), instantly and
accurately painting detailed pictures of the underwater world by combining the
results of numerous soundings.

GLOBAL POSITIONING SYSTEMS (GPS)

GPS utilizes a network of a minimum of 24 satellites that transmit orbital and
time information that enable GPS receivers to accurately calculate latitude,
longitude and altitude worldwide. The United States Department of Defense, which
currently maintains the system, originally designed the system only for defense
applications. However, in the 1980s, the United States government made the
system available for civilian use. The GPS satellites broadcast several limited
access codes and one unrestricted code for free-of-charge civilian use. In May
of 2000, the United States government eliminated Selective Availability (SA),
which while in place degraded the accuracy of GPS for security reasons. This
elimination of SA improved consumer GPS positional accuracy greatly from a
radius the size of a football field (100 yards worst performance on average) to
a much smaller radius about the size of a tennis court (30 feet worst
performance on average). The initialization of the United States Federal
Aviation Administration's new satellite signal correction system, the Wide Area
Augmentation System (WAAS), has improved consumer GPS positional accuracy to a
radius of approximately ten feet (best performance on average).

The markets for satellite-based GPS+WAAS navigational and mapping products are
projected to grow rapidly over the next five years according to Frost &
Sullivan. Fishermen, boaters, pilots and general outdoor recreational users in
the WAAS coverage areas can now enjoy excellent positional accuracy while
participating in their favorite outdoor activities.

According to a 2004 report by Frost & Sullivan, the combined North American
marine, aviation and general consumer land GPS market segments, which we
currently serve, are projected to grow from an estimated $2.6 billion in 2003 to
$6.2 billion in 2008, representing a compound annual growth rate (CAGR) of
18.4%. The North American GPS market is expected to grow from $3.5 billion in
2003 to $7.5 billion in 2008 according to Frost & Sullivan.

Marine SONAR and SONAR/GPS Combination. A critical component to our continued
growth is aftermarket marine electronics upgrades by existing fishing and
recreational boaters. Similar to computer users upgrading memory, processing
speed and screen sizes, fishermen and recreational boaters often upgrade the
electronic systems on their boats in order to keep up with the most advanced
technology. Sales of our SONAR and SONAR/GPS combination products grew by 10.8%
in fiscal 2002, 16.4% in fiscal 2003 and 26.8% in fiscal 2004.

Marine GPS. Inland, coastal and offshore sport fishermen as well as boaters and
commercial vessels have multiple uses for GPS receivers that range from
worldwide navigation to locating and returning to a favorite fishing or mooring
spot. According to Frost & Sullivan, the GPS Marine Market is expected to grow
from $266 million in 2003 to $407 million in 2008, representing a CAGR of 8.9%.

General consumer GPS. Handheld, portable and fixed-mount GPS products with
detailed street map displays, points-of-interest databases and "turn-by-turn"
guidance currently offer navigational assistance to drivers around the world.
Additionally, hikers, hunters, campers and bikers use GPS receivers
recreationally to navigate through rural and wilderness terrain. GPS systems
allow users to pinpoint their positions, map their routes and save specific
locations to memory in order to return to those locations at a later time.
According to Frost & Sullivan, the GPS land market is expected to grow from
approximately $2.2 billion in 2003 to approximately $5.6 billion in 2008,
representing a CAGR of 20.3%. The GPS land market is expected to expand from
64.4% of the total GPS market in 2003, to 74.5% in 2008.

Aviation GPS. In the aviation sector, the technological advancement of portable
GPS has resulted in significant cost savings due to direct routings to
destinations and increases in safety and air traffic control system efficiency.
Many general aviation users are installing GPS airborne receivers for use in en
route, terminal area and non-precision approach operations. Likewise, many
aviation authorities have realized that GPS offers a navigation service that is
equal to, and in some respects better than, the existing ground-based systems
and are taking the necessary steps to allow for more advanced use of GPS within
their respective airspace. We believe these factors will reduce aviation VFR
(visual flight rules) users' reliance on the existing air traffic control
system. According to Frost & Sullivan, the GPS aviation market is expected to
grow from $149 million in 2003 to $201 million in 2008, a CAGR of 6.2%.

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OUR KEY GROWTH STRATEGIES

Our key growth strategies are based on our ability to continually develop
technological innovations for products in our core markets and to expand our
product lines into other applicable end-user markets. Additionally, we must
efficiently utilize our existing manufacturing facility and take advantage of
our inherent operating leverage. We are focused on research and development of
new technologies that will enhance the performance and quality of our products.
Over the past 47 years we have maintained our position as a leader in the
markets we serve by seeking to be first-to-market with new product enhancements.
We intend to expand our position by implementing the following strategies:

- CONTINUE TO INTRODUCE NEW AND ENHANCED PRODUCTS IN OUR CORE MARKETS

We believe our future success depends upon our ability to be first-to-market
with technological advances and consistently deliver new products that provide
value-added enhancements to our core markets. Historically, one of our main
priorities has been to bring new products and technologies quickly to market.
This is evidenced by our increase in new product introductions in recent years
from ten in fiscal 2001, twelve in fiscal 2002, 28 in fiscal 2003 and over 30 in
fiscal 2004.

We intend to continue this focus on research and development, and the
introduction of new products in all of our core markets as set forth below.

   MARINE

   In fiscal 2005, we intend to introduce a series of multi-function gauges and
   an integrated system which is compatible with the National Marine Electronics
   Association standard for data transmission. This highly intelligent
   electronic system will permit various networks of multiple instruments (e.g.,
   SONAR/GPS, radar, autopilot, radio, etc.) and provide the ability to display
   digital data transmitted from boat engines in multiple formats to accommodate
   a consumer's preference. We are also engaged in on-going research and
   development projects, which we believe will allow us to expand our current
   marine product offerings to cover a full suite of boat instruments within the
   next 24 months. Our marine SONAR and SONAR/GPS combination products revenue
   grew $18.9 million in fiscal 2004 compared to fiscal 2003.

   GENERAL CONSUMER PRODUCTS

   We are extremely focused on enhancing our product offerings in the handheld
   and portable GPS market. In addition to the new fiscal 2004 products we are
   currently shipping, we intend to ship an additional seven new handheld and
   two new portable GPS products in fiscal 2005. Over half of these new fiscal
   2005 products will include audible turn-by-turn driving instruction
   capabilities for the United States, Canada and Europe. We will utilize our
   existing distribution channels for these new GPS products since sporting
   goods outlets and general merchants have effectively distributed our
   products, as exemplified by the fact that these distribution channels
   accounted for approximately 46% of our revenue during fiscal 2004. Our
   general consumer products revenue grew $3.5 million in fiscal 2004 compared
   to fiscal 2003.

   AVIATION

   We announced and shipped two new aviation GPS products in fiscal 2004 and
   announced a third aviation GPS products, a color aviation GPS product, which
   will ship in the first quarter of fiscal 2005. Our aviation products revenue
   grew $1.7 million during fiscal 2004 compared to fiscal 2003.

-  EXPAND OUR EXISTING TECHNOLOGIES INTO NEW END-USER MARKETS

We believe that there is a significant growth opportunity to apply the
technologies currently found in our core product set to alternative product
lines which will appeal to new end-user markets. For example, we see significant
opportunities in automotive turn-by-turn applications, additional hand-held GPS
applications and various industrial, governmental and commercial applications.
Specifically, we are developing a portable, specialized, on-dash automotive
turn-by-turn GPS product for fiscal 2005.

                                       3

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- CAPITALIZE ON OUR OPERATING EFFICIENCIES AND INCREASE UTILIZATION OF OUR
  EXISTING MANUFACTURING CAPABILITIES

We believe we have a competitive advantage with our integrated design
engineering and manufacturing processes, allowing us to adjust our product mix
according to market demand and ensuring high-quality production. By controlling
a significant portion of design engineering and manufacturing processes, we
expect to continue to benefit from increased speed to market. We intend to
capitalize on our technological advancements by rapidly providing new product
enhancements and product lines to the market.

We are poised to take advantage of the significant leverage inherent in our
operations. We have the capacity to more than double our production in our
Ensenada, Mexico manufacturing facility. We believe this increase is possible
without significant increases in fixed costs due to available manufacturing
capacity during our off-peak season. By adding certain non-seasonal products to
our product set, we expect to utilize this operating leverage and smooth our
production, while decreasing volatility in our sales and earnings. Expansion
into non-seasonal and counter-seasonal markets would allow us to spread our
fixed manufacturing costs over a larger base of products, thereby increasing the
gross margins across our entire product mix.

PRODUCTS

We design products that provide high-performance features at highly competitive
prices. We have established a reputation as a high quality, technologically
advanced innovator in the industry for the past 47 years. For 2004, we are
marketing the widest lineup of Eagle and Lowrance SONAR and GPS products in our
47-year history, including 18 Eagle and 45 Lowrance products. Our current
primary product markets include marine, general consumer and aviation, with
additional sales of related accessories and mapping software for all three
markets.

MARINE

Our marine products are extremely durable, completely waterproof and are
designed to withstand harsh cold, hot and salt-spray environments. Our products
are designed specifically for inland and coastal sport fishermen interested in
the size, depth and location of individual game fish, thermoclines, or
underwater structure (e.g., drop-offs, channels, humps, tree stumps and rock
piles), as well as the location of large schools of baitfish. The retail price
points of our marine products range from $79 to $2,499.

In fiscal 2004, we launched our new Lowrance "M" (Marine) Series of SONAR/GPS
domestic and international products. The M Series offers some of the highest
resolution screens in the industry at its price points which start at $319 for
monochrome models and $419 for color models, all with detailed built-in digital
mapping. In addition, we expanded our Eagle line of products with the release of
a combination SONAR/GPS unit at a breakthrough price point of $199.

We also introduced new Lowrance enhanced color SONAR and combination models
which are highly visible in direct sunlight. The price points range from a
highly competitive $549 to $749, making them very attractive to inland, coastal
and Great Lakes fisherman and boaters.

GENERAL CONSUMER

We currently market three cost-effective handheld GPS mapping models for outdoor
recreational use (e.g., camping, hunting, backpacking and fishing) and vehicular
(e.g., auto, SUV, ATV and RV) navigation applications. The handheld mapping
units are sold under the iFINDER product family name and can be used for marine
applications as well. All models come with a built-in background map that
provides coverage of major cities, highways, lakes, rivers and coastal areas of
the United States, including navigation aids and wrecks/obstructions, plus
interstate exit services. Price points for the handhelds range from $149 to
$329.

We recently enhanced our two newest iFINDER models, the iPro and H2O, to include
higher-resolution screens, white light emitting diode (LED) backlighting and
dual micro-processors for faster screen updates/scrolling. The H2O is a totally
waterproof handheld model. Each handheld has one slot for insertion of an
industry-standard digital media card (MMC/SD) for recording GPS trip details, or
for use of pre-programmed, plug-&-play, higher-detail mapping options.

                                       4

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We also offer models packed with CD-ROM software and hardware accessories that
permit consumers to make unlimited custom maps downloadable from CD to digital
media cards.

In addition to the handheld portable models, we also manufacture six larger
fixed-mount mapping models in the GlobalMap Series designed for navigational
guidance on water or land. These larger models with monochrome or color displays
feature diagonal screen sizes from 5" to 10.4". They feature the same built-in
background map coverage previously discussed for the handhelds. Moreover, most
of these models are packaged with the exclusive MapCreate CD software with two
million searchable points-of-interest such as restaurants, hotels, airports,
marinas, emergency services and shopping. The GlobalMap models all have from one
to two slots for use of pre-programmed, plug-&-play, electronic charts including
Lowrance FreedomMaps and Navionics HotMaps charts for users that do not have or
make use of computer map-making. Price points for this product series range from
$449 to $1,899.

AVIATION

In 2004, we announced three new portable avionics models, the AirMap 500, AirMap
1000 and the AirMap 2000c. Two models featuring high resolution monochrome
displays are currently shipping to specialty aviation retailers. The AirMap 500
is a handheld model with a Moving Map, Jeppesen aviation database, exclusive
obstructions database and has plug-&-play digital media card (MMC/SD)
capability. The AirMap 1000 is a larger portable model with larger display and
additional features including the exclusive new Airport Orientation and
Horizontal Situation Indicator (HSI) steering guidance navigational displays, as
well as digital media card capability. The AirMap 2000c will pack all of the
aviation-specific features of the two monochrome models into a color display
model that will be highly visible in direct sunlight.

All three AirMap models are true "buy-&-fly" values in that they will be
packaged with the important accessories pilots need: the Jeppesen and
Obstructions databases on one 32MB digital media card; MapCreate(TM)mapping
software with two million searchable points-of- interest; memory card
reader/writer; remote amplifying antenna; control yoke and windscreen mounting
systems; cigarette plug power adapter; and AA batteries. The new AirMap 2000c
can also be used for land-based navigation, such as in rental vehicles.

ACCESSORIES

In addition to our SONAR and GPS products, we offer a broad set of accessories
such as transducers, water temperature/boat speed/distance traveled sensors,
cables, portable power packs, ice fishing accessories, GPS antenna/receivers,
detailed mapping CD-ROM software, reusable digital media cards, a PC computer
memory card reader/writer, power adapter cables and various mounting brackets.

PRODUCT RESEARCH AND DEVELOPMENT

We believe that our successful operations and strong competitive position are
dependent to a great extent upon our ability to anticipate and react to the
technological innovations inherent within our industry. As a result, we devote a
substantial portion of our resources to developing new products and enhancing
existing product offerings. Our research and development expenditures, which
primarily consist of personnel and personnel related costs, were $3.1 million in
fiscal 2001, $2.7 million in fiscal 2002, $4.2 million in fiscal 2003 and $5.3
million in fiscal 2004. As of July 31, 2004, we employed approximately 35 design
engineers. To augment our continued investment in product research and
development, we utilize several manufacturing and design technologies, which
have been essential to the development of our breakthrough SONAR and GPS
products. These technologies have allowed us to reduce our material and
manufacturing costs and have provided improved product performance. They
include:

    - Computer Aided Design (CAD) systems,

    - Application Specific Integrated Circuits (ASICS),

    - Tape Automated bonding (TAB),

    - Chip-On-Flex (COF),

    - Chip-On-Glass (COG),

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    - System-On-Chip (SOC) and

    - Liquid Crystal Display (LCD) assembly.

For fiscal 2003, we announced 26 new models and delivered 28 new Lowrance and
Eagle products, more than we have ever introduced in a single model year. For
fiscal 2004, we continue an aggressive design schedule with the announcement of
26 new models and the introduction of a total of over 30 new Lowrance and Eagle
products.

MANUFACTURING

During fiscal 1997, we expanded our production operation in Mexico by
consolidating our existing manufacturing operations in Ensenada, Mexico, which
began in 1993, into a newly constructed leased facility that is leased through
September 30, 2006. We have purchase options on both the Ensenada facility and
adjacent undeveloped land through September 30, 2006. We may renew the leases
and the purchase options for four additional terms of five years each on the
terms set forth in the lease and purchase option agreements. The purchase prices
under both options escalate annually by 3% each October 1. As of July 31, 2004,
the combined purchase price of both options was approximately $5.6 million. We
expect to exercise both of our purchase options before they expire. Currently,
we utilize 86,000 square feet of manufacturing space within the 108,000 square
feet we presently occupy. From fiscal 1997 through fiscal 2000 we transitioned
the balance of our United States automated high-technology manufacturing to our
new Ensenada plant. We currently manufacture, test and package all of our
products in Ensenada. Our highly qualified Ensenada technical staff is comprised
of 101 college graduates, including a total of 70 engineers. Of the 70
engineers, there are 18 design/software engineers; 9 test engineers; 18
manufacturing engineers; 3 quality control engineers; and 22 industrial
engineers.

The manufacturing process primarily involves the use of automated surface mount
technology (SMT) equipment in the placement of electronic components on printed
circuit boards and the assembly of other 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 our manufacturing process.

SALES AND MARKETING

We market and sell our products worldwide through a combination of sporting good
stores, mass merchants, mail-order catalogs, wholesalers, boat dealers and OEM
boat manufacturers. Education of the consumer is important due to the high-tech
nature of our products. Our internet websites play a major role in educating
consumers about our product lines. The information included on these websites is
not a part of this prospectus. We also educate and support the sale of our
products through technical product promotion, technical selling, participation
in industry tradeshows and after-sales support.

We believe our dual-brand (Lowrance and Eagle) marketing strategy allows us to
attract a broader range of consumers and more effectively attract new customers.
We sell our Lowrance line primarily to retailers, wholesalers and boat
manufacturers (OEMs) who provide technical installation and product operation
assistance to the consumer. We sell the Eagle line primarily through mass
merchants, mail-order catalog companies, retail sporting goods stores and
wholesalers that do not usually provide technical assistance to the consumer.

LEI Extras, Inc., a wholly-owned subsidiary, allows consumers to purchase
accessories that might not be stocked by a dealer via the internet, toll-free
phone or mail-order.

We sell to over 1,480 customers in 43 countries. Some of our largest United
States customers include Bass Pro Shops, Bell Industries, Cabela's, Wal-Mart and
Boaters World. The two largest international markets for our products are Canada
and Australia, where we maintain our own warehouses. Our products are carried in
a number of retail giants including the large European sporting goods retailer,
Decathlon. Since fiscal 2001, no customer has accounted for over 10% of our net
sales.

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CUSTOMER SERVICE

Substantially all of our products are sold with a full one-year warranty. We
emphasize "service after the sale" in connection with our products by providing
free shipping, through a prepaid Return Authorization (R.A.) system, when
requested by consumers located in the United States electing to return their
units to us for warranty repairs. Warranty and non-warranty repairs are
available from our plant in Tulsa, Oklahoma, with "depot" inventories maintained
in foreign countries to handle warranty issues in a timely manner. Because
technology in the electronics industry changes rapidly, creating obsolescence in
repair components, we have developed a program that generally allows consumers
either repair or the ability to upgrade for products manufactured within the
past five years. We also offer two-year extended warranties for an additional
one-time fee through our LEI Extras, Inc. subsidiary.

INTELLECTUAL PROPERTY

Our technical and proprietary expertise and the continuation of technological
advances have resulted in our being a leader in the design, manufacture and
marketing of SONAR and GPS products. Our strategy is to predict future changes
in the market and to strive to be first to design and develop new products
incorporating the technological advances for, and to introduce these new
products into, the rapidly changing markets. In those circumstances where the
life cycle of the new products or technological advances is of sufficient
length, we seek to protect our proprietary interests and markets through the
patent process. As of July 31, 2004, we had five issued design patents, ten
issued utility patents and two patent applications pending in the United States.
All of our patents have been assigned to secure our revolving credit line. We
intend to continue to assess appropriate occasions for seeking patent protection
for those aspects of our technology that we believe provide significant
competitive advantages.

We also rely on a combination of copyright, trademark, trade secret and
contractual provisions to protect our proprietary rights. We have more than 40
active trademark registrations with the United States Patent and Trademark
Office including the Lowrance trademark and the Eagle trademark with
accompanying logos. We also have more than 50 trademark registrations in 19
foreign countries, and have three applications pending for trademark
registrations in two foreign countries. We also enter into patent, trade secret
and confidentiality agreements with our employees that require them to disclose
to us any inventions they create during employment, that convey all rights to
inventions to us and that restrict the distribution of proprietary information.

We license certain databases from third parties for use in our GPS products in
the marine, general consumer and aviation markets. We convert the data into a
format which allows our software interfaces to provide user-friendly access to
the detailed water, land, points of interest and aviation data. We license both
domestic and international data.

SUPPLIERS AND MATERIALS

During fiscal 1997, we expanded our production operation in Mexico by
consolidating our existing manufacturing operations in Ensenada, Mexico, into a
newly constructed leased facility. The manufacturing process primarily involves
the assembly of component parts purchased from suppliers. We purchase certain
components from sole or limited source providers, some of which are located in
foreign countries. See "Risk factors" relating to sole source providers.

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

With respect to plastic component parts, such as the housings for our units,
because of the expense, we generally maintain only one mold for each plastic
part. Although typically we own each mold and could move it to another supplier,
we are limited to one concurrent supplier.

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We have never experienced a substantial interruption in product distribution due
to unavailability of, or delay in, receiving component parts, which has resulted
in the loss of any material amount of sales. To protect against interruptions
and loss of sales, we maintain a limited amount of safety inventory of component
parts and some insurance coverage against loss of supply. We limit the amount of
safety stock to avoid the cost of carrying raw material inventory and problems
associated with obsolescence. To further protect against interruptions, we are
selective of our suppliers and, with limited exceptions, rely upon those who are
substantial in size, strong financially, and offer proven track records and
experience.

SEASONALITY AND WORKING CAPITAL MANAGEMENT

Our current business is seasonal, with a concentration of revenue in the months
of January through May each year due to marine consumer purchases in
anticipation of the fishing and boating seasons. We normally manufacture our
products in anticipation of, and not in response to, customer orders and fill
orders within a short period of time after receipt. Thus, we must maintain
inventories of finished goods to fill orders promptly. We are subject to
customer demands, which may not correlate with our forecasts utilized to
schedule the inventory production. Our working capital needs fluctuate as a
result of our current seasonality.

COMPETITION

The marine, consumer and aviation markets in which we compete are highly
competitive, subject to rapid change and significantly affected by new product
introductions and other market activities of industry participants. Competition
in the markets for our products is based upon a number of factors including
quality, technological development, performance, service and price. We encounter
competition from a number of domestic and foreign competitors. We compete with a
variety of competitors in each of our target markets and we encounter some of
the same competitors in each market.

The primary basis for competition in the marine sports fishing and recreational
boating market is technological innovation and price. In order to maintain our
competitive position, we must continue to enhance and improve our products and
anticipate rapid, major technological innovations and changes within the
industry. Presently, there are more than ten competitors worldwide in this
market including Humminbird, RayMarine, Garmin International, Inc. and Furuno
Electronic Company.

The general outdoor consumer hand-held GPS mapping market has expanded rapidly
over the past several years. Target markets for these products include, but are
not limited to, camping, hunting, hiking, cross-country skiing, automotive,
snowmobile, RV and off-road vehicles, plus general business and pleasure travel
(in addition to marine and aviation use).

The two primary competitors in the GPS market are Garmin International, Inc. and
the Magellan product line of Thales Navigation. Both companies have introduced
and marketed several non-mapping products retailing for under $150 and were
among the first to market handheld GPS products. The two companies also offer a
full range of higher priced products with more features than their lower priced
models.

Our principal competitor in the marketing of portable aviation GPS mapping
products is Garmin International, Inc.

EMPLOYEES

As of July 31, 2004, we employed 991 people of whom approximately 789 were
involved in manufacturing, quality and materials. Of the 789 employees involved
in manufacturing, quality and materials, 56 employees are located in our
headquarters in Tulsa and 733 are located in our leased manufacturing facility
in Ensenada, Mexico. The remaining 202 employees were engaged in research and
development, sales and marketing and administration. Additionally, we retain, on
a part-time basis, approximately 200 independent contractors, or "Pro-Staff",
who assist in promoting our products. We have never experienced a work stoppage
and none of our employees are represented by an outside union organization.
Electronica Lowrance, our Mexican subsidiary, has a collective work agreement
with Guadalupe Victoria Union, a company sponsored union. Company sponsored
unions are common in Mexico. Management considers our employee relations to be
satisfactory.

                                       8

<PAGE>


ITEM 2.  PROPERTIES

We have maintained our corporate offices at 12000 East Skelly Drive, Tulsa,
Oklahoma, since 1970. Our facility includes a 116,000 square foot building and
approximately 23 acres of land.

We lease a 108,000 square foot manufacturing facility in Ensenada, Mexico that
is leased through September 30, 2006. We have purchase options on both the
Ensenada facility and adjacent undeveloped land through September 30, 2006. We
may renew the leases and purchase options for four additional terms of five
years each on the terms set forth in the lease and purchase option agreements.
The purchase prices under both options escalate annually by 3% each October 1.
As of April 30, 2004, the combined purchase price of both options was
approximately $5.6 million. We expect to exercise both of our purchase options
before they expire. We presently are using approximately 86,000 square feet for
manufacturing, including a 42,000 square foot, dust-free,
atmospherically-controlled, manufacturing area. The unused portion of the
current building is available for expansion. The building was also designed for
additional expansion. In addition, we lease 12,000 square feet of warehouse
space in Ensenada.

We also lease 2,500 square feet and 3,500 square feet of warehousing, shipping
and office facilities in Australia and Canada, respectively.

We believe that our facilities and equipment are well suited to our needs and
are properly maintained. Our current manufacturing facilities are sufficient to
allow for significantly increased production with little capital investment. We
believe we operate the facilities and equipment in substantial compliance with
all current regulations. All the facilities and equipment are, in our opinion,
adequately insured.

ITEM 3.  LEGAL PROCEEDINGS

From time to time we may become involved in litigation relating to claims
arising from our ordinary course of business. We believe that there are no
claims or actions pending or threatened against us, the ultimate disposition of
which would have a material adverse effect on us.

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 August 30, 2004, the Company had 62 holders of its Common Stock,
not including the number of persons whose stock is held in nominee or "street
name" accounts through brokers. Our revolving credit line prohibits the payment
of dividends without the prior written consent of our lender. We have not
historically declared regular cash dividends. However, we announced dividends of
$0.25 per common share payable on August 15, 2003 to stockholders of record as
of August 13, 2003, payable on May 26, 2004 to stockholders of record as of May
24, 2004 and payable on August 16, 2004 to stockholders of record as of August
12, 2004 after obtaining approval from our lender. Declaration of dividends in
the future will remain within the discretion of our Board of Directors and will
depend upon, among other things, our financial results, the favorable tax
treatment of dividend payments and obtaining the requisite approvals from our
lender.

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

                                       9

<PAGE>



<TABLE>
<CAPTION>
                                          2003                           2004
                                  --------------------           ---------------------
                                  High            Low             High            Low
                                   $               $               $               $
                                  --------------------           ---------------------
<S>                               <C>             <C>            <C>              <C>
1st Quarter                       4.70            3.05           23.81            7.56
2nd Quarter                       6.80            3.85           25.27           18.00
3rd Quarter                       7.36            5.29           26.96           19.35
4th Quarter                       9.78            6.84           37.19           21.00
</TABLE>

ITEM 6.  SELECTED FINANCIAL DATA

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

<TABLE>
<CAPTION>
                                                        Years Ended July 31,
                                 ----------------------------------------------------------------
                                                (in thousands, except per share amounts)
                                 ----------------------------------------------------------------
                                   2000          2001          2002          2003          2004
                                 --------      --------      --------      --------      --------
<S>                              <C>           <C>           <C>           <C>           <C>
OPERATING AND PER SHARE DATA
Operating Data:
   Net sales                     $ 73,209      $ 73,419      $ 79,501      $ 88,297      $111,861
   Gross profit                    27,899        26,335        29,926        37,261        47,304
      Percent of sales               38.1%         35.9%         37.6%         42.2%         42.3%

   Operating income                 3,549         2,103         5,255         7,881        13,310
      Percent of sales                4.8%          2.9%          6.6%          8.9%         11.9%

   Income before taxes              1,523            99         3,935         6,862        12,429
      Percent of sales                2.1%          0.1%          4.9%          7.8%         11.1%

   Net income                       2,473            37         2,389         4,645         8,756
      Percent of sales                3.4%          0.1%          3.0%          5.3%          7.8%

Per Share Data:
   Net income
      Basic                      $   0.66      $   0.01      $   0.63      $   1.23      $   2.33
      Diluted                        0.66          0.01          0.63          1.19          2.20


   Cash dividends per
     common share                      --            --            --            --      $   0.50

Balance Sheet Data:
   Working capital               $ 10,874      $ 16,503      $ 12,681      $ 18,149      $ 23,778
   Total assets                    29,297        37,656        30,762        35,417        48,743
   Long term debt, less
      current maturities            8,573        14,418         6,183         5,825         6,040
   Stockholders' equity            11,955        11,877        14,359        19,608        26,655
</TABLE>

                                       10




<PAGE>



ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

COMPANY OVERVIEW

We design, manufacture, market and sell a comprehensive range of high quality,
cost-effective sound navigation and ranging (SONAR) and global positioning
system (GPS) products and digital mapping systems under two different brand
names for use in marine, general consumer (includes outdoor recreational use and
vehicular navigation systems) and aviation markets. Our SONAR and combination
SONAR/GPS products graphically display underwater information and are used as
fishfinders, navigational and safety devices by both inland, coastal and
offshore fishermen as well as recreational boaters. Our handheld and portable
GPS products are used in avionic and vehicular navigational applications and by
outdoor enthusiasts for camping, hunting, hiking and other recreational uses.
Currently, we offer approximately 63 different marine, outdoor, aviation and
original equipment manufacturer products.

We market our products to dealers, distributors, mass merchants and original
equipment manufacturers who in turn sell our products in the consumer
marketplace. Demand for our products has historically been seasonal, with the
lowest sales occurring in our first fiscal quarter (August through October) and
the highest sales occurring in our third fiscal quarter (February through April)
due to marine consumer purchases during the beginning of the fishing season. We
focus on developing product lines that address most price points in our markets
in order to provide a broad range of features to consumers. We have increased
the number of new product introductions in each of the last three fiscal years
and the current fiscal year. For the fiscal year 2004, we introduced more than
30 new SONAR and GPS products. The introduction of new products in the last
three fiscal years has resulted in the increase in sales and gross margin
discussed below.

Our successful operations and strong competitive position are dependent to a
great extent upon our ability to anticipate and react to the technological
innovations inherent within our industry. To augment our continued investment in
product research and development, we utilize several manufacturing and design
technologies, which have been essential to the development of our breakthrough
SONAR and GPS products. These advanced technologies have allowed us to reduce
our material and manufacturing costs and have provided improved product
performance. They include:

    - Surface Mount Technology (SMT) production equipment;

    - Computer Aided Design (CAD) systems;

    - Application Specific Integrated Circuits (ASICS);

    - Tape Automated Bonding (TAB);

    - Chip-On-Flex (COF);

    - Chip-On-Glass (COG);

    - System-on-Chip (SOC); and

    - Liquid Crystal Display (LCD) assembly.

We believe that we were first to utilize many of these manufacturing and design
technologies, which helped provide a competitive advantage and differentiation
in the marketplace. We intend to continue our focus on developing and delivering
leading-edge products based upon our innovations.

Our products are sold domestically and in 43 countries throughout the world.
International sales totaled approximately $26 million, or 23% of total net sales
for fiscal 2004 and $20 million, or 23% of total net sales for fiscal 2003. The
majority of our international sales are conducted in Canada, Australia and
Europe. As of July 31, 2004, we had approximately 1,480 wholesalers and
retailers purchasing our products.

                                       11
<PAGE>



EXECUTIVE SUMMARY

During the three fiscal years ended July 31, 2004, we noted:

    - Sales for fiscal 2004 were $111.9 million, a 26.7% increase from fiscal
    2003. Sales for fiscal 2003 were $88.3 million, an 11.1% increase from
    fiscal 2002.

    - Fully diluted net income per share for fiscal 2004 was $2.20, as compared
    to $1.19 for fiscal 2003 and $0.63 for fiscal 2002.

    - Gross profit margin increased by $10.0 million in fiscal 2004, a 27.0%
    increase from 2003. Gross profit margin increased by $7.3 million in fiscal
    2003, a 24.5% increase from fiscal 2002.

    - As part of an on-going commitment to develop new technology and improve
    existing technology, we hired thirteen additional engineers in fiscal 2004
    and seven additional engineers in the third and fourth quarters of fiscal
    2003 after hiring six additional engineers in the third and fourth quarters
    of fiscal 2002.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America. The
preparation of these statements requires us 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. The
estimates and assumptions are based on historical experience and on various
other assumptions that we believe to be reasonable under the circumstances, the
results of which form the basis for making judgments about the carrying values
of assets and liabilities that are not readily apparent from other sources. We
evaluate the estimates and assumptions on an on-going basis. We are not aware of
any circumstances in the past which have caused these estimates and assumptions
to be materially wrong. We are not currently aware of any material changes in
our business that might cause these assumptions or estimates to differ
significantly. The most significant estimates and assumptions relate to the
product warranty reserve and the excess and obsolete inventory reserve. Actual
results could differ from any of our estimates under different assumptions or
conditions. Historically, differences between actual results and our estimates
have not been material.

Our significant accounting policies are described in Note 1 to the consolidated
financial statements included in Part IVof this annual report on Form 10-K.
Below is a discussion of the accounting policies that we believe are most
critical to an understanding of our consolidated financial statements.

REVENUE RECOGNITION

We recognize revenue at the time of product shipment in accordance with our FOB,
shipping point terms of sale. Revenue is recorded net of certain reserves for
dealer premium coupons and product returns which are only accepted on a limited
case-by-case basis. Dealer premium coupons are rebates ranging from $10 to $100
to qualified boat and motor dealers who install SONAR units for consumers and
return to us the appropriate rebate card. Although the reserves for dealer
premium coupons and product returns fluctuate over time, historically those
fluctuations have not been significant.

PRODUCT WARRANTIES

The majority of our sales are made under a one-year product warranty. We provide
an estimate of future warranty costs based on recent historical product unit
return rates and the average repair costs per unit incurred during the year. The
estimate is adjusted, as necessary, for any specific knowledge that would impact
the historical trend. The reserve for warranty costs is sensitive to a change in
the historical rate of units returned during the warranty period. A 10% change
in the expected return rate for fiscal 2004 would change the reserve by
approximately $119,000. Historically, the average change in the estimated return
rate has been less than 10%.

                                       12

<PAGE>



INVENTORY

Inventories are stated at the lower of cost or market using the first-in,
first-out method, net of excess, obsolete and realization reserves. We estimate
the level of reserves based upon expected usage information for raw materials
and historical selling trends for finished goods.

Excess and obsolete inventory reserves are recorded by comparing available
quantities of raw materials and finished goods to work order requirements for
those raw materials and forecasted sales for finished goods. We adjust the
required reserves for anticipated changes in scheduled work orders resulting
from factors such as process or design changes that impact the raw materials
usage and changes in sales forecasts resulting in changes in finished goods
quantities. Increases or decreases in the required excess and obsolete inventory
reserves impact our gross margin. A 10% change in the results of this process
for the year ended July 31, 2004 would change the required reserve by
approximately $60,000. Historical fluctuations in this reserve have related
primarily to inventory levels and the ability to accurately forecast product
needs, although process and design changes in the products also have a direct
impact on the required reserve when they occur.


RESULTS OF OPERATIONS

YEAR ENDED JULY 31, 2004 (FISCAL 2004), COMPARED TO YEAR ENDED JULY 31, 2003
(FISCAL 2003)

Financial highlights. The following tables set forth selected amounts, ratios
and relationships calculated from the consolidated statements of income and
comprehensive income for the fiscal years ended July 31, 2004 and 2003:

<TABLE>
<CAPTION>
                                             FISCAL YEAR ENDED             INCREASE (DECREASE)
                                                  JULY 31,                      FROM 2003
                                        --------------------------       ------------------------
     (DOLLARS IN THOUSANDS)                2003            2004              $             %
-------------------------------------   ----------      ----------       ----------    ----------
<S>                                     <C>             <C>              <C>           <C>
Net sales............................   $   88,297      $  111,861       $   23,564         26.7%
Gross profit.........................       37,261          47,304           10,043         27.0%
Selling and administrative expenses..       25,189          28,742            3,553         14.1%
Research and development expenses....        4,191           5,252            1,061         25.3%
Operating income.....................        7,881          13,310            5,429         68.9%
Interest expense.....................          989             689             (300)       (30.3)%
Pretax income........................        6,862          12,429            5,567         81.1%
Net income...........................   $    4,645      $    8,756       $    4,111         88.5%
                                        ----------      ----------       ----------    ----------
</TABLE>


<TABLE>
<CAPTION>
                                             FISCAL YEAR ENDED
                                                 JULY 31,
  EXPRESSED AS A PERCENT OF NET SALES:      2003          2004
--------------------------------------    --------      --------
<S>                                       <C>           <C>
Gross profit..........................      42.2%         42.3%
Selling and administrative expenses...      28.5%         25.7%
Research and development expenses.....       4.7%          4.7%
Operating income......................       8.9%         11.9%
Interest expense......................       1.1%          0.6%
Pretax income.........................       7.8%         11.1%
Net income............................       5.3%          7.8%
</TABLE>

Sales and margin. During fiscal 2004, we introduced and shipped over 30 new
SONAR, SONAR/GPS navigation, GPS and GPS Aviation products. Total net sales
increased by $23.6 million, or 26.7%, during fiscal 2004 as compared to fiscal
2003, while total unit sales increased by approximately 21.1%. This year over
year increase in sales is due to:

                                       13
<PAGE>



    -   New SONAR and SONAR/GPS navigation products at new price points which
        began to ship in the third quarter of 2004. These new price points were
        at the upper end of our price point range;

    -   New high end SONAR/GPS navigation products introduced in fiscal 2003 at
        the end of the second quarter and during the third quarter which were
        selling throughout fiscal 2004;

    -   New GPS handhelds which began to ship in the third quarter of fiscal
        2004;

    -   Two new Aviation GPS products introduced in fiscal 2004 which began to
        ship in the first and second quarters; and

    -   Increased sales from new product introductions at previously existing
        price points.

Our gross profit margin increased by $10.0 million, or 27.0%, during fiscal 2004
as compared to fiscal 2003. The gross margin percentage increased slightly to
42.3% in fiscal 2004 as compared to 42.2% in fiscal 2003.

Operating expenses and income. Operating expenses increased by $4.6 million
during fiscal 2004 as compared to fiscal 2003. Operating expenses as a
percentage of sales decreased from 33.2% in fiscal 2003 to 30.4% in fiscal 2004.

During fiscal 2004, selling and administrative expenses increased by $3.6
million due primarily to increased advertising and marketing efforts relative to
our 2004 product introductions. Selling and administrative expenses as a
percentage of sales decreased to 25.7% during fiscal 2004 as compared to 28.5%
for fiscal 2003.

Research and development expenses increased by $1.1 million primarily due to new
product design for our new product introductions. Research and development
expenses as a percentage of sales were 4.7% for both fiscal 2004 and fiscal
2003. In preparation for the new fiscal 2005 products, we hired thirteen
additional design engineers in the third and fourth quarters of fiscal 2004.

Operating income increased by $5.4 million, or 68.9%, in fiscal 2004 and was
11.9% of sales as compared to 8.9% of sales in fiscal 2003.

Interest expense. Interest expense decreased by $300,000 in fiscal 2004 as
compared to fiscal 2003, a decrease of 30.3%. This decrease is related to
carrying, on average, $1.0 million in lower debt balances. The interest rate on
our credit facility ranged from 4.5% down to 4.25% during fiscal 2004 as
compared to rates from 5.75% down to 4.5% for fiscal 2003. The prime rate ranged
from 4.0% to 4.25% for fiscal 2004 as compared to rates from 4.75% to 4.0% for
fiscal 2003.

Income taxes. The effective tax rates were 29.6% and 32.3%, respectively, for
the fiscal years ended July 31, 2004 and 2003. The effective tax rates differ
from the statutory rates due to the impact of foreign taxes, research and
development credits, the United States treatment of foreign operations, state
taxes and permanent differences in the treatment of items from an income tax
versus financial reporting perspective. The change in effective tax rates is
primarily due to higher research and development credits in fiscal 2004.


                                       14

<PAGE>


YEAR ENDED JULY 31, 2003 (FISCAL 2003), COMPARED TO YEAR ENDED JULY 31, 2002
(FISCAL 2002)

Financial highlights. The following tables set forth selected amounts, ratios
and relationships calculated from the consolidated statements of income and
comprehensive income for the fiscal years ended July 31, 2003 and 2002:

<TABLE>
<CAPTION>
                                                FISCAL YEAR ENDED          INCREASE (DECREASE)
                                                     JULY 31,                   FROM 2002
        (DOLLARS IN THOUSANDS)                  2002         2003           $              %
-----------------------------------------     --------     --------     --------         ------
<S>                                           <C>          <C>          <C>              <C>
Net sales ...............................     $ 79,501     $ 88,297     $  8,796          11.1%
Gross profit ............................       29,926       37,261        7,335          24.5%
Selling and administrative expenses .....       22,021       25,189        3,168          14.4%
Research and development expenses .......        2,650        4,191        1,541          58.2%
Operating income ........................        5,255        7,881        2,626          50.0%
Interest expense ........................        1,424          989         (435)        (30.5)%
Pretax income ...........................        3,935        6,862        2,927          74.4%
Net income ..............................     $  2,389     $  4,645     $  2,256          94.4%
                                              --------     --------     --------         ------
</TABLE>

<TABLE>
<CAPTION>
                                                FISCAL YEAR ENDED
                                                      JULY 31,
EXPRESSED AS A PERCENT OF NET SALES:            2002          2003
---------------------------------------       --------      --------
<S>                                           <C>           <C>
Gross profit ............................         37.6%         42.2%
Selling and administrative expenses .....         27.7%         28.5%
Research and development expenses .......          3.3%          4.7%
Operating income ........................          6.6%          8.9%
Interest expense ........................          1.8%          1.1%
Pretax income ...........................          4.9%          7.8%
Net income ..............................          3.0%          5.3%
                                              --------      --------
</TABLE>

Sales and margin. During the second, third and fourth quarters of fiscal 2003,
we began shipping our 28 new SONAR/GPS products. The new products include new
SONAR units at most previously available price points, including two within our
largest volume price point, plus six new stand-alone GPS units. In addition, one
of the new SONAR units created a new price point for us at $79, while one of the
new SONAR/GPS navigation units created another new price point for us at $2,499.

Total net sales increased by $8.8 million, or 11.1%, during fiscal 2003 as
compared to fiscal 2002, while total unit sales increased by approximately
20.8%. This year over year increase in sales is due primarily to the new
products introduced during fiscal 2003. The two new units within our largest
volume price point and the new price point of $79 represent high volume, lower
price point units, which resulted in a larger increase in unit sales relative to
the increase in net sales.

Our gross profit margin increased by $7.3 million, or 24.5%, during fiscal 2003
as compared to fiscal 2002. The gross margin percentage increased to 42.2% as
compared to 37.6% in fiscal 2002 as a result of increased sales volume, which
reduced the fixed overhead costs per unit, as well as product cost reductions.

Operating expenses and income. Operating expenses increased by $4.7 million
during fiscal 2003 as compared to fiscal 2002. Operating expenses as a
percentage of sales increased from 31.0% in fiscal 2002 to 33.2% in fiscal 2003.

During fiscal 2003, selling and administrative expenses increased by $3.2
million due primarily to increased advertising and marketing efforts relative to
our 2003 product introductions. Selling and administrative expenses as a
percentage of sales increased to 28.5% during fiscal 2003 as compared to 27.7%
for fiscal 2002.

Research and development expenses increased by $1.5 million primarily due to new
product design for our new product introductions. Research and development
expenses as a percentage of sales increased to 4.7% during fiscal 2003 as
compared to 3.3% for fiscal 2002. In preparation for the new 2004 products, we
hired seven additional design engineers in the third and fourth quarters of
fiscal 2003.

Operating income increased by $2.6 million, or 50.0%, in fiscal 2003 and was
8.9% of sales as compared to 6.6% of sales in fiscal 2002.

                                       15

<PAGE>

Interest expense. Interest expense decreased by $435,000 in fiscal 2003 as
compared to fiscal 2002, a decrease of 30.5%. This decrease is related to
carrying, on average, $2.1 million in lower debt balances, and to interest rate
decreases. In addition, in November 2002, our credit facility was amended to,
among other things, lower the spread over prime from 1.0% to 0.5% and add
LIBOR-based interest rate options. The interest rate on our credit facility
ranged from 5.75% down to 4.5% for fiscal 2003 as compared to rates from 7.75%
down to 5.75% for the same period of the prior fiscal year. The prime rate
ranged from 4.75% to 4.0% for fiscal 2003 as compared to rates from 6.75% to
4.75% for the same period of the prior fiscal year.

Income taxes. The effective tax rates were 32.3% and 39.3%, respectively, for
the fiscal years ended July 31, 2003 and 2002. The effective tax rates differ
from the statutory rates due to the impact of foreign taxes, the United States
treatment of foreign operations, state taxes and permanent differences in the
treatment of items from an income tax versus financial reporting perspective.
The change in effective tax rates is primarily due to foreign taxes that do not
fluctuate in direct proportion to our consolidated income.

OFF-BALANCE SHEET ARRANGEMENTS

We have no off-balance sheet arrangements as described in Section 13(j) of the
Securities Exchange Act of 1934.

LIQUIDITY AND CAPITAL RESOURCES

GENERAL

We require capital principally for capital expenditures, working capital and
interest payments. Our capital expenditures relate primarily to new product
tooling and our manufacturing facility. Working capital is required principally
to fund inventory through payments to suppliers and manufacturing payroll costs
until the inventory is sold and the receivables are collected. Our working
capital requirements are seasonal and vary from period to period depending on
manufacturing volumes, timing of shipments and the payment cycles of our
customers and suppliers.

SOURCES OF CAPITAL

Our primary sources of liquidity are cash flows from operating activities, our
credit facility and lease financing. Our credit facility consists of a $26.5
million revolving credit line and initial term loans of $7.4 million with a July
31, 2004 remaining balance of $542,000 requiring monthly payments of $23,000
plus interest. The line of credit includes a borrowing base of 85% of qualifying
accounts receivable, 30% of qualifying raw material inventory and 60% of
qualifying finished goods inventory with borrowings from inventories limited to
$13 million. At July 31, 2004, we had $9.5 million available under the revolving
credit line.

Since the execution of this credit facility, we have on numerous occasions
amended the facility to, among other things, reset certain financial covenants.
In particular, during November 2002 we amended our credit facility to extend the
term of the agreement for the revolving credit line from December 31, 2003 to
December 31, 2005. Significant provisions of the amendment include changes in
certain financial covenants, the lowering of the interest rate from prime plus
1.0% to prime plus 0.5% on all loans under the facility and the addition of
LIBOR based interest rate options. In addition, the amendment allows for a
permanent $1.5 million seasonal overadvance facility. Effective May 1, 2004, the
interest rate was lowered to prime plus 0.25% and the LIBOR based interest rate
options were also reduced.

The credit facility requires, among other things, that we maintain a minimum
tangible net worth and a minimum fixed charge ratio, limit the ratio of total
liabilities to tangible net worth and maintain minimum EBITDA (Earnings before
Interest, Taxes, Depreciation and Amortization). Additionally, the credit
facility limits the amount of operating leases, capital expenditures and capital
leases and prohibits the payment of dividends without the prior written consent
of the lender.

We were in compliance with all loan covenants at July 31, 2004, except we
exceeded the annual $5 million limit on capital expenditures. The bank waived
this covenant violation.

                                       16

<PAGE>

CASH FLOWS

Cash flows provided by operating activities were $6.9 million for fiscal 2004 as
compared to $2.9 million for fiscal 2003. The increase was primarily due to
higher net income during fiscal 2004 as compared to fiscal 2003. Cash used for
capital expenditures was $3.5 million. An additional $1.5 million in capital
expenditures was funded by capital lease borrowings. The capital expenditures
primarily related to new product tooling, manufacturing equipment and computer
equipment.

Discontinued finished goods inventory attributable to fiscal 2004 product
decisions was approximately $32,000 at July 31, 2004 as compared to $723,000 at
July 31, 2003. Inventory on hand at July 31, 2004 for products we expect to
discontinue during fiscal 2005 was $3.4 million. All discontinued inventories
are carried at cost, which management believes to be lower than expected
realizable value. We expect the remaining inventory of discontinued products to
be sold during fiscal 2005. Management monitors all inventories via various
inventory control and review processes which include, but are not limited to,
forecast review and inventory reduction meetings, graphical presentations and
forecast versus inventory status reports. Management believes these processes
are adequate.

Cash flows provided by operating activities were $2.9 million in fiscal 2003
compared to $10.0 million in fiscal 2002. The decrease was primarily due to
increased inventory levels in fiscal 2003 compared to decreased inventory levels
in fiscal 2002, which was partially offset by higher earnings in fiscal 2003.
Cash flows from operating activities were utilized to fund capital expenditures
of $1.6 million and reduce debt by $1.4 million. An additional $1.2 million in
capital expenditures was funded by capital lease borrowings. The capital
expenditures primarily related to new product tooling, manufacturing equipment
and computer equipment.

Demand for our products is seasonal. We utilize the revolving credit line to
address our seasonal liquidity needs. Management believes the sources of
liquidity discussed above are adequate to satisfy our current working capital
and capital equipment needs. However, if we decide to pursue future acquisitions
or make capital expenditures not currently anticipated, we may need to raise
additional capital. No assurance can be made that we will be able to raise such
capital on commercially reasonable terms, if at all. The Company has filed a
registration statement on Form S-1 to sell 1,000,000 shares of stock which, when
completed, would provide additional liquidity.

CONTRACTUAL OBLIGATIONS

The following table summarizes our contractual obligations as of July 31, 2004:

<TABLE>
<CAPTION>
                                           LESS                                  MORE
                                           THAN         1-3          3-5         THAN
       (DOLLARS IN THOUSANDS)             1 YEAR       YEARS        YEARS       5 YEARS       TOTAL
------------------------------------     --------     --------     --------     --------     --------
<S>                                      <C>          <C>          <C>          <C>          <C>
Long-term debt .....................     $    707     $  5,744     $      0     $      0     $  6,451
Capital lease obligations ..........        1,657          476           13            0        2,146
Operating lease obligations ........          839        1,051           10            0        1,900
Open purchase orders ...............       30,556            0            0            0       30,556
Capital expenditure commitments ....          787            0            0            0          787
                                         --------     --------     --------     --------     --------
   Total ...........................     $ 34,546     $  7,271     $     23     $      0     $ 41,840
                                         --------     --------     --------     --------     --------
</TABLE>

The long-term debt and capital lease obligations line items presented in the
table above include an estimated interest portion. The open purchase orders are
subject to change or cancellation.

EFFECTS OF INFLATION

A significant portion of our costs and expenses consist of materials, supplies,
salaries and wages that are affected by inflation. In addition, certain
electronic parts that are in high industry demand are subject to market-driven
price increases. We may not be able to pass on the full effect of inflationary
increases in our selling prices in the near term. Accordingly, we concentrate on
changes in design, manufacturing processes, material scheduling and sourcing to
help contain costs. A significant portion of our 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.

                                       17

<PAGE>


ADOPTION OF NEW ACCOUNTING PRINCIPLE

In May 2004, we adopted the fair value method of accounting for stock based
compensation prescribed by Statement of Financial Accounting Standards (SFAS)
No. 123, Accounting for Stock-Based Compensation under the modified prospective
method permitted by SFAS No. 148. The adoption of SFAS No. 123 was effective
August 1, 2003.

QUARTERLY INFORMATION

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

SALES, GROSS PROFIT AND NET INCOME (LOSS)

<TABLE>
<CAPTION>
                                                                       NET
                                              GROSS                  INCOME
YEARS ENDED JULY 31,   SALES        %         PROFIT        %        (LOSS)        %
--------------------  --------   --------    --------   --------    --------    --------
                                        (DOLLARS IN THOUSANDS)
<S>                   <C>        <C>         <C>        <C>         <C>         <C>
2004
First Quarter .....   $ 14,036       12.5%   $  5,052       10.7%   $ (1,571)      (17.9)%(1)
Second Quarter ....     24,468       21.9%     10,063       21.3%      1,609        18.4%(1)
Third Quarter .....     46,296       41.4%     20,656       43.6%      6,671        76.2%(1)
Fourth Quarter ....     27,061       24.2%     11,533       24.4%      2,047        23.3%
                      --------   --------    --------   --------    --------    --------
Total for Year ....   $111,861      100.0%   $ 47,304      100.0%      8,756       100.0%
                      --------   --------    --------   --------    --------    --------
2003
First Quarter .....   $ 11,155       12.6%   $  4,123       11.1%   $ (1,473)      (31.7)%
Second Quarter ....     21,514       24.4%      7,729       20.7%        527        11.3%
Third Quarter .....     32,414       36.7%     16,118       43.3%      4,352        93.7%
Fourth Quarter ....     23,214       26.3%      9,291       24.9%      1,239        26.7%
                      --------   --------    --------   --------    --------    --------
Total for Year ....   $ 88,297      100.0%   $ 37,261      100.0%   $  4,645       100.0%
                      --------   --------    --------   --------    --------    --------
2002
First Quarter .....   $ 11,023       13.9%   $  3,004       10.0%   $ (1,887)      (79.0)%
Second Quarter ....     17,077       21.5%      5,966       19.9%         (6)       (0.2)%
Third Quarter .....     32,689       41.1%     12,967       43.3%      3,417       143.0%
Fourth Quarter ....     18,712       23.5%      7,989       26.7%        865        36.2%
                      --------   --------    --------   --------    --------    --------
Total for Year ....   $ 79,501      100.0%   $ 29,926      100.0%   $  2,389       100.0%
                      --------   --------    --------   --------    --------    --------
</TABLE>

EARNINGS (LOSS) PER SHARE, BASIC AND DILUTED

<TABLE>
<CAPTION>
                                      WEIGHTED AVERAGE         EARNINGS (LOSS)
                                     SHARES OUTSTANDING          PER SHARE
     YEARS ENDED JULY 31,            BASIC       DILUTED      BASIC     DILUTED
-----------------------------      ---------    ---------    -------    -------
<S>                                <C>          <C>          <C>        <C>
2004
First Quarter................      3,761,196    3,761,196     $(0.42)    $(0.42)(1)
Second Quarter...............      3,761,196    3,978,435       0.43       0.40(1)
Third Quarter................      3,761,196    3,981,774       1.77       1.68(1)
Fourth Quarter...............      3,761,196    3,987,626       0.54       0.51
Year-ended July 31, 2004.....      3,761,196    3,979,001       2.33       2.20
2003
First Quarter................      3,761,196    3,761,196     $(0.39)    $(0.39)
Second Quarter...............      3,761,196    3,885,319       0.14       0.14
Third Quarter................      3,761,196    3,902,302       1.15       1.11
Fourth Quarter...............      3,761,196    3,931,735       0.33       0.31
Year-ended July 31, 2003.....      3,761,196    3,893,324       1.23       1.19
2002
First Quarter................      3,768,796    3,768,796     $(0.50)    $(0.50)
Second Quarter...............      3,768,796    3,768,796      (0.00)     (0.00)
Third Quarter................      3,766,347    3,826,082       0.91       0.89
Fourth Quarter...............      3,763,594    3,870,306       0.23       0.22
Year-ended July 31, 2002.....      3,766,888    3,818,126       0.63       0.63
                                   ---------    ---------     ------     ------
</TABLE>

(1)      We adopted the fair value method of accounting for stock based
         compensation prescribed by SFAS No. 123, under the modified prospective
         method permitted by SFAS No. 148. The adoption of SFAS No. 123 was
         effective August 1, 2003. Therefore, the previously reported net income
         for the first three quarters of Fiscal 2004 has been restated as
         follows:

                                       18
<PAGE>



<TABLE>
<CAPTION>
                                                                           EARNING
                                                                      (LOSS) PER SHARE,
                                   NET INCOME (LOSS)                     AS RESTATED
                         ------------------------------------       ---------------------
                             AS          ADOPTION
                         PREVIOUSLY       OF SFAS      AS
                          REPORTED        NO. 123    RESTATED        BASIC        DILUTED
                         ----------      --------    --------       ------        -------
<S>                      <C>             <C>         <C>            <C>           <C>
  First Quarter          $ (2,237)        $ 666      $ (1,571)      $(0.42)       $ (0.42)
  Second Quarter            1,538            71         1,609         0.43           0.40
  Third Quarter             6,517           154          6,671        1.77           1.68
</TABLE>

Outlook and Uncertainties

Certain matters discussed in this report, excluding historical information,
include certain forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities and
Exchange Act of 1934, as amended, that involve risks and uncertainties. The
Company and its representatives may from time to time make written or verbal
forward-looking statements, including statements contained in filings with the
Securities and Exchange Commission and in the report to stockholders. Statements
that address the Company's operating performance, events or developments that
the Company expects or anticipates will occur in the future, including
statements relating to sales and earnings growth, statements expressing general
optimism about future operating results and statements relating to liquidity and
future financing plans are forward-looking statements. Although the Company
believes that such forward-looking statements are based on management's
then-current views and reasonable assumptions, no assurance can be given that
every objective will be reached. Such statements are made in reliance on the
"safe harbor" protections provided under the Private Securities litigation
Reform Act of 1995.

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

-    Financial performance and cash flow from operating activities in fiscal
     2005 are based on attaining current projections.

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

-    Because of the dynamic environment in which the Company operates, one or
     more key factors discussed in "Part I, Item 1. Business" of this Form 10-K
     could have an adverse effect on expected results for fiscal 2005.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to cash flow and interest rate risk due to changes in interest
rates with respect to our long-term debt. See Note 3 to the consolidated
financial statements included herein for details on our long-term debt. A 0.5%
increase in the prime rate for the fiscal year ended July 31, 2004 would have
had a negative after-tax impact on earnings of approximately $32,000.

We are subject to foreign currency risk due to the location of our manufacturing
facility in Mexico and sales from each of our distribution facilities in Canada
and Australia, which are denominated in the local currencies. Sales to countries
other than Canada and Australia are denominated in United States dollars.
Although fluctuations have occurred in the Mexican peso, the Canadian dollar and
the Australian dollar, such fluctuations have not historically had a significant
impact on our financial statements taken as a whole. A 10% unfavorable change in
the currency exchange rates would result in a foreign exchange loss of
approximately $11,000 on intercompany balances recorded at July 31, 2004.


                                       19


<PAGE>

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The consolidated financial statements and supplementary data are indexed in
Items 15 and 7 hereof, respectively. The consolidated financial statements for
the three fiscal years ended July 31, 2004 were audited by Deloitte & Touche
LLP.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURES

The change in the Company's independent auditors from Arthur Andersen LLP to
Deloitte & Touche LLP was previously reported on Form 8-K filed with the
Securities and Exchange Commission on July 10, 2002.

ITEM 9A.  CONTROLS AND PROCEDURES

The Principal Executive Officer and Principal Financial Officer have evaluated
the effectiveness of the design and operation of the Company's disclosure
controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the
Exchange Act) as of July 31, 2004, the end of the period covered by this report.
In making this evaluation, the Company has considered matters relating to its
restatement of previously issued financial statements for the year ended July
31, 2003 and each of the first three quarters of the fiscal year ended July 31,
2004, including the process that was undertaken to ensure that all material
adjustments necessary to correct the previously issued financial statements were
recorded. Based on that evaluation, the Company's Principal Executive Officer
and Principal Financial Officer have concluded that these controls and
procedures were effective as of that date to ensure that information required to
be disclosed by the Company in reports that it files or submits under the
Exchange Act is recorded, processed, summarized, and reported within the time
periods specified in Securities Exchange Commission rules and forms.

In connection with the evaluation described above, there have been no changes in
the Company's internal control over financial reporting (as such term is defined
in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the year ended
July 31, 2004 that have materially affected, or are reasonably likely to
materially affect, the Company's internal control over financial reporting.

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

DIRECTORS

The directors of the Company are as follows:

DARRELL J. LOWRANCE. Mr. Lowrance, age 65, a founder of the Company, has been
with the Company since its formation in 1957. He currently serves as President
and Chief Executive Officer and a Director of the Company, positions he has held
since 1964, and is active in the day to day operations of the Company. During
1983 and 1984, Mr. Lowrance served as President of the American Fishing Tackle
Manufacturer's Association (AFTMA). In July 1988, Mr. Lowrance returned to the
Board of Directors of AFTMA, a position he previously held from 1978 through
1986. Additionally, in April 1989, Mr. Lowrance was elected as a director of the
National Association of Marine Products and Services.

M. WAYNE WILLIAMS. Mr. Williams, age 67, a retired CPA, has served as a director
since August 2002. He was employed by Electronic Data Systems (EDS) from 1976
until his retirement in 1996. While at EDS, he was responsible for the
preparation of company financial statements in accordance with GAAP, as well as
the overview of all Securities and Exchange Commission (SEC) reporting. He was
also responsible for statutory, contract and GAAP reporting for EDS's
wholly-owned insurance subsidiary. Prior to EDS, he was an audit manager with
the accounting firm of Touche Ross & Co., working in audit, tax and consulting.

GEORGE W. JONES. Mr Jones, age 66, has served as a director since April 2001.
Mr. Jones is a retired Vice President for The Equitable of New York, a national
financial services provider. He holds the designation of Chartered Financial
Consultant awarded by the Society of Financial Service Professionals.

                                       20

<PAGE>

JASON C. SAUEY. Mr. Sauey, age 43 has served as a director since May 6, 2004.
Mr. Sauey has been President of Flambeau, Inc., a proprietary products marketer
and contracts plastics manufacturer, since 1992. Mr. Sauey joined Flambeau, Inc.
in 1985 as marketing manager and was subsequently promoted to Vice President of
Marketing in 1986. In addition, Mr. Sauey is a director of Flambeau, Inc., as
well as its parent holding company, The Nordic Group of Companies. Mr. Sauey
received his Masters of Business Administration from the University of Chicago
School of Business in 1985.

All directors of the Company are elected annually and serve until their
successors are duly elected and qualified.

EXECUTIVE OFFICERS

The executive officers of the Company are as follows:

DARRELL J. LOWRANCE. Mr. Lowrance, age 65, has served as President and Chief
Executive Officer since 1964.

RONALD G. WEBER. Mr. Weber, age 59, has served as Executive Vice President since
June 2004 and Executive Vice President of Engineering and Manufacturing from
July 2000 until June 2004. Prior thereto, Mr. Weber was the Senior Vice
President of Engineering since 1980 and was subsequently promoted to Executive
Vice President of Technology and Engineering in December 1993.

DAVID A. CRAIG. Mr. Craig, age 40, has served as Senior Vice President of
Engineering and Manufacturing since June 2004. Prior thereto, Mr. Craig was the
Engineering Manager of Project Engineering and Component Evaluation since July
2002. From October of 1999 until July 2002, Mr. Craig was employed by WorldCom
as a Senior Engineer. Mr. Craig joined Lowrance in June 1992 and was a Senior
Design Engineer/Project Engineer when he joined WorldCom in October 1999.

LARRY B. TOERING. Mr. Toering, age 42, has served as Senior Vice President of
Sales and Marketing since June 2004. Mr. Toering was the Director of Aviation
Product Sales from April 2003 through June 2004 and was North American Sales
Manager from June 1997 through November 1999. From November 1999 through June
2004, Mr. Toering was a captain with American Airlines.

MARK C. MCQUOWN. Mr. McQuown, age 52, has served as Vice President of Sales
since February 2000. Prior thereto, Mr. McQuown was Director of Sales since
August 1997. Mr. McQuown joined the Company in June 1984 as a Zone Sales Manager
and was subsequently promoted to Regional Sales Manager in June 1988, Director
of International Sales in February 1995 and Director of International,
Government and Industrial Sales in June 1996.

BOB G. CALLAWAY. Mr. Callaway, age 61, has served as Vice President of Marketing
since March 2000. Mr. Callaway joined Lowrance in August 1987 as Manager of
Video Communications and was promoted to Director of Video Communications in
October 1993. He subsequently joined Addvantage Media as Vice President-Field
Service Group in March 1997. He worked as a freelance marketing consultant from
October 1998 and in July 1999 joined T.D. Williamson as Manager of Marketing
Resources before returning to Lowrance in March 2000.

JANE M. KAISER. Ms. Kaiser, age 44, has served as Vice President of Customer
Operations since February 2000. Prior thereto, Ms. Kaiser was Director of
Customer/Sales Service since August 1997. Ms. Kaiser joined the Company in May
1995 as Cost Productivity Analyst and was subsequently promoted to Director of
Cost Productivity in December 1995. Prior to joining the Company, Ms. Kaiser was
employed by Kimberly Clark for nine years. Ms. Kaiser holds an MBA from Oklahoma
State University and a CPA from the state of Illinois.

DOUGLAS J. TOWNSDIN. Mr. Townsdin, age 41, has served as Vice President of
Finance and Chief Financial Officer since March 2000. Prior thereto, Mr.
Townsdin was a Senior Manager with Arthur Andersen LLP since 1990.

All officers of the Company are elected annually at an organizational meeting of
the Board of Directors immediately following the annual meeting.

                                       21

<PAGE>



AUDIT COMMITTEE FINANCIAL EXPERT

The Company's Board of Directors has determined that the Company has at least
one audit committee financial expert serving on its Audit Committee. M. Wayne
Williams, the financial expert, is independent, as that term is used in Item
7(d)(3)(iv) of Schedule 14A under the Exchange Act.

AUDIT COMMITTEE

The Company has a separately designated standing audit committee established in
accordance with section 3(a)(58)(A) of the Exchange Act. The 2004 Audit
Committee is composed of the following members: M. Wayne Williams-Chairman,
George W. Jones and Jason C. Sauey.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

The Company believes that during the fiscal year ended July 31, 2004, its
directors and executive officers timely filed all reports due under Section
16(a) of the Exchange Act.

CODE OF ETHICS

The Company has adopted a Code of Ethics and Business Conduct that applies to
the Company's principal executive officer, principal financial and accounting
officer, and all other employees. The Company filed a copy of the Code of Ethics
and Business Conduct as Exhibit 14.0 to the Company's report on Form 8-K dated
May 10, 2004. A copy of the Code of Ethics and Business Conduct may be obtained,
without charge, by writing or calling the Company at the following address and
phone number: Douglas J. Townsdin, Vice President of Finance and Chief Financial
Officer, Lowrance Electronics, Inc., 12000 East Skelly Drive, Tulsa, Oklahoma
74128; (918) 437-6881.

In the event of a waiver to the Code of Ethics and Business Conduct, the action
will be promptly disclosed on the Company's website at www.lowrance.com. If the
Code of Ethics and Business Conduct is amended, the revised version will also be
posted on the website noted above.

                                       22

<PAGE>



ITEM 11.  EXECUTIVE COMPENSATION

The following table sets forth the aggregate cash compensation earned by the
executive officers listed (the "Named Executive Officers") for services rendered
in all capacities to the Company for the fiscal years ended July 31, 2004, 2003
and 2002.

<TABLE>
<CAPTION>
                                                                   (1)              (2)             (3)       (4)
                                                                              OTHER ANNUAL     SECURITIES
  NAME OF INDIVIDUAL/PRINCIPAL          YEAR        SALARY         BONUS      COMPENSATION     UNDERLYING      ALL
           POSITION                                                                             OPTIONS/      OTHER
                                                                                                  SARS
                                                     ($)            ($)           ($)            (#'S)         ($)
------------------------------------    -----      --------        --------   ------------     ----------   ---------
<S>                                     <C>        <C>             <C>        <C>              <C>          <C>
Darrell J. Lowrance                      2004       441,100         373,800         57,900           --        43,300
President and Chief                      2003       429,200         304,700             --           --        29,900
Executive Officer                        2002       429,200         193,100             --           --        31,000

Ronald G. Weber                          2004       259,800         120,000             --            -        11,800
Executive Vice President                 2003       253,700         118,000             --            -        11,600
                                         2002       251,100          50,700             --       34,453 (5)    12,400
                                                                                                115,547 (6)

David A. Craig                           2004        88,000           8,200             --           --         2,600
Senior Vice President of                 2003        78,500              --             --           --            --
Engineering and Manufacturing            2002         1,400              --             --           --            --

Larry B. Toering                         2004        91,000           8,200             --           --         1,400
Senior Vice President of                 2003        12,500              --             --           --            --
Sales and Marketing                      2002            --              --             --           --            --

Mark C. McQuown                          2004       163,400          75,200             --           --        12,000
Vice President of Sales                  2003       159,000          74,000             --           --        11,600
                                         2002       159,000          31,800             --       25,000 (5)     9,900

Bob G. Callaway                          2004       160,000          73,700             --           --        10,700
Vice President of Marketing              2003       155,700          72,400             --           --        11,000
                                         2002       155,700          31,100             --       25,000 (5)     8,800

Jane M. Kaiser                           2004       154,200          71,000             --           --        10,800
Vice President of Customer               2003       150,000          69,700             --           --        10,600
Operations                               2002       148,300          30,000             --       25,000 (5)     8,800

Douglas J. Townsdin                      2004       160,500          74,000             --           --        12,000
Vice President of Finance                2003       156,200          72,600             --           --        11,600
Chief Financial Officer                  2002       156,200          31,200             --       25,000 (5)     8,600
</TABLE>


(1)      The Company's Executive Bonus Plan for fiscal year 2004 provided for a
         performance bonus pool measured entirely on the basis of the Company's
         pretax, prebonus earnings compared to targeted pretax, prebonus
         earnings. This bonus pool was to be divided, based on certain
         predetermined percentages, between the Company's President and its Vice
         Presidents. In order to earn any performance bonus, it was necessary
         for pretax, prebonus income to exceed $3.8 million, which the Company
         did and, accordingly, performance bonuses of approximately $595,000
         will be paid. The Executive Bonus Plan for fiscal year 2004 also
         provided

                                       23

<PAGE>

         for discretionary bonuses for executive officers. The discretionary
         bonuses for the executive officers, except the President, are granted
         at the recommendation of the President on the basis of individual
         performance not to exceed 15% of their respective salaries. The
         discretionary bonus for the President is granted by the Compensation
         Committee of the Board of Directors, not to exceed 15% of his salary.
         The President and the Compensation Committee of the Board of Directors
         did exercise their right to recommend discretionary bonuses for
         executive officers of the Company. Accordingly, discretionary bonuses
         of approximately $209,000 will be paid.

(2)      The remuneration described in other annual compensation includes the
         cost to the Company of benefits furnished to the executive officers,
         including premiums for life and health insurance, personal use of
         Company automobiles or automobile allowances and other personal
         benefits provided to such individuals that are extended in connection
         with the conduct of the Company's business. Reported amounts represent
         what the executive officers received in other compensation in excess of
         10% of such officer's cash compensation in the form of salary and bonus
         or in excess of $50,000.

(3)      Refer to the description below for a complete discussion of the stock
         options that the Board of Directors awarded under the 2001 Stock Option
         Plan, contingent upon Shareholder approval. Such shareholder approval
         was given on December 11, 2001.

(4)      Other compensation resulted from contributions to the Lowrance Savings
         Plan and Trust on behalf of the listed executive officers. Also
         included are director's fees of $31,500, $18,000, and $20,000 paid to
         Mr. Lowrance and $0, $0, and $2,000 paid to Mr. Weber in 2004, 2003 and
         2002, respectively.

(5)      Incentive stock options awarded under the 2001 Stock Option Plan. Refer
         to the description below for a complete discussion of this plan.

(6)      Non-qualified stock options awarded under the 2001 Stock Option Plan.
         Refer to the description below for a complete discussion of this plan.

The following table sets forth information concerning the exercise of stock
options during fiscal 2004 by each of the named executive officers and the
fiscal year-end value of unexercised options.

         AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END
                               OPTION/SAR VALUES

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
           Name                   Shares                     Exercisable Number of securities          Value of unexercised
                                acquired on      Value      underlying unexercised options/SARS    in-the-money option/SARs at
                                 exercise      realized              at July 31, 2004                     July 31, 2004
                                                              Exercisable      Unexercisable        Exercisable  Unexercisable
------------------------------------------------------------------------------------------------------------------------------
                                    (#)           ($)            (#)                (#)                 ($)           ($)
------------------------------------------------------------------------------------------------------------------------------
<S>                             <C>            <C>          <C>                <C>                 <C>           <C>

Darrell J. Lowrance                  --            --             --                  --                --                --
Ronald G. Weber                      --            --             --              34,453 (1)            --           841,342
                                     --            --             --             115,547 (2)            --         2,821,658
David A. Craig                       --            --             --                  --                --                --
Larry B. Toering                     --            --             --                  --                --                --
Bob G. Callaway                      --            --             --              25,000 (1)            --           610,500
Jane M. Kaiser                       --            --             --              25,000 (1)            --           610,500
Mark C. McQuown                      --            --             --              25,000 (1)            --           610,500
Douglas J. Townsdin                  --            --             --              25,000 (1)            --           610,500
------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Incentive Stock Options
(2) Non-Qualified Stock Options

                                       24

<PAGE>



COMPENSATION OF DIRECTORS

Each director receives compensation of $12,000 per year, an additional fee of
$1,500 for each meeting of the Board of Directors and $750 for each Committee
meeting attended. All directors are reimbursed for certain reasonable
out-of-pocket expenses incurred in attending meetings of the Board of Directors
or Committee meetings.

EMPLOYEE CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS

EMPLOYMENT AND SEVERANCE ARRANGEMENTS. The Company has entered into amended
employment agreements (the "Amended Employment Agreements") with Bob G.
Callaway, Mark C. McQuown, Douglas J. Townsdin and Jane M. Kaiser. The summary
of such Amended Employment Agreements contained herein does not purport to be
complete and is qualified in its entirety by reference to the Amended Employment
Agreements which were filed as Exhibits 10.49 through 10.52 to the Company's
April 30, 2004 Quarterly Report on Form 10-Q. The term of the Amended Employment
Agreements runs for a period of 12 months. Under the terms of the Employment
Agreements, if the employment of any executive is terminated other than for
"cause" (as defined therein), then each such executive would be entitled to
payment of their salary in accordance with the Company's standard payroll
practices for the remainder of the term of the agreement or a period of twelve
months, whichever is longer. If the employment of the executive is terminated
upon a change of control of the Company (as defined therein), then each such
executive would be entitled to a lump sum payment equal to 24 months of their
salary. As of July 31, 2004, the maximum aggregate amount of cash benefits
payable to each executive would be $331,000 for Mark C. McQuown, $325,000 for
Douglas J. Townsdin, $324,000 for Bob G. Callaway and $312,000 for Jane M.
Kaiser.

STOCK OPTION PLANS. On July 2, 2001, the Company adopted the 2001 Stock Option
Plan which provides for a maximum of 300,000 common shares available for issue.
The Plan provides for incentive stock options, non-qualified stock options and
stock appreciation rights and is designed to serve as an incentive for
attracting and retaining qualified, competent employees and directors. Depending
upon the type of option, the options and stock appreciation rights granted
cannot have terms greater than ten years and six months. The plan requires
incentive stock options to be granted at an option price of not less than 100%
of the fair market value of the Company's Common Stock at the date of grant. The
plan is administered by the Compensation and Nominating Committee and was
approved by the shareholders at the Annual Meeting held December 11, 2001. As of
July 31, 2004, seven persons were eligible for consideration to receive options
under the 2001 Stock Option Plan.

On July 25, 2001, the Compensation and Nominating Committee recommended and the
Board of Directors approved that a total of 134,453 incentive stock options be
granted and 115,547 non-qualified stock options be granted under the 2001 Stock
Option Plan, all at an exercise price of $2.67, the fair market value on the
date of grant. Under the terms of the Stock Option Agreements signed by each of
the five persons to whom options were granted, their respective options may be
exercised in whole or in part only upon or after the first to occur of the
following events: (i) the occurrence of any transaction by which Darrell J.
Lowrance sells 50% of the shares he then owns directly in a private placement,
registered public offering or through Rule 144 sales; (ii) upon the sale by the
Company of all or substantially all of the Company's assets and operations to a
third party; or (iii) on or after July 24, 2010.

RETIREMENT PLAN. The Lowrance Savings Plan and Trust (the "Retirement Plan")
requires the Company to contribute to the Retirement Plan up to 6% of each
participant's salary annually. Participants include all U.S. employees of the
Company, including executive officers, who have completed one year of employment
with at least 1,000 hours of service. The Company makes a fixed contribution of
3% of each participant's salary. In addition, if an employee makes voluntary
contributions, the Company will make additional contributions equal to 50% of
each dollar contributed by the employee, not to exceed 3% of the employee's
compensation. Each participant's interest in the Company's contributions vests
fully over a period of seven years. Generally, a participant's interest in the
Company's contributions may be withdrawn only upon termination or in certain
hardship situations.

                                       25
<PAGE>


BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

The members of the Compensation Committee are Mr. George W. Jones, Chairman, Mr.
M. Wayne Williams and Mr. Jason C. Sauey. Each member of the Committee is a
non-employee director.

In determining the compensation payable to the Company's executive officers, it
is the basic philosophy of the Committee that the total annual compensation for
these individuals should be at a level which is competitive with the marketplace
in companies of similar size for positions of similar scope and responsibility.
In determining the appropriateness of compensation levels, the Committee
annually reviews the Company's compensation policies and compensation
information/surveys, which provide a comparison of the fixed and variable
portions of the executive officer's compensation.

The key elements of the total annual compensation for executive officers
consists of a base salary and variable compensation in the form of annual bonus
and stock options. The base salaries are generally set based upon the
information referenced above. Annual bonuses typically consist of two
components, a performance bonus based entirely on the basis of the Company's
pretax, prebonus earnings and a discretionary bonus on the basis of individual
performance.

The committee determines the Chief Executive Officer's base pay by considering
the base pay of comparable Chief Executive Officers. Additional important
considerations are the Chief Executive Officer's ability to effectively manage
the development and timely delivery of new products in the complex consumer
electronics industry.

                                                     2004 Compensation Committee
                                                       George W. Jones, Chairman
                                                               M. Wayne Williams
                                                                  Jason C. Sauey

                                       26

<PAGE>
PERFORMANCE GRAPH

The following performance graph compares the cumulative total stockholder return
on the Common Stock to the cumulative total returns of the NASDAQ U.S. and
NASDAQ Electronic components indices. The graph assumes that the value of the
investment in the Common Stock and each index was $100 as of July 31, 1999 and
that all dividends were invested on a quarterly basis.

                                [GRAPHIC OMITTED]

TOTAL RETURN ANALYSIS

<TABLE>
<CAPTION>
                                 7/31/1999    7/31/2000     7/31/2001    7/31/2002     7/31/2003     7/31/2004
------------------------------------------------------------------------------------------------------------------
<S>                             <C>          <C>           <C>          <C>           <C>           <C>
LEIX                            $   100.00   $    58.59    $    47.68   $   59.15     $   139.47    $   437.82
------------------------------------------------------------------------------------------------------------------
NASDAQ Electronic Components    $   100.00   $   222.79    $    82.83   $   47.57     $    65.05    $    76.27
------------------------------------------------------------------------------------------------------------------
NASDAQ U.S.                     $   100.00   $   142.68    $    76.55   $   50.60     $    66.09    $    77.93
------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       27

<PAGE>


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
         RELATED STOCKHOLDER MATTERS

The following table sets forth information with respect to the Company's equity
compensation plans. It describes the stock options issued under the 2001 Stock
Option Plan, which is the only existing equity compensation plan approved by
shareholders. The Company has no other equity compensation plans not approved by
shareholders.

EQUITY COMPENSATION PLAN INFORMATION

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
                                  (a)                        (b)                              (c)
---------------------------------------------------------------------------------------------------------------------
    Plan Category     Number of securities to be      Weighted average     Number of securities remaining available
                        issued upon exercise of      exercise price of         for future issuance under equity
                         outstanding options,       outstanding options,   compensation plans (excluding securities
                          warrants and rights       warrants and rights            reflected in column (a))
---------------------------------------------------------------------------------------------------------------------
<S>                   <C>                           <C>                    <C>
Equity compensation
plans approved by
security holders                 250,000                   $2.67                              50,000

---------------------------------------------------------------------------------------------------------------------
Equity compensation                   --                      --                                  --
plans not approved
by security holders

---------------------------------------------------------------------------------------------------------------------
Total                            250,000                   $2.67                              50,000
---------------------------------------------------------------------------------------------------------------------
</TABLE>

The following table sets forth, as of August 30, 2004, the number and
percentages of outstanding shares of the Common Stock beneficially owned by all
persons known by the Company to own more than 5% of the Company's Common Stock,
by each director of the Company, and by all officers and directors of the
Company as a group:

                                       28
<PAGE>
                             PRINCIPAL SHAREHOLDERS

<TABLE>
<CAPTION>
           Name and Address                         Amount and Nature of                               Percentage
         of Beneficial Owner                        Beneficial Ownership                                of Shares
         -----------------------                    --------------------                               ----------
         <S>                                        <C>                                                <C>
         Darrell J. Lowrance (1)                         1,908,123 (2)                                    50.7%
         12000 East Skelly Drive
         Tulsa, OK  74128-2486

         Ronald G. Weber (4)                                36,645                                        1.0%
         12000 East Skelly Drive
         Tulsa, OK  74128-2486

         George W. Jones (3)                                20,000                                           *
         7607 So. Marion
         Tulsa, OK  74136

         M. Wayne Williams (3)                               8,500                                           *
         2800 Hacienda Ct.
         Plano, TX  75023

         Jason C. Sauey (3)                                      0                                         N/A
         15982 Valplast Road
         Middlefield, OH  44062

         David A. Craig (4)                                      0                                         N/A
         12000 East Skelly Drive
         Tulsa, OK  74128-2486

         Larry B. Toering (4)                                    0                                         N/A
         12000 East Skelly Drive
         Tulsa, OK  74128-2486

         Mark C. McQuown (4)                                   100                                           *
         12000 East Skelly Drive
         Tulsa, OK  74128-2486

         Bob G. Callaway (4)                                     0                                         N/A
         12000 East Skelly Drive
         Tulsa, OK  74128-2486

         Jane M. Kaiser (4)                                      0                                         N/A
         12000 East Skelly Drive
         Tulsa, OK  74128-2486

         Douglas J. Townsdin (4)                                 0                                         N/A
         12000 East Skelly Drive
         Tulsa, OK  74128-2486

         All directors and                               1,973,368 (5)                                    52.5%
         officers as a group
         (including those listed
         above, 11 persons total)
</TABLE>

(1)  Director and Executive Officer.

                                       29


<PAGE>

(2)  Includes 324,408 shares held indirectly in an individual retirement account
     with Mr. Lowrance having the sole voting and investment power, and 3,725
     owned indirectly by an immediate family member.

(3)  Director.

(4)  Executive Officer.

(5)  All securities owned by officers and directors are owned directly except
     for 328,133 shares described in note (2) above.

*    Less than 1%

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Company has no relationships or transactions that require reporting under
this item.

ITEM 14.  PRINCIPAL ACCOUNTING FEES AND SERVICES

AUDIT FEES

Fees paid to Deloitte and Touche LLP for the audit of the Company's annual
financial statements included in the registrant's reports on Form 10-K and
review of the financial statements included in the registrant's reports on Form
10-Q were $123,000 during fiscal 2004 and $117,000 during fiscal 2003.

AUDIT-RELATED FEES

There were $102,000 fees paid or payable to Deloitte & Touche LLP for
audit-related services in fiscal 2004 related to a secondary offering by the
Company. There were no fees paid or payable for audit-related services provided
for in fiscal 2003.

TAX FEES

Fees paid to Deloitte & Touche LLP for services rendered for preparation of the
Company's state and federal income tax returns, tax compliance, tax advice and
tax planning were $15,000 for fiscal 2004 and $22,000 for fiscal 2003.

ALL OTHER FEES

There were no additional fees paid or payable to Deloitte & Touche LLP for any
other services provided during fiscal 2004 or 2003, respectively.

AUDIT COMMITTEE'S PRE-APPROVAL POLICIES AND PROCEDURES

The Audit Committee pre-approves all auditing services and permitted non-audit
services (including the fees and terms thereof) to be performed for the Company
by its independent auditor on a case-by-case basis, subject to the de minimis
exceptions for non-audit services described in Section 10A(i)(1)(B) of the
Exchange Act, which are approved by the Audit Committee before the completion of
the audit. The Audit Committee approved 100% of audit, tax and all other
services provided by any audit firms.

No audit work was performed by persons other than the principal accountant's
full-time, permanent employees.

                                       30

<PAGE>


                                     PART IV

ITEM 15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

 (a) Financial Statements and Exhibits:
                                                                           Page
     1. Consolidated Financial Statements:

          Index to Consolidated Financial Statements                       F-1

          Report of Independent Registered Public Accounting Firm -
            Fiscal 2003 and 2004                                           F-2

          Consolidated Balance Sheets - July 31, 2003 and 2004             F-3

          Consolidated Statements of Income and Comprehensive Income
            for the Years Ended July 31, 2002, 2003, and 2004              F-4

          Consolidated Statements of Stockholders' Equity for the
            Years Ended July 31, 2002, 2003, and 2004                      F-5

          Consolidated Statements of Cash Flows for the Years
            Ended July 31, 2002, 2003, and 2004                            F-6

          Notes to Consolidated Financial Statements
            for the Years Ended July 31, 2002, 2003, and 2004              F-7

     2. Exhibits:

         3.1      Restated Certificate of Incorporation of Lowrance Electronics,
                  Inc., incorporated by reference to Exhibit 3.1 to the
                  Company's Quarterly Report on Form 10-Q dated October 31,
                  2002.

         3.2      By-Laws of Lowrance Electronics, Inc., incorporated by
                  reference to Exhibit 3.2 to the Company's 2003 Annual Report
                  on Form 10-K.

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

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

         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 incorporated by reference to Exhibit 4.5
                  to the Company's Registration Statement on Form S-1 (SEC File
                  No. 33-9464).

         10.2     Lowrance Retirement Plan and Trust incorporated by reference
                  to Exhibit 10.2 to the Company's Registration Statement on
                  Form S-1 (SEC File No. 33-9464).

                                       31

<PAGE>

         10.3     Form of Distributor Agreements incorporated by reference to
                  Exhibit 10.4 to the Company's Registration Statement on Form
                  S-1 (SEC File No. 33-9464).

         10.13    Loan and Security Agreement dated December 15, 1993, by the
                  Company in favor of Barclays Business Credit, Inc.,
                  incorporated by reference to Exhibit 10.13 to the Company's
                  Registration Statement on Form S-1 (SEC File No. 333-116490).

         10.14    Amended and Restated Secured Promissory Note dated October 16,
                  1995, by and between the Company and Shawmut Capital
                  Corporation (formerly Barclays Business Credit, Inc.),
                  incorporated by reference to Exhibit 10.14 to the Company's
                  Registration Statement on Form S-1 (SEC File No. 333-116490).

         10.15    Amended and Restated Revolving Credit Notes dated October 16,
                  1995, by and between the Company and Shawmut Capital
                  Corporation (formerly Barclays Business Credit, Inc.),
                  incorporated by reference to Exhibit 10.15 to the Company's
                  Registration Statement on Form S-1 (SEC File No. 333-116490).

         10.16    First Amendment to Loan and Security Agreement dated October
                  16, 1995, by and between the Company and Shawmut Capital
                  Corporation (formerly Barclays Business Credit, Inc.),
                  incorporated by reference to Exhibit 10.16 to the Company's
                  Registration Statement on Form S-1 (SEC File No. 333-116490).

         10.17    Amended and Restated Stock Pledge Agreement dated October 16,
                  1995, by and between the Company and Shawmut Capital
                  Corporation (formerly Barclays Business Credit, Inc.),
                  incorporated by reference to Exhibit 10.17 to the Company's
                  Registration Statement on Form S-1 (SEC File No. 333-116490).

         10.18    Unconditional Guaranty dated October 16, 1995, by and between
                  Sea Electronics, Inc. and Shawmut Capital Corporation,
                  incorporated by reference to Exhibit 10.18 to the Company's
                  Registration Statement on Form S-1 (SEC File No. 333-116490).

         10.19    First Amendment to Mortgage, Security Agreement, Financing
                  Statement and Assignment of Rents dated October 16, 1995, by
                  and between the Company and Shawmut Capital Corporation
                  (formerly Barclays Business Credit, Inc.) incorporated by
                  reference to Exhibit 10.19 to the Company's Registration
                  Statement on Form S-1 (SEC File No. 333-116490).

         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 incorporated by reference to
                  Exhibit 10.20 to the Company's Registration Statement on Form
                  S-1 (SEC File No. 333-116490).

         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 incorporated by
                  reference to Exhibit 10.21 to the Company's Registration
                  Statement on Form S-1 (SEC File No. 333-116490).

         10.22    Second Amendment to Loan and Security Agreement dated November
                  1, 1996, by and between the Company and Fleet Capital
                  Corporation (formerly Shawmut Capital Corporation),
                  incorporated by reference to Exhibit 10.22 to the Company's
                  Registration Statement on Form S-1 (SEC File No. 333-116490).


                                       32

<PAGE>



         10.23    Third Amendment to Loan and Security Agreement dated December
                  31, 1996, by and between the Company and Fleet Capital
                  Corporation (formerly Shawmut Capital Corporation),
                  incorporated by reference to Exhibit 10.23 to the Company's
                  Registration Statement on Form S-1 (SEC File No. 333-116490).

         10.24    Fourth Amendment to Loan and Security Agreement dated August
                  14, 1997, by and between the Company and Fleet Capital
                  Corporation (formerly Shawmut Capital Corporation),
                  incorporated by reference to Exhibit 10.24 to the Company's
                  Registration Statement on Form S-1 (SEC File No. 333-116490).

         10.25    Fifth Amendment to Loan and Security Agreement dated August
                  25, 1997, by and between the Company and Fleet Capital
                  Corporation (formerly Shawmut Capital Corporation),
                  incorporated by reference to Exhibit 10.25 to the Company's
                  Registration Statement on Form S-1 (SEC File No. 333-116490).

         10.26    Sixth Amendment to Loan and Security Agreement dated August
                  28, 1997, by and between the Company and Fleet Capital
                  Corporation (formerly Shawmut Capital Corporation),
                  incorporated by reference to Exhibit 10.26 to the Company's
                  Registration Statement on Form S-1 (SEC File No. 333-116490).

         10.27    Seventh Amendment to Loan and Security Agreement dated
                  November 6, 1997, by and between the Company and Fleet Capital
                  Corporation (formerly Shawmut Capital Corporation),
                  incorporated by reference to Exhibit 10.27 to the Company's
                  Registration Statement on Form S-1 (SEC File No. 333-116490).

         10.28    Eighth Amendment to Loan and Security Agreement dated December
                  9, 1997, by and between the Company and Fleet Capital
                  Corporation (formerly Shawmut Capital Corporation),
                  incorporated by reference to Exhibit 10.28 to the Company's
                  Registration Statement on Form S-1 (SEC File No. 333-116490).

         10.29    Ninth Amendment to Loan and Security Agreement dated September
                  14, 1998, by and between the Company and Fleet Capital
                  Corporation (formerly Shawmut Capital Corporation),
                  incorporated by reference to Exhibit 10.29 to the Company's
                  Registration Statement on Form S-1 (SEC File No. 333-116490).

         10.30    Tenth Amendment to Loan and Security Agreement dated November
                  12, 1998, by and between the Company and Fleet Capital
                  Corporation (formerly Shawmut Capital Corporation incorporated
                  by reference to Exhibit 10.30 to the Company's Registration
                  Statement on Form S-1 (SEC File No. 333-116490).

         10.31    Eleventh Amendment to Loan and Security Agreement dated March
                  14, 2000, by and between the Company and Fleet Capital,
                  incorporated by reference to Exhibit 10.31 to the Company's
                  2000 Annual Report on Form 10-K.

         10.32    Twelfth Amendment to Loan and Security Agreement dated October
                  18, 2000, by and between the Company and Fleet Capital,
                  incorporated by reference to Exhibit 10.32 to the Company's
                  October 31, 2000 Quarterly Report on Form 10-Q.

         10.33    Employment Agreement for Douglas J. Townsdin, dated as of
                  April 7, 2000, incorporated by reference to Exhibit 10.33 to
                  the Company's 2001 Annual Report on Form 10-K.

         10.34    Employment Agreement for Bob G. Callaway, dated as of March
                  27, 2000, incorporated by reference to Exhibit 10.34 to the
                  Company's 2001 Annual Report on Form 10-K.


                                       33

<PAGE>

         10.35    Employment Agreement for Mark C. McQuown, dated as of April 7,
                  2000, incorporated by reference to Exhibit 10.35 to the
                  Company's 2001 Annual Report on Form 10-K.

         10.36    Employment Agreement for Jane M. Kaiser, dated as of April 7,
                  2000, incorporated by reference to Exhibit 10.36 to the
                  Company's 2001 Annual Report on Form 10-K.

         10.37    Lease Agreement entered into by and between Eric Juan de Dios
                  Flourie Geffroy, Refugio Geffroy de Flourie, Elizabeth Pierret
                  Pepita Flourie Geffroy, Edith Elizabeth Cuquita Flourie
                  Geffroy and Lowrance Electronica de Mexico, S.A. de C.V. dated
                  May 11, 2001, incorporated by reference to Exhibit 10.37 to
                  the Company's 2001 Annual Report on Form 10-K.

         10.38    Amended and Restated 2001 Stock Option Plan for the Company,
                  incorporated by reference to Exhibit 10.38 to the Company's
                  2003 Annual Report on Form 10-K.

         10.39    Second Amended and Restated Nonqualified Stock Option
                  Agreement between the Company and Ron G. Weber dated April 23,
                  2004, incorporated by reference to Exhibit 10.39 to the
                  Company's April 30, 2004 Quarterly Report on Form 10-Q.

         10.40    Second Amended and Restated Incentive Stock Option Agreement
                  between the Company and Ron G. Weber dated April 23, 2004,
                  incorporated by reference to Exhibit 10.40 to the Company's
                  April 30, 2004 Quarterly Report on Form 10-Q.

         10.41    Second Amended and Restated Incentive Stock Option Agreement
                  between the Company and Douglas Townsdin dated April 23, 2004,
                  incorporated by reference to Exhibit 10.41 to the Company's
                  April 30, 2004 Quarterly Report on Form 10-Q.

         10.42    Second Amended and Restated Incentive Stock Option Agreement
                  between the Company and Bob G. Callaway dated April 23, 2004,
                  incorporated by reference to Exhibit 10.42 to the Company's
                  April 30, 2004 Quarterly Report on Form 10-Q.

         10.43    Second Amended and Restated Incentive Stock Option Agreement
                  between the Company and Mark McQuown dated April 23, 2004,
                  incorporated by reference to Exhibit 10.43 to the Company's
                  April 30, 2004 Quarterly Report on Form 10-Q.

         10.44    Second Amended and Restated Incentive Stock Option Agreement
                  between the Company and Jane M. Kaiser dated April 23, 2004,
                  incorporated by reference to Exhibit 10.44 to the Company's
                  April 30, 2004 Quarterly Report on Form 10-Q.

         10.45    Thirteenth Amendment to Loan and Security Agreement dated
                  October 19, 2001, by and between the Company and Fleet
                  Capital, incorporated by reference to Exhibit 10.45 to the
                  Company's October 31, 2001 Quarterly Report on Form 10-Q.

         10.46    Fourteenth Amendment to Loan and Security Agreement dated
                  March 11, 2002 by and between the Company and Fleet Capital,
                  incorporated by reference to Exhibit 10.46 to the Company's
                  January 31, 2002 Quarterly Report on Form 10-Q.

         10.47    Fifteenth Amendment to Loan and Security Agreement dated
                  November 26, 2002, by and between the Company and Fleet
                  Capital, incorporated by reference to Exhibit 10.47 to the
                  Company's October 31, 2002 Quarterly Report on Form 10-Q.

         10.48    Letter agreement dated September 10, 2003 by and between the
                  Company and Fleet Capital, incorporated by reference to
                  Exhibit 10.48 to the Company's 2003 Annual Report on Form
                  10-K.

                                       34

<PAGE>

         10.49    Amendment No. 1 to Employment Agreement between the Company
                  and Mark C. McQuown dated April 7, 2004, incorporated by
                  reference to Exhibit 10.49 to the Company's April 30, 2004
                  Quarterly Report on Form 10-Q.

         10.50    Amendment No. 1 to Employment Agreement between the Company
                  and Douglas J. Townsdin dated April 7, 2004, incorporated by
                  reference to Exhibit 10.50 to the Company's April 30, 2004
                  Quarterly Report on Form 10-Q.

         10.51    Amendment No. 1 to Employment Agreement between the Company
                  and Bob G. Callaway dated April 7, 2004, incorporated by
                  reference to Exhibit 10.51 to the Company's April 30, 2004
                  Quarterly Report on Form 10-Q.

         10.52    Amendment No. 1 to Employment Agreement between the Company
                  and Jane M. Kaiser dated April 7, 2004, incorporated by
                  reference to Exhibit 10.52 to the Company's April 30, 2004
                  Quarterly Report on Form 10-Q.

         10.53    Amendment to Loan and Security Agreement dated May 1, 2004 by
                  and between the Company and Fleet Capital, filed herewith.

         14.0     Code of Ethics and Business Conduct, incorporated by reference
                  to Exhibit 14.0 to the Company's Report on Form 8-K dated May
                  10, 2004.

         22.13    Subsidiaries of the Company as of July 31, 2001, incorporated
                  by reference to Exhibit 22.13 to the Company's 2001 Annual
                  Report on Form 10-K.

         31.1     Certification of the Principal Executive Officer, pursuant to
                  Exchange Act Rules 13a-14 and 15d-14, executed by Darrell J.
                  Lowrance, President and Chief Executive Officer of Lowrance
                  Electronics, Inc., filed herewith.

         31.2     Certification of the Principal Financial Officer, pursuant to
                  Exchange Act Rules 13a-14 and 15d-14, executed by Douglas J.
                  Townsdin, Vice President of Finance and Chief Financial
                  Officer of Lowrance Electronics, Inc., filed herewith.

         32.1     Certification of Periodic Financial Report, pursuant to 18
                  U.S.C. Section 1350, executed by Darrell J. Lowrance,
                  President and Chief Executive Officer of Lowrance Electronics,
                  Inc. and Douglas J. Townsdin, Vice President of Finance and
                  Chief Financial Officer of Lowrance Electronics, Inc., filed
                  herewith.

         99.2     Calculation of 2002 weighted average shares outstanding as of
                  July 31, 2002, incorporated by reference to Exhibit 99.2 to
                  the Company's 2003 Annual Report on Form 10-K.

(b)      Reports on Form 8-K:

         On May 13, 2004, the Company filed a Form 8-K with the SEC regarding
         its press release of the same date which announced its financial
         results for the third quarter and nine months ended April 30, 2004. A
         copy of this press release was furnished as an exhibit to this report
         on Form 8-K.

         On June 15, 2004, the Company filed a Form 8-K with the SEC regarding
         its press release of the same date which announced the filing of a Form
         10-K/A for fiscal 2003 and Form 10-Q/As for each of the first three
         quarters of fiscal 2004. A copy of this press release was furnished as
         an exhibit to this report on Form 8-K.

         On July 8, 2004, the Company filed a Form 8-K with the SEC regarding
         its press release of July 7, 2004 which announced the appointment of
         two Senior Vice Presidents. A copy of this press release was furnished
         as an exhibit to this report on Form 8-K.


                                       35
<PAGE>


         On August 4, 2004, the Company filed a Form 8-K with the SEC regarding
         its press release of August 4, 2004 which announced a dividend. A copy
         of this press release was furnished as an exhibit to this report on
         Form 8-K.

         On August 26, 2004, the Company filed a Form 8-K with the SEC regarding
         its press release of August 26, 2004 which announced its financial
         results for the fiscal year ended July 31, 2004. A copy of this press
         release was furnished as an exhibit to this report on Form 8-K.

                                       36

<PAGE>

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----
<S>                                                                          <C>
Report of Independent Registered Public Accounting Firm                      F-2

Consolidated Balance Sheets - July 31, 2003 and 2004                         F-3

Consolidated Statements of Income and Comprehensive Income
  for the Years Ended July 31, 2002, 2003, and 2004                          F-4

Consolidated Statements of Stockholders' Equity for the
  Years Ended July 31, 2002, 2003, and 2004                                  F-5

Consolidated Statements of Cash Flows for the Years Ended
  July 31, 2002, 2003, and 2004                                              F-6

Notes to Consolidated Financial Statements for the Years Ended
  July 31, 2002, 2003, and 2004                                              F-7
</TABLE>










                                      F-1
<PAGE>
             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


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

We have audited the accompanying consolidated balance sheets of Lowrance
Electronics, Inc. and subsidiaries as of July 31, 2003 and 2004, and the related
consolidated statements of income and comprehensive income, stockholders'
equity, and cash flows for each of the three years in the period ended July 31,
2004. 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 standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Lowrance Electronics, Inc. and
subsidiaries as of July 31, 2003 and 2004, and the results of their operations
and their cash flows for each of the three years in the period ended July 31,
2004 in conformity with accounting principles generally accepted in the United
States of America.

As discussed in Note 1 to the accompanying consolidated financial statements,
effective August 1, 2003 the Company adopted the fair value method of accounting
for stock-based compensation.


DELOITTE & TOUCHE LLP




Tulsa, Oklahoma
August 30, 2004


                                      F-2
<PAGE>
                           LOWRANCE ELECTRONICS, INC.
                           CONSOLIDATED BALANCE SHEETS
                        (in thousands, except share data)

<TABLE>
<CAPTION>
                                                                 JULY 31,
                                                           ---------------------
                                                             2003         2004
                                                           --------     --------
<S>                                                        <C>          <C>
                                     ASSETS

CURRENT ASSETS:
   Cash and cash equivalents                               $  1,206     $  1,412
   Trade accounts receivable, net of reserves
     of $732,000 in 2003 and $993,000 in 2004                 8,431       10,276
   Inventories                                               15,941       23,821
   Current deferred income taxes                                894        1,107
   Prepaid expenses                                           1,290        2,041
                                                           --------     --------
         Total current assets                                27,762       38,657
                                                           --------     --------

PROPERTY, PLANT, AND EQUIPMENT, net                           7,593       10,005

OTHER ASSETS                                                     62           81
                                                           --------     --------

TOTAL ASSETS                                               $ 35,417     $ 48,743
                                                           ========     ========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
   Current maturities of long-term debt                    $  2,061     $  1,874
   Accounts payable                                           2,951        6,072
   Accrued liabilities:
      Compensation and benefits                               2,704        3,175
      Product costs                                           1,004        1,968
      Accrued taxes                                              --          671
      Other                                                     893        1,119
                                                           --------     --------
         Total current liabilities                            9,613       14,879
                                                           --------     --------

LONG-TERM DEBT, less current maturities                       5,825        6,040

DEFERRED INCOME TAXES                                           371        1,169

STOCKHOLDERS' EQUITY:
   Common stock, $.10 par value, 10,000,000 shares
      authorized, 3,761,196 shares issued and
      outstanding at July 31, 2003 and 2004                     377          377
   Paid-in capital                                            7,418        7,449
    Retained earnings                                        11,846       18,721
    Accumulated other comprehensive income (loss)               (33)         108
                                                           --------     --------
      Total stockholders' equity                             19,608       26,655
                                                           --------     --------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                 $ 35,417     $ 48,743
                                                           ========     ========
</TABLE>

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


                                      F-3
<PAGE>
                           LOWRANCE ELECTRONICS, INC.
           CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
                    (in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                   FOR THE YEARS ENDED JULY 31
                                                 -------------------------------
                                                   2002        2003       2004
                                                 --------    --------   --------
<S>                                              <C>         <C>        <C>
NET SALES                                        $ 79,501    $ 88,297   $111,861
COST OF SALES                                      49,575      51,036     64,557
                                                 --------    --------   --------
   Gross profit                                    29,926      37,261     47,304
                                                 --------    --------   --------

OPERATING EXPENSES:
   Selling and administrative                      22,021      25,189     28,742
   Research and development                         2,650       4,191      5,252
                                                 --------    --------   --------
   Total operating expenses                        24,671      29,380     33,994
                                                 --------    --------   --------

   Operating income                                 5,255       7,881     13,310

OTHER EXPENSES:
   Interest                                         1,424         989        689
   Other                                             (104)         30        192
                                                 --------    --------   --------
   Total other expenses                             1,320       1,019        881
                                                 --------    --------   --------

INCOME BEFORE INCOME TAXES                          3,935       6,862     12,429

PROVISION FOR INCOME TAXES                          1,546       2,217      3,673
                                                 --------    --------   --------

NET INCOME                                       $  2,389    $  4,645   $  8,756
                                                 ========    ========   ========

NET INCOME PER COMMON SHARE
   Basic                                         $    .63    $   1.23   $   2.33
                                                 ========    ========   ========

   Diluted                                       $    .63    $   1.19   $   2.20
                                                 ========    ========   ========
WEIGHTED AVERAGE COMMON
 SHARES OUTSTANDING
   Basic                                            3,767       3,761      3,761
                                                 ========    ========   ========

   Diluted                                          3,818       3,893      3,979
                                                 ========    ========   ========

DIVIDENDS                                            NONE        NONE   $  1,881

COMPREHENSIVE INCOME:

Net Income                                       $  2,389    $  4,645   $  8,756
Foreign Currency Translation Adjustment,
   NET OF TAX                                         119         259        141
                                                 --------    --------   --------

Comprehensive Income                             $  2,508    $  4,904   $  8,897
                                                 ========    ========   ========
</TABLE>

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


                                      F-4
<PAGE>
                           LOWRANCE ELECTRONICS, INC.
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                FOR THE YEARS ENDED JULY 31, 2002, 2003, AND 2004
                                 (in thousands)

<TABLE>
<CAPTION>

                                                                                                        ACCUMULATED
                                                COMMON STOCK                                               OTHER
                                                ------------       PAID-IN     TREASURY    RETAINED    COMPREHENSIVE      TOTAL
                                            SHARES      AMOUNT     CAPITAL      STOCK      EARNINGS    INCOME(LOSS)       EQUITY
                                           --------    --------    --------    --------    --------    -------------    --------
<S>                                           <C>      <C>         <C>         <C>         <C>         <C>              <C>
Balance-
 July 31, 2001                                3,769    $    377    $  7,073    $     --    $  4,838    $   (411)        $ 11,877
Net income                                       --          --          --          --       2,389          --            2,389
Other comprehensive income:
  Foreign currency
   translation adjustment                        --          --          --          --          --         119              119
Treasury stock purchases                         (8)         --          --         (26)         --          --              (26)
                                           --------    --------    --------    --------    --------    --------         --------

Balance-
 July 31, 2002                                3,761         377       7,073         (26)      7,227        (292)          14,359
Net income                                       --          --          --          --       4,645          --            4,645
Stock option plan expense                        --          --         345          --          --          --              345
Other comprehensive income:
  Foreign currency
   translation adjustment                        --          --          --          --          --         259              259
Retirement of treasury stock                     --          --          --          26         (26)         --               --
                                           --------    --------    --------    --------    --------    --------         --------

Balance-
 July 31, 2003                                3,761         377       7,418          --      11,846         (33)          19,608
Net income                                       --          --          --          --       8,756          --            8,756
Stock option plan expense                        --          --          55          --          --          --               55
Impact of SFAS No. 123 adoption (Note 1)         --          --         (24)         --          --          --              (24)
Other comprehensive income:
   Foreign currency translation
      adjustment                                 --          --          --          --          --         141              141
Dividends ($0.50 per common share)               --          --          --          --      (1,881)         --           (1,881)
                                           --------    --------    --------    --------    --------    --------         --------
Balance-
  July 31, 2004                               3,761    $    377    $  7,449    $     --    $ 18,721    $    108         $ 26,655
                                           ========    ========    ========    ========    ========    ========         ========
</TABLE>

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


                                      F-5
<PAGE>
                           LOWRANCE ELECTRONICS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)

<TABLE>
<CAPTION>
                                                             FOR THE YEARS ENDED JULY 31,
                                                          -----------------------------------
                                                             2002         2003         2004
                                                          ---------    ---------    ---------
<S>                                                       <C>          <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income                                             $   2,389    $   4,645    $   8,756
   Adjustments to reconcile net income to net cash
   provided by (used in)
    operating activities:
      Depreciation and amortization                           2,194        2,319        2,601
      Gain on sale of fixed assets                               (8)         (21)          (9)
      Deferred income taxes                                   1,164        1,346          561
      Stock option plan expense                                  --          345           55
   Change in operating assets and liabilities:
      (Increase)decrease in trade accounts
         receivable                                            (951)        (736)      (1,845)
      (Increase)decrease in inventories                       6,722       (3,811)      (7,880)
      (Increase)decrease in prepaid expenses                   (463)        (278)        (751)
      (Increase)decrease in other assets                          2          (13)         (19)
      Increase(decrease) in accounts payable                 (1,288)      (1,469)       3,121
      Increase(decrease) in accrued liabilities                 227          618        2,332
                                                          ---------    ---------    ---------
      Net cash provided by operating activities               9,988        2,945        6,922
                                                          ---------    ---------    ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures                                       (1,084)      (1,566)      (3,473)
  Proceeds from sale of property, plant
      and equipment                                               8           21            9
                                                          ---------    ---------    ---------
   Net cash used in investing activities                     (1,076)      (1,545)      (3,464)
                                                          ---------    ---------    ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Borrowings under line of credit                            68,303       83,968      105,366
  Repayments of borrowings under line of credit             (75,151)     (83,391)    (104,580)
  Treasury stock purchases                                      (26)          --           --
  Dividends paid                                                 --           --       (1,881)
  Principal payments on term loan and
      capital lease obligations                              (1,948)      (1,933)      (2,298)
                                                          ---------    ---------    ---------
      Net cash used in financing activities                  (8,822)      (1,356)      (3,393)
Effect of exchange rate changes on cash                         119          259          141
                                                          ---------    ---------    ---------
      Net increase in cash and cash equivalents                 209          303          206
CASH AND CASH EQUIVALENTS - beginning of year                   694          903        1,206
                                                          ---------    ---------    ---------
CASH AND CASH EQUIVALENTS - end of year                   $     903    $   1,206    $   1,412
                                                          =========    =========    =========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

Cash paid during the year for:
  Interest                                                $   1,424    $     989    $     689
  Income taxes                                                    8        1,346        1,845

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND
  FINANCING ACTIVITIES:
Capital expenditures funded by capital lease borrowings   $     481    $   1,242    $   1,540
</TABLE>

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


                                      F-6
<PAGE>
                           LOWRANCE ELECTRONICS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                FOR THE YEARS ENDED JULY 31, 2002, 2003 AND 2004

(1)  BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BUSINESS

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

PRINCIPLES OF CONSOLIDATION

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

REVENUE RECOGNITION

Revenue for product sales is recognized at the time of product shipment since
the terms of sale are FOB, shipping point. Sales are recorded net of certain
costs as described below under Accrued Product Costs. Due to the seasonality of
certain products, the Company will offer extended credit terms of up to 120 days
during certain periods.

PROPERTY AND DEPRECIATION

Property, plant, and equipment is stated at cost. For financial reporting
purposes, depreciation is provided on a straight-line basis over the estimated
service lives of the respective classes of property. The building is being
depreciated using an estimated useful life of thirty years, while the estimated
lives for other assets are as follows: leasehold and building improvements,
15-20 years; machinery and equipment, 5-7 years; and office furniture and
fixtures, 3-5 years. Fully depreciated property and equipment with a cost of
approximately $24.7 million is still in use as of July 31, 2004.

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

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

INVENTORY

Inventories are stated at the lower of cost (first-in, first-out) or market. All
discontinued finished goods inventories are carried at cost, which management
believes to be lower than expected realizable value. Management monitors the
carrying value of inventories using inventory control and review processes which
include, but are not limited to, sales forecast review, inventory status reports
and inventory reduction programs. Excess and obsolete inventory reserves are
recorded by comparing available quantities of raw materials and finished goods
to work order requirements for raw materials and forecasted sales for finished
goods. The required reserves are adjusted based on anticipated changes in
scheduled work orders resulting from process or design changes that impact raw
material usage and from changes in sales forecasts resulting in changes in
finished goods quantities. Actual results could vary from these estimates.


                                      F-7
<PAGE>
RESEARCH AND DEVELOPMENT COSTS

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

FOREIGN CURRENCY TRANSLATIONS

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

USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America 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 an
estimate of future warranty costs based on recent historical product unit return
rates and the average repair costs per unit incurred during each year. The
estimate is adjusted, as necessary, based on actual returns or trends which
differ from historical results.

Dealer premium coupons -- The Company offers a SONAR installation subsidy to
qualified boat and motor dealers of its Lowrance product line. At the time of
shipment, the Company provides for the estimated cost of this program as a
reduction of revenue based on historical coupon return rates. This reserve is
analyzed and adjusted no less than quarterly.

Returns and refurbishments -- The Company accepts product returns only on a
limited, case-by-case basis. Estimated costs related to refurbishment of
approved returns as of the end of each period are accounted for by providing a
reserve based on the Company's historical experience. These reserves are
analyzed and adjusted quarterly. Returns are recorded as a reduction of net
sales at the time of receipt of the goods.

CASH AND CASH EQUIVALENTS

For purposes of the consolidated statements of cash flows, the Company considers
all highly liquid investments with original maturities of three months or less
at time of purchase to be cash equivalents.

ADVERTISING

Advertising costs are expensed as incurred. The Company expensed approximately
$3.3 million, $3.9 million and $4.0 million during the fiscal years 2002, 2003
and 2004, 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.


                                      F-8
<PAGE>
Long-term debt and revolving credit line -- The amounts outstanding under the
Company's term loan and revolving credit line bear interest at current floating
market rates, thus their carrying amounts approximate fair market value.
Interest rates underlying capitalized equipment leases approximate current
market rates.

STOCK BASED COMPENSATION

The Company has a stock based compensation plan which is more fully described in
Note 5. In May 2004, the Company adopted the fair value method of accounting for
stock based compensation prescribed by Statement of Financial Accounting
Standards (SFAS) No. 123, Accounting for Stock-Based Compensation under the
modified prospective method permitted by SFAS No. 148. The adoption of SFAS No.
123 was effective August 1, 2003.

Prior to fiscal 2004, the Company accounted for stock options utilizing the
intrinsic value method for variable awards under the provisions of Accounting
Principles Board Opinion ("APB") No. 25, Accounting for Stock Issued to
Employees. Accordingly, compensation cost was measured as the excess, if any, of
the quoted market price of the Company's stock at the end of each reporting
period over the amount an employee must pay to acquire the stock, amortized over
the vesting period. Had the Company continued to account for stock options under
the provisions of APB No. 25 during fiscal 2004, net income would have been
lower by approximately $1,393,000 (or $0.35 per fully diluted share).

Had the Company recognized compensation expense for its stock options in fiscal
years 2002 and 2003 under the provisions of SFAS No. 123, the Company's net
income and earnings per share would have been changed to the pro forma amounts
indicated below:

     <TABLE>
     <CAPTION>
                                                        YEARS ENDED JULY 31,
                                                     --------------------------
     (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)           2002             2003
     ----------------------------------------        ---------        ---------
     <S>                                             <C>              <C>
     Net income:
        As reported                                  $   2,389        $   4,645

        Compensation cost -- as reported                    --              286

        Compensation cost -- fair value
           method, net of tax                              (41)             (43)
                                                     ---------        ---------
        Pro forma                                    $   2,348        $   4,888
                                                     ---------        ---------
     Earnings per share:
        Basic -- as reported                         $    0.63        $    1.23
        Diluted -- as reported                            0.63             1.19
        Pro forma -- Basic                                0.62             1.30
        Pro forma -- Diluted                              0.62             1.26
                                                     ---------        ---------
     </TABLE>

The fair value of each option grant was estimated on the date of grant using the
Modified Black-Scholes European option pricing model with the following weighted
average assumptions: exercise price of $2.67, dividend yield of 0%, expected
volatility of 93.42%, risk-free interest rate of 5.31% and expected life of ten
years. The weighted average grant date fair value of the options was $2.39, for
a total value of $597,500.

TAXES

The Company accounts for income taxes in accordance with Statement No. 109 of
the Financial Accounting Standards Board, Accounting for Income Taxes, which
requires an asset and liability approach to financial accounting and reporting
for income taxes. The difference between the financial statement and tax bases
of assets and liabilities is determined and deferred tax assets or liabilities
are computed for those differences that have future tax consequences. The
Company provides a valuation allowance on deferred tax assets when, in
management's opinion, it is more likely than not that such assets will not be
realized.


                                      F-9
<PAGE>
RECLASSIFICATIONS

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

(2)  BALANCE SHEET DETAIL

INVENTORIES

Inventories consist of the following:

     <TABLE>
     <CAPTION>
                                                       YEARS ENDED JULY 31,
                                                   ----------------------------
     (IN THOUSANDS)                                  2003                2004
     --------------                                --------            --------
     <S>                                           <C>                 <C>
     Raw materials                                 $  4,290            $  6,895
     Work-in-process                                  2,608               4,445
     Finished goods                                   9,598              13,171
     Reserves                                          (555)               (690)
                                                   --------            --------
        Total inventories                          $ 15,941            $ 23,821
                                                   --------            --------
     </TABLE>

Discontinued finished goods inventory attributable to fiscal 2004 product
decisions was approximately $32,000 at July 31, 2004 as compared to $723,000 at
July 31, 2003. Inventory on hand at July 31, 2004 for products the Company
expects to discontinue during fiscal 2005 was $3.4 million. All discontinued
finished goods inventories are carried at cost, which management believes to be
lower than expected realizable value. The Company expects the remaining
inventory of discontinued products to be sold during fiscal 2005.

PROPERTY, PLANT, AND EQUIPMENT

Property, Plant, and Equipment consist of the following at July 31,

     <TABLE>
     <CAPTION>
     (IN THOUSANDS)                                         2003           2004
     --------------                                       -------        -------
     <S>                                                  <C>            <C>
     Land                                                 $   557        $   557
     Building and improvements                              5,318          5,345
     Machinery and equipment                               26,580         30,880
     Office furniture and fixtures                          4,339          4,966
                                                          -------        -------
                                                           36,794         41,748
     Less -- accumulated depreciation                      29,201         31,743
                                                          -------        -------
        Net property, plant, & equipment                  $ 7,593        $10,005
                                                          -------        -------
     </TABLE>

Fully depreciated property and equipment with a cost of approximately $24.7
million is still in use as of July 31, 2004.


                                      F-10
<PAGE>
Property, plant and equipment at July 31 includes the following amounts held in
the Company's manufacturing facility in Mexico:

     <TABLE>
     <CAPTION>
    (IN THOUSANDS)                                          2003           2004
    --------------                                        -------        -------
    <S>                                                   <C>            <C>
                                                          $    --        $    --
    Building and improvements                               1,311          1,311
    Machinery and equipment                                 8,683         10,229
    Office furniture and equipment                             51             81
                                                          -------        -------
                                                           10,045         11,621
    Less -- accumulated depreciation                        6,936          7,780
                                                          -------        -------
       Net property, plant, & equipment                   $ 3,109        $ 3,841
                                                          -------        -------
    </TABLE>

The property, plant, and equipment accounts at July 31 include the following
amounts for leased property under capitalized leases:

     <TABLE>
     <CAPTION>
     (IN THOUSANDS)                                           2003         2004
     --------------                                          ------       ------
     <S>                                                     <C>           <C>
     Machinery and equipment                                 $3,982       $3,634
     Less -- accumulated depreciation                         1,496        1,442
                                                             ------       ------
        Net property, plant, & equipment under
          capitalized leases                                 $2,486       $2,192
                                                             ------       ------
     </TABLE>

RESERVES FOR DOUBTFUL ACCOUNTS, SALES RETURNS AND CASH DISCOUNTS

Reserves for doubtful accounts, sales returns and cash discounts at July 31
consist of the following:

     <TABLE>
     <CAPTION>
     (IN THOUSANDS)                                      2003             2004
     --------------                                     ------           ------
     <S>                                                <C>              <C>
     Balance, beginning of period                       $  787           $  732
     Adjustment to provision                                (5)             263
     Write-offs                                            (50)              (2)
                                                        ------           ------
     Balance, end of period                             $  732           $  993
                                                        ------           ------
     </TABLE>

INVENTORY RESERVES

Excess, obsolete and realization reserves at July 31 consist of the following:

     <TABLE>
     <CAPTION>
     (IN THOUSANDS)                                      2003             2004
     --------------                                     ------           ------
     <S>                                                <C>              <C>
     Balance, beginning of period                       $  541           $  555
     Adjustment to provision                               215              682
     Inventory dispositions                               (201)            (547)
                                                        ------           ------
     Balance, end of period                             $  555           $  690
                                                        ------           ------
     </TABLE>

PRODUCT WARRANTIES

The following represents a tabular presentation of the changes in the Company's
aggregate product warranty liability for the reporting period.

     <TABLE>
     <CAPTION>
                                                          YEARS ENDED JULY 31,
                                                         ----------------------
     (IN THOUSANDS)                                        2003           2004
     --------------                                      -------        -------
     <S>                                                 <C>            <C>
     Balance, beginning of period                        $   720        $ 1,004
     Warranty cost incurred                               (1,786)        (2,174)
     New warranties issued                                 2,045          2,357
     Change in beginning of period estimate                   25              7
                                                         -------        -------
     Balance, end of period                              $ 1,004        $ 1,194
                                                         -------        -------
     </TABLE>

                                      F-11
<PAGE>
(3)  LONG-TERM DEBT AND REVOLVING CREDIT LINE

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

     <TABLE>
     <CAPTION>
                                                             YEARS ENDED JULY 31,
                                                             --------------------
     (IN THOUSANDS)                                           2003          2004
     --------------                                          ------        ------
     <S>                                                     <C>           <C>
     Revolving credit line                                   $4,509        $5,295
     Term loans due in monthly installments of $23,000
        plus interest                                         1,300           542
     Capitalized equipment lease obligations, payable
        in monthly installments of approximately $155,000,
        including interest at rates from 3.7% to 7.5%,
        with final payments ranging from January 2005
        through June 2008                                     2,077         2,077
                                                             ------        ------
                                                              7,886         7,914
     Less -- current maturities                               2,061         1,874
                                                             ------        ------
        Total long-term debt                                 $5,825        $6,040
                                                             ------        ------
</TABLE>

Future maturities of the above debt obligations at July 31, 2004, are
approximately $1.9 million, $6.0 million, $36,000 and $13,000 for the years
ending July 31, 2005 through 2008, respectively.

At July 31, 2004, the Company's financing facility consisted of a $26.5 million
revolving credit line and initial term loans of $7.4 million with a remaining
balance of $542,000. The revolving credit line provides for borrowings up to
$26.5 million based on varying percentages of qualifying categories of
receivables and inventories. Borrowing against inventories is limited to $13
million in total. At July 31, 2004, the Company had $9.5 million available under
the revolving credit line.

During November 2002 the Company amended its financing facility. This amendment
extended the term of the agreement for the revolving credit line from December
31, 2003 to December 31, 2005. Significant provisions of the amendment include
changes in certain financial covenants, the lowering of the interest rate from
prime plus 1.0% to prime plus 0.5% on all loans under the facility and the
addition of LIBOR based interest rate options. In addition, the amendment allows
for a permanent $1.5 million seasonal overadvance facility. Effective May 1,
2004, the interest rate was lowered to prime plus 0.25% and the LIBOR based
interest rate options were also reduced. As of July 31, 2003 and 2004, the
interest rate on the revolving credit line and term loans was 4.5%.

The terms of the foregoing agreement include a commitment fee of 0.25% based on
the unused portion of the bank credit line in lieu of compensating balances.

The agreement requires, among other things, that the Company maintain a minimum
tangible net worth and a minimum fixed charge ratio, limit the ratio of total
liabilities to tangible net worth and maintain minimum EBITDA (Earnings before
Interest, Taxes, Depreciation and Amortization). Additionally, the agreement
limits the amount of operating leases, capital expenditures and capital leases
and prohibits the payment of dividends without the prior written consent of the
lender. The Company announced a special dividend of $0.25 per common share on
August 15, 2003 to shareholders of record as of August 13, 2003 after obtaining
approval from the lender. The Company also announced a special dividend of $0.25
per common share on May 26, 2004 to shareholders of record as of May 24, 2004
after obtaining approval from the lender. The declaration of dividends is within
the discretion of the Company's Board of Directors and depends upon, among other
things, the Company's financial results and the favorable tax treatment of
dividend payments. Violation of any of the aforementioned provisions would
constitute an event of default which, if not cured, would empower the lender to
declare all amounts immediately payable. The agreement also contains a provision
that in the event of a defined change of ownership, the agreement may be
terminated. The Company was in compliance with all covenants at July 31, 2004
except the annual $5 million limit on capital expenditures. The bank waived this
covenant violation.

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


                                      F-12
<PAGE>
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,
                                                       ------------------------
     (IN THOUSANDS)                                      2003             2004
     --------------                                    -------          -------
     <S>                                               <C>              <C>
     Highest amount borrowed                           $14,827          $16,282
     Average amount borrowed                             9,507            8,910
     Weighted average interest rate                        4.7%             4.1%
     </TABLE>

(4)  LEASES

CAPITAL LEASES

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

The following is a schedule by years of future minimum lease payments under
capital leases, together with the present value of the net minimum lease
payments as of July 31, 2003 (in thousands):

     <TABLE>
     <CAPTION>
                                YEARS ENDING JULY 31:
     ---------------------------------------------------------------------------
     <S>                                                                  <C>
     2005                                                                 $1,657
     2006                                                                    439
     2007                                                                     36
     2008                                                                     13
                                                                          ------
     Total minimum lease payments                                          2,145
     Less-amounts representing interest                                       68
                                                                          ------
     Present value of net minimum lease payments                           2,077
     Current portion of obligations under capital leases                   1,596
                                                                          ------
     Long-term portion of obligations under capital leases                $  481
                                                                          ------
     </TABLE>

OPERATING LEASES

During fiscal 2002, 2003 and 2004, the Company recorded $1.2 million, $0.9
million and $.8 million, respectively, of expense related to operating leases.

At July 31, 2004, future minimum rental payments for operating leases totaled
$1.9 million. On August 30, 1996, the Company entered into a ten-year
non-cancelable lease for a manufacturing facility in Ensenada, Mexico. The
Company has purchase options on both the Ensenada facility and adjacent
undeveloped land through September 30, 2006. The Company may renew the leases
and purchase options for four additional terms of five years each on the terms
set forth in the lease and purchase option agreements. The purchase prices under
both options escalate annually by 3% each October 1. As of July 31, 2004, the
combined purchase price of both options was approximately $5.6 million. The
Company expects to exercise both its purchase options before they expire. Lease
payments for this facility are approximately $63,000 per month. The lease also
includes rent escalations of 3% per year. Total future minimum rental payments
under operating leases for the years ending July 31, 2005 through July 31, 2009
(including the rental for the Mexican facility assuming the purchase options are
not exercised) are approximately $.8 million, $.8 million, $.2 million, $8,000,
and $2,000, respectively.

(5)  STOCKHOLDERS' EQUITY AND RELATED ITEMS

On July 2, 2001, the Company adopted the 2001 Stock Option Plan which provides
for a maximum of 300,000 common shares available for issue to selected members
of management. The Plan provides for incentive stock options, non-qualified
stock options and stock appreciation rights. Depending upon the type of option,
the options and stock appreciation rights granted cannot have terms greater than
ten years and six months. The plan requires incentive stock options to be
granted at an option price of not less than 100% of the fair market value of the
Company's common stock at the date of grant. On July 2, 2001, the Company issued
134,453 incentive stock options


                                      F-13
<PAGE>
and 115,547 non-qualified stock options; these same amounts were issued and
outstanding as of July 31, 2001. Through July 31, 2004, none of these options
have been exercised or canceled, and no shares are exercisable.

On July 31, 2004, there were a total of 134,453 incentive stock options and
115,547 non-qualified stock options outstanding under the 2001 Stock Option
Plan, all at an exercise price of $2.67, the fair market value on the date of
grant. Each option may be exercised, in whole or in part, only upon the
occurrence of one of the following events: (1) the occurrence of any transaction
by which the Chief Executive Officer of the Company sells 50% of the shares he
then owns directly, in a private placement or registered public offering or
through Rule 144 sales, or (2) the sale by the Company of all or substantially
all of the Company's assets and operations to a third party, or (3) on or after
July 24, 2010.

In March 2002, the Board of Directors authorized the purchase of up to $1
million dollars of the Company's stock. These purchases must comply with Rule
10b-18 of the Securities Exchange Act of 1934. As of July 31, 2004, the Company
had purchased 7,600 shares at a cost of $26,000 under this program, which were
reflected as treasury stock in the equity section of the fiscal 2002
consolidated balance sheet and were retired during the first quarter of fiscal
2003.

(6)  EARNINGS PER SHARE

Basic and diluted earnings per share is calculated as follows:

<TABLE>
<CAPTION>
                                                     INCOME        SHARES       PER-SHARE
                                                  (NUMERATOR)   (DENOMINATOR)   AMOUNT
                                                  -----------   -------------   ---------
<S>                                               <C>            <C>             <C>
FOR THE YEAR ENDED JULY 31, 2004
BASIC EPS
Net income available to common stockholders       $8,756,000     3,761,196       $   2.33
                                                                                 --------
EFFECT OF DILUTIVE SECURITIES
2001 Stock Option Plan options                            --       217,805
                                                  ----------    ----------
DILUTED EPS
Net Income available to common stockholders and
   assumed conversions                            $8,756,000     3,979,001       $   2.20
                                                  ----------    ----------       --------
FOR THE YEAR ENDED JULY 31, 2003
BASIC EPS
Net Income available to common stockholders       $4,645,000     3,761,196       $   1.23
                                                                                 --------
EFFECT OF DILUTIVE SECURITIES
2001 Stock Option Plan options                            --       132,128
                                                  ----------    ----------
DILUTED EPS
Net income available to common stockholders and
   assumed conversions                            $4,645,000     3,893,324       $   1.19
                                                  ----------    ----------       --------
FOR THE YEAR ENDED JULY 31, 2002
BASIC EPS
Net income available to common stockholders       $2,389,000     3,766,888       $   0.63
                                                                                 --------
EFFECT OF DILUTIVE SECURITIES
2001 Stock Option Plan options                            --        51,238
                                                  ----------    ----------
DILUTED EPS
Net income available to common stockholders and
   assumed conversions                            $2,389,000     3,818,126       $   0.63
                                                  ----------    ----------       --------
</TABLE>

Related party disclosures -- Darrell J. Lowrance, President and Chief Executive
Officer since 1964, owns 50.7% of the Company's outstanding common stock and is
active in the day to day operations of the Company.


                                      F-14
<PAGE>
(7)  RETIREMENT PLAN

Substantially all Company employees in the United States participate in the
Lowrance Savings Plan which requires the Company to contribute 3% of the
participants' qualified earnings to the Plan. Also, each participant may make
contributions of qualified earnings into the Plan which will be matched by the
Company at 50% for each dollar contributed by the employee, not to exceed 3% of
compensation. Contributions made by the Company to the Plan for the years ended
July 31, 2002, 2003, and 2004 were approximately $433,000, $541,000 and
$586,000, respectively.

(8) INCOME TAXES

The provision for income taxes consists of the following:

     <TABLE>
     <CAPTION>
                                                    YEARS ENDED JULY 31,
                                          --------------------------------------
     (IN THOUSANDS)                        2002            2003            2004
                                          ------          ------          ------
     <S>                                  <C>             <C>             <C>
     Current
        U.S                               $    8          $  878          $2,947
        Foreign                              203             182             266
                                          ------          ------          ------
                                             211           1,060           3,213
                                          ------          ------          ------
     Deferred
        U.S                                1,335           1,157             460
        Foreign                               --              --              --
                                          ------          ------          ------
                                           1,335           1,157             460
                                          ------          ------          ------
     Total                                $1,546          $2,217          $3,673
                                          ------          ------          ------
     </TABLE>

Foreign income taxes are based on $0.5 million, $0.5 million and $0.9 million of
foreign earnings before income taxes during 2002, 2003 and 2004, respectively.

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

     <TABLE>
     <CAPTION>
                                                        YEARS ENDED JULY 31,
                                                    ----------------------------
                                                     2002       2003       2004
                                                    ------     ------     ------
     <S>                                              <C>        <C>        <C>
     Statutory rate                                   34.0%      34.0%      34.0%
     Foreign income taxes                              5.1        2.5         .9
     State income taxes                                2.6        0.3        4.1
     Non-deductible life insurance premiums
       and entertainment expenses                      0.8        0.7        0.5
     U.S. tax treatment of foreign operations         (3.8)      (2.3)      (1.8)
     Research and development credits                 --         (3.6)      (8.2)
     Other                                             0.6        0.7        0.1
                                                    ------     ------     ------
     Effective rate                                   39.3%      32.3%      29.6%
                                                    ------     ------     ------
     </TABLE>

The Company had a net operating loss carryforward of approximately $2,697,000 at
July 31, 2002, all of which was utilized during fiscal 2003. Deferred taxes on
accumulated other comprehensive income were $20,000 and $63,000 as of July 31,
2003 and 2004, respectively.


                                      F-15
<PAGE>
The tax effect of temporary differences giving rise to the Company's
consolidated deferred income taxes at July 31 are as follows:

     <TABLE>
     <CAPTION>
     (IN THOUSANDS)                                         2003         2004
     --------------                                       -------       -------
     <S>                                                  <C>           <C>
     Deferred tax assets --
        Reserves for product costs                        $   410       $   515
        Reserves for compensation and benefits                388           373
        State job tax credit carryforwards                    287            --
        Accounts receivable reserves                           45           135
        Other                                                 110           119
                                                          -------       -------
           Deferred tax assets                              1,240         1,142
                                                          -------       -------
     Deferred tax liabilities --
        Depreciation                                          717           885
        Research and development                               --           319
                                                          -------       -------
           Deferred tax liabilities                           717         1,204
                                                          -------       -------
     Net deferred tax asset (liability)                   $   523       $   (62)
                                                          -------       -------
     </TABLE>

The net deferred tax asset is recorded as $894,000 in current assets and
$371,000 in non-current liabilities for fiscal 2003 and $1.1 million in current
assets and $1.2 million in non-current liabilities for fiscal 2004.

(9)  OPERATING SEGMENT INFORMATION

The Company has one reportable segment as the CEO and President, the Company's
Chief Decision Maker, provides oversight and review based upon financial
statements and financial information presented at the consolidated level.

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

     <TABLE>
     <CAPTION>
                                                    YEARS ENDED JULY 31,
                                            ------------------------------------
     (IN THOUSANDS)                           2002          2003          2004
     --------------                         --------      --------      --------
     <S>                                    <C>           <C>           <C>
     Net sales:
        Domestic                            $ 62,538      $ 67,960      $ 85,769
        Foreign                               16,963        20,337        26,092
                                            --------      --------      --------
           Total                            $ 79,501      $ 88,297      $111,861
                                            --------      --------      --------
     </TABLE>

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

     <TABLE>
     <CAPTION>
                                                     YEARS ENDED JULY 31,
                                               ---------------------------------
                                                 2002         2003         2004
                                               -------      -------      -------
     <S>                                       <C>          <C>          <C>
     Net sales (foreign):
        Canada                                 $ 4,701      $ 5,413      $ 6,752
        Australia                                4,415        5,552        6,843
        Other                                    7,847        9,372       12,497
                                               -------      -------      -------
           Total                               $16,963      $20,337      $26,092
                                               -------      -------      -------
     </TABLE>


Long-lived assets in foreign countries are disclosed in Note 2 to the
Consolidated Financial Statements, Property, Plant and Equipment. There are no
long-lived assets in any foreign country other than Mexico.

(10) SALES TO A MAJOR CUSTOMER

No customer accounted for 10% or more of consolidated net sales in 2002, 2003 or
2004.


                                      F-16
<PAGE>
(11) CONCENTRATIONS OF CREDIT RISK

The Company extends credit to various companies in the marine and non-marine
markets in the normal course of business. Within these markets, certain
concentrations of credit risk exist. These concentrations of credit risk may be
similarly affected by changes in economic or other conditions and may,
accordingly, impact the Company's overall credit risk. However, management
believes that receivables are well diversified, thereby reducing the potential
credit risk and that allowances for doubtful accounts are adequate to absorb
estimated losses at July 31, 2004.

(12) SUBSEQUENT EVENT - DIVIDEND DECLARATION

On August 4, 2004, the Company declared a $0.25 per share dividend payable on
August 16, 2004 to shareholders of record as of August 12, 2004.









                                      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: August 31, 2004                       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 and Chief Executive                           August 31, 2004
                                         Officer, and Director
                                         (Principal Executive Officer)



/s/ Douglas J. Townsdin
-------------------------
Douglas J. Townsdin                      Vice President of Finance and                           August 31, 2004
                                         Chief Financial Officer
                                         (Principal Financial Officer and
                                         Principal Accounting Officer)



/s/ George W. Jones
-------------------------
George W. Jones                          Director                                                August 31, 2004



/s/ Jason C. Sauey
-------------------------
Jason C. Sauey                           Director                                                August 31, 2004



/s/ M. Wayne Williams
-------------------------
M. Wayne Williams                        Director                                                August 31, 2004
</TABLE>


                                       37