1 Revenues and (loss) income from continuing operations exclude the results of operations of the Company's Ultrasonic segment as a result of its sale in February 1998.

The above selected financial data include the results of operations of JM Ney which was sold effective March 22, 2002. Pursuant to the provisions of SFAS 144, "Accounting for the Impairment or Disposal of Long-Lived Assets", JM Ney has been reflected as " a continuing operation" in the Company's consolidated financial statements. The following presents certain selected financial data indicating the proforma effect of presenting JM Ney's as discontinued operations:

Additional information to assist in evaluating the Company's past performance separate from JM Ney can be found in Note 17 to the Company's Consolidated Financial Statements contained in Item 8 herein, and the Condensed Financial Information contained in Schedule I of Item 14 herein.

The Company is exposed to market risk from changes in certain commodity prices, changes in interest rates, and from factors that affect the Company's equity investments both domestic and in Russia.

The Company has one Ukraine-based common stock investment with a net reported value at February 28, 2002 of $5,000 and a longer-term indirect investment in ComCor-TV, a Russian cable television and Internet company, through its investment in Moscow Broadband, with a reported value at February 28, 2002 of $2,683,000. The realizable value of the trading investments is subject to currency fluctuations, illiquid markets and political risks. The Company has not entered into any derivative financial instruments to hedge the risks associated with these investments.

The Company's investment in Moscow Broadband is also at risk based upon Moscow Broadband's ability to raise sufficient equity capital at appropriate values to enable it to provide ComCor-TV additional equity capital in order for Moscow Broadband to maintain its 50% equity share in ComCor-TV. Additionally, the degree of success of ComCor-TV to add sufficient subscribers for its cable television and Internet access services at adequate rates, and for ComCor-TV to obtain sufficient equity and debt financing to fund its infrastructure build out and near term projected operating losses, will also significantly affect the value of the Company's investment in Moscow Broadband.

Prior to the sale of its assets and operations to Deringer Mfg. Company, JM Ney was exposed to precious metals risk relating to the pricing of orders for its customers and from changes in the value of its precious metals inventory. At February 28, 2002, JM Ney had precious metal exposure in its inventory, net of deferred pricing loans, relating to approximately 290 ounces of gold, 3,975 ounces of silver, 1,380 ounces of platinum and 915 ounces of palladium. After the sale of JM Ney's assets and the related payment of all outstanding deferred pricing loans, JM Ney's remaining exposure consisted of certain refining and scrap metal with estimated precious metal content of approximately $346,000 which it expects to convert to cash during the first quarter of FY03.

JM Ney has a revolving line of credit which bears interest at floating rates as described in Note 8 to the Company's consolidated financial statements. Neither the Company nor JM Ney hedges its interest rate risk. Based upon JM Ney's year-end balances, a 1% change in interest rates would affect its interest cost of its short-term cash borrowings by approximately $6,000.

In recent years prior to FY02, the leasing rates and market prices for palladium fluctuated significantly which had dramatic effects on JM Ney's interest costs. During FY02, there were not the significant fluctuations in lease rates, and the general trend of the price of palladium was downward, which served to reduce the cost of JM Ney's precious metals borrowings. At February 28, 2002, a 1% change in the precious metals lease rates or a 1% change in the market price of the underlying metals borrowed or owned would have affected JM Ney's borrowing costs on an annualized basis by approximately $18,000. As noted, all such borrowings were paid off in March 2002 concurrent with the sale of JM Ney's net assets.

During FY02, the Company invested a total of $278,000 in the common stocks of two savings bank institutions. In addition, the Company received shares in two financial institutions as part of their conversion from mutual companies to publicly traded stock companies. The aggregate value at February 28, 2002 of these four equity holdings was $450,000.

ANDERSEN GROUP, INC.

ANDERSEN GROUP, INC.

ANDERSEN GROUP, INC.

Consolidated Statements of Changes in Stockholders' Equity

Years ended February 28, 2001, February 29, 2000 and February 28, 1999

(in thousands, except share data)

ANDERSEN GROUP, INC.

Consolidated Statements of Cash Flows

Years ended February 28, 2002, February 28, 2001 and February 29, 2000

(in thousands)

Andersen Group, Inc.

Notes to Consolidated Financial Statements

Years ended February 28, 2002, February 28, 2001 and February 29, 2000

(1) Nature of Business

Andersen Group, Inc. ("the Company") is a diversified holding company which invests in both marketable and other securities of domestic and foreign-based companies. It also owns a consolidated subsidiary, The J.M. Ney Company ("JM Ney"), which manufactures electronic connectors, components and precious metal materials for sale to the automotive, telecommunications, defense, semiconductor, and medical and dental markets. As discussed in Note 23, in March 2002 the operating assets of JM Ney were sold.

(2) Summary of Significant Accounting Policies

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

The Company's financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation.

Cash and cash equivalents include funds held in investments with an original maturity of three months or less.

The Company's common stock investments are carried as trading securities at market value in accordance with Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities" (SFAS 115). Any changes in the valuation of the portfolio are reflected in the accompanying Consolidated Statements of Operations as investment income or losses.

Inventories are stated at the lower of cost or market. Cost is determined using the last-in, first-out (LIFO) method for precious metals, and at standard costs which approximate the first-in, first-out (FIFO) method for the balance of the inventories.

Property, plant and equipment, including those obtained under capital leases, are stated at cost and depreciated using the straight-line method over the estimated useful life of the respective assets, as follows:

Buildings and improvements	10-30 years
Machinery and equipment	5-10 years
Furniture and fixtures	3-10 years

When fixed assets are sold or retired the cost and accumulated depreciation are eliminated and the resulting gains or losses are reflected in income.

The Company has a 25% ownership interest in ABC Moscow Broadband Communication Limited (Moscow Broadband), a Cyprus based limited liability company which in turn has a 50% equity interest in a Moscow Russia-based cable television and Internet operator. This investment bears currency, economic and political risks relating to Russia in addition to other business risks associated with a venture capital investment. This investment is recorded using the equity method of accounting. Moscow Broadband has a December 31 year end, and as a result, the Company's equity in Moscow Broadband's results is reported on a two-month lag.

The Company capitalizes costs related to certain tooling items in accordance with EITF 99-5, "Accounting for Pre-Production Costs Related to Long-Term Supply Arrangements." The tooling, which amounted to approximately $197,000 and $268,000 as of February 28, 2002 and 2001, respectively, is amortized based on the units-of-production method.

Unamortized discounts on subordinated notes payable and notes payable to officer are being amortized over the term of the notes using the effective interest method.

The Company has established irrevocable trusts to fund the deferred compensation of certain executives. The assets of the trusts are owned by the Company and subject to the claims of its general creditors, and are reported on the Company's consolidated balance sheet in accordance with the consensus in EITF 97-14. Income and changes in the value of the trusts' assets are reported within Investment and Other Income with corresponding adjustments to the deferred compensation obligation and compensation expense.

Sales are recognized when title passes to the customer, which is when the products are shipped, the price is fixed and determinable, and collectibility is reasonably assured. Returns and warranty costs are estimated at the time of sale based on historical experience. Investment income and other income is recognized when earned and is based on changes in the fair value of marketable securities and realized gains and losses.

Income taxes are determined using the asset and liability approach. This method gives consideration to the future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities at currently enacted tax rates.

In accordance with Statement of Financial Accounting Standards No. 128 "Earnings Per Share" (SFAS 128), basic 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 plus the assumed issuance of common shares for all potentially dilutive securities. See Note 11 for additional information and a reconciliation of the basic and diluted earnings per share computations.

The Company uses derivative financial instruments primarily to hedge portions of precious metal fluctuations relating to fixed price sales contracts. The Company does not qualify for hedge accounting under Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("FAS 133"). All derivatives are recognized on the balance sheet at their fair value and changes in fair value of derivatives are recorded in current period earnings.

The Company adopted FAS 133 on March 1, 2001. In accordance with the transition provisions of FAS 133, the Company recorded a net-of-tax cumulative-effect loss adjustment of $47,000 in its Consolidated Statement of Operations to recognize the fair value of all derivatives in current period earnings.

As of February 28, 2002, the Company held contracts to purchase 1,252 ounces of palladium over the following three months at an average price of $387 per ounce. At February 28, 2002, the Company recorded a $13,000 loss related to these open contracts.

In July 2001, the Financial Accounting Standards Board issued Statements of Financial Accounting Standards (SFAS) No. 141, "Business Combinations", and No. 142, "Goodwill and Other Intangible Assets". Under the new rules, all business combinations are required to be accounted for using the purchase method. Goodwill and indefinite lived intangible assets are no longer amortized, but will be reviewed annually for impairment. SFAS 141 is effective for all business combinations initiated after June 30, 2001. SFAS 142 is effective for fiscal years beginning after December 15, 2001. The Company intends to account for the ComCor-TV transaction described in Note 23 in accordance with these standards.

In July 2001, the FASB issued SFAS 143, "Accounting for Asset Retirement Obligations." SFAS 143 requires recognition of the fair value of liabilities associated with the retirement of long-lived assets when a legal obligation to incur such costs arises as a result of the acquisition, construction, development and/or the normal operation of a long-lived asset. SFAS 143 is effective for fiscal years beginning after June 15, 2002. The Company does not expect that this new accounting pronouncement will have a material impact on its consolidated financial statements.

In August 2001, the FASB issued SFAS 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," which supercedes SFAS 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of." SFAS 144 requires that long-lived assets to be disposed of by sale, including discontinued operations, be measured at the lower of carrying amount or fair value less cost to sell, whether reported in continuing operations or in discontinued operations. SFAS 144 also broadens the reporting requirements of discontinued operations to include all components of an entity that have operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the entity. Pursuant to SFAS 144, an entity which commits to a plan to sell a long-lived asset after the balance sheet date but before issuance of the financial statements, the asset should continue to be classified as held and used. Accordingly, JM Ney has been classified as held and used in the accompanying financial statements. The provisions of SFAS 144 are effective for fiscal years beginning after December 15, 2001.

Certain reclassifications have been made to the prior years' financial statements in order to conform with the current year presentation.

(3) Inventories

Inventories consist of the following (in thousands):

The Company's precious metal inventory records are maintained on a first-in, first-out (FIFO) basis, which values the inventory equivalent to market or replacement cost. The Company records a LIFO reserve, which represents the excess of replacement cost over the historical LIFO value of the precious metal content of inventories.

At February 28, 2002 and February 28, 2001, inventories valued at LIFO cost comprised 44% and 57% of total inventories, respectively. At February 28, 2002, the precious metal components of inventories before the LIFO reserve consisted of 2,708 troy ounces of gold recorded at $298 per ounce; 3,975 troy ounces of silver recorded at $4.50 per ounce; 1,380 troy ounces of platinum recorded at $475 per ounce, and 3,759 troy ounces of palladium recorded at $380 per troy ounce. At February 28, 2001, inventories consisted of 6,054 troy ounces of gold recorded at $265 per ounce; 7,150 ounces of silver recorded at $4.75 per ounce; 2,110 troy ounces of platinum recorded at $610 per ounce, and 8,674 troy ounces of palladium recorded at $875 per ounce. Such quantities of precious metals exclude precious metals held by JM Ney on consignment subject to leasing arrangements with JM Ney's primary bank or for the benefit of its customers. During FY02, FY01 and FY00, JM Ney recognized LIFO gains (losses) of approximately $2,402,000, ($75,000) and $1,400,000, respectively, from decreases in certain precious metal LIFO layers.

(4) Property, Plant and Equipment

Property, plant and equipment consist of the following (in thousands):

Depreciation and amortization expense was $1,334,000, $1,439,000 and $1,380,000, in FY02, FY01, and FY00, respectively.

At February 28, 2002 and 2001, property, plant and equipment includes $89,000 and $539,000, respectively, of machinery and equipment acquired under capital leases, which expire through FY03, with related accumulated amortization of $57,000 and $334,000, respectively.

In December 2001, Andersen Realty, Inc., a wholly-owned subsidiary of the Company, sold a 108,000 square foot office building located in Bloomfield, Connecticut to a private buyer for proceeds of $1,692,000, net of transaction costs of $209,000. The buyer also assumed a sewer lien on the property of approximately $56,000. The Company recorded a loss on the sale of $197,000 for the year ended February 28, 2002. The Company recorded rental income related to the building of $272,000, $445,000, and $376,000 for FY02, FY01, and FY00, respectively.

(5) Investment in Moscow Broadband Communication Limited

During FY00, the Company invested $4,000,000 in a private placement of the common stock of Moscow Broadband, that, in total, raised approximately $18,000,000. Prior to this investment, the Company had an investment in Moscow Broadband with a reported value of $84,000. At each of February 28, 2002 and 2001, the Company had a 25% ownership interest in Moscow Broadband which was accounted for using the equity method of accounting.

On January 31, 2000, Moscow Broadband entered into an agreement ("Joint Venture Agreement") with Moscow Telecommunications Corporation ("COMCOR") under which COMCOR and Moscow Broadband would fund the operations of ZAO ComCor-TV ("ComCor-TV") and maintain joint and equal control over ComCor-TV. ComCor-TV is developing a network to deliver cable television, high speed data transmission and Internet access, and IP telephony to up to 1,500,000 homes and businesses throughout the Moscow region. On April 24, 2000, pursuant to the Joint Venture Agreement, Moscow Broadband contributed $8,500,000 in cash, 10,722 shares of the Institute for Automated Systems (IAS), a Moscow-based telecommunications company, and agreed to contribute an additional $500,000 in cash during the year ending December 31, 2000. In return, Moscow Broadband received a 50% ownership in ComCor-TV. Moscow Broadband accounts for its investment in ComCor-TV using the equity method of accounting.

The following presents summarized financial information for Moscow Broadband as of, and for the years ended December 31, 2001 and 2000 (in thousands):

	December 31,
	2001		2000
Balance Sheet Data
Current assets		$ 4,353		$ 7,837
Noncurrent assets		8,040		7,373
Total assets		$12,393		$15,210
Accounts payable and accrued liabilities		$ 137		$ 269
Capital stock subscribed		-		550
Shareholders' equity		12,256		14,391
		$12,393		$15,210
Statement of Operations Data
Net loss before equity in losses of ComCor-TV		$ (833)		$(1,104)
Equity in losses of ComCor-TV		(1,852)		(1,814)
Net loss		$(2,685)		$(2,918)

The following presents summarized financial information for ComCor-TV as of, and for the years ended December 31, 2001 and 2000 (in thousands):

	December 31,
	2001	2000
Balance Sheet Data
Current Assets	$ 2,930	$ 4,972
Non-Current Assets	14,850	14,921
Total assets	$17,780	$19,893
Current liabilities	$ 3,631	$ 666
Non-current liabilities and minority interest	2,124	3,498
Stockholder's equity	12,025	15,729
	$17,780	$19,893
Statement of Operations Data
Revenues	$1,200	$ 359
Cost of revenues, including amortization of intangibles	(3,099)	(1,611)
Loss from operations	(5,094)	(3,574)
Net loss	(3,704)	(3,599)

Moscow Broadband has a December 31 year end and, as a result, the Company's equity in Moscow Broadband's results is reported on a two-month lag. For the two-month periods ended February 28, 2002 and 2001, Moscow Broadband's net loss was $386,000 (unaudited) and $516,000 (unaudited), respectively.

At February 28, 2002, the reported value of the Company's investment in Moscow Broadband was $2,683,000 and the Company's 25% equity in the net assets of Moscow Broadband as of December 31, 2001 was approximately $3,060,000. The $381,000 difference is attributed to a non-depreciable asset that was transferred to ComCor-TV and will not result in the Company accreting the difference into its consolidated results of operations.

(6) Short-term Borrowings

As of February 28, 2002 and 2001, JM Ney had an $8.0 million revolving credit and deferred payment sales agreement with a commercial bank which is collateralized by substantially all of JM Ney's assets. At February 28, 2002, short-term borrowings under this line were comprised of $575,000 cash advances and $1,791,000 of precious metals borrowings. At February 28, 2001, short-term borrowings of $1,500,000 were comprised of cash advances. At February 28, 2002 and 2001, JM Ney had unused availability under this line of $5,291,000 and $6,114,000, respectively. At JM Ney's election, interest is charged at the bank's prime rate, which was 4.75% and 8.5% at February 28, 2002 and 2001, respectively, at LIBOR plus 1.75% if the borrowing is fixed for a period of time, or at 1.75% over the bank's precious metals leasing rate if the borrowing is represented by deferred payment purchases of precious metals. A fee of 0.25% is charged on the unused balance of the facility. In connection with the s ale of JM Ney's assets in March 2002, as described in Note 23, this line of credit was reduced to limit usage by JM Ney to a $343,000 outstanding letter of credit.

7. Accrued Liabilities and Other Long-Term Obligations

Accrued liabilities and other long term obligations consist of the following (in thousands):

(8) Long-term Debt and Subordinated Notes Payable

Long-term debt and subordinated notes payable consist of the following (in thousands):

The terms of the 2007 convertible subordinated debentures call for the annual redemption of approximately $431,000 of principal. The debentures are convertible into common stock of the Company at any time prior to maturity at $16.17 per share, subject to adjustment under certain conditions. At February 28, 2002, 159,802 shares of common stock were reserved for conversion.

In connection with the issuance of the subordinated note payable in FY98, JM Ney issued warrants to the lender to acquire 34,000 shares of its common stock at an exercise price of $1.00 per share, and warrants to acquire 6,000 shares at an exercise price of $10.00 per share. These warrants were exercisable at any time until December 2007, or six months after an initial public offering. Upon issuance of the note, the estimated fair value of these warrants of $205,000 was recorded as a liability and a discount to the face amount of the note. The discount was being amortized over the life of the note but was written off in its entirety during FY02 as a result of the prepayment of the underlying note. The lender had an option to put these warrants back to JM Ney at the earlier of December 2002, or the date of an initial public offering of JM Ney's common stock on terms as defined in the agreement. At February 28, 2002, the liability of $205,000 for the warrants remained within other long- term obligations. In connection with the sale of JM Ney's assets in March 2002 as discussed in Note 23, JM Ney settled these warrants for $160,000.

During FY00, the President and Chief Executive Officer loaned the Company $1,000,000 for the purpose of increasing the Company's investment in Moscow Broadband. This loan was paid by the Company in December 2001. The loan bore interest at the annual rate of 8.5%, and was collateralized by a lien on the Company's real estate which was sold in December 2001. In connection with the loan, the Company issued the officer warrants to acquire 18,706 shares of the Company's common stock at an exercise price of $16.04 per share. Such warrants are exercisable through February 2003. The estimated fair value of these warrants of $68,000 was recorded as a discount to the face amount of the loan, and was amortized over the original life of the loan. During FY01, the President and Chief Executive Officer loaned the Company an additional $200,000. The Company repaid this note in April 2001. The loan bore interest at the annual rate of 8.5%, and was collateralized by a lien on the Company's real estate. In connection with the loan, the Company issued the officer warrants to acquire 5,393 shares of the Company's common stock at an exercise price of $11.13 per share. Such warrants are exercisable through April 2003. The estimated fair value of these warrants of $18,000 was recorded as a discount to the face amount of the loan, and was being amortized over the life of the loan. During FY02 and FY01, the Company paid the officer approximately $99,000 and $101,000, respectively, of interest pursuant to these notes.

Non-cash interest expense from the amortization of discounts and deferred financing costs totaled $247,000, $150,000 and $86,000 during FY02, FY01 and FY00, respectively.

Maturities of long-term debt for each of the next five fiscal years and thereafter as of February 28, 2002 are as follows (in thousands):

(9) Income Taxes

For FY02, FY01 and FY00, income tax expense (benefit) consists of the following (in thousands):

The difference between the actual income tax expense (benefit) and the income tax expense (benefit) computed by applying the statutory Federal income tax rate of 34% to income (loss) before income taxes is attributable to the following (in thousands):

The principal components of the net deferred tax asset (liability) as of February 28, 2002 and 2001 are as follows (in thousands):

At February 28, 2002, the Company had $184,000 of Federal alternative minimum tax credit carry-forwards that have no expiration date. A valuation allowance of $1,021,000 has been established at February 28, 2002 against the capital losses, equity in losses of Moscow Broadband, and unrealized losses on marketable securities to the extent it is more likely than not that these items will not be realized. The Company has $521,000 of Federal capital loss carryforwards which expire in the fiscal years ending February 2021 and February 2022.

(10) Series A Cumulative Convertible Preferred Stock

The Company's Series A Cumulative Convertible Preferred Stock (Preferred Stock) has an annual dividend rate of $1.50 per share, that is paid quarterly. The Preferred Stock is convertible into the Company's common stock at any time at a rate of 1.944 shares of common stock for each share of Preferred Stock, subject to certain adjustments. At February 28, 2002, 365,483 shares of common stock have been reserved for conversion.

During FY02, FY01 and FY00, 13,195, 15,663 and 39,552 shares of the Preferred Stock were converted into 25,650, 30,447 and 76,886 shares, respectively, of the Company's common stock.

Holders of the convertible preferred stock have no voting rights, except as required by applicable law and except when among other things, accrued and unpaid dividends on the convertible preferred stock are equal to or exceed the equivalent of six quarterly dividends payable on the convertible preferred stock such holders will be entitled to elect one director to the Company's board of directors until the dividend arrearage has been paid or amounts have been set apart for such payment. The convertible preferred stock is senior to the common stock with respect to dividends and liquidation events.

(11) Income (loss) Per Share

The computation of basic and diluted income (loss) per share is as follows (in thousands, except per share amounts):

For FY02, FY01 and FY00, the net addition of 22,050, 28,078, and 16,777 common share equivalents, respectively, from the assumed exercise of stock options using the treasury method have been excluded, because of their antidilutive effects.

For each of FY02, FY01 and FY00, the effects of the conversion of the Preferred Stock and the 10 1/2% Convertible Subordinated Debentures have been excluded because the impacts of such conversions would have been antidilutive.

(12) Stock Option Plans

The Company's and JM Ney's incentive stock option plans provide for option grants to directors and key employees at prices equal to at least 100% of the stock's fair market value at date of grant. Options generally vest over three years and have a maximum term of ten years. No stock options were granted during FY02 or FY00. All options granted during FY01 had an exercise price equal to the fair market value as of the date of grant. The per share weighted average fair value of stock options granted during FY01 under the Company plan was $8.18 using the Black Scholes option pricing model with the following weighted average assumptions: expected dividend yield of 0%, risk-free interest rate of 6%, expected life of five years, and expected volatility of 80%.

Grants of options in FY01 under the JM Ney plan had a fair value of $7.61 per share, based upon an expected dividend yield of 0%, risk-free interest rate of 6%, expected life of five years, and expected volatility of 33%.

The Company has adopted the disclosure provisions of SFAS No. 123, "Accounting for Stock-Based Compensation". Accordingly, no compensation expense has been recognized for the stock option plans. Had compensation cost for the Company's stock option plans, including the JM Ney plan, been determined based on the fair value on the grant date for awards during FY02, FY01 and FY00 consistent with the provisions of SFAS No. 123, the Company's net income (loss) applicable to common shares, and the income (loss) per share would have adjusted to the pro forma amounts indicated below (amounts in thousands, except per share data):

The Company has reserved 94,250 shares of common stock for the exercise of stock options. The Company's plan expired during FY01, and accordingly, no future options can be granted under the Plan. JM Ney had reserved 106,050 shares of its common stock for the exercise of stock options, of which no shares were available for issuance at February 28, 2002 due to restrictions in the agreement governing the sale of its operating assets to Deringer Mfg. Company (Note 23).

Activity under the Company's plan, which excludes JM Ney's plan, was as follows:

At February 28, 2002, the range of exercise prices and the weighted average remaining contractual life of the options was as follows:

Options Outstanding Options Exercisable

During FY01, options to purchase 2,000 shares of JM Ney, at an average exercise price of $11.17 per share were issued. During FY02, FY01 and FY00, options to acquire 750, 500 and 6,500 shares, respectively, of JM Ney were forfeited. During FY02, FY01 and FY00, options to acquire 250, 21,000 and 9,750 shares, respectively, were exercised, and the resultant shares were simultaneously repurchased by JM Ney for net consideration of $100, $24,000 and $16,000, respectively. At February 28, 2002, all of the 106,050 total outstanding JM Ney options were exercisable. At February 28, 2002, the Company owned all 850,000 outstanding shares of JM Ney. There presently is no public market for JM Ney's common stock. Subsequent to the sale of JM Ney's assets, as discussed in Note 23, the Company purchased all of the outstanding JM Ney options from the holders thereof for total consideration of $304,000.

The Company maintains a noncontributory defined benefit plan and a defined contribution plan, which collectively cover substantially all full-time employees. The defined contribution plan is funded through employee contributions and employer matching contributions. Pension expense for the Company's defined contribution plan totaled $213,000, $223,000 and $208,000, in FY02, FY01 and FY00, respectively. The defined benefit plan held 12,250 shares of the Company's stock at both February 28, 2002 and 2001.

The following table sets forth the changes in benefit obligations, changes in fair value of plan assets, funded status and net amounts recognized for the defined benefit plan (in thousands). Such amounts are reported on a two month lag to coincide with the December 31 fiscal year end of the plan.

Experience losses are comprised primarily of variances in employee turnover, the amount of salary increases and the Plan's mortality experience. The effect of assumption changes is primarily comprised of changes in the discount rate used to calculate the projected benefit obligations.

For FY02, FY01 and FY00, the projected benefit obligations and pension expense were determined using the following assumptions:

Net pension expense for the Company's funded defined benefit plan in FY02, FY01 and FY00 includes the following components (in thousands):

At February 28, 2002 and 2001, the accumulated benefit obligation for its unfunded retiree health care plan was approximately $674,000 and $697,000, respectively, and the net unrecognized actuarial gain was approximately $6,000 and $115,000, respectively. The Company's cost for this plan for FY02, FY01, and FY00 was approximately $35,000, $2,000, and $7,000, respectively. Such expenses were comprised of interest cost of $40,000, $30,000 and $37,000, respectively and amortization of unrecognized net actuarial gains of $5,000, $28,000 and $30,000 respectively. . Benefit payments made under this plan for FY02, FY01 and FY00 were approximately $58,000, $41,000, and $40,000, respectively. At February 28, 2002, 32 retirees and their spouses were receiving benefits under this plan.

The accumulated benefit obligation was determined using the unit credit method and assumed discount rates of 7.00% and 7.25% at February 28, 2002 and 2001, respectively. At February 28, 2002, the accumulated benefit obligation was compiled using assumed health care cost trend rates of 12%, gradually declining to 6% for the remainder of the projected payout period of the benefits.

The estimated effect on the present value of the accumulated benefit obligation at March 1, 2002 of a 1% increase each year in the health care cost trend rate used would result in an estimated increase of approximately $3,000 in the service and interest cost, and approximately $41,000 in the accumulated benefit obligation. A 1% decrease each year in the health care trend rate would result in a decrease of approximately $3,000 in the service and interest costs, and a decrease of approximately $38,000 in the accumulated benefit obligation.

(15) Leases

The Company leases various manufacturing and office facilities and equipment under operating lease agreements expiring through December 2005. Lease expense was $602,000, $472,000 and $382,000 for FY02, FY01 and FY00, respectively.

Future minimum lease payments under the terms of the leases for each of the next five years, are as follows as of February 28, 2002 (in thousands):

	Electronics Segment	Corporate Segment	Total
2003	$ 590	$45	$ 635
2004	469	7	476
2005	405	-	405
2006	240	-	240
	$1,704	$52	$1,756

The above amounts include the principal portion of capital lease payments of $9,000 in FY03. Pursuant to the discussion in Note 23, the commitments of the Electronics Segment were assigned to the buyers of JM Ney's operating assets.

(16) Restructuring Costs

In February 2001, JM Ney announced a restructuring of its operations which involved the reduction of 33 employees from its workforce. The cost of this restructuring, which is primarily comprised of severance payments and benefits, was $256,000, of which $134,000 was paid prior to February 28, 2001. The remaining costs were paid during FY02.

(17) Business Segments and Export Sales

During FY02, the Company operated in two continuing segments: Electronics, which comprises the operations of JM Ney, and Corporate, which includes the Company's investment, real estate and corporate administrative activities. Operating income (loss) consists of revenues, less all non-interest costs and expenses directly allocated to the industry segments. Corporate revenues consist of investment income (loss) and other income not attributable to the Electronics segment. Corporate identifiable assets include assets not directly attributable to JM Ney.

Summarized financial information by business segment is as follows (in thousands):

Export sales for FY02, FY01 and FY00 were $7,373,000, $9,552,000 and $5,941,000, respectively. Such sales were made primarily to customers in Europe and the Pacific Rim.

During FY02, FY01, and FY00 sales to one customer accounted for 12.0%, 14.4%, and 17.7%, of net sales, respectively. At February 28, 2002 and February 28, 2001 accounts receivable from this customer represented and 9.5% and 14.7%, respectively, of consolidated net accounts receivable.

(18) Estimated Fair Value of Financial Instruments

The carrying amount of cash and cash equivalents, accounts receivable, short term borrowings, accounts payable and other accrued liabilities are reasonable estimates of their fair value based upon their current maturities. The carrying value of marketable securities approximates fair value as determined by quoted market prices less any reserves for liquidity and volatility concerns.

The carrying values of long-term debt issued by banks and capital lease obligations approximate fair value based on interest rate and repayment terms, and the extent to which the individual debts are collateralized. At February 28, 2002 the fair value of the Company's 10.5% convertible debentures was approximately $2,070,000 based on a quoted market value of the security.

(19) Litigation

The Company is involved in various legal proceedings generally incidental to its business. The outcome of any litigation or regulatory issues contains an element of uncertainty. Given the legal and factual issues that remain outstanding related to the Company's litigation, the Company currently has no basis to ascertain the range of loss, should any occur, with respect to an outcome that may be considered unfavorable.

(20) Supplemental Disclosure of Cash Flow Information

The information below supplements the cash flow data presented in the Company's Consolidated Statements of Cash Flows (in thousands):

	2002	2001	2000
Cash paid (received) for:
Interest	$1,038	$1,898	$ 1,692
Income taxes, net	$ (13)	$ (140)	$ (140)

During FY02, FY01 and FY00, the Company issued 25,650, 30,447 and 76,886 shares, respectively, of its common stock from the conversion of preferred stock; and during FY02, FY01 and FY00, it issued 247, 0 and 988 shares of its common stock from conversion of 10 1/2% convertible notes.

(21) Related Party Transactions

During FY02 and FY01, the Company allocated approximately $125,000 and $204,000 of expenses to Moscow Broadband for administrative services provided.

During FY01, the Company's Chairman and Secretary was granted a bonus in the form of the forgiveness of $111,743 of a $223,487 unsecured non-interest-bearing note payable to the Company. During FY02 the remaining $111,744 balance of this note was repaid to the Company.

The Company leases office space from a company owned by its President and Chief Executive Officer, for which it paid $40,476 during the fiscal year ended February 28, 2002.

(22) Quarterly Financial Data (unaudited)

To the Stockholders and Board of Directors

/s/ PricewaterhouseCoopers LLP

We have audited the consolidated statements of operations, changes in stockholders' equity, and cash flows of Andersen Group, Inc. and subsidiaries for the year ended February 29, 2000. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. 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 audit provides a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the results of operations, changes in stockholders' equity and cash flows of Andersen Group, Inc. and subsidiaries for the year ended February 29, 2000 in conformity with accounting principles generally accepted in the United States of America.

/s/Deloitte & Touche LLP

Hartford, Connecticut

May 3, 2000

Report of Independent Accountants

To the Board of Directors and

Shareholders of ABC Moscow Broadband Communication Limited:

In our opinion, the accompanying balance sheets and the related statements of operations, of changes in shareholders' equity (deficit) and of cash flows present fairly, in all material respects, the financial position of ABC Moscow Broadband Communication Limited at December 31, 2001 and 2000 and the results of its operations and its cash flows for the two years then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting th e amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP

Hartford, CT

April 30, 2002, except as to Note 8 which is as of May 15, 2002

ABC Moscow Broadband Communication Limited

Balance Sheets (in thousands, except share data)

December 31, 2001 and 2000

The accompanying notes are an integral part of these financial statements.

ABC Moscow Broadband Communication Limited

Statements of Operations (in thousands)

For the Years Ended December 31, 2001, 2000 and 1999

The accompanying notes are an integral part of these financial statements.

ABC Moscow Broadband Communication Limited

Statements of Changes in Shareholders' Equity (Deficit) (in thousands, except share data)

For the Years Ended December 31, 2001, 2000 and 1999

ABC Moscow Broadband Communication Limited

Statements of Cash Flows (in thousands)

December 31, 2001, 2000 and 1999