10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

FORM 10-Q

X	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2014.
	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ________________ TO ________________.

Commission File No. 0-13375

LSI Industries Inc.

State of Incorporation - Ohio        IRS Employer I.D. No. 31-0888951

10000 Alliance Road

Cincinnati, Ohio  45242

(513) 793-3200

Indicate by checkmark 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 checkmark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

YES    X      NO ____

Indicate by checkmark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [    ]	Accelerated filer [ X ]
Non-accelerated filer [    ]	Smaller reporting company [    ]

Indicate by checkmark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ____  NO    X

As of January 27, 2015 there were 24,146,716 shares of the Registrant's common stock, no par value per share, outstanding.

LSI INDUSTRIES INC.

FORM 10-Q

FOR THE QUARTER ENDED DECEMBER 31, 2014

INDEX

			Begins on Page
PART I.  Financial Information
	ITEM 1.	Financial Statements
		Condensed Consolidated Statements of Operations	3
		Condensed Consolidated Balance Sheets	4
		Condensed Consolidated Statements of Cash Flows	6
		Notes to Condensed Consolidated Financial Statements	7
	ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
	ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	35
	ITEM 4.	Controls and Procedures	35
PART II.  Other Information
	ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36
	ITEM 6.	Exhibits	37
Signatures			38

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995

This Form 10-Q contains certain forward-looking statements that are subject to numerous assumptions, risks or uncertainties.  The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements.  Forward-looking statements may be identified by words such as “estimates,” “anticipates,” “projects,” “plans,” “expects,” “intends,” “believes,” “seeks,” “may,” “will,” “should” or the negative versions of those words and similar expressions, and by the context in which they are used.  Such statements, whether expressed or implied, are based upon current expectations of the Company and speak only as of the date made.  Actual results could differ materially from those contained in or implied by such forward-looking statements as a result of a variety of risks and uncertainties over which the Company may have no control.  These risks and uncertainties include, but are not limited to, the impact of competitive products and services, product demand and market acceptance risks, potential costs associated with litigation and regulatory compliance, reliance on key customers, financial difficulties experienced by customers, the cyclical and seasonal nature of our business, the adequacy of reserves and allowances for doubtful accounts, fluctuations in operating results or costs whether as a result of uncertainties inherent in tax and accounting matters or otherwise, unexpected difficulties in integrating acquired businesses, the ability to retain key employees of acquired businesses, unfavorable economic and market conditions, the results of asset impairment assessments and the other risk factors that are identified herein.  You are cautioned to not place undue reliance on these forward-looking statements.  In addition to the factors described in this paragraph, the risk factors identified in our Form 10-K and other filings the Company may make with the SEC constitute risks and uncertainties that may affect the financial performance of the Company and are incorporated herein by reference.  The Company does not undertake and hereby disclaims any duty to update any forward-looking statements to reflect subsequent events or circumstances.

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PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

LSI INDUSTRIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended						Six Months Ended
	December 31						December 31
(In thousands, except per share data)	2014			2013			2014			2013
Net sales	$	84,715		$	76,123		$	163,181		$	156,609
Cost of products and services sold		64,160			59,366			124,018			120,730
Gross profit		20,555			16,757			39,163			35,879
Loss on sale of subsidiary (see Note 13)		--			--			565			--
Gain on sale of building		--			--			(343	)		--
Selling and administrative expenses		18,331			15,246			34,183			31,529
Operating income		2,224			1,511			4,758			4,350
Interest (income)		(6	)		(7	)		(9	)		(14	)
Interest expense		12			19			23			38
Income before income taxes		2,218			1,499			4,744			4,326
Income tax expense		630			629			1,629			1,591
Net income	$	1,588		$	870		$	3,115		$	2,735
Earnings per common share (see Note 4)
Basic	$	0.06		$	0.04		$	0.13		$	0.11
Diluted	$	0.06		$	0.04		$	0.13		$	0.11
Weighted average common shares outstanding
Basic		24,449			24,373			24,442			24,363
Diluted		24,507			24,627			24,506			24,530

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements.

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LSI INDUSTRIES INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	December 31,			June 30,
(In thousands, except shares)	2014			2014
ASSETS
Current Assets
Cash and cash equivalents	$	18,054		$	9,013
Accounts receivable, less allowance for doubtful accounts of $355 and $294, respectively		44,095			42,753
Inventories		42,067			45,408
Refundable income taxes		113			1,973
Asset held for sale		--			611
Other current assets		6,617			6,319
Total current assets		110,946			106,077
Property, Plant and Equipment, at cost
Land		6,934			6,918
Buildings		37,484			37,027
Machinery and equipment		75,312			75,533
Construction in progress		1,263			221
		120,993			119,699
Less accumulated depreciation		(76,661	)		(75,417	)
Net property, plant and equipment		44,332			44,282
Goodwill		10,508			10,508
Other Intangible Assets, net		6,344			7,227
Other Long-Term Assets, net		1,648			1,794
Total assets	$	173,778		$	169,888

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements.

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LSI INDUSTRIES INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	December 31,		June 30,
(In thousands, except shares)	2014		2014
LIABILITIES & SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts payable	$	12,836	$	13,658
Accrued expenses		17,931		15,631
Total current liabilities		30,767		29,289
Other Long-Term Liabilities		2,131		2,187
Commitments and Contingencies (Note 12)
Shareholders’ Equity
Preferred shares, without par value; Authorized 1,000,000 shares, none issued		—		—
Common shares, without par value; Authorized 40,000,000 shares; Outstanding 24,140,775 and 24,122,284 shares, respectively		105,105		104,064
Retained earnings		35,775		34,348
Total shareholders’ equity		140,880		138,412
Total liabilities & shareholders’ equity	$	173,778	$	169,888

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements.

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LSI INDUSTRIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months Ended
(In thousands)	December 31
	2014			2013
Cash Flows from Operating Activities
Net income	$	3,115		$	2,735
Non-cash items included in net income:
Depreciation and amortization		3,138			2,969
Goodwill impairment		--			--
Deferred income taxes		(101	)		(49	)
Deferred compensation plan		94			87
Stock option expense		882			779
Issuance of common shares as compensation		96			96
(Gain) on disposition of building		(343	)		--
(Gain) on disposition of fixed assets		(1	)		(38	)
Loss on sale of subsidiary		565			--
Allowance for doubtful accounts		176			68
Inventory obsolescence reserve		753			743
Changes in certain assets and liabilities:
Accounts receivable		(2,021	)		4,787
Inventories		1,757			(5,864	)
Refundable income taxes		1,801			1,061
Accounts payable		(784	)		368
Accrued expenses and other		1,792			(1,563	)
Customer prepayments		(201	)		2,368
Net cash flows provided by operating activities		10,718			8,547
Cash Flows from Investing Activities
Purchases of property, plant and equipment		(2,404	)		(2,721	)
Proceeds from sale of subsidiary, net of cash sold		1,494			--
Proceeds from sale of fixed assets		952			40
Net cash flows provided by (used in) investing activities		42			(2,681	)
Cash Flows from Financing Activities
Cash dividends paid		(1,688	)		(2,887	)
Exercise of stock options		108			152
Purchase of treasury shares		(139	)		(150	)
Issuance of treasury shares		--			10
Net cash flows (used in) financing activities		(1,719	)		(2,875	)
Increase in cash and cash equivalents		9,041			2,991
Cash and cash equivalents at beginning of period		9,013			7,949
Cash and cash equivalents at end of period	$	18,054		$	10,940

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements.

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LSI INDUSTRIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 -  INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The interim condensed consolidated financial statements are unaudited and are prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information, and rules and regulations of the Securities and Exchange Commission.  Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. In the opinion of Management, the interim financial statements include all normal adjustments and disclosures necessary to present fairly the Company’s financial position as of December 31, 2014, the results of its operations for the three and six month periods ended December 31, 2014 and 2013, and its cash flows for the six month periods ended December 31, 2014 and 2013. These statements should be read in conjunction with the financial statements and footnotes included in the fiscal 2014 Annual Report on Form 10-K.  Financial information as of June 30, 2014 has been derived from the Company’s audited consolidated financial statements.

NOTE 2  -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Consolidation:

The condensed consolidated financial statements include the accounts of LSI Industries Inc. (an Ohio corporation) and its subsidiaries (collectively, the “Company”), all of which are wholly owned.  All intercompany transactions and balances have been eliminated in consolidation.

Revenue Recognition:

Revenue is recognized when title to goods and risk of loss have passed to the customer, there is persuasive evidence of a purchase arrangement, delivery has occurred or services have been rendered, and collectability is reasonably assured.  Revenue from product sales is typically recognized at time of shipment.  In certain arrangements with customers, as is the case with the sale of some of our solid-state LED (light emitting diode) video screens, revenue is recognized upon customer acceptance of the video screen at the job site.  Sales are recorded net of estimated returns, rebates and discounts. Amounts received from customers prior to the recognition of revenue are accounted for as customer pre-payments and are included in accrued expenses.

The Company has five sources of revenue:  revenue from product sales; revenue from installation of products; service revenue generated from providing integrated design, project and construction management, site engineering and site permitting; revenue from the management of media content and digital hardware related to active digital signage; and revenue from shipping and handling.

Product revenue is recognized on product-only orders upon passing of title and risk of loss, generally at time of shipment.  However, product revenue related to orders where the customer requires the Company to install the product is recognized when the product is installed.  The Company provides product warranties and certain post-shipment service, support and maintenance of certain solid state LED video screens and billboards.

Installation revenue is recognized when the products have been fully installed.  The Company is not always responsible for installation of products it sells and has no post-installation responsibilities, other than normal warranties.

Service revenue from integrated design, project and construction management, and site permitting is recognized when all products at each customer site have been installed.

Revenue from the management of media content and digital hardware related to active digital signage is recognized evenly over the service period with the customer. Media content service periods with most customers range from 1 month to 1 year.

Shipping and handling revenue coincides with the recognition of revenue from sale of the product.

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The Company evaluates the appropriateness of revenue recognition in accordance with Accounting Standards Codification (“ASC”) Subtopic 605-25, “Revenue Recognition:  Multiple–Element Arrangements.” In situations where the Company is responsible for re-imaging programs with multiple sites, each site is viewed as a separate unit of accounting and has stand-alone value to the customer. Revenue is recognized upon the Company’s complete performance at the location, which may include a site survey, graphics products, lighting products, and installation of products. The selling price assigned to each site is based upon an agreed upon price between the Company and its customer and reflects the estimated selling price for that site relative to the selling price for sites with similar image requirements.

The Company also evaluates the appropriateness of revenue recognition in accordance with ASC Subtopic 985-605, “Software:  Revenue Recognition.”  Our solid-state LED video screens, billboards and active digital signage contain software elements which the Company has determined are incidental and excluded from the scope of ASC Subtopic 985-605.

Credit and Collections:

The Company maintains allowances for doubtful accounts receivable for probable estimated losses resulting from either customer disputes or the inability of its customers to make required payments.  If the financial condition of the Company’s customers were to deteriorate, resulting in their inability to make the required payments, the Company may be required to record additional allowances or charges against income.  The Company determines its allowance for doubtful accounts by first considering all known collectability problems of customers’ accounts, and then applying certain percentages against the various aging categories based on the due date of the remaining receivables.  The resulting allowance for doubtful accounts receivable is an estimate based upon the Company’s knowledge of its business and customer base, and historical trends.  The Company also establishes allowances, at the time revenue is recognized, for returns, discounts, pricing and other possible customer deductions.  These allowances are based upon historical trends.

The following table presents the Company’s net accounts receivable at the dates indicated.

(In thousands)	December 31,			June 30,
	2014			2014
Accounts receivable	$	44,450		$	43,047
less Allowance for doubtful accounts		(355	)		(294	)
Accounts receivable, net	$	44,095		$	42,753

Cash and Cash Equivalents:

The cash balance includes cash and cash equivalents which have original maturities of less than three months.  The Company maintains balances at financial institutions in the United States. The FDIC limit for insurance coverage on non-interest bearing accounts is $250,000. As of December 31, 2014 and June 30, 2014, the Company had bank balances of $20,926,000 and $12,367,000, respectively, without insurance coverage. Of these amounts, $741,000 was held in foreign bank accounts as of June 30, 2014. As a result of the sale of LSI Saco Technologies Inc., there are no longer cash accounts in foreign banks as of December 31, 2014 (See Note 13).

Inventories:

Inventories are stated at the lower of cost or market.  Cost of inventories includes the cost of purchased raw materials and components, direct labor, as well as manufacturing overhead which is generally applied to inventory based on direct labor and material content. Cost is determined on the first-in, first-out basis.

Property, Plant and Equipment and Related Depreciation:

Property, plant and equipment are stated at cost.  Major additions and betterments are capitalized while maintenance and repairs are expensed.  For financial reporting purposes, depreciation is computed on the straight-line method over the estimated useful lives of the assets as follows:

Buildings (years)	28	-	40
Machinery and equipment (years)	3	-	10
Computer software (years)	3	-	8

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Costs related to the purchase, internal development, and implementation of the Company’s fully integrated enterprise resource planning/business operating software system are either capitalized or expensed in accordance with ASC Subtopic 350-40, “Intangibles – Goodwill and Other:  Internal-Use Software.”  Leasehold improvements are amortized over the shorter of fifteen years or the remaining term of the lease.

The Company recorded $1,425,000 and $1,353,000 of depreciation expense in the second quarter of fiscal 2015 and 2014, respectively, and $2,863,000 and $2,563,000 of depreciation expense in the first half of fiscal 2015 and 2014, respectively.

Intangible Assets:

Intangible assets consisting of customer relationships, trade names and trademarks, patents, technology and software, and non-compete agreements are recorded on the Company's balance sheet.  The definite-lived intangible assets are being amortized to expense over periods ranging between five and twenty years.  The Company evaluates definite-lived intangible assets for permanent impairment when triggering events are identified. Neither indefinite-lived intangible assets nor the excess of cost over fair value of assets acquired ("goodwill") are amortized, however they are subject to review for impairment.  See additional information about goodwill and intangibles in Note 7.

Fair Value:

The Company has financial instruments consisting primarily of cash and cash equivalents, revolving lines of credit, and on occasion, long-term debt.  The fair value of these financial instruments approximates carrying value because of their short-term maturity and/or variable, market-driven interest rates.  The Company has no financial instruments with off-balance sheet risk.

Fair value measurements of nonfinancial assets and nonfinancial liabilities are primarily used in goodwill and other intangible asset impairment analyses, in the purchase price of acquired companies (if any), and in the valuation of the contingent earn-out. The fair value measurement of these nonfinancial assets and nonfinancial liabilities is based on significant inputs not observable in the market and thus represent Level 3 measurements as defined in ASC 820, “Fair Value Measurement.”

Product Warranties:

The Company offers a limited warranty that its products are free of defects in workmanship and materials.  The specific terms and conditions vary somewhat by product line, but generally cover defective products returned within one to five years, with some exceptions where the terms extend to 10 years, from the date of shipment.  The Company records warranty liabilities to cover the estimated future costs for repair or replacement of defective returned products as well as products that need to be repaired or replaced in the field after installation.  The Company calculates its liability for warranty claims by applying estimates to cover unknown claims, as well as estimating the total amount to be incurred for known warranty issues.  The Company periodically assesses the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary.

Changes in the Company’s warranty liabilities, which are included in accrued expenses in the accompanying consolidated balance sheets, during the periods indicated below were as follows:

	Six			Six			Fiscal
	Months Ended			Months Ended			Year Ended
(In thousands)	December 31,			December 31,			June 30,
	2014			2013			2014
Balance at beginning of the period	$	2,662		$	1,424		$	1,424
Additions charged to expense		1,557			1,208			3,816
Deductions for repairs and replacements		(971	)		(1,190	)		(2,578	)
Balance at end of the period	$	3,248		$	1,442		$	2,662

Research and Development Costs:

Research and development expenses are costs directly attributable to new product development, including the development of new technology for both existing and new products, and consist of salaries, payroll taxes, employee benefits, materials, supplies, depreciation and other administrative costs.   The Company follows the requirements of ASC Subtopic 985-20, “Software:  Costs of Software to be Sold, Leased, or Marketed,” and expenses as research and development all costs associated with development of software used in solid-state LED products.  All costs are expensed as incurred and are included in selling and administrative expenses. Research and development costs related to both product and software development totaled $1,450,000 and $2,127,000 for the three months ended December 31, 2014 and 2013, respectively, and $3,301,000 and $4,081,000 for the six months ended December 31, 2014 and 2013, respectively.

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Earnings Per Common Share:

The computation of basic earnings per common share is based on the weighted average common shares outstanding for the period net of treasury shares held in the Company’s non-qualified deferred compensation plan.  The computation of diluted earnings per share is based on the weighted average of common shares outstanding for the period and includes common share equivalents.  Common share equivalents include the dilutive effect of stock options, contingently issuable shares and common shares to be issued under a deferred compensation plan, all of which totaled 383,000 shares and 561,000 shares for the three months ended December 31, 2014 and 2013, respectively, and 383,000 shares and 468,000 shares for the six months ended December 31, 2014 and 2013, respectively.See further discussion in Note 4.

New Accounting Pronouncements:

In July 2013, the Financial Accounting Standards Board issued ASU 2013-11, “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists.” This amended guidance is intended to eliminate the diversity that is in practice with regard to the financial statement presentation of unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The amended guidance is effective for fiscal years and interim periods within those years, beginning after December 15, 2013, or the Company’s fiscal year 2015, with early adoption permissible. The adoption of this guidance did not have a material impact on the financial statements.

In September 2013, the Internal Revenue Service issued Treasury Decision 9636, which enacted final tax regulations regarding the capitalization and expensing of amounts paid to acquire, produce, or improve tangible property. The regulations also include guidance regarding the retirement of depreciable property. The regulations are required to be effective in taxable years beginning on or after January 1, 2014, or the Company’s fiscal year 2015. The Company has reviewed the impact of the final regulations and the anticipated impact to the financial statements is not material.

In June 2014, the Financial Accounting Standards Board issued ASU 2014-09, “Revenue from Contracts with Customers.” This amended guidance supersedes and replaces all existing U.S. GAAP revenue recognition guidance. The guidance established a new revenue recognition model, changes the basis for deciding when revenue is recognized over a point in time, provides new and more detailed guidance on specific revenue topics, and expands and improves disclosures about revenue. The amended guidance is effective for fiscal years and interim periods within those years, beginning after December 15, 2016, or the Company’s fiscal year 2018. The Company has not yet determined the impact the amended guidance will have on its financial statements.

Comprehensive Income:

The Company does not have any comprehensive income items other than net income (loss). The functional currency of the Company’s former Canadian operation was the U.S. dollar.

Subsequent Events:

The Company has evaluated subsequent events for potential recognition and disclosure through the date the condensed consolidated financial statements were filed.  No items were identified during this evaluation that required adjustment to or disclosure in the accompanying financial statements (See Note 14).

Use of Estimates:

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.  Actual results could differ from those estimates.

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NOTE 3 - BUSINESS SEGMENT INFORMATION

ASC Topic 280, “Segment Reporting,” establishes standards for reporting information regarding operating segments in annual financial statements and requires selected information of those segments to be presented in financial statements. Operating segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the chief operating decision maker (the Company’s Chief Executive Officer) in making decisions on how to allocate resources and assess performance. While the Company has twelve operating segments, it has only three reportable operating business segments (Lighting, Graphics, and Electronic Components), an All Other Category, and Corporate and Eliminations.

The Lighting Segment includes outdoor, indoor, and landscape lighting utilizing both traditional and LED light sources, that has been fabricated and assembled for the commercial, industrial and multi-site retail lighting markets, the Company’s primary niche markets (petroleum / convenience store market, automotive dealership market, and quick service restaurant market), and LED solid state digital sports video screens. LED video screens are designed and manufactured by the Company’s Lighting Segment. The Lighting Segment includes the operations of LSI Ohio Operations, LSI Metal Fabrication, LSI MidWest Lighting and LSI Lightron.  These operations have been integrated, have similar economic characteristics and meet the other requirements for aggregation in segment reporting.   

The Graphics Segment designs, manufactures and installs exterior and interior visual image elements related to traditional graphics and active digital signage along with the management of media content related to digital signage. These products are used in visual image programs in several markets, including the petroleum / convenience store market and multi-site retail operations. The Graphics Segment includes the operations of Grady McCauley, LSI Retail Graphics and LSI Integrated Graphic Systems, which have been aggregated as each facility manufactures two-dimensional graphics with the use of screen and digital printing, fabricate three-dimensional structural graphics sold in the multi-site retail, petroleum / convenience store markets and with other markets, and each exhibit similar economic characteristics and meet the other requirements for aggregation in segment reporting.

The Electronic Components Segment designs, engineers and manufactures custom designed electronic circuit boards, assemblies and sub-assemblies, and various products used in other applications including the control of solid-state LED lighting and metal halide lighting.  The Electronic Components Segment includes the operations of LSI ADL Technology as well as LSI Controls (formerly LSI Virticus). LSI ADL Technology sells electronic circuit boards, assemblies and sub-assemblies directly to customers and also has significant inter-segment sales to the Lighting Segment. LSI Controls sells lighting control systems directly to customers and to the Lighting Segment. Products produced by this segment may have applications in the Company’s other LED product lines such as digital scoreboards, advertising ribbon boards and billboards.  

The All Other Category includes the Company’s operating segments that historically neither meet the aggregation criteria, nor the criteria to be a separate reportable segment.  The Operations of LSI Images (menu board systems), LSI Adapt (implementation, installation and program management services related to products of the Graphics and Lighting Segments) and LSI Saco Technologies (designed and produced high-performance light engines, large format video screens using solid-state LED technology, and certain specialty LED lighting) are combined in the All Other Category. LSI Saco Technologies was sold on September 30, 2014 (See Note 13).

The Company’s corporate administration activities are reported in a line item titled Corporate and Eliminations.  This primarily includes intercompany profit in inventory eliminations, expense related to certain corporate officers and support staff, the Company’s internal audit staff, expense related to the Company’s Board of Directors, stock option expense for options granted to corporate administration employees, certain consulting expenses, investor relations activities, and a portion of the Company’s legal, auditing and professional fee expenses. Corporate identifiable assets primarily consist of cash, invested cash (if any), refundable income taxes, and deferred income tax assets.

There was no concentration of consolidated net sales in the three or six months ended December 31, 2014 or 2013.  There was no concentration of accounts receivable at December 31, 2014 or June 30, 2014.

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Summarized financial information for the Company’s reportable business segments is provided for the indicated periods and as of December 31, 2014 and June 30, 2014:

	Three Months Ended						Six Months Ended
(In thousands)	December 31						December 31
	2014			2013			2014			2013
Net Sales:
Lighting Segment	$	59,848		$	57,380		$	116,369		$	116,851
Graphics Segment		18,740			12,954			32,551			26,962
Electronic Components Segment		4,598			4,073			10,478			9,153
All Other Category		1,529			1,716			3,783			3,643
	$	84,715		$	76,123		$	163,181		$	156,609
Operating Income (Loss):
Lighting Segment	$	3,964		$	2,157		$	8,084		$	5,968
Graphics Segment		460			(275	)		246			(112	)
Electronic Components Segment		625			1,041			1,364			2,013
All Other Category		605			124			689			128
Corporate and Eliminations		(3,430	)		(1,536	)		(5,625	)		(3,647	)
	$	2,224		$	1,511		$	4,758		$	4,350
Capital Expenditures:
Lighting Segment	$	599		$	696		$	1,186		$	1,187
Graphics Segment		523			177			857			234
Electronic Components Segment		241			413			280			483
All Other Category		10			10			14			39
Corporate and Eliminations		61			195			67			778
	$	1,434		$	1,491		$	2,404		$	2,721
Depreciation and Amortization:
Lighting Segment	$	744		$	703		$	1,482		$	1,409
Graphics Segment		251			232			499			453
Electronic Components Segment		310			367			632			733
All Other Category		5			42			38			82
Corporate and Eliminations		242			217			487			292
	$	1,552		$	1,561		$	3,138		$	2,969

	December 31, 2014		June 30, 2014
Identifiable Assets:
Lighting Segment	$	92,385	$	96,499
Graphics Segment		26,230		22,312
Electronic Components Segment		30,093		30,788
All Other Category		4,443		4,987
Corporate and Eliminations		20,627		15,302
	$	173,778	$	169,888

The segment net sales reported above represent sales to external customers.  Segment operating income, which is used in management’s evaluation of segment performance, represents net sales less all operating expenses including impairment of goodwill, but excluding interest expense and interest income. Identifiable assets are those assets used by each segment in its operations. Corporate identifiable assets primarily consist of cash, invested cash (if any), refundable income taxes, and deferred income tax assets.

Page 12

The Company records a 10% mark-up on intersegment revenues. Any intersegment profit in inventory is eliminated in consolidation. Intersegment revenues were eliminated in consolidation as follows:

	Three Months Ended				Six Months Ended
	December 31				December 31
(In thousands)	2014		2013		2014		2013
Lighting Segment inter-segment net sales	$	445	$	925	$	1,497	$	1,823
Graphics Segment inter-segment net sales	$	147	$	195	$	856	$	400
Electronic Components inter-segment net sales	$	7,675	$	9,450	$	14,947	$	17,954
All Other Category inter-segment net sales	$	3,618	$	2,037	$	5,171	$	4,192

The Company considers its geographic areas to be:  1) the United States, and 2) Canada.  The majority of the Company’s operations are in the United States, with one operation in Canada.  As a result of the sale of LSI Saco Technologies Inc., the Company no longer has a presence in Canada as of September 30, 2014 (See Note 13). The geographic distribution of the Company’s net sales and long-lived assets are as follows:

	Three Months Ended				Six Months Ended
(In thousands)	December 31				December 31
	2014		2013		2014		2013
Net Sales (a):
United States	$	84,715	$	76,060	$	163,140	$	155,733
Canada		--		63		41		876
	$	84,715	$	76,123	$	163,181	$	156,609

	December 31,		June 30,
	2014		2014
Long-lived Assets (b):
United States	$	45,980	$	45,886
Canada		--		190
	$	45,980	$	46,076

a. Net sales are attributed to geographic areas based upon the location of the operation making the sale.

b. Long-lived assets include property, plant and equipment, and other long-term assets.  Goodwill and intangible assets are not included in long-lived assets.

Page 13

NOTE 4 - EARNINGS PER COMMON SHARE

The following table presents the amounts used to compute basic and diluted earnings per common share, as well as the effect of dilutive potential common shares on weighted average shares outstanding (in thousands, except per share data):

	Three Months Ended				Six Months Ended
	December 31				December 31
	2014		2013		2014		2013
BASIC EARNINGS PER SHARE
Net income	$	1,588	$	870	$	3,115	$	2,735
Weighted average shares outstanding during the period, net of treasury shares (a)		24,124		24,066		24,123		24,062
Weighted average shares outstanding in the Deferred Compensation Plan during the period		325		307		319		301
Weighted average shares outstanding		24,449		24,373		24,442		24,363
Basic earnings per share	$	0.06	$	0.04	$	0.13	$	0.11
DILUTED EARNINGS PER SHARE
Net income	$	1,588	$	870	$	3,115	$	2,735
Weighted average shares outstanding
Basic		24,449		24,373		24,442		24,363
Effect of dilutive securities (b):
Impact of common shares to be issued under stock option plans, and contingently issuable shares, if any		58		254		64		167
Weighted average shares outstanding (c)		24,507		24,627		24,506		24,530
Diluted earnings per share	$	0.06	$	0.04	$	0.13	$	0.11

(a) Includes shares accounted for like treasury stock in accordance with Accounting Standards Codification Topic 710, Compensation - General.

(b) Calculated using the “Treasury Stock” method as if dilutive securities were exercised and the funds were used to purchase common shares at the average market price during the period.

(c) Options to purchase 2,377,900 common shares and 1,197,150 common shares at December 31, 2014 and 2013, respectively, and options to purchase 2,371,900 common shares and 1,676,650 common shares at December 31, 2014 and 2013, respectively, were not included in the computation of the three month and six month periods for diluted earnings per share, respectively, because the exercise price was greater than the average fair market value of the common shares.

Page 14

NOTE 5 - INVENTORIES

The following information is provided as of the dates indicated:

	December 31,		June 30,
(In thousands)	2014		2014
Inventories:
Raw materials	$	26,781	$	30,278
Work-in-process		4,707		5,393
Finished goods		10,579		9,737
Total Inventories	$	42,067	$	45,408

NOTE 6 - ACCRUED EXPENSES

The following information is provided as of the dates indicated:

	December 31,		June 30,
(In thousands)	2014		2014
Accrued Expenses:
Compensation and benefits	$	8,607	$	7,134
Customer prepayments		1,272		1,473
Accrued sales commissions		1,838		1,814
Accrued warranty		3,248		2,662
Other accrued expenses		2,966		2,548
Total Accrued Expenses	$	17,931	$	15,631

NOTE 7 - GOODWILL AND OTHER INTANGIBLE ASSETS

Carrying values of goodwill and other intangible assets with indefinite lives are reviewed at least annually for possible impairment in accordance with ASC Topic 350, “Intangibles – Goodwill and Other.”  The Company may first assess qualitative factors in order to determine if goodwill and indefinite-lived intangible assets are impaired. If through the qualitative assessment it is determined that it is more likely than not that goodwill and indefinite-lived assets are not impaired, no further testing is required. If it is determined more likely than not that goodwill and indefinite-lived assets are impaired, or if the Company elects not to first assess qualitative factors, the Company’s impairment testing continues with the estimation of the fair value of goodwill and indefinite-lived intangible assets using a combination of a market approach and an income (discounted cash flow) approach, at the reporting unit level, that requires significant management judgment with respect to revenue and expense growth rates, changes in working capital and the selection and use of an appropriate discount rate.  The estimates of fair value of reporting units are based on the best information available as of the date of the assessment.  The use of different assumptions would increase or decrease estimated discounted future operating cash flows and could increase or decrease an impairment charge.  Company management uses its judgment in assessing whether assets may have become impaired between annual impairment tests.  Indicators such as adverse business conditions, economic factors and technological change or competitive activities may signal that an asset has become impaired. Based on this assessment, no such potential impairment conditions were noted during the six month periods ended December 31, 2014 and 2013.

The Company identified its reporting units in conjunction with its annual goodwill impairment testing.  The Company relies upon a number of factors, judgments and estimates when conducting its impairment testing.  These include operating results, forecasts, anticipated future cash flows and marketplace data, to name a few.  There are inherent uncertainties related to these factors and judgments in applying them to the analysis of goodwill impairment.

Page 15

The following table presents information about the Company's goodwill on the dates or for the periods indicated:

 Goodwill

(In thousands)	Lighting			Graphics			Components			All Other
	Segment			Segment			Segment			Category			Total
Balance as of June 30, 2014
Goodwill	$	34,913		$	24,959		$	11,621		$	6,850		$	78,343
Accumulated impairment losses		(34,778	)		(24,959	)		(2,413	)		(5,685	)		(67,835	)
Goodwill, net as of June 30, 2014		135			--			9,208			1,165			10,508
Sale of LSI Saco
Goodwill		--			--			--			(3,119	)		(3,119	)
Accumulated impairment losses		--			--			--			3,119			3,119
		--			--			--			--			--
Balance as of December 31, 2014
Goodwill		34,913			24,959			11,621			3,731			75,224
Accumulated impairment losses		(34,778	)		(24,959	)		(2,413	)		(2,566	)		(64,716	)
Goodwill, net as of December 31, 2014	$	135		$	--		$	9,208		$	1,165		$	10,508

In the first quarter of fiscal 2015, the Company sold LSI Saco Technologies Inc. A customer relationship intangible asset with a gross carrying amount of $1,036,000 and accumulated amortization of $428,000 was sold as a result of the sale of LSI Saco Technologies (See Note 13).

The gross carrying amount and accumulated amortization by major other intangible asset class is as follows:

	December 31, 2014
Other Intangible Assets	Gross
(In thousands)	Carrying		Accumulated		Net
	Amount		Amortization		Amount
Amortized Intangible Assets
Customer relationships	$	9,316	$	7,144	$	2,172
Patents		338		102		236
LED technology firmware, software		11,228		10,873		355
Trade name		460		460		--
Non-compete agreements		710		551		159
Total Amortized Intangible Assets		22,052		19,130		2,922
Indefinite-lived Intangible Assets
Trademarks and trade names		3,422		--		3,422
Total Indefinite-lived Intangible Assets		3,422		--		3,422
Total Other Intangible Assets	$	25,474	$	19,130	$	6,344

Page 16

	June 30, 2014
	Gross
	Carrying		Accumulated		Net
(In thousands)	Amount		Amortization		Amount
Amortized Intangible Assets
Customer relationships	$	10,352	$	7,412	$	2,940
Patents		338		84		254
LED technology firmware, software		11,228		10,832		396
Trade name		460		454		6
Non-compete agreements		710		501		209
Total Amortized Intangible Assets		23,088		19,283		3,805
Indefinite-lived Intangible Assets
Trademarks and trade names		3,422		--		3,422
Total Indefinite-lived Intangible Assets		3,422		--		3,422
Total Other Intangible Assets	$	26,510	$	19,283	$	7,227

(In thousands)	Amortization Expense of Other Intangible Assets
	December 31, 2014		December 31, 2013
Three Months Ended	$	127	$	208
Six Months Ended	$	275	$	406

The Company expects to record annual amortization expense as follows:

(In thousands)
2015	$	525
2016	$	505
2017	$	409
2018	$	400
2019	$	400
After 2019	$	958

NOTE 8  -  REVOLVING LINES OF CREDIT

In April 2014, the Company renewed its $30 million unsecured revolving credit line. The Company also renewed its $5 million unsecured revolving credit line for its Canadian operation. However, this Canadian line of credit was terminated as a result of the sale of LSI Saco Technologies Inc. (see note 13). The line of credit expires in the third quarter of fiscal 2017. Interest on the revolving line of credit is charged based upon an increment over the LIBOR rate as periodically determined, or at the bank’s base lending rate, at the Company’s option.  The increment over the LIBOR borrowing rate, as periodically determined, fluctuates between 150 and 190 basis points depending upon the ratio of indebtedness to earnings before interest, taxes, depreciation and amortization (“EBITDA”), as defined in the credit facility.  The fee on the unused balance of the $30 million committed lines of credit is 15 basis points.  Under the terms of this credit facility, the Company has agreed to a negative pledge of assets and is required to comply with financial covenants that limit the amount of debt obligations, require a minimum amount of tangible net worth, and limit the ratio of indebtedness to EBITDA. There are no borrowings against the line of credit as of December 31, 2014.

The Company is in compliance with all of its loan covenants as of December 31, 2014.

Page 17

NOTE 9 -  CASH DIVIDENDS

The Company paid cash dividends of $1,688,000 and $2,887,000 in the six months ended December 31, 2014 and 2013, respectively.  In January 2015, the Board of Directors declared a regular quarterly cash dividend of $0.02 per share payable February 17, 2015 to shareholders of record February 10, 2015. The new indicated annual cash dividend rate for fiscal 2015 is $0.08 per share.

NOTE 10 - EQUITY COMPENSATION

Stock Options 

The Company has an equity compensation plan that was approved by shareholders in November 2012 and that covers all of its full-time employees, outside directors and certain advisors.  This 2012 Stock Incentive Plan replaces all previous equity compensation plans. The options granted or stock awards made pursuant to this plan are granted at fair market value at the date of grant or award.  Options granted to non-employee directors become exercisable 25% each ninety days (cumulative) from the date of grant and options granted to employees generally become exercisable 25% per year (cumulative) beginning one year after the date of grant. The maximum contractual term of the Company’s stock options is ten years.  If a stock option holder’s employment with the Company terminates by reason of death, disability or retirement, as defined in the Plan, the Plan generally provides for acceleration of vesting.  The number of shares reserved for issuance is 1,258,156 shares, all of which were available for future grant or award as of December 31, 2014.  This plan allows for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, restricted and unrestricted stock awards, performance stock awards, and other stock awards.  As of December 31, 2014, a total of 2,867,614 options for common shares were outstanding from this plan as well as one previous stock option plan (which has also been approved by shareholders), and of these, a total of 1,778,589 options for common shares were vested and exercisable.  As of December 31, 2014, the approximate unvested stock option expense that will be recorded as expense in future periods is $1,514,863.  The weighted average time over which this expense will be recorded is approximately 37 months.

The fair value of each option on the date of grant was estimated using the Black-Scholes option pricing model. The below listed weighted average assumptions were used for grants in the periods indicated.

	Three Months Ended					Six Months Ended
	December 31					December 31
	2014			2013		2014			2013
Dividend yield		1.17	%		--		1.17	%		3.33	%
Expected volatility		56	%		--		56	%		53	%
Risk-free interest rate		1.64	%		--		1.64	%		1.66	%
Expected life (years)		6.0			--		6.0			5.5

At December 31, 2014, the 593,400 options granted during the first six months of fiscal 2015 to employees had exercise prices ranging from $5.96 to $6.94 per share, fair values ranging from of $2.19 to $3.48 per share, and remaining contractual lives of between nine years nine months and nine years eleven months.

At December 31, 2013, the 421,000 options granted during the first six months of fiscal 2014 to employees had exercise prices of $7.20 per share, fair values of $2.64 per share, and remaining contractual lives of nine years eight months.

The Company calculates stock option expense using the Black-Scholes model.  Stock option expense is recorded on a straight line basis, or sooner if the grantee is retirement eligible as defined in the 2012 Stock Incentive Plan, with an estimated 2.1% forfeiture rate effective October 1, 2014. Previous estimated forfeiture rates were 2.0% effective April 1, 2014, 2.1% effective January 1, 2014, 2.2% effective July 1, 2013, and 2.3% effective January 1, 2013. The expected volatility of the Company’s stock was calculated based upon the historic monthly fluctuation in stock price for a period approximating the expected life of option grants.  The risk-free interest rate is the rate of a five year Treasury security at constant, fixed maturity on the approximate date of the stock option grant.  The expected life of outstanding options is determined to be less than the contractual term for a period equal to the aggregate group of option holders’ estimated weighted average time within which options will be exercised.  It is the Company’s policy that when stock options are exercised, new common shares shall be issued.  The Company recorded $796,192 and $93,635 of expense related to stock options in the three months ended December 31, 2014 and 2013, respectively, and $881,825 and $779,294 of expense related to stock options in the six months ended December 31, 2014 and 2013, respectively.  As of December 31, 2014, the Company had 2,842,342 stock options that were vested and that were expected to vest, with a weighted average exercise price of $8.97 per share, an aggregate intrinsic value of $554,212 and weighted average remaining contractual terms of 6.3 years.

Page 18

Information related to all stock options for the six months ended December 31, 2014 and 2013 is shown in the following table:

	Six Months Ended December 31, 2014
	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value
Outstanding at 6/30/14		2,677,464		$	9.57		5.4	$	1,674,010
Granted		593,400		$	6.66
Forfeitures		(378,525	)	$	9.99
Exercised		(24,725	)	$	5.84
Outstanding at 12/31/14		2,867,614		$	8.95		6.3	$	558,591
Exercisable at 12/31/14		1,778,589		$	10.24		4.6	$	438,785

	Six Months Ended December 31, 2013
	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value
Outstanding at 6/30/13		2,341,150		$	9.95		5.6	$	1,544,896
Granted		421,000		$	7.20
Forfeitures		(25,550	)	$	10.71
Exercised		(21,900	)	$	6.41
Outstanding at 12/31/13		2,714,700		$	9.55		5.8	$	2,707,888
Exercisable at 12/31/13		1,908,337		$	10.70		4.5	$	1,208,150

The following table presents information related to unvested stock options:

	Shares			Weighted-Average Grant Date Fair Value
Non-vested at June 30, 2014		803,138		$	2.39
Granted		593,400		$	3.23
Vested		(268,763	)	$	2.23
Forfeited		(38,750	)	$	2.23
Non-vested at December 31, 2014		1,089,025		$	2.90

The weighted average grant date fair value of options granted during the six months ended December 31, 2014 and December 31, 2013 were $3.23 and $2.64, respectively. The aggregate intrinsic value of options exercised during the six months ended December 31, 2014 and 2013 were $22,383 and $59,520, respectively. The aggregate grant date fair value of options that vested during the six months ended December 31, 2014 and 2013 was $598,316 and $737,054, respectively. The Company received $144,352 and $140,404 of cash from employees who exercised options in the six month periods ended December 31, 2014 and 2013, respectively. Additionally, the Company recorded $7,834 as a reduction of federal income taxes payable, $36,575 as an decrease in common stock, $7,690 as a reduction of income tax expense, and $36,718 as a reduction of the deferred tax asset related to the exercises of stock options in which the employees sold the common shares prior to the passage of twelve months from the date of exercise.

Page 19

Stock Compensation Awards 

The Company awarded a total of 13,800 and 11,575 common shares in the six months ended December 31, 2014 and 2013, respectively, as stock compensation awards. These common shares were valued at their approximate $96,000 and $95,000 fair market values based on their stock price at dates of issuance multiplied by the number of common shares awarded, respectively, pursuant to the compensation programs for non-employee directors who receive a portion of their compensation as an award of Company stock and for employees who received a nominal recognition award in the form of company stock. Stock compensation awards are made in the form of newly issued common shares of the Company.

Deferred Compensation Plan 

The Company has a non-qualified deferred compensation plan providing for both Company contributions and participant deferrals of compensation. This plan is fully funded in a Rabbi Trust. All plan investments are in common shares of the Company. As of December 31, 2014 there were 32 participants, all with fully vested account balances. A total of 327,362 common shares with a cost of $3,053,900, and 307,328 common shares with a cost of $2,914,700 were held in the plan as of December 31, 2014 and June 30, 2014, respectively, and, accordingly, have been recorded as treasury shares. The change in the number of shares held by this plan is the net result of share purchases and sales on the open stock market for compensation deferred into the plan and for distributions to terminated employees. The Company does not issue new common shares for purposes of the non-qualified deferred compensation plan. The Company accounts for assets held in the non-qualified deferred compensation plan in accordance with Accounting Standards Codification Topic 710, Compensation — General. The Company used approximately $139,100 and $149,800 to purchase 20,034 and 20,157 common shares of the Company in the open stock market during the six months ended December 31, 2014 and 2013, respectively, for either employee salary deferrals or Company contributions into the non-qualified deferred compensation plan. For fiscal year 2015, the Company estimates the Rabbi Trust for the Nonqualified Deferred Compensation Plan will make net repurchases in the range of 25,000 to 29,000 common shares of the Company. The Company does not currently repurchase its own common shares for any other purpose.

NOTE 11  -  SUPPLEMENTAL CASH FLOW INFORMATION

(In thousands)	Six Months Ended December 31
	2014		2013
Cash payments:
Interest	$	36	$	38
Income taxes	$	21	$	690
Issuance of common shares as compensation	$	96	$	96

NOTE 12 - COMMITMENTS AND CONTINGENCIES

As part of the acquisition of Virticus Corporation on March 19, 2012, a contingent Earn-Out liability of $877,000 was recorded based on the fair value of estimated Earn-Out payments. This discounted liability is to be paid over a five year period, contingent upon reaching certain sales in each year over the five year period (fiscal year 2013 through fiscal year 2017). In fiscal 2013, as a result of modified sales forecasts for LSI Virticus, the fair value of the Earn-Out liability was adjusted to zero. The $877,000 reversal of the Earn-Out liability, was recorded in selling and administrative expenses in Corporate and Eliminations. As of December 31, 2014, the maximum potential undiscounted liability related to the Earn-Out is $3 million. This would be based upon the achievement of a defined level of sales of lighting control systems in fiscal years 2015 through 2017. The likelihood of this occurring is not considered probable.

The Company is party to various negotiations, customer bankruptcies, and legal proceedings arising in the normal course of business. The Company provides reserves for these matters when a loss is probable and reasonably estimable. The Company does not disclose a range of potential loss because the likelihood of such a loss is remote. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company’s financial position, results of operations, cash flows or liquidity.

The Company may occasionally issue a standby letter of credit in favor of third parties. As of December 31, 2014, there were no standby letter of credit agreements.

Page 20

NOTE 13 – SALE OF SUBSIDIARY

On September 30, 2014, the Company sold the stock of its wholly owned subsidiary LSI Saco Technologies Inc., located in Montreal, Canada, for $1.9 million cash. The sale resulted in a pre-tax loss of $565,000. As a result of the sale, the Company terminated the $5 million unsecured revolving line of credit for this Canadian operation. LSI Saco reported $41,000 of net customer sales and a $(183,000) operating loss in the first quarter of fiscal 2015 prior to the sale. LSI Saco was reported in the All Other Category. The sale of LSI Saco was not considered the sale of a discontinued operation because the Company migrated most of its manufacturing, research and development, and selling activities from LSI Saco to the Company’s Cincinnati, Ohio location.

NOTE 14 – SEVERANCE COSTS

Pursuant to a management succession agreement entered into in fiscal 2004 as subsequently amended, the Company’s former Chief Executive Officer, Robert J. Ready, relinquished this title and related management responsibilities when the Company hired and appointed a new Chief Executive Officer in October 2014. While Mr. Ready remains on the Company’s Board of Directors, he is no longer Chairman of the Board. This agreement provides for 18 months of compensation to be paid to Mr. Ready, which resulted in a severance charge in the second quarter of fiscal 2015 of $800,000. Severance payments totaling $154,000 were made in the second quarter of fiscal 2015, leaving a severance liability of $646,000 as of December 31, 2014.

In January 2015, the Company initiated a reduction in force and expects to record estimated severance charges of $543,000 and facility exit charges of $33,000 in the third quarter of fiscal 2015. This reduction in force and employee retirements that occurred early in the third quarter of fiscal 2015 represent approximately 8.3% of the Company’s total salaried workforce and approximately $3.7 million of annual total compensation and benefit reductions.

NOTE 15 – INCOME TAXES

The Company's effective income tax rate is based on expected income, statutory rates and tax planning opportunities available in the various jurisdictions in which it operates. For interim financial reporting, the Company estimates the annual income tax rate based on projected taxable income for the full year and records a quarterly income tax provision or benefit in accordance with the anticipated annual rate. The Company refines the estimates of the year's taxable income as new information becomes available, including actual year-to-date financial results. This continual estimation process often results in a change to the expected effective income tax rate for the year. When this occurs, the Company adjusts the income tax provision during the quarter in which the change in estimate occurs so that the year-to-date provision reflects the expected income tax rate. Significant judgment is required in determining the effective tax rate and in evaluating tax positions.

	Three Months Ended						Six Months Ended
	December 31						December 31
	2014			2013			2014			2013
Reconciliation to effective tax rate:
Provision for income taxes at the anticipated annual tax rate		36.1	%		40.6	%		41.0	%		37.9	%
Impact of foreign operations		--			(1.8	)		(0.2	)		(1.0	)
Enactment of tax law changes		(6.1	)		--			(2.9	)		--
Valuation allowances		--			7.9			--			2.8
Uncertain tax positions		(1.3	)		(4.1	)		(1.2	)		(2.9	)
Other		(0.3	)		(0.6	)		(2.4	)		--
Effective tax rate		28.4	%		42.0	%		34.3	%		36.8	%

Page 21

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIALCONDITION AND RESULTS OF OPERATIONS

The Company’s condensed consolidated financial statements, accompanying notes and the “Safe Harbor” Statement, each as appearing earlier in this report, should be referred to in conjunction with this Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Net Sales by Business Segment                

(In thousands)	Three Months Ended				Six Months Ended
	December 31				December 31
	2014		2013		2014		2013
Lighting Segment	$	59,848	$	57,380	$	116,369	$	116,851
Graphics Segment		18,740		12,954		32,551		26,962
Electronic Components Segment		4,598		4,073		10,478		9,153
All Other Category		1,529		1,716		3,783		3,643
	$	84,715	$	76,123	$	163,181	$	156,609

Operating Income (Loss) by Business Segment                

(In thousands)	Three Months Ended						Six Months Ended
	December 31						December 31
	2014			2013			2014			2013
Lighting Segment	$	3,964		$	2,157		$	8,084		$	5,968
Graphics Segment		460			(275	)		246			(112	)
Electronic Components Segment		625			1041			1,364			2,013
All Other Category		605			124			689			128
Corporate and Eliminations		(3,430	)		(1,536	)		(5,625	)		(3,647	)
	$	2,224		$	1,511		$	4,758		$	4,350

Summary Comments

Fiscal 2015 second quarter net sales of $84,715,000 increased $8.6 million or 11.3% as compared to second quarter fiscal 2014. Net sales were favorably influenced by increased net sales of the Lighting Segment (up $2.5 million or 4.3%), increased net sales of the Graphics Segment (up $5.8 million or 44.7%), and increased net sales of the Electronic Components Segment (up $0.5 million or 12.9%). Net sales were unfavorably influenced by decreased net sales of the All Other Category (down $0.2 million or 10.9%).

Fiscal 2015 first half net sales of $163,181,000 increased $6.6 million or 4.2% as compared to the same period of fiscal 2014. Net sales were favorably influenced by increased net sales of the Graphics Segment (up $5.6 million or 20.7%), increased net sales of the Electronic Components Segment (up $1.3 million or 14.5%), and increased net sales of the All Other Category (up $0.1 million or 3.8%). Net sales were unfavorably influenced by decreased net sales of the Lighting Segment (down $0.5 million or 0.4%).

Fiscal 2015 second quarter operating income of $2,224,000 increased $0.7 million from operating income of $1,511,000 in the same period the prior year. The $0.7 million increase in operating income was the net result of increased net sales, an increase in gross profit and an increase in gross profit as a percentage of net sales from 22.0% in the second quarter of fiscal 2014 to 24.3% in the second quarter of fiscal 2015, and an increase in selling and administrative expenses.

Fiscal 2015 first half operating income of $4,758,000 increased $0.4 million or 9.4% from operating income of $4,350,000 in the same period the prior year. The $0.4 million increase in operating income was the net result of increased net sales, an increase in gross profit and an increase in gross profit as a percentage of net sales from 22.9% in the first half of fiscal 2014 to 24.0% in the first half of fiscal 2015, an increase in selling and administrative expenses, and the net effect of the gain on the sale of a facility more than offset by the loss on the sale of a subsidiary in fiscal 2015 with no comparable events in fiscal 2014.

Page 22

The Company’s total net sales of products and services related to solid-state LED technology in light fixtures and video screens for sports, advertising and entertainment markets have been recorded as indicated in the table below. In addition, the Company sells certain elements of graphic identification programs that contain solid-state LED light sources.

	LED Net Sales
(In thousands)	FY 2015	FY 2014	% Change
First Quarter	$30,922	$25,293	22.30	%
Second Quarter	36,956	27,466	34.60	%
First Half	67,878	52,759	28.70	%
Third Quarter		25,452
Nine Months		78,211
Fourth Quarter		30,210
Full Year		$108,421

LED net sales include sales of LED lighting products, certain graphics products containing LEDs, and LED video and sports screens. Second quarter fiscal 2015 LED net sales of $36,956,000 were up $9.5 million or 34.6% from the same period of the prior year. The $36,956,000 total LED net sales and the $9.5 million increase are primarily the net result of Lighting Segment LED net sales of $36.6 million (up $10 million or 37.4%), which is comprised of $36.6 million of light fixtures having solid-state LED technology and nominal sales related to video screens, and Graphics Segment LED net sales of $0.3 million (down $0.4 million or 57.7%). There were no LED net sales made by All Other Category as a result of the sale of LSI Saco in the first quarter of fiscal 2015. First half fiscal 2015 total LED net sales of $67,678,000 were $15.1 million or 28.7% higher than the same period of the prior year. The $67,878,000 total LED net sales and the $15.1 million increase are primarily the result of Lighting Segment LED net sales of $67.1 million (up $16.5 million or 32.7%), which is comprised of $66.2 million of light fixtures having solid-state LED technology and $0.9 million related to video screens, Graphics Segment LED net sales of $0.8 million (down $0.6 million or 44.5%), and nominal All Other Category LED net sales (down $0.8 million).

Non-GAAP Financial Measures

The Company believes it is appropriate to evaluate its performance after making adjustments to the as-reported U.S. GAAP operating income and net income. Adjusted operating income, net income and earnings per share, which exclude the impact of severance costs, the sale of a manufacturing facility, the sale of a subsidiary, and the tax benefit of utilization of a portion of the related long-term capital loss are non-GAAP financial measures. We believe these are useful as a supplemental measure in assessing the operating performance of our business. The measures are used by our management, including our chief operating decision maker, to evaluate business results. We exclude these non-recurring items because they are not representative of the ongoing results of operations of our business. Below is a reconciliation of these non-GAAP measurements to operating income, net income, and earnings per share reported for the periods indicated.

(in thousands, unaudited)		Second Quarter
		FY 2015		FY 2014
Reconciliation of operating income to adjusted operating income:
Operating Income as reported	$	2,224	$	1,511
Adjustment for Severance Costs		800		--
Adjusted Operating Income	$	3,024	$	1,511

Page 23

(in thousands, except per share data; unaudited)	Second Quarter
				Diluted				Diluted
	FY 2015			EPS		FY 2014		EPS
Reconciliation of net income to adjusted net income:
Net income and earnings per share as reported	$	1,588		$	0.06	$	870	$	0.04
Adjustment for severance costs, inclusive of the income tax effect		517	(1)		0.02		--		--
Adjusted net income and earnings per share	$	2,105		$	0.09	$	870	$	0.04

⁽¹⁾ (283)

(in thousands, unaudited)	First Half
	FY 2015			FY 2014
Reconciliation of operating income to adjusted operating income:
Operating Income as reported	$	4,758		$	4,350
Adjustment for Severance Costs		800			--
Adjustment for the gain on the sale of a manufacturing facility		(343	)		--
Adjustment for the loss on sale of a subsidiary		565			--
Adjusted Operating Income	$	5,780		$	4,350

(in thousands, except per share data; unaudited)		First Half
				Diluted					Diluted
	FY 2015			EPS			FY 2014		EPS
Reconciliation of net income to adjusted net income:
Net income and earnings per share as reported	$	3,115		$	0.13		$	2,735	$	0.11
Adjustment for severance costs, inclusive of the income tax effect		517	(1)		0.02			--		--
Adjustment for the gain on the sale of a manufacturing facility, inclusive of the income tax effect		(224	)(2)		(0.01	)		--		--
Adjustment for the loss on sale of a subsidiary		565	(3)		0.02			--		--
Income tax effect of utilization of a long-term capital loss		(101	)		0			--		--
Adjusted net income and earnings per share	$	3,872		$	0.16		$	2,735	$	0.11

⁽¹⁾ (283)

⁽²⁾ 119

⁽³⁾ 0

Page 24

Results of Operations

THREE MONTHS ENDED DECEMBER 31, 2014 COMPARED TO THREE MONTHS ENDED DECEMBER 31, 2013

Lighting Segment

(In thousands)	Three Months Ended
	December 31
	2014		2013
Net Sales	$	59,848	$	57,380
Gross Profit	$	14,813	$	12,374
Operating Income	$	3,964	$	2,157

Lighting Segment net sales of $59,848,000 in the second quarter of fiscal 2015 increased 4.3% from fiscal 2014 same period net sales of $57,380,000. The Lighting Segment’s net sales of light fixtures having solid-state LED technology totaled $36.6 million in the second quarter of fiscal 2015, representing an $11.0 million or 43.3% increase from fiscal 2014 second quarter net sales of solid-state LED light fixtures of $25.5 million. There was a reduction in the Company’s traditional lighting sales (metal halide and fluorescent light sources) from fiscal 2014 to fiscal 2015 as customers converted from traditional lighting to light fixtures having solid-state LED technology. The Lighting Segment’s net sales related to LED video screens were nominal in the second quarter of fiscal 2015, representing a $1.1 million decrease from fiscal 2014 second quarter net sales.

Gross profit of $14,813,000 in the second quarter of fiscal 2015 increased $2.4 million or 19.7% from the same period of fiscal 2014, and increased from 21.2% to 24.6% as a percentage of Lighting Segment net sales (customer plus inter-segment net sales). The Company was able to leverage its sales growth with a larger percentage growth in gross profit. The increase in the amount of gross profit along with higher gross margin as a percentage of sales is due to the net effect of increased net sales, effective management of material and labor costs, competitive pricing pressures, improved manufacturing efficiencies, decreased freight expense, increased employee compensation and wage expense ($0.2 million), increased outside service expense ($0.1 million), decreased customer relations expense ($0.2 million), and increased warranty expense ($0.1 million).

Selling and administrative expenses of $10,849,000 in the second quarter of fiscal year 2015 increased $0.6 million or 6.2% from the same period of fiscal 2014 primarily as the net result of increased employee compensation and benefits expense ($0.5 million), increased outside service expense ($0.2 million), decreased research and development expense ($0.7 million), and increased sales commission ($0.7 million).

The Lighting Segment second quarter fiscal 2015 operating income of $3,964,000 increased $1.8 million or 83.7% from operating income of $2,157,000 in the same period of fiscal 2014. This increase of $1.8 million was primarily the net result of increased net sales, an increase in the gross margin as a percentage of sales, and increased selling and administrative expenses.

Graphics Segment

(In thousands)	Three Months Ended December 31
	2014		2013
Net Sales	$	18,740	$	12,954
Gross Profit	$	3,250	$	2,049
Operating Income (Loss)	$	460	$	(275	)

Graphics Segment net sales of $18,740,000 in the second quarter of fiscal 2015 increased $5.8 million or 44.7% from fiscal 2014 same period net sales of $12,954,000. The $5.8 million increase in Graphics Segment net sales is the net result of image conversion programs and sales to several petroleum / convenience store customers ($2.1 million net increase), one grocery retailer ($0.6 million increase), one national drug store retailer ($0.3 million decrease), four quick service restaurant chains ($1.9 million net increase), two commercial market customers ($0.6 million increase), one banking customer ($0.6 million increase), and changes in volume or completion of several other graphics programs ($0.3 million net increase). The Graphics Segment net sales of graphic identification products that contain solid-state LED light sources and LED lighting for signage totaled $0.3 million in the second quarter of fiscal 2015, representing a $0.4 million or 57.7% decrease from fiscal 2014 net sales of $0.8 million.

Page 25

Gross profit of $3,250,000 in the second quarter of fiscal 2015 increased $1.2 million or 58.6% from the same period of fiscal 2014. Gross profit as a percentage of Graphics Segment net sales (customer plus inter-segment net sales) increased from 15.6% in the second quarter of fiscal 2014 to 17.2% in the second quarter of fiscal 2015. The change in the amount of gross profit is due to the net effect of increased net sales, lower margins on installation net sales, increased freight costs ($0.3 million), and increased employee compensation and benefit expense ($0.5 million).

Selling and administrative expenses of $2,790,000 in the second quarter of fiscal 2015 increased $0.5 million from the same period of fiscal 2014 primarily as the net result of increased employee compensation and benefits expense ($0.4 million, increased outside service expense ($0.1 million), and decreased commission expense ($0.1 million).

The Graphics Segment second quarter fiscal 2015 operating profit of $460,000 increased $0.7 million from an operating loss of $(275,000) in the same period of fiscal 2014. The $0.7 million increase from a fiscal 2014 operating loss to a fiscal 2015 operating profit was primarily the net result of increased net sales, an increase in gross profit, and increased selling and administrative expenses.

Electronic Components Segment

(In thousands)	Three Months Ended December 31
	2014		2013
Net Sales	$	4,598	$	4,073
Gross Profit	$	1,532	$	1,957
Operating Income	$	625	$	1,041

Electronic Components Segment net sales of $4,598,000 in the second quarter of fiscal 2015 increased $0.5 million or 12.9% from fiscal 2014 same period net sales of $4,073,000. The $0.5 million increase in Electronic Components Segment net sales is primarily the net result of a $0.3 million increase in sales to the transportation market, a $0.2 million decrease in sales to the telecommunication market, a $0.3 million increase in sales to original equipment manufacturers, and a $0.1 million increase in sales to various other markets. While the net customer sales increased, the Electronic Components’ inter-segment sales decreased $1.8 million or 18.8% due to decreased intercompany demand of LED circuit board assemblies used in light fixtures having solid-state LED technology. The Company has chosen to outsource some of the components of its circuit board assembly in order to meet the growing demand for LED lighting and to make available production capacity for other LED component parts and assemblies.

Gross profit of $1,532,000 in the second quarter of fiscal 2015 decreased $0.4 million or 21.7% from the same period in fiscal 2014, and decreased from 14.5% to 12.5% as a percentage of net sales (customer plus inter-segment net sales). The $0.4 million decrease in gross profit is due to the net effect of increased customer net sales more than offset by decreased inter-segment sales, and increased employee compensation and benefit expense ($0.1 million).

Selling and administrative expenses of $907,000 in the second quarter of fiscal 2015 was comparable with fiscal 2014 selling and administrative expenses of $916,000. A decrease in amortization expense of $0.1 million was offset by several small cost increases in other cost categories.

The Electronic Components Segment second quarter fiscal 2015 operating income of $625,000 decreased $0.4 million or 40.0% from operating income of $1,041,000 in the same period of fiscal 2014. The $0.4 million decrease in operating income was primarily the net result of increased net customer sales more than offset by decreased inter-segment sales.

All Other Category

(In thousands)	Three Months Ended December 31
	2014		2013
Net Sales	$	1,529	$	1,716
Gross Profit (Loss)	$	879	$	543
Operating Income (Loss)	$	605	$	124

Page 26

All Other Category net sales of $1,529,000 in the second quarter of fiscal 2015 decreased $0.2 million or 10.9% from fiscal 2014 net sales of $1,716,000. The $0.2 million decrease in the All Other Category net sales is primarily the net result of increased sales of menu board systems ($0.6 million) and decreased project management net sales ($0.7 million). Effective September 30, 2014 with the sale of LSI Saco Technologies Inc., the Company is no longer selling LED video screen and specialty LED lighting to the entertainment and other markets. As a result, there were no sales of this product line in the second quarter of fiscal 2015.While the net customer sales decreased, All Other Category inter-segment sales increased $1.6 million or 77.6% due to increased intercompany project management support.

Gross profit of $879,000 in the second quarter of fiscal 2015 increased $0.3 million or 61.9% from the same period of fiscal 2014. The $0.3 million increase in gross profit is the net result of increased gross profit from increased intersegment sales partially offset by lower net customer sales, and a decrease in employee compensation and benefit expense ($0.2 million).

Selling and administrative expenses of $274,000 in the second quarter of fiscal 2015 decreased $0.1 million from the same period in fiscal year 2014. The decrease of $0.1 million is primarily the result of decreased employee compensation and benefit expense ($0.1 million).

The All Other Category second quarter fiscal 2015 operating income of $605,000 increased $481,000 from operating income of $124,000 in the same period of fiscal 2014. This $0.5 million increase in operating income was the net result of decreased customer net sales, increased inter-segment sales, and decreased selling and administrative expenses.

Corporate and Eliminations

(In thousands)	Three Months Ended December 31
	2014			2013
Gross Profit (Loss)	$	81		$	(166	)
Operating (Loss)	$	(3,430	)	$	(1,536	)

The gross profit (loss) relates to the change in the intercompany profit in inventory elimination.

Administrative expenses of $3,511,000 in the second quarter of fiscal 2015 increased $2.1 million or 156% from the same period of the prior year. The $2.1 million increase in expense is primarily the result of increased employee compensation and benefit expense ($0.7 million), an increase in legal fee expense ($0.3 million), increased outside service expense ($0.4 million), and $0.8 million in severance costs in the second quarter of fiscal 2015 with no comparable expense in fiscal 2014.

Consolidated Results

The Company reported net interest expense of $6,000 in the second quarter of fiscal 2015 as compared to net interest income of $12,000 in the same period of fiscal 2014. Commitment fees related to the unused portions of the Company’s lines of credit and interest income on invested cash are included in both fiscal years.

The $630,000 income tax expense in the second quarter of fiscal 2015 represents a consolidated effective tax rate of 28.4%. This is the net result of an year-to-data income tax rate of 35.4% for the Company’s U.S. operations influenced by certain permanent book-tax differences that were significant relative to the amount of taxable income, a valuation reserve against New York State tax credits, by a benefit related to uncertain income tax positions, and a $136,000 tax benefit related to the retroactive reinstatement of the R&D tax credit. The $629,000 income tax expense in the second quarter of fiscal 2014 represents a consolidated effective tax rate of 42.0%. This is the net result of an income tax rate of 34.6% for the Company’s U.S. operations influenced by certain permanent book-tax differences that were significant relative to the amount of taxable income, a valuation reserve against New York State tax credits, Canadian income tax credits, by a benefit related to uncertain income tax positions, and by a full valuation reserve on the Company’s Canadian tax position.

The Company reported a net income of $1,588,000 in the second quarter of fiscal 2015 as compared to net income of $870,000 in the same period of the prior year. The change in net income is primarily the net result of increased net sales, increased gross profit largely due to increased net sales, increased selling and administrative expense, and a lower effective tax rate in fiscal 2015 compared to fiscal 2014. Diluted earnings per share of $0.06 were reported in the second quarter of fiscal 2015 as compared to diluted earnings per share of $0.04 in the same period of fiscal 2014. The weighted average common shares outstanding for purposes of computing diluted earnings per share in the second quarter of fiscal 2015 were 24,507,000 shares as compared to 24,627,000 shares in the same period last year.

Page 27

SIX MONTHS ENDED DECEMBER 31, 2014 COMPARED TO SIX MONTHS ENDED DECEMBER 31, 2013

Lighting Segment 

(In thousands)	Six Months Ended
	December 31
	2014		2013
Net Sales	$	116,369	$	116,851
Gross Profit	$	29,043	$	26,657
Operating Income	$	8,084	$	5,968

Lighting Segment net sales of $116,369,000 in the first half of fiscal 2015 decreased 0.4% from fiscal 2014 same period net sales of $116,851,000. The Lighting Segment’s net sales of light fixtures having solid-state LED technology totaled $66.2 million in the first half of fiscal 2015, representing a 35.9% increase from first half fiscal 2014 net sales of solid-state LED light fixtures of $48.7 million. There was a reduction in the Company’s traditional lighting sales (metal halide and fluorescent light sources) from fiscal 2014 to fiscal 2015 as customers converted from traditional lighting to light fixtures having solid-state LED technology. The Lighting Segment's net sales related to LED video screens totaled $0.9 million in the first half of fiscal 2015, representing a 52.8% decrease from first half fiscal 2014 net sales of $1.8 million.

Gross profit of $29,043,000 in the first half of fiscal 2015 increased $2.4 million or 9.0% from the same period of fiscal 2014, and increased from 22.5% to 24.6% as a percentage of Lighting Segment net sales (customer plus inter-segment net sales).  The Company was able to leverage its sales growth with a larger percentage growth in gross profit. The increase in amount of gross profit is due to the net effect of decreased net sales, effective management of material and labor costs, competitive pricing pressures, improved manufacturing efficiencies, decreased freight expense, decreased employee compensation and benefits expense ($0.2 million), increased warranty costs ($0.3 million), decreased repairs and maintenance expense ($0.1 million), increased depreciation expense ($0.1 million), increased outside service expense ($0.3 million), and decreased customer relations expense ($0.2 million).

Selling and administrative expenses of $20,959,000 in the first half of fiscal 2014 increased $0.3 million or 1.3% from the same period of fiscal 2014 primarily as the net result of increased employee compensation and benefit expense ($0.4 million), increased sales commission expense ($0.2 million), decreased research and development expense ($0.8 million), increased convention and show expense ($0.1 million), and several other smaller cost increases which resulted in an overall net increase in selling and administrative expenses.

The Lighting Segment first half fiscal 2015 operating income of $8,084,000 increased $2.1 million or 35.4% from operating income of $5,968,000 in the same period of fiscal 2014.  This increase of $2.1 million was the net result of decreased net sales, an increase in gross profit and an increase in the gross margin as a percentage of sales, and increased selling and administrative expenses.

Graphics Segment 

(In thousands)	Six Months Ended
	December 31
	2015		2014
Net Sales	$	32,551	$	26,962
Gross Profit	$	5,314	$	4,571
Operating Income (Loss)	$	246	$	(112	)

Graphics Segment net sales of $32,551,000 in the first half of fiscal 2015 increased 20.7% from fiscal 2014 same period net sales of $26,962,000.  The $5.6 million increase in Graphics Segment net sales is primarily the net result of image conversion programs and sales to several petroleum / convenience store customers ($0.7 million net increase), one grocery retailer ($0.1 million increase), one national drug retailer ($0.6 million decrease), three quick-service restaurant chains ($3.1 million net increase), two commercial market customers ($0.7 million increase), one banking customer ($1.0 million increase), and changes in volume or completion of several other graphics programs ($0.6 million net increase). The Graphics Segment net sales of graphic identification products that contain solid-state LED light sources and LED lighting for signage totaled $0.8 million in the first half of fiscal 2015, representing a 44.5% decrease from first half fiscal 2014 net sales of $1.5 million.

Page 28

Gross profit of $5,314,000 in the first half of fiscal 2015 increased $0.7 million or 16.3% from the same period in fiscal 2014, and decreased from 16.7% to 15.9% as a percentage of Graphics Segment net sales (customer plus inter-segment net sales). The increase in the amount of gross profit is due to the net effect of increased net sales, lower margins on installation sales, increased freight expense, increased outside service expense ($0.1 million), decreased customer relations expense ($0.1 million), and increased compensation and benefit expense ($0.1 million).  

Selling and administrative expenses of $5,410,000 in the first half of fiscal 2015 increased $0.7 million or 15.5% from the same period of fiscal 2014 primarily as a result of increased compensation and benefit expense ($0.5 million), increased outside service expense ($0.2 million), and decreased commission expense ($0.1 million). In fiscal 2015, the Graphics Segment recorded a gain on the sale of one of its facilities in Woonsocket, Rhode Island of $343,000 with no comparable event in fiscal 2014.

The Graphics Segment first half fiscal 2015 operating income of $246,000 increased from an operating loss of $(112,000) in the same period of fiscal 2014 and is the net result of increased gross profit from higher net sales, increased selling and administrative expenses, and a gain on the sale of a facility.

Electronic Components Segment 

(In thousands)	Six Months Ended
	December 31
	2014		2013
Net Sales	$	10,478	$	9,153
Gross Profit	$	3,333	$	3,898
Operating Income (Loss)	$	1,364	$	2,013

Electronic Components Segment net sales of $10,478,000 in the first half of fiscal 2015 increased 14.5% from fiscal 2014 same period net sales of $9,153,000.  The $1.3 million increase in Electronic Components Segment net sales is primarily the net result of a $0.5 million decrease in sales to the telecommunications market, a $0.7 million increase in sales to the transportation market, a $0.6 million increase in sales to original equipment manufacturers, and a $0.5 million increase in sales to various other markets. While the net customer sales increased, the Electronic Components’ inter-segment sales decreased $3.0 million or 16.7% due to decreased intercompany demand of LED circuit board assemblies used in light fixtures having solid-state LED technology. The Company has chosen to outsource some of the components of its circuit board assembly in order to meet the growing demand for LED lighting and to make available production capacity for other LED component parts and assemblies.

Gross profit of $3,333,000 in the first half of fiscal 2015 decreased $0.6 million or 15.0% from the same period of fiscal 2014, and decreased from 14.4% to 13.1% as a percentage of Electronic Components Segment net sales (customer plus inter-segment net sales). The $0.6 million decrease in amount of gross profit is due to the net effect of increased customer net sales, decreased inter-segment sales, increased employee compensation and benefits expense ($0.2 million), and decreased supplies expense ($0.1 million).

Selling and administrative expenses of $1,969,000 in the first half of fiscal 2015 increased $84,000 or 4.5% from the same period of fiscal 2014 primarily as the result of an increase in employee compensation and benefit expense ($0.2 million), a decrease in research and development expense ($0.1 million), and a decrease in amortization expense ($0.1 million).

The Electronic Components Segment first half fiscal 2015 operating income of $1,364,000 decreased $0.6 million or 32.2% from operating income of $2,013,000 in the same period of fiscal 2014. The decrease of $0.6 million was the net result of increased net customer sales, decreased inter-segment sales, decreased gross profit, and increased selling and administrative expenses.

All Other Category 

(In thousands)	Six Months Ended
	December 31
	2014		2013
Net Sales	$	3,783	$	3,643
Gross Profit (Loss)	$	1,463	$	1,079
Operating Income (Loss)	$	689	$	128

Page 29

All Other Category net sales of $3,783,000 in the first half of fiscal 2015 increased $0.1 million or 3.8% from fiscal 2014 net sales of $3,643,000. The $0.1 million increase in the All Other Category net sales is primarily the net result of increased sales of menu board systems ($2.0 million), decreased net sales of LED video screen and specialty LED lighting sales to the entertainment and other markets ($0.8 million), and decreased project management net sales ($1.0 million). Effective September 30, 2014 with the sale of LSI Saco Technologies Inc., the Company is no longer selling LED video screen and specialty LED lighting to the entertainment and other markets. As a result, there were no sales of this product line in the second quarter of fiscal 2015. In addition to the increase in customer net sales, All Other Category inter-segment sales increased $1.0 million or 23.4% due mostly to increased intercompany project management support.

The gross profit of $1,463,000 in the first half of fiscal 2015 increased $0.4 million or 35.6% from the same period of fiscal 2014, and increased from 13.8% to 16.3% as a percentage of Electronic Components Segment net sales (customer plus inter-segment net sales). The $0.4 million increase in amount of gross profit is the net result of increased customer net sales, increased inter-segment sales, and decreased employee compensation and benefit expense ($0.1 million).

Selling and administrative expenses of $774,000 in the first half of fiscal 2015 decreased $0.2 million or 18.6% as compared to the same period of the prior year.  The decrease in selling and administrative expenses is primarily the net result of decreased employee compensation and benefit expense ($0.2 million), partially offset by increased research and development expense ($0.1 million).

The All Other Category first half fiscal 2015 operating income of $689,000 increased 438% from operating income of $128,000 in the same period of fiscal 2014. The $0.6 million increase was the result of increased customer net sales, increased inter-segment sales, an increase in gross margin, and decreased selling and administrative expenses.

Corporate and Eliminations 

(In thousands)	Six Months Ended
	December 31
	2014			2013
Gross Profit (Loss)	$	10		$	(326	)
Operating (Loss)	$	(5,625	)	$	(3,647	)

The gross profit (loss) relates to the change in the intercompany profit in inventory elimination.

Administrative expenses of $5,070,000 in the first half of fiscal 2015 increased $1.7 million or 52.7% from the same period of the prior year. The increase in expense is primarily the result of increased employee compensation and benefit expense ($0.2 million), an increase in legal fee expense ($0.3 million), increased outside service expense ($0.5 million), increased depreciation expense ($0.2 million), increased research and development expense ($0.1 million), and $0.8 million in severance cost in the second quarter of fiscal 2015 with no comparable expense in fiscal 2014. In fiscal 2015, the Company recognized a $565,000 loss on the sale of its Montreal subsidiary, LSI Saco, with no corresponding event in fiscal 2014.

Consolidated Results

The Company reported net interest expense of $14,000 in the first half of fiscal 2015 as compared to net interest expense of $24,000 in the same period of fiscal 2014. Commitment fees related to the unused portions of the Company’s lines of credit and interest income on invested cash are included in both fiscal years.

The $1,629,000 income tax expense in the first half of fiscal 2015 represents a consolidated effective tax rate of 34.3%. This is the net result of an income tax rate of 35.4% for the Company’s U.S. operations, influenced by certain permanent book-tax differences that were significant relative to the amount of taxable income, by certain U.S. federal tax credits, by a benefit related to uncertain income tax positions, by a full valuation reserve on the Company’s Canadian tax position and certain Canadian tax credits both occurring in the first quarter, and a $136,000 tax benefit related to the retroactive reinstatement of the R&D tax credit. The $1,591,000 income tax expense in the first half of fiscal 2014 represents a consolidated effective tax rate of 36.8%.  This is the net result of an income tax rate of 34.6% for the Company’s U.S. operations, influenced by certain permanent book-tax differences that were significant relative to the amount of taxable income, by certain U.S. federal and Canadian income tax credits, by a benefit related to uncertain income tax positions, and by a full valuation reserve on the Company’s Canadian tax position.

Page 30

The Company reported net income of $3,115,000 in the first half of fiscal 2015 compared to net income of $2,735,000 in the same period of the prior year.  The $380,000 increase in net income is primarily the net result of increased net sales, increased gross profit, increased operating expenses, the gain on the sale of a facility more than offset by the loss on the sale of a subsidiary in fiscal 2015 with no comparable events in fiscal 2014,and increased income tax expense.  Diluted earnings per share of $0.13 was reported in the first half of fiscal 2015 as compared to diluted earnings per share of $0.11 in the same period of fiscal 2014. The weighted average common shares outstanding for purposes of computing diluted earnings per share in the first half of fiscal 2015 was 24,506,000 shares as compared to 24,530,000 shares in the same period last year.

Liquidity and Capital Resources 

The Company considers its level of cash on hand, borrowing capacity, current ratio and working capital levels to be its most important measures of short-term liquidity. For long-term liquidity indicators, the Company believes its ratio of long-term debt to equity and its historical levels of net cash flows from operating activities to be the most important measures.

At December 31, 2014, the Company had working capital of $80.2 million, compared to $76.8 million at June 30, 2014. The ratio of current assets to current liabilities was 3.61 to 1 as compared to a ratio of 3.62 to 1 at June 30, 2014. The $3.4 million increase in working capital from June 30, 2014 to December 31, 2014 was primarily related to the net effect of increased cash and cash equivalents ($9.0 million), increased net accounts receivable ($1.3 million), and decreased accounts payable ($0.8 million), partially offset by an increase in accrued expenses ($2.3 million), a decrease in net inventory ($3.3 million), a decrease in refundable income taxes ($1.9 million), and a decrease in other current assets ($0.3 million). The Company has a strategy of aggressively managing working capital, including reduction of the accounts receivable days sales outstanding (DSO) and reduction of inventory levels, without reducing service to its customers.

The Company provided $10.7 million of cash from operating activities in the first half of fiscal 2015 as compared to a generation of cash of $8.5 million in the same period of the prior year. This $2.2 million increase in net cash flows from operating activities is primarily the net result of a decrease rather than an increase in inventory (favorable change of $7.6 million), a greater decrease in refundable income tax (favorable change of $0.7 million), a decrease rather than an increase in customer prepayments (unfavorable change of $2.6 million), an increase rather than a decrease in accrued expenses and other (favorable change of $3.3 million), a decrease rather than an increase in accounts payable (unfavorable change of $1.2), an increase rather than a decrease in accounts receivable (unfavorable change of $6.8 million), an increase in depreciation and amortization expense (favorable change of $0.2 million), an increase in net income (favorable change of $0.4 million), a loss on the sale of a subsidiary (favorable change of $0.6 million), and an increase in the gain recognized on the sale of fixed assets, which includes the sale of a facility (unfavorable change of $0.3 million).

Net accounts receivable were $44.1 million and $42.8 million at December 31, 2014 and June 30, 2014, respectively. The increase of $1.3 million in net receivables is due to a higher amount of net sales in the latter two months of the second quarter of fiscal 2015 as compared to the latter two months of the fourth quarter of fiscal 2014. DSO increased to 51 days at December 31, 2014 from 50 days at June 30, 2014. The Company believes that its receivables are ultimately collectible or recoverable, net of certain reserves, and that aggregate allowances for doubtful accounts are adequate.

Net inventories of $42.1 million at December 31, 2014 decreased $3.3 million from June 30, 2014 levels. Based on a strategy of balancing inventory reductions with customer service and the timing of shipments, net inventory decreases occurred in the first half of fiscal 2014 in the Lighting Segment of approximately $3.0 million and the Electronic Components Segment of approximately $0.2 million, and a net inventory decrease occurred in the All Other Category of approximately $0.1 million. An additional decrease of $0.3 million in inventory in the All Other Category occurred due to the sale of LSI Saco in the first quarter of fiscal 2015.

Cash generated from operations and borrowing capacity under the Company’s line of credit facility is the Company’s primary source of liquidity. The Company has an unsecured $30 million revolving line of credit with its bank group, with all of the $30 million of the credit line available as of January 27, 2015. This line of credit is a $30 million three year committed credit facility expiring in the third quarter of fiscal 2017. The Company believes that its $30 million line of credit plus cash flows from operating activities are adequate for the Company’s fiscal 2015 operational and capital expenditure needs. The Company is in compliance with all of its loan covenants.

The Company's investing activities provided cash of $0.04 million in the first half of fiscal 2015 as compared to a use of $2.7 million in the same period of the prior year, resulting in a favorable change of $2.7 million. Capital expenditures for the first half of fiscal 2015 decreased $0.3 million to $2.4 million from the same period in fiscal 2014. The largest components of the fiscal 2015 capital expenditures are tooling and equipment related to the Company’s Lighting and Graphics Segments. The Company also recorded proceeds from the sale of one of its Woonsocket, Rhode Island facilities of $950,000 in fiscal 2015 compared to proceeds of $25,000 from the sale of miscellaneous fixed assets in fiscal 2014. The Company also recorded net proceeds from the sale of its subsidiary in Montreal of $1.5 million with no comparable transaction in fiscal 2014.

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The Company used $1.7 million of cash related to financing activities in the first half of fiscal 2015 and $2.9 million in the first half of fiscal 2014. Dividends paid to shareholders represent most of the cash used in financing activities and represents most of the difference in cash used between the two fiscal years. The Company lowered its dividend payout to $0.01 per share per quarter for the dividend paid for the first quarter of fiscal 2015, down from $0.06 per share per quarter for the first quarter of fiscal 2014.

The Company has, or could have, on its balance sheet financial instruments consisting primarily of cash and cash equivalents, short-term investments, revolving lines of credit, and long-term debt. The fair value of these financial instruments approximates carrying value because of their short-term maturity and/or variable, market-driven interest rates. 

Off-Balance Sheet Arrangements

The Company has no financial instruments with off-balance sheet risk and has no off-balance sheet arrangements.

Cash Dividends

In January 2015, the Board of Directors declared a regular quarterly cash dividend of $0.02 per share payable February 17, 2015 to shareholders of record as of February 10, 2015. The indicated annual cash dividend rate for fiscal 2015 is $0.08 per share. The Board of Directors has adopted a policy regarding dividends which indicates that dividends will be determined by the Board of Directors in its discretion based upon its evaluation of earnings, cash flow requirements, financial condition, debt levels, stock repurchases, future business developments and opportunities, and other factors deemed relevant.

Critical Accounting Policies and Estimates

The Company is required to make estimates and judgments in the preparation of its financial statements that affect the reported amounts of assets, liabilities, revenues and expenses, and related footnote disclosures.  The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities.  The Company continually reviews these estimates and their underlying assumptions to ensure they remain appropriate.  The Company believes the items discussed below are among its most significant accounting policies because they utilize estimates about the effect of matters that are inherently uncertain and therefore are based on management’s judgment.  Significant changes in the estimates or assumptions related to any of the following critical accounting policies could possibly have a material impact on the financial statements.

Revenue Recognition

Revenue is recognized when title to goods and risk of loss have passed to the customer, there is persuasive evidence of a purchase arrangement, delivery has occurred or services have been rendered, and collectability is reasonably assured.  Revenue is typically recognized at time of shipment.  In certain arrangements with customers, as is the case with the sale of some of our solid-state LED video screens, revenue is recognized upon customer acceptance of the video screen at the job site.  Sales are recorded net of estimated returns, rebates and discounts.  Amounts received from customers prior to the recognition of revenue are accounted for as customer pre-payments and are included in accrued expenses.

The Company has five sources of revenue:  revenue from product sales; revenue from installation of products; service revenue generated from providing integrated design, project and construction management, site engineering and site permitting; revenue from the management of media content and digital hardware related to active digital signage; and revenue from shipping and handling.

Product revenue is recognized on product-only orders upon passing of title and risk of loss, generally at time of shipment.  However, product revenue related to orders where the customer requires the Company to install the product is recognized when the product is installed.  The company provides product warranties and certain post-shipment service, support and maintenance of certain solid state LED video screens and billboards.

Installation revenue is recognized when the products have been fully installed.  The Company is not always responsible for installation of products it sells and has no post-installation responsibilities, other than normal warranties.

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Service revenue from integrated design, project and construction management, and site permitting is recognized when all products at each customer site have been installed.

Revenue from the management of media content and digital hardware related to active digital signage is recognized evenly over the service period with the customer. Media content service periods with most customers range from 1 month to 1 year.

Shipping and handling revenue coincides with the recognition of revenue from the sale of the product.

The Company evaluates the appropriateness of revenue recognition in accordance with Accounting Standards Codification (“ASC”) Subtopic 605-25, Revenue Recognition:  Multiple–Element Arrangements. In situations where the Company is responsible for re-imaging programs with multiple sites, each site is viewed as a separate unit of accounting and has stand-alone value to the customer. Revenue is recognized upon the Company’s complete performance at the location, which may include a site survey, graphics products, lighting products, and installation of products. The selling price assigned to each site is based upon an agreed upon price between the Company and its customer and reflects the estimated selling price for that site relative to the selling price for sites with similar image requirements.

The Company also evaluates the appropriateness of revenue recognition in accordance with ASC Subtopic 985-605, “Software:  Revenue Recognition.”  Our solid-state LED video screens, billboards and active digital signage contain software elements which the Company has determined are incidental and excluded from the scope of ASC Subtopic 985-605.

Income Taxes

The Company accounts for income taxes in accordance with ASC Topic 740, “Income Taxes.”  Accordingly, deferred income taxes are provided on items that are reported as either income or expense in different time periods for financial reporting purposes than they are for income tax purposes.  Deferred income tax assets and liabilities are reported on the Company’s balance sheet.  Significant management judgment is required in developing the Company’s income tax provision, including the estimation of taxable income and the effective income tax rates in the multiple taxing jurisdictions in which the Company operates, the estimation of the liability for uncertain income tax positions, the determination of deferred tax assets and liabilities, and any valuation allowances that might be required against deferred tax assets.

The Company operates in multiple taxing jurisdictions and is subject to audit in these jurisdictions.  The Internal Revenue Service and other tax authorities routinely review the Company’s tax returns.  These audits can involve complex issues which may require an extended period of time to resolve.  In management’s opinion, adequate provision has been made for potential adjustments arising from these examinations.

In September 2013, the Internal Revenue Service issued Treasury Decision 9636, which enacted final tax regulations regarding the capitalization and expensing of amounts paid to acquire, produce, or improve tangible property. The regulations also include guidance regarding the retirement of depreciable property. The regulations are required to be effective in taxable years beginning on or after January 1, 2014, although taxpayers may choose to apply them in taxable years beginning on or after January 1, 2012. The Company has reviewed the impact of the final regulations and the anticipated impact to the financial statements is immaterial.

The Company is recording estimated interest and penalties related to potential underpayment of income taxes as a component of tax expense in the Condensed Consolidated Statements of Operations.  The reserve for uncertain tax positions is not expected to change significantly in the next twelve months.

Asset Impairment

Carrying values of goodwill and other intangible assets with indefinite lives are reviewed at least annually for possible impairment in accordance with ASC Topic 350, “Intangibles – Goodwill and Other.”  The Company may first assess qualitative factors in order to determine if goodwill is impaired in accordance with ASU 2011 – 08, “Intangible – Goodwill and Other (Topic 350).” If through the qualitative assessment it is determined that it is more likely than not that goodwill is not impaired, no further testing is required. If it is determined that it is more likely than not that goodwill is impaired, or if the Company elects not to first assess qualitative factors, the Company’s impairment testing continues with the estimation of the fair value of goodwill and indefinite-lived intangible assets using a combination of a market approach and an income (discounted cash flow) approach, at the reporting unit level, that requires significant management judgment with respect to revenue and expense growth rates, changes in working capital and the selection and use of an appropriate discount rate.  The estimates of fair value of reporting units are based on the best information available as of the date of the assessment.  The use of different assumptions would increase or decrease estimated discounted future operating cash flows and could increase or decrease an impairment charge.  Company management uses its judgment in assessing whether assets may have become impaired between annual impairment tests.  Indicators such as adverse business conditions, economic factors and technological change or competitive activities may signal that an asset has become impaired.

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Carrying values for long-lived tangible assets and definite-lived intangible assets, excluding goodwill and indefinite-lived intangible assets, are reviewed for possible impairment as circumstances warrant as required by ASC Topic 360, “Property, Plant, and Equipment.”  Impairment reviews are conducted at the judgment of Company management when it believes that a change in circumstances in the business or external factors warrants a review.  Circumstances such as the discontinuation of a product or product line, a sudden or consistent decline in the forecast for a product, changes in technology or in the way an asset is being used, a history of negative operating cash flow, or an adverse change in legal factors or in the business climate, among others, may trigger an impairment review.  The Company’s initial impairment review to determine if a potential impairment charge is required is based on an undiscounted cash flow analysis at the lowest level for which identifiable cash flows exist.  The analysis requires judgment with respect to changes in technology, the continued success of product lines and future volume, revenue and expense growth rates, and discount rates.

Credit and Collections

The Company maintains allowances for doubtful accounts receivable for probable estimated losses resulting from either customer disputes or the inability of its customers to make required payments.  If the financial condition of the Company’s customers were to deteriorate, resulting in their inability to make the required payments, the Company may be required to record additional allowances or charges against income.  The Company determines its allowance for doubtful accounts by first considering all known collectability problems of customers’ accounts, and then applying certain percentages against the various aging categories based on the due date of the remaining receivables.  The resulting allowance for doubtful accounts receivable is an estimate based upon the Company’s knowledge of its business and customer base, and historical trends.  The amount ultimately not collected may differ from the reserve established, particularly in the case where percentages are applied against aging categories.  In all cases, it is management’s goal to carry a reserve against the Company’s accounts receivable which is adequate based upon the information available at that time so that net accounts receivable is properly stated. The Company also establishes allowances, at the time revenue is recognized, for returns and allowances, discounts, pricing and other possible customer deductions.  These allowances are based upon historical trends.

Warranty Reserves

 The Company maintains a warranty reserve which is reflective of its limited warranty policy. The warranty reserve covers the estimated future costs to repair or replace defective product or installation services, whether the product is returned, scrapped or repaired in the field. The warranty reserve is first determined based upon known claims or issues, and then by the application of a specific percentage of sales to cover general claims. The percentage applied to sales to calculate general claims is based upon historical claims as a percentage of sales. Management addresses the adequacy of its warranty reserves on a quarterly basis to ensure the reserve is accurate based upon the most current information.

Inventory Reserves

The Company maintains an inventory reserve for probable obsolescence of its inventory. The Company first determines its obsolete inventory reserve by considering specific known obsolete items, and then by applying certain percentages to specific inventory categories based upon inventory turns. The Company uses various tools, in addition to inventory turns, to identify which inventory items have the potential to become obsolete. Significant judgment is used to establish obsolescence reserves and management adjusts these reserves as more information becomes available about the ultimate disposition of the inventory item.  Management values inventory at lower of cost or market.

New Accounting Pronouncements

In July 2013, the Financial Accounting Standards Board issued ASU 2013-11, “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists.” This amended guidance is intended to eliminate the diversity that is in practice with regard to the financial statement presentation of unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The amended guidance is effective for fiscal years and interim periods within those years, beginning after December 15, 2013, or the Company’s fiscal year 2015, with early adoption permissible. The adoption of this guidance did not have a material impact on the financial statements.

In June 2014, the Financial Accounting Standards Board issued ASU 2014-09, “Revenue from Contracts with Customers.” This amended guidance supersedes and replaces all existing U.S. GAAP revenue recognition guidance. The guidance established a new revenue recognition model, changes the basis for deciding when revenue is recognized over a point in time, provides new and more detailed guidance on specific revenue topics, and expands and improves disclosures about revenue. The amended guidance is effective for fiscal years and interim periods within those years, beginning after December 15, 2016, or the Company’s fiscal year 2018. The Company has not yet determined the impact the amended guidance will have on its financial statements.

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ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in the Registrant’s exposure to market risk since June 30, 2014.  Additional information can be found in Item 7A, Quantitative and Qualitative Disclosures About Market Risk, which appears on page 14 of the Annual Report on Form 10-K for the fiscal year ended June 30, 2014.

ITEM 4.  CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

The term “disclosure controls and procedures” as defined by Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) refers to the controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files under the Exchange Act is recorded, processed, summarized and reported within required time periods.Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

In accordance with Exchange Act Rule 13a-15(b), the Company’s management, with the participation of the Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of the Company’s disclosure controls and procedures as of December 31, 2014. In conducting this evaluation as of September 30, 2014 and December 31, 2014, the Company concluded there was a material weakness in the design and operating effectiveness of its internal control over financial reporting, as described below. As a result of such evaluation and this conclusion, the Company also has concluded that its disclosure controls and procedures were not effective in providing reasonable assurance that information required to be disclosed in its reports filed under the Exchange Act was recorded, processed, summarized and reported within the time periods prescribed by SEC rules and regulations, and that such information was not accumulated and communicated to the Company’s management to allow timely decisions regarding required disclosure. 

The Company’s management does not expect that its disclosure controls and procedures will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system's objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

A material weakness in internal control over financial reporting is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. Management identified the following material weakness in the Company’s internal control over financial reporting:

Communication of special customer terms of sale: The Company concluded that controls pertaining to the internal communication of certain terms of sale related to product warranty that could materially impact financial reporting were not operating effectively because of the lack of communication of such terms to the Accounting Department. Because of this material weakness, a reasonable possibility exists that a material misstatement in the Company’s condensed consolidated financial statements would not be prevented or detected on a timely basis.

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Remediation of Material Weakness

The Company believes it has made significant progress toward remediation of the underlying causes of the material weakness, having taken a number of actions to remediate the material weakness. Among other things, we have:

● Obtained input from all appropriate Lighting Segment Sales Managers and Customer Service personnel as to all customers who have been given special terms of sale regarding product warranty. In the future, management will solicit this information on a monthly basis.

● The Accounting Department used this knowledge of special terms of sale regarding product warranty to properly record an accrued warranty liability as of September 30, 2014. In the future, this will be done on a monthly basis.

In addition, with the oversight of the Audit Committee of the Company’s Board of Directors, management took additional steps and measures to conduct further review of the Company’s internal control over financial reporting in selected areas to ensure the following: 1) the Company’s internal controls are complete and suitably designed to address the relevant control objectives for all significant financial statement assertions, 2) the Company’s internal controls are designed at an appropriate level of precision such that they would detect a material misstatement in the consolidated financial statements, and 3) appropriate evidence is maintained to support the operating effectiveness of internal controls. We incurred additional costs in the second fiscal quarter and expect to incur some additional costs in the third fiscal quarter to conduct this review and implement new policies and procedures, as may be necessary or appropriate, and to remediate the previously identified material weakness, including testing of the new controls. The Company cannot provide any assurance that these remediation efforts will be successful or that the Company’s internal control over financial reporting will be effective as a result of these efforts. The identified material weakness in internal control will not be considered fully addressed until the new internal controls have been in operation for a sufficient period of time for our management to conclude that the material weakness has been fully remediated. The Company will continue to work on implementing and testing the new controls in order to make this final determination.

Notwithstanding the identified material weakness described above, management believes that the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q are fairly presented in all material respects in accordance with GAAP for interim financial statements, and the Company’s Chief Executive Officer and Chief Financial Officer have certified that, based on their knowledge, the condensed consolidated financial statements included in this report fairly present in all material respects the Company’s financial condition, results of operations and cash flows for each of the periods presented in this report.

Changes in Internal Control

There have been no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter ended December 31, 2014, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting, except as otherwise described in this Item 4.

PART II.  OTHER INFORMATION

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(c) The Company does not purchase into treasury its own common shares for general purposes.  However, the Company does purchase its own common shares, through a Rabbi Trust, in connection with investments of employee/participants of the LSI Industries Inc. Non-Qualified Deferred Compensation Plan.  Purchases of Company common shares for this Plan in the first quarter of fiscal 2014 were as follows:

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ISSUER PURCHASES OF EQUITY SECURITIES

Period	(a) Total Number of Shares Purchased		(b) Average Price Paid per Share		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		(d) Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs
10/1/14 to 10/31/14		1,476	$	7.19		1,476		(1)
11/1/14 to 11/30/14		1,232	$	6.85		1,232		(1)
12/1/14 to 12/31/14		1,343	$	6.65		1,343		(1)
Total		4,051	$	6.91		4,051		(1)

(1) All acquisitions of shares reflected above have been made in connection with the Company's Non-Qualified Deferred Compensation Plan, which has been authorized for 475,000 shares of the Company to be held in and distributed by the Plan.  At December 31, 2014, the Plan held 327,362 common shares of the Company and had distributed 137,343 common shares.

ITEM 6.  EXHIBITS

Exhibits:

10.1           LSI Industries Inc. Amended and Restated 2012 Stock Incentive Plan as of November 20, 2014

10.2           LSI Industries Inc. Nonqualified Deferred Compensation Plan (Amended and Restated as of November 20, 2014)     

31.1           Certification of Principal Executive Officer required by Rule 13a-14(a)

31.2           Certification of Principal Financial Officer required by Rule 13a-14(a)

32.1           Section 1350 Certification of Principal Executive Officer

32.2           Section 1350 Certification of Principal Financial Officer

101.INS XBRL Instance Document

101.SCH XBRL Taxonomy Extension Schema Document

101.CAL XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF XBRL Taxonomy Extension Definition Linkbase Document

101.LAB XBRL Taxonomy Extension Label Linkbase Document

101.PRE XBRL Taxonomy Extension Presentation Linkbase Document

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	LSI Industries Inc.
	By:	/s/ Dennis W. Wells
		Dennis W. Wells
		Chief Executive Officer and President
		(Principal Executive Officer)
	By:	/s/ Ronald S. Stowell
		Ronald S. Stowell
		Vice President, Chief Financial Officer and Treasurer
		(Principal Financial and Accounting Officer)
February 5, 2015

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EX-10

Exhibit 10.1

LSI INDUSTRIES INC.

AMENDED AND RESTATED

2012 STOCK INCENTIVE PLAN

AS OF NOVEMBER 20, 2014

TABLE OF CONTENTS

1.	Purposes		1
2.	Definitions		1
3.	Administration of the Plan		5
	(a)	Authority of Committee	5
	(b)	Binding Authority	6
	(c)	Delegation of Authority	6
4.	Eligibility		6
5.	Common Shares Subject to the Plan		6
	(a)	Authorized Number of Common Shares	6
	(b)	Share Counting	7
	(c)	Award Limitations	7
	(d)	Shares to be Delivered	8
6.	Awards to Participants		8
	(a)	Stock Options	8
	(b)	Stock Appreciation Rights	9
	(c)	Restricted Shares and Restricted Share Units	10
	(d)	Performance-Based Exception	12
	(e)	Unrestricted Share Awards	13
7.	Deferred Payment		13
8.	Dilution and Other Adjustments		13
9.	Change in Control		13
	(a)	all outstanding Stock Options and SARs vest and become fully exercisable; and	13
	(b)	all Full-Value Awards become fully vested	14
10.	Termination		14
	(a)	Termination by Death, Disability, or Retirement	14
	(b)	Termination for Cause	14
	(c)	Other Terminations	14
	(d)	Limitation for ISOs	14
	(e)	Transfers and Leaves of Absence	14
11.	Recoupment or Recovery Policy		15

2

12.	Miscellaneous Provisions		15
	(a)	Rights as a Shareholder	15
	(b)	No Loans	15
	(c)	Assignment or Transfer	15
	(d)	Withholding Taxes	15
	(e)	No Rights to Awards	16
	(f)	Beneficiary Designation	16
	(g)	Fractional Shares	16
	(h)	Unfunded Plan	16
	(i)	Severability	16
	(j)	Limitation of Liability	16
	(k)	Successors	16
	(l)	Code Section 409A Compliance	17
13.	Effective Date, Amendments, Governing Law and Plan Termination		17
	(a)	Effective Date	17
	(b)	Amendments	17
	(c)	Governing Law	18
	(d)	Plan Termination	18

3

LSI INDUSTRIES INC.
AMENDED AND RESTATED

2012 STOCK INCENTIVE PLAN

AS OF NOVEMBER 20, 2014

1.     Purposes

The purposes of the Plan are to provide long-term incentives to those persons with significant responsibility for the success and growth of the Company, to align the interests of such persons with those of the Company’s shareholders, to assist the Company in recruiting, retaining and motivating employees, directors and consultants on a competitive basis and to link compensation to performance.

2.     Definitions

For purposes of the Plan, the following capitalized terms shall have the meanings specified below:

(a)     “Affiliate” has the meaning set forth in Rule 12b-2 under the Exchange Act.

(b)     “Award” means a grant of Stock Options, Stock Appreciation Rights, Restricted Shares or Restricted Share Units, or any or all of them, to a Participant.

(c)     “Award Agreement” means an agreement, either in written or electronic format, between the Company and a Participant setting forth the terms and conditions of an Award granted to the Participant.

(d)     “Beneficial Owner” has the meaning given in Rule 13d-3 under the Exchange Act.

(e)     “Board” means the Board of Directors of the Company.

(f)     “Cause” means with respect to any Participant, unless otherwise provided in the applicable Award Agreement, (i) the Participant’s conviction or misappropriation of money or other property or conviction of a felony, or a guilty plea or plea of nolo contendere by Participant with respect to a felony, (ii) conduct by the Participant that is in competition with the Company, conduct by a Participant that breaches the Participant’s duty of loyalty to the Company or a Participant’s willful misconduct, any of which materially injures the Company, (iii) a willful and material breach by the Participant of his or her obligations under any agreement entered into between the Participant and the Company that materially injures the Company, or (iv) the Participant’s failure to substantially perform his or her duties with the Company (other than by reason of the Participant’s Disability). For Participants subject to Section 16 of the Exchange Act, the determination of whether any conduct, action or failure to act constitutes “Cause” shall be made by the Committee in its sole discretion.

(g)     “Change in Control” means the occurrence of any of the following events:

1

(i)     Any Person (including a “group” as defined in Section 14(d) of the Exchange Act) is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing more than 25% of the combined voting power of the Company’s then-outstanding securities; provided, however, that no Change of Control shall be deemed to have occurred as a result of a change in ownership percentage resulting solely from an acquisition of securities by the Company;

(ii)     During any one year period, individuals who at the beginning of such period constitute the Board and any new director whose election to the Board or nomination for election by the Company’s shareholders was approved by a vote of at least two−thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved cease for any reason to constitute at least a majority of the Board;

(iii)     A reorganization, merger or consolidation of the Company in each case, unless, following such reorganization, merger or consolidation, all or substantially all of the individuals and entities who were the Beneficial Owners of the Company’s outstanding voting securities immediately prior thereto beneficially own, directly or indirectly, more than 75% of the combined voting power of the Company’s then-outstanding voting securities entitled to vote generally in the election of directors resulting from such reorganization, merger or consolidation in substantially the same proportions as their ownership immediately prior to such reorganization, merger or consolidation of the outstanding voting securities of the Company; or

(iv)     A liquidation, dissolution, sale or other disposition of all or substantially all of the assets of the Company (other than in a transaction in which all or substantially all of the individuals and entities who were the Beneficial Owners of the Company’s outstanding voting securities immediately prior to such sale or other disposition beneficially own, directly or indirectly, substantially all of the combined voting power of the Company’s then-outstanding voting securities entitled to vote generally in the election of directors of the acquiror of such assets (either directly or through one or more subsidiaries) in substantially the same proportions as their ownership immediately prior to such sale or other disposition).

(h)     “Code” means the Internal Revenue Code of 1986, as amended, and any rules, regulations or guidance promulgated thereunder. Any reference to the Code or a section thereof shall also refer to any successor Code or section.

(i)     “Committee” means a committee appointed by the Board consisting of at least three members of the Board, all meeting the definitions of “outside director” set forth in Code Section 162(m), “independent director” set forth in The Nasdaq Stock Market rules, and “non-employee director” set forth in Rule 16b-3 of the Exchange Act, or any successor definitions adopted for a similar purpose by the Internal Revenue Service, any national securities exchange on which the Common Shares are listed or the Securities and Exchange Commission.

(j)     “Common Share” or “Common Shares” means one or more of the common shares, without par value, of the Company.

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(k)     “Company” means LSI Industries Inc., a corporation organized under the laws of the State of Ohio, its subsidiaries, divisions and affiliated businesses.

(l)     “Date of Grant” means the date on which the Committee authorizes the grant of an Award or such later date as may be specified by the Committee in such authorization.

(m)     “Disability” means a Participant’s physical or mental incapacity resulting from personal injury, disease, illness or other condition which (i) prevents him or her from performing his or her duties for the Company, as determined by the Committee or its designee, and (ii) results in his or her termination of employment or service with the Company. The Committee may substitute a different definition for the term “Disability” in its discretion as it deems appropriate.

(n)     “Effective Date” has the meaning set forth in Section 13(a).

(o)     “Exchange Act” means the Securities Exchange Act of 1934, as amended, and any rules, regulations, schedules or guidance promulgated thereunder. Any reference to the Exchange Act or a section thereof shall also refer to any successor Exchange Act or section.

(p)      “Exercise Price” means the purchase price of a Common Share covered by a Stock Option or SAR, as applicable.

(q)     “Fair Market Value” on any date means the closing price of the Common Shares as reported on The Nasdaq Stock Market or, if applicable, any other national securities exchange on which the Common Shares are principally traded, or, if there were no sales of Common Shares on such date, then on the immediately preceding date on which there were any sales of Common Shares. If the Common Shares cease to be traded on a national securities exchange, the Fair Market Value shall be determined pursuant to a reasonable valuation method prescribed by the Committee. In the case of an ISO (or Tandem SAR), Fair Market Value shall be determined by the Committee in accordance with Code Section 422. For Awards intended to be exempt from Code Section 409A, Fair Market Value shall be determined by the Committee in accordance with Code Section 409A.

(r)     “Full-Value Award” means Restricted Shares, Restricted Share Units or unrestricted Common Shares.

(s)     “ISO” means an Incentive Stock Option satisfying the requirements of Code Section 422 and designated as an ISO by the Committee.

(t)     “Non-Employee Director” means a member of the Board who is not an employee of the Company.

(u)     “NQSO” means a non-qualified Stock Option that does not satisfy the requirements of Code Section 422 or that is not designated as an ISO by the Committee.

(v)     “Participant” means a person eligible to receive an Award under the Plan, as set forth in Section 4, and designated by the Committee to receive an Award subject to the conditions set forth in the Plan and any Award Agreement.

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(w)     “Performance-Based Exception” means the performance-based exception to the deductibility limitations of Code Section 162(m), as set forth in Code Section 162(m)(4)(C).

(x)     “Performance Goals” means the goals established by the Committee, as described in Section 6(d)(ii).

(y)     “Performance Measures” means the criteria set out in Section 6(d)(iii) that may be used by the Committee as the basis for a Performance Goal.

(z)     “Performance Period” means the period established by the Committee during which the achievement of Performance Goals is assessed in order to determine whether and to what extent an Award that is conditioned on attaining Performance Goals has been earned.

(aa)     “Person” shall have the meaning given in Section 3(a)(9) of the Exchange Act, except that such term shall not include (i) the Company or any of its Affiliates, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its subsidiaries, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities or (iv) a corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of Company securities.

(bb)     “Plan” means the LSI Industries Inc. Amended and Restated 2012 Stock Incentive Plan as of November 20, 2014, as amended and restated from time to time.

(cc)     “Prior Plan” means the LSI Industries Inc. 2003 Equity Compensation Plan, as amended and restated.

(dd)     “Restricted Shares” means Common Shares that are subject to restrictions, as described in Section 6(c).

(ee)     “Restricted Share Units” means a right, as described in Section 6(c), denominated in Common Shares to receive an amount, payable in either cash, Common Shares, Restricted Shares, or a combination thereof, equal to the value of a specified number of Common Shares.

(ff)     “Restriction Period” means, with respect to any Full-Value Award, the period during which any risk of forfeiture or other restrictions set by the Committee, including performance restrictions, remain in effect until such time as they have lapsed under the terms and conditions of the Full-Value Award or as otherwise determined by the Committee, including the Performance Period for Full-Value Awards intended to qualify for the Performance-Based Exception.

(gg)     “Retirement” means retirement with the Company at or after age 65 or at or after the later of age 55 and ten years of service.

(hh)     “Securities Act” means the Securities Act of 1933, as amended, and any rules, regulations, schedules or guidance promulgated thereunder. Any reference to the Securities Act or a section thereof shall also refer to any successor Securities Act or section.

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(ii)     “Stock Appreciation Right” or “SAR” means the right, as described in Section 6(b), to receive a payment equal to the excess of the Fair Market Value of a Common Share on the date the SAR is exercised over the Exercise Price established for that SAR at the time of grant, multiplied by the number of Common Shares with respect to which the SAR is exercised.

(jj)     “Stock Option” means the right, as described in Section 6(a), to purchase Common Shares at a specified price for a specified period of time. Stock Options include ISOs and NQSOs.

(kk)     “Tandem SAR” means a SAR granted in tandem with a Stock Option.

3.     Administration of the Plan

(a)     Authority of Committee. The Plan shall be administered by the Committee. Unless otherwise determined by the Board, the Compensation Committee of the Board shall serve as the Committee. The Committee shall have all the powers vested in it by the terms of the Plan, such powers to include the sole and exclusive authority to (within the limitations described in the Plan):

(i)     select Participants to be granted Awards under the Plan and grant Awards pursuant to the terms of the Plan;

(ii)     determine the type, size and terms of the Awards to be granted to each Participant;

(iii)     determine the time when Awards are to be granted and any conditions that must be satisfied before an Award is granted;

(iv)     establish objectives and conditions for earning an Award;

(v)     determine all other terms and conditions, not inconsistent with the terms of the Plan and any operative employment or other agreement, of any Award granted under the Plan, and determine the appropriate Award Agreement evidencing the Award;

(vi)     determine whether the terms, conditions, and objectives for earning an Award have been met, including, without limitation, any such determination or certification, as the case may be, required for compliance with Code Section 162(m);

(vii)     modify or waive the terms and conditions of Awards granted under the Plan, not inconsistent with the terms of the Plan and any operative employment or other agreement, accelerate the vesting, exercise or payment of an Award or cancel or suspend an Award;

(viii)     determine whether the amount or payment of an Award should be reduced or eliminated, and determine if, when and under what conditions payment of all or any part of any Award may be deferred;

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(ix)     determine the guidelines and/or procedures for the payment or exercise of Awards;

(x)     determine whether an Award should qualify, regardless of its amount, as deductible in its entirety for federal income tax purposes, including whether any Awards granted to an employee should qualify for the Performance-Based Exception;

(xi)     adopt, alter and repeal such administrative rules, guidelines and practices governing the Plan;

(xii)     construe, interpret, administer and implement the Plan, any Award Agreements or related documents and correct any defect, supply an omission or reconcile any inconsistency in or between the Plan, any Award Agreement or related documents; and

(xiii)     make factual determinations with respect to the Plan and any Awards and otherwise supervise the administration of the Plan.

(b)     Binding Authority. The Committee’s interpretations of the Plan, and all actions taken and determinations made by the Committee pursuant to the powers vested in it under the Plan, shall be conclusive and binding on all parties, including the Company, its shareholders and all Participants.

(c)     Delegation of Authority. To the extent not prohibited by law or the rules of the national securities exchange on which the Company’s Common Shares are listed, the Committee may allocate its authority hereunder to one or more of its members or delegate its authority hereunder to one or more Non-Employee Directors, except that no such allocation or delegation shall be permitted with respect to Awards intended to qualify for the Performance-Based Exception, and may grant authority to employees of the Company to execute documents on behalf of the Committee or to otherwise assist in the administration and operation of the Plan. When the Committee delegates its authority hereunder to one or more officers of the Company, it shall specify the total number of Awards that the officer or officers may award and the terms on which any Awards may be issued, offered or sold. In no event shall the Committee authorize any officer to designate such officer as a recipient of any Awards.

4.     Eligibility

Subject to the terms and conditions of the Plan, the Committee may select, from all eligible persons, Participants to whom Awards shall be granted under the Plan and shall determine the nature and amount of each Award. Eligible persons include any of the following individuals: (i) any officer or key employee of the Company, (ii) any consultant (as defined in the General Instructions to the Form S-8 registration statement under the Securities Act) to the Company, and (iii) any Non-Employee Director. All Awards shall be evidenced by an Award Agreement, and Awards may be conditioned upon the Participant’s execution of an Award Agreement.

5.     Common Shares Subject to the Plan

(a)     Authorized Number of Common Shares. Unless otherwise authorized by the Company’s shareholders and subject to this Section 5 and Section 8, the maximum aggregate number of Common Shares available for issuance under the Plan is 1,600,000, plus (i) the number of Common Shares that, on the Effective Date, are available to be granted under the Prior Plan but which are not then subject to outstanding awards under the Prior Plan, and (ii) the number of Common Shares subject to outstanding awards under the Prior Plan as of the Effective Date which thereafter are forfeited, settled in cash or cancelled or expire. Upon the Effective Date, the Prior Plan will terminate; provided that all outstanding awards under the Prior Plan as of the Effective Date shall remain outstanding and shall be administered and settled in accordance with the provisions of the Prior Plan, as applicable.

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(i)     The maximum number of Common Shares available for grant with respect to Full-Value Awards is 600,000.

(ii)     The maximum number of Common Shares available for issuance with respect to ISOs is 1,600,000.

(b)     Share Counting. The following rules shall apply in determining the number of Common Shares available for grant under the Plan:

(i)     Common Shares subject to any Award shall be counted against the maximum share limitation as one Common Share for every Common Share subject thereto.

(ii)     To the extent that any Award is forfeited, cancelled, settled in cash, returned to the Company for failure to satisfy vesting requirements or other conditions of the Award or otherwise terminates without an issuance of Common Shares being made, the maximum share limitation shall be credited with one Common Share for each Common Share subject to such Award, and such number of credited Common Shares may again be made subject to Awards under the Plan.

(iii)     Any Common Shares tendered by a Participant or withheld as full or partial payment of withholding or other taxes or as payment for the exercise or conversion price of an Award or repurchased by the Company with Stock Option proceeds shall not be added back to the number of Common Shares available for issuance under the Plan. Upon exercise of a SAR, the number of Common Shares subject to the Award that are being exercised shall be counted against the maximum aggregate number of Common Shares that may be issued under the Plan on the basis of one Common Share for every Common Share subject thereto, regardless of the actual number of Common Shares used to settle the SAR upon exercise.

(iv)     Any Common Shares underlying Awards granted through the assumption of, or in substitution for, outstanding awards previously granted to individuals who become employees of the Company as a result of a merger, consolidation, acquisition or other corporate transaction shall not, unless required by law or regulation, count against the reserve of available Common Shares under the Plan.

(c)     Award Limitations. Subject to the adjustment provisions of Section 8, the following limits shall apply with respect to Awards intended to qualify for the Performance-Based Exception:

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(i)     The maximum aggregate number of Common Shares that may be subject to Stock Options or SARs granted in any calendar year to any one Participant shall be 175,000 Common Shares.

(ii)     The maximum aggregate number of Common Shares that may be subject to Full-Value Awards granted in any calendar year to any one Participant shall be 50,000 Common Shares.

(d)     Shares to be Delivered. Common Shares to be delivered by the Company under the Plan may consist in whole or in part of authorized but unissued shares or treasury shares.

6.     Awards to Participants

(a)     Stock Options.

(i)     Grants. Subject to the terms and conditions of the Plan, Stock Options may be granted to Participants, in such number and upon such terms and conditions as the Committee determines, and may consist of ISOs or NQSOs. Stock options may be granted alone or with Tandem SARs. With respect to Stock Options granted with Tandem SARs, the exercise of either such Stock Options or Tandem SARs will result in the simultaneous cancellation of the same number of Stock Options or Tandem SARs, as the case may be.

(ii)     Exercise Price. The Exercise Price shall be equal to or, at the Committee’s discretion, greater than the Fair Market Value on the date the Stock Option is granted, unless the Stock Option was granted through the assumption of, or in substitution for, outstanding awards previously granted to individuals who became employees of the Company as a result of a merger, consolidation, acquisition or other corporate transaction, in which case the assumption or substitution shall be accomplished in a manner that permits the Stock Option to be exempt from Code Section 409A.

(iii)     Term. The term of Stock Options shall be determined by the Committee in its sole discretion, but in no event shall the term exceed ten years from the Date of Grant.

(iv)     ISO Limits. ISOs may be granted only to Participants who are employees of the Company (or of any parent or subsidiary corporation within the meaning of Code Section 424) on the Date of Grant, and may only be granted to an employee who, at the time the Stock Option is granted, does not own more than ten percent of the total combined voting power of all classes of stock of the Company (or of any parent or subsidiary corporation within the meaning of Code Section 424), unless (A) the Exercise Price is at least 110% percent of the Fair Market Value on the Date of Grant, and (B) the ISO is not exercisable after five years from the Date of Grant. The aggregate Fair Market Value of all Common Shares, determined at the time the ISOs are granted, with respect to which ISOs are exercisable by a Participant for the first time during any calendar year (under all plans of the Company) shall not exceed $100,000 or such other amount as may subsequently be specified by the Code. If such Fair Market Value exceeds the $100,000 limit, the ISOs exceeding the limit shall be treated as NQSOs, taking the Stock Options in the order each was granted. The terms of all ISOs shall be consistent with and contain or be deemed to contain all provisions required to qualify as an “incentive stock option” under Code Section 422.

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(v)     No Repricing. Subject to the adjustment provisions of Section 8, without the approval of the Company’s shareholders, (A) the Exercise Price for any outstanding Stock Option may not be decreased after the Date of Grant, (B) no outstanding Stock Option may be surrendered to the Company as consideration for the grant of a new Stock Option with a lower Exercise Price, and (C) no other modifications to any outstanding Stock Option may be made that would be treated as a “repricing” under the then applicable rules, regulations or listing requirements adopted by the national securities exchange on which the Common Shares are listed.

(vi)     Form of Payment. Vested Stock Options may be exercised in whole or in part, and the Exercise Price shall be paid to the Company at the time of exercise, subject to any applicable rules or regulations adopted by the Committee:

(A) to the extent permitted by applicable law, pursuant to cashless exercise procedures that are approved by the Committee;

(B) through the tender of unrestricted Common Shares owned by the Participant (or by delivering a certification or attestation of ownership of such Common Shares) valued at their Fair Market Value on the date of exercise;

(C) in cash or its equivalent; or

(D) by any combination of (A), (B), and (C) above.

(vii)     No Dividends or Shareholder Rights. No dividends or dividend equivalents may be paid on Stock Options. Except as otherwise provided herein, a Participant shall have no rights as a holder of Common Shares covered by a Stock Option unless and until such Common Shares have been registered to the Participant as the owner.

(b)     Stock Appreciation Rights.

(i)     Grants. Subject to the terms and provisions of the Plan, SARs may be granted to Participants, in such number and upon such terms and conditions as the Committee determines, and may be granted alone or as Tandem SARs. With respect to Tandem SARs, the exercise of either such Stock Options or SARs will result in the simultaneous cancellation of the same number of Tandem SARs or Stock Options, as the case may be.

(ii)     Exercise Price. The Exercise Price shall be equal to or, at the Committee’s discretion, greater than Fair Market Value on the date the SAR is granted, unless the SAR was granted through the assumption of, or in substitution for, outstanding awards previously granted to individuals who became employees of the Company as a result of a merger, consolidation, acquisition or other corporate transaction involving the Company, in which case the assumption or substitution shall be accomplished in a manner that permits the SAR to be exempt from Code Section 409A.

(iii)     Term. The term of a SAR shall be determined by the Committee in its sole discretion, but in no event shall the term exceed ten years from the Date of Grant; provided that, each SAR granted in tandem with a Stock Option shall terminate upon the termination or exercise of the related Stock Option.

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(iv)     No Repricing. Subject to the adjustment provisions of Section 8, without the approval of the Company’s shareholders, (A) the Exercise Price for any outstanding SAR may not be decreased after the Date of Grant, (B) no outstanding SAR may be surrendered to the Company as consideration for the grant of a new SAR with a lower Exercise Price, and (C) no other modifications to any outstanding SAR may be made that would be treated as a “repricing” under the then applicable rules, regulations or listing requirements adopted by the national securities exchange on which the Common Shares are listed.

(v)     Form of Payment. Vested SARs may be exercised in whole or in part, and the Committee may authorize payment of a SAR in the form of cash, Common Shares valued at its Fair Market Value on the date of the exercise or a combination thereof, or by any other method as the Committee may determine.

(vi)     Tandem SARs. Tandem SARs may be exercised for all or part of the Common Shares subject to the related Stock Option upon the surrender of the right to exercise the equivalent portion of the related Stock Option. A Tandem SAR may be exercised only with respect to the Common Shares for which its related Stock Option is then exercisable. Notwithstanding any other provision of the Plan to the contrary, with respect to a Tandem SAR granted in connection with an ISO: (A) the Tandem SAR will expire no later than the expiration of the underlying ISO; (B) the value of the payout with respect to the Tandem SAR may be for no more than 100% of the excess of the Fair Market Value of the Common Shares subject to the underlying ISO at the time the Tandem SAR is exercised over the Exercise Price of the underlying ISO; and (C) the Tandem SAR may be exercised only when the Fair Market Value of the Common Shares subject to the ISO exceeds the Exercise Price of the ISO.

(vii)     No Dividends or Shareholder Rights. No dividends or dividend equivalents may be paid on SARs. Except as otherwise provided herein, a Participant shall have no rights as a holder of Common Shares covered by a SAR unless and until such Common Shares have been registered to the Participant as the owner.

(c)     Restricted Shares and Restricted Share Units.

(i)     Grants. Subject to the terms and provisions of the Plan, Restricted Shares and Restricted Share Units may be granted to Participants in such number and upon such terms and conditions as the Committee determines. Restricted Shares will be registered in the name of the Participant and deposited with the Company or its agent in certificated or book-entry form.

(ii)     Restrictions. Restricted Shares or Restricted Share Units may be granted at no cost or at a purchase price determined by the Committee, which may be less than the Fair Market Value, but subject to such terms and conditions as the Committee determines, including, without limitation: forfeiture conditions, transfer restrictions, restrictions based upon the achievement of specific Performance Goals (Company-wide, divisional and/or individual) which may be based on one or more Performance Measures, time-based restrictions on vesting and/or restrictions under applicable federal or state securities laws. Subject to Sections 9 and 10, for Awards to employees, no Restricted Shares or Restricted Share Units conditioned upon the achievement of performance shall be based on a Restriction Period of less than one year, and, except as may be determined by the Committee, any Restriction Period based solely on continued employment or service (time-based) shall be for a minimum of three years, subject to (A) pro rata or graded vesting prior to the expiration of such time-based Restriction Period, and (B) acceleration due to the Participant’s death, Disability or Retirement, in each case as specified in the applicable Award Agreement; provided that the Restriction Period applicable to the first vesting date of an Award subject to pro rata or graded vesting (as referenced in (A) above) may be for less than one year, provided the first vesting date is no earlier than the fiscal year-end date of the fiscal year during which the Award was granted. To the extent the Restricted Shares or Restricted Share Units are intended to qualify for the Performance-Based Exception, except as may be determined by the Committee, the applicable restrictions shall be based on the achievement of Performance Goals over a Performance Period, as described in Section 6(d).

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(iii)     Transfer Restrictions. During the Restriction Period, Restricted Shares and Restricted Share Units may not be sold, assigned, transferred or otherwise disposed of, or mortgaged, pledged or otherwise encumbered. In order to enforce the limitations imposed upon the Restricted Shares, the Committee may (A) cause a legend or legends to be placed on any certificates evidencing such Restricted Shares, and/or (B) cause “stop transfer” instructions to be issued, as it deems necessary or appropriate.

(iv)     Dividends and Voting Rights. Unless otherwise determined by the Committee, during the Restriction Period, Participants who hold Restricted Shares shall have the right to receive dividends in cash or other property or other distribution or rights in respect of the Restricted Shares and shall have the right to vote the Restricted Shares as the record owners; provided that, unless otherwise determined by the Committee, any dividends or other property payable to a Participant during the Restriction Period shall be distributed to the Participant only if and when the restrictions imposed on the applicable Restricted Shares lapse. Unless otherwise determined by the Committee, during the Restriction Period, Participants who hold Restricted Share Units shall be credited with dividend equivalents in respect of such Restricted Share Units; provided that, unless otherwise determined by the Committee, such dividend equivalents shall be distributed (without interest) to the Participant only if and when the restrictions imposed on the applicable Restricted Share Units lapse. Participants shall have no other rights as a shareholder with respect to Restricted Share Units unless otherwise determined by the Committee. Notwithstanding the forgoing, no Restricted Shares or Restricted Share Units intended to qualify for the Performance-Based Exception shall provide the Participant with dividend or shareholder rights unless otherwise determined by the Committee; provided, however, that if dividend rights are provided, any dividends or other property otherwise payable to the Participant during the Restriction Period with respect to such Restricted Shares or Restricted Share Units shall accumulate and be payable only if and when the specific Performance Goals are attained.

(v)     Payment of Restricted Share Units. Restricted Share Units that become payable in accordance with their terms and conditions shall be settled in cash, Common Shares, Restricted Shares, or a combination thereof, as determined by the Committee.

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(vi)     Ownership. Restricted Shares shall be registered in the name of the Participant on the books and records of the Company or its designee (or by one or more physical certificates if physical certificates are issued) subject to the applicable restrictions imposed by the Plan. At the end of the Restriction Period that applies to Restricted Shares, the number of shares to which the Participant is entitled shall be delivered to the Participant free and clear of the restrictions, either in certificated or book-entry form. No Common Shares shall be registered in the name of the Participant with respect to Restricted Share Units, and Participants shall have no ownership interest in the Common Shares to which the Restricted Share Units relate, unless and until payment is made in Common Shares.

(vii)     Forfeiture. If a Participant who holds Restricted Shares or Restricted Share Units fails to satisfy the restrictions, terms or conditions applicable to the Award, except as otherwise determined by the Committee, the Participant shall forfeit the Restricted Shares or Restricted Share Units. The Committee may at any time waive such restrictions or accelerate the date or dates on which the restrictions will lapse; however, to the extent the Restricted Shares or Restricted Share Units are intended to qualify for the Performance-Based Exception, the provisions of Section 6(d)(iv) will apply.

(d)     Performance-Based Exception.

(i)     Grants. Subject to the provisions of the Plan, Full-Value Awards granted in a manner that is intended to qualify for the Performance-Based Exception shall be conditioned upon the achievement of Performance Goals as the Committee shall determine, in its sole discretion.

(ii)     Performance Goals. Performance Goals shall be based on one or more Performance Measures, over a Performance Period, as to be determined by the Committee.

(iii)     Performance Measures. The Performance Measure(s) may be described in terms of objectives that are related to the individual Participant or objectives that are Company-wide or related to a subsidiary, division, department, region, function or business unit of the Company, and shall consist of one or more or any combination of the following criteria: cash flow, profit, revenue, stock price, market share, sales, net income, operating income, return ratios, earnings per share, earnings (which may include an add back for taxes, interest, and/or depreciation and amortization), operating earnings, profit margins, earnings per Common Share, favorable comparison to established budgets, return on shareholders’ equity, return on assets, attainment of strategic and operational initiatives, comparisons with various stock market indices, reduction in costs or a combination of such factors, personal performance measures, working capital, total assets, net assets, return on sales, return on invested capital, gross margin, costs, shareholders’ equity, shareholder return and/or productivity or productivity improvement. The Performance Goals based on these Performance Measures may be expressed in absolute terms or relative to the performance of other entities.

(iv)     Treatment of Awards. With respect to any Full-Value Award that is intended to qualify for the Performance-Based Exception: (A) the Committee shall interpret the Plan and this Section 6(d) in light of Code Section 162(m), (B) the Committee shall not amend the Full-Value Award in any way that would adversely affect the treatment of the Full-Value Award under Code Section 162(m), and (C) such Full-Value Award and any dividends or other property otherwise payable with respect to such Full-Value Award shall not vest or be paid until the Committee shall first have certified that the Performance Goals have been achieved.

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(e)     Unrestricted Share Awards.

Subject to the terms and provisions of the Plan, the Committee may grant awards of unrestricted Common Shares to Participants in such number and upon such terms and conditions as the Committee determines in recognition of outstanding achievements or contributions by such Participants or otherwise. Unrestricted Common Shares issued on a bonus basis may be issued for no cash consideration.

7.     Deferred Payment

Subject to the terms of the Plan, the Committee may determine that all or a portion of any Award to a Participant, whether it is to be paid in cash, Common Shares or a combination thereof, shall be deferred or may, in its sole discretion, approve deferral elections made by Participants. Deferrals shall be for such periods and upon such terms as the Committee may determine in its sole discretion, which terms shall comply with Code Section 409A.

8.     Dilution and Other Adjustments

In the event of any merger, reorganization, consolidation, liquidation, recapitalization, reclassification, redesignation, stock dividend, other distribution (whether in the form of cash, shares or otherwise), stock split, reverse stock split, spin off, combination, repurchase or exchange of shares or issuance of warrants or rights to purchase shares or other securities, or other change in corporate structure affecting the Common Shares, the Committee shall make such adjustments in the aggregate number and type of Common Shares which may be delivered and the individual award maximums as set forth in Section 5, the number and type of Common Shares subject to outstanding Awards and the Exercise Price or other price of Common Shares subject to outstanding Awards (provided the number of Common Shares subject to any Award shall always be a whole number), as may be and to the extent determined to be appropriate and equitable by the Committee to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan. Such adjustment shall be conclusive and binding for all purposes of the Plan. Any such adjustment of an ISO or SAR shall be made in compliance with Code Sections 422 and 424, and no such adjustment shall be made that would cause any Award which is or becomes subject to Code Section 409A to fail to comply with the requirements of Code Section 409A or is exempt from Code Section 409A to become subject to Code Section 409A.

9.     Change in Control

Notwithstanding any other provision of the Plan to the contrary, immediately upon the occurrence of a Change in Control, the following provisions of this Section 9 shall apply except to the extent an Award Agreement provides for a different treatment (in which case the Award Agreement shall govern):

(a)     all outstanding Stock Options and SARs vest and become fully exercisable; and

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(b)     all Full-Value Awards become fully vested.

10.     Termination

(a)     Termination by Death, Disability, or Retirement. If a Participant’s employment by the Company terminates by reason of death, Disability or Retirement, or in the case of an advisory relationship if such business relationship terminates by reason of death or Disability, any Award held by such Participant, unless otherwise determined by the Committee at grant or otherwise interpreted pursuant to Section 12(l) hereof, shall be fully vested and may thereafter be exercised by the Participant or by the Participant’s beneficiary or legal representative, for a period of one year following termination of employment, in the case of death or Disability, and 90 days in the case of Retirement, or such longer period as the Committee may specify at or after grant in all cases other than ISOs, or until the expiration of the stated term of such Award, whichever period is shorter; provided that, for Full-Value Awards intended to qualify for the Performance-Based Exception, no vesting may occur or no distribution may be made prior to the attainment of the Performance Goals.

(b)     Termination for Cause. If a Participant’s employment or service terminates for Cause, (i) all Stock Options and SARs (or portions thereof) which have not been exercised, whether vested or not, and (ii) all Full-Value Awards, shall immediately be forfeited upon termination, including such Awards that are subject to performance conditions (or unearned portions thereof).

(c)     Other Terminations. If a Participant’s employment or service terminates, voluntarily or involuntarily, for any reason other than death, Disability, Retirement or Cause, (i) any vested portion of Stock Options or SARs held by the Participant at the time of termination may be exercised for a period of three months (or such other period as the Committee may specify at or after the time of grant) from the termination date, or until the expiration of the original term of the Stock Option or SAR, whichever period is shorter, (ii) no unvested portion of any Stock Option or SAR shall become vested, including such Awards that are subject to performance conditions (or unearned portions thereof), and (iii) all Full-Value Awards, including such Awards that are subject to performance conditions (or unearned portions thereof), shall immediately be forfeited upon termination.

(d)     Limitation for ISOs. No ISO may be exercised more than three months following termination of employment for any reason (including Retirement) other than death or Disability, nor more than one year following termination of employment for the reason of death or Disability (as defined in Code Section 422), or such Award will no longer qualify as an ISO and shall thereafter be, and receive the tax treatment applicable to, a NQSO. For this purpose, a termination of employment is cessation of employment, under the rules applicable to ISOs, such that no employment relationship exists between the Participant and the Company.

(e)     Transfers and Leaves of Absence. The transfer of a Participant within the Company shall not be deemed a termination of employment except as required by Code Sections 422 and 409A, and other applicable laws. The following leaves of absences are not deemed to be a termination of employment:

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(i)     if approved in writing by the Company, for military service, sickness or any other purpose approved by the Company, and the period of absence does not exceed 90 days;

(ii)     if in excess of 90 days, if approved in writing by the Company, but only if the Participant’s right to reemployment is guaranteed by statute or contract and provided that the Participant returns to work within 30 days after the end of such absence; and

(iii)     subject to the restrictions of Code Section 409A and to the extent that such discretion is permitted by law, if the Committee determines in its discretion that the absence is not a termination of employment.

11.     Recoupment or Recovery Policy

Any Award shall be subject to forfeiture or repayment pursuant to the terms of any applicable compensation recoupment or recovery policy adopted by the Company, Committee or Board, as thereafter amended, including any policy adopted to comply with the rules of any stock exchange on which the Common Shares are traded or the Securities and Exchange Commission.

12.     Miscellaneous Provisions

(a)     Rights as a Shareholder. Except as otherwise provided herein, a Participant shall have no rights as a shareholder with respect to Awards hereunder, unless and until the Common Shares have been registered to the Participant as the owner.

(b)     No Loans. No loans from the Company to Participants shall be permitted in connection with the Plan.

(c)     Assignment or Transfer. Except as otherwise provided under the Plan, no Award or any rights or interests therein shall be transferable other than by will or the laws of descent and distribution. The Committee may, in its discretion, provide that an Award (other than an ISO) is transferable without the payment of any consideration to a Participant’s family member, subject to such terms and conditions as the Committee may impose. For this purpose, “family member” has the meaning given to such term in the General Instructions to the Form S-8 registration statement under the Securities Act. All Awards shall be exercisable, during the Participant’s lifetime, only by the Participant or a person who is a permitted transferee pursuant to this Section 12(c). Once awarded, the Common Shares (other than Restricted Shares) received by Participants may be freely transferred, assigned, pledged or otherwise subjected to lien, subject to the restrictions imposed by the Securities Act, Section 16 of the Exchange Act and the Company’s Insider Trading Policy, each as amended.

(d)     Withholding Taxes. The Company shall have the right to deduct from all Awards paid in cash to a Participant any taxes required by law to be withheld with respect to such Awards. All statutory minimum applicable withholding taxes arising with respect to Awards paid in Common Shares to a Participant shall be satisfied by the Company retaining Common Shares having a Fair Market Value on the date the tax is to be determined that is equal to the amount of such statutory minimum applicable withholding tax (rounded, if necessary, to the next lowest whole number of Common Shares); provided, however, that, subject to any restrictions or limitations that the Company deems appropriate, a Participant may elect to satisfy such statutory minimum applicable withholding tax through cash or cash proceeds.

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(e)     No Rights to Awards. Neither the Plan nor any action taken hereunder shall be construed as giving any person any right to be retained in the employ or service of the Company, and the Plan shall not interfere with or limit in any way the right of the Company to terminate any person’s employment or service at any time. Except as set forth herein, no employee or other person shall have any claim or right to be granted an Award under the Plan. By accepting an Award, the Participant acknowledges and agrees that (i) the Award will be exclusively governed by the Plan, including the right of the Company to amend or cancel the Plan at any time without the Company incurring liability to the Participant (except, to the extent the terms of the Award so provide, for Awards already granted under the Plan), (ii) the Participant is not entitled to future award grants under the Plan or any other plan, and (iii) the value of any Awards received shall be excluded from the calculation of termination or other severance payments or benefits.

(f)     Beneficiary Designation. To the extent allowed by the Committee, each Participant under the Plan may name any beneficiary or beneficiaries to whom any benefit under the Plan is to be paid in case of his or her death before he or she receives all of such benefit. Unless the Committee determines otherwise, each such designation shall revoke all prior designations by the same Participant, shall be in a form prescribed by the Committee and shall be effective only when received in writing by the Company during the Participant’s lifetime. In the absence of any such designation, benefits remaining unpaid at the Participant’s death shall be paid to the Participant’s estate.

(g)     Fractional Shares. Fractional Common Shares shall not be issued or transferred under an Award, but the Committee may direct that cash be paid in lieu of fractional shares or may round off fractional shares, in its discretion.

(h)     Unfunded Plan. The Plan shall be unfunded and any benefits under the Plan shall represent an unsecured promise to pay by the Company. With respect to any payments not yet made to a Participant pursuant to an Award, nothing contained in the Plan or any Award Agreement shall give the Participant any rights that are greater than those of a general unsecured creditor of the Company.

(i)     Severability. If any provision of the Plan is deemed illegal or invalid, the illegality or invalidity shall not affect the remaining provisions of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included.

(j)     Limitation of Liability. Members of the Board and the Committee and officers and employees of the Company who are their designees acting under the Plan shall be fully protected in relying in good faith upon the advice of counsel and shall incur no liability except for gross or willful misconduct in the performance of their duties hereunder.

(k)     Successors. All obligations of the Company with respect to Awards granted under the Plan shall be binding on any successor to the Company, whether as a result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.

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(l)     Code Section 409A Compliance. Each Award granted under the Plan is intended to be either exempt from or in compliance with the requirements of Code Section 409A and any regulations or guidance that may be adopted thereunder, including any transition relief available under applicable guidance. The Plan may be amended or interpreted by the Committee as it determines appropriate in accordance with Code Section 409A and to avoid a plan failure under Code Section 409A(a)(1). If a Participant is a “specified employee” as defined in Code Section 409A at the time of the Participant’s separation from service with the Company, then solely to the extent necessary to avoid the imposition of any additional tax under Code Section 409A, the commencement of any payments or benefits under an Award shall be deferred until the date that is six months following the Participant’s separation from service (or such other period as required to comply with Code Section 409A).

13.     Effective Date, Amendments, Governing Law and Plan Termination

(a)     Effective Date. The Effective Date of the Plan is the date on which the Company’s shareholders approve the Plan at a duly held shareholder meeting.

(b)     Amendments.

(i)     Amendment of the Plan. The Committee or the Board may at any time terminate or amend the Plan in whole or in part, but no such action shall materially and adversely affect any rights or obligations with respect to any Awards granted prior to the date of such termination or amendment without the consent of the affected Participant, except to the extent that the Committee reasonably determines that such termination or amendment is necessary or appropriate to comply with applicable law or the rules and regulations of any stock exchange on which the Common Shares are traded or to preserve any intended favorable, or avoid any unintended unfavorable, tax effects for the Company, Plan or Participants. Notwithstanding the foregoing, unless the Company’s shareholders shall have first approved the amendment, no amendment of the Plan shall be effective if the amendment would: (A) increase the maximum number of Common Shares that may be delivered under the Plan or to any one individual (except to the extent made pursuant to Section 8 hereof), (B) extend the maximum period during which Awards may be granted under the Plan, (C) add to the types of awards that can be made under the Plan, (D) modify the requirements as to eligibility for participation in the Plan, (E) permit a repricing or decrease the Exercise Price to less than the Fair Market Value on the Date of Grant of any Stock Option or SAR, except for adjustments made pursuant to Section 8, (F) materially increase benefits to Participants, or (G) otherwise require shareholder approval pursuant to the Plan or applicable law or the rules of the principal securities exchange on which Common Shares are traded.

(ii)     Amendment of Awards. The Committee may amend, prospectively or retroactively, the terms of an Award, provided that no such amendment is inconsistent with the terms of the Plan or would materially and adversely affect the rights of any Participant without his or her written consent.

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(c)     Governing Law. To the extent not preempted by Federal law, the Plan and all Award Agreements are construed in accordance with and governed by the laws of the State of Ohio. The Plan is not intended to be governed by the Employment Retirement Income Security Act of 1974, and shall be so construed and administered.

(d)     Plan Termination. No Awards shall be made under the Plan after the tenth anniversary of the Effective Date.

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EX-10

Exhibit 10.2

LSI INDUSTRIES INC.
NONQUALIFIED DEFERRED COMPENSATION PLAN

(Amended and Restated as of November 20, 2014)

PREAMBLE

LSI Industries Inc. and each Employer hereby amend and restate the Plan effective as of November 19, 2009 as set forth herein. The Plan was originally effective as of September 15, 1996. The Plan was amended and restated as of July 1, 1998, July 1, 2002, April 27, 2004, September 9, 2005, November 1, 2006, December 31, 2008, November 19, 2009 and November 18, 2010. This Plan is an unfunded deferred compensation arrangement for a select group of management or highly compensated employees who are rendering service to an Employer.

ARTICLE I. DEFINITIONS

1.1 “Beneficiary” shall mean the person or persons entitled to receive the distributions, if any, payable under the Plan upon or after a Participant’s death, to such person or persons as such Participant’s Beneficiary. Each Participant may designate a Beneficiary by filing the proper form with the Committee. A Participant may designate one or more contingent Beneficiaries to receive any distributions after the death of a prior Beneficiary. A designation shall be effective upon said filing, provided that it is so filed during such Participant’s lifetime, and may be changed from time to time by the Participant.

1.2 “Code” shall mean the Internal Revenue Code of 1986 as amended.

1.3 “Committee” shall mean the Compensation Committee of the Board of Directors of LSI Industries Inc. which is responsible for the administration of this Plan in accordance with the provisions of the Plan as set forth in this document.

1.4 “Compensation” shall mean the total amount of earnings (including bonuses) paid by an Employer to an Executive or which would otherwise be paid but for a deferral election hereunder or a salary reduction election under any Code Section 401(k) plan or Code Section 125 plan.

1.5 “Deferred Compensation Account” shall mean the account to be established by an Employer as a book reserve to reflect the amounts deferred by a Participant, the amounts credited by the Employer, and the earnings adjustment under Article VII. A Participant’s Deferred Compensation Account shall be reduced by distributions under Paragraph 7.2, Article VIII and Article IX.

1.6 “Employer” shall mean LSI Industries Inc. and any affiliate of LSI Industries Inc. (whether or not incorporated) which has adopted the Plan with the consent of LSI Industries Inc., or any successor or assignee of any of them.

1.7 “Executive” shall mean any employee designated by the Committee (in conjunction with senior management of LSI Industries Inc.) as a member of the select group of management or highly compensated employees eligible for participation in this Plan.

1.8 “Participant” shall mean any Executive who has a right to a benefit under the Plan and a person who was such at the time of the Executive’s death or Separation from Service and who retains, or whose Beneficiary retains, a benefit under the Plan which has not been distributed.

1.9 “Plan” shall mean the LSI Industries Inc. Nonqualified Deferred Compensation Plan as described in this instrument, amended and restated effective November 20, 2014, and, as may be amended thereafter.

1.10 “Plan Year” shall mean the 12-consecutive month period beginning on July 1.

1.12 “Separation from Service” shall mean a “separation from service” within the meaning of Code Section 409A and the rules and regulations promulgated thereunder.

ARTICLE II. PARTICIPANT’S ELECTION TO DEFER

2.1 Each Executive may elect to have up to 100% of the Executive’s Compensation (in whole percentages) for a Plan Year deferred and credited with earnings in accordance with the terms and conditions of the Plan. The Committee may allow separate elections with respect to regular earnings and bonuses.

2.2 An Executive desiring to exercise an election under Paragraph 2.1 shall notify the Committee of his deferral election. Such notice must be in writing on a form provided by the Committee, or in a manner otherwise satisfactory to the Committee, and provided to the Committee by such date as the Committee shall specify, but in all events no later than the end of the calendar year preceding the first day of the Plan Year to which such election is to apply. In the event an Executive first becomes eligible to participate in the Plan on or after January 1, 2005, the Executive’s election for deferrals must be provided no later than 30 days following the date the Executive first becomes eligible, and such election will only be effective with regard to Compensation earned following the election.

2.3 A deferral election shall be effective with respect to the entire Plan Year to which it relates and may not be modified or terminated for that Plan Year; provided, however, (1) in the Plan Year beginning July 1, 2002, Participants may increase their deferral election during a two week period designated by the Committee, and (2) for periods on or after January 1, 2005, in the event of an unforeseeable emergency (as defined in Paragraph 8.4), a Participant’s deferral election shall be terminated for the remainder of the respective Plan Year.

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2.4 The Compensation otherwise payable to the Executive during the Plan Year shall be reduced pursuant to the Executive’s election under this Article II. Such amounts shall be credited to the Executive’s Deferred Compensation Account.

2.5 For deferrals on or after January 1, 2005, an Executive’s election relating to Compensation from a performance-based bonus payment based on services over a period of at least 12 months must be made no later than 6 months before the end of the service period, provided the Executive performs services continuously from the later of the beginning of the performance period or the date the performance criteria are established through the date an election is made under this Paragraph 2.5, and provided further that in no event may an election to defer Compensation from a performance-based bonus payment be made after such Compensation has become readily ascertainable.

ARTICLE III. EMPLOYER MAKE-UP ALLOCATIONS

3.1 If because of an election under Article II, a Participant receives a smaller allocation of Employer contributions and/or forfeitures under the LSI Industries Inc. Retirement Plan for a Plan Year of that plan than the Participant would have received had no such election been made, then there shall be credited to the Participant’s Deferred Compensation Account an amount equal to the amount which bears the same relationship to the amounts deferred under Article II and credited to the Participant’s Deferred Compensation Account during the Plan Year as the Participant’s allocations (of Employer contributions and/or forfeitures) under the LSI Industries Inc. Retirement Plan bear to the Participant’s compensation taken into account under that plan. Such amount shall be credited to the Participant’s Deferred Compensation Account at such time as the Committee shall determine.

3.2 (a)     If, by reason of the application of the compensation limitation imposed by Code Section 401(a)(17) (or any corresponding successor provision), including any provision in the LSI Industries Inc. Retirement Plan providing such limitation, a Participant receives a smaller allocation of Employer contributions and/or forfeitures under the LSI Industries Inc. Retirement Plan for any plan year of that plan than he would have received had no such limitation been in effect, then there shall be credited to his Deferred Compensation Account the amount determined under (b) below. Such amount shall be credited to the Participant’s Deferred Compensation Account at such time as the Committee shall determine.

(b) The amount hereunder shall be equal to the amount which is the same percentage of the Participant’s compensation (as defined in the LSI Industries Inc. Retirement Plan) in excess of the compensation limitation referred to in (a) above as the percentage allocated under the LSI Industries Inc. Retirement Plan on compensation in excess of the Social Security taxable wage base (but not in excess of the limitation referred to in (a) above).

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ARTICLE IV. LSI INCENTIVE ALLOCATIONS

4.1 Subject to Paragraph 4.2, each Participant shall be eligible for an Employer incentive allocation for a Plan Year, to be determined in accordance with Paragraph 4.3, if the Participant satisfies both of the following requirements:

(a) The Participant must have elected to make Compensation deferrals under the Plan for the Plan Year of the LSI incentive allocation, the immediately preceding Plan Year and/or the second preceding Plan Year; and

(b) The Participant must be employed by an Employer at the time the Committee determines that the Performance Goal (defined below) was satisfied for the Plan Year.

4.2 (a)     The Employer shall make an incentive allocation determined under Paragraph 4.3 below only if the Performance Goal (defined below) is met for the Plan Year as determined in the sole discretion of the Committee.

(b) “Performance Goal” shall mean a Return on Average Shareholders’ Equity as determined in the sole discretion of the Committee each year based on the annual operating plan for the relevant fiscal year.

4.3 If the Performance Goal (defined above) is met for a Plan Year, those Participants eligible for an Employer incentive allocation under Paragraph 4.1 above shall receive such an allocation determined by the Committee as follows:

(a) The Committee shall determine the number of LSI Common Shares deemed to have been acquired during the Plan Year and each of the two immediately preceding Plan Years with the Compensation deferrals for such years. In making that determination, the Committee shall consider only Compensation deferrals for a Plan Year up to 40% of the Participant’s Compensation.

(b) The Committee shall determine the percentages applicable to each eligible Participant for the current Plan Year and for each of the two preceding Plan Years from the following:

	Return on Average Shareholders’ Equity
	At least Performance Goal but less than Performance Goal plus 0.5%	At least Performance Goal plus 0.5% but less than Performance Goal plus 1.0%	Performance Goal plus 1.0% or more
Corporate Officers and Top Executives	20%	25%	30%
All Other Employees	10%	12.5%	15%

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The Participant’s status (as a “corporate officer” or “top executive”) as determined by the Committee at the end of the Plan Year in which the Participant makes Compensation deferrals will determine the level of Employer allocations under this Paragraph attributable to such Compensation deferrals for that Plan Year.

(c) The applicable percentages determined for a Participant for the Plan Year and the two immediately preceding Plan Years shall be applied against the number of LSI Common Shares determined for the respective Plan Years (under (a) above). The resulting number shall be rounded to the nearest whole share.

(d) The Committee shall determine the value of the number of LSI Common Shares (determined under (c) above) as of such date as it deems appropriate. That amount shall be credited to the Participant’s Deferred Compensation Account at such time as the Committee shall determine.

ARTICLE V. ADDITIONAL LSI ALLOCATIONS

The Employer may make additional discretionary allocations to certain Participants. Such additional discretionary allocations must be approved by the Committee and shall be credited to the Participants’ Deferred Compensation Accounts at such time as the Committee shall determine.

ARTICLE VI. PARTICIPANT’S INTEREST

Neither a Participant nor a Participant’s designated Beneficiary shall acquire any property interest in the Participant’s Deferred Compensation Account or any other assets of the Employer, their rights being limited to receiving from the Employer a deferred payment as set forth in this Plan, and these rights are conditioned upon continued compliance with the terms and conditions of this Plan. To the extent that any Participant or Beneficiary acquires a right to receive benefits under this Plan, such right shall be no greater than the right of any unsecured general creditor of the Employer.

ARTICLE VII. CREDITING OF EARNINGS

7.1 General. There shall be credited to the Deferred Compensation Account of each Participant an additional amount of earnings (or losses) determined under this Article VII.

7.2 Investment of Compensation Deferrals in LSI Common Shares. All Compensation deferrals for a Plan Year shall be credited with earnings (or losses) as though invested primarily in LSI Common Shares. Participants who, prior to the amendment and restatement, had amounts attributable to their Deferred Compensation Account credited with earnings or losses based on any investment election other than the LSI Common Shares investment election shall receive a cash distribution before July 1, 1998 equal to such value of all accounts subject to such other investment elections under the Plan as it then existed.

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7.3 Employer Allocations. Employer allocations under Article III and Article IV shall be credited with earnings (or losses) as if it were invested primarily in LSI Common Shares. The Participant shall have no right to elect that alternative investments be used.

7.4 Determination of Rate of Return. The Committee shall determine the rate of return throughout each Plan Year quarter or other period for the investment in LSI Common Shares and any other investment required to maintain the liquidity of the Plan.

7.5 Investment Adjustment. For each Plan Year quarter or other period, the Participant’s Deferred Compensation Account shall be increased or decreased as if it had earned the rate of return corresponding to the amount determined by the Committee under Paragraph 7.4. Such increase or decrease shall be based on the balance in the Deferred Compensation Account throughout the Plan Year quarter or other period and shall be credited at such time as the Committee in its sole discretion shall determine.

ARTICLE VIII. PLAN BENEFITS

8.1 Vesting. Effective as of September 9, 2005, a Participant’s rights to the Participant’s Deferred Compensation Account (as adjusted for earnings and losses) shall be fully vested and nonforfeitable at all times.

8.2 Distribution of Benefit.

(a) At the time an Executive makes the first deferral election under Article II, the Executive shall also elect to have the amounts represented by the Executive’s Deferred Compensation Account paid in one of the following two forms commencing as soon as administratively feasible upon the Executive’s Separation from Service but in all events within 90 days following the date of such Separation from Service:

(1) a single lump sum payment, or

(2) approximately equal annual installments to last not more than 10 years.

If installment payments are in effect, the Participant’s Deferred Compensation Account shall continue to be credited with earnings (or losses) under Article VII until payment of the final installment.

(b) A Participant may change the election referred to in (a) above only in accordance with this Paragraph 0. Effective for deferrals made before January 1, 2005, payment shall be made in accordance with any such changed election only if the Participant terminates service with all Employers at least 12 months following the date of the election. Otherwise, the payment shall be made in accordance with the election (if any) in effect immediately prior to the changed election. Effective for deferrals made on or after January 1, 2005, subsequent elections to change the time and form of payment must meet the following requirements:

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(1) Elections shall not be effective until at least 12 months following the date the election is made.

(2) For all elections for payments other than because of death or an unforeseeable emergency (as such term is defined in Paragraph 7.4), the first payment may not be made for a period of not less than 5 years from the date such payment would otherwise have been made (or in the case of installment payments, 5 years from the date the first amount was scheduled to be paid).

Notwithstanding the preceding sentence, effective for deferrals made on or after January 1, 2005, a Participant shall be permitted to make a subsequent election to change the form of payment during 2008, provided such election is made on or before December 31, 2008, and provided further that such election may apply only to amounts that would not otherwise be payable in 2008 and may not cause an amount to be paid in 2008 that would not otherwise be payable in 2008.

(c) If a Participant has no election concerning the form of benefit payment under this Paragraph 8.2 in effect at the time of the Participant’s Separation from Service, payment shall be made in a single lump sum payment.

(d) Elections shall be made in writing, on a form provided by the Committee, and shall be made in accordance with the rules established by the Committee.

(e) Notwithstanding the Participant’s payment election under this Paragraph 8.2 for a Participant who is a “specified employee” as defined in Code Section 409A and the rules and regulations promulgated thereunder, a distribution may not be made before the date which is 6 months after the date of the Participant’s Separation from Service (or if earlier, the date of death of the Participant).

8.3 Distribution of LSI Common Shares. Participants shall receive benefit payments in the form of whole shares of LSI Common Shares. Any fractional shares shall be paid in cash. Any expenses attributable to such payment may be deducted from the Participant’s Deferred Compensation Account. The maximum number of LSI Common Shares available for issuance under the Plan shall be 575,000.

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8.4 Hardship Distribution. Subject to the approval of the Committee, a Participant may withdraw all or a portion of the Participant’s Deferred Compensation Account in the event of a hardship. The distribution shall be made in the form of whole shares of LSI Common Shares. Any fractional shares shall be paid in cash. A hardship distribution shall only be made in the event of an unforeseeable emergency that would result in severe financial hardship to the Participant if hardship distributions were not permitted. Withdrawals of amounts because of an unforeseeable emergency shall only be permitted to the extent reasonably needed to satisfy the emergency need. An unforeseeable emergency is defined as severe financial hardship to the Participant resulting from a sudden and unexpected illness or accident of the Participant, the Participant’s spouse, the Participant’s Beneficiary, or the Participant’s dependent (as defined in Code Section 152, without regard to Code Section 152(b)(1), (b)(2) and (d)(1)(B)), loss of the Participant’s property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. The circumstances that will constitute an unforeseeable emergency will depend upon the facts of each case, but, in any case, payment may not be made to the extent such hardship is or may be relieved (1) through reimbursement or compensation by insurance or otherwise (2) liquidation of the Participant’s assets (to the extent the liquidation of such assets would not cause severe financial hardship, or (3) by cessation of deferrals under the Plan. In the event of an unforeseeable emergency (regardless of whether a hardship distribution is made), a Participant’s deferral election under Paragraph 2.1 shall terminate and no further deferrals shall be made for such Participant for the remainder of the Plan Year.

ARTICLE IX. DEATH

Upon the death of a Participant prior to commencement of payment under Article VIII, the amounts represented by the Participant’s Deferred Compensation Account, increased by any amounts due to be credited but not yet credited under Article II, Article III or Article IV shall be payable to the Participant’s Beneficiary as soon as administratively feasible following the date of the Participant’s death but in all events within 90 days following such date in the form of distribution elected by the Participant pursuant to Paragraph 8.2(a). If the Participant has already commenced receiving the amounts represented by the Participant’s Deferred Compensation Account in the installment payment form, the installment payments shall continue to be paid to the Participant’s Beneficiary. The Beneficiary shall receive any benefit payments in the form of whole shares of LSI Common Shares.

ARTICLE X. NON-ASSIGNABLE/NON-ATTACHMENT

Except as required by law, no right of the Participant or designated Beneficiary to receive payments under this Plan shall be subject to anticipation, commutation, alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation or to execution, attachment, levy or similar process or assignment by operation of law and any attempt, voluntary or involuntary, to effect any such action shall be null and void and of no effect. An Employer may not assign its obligations hereunder.

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ARTICLE XI. CONSTRUCTION

This Plan shall be construed under the laws of the Code and to the extent not preempted by federal law, according to the laws of the State of Ohio. Article headings are for convenience only and shall not be considered as part of the terms and provisions of the Plan. The Committee shall have full power and authority to interpret, construe and administer this Plan.

ARTICLE XII. AMENDMENT OR TERMINATION OF PLAN

The Plan may be terminated at any time or amended in whole or in part from time to time by LSI Industries Inc. provided that no such termination or amendment may directly or indirectly reduce a Participant’s Deferred Compensation Account (other than through a distribution thereof to the Participant (or his Beneficiary in the event of his death)); and any such amendment shall be binding on each Employer, Participant and designated Beneficiary.

ARTICLE XIII. MISCELLANEOUS

13.1 Neither this Plan, nor any action of LSI Industries Inc., an Employer or the Committee, nor any election to defer Compensation hereunder shall be held or construed to confer on any person any legal right to be continued as an employee of LSI Industries Inc. or any Employer.

13.2 LSI Industries Inc. and the Participant’s Employer shall have the right to deduct from all payments and amounts credited hereunder any taxes required by law to be withheld with respect to any benefits under this Plan.

IN WITNESS WHEREOF, LSI Industries Inc. and each Employer, with the consent of LSI Industries Inc., have caused this amended and restated Plan to be executed as of this 20th day of November, 2014.

LSI INDUSTRIES INC. 

By:    /s/ Ronald S. Stowell 

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EX-31

EXHIBIT 31.1

Certification of Principal Executive Officer

Pursuant to Rule 13a-14(a)

I, Dennis W. Wells, certify that:

1.      I have reviewed this quarterly report on Form 10-Q of LSI Industries Inc.;              

2.       Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.       Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.       The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)       Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)       Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)       Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)       Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.       The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

(a)       All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)       Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  February 5, 2015	/s/ Dennis W. Wells
	Principal Executive Officer

EX-31

EXHIBIT 31.2

Certification of Principal Financial Officer

Pursuant to Rule 13a-14(a)

I, Ronald S. Stowell, certify that:

1.       I have reviewed this quarterly report on Form 10-Q of LSI Industries Inc.;

2.       Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.       Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.       The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)       Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)       Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)       Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)       Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.       The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

(a)       All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)       Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  February 5, 2015	/s/ Ronald S. Stowell
	Principal Financial Officer

EX-32

EXHIBIT 32.1

CERTIFICATION OF DENNIS W. WELLS

Pursuant to Section 1350 of Chapter 63 of the

United States Code and Rule 13a-14b

In connection with the filing with the Securities and Exchange Commission of the Quarterly Report of LSI Industries Inc. (the “Company”) on Form 10-Q for the quarter ended December 31, 2014 (the “Report”), I, Dennis W. Wells, Principal Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Dennis W. Wells

Dennis W. Wells

Chairman of the Board, Chief Executive Officer and President

Date: February 5, 2015

A signed original of this written statement required by Section 906 has been provided to LSI Industries Inc. and will be retained by LSI Industries Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32

EXHIBIT 32.2

CERTIFICATION OF RONALD S. STOWELL

Pursuant to Section 1350 of Chapter 63 of the

United States Code and Rule 13a-14b

In connection with the filing with the Securities and Exchange Commission of the Quarterly Report of LSI Industries Inc. (the “Company”) on Form 10-Q for the quarter ended December 31, 2014 (the “Report”), I, Ronald S. Stowell, Principal Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Ronald S. Stowell

Ronald S. Stowell

Vice President, Chief Financial Officer, and Treasurer

Date:  February 5, 2015

A signed original of this written statement required by Section 906 has been provided to LSI Industries Inc. and will be retained by LSI Industries Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Note 3- Business Segment Information (Details) - Revenue by Geographic Region (USD $)	3 Months Ended				6 Months Ended
	Dec. 31, 2014		Dec. 31, 2013		Dec. 31, 2014	Dec. 31, 2013
Net Sales (a):
Net Sales	$ 84,715,000	[1]	$ 76,123,000	[1]	$ 163,181,000	$ 156,609,000
UNITED STATES
Net Sales (a):
Net Sales	84,715,000	[1]	76,060,000	[1]	163,140,000	155,733,000
CANADA
Net Sales (a):
Net Sales		[1]	$ 63,000	[1]	$ 41,000	$ 876,000

[1] Net sales are attributed to geographic areas based upon the location of the operation making the sale.

XML

Note 10 - Equity Compensation (Details) - Stock Options (USD $)	6 Months Ended		12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Jun. 30, 2014	Jun. 30, 2013
Stock Options [Abstract]
Outstanding - Shares	2,867,614	2,714,700	2,677,464	2,341,150
Outstanding - Weighted Average Exercise Price	$ 8.95	$ 9.55	$ 9.57	$ 9.95
Outstanding - Weighted Average Remaining Contractual Term	6 years 109 days	5 years 292 days	5 years 146 days	5 years 219 days
Outstanding - Aggregate Intrinsic Value	$ 558,591	$ 2,707,888	$ 1,674,010	$ 1,544,896
Exercisable - Shares	1,778,589	1,908,337
Exercisable - Weighted Average Exercise Price	$ 10.24	$ 10.70
Exercisable - Weighted Average Remaining Contractual Term	4 years 219 days	4 years 6 months
Exercisable - Aggregate Instrinsic Value	$ 438,785	$ 1,208,150
Granted - Shares	593,400	421,000
Granted - Weighted Average Exercise Price	$ 6.66	$ 7.20
Forfeitures - Shares	(378,525)	(25,550)
Forfeitures - Weighted Average Exercise Price	$ 9.99	$ 10.71
Exercised - Shares	(24,725)	(21,900)
Exercised - Weighted Average Exercise Price	$ 5.84	$ 6.41

XML

Note 7 - Goodwill and Other Intangible Assets (Details) - Amortization Expense of Other Intangible Assets (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Three Months Ended [Member]
Note 7 - Goodwill and Other Intangible Assets (Details) - Amortization Expense of Other Intangible Assets [Line Items]
Amortization of Intangible Assets	$ 127	$ 208
Six Months Ended [Member]
Note 7 - Goodwill and Other Intangible Assets (Details) - Amortization Expense of Other Intangible Assets [Line Items]
Amortization of Intangible Assets	$ 275	$ 406

XML

Note 10 - Equity Compensation (Details) - Summary of Unvested Stock Options (USD $)	6 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Jun. 30, 2014
Summary of Unvested Stock Options [Abstract]
Non-vested shares	1,089,025		803,138
Non-vested weighted-average grant date fair value	$ 2.90		$ 2.39
Granted	593,400	421,000
Granted	$ 3.23	$ 2.64
Vested	(268,763)
Vested	$ 2.23
Forfeited	(38,750)
Forfeited	$ 2.23

XML

Note 7 - Goodwill and Other Intangible Assets (Details) - Goodwill (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Dec. 31, 2014	Jun. 30, 2014
Goodwill [Line Items]
Goodwill	$ 75,224	$ 78,343
Accumulated impairment Losses	(64,716)	(67,835)
Net Goodwill	10,508	10,508
Lighting Segment [Member]
Goodwill [Line Items]
Goodwill	34,913	34,913
Accumulated impairment Losses	(34,778)	(34,778)
Net Goodwill	135	135
Graphics Segment [Member]
Goodwill [Line Items]
Goodwill	24,959	24,959
Accumulated impairment Losses	(24,959)	(24,959)
Net Goodwill	0	0
Electronics Components Segment [Member]
Goodwill [Line Items]
Goodwill	11,621	11,621
Accumulated impairment Losses	(2,413)	(2,413)
Net Goodwill	9,208	9,208
All Other Category [Member] | LSI Saco [Member]
Goodwill [Line Items]
Goodwill	(3,119)
Accumulated impairment losses	3,119
All Other Category [Member]
Goodwill [Line Items]
Goodwill	3,731	6,850
Accumulated impairment Losses	(2,566)	(5,685)
Net Goodwill	1,165	1,165
LSI Saco [Member]
Goodwill [Line Items]
Goodwill	(3,119)
Accumulated impairment losses	$ 3,119

XML

Note 2- Summary of Significant Accounting Policies (Details) - Estimated Useful Lives of Long-Lived Assets	6 Months Ended
	Dec. 31, 2014
Building [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Property Plant and Equipment - estimated useful lives	28
Building [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Property Plant and Equipment - estimated useful lives	40
Machinery and Equipment [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Property Plant and Equipment - estimated useful lives	3
Machinery and Equipment [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Property Plant and Equipment - estimated useful lives	10
Software and Software Development Costs [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Property Plant and Equipment - estimated useful lives	3
Software and Software Development Costs [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Property Plant and Equipment - estimated useful lives	8

XML

Note 12 - Commitments and Contingencies (Details) (USD $)	1 Months Ended
	Mar. 19, 2012	Dec. 31, 2014	Jun. 30, 2013
Standby Letters of Credit [Member]
Note 12 - Commitments and Contingencies (Details) [Line Items]
Letters of Credit Outstanding, Amount		$ 0
LSI Virticus [Member]
Note 12 - Commitments and Contingencies (Details) [Line Items]
Business Combination, Contingent Consideration, Liability	877,000		0
Liability Payment Period	5 years
Loss Contingency, Range of Possible Loss, Maximum		$ 3,000,000

XML

Note 5 - Inventories (Tables)

6 Months Ended

Dec. 31, 2014

Inventory Disclosure [Abstract]

Schedule of Inventory, Current [Table Text Block]

	December 31,		June 30,
(In thousands)	2014		2014
Inventories:
Raw materials	$	26,781	$	30,278
Work-in-process		4,707		5,393
Finished goods		10,579		9,737
Total Inventories	$	42,067	$	45,408

XML

Note 8 - Revolving Lines of Credit (Details) (USD $)	1 Months Ended	6 Months Ended
	Apr. 30, 2014	Dec. 31, 2014
London Interbank Offered Rate (LIBOR) [Member] | Minimum [Member]
Note 8 - Revolving Lines of Credit (Details) [Line Items]
Debt Instrument, Basis Spread on Variable Rate	1.50%
London Interbank Offered Rate (LIBOR) [Member] | Maximum [Member]
Note 8 - Revolving Lines of Credit (Details) [Line Items]
Debt Instrument, Basis Spread on Variable Rate	1.90%
UNITED STATES
Note 8 - Revolving Lines of Credit (Details) [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	30,000,000
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage		0.15%
CANADA
Note 8 - Revolving Lines of Credit (Details) [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	5,000,000
Long-term Line of Credit		0

XML

Note 4 - Earnings Per Common Share (Details) - Basic and Diluted Earnings Per Share (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended				6 Months Ended
	Dec. 31, 2014		Dec. 31, 2013		Dec. 31, 2014		Dec. 31, 2013
BASIC EARNINGS PER SHARE
Net income (in Dollars)	$ 1,588		$ 870		$ 3,115		$ 2,735
Weighted average shares outstanding
Impact of common shares to be issued under stock option plans, and contingently issuable shares, if any	58	[1]	254	[1]	64	[1]	167	[1]
Weighted average shares outstanding (c)	24,507	[2]	24,627	[2]	24,506	[2]	24,530	[2]
Diluted earnings per share (in Dollars per share)	$ 0.06		$ 0.04		$ 0.13		$ 0.11
Weighted average shares outstanding - Basic	24,449		24,373		24,442		24,363
Basic earnings per share (in Dollars per share)	$ 0.06		$ 0.04		$ 0.13		$ 0.11
Weighted average shares outstanding in the Deferred Compensation Plan during the period	325		307		319		301
Net of Treasury Shares [Member]
Weighted average shares outstanding
Weighted average shares outstanding - Basic	24,124	[3]	24,066	[3]	24,123	[3]	24,062	[3]

[1] Calculated using the "Treasury Stock" method as if dilutive securities were exercised and the funds were used to purchase common shares at the average market price during the period.

[2] Options to purchase 2,377,900 common shares and 1,197,150 common shares at December 31, 2014 and 2013, respectively, and options to purchase 2,371,900 common shares and 1,676,650 common shares at December 31, 2014 and 2013, respectively, were not included in the computation of the three month and six month periods for diluted earnings per share, respectively, because the exercise price was greater than the average fair market value of the common shares.

[3] Includes shares accounted for like treasury stock in accordance with Accounting Standards Codification Topic 710, Compensation - General.

XML

Note 3- Business Segment Information (Details) - Identifiable Assets by Segment (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Jun. 30, 2014
Identifiable Assets:
Identifiable Assets	$ 173,778	$ 169,888
Lighting Segment [Member]
Identifiable Assets:
Identifiable Assets	92,385	96,499
Graphics Segment [Member]
Identifiable Assets:
Identifiable Assets	26,230	22,312
Electronics Components Segment [Member]
Identifiable Assets:
Identifiable Assets	30,093	30,788
All Other Category [Member]
Identifiable Assets:
Identifiable Assets	4,443	4,987
Corporate and Eliminations [Member]
Identifiable Assets:
Identifiable Assets	$ 20,627	$ 15,302

XML

Note 10 - Equity Compensation (Details) (USD $)	3 Months Ended					6 Months Ended		12 Months Ended		3 Months Ended
	Dec. 31, 2014	Jun. 30, 2014	Mar. 31, 2014	Sep. 30, 2013	Mar. 31, 2013	Dec. 31, 2014	Dec. 31, 2013	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013
Note 10 - Equity Compensation (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term						6 years 109 days	5 years 292 days	5 years 146 days	5 years 219 days
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant (in Shares)	1,258,156					1,258,156
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number (in Shares)	2,867,614	2,677,464				2,867,614	2,714,700	2,677,464	2,341,150	2,714,700
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number (in Shares)	1,778,589					1,778,589	1,908,337			1,908,337
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized	$ 1,514,863					$ 1,514,863
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition						37 months
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Remaining Contractual Term						4 years 219 days	4 years 6 months
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross (in Shares)						593,400	421,000
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price (in Dollars per share)						$ 6.66	$ 7.20
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value (in Dollars per share)						$ 3.23	$ 2.64
Share-based Compensation, Valuation Assumptions, Expected Forfeiture Rate	2.10%	2.00%	2.10%	2.20%	2.30%
Stock or Unit Option Plan Expense						882,000	779,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Number (in Shares)	2,842,342					2,842,342
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Weighted Average Exercise Price (in Dollars per share)	$ 8.97					$ 8.97
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Aggregate Intrinsic Value	554,212					554,212
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Exercisable, Weighted Average Remaining Contractual Term						6 years 109 days
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period, Intrinsic Value						22,383	59,520
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested in Period, Aggregate Grant Date Fair Value						598,316	737,054
Proceeds from Stock Options Exercised						108,000	152,000
Increase (Decrease) in Income Taxes Payable						7,834
Decrease In Common Stock Related To Stock Option Exercises						36,575
Reduction or Incorease of Income Tax Expense Related to Stock Option Exercises						7,690
Reduction Of Deferred Tax Asset Related To Stock Option Exercises						36,718
Share-based Compensation Arrangement by Share-based Payment Award, Shares Issued in Period (in Shares)						13,800	11,575
Stock Issued During Period, Value, Share-based Compensation, Gross						96,000	95,000
Treasury Stock, Shares (in Shares)	327,362	307,328				327,362		307,328
Treasury Stock, Value	3,053,900	2,914,700				3,053,900		2,914,700
Employee Stock Option [Member]
Note 10 - Equity Compensation (Details) [Line Items]
Stock or Unit Option Plan Expense	796,192					881,825	779,294			93,635
Excluding Tax Effect of Disqualified Dispositions [Member]
Note 10 - Equity Compensation (Details) [Line Items]
Proceeds from Stock Options Exercised						144,352	140,404
Each Ninety Days [Member] | Non-Employee Directors [Member]
Note 10 - Equity Compensation (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage						25.00%
Annually [Member] | Employees [Member]
Note 10 - Equity Compensation (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage						25.00%
Maximum [Member]
Note 10 - Equity Compensation (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term						10 years
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Remaining Contractual Term						9 years 11 months
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price (in Dollars per share)						$ 6.94
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value (in Dollars per share)						$ 3.48
Treasury Stock Acquired, Repurchase Authorization						29,000
Minimum [Member]
Note 10 - Equity Compensation (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Remaining Contractual Term						9 years 9 months
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price (in Dollars per share)						$ 5.96	$ 7.20
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value (in Dollars per share)						$ 2.19	$ 2.64
Treasury Stock Acquired, Repurchase Authorization						25,000
Employee Salary Deferrals or Company Contributions [Member]
Note 10 - Equity Compensation (Details) [Line Items]
Treasury Stock, Value, Acquired, Cost Method						$ 139,100	$ 149,800
Treasury Stock, Shares, Acquired (in Shares)						20,034	20,157

XML

Note 7 - Goodwill and Other Intangible Assets (Details) - Other Intangible Assets (USD $)	Dec. 31, 2014	Jun. 30, 2014
Amortized Intangible Assets
Amortized Intangible Assets, Gross	$ 22,052,000	$ 23,088,000
Amortized Intangible Assets, Accumulated Amortization	19,130,000	19,283,000
Amortized Intangible Assets, Net	2,922,000	3,805,000
Indefinite-lived Intangible Assets
Indefinite-lived Intangible Assets, Gross	3,422,000	3,422,000
Indefinite-lived Intangible Assets, Net	3,422,000	3,422,000
Intangible Assets, Gross	25,474,000	26,510,000
Intangible Assets, Accumulated Amortization	19,130,000	19,283,000
Intangible Assets, Net	6,344,000	7,227,000
Trademarks and Trade Names [Member]
Indefinite-lived Intangible Assets
Indefinite-lived Intangible Assets, Gross	3,422,000	3,422,000
Indefinite-lived Intangible Assets, Net	3,422,000	3,422,000
Customer Relationships [Member]
Amortized Intangible Assets
Amortized Intangible Assets, Gross	9,316,000	10,352,000
Amortized Intangible Assets, Accumulated Amortization	7,144,000	7,412,000
Amortized Intangible Assets, Net	2,172,000	2,940,000
Indefinite-lived Intangible Assets
Intangible Assets, Accumulated Amortization	7,144,000	7,412,000
Patents [Member]
Amortized Intangible Assets
Amortized Intangible Assets, Gross	338,000	338,000
Amortized Intangible Assets, Accumulated Amortization	102,000	84,000
Amortized Intangible Assets, Net	236,000	254,000
Indefinite-lived Intangible Assets
Intangible Assets, Accumulated Amortization	102,000	84,000
Technology-Based Intangible Assets [Member]
Amortized Intangible Assets
Amortized Intangible Assets, Gross	11,228,000	11,228,000
Amortized Intangible Assets, Accumulated Amortization	10,873,000	10,832,000
Amortized Intangible Assets, Net	355,000	396,000
Indefinite-lived Intangible Assets
Intangible Assets, Accumulated Amortization	10,873,000	10,832,000
Trade Names [Member]
Amortized Intangible Assets
Amortized Intangible Assets, Gross	460,000	460,000
Amortized Intangible Assets, Accumulated Amortization	460,000	454,000
Amortized Intangible Assets, Net		6,000
Indefinite-lived Intangible Assets
Intangible Assets, Accumulated Amortization	460,000	454,000
Noncompete Agreements [Member]
Amortized Intangible Assets
Amortized Intangible Assets, Gross	710,000	710,000
Amortized Intangible Assets, Accumulated Amortization	551,000	501,000
Amortized Intangible Assets, Net	159,000	209,000
Indefinite-lived Intangible Assets
Intangible Assets, Accumulated Amortization	$ 551,000	$ 501,000

XML

Note 4 - Earnings Per Common Share

6 Months Ended

Dec. 31, 2014

Earnings Per Share [Abstract]

Earnings Per Share [Text Block]

NOTE 4 - EARNINGS PER COMMON SHARE

The following table presents the amounts used to compute basic and diluted earnings per common share, as well as the effect of dilutive potential common shares on weighted average shares outstanding (in thousands, except per share data):

	Three Months Ended				Six Months Ended
	December 31				December 31
	2014		2013		2014		2013
BASIC EARNINGS PER SHARE
Net income	$	1,588	$	870	$	3,115	$	2,735
Weighted average shares outstanding during the period, net of treasury shares (a)		24,124		24,066		24,123		24,062
Weighted average shares outstanding in the Deferred Compensation Plan during the period		325		307		319		301
Weighted average shares outstanding		24,449		24,373		24,442		24,363
Basic earnings per share	$	0.06	$	0.04	$	0.13	$	0.11
DILUTED EARNINGS PER SHARE
Net income	$	1,588	$	870	$	3,115	$	2,735
Weighted average shares outstanding
Basic		24,449		24,373		24,442		24,363
Effect of dilutive securities (b):
Impact of common shares to be issued under stock option plans, and contingently issuable shares, if any		58		254		64		167
Weighted average shares outstanding (c)		24,507		24,627		24,506		24,530
Diluted earnings per share	$	0.06	$	0.04	$	0.13	$	0.11

(a) Includes shares accounted for like treasury stock in accordance with Accounting Standards Codification Topic 710, Compensation - General.

(b) Calculated using the “Treasury Stock” method as if dilutive securities were exercised and the funds were used to purchase common shares at the average market price during the period.

(c) Options to purchase 2,377,900 common shares and 1,197,150 common shares at December 31, 2014 and 2013, respectively, and options to purchase 2,371,900 common shares and 1,676,650 common shares at December 31, 2014 and 2013, respectively, were not included in the computation of the three month and six month periods for diluted earnings per share, respectively, because the exercise price was greater than the average fair market value of the common shares.

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Note 5 - Inventories (Details) - Inventory (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Jun. 30, 2014
Inventories:
Raw materials	$ 26,781	$ 30,278
Work-in-process	4,707	5,393
Finished goods	10,579	9,737
Total Inventories	$ 42,067	$ 45,408

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Note 11 - Supplemental Cash Flow Information (Tables)

6 Months Ended

Dec. 31, 2014

Supplemental Cash Flow Elements [Abstract]

Schedule of Cash Flow, Supplemental Disclosures [Table Text Block]

(In thousands)	Six Months Ended December 31
	2014		2013
Cash payments:
Interest	$	36	$	38
Income taxes	$	21	$	690
Issuance of common shares as compensation	$	96	$	96

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Note 10 - Equity Compensation (Tables)

6 Months Ended

Dec. 31, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

	Three Months Ended					Six Months Ended
	December 31					December 31
	2014			2013		2014			2013
Dividend yield		1.17	%		--		1.17	%		3.33	%
Expected volatility		56	%		--		56	%		53	%
Risk-free interest rate		1.64	%		--		1.64	%		1.66	%
Expected life (years)		6.0			--		6.0			5.5

Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block]

	Six Months Ended December 31, 2014
	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value
Outstanding at 6/30/14		2,677,464		$	9.57		5.4	$	1,674,010
Granted		593,400		$	6.66
Forfeitures		(378,525	)	$	9.99
Exercised		(24,725	)	$	5.84
Outstanding at 12/31/14		2,867,614		$	8.95		6.3	$	558,591
Exercisable at 12/31/14		1,778,589		$	10.24		4.6	$	438,785

	Six Months Ended December 31, 2013
	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value
Outstanding at 6/30/13		2,341,150		$	9.95		5.6	$	1,544,896
Granted		421,000		$	7.20
Forfeitures		(25,550	)	$	10.71
Exercised		(21,900	)	$	6.41
Outstanding at 12/31/13		2,714,700		$	9.55		5.8	$	2,707,888
Exercisable at 12/31/13		1,908,337		$	10.70		4.5	$	1,208,150

Schedule of Nonvested Share Activity [Table Text Block]

	Shares			Weighted-Average Grant Date Fair Value
Non-vested at June 30, 2014		803,138		$	2.39
Granted		593,400		$	3.23
Vested		(268,763	)	$	2.23
Forfeited		(38,750	)	$	2.23
Non-vested at December 31, 2014		1,089,025		$	2.90

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Note 11 - Supplemental Cash Flow Information (Details) - Supplemental Cash Flow Information (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Cash payments:
Interest	$ 36	$ 38
Income taxes	21	690
Issuance of common shares as compensation	$ 96	$ 96

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Note 6 - Accrued Expenses (Details) - Accrued Expenses (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Jun. 30, 2014	Dec. 31, 2013	Jun. 30, 2013
Accrued Expenses [Abstract]
Compensation and benefits	$ 8,607	$ 7,134
Customer prepayments	1,272	1,473
Accrued sales commissions	1,838	1,814
Accrued warranty	3,248	2,662	1,442	1,424
Other accrued expenses	2,966	2,548
Total Accrued Expenses	$ 17,931	$ 15,631

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Note 15 - Income Taxes (Tables)

6 Months Ended

Dec. 31, 2014

Income Tax Disclosure [Abstract]

Schedule of Effective Income Tax Rate Reconciliation [Table Text Block]

	Three Months Ended						Six Months Ended
	December 31						December 31
	2014			2013			2014			2013
Reconciliation to effective tax rate:
Provision for income taxes at the anticipated annual tax rate		36.1	%		40.6	%		41.0	%		37.9	%
Impact of foreign operations		--			(1.8	)		(0.2	)		(1.0	)
Enactment of tax law changes		(6.1	)		--			(2.9	)		--
Valuation allowances		--			7.9			--			2.8
Uncertain tax positions		(1.3	)		(4.1	)		(1.2	)		(2.9	)
Other		(0.3	)		(0.6	)		(2.4	)		--
Effective tax rate		28.4	%		42.0	%		34.3	%		36.8	%

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Note 2- Summary of Significant Accounting Policies (Details) (USD $)	3 Months Ended		6 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2014	Dec. 31, 2013	Jun. 30, 2014
Note 2- Summary of Significant Accounting Policies (Details) [Line Items]
Cash, FDIC Insured Amount	$ 250,000		$ 250,000
Cash, Uninsured Amount	20,926,000		20,926,000		12,367,000
Depreciation	1,425,000	1,353,000	2,863,000	2,563,000
Fair Value Disclosure, Off-balance Sheet Risks, Amount, Asset	0		0
Fair Value Disclosure, Off-balance Sheet Risks, Amount, Liability	0		0
Research and Development Expense	1,450,000	2,127,000	3,301,000	4,081,000
Incremental Common Shares Attributable to Dilutive Effect of Contingently Issuable Shares (in Shares)	383,000	561,000	383,000	468,000
Leasehold Improvements [Member] | Maximum [Member]
Note 2- Summary of Significant Accounting Policies (Details) [Line Items]
Property, Plant and Equipment, Useful Life			15 years
Product Warranty Exceptions [Member] | Maximum [Member]
Note 2- Summary of Significant Accounting Policies (Details) [Line Items]
Standard Warranty Term			10 years
Foreign Bank Accounts [Member]
Note 2- Summary of Significant Accounting Policies (Details) [Line Items]
Cash, Uninsured Amount					$ 741,000
Maximum [Member]
Note 2- Summary of Significant Accounting Policies (Details) [Line Items]
Finite-Lived Intangible Asset, Useful Life			20 years
Standard Warranty Term			5 years
Minimum [Member]
Note 2- Summary of Significant Accounting Policies (Details) [Line Items]
Finite-Lived Intangible Asset, Useful Life			5 years
Standard Warranty Term			1 year

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Note 3- Business Segment Information

6 Months Ended

Dec. 31, 2014

Segment Reporting [Abstract]

Segment Reporting Disclosure [Text Block]

NOTE 3 - BUSINESS SEGMENT INFORMATION

ASC Topic 280, “Segment Reporting,” establishes standards for reporting information regarding operating segments in annual financial statements and requires selected information of those segments to be presented in financial statements. Operating segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the chief operating decision maker (the Company’s Chief Executive Officer) in making decisions on how to allocate resources and assess performance. While the Company has twelve operating segments, it has only three reportable operating business segments (Lighting, Graphics, and Electronic Components), an All Other Category, and Corporate and Eliminations.

The Lighting Segment includes outdoor, indoor, and landscape lighting utilizing both traditional and LED light sources, that has been fabricated and assembled for the commercial, industrial and multi-site retail lighting markets, the Company’s primary niche markets (petroleum / convenience store market, automotive dealership market, and quick service restaurant market), and LED solid state digital sports video screens. LED video screens are designed and manufactured by the Company’s Lighting Segment. The Lighting Segment includes the operations of LSI Ohio Operations, LSI Metal Fabrication, LSI MidWest Lighting and LSI Lightron.  These operations have been integrated, have similar economic characteristics and meet the other requirements for aggregation in segment reporting.   

The Graphics Segment designs, manufactures and installs exterior and interior visual image elements related to traditional graphics and active digital signage along with the management of media content related to digital signage. These products are used in visual image programs in several markets, including the petroleum / convenience store market and multi-site retail operations. The Graphics Segment includes the operations of Grady McCauley, LSI Retail Graphics and LSI Integrated Graphic Systems, which have been aggregated as each facility manufactures two-dimensional graphics with the use of screen and digital printing, fabricate three-dimensional structural graphics sold in the multi-site retail, petroleum / convenience store markets and with other markets, and each exhibit similar economic characteristics and meet the other requirements for aggregation in segment reporting.

The Electronic Components Segment designs, engineers and manufactures custom designed electronic circuit boards, assemblies and sub-assemblies, and various products used in other applications including the control of solid-state LED lighting and metal halide lighting.  The Electronic Components Segment includes the operations of LSI ADL Technology as well as LSI Controls (formerly LSI Virticus). LSI ADL Technology sells electronic circuit boards, assemblies and sub-assemblies directly to customers and also has significant inter-segment sales to the Lighting Segment. LSI Controls sells lighting control systems directly to customers and to the Lighting Segment. Products produced by this segment may have applications in the Company’s other LED product lines such as digital scoreboards, advertising ribbon boards and billboards.  

The All Other Category includes the Company’s operating segments that historically neither meet the aggregation criteria, nor the criteria to be a separate reportable segment.  The Operations of LSI Images (menu board systems), LSI Adapt (implementation, installation and program management services related to products of the Graphics and Lighting Segments) and LSI Saco Technologies (designed and produced high-performance light engines, large format video screens using solid-state LED technology, and certain specialty LED lighting) are combined in the All Other Category. LSI Saco Technologies was sold on September 30, 2014 (See Note 13).

The Company’s corporate administration activities are reported in a line item titled Corporate and Eliminations.  This primarily includes intercompany profit in inventory eliminations, expense related to certain corporate officers and support staff, the Company’s internal audit staff, expense related to the Company’s Board of Directors, stock option expense for options granted to corporate administration employees, certain consulting expenses, investor relations activities, and a portion of the Company’s legal, auditing and professional fee expenses. Corporate identifiable assets primarily consist of cash, invested cash (if any), refundable income taxes, and deferred income tax assets.

There was no concentration of consolidated net sales in the three or six months ended December 31, 2014 or 2013.  There was no concentration of accounts receivable at December 31, 2014 or June 30, 2014.

Summarized financial information for the Company’s reportable business segments is provided for the indicated periods and as of December 31, 2014 and June 30, 2014:

	Three Months Ended						Six Months Ended
(In thousands)	December 31						December 31
	2014			2013			2014			2013
Net Sales:
Lighting Segment	$	59,848		$	57,380		$	116,369		$	116,851
Graphics Segment		18,740			12,954			32,551			26,962
Electronic Components Segment		4,598			4,073			10,478			9,153
All Other Category		1,529			1,716			3,783			3,643
	$	84,715		$	76,123		$	163,181		$	156,609
Operating Income (Loss):
Lighting Segment	$	3,964		$	2,157		$	8,084		$	5,968
Graphics Segment		460			(275	)		246			(112	)
Electronic Components Segment		625			1,041			1,364			2,013
All Other Category		605			124			689			128
Corporate and Eliminations		(3,430	)		(1,536	)		(5,625	)		(3,647	)
	$	2,224		$	1,511		$	4,758		$	4,350
Capital Expenditures:
Lighting Segment	$	599		$	696		$	1,186		$	1,187
Graphics Segment		523			177			857			234
Electronic Components Segment		241			413			280			483
All Other Category		10			10			14			39
Corporate and Eliminations		61			195			67			778
	$	1,434		$	1,491		$	2,404		$	2,721
Depreciation and Amortization:
Lighting Segment	$	744		$	703		$	1,482		$	1,409
Graphics Segment		251			232			499			453
Electronic Components Segment		310			367			632			733
All Other Category		5			42			38			82
Corporate and Eliminations		242			217			487			292
	$	1,552		$	1,561		$	3,138		$	2,969

	December 31, 2014		June 30, 2014
Identifiable Assets:
Lighting Segment	$	92,385	$	96,499
Graphics Segment		26,230		22,312
Electronic Components Segment		30,093		30,788
All Other Category		4,443		4,987
Corporate and Eliminations		20,627		15,302
	$	173,778	$	169,888

The segment net sales reported above represent sales to external customers.  Segment operating income, which is used in management’s evaluation of segment performance, represents net sales less all operating expenses including impairment of goodwill, but excluding interest expense and interest income. Identifiable assets are those assets used by each segment in its operations. Corporate identifiable assets primarily consist of cash, invested cash (if any), refundable income taxes, and deferred income tax assets.

The Company records a 10% mark-up on intersegment revenues. Any intersegment profit in inventory is eliminated in consolidation. Intersegment revenues were eliminated in consolidation as follows:

	Three Months Ended				Six Months Ended
	December 31				December 31
(In thousands)	2014		2013		2014		2013
Lighting Segment inter-segment net sales	$	445	$	925	$	1,497	$	1,823
Graphics Segment inter-segment net sales	$	147	$	195	$	856	$	400
Electronic Components inter-segment net sales	$	7,675	$	9,450	$	14,947	$	17,954
All Other Category inter-segment net sales	$	3,618	$	2,037	$	5,171	$	4,192

The Company considers its geographic areas to be:  1) the United States, and 2) Canada.  The majority of the Company’s operations are in the United States, with one operation in Canada.  As a result of the sale of LSI Saco Technologies Inc., the Company no longer has a presence in Canada as of September 30, 2014 (See Note 13). The geographic distribution of the Company’s net sales and long-lived assets are as follows:

	Three Months Ended				Six Months Ended
(In thousands)	December 31				December 31
	2014		2013		2014		2013
Net Sales (a):
United States	$	84,715	$	76,060	$	163,140	$	155,733
Canada		--		63		41		876
	$	84,715	$	76,123	$	163,181	$	156,609

	December 31,		June 30,
	2014		2014
Long-lived Assets (b):
United States	$	45,980	$	45,886
Canada		--		190
	$	45,980	$	46,076

a. Net sales are attributed to geographic areas based upon the location of the operation making the sale.

b. Long-lived assets include property, plant and equipment, and other long-term assets.  Goodwill and intangible assets are not included in long-lived assets.

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Note 2- Summary of Significant Accounting Policies (Details) - Net Accounts Receivable (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Jun. 30, 2014
Net Accounts Receivable [Abstract]
Accounts receivable	$ 44,450	$ 43,047
less Allowance for doubtful accounts	(355)	(294)
Accounts receivable, net	$ 44,095	$ 42,753

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Note 3- Business Segment Information (Details) - Long-lived Assets by Geographical Region (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014		Jun. 30, 2014
Long-lived Assets (b):
Assets by Geographic Region	$ 45,980	[1]	$ 46,076	[1]
UNITED STATES
Long-lived Assets (b):
Assets by Geographic Region	45,980	[1]	45,886	[1]
CANADA
Long-lived Assets (b):
Assets by Geographic Region		[1]	$ 190	[1]

[1] Long-lived assets include property, plant and equipment, and other long-term assets. Goodwill and intangible assets are not included in long-lived assets.

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Note 10 - Equity Compensation (Details) - Weighted Average Assumptions Used to Develop the Fair Value of Stock Options	3 Months Ended	6 Months Ended
	Dec. 31, 2014	Dec. 31, 2014	Dec. 31, 2013
Weighted Average Assumptions Used to Develop the Fair Value of Stock Options [Abstract]
Dividend yield	1.17%	1.17%	3.33%
Expected volatility	56.00%	56.00%	53.00%
Risk-free interest rate	1.64%	1.64%	1.66%
Expected life (years)	6 years	6 years	5 years 6 months

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Condensed Consolidated Statements of Operations (Unaudited) (USD $) Share data in Thousands, except Per Share data, unless otherwise specified	3 Months Ended				6 Months Ended
	Dec. 31, 2014		Dec. 31, 2013		Dec. 31, 2014		Dec. 31, 2013
Net sales	$ 84,715,000	[1]	$ 76,123,000	[1]	$ 163,181,000		$ 156,609,000
Cost of products and services sold	64,160,000		59,366,000		124,018,000		120,730,000
Gross profit	20,555,000		16,757,000		39,163,000		35,879,000
Loss on sale of subsidiary (see Note 13)					565,000
Selling and administrative expenses	18,331,000		15,246,000		34,183,000		31,529,000
Operating income	2,224,000		1,511,000		4,758,000		4,350,000
Interest (income)	(6,000)		(7,000)		(9,000)		(14,000)
Interest expense	12,000		19,000		23,000		38,000
Income before income taxes	2,218,000		1,499,000		4,744,000		4,326,000
Income tax expense	630,000		629,000		1,629,000		1,591,000
Net income	1,588,000		870,000		3,115,000		2,735,000
Earnings per common share (see Note 4)
Basic (in Dollars per share)	$ 0.06		$ 0.04		$ 0.13		$ 0.11
Diluted (in Dollars per share)	$ 0.06		$ 0.04		$ 0.13		$ 0.11
Weighted average common shares outstanding
Basic (in Shares)	24,449		24,373		24,442		24,363
Diluted (in Shares)	24,507	[2]	24,627	[2]	24,506	[2]	24,530	[2]
Building [Member]
Gain on sale of building					$ (343,000)

[1] Net sales are attributed to geographic areas based upon the location of the operation making the sale.

[2] Options to purchase 2,377,900 common shares and 1,197,150 common shares at December 31, 2014 and 2013, respectively, and options to purchase 2,371,900 common shares and 1,676,650 common shares at December 31, 2014 and 2013, respectively, were not included in the computation of the three month and six month periods for diluted earnings per share, respectively, because the exercise price was greater than the average fair market value of the common shares.

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Note 7 - Goodwill and Other Intangible Assets (Details) (USD $)	Dec. 31, 2014	Jun. 30, 2014	Sep. 30, 2014
Note 7 - Goodwill and Other Intangible Assets (Details) [Line Items]
Finite-Lived Intangible Assets, Gross	$ 22,052,000	$ 23,088,000
Finite-Lived Intangible Assets, Accumulated Amortization	19,130,000	19,283,000
Customer Relationships [Member] | LSI Saco [Member]
Note 7 - Goodwill and Other Intangible Assets (Details) [Line Items]
Finite-Lived Intangible Assets, Gross			1,036,000
Finite-Lived Intangible Assets, Accumulated Amortization			428,000
Customer Relationships [Member]
Note 7 - Goodwill and Other Intangible Assets (Details) [Line Items]
Finite-Lived Intangible Assets, Gross	9,316,000	10,352,000
Finite-Lived Intangible Assets, Accumulated Amortization	$ 7,144,000	$ 7,412,000

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Note 1 - Interim Condensed Consolidated Financial Statements

6 Months Ended

Dec. 31, 2014

Disclosure Text Block Supplement [Abstract]

Condensed Financial Statements [Text Block]

NOTE 1 -  INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The interim condensed consolidated financial statements are unaudited and are prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information, and rules and regulations of the Securities and Exchange Commission.  Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. In the opinion of Management, the interim financial statements include all normal adjustments and disclosures necessary to present fairly the Company’s financial position as of December 31, 2014, the results of its operations for the three and six month periods ended December 31, 2014 and 2013, and its cash flows for the six month periods ended December 31, 2014 and 2013. These statements should be read in conjunction with the financial statements and footnotes included in the fiscal 2014 Annual Report on Form 10-K.  Financial information as of June 30, 2014 has been derived from the Company’s audited consolidated financial statements.

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Note 14 - Severance Costs (Details) (USD $)	1 Months Ended	3 Months Ended
	Jan. 31, 2015	Mar. 31, 2015	Dec. 31, 2014
Subsequent Event [Member]
Note 14 - Severance Costs (Details) [Line Items]
Percent of Reduction of Workforce	8.30%
Employee Related, Reduction In Annual Compensation And Benefits	$ (3,700,000)
Scenario, Forecast [Member] | Facility Closing [Member]
Note 14 - Severance Costs (Details) [Line Items]
Business Exit Costs		33,000
Scenario, Forecast [Member]
Note 14 - Severance Costs (Details) [Line Items]
Severance Costs		543,000
Chief Executive Officer [Member]
Note 14 - Severance Costs (Details) [Line Items]
Severance Costs			800,000
Payments for Postemployment Benefits			154,000
Supplemental Unemployment Benefits, Severance Benefits			$ 646,000

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Note 3- Business Segment Information (Details)	6 Months Ended	3 Months Ended		6 Months Ended	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2013	Jun. 30, 2014
Note 3- Business Segment Information (Details) [Line Items]
Number of Operating Segments	12
Number of Reportable Segments	3
Intersegment Revenue, Mark-up, Percentange	10.00%
Sales Revenue, Net [Member]
Note 3- Business Segment Information (Details) [Line Items]
Concentration Risk, Percentage	0.00%	0.00%	0.00%	0.00%
Accounts Receivable [Member]
Note 3- Business Segment Information (Details) [Line Items]
Concentration Risk, Percentage	0.00%				0.00%
CANADA
Note 3- Business Segment Information (Details) [Line Items]
Number of Operating Segments	1

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Note 2- Summary of Significant Accounting Policies (Tables)

6 Months Ended

Dec. 31, 2014

Accounting Policies [Abstract]

Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block]

(In thousands)	December 31,			June 30,
	2014			2014
Accounts receivable	$	44,450		$	43,047
less Allowance for doubtful accounts		(355	)		(294	)
Accounts receivable, net	$	44,095		$	42,753

Property, Plant and Equipment [Table Text Block]

Buildings (years)	28	-	40
Machinery and equipment (years)	3	-	10
Computer software (years)	3	-	8

Schedule of Product Warranty Liability [Table Text Block]

	Six			Six			Fiscal
	Months Ended			Months Ended			Year Ended
(In thousands)	December 31,			December 31,			June 30,
	2014			2013			2014
Balance at beginning of the period	$	2,662		$	1,424		$	1,424
Additions charged to expense		1,557			1,208			3,816
Deductions for repairs and replacements		(971	)		(1,190	)		(2,578	)
Balance at end of the period	$	3,248		$	1,442		$	2,662

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Note 3- Business Segment Information (Details) - Summarized Financial Information by Reportable Business Segments (USD $)	3 Months Ended				6 Months Ended
	Dec. 31, 2014		Dec. 31, 2013		Dec. 31, 2014	Dec. 31, 2013
Segment Reporting Information [Line Items]
Net Sales	$ 84,715,000	[1]	$ 76,123,000	[1]	$ 163,181,000	$ 156,609,000
Operating Income (Loss)	2,224,000		1,511,000		4,758,000	4,350,000
Capital Expenditures	1,434,000		1,491,000		2,404,000	2,721,000
Depreciation and Amortization	1,552,000		1,561,000		3,138,000	2,969,000
Lighting Segment [Member]
Segment Reporting Information [Line Items]
Net Sales	59,848,000		57,380,000		116,369,000	116,851,000
Operating Income (Loss)	3,964,000		2,157,000		8,084,000	5,968,000
Capital Expenditures	599,000		696,000		1,186,000	1,187,000
Depreciation and Amortization	744,000		703,000		1,482,000	1,409,000
Graphics Segment [Member]
Segment Reporting Information [Line Items]
Net Sales	18,740,000		12,954,000		32,551,000	26,962,000
Operating Income (Loss)	460,000		(275,000)		246,000	(112,000)
Capital Expenditures	523,000		177,000		857,000	234,000
Depreciation and Amortization	251,000		232,000		499,000	453,000
Electronics Components Segment [Member]
Segment Reporting Information [Line Items]
Net Sales	4,598,000		4,073,000		10,478,000	9,153,000
Operating Income (Loss)	625,000		1,041,000		1,364,000	2,013,000
Capital Expenditures	241,000		413,000		280,000	483,000
Depreciation and Amortization	310,000		367,000		632,000	733,000
All Other Category [Member]
Segment Reporting Information [Line Items]
Net Sales	1,529,000		1,716,000		3,783,000	3,643,000
Operating Income (Loss)	605,000		124,000		689,000	128,000
Capital Expenditures	10,000		10,000		14,000	39,000
Depreciation and Amortization	5,000		42,000		38,000	82,000
Corporate and Eliminations [Member]
Segment Reporting Information [Line Items]
Operating Income (Loss)	(3,430,000)		(1,536,000)		(5,625,000)	(3,647,000)
Capital Expenditures	61,000		195,000		67,000	778,000
Depreciation and Amortization	$ 242,000		$ 217,000		$ 487,000	$ 292,000

[1] Net sales are attributed to geographic areas based upon the location of the operation making the sale.

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Note 4 - Earnings Per Common Share (Tables)

6 Months Ended

Dec. 31, 2014

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	Three Months Ended				Six Months Ended
	December 31				December 31
	2014		2013		2014		2013
BASIC EARNINGS PER SHARE
Net income	$	1,588	$	870	$	3,115	$	2,735
Weighted average shares outstanding during the period, net of treasury shares (a)		24,124		24,066		24,123		24,062
Weighted average shares outstanding in the Deferred Compensation Plan during the period		325		307		319		301
Weighted average shares outstanding		24,449		24,373		24,442		24,363
Basic earnings per share	$	0.06	$	0.04	$	0.13	$	0.11
DILUTED EARNINGS PER SHARE
Net income	$	1,588	$	870	$	3,115	$	2,735
Weighted average shares outstanding
Basic		24,449		24,373		24,442		24,363
Effect of dilutive securities (b):
Impact of common shares to be issued under stock option plans, and contingently issuable shares, if any		58		254		64		167
Weighted average shares outstanding (c)		24,507		24,627		24,506		24,530
Diluted earnings per share	$	0.06	$	0.04	$	0.13	$	0.11

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Note 2- Summary of Significant Accounting Policies

6 Months Ended

Dec. 31, 2014

Accounting Policies [Abstract]

Significant Accounting Policies [Text Block]

NOTE 2  -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Consolidation:

The condensed consolidated financial statements include the accounts of LSI Industries Inc. (an Ohio corporation) and its subsidiaries (collectively, the “Company”), all of which are wholly owned.  All intercompany transactions and balances have been eliminated in consolidation.

Revenue Recognition:

Revenue is recognized when title to goods and risk of loss have passed to the customer, there is persuasive evidence of a purchase arrangement, delivery has occurred or services have been rendered, and collectability is reasonably assured.  Revenue from product sales is typically recognized at time of shipment.  In certain arrangements with customers, as is the case with the sale of some of our solid-state LED (light emitting diode) video screens, revenue is recognized upon customer acceptance of the video screen at the job site.  Sales are recorded net of estimated returns, rebates and discounts. Amounts received from customers prior to the recognition of revenue are accounted for as customer pre-payments and are included in accrued expenses.

The Company has five sources of revenue:  revenue from product sales; revenue from installation of products; service revenue generated from providing integrated design, project and construction management, site engineering and site permitting; revenue from the management of media content and digital hardware related to active digital signage; and revenue from shipping and handling.

Product revenue is recognized on product-only orders upon passing of title and risk of loss, generally at time of shipment.  However, product revenue related to orders where the customer requires the Company to install the product is recognized when the product is installed.  The Company provides product warranties and certain post-shipment service, support and maintenance of certain solid state LED video screens and billboards.

Installation revenue is recognized when the products have been fully installed.  The Company is not always responsible for installation of products it sells and has no post-installation responsibilities, other than normal warranties.

Service revenue from integrated design, project and construction management, and site permitting is recognized when all products at each customer site have been installed.

Revenue from the management of media content and digital hardware related to active digital signage is recognized evenly over the service period with the customer. Media content service periods with most customers range from 1 month to 1 year.

Shipping and handling revenue coincides with the recognition of revenue from sale of the product.

The Company evaluates the appropriateness of revenue recognition in accordance with Accounting Standards Codification (“ASC”) Subtopic 605-25, “Revenue Recognition:  Multiple–Element Arrangements.” In situations where the Company is responsible for re-imaging programs with multiple sites, each site is viewed as a separate unit of accounting and has stand-alone value to the customer. Revenue is recognized upon the Company’s complete performance at the location, which may include a site survey, graphics products, lighting products, and installation of products. The selling price assigned to each site is based upon an agreed upon price between the Company and its customer and reflects the estimated selling price for that site relative to the selling price for sites with similar image requirements.

The Company also evaluates the appropriateness of revenue recognition in accordance with ASC Subtopic 985-605, “Software:  Revenue Recognition.”  Our solid-state LED video screens, billboards and active digital signage contain software elements which the Company has determined are incidental and excluded from the scope of ASC Subtopic 985-605.

Credit and Collections:

The Company maintains allowances for doubtful accounts receivable for probable estimated losses resulting from either customer disputes or the inability of its customers to make required payments.  If the financial condition of the Company’s customers were to deteriorate, resulting in their inability to make the required payments, the Company may be required to record additional allowances or charges against income.  The Company determines its allowance for doubtful accounts by first considering all known collectability problems of customers’ accounts, and then applying certain percentages against the various aging categories based on the due date of the remaining receivables.  The resulting allowance for doubtful accounts receivable is an estimate based upon the Company’s knowledge of its business and customer base, and historical trends.  The Company also establishes allowances, at the time revenue is recognized, for returns, discounts, pricing and other possible customer deductions.  These allowances are based upon historical trends.

The following table presents the Company’s net accounts receivable at the dates indicated.

(In thousands)	December 31,			June 30,
	2014			2014
Accounts receivable	$	44,450		$	43,047
less Allowance for doubtful accounts		(355	)		(294	)
Accounts receivable, net	$	44,095		$	42,753

Cash and Cash Equivalents:

The cash balance includes cash and cash equivalents which have original maturities of less than three months.  The Company maintains balances at financial institutions in the United States. The FDIC limit for insurance coverage on non-interest bearing accounts is $250,000. As of December 31, 2014 and June 30, 2014, the Company had bank balances of $20,926,000 and $12,367,000, respectively, without insurance coverage. Of these amounts, $741,000 was held in foreign bank accounts as of June 30, 2014. As a result of the sale of LSI Saco Technologies Inc., there are no longer cash accounts in foreign banks as of December 31, 2014 (See Note 13).

Inventories:

Inventories are stated at the lower of cost or market.  Cost of inventories includes the cost of purchased raw materials and components, direct labor, as well as manufacturing overhead which is generally applied to inventory based on direct labor and material content. Cost is determined on the first-in, first-out basis.

Property, Plant and Equipment and Related Depreciation:

Property, plant and equipment are stated at cost.  Major additions and betterments are capitalized while maintenance and repairs are expensed.  For financial reporting purposes, depreciation is computed on the straight-line method over the estimated useful lives of the assets as follows:

Buildings (years)	28	-	40
Machinery and equipment (years)	3	-	10
Computer software (years)	3	-	8

Costs related to the purchase, internal development, and implementation of the Company’s fully integrated enterprise resource planning/business operating software system are either capitalized or expensed in accordance with ASC Subtopic 350-40, “Intangibles – Goodwill and Other:  Internal-Use Software.”  Leasehold improvements are amortized over the shorter of fifteen years or the remaining term of the lease.

The Company recorded $1,425,000 and $1,353,000 of depreciation expense in the second quarter of fiscal 2015 and 2014, respectively, and $2,863,000 and $2,563,000 of depreciation expense in the first half of fiscal 2015 and 2014, respectively.

Intangible Assets:

Intangible assets consisting of customer relationships, trade names and trademarks, patents, technology and software, and non-compete agreements are recorded on the Company's balance sheet.  The definite-lived intangible assets are being amortized to expense over periods ranging between five and twenty years.  The Company evaluates definite-lived intangible assets for permanent impairment when triggering events are identified. Neither indefinite-lived intangible assets nor the excess of cost over fair value of assets acquired ("goodwill") are amortized, however they are subject to review for impairment.  See additional information about goodwill and intangibles in Note 7.

Fair Value:

The Company has financial instruments consisting primarily of cash and cash equivalents, revolving lines of credit, and on occasion, long-term debt.  The fair value of these financial instruments approximates carrying value because of their short-term maturity and/or variable, market-driven interest rates.  The Company has no financial instruments with off-balance sheet risk.

Fair value measurements of nonfinancial assets and nonfinancial liabilities are primarily used in goodwill and other intangible asset impairment analyses, in the purchase price of acquired companies (if any), and in the valuation of the contingent earn-out. The fair value measurement of these nonfinancial assets and nonfinancial liabilities is based on significant inputs not observable in the market and thus represent Level 3 measurements as defined in ASC 820, “Fair Value Measurement.”

Product Warranties:

The Company offers a limited warranty that its products are free of defects in workmanship and materials.  The specific terms and conditions vary somewhat by product line, but generally cover defective products returned within one to five years, with some exceptions where the terms extend to 10 years, from the date of shipment.  The Company records warranty liabilities to cover the estimated future costs for repair or replacement of defective returned products as well as products that need to be repaired or replaced in the field after installation.  The Company calculates its liability for warranty claims by applying estimates to cover unknown claims, as well as estimating the total amount to be incurred for known warranty issues.  The Company periodically assesses the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary.

Changes in the Company’s warranty liabilities, which are included in accrued expenses in the accompanying consolidated balance sheets, during the periods indicated below were as follows:

	Six			Six			Fiscal
	Months Ended			Months Ended			Year Ended
(In thousands)	December 31,			December 31,			June 30,
	2014			2013			2014
Balance at beginning of the period	$	2,662		$	1,424		$	1,424
Additions charged to expense		1,557			1,208			3,816
Deductions for repairs and replacements		(971	)		(1,190	)		(2,578	)
Balance at end of the period	$	3,248		$	1,442		$	2,662

Research and Development Costs:

Research and development expenses are costs directly attributable to new product development, including the development of new technology for both existing and new products, and consist of salaries, payroll taxes, employee benefits, materials, supplies, depreciation and other administrative costs.   The Company follows the requirements of ASC Subtopic 985-20, “Software:  Costs of Software to be Sold, Leased, or Marketed,” and expenses as research and development all costs associated with development of software used in solid-state LED products.  All costs are expensed as incurred and are included in selling and administrative expenses. Research and development costs related to both product and software development totaled $1,450,000 and $2,127,000 for the three months ended December 31, 2014 and 2013, respectively, and $3,301,000 and $4,081,000 for the six months ended December 31, 2014 and 2013, respectively.

Earnings Per Common Share:

The computation of basic earnings per common share is based on the weighted average common shares outstanding for the period net of treasury shares held in the Company’s non-qualified deferred compensation plan.  The computation of diluted earnings per share is based on the weighted average of common shares outstanding for the period and includes common share equivalents.  Common share equivalents include the dilutive effect of stock options, contingently issuable shares and common shares to be issued under a deferred compensation plan, all of which totaled 383,000 shares and 561,000 shares for the three months ended December 31, 2014 and 2013, respectively, and 383,000 shares and 468,000 shares for the six months ended December 31, 2014 and 2013, respectively.See further discussion in Note 4.

New Accounting Pronouncements:

In July 2013, the Financial Accounting Standards Board issued ASU 2013-11, “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists.” This amended guidance is intended to eliminate the diversity that is in practice with regard to the financial statement presentation of unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The amended guidance is effective for fiscal years and interim periods within those years, beginning after December 15, 2013, or the Company’s fiscal year 2015, with early adoption permissible. The adoption of this guidance did not have a material impact on the financial statements.

In September 2013, the Internal Revenue Service issued Treasury Decision 9636, which enacted final tax regulations regarding the capitalization and expensing of amounts paid to acquire, produce, or improve tangible property. The regulations also include guidance regarding the retirement of depreciable property. The regulations are required to be effective in taxable years beginning on or after January 1, 2014, or the Company’s fiscal year 2015. The Company has reviewed the impact of the final regulations and the anticipated impact to the financial statements is not material.

In June 2014, the Financial Accounting Standards Board issued ASU 2014-09, “Revenue from Contracts with Customers.” This amended guidance supersedes and replaces all existing U.S. GAAP revenue recognition guidance. The guidance established a new revenue recognition model, changes the basis for deciding when revenue is recognized over a point in time, provides new and more detailed guidance on specific revenue topics, and expands and improves disclosures about revenue. The amended guidance is effective for fiscal years and interim periods within those years, beginning after December 15, 2016, or the Company’s fiscal year 2018. The Company has not yet determined the impact the amended guidance will have on its financial statements.

Comprehensive Income:

The Company does not have any comprehensive income items other than net income (loss). The functional currency of the Company’s former Canadian operation was the U.S. dollar.

Subsequent Events:

The Company has evaluated subsequent events for potential recognition and disclosure through the date the condensed consolidated financial statements were filed.  No items were identified during this evaluation that required adjustment to or disclosure in the accompanying financial statements (See Note 14).

Use of Estimates:

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.  Actual results could differ from those estimates.

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Condensed Consolidated Balance Sheets (Unaudited) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Jun. 30, 2014
Current Assets
Cash and cash equivalents	$ 18,054	$ 9,013
Accounts receivable, less allowance for doubtful accounts of $355 and $294, respectively	44,095	42,753
Inventories	42,067	45,408
Refundable income taxes	113	1,973
Asset held for sale		611
Other current assets	6,617	6,319
Total current assets	110,946	106,077
Property, Plant and Equipment, at cost
Land	6,934	6,918
Buildings	37,484	37,027
Machinery and equipment	75,312	75,533
Construction in progress	1,263	221
	120,993	119,699
Less accumulated depreciation	(76,661)	(75,417)
Net property, plant and equipment	44,332	44,282
Goodwill	10,508	10,508
Other Intangible Assets, net	6,344	7,227
Other Long-Term Assets, net	1,648	1,794
Total assets	173,778	169,888
Current Liabilities
Accounts payable	12,836	13,658
Accrued expenses	17,931	15,631
Total current liabilities	30,767	29,289
Other Long-Term Liabilities	2,131	2,187
Commitments and Contingencies (Note 12)
Shareholders’ Equity
Preferred shares, without par value; Authorized 1,000,000 shares, none issued	0	0
Common shares, without par value; Authorized 40,000,000 shares; Outstanding 24,140,775 and 24,122,284 shares, respectively	105,105	104,064
Retained earnings	35,775	34,348
Total shareholders’ equity	140,880	138,412
Total liabilities & shareholders’ equity	$ 173,778	$ 169,888

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Note 12 - Commitments and Contingencies

6 Months Ended

Dec. 31, 2014

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure [Text Block]

NOTE 12 - COMMITMENTS AND CONTINGENCIES

As part of the acquisition of Virticus Corporation on March 19, 2012, a contingent Earn-Out liability of $877,000 was recorded based on the fair value of estimated Earn-Out payments. This discounted liability is to be paid over a five year period, contingent upon reaching certain sales in each year over the five year period (fiscal year 2013 through fiscal year 2017). In fiscal 2013, as a result of modified sales forecasts for LSI Virticus, the fair value of the Earn-Out liability was adjusted to zero. The $877,000 reversal of the Earn-Out liability, was recorded in selling and administrative expenses in Corporate and Eliminations. As of December 31, 2014, the maximum potential undiscounted liability related to the Earn-Out is $3 million. This would be based upon the achievement of a defined level of sales of lighting control systems in fiscal years 2015 through 2017. The likelihood of this occurring is not considered probable.

The Company is party to various negotiations, customer bankruptcies, and legal proceedings arising in the normal course of business. The Company provides reserves for these matters when a loss is probable and reasonably estimable. The Company does not disclose a range of potential loss because the likelihood of such a loss is remote. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company’s financial position, results of operations, cash flows or liquidity.

The Company may occasionally issue a standby letter of credit in favor of third parties. As of December 31, 2014, there were no standby letter of credit agreements.

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Document And Entity Information	6 Months Ended
	Dec. 31, 2014	Jan. 27, 2015
Document and Entity Information [Abstract]
Entity Registrant Name	LSI Industries Inc.
Document Type	10-Q
Current Fiscal Year End Date	--06-30
Entity Common Stock, Shares Outstanding		24,146,716
Amendment Flag	false
Entity Central Index Key	0000763532
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Accelerated Filer
Entity Well-known Seasoned Issuer	No
Document Period End Date	Dec. 31, 2014
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q2

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Note 13 - Sale of Subsidiary

6 Months Ended

Dec. 31, 2014

Discontinued Operations and Disposal Groups [Abstract]

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

NOTE 13 – SALE OF SUBSIDIARY

On September 30, 2014, the Company sold the stock of its wholly owned subsidiary LSI Saco Technologies Inc., located in Montreal, Canada, for $1.9 million cash. The sale resulted in a pre-tax loss of $565,000. As a result of the sale, the Company terminated the $5 million unsecured revolving line of credit for this Canadian operation. LSI Saco reported $41,000 of net customer sales and a $(183,000) operating loss in the first quarter of fiscal 2015 prior to the sale. LSI Saco was reported in the All Other Category. The sale of LSI Saco was not considered the sale of a discontinued operation because the Company migrated most of its manufacturing, research and development, and selling activities from LSI Saco to the Company’s Cincinnati, Ohio location.

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Condensed Consolidated Balance Sheets (Unaudited) (Parentheticals) (USD $) In Thousands, except Share data, unless otherwise specified	Dec. 31, 2014	Jun. 30, 2014
Allowance for doubtful accounts (in Dollars)	$ 355	$ 294
Preferred shares, par value (in Dollars per share)	$ 0	$ 0
Preferred shares, Authorized shares	1,000,000	1,000,000
Preferred shares, issued	0	0
Common shares, par value (in Dollars per share)	$ 0	$ 0
Common shares, Authorized shares	40,000,000	40,000,000
Common shares, Outstanding	24,140,775	24,122,284

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Note 7 - Goodwill and Other Intangible Assets

6 Months Ended

Dec. 31, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets Disclosure [Text Block]

NOTE 7 - GOODWILL AND OTHER INTANGIBLE ASSETS

Carrying values of goodwill and other intangible assets with indefinite lives are reviewed at least annually for possible impairment in accordance with ASC Topic 350, “Intangibles – Goodwill and Other.”  The Company may first assess qualitative factors in order to determine if goodwill and indefinite-lived intangible assets are impaired. If through the qualitative assessment it is determined that it is more likely than not that goodwill and indefinite-lived assets are not impaired, no further testing is required. If it is determined more likely than not that goodwill and indefinite-lived assets are impaired, or if the Company elects not to first assess qualitative factors, the Company’s impairment testing continues with the estimation of the fair value of goodwill and indefinite-lived intangible assets using a combination of a market approach and an income (discounted cash flow) approach, at the reporting unit level, that requires significant management judgment with respect to revenue and expense growth rates, changes in working capital and the selection and use of an appropriate discount rate.  The estimates of fair value of reporting units are based on the best information available as of the date of the assessment.  The use of different assumptions would increase or decrease estimated discounted future operating cash flows and could increase or decrease an impairment charge.  Company management uses its judgment in assessing whether assets may have become impaired between annual impairment tests.  Indicators such as adverse business conditions, economic factors and technological change or competitive activities may signal that an asset has become impaired. Based on this assessment, no such potential impairment conditions were noted during the six month periods ended December 31, 2014 and 2013.

The Company identified its reporting units in conjunction with its annual goodwill impairment testing.  The Company relies upon a number of factors, judgments and estimates when conducting its impairment testing.  These include operating results, forecasts, anticipated future cash flows and marketplace data, to name a few.  There are inherent uncertainties related to these factors and judgments in applying them to the analysis of goodwill impairment.

The following table presents information about the Company's goodwill on the dates or for the periods indicated:

 Goodwill

(In thousands)	Lighting			Graphics			Components			All Other
	Segment			Segment			Segment			Category			Total
Balance as of June 30, 2014
Goodwill	$	34,913		$	24,959		$	11,621		$	6,850		$	78,343
Accumulated impairment losses		(34,778	)		(24,959	)		(2,413	)		(5,685	)		(67,835	)
Goodwill, net as of June 30, 2014		135			--			9,208			1,165			10,508
Sale of LSI Saco
Goodwill		--			--			--			(3,119	)		(3,119	)
Accumulated impairment losses		--			--			--			3,119			3,119
		--			--			--			--			--
Balance as of December 31, 2014
Goodwill		34,913			24,959			11,621			3,731			75,224
Accumulated impairment losses		(34,778	)		(24,959	)		(2,413	)		(2,566	)		(64,716	)
Goodwill, net as of December 31, 2014	$	135		$	--		$	9,208		$	1,165		$	10,508

In the first quarter of fiscal 2015, the Company sold LSI Saco Technologies Inc. A customer relationship intangible asset with a gross carrying amount of $1,036,000 and accumulated amortization of $428,000 was sold as a result of the sale of LSI Saco Technologies (See Note 13).

The gross carrying amount and accumulated amortization by major other intangible asset class is as follows:

	December 31, 2014
Other Intangible Assets	Gross
(In thousands)	Carrying		Accumulated		Net
	Amount		Amortization		Amount
Amortized Intangible Assets
Customer relationships	$	9,316	$	7,144	$	2,172
Patents		338		102		236
LED technology firmware, software		11,228		10,873		355
Trade name		460		460		--
Non-compete agreements		710		551		159
Total Amortized Intangible Assets		22,052		19,130		2,922
Indefinite-lived Intangible Assets
Trademarks and trade names		3,422		--		3,422
Total Indefinite-lived Intangible Assets		3,422		--		3,422
Total Other Intangible Assets	$	25,474	$	19,130	$	6,344

	June 30, 2014
	Gross
	Carrying		Accumulated		Net
(In thousands)	Amount		Amortization		Amount
Amortized Intangible Assets
Customer relationships	$	10,352	$	7,412	$	2,940
Patents		338		84		254
LED technology firmware, software		11,228		10,832		396
Trade name		460		454		6
Non-compete agreements		710		501		209
Total Amortized Intangible Assets		23,088		19,283		3,805
Indefinite-lived Intangible Assets
Trademarks and trade names		3,422		--		3,422
Total Indefinite-lived Intangible Assets		3,422		--		3,422
Total Other Intangible Assets	$	26,510	$	19,283	$	7,227

(In thousands)	Amortization Expense of Other Intangible Assets
	December 31, 2014		December 31, 2013
Three Months Ended	$	127	$	208
Six Months Ended	$	275	$	406

The Company expects to record annual amortization expense as follows:

(In thousands)
2015	$	525
2016	$	505
2017	$	409
2018	$	400
2019	$	400
After 2019	$	958

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Note 6 - Accrued Expenses

6 Months Ended

Dec. 31, 2014

Disclosure Text Block Supplement [Abstract]

Accounts Payable, Accrued Liabilities, and Other Liabilities Disclosure, Current [Text Block]

NOTE 6 - ACCRUED EXPENSES

The following information is provided as of the dates indicated:

	December 31,		June 30,
(In thousands)	2014		2014
Accrued Expenses:
Compensation and benefits	$	8,607	$	7,134
Customer prepayments		1,272		1,473
Accrued sales commissions		1,838		1,814
Accrued warranty		3,248		2,662
Other accrued expenses		2,966		2,548
Total Accrued Expenses	$	17,931	$	15,631

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Note 3- Business Segment Information (Tables)

6 Months Ended

Dec. 31, 2014

Segment Reporting [Abstract]

Schedule of Segment Reporting Information, by Segment [Table Text Block]

	Three Months Ended						Six Months Ended
(In thousands)	December 31						December 31
	2014			2013			2014			2013
Net Sales:
Lighting Segment	$	59,848		$	57,380		$	116,369		$	116,851
Graphics Segment		18,740			12,954			32,551			26,962
Electronic Components Segment		4,598			4,073			10,478			9,153
All Other Category		1,529			1,716			3,783			3,643
	$	84,715		$	76,123		$	163,181		$	156,609
Operating Income (Loss):
Lighting Segment	$	3,964		$	2,157		$	8,084		$	5,968
Graphics Segment		460			(275	)		246			(112	)
Electronic Components Segment		625			1,041			1,364			2,013
All Other Category		605			124			689			128
Corporate and Eliminations		(3,430	)		(1,536	)		(5,625	)		(3,647	)
	$	2,224		$	1,511		$	4,758		$	4,350
Capital Expenditures:
Lighting Segment	$	599		$	696		$	1,186		$	1,187
Graphics Segment		523			177			857			234
Electronic Components Segment		241			413			280			483
All Other Category		10			10			14			39
Corporate and Eliminations		61			195			67			778
	$	1,434		$	1,491		$	2,404		$	2,721
Depreciation and Amortization:
Lighting Segment	$	744		$	703		$	1,482		$	1,409
Graphics Segment		251			232			499			453
Electronic Components Segment		310			367			632			733
All Other Category		5			42			38			82
Corporate and Eliminations		242			217			487			292
	$	1,552		$	1,561		$	3,138		$	2,969

Reconciliation of Assets from Segment to Consolidated [Table Text Block]

	December 31, 2014		June 30, 2014
Identifiable Assets:
Lighting Segment	$	92,385	$	96,499
Graphics Segment		26,230		22,312
Electronic Components Segment		30,093		30,788
All Other Category		4,443		4,987
Corporate and Eliminations		20,627		15,302
	$	173,778	$	169,888

Reconciliation of Revenue from Segments to Consolidated [Table Text Block]

	Three Months Ended				Six Months Ended
	December 31				December 31
(In thousands)	2014		2013		2014		2013
Lighting Segment inter-segment net sales	$	445	$	925	$	1,497	$	1,823
Graphics Segment inter-segment net sales	$	147	$	195	$	856	$	400
Electronic Components inter-segment net sales	$	7,675	$	9,450	$	14,947	$	17,954
All Other Category inter-segment net sales	$	3,618	$	2,037	$	5,171	$	4,192

Schedule of Revenue from External Customers Attributed to Foreign Countries by Geographic Area [Table Text Block]

	Three Months Ended				Six Months Ended
(In thousands)	December 31				December 31
	2014		2013		2014		2013
Net Sales (a):
United States	$	84,715	$	76,060	$	163,140	$	155,733
Canada		--		63		41		876
	$	84,715	$	76,123	$	163,181	$	156,609

Schedule of Disclosure on Geographic Areas, Long-Lived Assets in Individual Foreign Countries by Country [Table Text Block]

	December 31,		June 30,
	2014		2014
Long-lived Assets (b):
United States	$	45,980	$	45,886
Canada		--		190
	$	45,980	$	46,076

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Note 14 - Severance Costs

6 Months Ended

Dec. 31, 2014

Disclosure Text Block Supplement [Abstract]

Compensation and Employee Benefit Plans [Text Block]

NOTE 14 – SEVERANCE COSTS

Pursuant to a management succession agreement entered into in fiscal 2004 as subsequently amended, the Company’s former Chief Executive Officer, Robert J. Ready, relinquished this title and related management responsibilities when the Company hired and appointed a new Chief Executive Officer in October 2014. While Mr. Ready remains on the Company’s Board of Directors, he is no longer Chairman of the Board. This agreement provides for 18 months of compensation to be paid to Mr. Ready, which resulted in a severance charge in the second quarter of fiscal 2015 of $800,000. Severance payments totaling $154,000 were made in the second quarter of fiscal 2015, leaving a severance liability of $646,000 as of December 31, 2014.

In January 2015, the Company initiated a reduction in force and expects to record estimated severance charges of $543,000 and facility exit charges of $33,000 in the third quarter of fiscal 2015. This reduction in force and employee retirements that occurred early in the third quarter of fiscal 2015 represent approximately 8.3% of the Company’s total salaried workforce and approximately $3.7 million of annual total compensation and benefit reductions.

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Note 10 - Equity Compensation

6 Months Ended

Dec. 31, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

NOTE 10 - EQUITY COMPENSATION

Stock Options 

The Company has an equity compensation plan that was approved by shareholders in November 2012 and that covers all of its full-time employees, outside directors and certain advisors.  This 2012 Stock Incentive Plan replaces all previous equity compensation plans. The options granted or stock awards made pursuant to this plan are granted at fair market value at the date of grant or award.  Options granted to non-employee directors become exercisable 25% each ninety days (cumulative) from the date of grant and options granted to employees generally become exercisable 25% per year (cumulative) beginning one year after the date of grant. The maximum contractual term of the Company’s stock options is ten years.  If a stock option holder’s employment with the Company terminates by reason of death, disability or retirement, as defined in the Plan, the Plan generally provides for acceleration of vesting.  The number of shares reserved for issuance is 1,258,156 shares, all of which were available for future grant or award as of December 31, 2014.  This plan allows for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, restricted and unrestricted stock awards, performance stock awards, and other stock awards.  As of December 31, 2014, a total of 2,867,614 options for common shares were outstanding from this plan as well as one previous stock option plan (which has also been approved by shareholders), and of these, a total of 1,778,589 options for common shares were vested and exercisable.  As of December 31, 2014, the approximate unvested stock option expense that will be recorded as expense in future periods is $1,514,863.  The weighted average time over which this expense will be recorded is approximately 37 months.

The fair value of each option on the date of grant was estimated using the Black-Scholes option pricing model. The below listed weighted average assumptions were used for grants in the periods indicated.

	Three Months Ended					Six Months Ended
	December 31					December 31
	2014			2013		2014			2013
Dividend yield		1.17	%		--		1.17	%		3.33	%
Expected volatility		56	%		--		56	%		53	%
Risk-free interest rate		1.64	%		--		1.64	%		1.66	%
Expected life (years)		6.0			--		6.0			5.5

At December 31, 2014, the 593,400 options granted during the first six months of fiscal 2015 to employees had exercise prices ranging from $5.96 to $6.94 per share, fair values ranging from of $2.19 to $3.48 per share, and remaining contractual lives of between nine years nine months and nine years eleven months.

At December 31, 2013, the 421,000 options granted during the first six months of fiscal 2014 to employees had exercise prices of $7.20 per share, fair values of $2.64 per share, and remaining contractual lives of nine years eight months.

The Company calculates stock option expense using the Black-Scholes model.  Stock option expense is recorded on a straight line basis, or sooner if the grantee is retirement eligible as defined in the 2012 Stock Incentive Plan, with an estimated 2.1% forfeiture rate effective October 1, 2014. Previous estimated forfeiture rates were 2.0% effective April 1, 2014, 2.1% effective January 1, 2014, 2.2% effective July 1, 2013, and 2.3% effective January 1, 2013. The expected volatility of the Company’s stock was calculated based upon the historic monthly fluctuation in stock price for a period approximating the expected life of option grants.  The risk-free interest rate is the rate of a five year Treasury security at constant, fixed maturity on the approximate date of the stock option grant.  The expected life of outstanding options is determined to be less than the contractual term for a period equal to the aggregate group of option holders’ estimated weighted average time within which options will be exercised.  It is the Company’s policy that when stock options are exercised, new common shares shall be issued.  The Company recorded $796,192 and $93,635 of expense related to stock options in the three months ended December 31, 2014 and 2013, respectively, and $881,825 and $779,294 of expense related to stock options in the six months ended December 31, 2014 and 2013, respectively.  As of December 31, 2014, the Company had 2,842,342 stock options that were vested and that were expected to vest, with a weighted average exercise price of $8.97 per share, an aggregate intrinsic value of $554,212 and weighted average remaining contractual terms of 6.3 years.

Information related to all stock options for the six months ended December 31, 2014 and 2013 is shown in the following table:

	Six Months Ended December 31, 2014
	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value
Outstanding at 6/30/14		2,677,464		$	9.57		5.4	$	1,674,010
Granted		593,400		$	6.66
Forfeitures		(378,525	)	$	9.99
Exercised		(24,725	)	$	5.84
Outstanding at 12/31/14		2,867,614		$	8.95		6.3	$	558,591
Exercisable at 12/31/14		1,778,589		$	10.24		4.6	$	438,785

	Six Months Ended December 31, 2013
	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value
Outstanding at 6/30/13		2,341,150		$	9.95		5.6	$	1,544,896
Granted		421,000		$	7.20
Forfeitures		(25,550	)	$	10.71
Exercised		(21,900	)	$	6.41
Outstanding at 12/31/13		2,714,700		$	9.55		5.8	$	2,707,888
Exercisable at 12/31/13		1,908,337		$	10.70		4.5	$	1,208,150

The following table presents information related to unvested stock options:

	Shares			Weighted-Average Grant Date Fair Value
Non-vested at June 30, 2014		803,138		$	2.39
Granted		593,400		$	3.23
Vested		(268,763	)	$	2.23
Forfeited		(38,750	)	$	2.23
Non-vested at December 31, 2014		1,089,025		$	2.90

The weighted average grant date fair value of options granted during the six months ended December 31, 2014 and December 31, 2013 were $3.23 and $2.64, respectively. The aggregate intrinsic value of options exercised during the six months ended December 31, 2014 and 2013 were $22,383 and $59,520, respectively. The aggregate grant date fair value of options that vested during the six months ended December 31, 2014 and 2013 was $598,316 and $737,054, respectively. The Company received $144,352 and $140,404 of cash from employees who exercised options in the six month periods ended December 31, 2014 and 2013, respectively. Additionally, the Company recorded $7,834 as a reduction of federal income taxes payable, $36,575 as an decrease in common stock, $7,690 as a reduction of income tax expense, and $36,718 as a reduction of the deferred tax asset related to the exercises of stock options in which the employees sold the common shares prior to the passage of twelve months from the date of exercise.

Stock Compensation Awards 

The Company awarded a total of 13,800 and 11,575 common shares in the six months ended December 31, 2014 and 2013, respectively, as stock compensation awards. These common shares were valued at their approximate $96,000 and $95,000 fair market values based on their stock price at dates of issuance multiplied by the number of common shares awarded, respectively, pursuant to the compensation programs for non-employee directors who receive a portion of their compensation as an award of Company stock and for employees who received a nominal recognition award in the form of company stock. Stock compensation awards are made in the form of newly issued common shares of the Company.

Deferred Compensation Plan 

The Company has a non-qualified deferred compensation plan providing for both Company contributions and participant deferrals of compensation. This plan is fully funded in a Rabbi Trust. All plan investments are in common shares of the Company. As of December 31, 2014 there were 32 participants, all with fully vested account balances. A total of 327,362 common shares with a cost of $3,053,900, and 307,328 common shares with a cost of $2,914,700 were held in the plan as of December 31, 2014 and June 30, 2014, respectively, and, accordingly, have been recorded as treasury shares. The change in the number of shares held by this plan is the net result of share purchases and sales on the open stock market for compensation deferred into the plan and for distributions to terminated employees. The Company does not issue new common shares for purposes of the non-qualified deferred compensation plan. The Company accounts for assets held in the non-qualified deferred compensation plan in accordance with Accounting Standards Codification Topic 710, Compensation — General. The Company used approximately $139,100 and $149,800 to purchase 20,034 and 20,157 common shares of the Company in the open stock market during the six months ended December 31, 2014 and 2013, respectively, for either employee salary deferrals or Company contributions into the non-qualified deferred compensation plan. For fiscal year 2015, the Company estimates the Rabbi Trust for the Nonqualified Deferred Compensation Plan will make net repurchases in the range of 25,000 to 29,000 common shares of the Company. The Company does not currently repurchase its own common shares for any other purpose.

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Note 15 - Income Taxes (Details) - Summary of Effective Income Tax Rate Reconciliation	3 Months Ended		6 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2014	Dec. 31, 2013
Reconciliation to effective tax rate:
Provision for income taxes at the anticipated annual tax rate	36.10%	40.60%	41.00%	37.90%
Impact of foreign operations		(1.80%)	(0.20%)	(1.00%)
Enactment of tax law changes	(6.10%)		(2.90%)
Valuation allowances		7.90%		2.80%
Uncertain tax positions	(1.30%)	(4.10%)	(1.20%)	(2.90%)
Other	(0.30%)	(0.60%)	(2.40%)
Effective tax rate	28.40%	42.00%	34.30%	36.80%

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Note 8 - Revolving Lines of Credit

6 Months Ended

Dec. 31, 2014

Debt Disclosure [Abstract]

Debt Disclosure [Text Block]

NOTE 8  -  REVOLVING LINES OF CREDIT

In April 2014, the Company renewed its $30 million unsecured revolving credit line. The Company also renewed its $5 million unsecured revolving credit line for its Canadian operation. However, this Canadian line of credit was terminated as a result of the sale of LSI Saco Technologies Inc. (see note 13). The line of credit expires in the third quarter of fiscal 2017. Interest on the revolving line of credit is charged based upon an increment over the LIBOR rate as periodically determined, or at the bank’s base lending rate, at the Company’s option.  The increment over the LIBOR borrowing rate, as periodically determined, fluctuates between 150 and 190 basis points depending upon the ratio of indebtedness to earnings before interest, taxes, depreciation and amortization (“EBITDA”), as defined in the credit facility.  The fee on the unused balance of the $30 million committed lines of credit is 15 basis points.  Under the terms of this credit facility, the Company has agreed to a negative pledge of assets and is required to comply with financial covenants that limit the amount of debt obligations, require a minimum amount of tangible net worth, and limit the ratio of indebtedness to EBITDA. There are no borrowings against the line of credit as of December 31, 2014.

The Company is in compliance with all of its loan covenants as of December 31, 2014.

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Note 9 - Cash Dividends

6 Months Ended

Dec. 31, 2014

Stockholders' Equity Note [Abstract]

Stockholders' Equity Note Disclosure [Text Block]

NOTE 9 -  CASH DIVIDENDS

The Company paid cash dividends of $1,688,000 and $2,887,000 in the six months ended December 31, 2014 and 2013, respectively.  In January 2015, the Board of Directors declared a regular quarterly cash dividend of $0.02 per share payable February 17, 2015 to shareholders of record February 10, 2015. The new indicated annual cash dividend rate for fiscal 2015 is $0.08 per share.

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Note 11 - Supplemental Cash Flow Information

6 Months Ended

Dec. 31, 2014

Supplemental Cash Flow Elements [Abstract]

Cash Flow, Supplemental Disclosures [Text Block]

NOTE 11  -  SUPPLEMENTAL CASH FLOW INFORMATION

(In thousands)	Six Months Ended December 31
	2014		2013
Cash payments:
Interest	$	36	$	38
Income taxes	$	21	$	690
Issuance of common shares as compensation	$	96	$	96

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Note 2- Summary of Significant Accounting Policies (Details) - Warranty Liabilities (USD $) In Thousands, unless otherwise specified	6 Months Ended		12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Jun. 30, 2014
Warranty Liabilities [Abstract]
Balance at beginning of the period	$ 2,662	$ 1,424	$ 1,424
Additions charged to expense	1,557	1,208	3,816
Deductions for repairs and replacements	(971)	(1,190)	(2,578)
Balance at end of the period	$ 3,248	$ 1,442	$ 2,662

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Note 9 - Cash Dividends (Details) (USD $)	6 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Jan. 31, 2015
Note 9 - Cash Dividends (Details) [Line Items]
Payments of Ordinary Dividends, Common Stock	$ 1,688,000	$ 2,887,000
Annual Indicated Per Share Dividend Rate	$ 0.08
Subsequent Event [Member]
Note 9 - Cash Dividends (Details) [Line Items]
Quarterly Indicated Per Share Dividend Rate			$ 0.02

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Accounting Policies, by Policy (Policies)

6 Months Ended

Dec. 31, 2014

Accounting Policies [Abstract]

Consolidation, Policy [Policy Text Block]

Consolidation:

The condensed consolidated financial statements include the accounts of LSI Industries Inc. (an Ohio corporation) and its subsidiaries (collectively, the “Company”), all of which are wholly owned.  All intercompany transactions and balances have been eliminated in consolidation.

Revenue Recognition, Policy [Policy Text Block]

Revenue Recognition:

Revenue is recognized when title to goods and risk of loss have passed to the customer, there is persuasive evidence of a purchase arrangement, delivery has occurred or services have been rendered, and collectability is reasonably assured.  Revenue from product sales is typically recognized at time of shipment.  In certain arrangements with customers, as is the case with the sale of some of our solid-state LED (light emitting diode) video screens, revenue is recognized upon customer acceptance of the video screen at the job site.  Sales are recorded net of estimated returns, rebates and discounts. Amounts received from customers prior to the recognition of revenue are accounted for as customer pre-payments and are included in accrued expenses.

The Company has five sources of revenue:  revenue from product sales; revenue from installation of products; service revenue generated from providing integrated design, project and construction management, site engineering and site permitting; revenue from the management of media content and digital hardware related to active digital signage; and revenue from shipping and handling.

Product revenue is recognized on product-only orders upon passing of title and risk of loss, generally at time of shipment.  However, product revenue related to orders where the customer requires the Company to install the product is recognized when the product is installed.  The Company provides product warranties and certain post-shipment service, support and maintenance of certain solid state LED video screens and billboards.

Installation revenue is recognized when the products have been fully installed.  The Company is not always responsible for installation of products it sells and has no post-installation responsibilities, other than normal warranties.

Service revenue from integrated design, project and construction management, and site permitting is recognized when all products at each customer site have been installed.

Revenue from the management of media content and digital hardware related to active digital signage is recognized evenly over the service period with the customer. Media content service periods with most customers range from 1 month to 1 year.

Shipping and handling revenue coincides with the recognition of revenue from sale of the product.

The Company evaluates the appropriateness of revenue recognition in accordance with Accounting Standards Codification (“ASC”) Subtopic 605-25, “Revenue Recognition:  Multiple–Element Arrangements.” In situations where the Company is responsible for re-imaging programs with multiple sites, each site is viewed as a separate unit of accounting and has stand-alone value to the customer. Revenue is recognized upon the Company’s complete performance at the location, which may include a site survey, graphics products, lighting products, and installation of products. The selling price assigned to each site is based upon an agreed upon price between the Company and its customer and reflects the estimated selling price for that site relative to the selling price for sites with similar image requirements.

The Company also evaluates the appropriateness of revenue recognition in accordance with ASC Subtopic 985-605, “Software:  Revenue Recognition.”  Our solid-state LED video screens, billboards and active digital signage contain software elements which the Company has determined are incidental and excluded from the scope of ASC Subtopic 985-605.

Trade and Other Accounts Receivable, Policy [Policy Text Block]

Credit and Collections:

The Company maintains allowances for doubtful accounts receivable for probable estimated losses resulting from either customer disputes or the inability of its customers to make required payments.  If the financial condition of the Company’s customers were to deteriorate, resulting in their inability to make the required payments, the Company may be required to record additional allowances or charges against income.  The Company determines its allowance for doubtful accounts by first considering all known collectability problems of customers’ accounts, and then applying certain percentages against the various aging categories based on the due date of the remaining receivables.  The resulting allowance for doubtful accounts receivable is an estimate based upon the Company’s knowledge of its business and customer base, and historical trends.  The Company also establishes allowances, at the time revenue is recognized, for returns, discounts, pricing and other possible customer deductions.  These allowances are based upon historical trends.

The following table presents the Company’s net accounts receivable at the dates indicated.

(In thousands)	December 31,			June 30,
	2014			2014
Accounts receivable	$	44,450		$	43,047
less Allowance for doubtful accounts		(355	)		(294	)
Accounts receivable, net	$	44,095		$	42,753

Cash and Cash Equivalents, Policy [Policy Text Block]

Cash and Cash Equivalents:

The cash balance includes cash and cash equivalents which have original maturities of less than three months.  The Company maintains balances at financial institutions in the United States. The FDIC limit for insurance coverage on non-interest bearing accounts is $250,000. As of December 31, 2014 and June 30, 2014, the Company had bank balances of $20,926,000 and $12,367,000, respectively, without insurance coverage. Of these amounts, $741,000 was held in foreign bank accounts as of June 30, 2014. As a result of the sale of LSI Saco Technologies Inc., there are no longer cash accounts in foreign banks as of December 31, 2014 (See Note 13).

Inventory, Policy [Policy Text Block]

Inventories:

Inventories are stated at the lower of cost or market.  Cost of inventories includes the cost of purchased raw materials and components, direct labor, as well as manufacturing overhead which is generally applied to inventory based on direct labor and material content. Cost is determined on the first-in, first-out basis.

Property, Plant and Equipment, Policy [Policy Text Block]

Property, Plant and Equipment and Related Depreciation:

Property, plant and equipment are stated at cost.  Major additions and betterments are capitalized while maintenance and repairs are expensed.  For financial reporting purposes, depreciation is computed on the straight-line method over the estimated useful lives of the assets as follows:

Buildings (years)	28	-	40
Machinery and equipment (years)	3	-	10
Computer software (years)	3	-	8

Costs related to the purchase, internal development, and implementation of the Company’s fully integrated enterprise resource planning/business operating software system are either capitalized or expensed in accordance with ASC Subtopic 350-40, “Intangibles – Goodwill and Other:  Internal-Use Software.”  Leasehold improvements are amortized over the shorter of fifteen years or the remaining term of the lease.

The Company recorded $1,425,000 and $1,353,000 of depreciation expense in the second quarter of fiscal 2015 and 2014, respectively, and $2,863,000 and $2,563,000 of depreciation expense in the first half of fiscal 2015 and 2014, respectively.

Goodwill and Intangible Assets, Policy [Policy Text Block]

Intangible Assets:

Intangible assets consisting of customer relationships, trade names and trademarks, patents, technology and software, and non-compete agreements are recorded on the Company's balance sheet.  The definite-lived intangible assets are being amortized to expense over periods ranging between five and twenty years.  The Company evaluates definite-lived intangible assets for permanent impairment when triggering events are identified. Neither indefinite-lived intangible assets nor the excess of cost over fair value of assets acquired ("goodwill") are amortized, however they are subject to review for impairment.  See additional information about goodwill and intangibles in Note 7.

Fair Value Measurement, Policy [Policy Text Block]

Fair Value:

The Company has financial instruments consisting primarily of cash and cash equivalents, revolving lines of credit, and on occasion, long-term debt.  The fair value of these financial instruments approximates carrying value because of their short-term maturity and/or variable, market-driven interest rates.  The Company has no financial instruments with off-balance sheet risk.

Fair value measurements of nonfinancial assets and nonfinancial liabilities are primarily used in goodwill and other intangible asset impairment analyses, in the purchase price of acquired companies (if any), and in the valuation of the contingent earn-out. The fair value measurement of these nonfinancial assets and nonfinancial liabilities is based on significant inputs not observable in the market and thus represent Level 3 measurements as defined in ASC 820, “Fair Value Measurement.”

Standard Product Warranty, Policy [Policy Text Block]

Product Warranties:

The Company offers a limited warranty that its products are free of defects in workmanship and materials.  The specific terms and conditions vary somewhat by product line, but generally cover defective products returned within one to five years, with some exceptions where the terms extend to 10 years, from the date of shipment.  The Company records warranty liabilities to cover the estimated future costs for repair or replacement of defective returned products as well as products that need to be repaired or replaced in the field after installation.  The Company calculates its liability for warranty claims by applying estimates to cover unknown claims, as well as estimating the total amount to be incurred for known warranty issues.  The Company periodically assesses the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary.

Changes in the Company’s warranty liabilities, which are included in accrued expenses in the accompanying consolidated balance sheets, during the periods indicated below were as follows:

	Six			Six			Fiscal
	Months Ended			Months Ended			Year Ended
(In thousands)	December 31,			December 31,			June 30,
	2014			2013			2014
Balance at beginning of the period	$	2,662		$	1,424		$	1,424
Additions charged to expense		1,557			1,208			3,816
Deductions for repairs and replacements		(971	)		(1,190	)		(2,578	)
Balance at end of the period	$	3,248		$	1,442		$	2,662

Research, Development, and Computer Software, Policy [Policy Text Block]

Research and Development Costs:

Research and development expenses are costs directly attributable to new product development, including the development of new technology for both existing and new products, and consist of salaries, payroll taxes, employee benefits, materials, supplies, depreciation and other administrative costs.   The Company follows the requirements of ASC Subtopic 985-20, “Software:  Costs of Software to be Sold, Leased, or Marketed,” and expenses as research and development all costs associated with development of software used in solid-state LED products.  All costs are expensed as incurred and are included in selling and administrative expenses. Research and development costs related to both product and software development totaled $1,450,000 and $2,127,000 for the three months ended December 31, 2014 and 2013, respectively, and $3,301,000 and $4,081,000 for the six months ended December 31, 2014 and 2013, respectively.

Earnings Per Share, Policy [Policy Text Block]

Earnings Per Common Share:

The computation of basic earnings per common share is based on the weighted average common shares outstanding for the period net of treasury shares held in the Company’s non-qualified deferred compensation plan.  The computation of diluted earnings per share is based on the weighted average of common shares outstanding for the period and includes common share equivalents.  Common share equivalents include the dilutive effect of stock options, contingently issuable shares and common shares to be issued under a deferred compensation plan, all of which totaled 383,000 shares and 561,000 shares for the three months ended December 31, 2014 and 2013, respectively, and 383,000 shares and 468,000 shares for the six months ended December 31, 2014 and 2013, respectively.See further discussion in Note 4.

New Accounting Pronouncements, Policy [Policy Text Block]

New Accounting Pronouncements:

In July 2013, the Financial Accounting Standards Board issued ASU 2013-11, “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists.” This amended guidance is intended to eliminate the diversity that is in practice with regard to the financial statement presentation of unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The amended guidance is effective for fiscal years and interim periods within those years, beginning after December 15, 2013, or the Company’s fiscal year 2015, with early adoption permissible. The adoption of this guidance did not have a material impact on the financial statements.

In September 2013, the Internal Revenue Service issued Treasury Decision 9636, which enacted final tax regulations regarding the capitalization and expensing of amounts paid to acquire, produce, or improve tangible property. The regulations also include guidance regarding the retirement of depreciable property. The regulations are required to be effective in taxable years beginning on or after January 1, 2014, or the Company’s fiscal year 2015. The Company has reviewed the impact of the final regulations and the anticipated impact to the financial statements is not material.

In June 2014, the Financial Accounting Standards Board issued ASU 2014-09, “Revenue from Contracts with Customers.” This amended guidance supersedes and replaces all existing U.S. GAAP revenue recognition guidance. The guidance established a new revenue recognition model, changes the basis for deciding when revenue is recognized over a point in time, provides new and more detailed guidance on specific revenue topics, and expands and improves disclosures about revenue. The amended guidance is effective for fiscal years and interim periods within those years, beginning after December 15, 2016, or the Company’s fiscal year 2018. The Company has not yet determined the impact the amended guidance will have on its financial statements.

Comprehensive Income, Policy [Policy Text Block]

Comprehensive Income:

The Company does not have any comprehensive income items other than net income (loss). The functional currency of the Company’s former Canadian operation was the U.S. dollar.

Subsequent Events, Policy [Policy Text Block]

Subsequent Events:

The Company has evaluated subsequent events for potential recognition and disclosure through the date the condensed consolidated financial statements were filed.  No items were identified during this evaluation that required adjustment to or disclosure in the accompanying financial statements (See Note 14).

Use of Estimates, Policy [Policy Text Block]

Use of Estimates:

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.  Actual results could differ from those estimates.

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Note 6 - Accrued Expenses (Tables)

6 Months Ended

Dec. 31, 2014

Disclosure Text Block Supplement [Abstract]

Schedule of Accrued Liabilities [Table Text Block]

	December 31,		June 30,
(In thousands)	2014		2014
Accrued Expenses:
Compensation and benefits	$	8,607	$	7,134
Customer prepayments		1,272		1,473
Accrued sales commissions		1,838		1,814
Accrued warranty		3,248		2,662
Other accrued expenses		2,966		2,548
Total Accrued Expenses	$	17,931	$	15,631

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Note 7 - Goodwill and Other Intangible Assets (Details) - Future Amortization Expense (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014
Future Amortization Expense [Abstract]
2015	$ 525
2016	505
2017	409
2018	400
2019	400
After 2019	$ 958

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Note 4 - Earnings Per Common Share (Details)	3 Months Ended		6 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2014	Dec. 31, 2013
Earnings Per Share [Abstract]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	2,377,900	1,197,150	2,371,900	1,676,650

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Condensed Consolidated Statements of Cash Flows (Unaudited) (Under Review) (USD $)	6 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Cash Flows from Operating Activities
Net income	$ 3,115,000	$ 2,735,000
Non-cash items included in net income:
Depreciation and amortization	3,138,000	2,969,000
Deferred income taxes	(101,000)	(49,000)
Deferred compensation plan	94,000	87,000
Stock option expense	882,000	779,000
Issuance of common shares as compensation	96,000	96,000
(Gain) on disposition of fixed assets	(1,000)	(38,000)
Loss on sale of subsidiary	565,000
Allowance for doubtful accounts	176,000	68,000
Inventory obsolescence reserve	753,000	743,000
Changes in certain assets and liabilities:
Accounts receivable	(2,021,000)	4,787,000
Inventories	1,757,000	(5,864,000)
Refundable income taxes	1,801,000	1,061,000
Accounts payable	(784,000)	368,000
Accrued expenses and other	1,792,000	(1,563,000)
Customer prepayments	(201,000)	2,368,000
Net cash flows provided by operating activities	10,718,000	8,547,000
Cash Flows from Investing Activities
Purchases of property, plant and equipment	(2,404,000)	(2,721,000)
Proceeds from sale of subsidiary, net of cash sold	1,494,000
Proceeds from sale of fixed assets	952,000	40,000
Net cash flows provided by (used in) investing activities	42,000	(2,681,000)
Cash Flows from Financing Activities
Cash dividends paid	(1,688,000)	(2,887,000)
Exercise of stock options	108,000	152,000
Purchase of treasury shares	(139,000)	(150,000)
Issuance of treasury shares		10,000
Net cash flows (used in) financing activities	(1,719,000)	(2,875,000)
Increase in cash and cash equivalents	9,041,000	2,991,000
Cash and cash equivalents at beginning of period	9,013,000	7,949,000
Cash and cash equivalents at end of period	18,054,000	10,940,000
Building [Member]
Non-cash items included in net income:
(Gain) on disposition of building	$ (343,000)

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Note 5 - Inventories

6 Months Ended

Dec. 31, 2014

Inventory Disclosure [Abstract]

Inventory Disclosure [Text Block]

NOTE 5 - INVENTORIES

The following information is provided as of the dates indicated:

	December 31,		June 30,
(In thousands)	2014		2014
Inventories:
Raw materials	$	26,781	$	30,278
Work-in-process		4,707		5,393
Finished goods		10,579		9,737
Total Inventories	$	42,067	$	45,408

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Note 13 - Sale of Subsidiary (Details) (USD $)	3 Months Ended				6 Months Ended		0 Months Ended	3 Months Ended
	Dec. 31, 2014		Dec. 31, 2013		Dec. 31, 2014	Dec. 31, 2013	Sep. 30, 2014	Sep. 30, 2014
Note 13 - Sale of Subsidiary (Details) [Line Items]
Gain (Loss) on Disposition of Business					$ (565,000)
Revenue, Net	84,715,000	[1]	76,123,000	[1]	163,181,000	156,609,000
Operating Income (Loss)	2,224,000		1,511,000		4,758,000	4,350,000
LSI Saco Technologies Inc [Member]
Note 13 - Sale of Subsidiary (Details) [Line Items]
Sale of Stock, Consideration Received on Transaction							1,900,000
Gain (Loss) on Disposition of Business							(565,000)
Long-term Line of Credit							5,000,000	5,000,000
Revenue, Net								41,000
Operating Income (Loss)								$ (183,000)

[1] Net sales are attributed to geographic areas based upon the location of the operation making the sale.

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Note 7 - Goodwill and Other Intangible Assets (Tables)

6 Months Ended

Dec. 31, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Goodwill [Table Text Block]

(In thousands)	Lighting			Graphics			Components			All Other
	Segment			Segment			Segment			Category			Total
Balance as of June 30, 2014
Goodwill	$	34,913		$	24,959		$	11,621		$	6,850		$	78,343
Accumulated impairment losses		(34,778	)		(24,959	)		(2,413	)		(5,685	)		(67,835	)
Goodwill, net as of June 30, 2014		135			--			9,208			1,165			10,508
Sale of LSI Saco
Goodwill		--			--			--			(3,119	)		(3,119	)
Accumulated impairment losses		--			--			--			3,119			3,119
		--			--			--			--			--
Balance as of December 31, 2014
Goodwill		34,913			24,959			11,621			3,731			75,224
Accumulated impairment losses		(34,778	)		(24,959	)		(2,413	)		(2,566	)		(64,716	)
Goodwill, net as of December 31, 2014	$	135		$	--		$	9,208		$	1,165		$	10,508

Schedule of Intangible Assets and Goodwill [Table Text Block]

	December 31, 2014
Other Intangible Assets	Gross
(In thousands)	Carrying		Accumulated		Net
	Amount		Amortization		Amount
Amortized Intangible Assets
Customer relationships	$	9,316	$	7,144	$	2,172
Patents		338		102		236
LED technology firmware, software		11,228		10,873		355
Trade name		460		460		--
Non-compete agreements		710		551		159
Total Amortized Intangible Assets		22,052		19,130		2,922
Indefinite-lived Intangible Assets
Trademarks and trade names		3,422		--		3,422
Total Indefinite-lived Intangible Assets		3,422		--		3,422
Total Other Intangible Assets	$	25,474	$	19,130	$	6,344

	June 30, 2014
	Gross
	Carrying		Accumulated		Net
(In thousands)	Amount		Amortization		Amount
Amortized Intangible Assets
Customer relationships	$	10,352	$	7,412	$	2,940
Patents		338		84		254
LED technology firmware, software		11,228		10,832		396
Trade name		460		454		6
Non-compete agreements		710		501		209
Total Amortized Intangible Assets		23,088		19,283		3,805
Indefinite-lived Intangible Assets
Trademarks and trade names		3,422		--		3,422
Total Indefinite-lived Intangible Assets		3,422		--		3,422
Total Other Intangible Assets	$	26,510	$	19,283	$	7,227

Finite-lived Intangible Assets Amortization Expense [Table Text Block]

(In thousands)	Amortization Expense of Other Intangible Assets
	December 31, 2014		December 31, 2013
Three Months Ended	$	127	$	208
Six Months Ended	$	275	$	406

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block]

(In thousands)
2015	$	525
2016	$	505
2017	$	409
2018	$	400
2019	$	400
After 2019	$	958

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Note 3- Business Segment Information (Details) - Inter-segment Revenues (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2014	Dec. 31, 2013
Lighting Segment [Member]
Segment Reporting, Revenue Reconciling Item [Line Items]
Inter-segment net sales	$ 445	$ 925	$ 1,497	$ 1,823
Graphics Segment [Member]
Segment Reporting, Revenue Reconciling Item [Line Items]
Inter-segment net sales	147	195	856	400
Electronics Components Segment [Member]
Segment Reporting, Revenue Reconciling Item [Line Items]
Inter-segment net sales	7,675	9,450	14,947	17,954
All Other Category [Member]
Segment Reporting, Revenue Reconciling Item [Line Items]
Inter-segment net sales	$ 3,618	$ 2,037	$ 5,171	$ 4,192

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Note 15 - Income Taxes

6 Months Ended

Dec. 31, 2014

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

NOTE 15 – INCOME TAXES

The Company's effective income tax rate is based on expected income, statutory rates and tax planning opportunities available in the various jurisdictions in which it operates. For interim financial reporting, the Company estimates the annual income tax rate based on projected taxable income for the full year and records a quarterly income tax provision or benefit in accordance with the anticipated annual rate. The Company refines the estimates of the year's taxable income as new information becomes available, including actual year-to-date financial results. This continual estimation process often results in a change to the expected effective income tax rate for the year. When this occurs, the Company adjusts the income tax provision during the quarter in which the change in estimate occurs so that the year-to-date provision reflects the expected income tax rate. Significant judgment is required in determining the effective tax rate and in evaluating tax positions.

	Three Months Ended						Six Months Ended
	December 31						December 31
	2014			2013			2014			2013
Reconciliation to effective tax rate:
Provision for income taxes at the anticipated annual tax rate		36.1	%		40.6	%		41.0	%		37.9	%
Impact of foreign operations		--			(1.8	)		(0.2	)		(1.0	)
Enactment of tax law changes		(6.1	)		--			(2.9	)		--
Valuation allowances		--			7.9			--			2.8
Uncertain tax positions		(1.3	)		(4.1	)		(1.2	)		(2.9	)
Other		(0.3	)		(0.6	)		(2.4	)		--
Effective tax rate		28.4	%		42.0	%		34.3	%		36.8	%