-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, ULmaVhJBg4gTcGwRmAgWV2qUAVh155DLMqW0qMVdhdGFigY8zHuTBhDopeAqvtph 5ua6+sMGdLZ8SOpLwoS6Hw== 0000804731-00-000005.txt : 20000512 0000804731-00-000005.hdr.sgml : 20000512 ACCESSION NUMBER: 0000804731-00-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000511 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TENERA INC CENTRAL INDEX KEY: 0000804731 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ENGINEERING SERVICES [8711] IRS NUMBER: 943213541 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-09812 FILM NUMBER: 625723 BUSINESS ADDRESS: STREET 1: ONE MARKET, SPEAR TOWER STREET 2: SUITE 1850 CITY: SAN FRANCISCO STATE: CA ZIP: 94105-1018 BUSINESS PHONE: 4155364744 MAIL ADDRESS: STREET 1: ONE MARKET, SPEAR TOWER STREET 2: SUITE 1850 CITY: SAN FRANCISCO STATE: CA ZIP: 94105-1018 FORMER COMPANY: FORMER CONFORMED NAME: TENERA LP DATE OF NAME CHANGE: 19920703 10-Q 1 QUARTERLY REPORT FOR PERIOD ENDED MARCH 31, 2000 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------------------- FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2000 [ ] 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 March 31, 2000, was 9,948,759. TABLE OF CONTENTS
PAGE PART I -- FINANCIAL INFORMATION Item 1. Consolidated Financial Statements (Unaudited) ............................................. 1 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition ..... 8 Item 3. Quantitative and Qualitative Disclosures of Market Risk ................................... 9 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
___________________ * None. i PART I -- FINANCIAL INFORMATION Item 1. Financial Statements TENERA, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except per share amounts)
- ---------------------------------------------------------------------------------------------------------------- Three Months Ended March 31, ------------------------------ 2000 1999 - ---------------------------------------------------------------------------------------------------------------- Revenue ................................................................... $ 9,647 $ 9,282 Direct Costs .............................................................. 7,721 7,285 General and Administrative Expenses ....................................... 1,781 1,489 Other Income .............................................................. 4 -- ------------- ------------ Operating Income ........................................................ 149 508 Interest Income, Net ...................................................... 51 27 ------------- ------------ Net Earnings Before Income Tax Expense................................... 200 535 Income Tax Expense ........................................................ 80 230 ------------- ------------ Net Earnings .............................................................. $ 120 $ 305 ============= ============ Net Earnings per Share-- Basic ............................................ $ 0.01 $ 0.03 ============= ============ Net Earnings per Share-- Diluted .......................................... $ 0.01 $ 0.03 ============= ============ Weighted Average Number of Shares Outstanding-- Basic ..................... 9,939 10,129 ============= ============ Weighted Average Number of Shares Outstanding-- Diluted ................... 10,529 10,542 ============= ============ - ----------------------------------------------------------------------------------------------------------------
See accompanying notes. 1 TENERA, INC. CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands, except share amounts)
- ---------------------------------------------------------------------------------------------------------------- March 31, December 31, 2000 1999 - ---------------------------------------------------------------------------------------------------------------- ASSETS Current Assets Cash and cash equivalents ............................................... $ 4,470 $ 3,493 Receivables, less allowance of $1,291 (1999 - $1,298) Billed ................................................................ 2,496 3,587 Unbilled .............................................................. 3,190 2,968 Other current assets .................................................... 392 369 ------------- ------------ Total Current Assets ................................................ 10,548 10,417 Property and Equipment, Net ............................................... 393 293 Other Assets .............................................................. 166 -- ------------- ------------ Total Assets ..................................................... $ 11,107 $ 10,710 ============= ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable ........................................................ $ 3,184 $ 3,112 Accrued compensation and related expenses ............................... 1,952 1,838 Income taxes payable .................................................... 80 -- ------------- ------------ Total Current Liabilities ........................................... 5,216 4,950 Commitments and Contingencies Stockholders' Equity Common Stock, $0.01 par value, 25,000,000 authorized, 10,417,345 issued and outstanding ......................................................... 104 104 Paid in capital, in excess of par ....................................... 5,693 5,699 Retained earnings........................................................ 627 507 Treasury stock-- 468,586 shares (1999 - 483,586 shares).................. (533) (550) ------------- ------------ Total Shareholders' Equity ........................................ 5,891 5,760 ------------- ------------ Total Liabilities and Stockholders' Equity ....................... $ 11,107 $ 10,710 ============= ============ - ----------------------------------------------------------------------------------------------------------------
See accompanying notes. 2 TENERA, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) (In thousands, except share amounts)
- ---------------------------------------------------------------------------------------------------------------- Paid-In Capital Common in Excess Retained Treasury Stock of Par Earnings Stock Total - ---------------------------------------------------------------------------------------------------------------- December 31, 1999 .......... $ 104 $ 5,699 $ 507 $ (550) $ 5,760 Issuance of 15,000 Common Stock Shares from Treasury.. -- (6) -- 17 11 Net Earnings ............... -- -- 120 -- 120 ------------ ------------ ------------ ------------ ------------ March 31, 2000 ............. $ 104 $ 5,693 $ 627 $ (533) $ 5,891 ============ ============ ============ ============ ============ - ----------------------------------------------------------------------------------------------------------------
See accompanying notes. 3 TENERA, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands)
- ---------------------------------------------------------------------------------------------------------------- Three Months Ended March 31, ------------------------------ 2000 1999 - ---------------------------------------------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES Net earnings ............................................................ $ 120 $ 305 Adjustments to reconcile net earnings to cash provided (used) by operating activities: Depreciation and amortization.......................................... 68 48 Gain on sale of assets ................................................ (4) -- Decrease in allowance for sales adjustments ........................... (7) -- Changes in assets and liabilities: Receivables ......................................................... 876 (1244) Other current assets ................................................ (23) 29 Accounts payable .................................................... 72 392 Accrued compensation and related expenses ........................... 114 183 Income taxes payable ................................................ 80 150 ------------- ------------ Net Cash Provided (Used) By Operating Activities .................. 1,296 (137) CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of property and equipment ................................... (337) (60) Proceeds from sale of assets ............................................ 7 -- ------------- ------------ Net Cash Used in Investing Activities ............................. (330) (60) CASH FLOWS FROM FINANCING ACTIVITIES Issuance of common stock from Treasury.................................. 11 -- ------------- ------------ Net Cash Provided by Financing Activities ........................ 11 -- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ...................... 977 (197) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD .......................... 3,493 3,361 ------------- ------------ CASH AND CASH EQUIVALENTS AT END OF PERIOD ................................ $ 4,470 $ 3,164 ============= ============ - ----------------------------------------------------------------------------------------------------------------
See accompanying notes. 4 TENERA, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2000 and 1999 (Unaudited) Note 1. Organization TENERA, Inc. (the "Company"), a Delaware corporation,is the parent company of the subsidiaries described below. 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 professional technical consulting and management services, environmental outsourcing and monitoring, risk analysis and modeling, and organizational effectiveness and development. TENERA GoTrain.Net, LLC ("GoTrain.Net"), a Delaware limited liability company, was formed by the Company in October 1999, as a joint venture operation to design, develop, market, and maintain a web-based Corporate Distance Learning Center ("CDLC"). The joint venture was established with its minority interest partner, SoBran, Inc., an Ohio corporation specializing in Internet technologies. In February 2000, the Company purchased certain Internet-based development assets from SoBran, Inc. for $307,000, including SoBran's minority interest in GoTrain.Net. The purchase consideration was allocated to the acquired assets based on deemed fair values as follows: computer equipment and software ($289,000); office equipment ($18,000). After the asset acquisitiion from SoBran, the Company consolidated its technology enhanced training services group into GoTrain.Net. 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 are unaudited. All intercompany accounts and transactions have been eliminated. In the opinion of management, all adjustments (which include normal recurring adjustments) necessary to present fairly the financial position at March 31, 2000, and the results of operations and cash flows for the three-month periods ended March 31, 2000 and 1999, 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, 1999, 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. Cash and cash equivalents are carried at cost, which approximates fair value. The Company includes in cash and cash equivalents, all short-term, highly liquid investments which mature within three months of acquisition. 5 Concentrations of Credit Risk and Credit Risk Evaluations. Financial instruments, which potentially subject the Company to concentrations of credit risk, consist primarily of cash and cash equivalents and accounts receivable. Cash and cash equivalents consist principally of demand deposit, money market accounts, and commercial paper issued by companies with strong credit ratings. Cash and cash equivalents are held with various domestic financial institutions with high credit standing. The Company has not experienced any significant losses on its cash and cash equivalents. The Company conducts business with companies in various industries primarily in the United States. The Company performs ongoing credit evaluations of its customers and generally does not require collateral. Allowances are maintained for potential credit issues, and such losses to date have been within management's expectations. Property and Equipment. Property and equipment are stated at cost ($2,901,000 and $2,587,000 at March 31, 2000 and December 31, 1999, respectively), net of accumulated depreciation ($2,342,000 and $2,294,000 at March 31, 2000 and December 31, 1999, respectively). Depreciation is calculated using the straight line method over the estimated useful lives, which range from three to five years. Revenue. The Company primarily offers its services to the electric power industry and the DOE. 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). The Company performs credit evaluations of these clients 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 quarter of 2000, three clients accounted for 42%, 24%, and 15% of the Company's total revenue. During the same period in 1999, three clients accounted for 31%, 24% and 18% of the total revenue. Income Taxes. The Company uses the liability method to account for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates and laws that will be in effect when the differences are expected to reverse. Per Share Computation. Basic earnings per share is computed by dividing net earnings by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution of securities by adding other common stock equivalents, including stock options, warrants and convertible preferred stock, in the weighted average number of common shares outstanding for a period, if dilutive. 6 The following table sets forth the computation of basic and diluted earnings per share as required by Financial Accounting Standards Board Statement No. 128: (In thousands, except per share amounts)
- -------------------------------------------------------------------------------------------------------- Three Months Ended March 31, -------------------------------- 2000 1999 - -------------------------------------------------------------------------------------------------------- Numerator: Net earnings .................................................. $ 120 $ 305 ============= ============ Denominator: Denominator for basic earnings per share-- weighted-average shares outstanding............................. 9,939 10,129 Effect of dilutive securities: Employee & Director stock options (Treasury stock method) ... 590 413 ------------- ------------ Denominator for diluted earnings per share-- weighted-average common and common equivalent shares ........... 10,529 10,542 ============= ============ Basic earnings per share ........................................ $ 0.01 $ 0.03 ============= ============ Diluted earnings per share ...................................... $ 0.01 $ 0.03 ============= ============ - --------------------------------------------------------------------------------------------------------
Comprehensive Income. The Company does not have material components of other comprehensive income. Therefore, comprehensive income is equal to net earnings reported for all periods presented. Disclosures about Segments of an Enterprise. The Company has one reportable operating segment, which is providing services with respect to operations, maintenance, safety, strategic business and risk management, and environmental/ecological issues for electric utility and DOE facilities. Recent Accounting Pronouncements. In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("FAS 133"), which establishes accounting and reporting standards for derivative instruments and hedging activities. FAS 133 requires that an entity recognize all derivatives as either assets or liabilities in the balance sheet and measure those instruments at fair value. The Company will be required to adopt FAS 133 effective January 1, 2001. Management of the Company does not believe the adoption of this statement will have a material effect on the Company's consolidated financial position, results of operations, or cash flows. 7 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition TENERA, INC. Results of Operations (Unaudited)
- ---------------------------------------------------------------------------------------------------------------- Percent of Revenue ----------------------- Quarter Ended March 31, ----------------------- 2000 1999 - ---------------------------------------------------------------------------------------------------------------- Revenue ......................................................................... 100.0% 100.0% Direct Costs .................................................................... 80.0 78.5 General and Administrative Expenses ............................................. 18.5 16.0 Other Income .................................................................... * -- --------- --------- Operating Income .............................................................. 1.5 5.5 Interest Income, Net ............................................................ 0.5 0.3 --------- --------- Net Earnings Before Income Tax Expense .......................................... 2.0% 5.8% ========= ========= - ----------------------------------------------------------------------------------------------------------------
* Less than 0.05% Results of Operations Net earnings before income tax expense was $200,000 for the three month period ended March 31, 2000, compared to $535,000 for the first quarter of 1999. During the first quarter of 2000, the Company received written contracts and orders having an estimated value of approximately $9.5 million. The activity primarily reflects the additional funding of the Company's contract at the DOE's Rocky Flats Environmental Technology Site and a $.6 million GoTrain.Net contract involving the development of Technology Enhanced Training courses ("TET Courses") and future CDLC usage. Contracted backlog for current, active projects totaled approximately $15.6 million as of March 31, 2000, up from $15.3 million at December 31, 1999. The 4% revenue increase in the first quarter of 2000, compared to a year ago, is primarily the result of increased Rocky Flats Contract activity, partially offset by a revenue decline in the commercial strategic consulting business area. For the first quarter of 2000, the concentration of revenue from the government sector increased to 86% of total revenue, from 82% for the same period in 1999. Direct costs were higher in the first quarter of 2000, compared to a year ago, primarily as a result of increased revenue generation and the related use of subcontractor teams under the Rocky Flats Contract. Gross margins decreased to 20% in the first quarter of 2000, from 22% for the same period in 1999, primarily due to an increase in the proportion of lower margin government projects. General and administrative costs were 20% higher compared to a year ago, primarily reflecting increased costs associated with the development of TET Courses and the purchase of the Internet-based development and support business of SoBran, Inc. (see Note 1 to Consolidated Financial Statements). Net interest income in 2000 and 1999 represents earnings from the investment of cash balances in short-term, high-quality, money market accounts and corporate debt instruments. The higher net interest income in 2000, as compared to a year ago, primarily reflects larger average cash balances and higher interest rates. The Company had no borrowings under its line of credit during the first three months of 2000 and 1999. 8 Liquidity and Capital Resources Cash and cash equivalents increased by $977,000 during the first three months of 2000. The increase was due to cash provided by operations ($1,296,000) and the exercising of stock options ($11,000), partially offset by the net acquisition of property and equipment ($330,000), associated with the purchase of certain Internet-based development assets from SoBran, Inc. (see Note 1 to Consolidated Financial Statements). Receivables decreased by $876,000 from December 31, 1999, primarily due to increased collections. The allowance for sales adjustments decreased by $7,000 from December 31, 1999. Accounts payable increased by $72,000 since the end of 1999, primarily associated with supporting increased revenues. Accrued compensation and related expenses increased by $114,000 during the period, primarily reflecting the annual merit increases in employee salaries and fewer holiday and vacation days in the first quarter of the year. No cash dividend was declared in the first three months of 2000. The impact of inflation on project revenue and costs of the Company was minimal. At March 31, 2000, 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. The Company expects to renew on substantially the same terms. 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. 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 reliance on major customers and concentration of revenue from the government sector; the uncertainty of future profitability; uncertainty regarding industry trends and customer demand; uncertainty of access to additional capital; reliance on key personnel; government contract audits; uncertainty regarding competition; and unknown Year 2000 issues of third party vendors. 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, 1999. Item 3. Quantitative and Qualitative Disclosures of Market Risk The Company has minimal exposure to market and interest risk as the Company invests its excess cash in short-term instruments which mature within 90 days from the date of purchase. The Company does not have any derivative instruments. 9 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 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: May 11, 2000 TENERA, INC. By /s/ JEFFREY R. HAZARIAN ------------------------------------------ Jeffrey R. Hazarian Executive Vice President and Chief Financial Officer 11 EX-27.0 2 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS Dec-31-2000 Jan-01-2000 Mar-31-2000 4,470 0 6,977 1,291 0 10,548 393 0 11,107 5,216 0 5,797 0 0 0 11,107 0 9,647 0 7,721 1,777 0 (51) 200 80 120 0 0 0 120 0.01 0.01
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