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

----

|                                                                                   |   | March 26, |    |   | June 30, |   |
|----------------------------------------------------------------------------------------|--------|-----------|---------|--------|----------|--------|
|                                                                                   |   | 2010      |    |   | 2009     |   |
| Assets                                                                                 |   |      |    |   |     |   |
| Current assets:                                                                        |   |      |    |   |     |   |
| Cash                                                                                   |   | $         | 14,533  |   |     | $      | 13,266 |   |
| Trade accounts receivable, net                                                         |   |      | 42,211  |   |     |   | 53,367 |   |
| Inventories, net                                                                       |   |      | 79,083  |   |     |   | 92,331 |   |
| Deferred income taxes                                                                  |   |      | 5,413   |   |     |   | 6,280 |   |
| Other                                                                                  |   |      | 7,298   |   |     |   | 8,677 |   |
| Total current assets                                                                   |   |      | 148,538 |   |     |   | 173,921 |   |
|                                                                                   |   |      |    |   |     |   |   |   |
| Property, plant and equipment, net                                                     |   |      | 61,059  |   |     |   | 65,799 |   |
| Goodwill, net                                                                          |   |      | 17,228  |   |     |   | 17,509 |   |
| Deferred income taxes                                                                  |   |      | 14,053  |   |     |   | 14,386 |   |
| Intangible assets, net                                                                 |   |      | 7,039   |   |     |   | 7,855 |   |
| Other assets                                                                           |   |      | 6,309   |   |     |   | 6,095 |   |
|                                                                                   |   |      |    |   |     |   |   |   |
| Total assets                                                                           |   | $         | 254,226 |   |     | $      | 285,565 |   |
|                                                                                   |   |      |    |   |     |   |   |   |
| Liabilities and Equity                                                                 |   |      |    |   |     |   |   |   |
| Current liabilities:                                                                   |   |      |    |   |     |   |   |   |
| Short-term borrowings and current maturities of long-term debt                         |   | $         | 3,978   |   |     | $      | 4,421 |   |
| Accounts payable                                                                       |   |      | 22,949  |   |     |   | 24,864 |   |
| Accrued liabilities                                                                    |   |      | 28,784  |   |     |   | 40,967 |   |
| Total current liabilities                                                              |   |      | 55,711  |   |     |   | 70,252 |   |
|                                                                                   |   |      |    |   |     |   |   |   |
| Long-term debt                                                                         |   |      | 31,122  |   |     |   | 46,348 |   |
| Accrued retirement benefits                                                            |   |      | 60,754  |   |     |   | 60,241 |   |
| Other long-term                                                                        |   |      | 2,498   |   |     |   | 899 |   |
|                                                                                   |   |      |    |   |     |   |   |   |
| Total liabilities                                                                      |   |      | 150,085 |   |     |   | 177,740 |   |
|                                                                                   |   |      |    |   |     |   |   |   |
| Equity                                                                                 |   |      |    |   |     |   |   |   |
| Twin Disc shareholders’ equity:                                                  |   |      |    |   |     |   |   |   |
| Common shares authorized: 30,000,000;                                                  |   |      |    |   |     |   |   |   |
| issued: 13,099,468; no par value                                                       |   |      | 10,592  |   |     |   | 13,205 |   |
| Retained earnings                                                                      |   |      | 146,462 |   |     |   | 150,257 |   |
| Accumulated other comprehensive loss                                                   |   |      | (26,082 | )      |     |   | (26,218 | ) |
|                                                                                   |   |      | 130,972 |   |     |   | 137,244 |   |
| Less treasure stock, at cost  (1,907,642 and 2,070,124 shares, respectively) |   |      | 27,690  |   |     |   | 30,256 |   |
|                                                                                   |   |      |    |   |     |   |   |   |
| Total Twin Disc shareholders' equity                                                   |   |      | 103,282 |   |     |   | 106,988 |   |
|                                                                                   |   |      |    |   |     |   |   |   |
| Noncontrolling interest                                                                |   |      | 859     |   |     |   | 837 |   |
|                                                                                   |   |      |    |   |     |   |   |   |
| Total equity                                                                           |   |      | 104,141 |   |     |   | 107,825 |   |
|                                                                                   |   |      |    |   |     |   |   |   |
| Total liabilities and equity                                                           |   | $         | 254,226 |   |     | $      | 285,565 |   |

----

|                                                                                          |   | Three Months Ended |   |   | Nine Months Ended |   |
|-----------------------------------------------------------------------------------------------|--------|--------------------|--------|--------|-------------------|--------|
|                                                                                          |   | Mar. 26,           |   |   | Mar. 27,          |   |   | Mar. 26, |   |   | Mar. 27, |   |
|                                                                                          |   | 2010               |   |   | 2009              |   |   | 2010 |   |   | 2009 |   |
|                                                                                          |   |               |   |   |              |   |   |   |   |   |   |   |
| Net sales                                                                                     |   | $                  | 60,977 |   |              | $      | 69,292 |   |   | $ | 163,220 |   |   | $ | 223,562 |   |
| Cost of goods sold                                                                            |   |               | 44,472 |   |              |   | 50,141 |   |   |   | 122,182 |   |   |   | 161,386 |   |
|                                                                                          |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Gross profit                                                                                  |   |               | 16,505 |   |              |   | 19,151 |   |   |   | 41,038 |   |   |   | 62,176 |   |
|                                                                                          |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Marketing, engineering and administrative expenses                                            |   |               | 14,555 |   |              |   | 14,517 |   |   |   | 42,228 |   |   |   | 47,843 |   |
|                                                                                          |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Earnings (loss) from operations                                                               |   |               | 1,950  |   |              |   | 4,634 |   |   |   | (1,190 | ) |   |   | 14,333 |   |
|                                                                                          |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Interest expense                                                                              |   |               | 639    |   |              |   | 526 |   |   |   | 1,821 |   |   |   | 1,837 |   |
| Other (income) expense, net                                                                   |   |               | (433   | )      |              |   | 1,049 |   |   |   | (236 | ) |   |   | 37 |   |
|                                                                                          |   |               | 206    |   |              |   | 1,575 |   |   |   | 1,585 |   |   |   | 1,874 |   |
|                                                                                          |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Earnings (loss) before income taxes and noncontrolling interest                               |   |               | 1,744  |   |              |   | 3,059 |   |   |   | (2,775 | ) |   |   | 12,459 |   |
| Income taxes                                                                                  |   |               | 244    |   |              |   | 362 |   |   |   | (1,454 | ) |   |   | 3,639 |   |
|                                                                                          |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Net earnings (loss)                                                                           |   |               | 1,500  |   |              |   | 2,697 |   |   |   | (1,321 | ) |   |   | 8,820 |   |
|                                                                                          |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Less: Net (earnings) loss attributable to noncontrolling interest, net of tax                 |   |               | (49    | )      |              |   | 153 |   |   |   | (122 | ) |   |   | (72 | ) |
|                                                                                          |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Net earnings (loss) attributable to Twin Disc                                                 |   | $                  | 1,451  |   |              | $      | 2,850 |   |   | $ | (1,443 | ) |   | $ | 8,748 |   |
|                                                                                          |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Dividends per share                                                                           |   | $                  | 0.07   |   |              | $      | 0.07 |   |   | $ | 0.21 |   |   | $ | 0.21 |   |
|                                                                                          |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Earnings (loss) per share data:                                                               |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Basic earnings (loss) per share attributable to Twin Disc common shareholders                 |   | $                  | 0.13   |   |              | $      | 0.26 |   |   | $ | (0.13 | ) |   | $ | 0.79 |   |
| Diluted earnings (loss) per share attributable to Twin Disc common shareholders               |   | $                  | 0.13   |   |              | $      | 0.26 |   |   | $ | (0.13 | ) |   | $ | 0.78 |   |
|                                                                                          |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average shares outstanding data:                                                     |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Basic shares outstanding                                                                      |   |               | 11,065 |   |              |   | 11,006 |   |   |   | 11,062 |   |   |   | 11,127 |   |
| Dilutive stock awards                                                                         |   |               | 85     |   |              |   | 35 |   |   |   | - |   |   |   | 70 |   |
| Diluted shares outstanding                                                                    |   |               | 11,150 |   |              |   | 11,041 |   |   |   | 11,062 |   |   |   | 11,197 |   |
|                                                                                          |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive (loss) income:                                                                  |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Net earnings (loss)                                                                           |   | $                  | 1,500  |   |              | $      | 2,697 |   |   | $ | (1,321 | ) |   | $ | 8,820 |   |
| Adjustment for amortization of net actuarial loss and prior service cost, net of tax          |   |               | 488    |   |              |   | 470 |   |   |   | 1,405 |   |   |   | 1,412 |   |
|     Foreign currency translation adjustment                               |   |               | (7,124 | )      |              |   | (1,004 | ) |   |   | (1,209 | ) |   |   | (19,574 | ) |
| Comprehensive (loss) income                                                                   |   |               | (5,136 | )      |              |   | 2,163 |   |   |   | (1,125 | ) |   |   | (9,342 | ) |
|     Comprehensive (earnings) loss attributable to noncontrolling interest |   |               | (49    | )      |              |   | 153 |   |   |   | (122 | ) |   |   | (72 | ) |
|                                                                                          |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive (loss) income attributable to Twin Disc                                         |   | $                  | (5,185 | )      |              | $      | 2,316 |   |   | $ | (1,247 | ) |   | $ | (9,414 | ) |

| The notes to condensed consolidated financial statements are an integral part of these statements. |
|----------------------------------------------------------------------------------------------------|

----

|                                             |   | Nine Months Ended |    |
|--------------------------------------------------|--------|-------------------|---------|
|                                             |   | March 26,         |    |   | March 27, |   |
|                                             |   | 2010              |    |   | 2009 |   |
|                                             |   |              |    |   |   |   |
| Cash flows from operating activities:            |   |              |    |   |   |   |
| Net (loss) earnings                              |   | $                 | (1,321  | ) |   | $ | 8,820 |   |
| Adjustments to reconcile net (loss) earnings to  |   |              |    |   |   |   |   |   |
| net cash provided by operating activities:       |   |              |    |   |   |   |   |   |
| Depreciation and amortization                    |   |              | 7,338   |   |   |   | 7,308 |   |
| Other non-cash changes, net                      |   |              | 270     |   |   |   | 345 |   |
| Net change in working capital, excluding cash    |   |              | 16,827  |   |   |   | (15,830 | ) |
|                                             |   |              |    |   |   |   |   |   |
| Net cash provided by operating activities        |   |              | 23,114  |   |   |   | 643 |   |
|                                             |   |              |    |   |   |   |   |   |
| Cash flows from investing activities:            |   |              |    |   |   |   |   |   |
| Acquisitions of fixed assets                     |   |              | (2,791  | ) |   |   | (6,631 | ) |
| Other, net                                       |   |              | (263    | ) |   |   | 1,167 |   |
|                                             |   |              |    |   |   |   |   |   |
| Net cash used by investing activities            |   |              | (3,054  | ) |   |   | (5,464 | ) |
|                                             |   |              |    |   |   |   |   |   |
| Cash flows from financing activities:            |   |              |    |   |   |   |   |   |
| Proceeds from notes payable                      |   |              | 89      |   |   |   | 1,779 |   |
| Payments of notes payable                        |   |              | (531    | ) |   |   | (881 | ) |
| (Payments of) proceeds from long-term debt       |   |              | (15,244 | ) |   |   | 7,939 |   |
| Proceeds from exercise of stock options          |   |              | 80      |   |   |   | 110 |   |
| Purchase of treasury stock                       |   |              | -       |   |   |   | (1,813 | ) |
| Dividends paid to shareholders                   |   |              | (2,352  | ) |   |   | (2,333 | ) |
| Dividends paid to noncontrolling interest        |   |              | (160    | ) |   |   | (143 | ) |
| Other                                            |   |              | (466    | ) |   |   | (252 | ) |
|                                             |   |              |    |   |   |   |   |   |
| Net cash (used) provided by financing activities |   |              | (18,584 | ) |   |   | 4,406 |   |
|                                             |   |              |    |   |   |   |   |   |
| Effect of exchange rate changes on cash          |   |              | (209    | ) |   |   | (1,729 | ) |
|                                             |   |              |    |   |   |   |   |   |
| Net change in cash                               |   |              | 1,267   |   |   |   | (2,144 | ) |
|                                             |   |              |    |   |   |   |   |   |
| Cash:                                            |   |              |    |   |   |   |   |   |
| Beginning of period                              |   |              | 13,266  |   |   |   | 14,447 |   |
|                                             |   |              |    |   |   |   |   |   |
| End of period                                    |   | $                 | 14,533  |   |   | $ | 12,303 |   |

----

| A. | Basis of Presentation |
|----|-----------------------|

| a)   | How investment allocation decisions are made; |
|----------------|-----------------------------------------------|

| b)   | The major categories of plan assets; |
|----------------|--------------------------------------|

| c)   | The inputs and valuation techniques used to measure the fair value of plan assets; |
|----------------|------------------------------------------------------------------------------------|

| d)   | The effect of fair value measurements using significant unobservable inputs on changes in plan assets for the period; and |
|----------------|---------------------------------------------------------------------------------------------------------------------------|

| e)   | Significant concentrations of risk within plan assets. |
|----------------|--------------------------------------------------------|

| B. | Inventory |
|----|-----------|

|            | March 26, | June 30, |
|-----------------|-----------|----------|
|            | 2010      | 2009     |
| Inventories:    |      |     |
| Finished parts  | $50,892   | $62,498  |
| Work in process | 9,055     | 8,726    |
| Raw materials   | 19,136    | 21,107   |
|            |      |     |
|            | $79,083   | $92,331  |

| C. | Warranty |
|----|----------|

|                                 | Three Months Ended | Nine Months Ended |
|--------------------------------------|--------------------|-------------------|
|                                 | Mar. 26,           | Mar. 27,          | Mar. 26, | Mar. 27, |
|                                 | 2010               | 2009              | 2010 | 2009 |
|                                 |               |              |   |   |
| Reserve balance, beginning of period | $7,115             | $8,231            | $8,028 | $8,125 |
| Current period expense               | 414                | 2,068             | 2,833 | 4,175 |
| Payments or credits to customers     | (819)              | (2,372)           | (4,260) | (3,928) |
| Translation                          | (238)              | (161)             | (129) | (606) |
|                                 |               |              |   |   |
| Reserve balance, end of period       | $6,472             | $7,766            | $6,472 | $7,766 |

| D. | Contingencies |
|----|---------------|

| E. | Business Segments |
|----|-------------------|

|                                            |   | Three Months Ended |     |   | Nine Months Ended |   |
|-------------------------------------------------|--------|--------------------|----------|--------|-------------------|--------|
|                                            |   | Mar. 26,           |     |   | Mar. 27,          |   |   | Mar. 26, |   |   | Mar. 27, |   |
|                                            |   | 2010               |     |   | 2009              |   |   | 2010 |   |   | 2009 |   |
|                                            |   |               |     |   |              |   |   |   |   |   |   |   |
| Manufacturing segment sales                     |   | $                  | 50,249   |   |              | $      | 65,931 |   |   | $ | 129,908 |   |   | $ | 201,308 |   |
| Distribution segment sales                      |   |               | 24,165   |   |              |   | 25,741 |   |   |   | 75,601 |   |   |   | 83,712 |   |
| Inter/Intra segment elimination - manufacturing |   |               | (10,338  | )      |              |   | (16,738 | ) |   |   | (27,818 | ) |   |   | (45,973 | ) |
| Inter/Intra segment elimination - distribution  |   |               | (3,099   | )      |              |   | (5,642 | ) |   |   | (14,471 | ) |   |   | (15,485 | ) |
|                                            |   |               |     |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Net sales                                       |   | $                  | 60,977   |   |              | $      | 69,292 |   |   | $ | 163,220 |   |   | $ | 223,562 |   |
|                                            |   |               |     |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Manufacturing segment earnings (loss)           |   | $                  | 1,861    |   |              | $      | 3,165 |   |   | $ | (2,535 | ) |   | $ | 11,608 |   |
| Distribution segment earnings                   |   |               | 1,939    |   |              |   | 1,531 |   |   |   | 5,680 |   |   |   | 7,026 |   |
| Corporate and eliminations                      |   |               | (2,056   | )      |              |   | (1,637 | ) |   |   | (5,920 | ) |   |   | (6,175 | ) |
|                                            |   |               |     |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Earnings (loss) before income taxes             |   |               |     |   |              |   |   |   |   |   |   |   |   |   |   |   |
| and noncontrolling interest                     |   | $                  | 1,744    |   |              | $      | 3,059 |   |   | $ | (2,775 | ) |   | $ | 12,459 |   |
|                                            |   |               |     |   |              |   |   |   |   |   |   |   |   |   |   |   |
|                                            |   | Mar. 26,           |     |   | June 30,          |   |   |   |   |   |   |   |   |   |
| Assets                                          |   |               | 2010     |   |              |   | 2009 |   |   |   |   |   |   |   |   |   |
|                                            |   |               |     |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Manufacturing segment assets                    |   | $                  | 330,025  |   |              | $      | 355,672 |   |   |   |   |   |   |   |   |   |
| Distribution segment assets                     |   |               | 58,959   |   |              |   | 67,856 |   |   |   |   |   |   |   |   |   |
| Corporate assets and elimination                |   |               |     |   |              |   |   |   |   |   |   |   |   |   |   |   |
| of inter-company assets                         |   |               | (134,758 | )      |              |   | (137,963 | ) |   |   |   |   |   |   |   |   |
|                                            |   |               |     |   |              |   |   |   |   |   |   |   |   |   |   |   |
|                                            |   | $                  | 254,226  |   |              | $      | 285,565 |   |   |   |   |   |   |   |   |   |

| F. | Stock-Based Compensation |
|----|--------------------------|

| G. | Pension and Other Postretirement Benefit Plans |
|----|------------------------------------------------|

|                                  |   | Three Months Ended |   |   | Nine Months Ended |   |
|---------------------------------------|--------|--------------------|--------|--------|-------------------|--------|
|                                  |   | Mar. 26,           |   |   | Mar. 27,          |   |   | Mar. 26, |   |   | Mar. 27, |   |
|                                  |   | 2010               |   |   | 2009              |   |   | 2010 |   |   | 2009 |   |
|                                  |   |               |   |   |              |   |   |   |   |   |   |   |
| Pension Benefits:                     |   |               |   |   |              |   |   |   |   |   |   |   |
| Service cost                          |   | $                  | 70     |   |              | $      | 298 |   |   | $ | 205 |   |   | $ | 885 |   |
| Interest cost                         |   |               | 1,829  |   |              |   | 1,769 |   |   |   | 5,476 |   |   |   | 5,296 |   |
| Expected return on plan assets        |   |               | (1,521 | )      |              |   | (2,237 | ) |   |   | (4,554 | ) |   |   | (6,698 | ) |
| Amortization of prior service cost    |   |               | 3      |   |              |   | (180 | ) |   |   | 9 |   |   |   | (539 | ) |
| Amortization of transition obligation |   |               | 18     |   |              |   | 17 |   |   |   | 51 |   |   |   | 48 |   |
| Amortization of net loss              |   |               | 656    |   |              |   | 801 |   |   |   | 1,969 |   |   |   | 2,402 |   |
| Net periodic benefit cost             |   | $                  | 1,055  |   |              | $      | 468 |   |   | $ | 3,156 |   |   | $ | 1,394 |   |
|                                  |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Postretirement Benefits:              |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Service cost                          |   | $                  | 7      |   |              | $      | 9 |   |   | $ | 21 |   |   | $ | 28 |   |
| Interest cost                         |   |               | 336    |   |              |   | 325 |   |   |   | 1,010 |   |   |   | 973 |   |
| Amortization of net actuarial loss    |   |               | 46     |   |              |   | 137 |   |   |   | 136 |   |   |   | 412 |   |
| Net periodic benefit cost             |   | $                  | 389    |   |              | $      | 471 |   |   | $ | 1,167 |   |   | $ | 1,413 |   |

| H. | Income Taxes |
|----|--------------|

| Balance at June 30, 2009  | $17,509 |
|---------------------------|---------|
| Translation adjustment    | (281)   |
|                      |    |
| Balance at March 26, 2010 | $17,228 |

|                                 |   | March 26, |   | June 30, |   |
|--------------------------------------|--------|-----------|--------|----------|--------|
|                                 |   | 2010      |   | 2009     |   |
| Intangible assets with finite lives: |   |      |   |     |   |
| Licensing agreements                 |   | $         | 3,015  |     | $      | 3,015 |   |
| Non-compete agreements               |   |      | 2,050  |     |   | 2,050 |   |
| Other                                |   |      | 5,991  |     |   | 5,991 |   |
|                                 |   |      |   |     |   |   |   |
|                                 |   |      | 11,056 |     |   | 11,056 |   |
| Accumulated amortization             |   |      | (6,792 |     |   | (6,184 | ) |
| Translation adjustment               |   |      | 582    |     |   | 711 |   |
|                                 |   |      |   |     |   |   |   |
| Total                                |   | $         | 4,846  |     | $      | 5,583 |   |

| Fiscal Year |   |
|-------------|--------|
| 2010        | $195   |
| 2011        | 779    |
| 2012        | 779    |
| 2013        | 732    |
| 2014        | 732    |
| 2015        | 437    |

| J.   | Long-term Debt |
|----------------|----------------|

|                                               |   | March 26, |   | June 30, |   |
|----------------------------------------------------|--------|-----------|--------|----------|--------|
|                                               |   | 2010      |   | 2009     |   |
|                                               |   |      |   |     |   |
| Revolving loan                                     |   | $         | 9,250  |     | $      | 22,450 |   |
| 10-year unsecured senior notes                     |   |      | 25,000 |     |   | 25,000 |   |
| Other                                              |   |      | 850    |     |   | 3,319 |   |
| Subtotal                                           |   |      | 35,100 |     |   | 50,769 |   |
| Less: current maturities and short-term borrowings |   |      | (3,978 |     |   | (4,421 | ) |
| Total long-term debt                               |   | $         | 31,122 |     | $      | 46,348 |   |

| K.   | Shareholders’ Equity |
|----------------|----------------------------|

| The following is a reconciliation of the Company’s equity balances for the first fiscal nine months of 2009 and 2010 (in thousands): |
|--------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                       | Twin Disc, Inc. Shareholders’ Equity |   |   |
|                                                                                                                                       |   |   | Accumulated |   |   |   |
|                                                                                                                                       |   |   | Other |   | Non- |   |
|                                                                                                                                       | Common | Retained | Comprehensive | Treasury | Controlling | Total |
|                                                                                                                                       | Stock | Earnings | Income (Loss) | Stock | Interest | Equity |
| Balance –June 30, 2008                                                                                                               | $14,693 | $142,361 | $2,446 | ($29,854) | $679 | $130,325 |
| Net income                                                                                                                                 |   | 8,748 |   |   | 72 | 8,820 |
| Translation adjustments                                                                                                                    |   |   | (19,643) |   | 69 | (19,574) |
| Benefit plan adjustments, net of tax                                                                                                       |   |   | 1,412 |   |   | 1,412 |
| Cash dividends                                                                                                                             |   | (2,333) |   |   | (143) | (2,476) |
| Compensation expense and windfall                                                                                                          |   |   |   |   |   |   |
|     tax benefits                                                                                                       | 1,860 |   |   |   |   | 1,860 |
| Shares (acquired) issued, net                                                                                                              | (2,328) |   |   | (402) |   | (2,730) |
| Balance-March 27, 2009                                                                                                                     | $14,225 | $148,776 | ($15,785) | ($30,256) | $677 | $117,637 |
|                                                                                                                                       |   |   |   |   |   |   |
|                                                                                                                                       | Twin Disc, Inc. Shareholders’ Equity |   |   |
|                                                                                                                                       |   |   | Accumulated |   |   |   |
|                                                                                                                                       |   |   | Other |   | Non- |   |
|                                                                                                                                       | Common | Retained | Comprehensive | Treasury | Controlling | Total |
|                                                                                                                                       | Stock | Earnings | Income (Loss) | Stock | Interest | Equity |
| Balance-June 30, 2009                                                                                                                      | $13,205 | $150,257 | ($26,218) | ($30,256) | $837 | $107,825 |
| Net (loss) income                                                                                                                          |   | (1,443) |   |   | 122 | (1,321) |
| Translation adjustments                                                                                                                    |   |   | (1,269) |   | 60 | (1,209) |
| Benefit plan adjustments, net of tax                                                                                                       |   |   | 1,405 |   |   | 1,405 |
| Cash dividends                                                                                                                             |   | (2,352) |   |   | (160) | (2,512) |
| Compensation expense and windfall                                                                                                          |   |   |   |   |   |   |
| tax benefits                                                                                                                               | 190 |   |   |   |   | 190 |
| Shares (acquired) issued, net                                                                                                              | (2,803) |   |   | 2,566 |   | (237) |
| Balance-March 26, 2010                                                                                                                     | $10,592 | $146,462 | ($26,082) | ($27,690) | $859 | $104,141 |

| (In thousands)             |   |               |   |   |              |   |   |      |   |   |      |   |   |   |    |   |   |   |   |   |
|----------------------------|--------|--------------------|--------|--------|-------------------|--------|--------|-----------|--------|--------|-----------|--------|--------|--------|---------|--------|--------|--------|--------|--------|
|                       |   | Three Months Ended |   |   | Nine Months Ended |   |
|                       |   | March 26,          |   |   | March 27,         |   |   | March 26, |   |   | March 27, |   |
|                       |   | 2010               |   | %      |              |   | 2009   |      | %      |   |      | 2010   |   | %      |    |   | 2009   |   | %      |   |
|                       |   |               |   |   |              |   |   |      |   |   |      |   |   |   |    |   |   |   |   |   |
| Net sales                  |   | $                  | 60,977 |   |              |   |   | $         | 69,292 |   |      |   |   | $      | 163,220 |   |   |   |   | $      | 223,562 |   |   |   |
| Cost of goods sold         |   |               | 44,472 |   |              |   |   |      | 50,141 |   |      |   |   |   | 122,182 |   |   |   |   |   | 161,386 |   |   |   |
|                       |   |               |   |   |              |   |   |      |   |   |      |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Gross profit               |   |               | 16,505 |   | 27.1              | %      |   |      | 19,151 |   | 27.6      | %      |   |   | 41,038  |   | 25.1   | %      |   |   | 62,176 |   | 27.8 | % |
|                       |   |               |   |   |              |   |   |      |   |   |      |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Marketing, engineering and |   |               |   |   |              |   |   |      |   |   |      |   |   |   |    |   |   |   |   |   |   |   |   |   |
| administrative expenses    |   |               | 14,555 |   | 23.9              |   |   |      | 14,517 |   | 21.0      |   |   |   | 42,228  |   | 25.9   |   |   |   | 47,843 |   | 21.4 |   |
|                       |   |               |   |   |              |   |   |      |   |   |      |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Earnings from operations   |   | $                  | 1,950  |   | 3.2               |   |   | $         | 4,634  |   | 6.7       |   |   | $      | (1,190  | )      | (0.7   | )      |   | $      | 14,333 |   | 6.4 |   |

|                                 | Three Months Ended                                                                                  | Increase/                                                                                                 |
|--------------------------------------|-----------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------|
| $ thousands – (Income)/Expense | March 26, 2010                                                                                      | March 27, 2009                                                                                            | (Decrease) |
| Bonus                                |        $        -        |      $     (733)                                        |        $        733 |
| Stock Based Compensation             |                 122 |               428                   |                (306) |
| Defined Benefit Pension Plans        |                 460 |               265                   |                  195 |
|                                 |                                                                                                |                                                                                                      |                  622 |
|                                 | Foreign Currency Translation                                                                        |                  485 |
|                                 |                                                                                                |               1,107                 |
|                                 | All Other, Net                                                                                      |             (1,069)                           |
|                                 |                                                                                                |                                                                                                      |        $          38 |

|                                 | Nine Months Ended                                                                                             | Increase/                                                                                       |
|--------------------------------------|---------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------|
| $ thousands – (Income)/Expense | March 26, 2010                                                                                                | March 27, 2009                                                                                  | (Decrease) |
| Domestic/Corporate IT Expenses       |        $    3,520                                      |      $    4,602                                    |        $   (1,082) |
| Severance                            |                   - |            1,308                         |             (1,308) |
| Stock Based Compensation             |                 384           |               524         |                (140) |
| Defined Benefit Pension Plans        |              1,379                           |               676         |                  703 |
|                                 |                                                                                                          |                                                                                            |             (1,827) |
|                                 | Foreign Currency Translation                                                                                  |               1,033       |
|                                 |                                                                                                          |                (794) |
|                                 | All Other, Net                                                                                                |             (4,821)                 |
|                                 |                                                                                                          | Net Decrease                                                                                    |        $   (5,615) |

| ·   | “Four quarter EBITDA” is defined as “the sum of (i) Net Income plus, to the extent deducted in the calculation of Net Income, (ii) interest expense, (iii) depreciation and amortization expense, and (iv) income tax expense;” and |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | “Total funded debt” is defined as “(i) all Indebtedness for borrowed money (including without limitation, Indebtedness evidenced by promissory notes, bonds, debentures and similar interest-bearing instruments), plus (ii) all purchase money Indebtedness, plus (iii) the principal portion of capital lease obligations, plus (iv) the maximumamount which is available to be drawn under letters of credit then outstanding, all as determined for the Company and its consolidated Subsidiaries as of the date of determination, without duplication, and in accordance with generally accepted accounting principles applied on a consistent basis.” |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | “Total funded debt to four quarter EBITDA” is defined as the ratio of total funded debt to four quarter EBITDA calculated in accordance with the above definitions. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Four Quarter EBITDA Reconciliation                   |                                                                               |
|------------------------------------------------------|------------------------------------------------------------------------------------|
| Net Earnings                                         | $  1,311,000                                                             |
| Depreciation & Amortization                      |     9,804,000                                                  |
| Interest Expense                                     |     2,471,000                                                  |
| Income Taxes                                         |     1,164,000                                                  |
| Four Quarter EBITDA                                  | $14,750,000                                                                        |
|                                                 |                                                                               |
| Total Funded Debt to Four Quarter EBITDA             |                                                                               |
| Total Debt                                           | $35,100,000                                                                        |
| Divided by: Four Quarter EBITDA                      |   14,750,000                                                             |
|   Total Funded Debt to Four Quarter EBITDA |              2.38 |

|   Contractual Obligations |   Total |  Less than1 year |  1-3Years |  3-5Years |  After 5Years |
|-------------------------------------|-------------------|-----------------------|----------------|----------------|--------------------|
| Revolver borrowing                  | $9,250            |                  | $9,250         |           |               |
| Long-term debt                      | $25,850           | $3,978                | $7,533         | $7,166         | $7,173             |
| Operating leases                    | $9,847            | $3,501                | $4,314         | $1,822         | $210               |
| Total obligations                   | $44,947           | $7,479                | $21,097        | $8,988         | $7,383             |

| a)   | How investment allocation decisions are made; |
|----------------|-----------------------------------------------|

| b)   | The major categories of plan assets; |
|----------------|--------------------------------------|

| c)   | The inputs and valuation techniques used to measure the fair value of plan assets; |
|----------------|------------------------------------------------------------------------------------|

| d)   | The effect of fair value measurements using significant unobservable inputs on changes in plan assets for the period; and |
|----------------|---------------------------------------------------------------------------------------------------------------------------|

| e)   | Significant concentrations of risk within plan assets. |
|----------------|--------------------------------------------------------|

| Þ   | currency exchange rate fluctuations |
|--------------------|-------------------------------------|

| Þ   | export and import duties, changes to import and export regulations, and restrictions on the transfer of funds |
|--------------------|---------------------------------------------------------------------------------------------------------------|

| Þ   | problems with the transportation or delivery of our products |
|--------------------|--------------------------------------------------------------|

| Þ   | issues arising from cultural or language differences and labor unrest |
|--------------------|-----------------------------------------------------------------------|

| Þ   | longer payment cycles and greater difficulty in collecting accounts receivables |
|--------------------|---------------------------------------------------------------------------------|

| Þ   | compliance with trade and other laws in a variety of jurisdictions |
|--------------------|--------------------------------------------------------------------|

| Period                              | (a) Total Number of Shares Purchased | (b) Average Price Paid per Share | (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | (d) Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs |
|-------------------------------------|--------------------------------------|----------------------------------|--------------------------------------------------------------------------------------|------------------------------------------------------------------------------------|
|                                |                                 |                             |                                                                                 |                                                                               |
| Dec. 26, 2009 – Jan. 29, 2010 | 0                                    | NA                               | 0                                                                                    | 250,000                                                                            |
|                                |                                 |                             |                                                                                 |                                                                               |
| Jan. 30, 2010 – Feb. 26, 2010 | 0                                    | NA                               | 0                                                                                    | 250,000                                                                            |
|                                |                                 |                             |                                                                                 |                                                                               |
| Feb. 27, 2010 – Mar. 26, 2010 | 0                                    | NA                               | 0                                                                                    | 250,000                                                                            |
|                                |                                 |                             |                                                                                 |                                                                               |
| Total                               | 0                                    |                             | 0                                                                                    |                                                                               |

| 10.1 | Loan Agreement By and Between M&I Marshall & Ilsley Bank and Twin Disc, Incorporated Dated as of December 19, 2002 |
|------|----------------------------------------------------------------------------------------------------------------------------|

| 10.2 | Amendment No. 1 to Loan Agreement - September 13, 2004 |
|------|--------------------------------------------------------|

| 10.3 | Amendment No. 2 to Loan Agreement - April 10, 2006 |
|------|--------------------------------------------------------------|

| 10.4 | Amendment No. 3 to Loan Agreement - October 31, 2006 |
|------|----------------------------------------------------------------|

| 10.5 | Amendment No. 4 to Loan Agreement - March 1, 2007 |
|------|--------------------------------------------------------|

| 10.6 | Amendment No. 5 to Loan Agreement - August 9, 2007 |
|------|---------------------------------------------------------|

| 10.7 | Amendment No. 6 to Loan Agreement - May 27, 2009 |
|------|-------------------------------------------------------|

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

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

| 32a | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|-----|-----------------------------------------------------------------------------------------------------|

| 32b | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|-----|-----------------------------------------------------------------------------------------------------|

----

|                         | TWIN DISC, INCORPORATED  |
|------------------------------|--------------------------|
|                         | (Registrant)             |
|                         |                     |
|                         |                     |
| Date:  May 5, 2010 | /s/ JEFFREY S. KNUTSON   |
|                         | Jeffrey S. Knutson       |
|                         | Corporate Controller     |
|                         | Chief Accounting Officer |

----