	December 31, 2014 (unaudited)			June 30, 2014			December 31, 2015 (unaudited)			June 30, 2015

ASSETS
Current assets:
Cash	$	16,139		$	16,233		$	18,380		$	11,108
Short-term investments		7,790			8,723			-			7,855
Accounts receivable (less allowance for doubtful accounts of $766 and $704, respectively)		33,531			43,712
Accounts receivable (less allowance for doubtful accounts of $698 and $612, respectively)								31,204			40,311
Inventories		66,418			65,582			58,262			63,003
Current deferred income tax assets		4,651			6,037			4,143			4,554
Prepaid expenses and other current assets		8,241			6,615			6,200			6,582
Total current assets		136,770			146,902			118,189			133,413

Property, plant and equipment, net		47,097			51,537			42,940			44,413
Long-term income taxes receivable		3,775			3,775
Long-term deferred income tax assets, net of current portion		16,199			16,537
Income taxes receivable								3,103			3,383
Deferred income tax assets, net of current portion								18,782			18,803
Intangible assets, net		7,426			7,760			6,783			7,125
Goodwill		3,034			3,034			3,034			3,034
Other assets		2,015			1,898			2,170			2,101
Total assets	$	216,316		$	231,443		$	195,001		$	212,272

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Notes payable and current maturities of long-term debt	$	11,501		$	10,548		$	1,516		$	1,552
Accounts payable		9,210			9,980			8,148			9,471
Accrued expenses		6,718			8,516			5,876			7,011
Accrued compensation		3,824			6,642			3,479			5,565
Total current liabilities		31,253			35,686			19,019			23,599

Long-term debt, net of current portion		10,005			10,804			17,889			18,552
Other income tax obligations		4,485			3,013			4,680			4,607
Deferred income tax liabilities		2,017			2,037			1,489			1,548
Postretirement benefit and pension obligations		41,624			43,589			48,152			49,536
Total liabilities		89,384			95,129			91,229			97,842

Stockholders' equity:
Class A Common stock $1 par (20,000,000 shares authorized; 6,198,381 outstanding at December 31, 2014 and 6,165,838 outstanding at June 30, 2014)		6,199			6,166
Class B Common stock $1 par (10,000,000 shares authorized; 790,683 outstanding at December 31, 2014 and 794,990 outstanding at June 30, 2014)		791			795
Class A Common stock $1 par (20,000,000 shares authorized; 6,239,083 outstanding at December 31, 2015 and 6,223,558 outstanding at June 30, 2015)								6,239			6,224
Class B Common stock $1 par (10,000,000 shares authorized; 780,474 outstanding at December 31, 2015 and 789,069 outstanding at June 30, 2015)								780			789
Additional paid-in capital		54,468			54,063			55,010			54,869
Retained earnings		97,689			95,715			97,037			98,164
Accumulated other comprehensive loss		(32,215	)		(20,425	)		(55,294	)		(45,616	)
Total stockholders' equity		126,932			136,314			103,772			114,430
Total liabilities and stockholders’ equity	$	216,316		$	231,443		$	195,001		$	212,272

3 Months Ended

6 Months Ended

12/31/2014

12/31/2013

12/31/2014

12/31/2013

Net sales
$ 63,821 $ 61,841 $ 123,993 $ 119,328
Cost of goods sold
41,657 41,496 82,686 81,174
Gross margin
22,164 20,345 41,307 38,154
% of Net sales
34.7
%
32.9
%
33.3
%
32.0
%

Selling, general and administrative expenses
18,461 17,917 36,538 34,990

Operating income
3,703 2,428 4,769 3,164

Other income
620 513 1,295 622

Income before income taxes
4,323 2,941 6,064 3,786

Income tax expense
1,876 1,159 2,694 1,788

Net income
$ 2,447 $ 1,782 $ 3,370 $ 1,998

Basic and diluted income per share
$ 0.35 $ 0.26 $ 0.48 $ 0.29

Weighted average outstanding shares used in per share calculations:

Basic
6,974 6,922 6,970 6,908
Diluted
7,012 6,966 7,010 6,949

Dividends per share
$ 0.10 $ 0.10 $ 0.20 $ 0.20

3 Months Ended

6 Months Ended

12/31/2014

12/31/2013

12/31/2014

12/31/2013

Net income
$ 2,447 $ 1,782 $ 3,370 $ 1,998
Other comprehensive loss

Translation loss
(4,820
)
(2,120
)
(11,768
)
(945
)
Pension and postretirement plans, net of tax of $0,$0,$22 and $0 respectively
- (15
)
(22
)
(30
)
Other comprehensive loss
(4,820
)
(2,135
)
(11,790
)
(975
)

Total comprehensive income (loss)
$ (2,373
)
$ (353
)
$ (8,420
)
$ 1,023

	3 Months Ended						6 Months Ended
	12/31/2015			12/31/2014			12/31/2015			12/31/2014

Net sales	$	53,671		$	63,821		$	104,709		$	123,993
Cost of goods sold		37,672			41,657			72,858			82,686
Gross margin		15,999			22,164			31,851			41,307
% of Net sales		29.8	%		34.7	%		30.4	%		33.3	%


Selling, general and administrative expenses		14,796			18,461			30,469			36,538

Operating income		1,203			3,703			1,382			4,769

Other income (expense)		(211	)		620			92			1,295

Income before income taxes		992			4,323			1,474			6,064

Income tax expense		534			1,876			1,194			2,694

Net income	$	458		$	2,447		$	280		$	3,370



Basic and diluted income per share	$	0.07		$	0.35		$	0.04		$	0.48

Weighted average outstanding shares used in per share calculations:
Basic		7,022			6,974			7,018			6,970
Diluted		7,043			7,012			7,050			7,010



Dividends per share	$	0.10		$	0.10		$	0.20		$	0.20

	3 Months Ended					6 Months Ended
	12/31/2015		12/31/2014			12/31/2015			12/31/2014

Net income	$	458	$	2,447		$	280		$	3,370
Other comprehensive income (loss):
Translation gain (loss)		102		(4,820	)		(9,678	)		(11,768	)
Pension and postretirement plans, net of tax of $0,$0,$0 and $22 respectively		-		-			-			(22	)
Other comprehensive income (loss)		102		(4,820	)		(9,678	)		(11,790	)

Total comprehensive income (loss)	$	560	$	(2,373	)	$	(9,398	)	$	(8,420	)

	Common Stock Outstanding					Addi- tional Paid-in			Retained			Accumulated Other Com- prehensive						Common Stock Outstanding						Addi- tional Paid-in			Retained			Accumulated Other Com-prehensive
	Class A		Class B			Capital			Earnings			Loss			Total			Class A			Class B			Capital			Earnings			Loss			Total
Balance June 30, 2014	$	6,166	$	795		$	54,063		$	95,715		$	(20,425	)	$	136,314
Balance June 30, 2015																		$	6,224		$	789		$	54,869		$	98,164		$	(45,616	)	$	114,430
Total comprehensive income (loss)										3,370			(11,790	)		(8,420	)		-			-			-			280			(9,678	)		(9,398	)
Dividends ($0.20 per share)										(1,396	)					(1,396	)		-			-			-			(1,407	)		-			(1,407	)

Repurchase of shares				(2	)		(31	)								(33	)		(22	)		(3	)		(272	)		-			-			(297	)
Issuance of stock under 1984 ESOP		9					122									131
Issuance of stock under Long Term Incentive Plan		3					45									48
Issuance of stock under ESPP				14			111									125
Issuance of stock for length of service awards		5					71									76
Issuance of stock																			22			9			341			-			-			372
Stock-based compensation							87									87			-			-			72			-			-			72
Conversion of class B to class A		16		(16	)											-
Balance December 31, 2014	$	6,199	$	791		$	54,468		$	97,689		$	(32,215	)	$	126,932
Conversion																			15			(15	)		-			-			-			-
Balance December 31, 2015																		$	6,239		$	780		$	55,010		$	97,037		$	(55,294	)	$	103,772

Accumulated balance consists of:
Translation loss												$	(30,079	)																$	(46,978	)
Pension and postretirement plans, net of taxes													(2,136	)																	(8,316	)
												$	(32,215	)																$	(55,294	)

	6 Months Ended						6 Months Ended
	12/31/2014			12/31/2013			12/31/2015			12/31/2014

Cash flows from operating activities:
Net income	$	3,370		$	1,998		$	280		$	3,370
Non-cash operating activities:
Depreciation		3,959			4,070			3,052			3,959
Amortization		634			578			667			634
Stock-based compensation		87			94			227			211
Stock based compensation length of service awards		76			59
Stock based compensation Long-Term Incentive Plan		48			-
Net long-term tax obligations		1,723			-			320			1,723
Deferred taxes		1,301			370			(1	)		1,301
Unrealized transaction gain		(6	)		(13	)		44			(6	)
Income on equity method investment		(116	)		(152	)		(73	)		(116	)
Working capital changes:
Accounts receivable		5,928			3,003			4,666			5,928
Inventories		(6,158	)		(4,159	)		(661	)		(6,158	)
Other current assets		(2,219	)		(313	)		(235	)		(1,468	)
Other current liabilities		(2,986	)		(1,133	)		(1,351	)		(2,986	)
Postretirement benefit and pension obligations		(866	)		925			(677	)		(866	)
Other		761			316			(79	)		310
Net cash provided by operating activities		5,536			5,643			6,179			5,836

Cash flows from investing activities:
Additions to property, plant and equipment		(2,768	)		(4,277	)		(3,611	)		(2,768	)
Software development								(325	)		(300	)
Purchase of investments		(45	)		(52	)		-			(45	)
Proceeds from sale of investments		201			-			7,621			201
Net cash used in investing activities		(2,612	)		(4,329	)
Net cash provided by (used in) investing activities								3,685			(2,912	)

Cash flows from financing activities:
Proceeds from short-term borrowings		921			100			-			921
Short-term debt repayments		-			(25	)
Proceeds from long-term borrowings								750			-
Long-term debt repayments		(767	)		(3,268	)		(1,448	)		(767	)
Proceeds from common stock issued		256			270			217			256
Shares repurchased		(33	)		-			(297	)		(33	)
Dividends paid		(1,396	)		(1,383	)		(1,407	)		(1,396	)
Net cash used in financing activities		(1,019	)		(4,306	)		(2,185	)		(1,019	)

Effect of exchange rate changes on cash		(1,999	)		(206	)		(407	)		(1,999	)

Net decrease in cash		(94	)		(3,198	)
Net increase (decrease) in cash								7,272			(94	)
Cash, beginning of period		16,233			19,755			11,108			16,233
Cash, end of period	$	16,139		$	16,557		$	18,380		$	16,139

Supplemental cash flow information:
Interest paid	$	363		$	439		$	349		$	363
Income taxes paid, net		1,183			2,353			557			1,183

Supplemental disclosure of non-cash activities:
Issuance of stock under 2013 ESOP	$	-		$	773

Note 1: Basis of Presentation and Summary of Significant Account Policies

The balance sheet as of June 30, ~~2014,~~2015, which has been derived from audited financial statements, and the unaudited interim financial statements as of and for the three and six months ended December 31, 2015 and December 31, 2014, have been prepared by The L.S. Starrett Company (the “Company”) in accordance with accounting principles generally accepted in the United States of America for interim financial reporting. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for complete financial statements. These unaudited financial statements, which, in the opinion of management, reflect all adjustments (including normal recurring adjustments) necessary for a fair presentation, should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended June 30, ~~2014.~~2015. Operating results are not necessarily indicative of the results that may be expected for any future interim period or for the entire fiscal year.

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make judgments, assumptions and estimates that affect amounts reported in the consolidated financial statements and accompanying notes. Note 2 to the Company’s Consolidated Financial Statements included in the Annual Report on Form 10-K for the year ended June 30, ~~2014~~2015 describes the significant accounting policies and methods used in the preparation of the consolidated financial statements.

Note 2:Recent Accounting Pronouncements

In May 2014, the FASB issued a new standard related to the “Revenue from Contracts with Customers” which amends the existing accounting standards for revenue recognition. The standard requires entities to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration the entity expects to be entitled to in exchange for those goods or services. This standard is applicable for fiscal years beginning after December 15, ~~2016~~2017 and for interim periods within those years and early adoption is not permitted. The Company expects to adopt this standard on July 1, ~~2017.~~2018. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements.

Accounting Standards Update (ASU) 2015-11, "Inventory - Simplifying the Measurement of Inventory" requires companies to measure most inventory at the lower of cost or net realizable value, thereby simplifying the current guidance under which a company must measure inventory at the lower of cost or market. This Update eliminates the need to determine replacement cost and evaluate whether said cost is within a quantitative range. This Update also further aligns U.S. GAAP and international accounting standards. For public companies, the guidance in ASU 2015-11 is effective for annual periods beginning after December 15, 2016, and interim periods thereafter. Early adoption is permitted. Management does not expect ASU 2015-11 to have a material impact on the Company's financial statements and disclosures.

Accounting Standards Update ~~2013-11,~~~~Income Taxes: Presentation~~2015-17, “Balance Sheet Classification of ~~an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Existswas approved by the FASB in July 2013 and~~Deferred Taxes” requires that companies ~~report their tax reserves net of the impact of tax loss and credit carryforwards~~classify all deferred taxes as non-current assets or liabilities. This change is applicable for fiscal years beginning after December 15, ~~2013. The Company has implemented this pronouncement in the first quarter of fiscal 2015 with retrospective application as permitted by the standard. Amounts presented~~2016 and for ~~prior~~interim periods ~~have been reclassified to conform.~~within those years. There is no ~~effect on tax expense and net income. On~~impact to earnings as a result of this change; however, current assets will be reduced by the ~~balance sheet, there is a reduction in~~amount of the current deferred tax ~~assets~~asset as that amount will be included with the long term deferred tax asset upon adoption of ~~$7.8 million and a reduction in Other Tax Obligations of $7.8M for all periods presented.~~this ASU.

Note 3: Stock-based Compensation

On September 5, 2012, the Board of Directors adopted TheL.S. Starrett Company 2012 Long Term Incentive Plan (the “2012 Stock Plan”). The 2012 stock plan was approved by shareholders on October 17, 2012. The 2012 Stock Plan permits the granting of the following types of awards to officers, other employees and non-employee directors: stock options; restricted stock awards; unrestricted stock awards; stock appreciation rights; stock units including restricted stock units; performance awards; cash-based awards; and awards other than previously described that are convertible or otherwise based on stock. The 2012 Stock Plan provides for the issuance of up to 500,000 shares of common stock.

Options granted vest in periods ranging from one year to three years and expire ten years after the grant date. Restricted stock units (“RSU”) granted generally vest from one year to three years. Vested restricted stock units will be settled in shares of common stock. As of December 31, ~~2014,~~2015, there were ~~20,500~~20,000 stock options and ~~42,233~~73,367 restricted stock units outstanding. In addition, there were ~~431,800~~391,600 shares available for grant under the 2012 Stock Plan as of December 31, ~~2014.~~2015.

For ~~the~~ stock option ~~grant~~grants the fair value of each grant ~~was~~is estimated at the date of grant using the Binomial Options pricing model. The Binomial Options pricing model utilizes assumptions related to stock volatility, the risk-free interest rate, the dividend yield, and employee exercise behavior. Expected volatilities utilized in the model are based on the historic volatility of the Company’s stock price. The risk free interest rate is derived from the U.S. Treasury Yield curve in effect at the time of the grant. The expected life is determined using the average of the vesting period and contractual term of the options ~~(Short-cut method)~~(Simplified Method).

~~The fair value of~~No stock options ~~issued~~were granted during the 6six months ended December 31, ~~2014 of $3.82 was estimated using the following assumptions:~~2015 and 2014.

~~Risk-free interest rate~~	~~1.0~~	%
~~Expected life (years)~~	~~6.0~~
~~Expected stock volatility~~	~~52.3~~	%
~~Expected dividend yield~~	~~4.0~~	%

The weighted average contractual term for stock options outstanding as ~~of December~~ofDecember 31, ~~2014~~2015 was 87 years. The aggregate intrinsic value of stock options outstanding as ~~of December~~ofDecember 31, ~~2014~~2015 was $0.1 million. Stock options exercisable as ~~of December~~ofDecember 31, ~~2014~~2015 were ~~13,667.~~20,000.

The Company accounts for stock options and RSU awards by recognizing the expense of the grant date fair value ratably over vesting periods generally ranging from one year to three years. The related expense is included in selling, general and administrative expenses.

There were ~~39,500~~40,200 RSU awards ~~issued~~with a fair value of $15.11 per RSU granted during the six months ended December 31, ~~2014.~~2015. There were ~~2,733~~9,067 RSUs ~~vested~~settled during the six months ended December 31, ~~2014.~~2015. The aggregate intrinsic value of RSU awards outstanding as of December 31, ~~2014~~2015 was ~~$0.8~~$1.2 million. ~~RSU awards granted and vested as~~As of December 31, ~~2014 were 5,466.~~2015 all vested awards had been issued and settled.

On February 5, 2013, the Board of Directors adopted The L.S. Starrett Company 2013 Employee Stock Ownership Plan (the “2013 ESOP”).The purpose of the plan is to supplement existing Company programs through an employer funded individual account plan dedicated to investment in common stock of the Company, thereby encouraging increased ownership of the Company while providing an additional source of retirement income. The plan is intended as an employee stock ownership plan within the meaning of Section 4975 (e) (7) of the Internal Revenue Code of 1986, as amended. U.S. employees who have completed a year of service are eligible to participate.

Compensation expense related to all stock based plans for the six month ~~period~~periods ended December 31, 2015 and 2014 ~~and December 31, 2013~~ was ~~$0.1~~$0.2 million and $0.1 million, respectively. As of December 31, ~~2014,~~2015, there was ~~$0.7~~$1.1 million of total unrecognized compensation costs related to outstanding stock-based compensation arrangements. Of this cost ~~$0.3~~$0.7 million relates to performance based RSU grants that are not expected to be awarded. The remaining $0.4 million is expected to be recognized over a weighted average period of ~~2.5 years and $0.4 million relates to performance based RSU awards that are not expected to vest.~~ 2.2 years.

Note 4: Inventories

Inventories consist of the following (in thousands):

	12/31/2014 (Unaudited)			6/30/2014			12/31/2015			6/30/2015
Raw material and supplies	$	33,405		$	31,303		$	31,182		$	32,784
Goods in process and finished parts		19,498			19,148			16,195			18,569
Finished goods		40,895			42,459			39,364			39,689
		93,798			92,910			86,741			91,042
LIFO Reserve		(27,380	)		(27,328	)		(28,479	)		(28,039	)
Inventories	$	66,418		$	65,582		$	58,262		$	63,003

LIFO inventories were ~~$15.6~~$12.5 million and ~~$14.1~~$14.6 million at December 31, ~~2014and~~2015 and June 30, ~~2014,~~2015, respectively, orsuch amounts being approximately ~~$ 27.4~~$28.5 million and ~~$ 27.3~~$28.0 million, respectively, less than ~~their balances accounted for~~if determined on a FIFO basis. The use of LIFO, as compared to FIFO, resulted in a ~~$0.1~~$0.4 million increase in cost of sales for the six months ended December 31, ~~2014compared~~2015 compared to a ~~$0.4~~$0.1 million decrease for the six months ended December 31, ~~2013.~~2014.

Note 5: Goodwill and Intangible Assets

~~Goodwill is measured as the excess of the cost of acquisition over the sum of the amounts assigned to identifiable tangible and intangible assets acquired less liabilities assumed.~~ The Company’s acquisition of Bytewise in 2011 gave rise to ~~goodwill.~~a goodwill asset balance. The Company ~~performs an impairment~~performed a qualitative analysis in accordance with ASU 2011-08 for its October 1, 2015 annual assessment ~~on an annual basis~~of goodwill (commonly referred to as of“Step Zero”). From a qualitative perspective, in evaluating whether it is more likely than not that the ~~end of our October month end or more frequently if circumstances warrant. For fiscal year 2015, our impairment assessment was a two-step process. The first step requires a comparison of the implied~~ fair value of the reporting unit exceeds its respective carrying amount, relevant events and circumstances were taken into account, with greater weight assigned to ~~its carrying value. If~~events and circumstances that most affect the fair value or the carrying amounts of its assets. Items that were considered included, but were not limited to, the following: macroeconomic conditions, industry and market conditions, cost factors, overall financial performance and changes in management or key personnel. After assessing these and other factors the Company determined that it was more likely than not that the fair value of the reporting unit ~~is higher than~~exceeded its ~~fair value, there is an indication that impairment may exist and the second step~~carrying amount as of the evaluation must be performed. In the second step, the potential impairment is calculated by comparing the implied fair value of the reporting unit’s goodwill with the carrying value of the goodwill. If the carrying value of the reporting unit’s goodwill is greater than the implied fair value of its goodwill, an impairment loss will be recognized for the excess.October 1, 2015.

Determining the fair value of a reporting unit is subjective and requires the use of significant estimates and assumptions. With the assistance of an independent third-party appraisal firm, the Company estimates the fair value using an income approach based on the present value of future cash flows. The Company believes this approach yields the most appropriate evidence of fair value. The Company also utilizes the comparable company multiples method and market transaction fair value method to validate the fair value amount obtained using the income approach. The key assumptions utilized in the discounted cash flow model includes estimates of future cash flows from operating activities offset by estimated capital expenditures of the reporting unit, the estimated terminal value for the reporting unit, a discount rate based on a weighted average cost of capital, overall economic conditions, and an assessment of current market capitalization. Any unfavorable material changes to these key assumptions could potentially impact the Company’s fair value determinations.

The fair value of the 2015 goodwill assessment exceeded the carrying amount by approximately 37.4%. Therefore no goodwill impairment was recorded. If future results significantly vary from current estimates, related projections, or business assumptions in the future due to changes in industry or market conditions, the Company may be required to record impairment charges.

Amortizable intangible assets consist of the following (in thousands):

	12/31/2014 (Unaudited)			6/30/2014			12/31/2015			6/30/2015
Non-compete agreement	$	600		$	600		$	600		$	600
Trademarks and trade names		1,480			1,480			1,480			1,480
Completed technology		2,358			2,358			2,358			2,358
Customer relationships		4,950			4,950			4,950			4,950
Software development		1,307			1,007			1,980			1,655
Other intangible assets		325			325			325			325
Total		11,020			10,720			11,693			11,368
Accumulated amortization		(3,594	)		(2,960	)		(4,910	)		(4,243	)
Total net balance	$	7,426		$	7,760		$	6,783		$	7,125

Amortizable intangible assets are being amortized on a straight-line basis over the period of expected economic benefit.

The estimated useful lives of the intangible assets subject to amortization are 14 years for trademarks and trade names, 8 years for non-compete agreements, 10 years for completed technology, 8 years for customer relationships and 5 years for software development.

The estimated aggregate amortization expense for the remainder of fiscal ~~2015~~2016 and for each of the next five years and thereafter, is as follows (in thousands):

Note 6: Pension and Post-retirement Benefits

Net periodic benefit costs for the Company's defined benefit pension plans consist of the following (in thousands):

Three Months Ended

Six Months Ended

12/31/2014
(Unaudited)

12/31/2013

12/31/2014
(Unaudited)

12/31/2013

Service cost
$ 694 $ 714 $ 1,388 $ 1,423
Interest cost
1,722 1,736 3,412 3,451
Expected return on plan assets
(1,772
)
(1,581
)
(3,512
)
(3,143
)
Amortization of prior service cost
- 29 - 58
Amortization of net gain
7 3 14 6
$ 651 $ 901 $ 1,302 $ 1,795

	Three Months Ended						Six Months Ended
	12/31/2015 (Unaudited)			12/31/2014			12/31/2015 (Unaudited)			12/31/2014
Service cost	$	715		$	694		$	1,429		$	1,388
Interest cost		1,759			1,722			3,527			3,412
Expected return on plan assets		(1,585	)		(1,772	)		(3,179	)		(3,512	)
Amortization of net loss		12			7			26			14
	$	901		$	651		$	1,803		$	1,302

Net periodic benefit costs for the Company's Postretirement Medical Plan consists of the following (in thousands):

	Three Months Ended						Six Months Ended						Three Months Ended						Six Months Ended
	12/31/2014 (Unaudited)			12/31/2013			12/31/2014 (Unaudited)			12/31/2013			12/31/2015 (Unaudited)			12/31/2014			12/31/2015 (Unaudited)			12/31/2014
Service cost	$	29		$	89		$	57		$	177		$	27		$	29		$	53		$	57
Interest cost		61			132			122			265			72			61			144			122
Amortization of prior service credit		(200	)		(125	)		(400	)		(251	)		(196	)		(200	)		(391	)		(400	)
Amortization of net loss														3						7
	$	(110	)	$	96		$	(221	)	$	191		$	(94	)	$	(110	)	$	(187	)	$	(221	)

The Company’s pension plans use fair value as the market-related value of plan assets and recognize net actuarial gains or losses in excess of ten percent (10%) of the greater of the market-related value of plan assets or of the plans’ projected benefit obligation in net periodic (benefit) cost as of the plan measurement date, which is the same as the fiscal year end of the Company. Net actuarial gains or losses that are less than 10% of the thresholds noted above are accounted for as part of the accumulated other comprehensive ~~income (loss).~~loss.

Effective December 31, ~~2013,~~2014, the Company terminated the eligibility of employees ages 55 ~~-64~~- 64 years old to enter into the ~~Postretirement~~Post-retirement Medical Plan.

The Company ~~executed an amendment to~~amended its Loan and Security Agreement, ~~(Line of Credit) as of April 25, 2012. The~~which includes a Line of Credit ~~is effective for three years commencing~~and a Term Loan, in January 2015 with changes that took effect on April 25, ~~2012 and was due to expire~~2015. Borrowings under the Line of Credit may not exceed $23.0 million. The agreement expires on April 30, ~~2015. The agreement continued the previous line of $23.0 million, of which $12.2 million is available as of December 31, 2014, with~~2018 and has an interest rate of LIBOR plus 1.5%.

As of December 31, ~~2014~~2015, $9.4 million was outstanding on the Line of Credit.

The material financial covenants of the amended Loan and Security Agreement ~~were:~~are: 1) funded debt to EBITDA, excluding non-cash and retirement benefit expenses (“maximum leverage”), not to exceed 2.25 to ~~1, 2)~~1.2) annual capital expenditures not to exceed $15.0 million, 3) maintain a Debt Service Coverage Rate of a minimum of 1.25 to 1 and 4) maintain consolidated cash plus liquid investments of not less than $10.0 million at any time.

The Company was in compliance with all debt covenants as of December 31, ~~2014.~~

~~The effective interest rate on the Line of Credit under the Loan and Security Agreement for the six months ended December 31, 2014 and 2013 was 2.0% and 2.0%, respectively.~~

~~On January 26, 2015 the Line of Credit was amended based on the current debt limits and financial covenants and will expire on April 30, 2018.~~2015.

On November 22, 2011, in conjunction with the Bytewise acquisition, the Company entered into a $15.5 million term loan (the “Term Loan”) under the existing Loan and Security Agreement with TD Bank N.A. The ~~term loan~~Term Loan is a ten year loan bearing a fixed interest rate of 4.5% and is payable in fixed monthly payments of principal and interest of $160,640. The ~~term loan,~~Term Loan, which had a balance of ~~$11.4~~$10.0 million at December 31, ~~2014,~~2015, is subject to the same financial covenants as the Loan and Security Agreement.

The effective interest rate on the Line of Credit under the Loan and Security Agreement for the six months ended December 31, 2015 and 2014 was 2.1% and 2.0%, respectively.

Note 8: Income Taxes

The Company is subject to U.S. federal income taxes and various state, local and foreign income taxes in numerous jurisdictions. The Company’s domestic and foreign tax liabilities are subject to the allocation of revenues and expenses in different jurisdictions and the timing of recognizing revenues and expenses. Additionally, the amount of income taxes paid is subject to the Company’s interpretation of applicable tax laws in the jurisdictions in which it files.

The Company provides for income taxes on an interim basis based on an estimate of the effective tax rate for the year. This estimate is reassessed on a quarterly basis. Discrete tax items are accounted for in the quarterly period in which they occur.

The tax expense for the second quarter of fiscal 2016 was $534,000 on a profit before tax of $992,000 (an effective tax rate of 53.8%). The tax expense for the second quarter of fiscal 2015 was ~~43.4%. The~~$1,876,000 on a profit before tax for the quarter of $4,323,000 (an effective tax rate ~~for the second quarter~~ of ~~fiscal 2014 was 39.4%~~43.4%). For the first half of fiscal ~~2015, the~~2016, tax expense was $1,194,000 on profit before tax of $1,474,000 (an effective tax rate ~~was 44.4%~~of 81.0%) and for the first half of fiscal ~~2014, it~~2015, tax expense was ~~47.2%~~$2,694,000 on profit before tax of $6,064,000 (tax rate of 44.4%). The tax rate is higher than the U.S. ~~federal and state~~ statutory rate ~~in part~~primarily due to losses in ~~some~~ foreign jurisdictions for which no tax benefit is recognized. In the first quarter of fiscal 2016, there was a discrete reduction to tax expense of $54,000 related to return to provision adjustments in the United Kingdom (UK). In addition, in the second quarter of fiscal 2016, there were discrete adjustments of an increase for interest on audit exposures of $46,000 and a decrease for return to provision adjustments in the U.S. of $146,000. In the first half of fiscal 2015, there was a discrete reduction to tax expense of $108,000 related to use of tax loss carryforwards and ~~the~~a reduction of the tax liability for audits related to the expiration of the statute of limitations; $33,000 of this was recorded in the second ~~quarter. In the first half~~quarter of fiscal ~~2014 there was a discrete tax expense of $278,000 for the effect of a tax rate change in the UK applied to the net deferred tax assets in that jurisdiction.~~2015.

U.S. Federal tax returns through fiscal ~~2010~~2011 are generally no longer subject to review by tax authorities; however, tax loss carryforwards from years before fiscal ~~2011~~2012 are still subject to adjustment. As of December 31, ~~2014,~~2015, the Company has ~~substantially~~ resolved all open income tax audits and there were no other local or federal income tax audits in progress. In international jurisdictions including Australia, Brazil, Canada, China, Germany, Mexico, New Zealand, Singapore and the UK, which comprise a significant portion of the Company’s operations, the years that may be examined vary by country. The Company’s most significant foreign subsidiary in Brazil is subject to audit for the calendar years ~~2009~~2010 – 2014. The Company has identified no new uncertain tax positions during the six month period ended December 31, 2014 for which it is currently likely that the total amount of unrecognized tax benefits will significantly increase or decrease withinDuring the next twelve ~~months.~~months, it is possible that the Company will recognize a reduction of $0.4 million in its long term tax obligations due to the lapse of the applicable statute of limitations.

Accounting for income taxes requires estimates of future benefits and tax liabilities. Due to the temporary differences in the timing of recognition of items included in income for accounting and tax purposes, deferred tax assets or liabilities are recorded to reflect the impact arising from these differences on future tax payments. With respect to recorded deferred tax assets, the Company assesses the likelihood that the asset will be realized by addressing the positive and negative evidence to determine whether realization is more likely than not to occur. If realization is in doubt because of uncertainty regarding future profitability, the Company provides a valuation allowance related to the asset to the extent that it is more likely than not that the deferred tax asset will not be realized. Should any significant changes in the tax law or the estimate of the necessary valuation allowance occur, the Company would record the impact of the change, which could have a material effect on ~~the Company’s~~our financial position.

No valuation allowance has been recorded for the Company’s domestic federal net operating loss (NOL) ~~carry forwards.~~carry-forwards. The Company continues to believe that due to forecasted future taxable income and certain tax planning strategies available, it is more likely than not that it will be able to utilize the U.S. federal NOL carryforwards. In certain other countries where Company operations are in a loss position, the deferred tax assets for tax loss carryforwards and other temporary differences are fully offset by a valuation allowance.

Three ~~Months~~months EndedDecember 31, 2015 andDecember 31, 2014 ~~and December 31, 2013~~

The Company is a multi-national business that has experienced the headwinds of a strong ~~revenue growth~~dollar and a slowing international and domestic economy. The domestic market has slowed primarily due to spending cuts in ~~North America and continued gains in China. Both~~ the ~~Brazilian and European markets experienced poor~~oil sector while the international divisions have encountered stagnant or recessionary economic conditions and ~~lagged the prior year. The Company’s geographic and product diversity helped to minimize the volatility in selected geographic sectors.~~

Net sales ~~increased $2.0~~decreased $10.2 million or 3%16% from ~~$61.8 million in fiscal 2014 to $63.8~~$63.9 million in fiscal 2015 ~~as a result~~to $53.7 million in fiscal 2016. International results account for $9.1 million or 90% of ~~continued improvement in domestic demand for~~ the ~~Company’s products in the manufacturing sector that more than offset a weakening Brazilian Real.~~shortfall. Operating income ~~increased $1.3~~declined $2.5 million ~~or 54% due to a $1.8~~as $6.1 million ~~improvement~~of erosion in gross margin more than ~~offsetting~~offset a ~~$0.5~~$3.6 million ~~increase~~decrease in selling, general and administrative expenses.

North American sales ~~increased $ 3.8~~decreased $1.1 million or ~~12%~~3% from ~~$31.6 million in fiscal 2014 to~~ $35.4 million in fiscal 2015 ~~as a result of increased~~to $34.3 million in fiscal 2016. A weakening in manufacturing activity resulted in reduced demand for precision ~~measuring~~hand tools and saws which more than offset continued gains in capital equipment metrology products.

International sales declined ~~$1.7~~$9.1 million or 6%32% from ~~$30.2 million in fiscal 2014 to~~ $28.5 million in fiscal 2015 ~~as growth of $0.8~~to $19.4 million ~~or 3% in constant currency exchanges rates was offset by unfavorable exchange rates of $2.5 million related principally due to the decline in the Brazilian Real from 2.27 Reals to the U.S. dollar~~ in fiscal ~~2014 to 2.55 Reals to the U. S. dollar in fiscal 2015. Despite significant economic headwinds~~2016. A combination of recession in Brazil, ~~sales~~an economic slowdown in ~~local~~China and Europe, the unfavorable pricing impact of a strong dollar and $5.5 million in currency ~~increased by 7.1%.~~losses all contributed to difficult trading in our overseas markets.

Gross margin ~~increased $1.8~~decreased $6.1 million or 9%28% from ~~33% of sales in fiscal 2014 to~~ 35% of sales in fiscal 2015 ~~with higher~~to 30% of sales in fiscal 2016. Lower revenues and margin ~~improvement~~decline representing ~~$0.7~~$3.6 million and ~~$1.1~~$2.5 million, respectively.

North American gross margins ~~increased $2.8~~decreased $2.6 million from ~~$9.4~~$12.4 million or 35% of sales in fiscal 2015 to $9.8 million or 29% of sales in fiscal ~~2014 to $12.2 million or 34%~~2016. The reduced gross margins were the result of ~~sales~~a revenue decline in ~~fiscal 2015. A revenue increase~~precision hand tools, without a comparable reduction in ~~our high margin~~overhead costs, more than offsetting gains in the capital equipment ~~metrology business coupled with improved efficiencies in manufacturing were the prime factors contributing to the improved~~ gross ~~margin performance.~~margins.

International gross margins declined ~~$1.1~~$3.5 million from ~~36% of sales in fiscal 2014 to 35%~~34% of sales in fiscal 2015 ~~with~~to 32% of sales in fiscal 2016. Unfavorable exchange rates had an ~~unfavorable exchange rate~~ impact of ~~$0.9~~$1.8 million related principally to the weakening Brazilian ~~Real.~~Real coupled with revenue volume declines in Brazil and China based upon constant exchange rates.

Selling, general and administrative expenses ~~increased $0.5~~decreased $3.6 million or 3%20% from ~~17.9~~18.4 million in fiscal ~~2014~~2015 to ~~$18.4~~$14.8 million in fiscal 2016.

North American expenses decreased $1.8 million from $10.0 million in fiscal 2015 to $8.2 million in fiscal 2016 principally due to lower incentive compensation, professional fees, and software amortization.

International expenses declined $1.8 million or 21% as the strong dollar resulted in a $1.7 million decrease in Brazilian expenses expressed in U. S. dollars as the Brazilian currency declined 70% in twelve months.

Other income declined $0.8 million from income of $0.6 million in fiscal 2015 to an expense of $0.2 million in fiscal 2016 principally due to lower interest income and the impact of the stronger U. S. dollar on foreign subsidiaries’ dollar denominated assets and liabilities.

The effective tax rate for the second quarter of fiscal 2016 and 2015 were 54% and 44%, respectively. The quarterly tax rate is higher than a normalized combined federal and state rate of approximately 40% principally due to losses in some foreign subsidiaries for which no tax benefit is recognized. The tax rate includes discrete benefits of $0.1 million in fiscal 2016 and $0.0 million in fiscal 2015.

The Company recorded net income of $0.5 million ~~from $9.2~~or $0.07 per share in the second quarter of fiscal 2016 compared to net income of $2.4 million ~~in fiscal 2014 to $10.0 million~~or $0.35 per share in fiscal 2015 principally due to reduced Operating Income, Other Expenses and a higher effective tax rate.

Net sales ~~commissions, employee benefits~~declined $19.3 million or 16% from $124.0 million in fiscal 2015 to $104.7 million in fiscal 2016. North America and International operations posting declines of $2.8 and $16.5 million, respectively. Operating income decreased $3.4 million in fiscal 2016 from $4.8 million in fiscal 2015 compared to $1.4 million in fiscal 2016 as lower sales and related gross margins more than offset reduced selling, general and administrative expenses.

North American sales decreased $2.8 million or 4% from $69.5 million in fiscal 2015 to $66.7 million in fiscal 2016, as demand for all precision hand tools declined, particularly in the oil and agricultural sectors.

International sales declined $16.5 million or 30% from $54.5 million in fiscal 2015 to $38.0 million in fiscal 2016.Unfavorable exchange rates representing $8.5 million of the shortfall. The impact of a recessionary economic environment was significant in Brazil as revenue declined 19% in local currency.

Gross margin decreased $9.4 million or 23% from 33% of sales in fiscal 2015 to 30% of sales in fiscal 2016.Lower revenues and margin decline represented $6.4 and $3.1 million, respectively.

North American gross margins decreased $2.6 million or 12% in fiscal 2016 compared to fiscal 2015, as a result of reduced precision hand tool and saw product line revenues and increased costs.

International gross margins declined $6.8 million with weakening currencies representing $2.8 million. Excluding foreign exchange economic factors impacting margins, volume declines represented $2.2 and $1.0 million in Brazil and Europe, respectively.

Selling, general and administrative expense decreased $6.0 million or 16% from $36.5 million in fiscal 2015 to $30.5 million in fiscal 2016.

North American expenses decreased $2.2 million or 11% due to the completion of profit sharing in November of 2014 related to the Bytewise acquisition; lower incentive compensation; reduced professional ~~fees.~~fees; and completion of software amortization in fiscal 2015 related to a new ERP system.

International expenses ~~declined $0.3~~decreased $3.8 million ~~as increased employee benefits, professional fees and marketing expenses were offset by~~or 22% due to a ~~$0.7 million~~$3.0 foreign currency reduction for expenses expressed in U. S. dollars, primarily due to a weakening of the Brazilian Real relative to the U. S. dollar. In addition, reduced spending for sales commissions and incentive compensation contributed an additional $0.6 million.

Other income ~~improved~~declined $1.2 million from income of $1.3 million in fiscal 2015 to $0.1 million ~~principally related~~in fiscal 2016 due to ~~higher~~lower interest income and the ~~stronger~~devaluation of the Chinese Yuan currency relative to the U. S. ~~dollar as foreign subsidiaries’ dollar denominated assets, primarily accounts receivable related to export sales, translated into higher balances in local currency.~~dollar.

The effective tax rate for the ~~second quarter~~first of fiscal 2016 and 2015 was 81% and ~~2014 was 43.4% and 39.4%~~44%, respectively. The effective rate is higher than federal and state statutory ~~tax rate~~rates of ~~38.0% is~~approximately 40% due to losses in some foreign subsidiaries for which no tax benefit is recognized in consolidation.

The Company recorded net income of ~~$2.4~~$0.3 million or ~~$0.35~~$0.04 per share in the second quarter of fiscal 2015 compared to net income of $1.8 million or $0.26 per share or 36% in fiscal 2014 principally due to increased revenue, improved gross margins offsetting higher selling, general and administrative expenses and a higher effective tax rate.

Net sales increased $4.7 million or 4% from $119.3 million in fiscal 2014 to $124.0 million in fiscal 2015 despite a $5.8 foreign exchange reduction principally related to the weaker Brazilian Real. Operating income increased $1.6 million in fiscal 2015 from $3.2 million in fiscal 2014 compared to $4.8 million in fiscal 2015 due to increased sales and higher gross margins offsetting increased selling, general and administrative expenses.

North American sales increased $7.0 million or 11% from $62.5 million in fiscal 2014 to $69.5 million in fiscal 2015 as demand for all major product lines grew. The manufacturing sector continues to recover as sales of metrology capital equipment, including optical and vision and laser measurement machines increased 29%.

International sales declined $2.3 million or 4% from $56.8 million in fiscal 2014 to $54.5 million in fiscal 2015 with unfavorable exchange rates totaling $5.8 million. If foreign exchange rates remained level in both fiscal years, sales in local currencies would have grown 7%.

Gross margin increased $3.2 million or 8% and improved from 32.0% of sales in fiscal 2014 to 33.3% of sales in fiscal 2015 with higher revenues and margin improvement representing $1.5 million and $1.7 million, respectively.

North American gross margins increased $3.9 million or 21% in fiscal 2015 and improved from 30.2% of sales in fiscal 2014 to 32.8% of sales in fiscal 2015 as a result of increased sales of higher margin capital equipment and increased volume of precision measuring tools.

~~International gross margins declined $0.7 million as a $2.7 million improvement based upon a constant exchange rate was offset by $2.0 million of unfavorable foreign currency losses.~~

~~Selling, general and administrative expense increased $1.5 million or 4% from $35.0 million in fiscal 2014 to $36.5 million in fiscal 2015.~~

~~North American expenses increased $1.0 million or 5% due to higher sales commissions, employee benefits, professional fees and marketing expenses.~~

International expenses increased $0.5 million or 3% as higher salaries, sales commissions, professional fees and marketing expenses more than offset a $1.7 foreign currency reduction for expenses expressed in U. S. dollars, primarily due to a weakening of the Brazilian Real relative to the U. S. dollar.

Other income improved $0.7 million principally due to the stronger U. S. dollar as foreign subsidiaries’ dollar denominated assets, primarily accounts receivable related to export sales, translated into higher balances in local currency.

~~The effective tax rate for~~ the first half of fiscal 2015 and 2014 was 44.4% and 47.2%, respectively. The higher than federal and state statutory tax rate of 38.0% is due to losses in some foreign subsidiaries for which no tax benefit is recognized in consolidation as well as discrete income of $0.1 million in fiscal 20152016 compared to ~~a discrete expense of $0.3 million in fiscal 2014.~~

~~The Company recorded~~ net income of $3.4 million or $0.48 per share in ~~the first half of~~ fiscal 2015 ~~compared to net income of $2.0 million or $0.29 per share in fiscal 2014~~ principally due to ~~the increases in revenue and gross margin~~lower Operating Income, reduced Other Income and a ~~lower~~higher effective tax rate.

~~Fiscal 2015 net~~Net cash flow for the six months ~~ended~~ending December 31, ~~2014 declined $0.1million as a $5.5~~2015 was $7.3 million ~~contribution from operations was more than offset by disbursements for capital equipment, debt repayments, dividends and foreign currency translation.~~

~~Fiscal 2015 net cash for~~principally due to the ~~six months ended December 31, 2014 improved $3.1~~sale of investments of $7.6 million. This represents an improvement of $7.4 million compared to fiscal ~~2014 despite level contributions from operations. This was~~2015 primarily due to the ~~result~~sale of ~~reduced capital expenditures and lower debt payments.~~investments of $7.6 million.

The Company believes it ~~has~~maintains sufficient liquidity and has the resources to fund its operations. In addition to its cash, ~~and investments,~~ the Company maintains a $23 million line of credit in connection with its Loan and Security Agreement, of which, ~~$9.9~~$9.4 million was outstanding as of December 31, ~~2014.~~2015. Availability under the agreement is further reduced by open letters of credit totaling $0.9 million. The Loan and Security Agreement was ~~amended on~~renewed in January ~~26, 2015 and matures in April 30~~ of ~~2018.~~2015. The Loan and Security Agreement contains financial covenants with respect to leverage, tangible net worth, and interest coverage, and also contains customary affirmative and negative covenants, including limitations on indebtedness, liens, acquisitions, asset dispositions and fundamental corporate changes, and certain customary events of default. As of December 31, ~~2014,~~2015, the Company was in compliance with all debt covenants related to its Loan and Security Agreement. The Loan and Security Agreement expires on April 30, 2018.

The effective interest rate on the ~~short term~~ borrowings under the Loan and Security Agreement during the six months ended December 31, 2015 and 2014 was 2.1% and 2.0%. respectively.

The Company has no off-balance sheet arrangements ~~other than operating leases,~~ that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources.

There have been no material changes in ~~quantitative~~qualitative and ~~qualitative~~quantitative disclosures about market risk from what was reported in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, ~~2014.~~2015.

The Company's management, under the supervision and with the participation of the Company's President and Chief Executive Officer and Chief Financial Officer, has evaluated the Company's disclosure controls and procedures as of December 31, ~~2014,~~2015, and they have concluded that our disclosure controls and procedures were effective as of such date. All information required to be filed in this report was recorded, processed, summarized and reported within the time period required by the rules and regulations of the Securities and Exchange Commission, and such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of December 31, 2015, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective.

Based on management’s evaluation of controls at our Bytewise subsidiary at June 30, 2014, management concluded that the Company did not design and maintain effective controls over revenue transactions and the information technology system at that subsidiary. Therefore, material weaknessesThere have been no changes in the design and operating effectiveness of the internal control over revenue transactions and the information technology system at Bytewise exist. As a result, management has concluded that the Company’s internal control over financial reporting ~~was not effective as of June 30, 2014 and continues~~that materially affected, or are reasonably likely to ~~be not effective as of~~materially affect, the Company's internal control over financial reporting during the quarter ended December 31, ~~2014.~~

Management’s remediation of the material weaknesses that existed as of June 30, 2014, and which were noted in Item 9A of the Company’s 2014 Annual Report on Form 10-K filed on September 10, 2014, is not complete as of December 31, 2014. The Company expects to remediate the Bytewise material weaknesses in the second half of fiscal 2015.

This Quarterly Report on Form 10-Q contains forward-looking statements about the Company’s business, competition, sales, expenditures, foreign operations, plans for reorganization, interest rate sensitivity, debt service, liquidity and capital resources, and other operating and capital requirements. In addition, forward-looking statements may be included in future Company documents and in oral statements by Company representatives to securities analysts and investors. The Company is subject to risks that could cause actual events to vary materially from such forward-looking statements. You should carefully review and consider the information regarding certain factors which could materially affect our business, financial condition or future results set forth under Item 1A. “Risk Factors” in our Form 10-K for the year ended June 30, ~~2014.~~2015. There have been no material changes from the factors disclosed in our Form 10-K for the year ended June 30, ~~2014.~~2015.

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.

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the quarterly period ended	December 31, ~~2014~~2015

OR

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

MASSACHUSETTS		04-1866480
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

121 CRESCENT STREET, ATHOL, MASSACHUSETTS	01331-1915
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code	978-249-3551

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES ☒ NO ☐

Common Shares outstanding as of		January 31, ~~2015~~2016

Class A Common Shares		~~6,208,300~~ 6,240,537

Class B Common Shares		~~783,841~~775,081

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “accelerated filer,” “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check One):

Large Accelerated Filer ☐ Accelerated Filer ☒ Non-Accelerated Filer ☐ Smaller Reporting Company ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES ☐ NO ☒

			Page No.

Part I.	Financial Information:

	Item 1.	Financial Statements

		Consolidated Balance Sheets – December 31, ~~2014~~2015 (unaudited) and June 30, ~~2014~~2015	3

		Consolidated Statements of Operations – three and six months ended December 31, ~~2014~~2015 and December 31, ~~2013~~2014 (unaudited)	4

		Consolidated Statements of Comprehensive Income (Loss) – three and six months ended December 31, ~~2014~~2015 and December 31, ~~2013~~2014 (unaudited)	5

		Consolidated Statements of Stockholders' Equity – six months ended December 31, ~~2014 and December 31, 2013~~2015 (unaudited)	6

		Consolidated Statements of Cash Flows - six months ended December 31, ~~2014~~2015 and December 31, ~~2013~~2014 (unaudited)	7

		Notes to Unaudited Consolidated Financial Statements	8-12

	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	~~13-15~~12-15

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	15

	Item 4.	Controls and Procedures	15

Part II.	Other Information:

	Item 1A.	Risk Factors	16 15

	Item 6.	Exhibits	16

SIGNATURES			17

2015 (Remainder of year)	$	682
2016		1,364
2016 (Remainder of year)			$	749
2017		1,362		1,497
2018		1,294		1,429
2019		1,215		1,350
2020		659		826
2021				389
Thereafter		850		543

Cash flows (in thousands)	Six Months Ended
	12/31/2015			12/31/2014

Cash provided by operating activities	$	6,179		$	5,836
Cash provided by (used in) investing activities		3,685			(2,912	)
Cash used in financing activities		(2,185	)		(1,019	)
Effect of exchange rate changes on cash		(407	)		(1,999	)

Net increase (decrease) in cash	$	7,272		$	(94	)

		THE L. S. STARRETT COMPANY (Registrant)


Date	February ~~5, 2015~~3, 2016	/S/R. Douglas A. Starrett
		Douglas A. Starrett - President and CEO (Principal Executive Officer)

Date	February ~~5, 2015~~3, 2016	/S/R. Francis J. O’Brien
		Francis J. O’Brien - Treasurer and CFO (Principal Accounting Officer)