-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FxUK7FpGy1gl/I1zFBmhQskolklVshlEk9MaQOsX49Xqxbvo8dfhEvrGxH/UEL0T puic8v4DMkbEEdaM80RQdw== 0000927016-99-002473.txt : 19990629 0000927016-99-002473.hdr.sgml : 19990629 ACCESSION NUMBER: 0000927016-99-002473 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990628 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BROWN & SHARPE MANUFACTURING CO /DE/ CENTRAL INDEX KEY: 0000014637 STANDARD INDUSTRIAL CLASSIFICATION: METALWORKING MACHINERY & EQUIPMENT [3540] IRS NUMBER: 050113140 STATE OF INCORPORATION: DE FISCAL YEAR END: 1229 FILING VALUES: FORM TYPE: 11-K SEC ACT: SEC FILE NUMBER: 001-05881 FILM NUMBER: 99653435 BUSINESS ADDRESS: STREET 1: PO BOX 456 STREET 2: PRECISION PK - 200 FRENCHTOWN RD CITY: NORTH KINGSTOWN STATE: RI ZIP: 02852 BUSINESS PHONE: 4018862000 11-K 1 FORM 11-K 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, 1998 ----------------- 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) 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 FOR MANAGEMENT EMPLOYEES By: /s/ Alfred J. Corso ------------------------------ Alfred J. Corso Controller (Principal Accounting Officer) 2 BROWN & SHARPE SAVINGS AND RETIREMENT PLAN FOR MANAGEMENT EMPLOYEES 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 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, 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 THE BROWN & SHARPE SAVINGS AND RETIREMENT PLAN FOR MANAGEMENT EMPLOYEES ----------------------------------------------------------------------- STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS ----------------------------------------------------
December 31, ------------ 1998 1997 ---- ---- Assets: Investments (Notes 2 and 5) $38,064,463 $30,046,038 Employer contribution receivable 1,247,835 921,526 Plan loans receivable 597,970 587,411 ----------- ----------- Net Assets Available for Plan Benefits $39,910,268 $31,554,975 =========== ===========
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS ---------------------------------------------------------------
For the years ended December 31, -------------------------------- 1998 1997 ------------ ------------ Additions - --------- Contributions Employer $ 1,866,590 $ 1,172,444 Employee 2,294,964 1,734,086 ----------- ----------- 4,161,554 2,906,530 Investment income Interest and dividends 2,356,187 2,071,943 Net realized/unrealized appreciation in fair value of investments 2,506,184 1,601,420 ----------- ----------- Total additions 9,023,925 6,579,893 Deductions - ---------- Payments to participants (1,044,489) (5,311,300) Fees (1,702) (1,151) ----------- ----------- Total deductions (1,046,191) (5,312,451) Transfers - --------- From Brown & Sharpe Employee Stock Owner- ship and Profit Participation Plan (ESOP) 28,923 59,406 From Brown & Sharpe Savings and Retirement Plan (SARP) 348,636 89,769 Transfers from other plans (Note 1) - 2,020,639 ----------- ----------- Net transfers 377,559 2,169,814 ----------- ----------- Net increase 8,355,293 3,437,256 Net assets, beginning of year 31,554,975 28,117,719 ----------- ----------- Net assets, end of year $39,910,268 $31,554,975 =========== ===========
See notes to the financial statements. 5 THE BROWN & SHARPE SAVINGS AND RETIREMENT PLAN FOR MANAGEMENT EMPLOYEES 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 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. 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. 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. 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, (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 1998 and 1997 were $1,247,835 and $921,524, 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 $20,590 and $14,295, 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 $598,165 and $236,625, 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 6 Notes to Financial Statements (continued) ----------------------------------------- Years Ended December 31, 1998 and 1997 -------------------------------------- earnings. Guaranteed interest contract account earnings are valued on a monthly basis and are allocated to participants based on a pro rated basis. 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 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. 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 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 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 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:
Description - ----------- 1998 1997 ---- ---- Investments stated at fair value: Company common stock $ 1,526,823 $ 1,616,375 Putnam Stable Value Fund 4,925,712 3,333,527 The George Putnam Fund of Boston 5,681,762 4,982,088 Putnam Fund for Growth & Income 7,300,299 6,089,609 Putnam Voyager Fund 7,436,449 5,687,376 Putnam New Opportunities Fund 10,347,530 6,714,154 Putnam Diversified Income Trust 57,915 - Putnam Asset Allocation - Growth Portfolio 17,626 - Putnam Asset Allocation - Balanced Portfolio 29,430 - Putnam International Growth Fund 229,546 - Putnam Asset Allocation - Conservative Portfolio 3,280 - Investments stated at contract value: Guaranteed interest contracts American International Life Assurance Company Contract #18181-M 508,091 1,622,909 ----------- ----------- Total investments $38,064,463 $30,046,038 =========== ===========
9 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 ----------------
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 -------- ---------- ------------ ---------- ---------- ---------- ------------- ----------- Assets: Investments $ - $1,526,823 $5,433,803 $5,681,762 $7,300,299 $7,436,449 $10,347,530 $37,726,666 Employer contribution receivable - 43,776 279,980 96,596 208,763 225,229 363,423 1,217,767 Plan loans receivable 597,970 - - - - - - 597,970 -------- ---------- ---------- ---------- ---------- ---------- ----------- ----------- Net Assets Available for Plan Benefits $597,970 $1,570,599 $5,713,783 $5,778,358 $7,509,062 $7,661,678 $10,710,953 $39,542,403 ======== ========== ========== ========== ========== ========== =========== ===========
-------------------------------------------------------------------------------- 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 ----------- ------- ---------- ------------- ------------- ------------ ------------ Assets: Investments $57,915 $17,626 $29,430 $229,546 $3,280 $337,797 $38,064,463 Employer contribution receivable 3,516 3,646 1,246 19,478 2,182 30,068 1,247,835 Plan loans receivable - - - - - - 597,970 ------- ------- ------- -------- ------ -------- ----------- Net Assets Available for Plan Benefits $61,431 $21,272 $30,676 $249,024 $5,462 $367,865 $39,910,268 ======= ======= ======= ======== ====== ======== ===========
10 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 ----------------
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 -------------- ---------- ---------- ------------ ---------- ---------- ---------- ------------- 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 ============== ========== ========== ============ ========== ========== ========== =============
11 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 ----------------------------------------------
Brown & Sharpe George Putnam Putnam Putnam New Plan Company Stable Value Putnam Growth & Income Voyager Opportunities Sub Loans Stock Fund Fund Fund Fund Fund Fund Total --------- --------------- -------------- -------------- ------------- -------------- ------------- --------- Additions - --------- Contributions Employer $ - $ 86,418 $ 343,106 $ 146,048 $ 329,085 $ 345,850 $ 571,123 $1,821,630 Employee - 108,372 194,323 166,743 427,967 532,976 813,624 2,244,005 Loan repayments (238,814) 4,924 53,902 13,562 88,617 28,277 44,820 (4,712) --------- ---------- ---------- ---------- ---------- ---------- ----------- ----------- (238,814) 199,714 591,331 326,353 845,669 907,103 1,429,567 4,060,923 Investment income Interest and dividends - 1,176 334,469 525,678 654,830 496,514 330,536 2,343,203 Net realized/ unrealized appreciation (depreciation) in fair value of investments - (296,145) - 25,385 306,056 904,198 1,562,113 2,501,607 --------- ---------- ---------- ---------- ---------- ---------- ----------- ----------- Total additions (deductions) (238,814) (95,255) 925,800 877,416 1,806,555 2,307,815 3,322,216 8,905,733 Disbursements - ------------- Payments to participants 21,880 49,355 203,799 50,438 175,650 340,493 202,874 1,044,489 Loans to participants (265,093) 15,136 22,981 35,830 48,122 68,834 74,190 - Fees - 15 247 222 369 348 493 1,694 --------- ---------- ---------- ---------- ---------- ---------- ----------- ----------- Total (disbursements) additions (243,213) 64,506 227,027 86,490 224,141 409,675 277,557 1,046,183 Transfers - --------- Transfers from ESOP - - - - 2,918 5,384 17,179 25,481 Transfers (to) from SARP 6,160 34,754 35,605 75,970 38,416 53,177 104,554 348,636 Transfers between funds - 52,768 (164,011) (139,319) (375,451) (160,166) 539,940 (246,239) --------- ---------- ---------- ---------- ---------- ---------- ----------- ----------- Net transfers 6,160 87,522 (128,406) (63,349) (334,117) (101,605) 661,673 127,878 --------- ---------- ---------- ---------- ---------- ---------- ----------- ----------- Net increase (decrease) 10,559 (72,239) 570,367 727,577 1,248,297 1,796,535 3,706,332 7,987,428 Net assets, beginning of year 587,411 1,642,838 5,143,416 5,050,781 6,260,765 5,865,143 7,004,621 31,554,975 --------- ---------- ---------- ---------- ---------- ---------- ----------- ----------- Net assets, end of year $ 597,970 $1,570,599 $5,713,783 $5,778,358 $7,509,062 $7,661,678 $10,710,953 $39,542,403 ========= ========== ========== ========== ========== ========== =========== ===========
12 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 ----------------------------------------------
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 ------------ ----------- ----------- ------------- ------------- ------------ -------------- Additions - --------- Contributions Employer $ 5,029 $ 5,736 $ 2,514 $ 29,171 $ 2,510 $ 44,960 $ 1,866,590 Employee 5,407 10,416 7,183 25,679 2,274 50,959 2,294,964 Loan repayments 3,169 - - 1,254 289 4,712 - ------- ------- ------- -------- ------- -------- ----------- 13,605 16,152 9,697 56,104 5,073 100,631 4,161,554 Investment income Interest and dividends 1,842 432 736 9,461 513 12,984 2,356,187 Net realized/unrealized appreciation (depreciation) in fair value of investments (6,120) 913 (876) 8,463 2,197 4,577 2,506,184 ------- ------- ------- -------- ------- -------- ----------- Total additions (deductions) 9,327 17,497 9,557 74,028 7,783 118,192 9,023,925 Disbursements - ------------- Payments to participants - - - - - - 1,044,489 Loans to participants - - - - - - - Fees - - - 8 - 8 1,702 ------- ------- ------- -------- ------- -------- ----------- Total (disbursements) additions - - - 8 - 8 1,046,191 Transfers Transfers from ESOP 253 1,147 261 1,528 253 3,442 28,923 Transfers (to) from SARP - - - - - - 348,636 Transfers between funds 51,851 2,628 20,858 173,476 (2,574) 246,239 - ------- ------- ------- -------- ------- -------- ----------- Net transfers 52,104 3,775 21,119 175,004 (2,321) 249,681 377,559 ------- ------- ------- -------- ------- -------- ----------- Net increase (decrease) 61,431 21,272 30,676 249,024 5,462 367,865 8,355,293 Net assets, beginning of year - - - - - - 31,554,975 ------- ------- ------- -------- ------- -------- ----------- Net assets, end of year $61,431 $21,272 $30,676 $249,024 $ 5,462 $367,865 $39,910,268 ======= ======= ======= ======== ======= ======== ===========
13 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 -----------------------------------------------
Brown & Sharpe George Putnam Putnam Putnam New Plan Company Stable Value Putnam Growth & Income Voyager Opportunities Loans Stock Fund Fund Fund Fund Fund Fund Total ----- ---------- -------------- ------ --------------- ------- -------------- ----- Additions - --------- Contributions Employer $ - $ 49,341 $ 223,692 $ 87,302 $ 213,511 $ 225,769 $ 372,829 $1,172,444 Employee - 62,170 208,833 156,248 336,276 367,710 602,849 1,734,086 Loan repayments (144,472) 1,928 25,713 8,890 32,457 25,295 50,189 - ---------- ----------- ----------- ----------- --------- ---------- ---------- ---------- (144,472) 113,439 458,238 252,440 582,244 618,774 1,025,867 2,906,530 Investment income Interest and dividends - 455 333,334 459,632 776,148 339,281 163,093 2,071,943 Net realized/ unrealized appreciation (depreciation) in fair value of investments - (567,813) - 395,110 270,957 637,170 865,996 1,601,420 ---------- ----------- ----------- ----------- --------- ---------- ---------- ---------- Total additions (deductions) (144,472) (453,919) 791,572 1,107,182 1,629,349 1,595,225 2,054,956 6,579,893 Disbursements - ------------- Payments to participants (25,692) (151,393) (2,204,242) (1,184,996) (879,065) (442,062) (423,850) (5,311,300) Loans to participants 218,702 (712) (45,751) (20,598) (29,513) (38,734) (83,394) - Forfeitures - (3,311) 8,197 (1,377) (274) (439) (2,796) - Fees - - (244) (138) (222) (196) (351) (1,151) ---------- ----------- ----------- ----------- --------- ---------- ---------- ---------- Total (disbursements) additions 193,010 (155,416) (2,242,040) (1,207,109) (909,074) (481,431) (510,391) (5,312,451) Transfers - --------- Transfers from ESOP - - 3,084 10,730 27,921 2,488 15,183 59,406 Transfers (to) from SARP - 10,229 50,676 10,956 1,893 16,179 (164) 89,769 Transfers from another Plan 51,267 - 287,147 75,055 442,904 557,288 606,978 2,020,639 Transfers between funds - (408,098) (366,074) 96,110 406,520 242,966 28,576 - ---------- ----------- ----------- ----------- --------- ---------- ---------- ---------- Net transfers 51,267 (397,869) (25,167) 192,851 879,238 818,921 650,573 2,169,814 ---------- ----------- ----------- ----------- --------- ---------- ---------- ---------- Net increase (decrease) 99,805 (1,007,204) (1,475,635) 92,924 1,599,513 1,932,715 2,195,138 3,437,256 Net assets, beginning of year 487,606 2,650,042 6 ,619,051 4,957,857 4,661,252 3,932,428 4,809,483 28,117,719 ---------- ----------- ----------- ----------- --------- ---------- ---------- ---------- Net assets, end of year $587,411 $1,642,838 $5,143,416 $5,050,781 $6,260,765 $5,865,143 $7,004,621 $31,554,975 ========== =========== =========== =========== ========= ========== ========== ==========
14 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:
1998 1997 ---- ---- Shares Amount Shares Amount ------ ------ ------ ------ Brown & Sharpe Manufacturing Company - ------------------------------------ Purchases of capital stock 233,123.44 $2,244,555 19,670.12 $243,824 Distributions of capital stock to participants 49,364.55 42,419 6,285.00 93,459 Sales of capital stock, at market value 151,568.59 1,995,553 42,190.00 590,722
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 SUPPLEMENTAL SCHEDULES ---------------------- Brown & Sharpe Savings and Retirement Plan for Management Employees EIN No. 05-0113140 Plan No. 002 Line 27a Schedule of Assets Held for Investment Purposes December 31, 1998
Shares or Face Value Description Current Value Cost ============================================================================================================================== The George Putnam Fund of Boston * 314,953.570 shares Balanced fund consisting of stocks and corporate $ 5,681,762 $ 5,279,936 and government bonds Putnam New Opportunities Fund * 177,092.752 shares Long-term growth funds consisting of stock of 10,347,530 8,055,324 certain emerging industry groups that in Putnam Investments' view offer long-term growth potential Putnam Voyager Fund * 339,254.069 shares A combination of stocks of small companies expected 7,436,449 6,113,869 to grow over time in addition to stocks of larger more established corporations Brown & Sharpe Company Stock Fund * 190,852.833 shares Consisting of 190,852.833 shares of Brown & Sharpe 1,526,823 1,855,476 Class A & B Common Stock Putnam Fund for Growth & Income * 356,285.942 shares A combination of attractive priced stocks of 7,300,299 6,758,528 companies viewed by Putnam to offer long-term growth potential while also providing income Brown & Sharpe Stable Value Fund $508,091 face value American International Life Assurance Company 508,091 508,091 4,925,712 shares Putnam Stable Value Fund* 4,925,712 4,925,712 ----------- ----------- 5,433,803 5,433,803 ----------- ----------- SUB TOTAL ASSETS HELD FOR INVESTMENTS $37,726,666 $33,496,936 =========== ===========
*Identifies party-in-interest to the Plan 16 Brown & Sharpe Savings and Retirement Plan for Management Employees EIN No. 05-0113140 Plan No. 002 Line 27a Schedule of Assets Held for Investment Purposes (continued) December 31, 1998
Shares or Face Value Description Current Value Cost ============================================================================================================================== Putnam Diversified Income Trust * 5,036.107 shares Seeks income consistent with preservation $ 57,915 $ 60,870 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 * 1,293.188 shares Invests in equities and fixed income securities. 17,626 16,810 The fund is weighted more toward equity investments that traditionally return more than fixed income securities Putnam Asset Allocation - Balanced Portfolio * 2,450.498 shares Invests in equities and fixed income securities. 29,430 29,446 The fund takes a balanced approach between equities and fixed income investments regarding investment philosophy. Putnam Asset Allocation - Conservative Portfolio * 315.972 shares Invests in equity and fixed income securities weighted more towards the fixed income securities. 3,280 3,233 Putnam International Growth Fund * 11,936.880 shares Invests in companies located outside of the United 229,546 222,374 States. $597,970 Plan Loan Receivable 7% to 10.25% 597,970 - ----------- ----------- TOTAL ASSETS HELD FOR INVESTMENTS $38,662,433 $33,829,669 =========== ===========
* Identifies party-in-interest to the Plan 17 BROWN & SHARPE SAVINGS AND RETIREMENT PLAN FOR MANAGEMENT EMPLOYEES EIN No. 05-0113140 Plan No. 002 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 - ------------------
Current Value of ---------------- Identity of Party Involved Description of Assets Purchase Price Selling Price Cost of Asset Asset on Transaction Net Gain - -------------------------- --------------------- -------------- -------------- ------------- -------------------- -------- Date (Loss) ---- ------ Putnam Fiduciary Trust Company The George Putnam Fund of Boston * Purchased 89,834.462 shares in 105 transactions $1,641,408 - $1,641,408 $1,641,408 - Sold 51,971.460 shares in 75 transactions - $ 967,120 934,703 967,120 $32,417 Putnam Fund for Growth and Income * Purchased 196,327.821 shares in 157 transactions 3,960,462 - 3,960,462 3,960,462 - Sold 151,690.250 shares in 123 transactions - 3,055,828 3,010,239 3,055,828 45,589 Putnam Voyager Fund * Purchased 154,693.346 shares in 148 transactions 3,122,169 - 3,122,169 3,122,169 - Sold 113,989.220 shares in 117 transactions - 2,277,294 2,210,506 2,277,294 66,788
18 BROWN & SHARPE SAVINGS AND RETIREMENT PLAN FOR MANAGEMENT EMPLOYEES EIN No. 05-0113140 Plan No. 002 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 (continued) - ------------------------------
Current Value of ---------------- Identity of Party Involved Description of Assets Purchase Price Selling Price Cost of Asset Asset on Transaction Net Gain - --------------------------- ------------------------ -------------- ------------- ------------- -------------------- -------- Date (Loss) ---- ------ Putnam Stable Value Fund * Purchased 9,183,679.250 shares in 214 transactions $9,183,679 - $9,183,679 $9,183,679 - Sold 8,706,311.750 shares in 146 transactions - $8,706,312 8,706,312 8,706,312 - Putnam New Opportunities Fund * Purchased 110,714.219 shares in 169 transactions 5,654,198 - 5,654,198 5,654,198 - Sold 71,630.800 shares in 126 transactions - 3,582,935 3,529,007 3,582,935 $ 53,928 Putnam International Growth Fund * Purchased 111,816.470 shares in 112 transactions 2,048,578 - 2,048,578 2,048,578 - Sold 99,879.590 shares in 32 transactions - 1,827,495 1,826,204 1,827,495 1,291 Brown & Sharpe Stock Fund * Purchased 233,123.444 shares in 111 transactions 2,244,555 - 2,244,555 2,244,555 - Sold 200,933.140 shares in 70 transactions - 2,037,972 1,993,790 2,037,972 44,182
* Identifies party-in-interest to the Plan There were no category (i), (ii) or (iv) transactions for the year ended December 31, 1998. 19 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 21, 1999, 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, 1998. ERNST & YOUNG LLP Providence, Rhode Island June 22, 1999 20 -----END PRIVACY-ENHANCED MESSAGE-----