Advanced Marketing to Restate 5 Years of Results

Book distributor Advanced Marketing Services Inc. said Wednesday that it planned to restate its financial statements for the last five years, reducing earnings by as much as $9 million.

The San Diego-based firm previously had reported total net income of $85 million for the five years ended March 31, 2003.

Advanced Marketing said the restatement was mainly based on the timing and amount of revenue recognized, and the reversal of accrued liabilities.

Advanced Marketing is being investigated by federal prosecutors and the Securities and Exchange Commission. The company said it was cooperating in both probes, and has said that it believed the SEC was looking at the firm’s advertising services.

The company’s stock tumbled $1.82, or 15%, to close Wednesday at $10.15 on heavy volume on the New York Stock Exchange.

Advanced Marketing said the restatement constituted a default under its revolving credit agreement. The company has a forbearance deal with its lenders through Jan. 30 and plans to seek a longer forbearance.

For its 2004 fiscal year, which ends March 31, Advanced Marketing said it had lowered its earnings forecast to 30 cents to 40 cents a share because of slow sales in some high-margin book categories and because of the costs of the investigations. In July, the company forecast earnings of 90 cents to $1.05 a share.