<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                  FORM 10-K/A

                                 ANNUAL REPORT

                       PURSUANT TO SECTION 13 OR 15(d) OF

                      THE SECURITIES EXCHANGE ACT OF 1934
   For the fiscal year ended December 31, 2000 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 $68,000,000 as
of March 1, 2001.

There were 13,287,516 Shares of Class A Common Stock and 501,369 Shares of Class
B Common Stock, each having a par value of $1.00 per share, outstanding as of
March 1, 2001.

                                     Page 1
<PAGE>

                                    PART III


ITEM  11 - EXECUTIVE COMPENSATION
----------------------------------

DIRECTOR COMPENSATION

     As compensation for services rendered during 2000, the Company paid each
non-employee Director an annual retainer of $15,000, a fee of $1,000 for each
Board meeting attended, a fee of $500 for each teleconference meeting which
lasted more than one-half hour in duration, and a fee of $1,000 for each
Committee meeting attended. Directors who are Chairpersons of Committees also
receive an additional $3,000 in their annual retainer fee.

EXECUTIVE COMPENSATION

   The following table sets forth the annual and long-term compensation during
each of the Company's last three fiscal years of Kenneth N. Kermes, the
Company's President and Chief Executive Officer; four other highest-paid
Executive Officers (as such term is defined under rules promulgated under the
Securities Exchange Act of 1934) who were serving in such capacity as of the end
of the Company's last completed fiscal year; and Frank T. Curtin, who served as
the Company's President and Chief Executive Officer until May 1, 2000.

                           SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>

                                                                              Long-Term Compensation Awards
                                                                        --------------------------------------------------
                          Annual Compensation                           Awards                      Pay-outs
--------------------------------------------------------------------------------------------------------------------------
           (a)           (b)    (c)        (d)             (e)         (f)            (g)          (h)          (i)
                                                            Other       Restricted     Securities
                                                            Annual      Stock          Underlying   All Other
     Name and                                               Compen-     Award(s)       Options/     LTIP         Compen-
    Principal Position    Year   Salary ($) Bonus ($)(9)    sation ($)       ($)(6)    SARs (#)     Payouts ($)  sation ($)
------------------------  ----   --------   -------------   ---------   ----------     ----------   ----------   ---------
<S>                       <C>    <C>        <C>             <C>         <C>            <C>          <C>          <C>
Kenneth N. Kermes(1)       2000   81,730               --          --           --        150,000           --       1,153
  President and Chief      1999       --               --          --           --             --           --          --
  Executive Officer        1998       --               --          --           --             --           --          --

Philip James(3)(7)(8)      2000  265,200          179,010          --           --             --           --      78,037
  Group Vice President,    1999  264,846               --          --           --         50,000           --      76,956
  Measuring Systems        1998  254,846          107,785          --           --         50,000           --     116,917

Antonio Aparicio(4)(7)     2000  216,106          183,033          --           --         15,000           --      36,677
  Vice President -         1999  227,002               --       2,000           --         20,000           --      38,839
  Precision Measuring      1998  233,594           63,149          --           --         30,000           --      71,616
  Instruments

Andrew C. Genor(5)(7)(8)   2000  243,000          145,800          --           --             --           --      39,217
 Vice President and        1999  242,307               --     139,111           --         65,000           --      38,122
  Chief Financial Officer  1998   30,288               --          --           --         25,000           --          --

</TABLE>

                                     Page 2
<PAGE>

<TABLE>
<CAPTION>
<S>                       <C>    <C>        <C>             <C>         <C>            <C>          <C>          <C>
Edward D.                  2000  220,000          132,000          --           --             --           --      50,557
 DiLuigi(6)(7)(8)          1999  219,307               --          --           --         25,000           --      49,476
Vice President,            1998  199,230           84,537     113,724           --         25,000           --      62,697
 Measuring Systems
 -Americas

Frank T. Curtin(2)(7)(8)   2000  155,387               --          --           --             --           --     191,889
 President and Chief       1999  422,777               --          --           --        100,000           --     232,339
 Executive Officer         1998  359,972          208,455          --           --         80,000           --     286,756

</TABLE>


(1)  Mr. Kermes was elected President and Chief Executive Officer of the Company
    by the Board of Directors on April 28, 2000 to succeed Mr. Curtin, who
    retired on May 1, 2000.  The amount in Column (c) reflects compensation for
    the partial year of employment, and the amount in Column (i) reflects the
    Company contribution to Mr. Kermes' SARP and ESOP account.

(2) Column (i) includes for Mr. Curtin amounts of $54,191 for 1999 and $54,092
    for 1998, including interest earnings,  credited to a Supplemental Executive
    Retirement Plan account (the "SERP"); amounts of $15,496 and  $15,664,
    representing the values of the 1999 and 1998, year-end Company
    contributions, respectively, to the executives SARP (4% plus Company
    matching contributions) and ESOP (2% in shares of Class A Stock); and
    amounts referred to in Footnotes (7) and (8).

(3) Column (i) includes for Mr. James for 1998 and 1999 amounts of $15,496 and
    $15,664, respectively, for the value of the year-end Company contribution to
    the executives SARP and ESOP retirement account and for 2000 an amount of
    $16,577 for the year-end contribution to the executives SARP account and
    amounts of $8,253; $24,452; and $24,452, respectively, credited to the
    executives SERP account for such years and the amounts referred to in
    Footnotes (7) and (8).

(4) Mr. Aparicio is employed by Brown & Sharpe Tesa S.A., a Swiss corporation
    ("Tesa") and subsidiary of the Company. Amounts shown are converted from
    Swiss Franc equivalent for 2000, 1999, and 1998 at the yearly average U.S.
    dollar exchange rates of $.5946; $.6390; and $.6905, respectively. Column
    (i) includes dollar value of contributions made to Brown & Sharpe Tesa
    S.A.'s retirement plans for Mr. Aparicio's benefit for 1998, 1999, and 2000
    in the amounts of $40,616; $60,782; and $36,677, respectively and amounts
    referred to in Footnotes (7) and (8).

(5) Mr. Genor commenced his employment in December of 1998, and the amount in
    Column (c) reflects the short period of employment for such year.  Column
    (e) includes for 1999 amounts of $72,388 for reimbursement of moving
    expenses and $66,723 for offsetting additional income taxes incurred by the
    moving expense reimbursement.  Column (i) includes for 1999 an amount of
    $15,482 for the value of the year-end Company contribution to the executives
    SARP and ESOP retirement account and for 2000 an amount of $16,577 for the
    year-end contribution to the executives SARP account and the amounts
    referred to in Footnotes (7) and (8).  During 1999 the Company also loaned
    Mr. Genor $400,000 at the applicable federal rate in connection with his
    relocation home purchase, which principal amount and interest was repaid
    prior to year-end.

(6) Column (i) includes for Mr. DiLuigi 1999 and 1998 amounts of $15,664 and
    $15,496 for the value of the year-end Company contribution to the executives
    SARP and ESOP retirement account and for 2000 an amount of $16,577 for the
    year-end contribution to the executives SARP account and amounts of $8,033;
    $16,542; and $16,542 credited to the executives SERP account, respectively,
    for such years and the amounts referred to in Footnotes (7) and (8).

(7) Column (i) includes amounts of $217,000; $31,000; $93,000; and $39,000 for
    1998 for Messrs. Curtin, Aparicio, James, and DiLuigi, respectively,
    credited to memorandum accounts established for the Executive under the
    Long-Term Deferred Cash Incentive Plan.  On February 23, 1996 the Board of
    Directors approved, on recommendation of the Compensation and Nominating
    Committee, the Brown & Sharpe Key Employees' Long-Term Deferred Cash
    Incentive Plan ("LTDCIP") with effect from January 1, 1995 (see discussion
    in Compensation and Nominating Committee Report).  The LTDCIP is intended to
    be a non-qualified unfunded pension plan within the meaning of Section 3(2)
    of the Employee Retirement Income Security Act. Award credits are made
    annually to LTDCIP

                                     Page 3
<PAGE>

    participants based on one year's financial performance of the Company out of
    an award pool of 6% of adjusted pre-tax earnings pro rata based on the
    salaries of participants. The LTDCIP was amended in 1998 to provide that
    beginning in 1998 participant award opportunities are individually
    determined by the Committee annually as a percentage of adjusted pre-tax
    profit. Participants become vested in each accrued annual award after three
    years subject to accelerated vesting upon a change of control (as defined)
    and with payout of the credited vested amounts plus interest accrued at a
    market rate deferred until retirement at or after age 65, death or
    disability, or earlier upon termination of employment for reasons other than
    cause. Beginning after January 1, 1998, participants have the option under
    the Plan to convert all or a portion of their account balances into phantom
    shares of the Company's common stock in order to satisfy the requirements in
    the Company's Executive Officer Stock Ownership Policy applicable to
    participants. (See discussion under "Retirement Plans".) No award credits
    were earned by any of the named Executive Officers for 1999 and 2000.

(8) Column (i) includes for 2000 and for 1999 amounts of $162,652; $37,008;
    $22,640; and $17,438 for Messrs. Curtin, James, Genor, and DiLuigi,
    respectively, for payment of insurance premiums by the Company for split-
    dollar term life insurance for the benefit of the named Executive Officers
    who do not have any interest in either the cash surrender value of such
    policies or refunded premiums in the event of termination of such policy.

(9) For 1999 Messrs. Curtin, James, Aparicio, Genor, and DiLuigi met the cash
    flow performance criteria objectives (but not the net income criteria) for
    1999 under the amended Profit Incentive Plan and are entitled to partial
    bonuses in the amounts of $114,823; $53,703;  $44,618; $43,740; and $39,600,
    respectively.  The Board of Directors determined that such amounts will be
    earned and paid when the Company completes a financing transaction that
    deals satisfactorily with the Company's current default situation with its
    principal lenders and its indebtedness/liquidity problem.   The amounts in
    Column (d) for Messrs. James, Aparicio, Genor, and DiLuigi for 2000
    represent cash bonus payments to such executives earned for performance for
    such year under the Company's Profit Incentive Plan.


STOCK OPTION/SAR GRANTS

     Under provisions of the Company's 1989 Equity Incentive Plan, which Plan
terminated on February 24, 1999, with no further awards being able to be made
after such date, and the 1999 Equity Incentive Plan, which was approved by the
stockholders on April 30, 1999 (together the "EIP"), a variety of stock and
stock based awards, performance cash awards and related benefits, including
stock options, both qualified incentive and non-qualified options, and stock
appreciation rights ("SARs"), may be awarded to Executive Officers, other key
employees of the Company and its subsidiaries, and Directors.  Options were
awarded under the 1999 EIP in April and July of 2000 to two of the Executive
Officers named in the Summary Compensation Table as set forth in the table
below:

                     OPTIONS/SAR GRANTS IN LAST FISCAL YEAR



<TABLE>
<CAPTION>

                                                                                                 Potential Realizable Value
                                                                                                   at Assumed Annual Rates
                                                                                                 of Stock Price Appreciation
                             Individual Grants                                                         for Option Term
----------------------------------------------------------------------------------------------------------------------------------
        (a)                 (b)                (c)               (d)          (e)                  (f)             (g)
                                           % of Total
                                          Options/SARs
                        Options/SARs       Granted to         Exercise
                        Granted(1)        Employees in      or Base Price    Expiration
Name                    (#)               Fiscal Year          ($/Sh)           Date               5% ($)          10% ($)
----------------------------------------------------------------------------------------------------------------------------------
<S>                     <C>              <C>                 <C>            <C>            <C>             <C>
Kenneth N. Kermes          150,000            63.5               1.875         4/27/10            176,810          448,200
Antonio Aparicio            15,000             6.3               2.3125        7/30/10             21,713           55,163
</TABLE>

                                     Page 4
<PAGE>

(1)   There were no SARs granted in 2000 to any Executive Officers.

(2) The potential realizable value represents future opportunity and has not
    been reduced to present value in 2000 dollars.  The dollar amount included
    in these columns are the result of calculations at assumed rates set by
    rules of the Securities and Exchange Commission for illustrative purposes,
    and such rates are not intended to be a forecast of the common stock price
    and are not necessarily indicative of the values that may be realized by the
    named Executive Officer.  The potential realized value is based on
    arbitrarily assumed annualized rates of stock price appreciation of five and
    ten percent over the full ten-year term of the options.  For example in
    order for the persons named in the table who received options with exercise
    prices of $1.875 and $2.3125 per share to realize the potential values set
    forth in columns (f) and (g), the prices per share of the Company's Class A
    Stock would have to be $3.054 and $3.76; and $4.863 and $5.99, respectively

AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END VALUES

     The following table summarizes the number of options held, the number of
options exercised during 2000, and the value of unexercised options held by the
named Executive Officers at fiscal year-end:  No SARs have been granted to any
of the named Executive Officers.

    AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
                               OPTION/SAR VALUES
<TABLE>
<CAPTION>

(a)                      (b)             (c)                         (d)                                  (e)
                                                            Number of Securities              Value of Unexercised
                                                           Underlying Unexercised                 In-the-Money
                                                               Options/SARs at                   Options/SARs at
                                                             Fiscal Year-End (#)                Fiscal Year-End ($)
                        Shares
                     Acquired on        Value                 Exercisable (E)/                   Exercisable (E)/
Name                 Exercise (#)    Realized ($)            Unexercisable (U)                   Unexercisable (U)
-------------------  ------------    -----------          --------------------------         ------------------------
<S>                  <C>           <C>                    <C>             <C>                <C>           <C>
                                                          (E)             (U)                 (E)          (U)
Kenneth N. Kermes    None                  --                       --      150,000                --           --
Philip James         None                  --                   62,500       87,500                --           --
Antonio Aparicio     None                  --                   73,000       50,000                --           --
Andrew C. Genor      None                  --                   12,500       77,500                --           --
Edward D. DiLuigi    None                  --                   35,000       45,000                --           --
Frank T. Curtin      None                  --                  200,000           --                --           --
</TABLE>

RETIREMENT PLANS

     SENIOR EXECUTIVE SUPPLEMENTAL UMBRELLA PENSION PLAN. The Board of Directors
of the Company in May of 1998 ratified action taken by the Compensation and
Nominating Committee of the Board (the "Committee") on February 13, 1998,
approving the Senior Executive Supplemental Umbrella Pension Plan (the "Umbrella
SERP").  The Umbrella SERP is designed to provide key senior executives selected
by the Committee with retirement benefits which, together with the annuitized
value of their benefits under the Company's Employee Stock Ownership and Profit
Participation Plan ("ESOP"), Savings and Retirement Plan ("SARP") and
Supplemental Executive Retirement Plan ("SERP"), plus Social Security benefits,
will deliver an annuity equal to a percentage (determined by the Committee) of
the Executive's final average pay (as defined).  The portion of SARP benefits
attributable to the Executive's own savings or deferrals (or matching
contributions and credits) are disregarded in this computation.  For purposes of
determining any offset for ESOP and SARP benefits, the value of the Executive's
accounts in those two plans is assumed to have grown from January 1, 1998 at a
rate equal to the Merrill Lynch Government Master Treasury Bond Index (Ten Plus
Years) rate as from time to time in effect.

     Final average pay under the Umbrella SERP is defined as the aggregate of
the following amounts, in each case based on the highest three-year average for
such amount determined over the ten-year period preceding the determination
date:  base salary, annual or special bonuses, employer contributions to SARP,
Company matching contributions to the SARP, allocations of contributions under
the ESOP, and retirement credits under SERP.  Full benefits

                                     Page 5
<PAGE>

are payable upon retirement at or after age 65 with at least five years of
service or at or after age 60 with at least ten years of service. Reduced
benefits are payable in the event of termination after age 55 with at least five
years of service. Benefits are also payable upon a change in control, with
credit given for any period of severance entitlement under a management change-
in-control agreement with the Executive (whether or not the Executive's
employment has been terminated) and without regard as to whether the Executive
has five years of service. Initially benefits under the Umbrella SERP were
payable as an annuity with survivor benefits to the Executive's spouse or in any
of the following actuarially equivalent forms: a single life annuity, a 50%
joint and survivor annuity, three equal annual installments or a single lump sum
payment. In February 2000 the Board of Directors approved an amendment to the
Plan modifying the payment distribution provisions including distributions with
respect to participants whose employment with the Company has terminated prior
to the effective amendment date as permitted by the Plan. The amendment
eliminates the three annual installment and lump-sum payment options and
provides, in addition to retaining the other options, that payment may be made
in cash annually over a period of five years or such other period as permitted
by the administrator of the Plan. The participating Executive may elect the form
of payment subject to certain advance-election requirements specified in the
Umbrella SERP. Messrs. Curtin, James, Genor, and DiLuigi participate in the
Umbrella SERP and will receive retirement benefits at the following percentages
of 60%, 55%, 50%, and 50%, respectively, of their final average pay (as
defined), which based on current actuarial calculation and in accordance with
the Plan provisions, would (if this payment was selected by the participant)
yield annual lifetime post-retirement benefits at age 65 of approximately
$363,304; $179,037; $126,373; and $128,248, respectively. Mr. Kermes does not
participate in the Umbrella SERP.

     The Umbrella SERP was adopted in 1998 in conjunction with 1998 amendments
to the LTDCIP and the SERP and the adoption of an Executive Officer Stock
Ownership Policy.  That Policy requires that senior executives of the Company
designated by the Committee, and including all participants in the Umbrella
SERP, own shares of stock of the Company (including shares deemed to be owned
under certain circumstances) having a market value equal, at the date of
calculation of accrued credits under the LTDCIP, to three times (for the CEO)
and two times (for other executives) the amount of their base salary.  Until
such levels are achieved, the LTDCIP provides that any amounts annually credited
to such executives under the LTDCIP shall be notionally invested in shares of
stock of the Company as specified in the LTDCIP.

     SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN.  The Company maintains a non-
qualified Supplemental Executive Retirement Plan ("SERP") designed to permit
certain eligible employees to defer, on an elective basis, up to 50% of salary,
as well as automatic deferral of elective contribution amounts that could have
been saved under the Company's Savings and Retirement Plan but which were
reduced because of applicable tax limitations.  In addition the SERP provides
for Company credits designed to make up for Company contributions that would
have been made to the Savings Plan or the ESOP but for such tax limitations.
Participant accounts are maintained on the books of the Company on an unfunded
basis, although the Plan permits the establishment of a grantor trust or another
funding medium to fund the future payment of benefits, and reflect deferrals and
credits including interest earned from market-based investment alternatives
available to Participants.  Subject to such limitations as the Board of
Directors may impose, Participants may elect from several options the manner in
which their SERP accounts will be distributed, so long as the election is made
prior to the period for which the deferrals or other Company credits are made.
However, in the event of death or upon a change in control (as defined) of the
Company, a Participant's entire interest under SERP becomes immediately due and
payable in a lump sum.  Messrs. James, Genor, and DiLuigi but not Mr. Kermes
participate in the SERP, and Company contributions made to their SERP accounts
in 2000 are referenced in the respective footnotes to the Summary Compensation
Table.

     FOREIGN RETIREMENT PLAN.  Brown & Sharpe Tesa S.A., a Swiss corporation
("Tesa"), one of the Company's principal foreign subsidiaries, maintains a
defined contribution retirement plan required by Swiss law, pursuant to which
benefits accrue on behalf of Mr. Aparicio annually in an amount equal to a
percentage (based on his age and salary) of annual compensation and under which
interest accrues on accrued benefit amounts at a compound annual rate of 4%. Mr.
Aparicio has been a participant in this plan since 1972.  Upon retirement at age
65, he is entitled to receive an annual pension in an amount equal to 7.2% of
the total accrued benefits, and the estimated annual pension payable upon
retirement at normal retirement age (age 65) under such plan in an amount
equivalent to $102,023. In addition, Tesa sponsors a separate defined
contribution plan covering Mr. Aparicio and other key employees pursuant to
which Mr. Aparicio is eligible to receive a lump-sum payment upon retirement.
The estimated lump sum payable to Mr. Aparicio upon retirement under this
sponsored plan at normal retirement age is an amount equivalent to $418,973.
(U.S. Dollar amounts converted at the average monthly exchange rate for the 2000
year of $.5946 per Swiss Franc.)

                                     Page 6
<PAGE>

EMPLOYMENT, SEVERANCE, AND OTHER AGREEMENTS

     EMPLOYMENT AGREEMENTS.  Mr. Frank T. Curtin retired from employment in the
capacity of President and Chief Executive Officer on May 1, 2000 at the end of
his Employment Agreement dated May 2, 1995, as amended. The amended Agreement
provided for (i) an annual base salary at the rate of $425,274 for 2000 subject
to increases at the discretion of the Board of Directors; and (ii) annual cash
incentive bonuses in an amount not to exceed the maximum amount permitted under
the PIP with all or a portion thereof to be "earned out" and subject to
achievement of objectives determined by the Compensation Committee of the Board
(See Compensation Committee Report); and (iii) participation in other executive
employee benefits. The Agreement provides that the Company may terminate his
employment for a reason other than death, disability, or for cause (as defined
in the Agreement) subject, however, to continuation of his base salary and
benefits for the unexpired term remaining under the Agreement, but in any event
not less than twelve months. No salary or benefits are continued if the
employment is terminated by the Company for cause or upon death or disability.
The Company entered into an agreement with Mr. Curtin on the date of his
termination from employment on May 1, 2001 to pay him a one-year continued
salary for consulting services.

     The Company entered into Employment Agreements on January 3, 2000 with
Messrs. James and DiLuigi, which provide each Executive with a two (2) year term
of employment ending December 31, 2002 at their current annual base salaries,
which are to be reviewed by the Board of Directors.  The agreements also provide
that upon termination by the Company of their employment without cause, prior to
expiration of their terms of employment, the Company will pay them a severance
amount of one year's annual base salary in monthly installments, subject to a
one year non-compete covenant.  Both Employment Agreements provide that upon the
occurrence of a change in control of the Company, they are cancelled and
terminated and are superceded by the change-in-control agreements referred to
below.

   The Company's Swiss subsidiary, Brown & Sharpe Tesa S.A., has an employment
agreement with Antonio Aparicio entered into in October 1995 which provides
payment of a severance amount to Mr. Aparicio upon termination of employment
equal to the salary paid to him during the twelve-month period prior to the
effective date of termination.

   CHANGE-IN-CONTROL AGREEMENTS.  The Company had a Change-in-Control ("CIC")
agreement, dated August 31, 1999, with Mr. Curtin, which provides for certain
payments and benefits to Mr. Curtin upon termination of his employment by the
Company without cause or termination by Mr. Curtin for good reason (as defined),
in the event either such termination occurs after a change in control in the
Company (as defined).  Under such agreement, Mr. Curtin would be entitled to a
severance payment of an amount equal to twice the sum of his base salary and
bonus at the highest levels during the five-year period then preceding a change
in control or termination, an additional severance payment equal to the annual
levels in effect prior to the change in control (or termination), of the
contributions, credits, and other benefits that Mr. Curtin was receiving under
the Company's various retirement and long-term incentive plans and the
continuation for a two-year period of the Company's health and life insurance
benefits at the levels in effect immediately prior to the change in control or
termination.  These payments and benefits will be reduced to the extent
necessary to preserve their deductibility to the Company for federal income tax
purposes and to avoid imposition of any "excess parachute payment" taxes under
the Internal Revenue Code.  Termination by Mr. Curtin for good reason after a
change in control includes a reduction by the Company in Mr. Curtin's base
salary or the Company's failure to continue the compensation, retirement, and
benefit plans at the levels at which Mr. Curtin was participating immediately
prior to the change in control, the assignment of duties inconsistent with his
status as a Chief Executive Officer, or other adverse alteration in the nature
or status of his responsibilities.  With his retirement from service, Mr.
Curtin's CIC agreement is no longer in effect.

   The Company has similarly CIC management agreements providing for the same
level of benefits upon specified terminations of employment upon a change in
control of the Company for the other Executive Officers named in the Summary
Compensation Table except for Mr. Kermes.

COMPENSATION AND NOMINATING COMMITTEE REPORT


COMPENSATION PHILOSOPHY

          The Compensation and Nominating Committee of the Board of Directors
(the "Committee") presents its report on executive compensation for the year
2000.  The Committee's guidelines for compensation decisions are guided by the
following principles:

                                     Page 7
<PAGE>

 .  To provide a competitive total compensation package that enables the Company
   to attract and retain the key executive talent needed to accomplish its
   corporate goals.

 .  To integrate compensation programs with the Company's annual and long-term
   business objectives and strategy in order to focus executive behavior on the
   fulfillment of those objectives.

 .  To provide variable compensation opportunities that are directly linked with
   the performance of the Company and that significantly align executive
   remuneration with the interests of the stockholders.

     In addition, the Committee also considers, in implementing its decisions,
the impact of Section 162(m) of the Internal Revenue Code of 1986 (the "Code"),
which in certain circumstances disallows annual compensation deductions in
excess of $1,000,000. This disallowance provision does not apply to performance-
based compensation, commissions, and certain other payments or forms of
compensation. The Committee has determined that the Corporation's incentive
awards that will be subject to 162(m) should be made, to the extent practicable,
on a basis that ensures that the Corporation will be entitled to full
deductibility under Section 162(m).

COMPENSATION PROGRAM

     The Committee, which is composed of outside Directors who have no
interlocking relationships within the meaning of regulations of the Securities
and Exchange Commission, is responsible for reviewing the Company's overall
executive compensation program, reviewing the compensation of the Executive
Officers, and administering the cash bonus, deferred cash award, and stock based
incentive plans and certain retirement plans to ensure that pay levels,
incentive opportunities, and projected retirement benefits are competitive and,
of equal importance, appropriately reflect the performance of the Company. The
components of the compensation program for executives are described below.

     BASE SALARY. The factors considered in determining the appropriate salary
are level of responsibility, prior experience and accomplishments, and the
relative importance of the job in terms of achieving corporate objectives and
general salary ranges for comparable positions at similar size companies or
divisions within the industry. Each Executive Officer's salary is reviewed
annually. Adjustments may be recommended based upon individual performance,
inflationary and competitive factors, and overall results. In late December 1998
and early 1999, the Committee reviewed, with the assistance of a compensation
consulting firm, and then increased the base salaries of the Executive Officers
for the year 2000 to be more in line with the 50th percentile for comparable
companies ("general industrial" companies for executives in its measuring
equipment business and select "high-tech" companies for executives associated
with its software and sensors business) as surveyed by the consulting firm. (See
below for the Chief Executive Officer.)

     ANNUAL INCENTIVE COMPENSATION.  Under the Company's Amended Profit
Incentive Plan ("PIP"), executives are eligible to receive a planned annual cash
bonus of up to a specified percentage (generally 30% to 40% for executives) of
base salary.  At the beginning of each fiscal year, the Committee establishes
for each executive a maximum aggregate percentage bonus opportunity (generally
30% to 40% for executives), which is comprised of separate bonus categories tied
to the satisfaction of a specified, largely quantitative formula of corporation
goals (e.g., net income, cash flow, and achievement of specific objectives).
Actual bonuses paid may be above or below the target amount planned depending on
achievement of objectives but may not exceed 200% of the planned bonus.  In
order to assure that the PIP would effectively encourage and reward superior
performance, the Committee in early 1996 had restructured the specific
performance targets comprising the overall formula for the Executive Officers to
focus their content on promoting cross-divisional and inter-Company cooperation
and also focusing on net income and various determinants of cash flow.  Bonuses
under the PIP for performance in 1999 were made to a total of approximately 120
management executives.  None of the named Executive Officers have yet been paid
any bonuses for 1999 as the Plan's criteria for such year provided that bonuses
to such persons would be earned and paid only upon completion of a financing
transaction that deals satisfactorily with the Company's current default
situation with its principal lenders and its indebtedness/liquidity problem.
PIP bonuses were paid to the executives for 2000 performance as set forth in the
Compensation Table.

LONG-TERM INCENTIVE AWARDS

     STOCK OPTIONS.  Stock options, restricted stock, and other stock based
awards which may be granted under the Corporation's stock incentive plan for
management, the 1999 Equity Incentive Plan (which was approved by the

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<PAGE>

stockholders on April 30, 1999), and an earlier plan, the 1989 Equity Incentive
Plan, provide incentive to executives by giving them a strong economic interest
in maximizing stock price appreciation, thereby better aligning their interests
with the Corporation's stockholders.  Accordingly, each executive's total
compensation is significantly dependent upon stock performance.  Option exercise
prices are set at 100% of fair market value on the date of grant, and the
options expire after 10 years.  The options granted by the Committee in prior
years vest over a period of years, typically 50% after one year and 50%  the
next year or 50% after the first two years and 25% per year for the following
two years, in order to encourage management continuity and better align
compensation to long-term stock value.  In 1999 the Committee awarded options
for an aggregate of 783,200 shares to 136 management persons, including options
for an aggregate of 260,000 shares to the six named Executive Officers, as shown
in the Summary Compensation Table, and other Executive Officers.  These options
vest and become exercisable in seven years from the date of grant subject to
earlier partial exercise rights in the event the Company's stock price reaches
certain levels.

     LONG-TERM DEFERRED CASH INCENTIVE PLAN. This component of executive
compensation consists of the Key Employees' Long-Term Deferred Cash Incentive
Plan (the "LTDCIP"), which was amended by the Committee in 1998. Pursuant to the
Committee's recommendation under the amended Plan, the Company may make annual
deferred cash awards as a bonus based on earnings. Each participant has credited
to his account a percentage, established by the Committee from time to time, of
adjusted pre-tax profit (as defined). Accounts vest after three years or, if
earlier, upon retirement at or after age 65 with five years of service or at or
after age 60 with ten years of service. (If a participant retires at or after
age 55 with five years of service, the normal three-year vesting requirement is
reduced to one year after retirement.) Full vesting also occurs upon a Change in
Control (as defined). Participants are subject to a two-year post termination
non-compete, except for terminations after a change in control. Participant
accounts are subject to notional "investment" in one or more mutual fund
alternatives and/or Brown & Sharpe stock, except that credits are required to be
"invested" in the Company stock alternative if the participant is below the
Company's share ownership requirement for executives under the Executive Officer
Stock Ownership Policy adopted by the Board on recommendation by the Committee
in 1998. Participant vested accounts are distributable at termination of
employment in a lump sum or installments (up to three years). Certain larger
accounts may be distributed as an annuity. No awards were made to any
participant in the LTDCIP for 1999.

COMPENSATION OF CHIEF EXECUTIVE OFFICER

     Mr. Curtin, who joined the Company in May of 1995, retired from employment
on May 1, 2000 at the end of the term of his employment contract, as amended.
Mr. Curtin's base annual salary for 2000, following a review, with the
assistance of a compensation consulting firm, of executive compensation, was
$425,274.  Mr. Kermes', who succeeded Mr. Curtin, base annual salary was set by
the Committee at $125,000, and the Committee awarded him options for 150,000
shares at an exercise price of $1.875 per share.


                                    Russell A. Boss, Chairman
                                    John M. Nelson
                                    Richard M. Donnelly
                                    J. Robert Held




                                     Page 9
<PAGE>

                            STOCK PERFORMANCE GRAPH

     The following graph sets forth information comparing the cumulative total
return to holders of the Company's Class A Stock over the Company's last five
fiscal years beginning at the market close on the last trading day before the
beginning of the Company's fifth preceding fiscal year (the "Measuring Period")
with (1) the cumulative total return of the Standard & Poor's 500 Stock Index,
and (2) the cumulative total return of the Standard & Poor's Machinery
(Diversified) index. The graph assumes $100 invested in December 31, 1994 in
Company Class A common stock and $100 invested at the same time in each of the
S&P indexes shown and assumes that all dividends are reinvested.



                                    [GRAPH]



                                Plotting Points

<TABLE>
<S>                                                <C>         <C>         <C>         <C>         <C>         <C>
                                                        12/95       12/96       12/97       12/98       12/99       12/00

BNS CLASS A                                            100.00      154.72      211.32      153.77      120.75       32.08
S & P 500                                              100.00      137.58      169.17      225.61      290.09      351.13
S & P MACHINERY (DIVERSIFIED)                          100.00      123.40      153.81      203.46      169.33      200.20
</TABLE>

                                    Page 10
<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:  April 30, 2001          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/ John M. Nelson               3/30/01  /s/ Howard K. Fuguet     3/30/01
----------------------------------------  --------------------------------
John M. Nelson                     Date   Howard K. Fuguet  Date
Chairman of the Board and Director        Director



/s/ Kenneth N. Kermes            3/30/01  /s/ Russell A. Boss      3/30/01
----------------------------------------  --------------------------------
Kenneth N. Kermes                  Date   Russell A. Boss  Date
President, Chief Executive Officer        Director
(Principal Executive Officer)



/s/ J. Robert Held               3/30/01  /s/ Roger E. Levien      3/30/01
----------------------------------------  --------------------------------
J. Robert Held                     Date   Roger E. Levien  Date
Director                                  Director



/s/ Henry D. Sharpe, III         3/30/01  /s/ Richard M. Donnelly  3/30/01
----------------------------------------  --------------------------------
Henry D. Sharpe, III               Date   Richard M. Donnelly  Date
Director                                  Director



/s/ Alfred J. Corso              3/30/01  /s/ Andrew C. Genor      3/30/01
----------------------------------------  --------------------------------
Alfred J. Corso                    Date   Andrew C. Genor  Date
Controller                                Vice President and
(Principal Accounting Officer)            Chief Financial Officer


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