By Susan Kelly November 12, 2004 -- Courier Corporation (NASDAQ: CRRC) recently announced its fourth quarter and fiscal 2004 results, achieving their eighth straight year of record income. Fourth quarter income from continuing operations was $7.6 million, or $0.92 per diluted share, up 9% from $7.0 million, or $0.85 per diluted share, in the fourth quarter of fiscal 2003. Revenue for the quarter was $59.2 million, up 11% from $53.5 million in last year's fourth quarter. For fiscal 2004, income from continuing operations rose to $20.5 million, up 7% from $19.3 million in 2003. Net income per diluted share from continuing operations was $2.50; an increase of 5% over last year's earnings of $2.37. Despite the $12 million acquisition of Research & Education Association (REA) in January and significant capital expenditures related to a new four-color press, Courier finished the year with cash of $24 million. Topics of this summary: Quarter Highlights Results By Segment Outlook Q & A Quarter Highlights A new four-color press was installed at their Indiana plant in the third quarter. Start-up was a success and the press has been running 7-days a week, 24-hours a day since may, providing much needed capacity throughout the summer. Courier announced an agreement to purchasing a second new four-color press, with anticipated start-up for late December 2005. Courier completed a 50,000 square foot addition to the Indiana plant, relieving cramped operating conditions. Courier was named to the Forbes list of 'Best 200 Small Companies in America' for the fourth year in a row. Results by Segment In the Specialty Publishing segment includes Research & Education Association (REA) and Dover Publications. Overall, the segment reported fourth-quarter sales of $11.2 million, up 12% from $10.0 million in last year's fourth quarter due to the inclusion of REA sales. The segment's pretax income was $2.6 million or $.20 per diluted share for the quarter, up 8% from $2.4 million or $.19 per diluted share last year. For the full year, specialty publishing sales were $40.8 million, up 12% from $36.4 million in fiscal 2003, with most of the increase coming from REA. Full-year pretax income for the segment was $6.5 million, up 11% from $5.9 million a year earlier. REA sales were $1.5 million for the fourth quarter and $3.9 million for the year, yielding pretax income of $102,000 for the quarter and $170,000 or approximately $0.01 per diluted share for the year. Dover sales in the fourth quarter were $9.7 million, down 3% from $10.0 million a year earlier due to sluggish sales to U.S. retailers, particularly non-bookstore customers such as craft stores and gift shops. For the full year, Dover sales were up 1% to $36.9 million from $36.4 million in 2003. Direct-to-consumer sales were up 7% in the fourth quarter and 5% for the year, while international sales were flat in the quarter and up 9% for the year. Dover pretax income rose 4% in the fourth quarter to $2.5 million; for the full year, Dover pretax income was $6.3 million, up 8% from the prior year. Gross profit as a percentage of sales increased by 220 basis points, from 47.2% last year to 49.4% this year. Courier's book manufacturing segment had fourth-quarter sales of $49.6 million, up 9% from last year's fourth quarter. Pretax earnings for the segment rose 8% in the fourth quarter to $9.1 million or $.72 per diluted share versus $8.4 million or $.67 per diluted share in 2003. For the full year, book manufacturing sales were $177.2 million, up 3% from $171.9 million in fiscal 2003. Pretax earnings for the year were $25.2 million or $2.01 per diluted share, an increase of 4% from last year's $24.2 million or $1.95 per diluted share. Gross profit as a percentage of the year's sales decreased by 160 basis points to 27.9% from 29.5% in 2003. The book manufacturing segment focuses on three publishing markets: education, religious, and specialty trade. Sales to the education market rose 11% in the fourth quarter and 13% for the full year, driven by strong sales at the elementary and high school levels, which rose approximately 30% for the year. Higher-education sales were up 4% for the year. In the religious market, a 14% increase in fourth-quarter sales offset slow sales earlier in the year, bringing full-year growth to 3%, in line with expectations. Sales to the specialty trade market were up 2% in the fourth quarter, reversing the declines of previous quarters but still leaving full-year sales down 8% from a year earlier. Outlook For fiscal 2005 overall, Courier expects to achieve sales growth of 7% to 9%, resulting in total sales of between $226 and $231 million. It is expected that earnings per share will reach $2.75 to $2.90 for fiscal 2005. This represents an increase of between 10% and 16% from this year's earnings of $2.50 per diluted share. Courier Chairman and CEO James F. Conway III stated, “We will continue to deliver the best service in the industry while maximizing operating efficiency throughout our business. We expect the result of these efforts to deliver another record year in 2005.” Q & A With regard to the new four-color press, Courier is aware that the margins of efficiency may be swayed due to the learning curve needed. The jump in Religious sales is as a result of when the orders come in. Courier does not expect to see Religious sales to be as high in the first quarter of 2005. Courier’s new press was just ordered and the anticipated start-up is November/December 2005. The new press will begin to make an impact on Courier’s business by March 2006. Courier was responding to market pressures, customers and competitors with respects to the purchase of their additional four-color press. Courier feels very strongly that the market will grow over the next three to four years. This growth, they feel, will be driven by the elementary and high school textbook business. Regarding the Direct-to-Consumer business, this quarter is very strong due to the upcoming holiday season.