<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 SEPTEMBER 30, 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 September 30, 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 ............................................ 10
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 ............................................ 10
Item 6. Exhibits and Reports on Form 8-K ............................. 10
</TABLE>
- --------------------
* None.
i
<PAGE>
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 Nine Months Ended
September 30, September 30,
-------------------- --------------------
1997 1996 1997 1996
_____________________________________________________________________________________
<S> <C> <C> <C> <C>
Revenue ................................ $ 5,240 $ 5,586 $ 15,332 $ 18,878
Direct Costs ........................... 3,228 3,651 9,392 12,230
General and Administrative Expenses .... 2,209 2,595 6,580 7,207
Software Development Costs ............. 662 139 1,315 395
Other Income ........................... 14 -- 35 21
Special Item ........................... -- -- -- 250
--------- --------- --------- ---------
Operating Loss ....................... (845) (799) (1,920) (683)
Interest Income, Net.................... 23 43 96 118
--------- --------- --------- ---------
Net Loss Before
Income Tax Benefit ................... (822) (756) (1,824) (565)
Income Tax Benefit ..................... -- (76) (139) --
--------- --------- --------- ---------
Net Loss ............................... $ (822) $ (680) $ (1,685) $ (565)
========= ========= ========= =========
Net Loss per Share ..................... $ (0.08) $ (0.07) $ (0.17) $ (0.06)
========= ========= ========= =========
Weighted Average Number of
Shares Outstanding ..................... 10,123 10,192 10,123 10,267
========= ========= ========= =========
_____________________________________________________________________________________
See accompanying notes.
</TABLE>
1
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TENERA, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
(In thousands, except share amounts)
__________________________________________________________________________________________
Sept. 30, Dec. 31,
1997 1996
__________________________________________________________________________________________
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents .............................. $ 1,457 $ 3,964
Receivables, less allowance of $1,480 (1996 - $1,626):
Billed ............................................... 1,737 1,087
Unbilled ............................................. 2,072 2,032
Other current assets ................................... 326 534
---------- ----------
Total Current Assets ............................... 5,592 7,617
Property and Equipment, Net .............................. 403 323
---------- ----------
Total Assets ................................... $ 5,995 $ 7,940
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable ....................................... $ 901 $ 1,026
Accrued compensation and related expenses .............. 1,902 2,036
---------- ----------
Total Current Liabilities .......................... 2,803 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 ....................................... (2,304) (619)
Treasury stock - 294,192 shares
(1996 - 292,498 shares) ................................ (306) (305)
---------- ----------
Total Shareholders' Equity ....................... 3,192 4,878
---------- ----------
Total Liabilities and Shareholders' Equity ..... $ 5,995 $ 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 Earnings 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
Net Loss ......................... -- -- (866) -- (866)
-------- -------- -------- -------- --------
June 30, 1997 .................... $ 104 $ 5,698 $(1,482) $ (306) $ 4,014
Net Loss ......................... -- -- (822) -- (822)
-------- -------- -------- -------- --------
September 30, 1997 ............... $ 104 $ 5,698 $(2,304) $ (306) $ 3,192
======== ======== ======== ======== ========
____________________________________________________________________________________
See accompanying notes.
</TABLE>
3
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TENERA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
(In thousands)
_____________________________________________________________________________________
Nine Months Ended
September 30,
-----------------------
1997 1996
_____________________________________________________________________________________
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss ................................................. $(1,685) $ (565)
Adjustments to reconcile net loss to
cash (used) provided by operating activities:
Depreciation ........................................... 202 204
Gain on sale of equipment .............................. (21) (5)
Decrease in allowance for sales adjustments ............ (146) (1,121)
Changes in assets and liabilities:
Receivables .......................................... (544) 5,293
Other current assets ................................. 208 (299)
Other assets ......................................... -- 17
Accounts payable ..................................... (125) (204)
Accrued compensation and related expenses ............ (134) (343)
Income taxes payable ................................. -- (169)
-------- --------
Net Cash (Used) Provided By Operating Activities ... (2,245) 2,808
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and equipment .................... (282) (172)
Proceeds from sale of equipment .......................... 21 5
-------- --------
Net Cash Used in Investing Activities .............. (261) (167)
CASH FLOWS FROM FINANCING ACTIVITIES
Net repurchase of equity ................................. (1) (172)
-------- --------
Net Cash Used by Financing Activities .............. (1) (172)
-------- --------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS ....... (2,507) 2,469
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ........... 3,964 1,474
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ................. $ 1,457 $ 3,943
======== ========
_____________________________________________________________________________________
See accompanying notes.
</TABLE>
4
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TENERA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 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. The services and products of its operating
subsidiaries cover the following general areas: consulting and management
services and software services, products, and systems.
TENERA Rocky Flats, LLC ("Rocky Flats"), 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. In May 1997, the Company's other
government business was consolidated within the Rocky Flats subsidiary. This
business provides consulting and management services to the DOE directly and
through subcontracts with DOE prime contractors. These services provide
assistance to DOE-owned nuclear facilities in devising, implementing, and
monitoring strategies to upgrade from an operational, safety, and
environmental perspective.
TENERA Energy, LLC ("Energy"), a Delaware limited liability company, was
formed by the Company in May 1997, to consolidate its commercial electric
power utility business into a separate legal structure. The Energy subsidiary
provides consulting and management services in organizational effectiveness
and organizational development, environmental outsourcing and monitoring, risk
analysis and modeling, and business process improvement.
TENERA Technologies, LLC ("Technologies"), a Delaware limited liability
company, was formed by the Company in May 1997, to consolidate its mass
transportation business into a separate legal entity. The Technologies
subsidiary provides computerized maintenance management software and
consulting to the mass transit industry.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation. The accompanying consolidated financial statements
include the accounts of the Company and its subsidiaries 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 September 30, 1997, and the results of
operations and cash flows for the three- and nine-month periods ended
September 30, 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
($3,005,000 and $2,723,000 at September 30, 1997 and December 31, 1996,
respectively), net of accumulated depreciation ($2,602,000 and $2,400,000 at
September 30, 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
5
<PAGE>
software maintenance agreements, ratably over the period of the maintenance
support agreement (usually 12 months). 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 its 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. Due to the net loss for the three- and nine-months periods
ended September 30 ,1997 and 1996, no provision for income taxes was made. The
reported tax benefit in 1997 reflects the amount of 1995 income taxes to be
refunded related to the carry back of certain net operating losses. For the
three-month period in 1996, the tax benefit reflects the reversal of the tax
provisions recorded in earlier 1996 periods.
Per Share Information. Per share data for the three- and nine-month periods
ended September 30, 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.
Recent Accounting Pronouncements. In February 1997, the Financial
Accounting Standards Board issued Statement No. 128, "Earnings Per Share"
("FAS 128"), which is required to be adopted on December 31, 1997. At that
time, the Company will be required to change the method currently used to
compute earnings (loss) per share and to restate such amounts previously
reported. Under the new requirements for calculating primary (basic) earnings
(loss) per share, the dilutive effect of stock options and warrants and
convertible preferred stock will be excluded. Fully diluted earnings per share
will include the dilutive effect of common stock equivalents. The Company has
not determined what the full impact of FAS 128 will be on the calculation of
primary and fully diluted net loss per share, but does not believe the
calculation will be materially different from the reported net loss per share
for the three- and nine-month periods ended September 30, 1997 and 1996.
NOTE 3. SUBSEQUENT EVENTS
On November 14, 1997, the Company consummated the sale of all of the assets
related to Technologies' mass transportation business to Spear Technologies,
Inc., a California corporation newly formed by former members of the Company's
management, including the Company's former Chairman of the Board and Chief
Executive Officer, Michael D. Thomas. The Company received $1,300,000 in cash,
a promissory note in the amount of $300,000, and a warrant to acquire 4% of
the buyer's then outstanding shares of common stock exercisable upon an
initial public offering or a change of control (as defined in the warrant).
The buyer also assumed all liabilities associated with the Technologies
business.
6
<PAGE>
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 of Revenue
---------------------- ----------------------
Quarter Ended Nine Months Ended
September 30, September 30,
---------------------- ----------------------
Percent Percent
Increase Increase
(Decrease) (Decrease)
from from
Prior Prior
1997 1996 Year 1997 1996 Year
_______________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Revenue .............................. 100.0% 100.0% (6.2)% 100.0% 100.0% (18.8)%
Direct Costs ......................... 61.6 65.4 (11.6) 61.3 64.8 (23.2)
General and Administrative Expenses .. 42.2 46.4 (14.9) 42.8 38.1 (8.7)
Software Development Costs ........... 12.6 2.5 376.3 8.6 2.1 232.9
Other Income ......................... 0.3 -- n/m 0.2 0.1 66.7
Special Item ......................... -- -- -- -- 1.3 n/m
---------- ---------- ---------- ---------- ---------- ----------
Operating Loss ....................... (16.1) (14.3) 5.8 (12.5) (3.6) 181.1
Interest Income, Net.................. 0.4 0.8 (46.5) 0.6 0.6 (18.6)
---------- ---------- ---------- ---------- ---------- ----------
Net Loss Before
Income Tax Benefit ................... (15.7)% (13.5)% 8.7% (11.9)% (3.0)% 222.8%
========== ========== ========== ========== ========== ==========
_______________________________________________________________________________________________________________
n/m: Not meaningful.
</TABLE>
RESULTS OF OPERATIONS
Although partially offset by lower direct costs and administrative
expenses, the Company's lower revenue, and increased spending on software
product and business development efforts primarily related to the Technologies
subsidiary, resulted in the overall loss for the quarter and nine months ended
September 30, 1997. This quarterly net loss before income taxes of $822,000,
compared to a net loss of $756,000 before income taxes for the quarter in
1996. Similarly, the Company reported a nine-month net loss before income
taxes of $1,824,000, compared to a net loss of $815,000 before income taxes
and special item in 1996.
During the third quarter, the Company received written contracts and orders
having an estimated value of approximately $4.6 million. The activity
primarily reflects the next three months' funding at the DOE's Rocky Flats
Environmental Technology Site and the extension of a consulting contract with
a large electric utility client. Contracted backlog for current, active
projects totaled approximately $5.8 million as of September 30, 1997, down
from $6.5 million as of June 30, 1997 and $6.7 million at December 31, 1996.
The revenue decrease in the third quarter and first nine months 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), 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
third quarter and first nine months of 1997, the concentration of revenue from
the
7
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government sector decreased to 49% and 51% of total revenue, respectively,
from 62% and 64% for the same periods in 1996.
Direct costs were lower in the third quarter and first nine months of 1997,
compared to a year ago, primarily as a result of the reduced revenue
generation opportunities. Gross margins increased to 38% in the third quarter
of 1997, from 35% for the same period in 1996, primarily due to an increase in
higher margin consulting work and a reduction in the proportion of lower
margin government projects. For the nine-month period in 1997, gross margins
increased to 39% from 35% for the same period in 1996, due to the reduction in
the proportion of lower margin government work, partially offset by the effect
of an increased mix of higher cost subcontracted labor on fixed-price
contracts.
General and administrative costs were lower in the third quarter and first
nine months of 1997, compared to a year ago, primarily due to lower
administrative costs throughout the Company, partially offset by increased
sales staff and marketing expenditures in the Technologies subsidiary. These
business development expenditures amounted to $347,000 and $731,000 in the
third quarter and first nine months of 1997, respectively, compared to $88,000
and $117,000 for the same periods a year ago. The increased level of business
development activities, begun in the latter half of 1996, was primarily
responsible for the increase in general and administrative expenses as a
percentage of revenue to 43% in 1997, from 38% in 1996, with respect to the
nine-month period. The reduction in general and administrative expenses as a
percentage of revenue for the three-month period from 46% in 1996, to 42% in
1997, is primarily due to increased utilization of employees on billable
contracts and lower expenditures for retirement benefits.
The level of the Company's internally funded investments in software
product development in the Technologies subsidiary, increased to $650,000 and
$1,303,000 in the third quarter and first nine months of 1997, respectively,
compared to $139,000 and $395,000 for the same periods a year ago. The
accelerated development efforts in 1997, resulted in completion of a beta
version of the Technologies subsidiary's new client-server product.
Installation began at Dallas Area Rapid Transit, a major public transportation
agency, during the third quarter.
Effective November 14, 1997, the Company consummated the sale of all of the
assets related to the Technologies business for $1,300,000 in cash, a
promissory note in the amount of $300,000, a warrant to acquire 4% of the then
outstanding shares of the buyer's common stock, exercisable upon the
occurrence of an initial public offering or a change of control (as defined in
the warrant), plus the assumption of all liabilities associated with the
Technologies business. The Technologies subsidiary was not expected to produce
profitable results in the next twelve months due to the high level of
investment needs that management believes it will experience during this
growth stage of product and business development activities. Accordingly, the
sale of Technologies is not expected to negatively impact the Company's
profitability in the near term. Revenue, however, will be decreased as a
result of such sale. (See, Note 3 of the Consolidated Financial Statements.)
Other income for the third quarter and first nine months of 1997 was higher
than 1996. Other income in 1997 reflects gains on the sale of assets related
to facility downsizing. In 1996, other income primarily relates to the
liquidation of the Company's interest in the Individual Plant Evaluation
Partnership, a technical services partnership in which it was an operating
participant.
The special item of $250,000 during 1996, reflects an adjustment of the
reserve related to the settlement of specific disputed costs on certain U.S.
Government contracts with the DOE. This positive earnings impact resulted from
a further reduction of the reserve for sales adjustment established in 1991,
and is based upon the successful government audits and contract closeouts of
prior periods.
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 lower net interest income in 1997, as compared to a year ago,
primarily reflects smaller average cash balances in the second and third
quarters of 1997. The Company had no borrowings under its line of credit
during the first nine months of 1997 and 1996.
8
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents decreased by $2,507,000 during the first nine
months of 1997. The decrease was mainly due to cash used by operations
($2,245,000) and cash used in net acquisition of equipment ($261,000).
Receivables increased by $544,000 from December 31, 1996, primarily due to
an increase in consulting and government revenue in the third quarter of 1997.
The allowance for sales adjustments decreased by $146,000 from December 31,
1996 due to the write-off of uncollectable receivables.
Accounts payable decreased by $125,000 since the end of 1996. Accrued
compensation and related expenses decreased by $134,000 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 decreased by $1,686,000 in the first nine months ended September 30,
1997, due to net losses ($1,685,000) and the repurchase of stock ($1,000).
No cash dividend was declared in the first nine months of 1997.
The impact of inflation on revenue and projects of the Company was minimal.
During the third quarter of 1997, the Company amended the amount and
certain financial covenants of its revolving loan facility with its lender
which expires in May 1998. At September 30, 1997, the Company had available
$2,500,000 of a $3,000,000 revolving loan facility. The Company has no
outstanding borrowing against the line, however, $500,000 was assigned to
support standby letters of credit.
The Technologies subsidiary was not expected to generate cash from its
operations in the next twelve months due to its product and business
development investment needs. Accordingly, as a result of the sale of the
Technologies subsidiary, the Company's cash needs over the next twelve months
will be significantly reduced. Management believes that cash expected to be
generated by the Government and Energy subsidiaries' operations, proceeds from
the sale of the Technologies subsidiary, the Company's working capital, and
its loan facility are adequate to meet it anticipated liquidity needs for
these operations through the next twelve months. However, an adverse decision
from a trial in which the Company is a defendant (see Part II, Item 1) would
adversely affect the Company's liquidity and capital resources.
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 additional capital on terms favorable to the
Company, or at all; 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.
9
<PAGE>
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
("PLM"), filed an action against TENERA, L.P., the Company's predecessor
(the "Predecessor Partnership"), among others, in the Superior Court of
California for the Count of Alameda. The action entitled PLM Financial
Services, Inc. v. TERA Corporation, et al., Case No. 743 439-0, seeks damages
in excess of $4.6 million in unpaid equipment rent and other unspecified
damages allegedly owing to PLM under an equipment lease dated September 29,
1984 between PLM and TERA Power Corporation ("TERA Power), a former
subsidiary of TERA Corporation, the predecessor of the Predecessor Partnership
(the "Predecessor Corporation"). PLM has named the Predecessor Partnership
in the action pursuant to a Guaranty dated September 24, 1984 of the lease
obligations of TERA Power made by the Predecessor Corporation. Upon the
liquidation of the Predecessor Corporation in late 1986, the stock of TERA
Power was transferred to the TERA Corporation Liquidating Trust (the
"Trust") and was thereafter sold to Delta Energy Projects Phases III, IV,
and VI pursuant to a stock purchase agreement dated May 31, 1991. Management
understands that TERA Power has asserted various defenses to the claims
asserted by PLM in the action. Moreover, management believes that, even if
there is liability under the lease, the Guaranty has been exonerated and the
Company will be able to defend this action successfully. Management does not
believe that eventual resolution of this matter will have a material effect on
the Company's financial position; however, an adverse outcome could have a
material adverse impact on the financial position, results of operations, and
cash flows of the Company. The trial in this matter was concluded in
August 1997 and the Company is awaiting the trial judge's decision.
ITEM 5. OTHER INFORMATION
As reported in the Company's press release of November 7, 1997, Michael D.
Thomas resigned as the Company's Chairman of the Board and Chief Executive
Officer, to focus his efforts on the Company's Technologies subsidiary. On
November 14, 1997, the Company consummated the sale of Technologies to Spear
Technologies, Inc., a corporation newly formed by Mr. Thomas and other former
members of management to acquire Technologies. See Item 2 for a description of
the terms of such sale. The Company's Board of Directors has named Robert C.
McKay, the Company's former Chief Operating Officer, Chief Executive Officer
and President and Jeffrey R. Hazarian, the Company's Chief Financial Officer,
will also now hold the position of Executive Vice President.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
11.0 Statement regarding computation of per share data:
See Notes to Consolidated Financial Statements.
27.0* Financial Data Schedule
(b) REPORTS ON FORM 8-K
None.
- --------------------
* Filed herewith.
10
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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: November 14, 1997 By: /s/ JEFFREY R. HAZARIAN
------------------------------
Jeffrey R. Hazarian
Chief Financial Officer,
Corporate Secretary, and
Vice President, Finance
11
<PAGE>
EXHIBIT INDEX
Ex. 27.0 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-START> Jan-01-1997
<PERIOD-END> Sep-30-1997
<CASH> 1,457
<SECURITIES> 0
<RECEIVABLES> 5,289
<ALLOWANCES> 1,480
<INVENTORY> 0
<CURRENT-ASSETS> 5,592
<PP&E> 403
<DEPRECIATION> 0
<TOTAL-ASSETS> 5,995
<CURRENT-LIABILITIES> 2,803
<BONDS> 0
<COMMON> 5,802
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 5,995
<SALES> 0
<TOTAL-REVENUES> 15,332
<CGS> 0
<TOTAL-COSTS> 9,392
<OTHER-EXPENSES> 7,860
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (96)
<INCOME-PRETAX> (1,824)
<INCOME-TAX> (139)
<INCOME-CONTINUING> (1,685)
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