UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

Form 10-K

 

 

Commission file number 0-7597

 

Courier Corporation

 

A Massachusetts corporation

 

I.R.S. Employer Identification No. 04-2502514

 

15 Wellman Avenue

North Chelmsford, Massachusetts  01863

Telephone No. 978-251-6000

 

Securities registered pursuant to Section 12(b) of the Act:

None

 

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $1 par value

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ý No o

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  o

 

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).  Yes ý No o

 

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold as of the last business day of the registrant’s most recently completed second fiscal quarter.

 

Common Stock, $1 par value - $261,284,499

 

Indicate the number of shares outstanding of each of the registrant’s classes of common stock as of November 22, 2004.

 

Common Stock, $1 par value - 8,043,860

 

DOCUMENTS INCORPORATED BY REFERENCE

 

Portions of the registrant’s proxy statement for the annual meeting of stockholders scheduled to be held on January 20, 2005 (Part III).

 

 

PART I

 

Item 1.  Business.

 

INTRODUCTION

 

Courier Corporation and its subsidiaries (“Courier” or the “Company”) are among America’s leading book manufacturers and specialty publishers. Courier Corporation, founded in 1824, was incorporated under the laws of Massachusetts on June 30, 1972.  The Company has two business segments: full-service book manufacturing and specialty book publishing.  In fiscal 2003, Courier sold all of the assets of Courier Custom Publishing, Inc. which comprised all of the remaining activities of the customized education segment.

 

The book manufacturing segment focuses on streamlining and enhancing the process of bringing books from the point of creation to the point of use.  Based on sales, Courier is the fifth largest book manufacturer in the United States and largest in the Northeast, offering services from content management, prepress and production through storage and distribution. Courier’s principal book manufacturing markets are religious, educational and specialty trade books with products including Bibles, educational texts and consumer books. Revenues from this segment accounted for approximately 84% of Courier’s consolidated revenues in 2004.

 

The specialty publishing segment consists of Dover Publications, Inc. (“Dover”), acquired by Courier on September 22, 2000, as well as Research & Education Association, Inc. (“REA”), which was acquired on January 6, 2004.  Dover publishes over 8,500 titles in more than 30 specialty categories ranging from literature and poetry classics to paper dolls, and from musical scores to typographical fonts.  Revenues in this segment were approximately 19% of consolidated sales in 2004. REA publishes test preparation and study-guide books and software for high school, college, graduate students and professionals.  The combination of Dover’s and REA’s publishing, sales and distribution skills with Courier’s book manufacturing, digital content conversion, and e-commerce skills are providing a powerful end-to-end publishing solution for Courier.

 

Sales by segment (in thousands)		2004			2003			2002
Book Manufacturing		$	177,225		$	171,858		$	170,382
Specialty Publishing		40,787			36,391			36,004
Intersegment sales		(6,833		)	(6,247		)	(5,362		)
Total		$	211,179		$	202,002		$	201,024

 

Additional segment information, including the amounts of earnings before taxes and total assets, for each of the last three fiscal years, is contained in Note J in the Notes to Consolidated Financial Statements on pages F-17 to F-19 included in this Annual Report on Form 10-K.

 

On December 17, 2002, the Company sold the assets of its wholly owned subsidiary, Courier Custom Publishing, Inc.  Courier Custom Publishing provided customized coursepacks and textbooks.  The disposition was accounted for as a discontinued operation.  Additional information is contained in Note I in the Notes to Consolidated Financial Statements on pages F-16 and F-17 included in this Annual Report on Form 10-K.  In March 2001, Courier sold substantially all of the assets of The Home School and ceased operating this business.  The Company had purchased the assets of The Home School Books & Supplies in September 1997.  The Home School was a direct marketer of educational materials to families engaged in educating children at home and had been included in the customized education segment prior to its sale.

 

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BUSINESS SEGMENTS

 

BOOK MANUFACTURING SEGMENT

 

Courier’s book manufacturing segment produces hard and softcover books, as well as related services involved in managing the process of creating and distributing these products for publishers, religious organizations and other information providers.  Courier provides book manufacturing and related services from six facilities in Westford, Stoughton and North Chelmsford, Massachusetts; Philadelphia, Pennsylvania; North Bergen, New Jersey; and Kendallville, Indiana.

 

Courier’s book manufacturing operations consist of both electronic and conventional film processing, platemaking, printing and binding of soft and hard bound books.  Each of Courier’s six facilities have certain specialties adapted to the needs of the market niches Courier serves, such as short-run book manufacturing, printing on lightweight paper and four-color book manufacturing.  These services are primarily sold to publishers of educational, religious and consumer books.  During 2004, the Company expanded its four-color book manufacturing capabilities with the addition of a major new four-color press at its Kendallville, Indiana facility.

 

Courier’s book manufacturing sales force of 18 people is responsible for all of the Company’s sales to over 400 book-manufacturing customers.  Courier’s salespeople operate out of sales offices located in New York, New York; Chicago, Illinois; Philadelphia, Pennsylvania; Hayward, California; North Chelmsford, Massachusetts; and North Bergen and North Caldwell, New Jersey.

 

Sales to The Gideons International aggregated approximately 27% of consolidated sales in 2004 and 28% in both 2003 and 2002.  Sales to Pearson plc aggregated approximately 17% of consolidated sales in both 2004 and 2003, and 15% in 2002.  The loss of either of these customers or a significant reduction in order volumes from either of them would have a material adverse effect on the Company.  No other customer accounted for more than 10% of consolidated sales.  The Company distributes products around the world; export sales, as a percentage of consolidated sales, were approximately 21% in 2004, 22% in 2003 and 21% in 2002.  Approximately 90% of the export sales were in the book manufacturing segment in each of these years.

 

All phases of Courier’s business are highly competitive.  The printing industry, exclusive of newspapers, includes approximately 45,000 establishments.  While most of these establishments are relatively small, several of the Company’s competitors are considerably larger or are affiliated with companies that are considerably larger and have greater financial resources than Courier.  In recent years, consolidation of both customers and competitors within the Company’s markets has increased pricing pressures.  The major competitive factors in Courier’s book manufacturing business in addition to price are product quality, speed of delivery, customer service, availability of appropriate printing capacity, related services and technology support.

 

SPECIALTY BOOK PUBLISHING SEGMENT

 

Dover, acquired by the Company in September 2000, is a publisher of books in over 30 specialty categories, including fine and commercial arts, children’s books, crafts, musical scores, graphic design, mathematics, physics and other areas of science, puzzles, games, social science, stationery items, and classics of literature for both juvenile and adult markets, including the Dover Thrift Editions.  In 2002, a new line of scholarly hardcover books valuable to scientists and mathematicians was launched under the name of Dover Phoenix Editions.

 

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Dover sells its products through most American bookstore chains, independent booksellers, children’s stores, craft stores and gift shops, as well as a diverse range of distributors around the world.  Dover has also sold its books directly to consumers for over 50 years through its specialty catalogs and, since 2001, over the Internet at www.doverpublications.com.  Dover mails its proprietary catalogs to over 500,000 consumers.  In 2002, Dover launched www.DoverDirect.com, which is a business-to-business site for its retailers and distributors.

 

REA, acquired by the Company in January 2004, publishes more than 800 test preparation and study-guide titles.  Product lines include Problems Solvers®, Essentials®, Super Reviews® and Test Preparation books.  REA sells its products around the world through major bookseller chains, college bookstores, and teachers’ supply stores as well as directly to teachers and other consumers through catalogs and over the Internet at www.REA.com.

 

The U.S. publishing market is comprised of approximately 75,000 publishers.  Many of these publishers are very small, but a few are much larger than Dover and REA or are part of organizations that are much larger.  In addition, newer sources of competition have emerged with large retailers launching or expanding publishing operations and new web-based publishing businesses starting up, which compete in the specialty book publishing market, including publishing of electronic books.  Dover distinguishes its products by offering an extremely wide variety of high quality books at modest prices.  REA offers high editorial quality study guides and test preparation books and software products in almost every academic area including many specialized areas such as teacher certification, adult education, and professional licensing.

 

MATERIALS AND SUPPLIES

 

Courier purchases its principal raw materials, primarily paper, but also plate materials, ink, adhesives, cover stock, casebinding materials and cartons, from numerous suppliers, and is not dependent upon any one source for its requirements.  Many of Courier’s book manufacturing customers purchase their own paper and furnish it at no charge to Courier for book production.  Dover and REA purchase a significant portion of their books from Courier’s book manufacturing operations.  Paper prices increased in 2004 after a slight decrease last year, returning to levels comparable to 2002.

 

ENVIRONMENTAL REGULATIONS

 

The Company’s operations are subject to federal, state and local environmental laws and regulations relating to, among other things: air emissions; waste generation, handling, management and disposal; wastewater treatment and discharge; and remediation of soil and groundwater contamination.  The Company periodically makes capital expenditures so that its operations comply, in all material respects, with applicable environmental laws and regulations.  No significant expenditures for this purpose are anticipated in 2005.  The Company does not believe that its compliance with applicable environmental laws and regulations will have a material impact on the Company’s earnings or competitive position.

 

EMPLOYEES

 

The Company employed 1,465 persons at September 25, 2004 compared to 1,420 a year ago.

 

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OTHER

 

Courier’s overall business is not significantly seasonal in nature, although demand is normally highest in the Company’s fourth quarter.  Educational publishers in the book manufacturing segment and Dover’s business all contribute to this higher fourth quarter demand. There is no portion of Courier’s business subject to cancellation of government contracts or renegotiation of profits.

 

Courier holds no material patents, licenses, franchises or concessions that are important to its operations, but does have trademarks, service marks, and Universal Resource Locators (URL’s) on the World Wide Web in connection with each of its businesses.  Substantially all of Dover’s and REA’s publications are protected by copyright, either in its own name, in the name of the author of the work, or in the name of a predecessor publisher from whom rights were acquired.

 

The Company makes available free of charge (as soon as reasonably practicable after they are filed or furnished to the SEC) copies of its Annual Report on Form 10-K, as well as all other reports required to be filed by Section 13(a) or 15(d) of the Securities Exchange Act of 1934, via the Internet at www.courier.com or upon written request to Robert P. Story, Jr., Senior Vice President and Chief Financial Officer, Courier Corporation, 15 Wellman Avenue, North Chelmsford, MA 01863.

 

Item 2.  Properties.

 

REAL PROPERTIES

 

The following schedule lists the facilities owned or leased by Courier at September 25, 2004. Courier considers its plants and other facilities to be well maintained and suitable for the purposes intended.

 

Principal Activity and Location (Year Constructed)		Owned/ Leased		Sq. Ft.
Corporate headquarters and executive offices
North Chelmsford, MA (1973, 1996)		Owned		69,000	(1)
Book manufacturing and warehousing
Westford plant, Westford, MA (1900, 1968, 1969, 1981, 1990)		Owned		393,000	(2)
Kendallville plant, Kendallville, IN (1978, 2004)		Owned		205,000
National plant, Philadelphia, PA (1975, 1997)		Owned		229,000
Stoughton plant, Stoughton, MA (1980)		Leased		169,000
Book-mart plant, North Bergen, NJ (1917, 1935, 1997)		Leased		75,000
Dover offices and warehouses
Mineola, New York (1948-1981)		Leased		106,000
New Hyde Park, NY (1949-1969)		Leased		78,000
REA offices and warehouse
Piscataway, New Jersey (1990)		Leased		39,000

 

(1)                                Also houses warehousing and end-user fulfillment operations supporting the book manufacturing segment.

(2)                                In May 2004, the Company completed the sale of approximately 200,000 square feet of unoccupied and underutilized portions of its multi-building manufacturing complex in Westford, MA for $1.7 million.  The Company will continue its current levels of book manufacturing at the site.  Additional information is contained in Note K on page F-19 of this Annual Report on Form 10-K.

 

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EQUIPMENT

 

The Company’s products are manufactured on equipment that in most cases is owned by the Company, although it leases computers, image setters and other electronic prepress equipment which are subject to more rapid obsolescence.  In addition, one printing press is leased whereby the lessor holds title and the Company has an option to purchase the equipment upon expiration of the lease in 2008 at a price of $161,658.  Capital expenditures amounted to approximately $13.4 million in 2004, $10.9 million in 2003 and  $4.9 million in 2002. Capital expenditures in 2004 included approximately $10 million for a new four-color press installation and related building expansion at the Kendallville, Indiana facility.  Fiscal 2005 capital expenditures are expected to increase to $18 to $20 million with approximately half of this amount to be payments on another four-color press, which will expand the Company’s capacity to produce four-color textbooks.  On October 29, 2004, the Company entered into an agreement to purchase this new press, which is identical to the press installed in 2004 and which is expected to be installed early in fiscal 2006.  Courier considers its equipment to be in good operating condition and adequate for its present needs.

 

ENCUMBRANCES AND RENTAL OBLIGATIONS

 

For a description of encumbrances on certain properties and equipment, see Note D of Notes to Consolidated Financial Statements on page F-11 of this Annual Report on Form 10-K. Information concerning leased properties and equipment is disclosed in Note E of Notes to Consolidated Financial Statements, which appears on page F-11 of this Annual Report on Form 10-K.

 

Item 3.  Legal Proceedings.

 

In the ordinary course of business, the Company is subject to various legal proceedings and claims.  The Company believes that the ultimate outcome of these matters will not have a material adverse effect on its financial statements.

 

Item 4.  Submission of Matters to a Vote of Security Holders.

 

There were no matters submitted to a vote of security holders during the quarter ended September 25, 2004.

 

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PART II

 

Item 5.  Market for the Registrant’s Common Equity and Related Stockholder Matters.

 

The information required by this Item is contained in the section captioned “Selected Quarterly Financial Data (Unaudited)” which appears on page F-20 of this Annual Report on Form 10-K.

 

Item 6.  Selected Financial Data.

 

The information required by this Item is contained in the section captioned “Five-Year Financial Summary” appearing on page F-21 of this Annual Report on Form 10-K.

 

Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

The information required by this Item is contained in the section captioned “Management’s Discussion and Analysis” on pages F-22 through F-28 of this Annual Report on Form 10-K.

 

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk.

 

The Company does not hold any derivative financial instruments, derivative commodity instruments or other financial instruments except as noted in Notes A and M of Notes to Consolidated Financial Statements, which appear on pages F-7 through F-9 and F-19 of this Annual Report on Form 10-K.  The Company engages neither in speculative nor derivative trading activities. The Company is exposed to market risk for changes in interest rates on invested funds as well as borrowed funds.  The Company’s revolving bank credit facility bears interest at a floating rate.  There were no borrowings under this facility at any time during 2004.

 

Item 8.  Financial Statements and Supplementary Data.

 

The information required by this Item is contained on pages F-1 through F-19 of this Annual Report on Form 10-K.

 

Item 9.  Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

 

None.

 

Item 9A.  Controls and Procedures

 

(a)           Evaluation of disclosure controls and procedures

 

As required by Rule 13a-15 under the Securities Exchange Act of 1934, as of the end of the period covered by this annual report, the Company carried out an evaluation under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures.  Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time

 

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periods specified in the Securities and Exchange Commission’s rules and forms.  The Company continually reviews its disclosure controls and procedures, and its internal controls over financial reporting, and may from time to time make changes aimed at enhancing their effectiveness and to ensure that its systems evolve with its business.  In designing and evaluating the disclosure controls and procedures, the Company’s management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurances of achieving the desired control objectives, and management necessarily was required to apply its judgment in designing and evaluating the controls and procedures.

 

(b)           Changes in internal controls over financial reporting

 

There was no change in the Company’s internal control over financial reporting that occurred during the fourth quarter of fiscal 2004 that has materially affected, or that is reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

Item 9B.  Other Information

 

The following table sets forth information concerning the granting on September 23, 2004 of restricted stock awards and stock options under the Courier Corporation 1993 Stock Incentive Plan to each of the Executive Officers.

 

		Number of Shares Underlying
Name		Options Granted		Restricted Stock Awards
J. F. Conway, III		5,173		1,442
R. P. Story, Jr.		4,484		1,250
G. Q. Nichols		—		—
P. D. Tobin		1,552		433
P. M. Folger		966		269
E. J. Zimmerman		1,897		529

 

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PART III

 

Item 10.  Directors and Executive Officers of the Registrant.

 

Courier’s executive officers, together with their ages and all positions and offices with the Company presently held by each person named, are as follows:

 

James F. Conway III		52		Chairman, President and Chief Executive Officer
George Q. Nichols		75		Corporate Senior Vice President and Chairman of National Publishing Company
Robert P. Story, Jr.		53		Senior Vice President and Chief Financial Officer
Peter M. Folger		51		Vice President and Controller
Peter D. Tobin		49		Corporate Vice President and Executive Vice President of Courier Companies and National Publishing Company
Eric J. Zimmerman		39		Vice President, Publishing

 

The terms of office of all of the above executive officers continue until the first meeting of the Board of Directors following the next annual meeting of stockholders and the election or appointment and qualification of their successors, unless any officer sooner dies, resigns, is removed or becomes disqualified.

 

Mr. Conway III was elected Chairman of the Board in September 1994 after serving as acting Chairman since December 1992.  He has been Chief Executive Officer since December 1992 and President since July 1988.

 

Mr. Nichols became an executive officer of Courier in June 1989.  He was elected a Director of the Company in March 1995 and became Senior Vice President of the Company in November 1996.  He became Chairman of National Publishing Company in December 1999.  He had previously been President of National Publishing Company since 1976.

 

Mr. Story became Senior Vice President and Chief Financial Officer in April 1989.  He joined Courier in November 1986 as Vice President and Treasurer.  He was elected a Director of the Company in February 1995.

 

Mr. Folger has been Controller since 1982 and became Vice President in November 1992.

 

Mr. Tobin became Vice President of Courier Corporation and Executive Vice President of Courier Companies in October 2000, and Executive Vice President of National Publishing Company in March 2002.  He joined Courier Companies as National Sales Manager in 1994 and became Vice President of Sales and Marketing in 1997.

 

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Effective October 1, 2004, Mr. Zimmerman became Vice President, Publishing and an executive officer of Courier Corporation.  He joined Courier in December 1994 as General Manager of its former Copyright Management Services operation and became Vice President of e-Commerce for Courier in September 2000.

 

The Company has adopted a code of ethics entitled “Courier Corporation Business Conduct Guidelines,” which is applicable to all of the Company’s directors, officers, and employees.  These Business Conduct Guidelines are available on the Company’s Internet website, located at www.courier.com.

 

All other information called for by Item 10 is contained in the definitive Proxy Statement, under the captions “Item 1: Election of Directors” and “Section 16(a) Beneficial Ownership Reporting Compliance,” to be delivered to stockholders in connection with the Annual Meeting of Stockholders scheduled to be held on Thursday, January 20, 2005.  Such information is incorporated herein by reference.

 

Item 11.  Executive Compensation.

 

Information called for by Item 11 is contained in the definitive Proxy Statement, under the caption “Executive Compensation,” to be delivered to stockholders in connection with the Annual Meeting of Stockholders scheduled to be held on Thursday, January 20, 2005.  Such information is incorporated herein by reference.

 

Item 12.  Security Ownership of Certain Beneficial Owners and Management.

 

Information called for by Item 12 is contained in the definitive Proxy Statement, under the captions “Security Ownership of Certain Beneficial Owners and Management” and “Executive Compensation,” to be delivered to stockholders in connection with the Annual Meeting of Stockholders scheduled to be held on Thursday, January 20, 2005.  Such information is incorporated herein by reference.

 

Item 13.  Certain Relationships and Related Transactions.

 

Information called for by Item 13 is contained in the definitive Proxy Statement to be delivered to stockholders in connection with the Annual Meeting of Stockholders scheduled to be held on Thursday, January 20, 2005.  Such information is incorporated herein by reference.

 

Item 14.  Principal Accounting Fees and Services

 

Information called for by Item 14 is contained in the definitive Proxy Statement, under the caption “Item 4: Ratification and Approval of Selection of Independent Auditors,” to be delivered to stockholders in connection with the Annual Meeting of Stockholders scheduled to be held on Thursday, January 20, 2005.  Such information is incorporated herein by reference.

 

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PART IV

 

Item 15.  Exhibits, Financial Statement Schedules and Reports on Form 8-K.

 

(a)	Documents filed as part of this report
	1.	Financial statements
		•	Report of Independent Registered Public Accounting Firm
		•	Consolidated Statements of Income for each of the three years in the period ended September 25, 2004
		•	Consolidated Balance Sheets as of September 25, 2004 and September 27, 2003
		•	Consolidated Statements of Cash Flows for each of the three years in the period ended September 25, 2004
		•	Consolidated Statements of Changes in Stockholders’ Equity for each of the three years in the period ended September 25, 2004
		•	Notes to Consolidated Financial Statements
	2.	Financial statement schedule
			Schedule II - Consolidated Valuation and Qualifying Accounts
	3.	Exhibits

 

Exhibit No.		Description of Exhibit
3A-1		Articles of Organization of Courier Corporation, as of June 29, 1972 (filed as Exhibit 3A-1 to the Company’s Annual Report on Form 10-K for the fiscal year ended September 26, 1981, and incorporated herein by reference).
3A-2		Articles of Amendment of Courier Corporation (changing stockholder vote required for merger or consolidation), as of January 20, 1977 (filed as Exhibit 3A-2 to the Company’s Annual Report on Form 10-K for the fiscal year ended September 26, 1981, and incorporated herein by reference).
3A-3		Articles of Amendment of Courier Corporation (providing for staggered election of directors), as of January 20, 1977 (filed as Exhibit 3A-3 to the Company’s Annual Report on Form 10-K for the fiscal year ended September 26, 1981, and incorporated herein by reference).
3A-4		Articles of Amendment of Courier Corporation (authorizing class of Preferred Stock), as of February 15, 1978 (filed as Exhibit 3A-4 to the Company’s Annual Report on Form 10-K for the fiscal year ended September 26, 1981, and incorporated herein by reference).
3A-5		Articles of Amendment of Courier Corporation (increasing number of shares of authorized Common Stock), as of January 16, 1986 (described in item #2 of the

 

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		Company’s Proxy Statement for the Annual Meeting of Stockholders held on January 16, 1986, and incorporated herein by reference).
3A-6		Articles of Amendment of Courier Corporation (providing for fair pricing procedures for stock to be sold in certain business combinations), as of January 16, 1986 (filed as Exhibit A to the Company’s Proxy Statement for the Annual Meeting of Stockholders held on January 16, 1986, and incorporated herein by reference).
3A-7		Articles of Amendment of Courier Corporation (limiting personal liability of directors to the Corporation or to any of its stockholders for monetary damages for breach of fiduciary duty), as of January 28, 1988 (filed as Exhibit 3A-7 to the Company’s Annual Report on Form 10-K for the fiscal year ended September 24, 1988, and incorporated herein by reference).
3A-8		Articles of Amendment of Courier Corporation (establishing Series A Preferred Stock), as of November 8, 1988 (filed as Exhibit 3A-8 to the Company’s Annual Report on Form 10-K for the fiscal year ended September 24, 1988, and incorporated herein by reference).
3A-9		Articles of Amendment of Courier Corporation (increasing number of shares of authorized Common Stock), as of January 17, 2002 (filed as Exhibit 3 to the Company’s Quarterly Report on Form 10-Q for the period ended March 30, 2002, and incorporated herein by reference).
3B		By-Laws of Courier Corporation, amended and restated as of March 18, 1999 (filed as Exhibit 3.2 to the Company’s Current Report on Form 8-K, dated March 18, 1999, and incorporated herein by reference).
10.1+*		Form of Incentive Stock Option Agreement for the Courier Corporation 1993 Stock Incentive Plan.
10.2+*		Form of Non-Qualified Stock Option Agreement for the Courier Corporation 1993 Stock Incentive Plan.
10.3+*		Form of Stock Grant Agreement for the Courier Corporation 1993 Stock Incentive Plan.
10.5+*		Non-Qualified Stock Option Agreement for the Courier Corporation 1993 Stock Incentive Plan for J. F. Conway, III dated September 23, 2004.
10.6+*		Non-Qualified Stock Option Agreement for the Courier Corporation 1993 Stock Incentive Plan for R. P. Story, Jr. dated September 23, 2004.
10.7+*		Stock Grant Agreement for the Courier Corporation 1993 Stock Incentive Plan for R. P. Story, Jr. dated September 23, 2004.
10.8+*		Non-Qualified Stock Option Agreement for the Courier Corporation 1993 Stock Incentive Plan for P. D. Tobin dated September 23, 2004..
10.9+*		Stock Grant Agreement for the Courier Corporation 1993 Stock Incentive Plan for P. D. Tobin dated September 23, 2004.
10.10+*		Non-Qualified Stock Option Agreement for the Courier Corporation 1993 Stock Incentive Plan for P. M. Folger dated September 23, 2004.
10.11+*		Stock Grant Agreement for the Courier Corporation 1993 Stock Incentive Plan for P. M. Folger dated September 23, 2004.
10.12+*		Non-Qualified Stock Option Agreement for the Courier Corporation 1993 Stock Incentive Plan for E. J. Zimmerman dated September 23, 2004.
10.13+*		Stock Grant Agreement for the Courier Corporation 1993 Stock Incentive Plan for E. J. Zimmerman dated September 23, 2004.
10.14+*		Incentive Stock Option Agreement for the Courier Corporation 1993 Stock Incentive Plan for E. J. Zimmerman dated September 23, 2004.
10.15+*		Form of Non-Qualified Stock Option Agreement for the Courier Corporation 2005 Stock Equity Plan for Non-employee Directors.
10.16+*		Form of Stock Unit Agreement for the Courier Corporation 2005 Stock Equity Plan for Non-employee Directors.
10A-1+		Courier Corporation Stock Grant Plan (filed as Exhibit C to the Company’s Proxy Statement for the Annual Meeting of Stockholders held on January 20, 1977, and incorporated herein by reference).
10A-2+		Amendment, effective January 19, 1989, to the Courier Corporation Stock Grant Plan (described in Item 4 of the Company’s Proxy Statement for the Annual Meeting of Stockholders held January 19, 1989, and incorporated herein by reference).
10B+		Letter Agreement, dated February 8, 1990, of Courier Corporation relating to supplemental retirement benefit and consulting agreement with James F. Conway, Jr. (filed as Exhibit 10B to the Company’s Annual Report on Form 10-K for the fiscal year ended September 29, 1990, and incorporated herein by reference).
10C-1+		Courier Corporation 1989 Deferred Income Stock Option Plan for Non-employee Directors, effective September 28, 1989 (filed as Exhibit A to the Company’s Proxy Statement for the Annual Meeting of Stockholders held January 18, 1990, and incorporated herein by reference).
10C-2+		Amendment, effective November 4, 1993, to the 1989 Deferred Income Stock Option Plan for Non-employee Directors (filed as Exhibit 10C-2 to the Company’s Annual Report on Form 10-K for the fiscal year ended September 25, 1993, and incorporated herein by reference).

 

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10C-3+		Amendment, effective September 24, 1998, to the 1989 Deferred Income Stock Option Plan for Non-employee Directors (filed as Exhibit 10C-3 to the Company’s Annual Report on Form 10-K for the fiscal year ended September 26, 1998, and incorporated herein by reference).
10C-4+		Amendment, effective January 21, 1999, to the 1989 Deferred Income Stock Option Plan for Non-employee Directors (described in Item 3 of the Company’s Proxy Statement for the Annual Meeting of Stockholders held January 21, 1999, and incorporated herein by reference).
10D-1+		Courier Corporation 1983 Stock Option Plan (filed as Exhibit A to the Company’s Proxy Statement for the Annual Meeting of Stockholders held on January 20, 1983, and incorporated herein by reference).
10D-2+		Amendment, effective January 17, 1985, to the Courier Corporation 1983 Stock Option Plan (described in Item 2 of the Company’s Proxy Statement for the Annual Meeting of Stockholders held on January 17, 1985, and incorporated herein by reference).
10D-3+		Amendment, effective January 19, 1989, to the Courier Corporation 1983 Stock Option Plan (described in Item 3 of the Company’s Proxy Statement for the Annual Meeting of Stockholders held January 19, 1989, and incorporated herein by reference).
10E-1+		The Courier Executive Compensation Program, effective October 4, 1993 (filed as Exhibit 10E-2 to the Company’s Annual Report on Form 10-K for the fiscal year ended September 25, 1993, and incorporated herein by reference).
10E-2+		The Management Incentive Compensation Program, effective October 4, 1993 (filed as Exhibit 10E-3 to the Company’s Annual Report on Form 10-K for the fiscal year ended September 25, 1993, and incorporated herein by reference).
10F+		Courier Corporation Senior Executive Severance Program and Agreements, dated October 25, 1988 pursuant to the program with Messrs. Conway III, Nichols, Story, and Folger (filed as Exhibit 10P to the Company’s Annual Report on Form 10-K for the fiscal year ended September 24, 1988, and incorporated herein by reference).
10G		Rights Agreement between Courier Corporation and State Street Bank and Trust Company dated March 18, 1999 (filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K, dated March 18, 1999, and incorporated herein by reference).
10H+		Courier Corporation 1999 Employee Stock Purchase Plan (filed as Exhibit A to the Company’s Proxy Statement for the Annual Meeting of Stockholders held on January 21, 1999, and incorporated herein by reference).
10I-1+		Agreement, as of March 3, 1993, of Courier Corporation relating to employment contract and supplemental retirement benefit with George Q. Nichols (filed as Exhibit 10J to the Company’s Annual Report on Form 10-K for the fiscal year ended September 25, 1993, and incorporated herein by reference).

 

12

 

10I-2+		Amendment, as of April 16, 1997, to supplemental retirement benefit agreement with George Q. Nichols (filed as Exhibit 10J-2 to the Company’s Annual Report on Form 10-K for the fiscal year ended September 27, 1997, and incorporated herein by reference).
10I-3+		Amendment, as of November 9, 2000, to supplemental retirement benefit agreement with George Q. Nichols (filed as Exhibit 10I-3 to the Company’s Annual Report on Form 10-K for the fiscal year ended September 29, 2001, and incorporated herein by reference).
10J-1		Amended and Restated Revolving Credit Agreement, dated as of March 31, 2003, between Courier Corporation, Fleet National Bank, KeyBank National Association, Citizens Bank of Massachusetts and Sovereign Bank, providing for a $60 million revolving credit facility (filed as Exhibit 10 to the Company’s Quarterly Report on Form 10-Q for the period ended June 28, 2003, and incorporated herein by reference).
10J-2		Amendment, dated March 31, 2004, to Amended and Restated Revolving Credit Agreement, dated as of March 31, 2003, between Courier Corporation, Fleet National Bank, KeyBank National Association, Citizens Bank of Massachusetts and Sovereign Bank, providing for a $60 million revolving credit facility (filed as Exhibit 10 to the Company’s Quarterly Report on Form 10-Q for the period ended March 27, 2004, and incorporated herein by reference).
10K-1+		Courier Corporation 1993 Stock Incentive Plan, as amended and restated, effective May 6, 1996 (filed as Exhibit 10O to the Company’s Annual Report on Form 10-K for the fiscal year ended September 28, 1996, and incorporated herein by reference).
10K-2+		Amendment, effective September 24, 1998, to the Courier Corporation 1993 Stock Incentive Plan (filed as Exhibit 10O-2 to the Company’s Annual Report on Form 10-K for the fiscal year ended September 26, 1998, and incorporated herein by reference).
10K-3+		Amendment, effective January 21, 1999, to the Courier Corporation 1993 Stock Incentive Plan (described in Item 4 of the Company’s Proxy Statement for the Annual Meeting of Stockholders held January 21, 1999, and incorporated herein by reference).
10K-4+		Amendment, effective January 18, 2001, to the Courier Corporation 1993 Stock Incentive Plan (described in Item 3 of the Company’s Proxy Statement for the Annual Meeting of Stockholders held January 18, 2001, and incorporated herein by reference).

 

13

 

10L		Stock Purchase Agreement by and among Courier Corporation and the stockholders of Book-mart Press, Inc., dated as of July 21, 1997 (filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K dated July 21, 1997, and incorporated herein by reference).
10M+		Courier Corporation Deferred Compensation Program dated November 6, 1997 including Messrs. Conway III, Nichols, and Story (filed as Exhibit 10 to the Company’s Quarterly Report on Form 10-Q for the period ended December 27, 1997, and incorporated herein by reference).
10N		Master Lease Finance Agreement, dated as of September 23, 1998 between Courier Corporation and General Electric Capital Corporation (filed as Exhibit 10R to the Company’s Annual Report on Form 10-K for the fiscal year ended September 26, 1998, and incorporated herein by reference).
10O		Stock Purchase Agreement by and among Courier Corporation, Mrs. Blanche Cirker, individually, the Estate of Hayward Francis Cirker, by Blanche Cirker, executrix, and each of the stockholders of Dover Publications, Inc., Dover Book Store Inc. and Transfolio Express, Inc. dated as of August 14, 2000 (filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K dated September 22, 2000, and incorporated herein by reference).

 

14

 

10P		Master Lease Finance Agreement, dated as of September 25, 2000 between Courier Corporation and Eastern Bank (filed as Exhibit 10T to the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2000, and incorporated herein by reference).
21*		Schedule of Subsidiaries.
23*		Consent of Deloitte & Touche LLP, independent registered public accounting firm.
31.1*		Certification of Chief Executive Officer pursuant to 15 U.S.C. Section 10A, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of Chief Financial Officer pursuant to 15 U.S.C. Section 10A, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

* Exhibit is furnished herewith.

+ Designates a Company compensation plan or arrangement.

 

(b)

Reports on Form 8-K

 

Filed July 15, 2004, reporting under Item 12 a press release dated July 15, 2004 reporting financial results for the quarter ended June 26, 2004.

 

15

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on December 2, 2004.

 

	COURIER CORPORATION
	By:	s/James F. Conway III
		James F. Conway III
		Chairman, President and Chief Executive Officer
	By:	s/Robert P. Story, Jr.
		Robert P. Story, Jr.
		Senior Vice President and Chief Financial Officer
	By:	s/Peter M. Folger
		Peter M. Folger
		Vice President and Chief Accounting Officer

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities indicated, on December 2, 2004.

 

s/James F. Conway III		s/George Q. Nichols
James F. Conway III		George Q. Nichols
Chairman, President and		Director
Chief Executive Officer
s/Kathleen Foley Curley		s/Ronald L. Skates
Kathleen Foley Curley		Ronald L. Skates
Director		Director
s/Richard K. Donahue		s/Robert P. Story, Jr.
Richard K. Donahue		Robert P. Story, Jr.
Director		Director
s/Edward J. Hoff		s/W. Nicholas Thorndike
Edward J. Hoff		W. Nicholas Thorndike
Director		Director
s/Arnold S. Lerner		s/Susan L. Wagner
Arnold S. Lerner		Susan L. Wagner
Director		Director
s/Peter K. Markell
Peter K. Markell
Director

 

16

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

We have audited the accompanying consolidated balance sheets of Courier Corporation and subsidiaries as of September 25, 2004 and September 27, 2003, and the related consolidated statements of income, stockholders’ equity, and cash flows for each of the three years in the period ended September 25, 2004.  Our audits also included the financial statement schedule listed in the Index at Item 15(a)2.  These financial statements and financial statement schedule are the responsibility of the Corporation’s management.  Our responsibility is to express an opinion on the financial statements and financial statement schedule based on our audits.

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Courier Corporation and subsidiaries as of September 25, 2004 and September 27, 2003, and the results of their operations and their cash flows for each of the three years in the period ended September 25, 2004, in conformity with accounting principles generally accepted in the United States of America.  Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

 

 

/s/ Deloitte & Touche LLP
Boston, Massachusetts
December 3, 2004

 

F-1

 

COURIER CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

 

		For the Years Ended
		September 25, 2004			September 27, 2003			September 28, 2002
Net sales (Note A)		$	211,179,000		$	202,002,000		$	201,024,000
Cost of sales		142,609,000			134,630,000			138,451,000
Gross profit		68,570,000			67,372,000			62,573,000
Selling and administrative expenses		37,292,000			37,794,000			37,791,000
Interest (income) expense, net		(23,000		)	52,000			480,000
Other income (Note K)		250,000			—			—
Pretax income		31,551,000			29,526,000			24,302,000
Provision for income taxes (Note C)		11,011,000			10,254,000			8,007,000
Income from continuing operations		$	20,540,000		$	19,272,000		$	16,295,000
Discontinued operations:
Loss from operations, net of tax		—			(65,000		)	(120,000		)
Gain on disposal, net of tax		—			913,000			—
Net income		$	20,540,000		$	20,120,000		$	16,175,000
Income per basic share (Notes A and L):
Continuing operations		$	2.58		$	2.46		$	2.11
Discontinued operations (Note I):
Loss from operations		—			(0.01		)	(0.02		)
Gain on disposal		—			0.12			—
Net income per basic share		$	2.58		$	2.56		$	2.09
Income per diluted share (Notes A and L):
Continuing operations		$	2.50		$	2.37		$	2.04
Discontinued operations (Note I):
Loss from operations		—			(0.01		)	(0.02		)
Gain on disposal		—			0.11			—
Net income per diluted share		$	2.50		$	2.48		$	2.02
Cash dividends declared per share		$	0.35		$	0.30		$	0.27

 

The accompanying notes are an integral part of the consolidated financial statements.

 

F-2

 

COURIER CORPORATION

CONSOLIDATED BALANCE SHEETS

 

		September 25, 2004			September 27, 2003
ASSETS
Current assets:
Cash and cash equivalents (Note A)		$	23,965,000		$	23,824,000
Accounts receivable, less allowance for uncollectible accounts of $1,630,000 in 2004 and $1,741,000 in 2003 (Note A)		34,072,000			29,174,000
Inventories (Note B)		25,108,000			20,681,000
Deferred income taxes (Note C)		2,852,000			3,164,000
Other current assets		840,000			1,214,000
Total current assets		86,837,000			78,057,000
Property, plant and equipment (Note A):
Land		1,059,000			1,059,000
Buildings and improvements		25,781,000			22,349,000
Machinery and equipment		128,484,000			114,728,000
Furniture and fixtures		1,468,000			1,468,000
Construction in progress		1,073,000			5,094,000
		157,865,000			144,698,000
Less-Accumulated depreciation and amortization		(109,383,000		)	(101,356,000		)
Property, plant and equipment, net		48,482,000			43,342,000
Goodwill (Notes A, H and J)		33,255,000			24,847,000
Prepublication costs (Note A)		5,127,000			3,810,000
Other assets		1,498,000			1,429,000
Total assets		$	175,199,000		$	151,485,000

 

The accompanying notes are an integral part of the consolidated financial statements.

 

F-3

 

COURIER CORPORATION

CONSOLIDATED BALANCE SHEETS

 

		September 25, 2004			September 27, 2003
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current maturities of long-term debt (Note D)		$	83,000		$	81,000
Accounts payable (Note A)		10,059,000			6,494,000
Accrued payroll		6,470,000			8,031,000
Accrued taxes		5,557,000			6,521,000
Other current liabilities		7,194,000			6,070,000
Total current liabilities		29,363,000			27,197,000
Long-term debt (Notes A and D)		510,000			593,000
Deferred income taxes (Note C)		7,706,000			5,597,000
Other liabilities		2,630,000			2,678,000
Total liabilities		40,209,000			36,065,000
Commitments and contingencies (Note E)
Stockholders’ equity (Notes A and F):
Preferred stock, $1 par value - authorized 1,000,000 shares; none issued
Common stock, $1 par value - authorized 18,000,000 shares; issued 8,031,000 shares in 2004 and 8,088,000 in 2003		8,031,000			8,088,000
Additional paid-in capital		869,000			650,000
Retained earnings		126,573,000			108,827,000
Unearned compensation		(483,000		)	(350,000		)
Treasury stock, at cost: 157,000 shares in 2003		—			(1,795,000		)
Total stockholders’ equity		134,990,000			115,420,000
Total liabilities and stockholders’ equity		$	175,199,000		$	151,485,000

 

The accompanying notes are an integral part of the consolidated financial statements.

 

F-4

 

COURIER CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

		For the Years Ended
		September 25, 2004			September 27, 2003			September 28, 2002
Operating Activities:
Net income		$	20,540,000		$	20,120,000		$	16,175,000
Adjustments to reconcile net income to cash provided from operating activities:
Depreciation and amortization		10,929,000			9,798,000			10,687,000
Deferred income taxes (Note C)		2,471,000			938,000			1,531,000
Gain on sale of assets (Notes I and K)		(163,000		)	(913,000		)	—
Changes in assets and liabilities:
Accounts receivable		(3,843,000		)	1,718,000			2,914,000
Inventory		(2,459,000		)	731,000			728,000
Accounts payable		2,775,000			(214,000		)	(5,225,000		)
Accrued taxes		(964,000		)	(444,000		)	873,000
Other elements of working capital		(245,000		)	(492,000		)	691,000
Tax benefits of stock option activity		562,000			470,000			229,000
Other long-term, net		(1,271,000		)	(575,000		)	363,000
Cash provided from operating activities		28,332,000			31,137,000			28,966,000
Investment Activities:
Capital expenditures		(13,416,000		)	(10,885,000		)	(4,918,000		)
Business acquisition (Note H)		(11,850,000		)	—			—
Prepublication costs (Note A)		(2,818,000		)	(2,232,000		)	(1,821,000		)
Proceeds from sale of assets (Notes I and K)		1,664,000			1,500,000			—
Cash used for investment activities		(26,420,000		)	(11,617,000		)	(6,739,000		)
Financing Activities:
Long-term debt repayments		(81,000		)	(78,000		)	(76,000		)
Repayments of revolving credit facility, net		—			—			(15,750,000		)
Cash dividends		(2,794,000		)	(2,354,000		)	(2,058,000		)
Proceeds from stock plans		1,104,000			1,106,000			1,114,000
Cash used for financing activities		(1,771,000		)	(1,326,000		)	(16,770,000		)
Increase in cash and cash equivalents		141,000			18,194,000			5,457,000
Cash and cash equivalents at the beginning of the period		23,824,000			5,630,000			173,000
Cash and cash equivalents at the end of the period		$	23,965,000		$	23,824,000		$	5,630,000
Supplemental cash flow information:
Interest paid		$	249,000		$	245,000		$	436,000
Income taxes paid (net of receipts)		$	8,935,000		$	9,697,000		$	5,511,000

 

The accompanying notes are an integral part of the consolidated financial statements.

 

F-5

 

COURIER CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

 

		Total Stockholders’ Equity			Common Stock			Additional Paid-In Capital			Retained Earnings			Unearned Compensation			Treasury Stock
Balance, September 29, 2001		$	80,325,000		$	5,445,000		$	1,454,000		$	76,944,000		$	(510,000	)	$	(3,008,000	)
Net income		16,175,000			—			—			16,175,000			—			—
Cash dividends		(2,058,000		)	—			—			(2,058,000		)	—			—
Restricted stock grant/amortization activity, net		133,000			—			94,000			—			1,000			38,000
Other stock plan activity		1,344,000			—			698,000			—			—			646,000
Balance, September 28, 2002		95,919,000			5,445,000			2,246,000			91,061,000			(509,000		)	(2,324,000		)
Net income		20,120,000			—			—			20,120,000			—			—
Cash dividends		(2,354,000		)	—			—			(2,354,000		)	—			—
Stock dividend (Note A)		—			2,643,000			(2,643,000		)	—			—			—
Restricted stock grant/amortization activity, net		159,000			—			—			—			159,000			—
Other stock plan activity		1,576,000			—			1,047,000			—			—			529,000
Balance, September 27, 2003		115,420,000			8,088,000			650,000			108,827,000			(350,000		)	(1,795,000		)
Net income		20,540,000			—			—			20,540,000			—			—
Cash dividends		(2,794,000		)	—			—			(2,794,000		)	—			—
Restricted stock grant/amortization activity, net		160,000			—			200,000			—			(133,000		)	93,000
Other stock plan activity		1,664,000			—			772,000			—			—			892,000
Retire treasury stock (Note A)		—			(57,000		)	(753,000		)	—			—			810,000
Balance, September 25, 2004		$	134,990,000		$	8,031,000		$	869,000		$	126,573,000		$	(483,000	)	$	—

 

The accompanying notes are an integral part of the consolidated financial statements.

 

F-6

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