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Technology Stocks : GenRad Inc.(GEN) entering the ADSL market!
GEN 25.74+1.0%Nov 7 3:59 PM EST
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To: Kirce Stojanovski who wrote (33)4/4/1997 9:40:00 AM
From: Jeff Clegg   of 283
 
Genrad's 10-K Report (Annual Report - 1996)

Have you looked at this report at

sec.gov

Most looks good, but a couple of thoughts:

1) Sales of products & services increased 15.6% from '95 to '96, but Accounts Receivables increased 19%. Is this an acceptable increase, or did they possibly book some of '97 sales revenues in the last quarter of '96?

2) Accounts Payable decreased from '95 to '96 by 7.3%. Isn't the objective to DECREASE the Accounts Receivable and INCREASE the Accounts Payable?

3) If the European business side takes off, compared to the U.S. side, what is their effective British corporate tax rate compared to the U.S. and what % impact would this have on EPS? Does Genrad have any NOL to carry forward (they mentioned a $2.5 million income tax benefit in their statement)? I mention this only because Genrad had stated that they had benefitted (tax-wise) from increased revenue from the U.S. (lower tax rates) compared to Britain.

Also, Genrad had an income tax benefit of ($1,656,000) as an addition to their Net Income. Should I assume that there is an additional ($2.5M - $1.65M) $0.85M that could be additional Net Income for '97'?
(This tax benefit added almost 7 cents to Genrad's EPS for last year)

4) If 55% of their sales are to foreign countries, are these sales originations primarily from the U.S. or Britain? If Britain, how has the British Pound been doing against the Yen?

5) Inventories increased 29.8% from '95 to '96 (sales of products increased 18.2%. Is there any significance to this? Anything to be read into this (ie. Increased sales expected in 1st quarter '97 or poor inventory management)?

6) I see that they mention HP in their report as a key competitor. (Interesting)

Any of your thoughts to add?

Regards,
Jeff
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