LEIX Lowrance Electronics (MM)

Lowrance Electronics, Inc. (NASDAQ:LEIX) today announced that fourth quarter sales jumped 59% to a fourth quarter record $43.0 million, compared to sales of $27.0 million for the same quarter of fiscal 2004. Net income for the fourth quarter ended July 31, 2005, increased 23% to $2.5 million, or $0.49 per diluted share, compared to $2.0 million, or $0.51 per diluted share, for the same period in fiscal 2004. There were 5.1 million diluted shares outstanding in the fiscal 2005 fourth quarter, compared to 4.0 million diluted shares at the same time last year. For the fiscal year ended July 31, 2005, net sales increased 31% to a record $146.4 million, compared to $111.9 million last year. Net income increased 8% to a record $9.4 million, or $1.90 per diluted share, compared to $8.8 million, or $2.20 per diluted share, in fiscal 2004. There were 4.9 million diluted shares outstanding in fiscal 2005, compared to 4.0 million diluted shares in fiscal 2004. "Record full year and fourth quarter sales reflect the introduction of over 50 new, leading-edge SONAR, GPS/SONAR combination and GPS products, supplemented by significant contributions from our new turn-by-turn automotive GPS product, the award-winning iWay 500C. As expected, the strong sales for our automotive and hand-held GPS products, which have lower gross margin percentages than the marine products, reduced the fiscal 2005 gross margin percentage to 37% of sales, compared to 42% of sales in fiscal 2004. We believe the high fourth quarter sales rate for new automotive and hand-held GPS receivers provides clear evidence this new line of products will complement our seasonal marine business," said Darrell Lowrance, president and CEO. General and administrative expenses increased to support additional advertising, selling and marketing expenses for our new iWay 500C and other new GPS and marine products. Lowrance incurred $0.9 million of costs related to Section 404 reporting under the Sarbanes-Oxley act, three times the estimates the Company received from its outside consultants. "We are hopeful that the SEC will continue to examine this topic and reduce the extreme burden of Section 404 reporting," said Lowrance. "We are continuing our strategy to leverage our business through the introduction of additional new products for the automotive and handheld GPS markets. Our new product investments in the past year enabled the strong finish in 2005, and we are excited about the opportunity to build upon this momentum in fiscal 2006. This strong growth continued during August with sales increasing more than 37% over the same month last year," said Lowrance. About Lowrance Electronics Lowrance Electronics, Inc. (www.lowrance.com) designs, manufactures and markets SONAR and GPS products, digital mapping systems, and accessories under the brand names "Lowrance,"(R) and "Eagle"(R) Electronics, "Lowrance Automotive(TM)" and "Lowrance Avionics"(R). These products are used in the following primary product markets: marine, general consumer (which includes handheld GPS outdoor recreational use and voice turn-by-turn navigational systems for aftermarket automotive use) and aviation. This press release may include certain statements concerning expectations for the future that are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors that are difficult to predict and many of which are beyond management's control, including factors discussed in the Company's Annual Report on Form 10-K and other documents filed from time to time with the Securities and Exchange Commission. While the Company makes these statements and projections in good faith, neither the Company nor its management can guarantee that anticipated future results will be achieved. The Company undertakes no obligation to update or revise any forward-looking statement to reflect new information or events. -0- *T LOWRANCE ELECTRONICS, INC. CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (in thousands, except per share amounts) Three Months Twelve Months Ended Ended July 31, July 31, 2005 2004 2005 2004 NET SALES $43,048 $27,061 $146,369 $111,861 COST OF SALES 28,183 15,528 91,442 64,557 Gross profit 14,865 11,533 54,927 47,304 OPERATING EXPENSES: Selling and administrative 10,033 7,465 34,650 28,742 Research and development 1,665 1,492 6,306 5,252 Total operating expenses 11,698 8,957 40,956 33,994 Operating income 3,167 2,576 13,971 13,310 OTHER EXPENSES: Interest 216 131 921 689 Other 94 (18) 174 192 Total other expenses 310 113 1,095 881 INCOME BEFORE INCOME TAXES 2,857 2,463 12,876 12,429 PROVISION FOR INCOME TAXES 348 416 3,464 3,673 NET INCOME $2,509 $2,047 $9,412 $8,756 NET INCOME PER COMMON SHARE Basic $0.49 $0.54 $1.90 $2.33 Diluted $0.49 $0.51 $1.90 $2.20 WEIGHTED AVERAGE COMMON SHARES OUTSTANDING Basic 5,135 3,761 4,949 3,761 Diluted 5,135 3,988 4,949 3,979 DIVIDENDS $1,541 $941 $2,481 $1,881 COMPREHENSIVE INCOME Net Income $2,509 $2,047 $9,412 $8,756 Foreign currency translation adjustment, net of tax 51 (14) 261 141 Comprehensive income $2,560 $2,033 $9,673 $8,897 LOWRANCE ELECTRONICS, INC. CONSOLIDATED BALANCE SHEETS July 31, ASSETS 2005 2004 (in thousands) CURRENT ASSETS: Cash and cash equivalents $3,792 $1,412 Trade accounts receivable, net 19,908 10,128 Inventories 36,116 23,500 Current deferred income taxes 1,129 1,107 Prepaid income taxes 303 148 Prepaid expenses 3,781 2,362 Total current assets 65,029 38,657 PROPERTY, PLANT AND EQUIPMENT, net 18,519 10,005 OTHER ASSETS 1,500 81 TOTAL ASSETS $85,048 $48,743 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Current maturities of long-term debt $438 $1,874 Accounts payable 6,948 6,072 Accrued liabilities: Compensation and benefits 3,205 3,175 Product costs 2,285 1,968 Accrued taxes 1,255 671 Other 1,718 1,119 Total current liabilities 15,849 14,879 LONG-TERM DEBT, less current maturities 7,214 6,040 DEFERRED INCOME TAXES 1,134 1,169 STOCKHOLDERS' EQUITY: Common stock, $.10 par value, 10,000,000 shares authorized, 3,761,196 shares issued and outstanding at July 31, 2004 and 2003 514 377 Paid-in capital 34,316 7,449 Retained earnings 25,652 18,721 Accumulated other comprehensive income (loss) 369 108 Total stockholders' equity 60,851 26,655 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $85,048 $48,743 *T