NY - GP Strategies Report Fourth Quarter Operating Loss ( Mention of Y2K Issues)

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Title: GP Strategies Reports Fourth Quarter Operating Loss Story Filed: Tuesday, March 28, 2000 9:54 AM EST

NEW YORK, Mar 28, 2000 (BUSINESS WIRE) -- GP Strategies Corporation (NYSE:GPX) today reported a net loss of $12,814,000 or $1.12 per share diluted for the quarter ended December 31, 1999 compared to net income of $452,000, or $.04 per share diluted, for the quarter ended December 31, 1998. Included in the net loss for the quarter ended December 31, 1999, is approximately $11,200,000 of specific charges and losses discussed below. Net sales for the 1999 quarter decreased to $48,857,000 from $64,733,000 in the 1998 quarter.

For the year ended December 31, 1999, the Company reported a net loss of $22,205,000 or $1.95 per share diluted on net sales of $224,810,000 compared to a net loss for the year ended December 31, 1998 of $2,061, 000 or $.19 per share diluted, on net sales of $284,682,000. Included in the 1998 net loss was a $6,225,000 loss related to the sale of the assets of Five Star Group (which took place in the third quarter of 1998), and included in 1998 net sales was net sales of $64,148,000 of the Five Star Group.

The Company's General Physics subsidiary suffered a downturn in the fourth quarter of 1999, due to increased losses in its IT Group, as well as a slowdown in General Physics' Manufacturing and Process Groups.

The Company believes that the results were primarily due to clients diverting potential training dollars to resolve possible Y2K issues, a lack of new software product introductions and product sales in the IT area, delays in plant launches, and a general weakness in the technology enhancement business.

The Company took further steps in the fourth quarter of 1999, in addition to the steps it took in the second quarter, to better define the focus of its IT and consulting services, including closing or consolidating offices, terminating employees, and reducing related costs. As a result, the Company took restructuring and other charges that contributed to a fourth quarter loss for the IT Group of approximately $6,200,000 and recognized an additional loss of approximately $1,400,000 in connection with streamlining its consulting services practice.

In addition, the Company incurred expenses of $2,700, 000 relating to the terminated merger with an affiliate of Veronis, Suhler & Associates (VS&A) and incurred losses of approximately $900,000 related to its Hydro Med Sciences division, which is focusing its efforts to obtain FDA approval for its prostate cancer drug delivery system.

As a result of its operating loss and such specific charges and losses, the Company is in technical violation of certain financial covenants contained in its bank credit agreement. Based on discussions with its banks, the Company believes the agreement will be amended to eliminate the technical defaults.

The Company has reduced its borrowings under its revolving credit and term loan agreement from approximately $54,500,000 at December 31, 1999 to $47,500,000 currently.

The Company believes that the downturn in the fourth quarter of 1999 of the Manufacturing and Process Groups is only a temporary decline. The Company believes that it is still well positioned and unrivaled in its scope of services, quality and performance of its people. The Company anticipates that business will start improving in the second quarter of 2000.

The Company recently received several major awards from Fortune 500 corporations. The Company intends to continue to evaluate the sale of non-core assets and recently sold substantially all of its remaining shares in GTS Duratek, Inc.

An unaudited comparative summary of GP Strategies' consolidated net sales and operations for the fourth quarter ended December 31, 1999 and 1998 is as follows (in thousands, except per share data):

Quarter Ended December 31, 1999 1998 ------------ -------

Net Sales $ 48,857 $ 64,733 ======== ========Income (loss) before the following: (7,673)(a) 1,775 Interest expense (1,717) (759)

HMS loss (884) (25) Terminated merger expense (2,747)

Income tax (expense) benefit 207 (539) ---------- ----------- Net income (loss) $(12,814) $ 452 ======== ===========

Net income (loss) per share:

Diluted $ (1.12) $ .04 ========== ============Basic $ (1.12) $ .04 ========== ============ (a) Included in the fourth quarter 1999 loss is an approximately $6,200, 000 loss incurred by the IT Group and an approximately $1,400,000 loss incurred by General Physics' consulting services practice. These losses include expenses related to facility closures, severance and asset impairments.

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 the risk that the Company will not be able to obtain amendments to its loan agreement to eliminate existing defaults and those risks and uncertainties detailed in GP Strategies' periodic reports and registration statements filed with the Securities and Exchange Commission.

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-- (Dee360Degree@aol.com), March 28, 2000

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