Advanced Marketing Services Files Voluntary Petition under Chapter 11 of United States Bankruptcy Code

Company Will Use $75 Million Loan Agreement to Fund Ongoing Operations; Customer and Publisher Service Will Not Be Impacted by the

Filing

SAN DIEGO--(BUSINESS WIRE)--Dec. 29, 2006--Advanced Marketing Services, Inc. (the Company) (Pink Sheets: MKTS), a leading provider of customized merchandising, wholesaling and contract distribution services, announced today that it has filed a voluntary petition under Chapter 11 of the Federal Bankruptcy Code in United States Bankruptcy Court for the District of Delaware. The Chapter 11 proceeding does not include the Company's international subsidiaries in the United Kingdom, Mexico and Australia, and their operations will not be affected.

The Company also announced that, in conjunction with the filing, it has entered into a loan agreement for $75 million in Debtor-in-Possession (DIP) financing from Wells Fargo Foothill, Inc., subject to court approval. The DIP financing should provide sufficient liquidity to meet the Company's ongoing operating needs during the proceeding.

During the past few months, the Company explored a number of alternatives to strengthen the Company's financial base and resolve past legal and regulatory issues. Despite making some progress, the Company was unable to secure new financing and the current loan facility, which is used to finance the Company's operations, will not be extended beyond December 28, 2006.

"This move will permit AMS, with its investment banker, to continue to pursue strategic alternatives," said Gary M. Rautenstrauch, President and Chief Executive Officer. "Additionally, Chapter 11 protection will enable the Company to continue to conduct business in the normal course, make payments to vendors going forward and continue delivering quality service and products to customers."

Forward-looking statements in this public announcement 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, including the following statements:

The DIP financing should provide sufficient liquidity to meet the Company's ongoing operating needs during the proceeding; and Chapter 11 protection will enable the Company to continue to conduct business in the normal course, make payments to vendors going forward and continue to deliver quality service and products to customers.

Certain important factors could cause results to differ materially from those anticipated by the forward-looking statements, including the following: The DIP financing is subject to certain terms and conditions. The Company's failure to comply with those terms and conditions could result in a default under the DIP financing loan agreement and, consequently, insufficient liquidity to meet the Company's ongoing operating needs during the proceeding.

What this means is that there is a possibility that all the efforts to publish books successfully - to work with authors to help create the right book; to design and produce it well; to generate publicity and clever promotional tricks to bring people into retail outlets; to ensure continuity of stock; to generate enough revenue and profit to continue to invest - will have been to no avail as the annual profit disappears into a bad debt black hole.

From the outside, publishing risk is seen to be all about making the right authorial bets. This is, of course, still important but even with the best authors there are still many nightmarish risks. Decisions about advances, marketing spend, size of initial distribution, legal, country economics, and last but not least customer bankrupcy.

It's a tough old world out there in this business. US trade publishers were, in general, showing a reasonable result for 2006. Two days from the end of the year they may have to revise their statements.