SM&A Responds to Statements Made by Former CEO
28 April 2008 - 10:28PM
Business Wire
SM&A (Nasdaq:WINS) today said that information contained in a
recent press release and in proxy solicitation documents filed with
the Securities and Exchange Commission by former SM&A CEO
Steven Myers contained inaccurate and/or misleading information.
The press release from Myers was issued on April 24, 2008 and the
presentation documents were filed with the SEC on April 23, 2008.
Dwight Hanger, the Chairman of the Board of SM&A, said, �It is
most unfortunate that the founder of our company has decided to
pursue such a destructive path. I see nothing positive that can
come out of his efforts; in fact, it has already proven to be a
costly and distracting exercise. Having said that, I feel that our
shareholders are being misled and that we need to address several
of his allegations.� In his press release and proxy materials:
Myers complains about SM&A�s stock price When Myers left the
company as CEO in March 2007, SM&A�s stock price had fallen
nearly 78% from its peak during his tenure. The stock also was down
36% from the price it traded at three years before his retirement.
After the company went public in January 1998, Myers and his then
COO Kenneth Colbaugh � now one of the Myers� nominees -
substantially missed guidance the following September, beginning a
severe, downward spiral of the stock. At one point during Myers�
tenure as CEO, SM&A�s stock traded at 62 cents a share and was
de-listed. We believe the recent decline in stock price, although
in part a reflection of the market conditions in general, is
predominately due to our current slower revenue growth outlook and
inconsistent EPS growth partially caused by continual charges for
non-operational distractions � NOT because of poor guidance. Myers�
criticizes the accuracy of forecasted revenues We stand by our
recent guidance and note that our guidance will always be based on
concrete data and the best available information about our markets,
current trends and opportunities. Our ability to generate revenue
growth is highly dependent on the number and tenure of experienced
account executives, the availability of solutions we provide to our
clients and the quantity and quality of our associates who are
highly skilled to deliver our solutions. It should be noted that
Myers criticizes us for exceeding our forecasted revenue
expectations, the result of exceptional hard work and dedication by
our employees. Our strong Q4 revenues were delivered despite the
turmoil within the company and uncertain external economic negative
forces, which jointly led to our conservative guidance for the
period. Myers� promises include �correcting accounting methodology
to remedy the negative impact of the PPI acquisition�s accounting
process.� With respect to PPI, there is no accounting methodology
to remedy. The structure of the transaction, which presumably Myers
reviewed and approved when he signed the agreement, is what drives
the accounting treatment consequences we are faced with. Myers
claims that he will effectively deploy cash In 2008 until our
recent �black-out period,� the company aggressively repurchased
stock totaling $1 million, or 241,200 shares. The Board and
management review on a continual basis investment decisions which
will result in the best return on assets. The Board and management
will continue to make the best use of cash based on sound analysis
and the alternatives available. We currently have a buy back
authorization of $4.8 million and intend to continue to implement
it pursuant to its terms as market conditions warrant. As for
Myers' expertise in the �effective deployment of cash,� we only ask
that you look to his track record of investments in a series of
acquisitions that resulted in $45 million of write-offs and
aggregate losses totaling $50 million over 2000 and 2001. The
resulting shareholder erosion was immediately evident in a stock
which plunged from a peak of $32.75 three months after going public
in 1998 to 62 cents just two years later. Myers states he will
reverse �recent attrition of critical talent.� During the last 10
years as a public company under Myers� leadership, 16 highly
respected senior executives and numerous senior level managers left
SM&A, the majority of which either started or joined companies
that compete directly against SM&A. Much of that was due to the
pervasive lack of a sound strategic direction and investment
strategy, a situation the Board moved to correct in late 2006. The
recent resignations are largely due to management disruptions and
the resulting impact on employee morale and job security through
much of 2007. The Board believes the new reconstituted leadership
team has never been more talented, dedicated to operational
excellence and focused as a TEAM to deliver results for
shareholders. The Board and this leadership team have recently
attracted extraordinary new talent at every level to support our
strategic direction. Mr. Hanger continued: �Myers is running on his
record, so it is only fair that our stockholders have all of the
facts and context to evaluate it. As I said in my previous letter
to shareholders, `We invite you to review Myers� record as CEO of
SM&A because, when you do, we are confident you will conclude
as we have that our path to the future should not involve a detour
into the past.� "The credentials of your current Board speak for
themselves. We have a super majority independent board comprised of
professionals with extensive relevant industry expertise, financial
knowledge and significant business acumen. We would put them up
against Myers� nominees anytime and are confident that our
stockholders will conclude that the Myers nominees offer no
additional value. "I believe, after examining the facts, our
shareholders will conclude as we have that it is in their best
interests and the best interest of this company for them to vote
for the board of directors nominated by the company.� YOUR VOTE IS
IMPORTANT -- VOTE THE WHITE PROXY CARD TODAY � The Stockholder
meeting will be on Friday, May 23, 2008 with stockholders of record
as of April 9, 2008 eligible to vote. � If you have any questions
or need assistance in voting, contact MacKenzie Partners, Inc.
Toll-Free: (800) 322-2885 winsproxy@mackenziepartners.com � Please
ignore any materials sent to you by Myers and discard any gold
cards you receive. � We urge you to sign, date and return the
enclosed WHITE Proxy Card today or vote by telephone or Internet.
About SM&A SM&A is the world's foremost management
consulting firm providing leadership and mentoring solutions to
PLAN for business capture, WIN competitive procurements and
profitably PERFORM on the projects and programs won. Our proven
processes, people and tools have delivered significant top-line and
bottom-line growth across markets, products and services. From the
largest aerospace and defense contractors, through the major
software providers, to healthcare and financial/audit service
providers, SM&A is the partner many companies turn to WHEN THEY
MUST WIN. Some statements made in this news release refer to future
actions, strategies, or future performance that involves a number
of risks and uncertainties. Any one or number of actors could cause
actual results to differ materially from expectations, and could
include: shift in demand for SM&A's Competition Management and
Performance Assurance services; fluctuations in the size, timing,
and duration of client engagements; delays, cancellations, or
shifts in emphasis for competitive procurement activities; declines
in future defense, information technology, homeland security, new
systems, and research and development expenditures, and other risk
factors listed in SM&A's SEC reports, including the report on
Form 10-K for the year ended December 31, 2007. Actual results may
differ materially from those expressed or implied. The company
expressly does not undertake any duty to update forward-looking
statements.
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