News Release
FOR IMMEDIATE RELEASE
Contacts:
Jerome I. Feldman Scott N. Greenberg
Chairman & CEO President & CFO
(914) 249-9750 (914) 249-9729
GP STRATEGIES REPORTS RESULTS FOR THE QUARTER ENDED SEPTEMBER 30, 2003
General Physics Corporation Gross Profit Increases
in Quarter Ended September 30, 2003
Purchase of additional shares gives Company controlling interest in GSE Systems
and Strengthens Company's Core Operating Unit
NEW YORK, November 17, 2003--GP Strategies Corporation (NYSE: GPX), a leader in
workforce development and technical training, today reported its results for the
quarter ended September 30, 2003.
Net sales were $34.2 million for the quarter ended September 30, 2003 compared
to $36.6 million for the quarter ended September 30, 2002. The decrease in net
sales from the third quarter of 2002 is primarily attributable to a continued
reduction in business from the automotive division of the manufacturing and
process segment of General Physics, as well as decreased business from clients
in the utility industry and the Department of Energy.
Despite the decrease in net sales, each of the Company's three operating
business segments had increased gross profit for the quarter ended September 30,
2003 as compared to the quarter ended September 30, 2002, and overall gross
profit increased to $4,613,000 in the quarter ended September 30, 2003 compared
to $3,426,000 in the quarter ended September 30, 2002. The gross profit of the
Company's principal operating subsidiary, General Physics, increased by
$1,147,000 for the quarter ended September 30, 2003 as compared to the quarter
ended September 30, 2002, as a result of the Company's continued efforts to
control costs on existing contracts. The Company believes that this strategy
will enable it to take advantage of business opportunities from an improving
economic climate.
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Page 2
For the quarter ended September 30, 2003, the Company had a net loss before
income taxes of $2,634,000 compared to a net loss before income taxes of
$3,739,000 for the quarter ended September 30, 2002. The loss for the third
quarter of 2003 reflected (i) an expense for an executive incentive compensation
bonus of $1,000,000, (ii) a write-off of $860,000 of deferred finance costs due
to the early termination of the Company's prior credit agreement, (iii) a
non-cash equity loss on the Company's investment in Valera Pharmaceuticals
(formerly Hydro Med Sciences) of $500,000, and (iv) a non-cash charge of
$339,000 relating to the Company's Millennium Cell Deferred Compensation Plan,
offset by a non-cash gain of $1,162,000 from the September 30, 2003 valuation
adjustment to the liability for the warrant to purchase Company common stock
issued in connection with the Gabelli transaction. The loss before income taxes
of $3,739,000 in the third quarter of 2002 included severance and related
expenses of $1,944,000, offset by a $391,000 gain from the sale of shares of
Millennium Cell and a non-cash credit of $348,000 relating to the Company's
Millennium Cell Deferred Compensation Plan.
For the nine months ended September 30, 2003, the Company had a net loss before
income taxes of $5,811,000 compared to a net loss before income taxes of
$3,190,000 for the nine months ended September 30, 2002. The loss for the nine
months ended September 30, 2003 reflected (i) an expense for an executive
incentive compensation bonus of $2,000,000, (ii) a non-cash debt conversion
expense, net, of $622,000 related to the conversion of the Company's convertible
exchangeable notes, (iii) the write-off of deferred financing costs of $860,000,
and (iv) a non-cash equity loss on the Company's investment in Valera of
$500,000, offset by a $398,000 gain from the sale of shares of Millennium Cell,
a non-cash gain of $1,162,000 from the September 30, 2003 valuation adjustment
to the liability for the warrant to purchase Company common stock issued in
connection with the Gabelli transaction, and income of approximately $500,000
from a warrant received by the Company in connection with a Valera private
placement transaction. The loss before income taxes of $3,190,000 for the nine
months ended September 30, 2002 included severance and related expenses of
$1,944,000 and a non-cash equity loss of $1,401,000 on the Company's investment
in Valera, offset by a $1,677,000 gain from the sale of shares of Millennium
Cell and a non-cash credit of $1,216,000 relating to the Millennium Cell
Deferred Compensation Plan.
As previously announced, on October 23, 2003 the Company purchased from ManTech
International (NasdaqNM:MANT) an additional 3,426,699 shares of common stock of
GSE Systems, Inc. (AMEX:GVP) and a GSE Subordinated Note in the outstanding
principal amount of $650,000 which the Company immediately elected to convert
into 418,653 shares of GSE common stock This transaction increased the Company's
ownership of the common stock of GSE from approximately 22% to approximately
58%, after conversion of the GSE Note, and as a result the financial results of
GSE will be consolidated in the Company's consolidated financial statements
beginning in the fourth quarter of 2003.
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The Company and ManTech also entered into a five-year Teaming Agreement pursuant
to which ManTech and the Company will work together to pursue training
opportunities that will utilize the skills of the Company, GSE and ManTech.
Jerome I. Feldman, Chief Executive Officer of the Company, said, "We are excited
to be entering into this arrangement with ManTech to bring training solutions to
federal government customers focusing on national defense programs." The Company
believes that its purchase of a controlling interest in GSE, as well as its
Teaming Agreement with ManTech, will result in increased business opportunities.
As also previously announced, on October 10, 2003, the Company converted
$500,000 of the debt of Five Star Products, Inc. (OTCBB: FSPX) into additional
common stock of Five Star, increasing the Company's ownership in Five Star from
approximately 48% to approximately 54% of the outstanding Five Star common
stock. As a result, the financial results of Five Star will now be consolidated
in the Company's consolidated financial statements beginning in the fourth
quarter of 2003. It is contemplated that the Company's Five Star investment will
be transferred to National Patent Development Corporation in connection with the
planned spin-off of National Patent to the Company's stockholders.
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.
The Company has scheduled an investor conference call at 10:00 a.m. EST on
Monday, November 17, 2003. The dial-in number for the live conference call will
be 888-423-3275 (651-291-0561 outside the United States). A telephone replay of
the call will also be available beginning at 1:30 p.m. EST today. To listen to
the replay, dial 800-475-6701 (320-365-3844 outside the United States) and enter
access code number 706827.
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 for the quarters ended September 30, 2003 and 2002 is as follows (in
thousands):
Three Months Ended
-------------------------------------------
--------------------- ---------------------
September 30 September 30
2003 2002
---- ----
General Physics $32,313 $34,395
Other 1,914 2,221
--------- ---------
Net Sales $34,227 $36,616
======= =======
Three Months Ended
-------------------------------------------
--------------------- ---------------------
September 30 September 30
2003 2002
---- ----
Sales $34,227 $36,616
Cost of sales 29,614 33,190
------ ------
Gross profit 4,613 3,426
------- -------
Executive incentive compensation bonus (1,000)
Other selling, general & administrative expenses (5,562) (6,918)
------- -------
Total selling, general & administrative expenses (6,562) (6,918)
------- -------
Operating loss (1,949) (3,492)
------- -------
Write-off of deferred financing costs (860)
Interest expense (611) (654)
----- -----
Total interest expense (1,471) (654)
------- -----
Investment and other income (loss), net (562) 16
Valuation adjustment of liability for warrants 1,162 -
Gain on sale of marketable securities 186 391
------- ------
Loss before income taxes (2,634) (3,739)
Income tax expense (213) (148)
-------- ---------
Net loss $(2,847) $(3,887)
======== ========
Net loss per share:
Basic and diluted $(.16) $(.25)
====== ======
Di vidends per share $none $none
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An unaudited comparative summary of GP Strategies' consolidated net sales and
net loss for the nine months ended September 30, 2003 and 2002 is as follows (in
thousands):
Nine Months
ended September 30,
------------------------------------
--------------------- --------------
2003 2002
---- ----
General Physics $100,170 $108,393
Other 6,182 7,691
----------- -----------
Net Sales $106,352 $116,084
======== ========
Nine Months
ended September 30,
------------------------------------
--------------------- --------------
2003 2002
---- ----
Sales $106,352 $116,084
Cost of sales 93,598 102,305
------ -------
Gross profit 12,754 13,779
------ --------
Executive incentive compensation bonus (2,000) -
Non-cash debt conversion expense, net (622) -
Other selling, general & administrative expenses (14,944) (15,841)
-------- --------
Total selling, general & administrative expenses (17,566) (15,841)
-------- --------
Operating loss (4,812) (2,062)
------- -------
Write-off of deferred financing costs (860) -
Interest expense (1,799) (2,083)
------- -------
Total interest expense (2,659) (2,083)
------- -------
Investment and other income (loss), net 100 (722)
Valuation adjustment of liability for warrants 1,162 -
Gain on sale of marketable securities 398 1,677
-------- ------
Loss before income taxes (5,811) (3,190)
Income tax expense (605) (429)
--------- --------
Net loss $(6,416) $(3,619)
======== ========
Net loss per share:
Basic and diluted $(.38) $(.24)
====== ======
Dividends per share $none $none
===== =====
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