**Program Services:**Program Services revenue for the quarter was $15.1 million, an increase of 31%, compared with $11.5million for the same period of the prior year. Program Services accounted for 60% of totalquarterly revenues, compared to 46% of total quarterly revenue in the third quarter of 2007.Performance Management Associates, Inc. (PMA), acquired in mid-September 2007, contributed $2.3million to Program Services revenues in the third quarter of 2008, of which $1.8 million isconsidered non-organic. Organic revenue growth for the quarter in the Program Services segment was16%.**Competition Management:**Competition Management revenue for the quarter was $10.2 million, or 40% of total revenues,compared to $13.6 million, or 54% of total revenues, in the third quarter of 2007. During thequarter there were fewer large Federal procurement opportunities as compared to the third quarterof 2007. The trend of Federal procurement opportunities continues to contribute to the variabilityof Competition Management revenue.**Revenue by Market Vertical:**Revenue from A&D clients represented 79% of total revenues or $20.1 million for the third quarterof 2008, compared to $18.1 million, or 72% of total revenues, in the comparable quarter last year.Revenue from non-A&D clients was $5.2 million, compared to $7.0 million in the third quarter lastyear. Non-A&D business represented 21% of total third quarter revenue, compared with 28% a yearago.**SG&A Expense:**SG&A expenses were $8.0 million in the quarter. Stock-based compensation for the quarter totaled$0.4 million. Included in SG&A expense was $0.7 million related to an earn-out expense by theprincipal of an acquired business and $0.3 million associated with the recently announcedtransaction to be acquired and the recent proxy contest. Excluding the aforementioned stock-basedcompensation, earn-out, acquisition and proxy expenses, operating SG&A expenses were $6.5 million,or 25.7% of third quarter 2008 revenue compared to $6.1 million, or 24.2% on an operating basis inthe third quarter of 2007.(See Exhibit B for reconciliation of GAAP to non-GAAP information.)**Stock Buyback:**During the quarter, the Company did not buy back shares due to the recently announced transactionfor the Company to be acquired by Odyssey Investment Partners, LLC.**2008 Guidance:**The Company expects revenue growth forfull year 2008 of approximately 5% to 6%. The Companyanticipates GAAP earnings per share for full year 2008 to be between$0.25 and $0.27 per diluted share.Excluding proxy costs, transaction and earn-out expense, adjusted non-GAAP EPS is anticipated to bebetween $0.37 and $0.39 per diluted share for the year. Gross margin is expected to be approximately 39% to 40% forthe full year. The full year impact of the earn-out expense related to the PPI acquisition isestimated to be approximately $3.1 million or $0.10 per share**Disclosure of Certain Financial Information:**In an effort to be transparentand to provide more meaningful comparative SG&A and diluted EPS,including the recurring stock-based compensation expense disclosure to our shareholders, we haveprovided a reconciliation of GAAP and non-GAAP information.
 

 
**About SM&A**SM&A is the world’s foremost management consulting firm providing leadership and mentoringsolutions to PURSUE for business capture, WIN competitive procurements and PERFORM on the projectsand programs won. Our proven processes, people and tools have delivered significant top-line andbottom-line growth across markets, products and services. From the largest aerospace and defensecontractors, through the major software providers, to healthcare and financial/audit serviceproviders, SM&A is the partner many companies turn to WHEN THEY MUST WIN.**Information Regarding Solicitation of Proxies:**In connection with the proposed transaction, the Company will file proxy materials with the SECrelating to the solicitation of proxies to vote at a special meeting of stockholders to be calledto approve the proposed transaction. The definitive proxy statement will be mailed to thestockholders of the Company in advance of the special meeting. Stockholders of the Company areurged to read the proxy statement and other relevant materials when they become available becausethey will contain important information about the proposed transaction. Stockholders may obtain afree copy of the proxy statements and any other relevant documents (when available) at the SEC’sweb site at http://www.sec.gov. The definitive proxy statements and these other documents will alsobe available on the Company’s website (http://www.smawins.com) and may be obtained free from theCompany by directing a request to SM&A, Attn: Investor Relations, 4695 MacArthur Court, 8th Floor,Newport Beach, CA 92660.**Participants in the Solicitation:**SM&A and its executive officers and directors may be deemed, under SEC rules, to be participants inthe solicitation of proxies from SM&A stockholders with respect to the proposed merger describedabove. Information regarding the officers and directors of SM&A is included in its definitive proxystatement for its 2008 annual meeting filed with the SEC on April 18, 2008. More detailedinformation regarding the identity of potential participants, and their direct or indirectinterests, by securities, holdings or otherwise, will be set forth in the proxy statement and othermaterials to be filed with the SEC in connection with the proposed merger.**Conference Call and Webcast:**The Company will host a conference call with investors at 1:30 p.m. Pacific Time (4:30 p.m.Eastern) on November 6, 2008 to discuss the sale of the Company and financial results for the 3rdfiscal quarter ended September 30, 2008. The dial-in number for the conference call is 888-413-9033for domestic participants and 706-679-5064, for international participants. The call will also beaccessible via live webcast at the homepage of http://www.smawins.com by clicking on the InvestorRelations tab and webcast link. A replay of the conference call will be available athttp://www.smawins.com or by dialing 800-642-1687 or 706-645-9291, reference access code 69823725.The call replay will be available for seven days.**Cautionary Statement:**Some statements made in this news release refer to future actions, strategies, or results thatinvolve a number of risks and uncertainties. Any number of factors could cause actual results todiffer materially from expectations, including a shift in demand for SM&A’s Competition Managementand Program Services; fluctuations in the size, timing, and duration of client engagements; delays,cancellations, or shifts in emphasis for competitive procurement activities; declines in futuredefense, information technology, homeland security, new systems, and research and developmentexpenditures aerospace and defense industries along with System Integration and InformationTechnology industries, and other risk factors listed in SM&A’s SEC reports, including the report onForm 10-K for the year ended December 31, 2007. Actual results may differ materially from thoseexpressed or implied. The company does not undertake any duty to update forward-looking statement.
 

 
**Exhibit A**