<PAGE>
COMMISSION FILE NUMBER 1-5881
-----------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
AMENDMENT TO APPLICATION OR REPORT
FILED PURSUANT TO SECTION 12, 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
BROWN & SHARPE MANUFACTURING COMPANY
--------------------------------------------------
(Exact name of registrant as specified in charter)
AMENDMENT NO. 1
The undersigned registrant hereby amends the following items, financial
statement, exhibits or other portions of its Annual Report for the year ended
December 31, 1997, on Form 10-K as set forth in the pages attached hereto:
The Exhibit Index and Exhibits are amended to reflect the addition of the
following:
"Exhibit 28.1 - Annual Report on Form 11-K for The Brown & Sharpe Savings
and Retirement Plan for Management Employees for the year ended December 31,
1997."
"Exhibit 28.2 - Annual Report on Form 11-K for The Brown & Sharpe Savings
and Retirement Plan for the year ended December 31, 1997."
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.
Brown & Sharpe Manufacturing Company
By: /s/ Alfred J. Corso
------------------------------
Alfred J. Corso
Controller
(Principal Accounting Officer)
<PAGE>
Exhibit 28.1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 11-K
Annual Report Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
For the Fiscal Year Ended December 31, 1997
-----------------
Commission File Number 1-5881
------
THE BROWN & SHARPE SAVINGS AND RETIREMENT PLAN FOR MANAGEMENT EMPLOYEES
-----------------------------------------------------------------------
(Full Title of the Plan)
BROWN & SHARPE MANUFACTURING COMPANY
200 Frenchtown Road
North Kingstown, Rhode Island 02852-1700
(401) 886-2000
(Name of Issuer and Address of its Principal Executive Office)
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Plan has duly caused this Annual Report to be signed on its behalf by the
undersigned, thereunto duly authorized, in North Kingstown, Rhode Island, on the
17th day of June 1998.
BROWN & SHARPE SAVINGS AND RETIREMENT
PLAN FOR MANAGEMENT EMPLOYEES
By: /s/ Alfred J. Corso
------------------------------
Alfred J. Corso
Controller
(Principal Accounting Officer)
2
<PAGE>
BROWN & SHARPE SAVINGS AND RETIREMENT PLAN FOR MANAGEMENT EMPLOYEES
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Ernst & Young LLP, Independent Auditors 4
Audited Financial Statements:
Statements of Net Assets Available for Plan Benefits
at December 31, 1997 and 1996 5
Statements of Changes in Net Assets Available for
Plan Benefits for the Years Ended December 31,
1997 and 1996 5
Notes to Financial Statements 6 - 14
Supplemental Schedules:
Line 27a Schedule of Assets Held for Investment
Purposes 15
Line 27d Schedule of Reportable Transactions 16-17
Consent of Independent Auditors 18
</TABLE>
3
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
-------------------------------------------------
Brown & Sharpe Savings and Retirement Plan
for Management Employees Committee
Brown & Sharpe Manufacturing Company
We have audited the accompanying statements of net assets available for plan
benefits of the Brown & Sharpe Savings and Retirement Plan for Management
Employees (the "Plan") as of December 31, 1997 and 1996, and the related
statements of changes in net assets available for plan benefits for the years
then ended. These financial statements are the responsibility of the Plan's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the net assets available for plan benefits of the Plan
at December 31, 1997 and 1996, and the changes in its net assets available for
plan benefits for the years then ended, in conformity with generally accepted
accounting principles.
Our audit was made for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedules of assets
held for investment purposes as of December 31, 1997, and reportable
transactions for the year then ended, are presented for purposes of complying
with the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974, and are
not a required part of the financial statements. The supplemental schedules have
been subjected to the auditing procedures applied in our audit of the 1997
financial statements and, in our opinion, are fairly stated in all material
respects in relation to the 1997 financial statements taken as a whole.
ERNST & YOUNG LLP
May 12, 1998
4
<PAGE>
THE BROWN & SHARPE SAVINGS AND RETIREMENT PLAN FOR MANAGEMENT EMPLOYEES
-----------------------------------------------------------------------
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
----------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1997 1996
----------- -----------
<S> <C> <C>
Assets:
Investments (Notes 2 and 5) $30,046,038 $26,786,938
Employer contribution receivable 921,526 843,175
Plan loans receivable 587,411 487,606
----------- -----------
Net Assets Available for Plan Benefits $31,554,975 $28,117,719
=========== ===========
</TABLE>
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
---------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------
1997 1996
--------------- ---------------
<S> <C> <C>
ADDITIONS
- - ---------
Contributions
Employer $ 1,172,444 $ 1,040,395
Employee 1,734,086 1,391,573
----------- -----------
2,906,530 2,431,968
Investment income
Interest and dividends 2,071,943 1,630,252
Net realized/unrealized appreciation
in fair value of investments 1,601,420 1,729,650
----------- -----------
Total additions 6,579,893 5,791,870
DEDUCTIONS
- - ----------
Payments to participants (5,311,300) (3,136,607)
Fees (1,151) (421)
----------- -----------
Total deductions (5,312,451) (3,137,028)
TRANSFERS
- - ---------
From Brown & Sharpe Employee Stock Owner-
ship and Profit Participation Plan (ESOP) 59,406 16,264
From Brown & Sharpe Savings
and Retirement Plan (SARP) 89,769 150,131
Transfers from other plans (Note 1) 2,020,639 2,328,401
----------- -----------
Net transfers 2,169,814 2,494,796
----------- -----------
Net increase 3,437,256 5,149,638
Net assets, beginning of year 28,117,719 22,968,081
----------- -----------
Net assets, end of year $31,554,975 $28,117,719
=========== ===========
</TABLE>
See notes to the financial statements.
5
<PAGE>
THE BROWN & SHARPE SAVINGS AND RETIREMENT PLAN FOR MANAGEMENT EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
-----------------------------
YEARS ENDED DECEMBER 31, 1997 AND 1996
--------------------------------------
1. PLAN DESCRIPTION
----------------
The following description of The Brown & Sharpe Savings and Retirement Plan
for Management Employees (the "Plan") provides only general information.
Participants should refer to the Summary Plan Description for more complete
details.
GENERAL
-------
The Plan is a defined contribution plan covering all eligible full-time
salaried employees of Brown & Sharpe Manufacturing Company (the "Company")
and its affiliated companies who participate in the Plan. Such employees
are immediately eligible to make deferred salary contributions to the
Plan. One year of service is required to become a participant receiving
Company contributions. The Plan is subject to the provisions of the
Employee Retirement Income Security Act of 1974 (ERISA), as amended.
As a result of the Company's acquisition of DEA S.p.A. on September 28,
1994, participants of the Digital Electronic Automation, Inc. Tax-Deferred
Savings Plan (the "DEA Plan") became eligible to participate in the Plan
on April 1, 1995. Pursuant to the terms of the DEA Plan, former DEA
employees may select an annuity as a distribution option under the Plan.
In May 1996, $2,328,401 of net assets were transferred from the DEA Plan
into the Plan.
In July 1997, the Company purchased the remaining 50 percent interest in
its joint venture with Automation Software, Inc. In October 1997,
$2,020,639 of net assets were transferred from Automation Software, Inc.
into the Plan.
On May 6, 1996, the assets of the Plan were transferred from Fleet
National Bank to Putnam Fiduciary Trust Company which was appointed new
Trustee and Recordkeeper.
CONTRIBUTIONS
-------------
The Plan permits a participant to make deferred salary contributions to
the Plan up to 16% of compensation up to a maximum of $9,500 in 1997 and
1996, (indexed in future years) which is not subject to federal income tax
until distributed. Contributions are invested at the direction of the
employee in one or more investment alternatives, or "Funds", as described
below.
The Company may, at the discretion of the Board of Directors, make a
supplemental contribution of 4% of annual compensation plus 4% of the
amount over the Social Security wage base to the account of each
participant to be invested as instructed by the participant. The
Company's supplemental contributions for 1997 and 1996 were $921,524 and
$843,409, respectively.
In addition, the Plan provides for a Company contribution, or subsidy,
equal to one-quarter of the amount of each deferred salary contribution
invested directly in the Company Stock Fund. Such Company contributions
for 1997 and 1996 were $14,295 and $18,393, respectively.
In addition, at the discretion of the Board of Directors, the Company may
make a matching contribution equal to a percentage not to exceed 25% of
the elective contribution, disregarding any elective contribution in
excess of 6% of such eligible participant's salary for such Plan year.
Such contributions for 1997 and 1996 were $236,625 and $178,593,
respectively.
PARTICIPANT ACCOUNTS
--------------------
A separate account is established for each participant when enrolled in
the Plan. Each participant's account is credited with (a) participant
salary deferrals, (b) Company contributions and (c) Plan earnings.
Guaranteed interest contract account earnings are valued on a monthly
basis and are allocated to participants based on a pro rated basis.
6
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
-----------------------------------------
YEARS ENDED DECEMBER 31, 1997 AND 1996
--------------------------------------
INVESTMENTS
-----------
Prior to the conversion to Putnam Fiduciary Trust Company, participants
directed the trustee to deposit contributions in one or more of the
following investment alternatives in multiples of 10%:
(1) the Diversified Fund, managed by Frontier Capital Management, Inc.,
consisting primarily of a diversified portfolio of stock and fixed income
securities; (2) the Company Stock Fund, managed by Fleet National Bank,
consisting primarily of Company common stock; (3) the Money Market Fund,
invested by Fleet National Bank through Fidelity Management & Research
Company consisting primarily of obligations of the U.S. Government or its
agencies, banks and business corporations (other than the Company); or (4)
the Guaranteed Interest Fund, consisting primarily of guaranteed investment
contracts issued by American International Life Assurance Company of New
York in 1994, Principal Mutual Life Insurance Company in 1992 and 1993, and
Allstate Life Insurance Company in 1991. These guaranteed investment
contracts are agreements under which the issuer has agreed to pay the
investor a guaranteed rate of interest over terms ranging from 3 to 5 years.
The contracts automatically terminate at maturity date. A penalty is
imposed upon early termination of contract. The issuers of these contracts
are insurance companies, and because of this, the contracts are more
susceptible to factors adversely affecting the insurance industry than
similar contracts issued by parties other than insurance companies.
Transfers between investment funds can be made subject to certain rules.
After the transfer of assets to Putnam Fiduciary Trust Company,
participants direct the trustee to deposit contributions in one or more of
the following investment alternatives in multiples of 5%:
(1) Putnam New Opportunities Fund invests in a portfolio of stocks in
certain emerging industry groups that Putnam believes offer above-average
long-term growth potential; (2) the Company Stock Fund, managed by Putnam
Investments, consisting of Brown & Sharpe common stock; (3) the Putnam
Voyager Fund, invests in a combination of stocks of small companies expected
to grow over time as well as stocks of larger, more established
corporations; (4) the Putnam Fund for Growth & Income, invests mainly in
attractive priced stocks of companies that offer long-term growth potential
while also providing income; (5) The George Putnam Fund of Boston, invests
in stocks and corporate and government bonds, providing a balanced way to
pursue long-term rewards; (6) the Brown & Sharpe Stable Value Fund,
consisting of guaranteed investment contracts issued by American
International Life Assurance Company of New York, and the Putnam Stable
Value Fund, managed by Putnam Investments. This guaranteed investment
contract under which the issuer has agreed to pay the investor a guaranteed
rate of interest over terms ranging from 3 to 5 years matures on December
31, 1998. The crediting interest rate on this fund was 5.66% to 6.55% in
1997 and the average interest rate was 6.33% in 1997. The interest rate
adjusts monthly. The contract automatically terminates at maturity date. A
penalty is imposed upon early termination of the contract. The issuer of
this contract is an insurance company, and because of this, the contract is
more susceptible to factors adversely affecting the insurance industry than
similar contracts issued by parties other than insurance companies.
Transfers between investment funds can be made subject to certain rules.
The Plan assets are held in a trust administered by Putnam Fiduciary Trust
Company as Trustee.
The Company pays substantially all of the expenses associated with
administering this Plan.
BENEFITS
--------
A participant is always vested 100% in deferred salary contributions and
Company stock purchased at a discount and becomes 100% vested in Company
contributions after 3 years of service.
7
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
-----------------------------------------
YEARS ENDED DECEMBER 31, 1997 AND 1996
--------------------------------------
Upon termination of service, participants are eligible to receive the
vested value of their account in a lump sum payment or, if retired, in equal
annual installments over a 10-year period or deferred until a future date no
later than age 70-1/2.
Participants may borrow from their fund accounts a minimum of $1,000 and
to a maximum equal to the lesser of $50,000 or 50 percent of their vested
account balance. Loan transactions are treated as a transfer to (from) the
investment fund from (to) the loan fund. Loan terms range from one to five
years or up to fifteen years for the purchase of a primary residence. The
loans are secured by the balance in the participant's account and bear
interest at a rate commensurate with local prevailing rates as determined by
the Plan administrator. Principal and interest are paid ratably through
payroll deductions.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
The preparation of financial statements in accordance with GAAP requires the
use of management's estimates. Actual amounts could differ from these
estimates.
Investments, other than insurance contracts, are stated at fair value. The
shares of registered investment companies are valued at quoted market prices
which represent the net asset values of shares held by the Plan at year-end.
Investments in securities traded on a national securities exchange are
valued at the last reported sales price on the last business day of the
year. Investments in guaranteed interest contracts with insurance companies
and the Putnam Stable Value Fund are stated at contract value defined as
cost plus accrued interest less distributions to date, which approximates
fair value. The Plan loans receivable are valued at cost which approximates
fair value. Purchases and sales of securities are reflected on a trade-date
basis. The Plan presents in the statements 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. Dividend income is accrued on the ex-
dividend date. Income from other investments is recorded as earned on an
accrual basis.
3. TAX STATUS
----------
The Internal Revenue Service has determined and informed the Company by a
letter dated May 9, 1995 that the Plan qualifies under Section 401(a) of the
Internal Revenue Code (IRC) and, therefore, the related trust is not subject
to tax under present income tax law. Once qualified, the Plan is required to
operate in conformity with the IRC to maintain its qualification. Management
is not aware of any course of action or series of events that have occurred
that might adversely affect the Plan's qualified status.
4. PLAN TERMINATION
----------------
The Company adopted this Plan with a view to maintaining it permanently.
However, the Company reserves the right to modify or amend the Plan from
time to time, or to terminate the Plan, and to discontinue making
contributions temporarily or permanently depending upon business and
economic conditions. The Company cannot amend the Plan so as to deprive any
participant of benefits already accrued under the Plan at the time of
amendment, nor can the Company take back any contributions which it has made
to the Plan except in limited circumstances involving factual error or
contributions thought to be deductible which are not deductible. Should the
Plan terminate, accounts would become fully vested, regardless of years of
service, and would be paid to participants as directed by the Committee
administering the Plan.
8
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
-----------------------------------------
YEARS ENDED DECEMBER 31, 1997 AND 1996
-----------------------------------------
5. INVESTMENTS
-----------
Investments held at December 31, 1997 and 1996 are as follows:
<TABLE>
<CAPTION>
DESCRIPTION 1997 1996
- - ---------------------------------------- ----------- -----------
<S> <C> <C>
Investments stated at fair value:
Company common stock $ 1,616,375 $ 2,624,544
Putnam Stable Value Fund 3,333,527 2,301,692
The George Putnam Fund of Boston 4,982,088 4,896,277
Putnam Fund for Growth & Income 6,089,609 4,522,002
Putnam Voyager Fund 5,687,376 3,772,403
Putnam New Opportunities Fund 6,714,154 4,546,068
Investments stated at contract value:
Guaranteed interest contracts
American International Life Assurance
Company Contract #18181-M 1,622,909 1,721,814
Principal Mutual Life Insurance
Contract (3)88705-03-M - 2,225,705
Principal Mutual Life Insurance
Contract (3)88705-02-M - 176,433
Total investments ----------- -----------
$30,046,038 $26,786,938
=========== ===========
</TABLE>
9
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
-----------------------------------------
YEARS ENDED DECEMBER 31, 1997 AND 1996
-----------------------------------------
6. ALLOCATION OF STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS AND
----------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
---------------------------------------------------------------
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
----------------------------------------------------
AT DECEMBER 31, 1997, WITH FUND INFORMATION
------------------------------------------
<TABLE>
<CAPTION>
PUTNAM
BROWN & SHARPE GEORGE GROWTH & PUTNAM PUTNAM NEW
PLAN COMPANY STABLE VALUE PUTNAM INCOME VOYAGER OPPORTUNITIES
LOANS STOCK FUND FUND FUND FUND FUND FUND TOTAL
-------------- ---------- ---------- ------------ ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Assets:
Investments $ - $1,616,375 $4,956,436 $4,982,088 $6,089,609 $5,687,376 $6,714,154 $30,046,038
Employer contribution
receivable - 26,463 186,980 68,693 171,156 177,767 290,467 921,526
Plan loans receivable 587,411 - - - - - - 587,411
-------------- ---------- ---------- ---------- ---------- ---------- ---------- -----------
Net Assets Available for
Plan Benefits $587,411 $1,642,838 $5,143,416 $5,050,781 $6,260,765 $5,865,143 $7,004,621 $31,554,975
============== ========== ========== ========== ========== ========== ========== ===========
</TABLE>
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
----------------------------------------------------
AT DECEMBER 31, 1996, WITH FUND INFORMATION
------------------------------------------
<TABLE>
<CAPTION>
PUTNAM
BROWN & SHARPE GEORGE GROWTH & PUTNAM PUTNAM NEW
PLAN COMPANY STABLE VALUE PUTNAM INCOME VOYAGER OPPORTUNITIES
LOANS STOCK FUND FUND FUND FUND FUND FUND TOTAL
-------------- ---------- ---------- ------------ ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Assets:
Investments $ - $2,624,544 $6,425,644 $4,896,277 $4,522,002 $3,772,403 $4,546,068 $26,786,938
Employer contribution
receivable - 25,498 193,407 61,580 139,250 160,025 263,415 843,175
Plan loans receivable 487,606 - - - - - - 487,606
-------------- ---------- ---------- ---------- ---------- ---------- ---------- -----------
Net Assets Available for
Plan Benefits $487,606 $2,650,042 $6,619,051 $4,957,857 $4,661,252 $3,932,428 $4,809,483 $28,117,719
============== ========== ========== ========== ========== ========== ========== ===========
</TABLE>
10
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
-----------------------------------------
YEARS ENDED DECEMBER 31, 1997 AND 1996
-----------------------------------------
6. ALLOCATION OF STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
------------------------------------------------------------------
AND STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
-------------------------------------------------------------------
(CONTINUED)
------------
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
---------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1997, WITH FUND INFORMATION
-----------------------------------------------------------
<TABLE>
<CAPTION>
BROWN & SHARPE GEORGE PUTNAM
PLAN COMPANY STABLE VALUE PUTNAM GROWTH & INCOME
LOANS STOCK FUND FUND FUND FUND
----------------- ---------------- -------------- --------------- -------------
<S> <C> <C> <C> <C> <C>
ADDITIONS
- - ---------
Contributions
Employer $ - $ 49,341 $ 223,692 $ 87,302 $ 213,511
Employee - 62,170 208,833 156,248 336,276
Loan repayments (144,472) 1,928 25,713 8,890 32,457
--------- ----------- ----------- ----------- ----------
(144,472) 113,439 458,238 252,440 582,244
Investment income
Interest and dividends - 455 333,334 459,632 776,148
Net realized/unrealized
appreciation
(depreciation)
in fair value of
investments - (567,813) - 395,110 270,957
--------- ----------- ----------- ----------- ----------
Total additions
(deductions) (144,472) (453,919) 791,572 1,107,182 1,629,349
DISBURSEMENTS
- - -------------
Payments to
participants (25,692) (151,393) (2,204,242) (1,184,996) (879,065)
Loans to participants 218,702 (712) (45,751) (20,598) (29,513)
Forfeitures - (3,311) 8,197 (1,377) (274)
Fees - - (244) (138) (222)
--------- ----------- ----------- ----------- ----------
Total (disbursements)
additions 193,010 (155,416) (2,242,040) (1,207,109) (909,074)
TRANSFERS
- - ---------
Transfers from ESOP - - 3,084 10,730 27,921
Transfers (to) from SARP - 10,229 50,676 10,956 1,893
Transfers from another
Plan 51,267 - 287,147 75,055 442,904
Transfers between funds - (408,098) (366,074) 96,110 406,520
--------- ----------- ----------- ----------- ----------
Net transfers 51,267 (397,869) (25,167) 192,851 879,238
--------- ----------- ----------- ----------- ----------
Net increase (decrease) 99,805 (1,007,204) (1,475,635) 92,924 1,599,513
Net assets, beginning of
period 487,606 2,650,042 6 ,619,051 4,957,857 4,661,252
--------- ----------- ----------- ----------- ----------
Net assets, end of year $ 587,411 $ 1,642,838 $ 5,143,416 $ 5,050,781 $6,260,765
========= =========== =========== =========== ==========
<CAPTION>
PUTNAM PUTNAM NEW
VOYAGER OPPORTUNITIES
FUND FUND TOTAL
--------- ---------- ----------
<S> <C> <C> <C>
ADDITIONS
- - ---------
Contributions
Employer $ 225,769 $ 372,829 $ 1,172,444
Employee 367,710 602,849 1,734,086
Loan repayments 25,295 50,189 -
---------- ---------- ----------
618,774 1,025,867 2,906,530
Investment income
Interest and dividends 339,281 163,093 2,071,943
Net realized/unrealized
appreciation
(depreciation)
in fair value of
investments 637,170 865,996 1,601,420
---------- ---------- ----------
Total additions
(deductions) 1,595,225 2,054,956 6,579,893
DISBURSEMENTS
- - -------------
Payments to
participants (442,062) (423,850) (5,311,300)
Loans to participants (38,734) (83,394) -
Forfeitures (439) (2,796) -
Fees (196) (351) (1,151)
---------- ---------- ----------
Total (disbursements)
additions (481,431) (510,391) (5,312,451)
TRANSFERS
- - ---------
Transfers from ESOP 2,488 15,183 59,406
Transfers (to) from SARP 16,179 (164) 89,769
Transfers from another
Plan 557,288 606,978 2,020,639
Transfers between funds 242,966 28,576 -
---------- ---------- ----------
Net transfers 818,921 650,573 2,169,814
---------- ---------- ----------
Net increase (decrease) 1,932,715 2,195,138 3,437,256
Net assets, beginning of
period 3,932,428 4,809,483 28,117,719
---------- ---------- ----------
Net assets, end of year $5,865,143 $7,004,621 $31,554,975
========== ========== ==========
</TABLE>
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
-----------------------------------------
YEARS ENDED DECEMBER 31, 1997 AND 1996
-----------------------------------------
6. ALLOCATION OF STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS AND
----------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS (CONTINUED)
---------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS FOR THE PERIOD
------------------------------------------------------------------------------
JANUARY 1, 1996 - APRIL 30, 1996, WITH FUND INFORMATION
-------------------------------------------------------
<TABLE>
<CAPTION>
GUARANTEED
PLAN MONEY MARKET DIVERSIFIED COMPANY INTEREST
LOANS FUND FUND STOCK FUND FUND TOTAL
----- ------------ ----------- ---------- ---------- -----
<S> <C> <C> <C> <C> <C> <C>
ADDITIONS
- - ---------
Contributions
Employer $ - $ 22,530 $ 110,422 $ 18,506 $ 37,905 $ 189,363
Employee - 22,343 216,771 42,143 114,681 395,938
Loan repayments (41,714) 2,114 19,597 2,427 17,576 -
--------- --------- ------------ ----------- ----------- -----------
(41,714) 46,987 346,790 63,076 170,162 585,301
Investment income
Interest and dividends - 17,125 47,260 775 190,091 255,251
--------- --------- ------------ ----------- ----------- ------------
- 17,125 47,260 775 190,091 255,251
Net appreciation
(depreciation)
in fair value of
investments - - 918,822 (90,740) - 828,082
--------- --------- ------------ ----------- ----------- ------------
Total additions
(deductions) (41,714) 64,112 1,312,872 (26,889) 360,253 1,668,634
DISBURSEMENTS
- - -------------
Payments to participants (34,721) (447) (444,830) (30,656) (1,047,018) (1,557,672)
Loans to participants 61,804 (10,889) (41,811) (9,104) - -
Fees - - - - - -
--------- --------- ------------ ----------- ----------- ------------
Total (disbursements)
additions 27,083 (11,336) (486,641) (39,760) (1,047,018) (1,557,672)
TRANSFERS
- - ---------
Transfers (to) from SARP - 2,649 56,531 (617) 36,166 94,729
Transfers to new trustee (245,820) (905,921) (11,143,952) (1,782,872) (9,095,207) (23,173,772)
Transfers between funds - 134,114 (90,903) (100,511) 57,300 -
--------- --------- ------------ ----------- ----------- ------------
Net transfers (245,820) (769,158) (11,178,324) (1,884,000) (9,001,741) (23,079,043)
--------- --------- ------------ ----------- ----------- ------------
Net increase (decrease) (260,451) (716,382) (10,352,093) (1,950,649) (9,688,506) (22,968,081)
Net assets, beginning of
year 260,451 716,382 10,352,093 1,950,649 9,688,506 22,968,081
--------- --------- ------------ ----------- ----------- ------------
Net assets, end of period $ - $ - $ - $ - $ - $ -
========= ========= ============ =========== =========== ============
</TABLE>
12
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
-----------------------------------------
YEARS ENDED DECEMBER 31, 1997 AND 1996
-----------------------------------------
6. ALLOCATION OF STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS AND
----------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS (CONTINUED)
--------------------------------------------------------------- -----------
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS FOR THE PERIOD
------------------------------------------------------------------------------
MAY 1, 1996 - DECEMBER 31, 1996, WITH FUND INFORMATION (continued)
------------------------------------------------------------------
<TABLE>
<CAPTION>
BROWN & SHARPE GEORGE PUTNAM PUTNAM
PLAN COMPANY STABLE VALUE PUTNAM GROWTH & INCOME VOYAGER
LOANS STOCK FUND FUND FUND FUND FUND
---------------- --------------- -------------- ---------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
ADDITIONS
- - ---------
Contributions
Employer $ - $ 33,355 $ 193,407 $ 61,580 $ 139,250 $ 160,025
Employee - 33,216 160,065 76,629 170,514 202,423
Loan repayments (67,589) 759 19,786 4,451 13,161 12,677
-------- ---------- ----------- ----------- ---------- ----------
(67,589) 67,330 373,258 142,660 322,925 375,125
Investment income
Interest and dividends - 207 270,624 469,339 335,329 259,365
-------- ---------- ----------- ----------- ---------- ----------
- 207 270,624 469,339 335,329 259,365
Net realized/unrealized
appreciation
(depreciation) in
fair value
of investments - 811,654 - 124,244 125,049 (106,779)
-------- ---------- ----------- ----------- ---------- ----------
Total additions
(deductions) (67,589) 879,191 643,882 736,243 783,303 527,711
DISBURSEMENTS
- - -------------
Payments to
participants (24,752) (28,158) (908,924) (175,953) (27,950) (266,259)
Loans to participants 318,549 (3,349) (53,177) (77,365) (40,312) (62,125)
Fees - - (94) (77) (69) (70)
-------- ---------- ----------- ----------- ---------- ----------
Total (disbursements)
additions 293,797 (31,507) (962,195) (253,395) (68,331) (328,454)
TRANSFERS
- - ---------
Transfers from ESOP - - 5,445 10,819 - -
Transfers (to) from SARP - 78,881 (127,958) (636,021) 576,257 166,035
Transfers from previous
trustee 234,077 1,823,981 8,909,853 11,213,854 - 992,007
Transfer from another
Plan 27,321 - 2,301,080 - - -
Transfers between funds - (100,504) (4,151,056) (6,113,643) 3,370,023 2,575,129
-------- ---------- ----------- ----------- ---------- ----------
Net transfers 261,398 1,802,358 6,937,364 4,475,009 3,946,280 3,733,171
-------- ---------- ----------- ----------- ---------- ----------
Net increase (decrease) 487,606 2,650,042 6,619,051 4,957,857 4,661,252 3,932,428
Net assets, beginning of
period - - - - - -
-------- ---------- ----------- ----------- ---------- ----------
Net assets, end of year $487,606 $2,650,042 $ 6,619,051 $ 4,957,857 $4,661,252 $3,932,428
======== ========== =========== =========== ========== ==========
<CAPTION>
PUTNAM NEW
OPPORTUNITIES CONSOLIDATED
FUND TOTAL TOTAL
--------------- ---------------- ----------------
<S> <C> <C> <C>
ADDITIONS
- - ---------
Contributions
Employer $ 263,415 $ 851,032 $ 1,040,395
Employee 352,788 995,635 1,391,573
Loan repayments 16,755 - -
---------- ----------- -----------
632,958 1,846,667 2,431,968
Investment income
Interest and dividends 40,137 1,375,001 1,630,252
---------- ----------- -----------
40,137 1,375,001 1,630,252
Net realized/unrealized
appreciation
(depreciation) in
fair value
of investments (52,600) 901,568 1,729,650
---------- ----------- -----------
Total additions
(deductions) 620,495 4,123,236 5,791,870
DISBURSEMENTS
- - -------------
Payments to
participants (146,939) (1,578,935) (3,136,607)
Loans to participants (82,221) - -
Fees (111) (421) (421)
---------- ----------- -----------
Total (disbursements)
additions (229,271) (1,579,356) (3,137,028)
TRANSFERS
- - ---------
Transfers from ESOP - 16,264 16,264
Transfers (to) from SARP (1,792) 55,402 150,131
Transfers from previous
trustee - 23,173,772 -
Transfer from another
Plan - 2,328,401 2,328,401
Transfers between funds 4,420,051 - -
---------- ----------- -----------
Net transfers 4,418,259 25,573,839 2,494,796
---------- ----------- -----------
Net increase (decrease) 4,809,483 28,117,719 5,149,638
Net assets, beginning of
period - - 22,968,081
---------- ----------- -----------
Net assets, end of year $4,809,483 $28,117,719 $28,117,719
========== =========== ===========
</TABLE>
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1997 AND 1996
7. TRANSACTIONS WITH PARTIES-IN-INTEREST
Fees paid during the years ended December 31, 1997 and 1996, for investment
management, custodial services, recordkeeping and accounting services
rendered by parties-in-interest were based on customary and reasonable rates
for such services. The Plan invests in mutual funds managed by Putnam
Investments, who is also the Plan's recordkeeper and trustee. Therefore,
these transactions qualify as party-in-interest. There were no other party-
in-interest transactions that were prohibited by ERISA Section 406 and for
which there was no statutory or administrative exemption.
The following summarizes activity related to Brown & Sharpe capital stock
during the years ended December 31, 1997 and 1996:
<TABLE>
<CAPTION>
1997 1996
-------------------- --------------------
SHARES AMOUNT SHARES AMOUNT
--------- --------- --------- ---------
BROWN & SHARPE MANUFACTURING COMPANY
------------------------------------
<S> <C> <C> <C> <C>
Purchases of capital stock 19,670.12 $243,824 40,983.83 $467,490
Distributions of capital stock to participants 6,285.00 93,459 2,483.49 28,449
Sales of capital stock, at market value 42,190.00 590,722 33,855.65 409,344
</TABLE>
8. YEAR 2000 ISSUE (UNAUDITED)
The Plan sponsor has developed a plan to modify its internal information
technology to be ready for the Year 2000 and has begun converting critical
data processing systems. The project also includes determining whether
third-party service providers have reasonable plans in place to become Year
2000 ready. The Plan sponsor currently expects the project to be
substantially complete by early 1999. The Plan sponsor does not expect this
project to have a significant effect on Plan operations.
14
<PAGE>
SUPPLEMENTAL SCHEDULES
----------------------
<PAGE>
BROWN & SHARPE SAVINGS AND RETIREMENT PLAN FOR MANAGEMENT EMPLOYEES
LINE 27A SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1997
<TABLE>
<CAPTION>
SHARES OR FACE VALUE DESCRIPTION CURRENT VALUE COST
======================= ====================================================== ============= ===========
<S> <C> <C> <C>
THE GEORGE PUTNAM FUND OF BOSTON *
277,090.568 shares Balanced fund consisting of stocks and corporate $4,982,088 $4,573,231
and government bonds
PUTNAM NEW OPPORTUNITIES FUND *
138,009.333 shares Long-term growth funds consisting of stock of 6,714,154 5,930,133
certain emerging industry groups that in Putnam
Investments' view offer long-term growth potential
PUTNAM VOYAGER FUND *
298,549.943 shares A combination of stocks of small companies expected 5,687,376 5,202,206
to grow over time in addition to stocks of larger more
established corporations
BROWN & SHARPE COMPANY STOCK FUND *
158,662.551 shares Consisting of 158,662.551 shares of Brown & Sharpe 1,616,375 1,604,711
Class A & B Common Stock
PUTNAM FUND FOR GROWTH & INCOME *
311,648.371 shares A combination of attractive priced stocks of companies 6,089,609 5,808,305
viewed by Putnam to offer long-term growth potential
while also providing income
BROWN & SHARPE STABLE VALUE FUND
$1,622,909 face value American International Life Assurance Company 1,622,909 1,622,909
3,333,527 shares Putnam Stable Value Fund * 3,333,527 3,333,527
---------- ----------
4,956,436 4,956,436
Plan Loan Receivable 7% to 10.25% 587,411 -
----------- -----------
TOTAL ASSETS HELD FOR INVESTMENTS $30,633,449 $28,075,022
=========== ===========
</TABLE>
* IDENTIFIES PARTY-IN-INTEREST TO THE PLAN
16
<PAGE>
BROWN & SHARPE SAVINGS AND RETIREMENT PLAN FOR MANAGEMENT EMPLOYEES
LINE 27D SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
------------------------------------
CATEGORY (I) AN INDIVIDUAL TRANSACTION IN EXCESS OF 5% OF BEGINNING OF YEAR
- - -----------------------------------------------------------------------------
NET ASSETS
- - ----------
<TABLE>
<CAPTION>
CURRENT VALUE OF
ASSET ON TRANSACTION NET GAIN
IDENTITY OF PARTY INVOLVED DESCRIPTION OF ASSETS PURCHASE PRICE SELLING PRICE COST OF ASSET DATE (LOSS)
- - -------------------------- --------------------- -------------- ------------ ------------- -------------------- --------
<S> <C> <C> <C> <C> <C>
PRINCIPAL MUTUAL LIFE PRINCIPAL MUTUAL LIFE
INSURANCE COMPANY INSURANCE COMPANY
Contract No. (3)
88705-M
Sold $2,172,934
face amount in
1 transaction $ - $ 2,172,934 $ 2,172,934 $ 2,172,934 $ -
----------------------------------------------------------------
<CAPTION>
CATEGORY (III) A SERIES OF SECURITIES TRANSACTIONS IN EXCESS OF 5% OF BEGINNING
- - --------------------------------------------------------------------------------
OF YEAR NET ASSETS
- - ------------------
<S> <C> <C> <C> <C> <C>
PUTNAM FIDUCIARY TRUST THE GEORGE PUTNAM FUND
COMPANY OF BOSTON *
Purchased 112,245.46
shares in 114 trans-
actions 2,009,041 - 2,009,041 2,009,041 -
Sold 133,708.41 shares
in 87 transactions - 2,318,342 2,228,102 2,318,342 90,240
PUTNAM FUND FOR GROWTH
AND INCOME *
Purchased 181,929.34
shares in 149 trans-
actions 3,685,585 - 3,685,585 3,685,585 -
Sold 121,224.48 shares
in 83 transactions - 2,388,935 2,281,128 2,388,935 107,807
PUTNAM VOYAGER FUND *
Purchased 160,370.69
shares in 138 trans-
actions 3,002,861 - 3,002,861 3,002,861 -
Sold 95,840.77 shares
in 90 transactions - 1,725,058 1,698,536 1,698,536 26,522
</TABLE>
17
<PAGE>
BROWN & SHARPE SAVINGS AND RETIREMENT PLAN FOR MANAGEMENT EMPLOYEES
SCHEDULE OF REPORTABLE TRANSACTIONS
For the Year Ended December 31, 1997
------------------------------------
CATEGORY (III) A SERIES OF SECURITIES TRANSACTIONS IN EXCESS OF 5% OF BEGINNING
- - --------------------------------------------------------------------------------
OF YEAR NET ASSETS (CONTINUED)
- - ------------------------------
<TABLE>
<CAPTION>
CURRENT VALUE OF
ASSET ON TRANSACTION NET GAIN
IDENTITY OF PARTY INVOLVED DESCRIPTION OF ASSETS PURCHASE PRICE SELLING PRICE COST OF ASSET DATE (LOSS)
- - --------------------------- ------------------------ -------------- ------------- ------------- -------------------- --------
<S> <C> <C> <C> <C> <C>
PUTNAM STABLE VALUE
FUND *
Purchased 7,557,007.30
shares in
194 transactions 7,557,007 - 7,557,007 7,557,007 -
Sold 6,525,172.85
shares in 103
transactions - 6,525,172 6,525,172 6,525,172 -
PUTNAM NEW
OPPORTUNITIES FUND *
Purchased 74,877.58
shares in
143 transactions 3,412,604 - 3,412,604 3,412,604 -
Sold 48,757.68 shares
in 110
transactions - 2,110,513 2,096,327 2,110,513 14,186
</TABLE>
* IDENTIFIES PARTY-IN-INTEREST TO THE PLAN
THERE WERE NO CATEGORY (II) OR (IV) TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31,
1997.
18
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statements
(Form S-8 Nos. 2-77575, and 33-23603) pertaining to the Brown & Sharpe
Savings and Retirement Plan for Management Employees of Brown & Sharpe
Manufacturing Company of our report dated May 12, 1998, with respect to the
financial statements and schedules of the Brown & Sharpe Savings and
Retirement Plan for Management Employees included in this Annual Report (Form
11-K) for the year ended December 31, 1997.
ERNST & YOUNG LLP
Providence, Rhode Island
June 12, 1998
19
<PAGE>
Exhibit 28.2
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 11-K
Annual Report Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
For the Fiscal Year Ended December 31, 1997
-----------------
Commission File Number 1-5881
------
THE BROWN & SHARPE SAVINGS AND RETIREMENT PLAN
----------------------------------------------
(Full Title of the Plan)
BROWN & SHARPE MANUFACTURING COMPANY
200 Frenchtown Road
North Kingstown, Rhode Island 02852-1700
(401) 886-2000
(Name of Issuer and Address of its Principal Executive Office)
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Plan has duly caused this Annual Report to be signed on its behalf by the
undersigned, thereunto duly authorized, in North Kingstown, Rhode Island, on the
17th day of June 1998.
BROWN & SHARPE SAVINGS AND RETIREMENT PLAN
By: /s/ Alfred J. Corso
-------------------------------
Alfred J. Corso
Controller
(Principal Accounting Officer)
2
<PAGE>
THE BROWN & SHARPE SAVINGS AND RETIREMENT PLAN
----------------------------------------------
TABLE OF CONTENTS
-----------------
Page
----
Report of Ernst & Young LLP, Independent Auditors 4
Audited Financial Statements:
Statements of Net Assets Available for Plan Benefits
at December 31, 1997 and 1996 5
Statements of Changes in Net Assets Available for Plan
Benefits for the Years Ended December 31, 1997 and 1996 5
Notes to Financial Statements 6-14
Supplemental Schedules:
Line 27a Schedule of Assets Held for Investment Purposes 15
Line 27d Schedule of Reportable Transactions 16-17
Consent of Independent Auditors 18
3
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
-------------------------------------------------
Brown & Sharpe Savings and Retirement Plan Committee
Brown & Sharpe Manufacturing Company
We have audited the accompanying statements of net assets available for plan
benefits of the Brown & Sharpe Savings and Retirement Plan (the "Plan") as of
December 31, 1997 and 1996, and the related statements of changes in net assets
available for plan benefits for the years then ended. These financial
statements are the responsibility of the Plan's management. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the net assets available for plan benefits of the Plan
at December 31, 1997 and 1996, and the changes in its net assets available for
plan benefits for the years then ended, in conformity with generally accepted
accounting principles.
Our audit was made for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedules of assets
held for investment purposes as of December 31, 1997, and reportable
transactions for the year then ended, are presented for purposes of complying
with the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974, and are
not a required part of the financial statements. The supplemental schedules have
been subjected to the auditing procedures applied in our audit of the 1997
financial statements and, in our opinion, are fairly stated in all material
respects in relation to the 1997 financial statements taken as a whole.
ERNST & YOUNG LLP
May 12, 1998
4
<PAGE>
THE BROWN & SHARPE SAVINGS AND RETIREMENT PLAN
----------------------------------------------
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
----------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1997 1996
----------- -----------
<S> <C> <C>
ASSETS
- - ------
Investments (Notes 2 and 5) $7,385,821 $6,212,169
Employer contribution receivable 201,865 196,896
Plan loans receivable 221,675 164,879
----------- -----------
Net Assets Available for Plan Benefits $7,809,361 $6,573,944
=========== ===========
</TABLE>
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
---------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------
1997 1996
---------------- ----------------
<S> <C> <C>
ADDITIONS
- - ---------
Contributions
Employer $ 263,912 $ 239,804
Employee 419,848 357,515
---------- ----------
683,760 597,319
Investment income
Interest and dividends 506,770 419,612
Net realized/unrealized appreciation
in fair value of investments 452,468 425,218
---------- ----------
Total additions 1,642,998 1,442,149
DEDUCTIONS
- - ----------
Payments to participants (337,419) (590,325)
Fees (743) (255)
---------- ----------
Total deductions (338,162) (590,580)
TRANSFERS
- - ---------
From Brown & Sharpe Employee Stock Owner-
ship and Profit Participation Plan (ESOP) 20,350 26,479
To Brown & Sharpe Savings and Retirement
Plan for Management Employees (SARP-M) (89,769) (150,131)
---------- ----------
Net transfers (69,419) (123,652)
---------- ----------
Net increase 1,235,417 727,917
Net assets, beginning of year 6,573,944 5,846,027
---------- ----------
Net assets, end of year $7,809,361 $6,573,944
========== ==========
</TABLE>
See notes to the financial statements.
5
<PAGE>
THE BROWN & SHARPE SAVINGS AND RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
-----------------------------
YEARS ENDED DECEMBER 31, 1997 AND 1996
--------------------------------------
1. PLAN DESCRIPTION
----------------
The following description of the Brown & Sharpe Savings and Retirement Plan
(the "Plan") provides only general information. Participants should refer to
the Summary Plan Description for more complete details.
GENERAL
-------
The Plan, which began on October 1, 1987, is a defined contribution plan
covering all eligible full-time employees covered by a collective bargaining
agreement of Brown & Sharpe Manufacturing Company (the "Company") and its
affiliated companies who participate in the Plan. Such employees are
immediately eligible to make deferred salary contributions to the Plan. One
year of service is required to become a participant receiving Company
contributions. The Plan is subject to the provisions of the Employee
Retirement Income Security Act of 1974 (ERISA), as amended.
On May 6, 1996, the assets of the Plan were transferred from Fleet
National Bank to Putnam Fiduciary Trust Company which was appointed new
Trustee and Recordkeeper.
CONTRIBUTIONS
-------------
The Plan permits a participant to make deferred salary contributions to
the Plan up to 16% of compensation up to a maximum of $9,500 in 1997 and
1996 (indexed in future years) which is not subject to federal income tax
until distributed. Contributions are invested at the direction of the
employee in one or more investment alternatives, or "Funds", as described
below.
The Company may, at the discretion of the Board of Directors, make a
supplemental contribution of 4% of annual compensation plus 4% of the amount
over the Social Security wage base to the account of each participant to be
invested as instructed by the participant. The Company's supplemental
contributions for 1997 and 1996 were $201,863 and $196,896, respectively.
In addition, the Plan provides for a Company contribution, or subsidy,
equal to one-quarter of the amount of each deferred salary contribution
invested directly in the Company Stock Fund. Such Company contributions for
1997 and 1996 were $4,169 and $5,667, respectively.
In addition, at the discretion of the Board of Directors, the Company may
make a matching contribution equal to a percentage not to exceed 25% of the
elective contribution, disregarding any elective contribution in excess of
6% of such eligible participant's salary for such Plan year. Such
contributions for 1997 and 1996 were $57,880 and $37,241, respectively.
PARTICIPANT ACCOUNTS
--------------------
A separate account is established for each participant when enrolled in
the Plan. Each participant's account is credited with (a) participant
salary deferrals, (b) Company contributions and (c) Plan earnings.
Guaranteed interest contract account earnings are valued on a monthly basis
and are allocated to participants based on a pro rated basis.
6
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
-----------------------------------------
YEARS ENDED DECEMBER 31, 1997 AND 1996
--------------------------------------
INVESTMENTS
-----------
Prior to the conversion to Putnam Fiduciary Trust Company, participants
directed the trustee to deposit contributions in one or more of the
following investment alternatives in multiples of 10%:
(1) the Diversified Fund, managed by Frontier Capital Management, Inc.,
consisting primarily of a diversified portfolio of stock and fixed income
securities; (2) the Company Stock Fund, managed by Fleet National Bank,
consisting primarily of Company common stock and cash; (3) the Money Market
Fund, invested by Fleet National Bank through Fidelity Management & Research
Company, consisting primarily of obligations of the U.S. Government or its
agencies, banks and business corporations (other than the Company); or (4)
the Guaranteed Interest Fund, consisting primarily of guaranteed investment
contracts issued by American International Life Assurance Company of New
York, Principal Mutual Life Insurance Company, and Allstate Life Insurance
Company. These guaranteed investment contracts are agreements under which
the issuer has agreed to pay the investor a guaranteed rate of interest over
terms ranging from 3 to 5 years. The contracts automatically terminate at
maturity date. A penalty is imposed upon early termination of the contract.
The issuers of these contracts are insurance companies, and because of this,
the contracts are more susceptible to factors adversely affecting the
insurance industry than similar contracts issued by parties other than
insurance companies. Transfers between investment funds can be made subject
to certain rules.
After the transfer of assets to Putnam Fiduciary Trust Company,
participants direct the trustee to deposit contributions in one or more of
the following investment alternatives in multiples of 5%:
(1) Putnam New Opportunities Fund invests in a portfolio of stocks in
certain emerging industry groups that Putnam believes offer above-average
long-term growth potential; (2) the Company Stock Fund, managed by Putnam
Investments, consisting of Brown & Sharpe common stock; (3) the Putnam
Voyager Fund, invests in a combination of stocks of small companies expected
to grow over time as well as stocks of larger, more established
corporations; (4) the Putnam Fund for Growth & Income, invests mainly in
attractive priced stocks of companies that offer long-term growth potential
while also providing income; (5) The George Putnam Fund of Boston, invests
in stocks and corporate and government bonds, providing a balanced way to
pursue long-term rewards; (6) the Brown & Sharpe Stable Value Fund,
consisting of a guaranteed investment contract issued by American
International Life Assurance Company of New York, and the Putnam Stable
Value Fund, managed by Putnam Investments. This guaranteed investment
contract under which the issuer has agreed to pay the investor a guaranteed
rate of interest over terms ranging from 3 to 5 years maturing on December
31, 1998. The crediting interest rate on this fund was 5.66% to 6.42% in
1997 and the average interest rate was 6.31% in 1997. The interest rate
adjusts monthly. The contract automatically terminates at maturity date. A
penalty is imposed upon early termination of the contract. The issuer of
this contract is an insurance company, and because of this, the contract is
more susceptible to factors adversely affecting the insurance industry than
similar contracts issued by parties other than insurance companies.
Transfers between investment funds can be made subject to certain rules.
The Plan assets are held in a trust administered by Putnam Fiduciary Trust
Company as Trustee.
The Company pays substantially all of the expenses associated with
administering the Plan.
BENEFITS
--------
A participant is always vested 100% in deferred salary contributions and
Company stock purchased at a discount and becomes 100% vested in Company
contributions after 3 years of service.
7
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
-----------------------------------------
YEARS ENDED DECEMBER 31, 1997 AND 1996
--------------------------------------
Upon termination of service, participants are eligible to receive the
vested value of their account in a lump sum payment or, if retired, in equal
annual installments over a 10-year period or deferred until a future date no
later than age 70-1/2.
Participants may borrow from their fund accounts a minimum of $1,000 and
to a maximum equal to the lesser of $50,000 or 50 percent of their vested
account balance. Loan transactions are treated as a transfer to (from) the
investment fund from (to) the loan fund. Loan terms range from one to five
years or up to fifteen years for the purchase of a primary residence. The
loans are secured by the balance in the participant's account and bear
interest at a rate commensurate with local prevailing rates as determined by
the Plan administrator. Principal and interest are paid ratably through
payroll deductions.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
The preparation of financial statements in accordance with GAAP requires the
use of management's estimates. Actual amounts could differ from these
estimates.
Investments, other than insurance contracts, are stated at fair value. The
shares of registered investment companies are valued at quoted market prices
which represent the net asset values of shares held by the Plan at year-end.
Investments in securities traded on a national securities exchange are
valued at the last reported sales price on the last business day of the
year. Investments in guaranteed interest contracts with insurance companies
and the Putnam Stable Value Fund are stated at contract value defined as
cost plus accrued interest less distributions to date, which approximates
fair value. The Plan loans receivable are valued at cost which approximates
fair value. Purchases and sales of securities are reflected on a trade-date
basis. The Plan presents in the statements 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. Dividend income is accrued on the ex-
dividend date. Income from other investments is recorded as earned on an
accrual basis.
3. TAX STATUS
----------
The Internal Revenue Service has determined and informed the Company by a
letter dated April 11, 1995 that the Plan qualifies under Section 401(a) of
the Internal Revenue Code (IRC) and, therefore, the related trust is not
subject to tax under present income tax law. Once qualified, the Plan is
required to operate in conformity with the IRC to maintain its
qualification. Management is not aware of any course of action or series of
events that have occurred that might adversely affect the Plan's qualified
status.
4. PLAN TERMINATION
----------------
The Company adopted this Plan with a view to maintaining it permanently.
However, the Company reserves the right to modify or amend the Plan from
time to time, or to terminate the Plan, and to discontinue making
contributions temporarily or permanently depending upon business and
economic conditions. The Company cannot amend the Plan so as to deprive any
participant of benefits already accrued under the Plan at the time of
amendment, nor can the Company take back any contributions which it has made
to the Plan except in limited circumstances involving factual error or
contributions thought to be deductible which are not deductible. Should the
Plan terminate, accounts would become fully vested, regardless of years of
service, and would be paid to participants as directed by the Committee
administering the Plan.
8
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
-----------------------------------------
YEARS ENDED DECEMBER 31, 1997 AND 1996
--------------------------------------
5. INVESTMENTS
-----------
Investments held at December 31, 1997 and 1996 are as follows:
<TABLE>
<CAPTION>
DESCRIPTION 1997 1996
- - ----------- ---------- ----------
<S> <C> <C>
Investments stated at fair value:
Company common stock $ 284,634 $ 434,498
Putnam Stable Value Fund 1,522,784 629,947
The George Putnam Fund of Boston 1,387,037 1,202,853
Putnam Fund for Growth & Income 1,180,994 804,855
Putnam Voyager Fund 787,952 546,471
Putnam New Opportunities Fund 1,611,349 1,149,331
Investments stated at contract value:
Guaranteed interest contracts:
American International Life Assurance
Company Contract #18181-H 611,071 647,245
Principal Mutual Life Insurance
Contract (3)88705-03-H - 754,939
Principal Mutual Life Insurance
Contract (3)88705-02-H - 42,030
Total investments ---------- ----------
$7,385,821 $6,212,169
========== ==========
</TABLE>
9
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
-----------------------------------------
YEARS ENDED DECEMBER 31, 1997 AND 1996
--------------------------------------
6. ALLOCATION OF STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS AND
----------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
---------------------------------------------------------------
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS AT DECEMBER 31, 1997, WITH
------------------------------------------------------------------------------
FUND INFORMATION
----------------
<TABLE>
<CAPTION>
BROWN & PUTNAM
SHARPE GEORGE GROWTH & PUTNAM PUTNAM NEW
PLAN COMPANY STABLE PUTNAM INCOME VOYAGER OPPORTUNITIES
LOANS STOCK FUND VALUE FUND FUND FUND FUND FUND TOTAL
-------- ---------- ---------- ---------- ---------- ---------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments $ - $284,634 $2,133,855 $1,387,037 $1,180,994 $787,952 $1,611,349 $7,385,821
Employer contribution
receivable - 6,003 40,831 19,782 41,220 33,920 60,109 201,865
Plan loans receivable 221,675 - - - - - - 221,675
-------- ---------- ---------- ---------- ---------- ---------- ------------- ----------
Net Assets Available for
Plan Benefits $221,675 $290,637 $2,174,686 $1,406,819 $1,222,214 $821,872 $1,671,458 $7,809,361
======== ========== ========== ========== ========== ========== ============= ==========
</TABLE>
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS AT DECEMBER 31, 1996, WITH
- - ------------------------------------------------------------------------------
FUND INFORMATION
----------------
<TABLE>
<CAPTION>
BROWN & PUTNAM
SHARPE GEORGE GROWTH & PUTNAM PUTNAM NEW
PLAN COMPANY STABLE PUTNAM INCOME VOYAGER OPPORTUNITIES
LOANS STOCK FUND VALUE FUND FUND FUND FUND FUND TOTAL
-------- ---------- ---------- ---------- ---------- ---------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments $ - $434,498 $2,074,161 $1,202,853 $804,855 $546,471 $1,149,331 $6,212,169
Employer contribution
receivable - 6,181 48,088 18,860 36,516 30,873 56,378 196,896
Plan loans receivable 164,879 - - - - - - 164,879
-------- ---------- ---------- ---------- ---------- ---------- ------------- ----------
Net Assets Available for
Plan Benefits $164,879 $440,679 $2,122,249 $1,221,713 $841,371 $577,344 $1,205,709 $6,573,944
======== ========== ========== ========== ========== ========== ============= ==========
</TABLE>
10
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
-----------------------------------------
YEARS ENDED DECEMBER 31, 1997 AND 1996
--------------------------------------
6. ALLOCATION OF STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS AND
----------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS (CONTINUED)
--------------------------------------------------------------- -----------
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS FOR THE PERIOD
------------------------------------------------------------------------------
JANUARY 1, 1997 - DECEMBER 31, 1997, WITH FUND INFORMATION
----------------------------------------------------------
<TABLE>
<CAPTION>
BROWN & PUTNAM
SHARPE GEORGE GROWTH & PUTNAM PUTNAM NEW
PLAN COMPANY STABLE PUTNAM INCOME VOYAGER OPPORTUNITIES
LOANS STOCK FUND VALUE FUND FUND FUND FUND FUND TOTAL
-------- ---------- ---------- ---------- ---------- ---------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ADDITIONS
- - ---------
Contributions
Employer $ - $ 12,598 $ 50,220 $ 25,388 $ 52,763 $ 44,403 $ 78,540 $ 263,912
Employee - 16,683 56,174 43,410 89,999 80,651 132,931 419,848
Loan repayments (52,098) 5,274 7,648 5,528 11,196 6,158 16,294 -
-------- ---------- ---------- ---------- ---------- ---------- ------------- ----------
(52,098) 34,555 114,042 74,326 153,958 131,212 227,765 683,760
Investment income
Interest and dividends - 2,281 132,105 132,477 152,902 48,276 38,729 506,770
Net realized/unrealized
appreciation
(depreciation)
in fair value of
investments - (92,765) - 122,265 71,286 106,920 244,762 452,468
-------- ---------- ---------- ---------- ---------- ---------- ------------- ----------
Total additions
(deductions) (52,098) (55,929) 246,147 329,068 378,146 286,408 511,256 1,642,998
DISBURSEMENTS
- - -------------
Payments to participants (6,186) (1,973) (291,361) (37,686) - - (213) (337,419)
Loans to participants 115,080 (1,664) (9,788) (21,120) (23,153) (10,374) (48,981) -
Fees - - (141) (120) (137) (87) (258) (743)
-------- ---------- ---------- ---------- ---------- ---------- ------------- ----------
Total (disbursements)
additions 108,894 (3,637) (301,290) (58,926) (23,290) (10,461) (49,452) (338,162)
TRANSFERS
- - ---------
Transfers from ESOP - - 3,985 1,891 12,270 1,102 1,102 20,350
Transfers (to) from
SARP-M - (10,230) (52,886) (10,955) (1,891) (15,204) 1,397 (89,769)
Transfers between funds - (80,246) 156,481 (75,972) 15,608 (17,317) 1,446 -
-------- ---------- ---------- ---------- ---------- ---------- ------------- ----------
Net transfers - (90,476) 107,580 (85,036) 25,987 (31,419) 3,945 (69,419)
-------- ---------- ---------- ---------- ---------- ---------- ------------- ----------
Net increase (decrease) 56,796 (150,042) 52,437 185,106 380,843 244,528 465,749 1,235,417
Net assets, beginning of
period 164,879 440,679 2,122,249 1,221,713 841,371 577,344 1,205,709 6,573,944
-------- ---------- ---------- ---------- ---------- ---------- ------------- ----------
Net assets, end of year $221,675 $ 290,637 $2,174,686 $1,406,819 $1,222,214 $821,872 $1,671,458 $7,809,361
======== ========== ========== ========== ========== ========== ============= ==========
</TABLE>
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
-----------------------------------------
Years Ended December 31, 1997 and 1996
--------------------------------------
6. ALLOCATION OF STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS AND
----------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS (CONTINUED)
---------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS FOR THE PERIOD
------------------------------------------------------------------------------
JANUARY 1, 1996 - APRIL 30, 1996, WITH FUND INFORMATION
-------------------------------------------------------
<TABLE>
<CAPTION>
GUARANTEED
PLAN MONEY MARKET DIVERSIFIED COMPANY INTEREST
LOANS FUND FUND STOCK FUND FUND TOTAL
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
ADDITIONS
- - ---------
Contributions
Employer $ - $ 2,454 $ 19,992 $ 3,798 $ 13,412 $ 39,656
Employee - 1,095 40,314 9,659 41,975 93,043
Loan repayments (12,574) - 4,521 3,704 4,349 -
------------ ------------ ------------ ------------ ------------ ------------
(12,574) 3,549 64,827 17,161 59,736 132,699
Investment income
Interest and dividends - 2,688 628 633 68,317 72,266
------------ ------------ ------------ ------------ ------------ ------------
- 2,688 628 633 68,317 72,266
Net realized/unrealized
appreciation (depreciation) - - 186,515 (19,269) - 167,246
in fair value of investments ------------ ------------ ------------ ------------ ------------ ------------
Total additions (deductions) (12,574) 6,237 251,970 (1,475) 128,053 372,211
DISBURSEMENTS
- - -------------
Payments to participants - - (5,000) - - (5,000)
Loans to participants 18,500 (740) (17,760) - - -
------------ ------------ ------------ ------------ ------------ ------------
Total (disbursements) additions 18,500 (740) (22,760) - - (5,000)
TRANSFERS
- - ---------
Transfers (to) from SARP-M - (4,045) (56,426) 511 (34,769) (94,729)
Transfers to new trustee (76,281) (140,409) (2,168,209) (402,200) (3,331,410) (6,118,509)
Transfers between funds - (1,789) 38,196 14,512 (50,919) -
------------ ------------ ------------ ------------ ------------ ------------
Net transfers (76,281) (146,243) (2,186,439) (387,177) (3,417,098) (6,213,238)
------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease) (70,355) (140,746) (1,957,229) (388,652) (3,289,045) (5,846,027)
Net assets, beginning of period 70,355 140,746 1,957,229 388,652 3,289,045 5,846,027
------------ ------------ ------------ ------------ ------------ ------------
Net assets, end of year $ - $ - $ - $ - $ - $ -
============ ============ ============ ============ ============ ============
</TABLE>
12
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
-----------------------------------------
YEARS ENDED DECEMBER 31, 1997 AND 1996
--------------------------------------
6. ALLOCATION OF STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS AND
----------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS (CONTINUED)
--------------------------------------------------------------- -----------
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS FOR THE PERIOD
------------------------------------------------------------------------------
MAY 1, 1996 - DECEMBER 31, 1996, WITH FUND INFORMATION (continued)
------------------------------------------------------------------
<TABLE>
<CAPTION>
BROWN & SHARPE
COMPANY STABLE VALUE GEORGE PUTNAM PUTNAM GROWTH &
PLAN LOANS STOCK FUND FUND FUND INCOME FUND
--------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
ADDITIONS
- - ---------
Contributions
Employer $ - $ 9,433 $ 48,088 $ 18,860 $ 36,516
Employee - 12,024 36,292 26,293 58,222
Loan Repayments (22,922) 798 2,195 2,200 6,973
--------------- --------------- --------------- --------------- ---------------
(22,922) 22,255 86,575 47,353 101,711
Investment income
Interest and dividends - 103 131,737 109,113 61,203
--------------- --------------- --------------- --------------- ---------------
- 103 131,737 109,113 61,203
Net realized/unrealized
appreciation (depreciation)
in fair value of investments - 231,306 - 33,216 28,984
--------------- --------------- --------------- --------------- ---------------
Total additions (deductions) (22,922) 253,664 218,312 189,682 191,898
DISBURSEMENTS
- - -------------
Payments to participants - (31,277) (499,776) (54,272) -
Loans to participants 111,520 (2,792) (15,784) (27,566) (15,443)
Fees - - (47) (64) (29)
--------------- --------------- --------------- --------------- ---------------
Total disbursements (additions) 111,520 (34,069) (515,607) (81,902) (15,472)
TRANSFERS
- - ---------
Transfers from ESOP - - 15,962 10,517 -
Transfers (to) from SARP-M - (134,797) (1,038,497) (1,082,469) 644,707
Transfers from previous trustee 76,281 355,881 3,468,935 2,217,412 -
Transfers between funds - - (26,856) (31,527) 20,238
--------------- --------------- --------------- --------------- ---------------
Net transfers 76,281 221,084 2,419,544 1,113,933 664,945
--------------- --------------- --------------- --------------- ---------------
Net increase (decrease) 164,879 440,679 2,122,249 1,221,713 841,371
Net assets, beginning of period - - - - -
--------------- --------------- --------------- --------------- ---------------
Net assets, end of year $164,879 $ 440,679 $ 2,122,249 $ 1,221,713 $841,371
=============== =============== =============== =============== ===============
<CAPTION>
PUTNAM NEW
PUTNAM VOYAGER OPPORTUNITIES CONSOLIDATED
FUND FUND TOTAL TOTAL
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
ADDITIONS
- - ---------
Contributions
Employer $ 30,873 $ 56,378 $ 200,148 $ 239,804
Employee 46,038 85,603 264,472 357,515
Loan repayments 3,250 7,506 - -
--------------- --------------- --------------- ---------------
80,161 149,487 464,620 597,319
Investment income
Interest and dividends 35,157 10,033 347,346 419,612
--------------- --------------- --------------- ---------------
35,157 10,033 347,346 419,612
Net realized/unrealized
appreciation (depreciation)
in fair value of investments (15,992) (19,542) 257,972 425,218
--------------- --------------- --------------- ---------------
Total additions (deductions) 99,326 139,978 1,069,938 1,442,149
DISBURSEMENTS
- - -------------
Payments to participants - - (585,325) (590,325)
Loans to participants (14,116) (35,819) - -
Fees (21) (94) (255) (255)
--------------- --------------- --------------- ---------------
Total disbursements (additions) (14,137) (35,913) (585,580) (590,580)
TRANSFERS
- - ---------
Transfers from ESOP - - 26,479 26,479
Transfers (to) from SARP-M 473,250 1,082,404 (55,402) (150,131)
Transfers from previous trustee - - 6,118,509 -
Transfers between funds 18,905 19,240 - -
--------------- --------------- --------------- ---------------
Net transfers 492,155 1,101,644 6,089,586 (123,652)
--------------- --------------- --------------- ---------------
Net increase (decrease) 577,344 1,205,709 6,573,944 727,917
Net assets, beginning of period - - - 5,846,027
--------------- --------------- --------------- ---------------
Net assets, end of year $577,344 $1,205,709 $6,573,944 $6,573,944
=============== =============== =============== ===============
</TABLE>
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
-----------------------------------------
YEARS ENDED DECEMBER 31, 1997 AND 1996
--------------------------------------
7. TRANSACTIONS WITH PARTIES-IN-INTEREST
Fees paid during the years ended December 31, 1997 and 1996, for investment
management, custodial services, recordkeeping and accounting services
rendered by parties-in-interest were based on customary and reasonable rates
for such services. The Plan invests in mutual funds managed by Putnam
Investments, who is also the Plan's recordkeeper and trustee. Therefore,
these transactions qualify as party-in-interest. There were no other party-
in-interest transactions that were prohibited by ERISA Section 406 and for
which there was no statutory or administrative exemption.
The following summarizes activity related to Brown & Sharpe capital stock
during the years ended December 31, 1997 and 1996:
<TABLE>
<CAPTION>
1997 1996
---- ----
BROWN & SHARPE MANUFACTURING COMPANY SHARES AMOUNT SHARES AMOUNT
------------------------------------ ------ ------ ------ ------
<S> <C> <C> <C> <C>
Purchases of capital stock 15,163.854 $193,983 19,781.12 $159,790
Distributions of capital stock to participants -- -- 2,242.61 31,277
Sales of capital stock, at market value 18,259.837 251,080 22,934.77 279,472
Investment income/loss -- 47,765 -- 87,024
</TABLE>
8. YEAR 2000 ISSUE (UNAUDITED)
The Plan sponsor has developed a plan to modify its internal information
technology to be ready for the Year 2000 and has begun converting critical
data processing systems. The project also includes determining whether
third-party service providers have reasonable plans in place to become Year
2000 ready. The Plan sponsor currently expects the project to be
substantially complete by early 1999. The Plan sponsor does not expect this
project to have a significant effect on Plan operations.
14
<PAGE>
SUPPLEMENTAL SCHEDULES
----------------------
<PAGE>
BROWN & SHARPE SAVINGS AND RETIREMENT PLAN
LINE 27A SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1997
<TABLE>
<CAPTION>
SHARES OR FACE VALUE DESCRIPTION CURRENT VALUE COST
==================== =========== ============== ==========
<C> <S> <C> <C>
THE GEORGE PUTNAM FUND OF BOSTON *
77,143.335 shares Balanced fund consisting of stocks and corporate $1,387,037 $1,256,866
and government bonds
PUTNAM NEW OPPORTUNITIES FUND *
33,121.255 shares Long-term growth funds consisting of stock of 1,611,349 1,391,420
certain emerging industry groups that in Putnam
Investments view offer long-term growth potential
PUTNAM VOYAGER FUND *
41,362.349 shares A combination of stocks of small companies expected 787,952 700,491
to grow over time in addition to stocks of larger more
established corporations
BROWN & SHARPE COMPANY STOCK FUND *
27,939.491 shares Consisting of 31,035.57 shares of Brown & Sharpe 284,634 273,803
Class A & B Common Stock
THE PUTNAM FUND FOR GROWTH & INCOME *
60,439.819 shares A combination of attractive priced stocks of companies 1,180,994 1,101,179
viewed by Putnam to offer long-term growth potential
while also providing income
BROWN & SHARPE STABLE VALUE FUND
$611,071 face value American International Life Assurance Company 611,071 611,071
1,522,784 shares Putnam Stable Value Fund * 1,522,784 1,522,784
---------- -----------
2,133,855 2,133,855
Plan Loan Receivable 7% to 10% 221,675 -
---------- -----------
TOTAL ASSETS HELD FOR INVESTMENTS $7,607,496 $6,857,614
========== ===========
</TABLE>
*IDENTIFIES PARTY-IN-INTEREST TO THE PLAN
16
<PAGE>
BROWN & SHARPE SAVINGS AND RETIREMENT PLAN
LINE 27D SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
------------------------------------
CATEGORY (I) AN INDIVIDUAL TRANSACTION IN EXCESS OF
------------------------------------------------------
5% OF BEGINNING OF YEAR NET ASSETS
----------------------------------
<TABLE>
<CAPTION>
CURRENT VALUE OF
IDENTITY OF PARTY DESCRIPTION OF ASSET ON NET GAIN
INVOLVED ASSETS PURCHASE PRICE SELLING PRICE COST OF ASSET TRANSACTION DATE (LOSS)
- - --------------------- ------------------ -------------- ------------- -------------- ---------------- ----------
<S> <C> <C> <C> <C> <C> <C>
PRINCIPAL MUTUAL GIC (3)88705-03-H $ - $ 737,040 $ 737,040 $ 737,040 $ -
LIFE INS. CO. Sold $737,040
face amount in
1 transaction
</TABLE>
CATEGORY (III) A SERIES OF SECURITIES TRANSACTIONS IN EXCESS OF
-----------------------------------------------------------------
5% OF BEGINNING OF YEAR NET ASSETS
----------------------------------
<TABLE>
<CAPTION>
CURRENT VALUE OF
IDENTITY OF PARTY DESCRIPTION OF ASSET ON NET GAIN
INVOLVED ASSETS PURCHASE PRICE SELLING PRICE COST OF ASSET TRANSACTION DATE (LOSS)
- - --------------------- ------------------ -------------- ------------- -------------- ---------------- ----------
<S> <C> <C> <C> <C> <C> <C>
PUTNAM FIDUCIARY THE GEORGE PUTNAM
TRUST COMPANY FUND OF BOSTON *
Purchased 13,955.02
shares in
120 transactions 244,211 - 244,211 244,211 -
Sold 10,156.43 shares
in 42 transactions - 182,292 165,412 182,292 16,880
PUTNAM FUND FOR
GROWTH AND INCOME *
Purchased 24,045.27
shares in 140
transactions 476,247 - 476,247 476,247 -
Sold 8,270 shares in
40 transactions - 171,394 152,036 171,394 19,358
PUTNAM VOYAGER FUND *
Purchased 12,698.80
shares in
119 transactions 226,429 - 226,429 226,429 -
Sold 5,236.61 shares in
35 transactions - 91,867 88,888 91,867 2,979
</TABLE>
17
<PAGE>
BROWN & SHARPE SAVINGS AND RETIREMENT PLAN
SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
------------------------------------
CATEGORY (III) A SERIES OF SECURITIES TRANSACTIONS IN EXCESS OF
-----------------------------------------------------------------
5% OF BEGINNING OF YEAR NET ASSETS (CONTINUED)
----------------------------------------------
<TABLE>
<CAPTION>
CURRENT VALUE OF
IDENTITY OF PARTY DESCRIPTION OF ASSET ON NET GAIN
INVOLVED ASSETS PURCHASE PRICE SELLING PRICE COST OF ASSET TRANSACTION DATE (LOSS)
- - ------------------ --------------------- -------------- ------------- -------------- ---------------- ----------
<S> <C> <C> <C> <C> <C> <C>
PUTNAM STABLE VALUE FUND *
Purchased 1,553,464 shares
in 171 transactions 1,553,464 - 1,553,464 1,553,464 -
Sold 660,627 shares in
61 transactions - 660,627 660,627 660,627 -
PUTNAM NEW OPPORTUNITIES
FUND *
Purchased 8,555.36 shares in
127 transactions 378,560 - 378,560 378,560 -
Sold 3,721.82 shares in
48 transactions - 161,303 155,450 161,303 5,853
BROWN & SHARPE
MANUFACTURING THE BROWN & SHARPE
COMPANY STOCK FUND *
Purchased 15,163.85
shares in
111 transactions 193,983 - 193,983 193,983 -
Sold 18,268.93 shares in
17 transactions - 251,080 203,316 251,080 47,764
</TABLE>
* IDENTIFIES PARTY-IN-INTEREST TO THE PLAN
THERE WERE NO CATEGORY (II) OR (IV) TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31,
1997.
18
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statements
(Form S-8 Nos. 33-17831 and 33-23601) pertaining to the Brown & Sharpe
Savings and Retirement Plan of Brown & Sharpe Manufacturing Company of our
report dated May 12, 1998, with respect to the financial statements and
schedules of the Brown & Sharpe Savings and Retirement Plan included in this
Annual Report (Form 11-K) for the year ended December 31, 1997.
ERNST & YOUNG LLP
Providence, Rhode Island
June 12, 1998
19
