10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended	September 30, 2015
OR
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-367

THE L. S. STARRETT COMPANY

(Exact name of registrant as specified in its charter)

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

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

Registrant's telephone number, including area code	978-249-3551
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
YES ☒    NO ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, 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 definitions of “accelerated filer,” “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  (Check One):

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

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

YES ☐    NO ☒

Common Shares outstanding as of	October 31, 2015
Class A Common Shares	6,240,805
Class B Common Shares	777,520

1

 THE L. S. STARRETT COMPANY

CONTENTS

				Page No.
Part I.		Financial Information:
		Item 1.	Financial Statements
			Consolidated Balance Sheets – September 30, 2015 (unaudited) and June 30, 2015	3
			Consolidated Statements of Operations – three months ended September 30, 2015 and September 30, 2014 (unaudited)	4
			Consolidated Statements of Comprehensive Loss – three months ended September 30, 2015 and September 30, 2014 (unaudited)	5
			Consolidated Statements of Stockholders' Equity – three months ended September 30, 2015 (unaudited)	6
			Consolidated Statements of Cash Flows - three months ended September 30, 2015 and September 30, 2014 (unaudited)	7
			Notes to Unaudited Consolidated Financial Statements	8-12
		Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	12-14
		Item 3.	Quantitative and Qualitative Disclosures About Market Risk	14
		Item 4.	Controls and Procedures	14
Part II.	Other Information:
	Item 1A.		Risk Factors	14
	Item 6.		Exhibits	15
SIGNATURES				16

2

PART I.                      FINANCIAL INFORMATION

ITEM 1.                      FINANCIAL STATEMENTS

THE L. S. STARRETT COMPANY

Consolidated Balance Sheets

(in thousands except share data)

	September 30, 2015 (unaudited)			June 30, 2015
ASSETS
Current assets:
Cash	$	12,939		$	11,108
Short-term investments		7,565			7,855
Accounts receivable (less allowance for doubtful accounts of $609 and $612, respectively)		29,172			40,311
Inventories		60,090			63,003
Current deferred income tax assets		4,253			4,554
Prepaid expenses and other current assets		6,777			6,582
Total current assets		120,796			133,413
Property, plant and equipment, net		42,867			44,413
Income taxes receivable		3,209			3,383
Deferred income tax assets, net of current portion		18,715			18,803
Intangible assets, net		6,954			7,125
Goodwill		3,034			3,034
Other assets		2,149			2,101
Total assets	$	197,724		$	212,272
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Notes payable and current maturities of long-term debt	$	1,534		$	1,552
Accounts payable		8,853			9,471
Accrued expenses		5,227			7,011
Accrued compensation		4,325			5,565
Total current liabilities		19,939			23,599
Long-term debt, net of current portion		18,773			18,552
Other income tax obligations		4,785			4,607
Deferred income tax liabilities		1,520			1,548
Postretirement benefit and pension obligations		48,838			49,536
Total liabilities		93,855			97,842
Stockholders' equity:
Class A Common stock $1 par (20,000,000 shares authorized; 6,238,575 outstanding at September 30, 2015 and 6,223,558 outstanding at June 30, 2015)		6,238			6,224
Class B Common stock $1 par (10,000,000 shares authorized; 780,776 outstanding at September 30, 2015 and 789,069 outstanding at June 30, 2015)		781			789
Additional paid-in capital		54,964			54,869
Retained earnings		97,282			98,164
Accumulated other comprehensive loss		(55,396	)		(45,616	)
Total stockholders' equity		103,869			114,430
Total liabilities and stockholders’ equity	$	197,724		$	212,272

See Notes to Unaudited Consolidated Financial Statements

3

THE L. S. STARRETT COMPANY

Consolidated Statements of Operations

(in thousands except per share data) (unaudited)

	3 Months Ended
	9/30/2015			9/30/2014
Net sales	$	51,038		$	60,172
Cost of goods sold		35,186			41,029
Gross margin		15,852			19,143
% of Net sales		31.1	%		31.8	%
Selling, general and administrative expenses		15,673			18,077
Operating income		179			1,066
Other income		303			675
Income before income taxes		482			1,741
Income tax expense		660			818
Net income (loss)	$	(178	)	$	923
Basic and diluted income (loss) per share	$	(0.03	)	$	0.13
Weighted average outstanding shares used in per share calculations:
Basic		7,014			6,965
Diluted		7,014			6,999
Dividends per share	$	0.10		$	0.10

See Notes to Unaudited Consolidated Financial Statements

4

THE L. S. STARRETT COMPANY

Consolidated Statements of Comprehensive Loss

 (in thousands) (unaudited)

	3 Months Ended
	9/30/2015			9/30/2014
Net income (loss)	$	(178	)	$	923
Other comprehensive loss:
Translation loss		(9,780	)		(6,948	)
Pension and postretirement plans, net of tax of $0 and $22 respectively		-			(22	)
Other comprehensive loss		(9,780	)		(6,970	)
Total comprehensive loss	$	(9,958	)	$	(6,047	)

5

THE L. S. STARRETT COMPANY

Consolidated Statements of Stockholders' Equity

For the Three Months Ended September 30, 2015

(in thousands except per share data) (unaudited)

	Common Stock Outstanding						Addi- tional Paid-in			Retained			Accumulated Other Com-prehensive
	Class A			Class B			Capital			Earnings			Loss			Total
Balance June 30, 2015	$	6,224		$	789		$	54,869		$	98,164		$	(45,616	)	$	114,430
Total comprehensive loss											(178	)		(9,780	)		(9,958	)
Dividends ($0.10 per share)											(704	)					(704	)
Repurchase of shares		(6	)		(2	)		(99	)								(107	)
Issuance of stock		14						192									206
Stock-based compensation								2									2
Conversion		6			(6	)											-
Balance September 30, 2015	$	6,238		$	781		$	54,964		$	97,282		$	(55,396	)	$	103,869
Accumulated balance consists of:
Translation loss													$	(47,080	)
Pension and postretirement plans, net of taxes														(8,316	)
													$	(55,396	)

See Notes to Unaudited Consolidated Financial Statements

6

THE L. S. STARRETT COMPANY

Consolidated Statements of Cash Flows

(in thousands) (unaudited)

	3 Months Ended
	9/30/2015			9/30/2014
Cash flows from operating activities:
Net income (loss)	$	(178	)	$	923
Non-cash operating activities:
Depreciation		1,558			1,996
Amortization		333			317
Stock-based compensation		144			125
Net long-term tax obligations		433			-
Deferred taxes		42			1,343
Unrealized transaction (gain) loss		42			(1	)
Income from equity method investment		(47	)		(47	)
Working capital changes:
Accounts receivable		6,799			5,825
Inventories		(2,298	)		(3,457	)
Other current assets		(827	)		(1,219	)
Other current liabilities		(868	)		(1,012	)
Postretirement benefit and pension obligations		(271	)		(6	)
Other		(5	)		170
Net cash provided by operating activities		4,857			4,957
Cash flows from investing activities:
Additions to property, plant and equipment		(2,003	)		(1,584	)
Software development		(162	)		(122	)
Purchase of investments		-			(28	)
Net cash used in investing activities		(2,165	)		(1,734	)
Cash flows from financing activities:
Proceeds from short-term borrowings		-			921
Proceeds from long-term borrowings		750			-
Long-term debt repayments		(547	)		(379	)
Proceeds from common stock issued		64			66
Shares purchased		(107	)		(11	)
Dividends paid		(704	)		(697	)
Net cash used in financing activities		(544	)		(100	)
Effect of exchange rate changes on cash		(317	)		(1,033	)
Net increase in cash		1,831			2,090
Cash, beginning of period		11,108			16,233
Cash, end of period	$	12,939		$	18,323
Supplemental cash flow information:
Interest paid	$	163		$	187
Income taxes paid, net		295			897

See Notes to Unaudited Consolidated Financial Statements

7

THE L. S. STARRETT COMPANY

Notes to Unaudited Consolidated Financial Statements

September 30, 2015

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

The balance sheet as of June 30, 2015, which has been derived from audited financial statements, and the unaudited interim financial statements as of and for the three months ended September 30, 2015, 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, 2015.  Operating results are not necessarily indicative of the results that may be expected for any future interim period or for the entire fiscal year.

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

Note 2: Recent Accounting Pronouncements

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

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

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, 2015, there were 20,000 stock options and 76,101 restricted stock units outstanding. In addition, there were 391,600 shares available for grant under the 2012 Stock Plan as of September 30, 2015.

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).

8

No stock options were granted during the three months ended September 30, 2015 and 2014.

The weighted average contractual term for stock options outstanding as of September 30, 2015 was 7.25 years.  The aggregate intrinsic value of stock options outstanding as of September 30, 2015 was $0.1 million. Stock options exercisable as of September 30, 2015 were 13,167.

The Company accounts for stock options and RSU awards by recognizing the expense of the 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 40,200 RSU awards with a fair value of $15.11per RSU granted during the three months ended September 30, 2015. There were 6,333 RSUs settled during the three months ended September 30, 2015.  The aggregate intrinsic value of RSU awards outstanding as of September 30, 2015 was $1.2 million.  As of September 30, 2015 all vested awards had been issued and settled.

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

Compensation expense related to all stock based plans for the three month periods ended September 30, 2015 and 2014 was $0.1 million and $0.1 million, respectively.  As of September 30, 2015, there was $1.2 million of total unrecognized compensation costs related to outstanding stock-based compensation arrangements. Of this cost $0.4 relates to performance based RSU grants that are not expected to be awarded. The remaining $0.8 million is expected to be recognized over a weighted average period of 2.3 years.

Note 4:   Inventories

Inventories consist of the following (in thousands):

	9/30/2015			6/30/2015
Raw material and supplies	$	32,316		$	32,784
Goods in process and finished parts		16,851			18,569
Finished goods		39,094			39,689
		88,261			91,042
LIFO Reserve		(28,171	)		(28,039	)
Inventories	$	60,090		$	63,003

LIFO inventories were $13.5 million and $14.6 million at September 30, 2015 and June 30, 2015, respectively, such amounts being approximately $28.2 million and $28.0 million, respectively, less than if determined on a FIFO basis.  The use of LIFO, as compared to FIFO, resulted in a $0.1 million increase in cost of sales for the three months ended September 30, 2015 compared to a $0.1 million decrease for the three months ended September 30, 2014.

Note 5:   Goodwill and Intangible Assets

Goodwill is measured as the excess of the cost of acquisition over the sum of the amounts assigned to identifiable tangible and intangible assets acquired less liabilities assumed. The Company’s acquisition of Bytewise in 2011 gave rise to goodwill. The Company performs an impairment assessment on an annual basis as of the end of October or more frequently if circumstances warrant. The impairment assessment is a two-step process. The first step requires a comparison of the fair value of the reporting unit to its carrying value. If the carrying value of the reporting unit exceeds the fair value, the second step of the evaluation must be performed. The second step compares the fair value of the reporting unit’s goodwill with the carrying value of the goodwill. If the carrying value of the reporting unit’s goodwill is greater than the implied fair value of its goodwill, an impairment loss will be recognized for the excess.

9

Determining the fair value of a reporting unit is subjective and requires the use of significant estimates and assumptions. With the assistance of an independent third-party appraisal firm, on October 31, 2014, the Company estimated the fair value using an income approach based on the present value of future cash flows. The Company believes this approach yields the most appropriate evidence of fair value. The Company also utilized the comparable company multiples method and market transaction fair value method to validate the fair value amount it obtained using the income approach. The key assumptions utilized in the discounted cash flow model included estimates of future cash flows from operating activities offset by estimated capital expenditures of the reporting unit, the estimated terminal value for the reporting unit, a discount rate based on a weighted average cost of capital, overall economic conditions, and an assessment of current market capitalization. Any unfavorable material changes to these key assumptions could potentially impact the Company’s fair value determinations. As of October 31, 2014, the fair value of the goodwill assessment exceeded the carrying amount by approximately 37%. Therefore no goodwill impairment was recorded. If future results significantly vary from current estimates, related projections, or business assumptions in the future due to changes in industry or market conditions, the Company may be required to record impairment charges.

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

	9/30/2015			6/30/2015
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		1,817			1,655
Other intangible assets		325			325
Total		11,530			11,368
Accumulated amortization		(4,576	)		(4,243	)
Total net balance	$	6,954		$	7,125

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

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

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

2016 (Remainder of year)	$	1,104
2017		1,464
2018		1,396
2019		1,317
2020		794
2021		336
Thereafter		543

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
	9/30/2015			9/30/2014
Service cost	$	714		$	694
Interest cost		1,768			1,690
Expected return on plan assets		(1,594	)		(1,740	)
Amortization of net loss		14			7
	$	902		$	651

10

Net periodic benefit costs for the Company's post-retirement medical plan and life insurance consists of the following (in thousands):

	Three Months Ended
	9/30/2015			9/30/2014
Service cost	$	26		$	28
Interest cost		72			61
Amortization of prior service credit		(195	)		(200	)
Amortization of net loss		4			-
	$	(93	)	$	(111	)

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.

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

Note 7:   Debt

Debt, including capitalized lease obligations, is comprised of the following (in thousands):

	9/30/2015		6/30/2015
Notes payable and current maturities of long term debt
Loan and Security Agreement	$	1,491	$	1,474
Capitalized leases		43		78
		1,534		1,552
Long-term debt
Loan and Security Agreement		18,773		18,552
	$	20,307	$	20,104

The Company completed the negotiations for an amended Loan and Security Agreement and executed the new agreement as of April 25, 2015.  Borrowings under this agreement may not exceed $23.0 million.  The agreement expires on April 30, 2018 and has an interest rate of LIBOR plus 1.5%.  Based upon a new three year term, the Line of Credit has been classified as long-term. As of September 30, 2015, $9.9 million was outstanding on the Line of Credit.

The material financial covenants of the amended Loan and Security Agreement were: 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, 2015.

On November 22, 2011, in conjunction with the Bytewise acquisition, the Company entered into a $15.5 million term loan (the “Term Loan”) under the existing Loan and Security Agreement with TD Bank N.A.  The term loan 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, which had a balance of $10.4 million at September 30, 2015, is subject to the same financial covenants as the Loan and Security Agreement.

The effective interest rate on the Line of Credit under the Loan and Security Agreement for the three months ended September 30, 2015 and 2014 was 2.1% and 2.0%, respectively.

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.

11

The tax expense for the first quarter of fiscal 2016 was $660,000 on a profit before tax of $482,000 (an effective tax rate of 136.9%). The tax expense for the first quarter of fiscal 2015 was $818,000 on a profit before tax for the quarter of $1,741,000 (an effective tax rate of 47.0%). The tax rate is higher than the U.S. statutory rate primarily due to losses in some foreign jurisdictions for which no tax benefit is recognized. In the first quarter of fiscal 2016, there was a discrete reduction to tax expense of $54,000 related to return to provision adjustments in the United Kingdom (UK). In the first quarter of fiscal 2015, there was a discrete reduction to tax expense of $75,000 related to use of tax loss carryforwards and the reduction of the tax liability for audits related to the expiration of the statute of limitations.

U.S. Federal tax returns through fiscal 2011 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, 2015, the Company has substantially resolved all open income tax audits and there were no other local or federal income tax audits in progress. In international jurisdictions including Australia, Brazil, Canada, China, Germany, Mexico, New Zealand, Singapore and the UK, which comprise a significant portion of the Company’s operations, the years that may be examined vary by country. The Company’s most significant foreign subsidiary in Brazil is subject to audit for the calendar years 2010 – 2014. During the next twelve months, it is possible that the Company will recognize a reduction of $0.4 million in its long term tax obligations due to the lapse of the applicable statute of limitations.

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

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

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.

ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

Three months Ended September 30, 2015 and September 30, 2014

Overview

As a multi-national company, our business operations are subject to global political, economic and currency volatility. Over the past quarter, the Company’s domestic business was hurt by slowdowns in the oil and agricultural sectors, while the results from our international operations, particularly in Brazil and China, were negatively impacted by both significant economic challenges and currency devaluations. Management has implemented pricing and cost changes to address these issues, but has minimal control over currency fluctuations.

Net sales declined $9.2 million or 15%. Operating income also declined $0.9 million as $3.3 million gross margin erosion was only partially offset by a $2.4 million decrease in selling, general and administrative expenses. Net income declined $1.1 million from income of $0.9 million or $0.13 per share in fiscal 2015 to a loss of $0.2 million or ($0.03) per share in fiscal 2016.

12

Net Sales

North American sales declined $1.9 million or 6% from $34.3 million in fiscal 2015 to $32.4 million in fiscal 2016 as a 9% drop in precision hand tool sales more than offset continued growth in capital equipment shipments of 11%. International sales declined $7.3 million or 28% from $25.9 million in fiscal 2015 to $18.6 million in fiscal 2016 principally due to a recession in Brazil and a currency weakening of the Brazilian Real. The devaluation of the Brazilian currency represented $5.5 million or 75% of the international sales decline.

Gross Margin

Gross margin declined $3.3 million from $19.1 million in fiscal 2015 to $15.8 million in fiscal 2016. North American fiscal 2016 gross margin of $10.2 million was a $0.2 million decline compared with fiscal 2015 principally due to lower sales which was partially offset by a favorable product mix related to sales growth in higher margin capital equipment. International gross margins declined $3.1 million to $5.7 million due to sales decline and currency devaluation representing $1.4 and $1.7 million, respectively.

Selling, General and Administrative Expenses

Selling, general and administrative expenses decreased $2.4 million or 13% with currency accounting for 90% of the reduction. North American expenses decreased $0.6 million due to reduced information technology expenses and professional fees. International expenses decreased $1.8 million as higher selling expenses were offset by a $2.2 reduction related to currency.

Other Income

Other Income declined $0.4 million from $0.7 million in fiscal 2015 to $0.3 million in fiscal 2016 as the devaluation of the Chinese Yuan in fiscal 2016 increased China’s dollar denominated liabilities which were partially offset by gains related to the stronger U. S. dollar for dollar denominated assets, primarily accounts receivables related to export sales.

Income Tax Expense

The effective tax rates for the first quarter of fiscal 2016 and 2015 were 136.9% and 47.0%, respectively. The quarterly tax rate increased in both years due to losses in some foreign subsidiaries for which no tax benefit is recognized.

Net Income (Loss)

The Company recorded a net loss of $0.2 million or ($0.03) per share in the first quarter of fiscal 2016 compared to net earnings of $0.9 million or $0.13 per share in fiscal 2015 principally due to lower revenue and gross margins only partially offset by reduced selling, general and administrative expenses.

LIQUIDITY AND CAPITAL RESOURCES

Cash flows (in thousands)	Three months Ended
	9/30/2015			9/30/2014
Cash provided by operating activities	$	4,857		$	4,957
Cash used in investing activities		(2,165	)		(1,734	)
Cash used in financing activities		(544	)		(100	)
Effect of exchange rate changes on cash		(317	)		(1,033	)
Net increase in cash	$	1,831		$	2,090

Net cash increased $1.8 million as improved working capital management was sufficient to offset outflows for capital equipment, debt, dividends and unfavorable exchanges rates. The $0.3 million reduction in cash flow compared to the same period one year ago was primarily due to reduced profitability and higher capital expenditures.

13

Liquidity and Credit Arrangements

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

The effective interest rate on the short term borrowings under the Loan and Security Agreement during the three months ended September 30, 2015 was 2.07%.

OFF-BALANCE SHEET ARRANGEMENTS

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

ITEM 3.             QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

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

ITEM 4.             CONTROLS AND PROCEDURES

The Company's management, under the supervision and with the participation of the Company's President and Chief Executive Officer and Chief Financial Officer, has evaluated the Company's disclosure controls and procedures as of September 30, 2015, and they have concluded that our disclosure controls and procedures were effective as of such date. All information required to be filed in this report was recorded, processed, summarized and reported within the time period required by the rules and regulations of the Securities and Exchange Commission, and such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of September 30, 2015, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective.

There have been no changes in internal control over financial reporting that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting during the quarter ended September 30, 2015..

PART II.            OTHER INFORMATION

ITEM 1A.          RISK FACTORS

SAFE HARBOR STATEMENT

UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

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

14

ITEM 6.             EXHIBITS

31a Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.

31b Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.

32 Certifications of the Principal Executive Officer and the Principal Financial Officer pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

10.1 The L.S. Starrett Company 2012 Long-Term Incentive Plan (incorporated by reference to Exhibit 4.2 to The L.S. Starrett Company’s Registration Statement on Form S-8 (File No. 333-184934) filed November 14, 2012).

101 The following materials from The L. S. Starrett Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2015 are furnished herewith, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Comprehensive Loss, (iv) the Consolidated Statement of Stockholders' Equity, (v) the Consolidated Statements of Cash Flows, and (vi) Notes to Consolidated Financial Statements, tagged as blocks of text.

15

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 thereunto duly authorized.

		THE L. S. STARRETT COMPANY (Registrant)
Date	November 4, 2015	/S/R. Douglas A. Starrett
		Douglas A. Starrett - President and CEO (Principal Executive Officer)
Date	November 4, 2015	/S/R. Francis J. O’Brien
		Francis J. O’Brien - Treasurer and CFO (Principal Accounting Officer)

16

EX-31.A

EXHIBIT 31.a

CERTIFICATIONS

I, Douglas A. Starrett, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of The L.S. Starrett Company;

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;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial report; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 4, 2015	/S/	Douglas A. Starrett
		Douglas A. Starrett Chief Executive Officer

EX-31.B

EXHIBIT 31.b

CERTIFICATIONS

I, Francis J. O’Brien, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of The L.S. Starrett Company;

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;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial report; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 4, 2015	/S/	Francis J. O’Brien
		Francis J. O’Brien Chief Financial Officer

EX-32

EXHIBIT 32

CERTIFICATIONS

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), each of the undersigned officers of The L.S. Starrett Company, a Massachusetts corporation (the "Company"), does hereby certify, to such officer's knowledge, that:

The Quarterly Report on Form 10-Q for the quarter ended September 30, 2014 (the "Form 10-Q") of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date	November 4, 2015	/S/ Douglas A. Starrett
		Douglas A. Starrett Chief Executive Officer
Date	November 4, 2015	/S/ Francis J. O’Brien
		Francis J. O’Brien Chief Financial Officer

The foregoing certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code) and is not being filed as part of the Form 10-Q or as a separate disclosure document.

A signed original of this written statement required by Section 906 has been provided to The L.S. Starrett Company and will be retained by The L.S. Starrett Company and furnished to the Securities and Exchange Commission or its staff upon request.

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Note 7 - Debt Schedule (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Jun. 30, 2015
Notes payable and current maturities of long term debt
Loan and Security Agreement	$ 1,491	$ 1,474
Capitalized leases	43	78
	1,534	1,552
Long-term debt
Loan and Security Agreement	18,773	18,552
	$ 20,307	$ 20,104

XML

Note 4 - Inventories (Details Textual) - USD ($) $ in Millions	3 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Jun. 30, 2015
Cost of Sales [Member]
Inventory, LIFO Reserve, Effect on Income, Net	$ 0.1	$ (0.1)
LIFO Inventory Amount	13.5		$ 14.6
Inventory Difference Using FIFO Basis	$ 28.2		$ 28.0

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Cash flows from operating activities:
Net income (loss)	$ (178)	$ 923
Non-cash operating activities:
Depreciation	1,558	1,996
Amortization	333	317
Stock-based compensation	144	$ 125
Net long-term tax obligations	433
Deferred taxes	42	$ 1,343
Unrealized transaction (gain) loss	42	(1)
Income from equity method investment	(47)	(47)
Working capital changes:
Accounts receivable	6,799	5,825
Inventories	(2,298)	(3,457)
Other current assets	(827)	(1,219)
Other current liabilities	(868)	(1,012)
Postretirement benefit and pension obligations	(271)	(6)
Other	(5)	170
Net cash provided by operating activities	4,857	4,957
Cash flows from investing activities:
Additions to property, plant and equipment	(2,003)	(1,584)
Software development	$ (162)	(122)
Purchase of investments		(28)
Net cash used in investing activities	$ (2,165)	(1,734)
Cash flows from financing activities:
Proceeds from short-term borrowings		$ 921
Proceeds from long-term borrowings	$ 750
Long-term debt repayments	(547)	$ (379)
Proceeds from common stock issued	64	66
Shares purchased	(107)	(11)
Dividends paid	(704)	(697)
Net cash used in financing activities	(544)	(100)
Effect of exchange rate changes on cash	(317)	(1,033)
Net increase in cash	1,831	2,090
Cash, beginning of period	11,108	16,233
Cash, end of period	12,939	18,323
Supplemental cash flow information:
Interest paid	163	187
Income taxes paid, net	$ 295	$ 897

XML

Note 5 - Estimated Aggregate Amortization Expense (Details) $ in Thousands	Sep. 30, 2015 USD ($)
2016 (Remainder of year)	$ 1,104
2017	1,464
2018	1,396
2019	1,317
2020	794
2021	336
Thereafter	$ 543

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Note 5 - Finite-lived Intangible Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2015	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	1,817	1,655
Other Intangible Assets [Member]
Intangible assets, gross	325	325
Intangible assets, gross	11,530	11,368
Accumulated amortization	(4,576)	(4,243)
Total net balance	$ 6,954	$ 7,125

XML

Note 6 - Net Periodic Costs (Details) - Pension Plan [Member] - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Service cost	$ 714	$ 694
Interest cost	1,768	1,690
Expected return on plan assets	(1,594)	(1,740)
Amortization of net loss	14	7
	$ 902	$ 651

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Note 6 - 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, 2015	Sep. 30, 2014
Service cost	$ 26	$ 28
Interest cost	72	61
Amortization of prior service credit	(195)	$ (200)
Amortization of net loss	4
	$ (93)	$ (111)

XML

Consolidated Statements of Stockholders' Equity (Unaudited) (Parentheticals)	3 Months Ended
	Sep. 30, 2015 $ / shares
Retained Earnings [Member]
Dividends per share declared (in dollars per share)	$ 0.10
Dividends per share declared (in dollars per share)	$ 0.10

XML

Note 7 - Debt (Details Textual)			3 Months Ended
	Apr. 25, 2015	Nov. 22, 2011 USD ($) Rate	Sep. 30, 2015 USD ($)	Sep. 30, 2014
London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument, Basis Spread on Variable Rate			1.50%
Line of Credit [Member]
Debt Instrument, Term	3 years
Term Loan [Member]
Debt Instrument, Term		10 years
Long-term Line of Credit			$ 10,400,000
Debt Instrument, Face Amount		$ 15,500,000
Debt Instrument, Interest Rate, Stated Percentage | Rate		4.50%
Line of Credit Facility, Periodic Payment		$ 160,640
Amended Agreement [Member] | Maximum [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
Long-term Line of Credit			9,900,000
Minimum Consolidated Cash and Liquid Investments Pursuant to New Loan and Security Agreement			$ 10,000,000
Line of Credit Facility, Interest Rate During Period			2.10%	2.00%

XML

Consolidated Balance Sheets (Current Period Unaudited) - USD ($) $ in Thousands	Sep. 30, 2015	Jun. 30, 2015
Common Class A [Member]
Stockholders' equity:
Common stock	$ 6,238	$ 6,224
Common Class B [Member]
Stockholders' equity:
Common stock	781	789
Cash	12,939	11,108
Short-term investments	7,565	7,855
Accounts receivable (less allowance for doubtful accounts of $609 and $612, respectively)	29,172	40,311
Inventories	60,090	63,003
Current deferred income tax assets	4,253	4,554
Prepaid expenses and other current assets	6,777	6,582
Total current assets	120,796	133,413
Property, plant and equipment, net	42,867	44,413
Income taxes receivable	3,209	3,383
Deferred income tax assets, net of current portion	18,715	18,803
Intangible assets, net	6,954	7,125
Goodwill	3,034	3,034
Other assets	2,149	2,101
Total assets	197,724	212,272
Notes payable and current maturities of long-term debt	1,534	1,552
Accounts payable	8,853	9,471
Accrued expenses	5,227	7,011
Accrued compensation	4,325	5,565
Total current liabilities	19,939	23,599
Long-term debt, net of current portion	18,773	18,552
Other income tax obligations	4,785	4,607
Deferred income tax liabilities	1,520	1,548
Postretirement benefit and pension obligations	48,838	49,536
Total liabilities	93,855	97,842
Additional paid-in capital	54,964	54,869
Retained earnings	97,282	98,164
Accumulated other comprehensive loss	(55,396)	(45,616)
Total stockholders' equity	103,869	114,430
Total liabilities and stockholders’ equity	$ 197,724	$ 212,272

XML

Consolidated Statements of Comprehensive Income (Loss) (Unaudited) (Parentheticals) - USD ($)	3 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Pension and postretirement plans, tax	$ 0	$ 22,000

XML

Note 6 - Pension and Post-retirement Benefits (Tables)

3 Months Ended

Sep. 30, 2015

Post Retirement Medical and Life Insurance Plan [Member]

Notes Tables

Schedule of Net Benefit Costs [Table Text Block]

	Three Months Ended
	9/30/2015			9/30/2014
Service cost	$	26		$	28
Interest cost		72			61
Amortization of prior service credit		(195	)		(200	)
Amortization of net loss		4			-
	$	(93	)	$	(111	)

Schedule of Net Benefit Costs [Table Text Block]

	Three Months Ended
	9/30/2015			9/30/2014
Service cost	$	714		$	694
Interest cost		1,768			1,690
Expected return on plan assets		(1,594	)		(1,740	)
Amortization of net loss		14			7
	$	902		$	651

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Note 3 - Stock-based Compensation (Details Textual) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Employee Stock Option [Member] | Minimum [Member] | The 2012 Stock Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	1 year
Employee Stock Option [Member] | Maximum [Member] | The 2012 Stock Incentive Plan [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, 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, Options, Outstanding, Weighted Average Remaining Contractual Term	7 years 91 days
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Intrinsic Value	$ 0.1
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number	13,167
Restricted Stock Units (RSUs) [Member] | Minimum [Member] | The 2012 Stock Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	1 year
Restricted Stock Units (RSUs) [Member] | Maximum [Member] | The 2012 Stock Incentive Plan [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, Non-Option Equity Instruments, Outstanding, Number	76,101
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period	40,200
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value	$ 15.11
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period	6,333
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Aggregate Intrinsic Value	$ 1.2
The 2012 Stock Incentive Plan [Member] | Total Unrecognized Compensation Including Portion Relating to Grants Not Expected to Be Awarded [Member]
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized	1.2
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	$ 0.4
The 2012 Stock Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant	391,600
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized	$ 0.8
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition	2 years 109 days
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, Number of Shares Authorized	500,000
Allocated Share-based Compensation Expense	$ 0.1	$ 0.1

XML

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:
						$ (45,616)
Balance at Jun. 30, 2015	$ 6,224	$ 789	$ 54,869	$ 98,164	$ (45,616)	114,430
Total comprehensive loss				(178)	$ (9,780)	(9,958)
Dividends ($0.10 per share)				$ (704)		(704)
Repurchase of shares	$ (6)	$ (2)	$ (99)			(107)
Issuance of stock	$ 14		192			206
Stock-based compensation			$ 2			$ 2
Conversion	$ 6	$ (6)
Balance at Sep. 30, 2015	$ 6,238	$ 781	$ 54,964	$ 97,282	$ (55,396)	$ 103,869
Accumulated balance consists of:
Translation loss					(47,080)
Pension and postretirement plans, net of taxes					(8,316)
					$ (55,396)	$ (55,396)

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Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($) $ in Thousands	Sep. 30, 2015	Jun. 30, 2015
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)	6,238,575	6,223,558
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)	780,776	789,069
Allowance for doubtful accounts	$ 609	$ 612

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Note 8 - Income Taxes

3 Months Ended

Sep. 30, 2015

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 2016 was $660,000 on a profit before tax of $482,000 (an effective tax rate of 136.9%). The tax expense for the first quarter of fiscal 2015 was $818,000 on a profit before tax for the quarter of $1,741,000 (an effective tax rate of 47.0%). The tax rate is higher than the U.S. statutory rate primarily due to losses in some foreign jurisdictions for which no tax benefit is recognized. In the first quarter of fiscal 2016, there was a discrete reduction to tax expense of $54,000 related to return to provision adjustments in the United Kingdom (UK). In the first quarter of fiscal 2015, there was a discrete reduction to tax expense of $75,000 related to use of tax loss carryforwards and the reduction of the tax liability for audits related to the expiration of the statute of limitations.

U.S. Federal tax returns through fiscal 2011 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, 2015, the Company has substantially resolved all open income tax audits and there were no other local or federal income tax audits in progress. In international jurisdictions including Australia, Brazil, Canada, China, Germany, Mexico, New Zealand, Singapore and the UK, which comprise a significant portion of the Company’s operations, the years that may be examined vary by country. The Company’s most significant foreign subsidiary in Brazil is subject to audit for the calendar years 2010 – 2014. During the next twelve months, it is possible that the Company will recognize a reduction of $0.4 million in its long term tax obligations due to the lapse of the applicable statute of limitations.

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

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

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Document And Entity Information - shares	3 Months Ended
	Sep. 30, 2015	Oct. 31, 2015
Common Class A [Member]
Entity Common Stock, Shares Outstanding (in shares)		6,240,805
Common Class B [Member]
Entity Common Stock, Shares Outstanding (in shares)		777,520
Entity Registrant Name	STARRETT L S CO
Entity Central Index Key	0000093676
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, 2015
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q1
Amendment Flag	false

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Note 9 - Contingencies

3 Months Ended

Sep. 30, 2015

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.

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Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands	3 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Net sales	$ 51,038,000	$ 60,172,000
Cost of goods sold	35,186,000	41,029,000
Gross margin	$ 15,852,000	$ 19,143,000
% of Net sales	31.10%	31.80%
Selling, general and administrative expenses	$ 15,673,000	$ 18,077,000
Operating income	179,000	1,066,000
Other income	303,000	675,000
Income before income taxes	482,000	1,741,000
Income tax expense	660,000	818,000
Net income (loss)	$ (178,000)	$ 923,000
Basic and diluted income (loss) per share (in dollars per share)	$ (0.03)	$ 0.13
Weighted average outstanding shares used in per share calculations:
Basic (in shares)	7,014	6,965
Diluted (in shares)	7,014	6,999
Dividends per share declared (in dollars per share)	$ 0.10	$ 0.10

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Note 3 - Stock-based Compensation

3 Months Ended

Sep. 30, 2015

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, 2015, there were 20,000 stock options and 76,101 restricted stock units outstanding. In addition, there were 391,600 shares available for grant under the 2012 Stock Plan as of September 30, 2015.

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, 2015 and 2014.

The weighted average contractual term for stock options outstanding as of

September 30, 2015 was 7.25 years.  The aggregate intrinsic value of stock options outstanding as of

September 30, 2015 was $0.1 million. Stock options exercisable as of

September 30, 2015 were 13,167.

The Company accounts for stock options and RSU awards by recognizing the expense of the 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 40,200 RSU awards with a fair value of $15.11per RSU granted during the three months ended September 30, 2015. There were 6,333 RSUs settled during the three months ended September 30, 2015.  The aggregate intrinsic value of RSU awards outstanding as of September 30, 2015 was $1.2 million.  As of September 30, 2015 all vested awards had been issued and settled.

On February 5, 2013, the Board of Directors adopted The L.S. Starrett Company 2013 Employee Stock Ownership Plan (the “2013 ESOP”).

The purpose of the plan is to supplement existing Company programs through an employer funded individual account plan dedicated to investment in common stock of the Company, thereby encouraging increased ownership of the Company while providing an additional source of retirement income.  The plan is intended as an employee stock ownership plan within the meaning of Section 4975 (e) (7) of the Internal Revenue Code of 1986, as amended. U.S. employees who have completed a year of service are eligible to participate.

Compensation expense related to all stock based plans for the three month periods ended September 30, 2015 and 2014 was $0.1 million and $0.1 million, respectively.  As of September 30, 2015, there was $1.2 million of total unrecognized compensation costs related to outstanding stock-based compensation arrangements. Of this cost $0.4 relates to performance based RSU grants that are not expected to be awarded. The remaining $0.8 million is expected to be recognized over a weighted average period of 2.3 years.

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Note 2 - Recent Accounting Pronouncements

3 Months Ended

Sep. 30, 2015

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 and early adoption is not permitted. The Company expects to adopt this standard on July 1, 2018. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements.

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

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Note 7 - Debt (Tables)

3 Months Ended

Sep. 30, 2015

Notes Tables

Schedule of Debt [Table Text Block]

	9/30/2015		6/30/2015
Notes payable and current maturities of long term debt
Loan and Security Agreement	$	1,491	$	1,474
Capitalized leases		43		78
		1,534		1,552
Long-term debt
Loan and Security Agreement		18,773		18,552
	$	20,307	$	20,104

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Significant Accounting Policies (Policies)

3 Months Ended

Sep. 30, 2015

Accounting Policies [Abstract]

Basis of Accounting, Policy [Policy Text Block]

The balance sheet as of June 30, 2015, which has been derived from audited financial statements, and the unaudited interim financial statements as of and for the three months ended September 30, 2015, 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, 2015.  Operating results are not necessarily indicative of the results that may be expected for any future interim period or for the entire fiscal year.

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make judgments, assumptions and estimates that affect amounts reported in the consolidated financial statements and accompanying notes.  Note 2 to the Company’s Consolidated Financial Statements included in the Annual Report on Form 10-K for the year ended June 30, 2015 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 and early adoption is not permitted. The Company expects to adopt this standard on July 1, 2018. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements.

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

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Note 6 - Pension and Post-retirement Benefits

3 Months Ended

Sep. 30, 2015

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
	9/30/2015			9/30/2014
Service cost	$	714		$	694
Interest cost		1,768			1,690
Expected return on plan assets		(1,594	)		(1,740	)
Amortization of net loss		14			7
	$	902		$	651

Net periodic benefit costs for the Company's post-retirement medical plan and life insurance consists of the following (in thousands):

	Three Months Ended
	9/30/2015			9/30/2014
Service cost	$	26		$	28
Interest cost		72			61
Amortization of prior service credit		(195	)		(200	)
Amortization of net loss		4			-
	$	(93	)	$	(111	)

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.

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

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Note 4 - Inventories

3 Months Ended

Sep. 30, 2015

Notes to Financial Statements

Inventory Disclosure [Text Block]

Note 4:   Inventories

Inventories consist of the following (in thousands):

	9/30/2015			6/30/2015
Raw material and supplies	$	32,316		$	32,784
Goods in process and finished parts		16,851			18,569
Finished goods		39,094			39,689
		88,261			91,042
LIFO Reserve		(28,171	)		(28,039	)
Inventories	$	60,090		$	63,003

LIFO inventories were $13.5 million and $14.6 million at September 30, 2015 and June 30, 2015, respectively, such amounts being approximately $28.2 million and $28.0 million, respectively, less than if determined on a FIFO basis.  The use of LIFO, as compared to FIFO, resulted in a $0.1 million increase in cost of sales for the three months ended September 30, 2015 compared to a $0.1 million decrease for the three months ended September 30, 2014.

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Note 5 - Goodwill and Intangible Assets

3 Months Ended

Sep. 30, 2015

Notes to Financial Statements

Goodwill and Intangible Assets Disclosure [Text Block]

Note 5:   Goodwill and Intangible Assets

Goodwill is measured as the excess of the cost of acquisition over the sum of the amounts assigned to identifiable tangible and intangible assets acquired less liabilities assumed. The Company’s acquisition of Bytewise in 2011 gave rise to goodwill. The Company performs an impairment assessment on an annual basis as of the end of October or more frequently if circumstances warrant. The impairment assessment is a two-step process. The first step requires a comparison of the fair value of the reporting unit to its carrying value. If the carrying value of the reporting unit exceeds the fair value, the second step of the evaluation must be performed. The second step compares the fair value of the reporting unit’s goodwill with the carrying value of the goodwill. If the carrying value of the reporting unit’s goodwill is greater than the implied fair value of its goodwill, an impairment loss will be recognized for the excess.

Determining the fair value of a reporting unit is subjective and requires the use of significant estimates and assumptions. With the assistance of an independent third-party appraisal firm, on October 31, 2014, the Company estimated the fair value using an income approach based on the present value of future cash flows. The Company believes this approach yields the most appropriate evidence of fair value. The Company also utilized the comparable company multiples method and market transaction fair value method to validate the fair value amount it obtained using the income approach. The key assumptions utilized in the discounted cash flow model included estimates of future cash flows from operating activities offset by estimated capital expenditures of the reporting unit, the estimated terminal value for the reporting unit, a discount rate based on a weighted average cost of capital, overall economic conditions, and an assessment of current market capitalization. Any unfavorable material changes to these key assumptions could potentially impact the Company’s fair value determinations. As of October 31, 2014, the fair value of the goodwill assessment exceeded the carrying amount by approximately 37%.

Therefore no goodwill impairment was recorded. If future results significantly vary from current estimates, related projections, or business assumptions in the future due to changes in industry or market conditions, the Company may be required to record impairment charges.

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

	9/30/2015			6/30/2015
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		1,817			1,655
Other intangible assets		325			325
Total		11,530			11,368
Accumulated amortization		(4,576	)		(4,243	)
Total net balance	$	6,954		$	7,125

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

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

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

2016 (Remainder of year)	$	1,104
2017		1,464
2018		1,396
2019		1,317
2020		794
2021		336
Thereafter		543

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Note 7 - Debt

3 Months Ended

Sep. 30, 2015

Notes to Financial Statements

Debt Disclosure [Text Block]

Note 7:   Debt

Debt, including capitalized lease obligations, is comprised of the following (in thousands):

	9/30/2015		6/30/2015
Notes payable and current maturities of long term debt
Loan and Security Agreement	$	1,491	$	1,474
Capitalized leases		43		78
		1,534		1,552
Long-term debt
Loan and Security Agreement		18,773		18,552
	$	20,307	$	20,104

The Company completed the negotiations for an amended Loan and Security Agreement and executed the new agreement as of April 25, 2015.  Borrowings under this agreement may not exceed $23.0 million.  The agreement expires on April 30, 2018 and has an interest rate of LIBOR plus 1.5%.  Based upon a new three year term, the Line of Credit has been classified as long-term. As of September 30, 2015, $9.9 million was outstanding on the Line of Credit.

The material financial covenants of the amended Loan and Security Agreement were: 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, 2015.

On November 22, 2011, in conjunction with the Bytewise acquisition, the Company entered into a $15.5 million term loan (the “Term Loan”) under the existing Loan and Security Agreement with TD Bank N.A.  The term loan 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, which had a balance of $10.4 million at September 30, 2015, is subject to the same financial covenants as the Loan and Security Agreement.

The effective interest rate on the Line of Credit under the Loan and Security Agreement for the three months ended September 30, 2015 and 2014 was 2.1% and 2.0%, respectively.

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Note 8 - Income Taxes (Details Textual) - USD ($)	3 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Deferred Tax Assets, Valuation Allowance	$ 0
Income Tax Expense (Benefit)	660,000	$ 818,000
Income (Loss) from Continuing Operations before Income Taxes, Extraordinary Items, Noncontrolling Interest	$ 482,000	$ 1,741,000
Effective Income Tax Rate Reconciliation, Percent	136.90%	47.00%
Effective Income Tax Rate Reconciliation, Change in Enacted Tax Rate, Amount, Return to Provision Adjustment	$ 54,000
Effective Income Tax Rate Reconciliation, Change in Enacted Tax Rate, Amount, Use of Tax Loss Carryforwards	75,000
Decrease in Unrecognized Tax Benefits is Reasonably Possible	$ 400,000

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Note 5 - Goodwill and Intangible Assets (Tables)

3 Months Ended

Sep. 30, 2015

Notes Tables

Schedule of Finite-Lived Intangible Assets [Table Text Block]

	9/30/2015			6/30/2015
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		1,817			1,655
Other intangible assets		325			325
Total		11,530			11,368
Accumulated amortization		(4,576	)		(4,243	)
Total net balance	$	6,954		$	7,125

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block]

2016 (Remainder of year)	$	1,104
2017		1,464
2018		1,396
2019		1,317
2020		794
2021		336
Thereafter		543

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Note 4 - Inventory (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Jun. 30, 2015
Raw material and supplies	$ 32,316	$ 32,784
Goods in process and finished parts	16,851	18,569
Finished goods	39,094	39,689
	88,261	91,042
LIFO Reserve	(28,171)	(28,039)
Inventories	$ 60,090	$ 63,003

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Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Net income (loss)	$ (178)	$ 923
Other comprehensive loss:
Translation loss	$ (9,780)	(6,948)
Pension and postretirement plans, net of tax of $0 and $22 respectively		(22)
Other comprehensive loss	$ (9,780)	(6,970)
Total comprehensive loss	$ (9,958)	$ (6,047)

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Note 1 - Basis of Presentation and Summary of Significant Accounting Policies

3 Months Ended

Sep. 30, 2015

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 balance sheet as of June 30, 2015, which has been derived from audited financial statements, and the unaudited interim financial statements as of and for the three months ended September 30, 2015, 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, 2015.  Operating results are not necessarily indicative of the results that may be expected for any future interim period or for the entire fiscal year.

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

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Note 5 - Goodwill and Intangible Assets (Details Textual)	3 Months Ended
	Sep. 30, 2015 USD ($)
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
Goodwill, Impairment Loss	$ 0
Reporting Unit, Percentage of Fair Value in Excess of Carrying Amount	37.00%

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Note 4 - Inventories (Tables)

3 Months Ended

Sep. 30, 2015

Notes Tables

Schedule of Inventory, Current [Table Text Block]

	9/30/2015			6/30/2015
Raw material and supplies	$	32,316		$	32,784
Goods in process and finished parts		16,851			18,569
Finished goods		39,094			39,689
		88,261			91,042
LIFO Reserve		(28,171	)		(28,039	)
Inventories	$	60,090		$	63,003