<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, 1998
-----------------
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 1999.
- ---- ---------
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, 1998 and 1997 5
Statements of Changes in Net Assets Available for Plan
Benefits for the Years Ended December 31, 1998 and 1997 5
Notes to Financial Statements 6 - 15
Supplemental Schedules:
Line 27a Schedule of Assets Held for Investment Purposes 16-17
Line 27d Schedule of Reportable Transactions 18-19
Consent of Independent Auditors 20
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, 1998 and 1997, 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, 1998 and 1997, and the changes in its net assets available for
plan benefits for the years then ended, in conformity with generally accepted
accounting principles.
Our audits were performed 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, 1998, and reportable
transactions for the year then ended, are presented for purposes of additional
analysis and are not a required part of the financial statements but are
supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. These supplemental schedules are the responsibility of the
Plan's management. The supplemental schedules have been subjected to the
auditing procedures applied in our audit of the 1998 financial statements and,
in our opinion, are fairly stated in all material respects in relation to the
1998 financial statements taken as a whole.
ERNST & YOUNG LLP
May 21, 1999
4
<PAGE>
THE BROWN & SHARPE SAVINGS AND RETIREMENT PLAN
----------------------------------------------
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
----------------------------------------------------
<TABLE>
<CAPTION>
December 31,
-----------------------------
1998 1997
---------- ----------
<S> <C> <C>
Assets
- ------
Investments (Notes 2 and 5) $7,758,563 $7,385,821
Employer contribution receivable 216,545 201,865
Plan loans receivable 300,201 221,675
---------- ----------
Net Assets Available for Plan Benefits $8,275,309 $7,809,361
========== ==========
</TABLE>
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
---------------------------------------------------------------
<TABLE>
<CAPTION>
For the years ended December 31,
--------------------------------
1998 1997
----------- -----------
<S> <C> <C>
Additions
- ---------
Contributions
Employer $ 345,992 $ 263,912
Employee 410,955 419,848
----------- -----------
756,947 683,760
Investment income
Interest and dividends 509,397 506,770
Net realized/unrealized appreciation
in fair value of investments 480,958 452,468
----------- -----------
Total additions 1,747,302 1,642,998
Deductions
- ----------
Payments to participants (944,710) (337,419)
Fees (1,137) (743)
----------- -----------
Total deductions (945,847) (338,162)
Transfers
- ---------
From Brown & Sharpe Employee Stock Owner-
ship and Profit Participation Plan (ESOP) 13,129 20,350
To Brown & Sharpe Savings and Retirement
Plan for Management Employees (SARP-M) (348,636) (89,769)
----------- -----------
Net transfers (335,507) (69,419)
----------- -----------
Net increase 465,948 1,235,417
Net assets, beginning of year 7,809,361 6,573,944
----------- -----------
Net assets, end of year $ 8,275,309 $ 7,809,361
=========== ===========
</TABLE>
See notes to the financial statements.
5
<PAGE>
THE BROWN & SHARPE SAVINGS AND RETIREMENT PLAN
Notes To Financial Statements
-----------------------------
Years Ended December 31, 1998 and 1997
--------------------------------------
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.
Prior to January 1, 1998, one year of service was required to become a
participant receiving Company contributions. Beginning on January 1, 1998,
six months 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.
Contributions
-------------
The Plan permits a participant to make deferred salary contributions to
the Plan up to 16% of compensation up to a maximum of $10,000 in 1998 and
$9,500 in 1997, 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 1998 and 1997 were $216,545 and $201,863, 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
1998 and 1997 were $2,593 and $4,169, 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 1998 and 1997 were $126,854 and $57,880, respectively. On
January 1, 1998, the Company agreed to make matching contributions with each
pay period employee contribution.
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, 1998 and 1997
--------------------------------------
Investments
-----------
The Plan assets are held in a trust administered by Putnam Fiduciary Trust
Company as Trustee.
Participants direct the trustee to deposit contributions in one or more of
the following investment alternatives in multiples of 10%:
(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 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. The
average interest rate of the fund was 6.14% in 1998. The interest rate
adjusts monthly. Transfers between investment funds can be made subject to
certain rules.
In 1998 the Plan added five new funds. They are: (1) Putnam Asset
Allocation - Growth Portfolio, invests in equities and fixed income
securities. The fund is weighted more toward equity investments that
traditionally return more than fixed income securities. (2) Putnam Asset
Allocation - Balanced Portfolio, that invests in equities and fixed income
securities. The fund takes a balanced approach between equities and fixed
income investments regarding investment philosophy. (3) Putnam Asset
Allocation - Conservative Portfolio, invests in equity and fixed income
securities weighted more towards the fixed income securities. (4) Putnam
Diversified Income Trust, seeks income consistent with preservation of
capital. The fund invests in fixed income securities such as U.S.
Government obligation, lower rated U.S. corporate debt and debt obligations
of foreign governments. (5) Putnam International Growth, invests in equities
of companies located outside of the United States.
The Company pays substantially all of the expenses associated with
administrating 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. On January 1, 1998, the Company
changed the vesting schedule to 5 years graduated 20 percent per year. If
the participant's service date was before January 1, 1998 and was not vested
then the vesting schedule is a three year schedule at 20 percent for the
first two years and 100% in the third year.
7
<PAGE>
Notes to Financial Statements (continued)
-----------------------------------------
Years Ended December 31, 1998 and 1997
--------------------------------------
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, 1998 and 1997
--------------------------------------
5. Investments
-----------
Investments held at December 31, 1998 and 1997 are as follows:
<TABLE>
<CAPTION>
Description
- -----------
1998 1997
---------- ----------
<S> <C> <C>
Investments stated at fair value:
Company common stock $ 136,622 $ 284,634
Putnam Stable Value Fund 1,851,526 1,522,784
The George Putnam Fund of Boston 1,401,211 1,387,037
Putnam Fund for Growth & Income 1,210,517 1,180,994
Putnam Voyager Fund 954,911 787,952
Putnam New Opportunities Fund 1,972,225 1,611,349
Putnam Diversified Income Trust 13,733 -
Putnam Asset Allocation - Growth Portfolio 2,709 -
Putnam Asset Allocation - Balanced Portfolio 4,839 -
Putnam International Growth Fund 17,954 -
Putnam Asset Allocation - Conservative Portfolio 406 -
Investments stated at contract value:
Guaranteed interest contracts:
American International Life Assurance
Company Contract #18181-H 191,910 611,071
---------- ----------
Total investments $7,758,563 $7,385,821
========== ==========
</TABLE>
9
<PAGE>
Notes to Financial Statements (continued)
-----------------------------------------
Years Ended December 31, 1998 and 1997
--------------------------------------
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, 1998, WITH FUND INFORMATION
<TABLE>
<CAPTION>
Putnam
Brown & Sharpe George Growth & Putnam Putnam New
Plan Company Stable Value Putnam Income Voyager Opportunities Sub
Loans Stock Fund Fund Fund Fund Fund Fund Total
-------- -------- ---------- ---------- ---------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Assets:
Investments $ -- $136,622 $2,043,436 $1,401,211 $1,210,517 $954,911 $1,972,225 $7,718,922
Employer contribution
receivable -- 3,910 50,369 17,662 36,351 40,104 66,886 215,282
Plan loans receivable 300,201 -- -- -- -- -- -- 300,201
-------- -------- ---------- ---------- ---------- -------- ---------- ----------
Net Assets Available for
Plan Benefits $300,201 $140,532 $2,093,805 $1,418,873 $1,246,868 $995,015 $2,039,111 $8,234,405
======== ======== ========== ========== ========== ======== ========== ==========
</TABLE>
----------------------------------------
<TABLE>
<CAPTION>
Putnam Putnam Asset Putnam Asset Putnam Asset
Diversified Allocation Allocation Putnam Allocation
Income Growth Balanced International Conservative Sub
Trust Fund Portfolio Growth Fund Portfolio Total Total
----- ---- --------- ----------- --------- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Assets:
Investments $13,733 $2,709 $4,839 $17,954 $406 $39,641 $7,758,563
Employer contribution
receivable 370 239 167 272 215 1,263 216,545
Plan loans receivable -- -- -- -- -- -- 300,201
------- ------ ------ ------- ---- ------- ----------
Net Assets Available for
Plan Benefits $14,103 $2,948 $5,006 $18,226 $621 $40,904 $8,275,309
======= ====== ====== ======= ==== ======= ==========
</TABLE>
10
<PAGE>
Notes to Financial Statements (continued)
-----------------------------------------
Years Ended December 31, 1998 and 1997
--------------------------------------
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 $ -- $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>
11
<PAGE>
Notes to Financial Statements (continued)
-----------------------------------------
Years Ended December 31, 1998 and 1997
--------------------------------------
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR
PLAN BENEFITS FOR THE YEAR ENDED
DECEMBER 31, 1998, WITH FUND INFORMATION
<TABLE>
<CAPTION>
Putnam
Brown & Sharpe George Growth & Putnam Putnam New
Plan Company Stable Value Putnam Income Voyager Opportunities Sub
Loans Stock Fund Fund Fund Fund Fund Fund Total
----- ---------- ---- ---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Additions
Contributions
Employer $ -- $ 9,874 $ 68,368 $ 29,928 $ 61,416 $ 66,082 $ 108,245 $ 343,913
Employee -- 10,580 47,753 37,519 80,800 92,263 131,729 400,644
Loan repayments (71,785) 1,361 5,453 7,850 15,406 10,659 30,999 (57)
--------- --------- ----------- ----------- ----------- --------- ----------- -----------
(71,785) 21,815 121,574 75,297 157,622 169,004 270,973 744,500
Investment income
Interest and dividends -- 487 118,744 137,027 116,416 67,125 68,284 508,083
Net realized/unrealized
appreciation
(depreciation)
in fair value of
investments -- (28,184) -- 9,241 49,572 123,160 329,172 482,961
--------- --------- ----------- ----------- ----------- --------- ----------- -----------
Total additions
(deductions) (71,785) (5,882) 240,318 221,565 323,610 359,289 668,429 1,735,544
Disbursements
Payments to participants 44,065 80,335 488,137 24,458 100,081 13,883 193,751 944,710
Loans to participants (200,536) 7,992 27,361 20,788 50,875 25,952 67,568 --
Fees -- -- 177 146 249 156 409 1,137
--------- --------- ----------- ----------- ----------- --------- ----------- -----------
Total (disbursements)
additions (156,471) 88,327 515,675 45,392 151,205 39,991 261,728 945,847
Transfers
Transfers from ESOP -- -- 1,906 592 2,515 2,971 3,520 11,504
Transfers (to) from SARP (6,160) (34,753) (35,604) (75,970) (38,418) (53,177) (104,554) (348,636)
Transfers between funds -- (21,143) 228,174 (88,741) (111,848) (95,949) 61,986 (27,521)
--------- --------- ----------- ----------- ----------- --------- ----------- -----------
Net transfers (6,160) (55,896) 194,476 (164,119) (147,751) (146,155) (39,048) (364,653)
--------- --------- ----------- ----------- ----------- --------- ----------- -----------
Net increase (decrease) 78,526 (150,105) (80,881) 12,054 24,654 173,143 367,653 425,044
Net assets, beginning of
year 221,675 290,637 2,174,686 1,406,819 1,222,214 821,872 1,671,458 7,809,361
--------- --------- ----------- ----------- ----------- --------- ----------- -----------
Net assets, end of year $ 300,201 $ 140,532 $ 2,093,805 $ 1,418,873 $ 1,246,868 $ 995,015 $ 2,039,111 $ 8,234,405
========= ========= =========== =========== =========== ========= =========== ===========
</TABLE>
12
<PAGE>
Notes to Financial Statements (continued)
-----------------------------------------
Years Ended December 31, 1998 and 1997
--------------------------------------
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1998, WITH FUND INFORMATION
<TABLE>
<CAPTION>
Putnam Putnam Asset Putnam Asset Putnam Asset
Diversified Allocation Allocation Putnam Allocation
Income Growth Balanced International Conservative Sub
Trust Fund Portfolio Growth Fund Portfolio Total Total
----- ---- --------- ----------- --------- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Additions
- ---------
Contributions
Employer $ 461 $ 520 $ 257 $ 574 $ 267 $ 2,079 $ 345,992
Employee 697 1,655 4,424 2,936 599 10,311 410,955
Loan repayments 37 -- -- -- 20 57 --
-------- ------ ------ --------- -------- --------- -----------
1,195 2,175 4,681 3,510 886 12,447 756,947
Investment income
Interest and dividends 630 63 93 508 20 1,314 509,397
Net realized/unrealized
appreciation (depreciation)
in fair value of
investments (1,319) 139 232 (1,057) 2 (2,003) 480,958
-------- ------ ------ --------- -------- --------- -----------
Total additions
(deductions) 506 2,377 5,006 2,961 908 11,758 1,747,302
Disbursements
- -------------
Payments to participants -- -- -- -- -- -- 944,710
Loans to participants -- -- -- -- -- -- --
Fees -- -- -- -- -- -- 1,137
-------- ------ ------ --------- -------- --------- -----------
Total (disbursements)
additions -- -- -- -- -- -- 945,847
Transfers
- ---------
Transfers from ESOP -- 571 -- 1,054 -- 1,625 13,129
Transfers (to) from SARP -- -- -- -- -- -- (348,636)
Transfers between funds 13,597 -- -- 14,211 (287) 27,521 --
-------- ------ ------ --------- -------- --------- -----------
Net transfers 13,597 571 -- 15,265 (287) 29,146 (335,507)
-------- ------ ------ --------- -------- --------- -----------
Net increase (decrease) 14,103 2,948 5,006 18,226 621 40,904 465,948
Net assets, beginning of
year -- -- -- -- -- -- 7,809,361
-------- ------ ------ --------- -------- --------- -----------
Net assets, end of year $ 14,103 $2,948 $5,006 $ 18,226 $ 621 $ 40,904 $ 8,275,309
======== ====== ====== ========= ======== ========= ===========
</TABLE>
13
<PAGE>
Notes to Financial Statements (continued)
-----------------------------------------
Years Ended December 31, 1998 and 1997
---------------------------------------
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS FOR THE YEAR
---------------------------------------------------------------------------
ENDED 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>
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>
14
<PAGE>
Notes to Financial Statements (continued)
-----------------------------------------
Years Ended December 31, 1998 and 1997
--------------------------------------
7. Transactions with Parties-In-Interest
-------------------------------------
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, 1998 and 1997:
<TABLE>
<CAPTION>
1998 1997
---- ----
Shares Amount Shares Amount
------ ------ ------ ------
Brown & Sharpe Manufacturing Company
------------------------------------
<S> <C> <C> <C> <C>
Purchases of capital
stock 19,937.99 $189,283 15,163.854 $193,983
Distributions of
capital stock to
participants 2,232.71 23,961 -- --
Sales of capital
stock, at market
value 28,567.08 285,149 18,259.837 251,080
Investment income/loss -- 3,911 -- 47,765
</TABLE>
8. Year 2000 (unaudited)
---------------------
The Plan Sponsor has determined that it will be necessary to take certain
steps in order to ensure that the Plan's information systems are prepared to
handle year 2000 dates. The Plan Sponsor is taking a two phase approach.
The first phase addresses internal systems that must be modified or replaced
to function properly. Both internal and external resources are being
utilized to replace or modify existing software applications, and test the
software and equipment for the year 2000 modifications. The Plan Sponsor
anticipates substantially completing this phase of the project by mid 1999.
Costs associated with modifying software and equipment are not estimated to
be significant and will be paid by the Plan Sponsor.
For the second phase of the project, Plan management established formal
communications with its third party service providers to determine that they
have developed plans to address their own year 2000 problems as they relate
to the Plan's operations. All third party service providers have indicated
that they will be year 2000 compliant by early 1999. If modifications of
data processing systems of either the Plan, the Plan Sponsor, or its service
providers are not completely timely, the year 2000 problem could have a
material impact on the operations of the Plan. Plan management has not
developed a contingency plan, because they are confident that all systems
will be year 2000 ready.
15
<PAGE>
SUPPLEMENTAL SCHEDULES
----------------------
<PAGE>
Brown & Sharpe Savings and Retirement Plan
EIN No: 05-0113140 Plan No: 009
Line 27a Schedule of Assets Held for Investment Purposes
December 31, 1998
<TABLE>
<CAPTION>
Shares or Face Value Description Current Value Cost
=======================================================================================================
<S> <C> <C> <C>
The George Putnam Fund of Boston *
77,672.440 shares Balanced fund consisting of stocks and corporate $1,401,211 $1,284,836
and government bonds
Putnam New Opportunities Fund *
33,753.632 shares Long-term growth funds consisting of stock of 1,972,225 1,501,753
certain emerging industry groups that in Putnam
Investments' view offer long-term growth potential
Putnam Voyager Fund *
43,563.475 shares A combination of stocks of small companies expected 954,911 778,663
to grow over time in addition to stocks of larger more
established corporations
Brown & Sharpe Company Stock Fund *
17,077.689 shares Consisting of 17,077.689 shares of Brown & Sharpe 136,622 157,887
Class A & B Common Stock
The Putnam Fund for Growth & Income *
59,078.423 shares A combination of attractive priced stocks of companies 1,210,517 1,103,699
viewed by Putnam to offer long-term growth potential
while also providing income
Brown & Sharpe Stable Value Fund
$191,910 face value American International Life Assurance Company 191,910 191,910
1,851,526 shares Putnam Stable Value Fund * 1,851,526 1,851,526
---------- ----------
2,043,436 2,043,436
---------- ----------
SUB TOTAL ASSETS HELD FOR INVESTMENTS $7,718,922 $6,870,274
========== ==========
</TABLE>
* Identifies party-in-interest to the Plan
16
<PAGE>
Brown & Sharpe Savings and Retirement Plan
EIN No: 05-0113140 Plan No: 009
Line 27a Schedule of Assets Held for Investment Purposes (continued)
December 31, 1998
<TABLE>
<CAPTION>
Shares or Face Value Description Current Value Cost
=======================================================================================================
<S> <C> <C> <C>
Putnam Diversified Income Trust *
1,194.198 shares Seeks income consistent with preservation $13,733 $ 15,053
of capital. The fund invests in fixed income
securities such as U.S. Government obligations,
lower rated U.S. corporate debt and debt
obligations of foreign governments.
Putnam Asset Allocation - Growth Portfolio *
198.725 shares Invests in equities and fixed income securities. 2,709 2,570
The fund is weighted more toward equity investments
that traditionally return more than fixed income
securities.
Putnam Asset Allocation - Balanced Portfolio *
402.915 shares Invests in equities and fixed income securities. 4,839 4,607
The fund takes a balanced approach between equities
and fixed income investments regarding investment
philosophy.
Putnam Asset Allocation - Conservative Portfolio *
39.128 shares Invests in equity and fixed income securities weighted 406 400
more towards the fixed income securities.
Putnam International Growth Fund *
933.642 shares Invests in companies located outside of the United 17,954 18,773
States.
$300,201 Plan Loan Receivable 7% to 10% 300,201 --
---------- ----------
TOTAL ASSETS HELD FOR INVESTMENTS $8,058,764 $6,911,677
========== ==========
</TABLE>
*Identifies party-in-interest to the Plan
17
<PAGE>
BROWN & SHARPE SAVINGS AND RETIREMENT PLAN
EIN No: 05-0113140 Plan No: 009
Line 27d SCHEDULE OF REPORTABLE TRANSACTIONS
For the Year Ended December 31, 1998
------------------------------------
Category (iii) A series of securities transactions in excess of 5% of beginning
- --------------------------------------------------------------------------------
of year net assets
- ------------------
<TABLE>
<CAPTION>
Current Value
of Asset on
Purchase Selling Cost of Transaction Net
Identity of Party Involved Description of Assets Price Price Asset Date Gain
- -------------------------- --------------------- ----- ----- ----- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Putnam Fiduciary Trust Company The George Putnam Fund of Boston *
Purchased 15,533.061 shares in
120 transactions $280,311 -- $280,311 $280,311 --
Sold 15,003.956 shares in 66
transactions -- $275,378 252,341 275,378 $23,037
Putnam Fund for Growth and Income *
Purchased 17,984.493 shares in 130
transactions 367,529 -- 367,529 367,529 --
Sold 19,345.889 shares in 77
transactions -- 387,578 365,009 387,578 22,569
Putnam Voyager Fund *
Purchased 16,608.411 shares in
135 transactions 337,902 -- 337,902 337,902 --
Sold 14,407.285 shares in 61
transactions -- 294,104 259,730 294,104 34,374
</TABLE>
18
<PAGE>
BROWN & SHARPE SAVINGS AND RETIREMENT PLAN
EIN No: 05-0113140 Plan No: 009
SCHEDULE OF REPORTABLE TRANSACTIONS (continued)
For the Year Ended December 31, 1998
------------------------------------
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
Purchase Selling Cost of Transaction Net
Identity of Party Involved Description of Assets Price Price Asset Date Gain
- -------------------------- --------------------- ----- ----- ----- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Putnam Stable Value Fund *
Purchased 843,664.439 shares in
174 transactions $843,664 -- $843,664 $843,664 --
Sold 934,084.388 shares in 93
transactions -- $934,083 934,083 934,083 --
Putnam New Opportunities Fund *
Purchased 12,977.664 shares in
150 transactions 656,667 -- 656,667 656,667 --
Sold 12,345.287 shares in 83
transactions -- 624,963 546,334 624,963 $78,629
Brown & Sharpe Manufacturing
Company
The Brown & Sharpe Stock Fund *
Purchased 19,937.993 shares in
121 transactions 189,283 -- 189,283 189,283 --
Sold 30,799.795 shares in 45
transactions -- 309,110 305,199 309,110 3,911
</TABLE>
* Identifies party-in-interest to the Plan
There were no category (i), (ii) or (iv) transactions for the year ended
December 31, 1998.
19
<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 21, 1999, 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, 1998.
ERNST & YOUNG LLP
Providence, Rhode Island
June 22, 1999
20
