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GenRad Reports First Quarter Results; Revises Year 2000 Earnings Estimate

19 April 2000

GenRad Reports First Quarter Results; Revises Year 2000 Earnings Estimate

    WESTFORD, Mass.--April 19, 2000--GenRad, Inc. (NYSE:GEN) today reported diluted earnings per share of $0.08 for its first quarter ended April 1, 2000, compared to $0.14 last year, on a full tax basis of 36%.
    The $0.08 is before one-time charges and gains and reversal of a portion of the deferred tax valuation allowance.
    GenRad also reported it anticipates earnings in the range of $0.50 to 0.85 per share for the year, which the company will update as appropriate. The company said its original estimate of units to be shipped under the WDS contract may not materialize due to changing purchasing patterns of the sole customer.
    Also affecting the lowered earnings estimate, according to the company, are GRS consolidation costs against a lowered GRS revenue outlook.
    "Despite strong revenue and order growth, Q1 proved to be a challenging quarter," said Robert M. Dutkowsky, who joined GenRad as chairman, president and chief executive officer on Monday, April 10.
    "Looking ahead, we must continue to leverage the strength of our EMS business. Managing our WDS business, however, with one customer producing significantly lower margins than our other businesses, is a challenge. This demonstrates the need to accelerate the return on our GRS investment, and the integration of our most recent strategic acquisitions and the maximization of their revenue and profit stream as soon as possible," Mr. Dutkowsky explained.
    Net income for the first quarter of 2000, before a reversal of a portion of the deferred tax valuation allowance and before one-time charges and gains, was $2.3 million, versus $4.1 million for the first quarter of 1999 on a full tax basis of 36%.
    Net income for the first quarter of 2000, including a reversal of a portion of the deferred tax valuation allowance and including one-time charges and gains was $18.1 million or $0.63 per share on a diluted basis. Net income for the first quarter of 1999 on a full tax basis of 36% including a reversal of a portion of the deferred tax valuation allowance was $8.6 million or $0.29 per share on a diluted basis.
    The one-time charges relate to restructuring costs at the company's Manchester and Portland offices and a write-off of research and development in-process costs associated with the Nicolet/SRT acquisition. These charges were offset by a one-time gain from a reversal of a previously recorded restructuring charge for an unoccupied U.K. facility.
    Diluted weighted average common shares at the end of the first quarter of 2000 were 28,704,000, a decrease from the 1999 comparable period amount of 29,340,000.

    GenRad Background

    GenRad, Inc. provides electronics OEMs and their customers with the hardware, software and services to increase productivity by optimizing product design, manufacturing and after-market service. GenRad, headquartered in Westford, MA, offers products and services through three business units: Advanced Diagnostic Solutions (ADS), Electronic Manufacturing Solutions (EMS), and GR Software (GRS). GenRad's web site address is http://www.genrad.com.

    GenRad's most current shareholder information is available by visiting our Website at http://www.genrad.com or calling our Fax on Demand Service at (800) 469-1261.

    Statements made in this press release which are not historical, including statements regarding future performance, product capabilities and markets are forward looking statements and as such are subject to a number of risks. Factors that may cause results to differ materially from those projected are discussed in GenRad's 1999 Annual Report on Form 10-K for the fiscal year ending January 1, 2000 under the section "Management's Discussion and Analysis of Financial Conditions and Results of Operations - Factors That May Affect Future Results."

                    GenRad, Inc. and Subsidiaries
                       Supplemental Information
               (in thousands, except per share amounts)
                              (unaudited)


                                              Three Months Ended
                                          April 1,  April 3,       %
                                           2000      1999       Change

Orders                                    $80,122   $59,354        35%

Total Revenue                             $66,373   $53,110        25%

Net Income                                $18,078   $10,322        75%

Weighted Average Shares Outstanding:
 Basic                                     28,138    28,107
 Diluted                                   28,704    29,340

Net Income Per Share:
 Basic                                    $  0.64   $  0.37        73%
 Diluted                                  $  0.63   $  0.35        80%

Net Income Per Share Data (Diluted):
Net income as reported                    $18,078   $10,322        75%
Reversal of deferred tax valuation
 allowance                                (14,539)   (4,500)      223%
One-time charges (benefit), net of tax     (1,267)     --          NM
Net income before reversal of deferred
 tax valuation allowance and excluding
 one-time charges (benefit)               $ 2,272   $ 5,822      -61%

Net income per share before reversal of
 deferred                                 $  0.08   $0.20 (a)    -60%
  tax valuation allowance and excluding
   one-time charges (benefit)


(a) $0.14 based on an effective tax rate of 36%. The Company's
effective tax rates for fiscal 2000 and 1999 are 36% and 10%,
respectively. The effective tax rate excludes the impact of the
benefit from the reversal of the deferred tax valuation allowance.