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| Advanced Marketing Services Reports Financial Results for FY 2003 |
SAN DIEGO, May 22 /PRNewswire-FirstCall/ -- Advanced Marketing Services, Inc. (NYSE: MKT), a leading global provider of customized services to book retailers and publishers, today announced financial results for its fourth quarter and fiscal year ended March 31, 2003. For the fourth quarter ended March 31, 2003, the Company had a net loss of $4.4 million, compared to net income of $3.0 million for the same period last year. For the fourth quarter, the Company had a net loss of $0.23 per fully diluted share, compared to earnings of $0.15 per fully diluted share a year earlier. Net sales for the fourth quarter of fiscal 2003 increased to $205.7 million, 16 percent greater than the $177.8 million reported for the prior year. Sales growth for the fourth quarter of fiscal 2003 was positively impacted by one extra month of sales from Publishers Group West (PGW), acquired in January 2002, and by increases from international subsidiaries and U.S. wholesale customers. For the full year ended March 31, 2003, net income was $11.2 million, or $0.57 per fully diluted share, down from $23.1 million, or $1.16 per fully diluted share in fiscal year 2002. Net sales in fiscal year 2003 increased 21 percent to $911.6 million, up from $756.1 million in the prior fiscal year. Revenue increases can be attributed to an additional ten months of sales from PGW and higher sales from our domestic wholesale customers and international operations. "We are disappointed with our financial results for both the fiscal fourth quarter and year-end for fiscal 2003," said Michael M. Nicita, President and Chief Executive Officer. "Our higher costs during the year revolved around both a generally weak sales environment and systems implementation issues, resulting in higher-than-expected labor, freight, inventory and consulting costs. We have recently seen some evidence of strengthening sales and our systems are performing up to expectation as we move to finish our implementation within the next few months. Additionally, we have an opportunity to begin to reduce costs in our current fiscal year." Full Year Financial Results Gross margin for the year ended March 31, 2003 increased to 16.1 percent, compared with 15.7 percent for the prior year. The Company's total distribution and administrative expenses for fiscal 2003 increased to 14.2 percent of sales, up from 10.7 percent for fiscal 2002. The increase can be attributed primarily to costs associated with our system implementation, which include higher freight and labor costs at our distribution centers, consulting costs, depreciation expense as well as an extra ten months of PGW results which have a higher fixed cost percent associated with a field sales force. Return rates for fiscal 2003 increased to 26 percent of sales compared to 22 percent last year. Fourth Quarter Financial Results Gross margin for the fourth quarter of fiscal 2003 was 14.4 percent, compared with 16.0 percent for the prior year. This change was primarily the result of a weaker product mix during the fourth quarter, along with an increase in markdown expense associated with weak sales and higher returns. Distribution and administrative expenses were 17.9 percent for the fourth quarter of fiscal 2003, compared with 12.8 percent for the same period in the prior year. This increase can be attributed primarily to costs associated with our system implementation, which include freight and labor at our distribution centers, depreciation expense and information systems consulting costs. Strong Balance Sheet As of March 31, 2003, total assets increased to $445.6 million, up 10.6 percent compared with total assets of $402.9 million last year. The Company had cash and short-term investments of $14.6 million on March 31, 2003. As of March 31, 2003 the Company had borrowed $45.0 million under an existing credit line, which has been paid down to $22.0 million at May 22, 2003. Inventory levels increased to $172.6 million for the fiscal year ended March 31, 2003, compared with $123.9 million a year ago. Inventory increased as a result of the ramp-up of the Borders' Superstores business, a $15.0 million increase in inventory in-transit to our facilities, higher returns associated with a weak retail sales environment and increases to international inventory to support expanding sales levels. Positive Outlook For Fiscal 2004 "In the coming year, we intend to continue to execute our strategic plan by focusing our efforts on maintaining a leading position in the membership warehouse clubs, expanding the contract distribution business of Publishers Group West, cultivating niche publishing activities and by completing our system implementations," commented Charles C. Tillinghast, AMS chairman. "Based on existing conditions, the Company continues to estimate earnings per fully diluted share in the range of $0.90 to $1.05 for the full fiscal year 2004, ending March 31, 2004. A gradual decrease of certain cost areas throughout fiscal year 2004 will have the disproportional effect of weighting year-over-year profit growth to the second half of fiscal year 2004," Tillinghast added. CONFERENCE CALL Advanced Marketing Services' management will host a conference call to discuss the operating results for the fourth quarter and fiscal year ended March 31, 2003, at 11:30 a.m. (Eastern Daylight Time) on May 22, 2003. All shareholders and other interested persons are encouraged to participate. The conference call may be accessed by dialing 973-321-1030 ("listen only" mode) just prior to the scheduled start time. A replay of the call will be available within two hours following the conference call, through midnight May 27, 2003, by dialing 973-341-3080 (Pin Number: 3712204). The conference call may also be accessed on a "live" or replay basis through the Advanced Marketing Services' Web site, http://www.advmkt.com . ABOUT ADVANCED MARKETING SERVICES, INC. Headquartered in San Diego, Calif., 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' 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 1,700 people worldwide. Recent press releases on Advanced Marketing Services, Inc. are available on both the Company's Website, http://www.advmkt.com , and on PR Newswire, http://www.prnewswire.com . Forward-looking statements in this news release are made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are forward-looking statements that involve risks and uncertainties. Certain important factors could cause results to differ materially from those anticipated by the forward-looking statements including factors discussed from time to time in reports filed by the Company with the Securities and Exchange Commission. For further information, please contact: investors, Chuck Williams, Director of Investor Relations of Advanced Marketing Services, Inc., +1-858- 450-3545, chuckw@advmkt.com; or media, Greg McQuerter, or Tina Wilmott, twilmott@mcquerter.com, both of The McQuerter Group, +1-858-450-0030, ext. 140, for Advanced Marketing Services, Inc. ADVANCED MARKETING SERVICES, INC. COMPARATIVE FINANCIAL RESULTS (Unaudited - amounts in thousands, except per share data) Condensed Statements Three Months Ended Fiscal Year Ended of Operations Mar. 31, Mar. 31, Mar. 31, Mar. 31, 2003 2002 2003 2002 NET SALES $205,732 $177,842 $911,625 $756,122 Cost of Goods Sold 176,115 149,391 764,794 637,342 GROSS PROFIT 29,617 28,451 146,831 118,780 Distribution and Administrative Expenses 36,879 22,849 129,294 81,276 INCOME/(LOSS) FROM OPERATIONS (7,262) 5,602 17,537 37,504 Other Income/(Loss), Net (72) (607) 796 520 INCOME/(LOSS) BEFORE PROVISION FOR INCOME TAXES (7,334) 4,995 18,333 38,024 Income Tax Provision/ (Benefit) (2,917) 1,962 7,158 14,926 NET INCOME/(LOSS) $(4,417) $3,033 $11,175 $23,098 NET INCOME/(LOSS) PER SHARE (diluted) $(0.23) $0.15 $0.57 $1.16 SHARES USED IN CALCULATION 19,053 20,159 19,738 19,935 Condensed Balance Sheets Mar. 31, Mar. 31, 2003 2002 ASSETS Cash and Short-term Investments $14,642 $23,125 Accounts Receivable, Net 158,259 162,678 Inventories 172,564 123,904 Income Taxes Receivable 2,385 -- Other Current Assets 9,006 10,681 Total Current Assets 356,856 320,388 Property and Equipment, Net 32,886 30,983 Goodwill and Other Assets 55,818 51,481 TOTAL ASSETS $445,560 $402,852 LIABILITIES AND STOCKHOLDERS' EQUITY Line of Credit $45,000 $25,000 Accounts Payable 238,701 223,960 Accrued Liabilities 19,988 20,046 Income Taxes Payable -- 1,522 Stockholders' Equity 141,871 132,324 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $445,560 $402,852SOURCE Advanced Marketing Services, Inc.
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CONTACT:
investors, Chuck Williams, Director of
Investor Relations of Advanced Marketing Services, Inc.,
+1-858-450-3545, chuckw@advmkt.com; or media, Greg McQuerter, or
Tina Wilmott, twilmott@mcquerter.com, both of The McQuerter
Group, +1-858-450-0030, ext. 140, for Advanced Marketing
Services, Inc.
