<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________________________
FORM 10-Q
(MARK ONE)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
FOR THE TRANSITION PERIOD FROM _________ TO _________
COMMISSION FILE NUMBER
1-9812
TENERA, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 94-3213541
(STATE OF OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
One Market, Spear Tower, Suite 1850, San Francisco, California 94105-1018
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (415) 536-4744
_________________________________
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
Common Stock
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 (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 [ ]
The number of shares outstanding on March 31, 1997, was 10,123,153.
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TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
PAGE
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited) ............................. 1
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition ........................... 7
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings ............................................ *
Item 2. Changes in Securities ........................................ *
Item 3. Defaults Upon Senior Securities .............................. *
Item 4. Submission of Matters to a Vote of Security Holders .......... *
Item 5. Other Information ............................................ *
Item 6. Exhibits and Reports on Form 8-K ............................. 9
</TABLE>
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* None.
i
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PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TENERA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
(In thousands, except per share amounts)
___________________________________________________________________________________
Three Months Ended
March, 31
--------------------
1997 1996
___________________________________________________________________________________
<S> <C> <C>
Revenue ..................................................... $ 5,400 $ 7,256
Direct Costs ................................................ 3,218 4,901
General and Administrative Expenses ......................... 2,217 2,205
Other Income ................................................ 1 4
--------- ---------
Operating (Loss) Income ................................... (34) 154
Interest Income, Net ........................................ 39 32
--------- ---------
Net Earnings Before Income Tax Expense .................... 5 186
Income Tax Expense .......................................... 2 74
--------- ---------
Net Earnings ................................................ $ 3 $ 112
========= =========
Net Earnings per Share ...................................... $ 0.00 $ 0.01
========= =========
Weighted Average Number of Shares Outstanding ............... 10,124 10,422
========= =========
___________________________________________________________________________________
See accompanying notes.
</TABLE>
1
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TENERA, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
(In thousands, except share amounts)
__________________________________________________________________________________________
March 31, December 31,
1997 1996
__________________________________________________________________________________________
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents .............................. $ 3,704 $ 3,964
Receivables, less allowance of $1,626 (1996 - $1,626):
Billed ............................................... 1,120 1,087
Unbilled ............................................. 1,786 2,032
Other current assets ................................... 533 534
---------- ----------
Total Current Assets ............................... 7,143 7,617
Property and Equipment, Net .............................. 338 323
---------- ----------
Total Assets ................................... $ 7,481 $ 7,940
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable ....................................... $ 1,152 $ 1,026
Accrued compensation and related expenses .............. 1,447 2,036
Income taxes payable ................................... 2 --
---------- ----------
Total Current Liabilities .......................... 2,601 3,062
Commitments and Contingencies
Shareholders' Equity
Common Stock, $0.01 par value, 25,000,000 authorized,
10,417,345 issued and outstanding
(1996 - 10,417,345 shares) ............................. 104 104
Paid in capital, in excess of par ...................... 5,698 5,698
Retained deficit ....................................... (616) (619)
Treasury stock - 294,192 shares
(1996 - 292,498 shares) ................................ (306) (305)
---------- ----------
Total Shareholders' Equity ....................... 4,880 4,878
---------- ----------
Total Liabilities and Shareholders' Equity ..... $ 7,481 $ 7,940
========== ==========
__________________________________________________________________________________________
See accompanying notes.
</TABLE>
2
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TENERA, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
(In thousands, except share amounts)
____________________________________________________________________________________
Paid In
Capital
In
Common Excess Retained Treasury
Stock of Par Deficit Stock Total
____________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
December 31, 1996 ................ $ 104 $ 5,698 $ (619) $ (305) $ 4,878
Repurchase of 1,694 Shares ....... -- -- -- (1) (1)
Net Earnings ..................... -- -- 3 -- 3
-------- -------- -------- -------- --------
March 31, 1997 ................... $ 104 $ 5,698 $ (616) $ (306) $ 4,880
======== ======== ======== ======== ========
____________________________________________________________________________________
See accompanying notes.
</TABLE>
3
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TENERA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
(In thousands)
_____________________________________________________________________________________
Three Months Ended
March 31,
-----------------------
1997 1996
_____________________________________________________________________________________
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings ............................................. $ 3 $ 112
Adjustments to reconcile net earnings to cash provided
(used) by operating activities:
Depreciation ........................................... 69 75
Gain on sale of equipment .............................. (1) (4)
Increase in allowance for sales adjustments ............ -- 117
Changes in assets and liabilities:
Receivables .......................................... 213 2,950
Other current assets ................................. 1 94
Accounts payable ..................................... 126 (256)
Accrued compensation and related expenses ............ (589) 433
Income taxes payable ................................. 2 (168)
-------- --------
Net Cash (Used) Provided By Operating Activities ... (176) 3,353
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and equipment .................... (84) (43)
Proceeds from sale of equipment .......................... 1 4
-------- --------
Net Cash Used in Investing Activities .............. (83) (39)
CASH FLOWS FROM FINANCING ACTIVITIES
Net repurchase of equity ................................. (1) (11)
-------- --------
Net Cash Used by Financing Activities .............. (1) (11)
-------- --------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS ....... (260) 3,303
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ........... 3,964 1,474
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ................. $ 3,704 $ 4,777
======== ========
_____________________________________________________________________________________
See accompanying notes.
</TABLE>
4
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TENERA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1997 and 1996
(Unaudited)
NOTE 1. ORGANIZATION
Company. TENERA, Inc. (the "Company"), a Delaware corporation, provides a
broad range of professional services and software products to solve complex
management, engineering, environmental, and safety challenges associated with
the licensing, operation, asset management, and maintenance of power plants
and mass transit systems. Its services and products cover the following
general areas: consulting and management services and software services,
products, and systems.
TENERA Rocky Flats, LLC (the "LLC"), a Colorado limited liability company,
was formed by the Company in 1995, to provide consulting services in
connection with participation in the Performance Based Integrating Management
Contract ("Rocky Flats Contract") at the Department of Energy's ("DOE") Rocky
Flats Environmental Technology Site.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation. The accompanying consolidated financial statements
include the accounts of the Company and the LLC and have been prepared by the
Company without audit. All intercompany accounts and transactions have been
eliminated. In the opinion of management, all adjustments (which include
normal recurring adjustments) necessary to present fairly the financial
position at March 31, 1997, and the results of operations and cash flows at
March 31, 1997 and 1996, have been made. For further information, refer to the
financial statements and notes thereto contained in TENERA, Inc.'s Annual
Report on Form 10-K for the year ended December 31, 1996, filed with the
Securities and Exchange Commission.
Cash and Cash Equivalents. Cash and cash equivalents consist of demand
deposits, certificates of deposit, bank acceptances or repurchase agreements
of major banks having strong credit ratings, and commercial paper issued by
companies with strong credit ratings. The Company includes in cash and cash
equivalents, all short-term, highly liquid investments which mature within
three months of acquisition.
Property and Equipment. Property and equipment are stated at cost
($2,808,000 and $2,723,000 at March 31, 1997 and December 31, 1996,
respectively), net of accumulated depreciation ($2,470,000 and $2,400,000 at
March 31, 1997 and December 31, 1996, respectively). Depreciation is
calculated using the straight line method over the estimated useful lives,
which range from three to five years.
Revenue. Revenue from time-and-material and cost plus fixed-fee contracts
is recognized when costs are incurred; from fixed-price contracts, on the
basis of percentage of work completed (measured by costs incurred relative to
total estimated project costs); from software license fees, at time of
customer acceptance; and from software maintenance agreements, ratably over
the period of the maintenance support agreement (usually 12 months). The
Company's revenue recognition policy for its software contracts is in
compliance with the American Institute of Certified Public Accountants'
Statement of Position 91-1, "Software Revenue Recognition." The Company
primarily offers its services and software products to the electric power
industry, the DOE, and the municipal transit industry in North America.
The Company performs ongoing credit evaluations of these customers and
normally does not require collateral. Reserves are maintained for potential
sales adjustments and credit losses; such losses to date have been within
management's expectations. Actual revenue and cost of contracts in progress
may differ from management estimates and such differences could be material to
the financial statements.
Income Taxes. Provisions for income taxes were made for the three months
ended March 31, 1997 and 1996, at a 40% effective tax rate.
5
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Per Share and Pro Forma Per Share Information. Per share data for the
three-month periods ended March 31, 1997 and 1996, are computed on the basis
of: weighted average number of shares of common stock and common stock
equivalents using the treasury stock method.
6
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
TENERA, INC.
RESULTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
__________________________________________________________________________
Percent of Revenue Percent
---------------------- Increase
Quarter Ended (Decrease)
March, 31 from
---------------------- Prior
1997 1996 Year
__________________________________________________________________________
<S> <C> <C> <C>
Revenue .............................. 100.0% 100.0% (25.6)%
Direct Costs ......................... 59.6 67.5 (34.3)
General and Administrative Expenses .. 41.0 30.4 0.5
Other Income ......................... -- -- (75.0)
---------- ---------- ----------
Operating (Loss) Income ............ (0.6) 2.1 (122.1)
Interest Income, Net ................. 0.7 0.5 21.9
---------- ---------- ----------
Net Earnings Before
Income Tax Expense ................... 0.1% 2.6% (97.3)%
========== ========== ==========
__________________________________________________________________________
</TABLE>
RESULTS OF OPERATIONS
Lower revenue from the government sector in the first quarter of 1997,
compared to 1996, resulted in quarterly net earnings before income taxes of
$5,000, compared to net earnings before income tax expense of $186,000 for the
quarter in 1996.
During the first quarter, the Company received written contracts and orders
having an estimated value of approximately $5.7 million. The activity
primarily reflects the next four months' funding at the DOE's Rocky Flats
Environmental Technology Site; a new software maintenance contract at the New
York Metropolitan Transit Authority, an existing client; and extensions of
consulting contracts with two large electric utility clients. Contracted
backlog for current, active projects totaled approximately $6.6 million as of
March 31, 1997, approximately the same level as December 31, 1996.
The revenue decrease in the first quarter of 1997, compared to a year ago,
is primarily the result of reduced government sales and a reduction in the
Rocky Flats Contract activity (due primarily to decreased funding at various
DOE sites), reduced sales of consulting and management services, partially
offset by higher software revenue related to work on the Company's contract
with the National Railroad Passenger Corporation ("Amtrak") which began in
September 1996. For the first quarter of 1997, the concentration of revenue
from the government sector decreased to 52% of total revenue from 63% in the
first quarter of 1996.
Direct costs were lower in the first quarter of 1997, compared to a year
ago, primarily as a result of the reduced revenue generation opportunities.
Gross margins increased to 40% in the first quarter of 1997, from 33% for the
same period in 1996, primarily due to the reduction in the proportion of lower
margin government work.
General and administrative costs were approximately the same for the first
quarters of 1997 and 1996. Lower administrative costs were offset by higher
sales staff and product development expenditures, as compared to a year ago.
7
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Other income for the first quarters of 1997 and 1996, were essentially the
same. Other income primarily reflects gains on the sale of assets related to
facility downsizing.
Net interest income in 1997 and 1996 represents earnings from the
investment of cash balances in short-term, high-quality, government and
corporate debt instruments, partially offset by capital lease interest
expense. The Company had no borrowings under its line of credit during the
first quarters of 1997 and 1996.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents decreased by $260,000 during the first quarter of
1997. The decrease was due to cash used by operations ($176,000), cash used in
net acquisition of equipment ($83,000), and in financing activities ($1,000).
Receivables decreased by $213,000 from December 31, 1996, primarily due to
an increase in collections during the first quarter of 1997. The allowance for
sales adjustments was unchanged from December 31, 1996.
Accounts payable increased by $126,000 since the end of 1996, primarily due
to the net increase of prepaid fixed-price project commitments. Accrued
compensation and related expenses decreased by $589,000 during the period
primarily reflecting the payment of the Company's 1996 contribution to the
employee retirement plan and the elimination of the Company's contribution
accrual effective January 1, 1997.
Equity increased by $2,000 in the first quarter ended March 31, 1997, due
to net earnings ($3,000), partially offset by the repurchase of stock
($1,000).
No cash dividend was declared in the first quarter of 1997.
The impact of inflation on revenue and projects of the Company was minimal.
At March 31, 1997, the Company had available $4,500,000 of a $5,000,000
revolving loan facility with its lender which expires in May 1998. The Company
has no outstanding borrowing against the line, however, $500,000 was assigned
to support standby letters of credit.
Management believes that cash expected to be generated by operations, the
Company's working capital, and its loan facility are adequate to meet its
anticipated liquidity needs through the next twelve months.
Statements contained in this report which are not historical facts are
forward-looking statements as that term is defined in the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements are subject to
risks and uncertainties which could cause actual results to differ materially
from those projected. Such risks and uncertainties include the uncertainty of
future profitability, uncertainty regarding industry trends and customer
demand, uncertainty of access to capital, uncertainty regarding competition,
and reliance on major customers. Additional risks are detailed in the
Company's filings with the Securities and Exchange Commission, including its
Form 10-K for the year ended December 31, 1996.
8
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PART II -- OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
11.0 Statement regarding computation of per share earnings:
See Notes to Consolidated Financial Statements.
27.0* Financial Data Schedule
(b) REPORTS ON FORM 8-K
None.
- --------------------
* Filed herewith.
9
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SIGNATURES
PURSUANT TO THE REQUIREMENT 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.
TENERA, INC.
Dated: May 13, 1997 By: /s/ JEFFREY R. HAZARIAN
------------------------------
Jeffrey R. Hazarian
Chief Financial Officer,
Corporate Secretary, and
Vice President, Finance
10
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EXHIBIT INDEX
Ex. 27.0 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-START> Jan-01-1997
<PERIOD-END> Mar-31-1997
<CASH> 3,704
<SECURITIES> 0
<RECEIVABLES> 4,532
<ALLOWANCES> 1,626
<INVENTORY> 0
<CURRENT-ASSETS> 7,143
<PP&E> 338
<DEPRECIATION> 0
<TOTAL-ASSETS> 7,481
<CURRENT-LIABILITIES> 2,601
<BONDS> 0
<COMMON> 5,802
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 7,481
<SALES> 0
<TOTAL-REVENUES> 5,400
<CGS> 0
<TOTAL-COSTS> 3,218
<OTHER-EXPENSES> 2,216
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (39)
<INCOME-PRETAX> 5
<INCOME-TAX> 2
<INCOME-CONTINUING> 3
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.00
</TABLE>
