By Ann Levine of Raine Consulting July 21, 2003 -- Courier Corporation (NASDAQ: CRRC), North Chelmsford, MA, announced third quarter earnings of $0.88 per diluted share and income of $4.8 million for the period ending June 28th, 2003. These figures show a 14% increase over third quarter results last year of $4.1 million in income and $0.77 per diluted share. Sales were $51.1 million showing a decrease of 1% from third quarter sales of $51.7 million last year. Topics of this summary: * Specialty Publishing * Book Manufacturing * Outlook * Q & A Summary Courier Chairman, James Conway III, focused on three major areas for the company during the call: operating efficiencies, services, and innovation. Operating efficiencies are evident from the increase in basis points the company has achieved. The company has achieved a high level of process control and has made a disciplined investment in worker training and equipment. Courier enjoys its position as a service leader in the industry and will continue to support its customers as efficiently as possible. Courier believes that service is the edge they have over competitors. Although the printing industry has changed dramatically in the last several years, Courier is exploiting synergies within their two segments and creating process improvements and new marketing channels. Specialty Publishing Dover Publications reported sales for the quarter of $8.9 million, a 5% increase over the same period last year. Sales are below the company's target expectations of double- digits; however there has been significant improvement over the last two quarters. Areas of improvement have been in large bookstore chains and growth in the international sales. Dover will continue with expansion and exploration of new channels and new products laying the groundwork for future growth. This fall, 330 new titles will be published along with a new product of an "Origami Fun Kit" designed for retail channels. Channel development will include the International arena such as in Canadian and UK markets. Current initiatives in the UK include Doverdirect.co.UK and a British version of an electronic marketing program. Book Manufacturing Sales in this segment during the third quarter were $43.6 million, indicating a 2.5% decline from the same period last year. In the Education market, sales were up 5%. The College market showed a sales increase of 22% primarily due to an increase in reprint orders, new title activity and a demand for 4-color textbooks. The Elementary and High School market had a 13% decline in sales as publishers are delaying decisions on ordering due to state budget deficits. In June, some of the state monies have begun to be released. The Religious trade has a history of quarter-to-quarter variations and accounted for most of the loss. Long-term prospects remain excellent even though there was a 10% decline in performance. Specialty trade publications had an increase of 14% due to a gain in market share and strong sales specialty niches such as game books. Books sales were especially high in June due to the new release of Harry Potter and Hillary Clinton's book. Outlook 2003 Courier is confident about prospects for the balance of the year. Even though sales are down, earnings have exceeded expectations. 2003 revenue is expected to be in the range of $205-208 million, where 2002 revenue was $201 million. Earnings per diluted share are expected in the $3.50-3.60 range indicating a 14-18% increase over 2002 earnings of $3.06 per share. Q & A Summary 1. As new marketing channels are explored, other channels have experienced ups and downs. Direct-to-consumer channels are up a little less this quarter than the last and are showing single digit increases. These results are shifting from quarter to quarter. 2. Courier has a firm commitment to the new four-color press planned for 2004. The press is efficient and productive and will reduce time on the company's older press. Courier will put as many titles on the new press as possible. The company targets June when the press will be operational and in production. 3. Revenue from the new 4-color press will not be seen until Q4 2004. The expectation is that revenue will be generated in 1-2 years. The press would not come on line until May-June 2004. 4. Capital expenditures are expected to carry through to next year for the new 4-color press. The company reported capital expenditures of $4 million in the first 9 months of the year, however total expenditures will be in the range of $10 - 12 million and will carry into the following fiscal year. Courier maintains they are making investments in equipment that will lower costs and increase productivity. 5. The tax rate for the company has increased due to the State of Massachusetts Tax and also because of a lost benefit in the international arena. The tax rate will be at a higher level moving forward. There is no impact from currency exchange. 6. Average title prices are increasing as most of new products have higher price points. Courier has found areas where prices needed to rise. 7. Market share gains are coming from a variety of different sectors including the bigger and smaller customers.