U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
(Mark One) X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
____ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from __________ to ___________
Commission File Number 1-4142
TENNEY ENGINEERING, INC.
(Exact name of small business issuer as specified in its charter)
NEW JERSEY 22-1323920
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
1090 Springfield Road, Union, New Jersey 07083
(Address of principal executive offices)
(908) 686-7870
(Issuer's telephone number)
NONE
(Former name, former address and former fiscal year, if
changed since last report.)
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past
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
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date:
Class Outstanding at March 31, 1996
Common Stock $.10 par value 3,685,592
Transitional Small Business Disclosure Format: Yes ____ No X
TENNEY ENGINEERING, INC.
FORM 10-QSB
QUARTER ENDED MARCH 31, 1996
I N D E X
PAGE
Part I - Financial Information
Item 1. Financial Statements
Consolidated Condensed Balance Sheet - March 31, 1996 3
Consolidated Condensed Statements of Operations -
Three months ended March 31, 1996 and 1995 4
Consolidated Condensed Statements of CashFlows -
Three months ended March 31, 1996 and 1995 5
Notes to Consolidated Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis
Management's Discussion and Analysis of Financial
Condition and Results of Operations 17
Part II - Other Information 19
TENNEY ENGINEERING, INC.
AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEET MARCH 31, 1996
(In thousands of dollars - unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $ 223
Accounts receivable - net 2,000
Current portion of installment note receivables 36
Inventories 405
Prepaid expenses and other current assets 110
Deferred tax asset 295
Total Current Assets $ 3,069
Plant and equipment, net 300
Installment note receivable, noncurrent portion 324
Other assets 147
Total Assets $ 3,840
LIABILITIES AND STOCKHOLDERS EQUITY
Current Liabilities:
Accounts payable and other accrued liabilities $ 1,678
Current portion of long-term capital leases 55
Accrued payroll and payroll taxes 267
Billings in excess of estimated revenue on
long-term contracts 359
Pension obligation, current portion 179
Total Current Liabilities 2,538
Long-term debt, net of current portion 561
Total Liabilities $ 3,099
Commitments and contingencies
Stockholders Equity:
Preferred stock $1.00 par value:
Authorized 1,000,000 shares
Issued and outstanding - none
Common stock $.10 par value:
Authorized 10,000,000 shares
Issued 3,694,980 shares 369
Additional paid-in-capital 1,960
Retained earnings (deficit) (1,551)
778
Less treasury stock, 9,388 shares at cost 37
Total Stockholders Equity 741
Total Liabilities and Stockholders Equity $ 3,840
See Notes to Consolidated Financial Statements.<PAGE>
TENNEY ENGINEERING, INC.
AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(In thousands of dollars - unaudited)
1996 1995
Net Revenue:
Product and product related $ 2,141 $ 1,727
Service 198 219
Parts 184 173
Totals 2,523 2,119
Cost of Sales:
Product and product related 1,668 1,236
Service 119 155
Parts 77 72
Totals 1,864 1,463
Gross Profit 659 656
Selling and administrative expenses 519 526
Income from operations 140 130
Other expense (income):
Interest expense 4 44
Other income, net (1) (11)
Totals 3 33
Income before income taxes and
extraordinary items 137 97
Income taxes (benefit) ( 13) 2
Income before extraordinary items 150 95
Extraordinary item - gain on restructuring
of debt net of income taxes of
four thousand dollars, 1994 0 285
Net Income $ 150 $ 380
Income per common share before
extraordinary item $ 0.04 $ 0.02
Extraordinary item per common share 0.00 $ 0.08
Net Income per common share $ 0.04 $ 0.10
Exercise of option would not be dilutative.
<PAGE>
TENNEY ENGINEERING, INC.AND
SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
QUARTER ENDED MARCH 31, 1996 AND 1995
(In thousands of dollars - unaudited)
1996 1995
Operating activities:
Net income $ 150 $ 380
Adjustments to reconcile income to net
cash provided by (used in) operations:
Depreciation and amortization 19 15
Gain of debt forgiveness, principal
and interest 0 (290)
Provision for pension withdrawal
liability 0 36
Changes in operating assets
and liabilities:
Accounts and installments receivables (277) (244)
Inventories (94) (1,036)
Prepaid expenses and other current
assets (13) 22
Deferred tax asset (67) 0
Other assets (2) 0
Accounts payable and other accrued
liabilities 160 658
Accrued payroll and payroll taxes 105 48
Billings in excess of estimated
revenues 41 830
Net cash provided by operating
activities 22 419
Investing activities:
Acquisition of equipment (8) (26)
Cash used in investing activities (8) (26)
Financing activities:
Payments of note payable - bank
and debt (14) (213)
Cash used in financing activities (14) (213)
Net increase (decrease) in cash
and cash equivalents 0 180
Cash and cash equivalents, beginning
of year 223 842
Cash and cash equivalents,
end of period $ 223 $ 1,022
Supplemental disclosure of cash flow information:
Interest paid $ 4 $ 6
Income taxes paid $ 14 $ 28
Note 1:
Summary of Accounting Policies:The financial information enclosed
herewith as at March 31, 1996 and for the three months ended
March 31, 1995 is unaudited, and, in the opinion of the Company,
reflects all adjustments (which included only normal recurring
accruals) necessary for a fair presentation of the financial
position as of March 31, 1996, the changes in cash flow for the
three months ended March 31, 1996 and 1995 and the results of
operation for these periods.This quarterly report should be read
in conjunction with the Company's 1995 Annual Report and the
March 31, 1996 Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Note 2:
Results of Operations:
The results of operations for the three months ended March 31,
1996 are not necessarily indicative of the results to be expected
for the full year. Note 3:Financial Condition and Results of
Operation:As shown in the accompanying consolidated financial
statements, the Company has earned net income for the quarters
March 31, 1996 and 1995, respectively, from operations, which has
resulted in an improvement in the Company's financial position.
Significant Obligation:
As discussed in Note 4, with the cessation of its manufacturing
operations at the Union, New Jersey, facility, the Company
received a notification for payment of a withdrawal liability
from its union employees' multi-employer pension plan in the
amount of approximately $502,000. The Company has engaged
counsel to advise it with respect to this matter. The Company
met with a representative of the pension plan and has made a
proposal to the Fund for extended terms and a reduction of the
principal. Failure to reach an accord will have a material
adverse effect on the Company.
Note 4:
Restructuring:
The Company in February, 1993, ceased manufacturing operations at
its Union, New Jersey, facility. The Company's operations now
consist of manufacturing, through its wholly owned subsidiary,
diversified vacuum systems for space simulation, optic coating
and plasma treatment for medical labware, the servicing and
installation of environmental equipment, and earning license and
technology fees and rental income.During the fourth quarter of
1993, the Company received a demand from the Sheet Metal Workers'
National Pension Fund (the "Fund") for payment of a withdrawal
liability from its union employees' multi-employer pension plan
in the amount of approximately $530,000, to be paid in quarterly
payments starting in January, 1994. The Company engaged counsel
to advise it in these matters and made a provision for this
amount in the 1993 Consolidated Financial Statements. The
Company failed to make the first payment when due in January
1994. In March 1994, the Company received notice that they were
in default. In May 1994, the Company proposed, through counsel,
an amount significantly less than the original amount. In June
1994, the Company received notification from the Fund rejecting
the Company's offer. In November 1994, the Company proposed,
through counsel, a modified offer significantly less than the
total demanded, along with a significantly less periodic payment.
In December 1994, the Company received from the Fund a modified
calculation of the withdrawal liability in the amount of
approximately $502,000. On May 31, 1995, the Company received a
rejection of its proposals. On December 7, 1995, the Company was
served with a Complaint of Civil Action filed in the U.S.
District Court, Eastern District of Virginia, by the Fund,
demanding payment of past-due installments of withdrawal
liability (aggregating $271,034 at the date of the Complaint),
plus interest on overdue installments, statutory liquidated
damages, attorneys' fees and injunctive relief requiring payment
of future quarterly withdrawal installments and in the
alternative immediate payment of the entire withdrawal liability
plus accrued interest, statutory liquidated damages and
attorneys' fees.In February 1996, the Company filed an Answer and
Affirmative Defense to the action. The Company and its counsel
are having discussions with representatives of the Fund in an
attempt to reduce the amount of the liability and agree to an
installment payment schedule. At March 31, 1996, the Company had
in reserve $581,000 with respect to a possible liability to the
Fund.In the expectation that an agreement can be arrived at with
the Fund to pay the obligation in installments, the amount
reserved has been classified as being current and non-current
(see Note 4).The Company is not in a position to make immediate
payment of the entire amount or a significant portion of the
entire amount demanded by the Fund in the Complaint. If the
Company is required to make immediate payment of the entire
amount or of the past-due installments alleged to be due, it
would have a material adverse effect on the Company.The Company
reported net income of $150,000 and $380,000 for the three month
period ended March 31, 1996 and 1995, respectively.
Note 5:
License agreement:Concurrent with the Company's announcement to
discontinue manufacturing at the Union Facility, the Company
entered into a six-year licensing agreement (expiring December
1998) with a privately owned manufacturer (the "Licensee") of
environmental conditioning equipment. The terms of the
agreement, among others, provide for: the Licensee to
manufacture and sell environmental test chambers and other
equipment under the Tenney name with the Company also retaining
the right to manufacture such products; the Company to receive
license fees (up to a maximum of $1,900,000) equal to 5% of
qualifying sales during the term of the agreement with specified
minimum amounts payable annually; an option for the Licensee to
purchase the Company's rights, title and interest in the Tenney
trademark for $100,000 at the end of the license term in the
event the Company is no longer manufacturing such products; the
Company to perform all servicing and installation of the
aforementioned equipment. In addition, the Company entered into a
four-year consulting agreement with the Licensee whereby, for an
annual fee of $120,000, expiring December 31, 1996, the Company
will make the services of the Company's president available to
the Licensee for a specified period of time.For the first
quarter of 1996 and 1995, the Company earned License fees of
approximately $111,200 and $87,300, respectively, and $1,092,000
since inception. Net revenue for 1996 and 1995 includes
consulting revenue of $30,000.
Note 6:
Accounts receivable:
Accounts receivable consist of the following:
March 31,
1996
(In thousands
of dollars)
Accounts receivable, billed $ 1,920
Due from Licensee, net 108
2,028
Allowance for doubtful accounts (28)
Totals $ 2,000
At March 31, 1996, sales recognized on the percentage of
completion method approximated $1,788,800.
Note 7:
Inventories:
Inventories consist of the following:
March 31,
1996
(In thousands
of dollars)
Raw Materials $ 660
Work in process 55
Totals 715
Less: Provision for write-downs to estimated
realizable value 310
Totals $ 405
Accumulated costs on long-term contracts recognized by the
percentage of completion method (see Note 6) were approximately
$1,600,000.
Note 8:
Property and Equipment:
Property and equipment, which is stated at cost, is summarized as
follows at March 31, 1996:
March 31,
1996
(In thousands
of dollars)
Property (see below) $ 0
Equipment 1,272
Equipment under capital leases 324
1,596
Accumulated depreciation (1,296)
Total equipment - net $ 300
On December 12, 1994, in accordance with a Settlement Agreement,
the Company conveyed to First Fidelity Bank, N.A. (the "Bank")
the title to all real estate located in Union, New Jersey, with a
net book value of approximately $340,000 net of accumulated
depreciation (see Note 9).In conjunction with the conveyance of
the property, the Company entered into a Use and Occupancy
Agreement for approximately 10,500 square feet of space at an
annual rental of $50,000 and 25% of building operating costs
(excluding real estate taxes), which was terminated on December
14, 1995. On that date the Company entered into a three-year
lease with the new owner of the property for approximately
10,500 square feet at an annual rental of $70,000. On January
12, 1996, the Company and the new owners entered an amendment to
the lease for an additional 8,000 square feet of space at an
annual rental of $20,000, occupancy not to take effect until
July 1996. Rent totaled $17,500 and $12,500 for the quarter ended
March 31, 1996 and 1995, respectively.In addition, the Company
leases certain equipment for use in its operations under capital
leases. Property and equipment at March 31, 1996, included
capital leases of $324,000 and related accumulated depreciation
of $116,000.At March 31, 1996, the aggregate minimum rental
commitments under non-cancelable leases for the period shown are
as follows:
Year Capital Leases Operating Leases
(In thousands of dollars)
1996 $ 64 $ 52
1997 51 90
1998 51 90
1999 50 0
2000 30 0
Total $ 246 $ 232
Less imputed interest 32
Present value of net
lease payments $ 214
Less current installments 55
Long-term debt obligation
at March 31, 1996 $ 159
Imputed interest was calculated using rates between 7.06% - 9.76%
Note 9:
Debt:
Debt maturing within one year consists of the following at
March 31,
1996 1995
(In thousands
of dollars)
Notes payable - bank $ 0 $ 377
Current portion of capital leases 55 0
Current portion of pension obligation 179 0
(see Note 4)
Total $ 234 $ 377
The Company was indebted to the Bank in the amount of $1,020,000
principal at June 30, 1994, pursuant to a line of credit
agreement evidenced by a promissory note (the "Term Note"), the
maturity date of which had been extended from time to time. The
Company was also indebted to the Bank in the amount of
$2,480,474 principal pursuant to a mortgage loan secured by the
Company's real property in Union, New Jersey. The Bank also had
a security interest in substantially all of the Company's other
assets.The Company and the Bank entered into a Settlement
Agreement as at December 12, 1994, in which the Company conveyed
the title to the real estate located in Union, for a credit of
$1,800,000 against the total indebtedness of $3,758,663, the
remaining balance of $1,958,663 was converted to a non-interest
Note due September 30, 1995, in the amount of $800,000, payable
$200,000 in December, 1994, and the balance of $600,000 due in
nine monthly non-interest-bearing amounts of $66,667, and
forgiveness of debt of $1,158,663. The security interest held by
the bank in substantially all the Company's assets remained in
effect until 93 days after the date of the last payment. The
Company made the payments due during the first quarter of 1995
and recognized forgiveness of $289,666.Long-term debt consists of
the following at March 31,
1996
(In thousands
of dollars)
Capital lease obligations $ 214
Multi-employer pension
obligation (see Note 4) 581
Total long-term debt including
current maturities 795
Less: current maturities 234
Total long-term debt $ 561
Long-term liabilities consist of capital leases entered into for
equipment of $194,000 in 1995, and the long-term portion of the
multi-employer pension fund liability (see Note 3). As stated in
Note 4 of the Notes to Consolidated Financial Statements, the
Company has not concluded any agreement with the Fund as to the
amount and method of payment of the obligation. The Company has
estimated the maturities under the multi-employer pension fund
liability to be $153,000--1996; $104,000--1997; $104,000--1998;
$104,000--1999 and $26,000--2000.
Note 10:
Net Revenue:
Product and product-related net revenue includes revenue from the
Company's manufacturing operation, license and technology fees
and rental income. Service revenue includes revenue from the
servicing and installation of equipment and from the services of
the Company's president provided to the Licensee (see Note 5).
Parts revenue includes revenue from the sale of replacement and
spare parts for equipment previously manufactured by the Company
as well as equipment now being manufactured by the Licensee and
competitors.
Note 11:
Income taxes:
Effective January 1, 1993, the Company has adopted the Statement
of Financial Accounting Standards No. 109 ("SFAS No. 109"),
"Accounting for Income Taxes." SFAS 109 requires the use of an
asset and liability approach in accounting for income taxes.
Deferred tax assets and liabilities are recorded based on
differences between the financial statement and tax bases of
assets and liabilities at the tax rates in effect when these
differences are expected to reverse.Deferred tax assets are
reduced by a valuation allowance if, based on the weight of
available evidence, it is more likely than not that all or some
portion of the deferred tax assets will not be realized. The
ultimate realization of the deferred tax asset depends on the
Company's ability to generate sufficient taxable income in the
future. While management believes that the total deferred tax
asset will eventually be fully realized by future operations, as
a result of the losses experienced prior to 1994, management
recorded a valuation allowance equal to 100% of the deferred tax
asset upon adoption of SFAS 109 on January 1, 1993. As a result,
the initial adoption of SFAS 109 has no impact on the Company's
consolidated financial statements.At March 31, 1996, it was
determined that the valuation allowance should be reduced by
$13,000. This determination was based primarily on the
improvement in the Company's net income during 1996 and
1995.Accordingly, management believes that it is more likely than
not that the Company will generate sufficient taxable income to
realize these future tax benefits. The changes in the valuation
allowance resulted in the recording at March 31, 1996, of an
income tax benefit of $13,000.If the Company is unable to
generate sufficient taxable income in the future, increases in
the valuation allowance will be required through a charge to
expense. If, however, the Company achieves sufficient
profitability to realize all of the deferred tax assets, the
valuation allowance will be further reduced and reflected as an
income tax benefit in future periods.The components of the net
deferred tax asset are as follows at March 31,
1996
(In thousands
of dollars)
Deferred tax assets:
Inventory reserve $ 105
Accounts receivable reserve 10
Deferred revenue 38
Deferred compensation 10
Deferred pension obligation 197
Tax loss carryforward 1,104
Total deferred tax assets 1,464
Deferred tax liabilities:
Depreciation (1)
Valuation allowance (1,396)
Total additional deferred
tax assets $ 67
At March 31, 1996 and March 31, 1995, the Company utilized net
operating loss carryforwards of $191,000 and $663,000,
respectively. The income tax expense results from the federal
alternative tax which was allocated as follows:
1996 1995
(In thousands of dollars)
Income before extraordinary item $ 54 $ 2
Extraordinary item 0 4
Current income tax expense 54 6
Deferred income tax benefit (67) 0
Net income tax (benefit) $ (13) $ 6
At March 31, 1996, the Company has available, for tax reporting
purposes, net operating loss carryforwards of approximately
$3,200,000 which expire through 2008. A reconciliation of income
tax provision at federal statutory rate to the income tax
provision at the effective tax rate as follows: The effective
rate for 1996 is 34% and for 1995 was 34%.
1996 1995
(In thousands ofdollars)
Income taxes computed at the
federal statutory rates $ 65 $ 120
Federal alternative minimum tax 0 6
State taxes (net of federal benefit) 11 35
Realization of benefits of
tax loss carryforwards (22) (155)
Reduction of valuation allowance (67) 0
Net income tax (benefit) $ (13) $ 6
Note 12:
Common stock:
On May 26, 1995, at the annual meeting, a new ten-year incentive
stock option plan for officers and key employees was approved and
adopted. The plan provided that options could be granted from
time to time at a price of not less than 100% of the fair market
value of the common stock as of the date of grant for officers
and employees who own less than 10% of the voting stock of the
Company and 110% of fair market value for those officers and
employees who own more than 10% of the voting stock (affiliate
employees). Options granted are exercisable immediately and
terminate no later than ten years from date of grant (five years
from date of grant for affiliate employees). On June 1, 1995,
the Board of Directors of the Company granted and issued, to
officers and key employees, 155,000 options under the 1995
ten-year incentive stock option plan for officers and key
employees. Certain employees with the right to purchase 57,000
shares of stock under the 1991 ten-year incentive stock option
plan surrendered all outstanding options.A summary of plan
transactions follows:
Number of Option Price
Shares per Share
Outstanding and exercisable -
January 1, 1995 57,000 $.31250-$.34375
Outstanding and exercisable -
June 1, 1995 155,000 $.23437 - $.25781
Canceled (57,000) $.31250 - $.31250
Outstanding and exercisable -
December 31, 1995 155,000 $.23437 - .25781
Outstanding and exercisable -
March 31, 1996 155,000 $.23437 - $.25781
Note 13:
Commitments and contingencies:
Employment agreement:
In connection with the license agreement which provides for the
Company to receive $120,000 annually pursuant to a consulting
agreement (see Note 4), the Company entered into a four-year
employment agreement with its president which requires a minimum
annual salary of $200,000 commencing in 1993.
Lease commitment:
DynaTenn, Inc. (d/b/a "DynaVac"), a wholly-owned subsidiary which
manufactures diversified industrial vacuum equipment, leases its
facility in Weymouth, Massachusetts under an operating lease on a
month-to-month basis. At March 31, 1996 and 1995 rent charged to
operations for this facility approximated $16,800 and $17,800,
respectively.
Tenney Engineering, Inc. leases its facility in Union, New Jersey
under an operating lease which expires in December 1998 (see Note
8).
Contingencies:
The Company is involved in various lawsuits. Other than the one
explained in Note 4, all the others are covered by insurance and
subject to deductible amounts. Management believes that the
outcome of these lawsuits will not have a material adverse effect
on the Company's consolidated financial condition.
Note 14:
Extraordinary item:
Extraordinary item consists of gain on restructuring of debt net
of income taxes. The Settlement Agreement also provided for
the forgiveness of debt to be forgiven quarterly when periodic
quarterly payments totaling $200,000 were made timely. The
Company during the three months ended March 31, 1995 made the
required payments totaling $200,000 and recognized forgiveness of
$289,666 principal and interest.
* * *
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
Operating revenues continue to be sufficient to cover corporate
and associated administrative costs. Working capital and
stockholders equity continue to grow due to profitability.
At March 31, 1996 the Company's cash and cash equivalents totaled
$223,000 no change from a balance of $223,000 as at December 31,
1995. Net cash provided by operations totaled $22,000 while
acquisition of equipment and payment of debt totaled $22,000.
The Company's operations consist of manufacturing through its
DynaTenn, Inc. subsidiary (d/b/a "DynaVac") diversified vacuum
systems for space simulation, optic coating and plasma treatment
for medical labware and servicing, refurbishing, upgrading and
installing environmental equipment and earning licenses and
technology fees and rental income.
Significant obligation:
The Company is not in a position to make immediate payment of the
entire amount or a significant portion of the entire amount
demanded by the Fund, as discussed fully in Note 4. If the
Company is required to make immediate payment of the entire
amount or of the past-due installments alleged to be due, it
would have a material adverse effect on the Company.
RESULTS OF OPERATIONS
Total net revenue for the three months ended March 31, 1996 of
$2,523,000 compares to net revenue of $2,119,000 in the
corresponding 1995 period.
Product and product - related net revenue for 1996 and 1995 was
$2,141,000 and $1,727,000 respectively.
Service - related revenue of $198,000 for the three months ended
March 31, 1996 compares to the first quarter 1995 revenue of
$219,000, a decrease of 9%. The decrease is mainly due to the
harsh weather conditions in the northeast. Included in the 1996
and 1995 service revenue was revenue from the Licensee's
agreement for the use of the Company's president of approximately
$30,000, respectively.
Revenue related to the sale of parts totaled $184,000 and
$173,000 for the quarters ended March 31, 1996 and 1995,
respectively. The increase was due to more parts orders being
received and processed.
The Company's order backlog at March 31. 1996, December 31, 1995
and March 31, 1995 was approximately $4,080,000, $3,870,000 and
$4,070,200, respectively. The increase in backlog since March
31, 1995 is due primarily to an increase in backlog at the
Company's DynaVac subsidiary.
The total cost of sales as a percentage of net revenue was 74%
for the quarter ended March 31, 1996 and compares to 69% for the
corresponding 1995 period.
The first quarter 1996 cost of sales percentage of product and
product-related sales was 78% and compares to a cost of sales of
72% during 1995. The increase is due to certain fixed overhead
costs increasing in 1996.
Service cost of sale as a percentage of sales was 60% and 70% for
the 1996 and 1995 quarters, respectively. The decrease in the
cost of sales percentage between years was due to the ability to
continue to use service resources in productive areas which
reduced idle time and lowered the overhead charges.
Cost of sales as a percentage of sales during 1996 for parts was
42% and compares to 42% for the 1995 corresponding period.
Selling and administrative expenses for the first quarter of 1996
was $519,000 and compares to expenses of $526,000 in the 1995
period.
Interest expense was $4,000 in 1996 and compares to expense of
$44,000 in the 1995 period. The decrease is due to not having
interest on the Pension Obligation (see Note 4).
The first quarter net income was $150,000 and $380,000 in 1996
and 1995, respectively. During the first quarter of 1995 the
Company recognized an extraordinary item (see Note 9) of
$285,000. The Company continues to increase its revenue from
operating activities and continues to reduce costs.
PART II - OTHER INFORMATION
Item 6. Exhibits
(a)(27) Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter
ended March 31, 1996.
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Tenney Engineering, Inc.
(Registrant)
s/Martin Pelman
_________________________
Martin Pelman
Vice President, Finance
Principal Finance Officer
Dated: May 10, 1996.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 223,000
<SECURITIES> 0
<RECEIVABLES> 2,028,000
<ALLOWANCES> (28,000)
<INVENTORY> 405,000
<CURRENT-ASSETS> 3,069,000
<PP&E> 1,596,000
<DEPRECIATION> (1,296,000)
<TOTAL-ASSETS> 3,840,000
<CURRENT-LIABILITIES> 2,538,000
<BONDS> 0
0
0
<COMMON> 369,000
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 3,840,000
<SALES> 2,523,000
<TOTAL-REVENUES> 2,523,000
<CGS> 1,864,000
<TOTAL-COSTS> 519,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,000
<INCOME-PRETAX> 137,000
<INCOME-TAX> (13,000)
<INCOME-CONTINUING> 150,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 150,000
<EPS-PRIMARY> .04
<EPS-DILUTED> .04
</TABLE>
