By Ann Levine July 21, 2004 -- Courier Corporation (Nasdaq: CRRC) announced its third quarter income from continuing operations at $5.2 million up 9% from $4.8 million reported for the same period last year. Sales during the third quarter were $55.5 million also up 9% over $51.1 million in sales for the third quarter last year. Earnings per share were $0.63 for the third quarter over $0.59 for the same period last year. For the first nine months of FY 2004 income from continuing operations was $13.0 million up 5% from $12.3 million for the first nine months of last year. Sales for the first nine months of fiscal 2004 were $152.0 million up 2% for $148.5 million for the first nine month of fiscal year 2003. Topics of this summary: Results By Segment New Initiatives Good Citizenship Outlook Q & A Results by Segment In the Specialty Publishing segment overall sales were $10.4 million a 16% increase over the $8.9 million for the same period last year. Dover Publications sales were $9.1 million with REA sales of $3.1 million. Dover domestic sales were up 2% while international sales were flat. REA outperformed expectations. In the segment, gross profit as a percentage of sales was 47.3%. Dover gross profit was 49.2% and REA gross profit was 33.7%. In book manufacturing, sales were $47 million for the third quarter, an 8% increase over third quarter results for 2003. Sales in the education market increased 26% for the third quarter with the elementary and high school markets showing the strongest increase of 30%. Higher education sales were up 23%, religious market sales down 3% and specialty trade sales down 4%. Gross profit as a percentage of sales was down at 26.8% during the quarter. A return to traditional margins is expected as the new plant in Indiana reaches optimum performance by the end of the year. New Initiatives To capitalize on educational sales, Courier announced several new initiatives to reach out to new and existing customers and which should have impact on company revenues in upcoming quarters. Taking advantage of Courier’s niche presence in educational publishing with REA and to capture more spending on classroom materials, Courier will: begin releasing a new catalog for teachers in levels K-8 provide a new section on its website designed for teachers provide an on-line marketing program of Dover sample In the School and College Bookstores Courier is now deploying the REA sales force on Dover’s behalf to create a mutual benefit in both segments. Courier is implementing a far-reaching technology initiative designed to assist and benefit the Dover direct and indirect sales force. Good Citizenship Courier did not miss the opportunity to tout its good citizenship in two communities. In Westford, MA, Courier recently sold its mill building. Even though the sale added $0.02 in earnings per share to third quarter earnings, Courier indicated the sale would benefit the community as the building was to be part of a new development for the area. In Kendallville, IN, Courier was awarded a Corporate Good Citizen Award from the community for providing jobs to the area as opposed to shipping jobs overseas. Outlook Courier expects a strong fourth quarter with earnings per share in the range of $0.90 to $1.00. Full year earnings per share are expected in the $2.48-$2.58 range. Expected annual sales are in the range of $211-$215 million for fiscal 2004. Q & A. The installation and ramp-up of the new four-color press in the Indiana plant will not bring gross margins all the way back to traditional company levels during the fourth quarter. Gross margins will ramp above 26% during the fourth quarter. With Dover publications, Courier brass believes it has the right people with the right ideas in place to run the overall operations. Additional improvement efforts are currently underway at Dover. Courier has focused on a combination of items to increase profitability in the Specialty Publications segment including, cost, price increases, and selling products with the highest margins. Although pretax margins were about 5% for REA, Courier officials stated investors would begin to see profits in the second half of 2005 fiscal year. If current charges and expenses were stripped away from financials in this segment, it would show the segment is quite profitable.