NOTE

– RESTRUCTURING COSTS

September 22, 2016,

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

December 31, 2016.

Total restructuring costs related to the closure of the Kansas City facility 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

$485,000

recorded in 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

$377,000

were recorded in fiscal

2017,

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

November 2016,

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

December 31, 2016.

The Company owns the facility in Woonsocket and expects to realize a gain when the facility is sold. The facility is presented on the balance sheet as an asset held for sale of

$1,463,000.

Total restructuring costs related to the consolidation of the Woonsocket facility are expected to be approximately

$500,000.

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 recorded in fiscal

2017:

	Total
	Fiscal 2017
(In thousands)	Restructuring
	Costs

Severance and other termination benefits	$	811
Lease obligation		213
Impairment of fixed assets and accelerated depreciation		354
Gain on sale of facility		(1,361	)
Other		395
Total	$	412

Impairment and accelerated depreciation expense of

$354,000

was recorded in fiscal

2017

related to machinery and equipment at the Kansas City and Beaverton facilities. There was

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:

	Total
	Fiscal 2017
(In thousands)	Restructuring
	Costs

Cost of Goods Sold	$	1,503
Operating Expenses		(1,091	)
Total	$	412

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

	Total
	Fiscal 2017
(In thousands)	Restructuring
	Expenses

Lighting Segment	$	(417	)
Graphics Segment		452
Technology Segment		252
Corporate and Eliminations		125
Total	$	412

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

$485,000

recorded during 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 June 3 0, 2017

Severance and termination benefits	$	--	$	811	$	(804	)	$	(7	)	$	--
Lease obligation		--		213		(128	)		--			85
Other		--		395		(395	)		--			--
Total	$	--	$	1,419	$	(1,327	)	$	(7	)	$	85

The above table does

not

include fixed asset impairment and accelerated depreciation expense of

$354,000

or the

$1,361,000

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

2017.

Refer to Note

for information regarding additional severance expenses that are

not

included in the restructuring costs identified in this footnote.