<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
----------------------------------
WASHINGTON, D.C. 20549
----------------------
FORM 10-K
---------
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE FISCAL YEAR ENDED JUNE 30, 1996.
OR
/ / 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
Securities Registered Pursuant to Section 12(b) of the Act:
None
Securities Registered Pursuant to Section 12(g) of the Act:
Common Shares
(No par value)
Indicate by check mark 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 check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
Aggregate market value of the voting stock held by non-affiliates of the
registrant at August 30, 1996 was approximately $131,622,000, based on a closing
price of $16.75. At August 30, 1996, 8,996,791 shares of no par value Common
Shares were issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
-----------------------------------
Portions of the Registrant's Proxy Statement filed with the Commission for its
1996 annual meeting are incorporated by reference in Part III, as specified.
<PAGE> 2
LSI INDUSTRIES INC.
1996 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Begins on
Page
----
PART I
<S> <C> <C>
ITEM 1 - BUSINESS.......................................................... 1
ITEM 2 - PROPERTIES........................................................ 2
ITEM 3 - LEGAL PROCEEDINGS................................................. 2
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS................................................... 3
PART II
ITEM 5 - MARKET FOR THE REGISTRANT'S COMMON EQUITY AND
RELATED SHAREHOLDERS' MATTERS............................. 3
ITEM 6 - SELECTED FINANCIAL DATA........................................... 3
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS....................... 3
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA....................... 3
ITEM 9 - DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE...................................... 4
PART III
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT................ 4
ITEM 11 - EXECUTIVE COMPENSATION............................................ 4
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT............................................ 4
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.................... 4
PART IV
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, REPORTS ON
FORM 8-K.................................................. 4
SIGNATURES .................................................................. 6
</TABLE>
i
<PAGE> 3
PART I
ITEM 1 - BUSINESS
The Company's two business segments are Lighting and Graphics. Sales by
continuing operations by segment are as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Lighting $ 93,208 $ 72,782 $56,159
Graphics 59,525 47,145 37,376
-------- -------- -------
Total $152,733 $119,927 $93,535
======== ======== =======
</TABLE>
The Lighting segment manufactures and sells outdoor, indoor, and
landscape lighting fixtures to the retail petroleum, commercial and industrial
markets. Additionally, this segment produces and markets menu boards to the
restaurant and other markets. The Lighting segment includes the operations of
LSI Lighting Systems Commercial and Petroleum Lighting divisions, Abolite
Lighting division, Greenlee Lighting, the LSI Metal Fabrication division, and
the LSI IMAGES division.
The Graphics segment manufactures and sells screen printed materials
and architectural graphic structures to the retail petroleum and other markets.
The Graphics segment includes the operations of SGI Integrated Graphics Systems
and the Insight Graphic Systems division.
See Note 3 of Notes to Consolidated Financial Statements beginning on
page S-13 of this Form 10-K for additional information on business segments.
The Company believes that it is a low-cost producer for its types of
products, and as such, is in a position to promote its product lines with
substantial marketing and sales activities.
The Company is not dependent on any one supplier for any of its
component parts.
The Company's sales are partially seasonal as installation of outdoor
lighting and graphic systems in the northern states lessens during the harshest
winter months. One customer, Chevron U.S.A. Inc. accounted for 12% of
consolidated net sales in 1996, 14% in 1995, and 13% in 1994. The Company had a
backlog of orders, believed by it to be firm, of $9.6 million and $13.8 million
at June 30, 1996 and 1995, respectively. All orders are scheduled to ship within
twelve months.
The Company has approximately 900 full-time and 200 temporary
employees. The Company has a comprehensive compensation and benefit program for
employees, including competitive wages, a discretionary bonus plan, a
profit-sharing plan and retirement plan, a 401(k) savings plan, a non-qualified
deferred compensation plan (for certain employees), a stock option plan, and
medical and dental insurance.
-1-
<PAGE> 4
The Company sells its products throughout the United States and Canada.
LSI Industries encounters strong competition in all markets served by
the Company's product lines. The Company has many competitors, some of which
have greater financial and other resources. The Company considers product
quality and performance, price, customer service, prompt delivery, and
reputation to be important competitive factors.
The Company has several product and process patents which it has
obtained in the normal course of business. The Company does not believe that
patent protection is critical to its business.
ITEM 2 - PROPERTIES
The Company has five facilities:
<TABLE>
<CAPTION>
Description Size Location Status
----------- ---- -------- ------
<S> <C> <C> <C>
1) LSI Corporate 225,000 sq. ft., Cincinnati, OH Owned
Headquarters, and including 38,000
lighting fixture sq. ft. of office
and graphics space
manufacturing
2) LSI pole manufac- 131,000 sq. ft. Cincinnati, OH Owned
turing and dry
powder-coat painting
3) LSI Metal Fabrication 96,000 sq. ft. Independence, KY Owned
and LSI Images manu- including 5,000
facturing and dry sq. ft. of office
powder-coat painting space
4) SGI headquarters, 251,000 sq. ft. Houston, TX Leased
screen printing including 25,000
manufacturing, and sq. ft. of office
architectural space and 67,000
graphics manufac- sq. ft. of outside
turing warehouse space
5) Greenlee office 33,000 sq. ft. Dallas, TX Leased
and manufacturing
</TABLE>
The Company considers these facilities adequate for its current level of
operations.
ITEM 3 - LEGAL PROCEEDINGS
None
-2-
<PAGE> 5
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the fourth quarter of the year
covered by this report.
PART II
-------
ITEM 5 - MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
SHAREHOLDERS' MATTERS
"Common Share Information" appears on page S-18 of this Form 10-K.
ITEM 6 - SELECTED FINANCIAL DATA
"Selected Financial Data" appears on page S-19 of this Form 10-K.
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" appears on pages S-1 through S-3 of this Form
10-K.
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<TABLE>
<CAPTION>
Begins
Index to Financial Statements on Page
-------
<S> <C>
Financial Statements:
Report of Independent Public Accountants S-4
Consolidated Income Statements for the years
ended June 30, 1996, 1995 and 1994 S-6
Consolidated Balance Sheets at June 30, 1996 and 1995 S-7
Consolidated Statements of Cash Flows for the
years ended June 30, 1996, 1995 and 1994 S-9
Consolidated Statements of Shareholders' Equity for
the years ended June 30, 1996, 1995 and 1994 S-10
Notes to Consolidated Financial Statements S-11
Financial Statement Schedules:
II - Valuation and Qualifying Accounts for the S-20
years ended June 30, 1996, 1995 and 1994
</TABLE>
Schedules other than those listed above are omitted for the reason(s)
that they are either not applicable or not required or because the
information required is contained in the financial statements or notes
thereto.
-3-
<PAGE> 6
ITEM 9 - DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None
PART III
--------
ITEMS 10, 11, 12 and 13 of Part III are incorporated by reference from the LSI
Industries Inc. Proxy Statement for its Annual Meeting of Shareholders to be
held November 14, 1996, as filed with the Commission pursuant to Regulation 14A.
PART IV
-------
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
(a) The following documents are filed as part of this report:
(1) Financial Statements
Appear as part of Item 8 of this Form 10-K.
(2) Financial Statement Schedules
Appear as part of Item 8 of this Form 10-K.
(3) Exhibit list - listing of exhibits required to be filed with Form 10-K
incorporated by reference to Exhibit(s) filed as part of:
Proxy-89 = Proxy statement for 1989 Annual Shareholders' Meeting
10K-89 = Annual Report on Form 10-K for the fiscal year ended
June 30, 1989
10K-95 = Annual Report on Form 10-K for the fiscal year ended
June 30, 1995
S-8 (95-1) = Form S-8 Registration Statement No. 33-64721 for the LSI
Industries Inc. 1995 Stock Option Plan
S-8 (95-2) = Form S-8 Registration Statement No. 33-64723 for the LSI
Industries Inc. 1995 Directors' Stock Option Plan
S-3 (96) = Form S-3 Registration Statement No. 33-65043
or filed herewith where so noted.
-4-
<PAGE> 7
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
Current
Form 10-K Report/ Exhibit
Exhibit No. Description of Exhibit Document Number
- ----------- ---------------------- -------- ------
<S> <C> <C> <C>
3.1 Articles of Incorporation of LSI Industries Inc. S-3 (96) 3.1
3.2 Code of Regulations of LSI Industries Inc. S-3 (96) 3.2
4 Instruments Defining the Rights of *
Security Holders
Management Compensatory Agreements
----------------------------------
10.1 LSI Industries Inc. Retirement Plan 10K-95 10.4
and Trust
10.2 1985 Stock Option Plan 10K-89 10.1
10.3 LSI Industries Inc. 1995 Stock Option Plan S-8 (95-1) 4.1
10.4 LSI Industries Inc. 1995 Directors' Stock
Option Plan S-8 (95-2) 4.1
10.5 LSI Industries Inc. Nonqualified Deferred Filed herewith
Compensation Plan, and Rabbi Trust
Agreement
11 Statement Re Computation of Per Filed herewith
Share Earnings
22 Subsidiaries of the Registrant Filed herewith
23 Consent of Independent Public Accountants (2) Filed herewith
24 Powers of Attorney (5) Filed herewith
27 Financial Data Schedule Filed herewith
<FN>
* The Company has no outstanding issue or indebtedness exceeding
10% of the Company's assets on a consolidated basis. A copy of
the instruments defining the right of security holders will be
furnished to the Commission upon request.
</TABLE>
(b) Form 8-K:
A report on Form 8-K was filed April 5, 1996 to report a change in the
Company's certifying accountant from Price Waterhouse LLP to Arthur Andersen LLP
effective March 29, 1996.
-5-
<PAGE> 8
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) 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.
September 4, 1996 BY: /s/ Robert J. Ready
- --------------------------------- -----------------------------------
Date Robert J. Ready
Chairman of the Board and President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title
- --------- -----
<S> <C>
/s/ Robert J. Ready Chairman of the Board and President
- --------------------------------- (Principal Executive Officer)
Robert J. Ready
/s/ Ronald S. Stowell Chief Financial Officer and Treasurer
- --------------------------------- (Principal Financial and Accounting Officer)
Ronald S. Stowell
*Michael J. Burke Director
- ---------------------------------
Michael J. Burke
*Allen L. Davis Director
- ---------------------------------
Allen L. Davis
*James P. Sferra Secretary; Executive Vice President
- --------------------------------- - Manufacturing; and Director
James P. Sferra
*John N. Taylor, Jr. Director
- ---------------------------------
John N. Taylor, Jr.
*Donald E. Whipple Director
- ---------------------------------
Donald E. Whipple
</TABLE>
*The undersigned, by signing his name hereto, executed this Annual Report on
Form 10-K on September 4, 1996, pursuant to Powers of Attorney executed by
the above named Directors of the Registrant and filed with the Securities and
Exchange Commission as Exhibit 25 hereto.
September 4, 1996 By: /s/ Ronald S. Stowell
- ------------------- -----------------------------
Date Attorney-in-Fact
-6-
<PAGE> 9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
SALES BY BUSINESS SEGMENT
(In thousands)
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- -------
<S> <C> <C> <C>
LIGHTING $ 93,208 $ 72,782 $56,159
GRAPHICS 59,525 47,145 37,376
-------- -------- -------
$152,733 $119,927 $93,535
======== ======== =======
</TABLE>
RESULTS OF OPERATIONS
1996 COMPARED TO 1995
Net sales of $152,733,000 for 1996 increased 27% over 1995 net sales of
$119,927,000 with Lighting segment sales increasing 28% and Graphics segment
sales increasing 26%. The Company experienced sales growth in both the
multi-site retail market and the commercial / industrial lighting market, and
had significant growth in its largest market, the petroleum / convenience store
market. One customer, Chevron U.S.A., accounted for 12% of net sales in 1996 and
14% of net sales in 1995. The Company believes that it continues to maintain a
good business relationship with this major customer; however, the level of total
sales is never assured in the future. The increase in net sales in 1996 was
primarily the result of increased volume. While sales prices were increased,
inflation did not have a significant impact on sales in 1996 as competitive
pricing pressures held price increases to a minimum.
Gross profit of $48,512,000, or 31.8% of net sales, increased over last
year's gross profit of $39,771,000 or 33.2% of net sales. The increase in amount
of gross profit is attributed primarily to the 27% increase in net sales. A
sales mix shift in the Company's Graphics segment to somewhat lower gross margin
programs (including an increased level of prototype image programs), lower
utilization of manufacturing capacity in the Graphics segment, and an increase
in lighting sales to the petroleum / convenience store market provided
influences that reduced the gross profit percentage. Selling and administrative
expenses increased to $35,101,000 from $29,509,000 primarily as a result of
increased sales volume, and were reduced to 23% of net sales in 1996 as compared
to 25% last year.
Interest expense decreased in 1996 from $459,000 to $344,000, primarily
as a result of the paydown of substantially all of the Company's outstanding
debt in February 1996 with a portion of the net proceeds from the Company's
public offering of common shares (see also LIQUIDITY AND CAPITAL RESOURCES).
Other expense consists primarily of loss on disposition of fixed assets, of
which there was a greater amount in 1995. The Company's effective tax rate
increased to 36.4% from 36.0% last year as a result of the increased provision
for state income taxes.
Income from continuing operations of $8,270,000 or $.98 per share
increased 34% over 1995 levels of $6,174,000 or $.79 per share as a result of
increased net sales and gross profit, partially offset by increased selling and
administrative expenses and an increased provision for income taxes. The
weighted average common shares outstanding increased 8.4% in 1996 to 8,456,000
shares from 7,802,000 shares in 1995 primarily as a result of the effect of the
1.2 million common shares issued in the Company's public offering in February
1996.
S-1
<PAGE> 10
The Company recorded a $1.5 million or $.18 per share charge to
Discontinued Operations in 1996 to increase the reserve for remaining
liabilities associated with its discontinued European operations. As discussed
in Note 9 to the financial statements, the Company had been involved in a
dispute with the Internal Revenue Service (IRS) in which the IRS proposed audit
adjustments to the Company's 1989 through 1992 federal income tax returns which
could have resulted in a payment of income taxes by the Company of approximately
$2.0 million, plus interest, which had been refunded to the Company with the
filing of its 1992 income tax return. The IRS questioned the tax treatment of
the loss associated with the discontinued operations, specifically as to whether
it should receive ordinary loss or capital loss treatment. The settlement
discussions with the IRS Appeals Division relating to the proposed audit
assessment were concluded in December 1995. An agreement was reached that
re-characterized a portion of the 1992 loss associated with discontinued
European operations as a long term capital loss. The agreement resulted in
payment of $1.7 million (composed of taxes and interest), and in the $1.5
million charge to discontinued operations.
Net income of $6.8 million or $.80 per share compares to last year's
net income of $6.2 million or $.79 per share. The change resulted from increased
income from continuing operations, partially reduced by the charge to
discontinued operations.
Certain recently issued accounting pronouncements will affect the
Company's future financial statements and/or disclosures. See Note 1 to these
financial statements for additional discussion.
1995 COMPARED TO 1994
Net sales of $119,927,000 increased 28% over 1994 sales of $93,535,000. Lighting
segment sales increased 30% with sales increases in all major markets served:
the petroleum / convenience store market, the multi-site retail market, and the
commercial / industrial lighting market. Graphics segment sales increased 26%,
primarily as a result of strong sales into the petroleum / convenience store
market. One customer, Chevron U.S.A., accounted for 14% of net sales in 1995 and
13% of net sales in 1994. The Company believes that it continues to maintain a
good business relationship with this major customer; however, the level of total
sales is never assured in the future. The increase in sales in 1995 was
primarily the result of increased volume. While sales prices were increased,
inflation did not have a significant impact on sales in 1995 as competitive
pricing pressures held price increases to a minimum.
Gross profit of $39,771,000, or 33.2% of net sales, increased over last year's
gross profit of $31,105,000 or 33.3% of net sales. The increase in amount of
gross profit is attributed primarily to the 28% increase in sales. Increased
sales volume caused some manufacturing inefficiencies, increased employment
levels and related training, and overtime and additional shifts in the first
half of the year. The Company experienced cost increases in several raw
materials and components from suppliers in the first half for which sales price
increases were implemented in the second half of the year. Selling and
administrative expenses of $29,509,000 increased from $23,965,000, but decreased
as a percentage of net sales to 25% from 26%, primarily as a result of increased
sales volume.
Interest expense increased in 1995 from $199,000 to $459,000 as a result of
increased average borrowings on the Company's revolving lines of credit and
long-term debt facilities in addition to increased effective borrowing rates.
Other expense consists primarily of losses on disposition of assets of $122,000
and $250,000 in 1995 and 1994, respectively. Income tax expense of
S-2
<PAGE> 11
$3,469,000 or 36% of income before taxes compares to tax expense of $2,461,000
or 37% last year. The increase in income tax expense is related primarily to the
increased taxable income.
Net income of $6,174,000 or $.79 per share increased from last year's net income
of $4,190,000 or $.55 per share as a result of increased sales and gross profit,
partially offset by increased selling and administrative expenses and an
increased provision for taxes. See additional comments regarding earnings per
share in LIQUIDITY AND CAPITAL RESOURCES.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1996 the Company had working capital of $36,146,000,
compared to $17,788,000 at June 30, 1995. The ratio of current assets to current
liabilities increased to 2.66 to 1 from 1.74 to 1. The increased working capital
is primarily attributed to increases in cash and cash equivalents, accounts
receivable, inventories, and other current assets, and to reductions in accrued
expenses and current maturities of long-term debt.
The Company generated $19,581,000 in net proceeds from a public
offering of 1.2 million common shares in February 1996. The Company used a
portion of the net proceeds to repay all outstanding indebtedness under its
revolving lines of credit and its term loan facility with its banks. The
significant increase in cash and cash equivalents is directly related to this
public offering.
The Company generated $406,000 of cash from operating activities in
1996 as compared to $1,818,000 in 1995. The Company used more cash in fiscal
1996 primarily because of the payment of approximately $1.7 million associated
with the settlement of the IRS audit related to the discontinued European
operations. In 1996, the increased level of business resulted in increases in
accounts receivable and inventories. As of June 30, 1996, the Company's days
sales outstanding were approximately 59 days as compared to 62 days at year end
last year.
In addition to cash and cash equivalents (high grade, short-term
investments), the Company's primary source of liquidity continues to be its
lines of credit. The Company has two revolving lines of credit totaling $13
million, all of which is available as of August 21, 1996. The Company believes
that the total of available lines of credit plus cash flows from operating
activities is adequate for the Company's 1997 operational and capital
expenditure needs. The Company is in compliance with all of its loan covenants.
Capital expenditures of $3.4 million in 1996 compare to $5.1 million in 1995.
Spending in fiscal year 1996 is primarily related to manufacturing equipment and
process improvements. Capital expenditures of $4 million are planned for 1997.
In August 1996, the Board of Directors declared regular quarterly and
special year-end cash dividends of $.04 per share each to be paid September 17,
1996 to shareholders of record on September 10, 1996. During fiscal 1996, the
Company paid cash dividends each quarter.
The Company continues to seek opportunities to invest in new products
and markets, and in acquisitions which fit its strategic growth plans in the
lighting and graphics markets. The Company believes that adequate financing for
any such investments or acquisitions will be available through future borrowings
due to the enhanced financial condition of the Company after the public offering
or through the issuance of common or preferred shares in payment for acquired
businesses.
S-3
<PAGE> 12
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------
To the Board of Directors and Shareholders of LSI Industries Inc.:
We have audited the accompanying consolidated balance sheet of LSI
Industries Inc. (an Ohio corporation) and subsidiaries as of June 30, 1996, and
the related consolidated statements of income, shareholders' equity and cash
flows for the year then ended. These financial statements and the schedule
referred to below are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedule based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of LSI Industries Inc.
and subsidiaries as of June 30, 1996, and the results of their operations and
their cash flows for the year then ended in conformity with generally accepted
accounting principles.
Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the index to the
financial statements is presented for purposes of complying with the Securities
and Exchange Commissions rules and is not part of the basic financial
statements. The information in this schedule as of and for the year ended June
30, 1996 has been subjected to the auditing procedures applied in the audit of
the basic financial statements and, in our opinion, fairly states in a material
respects the financial data required to be set forth therein in relation to the
basic statements taken as a whole.
/s/ Arthur Andersen LLP
Arthur Andersen LLP
Cincinnati, Ohio
August 14, 1996
S-4
<PAGE> 13
REPORT OF INDEPENDENT ACCOUNTANTS
---------------------------------
To the Board of Directors and Shareholders of
LSI Industries Inc.
In our opinion, the accompanying consolidated financial statements listed in the
index appearing under ITEM 8 of this Form 10-K present fairly, in all material
respects, the financial position of LSI Industries Inc. and its subsidiaries at
June 30, 1995, and the results of their operations and their cash flows for each
of the two years in the period ended June 30, 1995, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audits to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
Cincinnati, Ohio
August 18, 1995
S-5
<PAGE> 14
LSI INDUSTRIES INC.
CONSOLIDATED INCOME STATEMENTS
FOR THE YEARS ENDED JUNE 30, 1996, 1995, AND 1994
(In thousands, except per share)
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Net sales $ 152,733 $119,927 $93,535
Cost of products sold 104,221 80,156 62,430
--------- -------- -------
Gross profit 48,512 39,771 31,105
Selling and administrative expenses 35,101 29,509 23,965
--------- -------- -------
Operating income 13,411 10,262 7,140
Interest expense 344 459 199
Other (income) expense 62 160 290
--------- -------- -------
Income from continuing operations
before income taxes 13,005 9,643 6,651
Income tax expense 4,735 3,469 2,461
--------- -------- -------
Income from continuing operations 8,270 6,174 4,190
Discontinued operations (1,500) -- --
--------- -------- -------
Net income $ 6,770 $ 6,174 $ 4,190
========= ======== =======
Net income (loss) per share
Continuing operations $ .98 $ .79 $ .55
Discontinued operations (.18) -- --
--------- -------- -------
$ .80 $ .79 $ .55
========= ======== =======
Average shares outstanding (see Note 6) 8,456 7,802 7,656
<FN>
The accompanying notes are an
integral part of these financial statements.
</TABLE>
S-6
<PAGE> 15
LSI INDUSTRIES INC.
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1996 AND 1995
(in thousands)
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 11,138 $ 2,124
Accounts receivable, less allowance
for doubtful accounts of $358 and $242,
respectively 24,825 19,273
Inventories 19,660 18,584
Refundable income taxes 345 438
Other current assets 1,901 1,397
-------- --------
Total current assets 57,869 41,816
Property, Plant and Equipment, at cost
Land 2,741 2,512
Buildings 9,682 8,967
Machinery and equipment 19,082 16,900
-------- --------
31,505 28,379
Less accumulated depreciation (11,178) (8,981)
-------- --------
Net property, plant and equipment 20,327 19,398
Goodwill 1,300 1,339
-------- --------
$ 79,496 $ 62,553
======== ========
<FN>
The accompanying notes are an
integral part of these financial statements.
</TABLE>
S-7
<PAGE> 16
LSI INDUSTRIES INC.
CONSOLIDATED BALANCE SHEETS (CONTINUED)
JUNE 30, 1996 AND 1995
(in thousands)
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
LIABILITIES & SHAREHOLDERS' EQUITY
Current Liabilities
Current maturities of long-term debt $ 180 $ 842
Accounts payable 10,855 10,641
Accrued expenses 10,688 12,545
------- -------
Total current liabilities 21,723 24,028
Long-Term Debt 1,382 7,257
Other Long-Term Liabilities -- 380
Deferred Income Taxes 1,654 1,435
Shareholders' Equity
Preferred shares, without par value;
Authorized 1,000,000 shares, none issued -- --
Common shares, without par value;
Authorized 30,000,000 shares;
Outstanding 8,964,491 and 7,554,229
shares, respectively
(see Note 6) 28,082 7,915
Retained earnings 26,655 21,538
------- -------
Total shareholders' equity 54,737 29,453
------- -------
$79,496 $62,553
======= =======
<FN>
The accompanying notes are an
integral part of these financial statements.
</TABLE>
S-8
<PAGE> 17
LSI INDUSTRIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended June 30, 1996, 1995 and 1994
(In thousands)
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 6,770 $ 6,174 $ 4,190
Non-cash items included in income
Depreciation and amortization 2,456 2,074 1,794
Deferred income taxes (129) 85 (234)
Loss on disposition of fixed assets 23 122 250
Change in
Accounts receivable (5,552) (4,897) (2,744)
Inventories (1,076) (7,505) (3,481)
Refundable income taxes 93 (438) 134
Accounts payable 214 2,683 2,087
Accrued expenses and other (2,069) 3,590 5,833
Change in liability for discontinued operations (324) (70) (245)
-------- ------- -------
Net cash flows from operating activities 406 1,818 7,584
-------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant, and equipment (3,392) (5,117) (4,609)
Proceeds from sale of fixed assets 23 12 13
-------- ------- -------
Net cash flows from investing activities (3,369) (5,105) (4,596)
-------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Decrease in lines of credit -- -- (1,312)
Payment of long-term debt (6,537) (451) (3,957)
Increase in long-term debt -- 4,950 3,600
Cash dividends paid (1,653) (1,078) (234)
Exercise of stock options 586 376 370
Proceeds from public offering of shares 19,581 -- --
-------- ------- -------
Net cash flows from financing activities 11,977 3,797 (1,533)
-------- ------- -------
Increase in cash and cash equivalents 9,014 510 1,455
Cash and cash equivalents at beginning of year 2,124 1,614 159
-------- ------- -------
Cash and cash equivalents at end of year $ 11,138 $ 2,124 $ 1,614
======== ======= =======
Supplemental cash flow information
Interest paid $ 924 $ 438 $ 210
Income taxes paid $ 5,588 $ 5,831 $ 204
<FN>
The accompanying notes are an
integral part of these financial statements.
</TABLE>
S-9
<PAGE> 18
LSI INDUSTRIES INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
For the years ended June 30, 1996, 1995, and 1994
(In thousands)
<TABLE>
<CAPTION>
Common Shares
----------------
Number of Retained
Shares Amount Earnings Total
--------- ------ --------- ------
<S> <C> <C> <C> <C>
BALANCE AT JUNE 30, 1993 7,367 $ 7,169 $ 12,486 $ 19,655
Net income -- -- 4,190 4,190
Stock options exercised 100 370 -- 370
Dividend - $.03 per share -- -- (234) (234)
----- ------- -------- --------
BALANCE AT JUNE 30, 1994 7,467 7,539 16,442 23,981
Net income -- -- 6,174 6,174
Stock options exercised 87 376 -- 376
Dividends - $ .15 per share -- -- (1,078) (1,078)
----- ------- -------- --------
BALANCE AT JUNE 30, 1995 7,554 7,915 21,538 29,453
Net income -- -- 6,770 6,770
Public offering of shares 1,233 19,581 -- 19,581
Stock options exercised 177 586 -- 586
Dividend - $.21 per share -- -- (1,653) (1,653)
----- ------- -------- --------
BALANCE AT JUNE 30, 1996 8,964 $28,082 $ 26,655 $ 54,737
===== ======= ======== ========
<FN>
The accompanying notes are an integral part
of these financial statements.
</TABLE>
S-10
<PAGE> 19
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CONSOLIDATION:
The consolidated financial statements include the accounts of LSI Industries
Inc. and its subsidiaries, all of which are wholly owned. All significant
intercompany transactions have been eliminated.
RECLASSIFICATION:
Certain reclassifications have been made to prior year amounts in order to be
consistent with the presentation for the current year.
USE OF ESTIMATES:
The preparation of the financial statements in conformity with generally
accepted accounting principles requires the Company to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
REVENUE RECOGNITION:
Revenue is recognized when the customer accepts title and the resultant risks
and rewards of ownership. Generally this occurs upon shipment of goods or
shortly thereafter. Amounts received from customers prior to the recognition of
revenue are accounted for as customer pre-payments under accrued expenses.
CASH AND CASH EQUIVALENTS:
The cash balance includes cash and cash equivalents which have original
maturities of less than three months.
INVENTORIES:
Inventories are stated at the lower of cost or market. Cost is determined on the
first-in, first-out basis.
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 31 - 39 years
Machinery and equipment 3 - 10 years
S-11
<PAGE> 20
GOODWILL:
The excess of cost over fair value of assets acquired ("goodwill") is amortized
over a forty year period. As of June 30, 1996 and 1995, accumulated amortization
of goodwill was $287,000 and $248,000, respectively. The Company periodically
evaluates goodwill and other long-lived assets for permanent impairment based
upon anticipated cash flows. To date no impairments have been recorded, nor are
any anticipated.
FINANCIAL INSTRUMENTS:
The Company has financial instruments consisting primarily of cash and cash
equivalents, 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 variable, market-driven interest rates. The Company has
no financial instruments with off balance sheet risk.
EMPLOYEE BENEFIT PLANS:
The Company has a defined contribution retirement plan and a discretionary
profit sharing plan covering substantially all of its employees, and a
non-qualified deferred compensation plan covering certain employees. The costs
of employee benefit plans are charged to expense and funded annually. Total
costs relating to continuing operations were $1,378,000 in 1996, $1,004,000 in
1995, and $942,000 in 1994.
INCOME TAXES:
Deferred income taxes are provided on items reported in income in different
periods for financial reporting and tax purposes.
NET INCOME PER COMMON SHARE:
The computation of net income per common share is based on the weighted average
common shares outstanding for the period, including Common Share equivalents
(dilutive stock options). Dilutive stock options amounted to 360,000 shares in
1996, 287,000 shares in 1995, and 236,000 shares in 1994. See also Note 6.
RECENT PRONOUNCEMENTS:
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121 "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed of," which requires
impairment losses to be recorded on long-lived assets used in operations when
indicators of impairment are present and the undiscounted cash flows estimated
to be generated by those assets are less than the assets' carrying amount. This
statement also addresses the accounting for long-lived assets that are expected
to be disposed of in the future. The Company will adopt this standard in fiscal
year 1997 and, based on current circumstances, does not believe the effect of
adoption will be material.
In October 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation." The Company
S-12
<PAGE> 21
intends to adopt this standard in fiscal year 1997 by making the required
footnote disclosures only. Therefore, the adoption of this standard is not
expected to have an effect on the Company's financial position or results of
operations.
NOTE 2 - DISCONTINUED OPERATIONS
In 1992 the Company sold the assets and operations of its U.K. subsidiary,
Duramark, to its management and reported a loss from Discontinued Operations.
Consideration received included cash, assumption of liabilities by management,
and rights to a percentage of future profits of the operation earned on or
before May 31, 1996 (to which no value was assigned). The maximum amount
receivable is not material, is subject to a time limit, and realizability is
believed not to be certain.
The remaining liabilities which were not assumed by the management buy-out group
of the discontinued operations, net of related taxes, have been classified in
the consolidated balance sheets as follows:
<TABLE>
<CAPTION>
June 30 June 30
1996 1995
---- ----
(In thousands)
<S> <C> <C>
Accrued expenses $589 $429
Other long-term liabilities -- 380
---- ----
Total $589 $809
==== ====
</TABLE>
NOTE 3 - BUSINESS SEGMENT INFORMATION
LSI operates in two business segments - Lighting and Graphics. The Lighting
segment manufactures and sells outdoor, indoor and landscape lighting fixtures
as well as menu boards and light boxes to the petroleum / convenience store,
multi-site retail and commercial/industrial markets. The Lighting segment
includes the operations of LSI Lighting Systems, Abolite Lighting, Greenlee
Lighting, LSI Images, and LSI Metal Fabrication. The Graphics segment
manufactures and sells screen printed materials and architectural graphic
structures for the petroleum / convenience store and multi-site retail markets.
The Graphics segment includes the operations of SGI and Insight Graphics. The
Company's most significant market is the petroleum / convenience store market
with slightly over 50% of net sales of lighting and graphics concentrated in
this market.
The following information is provided for the following periods:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
(In thousands)
NET SALES:
<S> <C> <C> <C>
Lighting $ 93,208 $ 72,782 $56,159
Graphics 59,525 47,145 37,376
-------- -------- -------
$152,733 $119,927 $93,535
======== ======== =======
</TABLE>
S-13
<PAGE> 22
<TABLE>
<S> <C> <C> <C>
OPERATING INCOME:
Lighting $ 7,130 $ 4,937 $ 3,684
Graphics 6,281 5,325 3,456
------- ------- -------
$13,411 $10,262 $ 7,140
======= ======= =======
IDENTIFIABLE ASSETS:
Lighting $43,138 $36,433 $29,912
Graphics 24,534 23,280 14,523
------- ------- -------
67,672 59,713 44,435
Corporate 11,824 2,840 1,852
------- ------- -------
$79,496 $62,553 $46,287
======= ======= =======
CAPITAL EXPENDITURES:
Lighting $ 2,748 $ 3,814 $ 3,747
Graphics 644 1,303 862
------- ------- -------
$ 3,392 $ 5,117 $ 4,609
======= ======= =======
DEPRECIATION AND AMORTIZATION:
Lighting $ 1,570 $ 1,404 $ 1,133
Graphics 886 670 661
------- ------- -------
$ 2,456 $ 2,074 $ 1,794
======= ======= =======
</TABLE>
Operating income of the business segments includes sales less all operating
expenses including allocations of corporate expense, but excluding interest
expense. Sales between business segments are immaterial.
Identifiable assets are those assets used by each segment in its operations,
including allocations of shared assets. Corporate assets consist primarily of
cash and cash equivalents, and refundable income taxes.
NOTE 4 - BALANCE SHEET DATA
The following information is provided as of June 30:
<TABLE>
<CAPTION>
1996 1995
---- ----
(In thousands)
<S> <C> <C>
INVENTORIES:
Raw materials $11,432 $ 9,821
Work-in-process and
finished goods 8,228 8,763
------- -------
$19,660 $18,584
======= =======
ACCRUED EXPENSES:
Compensation and benefits $ 4,600 $ 4,070
Customer prepayments $ 2,395 $ 5,648
</TABLE>
S-14
<PAGE> 23
NOTE 5 - REVOLVING LINES OF CREDIT AND LONG-TERM DEBT
The Company has lines of credit with its banks in the aggregate amount of
$13,000,000, all of which was available at June 30, 1996. These revolving lines
of credit are unsecured and expire in fiscal year 1997. Interest on the
revolving lines of credit is charged based upon a 1.0 percentage point increment
over the LIBOR rate as periodically determined, or at the banks' base lending
rate less 1.25 percentage points, at the Company's option. Under terms of these
agreements, the Company has agreed to maintain minimum levels of profitability
and net worth, and is subject to certain maximum levels of leverage.
The Company has an Industrial Revenue Development Bond (IRB) borrowing in the
amount of $1,195,000 associated with its facility in Northern Kentucky. The term
of this IRB is 15 years with semi-annual interest payments and annual principal
payments for retirement of bond principal in increasing amounts over the term of
the bonds. The IRB interest rate, which is reestablished semi-annually, is
currently 4.5%, plus a .9% letter of credit fee. The IRB is secured by the
Company's Kentucky real estate, which has a net carrying value of $1.4 million.
The Company has equipment loans outstanding totaling $367,000 with two
governmental agencies in Kentucky. The loans are for terms of five years at a
weighted average interest rate of 2.2% and are secured by the Company's Kentucky
equipment which has a net carrying value of $1.4 million. The Company makes
quarterly principal and interest payments of $32,000 through June 1999 and has
committed to specified job growth in its Kentucky facility.
<TABLE>
<CAPTION>
LONG-TERM DEBT: 1996 1995
---- ----
<S> <C> <C>
(In thousands)
Industrial Revenue Development Bond at 5.4% $1,195 $1,250
Equipment loans (average rate of 2.2%) 367 484
Term loan -- 6,365
------ ------
1,562 8,099
Less current maturities 180 842
------ ------
$1,382 $7,257
====== ======
</TABLE>
Future maturities of long-term debt at June 30, 1996 are as follows (in
thousands):
<TABLE>
1997 1998 1999 2000 2001 2002 and after
---- ---- ---- ---- ---- --------------
<S> <C> <C> <C> <C> <C>
$180 $187 $190 $ 70 $ 75 $860
</TABLE>
NOTE 6 - SHAREHOLDERS' EQUITY
The Company generated $19.6 million in net proceeds from a public offering of
1,232,894 common shares in February 1996. The Company used a portion of the net
proceeds to repay all outstanding indebtedness under its revolving lines of
credit and its term loan facility with its banks.
The Company has stock option plans which cover all of its full-time employees
and has a plan covering all non-employee directors. The options granted pursuant
to these plans are granted at
S-15
<PAGE> 24
fair market value at date of grant and generally become exercisable 25% per year
(cumulative) beginning one year after the date of grant at the fair market value
of the Common Shares at the date of grant. The number of shares reserved for
issuance is 785,100, of which 166,400 shares were available for future grant as
of June 30, 1996. The plans allow for the grant of both incentive stock options
and non-qualified stock options.
<TABLE>
Shares Average
(In thousands) Price
-------------- -------
<S> <C> <C>
OPTIONS OUTSTANDING AT JUNE 30, 1993 513 $ 3.13
Options granted 182 4.58
Options terminated (34) 3.37
Options exercised (107) 3.28
----
OPTIONS OUTSTANDING AT JUNE 30, 1994 554 3.56
Options granted 42 9.71
Options terminated (12) 3.37
Options exercised (92) 3.37
----
OPTIONS OUTSTANDING AT JUNE 30, 1995 492 4.13
Options granted 342 13.14
Options terminated (22) 12.10
Options exercised (193) 3.43
----
OPTIONS OUTSTANDING AT JUNE 30, 1996 619 $ 9.04
====
</TABLE>
At June 30, 1996, there were 184,000 options exercisable at an average price of
$4.99 per share.
On August 21, 1996, the Board of Directors declared a regular quarterly dividend
of $.04 per share and a special $.04 per share cash dividend to be paid
September 17, 1996 to shareholders of record on September 10, 1996. Annual cash
dividend payments made during fiscal years 1996, 1995 and 1994 were $.21, $.15,
and $.03 per share, respectively.
NOTE 7 - SALES TO MAJOR CUSTOMERS
The Company made sales in both the Lighting and Graphics segments to a major
customer which exceeded 10% of consolidated net sales. Sales to Chevron U.S.A.
represented 12% of consolidated net sales in 1996, 14% in 1995, and 13% in 1994.
NOTE 8 - LEASES
The Company leases certain of its facilities and equipment under operating lease
arrangements. Rental expense was $656,000 in 1996, $835,000 in 1995, and
$846,000 in 1994. Minimum annual rental commitments under non-cancelable
operating leases are: $600,000 in 1997; $505,000 in 1998; and $345,000 in 1999.
S-16
<PAGE> 25
NOTE 9 - INCOME TAXES
The following information is provided for the years ended June 30:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
(In thousands)
<S> <C> <C> <C>
PROVISION (BENEFIT) FOR INCOME TAXES:
Current federal $ 4,290 $ 3,179 $ 2,582
Current state and local 574 205 113
Deferred (129) 85 (234)
-------- -------- --------
$ 4,735 $ 3,469 $ 2,461
======== ======== ========
RECONCILIATION TO FEDERAL STATUTORY RATE:
Federal statutory tax rate 34.2% 34.0% 34.0%
State and local taxes 2.9 1.4 1.1
Goodwill and other (.7) .6 1.9
-------- -------- --------
Effective tax rate 36.4% 36.0% 37.0%
======== ======== ========
</TABLE>
The components of deferred income tax assets and liabilities at June 30, 1996
and 1995 are as follows:
<TABLE>
<CAPTION>
1996 1995
------- -------
(In thousands)
<S> <C> <C>
CURRENT ASSETS (LIABILITIES):
Reserves against current assets $ 385 $ 269
Prepaid expenses (164) (106)
Accrued expenses 663 373
------- -------
Deferred income tax asset included in Other Current
Assets on the Consolidated Balance Sheets $ 884 $ 536
======= =======
NONCURRENT LIABILITIES:
Depreciation $ 1,654 $ 1,435
------- -------
Deferred income tax liabilities as reported on the
Consolidated Balance Sheets $ 1,654 $ 1,435
======= =======
</TABLE>
The Company discontinued its European operations in 1992 and reported a $4.3
million loss, net of a $3.2 million income tax benefit. The Internal Revenue
Service (IRS) completed its audit of the Company's 1989 through 1992 federal
income tax returns and proposed audit adjustments which would have resulted in a
return of approximately $2 million of income taxes (plus interest) to the IRS
which had been refunded to the Company with the filing of its 1992 income tax
return. The IRS questioned the tax treatment of the loss associated with the
discontinued operations, specifically as to whether it should receive ordinary
loss or capital loss treatment.
S-17
<PAGE> 26
The Company's settlement discussions with the IRS Appeals Division relating to
the proposed audit assessment were concluded in December 1995. An agreement was
reached that re-characterized a portion of the 1992 loss associated with
discontinued European operations as a long term capital loss. The agreement
resulted in payment of $1.7 million (composed of taxes and interest), and in a
charge to discontinued operations of $1.5 million to increase the Company's
reserve for remaining liabilities associated with the discontinued operations.
NOTE 10 - SUMMARY OF QUARTERLY RESULTS (UNAUDITED)
<TABLE>
<CAPTION>
Quarter Ended
------------------------------------------------------ Fiscal
Sept. 30 Dec. 31 March 31 June 30 Year
-------- ------- -------- ------- ----
<S> <C> <C> <C> <C> <C>
1996
Net sales $ 35,882 $ 45,561 $ 33,495 $ 37,795 $ 152,733
Gross profit 11,942 13,824 10,001 12,745 48,512
Income from continuing
operations 2,194 2,693 948 2,435 8,270
Net income 2,194 1,193 948 2,435 6,770
Earnings per share
Income from continuing
operations $ .28 $ .34 $ .11 $ .26 $ .98(a)
Net income $ .28 $ .15 $ .11 $ .26 $ .80
Range of share prices
High $ 15.50 $ 19.63 $ 18.25 $ 19.75 $ 19.75
Low $ 12.17 $ 14.25 $ 13.50 $ 16.75 $ 12.17
1995
Net sales $ 29,320 $ 32,364 $ 26,920 $ 31,323 $ 119,927
Gross profit 9,858 11,174 8,570 10,169 39,771
Net income 1,849 2,159 749 1,417 6,174
Earnings per share $ .24 $ .28 $ .10 $ .18 $ .79(a)
Range of share prices
High $ 8.33 $ 8.00 $ 9.67 $ 12.92 $ 12.92
Low $ 6.67 $ 6.67 $ 7.33 $ 9.33 $ 6.67
<FN>
(a) The total of the earnings per share for each of the four quarters does
not equal the total earnings per share for the full year because the
calculations are based on the average shares outstanding during each of
the individual periods.
</TABLE>
At August 6, 1996, there were 517 shareholders of record. The Company believes
this represents approximately 2,800 beneficial shareholders.
S-18
<PAGE> 27
LSI INDUSTRIES INC.
SELECTED FINANCIAL DATA
(In thousands except per share)
The following data has been selected from the Consolidated Financial Statements
of the Company for the periods and dates indicated:
INCOME STATEMENT DATA:
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net sales $152,733 $119,927 $93,535 $ 72,563 $ 69,182
Cost of products sold 104,221 80,156 62,430 49,789 47,389
Operating expenses 35,101 29,509 23,965 20,156 19,351
Restructuring charges -- -- -- -- 2,136
-------- -------- ------- -------- --------
Operating income 13,411 10,262 7,140 2,618 306
Interest expense 344 459 199 503 580
Other (income) expense 62 160 290 (481) 539
-------- -------- ------- -------- --------
Income (loss) from
continuing operations
before income taxes 13,005 9,643 6,651 2,596 (813)
Income taxes 4,735 3,469 2,461 927 (282)
-------- -------- ------- -------- --------
Income (loss) from
continuing operations $ 8,270 $ 6,174 $ 4,190 $ 1,669 $ (531)
======== ======== ======= ======== ========
Net income (loss) $ 6,770 $ 6,174 $ 4,190 $ 1,669 $ (4,793)
======== ======== ======= ======== ========
Per share data
Income (loss) from
continuing operations $ .98 $ .79 $ .55 $ .23 $ (.07)
Net income (loss) $ .80 $ .79 $ .55 $ .23 $ (.65)
Cash dividends $ .21 $ .15 $ .03 $ .03 $ .03
Average number of
shares outstanding (a) 8,456 7,802 7,656 7,385 7,367
BALANCE SHEET DATA:
(At June 30) 1996 1995 1994 1993 1992
---- ---- ---- ---- ----
Working capital $ 36,146 $ 17,788 $11,223 $ 10,268 $ 12,241
Total assets 79,496 62,553 46,287 38,051 41,231
Long-term debt,
including current
maturities 1,562 8,099 3,600 3,957 8,454
Shareholders' equity 54,737 29,453 23,981 19,655 18,220
<FN>
(a) Average shares outstanding represents common shares outstanding plus
the dilutive impact of common share equivalents (stock options).
</TABLE>
S-19
<PAGE> 28
LSI INDUSTRIES INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED JUNE 30, 1996, 1995 AND 1994
(IN THOUSANDS)
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
-------- -------- -------- -------- --------
Additions
Balance Charged to Balance
Beginning Costs and (A) End of
Description of Period Expenses Deductions Period
- ----------- --------- -------- ---------- ------
<S> <C> <C> <C> <C>
ALLOWANCE FOR DOUBTFUL ACCOUNTS:
Year Ended June 30, 1996 $242 $328 $(212) $358
Year Ended June 30, 1995 $265 $103 $(126) $242
Year Ended June 30, 1994 $540 $316 $(591) $265
INVENTORY OBSOLESCENCE RESERVES:
Year Ended June 30, 1996 $453 $892 $(651) $694
Year Ended June 30, 1995 $306 $302 $(155) $453
Year Ended June 30, 1994 $356 $162 $(212) $306
<FN>
(A) For allowance for doubtful accounts, deductions are uncollectible accounts
charged off, less recoveries.
</TABLE>
S-20
<PAGE> 29
LSI INDUSTRIES INC.
Form 10-K
June 30, 1996
INDEX TO EXHIBITS
Exhibit
Number Description of Exhibit
- ------ ----------------------
10.5 LSI Industries Inc. Nonqualified Deferred Compensation
Plan, and Rabbi Trust Agreement
11 Statement Re Computation of Earnings Per Share
22 Subsidiaries of the Registrant
23 Consent of Independent Public Accountants (2)
24 Powers of Attorney (5)
27 Financial Data Schedule
<PAGE> 1
EXHIBIT 10.5
LSI INDUSTRIES INC.
NONQUALIFIED DEFERRED COMPENSATION PLAN
---------------------------------------
PREAMBLE
--------
LSI Industries Inc. and each Employer hereby adopt the Plan effective
as of September 15, 1996. This Plan is an unfunded deferred compensation
arrangement for a select group of management or highly compensated employees who
are rendering service to an Employer.
ARTICLE I - DEFINITIONS
-----------------------
1.1 "BENEFICIARY" shall mean the person or persons entitled to receive the
distributions, if any, payable under the Plan upon or after a
Participant's death, to such person or persons as such Participant's
Beneficiary. Each Participant may designate a Beneficiary by filing the
proper form with the Committee. A Participant may designate one or more
contingent Beneficiaries to receive any distributions after the death
of a prior Beneficiary. A designation shall be effective upon said
filing, provided that it is so filed during such Participant's
lifetime, and may be changed from time to time by the Participant.
1.2 "COMMITTEE" shall mean the Compensation Committee of the Board of
Directors of LSI Industries Inc. which is responsible for the
administration of this Plan in accordance with the provisions of the
Plan as set forth in this document.
1.3 "COMPENSATION" shall mean the total amount of earnings (including
bonuses) paid by an Employer to an Executive or which would otherwise
be paid but for a deferral election hereunder or a salary reduction
election under any Section 401(k) or 125 plan.
1.4 "DEFERRED COMPENSATION ACCOUNT" shall mean the account to be
established by an Employer as a book reserve to reflect the amounts
deferred by a Participant, the amounts credited by the Employer, and
the earnings adjustment under Article VI. A Participant's Deferred
Compensation Account shall be reduced by distributions under Articles
VII and VIII.
1.5 "EFFECTIVE DATE" shall mean September 15, 1996.
1.6 "EMPLOYER" shall mean LSI Industries Inc., any affiliate of LSI
Industries Inc. (whether or not incorporated) which has adopted the
Plan with the consent of LSI Industries Inc., or any successor or
assignee of any of them.
<PAGE> 2
- 2 -
1.7 "EXECUTIVE" shall mean any employee designated by the Committee (in
conjunction with senior management of LSI Industries Inc.) as a member
of the select group of management or highly compensated employees
eligible for participation in this Plan.
1.8 "PARTICIPANT" shall mean any Executive who has a right to a benefit
under the Plan and a person who was such at the time of his death or
termination of service and who retains, or whose Beneficiary retains, a
benefit under the Plan which has not been distributed.
1.9 "PLAN" shall mean the LSI Industries Inc. Nonqualified Deferred
Compensation Plan as described in this instrument, effective September
15, 1996, and, as may be amended thereafter.
1.10 "PLAN YEAR" shall mean the 12-consecutive month period beginning on
July 1.
ARTICLE II - PARTICIPANT'S ELECTION TO DEFER
--------------------------------------------
2.1 Each Executive may elect to have up to 100% of his Compensation (in
whole percentages) for a Plan Year deferred and credited with earnings
in accordance with the terms and conditions of the Plan. The Committee
may allow separate elections with respect to regular earnings and
bonuses.
2.2 An Executive desiring to exercise an election under Paragraph 2.1 shall
notify the Committee of his deferral election. Such notice must be in
writing, on a form provided by the Committee, and delivered to the
Committee by such date as the Committee shall specify, but in all
events before the first day of the Plan Year to which such election is
to apply. Notwithstanding the foregoing, for the Plan Year beginning
July 1, 1996 only, an Executive may provide such notice to the
Committee after July 1, 1996 to be effective only with respect to
Compensation paid in such Plan Year, but after the date such written
notice is provided to the Committee; provided that such written notice
is delivered to the Committee by September 1, 1996.
2.3 A deferral election shall be effective with respect to the entire Plan
Year to which it relates and may not be modified or terminated for that
Plan Year. Notwithstanding the foregoing, the election for the Plan
Year beginning July 1, 1996 only, shall be effective with respect to
Compensation paid between September 15, 1996 and June 30, 1997.
2.4 The Compensation otherwise payable to the Executive during the Plan
Year shall be reduced pursuant to the Executive's election under this
Article II. Such amounts shall be credited to the Executive's Deferred
Compensation Account.
<PAGE> 3
- 3 -
ARTICLE III - EMPLOYER MAKE-UP ALLOCATIONS
------------------------------------------
3.1 If, by reason of an election under Article II, a Participant receives a
smaller allocation of Employer contributions and/or forfeitures under
the LSI Industries Inc. Retirement Plan for a plan year of that plan
than he would have received had no such election been made, then there
shall be credited to the Participant's Deferred Compensation Account an
amount equal to the amount which bears the same relationship to the
amounts deferred under Article II and credited to the Participant's
Deferred Compensation Account during the Plan Year as the Participant's
allocations (of Employer contributions and/or forfeitures) under the
LSI Industries Inc. Retirement Plan bear to the Participant's
compensation taken into account under that plan. Such amount shall be
credited to the Participant's Deferred Compensation Account at such
time as the Committee shall determine.
3.2 (a) If, by reason of the application of the compensation limitation
imposed by Section 401(a)(17) of the Internal Revenue Code of 1986 (or
any corresponding successor provision), including any provision in the
LSI Industries Inc. Retirement Plan providing such limitation, a
Participant receives a smaller allocation of Employer contributions
and/or forfeitures under the LSI Industries Inc. Retirement Plan for
any plan year of that plan than he would have received had no such
limitation been in effect, then there shall be credited to his Deferred
Compensation Account the amount determined under (b) below. Such amount
shall be credited to the Participant's Deferred Compensation Account at
such time as the Committee shall determine. The Board of Directors of
LSI Industries Inc. may, in its sole discretion, determine that each
Employer shall make an allocation of this type with respect to the LSI
Industries Inc. Retirement Plan plan year ended June 30, 1996, to be
credited to the respective Employer's Participant's Deferred
Compensation Accounts at such time as the Committee shall determine.
(b) The amount hereunder shall be equal to the amount which is the same
percentage of the Participant's compensation (as defined in the LSI
Industries Inc. Retirement Plan) in excess of the compensation
limitation referred to in (a) above as the percentage allocated under
the LSI Industries Inc. Retirement Plan on compensation in excess of
the Social Security taxable wage base (but not in excess of the
limitation referred to in (a) above).
ARTICLE IV - LSI INCENTIVE ALLOCATIONS
--------------------------------------
4.1 Subject to Paragraph 4.2, each Participant shall be eligible for an
Employer incentive allocation for a Plan Year, to be determined in
accordance with Paragraph 4.3, if he satisfies each of the following
requirements:
(a) The Participant must have elected to have part or all of his
Compensation deferrals for the Plan Year of the LSI incentive
allocation, the immediately preceding Plan Year
<PAGE> 4
- 4 -
and/or the second preceding Plan Year credited with earnings (or
losses) under the LSI Common Shares investment option.
(b) As of the date specified by the Committee (or its delegate) in the
Plan Year (or the prior Plan Year) of the LSI incentive allocation,
after giving effect to any investment election changes, at least 50% of
the value of the Participant's Deferred Compensation Account
attributable to Compensation deferrals (for all Plan Years) must be
subject to the LSI Common Shares investment option; and
(c) The Participant must be employed by an Employer at the time the
Committee determines that the Performance Goal (defined below) was
satisfied for the Plan Year.
4.2 (a) The Employer shall make an incentive allocation determined under
Paragraph 4.3 below only if the Performance Goal (defined below) is met
for the Plan Year as determined in the sole discretion of the
Committee.
(b) "Performance Goal" shall mean a Return on Average Shareholders'
Equity (as determined in the sole discretion of the Committee) of at
least 18%. The Committee shall have the right to adjust the Performance
Goal from time to time on account of equity changes or other
extraordinary matters.
4.3 If the Performance Goal (defined above) is met for a Plan Year, those
Participants eligible for an Employer incentive allocation under
Paragraph 4.1 above shall receive such an allocation determined by the
Committee as follows:
(a) The Committee shall determine the number of LSI Common Shares
deemed to have been acquired during the Plan Year and each of the two
immediately preceding Plan Years with the Compensation deferrals for
such years elected by the Participant to be credited with earnings (or
losses) under the LSI Common Shares investment option.
In making that determination, the Committee shall consider only
Compensation deferrals for a Plan Year up to 40% of the Participant's
Compensation.
(b) The Committee shall determine the percentages applicable to each
eligible Participant for the current Plan Year and for each of the two
preceding Plan Years from the following:
<PAGE> 5
- 5 -
<TABLE>
<CAPTION>
RETURN ON AVERAGE SHAREHOLDERS' EQUITY
At least 18% but less At least 20% but less
than 20% than 22% 22% or more
<S> <C> <C> <C>
Corporate Officers 20% 25% 30%
and Top Executives
All Other Employees 10% 12.5% 15%
</TABLE>
The Participant's status (as a "corporate officer" or "top executive")
as determined by the Committee at the end of the Plan Year in which he
makes his Compensation deferrals will determine the level of Employer
allocations under this Paragraph attributable to such Compensation
deferrals for that Plan Year.
(c) The applicable percentages determined for a Participant for the
Plan Year and the two immediately preceding Plan Years shall be applied
against the number of LSI Common Shares determined for the respective
Plan Years (under (a) above). The resulting number shall be rounded to
the nearest whole share.
(d) The Committee shall determine the value of the number of LSI Common
Shares (determined under (c) above) as of such date as it deems
appropriate. That amount shall be credited to the Participant's
Deferred Compensation Account at such time as the Committee shall
determine.
ARTICLE V - PARTICIPANT'S INTEREST
----------------------------------
No Participant or his designated Beneficiary shall acquire any property
interest in his Deferred Compensation Account or any other assets of
the Employer, their rights being limited to receiving from the Employer
a deferred payment as set forth in this Plan, and these rights are
conditioned upon continued compliance with the terms and conditions of
this Plan. To the extent that any Participant or Beneficiary acquires a
right to receive benefits under this Plan, such right shall be no
greater than the right of any unsecured general creditor of the
Employer.
ARTICLE VI - CREDITING OF EARNINGS
----------------------------------
6.1 GENERAL. There shall be credited to the Deferred Compensation Account
of each Participant an additional amount of earnings (or losses)
determined under this Article VI.
<PAGE> 6
- 6 -
6.2 ELECTIONS FOR COMPENSATION DEFERRALS. Each Participant shall elect (in
whole percentages) to have earnings (or losses) credited to so much of
his Deferred Compensation Account as is attributable to his
Compensation deferrals under Article II under one (or a combination) of
the following investment elections:
(a) LSI Common Shares
(b) Fountain Square U.S. Treasury Obligations Fund
(c) Fountain Square Quality Bond Fund
(d) Fountain Square International Equity Fund
Such an election must be in writing, on a form provided by the
Committee, and delivered to the Committee prior to the beginning of the
period to which it relates. Notwithstanding the foregoing, for the
first quarter of the 1996 Plan Year only, a Participant may provide
such notice to the Committee no later than the date he provides his
first deferral election under Article II.
Subject to Paragraph 6.3, an investment election shall be effective for
the entire Plan Year quarter to which it relates and may not be
modified or terminated for that Plan Year quarter. In the event that an
investment election form is not received by the Committee by the date
specified for elections for a particular Plan Year quarter for a
Participant, the last investment election received by the Committee
from the Participant shall remain in effect for that Plan Year quarter.
6.3 COMMITMENT TO LSI COMMON SHARES INVESTMENT OPTION. If a Participant
elects to have some or all of his Compensation deferrals for a Plan
Year credited with earnings (or losses) under the LSI Common Shares
investment option, that election with respect to such Compensation
deferrals (and any earnings allocable to such Compensation deferrals)
may not be changed until the end of the second full Plan Year following
the Plan Year of the deferral. After that period, the previously
restricted Compensation deferrals (and earnings attributable thereto)
may be invested in any of the investment funds designated under
Paragraph 6.2 (including LSI Common Shares) without such a time
restriction. Notwithstanding Paragraph 6.2, an election changing the
amounts to be credited with earnings (or losses) under the LSI Common
Shares investment option may be made only once in a Plan Year at the
time designated by the Committee or its delegate.
6.4 EMPLOYER ALLOCATIONS. Employer allocations under Articles III and IV
shall be credited with earnings (or losses) under the LSI Common Shares
investment option. The Participant shall have no right to change the
investment option with respect to such Employer allocations.
<PAGE> 7
- 7 -
6.5 DETERMINATION OF RATE OF RETURN. The Committee shall determine the rate
of return throughout each Plan Year quarter or other period for the
investments or investment funds designated under Paragraph 6.2.
6.6 INVESTMENT ADJUSTMENT. For each Plan Year quarter or other period, the
Participant's Deferred Compensation Account shall be increased or
decreased as if it had earned the rate of return corresponding to the
amount determined by the Committee under Paragraph 6.5. Such increase
or decrease shall be based on the varying balances in each of the
investment elections comprising the Deferred Compensation Account
throughout the Plan Year quarter or other period and shall be credited
at such time as the Committee in its sole discretion shall determine.
ARTICLE VII - PLAN BENEFITS
---------------------------
7.1 (a) A Participant's rights to that portion of his Deferred Compensation
Account attributable to his Compensation deferrals under Article II (as
adjusted for earnings and losses) shall be nonforfeitable at all times.
(b) A Participant shall have a vested interest in that portion of his
Deferred Compensation Account attributable to Employer allocations
under Article III (as adjusted for earnings and losses) determined in
accordance with the following schedule:
YEARS OF VESTED SERVICE PERCENTAGE
----------------------- ----------
Less than two 0
Two but less than three 20
Three but less than four 40
Four but less than five 60
Five but less than six 80
Six or more 100
For purposes of this Paragraph, "Years of Vested Service" shall be
determined in accordance with the provisions of the LSI Industries Inc.
Retirement Plan.
(c) A Participant's rights to that portion of his Deferred Compensation
Account attributable to Employer allocations under Article IV based on
Compensation deferrals for a Plan Year (as adjusted for earnings and
losses) shall become nonforfeitable at the end of the second full Plan
Year following the year of the Compensation deferrals to which such
Employer allocations are attributable, if the Participant has been
continuously employed by an Employer through that date. This applies to
all Employer allocations based on such Compensation deferrals whether
the allocations are for the Plan Year of the Compensation deferrals or
the first or second succeeding Plan Years.
<PAGE> 8
- 8 -
(d) Notwithstanding Paragraphs 7.1(b) and (c) above, Employer
allocations under Articles III and IV (as adjusted for earnings and
losses) shall become fully vested upon the Participant's retirement
after age 62 and completion of at least three (3) years of service,
disability or death.
(e) Notwithstanding any provision to the contrary, Employer allocations
under Articles III and IV(as adjusted for earnings and losses) shall be
forfeited if the Participant commits any dishonest act or violates any
noncompete or nonsolicitation agreement (as the Committee in its sole
discretion shall determine).
7.2 (a) At the time an Executive makes his first deferral election under
Article II or investment election under Article VI, he shall also elect
to have the amounts represented by his Deferred Compensation Account
paid in one of the following two forms commencing as soon as
administratively feasible upon termination of his service with all
Employers:
(1) single lump sum payment, or
(2) approximately equal monthly installments to last not
less than 12 months nor more than 120 months.
If installment payments are in effect, the Participant's Deferred
Compensation Account shall continue to be credited with earnings (or
losses) under Article VI until payment of the final installment and the
Participant may continue to make such elections thereunder as are
available to other Participants.
(b) A Participant may change the election referred to in (a) above.
Payment shall be made in accordance with any such changed election only
if the Participant terminates service with all Employers at least one
year following the date of the election. Otherwise, the payment shall
be made in accordance with the election (if any) in effect immediately
prior to the changed election.
(c) If a Participant has no election concerning the form of benefit
payment under this Paragraph 7.2 in effect at the time he terminates
service with all Employers, payment shall be made in a single lump sum
payment.
(d) Elections shall be made in writing, on a form provided by the
Committee, and shall be made in accordance with the rules established
by the Committee.
7.3 DISTRIBUTION OF LSI COMMON SHARES. To the extent that a Participant's
Deferred Compensation Account is being credited with earnings (or
losses) under Article VI based on the LSI Common Shares investment
option, such Participant shall receive benefit payments in the form of
whole shares of such LSI Common Shares. Any fractional shares and all
other benefit payments shall be paid in cash. Any expenses
<PAGE> 9
- 9 -
attributable to a payment in shares may be deducted from the
Participant's Deferred Compensation Account.
ARTICLE VIII - DEATH
--------------------
Upon the death of a Participant prior to commencement of payment under
Article VII, the amounts represented by the Participant's Deferred
Compensation Account, increased by any amounts due to be credited but
not yet credited under Articles II, III or IV shall be payable to the
Participant's Beneficiary as soon as administratively feasible in a
single lump sum distribution. If the Participant has already commenced
receiving the amounts represented by the Participant's Deferred
Compensation Account in the installment payment form, the installment
payments shall continue to be paid to the Participant's Beneficiary. To
the extent that a Participant's Deferred Compensation Account is being
credited with earnings (or losses) under Article VI based on the LSI
Common Shares investment option, the Beneficiary shall receive any
benefit payments in the form of whole shares of such LSI Common Shares.
Otherwise, benefit payments shall be paid in cash.
ARTICLE IX - NON-ASSIGNABLE/NON-ATTACHMENT
------------------------------------------
Except as required by law, no right of the Participant or designated
Beneficiary to receive payments under this Plan shall be subject to
anticipation, commutation, alienation, sale, assignment, encumbrance,
charge, pledge, or hypothecation or to execution, attachment, levy or
similar process or assignment by operation of law and any attempt,
voluntary or involuntary, to effect any such action shall be null and
void and of no effect. An Employer may not assign its obligations
hereunder.
ARTICLE X - CONSTRUCTION
------------------------
This Plan shall be construed under the laws of the State of Ohio.
Article headings are for convenience only and shall not be considered
as part of the terms and provisions of the Plan. The Committee shall
have full power and authority to interpret, construe and administer
this Plan.
ARTICLE XI - AMENDMENT OR TERMINATION OF PLAN
---------------------------------------------
The Plan may be terminated at any time or amended in whole or in part
from time to time by LSI Industries Inc. provided that no such
termination or amendment may directly or indirectly reduce a
Participant's Deferred Compensation Account (other than through a
complete distribution thereof to the Participant (or his Beneficiary in
the event of his
<PAGE> 10
- 10 -
death)); and any such amendment shall be binding on each Employer,
Participant and designated Beneficiary.
ARTICLE XII - MISCELLANEOUS
---------------------------
12.1 Neither this Plan, nor any action of LSI Industries Inc., an Employer
or the Committee, nor any election to defer Compensation hereunder
shall be held or construed to confer on any person any legal right to
be continued as an employee of LSI Industries Inc. or any Employer.
12.2 LSI Industries Inc. and the Participant's Employer shall have the right
to deduct from all payments and amounts credited hereunder any taxes
required by law to be withheld with respect to any benefits under this
Plan.
IN WITNESS WHEREOF, LSI Industries Inc. and each Employer, with the consent of
LSI Industries Inc., have caused this Plan to be executed this 3rd day of
September, 1996.
LSI INDUSTRIES INC.
By: /s/ Ronald S. Stowell
____________________________________
Chief Financial Officer & Treasurer
SGI INTEGRATED GRAPHIC
SYSTEMS L.P.
By: /s/ Ronald S. Stowell
____________________________________
Treasurer
GREENLEE LIGHTING L.P.
By: /s/ Ronald S. Stowell
____________________________________
Treasurer
<PAGE> 11
EXPLANATION OF FORMS FOR USE BY EMPLOYEES ELIGIBLE
UNDER THE LSI INDUSTRIES INC.
NONQUALIFIED DEFERRED COMPENSATION PLAN
---------------------------------------
DEFERRAL ELECTION FORM is for an employee to elect:
(a) to defer part or all of a bonus under the LSI Industries Inc.
Nonqualified Deferred Compensation Plan; and
(b) to defer regular earnings under the LSI Industries Inc.
Nonqualified Deferred Compensation Plan.
BENEFICIARY DESIGNATION FORM. Note that spousal consent is not needed.
INVESTMENT ELECTION FORM. This form can be used for initial elections and
future changes under the LSI Industries Inc. Nonqualified Deferred Compensation
Plan.
FORM OF PAYMENT ELECTION (NEW PARTICIPANTS). This form is for use by a
participant to elect how he wants his LSI Industries Inc. Nonqualified Deferred
Compensation Plan benefit paid. For a new participant, the form will be
effective immediately if it is completed and dated prior to the commencement of
deferrals under the LSI Industries Inc. Nonqualified Deferred Compensation Plan.
Otherwise, the form will be given effect only after the passage of one year
after the date of election.
FORM OF PAYMENT ELECTION (ELECTION CHANGE). To avoid or minimize the
constructive receipt issue being argued by the IRS, any change in the form of
payment election may not be honored unless the employee remains employed by LSI
Industries Inc. or any Employer for at least one year after the change.
<PAGE> 12
LSI INDUSTRIES INC.
NONQUALIFIED DEFERRED COMPENSATION PLAN
FORM OF PAYMENT ELECTION
------------------------
(NEW PARTICIPANTS)
In accordance with the provisions of the LSI Industries Inc.
Nonqualified Deferred Compensation Plan, I hereby elect to receive payments from
my account (which become due upon my termination of employment) in the following
form: (Choose one)
/ / Single lump sum payment as soon as administratively
feasible after my termination of employment; or
/ / Approximately equal monthly installments commencing as soon as
administratively feasible after my termination of employment to
last ____ months (not less than 12 months nor more than 120
months).
I understand that this election will be honored immediately if made at
or before the time i make my first deferral election or investment election
under the LSI Industries Inc. Nonqualified Deferred Compensation Plan.
Otherwise, this election will be honored only if I continue in LSI Industries
Inc. (or any Employer's) employment for at least one year from this date.
Note: Amounts invested under the LSI Common Shares investment option will be
paid in LSI Common Shares. Other payments are in cash.
- ------------------------------------------------ ---------------------
Employee Signature Date
<PAGE> 13
LSI INDUSTRIES INC.
NONQUALIFIED DEFERRED COMPENSATION PLAN
BENEFICIARY DESIGNATION FORM
----------------------------
<TABLE>
<CAPTION>
=============================================================================================
MY PRIMARY BENEFICIARY(IES) UNDER THE PLAN IS (ARE):
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Name % Relationship to me Address
- ----------------------- ---- ------------------- ---------------------------------
- ----------------------- ---- ------------------- ---------------------------------
=============================================================================================
</TABLE>
<TABLE>
<CAPTION>
=============================================================================================
MY CONTINGENT BENEFICIARY(IES) (IN THE EVENT ALL MY PRIMARY BENEFICIARIES DIE
BEFORE ME OR BEFORE RECEIVING ALL THE PAYMENTS TO WHICH THEY WOULD BE
ENTITLED) IS (ARE):
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Name % Relationship to me Address
- ----------------------- ---- ------------------- ---------------------------------
- ----------------------- ---- ------------------- ---------------------------------
=============================================================================================
</TABLE>
<PAGE> 14
================================================================================
Any distribution shall be divided equally among these Primary Beneficiaries
living at the time of such distribution or, if there are no such Primary
Beneficiaries, equally among those Contingent Beneficiaries living at the time
of such distribution, unless otherwise correctly indicated.
This form supersedes any previous beneficiary designation made by the
undersigned.
Date: ________________________
WITNESS:
_____________________________________ _________________________________
Witness's Signature Participant's Signature
_____________________________________ _________________________________
Witness's Name (Printed) Participant's Name (Printed)
A beneficiary designation may be changed at any time by filing a new form. No
beneficiary designation form is effective unless and until it is received by the
plan administrator during the Participant's lifetime.
================================================================================
LSI INDUSTRIES INC.
NONQUALIFIED DEFERRED COMPENSATION PLAN
INVESTMENT ELECTION FORM
------------------------
NAME: _______________________________________________ SS #: ___________________
ADDRESS: ______________________________________________________________________
================================================================================
PART 1: INVESTMENT ELECTIONS FOR FUTURE COMPENSATION DEFERRALS
- --------------------------------------------------------------------------------
I hereby elect to have all future Compensation deferrals credited to my account
under the LSI Industries Inc. Nonqualified Deferred Compensation Plan credited
with earnings (or losses) under the following investment elections: (Note: You
may choose any combination. Investment allocations must be in increments of 10%.
Combined total must equal 100%.)
<TABLE>
<S> <C>
Restricted LSI Common Shares ______%(1)
Fountain Square U.S. Treasury Obligations Fund ______%
Fountain Square Quality Bond Fund ______%
Fountain Square International Equity Fund ______%
<FN>
(1)Compensation deferrals invested in the LSI Common Shares investment
option must remain so invested for the current year and the two succeeding
years.
================================================================================
</TABLE>
<PAGE> 15
================================================================================
PART 2: INVESTMENT ELECTIONS FOR CURRENT BALANCE ATTRIBUTABLE TO COMPENSATION
DEFERRALS NOT OTHERWISE INVESTED IN RESTRICTED LSI COMMON SHARES
- --------------------------------------------------------------------------------
I hereby elect to have my current account balance attributable to Compensation
deferrals not otherwise invested in Restricted LSI Common Shares credited with
earnings (or losses) under the following investment elections: (Note: You may
choose any combination. Investment allocations must be in increments of 10%.
Combined total must equal 100%.)
<TABLE>
<S> <C>
Unrestricted LSI Common Shares ________%(2)
Fountain Square U.S. Treasury Obligations Fund ________%
Fountain Square Quality Bond Fund ________%
Fountain Square International Equity Fund ________%
<FN>
(2)This percentage may change only once in a Plan Year at the time
designated by the Compensation Committee.
================================================================================
</TABLE>
================================================================================
PART 3: Authorization
- --------------------------------------------------------------------------------
The investment elections will continue in effect until future changes are made
in writing as provided by the Plan. This document is not valid unless properly
signed and dated.
_________________________________________________ ______________________
Employee Signature Date
================================================================================
Note: Employer contributions are not subject to this election. They will
remain invested pursuant to the LSI Common Shares investment option.
<PAGE> 16
LSI INDUSTRIES INC.
NONQUALIFIED DEFERRED COMPENSATION PLAN
DEFERRAL ELECTION FORM
----------------------
Name:_____________________________Social Security Number:_______________________
Address:________________________________________________________________________
City:_______________________________State:_______________________Zip:___________
Date of Birth:______________________________Date of Hire:_______________________
================================================================================
PART 1: BONUS DEFERRAL
- --------------------------------------------------------------------------------
Any bonus I might earn for the Plan Year July 1, 1996 through June 30, 1997
shall be paid or deferred as follows: (whole percentages only)
<TABLE>
<S> <C>
$________________ shall be paid in cash
_________________% of any remaining bonus shall be deferred under
the terms of the LSI Industries Inc.
Nonqualified Deferred Compensation Plan (and the
remaining amount (if any) shall be paid in cash)
</TABLE>
================================================================================
================================================================================
PART 2: REGULAR EARNINGS DEFERRAL
- --------------------------------------------------------------------------------
I hereby elect to defer the following percentage of my regular earnings
otherwise payable to me from September 15, 1996 through June 30, 1997 (but after
the date of this election) under the terms of the LSI Industries Inc.
Nonqualified Deferred Compensation Plan:
_________________% (whole percentage only)
================================================================================
================================================================================
PART 3: AUTHORIZATION
- --------------------------------------------------------------------------------
I understand that these elections are irrevocable and will remain in effect
throughout the period ending June 30, 1997.
_________________________________________________ ______________________
Employee Signature Date
================================================================================
<PAGE> 17
LSI INDUSTRIES INC.
NONQUALIFIED DEFERRED COMPENSATION PLAN
FORM OF PAYMENT ELECTION
------------------------
(ELECTION CHANGE)
In accordance with the provisions of the LSI Industries Inc.
Nonqualified Deferred Compensation Plan, I hereby elect to receive payments from
my account (which become due upon my termination of employment) in the following
form: (Choose one)
/ / Single lump sum payment as soon as administratively feasible
after my termination of employment; or
/ / Approximately equal monthly installments commencing as soon as
administratively feasible after my termination of employment
to last months (not less than 12 months nor more than 120
months).
I understand that this election will become effective one year from
this date and that my previous election (if any) will remain in effect until
that time.
Note: Amounts invested under the LSI Common Shares investment option will be
paid in LSI Common Shares. Other payments are in cash.
_________________________________________________ ______________________
Employee Signature Date
<PAGE> 18
RABBI TRUST AGREEMENT
UNDER THE
LSI INDUSTRIES INC.
NONQUALIFIED DEFERRED COMPENSATION PLAN
<PAGE> 19
RABBI TRUST AGREEMENT
UNDER THE
LSI INDUSTRIES INC.
NONQUALIFIED DEFERRED COMPENSATION PLAN
---------------------------------------
This Agreement made this 3rd day of September, 1996, by and between LSI
INDUSTRIES INC., GREENLEE LIGHTING L.P. AND SGI INTEGRATED GRAPHIC SYSTEMS L.P.
(collectively, the "Company") and THE FIFTH THIRD BANK ("Trustee"):
WHEREAS, Company has adopted the LSI Industries Inc. Nonqualified
Deferred Compensation Plan ("Plan");
WHEREAS, Company has incurred or expects to incur liability under the
terms of such Plan with respect to the individuals participating in such Plan;
WHEREAS, Company wishes to establish a trust (hereinafter called
"Trust") and to contribute to the Trust assets that shall be held therein,
subject to the claims of Company's creditors in the event of Company's
Insolvency, as herein defined, until paid to Plan participants and their
beneficiaries in such manner and at such times as specified in the Plan;
WHEREAS, it is the intention of the parties that this Trust shall
constitute an unfunded arrangement and shall not affect the status of the Plan
as an unfunded plan maintained for the purpose of providing deferred
compensation for a select group of management or highly compensated employees
for purposes of Title I of the Employee Retirement Income Security Act of 1974;
WHEREAS, it is the intention of the Company to make contributions to
the Trust to provide itself with a source of funds to assist it in the meeting
of its liabilities under the Plan;
NOW, THEREFORE, the parties do hereby establish the Trust and agree
that the Trust shall be comprised, held and disposed of as follows:
Section 1. Establishment of Trust.
-----------------------
(a) Company hereby deposits with Trustee in trust $10.00,
which shall become the principal of the Trust to be held, administered and
disposed of by Trustee as provided in this Trust Agreement.
(b) The Trust hereby established shall be irrevocable.
(c) The Trust is intended to be a grantor trust, of which
Company is the grantor, within the meaning of subpart E, part I, subchapter J,
chapter 1, subtitle A of the Internal Revenue Code of 1986, as amended, and
shall be construed accordingly.
<PAGE> 20
(d) The principal of the Trust, and any earnings thereon shall
be held separate and apart from other funds of Company and shall be used
exclusively for the uses and purposes of Plan participants and general creditors
as herein set forth. Plan participants and their beneficiaries shall have no
preferred claim on, or any beneficial ownership interest in, any assets of the
Trust. Any rights created under the Plan and this Trust Agreement shall be mere
unsecured contractual rights of Plan participants and their beneficiaries
against Company. Any assets held by the Trust will be subject to the claims of
Company's general creditors under federal and state law in the event of
Insolvency, as defined in Section 3(a) herein.
(e) Company, in its sole discretion, may at any time, or from
time to time, make additional deposits of cash or other property in trust with
Trustee to augment the principal to be held, administered and disposed of by
Trustee as provided in this Trust Agreement. Subject to (f) below, neither
Trustee nor any Plan participant or beneficiary shall have any right to compel
such additional deposits.
(f) Upon a Change of Control, Company shall, as soon as
possible, but in no event longer than 30 days following the Change of Control,
as defined herein, make an irrevocable contribution to the Trust in an amount
that is sufficient to pay each Plan participant or beneficiary the benefits to
which Plan participants or their beneficiaries would be entitled pursuant to the
terms of the Plan as of the date on which the Change of Control occurred.
Section 2. Payments to Plan Participants and Their Beneficiaries.
------------------------------------------------------
(a) Company shall deliver to Trustee a schedule (the "Payment
Schedule") that indicates the amounts payable in respect of each Plan
participant (and his or her beneficiaries), that provides a formula or other
instructions acceptable to Trustee for determining the amounts so payable, the
form in which such amount is to be paid (as provided for or available under the
Plan), and the time of commencement for payment of such amounts. Except as
otherwise provided herein, Trustee shall make payments to the Plan participants
and their beneficiaries in accordance with such Payment Schedule. The Trustee
shall make provision for the reporting and withholding of any federal, state or
local taxes that may be required to be withheld with respect to the payment of
benefits pursuant to the terms of the Plan and shall pay amounts withheld to the
appropriate taxing authorities or determine that such amounts have been
reported, withheld and paid by Company.
(b) The entitlement of a Plan participant or his or her
beneficiaries to benefits under the Plan shall be determined by Company or such
party as it shall designate under the Plan, and any claim for such benefits
shall be considered and reviewed under the procedures set out in the Plan.
(c) Company may make payment of benefits directly to Plan
participants or their beneficiaries as they become due under the terms of the
Plan. Company shall notify Trustee of its decision to make payment of benefits
directly prior to the time amounts are payable to participants or their
beneficiaries. In addition, if the principal of the Trust, and any
- 2 -
<PAGE> 21
earnings thereon, are not sufficient to make payments of benefits in accordance
with the terms of the Plan, Company shall make the balance of each such payment
as it falls due. Trustee shall notify Company where principal and earnings are
not sufficient.
Section 3. Trustee Responsibility Regarding Payments to Trust Beneficiary
--------------------------------------------------------------
When Company Is Insolvent.
--------------------------
(a) Trustee shall cease payment of benefits to Plan
participants and their beneficiaries if the Company is Insolvent. Company shall
be considered "Insolvent" for purposes of this Trust Agreement if (i) Company is
unable to pay its debts as they become due, or (ii) Company is subject to a
pending proceeding as a debtor under the United States Bankruptcy Code.
(b) At all times during the continuance of this Trust, as
provided in Section 1(d) hereof, the principal and income of the Trust shall be
subject to claims of general creditors of Company under federal and state law as
set forth below.
(1) The Board of Directors and the Chief Financial
Officer of Company shall have the duty to inform Trustee in writing of Company's
Insolvency. If a person claiming to be a creditor of Company alleges in writing
to Trustee that Company has been Insolvent, Trustee shall determine whether
Company is Insolvent and, pending such determination, Trustee shall discontinue
payment of benefits to Plan participants or their beneficiaries.
(2) Unless Trustee has actual knowledge of Company's
Insolvency, or has received notice from Company or a person claiming to be a
creditor alleging that Company is Insolvent, Trustee shall have no duty to
inquire whether Company is Insolvent. Trustee may in all events rely on such
evidence concerning Company's solvency as may be furnished to Trustee and that
provides Trustee with a reasonable basis for making a determination concerning
Company's solvency.
(3) If at any time Trustee has determined that
Company is Insolvent, Trustee shall discontinue payments to Plan participants,
their beneficiaries and shall hold the assets of the Trust for the benefit of
Company's general creditors. Nothing in this Trust Agreement shall in any way
diminish any rights of Plan participants or their beneficiaries to pursue their
rights as general creditors of Company with respect to benefits due under the
Plan or otherwise.
(4) Trustee shall resume payment of benefits to Plan
participants or their beneficiaries in accordance with Section 2 of this Trust
Agreement only after Trustee has determined that Company is not Insolvent (or is
no longer Insolvent).
- 3 -
<PAGE> 22
(c) Provided that there are sufficient assets, if Trustee
discontinues the payment of benefits from the Trust pursuant to Section 3(b)
hereof and subsequently resumes such payments, the first payment following such
discontinuance shall include the aggregate amount of all payments due to Plan
participants or their beneficiaries under the terms of the Plan for the period
of such discontinuance, less the aggregate amount of any payments made to Plan
participants or their beneficiaries by Company in lieu of the payments provided
for hereunder during any such period of discontinuance.
(d) Any notice, report, demand or waiver required or permitted
hereunder shall be in writing and shall be given personally or by prepaid
registered or certified mail, return receipt requested, addressed as follows:
If to the Company: Mailing Address--
LSI Industries Inc.
10000 Alliance Road, P.O. Box 42728
Cincinnati, Ohio 45242
If to the Trustee: The Fifth Third Bank
Trust Department
38 Fountain Square Plaza
Cincinnati, Ohio 45263
Section 4. Payments to Company.
--------------------
Except as provided in Section 3 hereof, Company shall have no right or
power to direct Trustee to return to Company or to divert to others any of the
Trust assets before all payment of benefits have been made to Plan participants
and their beneficiaries pursuant to the terms of the Plan.
Section 5. Investment Authority.
---------------------
(a) Trustee may invest in securities (including stock or
rights to acquire stock) or obligations issued by LSI Industries Inc. All rights
associated with assets of the Trust shall be exercised by Trustee or the person
designated by Trustee, and shall in no event be exercisable by or rest with Plan
participants, except that voting rights with respect to Trust assets will be
exercised by Company.
(b) Subject to the direction of the Company, the Trustee is
authorized and empowered, in addition to powers granted under any applicable
statutes, regulations or rules which, to the extent of their granting of powers
applicable to trusts of a similar nature to the Trust, are incorporated herein
by reference:
(1) to purchase and subscribe for any securities or
other property and to retain such securities or other property in trust;
- 4 -
<PAGE> 23
(2) to sell at public or private sale, for cash, or
upon credit, or otherwise dispose of any property, real or personal, and no
person dealing with the Trustee shall be bound to see to the application or to
inquire into the validity, expediency or propriety of any such sale or other
disposition;
(3) to exercise any conversion privilege,
subscription right or other option pertaining to or in connection with
securities or other property held by it;
(4) to exercise itself, or by general or limited
power of attorney, any right, including the right to vote, incident to any
securities or other property held by it;
(5) to join in, dissent from or oppose the
reorganization, recapitalization, consolidation, sale or merger of corporations
or properties of which it may hold stocks, bonds or other securities or in which
it may be interested, to pay any expenses, assessments or subscriptions in
connection therewith, and to accept and to hold any other securities issued in
connection therewith;
(6) to manage, administer, operate, repair, improve,
mortgage, or lease for any number of years, or to otherwise deal with any real
property or interest therein; to renew or extend or to participate in the
renewal or extension of any mortgage, and to agree to the reduction in the
interest on any mortgage or other modification or change in the terms of any
mortgage or guarantee thereof in any manner and upon such terms as may be deemed
advisable; to waive any defaults whether in the performance of any covenant or
condition of any mortgage or in the performance of any guarantee or to enforce
any such default in such a manner as may be deemed advisable, including the
exercise and enforcement of any and all rights of foreclosure;
(7) to register any investment held in its own name
or in the name of a nominee or to hold any investment in bearer form;
(8) to employ suitable agents, accountants and
counsel and to pay their reasonable expenses and compensation;
(9) to hold any part or all of the assets uninvested;
(10) to invest in savings accounts, certificates of
deposit and other deposits which bear a reasonable rate of interest, with any
financial institution or quasi-financial institution, either domestic or
foreign, including any such financial institution operated or maintained by the
Trustee (or an affiliate) in its corporate capacity;
(11) to form corporations and partnerships and to
create trusts to hold title to any securities or other property, all upon such
terms and conditions as it may deem advisable;
- 5 -
<PAGE> 24
(12) to invest in open-end and closed-end investment
companies (including those for which the Trustee serves as investment advisor),
investment trusts, and in any partnership, limited or unlimited, joint venture
or other form of joint enterprise created for any lawful purpose;
(13) to adjust, settle, contest, compromise and
arbitrate any claims, debts, or damages due or owing to or from the assets, and
to sue, commence or defend any legal proceedings in reference thereto;
(14) to borrow money upon such terms and conditions
as may be deemed advisable to carry out the purposes of the Trust and to pledge
securities or other property in repayment of any such loan; provided, however,
that loans or advances may be made by the Trustee by way of overdrafts or
otherwise on a temporary basis on which no interest is payable;
(15) to enter into any type of contract with any
insurance company or companies, either for the purpose of investment or
otherwise, and, to the extent the Plan so provides, to purchase any life
insurance policy or annuity contract;
(16) to buy, sell, and deal in options as writer of
call options against securities, stocks, convertible preferred stocks,
convertible bonds and warrants, which are owned by the Trust, to repurchase
written call options in a closing transaction, to deliver the securities for
cash if the option is exercised, to buy put options for securities, stock,
convertible preferred stock, convertible bonds and warrants, which are owned by
the Trust, to resell put options in a closing transaction, and to deliver the
securities for cash if the option is exercised;
(17) to invest in any collective or common trust fund
operated and maintained by the Trustee, including, but not limited to, demand
notes, short-term notes and cash equivalent funds;
(18) to make, execute and deliver as Trustee any and
all deeds, leases, mortgages, advances, contracts, waivers, releases or other
instruments in writing necessary or proper in the employment of any of the
foregoing powers; and
(19) to exercise, generally, any of the powers which
an individual owner might exercise in connection with property either real,
personal or mixed and to do all other acts that the Trustee may deem necessary
or proper to carry out any of the powers set forth in this Section 5 or
otherwise in the best interests of the Trust.
(c) Company shall have the right at any time, and from time to
time in its sole discretion, to substitute assets of equal fair market value for
any asset held by the Trust. This right is exercisable by Company in a
nonfiduciary capacity without the approval or consent of any person in a
fiduciary capacity.
- 6 -
<PAGE> 25
Section 6. Disposition of Income.
----------------------
During the term of this Trust, all income received by the Trust, net of
expenses and taxes, shall be accumulated and reinvested.
Section 7. Accounting by Trustee.
----------------------
Trustee shall keep accurate and detailed records of all investments,
receipts, disbursements, and all other transactions required to be made,
including such specific records as shall be agreed upon in writing between
Company and Trustee. Within 60 days following the close of each Plan year and
within 30 days after the removal or resignation of Trustee, Trustee shall
deliver to Company a written account of its administration of the Trust during
such year or during the period from the close of the last preceding year to the
date of such removal or resignation, setting forth all investments, receipts,
disbursements and other transactions effected by it, including a description of
all securities and investments purchased and sold with the cost or net proceeds
of such purchases or sales (accrued interest paid or receivable being shown
separately), and shown all cash, securities and other property held in the Trust
at the end of such year or as of the date of such removal or resignation, as the
case may be.
Section 8. Responsibility of Trustee.
--------------------------
(a) Trustee shall act with the care, skill, prudence and
diligence under the circumstances then prevailing that a prudent person acting
in like capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims, provided, however, that
Trustee shall incur no liability to any person for any action taken pursuant to
a direction, request or approval given by Company which is contemplated by, and
in conformity with, the terms of the Plan or this Trust and is given in writing
by Company. In the event of a dispute between Company and a party, Trustee may
apply to a court of competent jurisdiction to resolve the dispute.
(b) If Trustee undertakes or defends any litigation or claims
arising in connection with this Trust, Company agrees to indemnify Trustee
against Trustee's reasonable costs, expenses and liabilities (including, without
limitation, reasonable attorneys' fees and expenses) relating thereto and to be
primarily liable for such payments. If Company does not pay such reasonable
costs, expenses and liabilities in a reasonably timely manner, Trustee may
obtain reasonable payment from the Trust.
(c) Trustee may consult with legal counsel (who may also be
counsel for Company generally) with respect to any of its duties or obligations
hereunder.
(d) Trustee may hire agents, accountants, actuaries,
investment advisors, financial consultants or other professionals to assist it
in performing any of its duties or obligations hereunder.
- 7 -
<PAGE> 26
(e) Trustee shall have, without exclusion, all powers
conferred on Trustees by applicable law, unless expressly provided otherwise
herein, provided, however, that if an insurance policy is held as an asset of
the Trust, Trustee shall have no power to name a beneficiary of the policy other
than the Trust, to assign the policy (as distinct from conversion of the policy
to a different form) other than to a successor Trustee, or to loan to any person
the proceeds of any borrowing against such policy.
(f) Notwithstanding any powers granted to Trustee pursuant to
this Trust Agreement or to applicable law, Trustee shall not have any power that
could give this Trust the objective of carrying on a business and dividing the
gains therefrom, within the meaning of section 301.7701-2 of the Procedure and
Administrative Regulations promulgated pursuant to the Internal Revenue Code.
Section 9. Compensation and Expenses of Trustee.
-------------------------------------
Company shall pay all administrative and Trustee's fees and reasonable
expenses. If not so paid, the fees and expenses shall be paid from the Trust.
Section 10. Resignation and Removal of Trustee.
-----------------------------------
(a) Trustee may resign at any time by written notice to LSI
Industries Inc., which shall be effective 60 days after receipt of such notice
unless LSI Industries Inc. and Trustee agree otherwise.
(b) Trustee may be removed by LSI Industries Inc. on 60 days
notice or upon shorter notice accepted by Trustee.
(c) Upon a Change of Control, as defined herein, Trustee may
not be removed by LSI Industries Inc. for 2 years.
(d) If Trustee resigns within 2 years of a Change of Control,
as defined herein, Trustee shall select a successor Trustee in accordance with
the provisions of Section 11(b) hereof prior to the effective date of Trustee's
resignation or removal.
(e) Upon resignation or removal of Trustee and appointment of
a successor Trustee, all assets shall subsequently be transferred to the
successor Trustee. The transfer shall be completed within 60 days after receipt
of notice of resignation, removal or transfer, unless LSI Industries Inc.
extends the time limit.
(f) If Trustee resigns or is removed, a successor shall be
appointed, in accordance with Section 10 hereof, by the effective date of
resignation or removal under
- 8 -
<PAGE> 27
paragraphs (a) or (b) of this section. If no such appointment has been made,
Trustee may apply to a court of competent jurisdiction for appointment of a
successor or for instructions. All expenses of Trustee in connection with the
proceeding shall be allowed as administrative expenses of the Trust.
Section 11. Appointment of Successor.
-------------------------
(a) If Trustee resigns or is removed in accordance with
Section 10(a) or (b) hereof, LSI Industries Inc. may appoint any third party,
such as a bank trust department or other party that may be granted corporate
trustee powers under state law, as a successor to replace Trustee upon
resignation or removal. The appointment shall be effective when accepted in
writing by the new Trustee, who shall have all of the rights and powers of the
former Trustee, including ownership rights in the Trust assets. The former
Trustee shall execute any instrument necessary or reasonably requested by
Company or the successor Trustee to evidence the transfer.
(b) The successor Trustee need not examine the records and
acts of any prior Trustee and may retain or dispose of existing Trust assets,
subject to Section 7 and 8 hereof. The successor Trustee shall not be
responsible for and Company shall indemnify and defend successor Trustee from
any claim or liability resulting from any action or inaction of any prior
Trustee or from any other past event, or any condition existing at the time it
becomes successor Trustee.
Section 12. Amendment and Termination.
--------------------------
(a) This Trust Agreement may be amended by a written
instrument executed by Trustee and LSI Industries Inc. Notwithstanding the
foregoing, no such amendment shall conflict with the terms of the Plan or shall
make the Trust revocable.
(b) The Trust shall not terminate until the date on which Plan
participants and their beneficiaries are no longer entitled to benefits pursuant
to the terms of the Plan. Upon termination of the Trust any assets remaining in
the Trust shall be returned to Company.
Section 13. Miscellaneous.
--------------
(a) Any provisions of this Trust Agreement prohibited by law
shall be ineffective to the extent of any such prohibition, without invalidating
the remaining provisions hereof.
(b) Benefits payable to Plan participants and their
beneficiaries under this Trust Agreement may not be anticipated, assigned
(either at law or in equity), alienated, pledged, encumbered or subjected to
attachment, garnishment, levy, execution or other legal or equitable process.
- 9 -
<PAGE> 28
(c) This Trust Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio.
(d) For purposes of this Trust, Change of Control shall mean
the purchase or other acquisition by any person, entity or group of persons,
within the meaning of section 13(d) or 14(d) of the Securities Exchange Act of
1934 ("Act"), or any comparable successor provisions, of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Act) of 30 percent or
more of either the outstanding shares of common stock or the combined voting
power of Company's then outstanding voting securities entitled to vote
generally, or the approval by the stockholders of Company of a reorganization,
merger or consolidation, in each case, with respect to which persons who were
stockholders of Company immediately prior to such reorganization, merger or
consolidation do not, immediately thereafter, own more than 50 percent of the
combined voting power entitled to vote generally in the election of directors of
the reorganized, merged or consolidated Company's then outstanding securities,
or a liquidation or dissolution of Company or of the sale of all or
substantially all of Company's assets.
Section 14. Effective Date.
---------------
The effective date of this Trust Agreement shall be September 15, 1996.
COMPANY: TRUSTEE:
- -------- --------
LSI INDUSTRIES INC. THE FIFTH THIRD BANK
By: /s/ Ronald S. Stowell By: /s/ John S. Rybka
----------------------------------- --------------------------------
Title: Chief Financial Officer & Its: Vice President
-------------------------------- ------------------------------
Treasurer
--------------------------------
GREENLEE LIGHTING L.P.
By: /s/ Ronald S. Stowell
-----------------------------------
Title: Treasurer
--------------------------------
SGI INTEGRATED GRAPHIC
SYSTEMS L.P.
By: /s/ Ronald S. Stowell
-----------------------------------
Title: Treasurer
--------------------------------
- 10 -
<PAGE> 1
EXHIBIT 11
STATEMENT RE COMPUTATION OF EARNINGS PER SHARE
----------------------------------------------
(IN THOUSANDS, EXCEPT PER SHARE)
<TABLE>
<CAPTION>
1996 1995 1994
------- ------ ------
<S> <C> <C> <C>
NET INCOME
- ----------
Income from Continuing Operations $ 8,270 $6,174 $4,190
Discontinued Operations (1,500) -- --
------- ------ ------
Net Income $ 6,770 $6,174 $4,190
======= ====== ======
AVERAGE SHARES OUTSTANDING
- --------------------------
Weighted average shares
outstanding during the period,
net of treasury shares 8,096 7,515 7,420
Common Share Equivalents:
Common Shares to be issued
under Stock Option Plan (a) 360 287 236
------- ------ ------
8,456 7,802 7,656
======= ====== ======
NET INCOME PER SHARE
- --------------------
Continuing Operations $ .98 $ .79 $ .55
Discontinued Operations (.18) -- --
------- ------ ------
Net Income per share $ .80 $ .79 $ .55
======= ====== ======
<FN>
Notes (a): Calculated using the "Treasury Stock" method as if options were
exercised and the funds were used to purchase Common Shares at the
average market price during the period.
</TABLE>
<PAGE> 1
EXHIBIT 22
SUBSIDIARIES OF THE REGISTRANT
------------------------------
<TABLE>
<CAPTION>
Percent
Business and Owned by State of
Subsidiary Location Registrant Incorporation
- ---------- -------- ---------- -------------
<S> <C> <C> <C>
SGI Integrated Graphic Limited Partner 100% Delaware
Systems Inc. Wilmington, Delaware
SGI Delaware Systems Inc. General Partner 100% Delaware
Wilmington, Delaware
SGI Integrated Graphic Screen printed materials, 100% Delaware
Systems L.P. and illuminated and non- (Partnership)
illuminated architectural
graphics
Houston, Texas
Greenlee Lighting Inc. Limited Partner 100% Delaware
Wilmington, Delaware
Greenlee Incorporated General Partner 100% Delaware
Wilmington, Delaware
Greenlee Lighting L.P. Landscape Lighting 100% Delaware
Dallas, Texas (Partnership)
</TABLE>
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report included in this Form 10-K, into the Company's previously filed
Registration Statement File No.'s 33-3490, 33-19326, 33-0840, 33-64721 and
33-64723.
/s/ Arthur Andersen LLP
Arthur Andersen LLP
Cincinnati, Ohio
September 4, 1996
<PAGE> 2
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectuses
constituting part of the Registration Statement on Form S-8 (No. 33-3490, No.
33-19326 and No. 33-0840) of LSI Industries Inc. of our report dated August 18,
1995, which appears on page S-5 of this Form 10-K.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
Cincinnati, Ohio
August 30, 1996
<PAGE> 1
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or
director of LSI Industries Inc., an Ohio corporation, which is about to file an
annual report on Form 10-K for the fiscal year ended June 30, 1996, under
provisions of the Securities Exchange Act of 1934, with the Securities and
Exchange Commission, Washington, D.C., hereby constitutes and appoints Robert J.
Ready or Ronald S. Stowell his true and lawful attorney-in-fact and agent, and
each of them with full power to act without the other, his true and lawful
attorney-in-fact and agent, for him and in his name, place and stead, in any and
all capacities, to sign such Form 10-K and any and all amendments thereof, with
power where appropriate to affix the corporate seal of said corporation thereto
and to attest to said seal, and to file such Form 10-K and each such amendment,
with all exhibits thereto, and any and all other documents, in connection
therewith, with the Securities and Exchange Commission, hereby grants unto said
attorney-in-fact and agent, and each of them, full power and authority to do and
perform any and all acts and things requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as he might or could do
in person and hereby ratifies and confirms all that said attorney-in-fact and
agent, or either of them may lawfully do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on this
21st day of August, 1996.
/s/ Michael J. Burke
---------------------------
Michael J. Burke
<PAGE> 2
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or
director of LSI Industries Inc., an Ohio corporation, which is about to file an
annual report on Form 10-K for the fiscal year ended June 30, 1996, under
provisions of the Securities Exchange Act of 1934, with the Securities and
Exchange Commission, Washington, D.C., hereby constitutes and appoints Robert J.
Ready or Ronald S. Stowell his true and lawful attorney-in-fact and agent, and
each of them with full power to act without the other, his true and lawful
attorney-in-fact and agent, for him and in his name, place and stead, in any and
all capacities, to sign such Form 10-K and any and all amendments thereof, with
power where appropriate to affix the corporate seal of said corporation thereto
and to attest to said seal, and to file such Form 10-K and each such amendment,
with all exhibits thereto, and any and all other documents, in connection
therewith, with the Securities and Exchange Commission, hereby grants unto said
attorney-in-fact and agent, and each of them, full power and authority to do and
perform any and all acts and things requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as he might or could do
in person and hereby ratifies and confirms all that said attorney-in-fact and
agent, or either of them may lawfully do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on this
21st day of August, 1996.
/s/ Allen L. Davis
---------------------------
Allen L. Davis
<PAGE> 3
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or
director of LSI Industries Inc., an Ohio corporation, which is about to file an
annual report on Form 10-K for the fiscal year ended June 30, 1996 under
provisions of the Securities Exchange Act of 1934, with the Securities and
Exchange Commission, Washington, D.C., hereby constitutes and appoints Robert J.
Ready or Ronald S. Stowell his true and lawful attorney-in-fact and agent, and
each of them with full power to act without the other, his true and lawful
attorney-in-fact and agent, for him and in his name, place and stead, in any and
all capacities, to sign such Form 10-K and any and all amendments thereof, with
power where appropriate to affix the corporate seal of said corporation thereto
and to attest to said seal, and to file such Form 10-K and each such amendment,
with all exhibits thereto, and any and all other documents, in connection
therewith, with the Securities and Exchange Commission, hereby grants unto said
attorney-in-fact and agent, and each of them, full power and authority to do and
perform any and all acts and things requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as he might or could do
in person and hereby ratifies and confirms all that said attorney-in-fact and
agent, or either of them may lawfully do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on this
21st day of August, 1996.
/s/ James P. Sferra
---------------------------
James P. Sferra
<PAGE> 4
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or
director of LSI Industries Inc., an Ohio corporation, which is about to file an
annual report on Form 10-K for the fiscal year ended June 30, 1996, under
provisions of the Securities Exchange Act of 1934, with the Securities and
Exchange Commission, Washington, D.C., hereby constitutes and appoints Robert J.
Ready or Ronald S. Stowell his true and lawful attorney-in-fact and agent, and
each of them with full power to act without the other, his true and lawful
attorney-in-fact and agent, for him and in his name, place and stead, in any and
all capacities, to sign such Form 10-K and any and all amendments thereof, with
power where appropriate to affix the corporate seal of said corporation thereto
and to attest to said seal, and to file such Form 10-K and each such amendment,
with all exhibits thereto, and any and all other documents, in connection
therewith, with the Securities and Exchange Commission, hereby grants unto said
attorney-in-fact and agent, and each of them, full power and authority to do and
perform any and all acts and things requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as he might or could do
in person and hereby ratifies and confirms all that said attorney-in-fact and
agent, or either of them may lawfully do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on this
21st day of August, 1996.
/s/ John N. Taylor, Jr.
---------------------------
John N. Taylor, Jr.
<PAGE> 5
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or
director of LSI Industries Inc., an Ohio corporation, which is about to file an
annual report on Form 10-K for the fiscal year ended June 30, 1996, under
provisions of the Securities Exchange Act of 1934, with the Securities and
Exchange Commission, Washington, D.C., hereby constitutes and appoints Robert J.
Ready or Ronald S. Stowell his true and lawful attorney-in-fact and agent, and
each of them with full power to act without the other, his true and lawful
attorney-in-fact and agent, for him and in his name, place and stead, in any and
all capacities, to sign such Form 10-K and any and all amendments thereof, with
power where appropriate to affix the corporate seal of said corporation thereto
and to attest to said seal, and to file such Form 10-K and each such amendment,
with all exhibits thereto, and any and all other documents, in connection
therewith, with the Securities and Exchange Commission, hereby grants unto said
attorney-in-fact and agent, and each of them, full power and authority to do and
perform any and all acts and things requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as he might or could do
in person and hereby ratifies and confirms all that said attorney-in-fact and
agent, or either of them may lawfully do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on this
21st day of August, 1996.
/s/ Donald E. Whipple
---------------------------
Donald E. Whipple
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-K
FOR THE FISCAL YEAR ENDED JUNE 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
<CASH> 11,138
<SECURITIES> 0
<RECEIVABLES> 25,183
<ALLOWANCES> (358)
<INVENTORY> 19,660
<CURRENT-ASSETS> 57,869
<PP&E> 31,505
<DEPRECIATION> (11,178)
<TOTAL-ASSETS> 79,496
<CURRENT-LIABILITIES> 21,723
<BONDS> 1,382
<COMMON> 28,082
0
0
<OTHER-SE> 26,655
<TOTAL-LIABILITY-AND-EQUITY> 79,496
<SALES> 152,733
<TOTAL-REVENUES> 152,733
<CGS> 104,221
<TOTAL-COSTS> 34,773
<OTHER-EXPENSES> 62
<LOSS-PROVISION> 328
<INTEREST-EXPENSE> 344
<INCOME-PRETAX> 13,005
<INCOME-TAX> 4,735
<INCOME-CONTINUING> 8,270
<DISCONTINUED> (1,500)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,770
<EPS-PRIMARY> .80
<EPS-DILUTED> .80
</TABLE>
