<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
OR
[ ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-5881
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BROWN & SHARPE MANUFACTURING COMPANY
------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 050113140
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Precision Park, 200 Frenchtown Road, North Kingstown, Rhode Island 02852
-------------------------------------------------------------------------
(Address of principal executive offices and zip code)
(401) 886-2000
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(Registrant's telephone number, including area code)
__________________________________________________________________________
(Former name, former address and former fiscal year, if changed since last
______
report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes x No
------- _______
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date; 8,179,168 Class A common
shares, 531,710 Class B common shares, par value $1, outstanding as of March 31,
1995.
<PAGE>
PART I. FINANCIAL INFORMATION
---------------------
Item 1. FINANCIAL STATEMENTS*
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BROWN & SHARPE MANUFACTURING COMPANY
------------------------------------
CONSOLIDATED STATEMENT OF INCOME (LOSS)
---------------------------------------
(Dollars in Thousands Except Per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
For the Quarter Ended
---------------------
March 31, 1995 April 2, 1994
--------------- --------------
<S> <C> <C>
Net sales $ 74,095 $ 36,659
Cost of goods sold 50,911 25,940
Selling, general and
administrative expense 22,705 12,261
Restructuring expense 130 --
------- -------
Operating profit (loss) 349 (1,542)
Interest expense 1,724 1,280
Other income, net 120 48
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Income (loss) before income taxes (1,255) (2,774)
Income tax provision 200 100
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Net income (loss) $ (1,455) $ (2,874)
======= =======
Primary and fully diluted
income (loss) per common share $ (.17) $ (.57)
====== =====
Weighted average shares
outstanding during
the period 8,680,146 5,037,507
========= =========
</TABLE>
* The accompanying notes are an integral part of the financial statements.
<PAGE>
BROWN & SHARPE MANUFACTURING COMPANY
------------------------------------
CONSOLIDATED BALANCE SHEET
--------------------------
(Dollars in Thousands)
<TABLE>
<CAPTION>
March 31, 1995 December 31, 1994
------------------
ASSETS (Unaudited)
---------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 8,377 $ 6,676
Accounts receivable, net of allowances for
doubtful accounts of $3,006 and $3,103 100,430 108,234
Inventories 98,597 88,639
Deferred income taxes, less $38,100 valuation allowance 2,000 2,000
Prepaid expenses and other current assets 8,896 5,981
-------- --------
Total current assets 218,300 211,530
Property, plant and equipment:
Land 7,389 6,858
Buildings and improvements 36,930 33,124
Machinery and equipment 95,588 85,583
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139,907 125,565
Less-accumulated depreciation 89,206 80,210
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50,701 45,355
Other assets 15,096 15,389
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$ 284,097 $ 272,274
======== ========
LIABILITIES AND SHAREOWNERS' EQUITY
CURRENT LIABILITIES:
Notes payable and current
installments of long-term debt $ 23,973 $ 22,398
Accounts payable 45,246 36,896
Accrued expenses and income taxes 47,474 49,353
-------- --------
Total current liabilities 116,693 108,647
Long-term debt 72,566 70,215
Deferred income taxes 1,355 1,737
Unfunded accrued pension cost 5,782 5,035
Termination indemnities 7,416 7,715
SHAREOWNERS' EQUITY:
Preferred stock, $1 par value;
authorized 1,000,000 shares -- --
Common stock:
Class A, par value $1; authorized 15,000,000
shares; issued 8,186,660 shares in 1995
and 8,122,086 shares in 1994 8,187 8,122
Class B, par value $1; authorized 2,000,000 shares;
issued and outstanding 531,710 shares in 1995
and 534,821 shares in 1994 532 535
Additional paid in capital 66,710 66,412
Earnings employed in the business (11,413) (9,958)
Cumulative foreign currency translation adjustment 16,931 14,530
Treasury stock: 7,492 shares in 1995 and
in 1994 at cost (151) (151)
Unearned compensation (511) (565)
-------- --------
Total shareowners' equity 80,285 78,925
-------- --------
$ 284,097 $ 272,274
======== ========
</TABLE>
* The accompanying notes are an integral part of the financial statements.
<PAGE>
BROWN & SHARPE MANUFACTURING COMPANY
------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS
------------------------------------
(Dollars in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
For the Quarter Ended
----------------------
March 31, 1995 April 2, 1994
-------------- -------------
<S> <C> <C>
CASH PROVIDED BY (USED IN) OPERATIONS:
Net income (loss) $(1,455) $(2,874)
Adjustment for Noncash Items:
Depreciation and amortization 2,108 1,307
Pension credits and charges (13) 112
Deferred income taxes (392) --
Unfunded pension 102 102
Changes in Working Capital:
Accounts receivable 11,119 5,762
Inventories (4,032) 495
Prepaid expenses and other current assets (2,778) (477)
Accounts payable and accrued expenses 3,518 (798)
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Net Cash Provided by Operations 8,177 3,629
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INVESTMENT TRANSACTIONS:
Capital expenditures (2,474) (814)
Cash equivalent pledged -- (35)
Other investing activities (175) (194)
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Cash (Used in) Investment Transactions (2,649) (1,043)
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FINANCING TRANSACTIONS:
Increase in long-term and short-term debt 2,382 1,912
Payment of long-term and short-term debt (2,582) (2,488)
Other financing activities 388 396
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Cash Provided by (Used in) Financing Transactions 188 (180)
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EFFECT OF EXCHANGE RATE CHANGES ON CASH (4,015) (682)
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CASH AND CASH EQUIVALENTS:
Increase during the period 1,701 1,724
Beginning balance 6,676 2,094
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Ending balance $ 8,377 $ 3,818
======= =======
SUPPLEMENTARY CASH FLOW INFORMATION:
Interest paid $ 1,132 $ 532
======= =======
Taxes paid $ 1,025 $ 694
======= =======
</TABLE>
* The accompanying notes are an integral part of the financial statements.
<PAGE>
BROWN & SHARPE MANUFACTURING COMPANY
------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
(Dollars in Thousands)
1. Financial statements for interim periods are unaudited and include all
adjustments which are of a normal recurring nature which, in the opinion of
management, are necessary for a fair statement of the results for the
interim periods.
2. The Company has changed its accounting period ending dates to a calendar
month and year end basis beginning in 1995. Prior to 1995, the accounting
year ended on the last Saturday in December. The first quarter of 1995 and
1994 both consisted of 13 weeks.
3. The composition of inventory is as follows:
<TABLE>
<CAPTION>
Mar. 31, 1995 Dec. 31, 1994
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<S> <C> <C>
Parts, raw materials, and supplies $43,764 $42,665
Work in process 16,650 17,069
Finished goods 38,183 28,905
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$98,597 $88,639
======= =======
</TABLE>
4. Income taxes include provisions for federal, foreign and state income taxes
and is based on the Company's estimate of effective income tax rates for
the full year. The current tax provision for the first quarter of 1995 and
1994 is $200 and $100, respectively.
5. Earnings (loss) per share is based upon the weighted average number of
common shares outstanding for the periods presented since inclusion of
common stock equivalents would be antidilutive. Fully diluted earnings per
share are not materially different.
6. On April 7, 1995, the U.S. Court of Appeals for the District of Columbia
Circuit rendered a decision on the second appeal by the International
Association of Machinists and Aerospace Workers (the "IAM") of a
supplemental decision and order of the National Labor Relations Board
("NLRB") reaffirming an April 1986 decision of the NLRB dismissing
reinstated unfair labor practice charges brought against the Company by the
IAM in September 1982. These charges arose out of a strike which began at
the Company's Rhode Island operations in October 1981. Although the NLRB
has previously upheld dismissal of the reinstated unfair labor practices
charges, the Appeals Court in its latest decision has stated that the NLRB
failed to articulate and apply a judicially acceptable standard to
determine whether certain evidence offered and characterized by the Union
as being newly discovered was material and of such a nature to justify
tolling the statute of limitations so as to permit the filing of the
reinstated unfair labor practice charges. The Court vacated the judgment
of the NLRB favorable to the Company and has remanded the case back to the
NLRB for further proceedings to determine these evidentiary issues and
their effect on the application of the statute of limitations to the
reinstated unfair labor practice charges. The Court has directed that
should the NLRB rule against the Company on the evidentiary issues
presented for consideration then it must proceed to determine the merits of
the reinstated unfair labor practice charges. Management of the Company
and its counsel believe the NLRB is not likely to rule that the case must
go forward on its merits and that a finding of liability against the
Company in this matter continues to be remote.
The Company is involved in two environmental proceedings in which the
United States Environmental Protection Agency ("EPA") identified Brown &
Sharpe as a potentially responsible party ("PRP") at unrelated waste
disposal sites (the "Sites") in Rhode Island and Connecticut listed on the
EPA's National Priority List for clean-up and future monitoring remedial
action under the Superfund legislation. While the Company's proportionate
share of the total waste contributed to both Sites was minimal in volume
and toxicity, the EPA nevertheless with regard
<PAGE>
to the Rhode Island site issued an Administrative Order against the Company
and other PRP's to clean up the Site. Subsequently, the Company was
permitted by the EPA to settle its liability at such Site in exchange for
releases from the EPA and the State of Rhode Island and contribution
protection from claims of any third parties who may have liability at the
Site. On January 2, 1991, a group of non-settling major PRP's at the Rhode
Island site brought suit in the U.S. District Court in Rhode Island against
certain of the settling parties, including the Company, to recover a
portion of their past and anticipated future costs of performing the clean-
up remedy. The Court, on April 4, 1995, entered a final order and judgment
affirming a summary judgment rendered in favor of the Company and other
settling parties on October 30, 1992. The non-settling group of major PRP's
have a right of appeal from this final judgment and they have brought suit
against the EPA seeking to have the settlements of the de minimis settling
parties set aside. The Company is vigorously defending this lawsuit and
believes that the release and contribution protection obtained from the EPA
in connection with settlement of its liability at the Site will ultimately
bar the cost-recovery claim. The Company settled its de minimis liability
as a PRP at the Connecticut site in June of 1994 for an amount not deemed
to be material.
On March 1, 1995, the Company received a notice from the State of New York
asserting a claim against it, along with a group of approximately ten other
companies, to recover costs incurred by the New York State Department of
Environmental Conservation to clean up a waste disposal site in
Poughkeepsie, NY. The State has alleged that the Companys former
subsidiary, Standard Gage Company, Poughkeepsie, NY, which was merged with
and into the Company contributed hazardous waste to the site for disposal
and that the Company is a potentially responsible party as the surviving
corporation to the merger. The total claim asserted by the State against
all parties is approximately $500,000, and it has offered to settle its
claim with all PRPs receiving the notice. The Company is continuing to
investigate the basis for this claim and estimates that any potential loss
it might incur as a result of any involvement at this site would not be
material.
The Company is also involved in several product liability claims and
lawsuits which are incidental to the conduct of its business, the potential
liability for which is adequately covered by insurance or reserves
established for such contingencies. The Company is contesting or defending
these claims and suits and management believes that the ultimate liability,
if any, resulting from these matters will not have a material effect on the
Company's financial position.
<PAGE>
BROWN & SHARPE MANUFACTURING COMPANY
------------------------------------
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
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OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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Brown & Sharpe Manufacturing Company acquired the Roch/Mauser and DEA metrology
businesses on March 24, 1994 and September 28, 1994, respectively, as discussed
in the Companys Annual Report on Form 10-K for the year 1994. These
acquisitions have been accounted for using the purchase method of accounting.
Accordingly, the consolidated statements of income (loss) and cash flow include
the results of their operations in 1995, but not in 1994. The ending
consolidated balance sheet for both periods presented includes their assets and
liabilities.
The following table sets forth the percentage of net sales of Brown & Sharpe
represented by the components of income and expense for the quarters ended March
31, 1995 and April 2, 1994:
<TABLE>
<CAPTION>
Mar. 31 Apr. 2
1995 1994
---- ----
<S> <C> <C>
Net sales 100.0% 100.0%
Cost of goods sold 68.7 70.8
Selling, general and administrative expense 30.6 33.4
Restructuring charges 0.2 -
----- -----
Operating profit (loss) 0.5 (4.2)
Interest expense 2.3 3.5
Other income, net 0.1 0.1
----- -----
Income (loss) before income taxes (1.7) (7.6)
Income tax provision 0.3 0.2
----- -----
Net income (loss) (2.0) (7.8)
===== =====
</TABLE>
RESULTS OF OPERATIONS
(Quarter Ended March 31, 1995 compared to Quarter Ended April 2, 1994)
ORDERS AND BACKLOG. Orders during the first quarter of 1995 totaled $79.1
million compared to $37.9 million for the first quarter of 1994. Roch and its
affiliate company, which was acquired on March 24, 1994, and DEA, which was
acquired on September 28, 1994, represented $29.6 million in orders during the
first quarter of 1995, and foreign currency fluctuations caused a $2.0 million
increase in first quarter 1995 orders compared to the first quarter of 1994.
Excluding the effect of these items, orders increased 25.3% to $47.5 million in
the first quarter of 1995 from $37.9 million in the first quarter of 1994. The
first quarter includes increasing orders in the U.S. and Europe, primarily in
the Precision Measuring Instruments Division. Backlog at March 31, 1995
increased to $69.3 million compared to $61.0 million at the end of 1994.
NET SALES. Net sales in the first quarter of 1995 were $74.1 million, compared
to $36.7 million in the first quarter of 1994. Roch and its affiliate and DEAs
sales were $28.1 million in the first quarter of 1995. Foreign currency
exchange rate fluctuations caused an increase in net sales in the first quarter
of 1995 of $1.9 million as compared to the first quarter of 1994. Excluding the
effect of these items, first quarter 1995 net sales increased approximately $7.4
million or 20.2% from first quarter 1994 sales. This increase in sales resulted
largely from U.S. sales out of the larger than normal opening backlog for the
Measuring Systems Group and increased sales from the Precision Measuring
Instrument Division.
GROSS PROFIT. Gross profit margin increased to 31.3% of sales in the first
quarter of 1995 from 29.2% in the first quarter of 1994. This relative increase
resulted largely from product sales mix.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE. Selling, general and
administrative expense in the first quarter of 1995 was $22.7 million or 30.6%
of net sales, representing an increase from $12.3 million or
<PAGE>
33.4% of net sales in the comparable period in 1994. The increase in dollar
spending was primarily due to the inclusion of Roch and DEA selling, general and
administrative expense in the first quarter of 1995. Roch and DEA were acquired
by Brown & Sharpe in late March and September 1994, respectively. The increasing
foreign currency exchange rates in the first quarter of 1995 resulted in
increasing translated U.S. dollar costs of about 2 to 3%.
RESTRUCTURING CHARGES. Restructuring charges of $0.1 million, principally Brown
& Sharpe employee severance and Brown & Sharpe sales offices closing costs,
associated with integrating Brown & Sharpes existing operations with those of
DEA, acquired on September 28, 1994, were provided for in the first quarter of
1995.
OPERATING PROFIT (LOSS). Brown & Sharpe operating profit was $0.3 million in
the first quarter of 1995. This compared to an operating loss of $1.5 million
in the first quarter of 1994. In the United States, operations broke even for
the first quarter of 1995 as compared to an operating loss of $0.3 million in
the first quarter of 1994. Foreign operations had an operating profit of $0.3
million in the first quarter of 1995 as compared to an operating loss of $1.2
million in the first quarter of 1994.
INTEREST EXPENSE. Interest expense totaled $1.7 million in the first quarter of
1995 compared to $1.3 million in the first quarter of 1994. This increase
reflects $28.9 million increase in the average balance of borrowings, primarily
in the United States, which was partially offset by lower interest rates.
OTHER INCOME, NET. Other income, net was $120,000 in the first quarter of 1995
compared to $48,000 in the first quarter of 1994.
INCOME TAX PROVISION. The provision for income taxes was $200,000 in the first
quarter of 1995 compared to $100,000 in the first quarter of 1994. This
primarily results from tax provisions in countries and companies with profits.
NET (LOSS). As a result of the foregoing, Brown & Sharpe had a net loss of $1.5
million ($.17 net loss per share) in the first quarter of 1995, compared to a
net loss of $2.9 million ($.57 net loss per share) in the first quarter of 1994.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1995, Brown & Sharpe had borrowings of $20.7 million under the
lines of credit compared to total availability at that date of $60.0 million
under the lines of credit including lines of credit for DEA in an amount of
$17.3 million. As of March 31, 1995, there were borrowings of $4.8 million
outstanding under the Companys $25.0 million secured revolving credit facility.
Management believes that the availability of borrowings, following completion of
the DEA acquisition and the new financing arrangements concluded at that time,
together with cash flow from current levels of operations and anticipated cost
savings from the integration of DEA, Roch, and Mauser, will be sufficient to
meet operational cash requirements (including one-time costs in integrating
Roch, Mauser, and DEA), working capital requirements and planned capital
expenditures well into 1997. However, failure to achieve anticipated cost
savings from the integration of DEA, Roch, and Mauser, or unexpected delays in
or costs related to the integration, could have a material adverse effect on
Brown & Sharpe's liquidity.
CASH FLOW. The net loss of $1.5 million in the first quarter of 1995, reduced
by depreciation and other non-cash items and changes in working capital in the
first quarter of 1994 resulted in operations providing $8.1 million of cash. In
the first quarter of 1994, decreased working capital of $5.0 million resulted in
$3.5 million of cash being provided by operations.
In the first quarter of 1995, investment transactions used cash of $2.6 million,
of which capital expenditures were $2.5 million, as compared with depreciation
of $2.0 million in the first quarter of 1995.
<PAGE>
This compares to investment transactions using cash of $1.0 million in the first
quarter of 1994, of which capital expenditures amounted to $0.8 million and
depreciation amounted to $1.0 million.
Cash provided from financing transactions was $0.3 million in the first quarter
of 1995 compared to $0.1 million used in the 1994 period.
WORKING CAPITAL. Working capital was $101.6 million at the end of the first
quarter of 1995 compared to $102.9 million at the end of 1994. Inventories
increased to $98.6 million at March 31, 1995, an increase of $10.0 million from
the end of 1994, and accounts receivable decreased to $100.4 million at March
31, 1995, a decrease of $7.8 million from year end 1994. Also, total debt
increased $4.0 million to a total of $96.6 million at March 31, 1995 as compared
to $92.6 million outstanding at December 31, 1994.
CAPITAL EXPENDITURES. Brown & Sharpes capital expenditures net of disposal
proceeds were approximately $2.5 million in the first quarter of 1995 compared
to $0.8 million in the first quarter of 1994. Management estimates that annual
capital expenditures of approximately $6.0 million to $8.0 million are required
to tool new products, improve product and service quality, expand the
distribution network, and support the operations of the combined Company.
Planned capital expenditures, later in 1995, will include an aggregate of
approximately $2.3 million for the construction of a new facility in Telford,
England to replace an existing facility for which the lease expires and is non-
renewable.
ACQUISITIONS AND DIVESTITURES. There were no acquisitions or divestitures in
the first quarter of 1995. Roch and its affiliate, Mauser, were acquired in
late March 1994, and DEA S.p.A. and its subsidiaries were acquired in late
September 1994.
<PAGE>
PART II. OTHER INFORMATION
-----------------
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
- ------ --------------------------------
A. See Exhibit Index annexed.
B. No Form 8-K was filed during the quarter ended March 31, 1995, but
subsequent to the end of the period, a Form 8-K was filed concerning
the change of our Independent Auditors.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
BROWN & SHARPE MANUFACTURING COMPANY
By: /s/ Charles A. Junkunc
----------------------
Charles A. Junkunc
Vice President and Chief Financial Officer
(Principal Financial Officer)
May 11, 1995
<PAGE>
BROWN & SHARPE MANUFACTURING COMPANY
------------------------------------
EXHIBIT INDEX
-------------
4. Indenture dated as of October 1, 1980 (including form of debenture)
between the Company and Morgan Guaranty Trust Company of New York as
trustee relating to 9-1/4% convertible subordinated debentures due
December 15, 2005, originally filed as Exhibit (b) (1) to Form S-16
Registration Statement No. 2-69203 dated October 1, 1980 and incorporated
herein by reference.
The Registrant hereby agrees to furnish a copy to the Commission of other
instruments defining the rights of holders of long-term debt, as to which
the securities thereunder do not exceed ten percent of total assets on a
consolidated basis.
10.54 Restated Supplemental Executive Retirement Plan dated January 23, 1995.
10.55 Amendment to the Equity Incentive Plan as of February 15, 1995.
11. Computation of Per Share Data for the thirteen week period ended March 31,
1995 and the fourteen week period ended April 2, 1994.
27. Financial Data Schedule
<PAGE>
EXHIBIT 10.54
BROWN & SHARPE MANUFACTURING COMPANY
Supplemental Executive Retirement Plan
1. Purpose and Nature of Plan. This Plan is intended to provide
--------------------------
supplemental retirement benefits to certain key employees and former employees
of Brown & Sharpe Manufacturing Company (the "Company"). The Plan is not
intended to be a tax-qualified plan. Although the Company reserves the right to
establish a so-called grantor trust or another funding medium or investment
vehicle to provide for the payment of benefits hereunder, nothing in the Plan
will be construed to create a trust or to obligate the Company or any other
person to segregate a fund, purchase an insurance contract, or in any other way
currently to fund the future payment of any benefits hereunder, nor will
anything herein be construed to give any employee or any other person rights to
any specific assets of the Company or of any other person.
2. Meaning of Terms. Except as may otherwise be clearly indicated by the
----------------
context, for purposes of the Plan the following terms shall have the following
meanings:
(a) "Board of Directors" means the Board of Directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, as from time to
time amended.
(c) "Company" means Brown & Sharpe Manufacturing Company and any
successor to all or a major portion of its business or assets.
(d) "Eligible Employee" means an individual who is employed by the
Company or a subsidiary of the Company and who is individually designated
(or is a member of a classification of persons designated) by the Board of
Directors as eligible to participate in the Plan.
(e) "ESOP" means the Brown & Sharpe Employee Stock Ownership Plan as
from time to time in effect.
(f) "Plan" means the Brown & Sharpe Manufacturing Company
Supplemental Executive Retirement Plan as set forth herein, together with
any and all amendments hereto.
(g) "Participant" means an Eligible Employee who participates in
deferrals under the Plan or for whom one or more accounts are maintained
under the Plan.
(h) "Salary" has the same meaning as the term "Salary" under the
Savings Plan, determined without regard to the limitations described in
Section 401 (a) (17) of the Code and any corresponding limitation language
in the Savings Plan and without regard to any deferrals hereunder.
(i) "Savings Plan" means the Brown & Sharpe Savings and Retirement
Plan for Management Employees as from time to time in effect.
<PAGE>
(j) "Subject Rate" means, for any year, the rate credited for that
year with respect to amounts invested in the Guaranteed Interest Fund
within the Savings Plan; provided, that if for any period the Guaranteed
--------
Interest Fund (or a comparable fund investing in guaranteed interest
contracts) shall no longer be maintained within the Savings Plan, the
Subject Rate shall be the prime rate as in effect at Rhode Island Hospital
Trust National Bank. Notwithstanding the foregoing, the Board of Directors
may at any time prior to the beginning of a year fix a Subject Rate for
such year different than the rate determined in accordance with the
foregoing.
3. Administration. The Plan shall be administered by the Board of
--------------
Directors. If the Plan is administered by a committee, all references herein to
the Board of Directors (other than in Section 13) shall be deemed to include
such committee. The Board of Directors shall have complete and total discretion
to interpret the Plan in all its aspects, to determine eligibility under the
Plan, to prescribe forms and require such filings and submissions as it may deem
appropriate, and generally to do any and all such things as it deems necessary
for the proper administration of the Plan and the payment of benefits hereunder.
4. Participation. Each Eligible Employee shall be notified of his or her
-------------
eligibility to participate in the Plan as soon as practicable after designation
by the Board of Directors. In order to elect deferrals under the Plan, a
Participant must enter into an agreement with the Company, in such form as the
Board of Directors shall approve or prescribe, providing for deferral of future
Salary in accordance with the rules set forth in Section 5 below. Any
Participant with amounts deferred under the Plan (or his or her surviving
beneficiary, in the event of the Participants death), shall remain a
Participant until all amounts credited to his or her account have been paid out,
or until the termination of the Plan if earlier.
5. Deferral Elections. For any year commencing on or after January 1,
------------------
1988 a Participant may elect to defer any number of whole percentage points
between 1 and 50 of his or her Salary payable in such year (including bonuses
that may be attributable in part to services in prior periods). The Participant
may also elect that, in the event the aggregate of elective contributions to the
Savings Plan for his or her benefit for such year are prospectively reduced by
the plan administrator under the Savings Plan on account of the
nondiscrimination requirements of section 401(k) of the Code or the limitations
of sections 402(g) or 415 of the Code (including the corresponding provisions of
the Savings Plan), an amount equal to such reduction shall be automatically
deferred hereunder rather than paid currently to the Participant. Each election
hereunder shall be made in writing prior to the commencement of the year of
reference and shall be effective beginning with the first pay period in such
year, except that a person who becomes an Eligible Employee prior to December 1
of a given year may elect to participate hereunder for the remainder of such
year by submitting a properly executed election within thirty (30) days of
becoming eligible to participate, such election to take effect with the first
pay period following the receipt of such election by the Company. An election
once made hereunder shall continue in force from year to year unless revoked or
altered as to Salary to be earned in a subsequent year.
6. Additional Credits. For each year in which an Eligible Employee is a
------------------
participant in either the Savings Plan of the ESOP, or both, there shall be
credited to the Eligible Employees account hereunder an amount equal to the
excess, if any, of (a) over (b), where
(a) is the aggregate for such year of all Company contributions, other
than elective contributions under the Savings Plan but including
allocations from the ESOP supplemental suspense account (such ESOP
allocations to be valued for purposes of this paragraph in the same
manner as for purposes of determining "annual additions" under
paragraph (b) below), that would have been allocated to the Eligible
Employee's accounts under the Savings Plan or the ESOP but for the
limitations of section 415 of the Code and the corresponding
limitation language of those plans, and
<PAGE>
(b) is the aggregate of the "annual additions" (as defined in section 415
(c) of the Code) actually made to or allocated under the Savings Plan
and the ESOP for such year for the benefit of the Eligible Employee,
other than elective contributions for his or her benefit for such year
under the Savings Plan.
7. Accounts. For each Participant there shall be maintained hereunder
--------
one or more memorandum accounts to which shall be credited amounts deferred
under Section 5 and additional credits, if any, under Section 6. Amounts
deferred under Section 5 shall be allocated to accounts as of the end of the
calendar quarter in which the corresponding Salary, if paid in cash, would have
been paid. Amounts credit under Section 6 shall be allocated as of the end of
the year. As of the end of each calendar quarter there shall also be allocated
to each account notional interest determined at an annual rate equal to the
Subject Rate. A Participants account or accounts shall continue to be
maintained and adjusted until distributed in full.
8. Distribution. Subject to this Section and to such other restrictions
------------
and limitations as the Board of Directors may impose, each Participant may elect
the time and manner in which amounts to be deterred or credited hereunder with
respect to any subsequent year shall be distributed. For amounts deferred under
Section 5, the time and manner of distribution shall be specified in the
election form authorizing the deferral. For amounts credited under Section 6
the Eligible Employee shall be afforded an opportunity to elect irrevocably how
and when distribution is to be made, such election to be made not later than
January 1 of the year to which the credit pertains; but if the Eligible Employee
makes no such election he or she shall be deemed to have elected a lump-sum
payment payable as soon as practicable following termination of employment.
Notwithstanding the foregoing, the Company prior to a Change of Control may
defer distributions hereunder (but not beyond a Change of Control) to the extent
it determines that the distributable amount, if not deferred, would (together
with other compensation paid to the Eligible Employee) result in amounts that
are not deductible to the Company by reason of Section 162 (m) of the Code. Any
distributable amount deferred under the preceding sentence shall continue to
earn notional interest at the Subject Rate pursuant to Section 7 above until
actually paid.
9. Additional Accounts. In addition to any accounts established under
-------------------
Section 7 above, the Board of Directors in its sole discretion may establish one
or more memorandum accounts, with such opening balance or balances as the Board
of Directors may specify, for any employee or former employee of the Company who
is designated by the Board of Directors, whether or not such employee is
otherwise designated an Eligible Employee with rights of participation under the
Plan. Earnings equivalents shall be allocated and credited to accounts
established and maintained under this Section 9 in the same manner as to
accounts established and maintained under Section 7. The balance of any account
maintained under this Section 9 shall be distributed at such time or times and
in such manner as the Board of Directors shall determine, subject, however, to
the provisions of Section 15 below.
10. Death. In the event a Participant hereunder should die prior to
-----
complete distribution of his or her accounts, the remaining balance of such
accounts shall be distributed as soon as practicable thereafter in a lump-sum
payment to the Participants designated beneficiary or beneficiaries. A
Participant may at any time specify or add a beneficiary, or revoke an existing
beneficiary designation, by notice in writing delivered to the Secretary of the
Company. If the Participant dies without a beneficiary designation in effect,
the death benefit payable hereunder shall be paid to the Participants estate.
11. No Assignment. No Participant and no beneficiary of a Participant
-------------
shall have any right to assign or otherwise alienate the right to receive
payments hereunder, in whole or in part.
12. Taxes. All distributions from the Plan shall be subject to, and
-----
reduced by, applicable tax withholding. To the extent amounts deferred under
the Plan are determined by the Company to be subject to FICA, Medicare, or FUTA
tax at time of deferral or at any later time prior to distribution, the Company
in its discretion may withhold the required taxes from other amounts payable to
the Eligible
<PAGE>
Employee or may require the Eligible Employee to pay the required taxes by
separate check; but if the required taxes are not so paid or withheld, the
Eligible Employee's account balance hereunder shall be appropriately reduced.
13. Amendment; Termination. The Board of Directors reserves the right to
----------------------
amend or terminate the Plan at any time, including without limitation the right
to amend the definition of Change of Control under Section 15 below; provided,
--------
that no amendment or termination following a Change of Control shall affect the
rights of Participants to an immediate payment of amounts deferred or credited
under the Plan prior to the Change of Control. If the Board of Directors in its
sole discretion should at any time deem it necessary to preserve the
qualification of the plan under Title I of the Employee Retirement Income
Security Act of 1974, as amended, as a plan maintained primarily for the purpose
of providing deferred compensation for a select group of management or highly
compensated employees, it may terminate the Plan solely as to those Participants
whose continued participation in the Plan would or, in the determination of the
Board of Directors, might cause the Plan to fail to be so qualified. Upon
termination of the Plan as to any individual, no further deferrals or credit
under Section 5 or 6 shall be made in respect of such individual, and the Board
of Directors in its sole discretion may elect to accelerate the payment of any
or all of such individual's remaining benefits under the Plan.
14. No Employment Rights. Nothing in this Plan shall be construed as
--------------------
giving any person rights to be employed or remain employed by the Company or to
receive any remuneration from the Company, except payment of deferrals and
credits as described above. Nothing in this Plan shall be construed as
obligating the Company in any way to maintain either the Savings Plan or the
ESOP. By participating in the Plan, each Eligible Employee affirms and
acknowledges the Company's absolute right, subject only to the limitations of
law, to make such changes in the Saving Plan and the ESOP as the Company may
from time to time see fit, or to terminate on or both of those plans if it so
chooses.
15. Acceleration Upon Change of Control. In the Event of a Change of
-----------------------------------
Control, as hereinafter defined, all amounts theretofore deferred or credited
under the Plan shall become immediately due and payable and shall be distributed
in a lump sum not later than by the 60th day following the Change of Control.
For purposes of the preceding sentence, a "Change of Control" shall occur if
(i) any person, firm, corporation, organization or association or
persons or organizations acting in concert, excluding any qualified
employee benefit plan of the Company applicable to employees generally of
the Company shall acquire more than 30% of the outstanding voting stock of
the Company, whether in whole or in part by means of an offer made publicly
to the holders of all or substantially all of the outstanding shares of any
one or more classes of the voting securities of the Company to acquire such
shares for cash, other property or a combination thereof or whether such
acquisition was made by any other means, unless such transaction is
consented to by vote of at least a majority of the directors of the Company
then in office and such majority includes individuals who were directors at
the beginning of the period starting 24 months prior to such event or who
were not directors at the beginning of such period but whose election was
approved in advance by directors representing at least a majority of the
directors then in office who were directors at the beginning of such
period; or
(ii) the Company transfers all or substantially all of its operating
properties and assets to another person, firm, corporation, organization or
association of persons or organizations, excluding a subsidiary controlled
by the Company itself, unless such transaction is consented to by vote of
at least a majority of the directors of the Company then in office and such
majority includes individuals who were directors at the beginning of the
period starting 24 months prior to such event or who were not directors at
the beginning of such period but whose election was approved in advance by
directors representing at least a majority of the directors then in office
who were directors at the beginning of such period; or
<PAGE>
(iii) the Company shall consolidate or merge with or into any
person, firm, corporation, organization or association of persons or
organizations unless the Company or its controlled subsidiary shall be the
continuing corporation or the successor corporation and shall not be
controlled by any other person, firm or corporation, unless such
transaction is consented to by vote of at least a majority of the directors
of the Company then in office and such majority includes individuals who
were directors at the beginning of the period starting 24 months prior to
such event or who were not directors at the beginning of such period but
whose election was approved in advance by directors then in office who were
directors at the beginning of such period.
BROWN & SHARPE MANUFACTURING COMPANY
By: /s/ Charles A. Junkunc
-------------------------------------
Date: January 23, 1995
----------------
<PAGE>
EXHIBIT 10.55
Voted: that the number of shares of Class A common stock authorized to be
delivered under the Company's 1989 Equity Incentive Plan be increased
by 500,000 shares and in connection therewith that Section 4, SHARES
SUBJECT TO THE PLAN, of the Plan be amended by substituting the number
875,000 for the number 375,000 at the end of the first sentence of such
Section so that as amended such sentence shall read as follows:
"Subject to adjustment as provided in Section 8.6 below, the aggregate
number of shares of Stock that may be delivered under the Plan will be
875,000."
Voted: that the 1989 Equity Incentive Plan be further amended to set a limit
on the number of shares that any recipient can be awarded in any
calendar year attributable to stock options, and in connection
therewith, the Plan is hereby amended to add a new sub-section 4.1 to
read as follows:
"Special Limitations Applicable to Certain Awards. The Committee shall
------------------------------------------------
have the discretion under the Plan to award Stock Options that are
intended to satisfy certain performance-based compensation arrangements
intended to be exempt from the deduction limitations of Section 162(m)
of the Code (the "Section 162(m) requirements") ("exempt Options") as
well as Options that are not intended to satisfy those requirements
("non-exempt Options"); provided that the Committee shall award non-
exempt Options only if it shall have determined that such award will
not jeopardize the continued exemption under Section 162(m)(4)(C) of
exempt Options. Subject to adjustment as provided in Section 8.6, to
the extent such adjustment is consistent with the continued
satisfaction by exempt Options of the requirements of Section
162(m)(4)(C) of the Code, the maximum number of shares of Stock for
which exempt Options may be awarded under the Plan to any Participant
in any calendar year is, in each case, 300,000 shares. For purposes of
the preceding sentence, the re-grant of a canceled Option, or the
repricing of an Option, shall be treated as a separate Award to the
extent required under Section 162(m)(4)(C) of the Code. The per-
individual Award limitations described in this paragraph are intended
to enable exempt Options awarded under the Plan to qualify for the
performance-based compensation exemption rules set forth under Section
162(m)(4)(C) of the code and shall be subject to amendment or revision
to the extent (but only to the extent) consistent with such rules."
Voted: that Section 2 of the Plan be amended to adding the following words at
the end of the first sentence of such section:
"..., excluding any member who would not be an 'outside director' for
purposes of Section 162(m) of the Internal Revenue Code of 1986, as
amended, and the regulations including proposed regulations
thereunder."
<PAGE>
EXHIBIT 11
----------
BROWN & SHARPE MANUFACTURING COMPANY
------------------------------------
COMPUTATION OF PER SHARE DATA
-----------------------------
(Dollars in Thousands Except Per Share Data)
<TABLE>
<CAPTION>
For the Quarter Ended
---------------------
March 31, 1995 April 2, 1994
--------------- --------------
<S> <C> <C>
Computation of income (loss):
Net income (loss) used for computation
of primary earnings per share $(1,455) $(2,874)
Add interest expense, net of taxes,
assuming conversion of debentures 208 226
------ ------
Net income (loss) used for computation
of fully diluted earnings per share $(1,247) $(2,648)
====== ======
Computation of shares:
Weighted average number of common shares
outstanding during the period 8,680,146 5,037,507
Dilutive stock options -- --
--------- ---------
Weighted average number of common shares
used for computation of
primary earnings per share 8,680,146 5,037,507
Additional dilutive stock options -- --
Assumed conversion of convertible
debentures 571,429 609,523
--------- ---------
Weighted average number of common
shares used for computation of
fully diluted earnings per share 9,251,575 5,647,030
========= =========
Per common share:
Primary and fully diluted net income
(loss) per share $(.17) $(.57)
===== =====
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> DEC-31-1994
<PERIOD-END> MAR-31-1995
<EXCHANGE-RATE> 1
<CASH> 8,337
<SECURITIES> 0
<RECEIVABLES> 100,430
<ALLOWANCES> 0
<INVENTORY> 98,597
<CURRENT-ASSETS> 218,300
<PP&E> 139,907
<DEPRECIATION> 89,206
<TOTAL-ASSETS> 284,097
<CURRENT-LIABILITIES> 116,693
<BONDS> 14,000
<COMMON> 8,719
0
0
<OTHER-SE> 71,566
<TOTAL-LIABILITY-AND-EQUITY> 284,097
<SALES> 74,095
<TOTAL-REVENUES> 74,095
<CGS> 50,911
<TOTAL-COSTS> 50,911
<OTHER-EXPENSES> 22,715
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,724
<INCOME-PRETAX> (1,255)
<INCOME-TAX> 200
<INCOME-CONTINUING> (1,455)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,455)
<EPS-PRIMARY> (0.17)
<EPS-DILUTED> (0.17)
</TABLE>
