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FORM 11-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
X ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
----- EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED JUNE 30, 1997.
TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
----- EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
______________________ TO ________________.
Commission File No. 333-11503
LSI Industries Inc. Nonqualified Deferred Compensation Plan
LSI Industries Inc.
State of Incorporation - Ohio IRS Employer I.D. No. 31-0888951
10000 Alliance Road
Cincinnati, Ohio 45242
(513) 793-3200
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LSI INDUSTRIES INC.
NONQUALIFIED DEFERRED COMPENSATION PLAN
FINANCIAL STATEMENTS
AS OF
JUNE 30, 1997
TOGETHER WITH
AUDITORS' REPORT
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LSI INDUSTRIES INC.
NONQUALIFIED DEFERRED COMPENSATION PLAN
TABLE OF CONTENTS
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PAGE(S)
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Report of Independent Public Accountants 4
Statement of Net Assets Available for Benefits as of June 30, 1997 5
Statement of Changes in Net Assets Available for Benefits for the Period from Inception
(September 15, 1996) to June 30, 1997 6
Notes to Financial Statements 7-10
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Report of Independent Public Accountants
To the Plan Administrator of
LSI Industries Inc. Nonqualified
Deferred Compensation Plan:
We have audited the accompanying statement of net assets available for
benefits of LSI INDUSTRIES INC. NONQUALIFIED DEFERRED COMPENSATION PLAN (the
Plan) as of June 30, 1997 and the related statement of changes in net assets
available for benefits for the period from inception (September 15, 1996) to
June 30, 1997. These financial statements are the responsibility of the Plan
Administrator. Our responsibility is to express an opinion on these financial
statements 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 the
Plan Administrator, as well as evaluating the overall financial statement
presentation.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the net assets available for benefits of the
Plan as of June 30, 1997, and the changes in its net assets available for
benefits for the period then ended, in conformity with generally accepted
accounting principles.
/s/ Arthur Andersen LLP
Arthur Andersen LLP
Cincinnati, Ohio,
March 20, 1998
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LSI INDUSTRIES INC.
NONQUALIFIED DEFERRED COMPENSATION PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF JUNE 30, 1997
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JUNE 30,
1997
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ASSETS:
Receivable from LSI Industries Inc. (Note 1) $451,924
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NET ASSETS AVAILABLE FOR BENEFITS $451,924
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The accompanying notes are an integral part of
these financial statements.
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LSI INDUSTRIES INC.
NONQUALIFIED DEFERRED COMPENSATION PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE PERIOD FROM INCEPTION (SEPTEMBER 15, 1996) TO JUNE 30, 1997
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JUNE 30, 1997
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Net assets available for benefits, beginning of period $ -
Contributions (Note 1):
Participant voluntary deferrals 123,704
Company-
Make-up contributions 271,016
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394,720
Phantom investment earnings deferral 57,204
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Net assets available for benefits, end of year $451,924
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The accompanying notes are an integral part of
these financial statements.
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LSI INDUSTRIES INC.
NONQUALIFIED DEFERRED COMPENSATION PLAN
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
(1) Plan Description-
The following description of the LSI Industries Inc. Nonqualified
Deferred Compensation Plan (the Plan) provides only summary information.
Reference should be made to the Plan document for a more complete
description of the Plan's provisions.
The Plan, established on September 15, 1996, is an unfunded deferred
compensation agreement established for the purpose of providing
supplemental retirement savings primarily for a select group of
management or highly compensated employees of LSI Industries Inc. (LSI or
the Company) and its subsidiaries. As an unfunded Plan, no assets of the
Company have been segregated to pay the amounts due to participants under
the Plan. The Plan is administered by the Company through the
Compensation Committee. The administrative expenses of the Plan are paid
by the Company and are not included in the accompanying statements.
The Plan provides for three types of awards as follows:
o Voluntary Deferrals--Each Plan participant may elect to defer up to
100% of his salary and bonus for the Company's fiscal year. As
discussed below, these deferrals can be allocated to a number of
investment options at the discretion of the participant.
o Matching Incentive Contributions--Under certain circumstances, Plan
participants will be eligible for matching incentive contributions.
These contributions will be made annually over a three-year period
for each year the Company achieves a return on average shareholders'
equity of at least 18%. These annual matching employer contributions
will range from 10% to 30% depending upon the management level of the
participant and the actual return on average shareholders' equity.
Participants will be eligible to receive these matching contributions
in each of the three years beginning in the year the participant
makes a voluntary deferral eligible for the match. A maximum of 40%
of the participant's total salary and bonus is eligible for matching
incentive contributions.
Only voluntary deferrals that are allocated to the LSI Common Shares
investment option are eligible for the matching contribution. These
deferrals are eligible for the match only if, as of the beginning of
the Plan year, at least 50% of the value of the participant's
deferred compensation account attributable to voluntary deferrals
(for all plan years) is allocated to the LSI Common Shares investment
option.
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Make-Up Contributions--Participants in the Plan are entitled to
receive two types of make-up contributions:
- IRS Limitations--To the extent that a participant's allocation
of employer contributions under the LSI Industries Inc.
Retirement Plan and Trust (the Qualified Plan) has been subject
to the $150,000 compensation limitation imposed by IRC Section
401(a)(17), the participant's deferred compensation account will
be credited to the full extent of the limitation.
- Allocation of Employer Contributions and Forfeitures under the
Qualified Plan--The Qualified Plan specifies that employer
contributions are to be allocated to participant accounts based
upon covered compensation. To the extent that a Plan participant
elects to defer compensation under the Plan, and this deferral
election results in the participant receiving a smaller
allocation of employer contributions and forfeitures under the
Qualified Plan, the participant's deferred compensation account
will be credited with an amount to make up this difference.
Each participant elects to allocate his voluntary deferrals amongst
specified investment options for purposes of measuring return on the
deferral. The Plan does not permit transfers to or from an investment in
LSI Industries Inc. Common Shares after the initial investment is made.
At June 30, 1997 and for the period then ended, the phantom investment
options for the Plan consist of the following:
o LSI Industries Inc. Common Shares
o Fountain Square U.S. Treasury Obligations Fund (i.e., U.S. Treasury
obligations)
o Fountain Square Quality Bond Fund (i.e., investment grade bonds with
maturities of seven to ten years)
o Fountain Square International Equity Fund (i.e., common stock of
non-U.S. companies)
Deferred compensation account balances attributable to make-up
contributions and matching contributions must be credited to the LSI
Common Shares investment option. Participants have no right to change the
investment option with respect to these contributions.
Investment earnings are credited to the mutual fund investment options
based upon the actual rate of return earned by those funds. Investment
earnings are also credited with any unrealized appreciation or
depreciation in the market value of LSI Industries Inc. common shares.
Participants are 100% vested in voluntary deferrals made into the Plan.
The matching incentive contributions are subject to forfeiture in most
cases if a participant terminates employment prior to the end of the
third year. In addition, the portion of a participant's
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deferred compensation account attributable to make-up contributions is
typically subject to full or partial forfeiture if the participant
terminates with less than six "Years of Vested Service," as defined in
the Qualified Plan.
(2) Accounting Policies-
(a) Basis of Accounting--The Plan uses the accrual basis of accounting.
(b) Payment of Benefit--Benefits are recorded in participant's accounts
when paid.
(c) Use of Estimates--The preparation of financial statements in
conformity with generally accepted accounting principles requires the
Plan Administrator to make estimates and assumptions that affect the
financial statements. Actual results could differ from those
estimates.
(3) Priorities Upon Termination of the Plan-
Upon termination of the Plan, participants become fully vested in their
individual deferred compensation accounts.
(4) Present Value of Accumulated Plan Benefits-
Accumulated plan benefits represent the future benefit payments due to
participants under the provisions of the Plan. The present value of
accumulated plan benefits is equal to the total fair market value of the
participants' deferred compensation account balances (i.e., compensation
deferred plus company make-up contributions plus (minus) phantom
investment earnings (losses) less benefits paid).
The present value of accumulated plan benefits as of June 30, 1997 is as
follows:
Present value of accumulated plan benefits:
Vested $446,627
Nonvested 5,297
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Total present value of accumulated plan benefits $451,924
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Changes in the present value of accumulated plan benefits from inception
(September 15, 1996) through June 30, 1997 is as follows:
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Present value of accumulated plan benefits at inception
(September 15, 1996) $ -
Benefits accumulated through:
Participant voluntary deferrals 123,704
Company make-up contributions 271,016
Phantom investment earnings deferral 57,204
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Present value of accumulated plan benefits at June 30, 1997 $451,924
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(5) Income Tax Status-
The Plan is an "employee benefit plan" under Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended (ERISA), and,
therefore, is not subject to ERISA. The Plan also is not a qualified Plan
under Section 410(a) of the Internal Revenue Code of 1986, as amended.
Amounts deferred, along with any dividends and interest accrued thereon,
are not considered taxable income to a participant until distributed.
Amounts distributed from the Plan are considered compensation taxable as
ordinary income in the year distributed, in an amount equal to the total
of all cash and the existing fair market value of all LSI common shares
distributed.
Subsequent dispositions by a participant of LSI common shares received
from the Plan may result in capital gains (losses) equal to the amount
realized over (under) the tax basis in the shares. The tax basis is
generally considered to be the amount of ordinary income recognized in
conjunction with the distribution from the Plan.
(6) Participant Withdrawals-
Participants can elect to receive distributions from their deferred
compensation account either in a single lump sum payment or equal monthly
installments of not less than 12 months nor more than 120 months upon
termination of services with the Company.
All distributions to be made under the Plan from a participant's LSI
common shares account are to be made in the form of shares of LSI
Industries Inc. common stock and cash in lieu of fractional shares. All
other benefit payments will be made in cash.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Trustees have duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
LSI Industries Inc. Nonqualified Deferred Compensation Plan
BY: /s/ Robert J. Ready
----------------------
Robert J. Ready
Plan Administrator
BY: /s/ Ronald S. Stowell
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Ronald S. Stowell
Plan Administrator
March 20, 1998
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LSI INDUSTRIES INC.
NONQUALIFIED DEFERRED COMPENSATION PLAN
FORM 11-K
EXHIBIT INDEX
Exhibit Index Exhibit No.
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Consent of Independent Public Accountants 23
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EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report included in this Form 11-K, into the Company's previously filed
Registration Statement File No. 333-11503.
/s/ Arthur Andersen LLP
Arthur Andersen LLP
Cincinnati, Ohio
March 20, 1998
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