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     Comment Response Letter

October 13, 2005

Ms. Angela Crane

Branch Chief
Securities and Exchange
Commission
100 F Street, N.E.
Washington, D.C. 20549

         RE:
Comment
Letter Dated October 4, 2005 - LSI Industries Inc. Form 10-K
 for                   the
fiscal year ended June 30, 2005 - File No. 0-13375

Dear Ms. Crane:

        I
am in receipt of the SEC’s comment letter regarding LSI’s Form 10-K. LSI has
responded to each of the following points below.

        In
response to your letter, LSI hereby acknowledges:

•
LSI
is responsible for the adequacy and accuracy of the disclosure in           its filings;

•

SEC staff comments or changes to disclosure in response to staff comments in the filings
reviewed by the SEC staff do not foreclose the SEC from taking any action with respect to
the filling; and

•

LSI may not assert staff comments as a defense in any proceeding initiated by the SEC or
any person under the federal securities laws of the United States.

Note 1 – Summary of
Significant Accounting Policies, page S-19

         1.
          We note that in certain situations
          you recognize product revenue before
          installation has been completed. Please
          tell us and revise future filings
          to disclose the specific terms and
          conditions of those agreements in
          which you recognize product revenue prior
          to installation and tell us why
          revenue recognition upon shipment is appropriate.

LSI
reviewed its revenue recognition policy as it relates to both SEC Staff Accounting
Bulletin (SAB) No. 101, Revenue Recognition in Financial Statements, and Emerging Issues
Task Force (EITF) 00-21, Revenue Arrangements with Multiple Deliverables. LSI believes its
policy meets the criteria discussed in both pronouncements and that revenue has been
properly accounted for as discussed below.

LSI’s
Revenue Recognition Policy states “Product revenue related
to orders  where the customer requires
the Company to install the product is
generally  recognized when the product is
installed.” This is the revenue recognition model with most customer programs
where the customer requires the Company to install the product. When LSI is not involved
in the installation, revenue is recognized when the product is shipped. LSI’s Revenue
Recognition Policy further states “In some situations, product revenue is recognized
when the product is shipped, before it is installed, because by agreement the customer has
taken title to and risk of ownership for the product before installation has been
completed.” As indicated below, this does not occur very often and does not involve
material amounts of revenue.

The
Lighting Segment has had only two small (in revenue and time duration) customer programs
over the past thirteen years where LSI was asked to arrange for the installation of
lighting fixtures. Clearly, most often LSI is not involved in the installation of its
lighting products. These two programs were handled by LSI identifying independent
qualified subcontractors to perform the installation work. Terms and conditions of both of
these programs (one with ConocoPhillips in fiscal 2004 and one in fiscal 2005) were
defined by purchase orders received from the customer or by a customer agreement. The
customer received net 30 terms, agreed to accept title to and assume all risk of ownership
of the product when it was shipped from the LSI location to the job site or to the
warehouse used by the electrical installation subcontractor. They did not receive any
special terms related to return of product. Upon completion of installation of all light
fixtures at the job site, installation revenue was recorded. The time between product
shipment and installation ran between three to seven weeks on average, but could have been
as long as three or four months.

The
Graphics Segment is responsible for installation of LSI graphic products in many customer
programs or situations. In the clear majority of situations or programs, both product
revenue and installation revenue are recognized after the installation has been completed.
However, there have been a few situations in which product revenue was recognized at the
time of shipment and installation revenue was separately recognized later when the product
had been installed. In all of the latter cases, terms of the sale to the customer through
the purchase order or customer agreement specify that the customer takes title to the
product and assumes all risk of ownership at the time of shipment.

An
example of this circumstance was the Burger King menu board roll out program in the second
half of fiscal 2004 and first half of fiscal 2005. LSI’s menu board subsidiary
received from the customer a “Drive Thru Menu Board Order Form” for each
location (total of about 1,300 stores) as well as an order form for the interior menu
board if applicable. The terms of sale of the menu board clearly indicate that the
customer takes title to and all risk of ownership of the product when it is shipped from
the LSI facility. The customer made a separate decision for each store location, either at
the time of purchase of the menu board or later, regarding what company it wanted to
install the menu boards. If LSI was asked to handle the installation, LSI’s
installation subsidiary received a purchase order or other correspondence regarding
installation of the menu board (this occurred with approximately 300 of the 1,300 stores).
The store received one invoice from the LSI menu board manufacturing subsidiary at the
time the product shipped to either the store site or to the installation contractor, and a
second invoice from the LSI installation subsidiary when installation was complete. LSI
recorded revenue as each invoice was issued to the customer.

In
fiscal 2005 the only other Graphics program for which product revenue was recorded at time
of shipment and installation revenue was recorded when the installation was complete was a
small Shell program. Both product manufacturing and installation management were handled
by one LSI subsidiary. The terms of sale for the program, in accordance with a signed
agreement from the customer, include the following: 1) the customer takes title to the
product at time of shipment from the LSI facility; 2) 100% of the product value must be
paid for at time of shipment; 3) 75% of the installation price must be paid upon
completion of installation; and 4) the 25% installation hold back must be paid upon site
approval by Shell Oil.

Note 8 –
Shareholders’ Equity, page S-28

         2.
          We note that you changed the
          distribution method of your deferred
          compensation plan in April 2004 to
          allow terminated participants to receive
          cash distribution rather than share
          distributions; therefore the plan is
          now subject to variable accounting. Please
          confirm that the change was accounted
          for from the date of the modification,
          or April 2004. If so, tell us
          what effect the modification had on
          the fiscal year 2004 and your
          previously reported Form 10-Q’s.

LSI
has a Non-Qualified Deferred Compensation Plan that is fully funded in a Rabbi Trust with
100% of the contributed cash invested in LSI common shares (“LYTS”). This
response confirms that LSI has accounted for the change to variable accounting beginning
with the April 27, 2004 date of the Plan modification. The Company reviewed and analyzed
the effect this modification would have had on fiscal year 2004 (fourth quarter issue
only) as well as the first three quarters of fiscal 2005. The entire adjustment ($775,000
pre-tax expense or $469,000 net of tax) was recorded in the fourth quarter of fiscal 2005.
Grant Thornton, the Company’s registered independent public accounting firm, reviewed
the Company’s analysis and concurred with our conclusion that it was appropriate to
record the adjustment in the fourth quarter of fiscal 2005.

The
Company’s analysis took into account the after-tax impact on earnings per share of
the potential non-cash compensation expense adjustment in the quarters indicated below,
the Company’s EPS guidance (if any) that had been issued for that quarter, and the
EPS trend. The quarterly after-tax impact on net income and diluted EPS to mark-to-market
the shares in the Company’s Non-Qualified Deferred Compensation Plan, with the fourth
quarter of fiscal 2004 adjustment calculated for the time period April 27, 2004 to June
30, 2004, was as follows:

            LYTS
Stock Price at Period End

April 27, 2004
$10.0288
[Average cost of shares in the Plan.]

Fiscal Year 2004
$11.50

1Q FY 2005
$10.44

2Q FY 2005
$11.45

3Q FY 2005
$11.23

4Q FY 2005
$13.94

[This was the quarter in which the adjustment was recorded.]

Comments

                    a.

                    LYTS stock price fluctuates each quarter.

                    b.

                    The largest increase in stock price, and the increase causing the majority of
                    the non-cash compensation expense occurred in the fourth quarter of fiscal 2005,
                    the quarter in which the adjustment was recorded.

            Net
Income ($000)

     Reported
     Adjustment
     Proforma
     % Change

     4Q FY 2004

       1,163

       (183
        )
       980

       (15.74
        )%

     Fiscal Year 2004
       8,690

       (183
        )
       8,507

       (2.11
        )%

     1Q FY 2005
       3,316

       105

       3,421

       3.17
        %

     2Q FY 2005
       4,792

       (117
        )
       4,675

       (2.44
        )%

     3Q FY 2005
       2,422

       31

       2,453

       1.28
        %

     4Q FY 2005
     This was the quarter in which the adjustment was recorded.

     Before Adjust.
     Adjust
     Reported
     % Change

     Fiscal Year 2005

       15,105

       (469
        )
       14,636

       (3
        .11)%

Comments

                    a.

                    Third quarter earnings are lower primarily due to normal seasonality.

                    b.

                    While the percent of change for 4Q FY 2004 is not insignificant, the change did
                    not effect the overall trend in net income and was not significant to net income
                    for the fiscal year.

                    c.

                    The potential compensation expense adjustment as a percentage of reported net
                    net income was small in every quarter of fiscal 2005, averaging 2.30% (absolute
                    number), and was 2.11% in fiscal 2004.

                    d.

                    The effect of the cumulative compensation expense adjustment as a percentage of
                    net income prior to the adjustment was only 3.11% in fiscal 2005.

Earnings Per Share

     Reported
     Adjustment
     Proforma
     % Change

     Fiscal Year 2004

       0
        .43
       0
        .009
       0
        .42
       (2
        .09)%

     1Q FY 2005
       0
        .17
       0
        .0053
       0
        .18
       3
        .12%

     2Q FY 2005
       0
        .24
       (0
        .0058)
       0
        .23
       (2
        .41)%

     3Q FY 2005
       0
        .12
       0
        .0015
       0
        .12
       1
        .25%

     4Q FY 2005
     This was the quarter in which the adjustment was recorded.

     Before Adjust.
     Adjust
     Reported
     % Change

     Fiscal Year 2005

       0.75

       (0.
        0234)
       0.73

       (3
        .11)%

Comments

                    a.

                    The potential compensation expense adjustment as a percentage of reported EPS
                    was small in every quarter of fiscal 2005, averaging 2.26% (absolute number),
                    and was 2.09% in fiscal 2004.

                    b.

                    Third quarter earnings are lower primarily due to normal seasonality.

LSI EPS Guidance (if any)

     Reported
     Proforma
     LSI Guidance (if any)

     Fiscal Year 2004

       0
        .43
       0
        .42
       0.44 to 0.45

     1Q FY 2005
       0
        .17
       0
        .18
       none

     2Q FY 2005
       0
        .24
       0
        .23
       none

     3Q FY 2005
       0
        .12
       0
        .12
       none

     4Q FY 2005
       0
        .20*

       0.20 to 0.21

                  *
Includes the compensation adjustment.

Comments

                    a.

                    Actual reported EPS in fiscal 2004 was already below Company guidance by one to
                    two cents.

The
potential compensation expense adjustment would have reduced EPS by only $0.01 from what
was reported.

                    b.

                    Fourth quarter fiscal 2005 EPS, after the $469 compensation expense adjustment
                    was recorded, was still consistent with Company guidance.

                    c.

                    Third quarter earnings are lower due to normal seasonality.

        Please
call me at (513) 793-3200 with any questions regarding these matters.

Sincerely,

/s/Ronald S. Stowell
——————————————

Ronald S. Stowell

Vice President, Chief Financial
 Officer and Treasurer