|                                                                                                                                                                                                                                                                                                                                                                              | QUARTERLY      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF      1934  |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                              |                                                                                               |
|        x                                                                                                                                                                                                                                                                                                                                                                     | For      the quarterly period ended                                                                | December      26, 2009 |
|                                                                                                                                                                                                                                                                                                                                                                              |                                                                                               |
| OR                                                                                                                                                                                                                                                                                                                                                                                |
|                                                                                                                                                                                                                                                                                                                                                                              |                                                                                               |
|                                                                                                                                                                                                                                                                                                                                                                              | TRANSITION      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF      1934 |
|                                                                                                                                                                                                                                                                                                                                                                              |                                                                                               |
|        o                                                                                                                                                                                                                                                                                                                                                                     | 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                                                                                       |
|                                                                                                                                                                                                                                                                                                                                                                              |
|                                                                                                                                                                                                                                                                                                                                                                              |
| Former      name, address and fiscal year, if changed since last  report                                                                                                                                                                                                                                                                                                          |
|                                                                                                                                                                                                                                                                                                                                                                              |
| 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      x    NO o                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                                                                                                                                                                                                                                                                              |
| Indicate      by check mark whether the registrant is a large accelerated filer, an      accelerated filer, a non-accelerated filer, or a smaller reporting      company. See definition of “accelerated filer,” “large accelerated filer”      and “smaller reporting company” in Rule 12b-2 of the Exchange Act, (Check      One):          |
|                                                                                                                                                                                                                                                                                                                                                                              |
| Large      Accelerated Filer o    Accelerated      Filer x    Non-Accelerated Filer      o    Smaller Reporting Company      o                                                                                                                                                                                        |
|                                                                                                                                                                                                                                                                                                                                                                              |
| Indicate      by check mark whether the registrant is a shell company (as defined in      Rule 12b-2 of the Exchange Act).                                                                                                                                                                                                                                                        |
|                                                                                                                                                                                                                                                                                                                                                                              |
| YES      o    NO x                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                                                                                                                                                                                                                                                                              |
| Common      Shares outstanding as of                                                                                                                                                                                                                                                                                                                                              | January      29, 2010                                                                              |   |
|                                                                                                                                                                                                                                                                                                                                                                              |                                                                                               |
| Class      A Common Shares                                                                                                                                                                                                                                                                                                                                                        | 5,817,958                                                                                          |   |
|                                                                                                                                                                                                                                                                                                                                                                              |                                                                                               |
| Class      B Common Shares                                                                                                                                                                                                                                                                                                                                                        | 855,972                                                                                            |   |

----

|                                                                                                                                                                                                                |   | Page No. |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|
|                                                                                                                                                                                                                |   |     |
| Part      I.           Condensed      Consolidated Unaudited Financial Statements:                                                                           |   |     |
|                                                                                                                                                                                                                |   |     |
|   Item 1.   Financial      Statements                                                                                                                                                      |   |     |
|                                                                                                                                                                                                                |   |     |
|     Consolidated Balance      Sheets-    December 26, 2009 (unaudited) and      June 27, 2009                                                                               |   | 3        |
|                                                                                                                                                                                                                |   |     |
|     Consolidated Statements of      Operations-    thirteen and twenty-six weeks ended      December    26,      2009 and December 27, 2008 (unaudited) |   | 4        |
|                                                                                                                                                                                                                |   |     |
|     Consolidated Statements of Cash      Flows-    twenty-six weeks ended December 26,      2009 and December 27, 2008 (unaudited)                                          |   | 5        |
|                                                                                                                                                                                                                |   |     |
|     Consolidated Statements of      Stockholders' Equity -    twenty-six weeks ended December 26,      2009 and December 27, 2008 (unaudited)                               |   | 6        |
|                                                                                                                                                                                                                |   |     |
|     Notes      to Consolidated Financial Statements                                                                                                                                             |   | 7-10     |
|                                                                                                                                                                                                                |   |     |
| Item      2.    Management's      Discussion and Analysis of Financial Condition and Results of      Operations                                                                                 |   | 10-12    |
|                                                                                                                                                                                                                |   |     |
| Item      3.                Quantitative      and Qualitative Disclosures About Market Risk                                         |   | 12       |
|                                                                                                                                                                                                                |   |     |
| Item      4.                Controls      and Procedures                                                                            |   | 12-13    |
|                                                                                                                                                                                                                |   |     |
| Part      II.    Other information:                                                                                                                                                             |   |     |
|                                                                                                                                                                                                                |   |     |
| Item      1A.             Risk      Factors                                                                                                        |   | 13       |
|                                                                                                                                                                                                                |   |     |
| Item      6.                 Exhibits                                                                                          |   | 13       |
|                                                                                                                                                                                                                |   |     |
| SIGNATURES                                                                                                                                                                                                          |   | 13       |

----

|                                                                                                                                     |   | Dec.      262009(unaudited) |         |   | June      272009 |   |
|------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|--------------|--------|------------------|--------|
|                                                                                                                                     |   |                        |         |   |             |   |
| ASSETS                                                                                                                                   |   |                        |         |   |             |   |
| Current      assets:                                                                                                                     |   |                        |         |   |             |   |
| Cash                                                                                                                                     |   | $                           | 13,337       |   |             | $      | 10,248 |   |
| Investments                                                                                                                              |   |                        | 1,256        |   |             |   | 1,791 |   |
| Accounts receivable (less      allowance for doubtful accounts of $515 and $678)                                                         |   |                        | 31,594       |   |             |   | 27,233 |   |
| Inventories:                                                                                                                             |   |                        |         |   |             |   |   |   |
|   Raw materials and      supplies                                                                                              |   |                        | 15,332       |   |             |   | 19,672 |   |
|   Goods in process      and finished parts                                                                                     |   |                        | 18,573       |   |             |   | 20,265 |   |
|   Finished      goods                                                                                                          |   |                        | 18,231       |   |             |   | 20,289 |   |
|                                                                                                                                     |   |                        | 52,136       |   |             |   | 60,226 |   |
|    Current      deferred income tax asset                                                                                 |   |                        | 5,089        |   |             |   | 5,170 |   |
|    Prepaid      expenses, taxes and other current assets                                                                  |   |                        | 7,450        |   |             |   | 8,054 |   |
|     Total      current assets                                                                                        |   |                        | 110,862      |   |             |   | 112,722 |   |
|                                                                                                                                     |   |                        |         |   |             |   |   |   |
| Property,      plant and equipment, at cost (less accumulated depreciation of $129,328      and $122,856)                                |   |                        | 58,445       |   |             |   | 56,956 |   |
| Property      held for sale                                                                                                              |   |                        | 2,699        |   |             |   | 2,771 |   |
| Intangible      assets (less accumulated amortization of $4,349 and$3,724)                                                               |   |                        | 1,927        |   |             |   | 2,517 |   |
| Goodwill                                                                                                                                 |   |                        | 1,091        |   |             |   | 981 |   |
| Other      assets                                                                                                                        |   |                        | 698          |   |             |   | 275 |   |
| Long-term      taxes receivable                                                                                                          |   |                        | 2,807        |   |             |   | 2,807 |   |
| Long-term      deferred income tax asset                                                                                                 |   |                        | 16,891       |   |             |   | 15,212 |   |
|     Total    assets                                                                                                  |   | $                           | 195,420      |   |             | $      | 194,241 |   |
|                                                                                                                                     |   |                        |         |   |             |   |   |   |
| LIABILITIES      AND STOCKHOLDERS’ EQUITY                                                                                          |   |                        |         |   |             |   |   |   |
| Current      liabilities:                                                                                                                |   |                        |         |   |             |   |   |   |
|   Notes payable and      current maturities                                                                                    |   | $                           | 6,488        |   |             | $      | 10,136 |   |
|   Accounts payable      and accrued expenses                                                                                   |   |                        | 12,762       |   |             |   | 10,369 |   |
|   Accrued salaries      and wages                                                                                              |   |                        | 4,945        |   |             |   | 5,109 |   |
|     Total current      liabilities                                                                                   |   |                        | 24,195       |   |             |   | 25,614 |   |
|                                                                                                                                     |   |                        |         |   |             |   |   |   |
| Long-term      taxes payable                                                                                                             |   |                        | 8,944        |   |             |   | 9,140 |   |
| Long-term      debt                                                                                                                      |   |                        | 1,044        |   |             |   | 1,264 |   |
| Postretirement      benefit liability                                                                                                    |   |                        | 16,809       |   |             |   | 15,345 |   |
|     Total      liabilities                                                                                           |   |                        | 50,      992 |   |             |   | 51,363 |   |
|                                                                                                                                     |   |                        |         |   |             |   |   |   |
| Stockholders'      equity:                                                                                                               |   |                        |         |   |             |   |   |   |
| Class      A Common $1 par (20,000,000 shares authorized)5,812,328      outstanding on 12/26/09 and5,769,894      outstanding on 6/27/09 |   |                        | 5,812        |   |             |   | 5,770 |   |
| Class      B Common $1 par (10,000,000 shares authorized)856,629      outstanding on 12/26/09 and869,426      outstanding on 6/27/09     |   |                        | 857          |   |             |   | 869 |   |
| Additional      paid-in capital                                                                                                          |   |                        | 50,246       |   |             |   | 49,984 |   |
| Retained      earnings reinvested and employed in the business                                                                           |   |                        | 123,065      |   |             |   | 127,707 |   |
| Accumulated      other comprehensive loss                                                                                                |   |                        | (35,552      | )      |             |   | (41,452 | ) |
|     Total stockholders'      equity                                                                                  |   |                        | 144,428      |   |             |   | 142,878 |   |
|     Total liabilities and      stockholders’ equity                                                            |   | $                           | 195,420      |   |             | $      | 194,241 |   |

----

|                                                                                |   | 13 Weeks Ended |   |   | 26 Weeks Ended |   |
|-------------------------------------------------------------------------------------|--------|----------------|--------|--------|----------------|--------|
|                                                                                |   | 12/26/2009     |   |   | 12/27/2008     |   |   | 12/26/2009 |   |   | 12/27/2008 |   |
|                                                                                |   |           |   |   |           |   |   |   |   |   |   |   |
| Net      sales                                                                      |   | $              | 50,535 |   |           | $      | 54,081 |   |   | $ | 91,108 |   |   | $ | 122,066 |   |
| Cost      of goods sold                                                             |   |           | 34,634 |   |           |   | 37,766 |   |   |   | 65,175 |   |   |   | 84,558 |   |
|                                                                                |   |           |   |   |           |   |   |   |   |   |   |   |   |   |   |   |
| Gross      Margin                                                                   |   |           | 15,901 |   |           |   | 16,315 |   |   |   | 25,933 |   |   |   | 37,508 |   |
|      %      of Net Sales                                   |   |           | 31.5   | %      |           |   | 30.2 | % |   |   | 28.5 | % |   |   | 30.7 | % |
|                                                                                |   |           |   |   |           |   |   |   |   |   |   |   |   |   |   |   |
| Selling      and general expense                                                    |   |           | 14,359 |   |           |   | 15,493 |   |   |   | 28,712 |   |   |   | 32,991 |   |
|                                                                                |   |           |   |   |           |   |   |   |   |   |   |   |   |   |   |   |
| Operating      Income (loss)                                                        |   |           | 1,542  |   |           |   | 822 |   |   |   | (2,779 | ) |   |   | 4,517 |   |
|                                                                                |   |           |   |   |           |   |   |   |   |   |   |   |   |   |   |   |
| Other      (expense) income                                                         |   |           | (254   | )      |           |   | 820 |   |   |   | (642 | ) |   |   | 1,355 |   |
|                                                                                |   |           |   |   |           |   |   |   |   |   |   |   |   |   |   |   |
| Earnings      (loss) before income taxes                                            |   |           | 1,288  |   |           |   | 1,642 |   |   |   | (3,421 | ) |   |   | 5,872 |   |
|                                                                                |   |           |   |   |           |   |   |   |   |   |   |   |   |   |   |   |
| Income      tax expense                                                             |   |           | 1,600  |   |           |   | 507 |   |   |   | 22 |   |   |   | 2,114 |   |
|                                                                                |   |           |   |   |           |   |   |   |   |   |   |   |   |   |   |   |
| Net      (loss) earnings                                                            |   | $              | (312   | )      |           | $      | 1,135 |   |   | $ | (3,443 | ) |   | $ | 3,758 |   |
|                                                                                |   |           |   |   |           |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                |   |           |   |   |           |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                |   |           |   |   |           |   |   |   |   |   |   |   |   |   |   |   |
| Basic      and diluted (loss) earnings per share                                    |   | $              | (0.05  | )      |           | $      | .17 |   |   | $ | (.52 | ) |   | $ | .57 |   |
|                                                                                |   |           |   |   |           |   |   |   |   |   |   |   |   |   |   |   |
| Average      outstanding shares used in per share calculations (in      thousands): |   |           |   |   |           |   |   |   |   |   |   |   |   |   |   |   |
|   Basic                                                                   |   |           | 6,666  |   |           |   | 6,617 |   |   |   | 6,658 |   |   |   | 6,617 |   |
|   Diluted                                                                 |   |           | 6,666  |   |           |   | 6,620 |   |   |   | 6,658 |   |   |   | 6,624 |   |
|                                                                                |   |           |   |   |           |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                |   |           |   |   |           |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                |   |           |   |   |           |   |   |   |   |   |   |   |   |   |   |   |
| Dividends      per share                                                            |   | $              | .06    |   |           | $      | .12 |   |   | $ | .18 |   |   | $ | .24 |   |

----

|                                                      |   | 26 Weeks Ended |    |
|-----------------------------------------------------------|--------|----------------|---------|
|                                                      |   | 12/26/2009     |    |   | 12/27/2008 |   |
|                                                      |   |           |    |   |   |   |
| Cash      flows from operating activities:                |   |           |    |   |   |   |
| Net (loss)earnings                                        |   | $              | (3,443  | ) |   | $ | 3,758 |   |
| Non-cash items      included:                             |   |           |    |   |   |   |   |   |
| Depreciation                                              |   |           | 4,532   |   |   |   | 4,506 |   |
| Amortization                                              |   |           | 590     |   |   |   | 624 |   |
| Fixed asset      impairment                               |   |           | 72      |   |   |   | - |   |
| Net long-term tax      payable                            |   |           | (454    | ) |   |   | 224 |   |
| Deferred taxes                                            |   |           | (1,448  | ) |   |   | (562 | ) |
| Unrealized transaction (gains)      losses                |   |           | (303    | ) |   |   | 1,295 |   |
| Retirement    benefits                                    |   |           | 1,451   |   |   |   | (989 | ) |
| Working capital      changes                              |   |           |    |   |   |   |   |   |
| Receivables                                               |   |           | (2,727  | ) |   |   | 1,000 |   |
| Inventories                                               |   |           | 10,900  |   |   |   | (11,109 | ) |
| Other current    assets                                   |   |           | 1,270   |   |   |   | (761 | ) |
| Other current      liabilities                            |   |           | 1,556   |   |   |   | (3,175 | ) |
| Prepaid pension cost and      other                       |   |           | (329    | ) |   |   | 1,832 |   |
|                                                      |   |           |    |   |   |   |   |   |
| Net cash provided by (used in)      operating activities  |   |           | 11,667  |   |   |   | (3,357 | ) |
|                                                      |   |           |    |   |   |   |   |   |
| Cash      flows from investing activities:                |   |           |    |   |   |   |   |   |
|   Additions to plant      and equipment         |   |           | (4,132  | ) |   |   | (5,425 | ) |
|   Decrease in      investments                  |   |           | 618     |   |   |   | 6,683 |   |
|   Earn out paid for      Kinemetric Engineering |   |           | (110    | ) |   |   | (270 | ) |
|                                                      |   |           |    |   |   |   |   |   |
| Net cash (used in) provided by      investing activities  |   |           | (3,624  | ) |   |   | 988 |   |
|                                                      |   |           |    |   |   |   |   |   |
| Cash      flows from financing activities:                |   |           |    |   |   |   |   |   |
| Proceeds from short-term      borrowings                  |   |           | 14,049  |   |   |   | 9,646 |   |
| Short-term debt      repayments                           |   |           | (18,127 | ) |   |   | (4,365 | ) |
| Proceeds from long-term      borrowings                   |   |           | 129     |   |   |   | - |   |
| Long-term debt      repayments                            |   |           | (361    | ) |   |   | (190 | ) |
| Proceeds from common stock      issued                    |   |           | 260     |   |   |   | 332 |   |
| Treasury shares      purchased                            |   |           | -       |   |   |   | (188 | ) |
| Dividends paid                                            |   |           | (1,199  | ) |   |   | (1,589 | ) |
| Net cash (used in) provided by      financing activities  |   |           | (5,249  | ) |   |   | 3,646 |   |
|                                                      |   |           |    |   |   |   |   |   |
| Effect      of exchange rate changes on cash              |   |           | 295     |   |   |   | (1,660 | ) |
|                                                      |   |           |    |   |   |   |   |   |
| Net      increase (decrease) in cash                      |   |           | 3,089   |   |   |   | (383 | ) |
| Cash,      beginning of period                            |   |           | 10,248  |   |   |   | 6,515 |   |
| Cash,      end of period                                  |   | $              | 13,337  |   |   | $ | 6,132 |   |

----

|                                                                    |   | Common      Stock Out-standing($1      Par) |   |   |         |   |   |                      |   |   |             |   |   |                                     |    |
|-------------------------------------------------------------------------|--------|--------------------------------------------------|--------|--------|--------------|--------|--------|---------------------------|--------|--------|------------------|--------|--------|------------------------------------------|---------|
|                                                                    |   | Class      A                                     |   |   | Class      B |   |   | Addi-tionalPaid-inCapital |   |   | RetainedEarnings |   |   | AccumulatedOther      Com-prehensiveLoss |    |   | Total |   |
| Balance      June 28, 2008                                              |   | $                                                | 5,708  |   |         | $      | 906    |                      |   | $      | 49,613           |   |   | $                                        | 134,109 |   |   | $ | (3,563 | ) |   | $ | 186,773 |   |
| Comprehensive      income (loss):                                       |   |                                             |   |   |         |   |   |                      |   |   |             |   |   |                                     |    |   |   |   |   |   |   |   |   |   |
|   Net      earnings                                           |   |                                             |   |   |         |   |   |                      |   |   |             |   |   |                                     | 3,758   |   |   |   |   |   |   |   | 3,758 |   |
|   Unrealized net gain      on investments and swap agreement  |   |                                             |   |   |         |   |   |                      |   |   |             |   |   |                                     |    |   |   |   | 229 |   |   |   | 229 |   |
| Translation loss,      net                                              |   |                                             |   |   |         |   |   |                      |   |   |             |   |   |                                     |    |   |   |   | (22,168 | ) |   |   | (22,168 | ) |
| Dividends      ($.24 per share)                                         |   |                                             |   |   |         |   |   |                      |   |   |             |   |   |                                     | (1,589  | ) |   |   |   |   |   |   | (1,589 | ) |
| Treasury      shares:                                                   |   |                                             |   |   |         |   |   |                      |   |   |             |   |   |                                     |    |   |   |   |   |   |   |   |   |   |
| Purchased                                                               |   |                                             | (15    | )      |         |   |   |                      |   |   | (173             | )      |   |                                     |    |   |   |   |   |   |   |   | (188 | ) |
| Issued                                                                  |   |                                             | 15     |   |         |   |   |                      |   |   | 268              |   |   |                                     |    |   |   |   |   |   |   |   | 283 |   |
| Issuance      of stock under ESPP                                       |   |                                             |   |   |         |   | 4      |                      |   |   | 76               |   |   |                                     |    |   |   |   |   |   |   |   | 80 |   |
| Conversion                                                              |   |                                             | 31     |   |         |   | (31    | )                         |   |   |             |   |   |                                     |    |   |   |   |   |   |   |   | - |   |
|                                                                    |   |                                             |   |   |         |   |   |                      |   |   |             |   |   |                                     |    |   |   |   |   |   |   |   |   |   |
| Balance      December 27, 2008                                          |   | $                                                | 5,739  |   |         | $      | 879    |                      |   | $      | 49,784           |   |   | $                                        | 136,278 |   |   | $ | (25,502 | ) |   | $ | 167,178 |   |
|                                                                    |   |                                             |   |   |         |   |   |                      |   |   |             |   |   |                                     |    |   |   |   |   |   |   |   |   |   |
| Balance      June 27, 2009                                              |   | $                                                | 5,770  |   |         | $      | 869    |                      |   | $      | 49,984           |   |   | $                                        | 127,707 |   |   | $ | (41,452 | ) |   | $ | 142,878 |   |
| Comprehensive      income (loss):                                       |   |                                             |   |   |         |   |   |                      |   |   |             |   |   |                                     |    |   |   |   |   |   |   |   |   |   |
| Net loss                                                                |   |                                             |   |   |         |   |   |                      |   |   |             |   |   |                                     | (3,443  | ) |   |   |   |   |   |   | (3,443 | ) |
| Unrealized net gain on      investments                                 |   |                                             |   |   |         |   |   |                      |   |   |             |   |   |                                     |    |   |   |   | 6 |   |   |   | 6 |   |
| Translation gain,      net                                              |   |                                             |   |   |         |   |   |                      |   |   |             |   |   |                                     |    |   |   |   | 5,894 |   |   |   | 5,894 |   |
| Dividends      ($.18 per share)                                         |   |                                             |   |   |         |   |   |                      |   |   |             |   |   |                                     | (1,199  | ) |   |   |   |   |   |   | (1,199 | ) |
| Treasury      shares:                                                   |   |                                             |   |   |         |   |   |                      |   |   |             |   |   |                                     |    |   |   |   |   |   |   |   |   |   |
|       Issued                              |   |                                             | 29     |   |         |   |   |                      |   |   | 222              |   |   |                                     |    |   |   |   |   |   |   |   | 251 |   |
| Issuance      of stock under ESPP                                       |   |                                             |   |   |         |   | 1      |                      |   |   | 40               |   |   |                                     |    |   |   |   |   |   |   |   | 41 |   |
| Conversion                                                              |   |                                             | 13     |   |         |   | (13    | )                         |   |   |             |   |   |                                     |    |   |   |   |   |   |   |   | 0 |   |
|                                                                    |   |                                             |   |   |         |   |   |                      |   |   |             |   |   |                                     |    |   |   |   |   |   |   |   |   |   |
| Balance      December 26, 2009                                          |   | $                                                | 5,812  |   |         | $      | 857    |                      |   | $      | 50,246           |   |   | $                                        | 123,065 |   |   | $ | (35,552 | ) |   | $ | 144,428 |   |
|                                                                    |   |                                             |   |   |         |   |   |                      |   |   |             |   |   |                                     |    |   |   |   |   |   |   |   |   |   |
| Cumulative      Balance:                                                |   |                                             |   |   |         |   |   |                      |   |   |             |   |   |                                     |    |   |   |   |   |   |   |   |   |   |
| Translation loss                                                        |   |                                             |   |   |         |   |   |                      |   |   |             |   |   |                                     |    |   |   |   | (7,924 | ) |   |   |   |   |
| Unrealized loss on      investments                                     |   |                                             |   |   |         |   |   |                      |   |   |             |   |   |                                     |    |   |   |   | 4 |   |   |   |   |   |
| Amounts      not recognized as a component of net periodic benefit cost |   |                                             |   |   |         |   |   |                      |   |   |             |   |   |                                     |    |   |   |   | (27,632 | ) |   |   |   |   |
|                                                                    |   |                                             |   |   |         |   |   |                      |   |   |             |   |   |                                     |    |   |   | $ | (35,552 | ) |   |   |   |   |

----

| o   | Level      1 – Financial assets whose values are based on unadjusted quoted prices      for identical assets or liabilities in an active market which the company      has the ability to access at the measurement date (examples include active      exchange-traded equity securities and most U.S. Government and agency      securities). |
|---------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                             |   | Level      1 |   |
|--------------------------------------------------------------------------------------------------|--------|--------------|--------|
|        International      Bonds Puerto Rican debt obligations |   | $            | 1,256  |   |

----

|                                          |   | Thirteen WeeksEnded December |   |   | Twenty-six WeeksEnded December |   |
|-----------------------------------------------|--------|------------------------------|--------|--------|--------------------------------|--------|
|                                          |   | 2009                         |   |   | 2008                           |   |   | 2009 |   |   | 2008 |   |
|                                          |   |                         |   |   |                           |   |   |   |   |   |   |   |
| Service      cost                             |   | $                            | 486    |   |                           | $      | 556 |   |   | $ | 973 |   |   | $ | 1,129 |   |
| Interest      cost                            |   |                         | 1,574  |   |                           |   | 1,710 |   |   |   | 3,154 |   |   |   | 3,494 |   |
| Expected      return on plan assets           |   |                         | (1,783 | )      |                           |   | (2,561 | ) |   |   | (3,571 | ) |   |   | (5,197 | ) |
| Amortization      of prior service cost       |   |                         | 96     |   |                           |   | 105 |   |   |   | 192 |   |   |   | 215 |   |
| Amortization      of unrecognized (gain) loss |   |                         | 701    |   |                           |   | (3 | ) |   |   | 1,403 |   |   |   | (6 | ) |
|                                          |   | $                            | 1,074  |   |                           | $      | (193 | ) |   | $ | 2,151 |   |   | $ | (365 | ) |

|                                       |   | Thirteen WeeksEnded December |   |   | Twenty-six WeeksEnded December |   |
|--------------------------------------------|--------|------------------------------|--------|--------|--------------------------------|--------|
|                                       |   | 2009                         |   |   | 2008                           |   |   | 2009 |   |   | 2008 |   |
|                                       |   |                         |   |   |                           |   |   |   |   |   |   |   |
| Service      cost                          |   | $                            | 85     |   |                           | $      | 88 |   |   | $ | 169 |   |   | $ | 176 |   |
| Interest      cost                         |   |                         | 169    |   |                           |   | 177 |   |   |   | 339 |   |   |   | 354 |   |
| Amortization      of prior service benefit |   |                         | (226   | )      |                           |   | (226 | ) |   |   | (453 | ) |   |   | (452 | ) |
| Amortization      of unrecognized loss     |   |                         | -      |   |                           |   | - |   |   |   | - |   |   |   | - |   |
|                                       |   | $                            | 28     |   |                           | $      | 39 |   |   | $ | 55 |   |   | $ | 78 |   |

----

|                                    |   | December      26, 2009 |   |   | June      27,2009 |   |
|-----------------------------------------|--------|------------------------|--------|--------|-------------------|--------|
|                                    |   |                   |   |   |              |   |
| Loan and Security      Agreement        |   | $                      | 2,500  |   |              |   | - |   |
| Revolving credit      facility          |   |                   | -      |   |              | $      | 7,200 |   |
| Short-term foreign credit      facility |   |                   | 3,734  |   |              |   | 2,711 |   |
| Other                                   |   |                   | 254    |   |              |   | 225 |   |
|                                    |   | $                      | 6,488  |   |              | $      | 10,136 |   |

| o   | Cash      and short term instruments |
|---------------|--------------------------------------|

|   | The      carrying amount approximates fair value because of the short maturity of      those investments |
|--------|----------------------------------------------------------------------------------------------------------|

| o   | Long      term investments |
|---------------|----------------------------|

|   | The      fair value of some investments are estimated on quoted market prices for      those or similar investments. |
|--------|----------------------------------------------------------------------------------------------------------------------|

----

| o   | Long      term debt |
|---------------|---------------------|

|   | The      fair value of the Company’s long term debt is estimated on quoted market      prices for the same or similar issues or on the current rates offered to      the Company for debt of the same remaining  maturities. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| o   | Foreign      currency contracts |
|---------------|---------------------------------|

|   | The      fair value of foreign currency contracts is estimated by taking the      difference from the contract exchange rate and the current exchange rate      of the contract and multiplying it by the face value of the      contract. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                            |   | December      26, 2009 |   |   | June      27, 2009 |   |
|---------------------------------|--------|------------------------|--------|--------|--------------------|--------|
|                            |   | Carrying      Amount   |   |   | Fair      Value    |   |   | Carrying      Amount |   |   | Fair      Value |   |
|                            |   |                   |   |   |               |   |   |   |   |   |   |   |
| Cash                            |   | $                      | 13,337 |   |               | $      | 13,337 |   |   | $ | 10,248 |   |   | $ | 10,248 |   |
| Investments                     |   |                   | 1,256  |   |               |   | 1,256 |   |   |   | 1,791 |   |   |   | 1,791 |   |
| Foreign      currency contracts |   |                   | -      |   |               |   | - |   |   |   | - |   |   |   | 273 |   |
| Long      term debt             |   |                   | 1,044  |   |               |   | 1,044 |   |   |   | 1,264 |   |   |   | 1,264 |   |

----

----

| Cash      flows (in thousands)                         |   | 26 Weeks Ended |   |
|--------------------------------------------------------|--------|----------------|--------|
|                                                   |   | 12/26/09       |   |   | 12/27/08 |   |
|                                                   |   |           |   |   |   |   |
| Cash provided by (used in)      operations             |   |           | 11,667 |   |   |   | (3,357 | ) |
| Cash (used in) provided from      investing activities |   |           | (3,624 | ) |   |   | 988 |   |
| Cash (used in) provided from      financing activities |   |           | (5,249 | ) |   |   | 3,646 |   |
| Effect of exchange rates changes      on cash          |   |           | 295    |   |   |   | (1,660 | ) |
|                                                   |   |           |   |   |   |   |   |   |
| Net increase (decrease) in      cash                   |   |           | 3,089  |   |   |   | (383 | ) |

----

| o   | The      Company hired a new Chief Financial Officer, effective as of November 5,      2009 |
|---------------|---------------------------------------------------------------------------------------------|

| o   | The      Company has completed an enhanced accounting policies and procedures      manual |
|---------------|-------------------------------------------------------------------------------------------|

| o   | The      Company has affirmed subsidiaries’ responsibility to the Corporate Finance      Group |
|---------------|------------------------------------------------------------------------------------------------------|

| o   | The      Company is developing an improved financial reporting framework which will      facilitate a uniform approach to consolidated and subsidiary financial      analysis.  This project is expected to be completed in the third      quarter. |
|---------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| o   | The      Company will be working with the new CFO on developing a site visit plan      based on subsidiary risk management consideration and coordinating such      visits with internal audit. |
|---------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 31a | Certification      of Chief Executive Officer Pursuant to Rules 13a-15(e)/15(d)-15(e) and      13a-15(f)/15(d)-15(f), filedherewith. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------|

| 31b | Certification      of Principal Accounting Officer Pursuant to Rules 13a-15(e)/15(d)-15(e)      and 13a-15(f)/15(d)-15(f), filedherewith. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------|

| 32 | Certification      of Chief Executive Officer and Principal Accounting Officer Pursuant to      Rule 13a-14(b) and Section 906 of the Sarbanes-Oxley Act of 2002      (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United      States Code), filed herewith. |
|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |                  |   | THE      L. S. STARRETT COMPANY(Registrant)       |
|--------|-----------------------|--------|---------------------------------------------------|
|   |                  |   |                                              |
|   |                  |   |                                              |
| Date   | February      4, 2010 |   | S/R.      Douglas A. Starrett                     |
|   |                  |   | Douglas      A. Starrett - President and CEO      |
|   |                  |   |                                              |
| Date   | February      4, 2010 |   | S/R.      Francis J. O’Brien                |
|   |                  |   | Francis      J. O’Brien - Treasurer and CFO |

----