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): January 11, 2011

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 January11, 2011, Schmitt Industries, Inc. issued a press release entitled “Schmitt Industries Announces Second Quarter Fiscal 2011 Operating Results; Company Achieves Significant Revenue Growth and Profitability.” 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 Second Quarter Fiscal 2011 Operating Results; Company Achieves Significant Revenue Growth and Profitability” dated January 11, 2011.

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 filed 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.
January 11, 2011	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 Second Quarter Fiscal 2011 Operating Results; Company

Achieves Revenue Growth and Profitability

January 11, 2011 NASDAQ: SMIT

Portland, Oregon – Schmitt Industries, Inc. (NASDAQ: SMIT) today announced its operating results for the second quarter and the first half of Fiscal 2011. Sales for the three months ended November 30, 2010 increased 51.6% to $2,914,447 compared to $1,921,861 for the same period last year. Net income for the second quarter ended November 30, 2010 was $40,892, or $.01 per fully diluted share, compared to net loss of $223,646, or $.08 per fully diluted share, for the same period last year. For the first six months of Fiscal 2011 ended November 30, 2010, sales increased 69.1% to $5,318,914 from $3,145,095 for the six months ended November 30, 2009. The net loss decreased $726,910 to a net loss of $71,733 for the six months ended November 30, 2010 from a net loss of $798,643 for the six months ended November 30, 2009.

Sales in the SBS Balancer segment increased 42.8% to $1,972,050 in the second quarter of Fiscal 2011 compared to $1,380,693 in the second quarter of Fiscal 2010. Sales in the SMS Measurement segment also increased 74.1% to $942,397 for the three months ended November 30, 2010 compared to $541,168 for the same period last year. For the six months ended November 30, 2010, sales in the SBS Balancer segment increased 54.7% to $3,499,467 from $2,262,815 for the same period in the prior year. Sales in the SMS Measurement segment increased 106.2% to $1,819,447 for the six months ended November 30, 2010 from $882,280 for the six months ended November 30, 2009. Sales of the Company’s balancer and laser-based measurement products increased from prior periods due to higher volumes of shipments resulting from improvements in the worldwide manufacturing, industrial and commercial markets for our products.

Gross margins for the second quarter of Fiscal 2011 remained relatively flat at 49.0% as compared to 49.1% for the same period last year. Gross margins for the six months ended November 30, 2010 increased slightly to 47.5% from 47.4% for the six months ended November 30, 2009. This increase is primarily due to changes in the product sales mix shifting towards higher margin products and higher production volumes resulting in improved absorption of labor and overhead. Operating expenses increased 19.8% to $1,389,528 during the three months ended November 30, 2010 as compared to $1,159,777 for the same period in the prior year. Operating expenses increased 13.6% to $2,605,676 for the six months ended November 30, 2010 from $2,293,528 for the six months ended November 30, 2009. This increase is primarily due to higher commissions related to the increase in sales and higher expenses associated with an international trade show that occurs every two years.

“We are pleased with the increase in sales we are seeing across both business segments and the return to profitability. This is also the third consecutive quarter in which we have experienced sales increases in both our SBS Balancer and SMS Measurement segments on a quarter over quarter as well as a sequential basis,” commented Wayne A. Case, CEO of Schmitt Industries.

“As our financial results indicate, we are seeing a gradual recovery in our markets after a long period of decline. During this time period, we have been careful with our expenditures, focusing our resources on new product development and enhancing our sales organization and distribution channel. We believe that we are starting to see the positive results of those investments coupled with the improvement in general market conditions,” commented James A. Fitzhenry, President of Schmitt Industries. “We have worked hard to return the Company to profitability and we will continue to strive to increase profitability in the near term while positioning the Company for long-term growth,” Fitzhenry concluded.

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 vibration detection and 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-based surface measurement products for a wide variety of commercial applications in addition to the disk drive, silicon wafer and optics industries; laser-based distance measurement products for a wide variety of industrial applications; and ultrasonic measurement products that accurately measure the fill levels of large liquefied propane tanks and transmit that data via satellite to a secure web site (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

Certain statements in this release, including but not limited to remarks by Wayne Case and Jim Fitzhenry, 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)

	November 30, 2010			May 31, 2010
ASSETS
Current assets
Cash and cash equivalents	$	3,207,848		$	3,545,986
Accounts receivable, net of allowance of $21,381 and $23,387 at November 30, 2010 and May 31, 2010, respectively		1,559,384			1,144,420
Inventories		3,770,308			3,645,303
Prepaid expenses		193,502			192,167
Income taxes receivable		22,920			21,570
		8,753,962			8,549,446
Property and equipment
Land		299,000			299,000
Buildings and improvements		1,571,868			1,564,880
Furniture, fixtures and equipment		1,084,689			1,059,496
Vehicles		90,452			90,452
		3,046,009			3,013,828
Less accumulated depreciation and amortization		(1,814,033	)		(1,720,880	)
		1,231,976			1,292,948
Other assets
Intangible assets		1,425,457			1,509,711
TOTAL ASSETS	$	11,411,395		$	11,352,105
LIABILITIES & STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	735,927		$	665,044
Accrued commissions		254,907			170,614
Accrued payroll liabilities		154,439			231,390
Other accrued liabilities		182,274			160,717
Total current liabilities		1,327,547			1,227,765
Long-term liabilities		—			3,591
Stockholders’ equity
Common stock, no par value, 20,000,000 shares authorized, 2,894,802 shares issued and outstanding at both November 30, 2010 and May 31, 2010		9,758,569			9,739,391
Accumulated other comprehensive loss		(248,350	)		(264,004	)
Retained earnings		573,629			645,362
Total stockholders’ equity		10,083,848			10,120,749
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	11,411,395		$	11,352,105

SCHMITT INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND SIX MONTHS ENDED NOVEMBER 30, 2010 AND 2009

(UNAUDITED)

	Three Months Ended November 30,					Six Months Ended November 30,
	2010		2009			2010			2009
Net sales	$	2,914,447	$	1,921,861		$	5,318,914		$	3,145,095
Cost of sales		1,485,596		978,914			2,790,317			1,653,059
Gross profit		1,428,851		942,947			2,528,597			1,492,036
Operating expenses:
General, administration and sales		1,276,286		1,032,282			2,383,736			1,992,989
Research and development		113,242		127,495			221,940			300,539
Total operating expenses		1,389,528		1,159,777			2,605,676			2,293,528
Operating income (loss)		39,323		(216,830	)		(77,079	)		(801,492	)
Other income (expense)		5,156		5,468			(166	)		15,133
Income (loss) before income taxes		44,479		(211,362	)		(77,245	)		(786,359	)
Provision (benefit) for income taxes		3,587		12,284			(5,512	)		12,284
Net income (loss)	$	40,892	$	(223,646	)	$	(71,733	)	$	(798,643	)
Earnings (loss) per common share:
Basic	$	0.01	$	(0.08	)	$	(0.02	)	$	(0.28	)
Weighted average number of common shares, basic		2,894,802		2,886,949			2,894,802			2,878,509
Diluted	$	0.01	$	(0.08	)	$	(0.02	)	$	(0.28	)
Weighted average number of common shares, diluted		2,948,102		2,886,949			2,894,802			2,878,509