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CORRESP
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CORRESPONDENCE

Via EDGAR

June 8, 2009

Mr. Larry Spirgel

Ms. Melissa Hauber

Mr. Robert S. Littlepage, Jr.

Mr. John Harrington

Ms. Celeste Murphy

Securities and Exchange Commission

Division of Corporation Finance

Mail Stop 3720

100 F Street, N.E.

Washington, D.C. 20549

    Re:

    LSI Industries Inc. Form 10-K for Fiscal Year Ended June 30, 2008
Filed on September 15, 2008 and Form 10-Q for Fiscal Quarter Ended
December 31, 2008 File No.0-13375

Ladies and Gentlemen:

     This serves to formalize the materiality analysis referenced in our May 29, 2009 supplemental
response to your question number 14 from your letter dated March 12, 2009 related to the above
referenced filings of LSI Industries Inc.

Background:

As of June 30, 2008, the operating segments that contained goodwill prior to the impairment
charges recorded in fiscal 2008 and 2009 are listed below:

    Original Impairment Recorded

    Lighting Solutions Plus Reporting Unit:

    LSI Ohio

    $11,185,000 goodwill

    (fully impaired-12/08)

    LSI Greenlee Lighting

    $135,000 goodwill

    (fully impaired-12/08)

    Graphics Solutions Plus Reporting Unit:

    Grady McCauley

    $21,091,000 goodwill

    (fully impaired-6/08)

    LSI Retail Graphics

    $2,939,000 goodwill

    (fully impaired-6/08)

June 8, 2009

Page 2

    LSI Saco Reporting Unit

• $3,119,000 goodwill

    (fully impaired-6/08)

    LSI Adapt Reporting Unit

• $3,731,000 goodwill

    (partially impaired-12/08)

•   This reporting unit had originally been properly tested at the operating segment
level; therefore, re-performance of the goodwill

     impairment tests was not necessary.

We have re-performed the goodwill impairment tests in the reporting periods described below
in which we experienced triggering events and our annual testing date to disaggregate the
testing results of those reporting units that had been aggregated into our Lighting
Solutions Plus Reporting Unit and our Graphics Solutions Plus Reporting Unit. We completed
step 1 of the goodwill impairment tests at the disaggregated operating segment level, and
where necessary, also completed step 2 testing.

Additionally, we have considered whether any impairment indicators were present at the
operating segment level in the interim periods of the fiscal years 2006, 2007, 2008, and
2009, other than as previously identified in the fourth quarter of fiscal year 2008 and the
second quarter of fiscal year 2009, and do not believe there were indicators in any of those
other interim periods that would have necessitated an impairment analysis other than at the
dates historically performed. The recent impairment charges taken in fiscal years 2008 and
2009 were driven by lower projections for our business in future periods because of current
economic conditions and uncertainties.

Results of Revised Goodwill Impairment Testing:

Our annual goodwill testing date is July 1. Therefore, we performed step 1 of the revised
goodwill impairment test as of July 1, 2006, July 1, 2007, and July 1, 2008. We also
performed step 1 of the revised goodwill impairment test as of December 31, 2008 because we
believed there were indicators of potential impairment during that interim period. Based on
the results of those tests, we performed step 2 of the revised goodwill impairment test for
the following individual reporting units at the time period(s) indicated:

    Grady McCauley

    July 1, 2008

    LSI Retail Graphics

    July 1, 2008 and December 31, 2008

    LSI Ohio

    December 31, 2008

Because the conditions that triggered the results of the July 1, 2008 impairment test also
existed as of June 30, 2008, the goodwill impairment was recognized in the fourth quarter of
fiscal 2008. Therefore, the following references to goodwill impairments as of June 30,
2008 resulted from the July 1, 2008 test.

The results of these new goodwill impairment tests for each reporting unit are as indicated
in the discussion below.

June 8, 2009

Page 3

Grady McCauley

    Impairment reported on 6/30/08 Form 10-K

    $
    21,091,000

    Actual impairment per step 2 revised testing

    20,833,000

    Error in Q4 2008 and FY 2008

    $
    258,000

The step 2 testing performed on this individual reporting unit indicated that the goodwill
of $21,091,000 was not fully impaired as of June 30, 2008, but rather was partially impaired
and that $258,000 should have remained on the financial statements of this reporting unit as
of June 30, 2008.

Because we believed that potential impairment triggering events were evident, we performed
an additional step 1 goodwill impairment test for the Grady McCauley reporting unit at
December 31, 2008, and determined that the remaining goodwill of $258,000 was not impaired.

LSI Retail Graphics

    Impairment reported on 6/30/08 Form 10-K

    $
    2,939,000

    Actual impairment per step 2 revised testing

    2,223,000

    Error in Q4 2008 and FY 2008

    $
    716,000

The step 2 testing performed on this individual reporting unit indicated that the goodwill
of $2,939,000 was not fully impaired as of June 30, 2008, but rather was partially impaired
and that $716,000 should have remained on the financial statements of this reporting unit as
of June 30, 2008.

Because we believed that potential impairment triggering events were evident, we performed
step 1 and step 2 goodwill impairment tests for the LSI Retail Graphics reporting unit at
December 31, 2008, and determined that this remaining goodwill was fully impaired as of
December 31, 2008. As a result, with respect to the LSI Retail Graphics reporting unit for
the three and six month periods ended December 31, 2008, goodwill impairment expense was
understated by $716,000. However, the amount reported as goodwill for LSI Retail Graphics
on the consolidated balance sheet as of December 31, 2008 ($0) was correct.

LSI Ohio

    Impairment reported on 12/31/08 Form 10-Q

    $
    11,185,000

    Actual impairment per step 2 revised testing

    11,185,000

    Error in Q2 2009

    $
    none

We performed step 1 of the revised goodwill impairment test for LSI Ohio at June 30, 2008
and December 31, 2008. We determined that this goodwill was not impaired at June 30, 2008,
but did not pass step 1 of the revised goodwill impairment test at December 31, 2008. These
results were unchanged from our original step 1 testing conclusions.

June 8, 2009

Page 4

The step 2 revised testing performed on this individual reporting unit at December 31, 2008
confirmed our original testing, which indicated that the goodwill of $11,185,000 was fully
impaired as we reported and disclosed in the condensed consolidated financial statements in
Form 10-Q for the periods ended December 31, 2008.

LSI Greenlee Lighting

    Impairment reported on 12/31/08 Form 10-Q

    $
    135,000

    Actual impairment per step 1 revised testing

    —

    Error in Q2 2009

    $
    135,000

We performed step 1 of the revised goodwill impairment test for LSI Greenlee Lighting at
June 30, 2008 and December 31, 2008, and determined that this goodwill was not impaired in
either period.

Summary of Revised Goodwill Impairment Testing

Below summarizes the pre-tax impact of the errors noted during the revised goodwill
impairment testing:

    (Income)

    Expense

    June 2008 — overstatement of pre-tax goodwill impairment

    Grady McCauley

    $
    (258,000
    )

    LSI Retail Graphics

    (716,000
    )

    Pre-tax adjustment to be made in June 2008

    $
    (974,000
    )

    December 2008 — net understatement of pre-tax goodwill impairment

    LSI Greenlee Lighting

    $
    (135,000
    )

    LSI Retail Graphics

    716,000

    Pre-tax adjustment to be made in December 2008

    581,000

    Net overstatement of goodwill impairments through December 2008

    $
    (393,000
    )

    Net understatement of goodwill at December 31, 2008

    $
    (393,000
    )

Materiality Analysis:

Assessment of Error

In order to evaluate the differences above, we performed an analysis of the materiality of
the errors, considering quantitative measures under both the “iron curtain” and “rollover”
methods, as well as a number of qualitative factors, as described in SAB Topic 1.M. and 1.N.

In addition to our conclusion that these errors were quantitatively immaterial (see
quantitative measures section below), the primary qualitative factor that we considered in
our materiality

June 8, 2009

Page 5

analysis was the perceived importance that a reasonable investor placed on goodwill
impairments. It is our belief that a reasonable investor would exclude the goodwill
impairments from our operating results to evaluate the ongoing prospects of our business.
Therefore, when LSI issued its earnings releases to report operating results for these
periods, we made a non-GAAP presentation of earnings which isolated or excluded the impact
of the goodwill impairments. This was done so investors could better consider the trend of
operating results independent of and excluding non-cash events such as the goodwill
impairments. The Company’s chief operating decision maker also receives information in the
form of this non-GAAP presentation excluding any goodwill impairment as one of the metrics
used to manage the business.

In addition, following the June 2008 and December 2008 goodwill impairments, we reviewed the
reports of the four sell-side analysts who publish written reports on LSI Industries. While
the existence of the impairment is mentioned, their forecast models and comments about past
and future expected operating performance all exclude the goodwill impairments1.
Additionally, during the quarterly investor calls, periodic investor conferences in which
LSI has participated, and in routine conversations with these same analysts or investors,
very few questions ever came up regarding the goodwill impairments2. This
confirms LSI’s belief that goodwill and goodwill impairments are of lesser importance to a
reasonable investor than our core results from operations.

Quantitative Measures

Several quantitative measures of the materiality of the misstatement of goodwill impairment
in the periods ended June 30, 2008 and December 31, 2008 are presented in Attachment 1 to
this supplemental response letter. We believe these errors in both periods are
quantitatively immaterial under both the iron curtain and rollover approaches for evaluating
materiality in accordance with SAB Topic 1.M. and 1.N.

Qualitative Factors

Several qualitative factors, in conjunction with the quantitative measures must be
considered as the materiality of the adjustments or misstatements is evaluated. These
items, in addition to the primary qualitative consideration mentioned above, are as follows:

    1.

    Operating income, without regard to goodwill impairment expense, is a critical
metric to management’s evaluation of operating performance and is presented as such in
LSI’s internally reported financial information. LSI’s Chief Operating Decision Maker
(CEO and President) and its Board of Directors receive information quarterly reporting
the trend of operating income excluding goodwill impairment expense.

    1

    Based on review of August 2008 and January 2009 analyst
reports, which are the periods immediately following the reporting of the
goodwill impairment charges, goodwill impairment is only mentioned in terms of
removal or exclusion from discussion of LSI’s future expected operating
performance.

    2

    Only two questions were raised regarding the goodwill
impairment charges, which related to how the test was performed, and how much
of the goodwill impairment recorded as of June 30, 2008 related to LSI Saco
(LSI’s most recent acquisition).

June 8, 2009

Page 6

    2.

    No LSI executive or management compensation or incentive compensation was
affected by the impact of the misstatement of goodwill impairment expense in fiscal
2008 or 2009. In fact, in the operation of LSI’s discretionary incentive compensation
plan, the Compensation Committee excludes goodwill impairment expense when considering
the performance metrics for that plan.

    3.

    There is no impact on LSI’s loan covenant compliance for its lines of credit
related to any misstatement of goodwill on the consolidated balance sheet or of
goodwill impairment expense. The loan covenants, for instance, consider tangible net
worth, which excludes goodwill.

    4.

    LSI’s operating results for the June 2008 and December 2008 periods, excluding
any amount of goodwill impairment expense, were below “street” estimates (which also
did not include any goodwill impairment expense). Therefore, the reporting of a
revised or corrected goodwill impairment expense would not have impacted the comparison
of our results to the analyst estimates.

    5.

    The misstatement of goodwill impairment expense was not intentional.

    6.

    The misstatement of goodwill impairment expense did not mask a change in the
earnings trend of LSI, would not have changed a loss into income, or vice versa.

    7.

    The misstatement of goodwill impairment expense does not affect LSI’s
compliance with any regulatory requirements.

    8.

    Historically, we have disclosed results of operations in two reportable
segments. We do not highlight or differentiate one of our reportable segments as being
more important or more significant to our long-term operations than the other.
Therefore, the misstatement of goodwill impairment expense is not considered by
management to be important in assessing future profitability of our operations.

Conclusion regarding Materiality:

It is the opinion of LSI management and its Board of Directors, after full consideration of
all quantitative and qualitative factors, that the impact of misstatements of goodwill
impairment expense on previously issued financial statements for the year ended June 30,
2008 and periods ended December 31, 2008 is not material.

As noted in our May 29, 2009 supplemental response, as a result of the conclusion that a
material weakness exists, we intend to amend our June 30, 2008 Form 10-K and our Form 10-Qs
for the quarterly periods ended September 30, 2008 and December 31, 2008, to revise
management’s report on internal control over financial reporting, and disclosure controls
and procedures. We also intend to correct the known errors associated with the
re-performance of our goodwill testing in applicable Form 10-K/A and Form 10-Q/A filings (as
referenced above), reflecting the adjustments as immaterial restatements.

With respect to goodwill impairment testing in the future, LSI will properly identify and
disclose its reporting units according to paragraph 30 of SFAS 142 and will perform
impairment tests at the lower of the operating segment or component level.

June 8, 2009

Page 7

In connection with responding to your comments, the Company acknowledges that:

    •

    the Company is responsible for the adequacy and accuracy of the disclosure in the
filing;

    •

    staff comments or changes to disclosure in response to staff comments do not
foreclose the Commission from taking any action with respect to the filing; and

    •

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

We trust that the foregoing sufficiently addresses your comments. LSI appreciates any opportunity
to discuss any comments or questions you may have in advance of any written response the staff may
intend to provide in connection with the above. If there is a need for additional information or
clarification, please contact me at (513) 793-3200.

Sincerely,

LSI INDUSTRIES INC.

/s/
Ronald S. Stowell

Ronald S. Stowell

Vice President, Chief Financial Officer and

          Treasurer

cc: F. Mark Reuter, Esq.

    LSI INDUSTRIES INC.

    ATTACH