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/ -1- 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. -2- 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 * -3- 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 * -4- 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. -5- 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 -6- 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. -7- 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. -8- 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) -9- 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. -10- 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 -11- 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 -12 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. -13- 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. -14- 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. -15- 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. -16- 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 -17-