<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994 COMMISSION FILE NO. 1-8045
GENRAD, INC.
------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MASSACHUSETTS 04-1360950
------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
300 BAKER AVENUE, CONCORD, MASSACHUSETTS 01742-2174
---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (508) 287-7000
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
Common Stock, $1 par value New York Stock Exchange
7-1/4% Convertible Subordinated New York Stock Exchange
Debentures due 2011
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months and (2) has been
subject to such filing requirements for the past 90 days.
Yes /x/ No / /
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K. [ ]
The aggregate market value of shares held by non-affiliates of the
registrant as of March 14, 1995 was $98,529,314. 19,599,701 shares of the
Common Stock of GenRad, Inc., $1 par value, were outstanding on March 14, 1995.
DOCUMENTS INCORPORATED BY REFERENCE
1. Portions of the Proxy Statement of GenRad, Inc. for the Annual
Meeting of Shareholders to be held on May 11, 1995 (the "1995 Proxy
Statement"), which will be filed with the Securities and Exchange
Commission within 120 days after the close of the Company's fiscal
year ended December 31, 1994, are incorporated by reference into
Part III.
2. Portions of the Annual Report to Shareholders for the year ended
December 31, 1994 (the "1994 Annual Report"), are incorporated by
reference into Part II and Part IV.
Exhibit Index on page 7
<PAGE> 2
PART I
ITEM 1. BUSINESS
GenRad, Inc. (the "Company" or "GenRad") commenced operations as a
corporation in June 1915. The Company designs, develops, manufactures and
sells integrated software and test and measurement systems to manufacturers,
users and servicers of electronic and mechanical products. The Company has two
product lines: Electronic Manufacturing Test ("Concord Products"), and
Advanced Diagnostic Solutions. Prior to 1994, the Company had two additional
product lines which were Design Automation Products ("DAP") and Structural Test
Products ("STP"). DAP and STP were designated discontinued product lines in
the third quarter of 1993 as part of the Company's restructuring, as more fully
described in Management's Discussion and Analysis of Financial Condition and
Operating Results.
Concord Products products and services accounted for 81.4% of
consolidated revenues in the fiscal year ended December 31, 1994 ("fiscal
1994"), 73.6% in the fiscal year ended January 1, 1994 ("fiscal 1993"), and
76.1% in the fiscal year ended January 2, 1993 ("fiscal 1992"). Advanced
Diagnostic Solutions products and services accounted for 18.6% of consolidated
revenue in fiscal 1994, 22.2% in fiscal 1993, and 9.6% in fiscal 1992.
CONCORD PRODUCTS
Concord Products is comprised of the following products, each of which
is developed and manufactured at the Company's Concord, Massachusetts facility.
AUTOMATIC TEST EQUIPMENT (ATE)
The core ATE products include the GR228X product families and are used
to test printed-circuit boards, which are used in virtually all electronic
products, during their manufacturing process. These systems sell for prices
ranging from under $100,000 to over $500,000.
Major competitors include Hewlett-Packard, Teradyne and Schlumberger.
The Company sells its ATE products through a direct sales force in the United
States, the United Kingdom, Germany, France, Switzerland and Italy. Sales
elsewhere are made through these offices or independent representatives to whom
GenRad provides technical and administrative assistance.
GENEVA[TRADEMARK] TEST AND MEASUREMENT SYSTEMS
GenRad's Extended VXI Architecture ("GENEVA") is a combined hardware
and software test and measurement system that uses the industry standard VXIbus
for instrument control. GenRad's extension adds a scanner bus above the
instruments to solve the signal interconnect problems not addressed by VXI.
The Company has a patent for this VXIScan[trademark] architectural extension.
The GENEVA architecture is capable of addressing the needs of a wide range of
test and measurement system applications.
The GR9000 is the first announced product based on the GENEVA
architecture. The GR9000 is an end-of-line telecommunications compliance test
and measurement system. The GR9000 can be used by telecommunications companies
to run a full range of CCITT tests at high throughput and accuracy. The major
competitors thus far are Schlumberger and Hewlett-Packard.
The GENEVA Test & Measurement Systems GR1000 and GR5000 are an open
configurable VXI-based test and measurement system for functional test
applications. Such applications range from engineering verifications to
manufacturing verification and calibration to field service and repair at the
PC board, modular system level. Pricing of product varies based on customer
specifications.
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ADVANCED DIAGNOSTIC SOLUTIONS
Advanced Diagnostic Solutions (ADS), previously referred to as
Automotive Test Products, develops and produces test systems for diagnostics of
electrical and electronic failures on cars and other products. ADS designs,
manufactures and provides worldwide service and support for all products.
Applications support is provided to write test programs specific to customer
requirements. Hewlett-Packard is ADS's most significant competitor. Pricing
of product, including software, varies based on customer specifications.
PRINCIPAL MARKETS
GenRad's principal customers are electronics manufacturers in the
following industries: computers and computer peripherals, telecommunications,
aerospace, automotive, process controls, medical equipment, transportation,
consumer products, office automation/information processing,
government/military equipment and contract manufacturing. GenRad has
government contracts which are generally subject to termination at the
convenience of the government. Sales to agencies of the United States
Government amounted to 5% of consolidated revenues in 1994, 12% in 1993 and 4%
in 1992. Sales to Ford of Europe amounted to 16% of consolidated revenues in
1994, 16% in 1993 and 7% in 1992.
SALES, SERVICE AND DISTRIBUTION
GenRad sells and services its products primarily through its own sales
and service organizations consisting of sales offices and service centers
located in the United States, the United Kingdom, Germany, France, Switzerland,
Italy and Singapore. Sales or service elsewhere is made through these offices
or through independent representatives to whom GenRad provides technical and
administrative assistance.
FOREIGN OPERATIONS
GenRad's operations abroad consist of selling, marketing, distributing
and servicing products, providing other types of customer support services such
as software development and manufacturing of Advanced Diagnostic Solutions
products. GenRad Manchester, located in Manchester, England, is a division of
GenRad Limited and is the base of GenRad's Advanced Diagnostic Solutions
business unit.
GenRad is subject to the usual risks of international trade, including
unfavorable economic conditions, political instability, restrictive trade
policies, controls on funds transfers and foreign currency fluctuations.
During fiscal year 1994, sales in foreign countries were $78,692,000 or
55% of GenRad's total sales, compared with $88,839,000, or 56%, during fiscal
year 1993, and $83,220,000, or 58%, during fiscal year 1992. Additional
information regarding GenRad's foreign operations is contained in the
Consolidated Financial Statements incorporated in Item 8 of this report.
BACKLOG
Backlog at the end of 1994 was approximately $31.7 million as compared
to approximately $19.0 million at the end of 1993. Backlog relating to the
U.S. Marine Corps order as of the end of 1994 totaled $9.1 million compared to
$2.4 million at the end of 1993. Backlog for 1994 excluded orders related to
discontinued products. Most orders are filled within three months of receipt.
It is expected that substantially all of the orders on hand on December 31,
1994, will be filled during the current fiscal year. Although orders are
subject to cancellation by purchasers, GenRad's experience has been that
cancellations are not material.
COMPETITIVE CONDITIONS
Competition, from both U.S. and foreign competitors, is strong and
active. Some of these competitors are substantially larger companies with
greater resources. Typically, GenRad meets competition by carefully selecting
its markets and by developing its products to meet the needs of each group of
customers. Primary competitive factors are product performance, customer
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support services and pricing. The electronic manufacturing test industry is
subject to rapid change and success is dependent on the development of new
technologies and new product introductions. A key competitive advantage for
GenRad is the Company's broad and integrated product family and its extensive
software capabilities.
RESEARCH AND DEVELOPMENT
GenRad's expenditures for the development of new products and services,
and the improvement of existing products and services, were $13,716,000 in
fiscal 1994, $15,342,000 in fiscal 1993, and $20,278,000 in fiscal 1992. The
1994 expenditures were primarily for staffing and related expenses for the
development of electronic manufacturing test and of advanced diagnostic
solutions systems and software products.
PATENTS AND TRADEMARKS
GenRad seeks patents in the United States and appropriate foreign
countries for significant technological inventions. GenRad also owns patents,
copyrights, trademarks and proprietary information, some of which are
considered to be valuable assets. In the opinion of management, no individual
patent, copyright, trademark or proprietary information is material to the
business as a whole.
SUPPLIERS
Materials and components used by GenRad in manufacturing its products
are available primarily from domestic sources. Where possible, GenRad buys
from multiple sources to avoid dependence on any single supplier. However,
certain microcomputers, microprocessors, general-purpose digital computers and
custom semiconductor devices are only available from a limited number of
suppliers.
ENVIRONMENT
GenRad's manufacturing facilities are subject to numerous laws and
regulations designed to protect the environment. GenRad does not anticipate
that compliance with such laws or regulations presently in effect will
adversely affect its capital expenditures, earnings or competitive position.
GenRad does not expect to make any material expenditures for environmental
control facilities in the current fiscal year.
EMPLOYEES
GenRad had 1,096 employees, including contract employees, on December
31, 1994, and 1,184 employees on January 1, 1994. None of GenRad's employees
are covered by collective bargaining agreements, and GenRad believes relations
with its employees are good.
<TABLE>
EXECUTIVE OFFICERS OF GENRAD
<CAPTION>
NAME AGE OFFICE
---- --- ------
<S> <C> <C>
James F. Lyons 60 President and Chief Executive Officer
Sarah H. Lucas 35 Vice President, Strategic Planning and Analysis
George A. O'Brien 50 Vice President, Chief Financial Officer, Clerk and Secretary
John C. Washburn 65 Vice President, General Manager Concord Operations
</TABLE>
The President, Treasurer and Clerk are elected and all other officers
are appointed by the Board of Directors (the "Directors"). Elected officers
hold office until the first meeting of the Directors following the Annual
Meeting of Shareholders (the "Annual Meeting") and thereafter until a successor
is chosen and qualified. All appointed officers hold office until the first
meeting of the Directors following the Annual Meeting, unless a different term
is specified in the vote choosing or appointing them. There are no family
relationships among the officers and/or directors.
Mr. Lyons joined the Company as President and Chief Executive Officer
in July 1993. From January 1992 until July 1993, Mr. Lyons served as President
and Chief Executive Officer of Harry Gray Associates, a management consulting
and investment company located in Farmington, Connecticut. From 1989 to
January 1992, he was President and Chief Operating Officer of American Medical
International, Dallas, Texas.
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Ms. Lucas was appointed Vice President, Strategic Planning and Analysis
of GenRad in January 1994. From July 1990 to January 1994, Ms. Lucas served as
an Associate Consultant within McKinsey & Company. From September 1988 through
June 1990, she attended the MBA program at Harvard Business School where she
graduated as a Baker Scholar in 1990.
Mr. O'Brien joined the Company as Vice President and Chief Financial
Officer in September 1994, and was additionally elected Clerk and Secretary in
November 1994. From February 1991 until September 1994, Mr. O'Brien was head
of his own financial consulting firm, George A. O'Brien Associates, Dallas,
Texas. From January 1990 through January 1991, he was President and Chief
Executive Officer at The Remington Companies, Inc., Dallas, Texas, a privately
owned company that invested in under-valued properties.
Mr. Washburn was appointed GenRad's Vice President, General Manager
Concord Operations in December 1994. From the time Mr. Washburn joined the
Company in April 1994 until December 1994, he served as Vice President,
Manufacturing Operations. From 1985 to April 1994, Mr. Washburn was the
Executive Vice President and Chief Operating Officer of Mott Metallurgical
Corporation, a manufacturer of precision porous metal products located in
Farmington, Connecticut.
ITEM 2. PROPERTIES
GenRad's executive offices are located in Concord, Massachusetts, where
the Company owns a 450,000 square foot building on 77 acres of land. On
January 16, 1995, GenRad sold a 254,000 square foot manufacturing facility on
85 acres of land in Bolton, Massachusetts. All operations performed in the
Bolton facility were relocated to the Concord facility.
In addition, GenRad engages in research, design, manufacturing or
marketing operations in leased facilities in five states in the United States
and in six foreign countries. In the opinion of management, all of GenRad's
properties are well maintained.
ITEM 3. LEGAL PROCEEDINGS
On October 19, 1993, Hewlett-Packard Company ("H-P") brought an action
in the United States District Court in Colorado against GenRad for infringement
of one or more claims of H-P's U.S. Patents Nos. 5,124,660 and 5,254,953
directed to the use of capacitive coupling for detecting open component pins on
circuit boards. On October 19, 1993, GenRad brought an action in the United
States District Court in Massachusetts against H-P to obtain a judgment
declaring those patents invalid and not infringed. H-P has amended its
complaint to eliminate the former of these patents from the lawsuit, but it is
still charging GenRad with infringement of the latter. On April 7, 1994, the
location of the proceedings was determined to be in the United States District
Court in Massachusetts. On June 2, 1994, H-P filed a motion for injunctive
relief. On February 10, 1995, the motion for injunctive relief was denied.
In the opinion of management, reserves at December 31, 1994 are
adequate to cover the legal costs and liability, if any, related to the
eventual outcome of this litigation. An adverse result in this litigation
could have a material adverse effect on the Company's financial condition,
results of operations or liquidity.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable
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PART II
ITEM 5. MARKET FOR REGISTRANTS' COMMON STOCK AND RELATED SHAREHOLDER MATTERS
The information set forth in Exhibit 13, under the captions
"Supplementary Information" and "Investors' Reference Guide," which is the same
as the information set forth on pages 42 and 44 of GenRad's 1994 Annual Report,
is incorporated by reference.
ITEM 6. SELECTED FINANCIAL DATA
The information set forth in Exhibit 13, under the caption "Selected
Financial Data, Five Year Summary," which is the same as the information set
forth under that caption on page 21 of GenRad's 1994 Annual Report, is
incorporated by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information set forth in Exhibit 13, under the caption
"Management's Discussion and Analysis of Financial Condition and Operating
Results," which is the same as the information set forth under that caption on
pages 22 through 25 of GenRad's 1994 Annual Report, is incorporated by
reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information set forth in the Consolidated Financial Statements and
the Supplementary Information in Exhibit 13, which is the same information set
forth in the Consolidated Financial Statements and the Supplementary
Information on pages 27 through 42 of GenRad's 1994 Annual Report, is
incorporated by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information set forth under "Executive Officers of GenRad, Inc." on
pages 3 and 4 in Part I of this report and in Item 1 of the 1995 Proxy
Statement, is hereby incorporated by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information set forth under "Compensation of Executives and
Directors" in the 1995 Proxy Statement, is hereby incorporated by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information set forth under "Certain Shareholders" and "Election of
Directors" in the 1995 Proxy Statement, is hereby incorporated by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information set forth under "Compensation of Directors" in the 1995
Proxy Statement, is hereby incorporated by reference.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)(1) The following Consolidated Financial Statements of GenRad, Inc. and
Subsidiaries, which are the same as the Consolidated Financial
Statements in GenRad's 1994 Annual Report, are incorporated by
reference to Exhibit 13:
A. Consolidated Statement of Operations.
B. Consolidated Balance Sheet.
C. Consolidated Statement of Stockholders' Equity (Deficit).
D. Consolidated Statement of Cash Flows.
E. Notes to Consolidated Financial Statements.
(a)(2) The following schedules to the Consolidated Financial Statements of
GenRad, Inc. and Subsidiaries are filed as part of this report:
A. Report of Independent Public Accountants on Schedule II
B. Schedule II - Valuation and Qualifying Accounts
All other schedules not listed above are inapplicable or are not
required under Securities and Exchange Commission regulations and therefore
have been omitted.
(a)(3) The following Exhibits are filed as part of this report:
*10.01 -- Employment Agreement between GenRad, Inc. and Executive
Officer, Sarah H. Lucas, effective date January 17, 1994,
attached.
*10.02 -- Termination Agreement between GenRad, Inc. and Executive
Officer, Robert C. Aldworth, effective December 31, 1994,
attached.
*10.03 -- GenRad, Inc. Director Restricted Stock Plan, incorporated by
reference to GenRad's Registration Statement on Form S-8
(File No. 33-53867) filed May 27, 1994, attached.
13 -- GenRad, Inc. portions of Annual Report to Shareholders for
fiscal year ended December 31, 1994, attached.
21 -- List of Subsidiaries, attached.
23 -- Consent of Arthur Andersen LLP, attached.
27 -- Financial Data Schedule, attached.
(b) None
(c) See Item 14(a)(3) above.
(d) See Item 14(a)(1) and (2) above.
--------------------
*Management contract or compensatory plan or arrangement required to be filed
as an exhibit to this form pursuant to Item 14 (a) and (c) of this Report.
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SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED
ON ITS BEHALF BY THE UNDERSIGNED DULY AUTHORIZED.
GenRad, Inc.
(REGISTRANT)
By: /s/ JAMES F. LYONS
--------------------------
James F. Lyons
President and Chief
Executive Officer
Date: March 30, 1995
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934,
THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
(1) Principal executive officer
/s/ JAMES F. LYONS President and Chief Executive Officer March 30, 1995
---------------------------
James F. Lyons
(2) Principal financial officer:
/s/ GEORGE A. O'BRIEN Vice President, Chief Financial March 30, 1995
--------------------------- Officer, Clerk and Secretary
George A. O'Brien
(3) Principal accounting officer:
/s/ GEORGE A. O'BRIEN Vice President, Chief Financial March 30, 1995
--------------------------- Officer, Clerk and Secretary
George A. O'Brien
(4) A majority of the Board of Directors:
/s/ RUSSELL A. GULLOTTI Director March 30, 1995
---------------------------
Russell A. Gullotti
/s/ JAMES F. LYONS Director March 30, 1995
---------------------------
James F. Lyons
/s/ EDWIN M. MARTIN, JR. Director March 30, 1995
---------------------------
Edwin M. Martin, Jr.
/s/ PAUL PENFIELD, JR. Director March 30, 1995
---------------------------
Paul Penfield, Jr.
/s/ WILLIAM G. SCHEERER Director March 30, 1995
---------------------------
William G. Scheerer
/s/ ADRIANA STADECKER Director March 30, 1995
---------------------------
Adriana Stadecker
/s/ JAMES H. WRIGHT Director March 30, 1995
---------------------------
James H. Wright
</TABLE>
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ARTHUR ANDERSEN LLP
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
Stockholders and Board of Directors of
GenRad, Inc.:
We have audited in accordance with generally accepted auditing
standards, the consolidated financial statements included in GenRad, Inc.'s
annual report to shareholders incorporated by reference in this Form 10-K, and
have issued our report thereon dated February 8, 1995. Our audit was made for
the purpose of forming an opinion on those statements taken as a whole. The
schedule listed in the accompanying index is the responsibility of the
Company's management and is presented for the purposes of complying with the
Securities and Exchange Commission's rules and are not part of the basic
financial statements. This schedule has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, fairly states, in all material respects, the financial data required
to be set forth therein in relation to the basic financial statements taken as
a whole.
/s/ ARTHUR ANDERSEN LLP
------------------------
ARTHUR ANDERSEN LLP
Boston, Massachusetts
February 8, 1995
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<TABLE>
GENRAD, INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFIYING ACCOUNTS
(IN THOUSANDS)
<CAPTION>
====================================================================================================
Col. A Col. B Col. C Col. D Col. E
----------------------------------------------------------------------------------------------------
Additions
Balance at Charged to Balance
Beginning Costs and Deductions at End
Description of Period Expenses (a) of Period
====================================================================================================
<S> <C> <C> <C> <C>
Year ended December 31, 1994
Deducted from asset accounts:
Allowance for doubtful accounts $1,462 $516 $662 $1,316
Year ended January 1, 1994
Deducted from asset accounts:
Allowance for doubtful accounts $1,251 $368 $157 $1,462
Year ended January 2, 1993
Deducted from asset accounts:
Allowance for doubtful accounts $ 929 $650 $328 $1,251
------------------------
<FN>
(a) Uncollectable accounts written off, net of recoveries.
</TABLE>
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EXHIBIT 10.01
EMPLOYMENT AGREEMENT
--------------------
This Employment Agreement, effective the 17th day of January, 1994,
is between GenRad, Inc., a Massachusetts corporation (the "Company")
and Sarah Lucas.
In consideration of the mutual covenants contained herein, the
parties agree as follows:
1. TERM OF EMPLOYMENT. The Company agrees to employ the Employee
and the Employee agrees to serve the Company until December 31, 1995,
unless the employment of the Employee under this Agreement is
terminated earlier. The Employee shall devote her full business time
during normal business hours to the business and affairs of the
Company, except that the Employee shall have the right to participate
in civic, cultural, and charitable activities and to manage personal
investments so long as such activities in the aggregate do not
significantly interfere with the performance of the Employee's duties
for the Company. During the period of employment, the Company shall pay
the Employee a salary not less than the Employee's base salary in
effect on the date of this Agreement, as such base salary may be
increased from time to time, provided that the Employee's base salary
may be reduced prior to a Change in Control of the Company (as defined
in Section 2 below) in accordance with a general salary reduction
applicable to substantially all of the officers of the Company and the
Company's affiliates, taken as a whole (for purposes hereof,
"affiliates" means any entities controlled by, controlling, or under
common control with the Company at the time of any such reduction, and
"Company" includes any successors to the business of the Company).
During such period of employment, the Employee shall also be entitled
to receive fringe benefits at a level consistent with those for which
employees of the same grade level and seniority are eligible, including
participation in retirement plans, stock plans and incentive
compensation programs, vacation and sick time, and medical, dental,
life insurance, and other similar benefits.
2. SALARY CONTINUATION. If the Company terminates the Employee's
employment without cause prior to December 31, 1995 (such action being
hereafter referred to as a "Termination"), the Company shall:
A. Continue to provide the Employee, at the Company's expense,
with the full level of medical, dental, and similar health
benefits for which the Employee was eligible immediately prior to
the Termination, until the earlier to occur of (i) the Employee's
full time employment by another company, or (ii) December 31, 1995.
B. During the period commencing with the date of Termination
and ending 12 months thereafter (whether or not such period ends
after December 31, 1995 and regardless of whether the Employee has
become employed by another company), continue to pay the
Employee's base salary as in effect immediately prior to the
Termination at the same time intervals as salary payments were
made to the Employee immediately prior to the Termination.
C. During the period, if any, following completion of the
12-month period referred to in paragraph B above, and ending
December 31, 1995, pay the Employee, at the same time intervals as
salary payments were made to the Employee immediately prior to the
Termination, an amount equal to (i) her base salary immediately
prior to Termination minus (ii) any salary or other compensation
earned by the Employee from other employment; it being understood
that the Employee shall use reasonable efforts to find new
employment suitable to her training and performance (provided that
the Employee shall not be required to move her residence to accept
new employment). The Company shall not have a right to withhold
payments if it believes the Employee has not used reasonable
efforts to find new employment.
<PAGE> 2
D. Provide reasonable executive outplacement support.
Notwithstanding the foregoing, a Termination shall be deemed to
have occurred, and the Employee shall be entitled to the benefits set
forth in this Section 2, if the Employee voluntarily terminates her
employment on account of the occurrence of any of the following events
after a Change in Control of the Company: (i) the assignment to the
Employee of any duties inconsistent in any respect with the highest
position (including status, offices, titles, and reporting
requirements), authority, duties or responsibilities attained by the
Employee during the period of his employment by the Company; (ii) a
failure of the Company to comply with the terms of Section 1; (iii) a
relocation of the Employee outside the metropolitan Boston area; or
(iv) a decrease in the Employee' s compensation (including base
salary, bonus, or fringe benefits). For purposes hereof, "Change in
Control of the Company" shall have the meaning set forth in the
Company's 1991 Equity Incentive Plan, as adopted by the Board of
Directors of the Company on March 29, 1991 (and without regard to any
subsequent amendments thereto).
3. DEATH, RESIGNATION, OR TERMINATION FOR CAUSE. The Employee
shall have no rights under Sections 1 and 2 in the event the Employee
dies, resigns, or is terminated for cause (as defined in Section 4
below). Notwithstanding anything herein to the contrary, either party
hereto shall have the right to terminate the Employee's employment
with the Company upon 30 days notice (subject, in the event of a
termination by the Company, to the Employee's rights in Section 2
above).
4. TERMINATION FOR CAUSE. The Company may terminate the employment
of the Employee for cause. For purposes hereof, "cause" shall exist
only if the Employee (i) engages in fraud in the performance of her
duties for the Company, (ii) is convicted of or pleads guilty or no
contest to any felony involving moral turpitude, or (iii) is
incapacitated for a continuous period of one hundred eighty days.
5. NON-DISCLOSURE AND NON-COMPETITION.
A. The Employee agrees that all confidential information
relating to the Company's business is the exclusive property of
the Company. The Employee agrees not to make unauthorized use or
disclosure of such confidential information during the period of
her employment by the Company and for a period of five years
thereafter.
B. During the period of employment and, in the event the
Employee's employment is terminated for cause or if the Employee
voluntarily terminates her employment with the Company (other
than for reasons set forth in the last paragraph of Section 2
after the occurrence of a Change in Control of the Company), for
a period of one year after the expiration thereof, the Employee
will not, directly or indirectly, as an individual proprietor,
partner, stockholder, officer, employee, director, joint
venturer, investor, lender, or in any other capacity whatsoever
(other than as the holder of not more than one percent (1%) of
the total outstanding stock of a publicly held company), engage
in the business of developing, producing, marketing, or selling
automatic test equipment for electronic printed-circuit boards.
<PAGE> 3
6. MISCELLANEOUS.
-------------
A. The Company may assign its rights and obligations under this
Agreement to a successor to all or substantially all of the
business and/or assets of the Company. The Company will require any
successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to assume expressly and agree
to perform this Agreement to the same extent that the Company would
be required to perform it had no such succession taken place.
B. The Company agrees to pay promptly as incurred, to the full
extent permitted by law, all legal fees and expenses which the
Employee may reasonably incur as a result of any contest
(regardless of the outcome thereof) by the Company, the Employee or
others of the validity or enforceability of, or liability under,
any provision of this Agreement.
C. This Agreement may be amended only by a written agreement
signed by the Employee and the Company.
D. This Agreement shall be construed in accordance with the
laws of the Commonwealth of Massachusetts.
The Employee and the Company have executed this Agreement as of the
above date.
EMPLOYEE GENRAD, INC.
/S/ Sarah H. Lucas By: /S/ James F. Lyons
------------------ -------------------
<PAGE> 1
EXHIBIT 10.02
GENRAD
GENRAD, INC.
300 Baker Avenue Boston Line
Concord 617-646-7400
Mass 01742
508-369-4400
September 7, 1994
Mr. Robert C. Aldworth
Chief Financial Officer
GenRad, Inc.
300 Baker Avenue
Concord, MA 021742-2174
Dear Bob:
Pursuant to our discussions during the last few days, I
have set forth in this letter the terms agreed to between
us with respect to your plans to leave GenRad, Inc. (the
"Company").
1. You will resign as Chief Financial Officer of
the Company effective as of the later of (a) October 31,
1994, or (b) the earlier of the date upon which the
Company has a new Chief Financial Officer or the date
upon which you accept employment elsewhere.
Notwithstanding your resignation as Chief Financial
Officer, your employment with the Company will continue
thereafter until you accept employment elsewhere, but in
no event later than December 31, 1994, unless otherwise
agreed by the Company (the "Termination Date").
2. During the period beginning on the Termination
Date and ending on the second anniversary of the
Termination Date, the Company will pay to you your base
salary as in effect on the date hereof, which is $250,000
per annum, at the same time intervals as salary payments
were made to you immediately prior to the Termination
Date.
3. During the period beginning on the Termination
Date and ending on the second anniversary of the
Termination Date, the Company will maintain in effect for
you all life, medical, dental and similar health benefits
for which you are eligible as of the date hereof.
Further, during such period you will be treated for
purposes of the Company's 1982 Employee Stock Option Plan
and the 1991 Equity Incentive Plan, as it relates solely
to vested shares, as though you were a full time employee
of the Company.
<PAGE> 2
Robert C. Aldworth
September 7, 1994
Page 2
Still further, until December 31, 1994 for purposes of the Company's 1994
Incentive Compensation Plan, you will be treated as though you were a full time
employee of the Company.
4. The Company will provide you with reasonable outplacement support
in connection with your termination of employment.
5. You hereby acknowledge your continuing obligations to the Company
contained in Section 5 of the Amended and Restated Employment Agreement dated
December 1, 1991, as amended, between you and the Company (the "Employment
Agreement").
6. Amounts payable to you hereunder will be subject to any state and
federal withholding obligations imposed upon the Company by applicable law.
7. Your acceptance of the benefits provided herein will constitute an
acknowledgment of full satisfaction of any benefits to which you might be
entitled under your Employment Agreement.
8. Your acceptance of the benefits contained herein will resolve any
and all claims, disputes or obligations that you may have against the Company,
except those relating to the obligations of the Company provided for herein and
any benefits to which you are entitled under the Company's qualified employee
benefit plans. In consideration of the Company's agreement to make payments
hereunder that exceed those to which you would be entitled under your
Employment Agreement, you hereby release the Company, its officers and
directors and its representatives, successors and assigns from any and all
claims you may have against any of them for compensation, benefits or damages
of any nature, either in law or in equity, arising out of your employment by
the Company and the termination of that employment, including without
limitation any rights or claims under the Age Discrimination in Employment Act
of 1967 as amended (29 U.S.C. 621) and Massachusetts General Laws Chapter 151B,
except any such claims relating to the benefits to which you are entitled
hereunder. In consideration of the benefits provided under this agreement, you
agree to execute a further similar release of the Company on the Termination
Date.
9. This letter agreement represents the entire agreement between you
and the Company with respect to your employment and the termination thereof.
It supersedes any prior agreements or understandings between us, including
those contained in your Employment Agreement, except to the extent benefits
payable thereunder are to be paid as provided herein. Once accepted, this
agreement may be modified only in a writing signed by each of us. It will be
governed by Massachusetts law and will be binding upon and inure to the benefit
of your heirs and your and our successors and assigns.
<PAGE> 3
Robert C. Aldworth
September 7, 1994
Page 3
If you agree to the foregoing terms, will you please so indicate by
signing and returning the enclosed copy of this letter to me. In that case,
the agreement between us will be effective on the date first above written.
From the date that you receive this agreement you have twenty-two (22)
days to consider it. Should you decide to sign the agreement, you have seven
(7) days following the signing to revoke the agreement, and the agreement will
not become effective and enforceable until that seven (7) day revocation period
has expired. Should you either decide not to sign this agreement or should you
sign it and elect to revoke it during the seven (7) day period, then this
agreement shall be null and void.
Very truly yours,
GenRad, Inc.
By: /s/ JAMES F. LYONS
-------------------------------
James F. Lyons, President and
Chief Executive Officer
Accepted and Agreed:
/s/ ROBERT C. ALDWORTH
----------------------------
Robert C. Aldworth
<PAGE> 1
EXHIBIT 10.03
As filed with the Securities and Exchange Commission
on May 27, 1994
Registration No. 33-53867
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
GENRAD, INC.
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-1360950
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
300 BAKER AVENUE, CONCORD, MASSACHUSETTS 01742
(Address of Principal Executive Offices) (Zip Code)
DIRECTOR RESTRICTED STOCK PLAN
(Full title of the Plan)
MR. ROBERT C. ALDWORTH
GENRAD, INC.
300 BAKER AVENUE
CONCORD, MASSACHUSETTS 01742
(Name and address of agent for service)
(508) 369-4400
(Telephone number, including area code, of agent for service)
<TABLE>
===============================================================================
CALCULATION OF REGISTRATION FEE
<CAPTION>
Proposed Proposed
Title of maximum maximum
securities Amount offering aggregate Amount of
to be to be price offering registration
registered registered per share price fee
---------- ---------- --------- --------- ------------
<S> <C> <C> <C> <C>
Common Stock, 50,000 $5.437 (1) $271,850 (1) $93.73
$1.00 par shares
value per
share
------------------------------------------------------------------
<FN>
(1) Estimated solely for the purpose of calculating the
registration fee, and based upon the average of the high and
low prices of the Registrant's Common Stock on the New York
Stock Exchange on May 20, 1994 in accordance with Rules
457(c) and 457(h) of the Securities Act of 1933.
===============================================================================
</TABLE>
<PAGE> 2
PART I. INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The information required by Part I of Form S-8 is included in documents
sent or given to participants in the Registrant's Director Restricted Stock
Plan pursuant to Rule 428(b)(1) of the Securities Act of 1933, as amended (the
"Securities Act").
PART II. INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Certain Documents by Reference
-----------------------------------------------
The following documents, which are filed with the Securities and
Exchange Commission (the "Commission"), are incorporated in this Registration
Statement by reference:
(1) The Registrant's latest annual report filed pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), or the latest prospectus filed pursuant
to Rule 424(b) under the Securities Act that contains audited financial
statements for the Registrant's latest fiscal year for which such
statements have been filed.
(2) All other reports filed pursuant to Sections 13(a) or
15(d) of the Exchange Act since the end of the fiscal year covered by
the annual reports or the prospectus referred to in (1) above.
(3) The description of the common stock of the Registrant,
$1.00 par value per share (the "Common Stock"), contained in a
Registration Statement filed under the Exchange Act, including any
amendment or report filed for the purpose of updating such description.
All documents subsequently filed by the Registrant pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a
post-effective amendment which indicates that all shares of Common Stock
offered hereby have been sold or which deregisters all shares of Common Stock
then remaining unsold, shall be deemed to be incorporated by reference herein
and to be part hereof from the date of the filing of such documents.
Item 4. Description of Securities
-------------------------
Not applicable.
-2-
<PAGE> 3
Item 5. Interests of Named Experts and Counsel
--------------------------------------
The legality of the Common Stock offered hereby will be passed upon for
the Registrant by the law firm of Hale and Dorr, Boston, Massachusetts.
Item 6. Indemnification
---------------
Section 67 of Chapter 156B of the Massachusetts General Laws ("Section
67") provides that a corporation may indemnify its directors and officers to
the extent specified in or authorized by (i) the articles of organization, (ii)
a by-law adopted by the shareholders, or (iii) a vote adopted by the holders of
a majority of the shares of stock entitled to vote on the election of
directors. In all instances, the extent to which a corporation provides
indemnification to its directors and officers under Section 67 is optional.
Article 6 of the Registrant's Restated Articles of Organization, as amended to
date, provides that, to the extent permitted by Chapter 156B of the
Massachusetts General Laws, a director shall not be personally liable to the
Registrant or its shareholders for monetary damages for breach of fiduciary
duty as a director.
Article 5, Section 9 of the Registrant's By-laws, as amended to date,
provides that the Registrant will indemnify any director or officer or former
director or former officer against all liabilities and expenses incurred in
connection with or arising from the defense or disposition of any action, suit
or other proceeding in which such person may be a defendant or with which such
person may be threatened by reason of being or having been such director or
officer.
The Registrant's By-laws provide that a director or officer will not be
indemnified if such director or officer is finally adjudicated not to have
acted in good faith. Further, in the event of a settlement pursuant to a
consent decree or otherwise, no indemnification will be made unless such
settlement is approved as in the best interests of the Registrant, after notice
that indemnification is involved, by (i) a disinterested majority of the Board
of Directors or (ii) the holders of a majority of the outstanding stock
entitled to elect directors, voting as a single class, exclusive of any stock
owned by an interested director.
Article 5, Section 9 of the Registrant's By-laws further provides that
the indemnification provided therein shall not be exclusive of nor shall it
affect any other rights to which any director or officer may be entitled under
any agreement, statute, vote of shareholders or otherwise.
-3-
<PAGE> 4
Item 7. Exemption from Registration Claimed
-----------------------------------
Not applicable.
Item 8. Exhibits
--------
The Exhibit Index immediately preceding the exhibits is incorporated
herein by reference.
Item 9. Undertakings
------------
1. The Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement;
Provided, however, that paragraphs (i) and (ii) do not apply if the
----------------- Registration Statement is on Form S-3 or Form S-8,
and the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed by the
Registrant pursuant to Section 13 or Section 15(d) of the Exchange Act
that are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new Registration Statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
-4-
<PAGE> 5
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
2. The Registrant hereby undertakes that, for purposes of determining
any liability under the Securities Act, each filing of the Registrant's annual
report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in the Registration Statement shall be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
3. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
-5-
<PAGE> 6
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the Town of Concord, Massachusetts, on the 27th day of May, 1994.
GENRAD, INC.
By: /s/ James F. Lyons
------------------------
James F. Lyons
President and
Chief Executive Officer
POWER OF ATTORNEY
We, the undersigned officers and directors of GenRad, Inc., hereby
severally constitute and appoint James F. Lyons and Robert C. Aldworth, and
each of them singly, our true and lawful attorneys with full power to them, and
each of them singly, to sign for us and in our names, in the capacities
indicated below, the Registration Statement on Form S-8 filed herewith, and any
and all subsequent amendments to said Registration Statement, and generally to
do all such things in our names and on our behalf and in our capacities as
officers and directors to enable GenRad, Inc. to comply with all requirements
of the Securities and Exchange Commission, hereby ratifying and confirming our
signatures as they may be signed by our said attorneys, or any of them, to said
Registration Statement and any and all amendments thereto.
-6-
<PAGE> 7
Pursuant to the requirements of the Securities Act, this
Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ James F. Lyons President, Chief May 27, 1994
-------------------------- Executive Officer
James F. Lyons and Director (Principal
Executive Officer)
/s/ Robert C. Aldworth Vice President, May 26, 1994
-------------------------- Chief Financial
Robert C. Aldworth Officer and
Secretary (Principal
Financial and
Accounting Officer)
/s/ Edwin M. Martin, Jr. Director May 27, 1994
--------------------------
Edwin M. Martin, Jr.
/s/ Paul Penfield, Jr. Director May 26, 1994
--------------------------
Paul Penfield, Jr.
/s/ William G. Scheerer Director May 23, 1994
--------------------------
William G. Scheerer
/s/ Adriana Stadecker Director May 24, 1994
--------------------------
Adriana Stadecker
/s/ James H. Wright Director May 25, 1994
--------------------------
James H. Wright
</TABLE>
-7-
<PAGE> 8
<TABLE>
EXHIBIT INDEX
-------------
<CAPTION>
Exhibit
Number Description Page
------- ----------- ----
<S> <C> <C>
4.1 (1) Restated Articles of Organization of the --
Registrant, as amended to date
4.2 (2) By-Laws of the Registrant, as amended to date --
4.3 (3) Rights Agreement dated as of June 17, 1988 --
between the Registrant and The First National
Bank of Boston
5 Opinion of Hale and Dorr 9-10
23.1 Consent of Hale and Dorr (included in Exhibit 5) --
23.2 Consent of Arthur Andersen & Co. 11
24 Power of Attorney (included on the signature --
page of this Registration Statement)
<FN>
______________________
(1) Incorporated herein by reference to Exhibit 3.1 to the
Registrant's Report on Form 10-K for the year ended
January 2, 1988.
(2) Incorporated herein by reference to Exhibit 3.2 to the
Registrant's Report on Form 10-K for the year ended
December 29, 1990.
(3) Incorporated herein by reference to Exhibit 4.2 to the
Registrant's Report on Form 10-K for the year ended
December 31, 1988.
</TABLE>
-8-
<PAGE> 9
EXHIBIT 5
HALE AND DORR
COUNSELLORS AT LAW
60 STATE STREET, BOSTON, MASSACHUSETTS 02109
617-526-6000 * FAX 617-526-5000
May 27, 1994
GenRad, Inc.
300 Baker Avenue
Concord
Massachusetts 01742
Re: Director Restricted Stock Plan
Gentlemen:
We have assisted in the preparation of a Registration Statement on Form
S-8 (the "Registration Statement") to be filed on May 27, 1994 with the
Securities and Exchange Commission relating to 50,000 shares of the Common
Stock, $1.00 par value per share ("Shares"), of GenRad, Inc., a Massachusetts
corporation (the "Company"), issuable under the Company's Director Restricted
Stock Plan (the "Plan").
We have examined the Restated Articles of Organization and the By-laws
of the Company, each as amended to date, and originals, or copies certified to
our satisfaction, of all pertinent records of the meetings of the directors and
stockholders of the Company, the Registration Statement and such other
documents relating to the Company as we have deemed material for the purposes of
this opinion.
In our examination of the foregoing documents, we have assumed the
genuineness of all signatures and the authenticity of all documents submitted
to us as originals, the conformity to original documents of all documents
submitted to us as certified or photostatic copies and the authenticity of the
originals of such latter documents.
Based upon the foregoing, we are of the opinion that the Company is a
corporation duly organized and validly existing under the laws of the
Commonwealth of Massachusetts and that the Company has duly authorized for
issuance the Shares, and the Shares, when issued and paid for in accordance
with the terms of the Plan by the provision of services to the Company by each
Director issued Shares, the fair market value of which services is in excess of
the aggregate par value per share of the Shares issued to each such Director,
will be legally issued, fully-paid and nonassessable.
WASHINGTON, DC BOSTON, MA MANCHESTER, NH
-------------------------------------------------------------------------------
HALE AND DORR IS A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS
<PAGE> 10
GenRad, Inc.
May 27, 1994
Page 2
We hereby consent to the filing of this opinion with the Securities and
Exchange Commission in connection with the Registration Statement.
Very truly yours,
/s/ HALE AND DORR
-------------------
HALE AND DORR
<PAGE> 11
EXHIBIT 23.2
ARTHUR ANDERSEN & CO.
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our reports dated February 4, 1994
included in, and incorporated by reference into, GenRad, Inc.'s Form 10-K for
the year ended January 1, 1994 and to all references to our firm included in
this registration statement.
/s/ ARTHUR ANDERSEN & CO.
Boston, Massachusetts
May 27, 1994
<PAGE> 1
EXHIBIT 13
GENRAD, INC. AND SUBSIDIARIES
<TABLE>
SELECTED FINANCIAL DATA
------------------------------------------------------------------------------------------------------------------------------
FIVE YEAR SUMMARY
(Dollar amounts in thousands, except per share amounts)
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net sales and service revenues .......................... $143,915 $158,704 $142,609 $156,391 $179,349
Gross margin ............................................ 66,896 66,653 63,696 69,252 82,058
Income (loss) before extraordinary gain ................. $ 5,419 $(43,797) $ (7,406) $(39,081) $(26,197)
Extraordinary gain ...................................... -- -- -- -- 5,083
------------------------------------------------------------------------------------------------------------------------------
Net income (loss) ....................................... $ 5,419 $(43,797) $ (7,406) $(39,081) $(21,114)
================================================================
EARNINGS (LOSS) PER COMMON AND COMMON EQUIVALENT SHARE:
Primary before extraordinary gain ....................... $ .28 $ (2.42) $ (.42) $ (2.22) $ (1.51)
Extraordinary gain ...................................... -- -- -- -- .29
------------------------------------------------------------------------------------------------------------------------------
Net income (loss) ....................................... $ .28 $ (2.42) $ (.42) $ (2.22) $ (1.22)
================================================================
Fully diluted before extraordinary gain ................. $ .27 $ (2.42) $ (.42) $ (2.22) $ (1.51)
Extraordinary gain ...................................... -- -- -- -- .29
------------------------------------------------------------------------------------------------------------------------------
Net income (loss) ....................................... $ .27 $ (2.42) $ (.42) $ (2.22) $ (1.22)
================================================================
BALANCE SHEET
Current ratio ........................................... 1.3 1.2 1.8 1.7 2.3
Inventories ............................................. 15,882 13,305 15,519 19,213 32,161
Total assets ............................................ 79,708 77,116 100,151 117,024 150,463
Long-term debt .......................................... 48,917 48,851 48,785 48,719 48,653
Stockholders' equity (deficit) .......................... (38,231) (45,287) (5,280) 3,547 42,375
OTHER DATA:
Number of employees* .................................... 1,096 1,184 1,363 1,370 1,661
Average weighted shares outstanding
Primary ................................................. 19,694 18,132 17,798 17,642 17,391
Fully diluted ........................................... 19,884 18,132 17,798 17,642 17,391
<FN>
*Includes contract employees
</TABLE>
21
<PAGE> 2
GENRAD, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
--------------------------------------------------------------------------------
FINANCIAL CONDITION AND OPERATING RESULTS
<TABLE>
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, the percentage of net
revenues represented by certain items in the Company's Consolidated Statement
of Operations.
<CAPTION>
-------------------------------------------------------------------------------------------
1994 1993 1992
-------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales and service revenues ....................... 100.0% 100.0% 100.0%
Cost of products and services sold ................... 53.5 58.0 55.3
----- ----- -----
Gross margin ......................................... 46.5 42.0 44.7
Selling, general and administrative expenses ......... 30.4 34.0 33.2
Research and development ............................. 9.5 9.7 14.2
Restructuring charges ................................ -- 23.2 --
----- ----- -----
Operating income (loss) .............................. 6.6 (24.9) (2.7)
Other income (expense) ............................... (2.0) (2.7) (2.7)
Income tax benefit (provision) ....................... (0.8) -- 0.2
----- ----- -----
Net income (loss) .................................... 3.8% (27.6)% (5.2)%
===== ===== =====
</TABLE>
OPERATING RESULTS - 1994 vs. 1993:
Orders received for the Company's products and services were $156.6 million in
1994 as compared to $144.1 million in 1993. Included in orders received for 1993
were $11.9 million of orders related to product lines discontinued in the 1993
third quarter. The increase in 1994 product and service orders reflected
increased demand for the Company's electronic manufacturing test products and a
U.S. Marine Corps follow-on order in the amount of $12.2 million, related
to a contract received by the Company in the third quarter of 1992.
Backlog at the end of 1994 was $31.7 million as compared to $19.0 million
at the end of 1993. Backlog of U.S. Marine Corps orders totaled $9.1
million at the end of 1994, compared to $2.4 million at the end of 1993.
Net product and service revenues were $143.9 million for 1994 as
compared to $158.7 million in 1993. The reduction between years
is partially caused by the discontinuance of certain product lines
during the 1993 third quarter. Discontinued product lines contributed
$12.0 million in revenues in 1993. In addition, 1994 included
$20.4 million derived from contracts with Ford of Europe and the
U.S. Marine Corps, as compared to $40.8 million in 1993. Service
revenues decreased by $2.1 million. The decline in service rev-
enues is the result of a reduction in the active installed base, a
general reduction in service requirements by customers, and
decreased revenues derived from services performed.
Revenues derived from the international market accounted
for 55% in 1994 and 56% in 1993. Product and service revenues
derived from the international market are subject to the risks
of currency fluctuations. The U.S. dollar weakened during
1994 relative to most major foreign currencies, which had only
a minor impact on the Company's international net revenue.
Gross margin as a percent of revenues increased to 46.5% in
1994 from 42.0% in 1993. Gross margins increased due to changes
in product mix. Revenues from the Company's electronic manufacturing
test products increased. Revenues from automotive
electronics diagnostic systems and from the U.S. Marine Corps
contract decreased, both of which have overall lower margins.
In addition, margins have improved as a percentage of revenues
due to cost reductions achieved as a result of the 1993 restructuring
and continued focus on material and manufacturing cost
reduction programs. The margin improvements noted above
have been partially offset, however, by the adverse effect of
competitive pricing pressures.
Selling, general and administrative expenses decreased by
$10.3 million to $43.7 million in 1994 from $54.0 million in 1993. The
decline in expenses is related to the Company's 1993 restructuring
which was initiated at the end of the third quarter of 1993 and
resulted in a reduction in workforce, discontinued product lines,
reduced facility costs and reduced depreciation. The decline is
also related to a $5.0 million charge in 1993 for the establishment
of patent litigation reserves and for the accelerated recognition
of compensation expense associated with previously granted
stock options and stock awards. Partially offsetting the above,
the Company's operating expenses increased as a result of the
Company's establishment of additional sales capacity and offices
to service its automotive customers, increased costs associated
with sales and operating performance incentive programs, and
severance costs associated with various personnel changes.
Research and development expenses declined $1.6 million to
$13.7 million in 1994 from $15.3 million in 1993. As a percentage
of net product and service revenues, research and development
costs decreased 0.2% to 9.5% in 1994. The decrease is primarily
the result of the Company's 1993 restructuring program which
resulted in a reduction of workforce, discontinued product lines,
reduced facilities costs and reduced depreciation.
22
<PAGE> 3
GENRAD, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
--------------------------------------------------------------------------------
FINANCIAL CONDITION AND OPERATING RESULTS (continued)
At the end of the third quarter of 1993, the Company initiated a
program to divest certain product lines which were not consistent
with the Company's strategy and to realign and resize operations
to the expected revenue levels of the remaining core product
lines. As a result, restructuring charges of $36.8 million were
recorded in 1993. The restructuring charges included severance
of $6.5 million, asset write-offs of $12.3 million, excess facilities
reserves of $12.5 million, $3.2 million for discontinued product
lines and $2.3 million for miscellaneous other costs.
The labor force was reduced by 12% beginning in the fourth
quarter of 1993, resulting in cash outflows for severance of $1.3
million in 1993, $4.2 million in 1994 and expected cash outflows
of $1.0 million in 1995. Asset write-offs of $12.3 million related
principally to building and leasehold improvements of vacated
and excess space, had no cash flow effect, and resulted in
annual depreciation savings of $1.4 million in 1994. The Company's
Fareham, England facility was sold for $1.7 million in July 1994,
and its Bolton, Massachusetts facility was sold for $2.1 million
in January 1995, consistent with the restructuring plan. The pro-
ceeds from these sales approximated the carrying value of the
assets sold.
Excess facilities reserves of $12.5 million relate primarily to losses
in leases for vacated domestic and European facilities. Cash out-
flows related to excess facilities, provided as part of the 1993
restructuring, were $0.4 million in 1993, $3.2 million in 1994 and
are estimated to be $1.4 million in 1995 and $7.5 million thereafter.
Most of the estimated cash outflows for excess facilities costs,
in 1995 and thereafter, relate to two buildings: one in Milpitas,
California, with a lease expiration date of March 1998; and the
other in Maidenhead, England, with a lease expiration date of
December 2013. As part of the restructuring plan, the Milpitas,
California building has been partially subleased through July 1997,
and the Maidenhead building has been fully subleased through
February 1999. As the Company continues to restructure current
leasing arrangements, the utilization of excess facilities reserves
and related cash flows may differ from present estimates.
The $3.2 million provided for discontinued product lines relates
both to the sale of the Design Automation Products (DAP) product
line and to the sale of the Structural Test Products (STP) product
line. The DAP product line was sold in March 1994 resulting in
net cash inflows of approximately $0.2 million in 1994. The STP
product line was sold in March 1995 for cash of $1.1 million, and
receivables of approximately $1.1 million were retained and are
expected to be collected in the normal course of business. The
STP sale is expected to result in the reversal of a portion of the
restructuring reserves in the first quarter of 1995.
On January 31, 1995, the Company ceased all benefit accruals
under the Company's domestic noncontributory defined benefit
pension plan as part of its redesigning of the Company's employee
benefit plans. Participants of the plan who meet vesting require-
ments will earn benefits based on years of service and compen-
sation earned through January 31, 1995. This change will result
in the Company recognizing a curtailment gain of $1,946,000 in
the first quarter of 1995.
The Company is a named defendant in a patent infringement
litigation matter with a competitor. During the 1993 fourth quarter,
the Company established a reserve to cover its best estimate of
the outcome of settlement negotiations and legal costs. During
the 1994 first quarter, the Company increased its estimate of legal
costs and recorded such increase in general and administrative
expenses. Management believes the suit is without merit and
intends to contest the suit vigorously. In management's opinion,
current reserves are adequate to cover the expected outcome
of the dispute. An adverse result in this litigation could have a
material adverse effect on the Company's financial condition,
results of operations or liquidity.
Other income and expense includes foreign currency exchange
gains and losses, the cost of hedging and certain miscellaneous
expenses. Other income (expense) increased by $1.0 million to
$0.7 million in 1994 from $(0.3) in 1993. This resulted primarily due
to favorable foreign currency fluctuations in relation to the
Company's hedged position, which more than offset the cost of
hedging and other expenses in 1994 as compared to 1993.
The Company buys and sells foreign currencies using forward
contracts intended to hedge payables and receivables denomi-
nated in foreign currencies. The Company primarily trades in
U.S. dollars and European currencies. At December 31, 1994, the
Company had forward exchange contracts to sell $7.9 million
in foreign currencies, all of which were European denominated.
The provision for taxes in 1994 and 1993 represents foreign and
state income taxes. The Company utilized existing operating loss
carryforwards to offset current requirements for United States
federal income taxes.
OPERATING RESULT5 - 1993 vs. 1992:
Orders for the Company's products and services were $144.1
million in 1993 as compared to $154.7 million in 1992. The 1992
amount reflects the initial orders for the Company's FDS 2000
automotive electronics diagnostic system from Ford of Europe
as well as the initial order from the U.S. Marine Corps in the
amount of $14.2 million for specialty board test products. Orders
for 1993 and for 1992 included $11.9 million and $21.7 million,
respectively, related to discontinued product lines. Without
the preceding, orders in 1993 increased for in-circuit testers,
including the current GR228X combinational testers and
automotive diagnostic products.
The Company's sales increased by $16.1 million or 11.3% in 1993 to
$158.7 million from $142.6 million in 1992. The increase resulted in
part from greater shipments to Ford of Europe during 1993 under
the terms of a contract in which shipments initiated in November
23
<PAGE> 4
GENRAD, INC, AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
--------------------------------------------------------------------------------
FINANCIAL CONDITION AND OPERATING RESULTS (continued)
1992 and from revenues under the U.S. Marine Corps contract
which were $12.8 million in 1993 and $1.3 million in 1992. In addi-
tion, revenues from the Company's core board-test business
also increased during 1993 in relation to 1992. Partially offsetting
the above revenue increases was a decline in revenues from
discontinued products which amounted to $12.0 million in 1993
and $22.0 million in 1992 and from a decline in service revenues of
approximately 12% during 1993. The decline in service revenues
is the result of a reduction in the active installed base due to
lower unit shipments in recent years and from a general reduc-
tion in service requirements by many customers.
Sales to the international market accounted for 56% of sales for
1993, as compared to 58% in 1992.
Backlog at the end of 1993 was $19.0 million as compared to $35.4
million at the end of 1992. Backlog relating to the U.S. Marine
Corps order as of the end of 1993 totaled $2.4 million, compared to
$12.6 million at the end of 1992. Backlog for 1993 excluded orders
related to discontinued products. Backlog for 1992 included $3.5
million of orders related to discontinued products.
Gross margin as a percent of sales decreased to 42.0% for 1993
from 44.7% in 1992. Gross margin was adversely impacted by
competitive pricing pressures and generally lower margins on
sales to automotive and government customers, which in 1993
represented an increased portion of the Company's revenues
in relation to prior periods. Service gross margins as a percent
of sales decreased slightly, mainly as a result of the decline in
revenues.
Selling, general and administrative expenses increased by $6.6
million in 1993 from 1992 primarily due to a $5.0 million charge
for the establishment of patent litigation reserves and for the
accelerated recognition of compensation expense related
to stock options, a $1.6 million charge in the second quarter
of 1993 for severance and related costs associated with the
realignment of certain members of senior corporate and
international management, and increased incentive costs
in support of higher sales volume.
Research and development expenses declined in 1993 in com-
parison to 1992 by $4.9 million as a result of another restructuring
which began in 1991, from direct absorption of certain expenses
into product costs related to the U.S. Marine Corps contract and
from a reduction in the number of engineers. Research and devel-
opment expenses declined as a percentage of sales, reflecting
higher sales volume and a decrease in expenses.
At the end of the third quarter 1993, the Company initiated a pro-
gram to divest certain product lines which were not consistent
with the Company's strategy and to realign and resize operations
to the expected revenue levels of the remaining core product
lines. As a result, restructuring charges of $36.8 million were
recorded in 1993. The restructuring charges included severance
of $6.5 million, asset write-offs of $12.3 million, excess facilities
reserves of $12.5 million, $3.2 million for discontinued product
lines and $2.3 million for miscellaneous other costs. For further
discussion, see the Operating Results-1994 vs. 1993 section in this
Management's Discussion and Analysis of Financial Condition
and Operating Results.
Interest income decreased in 1993 in relation to 1992 as a result
of an overall reduction in cash balances available for investing
and a general decline in interest rates. During the same periods,
interest expense decreased due to lower short-term borrowings
and lower interest rates. Other income and expense in 1992
included the following non-operating items: the receipt of a
customs rebate, royalty income and a payment on the sale of
a product line.
The 1993 tax benefit is due to tax refunds from net operating loss
carryback claims, net of foreign and state income taxes.
In December 1990, the Financial Accounting Standards
board issued Statement No. 106, "Employers' Accounting for
postretirement Benefits Other Than Pensions." This Statement
requires employers to accrue the cost of postretirement benefits
during the years that the employee renders the service and was
effective for fiscal year 1993. The Company adopted this State-
ment in 1993 and it will recognize the unrecognized transition
obligation of approximately $11 million on the delayed recogni-
tion method over a period of 20 years. A curtailment loss of $1.1
million due to workforce reductions was recorded in 1993. The
Company's postretirement benefit plans have been modified and
include a limit on the cost of the Company's contribution for all
retirees and increased contributions for future retirees.
In February 1992, the Financial Accounting Standards Board
issued Statement No. 109, "Accounting for Income Taxes." The
Company was required to adopt the Statement in 1993. The
adoption of this Statement did not have a material impact on
the Company's financial position or results of operations.
LIQUIDITY AND CAPITAL RESOURCES:
Cash and equivalents decreased $0.8 million in 1994. Operating
activities provided $4.6 million in cash, $3.8 million of which was
used to repay short-term borrowings.
Capital expenditures in 1994 totaled $5.0 million. Additions to
property, plant and equipment were primarily for equipment
used in research and development and manufacturing. Capital
expenditure commitments were not significant at 1994 year-end.
Capital expenditures for 1995 are expected to be $6.1 million,
primarily for equipment to be used in research and development
and manufacturing. These expenditures are anticipated to be
financed through internally generated funds.
The Company is party to long-term leases from a product line
discontinued in 1987 and vacated domestic and European facili-
ties provided for in the Company's 1993 and prior restructurings.
24
<PAGE> 5
GENRAD, INC, AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
--------------------------------------------------------------------------------
FINANCIAL CONDITION AND OPERATING RESULTS (continued)
Cash of $6.5 million was used to fund these arrangements in 1994
and at December 31, 1994 reserves for excess facilities relating
to these long-term leases totaled $13.2 million. The Company is
projecting that cash of approximately $5.2 million will be used
in 1995 to fund these arrangements. Additionally, the Company
projects that $5.4 million is expected to be used in 1995 to fund
severance, litigation and legal costs and other miscellaneous
charges provided for in the restructuring.
The Company's primary source of liquidity is internally generated
funds. The Company also has existing available secured lines
of credit of up to $14.2 million, of which no borrowings were
outstanding at the end of 1994. The total available borrowings
consist of a $12.0 million U.S. credit facility entered into in June
1992 which expires on December 31, 1996, and $2.2 million in a
U.K. credit facility. At December 31, 1994, the Company had an
available borrowing capacity of $12.0 million under the U.S.
credit facility. Borrowings under the credit facility are subject
to compliance with specified financial and operating covenants
and are secured by all of the Company's domestic assets.
Additionally, the U.K. credit facility is secured by all of the
Company's U.K. assets and is payable on demand.
The terms of the Company's 7 1/4% Convertible Subordinated
Debentures require the Company to make annual sinking fund
payments of $2.875 million starting in May 1996. As a result of
the Company having repurchased $7.5 million of the Debentures
during 1990, the Company may use the previous repurchase in
lieu of sinking fund payments and defer the initiation of such
payments until 1998.
It is the intention of the Company to reinvest unremitted earnings
of foreign subsidiaries outside the United States. Accordingly,
Federal income taxes have not been provided and foreign with-
holding taxes would be due upon remittance. There are no
restrictions on the payment of intercompany accounts.
The Company's ability to fund its working capital and capital
expenditure requirements, make interest payments on its
convertible debentures and other borrowings and meet its
other cash obligations, including those arising from its recent
restructurings, may depend, among other things, on internally
generated funds and the continued availability and compliance
with its credit facilities. Management believes that internally
generated funds and its available credit facilities will provide the
Company with sufficient sources of funds to satisfy its anticipated
requirements in 1995. However, if there is a significant reduction
in internally generated funds, the Company may require signifi-
cant funds from outside financing sources. In such event, there
can be no assurance that the Company would be able to obtain
such funding as and when required or on acceptable terms.
Inflation during the years presented did not have any significant
effects on the operations of the Company. Due to the current
market environment, certain products have been repositioned
in the market with product changes and various price changes,
both upward and downward. The Company attempts to mitigate
inflationary cost increases by continued improvements in manu-
facturing efficiency achieved through the use of improved
methods and technology.
FACTORS THAT MAY AFFECT FUTURE RESULTS:
The Company's future operating results are dependent on
the Company's ability to develop, manufacture and market
technologically innovative products that meet customer needs,
fund its working capital, capital expenditure and financing
requirements and meet its cash obligations, including those
arising from past restructurings.
The market for the Company's products is characterized by rapid
technological change, evolving industry standards, changes in
customer needs and frequent new product introductions, and
is therefore highly dependent on timely product innovation.
Competition in the markets in which the Company operates is
intense. The introduction by the Company or its competitors of
products embodying new technology or the emergence of new
industry standards or practices could render the Company's
existing products obsolete or otherwise unmarketable. The
Company's ability to develop and market products and services
that successfully meet changing market needs will impact future
results. A portion of future revenues will come from new products
and services. The Company cannot determine the ultimate effect
that new products and services will have on revenues, earnings
and stock price.
The Company is dependent upon a number of suppliers for
several key components of its products. The loss of certain of the
Company's suppliers or substantial price increases imposed by
suppliers could have a material adverse effect on the Company.
The Company is exposed to risks inherent in international trade
and operations as a result of its international sales and operation
of its manufacturing facility in Manchester, England. Such trade
and operations expose the Company to continuing risks, such
as unpredictable and potentially inconsistent regulatory require-
merits, political and economic changes, tariffs or other trade
restrictions, transportation delays, foreign currency fluctuations
and labor disruptions.
The Company is currently subject to patent infringement litigation.
The Company may be subject to patent or product liability claims
in the future. A successful claim brought against the Company in
excess of available insurance coverage or any claim that results
in significant adverse publicity may have a material adverse effect
on the Company's competitive position, financial condition, results
of operations or liquidity.
25
<PAGE> 6
GENRAD, INC. AND SUBSIDIARIES
MANAGEMENT REPORT
--------------------------------------------------------------------------------
The accompanying consolidated financial statements and related information
included in the Annual Report are the responsibility of management. The
financial statements were prepared in conformity with generally accepted
accounting principles appropriate in the circumstances, based on management's
best estimates and judgments.
Management believes that the Company's internal control systems provide
reasonable assurance that assets are safeguarded and that transactions are
properly recorded and executed in accordance with management's authorization.
Judgments are required to assess and balance the relative cost and expected
benefits of these control systems.
The current financial statements have been audited by Arthur Andersen LLP, the
Company's independent public accountants whose audit report appears below. Their
audit included a review of the system of internal controls to the extent
considered necessary by them to determine the audit procedures required to
support their opinion.
The Board of Directors, through its Audit Committee consisting solely of outside
directors of the Company, is responsible for reviewing and monitoring the
Company's financial reporting and accounting practices. Arthur Andersen LLP has
full and free access to the Audit Committee, and meets with the Committee, with
and without the presence of management.
/s/ George A. O'Brien
George A. O'Brien
Vice President,
Chief Financial Officer and Secretary
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
--------------------------------------------------------------------------------
STOCKHOLDERS AND BOARD OF DIRECTORS
GENRAD, INC.
We have audited the accompanying consolidated balance sheets of GenRad, Inc. and
subsidiaries as of December 31, 1994 and January 1, 1994, and the related
consolidated statements of operations, stockholders' equity (deficit) and cash
flows for each of the three years in the period ended December 31, 1994. These
financial statements are the responsibility of the Company'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 financial position of GenRad, Inc. and subsidiaries
as of December 31, 1994 and January 1, 1994, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 1994 in conformity with generally accepted accounting principles.
As described in the Retirement Benefits Note to the Consolidated Financial
Statements, effective January 3, 1993, the Company changed its method of
accounting for Postretirement Benefits other than Pensions.
/s/ Arthur Andersen LLP
Boston, Massachusetts
February 8, 1995
(except with respect to the matters discussed in Note 14, as to which the date
is March 2, 1995)
26
<PAGE> 7
<TABLE>
GENRAD, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
-----------------------------------------------------------------------------------------------
Years ended December 31, 1994, January 1, 1994 and January 2, 1993
(In thousands, except per share amounts)
<CAPTION>
-----------------------------------------------------------------------------------------------
1994 1993 1992
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues:
Sales of products ...................................... $109,000 $121,192 $100,231
Sales of services ...................................... 34,915 37,512 42,378
-----------------------------------------------------------------------------------------------
143,915 158,704 142,609
-----------------------------------------------------------------------------------------------
Costs and expenses:
Cost of products sold .................................. 57,813 70,044 55,010
Cost of services sold .................................. 19,206 22,007 23,903
-----------------------------------------------------------------------------------------------
77,019 92,051 78,913
Selling, general and administrative .................... 43,698 54,006 47,362
Research and development ............................... 13,716 15,342 20,278
Restructuring charges .................................. -- 36,848 --
-----------------------------------------------------------------------------------------------
134,433 198,247 146,553
-----------------------------------------------------------------------------------------------
Operating income (loss) .................................... 9,482 (39,543) (3,944)
-----------------------------------------------------------------------------------------------
Other income (expense):
Interest income ........................................ 249 258 582
Interest expense ....................................... (3,958) (4,234) (4,558)
Other, net ............................................. 728 (307) 200
-----------------------------------------------------------------------------------------------
(2,981) (4,283) (3,776)
-----------------------------------------------------------------------------------------------
Income (loss) before income taxes .......................... 6,501 (43,826) (7,720)
Income tax provision (benefit) ............................. 1,082 (29) (314)
-----------------------------------------------------------------------------------------------
Net income (loss) .......................................... $ 5,419 $(43,797) $ (7,406)
==============================
Net income (loss) per common and common equivalent share:
Primary ................................................ $ .28 $ (2.42) $ (.42)
==============================
Fully diluted .......................................... $ .27 $ (2.42) $ (.42)
==============================
The accompanying notes are an integral part of these Consolidated Financial Statements.
</TABLE>
(27)
<PAGE> 8
GENRAD, INC. AND SUBSIDIARIES
<TABLE>
CONSOLIDATED BALANCE SHEET
--------------------------------------------------------------------------------
December 31, 1994 and January 1, 1994
(In thousands)
--------------------------------------------------------------------------------
1994 1993
--------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and equivalents ...................................... $ 7,613 $ 8,418
Accounts receivable, less allowances of $1,316 and $1,462.. 31,140 30,994
Inventories ............................................... 15,882 13,305
Other current assets ...................................... 4,347 2,846
--------------------------------------------------------------------------------
Total current assets .................................. 58,982 55,563
--------------------------------------------------------------------------------
Property, plant and equipment, net ......................... 14,547 16,073
Other assets ............................................... 1,221 1,380
Assets held for sale ....................................... 4,958 4,100
--------------------------------------------------------------------------------
$ 79,708 $ 77,116
==================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Notes payable to banks .................................... $ -- $ 3,475
Trade accounts payable .................................... 8,244 5,437
Accrued liabilities ....................................... 26,505 27,330
Accrued compensation and employee benefits ................ 8,797 10,134
Accrued income taxes ...................................... 935 --
--------------------------------------------------------------------------------
Total current liabilities ............................. 44,481 46,376
--------------------------------------------------------------------------------
Long-term Liabilities:
Long-term debt ............................................ 48,917 48,851
Accrued pensions and benefits ............................. 13,898 12,985
Future lease costs of unused facilities ................... 8,011 12,682
Other long-term liabilities ............................... 2,632 1,509
--------------------------------------------------------------------------------
Total long-term liabilities ............................... 73,458 76,027
--------------------------------------------------------------------------------
Stockholders' Equity (Deficit):
Common stock, $1 par value-authorized 60,000,000 shares;
issued and outstanding 19,342,000 and 18,530,000 ....... 19,342 18,530
Additional paid-in capital ................................ 105,925 105,177
Accumulated deficit ....................................... (161,073) (166,492)
Cumulative foreign currency translation loss .............. (2,425) (2,502)
--------------------------------------------------------------------------------
Total stockholders' equity (deficit) ................... (38,231) (45,287)
--------------------------------------------------------------------------------
$ 79,708 $ 77,116
==================
The accompanying notes are an integral part of these Consolidated Financial Statements.
</TABLE>
(28)
<PAGE> 9
<TABLE>
GENRAD, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
-----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Years ended December 31, 1994, January 1, 1994 and January 2, 1993
(In thousands)
-----------------------------------------------------------------------------------------------------------------------------
CUMULATIVE TOTAL
COMMON FOREIGN STOCK-
STOCK, ADDITIONAL ACCUMULATED CURRENCY HOLDERS'
$1 PAR PAID-IN EQUITY TRANSLATION EQUITY
VALUE CAPITAL (DEFICIT) GAIN (LOSS) (DEFICIT)
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 28, 1991 .............. $17,772 $101,422 $(115,289) $ (358) $ 3,547
Net loss .................................. -- -- (7,406) -- (7,406)
Translation adjustment .................... -- -- -- (1,967) (1,967)
Cash proceeds from stock issued under
Employee Stock Plans ...................... 71 475 -- -- 546
-----------------------------------------------------------------------------------------------------------------------------
BALANCE AT JANUARY 2, 1993 ................ 17,843 101,897 (122,695) (2,325) (5,280)
Net loss .................................. -- -- (43,797) -- (43,797)
Translation adjustment .................... -- -- -- (177) (177)
Cash proceeds from stock issued under
Employee Stock Plans ...................... 458 728 -- -- 1,186
Stock option and award
compensation expense ...................... 229 2,552 -- -- 2,781
-----------------------------------------------------------------------------------------------------------------------------
BALANCE AT JANUARY 1, 1994 ................ 18,530 105,177 (166,492) (2,502) (45,287)
Net income ................................ -- -- 5,419 -- 5,419
Translation adjustment .................... -- -- -- 77 77
Cash proceeds from stock issued under
Employee Stock Plans ...................... 812 697 -- -- 1,509
Stock option and award
compensation expense ...................... -- 51 -- -- 51
-----------------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1994 .............. $19,342 $105,925 $(161,073) $ (2,425) $(38,231)
==============================================================================
<FN>
The accompanying notes are an integral part of these Consolidated Financial Statements.
(29)
</TABLE>
<PAGE> 10
<TABLE>
GENRAD, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
-----------------------------------------------------------------------------------------------------------------
<CAPTION>
Years ended December 31, 1994, January 1, 1994 and January 2, 1993
(In thousands)
-----------------------------------------------------------------------------------------------------------------
1994 1993 1992
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) .............................................................. $5,419 $(43,797) $(7,406)
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities:
Depreciation and amortization .............................................. 5,812 9,714 11,715
Loss on sales, write-off and write-down of property, plant, and equipment .. 388 11,413 779
Provision for losses on accounts receivable ................................ 448 340 458
Provision for stock option and award compensation expense .................. 51 2,781 444
Provision (payment) for lease costs of excess facilities, net .............. (5,917) 8,174 (2,691)
Gain on sale of product line ............................................... -- -- (645)
Increase (decrease) resulting from changes in
operating assets and liabilities:
Accounts receivable ........................................................ (1,896) 1,226 (7,020)
Inventories ................................................................ (2,789) 1,116 2,728
Prepaid expenses ........................................................... (1,576) 2,712 (1,323)
Trade accounts payable ..................................................... 3,062 (3,135) 2,775
Income taxes ............................................................... 912 (2) 42
Accrued liabilities ........................................................ 430 7,983 (1,479)
Accrued compensation and employee benefits ................................. (596) 5,094 (3,691)
Other, net ................................................................. 875 1,422 (398)
-----------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities .................... 4,623 5,041 (5,712)
-----------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES:
Purchases of property, plant and equipment .................................... (5,033) (5,917) (5,020)
Proceeds from sale of property, plant and equipment ........................... 316 211 475
Proceeds from sale of assets held for sale .................................... 1,736 -- --
Sale of product line .......................................................... -- -- 645
-----------------------------------------------------------------------------------------------------------------
Net cash used in investing activities ................................... (2,981) (5,706) (3,900)
-----------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES:
Net change in notes payable .................................................. (3,781) (1,028) 1,455
Proceeds from employee stock plans ........................................... 1,509 1,186 546
-----------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities .................... (2,272) 158 2,001
-----------------------------------------------------------------------------------------------------------------
EFFECTS OF EXCHANGE RATES ON CASH .............................................. (175) 304 722
-----------------------------------------------------------------------------------------------------------------
DECREASE IN CASH AND EQUIVALENTS ............................................... (805) (203) (6,889)
CASH AND EQUIVALENTS AT BEGINNING OF YEAR ...................................... 8,418 8,621 15,510
-----------------------------------------------------------------------------------------------------------------
CASH AND EQUIVALENTS AT END OF YEAR ............................................ $7,613 $ 8,418 $ 8,621
=============================
<FN>
The accompanying notes are an integral part of these Consolidated Financial Statements.
</TABLE>
(30)
<PAGE> 11
GENRAD, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
NOTE 1: SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION: The consolidated financial statements include
the accounts of the Company and all of its subsidiaries. All significant
inter-company transactions and balances have been eliminated.
REVENUE RECOGNITION: Revenue from product sales is generally recognized at the
time the product is shipped or delivered based on shipping terms. Service
revenue is recognized over the contractual period on a straight-line basis for
service contracts or as services are performed.
INCOME TAXES: Effective January 3, 1993, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes." This standard determines deferred taxes based on the estimated future
tax effects of differences between the financial statement and tax bases of
assets and liabilities given the provisions of the currently enacted tax laws.
Prior to the implementation of this Statement, the Company accounted for income
taxes under SFAS No. 96.
NET INCOME (LOSS) PER COMMON AND COMMON EQUIVALENT SHARE: Primary net income
(loss) per common and common equivalent share is calculated based on the
weighted average number of common shares outstanding during the period plus, in
periods in which they have a dilutive effect, the effect of common shares
contingently issuable from stock options. Fully diluted net income (loss) per
common and common equivalent share is calculated consistent with primary net
income per common and common equivalent share but reflects additional dilution
from stock options due to the use of the market price at the end of the period
when it is higher than the average price for the period.
CASH AND EQUIVALENTS: All highly liquid investments with a maturity of three
months or less when purchased are classified as cash equivalents.
INVENTORY VALUATION: Inventories include material, labor and overhead and are
stated at the lower of cost (first-in, first-out method) or market.
PROPERTY, PLANT AND EQUIPMENT: These assets are stated at cost. Depreciation is
computed by the straight-line method over the estimated useful lives of the
assets (buildings and improvements, 10 to 40 years; machinery and equipment, 3
to 8 years; and service parts, 7 years).
INTANGIBLE ASSETS: The cost of patents and trademarks acquired is amortized on a
straight-line basis over their estimated useful lives.
FOREIGN CURRENCY TRANSLATION: All balance sheet accounts of foreign
subsidiaries are translated at the current exchange rates and statement of
operations items are translated at the average exchange rates during the year.
Resulting translation adjustments are made directly to a separate component of
stockholders' equity (deficit).
The effect of foreign currency transaction gains and losses included in the
determination of 1994, 1993 and 1992 results of operations was not material.
FOREIGN EXCHANGE CONTRACTS: The Company enters into foreign exchange contracts
as a hedge against certain currency transactions. Market value gains and losses
are recognized and the resulting gain or loss offsets foreign exchange gains
or losses on those transactions.
FISCAL YEAR: The Company's fiscal year ends on the Saturday nearest December
31. Fiscal years 1994 and 1993 include 52 weeks and fiscal year 1992 includes
53 weeks.
RECLASSIFICATIONS: Certain reclassifications have been made to the 1993 and 1992
Consolidated Statement of Operations, and to the 1993 and 1992 Consolidated
Statement of Cash Flows, to conform to the 1994 presentation. $4,983,000 for
patent litigation reserves and compensation associated with the acceleration of
stock options previously reported as a component of restructuring charges have
been reclassified to selling, general and administrative in the 1993
Consolidated Statement of Operations. Sales of products and sales of services
amounts for 1993 and 1992 have been reclassified to conform to 1994
classifications.
--------------------------------------------------------------------------------
NOTE 2: PROVISIONS FOR RESTRUCTURING
At the end of the third quarter of 1993, the Company initiated a program to
divest certain product lines which were not consistent with the Company's
strategy and to realign and resize operations to the expected revenue levels of
the remaining core product lines. As a result, restructuring charges of $36.8
million were recorded in 1993. The restructuring charges included severance of
$6.5 million, asset write-offs of $12.3 million, excess facilities reserves of
$12.5 million, $3.2 million for discontinued product lines and $2.3 million for
miscellaneous other costs.
The labor force was reduced by 12% beginning in the fourth quarter of 1993,
resulting in cash outflows for severance of $1.3 million in 1993, $4.2
million in 1994 and expected cash outflows of $1.0 million in 1995. Asset
write-offs of $12.3 million related principally to building and leasehold
improvements of vacated and excess space, had no cash flow effect, and resulted
in annual depreciation savings of $1.4 million in 1994. The Company's Fareham,
England facility
31
<PAGE> 12
GENRAD, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
--------------------------------------------------------------------------------
NOTE 2: PROVISIONS FOR RESTRUCTURING (continued)
was sold for $1.7 million in July 1994, and its Bolton, Massachusetts facility
was sold for $2.1 million in January 1995, consistent with the restructuring
plan. The proceeds from these sales approximated the carrying value of the
assets sold.
Excess facilities reserves of $12.5 million relate primarily to losses in leases
for vacated domestic and European facilities. Cash outflows related to excess
facilities, provided as part of the 1993 restructuring, were $0.4 million in
1993, $3.2 million in 1994 and are estimated to be $1.4 million in 1995 and $7.5
million thereafter. Most of the estimated cash outflows for excess facilities
costs, in 1995 and thereafter, relate to two buildings: one in Milpitas,
California, with a lease expiration date of March 1998; and the other in
Maidenhead, England, with a lease expiration date of December 2013. As part
of the restructuring plan, the Milpitas, California building has been partially
subleased through July 1997, and the Maidenhead building has been fully
subleased through February 1999. As the Company continues to restructure
current leasing arrangements, the utilization of excess facilities reserves and
related cash flows may differ from present estimates.
The $3.2 million provided for discontinued product lines relates both to the
sale of the Design Automation Products (DAP) product line and to the sale of
the Structural Test Products (STP) product line. The DAP product line was sold
in March 1994 resulting in net cash inflows of approximately $0.2 million in
1994. The STP product line was sold in March 1995 for cash of $1.1 million,
and receivables of approximately $1.1 million were retained and are expected to
be collected in the normal course of business. The STP sale is expected to
result in the reversal of a portion of the restructuring reserves in the first
quarter of 1995.
<TABLE>
<CAPTION>
NOTE 3: INVENTORIES
(In thousands)
-------------------------------------------------------------------------------------------------------------------------------
1994 1993
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Raw materials .................................................................................. $ 7,205 $ 6,480
Work in process ................................................................................ 4,853 3,068
Finished goods ................................................................................. 3,824 3,757
-------------------------------------------------------------------------------------------------------------------------------
$15,882 $13,305
=======================
</TABLE>
<TABLE>
<CAPTION>
NOTE 4: PROPERTY, PLANT AND EQUIPMENT
(In thousands)
-------------------------------------------------------------------------------------------------------------------------------
1994 1993
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Land ........................................................................................... $ 525 $ 512
Buildings ...................................................................................... 24,692 25,591
Machinery and equipment ........................................................................ 65,064 67,896
Service parts .................................................................................. 14,167 16,640
-------------------------------------------------------------------------------------------------------------------------------
1O4,448 110,639
Less: Accumulated depreciation ................................................................. 89,901 94,566
-------------------------------------------------------------------------------------------------------------------------------
$ 14,547 $ 16,073
========================
NOTE 5: ACCRUED LIABILITIES
(In thousands)
-------------------------------------------------------------------------------------------------------------------------------
1994 1993
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Lease costs of unused facilities ............................................................... $ 5,226 $ 6,472
Customer prepayments ........................................................................... 6,217 5,098
Warranty and installation ...................................................................... 2,406 2,849
Other accrued liabilities ...................................................................... 12,656 12,911
-------------------------------------------------------------------------------------------------------------------------------
$ 26,505 $ 27,330
========================
</TABLE>
(32)
<PAGE> 13
<TABLE>
GENRAD, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
----------------------------------------------------------------------------------------------------------------
NOTE 6: ACCRUED PENSIONS AND BENEFITS
(In thousands)
----------------------------------------------------------------------------------------------------------------
1994 1993
----------------------------------------------------------------------------------------------------------------
/S/ <C> <C>
Accrued U.S. pension cost .............................................................. $ 7,997 $ 7,533
Accrued foreign pension cost ........................................................... 3,789 3,818
Postretirement health care and life insurance benefits ................................. 2,112 1,634
----------------------------------------------------------------------------------------------------------------
$13,898 $12,985
==================
NOTE 7: DEBT
(In thousands)
----------------------------------------------------------------------------------------------------------------
1994 1993
----------------------------------------------------------------------------------------------------------------
7 1/4% Convertible Subordinated Debentures, due 2011 .................................. $48,917 $48,851
==================
</TABLE>
In May 1986, the Company issued $57,500,000 principal
amount of 7 1/4% Convertible Subordinated Debentures.
The Debentures are convertible at the option of the holder
into Common Stock of the Company at $14 3/8 per share.
The Debentures are unsecured and subordinated to senior
indebtedness of the Company. Interest is payable May 1
and November 1. The unamortized bond issuance expense
was $1,083,000 at December 31, 1994 and $1,149,000 at
January 1, 1994. The payment of dividends and the repur-
chase of Common Stock of the Company is restricted by
the indenture agreement.
The Debentures are subject to redemption at par through
the operation of a mandatory sinking fund with payments
beginning May 1, 1996, which is calculated to retire 75%
of the Debentures prior to maturity. The terms of the
Debenture require the Company to make annual sinking
fund payments of $2,875,000 starting in May 1996. In 1990,
the Company retired early $7,500,000 principal amount of
the Debentures. As a result, the Company may use the
repurchase in lieu of sinking fund payments and defer
the initiation of such payments until 1998.
In June 1992, the Company entered into a secured
Revolving Credit Agreement that has been subsequently
amended and provides for eligible borrowings of up to $12
million at prime lending rates (8.5% at December 31, 1994)
plus 2 1/2% or 9%, whichever is greater. This agreement has
been extended to December 31, 1996. Eligible borrowings
under the agreement are based on accounts receivable
and other assets and determined according to a formula.
At December 31, 1994, $12.0 million was available under
the formula. The borrowings under the credit facility are
secured by all of the Company's domestic assets and are
subject to compliance tests and restrictions. At year-end,
the Company had no outstanding borrowings under this
agreement.
The Company has a line of credit of $2.2 million with
U.K. bank. At December 31, 1994, the Company had no
outstanding borrowings under this agreement.
Interest paid amounted to $4,051,000 in 1994, $4,264,000
in 1993 and $4,493,000 in 1992.
NOTE 8: FINANCIAL INSTRUMENTS
AND RISK MANAGEMENT
The Company operates internationally and is exposed
to market risks from changes in foreign exchange rates.
Derivative financial instruments are utilized by the
Company to reduce those risks. The Company does not
hold or issue financial instruments for trading purposes.
The Company enters into foreign exchange contracts to
hedge certain purchases and accounts receivable denomi-
nated in foreign currencies (principally European curren-
cies). The term of the currency derivatives is rarely more
than six months. The purpose of the Company's foreign
currency hedging activities is to protect the Company from
the risk that the eventual net cash inflows resulting from the
sale of products to foreign customers and purchases from
foreign suppliers will be adversely affected by changes in
exchange rates.
At December 31, 1994, the Company had contracts maturing
through April 20, 1995 to sell $7,886,000, net, of foreign cur-
rency (sell 9,645,000 French francs, 1,888,000 British pounds,
2,058,074,000 Italian lira and 2,766,000 German marks) at
various rates.
(33)
<PAGE> 14
GENRAD, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
--------------------------------------------------------------------------------
NOTE 9: STOCK PLANS
STOCK OPTION PLANS: The Company has three stock option plans: a 1982 plan of
2,700,000 shares (terminated in 1991); a 1991 plan (amended in 1994) for
4,500,000 shares for which key employees are participants; and a 1991 plan of
100,000 shares for non-employee directors.
In general, shares granted under these plans are exercisable in installments
based on stock price or years of service. Shares issued under each plan may be
either non-qualified stock options or incentive stock options. No accounting
recognition is given to stock options with exercise prices equal to fair market
value on the grant date until the options are exercised, at which time the
proceeds are credited to the stockholders' equity accounts. For options with an
exercise price less than fair market value on the grant date, the amount that
the fair market value exceeds the exercise price is charged to compensation
expense over the period the options vest.
In 1993, the Company charged $2,781,000 to compensation expense for stock
options and restricted stock awards, of which $1,983,000 is included in selling,
general and administrative expenses as it relates to the acceleration of vesting
voted by the Compensation Committee of the Board of Directors during 1993.
Compensation amounts in 1994 and 1992 were immaterial.
Stock option activity is summarized below (thousands of shares):
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
1994 1993 1992
------------------------------------------------------------------------------------------------------------------------------------
Total Average Total Average Total Average
Shares Option Price Shares Option Price Shares Option Price
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Options:
Outstanding at beginning of year ............... 2,071 $2.41 1,710 $2.31 2,017 $3.25
Granted ........................................ 3,192 5.59 1,065 2.13 316 .24
Exercised ...................................... (747) 1.89 (469) 2.32 (71) 2.84
Cancelled ...................................... (384) 5.29 (235) 2.83 (552) 3.56
----- ----- -----
Outstanding at end of year ..................... 4,132 4.70 2,071 2.41 1,710 2.31
===== ===== =====
Options exercisable ............................ 894 1,522 845
===== ===== =====
Shares reserved for future grants .............. 224 1,032 565
===== ===== =====
</TABLE>
RESTRICTED STOCK AWARDS: In 1991, the Company adopted
the 1991 Equity Incentive Plan which contains provisions
for stock options, as described above, and restricted stock
awards. All stock awards are granted subject to restric-
tions as to continuous employment, except in the case of
death, permanent disability or retirement. One half of the
shares vest at the end of two years from the date of grant
and the remaining one half at the end of the third year. The
cost of the awards, determined as the fair market value
of the shares on the date of grant, is charged to expense
ratably over the vesting period. At December 31, 1994,
January 1, 1994 and January 2, 1993, the Company had
granted 35,000, 250,000 and 189,000 shares, respectively.
All stock awards granted to active employees were vested
in 1993.
In 1994, the Company adopted the 1994 Director Restricted Stock Plan, which
contains provisions for restricted stock awards. Up to 50,000 shares of
the Company's common stock may be issued under the plan. On August 31 of each
year, while the plan is in effect, each eligible director will be granted a
restricted stock award of 1,500 shares of the Company's common stock. The awards
are subject to certain restrictions that generally prohibit the transfer of any
shares prior to the third anniversary of the award, the director's death or
disability, the director's resignation with the consent of the Board of
Directors or a change in control of the Company as defined under the plan. At
December 31, 1994, the Company had granted 7,500 shares under the plan.
STOCK PURCHASE PLAN: Under an Employee Stock Purchase
Plan, eligible employees may invest up to 10% of their base
compensation in shares of the Company's Common Stock.
The purchase price of the shares is 85% of the fair market
value of the stock on the offering commencement date
or the offering termination date (typically six months after
commencement date), whichever is lower. In 1994, the
plan was amended, increasing the amount of shares from
1,962,000 to 2,462,000. Under the plan 33,000 shares were
issued in 1994. At December 31, 1994, 467,000 shares were
available for future issuance, and none were available
January 1, 1994 and January 3, 1993.
(34)
<PAGE> 15
GENRAD, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
-------------------------------------------------------------------------------
<TABLE>
NOTE 10: INCOME TAXES
The components of income (loss) before income taxes consist of the following (in thousands):
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
1994 1993 1992
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Domestic ............................................................................. $2,610 $(37,089) $(3,608)
Foreign .............................................................................. 3,891 (6,737) (4,112)
-----------------------------------------------------------------------------------------------------------------------------
$6,501 $(43,826) $(7,720)
===================================
</TABLE>
<TABLE>
The provision (benefit) for income taxes consists of the following (in thousands):
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
1994 1993 1992
--------------------------------------------------------------------------------------------------------------------------------
CURRENT DEFERRED CURRENT DEFERRED CURRENT DEFERRED
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Federal .................................................. $ -- $ -- $ -- $ -- $ -- $ --
Foreign .................................................. 980 -- (98) -- 63 (447)
State .................................................... 102 -- 69 -- 70 --
-------------------------------------------------------------------------------------------------------------------------------
$1,082 $ -- $ (29) $ -- $ 133 $(447)
=================================================================
</TABLE>
The deferred tax benefit recorded in 1992 totaling $447,000 relates
principally to reductions in deferred taxes due to operating losses and
differences in depreciation for book and tax reporting.
<TABLE>
A reconciliation of tax on income (loss) at the federal statutory rate to the recorded income tax provision (benefit)
is presented below (in thousands):
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
1994 1993 1992
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Tax provision (benefit) at statutory rate .................................. $ 2,210 $(14,901) $(2,625)
State income taxes less related federal income tax benefit ................. 102 69 70
Realization of deferred tax assets ......................................... (1,200) -- --
Effect of losses for which no tax carryback is available ................... -- 14,774 1,923
Foreign earnings taxed at different rates, including withholding taxes...... (30) -- 63
Goodwill amortization ...................................................... -- -- 184
Other nondeductible items .................................................. -- 29 71
-------------------------------------------------------------------------------------------------------------------------
Recorded income tax provision (benefit) .................................... $ 1,082 $ (29) $ (314)
===================================
</TABLE>
Effective January 3, 1993, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 109 (SFAS No. 109), "Accounting
for Income Taxes." This standard determines deferred taxes based on the
estimated future tax effects of differences between the financial statement and
tax bases of assets and liabilities given the provisions of currently enacted
tax laws. Prior to the implementation of this Statement, the Company accounted
for income taxes under SFAS No. 96. The adoption of SFAS No. 109 had no material
impact on the results of operations.
(35)
<PAGE> 16
GENRAD, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
<TABLE>
NOTE 1O: INCOME TAXES (continued)
The temporary differences and carryforwards that gave rise to the significant deferred tax assets and liabilities
as of December 31, 1994 and January 1, 1994 were as follows (in thousands):
<CAPTION>
Deferred Tax Assets:
-----------------------------------------------------------------------------------------------------------------
1994 1993
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Domestic net operating losses not yet benefited .................................. $ 51,056 $ 50,044
Research and development tax credits ............................................. 9,700 9,700
Foreign net operating losses not yet benefited ................................... 460 514
Inventory valuation reserves ..................................................... 3,730 4,364
Retirement benefit accruals ...................................................... 3,945 4,291
Restructuring reserves, severance and lease costs of unused facilities ........... 10,033 11,204
Other reserves ................................................................... 2,307 2,533
-----------------------------------------------------------------------------------------------------------------
Total deferred tax assets ........................................................ 81,231 82,650
Valuation allowance .............................................................. (79,451) (80,402)
-----------------------------------------------------------------------------------------------------------------
Net deferred tax assets .......................................................... $ 1,780 $ 2,248
==========================
Deferred Tax Liabilities:
-----------------------------------------------------------------------------------------------------------------
Depreciation ..................................................................... $ (1,687) $ (2,248)
Other ............................................................................ (93) --
-----------------------------------------------------------------------------------------------------------------
Total deferred tax liabilities ............................................... (1,780) (2,248)
-----------------------------------------------------------------------------------------------------------------
Net deferred taxes recorded ...................................................... $ -- $ --
==========================
</TABLE>
The valuation allowance relates to uncertainty surrounding
the realization of the deferred tax assets, principally tax
loss carryforwards.
It has been the practice of the Company to reinvest unremit-
ted earnings of foreign subsidiaries in the business outside
the United States. Accordingly, the Company does not pro-
vide for federal income taxes that would result from the
remittance of such earnings.
At December 31, 1994, the Company had, for tax purposes,
domestic unused net operating loss carryforwards of
$150,163,000 which are available to offset future taxable
income and begin expiring in 2000. The Tax Reform Act
of 1986 contains provisions that limit the net operating loss
carryforwards available to be used in any given year upon
the occurrence of certain events, including significant
changes in ownership interests. For tax purposes, the
Company has investment and research credit carryfor-
wards, which begin expiring in 1996, of $9,700,000.
At December 31, 1994, one of the Company's European
subsidiaries had a tax loss carryforward of $1,343,000. Of
that amount, $243,000 will expire commencing in 1996 with
the remainder able to be carried forward indefinitely.
Net taxes paid (refunded), were $151,000 in 1994, $(199,000)
in 1993 and $133,000 in 1992.
(36)
<PAGE> 17
GENRAD, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
-------------------------------------------------------------------------------
NOTE 11: RETIREMENT BENEFTI5
PENSION PLAN: The Company has a noncontributory defined
benefit pension plan covering substantially all domestic
employees. The benefits are based on years of service, age
and the average of the employee's highest five consecutive
year's compensation during the last 10 years of employment.
The Company's funding policy is to contribute amounts to
the plan sufficient to meet the minimum funding require-
ments set forth in the Employee Retirement Income Security
Act of 1974, plus such additional amounts as the Company
may determine to be appropriate from time to time. As
discussed further in the subsequent events, Note 14, on
January 31, 1995 benefit accruals were fixed at their current
levels. The Company will record a curtailment gain of
$1,946,000 in the first quarter of 1995.
<TABLE>
Net pension cost included the following components (in thousands):
<CAPTION>
-------------------------------------------------------------------------------------------------
1994 1993 1992
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost (benefits earned during the period) ............ $ 819 $ 723 $ 687
Interest cost on projected benefit obligation ............... 2,714 2,615 2,506
Actual return on plan assets ................................ 29 (3,841) (1,949)
Net amortization and deferral ............................... (3,098) 772 (1,313)
-------------------------------------------------------------------------------------------------
Net periodic pension cost ................................... $ 464 $ 269 $ (69)
=============================
</TABLE>
In addition, the Company recorded curtailment gains of $778,000 in 1993
and $800,000 in 1992 associated with workforce reductions.
<TABLE>
The plan's funded status and amounts recognized in the Company's consolidated financial statements are as follows
(in thousands):
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
1994 1993
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Actuarial present value of accumulated plan benefits, including
vested benefits of $36,979 and $31,981 .................................................... $(37,051) $(32,080)
====================
Actuarial present value of projected benefit obligation for service rendered to date ........ $(43,292) $(37,172)
Plan assets at fair value, primarily listed stocks and U.S. bonds ........................... 30,850 32,954
--------------------------------------------------------------------------------------------------------------------
Projected benefit obligation in excess of plan assets ....................................... (12,442) (4,218)
Unrecognized net asset at transition ........................................................ (4,102) (4,512)
Unrecognized prior service cost ............................................................. 484 523
Unrecognized net actuarial loss ............................................................. 8,063 674
--------------------------------------------------------------------------------------------------------------------
Accrued U.S. pension cost ................................................................... $ (7,997) $ (7,533)
====================
</TABLE>
The discount rate and rate of increase in future compen-
sation levels used in determining the actuarial present
value of the projected benefit obligation were 7.5% and
5%, respectively, at December 31, 1994 and January 1, 1994.
The expected long-term rate of return on plan assets was
8.5% in 1994 and 9% in 1993 and 1992.
No contributions were required for 1994 or 1993.
(37)
<PAGE> 18
GENRAD, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 11: RETIREMENT BENEFITS (continued)
The Company has a defined benefit pension plan and two defined contribution
plans outside the U.S. for three of its subsidiaries.
<TABLE>
For the non-U.S. defined benefit pension plan, the net pension cost included the following components (in thousands):
<CAPTION>
-----------------------------------------------------------------------------------------------
1994 1993 1992
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost (benefits earned during the period) ............... $124 $127 $204
Interest cost on projected benefit obligation .................. 214 211 228
Net amortization and deferral .................................. (53) (56) (38)
-----------------------------------------------------------------------------------------------
Net periodic pension cost ...................................... $285 $282 $394
===========================
</TABLE>
In addition, the Company recorded a curtailment gain of $516,000 in 1994
associated with workforce reductions.
<TABLE>
The plan's unfunded status and amounts recognized in the Company's financial statements are as follows (in thousands):
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
1994 1993
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Actuarial present value of accumulated plan benefits, including vested benefits of $2,579 and $2,055 .... $(2,522) $(2,123)
=================
Actuarial present value of projected benefit obligation for service rendered to date .................... $(3,182) $(2,667)
Unrecognized net obligation at transition ............................................................... (100) (96)
Unrecognized net actuarial gain ......................................................................... (507) (1,055)
---------------------------------------------------------------------------------------------------------------------------
Accrued pension cost .................................................................................... $(3,789) $(3,818)
=================
</TABLE>
The discount rate and rate of increase in future compensa-
tion levels used in determining the actuarial present value
of the projected benefit obligation were 7.5% and 4%,
respectively, at December 31, 1994 and 1993.
POSTRETIREMENT HEALTH CARE AND LIFE INSURANCE BENEFITS:
Effective January 3, 1993, the Company adopted the
provisions of Statement of Financial Accounting Standards
No. 106 (SFAS No. 106), "Employer's Accounting for
Postretirement Benefits Other Than Pensions," for its
postretirement benefit plan. The Company provides certain
health care and life insurance benefits for retired United
States employees. Employees become eligible for these
benefits when they reach normal retirement age while
working for the Company. Prior to the adoption of this
Statement, the cost was recognized as claims were paid.
The Company's postretirement benefit plans have been
modified and include a limit on the cost of the Company's
contribution for all retirees and increased contributions
for future retirees. The plan is not funded.
38
<PAGE> 19
GENRAD, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
--------------------------------------------------------------------------------
<TABLE>
NOTE 11: RETIREMENT BENEFITS (continued)
The following table sets forth the plan's projected funded status at December 31, 1994 and January 1, 1994.
The accumulated postretirement benefit obligation (in thousands):
<CAPTION>
--------------------------------------------------------------------------------------------
1994 1993
--------------------------------------------------------------------------------------------
<S> <C> <C>
Retired employees ................................................... $ (9,702) $(10,316)
Active employees .................................................... (1,854) (1,769)
--------------------------------------------------------------------------------------------
Total ............................................................... (11,556) (12,085)
Plan assets at fair value ........................................... -- --
--------------------------------------------------------------------------------------------
Unfunded accumulated benefit obligation in excess of plan assets .... (11,556) (12,085)
Unrecognized net gain ............................................... (1,038) (614)
Unrecognized prior service cost ..................................... -- --
Unrecognized transition obligation .................................. 10,482 11,065
--------------------------------------------------------------------------------------------
Accrued postretirement benefit cost ................................. $ (2,112) $ (1,634)
===================
</TABLE>
The Company is recognizing the actuarial present value of the accumulated
postretirement benefit obligation at transition on the delayed recognition
method over 20 years.
<TABLE>
Net periodic postretirement benefit cost for fiscal 1994 and 1993 includes the following components:
<CAPTION>
----------------------------------------------------------------------------------------
1994 1993
----------------------------------------------------------------------------------------
<S> <C> <C>
Service cost ........................................................ $ 96 $ 104
Interest cost ....................................................... 863 1,065
Amortization of transition obligation ............................... 583 654
----------------------------------------------------------------------------------------
Net periodic postretirement benefit cost ............................ 1,542 1,823
Curtailment loss .................................................... -- 1,100
----------------------------------------------------------------------------------------
$1,542 $2,923
===============
</TABLE>
Included in the 1993 expense of $2,923,000 is a curtailment
loss as a result of terminations related to the 1993 workforce
reduction.
Postretirement benefit expense was $1,290,000 in 1992.
For measurement purposes, a 12% annual rate of increase
in the per capita cost of covered health care benefits was
assumed for fiscal 1994 and a 15% annual rate in 1993. The
Company's annual per capita cost commitment for retiree
medical care is capped at 1995 levels. As a result, the health
care cost trend rate assumption does not have a significant
effect on the amounts reported.
The weighted average discount rate used in determining
the accumulated postretirement benefit obligation was
7.5% at December 31, 1994 and December 31, 1993.
(39)
<PAGE> 20
GENRAD, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
--------------------------------------------------------------------------------
NOTE 12: LEASES
The Company leases certain manufacturing facilities, sales and service offices
and equipment under operating leases. Total rental expense for these leases
amounted to $4,449,000 in 1994, $6,036,000 in 1993 and $5,768,000 in 1992.
<TABLE>
The future minimum rental commitments as of December 31, 1994 for noncancellable operating leases are as follows
(in thousands):
<CAPTION>
---------------------------------------------------------------------------------
Real Estate Equipment Total
---------------------------------------------------------------------------------
<S> <C> <C> <C>
1995 ....................................... $ 3,263 $ 691 $ 3,954
1996 ....................................... 2,272 482 2,754
1997 ....................................... 2,047 132 2,179
1998 ....................................... 1,947 65 2,012
1999 ....................................... 1,739 37 1,776
Thereafter ................................. 12,330 -- 12,330
---------------------------------------------------------------------------------
Gross commitment ........................... 23,598 1,407 25,005
Less sub-lease income ...................... (5,282) -- (5,282)
---------------------------------------------------------------------------------
Net commitment ............................. $18,316 $1,407 $19,723
================================
</TABLE>
At December 31, 1994, the Company has accrued $13,237,000 for future lease
commitments relating to idle facilities which are included above.
NOTE 13: CONTINGENCIES
The Company is a named defendant in a patent infringement
litigation matter with a competitor. In the opinion of manage-
ment, reserves at December 31, 1994 are adequate to cover
the liability, if any, related to the eventual outcome of this liti-
gation. An adverse result in this litigation could have a mater-
ial adverse effect on the Company's financial condition,
results of operations or liquidity. The Company is unable to
estimate the amount, if any, which an adverse result may
exceed available reserves.
NOTE 14: SUBSEQUENT EVENTS
On January 16, 1995, the Company sold its building located
in Bolton, Massachusetts for $2,100,000 in cash, of which
$300,000 will be held in escrow until certain conditions are
met. The net book value of the building had been reduced
to its net realizable value as part of the restructuring initiated
in the third quarter of 1993. Consequently, no gain or loss
will be recorded on the sale in the first quarter of 1995.
On January 31, 1995, the Company ceased all benefit
accruals under the Company's domestic noncontributory
defined benefit pension plan as part of its redesigning of
the Company's employee benefit plans. Participants of the
plan who meet vesting requirements will earn benefits
based on years of service and compensation earned
through January 31, 1995. This change will result in the
Company recognizing a curtailment gain of $1,946,000
in the first quarter of 1995.
The STP product line was sold on March 2, 1995 for cash
of $1.1 million, and receivables of approximately $1.1 million
were retained and are expected to be collected in the nor-
mal course of business. The STP sale is expected to result
in the reversal of a portion of the restructuring reserves in
the first quarter of 1995.
(40)
<PAGE> 21
GENRAD, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
--------------------------------------------------------------------------------
NOTE 15: FINANCIAL INFORMATION
BY GEOGRAPHIC AREA
The Company is a worldwide supplier of integrated software
systems and automatic test equipment to manufacturers and
users of electronic and mechanical equipment for product
testing and process quality management. Business is con-
ducted in two major geographic areas, North America and
Europe, with manufacturing activities conducted in the U.K.
and the U.S.
Sales and service activities outside the United States are
conducted primarily through subsidiaries and branches,
and to a lesser extent, through foreign agents or represen-
tatives. Sales to Asia are conducted through foreign agents
or directly from North America. Transfer prices to foreign
subsidiaries, combined with supplemental commission
arrangements, are intended to produce profit margins
commensurate with the sales and service effort associated
with the products sold.
<TABLE>
Certain information on a geographic basis follows (in thousands):
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
1994 North America Europe Eliminations Consolidated
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net revenues-unaffiliated customers .............................. $ 74,265 $ 69,650 $ -- $143,915
Transfer between geographic areas ................................ 21,917 2,676 (24,593) --
-------------------------------------------------------------------------------------------------------------------------
$ 96,182 $ 72,326 $(24,593) $143,915
==================================================
Operating income before general corporate expenses ............... $ 17,401 $ 3,012 $ 548 $ 20,961
General corporate expenses ....................................... 11,479
--------
Operating income ................................................. $ 9,482
========
Identifiable assets .............................................. $ 54,512 $ 25,196 $ -- $ 79,708
-------------------------------------------------------------------------------------------------------------------------
1993 North America Europe Eliminations Consolidated
-------------------------------------------------------------------------------------------------------------------------
Net revenues-unaffiliated customers .............................. $ 82,790 $ 75,914 $ -- $158,704
Transfer between geographic areas ................................ 20,841 4,251 (25,092) --
-------------------------------------------------------------------------------------------------------------------------
$103,631 $ 80,165 $(25,092) $158,704
==================================================
Operating income (loss) before general corporate expenses ........ $(34,274) $ 2,946 $ 757 $(30,571)
General corporate expenses ....................................... 8,972
--------
Operating loss ................................................... $(39,543)
========
Identifiable assets .............................................. $ 44,098 $ 33,018 $ -- $ 77,116
-------------------------------------------------------------------------------------------------------------------------
1992 North America Europe Eliminations Consolidated
-------------------------------------------------------------------------------------------------------------------------
Net revenues-unaffiliated customers .............................. $ 77,165 $ 65,444 $ -- $142,609
Transfer between geographic areas ................................ 19,473 5,562 (25,035) --
-------------------------------------------------------------------------------------------------------------------------
$ 96,638 $ 71,006 $(25,035) $142,609
==================================================
Operating income (loss) before general corporate expenses ........ $ 5,832 $ (1,613) $ 350 $ 4,569
General corporate expenses ....................................... 8,513
--------
Operating loss ................................................... $ (3,944)
========
Identifiable assets .............................................. $ 59,489 $ 40,662 $ -- $100,151
</TABLE>
North America revenues include export sales of $16,503,000 in 1994, $12,699,000
in 1993 and $17,650,000 in 1992.
Sales to the United States government and related agencies amounted to 5% of
consolidated revenues in 1994, 12% in 1993 and 4% in 1992. Sales to a
non-government customer amounted to 16% of consolidated revenues in 1994, 16% in
1993 and 7% in 1992. No other customer accounted for 10% or more of consolidated
revenues.
(41)
<PAGE> 22
GENRAD, INC. AND SUBSIDIARIES
<TABLE>
SUPPLEMENTARY INFORMATION
--------------------------------------------------------------------------------------------------------
QUARTERLY FINANCIAL INFORMATION
(In thousands, except per share amounts)
<CAPTION>
--------------------------------------------------------------------------------------------------------
First Second Third Fourth Year
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1994
Net sales and service revenues ............. $33,985 $ 36,827 $ 36,612 $36,491 $143,915
Gross margin ............................... 15,768 17,408 17,593 16,127 66,896
Net income ................................. 1,011 2,006 1,056 1,346 5,419
Net income per common
and common equivalent share:
Primary ................................ .05 .10 .05 .07 .28
Fully diluted .......................... .05 .10 .05 .07 .27
YEAR ENDED JANUARY 1, 1994
Net sales and service revenues ............. $42,749 $42,189 $ 35,837 $37,929 $158,704
Gross margin ............................... 18,148 17,656 14,803 16,046 66,653
Net income (loss) .......................... 1,330 (793) (44,774) 440 (43,797)
Net income (loss) per common
and common equivalent share:
Primary ................................ .07 (.04) (2.46) .02 (2.42)
Fully diluted .......................... .07 (.04) (2.46) .02 (2.42)
</TABLE>
The third quarter of 1993 net loss includes $36,848,000 for a
worldwide restructuring program. These charges included
provisions for excess facilities, severance, discontinued
products, equipment write-offs, consulting and miscella-
neous other items.
COMMON STOCK
As of February 21, 1995, there were 4,043 stockholders of
record holding 19,543,969 shares.
DIVIDENDS
It is the policy of the Company to retain earnings to support
the growth and expansion of the Company's business.
Although the Company has paid dividends in the past,
there are no plans to resume paying dividends. Payment
of dividends is restricted as set forth in financing agree-
ments to which the Company is a party.
<TABLE>
STOCK PRICE INFORMATION
<CAPTION>
--------------------------------------------------------------
1994 1993
--------------------------------------------------------------
HIGH LOW High Low
--------------------------------------------------------------
<S> <C> <C> <C> <C>
1st Quarter ............ 7 1/8 5 1/2 6 1/8 3 3/4
2nd Quarter ............ 6 3/8 5 5 1/4 2 5/8
3rd Quarter ............ 5 5/8 4 1/2 4 1/4 2 3/4
4th Quarter ............ 6 4 1/8 6 1/4 3
</TABLE>
(42)
<PAGE> 23
GENRAD, INC. AND SUBSIDIARIES
<TABLE>
CORPORATE DATA
-------------------------------------------------------------------------------------------------------
<S> <C>
DIRECTORS
Russell A. Gullotti William G. Scheerer*
President and Quality, Engineering,
Chief Executive Officer Software & Technologies
National Computer Systems, Inc. (QUEST Partnership) Vice President
AT&T Bell Laboratories
James F. Lyons
President and Adriana Stadecker**
Chief Executive Officer Managing Partner
The Boston Consulting Firm
Edwin M. Martin, Jr.* **
Partner, James H. Wright*
Piper & Marbury Attorney-at-Law
Paul Penfield, Jr.** *Member of the Audit Committee
Head, **Member of the Compensation Committee
Department of Electrical
Engineering and Computer Science,
Massachusetts Institute of Technology
-------------------------------------------------------------------------------------------------------
OFFICERS
James F. Lyons Walter A. Shephard
President and Treasurer
Chief Executive Officer
Sarah H. Lucas John C. Washburn
Vice President, Vice President,
Strategic Planning and Analysis General Manager
Concord Operations
George A. 0'Brien
Vice President,
Chief Financial Officer and Secretary
-------------------------------------------------------------------------------------------------------
FELLOWS*
Malcolm C. Holtje Henry P. Hall
*The GenRad Fellows Program was established in 1991 to honor senior technologists for their exceptional
achievements in the field of design and test technology.
-------------------------------------------------------------------------------------------------------
CORPORATE OFFICE
300 Baker Avenue SALES AND SERVICE OFFICES
Concord, Massachusetts USA Concord, Massachusetts USA
Arlington Heights, Illinois USA
MANUFACTURING CENTERS Detroit, Michigan USA
Irvine, California USA
Electronics Manufacturing Test Santa Clara, California USA
Concord, Massachusetts USA
Ismaning, Germany
Advanced Diagnostic Solutions Munich, Germany
Bredbury, Cheshire UK Cheadle Hulme, Cheshire UK
Maidenhead, Berkshire UK
Milan, Italy
Paris, France
Zurich, Switzerland
Science Park, Singapore
</TABLE>
(43)
<PAGE> 24
GENRAD, INC. AND SUBSIDIARIES
INVESTORS' REFERENCE GUIDE
-------------------------------------------------------------------------------
COMMON STOCK
The Company's Common Stock is listed and traded on the
New York Stock Exchange (trading symbol "GEN").
INVESTOR RELATIONS
Inquiries from stockholders and the financial community
are welcome by telephone, fax or letter and should be
directed to:
George A. O'Brien
Chief Financial Officer
GenRad, Inc.
300 Baker Avenue
Concord, MA 01742-2174
TEL (508) 287-7000
FAX (508) 287-2094
FORM 10-K
The GenRad, Inc. Annual Report on Form 10-K for the fiscal
year ended December 31, 1994, filed with the Securities and
Exchange Commission, will be sent to stockholders without
charge upon written request to the Investor Relations office.
The Company's Annual Report, filings with the Securities
and Exchange Commission, interim reports and additional
information about the Company, its products, and the mar-
kets it serves, can be obtained by request from the Investor
Relations office.
TEL (508) 287-7000
FAX (508) 287-2094
TRANSFER AGENT AND REGISTRAR FOR COMMON
STOCK
Bank of Boston is the Company's stock transfer agent and
registrar and maintains the stockholder accounting records.
The agent will respond to questions regarding change of
ownership, lost stock certificates and consolidation of
accounts. Please direct questions of this nature to Bank of
Boston's Consumer Service Department at (617) 575-2900.
A change of address should be reported promptly by
sending a signed and dated letter to Bank of Boston.
Stockholders should state the name in which the stock
is registered, account number, social security number,
and the new address. Please mail correspondence to:
Bank of Boston
Transfer Processing
Mail Stop: 45-01-05
P.O. Box 644
Boston, MA 02102-0644
ANNUAL MEETING
The Annual Meeting of Stockholders will be held in Boston
on Thursday, May 11, 1995, 11:00 a.m. at the Bank of
Boston's auditorium, Street Floor, 100 Federal Street, Boston.
All stockholders are cordially invited to attend.
GenRad, Inc. is an Equal Opportunity Employer. All employment related action(s)
are taken without regard to race, color, sex, national origin, sexual
orientation, religion, physical/mental disability, or veteran status.
Additionally, the Company is committed to maintaining an atmosphere free of
discrimination and one which fosters an environment that enables all employees
to work to their potential.
(44)
<PAGE> 1
EXHIBIT 21
----------
<TABLE>
GENRAD, INC.
------------
SCHEDULE OF SUBSIDIARIES AS OF MARCH 30, 1995
---------------------------------------------
<CAPTION>
SUBSIDIARIES NAME STATE/JURISDICTION OF INCORPORATION
----------------- -----------------------------------
<S> <C>
GenRad SA France
GenRad GmbH Germany
GenRad S.p.A. Italy
GenRad (Schweiz) AG Switzerland
GenRad Benelux B.V. Netherlands
GenRad Europe Limited England
GenRad Limited England
GenRad Holdings Limited England
GenRad Securities Corporation Massachusetts
</TABLE>
All subsidiaries are Consolidated Subsidiaries and do business under their own
name.
<PAGE> 1
EXHIBIT 23
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference of our reports, dated February 8, 1995, included in, and incorporated
by reference in, GenRad, Inc.'s Form 10-K, into the Company's previously filed
Registration Statement File No. 2-85614, No. 2-89950 and No. 33-28715 on Form
S-3 and Registration Statement File No. 2-92786, No. 2-92800, No. 33-1667,
No. 33-10658, No. 33-53869, No. 33-35918, No. 33-53871 and No. 33-53867 on
Form S-8.
/s/ ARTHUR ANDERSEN LLP
---------------------
ARTHUR ANDERSEN LLP
Boston, Massachusetts
March 30, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 1994 AND THE CONSOLIDATED
STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1994 FOR GENRAD, INC.
AND SUBSIDIARIES AND IS QUALIFIED BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-02-1994
<PERIOD-END> DEC-31-1994
<EXCHANGE-RATE> 1
<CASH> 7,613
<SECURITIES> 0
<RECEIVABLES> 32,456
<ALLOWANCES> 1,316
<INVENTORY> 15,882
<CURRENT-ASSETS> 58,982
<PP&E> 104,448
<DEPRECIATION> 89,901
<TOTAL-ASSETS> 79,708
<CURRENT-LIABILITIES> 44,481
<BONDS> 48,917
<COMMON> 19,342
0
0
<OTHER-SE> (57,573)
<TOTAL-LIABILITY-AND-EQUITY> 79,708
<SALES> 109,000
<TOTAL-REVENUES> 143,915
<CGS> 57,813
<TOTAL-COSTS> 77,019
<OTHER-EXPENSES> 55,921
<LOSS-PROVISION> 516
<INTEREST-EXPENSE> 3,958
<INCOME-PRETAX> 6,501
<INCOME-TAX> 1,082
<INCOME-CONTINUING> 5,419
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,419
<EPS-PRIMARY> .28
<EPS-DILUTED> .27
<FN>
OTHER EXPENSES OF $55,921 ARE NET OF PROVISION FOR DOUBTFUL ACCOUNTS AND
INTEREST EXPENSE.
</TABLE>
