UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM  10-K

	(Mark One)

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

	For the fiscal year ended **February 28, 2002**	or

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

	For the transition period from __________ to __________

Commission File Number: **0-1460
ANDERSEN GROUP, INC.

(Exact name of Registrant as specified in its charter)
**	                         Delaware				     	                                06-0659863

	  (State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
**	    515 Madison Avenue, New York, New York					   10022**
 	          (Address of principal executive offices)		    		             (Zip Code)        
**(212) 826-8942**
Registrant's telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:  **NONE**
Securities registered pursuant to Section 12(g) of the Act:

                                                                                                                               Name of Each exchange

Title of each class			               on which registered    **Common Stock, $.01 par value			       The NASDAQ Stock Market

10 1/2% Convertible Subordinated Debentures Due 2007**
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, and (2) has been subject to such filing requirements for the past 90 days.

					Yes   X                        No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  [   ]

The aggregate market value of the Common Stock, $.01 par value, held by non-affiliates of the Registrant based upon the average bid and asked prices on May 2, 2002 as reported on The NASDAQ Stock Market, was approximately $10,100,000.  Shares of Common Stock held by each officer and director and by each person who owns 5% or more of the outstanding Common Stock have been excluded in that such persons may be deemed to be affiliates.  This determination of affiliate status is not necessarily a conclusive determination for other purposes. 

As of May 2, 2002 there were 2,099,908 shares of Common Stock, $.01 par value, outstanding.

DOCUMENTS INCORPORATED BY REFERENCE:

None.
** 

ANDERSEN GROUP, INC.

FORM 10-K

TABLE OF CONTENTS

 

		

PART I.

 

Item 1.    Business	
Item 2.    Properties	

Item 3.    Legal Proceedings	

Item 4.    Submission of Matters to a Vote of Security Holders	

 

PART II.

Item 5.    Market for Registrant's Common Equity and Related Stockholder                               

               Matters	

Item 6.    Selected Financial Data	

Item 7.    Management's Discussion and Analysis of Financial Condition and                              

               Results of Operations	

Item 7A. Quantitative and Qualitative Disclosures about Market Risk	

Item 8.    Financial Statements and Supplementary Data	

Item 9.    Changes in and Disagreements with Accountants on Accounting           

               and Financial Disclosure	

 

PART III.

Item 10.  Directors and Executive Officers of the Registrant	

Item 11.  Executive Compensation	

Item 12.  Security Ownership of Certain Beneficial Owners and Management	

Item 13.  Certain Relationships and Related Transactions	

 

PART IV.

Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K	

 

Signatures	

 
***PART I*
 
**ITEM 1.     BUSINESS.
 

Statement Regarding Forward Looking Disclosure and Risk Factors

Certain sections of this Annual Report on Form 10-K, including "Item 1. Business" and "Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations", may contain various forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which represent our expectations or beliefs concerning future events.

Forward-looking statements include statements that are predictive in nature, which depend upon or refer to future events or conditions, which include words such as "believes," "plans," "anticipates," "estimates," "expects" or similar expressions.  In addition, any statements concerning future financial performance, ongoing business strategies or prospects, and possible future actions, which may be provided by our management, are also forward-looking statements.  Forward-looking statements are based on current expectations and projections about future events and are subject to risks, uncertainties, and assumptions about our company, economic and market factors and the industry in which we do business, among other things.  These statements are not guarantees of future performance and we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. 

Actual events and results may differ materially from those expressed or forecasted in forward-looking statements due to a number of factors.  Factors that could cause our actual performance and future events and actions to differ materially from such forward-looking statements, include, but are not limited to those discussed below and elsewhere in this Annual Report on Form 10-K.
**General

Andersen Group, Inc., referred to herein as the "Company" or the "Registrant", was incorporated under the laws of the State of Connecticut in 1951.  On April 24, 1998, the Company re-incorporated to the State of Delaware. As used herein, "FY02", "FY01" and "FY00" reference the fiscal years ended February 28, 2002, February 28, 2001 and February 29, 2000, respectively.

 

The Company's activities have principally been in the areas of manufacturing and investments.  Since February 1991, the Company's primary activities have been represented by its investment in The J.M. Ney Company ("JM Ney"), which at February 28, 2002 accounted for 80.3% of the Company's consolidated assets, and which represented 97.9% of the Company's consolidated revenues for the year ended February 28, 2002.  During the past four fiscal years, JM Ney's principal activities consisted of the manufacture and sale of precious metal alloys, stamped parts and insert-molded parts which were sold to customers in the automotive, medical and industrial electronic industries.  JM Ney previously also had a subsidiary which manufactured ultrasonic cleaning equipment, the assets of which were sold effective February 28, 1998, and a dental alloys distribution division which was sold in November 1995.

In November 2001, the Company reached a definitive agreement with Deringer Mfg. Company of Mundelein, Illinois to sell substantially all of the operating assets and certain liabilities of JM Ney.   After the approval of the Company's shareholders and the consent of the holders of the Company's 10 1/2 % convertible subordinated debentures, the Company closed the transaction effective March 22, 2002.

Currently, the Company's primary investment is a 25% equity interest in ABC Moscow Broadband Communication Limited ("Moscow Broadband"), a Cyprus-based limited liability company which holds a 50% equity interest in ZAO ComCor-TV ("ComCor-TV"), a Russian company based in Moscow, Russia that is licensed to deliver cable television, high speed data transmission and Internet access and IP telephony to 1,500,000 homes and businesses in the Moscow region.  

 

Recent Developments

In April 2002, the Company entered into agreements, subject to shareholder approval, under which the Company will acquire the 50% equity ownership of ComCor-TV presently owned by Moscow Telecommunications Company ("COMCOR") in exchange for approximately $28 million of the Company's common stock.  The number of shares to be issued to purchase this equity will be determined based upon the average price of the Company's stock during a ten-day trading period prior to the closing of the transaction subject to the average share price being within the range of $8 to $12 per share.  Either party has a right to terminate the agreement if the average share price is outside this defined range. The agreements require COMCOR to contribute defined operating assets and additional shares of the Institute for Automated Systems ("IAS"), a Russian telecommunications company, to ComCor-TV.  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.  At this date, the Company has not entered into any agreements or formalized any terms or plans to acquire additional ownership of Moscow Broadband.  These transactions are subject to various regulatory and shareholder approvals.  The Company expects to file the necessary proxy materials to effect a shareholder vote for these and transactions.  If these transactions occur substantially as planned, both Moscow Broadband and ComCor-TV will be substantially wholly-owned by the Company and become consolidated subsidiaries of the Company.

ComCor-TV is currently dependent upon additional sources of capital.  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.

Industry Segment Information

Financial information regarding the Company's industry segments is contained in Note 17 to the Registrant's Consolidated Financial Statements contained in Item 8 herein.

Description of Business

During FY02, the Company operated in two business segments: Electronics and Corporate.  The Electronics segment was comprised of the activities of JM Ney.  The Corporate segment is comprised of investment activities. 

Electronics Segment 

Products.  The Electronics segment, the assets of which were sold effective March 22, 2002, was a full-service, materials and parts supplier to various automotive, medical, industrial electronics, telecommunications and military market segments.  JM Ney's fully integrated approach included the manufacture of metal alloys, specializing in various trademarked precious metal alloys, and the design, engineering and fabrication of custom precision products. The fabrication capabilities included wire drawing, rolling from ingot to foil, precision turning, stamping, injection and insert molding, as well as complex tool making.  

JM Ney specialized in the custom engineering, design and manufacturing of precision metal contacts and insert molded contact assemblies and connectors aimed at low amperage applications.  Electrical contacts made utilizing precious metals, including gold, platinum, palladium and silver, are considered extremely dependable as the materials are inert and highly resistant to corrosion and wear.  In developing a finished contact or connector assembly, JM Ney's technical staff worked closely with customers, typically on an engineer-to-engineer level, in order to design a product that meets all of the metallurgical, electronic, dynamic and other performance specifications required for the customer's applications. JM Ney designed and built the necessary molds and tools, and designed and manufactured the end product.  By controlling the total process, JM Ney believed it had a competitive advantage over other companies in technology, cost and response time.  JM Ney has attained ISO 9001 certification and QS9000 certification for the manufacture of its products, as well as approval by the Japanese Industrial Standards ("JIS") and meets "Good Manufacturing Practices" of the United States Food and Drug Administration.  

In connection with the sale of the assets and liabilities of the Company's Dental segment in November, 1995, JM Ney (and the Company, solely for purposes of a non-competition covenant) entered into a three-year manufacturing agreement to alloy and fabricate precious metals for Ney Dental International, Inc. ("NDI"), a successor company to the purchaser of JM Ney's dental business. As part of this agreement, JM Ney and the Company agreed, for a ten-year period, not to sell alloys, equipment or merchandise into the dental market that NDI serves.  JM Ney, however, was permitted to continue producing, selling and marketing precious metal copings and other machined and molded parts and material for use in the dental implant industry.  Although this three-year manufacturing agreement expired in November 1998, JM Ney continued to manufacture products for NDI's successor, but at significantly reduced levels.

Competition.  JM Ney's business had direct competition from a limited number of companies with regard to the manufacture of low amperage metal contacts, contact assemblies, and molded connectors due to the extreme high precision and inherent risks which accompany the engineering and manufacture of precious metals (i.e., high start-up and inventory costs, theft, etc.).  While some competitors offer similar products, the Company believed that these operations lack the degree of vertical integration to compete effectively across the entire spectrum of products.  JM Ney faced competition from companies such as Polymetallurgical, Cendres and Metaux, MicroContacts, and Brainin Advance Industries.

Sales and Marketing.  JM Ney sold to more than 800 customers, with approximately 74% of its sales being made to customers in the United States.  JM Ney's domestic sales force included both direct field sales and manufacturers' representatives located in key geographic markets. Internationally, JM Ney sold through manufacturers' representatives, independent distributors and original equipment manufacturers.  

During FY02, sales to First Inertia, Inc. comprised 12.0% of total net sales.  No other single customer accounted for more than 10% of the Company's net sales.
Research and Development.  During FY02, FY01 and FY00, JM Ney's research and development expenses totaled approximately, $1,907,000, $2,348,000 and $2,203,000, respectively.

Sources and Availability of Raw Materials and Components.  JM Ney purchased its raw materials, including precious metals, and the components used in the manufacture of its products from a number of domestic suppliers, and generally was not dependent upon any single supplier.   

 

Corporate Segment

The Corporate Segment is comprised of the Company's investment and administrative activities. This includes the management of the Company's trading portfolios and long-term investments, as described below.  This segment also included the operations of Andersen Realty, Inc., which, until December 2001, owned a 108,000 square foot office building in Bloomfield, Connecticut, and the monitoring of the Company's continuing interest in the ultrasonic cleaning technology sold during FY98.  Such continuing interest is represented by royalties received pursuant to a technology assignment agreement which was entered into with the buyer of the former Ultrasonics Cleaning Equipment segment.  During FY02, the Company earned $210,000 of royalty revenue pursuant to this agreement.

Trading Portfolio

At February 28, 2001, the Company had a trading portfolio comprised of investments in a Ukrainian energy company and a Russian bond fund with an aggregate reported value of $96,000.  During FY02, the Company invested a total of $278,000 in two savings bank institutions and also received shares in two insurance and financial companies as part of their conversions from mutual companies to publicly traded stock companies.  During FY02, the Company also received liquidating distributions from the Russian bond fund.  At February 28, 2002, the aggregate reported fair value of the Company's trading portfolio was $455,000.  In prior years, the Company's trading portfolio was comprised of more substantial investments in the securities of domestic financial institutions and Eastern European and Russian companies.  

The Company has historically also made passive investments, including investments in publicly traded financial institutions and in the equity securities of Russian and other Eastern European companies.  At February 28, 2002 the Company had investments with an aggregate market value of $450,000 in financial institutions, and an investment in a Ukrainian based energy company with a value of $5,000.

Real Estate

Andersen Realty, Inc., a wholly-owned subsidiary of the Company, managed and operated a 108,000 square foot office building in Bloomfield, Connecticut.  In December 2001, the building was sold for proceeds of $1,691,000 net of transaction costs of $209,000, which resulted in a pre-tax loss of $197,000.  During FY02, rental income from the property represented less than 1% of consolidated revenues.

ABC Moscow Broadband Communication Limited

Prior to the fourth quarter of FY00, the Company held a 50% investment in Moscow Broadband whose primary asset was a 6% investment interest in IAS. From 1995 through 1999, the Company invested approximately $800,000 for a 50% equity interest in Moscow Broadband for the acquisition of a 6% ownership interest in IAS.  In FY99, the Company wrote down its investment in Moscow Broadband to $84,000.  The write-down resulted from the impact of the 1998 financial crisis in Russia, which involved a significant devaluation of the Russian ruble.  Accordingly, the Company recorded an impairment writedown of its investment in MBC to reflect the decline in the value of IAS. In 1999, the Company provided Moscow Broadband an additional $300,000 to perform due diligence with respect to a separate investment in ComCorTV.  

In the fourth quarter of FY00, Moscow Broadband entered into an agreement with COMCOR to jointly own, finance and operate the joint venture, ComCor-TV, to deliver cable television, data transmission and Internet access, and IP telephony throughout the Moscow, Russia region. Moscow Broadband raised $18 million in cash in a private placement of its stock, in which the Company invested $4 million.  To fund this investment, the Company used the proceeds from the sales of certain common stocks of U.S.- based savings bank institutions, and the proceeds from a $1 million loan received from Oliver R. Grace, Jr., the Company's President.

As a result of funding these expenses, and incurring additional costs in connection with the Moscow Broadband private placement, the Company was issued Moscow Broadband stock with a value of $500,000.  The other original shareholders of Moscow Broadband, which include entities formed for the benefit of Oliver R. Grace, Jr., John S. Grace or their families, also received an additional $500,000 of Moscow Broadband common stock.  Messrs. Grace, Jr. and Grace are both employees and directors of the Company. 

The Company did not participate in the private placement on a pro-rata basis, and accordingly, it presently owns 25% of the outstanding common stock of Moscow Broadband.  With the exception of Mr. Pripachkin, each of the Company's Directors, or members of their families, and one of its non-director officers also invested in the Moscow Broadband private placement.

See Note 5 to the Company's Consolidated Financial Statements contained in Item 8 herein, and Certain Relationships and Related Transactions in Item 13 for additional information.

Compliance with Environmental Protection Laws

Management of the Company believes that the Company and its operating subsidiaries are in material compliance with applicable federal, state and local environmental regulations. Compliance with these regulations has not in the past had any material effect on the Company's capital expenditures, consolidated statements of operations and financial position or competitive position, nor does the Company anticipate that compliance with existing regulations will have any such effect in the near future. 

Employees

As of May 8, 2002, the Company, including all majority-owned subsidiaries, had 6 full-time employees.  This excludes the employees at ComCor-TV, in which the Company indirectly holds a minority equity interest through its investment in Moscow Broadband.  None of these employees is represented by a labor union, and the Company is not aware of any organizing activities.  Neither the Company nor any of its subsidiaries has experienced any significant work stoppage due to any labor problems.  The Company considers its employee relations to be satisfactory.  

Executive Officers of the Company

The Executive Officers of the Company and certain significant employees of its subsidiaries are as follows:
**Name**Age**Position**Officer Since
Francis E. Baker
72
Chairman and Secretary
1959
Oliver R. Grace, Jr.
48
President and Chief Executive Officer
1990
Ronald N. Cerny
50
President, The J.M. Ney Company
1993
Andrew M. O'Shea
43
Chief Financial Officer; and Chief Financial Officer and Secretary, The J.M. Ney Company
1995
Executive officers hold their offices at the pleasure of the Board of Directors.  Except as set forth below, all of the officers and significant employees of its subsidiaries have been associated with the Company in their present positions for more than the past five years. 

Mr. Grace, Jr. has been a Director of the Company since 1986 and President and Chief Executive Officer since June 1, 1997.  Mr. Grace, Jr. was Chairman of the Company from March 1990 to May 1997.  Mr. Grace, Jr. has also been President of AG Investors, Inc., one of the Company's subsidiaries, since 1992.  Mr. Grace, Jr. is a General Partner of The Anglo American Security Fund L.P.  Mr. Grace, Jr., is the brother of John S. Grace, a member of the Company's Board of Directors. 

Mr. Baker became Chairman on June 1, 1997.  He has been a Director of the Company since 1959 and was President and Chief Executive Officer from 1959 until May 1997.  Mr. Baker is also the Secretary of the Company, a position he has held since May 1997.  Mr. Baker is also President of Moscow Broadband.

Mr. Cerny has served as President of JM Ney from November 1995.  From April 1993 to November 1995, Mr. Cerny was the General Manager of JM Ney's Electronics Division. 

Mr. O'Shea joined the Company in December 1995 as the Treasurer and Chief Financial Officer of JM Ney.  In November 1997 he was also appointed JM Ney's Secretary, and in December 1999, he was appointed as the Company's Chief Financial Officer. Mr. O'Shea is also Chief Financial Officer of Moscow Broadband. 
**ITEM 2.    PROPERTIES.
The Company's principal executive offices are located in New York, New York. The Company subleases office space from an entity owned by Oliver R. Grace, Jr., the Company's President and Chief Executive Officer, at lease rates that the Company believes approximate market rates. JM Ney (which has been renamed Andersen Land Corp in connection with the sale of JM Ney's operating assets) owns a 98,000 square foot facility and 18.4 acres within an industrial park in Bloomfield, Connecticut.  This site contains JM Ney's former principal operations and general administrative offices.  Effective March 22, 2002, this facility is being leased to a subsidiary of Deringer Mfg. Company, under terms of an eight-year lease entered into in connection with the sale of JM Ney's operating assets.

In December 2001, the Company's subsidiary, Andersen Realty, Inc., sold a 108,000 square foot building located in Bloomfield, Connecticut, which it had leased to light manufacturing companies, and also to tenants who utilized office space and limited support services. 

The Company has also signed a one year lease for office space in Windsor, Connecticut to support certain administrative activities.  The Company believes these facilities are adequate for its current and foreseeable operations, and that additional space will be available if needed.
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