<PAGE>
 
                                                                    Exhibit 28.1



                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549



                                    Form 11-K



                 Annual Report Pursuant to Section 15(d) of the
                         Securities Exchange Act of 1934





For the Fiscal Year Ended December 31, 1996
                          -----------------
                        

Commission File Number 1-5881
                       ------




     THE BROWN & SHARPE SAVINGS AND RETIREMENT PLAN FOR MANAGEMENT EMPLOYEES
     -----------------------------------------------------------------------
                            (Full Title of the Plan)





                      BROWN & SHARPE MANUFACTURING COMPANY
                               200 Frenchtown Road
                    North Kingstown, Rhode Island 02852-1700
                                 (401) 886-2000

         (Name of Issuer and Address of its Principal Executive Office)
<PAGE>
 
                                   SIGNATURES
                                   ----------


         Pursuant to the requirements of the Securities Exchange Act of 1934,
the Plan has duly caused this Annual Report to be signed on its behalf by the
undersigned, thereunto duly authorized, in North Kingstown, Rhode Island, on the
23rd day of June, 1997.
----        ----------

                               BROWN & SHARPE SAVINGS & RETIREMENT
                               PLAN FOR MANAGEMENT EMPLOYEES


                               By:  /s/ Alfred J. Corso
                                    -----------------------------------
                                    Alfred J. Corso
                                    Controller
                                    (Principal Accounting Officer)

                                       2
<PAGE>
 
       BROWN & SHARPE SAVINGS AND RETIREMENT PLAN FOR MANAGEMENT EMPLOYEES



                                Table of Contents
                                -----------------


<TABLE> 
<CAPTION> 
                                                                           Page
                                                                           ----
<S>                                                                        <C> 
Report of Ernst & Young LLP, Independent Auditors                             4


Financial Statements:

    Statements of Net Assets Available for Plan Benefits
         at December 31, 1996 and 1995                                        5

    Statements of Changes in Net Assets Available for Plan
         Benefits for the Years Ended December 31, 1996 and 1995              5

    Notes to Financial Statements                                          6-15


Supplemental Schedules:

    Schedule of Reportable Transactions                                   16-19

    Schedule of Assets Held for Investment Purposes at December 31, 1996     20


Consent of Independent Auditors                                              21

</TABLE> 

                                       3
<PAGE>
 
                REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
                -------------------------------------------------



Brown & Sharpe Savings and Retirement Plan
   for Management Employees Committee
Brown & Sharpe Manufacturing Company


         We have audited the accompanying statements of net assets available for
plan benefits of the Brown & Sharpe Savings and Retirement Plan for Management
Employees (the "Plan") as of December 31, 1996 and 1995, and the related
statements of changes in net assets available for plan benefits for the years
then ended. These financial statements are the responsibility of the Plan's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

         We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

         In our opinion, the financial statements referred to above present
fairly, in all material respects, the net assets available for benefits of the
Plan at December 31, 1996 and 1995, and the changes in its net assets available
for benefits for the years then ended, in conformity with generally accepted
accounting principles.

         Our audit was made for the purpose of forming an opinion on the
financial statements taken as a whole. The accompanying supplemental schedules
of assets held for investment purposes as of December 31, 1996, and reportable
transactions for the year then ended, are presented for purposes of complying
with the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974, and are
not a required part of the financial statements. The supplemental schedules have
been subjected to the auditing procedures applied in our audits of the financial
statements and, in our opinion, are fairly stated in all material respects in
relation to the financial statements taken as a whole.




                                ERNST & YOUNG LLP

June 23, 1997

                                       4
<PAGE>
 
      THE BROWN & SHARPE SAVINGS & RETIREMENT PLAN FOR MANAGEMENT EMPLOYEES
      ---------------------------------------------------------------------

              STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
              ----------------------------------------------------  
<TABLE> 
<CAPTION> 
                                                                 As of December 31,
                                                                 ------------------ 
                                                          1996                        1995
                                                          ----                        ----
<S>                                                    <C>                        <C>  
Assets:
 Investments (Notes 2 and 5)                           $26,786,938                $21,861,765
 Dividends and interest receivable                               -                     86,842
 Employer contribution receivable                          843,175                    759,023
 Plan loans receivable                                     487,606                    260,451
                                                       -----------                -----------
 Net Assets Available for Plan Benefits                $28,117,719                $22,968,081
                                                       ===========                ===========
</TABLE> 


   STATEMENTS OF INCOME AND CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
   --------------------------------------------------------------------------
<TABLE> 
<CAPTION> 
                                                          For the years ended December 31,
                                                          --------------------------------
                                                           1996                      1995
                                                           ----                      ----
<S>                                                  <C>                          <C>    
Additions
---------
Contributions
    Employer                                           $ 1,040,395                $   788,389
    Employee                                             1,391,573                  1,195,789
                                                       -----------                -----------
                                                         2,431,968                  1,984,178
Investment income
    Interest                                             1,630,252                    744,736
    Dividends                                                    -                     36,276
                                                       -----------                -----------
                                                         1,630,252                    781,012
Net appreciation
    in fair value of investments                         1,729,650                  2,815,217
                                                       -----------                -----------
Total additions                                          5,791,870                  5,580,407

Deductions
   Payments to participants                            (3,077,134)                (1,720,895)
   Loan defaults                                          (59,473)                        -
   Fees                                                      (421)                   (12,402)
                                                       -----------                -----------
Total deductions                                       (3,137,028)                (1,733,297)

Transfers
      From Brown & Sharpe Employee Stock Owner-
        ship & Profit Participation Plan (ESOP)             16,264                     11,383
      From Brown & Sharpe Savings
        & Retirement Plan (SARP)                           150,131                     46,263
      Transfers from DEA (Note 1)                        2,328,401                          -
                                                       -----------                -----------
Net transfers                                            2,494,796                     57,646
                                                       -----------                -----------

Net increase in assets                                   5,149,638                  3,904,756
Net assets, beginning of year                           22,968,081                 19,063,325
                                                       -----------                -----------
Net assets, end of year                                $28,117,719                $22,968,081
                                                       ===========                ===========
</TABLE> 

See notes to the financial statements.

                                       5
<PAGE>
 
      THE BROWN & SHARPE SAVINGS & RETIREMENT PLAN FOR MANAGEMENT EMPLOYEES


                          Notes To Financial Statements
                          -----------------------------

1.   Plan Description
     ----------------

     The following description of The Brown & Sharpe Savings and Retirement Plan
     for Management Employees (the "Plan") provides only general information.
     Participants should refer to the Summary Plan Description for more complete
     details.

           General
           -------

           The Plan is a defined contribution plan covering all eligible full-
           time salaried employees of Brown & Sharpe Manufacturing Company (the
           "Company") and its affiliated companies who participate in the Plan.
           Such employees are immediately eligible to make deferred salary
           contributions to the Plan. One year of service is required to become
           a participant receiving Company contributions. The Plan is subject to
           the provisions of the Employee Retirement Income Security Act of 1974
           (ERISA), as amended.

           As a result of the Company's acquisition of DEA S.p.A. on September
           28, 1994, participants of the Digital Electronic Automation, Inc. 
           Tax-Deferred Savings Plan (the "DEA Plan") became eligible to
           participate in the Plan on April 1, 1995. Pursuant to the terms of
           the DEA Plan, former DEA employees may select an annuity as a
           distribution option under the Plan. In May 1996, approximately
           $2,328,401 of net assets were transferred from the DEA Plan to the
           Plan.

           On May 6, 1996, the assets of the Plan were transferred from Fleet
           National Bank to Putnam Fiduciary Trust Company which was appointed
           new Trustee and Recordkeeper.

           Contributions
           -------------

           The Plan permits a participant to make deferred salary contributions
           to the Plan up to 16% of compensation up to a maximum of $9,500 in
           1996 and $9,240 in 1995, (indexed in future years) which is not
           subject to federal income tax until distributed. Contributions are
           invested at the direction of the employee in one or more investment
           alternatives, or "Funds," as described below.

           The Company may, at the discretion of the Board of Directors, make a
           supplemental contribution of 4% of annual compensation plus 4% of the
           amount over the Social Security wage base to the account of each
           participant to be invested as instructed by the participant. The
           Company's supplemental contributions for 1996 and 1995 were $843,409
           and $759,023, respectively.

           In addition, the Plan provides for a Company contribution, or
           subsidy, equal to one-quarter of the amount of each deferred salary
           contribution invested directly in the Company Stock Fund. Such
           Company contributions for 1996 and 1995 were $18,393 and $29,366
           respectively.

           In addition, at the discretion of the Board of Directors, the Company
           may make a matching contribution equal to a percentage not to exceed
           25% of the elective contribution, disregarding any elective
           contribution in excess of 6% of such eligible participant's salary
           for such Plan year. Such contribution for 1996 was $178,593; no such
           contribution was made for 1995.

           Participant Accounts
           --------------------

           A separate account is established for each participant when enrolled
           in the Plan. Each participant's account is credited with participant
           salary deferrals and Company contributions. An allocation of earnings
           of the Funds in which such participant's account is invested was
           determined by a monthly valuation and credited ratably among all
           participants in each Fund prior to the conversion to Putnam Fiduciary
           Trust Company. After the conversion to Putnam Fiduciary Trust
           Company, valuation of individual accounts are performed daily based
           on the number of shares a participant holds multiplied by the value
           of the Fund. Guaranteed interest contract account earnings are valued
           on a monthly basis and are allocated to participants based on a pro
           rated basis.

                                       6
<PAGE>
 
                    Notes to Financial Statements (continued)
                    -----------------------------------------


           Investments
           -----------

           Prior to the conversion to Putnam Fiduciary Trust Company,
           participants directed the trustee to deposit contributions in one or
           more of the following investment alternatives in multiples of 10%:

           (1) the Diversified Fund, managed by Frontier Capital Management,
           Inc., consisting primarily of a diversified portfolio of stock and
           fixed income securities; (2) the Company Stock Fund, managed by Fleet
           National Bank, consisting primarily of Company common stock; (3) the
           Money Market Fund, invested by Fleet National Bank through Fidelity
           Management & Research Company consisting primarily of obligations of
           the U.S. Government or its agencies, banks and business corporations
           (other than the Company); or (4) the Guaranteed Interest Fund,
           consisting primarily of guaranteed investment contracts issued by
           American International Life Assurance Company of New York in 1994,
           Principal Mutual Life Insurance Company in 1992 and 1993, and
           Allstate Life Insurance Company in 1991. These guaranteed investment
           contracts are agreements under which the issuer has agreed to pay the
           investor a guaranteed rate of interest over terms ranging from 3 to 5
           years. The contracts automatically terminate at maturity date. A
           penalty is imposed upon early termination of contract. The issuers of
           these contracts are insurance companies, and because of this, the
           contracts are more susceptible to factors adversely affecting the
           insurance industry than similar contracts issued by parties other
           than insurance companies. Transfers between investment funds can be
           made subject to certain rules.

           In 1995 the Plan assets and those of the Brown & Sharpe Savings and
           Retirement Plan were held in a trust administered by Fleet National
           Bank as Trustee. The assets and activity within this trust were
           allocated between the two plans based on the underlying participant
           records of each plan.

           After the transfer of assets to Putnam Fiduciary Trust Company,
           participants direct the trustee to deposit contributions in one of
           more of the following investment alternatives in multiples of 5%:

           (1) Putnam New Opportunities Fund invests in a portfolio of stocks in
           certain emerging industry groups that Putnam believes offer above-
           average long-term growth potential; (2) the Company Stock Fund,
           managed by Putnam Investments, consisting of Brown & Sharpe common
           stock; (3) the Putnam Voyager Fund, invests in a combination of
           stocks of small companies expected to grow over time as well as
           stocks of larger, more established corporations; (4) the Putnam Fund
           for Growth & Income, invests mainly in attractive priced stocks of
           companies that offer long-term growth potential while also providing
           income; (5) The George Putnam Fund of Boston, invests in stocks and
           corporate and government bonds, providing a balanced way to pursue
           long-term rewards; (6) the Brown & Sharpe Stable Value Fund,
           consisting of guaranteed investment contracts issued by American
           International Life Assurance Company of New York, Principal Mutual
           Life Insurance Company and the Putnam Stable Value Fund, managed by
           Putnam Investments. These individual guaranteed investment contracts
           are agreements under which the issuer has agreed to pay the investor
           a guaranteed rate of interest over terms ranging from 3 to 5 years.
           The contracts automatically terminate at maturity date. A penalty is
           imposed upon early termination of contract. The issuers of these
           contracts are insurance companies, and because of this, the contracts
           are more susceptible to factors adversely affecting the insurance
           industry than similar contracts issued by parties other than
           insurance companies. Transfers between investment funds can be made
           subject to certain rules.

           The Plan assets are held in a trust administered by Putnam Fiduciary
           Trust Company as Trustee.

           The Company pays substantially all of the expenses associated with
           administering this Plan.

           Benefits
           --------

           A participant is always vested 100% in deferred salary contributions
           and Company stock purchased at a discount and becomes 100% vested in
           Company contributions after 3 years of service.

                                       7
<PAGE>
 
                    Notes to Financial Statements (continued)
                    -----------------------------------------


     Upon termination of service, participants are eligible to receive the
     vested value of their account in a lump sum payment or, if retired, in
     equal annual installments over a 10-year period or deferred until a future
     date no later than age 70-1/2.

     While in service, a participant may apply for a hardship withdrawal of
     funds subject to restrictive IRS rules and excise tax. The Plan also
     permits a participant to borrow against his/her account and repay the loan
     by payroll deduction.

     Plan participants who are no longer employees of the Company but who have
     elected to defer payment of their account balance are assessed an asset
     management trust and recordkeeping fee based on actual cost. These
     participant account balances amount to $454,789 at December 31, 1996.


2.   Summary of Significant Accounting Policies
     ------------------------------------------

     The preparation of financial statements in accordance with GAAP requires
     the use of management's estimates.

     Investments, other than insurance contracts, are stated at fair value. The
     shares of registered investment companies are valued at quoted market
     prices which represent the net asset values of shares held by the Plan at
     year-end. Investments in securities traded on a national securities
     exchange are valued at the last reported sales price on the last business
     day of the year. Listed securities and governmental obligations for which
     no sale was reported on that date are valued at the last reported bid
     price. Investments in guaranteed interest contracts with insurance
     companies are stated at contract value defined as cost plus accrued
     interest less distributions to date, which approximates fair value. The
     Plan loans receivable are valued at cost which approximates fair value.
     Purchases and sales of securities are reflected on a trade-date basis. The
     Plan presents in the statements of changes in net assets the net
     appreciation (depreciation) in the fair value of its investments which
     consists of the realized gains or losses and the unrealized appreciation
     (depreciation) on those investments. Dividend income is accrued on the ex-
     dividend date. Income from other investments is recorded as earned on an
     accrual basis.


3.   Tax Status
     ----------

     The Internal Revenue Service ruled on May 9, 1995 that the Plan qualifies
     under Section 401(a) of the Internal Revenue Code (IRC) and, therefore, the
     related trust is not subject to tax under present income tax law. Once
     qualified, the Plan is required to operate in conformity with the IRC to
     maintain its qualification. Management is not aware of any course of action
     or series of events that have occurred that might adversely affect the
     Plan's qualified status.


4.   Plan Termination
     ----------------   

     The Company adopted this Plan with a view to maintaining it permanently.
     However, the Company reserves the right to modify or amend the Plan from
     time to time, or to terminate the Plan, and to discontinue making
     contributions temporarily or permanently depending upon business and
     economic conditions. The Company cannot amend the Plan so as to deprive any
     participant of benefits already accrued under the Plan at the time of
     amendment, nor can the Company take back any contributions which it has
     made to the Plan except in limited circumstances involving factual error or
     contributions thought to be deductible which are not deductible. Should the
     Plan terminate, accounts would become fully vested, regardless of years of
     service, and would be paid to participants as directed by the Committee
     administering the Plan.

                                       8
<PAGE>
 
                    Notes to Financial Statements (continued)
                    -----------------------------------------

5.   Investments
     -----------
<TABLE> 
<CAPTION> 

         Investments held at December 31, 1996 and 1995 are as follows:

Description                                      Current Value                              Cost
-----------                                      -------------                              ----
                                              1996            1995                  1996              1995
                                              ----            ----                  ----              ----
<S>                                       <C>             <C>                    <C>              <C> 
Investments stated at fair value:      
  Company common stock                    $ 2,624,544     $ 1,873,933            $ 1,891,267      $ 1,741,706
  Diversified investments:             
      Government securities                         -       1,036,330                      -          982,003
      Common & preferred stock                      -       8,643,280                      -        6,481,257
  Short-term investments (1)                        -         882,338                      -          882,338
  Putnam Stable Value Fund                  2,301,692               -              2,301,692                -
Registered investment companies        
  The George Putnam Fund of Boston          4,896,277               -              4,792,292                -
  Putnam Fund for Growth & Income           4,522,002               -              4,403,848                -
  Putnam Voyager Fund                       3,772,403               -              3,897,881                -
  Putnam New Opportunities Fund             4,546,068               -              4,613,856                -
Investments stated at contract value:  
  Guaranteed interest contracts             4,123,952       9,425,884              4,123,952        9,425,884
                                          -----------     -----------            -----------      -----------
Total investments                         $26,786,938     $21,861,765            $26,024,788      $19,513,188
                                          ===========     ===========            ===========      ===========
</TABLE> 

(1) Short-term investments include temporary investments made within each of the
    available Funds.

The following investments exceed 5% of Plan assets at December 31, 1996:
<TABLE> 
<CAPTION> 
                                                                                                      Current Value
                                                                                                      -------------  
Investments stated at contract value:
<S>                                         <C>                                                       <C>     
 1993 GIC                                   Principal Mutual Life Insurance                             $2,225,705
                                            Contract (3)88705-03-M
 1994 GIC                                   American International Life Assurance Company                1,721,814
                                            Contract #18181-M

Investments stated at fair value as determined by quoted market price:

 187,467.43 shares                          Brown & Sharpe Manufacturing Company                         2,624,544
                                               Common Stock Class A & B
 298,553.518 shares                         The George Putnam Fund of Boston                             4,896,277
 250,943.511 shares                         Putnam Fund for Growth & Income                              4,522,002
 234,020.022 shares                         Putnam Voyager Fund                                          3,772,403
 111,889.431 shares                         Putnam New Opportunities Fund                                4,546,068
   2,301,692 shares                         Putnam Stable Value Fund                                     2,301,692
                                            Contract #MFPFTC

The following investments exceed 5% of Plan assets at December 31, 1995:
                                                                                                     Current Value
                                                                                                     -------------
Investments stated at contract value:
 1991 GIC                                   Allstate Life Insurance Company                             $1,065,148
                                            Contract #GA5052
 1993 GIC                                   Principal Mutual Life Insurance                              5,996,330
                                            Contract #GA88705-3-M
 1994 GIC                                   American International Life Assurance Company                1,552,305
                                            Contract #18181-M
Investments stated at fair value:
 182,822.74 shares                          Brown & Sharpe Manufacturing Company                         1,873,933
                                            Common Stock Class A & B
</TABLE> 

                                       9
<PAGE>
 
                   Notes to Financial Statements (continued)
                   -----------------------------------------

6. Allocation of Statements of Net Assets Available for Plan Benefits and
   ----------------------------------------------------------------------
   Statements of Income and Changes in Net Assets Available for Plan Benefits
   --------------------------------------------------------------------------

   STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS AT DECEMBER 31, 1996,
   -------------------------------------------------------------------------
                             WITH FUND INFORMATION
                             ---------------------

<TABLE> 
<CAPTION> 
                                                                                                                    
                                                                               Brown & Sharpe        George          
                                                 Plan           Company         Stable Value         Putnam         
                                                 Loans         Stock Fund           Fund              Fund          
                                                 -----         ----------           ----              ----
<S>                                            <C>             <C>               <C>               <C> 
Assets:
  Investments                                  $   --          $2,624,544        $6,425,644        $4,896,277
  Dividend and interest receivable                 --                --                --                --   
  Employer contribution receivable                 --              25,498           193,407            61,580
  Plan loans receivable                         487,606              --                --                --   
                                               --------        ----------        ----------        ----------
Net  Assets Available for Plan Benefits        $487,606        $2,650,042        $6,619,051        $4,957,857
                                               ========        ==========        ==========        ==========

<CAPTION> 

                                                 Putnam                                                                 
                                                Growth &           Putnam          Putnam New                       
                                                 Income            Voyager        Opportunities                    
                                                  Fund              Fund              Fund              Total   
                                                  ----              ----              ----              -----
<S>                                            <C>               <C>               <C>               <C> 
Assets:
  Investments                                  $4,522,002        $3,772,403        $4,546,068        $26,786,938
  Dividend and interest receivable                   --                --                --                 --
  Employer contribution receivable                139,250           160,025           263,415            843,175
  Plan loans receivable                              --                --                --              487,606
                                               ----------        ----------        ----------        -----------
Net  Assets Available for Plan Benefits        $4,661,252        $3,932,428        $4,809,483        $28,117,719
                                               ==========        ==========        ==========        ===========
</TABLE> 


   STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS AT DECEMBER 31, 1995,
   -------------------------------------------------------------------------
                             WITH FUND INFORMATION
                             ---------------------

<TABLE> 
<CAPTION> 
                                                                                                                     
                                                                                                              /(1)/   
                                                                  Money            /(1)/        /(1)/    Guaranteed 
                                                      Plan       Market     Diversified     Company       Interest                  
                                                     Loans        Fund          Fund        Stock Fund      Fund          Total  
                                                     -----        ----          ----        ----------      ----          -----
      <S>                                           <C>         <C>         <C>             <C>          <C>           <C> 
      Assets:                                                                                                                     
         Investments                                $   --      $602,217    $ 9,827,923     $1,919,432   $9,512,193    $21,861,765
         Dividends and interest receivable              --         2,126         32,422             52       52,242         86,842
         Employer contribution receivable               --       112,039        491,748         31,165      124,071        759,023
         Plan loans receivable                       260,451        --             --             --           --          260,451
                                                    --------    --------    -----------     ----------   ----------    -----------
      Net Assets Available for Plan Benefits        $260,451    $716,382    $10,352,093     $1,950,649   $9,688,506    $22,968,081
                                                    ========    ========    ===========     ==========   ==========    ===========
</TABLE> 


      (1)  Includes short-term investments of $148,313 in the Diversified Fund,
           $45,499 in the Company Stock Fund, and $86,309 in the Guaranteed
           Interest Fund.

                                       10
<PAGE>
 
                   Notes to Financial Statements (continued)
                   -----------------------------------------

6. Allocation of Statements of Net Assets Available for Plan Benefits and
   ----------------------------------------------------------------------
   Statements of Income and Changes in Net Assets Available for Plan Benefits
   --------------------------------------------------------------------------
   (continued)
   -----------

 STATEMENT OF INCOME AND CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS FOR
 -----------------------------------------------------------------------------
      THE PERIOD JANUARY 1, 1996 - APRIL 30, 1996, WITH FUND INFORMATION
      ------------------------------------------------------------------

<TABLE> 
<CAPTION> 

                                          Plan           Money Market        Diversified             
                                         Loans               Fund               Fund                 
                                         -----               ----               ----
<S>                                     <C>               <C>               <C> 
Additions
---------
Contributions
    Employer                            $      --         $  22,530         $    110,422
    Employee                                   --            22,343              216,771
    Loan repayments                       (41,714)            2,114               19,597
                                        ---------         ---------         ------------
                                          (41,714)           46,987              346,790
Investment income
    Interest                                   --            17,125               47,260
                                        ---------         ---------         ------------
                                               --            17,125               47,260
Net appreciation (depreciation)                 
    in fair value of investments               --                --              918,822
                                        ---------         ---------         ------------

Total additions                           (41,714)           64,112            1,312,872

Disbursements
    Payments to participants                   --              (447)            (444,830)
    Loans to participants                  61,804           (10,889)             (41,811)
    Loan defaults                         (34,721)               --                   -- 
    Fees                                       --                --                   -- 
                                        ---------         ---------         ------------
Total disbursements                        27,083           (11,336)            (486,641)

Transfers
    Transfers (to) from SARP                   --             2,649               56,531
    Transfers to new trustee             (245,820)         (905,921)         (11,143,952)
    Transfers between funds                    --           134,114              (90,903)
                                        ---------         ---------         ------------
Net transfers                            (245,820)         (769,158)         (11,178,324)
                                        ---------         ---------         ------------

Net increase (decrease)                  (260,451)         (716,382)         (10,352,093)
Net assets, beginning of year             260,451           716,382           10,352,093
                                        ---------         ---------         ------------
Net assets, end of period               $      --         $      --         $         -- 
                                        =========         =========         ============

<CAPTION> 
                                                            Guaranteed                        
                                          Company            Interest                         
                                         Stock Fund            Fund                Total 
                                         ----------            ----                -----       
<S>                                     <C>                 <C>                 <C> 
Additions
Contributions
    Employer                            $    18,506         $    37,905         $    189,363
    Employee                                 42,143             114,681              395,938
    Loan repayments                           2,427              17,576                   --
                                        -----------         -----------         ------------
                                             63,076             170,162              585,301
Investment income
    Interest                                    775             190,091              255,251
                                        -----------         -----------         ------------
                                                775             190,091              255,251
Net appreciation (depreciation)
    in fair value of investments            (90,740)                 --              828,082
                                        -----------         -----------         ------------

Total additions                             (26,889)            360,253            1,668,634

Disbursements
    Payments to participants                (30,656)         (1,047,018)          (1,522,951)
    Loans to participants                    (9,104)                 --                   --
    Loan defaults                                --                  --              (34,721)
    Fees                                         --                  --                   --
                                        -----------         -----------         ------------
Total disbursements                         (39,760)         (1,047,018)          (1,557,672)

Transfers
    Transfers (to) from SARP                   (617)             36,166               94,729
    Transfers to new trustee             (1,782,872)         (9,095,207)         (23,173,772)
    Transfers between funds                (100,511)             57,300                   --
                                        -----------         -----------         ------------
Net transfers                            (1,884,000)         (9,001,741)         (23,079,043)
                                        -----------         -----------         ------------

Net increase (decrease)                  (1,950,649)         (9,688,506)         (22,968,081)
Net assets, beginning of year             1,950,649           9,688,506           22,968,081
                                        -----------         -----------         ------------
Net assets, end of period               $        --         $        --         $         --
                                        ===========         ===========         ============
</TABLE> 

                                       11
<PAGE>
 
                    Notes to Financial Statements (continued)

6.   Allocation of Statements of Net Assets Available for Plan Benefits and
     ----------------------------------------------------------------------
Statements of Income and Changes in Net Assets Available for Plan Benefits
--------------------------------------------------------------------------
(continued)
-----------

 STATEMENT OF INCOME AND CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS FOR
 -----------------------------------------------------------------------------
       THE PERIOD MAY 1, 1996 - DECEMBER 31, 1996, WITH FUND INFORMATION
       -----------------------------------------------------------------
<TABLE> 
<CAPTION> 

                                                                         Brown & Sharpe        George            Putnam      
                                           Plan         Company           Stable Value         Putnam       Growth & Income  
                                          Loans       Stock Fund              Fund              Fund              Fund      
                                          -----       ----------              ----              ----              ----      
<S>                                   <C>             <C>                <C>                 <C>            <C> 
Additions
---------
Contributions
    Employer                          $       -        $   33,355          $  193,407        $   61,580        $  139,250   
    Employee                                  -            33,216             160,065            76,629           170,514   
    Loan repayments                     (67,589)              759              19,786             4,451            13,161   
                                      ---------        ----------          ----------        ----------        ----------   
                                        (67,589)           67,330             373,258           142,660           322,925   
Investment income                                                                                              
    Interest                                  -               207             270,624           469,339           335,329   
                                      ---------        ----------          ----------        ----------        ----------   
                                              -               207             270,624           469,339           335,329   
Net appreciation (depreciation)                                                                                
     in fair value of investments             -           811,654                   -           124,244           125,049   
                                      ---------        ----------          ----------        ----------        ----------   
                                                                                                               
Total additions                         (67,589)          879,191             643,882           736,243           783,303   
                                                                                                               
Disbursements                                                                                                  
    Payments to participants                  -           (28,158)           (908,924)         (175,953)          (27,950)  
    Loans to participants               318,549            (3,349)            (53,177)          (77,365)          (40,312) 
    Loan defaults                       (24,752)                -                   -                 -                 -   
    Fees                                      -                 -                 (94)              (77)              (69) 
                                      ---------        ----------          ----------        ----------        ----------   
                                                                                            
Total disbursements                     293,797           (31,507)           (962,195)         (253,395)          (68,331)  
                                                                                            
Transfers                                                                                   
 Transfers from ESOP                          -                 -               5,445            10,819                 -    
 Transfers (to) from SARP                     -            78,881            (127,958)         (636,021)          576,257   
 Transfers from previous trustee        234,077         1,823,981           8,909,853        11,213,854                 -   
 Transfers from DEA                      27,321                 -           2,301,080                 -                 -   
 Transfers between funds                      -          (100,504)         (4,151,056)       (6,113,643)        3,370,023   
                                       --------        ----------          ----------        ----------        ----------   
Net transfers                           261,398         1,802,358           6,937,364         4,475,009         3,946,280   
                                       --------        ----------          ----------        ----------        ----------   
                                                                                                               
Net increase (decrease)                 487,606         2,650,042           6,619,051         4,957,857         4,661,252   
Net assets, beginning of period               -                 -                   -                 -                 -  
                                       --------        ----------          ----------        ----------        ----------   

Net assets, end of year                $487,606        $2,650,042          $6,619,051        $4,957,857        $4,661,252   
                                       ========        ==========          ==========        ==========        ==========   
<CAPTION> 

                                       Putnam          Putnam New      
                                       Voyager        Opportunities                         Consolidated   
                                        Fund              Fund               Total              Total      
                                        ----              ----               -----              -----      
<S>                                  <C>              <C>                 <C>               <C> 
Additions
---------
Contributions
    Employer                         $  160,025        $  263,415         $   851,032       $ 1,040,395      
    Employee                            202,423           352,788             995,635         1,391,573      
    Loan repayments                      12,677            16,755                   -                 -      
                                     ----------        ----------         -----------       -----------      
                                        375,125           632,958           1,846,667         2,431,968      
Investment income                                                                                            
    Interest                            259,365            40,137           1,375,001         1,630,252      
                                     ----------        ----------         -----------       -----------      
                                        259,365            40,137           1,375,001         1,630,252      
Net appreciation (depreciation)                                                                              
     in fair value of investments      (106,779)          (52,600)            901,568         1,729,650      
                                     ----------        ----------         -----------       -----------      
                                                                                                             
Total additions                         527,711           620,495           4,123,236         5,791,870      
                                                                                                             
Disbursements                                                                                                
    Payments to participants           (266,259)         (146,939)         (1,554,183)       (3,077,134)      
    Loans to participants               (62,125)          (82,221)                  -                 -      
    Loan defaults                             -                 -             (24,752)          (59,473)     
    Fees                                    (70)             (111)               (421)             (421)      
                                     ----------        ----------         -----------       -----------      
                                                                                                             
Total disbursements                    (328,454)         (229,271)         (1,579,356)       (3,137,028)      
                                                                                                             
Transfers                                                                                                    
 Transfers from ESOP                          -                 -              16,264            16,264      
 Transfers (to) from SARP               166,035            (1,792)             55,402           150,131      
 Transfers from previous trustee        992,007                 -          23,173,772                 -      
 Transfers from DEA                           -                 -           2,328,401         2,328,401      
 Transfers between funds              2,575,129         4,420,051                   -                 -      
                                     ----------        ----------         -----------       -----------      
Net transfers                         3,733,171         4,418,259          25,573,839         2,494,796      
                                     ----------        ----------         -----------       -----------      
                                                                                                             
Net increase (decrease)               3,932,428         4,809,483          28,117,719         5,149,638      
Net assets, beginning of period               -                 -                   -        22,968,081      
                                     ----------        ----------         -----------       -----------      
                                                                                                             
Net assets, end of year              $3,932,428        $4,809,483         $28,117,719       $28,117,719      
                                     ==========        ==========         ===========       ===========      
</TABLE> 

                                      12
<PAGE>
 
                   Notes to Financial Statements (continued)
                   -----------------------------------------

6.   Allocation of Statements of Net Assets Available for Plan Benefits and
     ----------------------------------------------------------------------
Statements of Income and Changes in Net Assets Available for Plan Benefits
--------------------------------------------------------------------------
(continued)
-----------

 STATEMENT OF INCOME AND CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS FOR
 -----------------------------------------------------------------------------
            THE YEAR ENDED DECEMBER 31, 1995, WITH FUND INFORMATION
            -------------------------------------------------------
<TABLE> 
<CAPTION> 
                                                                                             
                                               Plan         Money Market       Diversified   
                                              Loans             Fund               Fund         
                                              -----             ----               ----
<S>                                         <C>              <C>               <C> 
  Additions
  ---------
  Contributions
      Employer                              $        -       $  112,039        $   491,748   
      Employee                                       -           69,775            659,500   
      Loan repayments                         (121,146)           4,526             48,977   
                                            ----------       ----------        -----------   
                                              (121,146)         186,340          1,200,225   
  Investment income                                                            
      Interest                                       -           38,695             76,710   
      Dividends                                      -                -             36,276   
                                            ----------       ----------        -----------   
                                                     -           38,695            112,986   
  Net appreciation                                                             
      in fair value of investments                   -                -          2,051,965   
                                            ----------       ----------        -----------   
                                                                               
  Total additions                             (121,146)         225,035          3,365,176   
                                                                               
  Disbursements                                                                
      Payments to participants                       -          (61,407)          (249,068)   
      Loans to participants                    119,450          (16,972)           (76,715)   
      Fees                                           -              (88)           (10,215)   
                                            ----------       ----------        -----------   
  Total disbursements                          119,450          (78,467)          (335,998)   
                                                                               
  Transfers                                                                    
      Transfers (to) from ESOP                       -              622                138   
      Transfers from SARP                        4,478                -             11,234   
      Transfers between funds                        -           42,564             (3,913)   
                                            ----------       ----------        -----------   
  Net transfers                                  4,478           43,186              7,459   
                                            ----------       ----------        -----------   
                                                                               
  Net increase (decrease)                        2,782          189,754          3,036,637   
  Net assets, beginning of year                257,669          526,628          7,315,456   
                                            ----------       ----------        -----------   
  Net assets, end of year                   $  260,451       $  716,382        $10,352,093   
                                            ==========       ==========        ===========   
<CAPTION> 

                                                              Guaranteed
                                              Company          Interest
                                            Stock Fund           Fund             Total
                                            ----------           ----             -----
  <S>                                       <C>              <C>               <C> 
  Additions
  ---------
  Contributions
      Employer                              $   60,531       $  124,071        $   788,389    
      Employee                                 117,459          349,055          1,195,789    
      Loan repayments                            7,706           59,937                  -    
                                            ----------       ----------        -----------    
                                               185,696          533,063          1,984,178    
  Investment income                                                                           
      Interest                                   2,281          627,050            744,736    
      Dividends                                      -                -             36,276    
                                            ----------       ----------        -----------    
                                                 2,281          627,050            781,012    
  Net appreciation                                                                            
      in fair value of investments             763,252                -          2,815,217    
                                            ----------       ----------        -----------    
                                                                                              
  Total additions                              951,229        1,160,113          5,580,407    
                                                                                              
  Disbursements                                                                               
      Payments to participants                (148,196)      (1,262,224)        (1,720,895)   
      Loans to participants                     (4,019)         (21,744)                 -    
      Fees                                        (367)          (1,732)           (12,402)   
                                            ----------       ----------        -----------    
  Total disbursements                         (152,582)      (1,285,700)        (1,733,297)   
                                                                                              
  Transfers                                                                                   
      Transfers (to) from ESOP                  (2,105)          12,728             11,383    
      Transfers from SARP                        1,383           29,168             46,263    
      Transfers between funds                  (16,470)         (22,181)                 -    
                                            ----------       ----------        -----------    
  Net transfers                                (17,192)          19,715             57,646    
                                            ----------       ----------        -----------    
                                                                                              
  Net increase (decrease)                      781,455         (105,872)         3,904,756    
  Net assets, beginning of year              1,169,194        9,794,378         19,063,325    
                                            ----------       ----------        -----------    
  Net assets, end of year                   $1,950,649       $9,688,506        $22,968,081    
                                            ==========       ==========        ===========    
</TABLE> 


                                      13

                                      
<PAGE>
 
                   Notes to Financial Statements (continued)

                   7. Transactions with Parties-In-Interest

   During the years ended December 31, 1996 and 1995, the Plan entered into
             the following transactions with parties-in-interest:

<TABLE> 
<CAPTION> 
                                                                             December 31,
                                                                             ------------
                                                                 1996                                     1995
                                                                 ----                                     ----

                                                Units/Shares               Amount           Units/Shares          Amount
                                                ------------               ------           ------------          ------
 <S>                                            <C>                 <C>                     <C>                   <C> 
 The George Putnam Fund of Boston
 --------------------------------

      Purchase of face amount                    771,028.83         $   12,362,338               --               $  --
      Sales of face amount                       472,475.31              7,590,305               --                  --
      Investment income/loss                             --                 20,259               --                  --


 Putnam Fund for Growth and Income
 ---------------------------------

      Purchase of face amount                    259,811.96         $    4,555,765               --               $  --
      Sales of face amount                         8,868.45                158,812               --                  --
      Investment income/loss                             --                  6,895               --                  --


 Putnam Voyager Fund
 -------------------

      Purchase of face amount                    283,024.21         $    4,848,832               --               $  --
      Sales of face amount                        49,004.19                969,650               --                  --
      Investment income/loss                             --                 18,699               --                  --


 Putnam Stable Value Fund
 ------------------------

      Purchase of face amount                  6,284,070.00         $    6,284,070               --               $  --
      Sales of face amount                     3,982,378.00              3,982,378               --                  --
      Investment income/loss                             --                     --               --                  --
</TABLE> 

                                       14
<PAGE>
 
                   Notes to Financial Statements (continued)

                   7. Transactions with Parties-In-Interest

   During the years ended December 31, 1996 and 1995, the Plan entered into
             the following transactions with parties-in-interest:

<TABLE> 
<CAPTION> 
                                                                                December 31,
                                                                                ------------
                                                                1996                                      1995
                                                                ----                                      ----

                                                Units/Shares               Amount           Units/Shares          Amount
                                                ------------               ------           ------------          ------
<S>                                           <C>                  <C>                      <C>                  <C> 
Putnam New Opportunities Fund
-----------------------------

          Purchase of face amount                130,766.22        $     5,386,115                --        $         --
          Sales of face amount                    18,876.79                787,447                --                  --
          Investment income/loss                         --                 15,188                --                  --


Fleet National Bank Cash Management
-----------------------------------

          Purchase of face amount             21,349,611.00        $    21,349,611                --        $  6,581,041
          Sales of face amount                22,231,949.00             22,231,949                --           6,814,326
          Investment income/loss                         --                     --                --              17,253


Fleet Financial Group, Inc.
---------------------------

          Purchase of face amount                  2,271.00        $        98,498                --        $         --
          Sales of face amount                     2,271.00                 92,653                --                  --
          Investment income/loss                         --                (5,846)                --                  --


Brown & Sharpe Manufacturing Company
------------------------------------

          Purchases of capital stock              40,983.83        $       467,490             2,939        $     20,074
          Distributions of capital stock to 
            participants                           2,483.49                 28,449             4,518              43,224
          Sales of capital stock, at market 
            value                                 33,855.65                409,344                --                  --
          Investment income/loss                         --                     --           119,864                  --
</TABLE> 

                                       15
<PAGE>
 
       BROWN & SHARPE SAVINGS & RETIREMENT PLAN FOR MANAGEMENT EMPLOYEES
                      SCHEDULE OF REPORTABLE TRANSACTIONS
                     For the Year Ended December 31, 1996
                     ------------------------------------

<TABLE> 
<CAPTION> 

Category (i)  An  individual transaction in excess of 5% of plan assets
-----------------------------------------------------------------------
                                                                                                                                   
Identity of Party Involved             Description of Assets                  Purchase Price     Selling Price    Cost of Asset    
--------------------------             ---------------------                  --------------     -------------    -------------
<S>                                    <C>                                    <C>                <C>              <C> 

Putnam Fiduciary Trust Company         The George Putnam Fund of Boston
                                       Sold $6,239,569.20 face amount         $            -     $   6,239,569    $   6,266,375    

                                       Purchased $11,213,854  face amount         11,213,854                 -       11,213,854    


                                       Putnam Fund for Growth and Income
                                       Purchased $2,652,521 face amount            2,652,521                 -        2,652,521    


                                       Putnam Voyager Fund
                                       Purchased $2,766,997 face amount            2,766,997                 -        2,766,997    


                                       Putnam Stable Value Fund
                                       Sold $3,710,378 face amount                         -         3,710,378        3,710,378    


                                       Putnam New Opportunities Fund
                                       Purchased $4,248,162 face amount            4,248,162                 -        4,248,162    


Fleet National Bank                    Fleet National Bank Cash Management
                                       Sold $11,156,735 face amount                        -        11,156,735       11,156,735    

                                       Purchased $7,430,136 face amount            7,430,136                 -        7,430,136    

                                       Purchased $2,657,361 face amount            2,657,361                 -        2,657,361   

                                       Purchased $1,866,427 face amount            1,866,427                 -        1,866,427   

                                       Sold $1,914,700 face amount                         -         1,914,700        1,914,700   

<CAPTION>
                                                                                    Current Value of
                                                                                    ----------------
Identity of Party Involved             Description of Assets                     Asset on Transaction          Net Gain
--------------------------             ---------------------                     --------------------          --------
                                                                                         Date                   (Loss)
                                                                                         ----                   ------

<S>                                    <C>                                       <C>                        <C> 
Putnam Fiduciary Trust Company         The George Putnam Fund of Boston
                                       Sold $6,239,569.20 face amount                  $ 6,239,569          $  (26,806)
                                                                                                               
                                       Purchased $11,213,854  face amount               11,213,854                    -
                                                                                                               
                                                                                                               
                                       Putnam Fund for Growth and Income                                       
                                       Purchased $2,652,521 face amount                  2,652,521                    -
                                                                                                               
                                                                                                               
                                       Putnam Voyager Fund                                                     
                                       Purchased $2,766,997 face amount                  2,766,997                    -
                                                                                                               
                                                                                                               
                                       Putnam Stable Value Fund                                                
                                       Sold $3,710,378 face amount                       3,710,378                    -
                                                                                                               
                                                                                                               
                                       Putnam New Opportunities Fund                                           
                                       Purchased $4,248,162 face amount                  4,248,162                    -
                                                                                                               
                                                                                                               
Fleet National Bank                    Fleet National Bank Cash Management                                     
                                       Sold $11,156,735 face amount                     11,156,735                    -
                                                                                                               
                                       Purchased $7,430,136 face amount                  7,430,136                    -
                                                                                                               
                                       Purchased $2,657,361 face amount                  2,657,361                    -
                                                                                                               
                                       Purchased $1,866,427 face amount                  1,866,427                    -
                                                                                                               
                                       Sold $1,914,700 face amount                       1,914,700                    -
</TABLE>

                                       16
<PAGE>
 
       BROWN & SHARPE SAVINGS & RETIREMENT PLAN FOR MANAGEMENT EMPLOYEES
                SCHEDULE OF REPORTABLE TRANSACTIONS (continued)
                     For the Year Ended December 31, 1996
                     ------------------------------------


Category (i) An individual transaction in excess of 5% of plan assets
-----------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                                                                
Identity of Party Involved             Description of Assets                  Purchase Price     Selling Price   Cost of Asset  
--------------------------             ---------------------                  --------------     -------------   -------------  
<S>                                    <C>                                    <C>                <C>             <C> 
                                                                            
Fleet National Bank                    Purchased $2,004,119 face amount         $  2,004,119                 -    $  2,004,119  
                                                                            
                                       Sold $1,829,705 face amount                         -         1,829,705       1,829,705  
                                                                            
                                                                            
Principal Mutual Life Ins. Co.         Principal Mutual Life Insurance Co., 
                                       GIC (3)88705-03-M                    
                                       Sold $2,004,119 face amount                         -         2,004,119       2,004,119  

<CAPTION> 
                                                                              Current Value of
                                                                              ----------------
                                                                            Asset on Transaction             Net Gain
                                                                            --------------------             --------
Identity of Party Involved             Description of Assets                        Date                       (Loss)
--------------------------             ---------------------                        ----                       ------
<S>                                    <C>                                  <C>                               <C> 
                                                                              
Fleet National Bank                    Purchased $2,004,119 face amount         $  2,004,119                        -
                                                                              
                                       Sold $1,829,705 face amount                 1,829,705                        -
                                                                              
                                                                             
Principal Mutual Life Ins. Co.         Principal Mutual Life Insurance Co.,  
                                       GIC (3)88705-03-M                     
                                       Sold $2,004,119 face amount                 2,004,119                        - 
                                                                              
</TABLE> 

                                       17

<PAGE>
 
       BROWN & SHARPE SAVINGS & RETIREMENT PLAN FOR MANAGEMENT EMPLOYEES
                      SCHEDULE OF REPORTABLE TRANSACTIONS
                     For the Year Ended December 31, 1996
                     ------------------------------------

Category (iii) A series of securities transactions in excess of 5% of plan
--------------------------------------------------------------------------
assets
------

<TABLE> 
<CAPTION> 
                                                                                                                                  
Identity of Party Involved       Description of Assets                       Purchase Price        Selling Price    Cost of Asset 
--------------------------       ---------------------                       --------------        -------------    ------------- 
<S>                              <C>                                         <C>                   <C>              <C> 

Putnam Fiduciary Trust Company   The George Putnam Fund of Boston
                                 Purchased $12,362,338 face amount in
                                 70 transactions                                $ 12,362,338        $          -      $ 12,362,338

                                 Sold $7,590,305 face amount in 58
                                 transactions                                              -           7,590,305         7,570,046


                                 Putnam Fund for Growth and Income
                                 Purchased $4,555,765 face amount in 85
                                 transactions                                      4,555,765                   -         4,555,765

                                 Sold $158,812 face amount in 40
                                 transactions                                              -             158,812           151,917


                                 Putnam Voyager Fund
                                 Purchased $4,848,832 face amount in
                                 84 transactions                                   4,848,832                   -         4,848,832

                                 Sold $969,650 face amount in 42
                                 transactions                                              -             969,650           950,951


                                 Putnam Stable Value Fund
                                 Purchased $6,284,070 face amount in 128
                                 transactions                                      6,284,070                   -         6,284,070

                                 Sold $3,982,378 face amount in 65
                                 transactions                                              -           3,982,378         3,982,378

                                 Putnam New Opportunities Fund
                                 Purchased $5,386,115 face amount in
                                 85 transactions                                   5,386,115                   -         5,386,115

                                 Sold $787,447 face amount in 48
                                 transactions                                              -             787,447           772,259
<CAPTION> 

                                                                              Current Value of         
                                                                              ----------------         
Identity of Party Involved       Description of Assets                      Asset on Transaction        Net Gain       
--------------------------       ---------------------                      --------------------        --------       
                                                                                    Date                 (Loss)        
                                                                                    ----                 ------        
<S>                              <C>                                            <C>                    <C>             

Putnam Fiduciary Trust Company   The George Putnam Fund of Boston                                                      
                                 Purchased $12,362,338 face amount in                                                  
                                 70 transactions                                $ 12,362,338           $       -       
                                                                                                                       
                                 Sold $7,590,305 face amount in 58                                                     
                                 transactions                                      7,590,305              20,259       
                                                                                                                       
                                                                                                                       
                                 Putnam Fund for Growth and Income                                                     
                                 Purchased $4,555,765 face amount in 85                                                
                                 transactions                                      4,555,765                   -       
                                                                                                                       
                                 Sold $158,812 face amount in 40                                                       
                                 transactions                                        158,812               6,895       
                                                                                                                       
                                                                                                                       
                                 Putnam Voyager Fund                                                                   
                                 Purchased $4,848,832 face amount in                                                   
                                 84 transactions                                   4,848,832                   -       
                                                                                                                       
                                 Sold $969,650 face amount in 42                                                       
                                 transactions                                        969,650              18,699       
                                                                                                                       
                                                                                                                       
                                 Putnam Stable Value Fund                                                              
                                 Purchased $6,284,070 face amount in 128                                               
                                 transactions                                      6,284,070                   -       
                                                                                                                       
                                 Sold $3,982,378 face amount in 65                                                     
                                 transactions                                      3,982,378                   -       
                                                                                                                       
                                 Putnam New Opportunities Fund                                                         
                                 Purchased $5,386,115 face amount in                                                  
                                 85 transactions                                   5,386,115                   -       
                                                                                                                       
                                 Sold $787,447 face amount in 48                                                       
                                 transactions                                        787,447              15,188       
</TABLE> 

                                      18
<PAGE>
 
       BROWN & SHARPE SAVINGS & RETIREMENT PLAN FOR MANAGEMENT EMPLOYEES
                SCHEDULE OF REPORTABLE TRANSACTIONS (continued)
                     For the Year Ended December 31, 1996
                     ------------------------------------


Category (iii) A series of securities transactions in excess of 5% of plan
--------------------------------------------------------------------------
assets
------

<TABLE> 
<CAPTION> 

Identity of Party Involved        Description of Assets                      Purchase Price        Selling Price     Cost of Asset 
--------------------------        ---------------------                      --------------        -------------     ------------- 
<S>                               <C>                                        <C>                   <C>               <C>  


Fleet National Bank               Fleet National Bank Cash Management
                                  Purchased $21,349,611 face amount in
                                  117  transactions                             $ 21,349,611                   -      $ 21,349,611 

                                  Sold $22,231,949 face amount in 65
                                  transactions                                             -          22,231,949        22,231,949 



Principal Mutual Life Insurance   Principal Mutual Life Insurance Company
Company                           Contract No. (3) 88705-M
                                  Purchased $31,600 face amount in  1
                                  transaction                                         31,600                   -            31,600 

                                  Sold $3,802,225 face amount in 17
                                  transactions                                             -           3,802,225         3,802,225 

<CAPTION> 
                                                                                      Current Value of
                                                                                      ----------------
Identity of Party Involved        Description of Assets                            Asset on Transaction         Net Gain
--------------------------        ---------------------                            --------------------         --------
                                                                                           Date                  (Loss)
                                                                                           ----                  ------
<S>                               <C>                                              <C>                          <C> 

Fleet National Bank               Fleet National Bank Cash Management
                                  Purchased $21,349,611 face amount in
                                  117  transactions                                    $ 21,349,611                     -

                                  Sold $22,231,949 face amount in 65
                                  transactions                                           22,231,949                     -



Principal Mutual Life Insurance   Principal Mutual Life Insurance Company
Company                           Contract No. (3) 88705-M
                                  Purchased $31,600 face amount in  1
                                  transaction                                                31,600                     -

                                  Sold $3,802,225 face amount in 17
                                  transactions                                            3,802,225                     -
</TABLE> 

                                       19
<PAGE>
 
       Brown & Sharpe Savings & Retirement Plan For Management Employees
                Schedule of Assets Held for Investment Purposes
                             At December 31, 1996

<TABLE> 
<CAPTION> 
                                                                                                                   Cost of
Shares or Face Value        Description                                                  Fair Value             Investment
==========================================================================================================================

<S>                         <C>                                                         <C>                   <C> 
298,553.518 shares          The George Putnam Fund of Boston                         
                            Balanced fund consisting of stocks and corporate            $ 4,896,277           $  4,792,292
                            and government bonds                                     
                                                                                     
                            Putnam New Opportunities Fund                            
111,889.431 shares          Long-term growth funds consisting of stock of                 4,546,068              4,613,856
                            certain emerging industry groups that in Putnam          
                            Investments view offer long term growth potential        
                                                                                     
                            Putnam Voyager Fund                                      
234,020.022 shares          A combination of stocks of small companies expected           3,772,403              3,897,881
                            to grow over time in addition to stocks of larger more
                            established corporations

                            Brown & Sharpe Company Stock Fund
187,467.43 shares           Consisting of 187,467.43 shares of Brown & Sharpe             2,624,544              1,891,267
                            Class A & B Common Stock                                           
                                                                                         
                            Putnam Fund for Growth & Income                              
250,943.511 shares          A combination of attractive priced stocks of companies        4,522,002              4,403,848
                            viewed by Putnam to offer long-term growth potential         
                            while also providing income                                  
                                                                                         
                            Brown & Sharpe Stable Value Fund                             
$1,721,814 face value       American International Life Assurance Company                 1,721,814              1,721,814
$2,225,705 face value       Principal Mutual Life Insurance Company (3)88705-03-M         2,225,705              2,225,705
$176,433 face value         Principal Mutual Life Insurance Company (3)88705-02-M           176,433                176,433
2,301,692 shares            Putnam Stable Value Fund                                      2,301,692              2,301,692
                                                                                       ------------           ------------
                                                                                         
                                                                                         
                            TOTAL INVESTMENTS                                          $ 26,786,938           $ 26,024,788
                                                                                         
                            Plan Loan Receivable                                            487,606                487,606
                                                                                       ------------           ------------
                                                                                     
                            TOTAL ASSETS HELD FOR INVESTMENTS                          $ 27,274,544           $ 26,512,394
                                                                                       ============           ============


</TABLE>
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<PAGE>
 
                         Consent of Independent Auditors



We consent to the incorporation by reference in the Registration Statements
(Form S-8 Nos. 2-33676, 2-56821, 2-60398, 2-77219, 2-77575, 2-83637, 2-97935,
33-17831, 33-23601, 33-23603, 33-30927, and 33-54496) of Brown & Sharpe
Manufacturing Company of our report dated June 23, 1997, with respect to the
financial statements and schedules of the Brown & Sharpe Savings and Retirement
Plan for Management Employees included in this Annual Report (Form 11-K) for the
year ended December 31, 1996.



                                       ERNST & YOUNG LLP




Providence, Rhode Island
June 23, 1997

                                       21