|  x                                                                                                                                                                                                                                                                                                                                                                           | QUARTERLY      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF      1934  |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                              |                                                                                               |
|                                                                                                                                                                                                                                                                                                                                                                              | For      the quarterly period ended                                                                | December      29, 2007 |
|                                                                                                                                                                                                                                                                                                                                                                              |                                                                                               |
| OR                                                                                                                                                                                                                                                                                                                                                                                |
|                                                                                                                                                                                                                                                                                                                                                                              |                                                                                               |
|  o                                                                                                                                                                                                                                                                                                                                                                           | TRANSITION      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF      1934 |
|                                                                                                                                                                                                                                                                                                                                                                              |                                                                                               |
|                                                                                                                                                                                                                                                                                                                                                                              | For      the transition period from                                                                |   | to |   |
|                                                                                                                                                                                                                                                                                                                                                                              |                                                                                               |
|                                                                                                                                                                                                                                                                                                                                                                              | Commission      file number                                                                        | 1-367 |
|                                                                                                                                                                                                                                                                                                                                                                              |
| THE L. S. STARRETT      COMPANY                                                                                                                                                                                                                                                                                                                                                   |
| (Exact      name of registrant as specified in its charter)                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                                                                                                                                                                                                                                                                              |
| MASSACHUSETTS                                                                                                                                                                                                                                                                                                                                                                     |                                                                                               | 04-1866480 |
| (State      or other jurisdiction of incorporation or organization)                                                                                                                                                                                                                                                                                                               |                                                                                               | (I.R.S.      Employer Identification No.) |
|                                                                                                                                                                                                                                                                                                                                                                              |
| 121      CRESCENT STREET, ATHOL, MASSACHUSETTS                                                                                                                                                                                                                                                                                                                                    | 01331-1915                                                                                         |
| (Address      of principal executive offices)                                                                                                                                                                                                                                                                                                                                     | (Zip      Code)                                                                                    |
|                                                                                                                                                                                                                                                                                                                                                                              |
| Registrant's      telephone number, including area code                                                                                                                                                                                                                                                                                                                           | 978-249-3551                                                                                       |
|                                                                                                                                                                                                                                                                                                                                                                              |
|                                                                                                                                                                                                                                                                                                                                                                              |
| 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, or a non-accelerated filer.  See definition      of “accelerated filer and large accelerated filer” in Rule 12b-2 of the      Exchange Act, (Check One):                                                                                        |
|                                                                                                                                                                                                                                                                                                                                                                              |
| Large      Accelerated Filer o    Accelerated Filer x    Non-Accelerated      Filer 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      31, 2008                                                                              |   |
|                                                                                                                                                                                                                                                                                                                                                                              |                                                                                               |
| Class      A Common Shares                                                                                                                                                                                                                                                                                                                                                        | 5,679,303                                                                                          |   |
|                                                                                                                                                                                                                                                                                                                                                                              |                                                                                               |
| Class      B Common Shares                                                                                                                                                                                                                                                                                                                                                        | 920,345                                                                                            |   |

----

|                                                                                                                                                                        |   | Page      No. |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------|
|                                                                                                                                                                        |   |          |
| Part      I.                      Financial      Information: |   |          |
|                                                                                                                                                                        |   |          |
| Item      1.     Financial Statements                                                                                                              |   |          |
|                                                                                                                                                                        |   |          |
| Consolidated      Statements of Operations –thirteen      weeks and twenty-six weeks ended December 29, 2007 and December 23, 2006      (unaudited)                   |   | 3             |
|                                                                                                                                                                        |   |          |
| Consolidated      Statements of Cash Flows –thirteen      weeks and twenty-six weeks ended December 29, 2007 and December 23, 2006      (unaudited)                   |   | 4             |
|                                                                                                                                                                        |   |          |
| Consolidated      Balance Sheets –December      29, 2007 (unaudited) and June 30, 2007                                                                                |   | 5             |
|                                                                                                                                                                        |   |          |
| Consolidated      Statements of Stockholders' Equity -twenty-six      weeks ended December 29, 2007 and December 23, 2006      (unaudited)                                  |   | 6             |
|                                                                                                                                                                        |   |          |
| Notes      to Consolidated Financial Statements                                                                                                                             |   | 7-9           |
|                                                                                                                                                                        |   |          |
| Item      2.    Management's Discussion and Analysis of      FinancialCondition and Results of Operations                                               |   | 9-13          |
|                                                                                                                                                                        |   |          |
| Item      3.    Quantitative and Qualitative Disclosures      AboutMarket Risk                                                                          |   | 13            |
|                                                                                                                                                                        |   |          |
| Item      4.    Controls and Procedures                                                                                                                 |   | 14            |
|                                                                                                                                                                        |   |          |
| Part      II.  Other information:                                                                                                                                 |   |          |
|                                                                                                                                                                        |   |          |
| Item      1A. Risk Factors                                                                                                                                             |   | 14-15         |
|                                                                                                                                                                        |   |          |
| Item      2.     Unregistered Sales of Equity Securities      and Use ofProceeds                                                                   |   | 16            |
|                                                                                                                                                                        |   |          |
| Item      3,5.  Not Applicable                                                                                                                                    |   | 16            |
|                                                                                                                                                                        |   |          |
| Item      4.     Submission of Matters to a Vote of      Security Holders                                                                          |   | 16            |
|                                                                                                                                                                        |   |          |
| Item      6.     Exhibits                                                                                                                          |   | 16            |
|                                                                                                                                                                        |   |          |
| SIGNATURES                                                                                                                                                                  |   | 16            |

----

|                                                                                |   | 13      Weeks Ended |    |   | 26      Weeks Ended |   |
|-------------------------------------------------------------------------------------|--------|---------------------|---------|--------|---------------------|--------|
|                                                                                |   | 12/29/07            |    |   | 12/23/06            |   |   | 12/29/07 |   |   | 12/23/06 |   |
|                                                                                |   |                |    |   |                |   |   |   |   |   |   |   |
| Net      sales                                                                      |   | $                   | 62,436  |   |                | $      | 57,110 |   |   | $ | 121,986 |   |   | $ | 108,202 |   |
| Cost      of goods sold                                                             |   |                | (42,892 | )      |                |   | (40,805 | ) |   |   | (83,888 | ) |   |   | (78,329 | ) |
| Selling      and general expense                                                    |   |                | (15,766 | )      |                |   | (13,973 | ) |   |   | (30,469 | ) |   |   | (27,301 | ) |
| Other      income (expense)                                                         |   |                | 2,162   |   |                |   | (537 | ) |   |   | 1,896 |   |   |   | (482 | ) |
|                                                                                |   |                |    |   |                |   |   |   |   |   |   |   |   |   |   |   |
| Earnings      before income taxes                                                   |   |                | 5,940   |   |                |   | 1,795 |   |   |   | 9,525 |   |   |   | 2,090 |   |
| Income      tax expense                                                             |   |                | 2,517   |   |                |   | 553 |   |   |   | 3,772 |   |   |   | 627 |   |
|                                                                                |   |                |    |   |                |   |   |   |   |   |   |   |   |   |   |   |
| Net      earnings                                                                   |   | $                   | 3,423   |   |                | $      | 1,242 |   |   | $ | 5,753 |   |   | $ | 1,463 |   |
|                                                                                |   |                |    |   |                |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                |   |                |    |   |                |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                |   |                |    |   |                |   |   |   |   |   |   |   |   |   |   |   |
| Basic      and diluted earnings per share                                           |   | $                   | .52     |   |                | $      | .19 |   |   | $ | .87 |   |   | $ | .22 |   |
|                                                                                |   |                |    |   |                |   |   |   |   |   |   |   |   |   |   |   |
| Average      outstanding shares used in per share calculations (in      thousands): |   |                |    |   |                |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                               |   |                | 6,587   |   |                |   | 6,680 |   |   |   | 6,591 |   |   |   | 6,675 |   |
| Diluted                                                                             |   |                | 6,596   |   |                |   | 6,686 |   |   |   | 6,601 |   |   |   | 6,682 |   |
|                                                                                |   |                |    |   |                |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                |   |                |    |   |                |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                |   |                |    |   |                |   |   |   |   |   |   |   |   |   |   |   |
| Dividends      per share                                                            |   | $                   | .20     |   |                | $      | .10 |   |   | $ | .30 |   |   | $ | .20 |   |
|                                                                                |   |                |    |   |                |   |   |   |   |   |   |   |   |   |   |   |

----

|                                                     |   | 13      Weeks Ended |   |   | 26      Weeks Ended |   |
|----------------------------------------------------------|--------|---------------------|--------|--------|---------------------|--------|
|                                                     |   | 12/29/07            |   |   | 12/23/06            |   |   | 12/29/07 |   |   | 12/23/06 |   |
|                                                     |   |                |   |   |                |   |   |   |   |   |   |   |
| Cash      flows from operating activities:               |   |                |   |   |                |   |   |   |   |   |   |   |
| Net earnings                                             |   | $                   | 3,423  |   |                | $      | 1,242 |   |   | $ | 5,753 |   |   | $ | 1,463 |   |
| Non-cash items      included:                            |   |                |   |   |                |   |   |   |   |   |   |   |   |   |   |   |
| Gain from sale of real      estate                       |   |                | (1,703 | )      |                |   | - |   |   |   | (1,703 | ) |   |   | (299 | ) |
| Depreciation                                             |   |                | 2,465  |   |                |   | 2,823 |   |   |   | 4,839 |   |   |   | 5,331 |   |
| Impaired assets                                          |   |                | 95     |   |                |   | - |   |   |   | 95 |   |   |   | - |   |
| Amortization                                             |   |                | 321    |   |                |   | 265 |   |   |   | 616 |   |   |   | 573 |   |
| Long-term deferred      taxes                            |   |                | 660    |   |                |   | 98 |   |   |   | 1,107 |   |   |   | (76 | ) |
| Unrealized transaction (gains)      losses               |   |                | (758   | )      |                |   | 12 |   |   |   | (556 | ) |   |   | (143 | ) |
| Retirementbenefits                                       |   |                | (922   | )      |                |   | (472 | ) |   |   | (1,743 | ) |   |   | (764 | ) |
| Working capital      changes:                            |   |                |   |   |                |   |   |   |   |   |   |   |   |   |   |   |
| Receivables                                              |   |                | 2,384  |   |                |   | (3,177 | ) |   |   | (730 | ) |   |   | (3,420 | ) |
| Inventories                                              |   |                | 2,628  |   |                |   | 833 |   |   |   | 4,812 |   |   |   | 2,428 |   |
| Other current    assets                                  |   |                | (239   | )      |                |   | (555 | ) |   |   | 668 |   |   |   | 637 |   |
| Other current      liabilities                           |   |                | 1,117  |   |                |   | (429 | ) |   |   | 731 |   |   |   | (1,693 | ) |
| Prepaid pension cost and      other                      |   |                | 303    |   |                |   | (85 | ) |   |   | 648 |   |   |   | (30 | ) |
|                                                     |   |                |   |   |                |   |   |   |   |   |   |   |   |   |   |   |
| Net cash from operating      activities                  |   |                | 9,774  |   |                |   | 555 |   |   |   | 14,537 |   |   |   | 4,007 |   |
|                                                     |   |                |   |   |                |   |   |   |   |   |   |   |   |   |   |   |
| Cash      flows from investing activities:               |   |                |   |   |                |   |   |   |   |   |   |   |   |   |   |   |
| Additions to plant and      equipment                    |   |                | (1,701 | )      |                |   | (1,067 | ) |   |   | (4,098 | ) |   |   | (2,522 | ) |
| Proceeds from sale of real      estate                   |   |                | 2,416  |   |                |   | - |   |   |   | 2,416 |   |   |   | 394 |   |
| (Increase) decrease in      investments                  |   |                | (9,090 | )      |                |   | 284 |   |   |   | (9,850 | ) |   |   | 1,092 |   |
| Purchase of    Kinemetric                                |   |                | -      |   |                |   | - |   |   |   | (2,060 | ) |   |   | - |   |
|                                                     |   |                |   |   |                |   |   |   |   |   |   |   |   |   |   |   |
| Net cash used in investing      activities               |   |                | (8,375 | )      |                |   | (783 | ) |   |   | (13,592 | ) |   |   | (1,036 | ) |
|                                                     |   |                |   |   |                |   |   |   |   |   |   |   |   |   |   |   |
| Cash      flows from financing activities:               |   |                |   |   |                |   |   |   |   |   |   |   |   |   |   |   |
| Proceeds from short-term      borrowings                 |   |                | 2,265  |   |                |   | 1,088 |   |   |   | 4,481 |   |   |   | 1,328 |   |
| Short-term debt      repayments                          |   |                | (1,567 | )      |                |   | (669 | ) |   |   | (3,711 | ) |   |   | (2,537 | ) |
| Proceeds from long-term debt      borrowings             |   |                | -      |   |                |   | 250 |   |   |   | - |   |   |   | 421 |   |
| Long-term debt      repayments                           |   |                | (109   | )      |                |   | - |   |   |   | (224 | ) |   |   | - |   |
| Common stockissued                                       |   |                | 157    |   |                |   | 146 |   |   |   | 268 |   |   |   | 254 |   |
| Treasury shares      purchased                           |   |                | -      |   |                |   | - |   |   |   | (317 | ) |   |   | (35 | ) |
| Dividends                                                |   |                | (1,318 | )      |                |   | (668 | ) |   |   | (1,978 | ) |   |   | (1,337 | ) |
|                                                     |   |                |   |   |                |   |   |   |   |   |   |   |   |   |   |   |
| Net cash provided by (used in)      financing activities |   |                | (572   | )      |                |   | 147 |   |   |   | (1,481 | ) |   |   | (1,906 | ) |
|                                                     |   |                |   |   |                |   |   |   |   |   |   |   |   |   |   |   |
| Effect      of exchange rate changes on cash             |   |                | 136    |   |                |   | 92 |   |   |   | 166 |   |   |   | 177 |   |
|                                                     |   |                |   |   |                |   |   |   |   |   |   |   |   |   |   |   |
| Net      increase (decrease) in cash                     |   |                | 963    |   |                |   | 11 |   |   |   | (370 | ) |   |   | 1,242 |   |
| Cash,      beginning of period                           |   |                | 6,375  |   |                |   | 5,207 |   |   |   | 7,708 |   |   |   | 3,976 |   |
| Cash,      end of period                                 |   | $                   | 7,338  |   |                | $      | 5,218 |   |   | $ | 7,338 |   |   | $ | 5,218 |   |
|                                                     |   |                |   |   |                |   |   |   |   |   |   |   |   |   |   |   |

----

|                                                                                                                                 |   | Dec.      292007(unaudited) |    |   | June      30 2007 |   |
|--------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|---------|--------|-------------------|--------|
|                                                                                                                                 |   |                        |    |   |              |   |
| ASSETS                                                                                                                               |   |                        |    |   |              |   |
| Current      assets:                                                                                                                 |   |                        |    |   |              |   |
| Cash                                                                                                                                 |   | $                           | 7,338   |   |              | $      | 7,708 |   |
| Investments                                                                                                                          |   |                        | 24,846  |   |              |   | 14,503 |   |
| Accounts receivable (less      allowance for doubtful accounts of $954 and $1,623)                                                   |   |                        | 40,065  |   |              |   | 37,314 |   |
| Inventories:                                                                                                                         |   |                        |    |   |              |   |   |   |
| Raw materials and      supplies                                                                                                      |   |                        | 13,563  |   |              |   | 17,130 |   |
| Goods in process and finished      parts                                                                                             |   |                        | 16,428  |   |              |   | 17,442 |   |
| Finished goods                                                                                                                       |   |                        | 24,579  |   |              |   | 22,744 |   |
|                                                                                                                                 |   |                        | 54,570  |   |              |   | 57,316 |   |
| Current deferred income tax      asset                                                                                               |   |                        | 3,862   |   |              |   | 3,866 |   |
| Prepaid expenses, taxes and other      current assets                                                                                |   |                        | 4,450   |   |              |   | 4,920 |   |
| Total current    assets                                                                                                              |   |                        | 135,131 |   |              |   | 125,627 |   |
|                                                                                                                                 |   |                        |    |   |              |   |   |   |
| Property,      plant and equipment, at cost (less accumulated depreciation of $127,353      and $124,549)                            |   |                        | 59,516  |   |              |   | 58,883 |   |
| Property      held for sale                                                                                                          |   |                        | 1,940   |   |              |   | 2,653 |   |
| Intangible      assets (less accumulated amortization of $1,853 and$1,237)                                                           |   |                        | 4,388   |   |              |   | 4,063 |   |
| Goodwill                                                                                                                             |   |                        | 6,025   |   |              |   | 5,260 |   |
| Pension      asset                                                                                                                   |   |                        | 37,864  |   |              |   | 36,656 |   |
| Other      assets                                                                                                                    |   |                        | 778     |   |              |   | 869 |   |
| Long-term      taxes receivable                                                                                                      |   |                        | 1,799   |   |              |   | - |   |
| Total assets                                                                                                                         |   | $                           | 247,441 |   |              | $      | 234,011 |   |
|                                                                                                                                 |   |                        |    |   |              |   |   |   |
|                                                                                                                                 |   |                        |    |   |              |   |   |   |
| LIABILITIES AND STOCKHOLDERS'      EQUITY                                                                                            |   |                        |    |   |              |   |   |   |
| Current      liabilities:                                                                                                            |   |                        |    |   |              |   |   |   |
| Notes payable and current      maturities                                                                                            |   | $                           | 5,533   |   |              | $      | 4,737 |   |
| Accounts payable and accrued      expenses                                                                                           |   |                        | 18,552  |   |              |   | 16,674 |   |
| Accrued salaries and      wages                                                                                                      |   |                        | 5,461   |   |              |   | 4,869 |   |
| Total current      liabilities                                                                                                       |   |                        | 29,546  |   |              |   | 26,280 |   |
|                                                                                                                                 |   |                        |    |   |              |   |   |   |
| Long-term      taxes payable                                                                                                         |   |                        | 6,964   |   |              |   | 4,852 |   |
| Deferred      income taxes                                                                                                           |   |                        | 6,106   |   |              |   | 5,125 |   |
| Long-term      debt                                                                                                                  |   |                        | 8,388   |   |              |   | 8,520 |   |
| Postretirement      benefit liability                                                                                                |   |                        | 10,800  |   |              |   | 11,241 |   |
| Total liabilities                                                                                                                    |   |                        | 61,804  |   |              |   | 56,018 |   |
|                                                                                                                                 |   |                        |    |   |              |   |   |   |
| Stockholders'      equity:                                                                                                           |   |                        |    |   |              |   |   |   |
| Class      A Common $1 par (20,000,000 shrs. authorized)5,666,439      outstanding on 12/29/07,5,632,017      outstanding on 6/30/07 |   |                        | 5,666   |   |              |   | 5,632 |   |
| Class      B Common $1 par (10,000,000 shrs. authorized)924,317      outstanding on 12/29/07,962,758      outstanding on 6/30/07     |   |                        | 924     |   |              |   | 963 |   |
| Additional paid-in      capital                                                                                                      |   |                        | 49,261  |   |              |   | 49,282 |   |
| Retained earnings reinvested      and employed in the business                                                                       |   |                        | 131,365 |   |              |   | 127,902 |   |
| Accumulated other comprehensive      loss                                                                                            |   |                        | (1,579  | )      |              |   | (5,786 | ) |
| Total stockholders'      equity                                                                                                      |   |                        | 185,637 |   |              |   | 177,993 |   |
| Total liabilities and      stockholders’ equity                                                                                |   | $                           | 247,441 |   |              | $      | 234,011 |   |

----

|                                                                    |   | Common      Stock Out-standing($1 Par) |   |   |    |   |   |                      |   |   |             |   |   |                                      |    |
|-------------------------------------------------------------------------|--------|---------------------------------------------|--------|--------|---------|--------|--------|---------------------------|--------|--------|------------------|--------|--------|-------------------------------------------|---------|
|                                                                    |   | Class A                                     |   |   | Class B |   |   | Addi-tionalPaid-inCapital |   |   | RetainedEarnings |   |   | AccumulatedOther Com-prehensive      Loss |    |   | Total |   |
| Balance      June 24, 2006                                              |   | $                                           | 5,629  |   |    | $      | 1,040  |                      |   | $      | 50,569           |   |   | $                                         | 123,913 |   |   | $ | (15,909 | ) |   | $ | 165,242 |   |
| Comprehensive      income (loss):                                       |   |                                        |   |   |    |   |   |                      |   |   |             |   |   |                                      |    |   |   |   |   |   |   |   |   |   |
| Net earnings                                                            |   |                                        |   |   |    |   |   |                      |   |   |             |   |   |                                      | 1,463   |   |   |   |   |   |   |   | 1,463 |   |
| Unrealized net loss on investments      and swap agreement              |   |                                        |   |   |    |   |   |                      |   |   |             |   |   |                                      |    |   |   |   | (55 | ) |   |   | (55 | ) |
| Translation gain,    net                                                |   |                                        |   |   |    |   |   |                      |   |   |             |   |   |                                      |    |   |   |   | 3,073 |   |   |   | 3,073 |   |
| Total      comprehensive income                                         |   |                                        |   |   |    |   |   |                      |   |   |             |   |   |                                      |    |   |   |   |   |   |   |   | 4,481 |   |
| Dividends      ($.20 per share)                                         |   |                                        |   |   |    |   |   |                      |   |   |             |   |   |                                      | (1,337  | ) |   |   |   |   |   |   | (1,337 | ) |
| Treasury      shares:                                                   |   |                                        |   |   |    |   |   |                      |   |   |             |   |   |                                      |    |   |   |   |   |   |   |   |   |   |
| Purchased                                                               |   |                                        | (3     | )      |    |   |   |                      |   |   | (32              | )      |   |                                      |    |   |   |   |   |   |   |   | (35 | ) |
| Issued                                                                  |   |                                        | 14     |   |    |   |   |                      |   |   | 173              |   |   |                                      |    |   |   |   |   |   |   |   | 187 |   |
| Issuance      of stock under ESPP                                       |   |                                        |   |   |    |   | 5      |                      |   |   | 93               |   |   |                                      |    |   |   |   |   |   |   |   | 98 |   |
| Conversion                                                              |   |                                        | 50     |   |    |   | (50    | )                         |   |   |             |   |   |                                      |    |   |   |   |   |   |   |   |   |   |
|                                                                    |   |                                        |   |   |    |   |   |                      |   |   |             |   |   |                                      |    |   |   |   |   |   |   |   |   |   |
| Balance      December 23, 2006                                          |   | $                                           | 5,690  |   |    | $      | 995    |                      |   | $      | 50,803           |   |   | $                                         | 124,039 |   |   | $ | (12,891 | ) |   | $ | 168,636 |   |
|                                                                    |   |                                        |   |   |    |   |   |                      |   |   |             |   |   |                                      |    |   |   |   |   |   |   |   |   |   |
|                                                                    |   |                                        |   |   |    |   |   |                      |   |   |             |   |   |                                      |    |   |   |   |   |   |   |   |   |   |
| Balance      June 30, 2007                                              |   | $                                           | 5,632  |   |    | $      | 963    |                      |   | $      | 49,282           |   |   | $                                         | 127,902 |   |   | $ | (5,786 | ) |   | $ | 177,993 |   |
| Comprehensive      income (loss):                                       |   |                                        |   |   |    |   |   |                      |   |   |             |   |   |                                      |    |   |   |   |   |   |   |   |   |   |
| Net earnings                                                            |   |                                        |   |   |    |   |   |                      |   |   |             |   |   |                                      | 5,753   |   |   |   |   |   |   |   | 5,753 |   |
| Unrealized net loss on investments      and swap agreement              |   |                                        |   |   |    |   |   |                      |   |   |             |   |   |                                      |    |   |   |   | (36 | ) |   |   | (36 | ) |
| Translation gain,    net                                                |   |                                        |   |   |    |   |   |                      |   |   |             |   |   |                                      |    |   |   |   | 4,243 |   |   |   | 4,243 |   |
| Total      comprehensive income                                         |   |                                        |   |   |    |   |   |                      |   |   |             |   |   |                                      |    |   |   |   |   |   |   |   | 9,960 |   |
| Tax      adjustment for FIN 48                                          |   |                                        |   |   |    |   |   |                      |   |   |             |   |   |                                      | (312    | ) |   |   |   |   |   |   | (312 | ) |
| Dividends      ($.30 per share)                                         |   |                                        |   |   |    |   |   |                      |   |   |             |   |   |                                      | (1,978  | ) |   |   |   |   |   |   | (1,978 | ) |
| Treasury      shares:                                                   |   |                                        |   |   |    |   |   |                      |   |   |             |   |   |                                      |    |   |   |   |   |   |   |   |   |   |
| Purchased                                                               |   |                                        | (20    | )      |    |   |   |                      |   |   | (297             | )      |   |                                      |    |   |   |   |   |   |   |   | (317 | ) |
| Issued                                                                  |   |                                        | 10     |   |    |   |   |                      |   |   | 177              |   |   |                                      |    |   |   |   |   |   |   |   | 187 |   |
| Issuance      of stock under ESPP                                       |   |                                        |   |   |    |   | 5      |                      |   |   | 99               |   |   |                                      |    |   |   |   |   |   |   |   | 104 |   |
| Conversion                                                              |   |                                        | 44     |   |    |   | (44    | )                         |   |   |             |   |   |                                      |    |   |   |   |   |   |   |   | - |   |
|                                                                    |   |                                        |   |   |    |   |   |                      |   |   |             |   |   |                                      |    |   |   |   |   |   |   |   |   |   |
| Balance      December 29, 2007                                          |   | $                                           | 5,666  |   |    | $      | 924    |                      |   | $      | 49,261           |   |   | $                                         | 131,365 |   |   | $ | (1,579 | ) |   | $ | 185,637 |   |
|                                                                    |   |                                        |   |   |    |   |   |                      |   |   |             |   |   |                                      |    |   |   |   |   |   |   |   |   |   |
| Cumulative      Balance:                                                |   |                                        |   |   |    |   |   |                      |   |   |             |   |   |                                      |    |   |   |   |   |   |   |   |   |   |
| Translation loss                                                        |   |                                        |   |   |    |   |   |                      |   |   |             |   |   |                                      |    |   |   |   | (2,568 | ) |   |   |   |   |
| Unrealized      net loss on investments and swap agreement              |   |                                        |   |   |    |   |   |                      |   |   |             |   |   |                                      |    |   |   |   | (96 | ) |   |   |   |   |
| Amounts not recognized as a      component of net periodic benefit cost |   |                                        |   |   |    |   |   |                      |   |   |             |   |   |                                      |    |   |   |   | 1,085 |   |   |   |   |   |
|                                                                    |   |                                        |   |   |    |   |   |                      |   |   |             |   |   |                                      |    |   |   | $ | (1,579 | ) |   |   |   |   |
|                                                                    |   |                                        |   |   |    |   |   |                      |   |   |             |   |   |                                      |    |   |   |   |   |   |   |   |   |   |

----

|                                         |   | Thirteen      WeeksEnded      December |   |   | Twenty-six      WeeksEnded      December |   |
|----------------------------------------------|--------|----------------------------------------|--------|--------|------------------------------------------|--------|
|                                         |   | 2007                                   |   |   | 2006                                     |   |   | 2007 |   |   | 2006 |   |
|                                         |   |                                   |   |   |                                     |   |   |   |   |   |   |   |
| Interest income                              |   | $                                      | 423    |   |                                     | $      | 274 |   |   | $ | 734 |   |   | $ | 582 |   |
| Interest expense and commitment      fees    |   |                                   | (198   | )      |                                     |   | (420 | ) |   |   | (453 | ) |   |   | (870 | ) |
| Realized and unrealized exchange      losses |   |                                   | 278    |   |                                     |   | (47 | ) |   |   | 79 |   |   |   | (84 | ) |
| Gains on sale of real      estate            |   |                                   | 1,703  |   |                                     |   | - |   |   |   | 1,703 |   |   |   | 299 |   |
| Other                                        |   |                                   | (44    | )      |                                     |   | (344 | ) |   |   | (167 | ) |   |   | (409 | ) |
|                                         |   | $                                      | 2,162  |   |                                     | $      | (537 | ) |   | $ | 1,896 |   |   | $ | (482 | ) |

----

|                                    |   | Thirteen      WeeksEnded      December |   |   | Twenty-six      WeeksEnded      December |   |
|-----------------------------------------|--------|----------------------------------------|--------|--------|------------------------------------------|--------|
|                                    |   | 2007                                   |   |   | 2006                                     |   |   | 2007 |   |   | 2006 |   |
|                                    |   |                                   |   |   |                                     |   |   |   |   |   |   |   |
| Service cost                            |   | $                                      | 555    |   |                                     | $      | 597 |   |   | $ | 1,199 |   |   | $ | 1,363 |   |
| Interest cost                           |   |                                   | 1,658  |   |                                     |   | 1,680 |   |   |   | 3,503 |   |   |   | 3,382 |   |
| Expected return on plan      assets     |   |                                   | (2,959 | )      |                                     |   | (2,580 | ) |   |   | (5,909 | ) |   |   | (5,165 | ) |
| Amort. of prior service      cost       |   |                                   | 112    |   |                                     |   | 109 |   |   |   | 224 |   |   |   | 218 |   |
| Amort. of unrecognized (gain)      loss |   |                                   | (2     | )      |                                     |   | 36 |   |   |   | (4 | ) |   |   | 74 |   |
|                                    |   | $                                      | (636   | )      |                                     | $      | (158 | ) |   | $ | (987 | ) |   | $ | (128 | ) |

|                              |   | Thirteen      WeeksEnded      December |   |   | Twenty-six      WeeksEnded      December |   |
|-----------------------------------|--------|----------------------------------------|--------|--------|------------------------------------------|--------|
|                              |   | 2007                                   |   |   | 2006                                     |   |   | 2007 |   |   | 2006 |   |
|                              |   |                                   |   |   |                                     |   |   |   |   |   |   |   |
| Service cost                      |   | $                                      | 97     |   |                                     | $      | 88 |   |   | $ | 197 |   |   | $ | 190 |   |
| Interest cost                     |   |                                   | 191    |   |                                     |   | 187 |   |   |   | 371 |   |   |   | 364 |   |
| Amort. of prior service      cost |   |                                   | (226   | )      |                                     |   | (233 | ) |   |   | (453 | ) |   |   | (447 | ) |
| Amort. of unrecognized      loss  |   |                                   | 35     |   |                                     |   | 39 |   |   |   | 57 |   |   |   | 51 |   |
|                              |   | $                                      | 97     |   |                                     | $      | 81 |   |   | $ | 172 |   |   | $ | 158 |   |
|                              |   |                                   |   |   |                                     |   |   |   |   |   |   |   |   |   |   |   |

----

|                                                                                             |   | December      29, 2007 |   |   | June      30, 2007 |   |
|--------------------------------------------------------------------------------------------------|--------|------------------------|--------|--------|--------------------|--------|
|                                                                                             |   |                   |   |   |               |   |
| Reducing    revolver                                                                             |   | $                      | 9,600  |   |               | $      | 9,600 |   |
| Capitalized      lease obligations payable in Brazilian currency due 2007-2011,      13.3%-23.1% |   |                   | 1,677  |   |               |   | 1,768 |   |
|                                                                                             |   |                   | 11,277 |   |               |   | 11,368 |   |
| Less current      portion                                                                        |   |                   | 2,889  |   |               |   | 2,848 |   |
|                                                                                             |   | $                      | 8,388  |   |               | $      | 8,520 |   |

----

----

| Cash      flows (in thousands)                         |   | 13      Weeks Ended |   |   | 26      Weeks Ended |   |
|--------------------------------------------------------|--------|---------------------|--------|--------|---------------------|--------|
|                                                   |   | 12/29/07            |   |   | 12/23/06            |   |   | 12/29/07 |   |   | 12/23/06 |   |
|                                                   |   |                |   |   |                |   |   |   |   |   |   |   |
| Cash provided by (used in)      operations             |   |                | 9,774  |   |                |   | 555 |   |   |   | 14,537 |   |   |   | 4,007 |   |
| Cash (used in) provided from      investing activities |   |                | (8,375 | )      |                |   | (783 | ) |   |   | (13,592 | ) |   |   | (1,036 | ) |
| Cash provided from (used in)      financing activities |   |                | (572   | )      |                |   | 147 |   |   |   | (1,481 | ) |   |   | (1,906 | ) |
|                                                   |   |                |   |   |                |   |   |   |   |   |   |   |   |   |   |   |

----

----

----

----

----

| ISSUER      PURCHASES OF EQUITY SECURITIES |
|--------------------------------------------|
| Period                                     | Shares      Purchased | Average      Price | Shares      Purchased Under Announced Programs | Shares      yet to be Purchased Under Announced Programs |
| 9/29/07-11/3/07                            | none |   |   | none |
| 11/4/07-12/1/07                            | none |   |   | none |
| 12/2/07-12/29/07                           | none |   |   | none |

| (a)   | The      annual meeting of shareholders was held on October 10,    2007. |
|-----------------|--------------------------------------------------------------------------|

|                                          | VotesFor   |   | VotesWithheld |   | Abstentionsand      BrokerNon-votes |
|-----------------------------------------------|------------|--------|---------------|--------|-------------------------------------|
| Class      A shares voting as separate class: |       |   |          |   |                                |
| Richard B.Kennedy                             | 5,089,713  |   | 384,135       |   | N/A                                 |
| Class      A and B shares voting together:    |       |   |          |   |                                |
| Terry A. Piper                                | 12,063,471 |   | 997,867       |   | N/A                                 |

|   | 2. | As      more fully described in the registrant’s Notice of Annual Meeting of      Stockholders and Proxy Statement for said meeting, it was voted to adopt      the Company’s 2007 Employees’ Stock Purchase Plan.  There were      10,781,894 votes in favor, 525,119 against, and 619,283      abstentions. |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | Exhibits |
|-----------------|----------|

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

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

|   | 32 | Certification      of Chief Executive Officer and Chief Financial 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). |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |                  |   | THE      L. S. STARRETT COMPANY(Registrant)              |
|--------|-----------------------|--------|----------------------------------------------------------|
|   |                  |   |                                                     |
|   |                  |   |                                                     |
| Date   | February      7, 2008 |   | S/R.      J. Hylek                                       |
|   |                  |   | R.      J. Hylek (Treasurer and Chief Financial Officer) |
|   |                  |   |                                                     |
| Date   | February      7, 2008 |   | S/R.      J. Simkevich                                   |
|   |                  |   | R.J.      Simkevich (Corporate Controller)               |

----