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<SEC-DOCUMENT>0000100378-08-000017.txt : 20080627
<SEC-HEADER>0000100378-08-000017.hdr.sgml : 20080627
<ACCEPTANCE-DATETIME>20080627110309
ACCESSION NUMBER:		0000100378-08-000017
CONFORMED SUBMISSION TYPE:	11-K
PUBLIC DOCUMENT COUNT:		4
CONFORMED PERIOD OF REPORT:	20071231
FILED AS OF DATE:		20080627
DATE AS OF CHANGE:		20080627

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			TWIN DISC INC
		CENTRAL INDEX KEY:			0000100378
		STANDARD INDUSTRIAL CLASSIFICATION:	GENERAL INDUSTRIAL MACHINERY & EQUIPMENT [3560]
		IRS NUMBER:				390667110
		STATE OF INCORPORATION:			WI
		FISCAL YEAR END:			0608

	FILING VALUES:
		FORM TYPE:		11-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-07635
		FILM NUMBER:		08921068

	BUSINESS ADDRESS:	
		STREET 1:		1328 RACINE ST
		CITY:			RACINE
		STATE:			WI
		ZIP:			53403
		BUSINESS PHONE:		2626384000

	MAIL ADDRESS:	
		STREET 1:		1328 RACINE STREET
		CITY:			RACINE
		STATE:			WI
		ZIP:			53403

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	TWIN DISC CLUTCH CO
		DATE OF NAME CHANGE:	19770217
</SEC-HEADER>
<DOCUMENT>
<TYPE>11-K
<SEQUENCE>1
<FILENAME>r11k6082008.htm
<TEXT>

<HTML>
<HEAD>
   <TITLE>r11k6082008.pdf -- Converted by SECPublisher 4.0, created by BCL Technologies Inc., for SEC Filing</TITLE>
</HEAD>

<BODY bgcolor="#ffffff">
<!--$$/page=--><A name=page_1></A>
<P align=center><FONT face=sans-serif>SECURITIES AND EXCHANGE COMMISSION
</FONT></P>
<P align=center><FONT face=sans-serif>Washington, D.C. 20549 </FONT></P>
<P align=center>
<TABLE>

  <TR>
    <TD noWrap align=center><FONT face=sans-serif>FORM 11-
  K</FONT><BR></TD></TR></TABLE></P>
<P align=center><FONT face=sans-serif>Annual Report Pursuant to Section 15(d) of
the Securities Exchange Act of 1934 </FONT></P>
<P align=center>&nbsp;&nbsp;&nbsp;&nbsp;</P>
<P align=center>&nbsp;<FONT face=sans-serif>As of December 31, 2007 and December
31, 2006 </FONT></P>
<P align=center><FONT face=sans-serif>and for the years ended December 31, 2007
and December 31, 2006</FONT></P>
<P align=center><FONT face=sans-serif></FONT>&nbsp;</P>
<P align=center><FONT face=sans-serif>Commission file number 1 &#150; 7635</FONT></P>
<P align=center><FONT face=Arial></FONT>&nbsp;</P>
<P align=center><FONT face=Arial>A. Full title of the plan and the address of
the plan </FONT></P>
<P align=center><FONT face=Arial>if different from that of the issuer named
below:</FONT></P>
<P align=center>&nbsp;</P>
<P align=center>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=sans-serif>TWIN DISC,
INCORPORATED &#150; </FONT></P>
<P align=center><FONT face=sans-serif>T</FONT><FONT face=sans-serif>HE
ACCELERATOR 401 (K) SAVINGS PLAN</FONT></P>
<P align=center><FONT face=sans-serif></FONT>&nbsp;</P>
<P align=center><FONT face=sans-serif>B. Name of issuer of the securities held
pursuant to the</FONT></P>
<P align=center><FONT face=sans-serif>Plan and the address of its principal
executive office: </FONT></P>
<P align=center>
<TABLE>

  <TR>
    <TD noWrap><FONT face=sans-serif>TWIN DISC, INCORPORATED</FONT><BR><FONT face=sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1328 Racine
      Street </FONT><BR><FONT face=sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp; Racine,
      WI 53403 </FONT><BR></TD></TR></TABLE></P>
<HR align=center width="100%" noShade SIZE=2>


<!--$$/page=-->
<A name="page_2"></A>

<TABLE border=0 cellspacing=1 cellpadding=0>
<TR valign="bottom">
	<TD width=82% nowrap align=center>
<B><FONT size=2 face="sans-serif">TWIN DISC, INCORPORATED</FONT></B>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD width=15% nowrap align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD width=82% nowrap align=center>
<B><FONT size=2 face="sans-serif">THE ACCELERATOR 401(k) SAVINGS PLAN</FONT></B>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD width=15% nowrap align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD width=82% nowrap align=center>
<FONT size=2 face="sans-serif">Racine, Wisconsin</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD width=15% nowrap align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD width=82% nowrap align=center>
<FONT size=2 face="sans-serif">AUDITED FINANCIAL STATEMENTS</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD width=15% nowrap align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD width=82% nowrap align=center>
<FONT size=2 face="sans-serif">Years Ended December 31, 2007 and 2006</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD width=15% nowrap align=left>
&nbsp;
	</TD>
</TR>
<TR>
	<TD colspan=3>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD width=82% nowrap align=center>
<FONT size=2 face="sans-serif">TABLE OF CONTENTS</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD width=15% nowrap align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD width=82% nowrap align=left>
&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD width=15% nowrap align=center>
<U><FONT size=2 face="sans-serif">Page</FONT></U>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD width=82% nowrap align=left>
<FONT size=2 face="sans-serif">Independent Auditors&#146; Report</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD width=15% nowrap align=center>
<FONT size=2 face="sans-serif">1</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD width=82% nowrap align=left>
<FONT size=2 face="sans-serif">Statements of Net Assets Available for Benefits</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD width=15% nowrap align=center>
<FONT size=2 face="sans-serif">2</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD width=82% nowrap align=left>
<FONT size=2 face="sans-serif">Statement of Changes in Net Assets Available for Benefits</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD width=15% nowrap align=center>
<FONT size=2 face="sans-serif">3</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD width=82% nowrap align=left>
<FONT size=2 face="sans-serif">Notes to Financial Statements</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD width=15% nowrap align=center>
<FONT size=2 face="sans-serif">4-9</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD width=82% nowrap align=left>
<FONT size=2 face="sans-serif">Schedule of Assets Held for Investment</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD width=15% nowrap align=center>
<FONT size=2 face="sans-serif">10</FONT>&nbsp;
	</TD>
</TR>
</TABLE><BR>

<HR noshade align="center" width="100%" size=2>


<P align=center>
<TABLE>

  <TR>
    <TD noWrap align=center><U><FONT face=sans-serif size=2><FONT face=SansSerif>Report of Independent Public Accounting
      Firm</FONT></FONT></U><BR></TD></TR></TABLE></P>
<P align=left>
<TABLE>

  <TR>
    <TD noWrap><FONT face=sans-serif size=2><FONT face=SansSerif><FONT face=sans-serif size=2><FONT face=SansSerif>Benefits
      Committee</FONT></FONT></FONT></FONT> <BR><FONT face=sans-serif size=2><FONT face=SansSerif><FONT face=sans-serif size=2><FONT face=SansSerif>Twin Disc, Incorporated
      &#150;</FONT></FONT></FONT></FONT><BR><FONT face=sans-serif size=2><FONT face=SansSerif><FONT face=sans-serif size=2><FONT face=SansSerif>The
      Accelerator 401(k) Savings Plan</FONT></FONT></FONT></FONT><BR><FONT face=sans-serif size=2><FONT face=SansSerif><FONT face=sans-serif size=2><FONT face=SansSerif>Racine, Wisconsin</FONT></FONT></FONT></FONT>
      <BR></TD></TR></TABLE></P>
<P align=left><FONT face=SansSerif><FONT size=2></FONT></FONT>&nbsp;</P>
<P align=left><FONT face=SansSerif><FONT size=2>&nbsp;We have audited the
accompanying statements of net assets available for benefits of the Twin Disc,
Incorporated - The Accelerator 401(k) Savings Plan as of December 31, 2007 and
2006, and the related statements of changes in net assets available for benefits
for the years then ended. These financial statements are the responsibility of
the Plan&#146;s management. Our responsibility is to express an opinion on these
financial statements based on our audits.</FONT></FONT></P>
<P align=left><FONT face=SansSerif><FONT size=2>We conducted our audits in
accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></FONT></P>
<P align=left><FONT face=SansSerif><FONT size=2>&nbsp;In our opinion, the
financial statements referred to above, present fairly, in all material
respects, the net assets available for benefits of the Plan as of December 31,
2007 and 2006, and the changes in its net assets available for benefits for the
years then ended in conformity with accounting principles generally accepted in
the United States of America.&nbsp;&nbsp;&nbsp;</FONT></FONT></P>
<P align=left><FONT face=SansSerif><FONT size=2>Our audit was conducted for the
purpose of forming an opinion on the basic financial statements taken as a
whole. The supplemental Schedule of Assets Held for Investment Purposes &#150;
December 31, 2007, is presented for the purpose of additional analysis and is
not a required part of the basic financial statements but is supplementary
information required by the Department of Labor&#146;s rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. This supplemental schedule is the responsibility of the Plan&#146;s management.
The supplemental schedule has been subjected to the auditing procedures applied
in the audits of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.</FONT></FONT></P>
<P align=left>&nbsp;</P>
<P align=left>&nbsp;</P>
<P align=left><FONT face=SansSerif><FONT size=2>June 24, 2008</FONT></FONT></P>
<P align=left><FONT face=SansSerif><FONT size=2>Milwaukee,
Wisconsin</FONT></FONT></P>
<P align=center><FONT face=sans-serif size=2>1</FONT></P>
<HR align=center width="100%" noShade SIZE=2>
<A name=page_4></A>
<TABLE cellSpacing=1 cellPadding=0 border=0>

  <TR vAlign=bottom>
    <TD align=center width="99%" colSpan=9><B><FONT face=sans-serif size=2>TWIN DISC, INCORPORATED</FONT></B></TD></TR>
  <TR vAlign=bottom>
    <TD align=center width="99%" colSpan=9><B><FONT face=sans-serif size=2>THE
      ACCELERATOR 401(K) SAVINGS PLAN</FONT></B></TD></TR>
  <TR vAlign=bottom>
    <TD align=center width="99%" colSpan=9><FONT face=sans-serif size=2>Racine,
      Wisconsin</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="56%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="16%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=center width="14%"></TD></TR>
  <TR vAlign=bottom>
    <TD align=center width="99%" colSpan=9><FONT face=sans-serif size=2>Statements of
      Net Assets Available for Benefits</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD align=center width="99%" colSpan=9><FONT face=sans-serif size=2>December 31,
      2007 and 2006</FONT></TD></TR>
  <TR>
    <TD width="99%" colSpan=9>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="56%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=center width="16%"><U><FONT face=sans-serif size=2>2007</FONT></U>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=center width="14%"><U><FONT face=sans-serif size=2>2006</FONT></U>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="56%"><FONT face=sans-serif size=2>Assets:</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="16%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="14%">&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="56%"><FONT face=sans-serif size=2>Investment
      options at fair value</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=right width="2%"><FONT face=sans-serif size=2>$</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=right width="16%"><FONT face=sans-serif size=2>67,709,341</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="3%"><FONT face=sans-serif size=2>$</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=right width="14%">&nbsp;<FONT face=sans-serif size=2>62,642,361</FONT>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="56%"><FONT face=sans-serif size=2>Receivables:</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="16%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=right width="14%">&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="56%"><FONT face=sans-serif size=2>Employer match
      contribution</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=right width="16%"><FONT face=sans-serif size=2>7,969</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=right width="14%"><FONT face=sans-serif size=2>8,065</FONT>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="56%"><FONT face=sans-serif size=2>Participant
      contribution</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=right width="16%"><FONT face=sans-serif size=2><U>25,012&nbsp;</U></FONT></TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=right width="14%"><FONT face=sans-serif size=2><U>25,404&nbsp;</U></FONT></TD></TR>
  <TR>
    <TD width="56%"></TD>
    <TD width="2%"></TD>
    <TD width="2%"></TD>
    <TD width="2%"></TD>
    <TD width="16%"></TD>
    <TD width="2%"></TD>
    <TD width="3%"></TD>
    <TD width="2%"></TD>
    <TD align=right width="14%"></TD></TR>
  <TR>
    <TD width="99%" colSpan=9>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="56%">&nbsp;
      &nbsp;<FONT face=sans-serif size=2>Total receivables</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=right width="16%"><U><FONT face=sans-serif size=2>32,981</FONT>&nbsp;</U></TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=right width="14%"><U><FONT face=sans-serif size=2>33,469</FONT>&nbsp;</U></TD></TR>
  <TR>
    <TD width="56%"></TD>
    <TD width="2%"></TD>
    <TD width="2%"></TD>
    <TD width="2%"></TD>
    <TD width="16%"></TD>
    <TD width="2%"></TD>
    <TD width="3%"></TD>
    <TD width="2%"></TD>
    <TD align=right width="14%"></TD></TR>
  <TR>
    <TD width="99%" colSpan=9>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="56%"><FONT face=sans-serif size=2>Net assets
      reflecting all investments at fair value</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=right width="16%"><FONT face=sans-serif size=2>67,742,322</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=right width="14%"><FONT face=sans-serif size=2>62,675,830</FONT>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="56%"><FONT face=sans-serif size=2>Adjustment from
      fair value to contract value for fully</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="16%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=right width="14%">&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="56%"><FONT face=sans-serif size=2>benefit-responsive investment
    contracts</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=right width="16%"><U><FONT face=sans-serif size=2>(74,437)</FONT>&nbsp;</U></TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=right width="14%"><FONT face=sans-serif size=2><U>112,560&nbsp;</U></FONT></TD></TR>
  <TR>
    <TD width="56%"></TD>
    <TD width="2%"></TD>
    <TD width="2%"></TD>
    <TD width="2%"></TD>
    <TD width="16%"></TD>
    <TD width="2%"></TD>
    <TD width="3%"></TD>
    <TD width="2%"></TD>
    <TD align=right width="14%"></TD></TR>
  <TR>
    <TD width="99%" colSpan=9>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=center width="56%"><FONT face=sans-serif size=2>Net assets
      available for plan benefits</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=right width="2%"><FONT face=sans-serif size=2>$</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=right width="16%"><FONT face=sans-serif size=2><B><U>67,667,885&nbsp;</U></B></FONT></TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="3%"><FONT face=sans-serif size=2>$</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=right width="14%"><FONT face=sans-serif size=2><U><B>62,788,390</B></U></FONT>&nbsp;</TD></TR>
  <TR>
    <TD width="56%"></TD>
    <TD width="2%"></TD>
    <TD width="2%"></TD>
    <TD width="2%"></TD>
    <TD width="16%"></TD>
    <TD width="2%"></TD>
    <TD width="3%"></TD>
    <TD width="2%"></TD>
    <TD width="14%"></TD></TR></TABLE>
<P><FONT face=SansSerif><FONT size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></FONT></P>
<P><FONT face=SansSerif><FONT size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The accompanying notes to financial statements are an intergral part of these
statements.</FONT></FONT><BR></P>
<P align=center><FONT face=sans-serif size=2>2</FONT></P>
<HR align=center width="100%" noShade SIZE=2>
<A name=page_5></A>
<TABLE cellSpacing=1 cellPadding=0 border=0>

  <TR vAlign=bottom>
    <TD align=center width="99%" colSpan=9><B><FONT face=sans-serif size=2>TWIN DISC, INCORPORATED</FONT></B></TD></TR>
  <TR vAlign=bottom>
    <TD align=center width="99%" colSpan=9><B><FONT face=sans-serif size=2>THE
      ACCELERATOR 401(K) SAVINGS PLAN</FONT></B></TD></TR>
  <TR vAlign=bottom>
    <TD align=center width="99%" colSpan=9><FONT face=sans-serif size=2>Racine,
      Wisconsin</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="61%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="11%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="11%">&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD align=center width="99%" colSpan=9><FONT face=sans-serif size=2>Statements of
      Changes in Net Assets Available for Benefits</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD align=center width="99%" colSpan=9><FONT face=sans-serif size=2>Years Ended
      December 31, 2007 and 2006</FONT></TD></TR>
  <TR>
    <TD width="99%" colSpan=9>&nbsp;</TD></TR>
  <TR>
    <TD width="99%" colSpan=9>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="61%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="11%">&nbsp;
      &nbsp; &nbsp;<U><FONT face=sans-serif size=2>2007</FONT></U>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=center width="11%"><U><FONT face=sans-serif size=2>2006</FONT></U>&nbsp;</TD></TR>
  <TR>
    <TD width="99%" colSpan=9>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="61%"><FONT face=sans-serif size=2>Additions:</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="11%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="11%">&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="61%"><FONT face=sans-serif size=2>Additions to net
      assets attributed to:</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="11%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="11%">&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="61%">&nbsp;<FONT face=sans-serif size=2>Investment income:</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="11%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="11%">&nbsp;</TD></TR>
  <TR>
    <TD width="99%" colSpan=9>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="61%">&nbsp;
      &nbsp;<FONT face=sans-serif size=2>Net
      appreciation in fair value of investments</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="4%"><FONT face=sans-serif size=2>$</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=right width="11%"><FONT face=sans-serif size=2>288,558</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="4%"><FONT face=sans-serif size=2>$</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=right width="11%"><FONT face=sans-serif size=2>4,445,722</FONT>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="61%">&nbsp;
      &nbsp;<FONT face=sans-serif size=2>Interest</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=right width="11%"><FONT face=sans-serif size=2>93,413</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=right width="11%"><FONT face=sans-serif size=2>78,959</FONT>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="61%">&nbsp;
      &nbsp;<FONT face=sans-serif size=2>Dividends</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=right width="11%"><FONT face=sans-serif size=2><U>4,990,830&nbsp;</U></FONT></TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=right width="11%"><FONT face=sans-serif size=2><U>3,025,849&nbsp;</U></FONT></TD></TR>
  <TR>
    <TD width="61%"></TD>
    <TD width="2%"></TD>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="11%"></TD>
    <TD width="2%"></TD>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="11%"></TD></TR>
  <TR>
    <TD width="99%" colSpan=9>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="61%">&nbsp;
      &nbsp;<FONT face=sans-serif size=2>Net
      investment gain</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=right width="11%"><FONT face=sans-serif size=2>5,372,801</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=right width="11%"><FONT face=sans-serif size=2>7,550,530</FONT>&nbsp;</TD></TR>
  <TR>
    <TD width="99%" colSpan=9>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="61%"><FONT face=sans-serif size=2>Contributions:</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="11%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="11%">&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="61%"><FONT face=sans-serif size=2>Employer</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=right width="11%"><FONT face=sans-serif size=2>1,160,184</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=right width="11%"><FONT face=sans-serif size=2>1,081,000</FONT>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="61%"><FONT face=sans-serif size=2>Participant</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=right width="11%"><FONT face=sans-serif size=2>2,817,614</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=right width="11%"><FONT face=sans-serif size=2>2,724,236</FONT>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="61%"><FONT face=sans-serif size=2>Rollovers</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=right width="11%"><FONT face=sans-serif size=2><U>191,621&nbsp;</U></FONT></TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=right width="11%"><FONT face=sans-serif size=2><U>83,408&nbsp;</U></FONT></TD></TR>
  <TR>
    <TD width="61%"></TD>
    <TD width="2%"></TD>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="11%"></TD>
    <TD width="2%"></TD>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="11%"></TD></TR>
  <TR>
    <TD width="99%" colSpan=9>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="61%">&nbsp;<FONT face=sans-serif size=2>Total contributions</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=right width="11%"><FONT face=sans-serif size=2><U>4,169,419&nbsp;</U></FONT></TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=right width="11%"><FONT face=sans-serif size=2><U>3,888,644&nbsp;</U></FONT></TD></TR>
  <TR>
    <TD width="61%"></TD>
    <TD width="2%"></TD>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="11%"></TD>
    <TD width="2%"></TD>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="11%"></TD></TR>
  <TR>
    <TD width="99%" colSpan=9>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="61%">&nbsp;
      &nbsp;<FONT face=sans-serif size=2>Total additions</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=right width="11%"><FONT face=sans-serif size=2>9,542,220</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=right width="11%"><FONT face=sans-serif size=2>11,439,174</FONT>&nbsp;</TD></TR>
  <TR>
    <TD width="99%" colSpan=9>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="61%"><FONT face=sans-serif size=2>Deductions:</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="11%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="11%">&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="61%"><FONT face=sans-serif size=2>Deductions from
      net assets attributed to:</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="11%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="11%">&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="61%">&nbsp;<FONT face=sans-serif size=2>Administrative fees</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=right width="11%"><FONT face=sans-serif size=2>2,987</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=right width="11%"><FONT face=sans-serif size=2>2,298</FONT>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="61%">&nbsp;<FONT face=sans-serif size=2>Benefits paid to participants</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=right width="11%"><FONT face=sans-serif size=2><U>4,659,738&nbsp;</U></FONT></TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=right width="11%"><FONT face=sans-serif size=2><U>3,449,551&nbsp;</U></FONT></TD></TR>
  <TR>
    <TD width="61%"></TD>
    <TD width="2%"></TD>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="11%"></TD>
    <TD width="2%"></TD>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="11%"></TD></TR>
  <TR>
    <TD width="99%" colSpan=9>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="61%">&nbsp;<FONT face=sans-serif size=2>Total deductions</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=right width="11%"><U><FONT face=sans-serif size=2>4,662,725</FONT>&nbsp;</U></TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=right width="11%"><U><FONT face=sans-serif size=2>3,451,849</FONT>&nbsp;</U></TD></TR>
  <TR>
    <TD width="61%"></TD>
    <TD width="2%"></TD>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="11%"></TD>
    <TD width="2%"></TD>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="11%"></TD></TR>
  <TR>
    <TD width="99%" colSpan=9>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="61%">&nbsp;
      &nbsp;<FONT face=sans-serif size=2>Change in net assets available for plan
      benefits</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=right width="11%"><FONT face=sans-serif size=2>4,879,495</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=right width="11%"><FONT face=sans-serif size=2>7,987,325</FONT>&nbsp;</TD></TR>
  <TR>
    <TD width="99%" colSpan=9>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="61%"><FONT face=sans-serif size=2>Net assets
      available for plan benefits, beginning of year</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=right width="11%"><FONT face=sans-serif size=2><U>62,788,390&nbsp;</U></FONT></TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=right width="11%"><U><FONT face=sans-serif size=2>54,801,065&nbsp;</FONT></U></TD></TR>
  <TR>
    <TD width="61%"></TD>
    <TD width="2%"></TD>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="11%"></TD>
    <TD width="2%"></TD>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="11%"></TD></TR>
  <TR>
    <TD width="99%" colSpan=9>&nbsp;</TD></TR>
  <TR>
    <TD width="99%" colSpan=9>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="61%"><FONT face=sans-serif size=2>Net assets
      available for plan benefits, end of year</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="4%"><FONT face=sans-serif size=2>$</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=right width="11%"><FONT face=sans-serif size=2><B><U>67,667,885&nbsp;</U></B></FONT></TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="4%"><FONT face=sans-serif size=2>$</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=right width="11%"><FONT face=sans-serif size=2><U><B>62,788,390</B></U></FONT>&nbsp;</TD></TR>
  <TR>
    <TD width="61%"></TD>
    <TD width="2%"></TD>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="11%"></TD>
    <TD width="2%"></TD>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="11%"></TD></TR></TABLE>
<P><FONT face=SansSerif><FONT size=2></FONT></FONT>&nbsp;</P>
<P><FONT face=SansSerif><FONT size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
accompanying notes to financial statements are an intergral part of these
statements.</FONT></FONT><BR><BR></P>
<P align=center><FONT face=sans-serif size=2>3</FONT></P>
<HR align=center width="100%" noShade SIZE=2>
<!--$$/page=--><A name=page_6></A>
<P align=center><B><FONT face=sans-serif size=2>TWIN DISC, INCORPORATED &#150; THE
ACCELERATOR 401(k) SAVINGS PLAN</FONT></B></P>
<P align=center><FONT face=sans-serif size=2>Racine, Wisconsin </FONT></P>
<P align=center>
<TABLE>

  <TR>
    <TD noWrap align=center><FONT face=sans-serif size=2>Notes to Financial
      Statements</FONT><BR><FONT face=sans-serif size=2>December 31, 2007 and
      2006</FONT><BR></TD></TR></TABLE></P>
<P align=left><U><FONT face=sans-serif size=2>1. Basis of Presentation and
Significant Accounting Policies</FONT></U></P>
<P align=left>
<TABLE>

  <TR>
    <TD width=36>&nbsp;</TD>
    <TD noWrap><U><FONT face=sans-serif size=2>General</FONT></U><BR></TD></TR></TABLE></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=sans-serif size=2>The
following brief description of the Twin Disc, Incorporated &#150; The Accelerator
401(k) Savings Plan (the &#147;Plan&#148;) is provided for general information purposes
only. Participants should refer to the plan agreement for a more complete
description of the Plan&#146;s provisions. The Plan, established April 1, 1986, is a
defined-contribution plan covering substantially all Twin Disc, Incorporated
(the &#147;Company&#148;) domestic employees and is subject to the provisions of the
Employee Retirement Income Security Act of 1974 (&#147;ERISA&#148;). </FONT></P>
<P align=left>
<TABLE>

  <TR>
    <TD width=36>&nbsp;</TD>
    <TD noWrap><U><FONT face=sans-serif size=2>Eligibility</FONT></U><BR></TD></TR></TABLE><FONT face=sans-serif size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;An employee of the Company is
eligible for plan participation after completing two months of
employment.</FONT></P>
<P align=left>
<TABLE>

  <TR>
    <TD width=36>&nbsp;</TD>
    <TD noWrap><U><FONT face=sans-serif size=2>Contributions</FONT></U><BR></TD></TR></TABLE></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=sans-serif size=2>Participants may elect to contribute on a pre-tax basis up to 100% of
annual gross income with contributions limited under provisions of the Internal
Revenue Code. </FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=sans-serif size=2>For
participants who are employed by Twin Disc, Inc., the Company contributes an
amount equal to a percentage of each participant&#146;s 401(k) contributions, up to
6% of compensation. The contribution percentages for the years ended December
31, 2007 and 2006 was 50%. For participants who are employed by the Twin Disc
South East subsidiary, the Company contributes a matching contribution equal to
25% of each participant&#146;s 401(k) contributions, up to 6% of compensation, and a
profit sharing contribution equal to 2.5% of each participant&#146;s compensation.
The Internal Revenue Code has set a maximum of $15,500 and $15,000 for
tax-deferred contributions that may be excluded for any individual participant
in 2007 and 2006, respectively. The Internal Revenue Code also allows additional
catch-up contributions for participants age fifty and over. The maximum
additional contribution allowed was $5,000 in 2007 and 2006, respectively. No
federal income tax is paid on the tax-deferred contributions and growth thereon
until the participant withdraws them from the Plan. </FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=sans-serif size=2>The
Plan enables participants to allocate their contributions and account balances
among various investment options offered by the Plan. Assets of the Plan are
segregated and invested based upon the total allocation of the participants&#146;
accounts. Participants may direct such allocations in any whole percentage
increment and allocations can be changed at any time. </FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=sans-serif size=2>Effective January 2007, the Company has amended the Plan to allow Roth
after-tax employee contributions. Roth contributions are made by employees with
after-tax dollars. Federal income tax is paid on the Roth contributions when
made to the Plan. A qualified distribution from the Roth component, including
any earnings received from the investment of Roth contributions, is tax-free to
the participant if taken five years after the year of the first Roth
contribution and if the participant has reached the age of 591/2, become totally
disabled, or is deceased. If the distribution is not qualified, any withdrawal
from the account will be partially taxable to the participant. </FONT></P>
<P align=left>
<TABLE>

  <TR>
    <TD width=36>&nbsp;</TD>
    <TD noWrap><U><FONT face=sans-serif size=2>Vesting</FONT></U><BR></TD></TR></TABLE></P>
<P align=left><FONT face=sans-serif size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Participants are immediately 100%
vested in their individual account balances.</FONT></P>
<P align=center><FONT face=sans-serif size=2>4</FONT></P>
<HR align=center width="100%" noShade SIZE=2>
<A name=page_7></A>
<P align=center><B><FONT face=sans-serif size=2>TWIN DISC, INCORPORATED &#150; THE
ACCELERATOR 401(k) SAVINGS PLAN</FONT></B></P>
<P align=center><FONT face=sans-serif size=2>Racine, Wisconsin</FONT></P>
<P align=center>
<TABLE>

  <TR>
    <TD noWrap><FONT face=sans-serif size=2>Notes to Financial
      Statements</FONT><BR><FONT face=sans-serif size=2>December 31, 2007 and
      2006</FONT><BR><FONT face=sans-serif size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      (Continued)</FONT> <BR></TD></TR></TABLE></P>
<P align=left><U><FONT face=sans-serif size=2>1. Basis of Presentation and
Significant Accounting Policies</FONT></U> <FONT face=sans-serif size=2>(Continued)</FONT></P>
<P align=left>
<TABLE>

  <TR>
    <TD width=36>&nbsp;</TD>
    <TD noWrap><U><FONT face=sans-serif size=2>Withdrawals</FONT></U><BR></TD></TR></TABLE></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=sans-serif size=2>After-tax contributions may be withdrawn at any time upon receipt of
written notice by the Trustee. Pre-tax contributions may only be withdrawn,
prior to employment termination, in the event of severe financial hardship or
once annually upon attainment of age 59&#189;. A final distribution is paid to the
participant upon termination of employment with the Company. Final distributions
in excess of $5,000 may be deferred as elected by the participant until age 70
&#189;.</FONT></P>
<P align=left>
<TABLE>

  <TR>
    <TD width=36>&nbsp;</TD>
    <TD noWrap><U><FONT face=sans-serif size=2>Participant
      Accounts</FONT></U><BR></TD></TR></TABLE></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=sans-serif size=2>The
trusteeship of the Plan is T. Rowe Price Trust Company, and the recordkeeping
services for the Plan T. Rowe Price Retirement Plan Services, Inc. (&#147;T. Rowe
Price&#148;). T. Rowe Price maintains individual accounts for each participant for
their respective investment in each of twenty-three available investment funds.
For all investment programs which are mutual funds or collective trust funds,
participant balances are maintained on a share or unit method, as appropriate.
Participant investments in the Twin Disc, Inc. Stock were accounted for on a
share method. Shares and share values as of December 31, 2007 and 2006 were as
follows:</FONT></P>
<TABLE cellSpacing=1 cellPadding=0 border=0>

  <TR vAlign=bottom>
    <TD noWrap align=left width="27%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD align=center width="38%" colSpan=3><FONT face=sans-serif size=2>Shares</FONT>&nbsp; &nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD align=center width="30%" colSpan=3><FONT face=sans-serif size=2>Share
      Value</FONT>&nbsp; &nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="27%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=center width="38%" colSpan=3><FONT face=sans-serif size=2>December
      31,</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=center width="30%" colSpan=3><FONT face=sans-serif size=2>December
      31,</FONT>&nbsp;</TD></TR>
  <TR>
    <TD width="27%"></TD>
    <TD width="2%"></TD>
    <TD width="38%" colSpan=3>
      <HR noShade SIZE=1>
    </TD>
    <TD width="2%"></TD>
    <TD width="30%" colSpan=3>
      <HR noShade SIZE=1>
    </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="27%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=center width="21%"><FONT face=sans-serif size=2>2007</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=center width="15%"><FONT face=sans-serif size=2>2006</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=center width="21%"><FONT face=sans-serif size=2>2007</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=center width="7%"><FONT face=sans-serif size=2>2006</FONT>&nbsp;</TD></TR>
  <TR>
    <TD width="27%"></TD>
    <TD width="2%"></TD>
    <TD width="21%">
      <HR noShade SIZE=1>
    </TD>
    <TD width="2%"></TD>
    <TD width="15%">
      <HR noShade SIZE=1>
    </TD>
    <TD width="2%"></TD>
    <TD width="21%">
      <HR noShade SIZE=1>
    </TD>
    <TD width="2%"></TD>
    <TD width="7%">
      <HR noShade SIZE=1>
    </TD></TR>
  <TR>
    <TD width="99%" colSpan=9>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="27%"><FONT face=sans-serif size=2>Twin Disc, Inc.
      Stock</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=center width="21%"><FONT face=sans-serif size=2>123,154</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=center width="15%"><FONT face=sans-serif size=2>146,346</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=center width="21%">&nbsp;
      &nbsp; &nbsp;<FONT face=sans-serif size=2>$35.39</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=center width="7%"><FONT face=sans-serif size=2>$17.75</FONT>&nbsp;</TD></TR>
  <TR>
    <TD width="99%" colSpan=9>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="27%">&nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<U><FONT face=sans-serif size=2>Participant
      Loans</FONT></U>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="21%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="15%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="21%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="7%">&nbsp;</TD></TR></TABLE><BR>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=sans-serif size=2>Participants may be granted a loan against their individual account
balance limited to the lesser of $50,000 or 50% of the account balance. Loans
are granted in a uniform and nondiscriminatory manner based on the loan policy
as set forth by the Benefits Committee. The loan proceeds are made pro-rata from
the investment elections of the participant. Each participant's individual
account and the interest and principal paid on the loan shall be credited only
to such participant's account balance. Any such loan shall be repaid over a
period not exceeding five years unless the loan is used to purchase a principal
residence, in which case the loan shall be repaid over a period not exceeding
fifteen years.</FONT></P>
<P align=left>
<TABLE>

  <TR>
    <TD width=36>&nbsp;</TD>
    <TD noWrap><U><FONT face=sans-serif size=2>Basis of
      Accounting</FONT></U><BR></TD></TR></TABLE><FONT face=sans-serif size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The financial statements of the Plan are
prepared under the accrual method of accounting.</FONT></P>
<P align=left>
<TABLE>

  <TR>
    <TD width=36>&nbsp;</TD>
    <TD noWrap><U><FONT face=sans-serif size=2>Administrative
      Expenses</FONT></U><BR></TD></TR></TABLE></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=sans-serif size=2>Certain
administrative expenses of the Plan are paid by the Company at its discretion.
The remaining administrative expenses are paid by the Plan.</FONT></P>
<P align=left><FONT face=sans-serif size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Benefit
Payments</U></FONT><FONT face=sans-serif size=2></FONT></P>
<P align=left><FONT face=sans-serif size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Benefits are recorded when paid.</FONT></P>
<P align=center><FONT face=sans-serif size=2>5</FONT></P>
<HR align=center width="100%" noShade SIZE=2>
<!--$$/page=--><A name=page_8></A>
<P align=center><B><FONT face=sans-serif size=2>TWIN DISC, INCORPORATED &#150; THE
ACCELERATOR 401(k) SAVINGS PLAN</FONT></B></P>
<P align=center><FONT face=sans-serif size=2>Racine, Wisconsin </FONT></P>
<P align=center>
<TABLE>

  <TR>
    <TD noWrap><FONT face=sans-serif size=2>Notes to Financial
      Statements</FONT><BR><FONT face=sans-serif size=2>December 31, 2007 and
      2006</FONT><BR><FONT face=sans-serif size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      (Continued) </FONT><BR></TD></TR></TABLE></P>
<P align=left><U><FONT face=sans-serif size=2>1. Basis of Presentation and
Significant Accounting Policies</FONT></U><FONT face=sans-serif size=2>
(Continued)</FONT></P>
<P align=left>
<TABLE>

  <TR>
    <TD width=36>&nbsp;</TD>
    <TD noWrap><U><FONT face=sans-serif size=2>Investment
      Valuation</FONT></U><BR></TD></TR></TABLE></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=sans-serif size=2>Investments of the Plan are stated at fair value. The values of
investments in mutual funds and common stocks are determined by the last
reported market price on the last business day of the year. Investments in
collective trust funds, other than the T. Rowe Price Stable Value Common Trust
Fund (see below), are valued at redemption prices established by the trustee of
the funds based on the quoted market prices of the underlying investments.
Participant loans are valued at cost which approximates fair value. The Plan
presents, in the statement of changes in net assets, the net appreciation
(depreciation) in the fair value of its investments, which consists of the
realized gains or losses and the unrealized appreciation (depreciation) on those
investments. Purchases and sales of investments are recorded on a trade-date
basis. Dividends are recorded on the ex-dividend date. Interest is recognized
when earned. </FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=sans-serif size=2>The
fair value of the T. Rowe Price Stable Value Common Trust Fund is determined by
T. Rowe Price Retirement Plan Services, Inc. The collective trust fund invests
in short-term and long-term conventional and synthetic investment contracts
issued by insurance companies and other institutions that meet the high credit
quality standards established by T. Rowe Price. There is an adjustment made on
the Statements of Net Assets Available for Benefits to adjust the investment
contracts from fair value to contract value (which represents contributions
received, plus interest, less plan withdrawals). </FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=sans-serif size=2>As
described in Financial Accounting Standards Board Staff Position, FSP AAG INV-1
and SOP 94-4-1, Reporting of Fully Benefit-Responsive Investment Contracts Held
by Certain Investment Companies Subject to the AICPA Investment Company Guide
and Defined-Contribution Health and Welfare and Pension Plans (the FSP),
investment contracts held by a defined-contribution plan are required to be
reported at fair value. However, contract value is the relevant measurement
attribute for that portion of the net assets available for benefits of a defined
contribution plan attributable to fully benefit-responsive investment contracts
because contract value is the amount participants would receive if they were to
initiate permitted transactions under the terms of the plan. As required by the
FSP, the Statement of Net Assets Available for Benefits presents the fair value
of the investment contracts as well as the adjustment of the fully
benefit-responsive investment contracts from fair value to contract value. The
Statement of Changes in Net Assets Available for Benefits is prepared on a
contract value basis. </FONT></P>
<TABLE cellSpacing=1 cellPadding=0 border=0>

  <TR vAlign=bottom>
    <TD noWrap align=left width="2%"><U><FONT face=sans-serif size=2>2.</FONT></U>&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=left width="55%"><U><FONT face=sans-serif size=2>Investments</FONT></U>&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=left width="3%">&nbsp; </TD>
    <TD width="3%">&nbsp; </TD>
    <TD noWrap align=left width="17%">&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=left width="13%">&nbsp; </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="2%">&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=left width="95%" colSpan=7><FONT face=sans-serif size=2>The following
      presents investments that represent 5 % or more of the Plan&#146;s net
      assets:</FONT>&nbsp; </TD></TR>
  <TR>
    <TD width="99%" colSpan=9>&nbsp; </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="2%">&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=left width="55%">&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=left width="3%">&nbsp; </TD>
    <TD width="3%">&nbsp; </TD>
    <TD noWrap align=center width="32%" colSpan=3><FONT face=sans-serif size=2>December
      31,</FONT>&nbsp; </TD></TR>
  <TR>
    <TD width="2%"></TD>
    <TD width="2%"></TD>
    <TD width="55%"></TD>
    <TD width="2%"></TD>
    <TD width="3%"></TD>
    <TD width="3%"></TD>
    <TD align=center width="32%" colSpan=3>
      <HR noShade SIZE=1>
    </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="2%">&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=left width="55%">&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=left width="3%">&nbsp; </TD>
    <TD width="3%">&nbsp; </TD>
    <TD noWrap align=center width="17%"><FONT face=sans-serif size=2>2007</FONT>&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=center width="13%"><FONT face=sans-serif size=2>2006</FONT>&nbsp; </TD></TR>
  <TR>
    <TD width="2%"></TD>
    <TD width="2%"></TD>
    <TD width="55%"></TD>
    <TD width="2%"></TD>
    <TD width="3%"></TD>
    <TD width="3%"></TD>
    <TD width="17%">
      <HR noShade SIZE=1>
    </TD>
    <TD width="2%"></TD>
    <TD width="13%">
      <HR noShade SIZE=1>
    </TD></TR>
  <TR>
    <TD width="99%" colSpan=9>&nbsp; </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="2%">&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=left width="55%">&nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=sans-serif size=2>Mutual Funds:</FONT>&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=left width="3%">&nbsp; </TD>
    <TD width="3%">&nbsp; </TD>
    <TD noWrap align=left width="17%">&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=left width="13%">&nbsp; </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="2%">&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=left width="55%">&nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=sans-serif size=2>Dodge &amp; Cox
      Balanced Fund</FONT>&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=left width="3%"><FONT face=sans-serif size=2>$</FONT>&nbsp;
    </TD>
    <TD width="3%">&nbsp; </TD>
    <TD noWrap align=right width="17%"><FONT face=sans-serif size=2>4,218,422 $</FONT>&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=right width="13%"><FONT face=sans-serif size=2>4,252,755</FONT>&nbsp; </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="2%">&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=left width="55%">&nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=sans-serif size=2>Pimco Total
      Return Fund</FONT>&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=left width="3%">&nbsp; </TD>
    <TD width="3%">&nbsp; </TD>
    <TD noWrap align=right width="17%"><FONT face=sans-serif size=2>5,320,941</FONT>&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=right width="13%"><FONT face=sans-serif size=2>4,877,746</FONT>&nbsp; </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="2%">&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=left width="55%">&nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=sans-serif size=2>T. Rowe Price
      Equity Income Fund</FONT>&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=left width="3%">&nbsp; </TD>
    <TD width="3%">&nbsp; </TD>
    <TD noWrap align=right width="17%"><FONT face=sans-serif size=2>4,016,985</FONT>&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=right width="13%"><FONT face=sans-serif size=2>4,266,658</FONT>&nbsp; </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="2%">&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=left width="55%">&nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=sans-serif size=2>T. Rowe Price
      Growth Stock Fund</FONT>&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=left width="3%">&nbsp; </TD>
    <TD width="3%">&nbsp; </TD>
    <TD noWrap align=right width="17%"><FONT face=sans-serif size=2>12,970,830</FONT>&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=right width="13%"><FONT face=sans-serif size=2>12,879,405</FONT>&nbsp; </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="2%">&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=left width="55%">&nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=sans-serif size=2>T. Rowe Price
      Mid Cap Value Fund</FONT>&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=left width="3%">&nbsp; </TD>
    <TD width="3%">&nbsp; </TD>
    <TD noWrap align=right width="17%"><FONT face=sans-serif size=2>10,201,312</FONT>&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=right width="13%"><FONT face=sans-serif size=2>10,671,556</FONT>&nbsp; </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="2%">&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=left width="55%">&nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=sans-serif size=2>T. Rowe Price
      Small Cap Value Fund</FONT>&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=left width="3%">&nbsp; </TD>
    <TD width="3%">&nbsp; </TD>
    <TD noWrap align=right width="17%"><FONT face=sans-serif size=2>N/A</FONT>&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=right width="13%"><FONT face=sans-serif size=2>3,155,645</FONT>&nbsp; </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="2%">&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=left width="55%">&nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=sans-serif size=2>T. Rowe Price Stable Value Common Trust
      Fund</FONT>&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=left width="3%">&nbsp; </TD>
    <TD width="3%">&nbsp; </TD>
    <TD noWrap align=right width="17%"><FONT face=sans-serif size=2>12,519,968</FONT>&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=right width="13%"><FONT face=sans-serif size=2>13,242,352</FONT>&nbsp; </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="2%">&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=left width="55%">&nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=sans-serif size=2>Twin Disc , Inc. &#150; Common
      Stock</FONT>&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=left width="3%">&nbsp; </TD>
    <TD width="3%">&nbsp; </TD>
    <TD noWrap align=right width="17%"><FONT face=sans-serif size=2>4,357,802</FONT>&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=right width="13%"><FONT face=sans-serif size=2>N/A</FONT>&nbsp;
</TD></TR></TABLE><BR>
<P align=center><FONT face=sans-serif size=2>6</FONT></P>
<HR align=center width="100%" noShade SIZE=2>
<!--$$/page=--><A name=page_9></A>
<P align=center><B><FONT face=sans-serif size=2>TWIN DISC, INCORPORATED &#150; THE
ACCELERATOR 401(k) SAVINGS PLAN</FONT></B></P>
<P align=center><FONT face=sans-serif size=2>Racine, Wisconsin </FONT></P>
<P align=center>
<TABLE>

  <TR>
    <TD noWrap><FONT face=sans-serif size=2>Notes to Financial
      Statements</FONT><BR><FONT face=sans-serif size=2>December 31, 2007 and
      2006</FONT><BR><FONT face=sans-serif size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      (Continued) </FONT><BR></TD></TR></TABLE></P>
<P align=left>
<TABLE>

  <TR>
    <TD noWrap><U><FONT face=sans-serif size=2>2. Investments</FONT></U><FONT face=sans-serif size=2> (Continued)</FONT><BR></TD></TR></TABLE></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=sans-serif size=2>During
2007 and 2006, the Plan&#146;s investments (including gains and losses on investments
bought and sold as well as held during the year) appreciated in value by
$288,558 and $4,445,722, respectively, as follows: </FONT></P>
<TABLE cellSpacing=1 cellPadding=0 border=0>

  <TR vAlign=bottom>
    <TD noWrap align=left width="2%">&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=left width="54%">&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=left width="4%">&nbsp; </TD>
    <TD width="3%">&nbsp; </TD>
    <TD noWrap align=center width="32%" colSpan=5><FONT face=sans-serif size=2>December
      31,</FONT>&nbsp; </TD></TR>
  <TR>
    <TD width="2%"></TD>
    <TD width="2%"></TD>
    <TD width="54%"></TD>
    <TD width="2%"></TD>
    <TD width="4%"></TD>
    <TD width="3%"></TD>
    <TD width="32%" colSpan=5>
      <HR noShade SIZE=1>
    </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="2%">&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=left width="54%">&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=left width="4%">&nbsp; </TD>
    <TD width="3%">&nbsp; </TD>
    <TD noWrap align=center width="14%"><FONT face=sans-serif size=2>2007</FONT>&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=left width="3%">&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=left width="11%">&nbsp;
      &nbsp; &nbsp;<FONT face=sans-serif size=2>2006</FONT>&nbsp; </TD></TR>
  <TR>
    <TD width="2%"></TD>
    <TD width="2%"></TD>
    <TD width="54%"></TD>
    <TD width="2%"></TD>
    <TD width="4%"></TD>
    <TD width="3%"></TD>
    <TD width="14%">
      <HR noShade SIZE=1>
    </TD>
    <TD width="2%"></TD>
    <TD width="3%"></TD>
    <TD width="2%"></TD>
    <TD width="11%">
      <HR noShade SIZE=1>
    </TD></TR>
  <TR>
    <TD width="99%" colSpan=11>&nbsp; </TD></TR>
  <TR>
    <TD width="99%" colSpan=11>&nbsp; </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="2%">&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=left width="54%">&nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=sans-serif size=2>Mutual
      funds</FONT>&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=left width="4%"><FONT face=sans-serif size=2>$</FONT>&nbsp;
    </TD>
    <TD width="3%">&nbsp; </TD>
    <TD noWrap align=right width="14%"><FONT face=sans-serif size=2>(2,109,937)</FONT>&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=center width="3%"><FONT face=sans-serif size=2>$</FONT>&nbsp;
    </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=right width="11%"><FONT face=sans-serif size=2>3,273,040</FONT>&nbsp; </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="2%">&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=left width="54%">&nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=sans-serif size=2>Common
      stock</FONT>&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=left width="4%">&nbsp; </TD>
    <TD width="3%">&nbsp; </TD>
    <TD noWrap align=right width="14%"><FONT face=sans-serif size=2>2,344,622</FONT>&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=left width="3%">&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=right width="11%"><FONT face=sans-serif size=2>955,179</FONT>&nbsp; </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="2%">&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=left width="54%">&nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=sans-serif size=2>Collective trust
      fund</FONT>&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=left width="4%">&nbsp; </TD>
    <TD width="3%">&nbsp; </TD>
    <TD noWrap align=right width="14%"><FONT face=sans-serif size=2>53,873</FONT>&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=left width="3%">&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=right width="11%"><FONT face=sans-serif size=2>217,503</FONT>&nbsp; </TD></TR>
  <TR>
    <TD width="2%"></TD>
    <TD width="2%"></TD>
    <TD width="54%"></TD>
    <TD width="2%"></TD>
    <TD width="4%"></TD>
    <TD width="3%"></TD>
    <TD width="14%">
      <HR noShade SIZE=1>
    </TD>
    <TD width="2%"></TD>
    <TD width="3%">
      <HR noShade SIZE=1>
    </TD>
    <TD width="2%"></TD>
    <TD width="11%">
      <HR noShade SIZE=1>
    </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="2%">&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=left width="54%">&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=left width="4%"><FONT face=sans-serif size=2>$</FONT>&nbsp;
    </TD>
    <TD width="3%">&nbsp; </TD>
    <TD noWrap align=right width="14%"><FONT face=sans-serif size=2>288,558</FONT>&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=center width="3%"><FONT face=sans-serif size=2>$</FONT>&nbsp;
    </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=right width="11%"><FONT face=sans-serif size=2>4,445,722</FONT>&nbsp; </TD></TR>
  <TR>
    <TD width="2%"></TD>
    <TD width="2%"></TD>
    <TD width="54%"></TD>
    <TD width="2%"></TD>
    <TD width="4%"></TD>
    <TD width="3%"></TD>
    <TD width="14%">
      <HR noShade SIZE=2>
    </TD>
    <TD width="2%"></TD>
    <TD width="3%">
      <HR noShade SIZE=2>
    </TD>
    <TD width="2%"></TD>
    <TD width="11%">
      <HR noShade SIZE=2>
    </TD></TR>
  <TR>
    <TD width="99%" colSpan=11>&nbsp; </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="2%"><U><FONT face=sans-serif size=2>3.</FONT></U>&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=left width="54%"><U><FONT face=sans-serif size=2>T. Rowe Price Stable Value Common Trust
      Fund</FONT></U>&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=left width="4%">&nbsp; </TD>
    <TD width="3%">&nbsp; </TD>
    <TD noWrap align=left width="14%">&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=left width="3%">&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=left width="11%">&nbsp;
</TD></TR></TABLE><BR>
<P align=left><B><FONT face=sans-serif size=2></FONT></B><FONT face=sans-serif size=2>&nbsp;&nbsp; The Plan has assets invested in the T. Rowe Price Stable
Value Common Trust Fund. This fund holds Guaranteed and Synthetic Investment
Contracts. Information pertaining to the funds for the year ended December 31,
2007 is as follows: </FONT></P>
<TABLE cellSpacing=1 cellPadding=0 border=0>

  <TR vAlign=bottom>
    <TD noWrap align=left width="14%">&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=center width="16%"><FONT face=sans-serif size=2>Crediting</FONT>&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=left width="23%">&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=left width="22%">&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=center width="16%"><FONT face=sans-serif size=2>Adjustment</FONT>&nbsp; </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=center width="14%"><FONT face=sans-serif size=2>Average</FONT>&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=center width="16%"><FONT face=sans-serif size=2>Interest</FONT>&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=right width="23%"><FONT face=sans-serif size=2>Investments at</FONT>&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=right width="22%"><FONT face=sans-serif size=2>Investments at</FONT>&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=center width="16%"><FONT face=sans-serif size=2>to
      Contract</FONT>&nbsp; </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=center width="14%"><FONT face=sans-serif size=2>Yield</FONT>&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=center width="16%"><FONT face=sans-serif size=2>Rate</FONT>&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=left width="23%">&nbsp;
      &nbsp;<FONT face=sans-serif size=2>Fair
      Value</FONT>&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=right width="22%"><FONT face=sans-serif size=2>Contract Value</FONT>&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=center width="16%"><FONT face=sans-serif size=2>Value</FONT>&nbsp; </TD></TR>
  <TR>
    <TD width="14%">
      <HR noShade SIZE=1>
    </TD>
    <TD width="2%"></TD>
    <TD width="16%">
      <HR noShade SIZE=1>
    </TD>
    <TD width="2%"></TD>
    <TD width="23%">
      <HR noShade SIZE=1>
    </TD>
    <TD width="2%"></TD>
    <TD width="22%">
      <HR noShade SIZE=1>
    </TD>
    <TD width="2%"></TD>
    <TD width="16%">
      <HR noShade SIZE=1>
    </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="14%">&nbsp;
      &nbsp; &nbsp; &nbsp;<FONT face=sans-serif size=2>4.89%</FONT>&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=left width="16%">&nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=sans-serif size=2>4.99%</FONT>&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=left width="23%">&nbsp;
      &nbsp; &nbsp;<FONT face=sans-serif size=2>$12,594,405</FONT>&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=right width="22%"><FONT face=sans-serif size=2>$12,519,968</FONT>&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=right width="16%"><FONT face=sans-serif size=2>$(74,437)</FONT>&nbsp;
  </TD></TR></TABLE><BR>
<P align=left><FONT face=sans-serif size=2>&nbsp;&nbsp; Information pertaining
to the fund for the year ended December 31, 2006 is as follows:</FONT></P>
<TABLE cellSpacing=1 cellPadding=0 border=0>

  <TR vAlign=bottom>
    <TD noWrap align=left width="15%">&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=center width="16%"><FONT face=sans-serif size=2>Crediting</FONT>&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=left width="22%">&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=left width="22%">&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=center width="16%"><FONT face=sans-serif size=2>Adjustment</FONT>&nbsp; </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=center width="15%"><FONT face=sans-serif size=2>Average</FONT>&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=center width="16%"><FONT face=sans-serif size=2>Interest</FONT>&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=right width="22%"><FONT face=sans-serif size=2>Investments at</FONT>&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=right width="22%"><FONT face=sans-serif size=2>Investments at</FONT>&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=center width="16%"><FONT face=sans-serif size=2>to
      Contract</FONT>&nbsp; </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=center width="15%"><FONT face=sans-serif size=2>Yield</FONT>&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=center width="16%"><FONT face=sans-serif size=2>Rate</FONT>&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=left width="22%">&nbsp;
      &nbsp;<FONT face=sans-serif size=2>Fair
      Value</FONT>&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=right width="22%"><FONT face=sans-serif size=2>Contract Value</FONT>&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=center width="16%"><FONT face=sans-serif size=2>Value</FONT>&nbsp; </TD></TR>
  <TR>
    <TD width="15%">
      <HR noShade SIZE=1>
    </TD>
    <TD width="2%"></TD>
    <TD width="16%">
      <HR noShade SIZE=1>
    </TD>
    <TD width="2%"></TD>
    <TD width="22%">
      <HR noShade SIZE=1>
    </TD>
    <TD width="2%"></TD>
    <TD width="22%">
      <HR noShade SIZE=1>
    </TD>
    <TD width="2%"></TD>
    <TD width="16%">
      <HR noShade SIZE=1>
    </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%">&nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=sans-serif size=2>4.68%</FONT>&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=left width="16%">&nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=sans-serif size=2>4.81%</FONT>&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=left width="22%">&nbsp;
      &nbsp; &nbsp;<FONT face=sans-serif size=2>$13,129,792</FONT>&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=right width="22%"><FONT face=sans-serif size=2>$13,242,352</FONT> </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=right width="16%"><FONT face=sans-serif size=2>$112,560</FONT>&nbsp;
  </TD></TR></TABLE><BR>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=sans-serif size=2>As
described in Note 1, because the guaranteed investment contract is fully
benefit-responsive, contract value is the relevant measurement attribute for
that portion of the net assets available for benefits attributable to the
guaranteed investment contract.</FONT><FONT face=serif size=2> </FONT></P>
<P align=left>
<TABLE>

  <TR>
    <TD noWrap><U><FONT face=sans-serif size=2>4. Income Tax
      Status</FONT></U><BR></TD></TR></TABLE></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=sans-serif size=2>The
Plan obtained its latest determination letter on March 19, 2002, in which the
Internal Revenue Service stated the Plan as then designed, was in compliance
with the applicable requirements of the Internal Revenue Code. The Plan
administrator and the Plan's tax counsel believe that the Plan is currently
designed and being operated in compliance with the applicable requirements of
the Internal Revenue Code. Therefore, no provision for income taxes has been
included in the Plan's financial statements. </FONT></P>
<P align=center><FONT face=sans-serif size=2>7</FONT></P>
<HR align=center width="100%" noShade SIZE=2>
<!--$$/page=--><A name=page_10></A>
<P align=center><B><FONT face=sans-serif size=2>TWIN DISC, INCORPORATED &#150; THE
ACCELERATOR 401(k) SAVINGS PLAN</FONT></B></P>
<P align=center><FONT face=sans-serif size=2>Racine, Wisconsin </FONT></P>
<P align=center>
<TABLE>

  <TR>
    <TD noWrap><FONT face=sans-serif size=2>Notes to Financial
      Statements</FONT><BR><FONT face=sans-serif size=2>December 31, 2007 and
      2006</FONT><BR><FONT face=sans-serif size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      (Continued) </FONT><BR></TD></TR></TABLE></P>
<P align=left>
<TABLE>

  <TR>
    <TD noWrap><FONT face=sans-serif size=2>5. </FONT><U><FONT face=sans-serif size=2>Termination of Plan</FONT></U><BR></TD></TR></TABLE></P>
<P align=left><FONT face=sans-serif size=2>&nbsp;&nbsp;&nbsp;&nbsp; Although the
Company has not expressed any intent to terminate the Plan, it may do so at any
time.</FONT></P>
<P align=left>
<TABLE>

  <TR>
    <TD noWrap><U><FONT face=sans-serif size=2>6. Party-in-Interest
      Transactions</FONT></U><BR></TD></TR></TABLE></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=sans-serif size=2>Transactions involving employer securities, funds administered by T. Rowe
Price Retirement Plan Services, Inc., the current trustee and recordkeeper of
the Plan, and participant loans are considered party-in-interest transactions.
These transactions are not, however, considered prohibited transactions under 29
CFR 408(b) of the ERISA regulations. </FONT></P>
<P align=left>
<TABLE>

  <TR>
    <TD noWrap><U><FONT face=sans-serif size=2>7. Amounts Allocated to
      Withdrawn Participants</FONT></U><BR></TD></TR></TABLE></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=sans-serif size=2>Plan
assets of $10,342,234 and $10,805,445 have been allocated to the accounts of
persons who are no longer active participants of the Plan as of December 31,
2007 and 2006, respectively, but who have not yet received distributions as of
that date. </FONT></P>
<P align=left>
<TABLE>

  <TR>
    <TD noWrap><U><FONT face=sans-serif size=2>8. Use of
      Estimates</FONT></U><BR></TD></TR></TABLE></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=sans-serif size=2>The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the dates of the financial statements and the reported amounts of
additions and deductions during the reporting periods. Actual amounts could
differ from those estimates. </FONT></P>
<P align=left>
<TABLE>

  <TR>
    <TD noWrap><U><FONT face=sans-serif size=2>9. Risks and
      Uncertainties</FONT></U><BR></TD></TR></TABLE></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=sans-serif size=2>The
Plan&#146;s investments are exposed to various risks, such as interest rate, market
and credit risks. Due to the level of risk associated with certain investments
and the level of uncertainty related to changes in the values of investments, it
is at least reasonably possible that changes in risks in the near term would
materially affect participants&#146; account balances and the amounts reported in the
Statements of Net Assets Available for Benefits and the Statements of Changes in
Net Assets Available for Benefits.</FONT></P>
<P align=left><U><FONT face=sans-serif size=2>10. Reconciliation of Financial
Statements to Form 5500</FONT></U><FONT face=sans-serif size=2> </FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=sans-serif size=2>The
following is a reconciliation of assets available for benefits per the financial
statements to the Form 5500 as of December 31, 2007: </FONT></P>
<TABLE cellSpacing=1 cellPadding=0 border=0>

  <TR vAlign=bottom>
    <TD noWrap align=left width="66%">&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=left width="11%">&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=right width="18%"><FONT face=sans-serif size=2>December 31,</FONT>&nbsp; </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="66%">&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=left width="11%">&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=center width="18%"><FONT face=sans-serif size=2>2007</FONT>&nbsp; </TD></TR>
  <TR>
    <TD width="66%"></TD>
    <TD width="2%"></TD>
    <TD width="11%"></TD>
    <TD width="2%"></TD>
    <TD width="18%">
      <HR noShade SIZE=1>
    </TD></TR>
  <TR>
    <TD width="99%" colSpan=5>&nbsp; </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="66%"><FONT face=sans-serif size=2>Assets available
      for benefits per the financial</FONT>&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=left width="11%">&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=left width="18%">&nbsp; </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="66%"><FONT face=sans-serif size=2>statements</FONT>&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=right width="11%"><FONT face=sans-serif size=2>$</FONT>&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=right width="18%"><FONT face=sans-serif size=2>67,667,885</FONT>&nbsp; </TD></TR>
  <TR>
    <TD width="99%" colSpan=5>&nbsp; </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="66%"><FONT face=sans-serif size=2>Adjustment from
      contract value to fair value for fully</FONT>&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=left width="11%">&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=left width="18%">&nbsp; </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="66%"><FONT face=sans-serif size=2>benefit-responsive investment contracts</FONT>&nbsp;
    </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=left width="11%">&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=right width="18%"><FONT face=sans-serif size=2>74,437</FONT>&nbsp; </TD></TR>
  <TR>
    <TD width="66%"></TD>
    <TD width="2%"></TD>
    <TD width="11%"></TD>
    <TD width="2%"></TD>
    <TD width="18%">
      <HR noShade SIZE=1>
    </TD></TR>
  <TR>
    <TD width="99%" colSpan=5>&nbsp; </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="66%"><FONT face=sans-serif size=2>Assets available
      for benefits per the Form 5500</FONT>&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=right width="11%"><FONT face=sans-serif size=2>$</FONT>&nbsp; </TD>
    <TD width="2%">&nbsp; </TD>
    <TD noWrap align=right width="18%"><FONT face=sans-serif size=2>67,742,322</FONT>&nbsp; </TD></TR>
  <TR>
    <TD width="66%"></TD>
    <TD width="2%"></TD>
    <TD width="11%"></TD>
    <TD width="2%"></TD>
    <TD width="18%">
      <HR noShade SIZE=2>
    </TD></TR></TABLE><BR>
<P align=center><FONT face=sans-serif size=2>8</FONT></P>
<HR align=center width="100%" noShade SIZE=2>
<A name=page_11></A>
<P align=center><B><FONT face=sans-serif size=2>TWIN DISC, INCORPORATED &#150; THE
ACCELERATOR 401(k) SAVINGS PLAN</FONT></B></P><FONT face=sans-serif size=2>
<P align=center>Racine, Wisconsin</P>
<P align=center>
<TABLE>

  <TR>
    <TD noWrap><FONT size=1><FONT size=2>Notes to Financial
      Statements</FONT></FONT><BR><FONT size=1><FONT size=2>December 31, 2007
      and 2006</FONT></FONT><BR><FONT size=1><FONT size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      (Continued)</FONT></FONT> <BR></TD></TR></TABLE></P></FONT>
<P align=left><U><FONT face=sans-serif size=2>10. Reconciliation of Financial
Statements to Form 5500</FONT></U> <FONT face=sans-serif size=2>(Continued)</FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=sans-serif size=2>For the
year ended December 31, 2007, the following is a reconciliation of net
investment income per the financial statements to the Form 5500:</FONT></P>
<TABLE cellSpacing=1 cellPadding=0 border=0>

  <TR vAlign=bottom>
    <TD noWrap align=left width="66%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="11%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=right width="18%"><FONT face=sans-serif size=2>December 31,</FONT>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="66%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="11%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=center width="18%">&nbsp;<FONT face=sans-serif size=2>2007</FONT>&nbsp;</TD></TR>
  <TR>
    <TD width="66%"></TD>
    <TD width="2%"></TD>
    <TD width="11%"></TD>
    <TD width="2%"></TD>
    <TD width="18%">
      <HR noShade SIZE=1>
    </TD></TR>
  <TR>
    <TD width="99%" colSpan=5>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="66%"><FONT face=sans-serif size=2>Total net
      investment income per the financial</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="11%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="18%">&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="66%"><FONT face=sans-serif size=2>statements</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=right width="11%"><FONT face=sans-serif size=2>$</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=right width="18%"><FONT face=sans-serif size=2>5,372,801</FONT>&nbsp;</TD></TR>
  <TR>
    <TD width="99%" colSpan=5>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="66%"><FONT face=sans-serif size=2>Adjustment from
      contract value to fair value for fully</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="11%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="18%">&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="66%"><FONT face=sans-serif size=2>benefit-responsive investment contract</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="11%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=right width="18%"><FONT face=sans-serif size=2>74,437</FONT>&nbsp;</TD></TR>
  <TR>
    <TD width="66%"></TD>
    <TD width="2%"></TD>
    <TD width="11%"></TD>
    <TD width="2%"></TD>
    <TD width="18%">
      <HR noShade SIZE=1>
    </TD></TR>
  <TR>
    <TD width="99%" colSpan=5>&nbsp;</TD></TR>
  <TR>
    <TD width="99%" colSpan=5>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="66%"><FONT face=sans-serif size=2>Total earnings
      on investments per the Form 5500</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=right width="11%"><FONT face=sans-serif size=2>$</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=right width="18%"><FONT face=sans-serif size=2>5,447,238</FONT>&nbsp;</TD></TR>
  <TR>
    <TD width="66%"></TD>
    <TD width="2%"></TD>
    <TD width="11%"></TD>
    <TD width="2%"></TD>
    <TD width="18%">
      <HR noShade SIZE=2>
    </TD></TR></TABLE><BR>
<P align=left>
<TABLE>

  <TR>
    <TD noWrap><U><FONT face=sans-serif size=2>11. Subsequent
      Events</FONT></U><BR></TD></TR></TABLE></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=sans-serif size=2>In
February 2008, the Company made a one-time discretionary match contribution to
all Racine active Twin Disc, Incorporated employees as of December 31, 2007 and
to Racine Twin Disc, Incorporated employees who retired during 2007 that
participated and contributed to the Plan during 2007. The amount of the
contribution was based on the employee&#146;s payroll during 2007.</FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=sans-serif size=2>In
October 2007, the Board of Directors approved a two-for-one stock split of the
Company&#146;s outstanding common stock. The split was issued on December 31, 2007 to
shareholders of record at the close of business on December 10, 2007. The split
increased the number of shares outstanding to approximately 11.4 million from
approximately 5.7 million. The Consolidated Financial Statements and Notes
thereto, including all share and per share data, have been restated as if the
stock split had occurred as of the earliest period presented.</FONT></P>
<P align=center><FONT face=sans-serif size=2>9</FONT></P>
<HR align=center width="100%" noShade SIZE=2>
<A name=page_12></A>
<TABLE cellSpacing=1 cellPadding=0 border=0>

  <TR vAlign=bottom>
    <TD noWrap align=left width="6%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="73%" colSpan=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      &nbsp;<B><FONT face=sans-serif size=2>TWIN DISC, INCORPORATED</FONT></B>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="16%">&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="6%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=center width="73%" colSpan=3><B><FONT face=sans-serif size=2>THE
      ACCELERATOR 401(K) SAVINGS PLAN</FONT></B>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="16%">&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="6%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=center width="73%" colSpan=3><FONT face=sans-serif size=2>Racine,
      Wisconsin</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="16%">&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="6%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=center width="53%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=center width="18%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=center width="16%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="6%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=center width="73%" colSpan=3><FONT face=sans-serif size=2>Employer
      Identification #39-0667110</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="16%">&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="6%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=center width="53%"><FONT face=sans-serif size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      Plan 005</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=center width="18%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="16%">&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="6%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="91%" colSpan=5><FONT face=sans-serif size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      Schedule of Assets Held for Investment Purposes - Schedule H, Line
      4i</FONT>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="6%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=center width="73%" colSpan=3>&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=sans-serif size=2>December 31, 2007</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="16%">&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="6%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="53%"><FONT face=sans-serif size=2><U>Description
      of asset</U></FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="18%"><U><FONT face=sans-serif size=2>Shares/Units</FONT></U>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="16%"><U><FONT face=sans-serif size=2>Current Value</FONT></U>&nbsp;</TD></TR>
  <TR>
    <TD width="6%"></TD>
    <TD width="2%"></TD>
    <TD width="53%"></TD>
    <TD width="2%"></TD>
    <TD width="18%"></TD>
    <TD width="2%"></TD>
    <TD width="16%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="6%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="53%"><FONT face=sans-serif size=2>Dodge &amp; Cox
      Balanced Fund</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="18%"><FONT face=sans-serif size=2>52,079</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="16%"><FONT face=sans-serif size=2>$4,218,422</FONT>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="6%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="53%"><FONT face=sans-serif size=2>Goldman Sachs
      Growth Opportunities A Fund</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="18%"><FONT face=sans-serif size=2>34,885</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="16%"><FONT face=sans-serif size=2>788,062</FONT>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="6%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="53%"><FONT face=sans-serif size=2>Pimco Total
      Return Fund</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="18%"><FONT face=sans-serif size=2>497,749</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="16%"><FONT face=sans-serif size=2>5,320,941</FONT>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="6%"><FONT face=sans-serif size=2>*</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="53%"><FONT face=sans-serif size=2>T. Rowe Price
      Equity Income Fund</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="18%"><FONT face=sans-serif size=2>142,953</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="16%"><FONT face=sans-serif size=2>4,016,985</FONT>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="6%"><FONT face=sans-serif size=2>*</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="53%"><FONT face=sans-serif size=2>T. Rowe Price
      Growth Stock Fund</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="18%"><FONT face=sans-serif size=2>385,348</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="16%"><FONT face=sans-serif size=2>12,970,830</FONT>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="6%"><FONT face=sans-serif size=2>*</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="53%"><FONT face=sans-serif size=2>T. Rowe Price
      Mid Cap Value Fund</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="18%"><FONT face=sans-serif size=2>454,199</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="16%"><FONT face=sans-serif size=2>10,201,312</FONT>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="6%"><FONT face=sans-serif size=2>*</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="53%"><FONT face=sans-serif size=2>T. Rowe Price
      Small Cap Value Fund</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="18%"><FONT face=sans-serif size=2>85,888</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="16%"><FONT face=sans-serif size=2>3,085,098</FONT>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="6%"><FONT face=sans-serif size=2>*</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="53%"><FONT face=sans-serif size=2>T. Rowe Price
      Stable Value Common Trust Fund</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="18%"><FONT face=sans-serif size=2>12,519,968</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="16%"><FONT face=sans-serif size=2>12,519,968</FONT>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="6%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="53%"><FONT face=sans-serif size=2>Boston Company
      International Core Equity</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="18%"><FONT face=sans-serif size=2>90,024</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="16%"><FONT face=sans-serif size=2>2,314,525</FONT>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="6%"><FONT face=sans-serif size=2>*</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="53%"><FONT face=sans-serif size=2>Twin Disc, Inc.
      - Common Stock</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="18%"><FONT face=sans-serif size=2>123,154</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="16%"><FONT face=sans-serif size=2>4,357,802</FONT>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="6%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="53%"><FONT face=sans-serif size=2>Vanguard 500
      Index Fund</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="18%"><FONT face=sans-serif size=2>15,214</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="16%"><FONT face=sans-serif size=2>1,698,473</FONT>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="6%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="53%"><FONT face=sans-serif size=2>William Blair
      Small Cap Growth Fund</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="18%"><FONT face=sans-serif size=2>57,969</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="16%"><FONT face=sans-serif size=2>1,384,888</FONT>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="6%"><FONT face=sans-serif size=2>*</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="53%"><FONT face=sans-serif size=2>T. Rowe Price
      Retirement 2005 Fund</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="18%"><FONT face=sans-serif size=2>688</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="16%"><FONT face=sans-serif size=2>8,110</FONT>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="6%"><FONT face=sans-serif size=2>*</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="53%"><FONT face=sans-serif size=2>T. Rowe Price
      Retirement 2010 Fund</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="18%"><FONT face=sans-serif size=2>59,646</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="16%"><FONT face=sans-serif size=2>966,861</FONT>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="6%"><FONT face=sans-serif size=2>*</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="53%"><FONT face=sans-serif size=2>T. Rowe Price
      Retirement 2015 Fund</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="18%"><FONT face=sans-serif size=2>79,500</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="16%"><FONT face=sans-serif size=2>1,005,672</FONT>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="6%"><FONT face=sans-serif size=2>*</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="53%"><FONT face=sans-serif size=2>T. Rowe Price
      Retirement 2020 Fund</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="18%"><FONT face=sans-serif size=2>52,253</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="16%"><FONT face=sans-serif size=2>926,972</FONT>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="6%"><FONT face=sans-serif size=2>*</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="53%"><FONT face=sans-serif size=2>T. Rowe Price
      Retirement 2025 Fund</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="18%"><FONT face=sans-serif size=2>36,176</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="16%"><FONT face=sans-serif size=2>476,797</FONT>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="6%"><FONT face=sans-serif size=2>*</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="53%"><FONT face=sans-serif size=2>T. Rowe Price
      Retirement 2030 Fund</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="18%"><FONT face=sans-serif size=2>2,330</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="16%"><FONT face=sans-serif size=2>44,380</FONT>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="6%"><FONT face=sans-serif size=2>*</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="53%"><FONT face=sans-serif size=2>T. Rowe Price
      Retirement 2035 Fund</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="18%"><FONT face=sans-serif size=2>74</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="16%"><FONT face=sans-serif size=2>1,000</FONT>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="6%"><FONT face=sans-serif size=2>*</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="53%"><FONT face=sans-serif size=2>T. Rowe Price
      Retirement 2040 Fund</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="18%"><FONT face=sans-serif size=2>506</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="16%"><FONT face=sans-serif size=2>9,709</FONT>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="6%"><FONT face=sans-serif size=2>*</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="53%"><FONT face=sans-serif size=2>T. Rowe Price
      Retirement 2045 Fund</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="18%"><FONT face=sans-serif size=2>79</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="16%"><FONT face=sans-serif size=2>1,000</FONT>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="6%"><FONT face=sans-serif size=2>*</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="53%"><FONT face=sans-serif size=2>T. Rowe Price
      Retirement 2050 Fund</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="18%"><FONT face=sans-serif size=2>702</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="16%"><FONT face=sans-serif size=2>7,360</FONT>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="6%"><FONT face=sans-serif size=2>*</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="53%"><FONT face=sans-serif size=2>T. Rowe Price
      Retirement 2055 Fund</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="18%"><FONT face=sans-serif size=2>247</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="16%"><FONT face=sans-serif size=2>2,586</FONT>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="6%"><FONT face=sans-serif size=2>*</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="53%"><FONT face=sans-serif size=2>Participant
      Loans, interest rates ranging</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="18%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="16%">&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="6%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="53%"><FONT face=sans-serif size=2>between 5.0% and
      9.75%, maturities</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="18%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="16%">&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="6%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="53%"><FONT face=sans-serif size=2>ranging from
      2008 to 2019</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="18%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="16%"><U><FONT face=sans-serif size=2>1,307,151</FONT></U>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="6%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="53%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="18%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="16%"><B><FONT size=+0><U><FONT face=sans-serif size=2>$67,634,904</FONT></U>&nbsp;</FONT></B></TD></TR>
  <TR>
    <TD width="6%"></TD>
    <TD width="2%"></TD>
    <TD width="53%"></TD>
    <TD width="2%"></TD>
    <TD width="18%"></TD>
    <TD width="2%"></TD>
    <TD width="16%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="6%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="73%" colSpan=3>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=sans-serif size=2>The party involved is known to
      be a party-in-interest to the Plan.</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="16%">&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="6%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="53%">&nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=sans-serif size=2>See Independent
      Auditors&#146; Report.</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="18%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="16%">&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="6%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=center width="53%"><FONT face=sans-serif size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      10</FONT>&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="18%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="16%">&nbsp;</TD></TR></TABLE><BR>
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<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>3
<FILENAME>r11kexh9912008.htm
<TEXT>

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<!--$$/page=--><A name=page_1></A>
<P align=left>
<TABLE>

  <TR>
    <TD noWrap><FONT face=sans-serif>Exhibit
99.1</FONT><BR></TD></TR></TABLE></P>
<P align=left><FONT face=sans-serif>CERTIFICATION PURSUANT TO 18 U.S.C. SECTION
1350, AS ADOPTED PURSUANT TO </FONT></P>
<P align=left><FONT face=sans-serif>SECTION 906 OF THE SARBANES-OXLEY ACT OF
2002</FONT></P>
<P align=left><FONT face=sans-serif>In connection with the Annual Report of Twin
Disc, Incorporated &#150; The Accelerator 401 (k) Savings Plan (the &#147;Plan&#148;) on Form
11-K for the plan year ending December 31, 2007, as filed with the Securities
and Exchange Commission as of the date hereof (the &#147;Report&#148;) , I, Michael E.
Batten, Chairman, President &nbsp;and Chief Executive Officer of the Company,
certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:
</FONT></P>
<P align=left><FONT face=sans-serif>(1) the Report fully complies with Section
13(a) or 15(d) of the Securities Exchange Act 1934, and</FONT></P>
<P align=left><FONT face=sans-serif>(2) the information contained in the report
fairly presents, in all material respects, the financial condition of the Plan.
</FONT></P>
<P align=left><FONT face=sans-serif>A signed original of this written statement
has been provided to the Company and will be retained by the Company and
furnished to the SEC or its staff upon request. </FONT></P>
<P align=left>
<TABLE>

  <TR>
    <TD width=252>&nbsp;</TD>
    <TD noWrap><FONT face=sans-serif>/s/ Michael E. Batten </FONT><BR><FONT face=sans-serif>---------------------------------------------</FONT><BR><FONT face=sans-serif>Michael E. Batten </FONT><BR><FONT face=sans-serif>Chairman, President and</FONT><BR><FONT face=sans-serif>Chief Executive Officer
</FONT><BR></TD></TR></TABLE></P>
<P align=left>
<TABLE>

  <TR>
    <TD noWrap><FONT face=sans-serif>June 27,
2008</FONT><BR></TD></TR></TABLE></P>
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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>4
<FILENAME>r11kexh9922008.htm
<TEXT>

<HTML>
<HEAD>
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<BODY bgcolor="#ffffff">
<!--$$/page=--><A name=page_1></A>
<P align=left>
<TABLE>

  <TR>
    <TD noWrap><FONT face=sans-serif>Exhibit
99.2</FONT><BR></TD></TR></TABLE></P>
<P align=left><FONT face=sans-serif>CERTIFICATION PURSUANT TO 18 U.S.C. SECTION
1350, AS ADOPTED PURSUANT TO </FONT></P>
<P align=left><FONT face=sans-serif>SECTION 906 OF THE SARBANES-OXLEY ACT OF
2002</FONT></P>
<P align=left><FONT face=sans-serif>In connection with the Annual Report of Twin
Disc, Incorporated &#150; The Accelerator 401 (k) Savings Plan (the &#147;Plan&#148;) on Form
11-K for the plan year ending December 31, 2007, as filed with the Securities
and Exchange Commission as of the date hereof (the &#147;Report&#148;) , I, Christopher J.
Eperjesy, Vice President &#150; Finance, Chief Financial Officer and Treasurer of the
Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my
knowledge: </FONT></P>
<P align=left><FONT face=sans-serif>(1) the Report fully complies with Section
13(a) or 15(d) of the Securities Exchange Act 1934, and</FONT></P>
<P align=left><FONT face=sans-serif>(2) the information contained in the report
fairly presents, in all material respects, the financial condition of the Plan.
</FONT></P>
<P align=left><FONT face=sans-serif>A signed original of this written statement
has been provided to the Company and will be retained by the Company and
furnished to the SEC or its staff upon request. </FONT></P>
<P align=left>
<TABLE>

  <TR>
    <TD width=252>&nbsp;</TD>
    <TD noWrap><FONT face=sans-serif>/s/ Christopher J. Eperjesy
      </FONT><BR><FONT face=sans-serif>---------------------------------------------</FONT><BR><FONT face=sans-serif>Christopher J. Eperjesy </FONT><BR><FONT face=sans-serif>Vice President &#150; Finance, Chief Financial Officer
      </FONT><BR><FONT face=sans-serif>and Treasurer
</FONT><BR></TD></TR></TABLE></P>
<P align=left>
<TABLE>

  <TR>
    <TD noWrap><FONT face=sans-serif>June 27,
2008</FONT><BR></TD></TR></TABLE></P>
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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23
<SEQUENCE>5
<FILENAME>r11kexh232008.htm
<TEXT>

<HTML>
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<P align="left">
<TABLE><TR><TD nowrap>
<FONT face="sans-serif">Exhibit 23</FONT><BR>
</TD></TR></TABLE>
</P>
<P align="center">
<B><FONT face="sans-serif">Consent of Independent Registered Public Accounting Firm</FONT></B></P>
<P align="left">
<FONT face="sans-serif">We consent to the incorporation by reference in the Registration Statement (No. 333-000606) on Form S-8 of Twin Disc Incorporated of our report dated June 24, 2008, with respect to the statements of net assets available for
benefits of the Twin Disc Incorporated &#150; The Accelerator 401(k) Savings Plan for the years ended December 31, 2007 and 2006, the related statements of changes in net assets available for benefits for the year ended December 31, 2007, and the
related supplemental schedule of assets held for investment purposes as of December 31, 2007 annual report on Form 11-K of the Twin Disc Incorporated &#150; The Accelerator 401(k) Savings Plan. </FONT></P>
<P align="left">
<TABLE><TR><TD nowrap>
<FONT face="sans-serif">/s/ Reilly, Penner &amp; Benton LLP</FONT><BR>
<FONT face="sans-serif">----------------------------------------- </FONT><BR>
<FONT face="sans-serif">Milwaukee, Wisconsin </FONT><BR>
<FONT face="sans-serif">June 24, 2008 </FONT><BR>
</TD></TR></TABLE>
</P>

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