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AMS Consolidates Distribution Operations in Face of Investigations

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February 1-15, 2004 Edition

AMS Consolidates

Distribution Operations

in Face of Investigations

SAN DIEGO, CA/1/14/2004—In the midst of ongoing investigations by the SEC and U.S. Attorney, Advanced Marketing Services, Inc. (NYSE:MKT – News) will consolidate most of its Publishers Group West (PGW) U.S. distribution operations to its expanded facility in Indianapolis, IN, by June 2004.

An internal review at AMS confirmed that the company overstated circulation figures for its advertising publications and subsequently overcharged advertisers for co-op advertising. As a result of the findings, AMS has restated its five-year earnings, and said it is in the process of reaching appropriate resolutions with customers and vendors. The five-year earnings figure of $85 million is expected to be reduced by as much as $9 million.

In announcing the distribution center consolidation, PGW President Rich Freese said, “This move will significantly decrease the freight expense for PGW client publishers and will improve the time-to-market advantage of shipping from a location closer to a much higher percentage of the market.”

The consolidation is part of a wide-ranging initiative by AMS to reduce operating costs and improve profitability in response to changing market conditions that have led to expected reduced profitability for the fiscal year ending March 31, 2004, according to a press release issued January 14.

“We believe that these structural changes will improve service for our retail customers and client publishers, streamline our distribution infrastructure and improve our capacity utilization,” Freese added. “Overall, we anticipate a long-term reduction in facility and freight expenses, together with lower costs associated with our new AMS warehouse management system (PkMS).

“Our decision to consolidate operations was driven, in part, by the expiration of the lease on our Reno, NV, warehouse at the end of 2004, and an efficiency analysis that showed, among other things, a significant freight benefit in moving most of our operations to Indianapolis,” he added.

The Company expects to move its Reno-based order and returns processing, together with many PGW employees, to Indianapolis by June 2004. The Reno facility was acquired as part of AMS’s acquisition of PGW in January 2002, and is currently still responsible for most of PGW’s shipping.

ABOUT ADVANCED MARKETING SERVICES, INC.

Headquartered in San Diego, CA, Advanced Marketing Services (AMS) is a leading global provider of customized wholesaling, distribution and custom publishing services to the book industry. The Company provides a full range of value-added services that provide AMS customers with book-buying advice and expert supply chain management, including advertising and promotional support, to ensure the success of their book programs. AMS’s proprietary Vendor Managed Inventory (VMI) software is a unique tool that allows its book specialists to efficiently and effectively manage global book distribution systems for the benefit of its warehouse clubs and book store customers. AMS has extensive operations in the U.S., Canada, Mexico, Singapore, the United Kingdom and Australia and employs approximately 1,400 people worldwide. The company web site is: www.advmkt.com

ABOUT PUBLISHERS GROUP WEST

Publishers Group West, established in 1976 and headquartered in Berkeley, CA, is the largest exclusive distributor of independent publishers in North America. The company, acquired in January 2002 by Advanced Marketing Services, Inc., has sales offices in New York City and San Diego. Ranked as one of the top 10 vendors of books in the United States, PGW represents more than 150 independent publishers, who together are publishing some of the most topical, innovative, literary and award-winning books available today. More information is available at the corporate Web site, www.pgw.com.