<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)