Courier Reports Solid Third Quarter

  Courier Reports Solid Third Quarter

Digital Sales Continue to Grow; Courier to Add Second HP Press in Kendallville

Business Wire

NORTH CHELMSFORD, Mass. -- August 1, 2013

Courier Corporation (Nasdaq: CRRC), one of America’s leading innovators in
book manufacturing, publishing and content management, today announced results
for the quarter ended June 29, 2013, the third quarter of its 2013 fiscal
year. Revenues were $64.1 million, up 9% from last year’s third-quarter
revenues of $58.9 million. Net income for the quarter was $1.7 million or $.15
per diluted share, up from $1.6 million or $.13 per diluted share in last
year’s third quarter.

For the first nine months of fiscal 2013, Courier revenues were $190.7
million, up 4% from $184.2 million in fiscal 2012. Net income for the year to
date was $4.4 million or $.39 per diluted share, versus $3.5 million or $.29
per diluted share for the first nine months of last year, which included
first-quarter charges related to severance and post-retirement benefits and a
gain from asset sales; excluding those items, net income for the first nine
months of fiscal 2012 was $4.2 million or $.35 per diluted share. Details can
be found in the tables at the end of this release.

In Courier’s book manufacturing segment, third-quarter sales were up in all
three of its principal markets, with the largest gains in the education
market, led by increased sales of customized textbooks at the college and
university levels. Sales to the religious market were also up in keeping with
long-term trends, while trade sales rose on increases in both digital and
four-color books. In Courier’s publishing segment, sales were down slightly,
but the segment’s operating losses narrowed for both the quarter and the year
to date.

“The second half of our fiscal year is typically much stronger than the first
half, and so far we are on track to repeat that pattern in fiscal 2013,” said
Courier Chairman and Chief Executive Officer James F. Conway III. “As a book
manufacturer and content management partner, we had a very good quarter as we
continued to capitalize on growing demand for customized college textbooks. At
the same time, we continued to expand our share of work on behalf of our
largest religious customer in support of its long-term program of
international Scripture distribution. In our publishing segment, while overall
sales were down slightly, we continued to trim the segment’s operating losses,
helped by healthy growth in ebook sales.

“We head into our fourth quarter with a strong order flow for both our digital
and offset manufacturing facilities. Our new digital plant in Kendallville,
Indiana ramped up smoothly in time for the peak season in the education
market, and is now working hard alongside its offset counterpart to handle
virtually any combination of product formats and run lengths. Anticipating
further growth, we are preparing our Kendallville facility for the addition of
a second digital press. Meanwhile, our integration of our April acquisition of
FastPencil, a provider of self-publishing and workflow solutions, is
proceeding according to plan.

“Once again I am pleased to announce that our Board has approved our regular
quarterly dividend of $.21 per share.”

Book manufacturing: digital + offset combination powers gains

Courier’s book manufacturing segment had third-quarter sales of $58.1 million,
up 11% from $52.4 million in the same period last year. For fiscal 2013 to
date, book manufacturing sales were $171.5 million, up 5% from $163.9 million
in the first nine months of fiscal 2012. The segment’s third-quarter operating
income was $4.2 million, versus $4.0 million a year ago. On a year-to-date
basis, operating income was $11.1 million, up from $10.5 million for the same
period last year, which included the first-quarter items mentioned above.
Gross profit for the third quarter was $11.9 million or 20.4% of sales, versus
$10.2 million or 19.5% of sales last year. Gross profit for the first nine
months of fiscal 2013 was $33.3 million, compared to $31.9 million in fiscal
2012, and as percentage of sales was 19.4% in both periods. The margin
improvement in the third quarter reflected a favorable sales mix and increased
capacity utilization, which more than offset the effects of a competitive
pricing environment and reduced recycling income.

The book manufacturing segment focuses on three markets: education, religious,
and specialty trade. Sales to the education market were up 18% in the quarter
and up 9% for the year to date, with the largest proportion of sales at the
college and university levels. Sales to the religious market were up 7% in the
third quarter and up 4% for the first nine months of the year, driven by
growth in sales to our largest religious customer. Sales to the specialty
trade market were up 4% in the third quarter, but down 1% for the first nine
months of the fiscal year. Sales at Courier Digital Solutions continued to
account for a growing percentage of total book manufacturing sales in both
education and specialty trade.

“It was a great quarter in the education market,” said Mr. Conway. “The
ongoing shift toward customized versions of college textbooks continues to
fuel growth at our two digital facilities, and we had good utilization in our
offset print facilities as well. Meanwhile, demand for four-color digital has
also increased across many specialty trade categories as publishers work to
manage inventory and obsolescence costs. Our combination of digital and offset
print, content management and distribution expertise makes us a versatile,
economical partner to publishers of all sizes, and our new strategic
relationship with Ingram Content Group gives our customers even more options
for efficient print distribution and fulfillment. All these factors played
into our decision to order a second HP T-410 wide-body digital inkjet press
for our Kendallville plant, with the installation expected to be completed in
October.”

Publishing: ebooks contribute to improved performance

Courier’s publishing segment includes three businesses: Dover Publications, a
publisher of thousands of titles in dozens of specialty trade markets;
Creative Homeowner, a publisher of 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 $8.8 million, down 3% from $9.1
million in last year’s third quarter. The segment’s operating loss for the
quarter was $889,000, versus a loss of $975,000 last year. For fiscal 2013 to
date, segment sales were $27.3 million, versus $28.2 million for the first
nine months of last year. The segment’s operating loss through nine months was
$2.4 million, versus a loss of $3.9 million for the corresponding period last
year.

Within the segment, third-quarter and year-to-date sales were both up modestly
at Dover, helped by growing ebook sales and higher sales to large retailers,
but down at REA and Creative Homeowner. Creative Homeowner, with its reduced
cost structure, was slightly profitable during the quarter despite the sales
decline.

“Our publishing segment continues to adapt to a challenging book retail
environment,” said Mr. Conway. “Through careful management, we are steadily
chipping away at the operating losses that have troubled the segment in the
soft economy of the last few years. Part of this process includes narrowing
Creative Homeowner’s focus to concentrate on products with predictable,
positive cash flow. At the same time, Dover continues to press forward with
ebooks and other new titles suited to today’s consumers, as well as the use of
an expanded range of channels to reach them. Ebook sales for the year to date
have passed the million-dollar mark, and on the print side, Dover’s Creative
Haven adult coloring book line continues to grow and attract new fans each
month.”

Outlook

“We start our fourth quarter exceptionally well positioned to serve our
customers in today’s economy,” said Mr. Conway. “We have carved out a
distinctive profile as a complete, state-of-the-art resource for publishers in
all of our principal markets, with capabilities tailored to their evolving
content, process and distribution needs. Our ability to deliver customized
versions in any quantity continues to help us grow share in the education and
trade markets, while our expanding role on behalf of our largest religious
customer is enabling it to reach more people in more countries than ever.

“We continue to expect our performance in fiscal 2013 to reflect our customary
seasonal pattern, with the largest portion of our earnings coming in our
fourth quarter. With our digital capacity inKendallvillealready squeezed, we
are moving quickly to install a second HP T-410 digital inkjet press alongside
the first one, to begin production in the first quarter of fiscal 2014. The
total cost of this digital expansion will be approximately $12 million, of
which we will be paying approximately half in the current fiscal year and half
next year.

“As a result, we now expect capital expenditures, which were$10 millionin
fiscal 2012, to total between$23 million and $25 millionin fiscal 2013, with
approximately$20 milliondedicated to expanding our digital capabilities.

“In line with our past practice, today’s guidance, including comparisons to
prior performance, excludes impairment and restructuring charges. Overall, we
expect fiscal 2013 sales of between $269 million and $278 million, an increase
of between 3% and 6% over the 53-week period of fiscal 2012. We also expect
earnings per diluted share of between$.80 and $1.00, which compares with our
fiscal 2012 earnings of $.91per diluted share, excluding restructuring
charges.

“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
2013, we expect EBITDA to be between$40 million and $44 million, compared
to$42 millionin fiscal 2012, excluding restructuring charges.

Factors not incorporated into this guidance include the possibility of future
impairment or restructuring charges.

AboutCourier Corporation

Courier Corporationis America’s third largest book manufacturer and a leader
in content management and customization in new and traditional media. It also
publishes books under three brands offering award-winning content and
thousands of titles. Founded in 1824, Courier is headquartered inNorth
Chelmsford, Massachusetts. For more information, visit www.courier.com.

This news release includes forward-looking statements, including statements
relating to the Company’s financial expectations for fiscal year 2013,
including sales, EBITDA, earnings per share and capital
expenditures.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,” “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, changes in obligations of multiemployer pension
plans, 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)
                                                                         
                   QUARTER ENDED                       NINE MONTHS ENDED
                   June 29,         June 23,           June 29,          June 23,
                   2013             2012               2013              2012
                                                                         
Net sales          $ 64,143         $ 58,896           $ 190,677         $ 184,220
Cost of sales       49,315         45,864           147,845         143,392 
                                                                         
Gross profit         14,828           13,032             42,832            40,828
                                                                         
Selling and
administrative      11,813         10,285           35,062          35,227  
expenses
                                                                         
Operating            3,015            2,747              7,770             5,601
income
                                                                         
Interest             325              246                706               699
expense, net
Other income        -              -                -               (587    )
                                                                         
Income before        2,690            2,501              7,064             5,489
taxes
                                                                         
Income tax          1,009          937              2,627           2,031   
provision
                                                                         
Net income         $ 1,681         $ 1,564           $ 4,437          $ 3,458   
                                                                         
Net income per     $ 0.15          $ 0.13            $ 0.39           $ 0.29    
diluted share
                                                                         
Cash dividends
declared per       $ 0.21          $ 0.21            $ 0.63           $ 0.63    
share
                                                                         
Wtd. average
diluted shares       11,382           12,026             11,415            12,093
outstanding
                                                                         
SEGMENT
INFORMATION:
                                                                         
Net sales:
Book               $ 58,060         $ 52,413           $ 171,460         $ 163,863
Manufacturing
Publishing           8,818            9,127              27,305            28,214
Elimination of
intersegment        (2,735 )        (2,644 )          (8,088  )        (7,857  )
sales
Total              $ 64,143         $ 58,896           $ 190,677         $ 184,220
                                                                         
Operating
income (loss):
Book               $ 4,245          $ 3,982            $ 11,139          $ 10,537
Manufacturing
Publishing           (889   )         (975   )           (2,393  )         (3,938  )
Stock based          (330   )         (331   )           (1,002  )         (1,098  )
compensation
Intersegment        (11    )        71               26              100     
profit
Total              $ 3,015          $ 2,747            $ 7,770           $ 5,601

                                                            
COURIER CORPORATION
SEGMENT RESULTS OF OPERATIONS (Unaudited)
(In thousands)
                                                                         
                                                                         
BOOK
MANUFACTURING      QUARTER ENDED                       NINE MONTHS ENDED
SEGMENT
                   June 29,         June 23,           June 29,          June 23,
                   2013             2012               2013              2012
                                                                         
Net sales          $ 58,060         $ 52,413           $ 171,460         $ 163,863
Cost of sales       46,209         42,193           138,165         132,008 
                                                                         
Gross profit         11,851           10,220             33,295            31,855
                                                                         
Selling and
administrative      7,606          6,238            22,156          21,318  
expenses
                                                                         
Operating          $ 4,245         $ 3,982           $ 11,139         $ 10,537  
income
                                                                         
                                                                         
                                                                         
                                                                         
                                                                         
                                                                         
PUBLISHING         QUARTER ENDED                       NINE MONTHS ENDED
SEGMENT
                   June 29,         June 23,           June 29,          June 23,
                   2013             2012               2013              2012
                                                                         
Net sales          $ 8,818          $ 9,127            $ 27,305          $ 28,214
Cost of sales       5,831          6,387            17,795          19,340  
                                                                         
Gross profit         2,987            2,740              9,510             8,874
                                                                         
Selling and
administrative      3,876          3,715            11,903          12,812  
expenses
                                                                         
Operating loss      ($889  )        ($975  )          ($2,393 )        ($3,938 )

                                                         
COURIER CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS (Unaudited)
(In thousands)
                                                                 
                                                                 
                                                 June 29,        September 29,
ASSETS                                           2013            2012
                                                                 
Current assets:
  Cash and cash equivalents                      $ 193           $   64
  Investments                                      951               765
  Accounts receivable                              32,199            35,152
  Inventories                                      37,262            36,364
  Deferred income taxes                            4,512             4,273
  Other current assets                            4,173            950
    Total current assets                           79,290            77,568
                                                                 
Property, plant and equipment, net                 90,043            89,952
Goodwill and other intangibles                     26,161            17,880
Prepublication costs                               6,708             7,135
Deferred income taxes                              2,320             3,451
Other assets                                      1,888            1,374
                                                                 
    Total assets                                 $ 206,410       $   197,360
                                                                 
                                                                 
LIABILITIES AND STOCKHOLDERS' EQUITY
                                                                 
Current liabilities:
  Current maturities of long-term debt           $ 1,599         $   1,872
  Accounts payable                                 11,938            11,364
  Accrued taxes                                    818               3,857
  Other current liabilities                       15,740           15,777
    Total current liabilities                      30,095            32,870
                                                                 
Long-term debt                                     24,642            13,696
Other liabilities                                 10,405           6,283
                                                                 
    Total liabilities                             65,142           52,849
                                                                 
    Total stockholders' equity                    141,268          144,511
                                                                 
    Total liabilities and stockholders'          $ 206,410       $   197,360
    equity

                                                       
COURIER CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
                                                                
                                     For the Nine Months Ended
                                     June 29,                   June 23,
                                     2013                       2012
Operating Activities:
Net income                           $  4,437                   $  3,458
Adjustments to reconcile
net income to cash
provided from operating                                         
activities:
Depreciation and                        17,823                     18,022
amortization
Stock-based compensation                1,002                      1,098
Deferred income taxes                   514                        983
Gain on disposition of                  -                          (587     )
assets
Changes in other working                (2,089   )                 (79      )
capital
Other long-term, net                   (609     )                (1,003   )
                                                                
Cash provided from                     21,078                   21,892   
operating activities
                                                                
Investment Activities:
Capital expenditures                    (14,461  )                 (4,065   )
Business acquisition, net               (5,000   )                 -
of cash acquired
Prepublication costs                    (2,598   )                 (3,171   )
Proceeds on disposition                 -                          587
of assets
Investments                            (686     )                (169     )
                                                                
Cash used for investment               (22,745  )                (6,818   )
activities
                                                                
Financing Activities:
Long-term debt borrowings               10,673                     (2,479   )
(repayments), net
Cash dividends                          (7,244   )                 (7,693   )
Proceeds from stock plans               170                        167
Stock repurchases                       (1,568   )                 (4,842   )
Other                                  (235     )                (275     )
                                                                
Cash provided from (used               1,796                    (15,122  )
for) financing activities
                                                                
Increase (decrease) in               $  129                      ($48     )
cash and cash equivalents
                                                                
                                                                
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.
                                                                
Non-GAAP reconciliation -
EBITDA:
Net income                           $  4,437                   $  3,458
Income tax provision                    2,627                      2,031
Interest expense, net                   706                        699
Depreciation and                        17,823                     18,022
amortization
Severance-related                       -                          1,814
expense/restructuring
Other income                           -                        (587     )
EBITDA                               $  25,593                 $  25,437   

                                                                                                                       
COURIER CORPORATION
OTHER RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES (Unaudited)
(In thousands, except per share amounts)
                                                                                                                                            
                                                                                                                                            
                                                                                                                                            
                            Quarter Ended June 23, 2012                                     Nine Months Ended June 23, 2012
                            Income      Income                           Net Income         Income        Income                            Net Income
                            Before      Tax            Net               per                Before        Tax             Net               per Diluted
                                                                         Diluted
                            Taxes       Provision     Income            Share              Taxes         Provision      Income           Share
                                                                                                                                            
GAAP basis                  $ 2,501     $ 937          $   1,564         $ 0.13             $ 5,489       $ 2,031         $   3,458         $ 0.29
measures
                                                                                                                                            
  Severance and
  post-
  retirement     (1 )         235         87               148             0.01               1,814         671               1,143           0.09
  benefits
  Other income   (2 )        -          -              -             -                (587  )      (217    )        (370   )       (0.03   )
                                                                                                                                            
Non-GAAP                    $ 2,736     $ 1,024       $   1,712        $ 0.14            $ 6,716      $ 2,485        $   4,231        $ 0.35    
measures
                                                                                                                                            
                                                                                                                                            
                                                                                                                                            
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
                                                                                                                                            
  Net sales                             $ 52,413                         $ 52,413                         $ 163,863                         $ 163,863
  Cost of sales                          42,193         (212   )       41,981                         132,008         (212   )       131,796 
                                                                                                                                            
  Gross profit                            10,220           212             10,432                           31,855            212             32,067
                                                                                                                                            
  Selling and
  administrative                         6,238          (23    )       6,215                          21,318          (961   )       20,357  
  expenses
                                                                                                                                            
  Operating                             $ 3,982       $   235          $ 4,217                         $ 10,537       $   1,173        $ 11,710  
  income
                                                                                                                                            
                                                                                                                                            
                                                                                                                                            
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
                                                                                                                                            
  Net sales                             $ 9,127                          $ 9,127                          $ 28,214                          $ 28,214
  Cost of sales                          6,387                         6,387                          19,340                         19,340  
                                                                                                                                            
  Gross profit                            2,740            -               2,740                            8,874             -               8,874
                                                                                                                                            
  Selling and
  administrative                         3,715          -             3,715                          12,812          (641   )       12,171  
  expenses
                                                                                                                                            
  Operating loss                         ($975  )     $   0             ($975  )                        ($3,938 )     $   641           ($3,297 )
                                                                                                                                            

(1) During the first nine months of the prior year, cost reduction measures
were taken in both of the Company's operating segments. Related severance and
post-retirement benefit expenses were $235,000 in the third quarter and $1.8
million in the first nine months.

(2) During the first quarter of last year, the Company recorded a $0.6 million
gain associated with the sale of its interests in non-operating real property
relating to cell towers.

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