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SCHEDULE 14A
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ALLIED RESEARCH CORPORATION
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ALLIED RESEARCH CORPORATION
8000 TOWER CRESCENT DRIVE, STE 750
VIENNA, VIRGINIA 22182
CONTACT: Glenn Yarborough (800)847-5322
HOME PAGE: WWW.CFONEWS.COM/ALR
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TICKER: ALR - AMERICAN STOCK EXCH.
"FOR IMMEDIATE RELEASE"
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ALLIED RESEARCH CORPORATION LAUNCHES REBUTTAL TO
ZILKHA CAPITAL PARTNERS ALLEGATIONS
VIENNA, Virginia -- May 17, 1999 -- In response to the recent filing of proxy
material by Zilkha Capital to unseat Allied Research's incumbent board, Dr. Jay
R. Sculley, Chairman of Allied, commented, ``It is unfortunate that the low
valuation of small cap companies is perceived as an opportunity by this new
dissident stockholder group to disadvantage other stockholders with an
unsupportable attack on current management and the Board of Directors with
unfounded general accusations. The Zilkha group cannot ignore the excellent
results achieved by Allied Research with record revenue and earning results in
each of the last three fiscal years.''
Dr. Sculley went on to indicate that this is the second attempt by the Zilkha
group to take control of Allied in a self-serving proposal, without any specific
benefit to existing stockholders. After purchasing its 4% position on March 30th
of this year, the Zilkha group proposed purchasing a $9 million convertible note
from Allied Research. After discussions between the Zilkha group and Glenn
Yarborough, President of Allied Research, the Board of Directors rejected the
financing proposal as being unnecessary and dilutive. The proposal also would
have provided a 22.25% ownership position and three directorships, which would
have in effect transferred a near controlling interest in Allied Research to
Zilkha. Allied Research felt financing on such terms was unfair to other
shareholders and not required.
Dr. Sculley went on to identify the following:
- -- The Company's current management team has produced 15 consecutive
quarters of positive earnings and three successive years of record
results. In Allied Research's most recent fiscal year, its return on
assets of 11% and return on equity of 21% demonstrate the strong
financial performance achieved by the current management team. These
results equal the performance of the average of the 30 companies
comprising The Dow Jones Industrial Index.
- -- Although current backlog is down at MECAR, the recent increase in the
price of oil is expected to accelerate the receipt of new orders which
have been under negotiation for some time. In addition, Allied
Research is actively working on U. S. sponsored Foreign Military Sales
contracts for ammunition for two new weapon systems, one of which is
at an advanced stage of negotiations.
- -- Allied Research's cash management and investment policies have
resulted in a strong balance sheet, which provides appropriate
financing facilities for its existing business and the capacity for
growth through acquisition. Implementing the diversification plan
embarked upon several years ago with the acquisitions of VSK and IDCS
is now bearing fruit as The VSK Group produces strong results in the
European markets that it occupies. The Company is now well positioned
to continue with the expansion of its electronic security and access
control subsidiary, with possible diversification into Europe and the
United States.
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- -- Allied Research Corporation, along with many other small cap
companies, continues to be undervalued by the market in spite of the
company's strong performance. Management's recognition of this fact
is evidenced by the Board's authorization to repurchase up to
200,000 shares on the open market.
The management of Allied Research Corporation is concerned that shareholders
will be misled by the Zilkha group campaign and welcomes them to call Corporate
Investor Communications 877-460-4348 if they have any questions or would like to
discuss the issues with us. The Board recommends that shareholders support the
current management team by returning only white proxy cards and discarding any
card sent to them by the Zilkha group.
Allied Research Corporation is a defense and electronic security firm. Its
operating units develop and produce ammunition, supply equipment performance
upgrades for defense departments worldwide, and design, produce and market
sophisticated electronic security and access control systems.
Certain statements contained herein are ``Forward-Looking'' statements as such
term is defined in the Private Securities Litigation Reform Act of 1995. Because
such statements include risks and uncertainties, actual results may differ
materially from those expressed or implied. Factors that could cause results to
differ materially from those expressed or implied include, but are not limited
to, those discussed in filings by the Company with the Securities and Exchange
Commission.
