ADVANCED MARKETING SERVICES INC
10-K, 1997-06-24
MISCELLANEOUS NONDURABLE GOODS
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                     SECURITIES AND EXCHANGE COMMISSION
                         Washington, D.C.  20549
                 _________________________________________

                                 FORM 10-K
                                (Mark One)
[X]          ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF 
             THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]

                 For the Fiscal year ended March 31, 1997

                                    OR

[ ]        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF 
           THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

            For the transition period from                 to

                        Commission file number 0-16002
 
                       ADVANCED MARKETING SERVICES, INC.
           (Exact name of Registrant as specified in its charter)

           DELAWARE                            					95-3768341-9
       (State or other jurisdiction of              (I.R.S. 
        Employer incorporation or organization)     Identification No.)

                        5880 Oberlin Drive, Suite 400
                        San Diego, California  92121
                  (Address of principal executive offices)

               Registrant's telephone number : (619) 457-2500

         Securities registered pursuant to Section 12(b) of the Act:
                                   None

         Securities registered pursuant to Section 12(g) of the Act:
                       Common Stock, $.001 par value
                              (Title of class)

	Indicate by check mark whether the Registrant (1) has filed all reports 
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 
1934 during the preceding 12 months (or for such shorter period that the 
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
                          Yes       X          No  

	Indicate by a check mark if disclosure of delinquent filers pursuant to Item 
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrants knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K:                

	The aggregate market value of the Registrant's voting stock held by 
nonaffiliates of the Registrant at June 10, 1997 was $38,243,079.

	The number of shares of the Registrant's Common Stock outstanding as of June 
10, 1997 was 5,515,609.

DOCUMENTS INCORPORATED BY REFERENCE
	Portions of the Registrant's definitive Proxy Statement for its July 24, 1997 
Annual Meeting of Stockholders (filed June 20, 1997) are incorporated by 
reference into Part III of this Form 10-K.

PART I
Item 1 - BUSINESS

General

	Advanced Marketing Services, Inc. (the "Company" or "AMS") is a leading 
distributor of general interest books to the membership warehouse clubs and 
certain specialty retailers. General interest books include bestsellers; basic 
reference books, including computer and medical books; books regarding business
and management; cookbooks; gift books, including art and coffee table books; 
calendars; travel books; regional books; mass market paperbacks; children's 
books; and Spanish-language books.   In addition, to a lesser extent, the 
Company sells pre-recorded audio cassettes (books on tape) video cassettes.  The
Company provides product selection advice, specialized merchandising and 
product development services, and distribution and handling services to 
warehouse clubs operating in the United States, Canada, Mexico and the United
Kingdom.

	Due to the continuous introduction of new titles by the book publishing 
industry, the Company provides weekly recommendations, tailored to each 
customer's marketing priorities, with respect to the new titles to be sold in 
its customers' book departments.  These recommendations are selected by the 
Company's buyers from among the over 1,000,000 titles in print and over 50,000 
new books published each year.  AMS also creates unique products and develops 
specially packaged book and book-related products for customers.  The Company 
supports its customers' inventories by maintaining back-up inventory in its 
distribution centers for prompt delivery as needed to customer locations.  The
Company maintains four domestic regional distribution centers to assure timely
delivery to its customers, to enhance its customers' inventory turnover rates 
and to reduce its customers' handling and holding costs.  See "Properties."

	The Company provides distribution service to a major warehouse club customer in
the United Kingdom and is expanding its distribution to other retailers.  In 
Mexico, the Company distributes products to a variety of retailers, including 
warehouse clubs, hypermarkets, discount department stores and other specialty 
retailers.  The Company utilizes the services of third party warehousing and 
distribution companies in its United Kingdom and Mexican subsidiaries.

	The Company was incorporated in 1982 in California and was reincorporated in 
Delaware in June 1987.  The Company's executive offices are located at 5880 
Oberlin Drive, Suite 400, San Diego, California  92121; telephone (619) 
457-2500.

Membership Warehouse Club Industry   

	The Company's customers include for-profit membership warehouse clubs which 
sell a broad range of primarily brand-name merchandise at or near wholesale 
prices.  Membership warehouse clubs are able to provide their individual and 
business members, who commonly pay annual membership fees, substantial cost 
savings on high-quality merchandise through the efficiencies of warehouse-type 
facilities and a no-frills, self-service operation policy.  Membership warehouse
club locations typically have approximately 100,000 square feet (2 1/2 acres) of
floor space and offer a limited selection of brand-name products in a wide range
of merchandise categories.  This merchandising approach was introduced in 
Southern California in 1976.  Since then, the membership warehouse club industry
has experienced significant growth, with sales estimated to be approximately 
$43 billion in 1996.

	The following table summarizes the Company's penetration of the warehouse club
industry in U.S. and Canada:

<TABLE>
                  Number of Locations and Locations Served
                         Membership Warehouse Clubs
                        United States and Canada (1)

                 	    Fiscal							               Locations
                    Year Ended				  Total Number	  Served
                  	  March 31  				of Locations    by AMS       
                        <C>             <C>          <C>
                     	  1990					       466				      354
                     	  1991					       434				      402
                      	 1992	 			       514	  			    479	
		                   	  1993					       646				      571
                     	  1994					       716				      596
                     	  1995 				       742				      592
                     	  1996					       755				      743
                     	  1997					       786				      776
<FN>			
(1) Only U.S. membership warehouse club locations to which the 
Company shipped more than $50,000 per year are included as 
locations served in the above table.  
</TABLE>

 The Company also serves 22 warehouse club locations in Mexico, five in the U.K.
and ships a limited amount of product to six warehouse clubs in various Pacific
Rim countries. See "International Business."  The number of locations served is 
not necessarily indicative of the Company's total sales volumes to the warehouse
club industry as the volume of the Company's shipments to a location can vary 
from year to year based on competitive and other factors.

	Books are well-suited to the membership warehouse club merchandising strategy 
of offering recognizable, quality merchandise at substantial savings.  Books 
appeal to a wide range of consumers and are popular gift items.  Additionally, 
due to their relatively high selling price in relation to their size, books 
generally provide membership warehouse clubs with above-average sales per square
foot of selling space. By offering a continually changing selection of books at
a substantial discount from suggested retail prices, warehouse clubs encourage 
retail customers to purchase books for their enjoyment and for business needs 
or interests.

	Notwithstanding the appeal of books as a product line, most membership 
warehouse clubs are not able to apply their standard product purchasing and 
handling procedures to their book departments.  Typically, a membership 
warehouse club purchases a limited selection of each product category directly 
from manufacturers who ship to their retail locations.  In contrast, in order 
to be able to offer even a limited selection of books, typically 100 to 250 
stock keeping units (skus) at any one time, a membership warehouse club would be
required to devote considerable time and resources to selecting from among 
the over 1,000,000 titles in print and the over 50,000 new books published each 
year by more than 4,200 primary publishing houses.  The membership warehouse 
club also would incur high freight and handling costs to receive deliveries 
from, and make returns to, the numerous vendors of such books.  Thus, the unique
nature of books has led many membership warehouse clubs to rely on distributors 
for a portion of their book purchases.  See "Risks and Competition."

Other Customers	

	The Company supplies an assortment of primarily business and computer titles to
certain companies in the office product superstore industry.  The Company serves
several companies in the rapidly growing computer and electronics superstore 
marketplace. As a result of new business development efforts, the Company is now
supplying product to the pet supply industry and the discount drugstore market.
The Company serves a variety of other specialty retailers in the sporting goods,
children's education and book businesses.

	For many of these customers, the Company designs and recommends media programs 
to satisfy the unique marketing priorities of each retailer.  By constantly 
updating titles offered, the Company makes it possible for its customers to 
offer a targeted selection of books and media products without having to develop
media merchandising expertise with their own organizations.

Retailing Operations

	As of  March 31, 1997, the Company owned and operated 11 small retail outlet 
stores in eight states.  The stores are located generally in factory outlet 
malls in Gilroy and Lake Elsinore, California; Gurnee, Illinois; Hillsboro and
Conroe, Texas; Burlington and Centralia, Washington; Algodones, New Mexico; 
Silverthorne, Colorado; Birch Run, Michigan; and Phoenix, Arizona.  These retail
outlets sell both titles that were purchased on a non-returnable basis and 
remain unsold after being offered for sale in the Company's customers' locations
as well as titles purchased specifically for these retail stores.  During fiscal
1997, the Company introduced in five of its retail stores a new retail format 
that includes multimedia products such as computer sofware, CD-ROM and music 
CDs, in addition to books.   To merchandise these stores, the Company is 
purchasing products specifically for resale as well as selling its non-
returnable book inventory.  The Company plans to operate approximately 13 retail
stores by the end of fiscal 1998.

Business Strategy

	The Company's primary business strategy is to provide effective book 
purchasing, handling and distribution services to its customers. The Company 
believes that it has achieved its position as a leading book supplier to 
membership warehouse clubs as well as other specialty retailers because of 
its ability to offer sound product selection advice, specialized product 
development and marketing services and rapid product delivery, all at 
competitive prices.

Product Selection Services and Purchasing Practices

	The Company's warehouse club customers generally compete in the retail trade 
book market by offering a limited selection of books (typically 100 to 250 
skus compared to 10,000 to 100,000 titles at national bookstore chains and book
superstores) at prices which are generally 30% to 45% lower than cover price.  
The Company provides its specialty retail customers with book programs that 
range from as few as 50 titles to programs of several thousand titles.  The 
Company believes that one of its principal strengths is its ability to 
select books that will be successful in each customer's selling environment, 
which is a function of various factors such as customer base, regional 
characteristics and marketing priorities.  This service is important because 
many of the books offered by the Company have relatively limited sales lives 
(typically a few weeks to a few months) due to the relatively rapid introduction
of new books to replace titles for which demand has decreased.  Therefore, 
customers rely on the Company's expertise and experience to recommend new 
titles to be added to their book departments.

	The Company's book selection process depends on a close working relationship 
between the Company's general merchandise managers and its major vendors.  The
process of selecting books generally begins when a publisher's representative 
submits pre-publication book summaries to the Company's general merchandise 
managers.  A general merchandise manager evaluates each book on the basis of 
such factors as subject matter and author; suitability for the customers' 
selling  environments; visual appeal; the extent of the publisher's promotion 
and advertising support; and the estimated number of copies to be printed. 
Because the Company is a major customer of many of its vendors, such vendors 
often consult with the Company during pre-publication planning, allowing the 
Company to influence the design and packaging of many of the books it purchases.
After choosing titles, the general merchandise managers, in conjunction with 
the general marketing managers, determine which specific titles will be 
recommended to each customer on the basis of thier knowledge of the customer 
base, regional characteristics and marketing priorities.

	Product selection is the responsibility of the Company's Merchandising 
Department, under the direction of the Vice President of Merchandising to whom
five general merchandise managers and a staff of 20 associates report.  Each 
general merchandise manager is responsible for several categories of products 
which include hardcover bestsellers, mass market paperbacks, cooking, travel, 
regional, computer, gift books (including art and coffee table books), 
children's books, calendars, CD-ROM products, pre-recorded audio and video 
cassettes, computer and Spanish-language books.

	The Company usually purchases newly published or well established back-list 
(previously published) titles directly from publishing houses at standard book 
industry wholesaler discounts, which generally exceed retailer discounts.  The 
Company does not generally purchase remainder titles, but will occasionally 
purchase close-out lots of certain titles at higher than normal discounts.  
Virtually all books sold are returnable to AMS by its customers for full credit
so long as the books are in saleable condition.  Approximately 91% of the books
purchased by the Company in both fiscal 1997 and 1996 were returnable to the 
publisher; the balance were purchased on a non-returnable or partially 
returnable basis, often at higher purchase discounts.

 The Company has published a limited number of titles through its in-house 
publishing arm, Thunder Bay Press.  The titles are typically sold to both the 
Company's customers and to independent and chain book stores.  In fiscal 1998, 
AMS intends to increase its activities in this area to target distinct segments
of the book market, including juvenile. The Company has created a new division,
Advantage Publishers Group, to manage Thunder Bay as well as its new Laurel Glen
and Silver Dolphin imprints.

	In the years ended March 31, 1997, 1996 and 1995, customer returns represented 
approximately 28%, 24% and 22%, respectively, of the Company's gross sales.  
Customer return rates are impacted by the sales success of individual titles 
relative to quantities ordered by customers as well as customer ordering 
practices for different volume locations.  Returns to publishers by AMS 
represented approximately 31%, 28% and 34%, respectively, of the Company's total
purchases during the same period.  The publisher returns rate exceeds the 
customer returns rate due to the Company's policy of maintaining back-up 
inventory so that it can respond promptly to customer orders.

	The Company's reserves for markdowns on inventory decreased by approximately 
$204,000 in fiscal 1997.  The Company added $2,983,000 to its reserves for 
markdowns as a result of slower than expected sales of certain books which are 
not returnable to the publisher and deducted $3,187,000 for actual losses 
incurred on books for which reserves had previously been made.  To the extent 
that the Company is unable to sell non-returnable books to its traditional 
customers, it sells such books to customers where, in certain cases, it is 
necessary to sell at below the Company's cost.  The Company believes its 
reserves for markdowns are adequate based on its past experience and present
market conditions, although no assurances can be given that actual losses will 
not exceed present reserves when these non-returnable books are actually sold.

	The Company purchases from publishers on varying payment terms.  The Company 
generally takes advantage of discounts for prompt payments, when economically 
attractive.  During the year ended March 31, 1997, the Company made purchases 
from 356 publishers.  Three publishers accounted for 10% or more of the 
Company's total purchases in fiscal 1997.  These included Penguin Putnam, Inc.,
Random House and Bantam Doubleday Dell which accounted for 20%, 14% and 12%, 
respectively, of purchases.  The Company continues to open accounts with new 
publishers and believes that adequate sources of supply exist to meet 
anticipated growth.  As is customary in the industry, the Company does not 
maintain long-term or exclusive purchase commitments or arrangements with any 
publisher.

Product Development and Marketing Services

	In addition to selecting from among regularly published books, AMS provides 
specially packaged book and book-related products which are generally not 
available in retail bookstores.  For example, the Company works with various 
publishers to create specially packaged items such as combination of books, 
shrink-wrapped or slipcased to sell as a single item, or packages that contain 
a book and a non-book item, such as a stuffed animal with a book.  The Company 
also works directly with publishers to have books specially reprinted or created
for its customers.

	The Company assists in the promotion of the books it sells by creating seasonal
merchandising plans and recommending titles based on themes such as Christmas, 
Back to School, Father's Day and Easter.  The Company also conducts theme-
oriented promotions, frequently tied to specially designed products, such as 
gardening, taxes, health and fitness, and travel.  Special in-store promotions 
are coordinated by the Company for certain of its customers.  Customers may also
take advantage of the Company's cooperative advertising coordination service 
whereby the Company obtains publisher-sponsored advertising for use by its 
customers.

	Marketing the Company's products is under the direction of the Vice President 
of Marketing to whom six general managers and a staff of 26 marketing personnel
report.  Members of the staff are assigned to each of the Company's customers 
and present new titles, recommend promotions, coordinate orders and shipments, 
and handle other customer requests.  

Product Distribution and Handling Services

	Because an important financial and operating goal of many of the Company's 
customers is a high inventory turnover rate, a critical element of the Company's
service is its ability to respond quickly to its customers' orders.  The Company
has established a national network of four regional distribution centers to 
assure rapid deliveries to its customers.  These distribution centers are 
located in general purpose warehouse facilities in the metropolitan areas of 
Sacramento, California; Indianapolis, Indiana; Baltimore, Maryland; and Dallas, 
Texas.  At its distribution centers, the Company receives books from multiple 
vendors and dispatches, using common and contract carriers, consolidated 
shipments on a weekly basis to most customer locations.  Weekly deliveries 
eliminate the need for customers to stock large inventories on-site and enables
customers to utilize valuable marketing space for other products.  Consolidated 
shipments reduce customer handling and freight costs by eliminating the costs 
associated with deliveries by multiple vendors.  All of the Company's 
distribution centers are linked with its computerized order processing center at
its San Diego headquarters and as a result, customer orders are generally 
shipped within 24 hours of receipt.  Because customer orders are generally 
shipped within 24 hours of receipt, the Company's backlog at any date is 
usually insignificant and not a meaningful indicator of future sales.  The 
Company's computer system also enables AMS to provide information and special 
reports to assist customers with operations and marketing.  For an additional 
fee, upon request, the Company will ticket books with the customer inventory 
item number and retail sales price.  The Company believes that all of these 
services enhance its customers' inventory turnover rate and reduce their 
handling and holding costs.

 In fiscal 1997, the Company introduced a Vendor Managed Inventory ("VMI") 
replenishment system designed to reduce the customers' need to write individual
location orders and further improve their inventory turnover.  AMS has developed
software designed to forecast future book sales based on the expected life cycle
of a particular title.  This forecast, coupled with customer point of sale 
information, enables AMS to effectively manage customer laydown and
replenishment orders for each customer location.  Since late in the fourth 
quarter of fiscal 1997, VMI has been used to prepare store level orders for the
Company's two largest customers.

 To further enhance the Company's service capabilities, AMS installed new 
software and material handling equipment ("Acupak") in its newest distribution 
facility in Indianapolis.  The system is designed to improve the Company's 
efficiency in handling customer orders requiring less than a full carton of a 
particular title.  A similar Acupak system is presently being installed in the
Company's Northern California distribution center.

 The Company provides in-store management of certain customers' book departments
through its network of independent service representatives.

International Business

	The Company operates two wholly owned foreign subsidiaries.  Advanced Marketing
(UK) Limited was incorporated in September 1993 in the United Kingdom.  From its
headquarters near London, it provides a full range of general interest books, 
audio and music products primarily to the five Costco membership warehouse club
locations in the United Kingdom.  Two additional Costco locations are scheduled
to open during fiscal 1998.  The Company also services forty-six other specialty
retail locations and continues its efforts to expand its distribution of media 
products to other U.K. retailers.

	Advanced Marketing S. de R.L. de C.V. was incorporated in January 1994 in 
Mexico.  From its headquarters in Mexico City, the Company distributes books to
22 membership warehouse club locations, as well a variety of general and mass 
merchandisers, office supply superstores and other specialty retailers. The 
Company continues to move forward with the introduction of the concept of a one-
stop customized, book program to the retailers in the Mexican marketplace.

	During fiscal 1997, the Company's Mexican subsidiary operated at a loss and 
there can be no assurance of success in developing sufficient sales volumes 
and gross margin contributions to generate profits, particularly given the 
low level of economic activity in the Mexican consumer markets since the 
December 1994 Mexican peso devaluation. The Company accrued a provision for 
currency exchange loss on its investment in its Mexican subsidiary in fiscal 
years 1995, 1996 and 1997.

	To address the operating challenges in its Mexican subsidiary, the Company has 
augmented its management, marketing and product capabilities in the U.S. and 
Mexico with personnel with Spanish language and Mexican product expertise.  The
Company has also expended significant effort in developing relationships with 
Mexican publishers.  The Company believes that this strategy will assist its 
expansion efforts in Mexico and also create product sourcing opportunities for 
the Spanish language market in the United States.

	The Company utilizes third party warehousing and distribution companies in both
the United Kingdom and Mexico.  No assurances can be given that the expansion
in international markets will be profitable; the Company expects no significant
profit contribution from these international operations in fiscal 1998.

Risks and Competition

	In fiscal 1997, approximately 93% of the Company's sales were to membership 
warehouse clubs with the remainder to office product superstores, computer 
superstores, mass merchandisers or other specialty retailers. In the year ended
March 31, 1997, two warehouse club customers accounted for approximately 80% of
the Company's net sales.  Although the Company believes it provides services and
efficiencies that membership warehouse clubs and other retailers would have 
difficulty duplicating, the Company believes that its customers may, from time 
to time, increase the percentage of books they purchase directly from publishers
or from other wholesale distributors.  Further, the Company could lose customers
if they discontinue books as a product line, suffer a business failure or merge 
or consolidate with another entity not currently serviced by AMS.  The Company 
has no long-term or exclusive purchase commitments with any of its customers.  
Any loss of a major customer would have a material adverse effect on the 
Company.  Given the relatively small number of membership warehouse club chains,
the Company's reliance on a few customers is likely to continue.  See 
"Customers."

	The Company is a leading supplier of books to the membership warehouse club 
market, which is highly competitive.  The Company competes in such markets with
national book distributors, some of which are larger and have greater financial
resources than the Company, and with regional book wholesalers and local book
jobbers who compete with the Company on the basis of price and service.  Certain
publishers sell directly to membership warehouse clubs, and one or more of the 
Company's customers could choose in the future to purchase more of its books 
directly from publishers.  As a result, the Company could face additional 
competition from publishers in the future.  Membership warehouse clubs face 
competition from discount and retail bookstore chains which indirectly affects 
AMS.  Due to their high sales volume, membership warehouse clubs may represent
an attractive market that other book distributors may seek to enter and 
compete directly with the Company.  The Company believes that its principal 
competitive advantages are its ability to select, package, and assort products 
so that they sell in high volumes; to distribute such products rapidly; to 
electronically interface with customers; to maintain sufficient back-up 
inventories; and to price products competitively.
	
	The Company purchases certain titles on a non-returnable basis which it in turn
sells on a returnable basis.  To the extent that actual sales of such titles do
not equal purchased quantities, the Company risks having inventory remaining 
which it may be unable to sell at or above its cost.  The Company has developed 
a retail outlet chain to assist in the sale of such inventory.  In addition, the
Company has implemented policies to evaluate more completely the non-returnable 
inventory risk it assumes.  However, the Company has incurred substantial 
expense in the past to sell such excess inventory and may incur such expense in 
the future.  The Company may experience an increase in non-returnable inventory
and associated markdown costs as a result of its increased publishing 
activities.

Customers

	The Company is currently servicing four membership warehouse clubs.  The 
Company's customers account for over 95% of the sales in the warehouse club 
industry and operate approximately 800 locations throughout the United States, 
Canada, Mexico, the United Kingdom and certain Pacific Rim countries.  The 
following table sets forth those customers who accounted for 10% or more of the 
Company's total net sales in fiscal 1997, 1996 and 1995.
						
<TABLE>
              	                            	Percentage of Net Sales
                         								             1997    1996    1995
<S>                                            <C>     <C>     <C>
Costco Companies, Inc.						                   44%     43%     46% 
SAM's Club (a unit of Wal-Mart Stores, Inc.)			36%     40%     39%
</TABLE>

Employees

	At March 31, 1997, the Company had 428 employees who were engaged in 
administrative, merchandising, marketing, warehousing and retail operations.  
The Company also hires temporary workers, primarily during the peak holiday 
season.  None of the Company's employees is represented by a labor union.  The 
Company considers its employee relations to be good.

ITEM 2  - PROPERTIES

	The Company is headquartered in approximately 38,000 square feet of commercial 
space in San Diego, California.  The space is leased for a six-year term 
expiring in 1998 with an annual base rent of $456,000.

	The Company maintains the following distribution centers from which it ships to
its customers:

<TABLE>
  Location          		       Approximate		     Date
		(Metropolitan Area)        Square Footage   	Opened
		<S>                         <C>              <C>
		Dallas, Texas                89,000          July 1984
		Baltimore, Maryland		       151,000       			June 1986
		Sacramento, California		    150,000          August 1986
		Indianapolis, Indiana 		    140,000       			April 1996
</TABLE>

	Each of these distribution centers is leased, with the leases expiring between
1997 and 2006.  Annual base rental payments range from $262,000 to $617,000.  
In September 1997, the Company intends to relocate its Dallas distribution
center to a larger facility.  The Company intends to relocate its Baltimore 
distribution center in April 1998.  See Note 5 of Notes to Consolidated 
Financial Statements in Item 8 of this Form 10-K.  The Company believes that its
four domestic distribution centers are adequate for the conduct of its business 
through at least fiscal 1998.

	The Company utilizes third party warehousing and distribution companies in both
the United Kingdom and Mexico.  It also leases office space in both countries on
short-term leases, the commitments under which are not material.

ITEM 3- LEGAL PROCEDURES

	The Company is not a party to any material pending legal proceedings.

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

	No matters were submitted to a vote of the Company's stockholders during the 
last quarter of the year ended March 31, 1997.

PART II

ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

	The Company's Common Stock is traded in the over-the-counter market under the 
NASDAQ symbol "ADMS."  The following table sets forth the high and low closing 
prices of the Common Stock, as reported on the NASDAQ National Market. On June 
10, 1997, the Company had approximately 1,800 beneficial stockholders and 
100 stockholders of record.

<TABLE>
                                    					Fiscal           				Fiscal
                                    					 1997	 		             1996      	
FISCAL QUARTER		                     High    	  Low  		   High  		  Low  
<S>                                  <C>        <C>       <C>       <C>
First Quarter -
	     Ended June 29/July 1		          16	      10 7/8  		7  1/4	   6  1/8
Second Quarter -
     Ended September 28/
     September 30			                13 3/8     9  7/8		  8  5/8    6  5/8
Third Quarter -
     Ended December 28/
     December 30	             		    11 1/4		   8  7/8	   10 7/8		  7  1/4
Fourth Quarter -
     Ended March 31	                  11		     8  3/4    13 5/8  		8  1/2
</TABLE>

	The present policy of the Company is to retain earnings to provide funds for 
the operation and expansion of its business.  The Company has not paid cash 
dividends on its Common Stock and has no plans to do so in the foreseeable 
future.  There are no direct limitations or restrictions on the payment of cash
dividends under the Company's line of credit arrangement or any other agreement.
The declaration of dividends in the future will, however, remain within the 
discretion of the Company's Board of Directors, which will review its dividend 
policy from time to time.
	
	On May 30, 1994, the Company announced a stock repurchase program pursuant to 
which the Company may repurchase in open market transactions, from time to time,
based upon existing market conditions, up to 500,000 shares of its Common Stock.
The Company purchased 211,000 shares of Common Stock during fiscal 1995 and 
10,000 shares of Common Stock in April of 1997 pursuant to such repurchase 
program.

ITEM 6 - SELECTED FINANCIAL DATA

	The selected financial data below should be read in conjunction with Item 7 - 
"Management's Discussion and Analysis of Financial Condition and Results of 
Operations" and with the consolidated financial statements and notes thereto.  
No cash dividends were paid on the Company's Common Stock in any of the periods
presented.

<TABLE>
RESULTS OF OPERATIONS
                      	 		        	      		      FOR THE 
                                           YEARS ENDED MARCH 31                                 	 
                                   (IN THOUSANDS, EXCEPT PER SHARE DATA)
                             1997       1996       1995       1994       1993
<S>                         <C>        <C>        <C>        <C>        <C>
Net Sales                    $ 385,651 $ 365,499 $ 303,708 $ 264,518 $ 258,390
  Cost of Goods Sold           347,277   328,361   274,776   242,497   236,751 
Gross Profit                    38,374    37,138    28,932    22,021    21,639 
  Distribution and 
  Administrative Expenses       28,903    28,243    24,083    22,561    17,229 
Income (Loss) From Operations    9,471     8,895     4,849      (540)    4,410 
   Interest Expense                (20)        -       (35)      (56)     (184)
   Interest and Dividend Income    916     1,209       894       817       505 
Income Before Provision 
for Income Taxes                10,367    10,104     5,708       221     4,731 
  Provision for Income Taxes     3,911     4,003     2,346        65     1,779 
Net Income                     $ 6,456   $ 6,101   $ 3,362     $ 156   $ 2,952 

Net Income Per Common and 
Common Share Equivalent - 
Fully Diluted                   $ 1.13    $ 1.07    $ 0.60    $ 0.03    $ 0.53 

Weighted Average Number 
of Common and Common Share 
Equivalents Outstanding - 
Fully Diluted                    5,716     5,699     5,611     5,415     5,604 
</TABLE>


<TABLE>
BALANCE SHEET DATA
        	     		     	      		                       AS OF 
                                                    MARCH 31,
                                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                  1997     1996      1995     1994     1993
<S>                           <C>       <C>       <C>      <C>      <C>
Working Capital:
  Cash and Cash Equivalents   $ 13,592  $  8,706  $  9,035  $  2,928  $  5,022 
  Investments, Available-For-
  Sale                           9,177    12,532     9,153    14,469    12,609 
  Inventories, Net              91,745    72,297    69,356    62,451    65,474 
  Accounts Receivable and Other 
  Current Assets                62,656    65,767    42,075    28,569    25,125 
  Current Liabilities         (125,714) (111,680)  (88,794)  (70,775)  (71,129)
    Total Working Capital    $  51,456 $  47,622 $  40,825 $  37,642 $  37,101
Total Assets                 $ 183,501 $ 162,651 $ 133,131 $ 112,402 $ 112,231 

Debt                                 -         -         -         -         - 
Stockholders' Equity          $ 57,787  $ 50,971  $ 44,337  $ 41,627  $ 41,102 
Book Value Per Common Share    $ 10.47    $ 9.32    $ 8.22    $ 7.66    $ 7.65 
</TABLE>

ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
 OF OPERATIONS

RESULTS OF OPERATIONS
 
FISCAL 1997 COMPARED TO FISCAL 1996

 Net income for the fiscal year ended March 31, 1997 was $6,456,000, or $1.13 
per share, on net sales of $385,651,000.  This compares to net income of 
$6,101,000, or $1.07 per share, on net sales of $365,499,000 for the previous 
fiscal year.

	The 5.5 percent increase in net sales was spread among the Company's warehouse 
club and specialty retailer customers.  Net sales increases in the warehouse 
clubs were negatively impacted by higher returns, particularly from one of the 
Company's major customers.  Net sales increases to specialty retailers were the
result of the Company's continuing efforts to expand its customer base.  Net 
sales growth was concentrated in the bestseller and mass paperback categories of
books.

 The Company experienced a 28 percent rate of returns from customers in fiscal 
1997 compared with 24 percent in fiscal 1996.  To partially address this 
unfavorable trend in customer returns, the Company implemented its Vendor 
Managed Inventory replenishment system with its two largest customers late in
fiscal 1997. In addition, the Company, in conjunction with certain of its 
customers, is reviewing initial laydown quantities and other factors that affect
return rates.  Reserves have been established based on management's best 
estimate of expected future product returns.

 Gross profit for fiscal 1997 reached $38,374,000, an increase of $1,236,000 
from the fiscal 1996 level.   As a percentage of sales, gross profit was 10.0 
percent in fiscal 1997 compared with 10.2 percent in the previous fiscal year.
The decline in the gross profit margin resulted primarily from a greater mix of
best-selling novels and mass paperback titles, which generally carry lower 
margins.

 Distribution and administrative expenses increased to $28,903,000 for fiscal 
1997 from $28,243,000 for fiscal 1996.  As a percentage of sales, however, these
expenses declined to 7.5 percent from 7.7 percent for the prior fiscal year.
Modestly higher distribution expenses and increases in payroll and other staff 
related costs were partially offset by higher contributions to income from the 
Company's promotional activities and cash discount income.  As previously 
reported, the Company anticipates a substantial reduction in cash discount 
income in fiscal 1998.

 Interest and dividend income decreased to $916,000 in fiscal 1997 from 
$1,209,000 in fiscal 1996 as a result of a reduction in the Company's investment
balances, as well as lower yields due to a greater proportion of tax-exempt 
investment in the current fiscal year.

 The Company's combined federal and state statutory tax rate is approximately 39
percent.  Various adjustments, primarily due to the tax benefit of loss 
carryforward on one of the Company's foreign operations as well as tax-exempt 
interest income offset, in part, by foreign currency exchange losses caused the
fiscal 1997 provision for income taxes to be $3,911,000, or 38 percent of pre-
tax income. The fiscal 1996 provision for income taxes was $4,003,000, or 40
percent of pre-tax income, primarily due to the Company's loss on foreign 
operations.

FISCAL 1996 COMPARED TO FISCAL 1995

 Net income for the fiscal year ended March 31, 1996 was $6,101,000, or $1.07 
per share, on net sales of $365,499,000.  This compares to net income of 
$3,362,000, or $0.60 per share, on net sales of $303,708,000 for the previous 
fiscal year.

 The 20.3 percent increase in net sales was due primarily to (1) the Company 
being designated, effective June 1995, as primary book supplier to 65 additional
SAM's Club locations and (2) an increase in the extent of the Company's 
participation in the book programs of SAM's Club and certain other customers 
beginning in August 1995, in part as a result of a competitor filing for 
bankruptcy protection.  The sales growth was spread across most categories of 
books that the Company offers, with particularly strong increases in the 
computer and mass paperback categories.

 The Company experienced a 24 percent rate of returns from customers in fiscal 
1996 compared with 22 percent in fiscal 1995.  To date, initiatives designed to
reduce customer returns have fallen short of plan, but the Company continues 
to work with its customers and vendors to reduce the rate of returns.  Reserves
have been established based on management's best estimate of expected product 
returns.

 Gross profit for fiscal 1996 reached $37,138,000, an increase of $8,206,000 
from the fiscal 1995 level.   As a percentage of sales, gross profit was 10.2 
percent in fiscal 1996 compared with 9.5 percent in the previous fiscal year.
The increase in the gross profit percent resulted primarily from an improved mix
of higher margin titles and higher income from publisher incentive programs.  
These increases were offset, in part, by larger provisions for markdown expense
than during the prior year on the Company's non-returnable inventory.

 Distribution and administrative expenses increased to $28,243,000 for fiscal 
1996 from $24,083,000 for fiscal 1995.  As a percentage of sales, however, 
these expenses declined to 7.7 percent from 7.9 percent for the prior fiscal 
year.  This improvement was the result of freight, facilities and labor 
efficiencies, stemming in part from the Company's move over the last several 
years to fewer, but larger warehouses as well as from reductions in certain 
negotiated freight rates.  General and administrative expenses increased 
modestly as a percentage of sales, primarily as a result of higher corporate 
office staffing costs to handle increased sales volume from existing customers 
and costs associated with serving and obtaining new customers. The Company  
increased its accounts receivable reserve for adjustments and potential write-
offs due, in part, to increased incidence of disputed items with customers. The 
Company's foreign exchange losses on the investment in its Mexican subsidiary 
increased from the prior year due to additional devaluation of the Mexican peso.

 Interest and dividend income increased to $1,209,000 in fiscal 1996 from 
$894,000 in fiscal 1995 as a result of an increase in the Company's investment
balances, as well as higher yields due to a greater proportion of taxable 
investment in the current fiscal year.  Interest income was reduced in the 
previous year due to a provision for anticipated losses on preferred stock 
investments.

 The Company's combined federal and state statutory tax rate is approximately 39
percent.  Various adjustments, primarily due to the Company's loss on foreign 
operations, caused the fiscal 1996 provision for income taxes to be $4,003,000,
or 40 percent of pre-tax income compared to $2,346,000, or 41 percent of pre-tax
income in fiscal 1995.

SEASONALITY
 The Company's net sales and earnings in the third fiscal quarter have 
historically been, and are expected to continue to be, significantly higher than
in any other quarter due to the holiday season.  Income from operations during 
the third fiscal quarter, as a percentage of net sales, is typically higher than
in any other quarter because of product sales mix and other economies of scale 
caused by the higher sales volume.  The Company expects seasonality in its 
operations to continue.

 The Company experiences significant seasonal short-term swings in its cash 
position due to sales seasonality and to differences in timing of payments to 
its vendors and the receipt of payments from its customers.  Cash flow has been
historically greatest during the third fiscal quarter due to higher seasonal 
sales.

LIQUIDITY AND CAPITAL RESOURCES 
 For the year ended March 31, 1997, $5,161,000 of cash was provided by operating
activities.  In the same period of the prior year, $3,284,000 of cash was 
provided by operating activities.  At March 31, 1997, the Company's cash and 
investments had increased by $4,886,000 compared to March 31, 1996, primarily 
due to net income generated in fiscal 1997 offset, in part, by increased working
capital requirements.  Trade accounts receivable decreased $4,136,000 compared 
to one year ago as a result of a decrease in net sales in the latter part of the
fourth quarter as well as a decrease in customer disputed items.  The inventory
increase of $19,448,000 was comprised of an approximately $4,646,000 increase in
non-returnable inventory related to expansion of the Company's publishing 
activities and to purchases exceeding net sales of certain titles purchased on a
non-returnable or partially returnable basis.  Returnable inventory increased 
approximately $14,802,000 as a result of a variety of circumstances which are 
believed to be short term in nature, including the timing of receipt of 
individual high volume titles, the impact of reducing initial customer 
laydown quantities and the timing of returns to publishers of certain titles.  
A majority of the increase in inventories was offset by an increase in accounts
payable of $14,881,000 from levels at March 31, 1996.

 The working capital required to finance inventories is directly related to 
inventory turnover rate and trade credit terms provided by publishers.  Trade 
credit terms from the Company's vendors did not change significantly during 
fiscal 1997.  Inventory turnover rates declined to 4.2 times in fiscal 1997 from
4.5 times in fiscal 1996.

 The Company had available at March 31, 1997 an unsecured bank line of credit 
with a maximum borrowing limit of $10 million.  The interest rate is at the 
prime rate (8.5 percent at March 31, 1997).  The Company did not borrow on its 
line of credit during fiscal 1997 or fiscal 1996.  The line of credit expires 
July 31, 1998.

 The Company believes that its working capital, cash flows from operations, 
trade credit traditionally available from its vendors and its $10 million line 
of credit will be sufficient to finance its current and anticipated level of 
operations.  Although the Company has no commitments to do so at the present 
time, the Company may consider strategic acquisitions where deemed appropriate.
Such acquisitions, if any, could affect the Company's liquidity and capital 
resources.

IMPACT OF INFLATION
 The Company has been subject to relatively low prevailing inflation rates in 
all countries in which it operates, with the exception of Mexico, during fiscal
1997, 1996 and 1995.  The Company has generally been able to adjust its selling
prices in all countries in which it operates to offset increased costs of 
merchandise and expects to be able to continue to do so in the foreseeable 
future.  While the international activities are not a significant part of the
Company's overall operations, the continued high rates of inflation in Mexico 
may result in future foreign currency exchange losses.

STATEMENT OF PURPOSE OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES 
LITIGATION REFORM ACT OF 1995
 In December 1995, the Private Securities Litigation Reform Act of 1995 (the 
"Act") was enacted.  The Act contains amendments to the Securities Act of 1933 
and the Securities Exchange Act of 1934 which provide protection from liability 
in private lawsuits for "forward-looking" statements made by persons specified 
in the Act.  The Company desires to take advantage of the "safe harbor" 
provisions of the Act.

 The Company wishes to caution readers that, with the exception of historical 
matters, the matters discussed in this Annual Report on Form 10-K are forward-
looking statements that involve risks and uncertainties, including but not 
limited to factors related to the highly competitive nature of the publishing 
industry as well as the warehouse club and retail industries and their 
sensitivity to changes in general economic conditions, the Company's 
concentration of sales and credit risk with two customers, the Company's ability
to impact customer return rates, currency and other risks related to foreign 
operations, the Company's expansion plans, the results of financing efforts and 
other factors discussed in the Company's other filings with the Securities and
Exchange Commission.  Such factors could affect the Company's actual results 
during fiscal 1998 and beyond and cause such results to differ materially from
those expressed in any forward-looking statement made by or on behalf of the 
Company.

ITEM 8 - CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<TABLE>
               INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
                                                  											Page
<S>                                                          <C>
Report of Independent Public Accountants							                15

Consolidated Balance Sheets					                          			  16

Consolidated Statements of  Income							                      18

Consolidated Statements of Stockholders' Equity						          19

Consolidated Statements of Cash Flows							                   20

Notes to Consolidated Financial Statements							              21
</TABLE>


REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Advanced Marketing Services, Inc.:

 We have audited the accompanying consolidated balance sheets of ADVANCED 
MARKETING SERVICES, INC.  (a Delaware corporation) and subsidiaries as of March 
31, 1997 and 1996, and the related consolidated statements of income, 
stockholders' equity and cash flows for each of the three years in the period 
ended March 31, 1997.  These financial statements are the responsibility of the
Company's management.  Our responsibility is to express an opinion on these 
financial statements based on our audits.

 We conducted our audits in accordance with generally accepted auditing 
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the accounting principles used and significant estimates made by 
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

 In our opinion, the financial statements referred to above present fairly, in 
all material respects, the financial position of Advanced Marketing Services, 
Inc. and subsidiaries as of March 31, 1997 and 1996, and the results of their 
operations and their cash flows for each of the three years in the period ended
March 31, 1997 in conformity with generally accepted accounting principles.

 Our audits were made for the purpose of forming an opinion on the basic 
financial statements taken as a whole.  The schedule listed in the index to 
schedule to consolidated financial statements is presented for purposes of
complying with the Securities and Exchange Commission's rules and is not part of
the basic financial statements.  The schedule has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our 
opinion, fairly states, in all material respects, the financial data required to
be set forth therein in relation to the basic financial statements taken as a 
whole.

                                             								ARTHUR ANDERSEN LLP

San Diego, California
May 14, 1997


<TABLE>
                      ADVANCED MARKETING SERVICES, INC.

                        CONSOLIDATED BALANCE SHEETS

                       AS OF MARCH 31, 1997 AND 1996

ASSETS
  				 	                             				          1997		       1996
      	 								                                   (In Thousands)
<S>                                            <C>            <C>
Current Assets

Cash and Cash Equivalents                      $ 13,592       $ 8,706 

Investments, Available-For-Sale (Note 2)          9,177        12,532 

Accounts Receivable-Trade, Net of 
Allowances For Uncollectible Accounts 
and Sales Returns of $3,782,000 in 1997 
and $4,173,000 in 1996                           53,564        57,700 

Vendor and Other Receivables                      2,801         2,213 

Inventories                                      91,745        72,297 

Deferred Income Taxes (Note 4)                    5,482         5,279 

Prepaid Expenses                                    809           575 

     Total Current Assets                       177,170       159,302 

Property and Equipment, At Cost                   9,206         7,837 

Less: Accumulated Depreciation and 
Amortization                                      5,445         4,769 

     Net Property and Equipment                   3,761         3,068 

Investments, Available-For-Sale (Note 2)          2,063             - 

Other Assets                                        507           281 

Total Assets                                  $ 183,501     $ 162,651 
</TABLE>

The accompanying notes are an integral part of these consolidated balance 
sheets. 

<TABLE>
                     ADVANCED MARKETING SERVICES, INC.

                       CONSOLIDATED BALANCE SHEETS

                      AS OF MARCH 31, 1997 AND 1996

LIABILITIES AND STOCKHOLDERS' EQUITY
    										                                     1997	     	  1996
     									                           (In Thousands, Except Share Data)
<S>                                          <C>          <C>
Current Liabilities

Accounts Payable                              $ 119,507    $ 104,626 

Accrued Liabilities                               5,318        5,309 

Income Taxes Payable                                889        1,745 

     Total Current Liabilities                  125,714      111,680 

Commitments (Note 5)                                  -            - 

Stockholders' Equity (Note 7):

Common Stock $.001 Par Value, Authorized 
20,000,000 Shares, Issued 6,228,000 Shares 
in 1997 and 6,174,000 Shares in 1996.  
Outstanding: 5,521,000 Shares in 1997 and 
5,466,000 Shares in 1996.                             6             6

Additional Paid-In Capital                       26,319        25,968 

Retained Earnings                                33,569        27,113 

Unrealized Gain on Investments                        9             8 

Foreign Currency Translation Adjustment             (86)          (94)

Less: Treasury Stock, 708,000 shares in 
1997 and 1996, at Cost                           (2,030)       (2,030)

     Total Stockholders' Equity                  57,787        50,971 

Total Liabilities and Stockholders' Equity    $ 183,501     $ 162,651 
</TABLE>

The accompanying notes are an integral part of these consolidated balance 
sheets. 


<TABLE>
                     ADVANCED MARKETING SERVICES, INC.

                    CONSOLIDATED STATEMENTS OF INCOME

           FOR THE YEARS ENDED MARCH 31, 1997, 1996, AND 1995

                  (IN THOUSANDS, EXCEPT PER SHARE DATA)

                                                   1997       1996       1995
<S>                                           <C>        <C>        <C>
Net Sales                                     $ 385,651  $ 365,499  $ 303,708 

     Cost of Goods Sold                         347,277    328,361    274,776 

Gross Profit                                     38,374     37,138     28,932 

     Distribution and Administrative Expenses    28,903     28,243     24,083 

Income From Operations                            9,471      8,895      4,849 

     Interest Expense                               (20)         -        (35)

     Interest and Dividend Income                   916      1,209        894 

Income Before Provision For Income Taxes         10,367     10,104      5,708 

     Provision for Income Taxes (Note 4)          3,911      4,003      2,346 

Net Income                                     $  6,456   $  6,101   $  3,362 

Net Income Per Common and Common Share 
Equivalent:

     Primary                                     $ 1.13     $ 1.09     $ 0.60 

     Fully Diluted                               $ 1.13     $ 1.07     $ 0.60 

Weighted Average Number of Common and 
Common Share Equivalents Outstanding:

     Primary                                      5,716      5,619      5,588 

     Fully Diluted                                5,716      5,699      5,611 

</TABLE>
The accompanying notes are an integral part of these consolidated statements.


<TABLE>
                      Advanced Marketing Services, Inc.

              Consolidated Statements Of Stockholders' Equity

             For The Years Ended March 31, 1997, 1996, And 1995 
                               (In Thousands)
                   
                                         Unrealized   Foriegn
      Common Stock   Additional          (Gain) Loss  Currency
       Outstanding    Paid-In  Retained      On       Translation Treasury
      Shares  Amount  Capital  Earnings  Investments  Adjustment  Stock   Total
<S>   <C>     <C>     <C>      <C>       <C>          <C>          <C>     <C>
Balance, March 31, 1994
       5,433    $ 6  $24,851    $17,650        $ -        $ -    $(880) $41,627

Exercise of Options to Purchase Common Stock    
         173      -      668         -           -          -        -      668 

Purchase of Treasury Stock   
        (211)     -        -         -           -          -    (1,150) (1,150)

Unrealized (Loss) on Investments 
           -      -        -         -        (46)          -         -     (46)

Foreign Currency Translation Adjustment
           -      -        -         -          -        (124)        -    (124)

Net Income
           -      -        -     3,362          -           -         -   3,362

Balance, March 31, 1995
       5,395      6   25,519    21,012        (46)       (124)   (2,030) 44,337 

Exercise of Options to Purchase Common Stock    
          71      -      449         -          -           -         -     449 

Unrealized Gain on Investments
           -      -        -         -         54           -         -      54 

Foreign Currency Translation Adjustment
           -      -        -         -          -          30          -     30 

Net Income
           -      -        -     6,101          -           -          -  6,101

Balance, March 31, 1996
        5,466     6   25,968    27,113          8         (94)   (2,030) 50,971 

Exercise of Options to Purchase Common Stock
           55      -     351         -          -           -          -    351 

Unrealized Gain on Investments
            -      -       -         -          1           -          -      1
Foreign Currency Translation Adjustment
            -      -       -         -          -           8          -      8
Net Income
            -      -       -      6,456         -           -          -  6,456 

Balance, March 31, 1997
         5,521   $ 6 $ 26,319  $ 33,569       $ 9       $ (86) $(2,030) $57,787 
</TABLE>
	
The accompanying notes are an integral part of these consolidated statements.

<TABLE>
                     Advanced Marketing Services, Inc.
                  Consolidated Statements Of Cash Flows
           For The Years Ended March 31, 1997, 1996, And 1995
                             (In Thousands)

                                                         1997     1996     1995
<S>                                                   <C>      <C>      <C>
Cash Flows From Operating Activities:

Net Income                                            $ 6,456  $ 6,101  $ 3,362
Adjustments To Reconcile Net Income To Net Cash 
Provided By Operating Activities:
  Depreciation & Amortization                           1,289      897      909
  Provision For Uncollectible Accounts and Sales 
  Returns                                                 749    1,922      899
  Deferred Income Taxes                                  (203)  (2,168)    (490)
  Provision For Markdown of Inventories                 2,979    3,976    2,766 
  Changes in Assets and Liabilities:
    (Increase) Decrease in Accounts Receivable-Trade    3,343  (22,529) (14,883)
    (Increase) Decrease in Vendor and Other 
    Receivables                                          (588)    (547)     437
    Increase in Inventories                           (22,587)  (6,823)  (9,952)
    (Increase) Decrease in Other Assets                  (460)    (361)     293 
    Increase in Accounts Payable                       15,022   19,335   18,068 
    Increase (Decrease) in Accrued Liabilities             16    2,341     (191)
    Increase (Decrease) in Income Taxes Payable          (855)   1,140      310
  Net Cash Provided By Operating Activities             5,161    3,284    1,528

Cash Flows From Investing Activities:
  Purchase/Disposal of Property and Equipment, Net     (1,982)  (1,644)  (1,057)
  Purchase of Investments, Available-For-Sale          (8,672) (31,535) (67,553)
  Sale and Redemption of Investments, Available-For-
  Sale                                                  9,965   29,222   73,361
  Net Cash Provided By (Used In) Investing Activities    (689)  (3,957)   4,751

Cash Flows From Financing Activities:
  Proceeds from Exercise of Options and Related Tax 
  Benefit                                                 351      449      668
  Purchase of Treasury Stock                                -        -   (1,150)
  Net Cash Provided By (Used In) Financing Activities     351      449     (482)

Effect of Exchange Rate Changes on Cash                    63     (105)     310 

Increase (Decrease) in Cash and Cash Equivalents        4,886     (329)   6,107

Cash and Cash Equivalents, Beginning of Year            8,706    9,035    2,928 

Cash and Cash Equivalents, End of Year               $ 13,592 $  8,706 $  9,035 

Supplemental Disclosures of Cash Flow Information:
     Cash paid During the Year For:
          Interest                                    $     -  $     -  $    35
          Income Taxes                                $ 4,887  $ 4,927  $ 2,355 
</TABLE>

The accompanying notes are an integral part of these consolidated statements.



                       ADVANCED MARKETING SERVICES, INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
1.	ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

THE COMPANY

	Advanced Marketing Services, Inc., a Delaware corporation, (the "Company") 
distributes general interest books, pre-recorded audio cassettes (books on 
tape), CD-ROM and video cassettes primarily to membership warehouse clubs and 
other specialty retailers.  The Company established subsidiaries in Mexico and 
the United Kingdom to distribute similar media products including music (U.K. 
only).

PRINCIPLES OF CONSOLIDATION

	The accompanying consolidated financial statements include the accounts of the 
Company and its wholly-owned subsidiaries.  All significant intercompany 
accounts and transactions have been eliminated.

USE OF ESTIMATES

	The preparation of financial statements in conformity with generally accepted 
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of 
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.  
Actual results could differ from those estimates.

CASH AND CASH EQUIVALENTS

	The Company considers all highly liquid investments with an original maturity 
of three months or less to be cash and cash equivalents.  Cash equivalents 
consisting of money market funds totaled $7,953,000 and $5,046,000 as of March 
31, 1997 and 1996, respectively.

INVESTMENTS, AVAILABLE-FOR-SALE

	Investments, available-for-sale consist principally of highly rated corporate 
and municipal bonds.  The Company accounts for its investments in accordance 
with Statement of Financial Accounting Standards No. 115 which requires the use
of fair value accounting for debt and equity securities, except in those cases 
where there is a positive intent and ability to hold debt securities to 
maturity.  See Note 2.

CONCENTRATION OF CREDIT RISK

	The Company invests its excess cash in debt and equity instruments of financial
institutions and corporations with strong credit ratings.  The Company has 
established guidelines relative to diversification and maturities that maintain
safety and liquidity.  These guidelines are periodically reviewed and modified 
to take advantage of trends in yields and interest rates.  

	Approximately 80 and 84 percent of the Company's accounts receivable balances 
at March 31, 1997 and 1996, respectively, were concentrated with two major 
customers in the warehouse club industry.

ACCOUNTS RECEIVABLE ALLOWANCES

	In accordance with industry practice, a significant portion of the Company's
products are sold to customers with the right of return.  On approximately 91 
percent of the Company's purchases, the Company has the right to return unsold 
product to publishers.  The Company has provided allowances of $2,035,000 and 
$2,173,000 as of March 31, 1997 and 1996, respectively, for the gross profit 
effect of estimated future sales returns after considering historical results 
and evaluating current conditions.  The Company has also provided allowances for
uncollectible trade accounts receivable of $1,747,000 and $2,000,000 as of March
31, 1997 and 1996, respectively.

VENDOR AND OTHER RECEIVABLES

	Vendor and other receivables primarily consist of amounts due from vendors for
purchase rebates and for merchandise returned to vendors.

INVENTORIES

	Inventories consist primarily of books and, to a lesser extent, music CDs, 
CD-ROM and pre-recorded audio and video cassettes purchased for resale and are 
stated at the lower of cost (first-in, first-out) or market.  The Company's 
rights to return to publishers were limited or non-existent on approximately 26
and 27 percent of the Company's inventories at March 31, 1997 and 1996, 
respectively.

DEPRECIATION AND AMORTIZATION

	Depreciation and amortization of property and equipment are provided using the
straight-line method over the estimated useful lives (ranging from three to five
years) of the assets.

LONG-LIVED ASSETS

 In fiscal 1997, the Company adopted Statement of Financial Accounting Standards
No. 121, "Accounting for the Impairment of Long-lived Assets and for Long-lived
Assets to be Disposed Of."  The statement requires entities to review long-lived
assets and certain intangible assets in certain circumstances, and if the value
of the asset is impaired, an impairment loss must be recognized.  This 
pronouncement had no material effect on the Company's financial position or 
results of operations.

SIGNIFICANT CUSTOMERS

	A substantial portion of the revenue earned by the Company is derived from a 
limited number of customers.   Two customers accounted for 44 and 36 percent 
of net sales in fiscal 1997, 43 and 40 percent of net sales in fiscal 1996 and 
46 and 39 percent of net sales in fiscal 1995.  No other customers accounted for
10 percent or more of the Company's net sales during these years.

REVENUE RECOGNITION

	Sales and related cost of sales are recognized upon delivery of merchandise to 
customer locations.  The Company provides reserves for the effect of estimated 
future sales returns.

INCOME TAXES

	The Company provides currently for taxes on income regardless of when such 
taxes are payable in accordance with SFAS No. 109 "Accounting for Income Taxes."
Deferred income taxes result from temporary differences in the recognition of 
income and expense for tax and financial reporting purposes.  See Note 4.

PER SHARE INFORMATION

 Per share information is based on the weighted average number of common shares
and, when applicable, dilutive common share equivalents outstanding during the 
periods.  The effects of all anti-dilutive common share equivalents are excluded
from the calculation of earnings per share.  The Company's only potential 
dilutive common share equivalents are stock options.

 Statement of Financial Accounting Standards No. 128, "Earnings Per Share," was
issued in February 1997 and becomes effective for the Company's fiscal year 
ending March 31, 1998.  SFAS No. 128 modifies the way in which earnings per
per share ("EPS") is calculated and disclosed.  Currently, the Company discloses
primary and fully diluted EPS.  Upon adoption of the standard, the Company will
disclose basic and diluted EPS for fiscal 1998 and will restate all prior period
EPS data presented.  Basic EPS excludes dilution and is computed by dividing 
income available to common stockholders by the weighted-average number of 
common shares outstanding for the period.  Diluted EPS, similar to fully 
diluted EPS, reflects the potential dilution that could occur if securities 
or other contracts to issue common stock were exercised or converted into common
stock or resulted in the issuance of common stock that then shared in earnings 
of the entity.  If the Company had adopted SFAS No. 128 for fiscal 1997, basic 
EPS would have been $1.18 per share versus $1.13 reported for primary EPS.  
Diluted EPS would have been $1.13 per share, unchanged from fully diluted EPS 
reported in fiscal 1997.

2.	INVESTMENTS, AVAILABLE-FOR-SALE

	Investments, available-for-sale at March 31, 1997 and March 31, 1996 are as 
follows (in thousands):

<TABLE>
                                                  Gross      Gross  Estimated
                                   Amortized  Unrealied  Unrealied       Fair
                                        Cost      Gains     Losses      Value
<S>                                <C>        <C>        <C>        <C>
March 31, 1997 

Debt Securities Issued By States
of the U.S. and Political 
Subdivisions of the States          $ 11,231       $ 10        $ 1  $ 11,240 

March 31, 1996

Debt Securities Issued By States 
of the U.S. and Political 
Subdivisions of the States          $ 12,524       $  8       $  -  $ 12,532 
</TABLE>
			

	Investments in debt securities issued by states of the U.S. and political 
subdivisions of the States as of March 31, 1997 in the amount of approximately 
$9,177,000 are scheduled to mature within one year and $2,063,000 are scheduled 
to mature within two years.
	
	Proceeds from the sale of investments aggregated approximately $4,438,000 for 
year ended March 31, 1997.  The realized net gain on these sales totaled 
approximately $3,000.  Proceeds from the sale of investments during the same 
period of the previous year totaled approximately $15,128,000 on which a net
loss of approximately $42,000 was realized.  The Company uses the specific 
identification method in determining cost on these investments.  The change in 
net unrealized gain on investments was an increase of approximately $1,000 and
$54,000 for the years ended March 31, 1997 and 1996.

3.	LINE OF CREDIT

	The Company had available at March 31, 1997 and 1996 an unsecured bank line of 
credit with a maximum borrowing limit of $10 million.  The interest rate is at 
prime (8.5 and 8.25 percent at March 31, 1997 and 1996, respectively). The line
of credit expires July 31, 1998.  As of and during the years ended March 31, 
1997 and 1996, there were no borrowings on the Company's line of credit.

4.	INCOME TAXES

 The components of the provision for income taxes are as follows (in thousands):

<TABLE>
        				                              YEAR ENDED MARCH 31,        
                                         1997     1996     1995
<S>                                   <C>      <C>      <C>
Current:
     Federal                          $ 3,348  $ 5,034  $ 2,282 
     State                                767    1,137      554 

Deferred:
     Federal                             (167)  (1,775)    (374)
     State                                (37)    (393)    (116)

                                      $ 3,911  $ 4,003  $ 2,346 
</TABLE>

 A reconciliation of the provision for income taxes at the statutory federal 
income tax rate of 34 percent to the effective tax provision as reported is 
as follows (in thousands):

<TABLE>
                                         1997     1996     1995
<S>                                   <C>      <C>      <C>
Taxes At Statutory Federal Rate       $ 3,525  $ 3,435  $ 1,941 
State Income Taxes, Net of 
Federal Benefit                           480      470      264
Tax-Exempt Interest and 
Dividend Income                          (129)    (102)     (74)
Loss on Foreign Operations                 14      186      131
Other                                      21       14       84 

                                      $ 3,911  $ 4,003  $ 2,346 
</TABLE>

 The temporary differences which give rise to the deferred tax assets as of 
March 31, 1997 and 1996 are as follows (in thousands):

<TABLE>
     					                                  AS OF MARCH 31,     
                                           1997         1996
<S>                                     <C>          <C>                 
Inventory Reserves                      $ 2,653      $ 2,519
Allowances For Sales Returns and 
Uncollectible Accounts                    1,184        1,360
Depreciation and Amortization               218          218
Vacation Pay and Accrued 
Compensation                                 59           47
Accounts Payable Accruals                 1,247        1,014
Other                                       121          121

                                        $ 5,482      $ 5,279 
</TABLE>

5.	COMMITMENTS

	The Company leases its facilities and certain equipment under non-cancelable 
operating leases.  Rental expense for the years ended March 31, 1997, 1996 and 
1995 was $2,998,000, $2,834,000 and $2,641,000 respectively.  The leases have 
initial expiration dates ranging from 1997 to 2008.  Certain of the leases 
contain renewal options, termination options and periodic adjustment of the 
minimum monthly rental payment based upon increases in the Consumer Price Index.

	At March 31, 1997, the aggregate future minimum rentals are as follows (in 
thousands):
<TABLE>
                        		YEAR ENDING MARCH 31, 		                AMOUNT
	                         <C>                                    <C> 
                                 1998                            $ 3,005
                                 1999                              2,930
                                 2000                              2,899
                                 2001                              2,012
                                 2002                             	1,836
                          	Thereafter                              7,234
                                                              		$ 19,916 
</TABLE>

6.	EMPLOYEE BENEFIT PLANS

	The Company has a qualified 401(k) profit-sharing plan covering substantially 
all of its employees.  The Company matches, at a 25 percent rate, employee 
contributions up to 4 percent of compensation.  In fiscal years 1997, 1996 and 
1995, the Company's matching contributions equaled $71,000, $45,000 and $43,000,
respectively.  The plan also provides for discretionary Company contributions as
approved by the Board of Directors.  Company discretionary contributions of 
$262,000, $251,000 and $149,000 for the years ended March 31, 1997, 1996 and 
1995, respectively, are included in the accompanying statements of income.

	On March 1, 1996, the Company introduced a deferred compensation plan which 
permits eligible employees and officers to defer a portion of their compensation
and requires the Company to provide certain matching amounts and accrued
interest as defined in the plan.  The deferred compensation, together with 
company matching and accumulated interest, is accrued and amounted to 
approximately $274,000 at March 31, 1997.  The deferred compensation plan is 
funded under a trust agreement whereby the Company pays to the trust amounts 
necessary to pay premiums on life insurance policies carried to meet the 
obligations under the plan.  The expense associated with the plan, including 
life insurance costs, was $92,000 for fiscal 1997.

7.	STOCK OPTION PLANS

	The Company has two stock option plans (the "Plans") which provide for the 
grant of incentive stock options or nonqualified stock options to employees and
directors of the Company.  Nonemployee directors are only eligible to be granted
nonqualified stock options.  Incentive stock options may be granted at prices 
not less than 100% of the fair market value of such shares at the date of grant 
(110% with respect to optionees who are 10% or more stockholders of the 
Company).  Nonqualified options may be granted at prices not less than 85% of 
the fair market value of such shares at the date of grant.  Options granted 
under the Plans become exercisable in installments as determined by the Board 
of Directors.  There were 676,000 shares issuable under the 1987 Plan and are 
400,000 shares issuable under the 1995 Plan.  The expiration date of the options
is determined by the Board of Directors and does not exceed 10 years for 
incentive options (5 years with respect to optionees who are 10% or more 
stockholders of the Company) and 10 years and 1 day for nonqualified options.  
As of March 31, 1997, no further options may be granted under the 1987 Plan.

	The Company has adopted the disclosure only provision of SFAS No. 123, 
"Accounting for Stock-Based Compensation."  Accordingly, no compensation 
expense has been recognized for stock options.  Had compensation expense been
recorded for options granted in fiscal years 1997 and 1996, the Company's net 
income and earnings per share would have been reduced approximately $85,000 or
$.01 per share in fiscal 1997.  The impact on net income for fiscal 1996 would 
not have been material.  These amounts are for disclosure purposes only and may 
not be representative of future calculations since additional options may be 
granted in future years.  The fair value for these options was estimated at the
date of grant using the Black-Scholes option-pricing model with the following 
weighted-average assumptions for fiscal years 1997 and 1996: expected volatility
of 45 percent; risk-free interest rate of 6.5 percent; expected option life of 
5 years; and no dividend yield.

	The changes in the number of common shares under option for the years ended 
March 31, 1995, 1996, and 1997 are summarized as follows:
 
<TABLE>
                                         1995 PLAN               1987 PLAN
                                  Number of    Weighted   Number of    Weighted
                                     Shares  Avg. Price      Shares  Avg. Price
<S>                               <C>        <C>          <C>        <C>
Outstanding As Of March 31, 1994        ---       $ ---     458,030      $ 3.66

     Granted                        150,000        5.42      95,000        4.87
     Exercised                          ---         ---     173,120        2.21
     Forfeited                          ---         ---      25,000        4.96

Outstanding As Of March 31, 1995    150,000        5.42     354,910        4.60

     Granted                         81,500       11.16      39,500        9.18
     Exercised                          ---         ---      70,920        4.52
     Forfeited                          ---         ---      13,700        5.09 

Outstanding As Of March 31, 1996    231,500        7.42     309,790        5.18

     Granted                         11,500        8.94         ---         ---
     Exercised                          ---         ---      54,300        5.00 
     Forfeited                       13,000       11.16       1,400        5.02

Outstanding As Of March 31, 1997    230,000      $ 7.31     254,090      $ 5.22 

Exercisable As Of March 31, 1997     60,000      $ 5.42     167,090      $ 4.58 
</TABLE>

8.	SUMMARY OF QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
<TABLE>
 					                                        QUARTERS (YEARS ENDED MARCH 31)                
             						                    1st   		    2nd         3rd          4th
						                                (In Thousands Except Per Share Data)
<S>                               <C>        <C>          <C>          <C>
Fiscal 1997

  Net Sales                       $ 97,797    $ 87,939    $ 112,965    $ 86,950 
  Cost of Sales                     88,612      78,758      101,508      78,399 
  Net Income                         1,227       1,699        2,866         664 
  Net Income Per Common and 
  Common Share Equivalent:
     Primary                        $ 0.21      $ 0.30       $ 0.50      $ 0.12 
     Fully Diluted                  $ 0.21      $ 0.30       $ 0.50      $ 0.12 
  Weighted Average Number of 
  Common and Common Share 
  Equivalents Outstanding:
     Primary                         5,746       5,715        5,692       5,604
     Fully Diluted                   5,749       5,697        5,697       5,604

Fiscal 1996

  Net Sales                       $ 76,040    $ 90,318    $ 121,396    $ 77,745 
  Cost of Sales                     68,639      81,604      109,014      69,104 
  Net Income                           754       1,765        2,904         678
  Net Income Per Common and 
  Common Share Equivalent:
     Primary                        $ 0.14      $ 0.32       $ 0.52      $ 0.12 
     Fully Diluted                  $ 0.14      $ 0.32       $ 0.51      $ 0.12 
  Weighted Average Number of 
  Common and Common Share 
  Equivalents Outstanding:
     Primary                         5,519       5,568        5,637       5,700
     Fully Diluted                   5,544       5,591        5,671       5,714 

Fiscal 1995

  Net Sales                       $ 76,816    $ 76,653     $ 91,226    $ 59,013 
  Cost of Sales                     70,053      69,962        82,39      52,371 
  Net Income                            65         575        1,683         449 
  Net Income Per Common and 
  Common Share Equivalent:
     Primary                        $ 0.12      $ 0.10       $ 0.30      $ 0.08 
     Fully Diluted                  $ 0.12      $ 0.10       $ 0.30      $ 0.08 
  Weighted Average Number of 
  Common and Common Share 
  Equivalents Outstanding:
     Primary                         5,564       5,622        5,644       5,533
     Fully Diluted                   5,558       5,655        5,636       5,556 
</TABLE>

ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND 
         FINANCIAL DISCLOSURE

     Not applicable

                                 PART III

ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

ITEM 11 - EXECUTIVE COMPENSATION

ITEM 12  - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND 
           MANAGEMENT

ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

	     The information called for by Part III, Items 10, 11, 12 and 13, is hereby
incorporated by reference to the "Security Ownership of Certain Beneficial 
Owners and Management," "Management," "Executive Compensation - Summary of Cash 
and Other Compensation," "- Option Grants" and "- Option Exercises and 
Holdings,"  "Certain Transactions" and "Compliance with Section 16(a) of 
Exchange Act" sections of the Company's definitive Proxy Statement filed with 
the Securities and Exchange Commission and mailed to stockholders on  June 20, 
1997.

PART IV

ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

	(a)	1.	See Index to Consolidated Financial Statements contained in Item 8 
        herein.

   		2. See Index to Schedule to Consolidated Financial Statements included 
        herein.

   		3. See Item 14(c) for Index of Exhibits.

	(b)	No reports on Form 8-K filed during the fourth quarter ended March 31, 
     1997.

	(c)	Exhibits
		
 		  3.1  Registrant's Certificate of Incorporation, as amended. (1)

 		  3.2  Registrant's Bylaws, as amended. (1)

  		10.1	 1987 Stock Option Plan (2)

  		10.2	 Employee Profit-Sharing Plan (3)

  		10.3	 1995 Stock Option Plan (4)

  		10.4  Employment Agreement between the Company and Charles C. 
          Tillinghast, III

  		11.0  Statement re Computation of Per Share Earnings

  		21.0  Subsidiaries of the Registrant

  		23.1  Consent of Arthur Andersen LLP

  		27.0  Financial Data Schedule

	(d)	The required financial statement schedules are listed on the Index to 
     Schedule to Consolidated Financial Statements included herein.			


	(1)		Incorporated by reference to Registrant's Report on Form 8-K (File No.   
      0-16002) for July 25, 1991, as filed on October 18, 1991.

	(2)		Incorporated by reference to Registrant's Annual Report on Form 10-K (File
      No. 0-16002) for the fiscal	year ended March 31, 1992, as filed on June
      26, 1992.

	(3)		Incorporated by reference to Registrant's Registration Statement on Form 
      S-1 (File No. 33-14596) filed	on May 28, 1987.

	(4)		Incorporated by reference to Registrant's Registration Statement on Form 
      S-8 (File No. 333-01155 filed	on February 22, 1996.)


SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its 
behalf by the undersigned, thereunto duly authorized.

ADVANCED MARKETING SERVICES, INC.

Date:	 June 23, 1997	                    By:	/s/ Charles C. Tillinghast, III
                                         Charles C. Tillinghast, III
                                   					 Chairman of the Board and Director

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.

Date:  June 23, 1997	                    By:	/s/ Charles C. Tillinghast, III
                                     				Charles C. Tillinghast, III
                                     				Chairman of the Board and Director

Date:  June 23, 1997                     By:	/s/ Michael M. Nicita		
                                         Michael M. Nicita
                                         Chief Executive Officer and Director 
                                     				(Principal Executive, Financial and 
                                    				 Accounting Officer)

Date:  June 23, 1997                     By: /s/ Loren C. Paulsen	
                                    					Loren C. Paulsen
                                     				Director

Date:  June 23, 1997                     By: /s/ James A. Leidich
                                     				James A. Leidich
                                     				Director

Date:  June 23, 1997                     By: /s/ E. William Swanson, Jr.
                                     				E. William Swanson, Jr.
                                     				Director

Date:	 June 23, 1997	                    By: /s/ Trygve E. Myhren
                                    					Trygve E. Myhren
                                     				Director

Date	  June 23, 1997                     By: /s/ Lynn S. Dawson		
                                    					Lynn S. Dawson
                                    					Director

Date:  June 23, 1997                     By: /s/ Robert F. Bartlett		
                                    					Robert F. Bartlett
                                    					Director
	


                      ADVANCED MARKETING SERVICES, INC.

           INDEX TO SCHEDULE TO CONSOLIDATED FINANCIAL STATEMENTS


<TABLE>
                                         								Page
Schedule:
 <S>                                             <C> 
	II	Valuation and Qualifying Accounts						      	32
</TABLE>

	All other schedules are not submitted because they are not applicable, not 
required or because the required information is included in the consolidated 
financial statements of Advanced Marketing Services, Inc. or in the notes 
thereto.

<TABLE>
                               SCHEDULE II

                      ADVANCED MARKETING SERVICES, INC.

                      VALUATION AND QUALIFYING ACCOUNTS

             FOR THE YEARS ENDED MARCH 31, 1997, 1996 AND 1995
                               (In Thousands)

                            Balance at    Additions               Balance at
	                            beginning      charged	                  end of  
                 	           of period    to income   Deductions	     period  
<S>                          <C>          <C>         <C>         <C> 
1995

Allowance for 
	uncollectible accounts
	and sales returns	            $ 1,986      $   899     $   353      $ 2,532

Reserve for
	markdown of
	inventory   	                 $ 4,723      $ 2,766     $ 2,585      $ 4,904


1996

Allowance for 
	uncollectible accounts
	and sales returns	            $ 2,532      $ 2,049     $   408      $ 4,173

Reserve for
	markdown  of
	inventory	                    $ 4,904      $ 4,010     $ 3,027      $ 5,887

1997

Allowance for 
	uncollectible accounts
	and sales returns	            $ 4,173     $    989     $ 1,380      $ 3,782

Reserve for
	markdown  of
	inventory	                    $ 5,887      $ 2,983     $ 3,187      $ 5,683
</TABLE>

Exhibit 10.4
                           Employment Agreement

THIS EMPLOYMENT AGREEMENT is made and entered into as of July 16, 1996 by and 
between Advanced Marketing Services, Inc., a Delaware "Company"), and Charles C.
Tillinghast, III ("Executive").

RECITALS

     WHEREAS, Executive has served the Company as Chairman of the Board and 
Chief Executive Officer since November 1994 and, prior thereto, as Chairman of 
the Board, President and Chief Executive Officer since the Company's inception 
in 1982;
     WHEREAS, Executive's leadership and services have constituted a major 
factor in the successful growth and development of the Company;
     WHEREAS, in anticipation of retirement, Executive wishes to reduce 
gradually his active involvement in the management of the Company;
     WHEREAS, in order to provide for an orderly, efficient and successful 
transition in the management of the Company, Executive and the Company desire to
specify the terms of Executive's resignation as Chief Executive Officer of the 
Company and continued service as Chairman of the Board of the Company;

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing recitals, the mutual promises 
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as 
follows:

1.	Term.  The Company hereby agrees to employ Executive, and Executive hereby 
grees to serve the Company, on the terms and conditions set forth in this 
Agreement, for a five-year period commencing on January 1, 1997 (such period, 
subject to termination as provided herein, being referred to as the "Period of 
Employment").

2.	Resignation as Chief Executive Officer.  The Executive hereby tenders, and 
the Company hereby accepts, the Executive's resignation from his position as 
Chief Executive Officer of the Company, effective as of the close of business 
December 31, 1996.

3.	Continuing Duties and Services.  During the Period of Employment, the Company
shall use it's best efforts to nominate Executive for a seat on the Company's 
Board of Directors (the "Board of Directors"), to cause his election thereto and
to designate Executive as Chairman of the Board.  During the Period of 
Employment, Executive agrees to serve the Company as Chairman of the Board and
and to perform such other reasonable and appropriate duties and responsibilities
customary for the position of Chairman of the Board as may be requested of him 
by the Board of Directors, in accordance with the terms herein set forth.  In 
addition, during the Period of Employment, the Company shall use its best 
efforts to nominate Executive and cause his election, and Executive shall 
continue to serve, as a member of the Stock Option Committee for the Company's 
1987 Stock Option Plan, the Company's 1995 Stock Option Plan and as a member of
the Committee administrating the Company's Deferred Compensation Plan.  It is 
intended that during the first year of the Period of Employment, Executive shall
serve the Company on a full-time basis.  Thereafter, the number of days per year
that Executive shall be required to serve shall decrease proportionately during
the Period of Employment, such that during the fifth year of the Period of 
Employment, Executive shall only be required to serve the Company on an 
approximately half-time basis; provided, however, that the parties intend that 
in no event shall Executive's services be provided for less than 1,000 hours per
calendar year.  The principal place of performance by Executive of his duties 
hereunder shall be in San Diego, California or at such other location as may be 
mutually agreed upon by the Company and the Executive; provided, however, that 
Executive may be reasonably required to travel outside that area in connection 
with Company business.

4.	Compensation.  

(a)	Salary and Bonuses.  As compensation for his services hereunder, the 
Company shall pay Executive, during the Period of Employment, annual base salary
in the amounts set forth on Exhibit A hereto, payable in accordance with the 
Company's normal payroll procedures for senior executives, or at such other 
times as may mutually be agreed upon by the Company and Executive.  Although it
is intended that Executive's base salary shall be as set forth on Exhibit A, 
Executive's base salary may be subject to periodic increase by the Board of
Directors in its discretion.  Executive shall be entitled to participate in the
Company's bonus plan, deferred compensation plan and any other plan or plans 
which the Company may adopt during the Period of Employment, all on terms and 
conditions that are consistent with those established by the Compensation 
Committee of the Board of Directors in prior years or otherwise available to
senior Company executives.

(b)	Fringe Benefits.  During the Period of Employment, Executive shall be 
entitled to coverage under the Company's employee benefit programs (as such 
programs are in effect from time to time), including without limitation any 
pension plan, profit-sharing plan, savings plan, deferred compensation plan and 
medical, life and disability insurance plan or arrangement, on terms no less 
favorable than those generally made available to the Company's senior executive
officers; provided, however, that if coverage of Executive on such terms is not
permitted under the provisions of any such benefit program, the Company shall, 
at its own expense, provide the Executive with a comparable level of benefits 
during the Period of Employment; and provided further that with respect to any 
current or future deferred compensation plan which provides for a vesting period
of five years or greater, all amounts contributed by or on behalf of Executive,
plus all interest accrued thereon, shall be deemed fully vested as of the last 
day of the Period of Employment.   Executive shall also be entitled to all other
Company provided employment fringe benefits on terms not less favorable than 
those made available to the Company's senior executive officers.

(c)	Expenses.  All travel, entertainment and other expenses incident to the 
rendering of services by Executive hereunder shall be paid by the Company.  If 
any such expenses are paid in the first instance by Executive, the Company shall
reimburse Executive therefor on presentation of the appropriate documentation, 
subject to the Company's normal rules with respect to documentation of such 
expenses.

(d)	Vacation.  Executive shall be entitled to paid vacation, on the same basis 
as other senior executives of the Company based on length of service, to be 
taken at a time or times mutually satisfactory to Executive and the Company.  In
addition, Executive shall be entitled to participate in any sabbatical program 
which the Company has now or in the future during the Period of Employment.

5.	Early Termination.

(a)	For Cause.  Executive may be discharged by the Company only for Cause (as 
defined in Section 5(d) hereof), in which event the Period of Employment 
hereunder shall cease and terminate and the Company shall have no further 
obligation or duties under this Agreement, except for obligations accrued under
Section 4 at the date of termination.  In the event that the Board of Directors
shall determine that grounds exist for terminating the Period of Employment 
hereunder for Cause, the Company shall, within 60 days after the discovery of 
the Cause, send notice to the Executive that his employment is terminated 
effective not sooner than 30-days following the notice and specifying in 
reasonable detail the facts based upon which Cause exist for such actions.

(b)	Due to Death or Disability.  The Period of Employment hereunder 
shall cease and terminate upon the earliest to occur of the following events:  
(i) the death of Executive, or (ii) at the election of the Board of Directors 
(subject to the Americans With Disabilities Act), the inability of Executive 
by reason of physical or mental disability to continue the substantial 
performance of his duties hereunder for a period of 180 consecutive days.  In 
the event that the Board of Directors shall elect to terminate the Period of 
Employment pursuant this Section 5(b), it shall provide Executive with not
written notice of its election to do so.  Upon termination of the Period of 
Employment pursuant to this Section 5(b), the Company shall continue to pay to 
Executive or his estate, as the case may be, the entire compensation otherwise 
payable to him under Section 4 hereof for the lesser of one year or the 
remaining Period of Employment.

(c)	In the event that (i) Executive is discharged by the Company other than for 
Cause or other than pursuant to Section 5(b) hereof by reason of physical or 
mental disability, or (ii) Executive terminates employment with the Company 
For Good Reason (as defined in Section 5(e) hereof) (collectively an "Untimely 
Termination"), Executive shall have no further obligations or duties under this 
Agreement; provided, however, that Executive shall continue to be bound by the 
provisions of Section 6 hereof if the Company performs its obligations under 
this Section 5(c).  In the event of an Untimely Termination, Executive shall 
nevertheless be entitled to the compensation specified in Section 4 hereof 
with an assumed termination date of that date on which the Period of Employment
would have expired but for such Untimely Termination.

(d)	For purposes of this Agreement, Cause shall be deemed to exist only 
(i) willful misconduct in the substantial performance of his duties and 
obligations hereunder or (ii) upon the material breach by Executive of this 
Agreement.

(e)	For purposes of this Agreement, the term "For Good Reason" shall mean (i) 
the assignment to Executive of any duties or responsibilities which are 
inconsistent with Executive's position (including status, office, title and 
reporting requirements), authority, duties or responsibilities as contemplated 
by Section 3, or any other action by the Company which results in a substantial 
diminishment in such position, authority, duties or responsibilities; (ii) the 
Company's requiring relocation of Executive, without his prior written consent, 
to a place of employment other than San Diego, California, except for travel 
reasonably required in the performance of Executive's responsibilities; or (iii)
the Company's material breach of this Agreement.

6.	Confidentiality and Non-Competition.

(a)	The Company and Executive acknowledge that the services to be performed by 
Executive under this Agreement are unique and extraordinary and, as a result of
such employment, Executive will be in possession of confidential information, 
proprietary information and trade secrets (collectively, "Confidential 
Material") relating to the business practices of the Company.  Executive agrees
that he will not, directly or indirectly, (i) disclose to anyone other than the
Company and its affiliates and subsidiaries or any of their respective officers,
directors or agents, either during or after his employment by the Company or 
(ii) use, except during his employment by the Company in the business and for 
the benefit of the Company, any Confidential Material acquired by Executive 
during his employment by the Company, without the prior written consent of the
Company, unless (i) Executive is required to disclose any such information by 
judicial or administrative process or, in the opinion of counsel, by other 
requirements of law, (ii) such information in the public domain through no fault
of the Executive, or (iii) such information has been lawfully acquired by 
Executive from other sources unless Executive knows that such information was 
obtained in violation of an agreement of confidentiality or law.  Upon 
termination of his employment with the Company for any reason, Executive agrees
to return to the Company all tangible manifestations of Confidential Materials.
All programs, ideas, strategies, approaches, practices or inventions created, 
developed, obtained or conceived of by Executive prior to or during the term 
thereof, and all business opportunities presented to Executive during the term 
hereof by reason of his engagement by the Company, shall be owned by and belong 
exclusively to the Company, provided that they are related in any manner to its
business.  Executive shall (i) promptly disclose all such programs, ideas, 
strategies, approaches, practices, inventions or business opportunities to the 
Company and (ii) execute and deliver to the Company, without additional 
compensation, such instruments as the Company may require from time to time to 
evidence its ownership of any such items.

(b)	Executive agrees that during the term hereof and for a period of 12 months 
thereafter, he will not become a stockholder, director, officer, employee or 
agent of or consultant to any corporation (other than the Company), or member 
of or consultant to any partnership or other entity, or engage in any business 
as a sole proprietor or act as a consultant to any such entity, or otherwise 
engage, directly or indirectly, in any enterprise, in each case which competes 
with any business or activity engaged in, or known by Executive to be 
contemplated to be engaged in, by the Company within 100 miles of any location 
in which the Company does business or in which Executive has knowledge that the 
Company contemplates doing business; provided, however, that competition shall 
not include the ownership (solely as an investor and without any other 
participation in or contact with the management of the business) of less than 
five percent of the outstanding shares of stock of any corporation engaged in 
any such business, which shares are regularly traded on a national securities 
exchange or in an over-the-counter market.  Executive agrees that during the 
non-compete period referred to in this Section 6, neither Executive nor any 
person or enterprise controlled by Executive will solicit for employment any 
person employed by the Company at, or at any time within three months prior to, 
the time of the solicitation.

(c)	Executive agrees that the remedy at law for any breach by him of this 
Section 6 will be inadequate and that the Company shall be entitled to 
injunctive relief.

7.	Miscellaneous.

(a)	Notices.  Any notice or other communication required or permitted to 
be given hereunder shall be made in writing and shall be delivered in person, by
facsimile transmission or mailed by prepaid registered or certified mail, return
receipt requested, addressed to the parties as follows:

If to the Company:	                  Advanced Marketing Services, Inc.
                                     5880 Oberlin Drive, Suite 400
                                     San Diego, California  92121
                                     Attention:  Chief Financial Officer
                                     Facsimile:  (619) 452-2167

If to Executive:	                    Charles C. Tillinghast, III
                                     1762 Nautilus Street
                                     La Jolla, California  92037
                                     Facsimile:  (619) 459-6407

or to such other address as the party shall have furnished in writing in 
accordance with this Section.  Such notices or communications shall be effective
upon delivery if delivered in person or by facsimile and either upon actual 
receipt or three (3) days after mailing, whichever is earlier, if delivered by 
mail.

(b)	Parties In Interest.  This Agreement shall be binding upon and inure to 
the benefit of each of the parties hereto and to their respective successors, 
whether by operation of law or through the merger or consolidation of the 
Company or the sale of all or substantially all of the business or assets of the
Company.  This Agreement may otherwise not be assigned by either party without 
the express written consent thereto by the other party, which consent may be 
given or withheld in the sole and absolute discretion of such party.

(c)	Entire Agreement.  This Agreement supersedes any and all other agreements, 
either oral or in writing, between the parties hereto with respect to such 
employment of Executive by the Company and contains all of the covenants and 
agreements between the parties with respect to such employment in any manner 
whatsoever.  Any modification of this Agreement will be effective only if it is 
in writing signed by the party to be charged.

(d)	Governing Law.  This Agreement shall be governed by and construed 
in accordance with the laws of the State of California, without giving effect to
the choice of law or conflicts of laws rules and laws of such jurisdiction.

(e)	Severability.  In the event that any term or condition contained in this 
Agreement shall for any reason be held by a court of competent jurisdiction to
be invalid, illegal or unenforceable in any respect, such invalidity, illegality
or unenforceability shall not affect any other term or condition of this 
Agreement, but this Agreement shall be construed as if such invalid or illegal 
or unenforceable term or condition had never been contained herein.  If a court 
of competent jurisdiction determines by final judgment that the scope, time 
period or geographical limitations set forth in Section 6 are too broad to be 
capable of enforcement, it may modify such covenants and enforce such provisions
as to scope, time and geographical area as it deems equitable.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the 
dates across from their respective signatures, effective as of the date first
written above.

                                ADVANCED MARKETING SERVICES, INC.
                                By:/s/ James A. Leidich            
                                JAMES A. LEIDICH, Chairman of the Compensation 
                                Committee

                                /s/Charles C. Tillinghast, III	
                                CHARLES C. TILLINGHAST, III

<TABLE>
                                 EXHIBIT A
                     Period                   Salary
                  <C>                    <C>
                  First Year             $  275,000/year
                  Second Year            $  225,000/year
                  Third Year             $  175,000/year
                  Fourth Year            $  175,000/year
                  Fifth Year             $  150,000/year
</TABLE>

Exhibit 11.0
<TABLE>
                      ADVANCED MARKETING SERVICES, INC.

                STATEMENT RE COMPUTATION OF PER SHARE EARNINGS

              FOR THE YEARS ENDED MARCH 31, 1997, 1996 AND 1995

                                (UNAUDITED)

                  (in thousands except per  share data)

                                       		 1997    	 1996   	 1995
<S>                                    <C>       <C>       <C>
Net Income	                            $ 6,456   $ 6,101   $ 3,362

Weighted Average Number Of Common And 
	Common Share Equivalents Outstanding:

Weighted Average Shares Outstanding 	    5,480     5,424     5,434

Weighted Average Common Share
	Equivalents - Dilutive Stock Options:
		
		Primary                                  	36       	95       	54
		Fully Diluted                       	    236	      275	      177

Total Weighted Average Common And 
	Common Equivalent Shares:

		Primary	                               5,716     5,619     5,588
		Fully Diluted	                         5,716	    5,699	    5,611

Net Income Per Common And
	Common Share Equivalent:

		Primary	                              $ 1.13   $  1.09   $   .60
		Fully Diluted	                        $ 1.13   $  1.07 	 $   .60
</TABLE>	
_____________________________
The effects of all anti-dilutive common stock equivalents are excluded from the 
calculation of EPS.


Exhibit 21.0

Subsidiaries of the Registrant

	Advanced Marketing (UK) Limited - England
	Advanced Marketing  S. de R.L. de C.V. - Mexico
	Advanced Marketing Services Investments, Inc. - California
	Mira Mesa Marketing, Inc.


Exhibit 23.1

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the incorporation of our
reports included in this Form 10-K into the Company's previously filed 
Registration Statements, File Nos. 33-30467, 33-43792 and 333-01155.

					

San Diego, California					                                 ARTHUR ANDERSEN LLP
June 19, 1997




<TABLE> <S> <C>

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE COMPANY'S
CONSOLIDATED FINANCIAL STATEMENTS OF INCOME AND CONSOLIDATED BALANCE SHEETS
AND IS QUALIFIED BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
       
<S>                             <C>
<PERIOD-TYPE>                   12-MOS
<FISCAL-YEAR-END>                          MAR-31-1997
<PERIOD-END>                               MAR-31-1997
<CASH>                                           13592
<SECURITIES>                                      9177
<RECEIVABLES>                                    53564
<ALLOWANCES>                                      3782
<INVENTORY>                                      91745
<CURRENT-ASSETS>                                177170
<PP&E>                                            9206
<DEPRECIATION>                                    5445
<TOTAL-ASSETS>                                  183501
<CURRENT-LIABILITIES>                           125714
<BONDS>                                              0
<COMMON>                                             6
                                0
                                          0
<OTHER-SE>                                       57787
<TOTAL-LIABILITY-AND-EQUITY>                    183501
<SALES>                                         385651
<TOTAL-REVENUES>                                385651
<CGS>                                           347277
<TOTAL-COSTS>                                   347277
<OTHER-EXPENSES>                                 28903
<LOSS-PROVISION>                                   909
<INTEREST-EXPENSE>                                  20
<INCOME-PRETAX>                                  10367
<INCOME-TAX>                                      3911
<INCOME-CONTINUING>                               6456
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                      6456
<EPS-PRIMARY>                                     1.13
<EPS-DILUTED>                                     1.13
        

</TABLE>


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