Exhibit 99
National Patent Development Corporation Reports
Fiscal 2007 Second Quarter and Six Month Earnings Results
New York, NY, August 14, 2007 – National Patent Development Corporation (OTC Bulletin Board: NPDV.OB) today reported net income of $15,615,000 for the three months ended June 30, 2007, or $0.87 per diluted share, compared to a loss of $(118,000) or $(0.01) per diluted share, in the corresponding three month period a year ago.
For the six months ended June 30, 2007, the Company reported net income of $15,188,000, or $0.85 per fully diluted share, compared to a loss of $(555,000), or $(0.03) per fully diluted share, in the corresponding six month period a year ago.
The increase in net income for the second quarter and the first six months of the fiscal year is primarily a result of a gain of $17,031,000 recognized as a result of the merger of Valera Pharmaceuticals, Inc., in which the Company had an approximately 14% interest, and Indevus Pharmaceuticals, Inc. The gain includes the May 2007 receipt of the first of three contingent payments based upon achievement of post-merger milestones. In addition, the net operating income of the Company’s segments increased by $614,000 and $652,000 for the quarter and six months ended June 30, 2007, respectively, attributed primarily to improved operating results for Five Star Products, Inc. (Five Star), offset by reduced operating results for the Company’s wholly-owned subsidiary, MXL Industries, Inc.
National Patent’s majority owned subsidiary, Five Star, issued a press release on August 14, 2007 announcing its results for the second quarter and six months ended June 30, 2007, which is attached hereto.
About National Patent Development Corporation
National Patent Development Corporation (OTC Bulletin Board: NPDV.OB), is the majority owner of Five Star. National Patent also owns and operates an optical plastics business through its wholly owned subsidiary, MXL Industries, Inc. In addition, National Patent owns approximately 3% of the common stock of Indevus Pharmaceuticals, Inc. (Nasdaq: IDEV) and certain other non-core assets including real estate.
Safe Harbor Statement
This press release contains certain "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934 and the U.S. Private Securities Litigation Reform Act of 1995, including statements relating to, among other things, future business plans, strategies and financial position, working capital and capital expenditure needs, growth opportunities, and any statements of belief and any statements of assumptions underlying any of the foregoing. Neither the Company nor Five Star Products, Inc. have any material third party commitments with respect to growth plans. There is no assurance that specific plans can be executed or, if executed, will be successful from an operational or financial standpoint. These plans could require capital beyond the funds presently available to the Company.
These forward-looking statements reflect the current view of the management of National Patent Development Corporation with respect to future events and financial performance and are subject to certain risks, uncertainties, assumptions and changes in condition that could cause actual results to differ materially from those in the forward-looking statements, all of which are difficult to predict and many of which are beyond the control of National Patent Development Corporation, including, but not limited to the risks, uncertainties, assumptions and changes in condition detailed National Patents' periodic reports and registration statements filed with the Securities and Exchange Commission.
National Patent Development Corporation does not intend to, and disclaims any duty or obligation to, update or revise any forward-looking statements or industry information set forth in this press release to reflect new information, future events or otherwise.
Contact:
National Patent Development Corporation
Dean Heine 646-742-1630
Tables follow:
NATIONAL PATENT DEVELOPMENT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS DATA
(Unaudited)
(in thousands, except per share data)
| | | Three Months Ended | | | Six Months Ended | |
| | | June 30, | | | June 30, | |
| | | 2007 | | | 2006 | | | 2007 | | | 2006 | |
| | | | | | | | | | | | | |
| Sales | | $ | 38,134 | | | $ | 31,161 | | | $ | 70,065 | | | $ | 62,366 | |
| Cost of sales | | | 31,344 | | | | 25,627 | | | | 58,185 | | | | 51,619 | |
| Gross margin | | | 6,790 | | | | 5,534 | | | | 11,880 | | | | 10,747 | |
| | | | | | | | | | | | | | | | | |
Selling, general and administrative expenses | | | (6,269 | ) | | | (5,073 | ) | | | (10,971 | ) | | | (9,795 | ) |
| | | | | | | | | | | | | | | | | |
| Operating profit | | | 521 | | | | 461 | | | | 909 | | | | 952 | |
| | | | | | | | | | | | | | | | | |
| Interest expense | | | (506 | ) | | | (464 | ) | | | (832 | ) | | | (843 | ) |
| Gain on exchange of Valera for Indevus shares | | | 17,031 | | | | | | | | 17,031 | | | | | |
| Investment and other income (loss) | | | (835 | ) | | | 55 | | | | (769 | ) | | | (182 | ) |
| | | | | | | | | | | | | | | | | |
| Income (loss) before income tax expense and minority interest | | | 16,211 | | | | 52 | | | | 16,339 | | | | (73 | ) |
| | | | | | | | | | | | | | | | | |
| Income tax expense | | | (355 | ) | | | (125 | ) | | | (715 | ) | | | (346 | ) |
| | | | | | | | | | | | | | | | | |
| Income (loss) before minority interest | | | 15,856 | | | | (73 | ) | | | 15,624 | | | | (419 | ) |
| | | | | | | | | | | | | | | | | |
| Minority interest | | | (241 | ) | | | (45 | ) | | | (436 | ) | | | (136 | ) |
| | | | | | | | | | | | | | | | | |
| Net income (loss) | | $ | 15,615 | | | $ | (118 | ) | | $ | 15,188 | | | $ | (555 | ) |
| | | | | | | | | | | | | | | | | |
| Net income (loss) per share | | | | | | | | | | | | | | | | |
| Basic | | $ | 0.87 | | | $ | (0.01 | ) | | $ | 0.85 | | | $ | (0.03 | ) |
| | | | | | | | | | | | | | | | | |
| Diluted | | $ | 0.87 | | | $ | (0.01 | ) | | $ | 0.85 | | | $ | (0.03 | ) |
NATIONAL PATENT DEVELOPMENT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS DATA
(in thousands)
| | | June 30, | | | December 31, | |
| | | 2007 | | | 2006 | |
Assets | | (unaudited) | | | | |
Current assets | | | | | | |
| Cash and cash equivalents | | $ | 4,062 | | | $ | 4,485 | |
| Accounts receivable, less allowance | | | | | | | | |
| for doubtful accounts of $497 and $566 | | | 22,974 | | | | 11,939 | |
| Receivable from GP Strategies Corporation | | | | | | | 251 | |
| Inventories | | | 27,655 | | | | 22,535 | |
| Prepaid expenses and other current assets | | | 500 | | | | 724 | |
| Investment in marketable securities of Indevus, available for sale | | | 15,799 | | | | | |
| Deferred tax asset | | | 597 | | | | 791 | |
Total current assets | | | 71,587 | | | | 40,725 | |
| | | | | | | | | |
| Property, plant and equipment, net | | | 3,406 | | | | 2,925 | |
| Investment in Valera including available for sale securities of $4,823 | | | | | | | 5,995 | |
| Other marketable securities available for sale | | | 244 | | | | 343 | |
| Deferred tax asset | | | 193 | | | | | |
| Other assets | | | 3,847 | | | | 3,286 | |
Total assets | | $ | 79,277 | | | $ | 53,234 | |
| | | | | | | | | |
Liabilities and stockholder’s equity | | | | | | | | |
Current liabilities | | | | | | | | |
| Current maturities of long-term debt | | $ | 257 | | | $ | 151 | |
| Short term borrowings | | | 25,012 | | | | 18,414 | |
| Accounts payable and accrued expenses | | | 17,883 | | | | 9,978 | |
| Payable to GP Strategies Corporation | | | 74 | | | | - | |
Total current liabilities | | | 43,226 | | | | 28,543 | |
| | | | | | | | | |
| Long-term debt less current maturities | | | 1,570 | | | | 1,332 | |
| Deferred tax liability | | | 279 | | | | 279 | |
| Other liabilities | | | 1 | | | | 247 | |
| | | | | | | | | |
| Minority interest | | | 2,770 | | | | 1,696 | |
| Common stock subject to exchange rights | | | 477 | | | | | |
| | | | | | | | | |
Stockholder’s equity | | | | | | | | |
| Common Stock | | | 180 | | | | 178 | |
| Additional paid-in capital | | | 26,097 | | | | 25,990 | |
| Retained earnings (deficit) | | | 6,011 | | | | (9,177 | ) |
| Accumulated other comprehensive (loss) income | | | (926 | ) | | | 4,334 | |
| Treasury stock | | | (408 | ) | | | (188 | ) |
Total stockholder’s equity | | | 30,954 | | | | 21,137 | |
Total liabilities and stockholder’s equity | | $ | 79,277 | | | $ | 53,234 | |
Five Star Products, Inc. Reports Record Second Quarter and Six Month Results
Six month revenue climbs 14%; net income increases 172%
New York, NY, August 14, 2007 –Five Star Products, Inc. (OTC Bulletin Board: FSPX.OB), today announced that, through its wholly-owned subsidiary, Five Star Group, Inc., a leading distributor of paint sundry and hardware products in the Northeast and Middle-Atlantic states, its revenue in the second quarter ended June 30, 2007, was $35.9 million compared to compared to $28.9 million in the same period last year. Net income was $567,000, or $0.03 per diluted share, compared to net income of $126,000, or $0.01 per diluted share, in the corresponding period a year ago. The Company reported revenue of $65.8 million for the first six months of 2007, a 13.6% increase over the $57.9 million reported for the same period last year. Net income of $1,027,000 for the first six months ($.06 per fully diluted share) increased 172% as compared to net income of $378,000 ($.03 per fully diluted share) for the six month period ended June 30, 2006. The Company reported that results of the first half of fiscal year 2007 include three months of contribution from the business of Right-Way Dealer Warehouse, Inc., which was acquired on April 5, 2007.
Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization), as stated before stock compensation expense of $138,000, was $1,642,000 for the second quarter of 2007, an increase of 109% compared to the same period last year. For the six months of 2007, Adjusted EBITDA, before stock compensation expense of $180,000, was $2,909,000, an increase of 72% compared to the first six months of 2006.
Leslie Flegel, Five Star Chairman, said, "The results in the second quarter, where we doubled Adjusted EBITDA over the corresponding quarter last year on a 24% increase in revenue, is a clear indication of our executing the business plan we envisioned when John Belknap and I joined Five Star earlier this year. Of the 24% increase in revenues, 9% derives directly from organic growth; the remainder is attributable to the purchase of Right-Way in April 2007. The substantial increase in profits over last year reflects the organic growth, but also illustrates the importance of a strategic acquisition that was quickly and efficiently integrated into the business by our operating management team led by Bruce Sherman.”
Flegel continued, "Our plan going forward is to continue to seek out acquisitions which will provide greater distribution coverage, improved sourcing opportunities, and expanded products and services.”
John Belknap, Five Star President and CEO, added, "While we are pleased with the Company’s performance in the first six months of this fiscal year, which produced approximately $475,000 more Adjusted EBITDA than all of last year, we are encouraged that there is much more we can accomplish within the operation. Our plans include state –of-the-art facilities, improving our information technology capabilities which would provide enhanced on-line interaction with our customers and suppliers, and developing a national sales strategy with nationally based retail customers that we can service with an expanded distribution network. Our Board and management team are confident and excited about our future."
About Five Star Products, Inc.
Five Star Products, Inc. (OTC Bulletin Board: FSPX.OB) is engaged in the wholesale distribution of paint sundry and hardware products in the Northeast and Middle-Atlantic states with particular strength in the greater New York metropolitan area. The Company distributes products to approximately 3,000 independent retail dealers, which include paint stores, independent hardware stores, lumber yards, and do-it yourself centers. The Company distributes a range of private label products sold under the "Five Star" name. Five Star operates two distribution centers, the primary one located in East Hanover, NJ and another in Newington, CT. Five Star is a majority owned subsidiary of National Patent Development Corporation (OTC Bulletin Board: NPDV.OB).
About National Patent Development Corporation
National Patent Development Corporation (OTC Bulletin Board: NPDV.OB), is the majority owner of Five Star. National Patent also owns and operates an optical plastics business through its wholly owned subsidiary, MXL Industries, Inc. In addition, National Patent owns approximately 3% of the common stock of Indevus Pharmaceuticals, Inc. (NASDAQ: IDEV) and certain other non-core assets including real estate.
Safe Harbor Statement
This press release contains certain "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934 and the U.S. Private Securities Litigation Reform Act of 1995, including statements relating to, among other things, future business plans, strategies and financial position, working capital and capital expenditure needs, growth opportunities, and any statements of belief and any statements of assumptions underlying any of the foregoing. The Company has no material third party commitments with respect to growth plans. There is no assurance that specific plans can be executed or, if executed, will be successful from an operational or financial standpoint. These plans could require capital beyond the funds presently available to the Company.
These forward-looking statements reflect current views of the management of Five Star Products, Inc. with respect to future events and financial performance and are subject to certain risks, uncertainties, assumptions and changes in condition that could cause actual results to differ materially from those in the forward-looking statements, all of which are difficult to predict and many of which are beyond the control of Five Star Products including, but not limited to the risks, uncertainties, assumptions and changes in condition detailed in Five Star Products' periodic reports and registration statements filed with the Securities and Exchange Commission.
Five Star Products, Inc. does not intend to, and disclaims any duty or obligation to, update or revise any forward-looking statements or industry information set forth in this press release to reflect new information, future events or otherwise.
Contact:
Five Star Products, Inc.
Dean Heine 646-742-1630
Tables follow:
FIVE STAR PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per share data)
| | | Three Months Ended | | | Six Months Ended | |
| | | June 30, | | | June 30, | |
| | | 2007 | | | 2006 | | | 2007 | | | 2006 | |
| | | | | | | | | | | | | |
| Sales | | $ | 35,926 | | | $ | 28,938 | | | $ | 65,788 | | | $ | 57,890 | |
Cost of goods sold (net of vendor allowances) | | | 29,671 | | | | 24,023 | | | | 54,804 | | | | 48,370 | |
| Gross margin | | | 6,255 | | | | 4,915 | | | | 10,984 | | | | 9,520 | |
| | | | | | | | | | | | | | | | | |
Selling, general and administrative expenses (net of vendor allowances) | | | (4,837 | ) | | | (4,215 | ) | | | (8,427 | ) | | | (7,983 | ) |
| | | | | | | | | | | | | | | | | |
| Operating income | | | 1,418 | | | | 700 | | | | 2,557 | | | | 1,537 | |
| | | | | | | | | | | | | | | | | |
| Other income (loss) | | | 10 | | | | (1 | ) | | | 28 | | | | 6 | |
| | | | | | | | | | | | | | | | | |
| Interest expense | | | (515 | ) | | | (476 | ) | | | (858 | ) | | | (869 | ) |
| | | | | | | | | | | | | | | | | |
| Income before income taxes | | | 913 | | | | 223 | | | | 1,727 | | | | 674 | |
| | | | | | | | | | | | | | | | | |
| Income tax expense | | | (346 | ) | | | (97 | ) | | | (700 | ) | | | (296 | ) |
| | | | | | | | | | | | | | | | | |
| Net income | | $ | 567 | | | $ | 126 | | | $ | 1,027 | | | $ | 378 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Net income per share | | | | | | | | | | | | | | | | |
| Basic | | $ | .04 | | | $ | .01 | | | $ | .07 | | | $ | .03 | |
| | | | | | | | | | | | | | | | | |
| Fully diluted | | $ | .03 | | | $ | .01 | | | $ | .06 | | | $ | .03 | |
FIVE STAR PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands)
| | | June 30, | | | December 31, | |
| | | 2007 | | | 2006 | |
| | | (unaudited) | | | | |
ASSETS | | | | | | |
Current assets | | | | | | |
| Cash | | $ | 3 | | | $ | 3 | |
| Accounts receivable, net | | | 20,048 | | | | 10,520 | |
| Inventory | | | 26,806 | | | | 21,744 | |
| Deferred income taxes | | | 624 | | | | 652 | |
| Prepaid expenses and other current assets | | | 446 | | | | 520 | |
| Total current assets | | | 47,927 | | | | 33,439 | |
| | | | | | | | | |
| Machinery and equipment, net | | | 661 | | | | 530 | |
| Deferred income taxes | | | 193 | | | | 166 | |
| Other assets | | | 924 | | | | 362 | |
| | | $ | 49,705 | | | $ | 34,497 | |
| | | | | | | | | |
LIABILITIES AND STOCKHOLDERS' EQUITY | | | | | | | | |
Current liabilities | | | | | | | | |
| Short-term borrowings | | $ | 24,262 | | | $ | 17,664 | |
Accounts payable and accrued expenses (including due to affiliates of $94 and $79) | | | 16,123 | | | | 9,313 | |
| Note payable to National Patent Development Corporation | | | 2,800 | | | | 2,800 | |
| Total current liabilities | | | 43,185 | | | | 29,777 | |
| | | | | | | | | |
| Interest rate collar | | | 1 | | | | 6 | |
| Total Liabilities | | | 43,186 | | | | 29,783 | |
| | | | | | | | | |
Stockholders' equity | | | | | | | | |
| Common stock | | | 193 | | | | 173 | |
| Additional paid-in capital | | | 9,359 | | | | 8,552 | |
| Accumulated deficit | | | (2,468 | ) | | | (3,495 | ) |
| Accumulated other comprehensive income | | | 135 | | | | 184 | |
| Treasury stock, at cost | | | (700 | ) | | | (700 | ) |
| Total stockholders' equity | | | 6,519 | | | | 4,714 | |
| | | | | | | | | |
| | | $ | 49,705 | | | $ | 34,497 | |
FIVE STAR PRODUCTS, INC. AND SUBSIDIARIES
Non-GAAP Reconciliation - EBITDA and Adjusted EBITDA
(in thousands)
(unaudited)
| | | Three months ended June 30, | | | Six months ended June 30, | |
| | | 2007 | | | 2006 | | | 2007 | | | 2006 | |
Net income | | $ | 567 | | | $ | 126 | | | $ | 1,027 | | | $ | 378 | |
| Interest expense, net | | | 505 | | | | 477 | | | | 830 | | | | 863 | |
| Income tax expense | | | 346 | | | | 97 | | | | 700 | | | | 296 | |
| Depreciation and amortization | | | 86 | | | | 86 | | | | 172 | | | | 150 | |
EBITDA | | | 1,504 | | | | 786 | | | | 2,729 | | | | 1,687 | |
| Stock compensation expense | | | 138 | | | | | | | | 180 | | | | | |
Adjusted EBITDA | | $ | 1,642 | | | $ | 786 | | | $ | 2,909 | | | $ | 1,687 | |
EBITDA is a widely used non-GAAP financial measure of operating performance. It is presented as supplemental information that the Company believes is useful to investors to evaluate its results because it excludes certain items that are not directly related to the Company’s core operating performance. EBITDA is calculated by adding back net interest expense, income tax expense, and depreciation and amortization to net income. EBITDA should not be considered as a substitute either for net income, as an indicator of the Company’s operating performance, or cash flow, as a measure of the Company’s liquidity. In addition, because EBITDA may not be calculated identically by all companies, the presentation here may not be comparable to other similarly titled measures of other companies. Adjusted EBITDA is calculated as EBITDA prior to non-cash stock compensation expense.
