NOTE

– RESTRUCTURING COSTS

September

22,

2016,

the Company announced plans to close its lighting facility in Kansas City, Kansas. The decision was based upon the market shift away from fluorescent and other technologies and the rapid movement to LED lighting which is produced at other LSI facilities. The Company expects to continue to meet the demand for products containing fluorescent light sources as long as these products are commercially viable. All operations at the Kansas City facility ceased prior to

December

31,

2016.

Total restructuring costs related to the closure of the Kansas City facility are expected to be approximately

$900,000.

These costs primarily include employee-related costs (primarily severance), the impairment of manufacturing equipment, plant shut down costs

, costs related to the preparation of the facility for sale, legal costs, and other related costs. In addition, there was also an inventory write-down of

$400,000

recorded in the

first

quarter of fiscal

2017.

The write-down was related to inventory that was previously realizable until the decision in the

first

quarter of fiscal

2017

to shut down the Kanas City plant due to the planned curtailment of the manufacturing of fluorescent light fixtures. The Company owns the facility in Kansas City and expects to realize a gain when the facility is sold. The facility is presented on the balance sheet as an asset held for sale.

The Company also announced the consolidation of the Beaverton, Oregon facility into other LSI facilities. The light assembly of products in the Beaverton facility was moved to the Company’s Columbus, Ohio facility, and administration and engineering functions were moved to the Company’s Cincinnati, Ohio facility. This consolidation was completed

September

30,

2016.

As a result of this consolidation, restructuring charges of

$362,000

were recorded in the

first

half of fiscal

2017,

with the majority of this representing the costs related to the remaining period of the facility’s lease and severance costs for employees who formerly worked in the Beaverton facility.

November

2016,

the Company announced the consolidation of the Woonsocket, Rhode Island manufacturing operation into its North Canton, Ohio operation. The manufacturing operations in Woonsocket ceased prior to

December

31,

2016.

The Company owns the facility in Woonsocket and expects to realize a gain when the facility is sold

. The facility is presented on the balance sheet as an asset held for sale. Total restructuring costs related to the consolidation of the Woonsocket facility are expected to be approximately

$300,000.

These costs primarily include employee-related costs (severance), plant shut down costs, costs related to the preparation of the facility for sale, legal costs, and other related costs.

The following table presents information about restructuring costs for the periods indicated:

	Three		Six Months		Total Expected		Total
	Months Ended		Ended		to be Recognized		Fiscal 2017
(In thousands)	December 31,		December 31,		in Remainder of		Restructuring
	2016		2016		Fiscal 2017		Expenses

Severance and other termination benefits	$	526	$	691	$	77	$	768
Lease obligation		--		213		--		213
Impairment of fixed assets and accelerated depreciation		80		353		--		353
Other		91		96		132		228
Total	$	697	$	1,353	$	209	$	1,562

Impairment and accelerated depreciation expense of

$353,000

was recorded in the

first

half of fiscal

2017

related to machinery and equipment at the Kansas City and Beaverton facilities. There was no impairment expense related to the closure of the Woonsocket facility. Of the

$353,000

of impairment and accelerated depreciation expense,

$322,000

was recorded in the Lighting Segment and

$31,000

was recorded in the Technology Segment. The fair value of the equipment evaluated for impairment was determined by comparing the future undiscounted cash flows to the carrying value of the assets. The future cash flows are from the remaining use of the assets as well as the cash flows expected to result from the future sale of the assets.

The following table presents restructuring costs incurred by line item in the consolidated statement of operations in which the costs are included:

	Three Months Ended		Six Months Ended
(In thousands)	December 31		December 31
	2016		2016

Cost of Goods Sold	$	640	$	1,143
Operating Expenses		57		210
Total	$	697	$	1,353

The following table presents information about restructuring costs by segment for the periods indicated:

	Three			Six Months		Total Expected		Total
	Months Ended			Ended		to be Recognized		Fiscal 2017
(In thousands)	December 31,			December 31,		In Remainder of		Restructuring
	2016			2016		Fiscal 2017		Expenses

Lighting Segment	$	479		$	770	$	130	$	900
Graphics Segment		221			221		79		300
Technology Segment		(3	)		251		--		251
Corporate and Eliminations		--			111		--		111
Total	$	697		$	1,353	$	209	$	1,562

The above tables exclude the expected gain on the sale of the Kansas City and Woonsocket facilities. Additionally, the above tables do not include expense of

$400,000

recorded during the

first

quarter of fiscal

2017

related to the write-down of inventory included as cost of sales as part of the Kansas City facility closure.

The following table presents a roll forward of the beginning and ending liability balances related to the restructuring costs:

(In thousands)
	Balance as of June 30, 2016		Restructuring Expense		Payments			Adjustments			Balance as of December 31, 2016

Severance and termination benefits	$	--	$	691	$	(306	)	$	(3	)	$	382
Lease obligation		--		213		(43	)		--			170
Other		--		96		(90	)		--			6
Total	$	--	$	1,000	$	(439	)	$	(3	)	$	558

The above table does not include fixed asset impairment and accelerated depreciation expense of

$353,000

recorded in the

first

six

months of fiscal

2017.

Refer to Note

for information regarding additional severance expenses that are not included in the restructuring costs identified in this footnote.