Westford, Mass -- Feb 8, 2001 -- GenRad, Inc. (NYSE: GEN), a global leader in electronics manufacturing productivity solutions, today reported fiscal 2000 earnings of $0.29 per share (diluted) reflecting an $0.11 charge in the fourth quarter. The charge was for inventory adjustments primarily as a result of the elimination of one product line, refocusing another, and a forecasted reduction in demand from Ford Motor Company for the Worldwide Diagnostic System (WDS).

The company also reported earnings for the fourth quarter ended December 30, 2000, of $0.14 per share (diluted) excluding unusual charges and gains and after the $0.11 charge. Results for the fourth quarter benefited from $7.1 million of software revenue that offset weakness due to global economic softening.

"As promised, during 2000 we fundamentally began to change the way GenRad conducts business. While in the short-term this stage-setting negatively impacts our financial performance, I am confident our actions are necessary for GenRad to perform with greater effectiveness in our global markets over the long term," stated Robert M. Dutkowsky, chairman, president and chief executive officer.

"Although our top line growth increased, our earnings are not satisfactory," said Mr. Dutkowsky. "Therefore, today we also announced an aggressive set of actions in line with our three-year model for achieving predictable and sustainable revenue and earnings."

Strategic initiatives announced, including a 10 percent headcount reduction

• A 10 percent reduction in workforce. Initial staff reductions will total more than 125, with more than half resulting from the outsourcing of printed circuit board manufacturing. The remainder will be administrative and support personnel from consolidated operations.
• Outsourcing all printed circuit board manufacturing.
• Consolidation of Nicolet Imaging Systems manufacturing and administrative functions, located in San Diego, into the Westford, Mass, facility.
• Consolidation of Sierra Research and Technology manufacturing and administrative functions into the Westford, Mass, facility.
• Acceleration of the integration of selected operations of Autodiagnos AB, Mastertech Automotive Ltd. and Altest into Diagnostic Solutions.

"These actions, coupled with our current investments in new product development and marketing, are enabling us to establish a solid foundation for the future. Upon this base, we expect to deliver improved cost of goods sold, improved gross margins and lowered operating expenses. Collectively, achieving these goals will improve our longer-term outlook for both operating income and overall profitability," Mr. Dutkowsky said.

2001 Outlook

GenRad is transitioning through a period of "opposing vectors," Mr. Dutkowsky explained. Growth is slowing for established GenRad products - such as WDS and Board Test - which have historically produced consistent revenue streams while emerging products - such as X-Ray, Functional Test and Software - promise rapid-growth but require significant additional funding and increased amounts of management attention.

"With changing customer demand, WDS and Board Test revenues and profits will decrease year over year," Mr. Dutkowsky explained. "However, GenRad's new product volumes and revenues will begin to ramp upward. While managing these transitions, we are also aggressively refocusing our market presence, realigning our resources to better match opportunity, and challenging management with new responsibilities and performance metrics," he added.

During 2001, the strategy's second year, GenRad expects investment in Board Test and WDS products to be relatively flat.

"In contrast," Mr. Dutkowky said, "we will invest heavily in our X-Ray technologies, Functional Test platforms and software development. We believe X-Ray Solutions could reasonably achieve 40 percent revenue increases during fiscal 2001. Our Functional Test Solutions could be at that level, or higher. Software, where revenues will be relatively flat during fiscal 2001 as our product development continues, will become increasingly poised to make a more meaningful contribution in fiscal 2002, the third year of our plan."

"Given this transition, and the current economic climate for technology, we expect revenues for fiscal year 2001 in the range of $340 million to $350 million, and earnings per share in the range of $0.25 to $0.30, excluding any restructuring charges. For the first quarter, however, we expect a loss," Mr. Dutkowsky said.

2000 Revenues increase

Total revenue increased 44 percent to $109.4 million for the fourth quarter 2000, compared to $76.0 million for the fourth quarter 1999. For fiscal 2000, revenue grew 13 percent to $341.7 million, compared to $302.0 million for fiscal 1999.

2000 Net income declines

Fourth quarter net income was $4.1 million excluding unusual gains, compared with $8.1 million for the same period last year on a full tax basis of 36 percent. For fiscal 2000, net income was $8.3 compared with $30.6 million for fiscal 1999, excluding reversal of a portion of the deferred tax valuation allowance and unusual charges and gains on a full tax basis of 36 percent.

2000 Orders increase

Orders during the fourth quarter improved to $101.7 million, from $78.9 million last year, an increase of 29 percent. For fiscal 2000, orders increased by 12 percent to $349.8 million from $311.2 million for fiscal 1999.

Conference Call Information

GenRad's fourth quarter earnings conference call will be held today, Thursday, February 8, at 10:30 a.m. EST, and can be accessed by dialing 800-230-1085 for domestic callers and 612-288-0329 for international callers.

The call will also be broadcast live over the Internet through Vcall and can be accessed at www.vcall.com and entering "GEN" in the search field. A digitized replay will be available from 4:00 p.m. EST on February 8 to midnight on February 15 and can be accessed by dialing (800) 475-6701 for domestic callers and (320) 365-3844 for international callers, and entering the code 561815.

About GenRad

GenRad Inc. [NYSE: GEN] is a global leader of electronics manufacturing productivity solutions for contract and original equipment manufacturers [OEM] of handheld and wireless devices, PCs and business servers, DSL and other broadband switching and routing technologies, and other devices integral to emerging Internet e-commerce markets. GenRad also applies its technologies to development of diagnostic solutions for the automotive and general transportation industry.

GenRad is comprised of four lines of business bringing to market integrated hardware, software and service solutions that empower always-on services and un-interruptable business applications:

• Process Solutions focuses on in-circuit test, x-ray test, and re-work solutions as well as plant and line management solutions for electronic product manufacturers.
• Functional Solutions focuses on functional test platforms for manufacturers of telecommunications, computers and automotive electronics.
• Diagnostic Solutions focuses on service bay and manufacturing solutions for transportation OEMs and independent service providers.
• Support and Services focuses on maintenance programs, on-site and remote support, programming services, and training to help customers optimize their hardware and software solutions.

Founded in 1915, GenRad employs approximately 1,400 people and maintains its 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 Annual Report on Form 10-K for the fiscal year ending January 1, 2000 and Quarterly Report on Form 10-Q for the quarter ended September 30, 2000 under the section "Management's Discussion and Analysis of Financial Conditions and Results of Operations - Factors That May Affect Future Results."

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