A.	Basis of Presentation

The unaudited condensed consolidated financial statements have been prepared by Twin Disc, Incorporated (the “Company”) pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and, in the opinion of the Company, include adjustments, consisting primarily of normal recurring items, necessary for a fair statement of results for each period. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such SEC rules and regulations. The Company believes that the disclosures made are adequate to make the information presented

not

misleading. It is suggested that these financial statements be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Annual Report filed on Form

-K for

June 30, 2019.

The year-end condensed balance sheet data was derived from audited financial statements, but does

not

include all disclosures required by accounting principles generally accepted in the United States.

The consolidated financial statements and information presented herein include the financial results of Veth Propulsion Holding BV (“Veth Propulsion”), the acquisition of which was completed on

July 2, 2018.

The financial results included in this Form

-Q related to the acquisition method of accounting for the Veth Propulsion acquisition have been finalized and completed.

Recently Adopted Accounting Standards

June 2018,

the FASB issued guidance (ASU

2018

) intended to simplify the accounting for share based payments granted to nonemployees. Under the amendments in this guidance, payments to nonemployees would be aligned with the requirements for share-based payments granted to employees. The Company adopted this guidance effective

July 1, 2019.

The adoption of this guidance did

not

have a material impact on the Company’s financial statements and disclosures.

New Accounting Releases

August 2018,

the FASB issued updated guidance (ASU

2018

) as part of the disclosure framework project, which focuses on improving the effectiveness of disclosures in the notes to the financial statements. The amendments in this update modify the disclosure requirements on fair value measurements in Topic

820,

Fair Value Measurement. The amendments in this guidance are effective for fiscal years, and interim periods within those fiscal years, beginning after

December 15, 2019 (

the Company’s fiscal

2021

), with early adoption permitted. The Company is currently evaluating the potential impact of this guidance on the Company’s disclosures.

August 2018,

the FASB issued updated guidance (ASU

2018

) intended to modify the disclosure requirements for employers that sponsor defined benefit pension or postretirement plans. The amendments in this guidance are effective for fiscal years ending after

December 15, 2020 (

the Company’s fiscal

2021

), with early adoption permitted. The Company is currently evaluating the potential impact of this guidance on the Company’s disclosures.

December 2019,

the FASB issued guidance (ASU

2019

) intended to simplify the accounting for income taxes. The amendments in this guidance are effective for fiscal years, and interim periods within those fiscal years, beginning after

December 15, 2020 (

the Company’s fiscal

2022

), with early adoption permitted. The Company is currently evaluating the potential impact of this guidance on the Company’s disclosures.

Special Note Regarding Smaller Reporting Company Status

Under SEC Release

10513;

83550,

Amendments to Smaller Reporting Company Definition, the Company qualifies as a smaller reporting company and accordingly, it has scaled some of its disclosures of financial and non-financial information in this quarterly report. The Company will continue to determine whether to provide additional scaled disclosures of financial or non-financial information in future quarterly reports, annual reports and/or proxy statements if it remains a smaller reporting company under SEC rules.