My child can't focus at school

My son is 7 years old and in 1st grade. His teacher is completly frustrated and says he does not pay attention at all in class. I had him tested for ADD last week and they said he does not have that. He is not disruptive in class, just sits and doesn't pay attention. He misses directions for assignments and tests.
I don't know what to do to help him, and the teacher is at a loss. (She was convinced it was ADD, although I don't see the signs at home.)
Any suggestions would be much appreciated.