News Release
FOR IMMEDIATE RELEASE
Contacts:
Jerome I. Feldman Scott N. Greenberg
Chairman & CEO President & CFO
(914) 249-9750 (914) 249-9729
GP STRATEGIES RAISES $7.5 MILLION FROM NOTE AND WARRANT SALE
TO GABELLI FUNDS AND ENTERS INTO NEW BANKING FACILITY
THE COMPANY WILL PROCEED WITH ITS PREVIOUSLY ANNOUNCED SPIN-OFF
GP Strategies Reports Results for the Quarter Ended June 30, 2003
U.S. Government Accounts for Approximately 40% of General Physics Revenue
NEW YORK, August 15, 2003--GP Strategies Corporation (NYSE: GPX), a leader in
workforce development and technical training, today announced that it has raised
$7.5 million from a note and warrant sale to certain Gabelli Funds and has
entered into a new banking facility, and also reported its results for the
quarter ended June 30, 2003.
On August 14, 2003, the Company sold $7,500,000 principal amount of its 6%
Conditional Subordinated Notes due 2008 and five-year warrants to purchase
937,500 shares of the Company's common stock at a purchase price of $8.00 per
share to mutual funds managed by Gabelli Funds, LLC for aggregate consideration
of $7,500,000.
Also on August 14, 2003, General Physics, a wholly-owned subsidiary of the
Company, entered into a new $25 million revolving credit facility with Wachovia
Bank, National Association. The credit agreement is secured by certain of the
assets of General Physics, SkillRight subsidiary, and accounts receivable of
MXL. The credit agreement is also supported by an unsecured guaranty from the
Company. There is currently approximately $15.0 million outstanding under the
facility. In addition, the Company currently has cash and marketable securities
in excess of $2.0 million.
The proceeds of the Gabelli and Wachovia transactions were used to repay the
Company's existing credit facility and for working capital.
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Jerome I. Feldman, the Company's Chairman and Chief Executive Officer, stated "I
am pleased that the Gabelli Funds has made this investment in the Company and
that Wachovia has entered into a new credit agreement with the Company. Now that
our refinancing has been completed, we can turn our attention to finalizing the
previously announced spin-off of National Patent. The U.S. government now
represents approximately 40% of General Physics revenue and we continue to
expand our marketing efforts on our domestic preparedness initiatives."
The Company also reported its results for the quarter ended June 30, 2003.
Net sales were $36.0 million for the quarter ended June 30, 2003 compared to
$36.1 million for the quarter ended March 31, 2003 and $39.2 million for the
quarter ended June 30, 2002. The slight decrease in net sales from the first
quarter of 2003 reflects a small reduction in net sales by the Company's MXL
subsidiary, offset by a slight increase in net sales by General Physics. The
decline in net sales from the second quarter of 2002 was primarily attributable
to reduced revenue from the automotive sector.
For the quarter ended June 30, 2003, the pretax loss was $2.2 million, as
compared to pretax income of $0.2 million for the quarter ended June 30, 2002.
During the second quarter of 2003, the Company incurred an expense for an
executive incentive compensation bonus of $1.0 million, a non-cash expense on a
debt conversion agreement for $.6 million, and a restructuring charge of $.2
million.
Results for the quarter ended June 30, 2002 reflect a gain on the sale of
marketable securities of $.8 million and a non-cash credit on a deferred
compensation plan of $.3 million offset by a non-cash equity loss from HydroMed
Sciences of approximately $.6 million.
About GP Strategies Corporation
GP Strategies, whose principal operating subsidiary is General Physics
Corporation, is a NYSE listed company (GPX). General Physics is a workforce
development company that improves the effectiveness of organizations by
providing training, management consulting, e-Learning Solutions and engineering
services that are customized to meet the specific needs of clients. Programs
have been developed for service managers and executives, engineers, sales
associates, plant operators, the maintenance and purchasing workforces and
information technology professionals in the public and private sectors in North
and South America, Europe and Asia. Clients include Fortune 500 companies,
manufacturing, process and energy industries, and other commercial and
government customers. Additional information about GP Strategies may be found at
www.gpstrategies.com and about General Physics may be found at
www.gpworldwide.com.
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The company has scheduled an investor conference call at 10:00 a.m. EDT on
Friday, August 15th. The dial-in number for the live conference call will be
800-230-1951 (612-332-0226 outside the United States). A telephone replay of the
call will also be available beginning at 5:30 p.m. EDT today. To listen to the
replay, dial 800-475-6701 (320-365-3844 outside the United States) and enter
pass code number 696099.
The forward-looking statements contained herein reflect GP Strategies'
management's current views with respect to future events and financial
performance. These forward-looking statements are subject to certain risks and
uncertainties 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 GP Strategies, including, but not limited to
those risks and uncertainties detailed in GP Strategies' periodic reports and
registration statements filed with the Securities and Exchange Commission.
TABLES FOLLOW
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An unaudited comparative summary of GP Strategies' consolidated net sales and
net (loss) income for the quarters ended June 30, 2003, March 31, 2003, and June
30, 2002 is as follows (in thousands):
Three Months Ended
--------------------------------------------------
June 30, March 31, June 30,
2003 2003 2002
--------- ----------- ---------
General Physics $33,986 $33,871 $36,528
Other 2,052 2,216 2,714
-------- --------- --------
Net Sales $36,038 $36,087 $39,242
======= ======= =======
Three Months Ended
--------------------------------------------------
June 30, March 31, June 30,
2003 2003 2002
--------- ----------- ---------
Net Sales $36,038 $36,087 $ 39,242
Cost of sales 31,725 32,259 34,337
------ -------- --------
Gross margin 4,313 3,828 4,905
------- -------- ---------
Executive incentive compensation bonus (1,000) - -
Non-cash debt conversion expense, net (622) - -
Other selling, general & administrative expense (4,741) (4,423) (4,737)
------- --------- -------
Total selling, general & administrative expenses (6,363) (4,423) (4,737)
------- --------- ----------
Interest expense (592) (596) (675)
Investment and other income (loss), net (1) 502 160 (303)
Gain on marketable securities 138 74 846
Restructuring (charge) reversal (218) - 140
--------- ---------- ---------
(Loss) income before income taxes (2,220) (957) 176
Income tax (expense) benefit (646) 254 (113)
--------- -------- ----------
Net (loss) income $(2,866) $ (703) $ 63
======== -------- ===========
Net loss per share:
Basic and diluted (2) $ (.17) $ (.04) $ (.01)
========= ======== ===========
Dividends per share none none none
========== ========== ============
(1) Other Income includes approximately $0.5 million for the quarter ended June
30, 2003 relating to a warrant received by the Company in a Hydro Med Private
Placement Agreement.
(2) Includes an addition to the put obligation of $0.2 million for the quarter
ended June 30, 2002, deemed to be a dividend for the purposes of the basic
and diluted (loss) income per share calculation.
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An unaudited comparative summary of GP Strategies' consolidated net sales and
net loss (income) for the six months ended June 30, 2003 and June 30, 2002 is as
follows (in thousands):
Six months
ended June 30,
2003 2002
--------- ---------
General Physics $ 67,857 $ 73,998
Other 4,268 5,470
--------- --------
Net sales $ 72,125 $ 79,468
======== ========
Six months
ended June 30,
2003 2002
------- ---------
Net sales $72,125 $ 79,468
Cost of sales 63,984 69,115
-------- ------
Gross margin 8,141 10,353
--------- ------
Executive incentive compensation bonus (1,000) -
Non-cash debt conversion expense, net (622) -
Other selling, general & administrative expense (9,164) (9,277)
--------- -------
Total selling, general & administrative expenses (10,786) (9,277)
-------- -------
Interest expense (1,188) (1,429)
Investment and other income (loss), net (1) 662 (738)
Gain on marketable securities 212 1,286
Restructuring (charge) reversal (218) 354
---------- ---------
(Loss) income before income taxes (3,177) 549
Income tax expense (392) (281)
---------- ---------
Net (loss) income $(3,569) $ 268
======== =========
Net loss per share
Basic and diluted (2) $ (.21) $ -
========== ===========
Dividends per share none none
========== ==========
(1) Other Income includes approximately $0.5 million for the six months ended
June 30, 2003 relating to a warrant received by the Company in a Hydro Med
Private Placement Agreement.
(2) Includes an addition to the put obligation of $0.3 million for the six
months ended June 30, 2002, deemed to be a dividend for the purposes of the
basic and diluted (loss) income per share calculation.
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