-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, H7U5ApL6moSvqB0q57b1nBSnzLczU5fwNywRje+CHJH+8q1wXGnTLOBXwa+P6ph3 WeBAITrZC3e3WmwQ6hMVaA== 0000950135-94-000626.txt : 19941104 0000950135-94-000626.hdr.sgml : 19941104 ACCESSION NUMBER: 0000950135-94-000626 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19941001 FILED AS OF DATE: 19941031 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GENRAD INC CENTRAL INDEX KEY: 0000040972 STANDARD INDUSTRIAL CLASSIFICATION: 3825 IRS NUMBER: 041360950 STATE OF INCORPORATION: MA FISCAL YEAR END: 0102 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08045 FILM NUMBER: 94556997 BUSINESS ADDRESS: STREET 1: 300 BAKER AVE CITY: CONCORD STATE: MA ZIP: 01510 BUSINESS PHONE: 5083694400 FORMER COMPANY: FORMER CONFORMED NAME: GENERAL RADIO CO DATE OF NAME CHANGE: 19760210 10-Q 1 FORM 10-Q FOR GENRAD, INC. 1 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 ________________ FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED OCTOBER 1, 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 Incorporation or Organization) (I.R.S. employer 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. 19,140,682 SHARES OF COMMON STOCK, $1 PAR VALUE, OUTSTANDING OCTOBER 20, 1994 ================================================================================ 2 GENRAD, INC. AND SUBSIDIARIES TABLE OF CONTENTS
PAGE ---- PART I. FINANCIAL INFORMATION: Consolidated Balance Sheet Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Consolidated Balance Sheet Liabilities and Stockholders' Equity . . . . . . . . . . . . . . . . . 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 . . . . . . . . 6 PART II. OTHER INFORMATION: Item 1 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Item 6 Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3 PART I. FINANCIAL INFORMATION GENRAD, INC. AND SUBSIDIARIES Consolidated Balance Sheet Assets (In thousands)
October 1, January 1, 1994 1994 ----------- ----------- (Unaudited) Current Assets: Cash and equivalents $ 12,285 $ 8,418 Accounts receivable, net 32,207 30,994 Inventories: Raw materials 8,017 6,480 Work in process 3,546 3,068 Finished goods 4,742 3,757 --------- --------- 16,305 13,305 --------- --------- Other current assets 4,100 2,846 --------- --------- Total current assets 64,897 55,563 --------- --------- Property, plant and equipment: Land 519 512 Buildings 25,133 25,591 Machinery and equipment 70,769 67,896 Service parts 18,117 16,640 --------- --------- 114,538 110,639 Less: Accumulated depreciation 99,066 94,566 --------- --------- 15,472 16,073 Other assets 1,441 1,380 Assets held for sale 2,000 4,100 --------- --------- $ 83,810 $ 77,116 ========= =========
The accompanying Notes are an integral part of these Consolidated Financial Statements. 1 4 GENRAD, INC. AND SUBSIDIARIES Consolidated Balance Sheet Liabilities and Stockholders' Equity (In thousands, except share amounts)
October 1, January 1, 1994 1994 ----------- ----------- (Unaudited) Current Liabilities: Notes payable to banks $ - $ 3,475 Trade accounts payable 7,926 5,437 Accrued liabilities 30,157 27,330 Accrued compensation and employee benefits 10,307 10,134 Accrued income taxes 980 - --------- --------- Total current liabilities 49,370 46,376 --------- --------- Long-term Liabilities: Long-term debt 48,901 48,851 Accrued pensions and benefits 14,121 12,985 Future lease costs of unused facilities 9,811 12,682 Other long-term liabilities 1,510 1,509 --------- --------- Total long-term liabilities 74,343 76,027 --------- --------- Stockholders' Equity (Deficit): Common stock, $1 par value Authorized 60,000,000 shares; issued and outstanding 19,141,000 and 18,530,000 19,141 18,530 Additional paid-in capital 105,834 105,177 Accumulated deficit (162,419) (166,492) Equity adjustment from foreign currency translation (2,459) (2,502) --------- --------- Total stockholders' equity (deficit) (39,903) (45,287) --------- --------- $ 83,810 $ 77,116 ========= =========
The accompanying Notes are an integral part of these Consolidated Financial Statements. 2 5 GENRAD, INC. AND SUBSIDIARIES Consolidated Statement of Operations (In thousands, except per share amounts) (Unaudited)
Three Months Ended Nine Months Ended ------------------ ----------------- October 1, October 2, October 1, October 2, 1994 1993 1994 1993 ---------- ---------- ---------- ---------- Revenues: Sales of products $ 29,303 $ 26,755 $ 87,194 $ 95,760 Sales of services 7,309 9,082 20,230 25,015 ---------- ---------- ---------- ---------- 36,612 35,837 107,424 120,775 ---------- ---------- ---------- ---------- Cost and expenses: Cost of products sold 14,693 15,056 46,244 55,633 Cost of services sold 4,326 5,978 10,411 14,535 ---------- ---------- ---------- ---------- 19,019 21,034 56,655 70,168 ---------- ---------- ---------- ---------- Gross margin 17,593 14,803 50,769 50,607 Operating expenses: Selling, general and administrative 12,015 12,556 32,960 37,404 Research and development 3,543 4,331 10,526 12,084 Reorganization and unusual charges - 41,876 - 41,876 ---------- ---------- ---------- ---------- 15,558 58,763 43,486 91,364 ---------- ---------- ---------- ---------- Operating income (loss) 2,035 (43,960) 7,283 (40,757) Other income (expense): Interest income 64 74 178 208 Interest expense (1,017) (1,069) (3,035) (3,281) Other-net 224 (279) 627 (307) ---------- ---------- ---------- ---------- (729) (1,274) (2,230) (3,380) ---------- ---------- ---------- ---------- Income (loss) before taxes 1,306 (45,234) 5,053 (44,137) Income tax provision (benefit) 250 (460) 980 100 ---------- ---------- ---------- ---------- Net income (loss) $ 1,056 $ (44,774) $ 4,073 $ (44,237) ========== ========== ========== ========== Net income (loss) per share $ 0.05 $ (2.46) $ 0.21 $ (2.45) Average common shares outstanding 19,852,000 18,170,000 19,784,000 18,049,000
The accompanying Notes are an integral part of these Consolidated Financial Statements. 3 6 GENRAD, INC. AND SUBSIDIARIES Condensed Consolidated Statement of Cash Flows (In thousands) (Unaudited)
Nine Months Ended ----------------- October 1, October 2, 1994 1993 ----------- ---------- Operating activities: Net income (loss) $ 4,073 $ (44,237) Adjustments to reconcile net income to net cash provided (used) by operating activities: Depreciation and amortization 4,645 15,610 Stock option compensation expense - 2,602 Loss on sale and write-off of assets 114 1,434 Reserve for future lease costs of unused facilities, net (4,140) 6,314 Increase (decrease) resulting from changes in operating assets and liabilities Accounts receivable (19) 5,048 Inventories (2,629) (2,092) Trade accounts payable 2,275 (2,814) Accrued income taxes 980 (61) Accrued liabilities 3,235 14,611 Accrued compensation and employee benefits 875 7,604 Prepaid expense (1,121) 2,396 Other, net 219 751 -------- --------- Net cash provided (used) by operating activities 8,507 7,166 -------- --------- Investing activities: Purchases of property, plant and equipment (3,668) (5,053) Sale of assets held for sale, net 1,736 - Proceeds from sale of property, plant and equipment 134 78 -------- --------- Net cash provided (used) by investing activities (1,798) (4,975) -------- --------- Financing activities: Net change in notes payable (4,029) (1,490) Proceeds from employee stock plan 1,268 833 -------- --------- Net cash provided (used) by financing activities (2,761) (657) -------- --------- Effects of exchange rates on cash (81) 291 -------- --------- Increase (decrease) in cash and equivalents 3,867 1,825 Cash and equivalents at beginning of period 8,418 8,621 -------- --------- Cash and equivalents at end of period $ 12,285 $ 10,446 ======== =========
The accompanying Notes are an integral part of these Consolidated Financial Statements. 4 7 GENRAD, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. ACCOUNTING COMMENTS Reference is made to the registrant's 1993 annual report to stockholders, which contains, at pages 15 through 37, financial statements and the notes thereto, including a summary of significant accounting policies. Revenue from equipment sales is generally recognized at the time the equipment is shipped or delivered based upon shipping terms. Service revenue is recognized over the contractual period for service contracts or as services are performed. 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 of any interim period are not necessarily indicative of the results for the entire year. 5 8 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND OPERATING RESULTS OPERATING RESULTS Incoming orders for the Company's products and services increased to $44.6 million for the three months and $122.8 million for the nine months ended October 1, 1994 from $29.9 million and $114.0 million, respectively, for the comparable periods in 1993. Included in orders received during the nine months ending October 2, 1993 were $11.9 million of orders related to product lines discontinued in the 1993 third quarter. No orders were received for discontinued product lines during the 1993 third quarter. Excluding orders for these discontinued product lines, 1994 year-to-date product and service orders increased reflecting increased demand for the Company's 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. Net product and service revenues were $36.6 million for the three months and $107.4 million for the nine months ended October 1, 1994 as compared to $35.8 million and $120.8 million, respectively, for the same periods in 1993. The reduction between comparable nine month periods stems in part from the Company's discontinuance of certain product lines during the 1993 third quarter. Discontinued product lines contributed $3.8 million for the three months and $12.0 million in revenues for the nine months ended October 2, 1993. In addition, the three months and nine months ended October 2, 1993 included $3.9 million and $24.0 million, respectively, in increased revenues derived from contracts with Ford of Europe and the U.S. Marine Corps. Revenues derived from the international market accounted for 54% and 59% of revenues for the three and nine months ended October 1, 1994, as compared to 57% and 55% for the similar periods in 1993. Product and service revenues derived from the international market are subject to the risks of currency fluctuations. Backlog at the end of the 1994 third quarter was $34.4 million as compared to $19.0 million at year-end 1993 and $28.6 million at the end of the 1993 third quarter. The 1993 third quarter backlog included $3.4 million related to the discontinued product lines. Approximately 50% of the 1994 third quarter ending backlog is scheduled for shipment prior to the end of 1994. Gross margin as a percent of revenues increased to 48% and 47%, respectively, for the three and nine months ended October 1, 1994 from 41% and 42% in the comparable periods in 1993. Gross margin percentages increased due to changes in product mix and as a result of a relative decrease in revenue levels of automotive electronics diagnostic systems and revenues under the U.S. Marine Corps contract which have overall lower margins than the Company's electronic manufacturing test products. In addition, margins have improved as a percentage of revenues due to cost reductions achieved as a result of the 1993 restructuring. The margin improvements noted above have been partially offset, however, by the adverse effects of competitive pricing pressures. Selling, research and development and general and administrative expenses decreased for the three and nine month periods of 1994 to $15.6 million and $43.5 million, respectively, from $16.9 million and $49.5 million in the comparable periods in 1993. The decline in expenses is directly 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. Exclusive of the benefits of the restructuring, the Company's operating expenses increased as a result of the Company's establishment of two additional sales offices to service its automotive customers, from increased costs associated with sales and operating performance incentive programs and from severance costs associated with various personnel changes. 6 9 During the 1993 third quarter, the Company developed and began the implementation of a worldwide restructuring program. The results for the three and nine month periods ended October 1, 1994 reflect the benefits of a company-wide reduction in force and reflect cash outflows for severance pay of approximately $1.0 million and $3.4 million, respectively, related to the third quarter 1993 restructuring. Asset write-offs resulted in $0.7 million of depreciation savings in the three months and $2.1 million in the nine months ended October 1, 1994. Excess facilities reserves relate primarily to lease losses for vacated or excess domestic and European facilities. Net cash outflows related to excess facilities were $0.6 million and $1.8 million for the three months and nine months ended October 1, 1994, respectively, related to the third quarter 1993 restructuring and $0.8 and $2.3 million, respectively, related to earlier restructurings. During the 1994 third quarter, the Company received net cash of $1.7 million related to the sale of a facility previously held for sale as part of the 1993 product line discontinuances. Operating expense reductions for discontinued product lines related to the third quarter 1993 restructuring totaled $2.9 million for the three months and $8.8 million for the nine months ended October 1, 1994 in relation to the 1993 periods. 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. During the 1994 first quarter, the Company increased its estimate of legal costs and recorded such increase in General & Administrative Expenses. In management's opinion, current reserves are adequate to cover the expected outcome of the dispute. Other net income and expense includes foreign currency exchange gains and losses, the cost of hedging and certain miscellaneous expenses. During the 1994 periods, favorable foreign currency fluctuations in relation to the Company's hedged position resulted in exchange gains which more than offset the cost of hedging and other expenses. 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. As a result of the above, the Company reported net income of $1,056,000 for the three months and $4,073,000 for the nine months ended October 1, 1994 as compared to a net loss of ($44,774,000) and ($44,237,000), respectively, for the similar periods last year. LIQUIDITY AND SOURCES OF CAPITAL Cash and equivalents increased by $3.9 million for the nine months ended October 1, 1994. The increase reflects improved operating results which generated $8.5 million in cash, proceeds from employee stock purchases which generated $1.3 million in cash and the sale of assets held for sale which generated $1.7 million in cash, partially offset by the Company's investment in research and development and productive equipment of $3.7 million and the repayment of short-term borrowings of $4.0 million. The Company is a party to long-term leases related to closed offices and vacated domestic and European facilities provided for in the Company's 1993 and prior restructurings. During the nine months ended October 1, 1994, cash of approximately $4.1 million was used to fund these arrangements. Additional 1994 funding of approximately $1.2 million is projected in the fourth quarter of 1994. Such amounts do not include any benefit or additional cash outlays that may result from surrendering or sub-leasing any of the facilities since it is uncertain as to whether any such arrangements can be consummated during 1994. During the nine months ended October 1, 1994, cash of approximately $1.3 million was used to fund severance and other items provided in the 1993 restructuring. 7 10 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 the third quarter of 1994. The total available borrowings consist of a $12 million U.S. credit facility and a $2.2 million U.K. credit facility. Borrowings under the U.S. credit facility are secured by all of the Company's domestic assets and are subject to compliance tests and restrictions. Under these terms, as of October 1, 1994, the Company had an available borrowing capacity of $12 million under the U.S. credit facility. On October 20, 1994, the Company amended and extended its U.S. credit facility to December 31, 1996. The amendment provides in general for more favorable terms, including pricing and available borrowing capacity. Borrowings under the U.K. credit facility are secured by all of the Company's U.K. assets and are payable on demand. During July 1994, the U.K. credit facility was reduced from $3.7 million to $2.2 million to reflect a reduction in available collateral which resulted from the Company's sale of its facility in Fareham, England. The Fareham facility previously housed one of the discontinued product lines. 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 October 1, 1994 the Company had forward exchange contracts to buy $10.3 million and sell $10.3 million in foreign currencies, all of which were European denominated. 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 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 1994. However, if revenues or margins decrease significantly, thereby reducing 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. 8 11 PART II. OTHER INFORMATION Item 1. Legal Proceedings The Company is a named defendant in a patent infringement litigation matter with the Hewlett-Packard Company ("H-P"). The information set forth in Part 1, Item 3 of its Form 10-K for the fiscal year ended January 1, 1994 is incorporated herein by reference. On June 2, 1994, H-P filed a motion for injunctive relief. The Company has opposed the motion and is awaiting a decision. If such motion is granted, the Company expects that it will suffer a material adverse impact to its operations. Item 6. Exhibits and Reports on Form 8-K 10.1 (a) Amendment Number Three to General Loan and Security Agreement dated October 20, 1994 from Foothill Capital Corporation and the Company amending and extending the credit facility. (b) There were no reports on Form 8-K filed during the quarter ended October 1, 1994. 9 12 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/ ROBERT C. ALDWORTH ---------------------- Robert C. Aldworth CHIEF FINANCIAL OFFICER Date: October 31, 1994 10 EX-10.1(A) 2 AMEND #3 TO GENERAL LOAN & SECURITY AGREEMENT 1 EXHIBIT 10.1(a) AMENDMENT NUMBER THREE TO GENERAL LOAN AND SECURITY AGREEMENT THIS AMENDMENT NUMBER THREE TO GENERAL LOAN AND SECURITY AGREEMENT (this "Amendment"), dated as of October 20, 1994, 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: RECITALS A. Borrower and Foothill are parties to that certain General Loan and Security Agreement, dated as of June 23, 1992, as amended by that certain Amendment Number One to General Loan and Security Agreement, dated as of October 14, 1992, and as further amended by that certain Amendment Number Two to General Loan and Security Agreement, dated November 24, 1993 (collectively, the "Loan Agreement"), pursuant to which Foothill has extended certain revolving loans and letter of credit accommodations to Borrower. B. The Loan Agreement is currently scheduled to terminate on January 1, 1995. Borrower and Foothill wish to extend the term of the Loan Agreement until the second anniversary of the date of this Amendment on the terms and conditions set forth below. NOW, THEREFORE, the parties hereby agree as follows: 1. Defined Terms. Any and all initially capitalized terms set forth in this Amendment without definition shall have the respective meanings assigned thereto in the Loan Agreement. 2. Additional Definition. Section 1.1 of the Loan Agreement is hereby amended and supplemented by adding therein, in alphabetical order, a new definition of "Third Amendment" as follows: "'Third Amendment' means that certain Amendment Number Three to General Loan and Security Agreement, dated as of October 20, 1994, by and between Foothill and Borrower." 3. Amendment to Definition of "Real Property". Section 1.1 is further amended by adding the following proviso to the end of the definition of "Real Property": 2 "; provided, however, Borrower's real property located in Bolton, Massachusetts shall be excluded from this definition of "Real Property" and shall cease to be "Real Property" for all purposes under this Agreement following its sale by Borrower. 4. Increase in Advance Rates for Eligible Accounts and Discretionary Foreign Accounts. Section 2.1(a) of the Loan Agreement is hereby deleted in its entirety and a new Section 2.1(a) substituted therefor as follows: "(a) an amount equal to the sum of: (i) eighty-five percent (85%) of the amount of Eligible Accounts and (ii) sixty percent (60%) of the amount of Discretionary Foreign Accounts; plus" 5. Increase in Inventory/Fixed Asset Subline. Section 2.1(b) of the Loan Agreement is hereby deleted in its entirety and a new Section 2.1(b) substituted therefor as follows: "(b) an amount equal to the lesser of: (i) seventy-five percent (75%) of the outstanding balance of advances of Eligible Accounts and (ii) Four Million Five Hundred Thousand Dollars ($4,500,000) less One Hundred Thousand Dollars ($100,000) on the first day of each month commencing on the first day of the first month after the date on the Third Amendment hereto, and, further, less the value (as determined by Foothill in its reasonable discretion) of any Equipment sold or otherwise disposed of by Borrower, destroyed, obsolete or no longer actively used for its original purpose." 6. Reduction of Interest Rate. Section 2.5(a) of the Loan Agreement is hereby amended by deleting therefrom the reference to "three and one-half (3 1/2) percentage points above the Reference Rate" and by adding therein a reference therein to "two and one-half (2 1/2) percentage points above the Reference Rate." 7. Reduction of Number of Clearance Days. Section 2.6 of the Loan Agreement is hereby amended by deleting the reference to "three (3) Business Day(s)," from both places in which it appears within the second sentence of such Section, and by substituting therefor a reference to "two (2) calendar days." 8. Reduction of Loan Servicing Fee. Section 2.8(e) of the Loan Agreement is hereby amended by deleting therefrom the reference to "Two Thousand Five Hundred Dollars ($2,500) per 2 3 month" and by substituting therefor a reference to "Two Thousand Dollars ($2,000) per month." 9. Amendment to Initial Facility Fee Provision. Section 2.8(a) of the Loan Agreement is hereby deleted in its entirety and a new Section 2.8(a) substituted therefor as follows: "(a) Initial Facility Fee. Concurrently with the execution and delivery of the Third Amendment hereto, a fee (the "Initial Facility Fee") in the amount of One Hundred Twenty Thousand Dollars ($120,000). The Initial Facility Fee shall be fully earned at the time of payment and non-refundable;" 10. Reduction of Annual Facility Fee. Section 2.8(c) of the Loan Agreement is hereby amended by deleting therefrom the reference to "one percent (1%) of the Maximum Amount" and by substituting therefor a reference to "one-half percent (1/2%) of the Maximum Amount". 11. Increase in Field Examination Fee. Section 2.8(d) of the Loan Agreement is hereby amended by deleting therefrom the reference to "Five Hundred Dollars ($500), appearing on the first line thereof, and by substituting therefor a reference to "Six Hundred Dollars ($600) per day". 12. Reduction of Repurchase Fee. Section 2.8(f) of the Loan Agreement is hereby deleted in its entirety and a new Section 2.8(f) substituted therefor as follows: "(f) Repurchase Fee. Immediately upon purchase, a sum equal to one percent (1.0%) of the face amount of all Subordinated Debentures repurchased; provided, however, Borrower shall not be obligated to pay Foothill any such repurchase fee either (i) in connection with any exchange by Borrower of Subordinated Debentures solely for other debt equity securities of Borrower, or (ii) if at the time of and after giving effect to any such repurchase there are no Obligations outstanding hereunder." 13. Extension of Term of the Loan Agreement. Section 3.1 of the Loan Agreement is hereby amended by deleting therefrom the first sentence of such Section in its entirety and by substituting therefor a new first sentence as follows: "This Agreement shall become effective upon acceptance of the Third Amendment by Foothill and shall continue in full force and effect until December 31, 1996 (the "Renewal Date") and shall be automatically renewed for 3 4 successive two (2) year periods thereafter, unless sooner terminated pursuant to the terms hereof." 14. Amendment to Collateral Reports Provision. Section 6.2 of the Loan Agreement is hereby amended and supplemented by adding the following sentences to the end of such Section: "Notwithstanding the foregoing, at any time that there are no outstanding Obligations hereunder (a "Zero Balance Period"), Borrower's sole collateral reporting requirements under this Section 6.2 shall be to deliver to Foothill no later than the tenth (10th) day of each month during the term of this Agreement, (i) a detailed aging, by total, of the Accounts, (ii) a summary aging, by vendor, of all accounts payable and of any book overdraft, and (iii) a borrowing base certificate, in form and detail acceptable to Foothill in its reasonable discretion. Unless it complies with the prior notice requirements described below, Borrower may not request advances during any Zero Balance Period. Any Obligations which become outstanding for any reason during a Zero Balance Period shall be deemed to be Overadvances and shall be immediately payable to Foothill, in cash. Borrower may resume borrowing hereunder following a Zero Balance Period only after providing Foothill with prior written notice, of not less than fifteen (15) Business Days, of Borrower's intention to resume borrowing, which written notice shall be accompanied by up-to-date versions of each of the collateral reports normally required under this Section 6.2 (i.e., when a Zero Balance Period is not in effect). Following the termination of a Zero Balance Period, Borrower shall comply with its original (i.e., non-Zero Balance Period) collateral reporting requirements set forth in this Section 6.2." 15. Reaffirmation of Loan Agreement; No Default; No Defenses, Etc. Borrower hereby reaffirms the Loan Agreement and its obligations to Foothill thereunder. Borrower represents and warrants to Foothill that there are no outstanding Events of Default under the Loan Agreement. Borrower acknowledges that Foothill has fully complied with its obligations under the Loan Agreement and that Borrower has no defenses to the validity, enforceability or binding effect of the Loan Agreement or of any of the amendments thereto. 4 5 16. Effectiveness of Amendment. This Amendment shall become effective upon (i) the delivery by Borrower to Foothill of this Amendment duly executed by an authorized officer of Borrower, and (ii) the delivery of the attached Acknowledgement of Guarantor, duly executed by an authorized officer of GenRad Holdings, Limited. 17. Conflicts; Continued Effectiveness of Loan Agreement. In the event of a conflict between the terms and provisions of this Amendment and the terms and provisions of the Loan Agreement, the terms and provisions of this Amendment shall govern. In all other respects, the Loan Agreement, as amended hereby, shall remain in full force and effect. IN WITNESS WHEREOF, the parties hereto have executed this Amendment by their respective duly authorized officers as of the date first above written. FOOTHILL CAPITAL CORPORATION, a California corporation By /s/ Beth A Pease ---------------------------- Title: Assistant Vice President ------------------------ GENRAD, INC., a Massachusetts corporation By /s/ Robert C. Aldworth ---------------------------- Title: Vice President ------------------------ 5 6 ACKNOWLEDGEMENT OF GUARANTOR GenRad Holdings, Limited, a company registered in England (the "Guarantor"), has reviewed, and is familiar with, the foregoing Third Amendment to General Loan and Security Agreement, and hereby acknowledges and agrees as follows: (i) that its obligations to Foothill under that certain Continuing Guaranty, dated June 23, 1992 (the "Guaranty"), and under that certain Stock Pledge Agreement, dated as of June 23, 1992, by and between the Guarantor and Foothill (the "Stock Pledge Agreement"), shall remain in full force and effect notwithstanding Borrower's execution of the Third Amendment; (ii) that although Foothill has informed the Guarantor of the matter set forth above, and the Guarantor has acknowledged same, the Guarantor understands and agrees that Foothill has no duty under the Loan and Security Agreement, as amended, under the Guaranty, under the Stock Pledge Agreement, or under any other agreement with the Guarantor, to notify it or to seek such an acknowledgement, and nothing contained herein is intended to, or shall create such a duty as to any advances or transactions hereafter; and (iii) that the Guarantor reaffirms the Guaranty and the Stock Pledge Agreement. GENRAD HOLDINGS, LIMITED. a company registered in England By /s/ Robert C. Aldworth ---------------------------- Title: Director ------------------------ Dated: As of October 20, 1994. 6 EX-27 3 FINANCIAL DATA SCHEDULE FOR GENRAD, INC. FORM 10-Q
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF GENRAD, INC. FOR THE QUARTER ENDED OCTOBER 1, 1994, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1 U.S. DOLLARS 9-MOS JAN-01-1994 JAN-02-1994 OCT-01-1994 1 12,285 0 33,705 1,498 16,305 64,897 114,538 99,066 83,810 49,370 48,901 19,141 0 0 (59,044) 83,810 107,424 107,424 56,655 56,655 42,681 0 3,035 5,053 980 4,073 0 0 0 4,073 .21 .21
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