LOWRANCE ELECTRONICS INC - 10-K Annual Report

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FORM 10-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended July 31, 2002
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. [ ]

Aggregate Market Value of the Voting Stock Held By
Non-Affiliates on October 16, 2002 - $7,197,535

Number of Shares of Common Stock
Outstanding on October 16, 2002 - 3,761,196

DOCUMENT INCORPORATED BY REFERENCE
Proxy Statement for Annual Meeting of Stockholders to be held
December 10, 2002 - Part III

FORM 10-K

Annual Report for Fiscal Year Ended July 31, 2002

LOWRANCE ELECTRONICS, INC.

LOWRANCE ELECTRONICS, INC.
ANNUAL REPORT
FOR THE YEAR ENDED JULY 31, 2002

PART I

Item 1. Business

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

Founded in 1957, incorporated in 1958 and re-organized as a Delaware
corporation in 1986, the Company, today, remains the world leader in the design,
manufacture, and sales of SPORTFISHING SONAR (also known as fish finders or
depth finders) and GLOBAL POSITIONING SYSTEMS (GPS/Mapping). The Company
commands almost 50% of the total worldwide annual unit sales of sportfishing
SONAR through dual-brand marketing of its "Lowrance" and "Eagle" trade names. In
support of those two brands, the Company also markets a complete line of related
accessories (200 kHz single and 50/200 kHz dual-frequency transducers,
temp/speed/distance sensors, mounting systems, GPS+WAAS receiver/antennas,
detailed CD-ROM mapping software, SONAR/GPS computer interfaces, rewritable
Multi-Media Cards (MMC) and Secure Digital (SD) cards, MMC/SD card readers,
along with a variety of cables/connectors, etc.). The Company's SONAR
instruments are used primarily by sports fishermen to: detect underwater
structure, thermoclines, schools of baitfish, and individual game fish;
determine bottom depth as well as bottom composition/hardness; and display water
surface temperature, trolling speed and distance traveled readings. Fishermen
and boaters also utilize the Company's SONAR products as critical navigational
and safety devices for determining bottom depth in lakes, rivers, coastal and
offshore waters. The Company's 12-parallel channel GPS+WAAS receiver/antennas
offer consumers faster satellite lock-ons and more accurate GPS navigation,
fully enabled for user-selectable reception of the Federal Aviation
Administration's Wide Area Augmentation System (WAAS) satellite signals which
provide enhanced positional accuracy to 10 feet or less in select areas of the
U.S.A. Whether using the built-in custom background map, or the Company's
exclusive MapCreate(TM) CD-ROM detailed mapping software, or compatible
Navionics(R) XL and HotMaps(TM) digitized electronic mapping charts, fishermen
and boaters can determine precisely where they are relative to landmarks on the
maps, then see exactly what is under their boats as well. Several products offer
combined SONAR/GPS+WAAS mapping capabilities; others provide stand-alone SONAR
or GPS+WAAS capabilities. Some models are gimbal-mounted in brackets; some can
be panel-mounted in a console; and others are hand-held products. The GPS
navigational receivers can be used in a variety of marine and non-marine
applications, such as fishing, boating, hunting, camping/backpacking,
RV/off-road vehicles, aviation and automobile navigation. The Company's SONAR
and GPS products are marketed primarily through retail outlets, mail-order
catalogs, mass merchants, wholesale distributors, dealers and original equipment
boat manufacturers (OEMs), in all fifty states and in forty-seven foreign
countries.

The Company's principal U.S. corporate offices are located at 12000
East Skelly Drive, Tulsa, Oklahoma 74128, and the main telephone number is
918.437.6881. The corporate offices encompass: Engineering, Sales and

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Marketing, Order Management, Customer Service, Product Warranty and Repair,
Purchasing, Accounting, Warehouse/Distribution, and LEI Extras, Inc. (accessory
sales). Over 200 professional staff and management personnel are employed at the
Tulsa corporate facility. The Company's principal manufacturing facility,
Electronica Lowrance, is located in Ensenada, Mexico, approximately 80 miles
south of San Diego, California. There are approximately 600 manufacturing and
production support personnel at the Ensenada facility.

Products

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

SONAR Systems

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

The Company's SONAR products are extremely durable, completely
waterproof and are designed to withstand harsh saltwater environments, including
the shock and vibration encountered by sport boats. Sport boats, unlike offshore
commercial boats, are usually open to direct sun and are subject to shock, rain,
salt spray and temperature extremes that constantly test the durability of a
SONAR unit. The Company's products are also designed specifically for the needs
of sport fishermen who, unlike their commercial counterparts, are sometimes more
interested in the size, depth, and location of individual game fish, depth of
thermoclines, or underwater structures, rather than the location of large
schools of fish. The Company's SONAR units

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are designed for and used by both freshwater and saltwater sports fishermen and
boaters. The Company's SONAR models can typically utilize a variety of
transducers manufactured by the Company in different sizes, shapes, frequencies
and beam angles, to fit all types of boats and for every deep and shallow water
application. The Company's SONAR instruments are distinguished primarily by the
types of their displays. Today, the vast majority of its products utilize
graphic liquid crystal displays (LCDs), either in monochrome using multiple
levels of gray scale, or in color employing up to 256 colors.

Graphic Liquid Crystal Display (LCD) SONAR - The Company was the first to employ
LCD technology with regard to LCD use in SONAR products and was also the first
to utilize high-resolution, high-contrast, Film SuperTwist LCD technology,
which, when incorporated into its SONAR instruments, provides the very best
target detail and separation in the industry. By 2002, all the Company's
entry-level to advanced monochrome SONAR products sold under both trade names
had Film SuperTwist displays. Also during 2002, the Company expanded its popular
new family of (LC)X-15 and (LC)X-16 SERIES big-screen, high-performance
Monochrome Transflective (MT) and Color Illuminated (CI), TFT (Thin Film
Transistor) Lowrance LCD products. Patterned after the legendary performance
qualities of their X-15 and X-16 paper graph ancestors, these LCD products
feature up to 7" diagonal, 640 x 480 pixel screens (over 307,000 total pixels),
offering exceptional levels of resolution and readability. The (LC)X-15CI and
(LC)X-16CI models feature full 256-color displays with programmable color
palettes to match the viewing preferences of individual users. These high-detail
units, typically, will separate individual fish suspended less than 1" apart. In
addition, they offer another Lowrance "industry first": paper-free record/play
capabilities with standard reusable, compact digital Multi-Media Cards (MMC) or
Secure Digital (SD) memory cards, available in 8MB to 128MB memory capacities.
The large-screen color Lowrance LCD, the (LC)X-16CI, received the prestigious
"BEST OF SHOW AWARD" at ICAST.

During fiscal 2002, the Company began production of 4 NEW LOWRANCE 200
kHz SONAR LCD products, announced previously at major industry trade shows: the
X51, X71, X91 and LMS-240. These products offer exceptional features for their
suggested retail prices (SRP). For example, at a $199 SRP, the entry-level X51
SONAR has a 240 x 160 pixel LCD; a FishReveal(TM) feature with 10-levels of gray
scale to show fish hidden in surface clutter, weed beds and other types of
underwater cover; a full-screen FasTrack(TM) display; HyperScroll(TM) to enhance
the display of fish targets at higher boat speeds; a brand new 200 kHz
Skimmer(R) transducer with an integrated water temp sensor; a sporty new case
design; and 1500 watts of peak-to-peak transmit power, producing depth
capabilities to 800 feet. At an upper-middle price point, the LMS-240 ($579
SRP), a combo SONAR/GPS+WAAS mapping unit, offers even more impressive features:
a new compact case design; 3,000 watts of peak-to-peak transmit power; depth
capability to 1,000 feet; built-in temp sensor; FishReveal(TM); HyperScroll(TM);
and one waterproof slot for reusable digital MMC/SD cards to record/play SONAR
graphs (like the big-screen, top-of-the-line units) and to display optional
MapCreate(TM) and Navionics(R) detailed maps from MMC/SD cards; and a
high-impact protective cover to guard the screen and keypad when not in use.

In fiscal 2002, the Lowrance iFINDER(TM) hand-held, portable GPS+WAAS
mapping unit began shipping. This popular hand-held navigation instrument is
small enough to carry in a shirt pocket, yet has a large, easy-to-read LCD
display with backlighting for night use. The iFINDER(TM) offers several

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advantages to the outdoors enthusiast - custom built-in background map, as well
as the option of user-created, higher-detailed maps from Lowrance's exclusive
MapCreate(TM) CD-ROM mapping software. Users simply create the maps they want
and download from a PC to a reusable MMC/SD memory card, with the ability to
instantly expand the unit's record memory with the insertion of a single 8MB to
128MB card. Purchasers can also personalize the "look" of their iFINDER(TM) with
colorful FaceOffs(TM) covers in red, yellow, blue, camouflage and black. The
iFINDER has internal memory capable of storing up to 1,000 waypoints, 1,000
event markers, 100 routes and 10 plot-trails (up to 10,000 points per trail).

Also during fiscal 2002, the Company began distribution of 6 NEW EAGLE
200 kHz SONAR LCD products, all with new platinum gray cases: three new
entry-level sonar units in the FISHEASY(TM)2 SERIES (FishEasy(TM) 2,
FishEasy(TM) 2T, and FishEasy(TM) 2 Portable), all with 240 x 160 pixel screens
and 1500 watts of peak-to-peak transmit power - priced from $129 - $149 SRP;
next was the TRIFINDER(TM)2 SONAR (with the same high resolution LCD screen and
transmit power), but producing the widest underwater coverage yet - up to
150(Degrees), when using high sensitivity settings; the FISHMARK(TM)160 was the
new mid-priced 160 x 160 pixel SONAR with great versatility; and finally, the
FISHMARK(TM)240, was the top-of-the-line new Eagle SONAR and offered a 240 x 240
pixel, high-resolution LCD screen that produces superb target detail.

In addition to these products, late in the 4th quarter of fiscal 2002
at ICAST, the Company announced to the trade 3 EXCITING NEW ENTRY-LEVEL EAGLE
200 kHz SONAR LCD products for fiscal 2003: The new CUDA(TM) 128, at an
unbelievably low $79.99 SRP - and the CUDA(TM) 168, at only $99.99 SRP. Also, a
new PORTABLE version of the Cuda(TM) 128 will be available at a $119.99 SRP.
These products, with their impressive lists of performance features, will be
positioned to entry-level anglers as "PUTTING MORE BITES IN YOUR FISHING, FOR
THE SMALLEST CHUNK OUT OF YOUR WALLET!" For example, the Cuda(TM) 168 will offer
depth capabilities to 600 feet and will feature a high-contrast, highly-readable
168 vertical pixel Film SuperTwist display. Both models will have built-in water
temp sensors in their transducers, producing accurate surface water temp
readings. They will provide exceptional fishing advantages to price-conscious
anglers worldwide.

In a strategic plan to gain additional competitive advantage within its
SONAR and GPS markets, the Company delayed the internal announcement of its
ADDITIONAL NEW 2003 Lowrance and Eagle product lineups to its salesmen, dealers
and distributors until the 1st quarter of fiscal 2003. At a National Sales
Meeting held in September of 2002 in Tulsa, OK, the Company PREMIERED OVER 25
new Lowrance and Eagle products, many of which will begin shipping around the
first of calendar year 2003. For EAGLE, in addition to the Cuda(TM) 128 and 168
models, the other innovative new products for 2003 will include: the CUDA(TM)
168EX, the first Eagle, wide-screen (4.5" diagonal), entry-level fish finder
($119.00 SRP); the FISHMARK(TM) 320 (320 x 320 pixel LCD, high-performance sonar
with an extremely affordable $199.99 SRP); a new combo sonar/GPS+WAAS, the
FISHELITE(TM) 320 ($449.99 SRP), will also produce superb picture resolution and
will incorporate for the first time in an Eagle product the digital record/play
capability permitting consumers to create custom detailed mapping on MMC/SD
memory cards, or to use optional Navionics(R) XL and HotMaps(TM) electronic
charts; a brand new stand-alone Eagle GPS+WAAS mapping unit for 2003, the
INTELLIMAP(TM) 320 ($349.99 SRP), was revealed. And an entirely new series of
deep-water, 50/200 KHZ, DUAL-FREQUENCY SONAR and

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SONAR/GPS+WAAS models have been announced to meet the needs of the U.S. coastal
and Great Lakes markets: Eagle SEAFINDER(TM) 240DF ($179.99 SRP), SEAFINDER(TM)
320DF ($239.99 SRP), and the combo SONAR/GPS+WAAS, SEACHARTER(TM) 320DF ($499.99
SRP). The "DF" suffix denotes dual-frequency capability. The Company expects
these new Eagle products to have great market appeal, especially considering
their superbly affordable price-points.

For the LOWRANCE brand, the new fiscal 2003 product announcements
included OVER 15 NEW PRODUCTS: the all-new low-cost, entry-level X47 fish finder
with 168 vertical pixels ($129.00 SRP) and a wider-screen version, the X47EX
($169.00 SRP); the new X87 SONAR with a 320 x 320 pixel LCD; the high-powered
X97 SONAR with 3000 watts of transmit power and cold-cathode backlighting; the
new combo SONAR/GPS+WAAS model; the LMS-320 with 320 x 320 resolution,
record/play capability, code-cathode backlighting and high-power with depths to
1,000'; plus 3 new large-screen, sunlight viewable LCX Series products -
(LC)X-18C color SONAR with GPS+WAAS capability and a 6" diagonal, 1/4 VGA, TFT
display; the (LC)X-19C color SONAR with GPS+WAAS capability and a 7" diagonal
full VGA, TFT display viewable even in the brightest direct sunlight; and the
first commercial-sized 10.4" MEGA-SCREEN, COMBO SONAR/GPS+WAAS unit from
Lowrance, the (LC)X-104C ($2,499.00 SRP); and five new stand-alone,
bracket-mounted GPS+WAAS/mapping units - the compact-sized, GLOBALMAP(R) 3200
with 5" diagonal Film SuperTwist monochrome display; the 7" diagonal, big-screen
monochrome, GLOBALMAP(R) 4000; the 6" diagonal, color TFT model, the
GLOBALMAP(R) 5000; the 640 x 480 pixel, super high-res, 7" full VGA color,
GLOBALMAP(R) 6000; and the new GLOBALMAP(R) 7000, with an extremely bright,
sunlight viewable, 10.4" diagonal, high-res color, TFT display with adjustable
color palette. The LCX SONAR models are all capable of 50/200 kHz,
dual-frequency operation, and produce up to 8,000 watts of peak-to-peak power
resulting in depth capabilities to 3,000 feet and beyond. The combo
SONAR/GPS+WAAS and stand-alone mapping units offer the convenience of multiple
mapping sources: 1)- All-new, enhanced, built-in background map of the
continental U.S.A. and Hawaii, featuring over 60,000 navigational aids and
10,000 wrecks and obstructions in coastal and Great Lakes waters, along with
metro area, major streets/highways and interstate exit services; 2)-
User-created, custom detailed map segments from optional MapCreate(TM) CD-ROM
software which includes over 700,000 Points-of-Interest (marinas, restaurants,
hotels, airports, emergency services and more) downloaded from PC to rewritable
MMC/SD memory cards; and 3)- Optional Navionics(R) XL and HotMaps electronic
charts that include depth contour lines, real-time tide and current data, and
more.

Completing the Company's new fiscal 2003 product announcements for
Lowrance are 4 NEW compact-sized, highly affordable, DUAL-FREQUENCY, monochrome
LCD models to appeal to coastal markets: the X58DF, a 240 x 160 pixel unit
($229.00 SRP) including water temp/boat speed/distance readings; the X88DF, a
320 x 320 pixel model, also with built-in temp/speed/distance readings; the
X98DF, 320 x 320 pixel, high-powered unit with deep water capabilities down to
2,500 feet; and the new LMS-320DF COMBO SONAR/GPS+WAAS mapping unit with
record/play, MMC/SD memory card capability and temp/speed/distance readings. All
these new low-to-mid-priced, 50/200 kHz dual-frequency models from Lowrance will
bolster new sales to fishermen and boat owners in coastal areas, providing both
excellent shallow and deep-water performance.

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The Company's LCD products incorporate numerous technological
advancements such as Advanced Signal Processing (ASP(TM)), which constantly
monitors boat speed, water conditions and other sources of interference, and
automatically adjusts all crucial SONAR settings for the best pictures possible
and the best performance for nearly all situations, whether a boat is trolling
or traveling at high speed. The Company's patented, low-profile Skimmer(R)
transducers identify fish out to 60(Degrees) with high sensitivity settings, and
perform well at boat speeds up to 70 mph. The Company's GRAYLINE(R) and
COLORLINE(TM) innovations clearly separate fish and vital structure, on or near
the bottom, from the true bottom and also help define changes in bottom hardness
and composition. All of the Company's SONAR models utilize computer technology
and are keyboard controlled. The LCD models graphically display the bottom
contour, fish, and other underwater targets on an LCD and digitally display the
water depth. Several models can also display digital readings for the surface
temperature of the water, boat trolling speed and distance traveled. The
Company's new entry-level to lower mid-range LCD SONAR products will feature
from 128 to 240 vertical pixel screens and from 800 to 1500 watts of
peak-to-peak power, producing depth capabilities from 600 to 800 feet or more.
These products are normally priced in the $79 to $200 SRP range. The mid to
upper-middle range products typically offer larger, 240 to 320 vertical pixel
LCD displays and power outputs from 1,500 to 3,000 watts peak-to-peak, with
depth capabilities from 800 to 1,000 feet. These units are typically priced in
the $199 to $450 SRP range.

The top-of-the-line, large-screen LCX Lowrance units feature 240 to 480
vertical pixel and 320 to 640 horizontal pixel LCDs. These advanced models, with
screen sizes from 6" to 10.4" diagonally, retail from $799 to $2,499, depending
on whether they are packaged as SONAR-only or as combo SONAR/GPS+WAAS mapping
instruments. Between its Lowrance and Eagle brands, the Company will market
approximately 27 LCD SONAR MODELS in fiscal 2003, including 3 color units. In
addition, a projected 6 LCD, GPS+WAAS, stand-alone mapping units will be
offered, including 3 color models.

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

Global Positioning System (GPS) - The U.S. Department of Defense's Global
Positioning System offers worldwide navigational data for users via a
constellation composed of up to thirty-one, block II satellites. The system
provides precise global navigation for land, water, and air applications
delivering constant updates of an individual or object's position in latitude,
longitude, and altitude. Additionally, GPS measures speed and direction of
travel.

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Wide Area Augmentation System (WAAS) GPS - In recent years, the Federal Aviation
Administration (FAA) began installation of an enhancement to the GPS system
primarily for avionics use in the United States. Called WAAS, for Wide Area
Augmentation System, the new navigational data produced, improves the level of
GPS accuracy to approximately 1-3 meters, including enhanced altitude readings,
which are particularly beneficial to general aviation and commercial pilots.
Eventually, America's WAAS system will be comprised of several geostationary
satellites. Currently, however, only two satellites are installed and
functional, providing GPS coverage primarily to the coastal areas of the U.S.
Consequently, the system is only effective in select areas of America. While
other countries have similar WAAS systems planned for the future, they are far
from complete today; so it is important to remember that, WAAS is not available
worldwide as is the U.S. Department of Defense (DOD) system. With an eye to the
future; however, beginning in fiscal 2002, the Company announced that all of its
new 12-parallel channel Lowrance and Eagle GPS-mapping products will offer WAAS
as well as the standard worldwide DOD GPS system. The choice will be left
completely to the user, via a simple menu selection.

The Company has always been a leader in the development of marine
navigational technology and related products, including GPS, and was the first
to introduce a 5-parallel channel hand-held GPS model for both the marine and
general outdoor sports markets. By fiscal 1997, the Company's GPS technology had
evolved exclusively into 12-parallel channel marine, outdoors and general
aviation receivers for even faster satellite lock-ons and greater accuracy. The
Company's popular GPS products now utilize much smaller antennas and have become
considerably more user-friendly. Added to these important advantages is the
Company's digitized mapping technology. Whether users choose to rely on the
all-new, enhanced built-in custom Lowrance background map loaded into every
mapping product at no extra cost - or if they choose to purchase the optional
MapCreate(TM) GPS Accessories Pack with detailed mapping CD-ROM software,
rewritable MMC memory card, and PC computer MMC/SD card reader, consumers will
be able to pinpoint their locations precisely on their GPS maps using landmark
references, including surrounding shorelines, roads and streets and over 700,000
Points-of-Interest to include marinas, restaurants, hotels, airports, emergency
services, and more. With the Company's combination SONAR/GPS+WAAS mapping
models, fishermen and boaters can pinpoint their location on the map, see
precisely what targets are under their boats, and mark their favorite spots as
well as recording up to 1,000 waypoints, 1,000 event markers (with 42 different
icons), 100 routes and 10 plot-trails with up to 10,000 points per trail. This
critical stored data remains safe and accessible for decades, permitting users
to return to their previously recorded adventure spots or to repeat specific
journeys with great ease at any time in the future.

SONAR and GPS Accessories

The Company also markets a full line of accessories through its
subsidiary, LEI Extras, Inc. Primary accessory items consist of transducers
(50kHz, 192kHz, 200kHz and 50/200kHz dual-frequency), water temperature and boat
speed sensors, cables (power, transducer, and GPS), portable power packs, ice
fishing accessories, GPS antenna/receivers, detailed mapping CD-ROM software,
rewritable digital Multi-Media Cards (MMC), PC computer MMC/SD

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memory card readers, power adapter cables, and various mounting brackets, all of
which are used in conjunction with the Company's SONAR and GPS products.

Product Sales

The following table sets forth the percentage of total sales of SONAR,
GPS and OTHER products sold by the Company over the past three fiscal years.

Product Distribution

The Company markets its products under two trade names, "Lowrance" and
"Eagle". Sales of Lowrance products, as a percentage of total sales were
approximately 52% in 2000, 54% in 2001, and 54% in 2002.

The Lowrance line in both SONAR and GPS, with its large selection of
interchangeable transducers and its more extensive features, is intended for the
more sophisticated user. The wide choice of transducers available with Lowrance
SONAR models allows for greater installation and operating flexibility through
selection of a transducer of the appropriate size, shape, cone angle and
frequency to meet the angler or boater's specific needs. The Company now
packages many of its Lowrance and Eagle SONAR units with its patented Skimmer(R)
models, a series of high-performance transducers that are suitable for use on
nearly all types of boat hulls. These sleekly designed transducers slice cleanly
through the water, performing well at boat speeds up to 70 mph. Lowrance
customers can; however, exchange their Skimmer(R) transducers for credit toward
a different model if it better meets their specialized requirements for
installation or operation. Generally, the boater will require special assistance
with the installation and operation of a Lowrance SONAR unit. To this end, the
Company sells its Lowrance line primarily to retailers, wholesalers, and boat
manufacturers the Company believes have sufficient knowledge of the
installation, use, and service of the Lowrance line and can communicate such
expertise to their customers. As of July 31, 2002, the Company had approximately
2,000 wholesalers and retailers purchasing products in the Lowrance line. A
SONAR Installation Subsidy (SIS) is offered as a means of sharing the cost of
the installation to authorized dealers that sell and install Lowrance products
and generating additional income for the dealers. The Company believes that over
the past three years, the Lowrance line has been sold primarily through dealers
having the requisite level of knowledge to sell, install, and properly instruct
fishermen and boat owners as to their products' effective use. Terms of payment
for products in the Lowrance line vary, based on the time of the season, with
the longest dating terms of 120 days being offered for shipments during the
first quarter of the fiscal year.

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The Eagle line is sold primarily through mass merchants, mail-order
catalog companies, retail sporting goods stores, and wholesalers that do not
usually provide technical assistance to the consumer regarding the installation
and operation of SONAR and GPS products. Recognizing that special assistance
will not be available, as to the selection of an appropriate transducer or the
operation of an Eagle SONAR or GPS, the Company pre-packages each Eagle SONAR
unit with a universal transom-mount, 200 kHz or 50/200 kHz Skimmer(R) transducer
designed to work adequately on most boats. The operation requirements for the
entry-level Eagle SONAR units have also been simplified for the less
sophisticated SONAR user. While the typical Eagle SONAR does not offer the same
installation and operating flexibility as its Lowrance counterpart, it does, on
the other hand, normally cost less to the consumer. Terms of payment for
products in the Eagle line are generally thirty days. However, dating terms
similar to those for the Lowrance line are also available.

The Company's products are sold in all fifty states domestically and
forty-seven countries internationally. The Company's international sales totaled
$13 million in 2000, $15 million in 2001, and $17 million in 2002, representing
approximately 18%, 20%, and 21% of total net sales, respectively. The two
largest international markets for the Company's products are Canada and
Australia, where the Company maintains its own warehouses for sales and
distribution of its products. Annual sales in any one foreign country did not
account for 10% or more of the Company's total annual sales for the latest three
fiscal years. With the addition of certain in-house marketing/advertising
capabilities in 2000 (offering greater international sales support capabilities)
- -- in combination with the introduction of new products with specific
international consumer appeal, the Company expects international sales growth
over the next five years.

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

Sales to Wal-Mart Stores, Inc., accounted for 13%, 12%, and 9% of the
Company's net sales in 2000, 2001 and 2002, respectively. No other customer
accounted for 10% or more of net sales in fiscal 2000, 2001, or 2002.

Inventories

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

9

Advertising and Promotion

To support the sales of its Lowrance and Eagle products to wholesalers,
mass merchandisers, mail-order catalog companies, and others, the Company
actively promotes and advertises its products to fishermen, boat owners, and
increasingly to other outdoor enthusiasts. The high-tech nature of the Company's
products makes education of the user an important aspect of the Company's
promotional activities. Through educating and familiarizing potential buyers
with the practical benefits and use of SONAR and GPS-mapping products, the
Company endeavors to create demand for its products. The Company's internet
websites, www.lowrance.com, www.eaglesonar.com, and www.lei-extras.com, have
played a major role in educating consumers about the Company's product lines. A
special "SONAR Tutorial" featured on the website has been popular with potential
buyers. The information included on these websites is not intended to be a part
of this Form 10-K.

The internal Marketing Communications Department is comprised of a core
staff of six communications specialists. The positions include a Promotional
Programs Coordinator, a Manager of Advertising & Public Relations, a Graphic
Communications Manager, a Marketing Communications Traffic Manager, a Director
of Marketing Communications and a Vice President of Marketing. The department
has extensive in-house computer graphics and copywriting capabilities and is
responsible for the creative development of all advertisements, product
catalogs, product packaging, collateral materials including sales flyers and
product spec sheets, retail point-of-purchase displays and sales support
materials. The benefits offered the Company by this internal marketing group are
numerous. For example, the Company pays no annual advertising agency service and
production fees, and also receives the typical 15% agency commissions on Company
direct media buys. The department also provides much faster reaction times to
media opportunities. In addition, the department has met with great success in
graphically laying out the Company's product pages for several large national
retail catalog sales customers for the past two years. This action ensures
consistency in the appearance of the Company's products, as well as an overall
improved "quality look" in the various catalogs. The Marketing Department plans
and executes annual coordinated marketing communications programs that consist
of: print media advertising, TV fishing show sponsorships,
national/regional/state bass, walleye and saltwater species tournament
sponsorships, Pro-Team sponsorships, SONAR/GPS training seminars, and a
concentrated public relations and promotional strategy that results in greatly
increased media exposure for the Company's products.

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

10

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

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

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

In addition to advertising expenses and public relations activities, the
Company incurs promotional expenses which include sponsorship of fishing
tournaments, store promotions and contributions to environmental groups. The
Company, through its Eagle trade name, has been an Affiliate Sponsor of the
successful Wal-Mart FLW Tournament Trail since 1998 and will continue this
sponsorship through fiscal 2004. The Wal-Mart FLW tour offers the world's
largest cash prize for bass tournaments, including a $1,000,000 purse. The
Wal-Mart FLW tour is sponsored by Genmar Holdings, which also owns numerous boat
manufacturers including Ranger, Lund, Crestliner and Carver Yachts, to whom the
Company sells OEM SONAR products. During the 4th quarter of fiscal 2001, the
Lowrance trade name was announced as the new official and exclusive SONAR/GPS
sponsor for the BassMasters Tournament Trail, the oldest and largest
professional bass circuit in America. This highly promoted and successful
tournament series is owned by ESPN Television and is backed locally, regionally
and nationally by the Bass Anglers Sportsman Society (B.A.S.S.), which has a
membership of well over 500,000 anglers in the U.S. Therefore, between its two
trade names, the Company now controls the SONAR/GPS sponsorships of the two
largest and most successful tournament trails in the world. Dealer/distributor
support includes the availability of point-of-purchase displays, posters,
videos, and product simulators to assist in displaying the Company's products.

Competition

SONAR and SONAR/GPS+WAAS Combination Units -

The Company encounters competition from a number of domestic and
foreign manufacturers. More than 300 brands of SONAR have been offered to the
consumer since the Company's formation in 1957. Presently, there are more than
twenty-five competitors worldwide. Historically, the SONAR market, as it relates
to SONAR products marketed primarily to sports fishermen and recreational boat
owners, has been dominated by the Company and Techsonic Industries, Inc. The
Company believes its total market share (Eagle and Lowrance brands combined) is
approximately 50%.

11

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

Hand-held GPS+WAAS Mapping Units -

The hand-held GPS+WAAS mapping market has expanded rapidly over the
past several years. Target markets for these products include, but are not
limited to, boating, sportfishing, hunting, hiking, RV and off-road vehicles,
business travelers and aviation. Long term growth in the Company's GPS market
share will require continued development of advanced GPS technologies that can
be quickly brought to market at competitive prices with sales bolstered by
aggressive advertising and promotional programs. The Company's four new portable
models introduced in 2002, the iFINDER(TM), iFINDER(TM) PLUS, iFINDER(TM)
ATLANTIS and iFINDER(TM) EXPRESS are expected to provide significant new
opportunities for increased sales of hand-heLd GPS+WAAS mapping products.

Two competing GPS companies, (Garmin(R) International, Inc. and the
Magellan(TM) product line of Thales Navigation) currently dominate this market
and the Company believes these two competitors, combined, continue to control in
excess of 65% of the hand-held GPS market. The primary reason for their success
is that both companies initially introduced and marketed several non-mapping
products retailing for under $150 and were some of the first to market hand-held
GPS products. Both companies offer a full range of higher priced products with
more features than their lower priced models, and one produces products
specifically aimed at the avionics market. The Company believes the competitive
marketing strategies of these two companies continued to negatively impact sales
of its products in fiscal 2002, especially in international markets.

In 2002, the Company marketed six Lowrance hand-held GPS/mapping
products, which retail at suggested prices between $199 and $599. Two of the
Lowrance hand-helds in 2002 were popular existing products carried over from
previous years: the GlobalMap(R) 100 and the AirMap(R) 100. During the 2nd
quarter of fiscal 2002, the Company added distribution of its previously
announced, sleekly designed, personal hand-held GPS+WAAS, the iFINDER(TM). Its
large 160 x 120 pixel, Film SuperTwist display produces stunning map detail and
superb screen contrast and resolution. Its unique pocket-sized case will easily
slip into any shirt pocket. Along with its optional FaceOffs(TM) (changeable
faceplates in five striking colors), the iFINDER(TM), with its four different
initial model offerings ranging in retail price-points from $199 to $319, offers
an impressive list of GPS+WAAS mapping features: built-in custom Lowrance
background map with interstate exit services; capability of using the
MapCreate(TM) CD-ROM detailed mapping software option with 60,000 nav aids and
10,000 wrecks and obstructions in U.S. coastal and Great Lakes waters, as well
as a database containing over 700,000 searchable Points-of-Interest such as

12

marinas, restaurants, hotels, airports, emergency services and more;
instantly-expandable memory with a slot for one rewritable Multi-Media Card
(MMC) or Secure Digital (SD) memory card available in 8MB to 128MB memory
capacities for downloading custom mapping; storage of up to 1,000 waypoints and
1,000 event markers; 10 savable plot trails with up to 10,000 points per trail,
and stores up to 100 routes; choice of 42 different graphic icons to mark
favorite spots; 37 different map ranges from .05-to-4,000 miles; operates on two
AA batteries; internal back-up memory to keep GPS data safely stored and
accessible for years; backlighted screen; and a waterproof carrying case. All of
the Company's GPS products feature 12 parallel-channel receivers for faster
satellite lock-ons and more accurate GPS navigation. The new iFINDER(TM) models
are also WAAS enabled for even greater positioning accuracy at select locations.

The Company's line of hand-held GPS products has helped the Company
expand its presence in multiple non-marine retail markets and outlets. These
products, combined with continuing advertising and promotional campaigns, have
significantly increased consumer awareness and recognition of the Eagle and
Lowrance brand names in historically non-traditional markets. Currently, the
Company enjoys distribution through several outdoor recreational outlets who
serve hikers, campers, skiers, climbers and other outdoor enthusiasts.

The Company attempts to differentiate its SONAR and GPS+WAAS products
through quality, technological development, performance, price, and service. The
Company believes its products do offer competitive advantages due to quality,
technological advancement and the wide range of features. These advantages
result from the Company's long history of product innovation, such as Advanced
Signal Processing (ASP(TM)), fully waterproof SONAR and SONAR/GPS combination
units, GRAYLINE(R), COLORLINE(TM), interchangeable high-performance transducers
and dual-frequency capability and innovative products and features such as the
Broadview(TM) 3-beam transducer with super-wide 150(Degrees) under-water
coverage (TriFinder(TM) 2), split-screen SONAR/GPS+WAAS mapping navigational
displays, exclusive MapCreate(TM) CD-ROM detailed mapping software,
compatibility with Navionics(R) XL and HotMaps(TM) electronic charts,
programmable data-panels, super high-resolution color and monochrome LCD
displays with up to 480 vertical pixels, and an impressive 8,000 watts of
peak-to-peak transmit power available in a series of sportfishing SONAR capable
of producing depth capabilities to 3,000 feet and more.

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

Product Research and Development

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

13

developed and patented an effective interference suppression system and designed
the first interchangeable high-speed transducers which permit operation of SONAR
at boat speeds up to 70 mph. The Company also introduced, in 1979, the first
computer-controlled SONAR with microprocessor chip and software allowing
high-speed boating with accurate depth readings and no false signals. In 1987,
the Company introduced the industry's first high-resolution, "Film SuperTwist"
liquid crystal displays with enhanced visibility. In 1989, the Company
introduced the first fully waterproof SONAR/navigation combination units
featuring Loran-C circuitry and software contained solely in the antenna/coupler
module. Advanced Signal Processing (ASP(TM)), a breakthrough in automatic SONAR
control developed in 1990, constantly evaluates the effects of varying water
conditions, boat speeds, and interference sources, adjusting the SONAR's
critical settings for optimum performance. Based on the Company's belief that
the United States Department of Defense's GPS would be the preferred method of
navigation for the future (once it became affordable), the Company introduced
six marine GPS products in 1992, most at breakthrough price points. The
SupraPro(R) ID, a new SONAR model introduced in 1994, retailed for under $100
and provided users with four times the resolution of its nearest competitive
model. Another new 1994 model, the GlobalMap(R)1000, represented the first fully
waterproof mapping unit with a built-in mapping database and the capability of
using highly-popular detailed mapping cartridges. The AccuNav(R) Sport hand-held
GPS product, which retailed for under $400, transformed the GPS market in 1994
by offering users all the highly-detailed navigation plotting features
previously available only on larger and more costly gimbal-mounted GPS products,
yet at less than half the price. In 1995, the Company introduced its latest
generation of "3D" SONAR products, the ULTRA(R)III 3D and the X-70A 3D, which
provided expansive underwater coverage and innovative "three dimensional" images
of bottom contours in addition to traditional detailed "2D" views. Six new 1995
products utilized the Company's new Broadview(TM) technology. By purchasing a
"Broadview" accessory transducer (which could be installed on the transom or on
a trolling motor), users could expand their SONAR coverage, to search out --
left or right -- to detect fish and bottom structure, down and outward from
their boats. In 1996, the Company introduced and delivered its first hand-held
GPS-mapping products including the AirMap(R). In fiscal 1997, the Company
delivered four new hand-held GPS products, each utilizing advanced 12-parallel
channel receiver technology and three of which offered the exclusive capability
of allowing the user to download detailed customized maps from a CD-ROM into the
unit's memory. Two new gimbal-mount products, one a GPS-mapping-only product and
the other a GPS-mapping/SONAR combination model went into distribution in fiscal
1998. In fiscal 1999, R&D turned its full attention to exciting new breakthrough
technology slated for introduction late in fiscal 2000. At Chicago's ICAST 2000
trade/consumer show in July, 2000, the Company debuted its new lineup of four
Lowrance big-screen, high-performance, gimbal-mount, color and monochrome
transflective and color TFT liquid crystal SONAR and GPS-mapping products. The
(LC)X-15MT and (LC)X-15CT were SONAR units that were fully GPS-mapping capable,
with the simple addition of a MapCreate(TM) GPS Accessories Pack option. The
(LC)X-16Ci was a full SONAR/GPS-mapping combination unit right out of the box.
The GlobalMap(R)3000MT was a stand-alone, 12-parallel channel GPS/mapping-only
unit. The (LC)X-16Ci was presented the highest honor, the "Best of Show" Award
for product innovation at ICAST 2000.

14

Seven new Eagle SONAR and GPS-mapping products were also introduced at
ICAST 2000, including the FishEasy(TM) Series, TriFinder 3Beam(TM), Accura(R)
240, Status(TM) and Journey(TM). Then, in the 4th quarter of fiscal 2001, the
Company announced the completion of a full line of new compact SONAR/GPS-mapping
products for 2002, to be added to the top-of-the-line, big-screen models
introduced in 2000. At ICAST 2001, the new X51, X71, X91, LMS-240 and
GlobalMap(R)2400 models were announced to the trade and the media, along with
the new Eagle FishEasy(TM)2 Series, TriFinder(TM)2, FishMark(TM)160 and
FishMark(TM)240 SONAR units. The entry-level X51 (at $199 SRP) and the
FishEasy(TM)2 (at $129 SRP) SONAR products had 240 vertical pixel displays, 1500
watts of peak-to-peak transmit power producing depth penetration to 800 feet, a
new FishReveal(TM) feature with 10-levels of gray that revealed fish hidden in
surface clutter, weeds or other types of cover, and a HyperScroll(TM) feature
that enhanced the display of fish targets at higher boat speeds. Two of the new
compact, mid-sized Lowrance products, the LMS-240 and the GlobalMap(R) 2400,
utilized Multi-Media Card (MMC) technology for downloading detailed map segments
from CD-ROM. All of the new Lowrance models came with built-in water surface
temp sensors and most were packed with a high-impact protective cover.

For fiscal 2003, Lowrance has developed over 25 new Lowrance and Eagle
products, more than the Company has ever introduced in a single model year.
Enhanced design capabilities have permitted the Company to design and build a
new low-cost entry-level Cuda(TM) Series of fishfinders that will range in price
from $79, $99, to $119 SRP. These products will all feature built-in water
temperature readings, quick-release mounting systems with adjustable tilt, and
easy to connect/disconnect uniplug connectors. The $99 model will also have a
high-resolution, 168 vertical pixel LCD, the best screen resolution available at
that price-point. Lowrance has designed all of its new mid-to-upper-middle
priced SONAR and GPS models with 320x320 resolution, which will result in
enhanced underwater target detail and target separation. One of the new
high-resolution products, the Eagle FishMark 320, will be offered at a SRP of
$199, the same price-point as last year's model with the 160x160 resolution. The
new products for Lowrance in 2003 will include a series of two new 10.4"
diagonal, 256-color, full VGA, TFT models, including one SONAR/GPS+WAAS mapping
combo and one color GPS+WAAS stand-along mapping model. These color displays
offer improved viewing in the brightest of sunlight.

Research and development expenditures for the Company were $2,900,000
in fiscal 2000, $3,083,000 in fiscal 2001, and $2,650,000 in fiscal 2002. The
Company plans additional development of its LCD SONAR to increase performance
and versatility, and is conducting research and development into other potential
marine electronic products utilizing technology with which the Company is
familiar. Also, the Company intends to develop additional GPS+WAAS mapping
products for use in marine and non-marine applications. To augment its continued
investment in product research and development, the Company utilizes several
manufacturing and design technologies: Surface Mount Technology (SMT) production
equipment, Computer Aided Design (CAD) systems, Application Specific Integrated
Circuits (ASICS), Tape Automated Bonding (TAB), Tab-On-Glass (TOG),
Components-On-Glass (COG) and Liquid Crystal Display (LCD) assembly. These
advanced technologies, which have been essential to the development of the
Company's breakthrough SONAR and GPS products, have allowed the Company to
reduce its material and manufacturing costs and to provide even greater product
performance.

15

Manufacturing and Suppliers

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

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

With respect to plastic component parts, such as housings for SONAR
units, the Company, because of the expense, generally maintains only one mold
for each plastic part. Although typically the Company owns each mold and could
move it to another supplier, the Company is limited to one concurrent supplier.

The Company has never experienced a substantial interruption in product
distribution due to unavailability of or delay in receiving component parts,
resulting in the loss of any material amount of sales. However, if for any
reason (such as a protracted strike, war, fire, explosion, or wind damage
affecting production at the supplier's manufacturing plant, changes in import
restrictions, a damaged or destroyed mold or a supplier being unable to obtain
certain raw materials necessary to produce component parts), certain critical

16

component parts were to become unavailable or the shipment of such parts were to
be substantially delayed, such unavailability or delay could materially and
adversely affect the Company's ability to produce its products on a timely basis
until an alternative source of supply or a replacement mold could be made
available. This could adversely affect the Company's results of operations. The
use of alternate components may, in some cases, require the Company to redesign
other components or its sub-assemblies and the Company could experience
manufacturing delays. The extent of the impact upon the Company's sales and
earnings would depend upon the products affected and the time of year of the
interruption. To protect against interruptions and loss of sales, the Company
maintains a limited amount of safety inventory of component parts and some
insurance coverage against loss of supply. The Company limits the amount of
safety stock to avoid the cost of carrying raw material inventory and problems
associated with obsolescence. To further protect against interruptions, the
Company is selective of its suppliers and, with limited exceptions, relies upon
those who are substantial in size, strong financially, and offer proven track
records and experience.

Product Warranty and Support Services

Substantially all of the Company's products are sold with a full
one-year warranty. The Company emphasizes "service after the sale" in connection
with its products by providing free shipping, through a prepaid Return
Authorization (R.A.) system, when requested by consumers located in the United
States electing to return their units to the Company for warranty or
non-warranty repairs. Warranty and non-warranty repairs are available from the
Company's plant in Tulsa, Oklahoma, and from dealers and distributors in
forty-seven foreign countries. The Company also offers two-year extended
warranties for an additional one-time fee through its LEI Extras subsidiary.

Patents and Trademarks

Since 1970, the Company has obtained thirty-nine patents expiring at
various dates from 1987 through 2017. Since 1970, thirteen design patents have
also been issued. See "Product Research and Development" above. All of the
Company's patents have been assigned to secure the Company's revolving credit
line. The Company does not expect that the expiration of patents will have an
adverse impact on the Company's operations.

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

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

17

Employees

As of July 31, 2002, the Company employed 807 persons on a full-time
basis of whom approximately 644 were involved in manufacturing, quality and
materials. Of the 644 full time employees involved in manufacturing and
materials, 79 employees are located in the Company's headquarters in Tulsa and
565 are located in the Company's leased manufacturing facility in Ensenada,
Mexico. The remaining 163 employees were engaged in research and development,
sales and marketing and administration. Additionally, the Company retains, on a
part-time basis, over 200 independent contractors, or "Pro-Staff", who assist in
promoting its products.

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

Item 2. Properties

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

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

During the fourth quarter of fiscal 2002, the Company relocated its
warehousing and shipping functions to its 12000 East Skelly Drive facility and
allowed the lease to expire on a separate facility previously used as an
external warehouse. The Company also leases 2,500 square feet and 3,500 square
feet of warehousing, shipping and office facilities in Australia and Canada,
respectively.

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

Item 3. Legal Proceedings

None.

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

None.

PART II

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

18

As of October 16, 2002, the Company had more than 400 actual holders of
its Common Stock. The Company has not paid cash dividends for over twenty years.
The Company's revolving credit line prohibits the payment of dividends without
the prior written consent of the lender. The Company anticipates that for the
foreseeable future its earnings will be retained for use in its business and no
cash dividends will be paid on the Common Stock. Declaration of dividends in the
future will remain within the discretion of the Company's Board of Directors and
will depend upon the Company's growth, profitability, financial condition, and
other relevant factors.

The Company's Common Stock is traded in the over-the-counter market and
is listed with the NASDAQ National Market System under the NASDAQ symbol of
"LEIX". The table below reflects the high and low trade prices for each of the
Company's fiscal quarters for the 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.

19

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.

20

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

Results of Operations

During the second and third quarters of fiscal 2002, the Company began shipping
the eleven new SONAR/GPS products announced at ICAST 2001. The new products
include new SONAR units at our largest volume price point and two GPS units. The
new GPS units are the iFinder, a hand-held unit, and a high- volume, high margin
GPS navigation unit. The year-over-year sales increase discussed below is
primarily attributable to this new product line up.

Fiscal 2002 - Sales and Margin

Total net sales increased by 8.3% during fiscal 2002 as compared to fiscal 2001,
while total unit sales increased by approximately 7.0%. The gross profit margin
increased to 37.6% as compared to 35.9% in fiscal 2001.

Sales of non-original equipment SONAR and combination SONAR/GPS navigation units
increased 14.2% during fiscal 2002 on a unit sales increase of 13.0%. Gross
profit on non-original equipment SONAR and combination SONAR/GPS navigation
units increased 7.3% compared to fiscal 2001.

Stand-alone GPS navigation sales decreased 17.3% during fiscal 2002 on a 6.4%
unit sales decrease. Gross profit on these units declined by 44.2% compared to
fiscal 2001.

Accessory sales increased 7.0% during fiscal 2002, while gross profit on
accessory sales decreased 16.5% compared to fiscal 2001 as a result of accessory
promotions during the year.

Original equipment (OEM) SONAR sales to boat manufacturers decreased 14.1% on a
unit sales decrease of 12.9%. The original equipment market is slowly improving
from the major decrease in boat sales that occurred as a result of the general
economic downturn during the last year. Original equipment sales were 3.9% of
total sales as compared to 4.9% last year. Gross profit on OEM units declined
37.6% compared to fiscal 2001 related primarily to the substitution of more
expensive models to OEM customers due to discontinued product models. Gross
profit on OEM units was 1.7% of total gross profit as compared to 3.1% last
year.

Fiscal 2001 - Sales and Margin

Total net sales increased .3% for fiscal 2001 as compared to fiscal 2000 despite
a 5.3% decrease in unit sales. The gross profit margin decreased to 35.9% as
compared to 38.1% in fiscal 2000.

Sales of non-original equipment SONAR and combination SONAR/GPS navigation units
increased 8.0% from fiscal 2000 despite a 2.6% decrease in unit sales. The
dollar increase was due primarily to the release of the Company's new LCX series
of premium priced Lowrance products during the five-month period from December
to April. The unit decrease was due primarily to the general economic downturn
combined with an unusually long winter. Gross profit on

21

non-original equipment SONAR and combination SONAR/GPS navigation units
increased 15.3% compared to fiscal 2000.

Stand-alone GPS navigation sales decreased 12.1% during fiscal 2001 despite a
2.0% increase in unit sales. The decreased sales primarily resulted from lower
retail price points dictated by market conditions as well as the general
economic downturn. Gross profit on these units declined by 28.7% compared to
fiscal 2000.

Accessory sales increased 19.4% during fiscal 2001, while gross profit on
accessory sales increased 59.3% compared to fiscal 2000.

Original equipment (OEM) SONAR sales to boat manufacturers decreased 25.1% on a
20.5% unit decrease. The decline in the original equipment market is a direct
result of decreased boat sales related to the general economic downturn.
Original equipment SONAR sales were 4.9% of total sales as compared to 6.6% in
fiscal 2000. Gross profit on OEM unit sales decreased 7.5% compared to fiscal
2000. Gross profit on OEM units was 3.1% of total gross profit as compared to
3.0% in fiscal 2000.

Fiscal 2002 - Operating Expenses and Income

Operating expenses increased by $439,000 during fiscal 2002 as compared to
fiscal 2001. Operating expenses as a percentage of sales decreased from 33.0% in
fiscal 2001 to 31.0% in fiscal 2002.

During fiscal 2002, selling and administrative expenses decreased as a
percentage of sales from 28.3% to 27.7% while research and development expenses
also decreased as a percentage of sales from 4.2% to 3.3%. The decrease in
research and development expenses resulted from the transition from the fiscal
2002 new product development cycle to the fiscal 2003 product development cycle.
At the conclusion of the product development cycle, the design engineers
actively participate in the introduction of the new products into manufacturing.
Therefore, the expenses associated with their activities become part of the
manufacturing costs instead of the research and development costs. The
introduction of the new 2002 products into manufacturing began at the end of the
second quarter and continued in the third quarter of fiscal 2002. In preparation
for the new 2003 products, we hired six additional engineers in the third and
fourth quarters of fiscal 2002.

The Company incurred no severance or merger costs during fiscal 2002.

Operating income increased by $3,152,000 (149.9%) in fiscal 2002 and was 6.6% of
sales as compared to 2.9% of sales in fiscal 2001.

Fiscal 2001 - Operating Expenses and Income

Operating expenses decreased by $118,000 during fiscal 2001 as compared to
fiscal 2000. Operating expenses as a percentage of sales decreased from 33.3% in
fiscal 2000 to 33.0% in fiscal 2001.

During fiscal 2001, selling and administrative expenses increased as a
percentage of sales from 26.2% to 28.3% primarily related to increased
advertising expenditures related to new products introduced in fiscal 2001.

22

Research and development expenses increased as a percentage of sales from 4.0%
to 4.2% which increase is also related to the new products which entered into
production during fiscal 2001.

During fiscal 2001, the Company incurred $.4 million in costs associated with
the terminated merger with Cobra Electronics, Inc., compared to $.3 million
spent in fiscal 2000 related to the terminated merger with Orbital Sciences
Corporation.

The Company incurred no severance costs during fiscal 2001, compared to $1.9
million in fiscal 2000. All severance costs in 2000 related to the Company's
completion of the relocation of the remaining manufacturing processes to Mexico.

Operating income decreased from $3,549,000 to $2,103,000 in fiscal 2001.
Operating income as a percent of sales was 2.9% in fiscal 2001 as compared to
4.8% in fiscal 2000.

Fiscal 2002 - Interest Expense

Interest expense decreased $328,000 or 18.7% in fiscal 2002 as compared to
fiscal 2001 primarily due to lower debt balances during fiscal 2002 resulting
from lower inventories and higher sales and interest rate decreases resulting
from reductions in the prime rate of 1.5% since July 31, 2001. The prime rate
reductions were partially offset by an increase in the spread over prime from
prime plus .5% to prime plus 1% on the credit facility.

Fiscal 2001 - Interest Expense

Interest expense decreased $139,000 or 7.4% compared to fiscal 2000 due to
reductions in the prime rate of 2.75% in addition to the effect of a full year
of the decrease in the spread over prime relative to the credit facility from
prime plus 1.5% to prime plus .5% which took place in March 2000.

Income Taxes

The effective tax rates for fiscal 2002, 2001 and 2000 were 39.3%, 62.6% and
(62.4%), respectively. In fiscal 2000, due to continued profitability, the
remaining valuation allowance against the net deferred tax asset was reversed;
this was the primary factor resulting in the negative effective tax rate.

Net Income

Net income was $2.4 million, $0.04 million and $2.5 million, respectively, in
fiscal 2002, 2001 and 2000.

Liquidity and Capital Resources

The Company's primary sources of liquidity are cash flows from operations, a
$26.5 million line of credit and lease financing. The line of credit includes a
borrowing base of 85% of qualifying accounts receivable, 30% of qualifying raw
material inventory and 60% of qualifying finished goods inventory with

23

borrowings from inventories limited to $13 million. At July 31, 2002, the
Company had $6.0 million available under the revolving credit line.

The Company has an overall $33.9 million financing facility consisting of the
revolving credit line discussed above and $7.4 million in term loans. At July
31, 2002, the term loans had a remaining balance of $2.5 million. In October
2001, the Company amended its financing facility. The amendment allowed for
principal deferral on the term loan for the three month period ended January 31,
2002, with monthly principal payments of $155,000 plus interest from February 1,
2002 through July 1, 2002. As of August 1, 2002, the required monthly payments
returned to $103,000 plus interest.

The Company amended its financing facility in March 2002 prior to the
announcement of the stock buyback program under which the Company is authorized
to purchase up to $1 million of the Company's stock. The amendment entailed
minor changes specifically to allow the stock buyback program. As of July 31,
2002, the Company had purchased 7,600 shares for approximately $26,000. These
shares are reflected as Treasury Stock on the Consolidated Balance Sheet.

The Company was in compliance with all loan covenants at July 31, 2002.

Cash flows from operations were $10.1 million in fiscal 2002, resulting
primarily from increased income and decreased inventories. Operating cash flows
were utilized to fund capital expenditures of $1.1 million and reduce debt by
$8.8 million. An additional $.5 million in capital expenditures was funded by
capital lease borrowings.

Cash flows used in operations were ($3.1 million) in fiscal 2001, resulting
primarily from decreased earnings and increased inventories. Overall debt
increased by $4.0 million which was utilized to fund operations and capital
expenditures of $.9 million. An additional $1.4 million in capital expenditures
was funded by capital lease borrowings.

Cash flows from operations were $9.8 million in fiscal 2000. The operating cash
flows were utilized to fund capital expenditures of $1.4 million and reduce debt
by $8.3 million. No additional capital expenditures were funded by capital lease
borrowings.

Inventories as of July 31, 2002 were 35.7% lower than in July 31, 2001.
Discontinued inventory attributable to fiscal 2002 product decisions was
approximately $16,000 at July 31, 2002 as compared to $1.2 million at July 31,
2001. Inventory on hand at July 31, 2002 for products the Company expects to
discontinue during fiscal 2003 was $3.4 million. All discontinued inventories
are carried at cost, which management believes to be lower than expected
realizable value. The Company expects the remaining inventory of 2002
discontinued products to be sold by the end of fiscal 2003. Management monitors
all inventories via various inventory control and review processes which
include, but are not limited to, forecast review and inventory reduction
meetings, graphical presentations and forecast versus inventory status reports.
Management believes these processes are adequate.

Demand for the Company's products is seasonal. The Company utilizes the
revolving line of credit to address its seasonal liquidity needs. Management

24

believes the sources of liquidity discussed above are adequate to satisfy the
Company's current working capital and capital equipment needs.

Accounting Policies

The Company must exercise judgment in estimating certain costs included in its
results of operations. Footnote No. 1 to the Consolidated Financial Statements
describes the significant accounting policies and the fact that estimates and
assumptions are inherent in the reported assets and liabilities. The more
significant areas of judgment relate to the warranty and inventory reserves.

With respect to warranty reserves, the Company estimates both the expected
return rates by the consumers and the estimated repair costs utilizing
historical data. With respect to inventory reserves, the Company estimates the
level of reserves based upon expected usage information for raw materials and
historical selling trends for finished goods. The Company evaluates the effect
of new product introductions on its inventory and determines at fiscal year-end
the amounts on-hand for those products which the Company expects to discontinue
as a result of new product introductions during the next model year. Based on
forecasted sales, these inventories are valued at net realizeable value.

The estimates referred to above may be subject to adjustment if actual results
differ significantly from historical trends and costs.

Effects of Inflation

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

Recently Issued Accounting Standards

In July, 2001, the Financial Accounting Standards Board (FASB) issued Statement
No. 142, Goodwill and Other Intangible Assets. Statement No. 142 is required to
be applied starting with fiscal years beginning after December 15, 2001. The
adoption of Statement No. 142 will not impact the Company's financial position
or results of operations.

In June 2001 the FASB issued Statement No. 143, Accounting for Asset Retirement
Obligations. Statement No. 143 is effective for fiscal years beginning after
June 15, 2002. The adoption of Statement No. 143 will not impact the Company's
financial position or results of operations.

25

In August 2001, the FASB issued Statement No. 144, Accounting for the Impairment
or Disposal of Long-Lived Assets. Statement No. 144 is effective for fiscal
years beginning after December 15, 2001, and interim periods within those fiscal
years. The provisions of this statement generally are to be applied
prospectively. The adoption of Statement No. 144 did not impact the Company's
financial position or results of operations.

Quarterly Information

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

26

SALES, GROSS PROFIT & NET INCOME

EARNINGS PER SHARE, BASIC & DILUTED

The calculation of the weighted average shares outstanding for fiscal 2002 is
included as an exhibit in Item 14.

27

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:

o Financial performance and cash flow from operations in fiscal 2003 are
based on attaining current projections.

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

o Because of the dynamic environment in which the Company operates, one or
more key factors discussed in "Part I, Item 1. Business" of the Company's
most recent Form 10-K could have an adverse effect on expected results for
fiscal 2003.

Item 7a. Quantitative and Qualitative Disclosures About Market Risk

The Company is exposed to cash flow and interest rate risk due to changes in
interest rates with respect to its long-term debt. See Note 3 to the
consolidated financial statements for details on the Company's long-term debt. A
..5% increase in the prime rate in fiscal 2002 would have had a negative
after-tax impact of approximately $45,000.

The Company is subject to foreign currency risk due to the location of its
manufacturing facility in Mexico and sales from each of its distribution
facilities in Canada and Australia, which are denominated in the local currency.
Sales to other countries are denominated in U.S. dollars. Although fluctuations
have occurred in the Mexican peso, the Canadian dollar and the Australian
dollar, such fluctuations have not historically had a significant impact on the
Company's financial statements taken as a whole. Future volatility in these
exchange rates could have a significant impact on the Company's financial
statements.

28

Item 8. Financial Statements and Supplementary Data

The consolidated financial statements and supplementary data are indexed
in Items 14 and 7 hereof, respectively. The consolidated financial statements
for the periods ending July 31, 2000 and 2001 were audited by Arthur Andersen
LLP. Arthur Andersen has since ceased operations. The consolidated financials
for the period ending July 31, 2002 were audited by the Company's auditors,
Deloitte and Touche LLP.

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

The change in the Company's independent auditors was previously reported
on Form 8-K filed with the Securities and Exchange Commission on July 10, 2002.

PART III

Item 10. Directors and Executive Officers of the Registrant

Incorporated by reference to the Company's Proxy Statement to be filed
with the Securities and Exchange Commission in connection with the Company's
2002 annual meeting.

Item 11. Executive Compensation

Incorporated by reference to the Company's Proxy Statement to be filed
with the Securities and Exchange Commission in connection with the Company's
2002 annual meeting.

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

Incorporated by reference to the Company's Proxy Statement to be filed
with the Securities and Exchange Commission in connection with the Company's
2002 annual meeting.

Item 13. Certain Relationships and Related Transactions

Incorporated by reference to the Company's Proxy Statement to be filed
with the Securities and Exchange Commission in connection with the Company's
2002 annual meeting.

PART IV

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

(a) Financial Statements and Exhibits:

29

Report of Independent Public Accountants - Fiscal 2002 F-2

Report of Independent Public Accountants - Fiscal 2001 F-3

Consolidated Balance Sheets - July 31, 2001 and 2002 F-4

Consolidated Statements of Operations and Comprehensive
Income for the Years Ended July 31, 2000, 2001, and 2002 F-5

Consolidated Statements of Stockholders' Equity for the
Years Ended July 31, 2000, 2001, and 2002 F-6

Consolidated Statements of Cash Flows for the Years
Ended July 31, 2000, 2001, and 2002 F-7

Notes to Consolidated Financial Statements
for the Years Ended July 31, 2000, 2001, and 2002 F-8

2. Exhibits:

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

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

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

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

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

10.2 Lowrance Retirement Plan and Trust previously
filed as Exhibit 10.2 to the Company's
Registration Statement on

30

Form S-1 (SEC File No. 33-9464), which is
incorporated herein by reference thereto.

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

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

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

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

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

10.10 Sixth Amendment to Credit Agreement dated March
17, 1993, by and between the Company and
Norwest Business Credit, Inc., previously filed
as Exhibit 10.10 to the Company's 1992 Annual
Report on Form 10-K, which is incorporated
herein by reference thereto.

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

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

10.13 Loan and Security Agreement dated December 15,
1993, by the Company in favor of Barclays
Business Credit, Inc., previously filed as
Exhibit 10.13 to the Company's 1994 Annual
Report on Form 10-K, which is incorporated
herein by reference thereto.

31

10.14 Amended and Restated Secured Promissory Note
dated October 16, 1995, by and between the
Company and Shawmut Capital Corporation
(formerly Barclays Business Credit, Inc.),
previously filed as Exhibit 10.14 to the
Company's 1995 Annual Report on Form 10-K,
which is incorporated herein by reference
thereto.

10.15 Amended and Restated Revolving Credit Notes
dated October 16, 1995, by and between the
Company and Shawmut Capital Corporation
(formerly Barclays Business Credit, Inc.),
previously filed as Exhibit 10.15 to the
Company's 1995 Annual Report on Form 10-K,
which is incorporated herein by reference
thereto.

10.16 First Amendment to Loan and Security Agreement
dated October 16, 1995, by and between the
Company and Shawmut Capital Corporation
(formerly Barclays Business Credit, Inc.),
previously filed as Exhibit 10.16 to the
Company's 1995 Annual Report Report on Form
10-K, which is incorporated herein by reference
thereto.

10.17 Amended and Restated Stock Pledge Agreement
dated October 16, 1995, by and between the
Company and Shawmut Capital Corporation
(formerly Barclays Business Credit, Inc.),
previously filed as Exhibit 10.17 to the
Company's 1995 Annual Report on Form 10-K,
which is incorporated herein by reference
thereto.

10.18 Unconditional Guaranty dated October 16, 1995,
by and between Sea Electronics, Inc. and
Shawmut Capital Corporation, previously filed
as Exhibit 10.18 to the Company's 1995 Annual
Report on Form 10-K, which is incorporated
herein by reference thereto.

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

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

10.21 Lease Agreement entered into by and between
Refugio Geffroy De Flourie, Eric Juan De Dios
Flourie Geffroy, Elizabeth Flourie Geffroy,
Edith Flourie Geffroy and Electronica Lowrance
De Mexico, S. A. de C. V. dated August 30,
1996, previously filed as Exhibit 10.21 to

32

the Company's 1996 Annual Report on Form 10-K,
which is incorporated herein by reference
thereto.

10.22 Second Amendment to Loan and Security Agreement
dated November 1, 1996, by and between the
Company and Fleet Capital Corporation (formerly
Shawmut Capital Corporation), previously filed
as Exhibit 10.22 to the Company's 1997 Annual
Report on Form 10-K, which is incorporated
herein by reference thereto.

10.23 Third Amendment to Loan and Security Agreement
dated December 31, 1996, by and between the
Company and Fleet Capital Corporation (formerly
Shawmut Capital Corporation), previously filed
as Exhibit 10.23 to the Company's 1997 Annual
Report on Form 10-K, which is incorporated
herein by reference thereto.

10.24 Fourth Amendment to Loan and Security Agreement
dated August 14, 1997, by and between the
Company and Fleet Capital Corporation (formerly
Shawmut Capital Corporation), previously filed
as Exhibit 10.24 to the Company's 1997 Annual
Report on Form 10-K, which is incorporated
herein by reference thereto.

10.25 Fifth Amendment to Loan and Security Agreement
dated August 25, 1997, by and between the
Company and Fleet Capital Corporation (formerly
Shawmut Capital Corporation), previously filed
as Exhibit 10.25 to the Company's 1997 Annual
Report on Form 10-K, which is incorporated
herein by reference thereto.

10.26 Sixth Amendment to Loan and Security Agreement
dated August 28, 1997, by and between the
Company and Fleet Capital Corporation (formerly
Shawmut Capital Corporation), previously filed
as Exhibit 10.26 to the Company's 1998 Annual
Report on Form 10-K, which is incorporated
herein by reference thereto.

10.27 Seventh Amendment to Loan and Security
Agreement dated November 6, 1997, by and
between the Company and Fleet Capital
Corporation (formerly Shawmut Capital
Corporation), previously filed as Exhibit 10.27
to the Company's 1998 Annual Report on Form
10-K, which is incorporated herein by reference
thereto.

10.28 Eighth Amendment to Loan and Security Agreement
dated December 9, 1997, by and between the
Company and Fleet Capital Corporation (formerly
Shawmut Capital Corporation), previously filed
as Exhibit 10.28 to the Company's 1998 Annual
Report on Form 10-K, which is incorporated
herein by reference thereto.

10.29 Ninth Amendment to Loan and Security Agreement
dated September 14, 1998, by and between the
Company and Fleet Capital Corporation (formerly
Shawmut Capital

33

Corporation), previously filed as Exhibit 10.29
to the Company's 1998 Annual Report on Form
10-K, which is incorporated herein by reference
thereto.

10.30 Tenth Amendment to Loan and Security Agreement
dated November 12, 1998, by and between the
Company and Fleet Capital Corporation (formerly
Shawmut Capital Corporation), previously filed
as Exhibit 10.30 to the Company's 1998 Annual
Report on Form 10-K, which is incorporated
herein by reference thereto.

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

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

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

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