Note 3 - Business Segment And Major Customers Information

6 Months Ended

Dec. 31, 2012

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 interim 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 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 and by LSI Saco in the All Other Category. 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 graphics. 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 such facilities manufacture two-dimensional graphics with the use of screen and digital printing, fabricate three-dimensional structural graphics sold in the multi-site retail and petroleum / convenience store 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 various applications including the control of solid-state LED lighting and metal halide lighting.  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 Electronic Components Segment includes the operations of LSI ADL Technology and LSI Virticus.

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

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, the Company’s Board of Directors, stock option expense, 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 applicable), and deferred income tax assets.

There was no concentration of consolidated net sales in the three or six months ended December 31, 2012 or 2011.  There was no concentration of accounts receivable at December 31, 2012 or June 30, 2012.

Summarized financial information for the Company’s reportable business segments is provided for the indicated periods and as of December 31, 2012 and June 30, 2012:

(In thousands)	Three Months Ended December 31						Six Months Ended December 31
	2012			2011			2012			2011
Net Sales:
Lighting Segment	$	53,743		$	53,526		$	109,534		$	102,697
Graphics Segment		10,532			10,091			21,277			20,579
Electronic Components Segment		4,959			4,215			10,713			8,619
All Other Category		1,848			942			4,277			2,374
	$	71,082		$	68,774		$	145,801		$	134,269
Operating Income (Loss):
Lighting Segment	$	2,477		$	2,832		$	6,990		$	6,136
Graphics Segment		(1,140	)		(868	)		(1,495	)		(1,449	)
Electronic Components Segment		(1,559	)		689			(773	)		1,754
All Other Category		(1,429	)		(228	)		(1,431	)		(367	)
Corporate and Eliminations		(1,058	)		(1,206	)		(2,973	)		(2,677	)
	$	(2,709	)	$	1,219		$	318		$	3,397
Capital Expenditures:
Lighting Segment	$	578		$	470		$	894		$	939
Graphics Segment		145			337			363			446
Electronic Components Segment		196			14			329			111
All Other Category		27			27			57			134
Corporate and Eliminations		851			37			1,490			47
	$	1,797		$	885		$	3,133		$	1,677
Depreciation and Amortization:
Lighting Segment	$	1,139		$	1,238		$	2,304		$	2,458
Graphics Segment		224			214			446			440
Electronic Components Segment		333			267			653			530
All Other Category		46			56			93			110
Corporate and Eliminations		84			204			180			406
	$	1,826		$	1,979		$	3,676		$	3,944

	December 31, 2012		June 30, 2012
Identifiable Assets:
Lighting Segment	$	87,403	$	93,661
Graphics Segment		25,475		27,377
Electronic Components Segment		32,840		31,805
All Other Category		5,874		8,185
Corporate and Eliminations		16,186		14,198
	$	167,778	$	175,226

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 and intangible assets, but excluding interest expense and interest income.  Identifiable assets are those assets used by each segment in its operations.  Inter-segment revenues were eliminated in consolidation as follows:

	Three Months Ended December 31				Six Months Ended December 31
(In thousands)	2012		2011		2012		2011
Lighting Segment inter-segment net sales	$	855	$	569	$	1,512	$	1,168
Graphics Segment inter-segment net sales	$	449	$	178	$	1,286	$	325
Electronic Components inter-segment net sales	$	7,283	$	4,919	$	13,619	$	9,737
All Other Category inter-segment net sales	$	1,388	$	2,446	$	2,254	$	3,491

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.  The geographic distribution of the Company’s net sales and long-lived assets are as follows:

(In thousands)	Three Months Ended December 31				Six Months Ended December 31
	2012		2011		2012		2011
Net Sales (a):
United States	$	70,964	$	68,688	$	145,653	$	133,667
Canada		118		86		148		602
	$	71,082	$	68,774	$	145,801	$	134,269

	December 31, 2012		June 30, 2012
Long-lived Assets (b):
United States	$	44,939	$	44,286
Canada		328		322
	$	45,267	$	44,608

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.