<PAGE>
 
                      SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                        
                                   FORM 10-K
                                        
                                 ANNUAL REPORT
                                        
                       PURSUANT TO SECTION 13 OR 15(d) OF

                      THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998  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 of organization)                       Identification No.)

   PRECISION PARK, 200 FRENCHTOWN ROAD, NORTH KINGSTOWN, RHODE ISLAND  02852
   -------------------------------------------------------------------------
             (Address of principal executive offices and zip code)

       Registrant's telephone number, including area code    401-886-2000

          Securities registered pursuant to Section 12(b) of the Act:

                                                      Name of each exchange on
          Title of each class                              which registered
          -------------------                              ----------------
CLASS A COMMON STOCK-PAR VALUE $1.00                    NEW YORK STOCK EXCHANGE
PREFERRED STOCK PURCHASE RIGHTS                         NEW YORK STOCK EXCHANGE

          Securities registered pursuant to Section 12 (g) of the Act:

                     CLASS B COMMON STOCK - PAR VALUE $1.00

                                (Title of Class)

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 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 by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K ((S) 229.405) is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K.   [  X  ]
                                       ----- 

The aggregate market value (as calculated under the rules) of the voting common
stock held by non-affiliates of the Registrant was approximately
$88,400,000 as of March 12, 1999.

There were 12,965,649 Shares of Class A Common Stock and 506,796 Shares of Class
B Common Stock, each having a par value of $1.00 per share, outstanding as of
March 12, 1999.

                      DOCUMENTS INCORPORATED BY REFERENCE

The following documents have been incorporated by reference in the following
parts of the Form 10-K: (1) Definitive Proxy Statement for the April 30, 1999
Annual Meeting incorporated by reference (to the extent specified) in Part III.

Portions of the Annual Report for the year ended December 31, 1998 are
incorporated by reference into Parts I and II.
<PAGE>
 
                      BROWN & SHARPE MANUFACTURING COMPANY

                                     INDEX
<TABLE>
<CAPTION>
                                                                                          Page
                                                                                         -------
PART I
<S>          <C>                                                                         <C>
 
Item 1       Business..................................................................   3 - 12
  General..............................................................................        3
  Repositioning Initiatives............................................................    3 - 4
  Business Strategy....................................................................    4 - 5
  Metrology Industry...................................................................    5 - 7
  MS Group.............................................................................    7 - 8
  PMI Division.........................................................................        8
  CM Division..........................................................................        8
  Sales and Distribution...............................................................        9
  Engineering and Product Development..................................................        9
  Foreign Operations...................................................................   9 - 10
  Raw Materials and Sources of Supply..................................................       10
  Patents, Licenses, Trademarks, and Proprietary Information...........................       10
  Environmental Matters................................................................       10
  Employees............................................................................  10 - 11
  Competition..........................................................................  11 - 12
  Backlog..............................................................................       12
  Significant Customers................................................................       12
  Working Capital......................................................................       12
  Segment Information..................................................................       12
Item 2       Properties................................................................  12 - 13
Item 3       Legal Proceedings.........................................................  13 - 14
Item 4A      Executive Officers of the Registrant......................................  14 - 15
 
PART II
 
Item 5       Market  for Registrant's Common Stock and Related Stockholder Matters.....       15
Item 6       Selected Financial Data...................................................       15
Item 7       Management's Discussion and Analysis of Financial Condition and Results of
             Operations................................................................       15
Item 7A      Qualitative and Quantitative Disclosures About Market Risk................       15
Item 8       Financial Statements and Supplementary Data...............................       15
Item 9       Changes in and Disagreements With Accountants on Accounting and
             Financial Disclosure......................................................       15
 
PART III
 
Item 10      Directors and Executive Officers of the Registrant........................       16
Item 11      Management Remuneration and Transactions..................................       16
Item 12      Security Ownership of Certain Beneficial Owners and Management............       16
 
PART IV
 
Item 14      Exhibits, Financial Statement Schedules, and Reports on Form 8-K..........  16 - 17

Signatures.............................................................................       18
Directors..............................................................................       19
Officers...............................................................................       19
Investor Information...................................................................  19 - 20
Financial Statement Schedules..........................................................       21
Exhibit Index..........................................................................  22 - 29
</TABLE>
<PAGE>
 
                                     PART I
                                     ------
                                        
ITEM 1 - BUSINESS
-----------------

General
-------

The Company, which was founded in 1833, is a leading designer, manufacturer, and
marketer of metrology products worldwide under numerous internationally
recognized brand names.  Metrology is the science of the physical measurement of
objects using various precision instruments and equipment.  The Company's high
precision products measure physical dimensions of, and inspect and verify
conformance to specifications of, components and products and are used in
manufacturing, quality control, and product development operations.  The
Company's product line ranges from hand tools and instruments to customized
computer-controlled metrology systems which integrate hardware and software and
are augmented by service, training, and aftermarket support.  The Company
markets its metrology products and services in North America, Europe, Asia,
South America, and the Middle East.  Important end user markets for the
Company's products include the automotive, aerospace, industrial machinery,
electronics, and computer industries, and the Company's customers include Ford
Motor Co., Daimler Chrysler, Toyota, General Motors, BMW, Boeing Co., Eastman
Kodak Co. Inc., International Business Machines Corp., Hewlett-Packard Co.,
General Electric Co., Caterpillar Inc., United Technologies Corp., Motorola
Inc., Phillips, Samsung, and Xerox Corp.

The Company's operations are conducted through three management units:
Measuring Systems, Precision Measuring Instruments, and Custom Metrology.

   .  The Measuring Systems Group, which accounted for approximately 71% of the
      Company's sales in 1998, manufactures and markets a wide range of manual
      and computer-controlled, high precision CMMs including "in-process"
      measuring systems under the Brown & Sharpe and DEA brand names. The
      Company believes it is the worldwide market leader for CMMs as measured by
      net sales and installed base. The Company believes it has an installed
      base of over 22,400 CMMs worldwide. 

   .  The Precision Measuring Instruments Division, which accounted for
      approximately 26% of the Company's sales in 1998, manufactures a wide
      range of mechanical and electronic measuring and inspection tools
      (including height gauges, calipers, dial indicators, micrometers, and
      gauge blocks) which are marketed under the Brown & Sharpe, Tesa, Etalon,
      Interapid, Standard Gage, Select Gauge, Mauser, Mercer, Compac, and Roch
      brand names through more than 450 distributors and catalog houses
      worldwide.

   .  The Custom Metrology Division designs and engineers specialty products and
      systems that provide customized solutions for unique measurement or
      inspection problems primarily utilizing non-contact technology.
      Technologies and custom applications developed by the CM Division with
      customer funding have been directly applied to the design of standard
      products or systems.

Repositioning Initiatives
-------------------------

Over the past several years, the Company has undertaken a series of
divestitures, acquisitions and other strategic initiatives which have
repositioned the Company from its historical origins as a machine tool
manufacturer into a leader in the field of metrology.  These repositioning
initiatives included:

   .  Divestiture of Non-Core Operations. The divestiture of non-strategic
      operations, including the machine tool, pump and hydraulics businesses,
      and Technicomp, Inc. during 1997, which enabled the Company to focus on
      its core metrology technologies and market distribution strengths.
<PAGE>
 
   .  Strategic Metrology Acquisitions. Strategic acquisitions which enabled the
      Company to increase greatly the breadth of its metrology product offering
      and the strength of its distribution system. These acquisitions included
      the 1994 acquisitions of DEA, Roch and certain intellectual property and
      assets of Metronic Ltd. During 1997, the Company acquired the remaining
      50% of its equity investee ASI, which develops measurement software and
      provides training and services and other aftermarket support to
      manufacturing industries, and a 50% ownership position in Metroptic
      Technologies Limited, a joint venture located in Israel developing non-
      contact sensor technologies.

   .  Rationalization and Consolidation of Operations. Lowering the Company's
      overhead cost structure by reducing duplicative functions and associated
      headcount and by consolidating and rationalizing the Company's
      manufacturing facilities and operations, which enabled the Company to
      increase productivity and efficiency.

   .  Reorganization Plan. In the fourth quarter of 1997, management implemented
      a Reorganization Plan ("the Plan") which included business processing
      reengineering at certain of its European sites, as well as selected
      product rationalization in preparation for new product introductions. In
      addition, the MSG's marketing and service organization was also
      reorganized. The Plan provided for a workforce reduction of 159 persons,
      primarily in its European operations. The Plan also provided for inventory
      adjustments and the write-down of fixed assets and certain intangible
      assets. (See Management's Discussion and Analysis of Financial Condition
      and Results of Operations.)

Business Strategy
-----------------

The Company is implementing its strategy based on the following elements:

   .  Continue Cost Improvements. The Company intends to continue to implement
      measures designed to reduce its product costs through: (i) standardizing
      product designs worldwide; (ii) increasing the cost-effectiveness of
      product designs; (iii) outsourcing components and products; (iv)
      increasing supplier partnering; and (v) focusing on core manufacturing
      processes. The Company also intends to streamline its sales, marketing,
      and general and administrative processes in an effort to reduce selling,
      general and administrative expenses as a percentage of sales.

   .  Develop New Products and End User Markets. The Company's goal is to
      increase net sales by expanding penetration of served industrial end user
      markets and by capitalizing on high growth end user markets such as the
      electronics, computer, and medical industries where metrology needs are
      growing rapidly. To expand in these high growth industries, the Company
      intends to focus on development of software and emerging non-contact
      metrology technologies through continued internal development and through
      strategic acquisitions and technical partnerships. To expand its
      penetration of served industrial end user markets, the Company expects to
      continue the introduction of new metrology systems utilizing both contact
      and non-contact technologies, and to develop sensors and other
      sophisticated products that can be imbedded in a variety of manufacturing
      processes. The Company plans to form technical and commercial alliances
      with manufacturers of process equipment to provide enhanced combined
      manufacturing systems utilizing the Company's sensors and other products.

   .  Enhance Existing and Develop New Software. The Company intends to
      emphasize research and development of software systems and applications
      designed to meet the evolving metrology needs of its end users. To that
      end, the Company intends to leverage off its software development team of
      software and applications engineers and technicians in the following four
      areas: (i) metrology software for inspection and verification of piece-
      part integrity and conformance to design specifications; (ii) process
      control software designed to detect and correct drifts in part tolerances
      before the manufacturing process produces scrap or improperly
<PAGE>
 
   .  configured components; (iii) enhanced management information systems that
      report statistical and quality information from the manufacturing process;
      and (iv) new software that will link the Company's CMMs and, therefore,
      the manufacturing process with computer-aided engineering and
      manufacturing systems that will provide the means for real-time feedback,
      analysis and, ultimately, control of manufacturing to design
      specifications. The Company believes that its existing library of
      metrology software, together with newly developed software, should enable
      it to respond to the growing demand in manufacturing for on-line
      inspection and verification. The Company also believes that its experience
      with CMM software and manufacturing processes is critical to the
      successful development of software that is linked with computer aided
      engineering systems. To meet the needs of this growth market, the Company
      formed Brown & Sharpe Information Systems, Inc. (BSIS) in 1997. This new
      subsidiary, with a common Corporate vision, combines all the Company's
      software development expertise under one roof. The Company's objective is
      to develop the next generation of open architecture measurement software
      having more power and ease of use than any product on the market.
      Incorporating the most accurate metrology algorithms in the world, this
      new software will work effortlessly with CAD/CAM systems to facilitate the
      inspection process. It will also provide the user with powerful analysis
      tools to ensure overall process control.

   .  Leverage Worldwide Distribution Capability. Through its acquisitions,
      Brown & Sharpe has expanded its product lines and strengthened its
      marketing and distribution capabilities in Europe, South America, the
      Middle East, India, and China. The Company plans to continue to strengthen
      and expand its worldwide distribution capability, principally by
      continuing to rationalize its existing distribution network and by opening
      new demonstration centers and adding direct sales capacity and
      distributors where cost effective. The Company also intends to capitalize
      on the strength of its global distribution network by increasing the
      number of Company-designed and third-party sourced products sold through
      its distribution channels in an effort to increase gross profit without a
      corresponding increase in selling, general and administrative expenses.

   .  Increase Aftermarket Sales and Services. The Company intends to increase
      its focus on higher margin aftermarket sales and services, including
      consulting services, calibration and rebuilding of CMMs, software
      upgrades, and parts sales. The Company believes that the worldwide
      installed base of CMMs, estimated at over 67,000 (including 22,400 of the
      Company's CMMs), creates a significant demand for such aftermarket
      services.

The Company believes that the level of customer service it provides, as measured
by third-party surveys of its customers, is superior to that of its principal
competitors, and expects to further strengthen its customer relationships
through enhanced aftermarket support and increased partnering efforts.  The
Company's sales attributable to aftermarket sales and service in 1998 were
estimated to be approximately 29% of MS Group net sales for the same period.

Metrology Industry
------------------

General

Metrology products and systems range from hand tools for simple measuring tasks
to complex integrated systems of hardware and software that can measure,
digitize, inspect, and verify manufactured parts and components to exacting
specifications.  Manufacturers depend upon metrology hardware and software
products to monitor consistent product conformance to their exacting
specifications, thereby improving the reliability, fit, and finish of their
products.  In addition to these quality and performance benefits, metrology
products help manufacturers lower costs by reducing errors, scrap, rework and
warranty expense, improving the manufacturing process, lowering throughput time,
increasing capacity, and reducing work-in-progress inventories. In recent years,
manufacturers have accelerated the integration of quality control functions
directly into the production process by incorporating the use of metrology
products on the factory floor.  In addition, manufacturers are demanding more
precise, capable, and flexible metrology systems as their products become
smaller, more complex and/or must meet more 
<PAGE>
 
stringent quality and safety standards. Their exacting product specifications
often require measurement to an accuracy of less than one micron (one millionth
of a meter or approximately 1/100th of the thickness of a human hair) or, in
some special cases, measurement of nanometers (one billionth of a meter or the
unit of measurement for the wavelength of light). Increasingly, metrology
systems must incorporate a mix of traditional contact and newer non-contact
technologies because of reduced part sizes and the great diversity of new
materials used in manufactured products. Metrology systems are purchased by
customers regardless of their need for additional production capacity because of
ever-increasing quality requirements and the need to reduce product costs.

Metrology products serve a broad range of measurement requirements.  The
simplest metrology products include devices such as calipers, dial gauges,
micrometers, surface plates, and height gauges.  These are generally inexpensive
hand-held tools that measure in one dimension to within an accuracy of between
two and 25 microns (80 millionths and 1/100th of an inch). Fixed gauges are
often more expensive devices that inspect and verify in one to three dimensions
to within an accuracy of between one and 25 microns and are typically used where
manufacturers need to measure a single, uniform product at a high rate of speed.
Fixed gauges tend to make simple, comparative measurements of products in a
manufacturing process.  CMMs are more sophisticated, complex machines that use a
variety of technologies to measure in three dimensions to an accuracy of between
0.5 and 100 microns.  These technologies range from advanced probes that
physically "contact" the product being measured to highly sophisticated non-
contact vision, optical, laser and scanning probes that collect precise data
without touching the product being measured.  While some CMMs are manually
operated, most are now controlled by software systems that not only compare the
product to a manufacturer's CAD/CAM models, but also provide the manufacturer
with dimensions of the product to be converted into the CAD/CAM model.  CMMs are
highly flexible machines that can measure different products for a manufacturer
without re-tooling or other significant changes as opposed to fixed gauges that
may require expensive and time-consuming retooling.  The price points of
metrology products range from $100 for a caliper to over $1.5 million for a
sophisticated CMM such as those used to measure car and truck bodies.

Markets

Participants in the metrology industry generally compete in one or more of six
broad product areas:  (i) simple and relatively inexpensive tools that measure
in one dimension, such as calipers, dial gauges, micrometers, surface plates,
and transfer gauges; (ii) digital electronic height gauges of varying accuracies
and sizes; (iii) sophisticated special purpose metrology systems including fixed
gauges; (iv) general purpose and application-specific CMMs; (v) alternative
technologies such as vision tunnels or surface finish and geometry measurement;
and (vi) customized metrology solutions to specific metrology problems.  The
Company competes in all of the foregoing product areas other than fixed gauges
and most of the alternative technologies.

Sales of simple metrology products and less sophisticated height gauges are
driven by price, brand, product innovation, ease of purchase, and effectiveness
of distribution.  Products in this category are generally hand-held or
relatively small devices that permit a manufacturer to make measurements in one
or occasionally two dimensions.  These products are generally inexpensive,
providing a cost-effective solution to simple metrology problems where the
industrial customer does not need the increased capabilities of fixed gauges,
CMMs or certain other sophisticated metrology systems.  However, simple
metrology products are generally limited in terms of accuracy, flexibility
and/or their ability to collect data.  Further, they are dependent upon skilled
operators.  The market for simple metrology products is fragmented, with many
regional suppliers.  End user markets for these products include most basic
industries, including the automotive, construction, industrial machinery,
appliance, and farm equipment industries.

Sales of fixed gauges have traditionally been driven by manufacturers' needs for
one, two, or three dimensional metrology on the factory floor.  Products in this
category, typically more expensive than simple metrology products, compete
directly with CMMs regarding inspection and verification of manufactured parts.
Fixed gauge systems are frequently a more expensive investment than comparable
CMM systems, but for the specific purpose intended, may be less expensive over
the long run.  Fixed 
<PAGE>
 
gauges can range from simple one dimensional tools to semi- and fully-automatic
three dimensional factory floor systems that quickly compare production parts to
"master parts." However, because these gauge systems are "fixed," they are
inherently inflexible. The fixed gauge must be reworked or a new gauge designed
and built every time manufacturers make dimensional changes in the part being
measured. The trend of the industry is away from fixed gauges and toward
flexible gauges because of the need to make costly changes to fixed gauges when
the part they measure changes.

Sales of CMMs and more sophisticated height gauges are driven by manufacturers'
needs for high accuracy, flexibility, speed, and information.  Products in this
category, while typically more expensive than simple metrology products and some
fixed gauges, are generally more versatile machines that can measure, digitize,
inspect, and verify diverse manufactured parts.  The accelerating use of more
sophisticated software has played an important role in the evolution of CMMs in
response to the marketplace.  Improved software and linkage to CAD/CAM and
network technologies enable CMMs both to compensate automatically for the
position of the piece to be measured, eliminating the need for the time
consuming manual positioning necessary with less advanced metrology products,
such as surface plate gauges, and also to relay information to the
manufacturer's CAD/CAM model to facilitate production process adjustments.
Although CMM-type software can be added to on-machine gauging and a small
percentage of fixed gauges, CMMs are easier to use, more flexible, and generally
provide more analytical information than most products using competing
technologies.  Presently, CMMs are installed at sites ranging from highly
controlled laboratory sites to hostile, factory floor industrial settings, and
can measure objects ranging in size from a semiconductor chip to an aircraft
exterior, and can provide accuracies with tolerances of 0.5 to 100 microns.
CMMs can achieve this through contact or non-contact probing methods, depending
upon the manufacturer's needs.  The market for CMMs is dominated by five
competitors, including the Company.

Sales of customized metrology products are driven by specific needs in specific
industries and, in Brown & Sharpe's case, tend to focus on emerging metrology
technologies.  Generally, custom metrology challenges arise where existing
metrology products and systems cannot adequately address a narrow yet important
manufacturing task.  This product category requires research, development, and
innovation and often includes the development of new applications for optical,
laser, and scanning sensor probes.

MS Group
---------

The MS Group, the largest of Brown & Sharpe's three units, accounted for
approximately 71% of Brown & Sharpe's sales in 1998.  The MS Group is
headquartered in North Kingstown, Rhode Island and manufactures and markets
CMMs.  MS Group products sold under the Brown & Sharpe name are manufactured at
the Company's North Kingstown, Rhode Island; Wetzlar, Germany; and Turin, Italy
facilities.  The primary end user markets for the Company's CMM products include
the automotive (including automotive suppliers), heavy transport, aerospace,
electronics, computer, industrial machinery, and medical industries.

MS Group products range from small, manually operated CMMs to large, high speed,
high precision automatic CMMs.  In addition to these standard and custom-
configured CMMs, Brown & Sharpe also produces and sells high-speed process
control systems.  The smallest machines can measure in a volume up to 400 x 350
x 300 mm and are priced at approximately $10 thousand, while the larger, high
speed, high accuracy CMMs with integrated software systems can cost over $1.5
million.  The MS Group also provides laser scanning and optically based
measuring machinery from microscopes to vision systems.

The Company believes that its "user-friendly" CMM application software gives
it a competitive advantage in the marketplace for CMMs.  These proprietary
software products provide the MS Group's customers with an understandable, icon-
based inspection analysis capability, graphical user interfaces and outputs, and
the capability to network with manufacturing systems.  The MS Group also
provides its customers with special software and systems that integrate the MS
Group's products with the customer's host information and communications
network. In addition to sales of CMMs, the MS Group provides aftermarket sales
and service, including calibration and rebuilding of CMMs, software upgrades and
parts 
<PAGE>
 
sales, for Brown & Sharpe CMMs and competing CMMs. The Company's sales
attributable to aftermarket sales and services in 1998 were estimated to be
approximately 29% of MS Group sales for the same period. See Footnote 12 to the
Consolidated Financial Statements, which are incorporated by reference, for
financial information related to this business segment.

PMI Division
------------

The principal products of Brown & Sharpe's PMI Division are precision measuring
tools and related instruments such as micrometers, dial indicators, calipers,
electronic height gauges, and gauge blocks. PMI Division products accounted for
approximately 26% of Brown & Sharpe's sales in 1998.  The PMI Division's
products have broader applications and lower unit list prices (with a range of
$100 to approximately $13 thousand) than the prices of the MS Group's products.
These tools and instruments typically measure in one or two dimensions, and are
often used in comparative measuring where an unknown part or dimension is
compared to a previously measured part or dimension.  Some PMI Division products
also include systems and application software for measuring and statistical
process control.  The Company believes that the primary end user markets for the
products of Brown & Sharpe's PMI Division are the automotive, aerospace, metal
processing, and defense industries, although Brown & Sharpe's PMI Division
products are used in virtually all types of industrial settings.  Brown &
Sharpe's PMI Division is headquartered in Renens, Switzerland, and its products
are manufactured at its plants in Rolle and Renens, Switzerland; Poughkeepsie,
New York; Leicester, St. Albans, and Plymouth, England; and Luneville, France.
The Company also purchases components and products from third parties located in
various countries.  See Footnote 12 to the Consolidated Financial Statements,
which are incorporated by reference, for financial information related to this
business segment.

CM Division
-----------

The CM Division is an engineering division headquartered in Telford, England.
The CM Division designs and engineers specialty products primarily utilizing
non-contact technologies.  Recent examples of CM Division products include a
system for measuring the thickness and shape of the metal top of a beverage can
and the depth and contour of the groove scored around the can's pop-up tab, so
that the manufacturer could ensure the consistency with which the can could be
opened without rupture by the end user, and an automatic multi-sensor (laser
scanning, laser ranging, optical, and tactile) system to measure, inspect and
verify the ceramic substrates on which semiconductors are placed.  The CM
Division also manufactures a range of CNC optical measuring machines for shaft
type components.  In 1997, the Company formed a joint venture company to develop
the next generation of non-contact sensing technologies and products.  This
company, Metroptic Technologies Limited, is headquartered in Israel.  Products
using the new sensors will be designed and manufactured initially at the
Company's Custom Metrology facility in Telford, England and sold under the Brown
& Sharpe brand name.  Currently, Metroptic is working on sensors designed for
inspection of turbine engine blades and electronic components-two growth
markets for measurement and inspection.  This sensor technology is also
scaleable for use in the measurement of complex contours in the aerospace and
automotive industries.  Prices for CM Division products range from approximately
$20 thousand to $1.0 million.

The primary end user markets for the custom-designed products of the CM Division
are package and can manufacturing, oil drilling, standards laboratories,
semiconductors, aerospace and defense.  Sales of these products typically
involve a close, highly technical relationship with the customer.  This direct
relationship with the customer is reinforced by strong and continuing efforts to
provide superior customer service through ongoing customer training and
technical support.

The Company believes that the CM Division provides it with cost-effective access
to emerging applications and technologies as the technologies and custom
applications developed by the CM Division with customer funding have been
directly applied to the design of standard products or systems distributed by
the MS Group or the PMI Division.  See Footnote 12 to the Consolidated Financial
Statements, which are incorporated by reference, for financial information
related to this business segment.
<PAGE>
 
Sales and Distribution
----------------------

The MS Group distributes its products primarily through a 100-person worldwide
sales force directly to U.S. and European customers, and utilizes a network of
independent agents and distributors to cover the Pacific Rim, South American,
and African markets.  The typical MS Group sales process involves lengthy,
technical, one-on-one discussions between the salesperson or the
distributor/sales agent and customer and is often part of a competitive bid
process.  As an important part of its marketing and distribution strategy, Brown
& Sharpe provides in-depth training to its customers at 20 support and
demonstration centers located throughout the United States, Europe, and Asia.
The Company's direct sales force also provides the Company with important
opportunities to cross-sell the products of its PMI and CM Divisions.

In contrast to the MS Group, the PMI Division generally distributes its products
through international import companies, regional distributors, and catalog
houses throughout the world.  As of December 31, 1998, the PMI Division utilized
in excess of 80 major distributors located in over 40 countries to market its
products.  The Company believes that the PMI Division's established distribution
network provides it with a competitive advantage and intends to capitalize on
this network to increase sales of internally developed and third-party products.

The CM Division primarily designs and manufactures products and services in
response to specific customer inquiries.  The CM Division maintains a staff of
approximately 4 sales/project engineers to respond to customer inquiries, and,
upon receipt of an order, to develop tailored solutions and manage projects to
completion.  The CM Division typically targets sales to end user markets with a
small number of participants in which the Company has little or no competition.
As a result, the Company believes that the CM Division benefits from
comparatively lower selling expenses.

The Company has no single customer which accounts for 10% or more of its
consolidated net sales; however, several well recognized major automotive
manufacturers (without regard to their suppliers) account for a significant
portion of the Company's net sales.  The loss of a few of these major customers
would have a substantial effect upon the Company.

Engineering and Product Development
-----------------------------------

Brown & Sharpe's commercial success is dependent upon its ability to develop
products, enhancements, and applications that meet changing customer metrology
needs and anticipate and respond to technological changes.  Brown & Sharpe
designs, develops, and refines its products internally through engineering
departments within its product groups and divisions.  When it is more cost-
effective to do so, Brown & Sharpe purchases product designs or portions of
product designs from engineering subcontractors or acquires rights to such
designs through licensing arrangements.  Brown & Sharpe also benefits from
research and development efforts which are subsidized by customer funds and, in
certain countries, by government research grants.  Brown & Sharpe research,
development and manufacturing engineering activities are conducted in the United
States, Italy, France, Switzerland, Germany, the United Kingdom, and Lithuania.

Brown & Sharpe derived substantial sales in 1998 from the sale of products that
it introduced after 1993.  Brown & Sharpe has introduced at least one major new
product every year since 1987.  The Company's current design and engineering
focus is the continued integration of Roch technologies with Brown & Sharpe's
previously existing technologies, software development, and non-contact
metrology products.  In 1998, Brown & Sharpe invested $17.8 million, or 5.3% of
its net sales during that period in product design and manufacturing
engineering.  In 1996 and 1997, Brown & Sharpe expended $13.9 million and $15.8
million, respectively, for product design, development, refinement, and
manufacturing engineering.

Foreign Operations
------------------

Brown & Sharpe manufactures and sells substantial amounts of its metrology
products in foreign countries. As of December 31, 1998, approximately 68% (based
on book values) of the Company's 
<PAGE>
 
assets, 58% of the Company's sales (based on customer location) and 68% of its
employees were located outside the United States. The Company's manufacturing
operations are located in Italy, Switzerland, Germany, England, and France, as
well as in the United States, and Brown & Sharpe's products are sold in over 60
countries worldwide. See Footnote 12 to the Consolidated Financial Statements,
which are incorporated by reference, for financial information related to
foreign operations.

Raw Materials and Sources of Supply
-----------------------------------

Brown & Sharpe purchases raw materials, supplies, and other components from a
variety of suppliers, and considers its sources of supply to be adequate.  At
times, the Company depends upon various sole sources of supply for certain
components used by the Company (generally of items designed by Brown & Sharpe),
but has not experienced any significant difficulty in meeting delivery
obligations because of its reliance on such a supplier.  In addition, the
Company currently purchases substantially all of its externally sourced low to
medium accuracy electronic touch trigger sensor probes and heads from a publicly
held United Kingdom company which is the dominant supplier of such sensor probes
to CMM manufacturers.  No alternative supplier for this class of electronic
sensor probes, which are a key component of substantially all of the Company's
lower accuracy CMMs, is currently available and developing an alternative source
for the probes and heads could take more than a year.  Brown & Sharpe continues
to explore means of lowering production costs through selective outsourcing in
situations where Brown & Sharpe can achieve its high quality standards via
subcontractors.

Patents, Licenses, Trademarks, and Proprietary Information
----------------------------------------------------------

The Company's business is not significantly affected by or dependent upon the
procurement or maintenance of patents covering the Company's products.
Nevertheless, the Company pursues, where appropriate, patent protection for
inventions, developments and improvements relating to its products both in the
United States and abroad.  In addition, the Company relies on a combination of
copyrights, trade secret law and contracts to protect its proprietary
information (principally related to its software and software development).
Despite these precautions, it may be possible to copy or otherwise obtain and
use the Company's proprietary information without authorization.  In addition,
effective copyright and trade secret protection may be unavailable or limited in
certain foreign countries.

Brown & Sharpe and its subsidiaries own, or have the right to use, a number of
trademarks which they believe are valuable in promoting the sale of certain of
their principal products.  The Company and its subsidiaries have registered, or
have applied to register, the trademarks owned by them in the United States and
in some foreign countries.  In addition, the Company uses the Mauser brand name
under royalty-free license agreements entered into in connection with the
Company's acquisition of these product lines.  The license expires in 1999.  The
Company believes it will be able to negotiate satisfactory extensions of this
license prior to its expiration and/or that the failure to renew this license
would not have a material adverse effect on the Company.

Environmental Matters
---------------------

The Company is not significantly affected by compliance with rules and
regulations promulgated under environmental laws since its manufacturing
processes do not produce, as a by-product, material amounts of waste, water
discharges, or air emissions deemed hazardous under such laws.  However, the
Company is subject from time to time to environmental claims.  See Note 15,
"Contingencies" of Notes to Consolidated Financial Statements in Item 8 of this
Annual Report.

Employees
---------

At December 31, 1998, Brown & Sharpe had 2,359 employees, (as compared with
2,409 at December 31, 1997), including approximately 1,601 employees located
outside the United States.  Brown & Sharpe considers its relations with its
employees to be good, although there can be no assurance that Brown & Sharpe's
cost-cutting efforts or other factors will not cause a deterioration in these
relations.
<PAGE>
 
Approximately 508 of Brown & Sharpe's employees located at sites in the United
States, Italy, Switzerland, England, and France are covered by collective
bargaining agreements which expire at various times between December 31, 1998
and June 30, 1999.  Brown & Sharpe expects that these collective bargaining
agreements will be renegotiated successfully prior to their expiration.
However, there can be no assurance that successor collective bargaining
agreements will be successfully negotiated, that negotiations will not result in
work stoppages, or that a work stoppage would not materially interfere with
Brown & Sharpe's ability to produce the products manufactured at the affected
location.

In addition to the collective bargaining agreements that cover workers at
certain of Brown & Sharpe's foreign subsidiaries, it is customary for these
employees to be represented by various works or shop councils.  These councils
are governed by applicable labor laws and are comprised of members who are
elected or appointed by the work force.  Except for the top level of management,
these councils represent the entire work force at their location in its dealings
with senior management on matters affecting the work force or arising under the
relevant labor contracts in effect at the location.

The following table sets forth the location of Brown & Sharpe's employees as of
December 31, 1998:
<TABLE>
<CAPTION>
 
    Country                                 Employees (1)
    -------                                -------------
<S>                                        <C>
France....................................          198
Germany...................................          210
Italy.....................................          400
Japan.....................................           23
Spain.....................................           18
Switzerland...............................          386
United Kingdom............................          362
Mexico....................................            4
United States.............................          758
                                                  -----
TOTAL.....................................        2,359
                                                  =====
</TABLE>
(1)  Part-time employees are included on a full-time equivalent basis.

Competition
-----------

The Company's MS Group currently has four principal direct domestic and foreign
competitors, some of which are owned by entities that have greater financial and
other resources than the Company.  The MS Group also faces indirect competition
from other types of metrology firms such as manufacturers of fixed gauging
systems.  The primary industries to which the MS Group sells its products are
characterized by a relatively small number of large participants with
significant purchasing power.  In addition, the MS Group generally sells its
products through a competitive bid process in which at least one and frequently
several of the Company's competitors have submitted competing bids.  As a
result, the Company experiences severe pricing competition in connection with
sales by its MS Group which can have an adverse impact on the Company's net
sales and margins.  During periods when the metrology industry suffers from over
capacity, downward pricing pressure experienced by the MS Group is likely to be
more intense and the Company's margins may be more severely impacted. In
addition, certain of the Company's competitors that have access to greater
financial resources may be able to withstand such pricing pressure more
effectively than the Company.  The MS Group competes with Mitutoyo/MTI Corp., a
subsidiary of Mitutoyo Solsakusho Co. Ltd., a Japan-based company, which is the
largest supplier of metrology equipment and products worldwide.  In addition to
Mitutoyo, the MS Group's main competitors are Carl Zeiss, Inc., a subsidiary of
Carl Zeiss-Stiftung AG, the Sheffield Measurement Division of Giddings & Lewis,
Inc., and LK Tool Co. Ltd.

The market for the PMI Division's products is fragmented and the PMI Division
competes with a large number of competitors, including the market leader in this
area, primarily on the basis of the strength of its third party distribution
network, price, and product innovation.  New competitors from emerging
industrialized countries with lower cost products than the Company's represent a
significant competitive challenge to the Company.  As a result, the PMI
Division's continued success and profitability will be 
<PAGE>
 
dependent on its ability to continue to develop cost-effective and innovative
products. The primary competitors of the PMI Division are Mitutoyo, L.S.
Starrett Co., and Federal Products Co. (Inc.), a subsidiary of Esterline
Technologies Corporation.

To date, the CM Division has sold its custom solutions to markets in which there
is little or no effective competition in custom metrology systems.  However, in
certain niche markets where the Company does not generally sell, Marposs S.p.A.,
an Italian company, provides custom metrology products.

Backlog
-------

The Company's backlog of product orders was approximately $72 million at year-
end 1998, compared to approximately $68 million and $66 million at year-end 1997
and 1996, respectively.

All of the orders included in the Company's year-end 1998 backlog were requested
to be filled and completed within one year and are, subject to possible customer
cancellation, expected to be completed in 1999.

Significant Customers
---------------------

The Company has no single customer which accounts for 10% or more of its
consolidated net sales; however, several well recognized major automotive
manufacturers (without regard to their suppliers) account for a significant
portion of the Company's net sales.  The loss of a few of these major customers
would have a substantial effect upon the Company.

Working Capital
---------------

A substantial amount of working capital investment in inventory and accounts
receivable is required to operate the Company's businesses.  Working capital was
approximately $111.8 million at year-end 1998 compared to approximately $109.7
million at year-end 1997.  See the discussion of working capital in
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" in Item 7 of this Annual Report.

Segment Information
-------------------
(Dollars in thousands)

The Company operates exclusively in the Metrology Business.  See Note 1 for a
further description of the Company's business.  Sales to unaffiliated customers
from Europe are defined as sales of products that are primarily assembled in a
foreign country.  Refer to "Financial Information by Business Segment and
Geographic Area" included in Footnote 12 of the Company's 1998 Annual Report,
filed as an exhibit hereto, which is incorporated by reference.

ITEM 2 - PROPERTIES
-------------------

The following table sets forth certain information concerning Brown & Sharpe's
major operating facilities:
<TABLE>
<CAPTION>
 
                               Owned/                                         Approximate
          Location             Leased             Principal Use              Square Footage
          --------             -------            -------------              --------------
<S>                            <C>      <C>                                  <C>
United States
 N. Kingstown, Rhode Island     Owned   Manufacturing, Engineering, Sales,
                                        and Administration                     348,000 (1)
 Poughkeepsie, New York         Owned   Manufacturing                           58,000
 Wixom, Michigan               Leased   Sales and Administration                37,600
</TABLE>
<PAGE>
 
<TABLE>
<CAPTION>
                   Owned/                                                       Approximate
    Location       Leased            Principal Use                             Square Footage
    --------       ------            -------------                             ---------------
<S>               <C>              <C>                                         <C>           
                          
Italy                     
  Grugliasco       Leased          Assembly                                        107,000 (2)
  Moncalieri       Leased          Manufacturing                                    70,000 (2)
                          
Switzerland               
  Renens           Owned           Manufacturing, Engineering, Sales,
                                   and Administration                              139,000
  Rolle            Owned           Manufacturing                                    51,000
                          
Germany                   
  Wetzlar          Owned           Manufacturing, Engineering, Sales,
                                   and Administration                              280,000
  Ludwigsburg      Leased          Sales                                            15,000 (2)
                          
United Kingdom            
  St. Albans       Owned           Manufacturing and Sales                          36,000
  Telford          Owned           Manufacturing, Engineering, Sales,
                                   and Administration                               32,000
  Leicester        Owned           Manufacturing                                    14,000
  Torpoint         Leased          Manufacturing, Sales, and Administration          5,000 (2)
                          
France                    
  Luneville        Leased          Manufacturing, Engineering, and Sales            77,100 (2)
  Villebon         Leased          Sales                                            18,000 (2)
                          
Spain                     
                          
  Barcelona        Leased          Sales                                             9,000 (2)
 </TABLE>

------------------
(1) Excludes approximately 412,000 square feet leased to unrelated parties.
(2) The leases in Grugliasco, Ludwigsburg, Torpoint, Luneville, Villebon and
    Barcelona expire on December 31, 2002, September 30, 2003, August 18, 2001,
    March 23, 2003, October 20, 2001, and July 31, 2008, respectively.

In addition, Brown & Sharpe leases smaller sales offices located in the United
States, Europe, and Asia.  In the opinion of management, Brown & Sharpe's
properties are in good condition and adequate for Brown & Sharpe's business as
presently conducted.

ITEM 3 - LEGAL PROCEEDINGS
--------------------------

Other Environmental Matters
----------------------------

The nature of the Company's current operations are not significantly affected by
environmental laws, rules and regulations.  However, because the Company and its
subsidiaries and predecessors have conducted heavy manufacturing operations in
the past, sometimes at facilities which have been divested or sold and often in
locations at which or adjacent to which, other industrial operations were
conducted, from time to time the Company is subject to environmental claims.  As
with any such operations that involve the use, generation, and management of
hazardous materials, it is possible that practices, including practices that
were deemed acceptable by regulatory authorities in the past, may have created
conditions which could give rise to liability under current or future
environmental laws.  Because the law in this area is developing rapidly,
including in many European countries, and such environmental laws 
<PAGE>
 
are subject to amendment and widely varying degrees of enforcement, the Company
may be subject to, and cannot predict with any certainty the nature and amount
of, potential environmental liability related to these operations or locations
that it may face in the future.

Litigation
----------

Refer to Note 15 "Contingencies" of Notes to Consolidated Financial Statements
incorporated by reference in Item 8 of this Annual Report.

ITEM 4A  EXECUTIVE OFFICERS OF THE REGISTRANT
---------------------------------------------

The following table summarizes information regarding Executive Officers of the
Company as of March 1, 1999:

<TABLE>
Name               Age       Positions Held During the Last Five Years
----               ---       -----------------------------------------
<S>              <C>         <C>                    
Frank T. Curtin    64        President & Chief Executive Officer and a Director of the
                             Company since May 2, 1995; from 1992 to May 1995, Vice
                             President, National Center for Manufacturing Sciences, a
                             research and development organization, Ann Arbor, MI.
                    
Andrew C. Genor    56        Vice President & Chief Financial Officer since December 1,
                             1998; previously Chief Financial Officer, Safety First from
                             May 1998 through September 1998; previously Vice President,
                             Chief Financial Officer & Treasurer, Wyman-Gordon Company
                             from November 1994 through March 1998.

Charles A. Junkunc 56        Executive Vice President, Strategic Planning since
                             December 1, 1998; previously Vice President & Chief
                             Financial Officer since May 1, 1992.

Antonio Aparicio   48        Vice President & General Manager--Precision Measuring
                             Instruments since September 1991.

Marcus Burton      40        Vice President & General Manager--Custom Metrology Division
                             since January 1997; previously Director of Strategic
                             Planning--Brown & Sharpe Manufacturing Co. since July 1995;
                             Managing Director--Thomas Mercer Ltd. (a subsidiary) since
                             June 1992.

Philip James       57        Group Vice President--Measuring Systems since September 1997;
                             previously Executive Vice President--International,
                             Ingersoll Milling Machine Company since November 1993.

Edward D. DiLuigi  52        Vice President & General Manager--Measuring Systems
                             U.S.A. since June 1997; previously General Manager, UNC
                             Airwork, Aircraft Engine Services Division since July 1995;
                             previously Vice President of Operations, UNC Airwork since
                             August 1992.

Brian Gaunt        60        Vice President & General Manager--Brown & Sharpe DEA S.p.A.
                             since February 1998; previously Group Chief Executive,
                             Automotive Products Group Limited since 1995; previously
                             Chief Executive  Clutch Division BBA PLC since 1991.

</TABLE>
<PAGE>
 
<TABLE>
<CAPTION>
Name                  Age       Positions Held During the Last Five Years
----                  ---        -----------------------------------------
<S>                    <C>       <C>                    
Christopher J. Garcia  42        Vice President--Software Product Development since
                                 January 1998; previously Vice President--Marketing since
                                 November 1996; previously Vice President--Business
                                 Development since January 1991; Vice President--Research and
                                 Development of Valisys Corporation since June 1994;
                                 previously Vice President--Marketing of Valisys Corporation
                                 since June 1990.

Alfred J. Corso        62        Controller and Principal Accounting Officer since
                                 June 1, 1995; previously Partner with Ernst & Young LLP.

</TABLE>

To the best of the knowledge of the Registrant, none of the Executive Officers
has any family relationships with any of the others.  Each Executive Officer
holds office until the first meeting of the Board of Directors following the
next Annual Stockholders' meeting and until his successor is elected or
appointed and qualified, unless he dies, resigns, is removed or replaced.


                                    PART II
                                    -------
                                        
ITEM 5 - MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
---------------------------------------------------------------------
         MATTERS
         -------

Refer to "Common Stock Market Prices and Dividends" included on Page F-32 of the
Company's 1998 Annual Report, filed as an exhibit hereto, which is incorporated
by reference.

ITEM 6 - SELECTED FINANCIAL DATA
--------------------------------

Refer to "Selected Financial Data" on Page F-2 of the Company's 1998 Annual
Report, filed as an exhibit hereto, which is incorporated herein by reference.

ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
--------------------------------------------------------------------
         AND RESULTS OF OPERATIONS
         -------------------------

Refer to "Management Discussion and Analysis of Financial Condition and Results
of Operations" on Pages F-3 through F-11 of the Company's 1998 Annual Report,
filed as an exhibit hereto, which is incorporated herein by reference.

ITEM 7A - QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
-------------------------------------------------------------------

Refer to "Qualitative and Quantitative Disclosures About Market Risk" on Pages
F-8 through F-9 of the Company's 1998 Annual Report, filed as an exhibit hereto,
which is incorporated herein by reference.

ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
----------------------------------------------------

Refer to Consolidated Financial Statements and Report of Independent Auditors on
Pages F-12 through F-30 of the Company's 1998 Annual Report, filed as an exhibit
hereto, which are incorporated herein by reference.

ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
--------------------------------------------------------------------
         AND FINANCIAL DISCLOSURE
         ------------------------

None.
<PAGE>
 
                                    PART III
                                    --------

ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
------------------------------------------------------------

Refer to "Information With Respect to Nominees and Other Directors Continuing in
Office" on Pages 2 and 3 in the Company's definitive Proxy Statement for the
April 30, 1999 Annual Meeting which is incorporated herein by reference.

ITEM 11 - MANAGEMENT REMUNERATION AND TRANSACTIONS
--------------------------------------------------

Refer to "Executive Compensation" on Page 12 in the Company's Definitive Proxy
Statement for the April 30, 1999 Annual Meeting which is incorporated herein by
reference.

ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
------------------------------------------------------------------------

Refer to "Principal Shareholders" and "Stock Ownership of Directors and
Officers" on Pages 5-8 in the Company's Definitive Proxy Statement for the
April 30, 1999 Annual Meeting which are incorporated herein by reference.


                                    PART IV
                                    -------

ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
--------------------------------------------------------------------------

(a) (1) and (2)  List of Financial Statements and Financial Statement Schedules

The following consolidated financial statements of Brown & Sharpe Manufacturing
Co., Inc. and subsidiaries, included in the annual report of the registrant to
its shareholders for the year ended December 31, 1998, are incorporated by
reference in Item 8:

     Consolidated Balance Sheets--December 31, 1998 and 1997

     Consolidated Statements of Operations--Years ended December 31, 1998, 1997,
     and 1996

     Consolidated Statements of Shareowners' Equity--Years ended December 31,
     1998, 1997, and 1996

     Consolidated Statements of Cash Flows--Years ended December 31, 1998, 1997,
     and 1996

     Notes to Consolidated Financial Statements--December 31, 1998

The following consolidated financial statement schedule of Brown & Sharpe
Manufacturing Co., Inc. and subsidiaries is included in Item 14(d):

     Schedule II Valuation and Qualifying Accounts

All other schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable and therefore have been omitted.

     (3) The response to this portion of Item 14 is submitted as a separate
section of this report.

(b)  Form 8-K was filed during the first quarter of 1998.
<PAGE>
 
(c)  Exhibits--The response to this portion of Item 14 is submitted as a
     separate section of this report.

(d)  Financial Statement Schedules--The response to this portion of Item 14 is
     submitted as a separate section of this report.
<PAGE>
 
                                  SIGNATURES
                                  ----------

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                  BROWN & SHARPE MANUFACTURING COMPANY
                                  (Registrant)


Date:  March 25, 1999                             By:  /s/ Andrew C. Genor
       --------------                                -------------------
                                                     Andrew C. Genor
                                                     Vice President and 
                                                     Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.


/s/ Frank T. Curtin               3/25/98         /s/ Howard K. Fuguet  3/25/98
-------------------               -------         --------------------  -------
Frank T. Curtin                    Date           Howard K. Fuguet       Date
President, Chief Executive Officer                Director
(Principal Executive Officer),
Chairman of the Board, and Director



/s/ J. Robert Held              3/25/98         /s/ John M. Nelson      3/25/98
------------------              -------         ------------------      -------
J. Robert Held                  Date           John M. Nelson           Date
Director                                          Director



/s/ Paul R. Tregurtha           3/25/98         /s/ Russell A. Boss     3/25/98
---------------------           -------         -------------------     -------
Paul R. Tregurtha               Date            Russell A. Boss         Date
Director                                        Director



/s/ Henry D. Sharpe, III        3/25/98         /s/ Roger E. Levien     3/25/98
------------------------        -------         -------------------     -------
Henry D. Sharpe, III            Date            Roger E. Levien         Date
Director                                        Director



/s/ Harry A. Hammerly           3/25/98         /s/ Andrew C. Genor     3/25/98
---------------------           -------         -------------------     -------
Harry A. Hammerly               Date            Andrew C. Genor         Date
Director                                        Vice President and 
                                                Chief Financial Officer



/s/ Alfred J. Corso             3/25/98
-------------------             -------
Alfred J. Corso                 Date
Controller
(Principal Accounting Officer)
<PAGE>
 
DIRECTORS
---------

Russell A. Boss, Director and President & Chief Executive Officer, A. T. Cross
Company

Frank T. Curtin, President & Chief Executive Officer, Brown & Sharpe
Manufacturing Company

Howard K. Fuguet, Partner, in the law firm of Ropes & Gray

Harry A. Hammerly, Former Executive Vice President, 3M Company

J. Robert Held, Consultant, Former President and Chief Executive Officer of
Chipcom Corporation

Roger E. Levien, Vice President, Strategy and Innovation, Xerox Corporation

John M. Nelson, Chairman & Chief Executive Officer, Wyman-Gordon Company

Henry D. Sharpe, III, Co-founder & Technical Director, Design Lab, Inc.

Paul R. Tregurtha, Chairman of the Board and Chief Executive Officer, Mormac
Marine Group, Inc.

OFFICERS
--------

Frank T. Curtin, President, Chief Executive Officer, and Chairman of the Board

Andrew C. Genor, Vice President, and Chief Financial Officer

Charles A. Junkunc, Executive Vice President, Strategic Development

Antonio Aparicio, Vice President & General Manager - Precision Measuring
Instruments

Marcus Burton, Vice President & General Manager - Custom Metrology

Phil James, Group Vice President - Measuring Systems

Edward D. DiLuigi, Vice President & General Manager, Measuring Systems - U.S.A.

Brian Gaunt, Vice President & Managing Director - Brown & Sharpe - DEA S.p.A.

Christopher J. Garcia, Vice President - Software Product Development

James W. Hayes, III, Secretary & Corporate Counsel

Alfred J. Corso, Controller

INVESTOR INFORMATION
--------------------

Annual Meeting:  The Annual Meeting of Stockholders will be held April 30, 1999
at 10:00a.m. at the Corporate Offices

Corporate Offices:  Precision Park, 200 Frenchtown Road, North Kingstown, RI
02852; Telephone (401) 886-2000

Form 10-K Report:  A copy of the Company's Annual Report as filed with the
Securities and Exchange Commission is available upon request to the Secretary.
<PAGE>
 
Stock Listing:  New York Stock Exchange; Symbol BNS

Transfer Agent and Registrar Common Stock:  Bank of Boston, c/o Boston
EquiServe, L.P., Mail-Stop 45-02-64, P.O. Box 644, Boston, MA 02012-0644.  They
also can be reached on the internet at the following address
http://www.equiserve.com.
<PAGE>
 
                     BROWN & SHARPE MANUFACTURING COMPANY
                Schedule II - Valuation and Qualifying Accounts
                -----------------------------------------------
                            (dollars in thousands)
<TABLE>
<CAPTION>
 
 
                                   Balance at  Charged to                 Foreign     Balance at
                                   Beginning   Costs and                  Currency      End of
           Year Ended              of Period    Expenses   Deductions   Translation     Period
---------------------------------  ----------  ----------  -----------  ------------  ----------
                                                               (2)           (1)
 <S>                                <C>         <C>         <C>          <C>           <C>

December 31, 1998
---------------------------------
 
Allowance for doubtful accounts      $3,456      $1,639      $1,673          $235       $3,657
 
December 31, 1997
-----------------

Allowance for doubtful accounts      $3,226      $1,874      $1,358          $(286)     $3,456


December 31, 1996
-----------------

Allowance for doubtful accounts      $3,030      $  941      $  761          $  16      $3,226
</TABLE> 


(1)  Adjustment resulting from translating allowance for doubtful accounts of
     foreign subsidiaries at year-end exchange rates.

(2)  Write-offs of uncollectible accounts.
<PAGE>
 
                                 Exhibit Index
                                 -------------
                                        
Number
------

   3.1     Joint Agreement of Merger between Brown & Sharpe Manufacturing
           Company, incorporated in Rhode Island, and Brown & Sharpe
           Manufacturing Company, the surviving corporation incorporated in
           Delaware, filed as the only Exhibit to Form 8-K for the month of
           January, 1969, and such is hereby incorporated by reference.

   3.2     Amendment to Certificate of Incorporation, dated April 26, 1989,
           filed as Exhibit 13 to Form 10-K for the period ending December 29,
           1989, and such is hereby incorporated by reference.

   3.3     Amendment to Certificate of Incorporation, Dated April 25, 1980,
           filed as Exhibit 3.1 to Form 10-Q for the period ending June 28,
           1980, and such is hereby incorporated by reference.

   3.4     Amendment to Certificate of Incorporation dated April 24, 1987.
           Exhibit 3.7 was filed as Exhibit 10.4 to Form 10-Q for the period
           ended June 26, 1987, and such is hereby incorporated by reference.

   3.5     Amendment to Certificate of Incorporation dated May 6, 1988 filed as
           Exhibit 1 to Current Report on Form 8-K filed May 9, 1988 and such is
           hereby incorporated by reference.

   3.6     Certificate of Designation filed as Exhibit A to Exhibit 5 of
           Amendment on Form 8 filed on March 6, 1989, and such is hereby
           incorporated by reference.

   3.7     Amendment to Certificate of Incorporation dated May 2, 1989. Exhibit
           3.7 was filed as Exhibit 3.7 to the Form 10-K for the year ended
           December 30, 1989 and such is hereby incorporated by reference.

   3.8     By-laws of Brown & Sharpe Manufacturing Company, as amended through
           July 29, 1994; previously filed as Exhibit 3.1 to the Form 10-Q for
           the quarter ended July 2, 1994 and such is hereby incorporated by
           reference.

   3.9     Amendments to By-laws of Brown & Sharpe Manufacturing Company, as of
           September 28, 1994; previously filed as Exhibit 3 to the Form 10-Q
           for the quarter ended October 1, 1994 and such is hereby incorporated
           by reference.

   4.1     (Intentionally omitted)

   +10.1   (Intentionally omitted)

   +10.2   Amended 1983 Stock Option Plan, as amended through March 9, 1988.
           Exhibit 10.2 was filed as Exhibit 10.2 to the Form 10-K for the year
           ended December 31, 1988, and is hereby incorporated herein by
           reference.

   +10.3   Amendment dated December 29, 1990 to the Brown & Sharpe Amended 1983
           Stock Option Plan. Exhibit 10.3 was filed as Exhibit 10.3 to the Form
           10-K for the year ended December 29, 1990 and such is herein
           incorporated by reference.

   +10.4   Amendment No. 4 of the Restated Brown & Sharpe Employee Stock
           Ownership and Profit Participation Plan and Trust Agreement, as
           amended through December 21, 1990. Exhibit 10.4 was filed as Exhibit
           10.4 to the Form 10-K for the year ended December 29, 1990; and is
           hereby incorporated herein by reference.

   10.5    (Intentionally omitted)
<PAGE>
 
   10.6    (Intentionally omitted)

   +10.7   (Intentionally omitted)

   +10.8   (Intentionally omitted)

   +10.9   The Brown & Sharpe Savings and Retirement Plan for Management
           Employees dated October 7, 1987.

   10.10   The Brown & Sharpe Savings and Retirement Plan dated October 7, 1987.

   +10.11  Amendment and Restatement of the Brown & Sharpe Employee Stock
           Ownership and Profit Participation Plan and Trust Agreement dated
           October 7, 1987. Exhibits 10.9 through 10.11 were filed as Exhibits
           10.2 through 10.4 respectively, to Form 10-Q for the period ended
           September 26, 1987 and such are hereby incorporated by reference.

   10.12   Preferred Stock Rights Agreement dated as of March 9, 1988, between
           the Company and The First National Bank of Boston, as Rights Agent.
           Exhibit 10.12 was filed as Exhibits 1-4 to the Registration Statement
           on Form 8-A filed on April 28, 1988, and is hereby incorporated
           herein by reference.

   10.13   Amendment No. 1, dated as of May 2, 1988, to Preferred Stock Rights
           Agreement. Exhibit 10.13 was filed as Exhibit 5 to Amendment No. 1 on
           Form 8, filed on March 6, 1989, to the Registration Statement on Form
           8-A filed on April 28, 1988, and is hereby incorporated herein by
           reference.

   10.14   Amendment No. 2, dated as of February 24, 1989, to Preferred Stock
           Rights Agreement. Exhibit 10.14 was filed as Exhibit 6 to Amendment
           No. 1 on Form 8, filed on March 6, 1989, to the Registration
           Statement on Form 8-A filed on April 28, 1988, and is hereby
           incorporated herein by reference.

   +10.15  Amendment dated February 23, 1989 to The Brown & Sharpe Savings and
           Retirement Plan for Management Employees.

   +10.16  Amendment No. 2, dated October 19, 1988, to The Brown & Sharpe
           Savings and Retirement Plan for Management Employees.

   +10.17  Amendment No. 3, dated February 23, 1989, to The Brown & Sharpe
           Savings and Retirement Plan for Management Employees.

   10.18   Amendment dated February 23, 1989 to The Brown & Sharpe Savings and
           Retirement Plan.

   10.19   Amendment No. 2, dated October 19, 1988,to The Brown & Sharpe Savings
           and Retirement Plan.

   10.20   Amendment No. 3, dated February 23,1989, to The Brown & Sharpe
           Savings and Retirement Plan.

   +10.21  Amendment dated February 23, 1989, to the Restated Brown & Sharpe
           Employee Stock Ownership and Profit Participation Plan and Trust
           Agreement.

   +10.22  Amendment No. 2, dated October 19, 1988 to the Restated Brown &
           Sharpe Employee Stock Ownership and Profit Participation Plan and
           Trust Agreement.
<PAGE>
 
   +10.23  Amendment No. 3, dated February 23, 1989 to the Restated Brown &
           Sharpe Employee Stock Ownership and Profit Participation Plan and
           Trust Agreement. Exhibits 10.15 through 10.23 were filed as Exhibits
           10.19 through 10.26, respectively, to the Form 10-K for the year
           ended December 31, 1988, and are hereby incorporated herein by
           reference.

   +10.24  Amended 1989 Equity Incentive Plan as amended through February 21,
           1992. Exhibit 10.24 was filed as Exhibit 10.24 to the Form 10-K for
           the year ended December 28, 1991 and such is hereby incorporated by
           reference.

   +10.25  Deferred Stock Equivalent Unit Contract dated September 3, 1987
           between Brown & Sharpe Manufacturing Company and Paul R. Tregurtha.
           Exhibit 10.25 was filed as Exhibit 10.24 to the Form 10-K for the
           year ended December 30, 1989 and such is herein incorporated by
           reference.

   +10.26  (Intentionally omitted)

   +10.27  Deferred Stock Equivalent Unit Contract dated November 30, 1989
           between Brown & Sharpe Manufacturing Company and Herbert A. Beyer.
           Exhibit 10.26 was filed as Exhibit 10.25 to the Form 10-K for the
           year ended December 30, 1989 and such is hereby incorporated by
           reference.

   +10.28  (Intentionally omitted)

   +10.29  Amendment No. 4, dated October 20, 1989,to Brown & Sharpe Savings and
           Retirement Plan for Management Employees. Exhibit 10.29 was filed as
           Exhibit 10.26 to the Form 10-K for the year ended December 30, 1989
           and such is hereby incorporated by reference.

   10.30   Amendment No. 4, dated October 30, 1989, to Brown & Sharpe Savings
           and Retirement Plan. Exhibit 10.30 was filed as Exhibit 10.26 to the
           Form 10-K for the year ended December 30, 1989 and such is hereby
           incorporated by reference.

   10.31   Amendment No. 5, dated September 7, 1990, of the Brown & Sharpe
           Savings and Retirement Plan. Exhibit 10.31 was filed as Exhibit 10.30
           to the Form 10-K for the year ended December 29, 1990 and such is
           hereby incorporated by reference.

   +10.32  Amendment No. 5, dated September 7, 1990, of the Brown & Sharpe
           Savings and Retirement Plan for Management Employees. Exhibit 10.32
           was filed as Exhibit 10.31 to the Form 10-K for the year ended
           December 29, 1990 and such is hereby incorporated by reference.

   10.33   (Intentionally omitted)

   +10.34  (Intentionally omitted)

   +10.35  (Intentionally omitted)

   +10.36  (Intentionally omitted)

   +10.37  (Intentionally omitted)
<PAGE>
 
   +10.38  The sales agreement pertaining to the sale of GageTalker Corporation
           to P. Eric Berg by Brown & Sharpe Manufacturing Company dated
           January, 1992. Exhibit 10.38 was filed as Exhibit 10.38 to the Form
           10-K for the year ended December 28, 1991 and is hereby incorporated
           by reference.

   +10.39  (Intentionally omitted)

   +10.40  Amendment No. 5 of the Restated Brown & Sharpe Employee Stock
           Ownership and Profit Participation Plan and Trust Agreement, as
           amended through March 23, 1991.

   +10.41  Employment/Severance Agreement dated April 23, 1992 between Brown &
           Sharpe Manufacturing Company and Charles A. Junkunc.

   +10.42  Amendment dated July 24, 1992 to Employment/Severance Agreement dated
           April 23, 1992 between Brown & Sharpe Manufacturing Company and
           Charles A. Junkunc.

   +10.43  Amendment dated November 11, 1992 to 1989 Equity Incentive Plan as
           amended through November 6, 1992. 
                
           Exhibits 10.38 through 10.43 were filed as Exhibits 10.38 through
           10.43, respectively, to the Form 10-K for the year ended December 26,
           1992, and are hereby incorporated by reference.

   10.44   The Share Purchase and Transfer agreement dated March 24, 1994 by and
           between Diehl GmbH & Co. and Brown & Sharpe Manufacturing Company was
           filed as Exhibit (c) to Form 8-K filed as of May 13, 1994, and is
           hereby incorporated by reference.

   10.45   The Acquisition Agreement pertaining to the acquisition of DEA dated
           as of June 10, 1994 between Brown & Sharpe Manufacturing Company and
           Finmeccanica S.p.A.

   10.46   The Form of Shareholders Agreement to be entered into between Brown &
           Sharpe Manufacturing Company and Finmeccanica, S.p.A.

   10.47   Amendment No. 3, dated June 16, 1994, to Rights Agreement, dated
           March 9, 1988 between Brown & Sharpe Manufacturing Company and the
           First National Bank of Boston, as Rights Agent.

           Exhibits 10.45 through 10.47 were filed as Exhibits 1 through 3,
           respectively, to the Form 8-K filed as of June 24, 1994, and are
           hereby incorporated by reference.

   10.48   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 hereby
           incorporated by reference.

   10.49   Amendment No. 1 dated July 31, 1994, to Acquisition Agreement,
           amending certain debt provisions of the agreement was filed as
           Exhibit 10.1.1 to Form 10-Q/A for the quarter ended July 2, 1994 and
           is hereby incorporated by reference.

   10.50   Letter Agreement of Henry D. Sharpe, Jr. dated September 28, 1994
           entered into pursuant to the DEA Acquisition Agreement (was filed as
           Exhibit No. 3 to Report on Form 8-K as of September 28, 1994), filed
           October 13, 1994 is hereby incorporated by reference.

   10.51   Amendment No. 6, dated November 10, 1994, to Brown & Sharpe Savings
           and Retirement Plan for Management Employees
<PAGE>
 
   10.52   Amendment No. 6, dated November 10, 1994, to Brown & Sharpe Savings
           and Retirement Plan.

   10.53   Amended Profit Incentive Plan, as amended through February 14, 1994.

   10.54   Restated Supplemental Executive Retirement Plan dated January 23,
           1995, filed as Exhibit 10.54 to Form 10-Q for the quarter ended March
           31, 1995, and is hereby incorporated by reference.

   10.55   Amendment to the Equity Incentive Plan as of February 15, 1995, filed
           as Exhibit 10.55 to Form 10-Q for the quarter ended March 31, 1995,
           and is hereby incorporated by reference.

   10.56   Amendment No. 1 dated May 31, 1995 to the Brown & Sharpe Savings and
           Retirement Plan for Management Employees. (1994 Restatement)

   10.57   Amendment No. 2 dated May 31, 1995 to the Brown & Sharpe Savings and
           Retirement Plan for Management Employees. (1994 Restatement)

   10.58   Amendment No. 1 dated May 31, 1995 to the Brown & Sharpe Savings and
           Retirement Plan. (1994 Restatement)

   10.59   (Intentionally omitted)

   10.60   Employment Agreement with Frank T. Curtin dated May 17, 1995.

           Exhibits 10.56 through 10.60 were filed as Exhibits 10.56 through
           10.60, respectively, to the Form 10-Q for the quarter ended June 30,
           1995, and are hereby incorporated by reference.

   10.61   Indemnity Agreement with Frank T. Curtin dated May 3, 1995.

   10.62   Indemnity Agreement with Alfred J. Corso dated May 3, 1995.

   10.63   Indemnity Agreement with Enrico Albareto dated October 28, 1994.

   10.64   Indemnity Agreement with Alberto de Benedictis dated October 28,
           1994.

   10.65   Indemnity Agreement with Vincenzo Cannatelli dated October 28, 1994.

           Exhibits 10.61 through 10.65 were filed as Exhibits 10.61 through
           10.65, respectively, to the Form 10-Q for the quarter ended September
           30, 1995, and are hereby incorporated by reference.

   10.66   Indemnity Agreement with Robert D Batting dated October 5, 1995.

   10.67   Letter Agreement with Finmeccanica dated December 18, 1995 concerning
           Purchase Price Adjustment.

   10.68   The Brown & Sharpe Key Employee Long-Term Deferred Cash Incentive
           Plans dated February 23, 1996 effective January 1, 1995.

   10.69   Amendment dated July 28, 1995 to Employment/Severance Agreement dated
           March 14, 1988 between Brown & Sharpe Manufacturing Company and
           Richard F. Paolino.

   10.70   (Intentionally omitted)

   10.71   Employment Agreement with Robert D. Batting dated September 26, 1995.
<PAGE>
 
   10.72   Employment Agreement with C. John Cooke dated November 26, 1991.

   10.73   Employment Agreement with Antonio Aparicio dated October 17, 1995.

   10.74   (Intentionally omitted)

   10.75   Employment Agreement with James W. Cooper dated July 17, 1996, as
           amended July 24, 1996 and August 1, 1996.

   10.76   Amendment to Employment Agreement with Frank T. Curtin dated as of
           January 1, 1996.

           Exhibits 10.69 through 10.76 were filed as Exhibits 10.69 through
           10.76, respectively, to the Form S-1 dated October 9, 1996, and are
           hereby incorporated by reference.

   10.77   (Intentionally omitted)

   10.78   Indemnity Agreement with James W. Cooper dated August 19, 1996.

   10.79   Indemnity Agreement with Harry A. Hammerly dated October 25, 1996.

   10.80   Indemnity Agreement with John Robert Held dated October 25, 1996.

   10.81   Indemnity Agreement with Roger E. Levien dated October 25, 1996.

   10.82   Indemnity Agreement with Christopher J. Garcia dated January 1, 1998.

   10.83   Indemnity Agreement with Marcus Burton dated January 1, 1998.

   10.84   Employment Agreement dated May 29, 1997 with Edward D. DiLuigi.

   10.85   Employment Agreement dated August 18, 1997 with Philip James.

           Exhibits 10.84 and 10.85 were filed as Exhibits 10.84 through 10.85,
           respectively, to the Form 10-Q for the quarter ended September 30,
           1997, and are hereby incorporated by reference.

   +10.86  Indemnity Agreement with Edward D. DiLuigi dated June 16, 1997.

   +10.87  Indemnity Agreement with Philip James dated September 8, 1997.

   +10.88  Indemnity Agreement with Brian Gaunt dated February 13, 1998.

   +10.89  Supplemental Executive Retirement Plan dated February 13, 1998.

   10.90   Rights Agreement dated as of February 13, 1998 ("Rights Agreement")
           between the Company and BankBoston N.A., as Rights Agent, filed as
           Exhibit 1 to Report on Form 8-K dated March 5, 1998, which is hereby
           incorporated by reference.

   10.91   Form of Certificate of Designation with respect to the Series B
           Participating Preferred Stock, par value $1.00 per share, of the
           Company (filed as Exhibit A to the Rights Agreement, filed as Exhibit
           A to Report on Form 8-K dated March 5, 1998), which is hereby
           incorporated by reference.

   +*10.92 Severence agreement between Brown & Sharpe Manufacturing Company and
           Frank T. Curtin dated February 17, 1998.
<PAGE>
 
   +*10.93 Severence agreement between Brown & Sharpe Manufacturing Company and
           Charles A. Junkunc dated February 17, 1998.

   +*10.94 Severence agreement between Brown & Sharpe Manufacturing Company and
           Philip James dated February 17, 1998.

   +*10.95 Severence agreement between Brown & Sharpe Manufacturing Company and
           Antonio Aparicio dated February 17, 1998.

   +*10.96 Severence agreement between Brown & Sharpe Manufacturing Company and
           Marcus Burton dated February 17, 1998.

   +*10.97 Severence agreement between Brown & Sharpe Manufacturing Company and
           Edward D. DiLuigi dated February 17, 1998.

   +*10.98 Severence agreement between Brown & Sharpe Manufacturing Company and
           Christopher J. Garcia dated February 17, 1998.

   +*10.99 Severence agreement between Brown & Sharpe Manufacturing Company and
           Brian Gaunt dated February 17, 1998.

   +*10.100     Severence agreement between Brown & Sharpe Manufacturing Company
                and Alfred J. Corso dated February 17, 1998.

   +*10.101     Severence agreement between Brown & Sharpe Manufacturing Company
                and James W. Hayes, III dated February 17, 1998.

   +*10.102     Severence agreement between Brown & Sharpe Manufacturing Company
                and Les W. Sgnilek dated February 17, 1998.

   +*10.103     Severence agreement between Brown & Sharpe Manufacturing Company
                and Bryn Edwards dated February 17, 1998.

   +*10.104     Severence agreement between Brown & Sharpe Manufacturing Company
                and Kenneth Kirkendall dated February 17, 1998.

   +*10.105     Severence agreement between Brown & Sharpe Manufacturing Company
                and Fred Schutter dated February 17, 1998.

   +*10.106     Key Employee's Long-Term Deferred Cash Incentive Plan as amended
                through February 23, 1998.

   +*10.107     Supplemental Executive Retirement Plan as amended February 13,
                1998.

   +*10.108     Senior Executive Supplemental Umbrella Pension Plan dated
                February 13, 1998.

                Exhibits 10.92 through 10.108 were filed as Exhibits 10.92
                through 10.108, respectively, to the Form 10-Q for the quarter
                ended June 30, 1998, and are hereby incorporated by reference.

   *13.         1998 Annual Report to Shareowners, filed for information of the
                Commission except for those portion thereof which are expressly
                incorporated by reference in this report.

   *18.         Letter of Ernst & Young LLP, independent accountants, regarding
                preferability of change in accounting principles to conform
                worldwide use of completed contract method basis accounting for
                its larger, more fully configured machines.
<PAGE>
 
   *22.         Subsidiaries of the Registrant.

   *23.         Consent of Independent Auditors - Ernst & Young LLP.

    27          Financial Data Schedule for Fiscal Year ended December 31, 1998.


* To obtain a copy of the Exhibits filed with this Annual Report on Form 10-K, 
  refer to page 30.

+ This identifies management contracts or compensatory plans.
<PAGE>
 
Shareholders may obtain the following Exhibits filed with the 1998 Annual Report
on Form 10-K upon request. Charges will be made according to the following
schedule and payment should be made by either check or money order and should
accompany the request. The charge for all 1998 Exhibits is $57.05. Charges for
previously filed Exhibits incorporated by reference will be provided upon
request. Requests should be directed to: Secretary, Brown & Sharpe Manufacturing
Company, 200 Frenchtown Road, North Kingstown, Rhode Island 02852.

<TABLE>
<CAPTION>
 
   Exhibit                                                   Pages  Postage  Total
----------                                                   -----  -------  -----
<S>         <C>                                              <C>    <C>      <C>
 
  10.92     Severence agreement between Brown & Sharpe
            Manufacturing Company and Frank T. Curtin
            dated February 17, 1998.                            13     $.55  $3.80
 
  10.93     Severence agreement between Brown & Sharpe
            Manufacturing Company and Charles A. Junkunc
            dated February 17, 1998.                            13     $.55  $3.80
 
  10.94     Severence agreement between Brown & Sharpe
            Manufacturing Company and Philip James
            dated February 17, 1998.                            13     $.55  $3.80
 
  10.95     Severence agreement between Brown & Sharpe
            Manufacturing Company and Antonio Aparicio
            dated February 17, 1998.                            13     $.55  $3.80
 
  10.96     Severence agreement between Brown & Sharpe
            Manufacturing Company and Marcus Burton
            dated February 17, 1998.                            13     $.55  $3.80
 
  10.97     Severence agreement between Brown & Sharpe
            Manufacturing Company and Edward D. DiLuigi
            dated February 17, 1998.                            13     $.55  $3.80
 
  10.98     Severence agreement between Brown & Sharpe
            Manufacturing Company and Christopher J. Garcia
            dated February 17, 1998.                            13     $.55  $3.80
 
  10.99     Severence agreement between Brown & Sharpe
            Manufacturing Company and Brian Gaunt
            dated February 17, 1998.                            13     $.55  $3.80
 
  10.100    Severence agreement between Brown & Sharpe
            Manufacturing Company and Alfred J. Corso
            dated February 17, 1998.                            13     $.55  $3.80
 
  10.101    Severence agreement between Brown & Sharpe
            Manufacturing Company and James W. Hayes, III
            dated February 17, 1998.                            13     $.55  $3.80
 
  10.102    Severence agreement between Brown & Sharpe
            Manufacturing Company and Les W. Sgnilek
            dated February 17, 1998.                            13     $.55  $3.80
 
  10.103    Severence agreement between Brown & Sharpe
            Manufacturing Company and Bryn Edwards
            dated February 17, 1998.                            13     $.55  $3.80
</TABLE> 
<PAGE>
 
<TABLE> 
<S>         <C>                                                <C>    <C>    <C>  

  10.104    Severence agreement between Brown & Sharpe
            Manufacturing Company and Kenneth Kirkendall
            dated February 17, 1998.                            13     $.55  $3.80
 
  10.105    Severence agreement between Brown & Sharpe
            Manufacturing Company and Fred Shutter
            dated February 17, 1998.                            13     $.55  $3.80
 
  10.106    Key Employee's Long-Term Deferred Cash
            Incentive Plan as amended through
            February 23, 1998.                                  10     $.55  $3.05
 
  10.107    Supplemental Executive Retirement Plan
            as amended February 13, 1998.                        8     $.55  $2.55
 
  10.108    Senior Executive Supplemental Umbrella
            Pension Plan dated February 13, 1998.               11     $.55  $3.30
 
  13.       1997 Annual Report to Shareowners
 
  18.       Ernst & Young LLP, letter regarding
            preferability of change in
            accounting principles.                               1     $.33  $ .58

  22.       Subsidiaries of the Registrant.                      2     $.33  $ .83
 
  23.       Consent of Independent Auditors
            - Ernst & Young LLP.                                 1     $.33  $ .58
 
</TABLE>