Cash Dividend Actions
In December 2012, the Board of Directors accelerated payment into December 2012 of the fiscal 2013 second quarter regular quarterly cash dividend of $0.06 per share. Also, an additional cash dividend of $0.12 per share was paid in December 2012. The indicated annual cash dividend rate for fiscal 2013 is $0.24 per share. The declaration and amount of any cash and stock dividends will be determined by the Board of Directors in its discretion based upon its evaluation of earnings, cash flow requirements and future business developments and opportunities, including acquisitions, if any.
Robert J. Ready, Chief Executive Officer, commented, "As I write this message early in the third quarter, I am pleased to say that we now have before us a world-class opportunity that has the potential to have a major positive impact on our lighting revenues later this fiscal year. But first I want to comment briefly on our second quarter. Results were heavily impacted by a number of accounting elements. First, we took a goodwill impairment charge of $2.14 million in our Electronic Components Segment in connection with our acquisition of Virticus. This was a non-cash charge and should not be interpreted as a reduction in our intermediate and long-term outlook for this important part of our company. Virticus is making solid progress and is an important part of our 'one-stop' capabilities. Second, during the quarter we also conducted a careful and rigorous analysis of our inventory, particularly as it related to our technologically advanced solid-state products and components. We have been on the leading edge of developing new solid-state LED products, including technology advances, since we entered the market with the acquisition of SACO Technologies in 2006. As such, we have had to cope with adjusting our inventory levels and obsolescence factors on a different and more rapid basis than our conventional lines of lighting products. After careful review, we decided to take the conservative, and we believe appropriate, position of providing an additional inventory reserve in the aggregate amount of $1.9 million (approximately $1.6 million after a U.S.-only tax benefit) during the second quarter. The result of these inventory reserves is an improved quality of an already strong, debt-free balance sheet. As a further accounting action, we reduced the contingent earn-out liability related to the acquisition of Virticus, and thereby recorded pre-tax income of $705,000 ($511,000 after income tax effect) primarily under the category of Corporate Administrative expenses. We believe these actions were appropriate and will provide greater clarity and visibility into the earnings of LSI Industries as we move through the second half of fiscal 2013 and into fiscal 2014.