LSI INDUSTRIES INC.

FORM 10-Q

FOR THE QUARTER ENDED MARCH 31, 2003

INDEX

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995

This Form 10-Q contains forward-looking statements regarding the earnings and projected business, among other things. These are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E the Securities Exchange Act of 1934 that involve substantial risks and uncertainties that could cause actual results to differ materially from those expected. These risks and uncertainties include, but are not limited to, the impact of competitive products and services, product demand and market acceptance risks, reliance on key customers, financial difficulties experienced by customers, the adequacy of reserves and allowances for doubtful accounts, fluctuations in operating results or costs, unexpected difficulties in integrating acquired businesses, and the ability to retain key employees of acquired businesses.

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PART I.    FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS

LSI INDUSTRIES INC.

CONSOLIDATED INCOME STATEMENTS

(Unaudited)

The accompanying Notes to Financial Statements are an integral part of these financial statements.

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LSI INDUSTRIES INC.

CONSOLIDATED BALANCE SHEETS
(Unaudited)

The accompanying Notes to Financial Statements are an integral part of these financial statements.

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LSI INDUSTRIES INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

The accompanying Notes to Financial Statements are an integral part of these financial statements.

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LSI INDUSTRIES INC.

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

NOTE 1:           INTERIM FINANCIAL STATEMENTS

NOTE 2:           RECENT PRONOUNCEMENTS

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NOTE 3:           BUSINESS SEGMENT INFORMATION

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NOTE 4:          EARNINGS PER COMMON SHARE

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NOTE 5:         ACCOUNTS AND NOTES RECEIVABLE

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NOTE 6:         BALANCE SHEET DATA

NOTE 7:         GOODWILL AND INTANGIBLE ASSETS

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NOTE 8:          REVOLVING LINES OF CREDIT AND LONG-TERM DEBT

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NOTE 9:         CASH DIVIDENDS

NOTE 10:          SHAREHOLDERS’ EQUITY

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ITEM 2.          MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
                        CONDITION AND RESULTS OF OPERATIONS

Net Sales by Business Segment

   (In thousands, unaudited)

Results of Operations

THREE MONTHS ENDED MARCH 31, 2003
COMPARED TO THREE MONTHS ENDED MARCH 31, 2002

        Net sales of $44,228,000 in the third quarter of fiscal 2003 decreased 24% from third quarter fiscal 2002 net sales. Commercial / Industrial Lighting Segment net sales decreased 12% to $18.9 million and Image Segment net sales decreased 31% to $25.3 as compared to the prior year.

        The decrease in Commercial / Industrial Lighting Segment net sales is attributed to economic weakness in the commercial / industrial market, and, to an unknown degree, to several manufacturer sales representative agency changes made by the Company during the past six months. The Company believes these changes, which are now complete, will have a long term effect of increasing net sales through utilization of a more experienced and effective representative sales force, but a short term effect of a possible reduction in net sales as the new sales representative agencies are fully indoctrinated to the Company and trained in its lighting products.

        The decrease in Image Segment net sales is primarily attributed to continued weakness in the petroleum / convenience store market for both lighting and graphics products. Net sales of the Image Segment to the petroleum / convenience store market represented 30% and 36% of total net sales in the third quarters of fiscal 2003 and fiscal 2002, respectively. Sales to this market decreased $7.2 million in the third quarter of fiscal 2003 as compared to the same period last year due both to general economic conditions in this market and to much lower volume (down $3.5 million) associated with an image conversion program of a major oil company. The Company believes concerns about the Middle East and the war with Iraq have had the effect of reducing spending by the major oil companies. The Company believes this slow down is temporary, rather than a long term trend. The petroleum / convenience store market has been, and will continue to be a very important niche market for the Company. Additionally, net sales of the significant menu board program originally scheduled to conclude in the second quarter were down $3.3 million as compared to last year’s third quarter. The Company expects some additional sales through early fiscal 2004 as the remaining franchisee-operated restaurants of this customer implement this new menu board system.

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        While sales prices in some markets that the Company serves were increased, inflation did not have a significant impact on sales in fiscal 2003 as competitive pricing pressures held price increases to a minimum. During this temporary period of economic weakness, in certain situations the Company has accepted lower-than-normal sales prices and lower-than-normal margins where necessary, in part to protect market share.

        Gross profit of $10,581,000 in the third quarter of fiscal 2003 decreased 33% from last year, and decreased as a percentage of net sales to 23.9% in the third quarter of fiscal 2003 as compared to 27.3% in the same period last year. The decrease in amount of gross profit is due primarily to the 24% decrease in net sales, product mix and competitive pressures. These factors offset the approximate net $1.8 million of cost reductions the Company has achieved in manufacturing overhead spending, about two-thirds of which was in the area of wages, incentive compensation and benefits which are also related to the decrease in net sales and profitability. Selling and administrative expenses decreased $1.8 million or 16%. About half of this reduction relates to lower compensation and benefits costs as a result of the Company’s reduced sales volume and profitability. About $0.3 million of the reduction is due to lower sales commissions that relate almost entirely to the Company’s lighting sales. The Company adopted Financial Accounting Standards Statement No. 142 effective July 1, 2002, and accordingly did not record any goodwill amortization expense in fiscal 2003. Third quarter 2002 selling and administrative expense includes $334,000 of goodwill amortization expense. As a percentage of net sales, selling and administrative expenses were at 22.0% in the third quarter of fiscal 2003 as compared to 19.8% last year. The Company continued the task of converting its business operating software system company-wide. Total implementation costs expensed were $211,000 in the third quarter of fiscal 2003, as compared to expense of $353,000 in the same period last year. Expenditures are expected to continue into calendar year 2004. See additional discussion in Liquidity and Capital Resources regarding depreciation of this business operating system.

        The Company reported interest expense of $76,000 in the third quarter of fiscal 2003 as compared to $70,000 in the same period last year. The change between years is primarily reflective of both reduced interest rates and average outstanding borrowings on the Company’s line of credit that were about 40% less in the third quarter of fiscal 2003 as compared to the same period last year, partially offset by about $30,000 of interest that was capitalized in the third quarter of fiscal 2002 related to the Company’s construction of a manufacturing facility in New York. The effective tax rate in the third quarter of fiscal 2003 was 37.5% as compared to 40.3% in the same period last year.

        Net income of $468,000 in the third quarter of fiscal 2003 decreased 82% from the same period last year. The decrease is primarily the result of decreased gross profit from decreased net sales, partially offset by decreased operating expenses, and income taxes. Diluted earnings per share of $0.03 in the third quarter of fiscal 2003 decreased 81% from $0.16 per share reported in the same period of fiscal 2002. The weighted average common shares outstanding for purposes of computing diluted earnings per share in the third quarter of fiscal 2003 was 15,915,000 shares as compared to 16,085,000 shares in the same period of last year.

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NINE MONTHS ENDED MARCH 31, 2003
COMPARED TO NINE MONTHS ENDED MARCH 31, 2002

        Net sales of $157,548,000 in the first nine months of fiscal 2003 decreased 22% from the nine month fiscal 2002 net sales of $202,004,000. Commercial / Industrial Lighting Segment net sales decreased 11% to $64.0 million and Image Segment net sales decreased 28% to $93.5 as compared to the prior year.

        The decrease in Commercial / Industrial Lighting Segment net sales is attributed to economic weakness in the commercial / industrial market, and, to an unknown degree, to several manufacturer sales representative agency changes made by the Company during the past six months. The Company believes these changes, which are now complete, will have a long term effect of increasing net sales through utilization of a more experienced and effective representative sales force, but a short term effect of a possible reduction in net sales as the new sales representative agencies are fully indoctrinated to the Company and trained in its lighting products.

        The decrease in Image Segment net sales is primarily attributed to continued weakness in the petroleum/convenience store market for both lighting and graphics products. Net sales of the Image Segment to the petroleum / convenience store market represented 30% and 35% of total net sales in the first nine months of fiscal 2003 and fiscal 2002, respectively. Sales to this market decreased $23.9 million in the first nine months of fiscal 2003 as compared to the same period last year due both to general economic conditions in this market and to much lower volume (down $10.0 million) associated with an image conversion program of a major oil company. The Company believes concerns about the Middle East and the war with Iraq have had the effect of reducing spending by the major oil companies. The Company believes this slow down is temporary, rather than a long term trend. The petroleum / convenience store market has been, and will continue to be a very important niche market for the Company. Additionally, net sales of the significant menu board program originally scheduled to conclude in the second quarter were down $12.1 million as compared to last year’s third quarter. The Company expects some additional sales through early fiscal 2004 as the remaining franchisee-operated restaurants of this customer implement this new menu board system.

        While sales prices in some markets that the Company serves were increased, inflation did not have a significant impact on sales in fiscal 2003 as competitive pricing pressures held price increases to a minimum. During this temporary period of economic weakness, in certain situations the Company has accepted lower-than-normal sales prices and lower-than-normal margins where necessary, in part to protect market share.

        Gross profit of $40,655,000 in the first nine months of fiscal 2003 decreased 28% from last year, and decreased as a percentage of net sales to 25.8% in the fiscal 2003 nine month period as compared to 28.1% in the same period last year. The decrease in amount of gross profit is due primarily to the 22% decrease in net sales, product mix and competitive pressures. These factors offset the approximate net $4.9 million of cost reductions and improvements the Company has achieved in manufacturing overhead spending, about 70% of which was in the area of wages, incentive compensation and benefits which are also related to the decrease in net sales. Selling and administrative expenses decreased $5.8 million or 15%. About half of this reduction relates to lower compensation and benefits costs as a result of the Company’s reduced sales volume and profitability. About $1.3 million of the reduction is due to lower sales commissions that relate almost entirely to the Company’s lighting sales. The Company adopted Financial Accounting Standards Statement No. 142 effective July 1, 2002, and accordingly did not record any goodwill amortization expense in fiscal 2003. Nine month 2002 selling and

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administrative expense includes $1,003,000 of goodwill amortization expense. As a percentage of net sales, selling and administrative expenses were at 20.7% in the first nine months of fiscal 2003 as compared to 19.0% last year. The Company continued the task of converting its business operating software system company-wide. Total implementation costs expensed were $919,000 in the first nine months of fiscal 2003, as compared to expense of $1,019,000 in the same period last year. Expenditures are expected to continue into calendar year 2004. See additional discussion in Liquidity and Capital Resources regarding depreciation of this business operating system.

        The Company reported interest expense of $299,000 in the first nine months of fiscal 2003 as compared to $496,000 in the same period last year. The change between years is primarily reflective of both reduced interest rates and average outstanding borrowings on the Company’s line of credit that were about 25% less in the first nine months of fiscal 2003 as compared to the same period last year, partially offset by about $43,000 of interest that was capitalized in the first nine months of fiscal 2002 related to the Company’s construction of a manufacturing facility in New York. The effective tax rate in the first nine months of fiscal 2003 was reduced to 30.1%, compared to 39.0% last year, primarily as a result of the Company recording federal and state income tax credits that had not previously been recognized. The Company expects a 37.5% effective income tax rate in the fourth quarter of fiscal 2003.

        Net income of $5,370,000 in the first nine months of fiscal 2003 decreased 51% from the same period last year. The decrease is primarily the result of decreased gross profit from decreased net sales, partially offset by decreased operating expenses, net interest expense and income taxes. Diluted earnings per share of $0.34 in the first nine months of fiscal 2003 decreased 50% from $0.68 per share reported in the same period of fiscal 2002. The weighted average common shares outstanding for purposes of computing diluted earnings per share in the third quarter of fiscal 2003 was 15,935,000 shares as compared to 16,021,000 shares in the same period of last year.

Liquidity and Capital Resources

        The Company considers its level of cash on hand, its current ratio and working capital levels to be its most important measures of short-term liquidity. For long-term liquidity indicators, the Company believes its ratio of long-term debt to equity and its historical levels of net cash flows from operating activities to be the most important measures.

        At March 31, 2003 the Company had working capital of $52.3 million, compared to $55.8 million at June 30, 2002. The ratio of current assets to current liabilities increased to 3.50 to 1 from 2.84 to 1. The $3.5 million decrease in working capital is primarily attributed to decreased accounts and notes receivable, and decreased other current assets, partially offset by decreased accounts payable and accrued expenses, and increased inventories. The $12.4 million reduction in accounts receivable is primarily attributed to a reduction in net sales in the third quarter of fiscal 2003 as compared to the fourth quarter of fiscal 2002 ($44.2 million vs. $57.3 million), as the days sales outstanding remained constant at 64 days. Other current assets went down $2.6 million, primarily because $2.0 million of refundable income taxes at June 30, 2002 were applied to fiscal 2003 federal income tax estimated payments. The $3.3 million or 22% reduction in accounts payable is in line with the reduction in net sales in the third quarter of fiscal 2003 as compared to the fourth quarter of fiscal 2002. The $5.9 million reduction in accrued expenses is primarily due to lower accruals of performance-based compensation and benefit plans ($3.3 million), and a lower amount of accrued income taxes ($1.3 million). Inventories have increased a net $2.2 million in the nine months since June 30, 2002, with approximately $2 million of inventory reductions in the Company’s graphics businesses, primarily in finished goods, and approximately $4 million of increase in the Company’s lighting businesses, primarily in raw materials.

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        The Company generated $13.5 million of cash from operating activities in the first nine months of fiscal 2003 as compared to $19.7 million in the same period of fiscal 2002. The $6.2 million decrease in net cash flows from operating activities in the first nine months of fiscal 2003 is primarily the net result of decreased net income ($5.5 million), decreases in accounts payable and accrued expenses ($6.0 million), and decreased depreciation and amortization expense ($0.4 million), partially offset by a larger decrease in accounts receivable ($3.3 million) and less of a decrease in inventories ($2.9 million).

        As of March 31, 2002, the Company’s days sales outstanding (DSO) were at approximately 64 days, level with the DSO as of June 30, 2002. Net accounts and notes receivables were $29.8 million and $42.3 million at March 31, 2003 and June 30, 2002, respectively. Collection cycles from a few large customers in the Image Segment, as well as several other customers, have been very slow due to a combination of factors, including customer cash availability and economic conditions. The majority of one such open customer account (petroleum / convenience store customer) was converted into a collateralized note receivable during fiscal 2002, with the balance of the note at $1.8 million and the unsecured receivable at $0.2 million as of March 31, 2003. This note provides for scheduled weekly payments of $50,000. This customer is four weeks delinquent in payments as of May 2, 2003. The Company also has unsecured accounts receivable, as well as dedicated inventory, from Kmart, the large national retailer that filed Chapter 11 bankruptcy in January 2002. The Company’s total exposure is approximately $1.7 million. Subject to continual review, shipments to Kmart have resumed on a limited basis on open account. Two additional customers in the Image Segment filed bankruptcy in the first quarter of fiscal 2003. In the first quarter of fiscal 2003, the Company recorded an additional $1.0 million bad debt expense and $0.2 million inventory obsolescence expense as a result of these unexpected bankruptcies, with just over half of this total expense to cover exposure to these bankruptcies and the remainder to provide additional reserves for unknown loss exposures. The four customers discussed above represent approximately 10% of the Company’s total net accounts and notes receivable as of March 31, 2003. The Company believes that the receivables and inventory discussed above are ultimately collectible or recoverable, net of certain reserves, and that aggregate allowances for doubtful accounts are adequate.

        Cash generated from operations is the Company’s primary source of liquidity. In addition, the Company has an unsecured $50 million revolving line of credit with its bank group. As of April 28, 2003 there was approximately $36.4 million available on this line of credit. This line of credit is composed of a $30 million three year committed credit facility expiring in fiscal 2006 and a $20 million credit facility with an annual renewal in the third quarter of fiscal 2004. The Company believes that the total of available lines of credit plus cash flows from operating activities is adequate for the Company’s fiscal 2003 operational and capital expenditure needs. The Company is in compliance with all of its loan covenants.

        Capital expenditures of $4.7 million in the first nine months of fiscal 2003 compare to $10.7 million in the same period of fiscal 2002. The primary spending in fiscal 2002 was for a new manufacturing facility for LSI Lightron, with about $6.5 million of the eventual total of $11 million spent as of March 31, 2002. The Company commenced operations in this facility in July 2003. Fiscal 2003 spending is for completion of this facility ($1.4 million), tooling and equipment throughout all operations of the Company ($2.2 million), and capitalization of system design costs related to the Company’s fully integrated enterprise resource planning / business operating system ($1.1 million). Total capital expenditures in fiscal 2003 are expected to be approximately $7 million, exclusive of business acquisitions.

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        The Company used $8.9 million in financing activities in the first nine months of fiscal 2003 as compared to a use of $9.2 million in the same period of fiscal 2002. The change is the net result of a $1.8 million borrowing of long-term debt in fiscal 2003, a higher amount of repayment of funded debt in the first nine months of fiscal 2003 as compared to same period last year ($0.2 million), less stock option exercises ($1.2 million), and more cash dividends paid in fiscal 2003 ($0.1 million).

        The Company has been implementing a fully integrated enterprise resource planning / business operating system over the past three fiscal years, and will continue to do so throughout all operations of the Company, with completion of the implementation scheduled in fiscal 2005. Of the $8.0 million of software expenditures that are capitalized to date, a total of $2.9 million is being depreciated for the subsidiary companies currently using the software. A total of $0.7 million of depreciation has been expensed to date. As additional subsidiaries implement this software, proportionately more of this capitalized asset will be depreciated and the depreciation per period will significantly increase to approximately $1.5 million per fiscal year. This software is scheduled to be fully depreciated in fiscal 2008. Capitalization of additional design costs for this internal-use software is expected, as well as implementation costs that will be expensed as incurred.

        On April 22, 2003 the Board of Directors declared a regular quarterly cash dividend of $0.06 per share (approximately $946,000), payable May 13, 2003 to shareholders of record on May 6, 2003. During the first nine months of fiscal 2003, the Company paid cash dividends of $2,838,000, as compared to $2,773,000 in the same period of fiscal 2002.

        The Company continues to seek opportunities to invest in new products and markets, and in acquisitions that fit its strategic growth plans in the lighting and graphics markets. The Company believes adequate financing for any such investments or acquisitions will be available through future borrowings or through the issuance of common or preferred shares in payment for acquired businesses.

New Accounting Pronouncements

        In June 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 141 (SFAS No. 141), “Business Combinations,” and issued Statement of Financial Accounting Standards No. 142 (SFAS No. 142), “Goodwill and Other Intangible Assets.” SFAS No. 141 eliminated the pooling-of-interests method of accounting for business combinations and requires that all business combinations be accounted for as purchases. In addition, SFAS No. 141 establishes new rules concerning recognition of intangible assets arising in a purchase business combination and requires enhanced disclosure of information in the period in which a business combination is completed. SFAS No. 142 establishes new rules on accounting for goodwill whereby goodwill will no longer be amortized to expense, but rather will be subject to impairment review. SFAS No. 141 is effective for all business combinations initiated after June 30, 2001. The Company has adopted SFAS No. 142 effective July 1, 2002 and is currently evaluating the impact to its financial statements, financial position, results of operations and cash flows related to its implementation.

        The Company has completed the first phase of the transitional goodwill impairment test required by Statement of Financial Accounting Standards No. 142 (SFAS No. 142), “Goodwill and Other Intangible Assets.” This test required the Company to assess the fair value, as determined on a discounted cash flow basis, of each reporting unit that has goodwill on its balance sheet, and compare that value to the carrying value of the reporting unit’s net assets. Based upon this analysis, there is an indication that the recorded net goodwill of two reporting units in the Commercial / Industrial Lighting Segment (totaling $23,593,000) and two reporting

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units in the Image Segment (totaling $3,868,000) may be significantly impaired. The second phase of the transitional goodwill impairment test and final determination of the amount of impairment will be completed not later than June 2003. The impairment will be a non-cash and non-operating charge, booked net of income tax as a change in accounting methods, and will be recorded as of the date of adoption of SFAS No. 142, July 1, 2002.

        In June 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 143 (SFAS No. 143), “Accounting for Asset Retirement Obligations,” and in August 2001 issued Statement of Financial Accounting Standards No. 144 (SFAS No. 144), “Accounting for the Impairment or Disposal of Long-Lived Assets.” SFAS No. 143 establishes standards of accounting for asset retirement obligations (i.e., legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and/or the normal operation of a long-lived asset, except for certain obligations of lessees) and the associated asset retirement costs. SFAS No. 144 replaces existing accounting pronouncements related to impairment or disposal of long-lived assets. The Company adopted both SFAS No. 143 and No. 144 effective July 1, 2002 with no significant impact on its financial condition or results of operations.

        In June 2002, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS No. 146), “Accounting for Costs Associated with Exit or Disposal Activities.” SFAS No. 146 addresses financial accounting and reporting for costs associated with exit or disposal of facilities, and must be implemented not later than December 31, 2002. The Company is currently evaluating the impact of these statements, but does not expect any significant impact on its financial condition or results of operations when they are implemented.

        In November 2002, the Emerging Issues Task Force (EITF) of the Financial Accounting Standards Board issued consensus 00–21, “Revenue Arrangements with Multiple Deliverables.” This consensus provides guidance and specific criteria to determine if and how multiple deliverables should be separated, and whether revenue associated with each deliverable should be recorded at a separate time. The Company is currently evaluating the impact of this consensus, but does not expect any significant impact on its financial condition or results of operations upon implementation.

        In December 2002, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard No. 148 (SFAS No. 148), “Accounting for Stock-Based Compensation — Transition and Disclosure.”  SFAS No. 148 amends SFAS No. 123, “Accounting for Stock-Based Compensation,” to provide alternative methods of transition to the fair value method of accounting for stock-based employee compensation.  SFAS No. 148 also amends the disclosure provisions to require disclosure in the summary of significant accounting policies of the effects of an entity’s accounting policy with respect to stock-based employee compensation on reported net income and earnings per share. SFAS No. 148 does not require companies to expense employee stock options. The expanded annual disclosure requirements and the transition provisions are effective for fiscal years ending after December 15, 2002 (the Company’s fiscal year 2003) and the new interim period disclosures are required in financial statements for interim periods beginning after December 15, 2002 (the Company’s fiscal 2003 third quarter). The Company’s implementation of this statement did not have any significant impact on its financial condition or results of operations upon implementation. Required disclosures are included in Footnote No. 10.

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ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

ITEM 4.    CONTROLS AND PROCEDURES.

PART II.    OTHER INFORMATION

ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K

[All other items required in Part II have been omitted because they are not applicable or are not required.]

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

May 9, 2003

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Certification of Principal Executive Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
and Securities and Exchange Commission Release 34-46427

        I, Robert J. Ready, the principal executive officer of LSI Industries Inc., certify that:

       1.        I have reviewed this quarterly report on Form 10-Q of LSI Industries Inc.;

        2.        Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

        3.        Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

         4.        The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

        5.        The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

        6.        The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: May 9, 2003

Certification of Principal Financial Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
and Securities and Exchange Commission Release 34-46427

        I, Ronald S. Stowell, the principal financial officer of LSI Industries Inc., certify that:

       1.        I have reviewed this quarterly report on Form 10-Q of LSI Industries Inc.;

       2.        Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

       3.        Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

       4.        The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

       5.        The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

       6.        The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: May 9, 2003