SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
July 13, 1998
Date of Report (Date of earliest event reported)
GP STRATEGIES CORPORATION
(Exact Name of Registrant as Specified in Charter)
Delaware 033-78252 13-3729186
(State or Other Juris- (Commission (I.R.S. Employer
diction of Incorporation) File Number) Identification No.)
9 West 57th Street, New York, New York 10019
(Address of principal executive offices) (Zip Code)
(212) 230-9500
(Registrant's telephone number, including area code)
<PAGE>
Item 2. Acquisition or, Disposition of Assets.
On July 13, 1998, General Physics Corporation ("General
Physics"), a Delaware corporation and a wholly-owned subsidiary of GP Strategies
Corporation (the "Company"), completed its acquisition of substantially all of
the operations, assets, properties, rights and business of The Deltapoint
Corporation ("Deltapoint") and in connection therewith, assumed certain of the
liabilities of Deltapoint, pursuant to the Asset Purchase Agreement, dated as of
July 13, 1998 between General Physics and Deltapoint. Deltapoint is a Seattle,
Washington based management consulting firm focused on large systems change and
lean-enterprise, with primarily 500 clients operating in the aerospace,
pharmaceutical, manufacturing, health care and telecommunications industries.
General Physics purchased Deltapoint for approximately $6.3 million in cash and
a future earnout, as described in the Asset Purchase Agreement filed as an
exhibit hereto.
The $6.3 million cash consideration of the purchase price was
derived from funds borrowed by the Company and General Physics, pursuant to the
Company's Credit Agreement dated as of June 15, 1998 (the "Credit Agreement"),
with Key Bank, N.A., Mellon Financial Services Corporation, Summit Bank, The
Dime Savings Bank of New York, FSB, and Fleet Bank, National Association, as
Agent, as Issuing Bank and as Arranger. The Credit Agreement provides for a
secured credit facility of $80 million (the "Credit Facility") comprised of a
revolving credit facility of $65 million for the Company, expiring on June 15,
2001, and a five-year term loan of $15 million to General Physics Canada Ltd. At
the option of the Company or GP Canada, as the case may be, the interest rate on
any loan under the Credit Facility may be based on an adjusted prime rate or
Eurodollar rate, as described in the Credit Agreement.
The acquired operations and assets were used by Deltapoint in its
business of providing management consulting services to the manufacturing and
service industry (the "Business"). General Physics intends to use such assets in
operating the Business.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of businesses acquired.
(1) Audited Financial Statements of The Deltapoint
Corporation for the period ended December 31, 1997.
<PAGE>
The Stockholders
The Deltapoint Corporation
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying balance sheet of The Deltapoint Corporation as
of December 31, 1997 and the related statements of income, stockholders' equity,
and cash flows for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of The Deltapoint Corporation as
of December 31, 1997, and the results of its operations and its cash flows for
the year then ended in conformity with generally accepted accounting principles.
August 13, 1998
<PAGE>
THE DELTAPOINT CORPORATION
BALANCE SHEET
December 31, 1997
ASSETS
Current assets:
Cash and cash equivalents $769,749
Receivables:
Trade, less allowance for doubtful
accounts of $5,000 (Note 6) 2,003,394
Unbilled 34,372
Employees and other 2,051
Prepaid expenses 161,641
Total current assets 2,971,207
Investment in less than 50% owned company (Note 4) 6,254
--------------
Property and equipment (Notes 5, 6 and 7) 456,883
Less accumulated depreciation and amortization 265,223
191,660
Other assets:
Supplemental retirement plan (Note 11) 144,000
Deposits 32,935
New product development, less accumulated
amortization of $11,977 285,209
-------
462,144
$3,631,265
<PAGE>
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt (Note 7) $ 157,892
Accounts payable 334,194
Deferred revenue 68,524
Accrued liabilities:
Profit-sharing (Note 10) 24,676
Payroll and other taxes 16,087
Salaries and consultant fees 15,943
Deposit 7,475
Dividend 3,689
--------
Total current liabilities 628,480
Long-term debt, less current maturities (Note 7) 363,718
Supplemental retirement plan (Note 11) 144,067
--------
507,785
Stockholders' equity:
Common stock (Notes 9 and 14) 70,968
Retained earnings 2,424,032
---------
Total stockholders' equity 2,495,000
$3,631,265
The accompanying notes are an integral part of these financial statements.
<PAGE>
THE DELTAPOINT CORPORATION
STATEMENT OF INCOME
Year Ended December 31, 1997
Revenues $10,958,723
Operating expenses 9,013,174
Operating profit 1,945,549
Other income (expense):
Interest income 38,907
Interest expense (Note 3) (36,077)
Other income (expense) (194)
----------
2,636
Net income $ 1,948,185
============
The accompanying notes are an integral part of these financial statements.
<PAGE>
THE DELTAPOINT CORPORATION
STATEMENT OF STOCKHOLDERS' EQUITY
Year Ended December 31, 1997
<TABLE>
<CAPTION>
Common Stock
---------------------------------------------
Number Par Value
---------------------------------------------
of Retained
Shares Series A Series B Series C earnings Total
------ -------- -------- -------- -------- ----------
Balance,
<S> <C> <C> <C> <C> <C> <C> <C> <C>
December 31, 1996 5,300 $ 500 $ 47,788 $ 3,676 $ 986,060 $1,038,024
Net income - - - - 1,948,185 1,948,185
Redemptions (Note 3) (2,600) (500) (1,838) - (504,064) (506,402)
Exchange of Series B
common stock for
Series A common
stock - 32,165 (32,165) - - -
Stock issued 200 - 16,006 5,336 - 21,342
Dividends - - - - (6,149) (6,149)
Stock split 2,900 - - - - -
-------- -------- -------- -------- --------- ----------
Balance,
December 31, 1997 5,800 $32,165 $ 29,791 $ 9,012 $2,424,032 $2,495,000
======== ======== ========= ======== ========== ==========
The accompanyng notes are an integral part of these financial statements.
</TABLE>
<PAGE>
THE DELTAPOINT CORPORATION
STATEMENT OF CASH FLOWS
Year Ended December 31, 1997
Cash flows from operating activities:
Net income $1,948,185
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 78,417
Loss on equipment disposals 733
Provision for doubtful accounts 3,000
Issuance of stock for compensation (Note 2) 21,342
Increase in assets:
Receivables (577,681)
Prepaid expenses and deposits (93,329)
Retirement plan (144,000)
Increase (decrease) in liabilities:
Accounts payable (1,804)
Deferred revenue 31,385
Accrued liabilities (97,709)
Retirement plan 144,067
-----------
Net cash provided by operating activities 12,606
-----------
Cash flows from investing activities:
Property and equipment expenditures (144,918)
Proceeds from sale of equipment 475
New product development expenditures (297,186)
-----------
Net cash used in investing activities (441,629)
-----------
Cash flows from financing activities:
Repayment of long-term debt (140,861)
Repayment of notes payable (59,360)
Proceeds from issuance of long-term debt 21,431
Stock redemption (Note 2) (6,402)
Dividends paid (2,460)
-----------
Net cash used in financing activities (187,652)
-----------
Net increase in cash and cash equivalents 683,325
Cash and cash equivalents at beginning of year 86,424
-----------
Cash and cash equivalents at end of year $ 769,749
===========
The accompanying notes are an integral part financial statements.
<PAGE>
THE DELTAPOINT CORPORATION
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of business - The Deltapoint Corporation, which is incorporated and
headquartered in Washington State, is an international management
consulting firm dedicated to helping client organizations become
world-class competitors and preeminent in their industries. The majority
of the Company's revenues are derived from manufacturing consulting
services provided to Fortune 500 companies.
Use of estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
Cash equivalents - The Company considers all highly liquid debt
instruments including money market accounts and commercial paper purchased
with a maturity of three months or less to be cash equivalents.
Concentration of credit risk - Cash and cash equivalents includes
commercial paper which is not subject to FDIC insurance. The Company
places its cash with one financial institution. At times, cash may be in
excess of the FDIC insurance limit.
Investment in less than 50% owned company - The Company carries its
investment in the less than 50% owned company at cost.
Property and equipment - Property and equipment are carried at cost.
Depreciation is computed using the straight-line method. When assets are
retired or otherwise disposed of, the cost and related accumulated
depreciation are removed from the accounts, and any resulting gain or loss
is recognized in income for the period. The cost of maintenance and
repairs is charged to expense as incurred; significant renewals and
betterments are capitalized.
New product development - New product development represents internally
developed training materials and is being amortized upon completion over a
two-year period.
Deferred revenue - Deferred revenue represents amounts billed or paid for
services which will be performed in the following year.
<PAGE>
THE DELTAPOINT CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Income taxes - Effective January 1, 1992, the Company elected, by
unanimous consent of its stockholders, to be taxed under the provisions of
Subchapter S of the Internal Revenue Code. Under these provisions, the
Company generally pays no federal income taxes, and its stockholders are
liable for taxes on their share of the Company's income.
2. STATEMENTS OF CASH FLOWS
Supplemental disclosures of cash flow information:
Cash paid during the year for interest totaled $40,578.
Supplemental schedule of noncash investing and financing activities:
The Company incurred debt of $500,000 to redeem stock (Note 3).
The Company issued 150 shares of Series B and 50 shares of Series C
common stock to employees. The amount charged to compensation expense
was $21,342.
3. RELATED PARTY TRANSACTIONS
During 1997, the Company redeemed all of the common stock owned by its
majority stockholder, Colin Fox, Jr. for $500,000. See Note 7 for
outstanding debt related to the redemption. As part of this transaction, a
note payable to this stockholder was repaid. Interest expense related to
these loans was $21,266 in 1997. The Company entered into a four-year
consulting agreement with this former stockholder for approximately
$190,000 per year. In June, 1998, this agreement was paid in full. The
agreement also provides for the payment of a 5% commission on certain
customer billings through December, 1999; commissions totaled
approximately $43,000 in 1997. Mr. Fox resigned from the Board of
Directors of the Company in April, 1998.
<PAGE>
THE DELTAPOINT CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Continued)
4. INVESTMENT IN LESS THAN 50% OWNED COMPANY
The investment consists of ownership of 49% of the stock of Deltapoint
International, a Japanese corporation, which began operations in 1986.
5. PROPERTY AND EQUIPMENT
Property and equipment consist of the following at December 31, 1997:
Estimated
useful lives
Office equipment $336,546 5 years
Furniture and fixtures 102,520 5 years
Leasehold improvements 17,817 Life of lease
$456,883
Depreciation and amortization charged to expense was $66,440 in 1997.
6. BANK LINE-OF-CREDIT
The Company has an agreement for a line-of-credit of $400,000, which
provides for working capital financing. The agreement, which is evidenced
by a note dated April 1, 1998, expires on April 30, 1999. Borrowings bear
interest at .5% above the bank's prime rate (8.5% at December 31, 1997)
and are secured by accounts receivable and equipment. Outstanding
borrowings at December 31, 1997 were $-0-.
The Company has two agreements for non-revolving term loans of $50,000
each, which provide for acquisition of equipment. The agreements are
detailed in Note 7.
All of these agreements contain covenants which require the maintenance of
certain financial ratios.
<PAGE>
THE DELTAPOINT CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Continued)
7. LONG-TERM DEBT
Long-term debt consists of:
Note payable with a commercial bank; monthly payments
of $2,083, plus interest at the bank's prime rate
(8.5% at December 31, 1997) plus 1.25%; maturing in
December, 1999 and secured by equipment $ 21,591
Note payable with a commercial bank; monthly payments
of $2,083, plus interest at the bank's prime rate plus
1.25% beginning January 1, 1998; maturing in December,
2000 and secured by equipment 26,069
Note payable, former stockholder; monthly payments of
$2,335, including interest at 8%; maturing in June, 1998
and unsecured; note is subordinated to all bank debt 13,689
Notes payable, former stockholder; monthly payments of
$1,784, including interest at 2.5%;maturing in May, 1998
and unsecured; note is subordinated to all bank debt 8,859
Note payable, former stockholder; monthly payments of
$10,138, including interest at 8% until May, 2002; note
is unsecured and subordinated to all bank debt 451,402
--------
521,610
Less current maturities 157,892
$363,718
<PAGE>
THE DELTAPOINT CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Continued)
7. LONG-TERM DEBT (Continued)
Maturities of long-term debt in each of the next five years ending
December 31, are as follows:
1998 $157,892
1999 $ 97,189
2000 $104,098
2001 $112,738
2002 $ 49,693
8. LEASES
The Company leases its office space and computer and telephone equipment
under separate operating leases. These leases expire in various years
through 2002. The office lease requires the Company to pay its prorata
share of common area charges such as property taxes, insurance and
maintenance.
The Company subleases a portion of its leased office space. The sublease
calls for monthly payments of $7,475 and expires September, 1998.
The following is a schedule of future minimum lease payments for operating
leases (with initial terms in excess of one year) as of December 31, 1997:
Year ending Operating
December 31 lease expense
----------- -------------
1998 $ 486,847
1999 446,325
2000 406,182
2001 386,411
2002 386,411
------------
Total minimum lease payments $ 2,112,176
Rent expense amounted to $294,870 in 1997.
<PAGE>
THE DELTAPOINT CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Continued)
9. COMMON STOCK
The Company's Articles of Incorporation allow for three classes of common
stock. The holders of the Series A common stock have the right to nominate
and elect a majority of the Board of Directors. Holders of the Series B
common stock have the right to nominate and elect the remainder of the
Board of Directors. Series C is nonvoting common stock.
Common stock is subject to certain vesting restrictions, which lapse
between 1997 and 2000.
Common stock consists of the following number of no par value shares as of
December 31, 1997:
Issued and
Authorized outstanding
Series A 7,500 3,500
Series B 40,000 1,800
Series C 2,500 500
On December 31, 1997, the Company declared a two for one stock split on
all common stock.
On February 28, 1998, the 3,500 shares of outstanding Series A were
exchanged for 3,500 shares of Series B stock.
Subsequent to year-end, 500 shares of Series B stock were redeemed for
$200,000, payable in installments of $100,000 on June 30, 1998, $50,000 on
August 30, 1999 and $50,000 on August 30, 2000, plus interest at 10%.
Additionally, 100 shares of Series C stock were redeemed for $21,631,
payable in 60 monthly installments of $460, including interest at 10%,
beginning May 1, 1998. Both of these notes are subordinated to bank
borrowings.
10. PROFIT-SHARING PLAN
Effective January 1, 1991, the Company adopted a 401(k) plan in which
substantially all employees are eligible to participate. The Company is
required to match 25% of each employee's contribution up to 8% of eligible
compensation. The plan allows for additional contributions to be made at
the Company's discretion. Total profit-sharing expense was $276,485 in
1997.
<PAGE>
THE DELTAPOINT CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Continued)
10. PROFIT-SHARING PLAN (Continued)
Subsequent to year-end, the plan was terminated. All participants became
fully vested in 100% of their account balances at the time of termination.
It is expected that the majority of the assets will be transferred to the
General Physics plan (Note 16).
11. SUPPLEMENTAL RETIREMENT PLAN
Effective January 1, 1997, the Company adopted a nonqualified supplemental
executive retirement plan in which certain shareholders and highly
compensated employees participate. Annually, a percentage of each
participant's bonus is deferred into the plan. Participants can also elect
to defer an additional amount into the plan. Plan contributions are funded
into a rabbi trust account. Benefits are payable upon termination of
employment, generally over periods ranging from 5 to 10 years.
Contributions to the plan in 1997 were $144,067. Subsequent to year-end,
the plan was terminated and all contributions were paid to participants in
July, 1998.
12. REVENUE CONCENTRATION
Approximately 75% of revenues in 1997 were attributable to two customers.
13. LICENSE AGREEMENTS
In January, 1996, the Company entered into an agreement to license the use
of library and training materials created by the Company. The agreement
provided for an initial fee of $100,000 and a quarterly fee. After 1996,
the agreement provides for a minimum fee of $100,000 per year payable
quarterly. The Company recognized $100,000 of revenues from this license
agreement in 1997. The agreement terminates upon the mutual consent of the
parties.
In August, 1996, the Company entered into a non-exclusive agreement to use
and market products and services of a software company in conjunction with
its consulting services. The agreement does not require the Company to pay
a minimum fee and the agreement can be terminated by either party.
<PAGE>
THE DELTAPOINT CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Continued)
14. COMMITMENT
The Company and its stockholders are party to a stockholder agreement
which provides for certain restrictions and obligations on the transfer of
Company stock. In the event of a stockholder's death, disability or
termination of employment, the Company is obligated to purchase the stock
under the terms of the agreement.
15. STOCKHOLDER DISTRIBUTIONS
The Company makes dividend distributions to its stockholders in amounts
approximating the federal income tax liability of the stockholders
attributable to their share of the Company's income. Dividends paid on
March 31, 1998 totaled $584,051.
16. SUBSEQUENT SALE OF COMPANY ASSETS
In July, 1998, substantially all of the assets of the Company were
acquired by General Physics Corporation. As part of the sale, the Company
agreed to change its name to DP Holdings, Inc.
As a result of the sale of these assets, the Company anticipates incurring
a built-in gains tax of approximately $175,000 in 1998.
<PAGE>
(b) Pro Forma Financial Information.
(1) Pro Forma Consolidated Statements of Operations for the year ended
December 31, 1997 and the six months ended June 30, 1998, as well as the
consolidated pro forma balance sheet for the six months ended June 30, 1998.
GP Strategies Corporation and Subsidiaries
The pro forma balance sheet as of June 30,1998 and the pro forma statements of
operations for the year ended December 31,1997 and the six months ended June 30,
1998 give effect to the acquisition of substantially all the operations, assets,
properties, rights and business of The Deltapoint Corporation (Deltapoint) and
in connection therewith, assumed certain of the liabilities of Deltapoint,
pursuant to the Asset Purchase Agreement, dated as of July 13,1998 between
General Physics Corporation (General Physics), a wholly-owned subsidiary of GP
Strategies Corporation and Deltapoint. General Physics purchased Deltapoint for
$6,280,000 in cash and a future earnout , as described in the Asset Purchase
Agreement.
The pro forma results of operations for the periods presented is not necessarily
indicative of the results that might have been attained had this acquisition
taken place as of January 1,1997 and January 1, 1998.
<PAGE>
<TABLE>
GP Strategies Corporation and Subsidiaries
Pro forma Consolidated Balance Sheet
June 30,1998
(unaudited, in thousands)
<CAPTION>
Pro forma
Actual adjustments Pro forma
ASSETS
Current assets
<S> <C> <C>
Cash and cash equivalents $9,724 $9,724
Marketable securities 1,556 1,556
Accounts and other receivables 57,812 $2189 (a) 60,001
Inventories 24,255 24,255
Costs and estimated earnings in excess
of billings on uncompleted contracts 9,935 9,935
Prepaid expenses and other current assets 6,458 88 (a) 6,546
---------- --------
Total current assets 109,740 112,017
-- -------- --------
Investments and advances 24,948 24,948
---------- --------
Property, plant and equipment, at cost 48,991 201 (a) 49,192
Less accumulated depreciation (31,606) (31,606)
---------- --------
17,385 17,586
---------- --------
Intangible assets, net 75,128 4678 (b) 79,806
---------- --------
Deferred tax assets 592
592
Other assets 4,382 4,382
---------- --------
$232,175 $239,331
---------- ---------
</TABLE>
<PAGE>
<TABLE>
GP Strategies Corporation and Subsidiaries
Pro forma Consolidated Balance Sheet
June 30,1998 (Continued)
(unaudited, in thousands)
<CAPTION>
Pro forma
LIABILITIES AND STOCKHOLDERS' EQUITY Actual adjustments Pro forma
Current liabilities
Current maturities of long-term debt
<S> <C> <C> <C>
and notes payable $862 $122 (a) $984
Short-term borrowings 45,573 6280 (c) 51,853
Accounts payable and accrued expenses 27,365 344 (a) 27,809
100 (d)
Billings in excess of costs and estimated
earnings on uncompleted contracts 9,163 24 (a) 9,187
------- ------
Total current liabilities 82,963 89,833
------- ------
Long-term debt, less current maturities 19,456 286 (a) 19,742
------- ------
Minority interests and other 2 2
------ -------
Stockholders' equity
Common stock 109 109
Class B capital stock 1 1
Capital in excess of par value 159,953 159,953
Deficit (33,282) (33,282)
Net unrealized gain on available-for-sale securities 4,709 4,709
Treasury stock, at cost (1,736) (1,736)
-------- -------
Total stockholders' equity 129,754 129,754
-------- -------
$232,175 $239,331
--------- --------
(a) to record the purchase of the assets of Deltapoint, as if the purchase has
taken place on June 30, 1998
(b) to record a $60,000 covenant not to compete and goodwill of $4,618,000
(c) to record the financing of the purchase price of $6,280,000 for certain
assets and liabilities of Deltapoint
(d) to accrue $100,000 for the estimated costs of completing the transaction
</TABLE>
<PAGE>
<TABLE>
GP Strategies Corporation and Subsidiaries
Pro forma Statement of Operations
Year ended December 31, 1997
(unaudited, in thousands)
<CAPTION>
Pro forma
Actual Deltapoint adjustments Pro forma
<S> <C> <C> <C>
Sales $ 234,801 $ 10,959 $ 245,760
Cost of goods sold 199,572 199,572
--------- ------------- ----------
Gross margin 35,229 10,959 46,188
---------- --------- -----------
Selling, general &
administrative expenses (31,502) (9,013) (154) (a) (40,689)
(20) (b)
Interest expense (4,075) (37) (534) (c) (4,646)
Investment and other income, net 2,364 39 2,403
Gain on trading securities 689 689
Minority interests 25 25
------------- -------------- ------------
Income before income taxes 2,730 1,948 3,970
Income tax benefit (expense) 693 (124) (d) 569
------------ -------------- -----------
Net income $ 3,423 $ 1,948 $ 4,539
---------- --------- ----------
Net income per share:
Basic $ 0.33 $ 0.43
----------- -----------
Diluted $ 0.31 $ 0.42
----------- -----------
(a) to record the amortization of $4,618,000 of goodwill over a 30 year period
(b) to record the amortization of a $60,000 covenant not to compete over a three
year period
(c) to record interest expense at the prime rate of interest related to the cash
purchase price of $6,280,000
(d) to record the effective tax rate on Deltapoint of 10%, related to state and
local taxes, as well as the Federal alternative minimum tax
</TABLE>
<PAGE>
<TABLE>
GP Strategies Corporation and Subsidiaries
Pro forma Statement of Operations
Six months ended June 30,1998
(unaudited, in thousands)
<CAPTION>
Pro forma
Actual Deltapoint adjustments Pro forma
<S> <C> <C> <C>
Sales $133,769 $6,072 $139,841
Cost of goods sold 113,641 2,413 116,054
--------- ------ --------
Gross margin 20,128 3,659 23,787
--------- ------ --------
Selling, general & administrative expenses (15,768) (3,951) $(77) (a) (19,806)
(10) (b)
Interest expense (1,846) (267) (c) (2,113)
Investment and other income, net 782 782
Gain on trading securities 1,272 1,272
------------- --------
Income (loss) before income taxes 4,568 (292) 3,922
Income tax expense 28 (d)
--------- ------------
(514) (486)
----- --------
Net income (loss) $4,054 $(292) $3,436
- ------- - ------ --------
Net income per share:
Basic $0.38 $0.32
- ------ --------
Diluted $0.33 $0.28
- ------ --------
(a) to record the amortization of $4,618,000 of
goodwill over a 30 year period for six months
(b) to record the amortization of a $60,000 covenant not to compete over a three
year period
(c) to record interest expense at the prime rate of interest related to the cash
purchase price of $6,280,000
(d) to record an income tax benefit of 10% for state and local taxes and the
Federal alternative minimum tax related to Deltapoint's loss for the period
</TABLE>
<PAGE>
(c) Exhibits.
Exhibit No. Exhibit
10 Asset Purchase Agreement, dated as of July 13, 1998,
between General Physics Corporation and The Deltapoint
Corporation. Incorporated herein by reference to the
Registrant's Form 8-K filed on July 27, 1998.
99 Press Release, dated July 13, 1998. Incorporated herein
by reference to the Registrant's Form 8-K filed on
July 27, 1998
Signature
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 thereunto duly authorized.
GP STRATEGIES CORPORATION
(Registrant)
Dated: September 28, 1998 By: Scott N. Greenberg
-------------------
Executive Vice President
and Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Exhibit No. Description Page
10 Asset Purchase Agreement, dated as of July 13, 1998,
General Physics Corporation and The Deltapoint
Corporation. Incorporated herein by reference to the
Registrant's Form 8-K filed on July 27, 1998
99 Press Release, dated July 13, 1998. Incorporated herein
by reference to the Registrant's Form 8-K filed on July
27, 1998
