LSI Industries Inc. (LYTS, Financial) filed Quarterly Report for the period ended 2008-12-31.
LSI Industries is an Image Solutions company combining integrated design manufacturing & technology to supply its own high quality lighting fixtures and graphics elements for applications in the retail specialty niche & commercial markets. The Company's Lighting Segment produces high performance products dedicated to the outdoor architectural outdoor indoor architectural indoor and accent/downlight markets. The Graphics Segment provides a vast array of products and services including signage menu board systems active digital signage decorative fixturing design support engineering & project management for custom programs for today's retail environment. The Company's Technology Segment develops and designs high performance light engines digital signage and other products using LED lighting technology including large format LED video screens for the entertainment & sports markets. LSI's major markets are the petroleum convenience store multisite retail & the commer LSI Industries Inc. has a market cap of $129.85 million; its shares were traded at around $4.55 with a P/E ratio of 15.3 and P/S ratio of 0.43. The dividend yield of LSI Industries Inc. stocks is 3.32%. LSI Industries Inc. had an annual average earning growth of 8% over the past 5 years.
Selling and administrative expenses of $27,977,000 in the first half of fiscal year 2009 decreased $2.8 million, and increased to 20.5% as a percentage of net sales from 17.7% in the same period last year. Employee compensation and benefits expense decreased $0.6 million in the first half of fiscal 2009 as compared to the same period last year. Other changes of expense between years include decreased sales commission expense ($0.9 million), decreased warranty expense ($0.7 million), decreased outside services expense ($0.3 million), increased research & development expense ($0.3 million, primarily associated with research and development spending related to solid-state LED technology), decreased legal fees ($0.2 million), increased menu board litigation settlement costs ($0.2 million), increased bad debt expense ($0.1 million), decreased intangible asset amortization expense ($0.1 million), decreased supplies ($0.1 million) and decreased advertising and literature ($0.1 million).
At December 31, 2008 the Company had working capital of $73.6 million, compared to $72.9 million at June 30, 2008. The ratio of current assets to current liabilities was 4.72 to 1 as compared to a ratio of 3.32 to 1 at June 30, 2008. The $0.7 million increase in working capital from June 30, 2008 to December 31, 2008 was primarily related to decreased accounts payable ($4.8 million), decreased accrued expenses and customer prepayments ($6.0 million and $0.9 million, respectively), increased cash and cash equivalents ($1.2 million), partially offset by decreased inventory ($6.6 million), decreased accounts receivable ($3.6 million), and decreased other current assets ($2.0 million).
The Company generated $6.6 million of cash from operating activities in the first half of fiscal 2009 as compared to a generation of $7.3 million last year. This $0.7 million decrease in net cash flows from operating activities is primarily the net result of less net income ($22.2 million unfavorable), a non-cash goodwill impairment charge in fiscal 2009 ($12.7 million favorable), less of a reduction in accounts receivable (unfavorable change of $9.5 million), a decrease in inventories rather than an increase (favorable change of $7.6 million), less of a reduction in customer prepayments (favorable change of $10.5 million), reserve for uncertain income tax positions (unfavorable $0.2 million), a smaller decrease in accounts payable and accrued expenses (favorable change of $0.1 million), decreased depreciation and amortization (unfavorable $0.5 million), larger increases in the reserves for bad debts and inventory obsolescence (favorable $0.2 million) and an increase in deferred income tax assets rather than a decrease (unfavorable $0.3 million). The fiscal 2008 significant reduction in customer prepayments is related to the completion of a menu board replacement program in the Graphics Segment.
The Company used $4.5 million of cash related to financing activities in the first half of fiscal 2009 as compared to a use of $6.4 million in the same period last year. The $1.9 million change between periods is primarily the result of lower cash dividend payments ($4,314,000 in the first half of fiscal 2009 as compared to $7,107,000 in the same period last year). The $2.8 million reduction in dividend payments between years is primarily the net result of a special year-end dividend of approximately $1.1 million paid in the first quarter of fiscal 2008 with none in fiscal 2009, and a lower per share dividend rate beginning in the second quarter of fiscal 2009. Additionally, the Company had cash flow from the exercise of stock options in the first half of fiscal 2008, while there were no exercises in the first half of fiscal 2009 ($0.8 million unfavorable).
The Company adopted the provisions of FASB Interpretation No. 48 (FIN 48), “Accounting for Uncertainty in Income Taxes,” on July 1, 2007. As a result of adoption, the Company recognized $2,582,000 in reserves for uncertain tax positions and recorded a charge of $2,582,000 to the July 1, 2007 retained earnings balance. At June 30, 2008, tax and interest, net of potential federal tax benefits, were $2,098,000 and $534,000, respectively, of the total reserves of $3,225,000. Additionally, penalties were $593,000 of the reserve at June 30, 2008. Of the $3,225,000 reserve for uncertain tax positions, $2,632,000 would have an unfavorable impact on the effective tax rate if recognized.
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LSI Industries is an Image Solutions company combining integrated design manufacturing & technology to supply its own high quality lighting fixtures and graphics elements for applications in the retail specialty niche & commercial markets. The Company's Lighting Segment produces high performance products dedicated to the outdoor architectural outdoor indoor architectural indoor and accent/downlight markets. The Graphics Segment provides a vast array of products and services including signage menu board systems active digital signage decorative fixturing design support engineering & project management for custom programs for today's retail environment. The Company's Technology Segment develops and designs high performance light engines digital signage and other products using LED lighting technology including large format LED video screens for the entertainment & sports markets. LSI's major markets are the petroleum convenience store multisite retail & the commer LSI Industries Inc. has a market cap of $129.85 million; its shares were traded at around $4.55 with a P/E ratio of 15.3 and P/S ratio of 0.43. The dividend yield of LSI Industries Inc. stocks is 3.32%. LSI Industries Inc. had an annual average earning growth of 8% over the past 5 years.
Highlight of Business Operations:
Selling and administrative expenses of $14,014,000 in the second quarter of fiscal year 2009 decreased $1.7 million, and increased to 23.1% as a percentage of net sales from 18.7% in the same period last year. Employee compensation and benefits expense decreased $0.1 million in the second quarter of fiscal 2009 as compared to the same period last year. Other changes of expense between years include decreased sales commission expense ($1.0 million), decreased warranty expense ($0.3 million), decreased outside services expense ($0.3 million), increased research & development expense ($0.2 million, primarily associated with research and development spending related to solid-state LED technology), decreased legal fees ($0.2 million), increased menu board litigation settlement costs ($0.2 million), increased bad debt expense ($0.2 million), decreased intangible asset amortization expense ($0.1 million) and decreased advertising and literature ($0.1 million).Selling and administrative expenses of $27,977,000 in the first half of fiscal year 2009 decreased $2.8 million, and increased to 20.5% as a percentage of net sales from 17.7% in the same period last year. Employee compensation and benefits expense decreased $0.6 million in the first half of fiscal 2009 as compared to the same period last year. Other changes of expense between years include decreased sales commission expense ($0.9 million), decreased warranty expense ($0.7 million), decreased outside services expense ($0.3 million), increased research & development expense ($0.3 million, primarily associated with research and development spending related to solid-state LED technology), decreased legal fees ($0.2 million), increased menu board litigation settlement costs ($0.2 million), increased bad debt expense ($0.1 million), decreased intangible asset amortization expense ($0.1 million), decreased supplies ($0.1 million) and decreased advertising and literature ($0.1 million).
At December 31, 2008 the Company had working capital of $73.6 million, compared to $72.9 million at June 30, 2008. The ratio of current assets to current liabilities was 4.72 to 1 as compared to a ratio of 3.32 to 1 at June 30, 2008. The $0.7 million increase in working capital from June 30, 2008 to December 31, 2008 was primarily related to decreased accounts payable ($4.8 million), decreased accrued expenses and customer prepayments ($6.0 million and $0.9 million, respectively), increased cash and cash equivalents ($1.2 million), partially offset by decreased inventory ($6.6 million), decreased accounts receivable ($3.6 million), and decreased other current assets ($2.0 million).
The Company generated $6.6 million of cash from operating activities in the first half of fiscal 2009 as compared to a generation of $7.3 million last year. This $0.7 million decrease in net cash flows from operating activities is primarily the net result of less net income ($22.2 million unfavorable), a non-cash goodwill impairment charge in fiscal 2009 ($12.7 million favorable), less of a reduction in accounts receivable (unfavorable change of $9.5 million), a decrease in inventories rather than an increase (favorable change of $7.6 million), less of a reduction in customer prepayments (favorable change of $10.5 million), reserve for uncertain income tax positions (unfavorable $0.2 million), a smaller decrease in accounts payable and accrued expenses (favorable change of $0.1 million), decreased depreciation and amortization (unfavorable $0.5 million), larger increases in the reserves for bad debts and inventory obsolescence (favorable $0.2 million) and an increase in deferred income tax assets rather than a decrease (unfavorable $0.3 million). The fiscal 2008 significant reduction in customer prepayments is related to the completion of a menu board replacement program in the Graphics Segment.
The Company used $4.5 million of cash related to financing activities in the first half of fiscal 2009 as compared to a use of $6.4 million in the same period last year. The $1.9 million change between periods is primarily the result of lower cash dividend payments ($4,314,000 in the first half of fiscal 2009 as compared to $7,107,000 in the same period last year). The $2.8 million reduction in dividend payments between years is primarily the net result of a special year-end dividend of approximately $1.1 million paid in the first quarter of fiscal 2008 with none in fiscal 2009, and a lower per share dividend rate beginning in the second quarter of fiscal 2009. Additionally, the Company had cash flow from the exercise of stock options in the first half of fiscal 2008, while there were no exercises in the first half of fiscal 2009 ($0.8 million unfavorable).
The Company adopted the provisions of FASB Interpretation No. 48 (FIN 48), “Accounting for Uncertainty in Income Taxes,” on July 1, 2007. As a result of adoption, the Company recognized $2,582,000 in reserves for uncertain tax positions and recorded a charge of $2,582,000 to the July 1, 2007 retained earnings balance. At June 30, 2008, tax and interest, net of potential federal tax benefits, were $2,098,000 and $534,000, respectively, of the total reserves of $3,225,000. Additionally, penalties were $593,000 of the reserve at June 30, 2008. Of the $3,225,000 reserve for uncertain tax positions, $2,632,000 would have an unfavorable impact on the effective tax rate if recognized.
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