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
Date of Report: December 19, 2003
Date of earliest event reported: October 8, 2003
GP Strategies Corporation
(Exact name of registrant as specified in its charter)
Delaware 1-7234 13-1926739
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(State or other Jurisdiction (Commission (I.R.S. Employer
of Incorporation File Number) Identification No.)
777 Westchester Avenue, White Plains, NY 10604
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (914) 249-9700
N/A
(Former name or former address, if changed since last report)
Item 2. Acquisition or Disposition of Assets.
This Form 8-K/A amends the current report on Form 8-K dated October 8,
2003 (filed October 13, 2003) to amend the Item in which initial information was
reported from Item 5 to Item 2 and to include Item 7(b) Pro Forma Combined
Statements of Operations for the year ended December 31, 2002 and the nine
months ended September 30, 2003, as well as the Pro Forma Combined Balance Sheet
as of September 30, 2003.
On October 8, 2003, GP Strategies Corporation (the "Company") converted
$500,000 principal amount of the $3,500,000 Senior Unsecured 8% Note due
September 30, 2004 of Five Star Products, Inc. ("Five Star") into 2,000,000
shares of Five Star common stock (the "Five Star Acquisition"). In consideration
for the Company agreeing to convert at a conversion price of $0.25 per share,
Five Star agreed to terminate the voting agreement between the Company and Five
Star. The voting agreement, which by its terms would in any event have
terminated on June 30, 2004, provided that the Company (i) would vote its Five
Star common stock so that not more than 50% of the members of the Five Star
board of directors would be officers or directors of the Company and (ii) would
vote on matters other than the election of directors in the same proportion as
the other Five Star stockholders.
The Five Star Acquisition, which was approved by a Special Committee of
the Five Star board of directors comprised of an independent non-management
director who is unaffiliated with the Company, increased the Company's ownership
in Five Star from approximately 48% to approximately 54% of the outstanding Five
Star common stock and resulted in the Company obtaining control of Five Star. In
addition, the Company continues to own the remaining $3 million principal amount
of Five Star's Senior Unsecured 8% Note due September 30, 2004.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of the Business Acquired
The historical consolidated financial statements of Five Star Products,
Inc., including Five Star Products, Inc. consolidated balance sheets as of
December 31, 2001 and December 31, 2002, and the consolidated statements of
operations, changes in stockholders' equity and cash flows for each of the three
fiscal years in the periods ending December 31, 2002 are included in Five Star
Products, Inc Form 10-K for its fiscal year ended December 31, 2002 and
incorporated by reference.
The historical consolidated financial statements of Five Star Products,
Inc., including Five Star Products, Inc. consolidated condensed balance sheet as
of December 31, 2002 and September 30, 2003, and the consolidated condensed
statements of operations, comprehensive income and cash flows for the nine
months ended September 30, 2002 and September 30, 2003 are included in Five Star
Products, Inc Form 10-Q for its fiscal quarter ended September 30, 2003 and
incorporated by reference.
(b) Unaudited Pro Forma Financial Information
Unaudited Pro Forma Combined Statements of Operations for the year
ended December 31, 2002 and the nine months ended September 30, 2003, and the
Unaudited Pro Forma Combined Balance Sheet as of September 30, 2003:
The Unaudited Pro Forma Combined Balance Sheet as of September 30, 2003
is prepared as if the Five Star Acquisition had occurred on such date and the
Unaudited Pro Forma Combined Statements of Operations for the year ended
December 31, 2002 and the nine months ended September 30, 2003 are prepared as
if the Five Star Acquisition had occurred as of the beginning of such periods.
The acquisition is being accounted for as a purchase business combination.
Accordingly, the Company has recorded the estimated fair value of the assets and
liabilities acquired.
The unaudited pro forma adjustments are based on management's
preliminary estimates of the value of the tangible and intangible assets and
liabilities acquired. As a result, the actual adjustments may differ materially
from those presented in these Unaudited Pro Forma Combined Financial Statements.
A change in the Unaudited Pro Forma Combined Balance Sheet adjustments of the
purchase price for an acquisition would primarily result in a reallocation
affecting the value assigned to tangible and intangible assets. The income
statement effect of these changes will depend on the nature and amount of the
assets or liabilities adjusted.
The Unaudited Pro Forma Combined 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 purchase been consummated as of the dates indicated above. In addition, the
Pro Forma Combined Financial Statements are not necessarily indicative of the
future financial conditions or operating results of the Company.
The Unaudited Pro Forma Combined Financial Statements have been
prepared by the management of the Company. The statements should be read in
conjunction with the Company's historical financial statements and notes thereto
for the fiscal year ended December 31, 2002 and the nine months ended September
30, 2003, which are included in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2002, as amended, and its Quarterly Report on
Form 10-Q for the fiscal quarter ended September 30, 2003, as amended. The
statements should also be read in conjunction with Five Star's historical
financial statements, and the notes thereto for its fiscal year ended December
31, 2002 and the nine months ended September 30, 2003, which are included in
Five Star's Annual Report on Form 10-K for the fiscal year ended December 31,
2002 and its Quarterly Report on Form 10-Q for the fiscal quarter ended
September 30, 2003, each of which are incorporated herein by reference.
GP STRATEGIES CORPORATION
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003
(in thousands, except per share data)
GP Five Star
Strategies Products, Pro Forma Pro Forma
Corporation (1) Inc. (2) Adjustments (3) Combined
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Sales $106,352 $75,053 $181,405
Cost of sales 93,598 61,818 155,416
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Gross margin 12,754 13,235 25,989
Selling, general and administrative (17,566) (11,518) 82 (A) (29,002)
Interest expense (2,659) (781) 250 (B) (3,190)
Investment and other income (loss), net 100 (250) (B)
(189) (C) (339)
Valuation adjustment of liability for warrants 1,162 1,162
Gain on sales of marketable securities 398 398
Minority interest (250) (C) (250)
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Income (loss) before income taxes (5,811) 936 (357) (5,232)
Income tax (expense) benefit (605) (393) (998)
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Net income(loss) $(6,416) $543 $(357) $(6,230)
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Per Share Data:
Basic and diluted loss per share $(.38) $ (.37)
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Weighted average shares used to calculate
earnings per common share amounts 17,028 17,028
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(1) Represents historical statement of operations of the Company for the
nine months ended September 30, 2003, derived from the unaudited
consolidated financial statements of the Company included in the
Quarterly Report on Form 10-Q.
(2) Represents historical statement of operations of Five Star for the nine
months ended September 30, 2003, derived from the unaudited consolidated
financial statements of that company included in the Quarterly Report on
Form 10-Q.
(3) The Pro Forma adjustments give effect to the acquisition of Five Star as
if it were consummated on January 1, 2003.
See accompanying notes to the Unaudited Pro Forma Financial Statements
GP STRATEGIES CORPORATION
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2002
(in thousands, except per share data)
GP Five Star
Strategies Products, Pro Forma Pro Forma
Corporation (1) Inc. (2) Adjustments (3) Combined
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Sales $152,233 $94,074 $246,307
Cost of sales 134,768 77,461 212,229
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Gross margin 17,465 16,613 34,078
Selling, general and administrative (21,042) (14,763) 104(A) (35,701)
Interest expense (2,770) (1,131) 384(B) (3,517)
Investment and other income (loss), net (1,967) (384)B)
(161)C) (2,512)
Gain on sales of marketable securities 2,267 2,267
Minority interest (180)C) (180)
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Income (loss) before income taxes (6,047) 719 (237) (5,565)
Income tax (expense) benefit 819 (328) 491
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Net income(loss) $(5,228) $391 $(237) $(5,074)
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Per Share Data:
Basic and diluted loss per share $ (.34) $ (.33)
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Weighted average shares used to calculate
earnings per common share amounts 15,370 15,370
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(1) Represents historical 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 historical statement of operations of Five Star for the year
ended December 31, 2002, derived from the audited consolidated financial
statements of that company included in the Annual Report on Form 10-K.
(3) The Pro Forma adjustments give effect to the acquisition of Five Star as
if it were consummated on January 1, 2002.
See accompanying notes to the Unaudited Pro Forma Financial Statements
GP STRATEGIES CORPORATION
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
AS OF SEPTEMBER 30, 2003
(in thousands)
GP Five Star
Strategies Products, Pro Forma Pro Forma
Corporation (1) Inc. (2) Adjustments (3) Combined
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Assets
Current assets
Cash and cash equivalents $2,863 $ 7 $2,870
Accounts and other receivables, net 23,878 13,268 (100)(B) 37,046
Inventories 1,803 20,222 22,025
Costs and estimated earnings in excess of billings 11,217 11,217
Prepaid expenses and other current assets 4,503 427 4,930
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Total current assets 44,264 33,924 (100) 78,088
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Investments, marketable securities and note receivable
11,916 (3,500)(B)
(1,532)(D) 6,884
Property, plant and equipment, net 8,150 787 (307)(A)(E) 8,630
Goodwill 57,554 57,554
Deferred tax asset 10,754 229 (124)(G)
120 (F) 10,979
Other assets 6,083 78 6,161
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Total assets $138,721 $35,018 $(5,443) $168,296
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Liabilities and stockholders' equity
Current liabilities
Short-term borrowing and current maturities of
long-term debt $13,389 17,616 $31,005
Accounts payable and accrued expenses 18,550 10,063 (100)(B) 28,513
Billings in excess of costs and estimated earnings on
uncompleted contracts 4,955 4,955
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Total current liabilities 36,894 27,679 (100) 64,473
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Long-term debt less current maturities 7,974 3,500 (3,500)(B) 7,974
Other non-current liabilities 1,134 1,134
Minority interest 1,996(D) 1,996
Stockholders' equity
Common stock 163 153 (153)(D) 163
Class B common stock 12 12
Capital in excess of par value 195,143 8,071 (8,071)(D) 195,143
Retained earnings (deficit) (99,583) (4,363) 4,363(D) (99,583)
Accumulated other comprehensive income (loss) 456 21 (21)(D) 456
Note receivable from stockholder (3,258) (3,258)
Treasury stock, at cost (214) (43) 43(D) (214)
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Total stockholders' equity 92,719 3,839 (3,839) 92,719
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Total liabilities and stockholders' equity $138,721 $35,018 $(5,443) $168,296
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(1) Represents historical balance sheet of the Company as of September 30,
2003, derived from the unaudited consolidated financial statements of the
Company included in the Quarterly Report on Form 10-Q.
(2) Represents historical balance sheet of Five Star as of September 30, 2003,
derived from the unaudited consolidated financial statements of that
company included in the Quarterly Report on Form 10-Q.
(3) The Pro Forma adjustments give effect to the acquisition of Five Star
as if it were consummated on September 30, 2003.
See accompanying notes to the Unaudited Pro Forma Financial Statements
GP STRATEGIES CORPORATION
Notes to Unaudited Pro Forma Combined Financial Statements
(A) To reduce property, plant and equipment and related depreciation
expense to reflect the allocation of negative goodwill arising in
purchase accounting.
(B) To eliminate loans and balances due the Company from Five Star and the
related interest.
(C) To eliminate the Company's equity in earnings of Five Star and record
earnings of minority interest as a result of the acquisition of Five
Star.
(D) To eliminate the Company's equity investment in Five Star and record
minority interest as a result of the acquisition of Five Star.
(E) The Five Star Acquisition has been included in the Unaudited Pro Forma
Balance Sheet as if the acquisition were consummated at September 30,
2003. The excess of the related net assets over the purchase price is
determined as follows:
(in thousands)
Five Star net assets as of September 30, 2003 $3,839
Additional net assets arising from the Five Star Acquisition 500
The Company's investment in Five Star as of September 30, 2003 (1,532)
Minority interest (1,996)
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Net assets acquired 811
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Purchase price:
Additional investment arising from the Five Star Acquisition 500
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Excess of net assets acquired over the purchase price prior
to the deferred tax asset adjustment 311
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Deferred tax asset adjustment - Note (G) (124)
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Excess of net assets acquired over the purchase price,
net of tax effect of $120 $187
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(F) To record the tax effect of the negative goodwill arising in purchase
accounting which reduced property, plant and equipment.
(G) To eliminate the portion of Five Star's deferred tax asset that is allocable
to the Company.
EXHIBITS.
23.1 Consent of Eisner LLP as Independent Auditors to Five Star Products, Inc.
99.1 GP Strategies Corporation Annual Report on Form 10-K for the fiscal year
ended December 31, 2002, filed on April 15, 2003 and amended on April 29, 2003.*
99.2 GP Strategies Corporation Quarterly Report on Form 10-Q for the fiscal
quarter ended September 30, 2003, filed on November 19, 2003 and amended on
November 20, 2003.*
99.3 Five Star Products, Inc. Annual Report on Form 10-K for the fiscal year
ended December 31, 2002, filed on April 15, 2003. *
99.4 Five Star Products, Inc Quarterly Report on Form 10-Q for the fiscal
quarter ended September 30, 2003, filed on November 14, 2003.*
* Previously filed
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 19, 2003 By: Scott N. Greenberg, President and
Chief Financial Officer