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 MARCH 31, 2017.
	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 [    ]
Emerging growth company [   ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

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 May 1, 2017 there were 25,399,626 shares of the Registrant's common stock, no par value per share, outstanding.

LSI INDUSTRIES INC.

FORM 10-Q

FOR THE QUARTER ENDED MARCH 31, 2017

INDEX

			Begins on Page
PART I.  Financial Information
	ITEM 1.	Financial Statements (Unaudited)
		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 Analysisof Financial Condition and Results of Operations	27
	ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	42
	ITEM 4.	Controls and Procedures	42
PART II.  Other Information
	ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	43
	ITEM 6.	Exhibits	43
Signatures			44

“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						Nine Months Ended
	March 31						March 31
(In thousands, except per share data)	2017			2016			2017			2016
Net sales	$	78,156		$	70,740		$	247,973		$	241,352
Cost of products and services sold		59,445			54,191			185,877			177,528
Restructuring costs		312			--			1,455			--
Gross profit		18,399			16,549			60,641			63,824
Impairment of intangible asset		479			--			479			--
Acquisition Deal Costs		1,480			--			1,480			--
Restructuring costs (gain)		(1,301	)		--			(1,091	)		--
Selling and administrative expenses		18,515			15,817			56,663			51,949
Operating income (loss)		(774	)		732			3,110			11,875
Interest (income)		(25	)		(28	)		(80	)		(54	)
Interest expense		188			9			209			27
Income (loss) before income taxes		(937	)		751			2,981			11,902
Income tax (benefit) expense		(406	)		229			677			3,848
Net income (loss)	$	(531	)	$	522		$	2,304		$	8,054
Earnings (loss) per common share (see Note 4)
Basic	$	(0.02	)	$	0.02		$	0.09		$	0.32
Diluted	$	(0.02	)	$	0.02		$	0.09		$	0.32
Weighted average common shares outstanding
Basic		25,452			25,080			25,346			24,918
Diluted		25,452			25,700			25,909			25,494

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)

	March 31,			June 30,
(In thousands, except shares)	2017			2016
ASSETS
Current Assets
Cash and cash equivalents	$	4,375		$	33,835
Accounts receivable, less allowance for doubtful accounts of $399 and $226, respectively		48,740			46,975
Inventories		48,460			44,141
Assets held for sale		1,463			--
Other current assets		3,852			2,792
Total current assets		106,890			127,743
Property, Plant and Equipment, at cost
Land		6,422			6,978
Buildings		35,430			39,317
Machinery and equipment		82,058			82,628
Construction in progress		1,721			838
		125,631			129,761
Less accumulated depreciation		(79,511	)		(82,299	)
Net property, plant and equipment		46,120			47,462
Goodwill		58,376			10,508
Other Intangible Assets, net		38,859			5,586
Other Long-Term Assets, net		5,671			4,261
Total assets	$	255,916		$	195,560

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)

	March 31,		June 30,
(In thousands, except shares)	2017		2016
LIABILITIES & SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts payable	$	16,003	$	13,892
Accrued expenses		23,880		25,341
Total current liabilities		39,883		39,233
Long-Term Debt		54,966		--
Other Long-Term Liabilities		1,490		807
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 25,375,142 and 24,982,219 shares, respectively		119,178		113,653
Retained earnings		40,399		41,867
Total shareholders’ equity		159,577		155,520
Total liabilities & shareholders’ equity	$	255,916	$	195,560

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)

(In thousands)	Nine Months Ended
	March 31
	2017			2016
Cash Flows from Operating Activities
Net income	$	2,304		$	8,054
Non-cash items included in net income:
Depreciation and amortization		5,689			4,903
Intangible asset impairment		479			--
Deferred income taxes		(947	)		(126	)
Deferred compensation plan		196			328
Stock compensation expense		2,292			2,542
Issuance of common shares as compensation		331			168
(Gain) loss on disposition of fixed assets		52			(87	)
(Gain) on sale of building		(1,361	)		--
Fixed asset impairment and accelerated depreciation		354			--
Allowance for doubtful accounts		248			162
Inventory obsolescence reserve		981			1,351
Changes in certain assets and liabilities, net of acquisition:
Accounts receivable		5,189			5,588
Inventories		3,190			(4,440	)
Refundable income taxes		(143	)		(531	)
Accounts payable		(965	)		(3,176	)
Accrued expenses and other		(5,119	)		812
Customer prepayments		174			(310	)
Net cash flows provided by operating activities		12,944			15,238
Cash Flows from Investing Activities
Purchases of property, plant and equipment		(3,534	)		(8,410	)
Acquisition of business, net of cash received and warrants issued		(95,077	)		--
Proceeds from sale of fixed assets		3,081			124
Net cash flows (used in) investing activities		(95,530	)		(8,286	)
Cash Flows from Financing Activities
Payments of long-term debt		(14,882	)		--
Borrowings of long-term debt		69,649			--
Cash dividends paid		(3,772	)		(2,959	)
Exercise of stock options		2,401			3,604
Purchase of treasury shares		(446	)		(317	)
Issuance of treasury shares		176			90
Net cash flows provided by financing activities		53,126			418
Increase (decrease) in cash and cash equivalents		(29,460	)		7,370
Cash and cash equivalents at beginning of period		33,835			26,409
Cash and cash equivalents at end of period	$	4,375		$	33,779

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 March 31, 2017, the results of its operations for the three and nine month periods ended March 31, 2017 and 2016, and its cash flows for the nine month periods ended March 31, 2017 and 2016. These statements should be read in conjunction with the financial statements and footnotes included in the fiscal 2016 Annual Report on Form 10-K.  Financial information as of June 30, 2016 has been derived from the Company’s audited consolidated financial statements.

NOTE 2  -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Consolidation:

The 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. 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, and commissioning of lighting controls; 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. 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. 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.

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 a 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 one month to one year.

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

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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 the accounting standards on software revenue recognition. Our solid-state LED video screens and active digital signage contain software elements which the Company has determined are incidental.

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.  Receivables deemed uncollectable are written-off against the allowance for doubtful accounts receivable after all reasonable collection efforts have been exhausted. 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)	March 31,			June 30,
	2017			2016
Accounts receivable	$	49,139		$	47,201
Less: Allowance for doubtful accounts		(399	)		(226	)
Accounts receivable, net	$	48,740		$	46,975

Cash and Cash Equivalents:

The cash balance includes cash and cash equivalents which have original maturities of less than three months. Cash and cash equivalents consist primarily of bank deposits and a bank money market account that is stated at cost, which approximates fair value. The Company maintains balances at financial institutions in the United States.  In the United States, the FDIC limit for insurance coverage on non-interest bearing accounts is $250,000. As of March 31, 2017 and June 30, 2016, the Company had bank balances of $6,852,000 and $37,883,000, respectively, without insurance coverage.

Inventories and Inventory Reserves:

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 on material content. Cost is determined on the first-in, first-out basis.

The Company maintains an inventory reserve for obsolete and excess 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. Judgment is used to establish excess and obsolete inventory reserves and management adjusts these reserves as more information becomes available about the ultimate disposition of the inventory item.  

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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 (in years)	28	-	40
Machinery and equipment (in years)	3	-	10
Computer software (in 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.  Leasehold improvements are depreciated over the shorter of fifteen years or the remaining term of the lease.

The Company recorded $1,725,000 and $1,603,000 of depreciation expense in the third quarter of fiscal 2017 and 2016, respectively, and $5,122,000 and $4,524,000 of depreciation expense in the first nine months of fiscal 2017 and 2016, respectively.

The Company is in the process of selling its facility in Woonsocket, Rhode Island. This Graphics Segment facility, which is not expected to be sold at a loss, has been separately disclosed on the balance sheet as an asset held for sale as of March 31, 2017. The Company sold its Kansas City facility and certain manufacturing equipment in the third quarter of fiscal 2017. Refer to Note 14 for more information regarding the closure of these facilities.

Goodwill and 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 seven and twenty years.  The Company evaluates definite-lived intangible assets for possible 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, accounts receivable, accounts payable, 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, long-lived asset impairment analyses, in the purchase price of acquired companies, and in the valuation of the contingent earn-out. The accounting guidance on fair value measurement was used to measure the fair value of these nonfinancial assets and nonfinancial liabilities.

Product Warranties:

The Company offers a limited warranty that its products are free from 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 based upon historical claims as a percentage of sales 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.

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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:

	Nine			Nine			Fiscal
	Months Ended			Months Ended			Year Ended
(In thousands)	March 31,			March 31,			June 30,
	2017			2016			2016
Balance at beginning of the period	$	5,069		$	3,408		$	3,408
Additions charged to expense		3,841			4,018			5,069
Addition from acquisition		907			--			--
Deductions for repairs and Replacements		(2,283	)		(2,606	)		(3,408	)
Balance at end of the period	$	7,534		$	4,820		$	5,069

Research and Development Costs:

Research and development costs are 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, outside legal costs and filing fees related to obtaining patents, supplies, depreciation and other administrative costs.   The Company 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 $1,447,000 and $1,562,000 for the three months ended March 31, 2017 and 2016, respectively, and $4,117,000 and $4,193,000 for the nine months ended March 31, 2017 and 2016, respectively.

Cost of Products and Services Sold:

Cost of products sold is primarily comprised of direct materials and supplies consumed in the manufacture of products, as well as manufacturing labor, depreciation expense and direct overhead expense necessary to acquire and convert the purchased materials and supplies into finished product. Cost of products sold also includes the cost to distribute products to customers, inbound freight costs, internal transfer costs, warehousing costs and other shipping and handling activity. Cost of services sold is primarily comprised of the internal and external labor costs required to support the Company’s service revenue along with the management of media content.

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 nonqualified deferred compensation plan.  The computation of diluted earnings per share is based on the weighted average common shares outstanding for the period and includes common share equivalents.  Common share equivalents include the dilutive effect of stock options, restricted stock units, stock warrants, contingently issuable shares and common shares to be issued under a deferred compensation plan, all of which totaled 297,000 and 893,000 shares for the three month ended March 31, 2017 and 2016, respectively, and 853,000 shares and 846,000 shares for the nine months ended March 31, 2017 and 2016, respectively. See further discussion of earnings per share in Note 4.

Income Taxes:

The Company accounts for income taxes in accordance with the accounting guidance for 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 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.

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New Accounting Pronouncements:

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, provides new and more detailed guidance on specific revenue topics, and expands and improves disclosures about revenue. In April 2016, the FASB issued ASU 2016-10, “Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing.” In May 2016, the FASB issued ASU 2016-12, “Revenue from Contracts with Customers: Narrow Scope Improvements and Practical Expedients.” In December 2016, the FASB issued ASU 2016-20, “Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers.” These three standards clarify or improve guidance from ASU 2014-09 and are effective for fiscal years and interim periods within those years, beginning after December 15, 2017, or the Company’s fiscal year 2019. The Company will adopt these standards no later than July 1, 2018. While the Company is currently assessing the impact of the new standards, the Company’s revenue is primarily generated from the sale of finished products to customers. Those sales predominantly contain a single delivery element and revenue is recognized at a single point in time when ownership, risks, and rewards transfer. The recognition of revenue from most product sales is largely unaffected by the new standard. However, with respect to certain product sales requiring installation, revenue is currently not recognized until the installation is complete. While the Company does not expect this new guidance to have a material impact on the amount of overall sales recognized, the timing of recognition of revenues from sales on certain projects may be affected. The Company has not yet quantified this potential impact.

In November 2015, the FASB issued ASU 2015-17, “Balance Sheet Classification of Deferred Taxes,” which eliminates the current requirement to separate deferred income tax liabilities and assets into current and noncurrent amounts in the statement of financial position. This update requires that deferred tax liabilities and assets be classified as noncurrent. This update is effective for financial statements issued for fiscal years beginning April 1, 2017. This update may be applied either prospectively or retrospectively. However, early adoption is permitted and the Company has chosen to adopt the standard retrospectively as of June 30, 2016. As a result, prior periods have been adjusted to reflect this change. This update affected the presentation, but not the measurement of deferred tax liabilities and assets.

In February 2016, the Financial Accounting Standards Board issued ASU 2016-02, “Leases.” The amended guidance requires an entity to recognize assets and liabilities that arise from leases. The amended guidance is effective for financial statements issued for fiscal years and interim periods within those years, beginning after December 15, 2018, or the Company’s fiscal year 2020, with early adoption permitted. 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.

Subsequent Events:

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

Reclassifications:

Certain prior year balance sheet amounts have been reclassified to conform to new accounting guidance on balance sheet classification of deferred taxes. These reclassifications have no impact on net income, earnings per share, or operating cash flows.

Use of Estimates:

The preparation of 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 consolidated financial statements and accompanying notes.  Actual results could differ from those estimates.

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NOTE 3 - 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 no concentration of consolidated net sales in the three and nine months ended March 31, 2017 or March 31, 2016. There was no concentration of accounts receivable at March 31, 2017 or June 30, 2016.

Page 12

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.

Page 13

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.

Page 14

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					Nine Months Ended
	March 31					March 31
	2017			2016		2017		2016
BASIC EARNINGS PER SHARE
Net income (loss)	$	(531	)	$	522	$	2,304	$	8,054
Weighted average shares outstanding during the period, net of treasury shares (a)		25,155			24,807		25,056		24,648
Weighted average vested restricted stock units outstanding		37			22		37		25
Weighted average shares outstanding in the Deferred Compensation Plan during the period		260			251		253		245
Weighted average shares outstanding		25,452			25,080		25,346		24,918
Basic earnings (loss) per share	$	(0.02	)	$	0.02	$	0.09	$	0.32
DILUTED EARNINGS PER SHARE
Net income (loss)	$	(531	)	$	522	$	2,304	$	8,054
Weighted average shares outstanding
Basic		25,452			25,080		25,346		24,918
Weighted average stock warrants outstanding		--			--		28		--
Effect of dilutive securities (b): Impact of common shares to be issued under stock incentive plans, and contingently issuable shares, if any		--			620		535		576
Weighted average shares outstanding (c)		25,452			25,700		25,909		25,494
Diluted earnings (loss) per share	$	(0.02	)	$	0.02	$	0.09	$	0.32

(a) Includes shares accounted for like treasury stock included in the Company’s non-qualified deferred compensation plan. (See Note 10.)

(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 1,032,250 common shares at March 31, 2016, and options to purchase 1,683,883 common shares and 1,391,300 common shares at March 31, 2017 and 2016, respectively were not included in the computation of the three month and nine month periods for diluted earnings per share, respectively, because the exercise price was greater than the average fair market value of the common shares. For the three months ended March 31, 2017, the effect of dilutive securities was not included in the calculation of diluted earnings per share because there was a net operating loss for the period.

Page 15

NOTE 5 - INVENTORIES

The following information is provided as of the dates indicated:

	March 31,		June 30,
(In thousands)	2017		2016
Inventories:
Raw materials	$	31,817	$	28,979
Work-in-process		3,323		4,418
Finished goods		13,320		10,744
Total Inventories	$	48,460	$	44,141

NOTE 6 - ACCRUED EXPENSES

The following information is provided as of the dates indicated:

	March 31,		June 30,
(In thousands)	2017		2016
Accrued Expenses:
Compensation and benefits	$	7,540	$	11,983
Customer prepayments		1,227		1,053
Accrued sales commissions		2,275		2,792
Accrued warranty		7,534		5,069
Other accrued expenses		5,304		4,444
Total Accrued Expenses	$	23,880	$	25,341

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. 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 reporting units and indefinite-lived intangible assets using a combination of a market approach and an income (discounted cash flow) approach, at the reporting unit level. The estimation of the fair value of reporting units and intangible assets 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.

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 including, but not limited to operating results, forecasts, anticipated future cash flows and marketplace data.  There are inherent uncertainties related to these factors and judgments in applying them to the analysis of goodwill impairment.

As of March 1, 2017, the Company performed its annual goodwill impairment test on the three reporting units that contain goodwill (excluding Atlas Lighting Products). The preliminary goodwill impairment test on one reporting unit in the Lighting Segment passed with a business enterprise value that was $60.0 million or 80% above the carrying value of this reporting unit including goodwill. The preliminary goodwill impairment test of the one reporting unit with goodwill in the Graphics Segment passed with an estimated business enterprise value that was $4.2 million or 423% above the carrying value of the reporting unit including goodwill. The preliminary goodwill impairment test of the reporting unit in the Technology Segment that contains goodwill passed with an estimated business enterprise value that was $23.2 million or 95% above the carrying value of this reporting unit including goodwill. The impairment test is expected to be completed in the fourth quarter of fiscal 2017. It is anticipated that the results of the test will not change when the test is complete.

Page 16

The Company acquired all of the capital stock of Atlas Lighting Products, Inc., on February 21, 2017 (see Note 16). The total purchase price exceeded the estimated fair value of net assets by approximately $47.9 million, which was allocated to goodwill. A preliminary valuation of the goodwill and intangible assets was completed in March 2017, and preliminary purchase price allocations have been made at February 21, 2017. While identified intangible assets related to the Atlas acquisition are being amortized effective February 21, 2017 over appropriate lives, goodwill will not be amortized on the Company’s financial statements. Goodwill and intangible assets related to Atlas Lighting Products are included in the assets of the Lighting Segment. It is anticipated that the valuation analysis will be fully complete in the fourth quarter of fiscal 2017. Refer to Note 16 for additional information on the intangible assets of Atlas Lighting Products.

In March 2017, a customer relationship intangible asset with a net book value of $479,000 related to the LED video screen product line in the Graphics Segment was determined to be fully impaired. The Company deemed that distribution channels and corresponding projected future cash flows that support the customer list intangible asset are not adequate to support the asset.

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

Goodwill
(In thousands)	Lighting			Graphics			Technology
	Segment			Segment			Segment			Total
Balance as of June 30, 2016
Goodwill	$	34,913		$	28,690		$	11,621		$	75,224
Accumulated impairment losses		(34,778	)		(27,525	)		(2,413	)		(64,716	)
Goodwill, net as of June 30, 2016	$	135		$	1,165		$	9,208		$	10,508
Goodwill acquired	$	47,868		$	--		$	--		$	47,868
Balance as of March 31, 2017
Goodwill	$	82,781			28,690			11,621			123,092
Accumulated impairment losses		(34,778	)		(27,525	)		(2,413	)		(64,716	)
Goodwill, net as of March 31, 2017	$	48,003		$	1,165		$	9,208		$	58,376

The Company performed its annual review of indefinite-lived intangible assets (excluding the intangible assets of Atlas Lighting Products) as of March 1, 2017 and determined there was no impairment. The preliminary indefinite-lived intangible impairment test passed with a fair market value that was $15.2 million or 445% above its carrying value. The impairment test is expected to be completed in the fourth quarter of fiscal 2017. It is anticipated that the results of the test will not change when the test is complete.

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

	March 31, 2017
Other Intangible Assets	Gross
(In thousands)	Carrying		Accumulated		Net
	Amount		Amortization		Amount
Amortized Intangible Assets
Customer relationships	$	35,563	$	7,438	$	28,125
Patents		338		180		158
LED technology firmware, software		16,066		11,098		4,968
Trade name		2,658		472		2,186
Non-compete agreements		710		710		--
Total Amortized Intangible Assets		55,335		19,898		35,437
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	$	58,757	$	19,898	$	38,859

Page 17

	June 30, 2016
Other Intangible Assets	Gross
	Carrying		Accumulated		Net
(In thousands)	Amount		Amortization		Amount
Amortized Intangible Assets
Customer relationships	$	9,316	$	7,581	$	1,735
Patents		338		154		184
LED technology firmware, software		11,228		10,989		239
Trade name		460		460		--
Non-compete agreements		710		704		6
Total Amortized Intangible Assets		22,052		19,888		2,164
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	$	19,888	$	5,586

(In thousands)	Amortization Expense of Other Intangible Assets
	March 31, 2017		March 31, 2016
Three Months Ended	$	359	$	126
Nine Months Ended	$	567	$	379

The Company expects to record annual amortization expense as follows:

(In thousands)
2017	$	1,486
2018	$	2,761
2019	$	2,761
2020	$	2,687
2021	$	2,683
After 2021	$	23,587

NOTE 8  -  REVOLVING LINE OF CREDIT AND LONG-TERM DEBT

In February, 2017 the Company amended its line of credit to increase it to a $100 million secured revolving line of credit, increased from the $30 million line of credit that was previously in place. The increased credit line was required for the funding of the acquisition of Atlas Lighting Products, Inc. The line of credit expires in the third quarter of fiscal 2022. 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 125 and 250 basis points depending upon the ratio of indebtedness to earnings before interest, taxes, depreciation and amortization (“EBITDA”), as defined in the line of credit agreement. The increment over LIBOR borrowing rate will remain at 175 basis points for the next twelve months.  The fee on the unused balance of the $100 million committed line of credit is 15 basis points.  Under the terms of this line of credit, the Company has agreed to a negative pledge of real estate assets and is required to comply with financial covenants that limit the ratio of indebtedness to EBITDA and require a minimum fixed charge coverage ratio. As of March 31, 2017, there was $55.0 million borrowed against the line of credit, and $45.0 million was available as of that date. Based on the terms of the line of credit and the final principal due date, the debt has been classified as long term. The line of credit closing fees and legal fees of $199,000 have been recorded as a long term asset and are being amortized over the term of the line of credit.

Page 18

The Company is in compliance with all of its loan covenants as of March 31, 2017.

NOTE 9 - CASH DIVIDENDS

The Company paid cash dividends of $3,772,000 and $2,959,000 in the nine months ended March 31, 2017 and 2016, respectively. Dividends on restricted stock units in the amount of $24,120 and $7,860 were accrued as of March 31, 2017 and 2016, respectively. These dividends will be paid upon the vesting of the restricted stock units when shares are issued to the award recipients. In April 2017, the Board of Directors declared a regular quarterly cash dividend of $0.05 per share payable May 16, 2017 to shareholders of record as of May 8, 2017. The indicated annual cash dividend rate is $0.20 per share.

NOTE 10 - EQUITY COMPENSATION 

Stock Based Compensation 

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 replaced all previous equity compensation plans. The Company’s shareholders approved amendments to the 2012 Stock Incentive Plan that added 1,600,000 shares to the plan and implemented the use of a fungible share ratio that consumes 2.5 available shares for every 1 full value share awarded by the Company as stock compensation. The options granted or stock awards made pursuant to this plan are granted at fair market value at the date of grant or award.  Service-based 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. Performance-based options granted to employees become exercisable 33.3% 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 1,669,003 shares, all of which were available for future grant or award as of March 31, 2017.  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, stock warrants and other stock awards. Service based and performance based stock options were granted and restricted stock units (“RSU’s”) were awarded during the nine months ended March 31, 2017. As of March 31, 2017, a total of 3,631,155 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 1,423,528 options for common shares were vested and exercisable.  As of March 31, 2017, the approximate unvested stock option expense that will be recorded as expense in future periods is $3,508,348.  The weighted average time over which this expense will be recorded is approximately 24 months. Additionally, as of March 31, 2017, a total of 135,585 RSU’s were outstanding. The approximate unvested stock compensation expense that will be recorded as expense in future periods for the RSU’s is $752,231. The weighted average time over which this expense will be recorded is approximately 37 months.

Stock Warrants

The Company issued 200,000 fully vested stock warrants in the third quarter of fiscal 2017 in conjunction with the acquisition of Atlas Lighting Products, Inc., with the fair value of the warrants being included in the purchase price of that company rather than being expensed. See further discussion in Note 16. These 200,000 stock warrants were outstanding as of March 31, 2017. The fair value of the warrants on the date of grant was estimated using the Black-Scholes option pricing model. The below listed weighted average assumptions were used for the warrants.

	Three Months Ended
	March 31
	2017
Dividend yield		2.01	%
Expected volatility		39	%
Risk-free interest rate		1.80	%
Expected life (in yrs.)		4.5

The stock warrants issued during the quarter ended March 31, 2017 had an exercise price of $9.95, and a fair value of $2.87. As of March 31, 2017, the warrants had a remaining contractual life of 4.9 years.

Page 19

Stock Options

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						Nine Months Ended
	March 31						March 31
	2017			2016			2017			2016
Dividend yield		1.93	%		1.72	%		1.85	%		1.29	%
Expected volatility		41	%		43	%		42	%		44	%
Risk-free interest rate		1.92	%		1.46	%		1.31	%		1.66	%
Expected life (in yrs.)		6.2			6.0			6.1			6.0

At March 31, 2017, the 1,256,623 options granted during the first nine months of fiscal 2017 to employees had exercise prices ranging from $9.48 to $11.06 per share, fair values ranging from of $3.22 to $3.83 per share, and remaining contractual lives of between 9.3 and 10 years.

At March 31, 2016, the 1,026,800 options granted during the first nine months of fiscal 2016 to employees had exercise prices ranging from $8.84 to $11.87 per share, fair values ranging from of $3.28 to $4.52 per share, and remaining contractual lives of between 9.3 and 9.9 years.

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 3.3% forfeiture rate effective January 1, 2017. Previous estimated forfeiture rates were between 2.0% and 3.5% between the periods January 1, 2013 through December 31, 2016. 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 $510,851 and $360,952 of expense related to stock options in the three months ended March 31, 2017 and 2016, respectively, and recorded $1,806,860 and $2,191,659 of expense related to stock options in the nine months ended March 31, 2017 and 2016, respectively.  The lower stock option expense in fiscal 2017 was the result of expectations that the performance criteria related to performance based options will not be met. As of March 31, 2017, the Company had 3,148,352 stock options that were vested and that were expected to vest, with a weighted average exercise price of $9.20 per share, an aggregate intrinsic value of $4,515,257 and weighted average remaining contractual terms of 7.2 years.

Information related to all stock options for the nine months ended March 31, 2017 and 2016 is shown in the following tables:

	Nine Months Ended March 31, 2017
	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Outstanding at 6/30/16		2,976,490		$	8.97		6.6	$	8,338,974
Granted		1,256,623		$	10.67
Forfeitures		(161,812	)	$	16.17
Exercised		(440,146	)	$	7.39
Outstanding at 3/31/17		3,631,155		$	9.43		7.4	$	4,546,991
Exercisable at 3/31/17		1,423,528		$	8.99		5.3	$	2,912,714

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	Nine Months Ended March 31, 2016
	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Outstanding at 6/30/15		2,677,436		$	8.85		6.1	$	4,914,601
Granted		1,026,800		$	9.39
Forfeitures		(150,800	)	$	15.73
Exercised		(509,871	)	$	7.33
Outstanding at 3/31/16		3,043,565		$	8.95		6.8	$	10,448,456
Exercisable at 3/31/16		1,362,810		$	9.67		4.3	$	4,741,694

The following table presents information related to unvested stock options:

				Weighted-Average
				Grant Date
	Shares			Fair Value
Unvested at June 30, 2016		1,663,505		$	3.39
Granted		1,256,623		$	3.71
Vested		(685,751	)	$	3.30
Forfeited		(26,750	)	$	3.50
Unvested at March 31, 2017		2,207,627		$	3.60

The weighted average grant date fair value of options granted during the nine month periods ended March 31, 2017 and 2016 was $3.71 and $3.64, respectively. The aggregate intrinsic value of options exercised during the nine months ended March 31, 2017 and 2016 was $1,094,696 and $1,474,444, respectively. The aggregate grant date fair value of options that vested during the nine months ended March 31, 2017 and 2016 was $2,260,014 and $1,149,022, respectively. The Company received $2,612,578 and $3,737,233 of cash from employees who exercised options in the nine month periods ended March 31, 2017 and 2016, respectively. For the nine months ended March 31, 2017, the $2,612,578 cash received from stock options was partially offset by $138,793 related to the tax effect of disqualifying dispositions of stock options along with $72,399 related to the net tax effect of other stock option exercises. For the nine months ended March 31, 2016, the $3,737,233 cash received from stock options was partially offset by $133,172 related to the tax effect of disqualifying dispositions of stock options. In the first nine months of fiscal 2017 the Company recorded $465,521as a reduction of federal income taxes payable, $138,793 as a decrease in common stock, $109,140 as a reduction of income tax expense, and $495,175 as a reduction of the deferred tax asset related to the issuance of RSU’s and 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. In the first nine months of fiscal 2016 the Company recorded $518,515 as a reduction of federal income taxes payable, $133,172 as a decrease in common stock, $95,543 as a reduction of income tax expense, and $556,144 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.

Restricted Stock Units

A total of 96,210 RSU’s with a weighted average fair value of $10.84 per share were awarded to employees during the nine months ended March 31, 2017. A total of 72,000 RSU’s with a fair value of $9.39 per share were awarded to employees during the nine months ended March 31, 2016. The Company determined the fair value of the awards based on the closing price of the Company stock on the date the RSU’s were awarded. The RSU’s have a four year ratable vesting period. The RSU’s are non-voting, but accrue cash dividends at the same per share rate as those cash dividends declared and paid on LSI’s common stock. Dividends on RSU’s in the amount of $24,120 and $7,860 were accrued as of March 31, 2017 and 2016, respectively. Accrued dividends are paid to the holder upon vesting of the RSU’s and issuance of shares.

Page 21

The following table presents information related to RSU’s:

				Weighted-Average
				Grant Date
	Shares			Fair Value
Unvested at June 30, 2016		62,500		$	9.39
Awarded		96,210		$	10.84
Shares Issued		(23,125	)	$	9.71
Unvested at March 31, 2017		135,585		$	10.36

As of March 31, 2017, the 135,585 RSU’s had a remaining weighted average contractual life of 6.2 years. Of the 135,585 RSU’s outstanding as of March 31, 2017, 130,316 are vested or expected to vest in the future. An estimated forfeiture rate of 3.4% was used in the calculation of expense related to the RSU’s. The Company recorded $93,905 and $486,102 of expense related to RSU’s in the three and nine month periods ended March 31, 2017, respectively.

As of March 31, 2016, the 65,500 outstanding RSU’s had a remaining weighted average contractual life of 9.25 years. Of the 65,500 RSU’s outstanding as of March 31, 2016, 63,369 were vested or expected to vest in the future. An estimated forfeiture rate of 3.3% was used in the calculation of expense related to the RSU’s. The Company recorded $30,387 and $350,369 of expense related to RSU’s in the three and nine month periods ended March 31, 2016, respectively.

Director and Employee Stock Compensation Awards

The Company awarded a total of 31,782 and 17,240 common shares in the nine months ended March 31, 2017 and 2016, respectively, as stock compensation awards. These common shares were valued at their approximate $331,000 and $168,000 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 March 31, 2017, there were 29 participants, all with fully vested account balances. A total of 255,119 common shares with a cost of $2,437,880, and 228,103 common shares with a cost of $2,167,717 were held in the plan as of March 31, 2017 and June 30, 2016, 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 used approximately $446,251 and $316,900 to purchase 45,335 and 32,696 common shares of the Company in the open stock market during the nine months ended March 31, 2017 and 2016, respectively, for either employee salary deferrals or Company contributions into the non-qualified deferred compensation plan. For fiscal year 2017, the Company estimates the Rabbi Trust for the Nonqualified Deferred Compensation Plan will make net repurchases in the range of 48,000 to 53,000 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)	Nine Months Ended March 31
	2017		2016
Cash payments:
Interest	$	66	$	32
Income taxes	$	2,484	$	4,863
Issuance of common shares as compensation	$	331	$	168
Issuance of stock warrants	$	575		--

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NOTE 12 - COMMITMENTS AND CONTINGENCIES

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 March 31, 2017, there were no standby letter of credit agreements.

NOTE 13 – SEVERANCE COSTS

The Company recorded severance expense of $222,000 and $401,000 in the nine months ended March 31, 2017 and 2016, respectively. This severance expense was related to reductions in staffing not related to plant restructuring. See further discussion of restructuring expenses in Note 14.

The activity in the Company’s accrued severance liability is as follows for the periods indicated:

	Nine			Nine			Fiscal
	Months Ended			Months Ended			Year Ended
(In thousands)	March 31,			March 31,			June 30,
	2017			2016			2016
Balance at beginning of the period	$	39		$	379		$	379
Accrual of expense		222			401			469
Payments		(235	)		(544	)		(742	)
Adjustments		--			(67	)		(67	)
Balance at end of the period	$	26		$	169		$	39

NOTE 14 – RESTRUCTURING COSTS

On 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 were $944,000. These costs primarily included 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 $432,000 recorded in the first nine months 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 owned the facility in Kansas City and realized a $1,361,000 gain when the facility was sold.

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 $363,000 were recorded in the first nine months 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.

In 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 $464,000. 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.

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

	Three			Nine Months			Total Expected		Total
	Months Ended			Ended			to be Recognized		Fiscal 2017
(In thousands)	March 31,			March 31,			in Remainder of		Restructuring
	2017			2017			Fiscal 2017		Expenses
Severance and other termination benefits	$	120		$	811		$	--	$	811
Lease obligation		--			213			--		213
Impairment of fixed assets and accelerated depreciation		1			354			--		354
Gain on sale of facility		(1,361	)		(1,361	)		--		(1,361	)
Other		251			347			60		407
Total	$	(989	)	$	364		$	60	$	424

Impairment and accelerated depreciation expense of $354,000 was recorded in the first nine months 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 $354,000 of impairment and accelerated depreciation expense, $322,000 was recorded in the Lighting Segment and $32,000 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			Nine Months Ended
(In thousands)	March 31, 2017			March 31, 2017
Cost of Goods Sold	$	312		$	1,455
Operating Expenses		(1,301	)		(1,091	)
Total	$	(989	)	$	364

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

	Three			Nine Months			Total Expected		Total
	Months Ended			Ended			to be Recognized		Fiscal 2017
(In thousands)	March 31,			March 31,			In Remainder of		Restructuring
	2017			2017			Fiscal 2017		Expenses
Lighting Segment	$	(1,187	)		(417	)	$	--	$	(417	)
Graphics Segment		183			404			60		464
Technology Segment		1			252			--		252
Corporate and Eliminations		14			125			--		125
Total	$	(989	)		364		$	60	$	424

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The above tables include the gain on the sale of the Kansas City facility, and exclude the expected gain on the Woonsocket facility. Additionally, the above tables do not include expense of $432,000 recorded during the first nine months 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 March 31, 2017
Severance and termination benefits	$	--	$	814	$	(748	)	$	(15	)	$	51
Lease obligation		--		213		(86	)					127
Other		--		359		(354	)					5
Total	$	--	$	1,386	$	(1,188	)	$	(15	)	$	183

The above table does not include fixed asset impairment and accelerated depreciation expense of $354,000 recorded in the first nine months of fiscal 2017 or the gain on the sale of the Kansas City facility recorded in the three months ended March 31, 2017.

Refer to Note 13 for information regarding additional severance expenses that are not included in the restructuring costs identified in this footnote.

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 on a periodic basis 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						Nine Months Ended
	March 31						March 31
	2017			2016			2017			2016
Reconciliation to effective tax rate:
Provision for income taxes at the anticipated annual tax rate		32.0	%		34.4	%		30.4	%		34.5	%
Uncertain tax positions		4.2			(2.9	)		(2.4	)		(0.5	)
Disqualifying dispositions		9.3			(1.4	)		(3.6	)		(0.8	)
Deferred tax asset adjustment		--			--			(2.4	)		--
Other		(2.2	)		0.4			0.7			(0.9	)
Effective tax rate		43.3	%		30.5	%		22.7	%		32.3	%

NOTE 16 – ACQUISITION

On February 21, 2017, the Company acquired all the capital stock of Atlas Lighting Products, Inc. (Atlas), a Burlington North Carolina manufacturer of high-quality LED lighting products sold into the electrical distribution market. The purchase price of $97.5 million included a cash payment of $96.9 million and 200,000 five year warrants valued at $0.6 million. The Company funded the acquisition with a combination of cash on hand and $66 million from a new $100 million revolving line of credit (See note 8).

Page 25

The Company has accounted for this transaction as a business combination. Under business combination accounting, the preliminary allocation of the purchase consideration to the fair value of the assets acquired and liabilities assumed as of February 21, 2017 is as follows:

(amounts in thousands)
Cash and Cash Equivalents	$	1,815
Accounts Receivable		7,202
Inventories		8,490
Property, Plant, and Equipment		3,631
Other Assets		248
Intangible Assets		34,319
Liabilities Assumed		(6,106	)
Identifiable net assets acquired		49,599
Goodwill		47,868
Net Purchase Consideration	$	97,467

As indicated, the allocation of the purchase price and estimated useful lives of the property, plant, and equipment, and intangible assets shown remain preliminary, pending final completion of valuations.

Goodwill recorded from the acquisition of Atlas is attributable to the impact of the positive cash flow from Atlas in addition to the expected synergies from the business combination. The goodwill resulting from the acquisition is deductible for tax purposes. The intangible assets include amounts recognized for the fair value of the trade name, customer relationships, and technology-related assets. The fair value of the intangible assets was determined based upon a combination of the market and income (discounted cash flow) approach. The following table present the details of the identified intangible assets acquired at the date of acquisition (in thousands):

	Estimated		Estimate Useful
	Fair Value		Life (Years)
Tradename	$	2,198		20
Technology asset		4,838		10
Customer relationship		27,283		15
Total	$	34,319

The fair market value write-up of the inventory totaled $228,000, and the fair market value write-up of the property, plant, and equipment totaled $526,000. Transaction costs related to the acquisition totaled $1.48 million in the third quarter and nine months ended March 31, 2017 and are recorded as an operating expense.

Atlas’s post-acquisition results of operations for the period from February 21, 2017 through March 31, 2017 are included in the Company’s Condensed Consolidated Statements of Operations. Since the acquisition date, net sales of Atlas for the period from February 21, 2017 through March 31, 2017 were $6.7 million and operating income was $1.0 million. The operating results of Atlas are included in the Lighting Segment.

Pro Forma Impact of the Acquisition of Atlas Lighting Products, Inc. (unaudited)

The following table represents pro forma results of operations and gives effect to the acquisition of Atlas as if the transaction had occurred on July 1, 2015. The unaudited pro forma results of operations have been prepared for comparative purposes only and are not necessarily indicative of what would have occurred had the business combination been completed at the beginning of the period or the results that may occur in the future. Furthermore, the pro forma financial information does not reflect the impact of any synergies or operating efficiencies resulting from the acquisition of Atlas.

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(In thousands, unaudited)	Nine Months Ended March 31
	2017		2016
Net Sales	$	283,122	$	287,176
Gross Profit	$	73,802	$	81,067
Operating Income	$	6,230	$	14,694

The unaudited pro forma financial information for the nine months ended March 31, 2017 and March 31, 2016 is prepared using the acquisition method of accounting and has been adjusted to effect to the pro forma events that are: (1) directly attributable to the acquisition. (2) factually supportable, and (3) expected to have a continuing impact on the combined results. The pro forma operating income of $6.2 million excludes acquisition-related expenses of $1.48 million.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION 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				Nine Months Ended
	March 31				March 31
	2017		2016		2017		2016
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) by Business Segment
(In thousands)	Three Months Ended						Nine Months Ended
	March 31						March 31
	2017			2016			2017			2016
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

Summary Comments

The Company acquired Atlas Lighting Products, Inc. on February 21, 2017. Atlas is a manufacturer of high-quality LED lighting products sold in the electrical distribution market. The operating results of Atlas beginning February 21, 2017 have been included in the Company’s consolidated operating results and in the Lighting Segment results.

Fiscal 2017 third quarter net sales of $78,156,000 increased as compared to third quarter fiscal 2016 net sales of $70,740,000. Net sales were favorably influenced by increased net sales of the Lighting Segment (up $6.7 million or 13.6%) and increased net sales of the Technology Segment (up $1.5 million or 35.5%). Net sales were unfavorably influenced by decreased net sales of the Graphics Segment (down $0.8 million or 4.5%). Fiscal 2017 third quarter organic sales of $71,495,000 increased $0.7 million or 1.1% as compared to $70,740,000 in the same period of fiscal 2016.

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Fiscal 2017 nine month net sales of $247,973,000 increased $6.6 million or 2.7% as compared to the same period of fiscal 2016. Net sales were favorably influenced by increased net sales of the Lighting Segment (up $8.6 million or 5.1%) and increased net sales of the Technology Segment (up $2.9 million or 22.9%). Net sales were unfavorably influenced by decreased net sales of the Graphics Segment (down $4.8 million or 8.0%). Fiscal 2017 nine month organic sales of $241,312,000 remained fairly constant as compared to fiscal 2016 nine month organic sales of $241,352,000.

Fiscal 2017 third quarter operating income (loss) of $(774,000) decreased $1.5 million from operating income of $732,000 in the same period of fiscal 2016. The $1.5 million decrease in operating income was the net result of an increase in gross profit on higher sales year-over-year, higher selling and administrative expenses, acquisition costs of $1,480,000 in the third quarter of fiscal 2017 with no comparable costs in 2016, and the gain on the sale of a facility of $1,361,000 with no comparable gain in the same period of fiscal 2016. Also, contributing to the lower operating income in the third quarter of fiscal 2017 was an impairment expense of $479,000 related to a customer relationship intangible asset that was determined to be fully impaired with no comparable expense in the same period of fiscal 2016.

Fiscal 2017 nine month operating income of $3,110,000 decreased $8.8 million or 74% from operating income of $11,875,000 in the same period of fiscal 2016. The $8.8 million decrease in operating income was the net result of increased net sales, decreased gross profit, an increase in selling and administrative expenses, acquisition costs of $1,480,000 in fiscal 2017 with no comparable costs in fiscal 2016, restructuring, plant closure costs, related inventory write-downs of $2,157,000 with no comparable costs in fiscal 2016, and a gain on the sale of a facility of $1,361,000 in fiscal 2017 with no comparable gain in fiscal 2016. Also, contributing to the lower operating income in fiscal 2017 was an impairment expense of $479,000 related to a customer relationship intangible asset that was determined to be fully impaired with no comparable expense in the same period of fiscal 2016. Fiscal 2017 nine month operating income was favorably impacted by significant adjustments to the Company’s incentive compensation and stock compensation accruals. The adjustments affected fluctuations in employee compensation and benefits expense described below in the discussion of each segment’s results.

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, net income, and earnings per share. Adjusted operating income, net income and earnings per share, which exclude the impact of restructuring and plant closure costs, along with severance costs, intangible asset impairment expense, acquisition deal costs, and fair market value inventory adjustments, are non-GAAP financial measures. We believe that these adjusted supplemental measures are useful in assessing the operating performance of our business. These supplemental measures are used by our management, including our chief operating decision maker, to evaluate business results. We exclude these items because they are not representative of the ongoing results of operations of our business. Below is a reconciliation of these non-GAAP measures to operating income, net income, and earnings per share for the periods indicated.

(in thousands, unaudited)	Third Quarter
	FY 2017			FY 2016
Reconciliation of operating income (loss) to adjusted operating income:
Operating income (loss) as reported	$	(774	)	$	732
Impairment of intangible asset		479			--
Adjustment for restructuring and plant closure costs (gain), and related inventory write-downs		(957	)		--
Adjustment for other severance costs		49			178
Adjustment for acquisition deal costs		1,480			--
Fair market value inventory write-up		155			--
Adjusted Operating Income	$	432		$	910

Page 28

(in thousands, except per share data; unaudited)	Third Quarter
				Diluted						Diluted
	FY 2017			EPS			FY 2016			EPS
Reconciliation of net income (loss) to adjusted net income:
Net income (loss) and earnings (loss) per share as reported	$	(531	)	$	(0.02	)	$	522		$	0.02
Impairment of intangible asset, inclusive of the income tax effect		335	(1)		0.01			--			--
Adjustment for restructuring and plant closure costs (gain), inclusive of the income tax effect		(629	)(2)		(0.02	)		--			--
Adjustment for severance costs, inclusive of the income tax effect		44	(3)		--			117	(6)		--
Adjustment for acquisition deal costs, inclusive of the income tax effect		1,030	(4)		0.04			--			--
Fair market value inventory write-up, inclusive of the income tax effect		108	(5)		--			--
Adjusted net income and earnings per share	$	357		$	0.01		$	639		$	0.02

The income tax effects of the adjustments in the tables above were calculated using the estimated U.S. effective income tax rates re-computed after considering non-GAAP adjustments for the periods indicated. The income tax effects were as follows (in thousands):

⁽¹⁾ $144

⁽²⁾ $(328)

⁽³⁾ $5

⁽⁴⁾ $450

⁽⁵⁾ $47

⁽⁶⁾ $61

(in thousands, unaudited)	Nine Months
	FY 2017		FY 2016
Reconciliation of operating income to adjusted operating income:
Operating Income as reported	$	3,110	$	11,875
Impairment of intangible asset		479		--
Adjustment for restructuring, plant closure costs, and related inventory write-downs		796		--
Adjustment for other severance costs		222		401
Adjustment for acquisition deal costs		1,480		--
Fair market value inventory write-up		155		--
Adjusted Operating Income	$	6,242	$	12,276

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(in thousands, except per share data; unaudited)	Nine Months
				Diluted					Diluted
	FY 2017			EPS		FY 2016			EPS
Reconciliation of net income to adjusted net income:
Net income and earnings per share as reported	$	2,304		$	0.09	$	8,054		$	0.32
Impairment of intangible asset, inclusive of the income tax effect		335	(1)		0.01		--			--
Adjustment for restructuring, plant closure costs, and related inventory write-downs inclusive of the income tax effect		514	(2)		0.02		--			--
Adjustment for other severance costs, inclusive of the income tax effect		164	(3)		0.01		263	(6)		0.01
Adjustment for acquisition deal costs		1,030	(4)		0.04
Fair market value inventory write-up		108	(5)		--		--			--
Adjusted net income and earnings per share	$	4,455		$	0.17	$	8,317		$	0.33

The income tax effects of the adjustments in the tables above were calculated using the estimated U.S. effective income tax rates re-computed after considering non-GAAP adjustments for the periods indicated. The income tax effects were as follows (in thousands):

⁽¹⁾ $144

⁽²⁾ $282

⁽³⁾ $58

⁽⁴⁾ $450

⁽⁵⁾ $47

⁽⁶⁾ $138

These non-GAAP measures may be different from non-GAAP measures used by other companies.  In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles.  Non-GAAP measures have limitations, in that they do not reflect all amounts associated with our results as determined in accordance with U.S. GAAP.  Therefore, these measures should only be used to evaluate our results in conjunction with corresponding GAAP measures.

Results of Operations

THREE MONTHS ENDED MARCH 31, 2017 COMPARED TO THREE MONTHS ENDED MARCH 31, 2016

Lighting Segment
(In thousands)	Three Months Ended
	March 31
	2017		2016
Net Sales	$	56,039	$	49,331
Gross Profit	$	12,767	$	10,563
Operating Income	$	2,759	$	1,106

The Company acquired Atlas Lighting Products, Inc. on February 21, 2017. Atlas is a manufacturer of high-quality LED lighting products sold in the electrical distribution market. The operating results of Atlas beginning February 21, 2017 have been included in the Company’s consolidated operating results and in the Lighting Segment results. Atlas contributed $6.7 million to net sales during the third quarter of fiscal 2017 since the date of acquisition.

Lighting Segment net sales of $56,039,000 in the third quarter of fiscal 2017 increased 13.7% from fiscal 2016 same period net sales of $49,331,000. The Lighting Segment’s net sales of light fixtures having solid-state LED technology totaled $45.8 million in the third quarter of fiscal 2017, representing a $12.1 million or 36.1% increase from fiscal 2016 third quarter net sales of solid-state LED light fixtures of $33.7 million. Net sales of light fixtures having solid-state LED technology accounted for 81.8% of total Lighting Segment net sales in the third quarter of fiscal 2017 compared to 68.3% of total Lighting Segment net sales in the third quarter of fiscal 2016. There was a reduction in the Company’s traditional lighting sales (metal halide and fluorescent light sources) from third quarter fiscal 2016 to third quarter fiscal 2017 as customers converted from traditional lighting to light fixtures having solid-state LED technology.

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Lighting Segment total net sales of solid-state LED technology in light fixtures have been recorded as indicated in the table below.

	LED Net Sales
(In thousands)	FY 2017		FY 2016		% Change
First Quarter	$	43,146	$	37,393		15.4%
Second Quarter		46,137		41,612		10.9%
First Half		89,283		79,005		13.0%
Third Quarter		45,815		33,670		36.1%
Nine Months	$	135,098		112,675		19.9%
Fourth Quarter			$	42,810
Full Year			$	155,485

Gross profit of $12,767,000 in the third quarter of fiscal 2017 increased $2.2 million or 20.9% from the same period of fiscal 2016, and increased from 21.1% to 22.6% as a percentage of Lighting Segment net sales (customer plus inter-segment net sales). The Company incurred restructuring, plant closure and related inventory write-down costs that were recorded in cost of sales related to the closure of the Kansas City, Kansas manufacturing facility of $158,000 in the third quarter of fiscal 2017 with no comparable costs in the third quarter of fiscal 2016. The remaining change in the amount of gross profit is due to the net effect of increased product sales, improved manufacturing efficiencies as a result of the Company’s lean initiatives, competitive pricing pressures, product mix, and inflationary pressures including the rising cost of steel, aluminum, copper, and other commodities. Also contributing to the change in gross profit is decreased warranty expense ($0.3 million), decreased supplies expense ($0.1 million), decreased utilities expense ($0.1 million) increased rent expense ($0.1 million), increased depreciation expense ($0.1 million), decreased outside services expense ($0.1 million), and increased customer relations expense ($0.1 million).

Selling and administrative expenses of $10,008,000 in the third quarter of fiscal 2017 increased $0.6 million or 5.8% from the same period of fiscal 2016. The increase is primarily the net result of increased sales commission expense ($1.1 million), a gain on the sale of a facility ($1.4 million), increased wage and benefits expense ($0.4 million), increased bad debt expense ($0.1 million), increased travel expense ($0.1 million), and increased intangible asset amortization expense ($0.2 million).

The Lighting Segment third quarter fiscal 2017 operating income of $2,759,000 increased $1.7 million or 150% from operating income of $1,106,000 in the same period of fiscal 2016. This increase of $1.7 million was primarily the net result of increased net sales, increased gross profit, increased selling and administrative expenses, a gain on the sale of a facility of $1,361,000 and restructuring, plant closure, and related inventory write-down costs of $206,000 with no comparable costs in fiscal 2016.

On 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. All operations at the Kansas City facility ceased prior to December 31, 2016. The Company expects closure of this facility to result in annual net operating profit improvement and cost savings of approximately $1.4 million before consideration of the restructuring, inventory write-down costs, and gain on the sale of the facility. Realization of such savings started in the third quarter of fiscal 2017.

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Graphics Segment
(In thousands)	Three Months Ended
	March 31
	2017			2016
Net Sales	$	16,463		$	17,236
Gross Profit	$	3,506		$	4,308
Operating Income (Loss)	$	(480	)	$	1,078

Graphics Segment net sales of $16,463,000 in the third quarter of fiscal 2017 decreased $0.8 million or 4.5% from fiscal 2016 same period net sales of $17,236,000. The $0.8 million decrease in Graphics Segment net sales is the net result of sales to the petroleum / convenience store market ($0.3 million net decrease), sales to the retail grocery market ($0.1 million net decrease), sales to the national retail drug store market ($0.7 million decrease), sales to the quick serve restaurant market ($0.1 million net decrease), sales to the retail market ($0.3 million increase), and changes in volume or completion of several other graphics programs ($0.1 million net increase).

Gross profit of $3,506,000 in the third quarter of fiscal 2017 decreased $0.8 million or 18.6% from the same period of fiscal 2016. Gross profit as a percentage of Graphics Segment net sales (customer plus inter-segment net sales) decreased from 24.6% in the third quarter of fiscal 2016 to 21.0% in the third quarter of fiscal 2017. The Company incurred restructuring and plant closure costs of $185,000 in the third quarter of fiscal 2017 with no comparable costs in the prior year. The remaining change in the amount of gross profit is due to the net effect of decreased net product sales (customer plus inter-segment net product sales were down $0.5 million or 3.7%), a decrease in installation sales (customer plus inter-segment installation sales were down $0.5 million or 21.4%) an increase in the gross profit margin on installation sales, increased shipping and handling costs as a percentage of shipping and handling sales, decreased employee compensation and benefits expense ($0.1 million), decreased supplies expense ($0.1 million), decreased property taxes ($0.2 million), and decreased outside services expense ($0.1 million).

Selling and administrative expenses of $3,986,000 in the third quarter of fiscal 2017 increased $0.8 million or 23.4% from the same period of fiscal 2016 primarily as the net result of increased employee compensation and benefits expense, ($0.4 million), increased outside services expense ($0.1 million), and small net decreases in expense in other categories. Also contributing to the higher selling and administrative expense in the third quarter of fiscal 2017 was an intangible asset impairment expense of $479,000 related to a customer relationship intangible asset that was determined to be fully impaired with no comparable expense in the prior period of fiscal 2016.

The Graphics Segment third quarter fiscal 2017 operating loss of $(480,000) decreased $1.6 million from operating income of $1,078,000 in the same period of fiscal 2016. The $1.6 million decrease from fiscal 2016 was the net result of decreased net sales, decreased gross profit and decreased gross margin as a percentage of sales, increased selling and administrative expenses, restructuring and plant closure costs of $183,000 with no comparable costs in fiscal 2016, and intangible asset impairment expense of $479,000 with no comparable costs in the same period of fiscal 2016.

In 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 expects closure of this facility to result in annual net operating profit improvement and cost savings of approximately $680,000, before consideration of the restructuring costs.   

Technology Segment
(In thousands)	Three Months Ended
	March 31
	2017		2016
Net Sales	$	5,654	$	4,173
Gross Profit	$	2,153	$	1,852
Operating Income	$	1,386	$	984

Page 32

Technology Segment net sales of $5,654,000 in the third quarter of fiscal 2017 increased $1.5 million or 35.5% from fiscal 2016 same period net sales of $4,173,000. The $1.5 million increase in Technology Segment net sales is primarily the net result of a $0.6 million increase in sales to the transportation market, a $0.7 million increase in sales to the original equipment manufacturing market, and a $0.2 million increase in sales to various other markets. Technology Segment inter-segment sales decreased $0.2 million or 2.3%. While the Technology Segment’s intercompany sales decreased slightly, the support of electronic circuit boards and lighting control systems to the Lighting Segment continues to be core to the strategic growth of the Company.

Gross profit of $2,153,000 in the third quarter of fiscal 2017 increased $0.3 million or 16.3% from the same period in fiscal 2016, and increased from 14.1% to 15.0% as a percentage of net sales (customer plus inter-segment net sales). The $0.3 million increase in gross profit is due to the net effect of increased customer net sales partially offset by decreased inter-segment sales, increased supplies expense ($0.1 million), increased warranty expense ($0.1 million), and other small net increases in expense in other categories.

Selling and administrative expenses of $767,000 in the third quarter of fiscal 2017 decreased $0.1 million or 11.6% from fiscal 2016 selling and administrative expenses of $868,000 primarily as a result of a decrease in research and development expense ($0.1 million), a gain on the sale of assets in fiscal 2016 with no similar costs in fiscal 2017 ($0.1 million increase), and other small net decreases in expense in other categories.

The Technology Segment third quarter fiscal 2017 operating income of $1,386,000 increased $0.4 million or 40.9% from operating income of $984,000 in the same period of fiscal 2016. The $0.4 million increase in operating income was primarily the net result of increased customer net sales, decreased inter-segment sales, increased gross profit, and decreased selling and administrative expenses.

In September 2016, the Company 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. The consolidation of this facility and net reduction of employment is expected to result in annual cost savings of approximately $450,000. Realization of such savings started in the second quarter of fiscal 2017.

Corporate and Eliminations
(In thousands)	Three Months Ended
	March 31
	2017			2016
Gross Profit (Loss)	$	(27	)	$	(174	)
Operating (Loss)	$	(4,439	)	$	(2,436	)

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

Administrative expenses of $4,412,000 in the third quarter of fiscal 2017 increased $2.2 million or 95% from the same period of the prior year. The $2.2 million increase in expense is primarily the result of increased employee compensation and benefits expense, ($0.2 million), increased outside service expense ($0.2 million), acquisition costs of $1,480,000 million with no similar expenses in the prior period, and other small net increases in expense in other categories.

Consolidated Results

The Company reported net interest expense of $163,000 in the third quarter of fiscal 2017 as compared to net interest income of $19,000 in the same period of fiscal 2016. 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. Interest expense related to outstanding debt is included in fiscal 2017. The Company was in a positive cash position and was debt free during the three months ended March 31, 2016 and generated interest income on invested cash. The Company was in a borrowing position beginning on February 21, 2017 primarily as a result of the Atlas Lighting Products, Inc. acquisition.

The $(406,000) income tax benefit in the third quarter of fiscal 2017 represents a consolidated effective tax rate of 43.3%. This is the net result of an income tax rate of 30.4% influenced by certain permanent book-tax differences, a tax benefit related to disqualifying dispositions, and by a benefit related to uncertain income tax positions. The $229,000 income tax expense in the third quarter of fiscal 2016 represents a consolidated effective tax rate of 30.5%. This is the net result of an income tax rate of 34.5% influenced by certain permanent book-tax differences, a tax benefit related to disqualifying dispositions, and a benefit related to uncertain income tax positions.

Page 33

The Company reported a net loss of $(531,000) in the third quarter of fiscal 2017 as compared to net income of $522,000 in the same period of the prior year. The change in net income is primarily the net result of increased gross profit on higher sales, increased selling and administrative expenses, and an income tax benefit in fiscal 2017 compared to expense in fiscal 2016. Also contributing to the lower net income are pre-tax restructuring, plant closure, and related inventory write-down costs of $404,000 recorded in the third quarter of fiscal 2017 with no comparable costs in fiscal 2016, a gain on the sale of the Kansas City facility of $1,361,000 recorded in the third quarter of fiscal 2017 with no comparable gain in fiscal 2016, acquisition costs of $1,480,000 recorded in the third quarter of fiscal 2017 with no comparable costs in fiscal 2016, and intangible asset impairment expense of $479,000 with no comparable cost in fiscal 2016. Diluted loss per share of $(0.02) was reported in the third quarter of fiscal 2017 as compared to diluted earnings per share of $0.02 in the same period of fiscal 2016. The weighted average common shares outstanding for purposes of computing diluted earnings per share in the third quarter of fiscal 2017 were 25,452,000 shares as compared to 25,700,000 shares in the same period last year.

NINE MONTHS ENDED MARCH 31, 2017 COMPARED TO NINE MONTHS ENDED MARCH 31, 2016

Lighting Segment
(In thousands)	Nine Months Ended
	March 31
	2017		2016
Net Sales	$	176,578	$	168,007
Gross Profit	$	41,928	$	41,904
Operating Income	$	8,288	$	11,970

The Company acquired Atlas Lighting Products, Inc. on February 21, 2017. Atlas is a manufacturer of high-quality LED lighting products sold in the electrical distribution market. The operating results of Atlas beginning February 21, 2017 have been included in the Company’s consolidated operating results and in the Lighting Segment results. Atlas contributed $6.7 million to net sales during the first nine months of fiscal 2017 since the date of acquistion.

Lighting Segment net sales of $176,578,000 in the first nine months of fiscal 2017 increased 5.1% from fiscal 2016 same period net sales of $168,007,000. The Lighting Segment’s net sales of light fixtures having solid-state LED technology totaled $135.1 million in the first nine months of fiscal 2017, representing a 19.9% increase from first nine months of fiscal 2016 net sales of solid-state LED light fixtures of $112.7 million. Net sales of light fixtures having solid-state LED technology accounted for 76.5% of total Lighting Segment net sales. (See the LED net sales table on page 31.) There was a reduction in the Company’s traditional lighting sales (metal halide and fluorescent light sources) from fiscal 2016 to fiscal 2017 as customers converted from traditional lighting to light fixtures having solid-state LED technology.

Gross profit of $41,928,000 in the first nine months of fiscal 2017 increased $0.02 million or 0.1% compared to the same period of fiscal 2016, and decreased from 24.6% to 23.5% as a percentage of Lighting Segment net sales (customer plus inter-segment net sales).   The Company incurred restructuring and plant closure costs, including the write-down of inventory, that were recorded in cost of sales related to the closure of the Kansas City, Kansas manufacturing facility of $1,272,000 in fiscal 2017 with no comparable costs in fiscal 2016. The Lighting Segment’s gross profit was also favorably influenced by the net effect of increased product net sales, improved manufacturing efficiencies as a result of the Company’s lean initiatives, competitive pricing pressures, product mix, and inflationary pressures including the rising cost of steel, aluminum, copper, and other commodities. Also contributing to the net change in gross profit is decreased employee compensation and benefits expense ($0.7 million), decreased warranty costs ($0.5 million), increased customer relations expense ($0.4 million), increased repairs and maintenance expense ($0.1 million), increased depreciation expense ($0.4 million), increased rent expense ($0.3 million), decreased supplies expense ($0.1 million), and increased outside service expense ($0.1 million).

Selling and administrative expenses of $33,640,000 in the first nine months of fiscal 2017 increased $3.7 million or 12.4% from the same period of fiscal 2016. The $3.7 million increase is primarily the result of increased employee compensation and benefits expense ($0.9 million), increased intangible asset amortization expense ($0.2 million), increased samples expense ($0.1 million), increased outside service expense ($0.1 million), increased sales commission expense ($3.0 million), increased bad debt expense ($0.1 million), increased travel expense ($0.1 million), decreased literature expense ($0.1 million), a loss on the sale of fixed assets ($0.1 million), use tax recorded on current and prior year purchases as a result of a use tax audit ($0.2 million), and small net increases in several other categories. Also contributing to the increase in selling and administrative expenses are restructuring and plant closure costs of $104,000 related to the closure of the Kansas City, Kansas manufacturing facility that were recorded in fiscal 2017 with no comparable costs in fiscal 2016, and a gain on the sale of the Kansas City facility of $1,361,000 with no comparable gain in fiscal 2016.

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Lighting Segment nine month fiscal 2017 operating income of $8,288,000 decreased $3.7 million or 30.8% from operating income of $11,970,000 in the same period of fiscal 2016.  This decrease of $3.7 million was the net result of increased net sales, a slight increase in gross profit, increased selling and administrative expenses, restructuring and plant closure costs, and related inventory write-downs of $1.4 million with no comparable costs in fiscal 2016, and a gain on the sale of the Kansas City facility of $1.4 million with no comparable gain in fiscal 2016.

On 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. All operations at the Kansas City facility ceased prior to December 31, 2016. The Company expects closure of this facility to result in annual net operating profit improvement and cost savings of approximately $1.4 million before consideration of the restructuring, inventory write-down costs, and gain on the sale of the facility. Realization of such savings started in the third quarter of fiscal 2017.

Graphics Segment
(In thousands)	Nine Months Ended
	March 31
	2017		2016
Net Sales	$	55,939	$	60,772
Gross Profit	$	12,864	$	16,161
Operating Income	$	1,711	$	5,271

Graphics Segment net sales of $55,939,000 in the first nine months of fiscal 2017 decreased 8.0% from fiscal 2016 same period net sales of $60,772,000.  The $4.8 million decrease in Graphics Segment net sales is primarily the net result of sales to the petroleum / convenience store market ($2.7 million net decrease), sales to the retail grocery market ($0.9 million net decrease), sales to the national retailer drug store market ($2.6 million decrease), sales to the quick-service restaurant market ($0.5 million net increase), sales to the retail market ($0.7 million increase), and changes in volume or completion of several other graphics programs ($0.2 million net increase).

Gross profit of $12,864,000 in the first nine months of fiscal 2017 decreased $3.3 million or 20.4% from the same period in fiscal 2016, and decreased from 26.0% to 22.6% as a percentage of Graphics Segment net sales (customer plus inter-segment net sales). The Company incurred restructuring and plant closure costs that were recorded in cost of sales related to the closure of the Woonsocket, Rhode Island manufacturing facility of $396,000. The remaining $2.9 million decrease in the amount of gross profit is due to the net effect of decreased net product sales (customer plus inter-segment net product sales were down $3.5 million or 7.3%), a drop in installation sales (customer plus inter-segment installation sales were down $2.3 million or 23.7%) partially offset by higher margins on installation sales, slightly decreased freight expense as a percentage of shipping and handling revenue, increased depreciation expense ($0.3 million), decreased real estate taxes ($0.1 million), decreased supplies expense ($0.1 million), decreased repair and maintenance expense ($0.1 million), decreased outside services ($0.1 million), and decreased compensation and benefits expense ($0.5 million).  

Selling and administrative expenses of $11,153,000 in the first nine months of fiscal 2017 increased $0.3 million or 2.4% from the same period of fiscal 2016 primarily as a result of decreased compensation and benefits expense ($0.5 million), increased outside services expense ($0.3 million), increased convention and shows expense ($0.1 million), increased travel expense ($0.1 million), increased supplies expense ($0.1 million), decreased commissions expense ($0.1 million), and other small net decreases in other categories. Also contributing to the higher selling and administrative expense in fiscal 2017 was intangible asset impairment expense of $479,000 related to a customer relationship intangible asset that was determined to be fully impaired with no comparable expenses in the prior period of fiscal 2016.

Graphics Segment first nine month fiscal 2017 operating income of $1,711,000 decreased $3.6 million or 67.5% from the same period of fiscal 2016 and is the net result of decreased net sales, decreased gross profit and decreased gross profit as a percentage of net sales, restructuring and plant closure costs of $404,000 with no comparable costs in fiscal 2016, and intangible asset impairment expense of $479,000 with no comparable cost in fiscal 2016, and a decrease in other selling and administrative expenses.

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In 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 expects closure of this facility to result in annual net operating profit improvement and cost savings of approximately $680,000, before consideration of the restructuring costs.

Technology Segment
(In thousands)	Nine Months Ended
	March 31
	2017		2016
Net Sales	$	15,456	$	12,573
Gross Profit	$	5,704	$	6,029
Operating Income	$	3,038	$	3,320

Technology Segment net sales of $15,456,000 in the first nine months of fiscal 2017 increased $2.9 million or 22.9% from fiscal 2016 same period net sales of $12,573,000.  The $2.9 million increase in Technology Segment net sales is primarily the net result of a $0.2 million increase in sales to the medical market, a $2.2 million increase in sales to the transportation market, a $0.6 million increase in sales to original equipment manufacturers, and a $0.1 million decrease in sales to the telecommunication market. Technology Segment inter-segment sales decreased $1.4 million or 5.1%. While the Technology Segment’s intercompany sales decreased, the support of electronic circuit boards and lighting control systems to the Lighting Segment continues to be core to the strategic growth of the Company.

Gross profit of $5,704,000 in the first nine months of fiscal 2017 decreased $0.3 million or 5.4% from the same period of fiscal 2016, and decreased from 15.1% to 13.8% as a percentage of Technology Segment net sales (customer plus inter-segment net sales). The Company incurred restructuring charges of $0.2 million related to the consolidation of its Beaverton, Oregon facility into other LSI facilities, with no comparable costs in fiscal 2016. The remaining $0.1 million decrease in amount of gross profit is due to the net effect of increased customer net sales, partially offset by decreased inter-segment sales, increased employee compensation and benefits expense ($0.3 million), increased supplies expense ($0.4 million), increased warranty expense ($0.3 million), decreased rent expense ($0.1 million), and decreased outside services expense ($0.2 million).

Selling and administrative expenses of $2,666,000 in the first nine months of fiscal 2017 decreased $43,000 or 1.6% from the same period of fiscal 2016. The decrease in selling and administrative expenses is the net result of an increase in employee compensation and benefits expense ($0.1 million), an increase in outside services expense ($0.1 million), a decrease in research and development expense ($0.3 million), and a gain on the sale of assets in fiscal 2016 with no comparable gain in fiscal 2017 ($0.1 million increase).

Technology Segment nine month fiscal 2017 operating income of $3,038,000 decreased $0.3 million or 8.5% from operating income of $3,320,000 in the same period of fiscal 2016. The decrease of $0.3 million was the net result of increased net customer sales, decreased inter-segment sales, restructuring costs in fiscal 2017 with no comparable costs in fiscal 2016, and decreased gross profit.

In September 2016, the Company 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. The consolidation of this facility and net reduction of employment is expected to result in annual cost savings of approximately $450,000. Realization of such savings started in the second quarter of fiscal 2017.

Corporate and Eliminations
(In thousands)	Nine Months Ended
	March 31
	2017			2016
Gross Profit (Loss)	$	145		$	(270	)
Operating (Loss)	$	(9,927	)	$	(8,686	)

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

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Administrative expenses of $10,072,000 in the first nine months of fiscal 2017 increased $1.7 million or 19.7% from the same period of the prior year. The $1.7 million change in administrative expenses is primarily the net result of decreased employee compensation and benefits expense ($1.1 million), an increase in legal expense ($0.1 million), decreased depreciation expense ($0.1 million), increased research and development expense ($0.3 million), increased telephone expense ($0.1 million), increased outside services expense ($0.2 million), increased director’s fees ($0.2 million), a change in the allocation of corporate expense to the operating units ($0.2 million increase), and several small net increases in various other expenses. Also contributing to the increased administrative expenses are acquisition costs of $1,480,000 recorded in fiscal 2017 and restructuring costs of $0.1 million recorded in fiscal 2017 related to the consolidation of its Beaverton, Oregon facility into other LSI facilities, with no comparable costs in fiscal 2016. These restructuring expenses were primarily for severance costs for employees located in the Beaverton, Oregon facility that were previously included in corporate research and development expenses.

Consolidated Results

The Company reported net interest expense of $129,000 in the first nine months of fiscal 2017 as compared to net interest income of $27,000 in the same period of fiscal 2016. Commitment fees related to the unused portion of the Company’s line of credit and interest income on invested cash are included in both fiscal years. The Company was in a positive cash position and was debt free for the nine months ended March 31, 2016 and generated interest income on invested cash. The Company was in a borrowing position beginning on February 21, 2017 primarily as a result of the Atlas Lighting Products acquisition.

The $677,000 income tax expense in the first nine months of fiscal 2017 represents a consolidated effective tax rate of 22.7%. This is the net result of an income tax rate of 30.4% influenced by certain permanent book-tax differences, by a benefit related to uncertain income tax positions, a tax benefit related to disqualifying dispositions, and by a favorable adjustment to a deferred tax asset. The $3,848,000 income tax expense in the first nine months of fiscal 2016 represents a consolidated effective tax rate of 32.3%. This is the net result of an income tax rate of 34.5% influenced by certain permanent book-tax differences, an $111,000 tax benefit related to the retroactive reinstatement of the R&D tax credit, a tax benefit related to disqualifying dispositions, and by a benefit related to uncertain income tax positions.

The Company reported net income of $2,304,000 in the first nine months of fiscal 2017 compared to net income of $8,054,000 in the same period of the prior year.  The $5.8 million decrease in net income is primarily the net result of increased net sales, decreased gross profit, increased operating expenses, restructuring and plant closure costs in fiscal 2017 with no comparable costs in fiscal 2016, intangible asset impairment expense in fiscal 2017 with no comparable cost in fiscal 2016, and lower income tax expense in fiscal 2017 compared to fiscal 2016.  Diluted earnings per share of $0.09 was reported in the first nine months of fiscal 2017 as compared to diluted earnings per share of $0.32 in the same period of fiscal 2016. The weighted average common shares outstanding for purposes of computing diluted earnings per share in the first nine months of fiscal 2017 was 25,909,000 shares as compared to 25,494,000 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.

The March 31, 2017 balance sheet includes the acquisition Atlas Lighting Products, whereas Atlas was not included in the June 30, 2016 balance sheet. With respect to the Consolidated Statement of Cash flows, fiscal 2017 amounts include Atlas’ changes in its balance sheet from the February 21, 2017 acquisition date to March 31, 2017.

At March 31, 2017, the Company had working capital of $67.0 million, compared to $88.5 million at June 30, 2016. The ratio of current assets to current liabilities was 2.68 to 1 as compared to a ratio of 3.26 to 1 at June 30, 2016. The $21.5 million decrease in working capital from June 30, 2016 to March 31, 2017 was primarily related to the net effect of decreased cash and cash equivalents ($29.5 million), increased net accounts receivable ($1.8 million), increased net inventory ($4.3 million), a decrease in accrued expenses ($1.5 million), an increase in other current assets ($0.9 million), an increase in refundable income taxes ($0.1 million), an increase in accounts payable ($2.1 million), and assets held for sale of $1.5 million at March 31, 2017. 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 generated $12.9 million of cash from operating activities in the first nine months of fiscal 2017 as compared to $15.2 million in the same period of the prior year. This $2.3 million decrease in net cash flows from operating activities is primarily the net result of a smaller decrease in net accounts receivable (unfavorable change of $0.3 million), a smaller decrease in accounts payable (favorable change of $2.2 million), an increase rather than a decrease in customer prepayments (favorable change of $0.5 million), a decrease rather than an increase in net inventory (favorable change of $7.3 million), an decrease rather than an increase in accrued expenses and other (unfavorable change of $5.9 million), a smaller increase in refundable income taxes (favorable change of $0.4 million), a greater increase in net deferred tax assets (unfavorable change of $0.8 million), a decrease in stock compensation expense (unfavorable change of $0.1 million), a decrease in the deferred compensation liability (unfavorable change of $0.1 million), an increase in depreciation and amortization expense (favorable change of $0.8 million), fixed asset impairment and accelerated depreciation with no comparable events in the prior year (favorable change of $0.4 million), intangible asset impairment with no comparable events in the prior year (favorable change of $0.5 million), a gain on the sale of a building in fiscal 2017 with no comparable event in fiscal 2016 (unfavorable change of $1.4 million), a loss compared to a gain on the sale of fixed assets (favorable change of $0.1 million), and a decrease in net income (unfavorable change of $5.8 million).

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Net accounts receivable were $48.8 million and $47.0 million at March 31, 2017 and June 30, 2016, respectively. DSO increased to 52 days at March 31, 2017 compared to 47 days at June 30, 2016. 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 $48.5 million at March 31, 2017 increased $4.3 million from $44.1 million at June 30, 2016. The increase of $4.3 million is the result of an increase in gross inventory of $4.1 million and an increase of obsolescence reserves of $0.2 million. Based on a strategy of balancing inventory reductions with customer service and the timing of shipments, a net inventory decrease occurred in the first nine months of fiscal 2017 in the Lighting Segment of approximately $4.0 million, which was offset by the added inventory from the acquisition of Atlas Lighting Products. Graphics Segment net inventory decreased approximately $0.1 million. Technology Segment inventory remained constant.

Cash generated from operations and borrowing capacity under the Company’s line of credit is the Company’s primary source of liquidity. The Company has a secured $100 million revolving line of credit with its bank, with $44.2 million of the credit line available as of April 27, 2017. This line of credit is a $100 million five year credit line expiring in the third quarter of fiscal 2022. The Company believes that its $100 million line of credit plus cash flows from operating activities are adequate for the Company’s fiscal 2017 operational and capital expenditure needs. The Company is in compliance with all of its loan covenants.

The Company used cash of $95.5 million related to investing activities in the first nine months of fiscal 2017 as compared to a use of $8.3 million in the same period of the prior year, resulting in an unfavorable change of $87.2 million. Capital expenditures in the first nine months of fiscal 2017 decreased $4.9 million to $3.5 million from the same period in fiscal 2016. The largest components of the fiscal 2017 capital expenditures are equipment and building improvements related to the Company’s Lighting and Graphics Segments and computer hardware and software related to Corporate Administration. The Company acquired Atlas Lighting Products in the third quarter of fiscal 2017, which used cash of $95.1 million.

The Company provided $53.1 million of cash related to financing activities in the first nine months of fiscal 2017 compared to a source of cash of $0.4 million in the first nine months of fiscal 2016. The $52.7 million favorable change in cash flow was the net result of borrowings in excess of payments of long term debt of $54.8 million, an increase in dividends paid to shareholders (unfavorable change of $0.8 million), and a decrease in the exercise of stock options in the first nine months of fiscal 2017 (unfavorable change of $1.2 million).

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, except for various operating leases.

Cash Dividends

In April 2017, the Board of Directors declared a regular quarterly cash dividend of $0.05 per share payable May 16, 2017 to shareholders of record as of May 8, 2017. The indicated annual cash dividend rate for fiscal 2017 is $0.20 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.

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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. 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, and commissioning of lighting controls; 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. 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. 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 a 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.

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 the accounting standard on software revenue recognition. Our solid-state LED video screens, billboards and active digital signage contain software elements which the Company has determined are incidental.

Income Taxes

 The Company accounts for income taxes in accordance with the accounting guidance for 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 has adopted ASU 2015-17, “Balance Sheet Classification of Deferred Taxes.” As a result of early adoption of this accounting guidance, prior periods have been re-classified, which only affected the financial statement presentation and not the measurement of deferred tax liabilities and assets.

Page 39

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 audits.

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 the accounting standard on goodwill and intangible assets. The Company may first assess qualitative factors in order to determine if goodwill is impaired. 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. The estimation of the fair value of goodwill and indefinite-lived intangible assets 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.  

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. 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 contractual terms and historical trends.

Page 40

Warranty Reserves

The Company offers a limited warranty that its products are free from 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 based upon historical claims as a percentage of sales 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.

Inventory Reserves

The Company maintains an inventory reserve for probable obsolete and excess 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. Judgment is used to establish excess and obsolete inventory 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 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, provides new and more detailed guidance on specific revenue topics, and expands and improves disclosures about revenue. In April 2016, the FASB issued ASU 2016-10, “Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing.” In May 2016, the FASB issued ASU 2016-12, “Revenue from Contracts with Customers: Narrow Scope Improvements and Practical Expedients.” In December 2016, the FASB issued ASU 2016-20, “Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers.” These three standards clarify or improve guidance from ASU 2014-09 and are effective for fiscal years and interim periods within those years, beginning after December 15, 2017, or the Company’s fiscal year 2019. The Company will adopt these standards no later than July 1, 2018. While the Company is currently assessing the impact of the new standard, the Company’s revenue is primarily generated from the sale of finished products to customers. Those sales predominantly contain a single delivery element and revenue is recognized at a single point in time when ownership, risks, and rewards transfer. The recognition of revenue from most product sales is largely unaffected by the new standard. However, with respect to certain product sales requiring installation, revenue is currently not recognized until the installation is complete. While the Company does not expect this new guidance to have a material impact on the amount of overall sales recognized, the timing of recognition of revenues from sales on certain projects may be affected. The Company has not yet quantified this potential impact.

In July 2015, the Financial Accounting Standards Board issued ASU 2015-11, “Simplifying the Measurement of Inventory.” The amended guidance requires an entity to measure in scope inventory at lower of cost and net realizable value. The amended guidance is effective for fiscal years beginning after December 15, 2016, or the Company’s fiscal year 2018, with early adoption permitted. The Company is evaluating the impact the amended guidance will have on its financial statements.

In November 2015, the FASB issued ASU 2015-17, “Balance Sheet Classification of Deferred Taxes,” which eliminates the current requirement to separate deferred income tax liabilities and assets into current and noncurrent amounts in the statement of financial position. This update requires that deferred tax liabilities and assets be classified as noncurrent. This update is effective for financial statements issued for fiscal years beginning April 1, 2017. This update may be applied either prospectively or retrospectively. However, early adoption is permitted and the Company has chosen to adopt the standard retrospectively as of June 30, 2016. As a result, prior periods have been adjusted to reflect this change. This update affected the presentation, but not the measurement of deferred tax liabilities and assets.

In February 2016, the Financial Accounting Standards Board issued ASU 2016-02, “Leases.” The amended guidance requires an entity to recognize assets and liabilities that arise from leases. The amended guidance is effective for financial statements issued for fiscal years and interim periods within those years, beginning after December 15, 2018, or the Company’s fiscal year 2020, with early adoption permitted. The Company has not yet determined the impact the amended guidance will have on its financial statements.  

Page 41

In March 2016, the Financial Accounting Standards Board issued ASU 2016-08, “Principal versus Agent Considerations.” The amendment is intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations. The amended guidance is effective for financial statements issued for fiscal years and interim periods within those years, beginning after December 15, 2017, or the Company’s fiscal year 2019, with early adoption permitted in fiscal years beginning after December 15, 2016. The Company has not yet determined the impact the amended guidance will have on its financial statements.

In March 2016, the Financial Accounting Standards Board issued ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting.” This amended guidance simplifies several aspects of the accounting for share-based payment award transactions. The amended guidance is effective for financial statements issued for fiscal years and interim periods within those years, beginning after December 15, 2016, or the Company’s fiscal year 2018, with early adoption permitted. The Company has not yet determined the impact the amended guidance will have on its financial statements. 

In June 2016, the Financial Accounting Standards Board issued ASU 2016-13, “Measurement of Credit Losses on Financial Instruments.” This amendment provides additional guidance on the measurement of expected credit losses for financial assets based on historical experience, current conditions, and supportable forecasts. The amended guidance is effective for financial statements issued for fiscal years and interim periods within those years, beginning after December 15, 2019, or the Company’s fiscal year 2021. The Company is evaluating the impact of the amended guidance and the anticipated impact to the financial statements is not material.

In August 2016, the Financial Accounting Standards Board issued ASU 2016-15, “Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments,” which provides cash flow classification guidance for certain cash receipts and cash payments. This standard is effective for financial statements issued for fiscal years beginning after December 15, 2017, or the Company’s fiscal year 2019. The Company is evaluating the impact the amended guidance will have on its financial statements.

In January 2017, the Financial Accounting Standards Board issued ASU 2017-04, “Simplifying the Test for Goodwill Impairment, which simplifies the testing for goodwill impairment by eliminating a previously required step. The standard is effective for financial statements issued for fiscal years beginning after December 15, 2019, or the Company’s fiscal year 2021. The Company is evaluating the impact the amended guidance will have on its financial statements.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in the Company’s exposure to market risk since June 30, 2016.  Additional information can be found in Item 7A, Quantitative and Qualitative Disclosures About Market Risk, which appears on page 13 of the Annual Report on Form 10-K for the fiscal year ended June 30, 2016.

 ITEM 4.  CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures (as such term is defined Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), 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 specified in the SEC’s rules and forms. 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.

We conducted, under the supervision of our management, including the Chief Executive Officer and Chief Financial Officer, an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934. Based upon our evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2017, our disclosure controls and procedures were effective. 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.

Page 42

Control systems, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that control objectives are met. Because of inherent limitations in all control systems, no evaluation of controls can provide assurance that all control issues and instances of fraud, if any, within a company will be detected. Additionally, controls can be circumvented by individuals, by collusion of two or more people, or by management override. Over time, controls can become inadequate because of changes in conditions or the degree of compliance may deteriorate. Further, the design of any system of controls is based in part upon assumptions about the likelihood of future events. There can be no assurance that any design will succeed in achieving its stated goals under all future conditions. Because of the inherent limitations in any cost-effective control system, misstatements due to errors or fraud may occur and not be detected.

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 March 31, 2017, 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 second quarter of fiscal 2017 were as follows:

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
1/1/17 to 1/31/17		1,835		$8.69		1,835		(1)
2/1/17 to 2/28/17		1,627		$9.85		1,627		(1)
3/1/17 to 3/31/17		2,386		$10.05		2,386		(1)
Total		5,848		$9.57		5,848		(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 575,000 shares of the Company to be held in and distributed by the Plan.  At March 31, 2017, the Plan held 255,119 common shares of the Company and had distributed 299,474 common shares.

ITEM 6.  EXHIBITS

Exhibits:

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

 Page 43

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)
May 8, 2017

Page 44

EX-31.1

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:  May 8, 2017	/s/ Dennis W. Wells
	Principal Executive Officer

EX-31.2

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:  May 8, 2017	/s/ Ronald S. Stowell
	Principal Financial Officer

EX-32.1

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 March 31, 2017 (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:   May 8, 2017

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-32.2

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 March 31, 2017 (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:  May 8, 2017

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

Document And Entity Information - shares	9 Months Ended
	Mar. 31, 2017	May 01, 2017
Document Information [Line Items]
Entity Registrant Name	LSI INDUSTRIES INC
Entity Central Index Key	0000763532
Trading Symbol	lyts
Current Fiscal Year End Date	--06-30
Entity Filer Category	Accelerated Filer
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Common Stock, Shares Outstanding (in shares)		25,399,626
Document Type	10-Q
Document Period End Date	Mar. 31, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q3
Amendment Flag	false

XML

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands		3 Months Ended		9 Months Ended
		Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016
Net sales		$ 78,156	$ 70,740	$ 247,973	$ 241,352
Cost of products and services sold		59,445	54,191	185,877	177,528
Restructuring costs		312		1,455
Gross profit		18,399	16,549	60,641	63,824
Intangible asset impairment		479		479
Acquisition Deal Costs		1,480		1,480
Restructuring costs (gain)		(1,301)		(1,091)
Selling and administrative expenses		18,515	15,817	56,663	51,949
Operating income (loss)		(774)	732	3,110	11,875
Interest (income)		(25)	(28)	(80)	(54)
Interest expense		188	9	209	27
Income (loss) before income taxes		(937)	751	2,981	11,902
Income tax (benefit) expense		(406)	229	677	3,848
Net income (loss)		$ (531)	$ 522	$ 2,304	$ 8,054
Earnings (loss) per common share (see Note 4)
Basic (in dollars per share)		$ (0.02)	$ 0.02	$ 0.09	$ 0.32
Basic earnings (loss) per share (in dollars per share)		$ (0.02)	$ 0.02	$ 0.09	$ 0.32
Weighted average common shares outstanding
Basic (in shares)		25,452	25,080	25,346	24,918
Diluted (in shares)	[1]	25,452	25,700	25,909	25,494

[1] Options to purchase 1,032,250 common shares at March 31, 2016, and options to purchase 1,683,883 common shares and 1,391,300 common shares at March 31, 2017 and 2016, respectively were not included in the computation of the three month and nine month periods for diluted earnings per share, respectively, because the exercise price was greater than the average fair market value of the common shares. For the three months ended March 31, 2017, the effect of dilutive securities was not included in the calculation of diluted earnings per share because there was a net operating loss for the period.

XML

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Mar. 31, 2017	Jun. 30, 2016
ASSETS
Cash and cash equivalents	$ 4,375	$ 33,835
Accounts receivable, less allowance for doubtful accounts of $399 and $226, respectively	48,740	46,975
Inventories	48,460	44,141
Assets held for sale	1,463
Other current assets	3,852	2,792
Total current assets	106,890	127,743
Property, Plant and Equipment, at cost
Land	6,422	6,978
Buildings	35,430	39,317
Machinery and equipment	82,058	82,628
Construction in progress	1,721	838
	125,631	129,761
Less accumulated depreciation	(79,511)	(82,299)
Net property, plant and equipment	46,120	47,462
Goodwill	58,376	10,508
Other Intangible Assets, net	38,859	5,586
Other Long-Term Assets, net	5,671	4,261
Total assets	255,916	195,560
LIABILITIES & SHAREHOLDERS’ EQUITY
Accounts payable	16,003	13,892
Accrued expenses	23,880	25,341
Total current liabilities	39,883	39,233
Long-Term Debt	54,966
Other Long-Term Liabilities	1,490	807
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 25,375,142 and 24,982,219 shares, respectively	119,178	113,653
Retained earnings	40,399	41,867
Total shareholders’ equity	159,577	155,520
Total liabilities & shareholders’ equity	$ 255,916	$ 195,560

XML

Condensed Consolidated Balance Sheets (Unaudited) (Parentheticals) - USD ($) $ / shares in Thousands, $ in Thousands	Mar. 31, 2017	Jun. 30, 2016
Preferred shares, par value (in dollars per share)	$ 0	$ 0
Preferred shares, authorized shares (in shares)	1,000,000	1,000,000
Preferred shares, issued (in shares)	0	0
Common shares, par value (in dollars per share)	$ 0	$ 0
Common shares, authorized (in shares)	40,000,000	40,000,000
Common shares, outstanding (in shares)	25,375,142	34,982,219
Allowance for doubtful accounts	$ 399	$ 226

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	9 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Cash Flows from Operating Activities
Net income	$ 2,304,000	$ 8,054,000
Non-cash items included in net income:
Depreciation and amortization	5,689,000	4,903,000
Intangible asset impairment	479,000
Deferred income taxes	(947,000)	(126,000)
Deferred compensation plan	196,000	328,000
Stock compensation expense	2,292,000	2,542,000
Issuance of common shares as compensation	331,000	168,000
(Gain) loss on disposition of fixed assets	52,000	(87,000)
(Gain) on sale of building	(1,361,000)
Fixed asset impairment and accelerated depreciation	354,000
Allowance for doubtful accounts	248,000	162,000
Inventory obsolescence reserve	981,000	1,351,000
Changes in certain assets and liabilities, net of acquisition:
Accounts receivable	5,189,000	5,588,000
Inventories	3,190,000	(4,440,000)
Refundable income taxes	(143,000)	(531,000)
Accounts payable	(965,000)	(3,176,000)
Accrued expenses and other	(5,119,000)	812,000
Customer prepayments	174,000	(310,000)
Net cash flows provided by operating activities	12,944,000	15,238,000
Cash Flows from Investing Activities
Purchases of property, plant and equipment	(3,534,000)	(8,410,000)
Acquisition of business, net of cash received and warrants issued	(95,077,000)
Proceeds from sale of fixed assets	3,081,000	124,000
Net cash flows (used in) investing activities	(95,530,000)	(8,286,000)
Cash Flows from Financing Activities
Payments of long-term debt	(14,882,000)
Borrowings of long-term debt	69,649,000
Cash dividends paid	(3,772,000)	(2,959,000)
Exercise of stock options	2,401,000	3,604,000
Purchase of treasury shares	(446,000)	(317,000)
Issuance of treasury shares	176,000	90,000
Net cash flows provided by financing activities	53,126,000	418,000
Increase (decrease) in cash and cash equivalents	(29,460,000)	7,370,000
Cash and cash equivalents at beginning of period	33,835,000	26,409,000
Cash and cash equivalents at end of period	$ 4,375,000	$ 33,779,000

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Note 1 - Interim Condensed Consolidated Financial Statements

9 Months Ended

Mar. 31, 2017

Notes to Financial Statements

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

March

31,

2017,

the results of its operations for the

three

and

nine

month periods ended

March

31,

2017

and

2016,

and its cash flows for the

nine

month periods ended

March

31,

2017

and

2016.

These statements should be read in conjunction with the financial statements and footnotes included in the fiscal

2016

Annual Report on Form

10

-K.  Financial information as of

June

30,

2016

has been derived from the Company’s audited consolidated financial statements.

XML

Note 2 - Summary of Significant Accounting Policies

9 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Significant Accounting Policies [Text Block]

NOTE

2

  -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Consolidation:

The 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. 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, and commissioning of lighting controls; 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. 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. 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.

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 a 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

one

month to

one

year.

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

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 the accounting standards on software revenue recognition. Our solid-state LED video screens and active digital signage contain software elements which the Company has determined are incidental.

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.  Receivables deemed uncollectable are written-off against the allowance for doubtful accounts receivable after all reasonable collection efforts have been exhausted. 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)	March 31,			June 30,
	2017			2016
Accounts receivable	$	49,139		$	47,201
Less: Allowance for doubtful accounts		(399	)		(226	)
Accounts receivable, net	$	48,740		$	46,975

Cash and Cash Equivalents:

The cash balance includes cash and cash equivalents which have original maturities of less than

three

months. Cash and cash equivalents consist primarily of bank deposits and a bank money market account that is stated at cost, which approximates fair value. The Company maintains balances at financial institutions in the United States.  In the United States, the FDIC limit for insurance coverage on non-interest bearing accounts is

$250,000.

As of

March

31,

2017

and

June

30,

2016,

the Company had bank balances of

$6,852,000

and

$37,883,000,

respectively, without insurance coverage.

Inventories and Inventory Reserves:

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 on material content. Cost is determined on the

first

-in,

first

-out basis.

The Company maintains an inventory reserve for obsolete and excess 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. Judgment is used to establish excess and obsolete inventory reserves and management adjusts these reserves as more information becomes available about the ultimate disposition of the inventory item.  

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 (in years)	28	-	40
Machinery and equipment (in years)	3	-	10
Computer software (in 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.  Leasehold improvements are depreciated over the shorter of

fifteen

years or the remaining term of the lease.

The Company recorded

$1,725,000

and

$1,603,000

of depreciation expense in the

third

quarter of fiscal

2017

and

2016,

respectively, and

$5,122,000

and

$4,524,000

of depreciation expense in the

first

nine

months of fiscal

2017

and

2016,

respectively.

The Company is in the process of selling its facility in Woonsocket, Rhode Island. This Graphics Segment facility, which is not expected to be sold at a loss, has been separately disclosed on the balance sheet as an asset held for sale as of

March

31,

2017.

The Company sold its Kansas City facility and certain manufacturing equipment in the

third

quarter of fiscal

2017.

Refer to Note

14

for more information regarding the closure of these facilities.

Goodwill and 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

seven

and

twenty

years.  The Company evaluates definite-lived intangible assets for possible 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, accounts receivable, accounts payable, 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, long-lived asset impairment analyses, in the purchase price of acquired companies, and in the valuation of the contingent earn-out. The accounting guidance on fair value measurement was used to measure the fair value of these nonfinancial assets and nonfinancial liabilities.

Product Warranties:

The Company offers a limited warranty that its products are free from 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 based upon historical claims as a percentage of sales 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:

	Nine			Nine			Fiscal
	Months Ended			Months Ended			Year Ended
(In thousands)	March 31,			March 31,			June 30,
	2017			2016			2016
Balance at beginning of the period	$	5,069		$	3,408		$	3,408
Additions charged to expense		3,841			4,018			5,069
Addition from acquisition		907			--			--
Deductions for repairs and Replacements		(2,283	)		(2,606	)		(3,408	)
Balance at end of the period	$	7,534		$	4,820		$	5,069

Research and Development Costs:

Research and development costs are 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, outside legal costs and filing fees related to obtaining patents, supplies, depreciation and other administrative costs.   The Company 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

$1,447,000

and

$1,562,000

for the

three

months ended

March

31,

2017

and

2016,

respectively, and

$4,117,000

and

$4,193,000

for the

nine

months ended

March

31,

2017

and

2016,

respectively.

Cost of Products and Services Sold:

Cost of products sold is primarily comprised of direct materials and supplies consumed in the manufacture of products, as well as manufacturing labor, depreciation expense and direct overhead expense necessary to acquire and convert the purchased materials and supplies into finished product. Cost of products sold also includes the cost to distribute products to customers, inbound freight costs, internal transfer costs, warehousing costs and other shipping and handling activity. Cost of services sold is primarily comprised of the internal and external labor costs required to support the Company’s service revenue along with the management of media content.

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 nonqualified deferred compensation plan.  The computation of diluted earnings per share is based on the weighted average common shares outstanding for the period and includes common share equivalents.  Common share equivalents include the dilutive effect of stock options, restricted stock units, stock warrants, contingently issuable shares and common shares to be issued under a deferred compensation plan, all of which totaled

297,000

and

893,000

shares for the

three

month ended

March

31,

2017

and

2016,

respectively, and

853,000

shares and

846,000

shares for the

nine

months ended

March

31,

2017

and

2016,

respectively. See further discussion of earnings per share in Note

4.

Income Taxes:

The Company accounts for income taxes in accordance with the accounting guidance for 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 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.

New Accounting Pronouncements:

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, provides new and more detailed guidance on specific revenue topics, and expands and improves disclosures about revenue. In

April

2016,

the FASB issued ASU

2016

-

10,

“Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing.” In

May

2016,

the FASB issued ASU

2016

-

12,

“Revenue from Contracts with Customers: Narrow Scope Improvements and Practical Expedients.” In

December

2016,

the FASB issued ASU

2016

-

20,

“Technical Corrections and Improvements to Topic

606,

Revenue from Contracts with Customers.” These

three

standards clarify or improve guidance from ASU

2014

-

09

and are effective for fiscal years and interim periods within those years, beginning after

December

15,

2017,

or the Company’s fiscal year

2019.

The Company will adopt these standards no later than

July

1,

2018.

While the Company is currently assessing the impact of the new standards, the Company’s revenue is primarily generated from the sale of finished products to customers. Those sales predominantly contain a single delivery element and revenue is recognized at a single point in time when ownership, risks, and rewards transfer. The recognition of revenue from most product sales is largely unaffected by the new standard. However, with respect to certain product sales requiring installation, revenue is currently not recognized until the installation is complete. While the Company does not expect this new guidance to have a material impact on the amount of overall sales recognized, the timing of recognition of revenues from sales on certain projects

may

be affected. The Company has not yet quantified this potential impact.

In

November

2015,

the FASB issued ASU

2015

-

17,

“Balance Sheet Classification of Deferred Taxes,” which eliminates the current requirement to separate deferred income tax liabilities and assets into current and noncurrent amounts in the statement of financial position. This update requires that deferred tax liabilities and assets be classified as noncurrent. This update is effective for financial statements issued for fiscal years beginning

April

 

1,

2017.

This update

may

be applied either prospectively or retrospectively. However, early adoption is permitted and the Company has chosen to adopt the standard retrospectively as of

June

30,

2016.

As a result, prior periods have been adjusted to reflect this change. This update affected the presentation, but not the measurement of deferred tax liabilities and assets.

In

February

2016,

the Financial Accounting Standards Board issued ASU

2016

-

02,

“Leases.” The amended guidance requires an entity to recognize assets and liabilities that arise from leases. The amended guidance is effective for financial statements issued for fiscal years and interim periods within those years, beginning after

December

15,

2018,

or the Company’s fiscal year

2020,

with early adoption permitted. 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.

Subsequent Events:

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

Reclassifications:

Certain prior year balance sheet amounts have been reclassified to conform to new accounting guidance on balance sheet classification of deferred taxes. These reclassifications have no impact on net income, earnings per share, or operating cash flows.

Use of Estimates:

The preparation of 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 consolidated financial statements and accompanying notes.  Actual results could differ from those estimates.

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Note 3 - Segment Reporting Information

9 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

NOTE

3

-

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

no

concentration of consolidated net sales in the

three

and

nine

months ended

March

31,

2017

or

March

31,

2016.

There was

no

concentration of accounts receivable at

March

31,

2017

or

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.

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Note 4 - Earnings Per Common Share

9 Months Ended

Mar. 31, 2017

Notes to Financial Statements

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					Nine Months Ended
	March 31					March 31
	2017			2016		2017		2016
BASIC EARNINGS PER SHARE
Net income (loss)	$	(531	)	$	522	$	2,304	$	8,054
Weighted average shares outstanding during the period, net of treasury shares (a)		25,155			24,807		25,056		24,648
Weighted average vested restricted stock units outstanding		37			22		37		25
Weighted average shares outstanding in the Deferred Compensation Plan during the period		260			251		253		245
Weighted average shares outstanding		25,452			25,080		25,346		24,918
Basic earnings (loss) per share	$	(0.02	)	$	0.02	$	0.09	$	0.32
DILUTED EARNINGS PER SHARE
Net income (loss)	$	(531	)	$	522	$	2,304	$	8,054
Weighted average shares outstanding
Basic		25,452			25,080		25,346		24,918
Weighted average stock warrants outstanding		--			--		28		--
Effect of dilutive securities (b): Impact of common shares to be issued under stock incentive plans, and contingently issuable shares, if any		--			620		535		576
Weighted average shares outstanding (c)		25,452			25,700		25,909		25,494
Diluted earnings (loss) per share	$	(0.02	)	$	0.02	$	0.09	$	0.32

(a) Includes shares accounted for like treasury stock included in the Company’s non-qualified deferred compensation plan. (See Note 10.)

(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 1,032,250 common shares at March 31, 2016, and options to purchase 1,683,883 common shares and 1,391,300 common shares at March 31, 2017 and 2016, respectively were not included in the computation of the three month and nine month periods for diluted earnings per share, respectively, because the exercise price was greater than the average fair market value of the common shares. For the three months ended March 31, 2017, the effect of dilutive securities was not included in the calculation of diluted earnings per share because there was a net operating loss for the period.

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Note 5 - Inventories

9 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Inventory Disclosure [Text Block]

NOTE

5

 - INVENTORIES

The following information is provided as of the dates indicated:

	March 31,		June 30,
(In thousands)	2017		2016
Inventories:
Raw materials	$	31,817	$	28,979
Work-in-process		3,323		4,418
Finished goods		13,320		10,744
Total Inventories	$	48,460	$	44,141

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Note 6 - Accrued Expenses

9 Months Ended

Mar. 31, 2017

Notes to Financial Statements

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:

	March 31,		June 30,
(In thousands)	2017		2016
Accrued Expenses:
Compensation and benefits	$	7,540	$	11,983
Customer prepayments		1,227		1,053
Accrued sales commissions		2,275		2,792
Accrued warranty		7,534		5,069
Other accrued expenses		5,304		4,444
Total Accrued Expenses	$	23,880	$	25,341

XML

Note 7 - Goodwill and Other Intangible Assets

9 Months Ended

Mar. 31, 2017

Notes to Financial Statements

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. 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 reporting units and indefinite-lived intangible assets using a combination of a market approach and an income (discounted cash flow) approach, at the reporting unit level. The estimation of the fair value of reporting units and intangible assets 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.

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 including, but not limited to operating results, forecasts, anticipated future cash flows and marketplace data.  There are inherent uncertainties related to these factors and judgments in applying them to the analysis of goodwill impairment.

As of

March

1,

2017,

the Company performed its annual goodwill impairment test on the

three

reporting units that contain goodwill (excluding Atlas Lighting Products). The preliminary goodwill impairment test on

one

reporting unit in the Lighting Segment passed with a business enterprise value that was

$60.0

million or

80%

above the carrying value of this reporting unit including goodwill. The preliminary goodwill impairment test of the

one

reporting unit with goodwill in the Graphics Segment passed with an estimated business enterprise value that was

$4.2

million or

423%

above the carrying value of the reporting unit including goodwill. The preliminary goodwill impairment test of the reporting unit in the Technology Segment that contains goodwill passed with an estimated business enterprise value that was

$23.2

million or

95%

above the carrying value of this reporting unit including goodwill. The impairment test is expected to be completed in the

fourth

quarter of fiscal

2017.

It is anticipated that the results of the test will not change when the test is complete.

The Company acquired all of the capital stock of Atlas Lighting Products, Inc., on

February

21,

2017

(see Note

16).

The total purchase price exceeded the estimated fair value of net assets by approximately

$47.9

million, which was allocated to goodwill. A preliminary valuation of the goodwill and intangible assets was completed in

March

2017,

and preliminary purchase price allocations have been made at

February

21,

2017.

While identified intangible assets related to the Atlas acquisition are being amortized effective

February

21,

2017

over appropriate lives, goodwill will not be amortized on the Company’s financial statements. Goodwill and intangible assets related to Atlas Lighting Products are included in the assets of the Lighting Segment. It is anticipated that the valuation analysis will be fully complete in the

fourth

quarter of fiscal

2017.

Refer to Note

16

for additional information on the intangible assets of Atlas Lighting Products.

In

March

2017,

a customer relationship intangible asset with a net book value of

$479,000

 related to the LED video screen product line in the Graphics Segment was determined to be fully impaired. The Company deemed that

distribution channels and corresponding projected future cash flows that support the customer list intangible asset are not adequate to support the asset.

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

Goodwill
(In thousands)	Lighting			Graphics			Technology
	Segment			Segment			Segment			Total
Balance as of June 30, 2016
Goodwill	$	34,913		$	28,690		$	11,621		$	75,224
Accumulated impairment losses		(34,778	)		(27,525	)		(2,413	)		(64,716	)
Goodwill, net as of June 30, 2016	$	135		$	1,165		$	9,208		$	10,508
Goodwill acquired	$	47,868		$	--		$	--		$	47,868
Balance as of March 31, 2017
Goodwill	$	82,781			28,690			11,621			123,092
Accumulated impairment losses		(34,778	)		(27,525	)		(2,413	)		(64,716	)
Goodwill, net as of March 31, 2017	$	48,003		$	1,165		$	9,208		$	58,376

The Company performed its annual review of indefinite-lived intangible assets (excluding the intangible assets of Atlas Lighting Products) as of

March

1,

2017

and determined there was no impairment. The preliminary indefinite-lived intangible impairment test passed with a fair market value that was

$15.2

million or

445%

above its carrying value. The impairment test is expected to be completed in the

fourth

quarter of fiscal

2017.

It is anticipated that the results of the test will not change when the test is complete.

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

	March 31, 2017
Other Intangible Assets	Gross
(In thousands)	Carrying		Accumulated		Net
	Amount		Amortization		Amount
Amortized Intangible Assets
Customer relationships	$	35,563	$	7,438	$	28,125
Patents		338		180		158
LED technology firmware, software		16,066		11,098		4,968
Trade name		2,658		472		2,186
Non-compete agreements		710		710		--
Total Amortized Intangible Assets		55,335		19,898		35,437
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	$	58,757	$	19,898	$	38,859

	June 30, 2016
Other Intangible Assets	Gross
	Carrying		Accumulated		Net
(In thousands)	Amount		Amortization		Amount
Amortized Intangible Assets
Customer relationships	$	9,316	$	7,581	$	1,735
Patents		338		154		184
LED technology firmware, software		11,228		10,989		239
Trade name		460		460		--
Non-compete agreements		710		704		6
Total Amortized Intangible Assets		22,052		19,888		2,164
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	$	19,888	$	5,586

(In thousands)	Amortization Expense of Other Intangible Assets
	March 31, 2017		March 31, 2016
Three Months Ended	$	359	$	126
Nine Months Ended	$	567	$	379

The Company expects to record annual amortization expense as follows:

(In thousands)
2017	$	1,486
2018	$	2,761
2019	$	2,761
2020	$	2,687
2021	$	2,683
After 2021	$	23,587

XML

Note 8 - Revolving Line of Credit and Long-term Debt

9 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Debt Disclosure [Text Block]

NOTE

8

  -  REVOLVING LINE OF CREDIT AND LONG-TERM DEBT

In

February,

2017

the Company amended its line of credit to increase it to a

$100

million secured revolving line of credit, increased from the

$30

million line of credit that was previously in place. The increased credit line was required for the funding of the acquisition of Atlas Lighting Products, Inc. The line of credit expires in the

third

quarter of fiscal

2022.

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

125

and

250

basis points depending upon the ratio of indebtedness to earnings before interest, taxes, depreciation and amortization (“EBITDA”), as defined in the line of credit agreement. The increment over LIBOR borrowing rate will remain at

175

basis points for the next

twelve

months.  The fee on the unused balance of the

$100

million committed line of credit is

15

basis points.  Under the terms of this line of credit, the Company has agreed to a negative pledge of real estate assets and is required to comply with financial covenants that limit the ratio of indebtedness to EBITDA and require a minimum fixed charge coverage ratio. As of

March

31,

2017,

there was

$55.0

million borrowed against the line of credit, and

$45.0

million was available as of that date. Based on the terms of the line of credit and the final principal due date, the debt has been classified as long term. The line of credit closing fees and legal fees of

$199,000

have been recorded as a long term asset and are being amortized over the term of the line of credit.

The Company is in compliance with all of its loan covenants as of

March

31,

2017

.

XML

Note 9 - Cash Dividends

9 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

NOTE

9

 - CASH DIVIDENDS

The Company paid cash dividends of

$3,772,000

and

$2,959,000

in the

nine

months ended

March

31,

2017

and

2016,

respectively. Dividends on restricted stock units in the amount of

$24,120

and

$7,860

were accrued as of

March

31,

2017

and

2016,

respectively. These dividends will be paid upon the vesting of the restricted stock units when shares are issued to the award recipients. In

April

2017,

the Board of Directors declared a regular quarterly cash dividend of

$0.05

per share payable

May

16,

2017

to shareholders of record as of

May

8,

2017.

The indicated annual cash dividend rate is

$0.20

per share.

XML

Note 10 - Equity Compensation

9 Months Ended

Mar. 31, 2017

Notes to Financial Statements

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

NOTE

10

- EQUITY COMPENSATION

 

Stock Based Compensation

 

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 replaced all previous equity compensation plans. The Company’s shareholders approved amendments to the

2012

Stock Incentive Plan that added

1,600,000

shares to the plan and implemented the use of a fungible share ratio that consumes

2.5

available shares for every

1

full value share awarded by the Company as stock compensation. The options granted or stock awards made pursuant to this plan are granted at fair market value at the date of grant or award.  Service-based 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. Performance-based options granted to employees become exercisable

33.3%

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

1,669,003

shares, all of which were available for future grant or award as of

March

31,

2017.

  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, stock warrants and other stock awards. Service based and performance based stock options were granted and restricted stock units (“RSU’s”) were awarded during the

nine

months ended

March

31,

2017.

As of

March

31,

2017,

a total of

3,631,155

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

1,423,528

options for common shares were vested and exercisable.  As of

March

31,

2017,

the approximate unvested stock option expense that will be recorded as expense in future periods is

$3,508,348.

  The weighted average time over which this expense will be recorded is approximately

24

months. Additionally, as of

March

31,

2017,

a total of

135,585

RSU’s were outstanding. The approximate unvested stock compensation expense that will be recorded as expense in future periods for the RSU’s is

$752,231.

The weighted average time over which this expense will be recorded is approximately

37

months.

Stock Warrants

The Company issued

200,000

fully vested stock warrants in the

third

quarter of fiscal

2017

in conjunction with the acquisition of Atlas Lighting Products, Inc., with the fair value of the warrants being included in the purchase price of that company rather than being expensed. See further discussion in Note

16.

These

200,000

stock warrants were outstanding as of

March

31,

2017.

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

	Three Months Ended
	March 31
	2017
Dividend yield		2.01	%
Expected volatility		39	%
Risk-free interest rate		1.80	%
Expected life (in yrs.)		4.5

The stock warrants issued during the quarter ended

March

31,

2017

had an exercise price of

$9.95,

and a fair value of

$2.87.

As of

March

31,

2017,

the warrants had a remaining contractual life of

4.9

years.

Stock Options

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						Nine Months Ended
	March 31						March 31
	2017			2016			2017			2016
Dividend yield		1.93	%		1.72	%		1.85	%		1.29	%
Expected volatility		41	%		43	%		42	%		44	%
Risk-free interest rate		1.92	%		1.46	%		1.31	%		1.66	%
Expected life (in yrs.)		6.2			6.0			6.1			6.0

At

March

31,

2017,

the

1,256,623

options granted during the

first

nine

months of fiscal

2017

to employees had exercise prices ranging from

$9.48

to

$11.06

per share, fair values ranging from of

$3.22

to

$3.83

per share, and remaining contractual lives of between

9.3

and

10

years.

At

March

31,

2016,

the

1,026,800

options granted during the

first

nine

months of fiscal

2016

to employees had exercise prices ranging from

$8.84

to

$11.87

per share, fair values ranging from of

$3.28

to

$4.52

per share, and remaining contractual lives of between

9.3

and

9.9

years.

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

3.3%

forfeiture rate effective

January

1,

2017.

Previous estimated forfeiture rates were between

2.0%

and

3.5%

between the periods

January

1,

2013

through

December

31,

2016.

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

$510,851

and

$360,952

of expense related to stock options in the

three

months ended

March

31,

2017

and

2016,

respectively, and recorded

$1,806,860

and

$2,191,659

of expense related to stock options in the

nine

months ended

March

31,

2017

and

2016,

respectively.  The lower stock option expense in fiscal

2017

was the result of expectations that the performance criteria related to performance based options will not be met. As of

March

31,

2017,

the Company had

3,148,352

stock options that were vested and that were expected to vest, with a weighted average exercise price of

$9.20

per share, an aggregate intrinsic value of

$4,515,257

and weighted average remaining contractual terms of

7.2

years.

Information related to all stock options for the

nine

months ended

March

31,

2017

and

2016

is shown in the following tables:

	Nine Months Ended March 31, 2017
	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Outstanding at 6/30/16		2,976,490		$	8.97		6.6	$	8,338,974
Granted		1,256,623		$	10.67
Forfeitures		(161,812	)	$	16.17
Exercised		(440,146	)	$	7.39
Outstanding at 3/31/17		3,631,155		$	9.43		7.4	$	4,546,991
Exercisable at 3/31/17		1,423,528		$	8.99		5.3	$	2,912,714

	Nine Months Ended March 31, 2016
	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Outstanding at 6/30/15		2,677,436		$	8.85		6.1	$	4,914,601
Granted		1,026,800		$	9.39
Forfeitures		(150,800	)	$	15.73
Exercised		(509,871	)	$	7.33
Outstanding at 3/31/16		3,043,565		$	8.95		6.8	$	10,448,456
Exercisable at 3/31/16		1,362,810		$	9.67		4.3	$	4,741,694

The following table presents information related to unvested stock options:

				Weighted-Average
				Grant Date
	Shares			Fair Value
Unvested at June 30, 2016		1,663,505		$	3.39
Granted		1,256,623		$	3.71
Vested		(685,751	)	$	3.30
Forfeited		(26,750	)	$	3.50
Unvested at March 31, 2017		2,207,627		$	3.60

The weighted average grant date fair value of options granted during the

nine

month periods ended

March

31,

2017

and

2016

was

$3.71

and

$3.64,

respectively. The aggregate intrinsic value of options exercised during the

nine

months ended

March

31,

2017

and

2016

was

$1,094,696

and

$1,474,444,

respectively. The aggregate grant date fair value of options that vested during the

nine

months ended

March

31,

2017

and

2016

was

$2,260,014

and

$1,149,022,

respectively. The Company received

$2,612,578

and

$3,737,233

of cash from employees who exercised options in the

nine

month periods ended

March

31,

2017

and

2016,

respectively.

For the

nine

months ended

March

31,

2017,

the

$2,612,578

cash received from stock options was partially offset by

$138,793

related to the tax effect of disqualifying dispositions of stock options along with

$72,399

related to the net tax effect of other stock option exercises. For the

nine

months ended

March

31,

2016,

the

$3,737,233

cash received from stock options was partially offset by

$133,172

related to the tax effect of disqualifying dispositions of stock options.

In the

first

nine

months of fiscal

2017

the Company recorded

$465,521as

a reduction of federal income taxes payable,

$138,793

as a decrease in common stock,

$109,140

as a reduction of income tax expense, and

$495,175

as a reduction of the deferred tax asset related to the issuance of RSU’s and 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. In the

first

nine

months of fiscal

2016

the Company recorded

$518,515

as a reduction of federal income taxes payable,

$133,172

as a decrease in common stock,

$95,543

as a reduction of income tax expense, and

$556,144

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.

Restricted Stock Units

A total of

96,210

RSU’s with a weighted average fair value of

$10.84

per share were awarded to employees during the

nine

months ended

March

31,

2017.

A total of

72,000

RSU’s with a fair value of

$9.39

per share were awarded to employees during the

nine

months ended

March

31,

2016.

The Company determined the fair value of the awards based on the closing price of the Company stock on the date the RSU’s were awarded. The RSU’s have a

four

year ratable vesting period. The RSU’s are non-voting, but accrue cash dividends at the same per share rate as those cash dividends declared and paid on LSI’s common stock. Dividends on RSU’s in the amount of

$24,120

and

$7,860

were accrued as of

March

31,

2017

and

2016,

respectively. Accrued dividends are paid to the holder upon vesting of the RSU’s and issuance of shares.

The following table presents information related to RSU’s:

				Weighted-Average
				Grant Date
	Shares			Fair Value
Unvested at June 30, 2016		62,500		$	9.39
Awarded		96,210		$	10.84
Shares Issued		(23,125	)	$	9.71
Unvested at March 31, 2017		135,585		$	10.36

As of

March

31,

2017,

the

135,585

RSU’s had a remaining weighted average contractual life of

6.2

years. Of the

135,585

RSU’s outstanding as of

March

31,

2017,

130,316

are vested or expected to vest in the future. An estimated forfeiture rate of

3.4%

was used in the calculation of expense related to the RSU’s. The Company recorded

$93,905

and

$486,102

of expense related to RSU’s in the

three

and

nine

month periods ended

March

31,

2017,

respectively.

As of

March

31,

2016,

the

65,500

outstanding RSU’s had a remaining weighted average contractual life of

9.25

years. Of the

65,500

RSU’s outstanding as of

March

31,

2016,

63,369

were vested or expected to vest in the future. An estimated forfeiture rate of

3.3%

was used in the calculation of expense related to the RSU’s. The Company recorded

$30,387

and

$350,369

of expense related to RSU’s in the

three

and

nine

month periods ended

March

31,

2016,

respectively.

Director and Employee Stock Compensation Awards

The Company awarded a total of

31,782

and

17,240

common shares in the

nine

months ended

March

31,

2017

and

2016,

respectively, as stock compensation awards. These common shares were valued at their approximate

$331,000

and

$168,000

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

March

31,

2017,

there were

29

participants, all with fully vested account balances. A total of

255,119

common shares with a cost of

$2,437,880,

and

228,103

common shares with a cost of

$2,167,717

were held in the plan as of

March

31,

2017

and

June

 

30,

2016,

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 used approximately

$446,251

and

$316,900

to purchase

45,335

and

32,696

common shares of the Company in the open stock market during the

nine

months ended

March

31,

2017

and

2016,

respectively, for either employee salary deferrals or Company contributions into the non-qualified deferred compensation plan. For fiscal year

2017,

the Company estimates the Rabbi Trust for the Nonqualified Deferred Compensation Plan will make net repurchases in the range of

48,000

to

53,000

common shares of the Company. The Company does not currently repurchase its own common shares for any other purpose.

XML

Note 11 - Supplemental Cash Flow Information

9 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Cash Flow, Supplemental Disclosures [Text Block]

NOTE

11

 -  SUPPLEMENTAL CASH FLOW INFORMATION

(In thousands)	Nine Months Ended March 31
	2017		2016
Cash payments:
Interest	$	66	$	32
Income taxes	$	2,484	$	4,863
Issuance of common shares as compensation	$	331	$	168
Issuance of stock warrants	$	575		--

XML

Note 12 - Commitments and Contingencies

9 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

NOTE

1

2

-

COMMITMENTS AND CONTINGENCIES

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

March

31,

2017,

there were

no

standby letter of credit agreements.

XML

Note 13 - Severance Costs

9 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Compensation and Employee Benefit Plans [Text Block]

NOTE

1

3

– SEVERANCE COSTS

The Company recorded severance expense of

$222,000

and

$401,000

in the

nine

months ended

March

31,

2017

and

2016,

respectively. This severance expense was related to reductions in staffing not related to plant restructuring. See further discussion of restructuring expenses in Note

14.

The activity in the Company’s accrued severance liability is as follows for the periods indicated:

	Nine			Nine			Fiscal
	Months Ended			Months Ended			Year Ended
(In thousands)	March 31,			March 31,			June 30,
	2017			2016			2016
Balance at beginning of the period	$	39		$	379		$	379
Accrual of expense		222			401			469
Payments		(235	)		(544	)		(742	)
Adjustments		--			(67	)		(67	)
Balance at end of the period	$	26		$	169		$	39

XML

Note 14 - Restructuring Costs

9 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Restructuring and Related Activities Disclosure [Text Block]

NOTE

1

4

– RESTRUCTURING COSTS

On

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 were

$944,000.

These costs primarily included 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

$432

,000

recorded in the

first

nine

months 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 owned the facility in Kansas City and realized a

$1,361,000

gain when the facility was sold.

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

$363,000

were recorded in the

first

nine

months 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.

In

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

$464,000.

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			Nine Months			Total Expected		Total
	Months Ended			Ended			to be Recognized		Fiscal 2017
(In thousands)	March 31,			March 31,			in Remainder of		Restructuring
	2017			2017			Fiscal 2017		Expenses
Severance and other termination benefits	$	120		$	811		$	--	$	811
Lease obligation		--			213			--		213
Impairment of fixed assets and accelerated depreciation		1			354			--		354
Gain on sale of facility		(1,361	)		(1,361	)		--		(1,361	)
Other		251			347			60		407
Total	$	(989	)	$	364		$	60	$	424

Impairment and accelerated depreciation expense of

$354,000

was recorded in the

first

nine

months 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

$354,000

of impairment and accelerated depreciation expense,

$322,000

was recorded in the Lighting Segment and

$32,000

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			Nine Months Ended
(In thousands)	March 31, 2017			March 31, 2017
Cost of Goods Sold	$	312		$	1,455
Operating Expenses		(1,301	)		(1,091	)
Total	$	(989	)	$	364

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

	Three			Nine Months			Total Expected		Total
	Months Ended			Ended			to be Recognized		Fiscal 2017
(In thousands)	March 31,			March 31,			In Remainder of		Restructuring
	2017			2017			Fiscal 2017		Expenses
Lighting Segment	$	(1,187	)		(417	)	$	--	$	(417	)
Graphics Segment		183			404			60		464
Technology Segment		1			252			--		252
Corporate and Eliminations		14			125			--		125
Total	$	(989	)		364		$	60	$	424

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

$432,000

recorded during the

first

nine

months 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 March 31, 2017
Severance and termination benefits	$	--	$	814	$	(748	)	$	(15	)	$	51
Lease obligation		--		213		(86	)					127
Other		--		359		(354	)					5
Total	$	--	$	1,386	$	(1,188	)	$	(15	)	$	183

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

$354,000

recorded in the

first

nine

months of fiscal

2017

or the gain on the sale of the Kansas City facility recorded in the

three

months ended

March

31,

2017

.

Refer to Note

13

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

XML

Note 15 - Income Taxes

9 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Income Tax Disclosure [Text Block]

NOTE

1

5

–

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 on a periodic basis 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						Nine Months Ended
	March 31						March 31
	2017			2016			2017			2016
Reconciliation to effective tax rate:
Provision for income taxes at the anticipated annual tax rate		32.0	%		34.4	%		30.4	%		34.5	%
Uncertain tax positions		4.2			(2.9	)		(2.4	)		(0.5	)
Disqualifying dispositions		9.3			(1.4	)		(3.6	)		(0.8	)
Deferred tax asset adjustment		--			--			(2.4	)		--
Other		(2.2	)		0.4			0.7			(0.9	)
Effective tax rate		43.3	%		30.5	%		22.7	%		32.3	%

XML

Note 16 - Acquisition

9 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Business Combination Disclosure [Text Block]

NOTE

1

6

–

ACQUISITION

On

February

21,

2017,

the Company acquired all the capital stock of Atlas Lighting Products, Inc. (Atlas), a Burlington North Carolina manufacturer of high-quality LED lighting products sold into the electrical distribution market. The purchase price of

$97.5

million included a cash payment of

$96.9

million and

200,000

five

year warrants valued at

$0.6

million. The Company funded the acquisition with a combination of cash on hand and

$66

million from a new

$100

million revolving line of credit (See note

8).

The Company has accounted for this transaction as a business combination. Under business combination accounting, the preliminary allocation of the purchase consideration to the fair value of the assets acquired and liabilities assumed as of

February

21,

2017

is as follows:

(amounts in thousands)
Cash and Cash Equivalents	$	1,815
Accounts Receivable		7,202
Inventories		8,490
Property, Plant, and Equipment		3,631
Other Assets		248
Intangible Assets		34,319
Liabilities Assumed		(6,106	)
Identifiable net assets acquired		49,599
Goodwill		47,868
Net Purchase Consideration	$	97,467

As indicated, the allocation of the purchase price and estimated useful lives of the property, plant, and equipment, and intangible assets shown remain preliminary, pending final completion of valuations.

Goodwill recorded from the acquisition of Atlas is attributable to the impact of the positive cash flow from Atlas in addition to the expected synergies from the business combination. The goodwill resulting from the acquisition is deductible for tax purposes. The intangible assets include amounts recognized for the fair value of the trade name, customer relationships, and technology-related assets. The fair value of the intangible assets was determined based upon a combination of the market and income (discounted cash flow) approach. The following table present the details of the identified intangible assets acquired at the date of acquisition (in thousands):

	Estimated		Estimate Useful
	Fair Value		Life (Years)
Tradename	$	2,198		20
Technology asset		4,838		10
Customer relationship		27,283		15
Total	$	34,319

The fair market value write-up of the inventory totaled

$228,000,

and the fair market value write-up of the property, plant, and equipment totaled

$526,000.

Transaction costs related to the acquisition totaled

$1.48

million in the

third

quarter and

nine

months ended

March

31,

2017

and are recorded as an operating expense.

Atlas’s post-acquisition results of operations for the period from

February

21,

2017

through

March

31,

2017

are included in the Company’s Condensed Consolidated Statements of Operations. Since the acquisition date, net sales of Atlas for the period from

February

21,

2017

through

March

31,

2017

were

$6.7

million and operating income was

$1.0

million. The operating results of Atlas are included in the Lighting Segment.

Pro Forma Impact of the Acquisition of Atlas Lighting Products, Inc.

(unaudited)

The following table represents pro forma results of operations and gives effect to the acquisition of Atlas as if the transaction had occurred on

July

1,

2015.

The unaudited pro forma results of operations have been prepared for comparative purposes only and are not necessarily indicative of what would have occurred had the business combination been completed at the beginning of the period or the results that

may

occur in the future. Furthermore, the pro forma financial information does not reflect the impact of any synergies or operating efficiencies resulting from the acquisition of Atlas.

(In thousands, unaudited)	Nine Months Ended March 31
	2017		2016
Net Sales	$	283,122	$	287,176
Gross Profit	$	73,802	$	81,067
Operating Income	$	6,230	$	14,694

The unaudited pro forma financial information for the

nine

months ended

March

31,

2017

and

March

31,

2016

is prepared using the acquisition method of accounting and has been adjusted to effect to the pro forma events that are:

(1)

directly attributable to the acquisition.

(2)

factually supportable, and

(3)

expected to have a continuing impact on the combined results. The pro forma operating income of

$6.2

million excludes acquisition-related expenses of

$1.48

million.

XML

Significant Accounting Policies (Policies)

9 Months Ended

Mar. 31, 2017

Accounting Policies [Abstract]

Consolidation, Policy [Policy Text Block]

Consolidation:

The 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. 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, and commissioning of lighting controls; 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. 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. 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.

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 a 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

one

month to

one

year.

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

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 the accounting standards on software revenue recognition. Our solid-state LED video screens and active digital signage contain software elements which the Company has determined are incidental.

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.  Receivables deemed uncollectable are written-off against the allowance for doubtful accounts receivable after all reasonable collection efforts have been exhausted. 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)	March 31,			June 30,
	2017			2016
Accounts receivable	$	49,139		$	47,201
Less: Allowance for doubtful accounts		(399	)		(226	)
Accounts receivable, net	$	48,740		$	46,975

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. Cash and cash equivalents consist primarily of bank deposits and a bank money market account that is stated at cost, which approximates fair value. The Company maintains balances at financial institutions in the United States.  In the United States, the FDIC limit for insurance coverage on non-interest bearing accounts is

$250,000.

As of

March

31,

2017

and

June

30,

2016,

the Company had bank balances of

$6,852,000

and

$37,883,000,

respectively, without insurance coverage.

Inventory, Policy [Policy Text Block]

Inventories and Inventory Reserves:

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 on material content. Cost is determined on the

first

-in,

first

-out basis.

The Company maintains an inventory reserve for obsolete and excess 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. Judgment is used to establish excess and obsolete inventory reserves and management adjusts these reserves as more information becomes available about the ultimate disposition of the inventory item.  

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 (in years)	28	-	40
Machinery and equipment (in years)	3	-	10
Computer software (in 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.  Leasehold improvements are depreciated over the shorter of

fifteen

years or the remaining term of the lease.

The Company recorded

$1,725,000

and

$1,603,000

of depreciation expense in the

third

quarter of fiscal

2017

and

2016,

respectively, and

$5,122,000

and

$4,524,000

of depreciation expense in the

first

nine

months of fiscal

2017

and

2016,

respectively.

The Company is in the process of selling its facility in Woonsocket, Rhode Island. This Graphics Segment facility, which is not expected to be sold at a loss, has been separately disclosed on the balance sheet as an asset held for sale as of

March

31,

2017.

The Company sold its Kansas City facility and certain manufacturing equipment in the

third

quarter of fiscal

2017.

Refer to Note

14

for more information regarding the closure of these facilities.

Goodwill and Intangible Assets, Policy [Policy Text Block]

Goodwill and 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

seven

and

twenty

years.  The Company evaluates definite-lived intangible assets for possible 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, accounts receivable, accounts payable, 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, long-lived asset impairment analyses, in the purchase price of acquired companies, and in the valuation of the contingent earn-out. The accounting guidance on fair value measurement was used to measure the fair value of these nonfinancial assets and nonfinancial liabilities.

Standard Product Warranty, Policy [Policy Text Block]

Product Warranties:

The Company offers a limited warranty that its products are free from 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 based upon historical claims as a percentage of sales 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:

	Nine			Nine			Fiscal
	Months Ended			Months Ended			Year Ended
(In thousands)	March 31,			March 31,			June 30,
	2017			2016			2016
Balance at beginning of the period	$	5,069		$	3,408		$	3,408
Additions charged to expense		3,841			4,018			5,069
Addition from acquisition		907			--			--
Deductions for repairs and Replacements		(2,283	)		(2,606	)		(3,408	)
Balance at end of the period	$	7,534		$	4,820		$	5,069

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

Research and Development Costs:

Research and development costs are 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, outside legal costs and filing fees related to obtaining patents, supplies, depreciation and other administrative costs.   The Company 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

$1,447,000

and

$1,562,000

for the

three

months ended

March

31,

2017

and

2016,

respectively, and

$4,117,000

and

$4,193,000

for the

nine

months ended

March

31,

2017

and

2016,

respectively.

Cost of Sales, Policy [Policy Text Block]

Cost of Products and Services Sold:

Cost of products sold is primarily comprised of direct materials and supplies consumed in the manufacture of products, as well as manufacturing labor, depreciation expense and direct overhead expense necessary to acquire and convert the purchased materials and supplies into finished product. Cost of products sold also includes the cost to distribute products to customers, inbound freight costs, internal transfer costs, warehousing costs and other shipping and handling activity. Cost of services sold is primarily comprised of the internal and external labor costs required to support the Company’s service revenue along with the management of media content.

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 nonqualified deferred compensation plan.  The computation of diluted earnings per share is based on the weighted average common shares outstanding for the period and includes common share equivalents.  Common share equivalents include the dilutive effect of stock options, restricted stock units, stock warrants, contingently issuable shares and common shares to be issued under a deferred compensation plan, all of which totaled

297,000

and

893,000

shares for the

three

month ended

March

31,

2017

and

2016,

respectively, and

853,000

shares and

846,000

shares for the

nine

months ended

March

31,

2017

and

2016,

respectively. See further discussion of earnings per share in Note

4.

Income Tax, Policy [Policy Text Block]

Income Taxes:

The Company accounts for income taxes in accordance with the accounting guidance for 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 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.

New Accounting Pronouncements, Policy [Policy Text Block]

New Accounting Pronouncements:

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, provides new and more detailed guidance on specific revenue topics, and expands and improves disclosures about revenue. In

April

2016,

the FASB issued ASU

2016

-

10,

“Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing.” In

May

2016,

the FASB issued ASU

2016

-

12,

“Revenue from Contracts with Customers: Narrow Scope Improvements and Practical Expedients.” In

December

2016,

the FASB issued ASU

2016

-

20,

“Technical Corrections and Improvements to Topic

606,

Revenue from Contracts with Customers.” These

three

standards clarify or improve guidance from ASU

2014

-

09

and are effective for fiscal years and interim periods within those years, beginning after

December

15,

2017,

or the Company’s fiscal year

2019.

The Company will adopt these standards no later than

July

1,

2018.

While the Company is currently assessing the impact of the new standards, the Company’s revenue is primarily generated from the sale of finished products to customers. Those sales predominantly contain a single delivery element and revenue is recognized at a single point in time when ownership, risks, and rewards transfer. The recognition of revenue from most product sales is largely unaffected by the new standard. However, with respect to certain product sales requiring installation, revenue is currently not recognized until the installation is complete. While the Company does not expect this new guidance to have a material impact on the amount of overall sales recognized, the timing of recognition of revenues from sales on certain projects

may

be affected. The Company has not yet quantified this potential impact.

In

November

2015,

the FASB issued ASU

2015

-

17,

“Balance Sheet Classification of Deferred Taxes,” which eliminates the current requirement to separate deferred income tax liabilities and assets into current and noncurrent amounts in the statement of financial position. This update requires that deferred tax liabilities and assets be classified as noncurrent. This update is effective for financial statements issued for fiscal years beginning

April

 

1,

2017.

This update

may

be applied either prospectively or retrospectively. However, early adoption is permitted and the Company has chosen to adopt the standard retrospectively as of

June

30,

2016.

As a result, prior periods have been adjusted to reflect this change. This update affected the presentation, but not the measurement of deferred tax liabilities and assets.

In

February

2016,

the Financial Accounting Standards Board issued ASU

2016

-

02,

“Leases.” The amended guidance requires an entity to recognize assets and liabilities that arise from leases. The amended guidance is effective for financial statements issued for fiscal years and interim periods within those years, beginning after

December

15,

2018,

or the Company’s fiscal year

2020,

with early adoption permitted. 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.

Subsequent Events, Policy [Policy Text Block]

Subsequent Events:

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

Reclassification, Policy [Policy Text Block]

Reclassifications:

Certain prior year balance sheet amounts have been reclassified to conform to new accounting guidance on balance sheet classification of deferred taxes. These reclassifications have no impact on net income, earnings per share, or operating cash flows.

Use of Estimates, Policy [Policy Text Block]

Use of Estimates:

The preparation of 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 consolidated financial statements and accompanying notes.  Actual results could differ from those estimates.

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Note 2 - Summary of Significant Accounting Policies (Tables)

9 Months Ended

Mar. 31, 2017

Notes Tables

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

(In thousands)	March 31,			June 30,
	2017			2016
Accounts receivable	$	49,139		$	47,201
Less: Allowance for doubtful accounts		(399	)		(226	)
Accounts receivable, net	$	48,740		$	46,975

Property, Plant and Equipment [Table Text Block]

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

Schedule of Product Warranty Liability [Table Text Block]

	Nine			Nine			Fiscal
	Months Ended			Months Ended			Year Ended
(In thousands)	March 31,			March 31,			June 30,
	2017			2016			2016
Balance at beginning of the period	$	5,069		$	3,408		$	3,408
Additions charged to expense		3,841			4,018			5,069
Addition from acquisition		907			--			--
Deductions for repairs and Replacements		(2,283	)		(2,606	)		(3,408	)
Balance at end of the period	$	7,534		$	4,820		$	5,069

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Note 3 - Segment Reporting Information (Tables)

9 Months Ended

Mar. 31, 2017

Notes Tables

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

	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

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

	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

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

	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

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Note 4 - Earnings Per Common Share (Tables)

9 Months Ended

Mar. 31, 2017

Notes Tables

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

	Three Months Ended					Nine Months Ended
	March 31					March 31
	2017			2016		2017		2016
BASIC EARNINGS PER SHARE
Net income (loss)	$	(531	)	$	522	$	2,304	$	8,054
Weighted average shares outstanding during the period, net of treasury shares (a)		25,155			24,807		25,056		24,648
Weighted average vested restricted stock units outstanding		37			22		37		25
Weighted average shares outstanding in the Deferred Compensation Plan during the period		260			251		253		245
Weighted average shares outstanding		25,452			25,080		25,346		24,918
Basic earnings (loss) per share	$	(0.02	)	$	0.02	$	0.09	$	0.32
DILUTED EARNINGS PER SHARE
Net income (loss)	$	(531	)	$	522	$	2,304	$	8,054
Weighted average shares outstanding
Basic		25,452			25,080		25,346		24,918
Weighted average stock warrants outstanding		--			--		28		--
Effect of dilutive securities (b): Impact of common shares to be issued under stock incentive plans, and contingently issuable shares, if any		--			620		535		576
Weighted average shares outstanding (c)		25,452			25,700		25,909		25,494
Diluted earnings (loss) per share	$	(0.02	)	$	0.02	$	0.09	$	0.32

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Note 5 - Inventories (Tables)

9 Months Ended

Mar. 31, 2017

Notes Tables

Schedule of Inventory, Current [Table Text Block]

	March 31,		June 30,
(In thousands)	2017		2016
Inventories:
Raw materials	$	31,817	$	28,979
Work-in-process		3,323		4,418
Finished goods		13,320		10,744
Total Inventories	$	48,460	$	44,141

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Note 6 - Accrued Expenses (Tables)

9 Months Ended

Mar. 31, 2017

Notes Tables

Schedule of Accrued Liabilities [Table Text Block]

	March 31,		June 30,
(In thousands)	2017		2016
Accrued Expenses:
Compensation and benefits	$	7,540	$	11,983
Customer prepayments		1,227		1,053
Accrued sales commissions		2,275		2,792
Accrued warranty		7,534		5,069
Other accrued expenses		5,304		4,444
Total Accrued Expenses	$	23,880	$	25,341

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Note 7 - Goodwill and Other Intangible Assets (Tables)

9 Months Ended

Mar. 31, 2017

Notes Tables

Schedule of Goodwill [Table Text Block]

Goodwill
(In thousands)	Lighting			Graphics			Technology
	Segment			Segment			Segment			Total
Balance as of June 30, 2016
Goodwill	$	34,913		$	28,690		$	11,621		$	75,224
Accumulated impairment losses		(34,778	)		(27,525	)		(2,413	)		(64,716	)
Goodwill, net as of June 30, 2016	$	135		$	1,165		$	9,208		$	10,508
Goodwill acquired	$	47,868		$	--		$	--		$	47,868
Balance as of March 31, 2017
Goodwill	$	82,781			28,690			11,621			123,092
Accumulated impairment losses		(34,778	)		(27,525	)		(2,413	)		(64,716	)
Goodwill, net as of March 31, 2017	$	48,003		$	1,165		$	9,208		$	58,376

Schedule of Intangible Assets and Goodwill [Table Text Block]

	March 31, 2017
Other Intangible Assets	Gross
(In thousands)	Carrying		Accumulated		Net
	Amount		Amortization		Amount
Amortized Intangible Assets
Customer relationships	$	35,563	$	7,438	$	28,125
Patents		338		180		158
LED technology firmware, software		16,066		11,098		4,968
Trade name		2,658		472		2,186
Non-compete agreements		710		710		--
Total Amortized Intangible Assets		55,335		19,898		35,437
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	$	58,757	$	19,898	$	38,859

	June 30, 2016
Other Intangible Assets	Gross
	Carrying		Accumulated		Net
(In thousands)	Amount		Amortization		Amount
Amortized Intangible Assets
Customer relationships	$	9,316	$	7,581	$	1,735
Patents		338		154		184
LED technology firmware, software		11,228		10,989		239
Trade name		460		460		--
Non-compete agreements		710		704		6
Total Amortized Intangible Assets		22,052		19,888		2,164
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	$	19,888	$	5,586

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

(In thousands)	Amortization Expense of Other Intangible Assets
	March 31, 2017		March 31, 2016
Three Months Ended	$	359	$	126
Nine Months Ended	$	567	$	379

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

(In thousands)
2017	$	1,486
2018	$	2,761
2019	$	2,761
2020	$	2,687
2021	$	2,683
After 2021	$	23,587

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Note 10 - Equity Compensation (Tables)

9 Months Ended

Mar. 31, 2017

Notes Tables

Stock Warrants, Valuation Assumptions [Table Text Block]

	Three Months Ended
	March 31
	2017
Dividend yield		2.01	%
Expected volatility		39	%
Risk-free interest rate		1.80	%
Expected life (in yrs.)		4.5

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

	Three Months Ended						Nine Months Ended
	March 31						March 31
	2017			2016			2017			2016
Dividend yield		1.93	%		1.72	%		1.85	%		1.29	%
Expected volatility		41	%		43	%		42	%		44	%
Risk-free interest rate		1.92	%		1.46	%		1.31	%		1.66	%
Expected life (in yrs.)		6.2			6.0			6.1			6.0

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

	Nine Months Ended March 31, 2017
	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Outstanding at 6/30/16		2,976,490		$	8.97		6.6	$	8,338,974
Granted		1,256,623		$	10.67
Forfeitures		(161,812	)	$	16.17
Exercised		(440,146	)	$	7.39
Outstanding at 3/31/17		3,631,155		$	9.43		7.4	$	4,546,991
Exercisable at 3/31/17		1,423,528		$	8.99		5.3	$	2,912,714

	Nine Months Ended March 31, 2016
	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Outstanding at 6/30/15		2,677,436		$	8.85		6.1	$	4,914,601
Granted		1,026,800		$	9.39
Forfeitures		(150,800	)	$	15.73
Exercised		(509,871	)	$	7.33
Outstanding at 3/31/16		3,043,565		$	8.95		6.8	$	10,448,456
Exercisable at 3/31/16		1,362,810		$	9.67		4.3	$	4,741,694

Schedule of Nonvested Share Activity [Table Text Block]

				Weighted-Average
				Grant Date
	Shares			Fair Value
Unvested at June 30, 2016		1,663,505		$	3.39
Granted		1,256,623		$	3.71
Vested		(685,751	)	$	3.30
Forfeited		(26,750	)	$	3.50
Unvested at March 31, 2017		2,207,627		$	3.60

Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity [Table Text Block]

				Weighted-Average
				Grant Date
	Shares			Fair Value
Unvested at June 30, 2016		62,500		$	9.39
Awarded		96,210		$	10.84
Shares Issued		(23,125	)	$	9.71
Unvested at March 31, 2017		135,585		$	10.36

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Note 11 - Supplemental Cash Flow Information (Tables)

9 Months Ended

Mar. 31, 2017

Notes Tables

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

(In thousands)	Nine Months Ended March 31
	2017		2016
Cash payments:
Interest	$	66	$	32
Income taxes	$	2,484	$	4,863
Issuance of common shares as compensation	$	331	$	168
Issuance of stock warrants	$	575		--

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Note 13 - Severance Costs (Tables)

9 Months Ended

Mar. 31, 2017

Employee Severance [Member]

Notes Tables

Schedule of Accrued Severance Liability [Table Text Block]

	Nine			Nine			Fiscal
	Months Ended			Months Ended			Year Ended
(In thousands)	March 31,			March 31,			June 30,
	2017			2016			2016
Balance at beginning of the period	$	39		$	379		$	379
Accrual of expense		222			401			469
Payments		(235	)		(544	)		(742	)
Adjustments		--			(67	)		(67	)
Balance at end of the period	$	26		$	169		$	39

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Note 14 - Restructuring Costs (Tables)

9 Months Ended

Mar. 31, 2017

Notes Tables

Restructuring and Related Costs [Table Text Block]

	Three			Nine Months			Total Expected		Total
	Months Ended			Ended			to be Recognized		Fiscal 2017
(In thousands)	March 31,			March 31,			in Remainder of		Restructuring
	2017			2017			Fiscal 2017		Expenses
Severance and other termination benefits	$	120		$	811		$	--	$	811
Lease obligation		--			213			--		213
Impairment of fixed assets and accelerated depreciation		1			354			--		354
Gain on sale of facility		(1,361	)		(1,361	)		--		(1,361	)
Other		251			347			60		407
Total	$	(989	)	$	364		$	60	$	424

Restructuring and Related Costs, Summary of Costs Incurred by Line Item in the Statement of Operations [Table Text Block]

	Three Months Ended			Nine Months Ended
(In thousands)	March 31, 2017			March 31, 2017
Cost of Goods Sold	$	312		$	1,455
Operating Expenses		(1,301	)		(1,091	)
Total	$	(989	)	$	364

Restructuring Costs and Related Costs Incurred by Segment [Table Text Block]

	Three			Nine Months			Total Expected		Total
	Months Ended			Ended			to be Recognized		Fiscal 2017
(In thousands)	March 31,			March 31,			In Remainder of		Restructuring
	2017			2017			Fiscal 2017		Expenses
Lighting Segment	$	(1,187	)		(417	)	$	--	$	(417	)
Graphics Segment		183			404			60		464
Technology Segment		1			252			--		252
Corporate and Eliminations		14			125			--		125
Total	$	(989	)		364		$	60	$	424

Schedule of Liability Balances Related to Restructuring Costs [Table Text Block]

(In thousands)
	Balance as of June 30, 2016		Restructuring Expense		Payments			Adjustments			Balance as of March 31, 2017
Severance and termination benefits	$	--	$	814	$	(748	)	$	(15	)	$	51
Lease obligation		--		213		(86	)					127
Other		--		359		(354	)					5
Total	$	--	$	1,386	$	(1,188	)	$	(15	)	$	183

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Note 15 - Income Taxes (Tables)

9 Months Ended

Mar. 31, 2017

Notes Tables

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

	Three Months Ended						Nine Months Ended
	March 31						March 31
	2017			2016			2017			2016
Reconciliation to effective tax rate:
Provision for income taxes at the anticipated annual tax rate		32.0	%		34.4	%		30.4	%		34.5	%
Uncertain tax positions		4.2			(2.9	)		(2.4	)		(0.5	)
Disqualifying dispositions		9.3			(1.4	)		(3.6	)		(0.8	)
Deferred tax asset adjustment		--			--			(2.4	)		--
Other		(2.2	)		0.4			0.7			(0.9	)
Effective tax rate		43.3	%		30.5	%		22.7	%		32.3	%

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Note 16 - Acquisition (Tables)

9 Months Ended

Mar. 31, 2017

Notes Tables

Schedule of Business Acquisitions, by Acquisition [Table Text Block]

(amounts in thousands)
Cash and Cash Equivalents	$	1,815
Accounts Receivable		7,202
Inventories		8,490
Property, Plant, and Equipment		3,631
Other Assets		248
Intangible Assets		34,319
Liabilities Assumed		(6,106	)
Identifiable net assets acquired		49,599
Goodwill		47,868
Net Purchase Consideration	$	97,467

Schedule of Finite-Lived Intangible Assets Acquired as Part of Business Combination [Table Text Block]

	Estimated		Estimate Useful
	Fair Value		Life (Years)
Tradename	$	2,198		20
Technology asset		4,838		10
Customer relationship		27,283		15
Total	$	34,319

Business Acquisition, Pro Forma Information [Table Text Block]

(In thousands, unaudited)	Nine Months Ended March 31
	2017		2016
Net Sales	$	283,122	$	287,176
Gross Profit	$	73,802	$	81,067
Operating Income	$	6,230	$	14,694

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Note 2 - Summary of Significant Accounting Policies (Details Textual)	3 Months Ended		9 Months Ended
	Mar. 31, 2017 USD ($) shares	Mar. 31, 2016 USD ($) shares	Mar. 31, 2017 USD ($) shares	Mar. 31, 2016 USD ($) shares	Jun. 30, 2016 USD ($)
Number of Revenue Sources	5		5
Cash, FDIC Insured Amount	$ 250,000		$ 250,000
Cash, Uninsured Amount	6,852,000		6,852,000		$ 37,883,000
Depreciation	1,725,000	$ 1,603,000	5,122,000	$ 4,524,000
Research and Development Expense	$ 1,447,000	$ 1,562,000	$ 4,117,000	$ 4,193,000
Incremental Common Shares Attributable to Dilutive Effect of Contingently Issuable Shares | shares	297,000	893,000	853,000	846,000
Fair Value Disclosure, Off-balance Sheet Risks, Amount, Asset	$ 0		$ 0
Fair Value Disclosure, Off-balance Sheet Risks, Amount, Liability	$ 0		$ 0
Minimum [Member]
Media Content Service Period			30 days
Finite-Lived Intangible Asset, Useful Life			7 years
Standard Warranty Term			1 year
Maximum [Member]
Media Content Service Period			1 year
Finite-Lived Intangible Asset, Useful Life			20 years
Standard Warranty Term			5 years
Maximum [Member] | Product Warranty Exceptions [Member]
Standard Warranty Term			10 years
Maximum [Member] | Leasehold Improvements [Member]
Property, Plant and Equipment, Useful Life			15 years

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Note 2 - Summary of Significant Accounting Policies - Net Accounts Receivable (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Jun. 30, 2016
Accounts receivable	$ 49,139	$ 47,201
Less: Allowance for doubtful accounts	(399)	(226)
Accounts receivable, net	$ 48,740	$ 46,975

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Note 2 - Summary of Significant Accounting Policies - Estimated Useful Lives of Long-lived Assets (Details)	9 Months Ended
	Mar. 31, 2017
Building [Member] | Minimum [Member]
Property, plant, and equipment (Year)	28 years
Building [Member] | Maximum [Member]
Property, plant, and equipment (Year)	40 years
Machinery and Equipment [Member] | Minimum [Member]
Property, plant, and equipment (Year)	3 years
Machinery and Equipment [Member] | Maximum [Member]
Property, plant, and equipment (Year)	10 years
Software and Software Development Costs [Member] | Minimum [Member]
Property, plant, and equipment (Year)	3 years
Software and Software Development Costs [Member] | Maximum [Member]
Property, plant, and equipment (Year)	8 years

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Note 2 - Summary of Significant Accounting Policies - Warranty Liabilities (Details) - USD ($) $ in Thousands	9 Months Ended		12 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Jun. 30, 2016
Balance at beginning of the period	$ 5,069	$ 3,408	$ 3,408
Additions charged to expense	3,841	4,018	5,069
Addition from acquisition	907
Deductions for repairs and Replacements	(2,283)	(2,606)	(3,408)
Balance at end of the period	$ 7,534	$ 4,820	$ 5,069

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Note 3 - Segment Reporting Information (Details Textual) - USD ($)	3 Months Ended		9 Months Ended		12 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016	Jun. 30, 2016
Number of Operating Segments			3
Intersegment Revenue Markup Percentage			10.00%
Sales Revenue, Net [Member] | Customer Concentration Risk [Member]
Concentration Risk, Percentage	0.00%	0.00%	0.00%	0.00%
Accounts Receivable [Member] | Customer Concentration Risk [Member]
Concentration Risk, Percentage			0.00%		0.00%
Reclassification of Operating Loss from the Technology Segment to the Graphics Segment [Member] | Third Quarter of Fiscal 2016 [Member]
Prior Period Reclassification Adjustment	$ 96,000
Reclassification of Operating Loss from the Technology Segment to the Graphics Segment [Member] | First Nine Months of Fiscal 2016 [Member]
Prior Period Reclassification Adjustment	$ 99,000

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Note 3 - Segment Reporting Information - Summarized Financial Information by Reportable Business Segments (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016
Net Sales:
Net sales	$ 78,156	$ 70,740	$ 247,973	$ 241,352
Operating Income (Loss):
Operating income (loss)	(774)	732	3,110	11,875
Capital Expenditures:
Capital expenditures	790	5,026	3,534	8,410
Depreciation and Amortization:
Depreciation and amortization	2,084	1,729	5,689	4,903
Lighting Segment [Member]
Net Sales:
Net sales	56,039	49,331	176,578	168,007
Operating Income (Loss):
Operating income (loss)	2,759	1,106	8,288	11,970
Capital Expenditures:
Capital expenditures	251	1,074	1,518	2,923
Depreciation and Amortization:
Depreciation and amortization	1,124	730	2,762	2,152
Graphics Segment [Member]
Net Sales:
Net sales	16,463	17,236	55,939	60,772
Operating Income (Loss):
Operating income (loss)	(480)	1,078	1,711	5,271
Capital Expenditures:
Capital expenditures	499	2,145	1,324	3,337
Depreciation and Amortization:
Depreciation and amortization	357	316	1,093	787
Technology Segment [Member]
Net Sales:
Net sales	5,654	4,173	15,456	12,573
Operating Income (Loss):
Operating income (loss)	1,386	984	3,038	3,320
Capital Expenditures:
Capital expenditures	48	1,626	82	1,767
Depreciation and Amortization:
Depreciation and amortization	322	369	991	1,045
Corporate and Eliminations [Member]
Operating Income (Loss):
Operating income (loss)	(4,439)	(2,436)	(9,927)	(8,686)
Capital Expenditures:
Capital expenditures	(8)	181	610	383
Depreciation and Amortization:
Depreciation and amortization	$ 281	$ 314	$ 843	$ 919

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Note 3 - Segment Reporting Information - Identifiable Assets by Segment (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Jun. 30, 2016
Identifiable assets	$ 255,916	$ 195,560
Corporate and Eliminations [Member]
Identifiable assets	7,884	38,554
Lighting Segment [Member]
Identifiable assets	187,147	95,168
Graphics Segment [Member]
Identifiable assets	32,151	33,490
Technology Segment [Member]
Identifiable assets	$ 28,734	$ 28,348

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Note 3 - Segment Reporting Information - Inter-segment Revenues (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016
Net sales	$ 78,156	$ 70,740	$ 247,973	$ 241,352
Lighting Segment [Member]
Net sales	56,039	49,331	176,578	168,007
Graphics Segment [Member]
Net sales	16,463	17,236	55,939	60,772
Technology Segment [Member]
Net sales	5,654	4,173	15,456	12,573
Intersegment Eliminations [Member] | Lighting Segment [Member]
Net sales	442	715	1,929	2,143
Intersegment Eliminations [Member] | Graphics Segment [Member]
Net sales	216	275	1,028	1,281
Intersegment Eliminations [Member] | Technology Segment [Member]
Net sales	$ 8,715	$ 8,920	$ 25,846	$ 27,236

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Note 4 - Earnings Per Common Share (Details Textual) - shares	3 Months Ended			9 Months Ended
	Mar. 31, 2017	Mar. 31, 2016		Mar. 31, 2017		Mar. 31, 2016
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount		1,032,250		1,683,883		1,391,300
Incremental Common Shares Attributable to Dilutive Effect of Share-based Payment Arrangements	0	620,000	[1]	535,000	[1]	576,000	[1]

[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.

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Note 4 - Earnings Per Common Share - Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended			9 Months Ended
		Mar. 31, 2017	Mar. 31, 2016		Mar. 31, 2017		Mar. 31, 2016
BASIC EARNINGS PER SHARE
Net income		$ (531)	$ 522		$ 2,304		$ 8,054
Weighted average shares outstanding during the period, net of treasury shares (a) (in shares)	[1]	25,155,000	24,807,000		25,056,000		24,648,000
Weighted average vested units and shares outstanding (in shares)		260,000	251,000		253,000		245,000
Weighted average shares outstanding (in shares)		25,452,000	25,080,000		25,346,000		24,918,000
Basic earnings (loss) per share (in dollars per share)		$ (0.02)	$ 0.02		$ 0.09		$ 0.32
DILUTED EARNINGS PER SHARE
Net income		$ (531)	$ 522		$ 2,304		$ 8,054
Basic (in shares)		25,452,000	25,080,000		25,346,000		24,918,000
Weighted average stock warrants outstanding (in shares)					28,000
Effect of dilutive securities (b): Impact of common shares to be issued under stock incentive plans, and contingently issuable shares, if any (in shares)		0	620,000	[2]	535,000	[2]	576,000	[2]
Weighted average shares outstanding (c) (in shares)	[3]	25,452,000	25,700,000		25,909,000		25,494,000
Basic earnings (loss) per share (in dollars per share)		$ (0.02)	$ 0.02		$ 0.09		$ 0.32
Restricted Stock Units (RSUs) [Member]
BASIC EARNINGS PER SHARE
Weighted average vested units and shares outstanding (in shares)		37,000	22,000		37,000		25,000

[1] Includes shares accounted for like treasury stock included in the Company's non-qualified deferred compensation plan. (See Note 10.)

[2] 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.

[3] Options to purchase 1,032,250 common shares at March 31, 2016, and options to purchase 1,683,883 common shares and 1,391,300 common shares at March 31, 2017 and 2016, respectively were not included in the computation of the three month and nine month periods for diluted earnings per share, respectively, because the exercise price was greater than the average fair market value of the common shares. For the three months ended March 31, 2017, the effect of dilutive securities was not included in the calculation of diluted earnings per share because there was a net operating loss for the period.

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Note 5 - Inventories - Inventories (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Jun. 30, 2016
Inventories:
Raw materials	$ 31,817	$ 28,979
Work-in-process	3,323	4,418
Finished goods	13,320	10,744
Total Inventories	$ 48,460	$ 44,141

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Note 6 - Accrued Expenses - Accrued Expenses (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Jun. 30, 2016	Mar. 31, 2016	Jun. 30, 2015
Accrued Expenses:
Compensation and benefits	$ 7,540	$ 11,983
Customer prepayments	1,227	1,053
Accrued sales commissions	2,275	2,792
Accrued warranty	7,534	5,069	$ 4,820	$ 3,408
Other accrued expenses	5,304	4,444
Total Accrued Expenses	$ 23,880	$ 25,341

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Note 7 - Goodwill and Other Intangible Assets (Details Textual)		1 Months Ended	9 Months Ended
	Mar. 01, 2017 USD ($)	Mar. 31, 2017 USD ($)	Mar. 31, 2017 USD ($)	Feb. 21, 2017 USD ($)	Jun. 30, 2016 USD ($)
Number of Reporting Units			3
Goodwill		$ 58,376,000	$ 58,376,000		$ 10,508,000
Finite-Lived Intangible Assets, Gross		55,335,000	55,335,000		22,052,000
Intangible Assets, Indefinite-lived, Amount of Fair Value in Excess of Carrying Amount	$ 15,200,000
Intangible Assets, Indefinite-lived, Percentage of Fair Value in Excess of Carrying Amount	445.00%
Impairment of Intangible Assets, Indefinite-lived (Excluding Goodwill)	$ 0
Customer Relationships [Member]
Finite-Lived Intangible Assets, Gross		35,563,000	$ 35,563,000		9,316,000
Atlas Lighting Products, Inc. [Member]
Goodwill				$ 47,868,000
Lighting Segment [Member]
Number of Reporting Units			1
Good will Impairment Testing Value Above Carrying Value		$ 60,000,000	$ 60,000,000
Good will Impairment Testing Percent Value Above Carrying Value		80.00%	80.00%
Goodwill		$ 48,003,000	$ 48,003,000		135,000
Graphics Segment [Member]
Number of Reporting Units			1
Good will Impairment Testing Value Above Carrying Value		$ 4,200,000	$ 4,200,000
Good will Impairment Testing Percent Value Above Carrying Value		423.00%	423.00%
Goodwill		$ 1,165,000	$ 1,165,000		1,165,000
Graphics Segment [Member] | Customer Relationships [Member]
Finite-Lived Intangible Assets, Gross	$ 479,000
Impairment of Intangible Assets, Finite-lived		479,000
Technology Segment [Member]
Good will Impairment Testing Value Above Carrying Value		$ 23,200,000	$ 23,200,000
Good will Impairment Testing Percent Value Above Carrying Value		95.00%	95.00%
Goodwill		$ 9,208,000	$ 9,208,000		$ 9,208,000

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Note 7 - Goodwill and Other Intangible Assets - Goodwill (Details) - USD ($) $ in Thousands	9 Months Ended
	Mar. 31, 2017	Jun. 30, 2016
Goodwill, net	$ 58,376	$ 10,508
Lighting Segment [Member]
Goodwill	82,781	34,913
Accumulated impairment losses	(34,778)	(34,778)
Goodwill, net	48,003	135
Goodwill acquired	47,868
Graphics Segment [Member]
Goodwill	28,690	28,690
Accumulated impairment losses	(27,525)	(27,525)
Goodwill, net	1,165	1,165
Goodwill acquired
Technology Segment [Member]
Goodwill	11,621	11,621
Accumulated impairment losses	(2,413)	(2,413)
Goodwill, net	9,208	9,208
Goodwill acquired
All Other Category [Member]
Goodwill	123,092	75,224
Accumulated impairment losses	(64,716)	(64,716)
Goodwill, net	58,376	$ 10,508
Goodwill acquired	$ 47,868

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Note 7 - Goodwill and Other Intangible Assets - Other Intangible Assets (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Jun. 30, 2016
Amortized intangible assets, gross	$ 55,335	$ 22,052
Accumulated amortization	19,898	19,888
Amortized intangible assets, net	35,437	2,164
Indefinite-lived intangible assets, gross	3,422	3,422
Total other intangible assets, gross	58,757	25,474
Other Intangible Assets, net	38,859	5,586
Trademarks and Trade Names [Member]
Indefinite-lived intangible assets, gross	3,422	3,422
Customer Relationships [Member]
Amortized intangible assets, gross	35,563	9,316
Accumulated amortization	7,438	7,581
Amortized intangible assets, net	28,125	1,735
Patents [Member]
Amortized intangible assets, gross	338	338
Accumulated amortization	180	154
Amortized intangible assets, net	158	184
Technology-Based Intangible Assets [Member]
Amortized intangible assets, gross	16,066	11,228
Accumulated amortization	11,098	10,989
Amortized intangible assets, net	4,968	239
Trade Names [Member]
Amortized intangible assets, gross	2,658	460
Accumulated amortization	472	460
Amortized intangible assets, net	2,186
Noncompete Agreements [Member]
Amortized intangible assets, gross	710	710
Accumulated amortization	710	704
Amortized intangible assets, net		$ 6

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Note 7 - Goodwill and Other Intangible Assets - Amortization Expense of Other Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016
Amortization expense of other intangible assets	$ 359	$ 126	$ 567	$ 379

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Note 7 - Goodwill and Other Intangible Assets - Future Amortization Expense (Details) $ in Thousands	Mar. 31, 2017 USD ($)
2017	$ 1,486
2018	2,761
2019	2,761
2020	2,687
2021	2,683
After 2021	$ 23,587

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Note 8 - Revolving Line of Credit and Long-term Debt (Details Textual) - USD ($)	1 Months Ended	12 Months Ended
	Feb. 28, 2017	Mar. 31, 2018	Mar. 31, 2017	Feb. 21, 2017	Feb. 20, 2017
Line of Credit Facility, Maximum Borrowing Capacity				$ 100,000,000
Long-term Line of Credit			$ 55,000,000
Line of Credit Facility, Remaining Borrowing Capacity			45,000,000
Debt Issuance Costs, Line of Credit Arrangements, Net			$ 199,000
London Interbank Offered Rate (LIBOR) [Member] | Scenario, Forecast [Member]
Debt Instrument, Basis Spread on Variable Rate		1.75%
London Interbank Offered Rate (LIBOR) [Member] | Minimum [Member]
Debt Instrument, Basis Spread on Variable Rate	1.25%
London Interbank Offered Rate (LIBOR) [Member] | Maximum [Member]
Debt Instrument, Basis Spread on Variable Rate	2.50%
UNITED STATES
Line of Credit Facility, Maximum Borrowing Capacity				$ 100,000,000	$ 30,000,000
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage	0.15%

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Note 9 - Cash Dividends (Details Textual) - USD ($)	9 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Apr. 30, 2017
Payments of Ordinary Dividends, Common Stock	$ 3,772,000	$ 2,959,000
Dividends Accrued	$ 24,120	$ 7,860
Subsequent Event [Member]
Quarterly Indicated Per Share Dividend Rate			$ 0.05
Annual Indicated per Share Dividend Rate			$ 0.20

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Note 10 - Equity Compensation (Details Textual)		3 Months Ended		9 Months Ended		12 Months Ended		48 Months Ended
	Feb. 21, 2017 shares	Mar. 31, 2017 USD ($) $ / shares shares	Mar. 31, 2016 USD ($) shares	Mar. 31, 2017 USD ($) $ / shares shares	Mar. 31, 2016 USD ($) $ / shares shares	Jun. 30, 2016 USD ($) shares	Jun. 30, 2015 shares	Dec. 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term				7 years 146 days	6 years 292 days	6 years 219 days	6 years 36 days
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant | shares		1,669,003		1,669,003
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number | shares		3,631,155	3,043,565	3,631,155	3,043,565	2,976,490	2,677,436
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number | shares		1,423,528	1,362,810	1,423,528	1,362,810
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized		$ 3,508,348		$ 3,508,348
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition				2 years
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | shares				1,256,623	1,026,800
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price | $ / shares				$ 10.67	$ 9.39
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value | $ / shares				$ 3.71	$ 3.64
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Remaining Contractual Term				5 years 109 days	4 years 109 days
Share Based Compensation Valuation Assumptions Expected Forfeiture Rate		3.30%
Stock or Unit Option Plan Expense		$ 510,851	$ 360,952	$ 1,806,860	$ 2,191,659
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Number | shares		3,148,352		3,148,352
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Weighted Average Exercise Price | $ / shares		$ 9.20		$ 9.20
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Aggregate Intrinsic Value		$ 4,515,257		$ 4,515,257
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Exercisable, Weighted Average Remaining Contractual Term				7 years 73 days
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period, Intrinsic Value				$ 1,094,696	1,474,444
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested in Period, Aggregate Grant Date Fair Value				2,260,014	1,149,022
Proceeds from Stock Options Exercised				2,401,000	3,604,000
Employee Service Share-based Compensation, Tax Benefit from Disqualifying Dispositions of Stock Options				138,793	133,172
Employee Service Share-based Compensation, Tax Benefit from Exercise of Stock Options				72,399
Reduction of Federal Income Taxes Payable Related To Stock Option Exercise				465,521	518,515
Increase (Decrease) In Common Stock Related To Stock Option Exercise				138,793	133,172
Reduction of Income Tax Expense Related to Stock Option Exercises				109,140	95,543
Reduction of Deferred Tax Asset Related to Stock Option Exercises				$ 495,175	$ 556,144
Share-based Compensation Arrangement by Share-based Payment Award, Shares Issued in Period | shares				31,782	17,240
Stock Issued During Period, Value, Share-based Compensation, Gross				$ 331,000	$ 168,000
Deferred Compensation Plan, Number of Participants		29		29
Treasury Stock, Shares | shares		255,119		255,119		228,103
Treasury Stock, Value		$ 2,437,880		$ 2,437,880		$ 2,167,717
Employee Salary Deferrals or Company Contributions [Member]
Treasury Stock, Value, Acquired, Cost Method				$ 446,251	$ 316,900
Treasury Stock, Shares, Acquired | shares				45,335	32,696
Excluding Tax Effect of Disqualified Dispositions [Member]
Proceeds from Stock Options Exercised				$ 2,612,578	$ 3,737,233
Atlas Lighting Products, Inc. [Member]
Number of Stock Warrants Issued | shares	200,000	200,000
Class of Warrant or Right, Outstanding | shares		200,000		200,000
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares		$ 9.95		$ 9.95
Class of Warrant or Right, Exercise Price of Warrants or Rights, Fair value | $ / shares		$ 2.87		$ 2.87
Class of Warrant or Right, Remaining Contractual Life		4 years 328 days
Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term				10 years
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price | $ / shares				$ 11.06	$ 11.87
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value | $ / shares				$ 3.83	$ 4.52
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Remaining Contractual Term				10 years	9 years 328 days
Share Based Compensation Valuation Assumptions Expected Forfeiture Rate								3.50%
Treasury Stock Acquired, Repurchase Authorization, Shares Expected | shares		53,000		53,000
Minimum [Member]
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price | $ / shares				$ 9.48	$ 8.84
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value | $ / shares				$ 3.22	$ 3.28
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Remaining Contractual Term				9 years 109 days	9 years 109 days
Share Based Compensation Valuation Assumptions Expected Forfeiture Rate								2.00%
Treasury Stock Acquired, Repurchase Authorization, Shares Expected | shares		48,000		48,000
Restricted Stock Units (RSUs) [Member]
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized		$ 752,231		$ 752,231
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition				3 years 30 days
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number | shares		135,585	65,500	135,585	65,500	62,500
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value | $ / shares				$ 10.84	$ 9.39
Share Based Compensation Valuation Assumptions Expected Forfeiture Rate				3.40%	3.30%
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Number | shares		130,316		130,316
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | shares				96,210	72,000
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period				4 years
Dividends				$ 24,120	$ 7,860
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Outstanding, Weighted Average Remaining Contractual Terms				6 years 73 days	9 years 91 days
Allocated Share-based Compensation Expense		$ 93,905	$ 30,387	$ 486,102	$ 350,369
Sharebased Compensation Arrangement By Sharebased Payment Award Equity Other Than Options Expected To Vest Outstanding Number | shares			63,369		63,369
Annually [Member] | Performance Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage				33.30%
Non-Employee Directors [Member] | Each Ninety Days [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage				25.00%
Employees [Member] | Annually [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage				25.00%
The 2012 Stock Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Additional Shares Authorized | shares				1,600,000
Share-based Compensation Arrangement by Share-based Payment Award, Fungible Share Ratio				2.5

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Note 10 - Equity Compensation - Weighted Average Assumptions Were Used for the Warrants (Details) - Warrant [Member]	3 Months Ended
	Mar. 31, 2017
Dividend yield	2.01%
Expected volatility	39.00%
Risk-free interest rate	1.80%
Expected life (in yrs.) (Year)	4 years 182 days

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Note 10 - Equity Compensation - Weighted Average Assumptions Used to Develop the Fair Value of Stock Options (Details)	3 Months Ended		9 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016
Dividend yield	1.93%	1.72%	1.85%	1.29%
Expected volatility	41.00%	43.00%	42.00%	44.00%
Risk-free interest rate	1.92%	1.46%	1.31%	1.66%
Expected life (Year)	6 years 73 days	6 years	6 years 36 days	6 years

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Note 10 - Equity Compensation - Stock Options (Details) - USD ($)	9 Months Ended		12 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Jun. 30, 2016	Jun. 30, 2015
Outstanding (in shares)	2,976,490	2,677,436	2,677,436
Outstanding (in dollars per share)	$ 8.97	$ 8.85	$ 8.85
Outstanding (Year)	7 years 146 days	6 years 292 days	6 years 219 days	6 years 36 days
Outstanding	$ 4,546,991	$ 10,448,456	$ 8,338,974	$ 4,914,601
Granted (in shares)	1,256,623	1,026,800
Granted (in dollars per share)	$ 10.67	$ 9.39
Forfeitures (in shares)	(161,812)	(150,800)
Forfeitures (in dollars per share)	$ 16.17	$ 15.73
Exercised (in shares)	(440,146)	(509,871)
Exercised (in dollars per share)	$ 7.39	$ 7.33
Outstanding (in shares)	3,631,155	3,043,565	2,976,490	2,677,436
Outstanding (in dollars per share)	$ 9.43	$ 8.95	$ 8.97	$ 8.85
Exercisable (in shares)	1,423,528	1,362,810
Exercisable (in dollars per share)	$ 8.99	$ 9.67
Exercisable (Year)	5 years 109 days	4 years 109 days
Exercisable	$ 2,912,714	$ 4,741,694

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Note 10 - Equity Compensation - Summary of Unvested Stock Options (Details) - $ / shares	9 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Unvested (in shares)	1,663,505
Unvested (in dollars per share)	$ 3.39
Granted (in shares)	1,256,623	1,026,800
Granted (in dollars per share)	$ 3.71	$ 3.64
Vested (in shares)	(685,751)
Vested (in dollars per share)	$ 3.30
Forfeited (in shares)	(26,750)
Forfeited (in dollars per share)	$ 3.50
Unvested (in shares)	2,207,627
Unvested (in dollars per share)	$ 3.60

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Note 10 - Equity Compensation - Summary of Restricted Stock Units Activity (Details) - Restricted Stock Units (RSUs) [Member] - $ / shares	9 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Unvested (in shares)	62,500
Unvested (in dollars per share)	$ 9.39
Awarded (in shares)	96,210	72,000
Awarded (in dollars per share)	$ 10.84
Shares Issued (in shares)	(23,125)
Shares Issued (in dollars per share)	$ 9.71
Unvested (in shares)	135,585	65,500
Unvested (in dollars per share)	$ 10.36

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Note 11 - Supplemental Cash Flow Information - Supplemental Cash Flow Information (Details) - USD ($)	9 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Cash payments:
Interest	$ 66,000	$ 32,000
Income taxes	2,484,000	4,863,000
Stock Issued During Period, Value, Share-based Compensation, Gross	331,000	168,000
Issuance of stock warrants	$ 575,000

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Note 12 - Commitments and Contingencies (Details Textual) $ in Thousands	Mar. 31, 2017 USD ($)
Standby Letters of Credit [Member]
Letters of Credit Outstanding, Amount	$ 0

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Note 13 - Severance Costs (Details Textual) - USD ($)	9 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Severance Costs	$ 222,000	$ 401,000

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Note 13 - Severance Costs - Accrued Severance Liability Activity (Details) - USD ($) $ in Thousands	9 Months Ended		12 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Jun. 30, 2016
Balance at	$ 39	$ 379	$ 379
Accrual of expense	222	401	469
Payments	(235)	(544)	(742)
Adjustments		(67)	(67)
Balance at	$ 26	$ 169	$ 39

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Note 14 - Restructuring Costs (Details Textual) - USD ($)	3 Months Ended	9 Months Ended
	Mar. 31, 2017	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Restructuring and Related Cost, Expected Cost	$ 424,000	$ 424,000
Inventory Write-down		981,000	$ 1,351,000
Gain (Loss) on Disposition of Property Plant Equipment		1,361,000
Restructuring Charges		1,386,000
Impairment of Long-Lived Assets Held-for-use		354,000
Machinery and Equipment at the Kansas City and Beaverton Facilities [Member] | Lighting Segment [Member]
Impairment of Long-Lived Assets Held-for-use		322,000
Machinery and Equipment at the Kansas City and Beaverton Facilities [Member] | Technology Segment [Member]
Impairment of Long-Lived Assets Held-for-use		32,000
Closure of Kansas City Facility [Member]
Restructuring and Related Cost, Expected Cost				$ 944,000
Inventory Write-down		432,000
Gain (Loss) on Disposition of Property Plant Equipment	$ 1,361,000
Closure of Kansas City Facility [Member] | Machinery and Equipment at the Kansas City and Beaverton Facilities [Member]
Impairment of Long-Lived Assets Held-for-use		354,000
Consolidation of Beaverton, Oregon Facility into Other LSI Facilities [Member]
Restructuring Charges		363,000
Consolidation of Woonsocket, Rhode Island Manufacturing Operation into Its North Canton, Ohio Operation [Member]
Restructuring and Related Cost, Expected Cost				$ 464,000
Closure of Kansas City Facility and Consolidation of Beaverton, Oregon Facility Into Other LSI Facilities [Member] | Machinery and Equipment at the Kansas City and Beaverton Facilities [Member]
Impairment of Long-Lived Assets Held-for-use		$ 354,000

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Note 14 - Restructuring Costs - Summary of Restructuring Costs for the Period (Details) $ in Thousands	3 Months Ended	9 Months Ended
	Mar. 31, 2017 USD ($)	Mar. 31, 2017 USD ($)
Restructuring and related costs	$ (989)	$ 364
Total expected to be recognized in remainder of fiscal 2017	60	60
Total fiscal 2017 restructuring expenses	424	424
Severance and Other Termination Benefits [Member]
Restructuring and related costs	120	811
Total expected to be recognized in remainder of fiscal 2017
Total fiscal 2017 restructuring expenses	811	811
Lease Obligation Restructuring [Member]
Restructuring and related costs		213
Total expected to be recognized in remainder of fiscal 2017
Total fiscal 2017 restructuring expenses	213	213
Restructuring Impairment of Fixed Assets and Accelerated Depreciation [Member]
Restructuring and related costs	1	354
Total expected to be recognized in remainder of fiscal 2017
Total fiscal 2017 restructuring expenses	354	354
Facility Closing [Member]
Restructuring and related costs	(1,361)	(1,361)
Gain on Sale of Facility [Member]
Total expected to be recognized in remainder of fiscal 2017
Total fiscal 2017 restructuring expenses	(1,361)	(1,361)
Other Restructuring [Member]
Restructuring and related costs	251	347
Total expected to be recognized in remainder of fiscal 2017	60	60
Total fiscal 2017 restructuring expenses	$ 407	$ 407

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Note 14 - Restructuring Costs - Cost Incurred by Line Items on the Statement of Operations (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Mar. 31, 2017	Mar. 31, 2017
Restructuring and related costs, incurred cost	$ (989)	$ 364
Cost of Goods Sold [Member]
Restructuring and related costs, incurred cost	312	1,455
Operating Expense [Member]
Restructuring and related costs, incurred cost	$ (1,301)	$ (1,091)

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Note 14 - Restructuring Costs - Summary of Restructuring Costs by Segment (Details) $ in Thousands	3 Months Ended	9 Months Ended
	Mar. 31, 2017 USD ($)	Mar. 31, 2017 USD ($)
Restructuring and related costs, incurred cost	$ (989)	$ 364
Total expected to be recognized in remainder of fiscal 2017	60	60
Total Fiscal 2017 Restructuring Expenses	424	424
Corporate, Non-Segment [Member]
Restructuring and related costs, incurred cost	14	125
Total expected to be recognized in remainder of fiscal 2017
Total Fiscal 2017 Restructuring Expenses	125	125
Lighting Segment [Member] | Operating Segments [Member]
Restructuring and related costs, incurred cost	(1,187)	(417)
Total expected to be recognized in remainder of fiscal 2017
Total Fiscal 2017 Restructuring Expenses	(417)	(417)
Graphics Segment [Member] | Operating Segments [Member]
Restructuring and related costs, incurred cost	183	404
Total expected to be recognized in remainder of fiscal 2017	60	60
Total Fiscal 2017 Restructuring Expenses	464	464
Technology Segment [Member] | Operating Segments [Member]
Restructuring and related costs, incurred cost	1	252
Total expected to be recognized in remainder of fiscal 2017
Total Fiscal 2017 Restructuring Expenses	$ 252	$ 252

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Note 14 - Restructuring Costs - Liability Balances Related to Restructuring Costs (Details) $ in Thousands	9 Months Ended
	Mar. 31, 2017 USD ($)
Balance	$ 0
Restructuring Expense	1,386
Payments	(1,188)
Adjustments	(15)
Balance	183
Severance and Other Termination Benefits [Member]
Balance	0
Restructuring Expense	814
Payments	(748)
Adjustments	(15)
Balance	51
Lease Obligation Restructuring [Member]
Balance	0
Restructuring Expense	213
Payments	(86)
Adjustments
Balance	127
Other Restructuring [Member]
Balance	0
Restructuring Expense	359
Payments	(354)
Adjustments
Balance	$ 5

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Note 15 - Income Taxes - Reconciliation of Income Tax Rate (Details)	3 Months Ended		9 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016
Reconciliation to effective tax rate:
Provision for income taxes at the anticipated annual tax rate	32.00%	34.40%	30.40%	34.50%
Uncertain tax positions	4.20%	(2.90%)	(2.40%)	(0.50%)
Disqualifying dispositions	9.30%	(1.40%)	(3.60%)	(0.80%)
Deferred tax asset adjustment			(2.40%)
Other	(2.20%)	0.40%	0.70%	(0.90%)
Effective tax rate	43.30%	30.50%	22.70%	32.30%

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Note 16 - Acquisition (Details Textual) - USD ($)		1 Months Ended	3 Months Ended		9 Months Ended
	Feb. 21, 2017	Mar. 31, 2017	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016
Line of Credit Facility, Maximum Borrowing Capacity	$ 100,000,000
Business Combination, Acquisition Related Costs			$ 1,480,000		$ 1,480,000
Business Acquisition, Pro Forma Income (Loss) from Continuing Operations, Before Tax					6,230,000	$ 14,694,000
Atlas Lighting Products, Inc. [Member]
Business Combination, Consideration Transferred	97,500,000
Payments to Acquire Businesses, Gross	$ 96,900,000
Number of Stock Warrants Issued	200,000		200,000
Warrant Term	5 years
Business Combination, Inventory, Fair Value Adjustment	$ 228,000
Business Combination, Property, Plant, and Equipment, Fair Value Adjustment	526,000
Business Combination, Acquisition Related Costs			$ 1,480,000		1,480,000
Business Combination, Pro Forma Information, Revenue of Acquiree since Acquisition Date, Actual		$ 6,700,000
Business Combination, Pro Forma Information, Earnings or Loss of Acquiree since Acquisition Date, Actual		$ 1,000,000
Business Acquisition, Pro Forma Income (Loss) from Continuing Operations, Before Tax					$ 6,200,000
Atlas Lighting Products, Inc. [Member] | Line of Credit [Member]
Business Combination, Consideration Transferred, Liabilities Incurred	66,000,000
Atlas Lighting Products, Inc. [Member] | Warrant [Member]
Business Combination, Consideration Transferred, Equity Interests Issued and Issuable	$ 600,000

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Note 16 - Acquisition - Allocation of Purchase Consideration to Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Feb. 21, 2017	Jun. 30, 2016
Goodwill	$ 58,376		$ 10,508
Atlas Lighting Products, Inc. [Member]
Cash and Cash Equivalents		$ 1,815
Accounts Receivable		7,202
Inventories		8,490
Property, Plant, and Equipment		3,631
Other Assets		248
Intangible Assets		34,319
Liabilities Assumed		6,106
Identifiable net assets acquired		49,599
Goodwill		47,868
Net Purchase Consideration		$ 97,467

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Note 16 - Acquisition - Identified Intangible Assets Acquired (Details) - Atlas Lighting Products, Inc. [Member] $ in Thousands	Feb. 21, 2017 USD ($)
Intangible Assets Acquired	$ 34,319
Intangible Assets Acquired, Estimate Useful Life (Year)
Trade Names [Member]
Intangible Assets Acquired	$ 2,198
Intangible Assets Acquired, Estimate Useful Life (Year)	20 years
Technology-Based Intangible Assets [Member]
Intangible Assets Acquired	$ 4,838
Intangible Assets Acquired, Estimate Useful Life (Year)	10 years
Customer Relationships [Member]
Intangible Assets Acquired	$ 27,283
Intangible Assets Acquired, Estimate Useful Life (Year)	15 years

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Note 16 - Acquisition - Pro Forma Financial Information (Details) - USD ($) $ in Thousands	9 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Net Sales	$ 283,122	$ 287,176
Gross Profit	73,802	81,067
Operating Income	$ 6,230	$ 14,694