================================================================================

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended January 3, 1998 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)

7 Technology Park Drive, Westford, Massachusetts 01886-0033
- ------------------------------------------------ ----------
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (978) 589-7000

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
Common Stock, $1 par value New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: NONE

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 and (2) has been subject to such filing
requirements for the past 90 days.

Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

The aggregate market value of shares of Common Stock held by non-affiliates
of the registrant as of February 13, 1998 was $816,176,306. 27,376,983 shares of
the Common Stock of GenRad, Inc., $1 par value, were outstanding on February 13,
1998.

DOCUMENTS INCORPORATED BY REFERENCE

1. Portions of the Proxy Statement of GenRad, Inc. for the Annual Meeting of
Shareholders to be held on May 14,1998 (the "1998 Proxy Statement"), which
will be filed with the Securities and Exchange Commission within 120 days
after the close of the Company's fiscal year ended January 3, 1998, are
incorporated by reference into Part III.

2. Portions of the Annual Report to Stockholders for the year ended January 3,
1998 (the "1997 Annual Report"), are incorporated by reference into Part II
and Part IV.

Exhibit Index on page 6

================================================================================

PART I

Item 1. Business

GenRad, Inc. (the "Company" or "GenRad") commenced operations as a corporation
in June 1915. The Company is a leading worldwide supplier of integrated test,
measurement and diagnostic solutions for the manufacture and maintenance of
electronic products. The Company offers products and services in two core
business areas: Electronic Manufacturing Systems and Advanced Diagnostic
Solutions.

The following table sets forth for the fiscal years ended January 3, 1998
("fiscal 1997"), December 28, 1996 ("fiscal 1996") and December 30, 1995
("fiscal 1995") the percentage of net revenues represented by its two core
businesses.

1997 1996 1995
---- ---- ----

(1) Electronic Manufacturing Systems 80% 77% 79%
(2) Advanced Diagnostic Solutions 20% 23% 21%

(1) ELECTRONIC MANUFACTURING SYSTEMS
GenRad's electronic manufacturing systems is comprised of the following
products, each of which is developed and manufactured at the Company's Westford,
Massachusetts facility.

Board Test
The board test product line consists of the GR228X product family and is used to
test printed-circuit boards. Printed-circuit boards are used in virtually all
electronic products during their manufacturing process. These products sell for
prices ranging from $50,000 to over $900,000.

GENEVA(TM) Test and Measurement Systems
GenRad's Extended VXI Architecture ("GENEVA") is a combined hardware and
software test and measurement system that uses the industry standard VXIbus for
instrument control. GenRad's extension adds a scanner bus above the instruments
to solve the signal interconnect problems not addressed by VXI. The Company has
a patent for this VXIScan (TM) architectural extension. The GENEVA architecture
is capable of addressing the needs of a wide range of test and measurement
system applications, especially in the communication industry. These systems
sell for prices ranging from $100,000 to $500,000.

GR Vision(TM) Systems
GR Vision Systems are automatic optical inspection solutions that monitor the
performance of electronic printed-circuit board placement equipment. GR Vision
Systems point users to the root cause of problems that occur during the
assembly of electronic products. System prices range from $125,000 to $170,000.

Mitron
This product group was formed as a result of the acquisition of Mitron
Corporation on June 20, 1996. Mitron provides productivity and quality software
for computer-assisted PCB manufacturing. Mitron's software accelerates product
introductions, optimizes throughput, and improves process management from design
to manufacturing. Software packages range in price from $12,000 to $1,000,000.

Viper Electrical
Viper Electrical Process Inspection Systems are designed to integrate
manufacturing processes to provide immediate, closed-loop feedback concerning
process faults to help meet production goals in a timely and cost-effective
manner. Viper Electrical accomplishes this with virtually no programming costs,
while providing reliable, comprehensive inspection coverage and consistency
between systems. Additionally, Viper Electrical's PDU and Vacuum configurations
are designed for ease of in-line integration. System prices range from $30,000
to $70,000.

Integrated Customer Services
This product group was formed as a result of the acquisition of Test Technology
Associates, Inc. on January 16, 1996 and Testware, Inc. on November 8, 1996. ICS
provides programming services, fixturing and on-site training and support to
owners of in-circuit and functional testers throughout the United States and
Europe. Fixtures are custom designed and range in price between $7,500 to
$90,000, including programming services.

(2) ADVANCED DIAGNOSTIC SOLUTIONS ("ADS")
ADS, headquartered in Manchester, England, is a leading supplier of diagnostic
information solutions, specializing in complex electrical and electronic systems
for automotive, aerospace, agriculture and related industries. ADS also provides
worldwide service support for all of its products. Pricing of products,
including software, varies based on customer specifications.

PRINCIPAL MARKETS

GenRad's principal customers are manufacturers in the following industries:
transportation, contract manufacturing, computer/peripherals and communications.
Sales to Ford amounted to 10% of consolidated revenues in fiscal 1997.

SALES, SERVICE AND DISTRIBUTION

GenRad sells and services its products primarily through its own sales and
service organizations consisting of sales offices and service centers located in
the United States, Mexico, the United Kingdom, Germany, France, Switzerland,
Italy, Singapore and Malaysia. Sales and service elsewhere is provided through
independent representatives to whom GenRad provides technical and administrative
assistance.

SUPPLIERS

Materials and components used by GenRad in manufacturing its products are
purchased from various single sources, primarily domestic companies. GenRad's
purchasing strategy is to develop supportive supplier partnerships to leverage
core competencies by driving material through a preferred supplier base
committed to excellence through continuous improvement. The Company has also
developed alternative sources of supply for most materials and components;
however, certain microcomputers, microprocessors, general-purpose digital
computers and custom semiconductor devices are only available from a limited
number of suppliers.

FOREIGN OPERATIONS

GenRad's operations abroad consist of selling, marketing, distributing and
servicing products and providing other types of customer support services such
as software development and manufacturing of diagnostic systems. GenRad is
subject to the usual risks of international trade, including unfavorable
economic conditions, political instability, restrictive trade policies, controls
on funds transfers and foreign currency fluctuations.

During fiscal 1997, sales in foreign countries were $123,729,000, or 52% of
GenRad's total sales, compared with $101,136,000, or 55%, during fiscal
1996, and $92,109,000, or 58%, during fiscal 1995. Additional information
regarding GenRad's foreign operations is contained in the Consolidated Financial
Statements incorporated in Item 8 of this report.

BACKLOG

Backlog at the end of fiscal 1997 was approximately $24,937,000 as compared to
approximately $24,662,000 at the end of fiscal 1996. Most orders are filled
within three months of receipt. The Company believes that a substantial portion
of the fiscal 1997 backlog will be recognized as revenue during the first
quarter of its 1998 fiscal year. Although orders are subject to cancellation by
purchasers, GenRad's experience has been that losses resulting from
cancellations are not material.

COMPETITIVE CONDITIONS

Competition, from both U.S. and foreign competitors, is strong and active. Some
of these competitors are substantially larger companies with greater resources.
For example, the Company competes with Hewlett-Packard and Teradyne in its
Electronic Manufacturing Systems business and with Hewlett-Packard and Siemens
in its ADS business. Typically, GenRad meets competition by carefully selecting
its markets and by developing its products to meet the needs of each group of
customers. Primary competitive factors are product performance, customer-
specific applications engineering, customer support services and pricing. The
electronic manufacturing systems market is subject to rapid change, and success
is dependent on the development of new technologies and products. A key
competitive advantage for GenRad is the Company's broad and integrated product
family and its extensive software capabilities.

RESEARCH AND DEVELOPMENT

GenRad's expenditures for the development of new products and services, and the
improvement of existing products and services, were $19,902,000 in fiscal 1997,
$16,491,000 in fiscal 1996 and $15,717,000 in fiscal 1995. The expenditures were
primarily for staffing and related expenses for the development and redesign of
electronic manufacturing systems and advanced diagnostic solutions and software
products.

PATENTS AND TRADEMARKS

GenRad seeks patents in the United States and appropriate foreign countries for
significant technological inventions. GenRad also owns patents, copyrights,
trademarks and proprietary information, some of which are considered to be
valuable assets. In the opinion of management, no individual patent, copyright,
trademark or proprietary information is material to the business as a whole.

ENVIRONMENT

GenRad's manufacturing facilities are subject to numerous laws and regulations
designed to protect the environment. GenRad does not anticipate that compliance
with such laws or regulations presently in effect will adversely affect its
capital expenditures, earnings or competitive position. GenRad does not expect
to make any material expenditures for environmental control facilities in the
current fiscal year.

EMPLOYEES

GenRad had 1,388 employees, including contract employees, on January 3, 1998 and
1,239 employees on December 28, 1996. None of GenRad's employees are covered by
collective bargaining agreements, and GenRad believes relations with its
employees are good.

EXECUTIVE OFFICERS OF GENRAD

Name Age Office
---- --- ------

James F. Lyons 63 President, Chief Executive Officer and Director
Kevin R. Cloutier 35 Vice President, General Manager, Electronic Manufacturing Systems
Paul Geere 43 Vice President, Managing Director, Advanced Diagnostic Solutions
Lori B. Hannay 41 Vice President, Worldwide Human Resources
Sarah H. Lucas 38 Vice President, Chief Strategic Officer
Paul Pronsky, Jr. 56 Vice President, Chief Financial Officer and Secretary
Michael W. Schraeder 41 Vice President, Worldwide Sales and Service
Walter A. Shephard 43 Treasurer and Clerk

All officers are elected by the Board of Directors (the "Directors"). Elected
officers hold office until the first meeting of the Directors following the
Annual Meeting of Shareholders (the "Annual Meeting") and thereafter until a
successor is chosen and qualified. There are no family relationships among the
officers and/or directors.

James F. Lyons joined the Company as President, Chief Executive Officer and a
Director in July 1993. From January 1992 until July 1993, Mr. Lyons served as
President and Chief Executive Officer of Harry Gray Associates, a global
investment and management consulting organization specializing in acquisitions
and leveraged buyouts.

Kevin R. Cloutier was elected Vice President, General Manager, Electronic
Manufacturing Systems in November 1996. Mr. Cloutier was employed by the
Company for 14 years. From September 1995 to November 1996, he served as General
Manager of GenRad's Board Test Division. From December 1994 to September 1995,
Mr. Cloutier held the position of Southern Regional Sales Manager. From April
1993 to November 1994, Mr. Cloutier served as Executive Sales Engineer. From
January 1992 to March 1993, Mr. Cloutier held the position of Senior Account
Manager. Mr. Cloutier resigned from the Company on February 23, 1998.

Paul Geere was elected Vice President, Managing Director, Advanced Diagnostic
Solutions in May 1996. From September 1995 to May 1996, Mr. Geere was Managing
Director of GenRad's Advanced Diagnostic Solutions division in Manchester,
England. From January 1995 to September 1995, Mr. Geere held the position of
GenRad's Director of Consultative Selling. From November 1989 to January 1995,
Mr. Geere worked in Management Consultancy for Coopers & Lybrand in its London
office.

Lori B. Hannay was elected Vice President, Worldwide Human Resources in August
1997. From November 1996 to August 1997, Ms. Hannay was GenRad's Vice President,
Human Resources. From November 1994 to November 1996, Ms. Hannay served as the
Company's Director of Compensation and Benefits. From July 1990 to November
1994, Ms. Hannay was Corporate Secretary and Vice President of Human Resources
for First Inter-Bancorp.

Sarah H. Lucas was elected Vice President, Chief Strategic Officer in October
1995. From January 1994 to October 1995, Ms. Lucas was GenRad's Vice President,
Strategic Planning and Analysis. From July 1990 to January 1994, Ms. Lucas
served as an Associate Consultant within McKinsey & Company, a management
consulting firm.

Paul Pronsky, Jr. was elected Vice President, Chief Financial Officer and
Secretary in December 1996. From April 1992 to November 1996, Mr. Pronsky was a
Partner in NorthEast Ventures, a business consulting and venture investment
management organization.

Michael W. Schraeder was elected Vice President, Worldwide Sales and Service in
November 1996. Mr. Schraeder has been employed in various sales positions with
the Company for 18 years. From March 1995 to November 1996, Mr. Schraeder served
as Vice President, Sales and Service for the Americas. From April 1992 to
February 1995, Mr. Schraeder held the position of Eastern Regional Sales
Manager.

Walter A. Shephard was elected Treasurer and Clerk in February 1991. In August
1997, Mr. Shephard was given the additional responsibility of Vice President,
Investor Relations. Mr. Shephard has been employed by the Company for 14 years.

Item 2. Properties

On July 26, 1996, the Company entered into a 15-year lease for two adjoining
properties located in Westford, Massachusetts. These leased facilities include
130,000 square feet of prime office space used for the Company's corporate
headquarters, research and development and general business offices and 100,000
square feet used for manufacturing for the EMS business unit.

In October 1996, the Company's European subsidiary entered into a 15-year lease
commitment at the Orion Business Park located in Manchester, England. The
facility, encompassing 75,000 square feet, is used for administrative office
space as well as for manufacturing for the ADS business unit.

In addition, GenRad engages in research, design, manufacturing or marketing
operations in leased facilities in eight states in the United States and in
seven foreign countries. In the opinion of management, all of GenRad's
properties are well maintained and the current facilities are adequate for its
present needs.

Item 3. Legal Proceedings

None.

Item 4. Submission of Matters to a Vote of Security Holders

Not applicable.

PART II

Item 5. Market for Registrants' Common Stock and Related Shareholder Matters

The information set forth in Exhibit 13, under the captions "Supplementary
Information" and "Investors' Reference Guide", which is the same as the
information set forth on pages 38 and 39 of GenRad's 1997 Annual Report, is
incorporated by reference.

During fiscal 1996, the Company completed the acquisition of two companies which
involved the issuance of shares of its Common Stock. On June 20, 1996 the
Company acquired by merger all of the outstanding shares of stock of Mitron
Corporation in exchange for 1,196,000 shares of the Company's Common Stock which
were issued to the stockholders of Mitron Corporation. On November 8, 1996 the
Company acquired by merger all of the outstanding shares of stock of Testware,
Inc. in exchange for 80,000 shares of the Company's Common Stock which were
issued to the stockholders of Testware, Inc. The issuance of the Company's
Common Stock in both transactions was exempt from the registration requirements
of the Securities Act of 1933, as amended, pursuant to Regulation D thereunder.
The Company relied in part on representations of the stockholders of the
acquired companies in determining that such exemptions were available. Neither
transaction involved any underwriters.

Item 6. Selected Financial Data

The information set forth in Exhibit 13, under the caption "Selected Financial
Data, Five Year Summary", which is the same as the information set forth under
that caption on page 1 of GenRad's 1997 Annual Report, is incorporated by
reference.

Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

The information set forth in the Consolidated Financial Statements in Exhibit
13, which is the same information set forth in Consolidated Financial Statements
on pages 14 through 19 of GenRad's 1997 Annual Report, is incorporated by
reference.

Item 8. Financial Statements and Supplementary Data

The information set forth in the Consolidated Financial Statements and the
Supplementary Information in Exhibit 13, which is the same information set forth
in the Consolidated Financial Statements and Supplementary Information of
GenRad's 1997 Annual Report, is incorporated by reference.

Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure

None.
PART III

Item 10. Directors and Executive Officers of the Registrant

The information set forth under "Executive Officers of GenRad" in Part I of this
report and in Item 1 of the 1998 Proxy Statement is hereby incorporated by
reference.

Item 11. Executive Compensation

The information set forth under "Compensation of Executives and Directors" in
the 1998 Proxy Statement is hereby incorporated by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management

The information set forth under "Certain Shareholders" and "Election of
Directors" in the 1998 Proxy Statement is hereby incorporated by reference.

Item 13. Certain Relationships and Related Transactions

None.
PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

(a)(1) The following Consolidated Financial Statements of GenRad, Inc. and
Subsidiaries, which are the same as the Consolidated Financial
Statements in GenRad's 1997 Annual Report, are incorporated by
reference in Exhibit 13:

A. Consolidated Statement of Operations.
B. Consolidated Balance Sheet.
C. Consolidated Statement of Stockholders' Equity (Deficit).
D. Consolidated Statement of Cash Flows.
E. Notes to Consolidated Financial Statements.

(a)(2) The following schedules to the Consolidated Financial Statements of
GenRad, Inc. and Subsidiaries are filed as part of this report:

A. Schedule II - Valuation and Qualifying Accounts

All other schedules not listed above are inapplicable or are not required under
Securities and Exchange Commission regulations and therefore have been omitted.

(a)(3) The following Exhibits are filed as part of this report:

10 -- Lease agreement dated July 26, 1996 between GenRad, Inc. and
Michelson Farm-Westford Technology Park Trust, incorporated by
reference to Exhibit 10 to the Company's report on Form 10-Q for
the quarter ended June 29, 1996.

10.1 -- Facility agreement dated June 26, 1997 between GenRad Limited and
BankBoston, N.A. London Branch, incorporated by reference to
Exhibit 10.1 to the Company's report on Form 10-Q for the quarter
ended June 28, 1997.

10.2 -- Amended and restated revolving credit agreement dated May 6, 1997
between GenRad, Inc. and BankBoston, N.A., incorporated by
reference to Exhibit 10.2 to the Company's report on Form 10-Q for
the quarter ended June 28, 1997.

10.3 -- Severance Agreement between GenRad, Inc. and Kevin R. Cloutier
effective as of May 9, 1997, incorporated by reference to Exhibit
10.3 to the Company's report on Form 10-Q for the quarter ended
September 27, 1997.

10.4 -- Severance Agreement between GenRad, Inc. and Paul Geere effective
as of May 9, 1997, incorporated by reference to Exhibit 10.4 to
the Company's report on Form 10-Q for the quarter ended September
27, 1997.

10.5 -- Severance Agreement between GenRad, Inc. and Lori B. Hannay
effective as of May 9, 1997, incorporated by reference to Exhibit
10.5 to the Company's report on Form 10-Q for the quarter ended
September 27, 1997.

10.6 -- Severance Agreement between GenRad, Inc. and Sarah H. Lucas
effective as of May 9, 1997, incorporated by reference to Exhibit
10.6 to the Company's report on Form 10-Q for the quarter ended
September 27, 1997.

10.7 -- Severance Agreement between GenRad, Inc. and James F. Lyons
effective as of May 8, 1997, incorporated by reference to Exhibit
10.7 to the Company's report on Form 10-Q for the quarter ended
September 27, 1997.

10.8 -- Severance Agreement between GenRad, Inc. and Paul Pronsky, Jr.
effective as of May 9, 1997, incorporated by reference to Exhibit
10.8 to the Company's report on Form 10-Q for the quarter ended
September 27, 1997.

10.9 -- Severance Agreement between GenRad, Inc. and Michael W. Schraeder
effective as of May 9, 1997, incorporated by reference to Exhibit
10.9 to the Company's report on Form 10-Q for the quarter ended
September 27, 1997.

10.10 -- Severance Agreement between GenRad, Inc. and Walter A. Shephard
effective as of October 24, 1997, attached.

10.11 -- Severance Agreement between GenRad, Inc. and Gary H. Mueller
effective as of October 24, 1997, attached.

11 -- Computation of Per Share Earnings, attached.

13 -- GenRad, Inc. portions of Annual Report to Stockholders for fiscal
year ended January 3, 1998, attached.

21 -- List of Subsidiaries, attached.

23 -- Consent of Price Waterhouse LLP, attached.

27 -- Financial Data Schedule, attached.

(b) None

(d) See Item 14(a)(1) and (2) above.

Signatures

Pursuant to the requirements of Section 13 or 15(d) 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.
(REGISTRANT)

By: /s/ JAMES F. LYONS
---------------------------
James F. Lyons
President, Chief
Executive Officer and Director

Date: February 23, 1998

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.

Signature Title Date
--------- ----- ----

(1) Principal executive officer

/s/ JAMES F. LYONS President, Chief Executive Officer February 23, 1998
- ----------------------------------------- and Director
James F. Lyons

(2) Principal financial officer:

/s/ PAUL PRONSKY, JR. Vice President, Chief Financial Officer February 23, 1998
- ----------------------------------------- and Secretary
Paul Pronsky, Jr.

(3) Principal accounting officer:

/s/ PAUL PRONSKY, JR. Vice President, Chief Financial Officer February 23, 1998
- ----------------------------------------- and Secretary
Paul Pronsky, Jr.

(4) A majority of the Board of Directors:

/s/ WILLIAM S. ANTLE III Director February 23, 1998
- -----------------------------------------
William S. Antle III

/s/ RUSSELL A. GULLOTTI Director February 23, 1998
- -----------------------------------------
Russell A. Gullotti

/s/ LOWELL B. HAWKINSON Director February 23, 1998
- -----------------------------------------
Lowell B. Hawkinson

/s/ JAMES F. LYONS Director February 23, 1998
- -----------------------------------------
James F. Lyons

/s/ RICHARD G. ROGERS Director February 23, 1998
- -----------------------------------------
Richard G. Rogers

/s/ WILLIAM G. SCHEERER Director February 23, 1998
- -----------------------------------------
William G. Scheerer

/s/ ADRIANA STADECKER Director February 23, 1998
- -----------------------------------------
Adriana Stadecker

/s/ ED ZSCHAU Director February 23, 1998
- -----------------------------------------
Ed Zschau

GENRAD, INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND
QUALIFYING ACCOUNTS

(In Thousands)

Additions
Balance Charged to Balance
Beginning Costs and at End
Description of Period Expenses Deductions of Period
- ----------- --------- -------- ---------- ---------

Year ended January 3, 1998
Deducted from asset accounts:
Allowance for doubtful accounts $ 1,431 $ 26 $ 330 $ 1,127
Inventory reserve $ 8,836 $1,406 $ 4,229 $ 6,013
Deferred tax asset valuation allowance $66,678 $ -- $13,516 $53,162

Year ended December 28, 1996
Deducted from asset accounts:
Allowance for doubtful accounts $ 801 $ 963 $ 333 $ 1,431
Inventory reserve $10,238 $3,483 $ 4,885 $ 8,836
Deferred tax asset valuation allowance $76,710 $ -- $10,032 $66,678

Year ended December 30, 1995
Deducted from asset accounts:
Allowance for doubtful accounts $ 1,316 $ -- $ 515 $ 801
Inventory reserve $12,659 $1,387 $ 3,808 $10,238
Deferred tax asset valuation allowance $80,170 $ -- $ 3,460 $76,710