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face="Times New Roman">
face="Times New Roman">UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
face="Times New Roman">Form 10-Q
(Mark One)
x
face="Times New Roman">
QUARTERLY REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
size=2 face="Times New Roman">For the quarterly
period ended November 30, 2002
OR
face=Wingdings>o 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
|
face="Times New Roman">(State or other
jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification No.)
|
|
|
405
Park Avenue, New York, New York
|
10022
|
(Address
of principal executive offices)
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(Zip
Code)
|
|
|
(212)
826-8942
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(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 ____
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes ____ No
size=2 face=Wingdings>x
As of January 4, 2003 there were 2,099,908 shares of the Registrant's
$0.01 par value common stock outstanding.
Title
|
Outstanding
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Common Stock, $0.01 par value per share
|
Authorized 6,000,000 shares; Issued 2,099,908
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Table of Contents
ANDERSEN
GROUP, INC.
FORM 10-Q
Table of Contents
-2-
Table of Contents
face="Times New Roman">Part I.
Financial Information
Item 1. Financial Statements
ANDERSEN GROUP, INC.
Consolidated Condensed Balance Sheets
(In thousands)
(unaudited)
|
face="Times New Roman">November 30, 2002
|
face="Times New Roman">February 28, 2002
|
face="Times New Roman">ASSETS
|
face="Times New Roman">
|
face="Times New Roman">
|
face="Times New Roman">Current assets:
|
face="Times New Roman">
|
face="Times New Roman">
|
size=2 face="Times New Roman"> Cash and cash equivalents
|
face="Times New Roman">$ 7,162
|
face="Times New Roman">$ 1,152
|
Marketable
securities
|
face="Times New Roman">1,333
|
face="Times New Roman">455
|
Accounts
and other receivables less allowances of $14 and $96, respectively
|
40 |
3,820 |
Inventories
|
face="Times New Roman">-
|
face="Times New Roman">23
|
Prepaid
expenses and other assets
|
face="Times New Roman">33
|
face="Times New Roman">648
|
Net assets
held for sale
|
face="Times New Roman"> -
|
face="Times New Roman"> 6,974
|
|
|
|
Total
current assets
|
face="Times New Roman"> 8,568
|
face="Times New Roman"> 13,072
|
Property, plant and equipment, net
|
size=2 face="Times New Roman">3,461
|
size=2 face="Times New Roman">3,632
|
Prepaid pension expense
|
face="Times New Roman">4,475
|
face="Times New Roman">4,775
|
size=2 face="Times New Roman">Investment in
Moscow Broadband Communication Ltd.
|
face="Times New Roman">2,171
|
face="Times New Roman">2,683
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Other assets
|
face="Times New Roman"> 1,037
|
face="Times New Roman"> 913
|
|
|
|
face="Times New Roman">
|
size=2 face="Times New Roman">$ 19,712
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size=2 face="Times New Roman">$ 25,075
|
|
|
|
face="Times New Roman">LIABILITIES AND STOCKHOLDERS' EQUITY
|
face="Times New Roman">
|
face="Times New Roman">
|
face="Times New Roman">Current liabilities:
|
face="Times New Roman">
|
face="Times New Roman">
|
size=2 face="Times New Roman"> Current maturities of long-term debt
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face="Times New Roman">$ 420
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face="Times New Roman">$ 435
|
size=2 face="Times New Roman"> Short-term borrowings
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face="Times New Roman">-
|
face="Times New Roman">2,366
|
Accounts
payable
|
face="Times New Roman">401
|
face="Times New Roman">1,041
|
Other
current liabilities
|
face="Times New Roman">941
|
face="Times New Roman">1,712
|
Deferred income
taxes
|
face="Times New Roman"> 26
|
face="Times New Roman"> 156
|
|
|
|
Total
current liabilities
|
face="Times New Roman">1,788
|
face="Times New Roman">5,710
|
|
face="Times New Roman">
|
face="Times New Roman">
|
Long-term debt, less current maturities
|
face="Times New Roman">1,674
|
face="Times New Roman">2,158
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Other liabilities
|
face="Times New Roman">874
|
face="Times New Roman">1,842
|
Deferred income taxes
|
face="Times New Roman"> 1,697
|
face="Times New Roman"> 1,614
|
|
|
|
Total
liabilities
|
face="Times New Roman"> 6,033
|
face="Times New Roman"> 11,324
|
|
|
|
size=2 face="Times New Roman">Commitments and
contingencies
|
face="Times New Roman">
|
face="Times New Roman">
|
size=2 face="Times New Roman">
|
face="Times New Roman">
|
face="Times New Roman">
|
face="Times New Roman">Stockholders' equity:
|
face="Times New Roman">
|
face="Times New Roman">
|
size=2 face="Times New Roman"> Cumulative convertible preferred stock
|
face="Times New Roman">3,497
|
face="Times New Roman">3,497
|
Common
stock
|
face="Times New Roman">21
|
face="Times New Roman">21
|
Additional
paid-in capital
|
face="Times New Roman">6,653
|
6,574
|
Retained
earnings
|
face="Times New Roman"> 3,508
|
face="Times New Roman"> 3,659
|
|
|
|
Total stockholders'
equity
|
face="Times New Roman"> 13,679
|
face="Times New Roman"> 13,751
|
|
|
|
|
face="Times New Roman">$ 19,712
|
face="Times New Roman">$ 25,075
|
|
|
|
The accompanying notes
are an integral part of these consolidated condensed financial statements. |
-3-
Table of Contents
ANDERSEN GROUP, INC.
Consolidated Condensed Statements of Operations
(In thousands, except per share data)
(unaudited)
|
face="Times New Roman">Three months ended
|
face="Times New Roman">Nine months ended
|
|
face="Times New Roman">November 30, 2002
|
face="Times New Roman">November 30, 2001
|
face="Times New Roman">November 30, 2002
|
face="Times New Roman">November 30, 2001
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Revenues
|
face="Times New Roman">
|
face="Times New Roman">
|
face="Times New Roman">
|
face="Times New Roman">
|
Investment
and other income
|
face="Times New Roman">$ 322
|
face="Times New Roman">$ 76
|
face="Times New Roman">$ 608
|
face="Times New Roman">$ 467
|
|
|
|
|
|
Costs and expenses:
|
face="Times New Roman">
|
face="Times New Roman">
|
face="Times New Roman">
|
face="Times New Roman">
|
General and
administrative
|
face="Times New Roman">693
|
face="Times New Roman">439
|
face="Times New Roman">1,989
|
face="Times New Roman">1,300
|
Loss on
sale of asset
|
face="Times New Roman">-
|
face="Times New Roman">197
|
face="Times New Roman">-
|
face="Times New Roman">197
|
Interest
expense
|
face="Times New Roman"> 65
|
face="Times New Roman"> 94
|
face="Times New Roman"> 201
|
face="Times New Roman"> 300
|
|
|
|
|
|
|
face="Times New Roman"> 758
|
face="Times New Roman"> 730
|
face="Times New Roman"> 2,190
|
face="Times New Roman"> 1,797
|
|
|
|
|
|
Loss from continuing operations
before equity in losses of unconsolidated
subsidiary and income taxes
|
face="Times New Roman">
face="Times New Roman">(436)
|
face="Times New Roman">(654)
|
face="Times New Roman">
face="Times New Roman">(1,582)
|
face="Times New Roman"> (1,330)
|
|
|
|
|
|
Equity in losses of Moscow
Broadband Communication Ltd.
|
face="Times New Roman"> (172)
|
face="Times New Roman"> (183)
|
face="Times New Roman"> (512)
|
face="Times New Roman"> (594)
|
|
|
|
|
|
Net loss from continuing operations before
income taxes
|
face="Times New Roman">
(608)
|
face="Times New Roman">
(837)
|
face="Times New Roman"> (2,094)
|
face="Times New Roman">
(1,924)
|
Income tax benefit
|
face="Times New Roman"> (135)
|
face="Times New Roman"> (275)
|
face="Times New Roman"> (551)
|
face="Times New Roman"> (505)
|
|
|
|
|
|
Net loss from continuing operations
|
face="Times New Roman">(473)
|
face="Times New Roman"> (562)
|
face="Times New Roman">(1,543)
|
face="Times New Roman"> (1,419)
|
Discontinued operations (Note 2):
Income from discontinued segment,
net of income taxes of $0; ($173);
$80 and $608, respectively
|
face="Times New Roman">
-
|
face="Times New Roman">
283
|
face="Times New Roman">
132
|
face="Times New Roman">
945
|
Gain on sale
of discontinued segment, net
of income taxes of $686
|
face="Times New Roman"> -
|
face="Times New Roman">
-
|
face="Times New Roman">
1,472
|
face="Times New Roman">
-
|
|
|
|
|
|
Net (loss) income
|
face="Times New Roman">(473)
|
face="Times New Roman">(279)
|
face="Times New Roman">61
|
face="Times New Roman"> (474)
|
Preferred dividends
|
face="Times New Roman"> (71)
|
face="Times New Roman"> (70)
|
face="Times New Roman"> (212)
|
face="Times New Roman"> (216)
|
|
|
|
|
|
(Loss) income applicable to common shares
|
face="Times New Roman"> $ (544)
|
face="Times New Roman">$ (349)
|
face="Times New Roman"> $ (151)
|
face="Times New Roman">$ (690)
|
|
|
|
|
|
(Loss) earnings per common share:
Basic and diluted:
|
face="Times New Roman">
|
face="Times New Roman">
|
face="Times New Roman">
|
face="Times New Roman">
|
Net loss from continuing operations
|
face="Times New Roman">$ (0.26)
|
face="Times New Roman">$ (0.30)
|
$
(0.83)
|
face="Times New Roman">$ (0.79)
|
Income from discontinued operations
|
face="Times New Roman">-
|
face="Times New Roman">0.13
|
face="Times New Roman">0.06
|
face="Times New Roman">0.46
|
Gain on sale of discontinued operations
|
face="Times New Roman"> -
|
face="Times New Roman"> -
|
face="Times New Roman"> 0.70
|
face="Times New Roman"> -
|
face="Times New Roman">
|
|
|
|
|
face="Times New Roman">
|
face="Times New Roman">$ (0.26)
|
face="Times New Roman">$ (0.17)
|
face="Times New Roman">$ (0.07)
|
face="Times New Roman">$ (0.33)
|
|
|
|
|
|
The accompanying notes are an integral part of these condensed
consolidated financial statements.
-4-
Table of Contents
ANDERSEN
GROUP, INC.
Consolidated Condensed Statements of Cash Flows
(In thousands)
(unaudited)
|
face="Times New Roman">Nine Months ended
|
face="Times New Roman">
|
November 30, 2002
|
face="Times New Roman">November 30, 2001
|
face="Times New Roman">
|
|
|
Cash flows from operating
activities:
|
face="Times New Roman">
|
face="Times New Roman">
|
Net income ( loss)
|
face="Times New Roman">$ 61
|
face="Times New Roman">$ ( 474)
|
size=2 face="Times New Roman">
|
|
|
face="Times New Roman">Adjustments to reconcile net loss to net cash
|
face="Times New Roman">
|
face="Times New Roman">
|
face="Times New Roman">provided by (used in) operating activities:
|
face="Times New Roman">
|
face="Times New Roman">
|
Accrued
loss on asset held for sale
|
face="Times New Roman">-
|
face="Times New Roman">197
|
face="Times New Roman"> Equity in losses of Moscow Broadband
Communication Ltd.
|
face="Times New Roman">512
|
face="Times New Roman">594
|
Gain on
sale of JM Ney's operating assets
|
face="Times New Roman">(1,472)
|
face="Times New Roman">-
|
Gain on
settlement of retiree healthcare liability
|
face="Times New Roman">(142)
|
face="Times New Roman">-
|
Depreciation, amortization and accretion
|
face="Times New Roman">235
|
face="Times New Roman">1,238
|
Deferred
income taxes
|
face="Times New Roman">(75)
|
face="Times New Roman">96
|
Pension (income)
expense
|
face="Times New Roman">(149)
|
face="Times New Roman">44
|
Net
losses (gains) from marketable securities and
investments
|
face="Times New Roman">(319)
|
face="Times New Roman">2
|
Purchases
of marketable securities
|
face="Times New Roman">(700)
|
face="Times New Roman">(77)
|
Proceeds
from sales of marketable securities
|
face="Times New Roman">141
|
face="Times New Roman">19
|
|
face="Times New Roman">
|
face="Times New Roman">
|
face="Times New Roman">
Changes in operating assets and liabilities net of charges
from sale of JM Ney's net
assets:
|
face="Times New Roman">
|
face="Times New Roman">
|
Accounts
and other receivables
|
face="Times New Roman">3,780
|
face="Times New Roman">2,156
|
Inventories
|
face="Times New Roman">(419)
|
face="Times New Roman">4,656
|
Prepaid
expenses and other assets
|
face="Times New Roman">639
|
face="Times New Roman">319
|
Accounts
payable
|
face="Times New Roman">(640)
|
face="Times New Roman">(324)
|
Accrued
expenses and other long-term obligations
|
face="Times New Roman"> (1,448)
|
face="Times New Roman"> (399)
|
|
|
|
Net cash
provided by operating activities
|
face="Times New Roman"> 4
|
face="Times New Roman"> 8,047
|
|
|
|
Cash flows from investing
activities:
|
face="Times New Roman">
|
face="Times New Roman">
|
Purchases
of property and equipment, net
|
face="Times New Roman"> (9)
|
face="Times New Roman"> (184)
|
Proceeds
from sale of JM Ney, net of escrow
|
face="Times New Roman">10,390
|
face="Times New Roman">-
|
size=2 face="Times New Roman"> Transaction expenses paid
|
face="Times New Roman"> (1,172)
|
face="Times New Roman"> -
|
size=2 face="Times New Roman">
|
|
|
size=2 face="Times New Roman"> Net cash used in investing activities
|
face="Times New Roman"> 9,209
|
face="Times New Roman"> (184)
|
|
|
|
Cash flows from financing activities:
|
face="Times New Roman">
|
face="Times New Roman">
|
size=2 face="Times New Roman"> Principal payments on long-term debt
|
face="Times New Roman">(499)
|
face="Times New Roman">(6,729)
|
size=2 face="Times New Roman"> Repayment of short-term debt, net
|
face="Times New Roman">(2,366)
|
face="Times New Roman">(1,500)
|
Purchase
of subsidiary warrants
|
face="Times New Roman">(160)
|
face="Times New Roman">-
|
Stock
options exercised
|
face="Times New Roman">34
|
face="Times New Roman">6
|
Preferred
dividends paid
|
face="Times New Roman">
(212)
|
face="Times New Roman"> (222)
|
|
|
|
Net cash
used in financing activities
|
face="Times New Roman">(3,203)
|
face="Times New Roman">(8,445)
|
|
|
|
Net
decrease in cash and cash equivalents
|
face="Times New Roman">6,010
|
face="Times New Roman">(582)
|
|
|
|
Cash and
cash equivalents - beginning of period
|
face="Times New Roman"> 1,152
|
face="Times New Roman"> 1,217
|
|
|
|
Cash and
cash equivalents - end of period
|
face="Times New Roman">$ 7,162
|
face="Times New Roman">$ 635
|
|
|
|
The accompanying
notes are an integral part of these consolidated financial statements.
|
-5-
Table of Contents
face="Times New Roman">ANDERSEN GROUP, INC.
Notes to Consolidated Condensed Financial Statements
(unaudited)
(1) Accounting
Policies
The accompanying unaudited interim condensed financial statements and
related notes should be read in conjunction with the audited Consolidated
Financial Statements of Andersen Group, Inc. (the
"Company") and related notes as contained in the Annual Report on
Form 10-K for the fiscal year ended February 28, 2002. The interim condensed 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 of the consolidated balance sheet as of February 28, 2002 and
the consolidated statement of operations for the three and nine months ended November
30, 2001 to reflect The J.M. Ney Company ("JM Ney") as a discontinued
operation under Statement of Financial Accounting Standards No. 144 due to the
sale of its operating assets effective March 22, 2002, have been made so that
it conforms to the current period presentation.
(2) Discontinued
Operations - Sale of Assets of JM Ney
Effective March 22, 2002, the Company sold the operating assets of JM
Ney to Deringer Mfg. Company ("Deringer") for which it received
approximately $10,990,000, of which $600,000 was placed in an escrow account to
satisfy potential claims relating to inventory and representations made by the
Company to Deringer. The Company has
recorded a gain of $1,472,000 from this sale, after estimated income taxes of
$686,000. The following summarizes the elements of the transaction (in
thousands):
Proceeds
|
face="Times New Roman">$ 10,990
|
Book value of net assets sold
|
face="Times New Roman">(7,368)
|
Expenses of transaction
|
face="Times New Roman">(1,540)
|
Curtailment gain - pension plan
|
face="Times New Roman">76
|
Income taxes
|
face="Times New Roman"> (686)
|
|
|
Net gain on sale
|
face="Times New Roman"> $
1,472
|
|
|
Transaction expenses related to the sale
of JM Ney are as follows (in thousands): |
|
Settlement of JM Ney stock options |
$
275 |
Severance and bonuses
|
face="Times New Roman">
750
|
Legal and accounting
|
face="Times New Roman">365
|
Other
|
face="Times New Roman"> 150
|
|
|
Total transaction expenses |
$ 1,540 |
|
|
For the three and nine month periods ended November 30, 2002 and 2001,
JM Ney's summarized results of operations were as follows (in thousands):
|
size=2 face="Times New Roman">Three Months
Ended November 30,
|
|
size=2 face="Times New Roman">Nine Months
Ended November 30,
|
face="Times New Roman">
|
face="Times New Roman">2002
|
size=2 face="Times New Roman">2001
|
|
size=2 face="Times New Roman">2002
|
size=2 face="Times New Roman">2001
|
Net sales and other revenues
|
face="Times New Roman">$ -
|
size=2 face="Times New Roman">$ 6,233
|
face="Times New Roman">
|
size=2 face="Times New Roman">$ 1,298
|
size=2 face="Times New Roman">$ 21,739
|
Cost of sales
|
face="Times New Roman">-
|
size=2 face="Times New Roman">(4,466)
|
face="Times New Roman">
|
size=2 face="Times New Roman">(744)
|
size=2 face="Times New Roman">(15,797)
|
Operating expenses
|
face="Times New Roman"> -
|
size=2 face="Times New Roman"> (1,192)
|
face="Times New Roman">
|
size=2 face="Times New Roman"> (333)
|
size=2 face="Times New Roman"> (3,718)
|
|
|
|
|
|
|
Operating income
|
face="Times New Roman">-
|
size=2 face="Times New Roman">575
|
face="Times New Roman">
|
size=2 face="Times New Roman">221
|
size=2 face="Times New Roman">2,224
|
Interest expense
|
face="Times New Roman"> -
|
size=2 face="Times New Roman"> (119)
|
face="Times New Roman">
|
size=2 face="Times New Roman"> (9)
|
size=2 face="Times New Roman"> (624)
|
|
|
|
|
|
|
Net income before income taxes
|
face="Times New Roman">-
|
size=2 face="Times New Roman">456
|
face="Times New Roman">
|
size=2 face="Times New Roman">212
|
size=2 face="Times New Roman">1,600
|
Income tax expense
|
face="Times New Roman"> -
|
size=2 face="Times New Roman"> (173)
|
face="Times New Roman">
|
size=2 face="Times New Roman"> (80)
|
size=2 face="Times New Roman"> (608)
|
|
|
|
|
|
|
Net income before cumulative effect accounting
adjustment
|
face="Times New Roman"> -
|
size=2 face="Times New Roman"> 283
|
size=2 face="Times New Roman">
|
size=2 face="Times New Roman"> 132
|
size=2 face="Times New Roman"> 992
|
Cumulative effect accounting adjustment, net of
income taxes
|
face="Times New Roman"> -
|
size=2 face="Times New Roman">
-
|
face="Times New Roman">
|
size=2 face="Times New Roman"> -
|
size=2 face="Times New Roman">
(47)
|
width=4 height="1">
|
|
|
face="Times New Roman">
|
|
|
width=4 height="19">
face="Times New Roman">Net income
|
face="Times New Roman">$ -
|
size=2 face="Times New Roman">$ 283
|
size=2 face="Times New Roman">
|
size=2 face="Times New Roman">$ 132
|
size=2 face="Times New Roman">$ 945
|
width=4 height="19">
|
|
|
|
|
|
|
|
|
|
-6- |
Table of Contents
The February 28, 2002 consolidated balance sheet has been reclassified
to reflect the net assets of JM Ney which were held for sale, as follows (in
thousands):
|
face="Times New Roman">
|
Inventory
|
face="Times New Roman">$ 4,144
|
Prepaid expenses and other current assets
|
face="Times New Roman">182
|
Property, plant and equipment, net
|
face="Times New Roman">2,732
|
Other assets
|
face="Times New Roman">110
|
Other current liabilities
|
face="Times New Roman"> (194)
|
|
|
Total
|
face="Times New Roman">$ 6,974
|
|
|
In connection with the asset sale, the
Company entered into an eight-year lease with Deringer for the lease of JM Ney's
manufacturing facility. The lease calls for the Company to receive monthly
rental payments at the annual rate of $290,000 with annual increases of the
annual lease rate of $5,800.
(3) Investment in
Moscow Broadband Communication Ltd.
The Company records its investment in Moscow Broadband Communication
Ltd. ("Moscow Broadband") 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. For the
nine months ended November 30, 2002 and 2001, the Company recorded losses of $506,000
and $591,000, respectively, which represent its 25% interest in Moscow
Broadband's losses of $2,025,000 and $2,376,000 for the nine months ended September
30, 2002 and 2001, respectively. These
losses include Moscow Broadband's recording of a 50% equity interest in the
losses of ZAO ComCor-TV ("ComCor-TV"), a Russian company which
delivers cable television, high speed data transmission and Internet services
to its subscribers, for the same periods.
In May 2002, Moscow Broadband contributed $5,000,000 to ComCor-TV's
equity capital. In July 2002, Moscow
Telecommunications Company ("COMCOR") contributed operating equipment
and shares of The Institute for Automated Systems ("IAS") with an
aggregate agreed upon value of $17,374,000.
Such contributions were made in accordance with the provision of
agreements, which if approved by the Company's stockholders and consummated,
will result in the Company acquiring a 100% interest in ComCor-TV. Until such transaction is closed, Moscow
Broadband and COMCOR share voting control over ComCor-TV in accordance with
agreements among the parties. Accordingly,
Moscow Broadband continues to record a 50% equity interest in ComCor-TV's
results of operations.
At November 30, 2002, the carrying value of the Company's investment in Moscow
Broadband was $2,171,000, and the Company's 25% equity interest in the net
assets of Moscow Broadband was $2,552,000.
The $381,000 difference is attributed to a non-depreciable asset that
was contributed to ComCor-TV and will not result in the Company accreting the
difference into its consolidated results of operations.
The following presents summarized financial information for Moscow Broadband as
of September 30, 2002 and December 31, 2001 and its results of operations for
the three and nine month periods ended September 30, 2002 and 2001 (in
thousands):
width=126>
|
face="Times New Roman"> September 30, 2002
|
face="Times New Roman">December 31, 2001
|
Balance Sheet Data:
|
face="Times New Roman">
|
face="Times New Roman">
|
Current
assets
|
face="Times New Roman">$ 1,081
|
face="Times New Roman">$ 4,353
|
Noncurrent assets
|
face="Times New Roman"> 9,174
|
face="Times New Roman"> 8,040
|
|
|
|
Total
assets
|
face="Times New Roman">$ 10,255
|
face="Times New Roman">$ 12,393
|
|
|
|
Accounts
payable and accrued liabilities
|
face="Times New Roman">$ 46
|
face="Times New Roman">$ 137
|
Stockholders' equity
|
face="Times New Roman"> 10,209
|
face="Times New Roman"> 12,256
|
|
|
|
Total
liabilities and stockholders' equity
|
face="Times New Roman">$ 10,255
|
face="Times New Roman">$ 12,393
|
|
|
|
|
-7-
Table of Contents
|
face="Times New Roman">Three Months Ended
September 30,
|
size=2 face="Times New Roman">Nine Months
Ended September 30,
|
|
face="Times New Roman">2002
|
face="Times New Roman">2001
|
face="Times New Roman">2002
|
face="Times New Roman">2001
|
Statement of Operations Data:
|
face="Times New Roman">
|
face="Times New Roman">
|
face="Times New Roman">
|
face="Times New Roman">
|
Net loss
before equity in losses of ComCor-TV
|
face="Times New Roman">$ (60)
|
face="Times New Roman">$ (196)
|
face="Times New Roman">$ (340)
|
face="Times New Roman">$ (584)
|
Equity in
losses of ComCor-TV
|
face="Times New Roman">(627)
|
face="Times New Roman">(535)
|
face="Times New Roman">(1,707)
|
face="Times New Roman">(1,792)
|
|
|
|
|
|
Net loss
|
face="Times New Roman">$ (687)
|
face="Times New Roman">$ (731)
|
face="Times New Roman">$ (2,047)
|
face="Times New Roman">$ (2,376)
|
|
|
|
|
|
The following presents summarized financial information for ComCor-TV
as of September 30, 2002 and December 31, 2001 and for the three and nine month
periods ended September 30, 2002 and 2001 (in thousands):
|
face="Times New Roman">September 30, 2002
|
face="Times New Roman">December 31, 2001
|
Balance Sheet Data:
|
face="Times New Roman">
|
face="Times New Roman">
|
Current assets
|
size=2 face="Times New Roman">$ 6,759
|
size=2 face="Times New Roman">$ 2,930
|
Non-current
assets
|
size=2 face="Times New Roman"> 28,099
|
size=2 face="Times New Roman"> 14,850
|
|
|
|
Total
assets
|
size=2 face="Times New Roman">$ 34,859
|
size=2 face="Times New Roman">$ 17,780
|
|
|
|
Current
liabilities
|
size=2 face="Times New Roman">$ 1,939
|
size=2 face="Times New Roman">$ 3,631
|
Non-current
liabilities and minority interest
|
size=2 face="Times New Roman"> 1,932
|
size=2 face="Times New Roman"> 2,124
|
Stockholder's
equity
|
size=2 face="Times New Roman"> 30,988
|
size=2 face="Times New Roman"> 12,025
|
|
|
|
Total liabilities and stockholders' equity
|
size=2 face="Times New Roman">$ 34,859
|
size=2 face="Times New Roman">$ 17,780
|
|
|
|
|
size=2 face="Times New Roman">Three Months
Ended September 30,
|
size=2 face="Times New Roman">Nine Months
Ended September 30,
|
|
face="Times New Roman">2002
|
face="Times New Roman">2001
|
face="Times New Roman">2002
|
face="Times New Roman">2001
|
Statement of Operations Data:
|
face="Times New Roman">
|
face="Times New Roman">
|
face="Times New Roman">
|
face="Times New Roman">
|
Revenues
|
face="Times New Roman">$ 443
|
face="Times New Roman">$ 289
|
face="Times New Roman">$ 1,308
|
face="Times New Roman">$ 774
|
Cost of
revenues, including amortization of intangibles
|
face="Times New Roman">$ (882)
|
face="Times New Roman">$ (685)
|
face="Times New Roman">$ (2,535)
|
face="Times New Roman">$(2,198)
|
Loss from
operations
|
face="Times New Roman">$(1,262)
|
face="Times New Roman">$(1,161)
|
face="Times New Roman">$ (3,486)
|
face="Times New Roman">$(3,906)
|
Net loss
|
face="Times New Roman">$(1,252)
|
face="Times New Roman">$(1,071)
|
face="Times New Roman">$ (3,412)
|
face="Times New Roman">$(3,584)
|
(4) ComCor-TV and
Moscow Broadband Transactions
In April 2002, as amended in September 2002, the
Company entered into agreements, subject to shareholder and regulatory
approvals, pursuant to which the Company will acquire the 50% equity ownership
of ComCor-TV owned by COMCOR in exchange for 4,000,000 shares of the Company's
common stock. The
agreements require COMCOR to contribute defined operating assets and additional
shares of IAS to ComCor-TV. Such contributions were made in July
2002. In order to complete this
transaction, the Company is required to acquire substantially all of the
outstanding shares of Moscow Broadband that it currently does not own and to
contribute Moscow Broadband's remaining shares of IAS and approximately $16.7
million of cash to ComCor-TV, of which $5 million was contributed by Moscow
Broadband in May 2002. ComCor-TV is currently dependent
upon outside sources of capital. Without the capital to be provided by
COMCOR, Moscow Broadband and the Company pursuant to the acquisition agreements,
ComCor-TV may not be able to continue as a going concern, which could otherwise
have a significant adverse affect on the reported value of the Company's
investment in Moscow Broadband. As further discussed in Note 11, the
Company's board of directors has recommended that the Company close on these
proposed transactions only if prior to closing the Company or Moscow Broadband
shall have received commitments of $4 million or more of new capital.
-8-
Table of Contents
The agreements entered into in April 2002, as amended, pursuant
to which the Company plans to increase its ownership of ComCor-TV require the
Company and Moscow Broadband to make cash capital contributions to ComCor-TV
totaling approximately $16.7 million, of which approximately $5 million was
paid by Moscow Broadband in May 2002. In order to meet these payment
obligations, the Company expects to raise funds by (i) obtaining a loan collateralized
by JM Ney's real estate, (ii) selling certain short term investments or (iii)
issuing shares of its stock or debt in a public or private offering, subject to
the limitations contained in the acquisition agreements. The Company may also
arrange for ComCor-TV or Moscow Broadband to raise funds through the issuance
of equity securities, which, if successful, could result in the dilution of the
Company's ownership of ComCor-TV.
However, depending on market conditions, such sources of cash may still
be inadequate to meet the scheduled payments into ComCor-TV and still provide
the Company with sufficient liquidity to meet its administrative expenses and
debt service obligations.
(5) Prepaid Pension Expense
and Other liabilities
As a result of the sale of JM Ney's assets as discussed in Note 2, and the
resultant decrease in work force, the Company recorded a curtailment gain of
$76,000 relating to previously unrecognized prior service costs. In addition, an actuarial gain of
approximately $1,431,000 due to the reduction in the expected future pension
benefits for plan participants has been recorded as an offset against
previously unrecognized actuarial losses of the plan and, as a result, has not
directly impacted the reported gain on sale.
face="Times New Roman">In April 2002, the Company's defined benefit pension plan was amended to
provide enhanced pension benefits to a group of retirees who previously had
been receiving post-retirement health benefits from the Company. The implementation of this plan amendment
resulted in a net gain of $142,000 from the settlement of the post-retirement
health liability and has been recorded as a reduction of general and administrative
expenses in the Company's consolidated condensed statement of operations.
(6) Income Taxes
Income tax expense represents an estimate of the effective income tax rate for
the current fiscal year after considering valuation allowances with respect to
the Company's ability to realize a tax benefit from its equity in the losses of
Moscow Broadband.
face="Times New Roman">(7) Earnings (Loss) Per Share
Earnings (loss) per share are computed based on the weighted average number of
shares of common stock and common stock equivalents outstanding. Diluted earnings 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 antidilutive. For the three and nine month periods ended November
30, 2002 and 2001 the effect of the assumed conversion of the Company's
dilutive securities had an antidilutive effect on the Company's per share
results from continuing operations.
face="Times New Roman">(8) Business Segments and
Export Sales
face="Times New Roman"> As discussed in Note 2,
effective March 22, 2002, the Company sold the operating assets of JM Ney to
Deringer. The operations of JM Ney had
comprised the Company's electronics segment.
As a result of the sale of these assets, the Company currently operates
in one segment comprised of corporate, administrative and investment
activities.
face="Times New Roman">(9) Litigation
face="Times New Roman">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.
face="Times New Roman">(10) Supplemental Disclosure of
Cash Flow Information
face="Times New Roman"> In the prior fiscal year,
during the nine months ended November 30, 2001, the Company issued 11,323
shares of its common stock from the conversion of 5,825
shares of its cumulative convertible preferred stock.
-9-
Table of Contents
Item. 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations
The accompanying Management's Discussion and Analysis of Financial
Condition and Results of Operations ("MD&A") should be read in
conjunction with the MD&A in the Company's Report on Form 10-K for the year
ended February 28, 2002.
Overview
From February 1991 through March 22, 2002, the Company owned JM Ney as its
primary operating subsidiary. The
operating assets of JM Ney were sold effective March 22, 2002, and since that
date the Company has substantially liquidated JM Ney's net current assets that
were not sold, including accounts receivable and certain inventory balances.
The Company holds a 25% ownership interest in Moscow Broadband which in turn,
holds a 50% interest in ComCor-TV, a Russian company which delivers cable
television, high-speed data transmission and Internet services to its
subscribers. ComCor-TV is a start-up
venture which is currently expanding its network and increasing its customer base
to those homes and businesses to which it presently has access.
In April 2002, as amended in September 2002, the Company entered into
agreements which, subject to shareholder and regulatory approvals, will result
in ComCor-TV being substantially wholly-owned by the Company through the
purchase of the shares of ComCor-TV not presently owned by Moscow Broadband,
and from the proposed purchase of substantially all of the shares of Moscow
Broadband that the Company does not presently own.
Based upon the foregoing, the following discussion and analysis of the results
of operations and the financial condition of the Company is not expected to be
indicative of the Company's expectations of its future results of operations.
Critical Accounting Policies and Estimates
The MD&A discusses the Company's consolidated financial statements,
which have been prepared in accordance with accounting principles generally
accepted in the United States. The
preparation of these financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
the disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. On an on-going
basis, management evaluates its estimates and judgments, including those
related to product returns, bad debts, inventories, investments, income taxes,
financing operations, retirement benefits, and contingencies and
litigation. Management bases its
estimates and judgments on historical experience and on various other factors
that are believed to be reasonable under the circumstances, the results of
which form the basis for making judgments about the carrying values of assets
and liabilities that are not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.
face="Times New Roman">Management believes the following critical accounting policies, among others,
affect its more significant judgments and estimates used in the preparation of
its consolidated financial statements:
Discontinued Operations
Under terms of the sale of JM Ney's operating assets, the Company remains
exposed to losses from its inability to collect accounts receivable balances
and from claims against the portion of the proceeds which are being held in
escrow pending the satisfactory resolution of potential claims relating to
certain inventories and representations made by the Company to Deringer. The Company believes its reserves are
adequate to meet these contingencies, but there can be no assurances until
these matters have been fully resolved.
Deferred Tax Assets
The Company records a valuation allowance to reduce its deferred tax assets
to the amount that it believes is more likely than not to be realized. The
Company considers future taxable income and ongoing prudent and feasible tax
planning strategies in assessing the need for the valuation allowance. When the Company determines that it may not
be able to realize all or part of its net deferred tax assets, a valuation
allowance to reduce the deferred tax assets to estimated recoverable amounts is
charged to income in the period such determination is made. Likewise, should the Company determine that
it would be able to realize its deferred tax assets in the future in excess of
its net recorded amount, a reduction in the valuation allowance would increase
income in the period such determination is made.
Investment in Moscow Broadband
The Company records its investment in Moscow Broadband using the equity
method which also requires that the carrying value of the investment be
evaluated for impairment. If ComCor-TV
does not receive the planned increases to its equity capital or other sources
of financing, the Company's carrying value of Moscow Broadband could be
adversely impacted.
-10-
Table of Contents
RESULTS OF OPERATIONS - THREE AND NINE MONTHS ENDED NOVEMBER 30, 2002 VS.
THREE AND NINE MONTHS
ENDED NOVEMBER 30, 2001
For the nine months ended November 30, 2002 and 2001 the Company
reported net loss as follows (in thousands except per share amounts):
|
face="Times New Roman">November 30, 2002
|
face="Times New Roman">November 30, 2001
|
|
face="Times New Roman">Amount
|
size=2 face="Times New Roman">Per Share
|
face="Times New Roman">Amount
|
size=2 face="Times New Roman">Per Share
|
Net loss from continuing operations
|
face="Times New Roman">$ (1,755)
|
size=2 face="Times New Roman">$ (0.83)
|
face="Times New Roman">$ (1,635)
|
size=2 face="Times New Roman">$ (0.48)
|
Net income from discontinued operations
|
face="Times New Roman">132
|
size=2 face="Times New Roman">0.06
|
face="Times New Roman">662
|
size=2 face="Times New Roman">0.32
|
Gain on sale of JM Ney
|
face="Times New Roman"> 1,472
|
size=2 face="Times New Roman"> 0.70
|
face="Times New Roman"> -
|
size=2 face="Times New Roman"> -
|
|
|
|
|
|
|
face="Times New Roman">$ (151)
|
size=2 face="Times New Roman">$ (0.07)
|
face="Times New Roman">$ (341)
|
size=2 face="Times New Roman">$ (0.16)
|
|
|
|
|
|
Continuing Operations - Revenue
For the nine months ended November 30, 2002, revenues totaled
$608,000 as compared to $467,000 in the comparable period in the prior fiscal
year. Significant components of revenue
are as follows (in thousands):
|
face="Times New Roman">November 30, 2002
|
face="Times New Roman">November 30, 2001
|
Investment gains
|
size=2 face="Times New Roman">$
311
|
size=2 face="Times New Roman">$ 36
|
Rental income
|
size=2 face="Times New Roman">214
|
size=2 face="Times New Roman">254
|
Interest and dividends
|
size=2 face="Times New Roman">113
|
size=2 face="Times New Roman">12
|
Ultrasonic royalties
|
size=2 face="Times New Roman">37
|
size=2 face="Times New Roman">223
|
Change in deferred compensation accounts
|
size=2 face="Times New Roman"> (67)
|
size=2 face="Times New Roman"> (58)
|
|
|
|
Total
|
size=2 face="Times New Roman">$ 608
|
size=2 face="Times New Roman">$ 467
|
|
|
|
face="Times New Roman"> Current year rental income was earned from the lease of JM Ney's former
manufacturing facility effective March 22, 2002, while the prior year's rental
income relates to a property which the Company sold in December 2001.
Continuing Operations - General and Administrative Expenses
General and administrative expenses from continuing operations increased 53.0%
to $1,989,000 for the nine months ended November 30, 2002, from $1,300,000 in
the comparable period in the prior fiscal year. For the three months ended November
30, 2002, these expenses totaled $693,000, which was 57.9% more than the $439,000
of general and administrative expenses incurred in the comparable three-month
period in the prior fiscal year. Higher
professional fees incurred in connection with the proposed acquisition of
ComCor-TV and the preparation of regulatory reports in connection therewith,
and depreciation expense on the JM Ney building which, prior to the sale of JM
Ney's assets had been classified within cost of sales, were offset by a
$142,000 gain from the settlement of retiree health care obligations through an
amendment to the Company's deferred benefit pension plan.
Continuing Operations - Interest Expense
Interest expense from continuing operations for the nine months ended November
30, 2002 decreased 33% to $201,000 from $300,000 during the comparable period
in the prior fiscal year. For the three
months ended November 30, 2002, interest expense totaled $65,000, which
represented a 30.9% decrease from the $94,000 of interest expense incurred in
the comparable three-month period in the prior fiscal year. The prior year's annual sinking fund payment
of the Company's 10 1/2% convertible subordinated debenture and the repayment
in the prior fiscal year of a note payable to the Company's president lowered
average debt levels which resulted in the decrease in this expense.
Equity in Losses of Moscow Broadband
The Company's equity in the losses of Moscow Broadband decreased 13.8% to $512,000
in the nine months ended November 30, 2002 from $594,000 in the comparable
period of the prior fiscal year. For the
three months ended November 30, 2002, the Company's equity in Moscow Broadband's
losses was $172,000, as compared to $183,000 equity in such losses for the
comparable three-month period in the prior fiscal year. Lower net operating costs at Moscow Broadband
contributed to lowering the level of losses.
Income Tax Expense
Income taxes have been accrued based upon estimated effective tax rates for
the fiscal year, after considering valuation allowances related to the
Company's ability to realize a tax benefit from its equity in the losses of
Moscow Broadband.
-11-
Table of Contents
Income
from Discontinued Operations
During the nine month period ended November 30, 2002, the Company owned JM
Ney for only 22 days until its sale effective March 22, 2002. JM Ney's results for that period produced net
income of $132,000 after income taxes. During
the three and nine month periods in the prior fiscal year, JM Ney's operations
produced net income after income taxes of $283,000 and $945,000, respectively.
Gain on Sale of JM Ney
The sale of JM Ney's net assets in March 2002 produced a gain of $1,472,000
after a provision for income taxes of $686,000.
The components of the selling price resulted in proceeds which were
higher than book value for inventory and fixed assets, which were partially
offset by expenses of the transaction.
LIQUIDITY AND CAPITAL RESOURCES
At November 30, 2002 consolidated cash and marketable securities totaled $8,495,000
as compared to $1,607,000 as of February 28, 2002. The increase of $6,888,000 is primarily
attributable to the receipt of proceeds from the sale of JM Ney's operating
assets, and to the subsequent realization of much of JM Ney's net current
assets that were not sold to the buyer of its operating assets. The Company's
consolidated net current assets increased from $4,520,000 at February 28, 2002
to $6,780,000 as of November 30, 2002.
In April 2002, as amended in September 2002, the
Company entered into agreements, subject to shareholder and regulatory
approvals, under which the Company will acquire the 50% equity ownership of
ComCor-TV owned by COMCOR in exchange for 4,000,000 shares of the Company's
common stock. The agreements require
COMCOR to contribute defined operating assets and additional shares of IAS to
ComCor-TV. Such contributions were made
in July 2002. In order to complete this
transaction, the Company is required to acquire substantially all of the
outstanding shares of Moscow Broadband that it currently does not own and to
contribute additional cash and Moscow Broadband's remaining shares of IAS to
ComCor-TV. ComCor-TV is
currently dependent upon sources of capital from third parties. Without the capital to be provided by COMCOR,
Moscow Broadband and the Company pursuant to the agreements, ComCor-TV may not
be able to continue as a going concern, which could otherwise have a
significant adverse affect on the reported value of the Company's investment in
Moscow Broadband.
Subject to shareholder approval, the Company expects
to acquire the Moscow Broadband shares through the issuance of 2,250,000 shares
of the Company's common stock. The
Company may issue further additional shares of its common stock to acquire
additional Moscow Broadband shares that may be issued pursuant to a rights
offering of its common stock. At
present, the Company does not know how much cash will be raised by the Moscow
Broadband Rights Offering, or the exact terms of such offering.
For the balance of the current year and beyond, the Company is dependent upon
its existing cash and short term investments and rental income from Deringer
from the lease of JM Ney's manufacturing facility, to meet its operating
expense, preferred dividend and debt service requirements. To the extent that
such cash is used to fund additional investment activities of the Company,
including, but not limited to investment in ComCor-TV, the Company will have
fewer financial resources to meet such obligations.
The agreements entered into in April 2002, as amended, pursuant to which the
Company plans to increase its ownership of ComCor-TV require the Company and
Moscow Broadband to make cash capital contributions to ComCor-TV totaling
approximately $16.7 million. Approximately $5 million of this amount was paid
by Moscow Broadband in May 2002. The Company's board of directors has
recommended that the Company close on the acquisition agreements only if prior
to such closing of the acquisition the Company or Moscow Broadband shall have
received commitments of $4 million or more of new capital. In order to meet the payment obligations
contained in the acquisition agreements and its own operating requirements, the
Company expects to raise funds by obtaining a loan collateralized by JM Ney's
real estate, by selling certain short term investments, or by issuing shares of
its stock in a public or private offering, subject to the limitations contained
in the acquisition agreements. The Company may also arrange for ComCor-TV or
Moscow Broadband to raise funds, which, if successful, could result in the
dilution of the Company's ownership of ComCor-TV. However, depending on market conditions, such
sources of cash may still be inadequate to meet the scheduled payments into
ComCor-TV and still provide the Company with sufficient liquidity to meet its
administrative expenses and debt service obligations.
face="Times New Roman">OFF BALANCE SHEET
ARRANGEMENTS
The Company has a contingent liability with respect to
a $388,000 letter of credit issued by its bank to secure performance bonds
issued in connection with an unresolved state income tax matter.
Item 3. Quantitative and Qualitative
Disclosures About Market Risk
The Company is exposed to market risk from changes in equity security prices,
interest rates and from factors that impact equity investments in Russia, as
discussed in the Company's Annual Report on Form 10-K for the year ended
February 28, 2002. The following
information is presented to update the status of the identified risks.
-12-
Table of Contents
EQUITY SECURITY RISK
At November 30, 2002, the Company has equity risk with respect to $1,328,000
of investments in publicly traded financial institutions, and it also has an
equity investment in a Ukraine based utility company with a reported value of
$5,000.
FOREIGN INVESTMENT RISK
The Company has an investment in Moscow Broadband with a carrying value of
$2,171,000. Moscow Broadband's primary
asset is an investment in ComCor-TV, a Moscow, Russia-based broadband cable
operator licensed to provide video, Internet and telephony to up to 1.5 million
homes and businesses in Moscow. All such investments bear the specific
economic, currency and political risks of this region.
In April 2002, as amended September 2002, the Company entered into agreements
which, subject to stockholder and regulatory approvals, will result in
ComCor-TV being substantially wholly-owned by the Company. The consummation of these transactions will
increase the concentration of both foreign investment risk and the venture
capital risk associated with a start-up company which is experiencing operating
losses and requires the commitment of funds to meet the capital expenditure
needs of its business plan. Such
transactions are also expected to significantly reduce the Company's liquidity
as discussed in the Liquidity and Capital Resource section of Item 2 of this
report.
INTEREST RATE RISK
The Company currently has no variable rate obligations and its borrowing
costs are not exposed to changes in interest rates.
Item 4.
Controls and Procedures
As required by Rule 13a-15 under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), within the 90 days prior to
the filing date of this report, the Company carried out an evaluation of the
effectiveness of the design and operation of the Company's disclosure controls
and procedures. This evaluation was carried out under the supervision and with
the participation of the Company's management, including the Company's
President and Chief Executive Officer along with the Company's Chief Financial
Officer. Based upon that evaluation, the Company's President and Chief
Executive Officer along with the Company's Chief Financial Officer concluded
that the Company's disclosure controls and procedures are effective. There have
been no significant changes in the Company's internal controls, or in other
factors, which could significantly affect internal controls subsequent to the
date the Company carried out its evaluation.
Disclosure controls and procedures are controls and other procedures that are
designed to ensure that information required to be disclosed in Company reports
filed or submitted under the Exchange Act is recorded, processed, summarized
and reported within the time periods specified in the Securities and Exchange
Commission's rules and forms. Disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure that information
required to be disclosed in Company reports filed under the Exchange Act is
accumulated and communicated to management, including the Company's Chief
Executive Officer and Chief Financial Officer, as appropriate, to allow timely
decisions regarding required disclosure.
Part II.
Other Information
Item 6.
Exhibits and Reports on Form 8-K
Exhibits required by Item 601 of Regulation S-K:
Exhibit Description
Exhibit 11
Statement re: Computation of Per Share Earnings.
(a)
Reports
on Form 8-K: During the three months
ended November 30, 2002, the Company
filed the following reports on Form 8-K:
size=2 face="Times New Roman">(1)
On
September 4, 2002, the Company reported that it had reached agreement to amend
the terms of its planned acquisition of 50% of the outstanding stock of
ComCor-TV for a fixed number of shares.
Pursuant to the amendment, the provision that the Company would issue
$28 million of its common stock for the COMCOR
shares has been replaced with 4,000,000 shares.
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SIGNATURES
Pursuant to the
requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
face="Times New Roman">ANDERSEN GROUP, INC.
face="Times New Roman">
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By: /s/
Oliver R. Grace, Jr.
Oliver R. Grace, Jr.
President and Chief
Executive Officer
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Date: January
14, 2003
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face="Times New Roman">By: /s/ Andrew M. O'Shea
Andrew M. O'Shea
Chief Financial Officer
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Date: January
14, 2003
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CERTIFICATIONS
I, Oliver R. Grace, Jr., President and Chief Executive Officer of
Andersen Group, Inc., certify that:
1.
I have reviewed this quarterly report on Form 10-Q of Andersen Group, Inc.;
2.
Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly report;
3.
Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4.
The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a)
designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;
b)
face="Times New Roman">
evaluated the effectiveness of the
registrant's disclosure controls and procedures as of a date within 90 days
prior to the filing date of this quarterly report (the "Evaluation
Date"); and
c)
face="Times New Roman">
presented in this quarterly report
our conclusions about the effectiveness of the disclosure controls and
procedures based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying
officer and I have disclosed, based on our most recent evaluation, to the
registrant's auditors and the audit committee of registrant's board of
directors (or persons performing the equivalent function):
a)
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all significant deficiencies in
the design or operation of internal controls which could adversely affect the
registrant's ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material weaknesses in
internal controls; and
b)
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any fraud, whether or not
material, that involves management or other employees who have a significant
role in the registrant's internal controls; and
6. The registrant's other certifying
officer and I have indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors that could significantly
affect internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies and
material weaknesses.
Date: January 14, 2003
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/s/ Oliver R. Grace, Jr.
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Oliver R. Grace, Jr.
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President and Chief Executive Officer
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CERTIFICATIONS
I, Andrew M. O'Shea, Chief Financial Officer of Andersen Group, Inc.,
certify that:
1.
face="Times New Roman">
I have reviewed this quarterly
report on Form 10-Q of Andersen Group, Inc.;
2.
face="Times New Roman">
Based on my knowledge, this
quarterly report does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made, in light
of the circumstances under which such statements were made, not misleading with
respect to the period covered by this quarterly report;
3.
face="Times New Roman">
Based on my knowledge, the
financial statements, and other financial information included in this
quarterly report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and
for, the periods presented in this quarterly report;
4.
face="Times New Roman">
The registrant's other certifying
officer and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for
the registrant and we have:
a)
face="Times New Roman">
designed such disclosure controls
and procedures to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this quarterly report
is being prepared;
b)
face="Times New Roman">
evaluated the effectiveness of the
registrant's disclosure controls and procedures as of a date within 90 days
prior to the filing date of this quarterly report (the "Evaluation
Date"); and
c)
face="Times New Roman">
presented in this quarterly report
our conclusions about the effectiveness of the disclosure controls and
procedures based on our evaluation as of the Evaluation Date;
5.
face="Times New Roman">
The registrant's other certifying
officer and I have disclosed, based on our most recent evaluation, to the
registrant's auditors and the audit committee of registrant's board of
directors (or persons performing the equivalent function):
a)
face="Times New Roman">
all significant deficiencies in
the design or operation of internal controls which could adversely affect the
registrant's ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material weaknesses in
internal controls; and
b)
face="Times New Roman">
any fraud, whether or not
material, that involves management or other employees who have a significant
role in the registrant's internal controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: January 14, 2003
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/s/ Andrew M. O'Shea
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Andrew M. O'Shea
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Chief Financial Officer
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Exhibit
11
ANDERSEN
GROUP, INC.
Statement Re: Computation of Per Share Earnings
(In thousands, except per share data)
size=2 face="Times New Roman">
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size=2 face="Times New Roman">Three Months Ended
November 30, 2002 |
size=2 face="Times New Roman">Three Months Ended
November 30, 2001
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size=2 face="Times New Roman">Nine Months Ended
November 30, 2002 |
size=2 face="Times New Roman">Nine Months Ended
November 30, 2001 |
Calculation of basic earnings per share:
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Numerator for basic and diluted earnings
per share:
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face="Times New Roman">
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Net loss
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size=2 face="Times New Roman">$ (544)
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size=2 face="Times New Roman">$ (349)
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size=2 face="Times New Roman">$ (151)
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size=2 face="Times New Roman">$ (690)
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Denominator for basic earnings per share:
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Weighted average number of shares
Outstanding during the period
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size=2 face="Times New Roman">
2,100
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size=2 face="Times New Roman">
2,086
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size=2 face="Times New Roman">
2,100
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size=2 face="Times New Roman">
2,078
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Effect of dilutive securities
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size=2 face="Times New Roman"> -
(a)
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size=2 face="Times New Roman"> - (a)
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size=2 face="Times New Roman"> - (a)
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size=2 face="Times New Roman"> - (a)
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Denominator for diluted earnings per share
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size=2 face="Times New Roman"> 2,100
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size=2 face="Times New Roman"> 2,086
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size=2 face="Times New Roman"> 2,100
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size=2 face="Times New Roman"> 2,078
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Basic earnings per share
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size=2 face="Times New Roman">$ (0.26)
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size=2 face="Times New Roman">$ (0.17)
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size=2 face="Times New Roman">$ (0.07)
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size=2 face="Times New Roman">$ (0.33)
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Diluted earnings per share
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size=2 face="Times New Roman"> $ (0.26)
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size=2 face="Times New Roman">$ (0.17)
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size=2 face="Times New Roman">$ (0.07)
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size=2 face="Times New Roman"> $ (0.33)
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(a) For
each of the three and nine month periods ended November 30, 2002 and 2001, the
effect of outstanding stock options, or the assumed conversion of subordinated
convertible notes or cumulative preferred stock, were anti-dilutive based upon
the effects that the inclusion of the common stock equivalents would have had
on the Company's reported results from continuing operations.
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