8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported) November 10, 2008

GSE SYSTEMS, INC.

 (Exact name of registrant as specified in its charter)

Delaware	001-14785	52-1868008
(State of incorporation)	(Commission File Number)	(I.R.S. Employer Identification Number)
1332 Londontown Blvd., Sykesville, MD  21784
(Address of principal executive offices and zip code)

(410) 970-7800

Registrant's telephone number, including area code

Check  the  appropriate  box  below  if the  Form  8-K  filing  is  intended  to simultaneously  satisfy the filing obligation or the registrant under any of the following provisions (see General Instructions A.2 below):

[  ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[  ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[  ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d - 2(b))

[  ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e - 4 (c))

Form 8-K

Item 2.02  Results of Operations and Financial Condition

On November 10, 2008 the Company announced the financial results for the three and nine months ended September 30, 2008.  The earnings release is attached hereto as an exhibit to the Form 8-K.

Item 9.01 Financial Statements and Exhibits

(c) Exhibits

99.1   Press release of GSE Systems, Inc. dated November 10, 2008 announcing its financial results for the three and nine months ended September 30, 2008.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

       GSE SYSTEMS, INC.

November 12, 2008                                                                           /s/ Jeffery G. Hough

       -----------------------

       Jeffery G. Hough

       Senior Vice President and Chief Financial Officer

EXHIBIT INDEX

Exhibit No.                            Description

99.1 Press release of GSE Systems, Inc. dated November 10 announcing the financial results for the three and nine months ended September 30, 2008.

EX-99.1

 

http://www.gses.com

AT THE COMPANY

John V. Moran

Chief Executive Officer

FOR IMMEDIATE RELEASE

GSE Systems Announces Third Quarter Financial Results

Sykesville, Maryland, November 10, 2008 -- GSE Systems, Inc. (GSE) (Amex – GVP), a leading global provider of real-time simulation and training solutions to the power, process, manufacturing and Government sectors, reported that revenue for the three months ended September 30, 2008 was $7.0 million, a 7% decrease from the revenue reported for the three months ended September 30, 2007 of $7.5 million.

GSE reported operating income of $170,000 for the third quarter of 2008 as compared to operating income of $504,000 in the third quarter of 2007. Net income attributed to common shareholders was $430,000 in the third quarter of 2008 or $0.03 per share on both a basic and diluted basis versus net income attributed to common shareholders of $303,000 or $0.02 per share on both a basic and diluted basis for the third quarter of 2007.  During the third quarter 2008, the Company entered into several forward foreign exchange contracts to manage market risks associated with the fluctuations in foreign currency exchange rates on foreign-denominated trade receivables.  The Company recognized a $360,000 gain in relation to the fair market value of these contracts as of September 30, 2008 which was recorded as other income.

GSE’s backlog as of September 30, 2008 was approximately $34.7 million compared to a backlog of $24.6 million at December 31, 2007. Backlog is defined as the remaining value of signed contracts or authorizations to commence work and does not include any value for contracts currently being negotiated or for contracts that have been signed since September 30, 2008. Therefore, the backlog reported above does not include the expected total value of the two new full scope nuclear simulators for a Japanese customer or the expected total value of the full scope nuclear simulator currently being built for Westinghouse Electric Company’s Haiyang project in China. Backlog also does not include any values for the nuclear operator training contract with a U.S. utility announced on October 21, 2008.

Significant achievements since June 30, 2008 include:

·   In August, the Company received a large multi-million dollar contract to build a new full scope nuclear simulator for a U.S. based utility customer that will use the simulator at an existing site that currently has two reactors being serviced by one simulator. The utility cited the need for more simulator time to train plant operators, engineers and other key personnel as the primary driver for a second simulator. With this award, GSE is now working on six new full scope nuclear simulators.

·   In early October, the Company announced that it had recently been awarded contracts for six new non-nuclear full scope simulators for a variety of conventional power plants in the U.S. and Europe that are implementing control systems from three of the world’s premier digital control system vendors: Emerson, ABB and GE. The Company is currently working on a record number of projects in this business sector.

·   In mid October, the Company announced that it had been awarded a significant contract to provide a nuclear plant operator training program to one of the largest U.S. nuclear utilities. The nuclear industry in both the U.S. and around the world face the significant challenge of training a new nuclear workforce to operate their existing nuclear fleets as well as their planned new nuclear capacity.  GSE is ideally positioned to play a significant role in this global need by offering “turnkey” training solutions that integrate traditional classroom training with high fidelity simulation.

“The increasing flow of new business that began earlier this year has continued nicely during the third quarter and cumulatively represents one of the strongest periods in terms of new business wins and backlog growth for GSE in many years,” stated John V. Moran, GSE’s Chief Executive Officer. “This influx of large new awards is consistent with our 2008 outlook with respect to this being a year that would be punctuated by a number of large new contract awards and meaningful backlog growth which should translate into accelerating revenue and operating income.”

Moran continued, “Our backlog has now increased for six consecutive quarters to almost $35 million, a record level for the past decade. This backlog value does not include approximately $17.0 million of awards that were either contracted for after September 30, 2008 or are technically not in backlog yet even though the customer has requested work to begin. In addition to these recent awards of new business, we continue to maintain a large and expanding pipeline of potential new opportunities with both new and existing customers and strategic partners here at home and abroad. We are entering the final months of 2008 on a strong note and to the best of our ability remain confident that we are now entering a meaningful multi-year period of upward growth trends.”

GSE Systems, Inc. provides training simulators and educational solutions. The Company has over three decades of experience, over 343 installations, and 100 customers in more than 40 countries. Our software, hardware and integrated training solutions leverage proven technologies to deliver real-world business advantages to the energy, process, manufacturing and government sectors worldwide. GSE Systems is headquartered in Sykesville, Maryland. Our global locations include offices in St. Marys, Georgia; Atlanta, Georgia; Sweden; and China. Information about GSE Systems is available via the Internet at http://www.gses.com.

AT THE COMPANY                                                                 INVESTOR RELATIONS CONTACT

John V. Moran                                                                           Feagans Consulting Inc.

Chief Executive Officer                                                             Neal Feagans

Phone: 410-970-7801                                                                  Phone: 303-449-1184

GSE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
(unaudited)
	Three months ended					Nine months ended
	September 30,					September 30,
	2008		2007			2008			2007
Contract revenue	$	7,001	$	7,526		$	20,639		$	23,769
Cost of revenue		5,023		5,150			14,889			16,345
Gross profit		1,978		2,376			5,750			7,424
Operating expenses		1,808		1,872			5,902			5,735
Operating income (loss)		170		504			(152	)		1,689
Other income (expense), net		359		(150	)		269			(778	)
Income before income taxes		529		354			117			911
Provision for income taxes		99		51			250			229
Net income (loss)		430		303			(133	)		682
Preferred stock dividends		-		-			-			(49	)
Net income (loss) attributed to common shareholders	$	430	$	303		$	(133	)	$	633
Basic income (loss) per common share	$	0.03	$	0.02		$	(0.01	)	$	0.05
Diluted income (loss) per common share	$	0.03	$	0.02		$	(0.01	)	$	0.04
Weighted average shares outstanding - Basic		15,920,908		14,943,189			15,683,442			12,568,108
Weighted average shares outstanding - Diluted		16,713,216		16,394,732			15,683,442			14,503,500

GSE SYSTEMS, INC. AND SUBSIDIARIES
Selected Balance Sheet Data
(in thousands)
	September 30, 2008		December 31, 2007
Cash and cash equivalents	$	7,513	$	8,172
Current assets		22,936		22,015
Total assets		30,430		28,364
Current liabilities	$	8,645	$	7,304
Long-term liabilities		733		695
Stockholders' equity		21,052		20,365