
<PAGE> 1
 
                         SECURITIES AND EXCHANGE COMMISSION
                              Washington, D. C.  20549
                                     FORM 10-K
                    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) 
                       OF THE SECURITIES EXCHANGE ACT OF 1934
                       --------------------------------------
                       For the Fiscal Year Ended June 30, 1997
                           Commission File Number 1-7635
                              TWIN DISC, INCORPORATED
 ------------------------------------------------------------------------------
               (Exact Name of Registrant as Specified in its Charter)
 
                Wisconsin                                    39-0667110
 ---------------------------------------       -------------------------------
 (State or Other Jurisdiction of                (I.R.S. Employer Identification 
   Incorporation or Organization)                 Number)
            
 1328 Racine Street, Racine, Wisconsin                        53403
 -------------------------------------         --------------------------------
 (Address of Principal Executive Offices)                   (Zip Code)
 
 Registrant's Telephone Number, including area code:        (414) 638-4000
                                                          --------------------
 Securities registered pursuant to Section 12(b) of the Act:
 
 Title of each class                Name of each exchange on which registered:
 Common stock, no par value                 New York Stock Exchange
 --------------------------         ----------------------------------------
 Securities registered pursuant to Section 12(g) of the Act:
                           Common stock, no par value
 ------------------------------------------------------------------------------
                                 (Title of Class)
 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     
                                                              ---
 Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
 of Regulation S-K is not contained herein, and will not be contained, to the
 best of the registrant's knowledge, in definitive proxy or information
 statements incorporated by reference in Part III of this Form 10-K or any
 amendment to this Form 10-K [X].
 
 At September 2, 1997, the aggregate market value of the common stock held by
 non-affiliates of the registrant was $63,910,457.  Determination of stock
 ownership by affiliates was made solely for the purpose of responding to this
 requirement and registrant is not bound by this determination for any other
 purpose.
 
 At September 2, 1997, the registrant had 2,825,174 shares of its common stock
 outstanding.
 
 
 DOCUMENTS INCORPORATED BY REFERENCE:
 
 The incorporated portions of such documents being specifically identified in
 the applicable Items of this Report.
 
 Portions of the Annual Report to Shareholders for the year ended June 30, 1997
 are incorporated by reference into Parts I, II and IV.
 
 Portions of the Proxy Statement for the Annual Meeting of Shareholders to be
 held October 17, 1997 are incorporated by reference into Parts I, III and IV.
 
 Portions of the Company's Annual Report on Form 10-K for the year ended June
 30, 1988, are incorporated by reference into Part II.
 
<PAGE> 2

 PART  I
 
 Item 1. Business
 
 The Company is engaged in one line of business.  Twin Disc designs,
 manufactures and sells heavy duty off-highway power transmission equipment. 
 Products offered include: hydraulic torque converters; power-shift
 transmissions; marine transmissions and surface drives; universal joints; gas
 turbine starting drives; power take-offs and reduction gears; industrial
 clutches; fluid couplings and control systems.  Principal markets are: 
 construction equipment, industrial equipment, government, marine, energy and
 natural resources and agriculture.  The Company's worldwide sales to both
 domestic and foreign customers are transacted through a direct sales force and
 a distributor network.  There have been no significant changes in products or
 markets since the beginning of the fiscal year.  The products described above
 have accounted for more than 90% of revenues in each of the last three fiscal
 years.
 
 In August 1997, the Company purchased the inventory and equipment of Wilson
 Equipment Company Limited, a distributor of Twin Disc products.  The
 acquisition did not require significant capital investment.
 
 The Company's products receive direct widespread competition, including from
 divisions of other larger independent manufacturers.  The Company also
 competes for business with parts manufacturing divisions of some of its major
 customers. Ten customers accounted for approximately 48% of the Company's
 consolidated net sales during the year ended June 30, 1997. One such customer
 is Caterpillar Inc. which accounted for approximately 11% of consolidated net
 sales in 1997.
 
 Unfilled open orders for the next six months of $76,429,000 at June 30, 1997
 compares to $65,574,000 at June 30, 1996.  Since orders are subject to
 cancellation and rescheduling by the customer, the six-month order backlog is
 considered more representative of operating conditions than total backlog. 
 However, as procurement and manufacturing "lead times" change, the backlog
 will increase or decrease; and thus it does not necessarily provide a valid
 indicator of the shipping rate.  Cancellations are generally the result of
 rescheduling activity and do not represent a material change in backlog.
 Additionally, unfilled orders at June 30, 1997 of $2,536,000  relate to the
 major vehicle contract which should be completed by January, 1998.
 
 Most of the Company's products are machined from cast iron, forgings, cast
 aluminum and bar steel which generally are available from multiple sources and
 which are believed to be in adequate supply.
 
 The Company has pursued a policy of applying for patents in both the United
 States and certain foreign countries on inventions made in the course of its
 development work for which commercial applications are considered probable. 
 The Company regards its patents collectively as important but does not
 consider its business dependent upon any one of such patents.
 
 Engineering and development costs include research and development expenses
 for new product development and major improvements to existing products, and
 other charges for ongoing efforts to refine existing products. Research and
 development costs charged to operations totalled $3,517,000, $2,564,000 and
 $2,718,000 in 1997, 1996 and 1995, respectively.  Total engineering and
 development costs were $8,288,000, $6,998,000 and $7,411,000 in 1997, 1996 and
 1995, respectively.
 
<PAGE> 3 

 Item 1. Business (continued)
 
 Compliance with federal, state and local provisions regulating the discharge
 of materials into the environment, or otherwise relating to the protection of
 the environment, is not anticipated to have a material effect on capital
 expenditures, earnings or the competitive position of the Company.
 
 The number of persons employed by the Company at June 30, 1997 was 1,081.
 
 The business is not considered to be seasonal except to the extent that
 employee vacations are taken mainly in the months of July and August
 curtailing production during that period.
 
 Management recognizes that there are attendant risks that foreign governments
 may place restrictions on dividend payments and other movements of money, but
 these risks are considered minimal due to the political relations the United
 States maintains with the countries in which the Company operates or the
 relatively low investment within individual countries.
 
 A summary of financial data by geographic area for the years ended June 30,
 1997, 1996 and 1995 appears in Note I to the consolidated financial statements
 on pages 30 through 31 of the 1997 Annual Report to Shareholders, which
 financial statements are incorporated by reference in this Form 10-K Annual
 Report in Part II.
 
 Item 2.Properties
 
 The Company owns two manufacturing, assembly and office facilities in Racine,
 Wisconsin, U.S.A. and one in Nivelles, Belgium.  The aggregate floor space of
 these three plants approximates 677,000 square feet.  The Racine facility
 includes office space which is the location of the Company's corporate
 headquarters.
 
 The Company also has operations in the following locations, all of which are
 used for sales offices, warehousing and light assembly or product service. 
 The following properties are leased except for the Johannesburg, South Africa
 location, which is owned:
 
     Jacksonville, Florida, U.S.A.        Brisbane, Queensland, Australia
 
     Miami, Florida, U.S.A.               Perth, Western Australia, Australia
 
     Loves Park, Illinois, U.S.A.         Viareggio, Italy
 
     Coburg, Oregon, U.S.A.               Singapore
 
     Seattle, Washington, U.S.A.          Johannesburg, South Africa
 
                                          Vancouver, British Columbia, Canada  
                                         
                                          Madrid, Spain
 
                                          Edmonton, Alberta, Canada
 
 The properties are generally suitable for operations and are utilized in the
 manner for which they were designed.  Manufacturing facilities are currently
 operating at less than 77% capacity and are adequate to meet foreseeable needs
 of the Company.
 
  <PAGE> 4

 Item 3.  Legal Proceedings
 
 Twin Disc is a defendant in several product liability or related claims
 considered either adequately covered by appropriate liability insurance or
 involving amounts not deemed material to the business or financial condition
 of the Company.
 
 The Company has joined with a group of potentially responsible parties in
 signing a consent decree with the Illinois Environmental Protection Agency to
 conduct a remedial investigation and feasibility study at the Interstate
 Pollution Control facility in Rockford, Illinois.  The consent decree was
 signed on October 17, 1991, and filed with the federal court in the Northern
 District of Illinois.  The Company's total potential liability on the site
 cannot be estimated with particularity until completion of the remedial
 investigation.  Based upon current assumptions, however, the Company
 anticipates potential liability of approximately $600,000.
 
 The Company has also joined with a group of potentially responsible parties in
 signing a consent decree with the Illinois Environmental Protection Agency to
 conduct a remedial investigation and feasibility study at the MIG\DeWane
 Landfill in Rockford, Illinois.  The consent decree was signed on March 29,
 1991, and filed with the federal court in the Northern District of Illinois. 
 The Company's total potential liability on the site cannot be estimated with
 particularity until completion of the remedial investigation.  Based upon
 current assumptions, however, the Company anticipates potential liability of
 approximately $126,000.
 
 The Company also is involved with other potentially responsible parties in
 various stages of investigation and remediation relating to other hazardous
 waste sites, some of which are on the United States EPA National Priorities
 List (Superfund sites).  While it is impossible at this time to determine with
 certainty the ultimate outcome of such environmental matters, they are not
 expected to materially affect the Company's financial position, operating
 results or cash flows.
 
 Item 4.  Submission of Matters to a Vote of Security Holders
 
 None.
  
 Executive Officers of the Registrant
 
 (Pursuant to General Instruction G(3) of Form 10-K, the following list is
 included as an unnumbered Item in Part I of this Report in lieu of being
 included in the Proxy Statement for the Annual Meeting of Shareholders to
 be held on October 17, 1997.)
 <TABLE>
 <CAPTION>
                        Principal Occupation
 Name                   Last Five Years                                Age
 ------------------     ---------------------------------------        ---
 <S>                    <C>                                            <C>
 Michael E. Batten      Chairman, Chief Executive Officer              57
 
 Michael H. Joyce       President-Chief Operating Officer              56
 
 James O. Parrish       Vice President - Finance and Treasurer         57
 
 Philippe O. Pecriaux   Vice President - Europe                        59
 
 Lance J. Melik         Vice President - Corporate Development         54
                        since September 1995; formerly Vice 
                        President - Marketing
 
 James McIndoe          Vice President - International Marketing       58
 
 <PAGE> 5

 Executive Officers of the Registrant (continued)
 
                        Principal Occupation
 Name                   Last Five Years                                Age
 -------------------    --------------------------------------         ---
 
 Paul A. Pelligrino     Vice President - Engineering since             58
                        April 1996; formerly Chief Engineer 
                        of Corporate Engineering
 
 John W. Spano          Vice President - Sales and Marketing           53
                        since September 1995;  
                        formerly Director Mobile Market Group, 
                        Trinova Corporation since June 1993; 
                        formerly Director of Customer Service
                        since October 1991
 
 Fred H. Timm           Corporate Controller and Secretary             51
                        since August 1994; formerly 
                        Controller and Secretary 
 </TABLE>
 Officers are elected annually by the Board of Directors at the first meeting
 of the Board held after each Annual Meeting of the Shareholders.  Each officer
 shall hold office until his successor has been duly elected, or until he shall
 resign or shall have been removed from office.
 
 PART II
 
 Item 5.Market for the Registrant's Common Stock and Related Shareholder
 Matters 
 The dividends per share and stock price range information set forth under the
 caption "Sales and Earnings by Quarter" on page 1 of the Annual Report for the
 year ended June 30, 1997 are incorporated into this Report
 by reference.
 
 As of June 30, 1997 there were 845 shareholder accounts.  The Company's stock
 is traded on the New York Stock Exchange.  The market price of the Company's
 common stock as of the close of business on September 2, 1997 was $29.44 per
 share. 
 
 Pursuant to a shareholder rights plan (the "Rights Plan"), on June 17, 1988,
 the Board of Directors declared a dividend distribution, payable to
 shareholders of record on July 1, 1988, of one Preferred Stock Purchase Right
 for each outstanding share of Common Stock ("Rights").  The Rights will expire
 10 years after issuance, and will be exercisable only if a person or group
 becomes the beneficial owner of 20% or more (or 30% in the case of any person
 or group which currently owns 20% or more of the shares or who shall become
 the Beneficial Owner of 20% or more of the shares as a result of any transfer
 by reason of the death of or by gift from any other person who is an Affiliate
 or an Associate of such existing holder or by succeeding such a person as
 trustee of a trust existing on July 1, 1988) of the Common Stock (such person
 or group, an "Acquiring Person") or commences a tender or exchange offer which
 would result in the offeror beneficially owning 30% or more of the Common
 Stock.  A person who is not an Acquiring Person will not be deemed to have
 become an Acquiring Person solely as a result of a reduction in the number of
 shares of Common Stock outstanding due to a repurchase of Common Stock by the
 Company until such person becomes beneficial owner of any additional shares of
 Common Stock.  Each Right will entitle shareholders who received the Rights to
 buy one newly issued unit of one one-hundredth of a share of Series A Junior
 Preferred Stock at an exercise price of $80, subject to certain antidilution
 adjustments.  The Company will generally be entitled to redeem the Rights at
 $.05 per Right at any time prior to 10 business days after a public
 announcement of the existence of an Acquiring Person.
 In addition, if (i) a person or group accumulates more than 30% of the Common
 Stock (except pursuant to an offer for all outstanding shares of Common Stock
 which the independent directors of the Company determine to be fair to and
 otherwise in the best interests of the Company and its shareholders and except
 solely due to a reduction in the number of shares of Common Stock outstanding
 due to the repurchase of Common Stock by the Company), (ii) a 
 
 <PAGE> 6

 Item 5.  Market for the Registrant's Common Stock and Related Shareholder
 Matters (continued)
 
 merger takes place with an Acquiring Person where the Company is the surviving
 corporation and its Common Stock is not changed or exchanged, (iii) an
 Acquiring Person engages in certain self-dealing transactions, or (iv) during
 such time as there is an Acquiring Person, an event occurs which results in
 such Acquiring Person's ownership interest being increased by more than 1%
 (e.g., a reverse stock split), each Right (other than Rights held by such
 Acquiring Person and certain related parties which become void) will represent
 the right to purchase, at the exercise price, Common Stock (or in certain
 circumstances, a combination of securities and/or assets) having a value of
 twice the exercise price.  In addition, if following the public announcement
 of the existence of an Acquiring Person the Company is acquired in a merger or
 other business combination transaction, except a merger or other business
 combination transaction that takes place after the consummation of an offer
 for all outstanding shares of Common Stock that the independent directors of
 the Company have determined to be fair, or a sale or transfer of 50% or more
 of the Company's assets or earning power is made, each Right (unless
 previously voided) will represent the right to purchase, at the exercise
 price, common stock of the acquiring entity having a value of twice the
 exercise price at the time.
 
 The Rights have certain anti-takeover effects.  The Rights will cause
 substantial dilution to a person or group that attempts to acquire the Company
 without conditioning the offer on a substantial number of Rights being
 acquired. 
 However, the Rights are not intended to prevent a take-over, but rather are
 designed to enhance the ability of the Board of Directors to negotiate with an
 acquiror on behalf of all of the shareholders.  In addition, the Rights should
 not interfere with a proxy contest.
 
 The Rights should not interfere with any merger or other business combination
 approved by the Board of Directors since the Rights may be redeemed by the
 Company at $.05 per Right prior to 10 business days (as such period may be
 extended by the Company) after the public announcement of the existence of an
 Acquiring Person.
 
 The press release announcing the declaration of the Rights dividend, dated
 June 20, 1988, and a letter to the Company's shareholders, dated June 22,
 1988, explaining the Rights, filed as Item 14(a)(3), Exhibits 4(a) and (b) of
 Part IV of the Annual Report on Form 10-K for the year ended June 30, 1988 are
 hereby incorporated by reference.
 
 Item 6.Selected Financial Data
 
 The information set forth under the caption "Ten-Year Financial Summary" on
 pages 40 and 41 of the Annual Report to Shareholders for the year ended June
 30, 1997 is incorporated into this report by reference.
 
 Item 7.Management's Discussion and Analysis of Financial Condition and Results
 of Operations
 
 The information set forth under the caption "Management's Discussion and
 Analysis" on pages 19 through 21 of the Annual Report to Shareholders for the
 year ended June 30, 1997 is incorporated into this report by reference.
 
 <PAGE> 7

 Item 8.  Financial Statements and Supplementary Data
 
 The following Consolidated Financial Statements of Twin Disc, Incorporated and
 Subsidiaries set forth on pages 22 through 39 of the Annual Report to
 Shareholders for the year ended June 30, 1997 are incorporated into this
 report by reference:
 
      Consolidated Balance Sheets, June 30, 1997 and 1996
 
      Consolidated Statements of Operations for the years ended June 30, 1997,  
      1996 and 1995
 
      Consolidated Statements of Cash Flows for the years ended June 30, 1997,  
      1996 and 1995
 
      Consolidated Statements of Changes in Shareholders' Equity for the years  
      ended June 30, 1997, 1996 and 1995
 
      Notes to Consolidated Financial Statements
 
      Report of Independent Accountants
 
 The supplementary data regarding quarterly results of operations set forth
 under the caption "Sales and Earnings by Quarter" on page 1 of the Annual
 Report to Shareholders for the year ended June 30, 1997 is incorporated into
 this report by reference.
 
 Item 9.  Change in and Disagreements with Accountants on Accounting and
 Financial Disclosure
 
 None.
 
 PART III
 
 Item 10.  Directors and Executive Officers of the Registrant
 
 For information with respect to the executive officers of the Registrant, see
 "Executive Officers of the Registrant" at the end of Part I of this report. 
 For information with respect to the Directors of the Registrant, see "Election
 of Directors" on pages 5 through 6 of the Proxy Statement for the Annual
 Meeting of Shareholders to be held October 17, 1997, which is incorporated
 into this report by reference. 
 
 For information with respect to compliance with Section 16(a) of the
 Securities Exchange Act of 1934, see "Compliance with 16(a) of the Securities
 Exchange Act of 1934" on page 13 of  the Proxy Statement for the Annual
 Meeting of Shareholders to be held October 17, 1997, which is incorporated
 into this report by reference. 
 
 Item 11.  Executive Compensation
 
 The information set forth under the captions "Compensation of Executive
 Officers", "Stock Options" and "Compensation Pursuant to Plans" on pages 8
 through 10 of the Proxy Statement for the Annual Meeting of Shareholders to be
 held on October 17, 1997 is incorporated into this report by reference. 
 Discussion in the Proxy Statement under the captions "Board Executive
 Selection and Salary Committee Report on Executive Compensation" and
 "Corporate Performance Graph" is not incorporated by reference and shall not
 be deemed "filed" as part of this report.

 <PAGE> 8

 Item 12.  Security Ownership of Certain Beneficial Owners and Management
 
 Security ownership of certain beneficial owners and management is set forth on
 pages 3 and 4 of the Proxy Statement for the Annual Meeting of Shareholders to
 be held on October 17, 1997 under the caption "Principal Shareholders and
 Share Ownership of Directors and Executive Officers" and incorporated into
 this report by reference.
 
 There are no arrangements known to the Registrant, the operation of which may
 at a subsequent date result in a change in control of the Registrant.
 
 

 Item 13.  Certain Relationships and Related Transactions
 
 None.
 
 PART IV
 
 Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K
 
 (a)(1) The following Consolidated Financial Statements of Twin Disc,
 Incorporated and Subsidiaries set forth on pages 22 through 39 of the Annual
 Report to Shareholders for the year ended June 30, 1997 are incorporated by
 reference into this report in Part II:
 
      Consolidated Balance Sheets, June 30, 1997 and 1996
 
      Consolidated Statements of Operations for the years ended June 30, 1997,  
      1996 and 1995
 
      Consolidated Statements of Cash Flows for the years ended June 30, 1997,  
      1996 and 1995
 
      Consolidated Statements of Changes in Shareholders' Equity for the years  
      ended June 30, 1997, 1996 and 1995
  
      Notes to Consolidated Financial Statements
 
      Report of Independent Accountants
 
 The supplementary data regarding quarterly results of operations under the
 caption "Sales and Earnings by Quarter" on page 1 of the Annual Report to
 Shareholders for the year ended June 30, 1997 is incorporated by reference
 into this report in Part II hereof.
 
 Individual financial statements of the 50% or less owned entities accounted
 for by the equity method are not required because such 50% or less owned
 entities do not constitute significant subsidiaries.
 
 (a)(2) Consolidated Financial Statement Schedule (numbered in accordance with
 Regulation S-X) for the three years ended June 30, 1997:
                                                        Page
                                                        ----
 Report of Independent Accountants                       12
 
 Schedule II-Valuation and Qualifying Accounts           13
 
 Schedules, other than those listed, are omitted for the reason that they are
 inapplicable, are not required, or the information required is shown in the
 financial statements or the related notes thereto.
 
 The Report of the Independent Accountants of the Registrant with respect to
 the above-listed consolidated financial statement schedule appears on page 12
 of this report.

 <PAGE> 9
 
 Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K
 (continued)
 
 (a)(3) List of Exhibits:  (numbered in accordance with Item 601 of Regulation
 S-K)
                     
      2     Not applicable
 
      3     a)     Articles of Incorporation, as restated October 21, 1988
                   (Incorporated by reference to Exhibit 3(a) of the Company's
                   Form 10-K for the year ended June 30, 1989).
 
            b)     Corporate Bylaws, amended through June 16, 1995 
                   (Incorporated by reference to Exhibit 3(b) of the Company's 
                   Form 10-K for the year ended June 30, 1995).
 
      4     Instruments defining the rights of security holders, including      
            indentures 
 
            a)     Form of Rights Agreement dated as of June 17, 1988 by and
                   between the Company and the First Wisconsin Trust Company, 
                   as Rights Agent, with Form of Rights Certificate 
                   (Incorporated by reference to Exhibits 1 and 2 of the 
                   Company's Form 8-A dated June 27, 1988).
 
            b)     Announcement of Shareholder Rights Plan per press release 
                   dated June 20, 1988 and explanation of plan per letter to 
                   Company's shareholders dated June 20, 1988 (Incorporated by 
                   reference to Exhibit 4(a) and (b), respectively, of the 
                   Company's Form 10-K for the year ended June 30, 1988).
 
      9            Not applicable
 
     10            Material Contracts
 
            a)     * The 1988 Incentive Stock Option Plan (Incorporated by
                   reference to Exhibit B of the Proxy Statement for the Annual
                   Meeting of Shareholders held on October 21, 1988).
 
            b)     * The 1988 Non-Qualified Stock Option Plan for Officers, Key
                   Employees and Directors (Incorporated by reference to 
                   Exhibit C of the Proxy Statement for the Annual Meeting of 
                   Shareholders held on October 21,1988).
 
            c)     * Amendment to 1988 Incentive Stock Option Plan of Twin 
                   Disc, Incorporated (Incorporated by reference to Exhibit A 
                   of the Proxy Statement for the Annual Meeting of   
                   Shareholders held on October 15, 1993).
 
            d)     * Amendment to 1988 Non-Qualified Incentive Stock Option 
                   Plan for Officers, Key Employees and Directors of Twin Disc,
                   Incorporated (Incorporated by reference to Exhibit B of the
                   Proxy Statement for the Annual Meeting of Shareholders held 
                   on October 15, 1993).
                  
            e)     * Form of Severance Agreement for Senior Officers and form 
                   of Severance Agreement for Other Officers (Incorporated by
                   reference to Exhibit 10(c) and (d), respectively, of the
                   Company's Form 10-K for the year ended June 30, 1989).
 
            f)     *Supplemental Retirement Plan (Incorporated by reference to
                   Exhibit 10(a) of the Company's Form 10-K for the year ended
                   June 30, 1986).
 
            g)     * Director Tenure and Retirement Policy (Incorporated by
                   reference to Exhibit 10(f) of the Company's Form 10-K for 
                   the year ended June 30, 1993). 
 
 <PAGE>10

 (a)(3) List of Exhibits:  (numbered in accordance with Item 601 of Regulation
 S-K) (continued)
  
            h)     * Form of Twin Disc, Incorporated Corporate Short Term
                   Incentive Plan (Incorporated by reference to Exhibit 10(g)
                   of the Company's Form 10-K for the year ended June 30, 
                   1993).
 
 * Denotes management contract or compensatory plan or arrangement.
 
       11   Not applicable
 
       12   Not applicable
 
       13   Annual Report of the Registrant for the year ended June 30, 1997 is
            separately filed as Exhibit (13) to this Report (except for those
            portions of such Annual Report separately incorporated by reference
            into this Report, such Annual Report is furnished for the 
            information of the Securities and Exchange Commission and shall not 
            be deemed "filed" as part of this report).
 
       18   Not applicable
 
       21   Subsidiaries of the registrant
 
       22   Not applicable
 
       23   Consent of Independent Accountants
 
       24   Power of Attorney
 
       27   Financial Data Schedule for the year ended June 30, 1997 is 
            separately filed as Exhibit (27) to this report.  (This schedule is 
            furnished for the information of the Securities and Exchange 
            Commission and shall not be deemed "filed" for purposes of Section 
            11 of the Securities Act or Section 18 of the Exchange Act.)
 
       28   Not applicable
 
       99   Foreign Affiliate Separate Financial Statements 
 
            a)     Niigata Converter Co., Ltd. financial statements for the 
                   year ended March 31, 1995 prepared in accordance with 
                   Japanese Commercial Code (Incorporated by reference to 
                   Exhibit 99(a) of the Company's Form 10-K for the year ended 
                   June 30, 1995).
 
            b)     Niigata Converter Co., Ltd. financial statements for the 
                   year ended March 31, 1994 prepared in accordance with 
                   Japanese Commercial Code (Incorporated by reference to 
                   Exhibit 99(b) of the Company's Form 10-K for the year ended 
                   June 30, 1995).
 
 Copies of exhibits filed as a part of this Annual Report on Form 10-K may be
 obtained by shareholders of record upon written request directed to the
 Secretary, Twin Disc, Incorporated, 1328 Racine Street, Racine, Wisconsin
 53403.
 
 <PAGE> 11

 SIGNATURES
 Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
 Act of 1934, the Registrant has duly caused this Report to be signed on its
 behalf by the undersigned, thereunto duly authorized.
 
                                    TWIN DISC, INCORPORATED
 
 
 
                                By  FRED H. TIMM
                                    ----------------------------------------
                                    Fred H. Timm, Corporate Controller and
                                    Secretary (Chief Accounting Officer)
 
 September 19, 1997
 
 Pursuant to the requirements of the Securities Exchange Act of 1934, this
 Report has been signed below by the following persons on behalf of the 
 registrant and in the capacities and on the dates indicated.
 
                                    (   By  MICHAEL E. BATTEN
                                    (   ---------------------------------
                                    (   Michael E. Batten, Chairman,
                                    (   Chief Executive Officer and Director
                                    (
                                    (
                                    (
 September 19, 1997                 (   By  MICHAEL H. JOYCE
                                    (   ---------------------------------
                                    (   Michael H. Joyce, President,
                                    (   Chief Operating Officer and Director
                                    (
                                    (
                                    (
                                    (   By  JAMES O. PARRISH 
                                    (   ---------------------------------
                                    (   James O. Parrish, Vice President-
                                    (   Finance, Treasurer and Director
                                    (   (Chief Financial Officer)
                                    
  
 
                                    (   Jerome K. Green, Director
                                    (   Paul J. Powers, Director
                                    (   Richard T. Savage, Director
 September 19, 1997                 (   David L. Swift, Director
                                    (   Stuart W. Tisdale, Director
                                    (   George E. Wardeberg, Director
                                    (   David R. Zimmer, Director
                                    (
                                    (
                                    (   By  JAMES O. PARRISH
                                    (   ---------------------------------
                                    (   James O. Parrish, Attorney in Fact

 <PAGE> 12
                       REPORT OF INDEPENDENT ACCOUNTANTS
                                (See Item 14)
                Consolidated Financial Statement Schedule of
                  Twin Disc, Incorporated and Subsidiaries
 
 
 To the Shareholders
 Twin Disc, Incorporated
 Racine, Wisconsin
 
 Our report on the consolidated financial statements of Twin Disc, Incorporated
 and Subsidiaries has been incorporated by reference in this Form 10-K from
 page 39 of the 1997 Annual Report to Shareholders of Twin Disc, Incorporated
 and Subsidiaries.  In connection with our audits of such financial statements,
 we have also audited the related financial statement schedule listed in the
 index on page 8 of this Form 10-K.
 
 In our opinion, the financial statement schedule referred to above, when
 considered in relation to the basic financial statements taken as a whole,
 presents fairly, in all material respects, the information required to be
 included therein.
 
 
 
 
 
 
 
                                   COOPERS & LYBRAND L. L. P.
 
 
 
 Milwaukee, Wisconsin
 July 18, 1997
 
 <PAGE> 13

 <TABLE>
 TWIN DISC, INCORPORATED AND SUBSIDIARIES
 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
 for the years ended June 30, 1997, 1996 and 1995
 (In thousands)
 <CAPTION>
                    Balance at    Additions Charged                 Balance at  
                   Beginning of     to Costs and                      end of
 Description         Period           Expenses       Deductions<F1>   Period
 -----------       ------------   -----------------  ------------  -----------
 <S>               <C>            <C>                <C>           <C>
 1997:
 Allowance for 
  losses on          $   372          $   267          $   101       $   538
  accounts receivable-------          -------          -------       -------
                     -------          -------          -------       -------
 
 Reserve for inventory
  obsolescence           926            1,770            1,683         1,013
                     -------          -------          -------       -------
                     -------          -------          -------       -------
 1996:
 
 Allowance for 
  losses on
  accounts receivable$   408          $    41          $    77       $   372
                     -------          -------          -------       -------
                     -------          -------          -------       -------
 
 Reserve for inventory
  obsolescence         1,581              845            1,500           926
                     -------          -------          -------       -------
                     -------          -------          -------       -------
 1995:
 
 Allowance for 
  losses on
  accounts receivable$   441          $    54          $    87       $   408
                     -------          -------          -------       -------
                     -------          -------          -------       -------
 
 Reserve for inventory
   obsolescence        1,586              886              891         1,581
                     -------          -------          -------       -------
                     -------          -------          -------       -------
 <FN>
 <F1>Accounts receivable written-off and inventory disposed of during the year
 and other adjustments.
 </FN>
 </TABLE>

 <PAGE> 14

 <TABLE>
 <CAPTION>                         EXHIBIT INDEX
 
 Exhibit                         Description                              Page
 -------                         -----------                              ----
 <S>    <C>                                                               <C>
  3a)   Articles of Incorporation, as restated October 21, 1988
        (Incorporated by reference to Exhibit 3(a) of the Company's
        Form 10-K for the year ended June 30, 1989).                       -
 
   b)   Corporate Bylaws, as amended through June 16, 1995 
        (Incorporated by reference to Exhibit 3(b) of the Company's
        Form 10-K for the year ended June 30, 1995).                       -
 
  4a)   Form of Rights Agreement dated as of June 17, 1988 by and 
        between the Company and the First Wisconsin Trust Company,
        as Rights Agent, with Form of Rights Certificate (Incorporated
        by reference to Exhibits 1 and 2 of the Company's Form 8-A 
        date June 27, 1988).                                               -
 
   b)   Announcement of Shareholder Rights Plan per press release 
        dated June 20, 1988 and explanation of plan per letter to
        Company's shareholders dated June 20, 1988 (Incorporated by
        reference to Exhibit 4(a) and (b), respectively of the 
        Company's Form 10-K for the year ended June 30, 1988).             -
 
        Material Contracts
 
 10a)   The 1988 Incentive Stock Option Plan (Incorporated by
        reference to Exhibit B of the Proxy Statement for the 
        Annual Meeting of Shareholders held on October 21, 1988).          -
 
   b)   The 1988 Non-Qualified Stock Option Plan for Officers, 
        Key Employees and Directors (Incorporated reference to 
        Exhibit C of the Proxy Statement for the Annual Meeting 
        of Shareholders held on October 21,1988).                          -
 
   c)   Amendment to 1988 Incentive Stock Option Plan of Twin Disc, 
        Incorporated (Incorporated by reference to Exhibit A of the
        Proxy Statement for the Annual Meeting of Shareholders held 
        on October 15, 1993).                                              -
 
   d)   Amendment to 1988 Non-Qualified Incentive Stock Option Plan
        for Officers, Key Employees and Directors of Twin Disc, 
        Incorporated (Incorporated by reference to Exhibit B of the
        Proxy Statement for the Annual Meeting of Shareholders held 
        on October 15, 1993).                                              -
 
   e)   Form of Severance Agreement for Senior Officers and form of  
        Severance Agreement for Other Officers (Incorporated by 
        reference to Exhibit 10(c) and (d), respectively, of the 
        Company's Form 10-K for the year ended June 30, 1989).             -
 
   f)   Supplemental Retirement Plan (Incorporated by reference to
        Exhibit 10(a) of the Company's Form 10-K for the year ended 
        June 30, 1986).                                                    -
 
   g)   Director Tenure and Retirement Policy (Incorporated by
        reference to Exhibit 10(f) of the Company's Form 10-K for
        the year ended June 30, 1993).                                     -
 
   h)   Form of Twin Disc, Incorporated Corporate Short Term 
        Incentive Plan (Incorporated by reference to Exhibit 10(g) 
        of the Company's Form 10-K for the year ended June 30, 1993).      -
 
 <PAGE> 15
                                  EXHIBIT INDEX
                                  continued
 
 Exhibit                         Description                              Page
 -------                         -----------                              ----
 
 13     Annual Report of the Registrant for the year ended
        June 30, 1997                                                      16
 
 21     Subsidiaries of the Registrant                                     39
 
 23     Consent of Independent Accountants                                 40
 
 24     Power of Attorney                                                  41
      
 27     Financial Data Schedule for the year ended June 30, 1997           42
 
        Foreign Affiliate Separate Financial Statements  
 
 99a)   Niigata Converter Co., Ltd. financial statements for the year
        ended March 31, 1995 prepared in accordance with Japanese 
        Commercial Code (Incorporated by reference to Exhibit 99(a) 
        of the Company's Form 10-K for the year ended June 30, 1995).      -
 
   b)   Niigata Converter Co., Ltd. financial statements for the
        year ended March 31, 1994 prepared in accordance with Japanese
        Commercial Code  (Incorporated by reference to Exhibit 99(b) 
        of the Company's Form 10-K for the year ended June 30, 1995).      -
 
 </TABLE>
 