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, 1996
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/
As of March 3, 1997, the aggregate market value of the outstanding shares of the
Registrant's Common Stock, par value $.01 per share, held by non-affiliates
(assuming for this calculation only that all officers and directors are
affiliates) was approximately $74,721,587 based on the closing price of the
Common Stock on the American Stock Exchange on March 3, 1997. 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 3, 1997
Common Stock, par value $.01 per share 10,613,342 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 1997 Annual
Meeting of Stockholders are incorporated by reference into Part III hereof.
<PAGE>
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K ARE 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 31
Financial Statements:
Consolidated Balance Sheets -
December 31, 1996 and 1995 32
Consolidated Statements of Operations -
Years ended December 31, 1996, 1995 and 1994 34
Consolidated Statements of Changes in Stockholders' Equity -
Years ended December 31, 1996, 1995 and 1994 36
Consolidated Statements of Cash Flows -
Years ended December 31, 1996, 1995 and 1994 38
Notes to Consolidated Financial Statements 41
(a)(2) Financial Statement Schedules
Schedule I - Condensed Financial Information
of Registrant i
Schedule II - Valuation and Qualifying Accounts xi
Independent Auditors' Report xii
(a)(3) Exhibits
Consent of KPMG Peat Marwick LLP, Independent
Auditors *
(b) There were no Reports on Form 8-K filed by the Registrant during the last
quarter of the period covered by this report.
* Previously filed with Annual Report on Form 10-K for the fiscal year ended
December 31, 1996.
<PAGE>
NATIONAL PATENT DEVELOPMENT CORPORATION
SCHEDULE I
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
CONDENSED BALANCE SHEET
(in thousands)
ASSETS
Current assets December 31,
1996 1995
Cash and cash equivalents 18,478 $ 5,950
Marketable securities 3,250 3,563
Accounts and other receivables 1,474 2,536
Inventories 77 72
Prepaid expenses and other current assets 683 435
-------- ----------
Total current assets 23,962 12,556
-------- --------
Investments in subsidiaries 63,949 64,409
-------- --------
Note receivable from subsidiary 10,767 10,346
-------- --------
Other investments and advances 15,240 12,508
-------- --------
Property, plant and equipment, at cost 4,752 4,718
Less accumulated depreciation (4,681) (4,640)
-------- ---------
71 78
--------- -----------
Intangible assets, net of amortization 865 725
-------- ----------
Deferred tax asset 843
Other assets 2,629 2,690
-------- ---------
$118,326 $103,312
======== ========
i
<PAGE>
NATIONAL PATENT DEVELOPMENT CORPORATION
SCHEDULE I (Continued)
CONDENSED BALANCE SHEET (Continued)
(in thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY
December 31,
Current liabilities 1996 1995
------------------------
Current maturities of long-term debt $ 8,005 $ 2,996
Accounts payable and accrued expenses 2,443 2,976
------- -------
Total current liabilities 10,448 5,972
------- -------
Long-term debt, less current maturities 6,944 15,886
-------- -------
Amounts due subsidiaries, net 6,905 10,456
-------- -------
Commitments and contingencies
Stockholders' equity
Preferred stock
Common stock 75 68
Class B capital stock 1 1
Capital in excess of par value 131,388 125,419
Deficit (40,759) (52,139)
Net unrealized gain (loss) on
available-for-sale securities 3,324 (1,440)
Minimum pension liability adjustment (911)
--------- ---------
Total stockholders' equity 94,029 70,998
--------- ---------
$118,326 $103,312
======== ========
See accompanying notes to the condensed financial statements.
ii
<PAGE>
NATIONAL PATENT DEVELOPMENT CORPORATION
SCHEDULE I (Continued)
CONDENSED STATEMENT OF OPERATIONS
(in thousands, except per share data)
Year ended December 31,
1996 1995 1994
Revenues
Sales $ 892 $ 1,024 $ 812
Investment and other income (expense), net 1,069 (744) (3,899)
-------- --------- --------
1,961 280 (3,087)
-------- --------- --------
Costs and expenses
Cost of goods sold 562 582 586
Selling, general and administrative 7,727 7,899 7,278
Interest 2,058 2,511 4,086
------- -------- --------
10,347 10,992 11,950
------- ------- -------
Gain on disposition of stock of a
subsidiary and an affiliate 12,200 3,768
Gain on issuance of stock of a
subsidiary and an affiliate 2,168 5,912
Gains on trading securities 3,314 3,183
Loss on investments (4,000)
Equity in earnings of subsidiaries 4,059 2,046 3,640
------- -------- -------
Income (loss) before income taxes,
discontinued operation and
extraordinary item 9,355 4,197 (11,397)
------- ------- --------
Income tax (expense) benefit 2,025 (165)
------- --------
Income (loss) before discontinued
operation and extraordinary item 11,380 4,032 (11,397)
-------- -------- --------
Discontinued operation
Loss from discontinued operation (2,941) (2,574)
-------- ------- --------
Income (loss) before extraordinary item 11,380 1,091 (13,971)
-------- -------- --------
iii
<PAGE>
NATIONAL PATENT DEVELOPMENT CORPORATION
SCHEDULE I (Continued)
CONDENSED STATEMENT OF OPERATIONS (Continued)
(in thousands, except per share data)
Year ended December 31,
1996 1995 1994
Extraordinary item
Extinguishment of debt, net of income
tax expense (79)
-------- --------
Net income (loss) $ 11,380 $ 1,012 $ (13,971)
-------- -------- ---------
Income (loss) per share *
Income (loss) before discontinued
operation and extraordinary item $ 1.54 $ .60 $ (2.10)
Discontinued operation (.44) (.47)
Extraordinary item (.01)
--------- --------
Net income (loss) per share $ 1.54 $ .15 $ (2.57)
========== ======== ========
* All periods 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.
iv
<PAGE>
NATIONAL PATENT DEVELOPMENT CORPORATION
SCHEDULE I (Continued)
CONDENSED STATEMENT OF CASH FLOWS
(in thousands)
Year ended December 31,
1996 1995 1994
Cash flows from operations:
Net income (loss) $ 11,380 1,012 $ (13,971)
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 266 208 392
Equity in earnings of subsidiaries (4,059) (2,046) (3,640)
Provision for discontinued operation 2,460 1,570
Share of loss of discontinued operation 481 1,004
Deferred income taxes (1,860)
Gain on disposition of stock of
a subsidiary and an affiliate (12,200) (3,768)
Proceeds from sale of trading securities 4,425
Gain on issuance of stock of
a subsidiary and an affiliate (2,168) (5,912)
Gains on trading securities (3,314) (3,183)
Loss on investments 4,000
Extinguishment of debt, net of income tax 79
Changes in other operating items 281 (2,010) 994
--------- -------- --------
Net cash used for operations (3,249) (12,679) (13,651)
-------- ------- -------
Cash flows from investing activities:
Proceeds from sale of stock of a subsidiary 13,275 7,051
Additions to property, plant and equipment (34) (34) (29)
Additions to intangible assets (365) (6) (37)
Reduction of investments and
other assets, net 3,285 3,052 11,473
--------- ------- ------
Net cash provided by investing activities 16,161 10,063 11,407
-------- ------- ------
v
<PAGE>
NATIONAL PATENT DEVELOPMENT CORPORATION
SCHEDULE I (Continued)
CONDENSED STATEMENT OF CASH FLOWS
(in thousands)
Year ended December 31,
1996 1995 1994
Cash flows from financing activities:
Reduction of long-term debt $ (2,930) $(5,753) $ (295)
Proceeds from issuance of common stock 2,546 244 287
Proceeds from issuance of long-term debt 4,910 2,359
-------- ------- -------
Net cash (used for) provided by
financing activities (384) (599) 2,351
-------- -------- -------
Net increase (decrease) in
cash and cash equivalents 12,528 (3,215) 107
Cash and cash equivalents at beginning of year 5,950 9,165 9,058
-------- ------- -------
Cash and cash equivalents at end of year $ 18,478 $ 5,950 $ 9,165
-------- ------- -------
vi
<PAGE>
NATIONAL PATENT DEVELOPMENT CORPORATION
SCHEDULE I (Continued)
CONDENSED STATEMENT OF CASH FLOWS (Continued)
(in thousands, except per share data)
<TABLE>
<CAPTION>
Year ended December 31,
1996 1995 1994
Supplemental disclosures of cash flow information:
Cash paid during the year for:
<S> <C> <C> <C>
Interest $ 809 $ 813 $ 1,009
======= ======= =======
Income taxes $ 209 $ 98 $ 42
======= ======== ========
Supplemental schedule of non-cash transactions:
Additions to other assets and
prepaid expenses 5,379 625 100
Reduction of accrued interest payable 372 1,045
Reduction of debt 1,003 6,250 9,167
Reduction of accounts payable 267
Reduction (increase) in accrued pension liability 911 (911)
Issuances of common stock (3,430) (4,535) (10,579)
Net unrealized gain on available-for-sale securities (3,324)
Issuance of long-term debt (2,340)
Minimum pension liability adjustment (911) 911
</TABLE>
See accompanying notes to the condensed financial statements.
vii
<PAGE>
NATIONAL PATENT DEVELOPMENT CORPORATION
SCHEDULE I (Continued)
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. Inventories
Inventories are valued at the lower of 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,
1996 1995
Raw materials $ 44 $ 40
Finished goods 33 32
------- -------
$ 77 $ 72
======= ======
2. Long-term debt
Long-term debt consists of the following (in thousands):
December 31,
1996 1995
8% Swiss Bonds due 2000 $ 2,189 $ 2,365
5% Convertible Bonds 1,755 2,249
8% Swiss Bonds 247
Old Swiss convertible bonds 1,751
12% Subordinated debentures 6,732 6,749
Term loan with bank 4,000 5,000
Notes payable in connection with
settlements of litigation 273 521
------- --------
14,949 18,882
Less current maturities 8,005 2,996
------- ------
$ 6,944 $15,886
======= =======
viii
<PAGE>
NATIONAL PATENT DEVELOPMENT CORPORATION
SCHEDULE I (Continued)
NOTES TO CONDENSED FINANCIAL STATEMENTS (Continued)
2. Long-term debt (Continued)
Aggregate annual maturities of long-term debt outstanding at December 31, 1996
for each of the next five years are as follows (in thousands):
1997 8,005
1998 1,000
1999 2,755
2000 3,189
2001 -
See Note 11 of the Notes to Consolidated Financial Statements for additional
information with respect to the Company's long-term debt.
3. Dividends received from affiliates
For the years ended December 31, 1996, 1995 and 1994, the Company received cash
dividends from General Physics Corporation, a consolidated subsidiary, totaling
$1,301,000, $1,249,000 and $637,000, respectively.
ix
<PAGE>
NATIONAL PATENT DEVELOPMENT CORPORATION
SCHEDULE I (Continued)
NOTES TO CONDENSED FINANCIAL STATEMENTS (Continued)
4. Commitments and contingencies
The Company has several noncancellable leases which cover real property and
machinery and equipment. Such leases expire at various dates with options in
some cases to extend their terms.
Minimum rentals under long-term operating leases are as follows (in thousands):
Real Machinery &
property equipment Total
1997 $ 636 $ 102 $ 738
1998 636 67 703
1999 656 47 703
2000 656 25 681
2001 656 656
After 2001 1,312 1,312
------
Total $4,552 $ 241 $4,793
------
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.
x
<PAGE>
NATIONAL PATENT DEVELOPMENT CORPORATION AND SUBSIDIARIES
SCHEDULE II
<TABLE>
<CAPTION>
Valuation and qualifying accounts (in thousands)
Additions
Balance at Charged to Balance at
Beginning Costs & End of
of Period Expenses Deductions(a) Period
Year ended December 31, 1996:
<S> <C> <C> <C> <C>
Allowance for doubtful accounts (b) $3,066 $1,036 $(1,947) $2,155
Year ended December 31, 1995:
Allowance for doubtful accounts (b) $2,092 $2,077 $(1,103) $3,066
Year ended December 31, 1994:
Allowance for doubtful accounts (b) $1,689 $1,733 $(1,330) $2,092
(a) Write-off of uncollectible accounts, net of recoveries.
(b) Deducted from related asset on Balance Sheet.
</TABLE>
xi
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
National Patent Development Corporation
Under date of March 26, 1997, we reported on the consolidated balance sheets of
National Patent Development Corporation and subsidiaries as of December 31, 1996
and 1995, 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, 1996, as contained in the Annual Report on Form 10-K
for the year ended 1996. 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 26, 1997
xii
<PAGE>
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 29, 1997
xiii
<PAGE>
