NOTE

SEGMENT

REPORTING

INFORMATION

The accounting guidance on 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 or “CODM”) in making decisions on how to allocate resources and assess performance. The Company’s

three

operating segments are Lighting, Graphics, and Technology, each of which has a president who is responsible for that business and reports to the CODM. Corporate and Eliminations, which captures the Company’s corporate administrative activities, will also be reported in the segment information.

The Lighting Segment includes outdoor and indoor lighting utilizing both traditional and LED light sources that have been fabricated and assembled for the commercial, industrial market, the petroleum / convenience store market, the automotive dealership market, the quick service restaurant market, along with other markets the Company serves.

The Graphics Segment designs, manufactures and installs exterior and interior visual image elements such as traditional graphics, active digital signage along with the management of media content related to digital signage, LED video screens, and menu board systems that are either digital or traditional by design. These products are used in visual image programs in several markets including, but not limited to the petroleum / convenience store market, multi-site retail operations, banking, and restaurants. The Graphics Segment implements, installs and provides program management services related to products sold by the Graphics Segment and by the Lighting Segment.

LED video screens that were previously reported in the Technology Segment in prior years’ results have been reclassified to the Graphics Segment. The movement of the LED video screen product line was the result of a change in management responsibility of this product line to the Graphics Segment president during the

first

quarter of fiscal

2017.

This movement aligns the product line with other digital visual image elements sold to graphics customers and is consistent with how the Company’s CODM manages the business. The movement of the video screen product line resulted in a reclassification of

$96,000

of operating loss from the Technology Segment to the Graphics Segment in the

third

quarter of fiscal

2016,

and

$99,000

of operating loss in the

first

nine

months of fiscal

2016.

The Technology Segment designs, engineers, and manufactures electronic circuit boards, assemblies and sub-assemblies, and various control system products used in other applications (primarily the control of solid-state LED lighting). This operating segment sells its products directly to customers (primarily in the transportation, original equipment manufacturers, sports, and medical markets) and also has significant inter-segment sales to the Lighting Segment.

The Company’s corporate administration activities are reported in the Corporate and Eliminations line item. These activities primarily include 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 (if any), and deferred income taxes.

There was

concentration of consolidated net sales in the

three

and

nine

months ended

March

31,

2017

March

31,

2016.

There was

concentration of accounts receivable at

March

31,

2017

June

30,

2016.

Summarized financial information for the Company’s operating segments is provided for the indicated periods and as of

March

31,

2017

and

June

30,

2016:

	Three Months Ended						Nine Months Ended
( In thousands)	March 31						March 31
	2017			2016			2017			2016
Net Sales:
Lighting Segment	$	56,039		$	49,331		$	176,578		$	168,007
Graphics Segment		16,463			17,236			55,939			60,772
Technology Segment		5,654			4,173			15,456			12,573
	$	78,156		$	70,740		$	247,973		$	241,352

Operating Income (Loss):
Lighting Segment	$	2,759		$	1,106		$	8,288		$	11,970
Graphics Segment		(480	)		1,078			1,711			5,271
Technology Segment		1,386			984			3,038			3,320
Corporate and Eliminations		(4,439	)		(2,436	)		(9,927	)		(8,686	)
	$	(774	)	$	732		$	3,110		$	11,875

Capital Expenditures:
Lighting Segment	$	251		$	1,074		$	1,518		$	2,923
Graphics Segment		499			2,145			1,324			3,337
Technology Segment		48			1,626			82			1,767
Corporate and Eliminations		(8	)		181			610			383
	$	790		$	5,026		$	3,534		$	8,410

Depreciation and Amortization:
Lighting Segment	$	1,124		$	730		$	2,762		$	2,152
Graphics Segment		357			316			1,093			787
Technology Segment		322			369			991			1,045
Corporate and Eliminations		281			314			843			919
	$	2,084		$	1,729		$	5,689		$	4,903

	March 31, 2017		June 30, 2016
Identifiable Assets:
Lighting Segment	$	187,147	$	95,168
Graphics Segment		32,151		33,490
Technology Segment		28,734		28,348
Corporate and Eliminations		7,884		38,554
	$	255,916	$	195,560

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. Identifiable assets are those assets used by each segment in its operations.

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				Nine Months Ended
	March 31				March 31
(In thousands)	2017		2016		2017		2016

Lighting Segment inter-segment net sales	$	442	$	715	$	1,929	$	2,143

Graphics Segment inter-segment net sales	$	216	$	275	$	1,028	$	1,281

Technology inter-segment net sales	$	8,715	$	8,920	$	25,846	$	27,236

The Company’s operations are located solely within the United States. As a result, the geographic distribution of the Company’s net sales and long-lived assets originate within the United States.