UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended August 31, 1997
OR
|_| 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: 0-1460
ANDERSEN GROUP, INC.
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
CONNECTICUT 06-0659863
(Address of Principal Executive Offices)
1280 Blue Hills Avenue, Bloomfield, CT 06002-1374
(860) 242-0761
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 ____
There were 1,934,478 shares of the Registrants Common Stock, no par value,
outstanding as of October 15, 1997.
<PAGE>
ANDERSEN GROUP, INC.
FORM 10-Q
TABLE OF CONTENTS
Page No.
Part I - Financial Information
Item 1 Financial Statements:
Consolidated Balance Sheets
August 31, 1997 and February 28, 1997 3
Consolidated Statements of Operations for the
Three and Six months Ended August 31, 1997 and 1996 4
Consolidated Statements of Cash Flows for the
Six months Ended August 31, 1997 and 1996 5
Notes to Consolidated Financial Statements 6
Managements Discussion and Analysis of
Financial Condition and Results of Operations 7
Part II - Other Information
Item 1 - Legal Proceedings 9
Item 3 - Defaults Upon Senior Securities 10
Item 4 - Submission of Matters to a Vote of Security Holders 11
Item 6 - Exhibits and Reports on Form 8-K 11
Signatures 1
<PAGE>
Part I. Financial Information
Item 1. Financial Statements
ANDERSEN GROUP, INC.
Consolidated Balance Sheets
(In thousands)
<TABLE>
<CAPTION> August 31,1997 February 28, 1997
ASSETS (Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 2,673 $ 3,219
Marketable securities 10,267 5,345
Accounts and other receivables less
allowances of $232 and $190 3,450 2,773
Inventories 9,080 9,040
Prepaid expenses and other assets 160 516
-------- --------
Total current assets 25,630 20,893
-------- --------
Property, plant and equipment 21,954 20,946
Accumulated depreciation (12,315) (11,610)
-------- --------
Property, plant and equipment, net 9,639 9,336
-------- --------
Prepaid pension expense 4,420 4,274
Investment in Digital GraphiX 165 1,346
Investment in Institute for Automated Systems 890 835
Other assets 1,565 993
-------- --------
$ 42,309 $ 37,677
======== ========
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED
STOCK AND COMMON AND OTHER STOCKHOLDERS EQUITY
Current liabilities:
Current maturities of long-term debt $ 478 $ 773
Short-term debt 3,408 2,305
Accounts payable 1,313 1,398
Deferred income taxes 1,592 564
Other current liabilities 4,176 3,670
------- -------
Total current liabilities 10,967 8,710
------- -------
Commitments and contingencies (Note 7)
Long-term debt, less current maturities 6,877 7,041
Other long-term obligations 1,635 1,121
Deferred income taxes 2,252 2,267
Redeemable cumulative convertible preferred
stock 4,750 4,891
----- -----
Common and other stockholders equity:
Common stock 2,103 2,103
Additional paid-in capital 3,248 3,248
Retained earnings 10,567 8,386
Treasury stock (90) (90)
-------- --------
Total common and other stockholders equity 15,828 13,647
-------- --------
$ 42,309 $ 37,677
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
ANDERSEN GROUP, INC.
Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three-months ended August 31, Six-months ended August 31,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Sales and revenues:
Net sales $ 6,896 $ 5,944 $14,364 $13,333
Investment and other
income (loss) 3,728 (402) 4,018 259
------- ------- - ------- -------
10,624 5,542 18,382 13,592
------- ------- ------- -------
Costs and expenses:
Cost of sales 4,416 3,936 9,219 8,592
Selling, general and
administrative 2,014 1,662 3,891 3,466
Research and development 403 364 820 725
Interest expense 261 203 489 401
------- ------- ------- -------
7,094 6,165 14,419 13,184
------- ------- ------- -------
Income (loss) before
Income taxes 3,530 (623) 3,963 408
income taxes 3,530 (623) 3,963 408
Income tax (expense)
Benefit (1,419) 249 (1,585) (163)
------- ------- -------- -------
benefit (1,419) 249 (1,585) (163)
------- ------- ------- -------
Net income (loss) 2,111 (374) 2,378 245
Reversal of
preferred 37 - 37 -
dividends
Preferred dividend (108) (100) (234) (242)
------- ------- ------- -------
requirement
Income (loss) applicable
to common shares $2,040 ($474) $2,181 $3
========= ======= ======= =======
Earnings (loss) per common Share:
Primary $ 1.04 ($0.25) $1.12 $0.00
-------- ------- ------- --------
Fully diluted $ 0.79 ($0.25) $0.91 $0.00
======= ======= ======= =======
Weighted average common
and common equivalent
shares outstanding 1,956,734 1,946,051 1,953,445 1,946,051
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
ANDERSEN GROUP, INC.
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six-months ended August 31,
1997 1996
<S> <C> <C>
Cash flows from operating activities:
Net income $2,378 $245
Adjustments to reconcile net income
to net cash provided by (used for) operating
activities:
Depreciation, amortization and accretion 773 734
Deferred income taxes 1,013 (83)
Pension income (146) (124)
Net realized and unrealized gains from
marketable securities and investments (3,603) 92
Purchases of marketable securities (1,467) (1,124)
Sales of marketable securities - 506
Changes in operating assets and liabilities:
Accounts and notes receivable (677) 436
Inventories (40) 1,530
Prepaid expenses and other assets 342 (1)
Accounts payable (263) (2,315)
Accrued expenses and other long-term
obligations 445 (88)
------ -------
Net cash used for operating activities (1,245) (192)
------ -------
Cash flows from investing activities:
Purchase of property and equipment (1,059) (797)
Proceeds from sale of property, plant
and equipment - 25
Investments in other assets (55) (297)
Proceeds from collection of long-term
investments 1,329 -
------ --------
Net cash provided by (used for) investing
activities 215 (1,069)
---------- --- -------
Cash flows from financing activities:
Principal payments on long-term debt (459) (157)
Issuance of short-term debt, net -
1,103
Redemption of preferred stock (160) -
Capitalized lease obligations incurred - 210
------- -------
Net cash provided by financing activities 484 53
--------- -------
Net decrease in cash and cash equivalents (546) (1,208)
Cash and cash equivalents - beginning of
period 3,219 4,116
------- -------
Cash and cash equivalents - end of period $2,673 $ 2,908
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Accounting Policies
The accompanying interim consolidated financial statements and related notes
should be read in conjunction with the Consolidated Financial Statements of
Andersen Group, Inc. and related notes as contained in the Annual Report on Form
10-K for the fiscal year ended February 28, 1997. The interim financial
statements include all adjustments (consisting only of normal recurring
adjustments) and accruals necessary in the judgment of management for a fair
presentation of such statements.
(2) Marketable Securities
During the fourth quarter of the prior fiscal year and the six months ended
August 31, 1997, the Company invested a total of $1,450,000 in a portfolio of
Russian equity securities managed by a third party investment advisor. The
reported market value of these securities at August 31, 1997 was approximately
$5,098,000. However, due to concerns regarding the volatility of the Russian
securities market and liquidity issues, the Company has recorded these
investments net of a reserve, of $1,020,000, for a net carrying value of
approximately $4,078,000. Accordingly, the Company recognized net appreciation
on this portfolio of $2,558,000 and $2,628,000, respectively, for the three and
six months ended August 31, 1997. This reserve, which was increased by $418,000
during the three months ended August 31, 1997, will be evaluated periodically
and adjusted based upon an assessment of the market conditions and the
composition of the investments within the portfolio.
(3) Inventories
Inventories consisted of the following:
<TABLE>
<CAPTION>
(In thousands)
August 31, February 28,
1997 1997
--------- ---------
<S> <C> <C>
Raw materials $ 1,959 $ 3,111
Work in process 4,203 3,877
Finished goods 3,821 2,955
--------- --------
9,983 9,943
LIFO Reserve (903) (903)
--------- ---------
$ 9,080 $ 9,040
========= ========
</TABLE>
(4) Income Taxes
Income tax (expense) benefit represents an estimate of the effective income tax
rate for the current fiscal year.
(5) Dividends
The Companys Redeemable Cumulative Convertible Preferred Stock (the Preferred
Stock) is entitled to accrue quarterly dividends ranging from $.1875 to $.4375
per share, based upon the consolidated operating income (as defined) of The J.M.
Ney Company (Ney), a wholly-owned subsidiary of the Company. Due to restrictions
in the Companys debt covenants as discussed below, no dividends were declared on
the Preferred Stock during the three and six-month periods ended August 31,
1997, although they were accrued at rates of $0.3763 and $0.8138 per share,
respectively.
Under the terms of the Companys 10 1/2% Convertible Subordinated Debentures, the
Company has been restricted from paying dividends on its capital stock since
April 1993 and will continue to be restricted until such time as the Companys
cumulative consolidated earnings, as defined, reach specified amounts. Through
August 31, 1997, approximately $1,112,000 has been accrued for this arrearage.
(For further information concerning the Companys ability to pay dividends on or
purchase or redeem its capital stock see the Liquidity and Capital Resources
section of Managements Discussion and Analysis of Financial Condition and
Results of Operations, and also Part II, Item 3 - Defaults Upon Senior
Securities).
(6) Earnings Per Share
Earnings per share is computed based on the weighted average number of common
and common equivalent shares outstanding. Fully diluted net income (loss) per
share assumes full conversion of all convertible securities into common stock at
the later of the beginning of the year or date of issuance, unless
anti-dilutive. (For the current fiscal year, see Exhibit 11 Statement re
Computation of Per Share Earnings). The effects of the assumed conversion of
convertible securities was anti-dilutive in the prior fiscal year.
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, Earnings Per Share (SFAS 128), effective
for periods ending after December 15, 1997. This statement will replace the
presentation of primary earnings per share (EPS) with basic EPS, and fully
diluted EPS with diluted EPS. For the three and six-month periods ended August
31, 1997, basic EPS would have been unchanged from that which is presented as
primary EPS and diluted EPS would have been unchanged from that which is
presented as fully diluted EPS.
(7) Contingencies
Ney is contingently liable under a $500,000 standby letter of credit issued by
its primary lending bank.
Item 2. Managements Discussion and Analysis of Financial Condition and Results
of Operations
For the three months ended August 31, 1997, the Company recorded net income
applicable to common shareholders of $2,040,000 or $1.04 per share, primary, and
$0.79 per share, fully diluted, as compared to a net loss of $474,000 or $0.25
per share for the comparable quarter in the prior fiscal year.
For the six months ended August 31, 1997, the Company recorded net income
applicable to common shares of $2,181,000, or $1.12 per share, primary, and
$0.91 per share, fully diluted. This compares with net income of $3,000, or
$0.00 per share for the six months ended August 31, 1996.
REVENUES
Revenues for the three months ended August 31, 1997 totaled $10,624,000 which is
a 91.7% increase from the revenues reported for the prior fiscal years second
quarter. This increase represents the combination of a 16.0% increase in sales
and an increase of $4,130,000 in investment and other income (loss). Through the
six-month period ended August 31, 1997, revenues totaled $18,382,000, or an
increase of 35.2% over the prior years comparable six-month total. Sales
increases of 7.7% and an increase of $3,759,000 in investment and other income
produced the year-over-year revenue growth.
During the three months ended August 31, 1997, the Company recorded significant
income related to realized and unrealized investment gains from a portfolio of
Russian securities. For the three and six-month periods then ended, $2,558,000
and $2,628,000, respectively of such gains were recorded, although an additional
$418,000 and $1,020,000, respectively, were deferred from recognition to provide
a valuation allowance to account for volatility and liquidity concerns. At
August 31, 1997, the portfolio of Russian investments was recorded at a carrying
value of $4,078,000, net of the aforementioned $1,020,000 valuation allowance.
Additionally, increases in unrealized gains from a portfolio of common stock
primarily comprised of financial institutions, produced increases in unrealized
gains of $803,000 and $812,000, respectively, for the three and six-month
periods ended August 31, 1997. In the prior fiscal year, these investments
produced investment gains of $48,000 and $126,000, respectively, during the
comparable three and six-month periods. During the prior fiscal years first six
months, the Company also recorded a $400,000 mark down in the market value of
its common stock investment in Phoenix Shannon, p.l.c. This entire investment,
along with a $1 million note receivable from Phoenix Shannon was subsequently
written off in their entirety in the third quarter of the prior fiscal year.
<PAGE>
Sales from the Companys operating subsidiaries, The J. M. Ney Company (J. M.
Ney) and Ney Ultrasonics Inc., (Ney Ultrasonics) increased by 16.0% and 7.7%,
respectively, during the three and six-month periods ended August 31, 1997 over
comparable periods in the prior fiscal year. The sales growth reflects three and
six-month growth rates for J. M. Ney of 8.5% and 4.1%, respectively, and growth
of 66.6% and 27.1%, respectively, for Ney Ultrasonics. The continued expansion
of J. M. Neys manufacturing platform has supported growth in a few key customer
relationships. Ney Ultrasonics continues to experience sales growth as future
evidence of market acceptance of its products. At August 31, 1997, sales backlog
for this division was a record $2.1 million.
COST OF SALES
Cost of sales for the three months ended August 31, 1997 reflects margins of
35.9% versus margins for the prior years second quarter of 33.8%. Year-to-date
margins are 35.8%, versus 35.6% for the first half of the prior fiscal year. The
short-term impact of rapid increases in the costs of palladium and platinum
during the six months ended August 31, 1997 had the effect of reducing margin
improvements that would have been otherwise more significant.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
- ---------------------------------------------
Selling, general and administrative costs during the three months ended August
31, 1997, were $352,000 or 21.2% greater than the costs incurred during the
comparable period in the prior fiscal year. Year-to-date,such costs are $425,000
or 12.3% greater than the prior fiscal years first half totals. Increased
personnel recruitment expenses, costs relating to a new software implementation
process and increased costs at Ney Ultrasonics due to staff additions, have
contributed to these expenses increasing at a rate greater than the increase in
sales.
RESEARCH AND DEVELOPMENT EXPENSES
- --------------------------------------
Research and development costs increased 10.7% and 13.1%, respectively, during
the three-month and six-month periods ended August 31, 1997 over the comparable
periods in the prior fiscal year. Such increases primarily reflect increased
sales activity and the continued commitment to support future sales growth.
INTEREST EXPENSE
Interest expense during the three months ended August 31, 1997 totaled $261,000,
or 28.6% greater than interest expense incurred in the second quarter of the
prior fiscal year. For the six-month period ended August 31, 1997, the increase
in interest expense over the prior year totaled $88,000 or 21.9%. Increased
borrowings at J. M. Ney to support facility expansion and capital expenditures,
as well as significant increases in the borrowing rates related to a financing
program for palladium and platinum, offset the lower interest costs associated
with the reduction of the outstanding principal amount of the Companys 10.5%
Convertible Subordinated Debentures. Although borrowing rates for palladium and
platinum have come down from peak levels noted in June and July 1997, they
remain at high levels of approximately 20% per annum. J. M. Ney utilizes such
programs primarily to hedge its exposure on its precious metal refining
activities, and has instituted additional charges to its customers to reflect
these market conditions.
INCOME TAXES
- -------------
Income taxes have been accrued at rates which the Company estimates will
approximate its effective income tax rate for the year. Estimates of timing
differences between financial reporting and income tax reporting have been made
and reflected in changes to the deferred income tax liability accounts.
PREFERRED DIVIDENDS
Preferred dividends, including the amortization of issuance discounts, totaled
$108,000 for the quarter ended August 31, 1997, versus $100,000 for the prior
years second fiscal quarter. This increase reflects the net of improved
operating income of J. M. Ney and Ney Ultrasonics, on which the dividend
calculation is based, and fewer preferred shares outstanding, due to purchases
of Preferred Stock in both the fourth quarter of the prior fiscal year and the
quarter ended August 31, 1997.
Such dividends total $234,000 for the six months ended August 31, 1997, versus
$242,000 for the first six months of the prior fiscal year. Per share dividend
accruals have increased from approximately $0.733 per preferred share for the
six months ended August 31, 1996 to approximately $0.814 for the current fiscal
years first six months, however, fewer outstanding preferred shares have
resulted in the lower accrual.
During the quarter ended August 31, 1997, the Company purchased 8,744
shares of the preferred stock resulting in a reversal of previously accrued
dividends and accreted discounts of $37,000.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
At August 31, 1997, the Companys cash, cash equivalents and marketable
securities totaled $12,940,000, an increase of 51.1% over the total of
$8,564,000 recorded at February 28, 1997. The increase is primarily the result
of $2,628,000 of recorded appreciation of securities within the Companys
investment portfolio of securities of Russian companies. This appreciation has
been recorded net of a valuation reserve of $1,020,000 at August 31, 1997. At
August 31, 1997, the net carrying value of the Russian stock portfolio was
$4,078,000, while a portfolio of financial institutions was valued at
$4,439,000. In addition, appreciation totaling $812,000 in other securities
within the Companys short term investment portfolio, which includes investments
in financial institutions and in the common stock of Centennial Cellular (the
purchaser of the Companys former cellular operations) contributed to the
increase in marketable securities investments. Additional liquidity was also
generated from the receipt of an initial liquidating dividend and principal
payments on a note receivable from Digital GraphiX, which is now in the final
stages of its liquidation.
During the first six months of the current fiscal year, the Company repurchased
$300,000 principal amount of its 10.5% Convertible Subordinated Debentures, and
subsequent to August 31, 1997, purchased an additional $266,0000 principal
amount of such notes. Accordingly, the sinking fund requirements of the issue
have been fulfilled for the current fiscal year, and a credit of $109,000 has
been generated towards next years requirement of $834,000.
The Company believes that, in addition to availability under a line of credit
between its primary subsidiary, J. M. Ney, and a commercial bank and under
available lease lines, funds from operations and sales of existing investments
will be sufficient to meet its anticipated working capital and debt service
requirements for the foreseeable future.
The indenture relating to the Companys 10.5% Convertible Subordinated Debentures
contains a covenant restricting the payment of dividends, on or repurchases or
redemptions of the Companys capital stock. As the result of preferred stock
repurchases and losses incurred in recent years, the Company is currently
prohibited by such covenant (except as provided by a Capital Stock Purchase
Program, which has been approved by a majority in principal amount of the
non-affiliated bondholders, that solely permits the Company to purchase up to
$6.0 million of capital stock) from making such payments on the Preferred Stock
or the Common Stock until such time as the sum of (i) the aggregate cumulative
consolidated net income; (ii) the aggregate net cash proceeds received by the
Company from sales of shares of its capital stock for cash; and (iii) the
aggregate net cash proceeds received by the Company from sales of indebtedness
of the company convertible into stock of the Company, to the extent such stock
has been converted into stock of the Company (collectively, the Consolidated Net
Income) exceeds the sum of the aggregate amount of all dividends declared and
all such other payments and distributions on account of the purchase, redemption
or other retirement of any shares of stock of the Company (collectively, the
Distributions). At August 31, 1997, Distributions exceeded Consolidated Net
Income by approximately $2,065,000 and the Company had utilized approximately
$550,000 of the $6.0 million available pursuant to the Capital Stock Purchase
program to purchase shares of the Preferred Stock.
FORWARD LOOKING STATEMENTS
This report contains forward-looking statements, estimates or plans, which
involve known and unknown risks, uncertainties and other factors which may cause
the actual results, performance or achievements of the Company to be materially
different from results or plans expressed or implied by such forward-looking
statements.
Part II. Other Information
Item 1. Legal Proceedings
As previously reported in the Companys Annual Report on Form 10-K for the
year ended February 28, 1997, in July 1996, two lawsuits were filed in the
United States District Court for the District of New Jersey, MORTON
INTERNATIONAL, INC. V. A.E. STALEY MFG. CO. ET AL, and VELSICOL CHEMICAL CORP.
V. A.E. STALEY MFG. CO. ET AL, in which Morton and Velsicol, assert a private
right of action pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act (CERCLA) against approximately 95 companies,
including The J. M. Ney Company (Ney), relating to the Ventron/Velsicol
<PAGE>
Superfund Site located in Wood Ridge and Carlstadt, New Jersey (the Site). In
addition, in December 1996, Morton and Velsicol filed a First Amended Complaint,
alleging an alternative basis for liability under the Resources Conservation and
Recovery Act (RCRA). Specifically, the plaintiffs allege that Ney was among a
group of companies that were generators of hazardous substances, which were
ultimately processed at the Site and contributed to the alleged contamination at
the Site. The suits, which duplicate each other in all material respects, seek
to recover the plaintiffs unspecified past and future costs of remediation of
the Site. The investigation at the Site to determine the extent of contamination
has not been completed and no plan for remediation has been developed. The
plaintiffs have not been able to provide the defendants with any confirmed
figures with respect to past costs and no figures at all for its future costs.
Based on preliminary disclosure of information relating to the claims made by
plaintiffs and defendants in January 1997, Ney is one of the smaller parties to
have had any transactions with one of the plaintiffs predecessors in interest.
However, at this time, there is insufficient information to determine the
appropriate allocation of costs between or among the defendants, if liability to
the generator defendants is ultimately proved.
The Company is investigating whether any liability, which may accrue at some
future date, may be subject to reimbursement in whole or in part from insurance
proceeds. As of this date, the Company has no basis to conclude whether the
litigation may be material to the Companys financial condition or business.
Accordingly, the Company intends to vigorously defend the lawsuit.
In August 1997, The J. M. Ney Company (Ney) was included as a defendant in an
asbestos related civil action for negligence and product liability filed in the
Court of Common Pleas of Allegheny County, Pennsylvania entitled, James S.
Cathers and Sylvia Jean Cathers, his wife, (collectively, the Plaintiffs) v.
Kerr Corporation, Whip-Mix Corporation, The J. M. Ney Company and Dentsply
Corporation, Inc. (collectively, the Defendants) in which the Plaintiffs claim
damages in excess of $30,000 (the jurisdictional limit) from being exposed to
asbestos and asbestos products alleged to have been manufactured and supplied by
the Defendants, including Neys former Dental Division, while one of the
Plaintiffs worked in a dental lab from 1960 to 1986. The Plaintiffs allege that
this exposure to asbestos and asbestos products caused one of the Plaintiffs to
develop mesothelioma. The Plaintiffs have not provided any specific allegations
of facts as to which Defendants may have manufactured or supplied asbestos and
asbestos products which are alleged to have caused the injury.
The Company is investigating whether any liability, may be subject to
reimbursement in whole or in part from insurance proceeds. As of this date, the
Company has no basis to conclude that the litigation may be material to the
Companys financial condition or business. Accordingly, the Company intends to
vigorously defend the lawsuit.
Item 3. Defaults Upon Senior Securities
As discussed above in Note 5, Dividends, and in Managements Discussion and
Analysis of Results of Operations and Financial Condition Liquidity and Capital
Resources, the Company is not permitted to pay dividends on its capital stock.
As a result of this restriction, the Company was precluded from paying the
Preferred Stock dividend earned for each of the four quarters in fiscal years
1994, 1995, 1996 and 1997, respectively, and is precluded from paying the
Preferred Stock dividend earned for each of the two the quarters ended August
31, 1997. These dividends are ordinarily payable within 45 days after the end of
the quarter. Therefore, while the quarterly fiscal 1994 through May 31, 1997
dividends are in arrears, the dividend for the quarter ended August 31, 1997,
which was in the amount of $0.3763 per share, will be in arrears on October 16,
1997. The aggregate arrearage for all dividends (including that payable on
October 15, 1997) is approximately $1,112,000.
As of October 16, 1994, the Company was in arrears for six consecutive quarters
in the payment of the dividends on the Preferred Stock. The terms of the
Preferred Stock provide that once the Company is in arrears on the payment of
the dividends on the Preferred Stock for six consecutive quarters, the holders
of the Preferred Stock, voting together as a class, are entitled to elect one
additional director to the Companys Board of Directors at any annual meeting of
shareholders or a special meeting held in place thereof, or at a special meeting
of the holders of the Preferred Stock. If, and when, the dividends which are in
arrears on the Preferred Stock shall have been paid or declared and set apart
for payment, the rights of the holders of the Preferred Stock to elect such
additional director shall cease (but always subject to the same provisions for
the vesting of such voting rights in the case of any similar future arrearages
in dividends), and the term of office of any person elected director by the
holders of the Preferred Stock shall terminate. As of October 15, 1997, no
special meeting of the preferred stockholders has been held or scheduled.
<PAGE>
Item 4. Submission of Matters to a Vote of Security Holders
(a) The Registrants Annual Meeting was held on June 24, 1997 for the
purpose of electing Directors.
(b) The following Directors were elected:
Oliver R. Grace, Jr.
Francis E. Baker
Peter N. Bennett
John S. Grace
Louis A. Lubrano
James J. Pinto
(c) Votes for and against for each Director were as follows:
Directors Francis E. Baker, Oliver R.Grace, Jr., Louis A. Lubrano and
James J. Pinto each received 1,679,337 votes for and 9,844 votes against.
Directors Peter N. Bennett and John S. Grace received 1,679,037 and 1,679,333
votes for, respectively, and 10,244 and 9,848 votes against, respectively.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits required by Item 601 of Regulation S-K:
Exhibit 11.1 - Statement Re Computation of Per Share Earnings for
the three months ended August 31, 1997.
Exhibit 11.2 Statement Re Computation of Per Share Earnings for the
six months ended August 31, 1997.
Exhibit 27.1 - Financial Data Schedule for the six months ended
August 31, 1997.
Exhibit 27.2 - Amended Financial Data Schedule for the six months
Ended August 31, 1996.
No reports on Form 8-K were filed during the quarter ended August 31, 1997.
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ANDERSEN GROUP, INC.
By: /s/ Oliver R. Grace, Jr.
Oliver R. Grace, Jr.
President and Chief Executive Officer
Date: October 15, 1997
By: /s/ Andrew M. OShea
Andrew M. OShea
Treasurer
Date: October 15, 1997
