<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, 1998
[ ] 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 or 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, 1998, was 10,123,153.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
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 .......................................................... 10
</TABLE>
- --------------------
* None
i
<PAGE>
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements
TENERA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Three Months Ended September 30, Nine Months Ended September 30,
-------------------------------- -------------------------------
1998 1997 1998 1997
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue .................................. $ 7,014 $ 5,240 $ 19,558 $ 15,332
Direct Costs ............................. 5,363 3,228 14,658 9,392
General and Administrative Expenses ...... 1,283 2,209 3,930 6,580
Software Development Costs ............... -- 662 -- 1,315
Special Item Income ...................... -- -- 300 --
Litigation Judgment Cost Adjustment ..... -- -- (50) --
Other Income ............................. 42 14 181 35
------------ ------------- ------------ -------------
Operating Income (Loss)................. 410 (845) 1,501 (1,920)
Interest Income, Net ..................... 31 23 96 96
------------ ------------- ------------ -------------
Net Earnings (Loss) Before
Income Tax Expense (Benefit)............ 441 (822) 1,597 (1,824)
Income Tax Expense (Benefit).............. 20 -- 249 (139)
------------ ------------- ------------- ------------
Net Earnings (Loss)....................... $ 421 $ (822) $ 1,348 $ (1,685)
============ ============= ============ =============
Net Earnings (Loss) per Share-- Basic .... $ 0.04 $ (0.08) $ 0.13 $ (0.17)
============ ============= ============ =============
Net Earnings (Loss) per Share-- Diluted .. $ 0.04 $ (0.08) $ 0.13 $ (0.17)
============ ============= ============ =============
Weighted Average
Number of Shares Outstanding-- Basic...... 10,123 10,123 10,123 10,123
============ ============= ============ =============
Weighted Average
Number of Shares Outstanding-- Diluted.... 10,423 10,123 10,267 10,123
============ ============= ============= =============
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
1
<PAGE>
TENERA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share amounts)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
September 30, December 31,
1998 1997
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents ............................................... $ 3,226 $ 2,292
Receivables, less allowance of $1,299 (1997 - $1,358):
Billed ................................................................ 2,243 1,643
Unbilled .............................................................. 2,249 1,726
Other current assets .................................................... 251 235
------------- ------------
Total Current Assets ................................................ 7,969 5,896
Property and Equipment, Net ............................................... 196 156
============= ============
Total Assets ..................................................... $ 8,165 $ 6,052
============= ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable ........................................................ $ 1,876 $ 638
Accrued compensation and related expenses ............................... 1,904 1,477
Income taxes payable .................................................... 50 --
Litigation judgment accrual ............................................. -- 950
------------- ------------
Total Current Liabilities ........................................... 3,830 3,065
Commitments and Contingencies
Shareholders' Equity
Common Stock, $0.01 par value, 25,000,000 authorized, 10,417,345 issued and
outstanding (1997 - 10,417,345 shares) .................................. 104 104
Paid in capital, in excess of par ....................................... 5,698 5,698
Retained deficit ........................................................ (1,161) (2,509)
Treasury stock-- 294,192 shares (1997 - 294,192 shares) ................. (306) (306)
------------- ------------
Total Shareholders' Equity ........................................ 4,335 2,987
------------- ------------
Total Liabilities and Shareholders' Equity ....................... $ 8,165 $ 6,052
============= ============
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
2
<PAGE>
TENERA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
(In thousands, except share amounts)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Paid In
Capital
Common In Excess of Retained Treasury
Stock Par Deficit Stock Total
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
December 31, 1997 .......... $ 104 $ 5,698 $ (2,509) $ (306) $ 2,987
Net Earnings ............... -- -- 533 -- 533
------------ ------------ ------------ ------------ ------------
March 31, 1998 ............. 104 5,698 (1,976) (306) 3,520
Net Earnings ............... -- -- 394 -- 394
------------ ------------ ------------ ------------ ------------
June 30, 1998 .............. 104 5,698 (1,582) (306) 3,914
Net Earnings................ -- -- 421 -- 421
------------ ------------ ------------ ------------ ------------
September 30, 1998 ......... $ 104 $ 5,698 $ (1,161) $ (306) $ 4,335
============ ============ ============ ============ ============
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
3
<PAGE>
TENERA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Nine Months Ended September 30,
-------------------------------
1998 1997
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings (loss)...................................................... $ 1,348 $ (1,685)
Adjustments to reconcile net earnings (loss) to cash provided (used) by
operating activities:
Depreciation .......................................................... 78 202
Gain on sale of equipment ............................................. -- (21)
Decrease in allowance for sales adjustments ........................... (59) (146)
Gain on repayment of Asset Sale note .................................. (300) --
Changes in assets and liabilities:
Receivables ......................................................... (1,064) (544)
Other current assets ................................................ (16) 208
Accounts payable .................................................... 1,238 (125)
Accrued compensation and related expenses ........................... 427 (134)
Income taxes payable ................................................ 50 --
Litigation judgment accrual ......................................... (950) --
------------- -------------
Net Cash Provided (Used) By Operating Activities .................. 752 (2,245)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and equipment ................................... (118) (282)
Proceeds from repayment of Asset Sale note .............................. 300 --
Proceeds from sale of equipment ......................................... -- 21
------------- -------------
Net Cash Provided (Used) in Investing Activities .................. 182 (261)
CASH FLOWS FROM FINANCING ACTIVITIES
Net repurchase of equity ................................................ -- (1)
------------- -------------
Net Cash Used by Financing Activities ............................. -- (1)
------------- -------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ...................... 934 (2,507)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD .......................... 2,292 3,964
------------- -------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ................................ $ 3,226 $ 1,457
============= =============
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
4
<PAGE>
TENERA, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1998 and 1997
(Unaudited)
Note 1. Organization
TENERA, Inc. (the "Company"), a Delaware corporation, provides a broad
range of professional consulting, management, and technical services to solve
complex management, engineering, environmental, and safety challenges associated
with the operation, asset management, and maintenance of power plants, federal
government properties, and capital intensive industries. The Company provides
its services by utilizing its professional skills and technological resources in
an integrated approach which combines strategic consulting, technical, and
project management capabilities with software systems and data bases. Services
performed by the Company typically include one or more of the following:
consultation with the client to determine the nature and scope of the problem,
identification and evaluation of the problem and its impact, development and
design of a process for correcting the problem, preparation of business plans,
preparation of reports for obtaining regulatory agency permits, and analysis in
support of regulatory and legal proceedings. The Company operates in one
business segment providing services which cover these general areas: strategic
consulting, management, and technical services and prior to the Asset Sale
described below, 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
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. Before the Asset Sale
described below, Technologies provided computerized maintenance management
software and consulting to the mass transit industry. On November 14, 1997, the
Company consummated the sale of all of the assets ("Asset Sale") 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. The Company received $1.3 million in cash, a promissory note
("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. The
Promissory Note was paid in full in February 1998.
5
<PAGE>
Note 2. Summary of Significant Accounting Policies
Basis of Presentation. The accompanying condensed 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, 1998, and the results of operations and cash
flows at September 30, 1998 and 1997, 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, 1997, filed with the
Securities and Exchange Commission.
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 amounts reported in the financial
statements and accompanying notes. Actual results could differ from these
estimates.
Cash and Cash Equivalents. Cash and cash equivalents consist of demand
deposits, money market accounts, 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
($2,353,000 and $2,236,000 at September 30, 1998 and December 31, 1997,
respectively), net of accumulated depreciation ($2,157,000 and $2,080,000 at
September 30, 1998 and December 31, 1997, 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 (until the Asset Sale) at
the time of customer acceptance; and from software maintenance agreements (until
the Asset Sale), equally over the period of the maintenance support agreement
(usually 12 months). The Company primarily offers its services to the electric
power industry and the DOE. Until the Asset Sale, The Company also offered
software services and products to the municipal transit industry in North
America.
The Company performs 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.
During the first nine months of 1998, three clients accounted for 37%,
27%, and 10% of the Company's total revenue, the first and second clients being
DOE contractors associated with the Rocky Flats Contract. During the same period
in 1997, three clients accounted for 49% (DOE contractor), 14%, and 10% of the
total revenue.
Income Taxes. For the three-month and nine-month periods ended September
30, 1998, a provision for federal and state income taxes was made at a rate of
approximately 5% and 16%, respectively, which reflect the benefit of net
operating loss carryforwards. For the comparable periods in 1997, tax benefit
provisions were made to reflect anticipated tax refunds related to the carryback
of certain net operating losses.
Per Share Information. In 1997, the Financial Accounting Standards Board
issued Statement No. 128, "Earnings per Share" ("FAS 128"). FAS 128 replaced the
calculation of primary and fully diluted earnings per share with basic and
diluted earnings per share. Unlike primary earnings per share, basic earnings
per share excludes any dilutive effects of options, warrants, and convertible
securities. Diluted earnings per share is very similar to the previously
reported fully diluted earnings per share and includes the effect of dilutive
stock options. All earnings per share amounts for all periods have been
presented, and where appropriate, restated to conform to the FAS 128
requirements. A reconciliation of the numerators and denominators of the basic
and diluted earnings per share computations required by FAS 128 is unnecessary,
as the basic and diluted amounts are the same because the effect of "in the
money" options are immaterial in the three and nine-month periods of 1998 and
they are anti-dilutive in the same periods of 1997 due to the reported losses.
6
<PAGE>
Note 3. Litigation Judgment
On May 1, 1998, the Company settled the action, entitled PLM Financial
Services, Inc. v. TERA Corporation, et al., Case No. 743 439-0, for $950,000 in
cash. For further information, refer to the Company's Form 10-Q for the quarter
ended June 30, 1998, filed with the Securities and Exchange Commission on August
6, 1998.
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,
------------------------ -----------------------
1998 1997 1998 1997
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue ................................................ 100.0% 100.0% 100.0% 100.0%
Direct Costs ........................................... 76.5 61.6 74.9 61.3
General and Administrative Expenses .................... 18.3 42.2 20.1 42.8
Software Development Costs.............................. -- 12.6 -- 8.6
Special Item Income .................................... -- -- 1.5 --
Litigation Judgment Cost Adjustment .................... -- -- (0.3) --
Other Income ........................................... 0.6 0.3 0.9 0.2
--------- --------- --------- ----------
Operating (Loss) Income ............................. 5.8 (16.1) 7.7 (12.5)
Interest Income, Net ................................... 0.5 0.4 0.5 0.6
--------- ---------- --------- ----------
Net Earnings (Loss) Before Income Tax Expense (Benefit). 6.3% (15.7)% 8.2% (11.9)%
========= ========= ========= ==========
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
Results of Operations
The Company's increased revenue in its Rocky Flats subsidiary, lower
overall general and administrative expenses, and elimination of significant
ongoing development costs as a result of the Asset Sale in the fourth quarter of
1997, resulted in net earnings before income tax expense, special item, and
litigation judgment cost adjustment of $441,000 and $1,247,000, respectively,
for the three and nine-month periods ended September 30, 1998. Net losses before
income tax benefits for the comparable periods in 1997 were $822,000 and
$1,824,000, respectively.
During the third quarter and first nine months of 1998, the Company
received written contracts and orders having an estimated value of approximately
$12.7 million and $23.4 million, respectively. The activity primarily reflects
the partial funding of the Company's extended contract at the DOE's Rocky Flats
Environmental Technology Site for the next fiscal year beginning October 1,
1998, and the extension of consulting contracts with two large electric utility
clients. Partially offsetting the addition of the new sales activity into
backlog during the first nine months of the year was a reduction to the backlog
for the closeout of unused contract funding which had expired. Contracted
backlog for current, active projects totaled approximately $14.9 million as of
September 30, 1998, up from $12.8 million at December 31, 1997.
The revenue increase in the third quarter and first nine months of 1998,
compared to a year ago, is primarily the result of increased Rocky Flats
Contract activity, partially offset by the absence of mass transportation
software revenue as a result of the Asset Sale. For the third quarter and first
three quarters of 1998, the concentration of revenue from the government sector
increased to 80% and 77% of total revenue, respectively, from 49% and 51% for
7
<PAGE>
the same periods in 1997. Approximately one-half of the increase in revenue
concentration relates to the loss of Technologies revenue as a result of the
Asset Sale. The other one-half of the revenue concentration increase is due to
higher levels of Rocky Flats Contract activity versus a year ago.
Direct costs were higher in the third quarter and first three quarters of
1998, compared to a year ago, primarily as a result of increased revenue
generation opportunities and the related use of subcontractor teams under the
Rocky Flats Contract. Gross margins decreased to 24% and 25%, respectively, for
the three and nine-month periods ended September 30, 1998, from 38% and 39%,
respectively, for the same periods in 1997, primarily due to an increase in the
proportion of lower margin government projects.
General and administrative costs were lower in the three and nine months
ended September 30, 1998, compared to a year ago, primarily reflecting increased
utilization of employees on billable contracts and reduced corporate and
subsidiary administrative staffs. General and administrative expenses, as a
percentage of revenue, for the three and nine-month periods, decreased to 18%
and 20%, respectively, in 1998 from 42% and 43%, respectively, in 1997.
Due to the Asset Sale in the fourth quarter of 1997, the Company did not
internally fund software product development in the first nine months of 1998,
as compared to having spent $662,000 and $1.3 million, respectively, during the
three and nine month periods ended September 30, 1998.
The special item of $300,000 in the nine-month period ended September 30,
1998, reflects the additional realized gain from the Asset Sale associated with
the repayment of the Promissory Note in February 1998. (see Note 1 to Financial
Statements).
The litigation judgment cost adjustment of $50,000 in the nine month
period ended September 30, 1998, relates to the PLM litigation (see Note 3 to
Financial Statements). The Company settled the case in May 1998 for $50,000 less
than the amount previously accrued.
Other income in 1998 reflects temporary accounting and administrative
services provided to the buyer in the Asset Sale. This income is expected to end
during the fourth quarter of 1998. Other income in 1997 reflects gains on the
sale of assets related to facility downsizing.
Net interest income in 1998 and 1997 represents earnings from the
investment of cash balances in short-term, high-quality, government and
corporate debt instruments. The higher net interest income in the three months
ended September 30, 1998, as compared to a year ago, primarily reflects larger
average cash balances. The Company had no borrowings under its line of credit
during the first nine months of 1998 and 1997.
Liquidity and Capital Resources
Cash and cash equivalents increased by $934,000 during the first nine
months of 1998. The increase was due to cash provided by operations ($752,000)
and cash proceeds from the repayment of the Promissory Note ($300,000),
partially offset by the acquisition of equipment ($118,000).
Receivables increased by $1,064,000 from December 31, 1997, primarily due
to an increase in Rocky Flats services revenue in the first nine months of 1998.
The allowance for sales adjustments decreased by $59,000 reflecting the net
write-off of client disallowances associated with Rocky Flats billings.
Accounts payable increased by $1,238,000 since the end of 1997, primarily
associated with supporting increased revenues and the higher usage of
subcontractors under the Rocky Flats Contract. Accrued compensation and related
expenses increased by $427,000 during the nine-month period, primarily
reflecting increased accrued vacation and holiday due to fewer holiday and
vacation days taken in the first nine months of the year, an increase in the
number of Energy employees, and the accrual of employer matching amounts payable
under the Company's 401(k) Savings Plan.
The litigation judgment accrual decreased by $950,000 due to the
settlement of the PLM litigation in May 1998 (see Note 3 to Financial
Statements).
No cash dividend was declared in the first nine months of 1998.
The impact of inflation on project revenue and costs of the Company was
minimal.
8
<PAGE>
At September 30, 1998, 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 is assigned to support standby letters of
credit. The line of credit expires in May 2000.
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.
Year 2000 Issue
Many existing computer programs use only two digits to identify a year in
the date field. These programs were designed and developed without considering
the impact of the upcoming change in the century. If not corrected, many
computer applications could fail or create erroneous results by or at the Year
2000. The Year 2000 issue affects virtually all companies and organizations. The
Company's technical personnel are in the process of assessing the impact of the
Year 2000 issue on the Company's products and services.
The Company has established a two-phase program to ensure that its
proprietary software and internal computer systems are Year 2000 compliant. The
initial phase, which included planning, inventory and assessment, has been
substantially completed. The final phase, which consists of correction, testing,
deployment and acceptance, is in process and is expected to be completed by
mid-1999. The Company expects that the cost of making its proprietary software
and internal systems compliant will not have a material effect on its overall
financial position or results of operations.
The Company is also beginning the same two-phase program to assess the
risks to the Company of systems owned and operated by outside parties but used
by the Company in its leased and rented facilities which have embedded
technology, such as elevator and telephone systems, security systems, and other
physical office infrastructure. The Company is examining infrastructure issues
on an office-by-office basis and the initial phase is planned to be completed by
the end of 1998 with the final phase completed during 1999. The Company expects
to develop contingency plans to address any such embedded technology issues as
they are identified.
The Company is in the process of communicating with its major clients,
subcontractors, banking institution, and payroll vendor to determine whether
they are or will be Year 2000 capable. By mid-1999, the Company expects to have
identified and develop contingency plans for any such clients and vendors who
will not be Year 2000 ready.
Even with the effort to address the Year 2000 issue made by the Company to
date, there can be no assurance that the systems of other entities on which the
Company relies, including the Company's internal systems and proprietary
software, will be timely remediated, or that a failure to remediate by another
entity and/or the Company, would not have a material effect on the Company's
results of operations.
The Company will utilize both internal and external resources to
reprogram, or replace, and test software for Year 2000 modifications. The total
cost associated with the required modifications and conversions is not expected
to be material to the Company's consolidated results of operations and financial
position.
Forward-Looking Statements
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; reliance on major customers; uncertainty regarding
industry trends and customer demand; uncertainty of access to additional
capital; reliance on key personnel; uncertainty regarding competition;
government contract audits; and Year 2000 issues, including the costs of
compliance and anticipated results, described above. Additional risks are
detailed in the Company's filings with the Securities and Exchange Commission
("SEC"), including its Form 10-K for the year ended December 31, 1997.
9
<PAGE>
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.
10
<PAGE>
SIGNATURES
Pursuant to the requirements 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.
Dated: November 12, 1998
TENERA, INC.
By /s/ JEFFREY R. HAZARIAN
------------------------------------------
Jeffrey R. Hazarian
Executive Vice President and
Chief Financial Officer
11
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-START> Jan-01-1998
<PERIOD-END> Sep-30-1998
<CASH> 3,226
<SECURITIES> 0
<RECEIVABLES> 5,791
<ALLOWANCES> 1,299
<INVENTORY> 0
<CURRENT-ASSETS> 7,969
<PP&E> 196
<DEPRECIATION> 0
<TOTAL-ASSETS> 8,165
<CURRENT-LIABILITIES> 3,830
<BONDS> 0
<COMMON> 5,802
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 8,165
<SALES> 0
<TOTAL-REVENUES> 19,558
<CGS> 0
<TOTAL-COSTS> 14,658
<OTHER-EXPENSES> 3,399
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (96)
<INCOME-PRETAX> 1,597
<INCOME-TAX> 249
<INCOME-CONTINUING> 1,348
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,348
<EPS-PRIMARY> 0.13
<EPS-DILUTED> 0.13
</TABLE>
