SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 for the fiscal year ended December 31, 1997; or
-----------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 for the transition period from ______________ to
-----------------
Commission file number 001-08045
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A. Full title of the plan and the address of the plan, if different
from that of the issuer named below:
GenRad Choice Investment Plan
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
GenRad, Inc.
7 Technology Park Drive
Westford, MA 01886
Required Information
In accordance with the rules to Form 11-K, attached as Appendix 1 to this Form
11-K are the plan financial statements and schedules prepared in accordance with
the financial reporting requirements of ERISA and examined by an independent
accountant on a full scope basis.
Exhibits
23.1 Consent of PricewaterhouseCoopers LLP
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the employee benefit plan) have duly
caused this annual report to be signed on its behalf by the undersigned
thereunto duly authorized.
GENRAD CHOICE INVESTMENT PLAN
By: GenRad, Inc.
Date December 16, 1998 By: /s/ Walter A. Shephard
----------------------- -----------------------------------
Name: Walter A. Shephard
Title: Chief Financial Officer
Appendix 1
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GenRad, Inc.
Choice Investment Plan
Part I and Part II
Financial Statements and
Additional Information
December 31, 1997 and 1996
GenRad, Inc.
Choice Investment Plan - Part I and Part II
Index to Financial Statements and Additional Information
- --------------------------------------------------------------------------------
Page(s)
Financial Statements:
Report of Independent Accountants 1-2
Statement of Net Assets Available for Plan Benefits
as of December 31, 1997 and 1996 3
Statement of Changes in Net Assets Available for Plan Benefits (with Fund Information)
for the Year Ended December 31, 1997 4
Notes to Financial Statements 5-8
Additional Information:*
Schedule I - Schedule of Assets Held for Investment
as of December 31, 1997 9
Schedule II - Schedule of Loans or Fixed Income Obligations as of
December 31, 1997 10
Schedule III - Schedule of Reportable Transactions for the
Year Ended December 31, 1997 11
* Other schedules required by Section 2520.103-10 of the Department of Labor's
Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974 have been omitted because they are not
applicable.
Report of Independent Accountants
October 30, 1998
To the Committee on Employee Benefits of the
GenRad, Inc. Choice Investment Plan - Part I and Part II
We have audited the accompanying statement of net assets available for plan
benefits of the GenRad, Inc. Choice Investment Plan - Part I and Part II (the
"Plan") as of December 31, 1997 and 1996 and the related statement of changes in
net assets available for plan benefits for the year ended December 31, 1997.
These financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our report dated October 2, 1998, we were unable to, and did not, express an
opinion on the statement of net assets available for plan benefits as of
December 31, 1997 and 1996 and the related statement of changes in net assets
available for plan benefits for the year ended December 31, 1997 because, at the
instruction of the plan administrator, we did not perform any auditing
procedures with respect to the information summarized in Note 6 in those
financial statements. The plan administrator has now instructed us to perform,
and we did perform, an audit of the statement of net assets available for plan
benefits as of December 31, 1997 and 1996 and the related statement of changes
in net assets available for plan benefits for the year ended December 31, 1997
in accordance with generally accepted auditing standards. Accordingly, we are
now able to express an opinion on those financial statements.
In our opinion, the financial statements referred to in the first paragraph of
this report present fairly, in all material respects, the net assets available
for plan benefits of the Plan as of December 31, 1997 and 1996 and the changes
in net assets available for plan benefits for the year ended December 31, 1997
in conformity with generally accepted accounting principles.
1
To the Committee on Employee Benefits of the
GenRad, Inc. Choice Investment Plan - Part I and Part II
October 30, 1998
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The additional information included in
Schedules I, II and III is presented for purposes of additional analysis and is
not a required part of the basic financial statements but is additional
information required by ERISA. The Fund information in the statement of changes
in net assets available for plan benefits is presented for purposes of
additional analysis rather than to present the changes in net assets available
for plan benefits of each fund. Schedules I, II and III and the Fund Information
have been subjected to the auditing procedures applied in the audits of the
basic financial statements and, in our opinion, are fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
PricewaterhouseCoopers LLP
Boston, Massachusetts
2
GenRad, Inc.
Choice Investment Plan - Part I and Part II
Statement of Net Assets Available for Plan Benefits
- --------------------------------------------------------------------------------
December 31,
1997 1996
Investments, at fair value
Registered investment companies:
Vanguard LifeStrategy Portfolios - Growth Portfolio $ 1,050,035 $ 653,829
Vanguard/Wellington Fund 12,186,319 9,856,554
Vanguard Money Market Reserves - Prime Portfolio 8,156,214 8,471,376
Vanguard/PRIMECAP Fund 2,031,366 1,199,810
Vanguard LifeStrategy Portfolios - Income Portfolio 236,739 63,112
Vanguard LifeStrategy Portfolios - Conservative Growth 17,994 44,309
Vanguard/Windsor II Fund 15,945,110 11,896,938
Vanguard International Growth Portfolio 767,647 626,646
Vanguard Bond Index Fund - Total Bond Market Portfolio 2,414,999 2,220,417
Vanguard LifeStrategy Portfolios - Moderate Growth 669,281 428,481
----------------- -----------------
43,475,704 35,461,472
Genrad, Inc. common stock 6,915,725 4,741,078
Participant loans 780,264 741,670
----------------- -----------------
Total investments 51,171,693 40,944,220
----------------- -----------------
Receivables
Employer's contributions 79,197 76,348
Participants' contributions 185,183 178,415
Other receivables 27,887 27,399
----------------- -----------------
Total receivables 292,267 282,162
----------------- -----------------
Net assets available for plan benefits $ 51,463,960 $ 41,226,382
================= =================
The accompanying notes are an integral part of these financial statements.
3
GenRad, Inc.
Choice Investment Plan - Part I and Part II
Statement of Changes in Net Assets Available for Plan Benefits
(with Fund Information)
- --------------------------------------------------------------------------------
Year Ended
December 31, 1997
GenRad Vanguard Vanguard Vanguard
Common LifeStrategy Vanguard/ Money Vanguard/ LifeStrategy
Stock Growth Wellington Market PRIMECAP Income
----------- ------------ ------------- ------------ ------------ ------------
Sources of net assets:
Investment activity:
Net appreciation (depreciation)
in fair value of investments $1,870,708 $ 121,644 $1,261,377 $ -- $ 405,303 $ 2,459
Dividends and interest -- 41,237 1,038,347 440,116 73,493 8,213
----------- ------------ ------------- ------------ ------------ ------------
1,870,708 162,881 2,299,724 440,116 478,796 10,672
----------- ------------ ------------- ------------ ------------ ------------
Contributions:
Participants 205,847 259,642 517,286 276,846 297,367 6,325
Rollovers 22,444 80,781 42,815 28,308 29,413 --
Loan repayments 42,459 34,684 73,157 48,810 30,369 --
Employer 78,918 92,058 194,738 107,257 99,481 1,635
----------- ------------ ------------- ------------ ------------ ------------
Total sources 2,220,376 630,046 3,127,720 901,337 935,426 18,632
----------- ------------ ------------- ------------ ------------ ------------
Applications of net assets:
Benefits paid to participants 145,838 190,500 615,716 1,126,179 208,043 --
Participant loan withdrawals -- 34,204 92,057 62,830 28,324 --
Administrative expenses 1,695 1,564 4,257 14,674 1,469 --
----------- ------------ ------------- ------------ ------------ ------------
Total applications 147,533 226,268 712,030 1,203,683 237,836 --
----------- ------------ ------------- ------------ ------------ ------------
Net increase (decrease) prior to
interfund transfers and plan merger 2,072,843 403,778 2,415,690 (302,346) 697,590 18,632
Interfund transfers 98,922 (13,150) (102,010) (70,600) 122,269 154,995
Plan merger 2,882 5,578 16,085 57,784 11,697 --
----------- ------------ ------------- ------------ ------------ ------------
Increase (decrease) in net assets 2,174,647 396,206 2,329,765 (315,162) 831,556 173,627
Net assets available for plan benefits:
Beginning of year 4,741,078 653,829 9,856,554 8,471,376 1,199,810 63,112
----------- ------------ ------------- ------------ ------------ ------------
End of year $6,915,725 $1,050,035 $12,186,319 $8,156,214 $2,031,366 $236,739
=========== ============ ============= ============ ============ ============
Year Ended
December 31, 1997
Vanguard Vanguard
LifeStrategy Vanguard LifeStrategy
Conservative Vanguard/ International Vanguard Moderate Participant
Growth Windsor II Growth Bond Index Growth Loans Other
------------ ------------- ----------- ------------ ---------- ---------- ----------
Sources of net assets:
Investment activity:
Net appreciation (depreciation)
in fair value of investments $ 2,410 $ 2,434,407 $(15,463) $ 62,182 $ 63,119 $ -- $ --
Dividends and interest 1,140 1,451,329 32,979 150,091 29,647 54,419 --
------------ ------------- ----------- ------------ ---------- ---------- ----------
3,550 3,885,736 17,516 212,273 92,766 54,419 --
------------ ------------- ----------- ------------ ---------- ---------- ----------
Contributions:
Participants 6,480 760,735 142,434 126,864 78,765 -- 6,766
Rollovers -- 48,713 5,174 9,897 11,093 -- --
Loan repayments -- 149,618 17,375 22,241 2,747 (421,948) 488
Employer 3,240 264,867 49,322 49,516 33,875 -- 2,851
------------ ------------- ----------- ------------ ---------- ---------- ----------
Total sources 13,270 5,109,669 231,821 420,791 219,246 (367,529) 10,105
------------ ------------- ----------- ------------ ---------- ---------- ----------
Applications of net assets:
Benefits paid to participants 39,535 837,834 7,119 236,520 23,112 87,847 --
Participant loan withdrawals -- 216,352 18,485 15,808 3,500 (471,560) --
Administrative expenses 50 5,010 539 882 508 -- --
------------ ------------- ----------- ------------ ---------- ---------- ----------
Total applications 39,585 1,059,196 26,143 253,210 27,120 (383,713) --
------------ ------------- ----------- ------------ ---------- ---------- ----------
Net increase (decrease) prior to
interfund transfers and plan merger (26,315) 4,050,473 205,678 167,581 192,126 16,184 10,105
Interfund transfers -- (106,039) (78,010) 20,704 (27,081) -- --
Plan merger -- 103,738 13,333 6,297 75,755 22,410 --
------------ ------------- ----------- ------------ ---------- ---------- ----------
Increase (decrease) in net assets (26,315) 4,048,172 141,001 194,582 240,800 38,594 10,105
Net assets available for plan benefits:
Beginning of year 44,309 11,896,938 626,646 2,220,417 428,481 741,670 282,162
------------ ------------- ----------- ------------ ---------- ---------- ----------
End of year $ 17,994 $15,945,110 $ 767,647 $2,414,999 $ 669,281 $ 780,264 $ 292,267
============ ============= =========== ============ ========== ========== ==========
Total
-------------
Sources of net assets:
Investment activity:
Net appreciation (depreciation)
in fair value of investments $ 6,208,146
Dividends and interest 3,321,011
-------------
9,529,157
-------------
Contributions:
Participants 2,685,357
Rollovers 278,638
Loan repayments --
Employer 977,758
-------------
Total sources 13,470,910
-------------
Applications of net assets:
Benefits paid to participants 3,518,243
Participant loan withdrawals --
Administrative expenses 30,648
-------------
Total applications 3,548,891
-------------
Net increase (decrease) prior to
interfund transfers and plan merger 9,922,019
Interfund transfers --
Plan merger 315,559
-------------
Increase (decrease) in net assets 10,237,578
Net assets available for plan benefits:
Beginning of year 41,226,382
-------------
End of year $ 51,463,960
=============
The accompanying notes are an integral part of these financial statements.
4
GenRad, Inc.
Choice Investment Plan - Part I and Part II
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. Description of the Plan
The following description of the GenRad, Inc. (the "Company") Choice
Investment Plan - Part I and Part II (the "Plan") provides only general
information. Participants should refer to the Plan Agreement for a more
complete description of the Plan's provisions.
General
The Plan is a defined contribution plan, qualified under Section 401(k)
of the U.S. Internal Revenue Code ("IRC"), which provides retirement
benefits to employees of the Company who have completed at least one
month of service with the Company or any of its subsidiaries. The Plan
was established on December 31, 1943 and has been amended from time to
time. It is subject to the provisions of the Employee Retirement Income
Security Act of 1974 ("ERISA").
Contributions
Participants may contribute up to 15% of their annual compensation to
the extent that the contributions comply with IRC limitations. These
contributions are not subject to federal income taxes until withdrawn,
in accordance with Section 401(k) of the IRC. The Company matches 50%
of employee contributions, up to a maximum of 6% of compensation paid.
The Plan also includes a profit-sharing trust, whereby the Company may
make a contribution each year from its consolidated current or
accumulated earnings in an amount determined by the Board of Directors
on or before the last day of the Company's fiscal year. No
contributions were made to the profit-sharing trust during 1997.
Effective July 1, 1998, the Company changed its matching policy to 50%
of employee contributions, up to a maximum of 10% of compensation paid.
Participant Accounts
Each participant is assigned an individual account with only their
account's investment income, realized and unrealized investment gains
or losses allocated to them. Administrative expenses are charged to
each participant's account on a quarterly basis totalling $20 annually.
Vesting
Participants who were employees on or prior to December 31, 1995 are
fully vested in all employer and employee voluntary contributions plus
actual earnings thereon upon entering the Plan. Participants who became
employees subsequent to December 31, 1995 are fully vested in all
employee contributions and earnings thereon upon entering the Plan.
Company contributions and related earnings for these participants,
however, vest at a rate of 25% per year.
Retirement, Terminations and Disbursements
In case of normal retirement, retirement due to permanent disability or
termination of employment, participants may elect to receive the value
of their accumulated Plan benefits in a lump sum, in accordance with
the provisions of the Plan. In the event that a participant dies before
retirement, the beneficiary will receive the value of the participant's
accumulated Plan benefits in a lump-sum distribution, less the value of
outstanding loans made to the participant.
5
GenRad, Inc.
Choice Investment Plan - Part I and Part II
Notes to Financial Statements
- --------------------------------------------------------------------------------
Participants qualifying for a hardship withdrawal may receive all or a
portion of their contributions, plus investment income earned thereon,
but not more than the amount necessary to meet the financial hardship.
Administration
The Plan is administered by an administrative committee appointed by
the Company. All funds in the Plan are held in trust by Vanguard
Fiduciary Trust Company (the "Trustee").
The Plan offers eleven investment options selected by the participants.
In addition, the Plan maintains a 401(k) loan account for participant
loans.
Forfeitures
Forfeited balances are used to reduce future employer contributions.
Rollover
Employees commencing participation in the Plan may elect to transfer to
the Plan any amounts distributed from a previous qualified plan within
60 days of receiving such distribution.
2. Summary of Significant Accounting Policies
Basis of Presentation
The Plan's financial statements have been presented on the accrual
basis of accounting.
Reclassifications
Certain reclassifications were made to the 1996 financial statements to
conform to the 1997 presentation.
Plan Expenses
Administrative expenses of the Plan are paid by the Plan to a maximum
of $20 per participant annually, and are reflected in the accompanying
statement of changes in net assets available for plan benefits.
Excess administrative expenses are paid by the Company.
Valuation of Investments
Investments are stated at fair value. The fair value of the shares
owned by the Plan in mutual funds is based on the net asset value on
the last business day of the Plan year. GenRad, Inc. common stock is
valued at quoted market prices. Loans receivable from participants are
recorded at cost plus accrued interest, which approximates fair value.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of net assets
available for plan benefits. Actual results could differ from those
reported.
6
GenRad, Inc.
Choice Investment Plan - Part I and Part II
Notes to Financial Statements
- --------------------------------------------------------------------------------
Accounting Method
Security transactions are accounted for on the date securities are
purchased or sold (trade date). Dividend income is recorded on the
ex-dividend date. Interest income is recognized when earned. Net gains
and losses from securities transactions are computed using the average
cost method based on the beginning market value. Contributions are
recognized based on payroll dates and accrued if applicable.
3. Loans Receivable From Participants
The loans to participants bear interest at the prime rate and are due
at various dates, not to exceed five years from the date of issuance
unless the proceeds were used to construct or rehabilitate the
participant's primary residence, in which case the loan repayment
period shall not exceed 15 years.
Participants are allowed to borrow up to 50% of their investment
balances, not to exceed $50,000.
4. Federal Income Taxes
The Internal Revenue Service has determined and informed the Company by
a letter dated July 3, 1995 that the Plan and related trust are
designed in accordance with applicable sections of the IRC. The Plan
has since been amended. A new letter has not been requested. However,
management has asserted the Plan and its operations are in accordance
with the applicable requirements of the IRC.
5. Plan Termination
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time and
to terminate the Plan subject to the provisions of ERISA. In the event
of Plan termination, participants will receive 100% of their account
balances.
7
GenRad, Inc.
Choice Investment Plan - Part I and Part II
Notes to Financial Statements
- --------------------------------------------------------------------------------
6. Transactions with Parties-in-Interest
At December 31, 1997, the Plan held $43,475,704 in funds sponsored by
Vanguard Group, Inc., the Plan trustee and recordkeeper. Additionally,
at December 31, 1997, the Plan held $6,915,725 in GenRad, Inc.
common stock.
At December 31, 1996, the Plan held $35,461,472 in funds sponsored by
Vanguard Group, Inc., the Plan trustee and recordkeeper. Additionally,
at December 31, 1996, the Plan held $4,741,078 in GenRad, Inc.
common stock.
8
GenRad, Inc.
Choice Investment Plan - Part I and Part II
Schedule of Assets Held for Investment (Item 27a - Form 5500)
December 31,1997 Schedule I
- --------------------------------------------------------------------------------
Number of Current
Description Shares Cost Value
----------- ------ ---- -------
*GenRad Common Stock 229,092 $ 2,261,387 $ 6,915,725
*Vanguard LifeStrategy Portfolios -
Growth Portfolios 65,464 919,524 1,050,035
*Vanguard/Wellington Fund 413,797 9,444,603 12,186,319
*Vanguard Money Market Reserves -
Prime Portfolio 8,156,214 8,156,214 8,156,214
*Vanguard/PRIMECAP Fund 51,336 1,566,786 2,031,366
*Vanguard LifeStrategy Portfolios -
Income Portfolio 19,046 238,456 236,739
*Vanguard LifeStrategy Portfolios -
Conservative Growth 1,343 16,779 17,994
*Vanguard/Windsor II Fund 557,132 11,302,086 15,945,110
*Vanguard International Growth
Portfolio 46,836 765,827 767,647
*Vanguard Bond Index Fund -
Total Bond Market Portfolio 239,346 2,372,651 2,414,999
*Vanguard LifeStrategy Portfolios -
Moderate Growth 45,191 585,590 669,281
*Participant loans, current prime
interest rate, 8.50% -- 780,264 780,264
---------------- -----------------
Total $ 38,410,167 $ 51,171,693
================ =================
*Party-in-interest
9
GenRad, Inc.
Choice Investment Plan - Part I and Part II
Schedule of Loans or Fixed Income Obligations (Item 27b - Form 5500)
December 31, 1997 Schedule II
- --------------------------------------------------------------------------------
Original Amount Received Unpaid Balance at Amount Overdue
Identity and Amount During Reporting December 31, at December 31, 1997
Address of Obligor* of Loan Year 1997 Description of Loan Principal Interest
- ----------------------- ----------- ------------------- ------------------ ---------------------- ----------- -----------
Mr. John S. Bell $ 1,500 $ 340 $ 1,182 Promissory note with an annual $ 180 $ 24
1402 N. Valley Parkway rate of 8.25% payable in 24
#6510 equal weekly installments
Lewisville, Texas 70567 beginning on May 2, 1997.
*Obligor has been notified via certified mail by the treasurer as to the amount
overdue and a Form 1099 was issued to the obligor.
10
GenRad, Inc.
Choice Investment Plan - Part I and Part II
Schedule of Reportable Transactions* (Item 27d - Form 5500)
Year Ended December 31, 1997 Schedule III
- --------------------------------------------------------------------------------
Number of Purchase Selling Cost of Expense
Description of Assets Transactions Price Price Asset Incurred
- -------------------------------- -------------- --------------- -------------- -------------- ---------------
Vanguard Money Market 223 $ 1,519,159 $ 1,834,321 $ 1,834,321 $ --
Reserves - Prime Portfolio
Vanguard Wellington Fund 163 2,089,090 1,020,702 785,640 --
Vanguard Windsor II Fund 205 3,484,040 1,870,276 1,433,200 --
GenRad, Inc. common stock 119 1,301,290 997,351 407,982 --
Current
Value on Net
Lease Transaction Gain or
Description of Assets Rental Date Loss
- -------------------------------- -------------- ----------------- ---------------
Vanguard Money Market $ -- $ 3,353,480 $ --
Reserves - Prime Portfolio
Vanguard Wellington Fund -- 3,109,792 235,062
Vanguard Windsor II Fund -- 5,354,316 437,076
GenRad, Inc. common stock -- 2,298,641 589,369
*Transactions or a series of transactions in excess of 5 percent of the Plan's
assets as of December 31, 1996, as defined in Section 2520.103-6 of the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
ERISA.
11