-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, j+qzIu1C6uAbgFviHI3qeSyq0bUvXA4dPfzdzvdOhRdw//FwmJj+RlA7U103raZf JJtQiXFwFyevdgQUdZ0xng== 0000950109-94-001664.txt : 19940910 0000950109-94-001664.hdr.sgml : 19940910 ACCESSION NUMBER: 0000950109-94-001664 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19940702 FILED AS OF DATE: 19940907 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BROWN & SHARPE MANUFACTURING CO /DE/ CENTRAL INDEX KEY: 0000014637 STANDARD INDUSTRIAL CLASSIFICATION: 3540 IRS NUMBER: 050113140 STATE OF INCORPORATION: DE FISCAL YEAR END: 1229 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-05881 FILM NUMBER: 94548174 BUSINESS ADDRESS: STREET 1: PO BOX 456 STREET 2: PRECISION PK - 200 FRENCHTOWN RD CITY: NORTH KINGSTOWN STATE: RI ZIP: 02852 BUSINESS PHONE: 4018862000 10-Q/A 1 FORM 10-Q/A SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q/A AMENDMENT NO. 1 TO FORM 10-Q Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For Quarter Ended July 2, 1994 ------------ Commission file number 1-5881 ------ BROWN & SHARPE MANUFACTURING COMPANY ------------------------------------ (Exact name of registrant as specified in its charter) Delaware 050113140 -------- --------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) Precision Park, 200 Frenchtown Road, North Kingstown, Rhode Island 02852 ------------------------------------------------------------------------ (Address of principal executive offices and zip code) (401) 886-2000 -------------- (Registrant's telephone number, including area code) The registrant hereby amends Form 10-Q (Date of Report: August 15, 1994) to read in their respective entireties hereto. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes x No ------- ------- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date; 4,651,952 Class A common shares, 541,463 Class B common shares, par value $1, outstanding as of July 2, 1994. BROWN & SHARPE MANUFACTURING COMPANY ------------------------------------ CONSOLIDATED STATEMENT OF INCOME (LOSS) --------------------------------------- (Dollars in Thousands Except Share and Per Share Data) (Unaudited)
For the Quarter Ended For the Half-Year Ended ------------------------ ------------------------ July 2, June 26, July 2, June 26, 1994 1993 1994 1993 ----------- ----------- ----------- ----------- Net sales $43,152 $40,003 $79,811 $79,761 Cost of goods sold 29,397 26,521 55,337 54,969 Selling, general and administrative expense 13,610 12,179 25,871 22,923 ------- ------- ------- ------- Operating profit (loss) 145 1,303 (1,397) 1,869 Interest expense (1,443) (1,329) (2,723) (2,461) Other income, net 130 241 178 2,035 ------- ------- ------- ------- Income (loss) before income taxes (1,168) 215 (3,942) 1,443 Income tax provision 200 -- 300 -- ------- ------- ------- ------- Net income (loss) $(1,368) $ 215 $(4,242) $ 1,443 ======= ======= ======= ======= Primary and fully diluted income (loss) per common share $(.26) $.04 $(.83) $.29 ======= ======= ======= ======= Weighted average shares outstanding during the period 5,191,299 4,971,148 5,114,403 4,968,758 ========= ========= ========= =========
The accompanying notes are an integral part of the financial statements. BROWN & SHARPE MANUFACTURING COMPANY ------------------------------------ CONSOLIDATED BALANCE SHEET -------------------------- (Dollars in Thousands) (Unaudited)
July 2, 1994 December 25,1993 ------------- ----------------- ASSETS Current Assets: Cash and cash equivalents $ 2,283 $ 2,094 Restricted cash 6,147 6,078 Accounts receivable, net of allowances for doubtful accounts of $2,625 and $1,320 42,724 44,525 Inventories 59,844 53,963 Prepaid expenses and other current assets 4,233 3,031 -------- -------- Total current assets 115,231 109,691 Property, plant and equipment: Land 6,679 6,398 Buildings and improvements 34,052 32,315 Machinery and equipment 86,082 77,053 -------- -------- 126,813 115,766 Less-accumulated depreciation 81,114 72,212 -------- -------- 45,699 43,554 Other assets 13,146 12,626 -------- -------- $174,076 $165,871 ======== ======== LIABILITIES AND SHAREOWNERS' EQUITY Current Liabilities: Notes payable and current installments of long-term debt $ 38,859 $ 31,804 Accounts payable 12,351 12,716 Accrued expenses and income taxes 20,754 19,146 -------- -------- Total current liabilities 71,964 63,666 Long-term debt 33,806 32,696 Deferred income taxes 1,891 1,763 Unfunded accrued pension cost 4,724 4,226 Shareowners' Equity: Preferred stock, $1 par value; authorized 1,000,000 shares -- -- Common stock: Class A, par value $1; authorized 15,000,000 shares; issued 4,659,444 shares in 1994 and 4,431,890 shares in 1993 4,659 4,432 Class B, par value $1; authorized 2,000,000 shares; issued and outstanding 541,463 shares in 1994 and 547,604 shares in 1993 541 548 Additional paid in capital 46,999 45,710 Earnings employed in the business 135 4,377 Cumulative foreign currency translation adjustment 10,176 9,394 Treasury stock: 7,492 shares in 1994 and 8,076 in 1993 at cost (151) (163) Unearned compensation (668) (778) -------- -------- Total shareowners' equity 61,691 63,520 -------- -------- $174,076 $165,871 ======== ========
The accompanying notes are an integral part of the financial statements. BROWN & SHARPE MANUFACTURING COMPANY ------------------------------------ CONSOLIDATED STATEMENT OF CASH FLOWS ------------------------------------ (Dollars in Thousands) (Unaudited)
For the Half Year Ended ------------------------ July 2, 1994 June 26, 1993 ------------ ------------- Cash Provided by (Used in) Operations: Net income (loss) $(4,242) $ 1,599 Adjustment for Noncash Items: Depreciation and amortization 2,884 3,082 Pension credits and charges 224 150 Deferred income taxes 100 (500) Gain on sale of operations -- (2,182) Changes in Working Capital: Accounts receivable 3,717 (4,715) Inventories 1,106 (421) Prepaid expenses and other current assets (457) (1,353) Accounts payable and accrued expenses (3,991) 4,311 ------- ------- Cash Provided by (Used in) Operations (659) (29) ------- ------- Investment Transactions: Capital expenditures (1,363) (1,971) Proceeds from sale of operations -- 8,700 Cash equivalent pledged (69) (3,000) Other investing activities (213) 62 ------- ------- Cash Provided by (Used in) Investment Transactions (1,645) 3,791 ------- ------- Financing Transactions: Increase in long-term and short-term debt 4,902 1,081 Payment of long-term and short-term debt (2,276) (2,535) Other financing activities 395 -- ------- ------- Cash Provided by (Used in) Financing Transactions 3,021 (1,454) ------- ------- Effect of Exchange Rate Changes on Cash (528) (29) ------- ------- Cash and Cash Equivalents: Increase (decrease) during the period 189 2,279 Beginning balance 2,094 4,640 ------- ------- Ending balance $ 2,283 $ 6,919 ======= ======= Supplementary Cash Flow Information: Interest paid $ 2,547 $ 1,906 ======= ======= Taxes paid $ 730 $ 769 ======= =======
The accompanying notes are an integral part of the financial statements. BROWN & SHARPE MANUFACTURING COMPANY ------------------------------------ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ------------------------------------------ (Dollars in Thousands) 1. Financial statements for interim periods are unaudited and include all adjustments which are of a normal recurring nature which, in the opinion of management, are necessary for a fair statement of the results for the interim periods. 2. The Company operates and reports with its accounting year ending on the last Saturday of the calendar year. Thus, most years encompass 52 weeks with an occasional year encompassing 53 weeks. This results in most accounting quarters of 13 weeks with one quarter in the 53 week year including 14 weeks. The year 1994 will include 53 weeks and the first quarter and first half of 1994 include 14 weeks and 27 weeks, respectively. This compares to 1993 having 13 weeks in each quarter and 52 weeks in the year. 3. During the first quarter of 1994, the Company changed its method of accounting from the completed contract method to the percentage-of- completion accounting method for its large machinery construction contracts for its European operations. This conforms the worldwide accounting to the U.S. reporting percentage-of-completion basis. Management believes that this method more appropriately reports revenue and costs in related accounting periods rather than recognizing substantially all revenue and cost at the time of shipment. Information with respect to the quarter and half year ended June 26, 1993 and the year ended December 25, 1993 has been restated to reflect this change in accounting. The effect of this restatement was to increase retained earnings at December 25, 1993 by $294. Net income for the second quarter and half year of 1994 was reduced by $573 ($.11 per share) and $409 ($.08 per share), respectively, and net income in the second quarter and first half of 1993 was increased by $143 ($.03 per share) and reduced by $156 ($.03 per share), respectively. 4. Income taxes include provisions for federal, foreign and state income taxes and is based on the Company's estimate of effective income tax rates for the full year. The current tax provision for the first half of 1994 is $300. The tax provision for the first half of 1993 was $500 which was offset by a $500 due to reductions in deferred tax liabilities as a result of losses in certain of the Company's European subsidiaries. 5. Earnings (loss) per share is based upon the weighted average number of common shares outstanding for the periods presented since inclusion of common stock equivalents would be antidilutive. Fully diluted earnings per share are not materially different. 6. Certain information in 1993 has been reclassified to conform to the 1994 presentation. 7. Brown & Sharpe Manufacturing Company through its subsidiary Brown & Sharpe International Capital Corporation purchased, on March 24, 1994, the stock of the French company Ets. Pierre Roch, S.A. (Roch) and its German sister company, Mauser Prazisions - Messmittel GmbH, which together manufacture and market micrometers, calipers, height gages, digital indicators, and other similar precision measuring instrument products. The business is headquartered in Luneville, France which is its sole manufacturing site. The German operation is a sales office. These operations were purchased from Diehl GmbH & Co. of Nurnberg, Germany ("Diehl"). The Company intends to continue using the acquired assets in businesses in which they have been previously employed. The purchase price was delivery to Diehl of 175,000 shares of Brown & Sharpe Class A Common Stock, subject to certain post closing adjustments and granting Diehl the right to receive additional 50,000 shares of such stock in the event the Company's Class A Common Stock attains a market price of $15 or more per share for a total of 30 days or more during any twelve month period within the five years following the purchase. The purchase price was determined through negotiation by the parties subject to adjustment based on specified closing balance sheet changes. Roch entered into a nine year lease agreement to lease the Luneville facility from Societe Immobiliere Lunevilloise S.A.R.L., a subsidiary of Diehl, for about $34,000 annually and has options to purchase the facility during the lease term at the unamortized value remaining on the lease. The acquisition has been accounted for by the purchase method of accounting, and accordingly, the purchase price has been allocated to assets acquired and liabilities assumed based on an estimate of their fair values at the date of acquisition. The book value of the net assets exceeded the purchase price before allocation by approximately $2,100. The estimated fair values of assets and liabilities after allocation are summarized as follows: Cash $1,408,000 Accounts receivable 2,647,000 Inventory 3,398,000 Machinery and equipment 726,000 Other assets 267,000 Accounts payable and accruals 3,988,000 Short-term debt 1,511,000 Long-term debt 1,250,000 Pensions 516,000 ---------- $1,181,000 ==========
The Company's unaudited combined results of operations for the half year ended July 2, 1994 and the year ended December 25, 1993 on a pro forma basis assuming the acquisition of Roch occurred at the beginning of 1994 and 1993, respectively are as follows:
First Half Year Year 1994 1993 ---------- --------- Net sales $82,706 $167,323 Net (loss) $(4,147) $ (2,004) Primary and fully diluted (loss) per common share $ (.81) $ (.39)
8. On June 27, 1994, Brown & Sharpe Manufacturing Company ("Brown & Sharpe" or the "Company") and Finmeccanica S.p.A. ("Finmeccanica") announced that they have signed a definitive Acquisition Agreement providing for the combination of the DEA metrology business of Finmeccanica (the "DEA Group") with the Brown & Sharpe Measuring Systems Division. The DEA Group, headquartered in Turin, Italy, manufactures and markets worldwide a variety of types of coordinate measuring machines and systems ("CMM's") with 1993 worldwide sales and operating profit of approximately $112 million and $5.5 million, respectively. The transaction will expand the Company's combined business line of CMM products, strengthen its CMM distribution capability worldwide, augment its R&D capability, and provide for other benefits. The transaction will be accomplished by Brown & Sharpe acquiring from Finmeccanica all of the capital stock of DEA S.p.A., which owns the various companies, business units and assets comprising the DEA Group, in exchange for 3,450,000 shares of Brown & Sharpe's Class A Common Stock. At the closing date, DEA will have debt of about $13.8 million. The purchase price is subject to a post-closing adjustment pursuant to an adjustment formula based upon a comparison of the adjusted net asset value (as defined) of DEA and its subsidiaries at June 30, 1993 and the adjusted net asset value as of July 31, 1994 (as defined and calculated in accordance with a formula), and after reflecting certain specified adjustments in the Acquisition Agreement. In connection with this transaction, Brown & Sharpe and Finmeccanica will enter into a Shareholders Agreement that, among other things, provides that Finmeccanica will not sell its shares of Brown & Sharpe stock to any person other than Brown & Sharpe for a specified period and to afford Brown & Sharpe certain rights of first refusal with respect thereto for a further specified period. In addition, Finmeccanica is prohibited from acquiring any additional Brown & Sharpe shares until December 31, 1998 (or earlier under certain circumstances) other than to maintain its percentage of ownership of the outstanding capital stock of Brown & Sharpe at approximately 40%. With respect to governance, Brown & Sharpe has agreed to increase the total number of directors from seven to ten and nominate three persons selected by Finmeccanica so long as Finmeccanica owns at least 1,250,000 shares of the Company's stock. The transaction has been approved by the Board of Directors of each party. The statutory waiting period with respect to the proposed transaction under the Hart-Scott-Rodino Antitrust Improvements Act has expired through early termination by the pre-merger offer of the Federal Trade Commission. Completion of the transaction is subject to, among other things, receiving relevant governmental approvals in applicable countries, obtaining financing arrangements which are satisfactory to Brown & Sharpe, and approval by the Brown & Sharpe shareholders. Financing arrangements anticipated by the Company include completion of an $8.5 million, five-year mortgage loan secured by North Kingstown, Rhode Island facility, obtaining $25.0 million of three-year unsecured term loans, which are presently being negotiated with two banks, and guaranteed by Finmeccanica, and replacing the present $15.0 million revolving credit facility with a $25.0 million revolving credit facility. The Company expects to schedule a special shareholders meeting and complete the transaction in September; however, there can be no assurances that the conditions to the consummation of the contemplated transaction pursuant to the Acquisition Agreement will be satisfied. BROWN & SHARPE MANUFACTURING COMPANY ------------------------------------ Part I - Item 2 MANAGEMENT'S DISCUSSION AND ANALYSIS - - --------------- OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ------------------------------------------------ The following table sets forth the percentage of net sales of Brown & Sharpe represented by the components of income and expense for the quarters and half years ended July 2, 1994 and June 26, 1993:
Quarter Ended Half-Year Ended ------------- --------------- July 2 June 26 July 2 June 26 1994 1993 1994 1993 ------- ------- ------- ------- Net sales 100.0% 100.0% 100.0% 100.0% Cost of goods sold 68.1 66.3 69.3 69.0 Selling, general and administrative expense 31.6 30.4 32.5 28.7 ----- ---- ----- ---- Operating profit (loss) .3 3.3 (1.8) 2.3 Interest expense 3.3 3.3 3.3 3.1 Other income, net .3 .5 .2 2.6 ----- ---- ----- ---- Income (loss) before income taxes (2.7) .5 (4.9) 1.8 Income tax provision (benefit) .5 -- .4 -- ----- ---- ----- ---- Net income (loss) (3.2) .5 (5.3) 1.8 ===== ==== ===== ====
RESULTS OF OPERATIONS (Quarter Ended July 2, 1994 compared to Quarter Ended June 26, 1993) Orders during the second quarter of 1994 totaled $46.8 million compared to $41.1 million for the second quarter of 1993. Roch and its affiliate company, which was acquired on March 24, 1994, represented $2.5 million in orders during the second quarter of 1994. The machine tool spare parts and rebuild operations, sold near the end of the first quarter of 1993, represented $.2 million in orders during the second quarter of 1993, and foreign currency fluctuations caused a $.4 million increase in second quarter 1994 orders compared to second quarter 1993. Excluding the effect of these items, orders increased 7.3% to $43.9 million in the second quarter of 1994 from $40.9 million in the second quarter of 1993. Sales efforts have resulted in an increasing number of large value orders in the U.S. Orders for machines increased in 1994 from the canning industry for Custom Metrology Division ("CM") equipment the Precision Measuring Instruments Division ("PMI") had increasing orders, primarily from its European distributors. Backlog at July 2, 1994 increased to $31.6 million compared to $27.5 million at the end of the first quarter of 1994, $26.1 million at year-end 1993, and $25.9 million at the end of the first half- year of 1993. Net Sales. Net sales in the second quarter of 1994 were $43.2 million, compared to $40.0 million in the second quarter of 1993. Roch and its affiliate represented $2.3 million of sales during the second quarter of 1994. Approximately $.2 million of second quarter 1993 net sales were attributable to machine tool spare parts and rebuild operations which businesses were sold during the first half of 1993. Foreign currency exchange rate fluctuations caused an increase in net sales in the second quarter of 1994 of $.4 million as compared to the second quarter of 1993. Excluding the effect of these items, second quarter 1994 net sales increased approximately $.7 million from second quarter 1993 sales. A decline in net sales occurred in the Measuring Systems Division ("MS"). MS net sales in the second quarter were 3.1% below the second quarter of 1993. Increasing orders in the U.S. have been for larger value, larger size machines which are not generally included in sales until subsequent quarters due to required lead times. Net sales of PMI and CM products increased from the prior year primarily due to the resolution of the financial difficulties of a German distributor, which had depressed net sales during their reorganization in the prior period. Gross Profit. Gross profit margin decreased to 31.9% in the second quarter of 1994 from 33.7% in the second quarter of 1993. The comparative decline resulted principally from effect of a LIFO inventory liquidation benefit of $.5 million recorded in the second quarter of 1993. Selling, General and Administrative Expense. Selling, general and administrative ("SG&A") expense in the second quarter of 1994, at $13.6 million, or 31.6% of net sales, increased from the $12.2 million, or 30.4% of net sales, incurred in the comparable period in 1993. The increase was primarily due to the addition of Roch selling, general and administration costs since acquisition in late March 1994 of about $.6 million and due to the Company's recording of a provision increasing the allowance for uncollectible accounts receivable by approximately $.6 million for collection uncertainties arising from one prior sale to a single customer. Operating Profit (Loss). Brown & Sharpe generated an operating profit of $.1 million in the second quarter of 1994. This compared to an operating profit of $1.3 million in the second quarter of 1993. In the United States, operating profit for the second quarter of 1994 totaled $1.4 million as compared to an operating profit of $2.0 million in the second quarter of 1993. Foreign operations generated an operating loss of $1.3 million in the second quarter of 1994 as compared to an operating loss of $.7 million in the second quarter of 1993. The lower operating profit in the United States in the 1994 period as compared to the 1993 period was substantially due to the LIFO inventory liquidation benefit in the 1993 period. The greater operating loss in foreign operations was the result of a combination of factors at Brown & Sharpe's German CMM operations, including the $.6 million reserve for an account receivable, lower shipments, lower overhead absorption because of reduced production and a shift in the mix of products shipped. The larger German loss was partially offset by improvement at Brown & Sharpe PMI, headquartered in Switzerland. Interest Expense. Interest expense totaled $1.4 million in the second quarter of 1994 compared to $1.3 million in the second quarter of 1993. This increase reflects a $6.9 million increase in the average balance of borrowings, primarily in the United States, which was partially offset by lower interest rates. Other Income, Net. Other income, net was $130,000 in the second quarter of 1994 compared to $241,000 in the second quarter of 1993. Income Tax Provision. The provision for income taxes was $.2 million in the second quarter of 1994 compared to none provided in the second quarter of 1993. This primarily results from tax provisions in countries with profits in 1994 without similar profits in 1993. Net Income (Loss). As a result of the foregoing, Brown & Sharpe had a net loss of $1.4 million ($.26 net loss per share) in the second quarter of 1994, compared to net income of $.2 million ($.04 net income per share) in the second quarter of 1993. Brown & Sharpe expects to report a net loss for the third quarter of 1994 primarily resulting from the effect of normally low sales volume due to vacations, shutdowns, etc. in the third quarter. Upon the expected consummation of the DEA Acquisition, the expected net loss in the third quarter would be increased by certain restructuring accruals associated with the integration of the DEA business. RESULTS OF OPERATIONS (Half-Year Ended July 2, 1994 compared to Half-Year Ended June 26, 1993) Orders during the first half-year of 1994 totaled $84.7 million compared to $78.1 million for the first half-year of 1993. Roch and its affiliate company which was acquired on March 24, 1994, represented $2.5 million in orders during the first half of 1994. The machine tool spare parts and rebuild operations, sold near the end of the first quarter of 1993, represented $1.9 million in orders during the first half of 1993, and foreign currency fluctuations had very little impact on the comparable 1994 and 1993 periods. Excluding the effect of these items, orders increased 7.9% to $82.2 million in the first half-year of 1994 from $76.2 million in the first half-year of 1993. Sales efforts have resulted in an increasing number of larger value orders in the U.S. Orders for machines increased in 1994 from the canning industry for CM equipment and PMI had increasing orders primarily from its European distributors. MS orders were slightly higher in the first half of 1994 than in the first half of 1993. Backlog at July 2, 1994 increased to $31.6 million compared to $26.1 million at year-end 1993 and $25.9 million at the end of the first half-year of 1993. Net Sales. Net sales in the first half of both 1994 and 1993 were $79.8 million. Roch and its affiliate represented $2.3 million in sales during the first half of 1994. Approximately $1.9 million of first half 1993 net sales were attributable to machine tool spare parts and rebuild operations which businesses were sold during the first half of 1993. Foreign currency exchange rate fluctuations caused an increase in net sales in the first half of 1994 of $.3 million as compared to the first half of 1993. Excluding the effect of these items, first half 1994 net sales declined approximately $.7 million from first half 1993 sales. A decline in net sales occurred in MS. MS net sales in the half-year were 8.6% below the first half of 1993, largely as a result of entering 1993 with a larger backlog than at the beginning of 1994. In 1994, increasing U.S. orders have been received for larger value, larger size machines which are not generally included in sales until subsequent quarters due to required lead times. Net sales of PMI and CM products increased from the prior year primarily due to the resolution of the financial difficulties of a German distributor, which had depressed net sales in the prior period. Gross Profit. Gross profit margin decreased to 30.7% in the first half of 1994 from 31.0% in the first half of 1993. The decline resulted in part from a LIFO inventory liquidation benefit of $.5 million recorded in the first half of 1993, which was partially offset by reduced design engineering costs in 1994 in PMI of about $.2 million. Selling, General and Administrative Expense. Selling, general and administrative ("SG&A") expense in the first half of 1994, at $25.9 million or 32.5% of net sales, increased from the $22.9 million, or 28.7% of net sales, incurred in the comparable period in 1993. Nearly all of the increase was due to special items including an extra week of expenses of about $1 million in the first half of 1994 as compared to the first half of 1993, the receipt of litigation settlement proceeds in the first half of 1993 of about $.5 million, the addition of Roch selling, general and administrative costs since acquisition in late March 1994 of about $.6 million and the recording in the second quarter of 1994 of a provision increasing the allowance for uncollectible accounts receivable by approximately $.6 million for collection uncertainties arising from one prior sale to a single customer. Operating Profit (Loss). Brown & Sharpe generated an operating loss of $1.4 million in the first half of 1994. This compared to an operating profit of $1.9 million in the first half of 1993. In the United States, operating profit for the first half of 1994 totaled $1.2 million as compared to an operating profit of $2.8 million in the first half of 1993. Foreign operations generated an operating loss of $2.6 million in the first half of 1994 as compared to an operating loss of $.9 million in the first half of 1993. The lower operating profit in the United States in the 1994 period as compared to the 1993 period was substantially due to the receipt of litigation settlement proceeds and the LIFO inventory liquidation benefit in the 1993 period, as well as an extra week of selling, general and administrative expense in the 1994 period. Brown & Sharpe believes that its normal sales pattern would not generally result in proportionate increases in net sales in a twenty-seven week half year as compared to a twenty-six week half year. The greater operating loss in foreign operations was the result of a combination of factors at Brown & Sharpe's German CMM operations, including the $.6 million reserve for an account receivable, lower shipments, lower overhead absorption because of reduced production and a shift in the mix of products shipped. The larger German loss was partially offset by improvement at Brown & Sharpe PMI, headquartered in Switzerland. Interest Expense. Interest expense totaled $2.7 million in the first half of 1994 compared to $2.5 million in the first half of 1993. This increase reflects a $9.7 million increase in the average balance of borrowings, primarily in the United States, which was partially offset by lower interest rates averaging 4.0% in the first half of 1994 as compared to 4.2% in the first half of 1993. Other Income, Net. Other income, net was $178,000 in the first half of 1994 and $2.8 million in the first half of 1993. The 1993 first half included a gain of approximately $2.0 million on the sale of certain small business operations near the end of the first quarter, partially offset by foreign exchange losses. Income Tax Provision. The provision for income taxes was $.3 million in the first half of 1994 compared to $.5 million in the first half of 1993. The 1993 provision was offset by deferred tax benefits of $.5 million due to reductions in deferred tax liabilities as a result of losses in certain of Brown & Sharpe's European subsidiaries. Net Income (Loss). As a result of the foregoing, Brown & Sharpe had a net loss of $4.2 million ($.83 net loss per share) in the first half of 1994, compared to net income of $1.4 million ($.29 net income per share) in the first half of 1993. Brown & Sharpe expects to report a net loss for the third quarter of 1994 primarily resulting from the effect of normally low sales volume due to vacations, shutdowns, etc. in the third quarter. Upon the expected consummation of the DEA Acquisition, the expected net loss in the third quarter would be increased by certain restructuring accruals associated with the integration of the DEA business. LIQUIDITY AND CAPITAL RESOURCES In recent years, Brown & Sharpe has met its liquidity needs, including capital expenditures, working capital needs and the funding of operating losses, through cash generated from operations, sale proceeds of discontinued businesses, borrowings under secured and unsecured lines of credit and a renewable secured $15.0 million two-year revolving credit facility entered into in June 1993 (the "Foothill Facility"). Amounts outstanding under the lines of credit are payable on demand, and certain of the lines extended to Brown & Sharpe's foreign subsidiaries are secured by restricted cash balances and other assets. The Foothill Facility provides for borrowings based on a percentage of eligible domestic accounts receivable and finished inventory, is secured by substantially all domestic assets (including the stock of domestic subsidiaries and 65% of the stock of certain foreign subsidiaries), and requires maintenance of a minimum current ratio, a maximum ratio of debt to adjusted net worth, minimum adjusted net worth and minimum working capital. At July 2, 1994, Brown & Sharpe had borrowings of $25.4 million under the lines of credit including $2.0 million of overdraft borrowings netted against cash deposits in determining availability under lines of credit and $11.4 million borrowed under the Foothill Facility, compared to total lines of credit at that date of $29.2 million and the $15.0 million Foothill Facility. At July 2, 1994, Brown & Sharpe was required to maintain an aggregate of $6.1 million in restricted cash balances to support certain of the foreign lines of credit. The Three-Year Guaranteed Term Loans and the Revolving Credit Facility, each of which is conditioned on the DEA Acquisition, will result in substantially improved liquidity of the Combined Company as compared to Brown & Sharpe. To provide additional liquidity, pending the DEA Acquisition and the balance of the New Financing, Brown & Sharpe recently entered into a commitment letter for an $8.5 million, five-year North Kingstown mortgage, secured by Brown & Sharpe's North Kingstown, Rhode Island facility. The North Kingstown Mortgage bears interest at 8.75% with annual amortization based on a ten-year schedule and the remaining balance is due at maturity. Closing on this financing, expected near the end of August, is subject to completion of a property survey, an environmental survey that already has been completed and accepted, and appropriate loan documentation. In conjunction with the planned acquisition of DEA, the Company had filed an S-1 Registration Statement for a public offering of $75.0 million Senior Notes (the "Senior Notes"). However, the Company has decided to shift to the New Financing described below, which is expected to have lower aggregate interest changes and other fees than would the Senior Notes. As part of the New Financing, the Company has received written commitments from two banks to provide $25.0 million of Three-Year Guaranteed Term Loans. The banks' commitments for the term loans are contingent upon receipt of a full guarantee from Finmeccanica and completion of the DEA Acquisition. The interest rate is expected to be floating at approximately 75 basis points over LIBOR or the banks' cost of funds. The Company has also received written assurances from five Italian banks for the continuation of their existing demand lines of credit to DEA totaling $10.0 million. Brown & Sharpe is also negotiating with a number of other foreign banks to provide additional working capital lines of credit for DEA. Also, to provide for working capital needs expected after the DEA Acquisition, Brown & Sharpe is negotiating with several financial institutions to enter into a secured Revolving Credit Facility which will provide for borrowings by Brown & Sharpe of up to $25.0 million, subject to borrowing base limitations. The Company has received a written commitment from one of the financial institutions. Availability under the Revolving Credit Facility commitment is subject to completion of the DEA Acquisition, the Three-Year Guaranteed Term Loans and appropriate loan documentation. Brown & Sharpe expects that if obtained, the Revolving Credit Facility will be secured by a first priority lien, subject to certain permitted encumbrances, on domestic accounts receivable and inventory, a second position on the North Kingstown facility and certain equipment utilized there, and a portion of the shares of certain of Brown & Sharpe's subsidiaries, will have a term of three years and will bear interest at a floating rate. It is anticipated that with the New Financing, all existing Brown & Sharpe long-term debt (including current maturities of long-term debt) of $35.6 million and $6.5 million of Italian government subsidized long-term debt acquired in the DEA Acquisition will be retained. The Combined Company's long-term debt will be increased by new long-term debt including $25.0 million from the guaranteed Three-Year Term Loans and $8.5 million from the North Kingstown Mortgage. The $31.5 million net proceeds (after guarantee fees, professional fees and other expenses) from these new financings would be utilized to repay certain existing Brown & Sharpe short-term debt and, the U.S. short-term debt acquired in the DEA Acquisition. Additionally, the Combined Company will expend $1.3 million for costs, primarily for professional fees, associated with the DEA Acquisition. Following the expected completion of the DEA Acquisition and the New Financing arrangements, management believes that the availability of borrowings, together with cash flow from current levels of operations and anticipated cost savings from the integration of DEA, Roch and Mauser, will be sufficient to meet operational cash requirements (including one-time costs in integrating Roch, Mauser and DEA), working capital requirements and planned capital expenditures well into 1997. However, failure to achieve anticipated cost savings from the integration of DEA, Roch and Mauser, or unexpected delays in or costs related to the integration, could have a material adverse affect on Brown & Sharpe's liquidity. Cash Flow. In the first half of 1994, operations used cash of $.7 million; the net loss of $4.2 million was offset by accounts receivable collections from typically higher sales near the end of the preceding fourth quarter. In the first half of 1994, investment transactions used cash of $1.6 million, of which capital expenditures were $1.4 million, whereas, investment transactions provided cash of $3.8 million in the first half of 1993 with proceeds from the sale of the spares and rebuild operations of $8.7 million being partially offset by capital expenditures of $2.0 million amongst other transactions. Cash provided from financing transactions was $3.0 million in the first half of 1994 compared to cash used of $1.5 million in the first half of 1993. Working Capital. Working capital was $43.3 million at the end of the first half of 1994 compared to $46.0 million at the end of 1993. This change resulted largely from the timing of sales during the respective periods with higher sales in December of 1993 resulting in higher accounts receivable. Inventories increased to $59.8 million at July 2, 1994, an increase of $5.8 million from the end of 1993 which did not require a substantial use of cash because it primarily resulted from Brown & Sharpe's purchase of Roch and Mauser in the first quarter of 1994 using Brown & Sharpe Shares of Class A Common Stock. Also, debt increased at July 2, 1994 as compared to December 25, 1993 due to debt of Roch existing at its acquisition date, increased borrowing and foreign currency exchange rate changes. Capital Expenditures. Brown & Sharpe's capital expenditures were approximately $1.4 million in the first half of 1994 compared to $1.8 million in the first half of 1993. In addition, capital spending to construct a new building at its German facility, substantially completed in 1992, amounted to approximately $.2 million in the first half of 1993. After the expected completion of the DEA Acquisition, total capital expenditures for the Combined Company are expected to increase. DEA capital expenditures totaled $.6 million in the first half of 1994 compared to $1.2 million in the first half of 1993. Management estimates that annual capital expenditures of approximately $6.0 to $8.0 million are required to tool new products, improve product and service quality, expand the distribution network, and support the operations of the Combined Company. Planned capital expenditures in 1994 and 1995 will include an aggregate of approximately $2.1 million for the construction of a new facility in Telford, England to replace an existing facility for which the lease expires and is non-renewable. Acquisitions and Divestitures. There were no divestitures in 1994, and Roch and its affiliate, Mauser, were acquired in late March 1994. Proceeds from the sale of the machine tool parts and rebuild operations during the first half of 1993 provided $8.7 million of cash. As announced in June, 1994, Brown & Sharpe has entered into an Acquisition Agreement (the "Acquisition Agreement") with Finmeccanica S.p.A. dated as of June 10, 1994 for the purchase by Brown & Sharpe of Finmeccanica's DEA Group of metrology companies and business units. DEA, headquartered in Turin, Italy, manufactures and markets worldwide a variety of types of coordinate measuring machines and systems with 1993 worldwide sales of about $112.4 million. The Acquisition Agreement provides that Brown & Sharpe would issue 3,450,000 shares of Brown & Sharpe Class A Common Stock to Finmeccanica and that DEA would have an estimated $13.8 million debt at the Closing. The purchase price is subject to a post-closing adjustment under certain circumstances as provided in the Acquisition Agreement. In connection with the Closing of the DEA Acquisition, Brown & Sharpe and Finmeccanica will enter into a Shareholders Agreement providing among other things for a limitation on Finmeccanica's percentage ownership of Brown & Sharpe common stock, a Finmeccanica preemptive right to elect to acquire a portion of future issuances of stock by Brown & Sharpe in order to maintain its percentage ownership of Brown & Sharpe on a fully diluted basis (as defined) until December 31, 1998 (or earlier upon the happening of certain specified events), and a requirement that Finmeccanica not transfer the acquired Brown & Sharpe shares to any person other than Brown & Sharpe for a specified period and affording Brown & Sharpe certain rights of refusal with respect thereto for a further specified period. The Acquisition Agreement also provides that Brown & Sharpe's Board of Directors will be increased from seven to ten and that Finmeccanica would have three representatives on the Brown & Sharpe Board. The obligations of Brown & Sharpe and Finmeccanica to effect the DEA Acquisition transaction are subject to various closing conditions specified in the Acquisition Agreement, including approval by Brown & Sharpe's shareholders, completion by Brown & Sharpe of arrangements to raise necessary funding on terms deemed appropriate by Brown & Sharpe, and the approval of all governmental authorities that are necessary. The waiting period with respect to the DEA Acquisition under the Hart-Scott-Rodino Antitrust Improvements Act expired in early August, 1994, after refilings by the parties in July 1994. Brown & Sharpe has called a Special Meeting of Shareholders to be held September 28, 1994 to take action on the DEA Acquisition. In the meantime, arrangements to provide for the New Financing program described above are under way. However, there can be no assurance that the financing condition or other closing conditions under the Acquisition Agreement will be satisfied. PART II. OTHER INFORMATION ----------------- Item 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS --------------------------------------------------- The Company's 1994 Annual Meeting of Stockholders was held on Friday, April 29, 1994. The stockholders voted to (1) fix the number of directors at seven and to elect two members of the Board of Directors to serve for the ensuing year; and (2) ratify the appointment of Coopers & Lybrand as the Company's independent accountants for the year 1994. The tabulation of votes for the nominees for directors were as follows: For Withheld --- -------- Fred M. Stuber (Class A only) 3,527,675 27,857 Paul R. Tregurtha (Class A and B) 6,747,864 131,666 The vote on the appointment of the Company's independent accountants was 6,809,803 for; 26,785 against; with 42,940 abstaining. Item 6 EXHIBITS AND REPORTS ON FORM 8-K -------------------------------- A. See Exhibit Index annexed. B. Reports on Form 8-K were filed during the quarter ended July 2, 1994. On May 13, 1994, Brown & Sharpe filed a Current Report on Form 8-K under Item 2 reporting the Acquisition of Ets. Pierre Roch S.A. (Roch) and its affiliate, Mauser Prazisions - Messmittel GmbH (Mauser). On June 9, 1994, Brown & Sharpe filed a Form 8-K/A Amendment to Current Report on the May 13, 1994 Form 8-K updating Item 2 and including Item 7, financial statements of Roch and Mauser for 1991 through 1994. Brown & Sharpe filed a Current Report on Form 8-K under Item 5 dated June 24, 1994 reporting: the signing of an Acquisition Agreement between the Company and Finmeccanica; the form of a Shareholders' Agreement to be entered into in conjunction with this Acquisition Agreement; an Amendment to the Company's Rights Agreement; and portions of the Company's Registration Statement on Form S-1 filed on June 27, 1994. Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized. BROWN & SHARPE MANUFACTURING COMPANY By: /s/ John M. Lochner ------------------- John M. Lochner Corporate Controller (Principal Accounting Officer) September 1, 1994 BROWN & SHARPE MANUFACTURING COMPANY ------------------------------------ EXHIBIT INDEX ------------- 3.1 By-Laws of Brown & Sharpe Manufacturing Company, as amended through July 29, 1994. 4. Indenture dated as of October 1, 1980 (including form of debenture) between the Company and Morgan Guaranty Trust Company of New York as trustee relating to 9-1/4% convertible subordinated debentures due December 15, 2005, originally filed as Exhibit (b) (1) to Form S-16 Registration Statement No. 2-69203 dated October 1, 1980 and incorporated herein by reference. The Registrant hereby agrees to furnish a copy to the Commission of other instruments defining the rights of holders of long-term debt, as to which the securities thereunder do not exceed ten percent of total assets on a consolidated basis. 10.1 Definitive Acquisition Agreement providing for the combination of the DEA metrology business of Finmeccanica (the "DEA Group") with the Brown & Sharpe Measuring Systems Division dated as of June 10, 1994 between Brown & Sharpe Manufacturing Company and Finmeccanica S.p.A., was filed as Exhibit 1 to Form 8-K dated June 24, 1994, and is incorporated herein by reference. 10.1.1 Amendment No. 1 dated July 31, 1994, to Acquisition Agreement, filed as Exhibit 10.1, amending certain debt provisions of the agreement. 10.2 Amendment No. 3 dated June 16, 1994 to Rights Agreement, dated March 9, 1988 between the Company and the First National Bank of Boston, as Rights Agent, was filed as Exhibit 3 to Form 8-K dated June 24, 1994, and is incorporated herein by reference. 11. Computation of Per Share Data for the twenty-seven week period ended July 2, 1994 and the twenty-six week period ended June 26, 1993. EX-3.1 2 BY-LAWS EXHIBIT 3.1 ----------- BY-LAWS OF BROWN & SHARPE MANUFACTURING COMPANY Adopted November 27, 1968 As Amended through July 29, 1994 SECTION 1. CERTIFICATE OF INCORPORATION The name and the nature of the business or purposes of the corporation shall be as set forth in its Certificate of Incorporation. These By-Laws shall be subject to all requirements and provisions of law applicable to the corporation and to all requirements and provisions of the Certificate of Incorporation. In these By-Laws, references to the Certificate of Incorporation mean the provisions of the Certificate of Incorporation (as that term is defined in the General Corporation Law of Delaware) of the corporation as from time to time in effect, and reference to these By-Laws or to any requirement or provision of law means these By-Laws or such requirement or provision of law as from time to time in effect. SECTION 2. STOCKHOLDERS 2.1 ANNUAL MEETING. The annual meeting of stockholders shall be held at 10 o'clock in the forenoon on the fourth Thursday of April in each year, unless that day be a legal holiday at the place where the meeting is to be held, in which case the meeting shall be held at the same hour on the next succeeding day which is not a Saturday or Sunday and is not a legal holiday, or at such other date and time as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting, at which they shall elect a Board of Directors and transact such other business as may be required by law or by these By-Laws or as may be specified by the Chief Executive Officer or by a majority of the directors then in office or by vote of the Board of Directors and of which notice was given in the notice of the meeting. If the annual meeting for election for directors is not held on the date designated therefor, the directors shall cause the meeting to be held as soon thereafter as convenient. 2.2 SPECIAL MEETINGS. A special meeting of the stockholders may be called at any time by the Chairman or by the President or by a majority of the Directors then in office or by vote of the Board of Directors. Any such call shall state the time, place and purposes of the meeting. 2.3 PLACE OF MEETINGS. All meetings of the stockholders shall be held at the principal office of the corporation in the Town of North Kingstown, Rhode Island or at such other place within the United States as shall be designated by the Chief Executive Officer or by a majority of the directors then in office or by vote of the Board of Directors. Any adjourned session of any meeting of the stockholders shall be held at the place designated in the vote of adjournment. 2.4 NOTICE OF MEETINGS. Except as otherwise provided by law and subject to Section 6 hereof, a written or printed notice of each meeting of stockholders, stating the place, date and hour and the purpose or purposes of the meeting, shall be given not less than ten nor more than sixty days before the meeting to each stockholder entitled to vote thereat, and to each stockholder who, by law, by the Certificate of Incorporation or by these By-Laws is entitled to notice by leaving such notice with him or at his residence or usual place of business or by depositing such notice in the Unites States mail, postage pre-paid, addressed to such stockholder at his address as it appears on the records of the corporation. Such notice shall be given by the Secretary or an Assistant Secretary or by an officer designated by the Board of Directors. If a meeting is adjourned to another time or place, notice need not be given of the adjourned meeting if the time and place are announced at the meeting at which the adjournment is taken, except that if the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the adjourned meeting and to each stockholder who, by law, by the Certificate of Incorporation or by these By-Laws is entitled to notice thereof, in the same manner as would the original notice of any meeting be given. 2.4.1 CONDUCT OF MEETINGS. The officer of the corporation presiding at any meeting of stockholders shall have sole and conclusive responsibility for controlling the conduct of all meetings of stockholders, and shall in his best judgment conclusively determine whether any item is business entitled to be presented to the meeting, the order in which any such business shall come before the meeting, the stockholders entitled to address the meeting or to ask questions from the floor (and he may impose reasonable restrictions on such addresses or questions) and shall determine all other matters of procedure. The presiding officer may impose reasonable restrictions on any persons other than stockholders of record or their duly appointed proxies who may attend the meeting, and may deny admittance of any person to the meeting other than stockholders of record or their duly appointed proxies who in his judgment has disrupted any meeting of stockholders in the past, or is likely to disrupt the meeting to which such person seeks admittance. He may eject or cause to be ejected from the meeting any person, whether or not a stockholder of record or duly appointed proxy, who is disruptive and may use such reasonable force and take such other security measures as he considers reasonable. 2.5 VOTING AND PROXIES. Subject to the provisions of the Certificate of Incorporation and to Section 7 of these By-Laws, each stockholder of record shall at every meeting of the stockholders be entitled to one vote for each share of the capital stock held by him on any matter as to which he is entitled to vote. Each stockholder entitled to vote at a meeting of stockholders may authorize another person or persons to act for him by proxy, but no proxy shall be voted or acted upon after three years from its date, unless said proxy provides for a longer period. Persons holding stock in a fiduciary capacity shall be entitled to vote the shares so held, and persons whose stock is pledged shall be entitled to vote, unless in the transfer by the pledgor on the books of the corporation he shall have expressly empowered the pledgee to vote thereon, in which case only the pledgee, or his proxy, may represent said stock and vote thereon. If the shares stand of record in the names of two or more persons, whether fiduciaries, members of a partnership, joint tenants, tenants in common, tenants by the entirety or otherwise, or if two or more persons have the same fiduciary relationship respecting the same shares, unless the Secretary of the corporation is given written notice to the contrary and is furnished with a copy of the instrument or order appointing them or creating the relationship wherein it is so provided, their acts with respect to voting shall have the following effect: (1) If only one votes, his act binds all; (2) If more than one vote, the act of the majority so voting binds all; -2- (3) If more than one vote, but the vote is evenly split on any particular matter, each faction may vote the securities in question proportionally, or any person voting the shares, or a beneficiary, if any, may apply to the Court of Chancery of the State of Delaware or such other Court as may have jurisdiction to appoint an additional person to act with the persons so voting the shares, which shall then be voted as determined by a majority of such persons and the person appointed by the Court. If the instrument so filed shows that any such tenancy is held in unequal interests, a majority or even split for the purposes of these By-Laws shall be a majority or even-split in interest. In case of the death, bankruptcy, minority or mental incapacity of any stockholder the person entitled to transfer his shares shall be entitled to vote in respect of such shares, and if there shall be more than one such person, the right to vote shall be the same as if the shares stood of record in the names of two or more persons, as provided above. A vote given in accordance with a proxy shall be valid notwithstanding the previous death of the stockholder or revocation of the proxy unless information in writing of the death or revocation shall have been previously received by the Secretary of the corporation. Shares of the capital stock of the corporation belonging to the corporation shall not be voted upon, directly or indirectly, provided, however, that this sentence shall not be construed as limiting the right of the corporation to vote stock held by it in a fiduciary capacity. 2.6 LIST OF STOCKHOLDERS. The Secretary shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at said meeting, arranged in alphabetical order and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open, at the place where said meeting is to be held or at such other place in the city where such meeting is to be held as may be specified in the notice of the meeting, for a period of at least ten days, for the examination of any stockholder, for any purpose germane to the meeting, and during ordinary business hours, and shall be produced and kept at the time and place of the meeting during the whole time thereof, and subject to the inspection of any stockholder who may be present. The stock ledger shall be the only evidence as to who are stockholders entitled to examine the stock ledger or such list, or to vote in person or by proxy at such meeting, or, subject to the provisions of Section 9 of these By-Laws, to inspect the accounts or books of the corporation. 2.7 QUORUM OF STOCKHOLDERS. Except as otherwise provided by law, the Certificate of Incorporation or these By-Laws, at any meeting of the stockholders a quorum as to any matter shall consist of a majority of the votes entitled to be cast on the matter, except that where a separate vote by a class or classes or series thereof is required by law, the Certificate of Incorporation or these By-Laws a majority of the votes entitled to be cast by such class or classes (or series thereof) shall constitute a quorum with respect to that matter. Any stock of the corporation belonging to the corporation at the time of any record date for meeting or any adjourned session thereof shall neither be entitled to vote nor counted for quorum purposes; provided, however, that this sentence shall not be construed as limiting the right of the corporation to vote its own stock held by it in a fiduciary capacity. Any meeting may be adjourned from time to time by a majority of the votes properly cast upon the question, whether or not a quorum is present. 2.8 JUDGES OF ELECTION. Whenever a vote is taken at a meeting of stockholders the proxies and ballots, if any, shall be received and taken charge of and all questions relating to the qualification of votes and the validity of proxies and ballots and the acceptance and rejection of proxies, ballots and votes shall be decided by two Judges of Election. Such Judges of Election shall be appointed by the Board of Directors before or at the meeting of stockholders, and if no such appointment shall have been made, then by the stockholders at the -3- meeting. If for any reason either the Judges of Election previously appointed shall fail to attend or refuse or be unable to serve, a Judge of Election in place-of any so failing to attend or refusing or unable to serve shall be appointed either by vote of directors or by the stockholders at the meeting. 2.9 ACTION BY VOTE. When a quorum is present at any meeting, a plurality of the votes properly cast for election to any office shall elect to such office, and a majority of the votes properly cast upon any question other than an election to an office shall decide the question, except when a larger vote is required by law, by the Certificate of Incorporation or by these By-Laws. SECTION 3 BOARD OF DIRECTORS 3.1 NUMBER. Except as otherwise provided in Section 3.2 below, there shall be a Board of Directors composed of such number of directors, not less than six nor more than nine as may from time to time be fixed by the stockholders (or, with respect to the election of the first directors, by the incorporator), and elected as provided by law and by these By-Laws. 3.2 CLASSIFICATION OF DIRECTORS. Commencing with the election of directors at the 1969 Annual Meeting of stockholders, the Board of Directors shall be divided into three classes, each class subject to the provisions of this Section and Section 3.4 to hold office for three years. At the annual meeting of stockholders in 1969 the total number of directors fixed as provided in Section 3.1 shall be divided by three and three classes shall be designated for convenience the 1970 Directors, the 1971 Directors and the 1972 Directors, and nominations of directors shall designate the class for which nominated. The persons elected by the stockholders as provided by law and these By-Laws as 1970 Directors shall hold office until the 1970 annual meeting of stockholders, those elected as the 1971 Directors until the 1971 annual meeting of stockholders and those elected as the 1972 Directors until the 1972 annual meeting annual meeting of stockholders, and, at each of such meetings their respective successors shall be elected for three year terms. If at any annual meeting the number of directors is increased or decreased as provided in Section 3.1, the number of directors in each class elected at such annual meeting shall, subject to the provisions of the following paragraphs of this Section 3.2, be increased or decreased by one-third of the amount of such increase or decrease, as the case may be. Any director elected to fill a vacancy caused by death, resignation or removal shall be elected for a term which shall coincide with the term of the class of the vacant directorship. Any director elected to fill an additional directorship resulting from an increase in the number of directors shall be elected to the class of directors having the least number of directorships; provided, however, -------- -------- that if there is more than one class having the least number of directorships such additional director shall be elected to such of such classes the term of which class continues until the Annual Meeting of stockholders closest to three years from the date of increase; and provided, further, that if each class has --------- -------- an equal number of directorships such additional director shall be elected to the class the term of which class continues until the Annual Meeting of stockholders closest to three years from the date of increase. At no meeting of stockholders shall the number of directors so fixed be less than the number of directors theretofore fixed and elected (including directors elected to fill vacancies) for terms -4- not expiring at said meeting of stockholders. References herein to an annual meeting include any special meeting later held in lieu thereof. 3.3 POWERS OF BOARD OF DIRECTORS. No director need be a stockholder. Except as otherwise specified in these By-Laws, references in these By-Laws to a majority of the directors then in office shall mean such a majority but in any case not less than one-third of the whole board nor less than two directors. The business and affairs of the corporation shall be managed by the Board of Directors. In addition to the powers expressly conferred on the Board of Directors by these By-Laws and by the Certificate of Incorporation, the Board of Directors may exercise all the powers of the corporation except such as are expressly conferred upon the stockholders by law, or by the Certificate of Incorporation or by these By-Laws. 3.4 TENURE. Each director shall hold office for the terms specified in Section 3.1 and 3.2 and until his successor is elected and qualified (unless there is no successor as a result of a decrease in the number of directors in accordance with Sections 3.1 and 3.2) or until his earlier resignation, removal or death. 3.5 VACANCIES. Vacancies (including the entire remaining term and any vacancy occurring by reason of the failure to elect directors to the number fixed pursuant to Section 3.1 ) and any newly created directorships resulting from any increase in the authorized number of directors, may be filled by vote of a majority of the directors then in office, although less than a quorum, or by a sole remaining director. When one or more directors shall resign from the board, effective at a future date, a majority of the directors then in office shall have power to fill such vacancy or vacancies, the vote or action by writing thereon to take effect when such resignation or resignations shall become effective. 3.6 COMMITTEES. The Board of Directors may, by resolution adopted by a majority of the whole board, (a) designate, change the membership of or terminate the existence of any committee or committees, including the Executive Committee, each committee to consist of two or more of the directors; (b) designate one or more directors as alternate members of any such committee, including the Executive Committee, who may replace any absent or disqualified member at any meeting of the committee; and (c) determine the extent to which each such committee, including the Executive Committee, shall have and may exercise the powers of the Board of Directors in the management of the business and affairs of the corporation, including the power to authorize the seal of the corporation to be affixed to all papers which may require it, except that the Executive Committee, which shall consist of not less than two or more than five of the directors elected from and by the Board of Directors and shall include the Chief Executive Officer, who shall be chairman of the committee, shall have and may exercise, when the Board of Directors is not in session, all the powers of the Board of Directors in the management of the business and the affairs of the corporation and may authorize the seal of the corporation to be affixed to all papers which may require it, except as may be from time to time otherwise specifically reserved by the Board of Directors to itself by resolution adopted by majority of the whole board. In the absence or disqualification of any member of any committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not constituting a quorum, may unanimously appoint another member of the Board of Directors to act at any meeting in the place of any such absent or disqualified member. Except as the directors may otherwise determine, any committee may make rules for the conduct of its business. 3.7 REGULAR MEETINGS. Regular meetings of the Board of Directors may be held without call or notice at such places (within or without the State of Delaware or the United States) and at such times as the board may from time to time determine, provided that notice of the first -5- regular meeting following any such determination shall be given to absent directors. A regular meeting of the directors may be held without call or notice immediately after and at the same place as the annual meeting of the stockholders. 3.8 SPECIAL MEETINGS. Special meetings of the Board of Directors may be called by the Chairman of the Board or by two or more directors and may be held at any time and at any place (within or without the State of Delaware or the United States) designated in the call of the meeting, reasonable notice thereof being given to each director by the Secretary or an Assistant Secretary or by the officers or one of the directors calling the meeting. 3.9 NOTICE. It shall be sufficient notice to a director to send notice by mail at least forty-eight hours or by telegram at least twenty-four hours before the meeting addressed to him at his usual or last known business or residence address or to give notice to him in person or by telephone at least twenty-four hours before the meeting. Notice of a meeting need not be given to any director who waives notice as provided in Section 6. Notice of a meeting need not specify the purposes of the meeting. 3.10 QUORUM. Except as may be otherwise provided by law, by the Certificate of Incorporation or these By-Laws, at any meeting of the directors, a majority of the directors then in office shall constitute a quorum; a quorum shall not in any case be less than one-third of the total number of directors nor less than two directors. Any meeting may be adjourned from time to time by a majority of the votes cast upon the question, whether or not a quorum is present, and the meeting may be held as adjourned without further notice. 3.11 ACTION BY VOTE. Except as may be otherwise provided by law, by the Certificate of Incorporation or these By-Laws, the vote of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. 3.12 EMERGENCY PROVISIONS. During the existence of an emergency a meeting of the Board of Directors or a committee thereof may be called by any officers or directors by giving notice to such directors and officers as it may be feasible to reach at the time and by such means as may be feasible, the directors in attendance, but not less than two, shall constitute a quorum and officers or other persons designated on a list approved by the Board of Directors before the emergency shall, to the extent required to provide a quorum, be deemed directors for such meeting. An emergency for purposes of these By-Laws shall include any emergency resulting from an attack on the United States or on a locality in which the corporation conducts its business or customarily holds meetings of the Board of Directors or the stockholders, or during any nuclear or atomic disaster, or during the existence of any catastrophe, or other similar emergency condition, as a result of which a quorum of the Board of Directors thereof cannot readily be convened for action. Nothing in this Section 3.12 shall be exclusive of any other provisions for emergency powers which may be from time to time adopted by the corporation. 3.13 ACTION BY WRITING. Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if all members of the board or of any such committee, as the case may be, consent thereto in writing and the writing or writings are filed with the minutes of the proceedings of the board or of such committee. -6- 3.14 NOMINATION OF DIRECTORS. (a) Eligibility to Make Nominations. Nominations of candidates for election as directors at any meeting of stockholders called for election of directors (sometimes referred to as an "Election Meeting") may be made by the board or a committee of the board or by any stockholder entitled to vote for such director at such Election Meeting in accordance with this Section 3.14. (b) Procedure for Nominations by the board. Nominations by the board shall be made not fewer than 30 days prior to the date of an Election Meeting. At the request of the Secretary, each proposed nominee shall provide the corporation with such information concerning himself as is required under the rules of the Securities and Exchange Commission to be included in the corporation's proxy statement soliciting proxies for the election of such nominee as a director and such other information considered appropriate by the board or the Secretary. (c) Procedure for Nominations by Stockholders. Any stockholder who intends to make a nomination at such Election Meeting shall deliver a written notice to the Secretary, stating his intention to make such nomination, not later than (i) with respect to an election to be held at an annual meeting of stockholders, sixty days prior to the anniversary date of the immediately preceding annual meeting, and (ii) with respect to an election to be held at a special meeting of stockholders for the election of directors, the close of business on the tenth day following the date on which notice of such meeting is first given to stockholders. The notice shall set forth (i) the name, age, business address and residence address of each nominee proposed in such notice, (ii) the principal occupation or employment of each such nominee, (iii) the number of shares of capital stock of the corporation which are beneficially owned by each such nominee, (iv) a description of all arrangements or understandings between the stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the stockholder, and (v) such other information concerning each such nominee as would be required, under the rules of the Securities and Exchange Commission, in a proxy statement soliciting proxies for the election of such nominee as a director. Such notice shall include a signed consent of each such nominee to serve as a director of the corporation, if elected. Such nominee shall also upon request promptly provide the corporation with such other information considered appropriate by the board or the Secretary. (d) Substitution of Nominee. In the event that a person is validly designated as a nominee in accordance with Subsection (b) or (c) of this Section 3.14, and shall thereafter become unable or unwilling to stand for election to the Board of Directors, the Board of Directors or the stockholder who proposed such nominee, as the case may be, may designate a substitute nominee upon delivery not fewer than five days prior to the date of an Election Meeting of a written notice to the Secretary setting forth such information regarding such substitute nominee as would have been required to be delivered to the Secretary pursuant to Subsection (b) or (c) of this Section 3.14 as the case may be, had such substitute nominee been initially proposed as a nominee. Such notice shall include a signed consent of each substitute nominee to serve as a director of the corporation, if elected. (e) Petition in Support of Nomination. Nominations of persons for election as directors, other than nominations submitted on behalf of the incumbent Board of Directors, must be accompanied by a petition in support of such nominations signed by at least 100 record holders of shares of capital stock of the corporation entitled to vote in the elections of such director, holding in the aggregate not less that 1% of the voting power of the shares of capital stock of the corporation entitled to vote in the elections of such director outstanding as of the date such petition is submitted. -7- (f) Compliance with Procedures. If the presiding officer at the Election Meeting determines that a nomination of any candidate for election as a director was not made in accordance with the applicable provisions of this Section 3.14 he shall refuse to acknowledge such nomination and such nomination shall be void, provided, however, that nothing in this Section 3.14 shall be deemed to limit any class voting rights (if any) upon the occurrence of dividend arrearages provided to holders of preferred stock pursuant to a preferred stock designation. SECTION 4. OFFICERS AND AGENTS 4.1 ENUMERATION; QUALIFICATION: The officers of the corporation shall be: a President, a Vice President-Finance, a Treasurer, a Secretary, and such other officers, if any, as the Board of Directors may in its discretion elect or choose, including but not limited to a Chairman of the Board, one or more other Vice Presidents (which may have such designations as are fixed by the Board of Directors), and a Controller. The corporation may also have such agents, if any, as the Board of Directors may in its discretion choose. If the office of an any officer becomes vacant, the Board of Directors may elect or choose a successor. Any officer may be required by the directors to give bond for the faithful performance of his duties to the corporation in such amount and with such sureties as the directors may determine. No officer need be a stockholder. 4.2 POWERS. Subject to law, each officer shall have, in addition to the duties and powers set forth in these By-Laws, and subject to these By-Laws, such duties and powers as are commonly incident to his office and such duties and powers as the Board of Directors may from time to time designate. 4.3 ELECTION. The officers may be elected or chosen by the Board of Directors at their first meeting following the annual meeting of the stockholders or at any other time, and a vacancy in any office may be filled by the Board of Directors at any time. Any two offices, other than that of a principal office and an assistant in the same office, may be held by the same person. 4.4 TENURE. Each officer shall hold office until the first meeting of the Board of Directors following the next annual meeting of the stockholders and until his successor is chosen and qualified, unless a shorter period shall have been specified by the terms of his election or appointment, or until he sooner dies, resigns, is removed or becomes disqualified. Each agent shall retain his authority at the pleasure of the Board of Directors. 4.5 CHAIRMAN OF THE BOARD; PRESIDENT; VICE PRESIDENT-FINANCE; OTHER VICE PRESIDENTS. The Chairman of the Board, if one is elected, or the President (if no Chairman is elected) shall, except as otherwise voted by the Board of Directors, preside at all meetings of the stockholders and all meetings of the Board of Directors at which he is present. The Chairman of the Board shall have such other duties appropriate to the Chairman of the Board as the Board of Directors shall from time to time designate. The President shall be the chief executive officer of the corporation and shall have the general direction, control and management of the business and affairs of the corporation, subject to the control of the Board of Directors and the Executive Committee, and shall have such other duties and powers as the Board of Directors shall from time to time designate. The President shall be the chief operating officer of the corporation except as otherwise voted by the Board. -8- The Vice President-Finance shall be the chief financial officer of the corporation and shall have such other duties and powers as may be designated from time to time by the Board of Directors or by the President. Any other Vice Presidents shall have such duties and powers as shall be designated from time to time by the Board of Directors or by the President. 4.6 TREASURER AND ASSISTANT TREASURERS. The Treasurer shall be in charge of its funds, securities and valuable papers. He shall have such other duties and powers as may be designated from time to time by the Board of Directors. Any Assistant Treasurers shall have such duties and powers as shall be designated from time to time by the Treasurer. 4.7 CONTROLLER AND ASSISTANT CONTROLLERS. If a Controller is elected, he shall be the chief accounting officer of the corporation and shall be in charge of its books of account and accounting records and of its accounting procedures. He shall have such other duties and powers as may be designated from time to time by the Board of Directors. Any Assistant Controllers shall have such duties and powers as shall be designated from time to time by the Controller. 4.8 SECRETARY AND ASSISTANT SECRETARIES. The Secretary shall record all the proceedings of the meetings of the stockholders, of the Board of Directors and of the Executive Committee of the Board of Directors, in the books kept for that purpose. In his absence from any such meeting an Assistant Secretary, or if there be none or he is absent, a temporary Secretary chosen at the meeting shall record the proceedings thereof. The Secretary shall have custody of the corporation's seal and shall be the custodian of all records of the corporation (including the stock ledger which may, however, be kept by any transfer agent or agents of the corporation). He shall have such other duties and powers as may be designated from time to time by the Board of Directors. Any Assistant Secretaries shall have such duties and powers as shall be designated from time to time by the Secretary. SECTION 5. RESIGNATIONS AND REMOVALS Any director or officer may resign at any time by delivering his resignation in writing to the President or the Secretary or to a meeting of the Board of Directors. Such resignation shall take effect at the time stated therein, or if no time be so stated then upon its delivery, and without in either case the necessity of its being accepted unless the resignation shall so state. The Board of Directors may by resolution adopted by a majority of the whole board at any time remove from office any officer either with or without cause. The Board of Directors may at any time terminate or modify the authority of any agent. No director or officer resigning, and (except where a right to receive compensation shall be expressly provided in a duly authorized written agreement) no director or officer removed, shall have any right to any compensation as such director or officer for any period following his resignation or removal, or any right to damages on account of such removal, whether his compensation be by the month or by the year or otherwise. -9- SECTION 6. WAIVER OF NOTICE Whenever any notice is required to be given by law or under the provisions of the Certificate of Incorporation or of these By-Laws, a written waiver thereof, signed by the person or persons entitled to such notice, whether before or after the time stated therein or otherwise fixed for the meeting or other event for which notice is waived, shall be deemed equivalent to such notice. Neither the business to be transacted at, nor the purpose of, any meeting or such other event need be specified in any written waiver or notice, except to the extent otherwise required by law, the Certificate of Incorporation or these By-Laws. SECTION 7. TRANSFER OF SHARES OF STOCK AND RECORD DATE 7.1 TRANSFER ON BOOKS. The transfer of stock of the corporation and the certificates which represent the stock of the corporation shall be governed by the law of the State of Delaware. Except as may be otherwise required by law or by the provisions of Section 7.2 of these By-Laws, the corporation shall be entitled to treat the record holder of stock as shown on its stock ledger as the owner of such stock for all purposes until the shares have been properly transferred on the stock ledger of the corporation. It shall be the duty of every stockholder to notify the corporation of his mail address. 7.2 RECORD DATE. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the board of directors, and which record date shall not be more than sixty nor less than ten days before the date of such meeting. If no such record date is fixed by the board of directors, the record date for determining the stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the board of directors may fix a new record date for the adjourned meeting. In order that the corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the board of directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty days prior to such payment, exercise or other action. If no such record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the board of directors adopts the resolution relating thereto. SECTION 8. STOCK CERTIFICATES Every holder of stock in the corporation shall be entitled to have a certificate or certificates signed by, or in the name of the corporation, by the Chairman of the Board, the President or a Vice President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the corporation certifying the number of shares owned by him in such corporation. If such certificate is signed (1 ) by a transfer agent other than the corporation or its employee, or, (2) by a registrar other than the corporation or its employee, the signatures of the officers of the corporation and the corporate seal, if any, upon such certificate may be facsimiled, -10- engraved or printed. In case any officer who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, whether because of death, resignation or otherwise, before such certificate is delivered by the corporation, such certificate may nevertheless be adopted by the corporation and be issued and delivered as though the person who signs such certificate or whose facsimile signature shall have been used thereupon had not ceased to be such officer of the corporation. Certificates of stock shall be in such form as shall, in conformity with law, be prescribed from time to time by the Board of Directors. In the case of the alleged loss or destruction or the mutilation of a certificate of stock, a duplicate certificate may be issued in place thereof, upon such terms in conformity with law as the Board of Directors may prescribe. SECTION 9. INSPECTION OF ACCOUNTS AND BOOKS No account or book of the corporation shall be open to the inspection of any stockholder (except as provided by the laws of Delaware) unless such inspection in any case shall have been authorized by a resolution of a majority of the entire Board of Directors who shall be the sole judges as to whether any such inspection shall be allowed and the stockholders' rights in this respect are and shall be restricted and limited accordingly. SECTION 10. INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS This corporation shall, to the maximum extent permitted from time to time under the law of the State of Delaware, indemnify and upon request shall advance expenses to any person who is or was a party or is threatened to be made a party to any threatened, pending or completed action, suit, proceeding or claim, whether civil, criminal, administrative or investigative, by reason of the fact that such person is or was or has agreed to be a director or officer of this corporation or any direct or indirect subsidiaries of this corporation, or while such a director or officer is or was serving at the request of this corporation as a director, officer, partner, trustee, employee or agent of any corporation, partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, against expenses (including attorney's fees and expenses), judgments, fines, penalties and amounts paid in settlement incurred in connection with the investigation, preparation to defend or defense of such action, suit, proceeding or claim; provided, however, that the foregoing shall not require this corporation to indemnify or advance expenses to any person in connection with any action, suit, proceeding, claim or counterclaim initiated by or on behalf of such person. Such indemnification shall not be exclusive of other indemnification rights arising under any By-Law, agreement, vote of directors or stockholders or otherwise and shall inure to the benefit of the heirs and legal representatives of such person. Any person seeking indemnification under this Section 10 shall be deemed to have met the standard of conduct required for such indemnification unless the contrary shall be established. SECTION 11. CORPORATE SEAL The seal of the corporation shall bear the name of the corporation, the year and state in which it was organized, and the trademark of the corporation, consisting of the representation of a machinist's try-square over the blade of which are the letters B-S, all surrounded by the representation of the rim of a gear wheel. An impression of said seal shall be placed upon this record. -11- SECTION 12. EXECUTION OF PAPERS Except as the Board of Directors may generally or in particular cases authorize the execution thereof in some other manner, all deeds, leases, transfers, contracts, agreements, debentures, bonds, notes, checks, drafts and other obligations made, accepted or endorsed by the corporation shall be signed by the Chairman of the Board, or the President, or the Vice President-Finance or one of the other Vice Presidents or the Treasurer, and the signature of any such officer may be facsimile and in case any such officer who shall have signed, or whose facsimile signature shall have been used on any debenture, note or other document cease to be such officer of the corporation, whether because of death, resignation, or otherwise, before such debenture, note or other document shall have been delivered by the corporation, such debenture, note or other document may nevertheless be adopted by the corporation and be issued and delivered as through the person who signed such debenture, note or other document or whose facsimile signature shall have been used thereon had not ceased to be such officer and the delivery of any such debenture, note or other document shall be deemed the adoption thereof by the corporation. SECTION 13. FISCAL YEAR Except as from time to time otherwise provided by the Board of Directors, the fiscal year of the corporation shall end on the last Saturday of each year. SECTION 14. AMENDMENTS Except to the extent otherwise provided by law, these By-Laws may be made, altered amended or repealed by vote of three-quarters of the directors in office or by vote of the holders of two-thirds of the voting power of the outstanding stock entitled to vote in respect thereof, and any By-Laws, whether made, altered, amended or repealed by the stockholders or directors, may be altered, amended or reinstated, as the case may be, by either the stockholders or by the directors as here-in before provided. -12- EX-10.1.1 3 AMENDMENT NO. 1 TO ACQUISITION AGREEMENT EXHIBIT 10.1.1 -------------- EXECUTION VERSION AMENDMENT NO. 1 TO ACQUISITION AGREEMENT ---------------------------------------- THIS AMENDMENT NO. 1 TO ACQUISITION AGREEMENT made as of this 31st day of July, 1994 by and between Brown & Sharpe Manufacturing Company, a Delaware corporation with its principal offices at 200 Frenchtown Road, Precision Park, North Kingstown, Rhode Island 02852 U.S.A. ("Brown & Sharpe") and Finmeccanica S.p.A., an Italian corporation, operating through its Elsag Bailey division, with offices at Via Puccini, 2, 16154 Genoa, Italy ("Finmeccanica"). WHEREAS, the parties have entered into an Acquisition Agreement dated as of June 10, 1994 ("Acquisition Agreement") with regard to the acquisition by Brown & Sharpe of all of the issued and outstanding shares of capital stock of DEA S.p.A., a subsidiary of Finmeccanica; WHEREAS, the parties wish to amend the Acquisition Agreement in the manner provided herein; NOW, THEREFORE, Finmeccanica and Brown & Sharpe hereby agree as follows: 1. Definitions. Capitalized terms used herein and not otherwise defined ----------- shall have meanings ascribed to them in the Acquisition Agreement. 2. Amount of Assumed Indebtedness. (a) The reference to "8,000 Million ------------------------------ Italian Lire ("Lit.") denominated Indebtedness ("Lit. Debt")" in Section 1.3A, clause (w) of the Acquisition Agreement shall be amended by substituting "9,814 Million Italian Lire ("Lit.") denominated Indebtedness" therefor. (b) The reference to "$9,897,960 U.S. Dollar denominated Indebtedness ("U.S. Debt")" in Section 1.3A, clause (x) of the Acquisition Agreement shall be amended by substituting "$8,741,072 U.S. Dollar denominated Indebtedness ("U.S. Debt")" therefor. (c) The reference to "8 Billion Lit. Indebtedness" in Section 13 of the Acquisition Agreement shall be amended by substituting "9,814 Million Lit. Indebtedness" therefor. (d) Any reference in Schedule 3.5.1 or any other section or schedule of the Acquisition Agreement to "8 Billion Lit. Indebtedness" or to "$9,897,960 U.S. Dollar denominated Indebtedness" shall be deemed revised to refer to "9,814 Million Lit. Indebtedness" and to "$8,741,072 U.S. Dollar denominated Indebtedness", respectively Schedule 3.5.1 to the Acquisition Agreement is hereby substituted in its entirety by Exhibit A attached hereto and incorporated herein by reference. (e) The parties hereby agree that the increase in Lit. Debt provided for at Section 2(a) above results specifically and solely from the Lit. 3,003 Million in aggregate principal amount of new Lit. Debt incurred by the Company during the period from January 1, 1994 through July 31, 1994 by virtue of loans advanced to the Company under Contract Nos. 1171, 2229 and 2230 with the Ministero dell'Industria of the Republic of Italy (net of repayments of principal made by the Company in respect of Indebtedness owed to Istituto Mobiliare Italiano, Mediocredito Piemontese and Ministero dell'Industria). (f) The amount of the accrual for TFR Liabilities of the Company and the Subsidiaries attributable to CIGS Employees reflected on and as of the date of the Pricing Balance Sheet, not to exceed Lit. 1,700 Million, shall be applied solely to reduce the amount of U.S. Debt reflected in Section 1.3A, clause (x) of the Acquisition Agreement, as amended by Section 2(b) above, and shall be converted to U.S. Dollars at an exchange rate of U.S. $1.00/Lit. 1585.90, in lieu of the U.S. Dollar/Lit. exchange rate in effect on the business day immediately preceding July 31, 1994 as published in Sole 24 Ore. For purposes ----------- of illustration only, in the event that such accrual for TFR Liabilities is Lit. 1,700 Million, the countervalue in U.S. Dollars which shall be applied to reduce U.S. Debt shall be US$1,071,946. 3. Continuing Effectiveness. Except to the extent modified by this ------------------------ Amendment No. 1 to Acquisition Agreement, all terms and conditions of the Acquisition Agreement shall continue in full force and effect. IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment No. 1 to Acquisition Agreement, as attested by their respective Secretaries, as of the date and year first above written. ATTEST: BROWN & SHARPE MANUFACTURING COMPANY By: - - ------------- ------------------------------ Title: Vice President and Chief Financial Officer ATTEST: FINMECCANICA S.p.A. (through its Elsag Bailey Division) By: - - ------------- ------------------------------ Title: President EX-11 4 COMPUTATION OF PER SHARE DATA EXHIBIT 11 ---------- BROWN & SHARPE MANUFACTURING COMPANY ------------------------------------ COMPUTATION OF PER SHARE DATA ----------------------------- (Dollars in Thousands Except Per Share Data)
For the Half Year Ended ---------------------------- July 2, 1994 June 26, 1993 ------------- ------------- Computation of income (loss): Net income (loss) used for computation of primary earnings per share $ (4,242) $ 1,443 Add interest expense, net of taxes, assuming conversion of debentures 518 786 ---------- ---------- Net income (loss) used for computation of fully diluted earnings per share $ (3,724) $ 2,229 ========== ========== Computation of shares: Weighted average number of common shares outstanding during the period 5,114,403 4,967,758 Dilutive stock options -- -- ---------- ---------- Weighted average number of common shares used for computation of primary earnings per share 5,114,403 4,967,758 Additional dilutive stock options -- -- Assumed conversion of convertible debentures 609,523 647,619 ---------- ---------- Weighted average number of common shares used for computation of fully diluted earnings per share 5,723,926 5,615,377 ========== ========== Per common share: Primary and fully diluted net income (loss) per share $(.83) $.29 ===== ====
EX-27 5 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from Balance Sheet and Income Statement and is qualified in its entirety by reference to such financial statements. 1,000 U.S. DOLLARS 6-MOS DEC-31-1994 DEC-26-1993 JUL-2-1994 1 2,283 0 45,349 2,625 59,844 115,231 126,813 81,114 174,076 71,964 33,806 0 0 5,200 56,491 174,076 76,752 79,811 55,337 25,871 (178) 600 2,723 (3,942) 300 (4,242) 0 0 0 (4,242) (.83) (.83)
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