<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
LOWRANCE ELECTRONICS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
LOWRANCE ELECTRONICS, INC.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[_] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[X] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
LOWRANCE ELECTRONICS, INC.
12000 East Skelly Drive
Tulsa, Oklahoma 74128-2486
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 10, 1996
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Lowrance
Electronics, Inc., a Delaware corporation (the "Company"), will be held in the
Diplomat Room on the Main Lobby Floor of the Adam's Mark Hotel, 100 East Second
Street, Tulsa, Oklahoma, on Tuesday, December 10, 1996, at 10:00 a.m., local
time, to consider and vote upon the following matters described in the
accompanying Proxy Statement:
(1) To elect two Class I Directors for a three-year term expiring in
December 1999 and until their successors have been duly elected and
qualified;
(2) To consider and vote upon a proposal to approve the issuance of 70,000
shares of Series "A" Preferred Stock.
(3) To ratify the selection of Arthur Andersen LLP as independent public
accountants for the Company for its fiscal year 1997; and
(4) To transact such other and further business as may be brought before
the Annual Meeting or any adjournment or adjournments thereof.
Only Stockholders of record at the close of business on October 31, 1996,
are entitled to vote at the meeting or any adjournment or adjournments thereof.
Stockholders who do not expect to attend the meeting in person are urged to
mark, date, sign, and mail the enclosed Proxy in the enclosed return envelope
for which no postage is needed if mailed in the United States.
By Order of the Board of Directors
Robert F. Biolchini
Secretary
Tulsa, Oklahoma
November 13, 1996
IF YOU CANNOT BE PRESENT IN PERSON, PLEASE MARK, DATE,
AND SIGN THE ENCLOSED PROXY AND MAIL IT AT
YOUR EARLIEST CONVENIENCE
<PAGE>
LOWRANCE ELECTRONICS, INC.
12000 East Skelly Drive
Tulsa, Oklahoma 74128-2486
PROXY STATEMENT
Annual Meeting of Stockholders
December 10, 1996
The enclosed form of Proxy is solicited by the Board of Directors of
Lowrance Electronics, Inc., (the "Company") for use at the Annual Meeting of
Stockholders to be held in the Diplomat Room on the Main Lobby Floor of the
Adam's Mark Hotel, 100 East Second Street, Tulsa, Oklahoma, on Tuesday, December
10, 1996, at 10:00 a.m., local time.
This Proxy Statement and the Proxy are mailed to Stockholders on or about
November 15, 1996, and are furnished in connection with the solicitation of
Proxies by the Board of Directors of the Company. This Proxy solicitation is by
mail and at the expense of the Company. It may be that further solicitation of
Proxies will be made by telephone or oral communication. All such further
solicitation will be at the expense of the Company and may be conducted by
employees of the Company who will not receive additional compensation for such
solicitation.
VOTING
Shares represented by Proxies received by the Board of Directors will be
voted at the Annual Meeting in accordance with the specifications made thereon
by the Stockholders, unless authority to do so is withheld. If no specification
is made, the Proxy will be voted in favor of the proposals referred to therein
and herein.
Any Stockholder giving a Proxy has the power to revoke it at any time
before it is voted, and revocation may be by letter, notice in writing, or
telegram addressed to Robert F. Biolchini, Secretary of Lowrance Electronics,
Inc., 12000 East Skelly Drive, Tulsa, Oklahoma, 74128-2486. Each Proxy, unless
previously revoked, will be voted at the meeting.
Only Stockholders of record at the close of business on October 31, 1996,
will be entitled to vote at the Annual Meeting. On October 31, 1996, there were
outstanding 3,352,458 shares of Common Stock, par value $0.10 per share, all of
which will be entitled to vote at the Annual Meeting. Each Share of Common
Stock is entitled to one vote, with no right of cumulative voting. The Company
has no other voting securities outstanding.
The presence, in person or by proxy, of a majority of the outstanding
shares of Common Stock entitled to vote at the Annual Meeting shall constitute a
quorum for the transaction of business. A quorum being present, all proposals
to be voted on at the Annual Meeting will be decided by a majority vote of the
shares present, in person or by proxy, certified to by inspectors of election,
unless the proposal relates to matters on which more than a majority vote is
required under the Company's Certificate of Incorporation, its Bylaws, or the
laws of the State of Delaware, under whose laws the Company is Incorporated.
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth, as of October 31, 1996, the number and
percentages of outstanding shares of the Common Stock beneficially owned by all
persons known by the Company to own more than 5% of the Company's Common Stock,
by each director and nominee for director of the Company, and by all officers
and directors of the Company as a group:
<TABLE>
<CAPTION>
Name and Address Amount and Nature of Percentage
of Beneficial Owner Beneficial Ownership of Shares
------------------- -------------------- ----------
<S> <C> <C>
Darrell J. Lowrance (1) 1,734,507(2) 50.6%
12000 East Skelly Drive
Tulsa, OK 74128-2486
Willard P. Britton (1) 200 *
385 N.E. 91st Street Direct
Miami Shores, FL 33138
Ronald G. Weber (1) 68,100(3) 2.0%
12000 East Skelly Drive
Tulsa, OK 74128-2486
Robert F. Biolchini (1) 5,000 *
3300 First Place Tower Direct
15 East 5th Street
Tulsa, OK 74103
Peter F. Foley, III (1) 2,100 *
Boone Bait Company Direct
440 Plumosa Avenue
Casselbury, FL 32707
Estate of James L. Knight 652,344 19.0%
c/o Northern Trust Bank of Direct
Florida, N.A.
700 Brickell Avenue
Miami, FL 33131-2881
All directors and 1,831,757(4)(5) 53.4%
officers as a group
(including those listed
above, nine persons total)
</TABLE>
* One-half of one percent or less
(1) Director or nominee for director
(2) Includes 180,500 shares held indirectly in an individual retirement
account with Mr. Lowrance having the sole voting and investment power,
143,908 shares held of record by the Trustees of the Lowrance Savings
Plan and Trust for Mr. Lowrance, who is entitled to vote such shares,
3,725 owned indirectly by an immediate family member, and 22,500 shares
that may be purchased by Mr. Lowrance pursuant to options granted under
the Company's 1986 Stock Option Plan. See "Executive Officers and
Compensation - Stock Option Plans."
<PAGE>
(3) Includes 33,000 shares held of record by the Trustees of the Lowrance
Savings Plan and Trust for Mr. Weber, who is entitled to vote such
shares, and 22,500 shares that may be purchased by Mr. Weber pursuant
to options granted under the Company's 1986 Stock Option Plan. See
"Executive Officers and Compensation - Stock Option Plans".
(4) Includes 62,500 shares that may be purchased by officers of the
Company, including the 22,500 shares that may be purchased by both Mr.
Lowrance and Mr. Weber, pursuant to options granted under the Company's
1986 Stock Option Plan.
(5) All voting securities owned by officers and directors are owned
directly except for 365,033 shares.
Darrell J. Lowrance and James L. Knight (deceased) entered into a
Shareholders' Agreement dated December 22, 1978, which provides that, except for
sales in a public offering, neither party may sell his Common Stock without
offering the Company the right of first refusal at the same price offered by a
third party, payable in eight equal annual payments, including annual interest
at 8%. If the Company does not exercise the right of first refusal and purchase
the Common Stock, then the other individual party has the right to purchase such
stock at the same price and under the same payment terms. On October 8, 1986, a
First Amendment to the Shareholders' Agreement was entered into between Messrs.
Knight and Lowrance which permits them, after the initial public offering of the
Company's stock, to sell their Common Stock in the public market pursuant to
Rule 144 and allows them to make charitable donations of their Common Stock
within certain limits as to the total number of shares which may be donated to
one charitable institution without first offering such stock to the Company or
the other party. The right of first refusal terminates only when either (a) Mr.
Lowrance's stock ownership in the Company is less than 15% of the Company's
outstanding stock, or (b) Mr. Knight's stock ownership in the Company is less
than 10% of the Company's outstanding stock, exclusive of any stock donated by
either of them to a charitable institution. Additionally, Messrs. Lowrance and
Knight entered into an Agreement on October 8, 1986, with the Company whereby
they agreed not to sell any of their shares of Common Stock privately, except as
permitted under the First Amendment to Shareholders' Agreement.
As of October 31, 1996, 538,744 shares of Common Stock were sold in the
public market by the Estate of James L. Knight pursuant to Rule 144 since May of
1992 when the Estate first elected to sell stock owned by the Estate as
permitted by the Agreement and First Amendment to Shareholders' Agreement and as
allowed under Rule 144. Additionally, in May 1993, 68,966 shares of common
Stock were sold by the Estate of James L. Knight to the Company and retired and
34,483 shares were sold by the Estate of James L. Knight directly to Mr.
Lowrance. Except for the sales made by the Estate of James L. Knight pursuant
to Rule 144 and the sales made by the Estate of James L. Knight to the Company
and Mr. Lowrance, neither Mr. Knight nor Mr. Lowrance has sold nor made a gift
of any stock in the Company pursuant to the aforementioned Agreement and First
Amendment to Shareholders' Agreement.
ELECTION OF DIRECTORS
The directors of the Company are divided into three classes, designated as
Class I, Class II, and Class III. Each class consists of one-third of the
directors constituting the whole Board. The directors, upon being elected, all
serve three-year terms, and the term of each member of the same class expires at
the same time. At each Annual Meeting of Stockholders, directors to replace
those whose terms expire at such Annual Meeting are elected for a three-year
term.
<PAGE>
In accordance with the recommendation of the Compensation and Nominating
Committee, two individuals, Willard P. Britton and Ronald G. Weber, who are
currently directors of the Company, have been nominated by the Board of
Directors for re-election as Class I directors at the Annual Meeting for a
three-year term expiring in December 1999. Darrell J. Lowrance and Peter F.
Foley III, the Class III directors, and Robert F. Biolchini and Alpo F. Crane,
the Class II directors, will continue to serve as directors pursuant to their
prior elections.
The persons designated by the Board of Directors as proxies in the
accompanying Proxy intend to vote, unless otherwise instructed in such Proxy,
for the election of Messrs. Britton and Weber. Should either Mr. Britton or Mr.
Weber become unable for any reason to stand for election as a director of the
Company, it is the intention of the persons named in the Proxy to vote for the
election of such other person as the Compensation and Nominating Committee may
recommend and the Board of Directors may nominate to replace Mr. Britton or Mr.
Weber, or, if none, the Compensation and Nominating Committee will recommend
that the size of the Board of Directors be reduced. The Company knows of no
reason why Messrs. Britton and Weber will be unavailable or unable to serve.
STANDING FOR ELECTION
Class I Director Nominees
(Term Expires December 1999)
WILLARD P. BRITTON. Mr. Britton, age 73, has been a director of the
Company since December 1985. Mr. Britton is a retired Vice President and
Controller of Knight-Ridder, Inc., a corporation engaged primarily in
communications.
RONALD G. WEBER. Mr. Weber, age 52, has served the Company as its
Executive Vice President of Technology and Engineering since December 1993 and
prior thereto served as Senior Vice President of Engineering since 1980. Mr.
Weber has also been a director since October 1992. Mr. Weber joined the Company
in 1976, and prior to serving in his current position, he held several technical
positions with the Company.
DIRECTORS CONTINUING IN OFFICE
Class II Directors
(Term Expires December 1997)
ROBERT F. BIOLCHINI. Mr. Biolchini, age 57, has served as a Director of
the Company and its Secretary since December 1985. Mr. Biolchini is a director
and Chairman of the Board of Valley National Bank and his principal occupation
since 1968 has been the practice of law as a partner in the law firm of Stuart,
Biolchini, Turner & Givray, counsel for the Company.
ALPO F. CRANE. Mr. Crane, age 55, has been a Director of the Company since
December 1985 and presently is involved in private investments. Mr. Crane
retired as the Director of International Sales for the In-Sink-Erator Division
of Emerson Electric Company, a corporation engaged in the manufacture of a broad
range of electrical-electronic products and systems, in 1993, a position he held
since September 1989. Prior thereto, Mr. Crane was the President and Treasurer
of Almar International, Ltd., a corporation engaged in international trade
consulting.
<PAGE>
Class III Directors
(Term expires December 1998)
DARRELL J. LOWRANCE. Mr. Lowrance, age 58, a founder of the Company, has
been with the Company since its formation in 1957. He currently serves as
President and Chief Executive Officer and a Director of the Company, positions
he has held since 1964. During 1983 and 1984, Mr. Lowrance served as President
of the American Fishing Tackle Manufacturer's Association (AFTMA). In July
1988, Mr. Lowrance returned to the Board of Directors of AFTMA, a position he
previously held from 1978 through 1986. Additionally, in April 1989, Mr.
Lowrance was elected as a director of the National Association of Marine
Products and Services. Mr. Lowrance also serves on other industry boards whose
purpose is to restore and enhance fisheries.
PETER F. FOLEY, III. Mr. Foley, age 60, has served as a director since
October 1991 and has been President of Boone Bait Company, a Company engaged in
the manufacture of saltwater fishing lures, since 1978. For more than 10 years,
Mr. Foley has served on numerous boards related to the marine industry,
including the American Fishing Tackle Manufacturer's Association (AFTMA).
Further, he has been awarded government grants, as an industry expert in
international marketing of fishing tackle products, to study and report on key
opportunities for the industry.
BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
The Company's Board of Directors met seven times during the fiscal year
ended July 31, 1996. The Board of Directors has an Audit Committee and a
Compensation and Nominating Committee.
The Audit Committee is composed of Willard P. Britton, Alpo F. Crane, and
Robert F. Biolchini (Chairman). The Audit Committee held two meetings during
the Company's 1996 fiscal year. One member missed one of the two meetings. The
Audit Committee meets on a scheduled basis with the Company's independent public
accountants and is available to meet at the request of the Company's independent
public accountants. The Audit committee reviews the Company's accounting
policies, internal controls, and other accounting and auditing matters;
considers the qualifications of the Company's independent public accountants;
makes a recommendation to the Board as to the engagement of an independent
public accountant; and reviews the letter of engagement and statement of fees
relating to the scope of the annual audit and special audit work which may be
recommended or required by the independent public accountants.
The Compensation and Nominating Committee is composed of Willard P.
Britton, Peter F. Foley, III, and Robert F. Biolchini (Chairman). The
Compensation and Nominating Committee held three meetings during the Company's
1996 fiscal year at which all members attended. The Committee reviews the
nature and amount of compensation of the officers of the Company and recommends
changes with respect thereto, including the Company's Executive Bonus Plan, 1986
Stock Option Plan, and 1989 Stock Option Plan, and recommends the nominees for
directors. The Committee will consider qualified director candidates submitted
to it by other directors, employees, or Stockholders. As a prerequisite to
consideration, each recommendation must be accompanied by biographical material
of the proposed candidate, fully disclosing the candidate's qualifications and
demonstrated sound business judgment, as well as an indication that the proposed
candidate would be willing to serve as a director, if elected. In order for a
candidate recommended by a Stockholder to be considered as a nominee at the
Annual Meeting to be held in 1997, the name of such candidate, together with the
written description of the candidate's qualifications, must be received by the
Secretary of the Company prior to August 15, 1997.
<PAGE>
There was no incumbent or nominee for director who failed to attend at
least 75% of the aggregate number of meetings of the Board and Committees upon
which they sit. Each director receives $12,000 per year compensation and an
additional fee of $1,000 for each meeting of the Board of Directors and $750 for
each Committee meeting attended. All directors are reimbursed for certain
reasonable out-of-pocket expenses incurred in attending meetings of the Board of
Directors or Committee meetings.
There are no family relationships between any director or executive officer
of the Company. Alpo F. Crane is the son-in-law of the late James L. Knight,
whose Estate is a principal Stockholder of the Company. Mr. Crane and Willard
P. Britton initially served as directors of the Company at the request of Mr.
Knight and now serve at the request of the Board of Directors.
EXECUTIVE OFFICERS AND COMPENSATION
EXECUTIVE OFFICERS
The executive officers of the Company are as follows:
Name Age Position
---- --- --------
Darrell J. Lowrance 58 President and Chief Executive Officer since
1964.
Ronald G. Weber 52 Executive Vice President of Technology and
Engineering since December 1993. Prior thereto
Mr. Weber was the Senior Vice President of
Engineering since 1980.
Steven L. Schneider 37 Senior Vice President of Sales and Marketing
since March 1994. Prior thereto, Mr. Schneider
was Director of Marketing and International
Sales since September 1992 and was
subsequently promoted to Vice President of
Marketing and International Sales in February
1993.
Terry R. Nimmo 48 Vice President of Manufacturing and Materials
since June 1995. Prior thereto Mr. Nimmo was
Vice-President of Materials/M.I.S. since 1991.
Mr. Nimmo joined the Company in April 1982 as
its Manager of Information Systems and
subsequently was promoted to Manager of
Materials/Management Information Systems.
Mark C. Wilmoth 37 Vice President of Finance and Treasurer since
March 1994. Prior thereto, Mr. Wilmoth was
Corporate Controller and Assistant Secretary
since 1988.
Sue E. Chase 45 Vice President of Human Resources since
December 1993. Prior thereto, Ms. Chase was
director of Human Resources since June 1993.
Before joining the Company, Ms. Chase served
as Vice President of Human Resources at
Seiscor Technologies, Inc., since 1985.
All officers of the Company are elected annually and serve at the
pleasure of the Board of Directors.
<PAGE>
COMPENSATION
The following table sets forth the aggregate cash compensation paid to
the executive officers listed for services rendered in all capacities to the
Company for the fiscal year ended July 31, 1996:
<TABLE>
<CAPTION>
(1) (2) (3)
NAME OF INDIVIDUAL/ OTHER ANNUAL ALL
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OTHER
($) ($) ($) ($)
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Darrell J. Lowrance 1996 349,000 81,511 - 24,886
President and Chief 1995 325,000 92,073 - 22,389
Executive Officer 1994 306,000 - - 21,630
Ronald G. Weber 1996 193,000 48,884 - 25,681
Executive Vice President 1995 185,000 51,042 - 23,721
of Technology and Engineering 1994 176,000 21,400 - 25,382
Steven L. Schneider 1996 151,000 38,316 - 8,990
Senior Vice President of 1995 145,000 40,005 - 8,720
Sales and Marketing 1994 129,000 14,300 - 8,506
Mark C. Wilmoth 1996 125,000 31,635 - 8,649
Vice President of Finance and 1995 115,000 31,729 - 6,651
Treasurer 1994 96,000 11,000 - 5,493
Terry R. Nimmo 1996 123,000 31,244 - 6,682
Vice President of 1995 110,000 30,350 - 6,004
Materials/M.I.S. 1994 106,000 13,800 - 7,645
</TABLE>
(1) The Company's Executive Bonus Plan for fiscal year 1996 provided for a
performance bonus pool measured entirely on the basis of the Company's
pretax, prebonus earnings compared to budgeted pretax, prebonus earnings.
This bonus pool was to be divided, based on certain predetermined
percentages, between the Company's President, five Vice Presidents, and
certain other key employees. In order to earn any performance bonus, it
was necessary for pretax, prebonus income to exceed $1,200,000, which the
Company did and accordingly a performance bonus pool of $166,997 was earned
and paid in October, 1996 to those officers and key employees who earned a
performance bonus. The Executive Bonus Plan for fiscal year 1996 also
provided for discretionary bonuses for executive officers, except the
President, and certain other key employees, granted at the recommendation
of the President on the basis of individual performance not to exceed 15%
of their respective salaries. The President exercised his right to
recommend discretionary bonuses for executive officers and certain key
employees of the Company to the Compensation and Nominating Committee of
the Board of Directors. Accordingly, certain discretionary bonuses
aggregating $133,082 were recommended by the Compensation and Nominating
Committee and approved by the Board of Directors for payment in November of
1996. The Company paid an aggregate of $300,079 in bonuses in October and
November, 1996 pursuant to the Company's 1996 Executive Bonus Plan. The
aggregate maximum amount payable pursuant to the Company's 1996 Executive
Bonus Plan, to include performance bonuses and discretionary bonuses, was
limited to $1,000,000.
<PAGE>
(2) The 1996 remuneration described in other annual compensation includes the
cost to the Company of benefits furnished to the executive officers,
including premiums for life and health insurance, personal use of Company
automobiles, and other personal benefits provided to such individuals that
are extended in connection with the conduct of the Company's business.
During 1996, 1995, and 1994, no executive officers received other
compensation in excess of 10% of such officer's cash compensation.
(3) Other long-term compensation resulted from contributions to the Lowrance
Savings Plan and Trust Number 1 on behalf of the listed executive officers.
Also included are directors fees of $16,500, $15,500 and $13,500 paid to
each of Mr. Lowrance and Mr. Weber, respectively, in 1996, 1995 and 1994.
STOCK OPTION PLANS. The Company's 1986 and 1989 Stock Option Plans (the
"Plans") adopted by the Board of Directors and approved by the Stockholders,
reserve 400,000 shares of Common Stock (subject to certain adjustments) for
issuance upon the exercise of incentive stock options (as defined in Section
422A of the Internal Revenue Code), non-qualified stock options, and limited
stock appreciation rights ("limited SAR's") which may be granted to directors,
officers, and key employees (13 persons are eligible to participate as of the
date of this Proxy Statement). The Plans are designed to serve as an incentive
for attracting and retaining qualified and competent employees and directors.
The Compensation and Nominating Committee of the Board of Directors
administers and interprets the Plans and has authority to grant options on such
terms and at such prices as it may determine, but the exercise price of
incentive stock options will not be less than the fair market value of the
Common Stock on the date of grant and no option will be exercisable after the
expiration of ten years from the date of grant. The committee may also grant
limited SAR's in tandem with options. A limited SAR is exercisable only to the
extent that the related option is exercisable and the exercise of any portion of
either the related option or tandem limited SAR will cause a corresponding
reduction in the number of shares remaining subject to the option or the tandem
limited SAR. The Board of Directors has resolved that the exercise price of
non-statutory stock options will be not less than 85% of the fair market value
of the Common Stock on the date of grant.
During fiscal year 1996, no options and no limited SAR's were granted and
none were exercised. As of October 31, 1996, the Company had 75,000 non-
qualified options issued of the 400,000 authorized in the Plans. Total non-
qualified options granted to executive officers and presently outstanding were
as follows:
NON-QUALIFIED AVERAGE OPTION
EXECUTIVE OFFICER OPTIONS GRANTED PRICE PER SHARE
- ----------------- --------------- ---------------
Darrell J. Lowrance 22,500 shares $2.93
Ronald G. Weber 22,500 shares $2.93
Terry R. Nimmo 12,500 shares $2.97
Mark C. Wilmoth 5,000 shares $2.89
As of October 31, 1996, options on 5,000 shares under these plans have been
exercised to date and no limited SAR's have been granted.
<PAGE>
RETIREMENT PLAN. The Lowrance Savings Plan and Trust (the "Retirement
Plan") requires the Company to contribute to the Retirement Plan up to 6% of
each participant's salary annually. Participants include all employees of the
Company, including executive officers, who have completed one year of employment
with at least 1,000 hours of service. The Company makes a fixed contribution of
3% of each participant's salary. In addition, if an employee makes voluntary
contributions, the Company will make additional contributions equal to 100% of
the first $10 per pay period of the employee's contribution and 50% thereafter,
not to exceed 3% of the employee's salary. Each participant's interest in the
Company's contributions vests fully over a period of seven years. Generally, a
participant's interest in the Company's contributions may be withdrawn only upon
termination or in certain hardship situations. The Trustees and Administrative
Committee of the Retirement Plan are appointed by the Board of Directors.
BOARD COMPENSATION COMMITTEE REPORT. The members of the Compensation and
Nominating Committee are Mr. Robert Biolchini, Mr. Willard Britton, and Mr.
Peter Foley, III. Each member of the Committee is a non-employee director.
The Committee's executive compensation policies are designed to provide
competitive levels of compensation that integrate pay with the Company's
performance, recognize individual initiative and achievements, and assist the
Company in retaining qualified executives. Annual bonuses to executives include
two components, a performance pool measured entirely on the basis of the
Company's pretax, prebonus earnings, and a discretionary bonus for executive
officers, except the President, which is recommended by the President on the
basis of individual performance.
The Committee believes that the three programs described above provide
compensation that is competitive with the levels paid by other electronics
corporations and helps link executive and shareholder interests especially
through the Company's Executive Bonus Plan and Stock Options which create
meaningful rewards for both short and long-term performance that assists the
Company to attain its revenue growth and profitability for the benefit of the
Company and its Stockholders.
Compensation and Nominating Committee:
Robert F. Biolchini, Chairman
Willard P. Britton
Peter F. Foley, III
PERFORMANCE GRAPH. The following performance graph reflects yearly
percentage change in the Company's cumulative total Stockholder return on Common
Stock as compared with the cumulative total return of the NASDAQ (US) and the
NASDAQ Electronic Components Index. All cumulative returns assume reinvestment
of dividends and are calculated on a fiscal year basis on July 31 of each year.
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
AMONG THE COMPANY, NASDAQ US AND NASDAQ ELECTRONIC COMPONENT
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
7/31/91 7/31/92 7/31/93 7/31/94 7/31/95 7/31/96
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
NASDAQ U.S. 100.00 117.44 142.80 146.95 204.44 224.88
NASDAQ ELEC.
COMPONENTS 100.00 121.80 197.52 221.46 502.55 466.37
LOWRANCE ELEC. 100.00 300.00 214.29 314.29 357.14 328.57
</TABLE>
<PAGE>
PROPOSAL TO APPROVE 70,000 SHARES OF SERIES "A" PREFERRED STOCK
Upon the recommendations of the Compensation Committee, the Board of
Directors of the Company, on February 28, 1996, unanimously approved the
issuance of 70,000 shares of Series "A" Preferred Stock ("Preferred Stock") to
the five key officers of the Company. The Board of Directors believes that the
Preferred Stock is (i) an effective means of insuring that the Company retain
the services of the five key officers that the Compensation Committee and Board
of Directors believe are critical to the Company's future; and (ii) the
Preferred Stock provided long-term incentive for the five key officers and
promotes loyalty and dedication to the Company through their acquisition of the
Preferred Stock of a significant proprietary interest in the Company's ongoing
growth and future. The Certificate of the Designation of Preferences, Rights
and Limitations of the Company's Series "A" Preferred Stock is set forth in full
on Appendix A attached hereto.
The 70,000 shares of Preferred Stock were issued on May 13, 1996 to the
five key officers (Darrell J. Lowrance, President and Chief Executive Officer,
20,000 shares; Ronald G. Weber, Executive Vice President of Technology and
Engineering, 20,000 shares; Steven L. Schneider, Senior Vice President of Sales
and Marketing, 10,000 shares; Terry R. Nimmo, Vice President of Manufacturing
and Materials, 10,000 shares; and Mark C. Wilmoth, Vice President of Finance and
Treasurer, 10,000 shares) of the Company. The Series "A" Preferred Stock is a
nonvoting stock paying a noncumulative dividend of 2 1/2 cents per share. Each
share of Preferred Stock is convertible into five shares of the Company's Common
Stock, but only if (i) the Chief Executive Officer of the Company (Darrell J.
Lowrance) sells in excess of 30 percent of his Common Stock of the Company or
(ii) the Company sells substantially all of its assets and operations to a third
party. The Series "A" Preferred Stock was issued for a term of ten years for a
purchase price of $6.88 per share, pursuant to a fairness opinion letter, dated
February 27, 1996, from Principal Financial Securities, Inc. The Company
financed the total purchase price of $481,250 for the private placement of the
70,000 shares of Preferred Stock for the five key officers of the Company,
pursuant to five individual Promissory Notes from each of the five key officers
of the Company, bearing interest at Chase prime, payable annually on May 13,
which Promissory Notes are secured by a pledge of each key officer's Preferred
Stock. In the event the Preferred Stock is not converted within ten years, the
holder is required to surrender the Series "A" Preferred Stock for cancellation
by the Company in exchange for the Company forgiving the principal amount
remaining on each of the five Promissory Notes to the Company. If any of the key
employees terminate their employment with the Company for any reason, except
death, they immediately forfeit ownership rights to the Series "A" Preferred
Stock pledged to secure each Promissory Note and the Preferred Stock is
immediately surrendered to the Company for cancellation in exchange for the
Company's canceling the principal amount owing to the Company on the Promissory
Note, provided all accrued interest on the Promissory Note is paid to the date
of such key employee's termination.
If issuance of the Series "A" Preferred Stock is not approved by a majority
of the Stockholders of the Company at the Annual Meeting of Stockholders, the
five key officers of the Company to whom such 70,000 shares of Series "A"
Preferred Stock has been issued have agreed that such Series "A" Preferred Stock
will revert back to the Company and will be canceled with no further liability
to any of the five key officers pursuant to their individual Promissory Notes
and Pledge and Security Agreements held by the Company.
<PAGE>
SELECTION OF AUDITORS
The Board of Directors, upon recommendation of the Audit Committee, has
selected Arthur Andersen LLP as the independent public accountants for the
Company for its fiscal year 1997, subject to ratification by the Stockholders at
the Annual Meeting.
Arthur Andersen LLP served as independent public accountants for the
Company for its last fiscal year. A representative of Arthur Andersen LLP will
attend the Annual Meeting and have the opportunity to make a statement if the
representative desires to do so and will be available to answer appropriate
questions.
STOCKHOLDER PROPOSALS
The date by which proposals of Stockholders intended to be presented at the
1997 Annual Meeting of Stockholders must be received by the Company for
inclusion in the Company's Proxy Statement and form of Proxy relating to that
meeting is August 15, 1997.
OTHER MATTERS WHICH MAY COME BEFORE THE MEETING
The Board of Directors does not intend to bring any other matters before
the Annual Meeting nor does it know of any matters which other persons intend to
bring before the Annual Meeting. However, if any other matters properly come
before the Annual Meeting, the persons named as proxies in the accompanying
Proxy will vote thereon in accordance with their best judgment.
It is important that Proxies be returned promptly. Therefore, Stockholders
who do not expect to attend the Annual Meeting in person are urged to sign the
enclosed Proxy and mail it at their earliest convenience in the enclosed return
envelope for which no postage is needed if mailed in the United States.
<PAGE>
APPENDIX "A"
CERTIFICATE OF THE DESIGNATION OF
PREFERENCES, RIGHTS AND LIMITATIONS
OF THE LOWRANCE ELECTRONICS, INC.
SERIES "A" PREFERRED STOCK
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
We, Darrell J. Lowrance, President, and Robert F. Biolchini, Secretary, of
Lowrance Electronics, Inc. (the "Corporation"), a corporation organized and
existing under the General Corporation Law of the State of Delaware, in
accordance with the provisions of Section 151 thereof, do hereby certify:
That pursuant to authority conferred upon the Board of Directors of the
corporation by the Certificate of Incorporation of the Corporation, as amended
(the "Certificate of Incorporation"), said Board of Directors, at a meeting duly
held and convened on February 28, 1996, at which a quorum was present and acting
throughout, duly authorized and adopted the following resolution providing for
the issuance of 70,000 shares of a series of the Corporate Preferred Stock
of the par value of $.50 per share, to be designated "Series "A" Preferred
Stock":
"RESOLVED, that the officers of the Company be and they hereby are
authorized to file a Certificate of Designation Preferences, Rights and
Limitations for the Lowrance Electronics, Inc., Series A Preferred Stock
pursuant to Section 151 of the general corporation laws of the State of Delaware
with the Secretary of State of Delaware, and
"RESOLVED, that pursuant to Article IV of the Certificate of Incorporation
of the Company, that the Board of Directors hereby expressly authorizes the
issuance of 70,000 shares of Series "A" Preferred Stock ("Preferred Stock")
issued for a term of ten (10) years, having the following rights, limitations,
preferences, powers and designations: The Series "A" Preferred Stock ("Preferred
Stock") upon issuance shall be (i) nonvoting stock, no par value; and (ii) allow
the declaration of a noncumulative dividend payable at 2-1/2 cents per share
annually on such Preferred Stock, if and when declared by the Board of Directors
of the Company; and (iii) nontransferable and nonpledgable Preferred Stock
(except (a) if pledged to the Company by the holder to secure the purchase price
for such Preferred Stock; and (b) except upon the death of the holder when
Preferred Stock may be transferred to the holder's estate pursuant to the
holder's will); and (iv) with such Preferred Stock to be surrendered to the
Company by the holder for the price paid by the holder if the holder elects to
leave the employment of the Company); and (v) with each share of Preferred Stock
convertible into five shares of Common Stock of the Company at the purchase
price of Five Dollars ($5.00) per share of Common Stock (payable by the holder
to the Company at conversion) which conversion is permitted only upon the
occurrence of either one of the following events: (a) ninety (90) days after the
sale by the Chief Executive Officer of the Company of in excess of 30 percent of
the Common Stock of the Company currently (February 28, 1996) directly owned by
the Chief Executive Officer (exclusive of any stock options or Series "A"
Preferred Stock) by sale in a private placement or public offering or through
Rule 144 sales; or (b) upon the sale by the Company of all or substantially all
of the Company's assets and operations to a third party.
<PAGE>
All rights under the Series "A" Preferred Stock shall terminate ten (10) years
after the date first issued and the holder shall surrender such Series "A"
Preferred Stock to the Company for zero consideration for cancellation at the
end of ten years and thereafter such Series "A" Preferred Stock shall be null
and void and of no value."
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed by Darrell J. Lowrance, President and Chief Executive Officer, and its
corporate seal to be hereunto affixed and attested by Robert F. Biolchini, as
Secretary, this 30th day of April, 1996, and each of said persons by his
signature hereto affirms that this Certificate is his act and deed and the act
and deed of said Corporation, and that the facts stated therein are true.
LOWRANCE ELECTRONICS, INC.
By /s/ DARRELL J. LOWRANCE
-------------------------------------
DARRELL J. LOWRANCE
President and Chief Executive Officer
[SEAL]
Attest:
Robert F. Biolchini
(Secretary)
<PAGE>
PROXY
LOWRANCE ELECTRONICS, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE
HELD ON DECEMBER 10, 1996
The undersigned hereby (a) acknowledges receipt of the Notice of Annual Meeting
of Stockholders to be held in the Diplomat Room on the Main Lobby Floor of the
Adam's Mark Hotel, 100 East Second Street, Tulsa, Oklahoma, on December 10,
1996, at 10:00 a.m., local time, and the Proxy Statement relating thereto and
(b) appoints Darrell J. Lowrance and Robert F. Biolchini, or either or them, as
proxies and attorneys with several powers of substitution, hereby revoking any
prior Proxy, and hereby authorizes them or either of them to represent the
undersigned and to vote as designated on the reverse side, all the shares of
Common Stock of Lowrance Electronics, Inc. held of record by the undersigned on
October 31, 1996, at the Annual Meeting of Stockholders and at any adjournment
or adjournments thereof.
(Continued on reverse side)
FOLD AND DETACH HERE
<PAGE>
This Proxy when properly executed will be voted in Please mark
the manner directed herein by the undersigned. If your vote as
no direction is made, this Proxy will be voted FOR indicated in X
the persons nominated as Class I Directors, FOR this sample
the proposal to approve the issuance of 70,000
shares of Series "A" Preferred Stock and FOR the
proposal ratifying the selection of Arthur Andersen LLP.
1. ELECTION OF DIRECTORS. The undersigned directs that this Proxy be voted:
FOR the nominees WITHHOLD Class I Directors
listed to the right AUTHORITY (three-year terms)
/ / To vote for the nominees Willard P. Britton
listed to the right Ronald G. Weber
/ /
FOR, except WITHHOLD
AUTHORITY to vote for
------------------------------
2. Proposal to approve the issuance of 70,000 shares of Series "A" Preferred
Stock:
FOR AGAINST ABSTAIN
/ / / / / /
3. PROPOSAL TO RATIFY THE SELECTION OF ARTHUR ANDERSEN LLP AS INDEPENDENT
PUBLIC ACCOUNTANTS FOR THE COMPANY FOR ITS FISCAL YEAR 1997. The undersigned
directs that is Proxy be voted:
FOR AGAINST ABSTAIN
/ / / / / /
4. OTHER MATTERS. The undersigned directs that this Proxy be voted in such
manner as the proxies named herein, or either of them, may direct, in their
discretion, on any other matter that may properly come before the Annual
Meeting or any adjournment thereof.
Dated: , 1996
---------------------------
-----------------------------------------
Signature of Shareholder
-----------------------------------------
Signature of Shareholder
NOTE: in the case of joint ownership,
each such owner should sign. Executor,
administrators, guardian, trustees, etc.
should add their title as such and where
more than one executor, etc. is named, a
majority must sign. If the signer is a
corporation please sign full corporate
name by duly authorized officer.
"PLEASE MARK INSIDE BLUE BOXES SO THAT DATA PROCESSING EQUIPMENT WILL
RECORD YOUR VOTES"
FOLD AND DETACH HERE
