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CORRESP
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Correspondence

July 8, 2009

Mr. Michael Fay, Mr. Carlos Pacho, 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 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 June 30, 2009, we are
submitting this additional response regarding LSI’s business segment reporting based on your
suggestion that two of our lighting companies (operating segments named LSI MidWest Lighting and
LSI Lightron) be separated out of the current Lighting Segment and aggregated into a second
reportable Lighting Segment. We respectfully and strongly disagree with this suggestion, believe
that the fact pattern you apparently considered in connection with your suggestion is not
appropriate for LSI’s business segment reporting, and that the suggested reportable business
segment structure is not reflective of how the business is managed and performance assessed.

Both LSI’s Chief Operating Decision Maker (CODM) and its President of the Lighting Segment
manage the entire lighting business as one lighting entity as we previously have discussed
with the Staff. The Lighting Product catalog which was sent to the Staff for review on or about
July 6, 2009 clearly indicates one complete lighting product offering is presented to the
marketplace without regard to the identity of the facility manufacturing the light fixture. LSI
manufacturing management decides where to manufacture the light fixtures based upon both the
particular products involved and current levels of capacity utilization. The discrete financial
information package provided to the CODM does not enter into this decision. For example, during a
period of significant sales to the nation’s largest national retailer, LSI fulfilled product from
four lighting facilities and produced at least two of the highest volume light fixtures
simultaneously in two manufacturing facilities, each of which would fall into different reportable
lighting business segments under the Staff’s suggested segment structure. To separate this
one transaction and report results in two different reportable business segments would both
confuse investors and cause LSI extraordinary burden and cost. Such bifurcation is not reflective
of LSI’s total performance under the contract and other contracts of this nature.

Over the years as subsidiary entities were acquired, they were added to the financial package
that the CODM receives. Nothing was eliminated from this financial package, even though much of it
was not and is not used by the CODM. The CODM manages the overall corporate-wide strategic
direction of the business with primary reliance on the following items in the monthly financial
package: LSI consolidated net sales, net income, earnings per share and cash flow; LSI
consolidated balance sheet elements of cash, receivables, DSO statistics, inventory, inventory
turns and long-term debt; net sales and operating income of the Lighting and Graphics Segments.
The additional information in the CODM’s financial package mimimally complements his hands-on
management style and operating commentary received from his functional staff (Segment Presidents,
Sales, Manufacturing, Human Resources, Accounting, MIS, Procurement, etc.).

Our discussions with the Staff have caused us to reevaluate the contents of the CODM’s
financial package, and to determine what information is necessary for the CODM to effectively make
decisions about resource allocations and to assess segment performance. As a result of this
evaluation, we determined that certain information historically included in the CODM’s financial
package was not being used for these purposes. The CODM’s financial package, in the format that was provided to and reviewed by the
Staff, will not be sustained going forward. The following information has already been eliminated:
discrete financial information of individual operating segments (the separate legal entities), and
all “Enhanced Results.” The information that has been eliminated from the CODM’s financial package
was not helpful to managing the business or making strategic decisions and was included merely as a
carry forward from a time when the business was growing due to acquisitions. The CODM will receive
consolidated reportable business segment information only (which will flow directly into the
reportable business segment disclosures). This will be true for the financial package for the
fiscal year ended June 30, 2009 and therefore will impact the Form 10-K to be filed for fiscal
2009. As the 2009 presentation will reflect our current proposed view, any change to the 2008
financial statements and segment disclosures would be of limited usefulness.

While we are no longer reporting “Enhanced Results,” we believe that based upon the guidance
in SFAS No. 131, paragraph 30, that Enhanced Results were not determined in accordance with the
measurement principles most consistent with those used in preparing LSI’s consolidated financial
statements, and accordingly, that it would be inappropriate under the literature to use them as a
basis for presentation. Enhanced Results were a weakly supported and casual attempt to eliminate
the considerable management structure and manner in which LSI goes to the customer market and give
a brief glimpse (subject to the myriad of assumptions, cost sharing and allocations) of what a
facility’s results might have been if those LSI operating segments had been dealing directly with
customers — which they most certainly are not. Of the five lighting entities, only LSI Ohio is
equipped to deal directly with customers. Enhanced Results presented a what-if fictional scenario,
were not audit-worthy, were never subjected to any audit or review procedures, were not
calculated consistently from one year to the next or necessarily from one LSI company to the next,
appeared on only two of the 100+ pages of the CODM financial package and were not supported by
income or cash flow statements or corresponding balance sheets. We do not believe Enhanced Results
represent numbers that were solidly based upon the business transactions that are captured by LSI’s
accounting systems. Enhanced Results were created prior to our fiscal year 2006, after our
lighting operations were streamlined and consolidated, in an attempt to provide some comparability
to periods prior to these changes. As Enhanced Results will no longer be presented to the CODM
because they are not relevant, fiscal 2009 results could not be reported with Enhanced Results,
which also means in the June 30, 2009 Form 10-K, neither would fiscal 2008 or 2007 results.

LSI would be put in a position of considerable competitive disadvantage if the product lines
produced by MidWest Lighting and Lightron were reported together in a second lighting segment for
all lighting competitors to see. In an already competitive lighting market, the largest lighting
companies in the industry would receive detailed product line performance information from LSI and
would be able to achieve unfair competitive advantage. None of the large lighting companies are
subject to this micro level of external reporting: Cooper Industries (Electrical Products
$5.1 Billion; Tools $0.8 Billion); Hubbell Incorporated (Electrical $2.0 Billion; Power
$0.7 Billion); Acuity ($2.0 Billion, apparently all one unnamed reportable business
segment) —  then there is LSI Industries (approximately $300 million reported in four or five
business segments, which includes an All Other Category).

We believe investors would be confused by the segment structure suggested by the SEC Staff in
which MidWest and Lightron would be pulled out into a second reportable lighting segment, and that
they would be misled if results of these two lighting facilities were to be included in the All
Other Category. We believe confusion would stem from not having succinct reporting regarding total
lighting sales and operating results. We believe investors would tend to add the two lighting
business segments together to determine total lighting results, but in so doing, would calculate an
incorrect and overstated total. Further, if MidWest and Lightron were culled out of our Lighting
Segment and placed into the All Other Category, those lighting net sales and results would be
hidden from investors and they could be misled into thinking that LSI’s total lighting business was
as reported in the reported Lighting Segment that includes only LSI Ohio Ops, LSI Metal Fabrication
and LSI Greenlee Lighting. In either situation, this would bring less clarity and more
confusion. We believe analysts who follow LSI and publish written reports would find the Staff’s suggested new segment
structure (two Lighting Segments, Graphics, Technology and an All Other Category) far too difficult
for a company our size, that it would create significant additional work for them and that it would
be confusing to their investor audiences. LSI has worked hard to establish the interest of
respected security analysts and institutional investors. We are truly concerned that by making LSI
difficult to understand that we risk losing this independent and objective input from the financial
community. Such a loss would obviously be detrimental to current and prospective shareholders of
LSI. So who is served by the segment structure suggested by the Staff?

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Neither MidWest nor Lightron have an appropriate balance sheet to disclose identifiable assets
that would be related to purported customer sales reported in the Staff’s second lighting segment.
For example, there are no customer receivables, no bad debt reserves and the discrete income
statements for these two operating segments do not reflect any bad debt expense —  all because
100% of their sales are intercompany sales to LSI Ohio Ops. Creating these items for MidWest and
Lightron, when combined into either a second reportable lighting segment or into the All Other
Category, would represent an undue hardship, is not available on a historical basis and would cause
extraordinary burden and cost. Once again, the point is that LSI manages, operates, and goes to
market with only one lighting entity.

In summary, we believe the Staff would engage in a severe disservice to the investing public
by forcing LSI to use its suggested reportable business segment structure. Any disaggregation of
our proposed Lighting Segment would not be consistent with the way our CODM manages the business.
We are restructuring the CODM financial package to provide only the information the CODM uses to
make decisions regarding resource allocation and to assess performance. Discrete financial
information by operating segment will not be included in the CODM financial package. We believe
the Staff’s suggested segment reporting structure would provide less clarity and would confuse
investors. Additionally, LSI would suffer immeasurable competitive harm. Based on all of the
foregoing and considering also the information in the CODM financial package that the CODM uses to
manage the business and the changes/elimination of data from the CODM financial package, the
following reportable business structure with a single Lighting Segment as earlier proposed by LSI
in accordance with FAS No. 131 should, in our view, be implemented:

    Lighting Segment

    Graphics Segment

    Technology Segment

    All Other Category

    LSI Ohio Ops

    Grady McCauley

    LSI Saco Technologies

    LSI Marcole

    LSI Metal Fabrication

    LSI Retail Graphics

    LSI Images

    LSI MidWest Lighting

    LSI Integrated Graphics

    LSI Adapt

    LSI Lightron

    Corporate Admin Expense

    LSI Greenlee Lighting

We respectfully request a telephone conference call, to include LSI’s CODM, with the SEC Staff on
this critical subject of LSI’s reportable business segment structure at your earliest convenience.
Given the importance of this business segment reporting matter to LSI, we would feel compelled to
pursue this to a higher level decision maker in the SEC should you decide not to agree with our
position after the telephone conference call.

    Sincerely,

    /s/ Ronald S. Stowell

    Ronald S. Stowell

    Vice President, Chief Financial Officer &
Treasurer

    cc:

    F. Mark Reuter Esq.

Robert J. Ready (LSI Chairman, CEO & President)

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