By Trevor Shackelford April 19, 2006 -- Courier Corporation (NASDAQ: CRRC) announced their second quarter 2006 results last week. Results include the acquisition of Moore Langen completed on October 17, 2005. Total revenue for Courier's second quarter was $57.5 million, up 8% from $53.5 million reported for the second quarter of fiscal 2005. Net income for the second quarter of fiscal 2006 was $4.4 million, up 15% from $3.8 million reported for the second quarter of fiscal 2005. Net income per diluted share was $0.35, up 13% from $0.31 reported for the same period last year. For the first six months of the year, revenue was $115.2 million, up 10% from $104.8 million reported in the first six months of last year and net income was $8.9 million, or $0.71 per diluted share, up 16% from $7.6 million, or $0.61 per diluted share reported for the same period last year. Contents of this Summary * Quarter Highlights * Segment Performance * Guidance * Raine Radar * Q & A Quarter Highlights • Moore Langen, an Indiana-based printer specializing in educational book covers, acquired by the Courier on October 17, 2005 was fully integrated into the book manufacturing segment. • Courier’s second MAN Roland press was running at full production, adding four-color printing capacity. • Courier’s new McCain and Smyth sewing systems went into operation during the quarter. • Courier announced that it intends to expand bindery operations at its Kendallville, IN plant this summer. • Courier intendeds to install a third new MAN Roland four-color press in the fall. • During the second quarter, four-color sales were up 33%. • Gross profit for the second quarter was $17.9 million, compared to $16.3 million reported for the same period last year. • SG&A expenses for the second quarter were $11.12 million, compared to $10.3 million reported for the same period last year. • Adoption of FAS 123 (R), a new accounting rule for expensing stock options, reduced second quarter net income by approximately $200,000 in fiscal 2006 and $330,000 in fiscal 2005. • Cash from operating activities for the first six months was $10.1 million, compared to $10.2 million reported for the same period last year. • Prepublication expenditure in the publishing segment was $1.6 million, up 11% from last year. • During the second quarter, $15 million in cash went to activities related to the acquisition of Moore Langen, and $11.8 million went to capital expenditures, primarily for the four-color press. • At the end of second quarter, the company had approximately $14.3 million in cash and cash equivalents. • The board of directors declared a dividend of $0.12 per common share, payable May 26, 2006 to stockholders of record on May 5, 2006. Segment Performance Specialty Publishing Segment This segment comprises Dover Publications and Research & Education Association (REA). Courier reported Q2 revenues for the segment of $10.3 million, up 5% from $9.7 million reported in the second quarter of fiscal 2005. For the first six months of the year, revenues for the segment were $21.2 million, up 6% from $20.0 million reported for the same period last year. Pretax income for the second quarter was $1.1 million, or $0.05 per diluted share, up 32% from $800,000, or $0.04 per diluted share reported for the same period last year. For the first six months, pretax income was $2.1 million, or $0.11 per diluted share, up 15% from $1.9 million, or $0.09 per diluted share reported for the same period last year. Book Manufacturing Segment This segment focuses on three publishing markets: education, religion and specialty trade. Sales to the education market grew 14% in the quarter and in the first six months. Sales to religious market were down 2% for both the quarter and the first six months. Sales to the specialty trade market were up 2% in the second quarter and up 8% in the first six months of fiscal 2006. Q2 revenues for the segment were $49.4 million, up 9% from $45.2 million reported in the second quarter of fiscal 2005. For the first six months, revenue for the segment was $97.7 million, up 11% from $88.2 million reported for the same period last year. Gross profit increased 11% to $13.2 million reflecting volume growth and improvement in the sales mix. Pretax income for the second quarter was $6.3 million, or $0.33 per diluted share, up 9% from $5.8 million, or $0.30 per diluted share reported for the same period last year. For the first six months, pretax income was $12.5 million, or $0.65 per diluted share, up 9% from $11.5 million, or $0.59 per diluted share reported for the same period last year. Guidance Courier Corporation reiterated its fiscal year 2006 sales growth of 14% to 16% (which includes the benefit of a 53-week year in fiscal 2006), resulting in total sales of between $258 million and $263 million, which is a record high for Courier. The company also reiterated its net income per diluted share to be between $1.94 and $2.04. This range represents an increase of between 16% and 22% from fiscal 2005 earnings of $1.67 per diluted share. This guidance reflects its adoption of new stock option accounting rules under FAS 123(R), which are expected to reduce the fiscal 2006 earnings by approximately $0.06 per diluted share and will reduce fiscal year 2005 earnings by $0.10 per diluted share. Courier anticipates the effective tax rate level for fiscal 2006 to be approximately 36% level. Raine Radar Courier continues to see success in the education market, especially with its four-color textbooks. Seeing the success it has had with its new four-color presses and acquisition, with plans to add another new press, it looks like Courier is very confident in its position going forward. Investors seem confident also, with the stock edging upward almost 30% since January. Q & A 1. The company said that despite the increase in costs, particularly in utilities, the company achieved its targeted goals and expects that gross margin will continue to improve. Courier also said that growth in volume helped gross margins. 2. The company is looking forward to the launch of its latest press and is expecting growth in revenues.