8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): October 2, 2009

SCHMITT INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)

Oregon	000-23996	93-1151989
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification Number)
2765 N.W. Nicolai Street Portland, Oregon		97210-1818
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (503) 227-7908

Not Applicable

Former name or former address, if changed since last report

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

On October 2, 2009, Schmitt Industries, Inc. issued a press release entitled “Schmitt Industries Announces First Quarter of Fiscal 2010 Operating Results.” A copy of the press release is furnished as Exhibit 99.1 to this report.

The information contained in this Current Report shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Exchange Act or the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

99.1 Press release entitled “Schmitt Industries Announces First Quarter of Fiscal 2010 Operating Results” dated October 2, 2009.

Forward Looking Statements

This Current Report on Form 8-K, including its exhibits, contains forward-looking statements. Forward-looking statements typically are identified by use of terms such as “may,” “will,” “should,” “plan,” “expect,” “anticipate,” “intend,” “estimate” and similar words, although some forward-looking statements are expressed differently. Forward-looking statements represent our management’s judgment regarding future events. Although Schmitt believes that the expectations reflected in such forward-looking statements are reasonable, Schmitt can give no assurance that such expectations will prove to be correct. All statements other than statements of historical fact included on this Current Report on Form 8-K are forward-looking statements. Schmitt cannot guarantee the accuracy of the forward-looking statements, and you should be aware that Schmitt’s actual results could differ materially from those contained in the forward-looking statements due to a number of factors, including the statements under “Risk Factors” contained in Schmitt’s Annual Report on Form 10-K file with the Securities and Exchange Commission.

SIGNATURES

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 hereunto duly authorized.

	SCHMITT INDUSTRIES, INC.
October 2, 2009	By:	/S/    WAYNE A. CASE
	Name:	Wayne A. Case
	Title:	Chairman and Chief Executive Officer

EX-99.1

Exhibit 99.1

IMMEDIATE NEWS RELEASE

Schmitt Industries Announces First Quarter of Fiscal 2010 Operating Results

October 2, 2009 NASDAQ: SMIT

Portland, Oregon – Schmitt Industries, Inc. (NASDAQ: SMIT) today announced its operating results for the first quarter of Fiscal year 2010, which ends May 31, 2010. Sales for the three months ended August 31, 2009 were $1,223,234 compared to $3,193,385 for the same period last year. Net loss for the first quarter ended August 31, 2009 was $584,089 or $.20 per fully diluted share compared to net income of $33,547 or $.01 per fully diluted share for the same period last year.

In the first quarter, sales in the SBS Balancer segment decreased 61.7% while sales in the SMS Measurement segment also decreased 61.7% as compared to the same period last year. Sales of the Company’s balancer and laser-based measurement products declined from prior periods due to a sharp drop in demand that began in the second half of Fiscal year 2009 as a result of rapidly deteriorating market conditions in the US auto industry, a downturn in global manufacturing and the weakening of the US and global economy generally.

Gross margins for the quarter declined to 44.9% for the three months ended August 31, 2009 as compared to 51.9% for the same period in the prior year primarily due to lower sales volume, changes in the geographic sales mix and changes in the product sales mix. Operating expenses decreased to $1,133,751 during the three months ended August 31, 2009 as compared to $1,570,137 for the same period in the prior year. These decreases were primarily due to cost reduction initiatives enacted by the Company in the latter half of Fiscal 2009.

“We continued to see a weakness in order rates during the first quarter, a trend that began in the second half of our previous fiscal year (December 2008) and largely tracks the state of the US and global manufacturing economies,” commented Wayne A. Case, CEO of Schmitt Industries. “In response to this trend, we have reduced operating expenses and made necessary reductions to our workforce, which is reflected in our lower operating expenses for the first quarter. We are continuing to closely monitor both our order rates and our expense structure,” Case continued.

“While we will remain diligent on the expense side, our return to profitability must also be based on making the investments in product and market development necessary to increase sales,” commented Jim Fitzhenry, President, Schmitt Industries, Inc. “During the first quarter, we sold our first units of the Xact™ remote tank monitoring system for the propane industry. We also announced the acquisition of Optical Dimensions®, a small company that manufactures and markets the Lasercheck® line of laser-based surface roughness measurement gauges. We look forward to integrating the Lasercheck® line into our current product portfolio. At the end of the quarter ended August 31, 2009, we had approximately $3.7 million in cash, cash equivalents and investments, no debt, an unused $1.0 million line of credit and a current ratio in excess of 12:1. We are working hard to return the Company to profitability and we have the resources necessary to weather this difficult economic environment in the interim,” concluded Fitzhenry.

CORPORATE OFFICE: 2765 NW NICOLAI ST. • PORTLAND, OREGON 97210 • 503/227-7908 • FAX 503/223-1258

About Schmitt Industries

Schmitt Industries, Inc. designs, manufactures and markets computer controlled balancing equipment (the Balancer segment) primarily to the machine tool industry. Through its wholly owned subsidiary, Schmitt Measurement Systems, Inc., the Company designs, manufactures and markets precision laser measurement systems used in surface measurement applications and dimensional measurement applications and ultrasonic measurement products for remote monitoring of chemical storage tanks (the Measurement segment). The Company also sells and markets its products in Europe through its wholly owned subsidiary, Schmitt Europe Ltd. located in the United Kingdom.

FORWARD-LOOKING STATEMENTS

The statements in this release, including remarks by Wayne Case and Jim Fitzhenry regarding the impact of the global economy on the Company’s sales, the impact of the introduction of the Xact™ products, the expected contributions of investments in Optical Dimensions and the expectation that the Company can weather the current economic downturn, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are based upon current expectations, estimates and projections about the Company’s business that are based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements due to numerous factors including but not limited to the uncertainties of the Company’s new product introductions, the risks of increased competition and technological change in the Company’s industry and other factors detailed in the Company’s SEC filings. In addition, such statements could be affected by general industry and market conditions and growth rates, and general domestic and international economic conditions. Such forward-looking statements speak only as of the date on which they were made and the Company does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this release, or for changes to this document made by wire services or internet service providers.

For more information contact: Linda M. Case, Investor Relations (503) 227-7908 or visit our web site at www.schmitt-ind.com

CORPORATE OFFICE: 2765 NW NICOLAI ST. • PORTLAND, OREGON 97210 • 503/227-7908 • FAX 503/223-1258

SCHMITT INDUSTRIES, INC.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

	August 31, 2009			May 31, 2009
ASSETS
Current assets
Cash and cash equivalents	$	2,661,928		$	4,174,335
Short-term investments		1,000,000			—
Accounts receivable, net of allowance of $38,578 and $38,233 at August 31, 2009 and May 31, 2009, respectively		921,855			1,110,850
Inventories		3,953,782			3,866,971
Prepaid expenses		99,603			171,178
Income taxes receivable		330,908			330,134
		8,968,076			9,653,468
Property and equipment
Land		299,000			299,000
Buildings and improvements		1,564,880			1,564,880
Furniture, fixtures and equipment		1,023,280			1,037,346
Vehicles		90,452			90,452
		2,977,612			2,991,678
Less accumulated depreciation and amortization		(1,568,456	)		(1,563,840	)
		1,409,156			1,427,838
Other assets
Intangible assets		1,515,494			1,542,694
TOTAL ASSETS	$	11,892,726		$	12,624,000
LIABILITIES & STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	212,597		$	335,609
Accrued commissions		127,055			172,755
Accrued payroll liabilities		223,378			228,887
Other accrued liabilities		166,986			168,325
Total current liabilities		730,016			905,576
Long-term liabilities		3,993			—
Stockholders’ equity
Common stock, no par value, 20,000,000 shares authorized, 2,870,160 shares issued and outstanding at both August 31, 2009 and May 31, 2009		9,569,990			9,545,678
Accumulated other comprehensive loss		(192,651	)		(183,629	)
Retained earnings		1,781,378			2,356,375
Total stockholders’ equity		11,158,717			11,718,424
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	11,892,726		$	12,624,000

SCHMITT INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED AUGUST 31, 2009 AND 2008

(UNAUDITED)

	Three Months Ended August 31,
	2009			2008
Net sales	$	1,223,234		$	3,193,385
Cost of sales		674,145			1,536,005
Gross profit		549,089			1,657,380
Operating expenses:
General, administration and sales		960,707			1,322,918
Research and development		173,044			247,219
Total operating expenses		1,133,751			1,570,137
Operating income (loss)		(584,662	)		87,243
Other income		9,665			20,231
Income (loss) before income taxes		(574,997	)		107,474
Provision for income taxes		—			73,927
Net income (loss)	$	(574,997	)	$	33,547
Net income (loss) per common share:
Basic	$	(0.20	)	$	0.01
Weighted average number of common shares, basic		2,870,160			2,870,160
Diluted	$	(0.20	)	$	0.01
Weighted average number of common shares, diluted		2,870,160			2,966,182