<PAGE>
1ST QUARTER
FISCAL 1999
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED JUNE 27, 1998
Commission File Number: 0-16002
ADVANCED MARKETING SERVICES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 95-3768341
(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)
(Zip Code)
(619) 457-2500
(Registrant's telephone number, including area code)
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
---
The number of shares of the Registrant's Common Stock outstanding as of July 31,
1998 was 5,625,639.
<PAGE>
ADVANCED MARKETING SERVICES, INC.
INDEX TO FORM 10-Q
June 27, 1998
Page
PART I. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheets (Unaudited).................................. 3
Consolidated Statements of Income (Unaudited) ........................... 4
Consolidated Statements of Cash Flows (Unaudited).........................5
Notes to (Unaudited) Consolidated Financial Statements................6 - 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS...............................9 - 11
PART II. OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS ...................................................11
ITEM 2 - CHANGES IN SECURITIES ...............................................11
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES .....................................11
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..................11
ITEM 5 - OTHER INFORMATION....................................................11
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K.....................................11
SIGNATURES....................................................................12
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (See Note 1 for Basis of Presentation)
ADVANCED MARKETING SERVICES, INC.
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
JUNE 27, MARCH 31, JUNE 28,
1998 1998 1997
----------- --------- ----------
(UNAUDITED) (NOTE) (UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and Cash Equivalents $ 16,997 $ 28,982 $ 19,819
Investments, Available-For-Sale 13,805 8,068 2,852
Accounts Receivable - Trade, Net of Allowances for Uncollectible Accounts and
Sales Returns of $3,720 at June 27, 1998, $4,012 at March 31, 1998 and $3,832
at June 28, 1997 58,230 61,665 46,233
Vendor and Other Receivables 4,009 2,408 2,558
Inventories, Net 91,624 99,429 84,859
Deferred Income Taxes 4,937 4,922 4,758
Prepaid Expenses 1,445 1,368 971
--------- --------- ---------
TOTAL CURRENT ASSETS 191,047 206,842 162,050
--------- --------- ---------
PROPERTY AND EQUIPMENT, AT COST 12,387 11,964 9,378
Less - Accumulated Depreciation and Amortization 6,861 7,043 5,703
--------- --------- ---------
Net Property And Equipment 5,526 4,921 3,675
--------- --------- ---------
Investments, Available-For-Sale -- -- 3,108
Goodwill and Other Assets 6,806 6,709 1,356
--------- --------- ---------
TOTAL ASSETS $ 203,379 $ 218,472 $ 170,189
--------- --------- ---------
--------- --------- ---------
LIABILITIES
CURRENT LIABILITIES:
Accounts Payable $ 125,910 $ 142,203 $ 105,002
Accrued Liabilities 6,657 8,141 5,080
Income Taxes Payable 1,374 380 919
--------- --------- ---------
TOTAL CURRENT LIABILITIES 133,941 150,724 111,001
--------- --------- ---------
STOCKHOLDERS' EQUITY
Common Stock, $.001 Par Value, Authorized 20,000,000 Shares, Issued 6,343,000
Shares at June 27, 1998, 6,328,000 Shares at March 31, 1998 and 6,233,000
Shares at June 28, 1997 6 6 6
Additional Paid In Capital 27,276 27,145 26,351
Retained Earnings 44,229 42,718 34,984
Unrealized Gain on Investments 53 8 47
Foreign Currency Translation Adjustment (6) (9) (80)
Less: Treasury Stock, 718,000 shares, at Cost (2,120) (2,120) (2,120)
--------- --------- ---------
TOTAL STOCKHOLDERS' EQUITY 69,438 67,748 59,188
--------- --------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 203,379 $ 218,472 $ 170,189
--------- --------- ---------
--------- --------- ---------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED BALANCE
SHEETS.
NOTE: THE BALANCE SHEET AT MARCH 31, 1998 HAS BEEN DERIVED FROM THE AUDITED
FINANCIAL STATEMENTS AT THAT DATE, BUT DOES NOT INCLUDE ALL OF THE INFORMATION
AND FOOTNOTES REQUIRED BY GENERALLY ACCEPTED ACCOUNTING PRINCIPLES FOR COMPLETE
FINANCIAL STATEMENTS.
3
<PAGE>
ADVANCED MARKETING SERVICES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED - AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-------------------------
JUNE 27, JUNE 28,
1998 1997
----------- -----------
<S> <C> <C>
NET SALES $ 96,810 $ 82,080
Cost of Goods Sold 84,929 72,378
-------- --------
GROSS PROFIT 11,881 9,702
Distribution and Administrative Expenses 9,488 7,815
-------- --------
INCOME FROM OPERATIONS 2,393 1,887
Interest and Dividend Income 314 353
-------- --------
INCOME BEFORE PROVISION FOR INCOME TAXES 2,707 2,240
Provision for Income Taxes 1,056 825
-------- --------
NET INCOME $ 1,651 $ 1,415
-------- --------
-------- --------
OTHER COMPREHENSIVE INCOME:
Foreign Currency Translation Adjustments 3 6
Unrealized Gain on Investments 45 38
-------- --------
COMPREHENSIVE INCOME $ 1,699 $ 1,459
-------- --------
-------- --------
NET INCOME PER COMMON AND COMMON SHARE EQUIVALENT:
Basic $ .29 $ .26
-------- --------
-------- --------
Diluted $ .28 $ .25
-------- --------
-------- --------
NUMBER OF SHARES USED IN CALCULATION:
Basic 5,613 5,518
-------- --------
-------- --------
Diluted 5,819 5,697
-------- --------
-------- --------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED STATEMENTS.
4
<PAGE>
ADVANCED MARKETING SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED - AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------
JUNE 27, JUNE 28,
1998 1997
---------- ----------
<S> <C> <C>
OPERATING ACTIVITIES:
Net Income $ 1,651 $ 1,415
Adjustments to Reconcile Net Income to Net Cash Provided by
(Used In) Operating Activities:
Depreciation and Amortization 519 333
Provision for Uncollectible Accounts and Sales Returns 289 106
Provision for Markdown of Inventory 1,147 480
Deferred Income Taxes (15) 724
Changes in Assets And Liabilities:
Decrease in Accounts Receivable - Trade 3,295 7,266
(Increase) Decrease in Vendor and Other Receivables (1,540) 242
Decrease in Inventories 6,771 6,380
Increase in Prepaid Expenses And Other Assets (174) (1,011)
Decrease in Accounts Payable (16,521) (14,515)
Decrease in Accrued Liabilities (1,478) (237)
Increase in Income Taxes Payable 987 29
-------- --------
Net Cash Provided by (Used In) Operating Activities (5,069) 1,212
-------- --------
INVESTING ACTIVITIES:
Purchase/Disposal of Property and Equipment, Net (1,115) (246)
Purchase of Investments, Available-For-Sale (17,631) (14,532)
Sale and Redemption of Investments, Available for Sale 11,939 19,850
-------- --------
Net Cash Provided by (Used In) Investing Activities (6,807) 5,072
-------- --------
FINANCING ACTIVITIES:
Proceeds from Exercise of Options and Related Tax Benefits 131 32
Purchase of Treasury Stock -- (90)
Common Stock Dividend (140) --
-------- --------
Net Cash Used In Financing Activities (9) (58)
-------- --------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (100) 1
-------- --------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (11,985) 6,227
CASH AND CASH EQUIVALENTS, Beginning of Period 28,982 13,592
-------- --------
CASH AND CASH EQUIVALENTS, End of Period $ 16,997 $ 19,819
-------- --------
-------- --------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED STATEMENTS.
5
<PAGE>
ADVANCED MARKETING SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The consolidated financial statements presented herein as of and for the
three months ended June 27, 1998 and June 28, 1997 have been prepared in
accordance with generally accepted accounting principles and with
instructions to Form 10-Q. These financial statements have not been examined
by independent public accountants, but include all adjustments (consisting of
normal recurring adjustments) which are, in the opinion of Management,
necessary for a fair presentation of the financial condition, results of
operations and cash flows for such periods.
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.
Certain information and footnote disclosures normally included in financial
statements in accordance with generally accepted accounting principles have
been omitted pursuant to requirements of the Securities and Exchange
Commission. Management believes that the disclosures included in the
accompanying interim financial statements and footnotes are adequate to make
the information not misleading. For further information, refer to the
financial statements and notes thereto included in the Company's Annual
Report on Form 10-K for the fiscal year ended March 31, 1998.
The results of operations for the three-month period ended June 27, 1998 are
not necessarily indicative of the results to be expected for the fiscal year
ending March 31, 1999. Net sales in the Company's third fiscal quarter have
historically been, and are expected to be, significantly greater than in any
other quarter of the fiscal year due to increased demand during the holiday
season.
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.
2. INTERIM ACCOUNTING PERIODS
In accordance with wholesale distribution industry practice, net sales and
cost of goods sold for interim periods are cut off on the Saturday nearest to
the end of an accounting period. The cut-off for the fourth fiscal quarter is
March 31. This practice may result in differences in the number of business
days for which sales and cost of goods sold are recorded both as to
quarter-to-quarter comparisons, and as to comparisons of quarters between
years.
6
<PAGE>
3. INVESTMENTS, AVAILABLE-FOR-SALE
"Investments, available-for-sale" consist principally of highly rated corporate
and municipal bonds. The cost and estimated fair market value of investments at
June 27, 1998, March 31, 1998 and June 28, 1997 are as follows (in thousands):
<TABLE>
<CAPTION>
June 27, 1998
-----------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
-----------------------------------------------
<S> <C> <C> <C> <C>
Debt Securities Issued by States of The U.S.
And Political Subdivisions of The States $13,752 $53 $-- $13,805
------- ------- ------- --------
------- ------- ------- --------
</TABLE>
<TABLE>
<CAPTION>
March 31, 1998
-----------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
-----------------------------------------------
<S> <C> <C> <C> <C>
Debt Securities Issued by States of The U.S.
And Political Subdivisions of The States $ 8,060 $ 8 $-- $ 8,068
------- ------- ------- --------
------- ------- ------- --------
</TABLE>
<TABLE>
<CAPTION>
June 28, 1997
-----------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
-----------------------------------------------
<S> <C> <C> <C> <C>
Debt Securities Issued by States of The U.S.
And Political Subdivisions of The States $ 5,913 $47 $-- $ 5,960
------- ------- ------- --------
------- ------- ------- --------
</TABLE>
As of June 27, 1998, investments in debt securities issued by States of the
U.S. and political subdivisions of the States in the amount of $13,805,000
are scheduled to mature within one year.
Proceeds from the sale of investments aggregated $5,864,756 for the quarter
ended June 27, 1998. There was a gain of approximately $3,000 realized on
these sales. There were no sales of investments in the quarter ended June 28,
1997. The Company uses the specific identification method in determining cost
on these investments. The net increase in unrealized gain on investments was
approximately $45,000 for the quarter ended June 27, 1998. The net increase
in unrealized gain on investments for the quarter ended June 28, 1997 was
approximately $38,000.
4. SALES RETURNS
In accordance with industry practice, a significant portion of the Company's
products are sold to customers with the right of return. The Company has
provided allowances of $2,186,000 as of June 27, 1998, $2,334,000 as of March
31, 1998 and $2,021,000 as of June 28, 1997 for the gross profit effect of
estimated future sales returns.
7
<PAGE>
5. INVENTORIES
Inventories consist primarily of books and prerecorded audio cassettes
purchased for resale and are stated at the lower of cost (first-in,
first-out) or market.
6. LINE OF CREDIT
The Company had available at June 27, 1998 an unsecured bank line of credit
with a maximum borrowing limit of $10 million. The interest rate on bank
borrowings is based on the prime rate and "Libor" rates. The line of credit
expires July 31, 1999. As of June 27, 1998 and June 28, 1997, there were no
outstanding borrowings on the line of credit.
7. INCOME TAXES
The Company provides currently for taxes on income regardless of when such
taxes are payable. Deferred income taxes result from temporary differences in
the recognition of income and expense for tax and financial reporting
purposes. Income taxes paid in the three months ended June 27, 1998 totaled
$85,875. Income taxes paid during the same period of the previous year
totaled $48,000.
8. PER SHARE INFORMATION
Basic earnings per share information is based on the weighted average number
of common shares and diluted earnings per share includes 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.
In February 1997, the Financial Accounting Standards Board issued SFAS No.
128 "Earnings Per Share", which has been adopted by the Company. The
statement specifies the computation, presentation and disclosure requirements
for earnings per share ("EPS"), and is effective for periods ending after
December 15, 1997. Prior year per share information is presented in
accordance with the statement.
9. EMPLOYEE STOCK OPTION PLAN
Nonqualified options to purchase an aggregate of 661,050 shares of common
stock were outstanding as of June 27, 1998. The outstanding options were at
prices ranging from $4.25 to $14.66 per share.
10. RECENT ACCOUNTING PRONOUNCEMENTS
SFAS No. 130, "Reporting Comprehensive Income," was issued in June 1997 and
establishes standards for reporting and display of comprehensive income and
its components (revenue, expenses, gains and losses) in a full set of
general-purpose financial statements. The Company adopted SFAS No. 130 in its
first quarter of fiscal year 1999. The adoption of SFAS No. 130 did not have
a material effect on its consolidated financial statements.
SFAS No. 131, "Disclosure about Segments of an Enterprise and Related
Information," which, based on the management approach to segment reporting,
establishes requirements to report entity-wide disclosures about products and
services, major customers, and material countries in which the entity holds
assets and reports revenue. SFAS No. 131 requires limited segment data on a
quarterly basis. The Company will adopt SFAS No. 131 for its fiscal year
ended March 31, 1999.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
A. RESULTS OF OPERATIONS
THREE MONTH PERIOD ENDED JUNE 27, 1998 AND JUNE 28, 1997:
During the three months ended June 27, 1998, the Company reported net income
of $1,651,000, or $.28 per share (diluted), compared with net income of
$1,415,000, or $.25 per share (diluted), for the first three months of the
prior fiscal year.
Net sales for the three-month period ended June 27, 1998 increased 18 percent
to $96,810,000 from $82,080,000 for the comparable period last year. The
growth in first quarter sales can be attributed to an increase of gross
shipments to core customers, the continuing benefit of reduced customer
returns as well as additional sales from the Company's recently acquired
subsidiary, Aura Books PLC. Customer return rates dropped to 22 percent in
the first quarter of fiscal 1999 from 29 percent for the corresponding
quarter last year, as the Company continues to benefit from its vendor
managed inventory (VMI) program, which is in place at its two largest
customers.
During the first three months of fiscal 1999, gross profit increased 22
percent to $11,881,000 from $9,702,000 in the first three months of the
previous fiscal year. Gross profit as a percentage of net sales increased to
12.3 percent from 11.8 percent in the same period in the last fiscal year.
This increase was primarily due to higher income from publisher incentive
programs and increased sales from the international subsidiaries of AMS,
which typically achieve higher gross margins while at significantly higher
distribution and administrative expense levels.
Distribution and administrative expenses for the three months ended June 27,
1998 increased 21 percent to $9,488,000 and represented 9.8 percent of net
sales compared to $7,815,000, or 9.5 percent of net sales, in the same period
of the previous year. Increased contributions from the Company's promotional
activities were more than offset by increases in distribution costs and
certain administrative expenses, primarily related to increased international
activities as noted in the preceding paragraph.
Interest and dividend income decreased to $314,000 in the first quarter of
fiscal 1999 from $353,000 in the same period of the previous fiscal year as a
result of lower yields due to a greater proportion of tax-exempt investments
in the current fiscal year.
B. LIQUIDITY AND SOURCES OF CAPITAL
For the three months ended June 27, 1998, $5,069,000 of cash was used in
operating activities. Net cash provided by operating activities in the same
period of the prior fiscal year was $1,212,000. The Company's cash and
investments at June 27, 1998 increased by $5,023,000 compared to June 28,
1997 primarily due to net income and an increase in accounts payable, offset
in part by an increase in accounts receivable. Trade accounts receivable
increased $11,997,000 compared to one year ago primarily as a result of
increased sales in the month of June 1998. Trade accounts receivable
decreased $3,295,000 compared to March 31, 1998 primarily due to a decrease
in net sales when compared to fiscal 1998 fourth quarter sales. Inventories
at June 27, 1998 increased by $6,765,000 compared to June 28, 1997 primarily
to support sales growth and
9
<PAGE>
as a result of the Company's recent acquisition of Aura Books PLC. This
increase was more than offset by an increase in accounts payable of
$20,908,000 compared to June 28, 1997. Inventories decreased $7,918,000 and
Accounts Payable decreased $16,521,000 compared to March 31, 1998 primarily
due to decreased purchasing activity in response to the seasonal decrease in
sales.
Working capital was $57,106,000 as of June 27, 1998, which increased from the
March 31, 1998 level of $56,118,000 and from the June 28, 1997 balance of
$51,049,000. The increases compared to March 31, 1998 and June 28, 1997 were
primarily a result of net income.
The Company had available at June 27, 1998 an unsecured bank line of credit
with a maximum borrowing limit of $10 million. The interest rate on bank
borrowings is based on the prime rate and "Libor" rates. The line of credit
expires July 31, 1999. As of June 27, 1998, March 31, 1998 and June 28, 1997,
there were no outstanding borrowings on the line of credit.
The Company believes that its existing 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 additional strategic
acquisitions where deemed appropriate. Such acquisitions, if any, could
affect the Company's liquidity and capital resources.
C. COMPUTER OPERATIONS AND THE IMPACT OF YEAR 2000
During the previous fiscal year, the Company developed a plan to address
anticipated Year 2000 issues in connection with its data processing and other
activities. It is currently estimated that the net cost for review, analysis,
modification and testing of existing computer programs for both internal and
external software will be approximately $600,000. Since beginning this
project, the Company has incurred approximately half of such expenses through
the quarter ended June 1998 and it is anticipated that the remaining portion
of the estimated cost will be incurred during fiscal 1999 and will be
expensed as incurred. Although, based on a review of its data processing,
operating, and other computer based systems, the Company does not currently
believe that it will experience any significant adverse effects or material
unbudgeted costs resulting therefrom, there can be no assurance in that
regard.
D. STATEMENT OF PURPOSE OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE
SECURITITES 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 Quarterly Report on Form 10-Q 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,
10
<PAGE>
the Company's ability to impact customer return rates, continued successful
results from the VMI program, 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 1999 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.
PART II. OTHER INFORMATION
ITEMS 1-3. NOT APPLICABLE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Registrant's Annual Meeting of Stockholders was held on July 23, 1998.
James A. Leidich (4,634,898 votes for; 380,000 abstain/withheld) and E.
William Swanson (4,634,898 votes for; 380,000 abstain/withheld) were elected
as Class B directors to serve a three-year term, and will serve until their
respective successors are elected and qualified. In addition, the
stockholders approved the following proposals:
1. A proposal to amend the Company's 1995 Stock Option Plan to increase from
400,000 to 650,000 the number of shares of common stock issuable upon
exercise of options granted and to increase from 200,000 to 300,000 the
number of shares of common stock for which any eligible person may receive
options. There were 3,396,223 votes in favor of and 1,618,675 votes against
the adoption of this proposal.
2. A proposal to adopt the 1998 Employee Stock Purchase Plan. The Stock
Purchase Plan is intended to enable the Company to attract, motivate, and
retain key employees by permitting voluntarily purchase of common stock at a
15% discount from the market price through accumulated payroll deductions.
There were 3,952,740 votes in favor of and 1,062,158 votes against the
adoption of this proposal.
ITEM 5. OTHER INFORMATION - NONE
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) The following exhibits are included herein or incorporated by reference:
(11.0) Statement re Computation of Per Share Earnings
(27.0) Financial Data Schedule
(b) No reports on Form 8-K were filed for the three months ended June 27, 1998.
<PAGE>
SIGNATURES
Pursuant to the requirements 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.
REGISTRANT
August 7, 1998 By: /s/ MICHAEL M. NICITA
- ------------------------ ------------------------------------
Date Michael M. Nicita
Chief Executive Officer and Director
(Principal Executive, Financial and
Accounting Officer)
<PAGE>
EXHIBIT 11.0
ADVANCED MARKETING SERVICES, INC.
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
(UNAUDITED - AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-----------------------
JUNE 27, JUNE 28,
1998 1997
------ ------
<S> <C> <C>
Net Income $1,651 $1,415
------ ------
------ ------
Weighted Average Common and
Common Share Equivalents:
Weighted Average Common Shares
Outstanding 5,613 5,518
Weighted Average Common Share
Equivalents-Dilutive Stock Options:
Basic -- --
------ ------
Diluted 206 179
------ ------
Total Weighted Average Common and
Common Equivalent Shares:
Basic 5,613 5,518
------ ------
------ ------
Diluted 5,819 5,697
------ ------
------ ------
Net Income Per Common and
Common Share Equivalent:
Basic $ .29 $ .26
------ ------
------ ------
Diluted $ .28 $ .25
------ ------
------ ------
</TABLE>
COMMON SHARE EQUIVALENTS (FOR AMS OUTSTANDING STOCK OPTIONS) ARE EXCLUDED FROM
EARNINGS PER SHARE CALCULATIONS WHEN ANTIDILUTIVE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS OF INCOME AND CONSOLIDATED BALANCE
SHEETS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-START> APR-01-1998
<PERIOD-END> JUN-27-1998
<CASH> 16,997
<SECURITIES> 13,805
<RECEIVABLES> 58,230
<ALLOWANCES> 3,720
<INVENTORY> 91,624
<CURRENT-ASSETS> 191,047
<PP&E> 12,387
<DEPRECIATION> 6,861
<TOTAL-ASSETS> 203,379
<CURRENT-LIABILITIES> 133,941
<BONDS> 0
0
0
<COMMON> 6
<OTHER-SE> 69,438
<TOTAL-LIABILITY-AND-EQUITY> 203,379
<SALES> 96,810
<TOTAL-REVENUES> 96,810
<CGS> 84,929
<TOTAL-COSTS> 84,929
<OTHER-EXPENSES> 9,488
<LOSS-PROVISION> (107)
<INTEREST-EXPENSE> 57
<INCOME-PRETAX> 2,707
<INCOME-TAX> 1,056
<INCOME-CONTINUING> 1,651
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,651
<EPS-PRIMARY> .29
<EPS-DILUTED> .28
</TABLE>