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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________
Form 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended April 1, 1995
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
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code: (508) 287-7000
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /x/ No / /
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
19,649,645 shares of Common Stock, $1 par value, outstanding April 28,
1995.
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[CAPTION]
GENRAD, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
<TABLE>
<S> <C>
PAGE
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PART I. FINANCIAL INFORMATION:
Consolidated Balance Sheet Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Consolidated Balance Sheet Liabilities and Stockholders' Equity (Deficit) . . . . . . . . . . . 2
Consolidated Statement of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Condensed Consolidated Statement of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . 4
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Management's Discussion and Analysis of Financial Condition and Operating Results . . . . . . . 7
PART II. OTHER INFORMATION:
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
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PART I. FINANCIAL INFORMATION
<TABLE>
GENRAD, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
ASSETS
(IN THOUSANDS)
<CAPTION>
April 1, December 31,
1995 1994
------------ ------------
(Unaudited)
<S> <C> <C>
Current Assets:
Cash and equivalents $ 5,327 $ 7,613
Accounts receivable, net 37,159 31,140
Inventories:
Raw materials 8,997 7,205
Work in process 3,227 4,853
Finished goods 3,961 3,824
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16,185 15,882
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Other current assets 4,258 4,347
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Total current assets 62,929 58,982
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Property, plant and equipment:
Land 525 525
Buildings 24,805 24,692
Machinery and equipment 66,662 65,064
Service parts 14,507 14,167
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106,499 104,448
Less: Accumulated depreciation 91,624 89,901
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14,875 14,547
Other assets 1,175 1,221
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Assets held for sale - 4,958
$ 78,979 $ 79,708
======== ========
The accompanying Notes are an integral part of these Consolidated Financial Statements.
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<TABLE>
GENRAD, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
(IN THOUSANDS)
<CAPTION>
April 1, December 31,
1995 1994
------------ ------------
(Unaudited)
<S> <C> <C>
Current Liabilities:
Notes payable to banks $ 656 $ -
Trade accounts payable 7,375 8,244
Accrued liabilities 22,515 26,505
Accrued compensation and
employee benefits 8,259 8,797
Income taxes payable 1,650 935
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Total current liabilities 40,455 44,481
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Long-term Liabilities
Long-term debt 48,934 48,917
Accrued pensions and benefits 12,377 13,898
Future lease costs of unused facilities 8,136 8,011
Other long-term liabilities 2,472 2,632
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Total long-term liabilities 71,919 73,458
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Stockholders' Equity (deficit):
Common stock, $1 par value
Authorized 60,000,000 shares; issued and
outstanding 19,625,000 and 19,342,000 19,625 19,342
Additional paid-in capital 106,256 105,925
Accumulated deficit (156,875) (161,073)
Equity adjustment from foreign
currency translation (2,401) (2,425)
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Total stockholders' equity (deficit) (33,395) (38,231)
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$ 78,979 $ 79,708
========= =========
The accompanying Notes are an integral part of these Consolidated Financial Statements.
</TABLE>
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<TABLE>
GENRAD, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED
---------------------------------
APRIL 1, APRIL 2,
1995 1994
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<S> <C> <C>
Revenues:
Sales of products $ 27,630 $ 26,367
Sales of services 8,209 7,618
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35,839 33,985
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Cost and expenses:
Cost of products sold 14,077 14,291
Cost of services sold 4,184 3,926
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18,261 18,217
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Gross margin 17,578 15,768
Operating expenses:
Selling, general and administrative 9,541 10,341
Research and development 3,417 3,289
Restructuring credits (1,000) -
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11,958 13,630
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Operating income 5,620 2,138
Other income (expense):
Interest income 51 36
Interest expense (981) (1,042)
Other-net 71 129
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(859) (877)
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Income before taxes 4,761 1,261
Income taxes 563 250
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Net Income $ 4,198 $ 1,011
=========== ===========
Earnings per common and common
equivalent share:
Primary $ 0.21 $ 0.05
=========== ===========
Fully diluted $ 0.21 $ 0.05
=========== ===========
Shares used in computing earnings
per common and common equivalent share:
Primary 19,942,000 19,780,000
Fully diluted 19,959,000 19,786,000
The accompanying Notes are an integral part of these Consolidated Financial Statements.
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<TABLE>
GENRAD, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED
--------------------------
APRIL 1, APRIL 2,
1995 1994
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<S> <C> <C>
Operating activities:
Net income $ 4,198 $ 1,011
Adjustments to reconcile net income
to net cash provided (used) by operating activities:
Depreciation and amortization 1,295 1,417
Reserve for future lease costs of unused facilities (2,387) (1,651)
Increase (decrease) resulting from changes
in operating assets and liabilities
Accounts receivable (4,990) (599)
Inventories (186) (483)
Trade accounts payable (928) 644
Income taxes 693 -
Accrued liabilities and customer prepayments (1,690) 3,820
Accrued compensation and employee benefits (2,189) (164)
Prepaid expense 217 96
Other, net 799 339
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Net cash provided by (used in) operating activities (5,168) 4,430
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Investing activities:
Purchases of property, plant and equipment (1,373) (406)
Proceeds from sale of property, plant and equipment 27
Proceeds from sale of assets held for sale 3,157
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Net cash provided by (used in) investing activities 1,784 (379)
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Financing activities:
Net change in notes payable 650 (2,147)
Proceeds from employee stock plan 614 755
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Net cash provided by (used in) financing activities 1,264 (1,392)
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Effects of exchange rates on cash (166) (206)
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Increase (decrease) in cash equivalents (2,286) 2,453
Cash and equivalents at beginning of period 7,613 8,418
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Cash and equivalents at end of period $ 5,327 $10,871
======= =======
The accompanying Notes are an integral part of these Consolidated Financial Statements.
</TABLE>
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GENRAD, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ACCOUNTING COMMENTS
Reference is made to the registrant's 1994 annual report to
stockholders, which contains, at pages 21 through 42, financial statements and
the notes thereto, including a summary of significant accounting policies.
With respect to the financial information for the interim periods
included in this report, which is unaudited, the management of the Company
believes that all adjustments necessary for a fair presentation of the results
for such interim periods have been included. All adjustments are of a normal
and recurring nature.
The results for any interim period are not necessarily indicative of
the results for the entire year.
Certain reclassifications have been made to the first quarter 1994
Consolidated Statement of Operations. Sales and cost of sales for product and
service amounts have been reclassified to conform to the first quarter 1995
classifications.
2. 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. The 1995 first quarter results from operations reflects the benefits of
the labor force reductions and resulted in cash outflows for severance of $0.3
million related to the 1993 third quarter restructuring. 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 approximately $1.4 million. The Company's Bolton,
Massachusetts facility was sold for $2.1 million in January 1995, consistent
with the restructuring plan. The proceeds from the sale approximated the
carrying value of the assets sold.
Excess facilities reserves relate primarily to losses in leases for
vacated domestic and European facilities. Cash outflows related to excess
facilities were $0.8 million in the first quarter of 1995 related to the 1993
restructuring. 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 reserves for discontinued product lines relates to the sale of the
Design Automation Products (DAP) product line and 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 resulted in the reversal of $1.0
million of restructuring reserves in the first quarter of 1995 which is
classified in the consolidated statement of operations as Restructuring
Credits.
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3. RETIREMENT BENEFITS
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 resulted in the
Company recognizing a curtailment gain of $1,946,000 in the first quarter of
1995 which is classified as part of selling, general and administrative
expenses in the consolidated statement of operations.
6
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND OPERATING RESULTS
OPERATING RESULTS
Orders for the Company's products and services declined to $38.3
million in the 1995 first quarter from $45.1 million in the comparable 1994
period. The decline in orders reflects a $3.4 million decrease in electronic
manufacturing test product orders and a $4.6 million decrease in service
orders.
Backlog at the end of the 1995 first quarter was $34.1 million compared
to $31.7 million at year-end 1994 and $30.1 million at the end of the 1994
first quarter. The 1995 first quarter backlog, as compared to the 1994 first
quarter, included $5.7 million in increased backlog related to U.S. Marine
Corps and Ford of Europe contracts, offset by a $2.7 million decrease in
electronic manufacturing test backlog. A substantial portion of the 1995 first
quarter backlog is scheduled for shipment prior to the end of 1995.
Net product and service revenues in the 1995 and 1994 first quarters were
$35.8 million and $34.0 million, respectively. The increase between quarters
stems primarily from increased revenues of approximately $3.8 million derived
from contracts with the U.S. Marine Corps and Ford of Europe, offset by a
$1.8 million decrease in electronic manufacturing test product revenues.
Revenues derived from the international market during the 1995 and 1994 first
quarters were 53% and 64%, respectively. Product and service revenues derived
from the international market are subject to the risks of currency
fluctuations.
Gross margin as a percent of sales increased to 49.0% in the first
quarter of 1995 from 46.4% in the comparable period in 1994. Gross margin
increased due to mix changes, continued focus on material and manufacturing
cost reduction programs, and cost reductions achieved as part of a
restructuring at the end of the 1993 third quarter when 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 levels
of the remaining core product lines. Partially offsetting some of the margin
improvements noted above are continued competitive pricing pressures.
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 domestic employee benefit plans. This change
resulted in the Company recognizing a curtailment gain of $1,946,000 in the
first quarter of 1995, which is classified as part of selling, general and
administrative expenses in the consolidated statement of operations.
Selling, general and administrative expenses decreased by $0.8 million to
$9.5 million in the 1995 first quarter. The decline in expenses is
attributable primarily to a $1.9 million gain related to the curtailment of
benefits in the Company's domestic pension plan offset by $ 0.5 million of
severance, increased selling costs due to sales channel expansion and increased
commission costs related to revenue increases. Selling, general and
administrative expenses for the first quarter of both fiscal 1994 and 1995 were
beneficially impacted by the 1993 restructuring.
Research and development expenses increased slightly to $3.4 million in
the first quarter of 1995 as compared to $3.3 million in the first quarter of
1994. As a percentage of net product and service revenues, research and
development expenses decreased 0.2% to 9.5% in the first quarter of 1995
versus 9.7% in the first quarter of 1994. The Company continues to invest in
new product development and enhancements to existing products.
As part of the 1993 restructuring, the Company established a reserve for
discontinued product lines. As a result of the sale of one such product line
in March 1995, $1.0 million of the reserve was reversed in the first quarter of
fiscal 1995. This reversal is classified as restructuring credits in the
consolidated statement of operations. The Company's Bolton, Massachusetts
facility was sold for $2.1 million in January 1995, consistent with the
restructuring plan. The proceeds from the sale approximated the carrying
value of the assets sold.
7
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Interest income increased slightly in the first quarter of 1995 in
relation to the comparable period in 1994 as a result of increased interest
rates. During the same periods, interest expense also decreased slightly due
to lower short-term borrowing levels.
The provisions for taxes in the first quarters of 1995 and 1994
represents primarily foreign and state income taxes. The Company utilized
existing unrecognized tax assets and operating loss carryforwards to offset
current requirements for United States Federal Income Taxes. Income taxes
decreased to 11.8% of pretax net income in the first quarter of 1995 from 19.8%
in the first quarter of 1994 due to a decreased level of estimated taxable
foreign income.
As a result of the above, the Company generated net income of $4,198,000
for the first quarter of 1995 as compared to net income of $1,011,000 for the
similar period last year.
LIQUIDITY AND SOURCES OF CAPITAL
- --------------------------------
Cash and equivalents decreased $2.3 million for the three months ended
April 1, 1995. Operating activities utilized $5.2 million in cash, with the
largest factors being an increase in accounts receivables due primarily to
shipments of products later in the quarter as compared to shipments in the
fourth quarter of 1994, an increase in accounts receivable due to the timing of
progress billings to the U.S. Marine Corps and future lease costs of unused
facilities.
Proceeds from the sale of assets held for sale generated $3.2 million in
cash inflows in the first quarter of 1995. These proceeds were from the
January 16, 1995 sale of the Company's Bolton, Massachusetts facility for $2.1
million and the March 2, 1995 sale of the STP product line for $1.1 million.
Capital expenditures in the 1995 first quarter totaled $1.4 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 April 1, 1995.
The Company is party to long-term leases related to vacated domestic and
European facilities provided for in the Company's 1993 and prior
restructurings. Cash of $2.4 million was used to fund these arrangements in
the 1995 first quarter and at April 1, 1995 reserves for excess facilities
relating to these long-term leases totaled $10.7 million. The Company is
projecting that cash of approximately $5.2 million will be used in 1995 to fund
these arrangements. During the 1995 first quarter, cash of approximately $1.8
million was used to fund severance, litigation and legal costs and other
miscellaneous charges provided for in the restructurings.
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 $0.7 million was outstanding on April 1, 1995. 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. On April 1, 1995, the Company had an available borrowing
capacity of $11.1 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 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 withholding taxes would be due upon
remittance. There are no restrictions on the payment of intercompany accounts.
8
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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, will 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 significant 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.
The Company buys and sells foreign currencies using forward contracts
intended to hedge payables and receivables denominated in foreign currencies.
The Company primarily trades in U.S. dollars and European currencies. At
April 1, 1995, the Company had forward exchange contracts to sell $3.6 million
in foreign currencies, all of which were European denominated.
Inflation during the periods 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
manufacturing 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 market 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 requirements, 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.
9
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PART II. OTHER INFORMATION
Item 1. 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 April 1, 1995 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 6. Exhibits and Reports on Form 8-K
(a) 10.1 Amendment number four to General Loan and Security Agreement
dated March 31, 1995 between Foothill Capital Corporation
and the Company amending the credit facility.
11. Statement re: Computation of Earnings per share.
(b) The Company filed a current report on Form 8-K dated
March 27, 1995 reporting a change in the Company's
independent public accountants from Arthur Andersen LLP
to Price Waterhouse LLP.
(c) 27. Financial Data Schedule
10
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GENRAD, INC.
BY: /S/ GEORGE A. O'BRIEN
---------------------
GEORGE A. O'BRIEN
VICE PRESIDENT,
CHIEF FINANCIAL OFFICER AND SECRETARY
Date: May 5, 1995
11
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EXHIBIT 10.1
AMENDMENT NUMBER FOUR TO
GENERAL LOAN AND SECURITY AGREEMENT
GENRAD, INC.
THIS AMENDMENT NUMBER FOUR TO GENERAL LOAN AND SECURITY AGREEMENT
(this, "Amendment"), dated as of March 31, 1995, is entered into by and between
FOOTHILL CAPITAL CORPORATION, a California corporation ("Foothill"), with its
place of business located at 11111 Santa Monica Boulevard, Suite 1500, Los
Angeles, California 90025-3333, and GENRAD, INC., a Massachusetts corporation
("Borrower"), with its chief executive office located at 300 Baker Avenue,
Concord, Massachusetts 01742-2174, in light of the following facts:
FACTS:
------
FACT ONE: Borrower and Foothill are parties to that certain General
Loan and Security Agreement, dated as of June 23, 1992 (as amended and
supplemented, the "Agreement").
FACT TWO: Borrower and Foothill desire to further amend the Agreement
as provided herein. Terms defined in the Agreement which are used herein shall
have the same meanings as set forth in the Agreement, unless otherwise
specified.
NOW, THEREFORE, Borrower and Foothill modify and amend the Agreement as
follows:
1. Section 6.13 of the Agreement is hereby amended in its entirety
to read as follows:
"6.13 FINANCIAL COVENANTS. As of the end of any fiscal quarter during
the fiscal year 1995:
(a) Minimum Current Ratio
---------------------
(i) CONSOLIDATED. Borrower and its Subidiaries will not
permit the ratio of (A) Consolidated Current Assets to (B) Consolidated Current
Liabilities to be less than 1.0 to 1.0.
(ii) DOMESTIC. Borrower will not permit the ratio of (A)
Borrower's Current Assets to (B) Borrower's Current Liabilities to be less than
.70 to 1.00.
<PAGE> 2
(b) Minimum Capital Funds
---------------------
(i) CONSOLIDATED. Borrower and its Subidiaries will not
permit Consolidated Capital Funds to be less than Eight Million Dollars
($8,000,000).
(ii) DOMESTIC. Borrower will not permit Borrower's Capital
Funds to be less than Thirteen Million Dollars ($13,000,000).
(c) Leverage Ratio
--------------
(i) CONSOLIDATED. Borrower and its Subsidiaries will not
permit the ratio of (A) Indebtedness to (B) Consolidated Capital Funds to be
greater than 1.0 to 1.0.
(ii) DOMESTIC. Borrower will not permit the ratio of (A)
Indebtedness to (B) Borrower's Capital Funds to be greater than .75 to 1.00."
2. In the event of conflict between the terms and provisions of
this Amendment and the terms and provisions of the Agreement, the terms and
provisions of this Amendment shall govern. In all other respects, the
Agreement, as supplemented, amended and modified, shall remain in full force
and effect.
IN WITNESS WHEREOF, Borrower and Foothill have executed this Amendment
as of the day and year written above.
FOOTHILL CAPITAL CORPORATION GENRAD, INC.
By /s/ Lisa M. Gonzales By /s/ George A. O'Brien
------------------------- ----------------------------
Lisa M. Gonzales George A. O'Brien
Its Assistant Vice President Its Vice President and CFO
------------------------- ----------------------------
- --------------------------------------------------------------------------------
By its acceptance below as of the 31st day of March, 1995, the undersigned
guarantor hereby reaffirms its Continuing Guaranty dated June 23, 1992, and
consents to the above-stated terms.
The undersigned further confirms that the Guaranty continues to be secured by
that certain Stock Pledge Agreement dated June 23, 1992.
GENRAD HOLDINGS, LIMITED
By /s/ Walter A. Shephard
----------------------------
Its DIRECTOR
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<PAGE> 1
<TABLE>
Exhibit 11
GENRAD, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED
--------------------------------
APRIL 1, APRIL 2,
Primary: 1995 1994
- -------- ----------- -----------
<S> <C> <C>
Weighted average number of
shares outstanding 19,486,000 18,689,000
Shares deemed outstanding from
the assumed exercise of stock options 456,000 1,091,000
----------- -----------
Total: 19,942,000 19,780,000
=========== ===========
Earnings applicable to common shares $ 4,198,000 $ 1,011,000
=========== ===========
Earnings per share of common stock $ 0.21 $ 0.05
=========== ===========
Fully Diluted:
- --------------
Weighted average number of
shares outstanding 19,486,000 18,689,000
Shares deemed outstanding from the
assumed exercise of stock options 473,000 1,097,000
----------- -----------
Total: 19,959,000 19,786,000
=========== ===========
Earnings applicable to common shares $ 4,198,000 $ 1,011,000
=========== ===========
Earnings per share of common stock $ 0.21 $ 0.05
=========== ===========
</TABLE>
<PAGE> 1
EXHIBIT 11(b)
THE SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO
SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): MARCH 27, 1995
(MARCH 22, 1995)
---------------------------
GENRAD, INC.
------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
MASSACHUSETTS
------------------------------
(State of Incorporation)
1-8045 04-1360950
- --------------------- --------------------------------------
(Commission File No.) (I. R. S. Employer Identification No.)
300 BAKER AVENUE, CONCORD, MA 01742-2174
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
508-287-7000
----------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
<PAGE> 2
Item 4. Change in Registrant's Certifying Accountant.
Effective April 1, 1995, the Board of Directors of the Company, upon
recommendation of its audit committee, approved the engagement of Price
Waterhouse LLP as auditors to undertake the preparation of the Company's
audited financial statements for the fiscal year ending December 30, 1995.
The Company notified its prior auditors, Arthur Andersen LLP, on March
22, 1995 of their dismissal. This action was recommended by the audit
committee of the Company, and approved by the Board of Directors.
There have been no disagreements between management and Arthur Andersen
LLP or any predecessor firm, for the last two fiscal years, in connection with
the Company's audits and any subsequent interim period preceding the engagement
of Price Waterhouse LLP on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure of a nature
which if not resolved to the satisfaction of Arthur Andersen LLP would have
caused it to make reference in connection with its report to the subject matter
of any such disagreements. Arthur Andersen LLP's reports on the financial
statements of the Company for the last two fiscal years have not contained an
adverse opinion or a disclaimer of opinion and none of such reports was
qualified as to uncertainty, audit scope or accounting principles.
The Company has requested Arthur Andersen LLP to furnish it with a
letter addressed to the Securities and Exchange Commission stating whether
Arthur Andersen LLP agrees with the above statements.
Item 7 C: Financial Statements and Exhibits
16.1 Letter from Arthur Andersen LLP to the Securities and Exchange
Commission dated March 27, 1995.
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
GENRAD, INC.
----------------------------------
(Registrant)
DATE: MARCH 27, 1995 BY: /s/ GEORGE A. O'BRIEN
-------------------------------
GEORGE A. O'BRIEN
VICE PRESIDENT, CHIEF FINANCIAL
AND ACCOUNTING OFFICER
<PAGE> 4
ARTHUR
ANDERSEN
ARTHUR ANDERSEN & CO. SC
EXHIBIT 16.1
March 27, 1995 ________________________
Arthur Andersen LLP
Mr. Walter Schuetze ________________________
Chief Accountant One International Place
U.S. Securities and Exchange Commission Boston MA 02110-2604
450 Fifth Street NW 617 330 4000
Washington D.C. 20549
Dear Mr. Schuetze:
We have read Item 4 included in the attached Form 8-K dated March 27, 1995 of
GenRad, Inc. to be filed with the Securities and Exhange Commission and are in
agreement with the statements contained therein.
Very truly yours,
/s/ Arthur Andersen LLP
AHD
Attachment
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AS OF APRIL 1, 1995 AND THE CONSOLIDATED STATEMENT OF
OPERATIONS FOR THE PERIOD ENDED APRIL 1, 1995 FOR GENRAD, INC. AND SUBSIDIARIES
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-01-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> APR-01-1995
<EXCHANGE-RATE> 1
<CASH> 5,327
<SECURITIES> 0
<RECEIVABLES> 38,689
<ALLOWANCES> 1,530
<INVENTORY> 16,185
<CURRENT-ASSETS> 62,929
<PP&E> 106,499
<DEPRECIATION> 91,624
<TOTAL-ASSETS> 78,979
<CURRENT-LIABILITIES> 40,455
<BONDS> 48,934
<COMMON> 19,625
0
0
<OTHER-SE> (53,020)
<TOTAL-LIABILITY-AND-EQUITY> 78,979
<SALES> 27,630
<TOTAL-REVENUES> 35,839
<CGS> 14,077
<TOTAL-COSTS> 18,261
<OTHER-EXPENSES> 11,836
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 981
<INCOME-PRETAX> 4,761
<INCOME-TAX> 563
<INCOME-CONTINUING> 4,198
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,198
<EPS-PRIMARY> .21
<EPS-DILUTED> .21
<FN>
OTHER COSTS AND EXPENSES INCLUDE A RESTRUCTURING CREDIT
OF $1,000.
</TABLE>
