The resignations of Advanced Marketing Services president and CEO Michael Nicita and chief financial officer Ed Leonard "had nothing to do with the ongoing investigations," newly installed president and CEO Charlie Tillinghast and chairman Bob Bartlett insisted in an interview last week. Both the Securities and Exchange Commission and the U.S. attorney for the Southern District of California have been investigating AMS's co-op advertising practices since last summer.
Bartlett said a review by the board determined that "a new senior management team would better meet the current needs of the company" and would "better meet the objectives of the company going forward." Neither Bartlett nor Tillinghast, who was a cofounder of AMS in 1982 and its CEO up until December 1996, would comment on what the Nicita/Leonard team was lacking or what new expertise their replacements would bring to the company. Tillinghast said AMS's current strategy of lessening its dependence on the wholesale clubs by expanding its distribution and publishing businesses would "absolutely" continue. "This is a good business with good people," Tillinghast said.
Tillinghast told PW that before setting out any new company objectives, he and Bruce Myers, who is taking over as CFO, "need to get to know the company better." Myers, who has been serving as a consultant on accounting matters for AMS for the past several months, said, "This is a good company that simply needs new direction." He said one of the first things he would focus on would be to implement processes to improve company accounting. Asked if they could pinpoint why AMS's earnings per share has been declining, the executives pointed to costs associated with implementing a new Oracle system and legal expenses tied to the investigations.
Tillinghast, who said his leadership style is "to listen" and then set goals, made it clear he is not an interim CEO. "There is no search under way" to find a successor, said Tillinghast, who is 67, although he added that he doesn't expect to be running the company when he is 75.
All executives were guarded when discussing the continuing investigations. Bartlett said AMS "continues to cooperate" with the authorities, but said, "There is no way to predict when the process will end." Tillinghast noted that AMS has talked to some 152 publishers about providing some sort of restitution, and that agreements could be finalized soon. Myers said he hoped to be able to file the company's long-delayed quarterly and year-end reports with the SEC by the middle of June.
