Courier Reports Third-Quarter Results

  Courier Reports Third-Quarter Results

              Net Income of $1.6 Million on Sales of $59 Million

Business Wire

NORTH CHELMSFORD, Mass. -- July 24, 2012

Courier Corporation (Nasdaq: CRRC), one of America’s leading book
manufacturers and specialty publishers, today announced results for the
quarter ended June 23, 2012, the third quarter of its 2012 fiscal year.
Revenues were $58.9 million, down 5% from last year’s third-quarter revenues
of $61.9 million. Net income was $1.6 million or $.13 per diluted share,
including severance costs of $235,000 in conjunction with the previously
announced consolidation of one-color printing operations, versus a loss of
$3.1 million or $.26 per diluted share in the third quarter of fiscal 2011,
including a non-cash, pre-tax impairment charge of $8.6 million, or $.43 per
diluted share. Excluding the impairment charge related to Research & Education
Association (REA) in the wake of the Borders Group bankruptcy, adjusted net
income for the third quarter of fiscal 2011 was $2.0 million or $.17 per
diluted share.

For the first nine months of fiscal 2012, Courier revenues were $184.2
million, down slightly from $185.7 million in fiscal 2011. Net income for the
year to date was $3.5 million or $.29 per diluted share, including pretax
charges totaling $1.8 million related to severance and post-retirement benefit
costs and a first-quarter pretax gain of $0.6 million from the sale of certain
non-operating assets. For the first nine months of fiscal 2011, the
company’s net loss was $6.3 million or $.52 per diluted share, including
second-quarter restructuring costs and a bad-debt provision related to Borders
as well as the third-quarter impairment charge. Excluding those items for both
periods, adjusted net income for the first nine months of fiscal 2012 was $4.2
million or $.35 per diluted share, compared to $4.0 million or $.34 per
diluted share for the first nine months of fiscal 2011. Details for these
items can be found in the tables at the end of this release.

Third-quarter results in Courier’s book manufacturing segment were affected
by a shift in ordering patterns in the education market, with textbook
publishers tightening their inventory management in the current economy by
reducing print quantities and timing book production to the start of each
semester. As a result, while education sales picked up as the quarter
progressed, revenues were down from the previous year. In Courier’s
specialty book publishing segment, sales were lower at two of its three
businesses, but the continued streamlining of publishing operations enabled
the segment to narrow its losses from the prior year.

“The sluggish economy continued to be a thorn in the side of many of our
customers, and we felt it too,†said Courier Chairman and Chief Executive
Officer James F. Conway III. “Yet our relationships with key customers are
stronger than ever. While the traditional textbook ordering cycle has been
pushed back closer to the start of the school year, we are working closely
with customers to help them succeed, and we closed the quarter with a healthy
run rate. Meanwhile, our specialty book publishing businesses continued to
work through the effects of the past year’s channel turbulence with a
sharper product focus, helped by an increasing ability to deliver
award-winning content in both print and e-book form.

“Under our previously announced stock repurchase program, we purchased
approximately 445,000 shares in the third quarter, for a total of $4.8
million. Since the start of the fiscal year, our strong cash flow has also
enabled us to bring our debt down by $2.5 million. Given this performance and
our solid financial condition, our Board of Directors has once again approved
a regular quarterly dividend of $.21 per share. We head into our fourth
quarter with every expectation of a strong close to the fiscal year in keeping
with seasonal trends.â€

Book manufacturing: adjusting to changes in seasonal textbook cycle

Courier’s book manufacturing segment had third-quarter sales of $52.4
million, down from $55.0 million for the same period last year. For fiscal
2012 to date, book manufacturing sales were $163.9 million, up slightly from
$163.6 million in fiscal 2011.

As previously mentioned, the results for fiscal 2012 included restructuring
costs for severance and post-retirement benefits, while last year’s
second-quarter results included plant closing costs. Excluding these
restructuring costs, the segment’s third-quarter operating income was $4.2
million, versus $5.1 million a year ago. On a year-to-date basis, operating
income was $11.7 million, up 4% from $11.3 million for the first nine months
of last year. Gross profit for the first nine months of fiscal 2012, again
excluding restructuring costs, was $32.1 million or 19.6% of sales, compared
to $31.9 million or 19.5% of sales last year. The modest year-to-date
improvement in gross profit margins, achieved despite a highly competitive
pricing environment and reduced recycling income, reflects improved operating
efficiencies created by last year’s technology investments and the further
consolidation of the company’s one-color printing operations.

The book manufacturing segment focuses on three markets: education, religious,
and specialty trade. Sales to the education market were down 12% in the
quarter and down 3% for the year to date, with publishers managing inventories
tightly and taking advantage of available capacity. Sales to the religious
market were down 3% from fiscal 2011 in the third quarter; through the first
nine months religious sales were even with last year, but sales to the
company’s largest religious customer were up 2%. Sales to the specialty
trade market were up 1% in the quarter and up 6% for the year to date,
reflecting increased orders at Courier Digital Solutions and a return to more
traditional ordering patterns as the marketplace continues to assimilate the
loss of Borders.

“Our third quarter illustrated the continuing shift in the textbook
market’s seasonal ordering cycle,†said Mr. Conway. “Between the
uncertain economy and the budget crunch in state governments, many textbook
publishers have chosen to reduce print quantities, time their orders closer to
the start of the school year and, where appropriate, order separately for each
semester. Fortunately, our efficient combination of digital and offset
facilities has enabled us to respond effectively, and we are ready for the
strong fourth quarter we foresee.

“While sales to the religious market were down modestly, we have often
experienced sizable quarter-to-quarter fluctuations in that market, a
situation compounded by this third quarter’s unusually early close on June
23. On a year-to-date basis, we remain even with last year in the religious
market as a whole, and sales to our largest customer are up. Our customer
relationships remain excellent in both the religious and education markets,
and we look forward to long-term growth in both.â€

Publishing: operating efficiencies help trim losses

Courier’s specialty publishing segment includes three businesses: Dover
Publications, a niche publisher with thousands of titles in dozens of
specialty trade markets; Creative Homeowner, which publishes books on home
design, decorating, landscaping and gardening; and Research & Education
Association (REA), a publisher of test preparation books and study guides.

Third-quarter revenues for the segment were $9.1 million, down 8% from $9.9
million in last year’s third quarter. The segment’s operating loss for the
quarter was $975,000, compared to a loss of $1.2 million last year. For fiscal
2012 to date, segment sales were $28.2 million, versus $30.8 million for the
first nine months of last year. The segment’s operating loss through nine
months was $3.9 million, unchanged from last year.

Of Courier’s three publishing businesses, REA alone was profitable during
the quarter, with sales up 2% from a year earlier despite the absence of
Borders, which had been one of REA’s largest customers prior to the
chain’s closing. At Dover, sales were off 2% but careful attention to costs
enabled the business to trim its operating loss by more than 20%. Creative
Homeowner, with sales down 31% in a challenging retail environment, lost
$227,000.

Successes during the quarter included the beta-site launch of
DoverPictura.com, Dover’s new online image store, the availability of a
growing range of e-book titles on popular platforms and a very strong spring
for REA’s Crash Course series and other AP test preparation titles.

“Our publishing segment continued to deal with channel challenges and a
sluggish consumer economy,†said Mr. Conway. “Faced with this environment,
we continued to take out costs wherever we could without compromising our
ability to deliver top-drawer content such as Creative Homeowner’s Backyard
Homesteading, which recently won a Gold Medal in the 2012 Independent
Publisher Book Awards.

“At the same time, we continued to move forward on the digital front.
DoverPictura beta-site customers can now browse through more than a hundred
thousand compelling images, and readers everywhere can access a growing array
of Dover, REA and Creative Homeowner titles in e-book form through our
relationships with Apple, Amazon and Google, and our new agreement with Barnes
& Noble.â€

Outlook

“We enter our busiest part of the year well equipped to take advantage of
our opportunities within today’s challenging economic environment,†said
Mr. Conway. “We continue to expand the range of services we provide for our
largest customers, and we continue to attract new customers with our
state-of-the-art digital inkjet capabilities. Our four-color digital and
offset plants are running more efficiently than ever, thanks to years of
steady investment in technology and a highly professional, customer-focused
workforce. And our publishing businesses are adapting to a changing retail
environment with exciting strategies coupled to the core content strengths our
readers expect.

“We expect full-year capital expenditures to be between $8 million and $10
million, versus $16 million in fiscal 2011. We also continue to benefit from
the consolidation of one-color printing capacity and other cost-reduction
measures taken over the last year in both of our business segments. And we
look forward to a productive summer focused on meeting textbook publishers’
needs for standard and customized versions in a shortened timeframe.

“In line with our past practice, today’s guidance, including comparisons
to prior performance, excludes impairment and restructuring charges. It also
excludes this year’s non-recurring items related to severance and
post-retirement benefit costs and the gain from the sale of non-operating
assets, as well as the Borders receivable write-off in last year’s second
quarter.

“We expect fourth-quarter sales of between $80 million and $85 million,
leading to total fiscal 2012 sales of between $264 million and $269 million,
an increase over fiscal 2011 of between 2% and 4% (which includes the benefit
of a 53-week year in fiscal 2012). We expect fourth-quarter earnings per
diluted share of between $.40 and $.55, versus $.55 in last year’s fourth
quarter. And for fiscal 2012 as a whole, we expect earnings per diluted share
of between $.75 and $.90, which compares with our fiscal 2011 earnings of $.89
per diluted share.

“In addition to measuring our performance by generally accepted accounting
principles, we also track several non-GAAP measures including EBITDA (earnings
before interest, taxes, depreciation and amortization) as an additional
indicator of the company’s operating cash flow performance. This measure
should be considered in addition to, not a substitute for or superior to,
measures of financial performance prepared in accordance with GAAP. In fiscal
2012, we expect EBITDA to be between $39 million and $42 million, compared to
$39 million in fiscal 2011, excluding last year’s impairment and
restructuring charges and this year’s severance and post-retirement benefit
costs and the gain from the sale of non-operating assets.

“Factors not incorporated into our guidance include the possibility of
future impairment or restructuring charges.â€

About Courier Corporation

Courier Corporation prints, publishes and sells books. Headquartered in North
Chelmsford, Massachusetts, Courier has two operating segments, full-service
book manufacturing and specialty book publishing. For more information, visit
www.courier.com.

This news release includes forward-looking statements. Statements that
describe future expectations, plans or strategies are considered
“forward-looking statements†as that term is defined under the Private
Securities Litigation Reform Act of 1995 and releases issued by the Securities
and Exchange Commission. The words “believe,†“expect,†“anticipate,â€
“intend,†“estimate†and other expressions which are predictions of or
indicate future events and trends and which do not relate to historical
matters identify forward-looking statements. Such statements are subject to
risks and uncertainties that could cause actual results to differ materially
from those currently anticipated. Factors that could affect actual results
include, among others, changes in customers’ demand for the Company’s
products, including seasonal changes in customer orders and shifting orders to
lower cost regions, changes in market growth rates, changes in raw material
costs and availability, pricing actions by competitors and other competitive
pressures in the markets in which the Company competes, consolidation among
customers and competitors, insolvency of key customers or vendors, changes in
the Company’s labor relations, success in the execution of acquisitions and
the performance and integration of acquired businesses including carrying
value of intangible assets, restructuring and impairment charges required
under generally accepted accounting principles, changes in operating expenses
including medical and energy costs, changes in technology including migration
from paper-based books to digital, difficulties in the start up of new
equipment or information technology systems, changes in copyright laws,
changes in consumer product safety regulations, changes in environmental
regulations, changes in tax regulations, changes in the Company’s effective
income tax rate and general changes in economic conditions, including currency
fluctuations, changes in interest rates, changes in consumer confidence,
changes in the housing market, and tightness in the credit markets. Although
the Company believes that the assumptions underlying the forward-looking
statements are reasonable, any of the assumptions could be inaccurate, and
therefore, there can be no assurance that the forward-looking statements will
prove to be accurate. The forward-looking statements included herein are made
as of the date hereof, and the Company undertakes no obligation to update
publicly such statements to reflect subsequent events or circumstances.

COURIER CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share amounts)
               Â              Â               Â               Â
                  QUARTER ENDED                    NINE MONTHS ENDED
                  June 23,        June 25,         June 23,         June 25,
                  Â 2012   Â    Â 2011    Â    Â 2012    Â    Â 2011    Â
                                                                    Â
Net sales         $  58,896       $  61,894        $  184,220       $  185,708
Cost of sales     Â 45,864 Â    Â 47,174  Â    Â 143,392 Â    Â 150,509 Â
                                                                    Â
Gross profit         13,032          14,720           40,828           35,199
                                                                    Â
Selling and
administrative       10,285          11,242           35,227           36,353
expenses
Impairment        Â -      Â    Â 8,608   Â    Â -       Â    Â 8,608   Â
charge (1)
                                                                    Â
Operating            2,747           (5,130  )        5,601            (9,762  )
income (loss)
                                                                    Â
Interest             246             194              699              645
expense, net
Other income      Â -      Â    Â -       Â    Â (587    )     Â -       Â
                                                                    Â
Income (loss)        2,501           (5,324  )        5,489            (10,407 )
before taxes
                                                                    Â
Income tax
provision         Â 937    Â    Â (2,195  )     Â 2,031   Â    Â (4,127  )
(benefit)
                                                                    Â
Net income        $  1,564  Â    Â ($3,129 )     $  3,458   Â    Â ($6,280 )
(loss)
                                                                    Â
Net income
(loss) per        $  0.13   Â    Â ($0.26  )     $  0.29    Â    Â ($0.52  )
diluted share
                                                                    Â
Cash dividends
declared per      $  0.21   Â    $  0.21    Â    $  0.63    Â    $  0.63    Â
share
                                                                    Â
Wtd. average
diluted shares       12,026          11,996           12,093           11,978
outstanding
                                                                    Â
SEGMENT
INFORMATION:
                                                                    Â
Net sales:
Book              $  52,413       $  54,997        $  163,863       $  163,627
Manufacturing
Specialty            9,127           9,872            28,214           30,760
Publishing
Elimination of
intersegment      Â (2,644 )     Â (2,975  )     Â (7,857  )     Â (8,679  )
sales
Total             $  58,896       $  61,894        $  184,220       $  185,708
                                                                    Â
Operating
income (loss):
Book              $  3,982        $  5,050         $  10,537        $  3,799
Manufacturing
Specialty            (975   )        (1,154  )        (3,938  )        (3,949  )
Publishing
Impairment           -               (8,608  )        -                (8,608  )
charge (1)
Stock based          (331   )        (366    )        (1,098  )        (1,072  )
compensation
Intersegment      Â 71     Â    Â (52     )     Â 100     Â    Â 68      Â
profit
Total             $  2,747           ($5,130 )     $  5,601            ($9,762 )
                                                                    Â
(1) In the third quarter of the prior year, the Company recorded an $8.6 million
non-cash, pretax impairment charge related to REA which on an after-tax basis was
$5.2 million, or $0.43 per diluted share.

COURIER CORPORATION
SEGMENT RESULTS OF OPERATIONS (Unaudited)
(In thousands)
                                                            Â
                                                                       Â
BOOK
MANUFACTURING        QUARTER ENDED                    NINE MONTHS ENDED
SEGMENT
                     June 23,        June 25,         June 23,         June 25,
                     Â 2012   Â    Â 2011    Â    Â 2012    Â    Â 2011    Â
                                                                       Â
   Net sales         $  52,413       $  54,997        $  163,863       $  163,627
   Cost of sales     Â 42,193 Â    Â 43,445  Â    Â 132,008 Â    Â 138,810 Â
                                                                       Â
   Gross profit         10,220          11,552           31,855           24,817
                                                                       Â
   Selling and
   administrative    Â 6,238  Â    Â 6,502   Â    Â 21,318  Â    Â 21,018  Â
   expenses
                                                                       Â
   Operating         $  3,982  Â    $  5,050   Â    $  10,537  Â    $  3,799   Â
   income
                                                                       Â
                                                                       Â
                                                                       Â
                                                                       Â
                                                                       Â
                                                                       Â
SPECIALTY
PUBLISHING           QUARTER ENDED                    NINE MONTHS ENDED
SEGMENT
                     June 23,        June 25,         June 23,         June 25,
                     Â 2012   Â    Â 2011    Â    Â 2012    Â    Â 2011    Â
                                                                       Â
   Net sales         $  9,127        $  9,872         $  28,214        $  30,760
   Cost of sales     Â 6,387  Â    Â 6,653   Â    Â 19,340  Â    Â 20,446  Â
                                                                       Â
   Gross profit         2,740           3,219            8,874            10,314
                                                                       Â
   Selling and
   administrative    Â 3,715  Â    Â 4,373   Â    Â 12,812  Â    Â 14,263  Â
   expenses
                                                                       Â
   Operating loss    Â ($975  )     Â ($1,154 )     Â ($3,938 )     Â ($3,949 )

COURIER CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS (Unaudited)
(In thousands)
                                                        Â
                                                                 Â
                                                   June 23,      September 24,
ASSETS                                             2012          2011
                                                                 Â
Current assets:
   Cash and cash equivalents                       $  56         $    104
   Investments                                        1,310           1,141
   Accounts receivable                                30,765          35,320
   Inventories                                        39,098          39,353
   Deferred income taxes                              4,338           4,431
   Other current assets                            Â 2,735      Â   1,443
      Total current assets                            78,302          81,792
                                                                 Â
Property, plant and equipment, net                    90,116          100,523
Goodwill and other intangibles                        17,987          18,327
Prepublication costs                                  7,245           7,334
Deferred income taxes                                 2,882           3,772
Other assets                                       Â 1,273      Â   1,278
                                                                 Â
      Total assets                                 $  197,805    $    213,026
                                                                 Â
                                                                 Â
LIABILITIES AND STOCKHOLDERS' EQUITY
                                                                 Â
Current liabilities:
   Current maturities of long-term debt            $  1,855      $    1,804
   Accounts payable                                   10,094          12,061
   Accrued taxes                                      745             2,185
   Other current liabilities                       Â 15,603     Â   15,433
      Total current liabilities                       28,297          31,483
                                                                 Â
Long-term debt                                        17,188          19,718
Other liabilities                                  Â 6,247      Â   7,502
                                                                 Â
      Total liabilities                            Â 51,732     Â   58,703
                                                                 Â
      Total stockholders' equity                   Â 146,073    Â   154,323
                                                                 Â
      Total liabilities and stockholders'          $  197,805    $    213,026
      equity

COURIER CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
                            Â                        Â
                                  For the Nine Months Ended
                                  June 23,                 June 25,
                                  Â   2012      Â        Â   2011      Â
Operating Activities:
Net income (loss)                 $    3,458                    ($6,280   )
Adjustments to reconcile
net income (loss) to
cash provided from
operating activities:
Depreciation and                       18,022                   17,437
amortization
Impairment charge                      -                        8,608
Stock-based compensation               1,098                    1,072
Deferred income taxes                  983                      (3,974    )
Gain on disposition of                 (587      )              -
assets
Changes in other working               (79       )              (3,840    )
capital
Other long-term, net              Â   (1,003    )         Â   3,515     Â
                                                           Â
Cash provided from                Â   21,892    Â        Â   16,538    Â
operating activities
                                                           Â
Investment Activities:
Capital expenditures                   (4,065    )              (11,670   )
Prepublication costs                   (3,171    )              (3,218    )
Proceeds on disposition of             587                      -
assets
Short-term investments            Â   (169      )         Â   (176      )
                                                           Â
Cash used for investment          Â   (6,818    )         Â   (15,064   )
activities
                                                           Â
Financing Activities:
Long-term debt borrowings              (2,479    )              5,858
(repayments), net
Cash dividends                         (7,693    )              (7,610    )
Proceeds from stock plans              167                      219
Stock repurchases                      (4,842    )              -
Other                             Â   (275      )         Â   -         Â
                                                           Â
Cash used for financing           Â   (15,122   )         Â   (1,533    )
activities
                                                           Â
Decrease in cash and cash         Â   ($48      )         Â   ($59      )
equivalents
                                                           Â
                                                           Â
In addition to measuring our performance by generally accepted accounting
principles, we also track several non-GAAP measures including EBITDA (earnings
before interest, taxes, depreciation and amortization) as additional
indicators of the company's operating cash flow performance. These measures
should be considered in addition to, not a substitute for or superior to,
measures of financial performance prepared in accordance with GAAP.
                                                           Â
Non-GAAP reconciliation -
EBITDA:
Net income (loss)                 $    3,458                    ($6,280   )
Income tax provision                   2,031                    (4,127    )
(benefit)
Interest expense, net                  699                      645
Depreciation and                       18,022                   17,437
amortization
Impairment charge                      -                        8,608
Severance-related                      1,814                    7,272
expense/restructuring
Other income                      Â   (587      )         Â   -         Â
EBITDA                            $    25,437    Â        $    23,555    Â

COURIER CORPORATION
OTHER RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES (Unaudited)
(In thousands, except per share amounts)
    Â                   Â               Â               Â               Â              Â                Â               Â               Â
                                                                                                                                                   Â
                            Quarter Ended June 23, 2012                                        Nine Months Ended June 23, 2012
                            Income           Income                            Net Income      Income            Income                            Net Income
                            Before           Tax              Net              per Diluted     Before            Tax              Net              per Diluted
                            Taxes            Provision        Income        Â Share           Taxes             Provision        Income        Â Share
                                                                                                                                                   Â
GAAP basis measures         $  2,501         $  937           $  1,564         $  0.13         $  5,489          $  2,031         $  3,458         $  0.29
                                                                                                                                                   Â
       Severance and
       post-
       retirement    (1)       235              87               148              0.01            1,814             671              1,143            0.09
       benefits
       Other income  (2)    Â -       Â    Â -       Â    Â -       Â    Â -      Â    Â (587     )     Â (217    )     Â (370    )     Â (0.03  )
                                                                                                                                                   Â
Non-GAAP measures           $  2,736   Â    $  1,024   Â    $  1,712   Â    $  0.14   Â    $  6,716    Â    $  2,485   Â    $  4,231   Â    $  0.35   Â
                                                                                                                                                   Â
                                                                                                                                                   Â
                            Quarter Ended June 25, 2011                                        Nine Months Ended June 25, 2011
                            Income           Income                            Net Income      Income            Income                            Net Income
                            (Loss)           Tax              Net              (Loss)          (Loss)            Tax              Net              (Loss)
                            Before           Provision        Income           per Diluted     Before            Provision        Income           per Diluted
                            Taxes            (Benefit)        (Loss)        Â Share           Taxes             (Benefit)        (Loss)        Â Share
                                                                                                                                                   Â
GAAP basis measures            ($5,324 )        ($2,195 )        ($3,129 )        ($0.26 )        ($10,407 )        ($4,127 )        ($6,280 )        ($0.52 )
                                                                                                                                                   Â
       Impairment    (3)       8,608            3,443            5,165            0.43            8,608             3,443            5,165            0.43
       charge
       Restructuring (4)       -                -                -                -               7,472             2,787            4,685            0.39
       costs
       Bad-debt      (5)    Â -       Â    Â -       Â    Â -       Â    Â -      Â    Â 750      Â    Â 285     Â    Â 465     Â    Â 0.04   Â
       provision
                                                                                                                                                   Â
Non-GAAP measures           $  3,284   Â    $  1,248   Â    $  2,036   Â    $  0.17   Â    $  6,423    Â    $  2,388   Â    $  4,035   Â    $  0.34   Â
                                                                                                                                                   Â
                                                                                                                                                   Â
                                                                                                                                                   Â
       During the first quarter of this fiscal year, the Company's Chief Operating Officer announced his retirement. In addition, during the first nine months
(1)    cost reduction measures were taken in the Company's operating segments. Related severance and post-retirement benefit expenses were $235,000 in the
       third quarter and $1.8 million for the first nine months.
                                                                                                                                                   Â
(2)    In the first quarter of fiscal 2012, the Company recorded a $0.6 million gain associated with the sale of its interests in non-operating real property
       relating to cell towers.
                                                                                                                                                   Â
(3)    In the third quarter of fiscal 2011, the Company recorded an $8.6 million non-cash, pre-tax impairment charge related to REA, representing all of REA's
       goodwill as well as $200,000 related to the write-down of under-performing titles.
                                                                                                                                                   Â
       In the second quarter of fiscal 2011, the Company closed its book manufacturing plant in Stoughton, Massachusetts, due to the impact of technology and
(4)    competitive pressures affecting the one-color paperback books in which the plant specialized. Restructuring charges included $4.4 million related to
       severance and pension withdrawal liabilities and $3.1 million for lease termination and other facility closure costs.
                                                                                                                                                   Â
(5)    In the second quarter of fiscal 2011, the Company recorded a $750,000 bad-debt provision related to Borders Group, Inc.

COURIER CORPORATION
OTHER RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES (Unaudited)
(In thousands, except per share amounts)
    Â                Â                Â               Â                Â Â                Â               Â
                                                                                                                    Â
BOOK MANUFACTURING       Quarter Ended June 23, 2012                             Nine Months Ended June 23, 2012
SEGMENT
                         GAAP Basis        Non-Recurring    Non-GAAP             GAAP Basis        Non-Recurring    Non-GAAP
                         Measures          Items (1)        Measures             Measures          Items (1)        Measures
                                                                                                                    Â
       Net sales         $  52,413                          $  52,413            $  163,863                         $  163,863
       Cost of           Â 42,193  Â     Â  (212  )      Â 41,981  Â        Â 132,008 Â     Â (212   )      Â 131,796 Â
       sales
                                                                                                                    Â
       Gross                10,220             212             10,432               31,855            212              32,067
       profit
                                                                                                                    Â
       Selling and
       administrative    Â 6,238   Â     Â  (23   )      Â 6,215   Â        Â 21,318  Â     Â (961   )      Â 20,357  Â
       expenses
                                                                                                                    Â
       Operating         $  3,982   Â     $   235   Â     $  4,217   Â        $  10,537  Â     $  1,173  Â     $  11,710  Â
       income
                                                                                                                    Â
                                                                                                                    Â
                         Quarter Ended June 25, 2011                             Nine Months Ended June 25, 2011
                         GAAP Basis        Non-Recurring    Non-GAAP             GAAP Basis        Non-Recurring    Non-GAAP
                         Measures          Items (2)        Measures             Measures          Items (2)        Measures
                                                                                                                    Â
       Net sales         $  54,997                          $  54,997            $  163,627                         $  163,627
       Cost of           Â 43,445  Â     Â  -     Â     Â 43,445  Â        Â 138,810 Â     Â (7,061 )      Â 131,749 Â
       sales
                                                                                                                    Â
       Gross                11,552             -               11,552               24,817            7,061            31,878
       profit
                                                                                                                    Â
       Selling and
       administrative    Â 6,502   Â     Â  -     Â     Â 6,502   Â        Â 21,018  Â     Â (411   )      Â 20,607  Â
       expenses
                                                                                                                    Â
       Operating         $  5,050   Â     $   0     Â     $  5,050   Â        $  3,799   Â     $  7,472  Â     $  11,271  Â
       income
                                                                                                                    Â
                                                                                                                    Â
                                                                                                                    Â
                                                                                                                    Â
SPECIALTY PUBLISHING     Quarter Ended June 23, 2012                             Nine Months Ended June 23, 2012
SEGMENT
                         GAAP Basis        Non-Recurring    Non-GAAP             GAAP Basis        Non-Recurring    Non-GAAP
                         Measures          Items (1)        Measures             Measures          Items (1)        Measures
                                                                                                                    Â
       Net sales         $  9,127                           $  9,127             $  28,214                          $  28,214
       Cost of           Â 6,387   Â     Â               Â 6,387   Â        Â 19,340  Â     Â               Â 19,340  Â
       sales
                                                                                                                    Â
       Gross                2,740              -               2,740                8,874             -                8,874
       profit
                                                                                                                    Â
       Selling and
       administrative    Â 3,715   Â     Â  -     Â     Â 3,715   Â        Â 12,812  Â     Â (641   )      Â 12,171  Â
       expenses
                                                                                                                    Â
       Operating         Â ($975   )      $   0     Â     Â ($975   )         Â ($3,938 )      $  641    Â     Â ($3,297 )
       loss
                                                                                                                    Â
                                                                                                                    Â
                         Quarter Ended June 25, 2011                             Nine Months Ended June 25, 2011
                         GAAP Basis        Non-Recurring    Non-GAAP             GAAP Basis        Non-Recurring    Non-GAAP
                         Measures          Items (3)        Measures             Measures          Items (3)        Measures
                                                                                                                    Â
       Net sales         $  9,872                           $  9,872             $  30,760                          $  30,760
       Cost of           Â 6,653   Â     Â               Â 6,653   Â        Â 20,446  Â     Â               Â 20,446  Â
       sales
                                                                                                                    Â
       Gross                3,219              -               3,219                10,314            -                10,314
       profit
                                                                                                                    Â
       Selling and
       administrative    Â 4,373   Â     Â  -     Â     Â 4,373   Â        Â 14,263  Â     Â (750   )      Â 13,513  Â
       expenses
                                                                                                                    Â
       Operating         Â ($1,154 )      $   0     Â     Â ($1,154 )         Â ($3,949 )      $  750    Â     Â ($3,199 )
       loss
                                                                                                                    Â
                                                                                                                    Â
       During the first quarter of this fiscal year, the Company's Chief Operating Officer announced his retirement. In addition,
(1)    during the first nine months cost reduction measures were taken in the Company's operating segments. Related severance and
       post-retirement benefit expenses were $235,000 in the third quarter and $1.8 million for the first nine months.
                                                                                                                    Â
       In the second quarter of fiscal 2011, the Company closed its book manufacturing plant in Stoughton, Massachusetts, due to
(2)    the impact of technology and competitive pressures affecting the one-color paperback books in which the plant specialized.
       Restructuring charges included $4.4 million related to severance and pension withdrawal liabilities and $3.1 million for
       lease termination and other facility closure costs.
                                                                                                                    Â
(3)    In the second quarter of fiscal 2011, the Company recorded a $750,000 bad-debt provision related to Borders Group, Inc.

Contact:

Courier Corporation
James F. Conway III, 978-251-6000
Chairman, President and
Chief Executive Officer
or
Peter M. Folger, 978-251-6000
Senior Vice President and
Chief Financial Officer
www.courier.com
 
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