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Correspondence

Via EDGAR

June 15, 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:

In response to the Staff’s request during our conference call on May 13, 2009, we have prepared the
following overview of our application of the aggregation for operating segments under paragraph 17
of FASB Statement 131 Disclosures about Segments of an Enterprise and Related Information (FAS 131)
for the fiscal year ended June 30, 2008. Included as Appendix A is a schedule detailing financial
information for each operating segment in a format that shows a Lighting segment, a Graphics
segment, a Technology segment, and an “All Other” category. The amounts for each operating segment
in Appendix A have been accumulated from our discrete financial information, and Appendix A
summarizes the proposed quantitative footnote presentation of our reportable segments. Some of the
amounts in this Appendix A will not agree to the Appendix A previously provided to the Staff
because (a) we
have corrected the errors associated with our revised goodwill conclusions communicated to the
Staff on June 8, 2009, and (b) we have corrected a number of reclassifications that had been made
between operating segments in error in the previous version.

1

Background:

LSI provides graphics and lighting products and professional services to its customers. In
applying paragraph 10 of FAS 131, LSI identified twelve operating segments. Each operating segment
represents a separate legal entity that engages in business activities for which discrete financial
information is provided to the CEO (the Chief Operating Decision Maker of LSI; “CODM”) on a regular
basis. LSI has grown its business through acquisition of each of these separate legal entities,
which have been integrated over the years in order to provide its customers with a complete image
solution. As discussed in further detail below, while LSI historically presented two reportable
segments, Graphics and Lighting, based upon our conversations with the Staff, management has
preliminarily concluded that the Company should report three reportable segments and an “All Other”
category as follows:

    Products Produced/Sold

    Lighting Reportable Segment

    LSI Ohio

    Lighting

    LSI Metal Fabrication

    Lighting (parts only)

    LSI MidWest Lighting

    Lighting

    LSI Lightron

    Lighting

    LSI Greenlee Lighting

    Lighting

    Graphics Reportable Segment

    Grady McCauley

    Graphics

    LSI Retail Graphics

    Graphics

    LSI Integrated Graphics

    Graphics

    Technology Reportable Segment

    LSI Saco Technologies

    Screens

    All Other Category

    LSI Marcole

    Lighting

    LSI Images

    Menu boards

    LSI Adapt

    Installation

    Corporate Administration

    N/A

Graphics Reportable Segment:

The Graphics Reportable Segment is comprised of three operating segments: Grady McCauley, LSI
Integrated Graphics and LSI Retail Graphics. Each operating segment represents a graphics factory
in a separate state tax jurisdiction. All three locations are under the direction and management
of the Graphics Segment President, who also oversees the strategic direction of the Graphics
Segment. The Graphics Segment President reports directly to the CODM. There is a controller at
each of these operating segments who provides financial results to the Graphics Segment President.

2

In applying paragraph 17 of FAS 131, we considered the economic characteristics of each Graphics
operating segment. The following are the gross margin percentages of the three operating segments
included in the Graphics Reportable Segment.

Graphics Segment Gross Margins

LSI Grady McCauley

LSI Retail Graphics

LSI Integrated Graphics

    FY2009*

    9.6
    %

    29.6
    %

    16.4
    %

    FY2008

    22.9
    %

    16.7
    %

    22.4
    %

    FY2007

    26.7
    %

    22.3
    %

    22.9
    %

    FY2006

    27.1
    %

    20.8
    %

    23.3
    %

    FY2005

    26.2
    %

    28.1
    %

    21.9
    %

    FY2004

    25.3
    %

    32.3
    %

    21.9
    %

    Average

    23.0
    %

    25.0
    %

    21.5
    %

    *

    Gross Margin results through April 2009.

Given the uncertainties in today’s economic environment, LSI has not completed any projections
beyond the end of fiscal year 2009. The projected results for these operating segments through the
end of fiscal 2009 continue to support similarities on a long-term basis,
and are consistent with our future long-term expectations. The gross margin percentages vary
year-over-year based upon volume, due to the addition or completion of major customer programs at
the various locations and on the profitability of the mix of custom graphics programs being sold at
any one location at a given time. While there might be differences in gross margin trends on a
short-term basis because of the nature of a particular customer program, the long-term economic
trends of all three Graphic locations have been similar, and are expected to continue to be
similar. The variations evident in gross margins through April 2009 are indicative of the
challenging economic issues faced by our customers. Customer re-imaging projects are driven by
merger and acquisition activity and the availability of discretionary spending. LSI Retail
Graphics’ 2009 gross margins have been favorably impacted by a re-imaging program with a certain
grocery store customer with stores located in the northeastern United States and in proximity to
the LSI Retail Graphics facility. LSI has consistently provided disclosure in our management
discussion and analysis that describes the impact that our major graphics programs have on our
results of operations.

Our Graphics operating segments operate under a Graphics Segment President as one graphics
company. There is a great deal of intercompany support within the three traditional graphics
locations; the Graphics Segment President decides resource allocation (where to put a new digital
printing press) and resource utilization (which printing equipment to use for a particular customer
program). In determining the conclusions for aggregation of these operating segments, LSI
considered the qualitative conditions outlined in a-e of paragraph 17 of FAS 131.

3

    •

    Each operating segment Grady McCauley, LSI Retail Graphics and LSI Integrated Graphics
produces two-dimensional and three-dimensional graphics for retail and petroleum/convenience
store accounts.

    •

    The production process at each of these operating segments is similar in that each
operating segment produces two-dimensional graphics using digital and screen printing
equipment and three-dimensional graphics through fabrication. Raw materials that are
purchased can be utilized interchangeably among the entities. Additionally, production is
interchangeable among the factories. For example, Grady McCauley is currently helping LSI
Retail Graphics fill orders for a certain large retail customer and has acted in this
capacity for another large re-branding effort for another large retail account in prior
years. Grady McCauley has also assisted LSI Integrated Graphics in filling orders for
certain petroleum/convenience store accounts. For these types of integrated activities, the
Company recognizes intercompany sales within its discrete financial information based on a
subjectively determined internal transfer price (standard cost plus 10%).

    •

    Because of the nature of the products offered, the type and class of the customers is the
same among the three operating segments.

    •

    A unified sales and marketing approach is taken to penetrate the markets in which the
Graphics Segment serves. Sales agents market all of LSI’s Graphics capabilities and the
manufacturing operations group, through oversight by the Graphics Segment President,
determines which facility has the means to fulfill the order in the most cost effective way
in order to meet the customer’s needs. For example, LSI Integrated Graphics, located in
Houston, Texas, is often involved in fulfilling customer orders for petroleum/convenience
store markets because many petroleum customers have their headquarters in the Houston/Gulf
Coast region. LSI Retail Graphics, located in Woonsocket, Rhode Island, is often involved
in fulfilling customer orders for the nation’s largest chain of retail pharmacies also
located in Woonsocket.

As a result of these qualitative measures and in consideration of the similarities in gross profit
over the past several years, each of these locations shares in similar competitive, operating and
financial risks. LSI believes aggregation of these operating segments is consistent with the
considerations of paragraph 17 of FAS 131.

Lighting Reportable Segment:

The Lighting Reportable Segment is comprised of five operating segments: LSI Ohio, LSI Metal
Fabrication, LSI MidWest, LSI Lightron and LSI Greenlee. Each operating segment represents a
factory which is a separate legal entity in a separate state tax jurisdiction. All five lighting
factories are under the direction and management of the Lighting Segment President. The Lighting
Segment President oversees the entire operations of each of the Lighting factories, including the
strategic direction of the Lighting Segment. The Lighting Segment President reports directly to
the CODM. Unlike the Graphics business, four of the lighting operating segments are primarily
production facilities whose sales are 100% intercompany sales within the Lighting Reportable
Segment. Lighting products produced by LSI Metal Fabrication, LSI MidWest, LSI Lightron and LSI
Greenlee are sold to LSI Ohio based on an internal transfer price defined as standard cost plus a
subjectively determined 10%. LSI Ohio records the lighting product sale to all external customers
to whom lighting products are sold.

4

Discrete financial information at the legal entity level is necessary for tax purposes; however,
the results of each legal entity are not used to review the true economic performance of the
factory. Rather, as the factories sell their product to LSI Ohio, at standard cost plus 10%, this
transfer pricing of cost plus 10% allows the Lighting Segment President to monitor how well the
lighting factory is adhering to its standard costing. As a result, the discrete financial
information of the lighting factories on a stand-alone basis is not reflective of their true
economic performance. At the direction of the CODM, the Lighting Segment President monitors the
overall performance of the Lighting Segment and manages the performance against standard at each of
the lighting factories as each entity has a different cost structure driven by the type, size, age
of the facility and the environment in which it operates (e.g. Lightron’s facility in New York is
more expensive to operate in as compared to Greenlee’s facility in Texas). As such, this level of
discrete financial information is necessary for the Lighting Segment President.

As part of the financial package provided to the CODM, LSI estimates the full customer price and
gross margins for each factory to arrive at an ‘enhanced’ gross margin that attempts to adjust the
intercompany results of each factory as if each factory recorded sales to the end customer. The
‘enhanced’ gross margin analysis has been prepared since FY 2006 when management integrated the
Lighting business at LSI Ohio. Integration included centralized procurement, credit and
collections, invoicing and oversight of the business via the Lighting Segment President who is
supported by a Lighting Segment Controller who gathers and analyzes the financial results of the
Lighting Segment as a whole. The following are the ‘enhanced’ gross margin percentages of the five
operating segments included in the Lighting Reportable Segment.

Lighting
Segment ‘Enhanced’ Gross Margins**

LSI Ohio

LSI Metal Fab

    LSI MidWest

    LSI Lightron

    LSI Greenlee

    FY2009*

    33.4
    %

    6.7
    %

    12.6
    %

    8.6
    %

    33.9
    %

    FY2008

    38.6
    %

    4.1
    %

    17.3
    %

    10.6
    %

    42.5
    %

    FY2007

    34.5
    %

    14.6
    %

    12.8
    %

    12.2
    %

    41.7
    %

    FY2006

    34.1
    %

    3.7
    %

    12.4
    %

    14.0
    %

    46.9
    %

    Average

    35.2
    %

    7.3
    %

    13.8
    %

    11.4
    %

    41.3
    %

    *

    Enhanced Gross Margin results through March 2009.

    **

    Note that these results are not the source of discrete financial information that is used to
prepare the segment footnote disclosure as it is supplementary information contained in the CODM
reporting package.

5

Our Lighting business (which is managed by the President of the Lighting Segment and includes the
five operating segments) acts as one lighting company. There is a significant amount of
intercompany support among the five facilities with intercompany sales activity at 100% in four of
these facilities. In determining the conclusions for aggregation of these operating segments, LSI
considered the qualitative conditions outlined in a-e of paragraph 17 of FAS 131.

    •

    LSI MidWest and LSI Lightron produce indoor lighting for customers in the
commercial/industrial, multi-site retail and petroleum/convenience store markets. LSI
Greenlee produces outdoor architectural lighting for these markets as well. LSI
Ohio produces indoor and outdoor lighting for commercial/industrial, multi-site retail and
petroleum/convenience store markets. LSI Metal Fab fabricates the housings that are used in
the lighting fixtures at LSI Ohio.

    •

    The production process at all of these operating segments is similar in that all require
assembly and fabrication of lighting components. Raw materials are purchased via a
centralized purchasing function at LSI Ohio for all operating segments in the Lighting
business. Additionally, production is interchangeable among LSI Ohio, LSI MidWest and LSI
Lightron and the Company has moved production in prior years between LSI MidWest and LSI
Lightron in order to push more volume through the Lightron facility in New York as part of a
tax strategy. LSI Greenlee does not offer as extensive interchangeable capabilities as they
do not have the same fabrication capabilities as LSI Ohio, LSI MidWest and LSI Lightron.
They would have the capability of assisting LSI Ohio, LSI MidWest and LSI Lightron with
their assembly operation as would LSI Metal Fab.

    •

    Because of the nature of the products offered and as the sales team goes to market as one
Lighting business, most often offering a package of indoor and outdoor lighting fixtures for
a complete commercial or retail facility, to include parking garage lights, parking lot area
lights, office lights, display lights, architectural lighting, exit lighting, etc., the type
and class of customers are the same among the four operating segments with LSI Metal Fab
acting as an internal supplier of raw material components. The customer will submit one
purchase order for the various types of lighting fixtures it is purchasing and LSI
coordinates the timing of fabrication and assembly of the various types of fixtures at a
particular factory and then ships all the products as one package or drop ships the goods to
the customer. For example, LSI will ship product from LSI Lightron to LSI Ohio so that the
complete lighting order for a particular customer can be shipped together.

    •

    Independent sales reps market all of LSI’s Lig