10-Q/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

Form 10-Q/A

Amendment No. 1

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarter ended March 30, 2012

Commission File Number  1-7635

TWIN DISC, INCORPORATED

(Exact name of registrant as specified in its charter)

Wisconsin	39-0667110
(State or other jurisdiction of	(I.R.S. Employer
Incorporation or organization)	Identification No.)

1328 Racine Street, Racine, Wisconsin  53403

(Address of principal executive offices)

(262) 638-4000

(Registrant's telephone number, including area code)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).Yes √ No__

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 “large accelerated filer,” “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  √

At April 27, 2012, the registrant had 11,429,487 shares of its common stock outstanding.

EXPLANATORY NOTE

The sole purpose of this Amendment No. 1 to the Quarterly Report on Form 10-Q (the “Form 10-Q”) of Twin Disc, Incorporated for the quarterly period ended March 30, 2012, filed with the Securities and Exchange Commission on May 9, 2012, is to furnish Exhibit 101 to the Form 10-Q in accordance with Rule 405 of Regulation S-T. Exhibit 101 to the Form 10-Q provides the financial statements and related notes from the Form 10-Q formatted in Extensible Business Reporting Language (“XBRL”).  Due to unanticipated technical difficulties, Exhibit 101 was not furnished with the original filing of the Form 10-Q.

No other changes have been made to the Form 10-Q.  This Form 10-Q/A does not reflect events that may have occurred subsequent to the original filing date, and does not modify or update any related disclosures made in the Form 10-Q.

Item 6.                      Exhibits

31a Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31b Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

101.INS XBRL Instance Document

101.SCH XBRL Schema Linkbase

101.CAL XBRL Calculation Linkbase

101.LAB XBRL Label Linkbase

101.PRE XBRL Presentation Linkbase

In accordance with Rule 406T of Regulation S-T, the XBRL related information in Exhibit 101 to this Quarterly Report on Form 10-Q is furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be part of any registration statement or other document filed under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

SIGNATURE

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.

	TWIN DISC, INCORPORATED
	(Registrant)
Date:  May 10, 2012	/s/ JEFFREY S. KNUTSON
	Jeffrey S. Knutson
	Corporate Controller
	Chief Accounting Officer

EX-31.A

Exhibit 31a

CERTIFICATION

I, Michael E. Batten, certify that:

1. I have reviewed this quarterly report on Form 10-Q/A, Amendment No. 1, of Twin Disc, Incorporated;

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

Date:  May 10, 2012	/s/ MICHAEL E. BATTEN
	Michael E. Batten
	Chairman and Chief Executive Officer

EX-31.B

Exhibit 31b

CERTIFICATIONS

I, Christopher J. Eperjesy, certify that:

1. I have reviewed this quarterly report on Form 10-Q/A, Amendment No. 1, of Twin Disc, Incorporated;

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

Date:  May 10, 2012	/s/ CHRISTOPHER J. EPERJESY
	Christopher J. Eperjesy
	Vice President – Finance, Chief Financial Officer and Treasurer

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Contingencies

9 Months Ended

Mar. 30, 2012

Contingencies [Abstract]

Contingencies [Text Block]

D. Contingencies

The Company is involved in litigation of which the ultimate outcome and liability to the Company, if any, is not presently determinable.  Management believes that final disposition of such litigation will not have a material impact on the Company's results of operations, financial position or cash flows.

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Warranty

9 Months Ended

Mar. 30, 2012

Warranty [Abstract]

Warranty [Text Block]

C. Warranty

The Company engages in extensive product quality programs and processes, including actively monitoring and evaluating the quality of its suppliers.  However, its warranty obligation is affected by product failure rates, the number of units affected by the failure and the expense involved in satisfactorily addressing the situation.  The warranty reserve is established based on our best estimate of the amounts necessary to settle future and existing claims on products sold as of the balance sheet date.  When evaluating the adequacy of the reserve for warranty costs, management takes into consideration the term of the warranty coverage, historical claim rates and costs of repair, knowledge of the type and volume of new products and economic trends.  While we believe the warranty reserve is adequate and that the judgment applied is appropriate, such amounts estimated to be due and payable in the future could differ materially from what actually transpires.  The following is a listing of the activity in the warranty reserve during the three and nine month periods ended March 30, 2012 and March 25, 2011 (in thousands):

	Three Months Ended		Nine Months Ended
	Mar. 30,	Mar. 25,	Mar. 30,	Mar. 25,
	2012	2011	2012	2011
Reserve balance, beginning of period	$5,883	$6,893	$6,022	$6,061
Current period expense	1,044	291	2,825	3,262
Payments or credits to customers	(1,077)	(1,306)	(2,756)	(3,708)
Foreign currency translation	52	130	(189)	393
Reserve balance, end of period	$5,902	$6,008	$5,902	$6,008

The current portion of the warranty accrual ($4,016,000) is reflected in accrued liabilities, while the long-term portion ($1,886,000) is included in other long-term liabilities on the Consolidated Balance Sheets.

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CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (USD $) In Thousands, unless otherwise specified	Mar. 30, 2012	Jun. 30, 2011
Current assets:
Cash	$ 17,628	$ 20,167
Trade accounts receivable, net	67,675	61,007
Inventories, net	117,749	99,139
Deferred income taxes	5,942	5,765
Other	9,523	9,090
Total current assets	218,517	195,168
Property, plant and equipment, net	67,161	65,791
Goodwill, net	17,332	17,871
Deferred income taxes	9,159	16,480
Intangible assets, net	5,514	6,439
Other assets	7,678	7,371
Total assets	325,361	309,120
Current liabilities:
Short-term borrowings and current maturities of long-term debt	3,789	3,915
Accounts payable	30,986	38,372
Accrued liabilities	38,637	41,673
Total current liabilities	73,412	83,960
Long-term debt	41,319	25,784
Accrued retirement benefits	45,261	50,063
Deferred income taxes	3,660	4,170
Other long-term liabilities	4,478	7,089
Total liabilities	168,130	171,066
Twin Disc shareholders' equity:
Common shares authorized: 30,000,000; issued: 13,099,468; no par value	12,181	10,863
Retained earnings	184,831	162,857
Accumulated other comprehensive loss	(16,430)	(11,383)
Subtotal (Element to be removed from future filings)	180,582	162,337
Less treasury stock, at cost (1,669,981 and 1,739,574 shares, respectively)	24,356	25,252
Total Twin Disc shareholders' equity	156,226	137,085
Noncontrolling interest	1,005	969
Total equity	157,231	138,054
Total liabilities and equity	$ 325,361	$ 309,120

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Basis of Presentation

9 Months Ended

Mar. 30, 2012

Basis of Presentation [Abstract]

Basis of Presentation [Text Block]

A. Basis of Presentation

The unaudited condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") and, in the opinion of the Company, include all adjustments, consisting only of normal recurring items, necessary for a fair presentation of results for each period.  Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such SEC rules and regulations.  The Company believes that the disclosures made are adequate to make the information presented not misleading.  It is suggested that these financial statements be read in conjunction with the consolidated financial statements and the notes thereto included in the Company's latest Annual Report.  The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America.

Revision of Prior Period Financial Statements

In the third quarter of the fiscal 2012, the Company identified a prior period error in their first and second quarter 2012 condensed consolidated financial statements related to the cash flow statement classification of the windfall tax benefit related to stock-based compensation.  The windfall tax benefit in the first and second quarter of fiscal 2012 was reflected in operating activities rather than financing activities in the condensed consolidated cash flow statement.  There was no impact of the error on the statement of operations.  In evaluating whether the Company's previously issued condensed consolidated financial statements were materially misstated, the Company considered the guidance in Accounting Standard Codification ("ASC") Topic 250, Accounting Changes and Error Corrections and ASC Topic 250-10-S99-1, Assessing Materiality.  The Company concluded this error was not material individually or in the aggregate to any of the prior period reporting periods.  The revision for the correction is reflected in the financial information herein and will be reflected in future filings containing affected financial information.  The impact of these revisions on the Condensed Consolidated Statements of Cash Flows for previously filed 2012 Form 10-Q's is as follows (in thousands):

	Three Months Ended		Six Months Ended
	September30, 2011		December 30, 2011
	As Reported	As Revised	As Reported	As Revised
Cash flows from operating activities:
Other non-cash changes, net	$2,950	$2,505	$4,291	$3,756
Net cash used by operating activities	(1,196)	(1,641)	(3,054)	(3,589)
Cash flows from financing activities:
Other	(183)	262	(185)	350
Net cash provided by financing activities	10,051	10,496	10,096	10,631

New Accounting Releases

In September 2011, the Financial Accounting Standards Board ("FASB") issued a standards update that is intended to simplify how entities test goodwill for impairment.  This update permits an entity to first assess qualitative factors to determine whether it is "more likely than not" that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test described in Topic 350 "Intangibles-Goodwill and Other."  This update is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011 (the Company's fiscal 2013).  This standards update is not expected to have a material impact on the Company's financial statements.

In June 2011, FASB issued a standards update that will allow an entity the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements.  This standards update eliminates the option of presenting the components of other comprehensive income as part of the statement of changes in stockholders' equity.  This update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011 (the Company's fiscal 2013).  This standards update is not expected to have any impact on the Company's financial statements, as the Company's reporting is already compliant with this guidance.

In May 2011, the FASB issued a standards update which represents the converged guidance of the FASB and the International Accounting Standards Board ("IASB") on fair value measurement.  This collective effort has resulted in common requirements for measuring fair value and for disclosing information about fair value measurements, including a consistent meaning of the term "fair value."  This update is to be applied prospectively effective for interim and annual periods beginning after December 15, 2011 (the Company's third fiscal quarter of 2012).  This standards update did not have a material impact on the Company's financial statements.

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Inventory

9 Months Ended

Mar. 30, 2012

Inventory [Abstract]

Inventory [Text Block]

B. Inventory

The major classes of inventories were as follows (in thousands):

	March 30,	June 30,
	2012	2011
Inventories:
Finished parts	$63,697	$56,074
Work in process	22,769	18,561
Raw materials	31,283	24,504
	$117,749	$99,139

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CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) (USD $)	Mar. 30, 2012	Jun. 30, 2011
Twin Disc shareholders' equity:
Common shares, authorized (in shares)	30,000,000	30,000,000
Common shares, issued (in shares)	13,099,468	13,099,468
Common shares, no par value (in dollars per share)	$ 0.00	$ 0.00
Treasury stock, shares (in shares)	1,669,981	1,739,574

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Document And Entity Information (USD $)	9 Months Ended
	Mar. 30, 2012	Dec. 31, 2010
Entity Registrant Name	TWIN DISC INC
Entity Central Index Key	0000100378
Current Fiscal Year End Date	--06-30
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	No
Entity Filer Category	Accelerated Filer
Entity Public Float		$ 248,814,593
Entity Common Stock, Shares Outstanding	11,429,487
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q3
Document Type	10-Q
Amendment Flag	false
Document Period End Date	May 10, 2012

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Unaudited) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Mar. 30, 2012	Mar. 25, 2011	Mar. 30, 2012	Mar. 25, 2011
Condensed Consolidated Statements of Operations and Comprehensive Income [Abstract]
Net sales	$ 95,490	$ 76,471	$ 259,761	$ 213,026
Cost of goods sold	62,434	48,689	166,375	141,464
Gross profit	33,056	27,782	93,386	71,562
Marketing, engineering and administrative expenses	17,746	17,054	53,752	50,470
Earnings from operations	15,310	10,728	39,634	21,092
Interest expense	389	430	1,129	1,309
Other expense (income), net	71	193	(473)	836
	460	623	656	2,145
Earnings before income taxes and noncontrolling interest	14,850	10,105	38,978	18,947
Income taxes	5,412	5,563	14,039	7,648
Net earnings	9,438	4,542	24,939	11,299
Less: Net (earnings) loss attributable to noncontrolling interest, net of tax	(45)	6	(108)	(61)
Net earnings attributable to Twin Disc	9,393	4,548	24,831	11,238
Dividends per share	$ 0.09	$ 0.08	$ 0.25	$ 0.22
Earnings (loss) per share data:
Basic earnings per share attributable to Twin Disc common shareholders	$ 0.82	$ 0.40	$ 2.18	$ 0.99
Diluted earnings per share attributable to Twin Disc common shareholders	$ 0.81	$ 0.40	$ 2.15	$ 0.98
Weighted average shares outstanding data:
Basic shares outstanding	11,426	11,344	11,410	11,308
Dilutive stock awards	146	130	145	117
Diluted shares outstanding	11,572	11,474	11,555	11,425
Comprehensive income:
Net earnings	9,438	4,542	24,939	11,299
Foreign currency translation adjustment	2,241	4,551	(6,292)	14,776
Prior service credit, net	(80)	(107)	(240)	(321)
Net actuarial loss, net	498	652	1,543	1,986
Comprehensive income	12,097	9,638	19,950	27,740
Comprehensive (income) loss attributable to noncontrolling interest	(45)	6	(108)	(61)
Comprehensive income attributable to Twin Disc	$ 12,052	$ 9,644	$ 19,842	$ 27,679

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Pension and Other Postretirement Benefit Plans

9 Months Ended

Mar. 30, 2012

Pension and Other Postretirement Benefit Plans [Abstract]

Pension and Other Postretirement Benefit Plans [Text Block]

G. Pension and Other Postretirement Benefit Plans

The Company has non-contributory, qualified defined benefit plans covering substantially all domestic employees hired prior to October 1, 2003 and certain foreign employees.  Additionally, the Company provides health care and life insurance benefits for certain domestic retirees.  Components of net periodic benefit cost for the defined benefit pension plans and the other postretirement benefit plan are as follows (in thousands):

	Three Months Ended		Nine Months Ended
	Mar. 30,	Mar. 25,	Mar. 30,	Mar. 25,
	2012	2011	2012	2011
Pension Benefits:
Service cost	$53	$46	$152	$130
Interest cost	1,516	1,566	4,543	4,687
Expected return on plan assets	(1,927)	(1,525)	(5,775)	(4,562)
Amortization of net loss	580	783	1,740	2,350
Net periodic benefit cost	$222	$870	$660	$2,605
Postretirement Benefits:
Service cost	$10	$8	$31	$24
Interest cost	245	274	738	822
Amortization of net actuarial loss	106	111	316	334
Net periodic benefit cost	$361	$393	$1,085	$1,180

The Company expects to contribute approximately $3,728,000 to its pension plans in fiscal 2012.  As of March 30, 2012, $2,722,000 in contributions have been made.

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Stock-Based Compensation

9 Months Ended

Mar. 30, 2012

Stock-Based Compensation [Abstract]

Stock-Based Compensation [Text Block]

F. Stock-Based Compensation

In the first nine months of fiscal 2012 and 2011, the Company granted a target number of 15,449 and 98,358 performance stock unit awards, respectively, to various employees of the Company, including executive officers.  The performance stock unit awards granted in fiscal 2012 will vest if the Company achieves a specified target objective relating to consolidated economic profit (as defined in the Performance Stock Unit Award Grant Agreement) in the cumulative three fiscal year period ending June 30, 2014.  The performance stock unit awards granted in fiscal 2012 are subject to adjustment if the Company's economic profit for the period falls below or exceeds the specified target objective, and the maximum number of performance stock units that can be awarded if the target objective is exceeded is 18,539.  Based upon actual results to date and the probability of achieving the targeted performance levels, the Company is accruing the performance stock unit awards granted in fiscal 2012 at the target level.  The performance stock unit awards granted in fiscal 2011 will vest if the Company achieves a specified target objective relating to consolidated economic profit (as defined in the Performance Stock Unit Award Grant Agreement) in the cumulative three fiscal year period ending June 30, 2013.  The performance stock unit awards granted in fiscal 2011 are subject to adjustment if the Company's economic profit for the period falls below or exceeds the specified target objective, and the maximum number of performance stock units that can be awarded if the target objective is exceeded is 118,030.  Based upon actual results to date and the probability of achieving the maximum performance levels, the Company is accruing the performance stock unit awards granted in fiscal 2011 at the maximum level.  There were 243,647 and 278,665 unvested stock unit awards outstanding at March 30, 2012 and March 25, 2011, respectively.  The performance stock unit awards are remeasured at fair-value based upon the Company's stock price at the end of each reporting period.  The fair-value of the stock unit awards are expensed over the performance period for the shares that are expected to ultimately vest.  The compensation (income) expense for the three and nine months ended March 30, 2012, related to the performance stock unit awards, approximated $(963,000) and $88,000 respectively. The compensation expense for the three and nine months ended March 25, 2011, related to the performance stock unit awards, approximated $567,000 and $2,030,000, respectively.

In the first nine months of fiscal 2012 and 2011, the Company granted a target number of 15,335 and 72,546 performance stock awards, respectively, to various employees of the Company, including executive officers.  The performance stock awards granted in fiscal 2012 will vest if the Company achieves a specified target objective relating to consolidated economic profit (as defined in the Performance Stock Award Grant Agreement) in the cumulative three fiscal year period ending June 30, 2014.  The performance stock awards granted in fiscal 2012 are subject to adjustment if the Company's economic profit for the period falls below or exceeds the specified target objective, and the maximum number of performance shares that can be awarded if the target objective is exceeded is 18,402.  Based upon actual results to date and the probability of achieving the targeted performance levels, the Company is accruing the performance stock awards granted in fiscal 2012 at the target level.  The performance stock awards granted in fiscal 2011 will vest if the Company achieves a specified target objective relating to consolidated economic profit (as defined in the Performance Stock Award Grant Agreement) in the cumulative three fiscal year period ending June 30, 2013.  The performance stock awards granted in fiscal 2011 are subject to adjustment if the Company's economic profit for the period falls below or exceeds the specified target objective, and the maximum number of performance shares that can be awarded if the target objective is exceeded is 87,055.  Based upon actual results to date and the probability of achieving the maximum performance levels, the Company is accruing the performance stock awards granted in fiscal 2011 at the maximum level.  There were 191,398 and 213,219 unvested stock awards outstanding at March 30, 2012 and March 25, 2011, respectively.  The fair value of the stock awards (on the date of grant) is expensed over the performance period for the shares that are expected to ultimately vest.  The compensation expense for the three and nine months ended March 30, 2012, related to performance stock awards, approximated $214,000 and $625,000, respectively.  The compensation expense for the three and nine months ended March 25, 2011, related to performance stock awards, approximated $126,000 and $517,000, respectively.

In addition to the performance shares mentioned above, the Company has unvested restricted stock outstanding that will vest if certain service conditions are fulfilled.  The fair value of the restricted stock grants is recorded as compensation over the vesting period, which is generally 1 to 4 years.  During the first nine months of fiscal 2012 and 2011, the Company granted 43,620 and 119,268 service based restricted shares, respectively, to employees and non-employee directors in each year.  There were 250,323 and 237,691 unvested shares outstanding at March 30, 2012 and March 25, 2011, respectively.  The compensation expense for the three and nine months ended March 30, 2012, related to these service-based awards approximated $364,000 and $1,070,000, respectively. The compensation expense for the three and nine months ended March 25, 2011, related to these service-based awards approximated $289,000 and $741,000, respectively.

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Long-term Debt

9 Months Ended

Mar. 30, 2012

Long-term Debt [Abstract]

Long-term Debt [Text Block]

J.   Long-term Debt

Long-term debt at March 30, 2012 and June 30, 2011 consisted of the following (in thousands):

	March 30,	June 30,
	2012	2011
Revolving loan	$26,950	$11,300
10-year unsecured senior notes	17,857	17,857
Other	301	542
Subtotal	45,108	29,699
Less: current maturities and short-term borrowings	(3,789)	(3,915)
Total long-term debt	$41,319	$25,784

The revolving loan and unsecured senior notes listed above are subject to certain covenants, including restrictions on investments, acquisitions and indebtedness.  Financial covenants, as defined, include a minimum consolidated net worth, a minimum EBITDA for the most recent four fiscal quarters, and a maximum total funded debt to EBITDA ratio.  As of March 30, 2012, the Company was in compliance with these covenants.

The fair value of long-term debt is estimated by discounting the future cash flows at rates offered to the Company for similar debt instruments of comparable maturities.  This rate was represented by the US Treasury Three-Year Yield Curve Rate (0.51% and 0.81% for March 30, 2012 and June 30, 2011, respectively), plus the current add-on related to the revolving loan agreement (1.50% for March 30, 2012 and 2.00% for June 30, 2011, respectively).  The fair value of the Company's 10-year unsecured senior notes due April 10, 2016 was approximately $19,299,000 and $19,589,000 at March 30, 2012 and June 30, 2011, respectively.  The Company's revolving loan agreement approximates fair value at March 30, 2012 and June 30, 2011.

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Income Taxes

9 Months Ended

Mar. 30, 2012

Income Taxes [Abstract]

Income Taxes [Text Block]

H. Income Taxes

The effective tax rate for the first nine months of fiscal 2012 is 36.0%, which is lower than the prior year's 40.5%.  The effective tax rate for the fiscal 2012 third quarter was 36.5 %, compared to the prior year's tax rate of 55.0 %.  The fiscal 2011rates included a $794,000 benefit due to a favorable adjustment to the deferred tax asset in the prior year second quarter related to the pension liability resulting from the increase in the estimated tax rate from 34% to 35%.  The fiscal 2011 rates included the recording of a valuation allowance against the net deferred tax assets of certain foreign jurisdictions in the prior year third quarter.  The Company maintains valuation allowances when it is more likely than not that all or a portion of a deferred tax asset will not be realized.  In determining whether a valuation allowance is required, the Company takes into account such factors as prior earnings history, expected future earnings, carry-back and carry-forward periods, and tax strategies that could potentially enhance the likelihood of realization of a deferred tax asset.  Due to recent operating losses in certain foreign jurisdictions, the Company has evaluated the realizability of the net deferred tax assets related to these jurisdictions.  This evaluation concluded that, based primarily upon recent losses in this jurisdiction and failure to achieve targeted levels of improvement, a full valuation allowance continues to be necessary.

During the third quarter of fiscal 2012, the Company completed and filed its 2011 Federal and State income tax returns.  Subsequently, the Company completed its return-to-provision reconciliation to determine differences between positions taken per the year-end fiscal 2011 book tax provision and the actual positions taken per the 2011 returns.  This reconciliation identified an error in the fiscal 2011 tax provision, which resulted in overstating fiscal 2011 earnings by $608,000.  To correct this error, the Company increased tax expense by $608,000 in the third quarter of fiscal 2012.  This adjustment was effectively offset by normal provision to return adjustments in the quarter, resulting in a minimal impact on the effective tax rate.

Accounting policies for interim reporting require the Company to adjust its effective tax rate each quarter to be consistent with the estimated annual effective tax rate.  Under this effective tax rate methodology, the Company applies an estimated annual income tax rate to its year-to-date ordinary earnings to derive its income tax provision each quarter.  The impact of the Company's operations in certain foreign jurisdictions is removed from the overall effective tax rate methodology and recorded discretely based upon year-to-date results as these operations anticipate net operating losses for the year for which no tax benefit can be recognized.

The Company has approximately $560,000 of unrecognized tax benefits, excluding related interest and penalties, as of March 30, 2012, which, if recognized, would favorably impact the effective tax rate.  The Company finalized the settlement of a U.S. income tax audit for fiscal years 2006 and 2007 during the quarter, resulting in a decrease of $89,000 in the net amount of unrecognized tax benefits.  The Company does not anticipate any material changes to this amount during the next twelve months.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense. For the quarter ended March 30, 2012, total accrued interest and penalties with respect to income taxes was approximately $41,000 that would favorably affect the effective tax rate if recognized.

Annually, the Company files income tax returns in various taxing jurisdictions inside and outside the United States.  In general, the tax years that remain subject to examination are 2006 through 2011 for the major operations in the Italy, Belgium, and Japan.  The tax years open to examination in the U.S. are for years subsequent to fiscal 2007.  Audits currently underway include fiscal 2010 through 2011 in Belgium, fiscal 2010 in the U.S. and fiscal 2002 through 2009 in Wisconsin for income tax.  It is reasonably possible that at least one of these audit cycles will be completed during fiscal 2012.

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Goodwill and Other Intangibles

9 Months Ended

Mar. 30, 2012

Goodwill and Other Intangibles [Abstract]

Goodwill and Other Intangibles [Text Block]

I.      Goodwill and Other Intangibles

The changes in the carrying amount of goodwill, substantially all of which is allocated to the manufacturing segment, for the nine months ended March 30, 2012 were as follows (in thousands):

Balance at June 30, 2011	$17,871
Translation adjustment	(539)
Balance at March 30, 2012	$17,332

The gross carrying amount and accumulated amortization of the Company's intangible assets that have defined useful lives and are subject to amortization as of March 30, 2012 and June 30, 2011 were as follows (in thousands):

	March 30,	June 30,
	2012	2011
Intangible assets with finite lives:
Licensing agreements	$3,015	$3,015
Non-compete agreements	2,050	2,050
Other	5,991	5,991
	11,056	11,056
Accumulated amortization	(8,388)	(7,774)
Foreign currency translation	640	817
Total	$3,308	$4,099

The weighted average remaining useful life of the intangible assets included in the table above is approximately 6 years.

Intangible amortization expense was $197,000 and $614,000 for the three and nine months ended March 30, 2012, respectively, and $182,000 and $583,000 for the three and nine months ended March 25, 2011, respectively.  Estimated intangible amortization expense for the remainder of fiscal 2012 and each of the next five fiscal years is as follows (in thousands):

Fiscal Year
2012	$200
2013	745
2014	745
2015	432
2016	288
2017	284

The gross carrying amount of the Company's intangible assets that have indefinite lives and are not subject to amortization as of March 30, 2012 and June 30, 2011 are $2,206,000 and $2,340,000, respectively.  These assets are comprised of acquired tradenames.

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Shareholders' Equity

9 Months Ended

Mar. 30, 2012

Shareholders' Equity [Abstract]

Shareholders' Equity [Text Block]

K.   Shareholders' Equity

On February 1, 2008, the Board of Directors authorized the purchase of 500,000 shares of Common Stock at market values.  The Company purchased no shares of its outstanding Common Stock in fiscal 2011 or the first nine months of fiscal 2012.

The following is a reconciliation of the Company's equity balances for the first fiscal nine months of 2011 and 2012 (in thousands):
	Twin Disc, Inc. Shareholders' Equity
			Accumulated
			Other		Non-
	Common	Retained	Comprehensive	Treasury	Controlling	Total
	Stock	Earnings	Income (Loss)	Stock	Interest	Equity
Balance -June 30, 2010	$10,667	$147,438	($42,048)	($27,597)	$859	$89,319
Net income		11,238			61	11,299
Translation adjustments			14,661		115	14,776
Benefit plan adjustments, net of tax			1,665			1,665
Cash dividends		(2,494)			(137)	(2,631)
Compensation expense and
windfall tax benefits	1,482					1,482
Shares (acquired) issued, net	(1,979)			2,182		203
Balance-March 25, 2011	$10,170	$156,182	($25,722)	($25,415)	$898	$116,113
	Twin Disc, Inc. Shareholders' Equity
			Accumulated
			Other		Non-
	Common	Retained	Comprehensive	Treasury	Controlling	Total
	Stock	Earnings	Income (Loss)	Stock	Interest	Equity
Balance-June 30, 2011	$10,863	$162,857	($11,383)	($25,252)	$969	$138,054
Net income		24,831			108	24,939
Translation adjustments			(6,350)		58	(6,292)
Benefit plan adjustments, net of tax			1,303			1,303
Cash dividends		(2,857)			(130)	(2,987)
Compensation expense and
windfall tax benefits	2,230					2,230
Shares (acquired) issued, net	(912)			896		(16)
Balance-March 30, 2012	$12,181	$184,831	($16,430)	($24,356)	$1,005	$157,231

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Mar. 30, 2012	Mar. 25, 2011
Cash flows from operating activities:
Net earnings	$ 24,939	$ 11,299
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:
Depreciation and amortization	8,010	6,983
Other non-cash changes, net	4,557	5,537
Net change in working capital, excluding cash	(41,315)	(19,753)
Net cash (used) provided by operating activities	(3,809)	4,066
Cash flows from investing activities:
Capital expenditures	(10,560)	(4,099)
Proceeds from sale of fixed assets	95	58
Other, net	(293)	(293)
Net cash used by investing activities	(10,758)	(4,334)
Cash flows from financing activities:
Proceeds from notes payable	0	19
Payments of notes payable	(109)	(82)
Proceeds (payments) of long-term debt, net	15,543	(352)
Proceeds from exercise of stock options	169	203
Dividends paid to shareholders	(2,857)	(2,494)
Dividends paid to noncontrolling interest	(130)	(137)
Other	350	223
Net cash provided (used) by financing activities	12,966	(2,620)
Effect of exchange rate changes on cash	(938)	2,365
Net change in cash	(2,539)	(523)
Cash:
Beginning of period	20,167	19,022
End of period	$ 17,628	$ 18,499

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Business Segments

9 Months Ended

Mar. 30, 2012

Business Segments [Abstract]

Business Segments [Text Block]

E. Business Segments

The Company and its subsidiaries are engaged in the manufacture and sale of marine and heavy duty off-highway power transmission equipment.  Principal products include marine transmissions, surface drives, propellers and boat management systems, as well as power-shift transmissions, hydraulic torque converters, power take-offs, industrial clutches and controls systems.  The Company sells to both domestic and foreign customers in a variety of market areas, principally pleasure craft, commercial and military marine markets, as well as in the energy and natural resources, government and industrial markets.

The Company has two reportable segments: manufacturing and distribution. These segments are managed separately because each provides different services and requires different technology and marketing strategies. The accounting practices of the segments are the same as those described in the summary of significant accounting policies. Transfers among segments are at established inter-company selling prices.  Management evaluates the performance of its segments based on net earnings.

Information about the Company's segments is summarized as follows (in thousands):

	Three Months Ended		Nine Months Ended
	Mar. 30,	Mar. 25,	Mar. 30,	Mar. 25,
	2012	2011	2012	2011
Manufacturing segment sales	$86,659	$67,253	$235,686	$181,582
Distribution segment sales	30,990	29,195	94,166	93,476
Inter/Intra segment elimination - manufacturing	(20,068)	(17,179)	(62,017)	(49,024)
Inter/Intra segment elimination - distribution	(2,091)	(2,798)	(8,074)	(13,008)
Net sales	$95,490	$76,471	$259,761	$213,026
Manufacturing segment net earnings	$9,441	$4,965	$26,360	$13,381
Distribution segment net earnings	2,058	1,567	5,287	4,763
Corporate and eliminations	(2,106)	(1,984)	(6,816)	(6,906)
Net earnings attributable to Twin Disc	$9,393	$4,548	$24,831	$11,238
	Mar. 30,	June 30,
Assets	2012	2011
Manufacturing segment assets	$292,905	$271,454
Distribution segment assets	57,826	54,028
Corporate assets and elimination
of inter-company assets	(25,370)	(16,362)
	$325,361	$309,120