Business News | Mar 07, 2007

LSI Industries Inc. steps up commitment to Solid-State LED lighting

Cincinnati, Ohio-- LSI Industries Inc. today announced it has stepped up its commitment to designing, engineering, manufacturing, marketing, and selling solid-state LED products for the lighting and graphics markets.

Digital billboards using solid-state LEDs for the outdoor advertising industry are slated to be the first products produced. Last week the Board of Directors approved one of the largest capital investments in the Company's history to purchase and install a specialized state-of-the-art Salvagnini automated fabrication center for sheet metal production as part of this initiative. This Salvagnini equipment utilizes advanced manufacturing technology and will allow LSI to consolidate work centers, perform all work with less man hours, increase throughput, and reduce operating costs. The system is expected to be installed at LSI's metal fabrication facility in Northern Kentucky as soon as possible.

Commenting on LSI's targeted commitment to the outdoor digital billboard market, Bob Ready, President and Chief Executive Officer said, "We believe LSI Industries is perfectly suited to becoming a leading producer of digital billboards. We have the design, engineering, technology, and manufacturing capabilities and capacity at hand to dedicate to this product category. Our goal will be to provide customers with the most advanced, feature rich, and cost effective digital billboard products available based on our efficient high production manufacturing. This is exactly the kind of niche market that LSI has been so successful in penetrating throughout its history. Furthermore, we see this as a stepping stone to increasing our participation in related markets including indoor digital billboards and displays for sports arenas, public transit, shopping malls, and similar opportunities. Our analysis and information indicate that digital billboards, both indoor and outdoor, will experience rapid and sustainable growth over the next decade. LSI's first five outdoor digital billboards will be shipped during the current quarter to Clear Channel Outdoor for installation in the Memphis market."

LSI's capital investment program will provide for the efficient manufacturing of outdoor billboards, stadium and arena scoreboards and ribbon displays, and white light commercial fixtures based on solid-state LED technology. Manufacturing of these products at commercial production rates will be conducted at LSI's principal manufacturing facilities located in the Cincinnati area. The Montreal facility (LSI Saco Technologies) will continue to utilize its specialized knowledge and research and development skills to prototype new design concepts and validate new products. It will oversee all stages of solid-state product development and prototyping, and coordinate with LSI's Lighting and Graphics divisions to reach large-scale production. Montreal operations will continue to be responsible for the production of customized large format LED video screen displays for the entertainment market. LSI Industries formally entered the solid-state LED marketplace with its acquisition of Saco Technologies in June of last year. Mr. Ready stated, "When industry experts talk about solid-state LED lighting, terms like 'paradigm shift' and 'disruptive technology' are frequently heard. We believe these terms indicate the measure of importance that LEDs will play in both specialized and general lighting applications as time moves forward. There can be little doubt as to the strength of the factors driving solid-state based lighting. LEDs are more energy-efficient, last longer, require less maintenance, and produce less heat as compared to conventional light sources. As solid-state lighting becomes more cost effective and performance continues to improve, LEDs will become an attractive replacement for other light sources such as metal halide, incandescent, and fluorescent."

Mr. Ready went on to say, "LSI Industries is taking the necessary steps to establish and maintain a leadership position in the emerging market for LED lighting. Our acquisition of Saco Technologies provided the core capabilities we needed and we are now building upon that base with a recent plant expansion in Montreal, the creation of a new customer technology center in Cincinnati, and most recently, our purchase of advanced manufacturing equipment described in this press release. We believe our well established presence in the lighting and graphics markets ideally positions us to capitalize on the growing importance of solid-state LED lighting. The initiatives we have already put in place, with more to come, will have a significant impact on the growth of LSI's sales and earnings for years to come."

LSI Saco Technologies is a worldwide leader and pioneer in the design, production, and support of high-performance light engines and large format video screens using LED technology. State-of-the-art technology, strong commitment to research and development, over 18 years of industry experience and success in markets throughout the world have earned Saco its place as a major player in the production of solid-state lighting and LED video systems. LSI Saco's proprietary SMARTVISION(R) solid-state system has become a recognized brand name in both indoor and outdoor LED video displays. As an innovator, LSI Saco offers its customers expertise in developing and utilizing high-performance LED color and white lightsource solutions for both lighting and graphics applications. LSI Saco's established position and extensive capabilities in LEDs allow it to address the architectural, multimedia, industrial, entertainment and theatrical, sports, digital signage, outdoor billboard, transportation, and custom lighting and graphics markets. Recently, Saco produced the solid-state LED video screens for Madonna's "Confessions" tour using its advanced SMARTVISION(R) V9 technology, installed indoor and outdoor lighting at the Rexall Place (Edmonton Oilers, Edmonton Rush and Canadian Finals Rodeo), and has received purchase orders to design and manufacture digital billboards for outdoor advertising.

LSI Saco Technologies has also developed a proprietary innovative software package that allows customers to manage their digital signage network, content, scheduling and reporting system with minimal staff. The software package is designed with open architecture which allows future upgrades, using the LSI Saco "SmartUpgrade" automated upgrade seeker, which keeps customers current with new developments or custom plugins. LSI's technology and graphics segments are working together to provide a wide array of digital signage solutions to the marketplace. This includes solid-state LEDs, plasma, liquid crystal, projection and video technologies.

Introducing advanced products and utilizing state-of-the-art technologies have been an important growth strategy and a hallmark of LSI throughout its history. In all of its product lines, the Company continually employs advanced engineering and development with regard to photometrics, energy conservation, installation, maintenance and durability, and efficient manufacturing processes. LSI's Scottsdale(R) and Encore(R) product lines are good examples of this continual product improvement philosophy. New product lines are also introduced for specific markets or applications such as the Lightron LiniArc line of linear fluorescent series or indirect and direct/indirect lighting fixtures launched in April 2006.

For the past several years, LSI has been investigating and quietly gaining an understanding of the future of solid-state LED lighting. Management has concluded that now is the appropriate point in time to aggressively pursue and actively participate in the nearly certain bright future of solid-state LED lighting. LSI is on a deliberate tract to engineer and design energy- efficient and low maintenance solid-state LED lighting into standard commercial fixtures that will appeal to a broad base of lighting customers.

A number of converging industry and environmental dynamics have already begun to combine in a way to suggest that LED based solid-state lighting is clearly the future in the lighting business:

- LED performance is rising rapidly in the same fashion that the speed of computer processors grew in the 1980s and 1990s; - LED costs are falling steadily as volume production increases and manufacturing technologies are perfected; - increasing energy costs and limited new energy supply sources are bringing unprecedented attention from government and industry to the energy efficiency potential that solid-state lighting promises; - growing pressure from environmental groups to control light trespass and develop tighter lighting performance standards in terms of both energy and photometric characteristics are changing the industry accepted design standards which influence how lighting is used; and - maintenance costs associated with other types of lighting continue to grow thereby providing another economic advantage to solid-state LED lighting.

The adoption of solid-state LED lighting in all types of outdoor and indoor applications means unprecedented opportunity for LSI. The nature of LED technology also allows for LSI to have greater control as fixture design and optics expertise are combined with the LED experience and electronic control knowledge of LSI Saco Technologies. In the past, LSI controlled only the fixture housing and the reflector design and relied on outside suppliers for the light source and ballast designs. In the future LSI will be able to control all aspects of product design. Products will be more easily adapted to specific applications, a feature that serves well LSI's niche market segment philosophy. LSI's position and buying power combined with LSI Saco's market strength in the sports and entertainment business will provide an advantage over other companies seeking to develop lighting products and will allow LSI to enter the market at cost effective levels. LSI stands as an established leader in lighting and graphics and is well-positioned to capitalize on the trend toward LED solution based products.

About LSI Industries
LSI Industries is an Image Solutions company, combining integrated design, manufacturing, and technology to supply its own high quality lighting fixtures and graphics elements for applications in the retail, specialty niche, and 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 and 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 and sports markets. LSI's major markets are the petroleum / convenience store, multi-site retail (including automobile dealerships, restaurants and national retail accounts) and the commercial / industrial lighting markets. LSI employs approximately 1,850 people in fifteen facilities located in Ohio, California, New York, North Carolina, Kansas, Kentucky, Rhode Island, Tennessee, Texas and Montreal, Canada. The Company's common shares are traded on the NASDAQ Global Select Market under the symbol LYTS.

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