L.S. Starrett Co. - Ordinary Shares (SCX) 10-Q 27 Oct 16 2017 Q1 Quarterly report Financial data

Document And Entity Information

Document And Entity Information - shares	3 Months Ended
	Sep. 30, 2016	Oct. 27, 2016
Common Class A [Member]
Document Information [Line Items]
Entity Common Stock, Shares Outstanding (in shares)		6,279,715
Common Class B [Member]
Document Information [Line Items]
Entity Common Stock, Shares Outstanding (in shares)		767,527
Entity Registrant Name	STARRETT L S CO
Entity Central Index Key	93,676
Trading Symbol	scx
Current Fiscal Year End Date	--06-30
Entity Filer Category	Accelerated Filer
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Document Type	10-Q
Document Period End Date	Sep. 30, 2016
Document Fiscal Year Focus	2,017
Document Fiscal Period Focus	Q1
Amendment Flag	false

Consolidated Balance Sheets (Cu

Consolidated Balance Sheets (Current Period Unaudited) - USD ($) $ in Thousands	Sep. 30, 2016	Jun. 30, 2016
Common Class A [Member]
Stockholders' equity:
Common stock	$ 6,274	$ 6,250
Common Class B [Member]
Stockholders' equity:
Common stock	768	773
Cash	21,307	19,794
Accounts receivable (less allowance for doubtful accounts of $843 and $887, respectively)	27,360	34,367
Inventories	59,018	56,321
Current deferred income tax assets		4,518
Prepaid expenses and other current assets	7,808	5,911
Total current assets	115,493	120,911
Property, plant and equipment, net	39,983	41,010
Income taxes receivable	2,603	2,655
Deferred income tax assets	29,266	25,284
Intangible assets, net	6,309	6,490
Goodwill	3,034	3,034
Other assets	2,224	2,214
Total assets	198,912	201,598
Notes payable and current maturities of long-term debt	1,560	1,543
Accounts payable	8,538	8,981
Accrued expenses	5,570	6,372
Accrued compensation	4,501	4,922
Total current liabilities	20,169	21,818
Long-term debt, net of current portion	16,713	17,109
Other income tax obligations	4,398	3,813
Deferred income tax liabilities		187
Postretirement benefit and pension obligations	66,708	67,158
Total liabilities	107,988	110,085
Additional paid-in capital	55,376	55,227
Retained earnings	81,286	81,228
Accumulated other comprehensive loss	(52,780)	(51,965)
Total stockholders' equity	90,924	91,513
Total liabilities and stockholders’ equity	$ 198,912	$ 201,598

Consolidated Balance Sheets (C3

Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($) $ in Thousands	Sep. 30, 2016	Jun. 30, 2016
Common Class A [Member]
Common stock, par value (in dollars per share)	$ 1	$ 1
Common stock, authorized (in shares)	20,000,000	20,000,000
Common stock, outstanding (in shares)	6,273,574	6,249,563
Common Class B [Member]
Common stock, par value (in dollars per share)	$ 1	$ 1
Common stock, authorized (in shares)	10,000,000	10,000,000
Common stock, outstanding (in shares)	768,336	772,742
Allowance for doubtful accounts	$ 843	$ 887

Consolidated Statements of Oper

Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands	3 Months Ended
	Sep. 30, 2016		Sep. 30, 2015
Net sales	$ 48,913,000	[1]	$ 51,038,000
Cost of goods sold	34,999,000		35,186,000
Gross margin	$ 13,914,000		$ 15,852,000
% of Net sales	28.40%		31.10%
Selling, general and administrative expenses	$ 15,421,000		$ 15,673,000
Restructuring charges	343,000
Operating income (loss)	(1,850,000)		179,000
Other income	237,000		303,000
Gain on sale of building	3,089,000
Income before income taxes	1,476,000		482,000
Income tax expense	717,000		660,000
Net income (loss)	$ 759,000		$ (178,000)
Basic and diluted income (loss) per share (in dollars per share)	$ 0.11		$ (0.03)
Weighted average outstanding shares used in per share calculations:
Basic (in shares)	7,028		7,014
Diluted (in shares)	7,059		7,014
Dividends per share declared (in dollars per share)	$ 0.10		$ 0.10
[1]	Excludes $2,357 of North American segment sales to the International segment and $3,082 of International segment sales to the North American segment.

Consolidated Statements of Comp

Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Net income (loss)	$ 759	$ (178)
Other comprehensive loss:
Translation loss	(768)	(9,780)
Pension and postretirement plans, net of tax of $0 and $0 respectively	(47)
Other comprehensive loss	(815)	(9,780)
Total comprehensive loss	$ (56)	$ (9,958)

Consolidated Statements of Com6

Consolidated Statements of Comprehensive Loss (Unaudited) (Parentheticals) - USD ($)	3 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Pension and postretirement plans, tax	$ 0	$ 0

Consolidated Statements of Stoc

Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) $ in Thousands	Common Stock [Member]Common Class A [Member]	Common Stock [Member]Common Class B [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	AOCI Attributable to Parent [Member]	Total
Accumulated balance consists of:
						$ (51,965)
Balance at Jun. 30, 2016	$ 6,250	$ 773	$ 55,227	$ 81,228	$ (51,965)	91,513
Total comprehensive income (loss)				759	(815)	(56)
Dividends ($0.10 per share)				(701)		(701)
Repurchase of shares		(2)	(18)			(20)
Issuance of stock	5		56			61
Stock-based compensation	16		111			127
Conversion	3	(3)
Balance at Sep. 30, 2016	$ 6,274	$ 768	$ 55,376	$ 81,286	(52,780)	90,924
Accumulated balance consists of:
Translation loss					(42,654)
Pension and postretirement plans, net of taxes					(10,126)
					$ (52,780)	$ (52,780)

Consolidated Statements of Sto8

Consolidated Statements of Stockholders' Equity (Unaudited) (Parentheticals)	3 Months Ended
	Sep. 30, 2016$ / shares
Retained Earnings [Member]
Dividends per share declared (in dollars per share)	$ 0.10
Dividends per share declared (in dollars per share)	$ 0.10

Consolidated Statements of Cash

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Cash flows from operating activities:
Net income (loss)	$ 759	$ (178)
Non-cash operating activities:
Gain on sale of building	(3,089)
Depreciation	1,390	1,558
Amortization	364	333
Stock-based compensation	127	144
Net long-term tax obligations	603	433
Deferred taxes	281	42
Postretirement benefit and pension obligations	939	780
Income from equity method investment	(10)	(47)
Working capital changes:
Accounts receivable	6,562	6,799
Inventories	(3,165)	(2,298)
Other current assets	(1,953)	(827)
Other current liabilities	(1,296)	(826)
Prepaid pension expense	(1,159)	(1,051)
Other	138	(5)
Net cash provided by operating activities	491	4,857
Cash flows from investing activities:
Additions to property, plant and equipment	(889)	(2,003)
Software development	(183)	(162)
Proceeds from sale of building	3,321
Net cash provided by (used) in investing activities	2,249	(2,165)
Cash flows from financing activities:
Proceeds from long-term borrowings		750
Long-term debt repayments	(379)	(547)
Proceeds from common stock issued	61	64
Shares purchased	(20)	(107)
Dividends paid	(701)	(704)
Net cash used in financing activities	(1,039)	(544)
Effect of exchange rate changes on cash	(188)	(317)
Net increase in cash	1,513	1,831
Cash, beginning of period	19,794	11,108
Cash, end of period	21,307	12,939
Supplemental cash flow information:
Interest paid	161	163
Income taxes paid, net	$ 34	$ 295

Note 1 - Basis of Presentation

Note 1 - Basis of Presentation and Summary of Significant Account Policies	3 Months Ended
	Sep. 30, 2016
Notes to Financial Statements
Basis of Presentation and Significant Accounting Policies [Text Block]	Note 1: Basis of Presentation and Summary of Significant Account Policies The unaudited interim financial statements as of and for the three months ended September 30, 2016, 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, 2016. 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, 2016 describes the significant accounting policies and methods used in the preparation of the consolidated financial statements.

Note 2 - Recent Accounting Pron

Note 2 - Recent Accounting Pronouncements	3 Months Ended
	Sep. 30, 2016
Notes to Financial Statements
New Accounting Pronouncements and Changes in Accounting Principles [Text Block]	Note 2: Recent A ccounting 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, 2017 and for interim periods within those years. Earlier application will be permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company expects to adopt this standard on July 1, 2017. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements. In July 2015, the FASB issued ASU No. 2015-11, "Inventory (Topic 330): Simplifying the Measurement of Inventory." Previous to the issuance of this ASU, ASC 330 required that an entity measure inventory at the lower of cost or market. ASU 2015-11 specifies that “market” is defined as “net realizable value,” or the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. This ASU is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2016. Application is to be applied prospectively with earlier application permitted as of the beginning of an interim or annual reporting period. The adoption of ASU No. 2015-11 will not have a material impact on our consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)”. The ASU requires that organizations that lease assets recognize assets and liabilities on the balance sheet for the rights and obligations created by those leases. The ASU will affect the presentation of lease related expenses on the income statement and statement of cash flows and will increase the required disclosures related to leases. This ASU is effective for annual periods beginning after December 15, 2018, and interim periods thereafter, with early adoption permitted. The Company is currently evaluating the impact of ASU No. 2016-02 on its consolidated financial statements. It is expected that a key change upon adoption will be the balance sheet recognition of leased assets and liabilities and that any changes in income statement recognition will not be material. In March 2016, the FASB issued ASU No. 2016-09, "Compensation - Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting." The ASU affects the accounting for employee share-based payment transactions as it relates to accounting for income taxes, accounting for forfeitures, and statutory tax withholding requirements. This ASU is effective for annual periods beginning after December 15, 2016, and interim periods within those periods with early adoption permitted. The Company has adopted the new guidance prospectively in the first quarter of fiscal 2017. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements.

Note 3 - Stock-based Compensati

Note 3 - Stock-based Compensation	3 Months Ended
	Sep. 30, 2016
Notes to Financial Statements
Disclosure of Compensation Related Costs, Share-based Payments [Text Block]	Note 3: Stock-based Compensation On September 5, 2012, the Board of Directors adopted The L.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 September 30, 2016, there were 20,000 stock options and 105,634 restricted stock units outstanding. In addition, there were 346,600 shares available for grant under the 2012 Stock Plan as of September 30, 2016. For stock option grants the fair value of each grant 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 (Simplified Method). No stock options were granted during the three months ended September 30, 2016 and 2015. The weighted average contractual term for stock options outstanding as of September 30, 2016 was 6.25 years. There was no intrinsic value of stock options outstanding as of September 30, 2016. Stock options exercisable as of September 30, 2016 were 20,000. In recognizing stock compensation expense for the 2012 Stock Incentive Plan management has estimated that there will be no forfeitures of options. 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 45,000 RSU awards with a fair value of $10.86 per RSU granted during the three months ended September 30, 2016. There were 12,733 RSUs settled during the three months ended September 30, 2016. The aggregate intrinsic value of RSU awards outstanding as of September 30, 2016 was $1.0 million. As of September 30, 2016 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 three month periods ended September 30, 2016 and 2015 was $0.1 million for both periods. As of September 30, 2016, there was $1.4 million of total unrecognized compensation costs related to outstanding stock-based compensation arrangements. Of this cost $1.1 million relates to performance based RSU grants that are not expected to be awarded. The remaining $0.3 million is expected to be recognized over a weighted average period of 1.8 years.

Note 4 - Inventories

Note 4 - Inventories	3 Months Ended
	Sep. 30, 2016
Notes to Financial Statements
Inventory Disclosure [Text Block]	Note 4: Inventories Inventories consist of the following (in thousands): 9/30/2016 6/30/2016 Raw material and supplies $ 28,517 $ 29,209 Goods in process and finished parts 15,778 16,459 Finished goods 43,516 39,449 87,811 85,117 LIFO Reserve (28,793 ) (28,796 ) Inventories $ 59,018 $ 56,321 LIFO inventories were $11.5 million and $10.5 million at September 30, 2016 and at June 30, 2016, respectively, such amounts being approximately $28.8 million less than if determined on a FIFO basis. The use of LIFO, as compared to FIFO, resulted in no material change in cost of sales for the three months ended September 30, 2016 compared to a $0.1 million increase in the three months ended September 30, 2015.

Note 5 - Goodwill and Intangibl

Note 5 - Goodwill and Intangible Assets	3 Months Ended
	Sep. 30, 2016
Notes to Financial Statements
Goodwill and Intangible Assets Disclosure [Text Block]	Note 5: Goodwill and Intangible Assets The Company’s acquisition of Bytewise in 2011 gave rise to goodwill. The Company performed a qualitative analysis in accordance with ASU 2011-08 for its October 1, 2015 annual assessment of goodwill (commonly referred to as “Step Zero”). From a qualitative perspective, in evaluating whether it is more likely than not that the fair value of the reporting unit exceeds its respective carrying amount, relevant events and circumstances were taken into account, with greater weight assigned to 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 exceeded its carrying amount as of October 1, 2015. Amortizable intangible assets consist of the following (in thousands): 9/30/2016 6/30/2016 Non-compete agreement $ 600 $ 600 Trademarks and trade names 1,480 1,480 Completed technology 2,358 2,358 Customer relationships 4,950 4,950 Software development 2,585 2,402 Other intangible assets 325 325 Total 12,298 12,115 Accumulated amortization (5,989 ) (5,625 ) Total net balance $ 6,309 $ 6,490 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 2017 and for each of the next five years and thereafter, is as follows (in thousands): 2017 (Remainder of year) $ 1,213 2018 1,550 2019 1,471 2020 947 2021 544 2022 225 Thereafter 359

Note 6 - Pension and Post-retir

Note 6 - Pension and Post-retirement Benefits	3 Months Ended
	Sep. 30, 2016
Notes to Financial Statements
Pension and Other Postretirement Benefits Disclosure [Text Block]	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 9/30/2016 9/30/2015 Service cost $ 791 $ 714 Interest cost 1,552 1,768 Expected return on plan assets (1,306 ) (1,594 ) Amortization of net loss 28 14 $ 1,065 $ 902 Net periodic benefit costs for the Company's post-retirement medical plan and life insurance consists of the following (in thousands): Three Months Ended 9/30/2016 9/30/2015 Service cost $ 23 $ 26 Interest cost 68 72 Amortization of prior service credit (168 ) (195 ) Amortization of net loss 30 4 $ (47 ) $ (93 ) 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 loss.

Note 7 - Debt

Note 7 - Debt	3 Months Ended
	Sep. 30, 2016
Notes to Financial Statements
Debt Disclosure [Text Block]	Note 7: Debt Debt is comprised of the following (in thousands): 9/30/2016 6/30/2016 Notes payable and current maturities of long term debt Loan and Security Agreement $ 1,560 $ 1,543 Long-term debt Loan and Security Agreement 16,713 17,109 $ 18,273 $ 18,652 The Company amended its Loan and Security Agreement, which includes a Line of Credit and a Term Loan, in January 2015 with changes that took effect on April 25, 2015. Borrowings under the Line of Credit may not exceed $23.0 million. The Line of Credit expires on April 30, 2018 and has an interest rate of LIBOR plus 1.5%. The effective interest rate on the Line of Credit under the Loan and Security Agreement for the three months ended September 30, 2016 and 2015 was 2.4% and 2.1%, respectively. Based upon its three year term, the Line of Credit has been classified as long-term. As of September 30, 2016, $9.4 million was outstanding on the Line of Credit. 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 then existing Loan and Security Agreement. The 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, had a balance of $8.9 million at September 30, 2016. The material financial covenants of the amended Loan and Security Agreement are: 1) funded debt to EBITDA, excluding non-cash and retirement benefit expenses (“maximum leverage”), not to exceed 2.25 to 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 September 30, 2016.

Note 8 - Income Taxes

Note 8 - Income Taxes	3 Months Ended
	Sep. 30, 2016
Notes to Financial Statements
Income Tax Disclosure [Text Block]	Note 8: Income Tax The Company is subject to U.S. federal income tax 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 first quarter of fiscal 2017 was $717,000 on a profit before tax of $1,476,000 (an effective tax rate of 48.6%). The tax expense for the first quarter of fiscal 2016 was $660,000 on a profit before tax for the quarter of $482,000 (an effective tax rate of 136.9%). The tax rate in the first quarter of fiscal 2017 is higher than the U.S. statutory rate of approximately 40% as a result of discrete adjustments primarily for the impact of a tax rate change in the U.K. applied to deferred tax assets which increased tax expense by $298,000 in the quarter. The tax rate for the first quarter of fiscal 2016 was higher than the U.S. federal and state statutory rate of approximately 40% 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 provision to return adjustments in the UK. U.S. Federal tax returns through fiscal 2012 are generally no longer subject to review by tax authorities; however, tax loss carryforwards from years before fiscal 2012 are still subject to adjustment. As of September 30, 2016, 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 2011 – 2015. The Company has identified no new uncertain tax positions during the three month period ended September 30, 2016 for which it is currently likely that the total amount of unrecognized tax benefits will significantly increase or decrease within the next twelve months. 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 deferred tax 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 financial position. No valuation allowance has been recorded for the Company’s domestic deferred tax assets related to temporary differences in items included in taxable income. 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 tax benefit provided by those differences. In the U.S., there is a valuation allowance against foreign tax credits to the extent they are limited. 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. In November 2015, the FASB issued Accounting Standards Update No. 2015-17 ("ASU 2015-17") regarding ASC Topic 740 "Income Taxes: Balance Sheet Classification of Deferred Taxes." The amendments in ASU 2015-17 eliminate the requirement to bifurcate Deferred Taxes between current and non-current on the balance sheet and requires that all deferred tax liabilities and assets be classified as noncurrent on the balance sheet. The amendments for ASU 2015-17 can be applied retrospectively or prospectively and early adoption is permitted. The Company has adopted the new guidance prospectively in the first quarter of fiscal 2017. Implementation has no effect on the Consolidated Statement of Operations but does result in a change in classification of $4.5 million of deferred tax assets from short-term to long-term.

Note 9 - Contingencies

Note 9 - Contingencies	3 Months Ended
	Sep. 30, 2016
Notes to Financial Statements
Commitments and Contingencies Disclosure [Text Block]	Note 9: Contingencies The Company is involved in certain legal matters which arise in the normal course of business. These matters are not expected to have a material impact on the Company’s financial condition, results of operations or cash flows.

Note 10 - Segment Information

Note 10 - Segment Information	3 Months Ended
	Sep. 30, 2016
Notes to Financial Statements
Segment Reporting Disclosure [Text Block]	Note 10. Segment Information The segment information and the accounting policies of each segment are the same as those described in the notes to the consolidated financial statements entitled “Financial Information by Segment & Geographic Area” included in our Annual Report on Form 10-K for the year ended June 30, 2016. Our business is aggregated into two reportable segments based on geography of operations: North American Operations and International Operations. Segment income is measured for internal reporting purposes by excluding corporate expenses. Other income and expense, including interest income and expense, and income taxes are excluded entirely from the table below. The restructuring charge of $343,000 is included in the unallocated column. There were no significant changes in the segment operations or in the segment assets from the Annual Report. Financial results for each reportable segment are as follows (in thousands): North American Operations International Operations Unallocated Total Three Months ended September 30, 2016 Sales 1 $ 28,403 $ 20,510 $ — $ 48,913 Operating Income (Loss) $ 152 $ (866 ) $ (1,916 ) $ (1,850 ) Three Months ended September 30, 2015 Sales 2 $ 32,411 $ 18,627 $ — $ 51,038 Operating Income (Loss) $ 2,826 $ (1,048 ) $ (1,599 ) $ 179 1 Excludes $2,357 of North American segment intercompany sales to the International segment and $3,082 of International segment intercompany sales to the North American segment. 2 Excludes $1,910 of North American segment intercompany sales to the International segment and $2,262 of International segment intercompany sales to the North American segment.

Significant Accounting Policies

Significant Accounting Policies (Policies)	3 Months Ended
	Sep. 30, 2016
Accounting Policies [Abstract]
Basis of Accounting, Policy [Policy Text Block]	The unaudited interim financial statements as of and for the three months ended September 30, 2016, 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, 2016. 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, 2016 describes the significant accounting policies and methods used in the preparation of the consolidated financial statements.
New Accounting Pronouncements, Policy [Policy Text Block]	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, 2017 and for interim periods within those years. Earlier application will be permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company expects to adopt this standard on July 1, 2017. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements. In November 2015, the FASB issued Accounting Standards Update No. 2015-17 ("ASU 2015-17") regarding ASC Topic 740 "Income Taxes: Balance Sheet Classification of Deferred Taxes." The amendments in ASU 2015-17 eliminate the requirement to bifurcate Deferred Taxes between current and non-current on the balance sheet and requires that all deferred tax liabilities and assets be classified as noncurrent on the balance sheet. The amendments for ASU 2015-17 can be applied retrospectively or prospectively and early adoption is permitted. The Company has adopted the new guidance prospectively in the first quarter of fiscal 2017. Implementation has no effect on the Consolidated Statement of Operations but does result in a change in classification of $4.5 million of deferred tax assets from short-term to long-term. In July 2015, the FASB issued ASU No. 2015-11, "Inventory (Topic 330): Simplifying the Measurement of Inventory." Previous to the issuance of this ASU, ASC 330 required that an entity measure inventory at the lower of cost or market. ASU 2015-11 specifies that “market” is defined as “net realizable value,” or the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. This ASU is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2016. Application is to be applied prospectively with earlier application permitted as of the beginning of an interim or annual reporting period. The adoption of ASU No. 2015-11 will not have a material impact on the Company’s consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)”. The ASU requires that organizations that lease assets recognize assets and liabilities on the balance sheet for the rights and obligations created by those leases. The ASU will affect the presentation of lease related expenses on the income statement and statement of cash flows and will increase the required disclosures related to leases. This ASU is effective for annual periods beginning after December 15, 2018, and interim periods thereafter, with early adoption permitted. The Company is currently evaluating the impact of ASU No. 2016-02 on its consolidated financial statements. It is expected that a key change upon adoption will be the balance sheet recognition of leased assets and liabilities and that any changes in income statement recognition will not be material. In March 2016, the FASB issued ASU No. 2016-09, "Compensation - Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting." The ASU affects the accounting for employee share-based payment transactions as it relates to accounting for income taxes, accounting for forfeitures, and statutory tax withholding requirements. This ASU is effective for annual periods ending after December 15, 2016, and interim periods within those periods with early adoption permitted. The Company has adopted the new guidance prospectively in the first quarter of fiscal 2017. Implementation had no material on the Company’s consolidated financial statements.

Note 4 - Inventories (Tables)

Note 4 - Inventories (Tables)	3 Months Ended
	Sep. 30, 2016
Notes Tables
Schedule of Inventory, Current [Table Text Block]	9/30/2016 6/30/2016 Raw material and supplies $ 28,517 $ 29,209 Goods in process and finished parts 15,778 16,459 Finished goods 43,516 39,449 87,811 85,117 LIFO Reserve (28,793 ) (28,796 ) Inventories $ 59,018 $ 56,321

Note 5 - Goodwill and Intangi22

Note 5 - Goodwill and Intangible Assets (Tables)	3 Months Ended
	Sep. 30, 2016
Notes Tables
Schedule of Finite-Lived Intangible Assets [Table Text Block]	9/30/2016 6/30/2016 Non-compete agreement $ 600 $ 600 Trademarks and trade names 1,480 1,480 Completed technology 2,358 2,358 Customer relationships 4,950 4,950 Software development 2,585 2,402 Other intangible assets 325 325 Total 12,298 12,115 Accumulated amortization (5,989 ) (5,625 ) Total net balance $ 6,309 $ 6,490
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block]	2017 (Remainder of year) $ 1,213 2018 1,550 2019 1,471 2020 947 2021 544 2022 225 Thereafter 359

Note 6 - Pension and Post-ret23

Note 6 - Pension and Post-retirement Benefits (Tables)	3 Months Ended
	Sep. 30, 2016
Post Retirement Medical and Life Insurance Plan [Member]
Notes Tables
Schedule of Net Benefit Costs [Table Text Block]	Three Months Ended 9/30/2016 9/30/2015 Service cost $ 23 $ 26 Interest cost 68 72 Amortization of prior service credit (168 ) (195 ) Amortization of net loss 30 4 $ (47 ) $ (93 )
Pension Plan [Member]
Notes Tables
Schedule of Net Benefit Costs [Table Text Block]	Three Months Ended 9/30/2016 9/30/2015 Service cost $ 791 $ 714 Interest cost 1,552 1,768 Expected return on plan assets (1,306 ) (1,594 ) Amortization of net loss 28 14 $ 1,065 $ 902

Note 7 - Debt (Tables)

Note 7 - Debt (Tables)	3 Months Ended
	Sep. 30, 2016
Notes Tables
Schedule of Debt [Table Text Block]	9/30/2016 6/30/2016 Notes payable and current maturities of long term debt Loan and Security Agreement $ 1,560 $ 1,543 Long-term debt Loan and Security Agreement 16,713 17,109 $ 18,273 $ 18,652

Note 10 - Segment Information (

Note 10 - Segment Information (Tables)	3 Months Ended
	Sep. 30, 2016
Notes Tables
Schedule of Segment Reporting Information, by Segment [Table Text Block]	North American Operations International Operations Unallocated Total Three Months ended September 30, 2016 Sales 1 $ 28,403 $ 20,510 $ — $ 48,913 Operating Income (Loss) $ 152 $ (866 ) $ (1,916 ) $ (1,850 ) Three Months ended September 30, 2015 Sales 2 $ 32,411 $ 18,627 $ — $ 51,038 Operating Income (Loss) $ 2,826 $ (1,048 ) $ (1,599 ) $ 179

Note 3 - Stock-based Compensa26

Note 3 - Stock-based Compensation (Details Textual) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Employee Stock Option [Member] | The 2012 Stock Incentive Plan [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	1 year
Employee Stock Option [Member] | The 2012 Stock Incentive Plan [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	3 years
Employee Stock Option [Member] | The 2012 Stock Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	0	0
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period	10 years
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number	20,000
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding, Number	105,634
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term	6 years 91 days
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number	20,000
Restricted Stock Units (RSUs) [Member] | The 2012 Stock Incentive Plan [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	1 year
Restricted Stock Units (RSUs) [Member] | The 2012 Stock Incentive Plan [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	3 years
Restricted Stock Units (RSUs) [Member] | The 2012 Stock Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period	45,000
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value	$ 10.86
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period	12,733
The 2012 Stock Incentive Plan [Member] | Total Unrecognized Compensation Including Portion Relating to Grants Not Expected to Be Awarded [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Aggregate Intrinsic Value	$ 1
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized	1.4
The 2012 Stock Incentive Plan [Member] | Portion Relating to RSU Grants Not Expected to be Awarded [Member]
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized	$ 1.1
The 2012 Stock Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant	346,600
Allocated Share-based Compensation Expense	$ 0.1
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized	$ 0.3
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition	1 year 292 days
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized	500,000

Note 4 - Inventories (Details T

Note 4 - Inventories (Details Textual) - USD ($)	3 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Jun. 30, 2016
Cost of Sales [Member]
Inventory, LIFO Reserve, Effect on Income, Net	$ 0	$ 100,000
Inventory Difference Using FIFO Basis	28,800,000		$ 28,800,000
LIFO Inventory Amount	$ 11,500,000		$ 10,500,000

Note 4 - Inventories - Inventor

Note 4 - Inventories - Inventories (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Jun. 30, 2016
Raw material and supplies	$ 28,517	$ 29,209
Goods in process and finished parts	15,778	16,459
Finished goods	43,516	39,449
	87,811	85,117
LIFO Reserve	(28,793)	(28,796)
Inventories	$ 59,018	$ 56,321

Note 5 - Goodwill and Intangi29

Note 5 - Goodwill and Intangible Assets (Details Textual)	3 Months Ended
	Sep. 30, 2016
Trademarks and Trade Names [Member]
Finite-Lived Intangible Asset, Useful Life	14 years
Noncompete Agreements [Member]
Finite-Lived Intangible Asset, Useful Life	8 years
Completed Technology [Member]
Finite-Lived Intangible Asset, Useful Life	10 years
Customer Relationships [Member]
Finite-Lived Intangible Asset, Useful Life	8 years
Software Developement [Member]
Finite-Lived Intangible Asset, Useful Life	5 years

Note 5 - Goodwill and Intangi30

Note 5 - Goodwill and Intangible Assets - Finite-lived Intangible Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Jun. 30, 2016	Jun. 30, 2015
Noncompete Agreements [Member]
Intangible assets, gross	$ 600		$ 600
Trademarks and Trade Names [Member]
Intangible assets, gross	1,480		1,480
Completed Technology [Member]
Intangible assets, gross	2,358		2,358
Customer Relationships [Member]
Intangible assets, gross	4,950		4,950
Software Developement [Member]
Intangible assets, gross	2,585		2,402
Other Intangible Assets [Member]
Intangible assets, gross	325		325
Intangible assets, gross	12,298		12,115
Accumulated amortization	(5,989)		(5,625)
Total net balance	$ 6,309	$ 6,490	$ 6,490

Note 5 - Goodwill and Intangi31

Note 5 - Goodwill and Intangible Assets - Estimated Aggregate Amortization Expense (Details) $ in Thousands	Sep. 30, 2016USD ($)
2017 (Remainder of year)	$ 1,213
2,018	1,550
2,019	1,471
2,020	947
2,021	544
2,022	225
Thereafter	$ 359

Note 6 - Pension and Post-ret32

Note 6 - Pension and Post-retirement Benefits - Net Periodic Costs (Details) - Pension Plan [Member] - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Service cost	$ 791	$ 714
Interest cost	1,552	1,768
Expected return on plan assets	(1,306)	(1,594)
Amortization of net loss	28	14
	$ 1,065	$ 902

Note 6 - Pensions and Post-reti

Note 6 - Pensions and Post-retirement Benefits - Net Periodic Benefit Costs for Postretirement Medical Plan (Details) - Post Retirement Medical and Life Insurance Plan [Member] - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Service cost	$ 23	$ 26
Interest cost	68	72
Amortization of prior service credit	(168)	(195)
Amortization of net loss	30	4
	$ (47)	$ (93)

Note 7 - Debt (Details Textual)

Note 7 - Debt (Details Textual)	Nov. 22, 2011USD ($)	Sep. 30, 2016USD ($)	Sep. 30, 2015
London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument, Basis Spread on Variable Rate		1.50%
Term Loan [Member]
Long-term Line of Credit		$ 8,900,000
Debt Instrument, Face Amount	$ 15,500,000
Debt Instrument, Term	10 years
Debt Instrument, Interest Rate, Stated Percentage	4.50%
Line of Credit Facility, Periodic Payment	$ 160,640
Maximum [Member] | Amended Agreement [Member]
Current Funded Debt to EBITDA Ratio		2.25
Maximum [Member]
Annual Capital Expenditures		$ 15,000,000
Minimum [Member]
Debt Service Coverage Rate		1.25
Line of Credit Facility, Maximum Borrowing Capacity		$ 23,000,000
Line of Credit Facility, Interest Rate During Period		2.40%	2.10%
Long-term Line of Credit		$ 9,400,000
Minimum Consolidated Cash and Liquid Investments Pursuant to New Loan and Security Agreement		$ 10,000,000

Note 7 - Debt - Debt Schedule (

Note 7 - Debt - Debt Schedule (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Jun. 30, 2015
Notes payable and current maturities of long term debt
Loan and Security Agreement	$ 1,560	$ 1,543
Long-term debt
Loan and Security Agreement	16,713	17,109
	$ 18,273	$ 18,652

Note 8 - Income Taxes (Details

Note 8 - Income Taxes (Details Textual) - USD ($)	3 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Reclassification From Current Deferred Tax Assets to Noncurrent Deferred Tax Assets [Member]
Current Period Reclassification Adjustment	$ 4,500,000
Income Tax Expense (Benefit)	717,000	$ 660,000
Income (Loss) from Continuing Operations before Income Taxes, Noncontrolling Interest	$ 1,476,000	$ 482,000
Effective Income Tax Rate Reconciliation, Percent	48.60%	136.90%
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent	40.00%	40.00%
Effective Income Tax Rate Reconciliation, Change in Enacted Tax Rate, Amount	$ 298,000
Effective Income Tax Rate Reconciliation, Change in Enacted Tax Rate, Amount, Return to Provision Adjustment		$ 54,000

Note 10 - Segment Information37

Note 10 - Segment Information (Details Textual)	3 Months Ended
	Sep. 30, 2016USD ($)		Sep. 30, 2015USD ($)
North American Segment [Member] | Intersegment Eliminations [Member]
Revenue, Net	$ 2,357,000		$ 1,910,000
North American Segment [Member]
Revenue, Net	28,403,000	[1]	32,411,000
International Segment [Member] | Intersegment Eliminations [Member]
Revenue, Net	3,082,000		2,262,000
International Segment [Member]
Revenue, Net	$ 20,510,000	[1]	18,627,000
Number of Reportable Segments	2
Restructuring Charges	$ 343,000
Revenue, Net	$ 48,913,000	[1]	$ 51,038,000
[1]	Excludes $2,357 of North American segment sales to the International segment and $3,082 of International segment sales to the North American segment.

Note 10 - Segment Information -

Note 10 - Segment Information - Financial Results for Reportable Segments (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2016		Sep. 30, 2015
North American Segment [Member]
Net sales	$ 28,403	[1]	$ 32,411
Operating income	152		2,826
International Segment [Member]
Net sales	20,510	[1]	18,627
Operating income	(866)		(1,048)
Unallocated [Member]
Net sales		[1]
Operating income	(1,916)		(1,599)
Net sales	48,913	[1]	51,038
Operating income	$ (1,850)		$ 179
[1]	Excludes $2,357 of North American segment sales to the International segment and $3,082 of International segment sales to the North American segment.