On track to meet full-year EPS objective Orders up 16 % year-to-year

WESTFORD, MA -- October 19, 2000 -- GenRad [NYSE: GEN] today reported a third quarter decline in revenue to $78.6 million resulting from anticipated weakness of its Diagnostics business and manufacturing delays associated with implementation of an Enterprise Resource Planning (ERP) system. The company stated, however, that before a reversal of a portion of the deferred tax valuation allowance and before unusual charges and gains, it continues to anticipate diluted earnings per share of $0.40 for the year.

Revenue for the third quarter was down 28% from the $109.2 million reported for the same period in 1999. "In spite of the extremely difficult year-to-year comparisons for Diagnostics Solutions, and the impact of our ERP implementation, our third quarter proved to be robust with orders of $89.1 million, up 16% over a year ago," Robert M. Dutkowsky, chairman, president, and chief executive officer, said. "Given our significant backlog, we expect to achieve our previously announced year-end earnings objective of 40 cents per share."

Strong Q3 demand

The company's backlog at the end of the quarter stood at $49.9 million, a 78% increase over the $27.9 million for the same period last year. Due to exceptionally strong demand, the Process Solutions business unit, which typically enters the quarter with minimal backlog, accounted for 38%, or $18.9 million, of the total backlog.

"Our core businesses, in which we are increasing our investments, are solid -- as exhibited by the strong third-quarter demand --- and promise to get even stronger," stated Mr. Dutkowsky. "In fact, we clearly see revenue growth in excess of 30% for the fourth quarter over the comparable year-ago period."

"The sweeping reorganization that we announced in Q3 is in place and delivering results. Our customer community is starting to realize the true advantage emerging from the new GenRad," he noted.

Net Income

Net income for the third quarter was $0.3 million, versus $12.7 million for the year-ago quarter on a full tax basis of 36 % for both periods. Diluted earnings per share was $0.01 for the third quarter compared with $0.43 a year ago, both on a full tax basis of 36 %.

"It was clear when we reset expectations from 12,000 to 6,000 WDS units back in April that year-to-year comparisons for our Diagnostic Solutions unit would be difficult at best," Mr. Dutkowsky explained. "Q3 '99 was the biggest quarter ever for WDS shipments and revenues. Despite the appearance of the numbers for Q3, 2000, this product line is on-track to achieve our revised forecast."

"Furthermore, as our performance and our backlog clearly demonstrate, our Process Solutions business performance was severely affected during the quarter by the installation of our ERP system," Mr. Dutkowsky said. "This investment in the modernization of GenRad is a critical step for our company, and consistent with our plan to bring GenRad to the next level of consistency and performance."

Nine-Month Results

For the first nine months of fiscal 2000, GenRad reported orders of $248.1 million, an increase of 7 % over the same period in 1999. The nine-month revenue of $232.3 million represents an increase of 3 % over the first nine months of fiscal 1999.

Net income for the first nine months of 2000, before a reversal of a portion of the deferred tax valuation allowance and before unusual charges and gains, was $4.2 million versus $22.4 million for the comparable year-ago period on a full tax basis of 36 %. Diluted earnings per share was $0.15 for the nine months, compared with $0.76 a year ago on a full tax basis of 36 %.

After including a reversal of a portion of the deferred tax valuation allowance and unusual charges and gains, net income for the first nine months of 2000 was $17.3 million, or $0.61 per share on a diluted basis. For the comparable year-ago period, the company reported net income on a full tax basis of 36 % and--including a reversal of a portion of the deferred tax valuation allowance--of $26.9 million, equal to $0.91 per share on a diluted basis.

About GenRad

GenRad Inc. [NYSE: GEN] develops, manufactures and markets advanced performance-assurance technologies. GenRad's primary global markets for OEM and contract manufacturers include computers, advanced telecommunications for e-commerce and Internet services, and diagnostic systems for the transportation/automotive industry.

Founded in 1915, GenRad employs 1,600 people and maintains worldwide headquarters in Westford, MA, USA. The company's Web address is http://www.genrad.com.

Safe Harbor Statement

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 and form 10-Q for the quarter ended July 1, 2000 under the section "Management's Discussion and Analysis of Financial Conditions and Results of Operations - Factors That May Affect Future Results."

NOTE:
GenRad's third quarter earnings conference call will be held today, Thursday, October 19, at 9:30 a.m., hosted by GenRad Chairman and CEO, Robert M. Dutkowsky. The conference call will be audio Web cast at the following address: http://www.vcall.com/NASApp/Vcall/EventPage?ID=27920.

Contact: Richard M. Miles
Vice President, Global Communications
GenRad, Inc.
Phone: (978) 589-7144
milesr@genrad.com