FORM 10-K/A
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1993
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 1-7234
NATIONAL PATENT DEVELOPMENT CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 13-1926739
(State of Incorporation) (I.R.S. Employer
Identification No.)
9 West 57th Street, New York, NY 10019
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 826-8500
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of each exchange on which registered
Common Stock, $.01 Par Value American Stock Exchange, Inc.
Pacific Stock Exchange, Inc.
Securities registered pursuant to Section 12(g) of the Act: None
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 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 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. / /
As of March 15, 1994, the aggregate market value of the
outstanding shares of the Registrant's Common Stock, par value
$.01 per share, held by non- affiliates was approximately
$87,454,237 based on the closing price of the Common Stock on the
American Stock Exchange on March 15, 1994. None of the Class B
Capital Stock, par value $.01 per share, was held by non-
affiliates.
Indicate the number of shares outstanding of each of the
Registrant's classes of common stock, as of the most recent
practicable date.
Class Outstanding at March 15, 1994
Common Stock, par value
$.01 per share 20,299,388 shares
Class B Capital Stock, par
value $.01 per share 250,000 shares
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's definitive Proxy Statement for its
1994 Annual Meeting of Stockholders is incorporated by reference
into Part III hereof.
Item 14 - Exhibits, Financial Statement Schedules, and
Reports on Form 8-K is hereby amended in its entirely as follows:
Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K
Page
(a)(1) The following financial statements are included
in Part II,
Item 8. Financial Statements and Supplementary
Data:
Independent Auditors' Report 31
Financial Statements:
Consolidated Balance Sheets - December 31,
1993 and 1992 32
Consolidated Statements of Operations -
Years ended December 31, 1993, 1992 and 1991 34
Consolidated Statements of Changes in
Stockholders' Equity - Years ended December
31, 1993, 1992 and 1991 35
Consolidated Statements of Cash Flows -
Years ended December 31, 1993, 1992 and 1991 37
Notes to Consolidated Financial Statements 40
(a)(2) Financial Statement Schedules.
Schedule II - Amounts receivable from related
parties and underwriters, promoters and
employees other than related parties i
Schedule III - Condensed financial
information of registrant ii
Schedule VIII - Valuation and qualifying
accounts x
Schedule IX - Short-term borrowings xi
Schedule X - Supplementary income statement
information xii
Independent Auditors' Report xiii
(a)(3) Exhibit - Consent of Independent Auditors.
71
(b) There were no Reports on Form 8-K filed by the
Registrant during the last quarter of the period
covered by this report.
72
NATIONAL PATENT DEVELOPMENT CORPORATION AND SUBSIDIARIES
SCHEDULE II
AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS,
PROMOTERS AND EMPLOYEES OTHER THAN RELATED PARTIES
Name of Debtor
Balance at Additions Deductions Balance at
Beginning Amounts Amounts End of Year
of Year Loaned Collected Not Current
Year ended December 31, 1993:
Lawrence M. Gordon $200,000 $ - $200,0002 $ -
Year ended December 31, 1992:
Lawrence M. Gordon $ - $500,000 $300,000 $200,0001
(1) The above represents a note receivable due on July 9, 1997.
Interest at 6% per annum is payable quarterly.
(2) The above is a note receivable recorded on the balance sheet
of Interferon Sciences, Inc. (ISI). As a result of the
Company's interest in ISI falling below 50% in 1993, ISI is
accounted for on the equity method, and accordingly the
balance of $150,000 at December 31, 1993 is not included in
the Company's financial statements. During 1993, $50,000 of
the note receivable was repaid by the borrower.
i
NATIONAL PATENT DEVELOPMENT CORPORATION
SCHEDULE III
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
CONDENSED BALANCE SHEET
(in thousands)
ASSETS
Current assets December 31,
1993 1992
Cash and cash equivalents $ 9,058 $ 12,524
Restricted cash 270
Accounts and other receivables 2,768 2,741
Inventories 2,877 2,948
Prepaid expenses and other current assets 471 519
Total current assets 15,174 19,002
Investments in subsidiaries 164,122 162,769
Other investments and advances 14,807 23,003
Property, plant and equipment, at cost 4,655 4,633
Less accumulated depreciation (4,423) (4,179)
232 454
Intangible assets, net of amortization 915 2,350
Other assets 76 237
$195,326 $207,815
See accompanying notes to the condensed financial statements.
ii
NATIONAL PATENT DEVELOPMENT CORPORATION
SCHEDULE III (Continued)
CONDENSED BALANCE SHEET (Continued)
(in thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY
December 31,
Current liabilities 1993 1992
Current maturities of long-term debt $ 205 $
Short-term borrowings 4,379
Accounts payable and accrued expenses 3,626 2,862
Total current liabilities 3,831 7,241
Long-term debt, less current maturities 29,747 53,131
Amounts due subsidiaries, net 90,068 83,620
Commitments and contingencies
Common stock issued subject to
repurchase obligation 4,242
Stockholders' equity
Common stock 190 159
Class B capital stock 2 2
Capital in excess of par value 106,274 96,713
Deficit (39,028) (33,051)
Total stockholders' equity 67,438 63,823
$195,326 $207,815
See accompanying notes to the condensed financial statements.
iii
NATIONAL PATENT DEVELOPMENT CORPORATION
SCHEDULE III (Continued)
CONDENSED STATEMENT OF OPERATIONS
(in thousands, except per share data)
Year ended December 31,
Revenues 1993 1992 1991
Sales $ 945 $ 915 $12,406
Investment and other income, net 1,388 3,767 396
2,333 4,682 12,802
Costs and expenses
Cost of goods sold 573 632 9,746
Selling, general and administrative 8,294 8,131 9,647
Research and development 326 301 784
Interest 6,414 8,769 11,808
15,607 17,833 31,985
Gain on sale of stock of a subsidiary 18,844
Gain on disposition of stock of
a subsidiary and an affiliate 3,795
Gain on issuance of stock of
a subsidiary 1,353
Equity in earnings (losses) of
subsidiaries (713) (454) 947
Income (loss) before income taxes
and extraordinary item (8,839) (13,605) 608
Income tax benefit 1,043
Income (loss) before extraordinary item(7,796) (13,605) 608
Extraordinary item
Gain from early extinguishment
of debt, net of tax of
$1,043 in 1993 1,819 1,662 2,037
Net income (loss) $(5,977) $(11,943) $ 2,645
Income (loss) per share
Income (loss) before extraordinary
item $ (.46)$ (.86) $ .04
Extraordinary item .11 .10 .13
Income (loss) per share $ (.35)$ (.76) $ .17
See accompanying notes to the condensed financial statements.
iv
NATIONAL PATENT DEVELOPMENT CORPORATION
SCHEDULE III (Continued)
CONDENSED STATEMENT OF CASH FLOWS
(in thousands)
Year ended December 31,
1993 1992 1991
Cash flows from operations:
Net income (loss) $ (5,977) $(11,943) $ 2,645
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 798 1,332 3,928
Equity in (earnings) losses
of subsidiaries 713 454 (947)
Income tax benefit allocated to
continuing operations (1,043)
Gain on sale of stock of a subsidiary (18,844)
Gain on disposition of stock of
a subsidiary and an affiliate (3,795)
Gain on issuance of stock of
a subsidiary (1,353)
Gains from early extinguishment
of debt, net of income tax in 1993 (1,819) (1,662) (2,037)
Changes in other operating items 1,662 (204) 2,764
Total adjustments (4,837) (80) (15,136)
Net cash used for operations (10,814) (12,023) (12,491)
Cash flows from investing activities:
Proceeds from public sale of
a subsidiary's stock 43,997
Proceeds from disposal of business 7,192
Proceeds from sale of an investment 4,500
Marketable securities 229
Additions to property, plant & equipment (22) 34 (1,891)
Reduction of (additions to)
intangible assets 477 (1,083)
Reduction of investments and
other assets, net 13,841 5,787 2,340
Net cash provided by investing
activities 14,296 10,321 50,784
Cash flows from financing activities:
Net repayments of short-term borrowings(4,379) (5,967) (18,499)
Decrease in restricted cash 270 4,730 10,000
Reduction of long-term debt (3,450) (2,683) (15,039)
Proceeds from issuance of common stock 198 1,539
Exercise of common stock options
and warrants 413 282 718
v
NATIONAL PATENT DEVELOPMENT CORPORATION
SCHEDULE III (Continued)
CONDENSED STATEMENT OF CASH FLOWS
(in thousands)
Year ended December 31,
1993 1992 1991
Issuance of treasury stock $ $ 15 $ 825
Net cash used for financing
activities (6,948) (3,623) (20,456)
Net increase (decrease) in
cash and cash equivalents (3,466) (5,325) 17,837
Cash and cash equivalents
at beginning of year 12,524 17,849 12
Cash and cash equivalents at
end of year $ 9,058 $ 12,524 $ 17,849
vi
NATIONAL PATENT DEVELOPMENT CORPORATION
SCHEDULE III (Continued)
CONDENSED STATEMENT OF CASH FLOWS (Continued)
(in thousands, except per share data)
Year ended December 31,
1993 1992 1991
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 2,375 $ 6,145 $ 9,201
Income taxes $ 44 $ 103 $ 139
Supplemental schedule of noncash transactions:
Increase in investment in
subsidiaries $ $ $ 4,985
Reduction of intangibles (532)
Additions to other assets and
prepaid expenses 179 130 275
Reduction of accrued interest payable 607 1,744
Reduction of debt 21,900 1,819 7,430
Additions to (reduction of)
receivables from affiliates 597 (4,985)
Issuances of treasury stock (1,468) (2,098)
Issuances of common stock (8,981) (1,078)
Issuance of long-term debt (3,006)
Common stock issued subject to
repurchase obligation (4,242)
Gain on disposition of stock
of a subsidiary and
an affiliate (3,795)
Gain on exchange of debt,
before income tax effect (2,662)
See accompanying notes to the condensed financial statements.
vii
NATIONAL PATENT DEVELOPMENT CORPORATION
SCHEDULE III (Continued)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Note (a): INVENTORIES
Inventories are valued at the lower cost or market,
principally using the first-in, first-out (FIFO) method of
costing. Inventories consisting of material, labor, and overhead
are classified as follows (in thousands):
December 31,
1993 1992
Raw materials $ 95 $ 89
Work in process 2 1
Finished goods 80 70
Land for resale 2,700 2,788
$ 2,877 $ 2,948
Note (b): LONG-TERM DEBT
Long-term debt consists of the following (in thousands):
December 31,
1993 1992
5% Convertible Bonds $ 2,300
8% Swiss Bonds 4,572 $ 20,075
Old Swiss convertible bonds 15,300 25,173
12% Subordinated debentures 6,829 6,932
Notes payable in
connection with settlements
of litigation 951 951
29,952 53,131
Less current maturities 205
$ 29,747 $ 53,131
Aggregate annual maturities of long-term debt outstanding at
December 31, 1993 for each of the next five years are as follows
(in thousands):
1994 $ 205
1995 12,983
1996 7,363
1997 7,101
1998 -
See Note 9 of the Notes to Consolidated Financial Statements for
additional information with respect to the Company's long-term
debt.
viii
NATIONAL PATENT DEVELOPMENT CORPORATION
SCHEDULE III (Continued)
NOTES TO CONDENSED FINANCIAL STATEMENTS (Continued)
Note (c): COMMITMENTS AND CONTINGENCIES
The Company has several noncancellable leases which cover real
property and machinery and equipment. Such leases expire at
various dates with, in some cases, options to extend their terms.
Minimum rentals under long-term operating leases are as follows
(in thousands):
Real Machinery &
property equipment Total
1994 $ 640 $ 92 $ 732
1995 636 57 693
1996 636 22 658
1997 636 7 643
1998 656 656
After 1998 2,584 2,584
Total $5,788 $ 178 $5,966
Several of the leases contain provisions for rent escalation
based primarily on increases in real estate taxes and operating
costs incurred by the lessor.
The Company is party to several lawsuits incidental to its
business. It is not possible at the present time to estimate the
ultimate legal and financial liability, if any, of the Company
with respect to such litigation; however, management believes
that the ultimate liability, if any, will not have a material
adverse effect on the Company's Financial Statements.
ix
NATIONAL PATENT DEVELOPMENT CORPORATION AND SUBSIDIARIES
SCHEDULE VIII
Valuation and qualifying accounts (in thousands)
Additions
Balance at Charged to Balance at
Beginning Costs & Close of
of Period Expenses Deductions(a) Period
Year ended December 31, 1993:
Allowance for doubtful
accounts $1,581 $1,077 $ 969 $1,689
Year ended December 31, 1992:
Allowance for doubtful
accounts 1,795 1,287 1,501 1,581
Year ended December 31, 1991:
Allowance for doubtful
accounts 1,341 1,409 955 1,795
(a) Write-off of uncollectible accounts, net of recoveries.
x
NATIONAL PATENT DEVELOPMENT CORPORATION AND SUBSIDIARIES
SCHEDULE IX
Short-term borrowings
(in thousands)
Weighted
Maximum Average Average
Weighted Amount Amount Interest
Average OutstandingOutstanding Rate
Balance at Interest During theDuring the During the
End of Year Rate Year Year (a) Year (b)
Year ended December 31, 1993
Short-term
borrowings $21,390 7.46% $30,212 $23,768 8.2%
Year ended December 31, 1992
Short-term
borrowings $28,977 6.99% $33,795 $30,729 9.18%
Year ended December 31, 1991
Short-term
borrowings $26,317 7.11% $51,629 $41,017 9.28%
(a) Average amount outstanding during the year is computed by
dividing the total of the average monthly outstanding principal
balances by 12.
(b) Average interest rate for the year is computed by dividing
the actual short-term interest expense by the average short-term
debt outstanding.
See Note 7 of the Notes to Consolidated Financial Statements for
additional information with respect to the Company's short-term
borrowings.
xi
NATIONAL PATENT DEVELOPMENT CORPORATION AND SUBSIDIARIES
SCHEDULE X
B. Supplementary income statement information
Year ended December 31, 1993 1992 1991
Amortization of intangibles $ * $2,317,000 $4,231,000
* Less than 1% of total revenues
xii
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
National Patent Development Corporation
Under date of March 30, 1994, we reported on the consolidated
balance sheet of National Patent Development Corporation and
subsidiaries as of December 31, 1993 and 1992, and the related
consolidated statements of operations, changes in stockholders'
equity, and cash flows for each of the years in the three-year
period ended December 31, 1993, as contained in the annual report
on Form 10-K for the year 1993. In connection with our audits of
the aforementioned consolidated financial statements, we also
have audited the related financial statement schedules as listed
in the accompanying index. These financial statement schedules
are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statement schedules based on our audits.
In our opinion, the related financial statement schedules, when
considered in relation to the basic consolidated financial
statements taken as a whole, present fairly, in all material
respects, the information set forth therein.
KPMG Peat Marwick
New York, New York
March 30, 1994
xiii
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) 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.
NATIONAL PATENT DEVELOPMENT
CORPORATION
BY: Scott N. Greenberg
Vice President &
Chief Financial Officer
Dated: April 29, 1994
xiv
