Distributor of Books Plans Stock Offering

SAN DIEGO — Advanced Marketing Services, a San Diego-based book distributor that supplies books to major discount warehouse chains including Price Co., Pace Membership and Costco, said Tuesday it plans to file a registration statement this week for a 1-million share stock offering that at current prices would raise more than $14 million.

Although the fast-growing company is debt free and has ample cash, AMS needs more equity capital to increase its borrowing power so that it can finance larger inventories of books during prime selling seasons, said analyst Fred Wintzer of Alex. Brown & Sons of Baltimore.

“As they become a larger, even in some cases the largest, customer of book publishers, they have to finance some of the larger print runs,” AMS spokesman Scott Rieger said Tuesday.

Assuming the offering would be priced at Tuesday’s closing stock price of $14.50, the planned 1-million share offering would raise about $14.5 million before underwriting and brokerage costs.

AMS completed its first public offering July 1 last year, selling 1.6 million shares at $13 each, raising $20.8 million.

AMS stock declined sharply after the October, 1987, stock crash to as low as $5 before rebounding this year.

The company now has 5 million shares outstanding.

Of the 1 million shares to be sold, about 335,000 will be sold by founders Charles Tillinghast, AMS president, and Loren Paulsen and R. Craig Schafer, both vice presidents.

Tillinghast now owns 1,261,680 AMS shares, or 22.3% of the total outstanding; Paulsen and Schafer each own 1.26 million shares, or 22.2%.

Last year, Price Co. accounted for 42% of AMS’s book sales and Sam’s Wholesale Club for 22%.

The company’s high volume of sales to discount warehouse chains has made AMS one of the top 10 book distributors in the country.

AMS posted a profit of $3.6 million on sales of $110 million for the fiscal year ended March 31, up from a profit of $1.6 million on sales of $70.3 million during fiscal 1987.