Note 4 - Segment Reporting Information

3 Months Ended

Sep. 30, 2021

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

NOTE 4 - 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 two operating segments are Lighting and Display Solutions (formerly known as the Graphics Segment), with one executive team under the organizational structure reporting directly to the CODM with responsibilities for managing each segment. Corporate and Eliminations, which captures the Company’s corporate administrative activities, is also reported in the segment information.

The Lighting Segment includes non-residential outdoor and indoor lighting utilizing LED light sources that have been fabricated and assembled for the Company’s markets, primarily the petroleum/convenience markets, parking lot and garage markets, quick-service restaurant market, retail and grocery store markets, the automotive market, the warehouse market, and the sports complex market. The Company also offers a variety of lighting controls to complement its lighting fixtures which include sensors, photocontrols, dimmers, motion detection and Bluetooth systems. The Company also services lighting product customers through the commercial industrial, stock and flow, and renovation channels. The Lighting Segment also includes the design, engineering and manufacturing of electronic circuit boards, assemblies and sub-assemblies which are sold directly to customers.

The Company acquired JSI in the fourth quarter of fiscal 2021, and consolidated it into the former Graphics Segment, which has been rebranded as the Display Solutions Segment, to more closely align the Company’s comprehensive product offering with the markets it serves. The Display Solutions Segment manufactures, sells and installs exterior and interior visual image and display elements, including printed graphics, structural graphics, digital signage, menu board systems, display fixtures, refrigerated displays, and custom display elements. These products are used in visual image programs in several markets including the petroleum/convenience markets, parking lot and garage markets, quick-service restaurant market, retail and grocery store markets, the automotive market, the warehouse market, and the sports complex market. The Display Solutions Segment implements, installs and provides program management services related to products sold by the Display Solutions Segment and by 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, equity compensation expense for various equity awards 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.

One customer program in the Display Solutions Segment represents $12.3 million or 11.6% of the Company’s net sales in the three months ended September 30, 2021. There were no customers or customer programs representing a concentration of 10% or more of the Company’s consolidated net sales in the three months ended September 30, 2020. There was no concentration of accounts receivable at September 30, 2021 or June 30, 2021. 

Summarized financial information for the Company’s operating segments is provided for the indicated periods and as of September 30, 2021 and September 30, 2020:

	Three Months Ended
(In thousands)	September 30
	2021			2020
Net Sales:
Lighting Segment	$	51,260		$	45,405
Display Solutions Segment		55,137			24,601
	$	106,397		$	70,006
Operating Income (Loss):
Lighting Segment	$	4,339		$	3,588
Display Solutions Segment		3,749			1,823
Corporate and Eliminations		(3,644	)		(3,209	)
	$	4,444		$	2,202
Capital Expenditures:
Lighting Segment	$	180		$	369
Display Solutions Segment		221			27
Corporate and Eliminations		(104	)		9
	$	297		$	405
Depreciation and Amortization:
Lighting Segment	$	1,461		$	1,619
Display Solutions Segment		1,031			358
Corporate and Eliminations		71			56
	$	2,563		$	2,033

	September 30, 2021		June 30, 2021
Identifiable Assets:
Lighting Segment	$	137,071	$	132,169
Display Solutions Segment		155,203		147,354
Corporate and Eliminations		7,314		7,298
	$	299,588	$	286,821

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
(In thousands)	September 30
	2021		2020
Lighting Segment inter-segment net sales	$	10,457	$	4,080
Display Solutions Segment inter-segment net sales	$	163	$	38

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