<PAGE> 1
SCHEDULE 14A
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
LSI Industries Inc.
------------------------------------------------
(Name of Registrant as Specified in its Charter)
LSI Industries Inc.
------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i) (1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
---------------------------------------------------------------
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:(1)
---------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------
(1)Set forth the amount on which the filing fee is
calculated and state how it was determined.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
---------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
---------------------------------------------------------------
3) Filing Party:
---------------------------------------------------------------
4) Date Filed:
---------------------------------------------------------------
<PAGE> 2
[LSI INDUSTRIES LOGO]
NOTICE OF ANNUAL MEETING
AND PROXY STATEMENT
September 24, 1999
Dear Shareholder:
We invite you to attend our annual meeting of shareholders on Thursday,
November 11, 1999, at the Company's headquarters located at 10000 Alliance
Road, Cincinnati, Ohio. At the meeting, you will hear a report on our
operations and have a chance to meet your directors and executives.
This booklet includes the formal notice of the meeting and the proxy statement.
The proxy statement tells you more about the agenda and procedures for the
meeting. It also describes how the Board operated and gives a personal
information about our director candidates.
Even if you only own a few shares, we want your shares to be represented at the
meeting. I urge you to complete, sign, date and promptly return your proxy card
in the enclosed envelope.
Sincerely yours,
/s/ Robert J. Ready
Robert J. Ready
Chairman of the Board,
Chief Executive Officer, and President
<PAGE> 3
[LSI INDUSTRIES LOGO]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS OF
LSI INDUSTRIES INC.
TIME:
10:00 a.m., Eastern Standard Time
DATE:
Thursday, November 11, 1999
PLACE:
LSI Industries Corporate Headquarters
10000 Alliance Road
Cincinnati, Ohio 45242
PURPOSE:
- - Elect Directors
- - Ratify the appointment of Arthur Andersen LLP as the Company's
independent public accountants for fiscal year 2000
- - Conduct other business if properly raised
Only shareholders of record on September 16, 1999 may vote at the meeting. The
approximate mailing date of the Proxy Statement and accompanying Proxy Card is
September 27, 1999.
YOUR VOTE IS IMPORTANT. PLEASE COMPLETE, SIGN, DATE, AND PROMPTLY RETURN YOUR
PROXY CARD IN THE ENCLOSED ENVELOPE.
/s/ Robert J. Ready
Robert J. Ready
Chairman of the Board,
Chief Executive Officer, and President
September 24, 1999
<PAGE> 4
<TABLE>
<CAPTION>
LSI Industries Inc.
Proxy Statement
Table of Contents
-----------------
Begins on
Page
<S> <C>
INTRODUCTION.................................................................. 1
VOTING AT ANNUAL MEETING...................................................... 1
General Information..................................................... 1
Principal Shareholders.................................................. 2
Voting by Proxy......................................................... 2
Shareholder Proposals................................................... 2
Proposal 1. Election of Directors............................. 3
Proposal 2. Ratification of Appointment of
Independent Public Accountants.................... 3
Other Matters.................................................. 4
MANAGEMENT.................................................................... 4
Directors and Executive Officers........................................ 4
Board Actions........................................................... 6
Compliance with Section 16 of the Securities Exchange Act of 1934....... 6
Executive Compensation.................................................. 7
Stock Options........................................................... 7
REPORT OF THE COMPENSATION COMMITTEE.......................................... 8
Base Compensation....................................................... 8
Incentive Compensation.................................................. 8
Stock Option Grants..................................................... 9
CORPORATE PERFORMANCE GRAPH................................................... 9
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION................... 10
OTHER MATTERS................................................................. 10
QUESTIONS ................................................................... 11
</TABLE>
<PAGE> 5
LSI INDUSTRIES INC.
10000 ALLIANCE ROAD
CINCINNATI, OHIO 45242
TELEPHONE (513) 793-3200
------------------------------------------
P R O X Y S T A T E M E N T
ANNUAL MEETING OF SHAREHOLDERS
NOVEMBER 11, 1999
INTRODUCTION
The Board of Directors of LSI Industries Inc. is requesting your Proxy
for the Annual Meeting of Shareholders on November 11, 1999, and at any
adjournment thereof, pursuant to the foregoing Notice. This Proxy Statement and
the accompanying proxy were first mailed on September 27, 1999, to shareholders
of record on September 16, 1999.
VOTING AT ANNUAL MEETING
GENERAL INFORMATION
Shareholders may vote in person or by proxy at the Annual Meeting.
Proxies given may be revoked at any time by filing with the Company either a
written revocation or a duly executed proxy bearing a later date, or by
appearing at the Annual Meeting and voting in person. All shares will be voted
as specified on each properly executed proxy. If no choice is specified, the
shares will be voted as recommended by the Board of Directors, namely "FOR"
Proposal 1 to elect the two persons nominated as Class A directors by the Board
of Directors, and "FOR" Proposal 2 (Ratification of Appointment of Independent
Public Accountants).
As of September 16, 1999, the record date for determining shareholders
entitled to notice of and to vote at the Annual Meeting, LSI Industries had
10,173,056 Common Shares outstanding. Each share is entitled to one vote. Only
shareholders of record at the close of business on September 16, 1999, will be
entitled to vote at the Annual Meeting. Abstentions and shares otherwise not
voted for any reason, including broker non-votes, will have no effect on the
outcome of any vote taken at the Annual Meeting.
-1-
<PAGE> 6
PRINCIPAL SHAREHOLDERS
As of September 10, 1999, the following are the only shareholders
known by the Company to own beneficially 5% or more of its outstanding Common
Shares:
<TABLE>
<CAPTION>
Amount and Nature of Percent
Name of Beneficial Owner Beneficial Ownership Of Class
- ------------------------ -------------------- --------
<S> <C> <C>
DePrince, Race & Zollo, Inc. 608,800 5.90%
201 South Orange Ave.
Suite 850
Orlando, FL 32801
Robert J. Ready 567,149 (a) 5.50%
10000 Alliance Road
Cincinnati, Ohio 45242
State of Wisconsin Investment Board 564,000 5.47%
121 East Wilson Street
Madison, WI 53702
T. Rowe Price Associates, Inc. 550,000 5.33%
100 East Pratt Street
Baltimore, MD 21202
Fleet Investment Advisors, Inc. 537,678 5.21%
75 State Street
Boston, MA 02109
<FN>
(a) Includes exercisable options for 13,500 shares, 11,910 shares held in
the Company's non-qualified Deferred Compensation Plan, and 130,488
shares held in trust for Mr. Ready's children. Mr. Ready disclaims
beneficial ownership of shares held by or in trust for his children.
</TABLE>
VOTING BY PROXY
All properly signed proxies will, unless a different choice is
indicated, be voted "FOR" the election of the two nominees for Class A
directors proposed by the Board of Directors, and ratification of the
appointment of independent public accountants.
If any other matters come before the meeting or any adjournment, each
proxy will be voted in the discretion of the individuals named as proxies on
the card.
SHAREHOLDER PROPOSALS
Shareholders who desire to have proposals included in the Notice for
the 2000 Annual Meeting of Shareholders must submit their proposals to the
Company at its offices on or before May 30, 2000.
-2-
<PAGE> 7
The form of Proxy for the Annual Meeting of Shareholders grants
authority to the persons designated therein as proxies to vote in their
discretion on any matters that come before the meeting, or any adjournment
thereof, except those set forth in the Company's Proxy Statement and except for
matters as to which adequate notice is received. In order for a notice to be
deemed adequate for the 2000 Annual Shareholders' Meeting, it must be received
prior to August 11, 2000.
PROPOSAL 1. ELECTION OF DIRECTORS
The Company's Code of Regulations provides that the Board of Directors
be composed of two classes of directors, Class A and Class B, with each class
elected for a two-year term. One class is elected annually. The terms of the
Class A directors expire at the 1999 Annual Meeting of Shareholders while the
terms of the Class B directors expire at the 2000 Annual Meeting of
Shareholders.
The Board is nominating for reelection two present Class A directors,
namely, Michael J. Burke and Robert J. Ready. Proxies solicited by the Board
will be voted for the election of these two nominees. John N. Taylor, Jr., a
Class A director, has indicated that he will retire from the Board of Directors
effective November 11, 1999. This Director's position will remain vacant until
such time as the Board of Directors locates and recruits a suitable replacement
board member. No candidate is being nominated by the Board for this imminent
vacancy at the present time.
All Class A directors elected at the Annual Meeting will be elected to
hold office for two years and until their successors are elected and qualified.
In voting to elect directors, shareholders are entitled to one vote
for each share held of record. Shareholders are not entitled to cumulate their
votes in the election of directors.
Should any of the nominees become unable to serve, proxies will be
voted for any substitute nominee designated by the Board. Nominees receiving
the highest number of votes cast for the positions to be filled will be
elected.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors recommends a vote in FAVOR of each of the
directors nominated in this Proxy Statement. Nominees receiving the
highest number of votes will be elected.
PROPOSAL 2. RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors appointed Arthur Andersen LLP as the Company's
independent public accountants for fiscal 2000. Arthur Andersen LLP has been
the independent public accounting firm for the Company since March 1996.
Although not required by law, the Board is seeking shareholder ratification of
its selection. If ratification is not obtained, the Board intends to continue
the employment of Arthur Andersen LLP at least through fiscal 2000.
-3-
<PAGE> 8
Representatives of Arthur Andersen LLP are expected to be present at
the Shareholders' Meeting and will be given an opportunity to comment, if they
so desire, and to respond to appropriate questions that may be asked by
shareholders.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors recommends a vote in FAVOR of Proposal 2. The
affirmative vote of a majority of Common Shares voting at the Annual
Meeting is required for ratification of this proposal.
OTHER MATTERS
Any other matters considered at the Annual Meeting, including
adjournment, will require the affirmative vote of a majority of Common Shares
voting.
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of LSI Industries are:
<TABLE>
<CAPTION>
Common Shares
Beneficially Owned
Name and Age Position Amount Percentage
------------ -------- ------ ----------
<S> <C> <C> <C>
Robert J. Ready (a) Chairman, President, and 567,149 (d) 5.50%
59 Chief Executive Officer
James P. Sferra (a) Executive Vice President- 212,782 (e) 2.06%
60 Manufacturing; Secretary
and Director
John N. Taylor, Jr. (b)(c) Director 174,835 (e) 1.69%
64
Ronald S. Stowell Vice President, Chief Financial 43,668 (e) *
49 Officer and Treasurer
Michael J. Burke (b)(c) Director and Assistant 31,500 (e) *
56 Secretary
Allen L. Davis (b)(c) Director 31,312 (e) *
57
Wilfred T. O'Gara (b)(c) Director 1,500 (e) *
42
All Directors and Executive Officers _________ ______
as a Group (Seven Persons) 1,062,746 10.30%
========= ======
</TABLE>
-4-
<PAGE> 9
- ------------------------------
Information as of September 10, 1999
(a) Executive Committee Member
(b) Compensation Committee Member
(c) Audit Committee Member
(d) See "Principal Shareholders"
(e) Includes options exercisable within 60 days for Mr. Sferra of 9,500
shares, Mr. Taylor of 9,000 shares, Mr. Stowell of 17,500 shares, Mr.
Burke of 19,500 shares, Mr. Davis of 19,500 shares, and Mr. O'Gara
1,500 shares; and indirect beneficial ownership for Mr. Sferra of
6,732 shares, and Mr. Taylor of 98,825 shares.
* Less than 1%
Robert J. Ready is the founder of the Company and has been its
President and a Director since 1976. Mr. Ready was appointed Chairman of the
Board of Directors in February 1985. Mr. Ready is also a Director of Meridian
Diagnostics, Inc. (a Nasdaq listed company) and of Superior Label Systems, Inc.
James P. Sferra shared in the formation of the Company. Mr. Sferra has
served as Corporate Vice President of Manufacturing from November 1989 to
November 1992, and as Executive Vice President-Manufacturing since then. Prior
to that, he served as Vice President-Manufacturing of LSI Lighting Systems, a
division of the Company. Mr. Sferra has served as a Director since 1976, and
was appointed Secretary in 1996.
John N. Taylor, Jr. was elected a Director of the Company in November
1992. Mr. Taylor has indicated his intention to retire from the Board in
November 1999 and has tendered his resignation. Mr. Taylor is Chairman of
Kurz-Kasch, Inc., a specialty manufacturer of plastic-based components, and
electromagnetic products headquartered in Dayton, Ohio. Prior to that, Mr.
Taylor founded and was Chairman and Chief Executive Officer of Component
Technology Corp., a Nasdaq listed company in Erie, Pennsylvania, until its sale
in 1989. Mr. Taylor is a Director of Robbins & Myers Inc. (a Nasdaq listed
company), Dayton, Ohio.
Ronald S. Stowell has served as Chief Financial Officer since joining
the Company in December 1992, and was appointed Treasurer in November 1993 and
Vice President in November 1997. From 1985 to November 1992, Mr. Stowell served
as Corporate Controller of Essef Corporation (a Nasdaq listed company),
Chardon, Ohio, a manufacturer of high performance composite and engineered
plastics products.
Michael J. Burke was elected a Director and Assistant Secretary of the
Company in February 1985. Mr. Burke is a Managing Partner of the Cincinnati law
firm of Keating, Muething & Klekamp, P.L.L., counsel to the Company, and has
been associated with that firm since 1968.
Allen L. Davis was elected a Director of the Company in February 1985.
Mr. Davis, now retired, was the President and Chief Executive Officer, and a
Director of Provident Financial Group, Inc. and The Provident Bank (a Nasdaq
listed company), Cincinnati, Ohio from 1986 and 1984, respectively, to 1998.
Wilfred T. O'Gara was appointed a Director of the Company in January
1999 to fill the vacancy which was created by the death of an LSI Industries
director in 1997. Mr. O'Gara has been President, Chief Operating Officer and a
Director of The Kroll-O'Gara Company (a
-5-
<PAGE> 10
Nasdaq listed company), Cincinnati, Ohio since December 1997. Prior to the
December 1997 merger of Kroll Holdings, Inc. and The O'Gara Company, Mr. O'Gara
was the CEO of The O'Gara Company and has served in various executive officer
and director positions in its subsidiaries and predecessors since 1983.
BOARD ACTIONS
The Board of Directors met seven times during fiscal 1999.
The Executive Committee, composed of Messrs. Ready (Chairman), and
Sferra, is responsible, during the intervals between meetings of the Board of
Directors, for exercising all the powers of the Board of Directors in the
management and control and the business of the Company to the extent permitted
by law. The Executive Committee met two times during fiscal 1999.
The Audit Committee, composed of Messrs. Davis (Chairman), Burke,
O'Gara, and Taylor, is responsible for reviewing the Company's internal
accounting operations. It also recommends the appointment of the Company's
independent public accountants and reviews the relationships between the
Company and the independent public accountants. The Audit Committee met two
times during fiscal 1999.
The Compensation Committee, composed of Messrs. Burke (Chairman),
Davis, O'Gara, and Taylor, is responsible for establishing compensation levels
for management and for administering the Company's stock option plans and
Deferred Compensation Plan. The Compensation Committee met three times during
fiscal 1999.
The Company does not have a Nominating Committee.
During fiscal year 1999, directors who are not employees of the
Company received $13,000 per year for serving as a Director plus $1,200 for
each meeting attended. Committee members received $750 per year for serving as
Chairman of a committee plus $600 for each committee meeting attended.
Directors who are employees of the Company do not receive any compensation for
serving as a Director. All directors attended at least 75% of the aggregate of
the total number of meetings of the Board of Directors and Committees of which
they were members. Non-employee directors received an annual grant of an option
to purchase 1,500 Common Shares at the market price at the time of grant. The
option is exercisable at the time of grant and has a ten year life.
COMPLIANCE WITH SECTION 16 OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers, directors and persons who own more than ten percent of the
Company's Common Shares to file reports of ownership and changes in ownership
with the Securities and Exchange Commission. Such persons are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file. Based solely upon its review of copies of such forms received by it, or
upon written representations from certain reporting persons that no Forms 5
were required for those persons, the Company believes that during fiscal 1999
all filing requirements were met.
-6-
<PAGE> 11
EXECUTIVE COMPENSATION
The following table sets forth information regarding annual,
long-term, and other compensation paid by the Company to its Chief Executive
Officer and each of the other two executive officers at June 30, 1999 during
each of the last three fiscal years for services rendered to the Company and
its subsidiaries.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation
-------------------------------------
Other Annual Securities All Other
Name and Compensation Underlying Compensation
Principal Position Year Salary Bonus (1) Options (2) (3)
- ------------------ ---- ------ ----- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
Robert J. Ready 1999 $424,500 $212,250 $27,892 -- $112,670
Chairman, President 1998 410,000 205,000 31,300 -- 80,116
and Chief Executive 1997 395,000 -- 33,144 -- 96,706
Officer
James P. Sferra 1999 323,200 161,600 17,200 -- 61,955
Executive Vice President- 1998 312,200 156,100 17,200 5,000 41,643
Manufacturing; Secretary 1997 300,000 -- 15,397 -- 49,889
Ronald S. Stowell 1999 181,500 105,750 19,300 -- 48,529
Vice President, Chief 1998 165,000 79,895 18,900 10,000 21,138
Financial Officer, and 1997 142,000 -- 15,805 -- 29,105
Treasurer
<FN>
- ----------------------
(1) Other Annual Compensation consists of automobile allowances for all
executive officers as well as professional fee allowances for Mr. Ready,
and Mr. Sferra.
(2) Represents Common Shares underlying options awarded under the Company's
stock option plans.
(3) All Other Compensation includes Retirement Plan and Deferred Compensation
Plan contributions, premiums paid on long-term disability and life
insurance policies, and payment of accrued vacation.
</TABLE>
STOCK OPTIONS
No stock options were granted in fiscal year 1999 to the executive
officers shown in the Summary Compensation Table. The following table contains
information concerning the exercise and appreciation of stock options held by
the Named Executives.
<TABLE>
<CAPTION>
Fiscal 1999 Option Exercises and Year-End Option Values
-------------------------------------------------------
Number of
Securities Underlying Value of
Shares Unexercised Options Unexercised In-the-Money
Acquired on Value at Fiscal Year-End Options at Fiscal Year-End(1)
Name Exercise Realized Exercisable/Unexercisable Exercisable/Unexercisable
- ---- -------- -------- ------------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
Robert J. Ready -- -- 6,750 / 6,750 $ 76,241 / $ 76,241
James P. Sferra 20,738 204,747 2,500 / 7,000 $ 22,488 / $ 73,315
Ronald S. Stowell 4,725 47,675 10,500 / 14,500 $ 118,598 / $ 140,778
</TABLE>
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<PAGE> 12
(1) In-the-Money Options are options for which the market value of the
underlying Common Shares exceeds the exercise price. Calculation is based
upon the market value of the underlying Common Shares at fiscal year-end,
minus the exercise price.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors has furnished the
following report on executive compensation for fiscal year 1999.
The LSI Industries Inc. Compensation Committee annually establishes
salaries, bonuses and stock option awards for executive officers and key
management personnel. The Committee reviews the performance of the Company's
executive officers on an individual basis and also reviews each executive's
performance in connection with the Company's overall performance. The Committee
desires to establish executive compensation that enhances the Company's overall
fundamental objective of providing long-term value for its shareholders and
employees. In addition, major emphasis is being placed on retaining current
management and incentivizing key managers to align their interests to make them
consistent with the Company's growth. The Committee believes that the interests
of management and shareholders can be more closely aligned by providing
executives with competitive levels of compensation that will enable LSI
Industries to attract and retain key executives by rewarding exceptional
individual performance, and by tying executive pay to personal goals as well as
overall corporate performance.
The Committee uses base salaries, incentive and deferred compensation
arrangements, and stock options designed to tie a portion of the executive's
compensation to the stock market performance of the Company's Common Shares
when establishing executive and managerial compensation programs.
BASE COMPENSATION
The Committee reviewed the base salaries of the Company's executive
officers and each executive's level of responsibility and potential, as well as
salary levels offered by competitors and the overall competition in the
existing marketplace. Each executive's particular division of the Company was
reviewed, and its contribution to the overall results of the Company assessed.
The Committee used this information to determine the executive's base
compensation level and to set the performance goals for the upcoming year.
The Committee applied a collective, subjective evaluation of the above
factors to determine the annual base compensation level of its executive
officers in light of the Company's performance and, in certain cases, its
various divisions. The Committee did not utilize a particular objective formula
as a means of establishing annual base compensation levels. Mr. Ready's salary
was established on the same basis.
INCENTIVE COMPENSATION
Incentive compensation awards for performance during fiscal 1999 were
made to those employees based upon the achievement of specific goals set forth
in the strategic Plan adopted for the 1999 fiscal year. The Plan states that
20% of certain employees' bonuses are based upon overall corporate results,
with the remaining 80% based upon divisional results. Bonuses
-8-
<PAGE> 13
for Corporate officers are based entirely on overall corporate results. Some
discretionary bonuses were paid to various executive officers and key managers
based on the Committee's analysis of the performance of these individuals and
their contribution to the success of the Company or the particular division for
which they were primarily responsible.
STOCK OPTION GRANTS
The shareholders of LSI Industries established a Stock Option Plan to
provide a method of attracting, retaining and providing appropriate incentives
to key employees. The Committee is responsible for the administration of this
Plan, both with respect to executive officers and all other employees. To that
end, the Committee determines which employees receive options, the time of
grant and the number of shares subject to the option. In fiscal 1999 the
Committee took into account the employee's current responsibilities and
performance when granting stock options as an incentive for motivating future
performance as well as the number of shares already owned and the options
previously granted. All option prices are set at 100% of market value on the
date of grant. The Committee based its individual option awards upon the
contributions of the particular employee and its view of the importance of the
employee to the Company's future progress and development.
Compensation Committee
Michael J. Burke, Chairman
Allen L. Davis
Wilfred T. O'Gara
John N. Taylor, Jr.
CORPORATE PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return
on the Company's Common Shares during the five fiscal years ended June 30,
1999, with a cumulative total return on the Nasdaq Stock Market Index (U.S.
companies) and the Dow Jones Electrical Equipment Index. The comparison assumes
$100 was invested June 30, 1994 in the Company's Common Shares and in each of
the indexes presented; it also assumes reinvestment of dividends.
-9-
<PAGE> 14
<TABLE>
<CAPTION>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
LSI Nasdaq Dow Jones
Industries Market Index Electrical
June 30 Inc. (U.S.) Equipment Index
------- ---------- ------------ ---------------
<S> <C> <C> <C> <C>
1994 100 100 100
1995 197 133 125
1996 270 171 151
1997 215 208 189
1998 324 274 208
1999 397 393 292
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Michael J. Burke, who is Chairman of the Compensation Committee, is a
co-managing partner of Keating, Muething & Klekamp, P.L.L., Cincinnati, Ohio, a
law firm that provided legal services to the Company in fiscal year 1999.
OTHER MATTERS
LSI Industries is not aware of any other matters to be presented at
the Annual Meeting other than those specified in the Notice.
QUESTIONS
If you have any questions or need more information about the annual
shareholders' meeting, write to or contact:
LSI Industries Inc.
Ronald S. Stowell,
Vice President, Chief Financial
Officer & Treasurer
10000 Alliance Road
Cincinnati, Ohio 45242
(513) 793-3200
For more information about your stock ownership, call the Provident
Bank at (513) 763-8113.
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<PAGE> 15
We also invite you to visit the LSI Industries site on the Internet at
www.lsi-industries.com. Internet site materials are for your general
information only and are not part of this proxy solicitation.
By order of the Board of Directors
/s/ James P. Sferra
James P. Sferra
Secretary
Dated: September 24, 1999
-11-
<PAGE> 16
LSI INDUSTRIES INC.
PROXY The undersigned hereby appoints ALLEN L. DAVIS, WILFRED T. O'GARA,
FOR AND JAMES P. SFERRA, or any one of them, proxies of the
ANNUAL undersigned, each with the power of substitution, to vote all
MEETING Common Shares which the undersigned would be entitled to vote at
the Annual Meeting of Shareholders of LSI Industries Inc. to be
held on November 11, 1999 at 10:00 A.M. Eastern time at the
Company's headquarters located at 10000 Alliance Road, Cincinnati,
Ohio and any adjournment of such meeting on the matters specified
below and in their discretion with respect to such other business
as may properly come before the meeting or any adjournment thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING PROPOSALS:
1. AUTHORITY TO ELECT AS CLASS A DIRECTORS THE TWO NOMINEES BELOW.
FOR ___ WITHHOLD AUTHORITY ___
MICHAEL J. BURKE AND ROBERT J. READY
WRITE THE NAME OF ANY NOMINEE(S) FOR
WHOM AUTHORITY TO VOTE IS WITHHELD ________________________________________
2. RATIFICATION OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS
INDEPENDENT PUBLIC ACCOUNTANTS FOR FISCAL 2000.
FOR ___ AGAINST ___ ABSTAIN ___
THIS PROXY WILL BE VOTED AS RECOMMENDED BY THE BOARD OF DIRECTORS UNLESS A
CONTRARY CHOICE IS SPECIFIED.
_______________________, 1999 _______________________________________________
_______________________________________________
IMPORTANT: PLEASE SIGN EXACTLY AS NAME
APPEARS HEREON INDICATING, WHERE PROPER,
OFFICIAL POSITION OR REPRESENTATIVE
CAPACITY. IN THE CASE OF JOINT HOLDERS,
ALL SHOULD SIGN.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
