FORM 10K/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, 1995
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. /X/
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As of March 1, 1996, 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
$59,058,090 based on the closing price of the Common Stock on the
American Stock Exchange on March 1, 1996. 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 1, 1996
Common Stock,
par value $.01 per share 6,959,554 shares
Class B Capital Stock,
par value $.01 per share 62,500 shares
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's definitive Proxy Statement for
its 1996 Annual Meeting of Stockholders is incorporated by
reference into Part III hereof.
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Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K is hereby amended and restated in its entirety
as follows:
(a)(1) The following financial statements are included in
Part II, Item 8. Financial Statements and
Supplementary Data:
FINANCIAL STATEMENTS OF NATIONAL PATENT DEVELOPMENT
CORPORATION AND SUBSIDIARIES:
Page
Independent Auditors' Report 38
Financial Statements:
Consolidated Balance Sheets -
December 31, 1995 and 1994 39
Consolidated Statements of
Operations - Years ended
December 31, 1995, 1994 and 1993 41
Consolidated Statements of Changes in
Stockholders' Equity - Years ended
December 31, 1995, 1994 and 1993 43
Consolidated Statements of Cash
Flows - Years ended December 31,
1995, 1994 and 1993 45
Notes to Consolidated Financial
Statements 48
FINANCIAL STATEMENTS OF GSE SYSTEMS, INC.: *
GSE SYSTEMS, INC. AND SUBSIDIARIES: *
Report of Independent Accountants *
Consolidated Balance Sheets as of
December 31, 1994 and 1995 *
Consolidated Statements of Operations for the
period April 14, 1994 through December 31,
1994 and for the year ended December 31,
1995 *
Consolidated Statements of Stockholders' Equity
(Deficit) for the period April 14, 1994
through December 31, 1994 and for the year
ended December 31, 1995 *
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Consolidated Statements of Cash Flows for the
period April 14, 1994 through December 31,
1994 and for the year ended December 31, 1995 *
Notes to Consolidated Financial Statements *
SIMULATION SYSTEMS & SERVICES TECHNOLOGIES
COMPANY AND MSHI, INC.: *
Report of Independent Accountants *
Consolidated Statements of Operations for
the eight months ended August 31, 1993,
for the four months ended December 31, 1993,
and for the period January 1, 1994 through
April 13, 1994 *
Consolidated Statements of Stockholder's Equity
for the eight months ended August 31, 1993,
for the four months ended December 31, 1993
and for the period January 1, 1994 through
April 13, 1994 *
___________
* Incorporated herein by reference to Exhibit 99 to
the Annual Report on Form 10-K of National Patent
Development Corporation for the year ended December
31, 1995.
Consolidated Statements of Cash Flows for the
eight months ended August 31, 1993, for the
four months ended December 31, 1993 and for
the period January 1, 1994 though April 13,
1994 *
Notes to Consolidated Financial Statements *
GP INTERNATIONAL ENGINEERING & SIMULATION, INC.: *
Report of Independent Accountants *
Statements of Operations for the year ended
December 31, 1993 and for the period
January 1, 1994 through April 13, 1994 *
Statements of Stockholder's Equity (Deficit) for
the year ended December 31, 1993 and for the
period January 1, 1994 through April 13, 1994 *
Statements of Cash Flows for the year ended
December 31, 1993 and for the period
January 1, 1994 through April 13, 1994 *
Notes to Consolidated Financial Statements *
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EUROSIM AB: *
Report of Independent Accountants *
Statements of Operations for the year ended
December 31, 1993 and for the period
January 1, 1994 through April 13, 1994 *
Statements of Stockholder's Equity for the
year ended December 31, 1993 and for the
period January 1, 1994 through April 13, 1994 *
Statements of Cash Flows for the year ended
December 31, 1993 and for the period
January 1, 1994 through April 13, 1994 *
Notes to Financial Statements *
__________
* Incorporated herein by reference to Exhibit 99 to
the Annual Report on Form 10-K of National Patent
Development Corporation for the year ended December
31, 1995.
(a)(2) Financial Statement Schedules
Schedule I - Condensed Financial Information of
Registrant i
Schedule II - Valuation and Qualifying Accounts x
Independent Auditors' Report xi
(a)(3) Exhibits
Consent of KPMG Peat Marwick LLP, Independent
Auditors.
Consent of Coopers & Lybrand, L.L.P., Independent
Accountants.
(b) There were no Reports on Form 8-K filed by the
Registrant during the last quarter of the period
covered by this report.
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SIGNATURES
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: Jerome I. Feldman,
President and Chief
Executive Officer
Dated: April 26, 1996
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NATIONAL PATENT DEVELOPMENT CORPORATION
SCHEDULE I
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
CONDENSED BALANCE SHEET
(in thousands)
ASSETS
Current assets December 31,
1995 1994
(a)
Cash and cash equivalents $ 5,950 $ 9,165
Marketable securities 3,563
Accounts and other receivables 2,536 903
Inventories 72 2,747
Prepaid expenses and other current assets 435 937
Total current assets 12,556 13,752
Investments in subsidiaries 64,409 69,235
Note receivable from subsidiary 10,346 10,012
Other investments and advances 12,508 7,253
Property, plant and equipment, at cost 4,718 4,684
Less accumulated depreciation (4,640) (4,540)
78 144
Intangible assets, net of amortization 725 772
Other assets 2,690 1,877
$103,312 $103,045
(a) The December 31, 1994 Balance Sheet has been restated for
comparative purposes.
See accompanying notes to the condensed financial statements.
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NATIONAL PATENT DEVELOPMENT CORPORATION
SCHEDULE I (Continued)
CONDENSED BALANCE SHEET (Continued)
(in thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY
December 31,
Current liabilities 1995 1994
Current maturities of long-term debt $ 2,996 $ 9,275
Accounts payable and accrued expenses 2,976 3,526
Total current liabilities 5,972 12,801
Long-term debt, less current maturities 15,886 13,539
Amounts due subsidiaries, net 10,456 10,030
Commitments and contingencies
Common stock issued subject to
repurchase obligation 1,510
Stockholders' equity *
Preferred stock
Common stock 68 60
Class B capital stock 1 1
Capital in excess of par value 125,419 120,038
Deficit (52,139) (53,151)
Net unrealized loss on available-for-
- -sale securities (1,440) (1,783)
Minimum pension liability adjustment (911)
Total stockholders' equity 70,998 65,165
$103,312 $103,045
* Stockholders' equity has been restated to reflect the effect
of the one for four reverse stock split, which was effective
on October 6, 1995.
See accompanying notes to the condensed financial statements.
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NATIONAL PATENT DEVELOPMENT CORPORATION
SCHEDULE I (Continued)
CONDENSED STATEMENT OF OPERATIONS
(in thousands, except per share data)
Year ended December 31,
1995 1994 1993
Revenues
Sales $ 1,024 $ 812 $ 945
Investment and other income
(expense), net (744) (3,899) 1,388
280 (3,087) 2,333
Costs and expenses
Cost of goods sold 582 586 573
Selling, general and administrative 7,511 6,847 8,294
Research and development 388 431 326
Interest 2,511 4,086 6,414
10,992 11,950 15,607
Gain on disposition of stock of
a subsidiary and an affiliate 3,768 3,795
Gain on issuance of stock of
a subsidiary and an affiliate 2,055 1,353
Unrealized gain on transfer from
long-term investments to trading
securities 3,183
Equity in earnings of subsidiaries
(including $3,857 of gain on issuance
of stock by an affiliate in 1995) 5,903 3,640 234
Income (loss) before income taxes,
discontinued operation and
extraordinary item 4,197 (11,397) (7,892)
Income tax (expense) benefit (165) 1,043
Income (loss) before discontinued
operation and extraordinary item 4,032 (11,397) (6,849)
Discontinued operation
Loss from discontinued operation (2,941) (2,574) (947)
Income (loss) before
extraordinary item 1,091 (13,971) (7,796)
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NATIONAL PATENT DEVELOPMENT CORPORATION
SCHEDULE I (Continued)
CONDENSED STATEMENT OF OPERATIONS (Continued)
(in thousands, except per share data)
Year ended December 31,
1995 1994 1993
Extraordinary item
Extinguishment of debt, net of
income tax expense (79) 1,819
Net income (loss) $ 1,012 $(13,971) $(5,977)
Income (loss) per share *
Income (loss) before discontinued
operation and extraordinary item $ .60 $ (2.10) $ (1.60)
Discontinued operation (.44) (.47) (.22)
Extraordinary item (.01) .42
Net income (loss) per share $ .15 $ (2.57) $ (1.40)
* All periods have been restated to reflect the effect of the
one for four reverse stock split, which was effective on
October 6, 1995.
See accompanying notes to the condensed financialstatements.
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NATIONAL PATENT DEVELOPMENT CORPORATION
SCHEDULE I (Continued)
CONDENSED STATEMENT OF CASH FLOWS
(in thousands)
Year ended December 31,
1995 1994 1993
Cash flows from operations:
Net income (loss) $ 1,012 $(13,971) $(5,977)
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 208 392 798
Equity in earnings of subsidiaries (5,903) (3,640) (234)
Provision for discontinued operation 2,460 1,570
Share of loss of discontinued
operation 481 1,004 947
Income tax benefit allocated to
continuing operations (1,043)
Gain on disposition of stock of
a subsidiary and an affiliate (3,768) (3,795)
Gain on issuance of stock of
a subsidiary and an affiliate (2,055) (1,353)
Unrealized gain on transfer from
long-term investments to trading
securities (3,183)
Extinguishment of debt, net
of income tax 79 (1,819)
Changes in other operating items (2,010) 994 1,662
Net cash used for operations (12,679) (13,651) (10,814)
Cash flows from investing activities:
Proceeds from sale of stock of
a subsidiary 7,051
Additions to property, plant
& equipment (34) (29) (22)
Additions to intangible assets (6) (37) 477
Reduction of investments and
other assets, net 3,052 11,473 13,841
Net cash provided by investing
activities 10,063 11,407 14,296
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NATIONAL PATENT DEVELOPMENT CORPORATION
SCHEDULE I (Continued)
CONDENSED STATEMENT OF CASH FLOWS
(in thousands)
Year ended December 31,
1995 1994 1993
Cash flows from financing activities:
Net repayments of short-term
borrowings $ $ $ (4,379)
Decrease in restricted cash 270
Reduction of long-term debt (5,753) (295) (3,450)
Proceeds from issuance of
common stock 244 188 198
Exercise of common stock options
and warrants 99 413
Proceeds from issuance of
long-term debt 4,910 2,359
Net cash provided by (used
for) financing activities (599) 2,351 (6,948)
Net(decrease) increase in
cash and cash equivalents (3,215) 107 (3,466)
Cash and cash equivalents
at beginning of year 9,165 9,058 12,524
Cash and cash equivalents at
end of year $ 5,950 $ 9,165 $ 9,058
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NATIONAL PATENT DEVELOPMENT CORPORATION
SCHEDULE I (Continued)
CONDENSED STATEMENT OF CASH FLOWS (Continued)
(in thousands, except per share data)
Year ended December 31,
1995 1994 1993
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 813 $ 1,009 $ 2,375
Income taxes $ 98 $ 42 $ 44
Supplemental schedule of noncash transactions:
Additions to other assets and
prepaid expenses 625 100 179
Reduction of accrued interest
payable 1,045 607
Reduction of debt 6,250 9,167 21,900
Reduction of accounts payable 267
Increase in accrued pension
liability (911)
Issuances of common stock (4,535) (10,579) (8,981)
Issuance of long-term debt (2,340) (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)
Minimum pension liability
adjustment 911
See accompanying notes to the condensed financial statements.
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NATIONAL PATENT DEVELOPMENT CORPORATION
SCHEDULE I (Continued)
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. 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,
1995 1994
Raw materials $ 40 $ 50
Work in process 1
Finished goods 32 46
Land for resale 2,650
$ 72 $2,747
2. LONG-TERM DEBT
Long-term debt consists of the following (in thousands):
December 31,
1995 1994
8% Swiss Bonds due 2000 $ 2,365 $
5% Convertible Bonds 2,249 2,129
8% Swiss Bonds 247 2,999
Old Swiss convertible bonds 1,751 10,158
12% Subordinated debentures 6,749 6,783
Term loan with bank 5,000
Notes payable in connection
with settlements of litigation 521 745
18,882 22,814
Less current maturities 2,996 9,275
$15,886 $13,539
Aggregate annual maturities of long-term debt outstanding at
December 31, 1995 for each of the next five years are as follows
(in thousands):
1996 2,996
1997 8,021
1998 1,000
1999 3,249
2000 3,365
See Note 11 of the Notes to Consolidated Financial Statements for
additional information with respect to the Company's long-term debt.
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NATIONAL PATENT DEVELOPMENT CORPORATION
SCHEDULE I (Continued)
NOTES TO CONDENSED FINANCIAL STATEMENTS (Continued)
3. 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
1996 $ 636 $ 92 $ 728
1997 636 76 712
1998 656 49 705
1999 656 36 692
2000 656 20 676
After 2000 1,312 1,312
Total $4,552 $ 273 $4,825
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.
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NATIONAL PATENT DEVELOPMENT CORPORATION AND SUBSIDIARIES
SCHEDULE II
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,
1995:
Allowance for doubtful
accounts $2,092 $2,077 $1,103 $3,066
Year ended December 31,
1994:
Allowance for doubtful
accounts $1,689 $1,733 $1,330 $2,092
Year ended December 31,
1993:
Allowance for doubtful
accounts 1,581 1,077 969 1,689
(a) Write-off of uncollectible accounts, net of recoveries.
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INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
National Patent Development Corporation
Under date of March 28, 1996, we reported on the consolidated
balance sheet of National Patent Development Corporation and
subsidiaries as of December 31, 1995 and 1994, 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, 1995, as contained in the annual report
on Form 10-K for the year ended 1995. 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 LLP
New York, New York
March 28, 1996
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