Gasporox
Annual Report 2017

Plain-text annual report

Morningstar® Document Research℠ FORM 10-KGP STRATEGIES CORP - GPXFiled: March 01, 2018 (period: December 31, 2017)Annual report with a comprehensive overview of the companyThe information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The userassumes all risks for any damages or losses arising from any use of this information, except to the extent such damages or losses cannot belimited or excluded by applicable law. Past financial performance is no guarantee of future results.UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549FORM 10-Kx Annual Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934For the fiscal year ended December 31, 2017¨ Transition Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934For the transition period from to Commission File Number 1-7234 GP STRATEGIES CORPORATION(Exact name of Registrant as specified in its charter) Delaware52-0845774(State of Incorporation)(I.R.S. Employer Identification No.)70 Corporate Center 11000 Broken Land Parkway, Suite 200, Columbia, MD21044(Address of principal executive offices)(Zip Code) (443) 367-9600Registrant’s telephone number, including area code: Securities registered pursuant to Section 12(b) of the Act:Title of Each Class Name of each exchange on which registered:Common Stock, $.01 par value New York Stock Exchange, Inc.Securities registered pursuant to Section 12(g) of the Act: NoneIndicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No xIndicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ¨ No xIndicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted andposted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit andpost such files). Yes x No ¨Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’sknowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. xIndicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “largeaccelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.Large accelerated filer¨Accelerated filerxNon-accelerated filer¨Smaller reporting company¨Emerging growth company¨If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financialaccounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12(b)-2 of the Exchange Act). Yes ¨ No xThe aggregate market value of the outstanding shares of the Registrant’s Common Stock, par value $.01 per share, held by non-affiliates as of June 30, 2017 was approximately$328,089,000.The number of shares outstanding of the registrant’s Common Stock as of February 16, 2018:Class OutstandingCommon Stock, par value $.01 per share 16,592,007 sharesDOCUMENTS INCORPORATED BY REFERENCEPortions of the registrant’s definitive Proxy Statement for its 2018 Annual Meeting of Stockholders are incorporated herein by reference into Part III hereof.Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents PagePART I Cautionary Statement Regarding Forward-Looking Statements1 Item 1.Business1 Item 1A.Risk Factors8 Item 1B.Unresolved Staff Comments18 Item 2.Properties19 Item 3.Legal Proceedings19 Item 4.Mine Safety Disclosures19 PART II Item 5.Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities20 Item 6.Selected Financial Data23 Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations24 Item 7A.Quantitative and Qualitative Disclosures About Market Risk41 Item 8.Financial Statements and Supplementary Data42 Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure79 Item 9A.Controls and Procedures79 Item 9B.Other Information79 PART III Item 10.Directors, Executive Officers and Corporate Governance80 Item 11.Executive Compensation80 Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters80 Item 13.Certain Relationships and Related Transactions, and Director Independence81 Item 14.Principal Accounting Fees and Services81 PART IV Item 15.Exhibits and Financial Statement Schedules82 Signatures85Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Cautionary Statement Regarding Forward-Looking Statements This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of theSecurities Exchange Act of 1934, as amended (the “Exchange Act”). The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” forforward looking statements. Forward–looking statements are not statements of historical facts, but rather reflect our current expectations concerning futureevents and results. We use words such as “expects,” “intends,” “believes,” “may,” “will,” “should,” “could,” “anticipates,” “estimates,” “plans” and similarexpressions to indicate forward-looking statements, but their absence does not mean a statement is not forward-looking. Because these forward-lookingstatements are based upon management’s expectations and assumptions and are subject to risks and uncertainties, there are important factors that could causeactual results to differ materially from those expressed or implied by these forward-looking statements, including, but not limited to, those factors set forthunder Item 1A - Risk Factors and those other risks and uncertainties detailed in our periodic reports and registration statements filed with the Securities andExchange Commission (“SEC”). We caution that these risk factors may not be exhaustive. We operate in a continually changing business environment, andnew risk factors emerge from time to time. We cannot predict these new risk factors, nor can we assess the effect, if any, of the new risk factors on our businessor the extent to which any factor or combination of factors may cause actual results to differ from those expressed or implied by these forward-lookingstatements. If any one or more of these expectations and assumptions proves incorrect, actual results will likely differ materially from those contemplated by the forward-looking statements. Even if all of the foregoing assumptions and expectations prove correct, actual results may still differ materially from those expressed inthe forward-looking statements as a result of factors we may not anticipate or that may be beyond our control. While we cannot assess the future impact thatany of these differences could have on our business, financial condition, results of operations and cash flows or the market price of shares of our commonstock, the differences could be significant. We do not undertake to update any forward-looking statements made by us, whether as a result of new information,future events or otherwise. You are cautioned not to unduly rely on such forward-looking statements when evaluating the information presented in thisreport. Company Information Available on the Internet Our Internet address is www.gpstrategies.com. We make available free of charge through our Internet site, our annual reports on Form 10-K; quarterly reportson Form 10-Q; current reports on Form 8-K; and any amendment to those reports filed or furnished pursuant to the Exchange Act as soon as reasonablypracticable after such material is electronically filed with, or furnished to, the SEC.PART I Item 1: Business Company Overview GP Strategies Corporation, which is a New York Stock Exchange (“NYSE”) listed company traded under the symbol GPX, is a global performanceimprovement solutions provider of training, digital learning solutions, management consulting and engineering services. References in this report to “GPStrategies,” the “Company,” “we” and “our” are to GP Strategies Corporation and its subsidiaries, collectively. We are a global performance improvement and learning solutions provider focused on improving the effectiveness of organizations by delivering innovativeand superior training, consulting and business improvement services, customized to meet the specific needs of our clients. We also provide leadershipdevelopment, sales training, platform adoption, management consulting, engineering and technical services, learning outsourcing and multimedia solutionswhich enhance our customized learning capabilities and diversify our service offerings. We have global execution capabilities and provide services to a largecustomer base across a broad range of industries in over 50 countries. We serve leading companies in the automotive, financial services and insurance,pharmaceutical, oil and gas, power, chemical, electronics and technology, manufacturing, software, retail, healthcare, education and food and beverageindustries, as well as government agencies. We have over five decades of experience in developing solutions to optimize workforce performance byproviding services and products to our clients that assist them in successfully aligning their employees, processes and technologies. Over the last several years, we have focused on building our custom performance improvement and learning business through internal growth and theacquisition of complementary businesses. Since 2006, we have completed over 30 acquisitions to strengthen1Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.our capabilities in specific training and technical service areas, expand our global presence, and increase our customer base and market sector reach. As aresult, we’ve added product sales training and leadership training, and strengthened our digital learning and content development expertise, while alsoexpanding further within Europe and Asia Pacific. Our acquisitions have also expanded our market sector reach, added new customers and enhanced ourservice offerings through the addition of new complementary services. We also invested in global expansion through the establishment of over a dozen newsubsidiaries in select countries since 2013 to support new global outsourcing contracts. We believe our expanded infrastructure and the ability to deliverglobally will allow us to better support our existing client base as well as win new business for our comprehensive service offerings. Operating Segments For the year ended December 31, 2017, we operated through four reportable business segments: (i) Learning Solutions, (ii) Professional & Technical Services,(iii) Sandy Training & Marketing, and (iv) Performance Readiness Solutions. Each of our reportable segments represents an operating segment under U.S.GAAP. We are organized by operating group primarily based upon the markets served by each group and/or the services performed. Each operating groupconsists of business units which are focused on providing specific products and services to certain classes of customers or within targeted markets. Marketingand communications, accounting, tax, finance, legal, human resources, information systems and other administrative services are organized at the corporatelevel. Business development and sales resources are aligned with operating groups to support existing customer accounts and new customer development.Further information regarding our business segments is discussed below. Learning Solutions. The Learning Solutions segment delivers training, curriculum design and development, digital learning services, system hosting,managed learning services and consulting services globally. This segment serves large companies in the electronics and semiconductors, healthcare, software,financial services and other industries as well as government agencies. This segment also provides apprenticeship and vocational skills training funded by anagency of the United Kingdom government. The ability to deliver a wide range of training services on a global basis allows this segment to take over theentire learning function for the client, including their training personnel. Professional & Technical Services. The Professional & Technical Services segment provides training, consulting, engineering and technical services,including lean consulting, emergency preparedness, safety and regulatory compliance, chemical demilitarization and environmental services primarily tolarge companies in the manufacturing, steel, pharmaceutical, energy and petrochemical industries; federal and state government agencies; and largegovernment contractors. Our proprietary EtaPROTM Performance and Condition Monitoring System provides a suite of real-time software solutions for powergeneration facilities and is installed on power-generating units across the world. In addition to providing custom training solutions, this segment providesweb-based training through our GPiLEARNTM portal, which offers a variety of courses to power plant personnel in the U.S. and other countries. This segmentalso provides services to users of alternative fuels, including designing and constructing liquefied natural gas (LNG), liquid to compressed natural gas(LCNG), compressed natural gas (CNG) and hydrogen fueling stations, as well as supplying equipment. Sandy Training & Marketing. The Sandy Training & Marketing segment provides custom product sales training and has been a leader in servingmanufacturing customers in the U.S. automotive industry for over 40 years. Sandy provides custom product sales training designed to better educate customersales forces with respect to new vehicle features and designs, in effect rapidly increasing the sales force knowledge base and enabling them to addressdetailed customer queries. Furthermore, Sandy helps our clients assess their customer relationship marketing strategy and connect with their customers on aone-to-one basis including through custom publications. This segment also provides technical training services to automotive manufacturers as well ascustomers in other industries. Performance Readiness Solutions. This segment provides performance consulting and technology consulting services, including platform adoption, end-user training, change management, knowledge management, customer product training outsourcing, training content development and sales enablementsolutions. This segment also offers organization performance solutions, including leadership development training, strategy-through-implementationconsulting services and employee engagement tools and services. Industries served include manufacturing, aerospace, healthcare, life sciences, consumerproducts, financial, telecommunications and higher education as well as government agencies. 2Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Segment Financial Information For financial information about our business segments and geographic operations and revenue, see Note 12 to the accompanying Consolidated FinancialStatements. Services and Products Our personnel come from varied backgrounds in the corporate, technical, military and government arenas. They use their professional knowledge to createcost-effective solutions to address modern business and governmental performance challenges. Our training, consulting and engineering services and relatedproduct offerings are discussed in more detail below. Training. We provide custom training services and products to support our customers’ existing operations, as well as the launch of new plants, products,equipment, technologies and processes. Our training services are comprehensive, covering all aspects of an organization's needs, including: •Content and Curriculum Development. Services include a fundamental analysis of the client’s needs, curriculum design, instructional materialdevelopment (in hard copy, electronic/software or other format), information technology service support and delivery. Our instructional deliverycapabilities include traditional classroom, structured on-the-job training (OJT), just-in-time methods, computer-based, web-based, video-based andthe full spectrum of digital learning technologies.•Digital Learning. Though part of our content development services, our digital learning capabilities distinguish themselves because we are able tofunction as a single-source digital learning solutions provider through our integration services and hosting, the development and provisioning ofproprietary content and the aggregation and distribution of third party content. While considered a custom content developer in this arena, we are alsothe creators of GPiLearn™, a packaged, web-based training curriculum designed to equip workers with specialized maintenance, mechanical, operatorand technical skills throughout the energy industry (nuclear, fossil, hydroelectric, wind farms and other power generating plants) in order to addressthat industry's growing needs for a skilled and multi-skilled workforce.•Learning & Training Outsourcing. We offer a wide range of managed learning services, including design, delivery and global management ofcomprehensive learning programs for national and multinational businesses and government organizations. We can deliver our services individuallyor as a complete, integrated training solution. Solutions include the management of our customers’ training departments, as well as administrativeprocesses, such as tuition assistance program management, vendor management, call center/help desk administration and learning managementsystem (LMS) administration. Our services encompass a wide spectrum of learning engagements ranging from focusing on a single aspect of a learningprocess to multi-year contracts where we manage the learning infrastructure of our customer. In addition, we automate a large amount of ourcustomers’ tuition reimbursement programs by utilizing our own proprietary software.•Documentation Development. Training-related documentation products include custom instructor and student training manuals, job aids to supporttechnical skills development and instructional materials suitable for web-based and blended learning solutions.•Specialized Training Areas. Our professionals possess diverse skills in multiple industries that enable us to address specialized training needs,including technical training, machine and equipment maintenance training, product sales training and incentive programs, leadership developmenttraining, regulatory training, environmental training and homeland security training, to name a few.Consulting. Our consulting services include training-related consulting services as well as more traditional business management and specialized consulting,including the areas of: •Learning & Development Transformation Consulting. We work with organizations on their learning and development transformationencompassing strategy development, governance, and execution that aligns with their key performance objectives and business goals.•Organization & Leadership Development. We recognize that true success occurs when all parts of the organization are aligned and prepared totackle challenges in a unified manner.We work with organizations to design leadership development programs to serve the strategic and culture shiftstheir businesses need from their leaders.3Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.•Lean Enterprise. Our Lean and Six Sigma experts provide high-level lean enterprise consulting services, as well as training in the concept, methodsand application of lean enterprise and other quality practices, organizational development and change management.•Engineering. We provide engineering consulting services to support regulatory and environmental compliance, modification of facilities andprocesses, plant performance improvement, reliability-centered maintenance practices and plant start-up activities.•Information Technology. Consulting services include IT consulting and platform adoption services, system selection consulting, operationscontinuity assessment, planning, training and procedure development.•Customer Loyalty. Our Sandy Training & Marketing segment provides consultation on customer loyalty programs and supports those services withbrand loyalty publications, incentive programs and customer-focused sales training. Sandy develops personalized publications for automotive clientswhich establish a link between the manufacturer/dealer and each customer.•Performance Readiness. We offer change-management strategies to help our customer's employees accept, adopt and perform in new ways and beopen to change.•Homeland Security and Emergency Management. We deliver consulting services from physical security assessments to all-hazards emergencyplanning and preparedness. These services include training, exercises and documentation.•Maintenance & Reliability. We help manufacturers develop strategies, assessments and leadership alignment tactics for maintenance and reliabilityprograms, as well as provide the training, management systems and documentation that support an enduring culture of waste elimination andvariability reduction.Engineering and Technical Services. Our staff includes civil, mechanical and electrical engineers who are equipped to provide engineering, technicalsupport services, consulting expertise, design capabilities and evaluation services. Our engineering customers typically operate in technically complexindustries such as oil and gas, power, chemical, aerospace, transportation and manufacturing industries. Our engineering services support facilities, processesand systems in multiple capacities, including: •Power Plant Performance. We deliver multiple solutions to optimize power plant assets and mitigate risk. We have also developed proprietaryproducts to support the power industry, including our EtaPROTM software, installed in nearly every electricity-generating power plant in NorthAmerica, as well as our Virtual Plant™ and other software applications for the power generation industry. •Alternative Fueling Station Design and Engineering. We provide engineering design, permitting, fabrication, construction and maintenance ofalternative fuel stations, including liquefied natural gas (LNG), liquid to compressed natural gas (LCNG), compressed natural gas (CNG) andhydrogen fueling stations for vehicle fleets and public-access stations in the United States.•Technical Support. Services in this area include procedure writing and configuration control for capital intensive facilities, plant start-up assistance,logistics support (e.g., inventory management and control), implementation and engineering assistance for facility or process modifications, facilitymanagement for high technology training environments, staff augmentation and help-desk support for standard and customized client desktopapplications.•Environmental Services. We provide environmental engineering services, including the development and management of site environmentalremediation plans and perform other services in regard to air and water quality, hazardous waste and the stewardship of natural resources.4Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Competitive Strengths We believe our key competitive strengths include: Global Delivery and Single-Source Custom Training Solutions Provider. We believe we are one of the largest independent single-source custom trainingsolutions providers with the capability of delivering on a global basis in the markets in which we compete. We provide managed learning services solutionsspanning the full life-cycle of the training process, including the management of training departments and administrative processes for our customers. Webelieve that the breadth of our service and product offerings, which encompass fully integrated managed learning services solutions as well as discreteservices, allows us to better serve the needs of our clients by providing them with a single-source solution for custom training, consulting and technical andengineering services. We believe that the integration of our services into a single platform, together with our global presence and delivery capabilities, allowsour customers to leverage an enterprise-wide solution to address their performance improvement needs in a way that streamlines their internal operations,improves the speed and efficiency at which critical know-how is disseminated on a firm-wide basis, and enables them to achieve their desired performanceimprovement goals. Outstanding Reputation in the Industry. We have continued to build an outstanding reputation in the training industry through the delivery of exceptionaltraining solutions and have received numerous awards. In 2017, for the fourteenth consecutive year, Training Industry, Inc., an industry trade organization,selected us as one of the Top 20 Companies in Training Outsourcing, and for the tenth consecutive year selected us as one of the Top Sales TrainingCompanies. During 2017, Training Industry, Inc. also selected us as a Top 20 Learning Portal Company, Top 20 Leadership Training Company, Top 20Content Development Company and a Top 20 Health & Safety Training Company. We also won other industry awards including eleven Brandon HallExcellence in Learning Awards and Top 500 Design Firm by Engineering News Record. Scalable Technology Platform. Our training programs are delivered both online and in classroom settings. We have the ability to work with outsideinformation technology (IT) vendors in combination with our own proprietary software in order to deliver a scalable technology platform capable ofaddressing training needs of various size and commitment, ranging from a one-time project to a multi-year training program. Legacy Technical Expertise. In the 1960’s, we began providing technical services to the U.S. Navy nuclear submarine program and the nuclear electric-power generation industry, and have since maintained and expanded our reputation for providing technically complex consulting, engineering, and trainingservices. Many of our employees have engineering degrees, technical training or years of relevant technical industry experience. Through repeat projectswith industry leaders we have acquired significant industry experience in providing highly technical consulting services. We believe that our technicalexpertise allows us to address market opportunities for complex business challenges that require in-depth expertise and certifications typically acquired overseveral years of specialized training and many years of experience. We also believe that our ability to provide both training-related and business consultingservices allows us to gain insight into operations of our customers, understand the challenges they face and develop optimal solutions to meet thesechallenges. In addition, we believe that the knowledge that we develop while working with our clients provides us with a significant competitive advantageas those clients look to expand the scope of services outsourced to third party service providers.Well Positioned to Capitalize on the Large Product Sales Training Market. We believe that the introduction of new products with advanced features,combined with the growing amount and accessibility of information available to consumers, requires companies to maintain a highly skilled andtechnologically current sales force to effectively capture customer interest and confidence. In-house implementation of product sales training programs canbe expensive and time-consuming as these programs typically involve significant levels of face-to-face training, in some cases across a large global salesforce. In addition, product sales training tends to be a continuous process, as the pace of new products and features in many cases requires year-roundupdating of the sales force. We believe we have one of the industry’s leading product sales training platforms, and are well positioned to benefit fromincreased training outsourcing as companies look for ways to reduce costs. Highly Qualified and Dedicated Employees and Tenured Management Team. Our most important asset is our people, as their wide-ranging skill setsenable us to serve our diverse and expanding global client base. As a result, we are committed to the continued development of our employees. We offer ouremployees technical, functional, industry, managerial and leadership skill development and training throughout their careers with us. We seek to reinforceour employees’ commitment to our clients, culture and values through a comprehensive performance management system and a career philosophy thatrewards both individual performance and teamwork. We also benefit from the skill and experience of our executive management team, who together have inexcess of 100 years of experience in the training industry and have an average tenure with our company of over 20 years. 5Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Contracts We currently perform under fixed price (including fixed-fee per transaction), time-and-materials and cost-reimbursable contracts.The following table illustrates the percentage of our total revenue attributable to each type of contract for the year ended December 31, 2017:Fixed fee per transaction45%Fixed price22Time-and-materials, including fixed rate29Cost-reimbursable4Total revenue100% Fixed price contracts (including fixed-fee per transaction) provide for payment to us of pre-determined amounts as compensation for the delivery of specificproducts or services, without regard to the actual costs incurred. We bear the risk that increased or unexpected costs required to perform the specified servicesmay reduce our profit or cause us to sustain a loss, but we have the opportunity to derive increased profit if the costs required to perform the specified servicesare less than expected. Fixed price contracts generally permit the client to terminate the contract on written notice; in the event of such termination we wouldtypically be paid a proportionate amount of the fixed price. Time-and-materials contracts generally provide for billing of services based upon the hourly billing rates of the employees performing the services and theactual expenses incurred multiplied by a specified mark-up factor up to a certain aggregate dollar amount. Our time-and-materials contracts include certaincontracts under which we have agreed to provide training, engineering and technical services at fixed hourly rates. Time-and-materials contracts generallypermit the client to control the amount, type and timing of the services to be performed by us and to terminate the contract on written notice. If a contract isterminated, we are typically paid for the services we have provided through the date of termination. Cost-reimbursable contracts provide for us to be reimbursed for our actual direct and indirect costs plus a fee. These contracts also are generally subject totermination at the convenience of the client. If a contract is terminated, we are typically reimbursed for our costs through the date of termination, plus the costof an orderly termination, and paid a proportionate amount of the fee. International We conduct our business globally and outside the United States primarily through our wholly owned subsidiaries. We may continue to create newsubsidiaries as our business expands. Through these subsidiaries, we are capable of providing substantially the same services and products as are available toclients in the United States, although modified as appropriate to address the language, business practices and cultural factors unique to each client andcountry. In combination with our subsidiaries, we are able to coordinate the delivery to multi-national clients of services and products that achieveconsistency on a global, enterprise-wide basis. Revenue from operations outside the United States represented approximately 31% of our consolidatedrevenue for both of the years ended December 31, 2017 and 2016, respectively (see Note 12 to the accompanying Consolidated Financial Statements). Customers During 2017, we provided services to over 500 customers. Significant customers include multinational automotive manufacturers, such as General MotorsCompany, Hyundai Motor Company, Jaguar Land Rover, Ford Motor Company and Fiat North America LLC; financial services companies such as HSBC,Bank of America, SunTrust Banks and PNC Bank; governmental agencies, such as the U.S. Department of Defense, U.S. Department of Commerce, U.S.Department of Health and Human Services and the Skills Funding Agency in the United Kingdom; U.S. Government prime contractors, such as BechtelNational, Inc. and URS Corporation; commercial electric power utilities, such as Eskom, Entergy and National Grid; pharmaceutical companies, such asBristol-Myers Squibb, Merck & Co. and Pfizer; and other large multinational companies, such as Microsoft, CIGNA Corporation, Rockwell Automation,Network Appliance, Cisco Systems, Inc., Texas Instruments, Lowe’s Companies, Inc., General Electric and United Technologies Corporation. During the yearended December 31, 2017, we provided services to 148 customers in the Fortune 500 and 127 customers in the Global Fortune 500.We have a market concentration of revenue in both the automotive sector and the financial services & insurance sector. Revenue from the automotiveindustry accounted for approximately 22%, 22% and 19% of our consolidated revenue for the years ended December 31, 2017, 2016 and 2015, respectively.In addition, we have a concentration of revenue from a single automotive6Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.customer, which accounted for approximately 13% of our consolidated revenue for both of the years ended December 31, 2017 and 2016, respectively. As ofDecember 31, 2017 accounts receivable from a single automotive customer totaled $18.3 million, or 15% of our consolidated accounts receivable balance.Revenue from the financial services & insurance industry accounted for approximately 20%, 21% and 21% of our consolidated revenue for the years endedDecember 31, 2017, 2016 and 2015, respectively. In addition, we have a concentration of revenue from a single financial services customer, which accountedfor approximately 14% and 15% of our consolidated revenue for the years ended December 31, 2017 and 2016, respectively. As of December 31, 2017, billedand unbilled accounts receivable from a single financial services customer totaled $26.1 million, or 16%, of our consolidated accounts receivable and costsand estimated earnings in excess of billings on uncompleted contracts balances. No other single customer accounted for more than 10% of our consolidatedrevenue in 2017 or consolidated accounts receivable balance as of December 31, 2017.We believe the nature of our business, which includes established relationships with our clients, provides us with a platform from which to drive revenues andgives us visibility into our future performance. We have long-standing relationships with many of our clients, with over 90% of our top 25 clients havingused our services for five or more years. Additionally, over 90% of our annual revenue is generated from client relationships that existed in the prior year. Wealso had a backlog for services under executed contracts of $268.6 million as of December 31, 2017, most of which we anticipate will be recognized asrevenue during 2018.Employees Our principal resource is our personnel. As of December 31, 2017, we had 3,645 employees. We also utilize additional adjunct instructors and consultants asneeded. Our future success depends to a significant degree upon our ability to continue to attract, retain and integrate into our operations instructors,engineers, technical personnel and consultants who possess the skills and experience required to meet the needs of our clients. We utilize a variety of methods to attract and retain personnel. We believe that the compensation and benefits offered to our employees are competitive withthe compensation and benefits available from other organizations with which we compete for personnel. In addition, we encourage the professionaldevelopment of our employees, both internally via GP University (our own internal training resource) and through third parties, and we also offer tuitionreimbursement for job-related educational costs. We believe that we have good relations with our employees.Competition We face a highly competitive environment. The principal competitive factors are the experience and capability of service personnel, performance, qualityand functionality of products, reputation and price. The training industry is large, highly fragmented and competitive, with low barriers to entry and no singlecompetitor accounting for a significant market share. According to Training Magazine’s 2017 Training Industry Report, U.S. training expenditures totaledapproximately $90 billion in 2017, including payroll and spending on external products and services. Our competitors include several large publicly tradedand privately held companies, vocational and technical training schools, degree-granting colleges and universities, continuing education programs andthousands of small privately held training providers and individuals. In addition, many of our clients maintain internal training departments, which have theresources and ability to provide the same or similar services in-house. Some of our competitors offer services and products at lower prices, and somecompetitors have significantly greater financial, managerial, technical, marketing and other resources. Moreover, we expect to face additional competitionfrom new entrants into the training and performance improvement market due, in part, to the evolving nature of the market and the relatively low barriers toentry. There can be no assurance that we will be successful against such competition. Engineering and consulting services such as those that we provide are performed by many of the customers themselves, large architectural and engineeringfirms that have expanded their range of services beyond design and construction activities, large consulting firms, information technology companies, majorsuppliers of equipment and individuals and independent service companies similar to us. The engineering and construction markets are highly competitiveand require substantial resources and capital investment in equipment, technology and skilled personnel. Many of our competitors for our engineering andtechnical consulting services have greater financial resources than we do. Competition also places downward pressure on our contract prices and profitmargins. We cannot provide any assurance that we will be able to compete successfully, and the failure to do so could adversely affect our business andfinancial condition. 7Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Marketing Business development and sales resources are aligned with our operating groups to support existing customer accounts and new customer development. Weuse attendance at trade shows, presentations of technical papers at industry and trade association conferences, press releases, webinars and workshops givenby our personnel to serve an important marketing function. We also carry out selective print and online advertising and conduct targeted marketingcampaigns to current and prospective clients. In addition, we use social media channels, such as LinkedIn, Facebook, Twitter, YouTube, SlideShare and aCompany blog on our website, as a means of sharing thought leadership content, disclosing information about the Company, our services and other matters.By staying in contact and engaging with clients, we are able to identify possible needs and look for opportunities to expand the services we are providingthem; we sometimes obtain contract awards or extensions without having to undergo competitive bidding. In other cases, clients ask us to bid competitively.In both cases, we submit proposals to the client for evaluation. The period between submission of a proposal to final award can range from 30 days or less(generally for noncompetitive, short-term contracts), to a year or more (generally for large, competitive multi-year contracts). Backlog Our backlog for services under executed contracts and subcontracts was approximately $268.6 million and $284.6 million as of December 31, 2017 and2016, respectively. The decrease in backlog in 2017 compared to December 31, 2016 is primarily due to the termination of a contract with a foreign oil & gasclient during the fourth quarter of 2017. We anticipate that most of our backlog as of December 31, 2017 will be recognized as revenue during 2018.However, the rate at which services are performed under certain contracts, and thus the rate at which backlog will be recognized, may be at the discretion ofthe client and most contracts are, as mentioned above, subject to termination by the client upon written notice.Item 1A: Risk Factors The following are some of the factors that we believe could cause our actual results to differ materially from historical results and from the resultscontemplated by the forward-looking statements contained in this report and other public statements made by us. Additional risks and uncertainties notpresently known to us, or that we currently see as immaterial, may also harm our business. Most of these risks are generally beyond our control. If any of therisks or uncertainties described below, or any such additional risks and uncertainties actually occur, our business, results of operations and financialcondition could be materially and adversely affected. Changing economic conditions in the United States, the United Kingdom and the other countries in which we conduct our operations could harm ourbusiness, results of operations and financial condition. Our revenues and profitability are related to general levels of economic activity and employment primarily in the United States and the United Kingdom. Asa result, economic recession in both of those countries could harm our business and financial condition. A significant portion of our revenues is derived fromFortune 500 companies and their global equivalents, which historically have decreased expenditures for external training during economic downturns. If theeconomies in which these companies operate are weakened in any future period, these companies may reduce their expenditures on external training, andother products and services supplied by us, which could materially and adversely affect our business, results of operations and financial condition. As weexpand our business globally, we might be subject to additional risks associated with economic conditions in the countries into which we enter or in whichwe expand our operations. Our revenue and financial condition could be adversely affected by the loss of business from significant customers, including financial services institutionsand automotive manufacturers. During the years ended December 31, 2017, 2016 and 2015, revenue from our customers in the financial services & insurance sector accounted forapproximately 20%, 21% and 21%, respectively, of our consolidated revenue. In addition, we have a concentration of revenue from a single financialservices customer, which accounted for approximately 14% and 15% of our consolidated revenue for the years ended December 31, 2017 and 2016,respectively. As of December 31, 2017, billed and unbilled accounts receivable from this customer totaled $26.1 million, or 16%, of our consolidatedaccounts receivable and costs and estimated earnings in excess of billings on uncompleted contracts balances. A default in payment from this client or adecline in the volume of business from this client and other major financial services customers could adversely affect our business and financial condition.8Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.During the years ended December 31, 2017, 2016 and 2015, revenue from our customers in the automotive industry accounted for approximately 22%, 22%and 19%, respectively, of our consolidated revenue. In addition, we have a concentration of revenue from a single automotive customer, which accounted forapproximately 13% of our consolidated revenue for both of the years ended December 31, 2017 and 2016. As of December 31, 2017 accounts receivable froma single automotive customer totaled $18.3 million, or 15% of our consolidated accounts receivable balance. Historically, U.S. auto manufacturers have beennegatively impacted during times of economic downturns and recession, resulting in significant reductions in vehicle sales requiring the auto manufacturersto cut costs. A decline in the volume of business from automotive customers could adversely affect our business and financial condition. Substantially all of our contracts are subject to termination on written notice and, therefore, our operations are dependent upon our customers’ continuedsatisfaction with our services and their continued inability or unwillingness to perform those services themselves or to engage other third-parties to deliversuch services.Our successful performance of learning services under our Global Master Agreement with HSBC is subject to many risks. On July 2, 2013, we entered into an agreement (the “Global Master Agreement”) with HSBC Holdings plc (“HSBC”) to provide global learning services. TheGlobal Master Agreement, as originally written and as amended and restated in 2017, establishes a contractual framework pursuant to which we and certain ofour wholly owned subsidiaries have entered into local services agreements with certain members of HSBC’s group of companies in respect of countries inwhich the learning services are to be provided by us. The initial term of the Global Master Agreement was three years. In January 2016, we announced thatHSBC exercised its option to extend the Global Master Agreement for two additional years, which extended the contract to July 2018. Effective February 23,2018, the Global Master Agreement was extended to July 2019. The Global Master Agreement requires us and our subsidiaries that are parties to local services agreements to identify over $10 million in total global savingson HSBC’s learning expenses over the initial three year term and $6.7 million over the two year extension period. This obligation is applicable only if weand our subsidiaries receive, globally, revenue of at least $30 million per year for each of the first three contract years and $35 million per year over the twoyear extension period. We are required to pay HSBC the shortfall, if any, for any calendar year, between the savings realized and the savings guaranteed forthat year. We identified savings in excess of the amounts guaranteed. The Global Master Agreement includes certain minimum service level requirements that we must meet or exceed. If we fail to meet a given performancestandard, HSBC will, in certain circumstances, receive a credit against the charges otherwise due. Additionally, HSBC has the right to periodically engage a third party to perform benchmark studies to determine whether our services, the level and qualityto which our services are being provided and the applicable charges under the Global Master Agreement are within the top quartile for best-value-for-moneyfor comparable services provided by our competitors. If the benchmark report states that any benchmarked service is not within the top quartile for best-value-for-money for services comparable to our benchmarked services etc., then we must implement changes as soon as reasonably practicable. HSBC has the right to terminate the Global Master Agreement and the relevant HSBC contracting party has the right to terminate any local servicesagreement to which it is a party, in whole or in part, for, among other things, convenience on three months’ written notice. Our successful performance of the Global Master Agreement and the associated local services agreements, is subject to many risks, including the effect(s) thatfixed prices for four years, the guaranteed savings provision, the key milestone penalties and service level credits and the benchmarking requirements mayhave on our ability to perform services in a profitable manner; additional currency exchange rate exposure; local tax requirements and our need toconcurrently establish and maintain reliable payroll, accounting, purchasing, tax management, employment practices, project management, assetmanagement and information technology infrastructure in many countries where we did not have those capabilities. The price of our common stock is highly volatile and could decline regardless of our operating performance. The market price of our common stock could fluctuate in response to, among other things: •changes in economic and general market conditions;•changes in the outlook and financial condition of certain of our significant customers and industries in which we have a concentration of business;9Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.•changes in financial estimates, treatment of our tax assets or liabilities or investment recommendations by securities analysts following our business;•changes in accounting standards, policies, guidance, interpretations or principles;•sales of common stock by our directors, officers and significant stockholders;•factors affecting securities of companies included in the Russell 2000R Index, in which our common stock is included;•our failure to achieve operating results consistent with securities analysts’ projections; and•the operating and stock price performance of competitors.These factors might adversely affect the trading price of our common stock and prevent you from selling your common stock at or above the price at whichyou purchased it. In addition, in recent periods, the stock market has experienced significant price and volume fluctuations. This volatility has had asignificant impact on the market price of securities issued by many companies, including ours and others in our industry. These changes can occur withoutregard to the operating performance of the affected companies. As a result, the price of our common stock could fluctuate based upon factors that have littleor nothing to do with our company, and these fluctuations could materially reduce our share price. A substantial portion of our assets consists of goodwill and intangible assets, which are subject to impairment. We could incur material asset impairmentcharges in future periods. As of December 31, 2017, we had goodwill of $144.8 million and other intangible assets of $8.4 million in connection with acquisitions. In accordance withU.S. GAAP, goodwill is reviewed annually for impairment unless circumstances or events indicate that an impairment test should be performed sooner todetermine if there has been any impairment to value. The review for impairment is based on several factors requiring judgment. A decrease in expected cashflows or change in market conditions, among other things, may indicate potential impairment of recorded goodwill. We tested our goodwill at the reportingunit level as of December 31, 2017 and 2016 and there was no indication of impairment. Our acquisitions in recent years have not involved the acquisition of significant tangible assets and, as a result, a significant portion of the purchase price ineach case was allocated to goodwill and other intangible assets. We will continue to test for impairment on an annual basis or on an interim basis if eventsand circumstances indicate a possible impairment. However, we may incur material goodwill or other intangible asset impairment charges in the future relatedto past acquisitions. Our financial results are subject to quarterly fluctuations, which may result in volatility or declines in our stock price. We experience, and expect to continue to experience, fluctuations in quarterly operating results. Consequently, you should not deem our results for anyparticular quarter to be necessarily indicative of future results. Factors that may affect quarterly operating results in the future include: •the overall level of services and products sold;•the volume of publications shipped by our Sandy Training & Marketing segment each quarter, because revenue and cost of publications contracts arerecognized in the quarter during which the publications ship;•fluctuations in project profitability;•the gain or loss of material clients;•the timing, structure and magnitude of acquisitions;•participant training volume and general levels of outsourcing demand from clients in the industries that we serve;•the budget and purchasing cycles of our clients, especially of the governments and government agencies that we serve;•the commencement or completion of client engagements or services and products in a particular quarter;•currency fluctuations; and•the general level of economic activity.Accordingly, it is difficult for us to forecast our growth and results of operations on a quarterly basis. If we fail to meet expectations of investors or analysts,our stock price may fall rapidly and without notice. Furthermore, the fluctuation of quarterly operating results may render less meaningful period-to-periodcomparisons of our operating results.Sagard Capital Partners, L.P. (“Sagard”) may exert influence over us and could delay or deter a change of control or other business combination orotherwise cause us to take actions with which other stockholders may disagree. As of December 31, 2017, Sagard beneficially owned 3,639,367 shares or 21.7% of our outstanding common stock. In addition, until Sagard owns less thancertain specified amounts of common stock or certain other conditions have been met, Sagard is entitled10Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.to designate an individual to serve on our board of directors. As a result, Sagard may exert influence over our decision to enter into any corporate transactionor with respect to any transaction that requires the approval of stockholders, regardless of whether other stockholders believe that the transaction is in theirown best interests. This could have the effect of delaying, deterring or preventing a change of control or other business combination that might otherwise bebeneficial to our stockholders. We are vulnerable to the cyclical nature of the markets we serve. The demand for our services and products is dependent upon training and marketing budgets and the existence of projects with training, engineering,procurement, construction or management needs. Although downturns can impact our entire business, the automotive, financial and insurance,manufacturing, electronics and semiconductors, construction, alternative fuels and energy industries are examples of sectors that are cyclical in nature andhave been affected from time to time by fluctuations in either national or worldwide demand for our services. Industries such as these and many of the otherswe serve have historically been and might continue to be vulnerable to general downturns and are and might continue to be cyclical in nature. Duringeconomic downturns, our clients might demand better terms. In addition, many of our training contracts are subject to modification in the event of certainmaterial changes in the business or demand for our services. Our government clients also might face budget deficits that prohibit them from fundingproposed and existing projects. As a result, our past results have varied considerably and could continue to vary depending upon the demand for futureprojects in the industries that we serve. We may continue making acquisitions as part of our growth strategy, which subjects us to numerous risks that could have a material adverse effect on ourbusiness, financial condition and results of operations. As part of our growth strategy, we may continue to pursue selective acquisitions of businesses that broaden our service and product offerings, deepen ourcapabilities and allow us to enter attractive new domestic and international markets. Pursuit of acquisitions exposes us to many risks, including that: •acquisitions may require significant capital resources and divert management’s attention from our existing business;•acquisitions may not provide the benefits anticipated;•acquisitions could subject us to contingent or other liabilities, including liabilities arising from events or conduct predating the acquisition of abusiness that were not known to us at the time of the acquisition;•we may incur significantly greater expenditures in integrating an acquired business than had been initially anticipated;•acquisitions may create unanticipated tax and accounting problems; and•acquisitions may result in a material weakness in our internal controls if we are not able to successfully establish and implement proper controls andprocedures for the acquired business.Our failure to successfully accomplish future acquisitions or to manage and integrate completed or future acquisitions could have a material adverse effect onour business, financial condition or results of operations. We can provide no assurances that we: •will identify suitable acquisition candidates;•can consummate acquisitions on acceptable terms;•can successfully compete for acquisition candidates against larger companies with significantly greater resources;•can successfully integrate any acquired business into our operations or successfully manage the operations of any acquired business; or•will be able to retain an acquired company’s significant client relationships, goodwill and key personnel or otherwise realize the intended benefits ofany acquisition.In addition, acquisitions might involve our entry into new businesses that might not be as profitable as we expect. We can provide no assurances that ourexpectations regarding the profitability of future acquisitions will prove to be accurate. Acquisitions might also increase our exposure to the risks inherent incertain markets or industries. As a result of completed and possible future acquisitions, our past performance is not indicative of future performance, and investors should not base theirexpectations as to our future performance on our historical results. Future acquisitions may require that we incur debt or issue dilutive equity. Future acquisitions may require us to incur additional debt, under our existing credit facility or otherwise, or issue equity, resulting in additional leverage ordilution of ownership. 11Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Difficulties in integrating acquired businesses could result in reduced revenues and income. We might not be able to integrate successfully any business we have acquired or could acquire in the future. The integration of the businesses could becomplex and time consuming and will place a significant strain on our management, administrative services personnel and information systems. This straincould disrupt our business. Furthermore, we could be adversely impacted by liabilities of acquired businesses. We could encounter substantial difficulties,costs and delays involved in integrating common accounting, information and communication systems, operating procedures, internal controls and humanresources practices, including incompatibility of business cultures and the loss of key employees and customers. Also, depending on the type of acquisition,a key element of our strategy may include retaining management and key personnel of the acquired business to operate the acquired business for us. Ourinability to retain these individuals could materially impair the value of an acquired business. In addition, small businesses acquired by us may have greaterdifficulty competing for new work as a result of being part of our larger entity. These difficulties could reduce our ability to gain customers or retain existingcustomers, and could increase operating expenses, resulting in reduced revenues and income and a failure to realize the anticipated benefits of acquisitions. Our business and financial condition could be adversely affected by government limitations on contractor profitability. A significant portion of our revenue and profit is derived from contracts with the U.S. Government and subcontracts with prime contractors of the U.S.Government. The U.S. Government places limitations on contractor profitability; therefore, government-related contracts might have lower profit marginsthan the contracts we enter into with commercial customers. A negative audit or other actions by the U.S. Government could adversely affect our future operating performance. As a U.S. Government contractor, we must comply with laws and regulations relating to U.S. Government contracts and are subject to an increased risk ofinvestigations, criminal prosecution, civil fraud, whistleblower lawsuits and other legal actions and liabilities to which companies with solely commercialcustomers are not subject. We are subject to audit and investigation by the DCAA and other government agencies with respect to our compliance withfederal laws, regulations and standards. These audits may occur several years after the period to which the audit relates. The DCAA, in particular, alsoreviews the adequacy of, and our compliance with, our internal control systems and policies, including our purchasing, property, estimating, compensationand management information systems. Any payments received by us from the U.S. Government for allowable direct and indirect costs are subject toadjustment after audit by government auditors and repayment to the government if the payments exceed allowable costs as defined in the governmentcontracts, which could result in a material adjustment of the payments received by us under such contracts. In addition, any costs found to be improperlyallocated to a specific contract will not be reimbursed. If we are found to be in violation of the law, we may be subject to civil or criminal penalties oradministrative sanctions, including contract termination, the assessment of penalties and suspension or debarment from doing business with U.S. Governmentagencies. For example, many of the contracts we perform for the U.S. Government are subject to the Service Contract Act, which requires hourly employees tobe paid certain specified wages and benefits. If the Department of Labor determines that we violated the Service Contract Act or its implementingregulations, we could be suspended for a period of time from winning new government contracts or renewals of existing contracts, which could materially andadversely affect our future operating performance.Furthermore, our reputation could suffer serious harm if allegations of impropriety were made against us. If we are suspended or prohibited from contractingwith the U.S. Government, or any significant U.S. Government agency, if our reputation or relationship with U.S. Government agencies becomes impaired orif the U.S. Government otherwise ceases doing business with us or significantly decreases the amount of business it does with us, it could materially andadversely affect our operating performance and could result in additional expenses and a loss of revenue.We are a party to fixed price contracts and may enter into similar contracts in the future, which could result in reduced profits or losses if we are not ableto accurately estimate or control costs or meet specific service levels. A significant portion of our revenue is attributable to contracts entered into on a fixed price basis, which allows us to benefit from cost savings, but we carrythe burden of cost overruns. If our initial estimates are incorrect, or if unanticipated circumstances arise, we could experience cost overruns which wouldresult in reduced profits or even result in losses on these contracts. Our financial condition is dependent upon our ability to maximize our earnings from ourcontracts. Lower earnings or losses caused by cost overruns could have a negative impact on our financial results. Under time and materials contracts, we are paid for labor at negotiated hourly billing rates and for certain expenses. Under cost-reimbursable contracts, whichare subject to a contract ceiling amount, we are reimbursed for allowable costs and paid a fee, which12Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.may be fixed or performance based. However, if costs exceed the contract ceiling or are not allowable under the provisions of the contract or applicableregulations, we may not be able to obtain reimbursement for all such costs. Our inability to successfully estimate and manage costs on each of these contract types may materially and adversely affect our financial condition. Costoverruns also may adversely affect our ability to sustain existing programs and obtain future contract awards.Also, many of our contracts include clauses that tie our compensation to the achievement of agreed-upon performance standards. If we fail to satisfy thesemeasures, it could significantly reduce or eliminate our fees under the contracts. Clients also often have the right to terminate a contract and pursue damageclaims under the contract for serious or repeated failure to meet these service commitments. These provisions could increase the variability in revenues andmargins earned on those contracts. Our revenues may be adversely affected if we fail to win competitively awarded contracts or to receive renewal or follow-on contracts. We obtain many of our significant contracts through a competitive bidding process. Competitive bidding presents a number of risks, including, withoutlimitation: •the need to compete against companies or teams of companies that may have more financial and marketing resources and more experience in biddingon and performing major contracts than we have;•the need to compete against companies or teams of companies that may be long-term, entrenched incumbents for a particular contract for which we arecompeting;•the need to compete to retain existing contracts that have in the past been awarded to us;•the expense and delay that may arise if our competitors protest or challenge new contract awards;•the need to submit proposals for scopes of work in advance of the completion of their design, which may result in unforeseen cost overruns;•the substantial cost and managerial time and effort, including design, development and marketing activities necessary to prepare bids and proposalsfor contracts that we may not win;•the need to develop, introduce and implement new and enhanced solutions to our customers’ needs;•the need to locate and contract with teaming partners and subcontractors; and•the need to accurately estimate the resources and costs that will be required to perform over the term of the contract and any extension periods anyfixed price or fixed rate contract that we win.There are no assurances that we will continue to win competitively awarded contracts or to receive renewal or follow-on contracts. Renewal and follow-oncontracts are important because our contracts are for fixed terms. These terms vary from shorter than one year to over five years, particularly for contracts withextension options. The loss of revenues from our failure to win competitively awarded contracts or to obtain renewal or follow-on contracts may besignificant because competitively awarded contracts account for a substantial portion of our sales.Our backlog is subject to reduction and cancellation, which could negatively impact our future revenues or earnings. Our backlog for services under executed contracts (including subcontracts and purchase orders) was approximately $268.6 million, $284.6 million and$239.1 million as of December 31, 2017, 2016 and 2015, respectively. There can be no assurance that the revenues projected in our backlog will be realizedor, if realized, will result in profits. Further, contract terminations or reductions in the original scope of contracts reflected in our backlog might occur at anytime as discussed below in more detail. Our backlog consists of projects for which we have signed contracts from customers. The rate at which services are performed under contracts, and thus therate at which backlog will be recognized, may be at the discretion of the client. We cannot predict with certainty when or if backlog will be performed. Inaddition, even where a project proceeds as scheduled, it is possible that customers could default or otherwise fail to pay amounts owed to us. Material delays,terminations or payment defaults under contracts included in our backlog could have a material adverse effect on our business, results of operations andfinancial condition.In addition, most of our contracts are subject to termination by the client upon written notice. Reductions in our backlog due to termination by a customer orfor other reasons could materially and adversely affect the revenues and earnings we actually receive from contracts included in our backlog. If weexperience terminations of significant contracts or significant scope adjustments to contracts reflected in our backlog, our financial condition, results ofoperations, and cash flow could be materially and adversely impacted.13Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. We rely on third parties, including subcontractors, suppliers, teaming partners, software vendors and others to deliver the services we must provide to ourcustomers and to operate our business, and disputes with or the failure to perform satisfactorily of such a third party could materially and adversely affectour performance, our ability to obtain future work, and our ability to manage our business effectively. Many of our contracts involve subcontracts or agreements with other companies upon which we rely to perform a portion of the services or products we mustprovide to our customers. We also rely on third parties to provide us services and products we use for other functions in the operation of our business. There isa risk that we may have disputes with these third parties, including disputes regarding the quality and timeliness of services or work provided by the thirdparty. A failure by one or more of third parties on whom we rely to satisfactorily provide, on a timely basis, the agreed upon services or products maymaterially and adversely impact our ability to perform our obligations to our customer or effectively operate our business. Third party performancedeficiencies could expose us to liability and have a material adverse effect on our results of operations. Also, from time to time we have entered, and expect to continue to enter, into joint venture, teaming and other similar arrangements which involve risks anduncertainties. These risks and uncertainties could result in reduced profits or, in some cases, significant losses for us with respect to the joint venture, teamingand other similar arrangements. We maintain a workforce based upon anticipated staffing needs. If we do not receive future contract awards or if these awards are delayed or reduced inscope or funding, we could incur significant costs. Our estimates of future staffing requirements depend in part on the timing of new contract awards. We make our estimates in good faith, but our estimatescould be inaccurate or change based upon new information. In the case of larger projects, it is particularly difficult to predict whether we will receive acontract award and when the award will be announced. In some cases the contracts that are awarded require staffing levels that are different, sometimes lower,than the levels anticipated when the work was proposed. The uncertainty of contract award timing and changes in scope or funding can present difficulties inmatching our workforce size with our contract needs. If an expected contract award is delayed or not received, or if a contract is awarded for a smaller scopeof work than proposed, we could incur significant costs associated with making or failing to make reductions in staff. Failure to continue to attract and retain qualified personnel could harm our business. Our principal resource is our personnel. A significant portion of our revenue is derived from services and products that are delivered by instructors, engineers,technical personnel and consultants. Our consulting, technical training and engineering services require the employment of individuals with specific skills,training, licensure and backgrounds. An inability to hire or maintain employees with the required skills, training, licensure or backgrounds could have amaterial adverse effect on our ability to provide quality services, to expand the scope of our service offerings or to attract or retain customers or to acceptcontracts, which could negatively impact our business and financial condition. In order to initiate and develop client relationships and execute our growthstrategy, we must continue to hire and maintain qualified salespeople. We must also continue to attract and develop capable management personnel to guideour business and supervise the use of our resources. Similarly, our U.S. Government contracts require employment of individuals with specified skills, work experience, licensures, security clearances andbackgrounds. An inability to hire or maintain employees with the required skills, work experience, licensure, security clearances or backgrounds could havea material adverse effect on our ability to win new contracts or satisfy existing contractual obligations, and could result in additional expenses or possibleloss of revenue. Competition for qualified personnel can be intense. We cannot assure you that qualified personnel will continue to be available to us or will be available tous when our needs arise or on terms favorable to us. Any failure to attract or retain qualified instructors, engineers, technical personnel, consultants,salespeople and managers in sufficient numbers could have a material adverse effect on our business and financial condition. The loss of our key personnel, including our executive management team, could harm our business.Our success is largely dependent upon the experience and continued services of our executive management team and our other key personnel. The loss ofone or more of our key personnel and a failure to attract, develop or promote suitable replacements for them could materially and adversely affect ourbusiness, results of operation or financial condition. In 2017, our President indicated an intention to leave in 2019 and in November we promoted one of oursenior vice presidents to be our new President. We also removed an Executive Vice President who had led one of our business segments for many years, hireda new Chief Sales Officer, replaced our Chief Financial Officer and reorganized our business from four into two segments effective January 1, 2018.14Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Competition could materially and adversely affect our performance. The training industry is highly fragmented and competitive, with low barriers to entry and no single competitor accounting for a significant market share. Our competitors include divisions of several large publicly traded and privately held companies, vocational and technical training schools, degree-grantingcolleges and universities, continuing education programs and thousands of small privately held training providers and individuals. In addition, many of ourclients maintain internal training departments, which have the resources and ability to provide the same or similar services in-house. Some of our competitorsoffer similar services and products at lower prices, and some competitors have significantly greater financial, managerial, technical, marketing and otherresources. Moreover, we expect to face additional competition from new entrants into the training and performance improvement market due, in part, to theevolving nature of the market and the relatively low barriers to entry. The engineering and construction markets in which we compete are also highly competitive. Many of our competitors are niche engineering andconstruction companies. In some instances, it is necessary for us to partner with those competitors who meet the small business administration’s criteria for asmall business in order to win contract awards. This competition places downward pressure on our contract prices and profit margins. Intense competition isexpected to continue in our training, engineering and technical services markets, presenting us with significant challenges in our ability to maintain stronggrowth rates and acceptable profit margins. If we are unable to meet these competitive challenges, we could lose market share to our competitors andexperience an overall reduction in our profits. We cannot provide any assurance that we will be able to compete successfully in the industries or markets in which we compete, and the failure to do socould materially and adversely affect our business, results of operations and financial condition.Failure to keep pace with technology and changing market needs could harm our business. Our future success will depend upon our ability to adapt to changing client needs, to gain expertise in technological advances rapidly and to respond quicklyto evolving industry trends and market needs. Many of our clients are demanding that our services be available across the U.S. and worldwide. We cannotassure you that we will be able to expand our operations into all geographic areas into which our multinational clients seek to use our services or that we willbe able to attract and retain qualified personnel to provide our services in all such geographic areas. We also cannot assure you that we will be successful inadapting to advances in technology or marketing our services and products in advanced formats. In addition, services and products delivered in the newerformats might not provide comparable training results. Furthermore, subsequent technological advances might render moot any successful expansion of themethods of delivering our services and products. If we are unable to develop new means of delivering our services and products due to capital, personnel,technological or other constraints, our business, results of operations and financial condition could be materially and adversely affected. We have only a limited ability to protect the intellectual property rights that are important to our success, and we face the risk that our services or productsmay infringe upon the intellectual property rights of others. Our future success depends, in part, upon our ability to protect our proprietary methodologies and other intellectual property, including our EtaPRO™software. Existing laws of some countries in which we provide or license or intend to provide or license our services or products may offer only limitedprotection of our intellectual property rights. We rely upon a combination of trade secrets, confidentiality policies, non-disclosure and other contractualarrangements and copyright and trademark laws to protect our intellectual property rights. The steps we take in this regard might not be adequate to preventor deter infringement or other misappropriation of our intellectual property, and we may not be able to detect unauthorized use or take appropriate and timelysteps to enforce our intellectual property rights. Protecting our intellectual property rights might also consume significant management time and resources. We cannot be sure that our services and products, or the products of others that we offer to our clients, do not infringe on the intellectual property rights ofthird parties, and we might have infringement claims asserted against us or against our clients. These claims might harm our reputation, result in financialliabilities and prevent us from offering some services or products. We have generally agreed in our contracts to indemnify our clients against expenses orliabilities resulting from claimed infringements of the intellectual property rights of third parties. In some instances, the amount of these indemnities couldbe greater than the revenues we receive from the client. Any claims or litigation in this area, whether we ultimately win or lose, could be time-consuming andcostly, injure our reputation or require us to enter into royalty or licensing arrangements. We might not be able to enter into these royalty or licensingarrangements on acceptable terms. Any limitation on our ability to provide or license a service or product could cause us to lose revenue-generatingopportunities and require us to incur additional expenses to develop new or modified solutions for future projects.15Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Our information technology systems are subject to risks that we cannot control. Our information technology systems, including technology systems provided by third parties, are dependent upon global communications providers, webbrowsers, telephone systems, and other aspects of the Internet infrastructure that have experienced system failures and electrical outages in the past. Oursystems are susceptible to slow access and download times, outages from fire, floods, power loss, telecommunications failures, hacking, and similar events. Our servers are vulnerable to computer viruses, hacking, and similar disruptions from unauthorized tampering with our computer systems. The occurrence ofany of these events could disrupt or damage our information technology systems and inhibit our internal operations, our ability to provide services to ourcustomers, and the ability of our customers to access our information technology systems. This could result in our loss of customers, loss of revenue or areduction in demand for our services, or affect the ability to manage our business effectively.We may experience difficulties implementing our new global enterprise resource planning system.In the first quarter of 2017, we began the implementation of a new global enterprise resource planning (ERP) system, which we expect to be operational in thesecond half of 2018, which is later than our originally planned date of January 1, 2018. We believe the new ERP system will provide greater depth andbreadth of functionality than our current ERP system, allowing us to more effectively manage business and financial data, human resources functions, supplychain, and other business processes and information that is important to our management team. Implementation of the new ERP system will requiresignificant investment of human and financial resources throughout the year, which may distract from other key initiatives. In implementing the new ERPsystem, we may experience significant delays, increased costs and other difficulties which could negatively affect our business, results of operations andfinancial condition. A breach of our security measures (or security measures of third-parties we have engaged) could harm our business, results of operations and financialcondition. Our databases contain our confidential data and confidential data of our clients and our clients’ customers, employees and vendors, including sensitivepersonal data. As a result, we are subject to numerous laws and regulations designed to protect this information, such as the national laws implementing theEuropean Union Directive on Data Protection (and, after May 25, 2018, the European Union General Data Protection Regulation) and various U.S. federaland state laws governing the protection of health or other personally identifiable information. These laws and regulations are increasing in complexity andnumber, change frequently and sometimes conflict among the various countries in which we operate. We have implemented security measures, both directlyand with third-party subcontractors and service providers, with the intent of maintaining the security of any confidential information which has beenentrusted to us against unauthorized access through our information systems or by other electronic transmission or through the misdirection, theft or loss ofphysical media. A party, including one of our employees, who is able to circumvent our security measures could misappropriate such confidentialinformation or interrupt our operations. Many of our contracts require us to comply with specific data security requirements. If we are unable to maintain ourcompliance with these data security requirements or any person, including any of our current or former employees, penetrates our network security ormisappropriates sensitive data, we could be subject to significant liabilities to our clients or other parties or subject to legal actions for breaching these datasecurity requirements or other contractual confidentiality provisions. These liabilities might not be subject to a contractual limit of liability or an exclusionof consequential or indirect damages and could be significant. Furthermore, unauthorized disclosure of sensitive or confidential data of our clients or otherparties, whether through breach of our computer systems, systems failure or otherwise, could also damage our reputation and cause us to lose existing andpotential clients. We may also be subject to civil actions, regulatory enforcement actions, and criminal prosecution for breaches related to such data or needto expend significant capital and other resources to continue to protect against security breaches or to address any problem they may cause. In addition, ourliability insurance, which includes cyber insurance, might not be sufficient in type or amount to cover us against claims related to security breaches,cyberattacks and other related breaches. Our international sales and operations expose us to various political and economic risks, which could have a material adverse effect on our business,results of operations and financial condition. Our revenue outside of the U.S. was approximately 31%, 31% and 30% of our total revenue for the years ended December 31, 2017, 2016 and 2015,respectively. We conduct our business globally. We established over a dozen new subsidiaries in select countries since 2013 to support new globaloutsourcing contracts. We may continue to expand our global operations into countries other than those in which we currently operate. It could also involveexpanding into less developed countries, which may have less political, social or economic stability and less developed infrastructure and legal systems. Wemay encounter challenges adapting to cultural differences compared to the U.S. International sales and operations might be subject to a variety of risks,including:16Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.•greater difficulty in staffing and managing foreign operations;•greater risk of uncollectible accounts;•longer collection cycles;•logistical and communications challenges;•potential adverse changes in laws and regulatory practices, including export license requirements, trade barriers, tariffs and tax laws;•changes in labor conditions, burdens and costs of compliance with a variety of foreign laws;•political and economic instability;•increases in duties and taxation;•exchange rate risks;•greater difficulty in protecting intellectual property;•general economic and political conditions in these foreign markets;•acts of war or terrorism or natural disasters, and limits on the ability of governments to respond to such acts;•restrictions on the transfer of funds into or out of a particular country; or•nationalization of foreign assets and other forms of governmental protectionism.As we expand our business into new countries, we may increase our exposure to the risks discussed above. An adverse development relating to one or more ofthese risks could affect our relationships with our customers or could have a material adverse effect on our business, results of operations and financialcondition. We are subject to risks associated with currency fluctuations, which could have a material adverse effect on our results of operations and financialcondition. Approximately 31% of our revenue for the year ended December 31, 2017 was denominated in foreign currencies. British Pound Sterling-denominatedrevenue represented approximately 20% of our revenue for the year ended December 31, 2017. As a result, changes in the exchange rates of foreigncurrencies to the U.S. dollar will affect our reported consolidated U.S. dollar revenue, cost of revenue and operating margins and could result in exchangelosses. The impact of future exchange rate fluctuations on our results of operations cannot be accurately predicted. Business disruptions could adversely affect our future sales, financial condition, reputation or stock price or increase costs and expenses. Our business, and that of our key suppliers and customers, may be impacted by disruptions including, but not limited to, threats to physical security,information technology attacks or failures, damaging weather or other acts of nature and pandemics or other public health crises. Such disruptions couldaffect our internal operations or services provided to customers, adversely impacting our sales, financial condition, reputation or stock price or increase ourcosts and expenses. We are subject to potential liabilities which are not covered by our insurance. We engage in activities in which there are substantial risks of potential liability. We provide services involving electric power distribution and generation,nuclear power, chemical weapons destruction, petrochemical process training, pipeline operations, volatile fuels such as hydrogen and liquefied natural gas(“LNG”), environmental remediation, engineering design and construction management. We maintain a global insurance program (including generalliability coverage) covering the businesses we currently own. Claims by or against any covered insured could reduce the amount of available insurancecoverage for the other insureds and for other claims. In addition, certain liabilities might not be covered at all, such as deductibles, self-insured retentions,amounts in excess of applicable insurance limits and claims that fall outside the coverage of our policies. Although we believe that we currently have appropriate insurance coverage, we do not have coverage for all of the risks to which we are subject and we maynot be able to obtain appropriate coverage on a cost-effective basis in the future. Our policies exclude coverage for incidents involving nuclear liability, and we may not be covered by U.S. laws or industry programs providing liabilityprotection for licensees of the Nuclear Regulatory Commission (typically utilities) for damages caused by nuclear incidents; we are not a licensee and few ofour contracts with clients have contained provisions waiving or limiting our liability. Therefore, we could be materially and adversely affected by a nuclearincident. In addition, certain environmental risks, such as liability under the Comprehensive Environmental Response, Compensation, and Liability Act, asamended, (“Superfund”), also might not be covered by our insurance. 17Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Some of our policies, such as our professional liability insurance policy, provide coverage on a “claims-made” basis covering only claims actually madeduring the policy period then in effect. To the extent that a risk is not insured within our then-available coverage limits, insured under a low-deductiblepolicy, indemnified against by a third party or limited by an enforceable waiver or limitation of liability, claims could be material and could materially andadversely affect our business, results of operations and financial condition. We could incur substantial costs as a result of violations of, or liabilities under, environmental laws. We provide environmental engineering services, including the development and management of site environmental remediation plans. Although wesubcontract most remediation construction activities, and in all cases subcontract the removal and off-site disposal and treatment of hazardous substances, wecould be subject to liability relating to the environmental services we perform directly or through subcontracts. For example, if we were deemed under federalor state laws, including Superfund, to be an “operator” of sites to which we provide environmental engineering and support services, we could be subject toliability for cleanup costs or violations of applicable environmental laws and regulations at such sites. Any incurrence of any substantial Superfund or otherenvironmental liability could materially and adversely affect our business, results of operations or financial condition by reducing profits, causing us to incurlosses related to the cost of resolving such liability or otherwise.In addition, our environmental engineering services involve professional judgments about the nature of physical and environmental conditions, includingthe extent to which hazardous substances are present, and about the probable effect of procedures to mitigate or otherwise affect those conditions. If thejudgments and the recommendations based upon those judgments are incorrect, we may be liable for resulting damages incurred by our clients. Our authorized preferred stock and certain provisions in our amended and restated by-laws could make a third party acquisition of us difficult. Our restated certificate of incorporation, as amended, (“restated certificate”), allows us to issue up to 10,000,000 shares of preferred stock, the rights,preferences, qualifications, limitations and restrictions of which may be fixed by the Board of Directors without any further vote or action by thestockholders. In addition, our amended and restated bylaws provide, among other things, that stockholders seeking to bring business before or to nominatecandidates for election as directors at an annual meeting of stockholders must provide us with timely advance written notice of their proposal in a prescribedform. Our amended and restated bylaws also provide that stockholders desiring to call a special meeting for any purpose, must submit to us a request inwriting of stockholders representing at least 50% of the combined voting power of all issued and outstanding classes of capital stock and stating the purposeof such meeting. The ability to issue preferred stock and such provisions in our bylaws might have the effect of delaying, discouraging or preventing achange in control that might otherwise be beneficial to stockholders and might materially and adversely affect the market price of our common stock. In addition, some provisions of Delaware law, particularly the “business combination” statute in Section 203 of Delaware General Corporation Law, mightalso discourage, delay or prevent someone from acquiring us or merging with us. As a result of these provisions in our charter documents and Delaware law,the price investors might be willing to pay in the future for shares of our common stock might be limited. Our restated certificate allows us to redeem or otherwise dispose shares of our common stock owned by a foreign stockholder if certain U.S. Governmentagencies threaten termination of any of our contracts as a result of such an ownership interest. The United States Departments of Energy and Defense have policies regarding foreign ownership, control or influence over government contractors who haveaccess to classified information, and might conduct an inquiry as to whether any foreign interest has beneficial ownership of 5% or more of a contractor’s orsubcontractor’s voting securities. If either Department determines that an undue risk to the defense and security of the United States exists as a result offoreign ownership, control or influence over a government contractor (including as a result of a potential acquisition), it might, among other things, terminatethe contractor’s or subcontractor’s existing contracts. Our restated certificate allows us to redeem or require the prompt disposition of all or any portion of theshares of our common stock owned by a foreign stockholder beneficially owning 5% or more of the outstanding shares of our common stock if eitherDepartment threatens termination of any of our contracts as a result of such an ownership interest. These provisions may have the additional effect ofdelaying, discouraging or preventing a change in control and might materially and adversely affect the market price of our common stock. In connection withthe sale of shares of common stock to Sagard in December 2009, we agreed to render these provisions, as well as other anti-takeover measures, inapplicable toSagard.18Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Item 1B: Unresolved Staff Comments None. Item 2: Properties We do not own any significant real property, but we and our subsidiaries lease an aggregate of approximately 481,000 square feet of primarily office andrelated space at various locations throughout the United States and Europe and other countries in which we have operations. We occupy approximately64,000 square feet in an office building in Columbia, Maryland for our corporate headquarters under a lease which expires in 2025, and approximately60,000 square feet in an office building in Troy, Michigan under a lease which expires in 2018. We believe that our properties have been well maintained, are suitable and adequate for us to operate at present levels and the productive capacity and extentof utilization of the facilities are appropriate for our existing real estate requirements. Upon expiration of these leases, we do not anticipate any difficulty inobtaining renewals or alternative space.Item 3: Legal Proceedings None. Item 4: Mine Safety Disclosures None.19Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.PART II Item 5: Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock, $0.01 par value, is traded on the New York Stock Exchange. The following table presents our high and low market prices for the last twofiscal years. During the periods presented below, we have not paid any cash dividends. 2017Quarter High LowFirst $29.65 $22.70Second 28.35 23.00Third 31.05 25.95Fourth 31.25 22.30 2016Quarter High LowFirst $27.99 $21.76Second 27.36 20.06Third 25.50 19.59Fourth 30.00 23.75The number of shareholders of record of our common stock as of February 16, 2018 was 664. Shares of our common stock that are registered in the name of abroker or other nominee are listed as a single shareholder on our record listing, even though they are held for a number of individual shareholders. As such,our actual number of shareholders is higher than the number of shareholders of record. We have not declared or paid any cash dividends on our common stock during the two most recent fiscal years. We do not anticipate paying cash dividendson our common stock in the foreseeable future and intend to retain future earnings to finance the growth and development of our business.20Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Performance Graph The following graph assumes $100 was invested on December 31, 2012 in GP Strategies Common Stock, and compares the share price performance with theNYSE Market Index and a peer group index which consists of the companies included in Standard Industrial Classification (SIC) 8200, Educational Services. Values are as of December 31 of the specified year assuming that all dividends were reinvested. *$100 invested on 12/31/12 in stock or index, including reinvestment of dividends. Fiscal year ending December 31.Company / Index Year ended December 31,Name 2012 2013 2014 2015 2016 2017GP Strategies Corp. $100.00 $144.26 $164.31 $121.60 $138.50 $112.35NYSE Market Index 100.00 126.28 134.81 129.29 144.73 171.83Peer Group Index 100.00 161.32 160.79 154.55 205.70 326.4421Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Issuer Purchases of Equity Securities The following table provides information about our share repurchase activity for the three months ended December 31, 2017: Issuer Purchases of Equity SecuritiesMonth Total numberof sharespurchased (2) Averageprice paidper share Total numberof sharespurchased aspart of publiclyannounced program (1) Approximatedollar value ofshares that may yetbe purchased underthe programOctober 1 - 31, 2017 137(2) $29.15 — $3,631,000November 1 - 30, 2017 42,882(2) $24.12 31,500 $12,893,000December 1 - 31, 2017 63,992(2) $23.11 49,426 $11,748,000 (1)Represents shares repurchased in the open market in connection with our share repurchase program under which we may repurchase shares of ourcommon stock from time to time in the open market subject to prevailing business and market conditions and other factors. There is no expiration datefor the repurchase program. In November 2017, the Company's Board of Directors authorized an increase to the share repurchase program of $10million.(2)Includes shares surrendered to satisfy tax withholding obligations on restricted stock units which vested during these periods and shares surrendered toexercise stock options and satisfy the related tax withholding obligations.22Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Item 6: Selected Financial Data The selected financial data presented below should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Resultsof Operations” in Item 7 and our consolidated financial statements and the notes thereto included elsewhere in this report. Our consolidated statement ofoperations data for the years ended December 31, 2017, 2016, and 2015 and our consolidated balance sheet data as of December 31, 2017 and 2016 havebeen derived from our audited consolidated financial statements included elsewhere in this report. Our consolidated statement of operations data for the yearsended December 31, 2014 and 2013 and our consolidated balance sheet data as of December 31, 2015, 2014, and 2013 have been derived from auditedconsolidated financial statements which are not presented in this report. Years ended December 31,Statement of Operations Data 2017 2016 2015 2014 2013 (In thousands, except per share amounts)Revenue $509,208 $490,559 $490,280 $501,867 $436,689Gross profit 82,027 80,157 81,992 89,575 76,265Interest expense 3,132 1,568 1,381 833 366Income before income taxes 19,689 30,034 29,623 42,823 38,488Net income 12,891 20,247 18,789 27,098 23,756Diluted earnings per share 0.76 1.21 1.09 1.43 1.23 December 31,Balance Sheet Data 2017 2016 2015 2014 2013 (In thousands, except per share amounts)Cash $23,612 $16,346 $21,030 $14,541 $5,647Short-term borrowings 37,696 17,694 34,084 20,799 407Working capital 49,785 59,859 40,322 43,537 58,730Total assets 365,007 315,601 302,969 305,452 280,156Long-term debt, including current maturities 28,000 40,000 24,444 37,777 —Stockholders’ equity 188,054 167,496 158,344 151,725 193,027 23Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis provides information we believe is relevant to an assessment and understanding of our consolidated results ofoperations and financial condition. The discussion should be read in conjunction with the Consolidated Financial Statements and Notes thereto for the yearended December 31, 2017 which are located in Item 8 of this report.General Overview We are a global performance improvement solutions provider of training, digital learning solutions, management consulting and engineering services thatseeks to improve the effectiveness of organizations by providing services and products that are customized to meet the specific needs of clients. Clientsinclude Fortune 500 companies and governmental and other commercial customers in a variety of industries. We believe we are a global leader inperformance improvement, with over four decades of experience in providing solutions to optimize workforce performance. For the year ended December 31, 2017, we operated through four reportable business segments: (i) Learning Solutions, (ii) Professional & Technical Services,(iii) Sandy Training & Marketing, and (iv) Performance Readiness Solutions. Each of our reportable segments represents an operating segment under U.S.GAAP. We are organized by operating group primarily based upon the markets served by each group and/or the services performed. Each operating groupconsists of business units which are focused on providing specific products and services to certain classes of customers or within targeted markets. Marketingand communications, accounting, tax, finance, legal, human resources, information systems and other administrative services are organized at the corporatelevel. Business development and sales resources are aligned with operating groups to support existing customer accounts and new customer development.Further information regarding our business segments is discussed below. Learning Solutions. The Learning Solutions segment delivers training, curriculum design and development, digital learning services, system hosting,managed learning services and consulting services globally. This segment serves large companies in the electronics and semiconductors, healthcare, software,financial services and other industries as well as government agencies. This segment also provides apprenticeship and vocational skills training funded by anagency of the United Kingdom government. The ability to deliver a wide range of training services on a global basis allows this segment to take over theentire learning function for the client, including their training personnel. Professional & Technical Services. The Professional & Technical Services segment provides training, consulting, engineering and technical services,including lean consulting, emergency preparedness, safety and regulatory compliance, chemical demilitarization and environmental services primarily tolarge companies in the manufacturing, steel, pharmaceutical, energy and petrochemical industries; federal and state government agencies; and largegovernment contractors. Our proprietary EtaPROTM Performance and Condition Monitoring System provides a suite of real-time software solutions for powergeneration facilities and is installed on power-generating units across the world. In addition to providing custom training solutions, this segment providesweb-based training through our GPiLEARNTM portal, which offers a variety of courses to power plant personnel in the U.S. and other countries. This segmentalso provides services to users of alternative fuels, including designing and constructing liquefied natural gas (LNG), liquid to compressed natural gas(LCNG), compressed natural gas (CNG) and hydrogen fueling stations, as well as supplying equipment. Sandy Training & Marketing. The Sandy Training & Marketing segment provides custom product sales training and has been a leader in servingmanufacturing customers in the U.S. automotive industry for over 40 years. Sandy provides custom product sales training designed to better educate customersales forces with respect to new vehicle features and designs, in effect rapidly increasing the sales force knowledge base and enabling them to addressdetailed customer queries. Furthermore, Sandy helps our clients assess their customer relationship marketing strategy and connect with their customers on aone-to-one basis including through custom publications. This segment also provides technical training services to automotive manufacturers as well ascustomers in other industries. Performance Readiness Solutions. This segment provides performance consulting and technology consulting services, including platform adoption, end-user training, change management, knowledge management, customer product training outsourcing, training content development and sales enablementsolutions. This segment also offers organization performance solutions, including leadership development training, strategy-through-implementationconsulting services and employee engagement tools and services. Industries served include manufacturing, aerospace, healthcare, life sciences, consumerproducts, financial, telecommunications and higher education as well as government agencies.24Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. We discuss our business in more detail in Item 1. Business and the risk factors affecting our business in Item 1A. Risk Factors.Business Strategy We seek to increase shareholder value by pursuing the following strategies: Continuously enhance our service offerings and capabilities. We believe the demand for learning and development services will continue to increase. In aknowledge based economy, this demand is driven by ever increasing technology, processes, products, and attrition of personnel. The rate and effectiveness ofthe transfer of knowledge to the workforce of our clients, their partners, and even their customers can positively impact their performance. We plan to meetthis demand by continuously expanding our services and capabilities through organic growth initiatives based upon our technical expertise as well asthrough targeted acquisitions. Our acquisitions in recent years have added product sales training and leadership development to our services offerings,strengthened our digital learning and custom training content development services in both the commercial and government sectors, and expanded ourgeographical reach. We believe that the breadth of our service and product offerings allows us to effectively compete for customers by offering acomprehensive solution for custom training, consulting, engineering and technical services. We will continue to focus on increasing our capabilities to driveincremental growth from new, as well as existing, clients. Develop and maintain strong customer relationships. We plan to preserve and grow our business by cross-selling our services and capabilities across andwithin our existing client base. We have a successful track record of increasing the scope of our work for a number of our clients, many of whom we estimatecurrently outsource only a fraction of their training expenditures. We believe that as our clients benefit from the efficient, cost-effective and flexible trainingsolutions and services that we provide, many of them will find it beneficial to increase the scope of training services that they outsource to third partyproviders. We believe that the strength of our relationships with our existing clients, including the insight and knowledge into their operations that we havedeveloped through these relationships, when combined with the broad range of our service and product offerings, provide us with an advantage whencompeting for these additional expenditures. Leverage managed learning capabilities. We have a demonstrated ability to provide training services across a wide spectrum of learning engagements fromtransactional multi-week assignments focused on a single aspect of a learning process to multi-year contracts where we manage the learning infrastructure ofour customer. Integrated managed learning engagements typically require us to assume responsibility for the development, delivery and administration oflearning functions and are generally carried out under multi-year agreements. We intend to leverage our managed learning capabilities to expand thecustomers and markets we serve. Expand global platform. We believe international markets offer growth opportunities for our services. We established over a dozen new subsidiaries inselect countries since 2013 to support new global outsourcing contracts.We intend to leverage our enhanced infrastructure as well as to further establish ourglobal platform in order to deliver our comprehensive offerings to new and existing clients on a global basis. In our experience, many of our clients areseeking access to additional international markets and as such we intend to enhance our international capabilities. In order to support their businessexpansion we are providing employee training solutions across organizations in different countries and different languages, while maintaining quality andconsistency in the overall training program. By moving into specific international markets with our existing clients, we are able to not only deepen ourrelationships with those clients, but are also able to develop expertise in those markets that we can leverage to additional customers. We believe thatfollowing this strategy provides us with opportunities to gain access to international markets with established client relationships in those markets. Complete strategic acquisitions. We will continue to evaluate compelling, strategic acquisition targets and will acquire businesses that can further enhanceour service offerings and delivery capabilities. We have followed a disciplined approach to target selection and have been able to acquire complementarybusinesses at what we believe are attractive valuations. Since 2006, we have acquired over 30 businesses which have expanded our digital learningcapabilities and added complementary services such as product sales training and leadership development. Over half of these businesses are located outsideof the United States and have strengthened our international platform, enabling us to meet the needs of our global clients while providing additional clientopportunities. We also believe that our current operating structure, which utilizes a centralized infrastructure of corporate services to support our variousplatforms, enhances our ability to quickly and cost-effectively integrate acquisitions. We look to identify acquisitions to augment our capabilities when webelieve acquisitions are the quickest and most efficient way of expanding our platform and service offerings.25Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Significant EventsRestructuring PlanIn December 2017, we announced a new organizational structure and plan to improve operating results by increasing organic growth and reducing operatingcosts. Effective January 1, 2018, GP Strategies is organized into two global segments aligned by complementary service lines and supported by a newbusiness development organization aligned by industry sector. The Workforce Excellence segment includes the majority of the existing Learning Solutionssegment and the Professional & Technical Services segment. The Business Transformation Services segment includes the majority of the PerformanceReadiness Solutions segment and the Sandy Training & Marketing segment. Certain business units transferred between the existing operating segments tobetter align with the service offerings of the two new segments. We also hired a chief sales officer in January 2018 to establish a structured and morecentralized business development capability that will align our diverse market sector expertise with our service offerings.In connection with the reorganization, we initiated restructuring and transition activities to improve operational efficiency, reduce costs and better positionthe Company to drive future revenue growth. During the fourth quarter of 2017, we incurred restructuring charges of $3.3 million consisting primarily ofseverance costs. The Company estimates these initiatives will result in annual cost savings of approximately $4 million, net of investments in businessdevelopment and innovation initiatives. We expect these cost savings to be realized beginning in the first quarter of 2018 and to ramp up in the secondquarter of 2018 through the fourth quarter of 2018. The Company expects the restructuring activities to be substantially completed in the first half of 2018and that it will incur certain transition costs in 2018 and 2019.Acquisitions Below is a summary of the acquisitions we completed during 2017 and 2016 (we did not complete any acquisitions in 2015). See Note 2 to theaccompanying Consolidated Financial Statements for further details, including the purchase price allocations.2017 AcquisitionsYouTrainOn August 31, 2017, we acquired the entire share capital of YouTrain Limited ("YouTrain"), an independent training company delivering IT, digital and lifesciences skills training in Scotland and North West England. The upfront purchase price was $4.9 million which was paid in cash at closing and a completionaccounts payment of $0.2 million which was paid to the sellers during the fourth quarter of 2017. The goodwill recognized is due to the expected synergiesfrom combining the operations of the acquiree with the Company. None of the goodwill recorded for financial statement purposes is deductible for taxpurposes. The acquired YouTrain business is included in the Learning Solutions segment and the results of its operations have been included in theconsolidated financial statements beginning September 1, 2017. The pro-forma impact of the acquisition is not material to our results of operations. Theacquired YouTrain business is included in our acquiring United Kingdom subsidiary and its functional currency is the British Pound Sterling.CLS Performance Solutions LimitedOn August 31, 2017, we acquired the business and certain assets of CLS Performance Solutions Limited ("CLS"), an independent provider of EnterpriseResource Planning (ERP) end user adoption and training services in the United Kingdom. The upfront purchase price was $0.4 million which was paid incash at closing. In addition, the purchase agreement requires up to an additional $2.2 million of consideration contingent upon the achievement of certainearnings targets during the twelve-month period following the completion of the acquisition. The goodwill recognized is due to the expected synergies fromcombining the operations of the acquiree with the Company. None of the goodwill recorded for financial statement purposes is deductible for tax purposes.The acquired CLS business is included in the Performance Readiness Solutions segment, and the results of its operations have been included in theconsolidated financial statements beginning September 1, 2017. The pro-forma impact of the acquisition is not material to our results of operations. Theacquired CLS business is included in our acquiring United Kingdom subsidiary and its functional currency is the British Pound Sterling.26Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.EmantrasEffective April 1, 2017, we acquired the business and certain assets of Emantras, a digital education company that provides engaging learning experiencesand effective knowledge delivery through award-winning digital and mobile solutions with offices in Fremont, California and Chennai, India. Thisacquisition strengthens our eLearning development capabilities, allowing us to better serve our customer base with the latest digital learning solutions. Theupfront purchase price was $3.2 million in cash. In addition, the purchase agreement requires up to an additional $0.3 million of consideration, contingentupon the achievement of an earnings target during the twelve-month period following completion of the acquisition, plus a percentage of any earnings inexcess of the specified earnings target. The goodwill recognized is due to the expected synergies from combining the operations of the acquiree with theCompany. We expect that a portion of the goodwill recorded for financial statement purposes will be deductible for tax purposes. In addition, contingentconsideration is only deductible when paid. If the actual contingent consideration payments are less than the estimated fair value as of the acquisition date, aportion of goodwill will not be deductible for tax purposes. The acquired Emantras business is included in the Learning Solutions segment, and the results ofits operations have been included in the consolidated financial statements beginning April 1, 2017. The pro-forma impact of the acquisition is not material toour results of operations. The India-based operations of the acquired Emantras business is included in our India subsidiary and its functional currency is theIndian Rupee.McKinney RogersOn February 1, 2017, we acquired the business and certain assets of McKinney Rogers, a provider of strategic consulting services with offices in New Yorkand London. This acquisition will expand our solutions offerings, giving us the ability to leverage McKinney Rogers' intellectual property and consultingmethodologies to help our global client base meet strategic business goals. The upfront purchase price was $3.3 million in cash. In addition, the purchaseagreement requires up to an additional $18.0 million of consideration, $6.0 million of which was contingent upon the achievement of certain earnings targetsduring the five-month period ended April 30, 2017 and $12.0 million of which is contingent upon the achievement of certain earnings targets during thethree twelve-month periods following completion of the acquisition. In July 2017, we paid the seller $1.0 million in respect of the contingent considerationfor the five-month period ended April 30, 2017. The goodwill recognized is due to the expected synergies from combining the operations of the acquireewith the Company. We expect that a portion of the goodwill recorded for financial statement purposes will be deductible for tax purposes. In addition,contingent consideration is only deductible when paid. If the actual contingent consideration payments are less than the estimated fair value as of theacquisition date, a portion of goodwill will not be deductible for tax purposes. The acquired McKinney Rogers business is included in the PerformanceReadiness Solutions segment, and the results of its operations have been included in the consolidated financial statements beginning February 1, 2017. Thepro-forma impact of the acquisition is not material to our results of operations.2016 AcquisitionsJencal TrainingOn March 1, 2016, we acquired the share capital of Jencal Training Limited (Jencal Training) and its subsidiary B2B Engage Limited (B2B), an independentprovider of vocational skills training in the United Kingdom. The upfront purchase price was $2.5 million in cash. In addition, we paid an additional $0.2million of deferred consideration in the fourth quarter of 2016. The acquired Jencal Training business is included in the Learning Solutions segment and theresults of its operations have been included in the consolidated financial statements beginning March 1, 2016. The pro-forma impact of the acquisition is notmaterial to our results of operations.Maverick SolutionsEffective October 1, 2016, we acquired the business and certain assets of Maverick Solutions, a U.S.-based provider of Enterprise Resource Planning (ERP)product training services. The upfront purchase price was $4.6 million in cash. In addition, the purchase agreement requires up to an additional $10.0 millionof consideration, contingent upon the achievement of certain earnings targets during the two twelve-month periods following completion of the acquisition.We paid $4.1 million of contingent consideration during the fourth quarter of 2017 in respect of the first twelve-month period ended September 30, 2017.The acquired Maverick Solutions business is included in the Performance Readiness Solutions segment and the results of its operations have been includedin the consolidated financial statements beginning October 1, 2016. The pro-forma impact of the acquisition is not material to our results of operations.27Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Share Repurchase ProgramWe have a share repurchase program under which we may repurchase shares of our common stock from time to time in the open market, subject to prevailingbusiness and market conditions and other factors. During the years ended December 31, 2017, 2016 and 2015, we repurchased approximately 182,000,340,000 and 477,000 shares, respectively, of our common stock in the open market for a total cost of approximately $4.3 million, $8.0 million and $12.3million, respectively. As of December 31, 2017, there was approximately $11.7 million available for future repurchases under the buyback program. There isno expiration date for the repurchase program.Results of Operations Operating Highlights Year ended December 31, 2017 compared to the year ended December 31, 2016During the year ended December 31, 2017, our revenue increased $18.6 million, or 3.8%, to $509.2 million compared to $490.6 million for the year endedDecember 31, 2016. The revenue was comprised of a $5.8 million increase in our Learning Solutions segment and a $14.3 million increase in ourPerformance Readiness Solutions segment offset by a $0.9 million decline in our Professional & Technical Services segment and a $0.7 million decrease inour Sandy Training & Marketing segment. Foreign currency exchange rate declines resulted in a total $4.6 million decrease in U.S. dollar reported revenueduring 2017 across all segments. The changes in revenue and gross profit are discussed in further detail below by segment.Operating income, the components of which are discussed in detail below, decreased $8.5 million or 27.1% during the year ended December 31, 2017. Thenet decrease in operating income was primarily due to $3.3 million in restructuring charges and an $8.8 million, or 18.2%, increase in selling, general &administrative expenses, offset by a $1.9 million, or 2.3%, increase in gross profit and a $1.8 million increase in the gain on change in fair value ofcontingent consideration.For the year ended December 31, 2017, we had income before income taxes of $19.7 million compared to $30.0 million for the year ended December 31,2016. Net income was $12.9 million, or $0.76 per diluted share, for the year ended December 31, 2017 compared to $20.2 million, or $1.21 per diluted share,for 2016. Diluted weighted average shares outstanding were 16.9 million for the year ended December 31, 2017 compared to 16.8 million for the year endedDecember 31, 2016.Revenue Years ended December 31, 2017 2016 (Dollars in thousands)Learning Solutions $214,820 $208,998Professional & Technical Services 101,051 101,907Sandy Training & Marketing 101,104 101,768Performance Readiness Solutions 92,233 77,886 $509,208 $490,559 Learning Solutions revenue increased $5.8 million or 2.8% during the year ended December 31, 2017 compared to 2016. The increase in revenue is due tothe following: •a $5.7 million net increase in training content development and managed learning services;•a $0.8 million revenue increase attributable to the Jencal Training acquisition completed on March 1, 2016;•a $1.3 million revenue increase attributable to the Emantras acquisition completed on April 1, 2017; and•a $1.1 million revenue increase attributable to the YouTrain acquisition completed on August 31, 2017; partially offset by•a $3.1 million decrease in revenue due to unfavorable changes in exchange rates. 28Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Professional & Technical Services revenue decreased $0.9 million or 0.8% during the year ended December 31, 2017 compared to 2016. The decrease inrevenue is due to the following: •a $2.1 million decrease in training and technical services for oil and gas clients; and•a $1.0 million decrease in revenue due to unfavorable changes in foreign currency exchange rates; partially offset by•a $1.2 million increase in revenue in alternative fuels design and build projects; and•a $1.0 million net increase in engineering and technical training services.Sandy Training & Marketing revenue decreased $0.7 million or 0.7% during the year ended December 31, 2017 compared to 2016. The net decrease isprimarily due to the following:•a $0.2 million decrease in training services for automotive customers;•a $0.2 million decrease in glovebox portfolio revenue; and•a $0.3 million decrease in magazine publications revenue.Performance Readiness Solutions revenue increased $14.3 million or 18.4% during the year ended December 31, 2017 compared to 2016. The net increase isprimarily due to the following:•a $5.6 million revenue increase attributable to the Maverick acquisition completed on October 1, 2016;•a $5.4 million revenue increase attributable to the McKinney Rogers acquisition completed on February 1, 2017;•a $1.1 million revenue increase attributable to the CLS acquisition completed on August 31, 2017;•a $2.5 million increase in technical training services largely due to a new contract with an aerospace client; and•a $1.1 million increase in platform adoption training services; partially offset by•a $0.9 million decrease primarily in performance consulting services; and•a $0.5 million decrease due to unfavorable changes in foreign currency exchange rates. Gross profit Years ended December 31, 2017 2016 % Revenue % Revenue (Dollars in thousands)Learning Solutions $38,971 18.1% $38,954 18.6%Professional & Technical Services 14,426 14.3% 15,803 15.5%Sandy Training & Marketing 14,524 14.4% 14,181 13.9%Performance Readiness Solutions 14,106 15.3% 11,219 14.4% $82,027 16.1% $80,157 16.3%Learning Solutions gross profit was $39.0 million or 18.1% of revenue for the year ended December 31, 2017 compared to gross profit of $39.0 million or18.6% of revenue for the year ended December 31, 2016. While gross profit was overall flat year over year, unfavorable changes in foreign currency exchangerates contributed to a $0.8 million decline in gross profit during 2017. This decline was offset by an increase in gross profit due to the net revenue increasesnoted above. Professional & Technical Services gross profit of $14.4 million or 14.3% of revenue for the year ended December 31, 2017 decreased by $1.4 million or 8.7%when compared to gross profit of approximately $15.8 million or 15.5% of revenue for the year ended December 31, 2016. The decrease is primarily due to acontract termination by a foreign oil & gas client during the fourth quarter of 2017 which resulted in a gross profit reduction of approximately $3.1 millionfor the year ended December 31, 2017. Excluding this reduction, gross profit increased $1.7 million primarily due to increases in certain higher marginrevenue streams. Sandy Training & Marketing gross profit of $14.5 million or 14.4% of revenue for the year ended December 31, 2017 increased by $0.3 million or 2.4% whencompared to gross profit of $14.2 million or 13.9% for the year ended December 31, 2016. Gross profit increased in this segment despite the revenue declinedue to a decrease in lower margin projects. 29Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Performance Readiness Solutions gross profit of $14.1 million or 15.3% of revenue for the year ended December 31, 2017 increased by $2.9 million or 25.7%when compared to gross profit of $11.2 million or 14.4% of revenue for the year ended December 31, 2016. The increase in gross profit is primarily due to a$1.1 million increase attributable to acquisitions and the remaining $1.8 million increase is due to the organic revenue growth noted above and a decrease incosts due to cost cutting measures. Selling, general and administrative expenses Selling, general and administrative expenses increased $8.8 million or 18.2% from $48.6 million for the year ended December 31, 2016 to $57.4 million forthe year ended December 31, 2017. The increase in SG&A expenses is primarily due to a $4.9 million increase in costs relating to our new ERP systemimplementation which we anticipate will go live in the second half of 2018, a $1.8 million increase in bad debt expense (which includes a $1.3 million baddebt reserve on a receivable from a foreign oil and gas client relating to a contract which was terminated during the fourth quarter of 2017), a $1.3 millionincrease in labor and benefits expense, a $0.4 million increase in amortization expense, and a $0.4 million net increase in miscellaneous other expensesincluding executive search fees associated with the reorganization in the fourth quarter of 2017.Restructuring chargesDuring the fourth quarter of 2017, we initiated restructuring and transition activities to improve operational efficiency, reduce costs and better position thecompany to drive future revenue growth. We recorded restructuring charges of $3.3 million for the year ended December 31, 2017 which primarily consistedof severance expense which is expected to be paid by the end of 2019. The total remaining liability under these restructuring activities was $2.8 million as ofDecember 31, 2017, of which $2.2 million is included in accounts payable and accrued expenses and $0.6 million is included in other noncurrent liabilitieson the consolidated balance sheet. We expect these restructuring activities to be substantially completed in the first half of 2018.Gain (loss) on change in fair value of contingent consideration, net During the years ended December 31, 2017 and 2016, we recognized a net gain of $1.6 million and a net loss of $0.1 million, respectively, on the change infair value of contingent consideration related to acquisitions. Changes in the fair value of contingent consideration obligations result from changes indiscount periods and rates and changes in the timing and amount of revenue and/or earnings projections. See Note 2 to the Consolidated FinancialStatements for a detailed discussion of the acquisitions we have completed and the changes in fair value of contingent consideration during the year endedDecember 31, 2017. Interest expense Interest expense increased to $3.1 million for the year ended December 31, 2017 compared to $1.6 million for the year ended December 31, 2016. Theincrease in interest expense is primarily due to contingent interest of $1.1 million associated with unremitted value-added tax (VAT) from invoices raised inthe fourth quarter of 2017 that were issued related to undercharged VAT from prior year client billings. The remainder of the increase in interest expense isdue to both an increase in interest rates and higher borrowings under the Credit Agreement. Other (expense) income Other expense was $0.1 million compared to other income of $0.2 million for the years ended December 31, 2017 and 2016, respectively, and consistedprimarily of foreign currency losses offset by income from a joint venture in both years. During the years ended December 31, 2017 and and 2016, we hadforeign currency losses of $0.3 million and $0.2 million, respectively. The foreign currency losses primarily relate to the effect of exchange rates onintercompany receivables and payables and third party receivables and payables that are denominated in currencies other than the functional currency of ourlegal entities. In addition, we had a $0.1 million decrease in income from a joint venture during the year ended December 31, 2017 compared to 2016. Income taxes Income tax expense was $6.8 million for the year ended December 31, 2017 compared to $9.8 million for the year ended December 31, 2016. Our effectiveincome tax rate was 34.5% and 32.6% for the years ended December 31, 2017 and 2016, respectively. Our effective tax rate increased in 2017 due to theeffect of U.S. tax reform enacted in December 2017 which resulted in a net increase of $3.2 million of tax expense, or 16.3% of our pre-tax income (which isdiscussed in further detail below). This increase was offset by a decrease in our effective tax rate due to an increase in foreign income taxed at lower rates anda decrease30Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.in U.S. income taxed a higher rates. See Note 8 to the accompanying Consolidated Financial Statements for further information regarding income taxes.On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “2017 Tax Act”) was signed into law making significant changes to the Internal RevenueCode. Changes include, but are not limited to, a corporate tax rate decrease from 35% to 21% effective for tax years beginning after December 31, 2017, thetransition of U.S international taxation from a worldwide tax system to a territorial system, and a one-time transition tax on the mandatory deemedrepatriation of cumulative foreign earnings as of December 31, 2017. The Company has calculated its best estimate of the impact of the 2017 Tax Act in itsyear end income tax provision in accordance with its understanding of the 2017 Tax Act and guidance available as of the date of this filing and as a result hasrecorded $3.2 million as an additional income tax expense in the fourth quarter of 2017, the period in which the legislation was enacted. The provisional taxbenefit amount related to the remeasurement of certain deferred tax assets and liabilities based on the rates at which they are expected to reverse in the futurewas $1.4 million. The provisional amount related to the one-time transition tax on the mandatory deemed repatriation of foreign earnings was $4.6 millionbased on cumulative foreign earnings of $56.7 million. As we complete our analysis of the 2017 Tax Act, collect and prepare necessary data, and interpretany additional guidance issued by the U.S. Treasury Department, the IRS, and other standard-setting bodies, we may make adjustments to the provisionalamounts. Those adjustments may materially impact our provision for income taxes in the period in which the adjustments are made.We have not completed our accounting for the income tax effects of certain elements of the Tax Act, including the new Global Intangible Low-Taxed Income(GILTI) and Base Erosion and Anti-abuse Tax (BEAT) taxes. Due to the complexity of these new tax rules, we are continuing to evaluate these provisions ofthe Tax Act and whether such taxes are recorded as a current-period expense when incurred or whether such amounts should be factored into a company’smeasurement of its deferred taxes. As a result, we have not included an estimate of the tax expense/benefit related to these items for the period endedDecember 31, 2017. The 2017 Tax Act includes a mandatory one-time tax on accumulated earnings of foreign subsidiaries and, as a result, all previously unremitted earnings forwhich no U.S. deferred tax liability had been accrued have now been subject to U.S. tax. Notwithstanding the U.S. taxation of these amounts, we intend tocontinue to invest these earnings, as well as the capital invested in these subsidiaries, indefinitely outside of the U.S. and do not expect to incur anysignificant, additional taxes related to such amounts. The Company has not provided for any additional outside basis difference inherent in its foreignsubsidiaries, as these amounts continue to be indefinitely reinvested in foreign operations. Determining the amount of unrecognized deferred tax liabilityrelated to any additional outside basis difference in these entities is not practicable. In addition, the Company is still evaluating the impact of the one-timetransition tax on the outside basis differences and cumulative temporary differences inherent in these subsidiaries as of December 31, 2017 and as a result, itis not practicable to provide the amount of any cumulative temporary differences related to unrecorded differences.Year ended December 31, 2016 compared to the year ended December 31, 2015During the year ended December 31, 2016, our revenue increased $0.3 million, or 0.1%, to $490.6 million compared to $490.3 million for the year endedDecember 31, 2015. While revenue was largely flat in total, the slight increase in revenue was comprised of a $2.0 million increase in our Learning Solutionssegment, a $14.2 million increase in our Sandy Training & Marketing segment and a $1.3 million increase in our Performance Readiness Solutions segmentoffset by a $17.2 million decline in our Professional & Technical Services segment. Foreign currency exchange rate declines resulted in a total $14.0 milliondecrease in U.S. dollar reported revenue during 2016 across all segments. The changes in revenue and gross profit are discussed in further detail below bysegment.Operating income, the components of which are discussed in detail below, decreased $0.9 million or 2.8% during the year ended December 31, 2016. The netdecrease in operating income was primarily due to a $1.8 million, or 2.2%, decrease in gross profit and a $0.8 million, or 1.8%, increase in selling, general &administrative expenses, offset by restructuring charges of $1.6 million incurred during the year ended December 31, 2015 that did not recur in 2016.For the year ended December 31, 2016, we had income before income taxes of $30.0 million compared to $29.6 million for the year ended December 31,2015. Net income was $20.2 million, or $1.21 per diluted share, for the year ended December 31, 2016 compared to $18.8 million, or $1.09 per diluted share,for 2015. Diluted weighted average shares outstanding were 16.8 million for the year ended December 31, 2016 compared to 17.3 million for the year endedDecember 31, 2015. The decrease in shares outstanding is primarily due to the repurchase of shares under our buyback program in 2016.31Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Revenue Years ended December 31, 2016 2015 (Dollars in thousands)Learning Solutions $208,998 $207,039Professional & Technical Services 101,907 119,092Sandy Training & Marketing 101,768 87,567Performance Readiness Solutions 77,886 76,582 $490,559 $490,280 Learning Solutions revenue increased $2.0 million or 0.9% during the year ended December 31, 2016 compared to 2015. The increase in revenue is due tothe following: •a $7.7 million net increase in training content development and managed learning services; and•a $4.6 million revenue increase attributable to the Jencal Training acquisition completed on March 1, 2016; partially offset by•a $10.3 million decrease in revenue due to unfavorable changes in exchange rates. Professional & Technical Services revenue decreased $17.2 million or 14.4% during the year ended December 31, 2016 compared to 2015. The decrease inrevenue is due to the following: •a $7.8 million decrease in training and technical services for oil and gas clients primarily due to project completions and reductions in the volume ofspend by certain existing clients;•a $4.2 million net decrease in training and professional services for energy clients primarily due to project completions;•a $2.5 million net decrease in engineering and technical training services primarily due to project completions and reductions in the volume ofspend by certain existing clients; and•a $2.7 million decrease in revenue due to unfavorable changes in foreign currency exchange rates. Sandy Training & Marketing revenue increased $14.2 million or 16.2% during the year ended December 31, 2016 compared to 2015. The net increase isprimarily due to the following:•a $9.6 million increase in training services for in-dealership and other training programs for automotive customers;•a $5.9 million increase in training services for an automotive client related to a luxury vehicle launch; and•a $0.7 million increase in glovebox portfolio revenue, partially offset by•a $2.0 million decrease in magazine publications revenue due to a reduction in the volume of publications shipped.Performance Readiness Solutions revenue increased $1.3 million or 1.7% during the year ended December 31, 2016 compared to 2015. The net increase isprimarily due to the following:•a $2.0 million revenue increase attributable to the Maverick acquisition completed on October 1, 2016; and•a $1.9 million increase in technical training services largely due to a new contract with an aerospace client; partially offset by•a $1.1 million decrease in platform adoption training services;•a $0.5 million decrease primarily in leadership development services; and•a $1.0 million decrease due to unfavorable changes in foreign currency exchange rates.32Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Gross profit Years ended December 31, 2016 2015 % Revenue % Revenue (Dollars in thousands)Learning Solutions $38,954 18.6% $36,223 17.5%Professional & Technical Services 15,803 15.5% 23,621 19.8%Sandy Training & Marketing 14,181 13.9% 11,321 12.9%Performance Readiness Solutions 11,219 14.4% 10,827 14.1% $80,157 16.3% $81,992 16.7% Learning Solutions gross profit of $39.0 million or 18.6% of revenue for the year ended December 31, 2016 increased by $2.7 million or 7.5% whencompared to gross profit of $36.2 million or 17.5% of revenue for the year ended December 31, 2015. The increase in gross profit is primarily due to costreduction initiatives. In addition, there was a $1.1 million increase in gross profit attributable to the Jencal acquisition completed in March 2016, offset by a$2.0 million decrease in gross profit due to unfavorable changes in foreign currency exchange rates. Professional & Technical Services gross profit of $15.8 million or 15.5% of revenue for the year ended December 31, 2016 decreased by $7.8 million or33.1% when compared to gross profit of approximately $23.6 million or 19.8% of revenue for the year ended December 31, 2015. The decrease in gross profitis primarily due to the overall revenue decrease and a decline in higher margin revenue streams in this segment and a loss in our alternative fuels businessduring 2016. Sandy Training & Marketing gross profit of $14.2 million or 13.9% of revenue for the year ended December 31, 2016 increased by $2.9 million or 25.3%when compared to gross profit of $11.3 million or 12.9% for the year ended December 31, 2015. The increase in gross profit is primarily due to the revenueincreases noted above. Performance Readiness Solutions gross profit of $11.2 million or 14.4% of revenue for the year ended December 31, 2016 increased by $0.4 million or 3.6%when compared to gross profit of $10.8 million or 14.1% of revenue for the year ended December 31, 2015. The increase in gross profit is primarily due to theMaverick acquisition in October 2016 which contributed $0.3 million of gross profit in 2016. Selling, general and administrative expenses Selling, general and administrative expenses increased $0.8 million or 1.8% from $47.7 million for the year ended December 31, 2015 to $48.6 million forthe year ended December 31, 2016. The increase in SG&A expenses is due to a $1.1 million increase in labor and benefits expense and a $0.7 million increasein legal expenses related to acquisition activity partially offset by a $0.6 million decrease in amortization expense due to certain intangible assets related topreviously completed acquisitions becoming fully amortized and a $0.4 million decrease in other miscellaneous expenses largely due to a reduction in baddebt expense. We expect SG&A expenses to increase in 2017 compared to 2016 as we are implementing a new ERP system which we anticipate will go livein 2018. At this time, we cannot quantify the implementation costs that will result in an increase to SG&A expenses but will provide an update at a futuredate.Gain (loss) on change in fair value of contingent consideration, net During the years ended December 31, 2016 and 2015, we recognized net losses of $0.1 million and $0.4 million, respectively, on the change in fair value ofcontingent consideration related to acquisitions. Changes in the fair value of contingent consideration obligations result from changes in discount periodsand rates and changes in the timing and amount of revenue and/or earnings projections. See Note 2 to the Consolidated Financial Statements for a detaileddiscussion of the acquisitions we have completed and the changes in fair value of contingent consideration during the year ended December 31, 2016. Interest expense Interest expense increased $0.2 million from $1.4 million for the year ended December 31, 2015 to $1.6 million for the year ended December 31, 2016. Theincrease in interest expense is due to the increase in borrowings under our Credit Agreement during 2016. 33Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Other income (expense) Other income was $0.2 million compared to other expense of $1.3 million for the years ended December 31, 2016 and 2015, respectively, and consistedprimarily of foreign currency losses offset by income from a joint venture and interest income in both years. During the years ended December 31, 2016 andand 2015, we had foreign currency losses of $0.2 million and $2.0 million, respectively. The foreign currency losses primarily relate to the effect of exchangerates on intercompany receivables and payables and third party receivables and payables that are denominated in currencies other than the functionalcurrency of our legal entities. This improvement in other income was partially offset by a $0.3 million decrease in income from a joint venture during the yearended December 31, 2016 compared to 2015. Income taxes Income tax expense was $9.8 million for the year ended December 31, 2016 compared to $10.8 million for the year ended December 31, 2015. Our effectiveincome tax rate was 32.6% and 36.6% for the years ended December 31, 2016 and 2015, respectively. The decrease in the effective income tax rate in 2016compared to 2015 is primarily due to a change in the mix of taxable income from higher taxing jurisdictions to lower taxing jurisdictions. See Note 8 to theaccompanying Consolidated Financial Statements for further information regarding income taxes. As of December 31, 2016, we had approximately $42.1 million of accumulated undistributed earnings generated by our foreign subsidiaries. No provisionhas been made for income taxes that would be payable upon the distribution of such earnings since we intend to permanently reinvest these earnings. If theseearnings were distributed in the form of dividends or otherwise, the distributions would be subject to U.S. federal income tax at the statutory rate of 35percent, less foreign tax credits available to offset such distributions, if any. In addition, such distributions may be subject to withholding taxes in the varioustax jurisdictions. Determination of the deferred income tax liability on undistributed earnings is not practicable due the complexities associated withcalculating a liability which is dependent on future circumstances existing if and when a distribution occurs.Liquidity and Capital Resources Working Capital For the year ended December 31, 2017, our working capital decreased $10.1 million from $59.9 million at December 31, 2016 to $49.8 million atDecember 31, 2017. The decrease in working capital is primarily due to an increase in short-term borrowings under our Credit Agreement in 2017. We believethat cash generated from operations and borrowings available under our Credit Agreement ($57.0 million of available borrowings as of December 31, 2017)will be sufficient to fund our working capital and other requirements for at least the next twelve months.As of December 31, 2017, the amount of cash held outside of the U.S. by foreign subsidiaries was $23.3 million. The 2017 Tax Act includes a mandatory one-time tax on accumulated earnings of foreign subsidiaries, and as a result, all previously unremitted earnings for which no U.S. deferred tax liability had beenaccrued have now been subject to U.S. tax. Notwithstanding the U.S. taxation of these amounts, we intend to continue to invest these earnings, as well as ourcapital in these subsidiaries, indefinitely outside of the U.S. and do not expect to incur any significant, additional taxes related to such amounts. Share Repurchase Program We have a share repurchase program under which we may repurchase shares of our common stock from time to time in the open market, subject to prevailingbusiness and market conditions and other factors. Repurchases are made at management’s discretion in accordance with applicable federal securities law. Theamount and timing of share repurchases depend on a variety of factors, including market conditions and prevailing stock prices. The share repurchaseauthorization does not obligate us to acquire any specific number of shares in any period, and may be modified, suspended or discontinued at any time at thediscretion of our Board of Directors. During the years ended December 31, 2017, 2016 and 2015, we repurchased approximately 182,000, 340,000 and477,000 shares, respectively, of our common stock in the open market for a total cost of approximately $4.3 million, $8.0 million and $12.3 million,respectively. In November 2017, our Board of Directors authorized an increase to the share repurchase program of $10 million. As of December 31, 2017,there was approximately $11.7 million available for future repurchases under the current buyback program. There is no expiration date for the repurchaseprogram.34Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Acquisition-Related Payments In January 2018, we paid $10.0 million for the acquisition of Hula Partners. During the year ended December 31, 2017, we used $5.1 million of cash forcontingent consideration payments related to previously completed acquisitions. Below is a summary of the potential maximum contingent consideration wemay be required to pay in connection with completed acquisitions as of December 31, 2017 (dollars in thousands):Acquisition:Original range ofpotentialundiscountedpayments As of December 31, 2017 Maximum contingent consideration due in 201820192020TotalMaverick$0 - $10,000 $5,902$—$—$5,902McKinney Rogers$0 - $18,000 4,0004,0004,00012,000Emantras *———CLS$0 - $2,228 2,228——2,228 $12,130$4,000$4,000$20,130 * There is no maximum contingent consideration payable to the seller.As of December 31, 2017, accrued contingent consideration included in accounts payable and accrued expenses on the consolidated balance sheet totaled$2.7 million. We also had accrued contingent consideration totaling $1.5 million included in other long term liabilities and represents the portion ofcontingent consideration estimated to be payable greater than twelve months from the balance sheet date. Significant Customers & Concentration of Credit Risk We have a market concentration of revenue in both the automotive sector and the financial services & insurance sector. Revenue from the automotiveindustry accounted for approximately 22%, 22% and 19% of our consolidated revenue for the years ended December 31, 2017, 2016 and 2015, respectively.In addition, we have a concentration of revenue from a single automotive customer, which accounted for approximately 13% of our consolidated revenue forboth of the years ended December 31, 2017 and 2016. As of December 31, 2017, accounts receivable from a single automotive customer totaled $18.3million, or 15% of our consolidated accounts receivable balance.Revenue from the financial services & insurance industry accounted for approximately 20%, 21% and 21% of our consolidated revenue for the years endedDecember 31, 2017, 2016 and 2015, respectively. In addition, we have a concentration of revenue from a single financial services customer, which accountedfor approximately 14% and 15% of our consolidated revenue for the years ended December 31, 2017 and 2016, respectively. As of December 31, 2017, billedand unbilled accounts receivable from a single financial services customer totaled $26.1 million, or 16%, of our consolidated accounts receivable and costsand estimated earnings in excess of billings on uncompleted contracts balances. No other single customer accounted for more than 10% of our consolidatedrevenue in 2017 or consolidated accounts receivable balance as of December 31, 2017. Cash Flows Year ended December 31, 2017 compared to the year ended December 31, 2016 Our cash balance increased $7.3 million from $16.3 million as of December 31, 2016 to $23.6 million as of December 31, 2017. The increase in cash duringthe year ended December 31, 2017 resulted from cash provided by operating activities of $26.3 million, cash used in investing activities of $15.5 million,cash used in financing activities of $4.2 million and a $0.7 million positive effect due to exchange rate changes on cash. Cash provided by operating activities was $26.3 million for the year ended December 31, 2017 compared to $18.1 million in 2016. The increase in cashprovided by operating activities is primarily due to favorable changes in working capital accounts during 2017 compared to 2016, partially offset by adecrease in net income in 2017. 35Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Cash used in investing activities was $15.5 million for the year ended December 31, 2017 compared to $10.7 million in 2016. The increase in cash used isdue to an increase of $4.3 million of cash used to complete acquisitions in 2017, a $1.3 million increase in fixed asset additions during the year endedDecember 31, 2017 compared to 2016, and a $0.4 million increase in capitalized software development costs in 2017. Cash used in financing activities was $4.2 million for the year ended December 31, 2017 compared to $10.8 million in 2016. The decrease in cash used infinancing activities was primarily due to a $5.0 million decrease in cash used for open market share repurchases. In addition, we had a $8.4 million increase innet proceeds from borrowings under our Credit Agreement in 2017 compared to 2016. This was offset by a $3.5 million decrease in cash from the change innegative cash book balances in 2017 compared to 2016, a $2.4 million increase in payments for contingent consideration and a $0.5 million premiumpayment for the interest rate cap derivative in 2017. Year ended December 31, 2016 compared to the year ended December 31, 2015 Our cash balance decreased $4.7 million from $21.0 million as of December 31, 2015 to $16.3 million as of December 31, 2016. The decrease in cash duringthe year ended December 31, 2016 resulted from cash provided by operating activities of $18.1 million, cash used in investing activities of $10.7 million,cash used in financing activities of $10.8 million and a $1.3 million negative effect due to exchange rate changes on cash. Cash provided by operating activities was $18.1 million for the year ended December 31, 2016 compared to $25.6 million in 2015. The decrease in cashprovided by operating activities is primarily due to unfavorable changes in working capital accounts largely due to an increase in accounts receivable during2016. Cash used in investing activities was $10.7 million for the year ended December 31, 2016 compared to $2.2 million in 2015. The increase in cash used is dueto $6.8 million of cash used to complete acquisitions in 2016, $1.6 million of cash used for an investment in a new joint venture in 2016, and $0.9 million ofsoftware development costs. These cash uses were offset by a $1.0 million decline in fixed asset additions during the year ended December 31, 2016compared to 2015. Cash used in financing activities was $10.8 million for the year ended December 31, 2016 compared to $15.5 million in 2015. The decrease in cash used infinancing activities was primarily due to a $2.8 million decrease in cash used for open market share repurchases and a $2.5 million increase in cash from thechange in negative cash book balances in 2016 compared to 2015. In addition, we had a $40.0 million increase in cash from a new term loan in December2016, offset by $24.4 million of repayments on the existing term loan and net repayments of $16.1 million on our short-term borrowings under our revolvingcredit facility during 2016. Debt On December 15, 2016, we entered into a Fifth Amended and Restated Financing and Security Agreement (the “Credit Agreement”). The Credit Agreementprovides for a new revolving credit facility up to a maximum principal amount of $100 million, expiring on December 31, 2021 and for a term loan in theprincipal amount of $40 million maturing on April 30, 2020. The Credit Agreement is secured by substantially all of our assets. The new term loan was usedto refinance the $11.1 million remaining balance of the existing term loan and $28.9 million of borrowings outstanding under the existing revolving creditfacility on December 15, 2016.The maximum interest rate on the Credit Agreement is the daily one-month LIBOR market index rate (for borrowings in Dollars and Sterling) or the dailyone-month EURIBOR (for borrowings in Euros) plus 2.50%. Based on our financial performance, the interest rate can be reduced to a minimum rate of thedaily one-month LIBOR market index rate plus 1.25%, with the rate being determined based on our maximum leverage ratio for the preceding four quarters.Each unpaid advance on the revolving loan will bear interest until repaid. The term loan is payable in monthly installments in the principal amount of $1.0million each plus applicable interest, beginning on January 1, 2017. We may prepay the term loan or the revolving loan, in whole or in part, at any timewithout premium or penalty, subject to certain conditions. Amounts repaid or prepaid on the term loan may not be reborrowed.The Credit Agreement contains customary affirmative and negative covenants, including covenants that limit or restrict our and our subsidiaries’ (subject tocertain exceptions) ability to, among other things, grant liens, make investments, incur indebtedness, merge or consolidate, dispose of assets or makeacquisitions. We are also required to maintain compliance with a minimum fixed charge coverage ratio of 1.5 to 1.0 and a maximum leverage ratio of 3.0 to1.0. As of December 31, 2017, our fixed coverage charge ratio was 1.6 to 1.0 and our leverage ratio was 2.0 to 1.0, each of which was in compliance with theCredit Agreement. As of December 31, 2017, our total long-term debt outstanding under the term loan was $28.0 million. In addition, we had $37.736Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.million of borrowings outstanding and $57.0 million of available borrowings under the revolving credit facility as of December 31, 2017. For the years endedDecember 31, 2017 and 2016, the weighted average interest rate on our borrowings was 2.8% and 2.2%, respectively.In March 2017, we entered into an interest rate swap agreement which effectively fixed our interest rate on the remaining $37 million outstanding on our termloan to a fixed LIBOR of 1.59% plus the applicable margin under the Credit Agreement. We have designated the interest rate swap, which expires on April 1,2020, as a cash flow hedge and have applied hedge accounting. The fair value of the derivative asset associated with the interest rate swap was $0.1 millionas of December 31, 2017 and is included in other assets on the consolidated balance sheet.In April 2017, we entered into an interest rate cap agreement and paid a premium of $0.5 million which caps the daily one-month LIBOR at 2.0% for anaggregate notional amount of $20.0 million of our variable rate debt under our credit facility. The interest rate cap agreement matures on December 31, 2021.We have designated the interest rate cap as a cash flow hedge and have applied hedge accounting. The fair value of the derivative asset associated with theinterest rate cap was $0.3 million as of December 31, 2017 and is included in other assets on the consolidated balance sheet.Contractual Payment Obligations We enter into various agreements that result in contractual obligations in connection with our business activities. These obligations primarily relate to debtand interest payments under our Credit Agreement, operating leases and purchase commitments under non-cancelable contracts for certain products andservices. The following table summarizes our total contractual payment obligations as of December 31, 2017 (in thousands): Payments due in 2018 2019-2020 2021-2022 After2023 TotalLong-term debt, including current portion $12,000 $16,000 $— $— $28,000Interest on long-term debt (1) 792 332 — — 1,124Facility lease commitments 8,659 12,667 6,962 6,942 35,230Other operating lease commitments 994 573 28 — 1,595Purchase commitments (2) 6,541 5,917 3,759 — 16,217Total $28,986 $35,489 $10,749 $6,942 $82,166(1)Interest on long-term debt is calculated using the weighted-average interest rate in effect as of December 31, 2017 for all future periods. Interestincurred on borrowings under our revolving credit facility vary based on relative borrowing levels and variable interest rates. As such, we are unableto quantify our future obligations relating to interest on the credit facility.(2)Excludes purchase orders for goods and services entered into by us in the ordinary course of business, which are non-binding and subject toamendment or termination within a reasonable notification period.The table above excludes contingent consideration in connection with acquisitions which may be payable to the sellers if the revenue and/or earnings targetsset forth in the purchase agreements are achieved (see Note 2 to the Consolidated Financial Statements).Off-Balance Sheet Commitments As of December 31, 2017, we had eleven outstanding letters of credit totaling $5.4 million, which expire in 2018 through 2022. In addition, we have threeoutstanding performance bonds totaling $6.4 million for contracts to be completed in 2018. We do not have any off-balance sheet financing except foroperating leases and letters of credit entered into in the normal course of business.37Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Management Discussion of Critical Accounting Policies The preparation of our consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reportedamounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenuesand expenses during the reporting period. Our estimates, judgments and assumptions are continually evaluated based on available information andexperience. Because of the use of estimates inherent in the financial reporting process, actual results could differ from those estimates. Certain of our accounting policies require higher degrees of judgment than others in their application. These include revenue recognition, impairment ofintangible assets, including goodwill, valuation of contingent consideration for business acquisitions, and income taxes, which are summarized below. Inaddition, Note 1 to the accompanying Consolidated Financial Statements includes further discussion of our significant accounting policies. Revenue Recognition We provide services under time-and-materials, cost-reimbursable, fixed price and fixed-fee per transaction contracts to both government and commercialcustomers. Each contract has different terms based on the scope, deliverables and complexity of the engagement, requiring us to make judgments andestimates about recognizing revenue. Revenue is recognized as services are performed. Under time-and-materials contracts, as well as certain government cost-reimbursable and certain fixed price contracts, the contractual billing schedules arebased on the specified level of resources we are obligated to provide. As a result, for these “level-of-effort” contracts, the contractual billing amount for theperiod is a measure of performance and, therefore, revenue is recognized in that amount.Revenue under government fixed price contracts is recognized using the percentage-of-completion method. Under the percentage-of-completion method,management estimates the percentage-of-completion based upon costs incurred as a percentage of the total estimated costs. For commercial fixed price contracts which typically involve a discrete project, such as development of training content and materials, design of trainingprocesses, software implementation, or engineering projects, the contractual billing schedules are not based on the specified level of resources we areobligated to provide. These discrete projects generally do not contain milestones or other reliable measures of performance. As a result, revenue on thesearrangements is recognized using a percentage-of-completion method based on the relationship of costs incurred to total estimated costs expected to beincurred over the term of the contract. We believe this methodology is a reasonable measure of proportional performance since performance primarilyinvolves personnel costs and services provided to the customer throughout the course of the projects through regular communications of progress towardcompletion and other project deliverables. In addition, the customer typically is required to pay us for the proportionate amount of work and cost incurred inthe event of contract termination. When total direct cost estimates exceed revenues, the estimated losses are recognized immediately. The use of the percentage-of-completion method requiressignificant judgment relative to estimating total contract costs, including assumptions relative to the length of time to complete the project, the nature andcomplexity of the work to be performed, and anticipated changes in estimated salaries and other costs. Estimates of total contract costs are continuouslymonitored during the term of the contract, and recorded revenues and costs are subject to revision as the contract progresses. When revisions in estimatedcontract revenues and costs are determined, such adjustments are recorded in the period in which they are first identified. For certain commercial fixed-fee per transaction contracts, such as providing training courses, revenue is recognized during the period in which services aredelivered in accordance with the pricing outlined in the contracts. For certain fixed-fee per transaction and fixed price contracts in which the output of the arrangement is measurable, such as for the shipping of publicationsand print materials, revenue is recognized when the deliverable is met and the product is delivered based on the output method of performance. The customeris required to pay for the cost incurred in the event of contract termination. Certain of our fixed price commercial contracts contain revenue arrangements with multiple deliverables. Revenue arrangements with multiple deliverablesare evaluated to determine if the deliverables can be divided into more than one unit of accounting. For contracts determined to have more than one unit ofaccounting, we recognize revenue for each deliverable based on the revenue recognition policies discussed above. Within each multiple deliverable project,there is objective and reliable fair value across all38Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.units of the arrangement, as discounts are not offered or applied to one deliverable versus another, and the rates bid across all deliverables are consistent. As part of our on-going operations to provide services to our customers, incidental expenses, which are commonly referred to as “out-of-pocket” expenses, arebilled to customers, either directly as a pass-through cost or indirectly as a cost estimated in proposing on fixed price contracts. Out-of-pocket expensesinclude expenses such as airfare, mileage, hotel stays, out-of-town meals and telecommunication charges. Our policy provides for these expenses to berecorded as both revenue and direct cost of services. In connection with our delivery of products, primarily for publications delivered by our Sandy Training & Marketing segment, we incur shipping andhandling costs which are billed to customers directly as a pass-through cost. Our policy provides for these expenses to be recorded as both revenue and directcost of revenue. Impairment of Intangible Assets, Including Goodwill We review goodwill for impairment annually as of October 1st and whenever events or changes in circumstances indicate the carrying value of an asset maynot be recoverable. We test goodwill at the reporting unit level. A reporting unit is an operating segment, or one level below an operating segment, as definedby U.S. GAAP. Our reporting units each represent separate reportable segments. Our goodwill balances as of December 31, 2017 for each reporting unit were as follows (in thousands):Reporting Unit Learning Solutions$58,869Professional & Technical Services43,043Sandy Training & Marketing653Performance Readiness Solutions42,270 $144,835ASC 350 permits an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than itscarrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. Under ASC 350, an entity is not requiredto perform step one of the goodwill impairment test for a reporting unit if it is more likely than not that its fair value is greater than its carrying amount. Forour annual goodwill impairment test as of October 1, 2017, we performed a quantitative step one goodwill impairment test and concluded that the fair valuesof each of our reporting units exceeded their respective carrying values . For our annual goodwill impairment test as of October 1, 2016, we performed aqualitative assessment for all of our reporting units and determined that it was more likely than not that the fair values of each of our reporting units exceededtheir respective carrying values. If it is determined as a result of the qualitative assessment, that it is more likely than not that the fair value of a reporting unit is less than its carrying amount,a two-step impairment test is required. In the first step, we compare the fair value of each reporting unit to its carrying value. If the fair value of the reportingunit exceeds the carrying value of the net assets assigned to that unit, goodwill is not impaired and we are not required to perform further testing. If thecarrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, then we must perform the second step of theimpairment test in order to determine the implied fair value of the reporting unit's goodwill. The implied fair value of goodwill is determined by allocatingthe fair value of the reporting unit’s assets and liabilities in a manner similar to a purchase price allocation, with any residual fair value allocated to goodwill.If the carrying value of a reporting unit's goodwill exceeds its implied fair value, then we record an impairment loss equal to the difference. Under the two-step impairment test, we determine the fair value of our reporting units using both an income approach and a market approach, and weigh bothapproaches to determine the fair value of each reporting unit. Under the income approach, we perform a discounted cash flow analysis which incorporatesmanagement’s cash flow projections over a five-year period and a terminal value is calculated by applying a capitalization rate to terminal year projectionsbased on an estimated long-term growth rate. The five-year projected cash flows and calculated terminal value are discounted using a weighted average costof capital (“WACC”) which takes into account the costs of debt and equity. The cost of equity is based on the risk-free interest rate, equity risk premium,industry and size equity premiums and any additional market equity risk premiums as deemed appropriate for each reporting unit. To arrive at a fair value foreach reporting unit, the terminal value is discounted by the WACC and added to the present value of the estimated cash flows over the discrete five-yearperiod. There are a number of other variables which impact the projected cash39Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.flows, such as expected revenue growth and profitability levels, working capital requirements, capital expenditures and related depreciation andamortization. Under the market approach, we perform a comparable public company analysis and apply revenue and earnings multiples from the identifiedset of companies to the reporting unit’s actual and forecasted financial performance to determine the fair value of each reporting unit. We evaluate thereasonableness of the fair value calculations of our reporting units by reconciling the total of the fair values of all of our reporting units to our total marketcapitalization, and adjusting for an appropriate control premium. In addition, we make certain judgments in allocating shared assets and liabilities todetermine the carrying values for each of our reporting units. Determining the fair value of a reporting unit is judgmental in nature and involves the use of significant estimates and assumptions. These estimates andassumptions include revenue growth rates and operating margins used to calculate projected future cash flows, risk-adjusted discount rates, future economicand market conditions and determination of appropriate market comparables. We base our fair value estimates on assumptions we believe to be reasonablebut that are unpredictable and inherently uncertain. Actual future results may differ from those estimates. In addition, we make certain judgments andassumptions in allocating shared assets and liabilities to determine the carrying values for each of our reporting units. The timing and frequency of ourgoodwill impairment tests are based on an ongoing assessment of events and circumstances that would indicate a possible impairment. We will continue tomonitor our goodwill and intangible assets for impairment and conduct formal tests when impairment indicators are present. Valuation of Contingent Consideration for Business Acquisitions Acquisitions may include contingent consideration payments based on future financial measures of an acquired company. Contingent consideration isrequired to be recognized at fair value as of the acquisition date. We estimate the fair value of these liabilities using an appropriate valuation methodology,typically either an income-based approach or a simulation model, such as the Monte Carlo model, depending on the structure of the contingent considerationarrangement. We believe our estimates and assumptions are reasonable; however, there is significant judgment involved. At each reporting date, thecontingent consideration obligation are revalued to estimated fair value and changes in fair value subsequent to the acquisition are reflected in income orexpense in the consolidated statements of operations, and could cause a material impact to our operating results. Changes in the fair value of contingentconsideration obligations may result from changes in discount periods and rates and changes in the timing and amount of revenue and/or earningsprojections. Income Taxes We account for income taxes using the asset and liability method. Deferred tax assets and liabilities are recognized for future tax consequences attributable todifferences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and for operating loss and taxcredit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which thosetemporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in incomein the period that includes the enactment date. The measurement of deferred taxes often involves an exercise of judgment related to the computation and realization of tax basis. Our deferred tax assets andliabilities reflect our assessment that tax positions taken, and the resulting tax basis, are more likely than not to be sustained if they are audited by taxingauthorities. We establish accruals for uncertain tax positions taken or expected to be taken in a tax return when it is more likely than not (i.e., a likelihood ofmore than fifty percent) that the position would be sustained upon examination by tax authorities that have full knowledge of all relevant information. Arecognized tax position is then measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. Anumber of years may elapse before a particular matter, for which we have or have not established an accrual, is audited and finally resolved. Favorable orunfavorable adjustment of the accrual for any particular issue would be recognized as an increase or decrease to our income tax expense in the period of achange in facts and circumstances. In assessing the realizability of our deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets maynot be realized. The ultimate realization of the deferred tax assets is dependent upon the generation of future income during the periods in which temporarydifferences are deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planningstrategies in making this assessment. Based upon these factors, we believe it is more likely than not that we will realize the benefits of our deferred tax assets,net of the valuation allowance. The valuation allowance primarily relates to both foreign and domestic net operating loss carryforwards for which we do notbelieve the benefits may be realized. 40Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.The above matters, and others, involve the exercise of significant judgment. Any changes in our practices or judgments involved in the measurement ofdeferred tax assets and liabilities could materially impact our financial condition or results of operations.Accounting Standards Issued and Adopted We discuss recently issued and adopted accounting standards in Note 1 to the accompanying Consolidated Financial Statements. Item 7A: Quantitative and Qualitative Disclosures about Market RiskOur primary exposure to market risk relates to changes in interest rates and foreign currency exchange rates.Interest Rate RiskWe are exposed to interest rate risk related to our outstanding debt obligations. Borrowings under our Credit Agreement bear interest based on a variable rate.The maximum interest rate on our borrowings under the Credit Agreement is the daily one-month LIBOR market index rate plus 2.50%. Based on ourfinancial performance, the interest rate can be reduced to a minimum rate of the daily one-month LIBOR market index rate plus 1.25%, with the rate beingdetermined based on our maximum leverage ratio for the preceding four quarters. As such, we are exposed to interest rate risk relating to the fluctuations inthe LIBOR rate. In an effort to manage our exposure to this risk, we entered into interest rate derivative contracts discussed in further detail below.In March 2017, we entered into an interest rate swap agreement which effectively fixed our interest rate on the remaining $37million outstanding on our term loan to a fixed LIBOR of 1.59% plus the applicable margin under the Credit Agreement. We have designated the interest rateswap, which expires on April 1, 2020, as a cash flow hedge and have applied hedge accounting. The fair value of the derivative asset associated with theinterest rate swap was $0.1 million as of December 31, 2017 and is included in other assets on the consolidated balance sheet.In April 2017, we entered into an interest rate cap agreement and paid a premium of $0.5 million which caps the daily one-month LIBOR at 2.0% for anaggregate notional amount of $20.0 million of our variable rate debt under our credit facility. The interest rate cap agreement matures on December 31, 2021.We have designated the interest rate cap as a cash flow hedge and have applied hedge accounting. The fair value of the derivative asset associated with theinterest rate cap was $0.3 million as of December 31, 2017 and is included in other assets on the consolidated balance sheet.We estimate that the fair value of our borrowings under the Credit Agreement approximates its carrying value as of December 31, 2017 as it bears interest atvariable rates.Foreign Currency Exchange Rate Risk We operate in various foreign countries, which exposes us to market risk associated with foreign currency exchange rate fluctuations. Our foreign currencyexposure primarily relates to intercompany receivables and payables and third party receivables and payables that are denominated in currencies other thanthe functional currency of our legal entities. Our largest foreign currency exposure is unsettled intercompany payables and receivables which are reviewed ona regular basis. Gains and losses from foreign currency transactions are included in "Other income (expense)" on our Consolidated Statements of Operations.We had foreign currency transaction losses totaling $0.3 million, $0.2 million and $2.0 million for the years ended December 31, 2017, 2016 and 2015,respectively.Most of our foreign subsidiaries operate in a currency other than the United States dollar; therefore, increases or decreases in the value of the U.S. dollaragainst other major currencies will affect our operating results and the value of our balance sheet items denominated in foreign currencies. Our mostsignificant exposures to translation risk relate to functional currency assets and liabilities that are denominated in the British Pound Sterling, Euro andCanadian dollar. The changes in the net investments of foreign subsidiaries whose currencies are denominated in currencies other than the U.S. dollar arereflected in "Foreign currency translation adjustments” on our Consolidated Statements of Comprehensive Income. We have not used any exchange ratehedging programs to mitigate the effect of exchange rate fluctuations.41Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Item 8: Financial Statements and Supplementary Data Page Financial Statements of GP Strategies Corporation and Subsidiaries: Reports of Independent Registered Public Accounting Firm43 Consolidated Balance Sheets – December 31, 2017 and 201645 Consolidated Statements of Operations – Years ended December 31, 2017, 2016 and 201546 Consolidated Statements of Comprehensive Income – Years ended December 31, 2017, 2016 and 201547 Consolidated Statements of Stockholders’ Equity – Years ended December 31, 2017, 2016 and 201548 Consolidated Statements of Cash Flows – Years ended December 31, 2017, 2016 and 201549 Notes to Consolidated Financial Statements5142Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Report of Independent Registered Public Accounting Firm To the Stockholders and Board of DirectorsGP Strategies Corporation: Opinion on the Consolidated Financial StatementsWe have audited the accompanying consolidated balance sheets of GP Strategies Corporation and subsidiaries (the Company) as of December 31, 2017 and2016, the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for each of the years in the three‑yearperiod ended December 31, 2017, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financialstatements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operationsand its cash flows for each of the years in the three‑year period ended December 31, 2017, in conformity with U.S. generally accepted accounting principles.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’sinternal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control - Integrated Framework (2013) issued bythe Committee of Sponsoring Organizations of the Treadway Commission, and our report dated March 1, 2018 expressed an unqualified opinion on theeffectiveness of the Company’s internal control over financial reporting.Basis for OpinionThese consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on theseconsolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent withrespect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and ExchangeCommission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performingprocedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures thatrespond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financialstatements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating theoverall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ KPMG LLPWe or our predecessor firms have served as the Company’s auditor since 1970.Baltimore, MarylandMarch 1, 201843Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Report of Independent Registered Public Accounting Firm To the Stockholders and Board of DirectorsGP Strategies Corporation:Opinion on Internal Control Over Financial ReportingWe have audited GP Strategies Corporation and subsidiaries’ (the Company) internal control over financial reporting as of December 31, 2017, based oncriteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017, based on criteriaestablished in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidatedbalance sheets of the Company as of December 31, 2017 and 2016, the related consolidated statements of operations, comprehensive income, stockholders’equity, and cash flows for each of the years in the three-year period ended December 31, 2017, and the related notes (collectively, the consolidated financialstatements), and our report dated March 1, 2018 expressed an unqualified opinion on those consolidated financial statements.Basis for OpinionThe Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness ofinternal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Ourresponsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firmregistered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and theapplicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financialreporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing andevaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures aswe considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.Definition and Limitations of Internal Control Over Financial ReportingA company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal controlover financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are beingmade only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention ortimely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate. /s/ KPMG LLP Baltimore, MarylandMarch 1, 2018 44Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.GP STRATEGIES CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets December 31, 2017 and 2016(In thousands, except shares and par value per share) 2017 2016Assets Current assets: Cash $23,612 $16,346Accounts and other receivables, less allowance for doubtful accounts of $2,492 in 2017 and $1,091 in 2016 119,335 105,549Costs and estimated earnings in excess of billings on uncompleted contracts 42,958 39,318Prepaid expenses and other current assets 14,212 11,481Total current assets 200,117 172,694Property, plant and equipment, net 5,123 4,547Goodwill 144,835 127,772Intangible assets, net 8,363 5,825Deferred tax assets 1,135 1,058Other assets, net 5,434 3,705 $365,007 $315,601Liabilities and Stockholders’ Equity Current liabilities: Short-term borrowings $37,696 $17,694Current portion of long-term debt 12,000 12,000Accounts payable and accrued expenses 78,280 64,596Billings in excess of costs and estimated earnings on uncompleted contracts 22,356 18,545Total current liabilities 150,332 112,835Long-term debt 16,000 28,000Deferred tax liabilities 3,186 3,124Other noncurrent liabilities 7,435 4,146Total liabilities 176,953148,105 Stockholders’ equity: Preferred stock, par value $0.01 per share; Authorized 10,000,000 shares; no shares issued — —Common stock, par value $0.01 per share; Authorized 35,000,000 shares; issued 17,222,781 shares in 2017 and 2016 172 172Additional paid-in capital 107,256 106,569Retained earnings 106,599 93,845Treasury stock, at cost (474,855 shares in 2017 and 482,194 shares in 2016) (11,118) (11,628)Accumulated other comprehensive loss (14,855) (21,462)Total stockholders’ equity 188,054 167,496 $365,007$315,601See accompanying notes to consolidated financial statements.45Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.GP STRATEGIES CORPORATION AND SUBSIDIARIES Consolidated Statements of Operations Years ended December 31, 2017, 2016 and 2015(In thousands, except per share data) 2017 2016 2015Revenue $509,208 $490,559 $490,280Cost of revenue 427,181 410,402 408,288Gross profit 82,02780,15781,992Selling, general and administrative expenses 57,419 48,597 47,748Restructuring charges 3,317 — 1,551Gain (loss) on change in fair value of contingent consideration, net 1,620 (136) (371)Operating income 22,911 31,424 32,322Interest expense 3,132 1,568 1,381Other (expense) income (including interest income of $43 in 2017, $94 in 2016 and $149in 2015) (90) 178 (1,318)Income before income taxes 19,68930,03429,623Income tax expense 6,798 9,787 10,834Net income $12,891$20,247$18,789 Basic weighted average shares outstanding 16,748 16,696 17,110Diluted weighted average shares outstanding 16,873 16,791 17,264 Per common share data: Basic earnings per share $0.77$1.21$1.10Diluted earnings per share $0.76$1.21$1.09See accompanying notes to consolidated financial statements.46Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.GP STRATEGIES CORPORATION AND SUBSIDIARIES Consolidated Statements of Comprehensive Income Years ended December 31, 2017, 2016 and 2015(In thousands) 2017 2016 2015Net income $12,891 $20,247 $18,789Foreign currency translation adjustments 6,686 (8,661) (5,404)Change in fair value of interest rate cap, net of tax (142) — —Change in fair value of interest rate swap, net of tax 63 — —Comprehensive income $19,498$11,586$13,385See accompanying notes to consolidated financial statements.47Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.GP STRATEGIES CORPORATION AND SUBSIDIARIES Consolidated Statements of Stockholders’ Equity Years ended December 31, 2017, 2016 and 2015(In thousands, except for par value per share) Commonstock($0.01 par) Additionalpaid-in capital Retainedearnings Treasurystock at cost Accumulatedothercomprehensiveloss Totalstockholders’equityBalance at December 31, 2014 $171 $104,523 $54,809 $(381) $(7,397) $151,725 Net income — — 18,789 — — 18,789Foreign currency translation adjustments — — — — (5,404) (5,404)Repurchases of common stock in the open market — — — (12,347) — (12,347)Stock-based compensation expense — 3,050 — — — 3,050Income tax benefit from stock-based compensation —835———835Shares withheld in exchange for tax withholdingpayments on stock-based compensation —(1,451)———(1,451)Issuance of stock for employer contributions toretirement plan 1 681 — 2,029 — 2,711Net issuances of stock pursuant to stock compensation plans and other — (1,766) — 2,202 — 436Balance at December 31, 2015 $172$105,872$73,598$(8,497)$(12,801)$158,344 Net income — — 20,247 — — 20,247Foreign currency translation adjustments — — — — (8,661) (8,661)Repurchases of common stock in the open market — — — (7,959) — (7,959)Stock-based compensation expense — 3,229 — — — 3,229Income tax benefit from stock-based compensation — 137 — — — 137Shares withheld in exchange for tax withholdingpayments on stock-based compensation — (771) — — — (771)Issuance of stock for employer contributions toretirement plan — (34) — 2,742 — 2,708Net issuances of stock pursuant to stock compensation plans and other — (1,864) — 2,086 — 222Balance at December 31, 2016 $172$106,569$93,845$(11,628)$(21,462)$167,496Cumulative effect adjustment of adopting ASU 2016-09 — 234 (137) — — 97Adjusted balance at December 31, 2016 172 106,803 93,708 (11,628) (21,462) 167,593 Net income — — 12,891 — — 12,891Foreign currency translation adjustments — — — — 6,686 6,686Change in fair value of interest rate cap, net of tax — — — — (142) (142)Change in fair value of interest rate swap, net of tax — — — — 63 63Repurchases of common stock in the open market — — — (4,302) — (4,302)Stock-based compensation expense — 3,589 — — — 3,589Shares withheld in exchange for tax withholding paymentson stock-based compensation — (1,168) — — — (1,168)Issuance of stock for employer contributions toretirement plan — 40 — 2,685 — 2,725Net issuances of stock pursuant to stock compensationplans and other — (2,008) — 2,127 — 119Balance at December 31, 2017 $172$107,256$106,599$(11,118)$(14,855)$188,054See accompanying notes to consolidated financial statements.48Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.GP STRATEGIES CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows Years ended December 31, 2017, 2016 and 2015(In thousands) 2017 2016 2015Cash flows from operating activities: Net income 12,891 $20,247 $18,789Adjustments to reconcile net income to net cash provided by operating activities: (Gain) loss on change in fair value of contingent consideration, net (1,620) 136 371Depreciation and amortization 6,974 6,462 7,865Non-cash compensation expense 6,314 6,015 6,059Deferred income taxes (313) (1,761) (1,096)Changes in other operating items, net of acquired amounts: Accounts and other receivables (10,977) (17,965) 6,497Costs and estimated earnings in excess of billings on uncompleted contracts (1,893) 4,234 (16,942)Prepaid expenses and other current assets (2,297) (2,490) 5,111Accounts payable and accrued expenses 15,392 3,732 3,856Billings in excess of costs and estimated earnings on uncompleted contracts 2,520 383 (4,663)Income tax benefit from stock-based compensation — (137) (835)Contingent consideration payments in excess of fair value on acquisition date (408) (539) (325)Other (323) (240) 867Net cash provided by operating activities 26,26018,07725,554 Cash flows from investing activities: Additions to property, plant and equipment (2,734) (1,402) (2,357)Acquisitions, net of cash acquired (11,111) (6,801) —Investment in joint venture — (1,600) —Capitalized software development costs (1,313) (933) —Other investing activities (295) 14 186Net cash used in investing activities (15,453) (10,722) (2,171) Cash flows from financing activities: Proceeds from (repayment of) short-term borrowings 19,864 (16,127) 13,285Proceeds from long-term debt — 40,000 —Repayment of long-term debt (12,000) (24,444) (13,333)Contingent consideration payments (4,657) (2,244) (2,284)Change in negative cash book balance (2,138) 1,366 (1,143)Repurchases of common stock (3,773) (8,747) (11,559)Income tax benefit from stock-based compensation — 137 835Tax withholding payments for employee stock-based compensation in exchange for shares surrendered (1,168) (771) (1,451)Premium paid on interest rate cap (474) — —Other financing activities 120 48 138Net cash used in financing activities (4,226) (10,782) (15,512)49Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 2017 2016 2015 Effect of exchange rate changes on cash 685 (1,257) (1,382)Net change in cash 7,266(4,684)6,489Cash at beginning of year 16,346 21,030 14,541Cash at end of year $23,612 $16,346 $21,030 Supplemental disclosures of cash flow information: Cash paid during the year for: Interest $1,841 $1,523 $1,383Income taxes $6,256 $10,604 $8,273 Non-cash financing activities: Accrued share repurchases $529 $— $788Accrued contingent consideration $5,613 $5,166 $—See accompanying notes to consolidated financial statements.50Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.GP STRATEGIES CORPORATION Notes to Consolidated Financial Statements(1)Description of Business and Significant Accounting PoliciesBusinessGP Strategies Corporation is a global performance improvement solutions provider of training, digital learning solutions, management consulting andengineering services. References in this report to “GP Strategies,” the “Company,” “we” and “our” are to GP Strategies Corporation and its subsidiaries,collectively.FASB CodificationWe follow generally accepted accounting principles (“GAAP”) set by the Financial Accounting Standards Board (“FASB”). References to GAAP issuedby the FASB in these footnotes are to the FASB Accounting Standards Codification, sometimes referred to as ASC.Basis of ConsolidationThe consolidated financial statements include the operations of our wholly-owned subsidiaries. All significant intercompany balances and transactionshave been eliminated. Significant Customers & Concentration of Credit Risk We have a market concentration of revenue in both the automotive sector and financial services & insurance sector. Revenue from the automotiveindustry accounted for approximately 22%, 22% and 19% of our consolidated revenue for the years ended December 31, 2017, 2016 and 2015,respectively. In addition, we have a concentration of revenue from a single automotive customer, which accounted for approximately 13% of ourconsolidated revenue for both of the years ended December 31, 2017 and 2016. As of December 31, 2017 accounts receivable from a single automotivecustomer totaled $18.3 million, or 15%, of our consolidated accounts receivable balance. Revenue from the financial services and insurance industry accounted for approximately 20%, 21% and 21% of our consolidated revenue for the yearsended December 31, 2017, 2016 and 2015, respectively. In addition, we have a concentration of revenue from a single financial services customer, whichaccounted for approximately 14% and 15% of our consolidated revenue for the years ended December 31, 2017 and 2016, respectively. As ofDecember 31, 2017, billed and unbilled accounts receivable from a single financial services customer totaled $26.1 million, or 16%, of our consolidatedaccounts receivable and costs and estimated earnings in excess of billings on uncompleted contracts balances.No other single customer accounted for more than 10% of our consolidated revenue in 2017 or consolidated accounts receivable balance as ofDecember 31, 2017.Cash We maintain our cash balances in bank accounts at various financial institutions. Outstanding checks which have been issued but not presented to thebanks for payment in excess of amounts on deposit may create negative book cash balances. We transfer cash on an as-needed basis to fund these itemsas they clear the bank in subsequent periods. Such negative cash balances are included in accounts payable and accrued expenses and totaled $2.9million and $5.0 million as of December 31, 2017 and 2016, respectively. Changes in negative book cash balances from period to period are reported asa financing activity in the consolidated statement of cash flows. 51Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.GP STRATEGIES CORPORATION Notes to Consolidated Financial StatementsAllowance for Doubtful Accounts Receivable Trade accounts receivable are recorded at invoiced amounts. We evaluate the collectability of trade accounts receivable based on a combination offactors. When we are aware that a specific customer may be unable to meet its financial obligations to us, such as in the case of bankruptcy filings ordeterioration in the customer’s operating results or financial position, we evaluate the need to record a specific reserve for bad debt to reduce the relatedreceivable to the amount we reasonably believe is collectible. We also record reserves for bad debt for all other customers based on a variety of factors,including the length of time the receivables are past due, historical collection experience and trends of past due accounts, write-offs and specificidentification and review of past due accounts. Actual collections of trade receivables could differ from management’s estimates due to changes in futureeconomic or industry conditions or specific customers’ financial conditions.Activity in our allowance for doubtful accounts was comprised of the following for the periods indicated: Year ended December 31, 2017 2016 2015 (In thousands)Beginning balance $1,091 $1,856 $1,947Additions 1,720 368 17Deductions (319) (1,133) (108)Ending balance $2,492 $1,091 $1,856During the fourth quarter ended December 31, 2017, we recognized a $1.3 million bad debt reserve related to accounts receivable on a contract with aforeign oil and gas client which was terminated. During the third quarter of 2017, we also recognized a $2.6 million revenue and gross profit reductionrelated to this contract due to a performance dispute resulting in an increase in estimated costs to complete the project. Foreign Currency Translation The functional currencies of our international operations are the respective local currencies of the countries in which we operate. The translation of theforeign currency into U.S. dollars is performed for balance sheet accounts using current exchange rates in effect at the balance sheet date and for revenueand expense accounts using the weighted average exchange rates prevailing during the year. The unrealized gains and losses resulting from suchtranslation are included as a component of comprehensive income. Transaction gains and losses arising from currency exchange rate fluctuations ontransactions denominated in a currency other than the local functional currency are included in “Other income (expense)" on our ConsolidatedStatements of Operations. We had foreign currency transaction losses totaling $0.3 million, $0.2 million and $2.0 million for the years endedDecember 31, 2017, 2016 and 2015, respectively. Revenue Recognition We provide services under time-and-materials, cost-reimbursable, and fixed price (including fixed-fee per transaction) contracts to both government andcommercial customers. Each contract has different terms based on the scope, deliverables and complexity of the engagement, requiring us to makejudgments and estimates about recognizing revenue. Revenue is recognized as services are performed. Under time-and-materials contracts, as well as certain government cost-reimbursable and certain fixed price contracts, the contractual billing schedulesare based on the specified level of resources we are obligated to provide. As a result, for these “level-of-effort” contracts, the contractual billing amountfor the period is a measure of performance and, therefore, revenue is recognized in that amount. Revenue under government fixed price contracts is recognized using the percentage-of-completion method. Under the percentage-of-completionmethod, management estimates the percentage-of-completion based upon costs incurred as a percentage of the total estimated costs. 52Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.GP STRATEGIES CORPORATION Notes to Consolidated Financial StatementsFor commercial fixed price contracts which typically involve a discrete project, such as development of training content and materials, design of trainingprocesses, software implementation, or engineering projects, the contractual billing schedules are not based on the specified level of resources we areobligated to provide. These discrete projects generally do not contain milestones or other reliable measures of performance. As a result, revenue on thesearrangements is recognized using a percentage-of-completion method based on the relationship of costs incurred to total estimated costs expected to beincurred over the term of the contract. We believe this methodology is a reasonable measure of proportional performance since performance primarilyinvolves personnel costs and services provided to the customer throughout the course of the projects through regular communications of progress towardcompletion and other project deliverables. In addition, the customer typically is required to pay us for the proportionate amount of work and costincurred in the event of contract termination. When total direct cost estimates exceed revenues, the estimated losses are recognized immediately. The use of the percentage-of-completion methodrequires significant judgment relative to estimating total contract costs, including assumptions relative to the length of time to complete the project, thenature and complexity of the work to be performed, and anticipated changes in estimated salaries and other costs. Estimates of total contract costs arecontinuously monitored during the term of the contract, and recorded revenues and costs are subject to revision as the contract progresses. Whenrevisions in estimated contract revenues and costs are determined, such adjustments are recorded in the period in which they are first identified. For certain commercial fixed-fee per transaction contracts, such as providing training courses, revenue is recognized during the period in which servicesare delivered in accordance with the pricing outlined in the contracts.For certain fixed-fee per transaction and fixed price contracts in which the output of the arrangement is measurable, such as for the shipping ofpublications and print materials, revenue is recognized when the deliverable is met and the product is delivered based on the output method ofperformance. The customer is required to pay for the cost incurred in the event of contract termination. Certain of our fixed price commercial contracts contain revenue arrangements with multiple deliverables. Revenue arrangements with multipledeliverables are evaluated to determine if the deliverables can be divided into more than one unit of accounting. For contracts determined to have morethan one unit of accounting, we recognize revenue for each deliverable based on the revenue recognition policies discussed above. Within eachmultiple deliverable project, there is objective and reliable fair value across all units of the arrangement, as discounts are not offered or applied to onedeliverable versus another, and the rates bid across all deliverables are consistent. As part of our on-going operations to provide services to our customers, incidental expenses, which are commonly referred to as “out-of-pocket”expenses, are billed to customers, either directly as a pass-through cost or indirectly as a cost estimated in proposing on fixed price contracts. Out-of-pocket expenses include expenses such as airfare, mileage, hotel stays, out-of-town meals and telecommunication charges. Our policy provides for theseexpenses to be recorded as both revenue and direct cost of services. In connection with the delivery of products, primarily for publications delivered by our Sandy Training & Marketing segment, we incur shipping andhandling costs which are billed to customers directly as a pass-through cost. Our policy provides for these expenses to be recorded as both revenue anddirect cost of revenue. Contract Related Assets and Liabilities Costs and estimated earnings in excess of billings on uncompleted contracts in the accompanying consolidated balance sheets represent unbilledamounts earned and reimbursable under contracts in progress. These amounts become billable according to the contract terms, which usually considerthe passage of time, achievement of milestones or completion of the project. Generally, such unbilled amounts will be billed and collected over the nexttwelve months. Billings in excess of costs and estimated earnings on uncompleted contracts in the accompanying consolidated balance sheets represent advancedbillings to clients on contracts in advance of work performed. Generally, such amounts will be earned and recognized in revenue over the next twelvemonths. Comprehensive Income Comprehensive income consists of net income, foreign currency translation adjustments, and the change in fair value of interest rate derivatives, net oftax.53Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.GP STRATEGIES CORPORATION Notes to Consolidated Financial StatementsOther Current Assets Prepaid expenses and other current assets on our consolidated balance sheet include prepaid expenditures for goods or services before the goods are usedor the services are received, inventories and work in progress on customer contracts. Prepaid expenses are charged to expense in the periods the benefitsare realized. Inventories are stated at lower of cost or market. Provision is made to reduce excess and obsolete inventories to their estimated net realizablevalue.Property, Plant and Equipment Property, plant and equipment are carried at cost (or fair value at acquisition date for assets obtained through business combinations). Major additionsand improvements are capitalized, while maintenance and repairs which do not extend the lives of the assets are expensed as incurred. Gain or loss on thedisposition of property, plant and equipment is recognized in operations when realized.Depreciation of property, plant and equipment is recognized on a straight-line basis over the following estimated useful lives:Class of assets Useful lifeBuildings and improvements 5 to 40 yearsMachinery, equipment, and furniture and fixtures 3 to 10 yearsLeasehold improvements Shorter of asset life or term of leaseImpairment of Long-Lived Assets Long-lived assets, such as property, plant, and equipment, and intangibles subject to amortization, are reviewed for impairment whenever events orchanges in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measuredby a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carryingamount of an asset exceeds its estimated future cash flows, an impairment charge is recognized at the amount by which the carrying amount of the assetexceeds the fair value of the asset. Impairment of long-lived assets is assessed at the lowest level for which there are identifiable cash flows that areindependent from other groups of assets. Assets to be disposed of would be separately presented in the balance sheet and reported at the lower of thecarrying amount or fair value less costs to sell, and would no longer be depreciated. Goodwill and Intangible Assets Our intangible assets include amounts recognized in connection with acquisitions, including customer relationships, tradenames, technology andintellectual property. Intangible assets are initially valued at fair market value using generally accepted valuation methods appropriate for the type ofintangible asset. Amortization is recognized on a straight-line basis over the estimated useful life of the intangible assets. Intangible assets with definitelives are reviewed for impairment if indicators of impairment arise. Except for goodwill, we do not have any intangible assets with indefinite useful lives. Goodwill represents the excess of costs over fair value of assets of businesses acquired. We review our goodwill for impairment annually as of October 1and whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. We test goodwill at the reporting unitlevel. ASC 350 permits an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is lessthan its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. Under ASC 350, an entity isnot required to perform step one of the goodwill impairment test for a reporting unit if it is more likely than not that its fair value is greater than itscarrying amount. For our annual goodwill impairment test as of October 1, 2017, we performed a quantitative step one goodwill impairment test andconcluded that the fair values of each of our reporting units exceeded their respective carrying values. For our annual goodwill impairment test as ofOctober 1, 2016, we performed a qualitative assessment of all of our reporting units and determined that it was more likely than not that the fair values ofeach of our reporting units exceeded their respective carrying values. If it is determined as a result of the qualitative assessment, that it is more likely than not that the fair value of a reporting unit is less than its carryingamount, a two-step impairment test is required. In the first step, we compare the fair value of each reporting unit to its carrying value. If the fair value ofthe reporting unit exceeds the carrying value of the net assets assigned54Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.GP STRATEGIES CORPORATION Notes to Consolidated Financial Statementsto that unit, goodwill is not impaired and we are not required to perform further testing. If the carrying value of the net assets assigned to the reportingunit exceeds the fair value of the reporting unit, then we must perform the second step of the impairment test in order to determine the implied fair valueof the reporting unit's goodwill. The implied fair value of goodwill is determined by allocating the fair value of the reporting unit’s assets and liabilitiesin a manner similar to a purchase price allocation, with any residual fair value allocated to goodwill. If the carrying value of a reporting unit's goodwillexceeds its implied fair value, then we record an impairment loss equal to the difference. Under the two-step impairment test, we determine the fair value of our reporting units using both an income approach and a market approach, and weighboth approaches to determine the fair value of each reporting unit. Under the income approach, we perform a discounted cash flow analysis whichincorporates management’s cash flow projections over a five-year period and a terminal value is calculated by applying a capitalization rate to terminalyear projections based on an estimated long-term growth rate. The five-year projected cash flows and calculated terminal value are discounted using aweighted average cost of capital (“WACC”) which takes into account the costs of debt and equity. The cost of equity is based on the risk-free interestrate, equity risk premium, industry and size equity premiums and any additional market equity risk premiums as deemed appropriate for each reportingunit. To arrive at a fair value for each reporting unit, the terminal value is discounted by the WACC and added to the present value of the estimated cashflows over the discrete five-year period. There are a number of other variables which impact the projected cash flows, such as expected revenue growthand profitability levels, working capital requirements, capital expenditures and related depreciation and amortization. Under the market approach, weperform a comparable public company analysis and apply revenue and earnings multiples from the identified set of companies to the reporting unit’sactual and forecasted financial performance to determine the fair value of each reporting unit. We evaluate the reasonableness of the fair valuecalculations of our reporting units by reconciling the total of the fair values of all of our reporting units to our total market capitalization, and adjustingfor an appropriate control premium. In addition, we make certain judgments in allocating shared assets and liabilities to determine the carrying values foreach of our reporting units.Determining the fair value of a reporting unit is judgmental in nature and involves the use of significant estimates and assumptions. These estimates andassumptions include revenue growth rates and operating margins used to calculate projected future cash flows, risk-adjusted discount rates, futureeconomic and market conditions and determination of appropriate market comparables. We base our fair value estimates on assumptions we believe to bereasonable but that are unpredictable and inherently uncertain. Actual future results may differ from those estimates. In addition, we make certainjudgments and assumptions in allocating shared assets and liabilities to determine the carrying values for each of our reporting units. The timing andfrequency of our goodwill impairment tests are based on an ongoing assessment of events and circumstances that would indicate a possible impairment.We will continue to monitor our goodwill and intangible assets for impairment and conduct formal tests when impairment indicators are present. Contingent Consideration for Business Acquisitions Acquisitions may include contingent consideration payments based on future financial measures of an acquired company. Contingent consideration isrequired to be recognized at fair value as of the acquisition date. We estimate the fair value of these liabilities using an appropriate valuationmethodology, typically either an income-based approach or a simulation model, such as the Monte Carlo model, depending on the structure of thecontingent consideration arrangement. At each reporting date, the contingent consideration obligation is revalued to estimated fair value and changes infair value subsequent to the acquisition are reflected in income or expense in the consolidated statements of operations, and could cause a materialimpact to our operating results. Changes in the fair value of contingent consideration obligations may result from changes in discount periods and ratesand changes in the timing and amount of revenue and/or earnings projections.Other Assets Other assets primarily include an investment in a joint venture, certain software development costs and derivative assets associated with our interest rateswap and cap agreements. We account for a 10% interest in a joint venture partnership under the equity method of accounting because significantinfluence exists due to certain factors, including representation on the partnership’s Management Board and voting rights. We capitalize the cost ofinternal-use software in accordance with ASC Topic 350-40, Internal-Use Software. These costs consist of internal labor costs and payments made tothird parties for software development and implementation and are amortized using the straight-line method over their estimated useful lives, typicallythree to five years. We apply hedge accounting to our interest rate derivatives which are discussed in detail in Note 5.55Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.GP STRATEGIES CORPORATION Notes to Consolidated Financial StatementsIncome Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequencesattributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and foroperating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income inthe years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in taxrates is recognized in income in the period that includes the enactment date. We establish accruals for uncertain tax positions taken or expected to be taken in a tax return when it is more likely than not (i.e., a likelihood of morethan fifty percent) that the position would be sustained upon examination by tax authorities that have full knowledge of all relevant information. Arecognized tax position is then measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimatesettlement. Favorable or unfavorable adjustment of the accrual for any particular issue would be recognized as an increase or decrease to income taxexpense in the period of a change in facts and circumstances. Interest and penalties related to income taxes are accounted for as income tax expense. Earnings per Share Basic earnings per share (“EPS”) are computed by dividing earnings by the weighted average number of common shares outstanding during the periods. Diluted EPS reflects the potential dilution of common stock equivalent shares that could occur if securities or other contracts to issue common stockwere exercised or converted into common stock.Our dilutive common stock equivalent shares consist of stock options and restricted stock units outstanding under our stock-based incentive plans andare computed under the treasury stock method, using the average market price during the period. Performance-based restricted stock unit awards areincluded in the computation of diluted shares based on the probable outcome of the underlying performance conditions being achieved. The followingtable presents instruments which were not dilutive and were excluded from the computation of diluted EPS in each period, as well as the weightedaverage dilutive common stock equivalent shares which were included in the computation of diluted EPS: Year ended December 31, 2017 2016 2015 (In thousands)Non-dilutive instruments 13 45 15Dilutive common stock equivalents 125 95 154 Stock-Based Compensation Pursuant to our stock-based incentive plans which are described more fully in Note 10, we grant stock options, restricted stock units, performance-basedstock units (PSU's) and equity to officers, employees, and members of the Board of Directors. We compute compensation expense for all equity-basedcompensation awards issued to employees using the fair-value measurement method. We recognize compensation expense on a straight-line basis overthe requisite service period for stock-based compensation awards with both graded and cliff vesting terms. We recognize forfeitures as they occur with areduction in compensation expense in the period of forfeiture. We do not capitalize any material portion of our stock-based compensation.We recognize compensation expense for PSU's on a straight-line basis over the performance period based on the probable outcome of achievement of thefinancial targets. At the end of each reporting period, we estimate the number of PSU's expected to vest, based on the probability and extent to which theperformance goals will be met, and take into account these estimates when calculating the expense for the period. If the number of shares expected to beearned changes during the performance period, we will make a cumulative adjustment to compensation expense based on the revised number of sharesexpected to be earned. We estimate the fair value of our stock options on the date of grant using the Black-Scholes option pricing model, which requires various assumptionssuch as expected term, expected stock price volatility and risk-free interest rate. We estimate the expected term of stock options granted taking intoconsideration historical data related to stock option exercises. We use historical stock price data in order to estimate the expected volatility factor ofstock options granted. The risk-free interest56Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.GP STRATEGIES CORPORATION Notes to Consolidated Financial Statementsrate for the periods within the expected life of the option is based on the U.S. Treasury yield curve in effect at the time of grant.Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reportedamounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts ofrevenues and expenses during the reporting period. On an ongoing basis, we evaluate the estimates used, including but not limited to those related torevenue recognition, the allowance for doubtful accounts receivable, impairments of goodwill and other intangible assets, valuation of intangible assetsacquired and contingent consideration liabilities assumed in business acquisitions, valuation of stock-based compensation awards and income taxes. Actual results could differ from these estimates. Fair Value Estimates ASC Topic 820, Fair Value Measurements and Disclosure (“Topic 820”), defines fair value, establishes a market-based framework or hierarchy formeasuring fair value, and expands disclosures about fair value measurements. Fair value is defined as the price that would be received to sell an asset orpaid to transfer a liability in an orderly transaction between market participants. The guidance within Topic 820 is applicable whenever anotheraccounting pronouncement requires or permits assets and liabilities to be measured at fair value. The fair value hierarchy prioritizes the inputs used invaluation techniques into three levels as follows: •Level 1 – unadjusted quoted prices for identical assets or liabilities in active markets;•Level 2 – quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets thatare not active, and inputs other than quoted market prices that are observable or that can be corroborated by observable market data bycorrelation; and•Level 3 – unobservable inputs based upon the reporting entity’s internally developed assumptions which market participants would use inpricing the asset or liability.The carrying value of financial instruments including cash, accounts receivable, accounts payable and short-term borrowings approximate estimatedmarket values because of short-term maturities and interest rates that approximate current rates. In addition, the fair value of our long-term debtapproximated its carrying value as of December 31, 2017 as it bears interest at variable rates. Our fair value measurements related to goodwill, intangibleassets and contingent consideration are recognized in connection with acquisitions and are valued using Level 3 inputs. Our interest rate derivatives arevalued using Level 2 inputs. Leases We lease various office space, machinery and equipment under noncancelable operating leases which have minimum lease obligations. Many of theleases contain provisions for rent escalations based on increases in real estate taxes and operating costs incurred by the lessor. Rent expense isrecognized in the statements of operations as incurred except for escalating rents, which are expensed on a straight-line basis over the terms of the leases. Legal Expenses We are involved, from time to time, in litigation and proceedings arising out of the ordinary course of business. Costs for legal services rendered in thecourse of these proceedings are charged to expense as they are incurred.ReclassificationsCertain prior year amounts have been reclassified to conform with the current year presentation. 57Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.GP STRATEGIES CORPORATION Notes to Consolidated Financial StatementsRecent Accounting StandardsIn March 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No.2016-09, Compensation—StockCompensation (Topic 718) ("ASU 2016-09"), which simplifies several areas of accounting for share-based compensation arrangements. Upon adoption,ASU 2016-09 requires that excess tax benefits or deficiencies for share-based payments be recorded as income tax expense or benefit and reflected withinoperating cash flows rather than being recorded within equity and reflected within financing cash flows. The standard also requires companies to makean accounting policy election on whether to account for forfeitures on share-based payments by 1) recognizing forfeitures as they occur; or 2) estimatingthe number of awards expected to be forfeited and periodically adjusting the estimate, as was previously required. The standard is effective for annualand interim reporting periods of public companies beginning after December 15, 2016, although early adoption was permitted. We adopted ASU 2016-09 on January 1, 2017 and elected to make an accounting policy change to recognize forfeitures as they occur. The impact of adoption on the condensedconsolidated balance sheet was a cumulative-effect adjustment of $0.1 million, decreasing opening retained earnings. We recognized an income taxbenefit of less than $0.1 million relating to excess tax benefits on stock-based compensation awards during the twelve months ended December 31, 2017and could experience volatility in our effective income tax rate in the future as a result of this accounting change. We also elected to prospectively applythe change in presentation on the statement of cash flows and did not reclassify excess tax benefits on stock-based compensation from financing tooperating cash flows for the prior period presented.In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which provides a single comprehensive model for entities touse in accounting for revenue arising from contracts with customers and will supersede most current revenue recognition guidance. The ASU’s coreprinciple is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the considerationto which the company expects to be entitled in exchange for those goods or services. ASU 2014-09 is effective for public companies for annual andinterim periods beginning after December 15, 2017. Companies can elect to apply the provisions of ASU 2014-09 either retrospectively to each priorreporting period presented or retrospectively with a cumulative effect adjustment recognized at the date of adoption. We adopted the standard effectiveJanuary 1, 2018 using the modified retrospective approach with a cumulative effect adjustment on January 1, 2018. We estimate that the cumulativeeffect adjustment will result in a reduction to retained earnings ranging from approximately $0.3 million to $0.6 million. The primary impact of ASU No.2014-09 on our financial statements is a change in revenue recognition on a small portion of our contracts from a proportional performance method,where revenue was previously recognized over contract performance, to a point in time method, where revenue is now recognized upon completion ofour performance obligations. While we don't believe the adoption of ASU 2014-09 will materially impact our overall financial statements, the change intiming of revenue recognition on certain contracts could result in quarter to quarter fluctuations in revenue. In addition, the adoption of ASU 2014-09included necessary changes to policies, processes and internal controls, as well as expanded disclosure requirements which will be included in ourfinancial statements beginning with the first quarter ending March 31, 2018.In February 2016, the FASB issued ASU No. 2016-02, Leases. This standard will require all leases with durations greater than twelve months to berecognized on the balance sheet as a right-of-use asset and a lease liability. ASU 2016-02 is effective for public companies for annual reporting periodsbeginning after December 15, 2018, and interim periods within those fiscal years. We plan to adopt the standard effective January 1, 2019. We arecurrently evaluating ASU No. 2016-02 and the impact of its adoption on our consolidated financial statements.In January 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment. The standard will remove step 2 from the goodwillimpairment test. Under the ASU, an entity should perform its annual goodwill impairment test by comparing the fair value of a reporting unit with itscarrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value, however, theloss recognized should not exceed the total amount of goodwill allocated to that reporting unit. ASU No. 2017-04 is effective for public companies forannual reporting periods beginning after December 15, 2019. Early adoption is permitted for goodwill impairment tests performed on testing dates afterJanuary 1, 2017. We are currently evaluating ASU No. 2017-04 and the impact of its adoption on our consolidated financial statements.In August 2017, the FASB issued ASU No. 2017-12, Targeted Improvements to Accounting for Hedging Activities. The standard will ease theadministrative burden of hedge documentation requirements and assessing hedge effectiveness. ASU No. 2017-12 is effective for public companies forannual reporting periods beginning after December 15, 2018 but early adoption is permitted. We are currently evaluating ASU No. 2017-12 and theimpact of its adoption on our consolidated financial statements.58Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.GP STRATEGIES CORPORATION Notes to Consolidated Financial Statements(2)AcquisitionsBelow is a summary of the acquisitions we completed during 2017 and 2016 (we did not complete any acquisitions in 2015).2017 AcquisitionsThe following table summarizes the purchase prices and purchase price allocations for the acquisitions completed during the year ended December 31,2017. A description of the acquired businesses is summarized below the table.Acquired company YouTrain CLS Emantras McKinneyRogers Acquisition date 8/31/2017 8/31/2017 4/1/2017 2/1/2017 Cash purchase price $4,898 $436 $3,191 $3,259Fair value of contingent consideration — 888 220 4,505Working capital adjustment 180 — — —Total purchase price $5,078 $1,324 $3,411 $7,764 Purchase price allocation: Cash $673 $— $— $—Accounts receivable and other assets 234 — — —Fixed assets 215 — 50 —Technology-related intangible assets — — — 2,704Customer-related intangible assets 1,313 253 818 653Marketing-related intangible assets (tradename) — — — 121Goodwill 3,268 1,090 3,156 5,196Total assets 5,703 1,343 4,024 8,674 Accounts payable and accrued expenses 348 19 558 44Billings in excess of costs and estimated earnings on uncompleted contracts 28 — 55 866Deferred tax liability 249 — — —Total liabilities 625 19 613 910 Net assets acquired $5,078 $1,324 $3,411 $7,76459Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.GP STRATEGIES CORPORATION Notes to Consolidated Financial StatementsYouTrainOn August 31, 2017, we acquired the entire share capital of YouTrain Limited ("YouTrain"), an independent training company delivering IT, digital andlife sciences skills training in Scotland and North West England. The upfront purchase price was $4.9 million which was paid in cash at closing and acompletion accounts payment of $0.2 million was paid to the sellers during the fourth quarter of 2017. The goodwill recognized is due to the expectedsynergies from combining the operations of the acquiree with the Company. None of the goodwill recorded for financial statement purposes is deductiblefor tax purposes. The acquired YouTrain business is included in the Learning Solutions segment and the results of its operations have been included inthe consolidated financial statements beginning September 1, 2017. The pro-forma impact of the acquisition is not material to our results of operations.The acquired YouTrain business is included in our acquiring United Kingdom subsidiary and its functional currency is the British Pound Sterling.CLS Performance Solutions LimitedOn August 31, 2017, we acquired the business and certain assets of CLS Performance Solutions Limited ("CLS"), an independent provider of EnterpriseResource Planning (ERP) end user adoption and training services in the United Kingdom. The upfront purchase price was $0.4 million which was paid incash at closing. In addition, the purchase agreement requires up to an additional $2.2 million of consideration contingent upon the achievement ofcertain earnings targets during the twelve-month period following the completion of the acquisition. The goodwill recognized is due to the expectedsynergies from combining the operations of the acquiree with the Company. None of the goodwill recorded for financial statement purposes is deductiblefor tax purposes. The acquired CLS business is included in the Performance Readiness Solutions segment, and the results of its operations have beenincluded in the consolidated financial statements beginning September 1, 2017. The pro-forma impact of the acquisition is not material to our results ofoperations. The acquired CLS business is included in our acquiring United Kingdom subsidiary and its functional currency is the British Pound Sterling.EmantrasEffective April 1, 2017, we acquired the business and certain assets of Emantras, a digital education company that provides engaging learningexperiences and effective knowledge delivery through award-winning digital and mobile solutions with offices in Fremont, California and Chennai,India. This acquisition strengthens our eLearning development capabilities, allowing us to better serve our customer base with the latest digital learningsolutions. The upfront purchase price was $3.2 million in cash. In addition, the purchase agreement requires up to an additional $0.3 million ofconsideration, contingent upon the achievement of an earnings target during the twelve-month period following completion of the acquisition, plus apercentage of any earnings in excess of the specified earnings target. The goodwill recognized is due to the expected synergies from combining theoperations of the acquiree with the Company. We expect that a portion of the goodwill recorded for financial statement purposes will be deductible fortax purposes. In addition, contingent consideration is only deductible when paid. If the actual contingent consideration payments are less than theestimated fair value as of the acquisition date, a portion of goodwill will not be deductible for tax purposes. The acquired Emantras business is includedin the Learning Solutions segment, and the results of its operations have been included in the consolidated financial statements beginning April 1, 2017.The pro-forma impact of the acquisition is not material to our results of operations. The India-based operations of the acquired Emantras business isincluded in our India subsidiary and its functional currency is the Indian Rupee.McKinney RogersOn February 1, 2017, we acquired the business and certain assets of McKinney Rogers, a provider of strategic consulting services with offices in NewYork and London. This acquisition will expand our solutions offerings, giving us the ability to leverage McKinney Rogers' intellectual property andconsulting methodologies to help our global client base meet strategic business goals. The upfront purchase price was $3.3 million in cash. In addition,the purchase agreement requires up to an additional $18.0 million of consideration, $6.0 million of which was contingent upon the achievement ofcertain earnings targets during the five-month period ended April 30, 2017 and $12.0 million of which is contingent upon the achievement of certainearnings targets during the three twelve-month periods following completion of the acquisition. In July 2017, we paid the seller $1.0 million in respectof the contingent consideration for the five-month period ended April 30, 2017. The goodwill recognized is due to the expected synergies fromcombining the operations of the acquiree with the Company. We expect that a portion of the goodwill recorded for financial statement purposes will bedeductible for tax purposes. In addition, contingent consideration is only deductible when paid. If the actual contingent consideration payments are lessthan the estimated fair value as of the acquisition date, a portion of goodwill will not be deductible for tax purposes. The acquired McKinney Rogersbusiness is included in the Performance Readiness Solutions segment, and the results of its operations have been included in the consolidated financialstatements beginning February 1, 2017. The pro-forma impact of the acquisition is not material to our results of operations.60Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.GP STRATEGIES CORPORATION Notes to Consolidated Financial Statements2016 AcquisitionsJencal TrainingOn March 1, 2016, we acquired the share capital of Jencal Training Limited (Jencal Training) and its subsidiary B2B Engage Limited (B2B), anindependent provider of vocational skills training in the United Kingdom. The upfront purchase price was $2.5 million in cash. In addition, we paid anadditional $0.2 million of deferred consideration in the fourth quarter of 2016. The purchase price allocation for the acquisition primarily includes $1.4million of customer-related intangible assets which are being amortized over four years from the acquisition date and $1.8 million of goodwill. None ofthe goodwill recorded for financial statement purposes is deductible for tax purposes. The acquired Jencal Training business is included in the LearningSolutions segment and the results of its operations have been included in the consolidated financial statements beginning March 1, 2016. The pro-formaimpact of the acquisition is not material to our results of operations.Maverick SolutionsEffective October 1, 2016, we acquired the business and certain assets of Maverick Solutions, a U.S.-based provider of Enterprise Resource Planning(ERP) product training services. The upfront purchase price was $4.6 million in cash. In addition, the purchase agreement requires up to an additional$10.0 million of consideration, contingent upon the achievement of certain earnings targets during the two twelve-month periods following completionof the acquisition. We paid $4.1 million of contingent consideration during the fourth quarter of 2017 in respect of the first twelve-month period endedSeptember 30, 2017. We expect that all of the goodwill recorded for financial statement purposes will be deductible for tax purposes, except thatcontingent consideration is only deductible when paid. If the actual contingent consideration payments are less than the estimated fair value as of theacquisition date, a portion of goodwill will not be deductible for tax purposes. The acquired Maverick Solutions business is included in the PerformanceReadiness Solutions segment and the results of its operations have been included in the consolidated financial statements beginning October 1,2016.The pro-forma impact of the acquisition is not material to our results of operations.The following table summarizes the purchase price and purchase price allocation for the acquisition (dollars in thousands).Cash purchase price $4,639 Fair value of contingent consideration 5,166 Total purchase price $9,805 AmortizationPurchase price allocation: PeriodFixed assets $63 Customer-related intangible assets 1,219 4 yearsMarketing-related intangible assets (tradename) 124 2 yearsTechnology-related intangible assets 649 3 yearsGoodwill 8,111 Total assets 10,166 Accrued expenses 38 Billings in excess of costs and estimated earnings on uncompleted contracts 323 Total liabilities 361 Net assets acquired $9,805 61Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.GP STRATEGIES CORPORATION Notes to Consolidated Financial StatementsContingent Consideration Contingent consideration is recognized at fair value on the acquisition date and is re-measured each reporting period with subsequent adjustmentsrecognized in the consolidated statement of operations. We estimate the fair value of contingent consideration liabilities using an appropriate valuationmethodology, typically either an income-based approach or a simulation model, such as the Monte Carlo model, depending on the structure of thecontingent consideration arrangement. Contingent consideration is valued using significant inputs that are not observable in the market which aredefined as Level 3 inputs pursuant to fair value measurement accounting. We believe our estimates and assumptions are reasonable; however, there issignificant judgment involved. At each reporting date, the contingent consideration obligation is revalued to estimated fair value, and changes in fairvalue subsequent to the acquisitions are reflected in income or expense in the consolidated statements of operations, and could cause a material impactto, and volatility in, our operating results. Changes in the fair value of contingent consideration obligations may result from changes in discount periodsand rates and changes in the timing and amount of revenue and/or earnings projections.Below is a summary of the potential maximum contingent consideration we may be required to pay in connection with completed acquisitions as ofDecember 31, 2017 (dollars in thousands):Acquisition:Original range ofpotentialundiscountedpayments As of December 31, 2017 Maximum contingent consideration due in 201820192020TotalMaverick$0 - $10,000 $5,902$—$—$5,902McKinney Rogers$0 - $18,000 4,0004,0004,00012,000Emantras *———CLS$0 - $2,228 2,228——2,228 $12,130$4,000$4,000$20,130 * There is no maximum contingent consideration payable to the seller.Below is a summary of the changes in the recorded amount of contingent consideration liabilities from December 31, 2016 to December 31, 2017 foreach acquisition (dollars in thousands): Liability as of 2017Additions Change inFair Value ofContingent ForeignCurrency 2017Payments Liability as ofAcquisition: Dec. 31, 2016 Consideration Translation Dec. 31, 2017Maverick $5,258 — 819 — (4,098) $1,979McKinney Rogers — 4,505 (2,037) — (967) 1,501Emantras — 220 (144) — — 76CLS — 888 (258) 39 — 669 $5,258 $5,613 $(1,620) $39 (5,065) $4,225 As of December 31, 2017 and 2016, contingent consideration included in accounts payable and accrued expenses on the consolidated balance sheettotaled $2.7 million and $3.6 million, respectively. As of December 31, 2017 and 2016, we also had accrued contingent consideration totaling $1.5million and $1.7 million, respectively, which is included in other long-term liabilities on the consolidated balance sheet and represents the portion ofcontingent consideration estimated to be payable greater than twelve months from the balance sheet date.62Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.GP STRATEGIES CORPORATION Notes to Consolidated Financial Statements(3)Goodwill & Other Intangible AssetsGoodwill Changes in the carrying amount of goodwill by reportable business segment for the years ended December 31, 2017 and 2016 were as follows (inthousands): ProfessionalSandyPerformance Learning& TechnicalTraining &Readiness SolutionsServicesMarketingSolutionsTotalNet book value at January 1, 2016 Goodwill$51,901 $51,532 $6,161 $27,798 $137,392Accumulated impairment losses(2,079) (7,830) (5,508) — (15,417)Total49,822 43,702 653 27,798 121,9752016 Activity: Foreign currency translation(2,571) (1,338) — (233) (4,142)Net book value at December 31, 2016 Goodwill51,158 50,194 6,161 35,676 143,189Accumulated impairment losses(2,079) (7,830) (5,508) — (15,417)Total49,079 42,364 653 35,676 127,7722017 Activity: Acquisitions6,424 — — 6,286 12,710Foreign currency translation3,366 679 — 308 4,353Net book value at December 31, 2017 Goodwill60,948 50,873 6,161 42,270 160,252Accumulated impairment losses(2,079) (7,830) (5,508) — (15,417)Total$58,869 $43,043 $653 $42,270 $144,83563Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.GP STRATEGIES CORPORATION Notes to Consolidated Financial StatementsIntangible Assets Subject to Amortization Intangible assets with finite lives are subject to amortization over their estimated useful lives. The primary assets included in this category and theirrespective balances were as follows (in thousands):December 31, 2017 Gross Carrying Accumulated Net Carrying Amount Amortization AmountCustomer relationships $16,330 $(11,140) $5,190Intellectual property and other 4,298 (1,125) 3,173 $20,628$(12,265)$8,363 December 31, 2016 Customer relationships $14,595 $(9,855) $4,740Intellectual property and other 2,311 (1,226) 1,085 $16,906$(11,081)$5,825 Amortization expense for intangible assets was $4.0 million, $3.5 million and $4.1 million for the years ended December 31, 2017, 2016 and 2015,respectively. Estimated future amortization expense for intangible assets included in our consolidated balance sheet as of December 31, 2017 is asfollows (in thousands):Fiscal year ending: 2018$3,18020192,26420201,59720211,0822022240Total$8,363 As of December 31, 2017, our intangible assets with definite lives had a weighted average remaining useful life of 3.3 years. We have no amortizableintangible assets with indefinite useful lives.(4)Property, Plant and EquipmentProperty, plant and equipment consisted of the following (in thousands): December 31, 2017 2016Machinery, equipment and vehicles $16,078 $14,810Furniture and fixtures 3,090 3,118Leasehold improvements 1,967 1,823Buildings 331 302 21,466 20,053Accumulated depreciation and amortization (16,343) (15,506) $5,123 $4,547 Depreciation expense was $2.6 million, $2.9 million and $3.5 million for the years ended December 31, 2017, 2016 and 2015, respectively.64Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.GP STRATEGIES CORPORATION Notes to Consolidated Financial Statements(5)DebtOn December 15, 2016, we entered into a Fifth Amended and Restated Financing and Security Agreement (the “Credit Agreement”). The CreditAgreement provides for a new revolving credit facility up to a maximum principal amount of $100 million, expiring on December 31, 2021 and for aterm loan in the maximum principal amount of $40 million maturing on April 30, 2020. The Credit Agreement is secured by substantially all of ourassets. The new term loan was used to refinance the $11.1 million remaining balance of the existing term loan and $28.9 million of borrowingsoutstanding under the existing revolving credit facility as of December 15, 2016.The maximum interest rate on the Credit Agreement is the daily one-month LIBOR market index rate (for borrowings in Dollars and Sterling) or the dailyone-month EURIBOR (for borrowings in Euros) plus 2.50%. Based on our financial performance, the interest rate can be reduced to a minimum rate ofthe daily one-month LIBOR market index rate plus 1.25%, with the rate being determined based on our maximum leverage ratio for the preceding fourquarters. Each unpaid advance on the revolving loan will bear interest until repaid. The term loan is payable in monthly installments of principal in theamount of $1.0 million each plus applicable interest, beginning on January 1, 2017. We may prepay the term loan or the revolving loan, in whole or inpart, at any time without premium or penalty, subject to certain conditions. Amounts repaid or prepaid on the term loan may not be reborrowed.The Credit Agreement contains customary affirmative and negative covenants, including covenants that limit or restrict our and our subsidiaries’(subject to certain exceptions) ability to, among other things, grant liens, make investments, incur indebtedness, merge or consolidate, dispose of assetsor make acquisitions. We are also required to maintain compliance with a minimum fixed charge coverage ratio and a maximum leverage ratio. We werein compliance with each of these financial covenants under the Credit Agreement as of December 31, 2017. As of December 31, 2017, our total long-termdebt outstanding under the term loan was $28.0 million. In addition, there were $37.7 million of borrowings outstanding and $57.0 million of availableborrowings under the revolving credit facility as of December 31, 2017. For the years ended December 31, 2017 and 2016, the weighted average interestrate on our borrowings was 2.8% and 2.2%, respectively. As of December 31, 2017, the fair value of our borrowings under the Credit Agreementapproximated its carrying value as it bears interest at variable rates.In March 2017, we entered into an interest rate swap agreement which effectively fixed our interest rate on the remaining $37 million outstanding on ourterm loan to a fixed LIBOR of 1.59% plus the applicable margin under the Credit Agreement. We have designated the interest rate swap, which expireson April 1, 2020, as a cash flow hedge and have applied hedge accounting. The fair value of the derivative asset associated with the interest rate swapwas $0.1 million as of December 31, 2017 and is included in other assets on the consolidated balance sheet.In April 2017, we entered into an interest rate cap agreement and paid a premium of $0.5 million which caps the daily one-month LIBOR at 2.0% for anaggregate notional amount of $20.0 million of our variable rate debt under our credit facility. The interest rate cap agreement matures on December 31,2021. We have designated the interest rate cap as a cash flow hedge and have applied hedge accounting. The fair value of the derivative asset associatedwith the interest rate cap was $0.3 million as of December 31, 2017 and is included in other assets on the consolidated balance sheet.As of December 31, 2017, our future minimum payments of long-term debt are as follows (in thousands):Fiscal year ending: 2018$12,000201912,00020204,000Total$28,00065Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.GP STRATEGIES CORPORATION Notes to Consolidated Financial Statements(6)Accounts Payable and Accrued ExpensesAccounts payable and accrued expenses consisted of the following (in thousands): December 31, 2017 2016Trade accounts payable $24,189 $14,534Accrued salaries, vacation and benefits 22,205 18,049Other accrued expenses 26,256 23,379Accrued contingent consideration 2,724 3,590Negative cash book balance 2,906 5,044 $78,280 $64,596(7)Employee Benefit PlanWe offer the GP Retirement Savings Plan (the “Plan”) to our employees in the United States. Eligible employees are automatically enrolled unless theyelect to not participate in the Plan, and contributions begin as soon as administratively feasible after enrollment. The Plan permits pre-tax contributionsto the Plan by participants pursuant to Section 401(k) of the Internal Revenue Code (IRC). We make matching contributions at our discretion. In 2017,2016 and 2015, we contributed 104,751, 111,326, and 91,301 shares, respectively, of our common stock directly to the Plan which had a value ofapproximately $2.7 million for each of the three years, and is recognized as compensation expense in the consolidated statements of operations formatching contributions to the Plan.We also maintain several defined contribution pension schemes for our employees in the United Kingdom and other foreign countries. We contributed tothese plans $2.5 million, $2.2 million and $2.4 million during the years ended December 31, 2017, 2016 and 2015, respectively.66Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.GP STRATEGIES CORPORATION Notes to Consolidated Financial Statements(8)Income Taxes The components of income before income taxes and income tax expense for the years ended December 31, 2017, 2016 and 2015 are as follows (inthousands): Years ended December 31, 2017 2016 2015Income before income taxes: Domestic $2,901 $13,988 $18,656Foreign 16,788 16,046 10,967Total income before income taxes $19,689 $30,034 $29,623 Income tax expense (benefit): Current: Federal $3,210 $5,511 $6,802State and local 256 1,152 1,418Foreign 3,645 4,885 3,710Total current 7,111 11,548 11,930Deferred: Federal (241) (1,039) (198)State and local (176) 56 23Foreign 104 (778) (921)Total deferred (313) (1,761) (1,096)Total income tax expense $6,798$9,787$10,834The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate to income before income taxes. Thesources and tax effects of the differences are as follows: December 31, 2017 2016 2015Federal income tax rate 35.0 % 35.0 % 35.0 %State and local taxes net of federal benefit 0.2 2.4 3.2Domestic production deduction (1.1) (0.6) (0.6)Foreign tax rate differential (8.8) (5.8) (4.3)Permanent differences (6.2) 4.8 2.1Other (0.9) (3.2) 1.2Tax Cuts and Jobs Act of 2017 16.3 — —Effective tax rate 34.5 % 32.6 % 36.6 %On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “2017 Tax Act”) was signed into law making significant changes to the Internal RevenueCode. Changes include, but are not limited to, a corporate tax rate decrease from 35% to 21% effective for tax years beginning after December 31, 2017,the transition of U.S international taxation from a worldwide tax system to a territorial system, and a one-time transition tax on the mandatory deemedrepatriation of cumulative foreign earnings as of December 31, 2017. The Company has calculated its best estimate of the impact of the 2017 Tax Act inits year end income tax provision in accordance with its understanding of the 2017 Tax Act and guidance available as of the date of this filing, and as aresult has recorded $3.2 million as an additional income tax expense in the fourth quarter of 2017, the period in which the legislation was enacted. Theprovisional tax benefit amount related to the remeasurement of certain deferred tax assets and liabilities based on the rates at which they are expected toreverse in the future is $1.4 million. The provisional amount related to the one-time transition tax on the mandatory deemed repatriation of foreignearnings is $4.6 million estimated on cumulative foreign earnings as of December 31, 2017 of $56.7 million. As we complete our analysis of the 2017Tax Act, collect and prepare necessary data, and interpret any additional guidance issued by the U.S. Treasury Department, the IRS,67Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.GP STRATEGIES CORPORATION Notes to Consolidated Financial Statementsand other standard-setting bodies, we may make adjustments to the provisional amounts. Those adjustments may materially impact our provision forincome taxes in the period in which the adjustments are made.On December 22, 2017, the SEC issued Staff Accounting Bulletin No. 118 ("SAB 118") to address the application of U.S. GAAP in situations when aregistrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete theaccounting for certain income tax effects of the Act. In accordance with SAB 118, the Company has determined that the $1.4 million deferred tax benefitrecorded in connection with the remeasurement of certain deferred tax assets and liabilities and the $4.6 million of current tax expense recorded inconnection with the transition tax on the mandatory deemed repatriation of foreign earnings are provisional amounts, and a reasonable estimate atDecember 31, 2017. Additional work is necessary to do a more detailed analysis of historical foreign earnings as well as potential correlativeadjustments. Any subsequent adjustment to these amounts will be recorded to current tax expense in the quarter of 2018 in which the analysis iscomplete.The 2017 Tax Act creates a new requirement that Global Intangible Low-Taxed Income (“GILTI”) earned by a controlled foreign corporation (“CFC”)must be included in the gross income of the U.S. shareholder. The Tax Act also imposes the Base Erosion and Anti-abuse Tax (“BEAT”) which applies alimited-scope minimum tax on large corporations. Because of the complexity of the new GILTI and BEAT tax rules, we are continuing to evaluate theseprovisions of the Tax Act and whether taxes due on future U.S. inclusions related to GILTI or BEAT should be recorded as a current-period expense whenincurred, or factored into the company’s measurement of its deferred taxes. As a result, we have not included an estimate of the tax expense or benefitrelated to these items for the period ended December 31, 2017.The increase in the effective income tax rate compared to 2016 is primarily due to the effect of the 2017 Tax Act, partially offset by a decrease in theeffective rate due to an increase in foreign income taxed at lower rates and a decrease in U.S. income taxed a higher rates.Uncertain Tax Positions As of December 31, 2017 and 2016, we had no uncertain tax positions reflected on our consolidated balance sheet. The Company files income taxreturns in U.S. federal, state and local jurisdictions, and various non-U.S. jurisdictions, and is subject to audit by tax authorities in those jurisdictions. Tax years 2014 through 2016 remain open to examination by these tax jurisdictions, and earlier years remain open to examination in certain of thesejurisdictions which have longer statutes of limitations. Deferred Income Taxes Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reportingpurposes and the amounts used for tax purposes. Significant components of our deferred tax assets and liabilities are as follows (in thousands): December 31, 2017 2016Deferred tax assets: Allowance for doubtful accounts $559 $357Accrued liabilities and other 2,173 3,156Stock-based compensation expense 599 910Net federal, state and foreign operating loss carryforwards 1,432 1,292Foreign tax credit carryforwards — 1,207Deferred tax assets 4,763 6,922Valuation allowance on deferred tax assets (1,502) (1,320)Deferred tax liabilities: Intangible assets, property and equipment, principally due to difference in depreciation and amortization 5,312 7,668Net deferred tax liabilities $(2,051) $(2,066) 68Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.GP STRATEGIES CORPORATION Notes to Consolidated Financial StatementsAs of December 31, 2017, we had foreign and U.S. state net operating loss carryforwards of $7.3 million for tax purposes, which will be available to offsetfuture taxable income. If not used, these carryforwards will expire beginning in 2018.In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred taxassets may not be realized. The ultimate realization of the deferred tax assets is dependent upon the generation of future taxable income during theperiods in which temporary differences are deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxableincome and tax planning strategies in making this assessment. Based upon these factors, management placed a valuation allowance of $1.5 million and$1.3 million as of the years ended December 31, 2017 and 2016, respectively, against certain deferred tax assets, including net operating losscarryforwards, due to the uncertainty of future profitability in foreign jurisdictions. Management believes it is more likely than not that the Companywill realize the benefits of the remaining deferred tax assets. We remeasured our U.S. deferred tax assets and liabilities at the applicable tax rate of 21% inaccordance with the 2017 Tax Act. The remeasurement resulted in a total decrease in our net deferred tax liabilities of $1.4 million.Foreign Income The 2017 Tax Act includes a mandatory one-time tax on accumulated earnings of foreign subsidiaries, and as a result, all previously unremitted earningsfor which no U.S. deferred tax liability had been accrued have now been subject to U.S. tax. Notwithstanding the U.S. taxation of these amounts, weintend to continue to invest these earnings, as well as the capital invested in these subsidiaries, indefinitely outside of the U.S. and do not expect to incurany significant, additional taxes related to such amounts. The Company has not provided for any additional outside basis difference inherent in itsforeign subsidiaries, as these amounts continue to be indefinitely reinvested in foreign operations. Determining the amount of unrecognized deferred taxliability related to any additional outside basis difference in these entities is not practicable. In addition, the Company is still evaluating the impact ofthe one-time transition tax on the outside basis differences and cumulative temporary differences inherent in these subsidiaries as of December 31, 2017and as a result, it is not practicable to provide the amount of any cumulative temporary differences related to unrecorded differences.(9) RestructuringIn December 2017, we announced a new organizational structure and plan to improve operating results by increasing organic growth and reducingoperating costs. Effective January 1, 2018, we are organized into two global segments aligned by complementary service lines and supported by a newbusiness development organization aligned by industry sector. The Workforce Excellence segment includes the majority of the existing LearningSolutions segment and the Professional & Technical Services segment. The Business Transformation Services segment includes the majority of thePerformance Readiness Solutions segment and the Sandy Training & Marketing segment. Certain business units transferred between the existingoperating segments to better align with the service offerings of the two new segments. During the fourth quarter of 2017, we initiated restructuring andtransition activities to improve operational efficiency, reduce costs and better position the company to drive future revenue growth. We recordedseverance expense of $3.3 million for the year ended December 31, 2017 which is included in Restructuring charges on the consolidated statements ofoperations and which is expected to be paid by the end of 2019. The total remaining liability under these restructuring activities was $2.8 million as ofDecember 31, 2017, of which $2.2 million is included in accounts payable and accrued expenses and $0.6 million is included in other noncurrentliabilities on the consolidated balance sheet. We expect these restructuring activities to be substantially completed in the first half of 2018.(10)Stock-Based Compensation Under our 2011 Stock Incentive Plan (the "2011 Plan"), we may grant awards of non-qualified stock options, incentive stock options, restricted stock,stock units, performance shares, performance units and other incentives payable in cash or in shares of our common stock to officers, employees ormembers of the Board of Directors. We are authorized to grant an aggregate of 1,355,764 shares under the 2011 Plan. As of December 31, 2017, therewere 605,788 shares available for issuance of future grants of awards under the 2011 Plan and 340,302 shares representing outstanding awards under the2011 Plan. We may issue new shares or use shares held in treasury to deliver shares to employees for our equity grants or upon exercise of non-qualifiedstock options. The following table summarizes the pre-tax stock-based compensation expense included in reported net income (in thousands):69Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.GP STRATEGIES CORPORATION Notes to Consolidated Financial Statements Years ended December 31, 2017 2016 2015Cost of revenue $2,832 $2,545 $2,366Selling, general and administrative expenses 757 684 684Total stock-based compensation expense $3,589 $3,229 $3,050 We recognized a deferred income tax benefit of $1.2 million, $1.2 million and $1.1 million, respectively, during the years ended December 31, 2017,2016, and 2015 associated with the compensation expense recognized in our consolidated financial statements. As of December 31, 2017, we had non-qualified stock options and restricted stock units outstanding under these plans as discussed below.Non-Qualified Stock Options Non-qualified stock options are granted with an exercise price not less than the fair market value of our common stock at the date of grant, vest over aperiod up to ten years, and expire at various terms up to ten years from the date of grant. Summarized information for our non-qualified stock options is as follows:Stock Options Number ofoptions Weightedaverageexercise price Weightedaverageremainingcontractualterm AggregateintrinsicvalueOutstanding at December 31, 2016 67,550 $15.34 Granted — — Exercised (64,050) 15.12 Forfeited (100) 19.38 Expired (400) 19.38 Outstanding at December 31, 2017 3,000 $19.38 0.77 $12,000Exercisable at December 31, 2017 3,000 $19.38 0.77 $12,000 As of December 31, 2017, there is no remaining unrecognized compensation cost related to outstanding stock options.We received cash for the exercise price associated with stock options exercised of $0.1 million during each of the years ended December 31, 2017, 2016and 2015, respectively. During the years ended December 31, 2017, 2016, and 2015 we settled 55,050, 30,700, and 104,000 outstanding stock options,respectively, held by our employees by issuing 13,482, 9,976 and 46,432 fully vested shares, respectively, which represented the fair value of thosestock options upon settlement, net of required income tax withholdings. The total intrinsic value realized by participants on stock options exercisedand/or settled was $0.7 million, $0.5 million and $2.3 million during the years ended December 31, 2017, 2016 and 2015, respectively. During the yearsended December 31, 2017, 2016 and 2015, we realized excess income tax benefits of less than $0.1 million, $0.1 million and $0.8 million, respectively,related to stock option exercises and restricted stock vesting. As discussed in Note 1, upon adoption of ASU 2016-09 effective January 1, 2017 theexcess tax benefits are recognized in tax expense on our consolidated statements of operations. For 2016 and 2015, the income tax benefits are reflectedas an increase to additional paid-in capital on the consolidated statements of stockholders’ equity. Restricted Stock Units In addition to stock options, we issue restricted stock units to key employees and members of the Board of Directors based on meeting certain servicegoals. The stock units vest to the recipients at various dates, up to five years, based on fulfilling service requirements. We recognize the value of themarket price of the underlying stock on the date of grant to compensation expense over the requisite service period. Upon vesting, the stock units aresettled in shares of our common stock. Summarized share information for our restricted stock units is as follows:70Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.GP STRATEGIES CORPORATION Notes to Consolidated Financial Statements Year endedDecember 31,2017 Weightedaveragegrant datefair value (In shares) (In dollars)Outstanding and unvested, beginning of period 207,016 $29.85Granted 55,350 24.62Vested (105,915) 28.15Forfeited (8,217) 24.84Outstanding and unvested, end of period 148,234 $29.39The total intrinsic value realized by participants upon the vesting of restricted stock units was $2.7 million, $1.8 million and $2.0 million during theyears ended December 31, 2017, 2016 and 2015, respectively. As of December 31, 2017, we had unrecognized compensation cost of $2.2 million relatedto the unvested portion of our outstanding restricted stock units to be recognized over a weighted average remaining service period of 2.1 years. We have a long-term incentive program (LTIP) which provides for the issuance of performance-based and time-based restricted stock units under the2011 Plan to certain executives. Under the LTIP, a target level of equity compensation is set for each officer. The total equity compensation is dividedinto performance-based and time-based restricted stock units. Under the program, the Compensation Committee sets the performance-based goals withinthe first 90 days of each year. Vesting of the performance-based stock units (PSU's) is contingent upon the employee's continued employment and theCompany's achievement of certain performance goals during a three-year performance period. The performance goals are established by theCompensation Committee for a three-year performance period based on financial targets, including an average annual return on invested capital(“ROIC”) and average annual growth in earnings before interest, taxes, depreciation and amortization (adjusted to exclude the effect of acquisitions,dispositions, and certain other nonrecurring or extraordinary items) (“Adjusted EBITDA”). We recognize compensation expense, net of estimatedforfeitures, for PSU's on a straight-line basis over the performance period based on the probable outcome of achievement of the financial targets. At theend of each reporting period, we estimate the number of PSU's expected to vest, based on the probability and extent to which the performance goals willbe met, and take into account these estimates when calculating the expense for the period. If the number of shares expected to be earned changes duringthe performance period, we will make a cumulative adjustment to compensation expense based on the revised number of shares expected to be earned.Summarized share information for our performance-based restricted stock units is as follows: Year endedDecember 31,2017 Weightedaveragegrant datefair value (In shares) (In dollars)Outstanding and unvested, beginning of period 124,394 $31.08Granted 104,590 23.65Vested — —Forfeited (39,916) 27.74Outstanding and unvested, end of period 189,068 $27.68As of December 31, 2017, we had unrecognized compensation cost of $1.3 million related to the unvested portion of our outstanding restricted stockunits to be recognized over a weighted average remaining service period of 2.0 years. 71Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.GP STRATEGIES CORPORATION Notes to Consolidated Financial Statements(11)Common StockThe holders of common stock are entitled to one vote per share. As of December 31, 2017, there were 16,747,926 shares of common stock issued andoutstanding. In addition, as of December 31, 2017, there were 340,302 shares reserved for issuance under outstanding equity compensation awards suchas stock options and restricted stock units and an additional 605,788 shares available for issuance for future grants of awards under the 2011 Plan.Stock Repurchase ProgramWe have a share repurchase program under which we may repurchase shares of our common stock from time to time in the open market, subject toprevailing business and market conditions and other factors. During the years ended December 31, 2017, 2016 and 2015, we repurchased approximately182,000, 340,000 and 477,000 shares, respectively, of our common stock in the open market for a total cost of approximately $4.3 million, $8.0 millionand $12.3 million, respectively. As of December 31, 2017, there was approximately $11.7 million available for future repurchases under the buybackprogram. There is no expiration date for the repurchase program.Securities Purchase Agreement On December 30, 2009, we entered into a Securities Purchase Agreement (the “Purchase Agreement”) with a single accredited investor, Sagard CapitalPartners, L.P. (“Sagard”), pursuant to which we sold to Sagard, in a private placement, an aggregate of 2,857,143 shares (the “Shares”) of our commonstock, par value $0.01, at a price of $7.00 per share (the “Offering”), for an aggregate purchase price of $20.0 million. The Offering closed onDecember 30, 2009. The Purchase Agreement prohibits Sagard from acquiring beneficial ownership of more than 23% of our common stock (calculatedon a fully diluted basis). As of December 31, 2017, Sagard beneficially owned 3,639,367 shares or 21.7% of our outstanding common stock. In connection with the Offering, on December 30, 2009, we entered into a Registration Rights Agreement (the “Registration Rights Agreement”) withSagard. Pursuant to the Registration Rights Agreement, we filed a registration statement with the Securities and Exchange Commission (the “SEC”) forpurposes of registering the resale of the Shares and any shares of common stock issued pursuant to the preemptive rights under Section 4(l) of thePurchase Agreement (or any shares of common stock issuable upon exercise, conversion or exchange of securities issued pursuant to the preemptiverights). We filed the registration statement with the SEC on September 27, 2010 and it was declared effective by the SEC on October 8, 2010. If we fail tomeet filing or effectiveness deadlines with respect to any additional registration statements required by the Registration Rights Agreement, or fail tokeep any registration statements continuously effective (with limited exceptions), we will be obligated to pay to the holders of the Shares liquidateddamages in the amount of 1% of the purchase price for the Shares per month, up to a maximum of $2.4 million. We also agreed, among other things, toindemnify the selling holders under the registration statements from certain liabilities and to pay all fees and expenses (excluding underwritingdiscounts and selling commissions and all legal fees of the selling holders in excess of $25,000) incident to our obligations under the RegistrationRights Agreement.72Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.GP STRATEGIES CORPORATION Notes to Consolidated Financial Statements(12) Business SegmentsFor the year ended December 31, 2017, we operated through four reportable business segments: (i) Learning Solutions, (ii) Professional & TechnicalServices, (iii) Sandy Training & Marketing, and (iv) Performance Readiness Solutions. Each of our reportable segments represents an operating segmentunder U.S. GAAP. We are organized by operating group primarily based upon the markets served by each group and/or the services performed. Eachoperating group consists of business units which are focused on providing specific products and services to certain classes of customers or withintargeted markets. Marketing and communications, accounting, tax, finance, legal, human resources, information systems and other administrativeservices are organized at the corporate level. Business development and sales resources are aligned with operating groups to support existing customeraccounts and new customer development.Further information regarding our business segments is discussed below. Learning Solutions. The Learning Solutions segment delivers training, curriculum design and development, digital learning services, system hosting,managed learning services and consulting services globally. This segment serves large companies in the electronics and semiconductors, healthcare,software, financial services and other industries as well as government agencies. This segment also provides apprenticeship and vocational skills trainingfunded by an agency of the United Kingdom government. The ability to deliver a wide range of training services on a global basis allows this segment totake over the entire learning function for the client, including their training personnel. Professional & Technical Services. The Professional & Technical Services segment provides training, consulting, engineering and technical services,including lean consulting, emergency preparedness, safety and regulatory compliance, chemical demilitarization and environmental services primarilyto large companies in the manufacturing, steel, pharmaceutical energy and petrochemical industries; federal and state government agencies; and largegovernment contractors. Our proprietary EtaPROTM Performance and Condition Monitoring System provides a suite of real-time software solutions forpower generation facilities and is installed on power-generating units across the world. In addition to providing custom training solutions, this segmentprovides web-based training through our GPiLEARNTM portal, which offers a variety of courses to power plant personnel in the U.S. and other countries.This segment also provides services to users of alternative fuels, including designing and constructing liquefied natural gas (LNG), liquid to compressednatural gas (LCNG), compressed natural gas (CNG) and hydrogen fueling stations, as well as supplying equipment. Sandy Training & Marketing. The Sandy Training & Marketing segment provides custom product sales training and has been a leader in servingmanufacturing customers in the U.S. automotive industry for over 40 years. Sandy provides custom product sales training designed to better educatecustomer sales forces with respect to new vehicle features and designs, in effect rapidly increasing the sales force knowledge base and enabling them toaddress detailed customer queries. Furthermore, Sandy helps our clients assess their customer relationship marketing strategy and connect with theircustomers on a one-to-one basis including through custom publications. This segment also provides technical training services to automotivemanufacturers as well as customers in other industries. Performance Readiness Solutions. This segment provides performance consulting and technology consulting services, including platform adoption,end-user training, change management, knowledge management, customer product training outsourcing, training content development and salesenablement solutions. This segment also offers organization performance solutions, including leadership development training, strategy-through-implementation consulting services and employee engagement tools and services. Industries served include manufacturing, aerospace, healthcare, lifesciences, consumer products, financial, telecommunications and higher education as well as government agencies. We do not allocate the following items to the segments: selling, general & administrative expenses, restructuring charges, other income (expense),interest expense, gain (loss) on change in fair value of contingent consideration and income tax expense. Inter-segment revenue is eliminated inconsolidation and is not significant. 73Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.GP STRATEGIES CORPORATION Notes to Consolidated Financial StatementsThe following table sets forth the revenue and operating results attributable to each reportable segment and includes a reconciliation of segment revenueto consolidated revenue and operating results to consolidated income before income tax expense (in thousands): Years ended December 31, 2017 2016 2015Revenue: Learning Solutions $214,820 $208,998 $207,039Professional & Technical Services 101,051 101,907 119,092Sandy Training & Marketing 101,104 101,768 87,567Performance Readiness Solutions 92,233 77,886 76,582 $509,208 $490,559 $490,280Gross Profit: Learning Solutions $38,971 $38,954 $36,223Professional & Technical Services 14,426 15,803 23,621Sandy Training & Marketing 14,524 14,181 11,321Performance Readiness Solutions 14,106 11,219 10,827Total gross profit 82,027 80,157 81,992Selling, general and administrative expenses 57,419 48,597 47,748Restructuring charges 3,317 — 1,551Gain (loss) on change in fair value of contingent consideration, net 1,620 (136) (371)Operating income 22,911 31,424 32,322Interest expense 3,132 1,568 1,381Other (expense) income (90) 178 (1,318)Income before income tax expense $19,689 $30,034 $29,623 Additional information relating to our business segments is as follows (in thousands): December 31, 2017 2016Identifiable assets: Learning Solutions $170,093 $147,595Professional & Technical Services 87,014 80,033Sandy Training & Marketing 29,957 25,804Performance Readiness Solutions 77,943 62,169Total assets $365,007 $315,601 Corporate and other assets which consist primarily of cash, other assets, and deferred tax assets and liabilities are allocated to the segments based on theirrespective percentage of consolidated revenues. 74Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.GP STRATEGIES CORPORATION Notes to Consolidated Financial Statements Years ended December 31, 2017 2016 2015Additions to property, plant and equipment: Learning Solutions $1,174 $548 $768Professional & Technical Services 480 146 269Sandy Training & Marketing 70 13 77Performance Readiness Solutions 73 39 496Corporate and other 937 656 747 $2,734 $1,402 $2,357Depreciation and amortization: Learning Solutions $2,225 $2,403 $3,189Professional & Technical Services 749 797 1,152Sandy Training & Marketing 439 429 465Performance Readiness Solutions 2,023 1,530 1,446Corporate and other 1,538 1,303 1,613 $6,974 $6,462 $7,865 Information about our revenue in different geographic regions, which is attributable to our operations located primarily in the United States, UnitedKingdom and other countries is as follows (in thousands): Years ended December 31, 2017 2016 2015United States $350,632 $339,329 $341,581United Kingdom 100,466 93,017 98,991Other 58,110 58,213 49,708 $509,208 $490,559 $490,280 Information about our total assets in different geographic regions is as follows (in thousands): December 31, 2017 2016United States $215,523 $195,693United Kingdom 75,862 59,018Other 73,622 60,890 $365,007 $315,60175Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.GP STRATEGIES CORPORATION Notes to Consolidated Financial Statements(13)Fair Value MeasurementsASC Topic 820, Fair Value Measurements and Disclosure (“Topic 820”), defines fair value, establishes a market-based framework or hierarchy formeasuring fair value, and expands disclosures about fair value measurements. Fair value is defined as the price that would be received to sell an asset orpaid to transfer a liability in an orderly transaction between market participants. The guidance within Topic 820 is applicable whenever anotheraccounting pronouncement requires or permits assets and liabilities to be measured at fair value. The fair value hierarchy prioritizes the inputs used invaluation techniques into three levels as follows: •Level 1 – unadjusted quoted prices for identical assets or liabilities in active markets;•Level 2 – quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets thatare not active, and inputs other than quoted market prices that are observable or that can be corroborated by observable market data bycorrelation; and•Level 3 – unobservable inputs based upon the reporting entity’s internally developed assumptions which market participants would use inpricing the asset or liability.Our financial instruments measured at fair value include interest rate derivatives and contingent consideration in connection with businesscombinations. The following table summarizes the financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2017 and2016, and the level they fall within the fair value hierarchy (in thousands): Fair Value Fair Value December 31, Description of Financial Instrument Financial Statement Classification Hierarchy 2017 2016 Contingent consideration Accounts payable and accrued expenses Level 3 $2,724 $3,590 Contingent consideration Other noncurrent liabilities Level 3 1,502 1,669 Interest rate swap agreement Other assets Level 2 88 — Interest rate cap agreement Other assets Level 2 285 — Contingent consideration related to acquisitions is recognized at fair value on the acquisition date and is re-measured each reporting period withsubsequent adjustments recognized in the consolidated statement of operations. We estimate the fair value of contingent consideration liabilities usingan appropriate valuation methodology, typically either an income-based approach or a simulation model, such as the Monte Carlo model, depending onthe structure of the contingent consideration arrangement. Contingent consideration is valued using significant inputs that are not observable in themarket which are defined as Level 3 inputs pursuant to fair value measurement accounting. Refer to Note 2 for further details including the change in fairvalue of contingent consideration during the year ended December 31, 2017.The Company entered into interest rate swap and interest rate cap agreements to manage its interest rate risk. The valuation of these instruments isdetermined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. Thisanalysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interestrate curves. To comply with the provisions of ASC 820, the Company incorporates credit valuation adjustments to appropriately reflect both its ownnonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. Changes in the fair value of the interest rateswap agreements are recorded as a component of accumulated other comprehensive income or loss.76Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.GP STRATEGIES CORPORATION Notes to Consolidated Financial Statements(14)Commitments, Guarantees, and ContingenciesCommitments Operating Leases We have various noncancelable leases for real property and machinery and equipment. Such leases expire at various dates with, in some cases, options toextend their terms. Minimum rentals under long-term operating leases are as follows (in thousands): Fiscal year ending: Realproperty Machinery andequipment Total2018 $8,659 $994 $9,6532019 7,364 464 7,8282020 5,303 109 5,4122021 3,868 23 3,8912022 3,094 5 3,099Thereafter 6,942 — 6,942Total $35,230 $1,595 $36,825 Certain of the leases contain provisions for rent escalation based on increases in a specified Consumer Price Index, real estate taxes and operating costsincurred by the lessor. Rent expense was approximately $11.0 million, $9.8 million and $10.2 million for the years ended December 31, 2017, 2016 and2015, respectively. Other As of December 31, 2017, we had eleven outstanding letters of credit totaling $5.4 million, which expire in 2018 through 2022. In addition, we havethree outstanding performance bonds totaling $6.4 million for contracts to be completed in 2018.77Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.GP STRATEGIES CORPORATION Notes to Consolidated Financial Statements(15)Quarterly Information (unaudited)Our quarterly financial information has not been audited but, in management’s opinion, includes all adjustments necessary for a fair presentation. (In thousands) Three months ended Year ended2017 March 31 June 30 September 30 December 31 December 31Revenue $122,447 $131,161 $124,097 $131,503 509,208Gross profit 19,388 22,435 18,646 21,558 82,027Net income 4,086 5,863 3,281(a) (339)(a) 12,891 Earnings per share: Basic $0.24 $0.35 $0.20 $(0.02) $0.77Diluted $0.24 $0.35 $0.19 $(0.02) $0.76 2016 Revenue $115,756 $125,542 $121,978 $127,283 $490,559Gross profit 17,927 20,344 20,004 21,882 80,157Net income 3,800 4,913 4,802 6,732 20,247 Earnings per share: Basic $0.23 $0.29 $0.29 $0.40 $1.21Diluted $0.23 $0.29 $0.29 $0.40 $1.21The sum of the quarterly earnings per share amounts may not equal the total for the year due to the effects of rounding and dilution as a result ofissuing common shares during the year.(a) Includes a $2.6 million gross profit reduction in the third quarter ended September 30, 2017 due to a contract performance dispute resulting in anincrease in estimated costs to complete a project for a foreign oil and gas client. During the fourth quarter ended December 31, 2017, the clientterminated the contract and we incurred a $1.8 million loss in the fourth quarter of 2017, of which $0.5 million is reflected as a reduction to grossprofit and $1.3 million is included in SG&A expense and represents a bad debt reserve relating to accounts receivable from the client.(16) Subsequent EventOn January 2, 2018, we acquired the business and certain assets of Hula Partners, a provider of SAP SuccessFactors Human Capital Management (HCM)implementation services with headquarters in Houston, Texas. The purchase price was $10.0 million in cash. The results of Hula Partners' operations willbe included in the consolidated financial statements beginning January 2, 2018.78Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Item 9: Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. Item 9A: Controls and Procedures (a) Evaluation of Disclosure Controls and Procedures We carried out an evaluation, under the supervision and with the participation of our management including our Chief Executive Officer and our ChiefFinancial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15(e) of the SecuritiesExchange Act of 1934, as amended. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controlsand procedures as of December 31, 2017 were effective. (b) Management’s Annual Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Exchange Act Rule 13a-15(f). Our internal control processes and procedures are designed to provide reasonable assurance regarding the reliability of financial reporting and thepreparation of our consolidated financial statements in accordance with United States generally accepted accounting principles. Our internal control overfinancial reporting includes those policies and procedures that reasonably allow us to record, process, summarize, and report information and financial datawithin prescribed time periods and in accordance with Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate. Under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, we conducted anevaluation of internal control over financial reporting as of December 31, 2017 based on the criteria set forth by the Committee of Sponsoring Organizationsof the Treadway Commission in Internal Control – Integrated Framework (2013) (“COSO Framework”). Based upon our evaluation, we concluded that ourinternal control over financial reporting was effective as of December 31, 2017. Our internal control over financial reporting as of December 31, 2017 has been audited by KPMG LLP, an independent registered public accounting firm,whose report appears in Item 8. (c) Changes in Internal Control over Financial Reporting During the year ended December 31, 2017, there has been no change in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d—15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect our internal control over financialreporting. Item 9B: Other Information None.79Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Part III Item 10. Directors, Executive Officers and Corporate Governance The additional information required by this item will be either set forth under the Election of Directors section in the Proxy Statement for the 2018 AnnualMeeting of Shareholders and incorporated herein by reference or provided in an amendment to this Form 10-K to be filed no later than April 30, 2018. Compliance with Section 16(a) of the Exchange Act Section 16(a) of the Exchange Act requires our officers and directors, and persons who own more than 10% of a registered class of our securities, to file reportsof ownership and changes in ownership with the Securities and Exchange Commission (“SEC”) and the New York Stock Exchange (“NYSE”), and to furnishus with such reports. Based solely on a review of copies of such reports for 2017, we believe that during 2017 all reports applicable to our officers, directorsand greater than 10% beneficial owners were filed on a timely basis. Item 11. Executive Compensation The information required by this item will be either set forth under the Executive Compensation section in the Proxy Statement for the 2018 Annual Meetingof Shareholders and incorporated herein by reference or provided in an amendment to this Form 10-K to be filed no later than April 30, 2018. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The additional information required by this item will be either set forth under the Principal Stockholders and Security Ownership of Directors and NamedExecutive Officers sections in the Proxy Statement for the 2018 Annual Meeting of Stockholders and incorporated herein by reference or provided in anamendment to this Form 10-K to be filed no later than April 30, 2018. Equity Compensation Plan information as of December 31, 2017Plan category: Equity compensation plans not approved by security holders: (a) Number of securities to be issued upon exercise of outstanding options—(b) Weighted average exercise price of outstanding options$—(c) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in row (a))—Equity compensation plans approved by security holders: (a) Number of securities to be issued upon exercise of outstanding options3,000(b) Weighted average exercise price of outstanding options$19.38(c) Number of securities remaining available for future issuance under equity compensation plans605,788 For a description of the material terms of our stock-based compensation plans, see Note 10 to the Consolidated Financial Statements in Item 8 of this report.80Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Item 13. Certain Relationships and Related Transactions, and Director Independence The information required by this item will be either set forth in the Certain Relationships and Related Transactions section of the Proxy Statement for the2018 Annual Meeting of Shareholders and incorporated herein by reference or provided in an amendment to this Form 10-K to be filed no later than April 30,2018. Item 14. Principal Accounting Fees and Services The information required by this item will be either set forth in the Ratification of Independent Registered Public Accounting Firm section of the ProxyStatement for the 2018 Annual Meeting of Shareholders and incorporated herein by reference or provided in an amendment to this Form 10-K to be filed nolater than April 30, 2018.81Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Part IV Item 15: Exhibits and Financial Statement Schedules(a)The following documents are filed as a part of this Report: (1)Financial Statements of GP Strategies Corporation and Subsidiaries (Part II, Item 8): Reports of Independent Registered Public Accounting Firm Consolidated Balance Sheets – December 31, 2017 and 2016 Consolidated Statements of Operations – Years ended December 31, 2017, 2016 and 2015 Consolidated Statements of Comprehensive Income – Years ended December 31, 2017, 2016 and 2015 Consolidated Statements of Stockholders’ Equity – Years ended December 31, 2017, 2016 and 2015 Consolidated Statements of Cash Flows – Years ended December 31, 2017, 2016 and 2015 Notes to Consolidated Financial Statements (2)Financial Statement Schedules: Other financial statement schedules are omitted because they are not required or applicable, or the required information is shown in thefinancial statements or notes thereto, or contained in this report. (3)Exhibits required by Item 601 of Regulation S-K.Exhibit number3.1Composite of the Restated Certificate of Incorporation of GP Strategies Corporation including all amendments throughDecember 31, 2011. Incorporated herein by reference to Exhibit 3.1 of GP Strategies Corporation’s Form 8-K filed on January 3,2012.3.2GP Strategies Corporation Amended and Restated By-Laws, including all amendments through August 8, 2017. Incorporatedherein by reference to Exhibit 3.1 of GP Strategies Corporation’s Form 8-K filed on August 14, 2017.10.1Fifth Amended and Restated Financing and Security Agreement, dated December 15, 2016, by and between GP StrategiesCorporation as Borrower, as US Borrower, and General Physics (UK) Ltd., GP Strategies Holdings Limited, GP Strategies Limitedand GP Strategies Training Limited, collectively as UK Borrowers, and Wells Fargo Bank, National Association, as Lender.Incorporated herein by reference to Exhibit 10.1 of GP Strategies Corporation’s Form 8-K filed on December 21, 2016.10.2Short-term Incentive Plan approved by the Board of Directors on March 29, 2016. Incorporated herein by reference to Exhibit10.1 of GP Strategies Corporation's Form 10-Q filed on April 28, 2016.10.3GP Strategies Corporation 2011 Stock Incentive Plan. Incorporated herein by reference to Appendix B of GP StrategiesCorporation’s Definitive Proxy Statement filed on November 1, 2011. 82Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.10.41973 Non-Qualified Stock Option Plan of GP Strategies Corporation, as amended on December 28, 2006. Incorporated byreference to Exhibit 10.1 of GP Strategies Corporation’s Form 10-K for the year ended December 31, 2006.10.5GP Strategies Corporation 2003 Incentive Stock Plan. Incorporated herein by reference to Exhibit 4 of GP StrategiesCorporation’s Form 10-Q for the quarter ended September 30, 2003.10.6Employment Agreement, dated as of July 1, 1999, between GP Strategies Corporation’s and Scott N. Greenberg. Incorporatedherein by reference to Exhibit 10.1 of GP Strategies Corporation’s Form 10-Q for the quarter ended September 30, 1999.10.7Amendment, dated January 21, 2005, to Employment Agreement dated as of July 1, 1999 between GP Strategies Corporation andScott N. Greenberg. Incorporated herein by reference to Exhibit 10.1 of GP Strategies Corporation’s Form 8-K filed on January 25,2005.10.8Amendment, dated June 20, 2007, to Employment Agreement dated as of July 1, 1999 between GP Strategies Corporation andScott N. Greenberg. Incorporated herein by reference to Exhibit 10.1 of GP Strategies Corporation’s Form 8-K filed on June 26,2007.10.9Amendment, dated December 30, 2008, to Employment Agreement by and between GP Strategies Corporation and Scott N.Greenberg dated July 1, 1999. Incorporated herein by reference to Exhibit 10.1 of GP Strategies Corporation’s Form 8-K filed onJanuary 6, 2009.10.10Amendment, dated December 30, 2009, to Employment Agreement by and between GP Strategies Corporation and Scott N.Greenberg dated July 1, 1999. Incorporated herein by reference to Exhibit 10.3 to GP Strategies Corporation’s Form 8-K filedDecember 31, 2009.10.11Amendment, dated December 30, 2011, to Employment Agreement dated as of July 1, 1999 between General Physics Corporationand Scott N. Greenberg. Incorporated herein by reference to Exhibit 10.1 of GP Strategies Corporation’s Form 8-K filed onJanuary 3, 2012.10.12Employment Agreement, dated as of July 1, 1999, between General Physics Corporation and Douglas E. Sharp. Incorporatedherein by reference to Exhibit 10.11 of GP Strategies Corporation’s Form 10-K for the year ended December 31, 2003.10.13Amendment, dated January 21, 2005, to Employment Agreement dated as of July 1, 1999 between General Physics Corporationand Douglas E. Sharp. Incorporated herein by reference to Exhibit 10.2 of GP Strategies Corporation’s Form 8-K filed on January25, 2005.10.14Amendment, dated June 20, 2007, to Employment Agreement dated as of July 1, 1999 between General Physics Corporation andDouglas E. Sharp. Incorporated herein by reference to Exhibit 10.2 of GP Strategies Corporation’s Form 8-K filed on June 26,2007.10.15Amendment, dated December 30, 2008, to Employment Agreement by and between General Physics Corporation and DouglasSharp dated July 1, 1999. Incorporated herein by reference to Exhibit 10.2 of GP Strategies Corporation’s Form 8-K filed onJanuary 6, 2009.10.16Amendment, dated December 30, 2009, to Employment Agreement by and between General Physics Corporation and DouglasSharp dated July 1, 1999. Incorporated herein by reference to Exhibit 10.4 to GP Strategies Corporation’s Form 8-K filedDecember 31, 2009.10.17Amendment, dated December 30, 2011, to Employment Agreement dated as of July 1, 1999 between General Physics Corporationand Douglas E. Sharp. Incorporated herein by reference to Exhibit 10.2 of GP Strategies Corporation’s Form 8-K filed on January3, 2012.10.18Form of Employment Agreement between General Physics Corporation and certain of its executive vice presidents. Incorporatedherein by reference to Exhibit 10.1 of GP Strategies Corporation’s Form 8-K filed on October 4, 2007.10.19Form of Employment Agreement between General Physics Corporation and certain of its senior vice presidents. Incorporatedherein by reference to Exhibit 10.4 of GP Strategies Corporation’s Form 10-Q for the quarter ended September 30, 2007.83Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.10.20Amendment, dated December 30, 2011, to Form of Employment Agreement between General Physics Corporation and certain ofits executive officers. Incorporated herein by reference to Exhibit 10.3 of GP Strategies Corporation’s Form 8-K filed on January3, 2012.10.21Form of Non-Qualified Stock Option Agreement between GP Strategies Corporation and certain officers, dated June 26, 2007.Incorporated herein by reference to Exhibit 10.1 of GP Strategies Corporation’s Form 10-Q for the quarter ended June 30, 2007.10.22Form of Stock Unit Agreement between GP Strategies Corporation and certain officers, dated November 7, 2008. Incorporatedherein by reference to Exhibit 10.15 of GP Strategies Corporation’s Form 10-K for the year ended December 31, 2008.10.23Form of Non-Qualified Stock Option Agreement between GP Strategies Corporation and certain officers, dated January 21, 2010.Incorporated herein by reference to Exhibit 10.23 to GP Strategies Corporation’s Form 10-K for the year ended December 31,2009.10.24Form of Performance-Based Restricted Stock Unit Agreement. Incorporated herein by reference to Exhibit 10.1 of GP StrategiesCorporation's Form 10-Q filed on May 5, 2015.10.25Form of Time-Based Restricted Stock Unit Agreement. Incorporated herein by reference to Exhibit 10.2 of GP StrategiesCorporation's Form 10-Q filed on May 5, 2015.10.26Cash Bonus Plan of GP Strategies Corporation, as amended on March 30, 2015. Incorporated herein by reference to Exhibit 10.3of GP Strategies Corporation's Form 10-Q filed on May 5, 2015.10.27Lease Agreement, entered into as of February 28, 2013 by and between 70 CC, LLC, a Delaware limited liability company(“Landlord”) and GP Strategies Corporation, a Delaware corporation (“Tenant”). Incorporated herein by reference to Exhibit 10.1to GP Strategies Corporation’s Form 8-K filed on March 5, 2013.10.28Securities Purchase Agreement, dated as of December 30, 2009, between GP Strategies Corporation and Sagard Capital Partners,L.P. Incorporated herein by reference to Exhibit 10.1 to GP Strategies Corporation’s Form 8-K filed December 31, 2009.10.29Amendment, dated December 30, 2011, to Securities Purchase Agreement, dated as of December 30, 2009, between GP StrategiesCorporation and Sagard Capital Partners, L.P. Incorporated herein by reference to Exhibit 10.4 of GP Strategies Corporation’sForm 8-K filed on January 3, 2012.10.30Registration Rights Agreement, dated as of December 30, 2009, between GP Strategies Corporation and Sagard Capital Partners,L.P. Incorporated herein by reference to Exhibit 10.2 to GP Strategies Corporation’s Form 8-K filed December 31, 2009.10.31Code of Ethics Policy. Incorporated herein by reference to Exhibit 14.1 of GP Strategies Corporation’s Form 10-K for the yearended December 31, 2003.10.32Form of Indemnification Agreement. Incorporated herein by reference to Exhibit 10.1 of GP Strategies Corporation’s Form 8-Kdated December 23, 2005.10.33Global Outsourcing Services Agreement dated July 2, 2013 between HSBC Holdings plc and GP Strategies Managed ServicesLimited relating to the Provision of Global Learning Services. Incorporated herein by reference to Exhibit 10.1 of GP StrategiesCorporation’s Form 10-Q for the quarter ended September 30, 2013.10.34Separation Agreement, dated December 21, 2017, between GP Strategies Corporation and Sharon Esposito-Mayer. *21Subsidiaries of GP Strategies Corporation*23Consent of KPMG LLP, Independent Registered Public Accounting Firm*31.1Certification of Chief Executive Officer*31.2Certification of Chief Financial Officer*32.1Certification Pursuant to Section 18 U.S.C. Section 1350*101The following materials from GP Strategies Corporation’s Annual Report on Form 10-K for the year ended December 31, 2017,formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets; (ii) Consolidated Statements ofOperations; (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Stockholders’ Equity; (v)Consolidated Statements of Cash Flows; and (vi) Notes to Consolidated Financial Statements.* * Filed herewith.84Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on itsbehalf by the undersigned, thereunto duly authorized. GP STRATEGIES CORPORATION Dated: March 1, 2018By /s/ Scott N. Greenberg Scott N. Greenberg Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrantand in the capacities and on the dates indicated.Signatures Title Date /s/ Scott N. Greenberg Scott N. Greenberg Chief Executive Officer (PrincipalExecutive Officer and Director) March 1, 2018 /s/ Michael R. Dugan Michael R. Dugan Senior Vice President and ChiefFinancial Officer (Principal Financial andAccounting Officer) March 1, 2018 /s/ Harvey P. Eisen Harvey P. Eisen Chairman of the Board of Directors March 1, 2018 /s/ Marshall S. Geller Marshall S. Geller Director March 1, 2018 /s/ Steven E. Koonin Steven E. Koonin Director March 1, 2018 /s/ Richard C. Pfenniger, Jr. Richard C. Pfenniger, Jr. Director March 1, 2018 /s/ Samuel D. Robinson Samuel D. Robinson Director March 1, 2018 /s/ A. Marvin Strait A. Marvin Strait Director March 1, 201885Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Exhibit 10.34SEPARATION AGREEMENT THIS SEPARATION AGREEMENT (this “Agreement”) is dated and made as of December 21, 2017, between GP Strategies Corporation, a Delawarecorporation (the “Company”), and Sharon Esposito-Mayer (“Employee”).BACKGROUNDEmployee serves as Executive Vice President and Chief Financial Officer of the Company.Employee and the Company (formerly known as General Physics Corporation) are parties to the Employment Agreement dated as of September 28, 2007(together with any amendments, the “Employment Agreement”).Employee and the Company desire to enter into this Agreement to set forth the parties' agreement as to Employee's entitlements and continuing obligationsin connection with her termination of employment with the Company and as a consultant.AGREEMENT The Company and the Employee hereby agree as follows: 1.Separation. a.The Employment Agreement will expire at 11:59 p.m. on December 31, 2017 (the “Termination Date”), except for thoseprovisions of the Employment Agreement that this Agreement specifies will survive. b.From November 21, 2017 , Employee will no longer be responsible for the duties of Chief Financial Officer. Until theTermination Date, Employee shall undertake such activities requested by the Company to transfer responsibilities to other Company officers oremployees as directed, and to provide reasonable assistance to ensure orderly transition, including assistance required by the Company to addressissues arising relating to the Employee’s decisions and responsibilities as Chief Financial Officer, the Company’s financial statements, Securitiesand Exchange Commission filings or other regulatory requirements and any other issue that may arise or become known during the transition ofresponsibilities.c.From the Termination date until the end of the Severance Period (as defined below), the Company may request that the Employeeconsult or cooperate with the Company on the transition of her responsibilities and certain other matters and resolution of any issues, including anymatters relating to the financial statements of the Company during the period in which Employee was Chief Financial Officer. Employee shall makeherself reasonably available to perform such duties and provide such cooperation in connection with matters in which Employee was involved orhas knowledge as a result of her employment with the Company, including but not limited to testifying in any legal proceedings. The Companyshall pay Employee’s reasonable out-of-pocket expenses for her assistance in connection with such matters.d.After the Termination Date, Employee shall not be, nor represent to anyone that she is, an officer or agent of the Company, unlessexpressly authorized in writing to do so by an authorized officer of the Company.e.Employee hereby resigns effective as of the Termination Date from all positions she held as an officer or director of the Companyor any of its subsidiaries.2.Payments by the Company. Subject to execution, delivery and effectiveness of the release attached as Exhibit A to this Agreement (the “Release”)and Employee’s continued compliance with this Agreement:a.Through the Termination Date, the Company shall continue paying Employee her current salary and providing all benefitsprovided as of the date of this Agreement.b.From the Termination Date through December 31, 2019 (the “Severance Period”), the Company shall pay Employee at her baseannual salary rate in effect on the date of this Agreement, payable at such intervals as salaries are paid generally to employees of the Company.1Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 3.Other Obligations of the Company. Subject to execution, delivery and effectiveness of the Release and Employee’s continued compliance with thisAgreement:a.Vesting of Grants. Any stock option or restricted stock grants with time-based vesting (but not performance-based vesting) thatthe Company has issued to the Employee will continue to vest in accordance with their existing terms through the end of the Severance Period. Anystock options or restricted stock grants that are unvested at the end of the Severance Period will terminate at the end of the Severance Period.b.Car. The Company shall make any remaining lease payments with respect to the car leased for Employee’s use and either (i)purchase the car and transfer title to it to Employee at the end of the lease or (ii) pay to Employee the amount that it would have paid to purchase thecar, less any turn-in charges. The Company may purchase the car before the end of the lease and transfer title to Employee sooner if it elects to.c.Benefits Continuation. From the Termination Date until Employee has accepted another position which is eligible to receivebenefits, Employee shall continue to be eligible to receive such benefits as Employee was participating in as of the date of this Agreement subject tocontinued payment of any employee contributions, except that after the Termination Date the Company will not provide salary continuation, short-term disability, long-term disability or executive life insurance coverage but the Company will pay Employee $229.46 per month, which representsthe approximate amount of the Company’s contribution to the cost of such benefits when it provides them to employees. (Such amount will beadjusted if the Company changes its payroll frequency so that the Employee receives the same amount through the end of the Severance Period.)After the Termination Date Employee will not be eligible for 401(k) or Health Savings Account matching contributions, but the Company will payEmployee $600.00 per month as an agreed estimate of lost employer 401(k) matching contributions.d.Outplacement Assistance. The Company shall purchase executive outplacement assistance for the use and benefit of Employee.4.Continuing Provisions of the Employment Agreement. Sections 7, 8 and 20 of the Employment Agreement will continue in effect after theTermination Date. 5.Company Property. Before the Termination Date, Employee shall return to the Company all Company, client and vendor property in Employee’spossession. This includes, but is not limited to, any computer equipment, mobile phones, computer programs and electronic files, any storage media,security cards and keys, and any items developed by Employee and/or obtained by Employee or on Employee’s behalf, directly or indirectly, inconnection with Employee’s employment with the Company. However, after removal of any Company information and software, the Company shalltransfer ownership to the Employee of the laptop computer, iPhone and cellular telephone number issued to her by the Company.6.Non-Compete. Through June 30, 2018, Employee shall not compete with or Participate In any other business or organization which competes withthe Company with respect to any product or service sold by the Company within the 24 months preceding the Termination Date. The term“Participate In” shall mean: “directly or indirectly, for her own benefit or for, with, or through any other person, firm, or corporation, own (other thanthe ownership of not more than 1% of the outstanding common stock of a corporation, if, at the time of its acquisition, such stock is listed on anational securities exchange, is reported on NASDAQ, or is regularly traded in the over-the-counter market by a member of a national securitiesexchange), manage, operate, control, loan money to, or participate in the ownership, management, operation, or control of, or be connected as adirector, officer, employee, partner, consultant, agent, independent contractor, or otherwise with, or acquiesce in the use of her name in.”7.Non-Solicitation. Through December 31, 2018, Employee shall not directly or indirectly solicit or interfere with, encourage to leave the Company,or attempt to entice away from the Company any of its suppliers, customers, or employees or directly or indirectly employ any person who, at anytime within 90 days prior to such action, was an employee of the Company.8.Obligations Regarding Section 16 Reporting. Employee will have all responsibility for Section 16 compliance under the Securities Exchange Act of1934 until the expiration of her obligations thereunder. The Company will not have any responsibility or liability with respect to any failure to file(or delinquent filing of) a Form 4 or 5, any violation of Section 16(a) of the Securities Exchange Act of 1934 or any short swing profits” underSection 16(b) of that Act. Until2Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.the expiration of Employee’s filing obligations under Section 16 of the Securities Exchange Act, Employee shall comply with the Company’sInsider Trading Policy, including pre-approval requirements.9.General Release of Claims. The Company’s obligations under Section 2 and Section 3 are conditional on Employee’s delivery of a signed copy ofthe Release no later than December 31, 2017.10.No Disparagement or Encouragement of Claims. Employee shall not, nor will she cause anyone else to, make any statement or issue anycommunication that disparages, criticizes or otherwise reflects adversely on or encourages any adverse action against the Company or any otherReleasee (as defined in the Release). The Company shall not, nor will it cause anyone else to, make any statement or issue any communication thatdisparages, criticizes or otherwise reflects adversely on or encourages any adverse action against the Employee. The parties do not intend for thissection to prevent any person from testifying truthfully under oath pursuant to lawful court order or subpoena or otherwise responding to orproviding disclosures required by law.11.CEO Recommendation. The Company’s CEO will provide a letter of recommendation for Employee that is reasonably satisfactory to the Companyand Employee. A draft of the letter will be provided for the Employee’s review on or before January 31, 2018.12.Remedies and Enforcement. The Employee acknowledges that a breach on her part of the terms of Section 4, 6 or 7 of this Agreement could causeirreparable damage to the Company and that monetary damages will not provide an adequate remedy to the Company. The Company will beentitled to enforce the terms herein in court and seek any and all remedies available to it in equity and law, including, but not limited to, injunctiverelief, without the posting of any bond or other security. The parties agree that the prevailing party in any action related to enforcement of suchprovisions will be entitled to reimbursement from the non-prevailing party for attorneys’ fees and costs incurred related to such action. It is the intentof the parties that if any of these provisions, or any part thereof, is construed to be illegal, invalid or unenforceable, the same shall not affect theremainder of such covenant or any other covenants. Employee and the Company desire and authorize a court of competent jurisdiction to modifyany of these provisions to the extent necessary to make it legal, valid, and enforceable.13.Tax Matters. Notwithstanding any other provision of this Agreement, the Company may withhold from amounts payable under this Agreement allamounts that are required or authorized to be withheld, including, but not limited to, federal, state, local and foreign taxes required to be withheld byapplicable laws or regulations.14.Miscellaneous. a.The laws of the State of Maryland will govern the construction, interpretation and enforcement of this Agreement.b.This Agreement sets forth the entire understanding of the parties with respect to the subject matter hereof, supersedes all existingagreements between them concerning such subject matter, and may be modified only by a written instrument duly executed by each party.c.This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of whichtogether shall constitute one and the same instrument. A facsimile or other electronic transmission of this Agreement shall be deemed an original. 3Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.IN WITNESS WHEREOF, the Company and the Employee have duly executed this Agreement as of the date first written above. GP STRATEGIES CORPORATION By: /s/ Scott Greenberg /s/ Sharon Esposito-Mayer Scott Greenberg Sharon Esposito-Mayer Chief Executive Officer 4Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.EXHIBIT AFORM OF RELEASEGENERAL RELEASEThis General Release (this “Release”) is entered into by GP Strategies Corporation (the “Company”) and Sharon Esposito-Mayer (“Employee”).Under the Separation Agreement, dated December 21, between the Company and Employee (the “Separation Agreement”), certain of the Company’sobligations are conditioned on execution, delivery and effectiveness of this Release.In consideration of the parties’ continuing obligations under the Separation Agreement and under this Release, the parties agree as follows:1.Employee hereby releases the Company from any and all known or unknown claims, causes of action, liability, and/or damages arising out of orrelating to her employment with the Company and/or the termination of that employment, to the greatest extent permitted under applicable law. Bysigning this Release, Employee is waiving any such claims that she has or may have against the Company, its directors, officers, employees, agents,successors and assigns, and all other related or affiliated persons, companies or entities (“Releasees”). This includes all claims, rights, and/orobligations arising under any federal, state or local laws pertaining to employment, including but not limited to all employment discrimination laws,such as the Age Discrimination in Employment Act, Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, the Civil RightsAct of 1866, the Civil Rights Act of 1991, the Family and Medical Leave Act, the Employee Retirement Income Security Act, the National LaborRelations Act, and any and all other federal, state and local statutes, cases, authorities or laws (including common law) providing a cause of actionthat may be the subject of a release under applicable law, including but not limited to claims of wrongful termination, retaliation, harassment,discrimination, defamation, intentional infliction of emotional distress, breach of contract, fraud, negligence, and any other contract or tort claims.THIS IS A GENERAL RELEASE OF CLAIMS. Nothing in this Release shall be construed to waive any claims or rights that may not be waived asa matter of law.2.Employee and the Company agree that this Release shall not affect the rights and responsibilities of the United States Equal EmploymentOpportunity Commission (hereinafter “EEOC”) to enforce the ADEA and other laws. In addition, the parties agree that this Release shall not be usedto justify interfering with Employee’s right to file a charge or participate in an investigation or proceeding conducted by the EEOC or any other FairEmployment Practices agency. Employee further agrees that she knowingly and voluntarily waives all rights or claims that arose prior to Employee’sexecution of this Release, as well as any right Employee may have to receive any benefit or remedial relief (including, but not limited to,reinstatement, back pay, front pay, damages, attorneys’ fees, experts’ fees) as a consequence of any investigation or proceeding conducted by theEEOC or any other Fair Employment Practices agency. This Release does not waive any rights or claims that may arise after the date the waiver isexecuted. Furthermore, nothing in this Release will affect the ability of either party to enforce rights or entitlements specifically provided for underthis Release.3.By signing this Release, Employee acknowledges and agrees that: (a) except for the payments specifically described in Section 2 of the SeparationAgreement, Employee is not entitled to any other or further compensation, wages, bonuses, or payments of any kind from the Company; and (b)other than as described in Section 3 of the Separation Agreement and any rights Employee may have under COBRA, Employee has no further rightto participate in any Company benefit plan. The Company confirms that nothing in this Release shall in any way change or diminish theEmployee’s right to indemnification under Section 20 of her employment agreement.4.Employee represents that Employee (a) has suffered no injuries or occupational diseases arising out of or in connection with Employee’semployment with the Company that have not previously been reported in writing to the Company; (b) has received all leave to which she wasentitled, if any, under the Family and Medical Leave Act of 1993 (“FMLA”) and any applicable state or local leave laws; (c) is not aware of any factsor circumstances constituting a violation of the FMLA, and/or the Fair Labor Standards Act or any state or local laws pertaining to the payment ofwages; and (d) has not filed any claims, suits, or other actions against the Company prior to the date of Employee’s execution of this Release, and nosuch actions have been filed on Employee’s behalf.5Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.5.This Release, its contents, and all information pertaining to any employment termination discussions and the execution of this Release are to remainconfidential, and Employee shall not disclose this Release or its contents to any person, other than Employee’s spouse or significant other, and/orEmployee’s legal or tax advisor, unless compelled by legal process or permitted by any applicable whistleblower or similar law.6.Employee acknowledges that Employee (a) has been given 21 days from receipt of this Release to consider Employee’s decision to sign it and (b)understands that she has the right to consult with an attorney before signing this Release. Employee represents that she has done so to the extent thatshe deemed it necessary or appropriate.7.Employee understands that she may revoke this Release for up to and including 5 business days after she signs this Release and this Release shallnot become effective until the 5th business day after it has been signed by Employee (the “Effective Date”). Any revocation must be in writing anddelivered to Kenneth L. Crawford, General Counsel, GP Strategies Corporation, 70 Corporate Center, 11000 Broken Land Parkway, Suite 200,Columbia, Maryland 21044.The parties have signed this Release on the dates indicated below. /s/ Sharon Esposito-Mayer Sharon Esposito-Mayer Date:December 28, 2017 GP STRATEGIES CORPORATION By:/s/ Scott Greenberg Scott Greenberg, Chief Executive Officer Date:December 21, 20176Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Exhibit 21 SUBSIDIARIES OF THE REGISTRANT Name Jurisdiction ofIncorporationGP Strategies Argentina S.R.L. ArgentinaGP Strategies Australia Pty Limited AustraliaGP Treinamento Brasil Ltda BrazilGP Canada Co. CanadaGP (Shanghai) Co., Ltd. Beijing Branch ChinaGP (Shanghai) Co., Ltd. ChinaGP Colombia Ltda ColombiaEffective People A/S DenmarkGP Strategies Denmark ApS DenmarkGP Strategies Egypt, LLC EgyptGP Strategies France S.A.R.L. FranceGP Strategies Finland Oy FinlandGP Strategies Deutschland GmbH GermanyGP Strategies (Hong Kong) Limited Hong KongGP Strategies Hungary Kft HungaryGP Strategies India Pvt. Ltd. IndiaGP Strategies Japan G.K. JapanGP Strategies Malaysia Sdn. Bhd. MalaysiaGeneral Physics Corporation Mexico, S.A. de C.V. MexicoGP Strategies Netherlands B.V. NetherlandsGP Strategies Philippines, Inc. PhilippinesGP Strategies Poland sp. z.o.o PolandGP Strategies Singapore (Asia) Pte. Ltd. SingaporeGP Strategies Korea Y.H. South KoreaGP Strategies Switzerland GmbH SwitzerlandGP Strategies Sweden AB SwedenGP Strategies Taiwan Ltd. TaiwanGP Strategies Danışmanlık Limited Şirketi TurkeyGP Strategies Middle East FZ-LLC United Arab EmiratesGeneral Physics (UK) Ltd. United KingdomGP Strategies Holdings Ltd United KingdomGP Strategies Limited United KingdomGP Strategies Training Ltd. United KingdomYouTrain Limited United Kingdom Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Exhibit 23 Consent of Independent Registered Public Accounting Firm The Board of DirectorsGP Strategies Corporation: We consent to the incorporation by reference in the registration statements (Nos. 333‑178892 and 333-123949) on Form S-8 and registration statements (Nos.333-169603, 333-97531, and 333-110611) on Form S-3 of GP Strategies Corporation of our reports dated March 1, 2018, with respect to the consolidatedbalance sheets of GP Strategies Corporation and subsidiaries’ as of December 31, 2017 and 2016, and the related consolidated statements of operations,comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2017, and the related notes(collectively, the “consolidated financial statements”), and the effectiveness of internal control over financial reporting as of December 31, 2017, whichreports appear in the December 31, 2017 annual report on Form 10‑K of GP Strategies Corporation. /s/ KPMG LLP Baltimore, MarylandMarch 1, 2018Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Exhibit 31.1CERTIFICATIONI, Scott N. Greenberg, certify that:1.I have reviewed this annual report on Form 10-K of GP Strategies Corporation;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material factnecessary to make the statements made, in light of the circumstances under which such statements were made, not misleadingwith respect to the period covered by this report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in allmaterial respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periodspresented in this report;4.The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls andprocedures (as defined in Exchange Act Rules 13a‑15(e) and 15d‑15(e)) and internal control over financial reporting (as definedin Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designedunder our supervision, to ensure that material information relating to the registrant, including its consolidatedsubsidiaries, is made known to us by others within those entities, particularly during the period in which this report isbeing prepared;b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to bedesigned under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generally accepted accounting principles;c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report ourconclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by thisreport based on such evaluation; andd)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during theregistrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that hasmaterially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;and5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control overfinancial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or personsperforming the equivalent functions):a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reportingwhich are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financialinformation; andb)any fraud, whether or not material, that involves management or other employees who have a significant role in theregistrant’s internal control over financial reporting.Date: March 1, 2018/s/ Scott N. Greenberg_______Scott N. GreenbergChief Executive OfficerSource: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Exhibit 31.2CERTIFICATIONI, Michael R. Dugan, certify that:1.I have reviewed this annual report on Form 10-K of GP Strategies Corporation;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material factnecessary to make the statements made, in light of the circumstances under which such statements were made, not misleadingwith respect to the period covered by this report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in allmaterial respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periodspresented in this report;4.The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls andprocedures (as defined in Exchange Act Rules 13a‑15(e) and 15d‑15(e)) and internal control over financial reporting (as definedin Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designedunder our supervision, to ensure that material information relating to the registrant, including its consolidatedsubsidiaries, is made known to us by others within those entities, particularly during the period in which this report isbeing prepared;b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to bedesigned under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generally accepted accounting principles;c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report ourconclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by thisreport based on such evaluation; andd)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during theregistrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that hasmaterially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;and5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control overfinancial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or personsperforming the equivalent functions):a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reportingwhich are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financialinformation; andb)any fraud, whether or not material, that involves management or other employees who have a significant role in theregistrant’s internal control over financial reporting.Date: March 1, 2018/s/ Michael R. Dugan______Michael R. DuganSenior Vice President & Chief Financial OfficerSource: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Exhibit 32.1CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002In connection with the Annual Report on Form 10-K of GP Strategies Corporation (the “Company”) for the year endedDecember 31, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned herebycertifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to suchofficer’s knowledge:(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results ofoperations of the Company.Date: March 1, 2018/s/ Scott N. Greenberg__________________________ Scott N. Greenberg Chief Executive Officer /s/ Michael R. Dugan______________________Michael R. DuganSenior Vice President & Chief Financial OfficerSource: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Source: GP STRATEGIES CORP, 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.

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