Sales Shrink at AMS

by Jim Milliot -- Publishers Weekly, 3/27/2006

The seemingly endless audit of Advanced Marketing Services' financial statements took another slight turn last week, when AMS announced that it was making revisions to its 2000–2002 fiscal year reports, in addition to restatements to fiscal 2003 and 2004 (AMS's fiscal year ends in March). The additional restatements are needed, the company said, to correct new accounting issues, including corrections in income tax contingencies, the sales returns reserve and the reporting of stock options and stock-based compensation granted to employees. While the changes had little impact on revenue, they did lower earnings per share. The revisions for fiscal 2000–2004 are subject to an audit, which, the company said, is nearing completion.

Figures for fiscal 2005 are estimates and the audit for that has not yet begun. Fiscal 2005 bears the brunt of charges associated with AMS's legal, accounting, severance and distribution reorganization costs, and the company projects that in addition to a 11% decline in sales, fiscal '05 will show an earnings-per-share loss of $1–$1.10.