By Ann Levine April 22th, 2003 - Courier Corporation (NASDAQ: CRRC), the North Chelmsford, Massachusetts-based book manufacturer and publisher made its Second Quarter earnings announcement for the period ending March 29, 2003. Courier prints, publishes and sells books and had two lines of business, book manufacturing and specialty book publishing. Courier is the 5th largest book manufacturer in the U.S. and focuses on education, religion and specialized trade books. Courier's specialty book publishing company, Dover Publications, targets niche topics and titles. During their Second Quarter conference call, Courier announced income from continuing operations of $ 3.8 million or $.70 per diluted share, which exceeded the company's guidance by 9%. This represents a 32% increase over Second Quarter 2002 of $2.9 million or $.054 per diluted share. Sales for the Second Quarter were $48.6 million up 1% from Second Quarter sales of 48.1 million in fiscal 2002. Topics of this summary: * Specialty Publishing Segment * Book Manufacturing Segment * Guidance for 2003 * Q & A Summary Courier's CEO, James Conway III, highlighted the key metrics that drive shareholder value for Courier as growth in revenues and growth in earnings per share. To that end, the economic recovery has left consumers worried and businesses cautious. Although caution still rules, the business climate and sales growth has not been as robust as the company would have liked. Courier has become adept at squeezing more earnings out of smaller sales increases. As such, the company has expectations of continuing their seven straight years of double-digit earnings growth. Conway attributes this to: 1. Lower margin of error that plays to Courier's strengths; 2. A focused strategy for long-term growth prospects in their target market with capital investments to support that strategy. Specialty Publishing Segment Dover has seen $9.1 Million in sales in the Second Quarter up 2.5 %, which is below the expected growth of 10-15% growth. Several strategies have been implemented to reach higher growth including: -Building non-bookstore channels -Developing a sales partner program supporting traditional booksellers through electronic marketing -Direct marketing to consumers -Managing lists, precise segmentation, and upgrading catalogs -Enhancing Dover's website to increase traffic and access -Increased number of new titles released in 2003 at a 23% higher rate than 2002 Book Manufacturing Segment Book Manufacturing sales were up $41.1 Million in the Second Quarter representing a 2% increase. Courier stated it was a difficult Quarter for the book industry overall. Courier focuses on books in higher education, elementary education, religion and specialty books. In higher education, Courier expects a good year with a strong demand as indicated by Second Quarter sales up 20%. Elementary education will prove a slower market due to poor state economies, and federal funding issues. Religious books show the most fluctuation Quarter to Quarter, while specialty books showed an increase of 11% of sales. With specialty books, consumer purchases were down, reprints returned to normal levels, but Courier was able to gain market share with key customers. Guidance for 2003 Although Courier has had 2 Quarters of excellent earnings, the guidance for the remainder of 2003 remains the same as previously stated. Courier has lowered its forecast and expects revenues of $208 - 213 Million representing a 3-5% increase over 2002. In January the company predicted sales of $209-215 Million. Earnings per diluted share is expected to be $3.45-3.60 up 12-18% from last year's $3.06 per diluted share. Q & A Summary 1. In an era where big retailers are having tough years due to the economy, the outlook for Dover for the second half of the year looks promising as the company is confident of the strength of all its combined channels. 2. Gross margin was up 250 basis points due to a mix of sales and increased efficiencies. The book-manufacturing segment generated margin improvement due to an improved sales mix. Additional improvement was generated from the benefits of capital equipment that was installed and the process improvements made in the company. 3. After capital spending, excess cash will be spent on acquiring a similar small publishing company such as Dover. Capital expenditures in the form of additional 4 color presses are expected to tie up the remaining cash flow. 4. Although Courier has not identified another company to acquire at this time, the company will continue to look for one in 2003. 5. Retailer's reaction to Dover's marketing directly to consumers has been positive. Courier stresses the importance of their retail channel partners through providing a store locater function on their website. Their consumer marketing is driving sales through all channels.