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, 1998
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.
(Exact name of Registrant as specified in its charter)
DELAWARE 06-0659863
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
515 Madison Avenue, Suite 2000, New York, New York 10022
(Address of principal executive offices) (Zip Code)
(212) 826-8942
(Registrant's telephone number, including area code)
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 ____
As of October 9, 1998, there were 1,940,582 shares of the Registrant's $0.01
par value common stock outstanding.
Title Outstanding
Common Stock, $0.01 par value per share Authorized 6,000,000 shares;
Issued 1,958,478
<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, 1998 and February 28, 1998 3
Consolidated Statements of Operations for the 4
Three and Six Months Ended August 31, 1998 and 1997
Consolidated Statements of Cash Flows for the 5
Six Months Ended August 31, 1998 and 1997
Notes to Consolidated Financial Statements 6
Item 2 - Management's Discussion and Analysis of 8
Financial Condition and Results of Operations
Item 3 - Quantitative and Qualitative Disclosures About 10
Market Risk
Part II - Other Information
Item 1 - Legal Proceedings 11
Item 4 - Submission of Matters to a Vote of Security Holders 12
Item 6 - Exhibits and Reports on Form 8-K 12
Signatures 13
<PAGE>
Part I Financial Information
Item 1. Financial Statements.
<TABLE>
<S><C> <C> <C> <C> <C>
ANDERSEN GROUP, INC.
Consolidated Balance Sheets
(In thousands)
August 31, 1998 February 28, 1998
--------------- -----------------
ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $ 5,273 $ 2,516
Marketable securities 6,301 9,001
Receivable from sale of subsidiary 500 3,521
Accounts and other receivables, less
allowances of $151 and $130 2,955 3,870
Inventories 5,338 8,076
Deferred income taxes receivable 632 -
Prepaid expenses and other assets 111 142
------- -------
Total current assets 21,110 27,126
------- -------
Property, plant and equipment 22,349 21,854
Accumulated depreciation (12,950) (12,411)
------- -------
Property, plant and equipment, net 9,399 9,443
------- -------
Prepaid pension expense 4,879 4,665
Investments 206 1,815
Other assets 2,018 1,722
------- -------
$37,612 $44,771
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 595 $ 595
Short-term borrowings 1,370 2,183
Accounts payable 696 951
Accrued liabilities 2,650 3,352
Deferred income taxes - 1,286
------- -------
Total current liabilities 5,311 8,367
Long-term debt, less current maturities 4,370 4,459
Subordinated note payable, net of unamortized discount 7,314 7,300
Other long-term obligations 1,949 1,888
Deferred income taxes 1,954 2,561
------- -------
Total liabilities 20,898 24,575
------- -------
Stockholders' equity:
Cumulative convertible preferred stock 4,776 4,769
Common stock 20 2,103
Treasury stock (83) (82)
Additional paid-in capital 5,340 3,248
Retained earnings 6,661 10,158
------- -------
Total stockholders' equity 16,714 20,196
------- -------
$37,612 $44,771
======= =======
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<S><C> <C> <C> <C> <C>
ANDERSEN GROUP, INC.
Consolidated Statements of Operations
(In thousands, except per share data)
(unaudited)
Three Months Ended Six Months Ended
August 31, 1998 August 31, 1997 August 31, 1998 August 31, 1997
--------------- --------------- --------------- ---------------
Revenues:
Net sales $ 5,938 $ 5,618 $13,623 $11,666
Investment and other income (loss) (4,822) 3,728 (4,676) 4,018
-------- -------- -------- --------
1,116 9,346 8,947 15,684
-------- -------- -------- --------
Costs and expenses:
Cost of sales 3,852 3,681 9,022 7,656
Selling, general and administrative 1,822 1,574 3,446 3,012
Research and development 465 336 952 681
Interest expense 525 261 986 489
-------- -------- -------- --------
6,664 5,852 14,406 11,838
-------- -------- -------- --------
Income (loss) from continuing
operations before income taxes (5,548) 3,494 (5,459) 3,846
Income tax expense (benefit) (2,197) 1,406 (2,161) 1,541
-------- -------- -------- --------
Income (loss) from continuing
operations (3,351) 2,088 (3,298) 2,305
Income from discontinued operations
net of income taxes - 23 - 73
-------- -------- -------- --------
Net income (loss) (3,351) 2,111 (3,298) 2,378
Reversal of preferred dividends - 37 - 37
Preferred dividends (96) (108) (199) (234)
-------- -------- -------- --------
Income (loss) applicable to common
shares ($ 3,447) $ 2,040 ($3,497) $2,181
======== ======== ======== ========
Earnings (loss) per common share:
Basic
Continuing operations ($1.77) $1.04 ($1.80) $1.09
Discontinued operations - 0.01 - 0.04
-------- ------- ------- -------
Net income (loss) ($1.77) $1.05 ($1.80) $1.13
======== ======= ======= =======
Diluted
Continuing operations ($1.77) $0.78 $1.80 $1.09
Discontinued operations - 0.01 - 0.04
-------- ------- ------- -------
Net income (loss) ($1.77) $0.79 ($1.80) $1.13
======== ======= ======= =======
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<S><C> <C> <C>
ANDERSEN GROUP, INC.
Consolidated Statements of Cash Flows
(In thousands)
(unaudited)
Six Months Ended
August 31, 1998 August 31, 1997
--------------- ----------------
Cash flows from operating activities:
Net income (loss) ($3,298) $2,378
Adjustments to reconcile net income (loss)to net cash
provided by (used in) operating activities:
Depreciation, amortization and accretion 734 773
Deferred income taxes (2,525) 1,013
Pension income (214) (146)
Net losses (gains) from marketable securities
and investments 5,436 (3,603)
Purchases of marketable securities (1,731) (1,467)
Proceeds from sales of marketable securities 604 -
Disposals of property and equipment 160 -
Changes in operating assets and liabilities:
Accounts and notes receivable 915 (677)
Inventories 2,738 (40)
Prepaid expenses and other assets 34 342
Accounts payable (255) (263)
Accrued liabilities and other long-term obligations (81) 445
------ ------
Net cash provided by (used in) operating activities 2,517 (1,245)
------ ------
Cash flows from investing activities:
Purchases of property and equipment, net (1,058) (1,059)
Proceeds from sale of subsidiary 2,400
-
Proceeds from collection of long-term investments, net - 1,274
------ ------
Net cash provided by investing activities 1,342 215
------ ------
Cash flows from financing activities:
Principal payments on long-term debt (89) (459)
Issuance (repayment) of short term debt, net (813) 1,103
Stock options exercised 50 -
Purchase of treasury stock (42) -
Preferred dividends paid (208) -
Redemption of preferred stock - (160)
------ ------
Net cash provided by (used in)financing activities (1,102) 484
------ ------
Net increase (decrease) in cash and cash equivalents 2,757 (546)
Cash and cash equivalents - beginning of period 2,516 3,219
------ ------
Cash and cash equivalents - end of period $5,273 $2,673
====== ======
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
ANDERSEN GROUP, INC.
Notes to Consolidated Financial Statements
(1) Accounting Policies
The accompanying interim 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, 1998. 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. In addition, certain reclassifications have been made to the prior
period financial information so that it conforms to the current period
presentation.
(2) Marketable Securities
Marketable securities consisted of the following (in thousands):
<TABLE>
<S><C> <C> <C>
August 31, 1998 February 28, 1998
--------------- -----------------
Common stock of savings banks $4,968 $5,611
Common stock of Centennial Cellular - 430
C A Emerging Russia Fund 294 2,422
Portfolio of Ukraine stocks 206 314
Common stock of Bank Handlowy (Poland) 242 348
Renaissance Russian Bond Fund 201 -
Valuation reserve - foreign investments (90) (617)
Municipal bonds 480 493
----- ------
$6,301 $9,001
====== ======
</TABLE>
At August 31, 1998, the valuation reserve was established only for the
investments in Ukraine and Poland. The investments in Russia were written down
to 10% of original cost to reflect approximate market value due to lack of
published quotes.
(3) Inventories
Inventories consisted of the following (in thousands):
<TABLE>
<S><C> <C> <C>
August 31, 1998 February 28, 1998
--------------- -----------------
Raw material $1,759 $ 2,989
Work in process 3,784 6,509
Finished goods 2,243 657
------ -------
7,786 10,155
LIFO Reserve 2,448 2,079
------ -------
$ 5,338 $ 8,076
======= =======
</TABLE>
(4) Discontinued Operations
Effective February 28, 1998, the Company sold the net assets of Ney
Ultrasonics Inc., and recorded a net gain of $97,000 after income taxes. During
the quarter ended May 31, 1998, the Company received $2,400,000 of the purchase
price and an additional $500,000 was being held by an escrow agent pending a
review of the year-end financial information and finalization of the purchase
price. While this process has not yet been completed, the Company expects to
receive less consideration from the sale than originally estimated. However, the
estimate of the net gain on sale has not changed because, in the opinion of
management, accruals made at the Company's fiscal year end will be adequate to
cover the change in condition.
<PAGE>
(5) Income Taxes
Income tax expense (benefit) represents an estimate of the effective
income tax rates.
(6) Dividends
During February 1998 the Company amended its certificate of incorporation
to modify the terms of the Company's Series A Preferred Stock (Preferred Stock)
to provide for an annual fixed dividend rate of $1.50 per share of Preferred
Stock, paid quarterly, and to eliminate its mandatory redemption feature.
(7) Earnings Per Share
Earnings per share is computed based upon the weighted average number of
common shares outstanding during the period. Diluted earnings per share is
computed based upon the weighted average number of common shares outstanding,
plus the assumed issuance of common shares for all potentially dilutive
securities at the later of the beginning of the year or date of issuance, unless
antidilutive. For the three and six month periods ended August 31, 1998, the
effect of such conversions were antidilutive.
(8) Stockholders' Equity
On June 23, 1998 the Company's stockholders approved a plan of
reincorporation in which the Company was merged into a wholly-owned Delaware
subsidiary to effect a change in the Company's state of incorporation. As a
result, the common stock of the Company now has a par value of $.01, and
appropriate adjustments have been made to common stock and additional paid-in
capital on the accompanying Consolidated Balance Sheet.
(9) Business Segments and Export Sales
During the six months ended August 31, 1998, the Company operated in two
continuing segments, Electronics, which comprises the operations of J.M. Ney,
and Corporate, which includes the Company's investment, real estate and
corporate administrative activities. Operating income (loss) consists of net
sales, investment and other income, less cost of sales and selling, general and
administrative expenses directly allocated to the industry segments. Corporate
revenues consist of investment and other income not attributable to J.M. Ney.
Summarized financial information for business segments is as follows (in
thousands):
<TABLE>
<S><C> <C> <C>
Six months ended: August 31, 1998 August 31, 1997
--------------- ---------------
Revenues:
Electronics $ 13,536 $11,671
Corporate (4,589) 4,013
--------- -------
$ 8,947 $15,684
--------- -------
Operating income (loss):
Electronics $ 938 $ 1,413
Corporate (5,411) 2,922
--------- -------
($ 4,473) $ 4,335
--------- -------
Interest expense:
Electronics $ 727 $ 138
Corporate 259 351
------- -------
$ 986 $ 489
------- -------
Depreciation, amortization and accretion:
Electronics $ 655 $647
Ultrasonics - 33
Corporate 79 93
------- -------
$ 734 $ 773
------- -------
Capital expenditures:
Electronics $ 1,047 $1,025
Ultrasonics - 25
Corporate 11 9
------- ------
$ 1,058 $1,059
------- ------
<PAGE>
As of: August 31, 1998 February 28, 1998
--------------- -----------------
Identifiable assets:
Electronics $25,077 $25,337
Corporate 12,535 19,434
------- -------
$37,612 $44,771
------- -------
</TABLE>
Export sales for the six months ended August 31, 1998 and 1997 were $2,225,000
and $2,161,000, respectively. Such sales were made primarily to customers in
Europe and the Pacific Rim.
During the six months ended August 31, 1998, sales to two customers accounted
for 13% and 12% of net sales, respectively.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
For the three months ended August 31, 1998, the Company recorded a net loss
applicable to common shareholders of $3,447,000, or $1.77 per share, basic and
diluted. During the prior fiscal year's second quarter, the Company recorded net
income applicable to common shareholders of $2,040,000, or $1.05 basic and $0.79
diluted. Such prior year results include $23,000 of net income from discontinued
operations.
For the six months ended August 31, 1998, the Company recorded a net loss
applicable to common shareholders of $3,497,000, or $1.80 per share, basic and
diluted. This compares with net income applicable to common shareholders of
$2,181,000, or $1.13 basic and diluted, for the six months ended August
31, 1997. Such prior year results include $73,000 of net income from
discontinued operations.
REVENUES
Revenues for the three months ended August 31, 1998 totaled $1,116,000,
comprised of $5,938,000 of net sales from The J.M. Ney Company (J.M. Ney) and
a net loss of $4,822,000 from investments and other income. For the six months
ended August 31, 1998, revenues totaled $8,947,000, which was comprised of
$13,623,000 of net sales from J.M. Ney and $4,676,000 of net losses from
investments and other income.
Sales generated by J.M. Ney, the Company's wholly-owned manufacturer of
electronic materials and components, increased by 5.7% over the prior fiscal
year's second quarter due to higher selling prices for palladium-based products
and increased sales of materials made from precious metal alloys. Sales of parts
were adversely impacted by the reduced demand from the automotive market as a
result of the labor strike against General Motors.
For the six months ended August 31, 1998, sales were 16.8% ahead of last year
primarily due to the increased palladium prices and increased material sales to
various customers.
Investment and other income produced a net loss of $4,822,000 during the quarter
ended August 31, 1998 and a net loss of $4,676,000 for the six months then
ended. Significant components of this six month net loss and the comparable
income recognized during the first six months of the prior fiscal year were as
follows (in thousands):
<TABLE>
<S><C> <C> <C>
Six months ended
August 31, 1998 August 31, 1997
--------------- ---------------
Net gains (losses) from domestic investment portfolio $(1,712) $ 796
Net (losses) gains from Russian and Eastern European
portfolio and longer-term investments (3,722) 2,645
Interest and dividends 190 105
Rental income 267 216
Other, net 301 256
-------- --------
$(4,676) $4,018
------- ------
</TABLE>
During the quarter ended August 31, 1998, Russian equity investments for
which a market quote was not available were written down to 10% of original
cost, which represents management's estimate of the net realizable value of
those investments. This also includes the Company's longer-term
investments in the Institute for Automated Systems, a Russian telecommunications
company, and VSMPO, a Russian titanium producer. Other Eastern European
investments have valuation reserves equal to 20% of quoted market to provide for
volatility and liquidity concerns. In addition, a Russian income fund investment
has been marked down approximately 60% based on information received from the
portfolio managers.
COST OF SALES
Cost of sales for the three months ended August 31, 1998 represented 64.9%
of sales, versus cost of sales, which were equal to 65.5% of sales for the
second quarter of the prior fiscal year. Year-to-date, cost of sales is 66.2% of
net sales, versus the prior fiscal year in which cost of sales represented 65.6%
of net sales during the first six months. More effective market pricing of sales
of palladium-based products in the current year along with increased volumes of
refining activity have contributed to improved margins. However, increased sales
mix of material sales and lower absorption of operating costs resultant from
reduced production of parts for sale into the automotive market in the second
quarter served to lower margins.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses for the three months ended
August 31, 1998 totaled $1,822,000, which is a 15.8% increase from the prior
fiscal year's second quarter expense total of $1,574,000. Year-to-date, such
costs totaling $3,446,000 represent a 14.4% increase over the prior year's six
months expenses of $3,012,000. Costs incurred in connection with computer
systems enhancements to position the Company to be Year 2000 compliant totaling
approximately $273,000 have contributed to the increase, along with increased
personnel recruiting costs.
RESEARCH AND DEVELOPMENT EXPENSES
Research and development expenses for the three months ended August 31, 1998
totaled $465,000, or 7.8% of net sales, versus $336,000, or 6.0% of net sales,
in the prior fiscal year's second quarter. Year-to-date, these costs have
increased by 39.8% and represent 7.0% of sales versus 5.8% of sales in the first
six months of the prior fiscal year. The absolute increase was due to lower
allocations to cost of sales of portions of these costs and to increased
engineering and research activities. The increase relative to sales was also
caused by lower than planned sales caused by the labor dispute against General
Motors.
INTEREST EXPENSE
For the three months ended August 31, 1998, interest expense totaled
$525,000, or a 101.1% increase over the prior fiscal year's second quarter total
of $261,000. Year-to-date through August 31, 1998, interest expense totaled
$986,000, or 101.6% more than interest incurred during the prior fiscal year's
first six months. Most of the increase is from interest on $7.5 million of
subordinated debt, which J.M. Ney obtained in December 1997. In addition, high
interest rate palladium leases have added to the interest expense. Corporate
level interest expense is lower in the current year due to repayment of debt in
February 1998 in connection with an exchange of 10 1/2% convertible subordinated
debentures and the repayment of Industrial Revenue Bonds obligation.
INCOME TAX EXPENSE
Income taxes have been accrued based on estimated effective income tax rates.
PREFERRED DIVIDENDS
For the three and six months ended August 31, 1998, dividends were accrued
based upon the revised terms, which provide for quarterly payments of dividends
at the annual rate of $1.50 per share. For the comparable three and six month
periods in the prior fiscal year, dividends were accrued at the rate of $0.2955
and $0.7330, respectively per preferred share in accordance with the prior
terms of this security.
During the second quarter of the prior fiscal year, the Company purchased 8,744
shares of its preferred stock, which resulted in the reversal of accrued unpaid
dividends and accreted discounts of $37,000.
LIQUIDITY AND CAPITAL RESOURCES
At August 31, 1998, the Company's consolidated cash and marketable securities
was approximately $11.6 million, which is a modest increase from $11.5 million
at February 28, 1998. Of these amounts, $4.1 million and $1.1 million,
respectively were held in the accounts of J.M. Ney, while the Company's cash and
short-term investments at August 31, 1998 totaled $7.5 million, a $2.9 million
decline from February 28, 1998 levels. J.M. Ney's cash and short-term
investments increased primarily from lower accounts receivable and inventory
balances, while the decrease in the Company's cash and short-term investments
reflects declines in the values of its domestic and Russia trading portfolio. At
August 31, 1998, 29.7% of the Company's consolidated stockholder's equity was
invested in the common stock of financial institutions, while 6.3% of
consolidated stockholder's equity was invested in both short-term and long-term
investments in Russia, Ukraine and Poland, including a J.M. Ney investment in a
Russian income fund with a reported value of $201,000.
As a result of covenants contained in its borrowing agreement, J.M. Ney is
restricted from paying dividends or otherwise transferring funds to the Company
outside the ordinary course of business, except as defined in certain covenants.
At August 31, 1998, J.M. Ney's working capital and net worth (net of liabilities
to the Company) totaled approximately $9.1 million and $7.0 million
respectively.
The Company is required to make sinking fund payments on its 10 1/2% debentures
and has interest, preferred dividend and operating expense cash flow
requirements. The Company anticipates that these working capital and debt
service requirements will be met from the liquidation or additional leveraging
of investments and from permitted payments from J.M. Ney.
DISCLOSURE OF YEAR 2000 ISSUES
The "Year 2000 problem" arose because many existing computer programs use only
the last two digits to refer to a year. This does not allow programs to properly
recognize a year that begins with "20" instead of "19", and could result in
program failures or erroneous results.
The Company and J.M. Ney have evaluated all known exposures to applications
with embedded chips, including those that are informational and operational in
nature, which do not properly recognize all four digits of dates. To date, most
of the financial and operational effort has been expended in upgrading J.M.
Ney's enterprise resource planning (ERP) system, which is used to control its
operational activities from order entry through manufacturing to financial
reporting. Prior to the current fiscal year, approximately $128,000 had been
expended on this project while identifiable costs expended during the current
fiscal year totals $273,000. An additional $75,000-$100,000 is anticipated to be
expensed on this phase of the Year 2000 preparedness project, which is expected
to be completed prior to December 31, 1998. As of the date of this filing, this
major project is substantially complete. Additional applications, which require
modification or replacement to ensure Year 2000 compliance have been identified,
and are planned to be completed by no later than May 31, 1998. The cost of
these additional upgrades is estimated to total approximately $200,000.
Based upon a comprehensive review of exposure areas, which included among
other steps, analyses of the Company's and J.M. Ney's interdependence on outside
computer applications from vendors and customers, the Company and J.M. Ney are
confident that manufacturing and other operational and administrative activities
will not be at significant risk due to the Year 2000 problem, as long as outside
sources of power and communications remain operational.
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. Among the risk and uncertainty are the performance of the world's
equity markets, principally the U.S. stock market, precious metal prices,
general economic conditions and the degree of success of identifying all
critical Year 2000 exposures.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not required.
<PAGE>
Part II. Other Information
Item 1. Legal Proceedings
Morton International, Inc. v. A.E. Staley Mfg. Co. et al. and Velsicol
Chemical Corp. v. A.E. Staley Mfg. Co. et al
.
As originally reported in the Company's Form 10-K for the year ended February
28, 1997, in July 1996, two companion lawsuits were filed in the United States
District Court for the District of New Jersey, by various owners and operators
of the Ventron-Velsicol Superfund Site (Site). The lawsuits, which were
subsequently consolidated, were filed under the Comprehensive Environmental
Resource Compensation and Liability Act (CERCLA), the Resource Conservation and
Recovery Act, the New Jersey Spill Act and New Jersey common law, alleging that
the defendants (over 100 companies, including J.M. Ney) were generators of
certain wastes allegedly processed at the site. The lawsuits seek recovery of
costs incurred and a declaration of future liability for costs to be incurred by
the owners and operators in studying and remediating the Site.
Based on preliminary disclosure of information relating to the claims made by
plaintiffs and defendants, J.M. Ney, which produced and refined precious metals
used in dental amalgams, is one of the smaller parties to have had any
transactions with one of the plaintiff's predecessors in interest. However,
under both CERCLA and the New Jersey Spill Act, a party is jointly and severally
liable, unless there is a basis for divisibility. At this time, there is
insufficient information to determine the appropriate allocation of costs as
between or among the defendant group, if liability to the generator defendants
is ultimately proven. Moreover, because of the incomplete status of discovery,
the Company is unable to predict the probable outcome of the lawsuit, whether
favorable or unfavorable, and has no basis to ascertain a range of loss, should
any occur, with respect to an outcome that might be characterized as
unfavorable.
The Company continues to investigate whether any liability, which may accrue at
some future date, may be subject to reimbursement in whole or in part from
insurance proceeds. The Company intends to continue to vigorously defend the
lawsuit.
James S. Cathers and Sylvia Jean Cathers, his wife v. Kerr Corporation,
Whip-Mix Corporation, The J.M. Ney Company and Dentsply Corporation, Inc.
As originally reported in the Company's Form 10-Q for the Quarter ended August
31, 1997, in August 1997, J.M. 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, 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 Ney's former Dental Division, while one of the
Plaintiffs worked in a dental lab from 1960 to 1986 at an unspecified location
in Pittsburgh, Pennsylvania. The Plaintiffs allege that this exposure to
asbestos and asbestos products caused the wrongful death of one of the
Plaintiffs from cancer (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 has determined that it has insurance that potentially covers this
claim and has called upon the insurance carriers to provide reimbursement of
defense costs and liability, should any arise. As of this date, the Company has
no basis to conclude that the litigation may be material to the Company's
financial condition or business. The Company intends to vigorously defend the
lawsuit.
Anthony Nicholas Georgiou, et al v. Mobil Exploration and Producing
Services, Inc., Metromedia International Telecommunications, Inc., et al.
On January 14, 1998, Anthony Nicholas Georgiou, et al. v. Mobil Exploration
and Producing Services, Inc., Metromedia International Telecommunications, Inc.,
et al., was filed in the United States District Court for the Southern District
of Texas. Plaintiffs claim that the defendants, including the Registrant and
Oliver R. Grace, Jr. the Registrant's President and Chief Executive Officer,
interfered with plaintiffs' business relationships with several companies
involving certain oil exploration and production contracts in Siberia and
telecommunications contracts in the Russian Federation.
On August 27, 1998, the United States District court granted the Company's
motion to dismiss this case for lack of personal jurisdiction.
Item 4. Submission of Matters to a Vote of Security Holders.
Votes of security holders held on June 23, 1998 have been previously
reported in the Company's Form 10-Q for the quarter ended as of May 31, 1998.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits required by Item 601 of Regulation S-K:
Exhibit Description
Exhibit 27 Financial Data Schedule.
Exhibit 27.1 Restated Financial Data Schedule Six Months Ended
Ended August 31, 1997.
No reports on Form 8-K were filed during the quarter ended August 31, 1998.
<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 13, 1998
By: /s/ Andrew M. O'Shea
Andrew M. O'Shea
Chief Financial Officer
The J.M. Ney Company
(Principal Financial Officer of the Company)
Date: October 13, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Exhibit 27
ANDERSEN GROUP, INC.
FINANCIAL DATA SCHEDULE
COMMERCIAL AND INDUSTRIAL COMPANIES
ARTICLE 5 OF REGULATION S-X
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-Q FOR THE QUARTERLY PERIOD ENDED AUGUST 31, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> FEB-28-1999
<PERIOD-START> MAR-01-1998
<PERIOD-END> AUG-31-1998
<CASH> 5,273
<SECURITIES> 6,301
<RECEIVABLES> 3,606
<ALLOWANCES> (151)
<INVENTORY> 5,338
<CURRENT-ASSETS> 21,110
<PP&E> 22,349
<DEPRECIATION> (12,950)
<TOTAL-ASSETS> 37,612
<CURRENT-LIABILITIES> 5,311
<BONDS> 11,684
0
4,776
<COMMON> 20
<OTHER-SE> 11,918
<TOTAL-LIABILITY-AND-EQUITY> 37,612
<SALES> 13,623
<TOTAL-REVENUES> 8,947
<CGS> 9,022
<TOTAL-COSTS> 13,420
<OTHER-EXPENSES> 4,398
<LOSS-PROVISION> 21
<INTEREST-EXPENSE> 986
<INCOME-PRETAX> (5,459)
<INCOME-TAX> (2,161)
<INCOME-CONTINUING> (3,298)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,497)
<EPS-PRIMARY> (1.80)
<EPS-DILUTED> (1.80)
<FN>
ANTI-DILUTIVE
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Exhibit 27.1
ANDERSEN GROUP, INC.
RESTATED FINANCIAL DATA SCHEDULE
COMMERCIAL AND INDUSTRIAL COMPANIES
ARTICLE 5 OF REGULATION S-X
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-Q FOR THE QUARTERLY PERIOD ENDED AUGUST 31, 1997 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> FEB-28-1998
<PERIOD-START> MAR-01-1997
<PERIOD-END> AUG-31-1997
<CASH> 2,673
<SECURITIES> 10,267
<RECEIVABLES> 3,682
<ALLOWANCES> (232)
<INVENTORY> 9,080
<CURRENT-ASSETS> 25,630
<PP&E> 21,954
<DEPRECIATION> (12,315)
<TOTAL-ASSETS> 42,309
<CURRENT-LIABILITIES> 10,967
<BONDS> 6,877
4,750
0
<COMMON> 2,103
<OTHER-SE> 13,725
<TOTAL-LIABILITY-AND-EQUITY> 42,309
<SALES> 11,666
<TOTAL-REVENUES> 15,684
<CGS> 7,656
<TOTAL-COSTS> 11,349
<OTHER-EXPENSES> 3,693
<LOSS-PROVISION> 24
<INTEREST-EXPENSE> 489
<INCOME-PRETAX> 3,846
<INCOME-TAX> 1,541
<INCOME-CONTINUING> 2,305
<DISCONTINUED> 73
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,181
<EPS-PRIMARY> 1.13
<EPS-DILUTED> 1.13
<FN>
Anti-Dilutive
</FN>
</TABLE>
