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Courier Reports Record Q1 Results: Specialty Publishing Unit Off Slightly

Press release from the issuing company

NORTH CHELMSFORD, Mass.-Jan. 16, 2003--Courier Corporation, one of America's leading book manufacturers and specialty publishers, today announced results for the quarter ending December 28, 2002, the first quarter of the company's 2003 fiscal year. Courier reported income from continuing operations of $3.7 million, or $.70 per diluted share, for the first quarter of fiscal 2003, up 38% from last year's $2.7 million, or $.52 per diluted share. Sales from continuing operations were $48.8 million for the quarter, up 7% from first-quarter sales of $45.6 million in fiscal 2002. These results reflect improved performance in all three of the company's book manufacturing markets, continuing the recovery that began in the latter part of fiscal 2002. They do not include the results of a discontinued operation, Courier Custom Publishing, a provider of customized teaching materials which operated at a small loss prior to its sale by Courier in December 2002. The $1.5 million sale resulted in an after-tax gain of approximately $0.8 million or $.15 per diluted share. Including discontinued operations, net income for this year's first quarter was $.84 per diluted share versus $.50 per diluted share last year. "We are pleased to have started our new year with such a strong quarter," said Courier Chairman and Chief Executive Officer James F. Conway III. "It was particularly gratifying to see the pace of orders increasing across all of our book manufacturing markets, continuing the positive trend of the previous quarter. This reinforces our hope for continued solid performance through the remainder of the year. With retailers reporting a disappointing holiday season, sales at Dover Publications, our specialty publishing unit, were off slightly. Nonetheless, we were again able to increase gross profits and earnings in this segment as well as in book manufacturing. And we came out of the quarter in excellent financial condition, with $11 million in cash." Results by segment Book manufacturing sales for the first quarter of fiscal 2003 were $41.8 million, an increase of $3.6 million, or 9% from fiscal 2002's first quarter. First quarter pretax income for the segment was $4.7 million, up 50% from a year earlier. As a book manufacturer, Courier serves publishers in three markets: religious, education and specialty trade. Sales to the religious market were up 17%. Sales to the education market were up 13%, with both the elementary/high school and college markets showing renewed demand for reprints following the previous year's inventory reductions. Sales to the specialty trade publishing market were up 7%, with sales of computer game books particularly strong through the fall. "Our book manufacturing business benefited from an improved sales mix," said Conway. "We also continued to ratchet up internal efficiency, demonstrating the value of our steady investments in equipment and training. Factoring in the effects of higher capacity utilization, our gross profit as a percent of sales increased by 260 basis points over the prior year, and pretax income was up 50%." Dover Publications, Courier's specialty book publishing segment, reported pretax income of $1.1 million for the quarter, up 17% over the fiscal 2002 figure of $0.9 million. Sales for the quarter were $8.4 million, down 2% from fiscal 2002's first-quarter sales of $8.5 million. These results reflected a mixed retail environment, with disappointing sales to large bookstore chains but a 14% increase in direct-to-consumer sales and smaller increases in other non-bookstore channels. International sales rose 3%, helped by additional representation in several international markets. "Like most retailers, the major bookstore chains reported disappointing sales this Christmas season," said Mr. Conway. "This experience affected the timing and volume of first-quarter orders at Dover. In other venues, including smaller bookstores, craft shops and restaurant chains, results were much stronger. And our healthy growth in direct sales to readers indicates that we are meeting their needs better than ever. This shift in sales mix combined with higher prices and lower costs helped Dover come through for us with a double-digit increase in pretax income." Outlook "Given our strong first quarter in book manufacturing, we have raised our earnings guidance for the full year by $.05 per share," said Mr. Conway. "We believe that the combination of gradual market recovery and our own perseverance in achieving additional cost efficiencies will lead to Courier's seventh consecutive year of double-digit earnings growth. "In spite of the soft 2002 holiday season, we remain excited about the long-term growth prospects at Dover Publications. And we are vigorously pursuing a full range of plans to serve both our traditional reader constituencies and generations of new Dover readers around the world. "All told, for fiscal year 2003 as a whole, we expect Courier's sales from continuing operations to be in the range of $209 to $215 million, representing an increase of 4% to 7% over fiscal 2002 sales. And we expect earnings per diluted share from continuing operations to be in the range of $3.40 to $3.55, up approximately 11% to 16% from last year's $3.06 per diluted share from continuing operations."