-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ryl0SgTKhIRblaqzg0aUEukjDE9OT+6o3N7+qU1m/JbFAKm7Y+deVTCqEmO65RuS RprZslkhnLbmY8PXIOqBPw== 0000070415-98-000061.txt : 19981019 0000070415-98-000061.hdr.sgml : 19981019 ACCESSION NUMBER: 0000070415-98-000061 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980930 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19981016 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GP STRATEGIES CORP CENTRAL INDEX KEY: 0000070415 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EDUCATIONAL SERVICES [8200] IRS NUMBER: 133729186 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-07234 FILM NUMBER: 98726484 BUSINESS ADDRESS: STREET 1: 9 W 57TH ST STREET 2: STE 4170 CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2122309500 MAIL ADDRESS: STREET 1: 9 WEST 57TH STREET STREET 2: STE 4107 CITY: NEW YORK STATE: NY ZIP: 10019 FORMER COMPANY: FORMER CONFORMED NAME: NATIONAL PATENT DEVELOPMENT CORP DATE OF NAME CHANGE: 19920703 8-K 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 September 30, 1998 Date of Report (Date of earliest event reported) GP STRATEGIES CORPORATION (Exact Name of Registrant as Specified in Charter) Delaware 1-7234 13-1926739 (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) Item 2. Acquisition or, Disposition of Assets On September 30, 1998, JL Distributors, Inc., formerly Five Star Group, Inc., a Delaware corporation (JL) and a wholly-owned subsidiary of GP Strategies Corporation (the "Company") completed the sale of substantially all of its operating assets to the Five Star Group, Inc. (Five Star), formerly Five Star Acquisition Corp., a newly formed wholly-owned subsidiary of American Drug Company (ADC) for approximately $16,500,000 in cash and a $5,000,000 unsecured senior note. The Company used the cash proceeds of the transaction to repay JL's existing short-term borrowings. The unsecured senior note bears interest at the rate of 8%, payable quarterly, with the principal due on September 30, 2003. In connection with the above transaction, the Company sold approximately 16% of its interest in ADC to the management and employees of Five Star, thereby reducing its ownership in ADC to approximately 37.5%. As a result of the Company's ownership in ADC falling below 50% during the quarter ended September 30,1998, the Company will no longer consolidate the balance sheet and results of operations of ADC and its wholly-owned subsidiary, Five Star, and will now account for its ownership in ADC on the equity basis. Item 7. Financial Statements and Exhibits (a) N/A (b) Pro forma financial information (1) Pro forma consolidated statement 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. The pro forma balance sheet as of June 30,1998 and the pro forma statements of operations for the year then ended December 31,1997 and the six months ended June 30, 1998 give effect to: (1) the sale of substantially all the operating assets of JL Distributors, Inc. (JL), formerly the Five Star Group, Inc., to the Five Star Group, Inc. (Five Star), formerly Five Star Acquisition Corp., a wholly-owned subsidiary of American Drug Company (ADC) and the assumption of certain liabilities pursuant to the Asset Purchase Agreement dated as of August 31, 1998; (2) the sale of approximately 16.5% of the Company's interest in ADC to the management and employees of Five Star, and the resulting consolidation of the results of operations and the balance sheet of ADC; (3)the acquisition of substantially all the operations, assets, properties, rights and business of The Deltapoint Corporation (Deltapoint) and in connection therewith, assumption of certain 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 the Company and Deltapoint. The Company sold substantially all the operating assets of JL to ADC for approximately $16,500,000 in cash and a $5,000,000 unsecured senior note. The Company used the cash proceeds of the transaction to repay Five Star's existing short-term borrowings . 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. (c) Exhibits Exhibit No. Exhibit 10 Asset Purchase Agreement dated as of August 31, 1998 between American Drug Company and Five Star Group, Inc. Incorporated herein by reference to American Drug Company's Form 8-K filed on September 15, 1998. 99 Press Release, dated October 1, 1998. GP Strategies Corporation and Subsidiaries Pro forma Consolidated Balance Sheet June 30,1998 (unaudited, in thousands)
Pro forma Pro forma Pro forma adjustments adjustments adjustments Actual JL ADC Deltapoint Pro forma ASSETS Current assets Cash and cash equivalents $9,724 $279(4) (126) (8) $9,877 Marketable securities 1,556 1,556 Accounts and other receivables 57,812 (14,435)(1) (95) (8) 2189 (a) 45,471 Inventories 24,255 (22,753)(1) (83) (8) 1,419 Costs and estimated earnings in excess - of billings on uncompleted contracts 9,935 9,935 Prepaid expenses and other current assets 6,458 (1,415)(1) (1) (8) 88 (a) 5,130 ------ --------------- Total current assets 109,740 73,388 -------- ------- Investments and advances 24,948 5,370(7) 305 (8) 35,623 ------- 5,000(3) -------- Property, plant and equipment, at cost 48,991 (6,976)(1) 201 (a) 42,216 Less accumulated depreciation (31,606) 5,424(1) (26,182) -------- --------------- 17,385 16,034 ------- ------ Intangible assets, net 75,128 (3,953)(2) 4678 (b) 75,853 ------- -------------- Deferred tax assets 592 592 ---- --------------- Other assets 4,382 (56)(1) (34) (8) 4,292 ------ --------------- $232,175 $205,782 --------- -------- Note: Effective September 30, 1998, the Five Star Group, Inc. changed its name to JL Distributors, Inc.(JL). JL ia a wholly-owned subsidiary of the Company.
LIABILITIES AND STOCKHOLDERS' EQUITY
Pro forma Pro forma Pro forma adjustments adjustments adjustments Actual JL ADC Deltapoint Pro forma Current liabilities Current maturities of long-term debt and notes payable $862 122 (a) 984 Short-term borrowings 45,573 (19,049)(5) 6280 (c) 32,804 Accounts payable and accrued expenses 27,365 (10,791)(1) (34)(8) 344 (a) 16,984 100 (d) Billings in excess of costs and estimated - earnings on uncompleted contracts 9,163 24 (a) 9,187 ------ ------------ Total current liabilities 82,963 59,959 ------- ------ 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) (3,675)(6) (36,957) Net unrealized gain on available-for-sale securities 4,709 4,709 Treasury stock, at cost (1,736) (1,736) ------- ---------- Total stockholders' equity 129,754 126,079 -------- ---------- $232,175 $205,782 -------- ---------- Note: Effective September 30, 1998, the Five Star Group, Inc. changed its name to JL Distributors, Inc.(JL). JL ia a wholly-owned subsidiary of the Company.
Deltapoint (a) to record the purchase of the assets of The Deltapoint Corporation, as if the purchase had 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 JL and ADC (1) to record the sale of certain assets and liabilities of JL to Five Star, a wholly-owned subsidiary of ADC (2) to record the elimination of the good- will related to JL (see adjustment (7) (3) to record the issuance of a $5,000,000 senior unsecured note by ADC to JL Distributors (4) to record the cash received by the Company on its sale of shares of ADC common stock to the employees of JL (5) to record the cash payment by Five Star for the value of the outstanding short-term borrowings (6) to record the estimated loss on the sale of certain net assets of JL to Five Star (7) to record 37.5% of the value of the net assets of JL sold to ADC, as well as the transfer of 37.5% of the goodwill related to JL to Investments and advances (8) to reflect the Company's interest in ADC falling below 50% (37.5%), and the subsequent accounting for ADC on the equity basis GP Strategies Corporation and Subsidiares Pro forma Statement of Operations Year ended December 31, 1997 (unaudited, in thousands)
less: less: plus: Pro forma Actual JL ADC Deltapoint adjustments Pro forma Sales $234,801 $82,300 $1,123 $10,959 $162,337 Cost of goods sold 99,572 68,578 936 130,058 ------- ------- - ---- -------- Gross margin 35,229 13,722 187 10,959 32,279 ------- ------- - ---- - ------- -------- Selling, general & administrative expenses 31,502) (12,867) (1,385) (9,013) (214)(a) (26,497) (20)(b) Interest expense (4,075) (72) (37) 1,563(c) (2,477) Investment and other income, net 2,364 1,433 924 39 (299)(e) (253) Gain (loss) on trading securities 689 689 Minority interests 25 - 25 ------- ------- ---- Income before income taxes 2,730 2,288 (346) 1,948 3,766 Income tax benefit (expense) 693 (120) - - (124)(d) 689 ------ ------ ----- ---- - ----- Net income $3,423 $2,168 $(346) $1,948 $4,455 ------- - ------- - ------ - ------- - ------ Net income per share: Basic $0.33 $0.43 ------ - ----- Diluted $0.31 $0.41 ------ - ----- Note: Effective September 30, 1998, the Five Star Group, Inc. changed its name to JL Distributors, Inc.(JL). JL ia a wholly-owned subsidiary of the Company.
(a) to adjust the amortization of goodwill as follows: Deltapoint; $4,618,000 over a 30 year period $(154,000) JL; to eliminate goodwill previously recorded at (60,000) the corporate level ---------------- $(214,000) ---------------- (b) to record the amortization of a $60,000 covenant not to compete, related to Deltapoint, over a three year period (c) to adjust interest expense as follows: Deltapoint; interest at the prime rate (8.5%) $(534,000) related to the cash purchase price of $6,280,000 to reduce interest expense related to the 1,697,000 short-term borrowings to record interest income on the 8% $5,000,000 400,000 senior unsecured note ---------------- $1,563,000 ---------------- (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 (e) to adjust Investment and other income as follows: to record 37.5% of the goodwill previously recorded at the corporate level $(23,000) JL; to record 37.5% of the goodwill eliminated within Five Star (173,000) JL; to record 37.5% of the interest on the short-term borrowings (636,000) to record the Company's 37.5% share in the income and loss of Five Star and ADC 683,000 JL; to record 37.5% of the interest expense on the unsecured senior note (150,000) ---------------- $(299,000) ----------------
GP Strategies Corporation and Subsidiares Pro forma Statement of Operations Six months ended June 30,1998 (unaudited, in thousands)
less: less: plus: Pro forma Actual JL ADC Deltapoint adjustments Pro forma Sales $133,769 $42,328 $158 $6,072 $97,355 Cost of goods sold 113,641 35,455 142 2,413 80,457 -------- - ------- - ---- - ------ ------ Gross margin 20,128 6,873 16 3,659 16,898 ------- - ------ - --- - ------ ------ Selling, general & administrative expenses (15,768) (6,282) (430) (3,951) $(107) (a) (13,124) (10) (b) Interest expense (1,846) - 678 (c) (1,168) Investment and other income, net 782 622 80 (151) (e) (71) Gain on trading securities 1,272 - - ______ 1,272 ------------------------------------- ---------- Income before income taxes 4,568 1,213 (334) (292) 3,807 Income tax expense (514) (80) - - 28 (d) (406) ----- - ---- - ---- - ---- ----- Net income $4,054 $1,133 $(334) $(292) $3,401 ------- - ------- - ------ - ------ ------ Net income per share: Basic $0.38 $0.32 ------ ----- Diluted $0.33 $0.28 - ------ Note: Effective September 30, 1998, the Five Star Group, Inc. changed its name to JL Distributors, Inc.(JL). JL ia a wholly-owned subsidiary of the Company.
(a) to adjust the amortization of goodwill as follows: Deltapoint; $4,618,000 over a 30 year period $(77,000) JL; to eliminate goodwill previously recorded at the corporate level (30,000) ---------------- $(107,000) ---------------- (b) to record the amortization of a $60,000 covenant not to compete, related to Deltapoint, over a three year period (c) to adjust interest expense as follows: Deltapoint; interest at the prime rate (8.5%)related to the cash purchase price of $6,280,000 $(267,000) to reduce interest expense related to the short-term borrowings 745,000 to record interest income on the 8% $5,000,000 senior unsecured note 200,000 --------------- $678,000 ---------------- (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 (e) to adjust Investment and other income as follows: to record 37.5% of the goodwill previously recorded at the corporate level $(11,000) JL; to record 37.5% of the goodwill eliminated within Five Star (86,000) JL; to record 37.5% of the interest on the short-term borrowings (279,000) to record the Company's 37.5% share in the income and loss of JL and ADC 300,000 JL; to record 37.5% of the interest expense onthe unsecured senior note (75,000) ---------------- $(151,000) ----------------
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: October 15, 1998 BY: Scott N. Greenberg Executive Vice President and Chief Financal Officer EXHIBIT INDEX Exhibit No. Description Page 10 Asset Purchase Agreement dated as of August 31, 1998 between American Drug Company and Five Star Group, Inc. Incorporated herein by reference to American Drug Company's Form 8-K filed on September 15, 1998. 99 Press Release, dated October 1, 1998 EX-99 2 Contact: Scott N. Greenberg GP Strategies Corporation Executive Vice President and Chief Financial Officer (212) 230-9529 GP STRATEGIES CORPORATION ANNOUNCES THE SALE OF ALL OPERATING ASSETS OF THE FIVE STAR GROUP, INC. TO AMERICAN DRUG COMPANY FOR IMMEDIATE RELEASE: New York, New York, October 1, 1998, . . . . . . GP Strategies Corporation (NYSE:GPX) announced today that its wholly-owned subsidiary, the Five Star Group, Inc. (Five Star) has sold substantially all of Five Star's operating assets to American Drug Company (OTC-ADRG) for approximately $16,500,000 in cash and a $5,000,000 unsecured senior note. As previously announced, GP Strategies used the cash proceeds of the transaction to repay Five Star's existing short-term borrowings, thereby reducing GP Strategies short-term debt. Five Star is a leading distributor of home decorating, hardware and finishing products in the northeast. GP Strategies has sold approximately 16% of its interest in American Drug to the management of Five Star, bringing GP Strategies' interest in American Drug to approximately 38%. As a result of the proposed transaction, GP Strategies will no longer consolidate the operations of Five Star, but will instead account for Five Star as an investment. For the year ended December 31, 1997, Five Star had sales of $82,300,000. With the conclusion of this transaction over 95% of GP Strategies' revenues will be derived from the performance improvement and training industry. GP Strategies principal operating subsidiary, General Physics Corporation, now with over 2100 employees located in 75 offices worldwide, provides performance improvement services to Fortune 500 companies, manufacturing and process industries, electric power utilities, and other commercial and governmental customers. The forward-looking statements contained herein reflect GP Strategies' management's current view 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, the risks that the sale of certain assets of Five Star to American Drug will not be completed, and those risks and uncertainties detailed in GP Strategies' periodic reports and registration statements filed with the Securities and Exchange Commission. # # # -----END PRIVACY-ENHANCED MESSAGE-----