UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported) November 24, 2004
-----------------
GP Strategies Corporation
--------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
Delaware
--------------------------------------------------------------------------------
(State or Other Jurisdiction of Incorporation)
1-7234 13-1926739
--------------------------------------------------------------------------------
(Commission File Number) (IRS Employer Identification No.)
777 Westchester Avenue, White Plains, NY 10604
--------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(914) 249-9700
--------------------------------------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
--------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 2.01 Completion of Acquisition or Disposition of Assets.
In July 2002, the Board of Directors of GP Strategies Corporation (the Company)
approved a spin-off of certain of its non-core assets into a separate
corporation, National Patent Development Corporation (NPDC). The separation of
these businesses was accomplished through a pro-rata distribution (the
Distribution) of 100% of the outstanding common stock of NPDC to the Company's
stockholders on the record date of the Distribution. Holders of record, on
November 18, 2004, of GP Strategies common stock and Class B capital stock
received one share of NPDC common stock for each share of GP Strategies common
stock or Class B capital stock owned. Shares of NPDC common stock were
distributed on November 24, 2004 and are traded publicly under the symbol "NPDV"
beginning November 26, 2004.
Previously, NPDC was incorporated on March 10, 1998 as a wholly owned subsidiary
of the Company. On March 21, 2003, the Internal Revenue Service issued a
favorable tax ruling, which would enable the Distribution to be tax-free. On
February 12, 2004, NPDC was recapitalized whereby the authorized capital was
changed to 10,000,000 shares of preferred stock and 30,000,000 shares of common
stock. On July 30, 2004, the Company contributed the following non-core assets
to NPDC in exchange for 17,769,919 shares of common stock:
1. 100% of the outstanding common stock of MXL Industries, Inc (MXL).
2. 9,133,417 common shares of Five Star Products, Inc. (Five Star) (a
publicly traded corporation) representing an ownership interest of
approximately 64%.
3. 293,271 common shares of Millennium Cell Inc. (a publicly traded
corporation).
4. 1,067,900 common shares of Avenue Entertainment Group, Inc. (a publicly
traded corporation).
5. 100% of the common stock of JL Distributors, Inc. whose sole asset is
a $2,800,000 senior unsecured 8% note receivable from Five Star due
June 30, 2005, as amended.
6. An option to acquire 500,000 shares of common stock (an approximate
4% interest) of Red Storm Scientific Inc., a privately held company.
7. Approximately 1,000 acres of undeveloped real property located in
Pawling, New York.
8. 100% of the common stock of Chestnut Hill Reservoir Company whose sole
asset is certain undeveloped property located in East Killingly,
Connecticut.
NPDC then transferred all of the above assets, excluding the MXL stock, to MXL
for additional MXL stock. Prior to the contribution, NPDC was inactive and had
no operations. In addition, on July 30, 2004, the Company made a cash capital
contribution to NPDC, which was immediately transferred to MXL, of $1,250,000
and agreed to make an additional capital contribution to NPDC out of certain
proceeds of pending litigation and arbitration claims. The Company transferred
an additional $625,000 in cash prior to the Distribution.
After the spin-off became effective, the Company's business is comprised of its
training and workforce development business operated by General Physics
Corporation and its simulation business operated by GSE Systems, Inc. NPDC is a
stand-alone public company owning all of the stock of MXL, the interest in Five
Star and certain other non-core assets, previously described. Effective with the
spin-off, the historical results of NPDC's operations will be presented as
discontinued operations.
1
Item 9.01. Financial Statements and Exhibits.
(b) Pro Forma Financial Information
On November 24, 2004, the Company completed the spin-off of NPDC. The following
Unaudited Pro Forma Condensed Consolidated Statements of Operations for the nine
months ended September 30, 2004 and for each of the years in the three-year
period ended December 31, 2003, and the Unaudited Pro Forma Condensed
Consolidated Balance Sheet as of September 30, 2004 give effect to the spin-off
by the Company of certain of its non-core assets into a separate corporation,
NPDC.
The Unaudited Pro Forma Condensed Consolidated Balance Sheet as of September 30,
2004 is prepared as if spin-off of NPDC was effective on September 30, 2004 and
the Unaudited Pro Forma Condensed Consolidated Statements of Operations for the
nine months ended September 30, 2004 and for each of the years in the three-year
period ended December 31, 2003 are prepared as if as if spin-off of NPDC had
occurred at the beginning of the respective period.
The Unaudited Pro Forma Condensed Consolidated Financial Statements are
presented for informational purposes only and are not necessarily indicative of
the financial position or results of operations of the Company that would have
occurred had the Distribution been consummated as of the dates indicated above.
In addition, the Pro Forma Condensed Consolidated Financial Statements are not
necessarily indicative of the future financial position or operating results of
the Company.
The Unaudited Pro Forma Condensed Consolidated Financial Statements have been
prepared by the management of the Company. The statements should be read in
conjunction with the Company's historical consolidated financial statements and
notes thereto for each of the years in the three-year period ended December 31,
2003 and the nine months ended September 30, 2004, which are included in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
2003, as amended, and its Quarterly Report on Form 10-Q for the fiscal quarter
ended September 30, 2004, respectively. The statements should also be read in
conjunction with NPDC's historical financial statements, and the notes thereto
for each of the years in the three-year period ended December 31, 2003 and the
nine months ended September 30, 2004, which are included in NPDC's Form S-1.
2
GP STRATEGIES CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2004
(in thousands)
GP Less Amounts
Strategies Related to Spin-off
Corporation (1) of NPDC (2) Pro Forma
--------------- ----------- ---------
---------------------------------------------------------- -------------------- ------------------------ ------------------
Assets
Current assets:
Cash and cash equivalents $ 3,818 $ 2,233 $ 1,585
Accounts and other receivables, net 43,063 16,131 26,932
Inventories 24,782 24,782 -
Costs and estimated earnings in excess of billings
on uncompleted contracts 19,080 - 19,080
Prepaid expenses and other current assets 6,202 293 5,909
---------------------------------------------------------- -------------------- ------------------------ ------------------
Total current assets 96,945 43,439 53,506
---------------------------------------------------------- -------------------- ------------------------ ------------------
Property, plant and equipment, net 8,406 5,741 2,665
Intangible assets
Goodwill 62,552 202 62,350
Patents, licenses and contract rights, net 814 - 814
---------------------------------------------------------- -------------------- ------------------------ ------------------
63,366 202 63,164
Deferred tax assets 11,505 3,746 7,759
Other assets 7,699 4,270 3,429
---------------------------------------------------------- -------------------- ------------------------ ------------------
Total assets $ 187,921 $ 57,398 $ 130,523
---------------------------------------------------------- -------------------- ------------------------ ------------------
Liabilities and stockholders' equity
Current liabilities:
Current maturities of long-term debt $ 487 $ 405 $ 82
Short-term borrowings 27,852 19,976 7,876
Accounts payable and accrued expenses 38,199 12,384 25,815
Billings in excess of costs and estimated earnings
on uncompleted contracts 8,659 - 8,659
---------------------------------------------------------- -------------------- ------------------------ ------------------
Total current liabilities 75,197 32,765 42,432
---------------------------------------------------------- -------------------- ------------------------ ------------------
Long-term debt less current maturities 13,488 2,622 10,866
Other non-current liabilities 1,832 - 1,832
---------------------------------------------------------- -------------------- ------------------------ ------------------
Total liabilities 90,517 35,387 55,130
---------------------------------------------------------- -------------------- ------------------------ ------------------
Minority interests 4,064 1,632 2,432
---------------------------------------------------------- -------------------- ------------------------ ------------------
Total stockholders' equity 93,340 20,379 72,961
---------------------------------------------------------- -------------------- ------------------------ ------------------
---------------------------------------------------------- -------------------- ------------------------ ------------------
Total liabilities and stockholders' equity $ 187,921 $ 57, 398 $ 130,523
---------------------------------------------------------- -------------------- ------------------------ ------------------
(1) Represents historical condensed consolidated balance sheet of the
Company as of September 30, 2004, derived from the unaudited condensed
consolidated financial statements of the Company included in the
Quarterly Report on Form 10-Q for the quarter ended September 30, 2004.
(2) Represents net assets distributed to NPDC as if the spin-off occurred
on September 30, 2004 and other adjustments directly attributed to the
spin-off. The pro forma adjustment to equity represents an estimate as
if the distribution was consummated as of September 30, 2004 and is not
necessarily indicative of actual or future adjustments that may be
required.
3
GP STRATEGIES CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004
(in thousands, except share data)
GP Less
Strategies NPDC
Corporation (1) Operations (2) Pro Forma (3)
--------------- -------------- - -------------
Sales $ 228,776 $ 87,464 $ 141,312
Cost of sales 194,660 72,339 122,321
--------------------------------------------------- -------------------- -------------------- ---------------------
Gross profit 34,116 15,125 18,991
--------------------------------------------------- -------------------- -------------------- ---------------------
Selling, general & administrative expenses (29,468) (14,322) (15,146)
--------------------------------------------------- -------------------- -------------------- ---------------------
Operating income 4,648 803 3,845
--------------------------------------------------- -------------------- -------------------- ---------------------
Interest expense (2,550) (948) (1,602)
Investment and other income, net 671 425 246
--------------------------------------------------- -------------------- -------------------- ---------------------
Income from operations before income tax
expense and minority interests 2,769 280 2,489
--------------------------------------------------- -------------------- -------------------- ---------------------
Income tax expense (1,467) (118) (1,349)
--------------------------------------------------- -------------------- -------------------- ---------------------
Income from operations before minority 1,302 162 1,140
interests
--------------------------------------------------- -------------------- -------------------- ---------------------
Minority interests (349) (264) (85)
--------------------------------------------------- -------------------- -------------------- ---------------------
Net income from continuing operations $ 953 $ (102) $ 1,055
--------------------------------------------------- -------------------- -------------------- ---------------------
Per Share Data:
Basic and diluted net income from continuing
operations per share $0.05 N/A $0.06
Weighted average shares used to calculate
earnings per common share amounts 18,158,000 N/A 18,158,000
(1) Represents historical condensed consolidated statement of operations of
the Company for the nine months ended September 30, 2004, derived from
the unaudited condensed consolidated financial statements of the
Company included in the Quarterly Report on Form 10-Q for the quarter
ended September 30, 2004.
(2) Represents the results of operations for entities and net assets
distributed to NPDC for the nine months ended September 30, 2004.
Selling, general and administrative expenses include only those
corporate expenses that were directly attributed to the operations of
the NPDC entities. Interest expense includes a corporate allocation
based upon the net assets distributed to NPDC as a percentage of the
Company's total net assets as of September 30, 2004.
(3) Represents the pro forma condensed consolidated statement of operations
of the Company as if the spin-off of NPDC occurred on January 1, 2004
and is not necessarily indicative of actual or future results of the
continuing operations of the Company.
4
GP STRATEGIES CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2003
(in thousands, except share data)
GP Less
Strategies NPDC
Corporation (1) Operations (2) Pro Forma (3)
--------------- -------------- -------------
Sales $ 168,678 $ 28,644 $ 140,034
Cost of sales 145,236 22,297 122,939
-------------------------------------------------- -------------------- -------------------- --------------------
Gross profit 23,442 6,347 17,095
-------------------------------------------------- -------------------- -------------------- --------------------
Selling, general & administrative expenses (29,470) (6,536) (22,934)
-------------------------------------------------- -------------------- -------------------- --------------------
Operating loss (6,028) (189) (5,839)
-------------------------------------------------- -------------------- -------------------- --------------------
Interest expense (3,625) (537) (3,088)
Investment and other income, net 797 456 341
Valuation adjustment of liability for warrants 1,436 - 1,436
-------------------------------------------------- -------------------- -------------------- --------------------
Loss from operations before income tax
expense and minority interests (7,420) (270) (7,150)
-------------------------------------------------- -------------------- -------------------- --------------------
Income tax expense (886) (113) (773)
-------------------------------------------------- -------------------- -------------------- --------------------
Loss from operations before minority (8,306) (383) (7,923)
interests
-------------------------------------------------- -------------------- -------------------- --------------------
Minority interests 30 (30) 60
-------------------------------------------------- -------------------- -------------------- --------------------
Net loss from continuing operations $(8,276) $ (413) $ (7,863)
-------------------------------------------------- -------------------- -------------------- --------------------
Per Share Data:
Basic and diluted net loss from continuing
operations per share $(0.48) N/A $ (0.46)
Weighted average shares used to calculate
earnings per common share amounts 17,139,000 N/A 17,139,000
(1) Represents historical condensed consolidated statement of operations of
the Company for the year ended December 31, 2003, derived from the
audited consolidated financial statements of the Company included in the
Annual Report on Form 10-K.
(2) Represents the results of operations for entities and net assets
distributed to NPDC for the year ended December 31, 2003. Selling,
general and administrative expenses include only those corporate
expenses that were directly attributed to the operations of the NPDC
entities. Interest expense includes a corporate allocation based upon
the net assets distributed to NPDC as a percentage of the Company's
total net assets as of December 31, 2003.
(3) Represents the pro forma condensed consolidated statement of operations
of the Company as if the spin-off of NPDC occurred on January 1, 2003
and is not necessarily indicative of actual or future results of the
continuing operations of the Company.
5
GP STRATEGIES CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLDIATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2002
(in thousands, except share data)
GP Less
Strategies NPDC
Corporation (1) Operations (2) Pro Forma (3)
--------------- -------------- -------------
Sales $ 152,233 $ 9,996 $ 142,237
Cost of sales 134,768 7,897 126,871
------------------------------------------------------ -------------------- ------------------- ---------------------
Gross profit 17,465 2,099 15,366
------------------------------------------------------ -------------------- ------------------- ---------------------
Selling, general & administrative expenses (21,042) (1,813) (19,229)
------------------------------------------------------ -------------------- ------------------- ---------------------
Operating income (loss) (3,577) 286 (3,863)
------------------------------------------------------ -------------------- ------------------- ---------------------
Interest expense (2,770) (322) (2,448)
Investment and other income, net 300 (847) 1,147
------------------------------------------------------ -------------------- ------------------- ---------------------
Loss from operations before income tax benefit (6,047) (883) (5,164)
------------------------------------------------------ -------------------- ------------------- ---------------------
Income tax benefit 819 371 448
------------------------------------------------------ -------------------- ------------------- ---------------------
Net loss from continuing operations $ (5,228) $ (512) $ (4,716)
------------------------------------------------------ -------------------- ------------------- ---------------------
Per Share Data:
Basic and diluted net loss from continuing
operations per share $ (0.34) N/A $ (0.31)
Weighted average shares used to calculate earnings
per common share amounts 15,370,000 N/A 15,370,000
(1) Represents historical condensed consolidated statement of operations of
the Company for the year ended December 31, 2002, derived from the
audited consolidated financial statements of the Company included in the
Annual Report on Form 10-K.
(2) Represents the results of operations for entities and net assets
distributed to NPDC for the year ended December 31, 2002. Selling,
general and administrative expenses include only those corporate
expenses that were directly attributed to the operations of the NPDC
entities. Interest expense includes a corporate allocation based upon
the net assets distributed to NPDC as a percentage of the Company's
total net assets as of December 30, 2002.
(3) Represents the pro forma condensed consolidated statement of operations
of the Company as if the spin-off of NPDC occurred on January 1, 2002
and is not necessarily indicative of actual or future results of the
continuing operations of the Company.
6
GP STRATEGIES CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLDIATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2001
(in thousands, except share data)
GP Less
Strategies NPDC
Corporation (1) Operations (2) Pro Forma (3)
--------------- -------------- -------------
Sales $ 186,611 $ 11,189 $ 175,422
Cost of sales 164,034 8,944 155,090
------------------------------------------------------ -------------------- ------------------- ---------------------
Gross profit 22,577 2,245 20,332
------------------------------------------------------ -------------------- ------------------- ---------------------
Selling, general & administrative expenses (20,744) (4,549) (16,195)
------------------------------------------------------ -------------------- ------------------- ---------------------
Operating income (loss) 1,833 (2,304) 4,137
------------------------------------------------------ -------------------- ------------------- ---------------------
Interest expense (4,733) (345) (4,388)
Investment and other income, net 4,470 97 4,373
------------------------------------------------------ -------------------- ------------------- ---------------------
Income (loss) from operations before income tax
expense 1,570 (2,552) 4,122
------------------------------------------------------ -------------------- ------------------- ---------------------
Income tax expense (2,515) (1,071) (1,444)
------------------------------------------------------ -------------------- ------------------- ---------------------
Net income (loss) for continuing operations $ (945) $ (3,623) $ 2,678
------------------------------------------------------ -------------------- ------------------- ---------------------
Per Share Data:
Basic and diluted net income (loss) from
continuing operations per share $ (0.07) N/A $0.20
Weighted average shares used to calculate earnings
per common share amounts 13,209,000 N/A 13,209,000
(1) Represents historical condensed consolidated statement of operations of
the Company for the year ended December 31, 2001, derived from the
audited consolidated financial statements of the Company included in the
Annual Report on Form 10-K.
(2) Represents the results of operations for entities and net assets
distributed to NPDC for the year ended December 31, 2001. Selling,
general and administrative expenses include only those corporate
expenses that were directly attributed to the operations of the NPDC
entities. Interest expense includes a corporate allocation based upon
the net assets distributed to NPDC as a percentage of the Company's
total net assets as of December 30, 2001.
(3) Represents the pro forma condensed consolidated statement of operations
of the Company as if the spin-off of NPDC occurred on January 1, 2001
and is not necessarily indicative of actual or future results of the
continuing operations of the Company.
7
EXHIBIT NO. DESCRIPTION
99.1 GP Strategies Corporation Annual Report on Form 10-K for the fiscal year
ended December 31, 2003, filed on April 14, 2004 and amended on April
29, 2004. *
99.2 GP Strategies Corporation Quarterly Report on Form 10-Q for the fiscal
quarter ended September 30, 2004, filed on November 15, 2004. *
* Previously filed
8
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GP Strategies Corporation
Date: December 1, 2004 Scott N. Greenberg, President and
Chief Financial Officer
9