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