<PAGE>

                                UNITED STATES
                     SECURITIES AND EXCHANGE COMMISSION
                           WASHINGTON, D.C. 20549

                      _________________________________


                                  FORM 10-K

(MARK ONE)

[  X  ]    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE 
           SECURITIES EXCHANGE ACT OF 1934

           FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996

[     ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE 
           SECURITIES EXCHANGE ACT OF 1934

           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 [ ].

   Indicate by check mark if disclosure of delinquent filers pursuant to Item 
405 of Regulation S-K is not contained herein, and will not be contained, to 
the best of Registrant's knowledge, in definitive proxy as information 
statements incorporated by reference in Part III of this Form 10-K or any 
amendment to this Form 10-K. [  X  ]  

   As of March 17, 1997, the aggregate market value of the Registrant's Common 
Stock held by nonaffiliates of the Registrant was $4,215,650 based on the last 
transaction price as reported on the American Stock Exchange. This calculation 
does not reflect a determination that certain persons are affiliates of the 
Registrant for any other purposes. 

   The number of shares outstanding on March 17, 1997, was 10,123,153.  



<PAGE>
                                   PART I

ITEM 1.  BUSINESS

GENERAL

   TENERA, Inc. ("TENERA" or the "Company"), a Delaware corporation, was 
formed in connection with the conversion of TENERA, L.P. (the predecessor of 
the Company, the "Predecessor Partnership") into corporate form (the "Merger" 
or "Conversion"), completed on June 30, 1995. Pursuant to the Merger, the 
Company succeeded to the business, assets, and liabilities of the Predecessor 
Partnership. Therefore, the Company and the Predecessor Partnership are 
sometimes collectively referred to herein as TENERA or the Company. (See Note 
1 to Financial Statements. Organization)

   The Company provides a broad range of professional services and software 
products to solve complex management, engineering, environmental, and safety 
challenges associated with the licensing, operation, asset management, and 
maintenance of power plants and mass transit systems. Its services and 
products cover the following general areas:  consulting and management 
services and software services, products, and systems.

   In the area of consulting and management services, TENERA provides services 
to assist its commercial electric power industry clients with respect to 
nuclear and fossil plant operations and maintenance, nuclear safety and 
licensing, organizational effectiveness, management audits, utility and 
project management, risk management, and certain environmental engineering 
tasks, and also provides expert witness and analysis support for regulatory 
and legal proceedings. For its governmental clients, TENERA provides the 
Department of Energy ("DOE") and DOE prime contractors with assistance in 
devising, implementing, and monitoring strategies to upgrade from an 
operational, safety, and environmental perspective at DOE-owned nuclear 
reactor sites. For the mass transit area, TENERA provides its clients with 
consulting services associated with the maintenance of their rolling stock, 
right-of-way, and facilities. The software services, products, and systems 
area complements the management and consulting services areas providing 
software services and information management products, specialized data bases, 
and systems which support electric power generation and mass transit systems 
in areas such as regulatory compliance, facility operations, maintenance, and 
data management.

   TENERA has developed expertise in providing solutions to the complex 
technical and regulatory issues facing the commercial electric power industry, 
particularly with respect to nuclear facilities. Over the past several years, 
commercial electric utilities have experienced increased competitive pressure 
due to a continued deregulation of electric power production. For example, 
utilities continue to find it more difficult to recover total capital 
expenditures through rate increases, as well as facing increased competition 
from independent power producers, alternative energy production, and 
cogeneration. During the same period, utilities have responded to continued 
regulatory pressures to comply with complex safety and environmental 
guidelines. Safety problems and environmental issues have also emerged at 
government-owned production facilities. A massive program is underway 
throughout the DOE complex of nuclear facilities to comply with health, 
safety, and environmental requirements similar to those applicable to 
commercial facilities, principally in the areas of hazardous wastes, 
decontamination, decommissioning, and remediation. Electric utilities, as well 
as a variety of other industries, have been subjected to extensive regulation 
regarding environmentally safe handling of hazardous materials. It has been 
TENERA's strategy to provide solutions to these issues by providing clients 
with a high level of professional skills and a broad range of scientific, 
technological, and management resources, including software and data bases 
which are used either in support of consulting projects or as the basis for 
development of stand alone software products and systems. The Company assists 
its clients in the initial identification and analysis of a problem, the 
implementation of a technologically feasible solution that client management 
believes will be sensitive to business and public interest constraints, and 
the ongoing monitoring of that solution.

   During 1995, the Company formed TENERA Rocky Flats, LLC ("LLC"), a Colorado 
limited liability company, to provide consulting and management services in 
connection with participation in the Performance Based Integrating Management 
Contract ("Rocky Flats Contract") at the DOE's Rocky Flats Environmental 
Technology Site ("Site").

                                      1


<PAGE>
BACKGROUND

   The Company's principal markets are the commercial electric utility 
industry and the DOE-owned nuclear reactor sites. The electric utility 
industry has undergone considerable change in recent years and faces a complex 
mix of economic and regulatory pressures. There has been gradual deregulation 
of the production and distribution of electricity, and the associated desire 
by utilities to meet demand for electricity through higher operating 
efficiency. Some of the Company's largest commercial clients have responded to 
a more competitive environment by implementation of significant cost control 
measures. 

   Electric utilities and the DOE-owned nuclear reactor sites also face close 
scrutiny resulting from public concern over health, safety, and the 
environment. The Company believes that increased enforcement of environmental 
laws and regulations at various levels of government continues to be prompted 
by publicity and public awareness of environmental problems and health hazards 
posed by hazardous materials and toxic wastes. 

   Economic pressures have resulted in certain changes in the focus of 
electric utility management. For example, the rate-making process now 
represents a significant area of risk to utilities. This has highlighted the 
importance of careful planning and documentation in connection with rate case 
preparation. Furthermore, rate base decisions apparently are shifting their 
emphasis to ongoing performance reviews related to such measures as plant 
capacity factors. This has resulted in substantial penalties for extended 
plant outages and has stimulated actions by the utilities to assure more 
reliable operations. 

   The DOE has begun the implementation of programs to address safety problems 
and environmental concerns which have emerged at its nuclear facilities. These 
programs are designed to bring the operations into compliance with a variety 
of health, safety, and environmental requirements, similar to those applicable 
to the commercial electric utility industry. The DOE's decontamination, 
decommissioning, and remediation programs are also aimed at achieving 
significant cleanup of its hazardous waste storage facilities and the partial 
shutdown of nuclear operations at certain of its sites.

   The markets for electric utility and DOE facility professional services and 
software products covers a broad range of activities. Typical markets include 
waste management, outage support, operating plant services, licensing support, 
safety and health management, maintenance and information services, 
decommissioning consulting, risk assessment, quality assurance and control, 
organizational effectiveness, engineering support, records management, fuel 
related services, and plant security. 

   In recent years, the slowdown in construction of commercial power plants 
has placed a premium on extending existing plant life and has shifted the 
electric utility commercial market emphasis. This has also resulted in greater 
attention by utilities to management systems for preventive maintenance and 
improved methods of plant operation, which may, in time, result in the 
expansion of the market for services and software associated with the 
efficient and profitable operation of existing capacity. 

   The Company's other market, mass transit systems, consists of public 
entities that provide ground transportation services to the general public. 
The properties are typically characterized as either bus or rail operators, 
with rail and large bus operators comprising approximately 75% of the budgeted 
mass transit funds for maintenance and capital assets. The transit industry 
consists primarily of government or quasi-government agencies, which are 
subject to swings in government subsidy levels, and operate in a political 
arena. A significant portion of this funding is spent by the operators on 
asset operation and maintenance. In several sectors of the country, transit 
infrastructure and fleets are aging and may require extensive maintenance or 
replacement to the extent that capital budgets will allow. 

   The industrial association, American Public Transit Association ("APTA") is 
a strong representative of the transit industry, with a membership comprised 
of over 96% of the transit organizations. TENERA has established close and 
active ties with APTA in order to maintain a clear understanding of the issues 
facing this industry. The Company has sold total solution systems and services 
to some of the most prestigious operators in the industry (i.e., New York 
Metropolitan Transit Authority and Amtrak). The experience gained during these 
engagements has provided the Company's transit consultants with additional 
insight into the day-to-day, on-the-line problems which must be solved by the 
operator's maintenance organizations. 

                                      2


<PAGE>
SERVICES AND PRODUCTS

   The Company provides its services by utilizing its professional skills and 
technological resources in an integrated approach which combines 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:  
consulting and management services and software services, products, and 
systems.

   The following table reflects the percentage of revenues derived for each of 
these areas for the period indicated during the fiscal years ended December 
31, 1994 through 1996:

<TABLE>
<CAPTION>
________________________________________________________________________
                                                                        
                                              Year Ended December 31,  
                                             -------------------------- 
                                              1996      1995      1994  
________________________________________________________________________
<S>                                          <C>       <C>       <C>    
Consulting and Management Services ......... 91.8%     85.5%     83.6%  
Software Services, Products, and Systems ...  8.2%     14.5%     16.4%  
________________________________________________________________________
</TABLE>

   Consulting and Management Services. The Company's consulting and management 
services involve determining a solution to client problems and challenges 
arising in the design, operation, and management of large facilities and mass 
transit systems. Focus is also placed on providing expertise in the wide range 
of disciplines required to resolve complex legal and regulatory issues and 
offering executives guidance in planning and implementing a coordinated, 
effective response to such issues. The Company applies its professional 
skills, software, and specialized data bases to all aspects of these problems 
and challenges in the following general areas:

  -  Operations and maintenance
  -  Engineering design review and verification
  -  Nuclear safety and licensing
  -  Organizational effectiveness
  -  Management audits
  -  Project management
  -  Nuclear safety and criticality at DOE facilities
  -  Environmental engineering issues at DOE and electric utility facilities

   Software Services, Products, and Systems. To complement its professional 
services, the Company offers a range of information software services, 
products, and systems including data bases designed to support mass transit 
and electric utility clients in areas such as asset management, regulatory 
compliance, facility operations, and equipment maintenance and data management 
related to management consulting, operating performance, and environmental 
engineering requirements. The principal proprietary aspect of the software 
business lies in the ability to utilize it to solve client problems and to 
market this capability. Software applications for a variety of industrial 
sectors and requirements have been developed for PC, mini, and mainframe 
hardware installations. The Company offers interactive software applications 
for mass transit systems or large facility information management 
requirements, which are designed for use with IBM mainframe and networked 
personal computer environments. Major core products which are customized to 
the client's specifications include:

  -  An on-line interactive system for coordinating and controlling all 
     aspects of maintenance for large mass transit systems and electric 
     utility facilities

                                      3


<PAGE>
  -  Networked PC software to manage nuclear safety-related data bases and 
     engineering processes in conformance with rigorous software quality 
     assurance requirements

MARKETING AND CLIENTS

   Marketing. The Company's marketing strategy emphasizes its ability to offer 
a broad range of services and software designed to meet the needs of its 
clients in a timely and cost-efficient manner. The Company has the 
organization and capability to undertake not only small tasks requiring a few 
professionals but also the management, staffing, design, and implementation of 
major projects which may last for several months and involve large numbers of 
professionals in several geographic locations. Characteristic of TENERA's 
marketing strategy are significant projects in which initial contracts have 
been only a fraction of the ultimate sale. 

   The Company provides financial incentives to attract senior technical 
professionals with extensive utility and transit industry experience and to 
encourage these individuals to market the complete range of TENERA's services 
and software throughout existing and potential customer organizations. 

   TENERA's marketing efforts are facilitated by the technical reputation and 
industry recognition often enjoyed by its professional staff. TENERA's 
reputation in the electric power and mass transit industries often leads to 
invitations to participate at an early stage in the conceptualization of a 
project. During this phase, the Company assists clients in developing an 
approach for efficiently and productively solving a problem. This assistance 
can lead, in turn, to a request for TENERA to use existing software or to 
develop software systems to solve the problem. If new services or products are 
developed for a client, they generally are marketed to other clients with 
similar needs.

   Clients. During the year ended December 31, 1996, TENERA provided services 
and software to over 75 clients involving over 125 contracts. During the year 
ended December 31, 1995, TENERA provided services and software to over 66 
clients involving over 150 contracts. Over 80% of TENERA's clients during the 
year ended December 31, 1996, had previously used its services or software. 

   During the year ended December 31, 1996, two customers, Kaiser-Hill 
Company, LLC ("Kaiser-Hill"), prime contractor of the Rocky Flats Contract, 
and Commonwealth Edison Company ("ComEd"), accounted for approximately 68% of 
the Company's total revenue. Kaiser-Hill and ComEd represented approximately 
56% and 12%, respectively. During the year ended December 31, 1995, these two 
clients accounted for approximately 38% of the Company's total revenue 
(Kaiser-Hill - 31%; ComEd - 7%). The Company has maintained working 
relationships with Kaiser-Hill and ComEd for two years and ten years, 
respectively, during which time various contracts have been completed and 
replaced with new or follow-on contracts. There can be no assurance that these 
relationships will be maintained at current levels or beyond the existing 
contracts, and the loss of these clients could have a material adverse effect 
on the Company. 

OPERATIONS

   The Company contracts for the billing of its services in one of four ways:  
time and materials ("T & M"), cost plus fixed fee ("CPFF"), cost plus 
incentive fee ("CPIF"), or fixed price. T & M, CPFF, and CPIF contracts, which 
cover a substantial amount of TENERA's revenues, are generally billed monthly 
by applying a multiplier factor to specific labor costs or by use of a fixed 
labor rate per hour charged to each project. T & M, CPFF, and CPIF contracts 
are generally structured to include "not-to-exceed" ceilings; however, if 
after initial review or after work has started, it is noted that additional 
work beyond the initial scope of work is required, the contract normally can 
be renegotiated to include such additional work and to increase the contract 
ceiling accordingly. The Company also receives license and annual maintenance 
fees from contracts involving software products. During the year ended 
December 31, 1996, such fees amounted to $283,000 ($814,000 in 1995).

   Fixed-price contracts are generally applicable to instances in which TENERA 
has been requested to deliver services and/or products previously developed or 
products and/or services deliverable to multiple customers. Certain fixed 
price contracts are established where TENERA is developing software products 
or transferring the technology to a new platform.

                                      4


<PAGE>
   TENERA generally receives payments on amounts billed 30 to 90 days after 
billing, except for retention under contracts. Since the majority of TENERA's 
clients are utility companies, DOE, DOE prime contractors, or major mass 
transit systems, TENERA historically has experienced a low percentage of 
losses due to poor credit risks.

BACKLOG

   As of December 31, 1996, TENERA had contracted a backlog of approximately 
$6.7 million, all of which is cancelable by the clients. Contracted backlog 
represents the aggregate of the residual (unspent) value of those active 
contracts entered into by TENERA for services which are limited by a 
contractual amount and does not include any estimates of open-ended services 
contracts or unfunded backlog that may result from additions to existing 
contracts. 

   Since all outstanding contracts are cancelable, there is no assurance that 
the revenues from these contracts will be realized by the Company. If any 
contract is canceled, there is no assurance that the Company will be 
successful in replacing such contracts.

COMPETITION

   The market for consulting and management services and related software 
products and services is highly competitive and TENERA competes with several 
larger firms with significantly greater resources. The primary competitive 
factor in the market for consulting and management services is price, and a 
number of TENERA's competitors are able to offer such services at prices that 
are lower than those offered by TENERA. 

RESEARCH AND DEVELOPMENT

   It has been TENERA's policy to undertake development projects of software, 
systems, and data bases only if they can be expected to lead directly to 
proprietary products that may be generally marketable. A portion of TENERA's 
research and development effort may be funded through customer-sponsored 
projects, although the rights to the systems and data bases generally remain 
with TENERA. Because TENERA's research and development activities involve the 
integration of customer-funded, cost sharing, and TENERA-funded projects, it 
is not possible to segregate on a historical basis all of the specific costs 
allocable as research and development costs. In 1996 however, TENERA expended 
in excess of $562,000 ($68,000 in 1995) of its funds on software development 
designed to meet customers needs for 1996 and beyond.

PATENTS AND LICENSES

   The Company does not hold any patents material to its business. TENERA 
relies upon trade secret laws and contracts to protect its proprietary rights 
in software systems and data bases. The license agreements under which 
customers acquire the rights to use TENERA's products generally restrict the 
customers' use of the products to their own operations and prohibit disclosure 
to others.

PERSONNEL

   At December 31, 1996, the Company employed a total of 176 consultants, 
engineers, programmers, and scientists and a supporting administrative staff 
of over 30 employees. Nine employees hold doctorates and 71 employees hold 
master's degrees. TENERA also retains the services of independent contractors 
in order to fulfill specific needs for particular projects. None of TENERA's 
employees are represented by a labor union. 

ITEM 2.  PROPERTIES

   The Company's headquarters are located in San Francisco, California, and 
consist of approximately 13,500 square feet of leased office space. TENERA 
also leases approximately 5,000 square feet of office space in Hartford, 
Connecticut. These leases expire in 1997 and 2000, respectively. Additionally, 
TENERA maintains leases covering approximately 8,000 square feet in total in 
Louisville, Colorado; Knoxville, Tennessee; and Richland, Washington which 
expire at various dates through 1998. 

                                      5


<PAGE>
   The Company believes that its facilities are well maintained and adequate 
for its current needs.

ITEM 3.  LEGAL PROCEEDINGS

   On November 4, 1994, PLM Financial Services, Inc. ("PLM") filed an action 
against the Predecessor Partnership, among others, in the Superior Court of 
California for the County 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 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 II, 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.

   On October 13, 1995, the League for Coastal Protection ("League") filed an 
action on behalf of the League and the general public against the Company, 
among others, in the Superior Court of California for the County of San 
Francisco. The action entitled League for Coastal Protection v. Pacific Gas & 
Electric Company ("PG&E"), et al., Case No. 973182, seeks injunctive relief 
and disgorgement of unspecified profits under the California Business and 
Professions Code, Section 17200, et seq. The plaintiff contends that certain 
studies performed by the Company and its predecessors respecting the 
requirements of 316(b) of the Clean Water Act, that ultimately were submitted 
by PG&E to the Regional Water Quality Control Board ("RWQCB") in 1988 in 
connection with the Diablo Canyon Nuclear Power facility at Diablo Canyon, 
California, were deficient in various respects, and that the Company and PG&E 
covered up those deficiencies from the RWQCB and other state agencies. On 
October 13, 1995, the League filed an action against the Company among others, 
in the United States District Court for the Northern District of California, 
entitled League for Coastal Protection v. Pacific Gas & Electric Company, et 
al., Case No. C96-1393DLJ, seeking injunctive and other relief under the 
United States Clean Water Act related to the same studies and reporting 
described above. On February 5, 1996, John W. Carter filed an action against 
the Company and others in the United States District Court for the Northern 
District of California entitled United States of America, ex rel. and State of 
California, ex rel., John W. Carter v. Pacific Gas & Electric Company, et al., 
Case No. C-95-2843-MHP, under the False Claims Act. This action, which is 
based on the same studies and reports described above, seeks unspecified 
damages and penalties. An agreement has been reached in principal for a global 
settlement with the League, Carter, the California Attorney General, and the 
Environmental Protection Agency. While the settlement is being documented, all 
matters have been stayed, and/or held in abeyance, pending consummation of the 
settlement. As a result of the settlement, all of the actions will be 
dismissed. The Company is not required to make any payment or other 
contribution to the settlement.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

   None. 

                                      6


<PAGE>
                                   PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

   Shares of the Company's Common Stock are listed for trading on AMEX under 
the symbol TNR. The first trading day on AMEX was June 30, 1995, at which time 
10,417,345 shares were outstanding. The Units of the Predecessor Partnership 
were listed for trading on AMEX under the symbol TLP. The first and last 
trading days on AMEX for the Predecessor Partnership was January 28, 1988, and 
June 30, 1995, respectively. There were approximately 500 shareholders of 
record as of March 17, 1997.

<TABLE>
<CAPTION>
___________________________________________________________________________________
                                                                                   
                          1996                  1995                  1994         
                   ------------------    ------------------    ------------------  
                     Price Range of        Price Range of        Price Range of    
                      TENERA, Inc.          TENERA, Inc.          Predecessor      
                         Shares              Shares (1)        Partnership Units   
                   ------------------    ------------------    ------------------  
                     High      Low         High      Low         High      Low     
___________________________________________________________________________________
<S>                <C>       <C>         <C>       <C>         <C>       <C>       
First Quarter .... $ 1.375   $ 0.875     $ 0.9375  $ 0.50      $ 1.6875  $ 1.25    
Second Quarter ...   1.4375    0.875       1.1875    0.75        1.4375    1.0625  
Third Quarter ....   1.0625    0.75        1.875     1.1875      1.1875    0.50    
Fourth Quarter ...   0.875     0.625       1.50      0.875       1.3125    0.625   
___________________________________________________________________________________
 (1) Reflects trading prices of the Predecessor Partnership Units for the period   
     from January 1, 1995 to June 30, 1995.                                        
</TABLE>

   The Board of Directors of the Company determines the amount of cash 
dividends which the Company may make to shareholders after consideration of 
projected cash requirements and a determination of the amount of retained 
funds necessary to provide for growth of the Company's business. The Company 
and its Predecessor Partnership have made no distributions since 1991. The 
Company does not anticipate resumption of cash distributions in the 
foreseeable future.

                                      7


<PAGE>
ITEM 6.  SELECTED FINANCIAL DATA

   The following combined selected financial data of the Company for the five 
prior fiscal years should be read in conjunction with the combined financial 
statements and related notes included elsewhere. 

                                TENERA, INC.
                            FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
(In thousands, except per unit and statistical amounts)                                                        
_______________________________________________________________________________________________________________
                                                                                                               
                                                                       Year Ended December 31,                 
                                                         ----------------------------------------------------  
                                                           1996       1995       1994       1993       1992    
_______________________________________________________________________________________________________________
<S>                                                      <C>        <C>        <C>        <C>        <C>       
OPERATIONS DATA                                                                                                
Revenue ................................................ $ 24,003   $ 25,545   $ 23,600   $ 29,340   $ 36,648  
Operating (Loss) Income ................................   (1,382)     1,203     (1,239)      (315)       826  
Net (Loss) Earnings ....................................   (1,080)       898     (1,202)      (294)       795  
Earnings (Loss) per Share/Equivalent Unit(1) ...........    (0.11)      0.07      (0.13)     (0.03)      0.08  
Weighted Average Shares/Equivalent Units(1) ............   10,248     10,014      9,555      9,646      9,710  
CASH FLOW DATA                                                                                                 
Net Cash Provided (Used) by Operating Activities .......    2,954       (286)        17      1,472       (626) 
Net Increase (Decrease) in Cash and Cash Equivalents ...    2,490       (469)       363      1,085     (1,418) 
FINANCIAL POSITION AT DECEMBER 31                                                                              
Cash and Cash Equivalents ..............................    3,964      1,474      1,943      1,580        495  
Working Capital ........................................    4,555      5,836      4,024      5,196      5,383  
Total Assets ...........................................    7,940     10,087      8,616      9,345     11,111  
Total Liabilities ......................................    3,062      3,912      4,069      3,524      4,932  
Shareholders' Equity/Partners' Capital .................    4,878      6,175      4,547      5,821      6,179  
Book Value per Share/Equivalent Unit(1)(2) .............     0.48       0.60       0.48       0.60       0.64  
OTHER INFORMATION                                                                                              
Number of Employees ....................................      208        270        170        202        263  
_______________________________________________________________________________________________________________
 (1) Equivalent Units represent both the general and limited partners' interest in Predecessor Partnership     
     earnings.                                                                                                 
 (2) Calculated as Shareholders' Equity divided by shares of Common Stock outstanding at December 31, 1996 and 
     December 31, 1995, and as the Predecessor Partnership's Partners' Capital divided by Equivalent Units     
     outstanding at December 31, for the years 1992 to 1994, respectively.                                     
</TABLE>

                                      8


<PAGE>
ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND 
         FINANCIAL CONDITION

                                TENERA, INC.
                            RESULTS OF OPERATIONS

<TABLE>
<CAPTION>
______________________________________________________________________________________________________
                                                                                                      
                                                          Year Ended December 31,                     
                                       -------------------------------------------------------------- 
                                                1996                      1995                1994    
                                       ----------------------    ----------------------    ---------- 
                                                   % Increase                % Increase               
                                                   (Decrease)                (Decrease)               
                                          % of      to Prior        % of      to Prior        % of    
                                        Revenue       Year        Revenue       Year        Revenue   
______________________________________________________________________________________________________
<S>                                    <C>         <C>           <C>         <C>           <C>        
Revenue ..............................     100          (6)          100           8           100    
Direct Costs .........................      65          (4)           63          10            62    
General and Administrative Expenses ..      41          19            32         (23)           45    
Other Income (Expenses) ..............       0         275             0         (69)            0    
Special Items, Net ...................       0         N/M            --        (100)            2    
                                       ----------  ----------    ----------  ----------    ---------- 
  Operating (Loss) Income ............      (6)       (215)            5         N/M            (5)   
Interest Income, Net .................       1         164             0         (97)            0    
                                       ----------  ----------    ----------  ----------    ---------- 
Net (Loss) Earnings Before Income                                                                     
Tax Benefit/Expense ..................      (5)       (220)            5         N/M            (5)   
                                       ==========  ==========    ==========  ==========    ========== 
______________________________________________________________________________________________________
N/M  Not meaningful.                                                                                  
</TABLE>

YEAR ENDED DECEMBER 31, 1996 VERSUS YEAR ENDED DECEMBER 31, 1995

   Lower revenue and higher general and administrative expenses resulted in a 
net loss before income tax benefit/expense of $1,217,000, compared to net 
earnings before income tax expense of $1,204,000 in 1995. 

   The revenue decrease is primarily the result of reduced sales of consulting 
and management services throughout the year; lower sales activity of software 
services until the award of a software contract in August 1996, valued at 
approximately $2.9 million, with the National Railroad Passenger Corporation 
("Amtrak"); and the reduced availability of staff reassigned to internal 
software product development; partially offset by an increase in revenue 
related to the Rocky Flats Contract at DOE's Site. Concentration of revenue 
from the government sector increased to 61% of total revenue for 1996 from 49% 
in 1995. This is primarily the result of the Rocky Flats Contract which was in 
existence for the entire year of 1996, but commenced in mid-1995. During 1996, 
the government sector quarterly revenue declined approximately 40% from the 
first quarter to the fourth quarter, due primarily to site budget constraints 
on the Rocky Flats Contract. The Company is unable to determine whether future 
budgetary actions at Rocky Flats will further reduce revenue from the Rocky 
Flats Contract. The number of clients served during the year increased 
slightly to 75 from 66 in 1995. Revenue from software license and maintenance 
fees during 1996 decreased to $283,000 from $814,000 in 1995, primarily due to 
fewer new software installations.

   Direct costs were lower in 1996, primarily as a result of the reduced 
revenue generation opportunities. Gross margins decreased to 35% in 1996 from 
37% in 1995 due to the full year impact of the lower margin Rocky Flats 
Contract. This lower margin contribution is primarily due to the cost-plus 
pricing characteristics of 

                                      9


<PAGE>
the contract. Gross margin contribution from overall project activity during 
the year, before consideration for the impact of the Rocky Flats Contract, was 
up slightly to 44% in 1996 from 43% in 1995.

   General and administrative costs increased by $1.6 million in 1996, 
primarily reflecting increased professional staff time spent on overhead and 
sales activities, higher severance costs, and increased internally-funded 
software development costs. Prior to January 1, 1996, the Company's product 
development had been primarily funded by clients as part of the development of 
software applications. These cost increases resulted in an increase in general 
and administrative expenses as a percentage of revenue from 32% in 1995 to 41% 
in 1996.

   Other income for 1996 primarily relates to the final liquidation, in April 
1996, of the Company's interest in the Individual Plant Evaluation Partnership 
("IPEP partnership"), a technical services partnership in which it was an 
operating participant until its termination in 1995. The Company previously 
booked a loss provision of $30,000 in 1995 for estimated closure costs of the 
IPEP partnership. Other income also includes gains on the sale of assets 
related to facility downsizing (approximately $10,000 in 1996 and 1995).

   The special items' net expense of $50,000 is comprised of two items (see 
Note 8 to Financial Statements. Special Items). First, in the second quarter 
of 1996, the Company recorded a $250,000 adjustment to the reserve related to 
the settlement of specific disputed costs on certain 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. The 
second special adjustment occurred in December 1996, and more than offset the 
first item. This adjustment related to the repricing of debt owed to the 
Company by one of its executive officers (see Note 3 to Financial Statements. 
Related Party Transactions). The principal amount of the note was reduced to 
the then current fair market value of the stock held as security, resulting in 
a charge to earnings of approximately $300,000.

   Net interest income in 1996 represents earnings from the investment of cash 
balances in short-term, high-quality, government and corporate debt 
instruments, partially offset by capital lease interest expense. The Company 
had no borrowings under its line of credit during 1996. Net interest income in 
1995 reflects investment earnings on smaller average cash balances, partially 
offset by interest costs associated with short-term borrowing on the Company's 
line of credit during the first six months of 1995.

YEAR ENDED DECEMBER 31, 1995 VERSUS YEAR ENDED DECEMBER 31, 1994

   Higher revenue and lower general and administrative expenses resulted in 
net earnings before income tax expense for 1995 of $1,204,000 versus a pre-tax 
loss of $1,702,000 in 1994 before the special item for settlement with the 
DOE.

   The revenue increase was primarily a result of the impact of beginning the 
Rocky Flats Contract at the Site on July 1, 1995. This contract is a cost-plus 
incentive agreement with estimated revenue for direct and overhead cost 
recovery exceeding $16 million and an incentive fee percentage comprised of a 
1% base and 4.5% maximum performance-based award over a two-year base period. 
The total period of performance for the Rocky Flats Contract includes options 
to extend the contract beyond the two-year initial base period, upon the 
request of Kaiser-Hill, through June 30, 2000. The Rocky Flats Contract, as 
with all TENERA contracts, is cancelable by the clients (see Item 1. 
"Business"). The Rocky Flats Contract's impact on revenue for 1995 was 
partially offset by the impact of reduced technical services sales to electric 
utility clients and related staffing when compared to 1994.

   Concentration of revenue from the government sector increased to 49% of 
total revenue for 1995 from 36% in 1994. This was primarily due to the Rocky 
Flats Contract activity which represented 45% of total revenue in the final 
six months of 1995 and 31% of total revenue for the entire year. The number of 
clients served during the year decreased slightly to 66 from 73 in 1994. 
Revenue from software license and maintenance fees during 1995 rose to 
$814,000 from $393,000 in 1994, primarily due to the recognition of license 
fees associated with achieving certain milestones in the ongoing New York 
Metropolitan Transit Authority and Long Island Rail Road installations.

                                     10


<PAGE>
   Direct costs were higher in 1995, primarily reflecting the increased 
staffing for the Rocky Flats Contract. Gross margin contribution from overall 
project activity during the year, before consideration for the impact of the 
Rocky Flats Contract, was up from 38% in 1994 to 43% in 1995. The 1995 margins 
reflected improved pricing in services to electric utility clients and 
achievement of milestones under software contracts. The gross margin 
contribution for the Rocky Flats Contract was only 19%. This lower gross 
margin contribution was primarily due to the cost-plus pricing characteristics 
of the contract.

   General and administrative expenses decreased by $2,422,000 in 1995 as 
compared to 1994, primarily due to overall reduced staff size during the first 
half of the year, improved technical staff productivity on client projects, 
and lower professional service, facilities, travel, and office equipment costs 
in 1995, partially offset by costs associated with the Conversion incurred in 
1995 and incentive compensation awards. These net cost reductions resulted in 
a drop in general and administrative expenses as a percentage of revenue from 
45% in 1994 to 32% in 1995. 

   Other expense for 1995 primarily related to the Company's interest 
($30,000) in the estimated loss of the Individual Plant Evaluation Partnership 
("IPEP"), a technical services partnership in which it was an operating 
participant, partially offset by a gain on the sale of assets related to 
facility downsizing ($10,000).

   The special item of $500,000 in 1994, reflected the estimated settlement of 
specific disputed costs on certain U.S. Government contracts with the DOE. 
This positive earnings adjustment resulted from a partial reduction of the 
reserve for sales adjustment established in 1991. The reserve was established 
to provide for a dispute between the Company and the DOE with respect to the 
allowability and amount of potential rate adjustments on U.S. Government 
contracts for certain employee compensation costs.

   Net interest income represented earnings from the investment of cash 
balances in short-term, high-quality, corporate debt instruments, offset by 
the interest costs associated with short-term borrowing on the Company's line 
of credit during the first six months of 1995.

LIQUIDITY AND CAPITAL RESOURCES

   Cash and cash equivalents increased by $2,490,000 during 1996. The increase 
was due to cash provided by operations ($2,954,000), offset by cash used in 
net acquisition of equipment ($247,000), and in financing activities 
($217,000).

   Receivables decreased by $5,758,000 from December 31, 1995, primarily due 
to an increase in collections and a reduction in revenue during 1996. The 
allowance for sales adjustments decreased by $1,262,000 since December 31, 
1995, primarily due to contract closeouts of various government contracts from 
prior periods.

   Accounts payable decreased by $144,000 since the end of 1995, primarily due 
to the net reduction of prepaid fixed-price project commitments. Accrued 
compensation and related expenses decreased by $382,000 during the period 
primarily reflecting staff reductions.

   Income taxes payable and deferred income taxes decreased by $216,000 and 
$90,000, respectively, during the period resulting from payment of 1995 income 
taxes and reduced tax liability associated with 1996 net losses.

   Equity decreased by $1,297,000 in 1996, due to net losses ($1,080,000) and 
the repurchase of stock ($217,000).

   No cash dividend was declared in 1996.

   The impact of inflation on revenue and projects of the Company was minimal.

   At December 31, 1996, the Company had available $4,500,000 of a $5,000,000 
revolving loan facility with its lender which expires in May 1998. The Company 
has no outstanding borrowing against the line; however, $500,000 was assigned 
to support standby letters of credit.

   Management believes that cash expected to be generated by operations, the 
Company's working capital, and its loan facility are adequate to meet its 
anticipated liquidity needs through the next twelve months.

                                     11


<PAGE>
OPERATING RISKS

   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 
the risks and uncertainties which could cause actual results to differ 
materially from those projected, including those risks and uncertainties 
discussed below. 

   History of Losses; Uncertainty of Future Profitability. Revenue decreased 
each year from 1990 to 1994 ($51.2 million in 1990, $44.1 million in 1991, 
$36.6 million in 1992, $29.3 million in 1993, $23.6 million in 1994), and has 
remained relatively flat from 1994 through 1996, while net earnings (loss) 
from operations over the same periods declined from $7.9 million in 1990, to 
$(6.2 million) in 1991, $0.8 million in 1992, $(0.3 million) in 1993, $(1.2 
million) in 1994, $0.9 million in 1995, and $(1.2 million) in 1996. There can 
be no assurance of the level of earnings, if any, that the Company will be 
able to derive in the future.

   Uncertainty Regarding Industry Trends and Customer Demand. As a result of 
the slowdown in the construction of power plants and the absence of new power 
plants scheduled for construction, as well as the gradual deregulation of the 
production and distribution of electricity, the market for engineering 
services and software relating to licensing and construction of power plants 
has contracted, and the market for services and software related to efficient 
and profitable operation of existing capacity has expanded. This trend has 
caused some electric utilities to close power plants and to curtail certain 
other activities traditionally supported by TENERA. This reduced demand for 
TENERA's traditional engineering services and software, which has caused 
TENERA to discontinue certain business units and related facilities, and to 
downsize and realign engineering staff, has had, and may continue to have, a 
material adverse impact on operating results. TENERA's profitability depends 
on its ability to successfully adjust to these industry changes through 
additional downsizing or realignment of professional staff and through the 
successful development and marketing of new services and software. There can 
be no assurance that TENERA will have the financial and other resources 
necessary to successfully research, develop, introduce, and market new 
products and services, that if, or when, such new products or services are 
introduced, they will be favorably accepted by current or potential customers, 
or that TENERA will be otherwise able to fully adjust its services and 
products to meet the changing needs of the industry. See "Business - 
Background."

   Uncertainty of Access to Capital; Research and Development. Management 
currently believes that cash expected to be generated from operations, the 
Company's working capital, and its available loan facility, are adequate to 
meet its anticipated near-term needs. If cash from operations is less than 
currently anticipated, TENERA may need to seek other sources of capital. 
Moreover, additional amounts will be required to adequately fund research and 
development of new products and services necessary to meet changing industry 
trends and customer demand. There can be no guarantee that such sources will 
be available in sufficient amounts or on terms favorable to TENERA, or at all.

   Reliance on Key Personnel. Due to the nature of the consulting and 
professional services business, the Company's success depends, to a 
significant extent, upon the continued services of its officers and key 
technical personnel and the ability to recruit additional qualified personnel. 
The Company experienced a historically high rate of turnover as revenue and 
earnings began to decline in 1991 and thereafter, and the further loss of such 
officers and technical personnel, and the inability to recruit sufficient 
additional qualified personnel could have material adverse effect on the 
Company.

   Government Contracts Audits. The Company's United States government 
contracts are subject in all cases to audit by governmental authorities. The 
Company earlier in 1994 concluded an audit begun in 1991 of certain of its 
government contracts with the DOE relating to the allowability of certain 
employee compensation costs. The Company made a special charge to earnings in 
1991 for a $2.4 million provision for the potential rate adjustments then 
disputed by the Company and the government. As a result of resolving the 
dispute, the Company recognized increases to earnings of $500,000 in 1994 and 
$250,000 in 1996. Cash payments to clients associated with the settlement, 
which are estimated to be between $400,000 and $500,000, which were accrued 
for in the 1991 Special Charge to earnings, are expected to be made as 
government contracts with individual clients are closed out. There can be no 
assurance that no additional charges to earnings of the Company may result 
from future audits of the Company's government contracts.

                                     12


<PAGE>
   Litigation. PLM Financial Services, Inc. has filed an action, in the 
Superior Court of California for the County of Alameda, seeking damages in 
excess of $4.6 million in unpaid equipment rent and other payments allegedly 
owing to PLM under an equipment lease between PLM and TERA Power Corporation, 
a former subsidiary of TERA Corporation of the Predecessor Corporation. PLM 
has named the Company in the action pursuant to a guaranty of the lease 
obligations made by the Predecessor Corporation. 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. See "Legal Proceedings."

   Competition. The market for engineering and management services and related 
software products and services is highly competitive and TENERA competes with 
several larger firms with significantly greater resources. Significant 
competitive factors in the market for engineering and management services are 
price and the ability to offer new products and services designed to meet 
changing customer demand. A number of TENERA's competitors are able to offer 
such services at prices that are lower than those offered by TENERA, and to 
devote far greater resources toward the development of new products and 
services. This competition has had, and is expected to continue to have, a 
material adverse impact on TENERA's business.

   Reliance on Major Customers. During fiscal 1996, two customers, Kaiser-Hill 
and ComEd, accounted for approximately 68% of the Company's total revenues, 
and during 1995, these two customers accounted for approximately 38% of the 
Company's total revenues. All outstanding customer contracts are cancelable 
upon notice by either party, and therefore, there can be no assurance that 
relationships with customers will be maintained at existing levels, or at all. 
Budgetary constraints at the Rocky Flats Site resulted in a decline in revenue 
attributable to Kaiser-Hill, and a 40% decline in revenue from the government 
sector, generally from the first quarter to the fourth quarter of 1996, and if 
continued, such budgetary constraints could result in further declines in 
revenue in the future. The discontinuation or material reduction of business 
relations with these customers could have a material adverse impact on 
TENERA's business. See "Business - Marketing and Clients."

                                     13


<PAGE>
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                                TENERA, INC.
                    CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
(In thousands, except per share amounts)                                   
___________________________________________________________________________
                                                                           
                                               Year Ended December 31,     
                                           ------------------------------- 
                                             1996       1995       1994    
___________________________________________________________________________
<S>                                        <C>        <C>        <C>       
Revenue .................................. $ 24,003   $ 25,545   $ 23,600  
Direct Costs .............................   15,527     16,082     14,612  
General and Administrative Expenses ......    9,843      8,240     10,662  
Other Income (Expenses) ..................       35        (20)       (65) 
Special Items, Net .......................      (50)        --        500  
                                           ---------  ---------  --------- 
    Operating (Loss) Income ..............   (1,382)     1,203     (1,239) 
Interest Income, Net .....................      165          1         37  
                                           ---------  ---------  --------- 
  Net (Loss) Earnings Before Income                                        
  Tax Benefit/Expense ....................   (1,217)     1,204   $ (1,202) 
                                                                 ========= 
Income Tax (Benefit) Expense .............     (137)       306             
                                           ---------  ---------            
Net (Loss) Earnings ...................... $ (1,080)  $    898             
                                           =========  =========            
Net (Loss) Earnings per Share                                              
(Pro Forma for 1995) ..................... $  (0.11)  $   0.07             
                                           =========  =========            
Weighted Average Number of Shares                                          
Outstanding ..............................   10,248     10,014             
                                           =========  =========            
___________________________________________________________________________
 See accompanying notes.                                                   
</TABLE>

                                     14


<PAGE>
                                TENERA, INC.
                         CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
(In thousands, except share and unit amounts)                                             
__________________________________________________________________________________________
                                                                                          
                                                                     December 31,         
                                                              --------------------------- 
                                                                 1996             1995    
__________________________________________________________________________________________
<S>                                                           <C>              <C>        
ASSETS                                                                                    
Current Assets                                                                            
  Cash and cash equivalents ..............................    $   3,964        $   1,474  
  Receivables, less allowances of $1,626 (1995 - $2,888)                                  
    Billed ...............................................        1,087            4,857  
    Unbilled .............................................        2,032            2,758  
  Other current assets ...................................          534              641  
                                                              ----------       ---------- 
      Total Current Assets ...............................        7,617            9,730  
Property and Equipment, Net ..............................          323              340  
Other Assets .............................................           --               17  
                                                              ----------       ---------- 
        Total Assets .....................................    $   7,940        $  10,087  
                                                              ==========       ========== 
                                                                                          
LIABILITIES AND SHAREHOLDERS' EQUITY/PARTNERS' CAPITAL                                    
Current Liabilities                                                                       
  Accounts payable .......................................    $   1,026        $   1,170  
  Accrued compensation and related expenses ..............        2,036            2,418  
  Income taxes payable ...................................           --              216  
  Deferred income taxes ..................................           --               90  
                                                              ----------       ---------- 
      Total Current Liabilities ..........................        3,062            3,894  
Non-Current Liabilities ..................................           --               18  
                                                              ----------       ---------- 
        Total Liabilities ................................        3,062            3,912  
Commitments and Contingencies                                                             
Shareholders' 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 ......................        5,698            5,698  
  Retained (deficit) earnings ............................         (619)             461  
  Treasury stock - 292,498 shares                                                         
  (1995 - 87,402 shares) .................................         (305)             (88) 
                                                              ----------       ---------- 
        Total Shareholders' Equity .......................        4,878            6,175  
                                                              ----------       ---------- 
          Total Liabilities and Shareholders' Equity .....    $   7,940        $  10,087  
                                                              ==========       ========== 
__________________________________________________________________________________________
 See accompanying notes.                                                                  
</TABLE>

                                     15


<PAGE>
                                TENERA, INC.
      CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (PARTNERS' CAPITAL)

<TABLE>
<CAPTION>
(In thousands, except share and unit amounts)                                                                                    
_________________________________________________________________________________________________________________________________
                                                                                                                                 
                                          Shareholders' Equity                         Partners' Capital                         
                                -----------------------------------------  ------------------------------------------            
                                           Paid In                                                                               
                                           Capital                                                            Notes              
                                             In      Retained                                                 from               
                                 Common    Excess    (Deficit)  Treasury    General    Limited   Treasury    Limited             
                                  Stock    of Par    Earnings     Stock     Partner   Partners     Units    Partners     Total   
_________________________________________________________________________________________________________________________________
<S>                            <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>       
December 31, 1993 ............ $     --   $     --   $     --   $     --   $    335   $  6,555   $ (1,065)  $     (4)  $  5,821  
                                                                                                                                 
Repurchase of 51,507 Units ...       --         --         --         --         --         --        (76)        --        (76) 
Amortization of Notes ........       --         --         --         --         --         --         --          4          4  
Net Loss .....................       --         --         --         --        (23)    (1,179)        --         --     (1,202) 
                                --------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  --------- 
December 31, 1994 ............       --         --         --         --        312      5,376     (1,141)        --      4,547  
                                                                                                                                 
Repurchase of 242,481 Units ..       --         --         --         --         --         --       (182)        --       (182) 
Net Earnings Through                                                                                                             
June 30, 1995 ................       --         --         --         --          9        428         --         --        437  
Merger of Predecessor                                                                                                            
Partnership into                                                                                                                 
TENERA, Inc. .................       93      4,709         --         --       (321)    (5,804)     1,323         --         --  
Common Stock Issued at                                                                                                           
$0.89 per Share ..............       11        989         --         --         --         --         --         --      1,000  
Repurchase of 87,402 Shares ..       --         --         --        (88)        --         --         --         --        (88) 
Net Earnings for July 1, 1995                                                                                                    
to December 31, 1995 .........       --         --        461         --         --         --         --         --        461  
                                --------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  --------- 
December 31, 1995 ............      104      5,698        461        (88)        --         --         --         --      6,175  
                                                                                                                                 
Repurchase of 205,096 Shares .       --         --         --       (217)        --         --         --         --       (217) 
Net Loss .....................       --         --     (1,080)        --         --         --         --         --     (1,080) 
                                --------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  --------- 
December 31, 1996 ............ $    104   $  5,698   $   (619)  $   (305)  $     --   $     --   $     --   $     --   $  4,878  
                               =========  =========  =========  =========  =========  =========  =========  =========  ========= 
_________________________________________________________________________________________________________________________________
 See accompanying notes.                                                                                                         
</TABLE>

                                     16


<PAGE>
                                TENERA, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
(In thousands)                                                                                   
_________________________________________________________________________________________________
                                                                                                 
                                                                   Year Ended December 31,       
                                                              ---------------------------------- 
                                                                 1996        1995        1994    
_________________________________________________________________________________________________
<S>                                                           <C>         <C>         <C>        
CASH FLOWS FROM OPERATING ACTIVITIES                                                             
  Net (loss) earnings ....................................... $  (1,080)  $     898   $  (1,202) 
  Adjustments to reconcile net (loss) earnings to cash                                           
  provided (used) by operating activities:                                                       
    Depreciation ............................................       272         298         383  
    (Gain) Loss on sale of equipment ........................        (8)          1          24  
    Decrease in allowance for sales adjustments .............    (1,262)         (9)       (820) 
    Amortization of Limited Partners' notes .................        --          --           4  
    Deferred income taxes ...................................       (90)         90          --  
    Changes in assets and liabilities:                                                           
      Receivables ...........................................     5,758      (2,137)      1,919  
      Other current assets ..................................       107          40        (109) 
      Other assets ..........................................        17          30          23  
      Accounts payable ......................................      (144)       (495)        286  
      Accrued compensation and related expenses .............      (382)        764        (491) 
      Income taxes payable ...............................         (216)        216          --  
      Non-Current liabilities ...............................       (18)         18          --  
                                                              ----------  ----------  ---------- 
        Net Cash Provided (Used) by Operating Activities ....     2,954        (286)         17  
CASH FLOWS FROM INVESTING ACTIVITIES                                                             
  Acquisition of property and equipment .....................      (258)       (164)       (361) 
  Proceeds from sale of equipment ...........................        11           1          33  
                                                              ----------  ----------  ---------- 
        Net Cash Used in Investing Activities ...............      (247)       (163)       (328) 
CASH FLOWS FROM FINANCING ACTIVITIES                                                             
  (Repayment) Borrowings under bank loan agreement ..........        --        (750)        750  
  Repurchase of equity ......................................      (217)       (270)        (76) 
  Issuance of Common Stock ..................................        --       1,000          --  
                                                              ----------  ----------  ---------- 
        Net Cash (Used) Provided by Financing Activities ....      (217)        (20)        674  
                                                              ----------  ----------  ---------- 
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ........     2,490        (469)        363  
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR ..............     1,474       1,943       1,580  
                                                              ----------  ----------  ---------- 
CASH AND CASH EQUIVALENTS AT END OF YEAR .................... $   3,964   $   1,474   $   1,943  
                                                              ==========  ==========  ========== 
_________________________________________________________________________________________________
 See accompanying notes.                                                                         
</TABLE>

                                     17


<PAGE>
                                TENERA, INC.
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              DECEMBER 31, 1996

NOTE 1. ORGANIZATION

   Company. TENERA, Inc. (the "Company"), a Delaware corporation, was formed 
in connection with the conversion of TENERA, L.P. (the predecessor of the 
Company; the "Predecessor Partnership") into corporate form (the 
"Conversion"). Therefore the Company and the Predecessor Partnership are 
sometimes collectively referred to herein as the Company.

   On June 30, 1995, the Company completed the Conversion by means of a merger 
(the "Merger") of the Predecessor Partnership, its General Partner (Teknekron 
Technology MLP I Corporation) and its Operating Partnership (TENERA Operating 
Company, L.P.) with, and into, TENERA, Inc. Pursuant to the Merger:  (i) the 
Company succeeded to the business, assets, and liabilities of the Predecessor 
Partnership; (ii) each limited partner Unit previously held by Unitholders in 
the Predecessor Partnership, (including 184,946 equivalent Units representing 
the interest in the Partnership of the General Partner), automatically 
converted to one share of Common Stock of TENERA, Inc.; and (iii) an 
additional 1,123,596 shares of Common Stock were issued to the sole 
shareholder of the General Partner in consideration of the contribution of 
$1,000,000 made to TENERA, Inc. by the General Partner in connection with the 
Merger. The Merger was approved by the Unitholders of the Predecessor 
Partnership pursuant to the Consent Solicitation Statement/Prospectus dated 
June 6, 1995, included in the Company's Registration Statement on Form S-4 
(Registration Number 33-58393; the "Form S-4").

   TENERA Rocky Flats, LLC ("LLC"), a Colorado limited liability company, was 
formed by the Company in 1995 to provide consulting services in connection 
with participation in the Performance Based Integrating Management Contract 
("Rocky Flats Contract") at the Department of Energy's ("DOE") Rocky Flats 
Environmental Technology Site ("Site").

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

   Basis of Presentation. The accompanying consolidated financial statements 
include the accounts of the Company and the LLC. All intercompany accounts and 
transactions have been eliminated. 

   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, certificates of deposit, bank acceptances or repurchase agreements 
of major banks having strong credit ratings, and commercial paper issued by 
companies with strong credit ratings. The Company includes in cash and cash 
equivalents, all short-term, highly liquid investments which mature within 
three months of acquisition. 

   Property and Equipment. Property and equipment are stated at cost 
($2,723,000 and $2,518,000 at December 31, 1996 and 1995, respectively), net 
of accumulated depreciation ($2,400,000 and $2,178,000 at December 31, 1996 
and 1995, respectively). Depreciation is calculated using the straight line 
method over the estimated useful lives, which range from three to five years. 

   Revenue. Revenue from time-and-material and cost plus fixed-fee contracts 
is recognized when costs are incurred; from fixed-price contracts, on the 
basis of percentage of work completed (measured by costs incurred relative to 
total estimated project costs); from software license fees at time of customer 
acceptance; and from software maintenance agreements, equally over the period 
of the maintenance support agreement (usually 12 months). The Company's 
revenue recognition policy for its software contracts is in compliance with 
the American Institute of Certified Public Accounts' Statement of Position 91-
1, "Software Revenue Recognition." The Company primarily offers its services 
and software products to the electric power industry, the DOE, and the 
municipal transit industry in North America. 

                                     18


<PAGE>
   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 contacts in progress may 
differ from management estimates and such differences could be material to the 
financial statements.

   During 1996, two clients accounted for 56% and 12% of the Company's total 
revenue. During 1995 and 1994, a single client accounted for 31% and a 
different client accounted for 29% of total revenue, respectively. 

   Income Taxes. As a result of the Conversion, the Company is no longer 
subject to partnership tax treatment whereby the Company pays no entity-level 
tax on Company income. The Company became a C Corporation subject to federal 
and state statutory income tax rates for income earned after the close of 
business on June 30, 1995. Due to the net loss in 1996, an income tax benefit 
has been recorded for the twelve-month period ended December 31, 1996. During 
1995, a provision for income taxes was made for the six months ended December 
31, 1995; however, no provision for income taxes was made by the Company for 
the six months ended June 30, 1995.

   Accounting for Stock-Based Compensation. Statement of Financial Standards 
No. 123, "Accounting for Stock-Based Compensation," ("FAS 123") is effective 
for the Company's 1996 year. The Company continues to account for employee 
stock options in accordance with Accounting Principles Board Opinion No. 25 
("APB 25") and has provided the pro forma disclosures required by FAS 123 in 
Note 4.

   Per Share and Pro Forma Per Share Information. Per share data for 1996 is 
computed based on weighted average number of shares of common stock 
outstanding and common stock equivalents using the treasury stock method. In 
accordance with financial reporting guidelines, pro forma earnings per share 
information for 1995 was based on the assumption that the Company was taxed 
for federal and state income tax purposes as a C Corporation at a 40% 
effective tax rate, and was computed based on weighted average number of 
shares of common stock outstanding and the effect of common stock equivalents 
from outstanding stock options, using the treasury stock method. Historical 
earnings (loss) per share information for 1995 and 1994 has been omitted from 
the face of the historical statements of operations because this data is not 
indicative of the Company's ongoing operations as a result of the change in 
tax treatment. 

NOTE 3. RELATED PARTY TRANSACTIONS

   Teknekron. The principal shareholder of Teknekron Corporation ("Teknekron") 
beneficially owned approximately 37%, 36%, and 26% of the Company's 
outstanding shares of Common Stock/Predecessor Partnership Units at December 
31, 1996, 1995, and 1994, respectively. Teknekron provided management and 
related services to the Predecessor Partnership under an advisory services 
agreement, which expired on June 30, 1995. Charges to earnings for the 
services amounted to none in 1996, $125,000 in 1995, and $600,000 in 1994. 

   Individual Plant Evaluation Partnership ("IPEP"). The Company was an equal 
participant in a partnership, IPEP, with Westinghouse Electric Corporation and 
Fauske & Associates, Inc., which provided executive consulting services to 
commercial utility companies. IPEP ceased activities in 1995 and dissolved in 
April 1996. Revenue recognized for services provided through IPEP amounted to 
none in 1996, $390,000 in 1995, and $173,000 in 1994, and represented less 
than 1% of total revenue in 1995 and 1994. 

   The participants paid a royalty to IPEP, equal to 2% to 4% of billed fees 
on certain projects, for administrative services. Royalties paid to IPEP 
amounted to none in 1996, $1,000 in 1995, and $4,000 in 1994. 

   The Company's interest in IPEP was accounted for under the equity method. 
Each of the participants shared equally in the earnings and losses of IPEP. In 
1996, the Company recorded income of $17,000 related to the final liquidation 
of IPEP. For 1995, the Company recognized $30,000 as its share of IPEP's 1995 
estimated losses ($34,000 in 1994).

   Notes Receivable. The Company included in other current assets, notes 
receivables from executive officers which amounted to none and $347,639 at 
December 31, 1996 and 1995, respectively. In 1996, certain terms of the note 
made by an executive officer, related to the purchase of stock by such officer 
in 1988, were renegotiated to provide for a purchase price adjustment on the 
stock securing the note balance, and the remaining balance of 

                                     19


<PAGE>
the note was reduced to the then fair market value of the stock held as 
security, resulting in a charge to operations of $300,419 in 1996.

   TERA Corporation Liquidating Trust ("Trust"). The Trust was established by 
TERA Corporation ("Predecessor Corporation") in 1986, to facilitate the 
orderly sale or other disposition of the remaining assets and satisfaction of 
all remaining debts and liabilities. The Company did not recognize any income 
or expense from the Trust in 1996, 1995, and 1994. 

   Toltec Development Corporation ("Toltec"). The Company entered into a lease 
for approximately 10,000 square feet of office space during 1993 for its 
Berkeley facilities with Toltec, an affiliate of Teknekron. The lease expired 
in 1995. Expenses related to lease payments to Toltec totaling $141,000 and 
$224,000 were recorded in 1995 and 1994, respectively.

NOTE 4. EMPLOYEE BENEFIT PLANS

   Incentive Bonus Plans. The Company has incentive plans based on financial 
performance. Bonus awards of cash and shares are discretionary and are 
determined annually by the Board of Directors. In 1996, there were no charges 
to earnings for incentive bonuses ($150,000 in 1995 and none in 1994). 
Additionally, $90,000 of the 1995 bonus accrual was not paid and was reversed 
in 1996.

   Profit Sharing Plan ("PSP"). Effective January 1, 1997, the Company 
initiated a profit sharing plan whereby the funding for the plan is based on 
overall company profitability as measured by pretax earnings. Twenty percent 
of pretax earnings will be distributed quarterly to eligible employees on an 
equal percentage of salary basis.

   401(k) Savings Plan. The 401(k) Savings Plan is administered through a 
trust that covers substantially all employees. Employees can contribute 
amounts to the plan, not exceeding 10% of salary. In 1995 and 1994, the 
Company matched these amounts with a 50% contribution on a matching 
contribution base, not exceeding 6% of salary. Effective January 1, 1996, the 
Company's matching contribution increased to 100% of a matching contribution 
base, not exceeding 6% of the employee's salary. As of January 1, 1997, the 
Company amended the plan to discontinue the matching contribution, but allow 
employees to contribute up to 15% of salary. The Company, at its discretion, 
may also contribute funds to the plan for the benefit of employees. During 
1996, 1995, and 1994, no discretionary amounts were contributed to the plan by 
the company.

   Money Purchase Plan ("MPP"). On December 31, 1995, the MPP was merged with 
and into the 401(k) Savings Plan, eliminating the MPP contribution. 
Previously, the MPP was administered through a trust that covered 
substantially all employees. In 1995 and 1994, the Company's contribution 
amount was 3% of eligible employees annual salaries. 

   During 1996, charges to earnings for the 401(k) Savings Plan amounted to 
$397,000 ($720,000 in 1995 and $492,000 in 1994 for the 401(k) and MPP Plans 
combined). 

   Stock Option Plans. The Company has elected to follow APB 25 and related 
interpretations in accounting for its employee stock options because, as 
discussed below, the alternative fair value accounting provided for under FAS 
123 requires use of option valuation models that were not developed for use in 
valuing employee stock options. Under APB 25, because the exercise price of 
the Company's employee stock options equals the market price of the underlying 
stock on the date of grant, no compensation expense is recognized.

   In connection with the Merger, the Company amended its Stock Option Plan to 
reflect the fact that options will relate to shares of common stock, instead 
of limited partnership units of the Predecessor Partnership. All outstanding 
options for units were automatically converted to options to purchase an equal 
number of shares of common stock at the original exercise price and on the 
same terms and conditions as the original unit options. Under the provisions 
of the Company's Stock Option Plan, 1,500,000 shares were reserved for 
issuance upon the exercise of options granted to key employees and 
consultants. During 1996, options were granted for 391,500 shares at an 
exercise price of $1.00, the then fair market value, expiring on February 1, 
2002. In 1995, options were granted for 130,000 shares at an exercise price of 
$1.1875, the then fair market value, expiring on July 1, 2001. In 1994, 
options were granted for 315,000 shares at an exercise price of $1.3125, and 

                                     20


<PAGE>
290,000 shares at an exercise price of $0.6875, the then fair market values, 
expiring on February 7, 2004, and December 30, 2004, respectively. During 
1996, options for 278,500 shares were canceled due to employee terminations 
($28,000 and $362,000 in 1995 and 1994, respectively). No options were 
exercised in 1996, 1995, and 1994. As of December 31, 1996, options for 
1,081,000 shares were outstanding and options for 545,000 shares were 
exercisable.

   Under the provisions of the 1993 Outside Directors Compensation and Stock 
Option Plan, which was approved by the Board of Directors, effective March 1, 
1994, 150,000 shares were reserved for issuance upon the exercise of options 
granted to non-employee directors. During 1996, options were granted for 
50,000 shares at an exercise price of $1.00, the then fair market value, 
expiring on March 1, 2006. In 1995, options were granted for 60,000 shares at 
an exercise price of $0.6875, the then fair market value, expiring on March 1, 
2005. In 1994, options were granted for 20,000 shares at an exercise price of 
$1.3125, the then fair market value, expiring on March 1, 2004. No options 
were exercised in 1996, 1995, and 1994. As of December 31, 1996, 130,000 
options were outstanding and 80,000 options were exercisable.

   Pro forma information regarding net income (loss) and earnings (loss) per 
share is required by FAS 123 for fiscal years beginning after December 31, 
1994, and has been determined as if the Company had accounted for its stock 
options under the fair value method of FAS 123. The fair value for these 
options was estimated at the date of grant using a Black-Scholes option 
pricing model with the following weighted-average assumptions for 1995 and 
1996:  risk-free interest rates of 7.0% and 6.0%, respectively, for the March 
and July 1995 grants, and 5.2% and 5.7%, respectively, for the February and 
March 1996 grants; dividend yield of 0% for both years; volatility factors of 
the expected market price of the Company's common stock of 0.54 and 0.53, 
respectively; and a weighted-average expected life of the option of five years 
for all grants.

   The Black-Scholes option valuation model was developed for use in 
estimating the fair value of traded options which have no vesting restrictions 
and are fully transferable. In addition, options valuation models require the 
input of highly subjective assumptions including the expected stock price 
volatility. Because the Company's stock options have characteristics 
significantly different from those of traded options, and because changes in 
the subjective input assumptions can materially affect the fair value 
estimate, in management's opinion, the existing models do not necessarily 
provide a reliable single measure of the fair value of its stock options.

   For purposes of pro forma disclosures, the estimated fair value of the 
options is amortized to expense over the vesting periods of the options. Pro 
forma information regarding the Company's net income (loss) and earnings 
(loss) per share follows:

<TABLE>
<CAPTION>
(In thousands, except for per share amounts)                                              
__________________________________________________________________________________________
                                                                                          
                                                                Year Ended December 31,   
                                                              --------------------------- 
                                                                 1996             1995    
__________________________________________________________________________________________
<S>                                                           <C>              <C>        
Net (Loss) Earnings - As Reported ........................    $  (1,080)       $     898  
Pro Forma Net (Loss) Earnings - FAS 123 ..................       (1,133)             881  
                                                                                          
Net (Loss) Earnings per Share - As Reported ..............        (0.11)            0.07  
Pro Forma Net (Loss) Earnings per Share - FAS 123 ........        (0.11)            0.07  
__________________________________________________________________________________________
</TABLE>

                                     21


<PAGE>
   A summary of the Company's stock option activity, and related information 
follows:

<TABLE>
<CAPTION>
(In thousands, except for dollar amounts)                                                               
________________________________________________________________________________________________________
                                                                                                        
                                                     Year Ended December 31,                            
                            --------------------------------------------------------------------------  
                                     1996                      1995                      1994           
                            ----------------------    ----------------------    ----------------------  
                                        Weighted-                 Weighted-                 Weighted-   
                                         Average                   Average                   Average    
                                         Exercise                  Exercise                  Exercise   
                             Options      Price        Options      Price        Options      Price     
________________________________________________________________________________________________________
<S>                         <C>         <C>           <C>         <C>           <C>         <C>         
Outstanding -                                                                                           
Beginning of Year ........      1,048    $   1.20           886    $   1.24           623    $   1.75   
Granted ..................        441        1.00           190        1.03           625        1.02   
Exercised ................         --          --            --          --            --          --   
Forfeited ................       (278)       1.36           (28)       1.19          (362)       1.75   
                            ----------  ----------    ----------  ----------    ----------  ----------  
Outstanding -                                                                                           
End of Year ..............      1,211    $   1.09         1,048    $   1.20           886    $   1.24   
                            ==========  ==========    ==========  ==========    ==========  ==========  
Exercisable at                                                                                          
End of Year ..............        625    $   1.16           638    $   1.34           426    $   1.41   
Weighted-Average                                                                                        
Fair Value of Options                                                                                   
Granted During the Year ..   $   0.52                  $   0.54                       N/A               
________________________________________________________________________________________________________
N/A   Not applicable under FAS 123.                                                                     
</TABLE>

   Exercise prices for options outstanding as of December 31, 1996, ranged 
from $0.6875 to $1.75. The weighted-average remaining contractual life of 
those options is 6.4 years.

                                     22


<PAGE>
NOTE 5.  INCOME TAXES

   Deferred income taxes reflect the net tax effects of temporary differences 
between the carrying amounts of assets and liabilities for financial reporting 
purposes and the amounts used for income tax purposes. Significant components 
of the Company's deferred tax assets and liabilities as of December 31, 1996 
and 1995, are as follows, using the liability method:

<TABLE>
<CAPTION>
__________________________________________________________________________________________
                                                                                          
                                                                     December 31,         
                                                              --------------------------- 
                                                                 1996             1995    
__________________________________________________________________________________________
<S>                                                           <C>              <C>        
Current Deferred Tax Assets                                                               
  Contract reserves not currently deductible .............    $     551        $     663  
  Accrued expenses not currently deductible ..............          231              246  
  Net operating loss carryforward ........................          367               --  
  Other ..................................................          165              214  
                                                              ----------       ---------- 
    Total Current Gross Deferred Tax Assets ..............        1,314            1,123  
  Less:  Valuation Allowance .............................         (401)              --  
                                                                                          
Current Deferred Tax Liabilities                                                          
  Revenue differences related to timing ..................          913            1,213  
                                                              ----------       ---------- 
    Net Current Deferred Tax Liabilities .................    $      --        $      90  
                                                              ==========       ========== 
__________________________________________________________________________________________
</TABLE>

   The current and deferred tax provisions for the years ended December 31, 
1996 and 1995, are as follows:

<TABLE>
<CAPTION>
____________________________________________________________________________
                                                                            
                                                  Year Ended December 31,   
                                                --------------------------- 
                                                   1996             1995    
____________________________________________________________________________
<S>                                             <C>              <C>        
Current:                                                                    
  Federal ..................................    $     (47)       $     202  
  State ....................................           --               14  
                                                ----------       ---------- 
                                                      (47)             216  
                                                ----------       ---------- 
                                                                            
Deferred:                                                                   
  Federal ..................................          (77)              77  
  State ....................................          (13)              13  
                                                ----------       ---------- 
                                                      (90)              90  
                                                ----------       ---------- 
  Tax (Benefit) Provision ..................    $    (137)       $     306  
                                                ==========       ========== 
____________________________________________________________________________
</TABLE>

                                     23


<PAGE>
   A valuation allowance of $401,000 was established for the year ended 
December 31, 1996, for those deferred tax assets which may not be realized. 
There was no valuation allowance at December 31, 1995.

   The provision (benefit) for income taxes differed from the amount computed 
by applying the statutory federal income tax rate for the years ended December 
31, 1996 and 1995, as follows:

<TABLE>
<CAPTION>
_____________________________________________________________________________
                                                                             
                                                   Year Ended December 31,   
                                                 --------------------------- 
                                                    1996             1995    
_____________________________________________________________________________
<S>                                              <C>              <C>        
Federal Statutory Rate ......................       (35)%             34 %   
State Taxes, Net of Federal Benefit .........        (1)%              6 %   
Permanent Differences .......................        (8)%             --     
Valuation Allowance .........................        33 %             --     
Non-Taxable Partnership Earnings ............        --              (15)%   
                                                 ----------       ---------- 
Income Tax (Benefit) Provision ..............       (11)%       $     25 %   
                                                 ==========       ========== 
_____________________________________________________________________________
</TABLE>

   The Company paid income taxes of $410,000 in 1996. No income taxes were 
paid in 1995. 

   At December 31, 1996, the Company had net operating loss carryforwards of 
approximately $970,000 for federal and $700,000 for state income tax purposes. 
The federal net operating loss carryforwards expire in the year 2011. The 
state net operating loss expires in 2001. Utilization of the Company's net 
operating losses may be subject to a substantial annual limitation due to the 
ownership change limitations provided by the Internal Revenue Code. The annual 
limitation may result in the expiration of net operating losses before 
utilization.

NOTE 6.  COMMITMENTS AND CONTINGENCIES

   Leases. The Company occupies facilities under noncancelable operating 
leases expiring at various dates through 2000. The leases call for 
proportionate increases due to property taxes and certain other expenses. Rent 
expense amounted to $702,000 for the year ended December 31, 1996 ($734,000 in 
1995 and $850,000 in 1994). 

   Minimum rental commitments under operating leases, principally for real 
property, are as follows:

<TABLE>
<CAPTION>
(Year Ending December 31)                                                  
___________________________________________________________________________
<S>                                                          <C>           
1997 ....................................................... $   511,000   
1998 .......................................................     124,000   
1999 .......................................................      96,000   
2000 .......................................................      40,000   
2001 and Thereafter ........................................          --   
                                                             ------------  
Total Minimum Payments Required ............................ $   771,000   
                                                             ============  
___________________________________________________________________________
</TABLE>

   Revolving Loan Agreement. A loan agreement with a bank provides for a 
revolving line of credit of $5,000,000, through May 1998. At December 31, 
1996, $4,500,000 was available under the credit line, and in addition, 
$500,000 was assigned to support standby letters of credit. Amounts advanced 
under the line of credit are secured by the Company's eligible accounts 
receivable. Under the agreement, the Company is obligated to comply with 
certain covenants related to equity, quick ratio, debt/equity ratio, and 
profits. At December 31, 1996, the Company obtained a waiver from the lender 
with respect to a certain financial covenant in the loan agreement concerning 
tangible net worth. The waiver extends to the next review date, March 31, 
1997. The 

                                     24


<PAGE>
interest rate under the agreement is the bank's prime rate (8.25% at December 
31, 1996). During 1996, the Company paid no interest expense ($39,000 in 1995 
and $9,000 in 1994). 

   Contingent Liabilities. In December 1986, the Predecessor Partnership 
received a substantial portion of its Predecessor Corporation's net assets and 
operations in connection with a restructuring plan approved by the 
shareholders. The balance of the Predecessor Corporation's assets and 
liabilities were transferred to the Trust for the benefit of the shareholders, 
to facilitate the orderly sale or other disposition of the remaining assets, 
and satisfaction of all remaining debts and liabilities. The Company has 
assumed such contingent liabilities of the Trust to the extent they exceed the 
assets of the Trust. Management believes that adequate assets exist to satisfy 
all liabilities of the Trust, contingent or otherwise, not specifically 
transferred to the Company. 

NOTE 7. LEGAL PROCEEDINGS

   PLM Financial Services, Inc. ("PLM") filed an action on November 4, 1994, 
in the Superior Court of California for the County of Alameda seeking damages 
in excess of $4.6 million in unpaid equipment rent and other payments 
allegedly owing to PLM under an equipment lease between PLM and TERA Power 
Corporation, a former subsidiary of the Predecessor Corporation. PLM has named 
the Predecessor Partnership in the action pursuant to a guaranty of the lease 
obligations made by the Predecessor Corporation. Management believes that the 
guaranty has been exonerated and 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.

   On October 13, 1995, the League for Coastal Protection ("League") filed an 
action on behalf of the League and the general public against the Company, 
among others, in the Superior Court of California for the County of San 
Francisco. The action entitled League for Coastal Protection v. Pacific Gas & 
Electric Company ("PG&E"), et al., Case No. 973182, seeks injunctive relief 
and disgorgement of unspecified profits under the California Business and 
Professions Code, Section 17200, et seq. The plaintiff contends that certain 
studies performed by the Company and its predecessors respecting the 
requirements of 316(b) of the Clean Water Act, that ultimately were submitted 
by PG&E to the Regional Water Quality Control Board ("RWQCB") in 1988 in 
connection with the Diablo Canyon Nuclear Power facility at Diablo Canyon, 
California, were deficient in various respects, and that the Company and PG&E 
covered up those deficiencies from the RWQCB and other state agencies. On 
October 13, 1995, the League filed an action against the Company among others, 
in the United States District Court for the Northern District of California, 
entitled League for Coastal Protection v. Pacific Gas & Electric Company, et 
al., Case No. C96-1393DLJ, seeking injunctive and other relief under the 
United States Clean Water Act related to the same studies and reporting 
described above. On February 5, 1996, John W. Carter filed an action against 
the Company and others in the United States District Court for the Northern 
District of California entitled United States of America, ex rel. and State of 
California, ex rel., John W. Carter v. Pacific Gas & Electric Company, et al., 
Case No. C-95-2843-MHP, under the False Claims Act. This action, which is 
based on the same studies and reports described above, seeks unspecified 
damages and penalties. An agreement has been reached in principal for a global 
settlement with the League, Carter, the California Attorney General, and the 
Environmental Protection Agency. While the settlement is being documented, all 
matters have been stayed, and/or held in abeyance, pending consummation of the 
settlement. As a result of the settlement, all of the actions will be 
dismissed. The Company is not required to make any payment or other 
contribution to the settlement.

NOTE 8. SPECIAL ITEMS

   There were two special items in 1996, one of which also occurred in 1994. 
This item amounted to $250,000 and $500,000 in 1996 and 1994 respectively, and 
reflects the estimated settlement of specific disputed costs on certain U.S. 
Government contracts with the DOE. These positive earnings adjustments 
resulted from partial reductions of the reserve for sales adjustment 
established in 1991. The reserve related to a dispute between the Company and 
the DOE with respect to the allowability and amount of potential rate 
adjustments on U.S. Government contracts for certain employee compensation 
costs.

                                     25


<PAGE>
   The other special item in 1996, related to the repricing of debt owed by 
one of the Company's executive officers. In December 1996, certain terms of 
the note related to the purchase of stock by an executive officer in 1988, 
were renegotiated to provide for a purchase price adjustment on the stock 
securing the note balance and a corresponding reduction in the note balance. 
The remaining balance of the note was paid off, by the transfer to the Company 
of the stock purchased by the executive officer in 1988, at the fair market 
value of the stock. As a result, a charge of approximately $300,000 was made 
in 1996 to adjust the price of the stock to the then current fair market 
value.

NOTE 9. SELECTED QUARTERLY COMBINED FINANCIAL DATA (UNAUDITED)

   A summary of the Company's quarterly financial results follows:

<TABLE>
<CAPTION>
(In thousands, except per share or unit amounts)                                                                          
__________________________________________________________________________________________________________________________
                                                                                                                          
                                                    Quarter Ended                             Quarter Ended               
                                        --------------------------------------    --------------------------------------  
                                        12/31/96  9/30/96   6/30/96   3/31/96     12/31/95  9/30/95   6/30/95   3/31/95   
__________________________________________________________________________________________________________________________
<S>                                     <C>       <C>       <C>       <C>         <C>       <C>       <C>       <C>       
                                                                                                                          
Revenue ............................... $ 5,125   $ 5,586   $ 6,036   $ 7,256     $ 7,288   $ 7,249   $ 5,664   $ 5,344   
Direct Costs ..........................   3,297     3,651     3,678     4,901       4,585     5,033     3,265     3,199   
General and Administrative Expenses ...   2,241     2,734     2,663     2,205       2,264     1,866     2,154     1,956   
Other Income (Expenses) ...............      14        --        17         4         (30)        1         2         7   
Special Item ..........................    (300)       --       250        --          --        --        --        --   
                                        --------  --------  --------  --------    --------  --------  --------  --------  
Operating (Loss) Income ...............    (699)     (799)      (38)      154         409       351       247       196   
Interest Income (Expense) .............      47        43        43        32           6         1        (6)       --   
                                        --------  --------  --------  --------    --------  --------  --------  --------  
Net (Loss) Earnings Before Income                                                                                         
Tax Benefit/Expense ...................    (652)     (756)        5       186         415       352   $   241   $   196   
                                                                                                      ========  ========  
Income Tax (Benefit) Expense ..........    (137)      (76)        2        74         165       141                       
                                        --------  --------  --------  --------    --------  --------                      
Net (Loss) Earnings ................... $  (515)  $  (680)  $     3   $   112     $   250   $   211                       
                                        ========  ========  ========  ========    ========  ========                      
Net (Loss) Earnings Per Share                                                                                             
(Pro Forma First Half 1995) ........... $ (0.05)  $ (0.07)  $  0.00   $  0.01     $  0.02   $  0.02   $  0.02   $  0.01   
                                        ========  ========  ========  ========    ========  ========  ========  ========  
__________________________________________________________________________________________________________________________
</TABLE>

                                     26


<PAGE>
                       REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Stockholders
TENERA, Inc.

   We have audited the accompanying consolidated balance sheets of TENERA, 
Inc. at December 31, 1996 and 1995, and the related consolidated statements of 
operations, stockholders' equity (partners' capital), and cash flows for each 
of the three years in the period ended December 31, 1996. Our audits also 
included the financial statement schedule listed in the Index at Item 14(a). 
These financial statements and schedule are the responsibility of the 
Company's management. Our responsibility is to express an opinion on these 
financial statements and schedule based on our audits.

   We conducted our audits in accordance with generally accepted auditing 
standards. Those standards require that we plan and perform the audit to 
obtain reasonable assurance about whether the financial statements are free of 
material misstatement. An audit includes examining, on a test basis, evidence 
supporting the amounts and disclosures in the financial statements. An audit 
also includes assessing the accounting principles used and significant 
estimates made by management, as well as evaluating the overall financial 
statement presentation. We believe that our audits provide a reasonable basis 
for our opinion.

   In our opinion, the consolidated financial statements referred to above 
present fairly, in all material respects, the consolidated financial position 
of TENERA, Inc. at December 31, 1996 and 1995, and the consolidated results of 
its operations and its cash flows for each of the three years in the period 
ended December 31, 1996, in conformity with generally accepted accounting 
principles. Also, in our opinion, the related consolidated financial statement 
schedule, when considered in relation to the basic financial statements taken 
as a whole presents fairly, in all material respects, the information set 
forth therein.

                                                            ERNST & YOUNG LLP

San Francisco, California
January 24, 1997

                                     27


<PAGE>
ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND 
         FINANCIAL DISCLOSURE

   Not applicable. 

                                     28


<PAGE>
                                  PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

   The following tables set forth certain information with respect to the 
directors and executive officers of the Company.

   The directors of the Company are as follows:

      Michael D. Thomas, 48, has served as Chairman of the Board of the 
   Company since his election in August 1991, and was named its Chief 
   Executive Officer in September 1994. He was President of Teknekron 
   Corporation from 1991 until December 31, 1994, and was Vice President of 
   Marketing and Corporate Business Development for Teknekron Corporation from 
   1989 to 1991. 

      William A. Hasler, 55, has served as a Director of the Company since his 
   election in March 1992. Mr. Hasler is dean of the Walter A. Haas School of 
   Business at the University of California, Berkeley. Prior to his 
   appointment as dean in 1991, Mr. Hasler was Vice Chairman of Management 
   Consulting for KPMG Peat Marwick from 1986 to 1991. Mr. Hasler is also a 
   director of The Gap, Inc., ESCAgenetics Corporation, Aphton Corporation, 
   Walker Systems, and TCSI Corporation.

      Jeffrey R. Hazarian, 41, has served as a Director of the Company since 
   his election in October 1996, and was named its Chief Financial Officer, 
   Vice President of Finance, and Corporate Secretary of the Company in 1992. 
   Previously, Mr. Hazarian held the position of Vice President, Planning and 
   Analysis of the Company from 1990 to 1992.

      Thomas S. Loo, Esq., 53, was elected as a Director of the Company in 
   February 1997. He previously served as a Director of the Predecessor 
   Partnership from August 1987 to September 1993. Mr. Loo has been a partner, 
   since 1986, of Bryan Cave LLP, general counsel to the Company. Mr. Loo has 
   also served as a director of Teknekron Corporation since March 1989.

      George L. Turin, Sc.D., 67, has served as a Director of the Company 
   since his election in March 1995. Previously, Mr. Turin served as a 
   Professor of Electrical Engineering and Computer Science at the University 
   of California at Berkeley from 1960 to 1990. Mr. Turin also served as Vice 
   President, Technology for Teknekron Corporation from 1988 to 1994.

      Barry L. Williams, J.D., 52, has served as a Director of the Company 
   since his election in September 1993. Mr. Williams has been President of 
   Williams Pacific Venture, Inc., a venture capital consulting company, since 
   1987. From 1988 until its sale in 1992, Mr. Williams was also President of 
   C.N. Flagg Power, Inc., a company that provides construction services 
   primarily to the electric utility industry. Mr. Williams is also a director 
   of American President Companies, PG&E, and Simpson Manufacturing Co., Inc.

   In addition to Messrs. Thomas and Hazarian, the executive officers of the 
Company are as follows:

      Raymond A. Allen III, 37, has served as Vice President of the Company 
   since his arrival at the Company in July 1996. Previously, Mr. Allen was 
   Vice President of Commercial Operations for ABB Environmental Services, 
   Inc. and was employed by ABB in various positions since 1984. 

      Robert C. McKay, 45, was elected Senior Vice President of the Company in 
   December 1992. Previously, Mr. McKay was a Vice President of the Company 
   from 1991 to 1992, and a senior technical manager of the Company from 1990 
   to 1991. Formerly, Mr. McKay was Manager, Management Systems for the 
   Tennessee Valley Authority from 1988 to 1990.

      Joe C. Turnage, Ph.D., 51, has served as Senior Vice President of the 
   Company since his arrival at the Company in 1988. 

      Kenneth S. Voss, 46, has served as Vice President of Business 
   Development since his arrival at the Company in June 1996. Previously, 
   Mr. Voss was Vice President of Sales and Service at Software 

                                     29


<PAGE>
   Professionals, Inc. from 1992 to 1996, and General Manager for SHL 
   Systemhouse, Inc. from 1981 to 1992.

   Officers of the Company hold office at the pleasure of the Board of 
Directors. There are no familial relationships between or among any of the 
executive officers or directors of the Company.

ITEM 11.  EXECUTIVE COMPENSATION

   The following tables set forth certain information covering compensation 
paid by TENERA to the Chief Executive Officer ("CEO") and each of the 
Company's other executive officers, other than the CEO, whose total annual 
salary and bonus exceeded $100,000 (the "named executives") for services to 
TENERA in all their capacities during the fiscal years ended December 31, 
1996, 1995, and 1994. 

                         SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
____________________________________________________________________________________________________________
                                                                                                            
                                                                      Long-Term Compensation                
                                                                      ----------------------                
                                             Annual Compensation        Awards     Payouts                  
                                            ----------------------    ----------  ----------                
                                                                      Securities                            
                                                                      Underlying                All Other   
                                                                       Options/      LTIP       Compensa-   
 Name and Principal Position     Year         Salary      Bonus        SARs(1)    Payouts(2)     tion(3)    
____________________________________________________________________________________________________________
<S>                           <C>           <C>         <C>           <C>         <C>           <C>         
Michael D. Thomas(4) ........    1996       $ 220,915          --        55,000   $      --     $ 8,602     
Chief Executive Officer          1995         214,000          --        25,000          --       8,602     
                                 1994              --          --       100,000          --          --     
Joe C. Turnage ..............    1996         169,295          --        45,000          --     105,054(5)  
Senior Vice President            1995         170,000          --        20,000      55,750       8,703     
                                 1994         158,100          --        35,000      55,751       8,452     
Robert C. McKay, Jr. ........    1996         145,390          --        28,000          --       9,000     
Senior Vice President            1995         169,030          --        20,000          --       9,000     
                                 1994         135,000          --        70,000          --       3,531     
Jeffrey R. Hazarian .........    1996         142,500          --        27,000          --       8,058     
Chief Financial Officer          1995         142,192          --        13,000          --       8,058     
                                 1994         126,046          --        20,000          --       7,563     
____________________________________________________________________________________________________________
 (1)  Reflects the number of options granted under the 1992 Stock Option Plan; no SARs have been issued.    
 (2)  These amounts reflect forgiveness of certain indebtedness pursuant to notes executed by the           
      individual in payment for partnership units acquired pursuant to the Entrepreneurial Equity Incentive 
      Plan ("EEIP"). The EEIP was discontinued in March 1992.                                               
 (3)  These amounts represent the amounts accrued for the Company's Profit Sharing/401(k) Plan for 1996,    
      1995, and 1994, respectively, and allocated to the named executive officers.                          
 (4)  Mr. Thomas was President of Teknekron Corporation until December 31, 1994. He assumed the position of 
      Chief Executive Officer of the Company in September 1994, for which he received no compensation.      
 (5)  This amount includes forgiveness of interest from the repricing of indebtedness to the Company        
      incurred in connection with the purchase of company stock ($96,351) (see Item 13.  "Certain           
      Relationships and Related Transactions," and Notes 3 and 8 to Financial Statements).                  
</TABLE>

                                     30


<PAGE>
   The following table sets forth certain information concerning options/SARs 
granted during 1996 to the named executives:

                         OPTIONS/SAR GRANTS IN 1996

<TABLE>
<CAPTION>
_______________________________________________________________________________________________
                                                                         Potential Realizable  
                                                                           Value at Assumed    
                                                                           Annual Rates of     
                                                                             Stock Price       
                                                                           Appreciation for    
                                      Individual Grants                      Option Term       
                        ---------------------------------------------    --------------------  
                                    % of Total                                                 
                        Number of    Options/                                                  
                        Securities     SARs                                                    
                        Underlying  Granted to  Exercise                                       
                         Options/   Employees    or Base                                       
                           SARs     in Fiscal     Price    Expiration                          
         Name            Granted       Year     ($/Share)     Date          5%         10%     
_______________________________________________________________________________________________
<S>                     <C>         <C>         <C>        <C>           <C>        <C>        
Michael D. Thomas .....    55,000      14.05    $ 1.00      2/1/2002     $ 18,700   $ 42,400   
Joe C. Turnage ........    45,000      11.49      1.00      2/1/2002       15,300     34,700   
Robert C. McKay, Jr. ..    28,000       7.20      1.00      2/1/2002        9,500     21,600   
Jeffrey R. Hazarian ...    27,000       6.90      1.00      2/1/2002        9,200     20,800   
_______________________________________________________________________________________________
N/A   Not applicable.                                                                          
</TABLE>

OTHER COMPENSATION ARRANGEMENTS

   Joe C. Turnage, Senior Vice President, executed an employment agreement 
upon joining the Company in 1988. The employment agreement provided for 
purchases of limited partnership units of the Predecessor Partnership by Mr. 
Turnage at the fair market value upon the date of issuance, dependent upon 
meeting various objectives set forth in the agreement. Pursuant to the 
Agreement and the EEIP, Mr. Turnage purchased an aggregate of 289,371 limited 
partnership units, the purchase price of which was payable by notes, which 
notes were to be forgiven over specified periods, provided Mr. Turnage 
remained in the employ of the Company. In late 1991, the terms of the EEIP 
awards made to Mr. Turnage and others with similar arrangements, were modified 
and the period over which the remaining balance of the notes was extended and 
the conditions for future forgiveness modified. In 1996, these notes were 
repriced to the then current fair market value of the stock held as security, 
resulting in a special item charge (see Item 13. "Certain Relationships and 
Related Transactions"). The amount of indebtedness forgiven is included in the 
Summary Compensation Table under the captions "LTIP Payouts." Mr. Turnage's 
employment may be terminated at any time by the Company under the terms of the 
employment agreement. 

   The 1992 Stock Option Plan provides that options may become exercisable 
over such periods as provided in the agreement evidencing the option award. 
Options granted to date, including options granted to executive officers and 
set forth in the above tables, generally call for vesting over a four-year 
period. The 1992 Stock Option Plan provides that a change in control of the 
Company will result in immediate vesting of all options granted and not 
previously vested. 

DIRECTORS COMPENSATION

   Except as described below, the directors of the Company are paid no 
compensation by the Company for their services as directors. Thomas S. Loo, 
William A. Hasler, George L. Turin, and Barry L. Williams as non-employee 
directors, are paid a retainer of $1,000 per month. These non-employee 
directors are also paid a fee of $1,000 for each meeting of the Board and any 
Board Committee which they attend. The 1993 Outside Directors Compensation and 
Stock Option Plan was approved by the Board effective March 1, 1994, which 
provides for the annual issuance of options for non-employee directors. During 
1994, 10,000 stock options were issued to each of Messrs. Hasler and Williams. 
During 1996 and 1995, 12,500 and 15,000 stock options, respectively, were 
issued to each of Ms. Cheng (resigned in February 1997) and Messrs. Hasler, 
Turin, and Williams. The 

                                     31


<PAGE>
options expire ten (10) years after, vest one (1) year after the date of 
grant, and have an exercise price equal to the fair market value of the shares 
of Common Stock on the date of grant. Upon exercise of the options, a director 
may not sell or otherwise transfer more than 50% of the shares until six (6) 
months after the date on which the director ceases to be a director of the 
Company.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

   During 1996, the Compensation Committee was composed of Susan T. Cheng, 
William A. Hasler, and Barry L. Williams. Susan T. Cheng was Treasurer and 
Vice President of Teknekron Corporation until February 1, 1997. (See Item 13. 
"Certain Relationships and Related Transactions")

EFFECT OF MERGER ON OPTION PLANS

   In connection with the Conversion, the Company amended the Predecessor 
Partnership's 1992 Unit Option Plan and 1993 Outside Director Compensation and 
Unit Option Plan to reflect the fact that options now relate to shares of 
Common Stock instead of Units. Except for the changes from Units to Common 
Stock and minor conforming changes, the amended 1992 Stock Option Plan and the 
1993 Outside Director Compensation and Stock Option Plan are identical to the 
previous plans and all outstanding options for Units were automatically 
converted to options for Common Stock at the original exercise price and on 
the same terms and conditions as the original Unit options.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

   (a)  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

   The following table sets forth certain information as of March 17, 1997, 
with respect to beneficial ownership of the shares of Common Stock of the 
Company by each person who is known by the Company to own beneficially more 
than 5% of the shares of Common Stock:

<TABLE>
<CAPTION>
_____________________________________________________________________________
                                                                             
                                                               Approximate   
                                                    Shares       Percent     
                                                 Beneficially  Beneficially  
                Name and Address                    Owned         Owned      
_____________________________________________________________________________
<S>                                              <C>           <C>           
Harvey E. Wagner ...............................   3,708,658      36.6%(1)   
P.O. Box 7463                                                                
Incline Village, NV  89450                                                   
Dr. Michael John Keaton Trust ..................   1,106,887      10.9%(2)   
P.O. Box 400                                                                 
Orinda, CA  94563-0400                                                       
_____________________________________________________________________________
 (1)  Such shares are held of record by Incline Village Investment Group     
      Limited Partnership, a Georgia limited partnership, and were           
      contributed to the Incline Village Investment Group Limited            
      Partnership by Mr. Wagner in exchange for a 99% limited partnership    
      interest. An additional 37,462 shares, as to which Mr. Wagner          
      disclaims beneficial ownership, were contributed to the Incline        
      Village Investment Group Limited Partnership by Mr. Wagner's spouse,   
      Leslie Wagner, in exchange for a 1% general partner interest. The      
      Incline Village Investment Group Limited Partnership has sole voting   
      and investment power with respect to all such shares.                  
 (2)  Mr. Keaton has sole voting and investment power with respect to all    
      shares shown as beneficially owned by him, subject to community        
      property laws where applicable.                                        
</TABLE>

                                     32


<PAGE>
   (b)  SECURITY OWNERSHIP OF MANAGEMENT

   The following table sets forth information as of March 17, 1997, with 
respect to current beneficial ownership of shares of Common Stock by (i) each 
of the directors of the Company, (ii) each of the named executive officers 
(see Item 11. "Executive Compensation"), and (iii) all current directors and 
executive officers as a group. 

<TABLE>
<CAPTION>
_____________________________________________________________________________
                                                                             
                                                    Shares                   
                                                 Beneficially   Percentage   
                      Name                         Owned(1)    Ownership(2)  
_____________________________________________________________________________
<S>                                              <C>           <C>           
William A. Hasler ..............................   57,500(3)        *        
Jeffrey R. Hazarian ............................   52,186(4)        *        
Thomas S. Loo ..................................        0           0        
Robert C. McKay, Jr. ...........................   97,539(4)        1.0%     
Michael D. Thomas ..............................  116,400(4)        1.1%     
George L. Turin ................................   73,004(3)        *        
Joe C. Turnage .................................   85,737(4)        *        
Barry L. Williams ..............................   37,500(3)        *        
                                                 ------------  ------------  
All Current Directors and Executive Officers                                 
as a Group (10 persons) ........................  519,866(3)(4)     5.1%     
_____________________________________________________________________________
 (1)  The persons named above have sole voting and investment power with     
      respect to all shares of Common Stock shown as beneficially owned by   
      them, subject to community property laws where applicable.             
 (2)  Asterisks represent less than 1% ownership.                            
 (3)  Includes options under the Company's 1993 Outside Directors            
      Compensation and Stock Option Plan which are exercisable on March 17,  
      1997, or within 60 days thereafter.                                    
 (4)  Includes options under the Company's 1992 Stock Option Plan which are  
      exercisable on March 17, 1997, or within 60 days thereafter.           
</TABLE>

   Beneficial ownership as shown in the tables above has been determined in 
accordance with Rule 13d-3 under the Exchange Act. Under this Rule, certain 
securities may be deemed to be beneficially owned by more than one person 
(such as where persons share voting power or investment power). In addition, 
securities are deemed to be beneficially owned by a person if the person has 
the right to acquire the securities (for example, upon exercise of an option 
or the conversion of a debenture) within 60 days of the date as of which the 
information is provided; in computing the percentage of ownership of any 
person, the amount of securities outstanding is deemed to include the amount 
of securities beneficially owned by such person (and only such person) by 
reason of these acquisition rights. As a result, the percentage of outstanding 
Units of any person as shown in the preceding tables do not necessarily 
reflect the person's actual voting power at any particular date.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

   Certain members of management or shareholders of the Company have certain 
direct or indirect interests in certain transactions involving the Company, 
separate from their interests as shareholders, as follows:

      (i)  The Company had made certain loans to various employees, including 
   officers, generally pursuant to employee benefit plan(s) and generally in 
   connection with the purchase of stock or units. In making loans to 
   officers, the Company held the stock as collateral securing the repayment 
   for such loans. In December 1996, certain terms of the note related to the 
   purchase of stock by an executive officer (Mr. Turnage) in 1988 were 
   renegotiated to provide for a purchase price adjustment on the stock 
   securing the note balance and a corresponding reduction in the note 
   balance. The remaining balance of the note was 

                                     33


<PAGE>
   paid off by the transfer to the Company of the stock purchased by 
   Mr. Turnage in 1988 at the fair market value of the stock as reported on 
   AMEX at the date of the transfer. As a result, a charge of approximately 
   $300,000 was made in 1996 to adjust the price of the stock to the then 
   current fair market value. As of December 31, 1996, the Company had no 
   notes receivables from its executive officers. The largest amount 
   outstanding during 1996 was $347,639. 

      (ii)  Susan T. Cheng, a director of the Company until her resignation in 
   February 1997, was Treasurer and Vice President of Teknekron Corporation 
   until February 1, 1997. Mr. Wagner, the Company's largest stockholder, is 
   the sole stockholder and a director of Teknekron Corporation.

      (iii)  Thomas S. Loo, a director of the Company since February 7, 1997, 
   is a partner in the law firm of Bryan Cave LLP, general counsel to the 
   Company and Teknekron Corporation, and is a director of Teknekron 
   Corporation.

                                     34


<PAGE>
                                   PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8K

   (a)(1)  FINANCIAL STATEMENTS

   The following financial statements of the Company are filed with this 
   report and can be found in Part II, Item 8, on the pages indicated below: 

<TABLE>
<CAPTION>
                                                                       PAGE 
   <S>                                                                 <C>  
      Consolidated Statements of Operations - Year Ended December 31,       
      1996, 1995, and 1994 ............................................  14 
                                                                            
      Consolidated Balance Sheets - December 31, 1996 and 1995 ........  15 
                                                                            
      Consolidated Statements of Shareholders' Equity (Partners'            
      Capital) - Year Ended December 31, 1996, 1995, and 1994 .........  16 
                                                                            
      Consolidated Statements of Cash Flows - Year Ended December 31,       
      1996, 1995, and 1994 ............................................  17 
                                                                            
      Notes to Consolidated Financial Statements ......................  18 
                                                                            
      Report of Independent Auditors ..................................  27 
                                                                            
   (a)(2)  FINANCIAL STATEMENT SCHEDULES                                    
                                                                            
   The following financial statement schedules with respect to the          
   Company are filed in this report:                                        
                                                                            
      Schedule VIII - Valuation and Qualifying Accounts and Reserves ..  37 
                                                                            
   All other schedules are omitted because they are either not              
   required or not applicable.                                              
                                                                            
</TABLE>

   (a)(3)  EXHIBITS

2.1       Agreement and Plan of Merger dated as of June 6, 1995 among the 
            Registrant, Teknekron Technology MLP I Corporation, TENERA, L.P., 
            and TENERA Operating Company, L.P. (a form of which is attached as 
            Annex A to the Registrant's Consent Solicitation 
            Statement/Prospectus included in the Registration Statement on 
            Form S-4 (Registration No. 33-58393) declared effective by the 
            Securities and Exchange Commission on June 2, 1995 (the 
            "Registration Statement"), and is incorporated herein by this 
            reference).

3.1       Certificate of Incorporation of the Registrant dated October 27, 
            1994 (filed by incorporation by reference to Exhibit 3.3 to the 
            Registration Statement).

3.2       By-Laws of the Registrant (filed by incorporation by reference to 
            Exhibit 3.4 to the Registration Statement).

4.1       Form of Certificate of Common Stock of Registrant (filed by 
            incorporation by reference to Exhibit 4.5 to the Registration 
            Statement).

10.2      Registrant's lease on its Rockville, Maryland properties (filed as 
            Exhibit 10.2 to the Predecessor Partnership's Form 10-K filed with 
            the SEC on March 29, 1995, and incorporated by reference herein).

10.3      Registrants' lease on its Knoxville, Tennessee properties (filed as 
            Exhibit 10.4 to Form 10-K filed with the SEC on March 25, 1994, 
            and incorporated by reference herein).

10.4      Registrant's lease on its headquarters located in San Francisco, 
            California (filed as Exhibit 10.12 to Form 10-Q filed with the 
            SEC on November 14, 1995, and incorporated by reference herein).

                                     35


<PAGE>
10.5(1)   Registrant's lease on its Hartford, Connecticut properties.

11.1      Statement regarding computation of per share earnings:  See "Notes 
            to Consolidated Financial Statements."

21.2      List of Subsidiaries of the Registrant (filed as Exhibit 21.2 to 
            Form 10-K filed with the SEC on March 27, 1996, and incorporated 
            by reference herein).

23.1(1)   Consent of Independent Auditors.

27.1(1)   Financial Data Schedule.

   (b)  REPORTS ON FORM 8-K

   No reports on Form 8-K were filed by the Registrant during the last quarter 
of 1996.

   (c)  EXHIBITS (SEE ITEM 14(a)(3) ABOVE.)

   (d)  FINANCIAL STATEMENT SCHEDULES

   The schedules listed in Item 14(a)(2) above should be used in conjunction 
with the Consolidated Financial Statements of the Company for the year ended 
December 31, 1996. 



------------------------------
(1)  Filed herewith.

                                     36


<PAGE>
                                                                SCHEDULE VIII

                                TENERA, INC.
               VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

<TABLE>
<CAPTION>
(In thousands)                                                                                        
______________________________________________________________________________________________________
                                                                                                      
                                               Additions            Deductions                        
                                              -----------    ------------------------                 
                                 Balance      Charged to     Credited to                   Balance    
                                Beginning      Costs and       Special                     at End     
    Description                  of Year       Expenses         Item         Other         of Year    
______________________________________________________________________________________________________
<S>                            <C>            <C>            <C>          <C>            <C>          
1994                                                                                                  
Reserve for Sales Adjustment                                                                          
and Credit Losses ............  $   3,717      $     271      $     500    $     591      $   2,897   
1995                                                                                                  
Reserve for Sales Adjustment                                                                          
and Credit Losses ............      2,897            131             --          140          2,888   
1996                                                                                                  
Reserve for Sales Adjustment                                                                          
and Credit Losses ............      2,888            289            250        1,301          1,626   
______________________________________________________________________________________________________
</TABLE>

                                     37


<PAGE>
                                SIGNATURES

   PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15 (d) 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:  March 27, 1997

                                 TENERA, INC.                                
                                                                             
                                 By:         /s/ JEFFREY R. HAZARIAN         
                                      -------------------------------------- 
                                               Jeffrey R. Hazarian           
                                             Chief Financial Officer         

   PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS 
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE 
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.

         Signature                        Title                    Date      
                                                                             
                                                                             
                                                                             
                                Chairman of the Board and                    
                                 Chief Executive Officer                     
 /s/ MICHAEL D. THOMAS        (Principal Executive Officer)   March 27, 1997 
---------------------------                                                  
    (Michael D. Thomas)                                                      
                                                                             
                                                                             
                                                                             
                                                                             
                                                                             
   /s/ WILLIAM A. HASLER                Director              March 27, 1997 
---------------------------                                                  
    (William A. Hasler)                                                      
                                        Director,                            
                                Chief Financial Officer,                     
                                Corporate Secretary, and                     
                                 Vice President, Finance                     
                                (Principal Financial and                     
  /s/ JEFFREY R. HAZARIAN          Accounting Officer)        March 27, 1997 
---------------------------                                                  
   (Jeffrey R. Hazarian)                                                     
                                                                             
                                                                             
                                                                             
                                                                             
                                                                             
     /s/ THOMAS S. LOO                  Director              March 27, 1997 
---------------------------                                                  
      (Thomas S. Loo)                                                        
                                                                             
                                                                             
                                                                             
                                                                             
                                                                             
    /s/ GEORGE L. TURIN                 Director              March 27, 1997 
---------------------------                                                  
     (George L. Turin)                                                       
                                                                             
                                                                             
                                                                             
                                                                             
                                                                             
   /s/ BARRY L. WILLIAMS                Director              March 27, 1997 
---------------------------                                                  
    (Barry L. Williams)                                                      

                                     38


<PAGE>
                                EXHIBIT INDEX

Ex. 10.5   Registrant's Lease on its Hartford, Connecticut Properties

Ex. 23.1   Consent of Independent Auditors

Ex. 27.1   Financial Data Schedule